<PAGE>
VAN KAMPEN AMERICAN CAPITAL
GLOBAL EQUITY FUND
SEMI-ANNUAL REPORT
NOVEMBER 30, 1997
LOGO
A Wealth of Knowledge "A Knowledge of Wealth"
VAN KAMPEN AMERICAN CAPITAL
<PAGE>
Table of Contents
Letter to Shareholders 1
Performance Results 4
Portfolio Management Review 5
Portfolio Highlights 7
Portfolio of Investments 8
Statement of Assets and Liabilities 45
Statement of Operations 46
Statement of Changes in Net Assets 47
Financial Highlights 48
Notes to Financial Statements 51
<PAGE>
Letter to Shareholders
January 5, 1998
Dear Shareholder,
On August 4, 1997, the announcement of exchange privileges between Van
Kampen American Capital and Morgan Stanley funds opened the door to even greater
investment opportunities. We are proud to offer an expanded family of mutual
funds covering virtually every market and continent. In our view, the rapid
appreciation of U.S. stock prices in recent years has created a need for
investors to examine their portfolios carefully to ensure proper diversification
among domestic and foreign investments. The Morgan Stanley funds, with their
emphasis on global markets, can be valuable tools for accomplishing this
diversification.
[ARTWORK APPEARS HERE]
Dennis J. McDonnell and Don G. Powell
ECONOMIC OVERVIEW
After years of breakneck growth and rapid expansion of credit, Asia
experienced a rare economic setback during the reporting period. The region's
problems first became evident in July, when Thailand responded to a growing
deficit in its current account (the broadest measure of a country's trade in
goods and services) by devaluing its currency by nearly 40 percent. The Thai
government's move set in motion a chain reaction of devaluations in other
countries, which ultimately severed much of the region's traditional currency
link to the U.S. dollar. At the height of the crisis in October, the Hong Kong
dollar, pegged to the American dollar since 1983, came under attack by
speculators.
While Hong Kong officials ultimately used their large reserves to defend
the currency and retain the U.S. dollar peg, Asia's turmoil was far from
finished. The crisis next spread to South Korea, where that country's ailing
financial sector required a massive infusion of liquidity from the International
Monetary Fund to stave off widespread bankruptcies. As the reporting period
ended, IMF and Korean officials were negotiating the precise terms and amount of
the bailout.
Compared to Asia, economic conditions in Europe and the United States were
healthy and tranquil. Europe continued to enjoy solid economic growth with low
inflation. The relatively tight fiscal policies required to accomplish a move to
a single currency, however, have left Europe's unemployment rate in double
digits.
Strong growth, low inflation and robust job creation continued to
characterize the U.S. economic environment during the reporting period. During
the first quarter of 1997, the nation's output of goods and services grew at its
fastest pace in nine years before slowing only modestly over the subsequent two
quarters. Meanwhile, unemployment fell to 4.6 percent of the workforce in
November, its lowest level since October 1973.
Despite the thriving labor market and the rapid pace of economic activity,
there was little evidence of inflation. Wholesale prices actually fell during
each of the first seven months of 1997, the longest stretch of consecutive
monthly declines in history. At the consumer level, prices increased by 1.8
percent over the 12 months through November.
1 Continued on page two
<PAGE>
Several factors contributed to keeping inflation in check. A strong rally
in the U.S. dollar helped limit price increases on imported goods. Also, a sharp
acceleration in productivity gains allowed employers to offset the cost of
higher worker salaries without significantly raising prices.
MARKET REVIEW
Global equity markets experienced a sharp increase in volatility during the
later stages of the reporting period. In particular, the currency crisis that
roiled most Southeast Asian economies spilled over into the region's equity
markets, creating an avalanche of selling that ultimately spread to the United
States. From its peak in early August, the Dow Jones Industrial Average fell by
nearly 16 percent by late October before rebounding in November.
Despite the shifting global economic conditions, U.S. stocks continued to
post solid returns. The Morgan Stanley Capital International (MSCI) U.S. Index
gained 13.7 percent in the six months ended in November. Within the U.S. market,
investors poured money into small-capitalization stocks, attracted by the
sector's favorable relative valuations and indications that the strong U.S.
dollar could undermine the earnings of large multinational corporations.
The Asian crisis took a larger toll on foreign equity markets, as evidenced
by the MSCI EAFE Index falling by 4.33 percent in the six-month period.
Predictably, the biggest declines occurred in the Pacific Rim nations. The MSCI
Far East Index lost 23.4 percent during the same six-month period, while the
MSCI Emerging Markets Far East Index fell 45.5 percent. Within Asia itself, no
equity market emerged from the crisis unscathed; MSCI Indices in Korea,
Indonesia, Malaysia, Thailand, and the Philippines each fell by more than 50
percent.
Despite the strong headwinds from Asia, European stocks managed to gain
ground. In the six months ended in November, the MSCI Europe Index climbed 9.8
percent, led by double-digit advances in Denmark, Finland, Italy, Sweden, and
Switzerland. The generally solid performances by U.S. and European equities
helped generate a 4.1 percent total return for the MSCI World Index during the
reporting period.
OUTLOOK
We expect that the recent upheavals in Southeast Asia will have a mixed
impact on the U.S. economy and financial markets. Overall, we believe that lower
currency values in Asia will result in less inflation in the U.S. and a greater
likelihood of stable or falling interest rates. While equities also usually
benefit from low inflation, we anticipate that corporate profits in the U.S.
could be negatively impacted by the crisis. And with volatility already at hair-
trigger levels, negative earnings surprises could lead to a sharp correction in
U.S. stocks in the near term.
Within Asia itself, we believe that the turbulence has yet to run its
course. It is likely that Pacific Rim markets will continue to search for a
bottom until investors arrive at meaningful projections for economic growth
rates and corporate profits. As the reporting period ended, a clear vision of
the new economic order in Asia remained elusive.
We believe that European stocks generally have the least to lose by the
Asian shock. European exports to Asia are relatively modest, and the region
continues to enjoy solid growth, declining budget deficits, and benign
inflation.
The return of significant market volatility in the world markets is a
reminder of the ongoing need to monitor your portfolio carefully for proper
diversification among asset classes. We urge our
2 Continued on page three
<PAGE>
fund shareholders to use this opportunity to consider how their holdings are
currently divided among the three major asset classes of stocks, bonds, and
cash. Uneven moves in the various markets can distort a carefully planned
investment program. We encourage you to review your portfolio with an eye toward
correcting imbalances in the way assets have grown to be allocated.
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.
3
<PAGE>
Performance Results for the Period Ended November 30, 1997
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
Total Returns
Six-month total return based on NAV/1/................. 2.27% 1.83% 1.88%
Six-month total return/2/............................ (3.63%) (3.17%) .88%
One-year total return/2/............................. 6.42% 7.16% 11.12%
Five-year average annual total return/2/............. 12.02% 12.31% N/A
Life-of-Fund average annual total return/2/.......... 10.56% 10.14% 12.18%
Commencement Date.................................... 08/05/91 11/15/91 06/21/93
</TABLE>
N/A=Not Applicable
/1/Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge (5.75% for A shares) or
contingent deferred sales charge for early withdrawal (5% for B shares and
1% for C shares).
/2/Standardized total return. Assumes reinvestment of all distributions for
the periods and includes payment of the maximum sales charge (A shares) or
contingent deferred sales charge for early withdrawal (B and C shares).
See the Prior Performance section of the current prospectus. Past
performance does not guarantee future results. Investment return and net
asset value will fluctuate with market conditions. Fund shares, when
redeemed, may be worth more or less than their original cost.
Market forecasts provided in this report may not necessarily come to pass.
4
<PAGE>
Portfolio Management Review
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
The following is an interview with the management team of the Van Kampen
American Capital Global Equity Fund. As of April 1, 1997, the Fund is managed by
portfolio managers Barton M. Biggs and Ann D. Thivierge, with support from
Madhav Dhar and Francine J. Bovich, Morgan Stanley Asset Management Inc.,
subadviser to the Fund.
[Q] HOW WOULD YOU CHARACTERIZE THE MARKET CONDITIONS IN WHICH THE FUND OPERATED
DURING THE SIX-MONTH PERIOD ENDED NOVEMBER 30, 1997?
[A] During the period, there were several prevailing trends in the global
marketplace:
. A severe and high-profile currency crisis in Southeast Asia led to
drastic declines in nearly all the region's equity markets.
. Despite changing global economic conditions, U.S. equities continued to
perform solidly. Stocks in the U.S. were supported by a nearly perfect
economic environment of sustainable growth, negligible inflation, and
declining budget deficits. Fears that a recession in Asia would slow
imports and pinch profit margins, however, led to a correction in U.S.
stock prices between August and late October.
. European stocks benefited from a continuation of the region's economic
expansion and widespread investor optimism regarding interest rates.
Inflation remained stable as governments followed generally restrictive
fiscal policies and consumer demand was subdued.
[Q] WHAT SIGNIFICANT INVESTMENT TECHNIQUES AND STRATEGIES WERE USED TO PURSUE
THE FUND'S INVESTMENT OBJECTIVE?
[A] We believed early in 1997 that growing current-account deficits in Asia
would eventually threaten currency stability and economic growth in the region.
Accordingly, the Fund was under-weighted in the Far East as the reporting period
began, and this allocation was further reduced during the following six months.
Meanwhile, weightings were substantially increased in Europe, particularly
in the United Kingdom. We used the occasion of record-high equity values in the
U.S. to take profits, thereby reducing the Fund's allocation to U.S. stocks by
about three percent. We also raised cash reserves significantly to help cushion
the portfolio against volatility and to provide buying power in the event of
future declines. The following table displays changes in asset and regional
allocations during the reporting period.
<TABLE>
<CAPTION>
Percentage
November 30, 1997 May 31, 1997 Change
----------------- ------------ ----------
<S> <C> <C> <C>
North America.............. 41.00% ............ 43.94% ............ -6.7%
Europe..................... 38.65% ............ 29.65% ............ +30.4%
Japan...................... 6.13% ............ 12.48% ............ -50.9%
Far East................... 0.32% ............ 8.27% ............ -96.1%
Cash....................... 12.54% ............ 3.81% ............ +229.1%
</TABLE>
5
<PAGE>
[Q] HOW HAS THE FUND PERFORMED DURING THE REPORTING PERIOD?
[A] The Fund's total return during the six months ended November 30, 1997 was
2.27 percent/1/ (Class A shares at net asset value). During the same period, the
Morgan Stanley Capital International World Index gained 4.1 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 four for additional Fund performance results.
[Q] WHAT IS YOUR OUTLOOK FOR THE MONTHS AHEAD?
[A] Prospects for economic growth in Asia continue to deteriorate as
governments struggle with systemic weakness in the region's financial sector. In
this environment, we believe that further instability is likely in Asian equity
and currency markets. We find the most compelling investment opportunities in
Europe, where solid growth and stable interest rates provide a sound
underpinning for equity prices. Also, the underfunded position of many European
pension funds could provide additional demand for that region's stocks.
Closer to home, we are less optimistic about U.S. equities. While the
American economy remains fundamentally sound, we believe that investors are
overly optimistic regarding growth in corporate profits. With valuations already
extended and volatility increasing, U.S. stocks could become vulnerable to the
effects of widespread earnings disappointments next year.
/s/ Barton M. Biggs /s/ Ann D. Thivierge
Barton M. Biggs Ann D. Thivierge
Portfolio Manager Portfolio Manager
Morgan Stanley Asset Management Inc. Morgan Stanley Asset Management Inc.
/s/ Francine J. Bovich /s/ Madhav Dhar
Francine J. Bovich Madhav Dhar
Portfolio Manager Portfolio Manager
Morgan Stanley Asset Management Inc. Morgan Stanley Asset Management Inc.
6 Please see footnotes on page four
<PAGE>
Portfolio Highlights
Van Kampen American Capital Global Equity Fund
Top Five Holdings as a Percentage of Long-Term Investments
<TABLE>
<CAPTION>
AS OF AS OF
NOVEMBER 30, 1997 MAY 31, 1997
<S> <C> <C>
Latin American Discovery Fund, Inc. ....................... 1.5% ...................... 1.1%
General Electric Co........................................ 1.0% ...................... 1.9%
Novartis................................................... 1.0% ...................... 0.8%
ENI........................................................ 0.8% ...................... 0.5%
Bank of Tokyo.............................................. 0.8% ...................... 0.3%
</TABLE>
Asset Allocation as a Percentage of Total Investments
<TABLE>
<CAPTION>
AS OF NOVEMBER 30, 1997 AS OF MAY 31, 1997
<S> <C> <C> <C>
Stocks..................................................... 86.2% Stocks................... 95.6%
Commercial Paper........................................... 13.5% Repurchase Agreements.... 3.8%
Foreign Currency........................................... 0.3% Foreign Currency......... 0.6%
</TABLE>
Top Ten Countries as a Percentage of Long-Term Investments
<TABLE>
<CAPTION>
AS OF NOVEMBER 30, 1997 AS OF MAY 31, 1997
<S> <C> <C> <C>
United States.............................................. 45.8% United States............ 47.0%
United Kingdom............................................. 10.9% Japan.................... 12.8%
Japan...................................................... 9.8% United Kingdom........... 8.3%
Germany.................................................... 5.8% France................... 5.4%
France..................................................... 5.4% Germany.................. 4.7%
Canada..................................................... 5.0% Canada................... 4.4%
Switzerland................................................ 4.1% Singapore................ 3.2%
Italy...................................................... 3.7% Switzerland.............. 3.1%
Spain...................................................... 2.4% Spain.................... 2.2%
Sweden..................................................... 2.4% HongKong................. 2.2%
</TABLE>
7
<PAGE>
Portfolio of Investments
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Number
Description of Shares Market Value
- -----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 84.9%
AUSTRALIA 0.0%
Broken Hill Proprietary Co....................... 981 $ 8,994
Coles Myer....................................... 3,587 17,635
GIO Australia Holding............................ 281 679
M.I.M. Holdings.................................. 370 268
---------
27,576
---------
AUSTRIA 0.9%
AMS Austria Mikros............................... 400 24,175
Austrian Airlines (b)............................ 2,200 46,980
Bau Holding...................................... 600 34,329
BBAG Oest Brau Bet............................... 800 38,680
Bk Austria (b)................................... 9,166 427,544
Bohler Uddeholm.................................. 1,500 101,293
BWT Benckiser.................................... 200 31,186
Creditanstalt Bank............................... 2,000 103,147
EA-Generali...................................... 700 165,277
Flughafen Wien................................... 3,300 134,478
Lenzing (b)...................................... 500 27,197
Mayr-Melnhof Karton (b).......................... 1,700 95,209
Oest Elektrizitats, Class A...................... 4,100 328,410
OMV.............................................. 3,200 416,429
Radex-Heraklith.................................. 1,900 68,899
Steyr-Daimler-Puch............................... 1,400 39,881
VA Technologie................................... 1,700 256,038
Wienerberger Baust............................... 1,200 233,197
---------
2,572,349
---------
CANADA 4.2%
Abitibi Consolidated, Inc. (b)................... 8,300 107,221
Agrium, Inc...................................... 6,800 68,508
Air Canada, Inc. (b)............................. 6,900 65,883
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Number
Description of Shares Market Value
- ---------------------------------------------------------------------------
<S> <C> <C>
CANADA (CONTINUED)
Alcan Aluminum..................................... 10,100 $ 271,584
Avenor, Inc........................................ 3,200 48,864
Bank of Montreal................................... 12,200 522,056
Bank of Nova Scotia................................ 11,100 481,609
Barrick Gold Corp.................................. 19,600 322,688
BCE, Inc........................................... 28,900 874,497
Bombardier, Inc., Class B.......................... 14,800 305,487
Cae, Inc........................................... 6,300 49,981
Cameco Corp........................................ 2,600 92,365
Canadian Imperial Bank............................. 19,100 569,909
Canadian Natural Resources (b)..................... 4,800 105,732
Canadian Occidental Petroleum...................... 7,300 161,955
Canadian Pacific................................... 16,000 452,136
Canadian Tire, Class A............................. 4,300 88,303
Cominco............................................ 3,800 62,028
Corel Corp. (b).................................... 3,400 7,877
Cott Corp.......................................... 2,800 27,718
Dofasco, Inc....................................... 4,700 72,924
Domtar, Inc........................................ 7,400 50,135
Echo Bay Mines..................................... 7,300 16,657
Gulf Canada Resource (b)........................... 11,400 80,037
Imasco............................................. 9,900 352,740
Imperial Oil....................................... 7,800 464,106
Inco............................................... 7,300 138,379
IPL Energy, Inc.................................... 2,700 115,253
Laidlaw, Inc., Class B Non Voting.................. 13,400 172,633
Loewen Group, Inc.................................. 3,200 78,632
MacMillan Bloedel.................................. 7,200 76,330
Magna International, Inc., Class A................. 3,300 207,821
Methanex Corp. (b)................................. 8,100 67,957
</TABLE>
9 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
CANADA (CONTINUED)
Molson Cos., Class A.................................. 3,700 $ 67,540
Moore Corp............................................ 5,200 81,047
Newbridge Networks Corp. (b).......................... 7,000 294,871
Noranda, Inc.......................................... 11,300 189,609
Norcen Energy Resources............................... 11,400 140,064
Northern Telecom...................................... 10,900 979,535
Nova Corp............................................. 25,300 237,129
Petro................................................. 13,500 240,741
Placer Dome, Inc...................................... 9,800 118,686
Potash Corporation of Saskatchewan, Inc............... 2,500 196,581
Power Corporation of Canada........................... 6,100 186,724
Provigo, Inc. (b)..................................... 6,100 32,334
Ranger Oil............................................ 6,300 44,010
Renaissance Energy (b)................................ 6,000 125,742
Repap Enterprises, Inc. (b)........................... 5,100 537
Rogers Communications, Inc., Class B (b).............. 8,100 36,396
Royal Bank of Canada.................................. 14,400 770,372
Seagram............................................... 16,400 527,918
Suncor Energy, Inc.................................... 3,700 121,766
Talisman Energy, Inc. (b)............................. 6,200 182,167
Teck Corp., Class B................................... 4,000 58,132
TELUS Corp............................................ 5,000 107,417
Thomson Corp.......................................... 26,700 674,834
Transcanada Pipelines................................. 11,200 234,718
Westcoast Energy, Inc................................. 5,700 128,058
Weston George......................................... 2,200 172,991
----------
12,529,924
----------
FRANCE 4.6%
Accor................................................. 1,250 236,309
Air Liquide........................................... 2,350 369,819
Alcatel Alsthom....................................... 4,700 589,162
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
FRANCE (CONTINUED)
AXA-UAP............................................... 10,000 $ 725,696
BQE National Paris.................................... 6,666 325,209
BIC................................................... 2,100 145,744
Bouygues.............................................. 899 90,916
Canal Plus............................................ 1,070 186,148
Carrefour............................................. 1,250 668,906
Cie Bancaire.......................................... 900 134,467
Cie De St. Gobain..................................... 2,779 377,544
Cie Fin Paribas....................................... 3,500 252,867
Danone................................................ 2,450 390,951
Eaux Cie Generale..................................... 4,027 532,085
Eaux Cie Generale, Warrants expiring 5/2/01 (b)....... 3,550 2,171
Elf Aquitaine......................................... 8,150 945,700
Erid Beghin Say....................................... 950 147,731
Essilor International................................. 350 97,590
Eurafrance............................................ 125 50,395
France Telecom (b).................................... 30,800 1,131,137
Havas................................................. 2,361 154,179
Imetal................................................ 500 59,289
L'Oreal............................................... 2,100 803,957
Lafarge............................................... 3,050 201,497
Lagardere S.C.A....................................... 3,500 100,791
Legrand............................................... 1,000 190,571
LVMH (Moet Hennessy Louis Vuitton) (b)................ 2,750 474,226
Lyonnaise des Eaux.................................... 3,856 414,778
Michelin (CGDE), Class B.............................. 3,916 210,948
Pathe................................................. 275 53,013
Pernod Ricard......................................... 2,150 109,261
Peugeot............................................... 1,650 186,430
Pin Printemps Redo.................................... 675 345,315
Promodes.............................................. 600 220,555
</TABLE>
11 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
FRANCE (CONTINUED)
Rhone-Poulenc........................................ 10,679 $ 480,105
Sagem................................................ 150 67,564
Sanofi............................................... 3,400 340,386
Schneider............................................ 4,200 224,823
Simco................................................ 775 55,139
Societe Generale..................................... 3,094 406,712
Sodexho Alliance..................................... 250 133,498
Thomson CSF.......................................... 3,850 111,392
Total, Class B....................................... 7,550 792,946
Usinor Sacilor....................................... 7,950 124,974
Valeo................................................ 2,100 138,878
----------
13,801,774
----------
GERMANY 4.9%
Adidas............................................... 1,400 197,278
AGIV (b)............................................. 1,350 27,712
Allianz.............................................. 6,500 1,542,529
Amb Aach & Mun Bet................................... 100 102,580
BASF................................................. 16,500 583,839
Bayerische Hypotheden Bank........................... 7,050 305,827
Bayerische Vereinsbank............................... 7,400 439,552
Bayerische........................................... 21,000 777,244
Beiersdorf, Class A.................................. 2,450 102,807
Bilfinger & Berger BAU............................... 1,400 51,523
Brau Und Brunnen (b)................................. 250 20,839
CKAG Colonia Konzern................................. 800 67,593
Continental.......................................... 2,800 70,893
Daimler Benz......................................... 14,300 1,012,799
Degussa.............................................. 2,500 115,963
Deutsche Bank........................................ 14,150 907,494
Deutsche Telekom..................................... 60,000 1,216,331
Dresdner Bank........................................ 12,450 482,892
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Number
Description of Shares Market Value
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
GERMANY (CONTINUED)
Heidelberg Zement (b).................................................... 1,485 $ 116,206
Hochtief................................................................. 2,600 107,627
Karstadt................................................................. 300 104,281
Klockner Humb Deut....................................................... 1,800 12,248
Linde.................................................................... 300 186,958
Lufthansa................................................................ 10,800 205,160
Man...................................................................... 400 119,081
Mannesmann............................................................... 1,050 488,829
Merck KGaA............................................................... 4,550 165,642
Metro.................................................................... 6,960 319,683
Muenchener Ruckversicherungs-Gesellschaft................................ 2,000 624,894
Preussag................................................................. 500 143,039
RWE...................................................................... 9,400 460,805
SAP...................................................................... 1,700 494,528
Schering................................................................. 2,050 201,106
Siemens.................................................................. 16,000 939,495
Strabag (b).............................................................. 100 6,589
Thyssen.................................................................. 1,100 261,979
Veba..................................................................... 14,000 831,982
Viag..................................................................... 800 406,555
Volkswagen............................................................... 800 453,643
----------
14,676,025
----------
ITALY 3.2%
Assic Generali........................................................... 40,250 902,827
BCA Comm Italiana........................................................ 64,000 183,380
BCO Ambros Veneto........................................................ 25,000 81,907
BCO Ambros Veneto, Warrants expiring 1/2/98.............................. 25,000 84,020
Benetton Group........................................................... 8,220 124,664
Burgo Cartiere........................................................... 7,000 41,330
Credito Italiano......................................................... 110,000 301,176
Edison................................................................... 29,000 157,123
ENI...................................................................... 348,000 2,031,524
</TABLE>
13 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Number
Description of Shares Market Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ITALY (CONTINUED)
Falck Acciaierie & Ferriere Lombarde......................................... 5,000 $ 21,736
Fiat......................................................................... 146,700 423,738
Fiat Di Risp................................................................. 32,400 51,388
Fiat Priv.................................................................... 49,700 76,238
Impregilo (b)................................................................ 15,000 10,758
Instituto Bancario San Paolo................................................. 38,500 318,909
Instituto Mobiliare Italiano................................................. 27,750 289,939
Instituto Nazionale delle Assicurazioni...................................... 184,000 320,591
Italcementi.................................................................. 10,500 66,797
Italcementi Di Risp.......................................................... 7,000 17,910
Italgas...................................................................... 30,000 115,741
Magneti Marelli.............................................................. 22,500 36,663
Mediaset..................................................................... 52,500 259,224
Mediobanca Rinascente Risp, Warrants expiring 12/31/99 (b)................... 1,400 605
Mediobanca................................................................... 22,000 153,708
Montedison (b)............................................................... 125,000 103,325
Montedison Di Risp (b)....................................................... 40,000 22,621
Olivetti & C. (b)............................................................ 156,000 87,502
Parmalat Finanz (b).......................................................... 70,000 101,096
Pirelli...................................................................... 70,000 173,829
RAS.......................................................................... 13,000 120,965
Rinascente................................................................... 10,400 78,863
Rinascente, Warrants expiring 11/30/99....................................... 1,400 1,722
Sasib........................................................................ 7,000 19,227
Sirti........................................................................ 13,500 81,271
Snia BPD..................................................................... 30,000 29,869
Societa Assicuratrice Industriale............................................ 6,000 60,779
Telecom Italia............................................................... 159,720 995,731
Telecom Italia Di Risp....................................................... 43,779 172,576
Telecom Italia Mob........................................................... 287,500 1,164,106
Telecom Italia Mob Di Risp................................................... 67,500 147,694
---------
9,433,072
---------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Number
Description of Shares Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
JAPAN 8.3%
Advantest................................................................ 1,800 $ 124,537
Ajinomoto Co., Inc....................................................... 24,000 218,139
Aoki Corp. (b)........................................................... 14,000 3,291
Aoyama Trading Co........................................................ 1,900 48,384
Asahi Breweries.......................................................... 14,000 196,357
Asahi Chemical Industry Co............................................... 42,000 180,999
Asahi Glass Co........................................................... 40,000 255,436
Bank of Tokyo............................................................ 132,600 1,922,116
Bridgestone Corp......................................................... 14,000 303,859
Canon, Inc............................................................... 17,000 410,264
Casio Computer Co........................................................ 8,000 63,937
Chiba Bank............................................................... 4,000 15,608
Chugai Pharm Co. (b)..................................................... 14,000 87,209
Dai Nippon Printing...................................................... 16,000 317,179
Daiei, Inc. (b).......................................................... 15,000 64,995
Daikin Industries........................................................ 14,000 73,606
Daiwa House Industries................................................... 14,000 112,987
Denso Corp............................................................... 17,000 310,362
East Japan Railway....................................................... 82 372,654
Ebara Corp............................................................... 9,000 100,137
Fanuc.................................................................... 5,900 221,900
Fuji Photo Film Co....................................................... 8,000 287,718
Fujitsu (b).............................................................. 36,000 403,369
Furukawa Electric........................................................ 10,000 48,893
Hankyu Corp.............................................................. 19,000 90,813
Hazama Corp.............................................................. 14,000 8,337
Hitachi.................................................................. 69,000 489,285
Honda Motor Co........................................................... 18,000 651,597
Ito Yokado Co............................................................ 9,000 406,190
Japan Air Lines Co. (b).................................................. 43,000 133,759
Japan Energy Corp........................................................ 35,000 52,380
Jusco Co................................................................. 7,000 117,375
Kajima Corp.............................................................. 28,000 92,145
</TABLE>
15 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Number
Description of Shares Market Value
- -----------------------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Kansai Electric Power............................... 18,600 $316,255
Kao Corp............................................ 25,000 333,007
Kawasaki Steel Corp................................. 22,000 36,200
Kinki Nippon Railway................................ 33,000 182,809
Kirin Brewery Co.................................... 28,000 215,663
Komatsu............................................. 28,000 168,055
Kubota Corp......................................... 42,000 145,128
Kumagai Gumi Co..................................... 28,000 18,868
Kyocera Corp........................................ 4,200 202,719
Kyowa Hakko Kogyo................................... 14,000 70,206
Long-Term Credit Bank of Japan...................... 35,000 58,962
Marubeni Corp....................................... 42,000 104,979
Marui Co............................................ 3,000 47,013
Matsushita Electric Industries...................... 42,000 654,887
Mitsubishi Chemical................................. 42,000 81,943
Mitsubishi Corp..................................... 39,000 304,360
Mitsubishi Electric Corp............................ 49,000 135,530
Mitsubishi Heavy Industries......................... 76,000 298,938
Mitsubishi Materials Corp........................... 28,000 63,185
Mitsubishi Trust & Banking Corp..................... 37,000 492,850
Mitsui & Co......................................... 42,000 291,902
Mitsui Engineering & Ship Building Co. (b).......... 28,000 24,791
Mitsukoshi.......................................... 15,000 42,311
Murata Manufacturing Co............................. 5,000 150,049
Mycal Corp.......................................... 9,000 74,045
NEC Corp............................................ 24,000 253,869
NGK Insulators...................................... 14,000 130,539
Nippon Express Co................................... 11,000 57,575
Nippon Fire & Marine Insurance...................... 14,000 43,330
Nippon Light Metal.................................. 13,000 24,549
Nippon Meat Packer.................................. 14,000 183,193
Nippon Oil Co....................................... 40,000 139,471
Nippon Steel Corp................................... 155,000 286,621
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Number
Description of Shares Market Value
- -----------------------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Nippon Telegraph & Telephone Corp................... 209 $1,719,491
Nippon Yusen Kabushiki Kaisha....................... 42,000 128,674
Nissan Fire & Marine Insurance...................... 350 1,316
Nissan Motor Co..................................... 53,000 230,480
NKK Corp............................................ 81,000 81,873
Odakyu Electric Railway............................. 16,000 77,101
Oji Paper Co........................................ 28,000 116,498
Osaka Gas Co........................................ 62,000 138,453
Penta Ocean Construction............................ 14,000 24,243
Pioneer Electronic.................................. 4,000 69,579
Rohm Co............................................. 1,000 98,727
Sakura Bank......................................... 97,000 338,977
Sankyo Co........................................... 11,000 350,793
Sanwa Bank.......................................... 46,000 504,603
Sanyo Electric Co................................... 42,000 118,472
Secom Co............................................ 3,000 188,051
Sega Enterprises.................................... 2,700 60,082
Sekisui House....................................... 14,000 100,701
Sharp Corp.......................................... 28,000 187,361
Shimano, Inc........................................ 4,000 91,518
Shimizu Corp........................................ 20,000 64,251
Shin Etsu Chemical Co............................... 6,000 142,449
Shiseido Co......................................... 6,000 81,332
Showa Denko K.K. (b)................................ 28,000 41,465
Softbank Corp....................................... 700 12,615
Sony Corp........................................... 6,400 546,601
Sumitomo Chemical................................... 56,000 186,484
Sumitomo Corp....................................... 28,000 176,611
Sumitomo Electric Industries........................ 19,000 254,574
Sumitomo Forestry................................... 6,000 40,431
Sumitomo Metal Industries........................... 50,000 101,861
Sumitomo Metal Mining Co............................ 13,000 51,745
Sumitomo Osaka Cement Co............................ 14,000 26,656
</TABLE>
17 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Number
Description of Shares Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Taisei Corp........................................... 28,000 $ 64,721
Taisho Pharmacy Co.................................... 8,000 200,588
Takeda Chemical Industries............................ 17,000 496,846
Teijin................................................ 28,000 73,497
Tobu Railway Co....................................... 19,000 66,249
Tohoku Electric Power................................. 10,000 151,224
Tokyu Corp............................................ 23,000 98,217
Tokyo Electric Power.................................. 25,900 464,729
Tokyo Electron........................................ 2,000 76,631
Tokyo Gas Co.......................................... 56,000 133,830
Tokyo Marine & Fire Insurance Co...................... 42,000 398,198
Toppan Printing Co.................................... 19,000 257,551
Toray Industries, Inc................................. 42,000 190,872
Toto.................................................. 14,000 128,345
Toyobo Co............................................. 28,000 42,782
Toyota Motor Corp..................................... 61,000 1,758,903
Ube Industries........................................ 28,000 50,460
-----------
24,827,330
-----------
NETHERLANDS 1.5%
ABN Amro Holdings..................................... 19,362 369,255
Ahold Koninklijke..................................... 7,108 189,566
Akzo Nobel............................................ 1,100 193,509
Elsevier.............................................. 9,900 167,383
Getronics............................................. 1,200 41,242
Heineken.............................................. 700 118,528
ING Groep NV.......................................... 11,207 455,656
KLM Royal Dutch Air Lines............................. 1,316 47,348
Koninklijke KNP BT.................................... 1,500 32,381
Koninklijke Nedlloyd.................................. 400 9,198
Koninklijke PTT Nederland............................. 6,660 267,432
OCE................................................... 303 34,534
Philips Electronic.................................... 4,800 317,134
Royal Dutch Petroleum Co.............................. 29,200 1,520,757
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------
<S> <C> <C>
NETHERLANDS (CONTINUED)
Stork....................................... 500 $ 18,316
Unilever.................................... 8,800 511,890
Wolters Kluwer.............................. 1,010 133,714
----------
4,427,843
----------
NORWAY 0.5%
Aker RGI.................................... 3,200 56,512
Bergesen, Series A.......................... 2,800 71,836
Bergesen, Series B.......................... 1,200 30,370
Christiania Bank............................ 27,000 97,241
Dyno Industrier............................. 1,500 28,993
Elkem....................................... 2,600 36,877
Hafslund.................................... 4,800 28,701
Helikopter Services Group................... 1,000 11,402
Kvaerner.................................... 2,000 98,729
Leif Hoegh & Co............................. 1,600 31,371
Ncl Holdings (b)............................ 6,600 24,688
Norsk Hydro................................. 11,300 582,175
Norske Skogsindustrier...................... 1,500 45,888
Orkla....................................... 2,300 198,292
Petroleum Geo-Services (b).................. 1,600 103,012
Storebrand (b).............................. 14,000 95,197
Unitor...................................... 1,000 12,932
----------
1,554,216
----------
PORTUGAL 1.0%
Banco Comercial Portugues................... 15,000 316,315
Banco Espirito Santo E Comercial............ 7,900 222,226
Banco Totta E Acores........................ 5,700 107,547
Bpi Soc Gestora............................. 7,600 168,912
Cimpor-Cimentos de Portugal................. 8,000 202,619
CIN Corp Ind Norte.......................... 400 24,839
Corticeira Amorim........................... 1,500 17,064
Elec De Portugal (b)........................ 35,200 636,218
INAPA Investimentos Participacoes Gestao.... 500 16,648
</TABLE>
19 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Number
Description of Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
PORTUGAL (CONTINUED)
Jeronimo Martins.......................................... 2,300 $ 72,689
Jeronimo Martins, Common Rights callable through 12/31/97. 2,300 72,689
Portucel Industrial Empressa Productora de Celulose....... 8,600 55,265
Portugal Telecom.......................................... 22,000 1,013,319
Soares Da Costa (b)....................................... 1,100 8,546
Sonae Investimentos....................................... 4,000 149,501
UNICER-Uniao Cervejeira................................... 1,000 15,649
----------
3,100,046
----------
SPAIN 2.1%
Acerinox.................................................. 500 78,130
Aguas De Barcelona........................................ 1,721 69,845
Argentaria, SA............................................ 5,120 317,618
Autopistas Cesa........................................... 8,610 114,908
BCO Bilbao Vizcaya........................................ 27,300 824,804
BCO Central Hispan........................................ 13,200 253,182
BCO Santander............................................. 19,500 589,800
Corp Fin Alba............................................. 600 64,784
Corp Mapfre............................................... 1,100 53,705
Dragados Y Construction................................... 2,300 48,897
Ebro Agricolas............................................ 2,000 34,605
Emp Nac Electricid (b).................................... 41,600 782,563
Empresa Nacl Celul........................................ 900 14,607
Ercros (b)................................................ 6,900 7,034
Fom Const Y Contra........................................ 2,400 95,285
Gas Natural SDG........................................... 6,000 296,962
Iberdrola................................................. 37,700 481,648
Metrovacesa............................................... 945 40,751
Portland Valderriv........................................ 300 24,445
Repsol.................................................... 12,200 527,731
Tabacalera, Class A....................................... 1,500 114,681
Telefonica De Espana...................................... 38,000 1,095,835
Union Electrica Fenosa.................................... 11,800 118,309
</TABLE>
20 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- -----------------------------------------------------------------------------
<S> <C> <C>
SPAIN (CONTINUED)
Uralita................................................ 2,100 $ 24,435
Vallehermoso........................................... 1,700 49,879
Viscofan Envoltura..................................... 900 22,212
Zardoya Otis........................................... 400 46,543
------------
6,193,198
------------
SWEDEN 2.0%
ABB, Class A........................................... 32,000 408,211
AGA, Class A........................................... 2,700 36,016
AGA, Class B........................................... 4,700 59,043
Astra, Class A......................................... 60,000 1,041,248
Atlas Copco, Class A................................... 7,400 227,132
Electrolux, Class B.................................... 2,900 228,349
Ericsson Telefonaktiebolaget LM, Class B (b)........... 36,800 1,501,263
Esselte, Class A....................................... 1,500 29,139
Granges (b)............................................ 1,450 23,098
Hennes & Mauritz, Class B.............................. 8,000 369,876
Securitas, Class B..................................... 3,600 108,166
Skandia Foersaekrings.................................. 4,600 242,466
Skandinaviska Enskilda Banken, Class A................. 21,100 248,669
Skanska, Class B....................................... 4,900 201,800
SKF, Class B........................................... 4,800 112,517
Stora Kopparbergs, Class A............................. 12,200 161,950
Svenska Cellulosa, Class B............................. 7,500 164,638
Svenska Handelsbkn, Class A (b)........................ 8,200 288,856
Swedish Match.......................................... 18,800 63,547
Trelleborg, Class B.................................... 5,300 74,131
Volvo, Class B......................................... 15,600 416,189
------------
6,006,304
------------
SWITZERLAND 3.5%
ABB.................................................... 250 332,620
Adecco................................................. 450 132,557
Alusuisse-Lonza Holding................................ 140 128,531
</TABLE>
21 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Number
Description of Shares Market Value
- -------------------------------------------------------------------------
<S> <C> <C>
SWITZERLAND (CONTINUED)
Credit Suisse Group............................ 6,000 $ 877,402
Georg Fischer.................................. 30 41,240
Holderbk Fn Glarus............................. 170 148,205
Nestle......................................... 970 1,427,311
Novartis (b)................................... 1,566 2,501,998
Roche Holdings Bearer.......................... 40 608,781
Roche Holdings Genusscheine.................... 171 1,530,341
Sairgroup (b).................................. 90 117,471
SGS Holdings................................... 45 84,079
SMH............................................ 130 71,027
Sulzer......................................... 100 66,068
Swiss Bank Corp. (b)........................... 1,860 534,205
Swiss Reinsurance.............................. 350 571,714
Ubs Schw Bkgesell (b).......................... 570 144,519
Union Bank of Switzerland...................... 510 649,215
Valora Holding................................. 170 35,769
Zurich Versicherun............................. 1,170 492,355
----------
10,495,408
----------
UNITED KINGDOM 9.3%
Abbey National................................. 34,200 545,836
Arjo Wiggins Apple............................. 17,050 48,665
Associated British Foods....................... 12,225 112,628
B.A.T Industries............................... 75,625 679,487
Barclays....................................... 41,500 1,000,877
Bass........................................... 26,825 385,091
BG............................................. 94,720 454,323
BG, Class B (b)................................ 107,350 52,578
BICC........................................... 17,050 44,345
Blue Circle Industiries........................ 31,725 182,173
BOC Group...................................... 17,050 272,120
Boots Co....................................... 26,825 394,151
BPB............................................ 17,050 97,330
British Aerospace.............................. 12,225 333,653
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Number
Description of Shares Market Value
- -------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
British Airways................................. 29,275 $ 265,507
British Petroleum............................... 140,163 1,917,444
British Sky Broadcast........................... 39,025 290,001
British Steel................................... 48,800 113,943
British Telecommunications...................... 141,550 1,092,522
BTR............................................. 102,500 355,746
Burmah Castrol.................................. 7,300 122,920
Cable & Wireless................................ 61,025 554,491
Cadbury Schweppes............................... 26,825 278,624
Caradon......................................... 19,170 60,544
Centrica (b).................................... 107,350 155,921
Coats Viyella................................... 21,975 38,227
Commercial Union................................ 17,050 234,685
Courtaulds...................................... 12,225 56,366
De Lousiana Rue................................. 2,450 16,551
EMI Group....................................... 12,860 96,868
General Electric................................ 70,775 460,796
GKN............................................. 14,600 317,348
Glaxo Wellcome.................................. 78,075 1,714,192
Granada Group................................... 17,050 243,900
Grand Metropolitan.............................. 44,700 406,912
Great University Stores......................... 29,275 343,626
Guardian Royal Exchange......................... 19,525 93,981
Guinness........................................ 44,800 406,309
Hanson.......................................... 14,675 74,726
Harrison & Crosfield............................ 31,725 63,493
HSBC Holdings (ADR)............................. 53,700 1,308,714
Imperial Chemical Industries.................... 21,975 325,115
Ladbroke Group.................................. 29,275 133,001
Land Securities................................. 19,525 317,557
Lasmo........................................... 19,525 86,726
Legal & General Group........................... 29,275 249,685
Lloyds TSB Group................................ 134,175 1,529,606
</TABLE>
23 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Number
Description of Shares Market Value
- -------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Lonrho.......................................... 19,525 $ 30,338
Marks & Spencer................................. 85,375 878,117
MEPC............................................ 14,675 132,350
National Power.................................. 34,200 326,635
North West Water (b)............................ 17,050 219,136
P & O Finance (b)............................... 19,525 211,375
Pilkington...................................... 36,575 79,685
Prudential Corp................................. 48,800 525,829
Rank Group...................................... 21,975 128,227
Redland......................................... 14,675 84,516
Reed International.............................. 33,725 359,121
Reuters Holdings................................ 41,500 468,197
Rexam........................................... 14,675 71,875
Rio Tinto....................................... 29,275 353,514
RMC Group....................................... 7,300 110,468
Royal Bank Scot Group........................... 12,225 140,605
Royal Sun Alliance.............................. 34,200 307,863
Safeway......................................... 21,975 120,248
Sainsbury J Finance............................. 39,025 320,979
Schroders....................................... 4,850 139,741
Scottish Power.................................. 24,425 198,007
Sears........................................... 48,800 40,385
Sedgwick Group.................................. 14,675 30,981
Slough Estates.................................. 12,225 71,335
Smithkline Beecham.............................. 127,975 1,188,754
Southern Electric............................... 12,225 92,704
Tarmac.......................................... 34,200 66,424
Taylor Woodrow.................................. 19,525 57,708
Tesco........................................... 46,325 374,370
Thames Water.................................... 17,050 256,858
Thorn........................................... 11,892 30,026
TI Group........................................ 12,225 98,795
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Unilever.............................................. 70,750 $ 557,718
Vodafone Group........................................ 80,525 538,555
Zeneca Group.......................................... 21,975 701,447
----------
27,642,190
----------
UNITED STATES 38.9%
Abbott Laboratories, Inc.............................. 6,000 390,000
AccuStaff, Inc. (b)................................... 2,600 76,863
Adobe Systems, Inc.................................... 3,300 138,600
Advanced Fibre Communications, Inc. (b)............... 2,200 56,925
AGCO Corp............................................. 2,600 71,175
Air Express International Corp........................ 2,400 68,850
Air Products & Chemicals, Inc......................... 900 69,019
Airborne Freight Corp................................. 1,400 89,163
ALBANK Financial Corp................................. 1,800 83,250
Albertsons, Inc....................................... 5,000 221,875
Alcan Aluminum........................................ 600 16,163
Allegheny Teldyne, Inc................................ 200 5,150
Allen Telecom, Inc. (b)............................... 1,700 34,531
Allergan, Inc......................................... 2,900 98,238
Allied Waste Industries, Inc. (b)..................... 3,400 74,375
AlliedSignal, Inc..................................... 6,800 252,450
Allstate Corp......................................... 6,300 541,012
Alltel Corp........................................... 5,600 222,600
Aluminum Company of America........................... 100 6,725
ALZA Corp. (b)........................................ 3,000 80,063
AMBAC, Inc............................................ 2,700 108,337
American Bankers Insurance Group, Inc................. 2,000 81,000
American Express Co................................... 5,800 457,475
American General Corp................................. 1,300 70,038
American Greetings Corp............................... 10,000 367,500
American Home Products Corp........................... 9,700 677,787
American International Group, Inc..................... 6,600 665,362
</TABLE>
25 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
American Power Conversion Corp. (b)................... 2,000 $ 60,750
American Stores Co.................................... 5,600 110,950
Ameritech Corp........................................ 5,200 400,725
Amoco Corp............................................ 5,400 486,000
AMP, Inc.............................................. 3,200 139,000
AMR Corp. (b)......................................... 700 84,831
AMRESCO, Inc. (b)..................................... 1,900 53,200
Andrew Corp. (b)...................................... 3,600 95,400
Anheuser Busch Cos., Inc.............................. 7,100 306,631
Apple Computer (b).................................... 3,300 58,575
Applied Materials, Inc. (b)........................... 9,600 316,800
AptarGroup, Inc....................................... 1,800 102,600
Armstrong World Industries, Inc....................... 2,200 151,662
Arvin Industries, Inc................................. 2,300 79,350
ASARCO, Inc........................................... 3,500 87,063
Ashland, Inc.......................................... 3,500 163,406
Associated Banc-Corp.................................. 1,900 94,525
Astoria Financial Corp................................ 2,300 126,787
AT&T Corp............................................. 18,900 1,056,037
Atlantic Richfield Co................................. 1,600 130,400
Atmel Corp. (b)....................................... 3,700 83,019
Automatic Data Processing, Inc........................ 4,600 258,750
Avery Dennison Corp................................... 900 37,688
Avnet, Inc............................................ 3,200 212,000
Avon Products, Inc.................................... 2,600 150,312
AVX Corp.............................................. 2,400 64,650
Baker Hughes, Inc..................................... 2,300 96,313
Baldor Electric Co., Common Rights
Callable Through 5/25/98............................. 3,600 111,375
Ballard Medical Products.............................. 3,000 69,188
BancOne Corp.......................................... 6,000 308,250
Bank of New York, Inc................................. 5,400 290,250
BankAmerica Corp...................................... 10,400 759,200
BankBoston Corp....................................... 3,600 320,850
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Bankers Trust New York Corp.......................... 1,300 $154,131
Bard (C.R.), Inc..................................... 6,100 182,619
Barnes & Noble, Inc. (b)............................. 3,800 117,562
Bausch & Lomb, Inc................................... 5,100 202,087
Baxter International, Inc............................ 3,000 151,875
Becton, Dickinson & Co............................... 10,100 520,781
Belden, Inc.......................................... 2,200 72,875
Bell Atlantic Corp................................... 7,700 687,225
BellSouth Corp....................................... 11,000 602,250
Belo (A.H.) Corp..................................... 2,600 128,212
Bemis, Inc........................................... 1,200 50,550
Beneficial Corp...................................... 1,500 116,437
Bergen Brunswig Corp., Class A....................... 1,900 81,581
Berkley (W.R.) Corp.................................. 2,600 108,225
Betz Dearborn, Inc., Common Rights
Callable through 9/19/98............................ 1,900 115,662
Beverly Enterprises, Inc. (b)........................ 4,100 69,700
Biogen, Inc. (b)..................................... 2,600 91,000
Biomet, Inc. (b)..................................... 3,400 81,175
Birmingham Steel Corp................................ 8,100 124,031
BISYS Group, Inc. (b)................................ 3,900 124,800
Black Box Corp. (b).................................. 2,100 74,813
Blanch (E.W.) Holdings, Inc.......................... 3,600 124,425
BMC Industries, Inc.................................. 3,600 66,825
Bob Evans Farms, Inc................................. 5,600 112,000
Boeing Co............................................ 5,600 297,500
Boise Cascade Corp................................... 2,400 80,850
Borders Group, Inc. (b).............................. 1,900 54,269
Bowater, Inc......................................... 1,800 80,775
Briggs & Stratton Corp., Common Rights
Callable Through 1/5/00............................ 3,900 199,387
Bristol-Myers Squibb Co.............................. 11,700 1,095,412
Brown-Forman Corp., Class B.......................... 2,900 148,987
Browning Ferris Industries, Inc...................... 2,500 89,219
</TABLE>
27 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Burlington Northern Santa Fe Corp.......................................... 2,800 $256,200
Burlington Resources, Inc.................................................. 1,700 75,650
CalEnergy, Inc. (b)........................................................ 2,600 86,450
Callaway Golf Co........................................................... 3,200 102,000
Cambridge Technology Partners, Inc. (b).................................... 2,400 93,300
Camco International, Inc................................................... 1,600 100,400
Campbell Soup Co........................................................... 3,200 179,200
Capital Re Corp............................................................ 1,600 89,700
Catalina Marketing Corp. (b)............................................... 1,300 60,125
Caterpillar, Inc........................................................... 6,400 306,800
Centocor, Inc. (b)......................................................... 2,200 95,700
Central & South West Corp.................................................. 6,800 170,000
Central Fidelity Banks, Inc................................................ 2,600 125,287
Central Louisiana Electric Co.............................................. 2,000 58,125
Central Newspapers, Inc., Class A.......................................... 1,300 89,375
Centura Banks, Inc......................................................... 2,100 124,162
Century Telephone Enterprises, Inc......................................... 2,200 101,338
Chancellor Media Corp. (b)................................................. 1,600 96,100
Charter One Financial, Inc................................................. 1,900 112,575
Chase Manhattan Corp....................................................... 6,600 716,925
Chevron Corp............................................................... 7,500 601,406
Chittenden Corp............................................................ 1,600 70,600
Choice Hotels, Inc. (b).................................................... 4,300 74,981
Chrysler Corp.............................................................. 11,000 377,437
Chubb Corp................................................................. 2,100 148,969
CIGNA Corp................................................................. 2,200 367,950
Cincinnati Milacron, Inc................................................... 7,000 206,937
CIPSCO, Inc................................................................ 2,700 108,169
Circus Circus Enterprises, Inc. (b)........................................ 4,400 90,750
Cisco Systems, Inc. (b).................................................... 2,500 215,625
Citicorp................................................................... 6,200 743,612
CKE Restaurants, Inc....................................................... 2,200 82,638
Clayton Homes, Inc......................................................... 5,500 90,406
</TABLE>
28 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Number
Description of Shares Market Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Clorox Co.................................................................. 2,100 $ 163,012
CMAC Investment Corp....................................................... 1,600 83,100
CNF Transportation, Inc.................................................... 1,800 78,300
Coast Savings Financial, Inc. (b).......................................... 1,600 96,000
Coastal Corp............................................................... 900 52,706
Coca-Cola Co............................................................... 27,800 1,737,500
Colgate-Palmolive Co....................................................... 1,200 80,175
Columbia / HCA Healthcare Corp............................................. 17,800 525,100
Comdisco, Inc.............................................................. 2,200 64,350
Comerica, Inc.............................................................. 3,600 306,675
Commercial Metals Co....................................................... 3,100 102,106
COMNET Cellular, Inc. (b).................................................. 3,100 109,469
Compaq Computer Corp. (b).................................................. 8,100 505,744
Compass Bancshares, Inc.................................................... 2,000 80,000
CompUSA, Inc. (b).......................................................... 2,700 98,719
Computer Associates International, Inc..................................... 8,700 452,944
Computer Management Sciences, Inc. (b)..................................... 3,300 53,625
ConAgra, Inc............................................................... 2,000 71,875
Concord EFS, Inc. (b)...................................................... 2,700 68,850
Consolidated Edison Co..................................................... 4,300 162,325
Consolidated Natural Gas Co................................................ 800 48,300
Consolidated Papers, Inc................................................... 1,800 96,975
Consolidated Stores Corp. (b).............................................. 2,600 126,425
Continental Airlines, Inc., Class B (b).................................... 1,900 86,569
Cooper Cameron Corp. (b)................................................... 1,400 85,313
Cooper Industries, Inc..................................................... 2,500 129,063
Cooper Tire & Rubber Co.................................................... 7,100 158,862
Coors (Adolph) Co.......................................................... 1,800 64,800
CoreStates Financial Corp.................................................. 1,700 131,431
Corporate Express, Inc. (b)................................................ 3,300 51,563
Countrywide Credit Industries, Inc......................................... 3,500 143,281
Covance, Inc. (b).......................................................... 3,800 68,875
CPC International, Inc..................................................... 4,100 423,837
</TABLE>
29 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Crescendo Pharmaceuticals Corp., Class A (b)................................. 100 $ 1,144
Crompton & Knowles Corp...................................................... 3,800 100,700
Crown Cork & Seal Co., Inc................................................... 100 4,881
CSX Corp..................................................................... 4,700 245,869
Cyprus Amax Minerals Co...................................................... 2,900 53,106
Cytec Industries, Inc. (b)................................................... 2,100 96,075
Dallas Semiconductor Corp.................................................... 2,500 122,187
Dana Corp.................................................................... 800 37,400
Danaher Corp................................................................. 2,600 152,750
Darden Restaurants, Inc...................................................... 8,600 102,125
Dayton Hudson Corp........................................................... 4,300 285,681
Dean Foods Co................................................................ 2,600 138,125
Deere & Co................................................................... 4,700 257,619
Dell Computer Corp. (b)...................................................... 2,200 185,212
Delta Air Lines, Inc......................................................... 2,600 289,737
Deluxe Corp., Common Rights Callable Through 2/22/98......................... 7,300 257,781
Deposit Guaranty Corp........................................................ 2,200 106,150
Digital Equipment Corp. (b).................................................. 3,000 147,750
Dime Bancorp, Inc............................................................ 4,500 109,125
Donnelley (R.R.) & Sons Co................................................... 1,800 63,450
Doubletree Corp. (b)......................................................... 1,900 83,481
Dow Chemical Co.............................................................. 2,500 246,875
Dress Barn (b)............................................................... 3,100 79,825
Dresser Industries, Inc...................................................... 2,200 82,225
DTE Energy Co................................................................ 600 19,688
Du Pont (E. I.) de Nemours & Co.............................................. 15,300 926,606
Dun & Bradstreet Corp........................................................ 11,100 310,800
Dura Pharmaceuticals, Inc. (b)............................................... 1,800 78,975
Eastern Enterprises.......................................................... 6,500 261,625
Eastman Chemical Co.......................................................... 1,500 90,563
Eastman Kodak Co............................................................. 5,100 309,188
Echlin, Inc.................................................................. 2,600 82,388
Ecolab, Inc.................................................................. 2,500 127,500
</TABLE>
30 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Number
Description of Shares Market Value
- -----------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Edison International.............................................. 900 $ 24,131
EG & G, Inc....................................................... 5,500 107,937
Electronic Arts (b)............................................... 2,300 77,050
Eletronics for Imaging, Inc. (b).................................. 2,100 101,325
EMC Corp. (b)..................................................... 4,100 124,281
Emerson Electric Co............................................... 2,900 159,500
Enova Corp........................................................ 6,200 161,200
Enron Corp........................................................ 2,500 96,875
Entergy Corp...................................................... 29,100 756,600
Etec Systems, Inc. (b)............................................ 1,300 59,475
Exxon Corp........................................................ 20,700 1,262,700
Falcon Drilling, Inc. (b)......................................... 2,200 70,950
Family Dollar Stores, Inc......................................... 3,000 83,063
Fastenal Co....................................................... 1,800 95,400
Federal Express Corp. (b)......................................... 800 53,650
Federal Home Loan Mortgage Corp................................... 2,800 115,500
Federal National Mortgage Association............................. 11,400 602,062
Federal Signal Corp............................................... 2,700 58,725
FINOVA Group, Inc................................................. 2,300 108,387
First American Corp-Tennessee..................................... 2,700 133,650
First Chicago NBD Corp............................................ 4,600 359,950
First Commerce Corp............................................... 1,600 102,600
First Commercial Corp., Common Rights Callable Through 9/28/00.... 3,000 153,375
First Hawaiian, Inc............................................... 2,000 76,000
First Midwest Bancorp, Inc. (b)................................... 2,700 106,312
First Security Corp............................................... 2,900 98,238
First Union Corp.................................................. 11,000 536,250
First Virginia Banks, Inc., Common Rights Callable Through 8/8/98. 3,500 167,344
FirstMerit Corp................................................... 1,400 37,100
Fiserv, Inc. (b).................................................. 2,700 130,950
Fleet Financial Group, Inc........................................ 4,100 270,856
Fleetwood Enterprises, Inc........................................ 100 3,569
Fleming Cos., Inc................................................. 3,900 64,838
</TABLE>
31 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Number
Description of Shares Market Value
- ------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Fluor Corp................................. 2,500 $ 89,844
FMC Corp. (b).............................. 1,400 102,287
Ford Motor Co.............................. 18,200 782,600
Forest Labs, Inc. (b)...................... 2,500 111,875
Fort James Corp............................ 100 3,913
Fortune Brands, Inc........................ 3,600 130,275
Freeport-McMoran Copper & Gold, Class B.... 1,700 35,594
Fruit of the Loom, Inc. (b)................ 3,600 83,925
Gannett, Inc............................... 2,500 145,156
Gap, Inc................................... 2,200 118,113
Gaylord Entertainment Co................... 900 27,506
General Dynamics Corp...................... 400 34,650
General Electric Co........................ 34,800 2,566,500
General Mills, Inc......................... 2,200 162,800
General Motors Corp........................ 9,900 603,900
General Reinsurance Corp. (b).............. 800 158,800
General Signal Corp........................ 3,000 122,437
Genesis Health Ventures, Inc. (b).......... 1,300 31,525
Genzyme Corp............................... 2,600 69,713
Giant Foods, Inc., Class A................. 3,600 121,500
Goodrich (B.F.) Co......................... 4,100 182,450
Goodyear Tire & Rubber Co.................. 1,600 97,100
GPU, Inc................................... 1,300 51,350
Great Atlantic & Pacific Tea, Inc.......... 6,700 206,862
Green Tree Financial Corp.................. 4,100 125,563
GTE Corp................................... 12,500 632,031
GTECH Holdings Corp. (b)................... 1,500 48,281
Gulfstream Aerospace Corp. (b)............. 3,900 114,562
H & R Block, Inc........................... 1,600 65,600
Halliburton Co............................. 1,200 64,725
Hanna (M.A.) Co............................ 3,400 83,938
Hannaford Brothers Co...................... 2,900 116,544
Harland (John H.) Co....................... 4,700 97,231
</TABLE>
32 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Harleysville Group, Inc...................... 4,900 $ 113,312
Harman International Industries, Inc......... 1,800 91,125
Harnischfeger Industries, Inc................ 1,800 68,738
Harrahs Entertainment, Inc. (b).............. 3,600 72,225
Harris Corp.................................. 9,100 431,681
Harsco Corp.................................. 3,900 154,537
Harte-Hanks Communications................... 2,600 89,700
Hartford Financial Services Group, Inc....... 5,300 443,875
Heinz (H. J.) & Co........................... 3,000 150,188
Hercules, Inc................................ 6,700 325,369
Hershey Foods Corp........................... 2,100 128,887
Hewlett-Packard Co........................... 16,400 1,001,425
Hibernia Corp., Class A...................... 7,200 130,500
Hilton Hotels Corp........................... 2,500 77,813
Home Depot, Inc.............................. 9,600 537,000
Honeywell, Inc............................... 1,700 111,350
Hong Kong Land Hld Usd....................... 12,596 27,710
Houston Industries, Inc...................... 2,500 59,219
Huntington Bancshares, Inc................... 1,800 61,200
Illinois Central Corp........................ 1,900 68,519
IMCO Recycling, Inc.......................... 3,000 47,250
Imperial Credit Mortgage Holdings, Inc....... 6,750 119,391
Ingersoll-Rand Co............................ 2,600 106,275
INMC Mortgage Holdings, Inc.................. 3,400 77,138
Integrated Health Services, Inc.............. 2,200 66,963
Intel Corp................................... 19,900 1,544,737
Interim Services, Inc. (b)................... 3,700 104,756
International Business Machines Corp......... 12,900 1,413,356
International Flavours & Fragrances, Inc..... 3,000 144,562
International Game Technology................ 3,400 85,000
International Rectifier Corp. (b)............ 3,700 52,263
Interpublic Group of Cos., Inc............... 800 38,350
Interstate Bakeries Corp..................... 2,900 100,231
</TABLE>
33 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Invacare Corp............................................. 3,000 $ 69,375
Iomega Corp. (b).......................................... 3,100 101,912
Ionics, Inc. (b).......................................... 2,400 88,500
ITT Industries, Inc....................................... 6,300 200,025
Jacobs Engineering Group, Inc. (b)........................ 1,900 50,231
Jefferson-Pilot Corp...................................... 700 53,419
Johns Manville Corp....................................... 4,300 47,031
Johnson & Johnson, Inc.................................... 15,100 950,356
Johnson Controls, Inc..................................... 5,300 242,806
Jones Apparel Group, Inc. (b)............................. 1,600 78,000
Jostens, Inc., Common Rights Callable Through 8/19/98..... 3,800 91,200
JP Morgan & Co., Inc...................................... 1,600 182,700
KN Energy, Inc............................................ 2,500 116,875
Kansas City Southern Industries, Inc...................... 4,500 138,937
Kemet Corp. (b)........................................... 2,500 59,063
Kennametal, Inc........................................... 2,100 110,644
Kent Electronics Corp. (b)................................ 2,400 80,400
Kerr-McGee Corp........................................... 300 19,894
Keycorp................................................... 5,200 350,675
Keyspan Energy Corp....................................... 1,400 46,638
Kimball International, Inc., Class B...................... 2,300 92,144
Kimberly-Clark Corp....................................... 6,700 348,819
King World Productions, Inc............................... 2,500 135,937
KLA-Tencor Corp. (b)...................................... 2,700 104,625
Knight-Ridder, Inc........................................ 500 25,063
Komag, Inc. (b)........................................... 3,000 60,188
Latin American Discovery Fund, Inc. (c)................... 249,100 3,938,894
LCI International, Inc. (b)............................... 2,200 60,638
Lear Corp. (b)............................................ 2,100 98,306
Lexmark International Group, Inc., Class A (b)............ 2,700 86,063
LG & E Energy Corp........................................ 4,000 89,500
Liberty Financial Cos., Inc............................... 1,600 86,700
Lilly (Eli) & Co. (b)..................................... 6,800 428,825
</TABLE>
34 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Limited, Inc........................................... 3,600 $ 86,625
Lincoln National Corp.................................. 2,900 206,987
Littelfuse, Inc. (b)................................... 2,200 60,775
Lockheed Martin Corp................................... 4,100 400,006
Loews Corp............................................. 4,500 477,562
Long Island Lighting Co................................ 2,900 78,300
Longs Drug Stores Corp................................. 800 23,400
Louisiana-Pacific Corp................................. 2,400 48,450
Lowe's Cos., Inc....................................... 5,900 271,031
Lubrizol Corp.......................................... 2,400 93,600
Lucent Technologies, Inc............................... 2,000 160,250
MacFrugals Bargains Close Outs (b)..................... 2,500 107,187
Magna Group, Inc....................................... 3,100 124,000
Mallinckrodt, Inc...................................... 5,800 214,600
Manor Care, Inc........................................ 14,500 511,125
Markel Corp. (b)....................................... 700 107,800
Marriot International, Inc............................. 700 50,706
Martin Marietta Materials, Inc......................... 2,400 83,100
May Department Stores Co............................... 4,600 247,250
Maytag Corp............................................ 2,600 84,013
MBIA, Inc.............................................. 2,200 138,325
MBNA Corp.............................................. 3,900 103,594
McClatchy Newspapers, Inc., Class A.................... 3,600 103,500
McCormick & Co., Inc................................... 4,200 111,300
McDonalds Corp......................................... 8,400 407,400
McGraw Hill, Inc....................................... 500 34,219
MCN Corp............................................... 3,500 133,656
Medical Assurance, Inc. (b)............................ 3,600 102,375
Medtronic, Inc......................................... 2,500 119,375
Mellon Bank Corp....................................... 3,000 170,062
Mercantile Stores, Inc................................. 900 58,163
Merck & Co., Inc....................................... 13,300 1,257,681
Meredith Corp.......................................... 2,300 80,213
</TABLE>
35 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Meritor Automotive, Inc............................ 1 $ 21
Merrill Lynch & Co., Inc........................... 7,400 519,387
Meyer (Fred), Inc. (b)............................. 2,700 91,463
Microchip Technology, Inc. (b)..................... 2,300 80,500
Microsoft Corp. (b)................................ 12,900 1,825,350
Millennium Chemicals, Inc.......................... 4,100 94,300
Miller (Herman), Inc............................... 1,800 91,350
Millipore Corp..................................... 2,400 93,000
Minerals Technologies, Inc......................... 1,600 70,000
Minnesota Mining & Manufacturing Co................ 2,800 272,825
Mobil Corp......................................... 10,900 784,119
Molex, Inc......................................... 2,700 102,769
Monsanto Co........................................ 2,800 122,325
Montana Power Co................................... 3,400 93,075
Morgan Stanley Asia Pacific Fund, Inc. (c)......... 124,800 928,200
Morton International, Inc.......................... 2,900 98,781
Motorola, Inc...................................... 7,400 465,275
MSC Industrial Direct, Inc., Class A (b)........... 1,600 62,200
Murphy Oil Corp.................................... 2,300 126,500
Mylan Laboratories, Inc............................ 4,000 88,750
Nabors Industries, Inc. (b)........................ 4,300 150,769
Nalco Chemical Co.................................. 3,200 124,200
National City Corp................................. 1,500 100,125
National Commerce Bancorp.......................... 4,000 118,000
National Fuel Gas Co............................... 2,200 102,712
National Service Industries, Inc................... 1,900 88,944
NationsBank Corp................................... 8,900 534,556
NCS Healthcare, Inc., Class A (b).................. 3,400 90,525
New Century Energies, Inc.......................... 5,500 243,375
New England Electric System........................ 3,100 127,875
New Jersey Resources Corp.......................... 2,900 100,956
New York St Electric & Gas Corp.................... 4,600 141,450
New York Times Co.................................. 700 41,563
</TABLE>
36 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Newell Co............................................ 1,300 $ 53,056
NICOR, Inc........................................... 200 8,050
Nine West Group, Inc. (b)............................ 2,300 62,531
Noble Affiliates, Inc................................ 1,600 59,400
Noble Drilling Corp. (b)............................. 3,100 93,194
Nordson Corp., Common Rights
Callable Through 9/9/98............................. 1,900 99,750
Norfolk Southern Corp................................ 600 19,088
Norrell Corp......................................... 2,700 65,813
Northern Telecom..................................... 1,300 116,756
Northrop Grumman Corp................................ 600 67,650
Norwest Corp......................................... 8,400 314,475
Novacare, Inc. (b)................................... 3,300 40,838
Novell, Inc. (b)..................................... 4,500 134,125
Novellus Systems, Inc. (b)........................... 1,800 67,725
OO Reilly Automotive, Inc. (b)....................... 2,900 68,513
Occidental Petroleum Corp............................ 3,800 112,812
Office Depot, Inc. (b)............................... 7,000 165,375
Office Max, Inc. (b)................................. 6,500 91,406
Ohio Casualty Corp................................... 2,200 100,375
Old Kent Financial Corp.............................. 2,500 169,062
Olsten Corp.......................................... 6,100 90,738
OM Group, Inc........................................ 1,900 72,913
Omnicare, Inc........................................ 3,600 103,950
One Valley Bancorp, Inc.............................. 3,700 139,906
Oracle Systems Corp. (b)............................. 2,500 83,281
Oregon Steel Mills, Inc.............................. 2,900 56,913
Orion Capital Corp................................... 2,500 112,656
Oryx Energy Co. (b).................................. 3,700 99,900
PP&L Resources, Inc.................................. 5,000 117,500
Pacific Century Financial Corp....................... 2,100 107,100
Pacific Enterprises, Common Rights
Callable Through 3/6/99............................. 5,100 180,412
Pall Corp............................................ 2,700 57,038
Parker Hannifin Corp................................. 800 35,600
</TABLE>
37 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Patterson Dental Co. (b).............................. 1,800 $ 73,913
Payless Shoesource, Inc. (b).......................... 1,600 101,600
PECO Energy Co........................................ 3,800 92,388
Penney (J.C.), Inc.................................... 3,700 237,725
Pennzoil Co........................................... 500 33,313
Peoples Energy Corp................................... 900 32,963
Pep Boys.............................................. 2,900 72,863
Perkin-Elmer Corp., Common Rights
Callable Through 4/30/99............................. 1,200 83,475
Personnel Group of America, Inc. (b).................. 2,000 73,125
Pfizer, Inc........................................... 13,700 996,675
Pharmacia & Upjohn, Inc............................... 4,300 145,125
Phelps Dodge Corp..................................... 8,400 556,500
Philip Morris Cos., Inc............................... 34,400 1,496,400
Phillips Petroleum Co................................. 8,300 402,031
Phillips-Van Heusen Corp.............................. 4,300 59,125
Photronics, Inc. (b).................................. 1,600 76,400
PhyCor, Inc. (b)...................................... 2,700 66,488
Pier 1 Imports, Inc................................... 3,600 80,550
Pinnacle West Capital Corp............................ 3,100 119,544
Pioneer Natural Resources Co. (b)..................... 2,000 63,875
PMI Group, Inc........................................ 1,400 91,000
PNC Bank Corp......................................... 3,300 177,581
Pogo Producing Co..................................... 1,900 59,613
Polaroid Corp......................................... 2,100 89,250
Policy Management Systems Corp. (b)................... 1,900 122,787
Potomac Electric Power Co............................. 4,900 121,275
PPG Industries, Inc................................... 1,500 86,906
Precision Castparts Corp.............................. 1,800 106,875
Price (T. Rowe) & Associates, Inc..................... 1,900 123,500
Procter & Gamble Co................................... 16,100 1,228,631
Proffitt's, Inc. (b).................................. 2,600 79,463
Promus Hotel Corp. (b)................................ 1,800 74,700
Protective Life Corp.................................. 1,800 101,025
</TABLE>
38 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Provident Bankshares Corp............................. 1,800 $ 106,650
Provident Cos., Inc................................... 2,200 72,188
Public Service Enterprise Group....................... 18,900 551,644
Puget Sound Energy, Inc., Common Rights
Callable Through 1/25/01............................. 3,800 104,975
Quanex Corp........................................... 1,400 41,650
Quantum Corp. (b)..................................... 4,100 109,162
Queens County Bancorp................................. 2,700 94,500
Quintiles Transnational Corp. (b)..................... 1,300 101,563
RPM, Inc.............................................. 5,600 112,000
Ralston-Ralston Purina Group.......................... 2,000 186,000
Raychem Corp.......................................... 3,200 302,600
Rayonier, Inc......................................... 1,800 87,975
Raytheon Co., Class B................................. 6,300 352,406
Readers Digest Association, Inc.,
Class A Non Voting................................... 3,700 88,569
Reading & Bates Corp. (b)............................. 2,100 80,588
Reebok International Ltd. (b)......................... 2,900 114,006
Reliastar Financial Corp.............................. 2,400 88,800
Renal Care Group, Inc. (b)............................ 2,200 69,850
Rite Aid Corp......................................... 700 46,025
RLI Corp.............................................. 3,200 139,800
Robert Half International, Inc........................ 3,500 136,719
Rochester Gas & Electric Corp......................... 3,400 93,500
Rockwell International Corp........................... 4,500 219,375
Rohm & Haas Co........................................ 1,200 110,325
Rowan Cos., Inc. (b).................................. 2,500 85,000
Royal Dutch Petroleum Co.............................. 21,000 1,106,437
Russell Corp.......................................... 500 15,281
Ryder Systems, Inc.................................... 2,200 79,888
SAFECO Corp........................................... 700 34,213
Safeguard Scientifics, Inc. (b)....................... 3,900 123,094
Sanmina Corp. (b)..................................... 900 61,200
Sara Lee Corp......................................... 9,200 486,450
SBC Communications, Inc............................... 8,400 611,625
</TABLE>
39 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
SCANA Corp............................................ 3,700 $102,212
Scherer (R.P.) Corp. (b).............................. 1,800 110,362
Schering-Plough Corp.................................. 1,200 75,225
Scholastic Corp. (b).................................. 1,800 68,738
SCI Systems, Inc. (b)................................. 2,700 123,694
Scientific-Atlanta, Inc............................... 5,800 116,000
Sealed Air Corp. (b).................................. 2,100 119,437
Sears Roebuck & Co.................................... 11,300 517,681
Service Corp. International........................... 7,200 263,250
Shared Medical Systems................................ 300 19,200
Shaw Industries, Inc.................................. 4,300 47,300
Sierra Health Services, Inc. (b)...................... 2,200 80,025
Signet Banking Corp................................... 1,400 75,513
Smith International, Inc. (b)......................... 1,300 83,200
Snap-On, Inc.......................................... 3,600 158,175
Sonat, Inc............................................ 700 30,494
Sonoco Products Co.................................... 3,600 118,125
Springs Industries, Inc............................... 1,400 70,613
Sprint Corp........................................... 4,600 269,388
St. John Knits, Inc................................... 2,300 87,831
St. Jude Medical, Inc. (b)............................ 3,600 106,650
St. Paul Bancorp, Inc................................. 2,900 71,050
St. Paul Cos., Inc.................................... 1,400 112,000
Starbucks Corp. (b)................................... 2,600 90,675
Steel Dynamics, Inc. (b).............................. 3,800 70,300
Steris Corp. (b)...................................... 1,600 75,200
Sterling Commerce, Inc. (b)........................... 2,400 83,400
Sterling Software, Inc. (b)........................... 2,900 106,212
Stewart Enterprises, Inc., Class A.................... 2,700 117,281
Storage Technology Corp. (b).......................... 1,800 116,212
Sun Microsystems, Inc. (b)............................ 10,500 378,000
Sun, Inc.............................................. 6,300 254,756
Sunbeam Corp.......................................... 1,800 79,313
</TABLE>
40 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Sunburst Hospitality Corp.(b).......................... 1,400 $ 14,000
SunGard Data Systems, Inc.(b).......................... 2,900 75,038
Sunrise Medical, Inc.(b)............................... 4,500 71,156
Superior Industries International, Inc................. 4,200 109,200
SUPERVALU, Inc......................................... 11,600 456,025
Sybase, Inc.(b)........................................ 4,100 57,400
Sybron International Corp.(b).......................... 2,300 101,200
Symantec Corp.(b)...................................... 6,100 152,500
Symbol Technologies, Inc............................... 2,100 82,031
Synopsys, Inc.(b)...................................... 2,100 86,363
Sysco Corp............................................. 400 17,825
360 Communications Co.(b).............................. 4,100 78,925
3Com Corp.(b).......................................... 6,400 232,000
Tandy Corp............................................. 3,300 141,900
Tech Data Corp.(b)..................................... 1,800 72,675
Tektronix, Inc......................................... 5,100 213,881
Tele-Communications TCI Ventures Group, Class A(b)..... 5,566 125,931
Telephone & Data Systems, Inc.......................... 2,700 118,631
Texaco, Inc............................................ 5,300 299,450
Texas Instruments, Inc................................. 3,400 167,450
Texas Utilities Co..................................... 5,100 204,000
Thiokol Corp........................................... 1,500 123,937
Thomas & Betts Corp.................................... 3,000 136,125
Tidewater, Inc......................................... 1,900 106,519
TIG Holdings, Inc...................................... 1,900 61,156
Times Mirror Co., Series A............................. 1,300 77,188
TJX Cos., Inc.......................................... 3,600 124,200
Torchmark, Inc......................................... 1,800 73,463
Toro Co................................................ 1,800 79,425
Transamerica Corp...................................... 800 86,850
Transatlantic Holdings, Inc............................ 1,800 128,587
Transport Financial, Inc............................... 2,400 82,500
Travelers Group, Inc................................... 13,150 664,075
</TABLE>
41 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Triad Guaranty, Inc. (b)............................. 3,200 $ 94,400
Trinity Industries, Inc.............................. 2,100 95,288
TRW, Inc............................................. 2,700 153,225
Tupperware Corp...................................... 2,700 64,463
Tyco International Ltd. ............................ 5,300 208,025
U.S. Airways Group, Inc. (b)......................... 2,100 115,762
U.S. Bancorp......................................... 1,400 150,587
U.S. Surgical Corp................................... 4,300 113,412
U.S. West Media Group (b)............................ 6,100 275,644
UCAR International, Inc. (b)......................... 1,600 63,900
Ultramar Diamond Shamrock Corp....................... 3,100 94,356
Unicom Corp.......................................... 15,600 454,350
Unifi, Inc........................................... 2,700 102,600
Unilever............................................. 6,200 359,988
Union Carbide Corp................................... 1,800 79,425
Union Pacific Corp................................... 1,300 78,000
Unisys Corp. (b)..................................... 7,300 104,481
United Asset Management Corp......................... 2,900 75,581
United Cos. Financial Corp........................... 2,600 56,388
United Illuminating Co............................... 2,700 109,856
United States Cellular Corp. (b)..................... 2,400 78,600
United States Filter Corp. (b)....................... 3,500 109,812
United States Industries, Inc........................ 1,800 46,350
United Technologies Corp............................. 2,900 217,319
Universal Health Services, Inc., Class B (b)......... 2,300 100,481
Unocal Corp.......................................... 3,700 147,306
UNUM Corp............................................ 1,300 61,669
USF&G Corp........................................... 8,300 167,556
USG Corp. (b)........................................ 2,100 98,438
UST, Inc............................................. 8,300 256,262
USX-U.S. Steel, Inc.................................. 18,900 591,806
USX-Marathon Group................................... 11,400 390,450
Utilicorp United, Inc................................ 3,500 119,656
</TABLE>
42 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
VF Corp............................................. 1,400 $ 64,663
Valero Energy Corp.................................. 2,900 90,988
Varian Associates, Inc.............................. 2,600 150,150
Vencor, Inc. (b).................................... 2,700 65,475
Viking Office Products, Inc. (b).................... 3,800 88,113
Vintage Petroleum, Inc.............................. 2,400 46,500
Vishay Intertechnology, Inc. (b).................... 4,400 93,225
Vulcan Materials Co................................. 1,800 183,037
Walgreen Co......................................... 1,700 54,719
Wallace Computer Services, Inc...................... 2,600 90,513
Wal-Mart Stores, Inc................................ 28,100 1,122,244
Walt Disney Co...................................... 3,500 332,281
Warner-Lambert Co................................... 1,600 223,800
Waste Management, Inc............................... 2,300 56,638
Weatherford Enterra, Inc. (b)....................... 2,500 112,656
Webster Financial Corp.............................. 1,300 81,453
Wendy's International, Inc.......................... 5,100 107,100
Westamerica Bancorp................................. 2,200 201,025
Western Digital Corp. (b)........................... 2,500 50,469
Westinghouse Electric Corp.......................... 1,700 51,000
Western National Corp............................... 2,300 67,850
Whitman Corp........................................ 14,500 381,531
WICOR, Inc.......................................... 1,600 73,800
Williams Cos., Inc.................................. 100 5,344
Wisconsin Central Transportation Corp. (b).......... 2,600 78,325
Witco Corp.......................................... 2,500 107,812
Worthington Industries, Inc......................... 1,500 27,188
WPS Resources Corp.................................. 5,100 154,594
Xerox Corp.......................................... 3,600 279,675
York International Corp............................. 2,700 125,044
Zions Bancorp....................................... 2,700 108,338
-------------
116,180,308
-------------
TOTAL COMMON STOCKS............................... 253,467,563
-------------
</TABLE>
43 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS 0.3%
AUSTRIA 0.1%
Bau Holdings............................................................................. 200 $ 9,186
Bk Austria Ag............................................................................ 1,466 60,249
Creditanstalt Bank....................................................................... 1,100 54,515
EA-Generali.............................................................................. 100 11,604
Z-Laenderbank Bank Austria............................................................... 2,200 91,301
------------
226,855
------------
FRANCE 0.0%
Casino Guichard Perrach.................................................................. 2,800 155,194
------------
GERMANY 0.2%
RWE, Non Voting.......................................................................... 6,400 257,851
SAP, Non Voting (ADR).................................................................... 1,150 354,097
------------
611,948
------------
TOTAL PREFERRED STOCKS................................................................. 993,997
------------
CORPORATE OBLIGATIONS 0.0%
FRANCE 0.0%
Simco (337,000 par, 3.25% coupon, 01/01/06 maturity, convertible into
650 common shares)....................................................................... 29,171
------------
ITALY 0.0%
Mediobanca, SpA (11,200,000 par, 4.50% coupon, 01/00/00 maturity)........................ 6,373
------------
TOTAL CORPORATE OBLIGATIONS............................................................ 35,544
------------
TOTAL LONG-TERM INVESTMENTS 85.2% (COST $234,609,119).................................... 254,497,104
------------
SHORT-TERM INVESTMENTS AT AMORTIZED COST 13.4%
COMMERCIAL PAPER 13.4%
State Street Bank & Trust Co. ($39,956,000 par, yielding 5.00%, maturing 12/01/97)(a).... 39,956,000
------------
TOTAL INVESTMENTS 98.6% (COST $274,565,119).............................................. 294,453,104
FOREIGN CURRENCY 0.3% (VARIOUS DENOMINATIONS, COST $829,824)............................. 808,893
OTHER ASSETS IN EXCESS OF LIABILITIES 1.1%............................................... 3,203,907
------------
NET ASSETS 100.0%........................................................................ $298,465,904
============
</TABLE>
(a) Assets segregated as collateral for open futures and forward transactions.
(b) Non-income producing security as this security currently does not declare
dividends.
(c) Related party transactions. See Footnote 2.
44 See Notes to Financial Statements
<PAGE>
Statement of Assets and Liabilities
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Total Investments, at Market Value (Cost $274,565,119)...................................... $294,453,104
Foreign Currency, at Market Value (Cost $829,824)........................................... 808,893
Cash........................................................................................ 976
Receivables:
Variation Margin on Futures............................................................... 2,057,747
Dividends................................................................................. 574,382
Fund Shares Sold.......................................................................... 449,384
Investments Sold.......................................................................... 391,031
Interest.................................................................................. 16,649
Forward Currency Contracts.................................................................. 1,686,056
Other....................................................................................... 16
--------------
Total Assets.............................................................................. 300,438,238
--------------
LIABILITIES:
Payables:
Investments Purchased..................................................................... 697,304
Fund Shares Repurchased................................................................... 655,810
Investment Advisory Fee................................................................... 247,323
Distributor and Affiliates................................................................ 244,320
Accrued Expenses............................................................................ 88,265
Trustee's Deferred Compensation and Retirement Plans........................................ 39,312
--------------
Total Liabilities......................................................................... 1,972,334
--------------
NET ASSETS.................................................................................. $298,465,904
==============
NET ASSETS CONSIST OF:
Capital..................................................................................... $228,629,391
Accumulated Net Realized Gain............................................................... 51,292,931
Net Unrealized Appreciation................................................................. 19,800,963
Accumulated Distributions in Excess of Net Investment Income................................ (1,257,381)
--------------
NET ASSETS.................................................................................. $298,465,904
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net assets of
$150,967,296 and 9,321,820 shares of beneficial interest issued and
outstanding)........................................................................... $ 16.20
Maximum sales charge (5.75%* of offering price)........................................... .99
--------------
Maximum offering price to public.......................................................... $ 17.19
==============
Class B Shares:
Net asset value and offering price per share (Based on net assets of $133,364,977
and 8,546,519 shares of beneficial interest issued and outstanding).................... $ 15.60
==============
Class C Shares:
Net asset value and offering price per share (Based on net assets of $14,133,631
and 897,284 shares of beneficial interest issued and outstanding)...................... $ 15.75
==============
</TABLE>
*On sales of $50,000 or more, the sales charge will be reduced.
45 See Notes to Financial Statements
<PAGE>
Statement of Operations
For the Six Months Ended November 30, 1997 (Unaudited)
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of $190,057).................. $ 2,334,418
Interest (Net of foreign withholding taxes of $80)........................ 869,917
-----------
Total Income............................................................ 3,204,335
-----------
EXPENSES:
Investment Advisory Fee................................................... 1,494,556
Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C
of $188,240, $671,029 and $70,567, respectively)........................ 929,836
Shareholder Services...................................................... 764,012
Custody................................................................... 213,860
Legal..................................................................... 10,248
Trustees' Fees and Expenses............................................... 7,040
Other..................................................................... 162,699
-----------
Total Expenses.......................................................... 3,582,251
-----------
NET INVESTMENT LOSS....................................................... $ (377,916)
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................................. $12,027,759
Foreign Currency Transactions........................................... 445,929
Futures................................................................. 174,852
-----------
Net Realized Gain......................................................... 12,648,540
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................................. 26,931,817
-----------
End of the Period:
Investments.......................................................... 19,887,985
Futures.............................................................. (1,747,188)
Forward Currency Contracts........................................... 1,686,056
Foreign Currency Translation......................................... (25,890)
-----------
19,800,963
-----------
Net Unrealized Depreciation During the Period............................. (7,130,854)
-----------
NET REALIZED AND UNREALIZED GAIN.......................................... $ 5,517,686
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS................................ $ 5,139,770
===========
</TABLE>
46 See Notes to Financial Statements
<PAGE>
Statement of Changes in Net Assets
For the Six Months Ended November 30, 1997 and
the Year Ended May 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
November 30, 1997 May 31, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss............................................... $ (377,916) $ (1,952,191)
Net Realized Gain................................................. 12,648,540 42,112,838
Net Unrealized Depreciation During the Period..................... (7,130,854) (810,153)
------------ ------------
Change in Net Assets from Operations.............................. 5,139,770 39,350,494
------------ ------------
Distributions in Excess of Net Investment Income*................. -0- (1,377,948)
Distributions from Net Realized Gain*............................. -0- (6,599,826)
----------- ------------
Total Distributions............................................... -0- (7,977,774)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES............... 5,139,770 31,372,720
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold......................................... 74,838,151 127,851,283
Net Asset Value of Shares Issued Through Dividend Reinvestment.... -0- 7,550,550
Cost of Shares Repurchased........................................ (55,575,934) (101,392,502)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS................ 19,262,217 34,009,331
------------ ------------
TOTAL INCREASE IN NET ASSETS...................................... 24,401,987 65,382,051
NET ASSETS:
Beginning of the Period........................................... 274,063,917 208,681,866
------------ ------------
End of the Period (Including accumulated distributions in
excess of net investment income of $1,257,381 and
$879,465, respectively).......................................... $298,465,904 $274,063,917
============ ============
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended
*Distributions by Class November 30, 1997 May 31, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Distributions in Excess of Net Investment Income:
Class A Shares................................................... $ -0- $(1,133,880)
Class B Shares................................................... -0- (221,577)
Class C Shares................................................... -0- (22,491)
----------- -----------
$ -0- $(1,377,948)
=========== ===========
Distributions from Net Realized Gain:
Class A Shares................................................... $ -0- $(3,319,275)
Class B Shares................................................... -0- (2,976,985)
Class C Shares................................................... -0- (303,566)
----------- -----------
$ -0- $(6,599,826)
=========== ===========
</TABLE>
47 See Notes to Financial Statements
<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
------------------------------------------
Class A Shares November 30, 1997 1997 1996(a) 1995(a) 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period....................................... $15.838 $13.98 $11.79 $11.67 $10.76
------ ----- ----- ----- ------
Net Investment Income/Loss.................................... .008 (.064) (.04) (.04) (.06)
Net Realized and Unrealized Gain.............................. .349 2.460 2.561 .42 1.0125
------ ----- ----- ----- ------
Total from Investment Operations................................ .357 2.396 2.521 .38 .9525
------ ----- ----- ----- ------
Less:
Distributions in Excess of Net Investment Income.............. -0- .137 -0- -0- -0-
Distributions from and in excess of Net Realized Gain......... -0- .401 .331 .26 .0425
------ ------- ------ ------ ------
Total Distributions............................................. -0- .538 .331 .26 .0425
------ ------- ------ ------ ------
Net Asset Value, End of the Period.............................. $16.195 $15.838 $13.98 $11.79 $11.67
------ ------ ------ ------ ------
Total Return (b)................................................ 2.27%* 17.67% 21.85% 3.36% 9.17%
Net Assets at End of the Period (In millions)................... $ 151.0 $ 136.9 $106.7 $ 60.1 $ 41.8
Ratio of Expenses to Average Net Assets (c)..................... 2.02% 2.09% 2.22% 2.29% 2.46%
Ratio of Net Investment Income/Loss to Average Net Assets (c)... .13% (.46%) (.30%) (.35%) (.46%)
Portfolio Turnover.............................................. 50%* 144% 94% 120% 116%
Average Commission Rate per Equity Share Traded (d)............. $.0141 $.0206 $.0199 -- --
</TABLE>
* Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Income/Loss to
Average Net Assets due to VKAC's reimbursement of certain expenses was less
than 0.01%.
(d) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.
48 See Notes to Financial Statements
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended May 31
---------------------------------------------
Class B Shares November 30, 1997 1997 1996(a) 1995(a) 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period............ $15.318 $ 13.53 $ 11.50 $ 11.48 $ 10.67
------- ------- ------- ------- -------
Net Investment Loss................ (.043) (.139) (.14) (.13) (.13)
Net Realized and Unrealized Gain... .329 2.358 2.501 .41 .9825
------- ------- ------- ------- -------
Total from Investment Operations..... .286 2.219 2.361 .28 .8525
------- ------- ------- ------- -------
Less:
Distributions in Excess
of Net Investment Income.......... -0- .030 -0- -0- -0-
Distributions from and in
Excess of Net Realized Gain....... -0- .401 .331 .26 .0425
------- ------- ------- ------- -------
Total Distributions.................. -0- .431 .331 .26 .0425
------- ------- ------- ------- -------
Net Asset Value,
End of the Period................. $15.604 $15.318 $ 13.53 $ 11.50 $ 11.48
======= ======= ======= ======= =======
Total Return (b)..................... 1.83%* 16.83% 20.90% 2.62% 8.21%
Net Assets at End
of the Period (In millions)....... $ 133.4 $ 124.1 $ 92.8 $ 64.7 $ 48.8
Ratio of Expenses to
Average Net Assets (c)............ 2.78% 2.86% 2.99% 3.05% 3.21%
Ratio of Net Investment Loss
to Average Net Assets (c)......... (.63%) (1.22%) (1.11%) (1.11%) (1.19%)
Portfolio Turnover................... 50%* 144% 94% 120% 116%
Average Commission Rate
per Equity Share Traded (d)....... $ .0141 $ .0206 $ .0199 -- --
</TABLE>
* Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Loss to Average Net
Assets due to VKAC's reimbursement of certain expenses was less than 0.01%.
(d) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.
49 See Notes to Financial Statements
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
June 21, 1993
(Commencement
Six Months Ended Year Ended May 31, of Distribution)
----------------------------
Class C Shares November 30, 1997 1997 1996(a) 1995(a) to May 31, 1994(a)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period....................... $15.464 $ 13.66 $11.61 $11.59 $ 10.29
------- ------- ------ ------ --------
Net Investment Loss.............. (.045) (.137) (.14) (.13) (.13)
Net Realized and
Unrealized Gain................. .333 2.372 2.521 .41 1.4725
------- ------- ------ ------ --------
Total from Investment
Operations....................... .288 2.235 2.381 .28 1.3425
------- ------- ------ ------ --------
Less:
Distributions in Excess of Net
Investment Income............... -0- .030 -0- -0- -0-
Distributions from and in Excess
of Net Realized Gain............ -0- .401 .331 .26 .0425
------- ------- ------ ------ --------
Total Distributions................. -0- .431 .331 .26 .0425
------- ------- ------ ------ --------
Net Asset Value,
End of the Period................ $15.752 $15.464 $13.66 $11.61 $ 11.59
======= ======= ====== ====== ========
Total Return (b).................... 1.88%* 16.82% 20.87% 2.60% 13.06%*
Net Assets at End of the
Period (In millions)............. $ 14.1 $ 13.0 $ 9.2 $ 6.6 $ 5.1
Ratio of Expenses to Average
Net Assets (c)................... 2.79% 2.87% 3.00% 3.05% 3.21%
Ratio of Net Investment Loss
to Average Net Assets (c)........ (.64%) (1.23%) (1.10%) (1.13%) (1.15%)
Portfolio Turnover.................. 50%* 144% 94% 120% 116%
Average Commission Rate per
Equity Share Traded (d).......... $ .0141 $ .0206 $ 0199 -- --
</TABLE>
* Non-Annualized
(a) Based on average month-end shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Loss to Average Net
Assets due to VKAC's reimbursement of certain expenses was less than 0.01%.
(d) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.
50 See Notes to Financial Statements
<PAGE>
Notes to Financial Statements
November 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Global Equity 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 diversified open-end management
investment company under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to provide long-term growth of capital by
investing in an internationally diversified portfolio of equity securities.
Investments in foreign securities involve certain risks not ordinarily
associated 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 Fund commenced investment operations on
August 5, 1991. The distribution of the Fund's Class B and Class C shares
commenced on November 15, 1991 and June 21, 1993, respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Unlisted securities and listed securities for which the last sales price is not
available are valued at the last bid price. Fixed income investments are stated
at value using market quotations. For those securities where quotations or
prices are not available, valuations are determined in accordance with
procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements, which are short-term investments
in which the Fund acquires ownership of a debt security and the seller agrees to
repurchase the security at a future time and specified price. The Fund may
invest independently in repurchase agreements, or transfer uninvested cash
balances into a pooled cash account along with other investment companies
advised by Van Kampen American Capital Asset Management, Inc. (the "Adviser")
or its affiliates, the daily aggregate of which is invested in repurchase
agreements. Repurchase agreements are fully collateralized by the underlying
debt security. The Fund will make payment for such securi-
51
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
ties only upon physical delivery or evidence of book entry transfer to the
account of the custodian bank. The seller is required to maintain the value of
the underlying security at not less than the repurchase proceeds due the Fund.
C. INVESTMENT INCOME-Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Original issue discount is
amortized over the life of each applicable security. Premiums on debt securities
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 currencies
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 prevailing
when such securities were acquired or sold. Income and expenses are translated
at rates prevailing when accrued. Gains and losses on the sale of securities are
not segregated for financial reporting purposes between amounts arising from
changes in exchange rates and amounts arising from changes in the market prices
of securities. 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.
E. FEDERAL INCOME TAXES-It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
At November 30, 1997, for federal income tax purposes, cost of long- and
short-term investments is $275,853,361; the aggregate gross unrealized
appreciation is $30,168,418 and the aggregate gross unrealized depreciation is
$10,820,914, resulting in net unrealized appreciation on investments, futures,
forward currency contracts and foreign currency of $19,347,504.
F. DISTRIBUTION OF INCOME AND GAINS-The Fund declares and pays dividends
annually from net investment income. Net realized gains, if any, are distributed
annually. Net investment income 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.
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. Investment advisory fees are
52
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
calculated monthly, based on the average daily net assets of the Fund at the
annual rate of 1.00%. The Adviser has entered into a subadvisory agreement with
Morgan Stanley Asset Management Inc. (the "Subadvised") who provides advisory
services to the Fund and the Adviser with respect to the Fund's investments. The
Adviser pays 50% of its investment advisory fee to the Subadviser.
For the six months ended November 30, 1997, the Fund recognized expenses of
approximately $10,200 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
For the six months ended November 30, 1997, the Fund recognized expenses of
approximately $10,800 representing VKAC's cost of providing accounting services
to the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc. (("ACCESS")), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
November 30, 1997, the Fund recognized expenses of approximately $582,200,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit.
Certain officers and trustees of the Fund are also officers and directors
of VKAC. The Fund does not compensate its officers or trustees who are officers
of VKAC.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Fund. The maximum annual
benefit per Trustee under the plan is equal to $2,500.
During the period, the Fund owned the following Morgan Stanley Funds which
were managed by the Subadviser:
<TABLE>
<CAPTION>
Transactions
During the Period
----------------------
% of Net Assets Cost of Proceeds
At November 30, 1997 Purchases of Sales
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Latin America Discovery Fund, Inc....... 1.32% $1,494,859 $ -0-
Morgan Stanley Asia Pacific Fund, Inc... 0.31% $ -0- $1,353,262
Morgan Stanley India Investment Fund.... 0.00% $ -0- $1,547,936
</TABLE>
53
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of shares of beneficial interest, Classes
A, B and C, each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized.
At November 30, 1997, capital aggregated $114,356,947, $103,089,702 and
$11,182,742 for Classes A, B and C, respectively. For the six months ended
November 30, 1997, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A....................................... 3,192,732 $ 53,170,480
Class B....................................... 1,191,878 19,184,987
Class C....................................... 153,134 2,482,684
----------- ------------
Total Sales..................................... 4,537,744 $ 74,838,151
=========== ============
Dividend Reinvestment:
Class A....................................... -0- $ -0-
Class B....................................... -0- -0-
Class C....................................... -0- -0-
----------- ------------
Total Dividend Reinvestment..................... -0- $ -0-
=========== ============
Repurchases:
Class A....................................... (2,516,132) $(41,987,054)
Class B....................................... (746,628) (11,973,706)
Class C....................................... (99,227) (1,615,174)
----------- ------------
Total Repurchases............................... (3,361,987) $(55,575,934)
=========== ============
</TABLE>
54
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997 (Unaudited)
- ------------------------------------------------------------------------------
At May 31, 1997, capital aggregated $103,173,521, $95,878,421 and
$10,315,232 for Classes A, B and C, respectively. For the year ended May 31,
1997, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------------------------
Sales:
<S> <C> <C>
Class A....................................... 6,134,539 $ 89,228,576
Class B....................................... 2,431,724 34,006,661
Class C....................................... 326,525 4,616,046
----------- -------------
Total Sales..................................... 8,892,788 $ 127,851,283
=========== =============
Dividend Reinvestment:
Class A....................................... 304,883 $ 4,257,239
Class B....................................... 221,179 2,997,101
Class C....................................... 21,652 296,210
----------- -------------
Total Dividend Reinvestment..................... 547,714 $ 7,550,550
=========== =============
Repurchases:
Class A....................................... (5,426,393) $ (79,299,631)
Class B....................................... (1,408,797) (19,584,581)
Class C....................................... (176,672) (2,508,290)
----------- -------------
Total Repurchases............................... (7,011,862) $(101,392,502)
=========== =============
</TABLE>
Class B and C shares are offered without a front-end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC will be imposed
on most redemptions made within five years of the purchase for Class B and one
year of the purchase for Class C as detailed in the following schedule. The
Class B and C shares bear the expense of their respective deferred sales
arrangements, including higher distribution and service fees and incremental
transfer agency costs.
55
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Contingent Deferred
Sales Charge
--------------------
Year of Redemption Class B Class C
- ------------------------------------------------------------------------------
<S> <C> <C>
First................................................... 5.00% 1.00%
Second.................................................. 4.00% None
Third................................................... 3.00% None
Fourth.................................................. 2.50% None
Fifth................................................... 1.50% None
Sixth and Thereafter.................................... None None
</TABLE>
For the six months ended November 30, 1997, VKAC, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of
approximately $49,000 and CDSC on the redeemed shares of approximately $87,400.
Sales charges do not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $128,589,743 and $136,604,808,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio, manage the portfolio's effective yield, foreign currency exposure, or
generate potential gain. All of the Fund's portfolio holdings, including
derivative instruments, are marked to market each day with the change in value
reflected in unrealized appreciation/depreciation. Upon disposition, a realized
gain or loss is recognized accordingly, except when taking delivery of a
security underlying a futures or forward contract. In this instance, the
recognition of gain or loss is postponed until the disposal of the security
underlying the futures or forward contract.
Summarized below are the specific types of derivative financial instruments
used by the Fund.
A. FUTURES CONTRACTS-A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Fund generally invests in stock index futures. These contracts are generally
used to provide the return of an index without purchasing all the securities
underlying the index or to manage the Fund's overall exposure to the equity
markets.
Upon entering into future contracts, the Fund maintains, in a segregated
account with its custodian, securities with a value equal to its obligation
under the futures contracts. During the period
56
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
the futures contract is open, payments are received from or made to the broker
based upon changes in the value of the contract (the variation margin).
Transactions in futures contracts for the six months ended November 30,
1997, were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- --------------------------------------------------------------------------------
<S> <C>
Outstanding at May 31, 1997........................................ 25
Futures Opened..................................................... 545
Futures Closed..................................................... (297)
-----
Outstanding at November 30, 1997................................... 273
=====
</TABLE>
The futures contracts outstanding as of November 30, 1997, and the
description and unrealized appreciation/depreciation are as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION/
DESCRIPTION CONTRACTS DEPRECIATION
- -------------------------------------------------------------------------------
<S> <C> <C>
LONG CONTRACTS
CAC 40 (France) Index Future, Dec. 1997
(Current Notional Value of $572,600 per contract)... 40 $ (191,718)
FTSE 100 (United Kingdom) Index Future, Dec. 1997
(Current Notional Value of $205,455)................ 60 (1,298,737)
Milan (Italy) Stock Index Future, Dec. 1997
(Current Notional Value of $134,056)................ 10 45,278
SHORT CONTRACTS
Topix (Japan) Future, Dec. 1997
(Current Notional Value of $9,880).................. 65 (238,367)
OMX Stock (Sweden) Index Futures, Dec. 1997
(Current Notional Value of $31,645)................. 90 (180,516)
DAX (Germany) Index Futures, Dec. 1997
(Current Notional Value of $225,925)................ 8 116,872
----- -----------
273 (1,747,188)
===== ===========
</TABLE>
57
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
B. Foward Currency Contracts- These instruments are commitments to purchase or
sell a foreign currency at a future date at a negotiated forward rate. The gain
or loss arising from the difference between the original value of the contract
and the closing value of such contract is included as a component of realized
gain/loss on foreign currency.
At November 30, 1997, the Fund has outstanding forward currency contracts
as follows:
<TABLE>
<CAPTION>
Unrealized
Current Appreciation/
Description Value Depreciation
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG CONTRACTS
Australian Dollar,
1,300,000 expiring 12/19/97.................................. $ 888,274 $ (50,066)
French Franc,
42,528,152 expiring 12/15/97-01/21/98........................ 7,218,026 (81,658)
German Mark,
11,084,635 expiring 01/16/98................................. 6,304,425 (157,696)
Italian Lira,
13,934,888,400 expiring 01/21/98-02/19/98.................... 8,063,768 (54,235)
Japanese Yen,
1,362,193,460 expiring 01/26/98-03/16/98..................... 10,776,995 (487,415)
Netherlands Guilder,
1,241,728 expiring 02/19/98.................................. 627,915 (16,704)
Spanish Peseta,
235,233,580 expiring 12/18/97-02/12/98....................... 1,578,866 (32,097)
---------
$(879,871)
---------
SHORT CONTRACTS
Australian Dollar,
1,300,000 expiring 12/19/97.................................. 888,274 51,236
German Mark,
16,614,418 expiring 01/16/98-03/16/98........................ 9,453,772 17,228
French Franc,
30,072,747 expiring 12/15/97-03/16/98........................ 5,105,458 (16,349)
Italian Lira,
13,934,888,400 expiring 01/21/98-02/19/98.................... 8,063,768 85,107
Japanese Yen,
4,181,480,772 expiring 01/21/98-02/26/98..................... 33,115,735 2,341,822
</TABLE>
58
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Unrealized
Current Appreciation/
Description Value Depreciation
- ---------------------------------------------------------------------------
<S> <C> <C>
SHORT CONTRACTS (CONTINUED)
Netherlands Guilder,
1,241,728 expiring 02/19/98................ $ 627,915 $ 12,085
Spanish Peseta,
235,233,580 expiring 12/18/97-02/12/98..... 1,578,866 3,063
Swedish Krona,
21,240,565 expiring 02/18/97............... 2,758,265 71,735
----------
$2,565,927
==========
</TABLE>
6. DISTRIBUTION AND SERVICE PLANS
The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a service plan (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.
Annual fees under the Plans of up to .25% of Class A net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these fees
for the six months ended November 30, 1997, are payments to VKAC of
approximately $585,700.
59
<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
Growth Fund
Pace Fund
Growth & Income
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 York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
MORGAN STANLEY
FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
U.S. Real Estate Fund
Value Fund
Worldwide High Income Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us weekdays from 7:00 a.m. to 7:00 p.m.
Central time at 1-800-341-2911 for Van Kampen American Capital and Morgan
Stanley funds.
60
<PAGE>
Van Kampen American Capital Global Equity Fund
Board of Trustees
J. MILES BRANAGAN
RICHARD M. DEMARTINI*
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
JACK E. NELSON
JEROME L. ROBINSON
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN* - CHAIRMAN
Officers
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
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
MORGAN STANLEY ASSET
MANAGEMENT INC.
1585 Broadway
New York, New York 10036
Distributor
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Shareholder Servicing Agent
ACCESS INVESTOR
SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
Custodian
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
Legal Counsel
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
Independent Accountants
PRICE WATERHOUSE LLP
200 E. Randolph
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the Investment Company
Act of 1940 .
(C) Van Kampen American Capital Distributors, Inc., 1997 All rights reserved.
(SM) denotes a service mark of
Van Kampen American Capital Distributors, Inc.
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless it
has been preceded or is accompanied by an effective prospectus of the Fund which
contains additional information on how to purchase shares, the sales charge, and
other pertinent data. After March 31, 1997, this report, if used with
prospective investors, must be accompanied by a quarterly performance update, if
applicable.
61
<PAGE>
----------------
Bulk Rate
Van Kampen American Capital Distributors, Inc. U.S. Postage
One Parkview Plaza PAID
Oakbrook Terrace, Illinois 60181 VAN KAMPEN
AMERICAN CAPITAL
----------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> GLOBAL EQUITY FUND CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 274,565,119<F1>
<INVESTMENTS-AT-VALUE> 294,453,104<F1>
<RECEIVABLES> 3,489,193<F1>
<ASSETS-OTHER> 16<F1>
<OTHER-ITEMS-ASSETS> 2,495,925<F1>
<TOTAL-ASSETS> 300,438,238<F1>
<PAYABLE-FOR-SECURITIES> 697,304<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,275,030<F1>
<TOTAL-LIABILITIES> 1,972,334<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 114,356,947
<SHARES-COMMON-STOCK> 9,321,820
<SHARES-COMMON-PRIOR> 8,645,220
<ACCUMULATED-NII-CURRENT> (1,257,381)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 51,292,931<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 19,800,963<F1>
<NET-ASSETS> 150,967,296
<DIVIDEND-INCOME> 2,334,418<F1>
<INTEREST-INCOME> 869,917<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (3,582,251)<F1>
<NET-INVESTMENT-INCOME> (377,916)<F1>
<REALIZED-GAINS-CURRENT> 12,648,540<F1>
<APPREC-INCREASE-CURRENT> (7,130,854)<F1>
<NET-CHANGE-FROM-OPS> 5,139,770<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,192,732
<NUMBER-OF-SHARES-REDEEMED> (2,516,132)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,042,691
<ACCUMULATED-NII-PRIOR> (879,465)<F1>
<ACCUMULATED-GAINS-PRIOR> 38,644,391<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,494,556<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 3,582,251<F1>
<AVERAGE-NET-ASSETS> 150,591,945
<PER-SHARE-NAV-BEGIN> 15.838
<PER-SHARE-NII> 0.008
<PER-SHARE-GAIN-APPREC> 0.349
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.195
<EXPENSE-RATIO> 2.02
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> GLOBAL EQUITY FUND CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 274,565,119<F1>
<INVESTMENTS-AT-VALUE> 294,453,104<F1>
<RECEIVABLES> 3,489,193<F1>
<ASSETS-OTHER> 16<F1>
<OTHER-ITEMS-ASSETS> 2,495,925<F1>
<TOTAL-ASSETS> 300,438,238<F1>
<PAYABLE-FOR-SECURITIES> 697,304<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,275,030<F1>
<TOTAL-LIABILITIES> 1,972,334<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 103,089,702
<SHARES-COMMON-STOCK> 8,546,519
<SHARES-COMMON-PRIOR> 8,101,269
<ACCUMULATED-NII-CURRENT> (1,257,381)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 51,292,931<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 19,800,963<F1>
<NET-ASSETS> 133,364,977
<DIVIDEND-INCOME> 2,334,418<F1>
<INTEREST-INCOME> 869,917<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (3,582,251)<F1>
<NET-INVESTMENT-INCOME> (377,916)<F1>
<REALIZED-GAINS-CURRENT> 12,648,540<F1>
<APPREC-INCREASE-CURRENT> (7,130,854)<F1>
<NET-CHANGE-FROM-OPS> 5,139,770<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,191,878
<NUMBER-OF-SHARES-REDEEMED> (746,628)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,268,249
<ACCUMULATED-NII-PRIOR> (879,465)<F1>
<ACCUMULATED-GAINS-PRIOR> 38,644,391<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,494,556<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 3,582,251<F1>
<AVERAGE-NET-ASSETS> 134,205,807
<PER-SHARE-NAV-BEGIN> 15.318
<PER-SHARE-NII> (0.043)
<PER-SHARE-GAIN-APPREC> 0.329
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 15.604
<EXPENSE-RATIO> 2.78
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> Global Equity Fund Class C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 274,565,119<F1>
<INVESTMENTS-AT-VALUE> 294,453,104<F1>
<RECEIVABLES> 3,489,193<F1>
<ASSETS-OTHER> 16<F1>
<OTHER-ITEMS-ASSETS> 2,495,925<F1>
<TOTAL-ASSETS> 300,438,238<F1>
<PAYABLE-FOR-SECURITIES> 697,304<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,275,030<F1>
<TOTAL-LIABILITIES> 1,972,334<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 11,182,742
<SHARES-COMMON-STOCK> 897,284
<SHARES-COMMON-PRIOR> 843,377
<ACCUMULATED-NII-CURRENT> (1,257,381)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 51,292,931<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 19,800,963<F1>
<NET-ASSETS> 14,133,631
<DIVIDEND-INCOME> 2,334,418<F1>
<INTEREST-INCOME> 869,917<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (3,582,251)<F1>
<NET-INVESTMENT-INCOME> (377,916)<F1>
<REALIZED-GAINS-CURRENT> 12,648,540<F1>
<APPREC-INCREASE-CURRENT> (7,130,854)<F1>
<NET-CHANGE-FROM-OPS> 5,139,770<F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 153,134
<NUMBER-OF-SHARES-REDEEMED> (99,227)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,091,047
<ACCUMULATED-NII-PRIOR> (879,465)<F1>
<ACCUMULATED-GAINS-PRIOR> 38,644,391<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,494,556<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 3,582,251<F1>
<AVERAGE-NET-ASSETS> 14,113,503
<PER-SHARE-NAV-BEGIN> 15.464
<PER-SHARE-NII> (0.045)
<PER-SHARE-GAIN-APPREC> 0.333
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 15.752
<EXPENSE-RATIO> 2.79
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not a class basis
</FN>
</TABLE>
