<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................... 1
Performance Results......................... 3
Portfolio Management Review................. 4
Portfolio of Investments.................... 6
Statement of Assets and Liabilities......... 7
Statement of Operations..................... 8
Statement of Changes in Net Assets.......... 9
Financial Highlights........................ 10
Notes to Financial Statements............... 13
</TABLE>
GGS SAR 1/97
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO OF DENNIS J. MCDONNELL AND DON G. POWELL]
DENNIS J. MCDONNELL AND DON G. POWELL
January 10, 1997
Dear Shareholder,
As you may already be aware, an agreement was reached in late June for VK/AC
Holding Inc., the parent company of Van Kampen American Capital, Inc., to be
acquired by Morgan Stanley Group Inc. This transaction was completed in Octo-
ber.
The combination of Morgan Stanley's global leadership in investment banking
and asset management and Van Kampen American Capital's reputation for competi-
tive long-term performance and superior investor services has created a world-
class company offering an extensive range of investment opportunities and
expertise.
More importantly, we expect the new ownership arrangement to strengthen our
commitment in pursuing excellence in all aspects of our business. And we expect
very little change in the way your mutual fund account is maintained and serv-
iced. Similarly, the investment practices and policies of your Fund remain un-
changed.
MARKET REVIEW
The early stages of the past fiscal year were characterized by declining
yields in global bond markets, amidst signs of weakness in the U.S. economy.
This trend was reversed in February of 1996 when U.S. non-farm payroll data re-
vealed a strong increase in U.S. employment, threatening an otherwise benign
inflation outlook. The yield on the 30-year U.S. Treasury bond rose to 7.19
percent by mid-June, up from 5.95 percent at the end of 1995. At the close of
the reporting period, the yield on the 30-year Treasury stood at 6.35 percent.
Yields in other global bond markets have fluctuated, but to a lesser degree.
Trading activity in the U.S. market has reflected the changing expectations
concerning U.S. economic growth and inflation, and the resulting monetary pol-
icy stance of the Federal Reserve Board. The U.S. bond market has been particu-
larly preoccupied with employment data as the key to inflation expectations. As
a result, the release of monthly non-farm payroll data has generally caused the
bond market to trade at or close to its monthly highs or lows, depending on the
tone of the report.
The U.S. is at a more mature phase of the business cycle than the European
economies, with the exception of the U.K. Economic activity and inflation pres-
sures generally remained subdued in continental Europe. During the third quar-
ter of 1996, yields on ten-year German government bonds declined to 6.1
percent, down from 6.5 percent, and have subsequently traded below 6 percent.
The major focus in continental Europe in recent months has been the pursuit
of tight fiscal policies, as governments have sought to ensure their eligibil-
ity for the European Monetary Union (EMU) in 1999. Slow economic activity, de-
clining inflation, fiscal prudence,
1 Continued on page two
<PAGE>
and optimism concerning EMU membership have caused yields in the higher-yield-
ing European markets to decline.
The U.S. dollar has strengthened against key foreign currencies, reflecting
relative growth rates, a very strong U.S. stock market, and--to some extent--
increasing oil prices.
ECONOMIC OUTLOOK
While we expect inflation to remain modest, factors such as tighter labor
market conditions and increasing average hourly earnings could pose a threat to
the inflation outlook in the U.S. market.
In European markets, continued skepticism surrounding the ability of certain
economies to adhere to EMU standards could cause yield spreads to widen. Tight
fiscal policies and the need to stimulate economic activity throughout Europe
will add pressure to keep yields in check. In Japan, the fragility of the bank-
ing and financial sectors has held Japanese interest rates at very low levels,
where they could likely remain into 1997.
As always, you should work with your investment representative to assess
global market opportunities and determine an appropriate diversification strat-
egy for your portfolio. We appreciate your continued confidence in your Fund's
portfolio management team, and look forward to capitalizing on the combination
of the talents and resources of Morgan Stanley and 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 NOVEMBER 30, 1996
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
TOTAL RETURNS
<S> <C> <C> <C>
Six-month total return based on NAV/1/............... 6.91% 6.48% 6.39%
Six-month total return/2/............................ 1.89% 2.48% 5.39%
One-year total return/2/............................. 0.56% 0.76% 3.76%
Five-year average annual total return/2/............. 4.70% 4.78% N/A
Life-of-Fund average annual total return/2/.......... 4.59% 4.88% 4.89%
Commencement Date.................................... 11/15/91 11/15/91 04/12/93
DISTRIBUTION RATE AND YIELD
Distribution rate/3/................................. 6.14% 5.69% 5.73%
SEC Yield/4/......................................... 3.45% 3.44% 3.44%
</TABLE>
N/A-Not Applicable.
/1/Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge(4.75% for A shares) or contingent
deferred sales charge for early withdrawal (4% for B shares and 1% for C
shares).
/2/Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (A shares) or
contingent deferred sales charge for early withdrawal (B and C shares).
/3/Distribution rate represents the monthly annualized distributions of the
Fund at the end of the period and not the earnings of the Fund.
/4/SEC Yield is a standardized calculation prescribed by the Securities and
Exchange Commission for determining the amount of net income a portfolio should
theoretically generate for the 30-day period ending November 30, 1996.
See the Fund Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. Fund shares, when redeemed, may be worth more
or less than their original cost.
3
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
The following is an interview with the management team of the Van Kampen
American Capital Global Government Securities Fund. The Fund is co-managed by
portfolio manager John R. Reynoldson, Van Kampen American Capital (U.S.
holdings), portfolio manager Jonathan Hourigan, John Govett & Co. Limited
(international holdings), and Peter W. Hegel, Van Kampen American Capital,
executive vice president for fixed income investments.
Q HOW WOULD YOU CHARACTERIZE THE MARKET CONDITIONS IN WHICH THE FUND OPER-
ATED DURING THE SIX MONTHS ENDED NOVEMBER 30, 1996?
A During the period, there were several prevailing trends in the global
marketplace:
. Most countries experienced slow to moderate economic growth. As a result,
inflation generally remained muted worldwide, although tight labor market
conditions in the United States threatened to cause a resurgence of inflation
in the United States.
. Due to a lack of inflationary pressure, interest rates fell or remained
steady in most countries. For example, after having increased during the
first half of 1996, yields on U.S. bonds stabilized in the third quarter and
subsequently declined as inflation expectations moderated. Some countries
that experienced a decline in their 10-year bond yields were:
<TABLE>
<CAPTION>
NOVEMBER 30, 1996 MAY 31, 1996
<S> <C>
New Zealand............................... 7.04% ..................... 8.64%
Spain..................................... 7.01% ..................... 9.16%
United Kingdom............................ 7.35% ..................... 8.17%
United States............................. 6.05% ..................... 6.80%
Japan..................................... 2.62% ..................... 3.28%
</TABLE>
. As interest rates fell, bond markets rallied worldwide. Italy, Canada, Spain,
the United Kingdom, and Australia all experienced substantial rallies,
producing six-month total returns of 28.07 percent, 21.61 percent, 21.50
percent, 20.89 percent, and 19.34 percent respectively (returns are U.S.
dollar adjusted).
Q WHAT SIGNIFICANT INVESTMENT TECHNIQUES AND STRATEGIES WERE USED TO PUR-
SUE THE FUND'S INVESTMENT OBJECTIVES?
A Our investment strategy consists of a top-down asset allocation process
in which bond and currency market exposure are analyzed and managed
separately. The Fund's country allocations, compared to the J.P. Morgan Global
Government Bond Index, were as follows:
. For most of the period, the Fund maintained a neutral position in the U.S.
bond market. However, the domestic bond market rallied significantly during
the period, and we used this opportunity to realize some gains on our U.S.
holdings.
. In Europe, the Fund's exposure was increasingly overweighted in the major
core markets.
4
<PAGE>
. The Fund was underweighted in the Japanese market, as yields remained
historically low throughout the period.
Q HOW HAS THE FUND PERFORMED DURING THE REPORTING PERIOD?
A The Fund achieved a six-month total return of 6.91 percent/1/ (Class A
shares at net asset value). Over the same period, the J.P. Morgan Global
Government Bond Index achieved a total return of 7.29 percent. Please keep in
mind that this is an unmanaged index used as a benchmark for general global
equity funds. It does not reflect any commissions or fees that would be paid by
an investor purchasing the securities it represents. Please refer to the chart
on page three for additional Fund performance results.
Q WHAT IS YOUR OUTLOOK FOR THE MONTHS AHEAD?
A We expect the global economy to experience another year of moderate
growth accompanied by modest inflationary pressure. In fact, bond
markets have already moved to reflect these expectations, and bond yields have
declined as a result. We are currently favoring a more cautious investment
strategy, anticipating that the Fund's overall exposure to interest rates going
forward will be underweighted compared to the J.P. Morgan Global Government
Bond Index.
/s/ Peter W. Hegel /s/ John R. Reynoldson /s/ Jonathan Hourigan
Peter W. Hegel John R. Reynoldson Jonathan Hourigan
Van Kampen American Capital Van Kampen American Capital John Govett & Co.,
Asset Management, Inc. Asset Management, Inc. Ltd.
Executive Vice President Portfolio Manager Portfolio Manager
Fixed Income Investments
5
<PAGE>
PORTFOLIO OF INVESTMENTS
November 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UNITED STATES GOVERNMENT &
GOVERNMENT AGENCY
OBLIGATIONS 95.7%
$ 7,298 Government National
Mortgage Association
Pools..................... 8.000% 11/15/00 to 01/15/26 $ 7,526,222
111,500 U.S. Treasury Notes (b)... 9.250 08/15/98 118,120,870
------------
TOTAL UNITED STATES GOVERNMENT &
GOVERNMENT AGENCY OBLIGATIONS.......................... 125,647,092
------------
FORWARD PURCHASE COMMITMENTS 65.1%
90,000 Austria (Republic of),
settlement 04/07/97....... 6.250 05/31/06 8,544,266
13,000 Denmark (Kingdom of),
settlement 04/04/97....... 8.000 11/15/01 2,434,205
8,000 Federal Home Loan Mortgage
Corp., settlement
01/14/97.................. 7.500 01/01/99 8,093,760
16,500 Germany (Treuhandanstalt),
settlement 02/21/97....... 6.750 05/13/04 11,510,954
24,000 Netherlands (Government
of), settlement 04/04/97.. 8.500 03/15/01 16,025,982
4,750 United Kingdom, settlement
04/07/97.................. 7.500 12/07/06 7,989,072
31,250 U.S. Treasury Notes,
settlement 01/14/97....... 5.750 08/15/03 30,920,000
------------
TOTAL FORWARD PURCHASE COMMITMENTS..................... 85,518,239
------------
TOTAL INVESTMENTS 160.8%
(Cost $209,140,899) (a)........................................ 211,165,331
FOREIGN CURRENCY, VARIOUS DENOMINATIONS 1.0%
(Cost $1,286,695) (a).......................................... 1,281,988
LIABILITIES IN EXCESS OF NET ASSETS (61.8%).................... (81,148,252)
------------
NET ASSETS 100.0%.............................................. $131,299,067
------------
</TABLE>
(a) At November 30, 1996, for federal income tax purposes, cost is
$210,427,594, the aggregate gross unrealized appreciation is $3,036,915,
and the aggregate gross unrealized depreciation is $1,445,234, resulting in
net unrealized appreciation on investments, forward contracts, foreign cur-
rency and foreign currency translation of other assets and liabilities of
$1,591,681.
(b) Assets segregated as collateral for open forward commitments.
See Notes to Financial Statements
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $209,140,899) (Note 1)........ $211,165,331
Foreign currency, at market value (Cost $1,286,695).............. 1,281,988
Receivables:
Interest........................................................ 3,099,439
Fund Shares Sold................................................ 63,722
Forward Currency Contracts and Closed but Unsettled Forward
Commitments...................................................... 439,698
Other............................................................ 99
------------
Total Assets.................................................... 216,050,277
------------
LIABILITIES:
Payables:
Securities Purchased............................................ 83,780,397
Fund Shares Repurchased......................................... 359,108
Income Distributions............................................ 263,101
Distributor and Affiliates (Notes 2 and 6)...................... 119,708
Investment Advisory Fee (Note 2)................................ 81,625
Custodian Bank.................................................. 50,734
Accrued Expenses................................................. 70,110
Deferred Compensation and Retirement Plans (Note 2).............. 26,427
------------
Total Liabilities............................................... 84,751,210
------------
NET ASSETS....................................................... $131,299,067
------------
NET ASSETS CONSIST OF:
Capital (Note 3)................................................. $159,835,874
Net Unrealized Appreciation on Securities........................ 1,591,681
Accumulated Distributions in Excess of Net Investment Income
(Note 1)......................................................... (171,737)
Accumulated Net Realized Loss on Securities...................... (29,956,751)
------------
NET ASSETS....................................................... $131,299,067
------------
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net
assets of $33,380,979 and 4,076,639 shares of beneficial
interest issued and outstanding)................................ $ 8.19
Maximum sales charge (4.75%* of offering price)................. .41
------------
Maximum offering price to public................................ $ 8.60
------------
Class B Shares:
Net asset value and offering price per share (Based on net
assets of $89,611,070 and 10,887,014 shares of beneficial
interest issued and outstanding)................................ $ 8.23
------------
Class C Shares:
Net asset value and offering price per share (Based on net
assets of $8,307,018 and 1,016,897 shares of beneficial interest
issued and outstanding)......................................... $ 8.17
------------
</TABLE>
*On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
7
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended November 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................................... $5,767,454
----------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes A, B
and C of $43,477, $465,802 and $44,849, respectively) (Note 6).... 554,128
Investment Advisory Fee (Note 2)................................... 513,420
Shareholder Services (Note 2)...................................... 215,870
Legal (Note 2)..................................................... 8,900
Trustees Fees and Expenses (Note 2)................................ 4,535
Amortization of Organizational Expenses (Note 1)................... 1,070
Other.............................................................. 167,141
----------
Total Expenses.................................................... 1,465,064
Less Expenses Reimbursed (Note 2)................................. 7,800
----------
Net Expenses...................................................... 1,457,264
----------
NET INVESTMENT INCOME.............................................. $4,310,190
----------
REALIZED AND UNREALIZED GAIN/LOSS ON SECURITIES:
Realized Gain/Loss on Securities:
Investments....................................................... $ (471,309)
Futures........................................................... (76,508)
Forward Contracts................................................. (726,039)
Foreign Currency Transaction...................................... 488,928
----------
Net Realized Loss on Securities.................................... (784,928)
----------
Unrealized Appreciation/Depreciation on Securities:
Beginning of the Period........................................... (3,506,613)
----------
End of the Period:
Investments....................................................... 2,024,432
Forward Contracts................................................. (567,430)
Foreign Currency Translation...................................... 134,679
----------
1,591,681
----------
Net Unrealized Appreciation on Securities During the Period........ 5,098,294
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................... $4,313,366
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS......................... $8,623,556
----------
</TABLE>
See Notes to Financial Statements
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended November 30, 1996
and the Year Ended May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
November 30, 1996 May 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income......................... $ 4,310,190 $ 10,207,114
Net Realized Gain/Loss on Securities.......... (784,928) 543,929
Net Unrealized Appreciation/Depreciation on
Securities During the Period................. 5,098,294 (6,367,840)
------------ ------------
Change in Net Assets from Operations.......... 8,623,556 4,383,203
Distributions from Net Investment Income*..... (4,126,673) (10,180,192)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES.................................... 4,496,883 (5,796,989)
------------ ------------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold..................... 5,602,968 22,142,711
Net Asset Value of Shares Issued Through
Dividend Reinvestment......................... 2,511,395 5,934,913
Cost of Shares Repurchased.................... (24,884,918) (68,487,512)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS.................................. (16,770,555) (40,409,888)
------------ ------------
TOTAL DECREASE IN NET ASSETS.................. (12,273,672) (46,206,877)
NET ASSETS:
Beginning of the Period....................... 143,572,739 189,779,616
------------ ------------
End of the Period (Including undistributed net
investment income of $(171,737) and
$(355,254), respectively).................... $131,299,067 $143,572,739
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended
*Distributions by Class November 30, 1996 May 31, 1996
---------------------------------------------------------------------------
<S> <C> <C>
Distributions from Net Investment Income
(Note 1):
Class A Shares......................... $(1,147,580) $ (2,860,078)
Class B Shares......................... (2,716,261) (6,497,549)
Class C Shares......................... (262,832) (822,565)
----------- ------------
$(4,126,673) $(10,180,192)
----------- ------------
</TABLE>
See Notes to Financial Statements
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended May 31,
November 30, ------------------------------
Class A Shares 1996 1996 1995 1994 1993 (a)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period...................... $ 7.92 $8.24 $8.26 $ 9.01 $9.07
------ ----- ----- ------ -----
Net Investment Income.......... .280 .56 .60 .78 .845
Net Realized and Unrealized
Gain/Loss on Securities....... .258 (.328) (.016) (.5715) (.123)
------ ----- ----- ------ -----
Total from Investment
Operations...................... .538 .232 .584 .2085 .722
------ ----- ----- ------ -----
Less:
Distributions from and in
Excess of Net
Investment Income (Note 1).... .270 .522 .604 .726 .782
Distributions from and in
Excess of Net
Realized Gain on Securities
(Note 1)...................... -0- -0- -0- .2325 -0-
------ ----- ----- ------ -----
Total Distributions............. .270 .552 .604 .9585 .782
------ ----- ----- ------ -----
Net Asset Value, End of the
Period......................... $8.188 $7.92 $8.24 $ 8.26 $9.01
------ ----- ----- ------ -----
Total Return* (b)............... 6.91%** 2.81% 7.52% 1.89% 8.47%
Net Assets at End of the Period
(In millions).................. $ 33.4 $36.4 $47.9 $ 62.8 $36.1
Ratio of Expenses to Average Net
Assets*........................ 1.56% 1.51% 1.42% 1.45% 1.52%
Ratio of Net Investment Income
to
Average Net Assets*............ 6.80% 6.66% 7.18% 8.12% 9.33%
Portfolio Turnover.............. 103%** 239% 209% 236% 301%
*If certain expenses had not been reimbursed by VKAC, total return would have
been lower and the ratios would have been as follows:
Ratio of Expenses to Average Net
Assets......................... 1.58% 1.52% N/A N/A N/A
Ratio of Net Investment Income
to
Average Net Assets............. 6.79% 6.65% N/A N/A N/A
</TABLE>
**Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
N/A = Not Applicable
See Notes to Financial Statements
10
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended May 31,
November 30, --------------------------------
Class B Shares 1996 1996 1995 1994 1993 (a)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period.................... $ 7.96 $8.28 $ 8.30 $ 9.04 $9.09
------ ----- ------ ------- -----
Net Investment Income........ .246 .49 .53 .69 .78
Net Realized and Unrealized
Gain/Loss on Securities..... .265 (.318) (.006) (.5435) (.12)
------ ----- ------ ------- -----
Total from Investment
Operations.................... .511 .172 .524 .1465 .66
------ ----- ------ ------- -----
Less:
Distributions from and in
Excess of Net
Investment Income (Note 1).. .240 .492 .544 .654 .71
Distributions from and in
Excess of Net
Realized Gain on Securities
(Note 1).................... -0- -0- -0- .2325 -0-
------ ----- ------ ------- -----
Total Distributions........... .240 .492 .544 .8865 .71
------ ----- ------ ------- -----
Net Asset Value, End of the
Period........................ $8.231 $7.96 $ 8.28 $ 8.30 $9.04
------ ----- ------ ------- -----
Total Return* (b)............. 6.48%** 2.06% 6.69% 1.07% 7.95%
Net Assets at End of the
Period (In millions).......... $ 89.6 $97.7 $123.4 $ 147.5 $56.7
Ratio of Expenses to Average
Net Assets*.................. 2.32% 2.27% 2.18% 2.22% 2.19%
Ratio of Net Investment Income
to Average Net Assets*....... 6.05% 5.91% 6.41% 7.30% 8.66%
Portfolio Turnover............ 103%** 239% 209% 236% 301%
*If certain expenses had not been reimbursed by VKAC, total return would have
been lower and the ratios would have been as follows:
Ratio of Expenses to Average
Net Assets................... 2.33% 2.27% N/A N/A N/A
Ratio of Net Investment Income
to
Average Net Assets........... 6.04% 5.91% N/A N/A N/A
</TABLE>
**Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
N/A = Not Applicable
See Notes to Financial Statements
11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 12,
1993
(Commencement
Six Months of
Ended Year Ended May 31, Distribution)
November 30, ---------------------- to May 31,
Class C Shares 1996 1996 1995 1994 1993 (a)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period. $ 7.91 $ 8.22 $ 8.25 $ 8.99 $ 9.00
------ ------ ------ ------- ------
Net Investment Income.. .227 .46 .51 .63 .095
Net Realized and
Unrealized
Gain/Loss on
Securities............ .272 (.278) .004 (.4835) .011
------ ------ ------ ------- ------
Total from Investment
Operations.............. .499 .182 .514 .1465 .106
------ ------ ------ ------- ------
Less:
Distributions from and
in Excess of Net
Investment Income
(Note 1).............. .240 .492 .544 .654 .116
Distributions from and
in Excess of Net
Realized Gain on
Securities (Note 1)... -0- -0- -0- .2325 -0-
------ ------ ------ ------- ------
Total Distributions..... .240 .492 .544 .8865 .116
------ ------ ------ ------- ------
Net Asset Value, End of
the Period.............. $8.169 $ 7.91 $ 8.22 $ 8.25 $ 8.99
------ ------ ------ ------- ------
Total Return (b)........ 6.39%** 2.20% 6.60% 1.19% 8.78%**
Net Assets at End of the
Period (In millions).... $ 8.3 9.5% $ 18.5 $ 23.5 $ 1.4
Ratio of Expenses to
Average Net Assets*.... 2.32% 2.27% 2.18% 2.22% 2.63%
Ratio of Net Investment
Income to
Average Net Assets*.... 6.05% 5.91% 6.42% 7.13% 10.06%
Portfolio Turnover...... 103%** 239% 209% 236% 301%
*If certain expenses had not been reimbursed by VKAC, total return would have
been lower and the ratios would have been as follows:
Ratio of Expenses to
Average Net Assets..... 2.33% 2.27% N/A N/A N/A
Ratio of Net Investment
Income to
Average Net Assets..... 6.03% 5.91% N/A N/A N/A
</TABLE>
**Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
N/A=Not Applicable
See Notes to Financial Statements
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Global Government Securities Fund (the "Fund") is
organized as a series of Van Kampen American Capital World Portfolio Series
Trust, a Delaware business trust, and is registered as a non-diversified open-
end management investment company under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek total return through a
managed balance of foreign and domestic debt securities. The Fund commenced
investment operations on November 15, 1991. The distribution of the Fund's
Class C shares commenced on April 12, 1993.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The prep-
aration of financial statements in conformity with generally accepted account-
ing principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of con-
tingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION-Investments are stated at values using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accor-
dance with procedures established in good faith by the Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are valued
at amortized cost.
B. SECURITY TRANSACTIONS-Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements which are short-term invest-
ments in which the Fund acquires ownership of a debt security and the seller
agrees to repurchase the security at a future time and specified price. The
Fund may invest independently in repurchase agreements or transfer uninvested
cash balances into a pooled cash account along with other investment companies
advised by Van Kampen American Capital Asset Management Inc. (the "Adviser")
or its affiliates, the daily aggregate of which is invested in repurchase
agreements. Repurchase agreements are 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.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
C. INVESTMENT INCOME-Interest income is recorded on an accrual basis. The Fund
accounts for discounts and premiums on the same basis as is used for federal
income tax reporting. Accordingly, original issue discounts on debt securities
purchased are amortized over the life of the security. Premiums on debt secu-
rities are not amortized. Market discounts are recognized at the time of sale
as realized gains for book purposes and ordinary income for tax purposes.
D. CURRENCY TRANSLATION-Assets and liabilities denominated in foreign curren-
cies and commitments under forward currency contracts are translated into U.S.
dollars based on quoted exchange rates as of noon Eastern Time. Purchases and
sales of portfolio securities are translated at the rate of exchange prevail-
ing when such securities were acquired or sold. Income and expenses are trans-
lated at rates prevailing when accrued.
E. ORGANIZATIONAL EXPENSES-The Fund reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred
in connection with the Fund's organization in the amount of $13,000. These
costs were amortized on a straight line basis over the 60 month period ended
November, 1996.
F. FEDERAL INCOME TAXES-It is the Fund's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment compa-
nies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following
the year of the loss and offset such losses against any future realized capi-
tal gains. At May 30, 1996, the Fund had an accumulated capital loss
carryforward for tax purposes of $29,029,708, which will expire between May
31, 2003 and May 31, 2004. Net realized gains or losses may differ for finan-
cial and tax reporting purposes primarily as a result of post October 31
losses which are not recognized for tax purposes until the first day of the
following fiscal year.
G. DISTRIBUTION OF INCOME AND GAINS-The Fund declares daily and pays monthly
dividends from net investment income. Net income investment for federal income
tax purposes includes gains and losses realized on transactions in foreign
currencies. These realized gains and losses are included as net realized gains
or losses for financial reporting purposes.
Net realized gains on securities, if any, are distributed annually.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly. 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. In-
vestment advisory 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 in-
vestment advisory fee to the Subadviser.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.
For the six months ended November 30, 1996, the Fund recognized expenses of
approximately $13,200 representing VKAC's cost of providing accounting serv-
ices to the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months
ended November 30, 1996, the Fund recognized expenses of approximately
$166,900, representing ACCESS' cost of providing transfer agency and share-
holder services plus a profit.
Additionally, for the six months ended November 30, 1996, the Fund paid VKAC
approximately $17,900 related to the direct cost of consolidating the VKAC
open-end fund complex. Payment was contingent upon the realization by the Fund
of cost efficiencies in shareholder services resulting from the consolidation.
Certain officers and trustees of the Fund are also officers and directors of
VKAC. The Fund does not compensate its officers or trustees who are officers
of VKAC.
The Fund has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer
all or a portion of their compensation to a later date. The retirement plan
covers those trustees who are not officers of VKAC.
At November 30, 1996, VKAC owned 106, 53 and 56 shares of Classes A, B and
C, respectively.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of common shares, Classes A, B and C,
each with a par value of $.01 per share. There are an unlimited number of
shares of each class authorized.
At November 30, 1996, capital aggregated $41,950,728, $106,582,978 and
$11,302,168 for Classes A, B and C, respectively. For the six months ended No-
vember 30, 1996, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A............................................. 250,294 $ 2,011,335
Class B............................................. 431,684 3,457,992
Class C............................................. 16,674 133,641
---------- ------------
Total Sales.......................................... 698,652 $ 5,602,968
---------- ------------
Dividend Reinvestment:
Class A............................................. 90,439 $ 726,555
Class B............................................. 203,833 1,645,918
Class C............................................. 17,334 138,922
---------- ------------
Total Dividend Reinvestment.......................... 311,606 $ 2,511,395
---------- ------------
Repurchases:
Class A............................................. (859,462) $ (6,900,236)
Class B............................................. (2,010,214) (16,229,876)
Class C............................................. (218,808) (1,754,806)
---------- ------------
Total Repurchases.................................... (3,088,484) $(24,884,918)
---------- ------------
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
At May 31, 1996, capital aggregated $46,113,074, $117,708,944 and
$12,784,411 for Classes A, B and C, respectively. For the year ended May 31,
1996, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.............................................. 863,668 $ 7,095,429
Class B.............................................. 1,568,183 12,820,664
Class C.............................................. 271,697 2,226,618
---------- ------------
Total Sales........................................... 2,703,548 $ 22,142,711
---------- ------------
Dividend Reinvestment:
Class A.............................................. 215,647 $ 1,763,615
Class B.............................................. 450,331 3,699,958
Class C.............................................. 57,724 471,340
---------- ------------
Total Dividend Reinvestment........................... 723,702 $ 5,934,913
---------- ------------
Repurchases:
Class A.............................................. (2,290,621) $(18,784,532)
Class B.............................................. (4,655,689) (38,363,849)
Class C.............................................. (1,382,547) (11,339,131)
---------- ------------
Total Repurchases..................................... (8,328,857) $(68,487,512)
---------- ------------
</TABLE>
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC will be imposed
on most redemptions made within five years of the purchase for Class B and one
year of the purchase for Class C as detailed in the following schedule. The
Class B and C shares bear the expense of their respective deferred sales ar-
rangements, including higher distribution and service fees and incremental
transfer agency costs.
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED SALES
CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C>
First........................................................... 4.00% 1.00%
Second.......................................................... 4.00% None
Third........................................................... 3.00% None
Fourth.......................................................... 2.50% None
Fifth........................................................... 1.50% None
Sixth and Thereafter............................................ None None
</TABLE>
For the six months ended November 30, 1996, VKAC, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of approxi-
mately $1,300 and CDSC on the redeemed shares of approximately $212,100. Sales
charges do not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments and forward commitments, were
$136,870,664 and $147,275,508, respectively.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
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, manage the portfolio's effective yield, foreign currency expo-
sure, or generate potential gain. All of the Fund's portfolio holdings, in-
cluding derivative instruments, are market to market each day with the change
in value reflected in the unrealized appreciation/depreciation on securities.
Upon disposition, a realized gain or loss is recognized accordingly.
FORWARD COMMITMENTS
The Fund trades certain securities under the terms of forward commitments,
whereby the settlement occurs at a specific future date. Forward commitments
are privately negotiated transactions between the Fund and dealers. While for-
ward commitments are outstanding, the Fund maintains sufficient collateral of
cash or securities in a segregated account with its custodian. The forward
purchase commitments are included in the portfolio of investments and are
marked to market on a daily basis with changes in value reflected as a compo-
nent of unrealized appreciation on investments.
CLOSED BUT UNSETTLED FORWARD COMMITMENTS
In certain situations, the Fund has entered into closing transactions for
outstanding forward commitments prior to settlement of the obligation. In do-
ing so, the Fund realizes a gain or loss on the transaction at the time the
forward commitment is closed. However, settlement of both the purchase and
sale is still scheduled to occur in the denominated foreign currency at a fu-
ture date. The net difference in the amount of foreign currency on the trade
is marked to market daily with any fluctuation included as a component of
unrealized gain/loss on forward contracts.
The following closed but unsettled forward transactions were outstanding at
November 30, 1996:
<TABLE>
<CAPTION>
Unrealized
Gain/Loss
Local Currency on Net US$
------------------------- Currency Net Receivable
Description/Currency Receivable Payable Difference (Payable)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRIA (REPUBLIC OF)--
SCHILLING
(95,000,000 par, 6.250%,
05/31/06)................ 100,519,236 95,612,899 $ 294,521 $453,388
UNITED KINGDOM--POUND
(4,850,000 par, 7.50%,
12/07/06)................ 4,845,017 4,703,527 (610,381) 237,880
--------- --------
$(315,860) $691,268
--------- --------
</TABLE>
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
FORWARD CURRENCY CONTRACTS
A forward currency contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated forward rate. Upon the settlement of
the contract, a realized gain or loss is recognized and is included as a com-
ponent of realized gain/loss on forward contracts.
The following forward currency contracts were outstanding as of November 30,
1996:
<TABLE>
<CAPTION>
UNREALIZED
ORIGINAL CURRENT APPRECIATION/
DESCRIPTION VALUE VALUE DEPRECIATION
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
BUYS TO OPEN
Austrian Schilling,
93,400,000 expiring 12/02/96........... $ 9,042,502 $ 8,631,952 $ (410,550)
93,000,000 expiring 03/27/97........... 8,683,798 8,650,358 (33,440)
German Mark
16,900,000 expiring 02/21/97........... 11,067,452 11,044,084 (23,368)
Danish Krone
15,050,000 expiring 02/21/97........... 2,567,076 2,564,540 (2,536)
British Pound Sterling
3,900,000 expiring 12/02/96............ 6,020,625 6,556,517 535,892
3,900,000 expiring 03/27/97............ 6,529,770 6,537,843 8,073
Japanese Yen,
1,715,910,000 expiring 02/21/97........ 15,566,634 15,242,293 (324,341)
Netherlands Guilder
23,300,000 expiring 02/21/97........... 13,612,994 13,588,644 (24,350)
SELLS TO OPEN
Austrian Schilling,
93,400,000 expiring 12/02/96........... 8,662,586 8,630,967 31,619
British Pound Sterling
3,900,000 expiring 12/02/96............ 6,548,100 6,556,826 (8,726)
Danish Krone
550,000 expiring 02/21/97.............. 93,878 93,721 157
----------
$(251,570)
----------
</TABLE>
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
6. DISTRIBUTION AND SERVICE PLANS
The Fund and its shareholders have adopted a distribution plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940 and a service plan (col-
lectively the "Plans"). The Plans govern payments for the distribution of the
Fund's shares, ongoing shareholder services and maintenance of shareholder ac-
counts.
Annual fees under the Plans of up to .25% for Class A and 1.00% each for
Class B and Class C shares are accrued daily. Included in these fees for the
six months ended November 30, 1996, are payments to VKAC of approximately
$112,700.
21
<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
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.
22
<PAGE>
RESULTS OF SHAREHOLDER VOTES
A Special Meeting of Shareholders of the Fund was held on October 25, 1996
where shareholders voted on a new investment advisory agreement, new
subadvisory agreements, changes to investment policies and the ratification of
Price Waterhouse LLP as independent public accountants. With regard to the ap-
proval of a new investment advisory agreement between Van Kampen American Cap-
ital Asset Management, Inc. and the Fund, 11,366,934 shares voted for the
proposal, 215,895 shares voted against and 814,873 shares abstained. With re-
gard to the approval of an investment subadvisory agreement between the Fund
and Morgan Stanley Asset Management, Inc., 11,358,098 shares voted for the
proposal, 213,758 shares voted against and 825,846 shares abstained. With re-
gard to the approval of an interim investment subadvisory agreement between
the Fund and John Govett & Co. Limited, 11,307,364 shares voted in favor,
248,633 shares voted against and 841,704 shares abstained. With regard to the
approval of certain changes to the Fund's fundamental investment policies with
respect to investment in other investment companies, 7,988,731 shares voted
for the proposal, 291,182 shares voted against and 895,031 shares abstained.
With regard to the ratification of Price Waterhouse LLP as independent public
accountants for the Fund, 11,495,026 shares voted for the proposal, 137,548
shares voted against and 765,127 shares abstained.
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 - Co-Chairman
JACK E. NELSON
JEROME L. ROBINSON
FERNANDO SISTO - Co-Chairman
WAYNE W. WHALEN*
WILLIAM S. WOODSIDE
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
ALAN T. SACHTLEBEN*
PAUL R. WOLKENBERG*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
INVESTMENT SUBADVISER
JOHN GOVETT & CO., LTD.
Shackleton House
4 Battle Bridge Lane
London, SE1 2HR England
DISTRIBUTOR
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
SHAREHOLDER SERVICING AGENT
ACCESS INVESTOR
SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas 77002
*"Interested" persons of the Fund, as defined in the Investment Company Act of
1940.
(C)Van Kampen American Capital Distributors, Inc., 1997
All rights reserved.
(SM)denotes a service mark of Van Kampen American Capital Distributors, Inc.
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors 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.
24
