VAN KAMPEN EQUITY TRUST, N-30D, 2000-05-30

VAN KAMPEN EQUITY TRUST
N-30D, 2000-05-30

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<PAGE> 1

<TABLE>
<S> <C>
Table of Contents

OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2

PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 3
GROWTH OF A $10,000 INVESTMENT 4

PORTFOLIO AT A GLANCE
TOP TEN HOLDINGS 5
TOP FIVE INDUSTRIES 5
Q&A WITH YOUR PORTFOLIO MANAGERS 6
GLOSSARY OF TERMS 9

BY THE NUMBERS
YOUR FUND'S INVESTMENTS 10
FINANCIAL STATEMENTS 13
NOTES TO FINANCIAL STATEMENTS 19
REPORT OF INDEPENDENT ACCOUNTANTS 27
FUND OFFICERS AND IMPORTANT ADDRESSES 28
RESULTS OF SHAREHOLDER VOTES 29
</TABLE>

One of the greatest shifts we've seen is the increasing importance of investing
for many Americans.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 2

OVERVIEW

LETTER TO SHAREHOLDERS
April 20, 2000

Dear Shareholder,

As we enter a new century--and millennium--it seems appropriate to take a look
back at the progress that's been made over the last 100 years and how the world
of investing has changed over the generations. Although rapid advances in
technology and science have dramatically altered the world that we live in
today, one of the greatest shifts we've seen is the increasing importance of
investing for many Americans.

Once considered primarily for the wealthy, investing in the stock market is now
available to most people. In fact, almost 79 million individuals--who represent
almost half of all U.S. households--own stocks either directly or through mutual
funds. This is even more impressive when considering that just 16 years earlier,
only 19 percent of households owned stocks. Another important shift has been the
need for retirement planning beyond a pension plan or Social Security. The
Investment Company Institute, the leading mutual fund industry association,
reports that 77 percent of all
mutual fund shareholders earmarked retirement as their primary
financial goal in 1998.

Through all the changes in the investment environment over the
past century, the general principles that have made
generations of investors successful remain the same. Some that have stood the
test of time include:

- Investing for the long term

- Basing investment decisions on sound research

- Building a diversified portfolio

- Acting on the value of professional investment advice

While no one can predict the future, at Van Kampen we believe that these ideas
will remain important tenets for investors well into this century. As we
continue to focus on these principles, we hope that our decades of investment
experience can help bring you closer to your financial goals as we welcome the
new millennium.

Sincerely,

[SIG]
Richard F. Powers, III
Chairman
Van Kampen
Investment Advisory Corp.
</TABLE>

1
<PAGE> 3

ECONOMIC SNAPSHOT

ECONOMIC GROWTH
ECONOMIC GROWTH REMAINED VIBRANT DURING THE REPORTING PERIOD, PRIMARILY DUE TO
STRONG CONSUMER SPENDING. GROSS DOMESTIC PRODUCT (GDP), THE PRIMARY MEASURE OF
ECONOMIC GROWTH, INCREASED AT AN ANNUALIZED RATE OF 7.3 PERCENT IN THE FOURTH
QUARTER OF 1999, ITS FASTEST GROWTH RATE SINCE 1984. WITH GDP MEASURING 4.4
PERCENT FOR 1999, THIS WAS THE THIRD SUCCESSIVE YEAR IN WHICH GDP EXCEEDED 4
PERCENT.

CONSUMER SPENDING AND EMPLOYMENT
INFLATION CONCERNS MOUNTED DURING THE REPORTING PERIOD BECAUSE OF STRONG
CONSUMER SPENDING AND THE TIGHT LABOR MARKET. RISING INTEREST RATES HAVE DONE
LITTLE TO CURB CONSUMER SPENDING--RETAIL SALES GROWTH SOARED AS SHOPPERS SPENT
SOME OF THEIR STOCK-MARKET PROFITS.

IN ADDITION, UNEMPLOYMENT HOVERED NEAR A 30-YEAR LOW. THE LABOR SHORTAGE BEGAN
TO PUSH WAGES UPWARD, AS EMPLOYERS RAISED WAGES TO ATTRACT SKILLED WORKERS. WAGE
PRESSURE, IN TURN, BEGAN TO AFFECT PRICES, AS COMPANIES STARTED TO RAISE THE
COST OF GOODS AND SERVICES TO COMPENSATE FOR THEIR HIGHER LABOR COSTS.

INTEREST RATES AND INFLATION
STRONG GDP DATA, CONSUMER SPENDING, AND EMPLOYMENT PROMPTED THE FEDERAL RESERVE
BOARD TO MAINTAIN ITS ACTIVE STANCE IN TEMPERING ECONOMIC GROWTH TO WARD OFF
INFLATION. THE FED HAS INCREASED THE FEDERAL FUNDS RATE FIVE TIMES SINCE JUNE
1999. DESPITE THE FED'S ACTIONS, INFLATION BEGAN TO ACCELERATE, DRIVEN
PRINCIPALLY BY ESCALATING ENERGY PRICES. THE CONSUMER PRICE INDEX, A MEASURE OF
INFLATION, ROSE 3.7 PERCENT DURING THE 12 MONTHS ENDED MARCH 31, 2000--A NOTABLE
INCREASE OVER RECENT MONTHS. GIVEN THIS RECENT SURGE, FURTHER FED INTEREST-RATE
HIKES ARE WIDELY ANTICIPATED.

INTEREST RATES AND INFLATION

(March 31, 1998 - March 31, 2000)

[LINE GRAPH]

<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Mar 98 5.50 1.40
5.50 1.40
5.50 1.70
Jun 98 5.50 1.70
5.50 1.70
5.50 1.60
Sep 98 5.25 1.50
5.00 1.50
4.75 1.50
Dec 98 4.75 1.60
4.75 1.70
4.75 1.60
Mar 99 4.75 1.70
4.75 2.30
4.75 2.10
Jun 99 5.00 2.00
5.00 2.10
5.25 2.30
Sep 99 5.25 2.60
5.25 2.60
5.50 2.60
Dec 99 5.50 2.70
5.50 2.70
5.75 3.20
Mar 00 6.00 3.70
</TABLE>

Interest rates are represented by the closing midline federal funds target rate
on the last day of each month. Inflation is indicated by the annual percent
change of the Consumer Price Index for all urban consumers at the end of each
month.

2
<PAGE> 4

PERFORMANCE SUMMARY

RETURN HIGHLIGHTS

(as of March 31, 2000)

<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One-year total return based on
NAV(1) 39.44% 38.30% 38.32%
-------------------------------------------------------------------------
One-year total return(2) 31.39% 34.30% 37.32%
-------------------------------------------------------------------------
Five-year average annual total
return(2) 19.54% 19.84% 20.00%
-------------------------------------------------------------------------
Life-of-Fund average annual total
return(2) 13.60% 13.82%(3) 13.64%
-------------------------------------------------------------------------
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 Class A shares) or
contingent deferred sales charge ("CDSC"). On purchases of Class A shares of $1
million or more, a CDSC of 1% may be imposed on certain redemptions made within
one year of purchase. Returns for Class B shares are calculated without the
effect of the maximum 4% CDSC, charged on certain redemptions made within one
year of purchase and declining thereafter to 0% after the sixth year. Returns
for Class C shares are calculated without the effect of the maximum 1% CDSC,
charged on certain redemptions made within one year of purchase. If the sales
charges were included, total returns would be lower.

(2) Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (5.75% for Class A
shares) or contingent deferred sales charge ("CDSC"). On purchases of Class A
shares of $1 million or more, a CDSC of 1% may be imposed on certain redemptions
made within one year of purchase. Returns for Class B shares are calculated with
the effect of the maximum 4% CDSC, charged on certain redemptions made within
one year of purchase and declining thereafter to 0% after the sixth year.
Returns for Class C shares are calculated with the effect of the maximum 1%
CDSC, charged on certain redemptions made within one year of purchase.

(3) The total return reflects the conversion of Class B shares into Class A
shares six years after the end of the calendar month in which the shares were
purchased. See footnote 3 in the Notes to Financial Statements for additional
information.

See the Comparative Performance section of the current prospectus. Past
performance is no guarantee of future results. Investment return and net asset
value will fluctuate with market conditions. Fund shares, when redeemed, may be
worth more or less than their original cost.

Because the Fund concentrates investments in the utility industry, it may be
more susceptible to any economic, political or regulatory occurrence effecting
this industry. Foreign securities involve the risk of fluctuations in foreign
exchange rates, future political and economic developments. Lower-rated
securities are referred to as "junk bonds" and are considered speculative with
regards to payment of interest and principal.

Market forecasts provided in this report may not necessarily come to pass.

3
<PAGE> 5

GROWTH OF A $10,000 INVESTMENT

(July 28, 1993 - March 31, 2000)

[INVESTMENT PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
UTILITY FUND S&P UTILITIES INDEX
------------ -------------------
<S> <C> <C>
7/93 9427 10000
3/94 8994 9094
3/95 9043 9759
3/96 11020 12335
3/97 11911 12902
3/98 16773 17544
3/99 16798 17265
3/00 23423 18767
</TABLE>

Fund's Total Return
1 Year Total Return 31.39%
3 Year Avg. Annual 22.84%
5 Year Avg. Annual 19.54%
Inception Avg. Annual 13.60%

This chart compares your Fund's performance to that of the S&P Utilities
Index over time.

This index is a broad-based, statistical composite that does not include
any commissions or fees that would be paid by an investor purchasing the
securities it represents. Such costs would lower the performance of this
index. An investment cannot be made directly in an index.

The above chart reflects the performance of Class A shares of the Fund. The
performance of Class A shares will differ from that of other share classes of
the Fund because of the difference in sales charges and/or expenses paid by
shareholders investing in the different share classes. The Fund's performance
assumes reinvestment of all distributions, and includes payment of the maximum
sales charge (5.75% for Class A shares).

While past performance is no guarantee of future results, the above information
provides a broader vantage point from which to evaluate the discussion of the
Fund's performance found in the following pages.

4
<PAGE> 6

PORTFOLIO AT A GLANCE

TOP TEN HOLDINGS

(as a percentage of long-term investments--March 31, 2000)

1. CALPINE 8.9%
Owns and operates power plants and
sells electricity predominately in
the United States.

2. CHINA TELECOM 7.8%
Provides wireless-communications
services in China.

3. CABLE & WIRELESS 3.0%
Provides communications products and
services, including cable television,
telephone, and Internet access in the
United Kingdom and in China.

4. ENRON 2.9%
Explores for and produces natural gas
and crude oil and develops and
distributes energy throughout the
United States.

5. NORTHEAST OPTIC NETWORK 2.7%
Operates an extensive fiber-optic
network in the northeastern United
States.

6. DYNEGY 2.7%
Markets natural gas and other energy
sources in the United States, Canada,
and the United Kingdom.

7. DQE 2.7%
Provides a variety of utility
services throughout the United
States.

8. COASTAL 2.7%
Explores for and produces oil and
natural gas.

9. NSTAR (FORMERLY BEC
ENERGY) 2.6%
Provides electricity and natural gas
to the northeastern United States.

10. TELEFONOS DE MEXICO 2.5%
Provides telecommunications services
to residents of Mexico.
</TABLE>

TOP FIVE INDUSTRIES

(as a percentage of long-term investments)

[BAR GRAPH]

<TABLE>
<CAPTION>
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
Electric Utilities 34.7 44.6
Telecommunications 30.4 38.3
Oil, Gas Pipeline and Distribution 11.8 9.2
Utilities 9.8 0
Technology 6.9 0.6
</TABLE>

5
<PAGE> 7

Q&A WITH YOUR PORTFOLIO MANAGERS

WE RECENTLY SPOKE WITH REPRESENTATIVES OF THE ADVISER OF THE VAN KAMPEN UTILITY
FUND ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS DURING THE
PAST YEAR. THE REPRESENTATIVES INCLUDE CHRISTINE DRUSCH, SENIOR PORTFOLIO
MANAGER, WHO HAS MANAGED THE FUND SINCE AUGUST 1997 AND HAS WORKED IN THE
INVESTMENT INDUSTRY SINCE 1985. SHE IS JOINED BY DAVID MCLAUGHLIN, PORTFOLIO
MANAGER, AND STEPHEN L. BOYD, CHIEF INVESTMENT OFFICER FOR EQUITY INVESTMENTS.
THE FOLLOWING DISCUSSION REFLECTS THEIR VIEWS ON THE FUND'S PERFORMANCE DURING
THE 12 MONTHS ENDED MARCH 31, 2000.

Q WHAT MARKET FACTORS AFFECTED THE
FUND DURING THE REPORTING PERIOD?

A The past year was difficult for the
utility sector. Historically, utilities have performed well when investors are
worried about rising inflation. Although there were inflationary concerns during
the past year, the general consensus has been that the Federal Reserve Board is
doing a good job controlling inflation through strategic interest-rate changes.
As a result, many investors felt comfortable abandoning utilities and pursuing
higher-growth investments. This lack of investor enthusiasm had a negative
impact on the utilities sector as a whole.

Q WHAT WAS YOUR STRATEGY IN
MANAGING THE FUND IN THIS ENVIRONMENT, AND HOW DID THIS STRATEGY AFFECT THE
FUND'S PERFORMANCE?

A Our key strategy was to focus on
growth opportunities in the telecommunications industry. Telecommunications
companies provided the greatest benefit to Fund performance, particularly among
the Fund's investments in international securities. China Telecom, for example,
was one of the Fund's largest holdings and most significant contributors to
performance. The company is the dominant provider of cellular telecommunications
services in China, and it has benefited from the recent rebound in the Asian
economy, which has precipitated an increase in cellular subscribers. Other
strong international holdings included Cable & Wireless, Tele Danmark, France
Telecom, and Telefonos de Mexico.

We've been especially pleased with Telefonos de Mexico, or Telmex. The
company provides local, long-distance, and cellular services in Mexico, as well
as data transmission, Internet access, and other related services. Telmex is
aggressively branching into other product and service areas, and its revenues
are accelerating. Past performance, of course, is no guarantee of future
results.

6
<PAGE> 8

Q WHAT ABOUT THE FUND'S DOMESTIC
TELECOMMUNICATIONS HOLDINGS?

A As we mentioned in your last
report, Northeast Optics Network was one of the Fund's top performers and
remained a large holding. This company is laying fiber optic cabling throughout
the northeastern United States, where there is heavy demand for data
transmission but a shortage of the necessary infrastructure. Another strong
performer for the Fund was Amdocs, a firm that produces a software system for
telecommunications companies to use for customer service and billing functions.

Q WHY DID YOU INVEST A
PORTION OF THE FUND'S ASSETS IN SECURITIES FROM THE TELECOMMUNICATIONS
SECTOR?

A By prospectus definition, the
telecommunications sector is a subset of the utilities industry. Companies
engaged in the utilities industry include those involved in the production,
transmission, or distribution of electric energy, gas, and telecommunications
services, or the provision of other utility or utility-related goods and
services. Currently, we believe that telecommunications may provide attractive
growth opportunities, as these companies now offer a variety of products beyond
just long-distance or local telephone service.

Q DID INVESTMENTS IN OTHER AREAS
HELP FUND PERFORMANCE?

A Yes. Calpine, which we discussed in
the last report, continued to be a large holding and an excellent performer.
Calpine is an independent energy producer that has been profitable in this new
era of utility deregulation. Oil and gas companies such as Enron and Illinova
also performed well for the Fund. These companies sell natural gas and
electricity products, and they are taking advantage of deregulation to diversify
into other services.

Of course, not all of the securities in the Fund performed favorably, nor is
there any guarantee that the securities mentioned in this report will continue
to perform well or will be held by the Fund in the future. For additional Fund
highlights, please refer to page 5.

Q WHAT FACTORS HURT
FUND PERFORMANCE?

A The Fund's exposure to electric
utilities hindered performance, as these slower-growth companies were not
popular with investors during the reporting period. We reduced the Fund's
exposure to electric utilities significantly throughout the period, shifting the
assets to better-performing telecommunications securities. Electric-utility
holdings that hurt the Fund's performance included Sierra Pacific, FirstEnergy,
and Pinnacle West. In addition, many companies that specialize in long-distance
telephone services did poorly, as extreme competition drove prices and profits
downward. The Fund's holdings in this area included AT&T and MCI Worldcom.

DyCom Industries took a toll on Fund performance as well. This company
provides engineering and construction services to utility

7
<PAGE> 9

companies, and it was negatively affected by concerns that its accounting
methods were overstating the firm's projected growth. In response to this
uncertainty, many investors sold the stock, causing its price to drop. We sold
the Fund's position in DyCom but incurred a substantial loss on the investment.

Q HOW DID THE FUND PERFORM
DURING THE FISCAL YEAR?

A The Fund performed very well,
primarily due to our security selection in the telecommunications industry. As
of March 31, 2000, the Fund achieved a 12-month total return of 39.44 percent
(Class A shares at net asset value; if the maximum sales charge of 5.75 percent
were included, the return would have been lower). By comparison, the Standard &
Poor's Utilities Index returned 8.70 percent.(1) The S&P Utilities Index is a
broad-based, unmanaged index that reflects the general performance of utility
stocks. Past performance is no guarantee of future results.

This index is a statistical composite that doesn't include any commissions
or sales charges that would be paid by an investor purchasing the securities
represented by this index. Such costs would lower its performance. It is not
possible to invest directly in an index. Please refer to the footnotes and chart
on page 3 for additional Fund performance results.

Q WHAT IS YOUR OUTLOOK FOR THE
UTILITIES SECTOR, AND HOW ARE YOU POSITIONING THE FUND?

A Going forward, we don't see any
major changes in the utilities environment. Utility deregulation and the
sector's subsequent transformation into a more growth-oriented area will take
time. Therefore, we will try to take advantage of the potential for growth
opportunities and strong performance in telecommunications, and we plan to be

more selective among electric utilities.

(1 )Because Lipper Analytical Services has reclassified how it categorizes its
indexes, we will no longer be using Lipper comparisons because we believe the
new system is less applicable. As a result, the Lipper Utility Fund Index will
not appear in this or future reports.

8
<PAGE> 10

GLOSSARY OF TERMS

A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.

CLASS A SHARES: The division of mutual funds, generally into three groupings,
called Class A, Class B, and Class C shares. The specific features of each is
dependent on varying fees/sales charges. In most cases, Class A shares will have
no redemption fee (contingent deferred sales charge).

DEREGULATION: The process of allowing utility companies to engage in open
competition to offer customers new and expanded services, as ushered in by
revised state legislation.

FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve
System, which is the central bank of the United States. Its policy-making
committee, called the Federal Open Market Committee, meets eight times a year to
establish monetary policy and monitor the economic pulse of the United States.

INFLATION: A persistent and measurable rise in the general level of prices.
Inflation is widely measured by the Consumer Price Index, an economic indicator
that measures the change in the cost of purchased goods and services.

NET ASSET VALUE (NAV): The value of a mutual fund share, calculated by deducting
a fund's liabilities from the total assets in its portfolio and dividing this
amount by the number of shares outstanding. The NAV does not include any initial
or contingent deferred sales charge.

9
<PAGE> 11

BY THE NUMBERS

YOUR FUND'S INVESTMENTS

March 31, 2000
THE FOLLOWING PAGES DETAIL THE SPECIFIC HOLDINGS OF YOUR FUND AT THE END OF THE
REPORTING PERIOD.

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMMON AND PREFERRED STOCKS 85.8%
ELECTRIC UTILITIES 31.3%
Calpine Capital Trust....................................... 32,100 $ 2,804,737
Calpine Corp. (a)........................................... 176,700 16,609,800
Consolidated Edison, Inc. .................................. 40,000 1,160,000
DQE, Inc. .................................................. 109,900 5,000,450
DTE Energy Co. ............................................. 50,000 1,450,000
Edison International........................................ 36,200 599,563
FirstEnergy Corp. .......................................... 138,000 2,846,250
GPU, Inc. .................................................. 43,975 1,203,816
Independent Energy Holdings, PLC--ADR (United Kingdom)...... 75,000 3,365,625
Montana Power Co. .......................................... 45,800 2,931,200
New Century Energies, Inc. ................................. 49,000 1,473,062
Niagara Mohawk Holdings, Inc. (a)........................... 127,700 1,723,950
Northeast Utilities......................................... 45,900 986,850
NSTAR....................................................... 114,600 4,813,200
OGE Energy Corp. ........................................... 75,200 1,442,900
PECO Energy Co. ............................................ 60,700 2,238,312
Pinnacle West Capital Corp. ................................ 104,700 2,951,231
Public Service Co. of New Mexico............................ 88,500 1,393,875
Reliant Energy, Inc. ....................................... 114,800 2,690,625
Sierra Pacific Resources.................................... 134,928 1,686,600
Southern Co. ............................................... 75,800 1,648,650
Texas Utilities Co. ........................................ 29,300 869,844
Texas Utilities Co.--Convertible Preferred, PRIDES.......... 14,800 583,675
------------
62,474,215
------------
NATURAL GAS PIPELINE AND DISTRIBUTION 4.4%
KeySpan Corp. .............................................. 85,800 2,370,225
National Fuel Gas Co........................................ 31,000 1,381,438
NICOR, Inc. ................................................ 50,000 1,646,875
Southwest Gas Corp. ........................................ 58,800 1,120,875
WICOR, Inc. ................................................ 72,000 2,232,000
------------
8,751,413
------------
OIL & GAS PIPELINE AND DISTRIBUTION 10.5%
Coastal Corp. .............................................. 108,000 4,968,000
Columbia Energy Group....................................... 55,500 3,288,375
Dynegy, Inc. ............................................... 80,500 5,051,375
</TABLE>

See Notes to Financial Statements

10
<PAGE> 12

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
OIL & GAS PIPELINE AND DISTRIBUTION (CONTINUED)
El Paso Energy Capital Trust I--Convertible Preferred....... 41,750 $ 2,191,875
Enron Corp. ................................................ 72,800 5,450,900
------------
20,950,525
------------
TELECOMMUNICATIONS 24.0%
AirGate PCS, Inc. (a)....................................... 8,500 896,750
ALLTEL Corp. ............................................... 49,300 3,108,981
Bell Atlantic Corp. ........................................ 39,900 2,438,888
BellSouth Corp. ............................................ 69,400 3,261,800
Cable & Wireless, PLC--ADR (United Kingdom)................. 100,700 5,639,200
China Telecom--ADR (China).................................. 82,000 14,534,500
France Telecom--ADR (France)................................ 20,000 3,538,750
SBC Communications, Inc. ................................... 66,400 2,788,800
Sprint Corp. (PCS Group).................................... 61,800 3,893,400
Tele Danmark A/S--ADS (Denmark)............................. 100,000 4,643,750
U.S. West, Inc. ............................................ 44,400 3,224,550
------------
47,969,369
------------
TECHNOLOGY 6.4%
Amdocs Ltd., TRACES......................................... 59,800 3,707,600
Nippon Telegraph & Telephone Corp.--ADR (Japan)............. 31,800 2,506,237
NorthEast Optic Network, Inc. (a)........................... 60,000 5,073,750
PSI Net, Inc. .............................................. 26,700 908,217
Verio, Inc.................................................. 12,500 563,281
------------
12,759,085
------------
UTILITIES 9.2%
Broadwing, Inc. ............................................ 41,000 1,524,688
CoreComm Ltd. (a)........................................... 46,800 2,059,200
Enel SpA--ADR (Italy) (a)................................... 10,000 445,000
Global Crossing Ltd. (Bermuda) (a).......................... 56,580 2,316,244
Global Crossing Ltd.--Convertible Preferred, 144A--Private
Placement (Bermuda) (b)................................... 12,600 3,061,800
IPALCO Enterprises, Inc. ................................... 102,700 2,002,650
Jazztel, PLC--ADR (Spain) (a)............................... 1,100 89,031
MCI WorldCom, Inc. (a)...................................... 45,000 2,039,063
NEXTLINK Communications, Inc., Class A (a).................. 22,500 2,782,969
Tritel, Inc. (a)............................................ 2,400 91,800
Winstar Communications, Inc. (a)............................ 31,500 1,890,000
------------
18,302,445
------------

TOTAL COMMON AND PREFERRED STOCKS 85.8%............................. 171,207,052
------------
</TABLE>

See Notes to Financial Statements

11
<PAGE> 13

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
FIXED INCOME SECURITIES 7.4%
CABLE TELEVISION 1.6%
$ 700 AT&T Corp., 144A--Private Placement (b)..... 4.000% 11/15/29 $ 1,101,163
1,000 Continental Cablevision, Inc. .............. 8.300 05/15/06 1,031,189
1,000 Cox Communications, Inc. ................... 6.875 06/15/05 960,933
------------
3,093,285
------------
ELECTRIC UTILITIES 1.0%
1,000 Texas Utilities Electric Co. ............... 8.250 04/01/04 1,025,904
1,000 Union Electric Co. ......................... 7.375 12/15/04 1,000,605
------------
2,026,509
------------
OIL & GAS PIPELINE AND DISTRIBUTION 0.5%
1,000 Enron Corp. ................................ 7.125 05/15/07 958,687
------------
TELECOMMUNICATIONS 4.3%
1,000 360 Communications.......................... 7.125 03/01/03 994,496
900 GTE Corp. .................................. 9.375 12/01/00 914,073
1,000 Sprint Corp. ............................... 8.125 07/15/02 1,012,998
3,000 Telefonos de Mexico, SA (Mexico)............ 4.250 06/15/04 4,676,250
1,000 Worldcom, Inc. ............................. 7.750 04/01/07 1,017,914
------------
8,615,731
------------
TOTAL FIXED INCOME SECURITIES........................................... 14,694,212
------------
TOTAL LONG-TERM INVESTMENTS 93.2%
(Cost $112,465,315)..................................................... 185,901,264

SHORT-TERM INVESTMENTS 6.7%
Federal Home Loan Bank Discount Note
($13,441,000 par, yielding 4.034%, 04/03/00 maturity)
(Cost $13,436,482).................................................... 13,436,482
------------

TOTAL INVESTMENTS 99.9%
(Cost $125,901,797)................................................... 199,337,746
OTHER ASSETS IN EXCESS OF LIABILITIES 0.1%............................. 142,993
------------

NET ASSETS 100.0%...................................................... $199,480,739
============
</TABLE>

(a) Non-Income producing security as this stock currently does not declare
dividends.

(b) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933. These securities may be resold in
transactions exempt from registration which are normally transactions with
qualified institutional buyers.

ADR--American Depository Receipts
ADS--American Depository Shares
PRIDES--Preferred Redeemable Increased Dividend Securities
TRACES--Trust Automatic Common Exchange Securities

See Notes to Financial Statements

12
<PAGE> 14

FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2000

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $125,901,797)....................... $199,337,746
Cash........................................................ 13,429
Receivables:
Fund Shares Sold.......................................... 498,397
Interest.................................................. 280,004
Dividends................................................. 171,813
Other....................................................... 7,413
------------
Total Assets............................................ 200,308,802
------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 248,781
Distributor and Affiliates................................ 198,067
Investment Advisory Fee................................... 110,311
Trustees' Deferred Compensation and Retirement Plans........ 188,401
Accrued Expenses............................................ 82,503
------------
Total Liabilities....................................... 828,063
------------
NET ASSETS.................................................. $199,480,739
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $117,388,707
Net Unrealized Appreciation................................. 73,435,949
Accumulated Net Realized Gain............................... 8,752,019
Accumulated Distributions in Excess of Net Investment
Income.................................................... (95,936)
------------
NET ASSETS.................................................. $199,480,739
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $89,062,633 and 3,931,085 shares of
beneficial interest issued and outstanding)............. $ 22.66
Maximum sales charge (5.75%* of offering price)......... 1.38
------------
Maximum offering price to public........................ $ 24.04
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $101,260,921 and 4,479,940 shares of
beneficial interest issued and outstanding)............. $ 22.60
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $9,157,185 and 405,334 shares of
beneficial interest issued and outstanding)............. $ 22.59
============
</TABLE>

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

See Notes to Financial Statements

13
<PAGE> 15

Statement of Operations
For the Year Ended March 31, 2000

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of $2,941)...... $ 3,865,425
Interest.................................................... 1,313,257
-----------
Total Income............................................ 5,178,682
-----------
EXPENSES:
Distribution (12b-1) and Services Fees (Attributed to
Classes A, B and C of $179,843, $923,901 and $73,007,
respectively)............................................. 1,176,751
Investment Advisory Fee..................................... 1,116,969
Shareholder Services........................................ 292,898
Trustees' Fees and Related Expenses......................... 66,112
Custody..................................................... 31,838
Legal....................................................... 29,279
Other....................................................... 201,789
-----------
Total Expenses.......................................... 2,915,636
Less Credits Earned on Cash Balances.................... 3,470
-----------
Net Expenses............................................ 2,912,166
-----------
NET INVESTMENT INCOME....................................... $ 2,266,516
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $15,579,388
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 35,241,774
End of the Period......................................... 73,435,949
-----------
Net Unrealized Appreciation During the Period............... 38,194,175
-----------
NET REALIZED AND UNREALIZED GAIN............................ $53,773,563
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $56,040,079
===========
</TABLE>

See Notes to Financial Statements

14
<PAGE> 16

Statement of Changes in Net Assets
For the Year Ended March 31, 2000, the Nine Months Ended March 31, 1999 and the
Year Ended June 30, 1998

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED YEAR ENDED
MARCH 31, 2000 MARCH 31, 1999 JUNE 30, 1998
-----------------------------------------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................. $ 2,266,516 $ 2,146,231 $ 2,919,996
Net Realized Gain................................. 15,579,388 3,971,978 5,691,843
Net Unrealized Appreciation/Depreciation During
the Period....................................... 38,194,175 (4,004,125) 26,338,865
------------ ------------ ------------
Change in Net Assets from Operations.............. 56,040,079 2,114,084 34,950,704
------------ ------------ ------------
Distributions from Net Investment Income.......... (2,284,696) (2,070,469) (3,302,950)
Distributions in Excess of Net Investment
Income........................................... (95,936) -0- (58,293)
------------ ------------ ------------
Distributions from and in Excess of Net Investment
Income*.......................................... (2,380,632) (2,070,469) (3,361,243)
------------ ------------ ------------
Distributions from Net Realized Gain.............. (8,887,968) (1,862,563) (13,156,292)
Distributions in Excess of Net Realized Gain...... -0- -0- (125,726)
------------ ------------ ------------
Distributions from and in Excess of Net Realized
Gain*............................................ (8,887,968) (1,862,563) (13,282,018)
------------ ------------ ------------
Return of Capital Distribution*................... -0- -0- (7,471,305)
------------ ------------ ------------
Total Distributions............................... (11,268,600) (3,933,032) (24,114,566)
------------ ------------ ------------

NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... 44,771,479 (1,818,948) 10,836,138
------------ ------------ ------------

FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold......................... 32,510,689 25,006,965 33,570,538
Net Asset Value of Shares Issued Through Dividend
Reinvestment..................................... 9,916,837 3,332,371 21,003,724
Cost of Shares Repurchased........................ (40,829,395) (26,459,204) (53,035,786)
------------ ------------ ------------

NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS..................................... 1,598,131 1,880,132 1,538,476
------------ ------------ ------------

TOTAL INCREASE IN NET ASSETS...................... 46,369,610 61,184 12,374,614

NET ASSETS:
Beginning of the Period........................... 153,111,129 153,049,945 140,675,331
------------ ------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $(95,936),
$18,180 and $(57,582), respectively)............. $199,480,739 $153,111,129 $153,049,945
============ ============ ============
* Distributions by Class
--------------------------------------------------
Distributions from and in Excess of Net Investment
Income:
Class A Shares................................... $ (1,295,698) $ (1,031,678) $ (1,538,296)
Class B Shares................................... (1,005,190) (970,381) (1,714,845)
Class C Shares................................... (79,744) (68,410) (108,102)
------------ ------------ ------------
$ (2,380,632) $ (2,070,469) $ (3,361,243)
============ ============ ============
Distributions from and in Excess of Net Realized
Gain:
Class A Shares................................... $ (3,740,190) $ (740,901) $ (5,310,506)
Class B Shares................................... (4,770,849) (1,048,593) (7,494,154)
Class C Shares................................... (376,929) (73,069) (477,358)
------------ ------------ ------------
$ (8,887,968) $ (1,862,563) $(13,282,018)
============ ============ ============
Return of Capital Distribution:
Class A Shares................................... $ -0- $ -0- $ (2,987,603)
Class B Shares................................... -0- -0- (4,215,072)
Class C Shares................................... -0- -0- (268,630)
------------ ------------ ------------
$ -0- $ -0- $ (7,471,305)
============ ============ ============
</TABLE>

See Notes to Financial Statements

15
<PAGE> 17

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
YEAR NINE MONTHS
ENDED ENDED YEAR ENDED JUNE 30,
MARCH 31, MARCH 31, -------------------------------------
CLASS A SHARES 2000 1999 1998 1997 1996 1995
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
THE PERIOD............................. $17.465 $17.657 $16.441 $15.298 $13.386 $12.906
------- ------- ------- ------- ------- -------
Net Investment Income.................. .351 .310 .429 .637 .538 .595
Net Realized and Unrealized Gain....... 6.276 .013 3.909 1.317 2.077 .485
------- ------- ------- ------- ------- -------
Total from Investment Operations........ 6.627 .323 4.338 1.954 2.615 1.080
------- ------- ------- ------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income.................... .360 .300 .480 .610 .703 .600
Distributions from and in Excess of Net
Realized Gain........................ 1.076 .215 1.691 .201 -0- -0-
Return of Capital Distribution......... -0- -0- .951 -0- -0- -0-
------- ------- ------- ------- ------- -------
Total Distributions..................... 1.436 .515 3.122 .811 .703 .600
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD...... $22.656 $17.465 $17.657 $16.441 $15.298 $13.386
======= ======= ======= ======= ======= =======

Total Return (a)........................ 39.44% 1.72%* 28.17% 13.20% 19.93% 8.70%
Net Assets at End of the Period (In
millions).............................. $ 89.1 $ 62.1 $ 60.4 $ 52.5 $ 57.7 $ 50.4
Ratio of Expenses to Average Net Assets
(b).................................... 1.26% 1.24% 1.30% 1.41% 1.38% 1.34%
Ratio of Net Investment Income to
Average Net Assets (b)................. 1.76% 2.29% 2.47% 4.03% 3.61% 4.55%
Portfolio Turnover...................... 32% 13%* 23% 102% 121% 109%
</TABLE>

* Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 5.75% or contingent deferred
sales charge ("CDSC"). On purchases of $1 million or more, a CDSC of 1% may
be imposed on certain redemptions made within one year of purchase. If the
sales charges were included, total returns would be lower.

(b) For the years ended June 30, 1997, and 1996, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.

See Notes to Financial Statements

16
<PAGE> 18

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
YEAR NINE MONTHS
ENDED ENDED YEAR ENDED JUNE 30,
MARCH 31, MARCH 31, -------------------------------------
CLASS B SHARES 2000 1999 1998 1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD................................ $17.437 $17.632 $16.434 $15.296 $13.356 $12.880
------- ------- ------- ------- ------- -------
Net Investment Income................. .203 .208 .309 .519 .426 .507
Net Realized and Unrealized Gain...... 6.259 .012 3.891 1.314 2.080 .461
------- ------- ------- ------- ------- -------
Total from Investment Operations....... 6.462 .220 4.200 1.833 2.506 .968
------- ------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Investment Income............... .220 .200 .360 .494 .566 .492
Distributions from and in Excess of
Net Realized Gain................... 1.076 .215 1.691 .201 -0- -0-
Return of Capital Distribution........ -0- -0- .951 -0- -0- -0-
------- ------- ------- ------- ------- -------
Total Distributions.................... 1.296 .415 3.002 .695 .566 .492
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD..... $22.603 $17.437 $17.632 $16.434 $15.296 $13.356
======= ======= ======= ======= ======= =======

Total Return (a)....................... 38.30% 1.21%* 27.20% 12.30% 19.08% 7.80%
Net Assets at End of the Period (In
millions)............................. $ 101.3 $ 84.1 $ 86.8 $ 83.3 $ 92.9 $ 81.0
Ratio of Expenses to Average Net Assets
(b)................................... 2.01% 1.99% 2.07% 2.17% 2.13% 2.05%
Ratio of Net Investment Income to
Average Net Assets (b)................ 1.01% 1.53% 1.74% 3.27% 2.86% 3.84%
Portfolio Turnover..................... 32% 13%* 23% 102% 121% 109%
</TABLE>

* Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 4%,
charged on certain redemptions made within one year of purchase and
declining thereafter to 0% after the sixth year. If the sales charge was
included, total returns would be lower.

See Notes to Financial Statements

17
<PAGE> 19

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
YEAR NINE MONTHS
ENDED ENDED YEAR ENDED JUNE 30,
MARCH 31, MARCH 31, -------------------------------------
CLASS C SHARES 2000 1999 1998 1997 1996 1995
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
THE PERIOD............................. $17.426 $17.619 $16.426 $15.290 $13.356 $12.868
------- ------- ------- ------- ------- -------
Net Investment Income.................. .204 .209 .308 .503 .470 .482
Net Realized and Unrealized Gain....... 6.258 .013 3.887 1.328 2.030 .498
------- ------- ------- ------- ------- -------
Total from Investment Operations........ 6.462 .222 4.195 1.831 2.500 .980
------- ------- ------- ------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income.................... .220 .200 .360 .494 .566 .492
Distributions from and in Excess of Net
Realized Gain........................ 1.076 .215 1.691 .201 -0- -0-
Return of Capital Distribution......... -0- -0- .951 -0- -0- -0-
------- ------- ------- ------- ------- -------
Total Distributions..................... 1.296 .415 3.002 .695 .566 .492
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD...... $22.592 $17.426 $17.619 $16.426 $15.290 $13.356
======= ======= ======= ======= ======= =======

Total Return (a)........................ 38.32% 1.22%* 27.14% 12.37% 19.00% 7.88%
Net Assets at End of the Period (In
millions).............................. $ 9.2 $ 7.0 $ 5.9 $ 4.9 $ 5.0 $ 1.3
Ratio of Expenses to Average Net Assets
(b).................................... 2.01% 1.99% 2.06% 2.17% 2.13% 2.09%
Ratio of Net Investment Income to
Average Net Assets (b)................. 1.01% 1.53% 1.73% 3.23% 2.78% 3.80%
Portfolio Turnover...................... 32% 13%* 23% 102% 121% 109%
</TABLE>

* Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 1%,
charged on certain redemptions made within one year of purchase. If the
sales charge was included, total returns would be lower.

See Notes to Financial Statements

18
<PAGE> 20

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Utility Fund (the "Fund") is organized as a series of the Van Kampen
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, which approximates market value.

B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may 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 March 31, 2000, there were no
when-issued or delayed delivery purchase commitments.

The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies

19
<PAGE> 21

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

advised by Van Kampen 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. INCOME AND EXPENSES Dividend income is recorded net of applicable withholding
taxes on the ex-dividend date; interest income is recorded on an accrual basis.
Bond discount is accreted over the expected life of each applicable security.
Income and expenses of the Fund are allocated on a pro rata basis to each class
of shares, except for distribution and service fees and transfer agency costs
which are unique to each class of shares.

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

At March 31, 2000, for federal income tax purposes the cost of long- and
short-term investments is $125,901,797, the aggregate gross unrealized
appreciation is $78,120,331 and the aggregate gross unrealized depreciation is
$4,684,382, resulting in net unrealized appreciation on long- and short-term
investments of $73,435,949.

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

F. EXPENSE REDUCTIONS During the year ended March 31, 2000, the Fund's custody
fee was reduced by $3,470 as a result of credits earned on overnight cash
balances.

20
<PAGE> 22

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

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 DAILY 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>

For the year ended March 31, 2000, the Fund recognized expenses of
approximately $18,800 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.

For the year ended March 31, 2000, the Fund recognized expenses of
approximately $70,700 representing Van Kampen's cost of providing accounting and
legal services to the Fund.

Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent of the Fund. For the year ended March 31, 2000,
the Fund recognized expenses of approximately $188,200. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees and are based
on competitive market benchmarks.

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

The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per Trustee under the plan is $2,500.

21
<PAGE> 23

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

3. CAPITAL TRANSACTIONS

At March 31, 2000, capital aggregated $56,388,062, $55,086,903 and $5,913,742
for Classes A, B and C, respectively. For the year ended March 31, 2000,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A................................................. 827,297 $ 17,303,040
Class B................................................. 617,832 12,565,190
Class C................................................. 127,931 2,642,459
---------- ------------
Total Sales............................................... 1,573,060 $ 32,510,689
========== ============
Dividend Reinvestment:
Class A................................................. 233,973 $ 4,571,971
Class B................................................. 259,439 5,038,767
Class C................................................. 15,753 306,099
---------- ------------
Total Dividend Reinvestment............................... 509,165 $ 9,916,837
========== ============
Repurchases:
Class A................................................. (684,221) $(13,679,242)
Class B................................................. (1,219,325) (24,471,150)
Class C................................................. (137,567) (2,679,003)
---------- ------------
Total Repurchases......................................... (2,041,113) $(40,829,395)
========== ============
</TABLE>

22
<PAGE> 24

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

At March 31, 1999, capital aggregated $48,192,293, $61,954,096 and
$5,644,187 for Classes A, B and C, respectively. For the nine months ended March
31, 1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A................................................. 544,379 $ 9,808,618
Class B................................................. 673,415 12,063,204
Class C................................................. 174,359 3,135,143
---------- ------------
Total Sales............................................... 1,392,153 $ 25,006,965
========== ============
Dividend Reinvestment:
Class A................................................. 85,041 $ 1,531,265
Class B................................................. 95,052 1,711,764
Class C................................................. 4,958 89,342
---------- ------------
Total Dividend Reinvestment............................... 185,051 $ 3,332,371
========== ============
Repurchases:
Class A................................................. (496,899) $ (8,902,999)
Class B................................................. (867,572) (15,566,941)
Class C................................................. (113,012) (1,989,264)
---------- ------------
Total Repurchases......................................... (1,477,483) $(26,459,204)
========== ============
</TABLE>

23
<PAGE> 25

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

At June 30, 1998, capital aggregated $45,755,409, $63,746,069 and $4,408,966
for Classes A, B and C, respectively. For the year ended June 30, 1998,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A................................................. 1,328,514 $ 22,835,462
Class B................................................. 538,641 9,290,235
Class C................................................. 83,771 1,444,841
---------- ------------
Total Sales............................................... 1,950,926 $ 33,570,538
========== ============
Dividend Reinvestment:
Class A................................................. 540,406 $ 8,897,389
Class B................................................. 703,377 11,560,470
Class C................................................. 33,229 545,865
---------- ------------
Total Dividend Reinvestment............................... 1,277,012 $ 21,003,724
========== ============
Repurchases:
Class A................................................. (1,639,476) $(27,743,068)
Class B................................................. (1,388,187) (23,874,869)
Class C................................................. (83,492) (1,417,849)
---------- ------------
Total Repurchases......................................... (3,111,155) $(53,035,786)
========== ============
</TABLE>

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares purchased
on or after June 1, 1996, and any dividend reinvestment plan Class B shares
received thereon, automatically convert to Class A shares eight years after the
end of the calendar month in which the shares were purchased. Class B shares
purchased before June 1, 1996, and any dividend reinvestment plan Class B shares
received thereon, automatically convert to Class A shares six years after the
end of the calendar month in which the shares were purchased. For the year ended
March 31, 2000, 237,933 Class B shares converted to Class A shares and are shown
in the above tables as sales of Class A shares and repurchases of Class B
shares. Class C shares purchased before January 1, 1997, and any dividend
reinvestment plan Class C shares received thereon, automatically convert to
Class A shares ten years after the end of the calendar month in which such
shares were purchased. Class C shares purchased on or after January 1, 1997 do
not possess a conversion feature. For the year ended March 31, 2000, no Class C
shares converted to Class A shares. The CDSC will be imposed on most redemptions
made within six years of the

24
<PAGE> 26

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

purchase for Class B shares and one year of the purchase for Class C shares as
detailed in the following schedule.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
--------------------------
YEAR OF REDEMPTION CLASS B CLASS C
<S> <C> <C>
First...................................................... 4.00% 1.00%
Second..................................................... 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 March 31, 2000, Van Kampen, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approximately
$30,300 and CDSC on redeemed shares of approximately $120,100. 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 $52,559,471 and $68,328,340,
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, as amended, 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 year ended March 31, 2000, are payments retained by Van Kampen of
approximately $712,300.

6. BORROWINGS

25
<PAGE> 27

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

the consent of the participating banks. Each fund is permitted to utilize the
facility in accordance with the restrictions of its prospectus. In the event the
demand for the credit facility meets or exceeds $650 million on a complex-wide
basis, each fund will be limited to its pro-rata percentage based on the net
assets of each participating fund. Interest on borrowings is charged under the
agreement at a rate of 0.50% above the federal funds rate per annum. An annual
commitment fee of 0.09% per annum is charged on the unused portion of the credit
facility, which each fund incurs based on its pro-rata percentage of quarterly
net assets. The Fund has not borrowed against the credit facility during the
period.

26
<PAGE> 28

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Trustees of Van Kampen Utility Fund:

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen Utility Fund (the
"Fund") at March 31, 2000, and the results of its operations, the changes in its
net assets and the financial highlights for the year then ended in conformity
with accounting principles generally accepted in the United States. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of securities at March 31, 2000 by correspondence with the custodian and
brokers, provides a reasonable basis for the opinion expressed above. The
statement of changes in net assets and the financial highlights for each of the
periods ended on or prior to March 31, 1999 were audited by other independent
accountants whose report dated May 6, 1999 expressed an unqualified opinion
thereon.

PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
May 5, 2000

27
<PAGE> 29

FUND OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN UTILITY FUND

BOARD OF TRUSTEES

J. MILES BRANAGAN
JERRY D. CHOATE
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY

OFFICERS

RICHARD F. POWERS, III*
President

STEPHEN L. BOYD*(1)
Executive Vice President and
Chief Investment Officer

A. THOMAS SMITH III*
Vice President and Secretary

JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer

PETER W. HEGEL*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, III*
Vice Presidents

INVESTMENT ADVISER

VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555

DISTRIBUTOR

VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555

SHAREHOLDER SERVICING AGENT

VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256

CUSTODIAN

STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105

LEGAL COUNSEL

SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606

INDEPENDENT ACCOUNTANTS

PRICEWATERHOUSECOOPERS LLP
200 E. Randolph Drive

Chicago, Illinois 60601

For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
March 31, 2000. The Fund designated and paid $8,887,968 as a 20% rate gain
distribution. Shareholders were sent a 1999 Form 1099-DIV in January 2000,
representing their proportionate share of this capital gain distribution. For
corporate shareholders 100% of the distributions qualify for the dividend
received deductions.

(1) Appointed Executive Vice President and Chief Investment Officer effective
April 3, 2000.

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

(SM) denotes a service mark of Van Kampen Funds Inc.

This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless it
has been preceded or is accompanied by an effective prospectus of the Fund which
contains additional information on how to purchase shares, the sales charge, and
other pertinent data. After September 30,
2000, the report, if used with prospective investors, must be accompanied by a
quarterly performance update, if applicable.

28
<PAGE> 30

RESULTS OF
SHAREHOLDER VOTES

A Joint Special Meeting of the Shareholders of the Portfolio was held on
December 15, 1999, where shareholders voted on the election of trustees and
independent public accountants.

1) With regard to the election of the following trustees by shareholders:

<TABLE>
<CAPTION>
# OF SHARES
-----------------------------
IN FAVOR WITHHELD
<S> <C> <C>
J. Miles Branagan...................................... 5,706,738 49,995
Jerry D. Choate........................................ 5,702,044 54,689
Linda Hutton Heagy..................................... 5,702,080 54,653
R. Craig Kennedy....................................... 5,709,805 46,928
Mitchell M. Merin...................................... 5,703,427 53,306
Jack E. Nelson......................................... 5,701,938 54,795
Richard F. Powers, III................................. 5,701,604 55,129
Phillip B. Rooney...................................... 5,703,594 53,139
Fernando Sisto......................................... 5,699,004 57,729
Wayne W. Whalen........................................ 5,706,947 49,786
Suzanne H. Woolsey..................................... 5,703,394 53,339
Paul G. Yovovich*...................................... 5,703,635 53,098
</TABLE>

* On April 14, 2000, Paul G. Yovovich resigned from the Board of Trustees.

2) With regard to the ratification of KPMG LLP as independent public accounts
for the Fund, 5,661,821 shares voted for the proposal, 15,914 shares voted
against and 78,998 shares abstained.**

** KPMG LLP has ceased being the Fund's independent accountants effective April
14, 2000. The cessation of the client-auditor relationship between the Fund and
KPMG was based solely on a possible future business relationship by KPMG with an
affiliate of the Fund's investment adviser.

29
<PAGE> 31

<TABLE>
<S> <C>
Table of Contents

OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2

PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 3
GROWTH OF A $10,000 INVESTMENT 4

PORTFOLIO AT A GLANCE
TOP TEN HOLDINGS 5
TOP FIVE SECTORS 5
Q&A WITH YOUR PORTFOLIO MANAGERS 6
GLOSSARY OF TERMS 10

BY THE NUMBERS
YOUR FUND'S INVESTMENTS 11
FINANCIAL STATEMENTS 16
NOTES TO FINANCIAL STATEMENTS 22
REPORT OF INDEPENDENT ACCOUNTANTS 30

VAN KAMPEN FUNDS
THE VAN KAMPEN FAMILY OF FUNDS 31
FUND OFFICERS AND IMPORTANT ADDRESSES 32
RESULTS OF SHAREHOLDER VOTES 33
</TABLE>

One of the greatest shifts we've seen is the increasing importance of investing
for many Americans.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 32

OVERVIEW

LETTER TO SHAREHOLDERS
April 20, 2000

Dear Shareholder,

- Investing for the long term

- Basing investment decisions on sound research

- Building a diversified portfolio

- Acting on the value of professional investment advice

Sincerely,

[SIG]
Richard F. Powers, III
Chairman
Van Kampen
Investment Advisory Corp.
</TABLE>

1
<PAGE> 33

ECONOMIC SNAPSHOT

INTEREST RATES AND INFLATION

(March 31, 1998 - March 31, 2000)

[LINE GRAPH]

2
<PAGE> 34

PERFORMANCE SUMMARY

RETURN HIGHLIGHTS

(as of March 31, 2000)

<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One-year total return based on
NAV(1) 133.67% 131.91% 132.31%
-------------------------------------------------------------------------
One-year total return(2) 120.18% 126.91% 131.31%
-------------------------------------------------------------------------
Life-of-Fund average annual total
return(2) 45.97% 46.91% 47.21%
-------------------------------------------------------------------------
Commencement date 05/29/96 05/29/96 05/29/96
-------------------------------------------------------------------------
</TABLE>

(1) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge (5.75% for Class A shares) or
contingent deferred sales charge ("CDSC"). On purchases of Class A shares of $1
million or more, a CDSC of 1% may be imposed on certain redemptions made within
one year of purchase. Returns for Class B shares are calculated without the
effect of the maximum 5% CDSC, charged on certain redemptions made within one
year of purchase and declining thereafter to 0% after the fifth year. Returns
for Class C shares are calculated without the effect of the maximum 1% CDSC,
charged on certain redemptions made within one year of purchase. If the sales
charge was included, total returns would be lower.

(2) Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (5.75% for Class A
shares) or contingent deferred sales charge ("CDSC"). On purchases of Class A
shares of $1 million or more, a CDSC of 1% may be imposed on certain redemptions
made within one year of purchase. Returns for Class B shares are calculated with
the effect of the maximum 5% CDSC, charged on certain redemptions made within
one year of purchase and declining thereafter to 0% after the fifth year.
Returns for Class C shares are calculated with the effect of the maximum 1%
CDSC, charged on certain redemptions made within one year of purchase.

See the Comparative 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.

The Fund invests primarily in equity securities of small- and mid-sized
companies. These types of companies may have limited product lines, markets or
financial resources and their securities may be subject to more erratic market
movements than those of larger companies. Foreign investments may magnify
volatility due to changes in foreign exchange rates, the political and economic
uncertainties in foreign countries, and the potential lack of liquidity,
government supervision, and regulation.

Market forecasts provided in this report may not necessarily come to pass.

3
<PAGE> 35

GROWTH OF A $10,000 INVESTMENT

(May 29, 1996 - March 31, 2000)

[INVESTMENT PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND RUSSELL 2500 GROWTH INDEX RUSSELL 2000 INDEX
---------------------- ------------------------- ------------------
<S> <C> <C> <C>
5/96 9421 10000 10000
9/96 9990 9698 9622
3/97 8092 9221 9599
9/97 12687 12420 12815
3/98 13067 12701 13632
9/98 11608 9394 10378
3/99 18275 11651 11416
9/99 22657 13143 12357
3/00 42702 21089 15673

Fund's Total Return
1 Year Total Return 120.18%
3 Year Avg. Annual 70.72%
Inception Avg. Annual 45.97%
</TABLE>
This chart compares your Fund's performance to that of the Russell 2000
Index and the Russell 2500 Growth Index over time.

These indices are broad-based, statistical composites that do not include
any commissions or fees that would be paid by an investor purchasing the
securities they represent. Such costs would lower the performance of these
indices. An investment cannot be made directly in an index.

Based upon the Fund's asset composition, we believe the Russell 2000 Index is no
longer a meaningful point of comparison for the Fund. Therefore, we will not be
providing information about this index in future shareholder reports.

4
<PAGE> 36

PORTFOLIO AT A GLANCE

TOP TEN HOLDINGS

(as a percentage of long-term investments--March 31, 2000)

1. SDL 4.2%
Sells products for fiber-optic and
satellite communications networks.

2. MICROMUSE 2.7%
Produces software that monitors and
manages information-technology
infrastructures.

3. JDS UNIPHASE 2.7%
Makes products used in optical
networks for the telecommunications
and cable-television industries.

4. BUSINESS OBJECTS 2.4%
Produces software that helps
nontechnical executives analyze
information stored in their
companies' computer databases.

5. QLOGIC 2.0%
Makes integrated circuits and adapter
boards that connect peripheral
devices to computers.

6. APPLIED MICRO CIRCUITS 2.0%
Develops high-speed integrated
circuits for tele- and data
communications.

7. CREDENCE SYSTEMS 1.9%
Develops equipment and software for
testing semiconductors.

8. EMULEX 1.7%
Designs products that enhance access
to and storage of electronic data and
applications.

9. ASYST TECHNOLOGIES 1.7%
Develops systems used in the
semiconductor manufacturing process.

10. ADVANCED DIGITAL
INFORMATION 1.6%
Manufactures storage systems for
archiving and accessing electronic
data.
</TABLE>

TOP FIVE SECTORS*

(as a percentage of long-term investments)

[BAR GRAPH]

<TABLE>
<CAPTION>
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
Technology 62.9 43.7
Consumer Services 8.0 13.4
Producer Manufacturing 7.3 2.2
Energy 5.2 0.0
Utilities 3.4 4.7
</TABLE>

*These sector categories represent broad groupings of related industries.

5
<PAGE> 37

Q&A WITH YOUR PORTFOLIO MANAGERS

WE RECENTLY SPOKE WITH REPRESENTATIVES OF THE ADVISER OF THE VAN KAMPEN
AGGRESSIVE GROWTH FUND ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE
MARKETS DURING THE PAST 12 MONTHS. THE REPRESENTATIVES INCLUDE GARY M. LEWIS,
SENIOR PORTFOLIO MANAGER, WHO HAS MANAGED THE FUND SINCE ITS INCEPTION IN 1996
AND WORKED IN THE INVESTMENT INDUSTRY SINCE 1979. HE IS JOINED BY DUDLEY
BRICKHOUSE, MATTHEW HART (NEW TO THE FUND AS OF FEBRUARY 2000), JANET LUBY, AND
DAVID WALKER, PORTFOLIO MANAGERS, AND STEPHEN L. BOYD, CHIEF INVESTMENT OFFICER
FOR EQUITY INVESTMENTS. THE FOLLOWING DISCUSSION REFLECTS THEIR VIEWS ON THE
FUND'S PERFORMANCE DURING THE 12 MONTHS ENDED MARCH 31, 2000.

Q WHAT MARKET FACTORS AFFECTED
THE FUND DURING THE REPORTING PERIOD?

A For the vast majority of the
reporting period, the market environment was favorable for the Fund. Technology
stocks, which made up a substantial portion of the Fund's investments, continued
their outstanding performance. (The Fund's investment in the technology sector
consisted of broad groupings of related industries.) This was especially the
case during the final quarter of 1999, when the NASDAQ stock index, which
includes a number of technology companies, rose an impressive 48 percent.

In the first two months of the new year, technology stocks continued their
upward move, while "blue chip" stocks started falling out of favor with
investors. In March, however, this situation reversed itself, with the Dow Jones
Industrial Average making a healthy recovery and the NASDAQ giving back some of
the ground it had gained earlier that year. Nevertheless, it was still an
unusually successful period for investors in technology companies.

Q IN WHAT AREAS OF THE MARKET DID
YOU FIND ATTRACTIVE INVESTMENTS?

A The Fund's investment approach
(see next page) leads us to the areas of the market where we believe we can find
the best stocks at any given time. As a consequence, during the reporting period
the Fund was invested heavily in companies that have taken advantage of
burgeoning technologies such as the Internet and wireless communications, two
market areas that we believe have enormous growth potential. The heavy weighting
in these areas of technology significantly benefited the Fund's results, as
stocks in these areas were overwhelmingly the best performers in the market
during the period. (Although we invested the Fund's assets in nontechnology
stocks, these were

6
<PAGE> 38

THE MANAGERS' INVESTMENT APPROACH

REGARDLESS OF MARKET CONDITIONS, WE FOLLOW A CONSISTENT INVESTMENT STRATEGY IN
MANAGING THE FUND: TO LOOK FOR STOCKS WITH RISING EARNINGS EXPECTATIONS AND
RISING VALUATIONS. WE INVEST THE FUND'S ASSETS IN THOSE COMPANIES WE BELIEVE
HAVE THE POTENTIAL TO OUTPERFORM EARNINGS EXPECTATIONS, AND WE SELL STOCKS IF
THEIR UNDERLYING COMPANIES' EARNINGS ESTIMATES OR VALUATIONS ARE DECLINING. WE
MANAGE THE FUND FROM THE "BOTTOM UP," MEANING THAT WE EVALUATE EACH COMPANY
INDIVIDUALLY BEFORE DECIDING TO INVEST.

not significant positive contributors to the Fund's return.)

Q HOW WERE YOUR INVESTMENT
CHOICES SHAPED BY THE INTERNET'S CONTINUED GROWTH?

A Increasingly, companies have
been reengineering their business practices to take advantage of the Internet's
cost efficiencies, leading to many investment opportunities in technology
stocks.

As we mentioned in your last shareholder report, we continued to invest the
Fund's assets in businesses that are creating the infrastructure supporting the
Internet. The Fund benefited greatly from its investments in SDL and JDS
Uniphase, both of which produce optical-networking products that are helping to
enhance the Internet's speed and capacity. Both companies have been helped by
heavy demand resulting from the Internet's rapid growth.

The Fund's results were also boosted by its holdings in the data-storage
area. As the Internet becomes an increasingly important part of daily life, it
is necessary to develop systems to store all of the information being generated.
Along those lines, we invested successfully in Emulex, a manufacturer of
equipment used in the development of computer storage networks, and QLogic,
which develops products that connect storage devices to computers.

Of course, not all the stocks in the Fund performed as favorably, nor is
there any guarantee that any of the stocks mentioned above will continue to
perform as well or will be held by the Fund in the future. For additional
portfolio highlights, please refer to page 5.

Q DID OTHER INVESTMENTS BENEFIT
THE FUND?

A Yes. We invested broadly across the
technology sector during the reporting period. Although we did invest outside
technology--in areas such as energy, health care, and consumer services--
technology stocks still represented the Fund's most successful investment
opportunities during the last year.

7
<PAGE> 39

Some of the stocks whose performance boosted the Fund's returns included
Applied Micro Circuits, a semiconductor company working in communications
infrastructure; Micromuse, whose software monitors and manages information-
technology infrastructures; and VeriSign, which helps enable secure data
transmission over the Internet.

Q DID ANY STOCKS HURT THE FUND?

A Although technology stocks were
generally excellent performers during the past 12 months, many of our weakest
investments also came from this sector--not surprising considering the Fund's
extremely large technology weighting.

The most significant drag on the Fund's performance came from
telecommunications equipment manufacturer Carrier Access. This company makes
equipment to enhance voice and high-speed data services. Its stock value
declined in response to concerns about increased competition and falling prices.
Another stock that had a substantial negative impact on performance was New Era
of Networks (NEON), a developer of software that helps businesses share data
with their customers. As with Carrier Access, NEON's stock price fell in
response to fears of increased competition, a potential slowdown due to customer
response to the year 2000 problem, and reliance on a small number of customers
for much of its business.

Outside the technology industry, the Fund's results were hurt by the poor
performance of bebe stores, a woman's apparel retailer, and Emmis
Communications, a television and radio broadcasting company.

Q HOW DID THE FUND PERFORM
DURING THE REPORTING PERIOD?

A The Fund's strong performance
during the 12-month reporting period can largely be attributed to investments in
the technology sector, which performed favorably during that time. This
performance was achieved during a rising market, and there is no guarantee that
this performance record or the circumstances leading to it can ever be repeated.
As the Fund expects to have a substantial portion of its assets invested in
stocks of emerging growth companies, the Fund will be subject to more volatility
and erratic movements than will the market in general.

During the 12 months ended March 31, 2000, the Fund returned 133.67 percent
(Class A shares at net asset value; if the sales charge of 5.75 percent were
included, the return would have been lower). By comparison, the Russell 2000
Index returned 37.29 percent, and the Russell 2500 Growth Index, which more
closely resembles the Fund, returned 80.98 percent. The Russell 2000 Index
reflects the general performance of small-cap stocks, and the Russell 2500
Growth Index measures the performance of

8
<PAGE> 40

those Russell 2500 companies with higher price-to-book ratios and higher
forecasted growth values.(1)

These indices are statistical composites that don't include any commissions
or fees that would be paid by an investor purchasing the securities they
represent. Such costs would lower the performance of the indices. Also, keep in
mind that you can't invest directly in an index. Please refer to the chart and
footnotes on page 3 for additional Fund performance results. Past performance
does not guarantee future performance.

Q WHAT IS YOUR OUTLOOK FOR
THE FUND?

A We remain optimistic and believe
that the outlook is favorable for the companies in which we invest--those with
strong fundamentals currently being rewarded in the marketplace. In particular,
we believe that the Internet is a dynamic force that will continue to drive
dramatic change in how companies and consumers conduct business. We believe that
this change will create many unique and exciting investment opportunities.

Against this positive outlook for company fundamentals, we remain mindful of
stock valuations. The higher valuations are, the greater the negative impact on
the Fund if investors lose their enthusiasm for growth stocks, causing
valuations to fall. Indeed, growth stocks performed poorly in the final weeks of
the reporting period, largely because investors became concerned that valuations
had risen too far too fast.

Our outlook also depends in part on whether the Federal Reserve continues to
increase interest rates to help limit inflationary pressures. Inflation
continues to be modest, but it is uncertain how long this trend will continue,
particularly if rising oil prices contribute to a general rise in the cost of
living. Although recent interest-rate increases have had only a moderate effect
on stock prices, additional rate hikes could have a more substantial impact.

(1) Based upon the Fund's asset composition, we believe that the Russell 2000
Index is no longer a meaningful point of comparison for the Fund. Therefore, we
will not be providing information about this index in future shareholder report
Q&As.

9
<PAGE> 41

GLOSSARY OF TERMS

A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.

BOTTOM-UP INVESTING: A management style that emphasizes the analysis of
individual stocks, rather than economic and market cycles.

DOW JONES INDUSTRIAL AVERAGE: The oldest and most widely recognized stock market
average, which reflects the performance of 30 actively traded stocks of
well-established, blue-chip companies.

EARNINGS ESTIMATES: A forecast for a company's net income during a given period.
Earnings estimates can come from the company's management as well as from
independent analysts.

GROWTH INVESTING: An investment strategy that seeks to identify stocks that are
expected to offer greater-than-average earnings growth. Growth stocks typically
trade at higher prices relative to their earnings than value stocks, due to
their higher expected earnings growth.

VALUATION: The estimated or determined worth of a stock, based on financial
measures such as the stock's current price relative to earnings, revenue, book
value, and cash flow.

10
<PAGE> 42

BY THE NUMBERS

YOUR FUND'S INVESTMENTS

March 31, 2000
THE FOLLOWING PAGES DETAIL THE SPECIFIC HOLDINGS OF YOUR FUND AT THE END OF THE
REPORTING PERIOD.

<TABLE>
<CAPTION>
DESCRIPTION SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS* 96.7%
CONSUMER DISTRIBUTION 2.1%
Anixter International, Inc. (a)............................ 200,000 $ 5,575,000
Emulex Corp. (a)........................................... 350,000 38,193,750
Whitehall Jewellers, Inc. (a).............................. 225,000 5,287,500
--------------
49,056,250
--------------
CONSUMER NON-DURABLES 0.5%
Kenneth Cole Productions, Inc., Class A (a)................ 300,000 11,775,000
--------------

CONSUMER SERVICES 7.7%
Adelphia Business Solutions, Class A (a)................... 325,000 20,028,125
Aether Systems, Inc. (a)................................... 23,100 4,192,650
Albany Molecular Research, Inc. (a)........................ 100,000 5,837,500
Cox Radio, Inc., Class A (a)............................... 40,000 3,360,000
Diamond Technology Partners, Inc., Class A (a)............. 172,500 11,341,875
Hispanic Broadcasting Corp. (a)............................ 200,000 22,650,000
Macrovision Corp. (a)...................................... 400,000 34,450,000
Photon Dynamics, Inc. (a).................................. 85,000 5,865,000
Proxicom, Inc. (a)......................................... 350,000 15,509,375
Quanta Services, Inc. (a).................................. 125,000 7,585,937
Radio One, Inc., Class A (a)............................... 175,000 11,659,375
TMP Worldwide, Inc. (a).................................... 240,000 18,660,000
ValueVision International, Inc., Class A (a)............... 300,000 12,412,500
Vignette Corp. (a)......................................... 50,000 8,012,500
--------------
181,564,837
--------------
ENERGY 5.0%
ENSCO International, Inc. ................................. 800,000 28,900,000
Newfield Exploration Co. (a)............................... 175,000 6,168,750
Patterson Energy, Inc. (a)................................. 500,000 15,875,000
Rowan Cos., Inc. (a)....................................... 500,000 14,718,750
Santa Fe International Corp. .............................. 150,000 5,550,000
Smith International, Inc. (a).............................. 275,000 21,312,500
Stone Energy Corp. (a)..................................... 150,000 7,387,500
Triton Energy Ltd. ........................................ 500,000 17,531,250
--------------
117,443,750
--------------
</TABLE>

See Notes to Financial Statements

11
<PAGE> 43

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
DESCRIPTION SHARES MARKET VALUE
<S> <C> <C>
FINANCE 1.7%
London Pacific Group Ltd.--ADR (United Kingdom)............ 700,000 $ 16,275,000
Silicon Valley Bancshares (a).............................. 350,000 25,156,250
--------------
41,431,250
--------------
FINANCIAL SERVICES 0.3%
TD Waterhouse Group, Inc. (a).............................. 300,000 7,500,000
--------------

HEALTHCARE 3.1%
Hooper Holmes, Inc. ....................................... 100,000 3,431,250
Jones Pharma, Inc. ........................................ 750,000 22,781,250
Medicis Pharmaceutical Corp., Class A (a).................. 125,000 5,000,000
MedImmune, Inc. (a)........................................ 60,000 10,447,500
PolyMedica Corp. (a)....................................... 175,000 10,281,250
Priority Healthcare Corp., Class B (a)..................... 150,000 7,537,500
QLT PhotoTherapeutics, Inc. (a)............................ 150,000 8,287,500
Zoll Medical Corp. (a)..................................... 85,000 4,356,250
--------------
72,122,500
--------------
PHARMACEUTICALS 0.9%
Biovail Corp. (a).......................................... 200,000 8,862,500
Celgene Corp. (a).......................................... 40,000 3,982,500
Cor Therapeutics, Inc. (a)................................. 135,000 8,899,453
--------------
21,744,453
--------------
PRODUCER MANUFACTURING 7.1%
Advanced Energy Industries, Inc. (a)....................... 100,000 5,100,000
Advanced Fibre Communications, Inc. (a).................... 200,000 12,537,500
Amphenol Corp., Class A (a)................................ 55,000 5,623,750
Asyst Technologies, Inc. (a)............................... 650,000 38,025,000
Cooper Cameron Corp. (a)................................... 125,000 8,359,375
Cree Research, Inc. (a).................................... 250,000 28,218,750
Elantec Semiconductor, Inc. (a)............................ 175,000 12,873,437
Electro Scientific Industries, Inc. (a).................... 200,000 11,600,000
Helix Technology Corp. .................................... 250,000 15,015,625
Insituform Technologies, Inc., Class A (a)................. 175,000 5,359,375
Kopin Corp. (a)............................................ 150,000 10,312,500
LTX Corp. (a).............................................. 150,000 6,778,125
Newport Corp............................................... 50,000 6,750,000
--------------
166,553,437
--------------
RAW MATERIALS/PROCESSING INDUSTRIES 0.2%
Maverick Tube Corp. (a).................................... 175,000 5,676,563
--------------
</TABLE>

See Notes to Financial Statements

12
<PAGE> 44

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
DESCRIPTION SHARES MARKET VALUE
<S> <C> <C>
TELECOMMUNICATIONS 4.0%
Exar Corp. (a)............................................. 232,500 $ 16,638,282
LCC International, Inc. (a)................................ 250,000 9,906,250
Natural MicroSystems Corp. (a)............................. 100,000 8,575,000
Network Plus Corp. (a)..................................... 175,000 7,087,500
Next Level Communications, Inc., Class A (a)............... 16,700 1,816,125
OTG Software, Inc. (a)..................................... 12,800 516,000
Primus Telecommunications Group, Inc. (a).................. 150,000 7,753,125
Tekelec, Inc. (a).......................................... 150,000 5,568,750
Telaxis Communications Corp. (a)........................... 11,200 673,225
Terayon Communication Systems, Inc. (a).................... 125,000 25,625,000
UTStarcom, Inc. (a)........................................ 21,300 1,662,731
Westell Technologies, Inc., Class A (a).................... 250,000 7,968,750
--------------
93,790,738
--------------
TECHNOLOGY 60.8%
724 Solutions, Inc. (a) ................................... 29,000 3,610,500
Actuate Corp. (a).......................................... 120,000 6,457,500
Advanced Digital Information Corp. (a)..................... 1,050,000 35,962,500
Allaire Corp. (a).......................................... 250,000 18,906,250
Alpha Industries, Inc. .................................... 200,000 19,000,000
ANADIGICS, Inc. (a)........................................ 350,000 23,100,000
Applied Micro Circuits Corp. (a)........................... 300,000 45,018,750
AppNet, Inc. (a)........................................... 75,000 3,525,000
Arrowpoint Communications, Inc. (a)........................ 4,900 580,573
Aspect Development, Inc. (a)............................... 300,000 19,312,500
Aspen Technology, Inc. (a)................................. 150,000 6,056,250
Audiovox Corp., Class A (a)................................ 301,000 13,131,125
AVX Corp. ................................................. 200,000 15,162,500
BroadVision, Inc. (a)...................................... 235,000 10,545,625
Brocade Communications Systems, Inc. (a)................... 112,000 20,083,000
Business Objects SA--ADR (France) (a)...................... 550,000 54,725,000
C-COR.net Corp. (a)........................................ 325,000 15,925,000
Check Point Software Technologies, Ltd.--ADR (Israel) 200,000 34,212,500
(a)......................................................
Copper Mountain Networks, Inc. (a)......................... 200,000 16,387,500
Credence Systems Corp. (a)................................. 350,000 43,793,750
Cymer, Inc. (a)............................................ 325,000 16,250,000
Davox Corp. (a)............................................ 150,000 4,012,500
Digital Lightwave, Inc. (a)................................ 100,000 6,231,250
Efficient Networks, Inc. (a)............................... 175,000 27,256,250
Exodus Communications, Inc. (a)............................ 130,000 18,265,000
Extreme Networks, Inc. (a)................................. 125,000 9,875,000
Foundry Networks, Inc. (a)................................. 74,200 10,666,250
Gemstar International Group Ltd. (a)....................... 259,200 22,291,200
Harmonic, Inc. (a)......................................... 400,000 33,300,000
</TABLE>

See Notes to Financial Statements

13
<PAGE> 45

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
DESCRIPTION SHARES MARKET VALUE
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Informatica Corp. (a)...................................... 150,000 $ 11,521,875
Informix Corp. (a)......................................... 650,000 11,009,375
Integrated Device Technology, Inc. (a)..................... 300,000 11,887,500
Intersil Holding Corp., Class A (a)........................ 45,200 2,336,275
Iona Technologies--ADR (Ireland) (a)....................... 100,000 7,400,000
ISS Group, Inc. (a)........................................ 250,000 29,125,000
JDS Uniphase Corp. (a)..................................... 500,000 60,281,250
KEMET Corp. (a)............................................ 362,000 22,896,500
Keynote Systems, Inc. (a).................................. 125,000 12,781,250
Lam Research Corp. (a)..................................... 225,000 10,139,062
LSI Logic Corp. (a)........................................ 200,000 14,525,000
Mercury Interactive Corp. (a).............................. 250,000 19,812,500
Micrel, Inc. (a)........................................... 230,000 22,080,000
Micromuse, Inc. (a)........................................ 450,000 62,465,625
MRV Communications, Inc. (a)............................... 50,000 4,581,250
NetIQ Corp. (a)............................................ 20,700 1,383,019
Novellus Systems, Inc. (a)................................. 225,000 12,628,125
OpenTV Corp., Class A (a).................................. 31,100 3,681,462
Orbotech, Ltd. (a)......................................... 97,500 8,287,500
PC-Tel, Inc. (a)........................................... 28,900 2,174,725
Peregrine Systems, Inc. (a)................................ 500,000 33,531,250
PerkinElmer, Inc. ......................................... 125,000 8,312,500
Pharmacopeia, Inc. (a)..................................... 300,000 14,700,000
Pinnacle Systems, Inc. (a)................................. 300,000 9,975,000
Polycom, Inc. (a).......................................... 150,000 11,878,125
Powerwave Technologies, Inc. (a)........................... 250,000 31,250,000
Proxim, Inc. (a)........................................... 100,000 11,968,750
QIAGEN NV--ADR (Netherlands) (a)........................... 40,000 5,440,000
QLogic Corp. (a)........................................... 340,000 46,070,000
Radisys Corp. (a).......................................... 105,000 6,313,125
RADVision Ltd. (a)......................................... 13,000 680,875
Redback Networks, Inc. (a)................................. 50,000 14,996,875
SanDisk Corp. (a).......................................... 175,000 21,437,500
Scient Corp. (a)........................................... 50,000 4,534,375
SDL, Inc. (a).............................................. 450,000 95,793,750
Selectica, Inc. (a)........................................ 20,600 1,817,950
Semtech Corp. (a).......................................... 300,000 19,218,750
Silicon Image, Inc. (a).................................... 22,900 1,640,213
Silicon Storage Technology, Inc. (a)....................... 125,000 9,234,375
St Assembly Test Services Ltd.--ADR (Singapore) (a)........ 28,400 1,377,400
Symyx Technologies, Inc. (a)............................... 27,400 1,181,625
Techne Corp. (a)........................................... 250,000 17,250,000
Three-Five Systems, Inc. (a)............................... 200,000 12,000,000
</TABLE>

See Notes to Financial Statements

14
<PAGE> 46

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
DESCRIPTION SHARES MARKET VALUE
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Titan Corp. (a)............................................ 500,000 $ 25,500,000
TranSwitch Corp. (a)....................................... 187,500 18,023,438
TriQuint Semiconductor, Inc. (a)........................... 300,000 22,050,000
Turnstone Systems, Inc. (a)................................ 8,400 966,000
Varian Semiconductor Equipment Associates, Inc. (a)........ 350,000 22,268,750
VERITAS Software Corp. (a)................................. 112,500 14,737,500
Versata, Inc. (a).......................................... 10,600 637,988
Virata Corp. (a)........................................... 25,700 2,566,788
Vishay Intertechnology, Inc. (a)........................... 350,000 19,468,750
Vitria Technology, Inc. (a)................................ 16,000 1,613,000
WebTrends Corp. (a)........................................ 150,000 10,800,000
Zomax, Inc. (a)............................................ 325,000 19,581,250
Zoran Corp. (a)............................................ 175,000 9,854,687
--------------
1,433,311,155
--------------
UTILITIES 3.3%
AirGate PCS, Inc. (a)...................................... 45,300 4,779,150
Calpine Corp. (a).......................................... 350,000 32,900,000
Clarent Corp. (a).......................................... 60,000 5,411,250
Illuminet Holdings, Inc. (a)............................... 13,100 644,970
RF Micro Devices, Inc. (a)................................. 250,000 33,593,750
--------------
77,329,120
--------------
TOTAL LONG-TERM INVESTMENTS 96.7%
(Cost $1,289,693,421)............................................... 2,279,299,053
REPURCHASE AGREEMENT 3.2%
Warburg Dillon Read ($74,975,000 par, collateralized by U.S.
Government obligations in a pooled cash account, dated 03/31/00, to
be sold on 04/03/00 at $75,012,987) (Cost $74,975,000).............. 74,975,000
--------------
TOTAL INVESTMENTS 99.9%
(Cost $1,364,668,421)............................................. 2,354,274,053
OTHER ASSETS IN EXCESS OF LIABILITIES 0.1%........................... 2,723,318
--------------
NET ASSETS 100.0%.................................................... $2,356,997,371
==============
</TABLE>

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

ADR--American Depositary Receipt.

* The common stocks are classified by sectors which represent broad groupings
of related industries.

See Notes to Financial Statements

15
<PAGE> 47

FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2000

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $1,364,668,421)..................... $2,354,274,053
Cash........................................................ 3,138
Receivables:
Investments Sold.......................................... 45,708,764
Fund Shares Sold.......................................... 16,791,054
Dividends................................................. 100,260
Interest.................................................. 12,691
Unamortized Organizational Costs............................ 24,456
Other....................................................... 19,397
--------------
Total Assets............................................ 2,416,933,813
--------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 30,219,549
Investments Purchased..................................... 25,419,440
Distributor and Affiliates................................ 2,283,905
Investment Advisory Fee................................... 1,571,579
Accrued Expenses............................................ 322,723
Trustees' Deferred Compensation and Retirement Plans........ 119,246
--------------
Total Liabilities....................................... 59,936,442
--------------
NET ASSETS.................................................. $2,356,997,371
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $1,174,619,430
Net Unrealized Appreciation................................. 989,605,632
Accumulated Net Realized Gain............................... 192,891,352
Accumulated Net Investment Loss............................. (119,043)
--------------
NET ASSETS.................................................. $2,356,997,371
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $1,205,790,902 and 32,203,301 shares of
beneficial interest issued and outstanding)............. $ 37.44
Maximum sales charge (5.75%* of offering price)......... 2.28
--------------
Maximum offering price to public........................ $ 39.72
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $948,484,491 and 26,170,809 shares of
beneficial interest issued and outstanding)............. $ 36.24
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $202,721,978 and 5,580,265 shares of
beneficial interest issued and outstanding)............. $ 36.33
==============
</TABLE>

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

See Notes to Financial Statements

16
<PAGE> 48

Statement of Operations
For the Year Ended March 31, 2000

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 4,411,270
Dividends (Net of foreign withholding taxes of $8,640)...... 348,204
--------------
Total Income............................................ 4,759,474
--------------
EXPENSES:
Investment Advisory Fee..................................... 8,558,616
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $1,528,368, $5,124,708 and $920,433,
respectively)............................................. 7,573,509
Shareholder Services........................................ 2,506,653
Custody..................................................... 133,654
Legal....................................................... 63,152
Trustees' Fees and Related Expenses......................... 60,060
Amortization of Organizational Costs........................ 21,056
Other....................................................... 861,878
--------------
Total Expenses.......................................... 19,778,578
Less Credits Earned on Overnight Cash Balances.......... 2,232
--------------
Net Expenses............................................ 19,776,346
--------------
NET INVESTMENT LOSS......................................... $ (15,016,872)
==============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 285,606,283
--------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 168,181,463
End of the Period......................................... 989,605,632
--------------
Net Unrealized Appreciation During the Period............... 821,424,169
--------------
NET REALIZED AND UNREALIZED GAIN............................ $1,107,030,452
==============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $1,092,013,580
==============
</TABLE>

See Notes to Financial Statements

17
<PAGE> 49

Statement of Changes in Net Assets
For the Year Ended March 31, 2000, Nine Months Ended March 31, 1999 and the Year
Ended June 30, 1998

<TABLE>
<CAPTION>
YEAR ENDED
MARCH NINE MONTHS ENDED YEAR ENDED
31, 2000 MARCH 31, 1999 JUNE 30, 1998
----------------------------------------------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss................ $ (15,016,872) $ (3,914,828) $ (3,698,217)
Net Realized Gain.................. 285,606,283 17,607,525 46,196,606
Net Unrealized Appreciation During
the Period....................... 821,424,169 98,128,461 30,931,626
-------------- ------------ ------------
Change in Net Assets from
Operations....................... 1,092,013,580 111,821,158 73,430,015
-------------- ------------ ------------
Distributions from Net Realized
Gain:
Class A Shares................... (44,926,473) (8,188,984) -0-
Class B Shares................... (42,825,702) (10,090,918) -0-
Class C Shares................... (7,505,533) (1,152,760) -0-
-------------- ------------ ------------
Total Distributions................ (95,257,708) (19,432,662) -0-
-------------- ------------ ------------

NET CHANGE IN NET ASSETS FROM
INVESTMENT ACTIVITIES............ 996,755,872 92,388,496 73,430,015
-------------- ------------ ------------

FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold.......... 1,278,094,894 293,035,698 165,163,266
Net Asset Value of Shares Issued
Through Dividend Reinvestment.... 84,362,153 18,218,328 -0-
Cost of Shares Repurchased......... (503,929,502) (184,145,939) (145,403,812)
-------------- ------------ ------------
NET CHANGE IN NET ASSETS FROM
CAPITAL TRANSACTIONS............. 858,527,545 127,108,087 19,759,454
-------------- ------------ ------------
TOTAL INCREASE IN NET ASSETS....... 1,855,283,417 219,496,583 93,189,469
NET ASSETS:
Beginning of the Period............ 501,713,954 282,217,371 189,027,902
-------------- ------------ ------------
End of the Period (Including
accumulated net investment loss
of $119,043, $66,257 and $51,572,
respectively).................... $2,356,997,371 $501,713,954 $282,217,371
============== ============ ============
</TABLE>

See Notes to Financial Statements

18
<PAGE> 50

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
MAY 29, 1996
(COMMENCEMENT
NINE MONTHS YEAR ENDED OF INVESTMENT
YEAR ENDED ENDED JUNE 30, OPERATIONS) TO
CLASS A SHARES MARCH 31, MARCH 31, ---------------- JUNE 30,
2000 (B) 1999 (B) 1998 1997 1996
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
THE PERIOD................. $ 17.137 $13.676 $ 9.948 $9.118 $9.430
-------- ------- ------- ------ ------
Net Investment Loss........ (.234) (.125) (.135) (.065) (.002)
Net Realized and Unrealized
Gain/Loss................ 22.414 4.445 3.863 .895 (.310)
-------- ------- ------- ------ ------
Total from Investment
Operations................. 22.180 4.320 3.728 .830 (.312)
Less Distributions from Net
Realized Gain.............. 1.874 .859 -0- -0- -0-
-------- ------- ------- ------ ------
NET ASSET VALUE, END OF THE
PERIOD..................... $ 37.443 $17.137 $13.676 $9.948 $9.118
======== ======= ======= ====== ======

Total Return (a)............. 133.67% 33.72%** 37.49% 9.10% (3.29%)**
Net Assets at End of the
Period (In millions)....... $1,205.8 $ 242.6 $ 117.5 $ 84.0 $ 30.3
Ratio of Expenses to Average
Net Assets*................ 1.25% 1.56% 1.44% 1.30% 1.29%
Ratio of Net Investment Loss
to Average Net Assets*..... (.86%) (1.22%) (1.09%) (.81%) (.50%)
Portfolio Turnover........... 139% 126%** 185% 186% 4%**

* If certain expenses had not been waived by Van Kampen, Total Return would have been
lower and the ratios would have been as follows:
Ratio of Expenses to Average
Net Assets................. N/A N/A 1.61% 1.61% 2.05%
Ratio of Net Investment Loss
to Average Net Assets...... N/A N/A (1.26%) (1.12%) (1.25%)
</TABLE>

** Non-Annualized

(b) Based on average shares outstanding.

N/A = Not Applicable

See Notes to Financial Statements

19
<PAGE> 51

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
MAY 29, 1996
(COMMENCEMENT
NINE MONTHS YEAR ENDED OF INVESTMENT
YEAR ENDED ENDED JUNE 30, OPERATIONS) TO
CLASS B SHARES MARCH 31, MARCH 31, ---------------- JUNE 30,
2000 (B) 1999 (B) 1998 1997 1996
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
THE PERIOD................. $16.747 $13.461 $ 9.867 $9.112 $9.430
------- ------- ------- ------ ------
Net Investment Loss........ (.422) (.197) (.204) (.105) (.006)
Net Realized and Unrealized
Gain/Loss................ 21.791 4.342 3.798 .860 (.312)
------- ------- ------- ------ ------
Total from Investment
Operations................. 21.369 4.145 3.594 .755 (.318)
Less Distributions from Net
Realized Gain.............. 1.874 .859 -0- -0- -0-
------- ------- ------- ------ ------
NET ASSET VALUE, END OF THE
PERIOD..................... $36.242 $16.747 $13.461 $9.867 $9.112
======= ======= ======= ====== ======

Total Return (a)............. 131.91% 32.99%** 36.37% 8.34% (3.39%)**
Net Assets at End of the
Period (In millions)....... $ 948.5 $ 231.8 $ 148.4 $ 94.2 $ 25.5
Ratio of Expenses to Average
Net Assets*................ 2.00% 2.33% 2.20% 2.05% 2.06%
Ratio of Net Investment Loss
to Average Net Assets*..... (1.61%) (1.99%) (1.85%) (1.55%) (1.28%)
Portfolio Turnover........... 139% 126%** 185% 186% 4%**

* If certain expenses had not been waived by Van Kampen, Total Return would have been
lower and the ratios would have been as follows:
Ratio of Expenses to Average
Net Assets................. N/A N/A 2.37% 2.35% 2.81%
Ratio of Net Investment Loss
to Average Net Assets...... N/A N/A (2.02%) (1.86%) (2.04%)
</TABLE>

** Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 5%, charged on certain redemptions
made within one year of purchase and declining thereafter to 0% after the
fifth year. If the sales charge was included, total returns would be lower.

(b) Based on average shares outstanding.

N/A = Not Applicable

See Notes to Financial Statements

20
<PAGE> 52

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
MAY 29, 1996
(COMMENCEMENT
NINE MONTHS YEAR ENDED OF INVESTMENT
YEAR ENDED ENDED JUNE 30, OPERATIONS) TO
CLASS C SHARES MARCH 31, MARCH 31, ---------------- JUNE 30,
2000 (B) 1999 (B) 1998 1997 1996
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
THE PERIOD................. $16.762 $13.470 $ 9.869 $9.113 $9.430
------- ------- ------- ------ ------
Net Investment Loss........ (.447) (.197) (.203) (.103) (.006)
Net Realized and Unrealized
Gain/Loss................ 21.887 4.348 3.804 .859 (.311)
------- ------- ------- ------ ------
Total from Investment
Operations................. 21.440 4.151 3.601 .756 (.317)
Less Distributions from Net
Realized Gain.............. 1.874 .859 -0- -0- -0-
------- ------- ------- ------ ------
NET ASSET VALUE, END OF THE
PERIOD..................... $36.328 $16.762 $13.470 $9.869 $9.113
======= ======= ======= ====== ======

Total Return (a)............. 132.31% 32.96%** 36.47% 8.34% (3.39%)**
Net Assets at End of the
Period (In millions)....... $ 202.7 $ 27.4 $ 16.4 $ 10.8 $ 3.9
Ratio of Expenses to Average
Net Assets*................ 2.01% 2.33% 2.20% 2.05% 2.05%
Ratio of Net Investment Loss
to Average Net Assets*..... (1.62%) (1.98%) (1.85%) (1.54%) (1.28%)
Portfolio Turnover........... 139% 126%** 185% 186% 4%**

* If certain expenses had not been waived by Van Kampen, Total Return would have been
lower and the ratios would have been as follows:
Ratio of Expenses to Average
Net Assets................. N/A N/A 2.36% 2.35% 2.81%
Ratio of Net Investment Loss
to Average Net Assets...... N/A N/A (2.02%) (1.85%) (2.04%)
</TABLE>

** Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1%, charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower.

(b) Based on average shares outstanding.

N/A = Not Applicable

See Notes to Financial Statements

21
<PAGE> 53

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Aggressive Growth Fund (the "Fund") is organized as a separate
diversified series of Van Kampen 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.

A. SECURITY VALUATION Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Unlisted securities and listed securities for which the last sales price is not
available are valued at the mean of the bid and asked prices. For those
securities where quotations or prices are not available, valuations are
determined in accordance with procedures established in good faith by the Board
of Trustees. Short-term securities with remaining maturities of 60 days or less
are valued at amortized cost, which approximates market value.

B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.

The Fund may invest in repurchase agreements which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen 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

22
<PAGE> 54

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

the value of the underlying security at not less than the repurchase proceeds
due the Fund.

C. INCOME AND EXPENSES Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Income and expenses of the Fund
are allocated on a pro rata basis to each class of shares, except for
distribution and service fees and transfer agency costs which are unique to each
class of shares.

D. ORGANIZATIONAL COSTS The Fund will reimburse Van Kampen Funds Inc. or its
affiliates (collectively "Van Kampen") 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 Van Kampen are redeemed by the Fund during the
amortization period, the Fund will be reimbursed for any unamortized
organizational costs 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.

Accumulated net realized gain/loss differs for financial and tax reporting
purposes as a result of losses relating to wash sale transactions.

At March 31, 2000, for federal income tax purposes, cost of long- and short-
term investments is $1,365,546,684; the aggregate gross unrealized appreciation
is $1,019,181,282 and the aggregate gross unrealized depreciation is
$30,453,913, resulting in net unrealized appreciation on long- and short-term
investments of $988,727,369.

F. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays dividends
annually from net investment income and net realized gains, if any. Due to
inherent differences in the recognition of income, expenses and realized
gains/losses under generally accepted accounting principles and federal income
tax purposes, permanent differences between book and tax basis reporting for the
year ended March 31, 2000, the nine months ended March 31, 1999 and for the year
ended June 30, 1998 have been identified and appropriately reclassified. For the
year ended March 31, 2000, a permanent difference related to net operating loss
which may be used as an offset against short-term gains for tax purposes
totaling $14,964,086 has been reclassified from accumulated net realized gains
to

23
<PAGE> 55

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

accumulated net investment loss. For the nine months ended March 31, 1999, a
permanent difference related to a net operating loss totaling $3,900,143 has
been reclassified from accumulated net investment loss to capital. For the year
ended June 30, 1998, a permanent difference related to net operating loss which
may be used as an offset against short-term gains for tax purposes totaling
$124,267 has been reclassified from accumulated net realized gains to
accumulated net investment loss. The $3,557,256 of remaining tax basis net
operating loss was reclassified from accumulated net investment loss to capital.

G. EXPENSE REDUCTIONS During the year ended March 31, 2000, the Fund's custody
fee was reduced by $2,232 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 of 1%
Next $500 million........................................... .70 of 1%
Over $1 billion............................................. .65 of 1%
</TABLE>

For the year ended March 31, 2000, the Fund recognized expenses of
approximately $48,200, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.

For the year ended March 31, 2000, the Fund recognized expenses of
approximately $166,100, representing Van Kampen's cost of providing accounting
and legal services to the Fund.

Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the year ended March 31, 2000,
the Fund recognized expenses of approximately $1,931,100. Transfer agency fees
are determined through negotiations with the Fund's Board of Trustees and are
based on competitive market benchmarks.

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

The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation

24
<PAGE> 56

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.

At March 31, 2000, Van Kampen owned 100 shares each of Classes A, B and C.

3. CAPITAL TRANSACTIONS

At March 31, 2000, capital aggregated $624,037,002, $434,920,028 and
$115,662,400 for Classes A, B, and C, respectively. For the year ended March 31,
2000, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A.............................................. 28,901,927 $ 792,938,804
Class B.............................................. 15,130,699 372,428,551
Class C.............................................. 4,427,215 112,727,539
----------- --------------
Total Sales............................................ 48,459,841 $1,278,094,894
=========== ==============
Dividend Reinvestment:
Class A.............................................. 1,492,984 $ 39,967,184
Class B.............................................. 1,455,968 37,811,488
Class C.............................................. 252,919 6,583,481
----------- --------------
Total Dividend Reinvestment............................ 3,201,871 $ 84,362,153
=========== ==============
Repurchases:
Class A.............................................. (12,345,867) $ (366,411,624)
Class B.............................................. (4,256,570) (116,693,001)
Class C.............................................. (732,790) (20,824,877)
----------- --------------
Total Repurchases...................................... (17,335,227) $ (503,929,502)
=========== ==============
</TABLE>

25
<PAGE> 57

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

At March 31, 1999, capital aggregated $157,542,638, $141,372,990 and
$17,176,257 for Classes A, B, and C, respectively. For the nine months ended
March 31, 1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A............................................... 16,304,723 $ 225,416,282
Class B............................................... 4,260,040 58,630,954
Class C............................................... 654,046 8,988,462
----------- -------------
Total Sales............................................. 21,218,809 $ 293,035,698
=========== =============
Dividend Reinvestment:
Class A............................................... 617,711 $ 7,881,994
Class B............................................... 748,531 9,356,636
Class C............................................... 78,313 979,698
----------- -------------
Total Dividend Reinvestment............................. 1,444,555 $ 18,218,328
=========== =============
Repurchases:
Class A............................................... (11,356,554) $(151,245,333)
Class B............................................... (2,191,661) (28,721,224)
Class C............................................... (315,445) (4,179,382)
----------- -------------
Total Repurchases....................................... (13,863,660) $(184,145,939)
=========== =============
</TABLE>

At June 30, 1998, capital aggregated $77,375,241, $103,908,446 and
$11,600,254 for Classes A, B, and C, respectively. For the year ended June 30,
1998, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A............................................... 9,586,041 $ 113,481,993
Class B............................................... 3,875,397 46,006,833
Class C............................................... 476,868 5,674,440
----------- -------------
Total Sales............................................. 13,938,306 $ 165,163,266
=========== =============
Repurchases:
Class A............................................... (9,437,958) $(112,683,409)
Class B............................................... (2,400,562) (28,531,040)
Class C............................................... (359,118) (4,189,363)
----------- -------------
Total Repurchases....................................... (12,197,638) $(145,403,812)
=========== =============
</TABLE>

26
<PAGE> 58

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares purchased
on or after June 1, 1996, and any dividend reinvestment plan Class B shares
received thereon, automatically convert to Class A shares eight years after the
end of the calendar month in which the shares were purchased. Class B shares
purchased before June 1, 1996, and any dividend reinvestment plan Class B shares
received thereon, automatically convert to Class A shares six years after the
end of the calendar month in which the shares were purchased. For the year ended
March 31, 2000, no Class B shares converted to Class A shares. Class C shares
purchased before January 1, 1997, and any dividend reinvestment plan Class C
shares received thereon, automatically convert to Class A shares ten years after
the end of the calendar month in which such shares were purchased. Class C
shares purchased on or after January 1, 1997 do not possess a conversion
feature. For the year ended March 31, 2000, no Class C shares converted to Class
A shares. The CDSC will be imposed on most redemptions made within five years of
the purchase for Class B and one year of the purchase for Class C as detailed in
the following schedule.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
--------------------------
YEAR OF REDEMPTION CLASS B CLASS C
<S> <C> <C>
First...................................................... 5.00% 1.00%
Second..................................................... 4.00% None
Third...................................................... 3.00% None
Fourth..................................................... 2.50% None
Fifth...................................................... 1.50% None
Sixth and Thereafter....................................... None None
</TABLE>

For the year ended March 31, 2000, Van Kampen, as Distributor for the Fund,
received commissions on sales of the Fund's Class A shares of approximately
$860,000, and CDSC on redeemed shares of approximately $655,600. 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 $2,298,722,633 and $1,577,164,936,
respectively.

5. DERIVATIVE FINANCIAL INSTRUMENTS

A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.

27
<PAGE> 59

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or to generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract.

Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, cash or liquid securities with a value equal to its
obligation under the futures contracts. During the period the futures contract
is open, payments are received from or made to the broker based upon changes in
the value of the contract (the variation margin). There were no transactions in
futures contracts during the year ended March 31, 2000.

6. DISTRIBUTION AND SERVICE PLANS

The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a service plan (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.

Annual fees under the Plans of up to .25% of Class A net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these fees
for the year ended March 31, 2000, are payments retained by Van Kampen of
approximately $3,811,700.

7. BORROWINGS

28
<PAGE> 60

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

the credit facility meets or exceeds $650 million on a complex-wide basis, each
fund will be limited to its pro-rata percentage based on the net assets of each
participating fund. Interest on borrowings is charged under the agreement at a
rate of 0.50% above the federal funds rate per annum. An annual commitment fee
of 0.09% per annum is charged on the unused portion of the credit facility,
which each fund incurs based on its pro-rata percentage of quarterly net assets.
The Fund has not borrowed against the credit facility during the period.

29
<PAGE> 61

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Trustees of Van Kampen Aggressive Growth Fund:

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen Aggressive Growth Fund
(the "Fund") at March 31, 2000, and the results of its operations, the changes
in its net assets and the financial highlights for the year then ended in
conformity with accounting principles generally accepted in the United States.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of securities at March 31, 2000 by correspondence with the custodian and
brokers, provides a reasonable basis for the opinion expressed above. The
statement of changes in net assets and the financial highlights for each of the
periods ended on or prior to March 31, 1999 were audited by other independent
accountants whose report dated May 6, 1999 expressed an unqualified opinion
thereon.

PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
May 5, 2000

30
<PAGE> 62

VAN KAMPEN FUNDS

THE VAN KAMPEN
FAMILY OF FUNDS

Growth

Aggressive Growth
American Value*
Emerging Growth
Enterprise
Equity Growth
Focus Equity
Growth*
Mid Cap Growth
Pace
Small Cap Value
Technology

Growth and Income

Comstock
Equity Income
Growth and Income
Harbor
Real Estate Securities
Utility
Value

Global/International

Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
International Magnum
Latin American
Strategic Income
Tax Managed Global Franchise
Worldwide High Income

Income

Corporate Bond
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
U.S. Government
U.S. Government Trust for Income

Capital Preservation

Reserve
Tax Free Money

Senior Loan

Prime Rate Income Trust
Senior Floating Rate

Tax Free

California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal**
Insured Tax Free Income
Intermediate Term Municipal
Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income

To find out more about any of these funds, ask your financial advisor for a
prospectus, which contains more complete information, including sales charges,
risks, and ongoing expenses. Please read it carefully before you invest or send
money.

To view a current Van Kampen fund prospectus or to receive additional fund
information, choose from one of the following:

- visit our Web site at
WWW.VANKAMPEN.COM--
to view a prospectus, select
Download Prospectus [COMPUTER ICON]

- call us at 1-800-341-2911
weekdays from 7:00 a.m. to 7:00 p.m.
Central time. Telecommunications
Device for the Deaf users, call
1-800-421-2833.

[PHONE ICON]

- e-mail us by visiting
WWW.VANKAMPEN.COM and
selecting Contact Us

[MAIL ICON]

* Closed to new investors

** Open to new investors for a limited time

31
<PAGE> 63

FUND OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN AGGRESSIVE GROWTH FUND

BOARD OF TRUSTEES

OFFICERS

RICHARD F. POWERS, III*
President

STEPHEN L. BOYD*(1)
Executive Vice President and
Chief Investment Officer

A. THOMAS SMITH III*
Vice President and Secretary

JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer

PETER W. HEGEL*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, III*
Vice Presidents

INVESTMENT ADVISER
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
DISTRIBUTOR

VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555

SHAREHOLDER SERVICING AGENT

VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 218256
Kansas City, Missouri 64121-8256

CUSTODIAN

STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105

LEGAL COUNSEL

SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606

INDEPENDENT ACCOUNTANTS

PRICEWATERHOUSECOOPERS LLP
200 E. Randolph Drive
Chicago, Illinois 60601

For federal income tax purposes, the following is furnished with respect of the
distributions paid by the Fund during its taxable year ended March 31, 2000.
The Fund designated and paid $69,453,074 as a 20% rate gain distribution.
Shareholders were sent a 1999 Form 1099-DIV in January 2000, representing their
proportionate share of this capital gain distribution.

(1) Appointed Executive Vice President and Chief Investment Officer effective
April 3, 2000.

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

(SM) denotes a service mark of Van Kampen Funds Inc.

This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless it
has been preceded or is accompanied by an effective prospectus of the Fund which
contains additional information
on how to purchase shares, the sales charge, and other pertinent data. After
September 30, 2000, the report must be accompanied by a quarterly performance
update, if applicable.

32
<PAGE> 64

RESULTS OF
SHAREHOLDER VOTES

A Joint Special Meeting of the Shareholders of the Fund was held on December 15,
1999, where shareholders voted on the election of trustees and the ratification
of KPMG LLP as the independent public accountants.

1) With regard to the election of the following trustees by shareholders:

<TABLE>
<CAPTION>
# OF SHARES
------------------------------
IN FAVOR WITHHELD
<S> <C> <C>
J. Miles Branagan..................................... 23,699,926 228,108
Jerry D. Choate....................................... 23,695,301 232,733
Linda Hutton Heagy.................................... 23,697,744 230,290
R. Craig Kennedy...................................... 23,701,897 226,137
Mitchell M. Merin..................................... 23,699,398 228,636
Jack E. Nelson........................................ 23,700,441 227,593
Richard F. Powers, III................................ 23,692,169 235,865
Phillip B. Rooney..................................... 23,699,067 228,967
Fernando Sisto........................................ 23,680,407 247,627
Wayne W. Whalen....................................... 23,700,131 227,903
Suzanne H. Woolsey ................................... 23,697,269 230,765
Paul G. Yovovich*..................................... 23,700,314 227,720
</TABLE>

* On April 14, 2000, Paul G. Yovovich resigned from the Board of Trustees.

2) With regard to the ratification of KPMG LLP as independent public accounts
for the Fund, 23,441,543 shares voted for the proposal, 95,683 shares voted
against and 390,808 shares abstained.**

33
<PAGE> 65

<TABLE>
<S> <C>
Table of Contents

OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2

PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 3
GROWTH OF A $10,000 INVESTMENT 5

PORTFOLIO AT A GLANCE
TOP TEN HOLDINGS 6
TOP FIVE SECTORS 6
Q&A WITH YOUR PORTFOLIO MANAGERS 7
GLOSSARY OF TERMS 12

BY THE NUMBERS
YOUR FUND'S INVESTMENTS 13
FINANCIAL STATEMENTS 17
NOTES TO FINANCIAL STATEMENTS 23
REPORT OF INDEPENDENT ACCOUNTANTS 31
FUND OFFICERS AND IMPORTANT ADDRESSES 32
RESULTS OF SHAREHOLDER VOTES 33
</TABLE>

One of the greatest shifts we've seen is the increasing importance of investing
for many Americans.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 66

OVERVIEW

LETTER TO SHAREHOLDERS
April 20, 2000

Dear Shareholder,

- Investing for the long term

- Basing investment decisions on sound research

- Building a diversified portfolio

- Acting on the value of professional investment advice

Sincerely,

[SIG]
Richard F. Powers, III
Chairman
Van Kampen
Investment Advisory Corp.
</TABLE>

1
<PAGE> 67

ECONOMIC SNAPSHOT

INTEREST RATES AND INFLATION

(March 31, 1998 - March 31, 2000)

[LINE GRAPH]

2
<PAGE> 68

PERFORMANCE SUMMARY

RETURN HIGHLIGHTS

(as of March 31, 2000)

<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One-year total return based on
NAV(1) 93.18% 91.74% 91.52%
-------------------------------------------------------------------------
One-year total return(2) 82.09% 86.74% 90.52%
-------------------------------------------------------------------------
Life-of-Fund average annual total
return(2) 44.53% 45.58% 45.65%
-------------------------------------------------------------------------
Commencement Date 12/27/95 12/27/95 12/27/95
-------------------------------------------------------------------------
</TABLE>

()1 Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge (5.75% for Class A shares) or
contingent deferred sales charge ("CDSC"). On purchases of Class A shares of $1
million or more, a CDSC of 1% may be imposed on certain redemptions made within
one year of purchase. Returns for Class B shares are calculated without the
effect of the maximum 5% CDSC, charged on certain redemptions made within one
year of purchase and declining thereafter to 0% after the fifth year. Returns
for Class C shares are calculated without the effect of the maximum 1% CDSC,
charged on certain redemptions made within one year of purchase. If the sales
charges were included, total returns would be lower.

(2) Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (5.75% for Class A
shares) or contingent deferred sales charge ("CDSC"). On purchases of Class A
shares of $1 million or more, a CDSC of 1% may be imposed on certain redemptions
made within one year of purchase. Returns of Class B shares are calculated with
the effect of the maximum 5% CDSC, charged on certain redemptions made within
one year of purchase and declining thereafter to 0% after the fifth year.
Returns for Class C shares are calculated with the effect of the maximum 1%
CDSC, charged on certain redemptions made within one year of purchase.

See the Comparative Performance section of the current prospectus. An investment
should be made with an understanding of the risks that an investment in equity
securities entails. These include the risk that the financial condition of the
issuers of the securities in the portfolio, or the condition of the stock market
in general, may worsen and therefore, the value of Fund shares may decline. Past
performance is no guarantee of 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.

Since the Fund's inception, certain fees were waived and expenses were
reimbursed by the Fund's adviser which had a material effect on the Fund's total
return. Had these fees not been waived and expenses reimbursed, the Fund's total
return would have been lower.

One factor impacting the Fund's total return for the life of the Fund was the
Fund's investments in initial public offerings (IPOs) in 1996. These investments
had a greater effect on fund performance in 1996 than similar investments made
in subsequent years, in part because of the smaller size of the Fund in 1996.
There is no assurance that the Fund's future investments in IPOs will have the
same impact on performance as they did in 1996.

For additional Performance Summary disclosure, see page 4.

3
<PAGE> 69

Continued from page 3.

The Fund's investments in less seasoned companies, special situations involving
new management, special projects and techniques, unusual developments, mergers,
or liquidations involve greater risks than more conservative investments.
Securities of foreign issuers may magnify volatility due to changes in foreign
exchange rates, the political and economic uncertainties in foreign countries,
and the potential lack of liquidity, government supervision, and regulation.

Market forecasts provided in this report may not necessarily come to pass.

4
<PAGE> 70

GROWTH OF A $10,000 INVESTMENT

(December 27, 1995 - March 31, 2000)

[INVESTMENT PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
GROWTH FUND S&P 500 INDEX
----------- -------------
<S> <C> <C>
12/95 9425.00 10000.00
3/96 11310.00 10621.00
9/96 14213.00 11437.00
3/97 15213.00 12723.00
9/97 21168.00 16057.00
3/98 23134.00 18815.00
9/98 18768.00 17505.00
3/99 24857.00 22283.00
9/99 26180.00 22365.00
3/00 48020.00 26272.00
</TABLE>

This chart compares your Fund's performance to that of the S&P 500 Index over
time.

While past performance is no guarantee of future results, the above
information provides a broader vantage point from which to evaluate the
discussion of the Fund's performance found in the following pages.

Since Lipper Analytical Services has reclassified how it categorizes its
indices, we will no longer be using Lipper comparisons because we believe the
new system is less applicable. As a result, the Lipper Growth Fund Index will
not appear in this or future reports.

This index is a broad-based, statistical composite that does not include any
commissions or fees that would be paid by an investor purchasing the securities
it represents. Such costs would lower the performance of this index. An
investment cannot be made directly in an index.

The Fund commenced operation in 1995 with limited capital invested primarily by
the adviser's affiliate. While the Fund had been available for sale in a limited
number of states, prior to February 3, 1997, 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 had been
managed substantially the same as if the Fund had been open for investment to
all public investors. No assurances 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.

5
<PAGE> 71

PORTFOLIO AT A GLANCE

TOP TEN HOLDINGS

(as a percentage of long-term investments--March 31, 2000)

1. JDS UNIPHASE 3.4%
Makes products used in optical
networks for the telecommunications
and cable-television industries.

2. VERITAS SOFTWARE 2.1%
Makes software designed to enhance
electronic information storage.

3. ANALOG DEVICES 1.9%
Develops integrated circuits used in
analog and digital signal processing.

4. EXODUS COMMUNICATIONS 1.8%
Offers services that allow businesses
to outsource management of their
Internet sites.

5. ATMEL 1.8%
Develops semiconductors for use in
electronic devices.

6. BJ SERVICES 1.6%
Provides a variety of oil-field
services to the petroleum industry
worldwide.

7. ALTERA 1.6%
Makes high-density logic devices that
customers can program.

8. POLYCOM 1.6%
Makes long-distance video-, audio-,
and data-conferencing products.

9. PMC SIERRA 1.6%
Develops semiconductor systems for
communications markets.

10. BROADCOM 1.5%
Makes semiconductors used in
high-speed data and
video-transmission products.
</TABLE>

TOP FIVE SECTORS*

(as a percentage of long-term investments)

(*)These sector categories represent broad groupings of related industries.

[BAR GRAPH]

<TABLE>
<CAPTION>
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
Technology 58.1 34.3
Consumer Services 10.8 6.1
Consumer Distribution 8.7 29.0
Energy 6.7 0.0
Utilities 4.9 4.8
</TABLE>

6
<PAGE> 72

Q&A WITH YOUR PORTFOLIO MANAGERS

WE RECENTLY SPOKE WITH REPRESENTATIVES OF THE ADVISER OF THE VAN KAMPEN GROWTH
FUND ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS DURING THE
PAST YEAR. THE REPRESENTATIVES INCLUDE JEFF D. NEW, SENIOR PORTFOLIO MANAGER,
WHO HAS MANAGED THE FUND SINCE ITS INCEPTION IN DECEMBER 1995 AND HAS WORKED IN
THE INVESTMENT INDUSTRY SINCE 1987. HE IS JOINED BY MICHAEL DAVIS AND MARY JAYNE
MALY, PORTFOLIO MANAGERS, AND STEPHEN L. BOYD, CHIEF INVESTMENT OFFICER. THE
FOLLOWING DISCUSSION REFLECTS THEIR VIEWS ON THE FUND'S PERFORMANCE DURING THE
12 MONTHS ENDED MARCH 31, 2000.

Q HOW DID THE STOCK MARKET
PERFORM DURING THE REPORTING PERIOD?

A For the vast majority of the
reporting period, it was a favorable market environment for the Fund. Technology
stocks, which made up a substantial portion of the Fund's investments during the
reporting period, continued their outstanding performance of the past few years.
(The Fund's investments in the technology sector consisted of broad groupings of
related industries.) This was especially the case during the final quarter of
1999, when the NASDAQ stock index, which includes a number of technology
companies, rose impressively. In the first two months of the new year,
technology stocks continued their strong results while "blue chip" stocks
started falling out of favor with investors. In March, however, this situation
reversed itself, with the Dow Jones Industrial Average making a healthy recovery
and the NASDAQ giving back some of the ground it had gained during the reporting
period.

Over the last 12 months an unusually large number of companies, especially
technology firms, raised financing through the initial public offering (IPO)
process. Generally, IPOs performed exceedingly well--at least in their initial
days or months of being a public stock--with many rising more than 100 percent
on their first trading day. [Editor's note: At press time, the IPO market has
become more subdued, and many stocks that went public during the reporting
period have experienced large declines from their highs.]

Q WERE THERE ANY SIGNIFICANT
TRENDS THAT AFFECTED THE STOCK MARKET?

A Recently, we've noticed a shift in
how the market assesses the value of certain companies--especially technology
companies. In the past, the market focused intensely on a company's expected
earnings as a

7
<PAGE> 73

THE MANAGERS' INVESTMENT APPROACH

WE PURCHASE STOCKS THAT MEET OUR CRITERIA OF POSITIVE FUTURE FUNDAMENTALS AND
ATTRACTIVE CURRENT VALUATIONS. BY OUR DEFINITION, A COMPANY WITH POSITIVE FUTURE
FUNDAMENTALS HAS AT LEAST ONE OF THE FOLLOWING TRAITS: CONSISTENT EARNINGS
GROWTH; ACCELERATING EARNINGS GROWTH; BETTER THAN EXPECTED FUNDAMENTALS; OR AN
UNDERLYING CHANGE IN A COMPANY, INDUSTRY, OR REGULATORY ENVIRONMENT. WE EVALUATE
STOCKS USING A "BOTTOM UP" APPROACH--IN OTHER WORDS, ON A COMPANY BY COMPANY
BASIS.

measure of its strength. Recently, however, the market has been concentrating on
expectations for a company's future sales. Investors have been rewarding stocks
whose revenue outlook is bright, regardless of whether the company is currently
making money. Many Internet and telecommunications companies, for example,
aren't making a profit now, but investors believe these companies will produce
earnings in the future and are willing to pay high stock prices to own them.

Over the past year and a half, valuations of companies with a strong revenue
growth outlook have dramatically increased relative to those of companies with
more moderate revenue growth expectations. This valuation divergence is at or
near a historically high level. We can not predict if this will continue, but it
has been a major determinant of individual stock performance during the
reporting period.

Q IN LIGHT OF THIS ENVIRONMENT,
WHAT STRATEGIES DID YOU USE TO MANAGE THE FUND?

A Regardless of the market
environment, we follow a consistent investment strategy in managing the Fund
(see above). During the reporting period, our investment criteria led us to
emphasize the technology sector. Many technology companies had a positive
fundamental outlook at the start of the reporting period. As the year
progressed, that outlook improved even further based on a strong economy,
continued spending from companies investing in their Internet strategy, and
better-than-expected growth in end-user markets such as mobile phones. This
strategy contributed to the Fund's positive performance during the period.

On the other hand, fundamentals deteriorated in some health care companies,
causing us to reduce the Fund's exposure to that sector.

Q WHICH AREAS OF THE MARKET
PRESENTED ATTRACTIVE INVESTMENT OPPORTUNITIES?

A As we mentioned, we found many
opportunities in technology and related industries. During the reporting period,
technology companies were largely immune to the Fed's interest-rate increases,
while many retail firms

8
<PAGE> 74

struggled. Consequently, the Fund's top holdings changed substantially during
the reporting period, as technology stocks edged out many retail stocks.

A new area of opportunity for the Fund was energy services, which includes
offshore drillers and energy-services companies. Although it does not encompass
a large portion of the Fund's assets, we increased the Fund's position in this
sector because escalating energy prices have triggered a rebound in drilling.
Some of the Fund's holdings in this area during the reporting period included
Smith International and BJ Services.

Q WHICH STOCKS MADE THE GREATEST
POSITIVE CONTRIBUTION TO FUND PERFORMANCE?

A The Fund's best-performing stocks
were overwhelmingly technology companies. At the end of the reporting period,
the Fund's largest holding and strongest contributor to performance was JDS
Uniphase, which produces optical networking equipment for data communications.
Another top holding and excellent performer was Polycom, which is the market
leader in audio conferencing equipment.

Semiconductor stocks were a very fruitful pocket of the technology sector,
as this area recently rallied from a prolonged downturn. Semiconductors are the
core of many technology products, and the explosion in communications equipment
has accelerated their growth. The Fund benefited from owning Applied Micro
Circuits, PMC Sierra, and TranSwitch--companies that primarily supply the
communications market--as well as LSI Logic and Altera, which are more
diversified in their product offerings.

Q DID INVESTMENTS IN OTHER AREAS
HELP FUND PERFORMANCE?

A Yes. Univision, Radio One, and
Emmis Communications are media companies that added significantly to the Fund's
total return. These companies benefited from increased advertising spending
resulting from a strong economy.

Also, Nextel Communications performed very well for the Fund, as the
wireless industry has exploded with subscriber growth. The Fund benefited from
its investment in Calpine, an independent energy producer that has taken
advantage of opportunities presented by utility deregulation. Young shoppers
boosted sales for Pacific Sunwear (beach clothing retailer) and Too (apparel and
lifestyle products for girls), two of the Fund's strong retail holdings.

Of course, not all of the stocks in the Fund performed as favorably as any
of those mentioned, nor is there any guarantee that any of the stocks mentioned
above will continue to perform as well or be held by the Fund in the future. For
additional Fund highlights, please refer to page 6.

Q WHAT STOCKS HURT
FUND PERFORMANCE?

A Many of the Fund's retail holdings
performed poorly, as investors feared that higher interest rates might curtail
consumer spending. The Fund's return was negatively affected by Tandy, Cost
Plus, Tommy Hilfiger, Sunglass Hut,

9
<PAGE> 75

Jones Apparel, Ann Taylor Stores, and TJX Companies. During the reporting period
we sold most of these stocks from the Fund's portfolio. Financial stocks also
struggled during the reporting period due to rising interest rates. Capital One
and Providian--two credit card issuers--were among those that hurt the Fund's
return.

Finally, health-care services was a disappointing sector. Issues regarding
Medicare reimbursement have taken a toll on many service providers, including
Wellpoint and HealthSouth, two of the Fund's holdings. Consequently, we greatly
reduced the Fund's weighting in the health-care sector during the reporting
period.

Q HOW DID THE FUND
PERFORM OVERALL?

A In a healthy market for growth
companies, the Fund performed very strongly during the reporting period. As of
March 31, 2000, the Fund achieved a 12-month total return of 93.18 percent
(Class A shares at net asset value; if the maximum sales charge of 5.75 percent
were included, the return would have been lower). By comparison, the Standard &
Poor's 500 Index returned 17.23 percent.(1) The S&P 500 is a broad-based,
unmanaged index that reflects the general performance of the stock market. Past
performance does not guarantee future results.

This index is a statistical composite that does not include any commissions
or sales charges that would be paid by an investor purchasing the securities
represented by this index. Such costs would lower the performance of the index.
It is not possible to invest directly in an index. Please refer to the footnotes
and chart on page 3 for additional Fund performance results.

The Fund's strong performance during the 12-month reporting period can
largely be attributed to investments in the technology sector, which performed
favorably during that time. This performance was achieved during a rising
market, and there is no guarantee that this performance record or the
circumstances leading to it can ever be repeated. As the Fund expects to have a
substantial portion of its assets invested in growth companies, the Fund may be
subject to more volatility and erratic movements than the markets in general.

Q WHAT DO YOU SEE AHEAD FOR THE
STOCK MARKET?

A Unless rising interest rates put a
significant damper on the economy, we anticipate a continuation of current
market conditions. Our biggest concern is that stock valuations are at
historically high levels, which could lead to a major market disruption if the
Fed continues to raise interest rates. This could upset corporate earnings and
cause significant market volatility--and high-growth, high-valuation stocks can
plummet quickly in a volatile market. We've been wary

(1) Since Lipper Analytical Services has reclassified how it categorizes its
indices, we will no longer be using Lipper comparisons because we believe the
new system is less applicable. As a result, the Lipper Growth Fund Index will
not appear in this or future shareholder report Q&As.

10
<PAGE> 76

of this possible scenario for awhile, however, and such a disruption has yet to
occur in the current bull market.

Q GIVEN THESE CONDITIONS, WHAT IS
YOUR OUTLOOK FOR THE FUND?

A In managing the Fund, we will
focus increasingly on how all of the Fund's holdings are positioning themselves
for the future. As the world continues to embrace new technologies, we will try
to distinguish long-term winners and identify future beneficiaries of these
radical changes.

In the near term, we expect fundamentals in the technology sector to remain
strong despite higher interest rates. There is no guarantee, however, that the
technology sector will continue its strong performance. If technology companies
were to develop weaker earnings, then we'd seek out other investment areas with
stronger fundamentals. We simply want to invest wherever we find positive future
fundamentals, consistent with the investment discipline that has provided strong
Fund performance over time.

11
<PAGE> 77

GLOSSARY OF TERMS

A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.

BLUE-CHIP STOCKS: Stocks of large, well-known companies that have a long record
of growth. Examples of blue-chip stocks include General Motors, International
Business Machines (IBM), Coca-Cola, and General Electric.

DOW JONES INDUSTRIAL AVERAGE: The oldest and most widely recognized stock market
average, which reflects the performance of 30 actively traded stocks of
well-established, blue-chip companies.

EARNINGS ESTIMATES: A forecast for a company's net income during a given period.
Earnings estimates can come from the company's management as well as from
independent analysts.

GROWTH INVESTING: An investment strategy that seeks to identify stocks that tend
to offer greater-than-average earnings growth. Growth stocks typically trade at
higher prices relative to their earnings than value stocks, due to their higher
expected earnings growth.

VALUATION: The estimated or determined worth of a stock, based on financial
measures such as the stock's current price relative to earnings, revenue, book
value, and cash flow.

12
<PAGE> 78

BY THE NUMBERS

YOUR FUND'S INVESTMENTS

March 31, 2000
THE FOLLOWING PAGES DETAIL THE SPECIFIC HOLDINGS OF YOUR FUND AT THE END OF THE
REPORTING PERIOD.

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMMON STOCKS* 95.1%
CONSUMER DISTRIBUTION 8.3%
Chico's Fas, Inc. (a)....................................... 148,000 $ 2,509,062
Pacific Sunwear of California, Inc. (a)..................... 81,500 3,137,750
Starbucks Corp. (a)......................................... 72,000 3,226,500
Tandy Corp.................................................. 47,000 2,385,250
Tiffany & Co................................................ 24,000 2,007,000
Too, Inc. (a)............................................... 95,000 2,998,437
Whitehall Jewellers, Inc. (a)............................... 100,000 2,350,000
Zale Corp. (a).............................................. 15,000 707,813
------------
19,321,812
------------
CONSUMER DURABLES 0.7%
Harley Davidson, Inc........................................ 21,000 1,666,875
------------

CONSUMER NON-DURABLES 0.4%
Jones Apparel Group, Inc. (a)............................... 30,000 956,250
------------

CONSUMER SERVICES 10.3%
Beasley Broadcast Group, Inc., Class A (a).................. 225,000 2,081,250
Brinker International, Inc. (a)............................. 53,000 1,573,437
EchoStar Communications Corp., Class A (a).................. 14,200 1,121,800
Hispanic Broadcasting Corp. (a)............................. 25,000 2,831,250
Mediacom Communications Corp., Class A (a).................. 31,500 439,031
Metro-Goldwyn-Mayer, Inc. (a)............................... 39,080 994,098
New York Times Co., Class A................................. 28,000 1,202,250
Outback Steakhouse, Inc. (a)................................ 59,000 1,891,687
Park Place Entertainment Corp. (a).......................... 113,000 1,306,563
Radio One, Inc., Class A (a)................................ 50,000 3,331,250
TMP Worldwide, Inc. (a)..................................... 21,000 1,632,750
Univision Communications, Inc., Class A (a)................. 19,000 2,147,000
USA Networks, Inc. (a)...................................... 53,000 1,195,813
Wind River Systems, Inc. (a)................................ 28,000 1,015,000
Young & Rubicam, Inc. (a)................................... 28,000 1,316,000
------------
24,079,179
------------
</TABLE>

See Notes to Financial Statements

13
<PAGE> 79

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
ENERGY 6.4%
BJ Services Co.............................................. 49,000 $ 3,619,875
ENSCO International, Inc.................................... 72,000 2,601,000
Nabors Industries, Inc. (a)................................. 45,000 1,746,562
Noble Drilling Corp. (a).................................... 61,000 2,527,687
Rowan Cos., Inc. (a)........................................ 45,000 1,324,688
Smith International, Inc. (a)............................... 41,000 3,177,500
------------
14,997,312
------------
FINANCE 3.6%
Capital One Financial Corp.................................. 34,000 1,629,875
E Trade Group, Inc.......................................... 32,000 964,000
Franklin Resources, Inc..................................... 23,000 769,062
Knight Trimark Group, Inc., Class A (a)..................... 14,000 714,000
Northern Trust Corp......................................... 10,000 675,625
SLM Holding Corp............................................ 24,000 799,500
Synovus Financial Corp...................................... 33,000 622,875
T. Rowe Price Associates, Inc............................... 24,000 948,000
U.S. Trust Corp............................................. 2,000 378,000
Waddell & Reed Financial, Inc., Class A..................... 17,000 719,313
Zions Bancorp............................................... 7,000 291,375
------------
8,511,625
------------
HEALTHCARE 4.3%
Alpharma, Inc., Class A..................................... 35,000 1,286,250
Biogen, Inc. (a)............................................ 16,000 1,118,000
Forest Laboratories, Inc. (a)............................... 15,000 1,267,500
Jones Pharma, Inc........................................... 25,500 774,563
Medimmune, Inc. (a)......................................... 6,000 1,044,750
PE Corp.--PE Biosystems Group............................... 34,000 3,281,000
Wellpoint Health Networks, Inc., (a)........................ 19,000 1,327,625
------------
10,099,688
------------
PRODUCER MANUFACTURING 0.4%
Corning, Inc................................................ 5,000 970,000
------------

TECHNOLOGY 55.3%
3Com Corp. (a).............................................. 25,000 1,390,625
Adaptec, Inc. (a)........................................... 16,000 618,000
ADC Telecommunications, Inc. (a)............................ 32,000 1,724,000
Adobe Systems, Inc.......................................... 15,000 1,669,687
ADTRAN, Inc. (a)............................................ 20,000 1,188,750
Altera Corp. (a)............................................ 40,000 3,570,000
Amdocs Ltd. (a)............................................. 13,000 957,938
Analog Devices, Inc. (a).................................... 52,000 4,189,250
</TABLE>

See Notes to Financial Statements

14
<PAGE> 80

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>

TECHNOLOGY (CONTINUED)
Apple Computer, Inc. (a).................................... 7,000 $ 950,688
Applied Micro Circuits Corp. (a)............................ 16,000 2,401,000
Atmel Corp. (a)............................................. 77,000 3,975,125
BEA Systems, Inc. (a)....................................... 16,000 1,174,000
Broadcom Corp., Class A (a)................................. 14,000 3,400,250
CDW Computer Centers, Inc. (a).............................. 27,000 2,279,812
Citrix Systems, Inc. (a).................................... 18,000 1,192,500
Comverse Technology, Inc. (a)............................... 12,000 2,268,000
Conexant Systems, Inc. (a).................................. 16,000 1,136,000
Covad Communications Group, Inc. (a)........................ 22,000 1,595,000
Credence Systems Corp. (a).................................. 7,000 875,875
Digital Lightwave, Inc. (a)................................. 13,000 810,063
Electronics for Imaging, Inc. (a)........................... 38,000 2,280,000
Exodus Communications, Inc. (a)............................. 29,000 4,074,500
Flextronics International Ltd. (a).......................... 19,000 1,338,312
Informix Corp. (a).......................................... 51,000 863,813
Inktomi Corp. (a)........................................... 13,000 2,535,000
Intuit, Inc. (a)............................................ 19,000 1,033,125
Jabil Circuit, Inc. (a)..................................... 34,000 1,470,500
JDS Uniphase Corp. (a)...................................... 63,000 7,595,437
Juniper Networks, Inc. (a).................................. 3,400 896,113
KLA--Tencor Corp. (a)....................................... 11,000 926,750
Lam Research Corp. (a)...................................... 25,000 1,126,563
Lattice Semiconductor Corp. (a)............................. 13,000 879,938
Lexmark International Group, Inc., Class A (a).............. 12,000 1,269,000
Linear Technology Corp...................................... 32,000 1,760,000
LSI Logic Corp. (a)......................................... 32,000 2,324,000
Mercury Interactive Corp. (a)............................... 10,000 792,500
Micrel, Inc. (a)............................................ 9,000 864,000
Microchip Technology, Inc. (a).............................. 20,000 1,315,000
Micron Technology, Inc. (a)................................. 5,000 630,000
Network Appliance, Inc. (a)................................. 33,000 2,730,750
Networks Associates, Inc. (a)............................... 48,000 1,548,000
Novellus Systems, Inc. (a).................................. 26,000 1,459,250
PMC Sierra, Inc. (a)........................................ 17,000 3,462,687
Polycom, Inc. (a)........................................... 45,000 3,563,437
Portal Software, Inc. (a)................................... 12,000 683,250
QLogic Corp. (a)............................................ 20,000 2,710,000
Rational Software Corp. (a)................................. 35,000 2,677,500
RealNetworks, Inc. (a)...................................... 16,000 911,000
RF Micro Devices, Inc. (a).................................. 11,000 1,478,125
</TABLE>

See Notes to Financial Statements

15
<PAGE> 81

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>

TECHNOLOGY (CONTINUED)
{ScanDisk Corp. (a)......................................... 15,000 $ 1,837,500
Sanmina Corp. (a)........................................... 32,000 2,162,000
Scientific Atlanta, Inc..................................... 40,000 2,537,500
SDL, Inc. (a)............................................... 6,000 1,277,250
Siebel Systems, Inc. (a).................................... 28,000 3,344,250
Symbol Technologies, Inc.................................... 24,000 1,975,500
Teradyne, Inc. (a).......................................... 23,000 1,891,750
Terayon Communication Systems, Inc. (a)..................... 4,000 820,000
TranSwitch Corp. (a)........................................ 27,000 2,595,375
VeriSign, Inc. (a).......................................... 13,000 1,943,500
VERITAS Software Corp. (a).................................. 36,000 4,716,000
Vignette Corp. (a).......................................... 6,000 961,500
Vitesse Semiconductor Corp. (a)............................. 20,000 1,925,000
VoiceStream Wireless Corp. (a).............................. 14,000 1,803,375
Waters Corp. (a)............................................ 35,000 3,333,750
Xilinx, Inc. (a)............................................ 41,000 3,395,312
------------
129,084,675
------------
TRANSPORTATION 0.8%
Kansas City Southern Industries, Inc........................ 21,000 1,804,688
------------

UTILITIES 4.6%
Broadwing, Inc. (a)......................................... 69,000 2,565,937
Calpine Corp. (a)........................................... 33,000 3,102,000
McLeodUSA, Inc. (a)......................................... 20,000 1,696,250
Nextel Communications, Inc., Class A (a).................... 16,000 2,372,000
NEXTLINK Communications, Inc., Class A (a).................. 9,000 1,113,188
------------
10,849,375
------------
TOTAL LONG-TERM INVESTMENTS 95.1%
(Cost $136,821,580)................................................ 222,341,479

REPURCHASE AGREEMENT 5.9%
SBC Warburg, Corp. ($13,750,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated
03/31/00, to be sold on 04/03/00 at $13,756,967) (Cost
$13,750,000)................................................ 13,750,000
------------

TOTAL INVESTMENTS 101.0%
(Cost $150,571,580)................................................ 236,091,479
LIABILITIES IN EXCESS OF OTHER ASSETS (1.0%)........................ (2,441,196)
------------
NET ASSETS 100.0%................................................... $233,650,283
============
</TABLE>

See Notes to Financial Statements

YOUR FUND'S INVESTMENTS

March 31, 2000

(a) Non-income producing security as this stock currently does not declare
dividends.
* The common stocks are classified by sectors which represent broad groupings
of related industries.

See Notes to Financial Statements

17
<PAGE> 82

FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2000

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $150,571,580)....................... $236,091,479
Cash........................................................ 127
Receivables:
Investments Sold.......................................... 6,147,920
Fund Shares Sold.......................................... 2,724,425
Dividends................................................. 16,045
Unamortized Organizational Costs............................ 6,105
Other....................................................... 5,511
------------
Total Assets............................................ 244,991,612
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 10,676,996
Distributor and Affiliates................................ 221,525
Investment Advisory Fee................................... 153,312
Fund Shares Repurchased................................... 125,948
Trustees' Deferred Compensation and Retirement Plans........ 92,375
Accrued Expenses............................................ 71,173
------------
Total Liabilities....................................... 11,341,329
------------
NET ASSETS.................................................. $233,650,283
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $ 96,356,681
Net Unrealized Appreciation................................. 85,519,899
Accumulated Net Realized Gain............................... 51,865,070
Accumulated Net Investment Loss............................. (91,367)
------------
NET ASSETS.................................................. $233,650,283
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $106,258,964 and 2,642,144 shares of
beneficial interest issued and outstanding)............. $ 40.22
Maximum sales charge (5.75%* of offering price)........... 2.45
------------
Maximum offering price to public.......................... $ 42.67
============
Class B Shares:
Net asset value and offering price per share (Based on net
assets of $115,598,099 and 2,959,289 shares of
beneficial interest issued and outstanding)............. $ 39.06
============
Class C Shares:
Net asset value and offering price per share (Based on net
assets of $11,793,220 and 302,298 shares of beneficial
interest issued and outstanding)........................ $ 39.01
============
</TABLE>

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

See Notes to Financial Statements

17
<PAGE> 83

Statement of Operations
For the Year Ended March 31, 2000

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 272,162
Interest.................................................... 213,777
------------
Total Income............................................ 485,939
------------
EXPENSES:
Investment Advisory Fee..................................... 1,205,210
Distribution (12b-1) and Service Fees (Attributed to Class
A, B, and C of $175,663, $821,276 and $84,440,
respectively)............................................. 1,081,379
Shareholder Services........................................ 403,011
Trustees' Fees and Related Expenses......................... 41,841
Custody..................................................... 41,228
Legal....................................................... 27,260
Amortization of Organizational Costs........................ 7,997
Other....................................................... 184,932
------------
Total Expenses.......................................... 2,992,858
Less Credits Earned on Cash Balances.................... 918
------------
Net Expenses............................................ 2,991,940
------------
NET INVESTMENT LOSS......................................... $ (2,506,001)
============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 76,661,986
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 45,329,746
End of the Period......................................... 85,519,899
------------
Net Unrealized Appreciation During the Period............... 40,190,153
------------
NET REALIZED AND UNREALIZED GAIN............................ $116,852,139
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $114,346,138
============
</TABLE>

See Notes to Financial Statements

18
<PAGE> 84

Statement of Changes in Net Assets
For the Year Ended March 31, 2000, the Nine Months Ended March 31, 1999 and the
Year Ended June 30, 1998

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED YEAR ENDED
MARCH 31, 2000 MARCH 31, 1999 JUNE 30, 1998
--------------------------------------------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss.................... $ (2,506,001) $ (1,603,898) $ (1,438,667)
Net Realized Gain/Loss................. 76,661,986 (3,953,208) 12,903,865
Net Unrealized Appreciation During the
Period............................... 40,190,153 6,336,602 31,450,153
------------ ------------ ------------
Change in Net Assets from Operations... 114,346,138 779,496 42,915,351
------------ ------------ ------------

Distributions from Net Realized Gain... (18,083,411) (3,378,184) (6,327,980)
Distributions in Excess of Net Realized
Gain................................. -0- (291,949) -0-
------------ ------------ ------------
Distributions from and in Excess of Net
Realized Gain*....................... (18,083,411) (3,670,133) (6,327,980)
------------ ------------ ------------

NET CHANGE IN NET ASSETS FROM
INVESTMENT ACTIVITIES................ 96,262,727 (2,890,637) 36,587,371
------------ ------------ ------------

FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold.............. 25,872,275 12,933,199 28,476,433
Net Asset Value of Shares Issued
Through Dividend Reinvestment........ 16,663,811 3,395,527 5,825,754
Cost of Shares Repurchased............. (45,486,452) (26,950,184) (33,462,669)
------------ ------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS......................... (2,950,366) (10,621,458) 839,518
------------ ------------ ------------
TOTAL INCREASE/DECREASE IN NET
ASSETS............................... 93,312,361 (13,512,095) 37,426,889
NET ASSETS:
Beginning of the Period................ 140,337,922 153,850,017 116,423,128
------------ ------------ ------------
End of the Period (Including
accumulated net investment loss of
$91,367, $54,616 and $47,131
respectively)........................ $233,650,283 $140,337,922 $153,850,017
============ ============ ============

*Distributions by Class
---------------------------------------

Distributions from and in Excess of Net
Realized Gain:
Class A Shares....................... $ (7,810,884) $ (1,555,668) $ (2,743,327)
Class B Shares....................... (9,299,741) (1,907,640) (3,159,670)
Class C Shares....................... (972,786) (206,825) (424,983)
------------ ------------ ------------
$(18,083,411) $ (3,670,133) $ (6,327,980)
============ ============ ============
</TABLE>

See Notes to Financial Statements

19
<PAGE> 85

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
DECEMBER 27,
1995
NINE (COMMENCEMENT
YEAR MONTHS YEAR YEAR OF INVESTMENT
ENDED ENDED ENDED ENDED OPERATIONS)
CLASS A SHARES MARCH 31, MARCH 31, JUNE 30, JUNE 30, TO JUNE 30,
2000(A) 1999(A) 1998 1997(A) 1996
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD.............................. $23.298 $23.463 $17.878 $13.696 $10.000
------- ------- ------- ------- -------
Net Investment Income/Loss.......... (.322) (.185) (.136) .031 (.044)
Net Realized and Unrealized Gain.... 20.615 .604 6.711 4.810 3.740
------- ------- ------- ------- -------
Total from Investment Operations..... 20.293 .419 6.575 4.841 3.696
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Realized Gain................. 3.374 .584 .990 .353 -0-
Return of Capital Distribution...... -0- -0- -0- .306 -0-
------- ------- ------- ------- -------
Total Distributions.................. 3.374 .584 .990 .659 -0-
------- ------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD... $40.217 $23.298 $23.463 $17.878 $13.696
======= ======= ======= ======= =======

Total Return* (b).................... 93.18% 2.18%** 38.52% 36.00% 37.00%**
Net Assets at End of the Period (In
millions)........................... $ 106.3 $ 60.1 $ 64.9 $ 53.1 $ .1
Ratio of Expenses to Average Net
Assets*............................. 1.44% 1.64% 1.30% 1.32% 1.46%
Ratio of Net Investment Income/Loss
to Average Net Assets*.............. (1.14%) (1.19%) (.64%) .19% (.79%)
Portfolio Turnover................... 170% 82%** 125% 139% 94%**

* If certain fees had not been assumed by Van Kampen, Total Return would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net
Assets.............................. N/A 1.68% 1.58% 2.31% 15.69%
Ratio of Net Investment Loss to
Average Net Assets.................. N/A (1.23%) (.92%) (.80%) (15.02%)
</TABLE>

** Non-Annualized

(a) Based on average shares outstanding.

(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 5.75% or contingent deferred
sales charge ("CDSC"). On purchases of $1 million or more, a CDSC of 1% may
be imposed on certain redemptions made within one year or purchase. If the
sales charges were included, total returns would be lower.

N/A = Not Applicable

See Notes to Financial Statements

20
<PAGE> 86

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
DECEMBER 27,
1995
NINE (COMMENCEMENT
YEAR MONTHS YEAR YEAR OF INVESTMENT
ENDED ENDED ENDED ENDED OPERATIONS)
CLASS B SHARES MARCH 31, MARCH 31, JUNE 30, JUNE 30, TO JUNE 30,
2000(A) 1999(A) 1998 1997(A) 1996
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................... $22.869 $23.173 $17.796 $13.695 $10.000
------- ------- ------- ------- -------
Net Investment Loss.................. (.521) (.299) (.270) (.093) (.045)
Net Realized and Unrealized Gain..... 20.089 .579 6.637 4.853 3.740
------- ------- ------- ------- -------
Total from Investment Operations...... 19.568 .280 6.367 4.760 3.695
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Realized Gain.................. 3.374 .584 .990 .353 -0-
Return of Capital Distribution....... -0- -0- -0- .306 -0-
------- ------- ------- ------- -------
Total Distributions................... 3.374 .584 .990 .659 -0-
------- ------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD.... $39.063 $22.869 $23.173 $17.796 $13.695
======= ======= ======= ======= =======

Total Return* (b)..................... 91.74% 1.60%** 37.56% 35.32% 37.00%**
Net Assets at End of the Period (In
millions)............................ $ 115.6 $ 72.8 $ 79.7 $ 55.0 $ .1
Ratio of Expenses to Average Net
Assets*.............................. 2.18% 2.40% 2.05% 2.07% 1.46%
Ratio of Net Investment Loss to
Average Net Assets*.................. (1.89%) (1.95%) (1.40%) (.56%) (.74%)
Portfolio Turnover.................... 170% 82%** 125% 139% 94%**

* If certain fees had not been assumed by Van Kampen, Total Return would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net
Assets............................... N/A 2.44% 2.34% 3.04% 15.70%
Ratio of Net Investment Loss to
Average Net Assets................... N/A (1.99%) (1.68%) (1.53%) (14.97%)
</TABLE>

** Non-Annualized

(a) Based on average shares outstanding.

(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 5%, charged on certain redemptions
made within one year of purchase and declining thereafter to 0% after the
fifth year. If the sales charge was included, total returns would be lower.

N/A = Not Applicable

See Notes to Financial Statements

21
<PAGE> 87

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
DECEMBER 27,
1995
NINE (COMMENCEMENT
YEAR MONTHS YEAR YEAR OF INVESTMENT
ENDED ENDED ENDED ENDED OPERATIONS)
CLASS C SHARES MARCH 31, MARCH 31, JUNE 30, JUNE 30, TO JUNE 30,
2000(A) 1999(A) 1998 1997(A) 1996
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................... $22.867 $23.173 $17.793 $13.695 $10.000
------- ------- ------- ------- -------
Net Investment Loss.................. (.520) (.300) (.311) (.096) (.045)
Net Realized and Unrealized Gain..... 20.039 .578 6.681 4.853 3.740
------- ------- ------- ------- -------
Total from Investment Operations...... 19.519 .278 6.370 4.757 3.695
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of
Net Realized Gain.................. 3.374 .584 .990 .353 -0-
Return of Capital Distribution....... -0- -0- -0- .306 -0-
------- ------- ------- ------- -------
Total Distributions................... 3.374 .584 .990 .659 -0-
------- ------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD.... $39.012 $22.867 $23.173 $17.793 $13.695
======= ======= ======= ======= =======

Total Return* (b)..................... 91.52% 1.60%** 37.56% 35.32% 37.00%**
Net Assets at End of the Period (In
millions)............................ $ 11.8 $ 7.4 $ 9.2 $ 8.3 $ .1
Ratio of Expenses to Average Net
Assets*.............................. 2.19% 2.41% 2.05% 2.07% 1.46%
Ratio of Net Investment Loss to
Average Net Assets*.................. (1.89%) (1.96%) (1.39%) (.57%) (.74%)
Portfolio Turnover.................... 170% 82%** 125% 139% 94%**

* If certain fees had not been assumed by Van Kampen, Total Return would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net
Assets............................... N/A 2.45% 2.34% 3.04% 15.70%
Ratio of Net Investment Loss to
Average Net Assets................... N/A (2.00%) (1.68%) (1.55%) (14.97%)
</TABLE>

** Non-Annualized

(a) Based on average shares outstanding.

(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1%, charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower.

N/A = Not Applicable

See Notes to Financial Statements

22
<PAGE> 88

NOTES TO
FINANCIAL STATEMENTS
March 31, 2000

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Growth Fund (the "Fund") is organized as a diversified series of the
Van Kampen Equity 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 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.

B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.

The Fund may invest in repurchase agreements, which are short-term
investments whereby the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen 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.

23
<PAGE> 89

NOTES TO
FINANCIAL STATEMENTS
March 31, 2000

C. INCOME AND EXPENSES Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discount on debt securities
purchased are amortized over the expected life of each applicable security.
Income and expenses of the Fund are allocated on a pro rata basis to each class
of shares, except for distribution and service fees and transfer agency costs
which are unique to each class of shares.

D. ORGANIZATIONAL COSTS The Fund has agreed to reimburse Van Kampen Funds Inc.
or its affiliates ("collectively Van Kampen") 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 Van Kampen are redeemed during the amortization
period, the Fund will be reimbursed for any unamortized organizational costs 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.a24

At March 31, 2000, for federal income tax purposes the cost of long- and
short-term investments is $150,571,580, the aggregate gross unrealized
appreciation is $92,513,023 and the aggregate gross unrealized depreciation is
$6,993,124, resulting in net unrealized appreciation on long- and short-term
investments of $85,519,899.

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 and gains on futures transactions. All short-term
capital gains and a portion of gains on futures transactions are included in
ordinary income for tax purposes.

Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between book and tax basis reporting
for the year ended March 31, 2000 have been identified and appropriately
reclassified. For the year ended March 31, 2000, a permanent difference related
to net operating loss which may be used as an offset against short-term gains
for tax

24
<PAGE> 90

NOTES TO
FINANCIAL STATEMENTS
March 31, 2000

purposes totaling $2,469,250 has been reclassified from accumulated net
investment loss to accumulated net realized gain.

G. EXPENSE REDUCTIONS During the year ended March 31, 2000, the Fund's custody
fee was reduced by $918 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:

For the year ended March 31, 2000, the Fund recognized expenses of
approximately $10,000, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.

For the year ended March 31, 2000, the Fund recognized expenses of
approximately $71,500, representing Van Kampen's cost of providing accounting
and legal services to the Fund.

Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent of the Fund. For the year ended March 31, 2000,
the Fund recognized expenses of approximately $291,100. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees and are based
on competitive market benchmarks.

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

At March 31, 2000, Van Kampen owned 7,000 shares of Class A and 6,500 shares
each of Classes B and C, respectively.

25
<PAGE> 91

NOTES TO
FINANCIAL STATEMENTS
March 31, 2000

3. CAPITAL TRANSACTIONS

At March 31, 2000, capital aggregated $45,073,752, $47,095,700, and $4,187,229
for Classes A, B, and C, respectively. For the year ended March 31, 2000,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A................................................. 548,998 $ 19,238,328
Class B................................................. 213,625 6,300,698
Class C................................................. 12,657 333,249
---------- ------------
Total Sales............................................... 775,280 $ 25,872,275
========== ============
Dividend Reinvestment:
Class A................................................. 254,319 $ 7,184,507
Class B................................................. 318,096 8,747,651
Class C................................................. 26,635 731,653
---------- ------------
Total Dividend Reinvestment............................... 599,050 $ 16,663,811
========== ============
Repurchases:
Class A................................................. (742,010) $(22,939,813)
Class B................................................. (756,123) (20,859,185)
Class C................................................. (60,627) (1,687,454)
---------- ------------
Total Repurchases......................................... (1,558,760) $(45,486,452)
========== ============
</TABLE>

26
<PAGE> 92

NOTES TO
FINANCIAL STATEMENTS
March 31, 2000

At March 31, 1999, capital aggregated $41,591,140, $52,906,982, and
$4,809,827 for Classes A, B, and C, respectively. For the nine months ended
March 31, 1999, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A................................................. 337,597 $ 7,019,197
Class B................................................. 269,887 5,504,113
Class C................................................. 19,753 409,889
---------- ------------
Total Sales............................................... 627,237 $ 12,933,199
========== ============
Dividend Reinvestment:
Class A................................................. 71,540 $ 1,449,407
Class B................................................. 89,988 1,793,457
Class C................................................. 7,660 152,663
---------- ------------
Total Dividend Reinvestment............................... 169,188 $ 3,395,527
========== ============
Repurchases:
Class A................................................. (593,731) $(12,335,516)
Class B................................................. (616,839) (12,488,158)
Class C................................................. (102,252) (2,126,510)
---------- ------------
Total Repurchases......................................... (1,312,822) $(26,950,184)
========== ============
</TABLE>

27
<PAGE> 93

NOTES TO
FINANCIAL STATEMENTS
March 31, 2000

At June 30, 1998, capital aggregated $46,142,115, $58,925,789, and
$6,457,916 for Classes A, B, and C, respectively. For the year ended June 30,
1998, transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A................................................. 703,177 $ 14,445,936
Class B................................................. 623,694 12,750,067
Class C................................................. 63,730 1,280,430
---------- ------------
Total Sales............................................... 1,390,601 $ 28,476,433
========== ============
Dividend Reinvestment:
Class A................................................. 141,978 $ 2,548,516
Class B................................................. 166,305 2,960,278
Class C................................................. 17,807 316,960
---------- ------------
Total Dividend Reinvestment............................... 326,090 $ 5,825,754
========== ============
Repurchases:
Class A................................................. (1,052,014) $(21,445,447)
Class B................................................. (440,708) (9,047,981)
Class C................................................. (147,921) (2,969,241)
---------- ------------
Total Repurchases......................................... (1,640,643) $(33,462,669)
========== ============
</TABLE>

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares and any
dividend reinvestment plan Class B shares received on such shares automatically
convert to Class A shares eight years after the end of the calendar month in
which the shares were purchased. 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.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
--------------------------
YEAR OF REDEMPTION CLASS B CLASS C
<S> <C> <C>
First...................................................... 5.00% 1.00%
Second..................................................... 4.00% None
Third...................................................... 3.00% None
Fourth..................................................... 2.50% None
Fifth...................................................... 1.50% None
Sixth and thereafter....................................... None None
</TABLE>

For the year ended March 31, 2000, Van Kampen, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approximately
$16,800 and CDSC on the redeemed shares of Classes B and C of approximately
$213,100. Sales charges do not represent expenses of the Fund.

28
<PAGE> 94

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

4. INVESTMENT TRANSACTIONS

During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments, were $266,096,287 and $297,447,960,
respectively.

5. DERIVATIVE FINANCIAL INSTRUMENTS

A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.

The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In these instances,
the recognition of gain or loss is postponed until the disposal of the security
underlying futures contract.

The Fund may invest in futures contracts, a type of derivative. A futures
contract is an agreement involving the delivery of a particular asset on a
specified future date at an agreed upon price. The Fund generally invests in
stock index futures. These contracts are generally used as a substitute for
purchasing and selling specific securities. Upon entering into futures
contracts, the Fund maintains, in a segregated account with its custodian, cash
or liquid securities with a value equal to its obligation under the futures
contracts. During the period the futures contract is open, payments are received
from or made to the broker based upon changes in the value of the contract (the
variation margin).

There were no transactions in futures contracts during the year ended March
31, 2000.

6. DISTRIBUTION AND SERVICE PLANS

7. BORROWINGS

In accordance with its investment policies, the Fund may borrow from banks for
temporary purposes and is subject to certain other customary restrictions.
Effective

29
<PAGE> 95

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

November 30, 1999, the Fund, in conjunction with certain other funds of Van
Kampen, has entered into a $650,000,000 committed line of credit facility with a
group of banks which expires on November 28, 2000, but is renewable with the
consent of the participating banks. Each fund is permitted to utilize the
facility in accordance with the restrictions of its prospectus. In the event the
demand for the credit facility meets or exceeds $650 million on a complex-wide
basis, each fund will be limited to its pro-rata percentage based on the net
assets of each participating fund. Interest on borrowings is charged under the
agreement at a rate of 0.50% above the federal funds rate per annum. An annual
commitment fee of 0.09% per annum is charged on the unused portion of the credit
facility, which each fund incurs based on its pro-rata percentage of quarterly
net assets. The Fund has not borrowed against the credit facility during the
period.

30
<PAGE> 96

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Trustees of Van Kampen Growth Fund:

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen Growth Fund (the "Fund")
at March 31, 2000, and the results of its operations, the changes in its net
assets and the financial highlights for the year then ended in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at March
31, 2000 by correspondence with the custodian and brokers, provides a reasonable
basis for the opinion expressed above. The statement of changes in net assets
and the financial highlights for each of the periods ended on or prior to March
31, 1999 were audited by other independent accountants whose report dated May 5,
1999 expressed an unqualified opinion thereon.

PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
May 5, 2000

31
<PAGE> 97

FUND OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN GROWTH FUND

BOARD OF TRUSTEES

OFFICERS

RICHARD F. POWERS, III*
President

STEPHEN L. BOYD*(1)
Executive Vice President and
Chief Investment Officer

A. THOMAS SMITH III*
Vice President and Secretary

JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer

PETER W. HEGEL*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, III*
Vice Presidents

INVESTMENT ADVISER
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
DISTRIBUTOR

VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555

SHAREHOLDER SERVICING AGENT

VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 218256
Kansas City, Missouri 64121-8256

CUSTODIAN

STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105

LEGAL COUNSEL

SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606

INDEPENDENT ACCOUNTANTS

PRICEWATERHOUSECOOPERS LLP
200 E. Randolph Drive
Chicago, Illinois 60601

For federal income tax purposes, the following is furnished with respect to the
distributions paid by the Fund during its taxable year ended March 31, 2000.
The Fund designated and paid $16,903,044 as a 20% rate gain distribution. For
corporate shareholders 1.00% of the distributions qualify for the dividend
received reductions. In January 2000, the Fund provided tax information to
shareholders for the 1999 calendar year.

(1) Appointed Executive Vice President and Chief Investment Officer effective
April 3, 2000.

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

(SM) denotes a service mark of Van Kampen Funds Inc.

32
<PAGE> 98

RESULTS OF
SHAREHOLDER VOTES

A Joint Special Meeting of Shareholders of the Fund was held on December 15,
1999, where shareholders voted on the election of Trustees and the ratification
of KPMG LLP as the independent public accountants.

1) With regard to the election of the following trustees by the common
shareholders of the Fund:

<TABLE>
<CAPTION>
# OF SHARES
------------------------------
IN FAVOR WITHHELD
<S> <C> <C>
J. Miles Branagan..................................... 3,213,834 36,612
Jerry D. Choate....................................... 3,214,820 35,626
Linda Hutton Heagy.................................... 3,214,232 36,214
R. Craig Kennedy...................................... 3,214,520 35,926
Mitchell M. Merin..................................... 3,213,333 37,113
Jack E. Nelson........................................ 3,214,298 36,148
Richard F. Powers, III................................ 3,213,059 37,387
Phillip B. Rooney..................................... 3,215,323 35,123
Fernando Sisto........................................ 3,213,779 36,667
Wayne W. Whalen....................................... 3,213,187 37,259
Suzanne H. Woolsey.................................... 3,212,001 38,445
Paul G. Yovovich*..................................... 3,214,926 35,520
</TABLE>

*On April 14, 2000, Paul G. Yovovich resigned from the Board of Trustees.

2) With regard to the ratification of KPMG LLP as independent public accounts
for the Fund, 3,203,163 shares voted for the proposal, 13,119 shares voted
against and 34,163 shares abstained.**

33
<PAGE> 99

<TABLE>
<S> <C>
Table of Contents

OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2

PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 3
GROWTH OF A $10,000 INVESTMENT 4

PORTFOLIO AT A GLANCE
TOP TEN HOLDINGS 5
TOP FIVE INDUSTRIES 5
Q&A WITH YOUR PORTFOLIO MANAGERS 6
GLOSSARY OF TERMS 9

BY THE NUMBERS
YOUR FUND'S INVESTMENTS 10
FINANCIAL STATEMENTS 16
NOTES TO FINANCIAL STATEMENTS 22
REPORT OF INDEPENDENT ACCOUNTANTS 27
FUND OFFICERS AND IMPORTANT ADDRESSES 28
RESULTS OF SHAREHOLDER VOTES 29
</TABLE>

One of the greatest shifts we've seen is the increasing importance of investing
for many Americans.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 100

OVERVIEW

LETTER TO SHAREHOLDERS
April 20, 2000

Dear Shareholder,

Once considered primarily for the wealthy, investing in the stock market is now
available to most people. In fact, almost 79 million individuals--who represent
almost half of all U.S. households--own stocks either directly or through mutual
funds. This is even more impressive when considering that just 16 years earlier,
only 19 percent of households owned stocks. Another important shift has been the
need for retirement planning beyond a pension plan
or Social Security. The Investment Company Institute, the
leading mutual fund industry association, reports that 77
percent of all mutual fund shareholders earmarked retirement
as their primary financial goal in 1998.

Through all the changes in the investment environment over the past century, the
general principles that have made generations of investors successful remain the
same. Some that have stood the test of time include:

- Investing for the long term

- Basing investment decisions on sound research

- Building a diversified portfolio

- Acting on the value of professional investment advice

Sincerely,

[SIG]
Richard F. Powers, III
Chairman
Van Kampen
Investment Advisory Corp.
</TABLE>

1
<PAGE> 101

ECONOMIC SNAPSHOT

INTEREST RATES AND INFLATION

(March 31, 1998 - March 31, 2000)

[LINE GRAPH]

2
<PAGE> 102

PERFORMANCE SUMMARY

RETURN HIGHLIGHTS

(as of March 31, 2000)

<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Since inception total return based
on NAV(1) (0.92%) (1.81%) (1.81%)
-------------------------------------------------------------------------
Since inception total return(2) (6.62%) (6.71%) (2.79%)
-------------------------------------------------------------------------
Commencement date 06/21/99 06/21/99 06/21/99
-------------------------------------------------------------------------
</TABLE>

(1) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge (5.75% for Class A shares) or
contingent deferred sales charge ("CDSC") for Class B and C shares. On purchases
of Class A shares of $1 million or more, a CDSC of 1% may be imposed on certain
redemptions made within one year of purchase. Returns for Class B shares are
calculated without the effect of the maximum 5% CDSC, charged on certain
redemptions made within one year of purchase and declining thereafter to 0%
after the fifth year. Returns for Class C shares are calculated without the
effect of the maximum 1% CDSC, charged on certain redemptions made within one
year of purchase. If the sales charges were included, total returns would be
lower.

(2) Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (5.75% for Class A
shares) or contingent deferred sales charge ("CDSC") for Class B and C shares.
On purchases of Class A shares of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within one year of purchase. Returns for
Class B shares are calculated with the effect of the maximum 5% CDSC, charged on
certain redemptions made within one year of purchase and declining thereafter to
0% after the fifth year. Returns for Class C shares are calculated with the
effect of the maximum 1% CDSC, charged on certain redemptions made within one
year of purchase.

See the Comparative Performance section of the current prospectus. An investment
should be made with an understanding of the risks that an investment in equity
securities entails. The Fund invests in equity securities which include common
and preferred stocks and securities convertible into common and preferred stock.
Investing in such companies involves risks not ordinarily associated with
investments in larger, more established companies. These types of companies may
have limited product lines, markets or financial resources and their securities
may be subject to more erratic market movements than those of larger companies.
Additionally, equity securities of small cap companies may be less liquid than
larger, more established companies, or the stock market in general. During an
overall market decline, stock prices of small-sized companies often fluctuate
more and fall more than prices of larger company stocks. The Fund may invest up
to 10% of its total assets in the securities of foreign issuers. This may
magnify volatility due to changes in foreign exchange rates, the political and
economic uncertainties of foreign countries, and the potential lack of
liquidity, government supervision, and regulation. In addition, the Fund is
subject to derivative investments. A derivative investment is one whose value
depends on (or is derived from) the value of an underlying asset. Past
performance is no guarantee of future results. Investment return and net asset
value will fluctuate with market conditions. Fund shares, when redeemed, may be
worth more or less than their original cost.

Market forecasts provided in this report may not necessarily come to pass.

3
<PAGE> 103

GROWTH OF A $10,000 INVESTMENT

(June 21, 1999 - March 31, 2000)

[INVESTMENT PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
SMALL CAP VALUE FUND RUSSELL 2000 VALUE INDEX
-------------------- ------------------------
<S> <C> <C>
6/99 9425.00 10000.00
7/99 9680.00 9896.00
8/99 9312.00 9534.00
9/99 9105.00 9343.00
10/99 9067.00 9156.00
11/99 9048.00 9204.00
12/99 9224.00 9486.00
1/00 8826.00 9238.00
2/00 8968.00 9802.00
3/00 9338.00 9848.00
</TABLE>

This chart compares your Fund's performance to that of the Russell 2000
Value Index over time.

4
<PAGE> 104

PORTFOLIO AT A GLANCE

TOP TEN HOLDINGS

(as a percentage of long-term investments--March 31, 2000)

1. PERKINELMER 1.5%
Provides detection systems and
diagnostic instruments to the
telecommunications, medical,
pharmaceutical, chemical, semicon-
ductor, and photographic markets.

2. TEKTRONIX 1.5%
Manufactures test and measurement
equipment for communications networks
and Internet technologies.

3. CYPRESS SEMICONDUCTOR 1.4%
Makes integrated-circuit products for
use in the computer, electronics, and
telecommunications industries.

4. S3 1.3%
Produces computer chips and software
for accelerated multimedia and
graphics processing.

5. ACTEL 1.3%
Produces components for integrated
circuits used in electronic products.

6. LAM RESEARCH 1.2%
Manufactures semiconductor equipment
used in the computer chip making
process.

7. LOUIS DREYFUS NATURAL GAS 1.2%
Explores for and produces natural gas
and oil in the United States and the
Gulf of Mexico.

8. QUEST DIAGNOSTICS 1.2%
Offers clinical laboratory testing
services to the medical industry.

9. INTERNATIONAL RECTIFIER 1.2%
Manufactures semiconductors that
refine electricity into a more usable
form.

10. HELMERICH & PAYNE 1.1%
Explores for and produces natural gas
and oil in the United States and
South America.
</TABLE>

TOP FIVE INDUSTRIES

(as a percentage of long-term investments)

[BAR GRAPH]

<TABLE>
<CAPTION>
MARCH 31, 2000
--------------
<S> <C>
Finance 20.6
Technology 18.9
Raw Materials/Processing Industries 9.1
Utilities 8.9
Energy 7.3
</TABLE>

5
<PAGE> 105

Q&A WITH YOUR PORTFOLIO MANAGERS

WE RECENTLY SPOKE WITH REPRESENTATIVES OF THE ADVISER OF THE VAN KAMPEN SMALL
CAP VALUE FUND ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS
SINCE THE FUND'S INCEPTION ON JUNE 21, 1999. THE REPRESENTATIVES INCLUDE JOHN
CUNNIFF, SENIOR PORTFOLIO MANAGER, WHO HAS MANAGED THE FUND SINCE ITS INCEPTION
AND HAS WORKED IN THE INVESTMENT INDUSTRY SINCE 1992. HE IS JOINED BY THOMAS
COPPER, PORTFOLIO MANAGER, AND STEPHEN L. BOYD, CHIEF INVESTMENT OFFICER FOR
EQUITY INVESTMENTS. THE FOLLOWING DISCUSSION REFLECTS THEIR VIEWS ON THE FUND'S
PERFORMANCE BETWEEN ITS INCEPTION AND MARCH 31, 2000.

Q WHAT WERE SOME OF THE MARKET
FACTORS THAT AFFECTED THE FUND DURING THE REPORTING PERIOD?

A For much of the reporting period,
it was a better market environment for growth investors than value investors.
While technology stocks generally continued their outstanding performance of the
past few years, small-cap value stocks fell out of favor in the latter half of
1999. From June 21, 1999 (the Fund's inception date), to December 31, 1999, the
Russell 2000 Value Index, an index representing small-cap value stocks, dropped
5.14 percent. In the first three months of the new year, however, investors,
expecting higher returns, returned to small-cap stocks, and the Russell 2000
Value Index regained much of its lost ground. By March 31, 2000, the index was
down just 1.51 percent for the period since the Fund's inception.

Q HOW WAS YOUR MANAGEMENT
STRATEGY AFFECTED BY RECENT MARKET CONDITIONS?

A Because we believe in our "value
with a catalyst" management strategy (see next page), we maintained it even in a
market environment that was generally more conducive to growth than value
investing. Nonetheless, under these market conditions, at net asset value (Class
A shares) the Fund slightly outperformed its benchmark, the Russell 2000 Value
Index, during the reporting period--although it underperformed its benchmark
when taking into consideration the Fund's maximum sales charge of 5.75 percent.

Q WHICH STOCKS IN THE FUND HAD AN
ESPECIALLY POSITIVE IMPACT ON PERFORMANCE DURING THE REPORTING PERIOD?

A Technology stocks were the
strongest contributors to the overall performance of the Fund. In particular,
two semiconductor

6
<PAGE> 106

THE MANAGERS' INVESTMENT STRATEGY

OUR INVESTMENT STRATEGY IS COMMONLY REFERRED TO AS "VALUE WITH A CATALYST." WE
SEARCH FOR UNDERVALUED SMALL-CAP COMPANIES BY USING COMMON VALUATION
MEASURES--FOR EXAMPLE, PRICE-TO- EARNINGS RATIO. FOR EACH STOCK WE CONSIDER FOR
PURCHASE, WE SEARCH FOR A SPARK (OR CATALYST)--SUCH AS NEW MANAGEMENT, A NEW
PRODUCT, OR NEW INDUSTRY REGULATIONS--THAT MAY IGNITE A COMPANY'S GROWTH
PROSPECTS AND REVEAL THE POTENTIAL VALUE HIDDEN IN THE CURRENT STOCK PRICE. WE
ALSO LOOK FOR RISING EARNINGS EXPECTATIONS, WHICH WE BELIEVE CAN INDICATE THAT A
CATALYST IS PRESENT. IF A STOCK MEETS OUR CRITERIA, WE THEN CONSIDER IT FOR
INVESTMENT. OUR STOCK SELECTION PROCESS IS "BOTTOM UP," THE FUND IS DIVERSIFIED
ACROSS MULTIPLE INDUSTRIES, AND WE NORMALLY REMAIN FULLY INVESTED IN MOST MARKET
CONDITIONS.

companies performed better than expected, as they benefited significantly from a
healthy demand for their products.

Lam Research, which makes capital equipment for semiconductor manufacturers,
received "strong buy" recommendations from various analysts, which helped raise
its stock price in the first quarter of 2000. Cypress Semiconductor, which
offers a line of digital and mixed-signal integrated circuits, produced sound
returns due to the company's development of new, competitive, high-quality
products.

The Fund's performance was supported by stocks from other sectors as well,
including energy services and financial services. For example, the Fund
benefited from its investment in Louis Dreyfus Natural Gas, a company in the
business of developing and exploring natural gas and oil properties. The
company's fourth-quarter announcement of record financial results was favorably
received, and the company's stock price rose on the news.

Of course, not all stocks in the Fund performed as favorably, nor is there
any guarantee that any of these stocks will continue to perform as well or will
be held by the Fund in the future. For additional portfolio highlights, please
refer to page 5.

Q DID ANY STOCKS HURT THE
FUND'S PERFORMANCE?

A The stocks that hurt Fund
performance most significantly were companies that experienced earnings-related
problems, including Pep Boys, Terex, and Wallace Computer Service.

- Pep Boys, a retailer of automotive parts and accessories, had posted
disappointing earnings estimates in the last few quarters of 1999. Although
earnings for the fourth

7
<PAGE> 107

quarter of 1999 increased slightly, the company's overall performance was
subpar. Below-budget sales and the elimination of all sponsorship obligations
affected the company negatively, and the stock price declined as a result.

- Management for Terex, a diversified global manufacturer of heavy-duty off-road
trucks, lowered its earnings outlook in February, based on slowing sales of
earth-moving equipment. Strict competition hurt the company's revenues, as
many consumers opted for other manufacturers offering the same service. The
Fund's holdings in Terex declined following the announcement of the revised
earnings outlook.

- Wallace Computer Service, a provider of print-management services, lowered its
profit expectations in January as a result of continued weakness of sales in
local markets. At the same time, the company's chairman and CEO retired in
early January. Both news items disrupted the stock price.

Q HOW DID THE FUND PERFORM
DURING THE REPORTING PERIOD?

A Effective stock selection was offset
by the poor performance of small-cap value stocks during most of the reporting
period. The Fund achieved a total return of -0.92 percent for the period from
Fund inception to March 31, 2000 (Class A shares at net asset value; if the
sales charge of 5.75 percent were included, the return would have been lower).
By comparison, the Russell 2000 Value Index, returned -1.51 percent during the
same period. This broad-based index measures the performance of those Russell
2000 companies with lower price-to-book ratios and lower forecasted growth
values.

This index is a statistical composite that doesn't include any commissions
or fees that would be paid by an investor purchasing the securities it
represents. Such costs would lower the performance of the index. Also, keep in
mind that you can't invest directly in an index. Please refer to the chart and
footnotes on page 3 for additional Fund performance results. Past performance
does not guarantee future performance.

Q WHAT DO YOU SEE AHEAD FOR THE
FUND FOR THE UPCOMING SIX MONTHS?

A Small-cap value stocks continue to
be very attractively priced relative to the broad stock market. In this
environment, we will maintain our philosophy of investing in small-cap value
stocks with catalysts for change. Although current market conditions favor
growth investing, we believe the Fund is well positioned should value investing
once again find itself in favor.

8
<PAGE> 108

GLOSSARY OF TERMS

A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.

BOTTOM-UP INVESTING: A management style that emphasizes the analysis of
individual stocks, rather than economic and market cycles.

CLASS A SHARES: The division of mutual funds, generally into three groupings,
called Class A, Class B, and Class C shares. The specific features of each is
dependent of varying fees/sales charges. In most cases, Class A shares will have
no redemption fee (contingent deferred sales charge).

EARNINGS ESTIMATES: A forecast for a company's net income during a given period.
Earnings estimates can come from the company's management as well as from
independent analysts.

MARKET CAPITALIZATION: The size of a company, as measured by the value of its
issued and outstanding stock.

P/E RATIO: The price-to-earnings ratio shows the "multiple" of earnings at which
a stock is selling. The P/E ratio is calculated by dividing a stock's current
price by its current earnings per share. A high multiple means that investors
are optimistic about future growth and have bid up the stock's price.

VALUATION: The estimated or determined worth of a stock, based on financial
measures such as the stock's current price relative to earnings, revenue, book
value, and cash flow.

VALUE INVESTING: A strategy that seeks to identify stocks that are sound
investments but are temporarily out of favor in the marketplace. As a result,
the stocks trade at prices below what value investors believe they are actually
worth.

9
<PAGE> 109

BY THE NUMBERS

YOUR FUND'S INVESTMENTS

March 31, 2000
THE FOLLOWING PAGES DETAIL THE SPECIFIC HOLDINGS OF YOUR FUND AT THE END OF THE
REPORTING PERIOD.

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMMON STOCKS 94.6%
BUILDING & MATERIALS 4.2%
Astec Industries, Inc. (a).................................. 150 $ 3,984
Crossmann Communities, Inc. (a)............................. 250 3,961
D.R. Horton, Inc. .......................................... 4,000 52,250
Granite Construction, Inc. ................................. 350 9,450
NCI Building Systems, Inc. (a).............................. 4,100 77,131
Nortek, Inc. (a)............................................ 3,050 67,481
Pulte Corp. ................................................ 3,700 77,238
Texas Industries, Inc. ..................................... 1,550 48,244
US Home Corp. .............................................. 2,100 79,800
-----------
419,539
-----------
BUSINESS SERVICES 3.5%
ABM Industries, Inc. ....................................... 1,100 25,850
CDI Corp. (a)............................................... 2,300 43,700
John H. Harland Co. ........................................ 3,300 44,550
Mail-Well, Inc. (a)......................................... 300 2,606
United Stationers, Inc. .................................... 2,850 101,709
URS Corp. (a)............................................... 3,300 43,313
Wallace Computer Services, Inc. ............................ 7,550 89,184
-----------
350,912
-----------
CAPITAL GOODS 1.6%
Applied Industrial Technologies, Inc. ...................... 2,500 40,000
Donaldson, Inc. ............................................ 900 20,306
Manitowoc, Inc. ............................................ 1,600 43,300
Sauer, Inc. ................................................ 1,200 11,625
Standard Register Co. ...................................... 400 5,150
Tecumseh Products Co., Class A.............................. 50 2,200
Terex Corp. ................................................ 2,300 33,063
-----------
155,644
-----------
CONSUMER DISTRIBUTION 2.3%
Cato Corp., Class A......................................... 5,000 58,750
Footstar, Inc. (a).......................................... 700 19,775
Furniture Brands International, Inc. (a).................... 2,250 42,328
Group 1 Automotive, Inc. (a)................................ 750 8,719
PEP Boys Manny Moe & Jack................................... 4,350 25,828
</TABLE>

See Notes to Financial Statements

10
<PAGE> 110

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
CONSUMER DISTRIBUTION (CONTINUED)
Spiegel, Inc., Class A (a).................................. 4,450 $ 35,600
Systemax, Inc. (a).......................................... 4,100 37,413
-----------
228,413
-----------
CONSUMER DURABLES 3.0%
Aaron Rents, Inc., Class B.................................. 2,550 38,409
Arvin Industries, Inc. ..................................... 2,250 50,906
Kimball International, Inc., Class B........................ 1,000 11,000
Smith A.O. Corp. ........................................... 1,200 21,600
Stoneridge, Inc. (a)........................................ 100 1,150
Toro Co. ................................................... 1,850 55,385
Tower Automotive, Inc. (a).................................. 4,200 68,775
Woodward Governor Co. ...................................... 2,300 52,900
-----------
300,125
-----------
CONSUMER NON-DURABLES 5.8%
Agribrands International, Inc. (a).......................... 1,400 55,037
Corn Products International, Inc. .......................... 2,650 63,766
Fleming Cos, Inc. .......................................... 5,700 85,856
International Multifoods Corp. ............................. 900 12,037
Ivex Packaging Corp. (a).................................... 800 6,050
Michael Foods, Inc. ........................................ 200 4,200
Mikasa, Inc. ............................................... 1,000 7,438
Movado Group, Inc. ......................................... 400 4,025
Performance Food Group Co. (a).............................. 2,150 47,031
Pilgrims Pride Corp., Class A............................... 425 2,072
Quiksilver, Inc. (a)........................................ 250 4,391
Riviana Foods, Inc. ........................................ 250 3,969
Schweitzer Mauduit International, Inc. ..................... 1,400 18,112
Smithfield Foods, Inc. (a).................................. 2,850 57,000
Springs Industries, Inc. ................................... 1,400 53,200
Suiza Foods Corp. (a)....................................... 1,700 68,425
Universal Corp. ............................................ 5,300 79,831
Zapata Corp. (a)............................................ 650 3,088
-----------
575,528
-----------
CONSUMER SERVICES 4.0%
Avis Rent A Car, Inc. (a)................................... 4,150 73,144
Aztar Corp. (a)............................................. 5,700 54,150
Dollar Thrifty Automotive Group. (a)........................ 2,850 48,984
Extended Stay America, Inc. (a)............................. 1,650 12,375
Landry's Seafood Restaurants, Inc. (a)...................... 4,300 27,412
Lone Star Steakhouse & Saloon (a)........................... 5,550 56,541
Pulitzer, Inc. ............................................. 500 20,438
</TABLE>

See Notes to Financial Statements

11
<PAGE> 111

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
CONSUMER SERVICES (CONTINUED)
Ruby Tuesday, Inc. ......................................... 3,100 $ 54,250
Station Casinos, Inc. (a)................................... 2,200 47,987
-----------
395,281
-----------
ENERGY 6.9%
Cascade Natural Gas Corp.................................... 3,800 61,275
Helmerich & Payne, Inc. .................................... 3,400 105,400
HS Resources, Inc. (a)...................................... 2,900 61,262
Louis Dreyfus Natural Gas Corp. (a)......................... 3,300 112,200
Parker Drilling Co. (a)..................................... 12,000 60,000
Pioneer Natural Resources Co. .............................. 4,700 49,938
RPC, Inc. .................................................. 2,600 24,538
Seitel, Inc. ............................................... 7,000 55,562
Tesoro Petroleum Corp. (a).................................. 7,000 80,500
Tom Brown, Inc. (a)......................................... 1,400 25,725
TransMontaigne, Inc. (a).................................... 7,900 53,819
-----------
690,219
-----------
FINANCE 19.6%
Advanta Corp., Class A...................................... 3,400 69,063
Affiliated Managers Group, Inc. (a)......................... 1,600 76,000
Alfa Corp. ................................................. 1,350 23,963
Amerus Life Holdings, Inc. ................................. 3,250 58,906
BancFirst Corp. ............................................ 1,050 27,825
BancWest Corp. ............................................. 2,900 57,275
Bank United Corp., Class A.................................. 2,350 74,172
Capstead Mortgage Corp. .................................... 581 2,251
Cathay Bancorp, Inc. ....................................... 1,500 69,000
Chicago Title Corp. ........................................ 400 23,400
Commonwealth Bancorp, Inc. ................................. 3,150 39,966
Community Trust Bancorp, Inc. .............................. 1,980 35,640
Crown American Reality...................................... 750 3,984
Dain Rauscher Corp. ........................................ 1,400 92,312
Delphi Financial Group, Inc. ............................... 816 24,786
Dime Community Bancshares, Inc. ............................ 3,150 49,809
EastGroup Properties, Inc. ................................. 2,950 63,425
First Citizens Bancshares, Inc. ............................ 1,050 59,292
First Washington Realty Trust, Inc. ........................ 2,750 51,047
GBC Bancorp of California................................... 3,300 76,519
Glimcher Realty Trust....................................... 5,250 70,875
Great Lakes REIT, Inc. ..................................... 2,650 40,081
JP Realty, Inc. ............................................ 1,450 25,828
Kansas City Life Insurance Co. ............................. 2,050 49,456
Lasalle Hotel Properties.................................... 2,550 31,875
</TABLE>

See Notes to Financial Statements

12
<PAGE> 112

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
FINANCE (CONTINUED)
Leucadia National Corp. .................................... 3,950 $ 93,812
LNR Property Corp. ......................................... 2,400 45,750
Medical Assurance, Inc. .................................... 3,205 61,095
Meristar Hospitality Corp. ................................. 600 10,463
OceanFirst Financial Corp. ................................. 2,800 43,925
Prentiss Properties Trust................................... 2,200 49,088
PS Business Parks, Inc. .................................... 2,800 57,050
RLI Corp. .................................................. 1,650 55,275
Silicon Valley Bancshares (a)............................... 1,100 79,062
Southwest Securities Group, Inc. ........................... 110 4,778
Stewart Information Services Corp. ......................... 1,550 24,509
Summit Properties, Inc. .................................... 2,000 38,250
Triad Guaranty, Inc. (a).................................... 3,800 77,188
UICI (a).................................................... 8,500 56,313
Webster Financial Corp. .................................... 2,100 48,300
-----------
1,941,608
-----------
HEALTHCARE 5.1%
Alpharma, Inc., Class A .................................... 1,300 47,775
Ameripath, Inc. (a)......................................... 8,600 69,875
Apria Healthcare Group, Inc. (a)............................ 5,400 77,962
Bindley Western Industries, Inc. ........................... 1,716 23,273
Chattem, Inc. (a)........................................... 2,800 39,550
Herbalife International, Inc., Class A...................... 450 6,356
Laboratory Corp. of America Holdings (a).................... 17,000 73,313
Province Healthcare Co. (a)................................. 2,150 61,544
Quest Diagnostics, Inc. (a)................................. 2,800 111,300
-----------
510,948
-----------
PRODUCER MANUFACTURING 0.7%
AptarGroup, Inc. ........................................... 300 8,006
Scott Technologies, Inc. (a)................................ 3,300 62,288
-----------
70,294
-----------
RAW MATERIALS/PROCESSING INDUSTRIES 8.6%
AMCOL International Corp.................................... 3,900 59,963
Buckeye Technologies, Inc. (a).............................. 3,250 57,281
Commercial Metals Co........................................ 2,650 73,206
Dexter Corp. ............................................... 850 45,050
Ethyl Corp. ................................................ 15,000 45,938
Ferro Corp. ................................................ 450 8,016
Geon Co. ................................................... 2,400 51,600
Gibraltor Steel Corp. ...................................... 3,100 50,956
Glatfelter P.H. Co. ........................................ 600 6,375
H.B. Fuller Co. ............................................ 800 31,950
</TABLE>

See Notes to Financial Statements

13
<PAGE> 113

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
RAW MATERIALS/PROCESSING INDUSTRIES (CONTINUED)
Mueller Industries, Inc. (a)................................ 2,800 $ 85,050
Polymer Group, Inc. ........................................ 1,300 16,575
Quanex Corp. ............................................... 3,150 56,700
Reliance Steel & Aluminum Co. .............................. 3,225 72,159
Rock Tennessee Co., Class A................................. 6,800 66,300
Ryerson Tull, Inc. ......................................... 2,300 35,650
Scotts Co., Class A (a)..................................... 1,100 46,200
Spartech Corp. ............................................. 1,400 48,125
Universal Forest Products, Inc. ............................ 200 2,475
-----------
859,569
-----------
TECHNOLOGY 17.9%
Actel Corp. (a)............................................. 3,300 117,769
Alliance Semiconductor Corp. (a)............................ 3,800 81,463
American Mobile Satellite Corp. (a)......................... 2,400 57,600
Amkor Technology, Inc. (a).................................. 1,850 98,166
AVT Corp. (a)............................................... 2,300 27,169
Cypress Semiconductor Corp. (a)............................. 2,600 128,212
Genrad, Inc. (a)............................................ 5,350 66,206
InaCom Corp. (a)............................................ 15,400 42,350
Informix Corp. (a).......................................... 4,500 76,219
International Rectifier Corp. (a)........................... 2,850 108,656
Kaman Corp., Class A........................................ 2,700 26,325
Lam Research Corp. (a)...................................... 2,500 112,656
MTS Systems Corp. .......................................... 10,550 80,444
Park Electrochemical Corp. ................................. 3,100 75,950
PerkinElmer, Inc. .......................................... 2,150 142,975
Pinnacle Systems, Inc. (a).................................. 200 6,650
Primex Technologies, Inc. .................................. 3,200 68,200
S3, Inc. (a)................................................ 5,650 118,650
Tektronix, Inc. ............................................ 2,500 140,000
ThermoQuest Corp. (a)....................................... 4,300 72,025
Triumph Group, Inc. (a)..................................... 2,450 71,356
Xircom, Inc. (a)............................................ 1,700 62,900
-----------
1,781,941
-----------
TRANSPORTATION 3.0%
America West Holdings Corp., Class B (a).................... 3,050 47,275
American Freightways Corp. (a).............................. 2,900 43,319
Covenant Transport, Inc., Class A (a)....................... 1,600 25,400
Landstar System, Inc. (a)................................... 950 52,012
MS Carriers, Inc. (a)....................................... 1,600 37,600
</TABLE>

See Notes to Financial Statements

14
<PAGE> 114

YOUR FUND'S INVESTMENTS

March 31, 2000

<TABLE>
<CAPTION>
MARKET
DESCRIPTION SHARES VALUE
<S> <C> <C>
TRANSPORTATION (CONTINUED)
Rollins Truck Leasing Corp. ................................ 4,200 $ 35,438
US Freightways Corp. ....................................... 1,400 52,412
-----------
293,456
-----------
UTILITIES 8.4%
Black Hills Corp. .......................................... 250 5,516
Empire District Electric Co. ............................... 200 3,925
Energen Corp. .............................................. 4,800 76,500
Equitable Resources, Inc. .................................. 2,200 98,588
General Communication, Inc., Class A (a).................... 4,000 21,500
Idacorp, Inc. .............................................. 900 31,275
Laclede Gas Co. ............................................ 1,850 37,000
Madison Gas & Electric Co. ................................. 2,600 46,475
Northwest Natural Gas Co. .................................. 2,500 48,750
Northwestern Corp. ......................................... 3,250 67,031
NUI Corp. .................................................. 1,050 27,169
Oneok, Inc. ................................................ 3,600 90,000
Public Service Co. of New Mexico............................ 1,200 18,900
RGS Energy Group, Inc. ..................................... 3,800 80,750
South Jersey Industries, Inc. .............................. 1,200 33,825
Southwestern Energy Co. .................................... 7,550 50,019
TNP Enterprises, Inc. ...................................... 750 32,859
Western Gas Resources, Inc. ................................ 3,800 60,325
WPS Resources Corp. ........................................ 300 7,781
-----------
838,188
-----------
TOTAL LONG-TERM INVESTMENTS 94.6%
(Cost $9,219,391)............................................... 9,411,665

REPURCHASE AGREEMENT 6.1%
Goldman Sachs ($605,000 par collateralized by U.S. Government
obligations in a pooled cash account, dated 03/31/00, to be sold
on 4/3/00 at $605,313) (Cost $605,000).......................... 605,000
-----------

TOTAL INVESTMENTS 100.7%
(Cost $9,824,391)............................................... 10,016,665

LIABILITIES IN EXCESS OF OTHER ASSETS (0.7%)....................... (73,116)
-----------

NET ASSETS 100.0%.................................................. $ 9,943,549
===========
</TABLE>

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

See Notes to Financial Statements

15
<PAGE> 115

FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2000

<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $9,824,391)......................... $10,016,665
Receivables:
Fund Shares Sold.......................................... 151,550
Expense Reimbursement from Adviser........................ 123,904
Dividends................................................. 11,510
-----------
Total Assets............................................ 10,303,629
-----------
LIABILITIES:
Payables:
Investments Purchased..................................... 152,758
Fund Shares Repurchased................................... 31,672
Custodian Bank............................................ 14,264
Distributor and Affiliates................................ 8,448
Accrued Expenses............................................ 142,017
Trustees' Deferred Compensation and Retirement Plans........ 10,921
-----------
Total Liabilities....................................... 360,080
-----------
NET ASSETS.................................................. $ 9,943,549
===========
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $ 9,740,690
Net Unrealized Appreciation................................. 192,274
Accumulated Net Realized Gain............................... 8,833
Accumulated Undistributed Net Investment Income............. 1,752
-----------
NET ASSETS.................................................. $ 9,943,549
===========
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $4,326,666 and 441,146 shares of
beneficial interest issued and outstanding)........... $ 9.81
Maximum sales charge (5.75%* of offering price)......... .60
-----------
Maximum offering price to public........................ $ 10.41
===========
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $3,658,629 and 374,071 shares of
beneficial interest issued and outstanding)........... $ 9.78
===========
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $1,958,255 and 200,158 shares of
beneficial interest issued and outstanding)........... $ 9.78
===========
</TABLE>

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

See Notes to Financial Statements

16
<PAGE> 116

Statement of Operations
For the Period June 21, 1999 (Commencement of Investment Operations) through
March 31, 2000

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 62,546
Interest.................................................... 8,092
--------
Total Income............................................ 70,638
--------
EXPENSES:
Registration Fee............................................ 70,227
Custody..................................................... 18,962
Trustees' Fees and Related Expenses......................... 13,957
Investment Advisory Fee..................................... 24,348
Audit....................................................... 18,453
Reports to Shareholders..................................... 110,559
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $3,756, $11,318 and $5,855, respectively)... 20,929
Shareholder Services........................................ 8,734
Legal....................................................... 434
Other....................................................... 2,589
--------
Total Expenses.......................................... 289,192
Expense Reduction ($24,348 Investment Advisory Fee and
$202,348 Other)....................................... 226,696
Less Credits Earned on Cash Balances.................... 813
--------
Net Expenses............................................ 61,683
--------
NET INVESTMENT INCOME....................................... $ 8,955
========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 8,727
--------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... -0-
End of the Period......................................... 192,274
--------
Net Unrealized Appreciation During the Period............... 192,274
--------
NET REALIZED AND UNREALIZED GAIN............................ $201,001
========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $209,956
========
</TABLE>

See Notes to Financial Statements

17
<PAGE> 117

Statement of Changes in Net Assets
For the Period June 21, 1999 (Commencement of Investment Operations) through
March 31, 2000

<TABLE>
<S> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income....................................... $ 8,955
Net Realized Gain........................................... 8,727
Net Unrealized Appreciation During the Period............... 192,274
----------
Change in Net Assets from Operations........................ 209,956
----------
Distributions from Net Investment Income.................... (8,955)
Distributions in Excess of Net Investment Income............ (12,718)
----------
Distributions from and in Excess of Net Investment
Income*................................................... (21,673)
----------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES......... 188,283
----------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................... 9,555,139
Net Asset Value of Shares Issued Through Dividend
Reinvestment.............................................. 16,500
Cost of Shares Repurchased.................................. (816,373)
----------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS.......... 8,755,266
----------
TOTAL INCREASE IN NET ASSETS................................ 8,943,549
NET ASSETS:
Beginning of the Period..................................... 1,000,000
----------
End of the Period (Including accumulated undistributed net
investment income of $1,752).............................. $9,943,549
==========

* Distributions by Class:
------------------------------------------------------------
Distributions from and in Excess of Net Investment Income:
Class A Shares............................................ $ (14,958)
Class B Shares............................................ (4,541)
Class C Shares............................................ (2,174)
----------
$ (21,673)
==========
</TABLE>

See Notes to Financial Statements

18
<PAGE> 118

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.

<TABLE>
<CAPTION>
JUNE 21, 1999
(COMMENCEMENT OF
CLASS A SHARES INVESTMENT OPERATIONS)
TO MARCH 31, 2000
----------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $10.000
-------
Net Investment Income..................................... .053
Net Realized and Unrealized Loss.......................... (.181)
-------
Total from Investment Operations............................ (.128)
Less Distributions from and in Excess of Net Investment
Income.................................................... .064
-------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 9.808
=======

Total Return (a)............................................ (.92%)**
Net Assets at End of the Period (In millions)............... $ 4.3
Ratio of Expenses to Average Net Assets* (b)................ 1.48%
Ratio of Net Investment Income to Average Net Assets*....... .67%
Portfolio Turnover.......................................... 15%**
* If certain expenses had not been assumed by Van Kampen,
total return would have been lower and the ratios would
have been as follows:
Ratio of Expenses to Average Net Assets (b)................. 8.29%
Ratio of Net Investment Loss to Average Net Assets.......... (6.14%)
</TABLE>

** Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 5.75% or contingent deferred
sales charge ("CDSC"). On purchases of $1 million or more, a contingent
deferred sales charge of 1% may be imposed on certain redemptions made
within one year of purchase. If the sales charges were included, total
returns would be lower.

(b) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on overnight cash balances. If these credits were reflected as a reduction
of expenses, the ratios would decrease by .02% for the period June 21, 1999
to March 31, 2000.

See Notes to Financial Statements

19
<PAGE> 119

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.

<TABLE>
<CAPTION>
JUNE 21, 1999
(COMMENCEMENT OF
CLASS B SHARES INVESTMENT OPERATIONS)
TO MARCH 31, 2000
----------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.000
-------
Net Investment Income..................................... .013
Net Realized and Unrealized Loss.......................... (.205)
-------
Total from Investment Operations............................ (.192)
Less Distributions from and in Excess of Net Investment
Income.................................................... .027
-------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 9.781
=======

Total Return (a)............................................ (1.81%)**
Net Assets at End of the Period (In millions)............... $ 3.7
Ratio of Expenses to Average Net Assets* (b)................ 2.23%
Ratio of Net Investment Loss to Average Net Assets*......... (.08%)
Portfolio Turnover.......................................... 15%**
* If certain expenses had not been assumed by Van Kampen,
total return would have been lower and the ratios would
have been as follows:
Ratio of Expenses to Average Net Assets (b)................. 9.04%
Ratio of Net Investment Loss to Average Net Assets.......... (6.89%)
</TABLE>

** Non-Annualized

(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum contingent deferred sales charge of 5%,
charged on certain redemptions made within one year of purchase and
declining thereafter to 0% after the fifth year. If the sales charge was
included, total returns would be lower.

See Notes to Financial Statements

20
<PAGE> 120

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.

<TABLE>
<CAPTION>
JUNE 21, 1999
(COMMENCEMENT OF
CLASS C SHARES INVESTMENT OPERATIONS)
TO MARCH 31, 2000
----------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $10.000
-------
Net Investment Loss....................................... .013
Net Realized and Unrealized Loss.......................... (.202)
-------
Total from Investment Operations............................ (.189)
Less Distributions from and in Excess of Net Investment
Income.................................................... .027
-------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 9.784
=======

Total Return (a)............................................ (1.81%)**
Net Assets at End of the Period (In millions)............... $ 2.0
Ratio of Expenses to Average Net Assets* (b)................ 2.23%
Ratio of Net Investment Loss to Average Net Assets*......... (.08%)
Portfolio Turnover.......................................... 15%**
* If certain expenses had not been assumed by Van Kampen,
total return would have been lower and the ratios would
have been as follows:
Ratio of Expenses to Average Net Assets (b)................. 9.04%
Ratio of Net Investment Loss to Average Net Assets.......... (6.89%)
</TABLE>

** Non-Annualized

See Notes to Financial Statements

21
<PAGE> 121

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Small Cap Value Fund (the "Fund") is organized as a series of Van
Kampen Equity Trust (the "Trust"), a Delaware business trust, and is registered
as a diversified open-end investment management company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to seek
capital appreciation by investing primarily in a diversified portfolio of equity
securities of small capitalization companies that the Fund's investment adviser
believes are undervalued. The Fund commenced investment operations on June 21,
1999 with three classes of common shares, Class A, Class B, and Class C shares.

A. SECURITY VALUATION Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Unlisted securities and listed securities for which the last sales price is not
available are valued at the mean of the bid and asked prices, or, if not
available, their fair value as determined in accordance with procedures
established in good faith by the Board of Trustees. Short-term securities with
remaining maturities of 60 days or less are valued at amortized cost which
approximates market value.

B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.

The Fund may invest in repurchase agreements which are short-term
investments whereby the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen 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

22
<PAGE> 122

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.

C. INCOME AND EXPENSE Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Income and expenses of the Fund
are allocated on a pro rata basis to each class of shares, except for
distribution and service fees and transfer agency costs which are unique to each
class of shares.

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

At March 31, 2000, for federal income tax purposes, cost of long- and
short-term investments is $9,825,452, the aggregate gross unrealized
appreciation is $1,007,904 and the aggregate gross unrealized depreciation is
$816,691, resulting in net unrealized appreciation on long- and short-term
investments of $191,213.

E. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays dividends
annually from net investment income. Net realized gains, if any, are distributed
annually. Distributions from net realized gains for book purposes may include
short-term capital gains and gains on option and futures transactions.

Due to inherent differences in the recognition of certain expenses under
generally accepted accounting principals and federal income tax purposes, the
amount of distributed net investment income may differ for a particular period.
These differences are temporary in nature, but may result in book basis
distribution in excess of net investment income for certain periods.

Due to inherent differences in the recognition of income and expenses under
generally accepted accounting principles and federal income tax purposes,
permanent differences between book and tax basis reporting for the current
fiscal year have been identified and appropriately reclassified. Permanent
differences related to the recognition of certain expenses that are not
deductible for tax purposes totaling $14,576 have been reclassified from
accumulated undistributed net investment income to capital. In addition,
permanent differences totaling $106 were reclassified from accumulated
undistributed net investment income to accumulated net realized gain.

F. EXPENSE REDUCTIONS During the period ended March 31, 2000, the Fund's custody
fee was reduced by $813 as a result of credits earned on overnight cash
balances.

23
<PAGE> 123

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

2. INVESTMENT ADVISORY AGREEMENT AND
OTHER TRANSACTIONS WITH AFFILIATES

Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide facilities and investment advice to the Fund for an annual fee payable
monthly as follows:

<TABLE>
<CAPTION>
AVERAGE DAILY 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>

For the period ended March 31, 2000, the Adviser voluntarily waived $24,348
of its investment advisory fees and assumed $202,348 of the Fund's other
expenses. This waiver is voluntary in nature and can be discontinued at the
Adviser's discretion.

For the period ended March 31, 2000, the Fund recognized expenses of
approximately $400 representing legal services provided by Skadden, Arps, Slate,
Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the Fund
is an affiliated person. All of this expense has been assumed by Van Kampen.

For the period ended March 31, 2000, the Fund recognized expenses of
approximately $1,700 representing Van Kampen Funds Inc. or its affiliates'
(collectively "Van Kampen") cost of providing accounting and legal services to
the Fund. All of this expense has been assumed by Van Kampen.

Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the period ended March 31,
2000, the Fund recognized expenses of approximately $6,900. All of this expense
has been assumed by Van Kampen. Transfer agency fees are determined through
negotiations with the Fund's Board of Trustees and are based on competitive
market benchmarks.

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

At March 31, 2000, Van Kampen owned 40,000 shares of Class A, 30,000 shares
of Class B, and 30,000 shares of Class C.

24
<PAGE> 124

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

3. CAPITAL TRANSACTIONS

At March 31, 2000, capital aggregated $4,239,324, $3,579,809 and $1,921,557 for
Classes A, B and C, respectively. For the period ended March 31, 2000,
transactions were as follows:

<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Sales:
Class A................................................... 434,157 $4,160,669
Class B................................................... 387,489 3,699,051
Class C................................................... 177,518 1,695,419
------- ----------
Total Sales................................................. 999,164 $9,555,139
======= ==========
Dividend Reinvestment:
Class A................................................... 1,251 $ 11,585
Class B................................................... 388 3,590
Class C................................................... 143 1,325
------- ----------
Total Dividend Reinvestment................................. 1,782 $ 16,500
======= ==========
Repurchases:
Class A................................................... (34,262) $ (326,588)
Class B................................................... (43,806) (417,468)
Class C................................................... (7,503) (72,317)
------- ----------
Total Repurchases........................................... (85,571) $ (816,373)
======= ==========
</TABLE>

Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares and any
dividend reinvestment plan Class B shares automatically convert to Class A
Shares after the eighth year following purchase. 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.

<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>

25
<PAGE> 125

NOTES TO
FINANCIAL STATEMENTS

March 31, 2000

For the period ended March 31, 2000, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of
approximately $10,900 and CDSC on redeemed shares of approximately $900. 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 $9,878,644 and $667,981, 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, as amended 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 period ended March 31, 2000, are payments retained by Van Kampen of
approximately $11,400.

6. BORROWINGS

In accordance with its investment policies, the Fund may borrow from banks for
temporary purposes and is subject to certain other customary restrictions.
Effective November 30, 1999, the Fund, in conjunction with certain other funds
of Van Kampen, has entered in to a $650,000,000 committed line of credit
facility with a group of banks which expires on November 28, 2000, but is
renewable with the consent of the participating banks. Each fund is permitted to
utilize the facility in accordance with the restrictions of its prospectus. In
the event the demand for the credit facility meets or exceeds $650 million on a
complex-wide basis, each fund will be limited to its pro-rata percentage based
on the net assets of each participating fund. Interest on borrowings is charged
under the agreement at a rate of 0.50% above the federal funds rate per annum.
An annual commitment fee of 0.09% per annum is charged on the unused portion of
the credit facility, which each fund incurs based on its pro-rate percentage of
quarterly net assets. The Fund has not borrowed against the credit facility
during the period.

26
<PAGE> 126

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Trustees of Van Kampen Small Cap Value Fund:

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen Small Cap Value Fund
(the "Fund") at March 31, 2000, and the results of its operations, the changes
in its net assets and the financial highlights for the period June 21, 1999
(commencement of operations) through March 31, 2000 in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at March
31, 2000 by correspondence with the custodian and brokers, provides a reasonable
basis for the opinion expressed above.

PRICEWATERHOUSECOOPER LLP
Chicago, Illinois
May 5, 2000

27
<PAGE> 127

FUND OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN SMALL CAP VALUE FUND

BOARD OF TRUSTEES
J. MILES BRANAGAN
JERRY D. CHOATE
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY

OFFICERS
RICHARD F. POWERS, III*
President

STEPHEN L. BOYD*(1)
Executive Vice President and
Chief Investment Officer

A. THOMAS SMITH III*
Vice President and Secretary

JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer

PETER W. HEGEL*
MICHAEL H. SANTO*
JOHN H. ZIMMERMAN, III*
Vice Presidents

INVESTMENT ADVISER

VAN KAMPEN INVESTMENT
ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555

DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555

SHAREHOLDER SERVICING AGENT

VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 218256
Kansas City, Missouri 64121-8256

CUSTODIAN

STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105

LEGAL COUNSEL

SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606

INDEPENDENT ACCOUNTANTS

PRICEWATERHOUSECOOPERS LLP
200 E. Randolph Drive
Chicago, Illinois 60601

For Federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during the period ended March 31,
2000. For corporate shareholders 87% of the distributions qualify for the
dividends received deduction.

(1) Appointed Executive Vice President and Chief Investment Officer effective
April 3, 2000.

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

(SM) denotes a service mark of Van Kampen Funds Inc.

28
<PAGE> 128

RESULTS OF
SHAREHOLDER VOTES

A Joint Special Meeting of Shareholders of the Fund was held on December 15,
1999, where shareholders voted on the election of trustees and the ratification
of KPMG LLP as the independent public accountants.

1) With regard to the election of the following trustees by shareholders:

<TABLE>
<CAPTION>
# OF SHARES
-----------------------------
IN FAVOR WITHHELD
<S> <C> <C>
J. Miles Branagan...................................... 226,587 --
Jerry D. Choate........................................ 226,587 --
Linda Hutton Heagy..................................... 226,587 --
R. Craig Kennedy....................................... 226,587 --
Mitchell M. Merin...................................... 226,587 --
Jack E. Nelson......................................... 226,587 --
Richard F. Powers, III................................. 224,656 1,931
Phillip B. Rooney...................................... 226,587 --
Fernando Sisto......................................... 224,656 1,931
Wayne W. Whalen........................................ 226,587 --
Suzanne H. Woolsey..................................... 226,587 --
Paul G. Yovovich*...................................... 224,656 1,931
</TABLE>

* On April 14, 2000, Paul G. Yovovich resigned from the Board of Trustees.

2) With regard to the ratification of KPMG LLP to act as independent public
accountants for the fund, 226,587 shares voted in favor of the proposal and no
shares voted against the proposal and no shares abstained from voting.**