<PAGE>
TABLE OF CONTENTS
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................... 1
Performance Results......................... 3
Putting Your Fund's Performance in Perspec-
tive...................................... 4
Portfolio Management Review................. 5
Portfolio of Investments.................... 7
Statement of Assets and Liabilities......... 8
Statement of Operations..................... 9
Statement of Changes in Net Assets.......... 10
Financial Highlights........................ 11
Notes to Financial Statements............... 14
Report of Independent Accountants........... 22
</TABLE>
GGS ANR 7/96
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO OF DENNIS J. MCDONNELL AND DON G. POWELL]
DENNIS J. MCDONNELL AND DON G. POWELL
July 8, 1996
Dear Shareholder:
The past twelve months have been positive for most investors. U.S. equity
markets performed well and many global markets posted solid gains for the one-
year period ended May 31, 1996.
Events around the world--from the presidential election in the United States
to the presidential election in Russia--reiterate the need to maintain a di-
versified portfolio and long-term investment perspective. While short-term po-
litical and economic events may affect investment performance, a long-term
strategy that includes international diversification may help you achieve your
financial objectives.
MARKET OVERVIEW
In general terms, the U.S. dollar has risen against the Japanese yen, the
German deutschemark, and other currencies since the beginning of the fourth
quarter of 1995. Aided by a strong dollar, equity investments in the United
States have outperformed those in other markets during the reporting period.
The U.S. stock market demonstrated strong performance during the reporting
period. From June 1, 1995 to May 31, 1996, the total return of the Standard &
Poor's 500 Index was 28.45 percent. Several factors contributed to this posi-
tive equity market environment. During the first half of the period, stocks
and bonds rallied as economic indicators reflected low levels of inflation,
which reduced the likelihood that the Federal Reserve Board would raise inter-
est rates. During the twelve-month period the heavy influx of money into eq-
uity mutual funds also helped drive the market forward.
In developed countries, markets underperformed early in the one-year period,
but are now recovering. The Pacific Basin economies have experienced strong
growth, but their equity market returns trailed those in the United States on
a dollar-adjusted basis. European markets also did well--although not as well
as U.S. markets, measured in dollar terms. The Morgan Stanley Capital Interna-
tional Europe-Asia-Far East Index + Dividends, which measures market perfor-
mance of developed countries outside the United States, earned 11.01 percent
during the reporting period. Additional details on international market per-
formance is provided in the Portfolio Management Review section of this re-
port.
During the twelve-month period, bond prices generally appreciated in Euro-
pean markets and in dollar-bloc markets such as Australia and Canada, as eco-
nomic activity slowed and yields fell. However, entering 1996, yields in many
developed countries edged upwards as new concerns about inflation rates sur-
faced in the fixed-income markets. Meanwhile, bonds in most emerging markets
experienced a strong start in 1996 as capital flows returned to many develop-
ing economies because of attractive yields and renewed investor confidence.
Continued on page two
1
<PAGE>
ECONOMIC OUTLOOK
In general terms, there are positive signs for both the domestic and interna-
tional economies. The current consensus among economists is that the U.S. econ-
omy will be marked by moderate growth and relatively low inflation in the near
term. Overall, international stock markets should benefit from a stronger out-
look for corporate profits, productivity gains and subdued inflation. Addition-
ally, many international economies are entering higher growth cycles as the
U.S. economy moderates. Merger and acquisition activity and the increasing de-
termination by many companies to create greater shareholder value could also
enhance international equity returns.
We expect international bond markets will continue to be influenced by the
U.S. market. We anticipate relatively moderate global inflation due to more
prudent fiscal and monetary policies in emerging markets and increased
competition in developed markets. As the European and Japanese economies begin
to experience accelerating economic growth, we may see a modest rise in yields
because inflation concerns often accompany revitalized growth.
Global investing provides diversification and growth potential for your port-
folio, and investing in global mutual funds enhances those benefits. With a
comprehensive network of data and resources, your mutual fund portfolio manage-
ment team has up-to-the-minute information about events around the world. By
monitoring and adjusting the Fund's holdings, the team seeks opportunities cre-
ated by these worldwide events. You will find additional insights from your
portfolio manager and additional information about your investment on the fol-
lowing pages. Thank you for your continued confidence in your investment with
Van Kampen American Capital.
Sincerely,
/S/ Don G. Powell /S/ Dennis J. McDonnell
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Asset Management, Inc. Asset Management, Inc.
2
<PAGE>
PERFORMANCE RESULTS FOR THE PERIOD ENDED MAY 31, 1996
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
TOTAL RETURNS
<S> <C> <C> <C>
One-year total return based on NAV/1/............. 2.81% 2.06% 2.20%
One-year total return/2/.......................... (2.06%) (1.79%) (1.24%)
Three-year average annual total return/2/......... 2.37% 2.41% 3.30%
Life-of-Fund average annual total return/2/....... 3.53% 3.69% 3.54%
Commencement date................................. 11/15/91 11/15/91 04/12/93
DISTRIBUTION RATE AND YIELD
Distribution rate/3/.............................. 6.85% 6.36% 6.40%
SEC Yield/4/...................................... 4.47% 3.92% 3.90%
</TABLE>
/1/Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge(4.75% for A shares) or contingent
deferred sales charge for early withdrawal (4% for B and 1% for C shares).
/2/Standardized total return. Assumes reinvestment of all distributions for
the period and includes payment of the maximum sales charge (A shares) or
contingent deferred sales charge for early withdrawal (B and C shares).
/3/Distribution Rate represents the monthly annualized distributions of the
Fund at the end of the period and not the earnings of the Fund.
/4/SEC Yield is a standardized calculation prescribed by the Securities and
Exchange Commission for determining the amount of net income a portfolio
should theoretically generate for the 30-day period ending as shown above.
See the Prior Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. Fund shares, when redeemed, may be worth
more or less than their original cost.
3
<PAGE>
PUTTING YOUR FUND'S PERFORMANCE IN PERSPECTIVE
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment portfolio's performance at regular inter-
vals. A good starting point is a comparison of your investment holdings to an
applicable benchmark, such as a broad-based market index. Such a comparison
can:
. Illustrate the general market environment in which your investments are
being managed
. Reflect the impact of favorable market trends or difficult market con-
ditions
. Help you evaluate the extent to which your Fund's management team has
responded to the opportunities and challenges presented to them over
the period measured
For these reasons, you may find it helpful to review the chart below, which
compares your Fund's performance to that of the J.P. Morgan Global Traded Gov-
ernment Index over time. As a broad-based, unmanaged statistical composite,
this index does not reflect any commissions or fees which would be incurred by
an investor purchasing the securities it represents. Similarly, its perfor-
mance does not reflect any sales charges or other costs which would be appli-
cable to an actively managed portfolio, such as that of the Fund.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Van Kampen American Capital Global Government vs. J.P. Morgan Global Traded
Government Index. (November 1991 through May 1996)
<TABLE>
<CAPTION>
VKAC GLOBAL J.P. MORGAN
GOVERNMENT GLOBAL TRADED
SECURITIES INDEX GOVERNMENT INDEX
---------------- ----------------
<S> <C> <C>
Nov 1991 9525 10000
Dec 1991 9712 10099
Dec 1992 9770 11775
Dec 1993 11259 13220
Dec 1994 10566 13388
Dec 1995 12055 15975
May 1996 11706 15652
</TABLE>
The above chart reflects the performance of Class A shares of the Fund. The
performance of Class A shares will differ from that of other share classes of
the Fund because of the difference in sales charges and/or expenses paid by
shareholders investing in the different share classes. The Fund's performance
assumes reinvestment of all distributions for the period ended May 31, 1996,
and includes payment of the maximum sales charge (4.75% for A shares).
While past performance is not indicative of future performance, the above in-
formation provides a broader vantage point from which to evaluate the discus-
sion of the Fund's performance found in the following pages.
4
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
The following is an interview with the management team of Van Kampen American
Capital Global Government Securities Fund. The Fund is co-managed by portfolio
managers John R. Reynoldson, Van Kampen American Capital Asset Management,
Inc., (U.S. holdings), Alan Doyle, John Govett & Co. Limited (international
holdings), and Robert C. Peck, Jr., Van Kampen American Capital Asset
Management Inc., executive vice president of fixed-income investments.
WHAT HAVE BEEN THE OVERALL TRENDS IN THE WORLD BOND MARKETS DURING THE
Q YEAR ENDED MAY 31, 1996?
A The trend until February of 1996 was a decline in global bond yields as
economic activity slowed. This decline accompanied short-term interest
rate cuts by central banks in Europe and Japan and an anticipated cut in the
U.S. Experiencing an even more rapid decline in interest rates were developing
markets and smaller, peripheral European countries--markets that typically is-
sue higher-yielding bonds.
Since February, the decline in global bond yields has been partially re-
versed. For instance, continued signs of strong growth have led to increased
yields and declining prices in the U.S. bond market. The yield on 10-year U.S.
Treasury notes has climbed from 6.30 percent in May 1995 to 6.85 percent in
May 1996. On the other hand, continued sluggish economic activity in Europe
and Japan has kept down interest rates in these markets, allowing them to
outperform the U.S. market. For example, in Germany, 10-year government bond
rates were 15 basis points lower than a year earlier.
Looking at currency trends, the U.S. dollar declined against most currencies
over the first half of this reporting period. In August of 1995, intervention
by the major central banks, combined with a cut in Japanese interest rates,
reversed this process. However, the currencies of smaller European markets
continued to appreciate against other European currencies and the U.S. dollar.
Q OVER THE REPORTING PERIOD, WHICH OF THESE TRENDS HAD THE MOST SIGNIFICANT
INFLUENCE ON THE FUND AND HOW DID YOU POSITION THE FUND IN RESPONSE TO
THESE EVENTS?
A The appreciation of the U.S. dollar against other currencies, and partic-
ularly the sharp fall in the Japanese yen over the second half of 1995, had
a positive influence on the Fund. Because the portfolio was overweighted in U.S.
dollars and had no exposure to the yen, the Fund performed well com-pared to the
J.P. Morgan Global Traded Government Index and other similar funds.
However, early in 1996, we anticipated a decline in the U.S. dollar and re-
duced the Fund's U.S. dollar exposure. This adjustment did not prove to be as
beneficial as we expected. Instead, the U.S. dollar continued to rise and the
Fund's performance was reduced accordingly. Nevertheless, the Fund
outperformed the index during the reporting period.
Finally, from December 1995 through May 1996, the Fund benefited from an
overweighting in bonds issued by peripheral European countries, such as Swe-
den, Denmark, and the Netherlands. These bond markets outperformed most other
bond markets, due to improvements in inflation rates, budget deficits and
other economic fundamentals of a number of these European countries.
5
<PAGE>
Van Kampen HOW DID THE FUND PERFORM DURING THE YEAR
American Capital ENDED MAY 31, 1996?
Global Government
Securities Fund Class A shares achieved a total return at
net asset value of 2.81 percent/1/. Over the
Countries Represented same period, the J.P. Morgan Global Traded Gov-
in the Portfolio ernment Index generated a total return of 1.79
as of May 31, 1996 percent. The Index is unmanaged and comprised of
major foreign and U.S. government bonds, weighted
by the total market value of each country's secu-
Denmark rities. It reflects variations in currency value
Germany with all results measured in U.S. dollar terms.
Netherlands Also, keep in mind, however, that it does not re-
Spain flect any commissions or fees that would be paid
Sweden by an investor purchasing the securities it rep-
United States resents.
- -------------------------
Q IN GENERAL, WHAT IS YOUR OUTLOOK FOR THE GLOBAL BOND MARKETS FOR THE
REMAINDER OF 1996 AND, MORE SPECIFICALLY, FOR THE FUND?
A We believe that the rise in U.S. bond yields since February is attribut-
able to expectations of a significant increase in short-term interest
rates by the Fed before the end of 1996. However, there has been little evi-
dence of an increase in inflation and only a modest increase in economic
growth. We believe, therefore, that the current level of real yields in the
U.S. bond market is high and that there is value in the U.S. bond market at
these current levels. In the European bond markets, we expect a small yield
increase, as growth in these countries continues to be sluggish and inflation
remains low. As economic growth in Japan gains momentum, we expect a tighten-
ing in monetary policy before the end of 1996. Accordingly, we anticipate Jap-
anese bond yields will rise later this year.
Because we are confident that the U.S. bond market offers an attractive in-
vestment opportunity, we have recently been increasing the Fund's exposure to
this market and decreasing its exposure to European bonds, especially those of
smaller European countries. With respect to Japan, the Fund currently does not
own any Japanese bonds. However, we will reevaluate this positioning as new
opportunities emerge.
<TABLE>
<S> <C>
/S/Robert C. Peck, Jr. /S/ John R. Reynoldson /S/ Alan Doyle
Robert C. Peck, Jr. John R. Reynoldson Alan Doyle
Van Kampen American Capital Van Kampen American Capital John Govett & Co. Limited
Asset Management, Inc. Asset Management, Inc. Portfolio Manager
Fixed Income Investments Portfolio Manager
</TABLE>
Please see footnotes on page three
6
<PAGE>
PORTFOLIO OF INVESTMENTS
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UNITED STATES AGENCY & GOVERNMENT
OBLIGATIONS 98.3%
$ 7,532 Government National Mtg
Association, Pools......... 8.00% various $ 7,551,364
*80,000 Treasury Notes............. 8.50 04/15/97 81,825,600
*50,000 Treasury Notes............. 8.75 10/15/97 51,758,000
------------
TOTAL UNITED STATES AGENCY
& GOVERNMENT OBLIGATIONS
(Cost $142,830,525)........ 141,134,964
------------
REPURCHASE AGREEMENT 2.8%
4,010 State Street Bank & Trust
Co., dated 5/31/96
(collateralized by U.S.
Government obligations in a
pooled cash account)
repurchase proceeds
$4,011,761 (Cost
$4,010,000)................ 5.27 06/03/96 4,010,000
------------
TOTAL INVESTMENTS (Cost $146,840,525) 101.1% .................................... 145,144,964
OTHER ASSETS AND LIABILITIES, NET (1.1%)......................................... (1,572,225)
------------
NET ASSETS 100%.................................................................. $143,572,739
------------
*Securities placed as collateral for forward commitments (see Note 1D).
FORWARD PURCHASE COMMITMENTS
<CAPTION>
Par Amount Unrealized
(000) Appreciation
(Local Currency) Description Coupon Maturity (Depreciation)
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
63,000 DENMARK (Kingdom)
settlement 7/05/96......... 8.00% 03/15/06 $ 150,311
17,000 NETHERLANDS (Government)
settlement 7/15/96......... 7.00 06/15/05 227,852
1,500,000 SPAIN (Kingdom of)
settlement 7/05/96......... 10.15 01/31/06 310,537
97,000 SWEDEN (Kingdom of)
settlement 7/05/96......... 6.00 02/09/05 272,191
------------
960,891
------------
16,500 GERMANY (Treuhandanstalt)
settlement 6/20/96......... 6.75 05/13/04 (31,732)
UNITED STATES
8,000 FHLMC, settlement 6/13/96.. 7.50 12/01/99 (147,420)
32,000 Treasury Note, settlement
8/08/96.................... 5.75 08/15/03 (288,431)
------------
(467,583)
------------
Total Forward Purchase Commitments (Obligation $94,536,709)..... $ 493,308
------------
</TABLE>
7
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $146,840,525)................ $145,144,964
Foreign currency, at market value (Cost $51,614)................ 50,036
Cash............................................................ 6,349
Receivable for offsetting forward bond commitments.............. 25,392,728
Unrealized appreciation of forward commitments and currency
exchange contracts.............................................. 2,944,065
Interest receivable............................................. 1,484,356
Receivable for Fund shares sold................................. 32,703
Other assets and receivables.................................... 1,169
------------
Total Assets................................................... 175,056,370
------------
LIABILITIES
Payable for offsetting forward bond commitments................. 25,510,859
Unrealized depreciation of forward commitments and currency
exchange contracts.............................................. 4,749,401
Payable for Fund shares purchased............................... 539,046
Distributions payable........................................... 338,609
Due to Distributor.............................................. 102,158
Due to Adviser.................................................. 88,189
Deferred Trustees' compensation................................. 13,876
Payable to shareholder service agent............................ 29,583
Accrued expenses and other liabilities.......................... 111,910
------------
Total Liabilities.............................................. 31,483,631
------------
NET ASSETS, equivalent to $7.92 per share for Class A, $7.96 per
share for Class B, and $7.91 per share for Class C shares...... $143,572,739
------------
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par; 4,595,368 Class A,
12,261,711 Class B, and 1,201,697 Class C shares outstanding... $ 180,588
Capital surplus................................................. 176,425,841
Accumulated net realized loss on securities..................... (29,171,823)
Unrealized appreciation (depreciation) of securities
Investments.................................................... (1,695,561)
Forward commitments............................................ 493,308
Offsetting forward commitments................................. 174,527
Foreign currency............................................... (1,578)
Forward currency exchange contracts............................ (2,473,171)
Other foreign denominated assets and liabilities............... (4,138)
Accumulated net investment loss................................. (355,254)
------------
NET ASSETS...................................................... $143,572,739
------------
</TABLE>
8
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
Year Ended May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest.......................................................... $13,679,934
-----------
EXPENSES
Management fees................................................... 1,254,494
Shareholder service agent's fees and expenses..................... 457,689
Accounting services............................................... 31,987
Service fees--Class A............................................. 107,670
Distribution and service fees--Class B............................ 1,100,558
Distribution and service fees--Class C............................ 141,419
Trustees' fees and expenses....................................... 40,082
Audit fees........................................................ 55,405
Custodian fees.................................................... 150,117
Legal fees........................................................ 5,301
Reports to shareholders........................................... 49,951
Registration and filing fees...................................... 63,425
Organization expenses............................................. 2,807
Miscellaneous..................................................... 17,115
Retirement plan expense reimbursement (see Note 4)................ (5,200)
-----------
Total expenses................................................... 3,472,820
-----------
NET INVESTMENT INCOME............................................. 10,207,114
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain (loss) on securities
Investments and forward commitments.............................. 5,456,144
Futures contracts................................................ 357,264
Foreign currency................................................. (560,266)
Forward currency exchange contracts.............................. (4,709,213)
Net unrealized appreciation (depreciation) of securities during
the period
Investments...................................................... (3,317,255)
Forward purchase commitments..................................... (2,590,003)
Foreign currency................................................. (128)
Forward currency exchange contracts.............................. (1,028,680)
Offsetting forward bond commitments.............................. 569,879
Other foreign denominated assets and liabilities................. (1,653)
-----------
NET REALIZED AND UNREALIZED LOSS ON SECURITIES.................... (5,823,911)
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $ 4,383,203
-----------
</TABLE>
9
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended May 31
--------------------------
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period................... $189,779,616 $233,762,956
------------ ------------
OPERATIONS
Net investment income............................ 10,207,114 13,818,216
Net realized gain (loss) on securities........... 543,929 (13,654,555)
Net unrealized appreciation (depreciation) of se-
curities during the period...................... (6,367,840) 12,319,494
------------ ------------
Increase in net assets resulting from operations. 4,383,203 12,483,155
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME
Class A.......................................... (2,860,078) (4,034,848)
Class B.......................................... (6,497,549) (8,907,916)
Class C.......................................... (822,565) (1,423,252)
------------ ------------
(10,180,192) (14,366,016)
------------ ------------
NET EQUALIZATION DEBITS........................... -- (902,657)
------------ ------------
CAPITAL TRANSACTIONS
Proceeds from shares sold
Class A.......................................... 7,095,429 8,153,327
Class B.......................................... 12,820,664 19,270,979
Class C.......................................... 2,226,618 3,154,166
------------ ------------
22,142,711 30,578,472
------------ ------------
Proceeds from shares issued for distributions
reinvested
Class A.......................................... 1,763,615 2,361,328
Class B.......................................... 3,699,958 5,045,660
Class C.......................................... 471,340 875,506
------------ ------------
5,934,913 8,282,494
------------ ------------
Cost of shares redeemed
Class A.......................................... (18,784,532) (24,576,393)
Class B.......................................... (38,363,849) (46,690,375)
Class C.......................................... (11,339,131) (8,792,020)
------------ ------------
(68,487,512) (80,058,788)
------------ ------------
Decrease in net assets resulting from capital
transactions..................................... (40,409,888) (41,197,822)
------------ ------------
DECREASE IN NET ASSETS............................ (46,206,877) (43,983,340)
------------ ------------
NET ASSETS, end of period (including accumulated
net investment loss of $355,254 and undistributed
net investment income of $186,959, respectively).. $143,572,739 $189,779,616
------------ ------------
</TABLE>
10
See Notes to Financial Statements
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
of the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------
November 15,
Year Ended May 31 1991(/1/) to
------------------------------- May 31,
1996 1995 1994 1993(/2/) 1992(/2/)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $8.24 $8.26 $9.01 $9.07 $9.43
----- ----- ------ ----- ------
INCOME FROM INVESTMENT OPERATIONS
Investment income................ .69 .72 .92 .98 .62
Expenses......................... (.13) (.12) (.14) (.135) (.03)
----- ----- ------ ----- ------
Net investment income............. .56 .60 .78 .845 .59
Net realized and unrealized gain
(loss) on securities.............. (.328) (.016) (.5715) (.123) (.5245)
----- ----- ------ ----- ------
Total from investment operations.. .232 .584 .2085 .722 .0655
----- ----- ------ ----- ------
LESS DISTRIBUTIONS FROM (See Note
1i)
Net investment income............ (.552) (.604) (.726) (.782) (.4255)
Excess of book-basis net realized
gain on securities ............. -- -- (.2325) -- --
----- ----- ------ ----- ------
Total distributions............... (.552) (.604) (.9585) (.782) (.4255)
----- ----- ------ ----- ------
Net asset value, end of period ... $7.92 $8.24 $8.26 $9.01 $9.07
----- ----- ------ ----- ------
TOTAL RETURN(/3/)................. 2.81% 7.52% 1.89% 8.47% .71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(millions)........................ $36.4 $47.9 $62.8 $36.1 $25.0
Average net assets (millions)..... $43.1 $54.5 $55.6 $32.4 $14.0
Ratios to average net assets
(annualized)(/4/)
Expenses......................... 1.51% 1.42% 1.45% 1.52% .50%
Expenses, without expense
reimbursement.................... 1.52% -- -- -- 1.29%
Net investment income............ 6.66% 7.18% 8.12% 9.33% 10.41%
Net investment income, without
expense reimbursement........... 6.65% -- -- -- 9.62%
Portfolio turnover rate........... 239% 209% 236% 301% 289%
</TABLE>
(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(4) See Notes 2 and 4.
11
See Notes to Financial Statements
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each
of the periods indicated.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
---------------------------------------------
November 15
Year Ended May 31 1991(/1/)
--------------------------------- to May 31,
1996 1995 1994 1993(/2/) 1992(/2/)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $8.28 $8.30 $9.04 $9.09 $9.43
------ ------ ------ ----- ------
INCOME FROM INVESTMENT OPERATIONS
Investment income............................ .68 .71 .90 .98 .605
Expenses..................................... (.19) (.18) (.21) (.20) (.055)
------ ------ ------ ----- ------
Net investment income......................... .49 .53 .69 .78 .55
Net realized and unrealized gain (loss) on
securities................................... (.318) (.006) (.5435) (.12) (.5005)
------ ------ ------ ----- ------
Total from investment operations.............. .172 .524 .1465 .66 .0495
------ ------ ------ ----- ------
LESS DISTRIBUTIONS FROM (See Note 1i)
Net investment income........................ (.492) (.544) (.654) (.71) (.3895)
Excess of book-basis net realized gain on
securities ................................. -- -- (.2325) -- --
------ ------ ------ ----- ------
Total distributions........................... (.492) (.544) (.8865) (.71) (.3895)
------ ------ ------ ----- ------
Net asset value, end of period................ $7.96 $8.28 $8.30 $9.04 $9.09
------ ------ ------ ----- ------
TOTAL RETURN(/3/)............................. 2.06% 6.69% 1.07% 7.95% .53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions).......... $ 97.7 $123.4 $147.5 $56.7 $22.5
Average net assets (millions)................. $110.1 $133.3 $107.1 $39.6 $11.0
Ratios to average net assets (annualized)(/4/)
Expenses..................................... 2.27% 2.18% 2.22% 2.19% 1.02%
Expenses, without expense reimbursement...... 2.27% -- -- -- 1.82%
Net investment income........................ 5.91% 6.41% 7.30% 8.66% 9.86%
Net investment income, without expense
reimbursement............................... 5.91% -- -- -- 9.07%
Portfolio turnover rate....................... 239% 209% 236% 301% 289%
</TABLE>
(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(4) See Notes 2 and 4.
12
See Notes to Financial Statements
<PAGE>
See Notes to Financial Statements
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each
of the periods indicated.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
------------------------------------
April 12,
Year Ended May 31 1993(/1/) to
----------------------- May 31,
1996 1995 1994(/2/) 1993(/2/)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period...... $8.22 $8.25 $8.99 $9.00
----- ----- ------ -----
INCOME FROM INVESTMENT OPERATIONS
Investment income........................ .64 .69 .83 .12
Expenses................................. (.18) (.18) (.20) (.025)
----- ----- ------ -----
Net investment income..................... .46 .51 .63 .095
Net realized and unrealized gain (loss) on
securities................................ (.278) .004 (.4835) .011
----- ----- ------ -----
Total from investment operations.......... .182 .514 .1465 .106
----- ----- ------ -----
LESS DISTRIBUTIONS FROM (See Note 1i)
Net investment income.................... (.492) (.544) (.654) (.116)
Excess of book-basis net realized gain on
securities.............................. -- -- (.2325) --
----- ----- ------ -----
Total distributions....................... (.492) (.544) (.8865) (.116)
----- ----- ------ -----
Net asset value, end of period............ $7.91 $8.22 $8.25 $8.99
----- ----- ----- -----
TOTAL RETURN(/3/)......................... 2.20% 6.60% 1.19% 8.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)...... $9.5 $18.5 $23.5 $1.4
Average net assets (millions)............. $14.1 $21.2 $14.1 $0.4
Ratios to average net assets
(annualized)(/4/)
Expenses................................. 2.27% 2.18% 2.22% 2.63%
Expenses, without expense reimbursement.. 2.27% -- -- --
Net investment income.................... 5.91% 6.42% 7.13% 10.06%
Net investment income, without expense
reimbursement............................ 5.91% -- -- --
Portfolio turnover rate................... 239% 209% 236% 301%
</TABLE>
(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(4) See Note 4.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital World Portfolio Series Trust (formerly American
Capital World Portfolio Series, Inc.) is registered under the Investment Com-
pany Act of 1940, as amended, as an open-end, non-diversified management in-
vestment company which offers shares in two separate portfolios, one of which
is described in this report: Van Kampen American Capital Global Government Se-
curities Fund (the "Fund"). The investment objective of the Fund is to seek to-
tal return through a managed balance of foreign and domestic debt securities.
Investments in foreign securities involve certain risks not ordinarily associ-
ated with investments in securities of domestic issuers, including fluctuations
in foreign exchange rates, future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental laws or
restrictions.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The prepa-
ration of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the amounts reported. Actual amounts may differ from the estimates.
A. INVESTMENT VALUATIONS-Securities listed or traded on a national securities
exchange are valued at the mean between the bid and asked prices. Unlisted se-
curities, and listed securities for which prices are not available, are valued
at prices of comparable securities. Futures contracts are valued at the last
sale price or, if no sales are reported, at the mean between the bid and asked
prices. Securities for which market quotations are not readily available are
valued at fair value under a method approved by the Board of Trustees.
Short-term investments with a maturity of 60 days or less when purchased are
valued at amortized cost, which approximates market value. Short-term invest-
ments with a maturity of more than 60 days when purchased are valued based on
market quotations until the remaining days to maturity become less than 61
days. From such time, until maturity, the investments are valued at amortized
cost. U.S. Treasury Notes are held in the Fund chiefly to support foreign fu-
ture or forward positions.
B. FOREIGN CURRENCY TRANSLATION-The market values of foreign securities, for-
ward currency contracts and other assets and liabilities stated in foreign cur-
rency are translated into U.S. dollars based on quoted exchange rates as of
noon Eastern Time. The cost of securities is determined using historical ex-
change rates. Income and expenses are translated at prevailing exchange rates
when accrued or incurred. Gains and losses on the sale of securities are not
segregated for financial reporting purposes between amounts arising from
changes in ex-
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
change rates and amounts arising from changes in the market prices of securi-
ties. Realized gain and loss on foreign currency includes the net realized
amount from the sale of currency and the amount realized between trade date
and settlement date on security transactions.
C. FORWARD CURRENCY EXCHANGE CONTRACTS-The Fund enters into forward currency
exchange contracts in order to hedge its exposure to changes in foreign cur-
rency exchange rates on its foreign portfolio holdings or to settle transac-
tions. A forward currency exchange contract is a commitment to buy or to sell
a foreign currency at a set price on a future date. Changes in the value of
the contract are recognized by marking the contract to market on a daily basis
to reflect current currency translation rates. The Fund realizes gains or
losses at the time the forward currency exchange contract is closed. Risks may
arise as a result of the potential inability of the counterparties to meet the
terms of their contracts, and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
D. FUTURES CONTRACTS AND FORWARD COMMITMENTS-General--Transactions in futures
contracts and forward commitments are utilized in strategies to manage the
market risk of the Fund's investments. The purchase of a futures contract or
forward commitment increases the impact on net asset value of changes in the
market price of investments. Forward commitments have a risk of loss due to
nonperformance of counterparties. There is also a risk that the market move-
ment of such instruments may not be in the direction forecasted. Note 3--In-
vestment Activity contains additional information.
Futures Contracts--Upon entering into futures contracts, the Fund maintains
securities with a value equal to its obligation under the futures contracts in
a segregated account with its custodian. A portion of these funds is held as
collateral in an account in the name of the broker, the Fund's agent in ac-
quiring the futures position. During the period the futures contract is open,
changes in the value of the contract ("variation margin") are recognized by
marking the contract to market on a daily basis. As unrealized gains or losses
are incurred, variation margin payments are received from or made to the bro-
ker. Upon the closing or cash settlement of a contract, gains or losses are
realized. The cost of securities acquired through delivery under a contract is
adjusted by the unrealized gain or loss on the contract.
Forward Commitments--The Fund trades certain securities under the terms of
forward commitments, whereby the settlement for payment and delivery occurs at
a specified future date. Forward commitments are privately negotiated transac-
tions between the Fund and dealers. Upon executing a forward commitment and
during the period of obligation, the Fund maintains collateral of cash or se-
curities in a segregated account with its custodian in an amount sufficient to
relieve the obligation. If the intent of the Fund is to accept delivery of a
security traded under a forward purchase commitment, the commitment is re-
corded as a long-
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
term purchase. For forward purchase commitments for which security settlement
is not intended by the Fund and all forward sale commitments, changes in the
value of the commitment are recognized by marking the commitment to market on
a daily basis. During the commitment, the Fund may either resell or repurchase
the forward commitment and enter into a new forward commitment, the effect of
which is to extend the settlement date. In addition, the Fund may close such
forward commitments prior to delivery. Gains and losses are realized upon the
ultimate closing or cash settlement of forward commitments.
E. REPURCHASE AGREEMENTS-A repurchase agreement is a short-term investment 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 in-
vest independently in repurchase agreements, or transfer uninvested cash bal-
ances into a pooled cash account along with other investment companies advised
by Van Kampen American Capital Asset Management, Inc. (the "Adviser"), 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 re-
quired to maintain the value of the underlying security at not less than the
repurchase proceeds due the Fund.
F. FEDERAL INCOME TAXES-No provision for federal income taxes is required be-
cause the Fund has elected to be taxed as a "regulated investment company" un-
der the Internal Revenue Code and intends to maintain this qualification by
annually distributing all of its taxable net investment income and taxable net
realized gains on investments to its shareholders. It is anticipated that no
distributions of capital gains will be made until tax basis capital loss
carryforwards expire or are offset by net realized capital gains.
The net realized capital loss carryforward of approximately $29.0 million
for federal income tax purposes at the end of the period may be utilized to
offset future capital gains until expiration in 2004. Additionally, approxi-
mately $1.4 million of post October losses are deferred for tax purposes to
the 1997 fiscal year.
G. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME-Investment transac-
tions are accounted for on the trade date. Realized gains and losses on in-
vestments are determined on the basis of identified cost. Interest income is
accrued daily. Under the applicable foreign tax laws, a withholding tax may be
imposed on interest and realized gains generated from foreign investments.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
H. DEBT DISCOUNT AND PREMIUM-The Fund accounts for discounts and premiums on
the same basis as is used for federal income tax reporting. Accordingly, orig-
inal issue discounts on debt securities purchased are amortized over the life
of the security. Premiums on debt securities are not amortized. Market dis-
counts are recognized at the time of sale as realized gains for book purposes
and ordinary income for tax purposes.
I. DIVIDENDS AND DISTRIBUTIONS-Dividends and distributions to shareholders are
recorded on the record date. The Fund distributes tax basis earnings in accor-
dance with the minimum distribution requirements of the Internal Revenue Code,
which may differ from generally accepted accounting principles. Such dividends
or distributions may exceed financial statement earnings.
J. EQUALIZATION-At May 31, 1995, the Fund discontinued the accounting practice
of equalization, which it had used since its inception. Equalization is a
practice whereby a portion of the proceeds from sales and costs of redemptions
of Fund shares, equivalent on a per-share basis to the amount of the undis-
tributed net investment income, is charged or credited to undistributed net
investment income.
The balance of equalization included in undistributed net investment income
at the date of change, which was $3,058,279, was reclassified to capital sur-
plus. Such reclassification had no effect on net assets, results of opera-
tions, or net asset value per share of the Fund.
K. ORGANIZATION COSTS-Organization expenses of approximately $13,000 were de-
ferred and are being amortized over a five-year period ending December, 1996.
NOTE 2--MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as investment manager to the Fund. The Adviser has entered
into a subadvisory agreement with John Govett & Co., Ltd. (the "Subadviser"),
who provides advisory services to the Fund and the Adviser with respect to the
Fund's investments in foreign securities. Management fees are calculated
monthly, based on the average daily net assets of the Fund at the annual rate
of .75%. The Adviser pays 50% of its management fee to the Subadviser. From
time to time, the Adviser may elect to reimburse the Fund for a portion of its
management fee. The reimbursement is voluntary and may be discontinued at any
time without prior notice.
At the annual meeting in July 1995, Fund shareholders approved the reorgani-
zation of the Fund as a Delaware business trust and an expansion of the Board
from eight to fourteen trustees (the "Consolidation"). Van Kampen American
Capital ("VKAC") agreed to initially bear the expenses, aggregating $28,934,
relating to the Consolidation. However, if during the five-
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
year period ending July, 2000, the Fund realizes a benefit from the Consolida-
tion, the Fund will reimburse VKAC the amount of the savings, not to exceed
the amount of the Consolidation expenses. During the period, savings of $9,774
were realized by the Fund, and reimbursed to VKAC.
ACCESS Investor Services, Inc., an affiliate of the Adviser, serves as the
Fund's shareholder service agent. These services are provided at cost plus a
profit. For the period, such fees aggregated $357,968.
The Fund was advised that Van Kampen American Capital Distributors, Inc.
(the "Distributor") and Advantage Capital Corp. (the "Retail Dealer"), both
affiliates of the Adviser, received $100,311 and $25,468, respectively, as
their portion of the commissions charged on sales of Fund shares during the
period. As of January 2, 1996, the Retail Dealer was no longer an affiliate of
the Adviser.
Under the Distribution Plans, each class of shares pays up to .25% per annum
of its average net assets to reimburse the Distributor for expenses and serv-
ice fees incurred. Class B and C shares pay an additional fee of up to .75%
per annum of their average net assets to reimburse the Distributor for its
distribution expenses. Actual distribution expenses incurred by the Distribu-
tor for Class B and C shares may exceed the amounts reimbursed to the Distrib-
utor by the Fund. At the end of the period, the unreimbursed expenses incurred
by the Distributor under the Class B and C plans aggregated approximately $4.5
million and $185,000, respectively, and may be carried forward and reimbursed
through either the collection of the contingent deferred sales charges from
share redemptions or, subject to the annual renewal of the plans, future Fund
reimbursements of distribution fees.
Legal fees during the period were for services rendered by former counsel of
the Fund, O'Melveny & Myers. A former trustee was of counsel to that firm.
Certain officers and trustees of the Fund are officers and trustees of the
Adviser, the Distributor, and the shareholder service agent.
NOTE 3--INVESTMENT ACTIVITY
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments and forward commitments, were
$429,931,413 and $428,936,479, respectively.
For federal income tax purposes, the identified cost of investments and for-
eign currency owned at the end of the period was $146,896,514. Net unrealized
and gross depreciation of investments aggregated $1,701,514. There was no
gross unrealized appreciation of investments at the end of the period.
At the end of the period, the Fund held the following forward currency ex-
change contracts and offsetting forward bond commitments.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
FORWARD CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Settlement U.S. Dollar Unrealized Unrealized
Currency (000) Date Value Appreciation (Depreciation)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIAN DOLLAR
15,000 (payable).......................... 06/20/96 $11,958,023 $594,023 $ --
15,000 (receivable)....................... 06/20/96 11,958,023 -- (573,023)
DANISH KRONE
63,000 (payable).......................... 06/20/96 10,700,819 -- (362,488)
DEUTSCHE MARK
23,364 (payable).......................... 06/20/96 17,296,756 -- (803,244)
23,364 (receivable)....................... 06/20/96 17,296,756 663,909 --
16,900 (payable).......................... 06/20/96 11,087,471 -- (415,779)
16,900 (receivable)....................... 06/20/96 11,087,471 201,774 --
FRENCH FRANC
54,742 (payable).......................... 06/20/96 10,598,515 -- (401,485)
54,742 (receivable)....................... 06/20/96 10,598,515 243,533 --
JAPANESE YEN
2,015,910 (payable)....................... 06/20/96 18,718,812 -- (781,188)
NETHERLANDS GUILDER
17,714 (payable).......................... 06/20/96 10,390,189 -- (609,811)
SPANISH PESETA
1,500,000 (payable)....................... 06/20/96 11,643,160 -- (334,800)
SWEDISH KRONA
80,000 (payable).......................... 06/20/96 11,901,339 105,408 --
------------ ---------- -----------
TOTAL FORWARD CURRENCY EXCHANGE CONTRACTS. $165,235,849 $1,808,647 $(4,281,818)
------------ ---------- -----------
</TABLE>
OFFSETTING FORWARD BOND COMMITMENTS
<TABLE>
<CAPTION>
Par Amount U.S. Dollar Value Net Unrealized
(000) Settlement ----------------------- Currency
(Local Currency) Security Date Payable Receivable Appreciation
- -----------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
140,000 AUSTRALIA (Commonwealth)
10.00%, 10/07/15......... 07/29/96 $11,623,939 $11,798,274 $ 69,443
19,700 GERMANY (Treuhandanstalt)
6.75%, 05/13/04.......... 06/20/96 13,886,920 13,594,454 105,084
----------- ----------- --------
$25,510,859 $25,392,728 $174,527
----------- ----------- --------
</TABLE>
NOTE 4--TRUSTEE COMPENSATION
Trustees who are not affiliated with the Adviser are compensated by the Fund
at the annual rate of $840 plus a fee of $24 per day for Board and Committee
meetings attended. During the period, such fees aggregated $19,165.
The Fund has a deferred compensation plan and a defined benefits retirement
plan for its trustees not affiliated with the Adviser. These plans are not
funded, and obligations under the plans will be paid solely out of the Fund's
general account. The Fund will not reserve or set aside funds for the payment
of its obligations under the plans by any form of trust or escrow.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
Under the deferred compensation plan, trustees may elect to defer all or a
portion of their compensation to a later date. Each trustee covered under the
plan elects to earn on the deferred balances an amount equal to the total re-
turn of the Fund or equal to the income earned by the Fund on its short-term
investments.
Under the retirement plan, which became effective in January 1996, benefits
which are based on years of service will be received by the trustee for a ten-
year period. The maximum annual benefit for each trustee is $2,500. Retirement
plan expenses for the period aggregated $5,200. During the calendar year 1996,
the Adviser has agreed to reimburse the Fund for these plan expenses.
NOTE 5--CAPITAL
The Fund offers three classes of shares at their respective net asset values
per share, plus a sales charge which is imposed either at the time of purchase
(Class A) or at the time of redemption on a contingent deferred basis (Class B
and C). All classes of shares have the same rights, except that Class B and C
shares bear the cost of distribution fees and certain other class specific ex-
penses. Class B and C shares automatically convert to Class A shares six years
and ten years after purchase, respectively, subject to certain conditions. Re-
alized and unrealized gains or losses, investment income, and expenses (other
than class specific expenses) are allocated daily to each class of shares
based upon the relative proportion of net assets of each class.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
The Fund has an unlimited number of shares of $.01 par value beneficial in-
terest authorized. Transactions in shares of beneficial interest were as fol-
lows:
<TABLE>
<CAPTION>
Year Ended May 31
-----------------------
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Shares sold
Class A............................................... 863,668 1,027,970
Class B............................................... 1,568,183 2,425,271
Class C............................................... 271,697 390,014
---------- -----------
2,703,548 3,843,255
---------- -----------
Shares issued for distributions reinvested
Class A............................................... 215,647 298,501
Class B............................................... 450,331 637,479
Class C............................................... 57,724 109,085
---------- -----------
723,702 1,045,065
---------- -----------
Shares redeemed
Class A............................................... (2,290,621) (3,117,182)
Class B............................................... (4,655,689) (5,919,339)
Class C............................................... (1,382,547) (1,096,832)
---------- -----------
(8,328,857) (10,133,353)
---------- -----------
Decrease in shares outstanding......................... (4,901,607) (5,245,033)
---------- -----------
</TABLE>
NOTE 6--SUBSEQUENT DIVIDENDS
The Board of Trustees of the Fund declared a dividend of $.046 per share for
Class A shares and $.041 per share for both Class B and Class C shares from
net investment income, payable July 15, 1996 to shareholders of record June
28, 1996.
NOTE 7--FUND REORGANIZATION
On July 21, 1995, the shareholders approved the reorganization of the Fund to
a Delaware Business Trust and the election of fourteen trustees. On August 31,
1995, the reorganization became effective.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
In our opinion, the accompanying statement of assets and liabilities, includ-
ing 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 American Capital
Global Government Securities Fund (the "Fund") at May 31, 1996, and the re-
sults of its operations, the changes in its net assets and the financial high-
lights for each of the periods presented, in conformity with generally
accepted accounting principles. These financial statements and financial high-
lights (hereafter referred to as "financial statements") are the responsibil-
ity of the Fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reason-
able assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence support-
ing the amounts and disclosures in the financial statements, assessing the ac-
counting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at May 31, 1996 by corre-
spondence with the custodian and brokers and the application of alternative
procedures where confirmations from brokers were not received, provide a rea-
sonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
July 16, 1996
22
<PAGE>
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-341-2911 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
23
<PAGE>
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
LINDA HUTTON HEAGY
ROGER HILSMAN
R. CRAIG KENNEDY
DENNIS J. MCDONNELL
DONALD C. MILLER*
JACK E. NELSON
DON G. POWELL
JEROME L. ROBINSON
FERNANDO SISTO*
WAYNE W. WHALEN
WILLIAM S. WOODSIDE
*Co-Chairman of the Board
OFFICERS
DON G. POWELL
President and Chief Executive Officer
DENNIS J. MCDONNELL
Executive Vice President
RONALD A. NYBERG
Vice President and Secretary
EDWARD C. WOOD, III
Vice President and Chief Financial Officer
CURTIS W. MORELL
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN
Treasurer
TANYA M. LODEN
Controller
WILLIAM N. BROWN
PETER W. HAGEL
ROBERT C. PECK, JR.
ALAN T. SACHTLEBEN
PAUL R. WOLKENBERG
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
INVESTMENT SUBADVISER
JOHN GOVETT & CO., LTD.
4 Battle Bridge Lane
London, SEI 24R England
DISTRIBUTOR
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
SHAREHOLDER SERVICE AGENT
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK AND TRUST CO.
225 Franklin Street,
Boston, Massachusetts 02110
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas 77002
(C)Van Kampen American Capital Dis-
tributors, Inc., 1996
All rights reserved.
SM denotes a service mark of
Van Kampen American Capital Distrib-
utors, Inc.
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors un-
less 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. If used for distribution to prospective
investors after 09/30/96, this annual report must be accompanied by a Van
Kampen American Capital Global Government Securities Fund performance data up-
date for the most recent quarter.
24
