<PAGE>
VAN KAMPEN AMERICAN CAPITAL
GLOBAL EQUITY FUND
Annual Report
May 31, 1998
A Wealth of Knowledge - A Knowledge of Wealth(sm)
VAN KAMPEN AMERICAN CAPITAL
<PAGE>
Table of Contents
Letter to Shareholders 1
Performance Results 4
Putting Your Fund's Performance in Perspective 5
Portfolio Management Review 6
Portfolio of Investments 8
Statement of Assets and Liabilities 31
Statement of Operations 32
Statement of Changes in Net Assets 33
Financial Highlights 34
Notes to Financial Statements 37
Report of Independent Accountants 42
GE ANR 7/98
<PAGE>
LETTER TO SHAREHOLDERS
June 26, 1998
Dear Shareholder,
The recent announcement that the federal government will generate a
budget surplus this year for the first time since 1969 gives us pause to reflect
on how far the nation's finances have come during the past 15 years. Many
Americans can remember the 1970s, when a painful outbreak of inflation
undermined investment returns and lowered living standards. Just a few years
ago, the federal budget was still nearly $300 billion in the red and the U.S.
dollar was weak.
Today, economic growth is robust, inflation is virtually nonexistent,
the job market is healthy, and the dollar is rising around the world. Against
this backdrop, stock and bond prices have appreciated considerably since the
nation's inflationary fever began to subside more than a decade ago. From a
long-term perspective, however, history tells us that the good times will not
last forever.
At Van Kampen American Capital, we are pleased to provide investors
with products and tools for all economic climates. As always, we remain vigilant
in identifying changes in the investment environment that might affect our fund
shareholders. In the meantime, we encourage you to talk to your adviser about
how diversification can help your portfolio's long-term performance.
ECONOMIC OVERVIEW
It was the best of times and the worst of times for the global economy.
The United States and Europe each enjoyed strong growth with virtually no
inflation. In Asia, however, many economies experienced their first brush with
recession in more than a decade while Japan remained mired in a deep and
prolonged slump.
The American economy cruised into the eighth year of a vigorous
expansion with no end in sight. Economic growth accelerated during the later
stages of the reporting period, with the nationis total output of goods and
services growing at a 4.2 percent annualized rate in the first quarter of 1998.
Meanwhile, unemployment fell to a 28-year low of 4.3 percent in April. Despite
robust growth and low unemployment, inflation remained benign. During the 12
months through May, consumer prices rose by only 1.7 percent. A rising dollar,
tepid demand for U.S. goods in Asia, and falling commodity prices offset the
inflationary impact of the tight labor market.
Europe also experienced solid growth with low inflation. However,
unemployment in the region remains near double digit rates, a legacy of Europeis
traditionally high cost of doing business. In May, the European Monetary Union
(EMU) named its inaugural 11 nations. The near certainty of a common currency
(the euro) led to a wave of mergers and acquisitions, particularly in the
pharmaceutical and financial industries.
As the reporting period ended, several Asian economies were struggling
in the aftermath of last yearis currency crisis. South Korea, Hong Kong, and
Malaysia each showed negative economic growth during the first quarter. With
inflation reaching nearly 50 percent, social and political unrest broke out in
Indonesia, leading to the resignation of President Suharto. Rising unemployment
in South Korea resulted in nationwide strikes. Complicating the regionis
problems was the inability of Japan to pull out of a nearly decade-long economic
slump. Without help from Japanese consumers, already-struggling Asian economies
lose an important export market.
1 Continued on page two
<PAGE>
MARKET OVERVIEW
Reflecting the wide disparity in global economic conditions, stocks in
the United States and Europe soared, while most Asian markets suffered deep
losses. In the 12 months through May, the Wilshire 5000 Index of U.S. stocks
increased 28.6 percent, while the Dow Jones Europe/Africa Index gained 38.2
percent. During the same period, the Dow Jones Asia/Pacific Index decreased 34.1
percent in U.S. dollar terms, from 108.33 on May 31, 1997 to 74.24 on May 31,
1998.
European equity markets were led by Portugal and Italy, increasing 84.5
percent and 82.3 percent, respectively, where interest rates fell in
anticipation of monetary union. Strength in Europe was broad based, however,
with markets in Belgium, Finland, France, Germany, Greece, Ireland, Spain,
Switzerland, and the Netherlands each gaining more than 40 percent in dollar
terms.
It was a far different story in Asia, where Indonesia, Malaysia, South
Korea, and Thailand each decreased by more than 60 percent during the reporting
period. Singapore and the Philippines also lost about 50 percent each, while the
huge Hong Kong market fell nearly 44 percent in dollar terms, from $324.98 on
May 31, 1997 to $182.12 on May 31, 1998. Most of the decline in Asian markets
occurred last fall, as currencies plunged in the wake of the devaluation of the
Thai baht. But after the market mounted brief rallies early in 1998, the
widespread marking down of economic growth and earnings projections, coupled
with social and political unrest, caused a collapse of investor confidence in
the region. As the reporting period ended, many Asian markets were trading near
12-month lows.
Equity markets in Latin America also were negatively affected by
fallout from Asia. The Dow Jones Latin America Index decreased 17 percent in
dollar terms, from $218.30 on May 31, 1997 to $181.00 on May 31, 1998. Investors
worried about economic growth rates and currency values in the region, in part
because Latin American companies export industrial commodities and energy
products to Asia. Also, the relatively high interest rates required to stabilize
Latin American currencies could erode corporate profits.
OUTLOOK
We remain optimistic about European markets, based on the regionis
accelerating growth rate and the introduction of a common currency next year.
Also, more European investors are leaving the sanctuary of money market funds in
favor of equities as interest rates decline. We are particularly upbeat about
stocks in Italy and Spain, as well as the European banking sector in general.
Our outlook for Asia is guarded. A quick fix to the financial crisis
that shook the region last year is not likely to be forthcoming. Instead, a
series of meaningful reforms encompassing both the public and private sectors
must be undertaken before a lasting recovery can begin. As the reporting period
ended, the reforms necessary to set Asian economies on a healthier path had yet
to be accomplished.
In our opinion, economic growth in the United States is likely to slow
in coming months as the impact of the Asian crisis becomes more evident. The
deflationary effects of Asia will also serve to limit the ability of domestic
companies to raise prices. Coupled with rising wages, this loss of pricing power
could pinch corporate profit margins in coming months. With equities already
trading at record valuations, we are cautious about the ability of U.S.
stocks to produce a significant rally from current levels.
Additional details about your Fund, including a question-and-answer
section with your portfolio management team, are provided in this report. As
always, we are pleased to have the opportunity to serve you and your family
through our diverse selection of quality investments.
2 Continued on page three
<PAGE>
FUND MERGER
On June 4, 1998, shareholders approved the reorganization of the Van Kampen
American Capital Global Equity Fund into the Morgan Stanley Global Equity
Allocation Fund. The two funds have similar investment objectives and policies
as outlined in the Morgan Stanley Global Equity Allocation Fund prospectus you
received with your proxy. For more information, please see footnote 7 in the
Notes to Financial Statements section. Daily pricing is available by calling
FundInfo, our 24-hour automated phone system, at 1-800-847-2424 or by visiting
our Internet site at www.vkac.com and selecting Investors' Place.
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 YEAR ENDED MAY 31, 1998
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
TOTAL RETURNS A SHARES B SHARES C SHARES
<S> <C> <C> <C>
One-year total return based on NAV(1) 19.77% 18.91% 18.86%
One-year total return(2) 12.86% 13.91% 17.86%
Five-year average annual total return(2) 12.81% 13.09% N/A
Life-of-Fund average annual total return(2) 12.35% 11.96% 14.44%
Commencement Date 8/5/91 11/15/91 6/21/93
N/A=Not Applicable
<FN>
(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).
</FN>
</TABLE>
See the Prior Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. Fund shares, when redeemed, may be worth more
or less than their original cost.
Market forecasts provided in this report may not necessarily come to pass.
4
<PAGE>
PUTTING YOUR FUND'S PERFORMANCE IN PERSPECTIVE
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment portfolio's performance at regular intervals.
A good starting point is a comparison of your investment holdings to an
applicable benchmark, such as a broad-based market index. Such a comparison can:
- Illustrate the general market environment in which your investments
are being managed
- Reflect the impact of favorable market trends or difficult market
conditions
- Help you evaluate the extent to which your Fund's management team
has responded to the opportunities and challenges presented to them
over the period measured
For these reasons, you may find it helpful to review the chart below,
which compares your Fund's performance to that of the Morgan Stanley Capital
International (MSCI) World Index + Dividends over time. As a broad-based
statistical composite, this index does not reflect any commissions that would be
incurred by an investor purchasing the securities it represents. Similarly, its
performance does not reflect any sales charges or other costs which would be
applicable to an actively managed portfolio, such as that of the Fund.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Van Kampen American Capital Global Equity Fund vs. Morgan Stanley
Capital International (MSCI) World Index + Dividends (August 19, 1991
through May 31, 1998)
<TABLE>
<CAPTION>
[MOUNTAIN CHART]
MONTH FUND VALUE INDEX VALUE
----- ---------- -----------
<S> <C> <C>
Aug-91 $ 9,424.00 $ 10,000.00
Sep-91 $ 9,929.00 $ 10,264.00
Oct-91 $ 10,111.00 $ 10,432.00
Nov-91 $ 9,707.00 $ 9,979.00
Dec-91 $ 10,333.00 $ 10,708.00
Jan-92 $ 10,394.00 $ 10,511.00
Feb-92 $ 10,394.00 $ 10,331.00
Mar-92 $ 10,018.00 $ 9,847.00
Apr-92 $ 10,262.00 $ 9,986.00
May-92 $ 10,658.00 $ 10,385.00
Jun-92 $ 10,303.00 $ 10,039.00
Jul-92 $ 10,140.00 $ 10,066.00
Aug-92 $ 10,181.00 $ 10,313.00
Sep-92 $ 10,038.00 $ 10,220.00
Oct-92 $ 9,906.00 $ 9,945.00
Nov-92 $ 10,048.00 $ 10,125.00
Dec-92 $ 10,220.00 $ 10,209.00
Jan-93 $ 10,295.00 $ 10,245.00
Feb-93 $ 10,401.00 $ 10,489.00
Mar-93 $ 10,655.00 $ 11,099.00
Apr-93 $ 11,047.00 $ 11,616.00
May-93 $ 11,364.00 $ 11,885.00
Jun-93 $ 11,036.00 $ 11,787.00
Jul-93 $ 11,269.00 $ 12,032.00
Aug-93 $ 11,852.00 $ 12,586.00
Sep-93 $ 11,799.00 $ 12,355.00
Oct-93 $ 12,106.00 $ 12,698.00
Nov-93 $ 11,491.00 $ 11,981.00
Dec-93 $ 12,311.00 $ 12,570.00
Jan-94 $ 12,917.00 $ 13,401.00
Feb-94 $ 12,694.00 $ 13,230.00
Mar-94 $ 12,183.00 $ 12,661.00
Apr-94 $ 12,524.00 $ 13,055.00
May-94 $ 12,407.00 $ 13,091.00
Jun-94 $ 12,343.00 $ 13,057.00
Jul-94 $ 12,566.00 $ 13,307.00
Aug-94 $ 12,875.00 $ 13,710.00
Sep-94 $ 12,524.00 $ 13,353.00
Oct-94 $ 12,715.00 $ 13,735.00
Nov-94 $ 12,045.00 $ 13,142.00
Dec-94 $ 12,105.00 $ 13,271.00
Jan-95 $ 11,692.00 $ 13,075.00
Feb-95 $ 11,833.00 $ 13,268.00
Mar-95 $ 12,301.00 $ 13,910.00
Apr-95 $ 12,639.00 $ 14,397.00
May-95 $ 12,824.00 $ 14,523.00
Jun-95 $ 13,009.00 $ 14,522.00
Jul-95 $ 13,782.00 $ 15,251.00
Aug-95 $ 13,640.00 $ 14,914.00
Sep-95 $ 13,945.00 $ 15,351.00
Oct-95 $ 13,673.00 $ 15,113.00
Nov-95 $ 13,858.00 $ 15,640.00
Dec-95 $ 14,117.00 $ 16,100.00
Jan-96 $ 14,430.00 $ 16,394.00
Feb-96 $ 14,710.00 $ 16,497.00
Mar-96 $ 14,989.00 $ 16,775.00
Apr-96 $ 15,481.00 $ 17,172.00
May-96 $ 15,626.00 $ 17,190.00
Jun-96 $ 15,660.00 $ 17,280.00
Jul-96 $ 14,933.00 $ 16,673.00
Aug-96 $ 15,436.00 $ 16,868.00
Sep-96 $ 15,995.00 $ 17,531.00
Oct-96 $ 15,984.00 $ 17,657.00
Nov-96 $ 16,655.00 $ 18,649.00
Dec-96 $ 16,600.00 $ 18,354.00
Jan-97 $ 17,215.00 $ 18,578.00
Feb-97 $ 17,343.00 $ 18,795.00
Mar-97 $ 17,088.00 $ 18,426.00
Apr-97 $ 17,482.00 $ 19,032.00
May-97 $ 18,388.00 $ 20,210.00
Jun-97 $ 19,282.00 $ 21,221.00
Jul-97 $ 20,117.00 $ 22,202.00
Aug-97 $ 18,817.00 $ 20,720.00
Sep-97 $ 19,676.00 $ 21,849.00
Oct-97 $ 18,597.00 $ 20,702.00
Nov-97 $ 18,806.00 $ 21,072.00
Dec-97 $ 19,212.00 $ 21,332.00
Jan-98 $ 19,653.00 $ 21,930.00
Feb-98 $ 20,952.00 $ 23,417.00
Mar-98 $ 22,010.00 $ 24,409.00
Apr-98 $ 22,077.00 $ 24,651.00
May-98 $ 22,023.00 $ 24,346.00
Fund's Total Return
1 Year Avg. Annual = 12.86%
5 Year Avg. Annual = 12.81%
Inception Avg. Annual = 12.35%
</TABLE>
The above chart reflects the performance of Class A shares of the Fund. The
performance of Class A shares will differ from that of other share classes of
the Fund because of the difference in sales charges and/or expenses paid by
shareholders investing in the different share classes. The Fund's performance
assumes reinvestment of all distributions and includes payment of the maximum
sales charge (5.75% for A shares).
While past performance is not indicative of future performance, the above
information provides a broader vantage point from which to evaluate the
discussion of the Fund's performance found in the following pages.
5
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
We recently spoke with the management team of the Van Kampen American Capital
Global Equity Fund about the key events and economic forces that shaped the
markets during the past twelve months. 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. The
following excerpts reflect their views on the Fund's performance during the
12-month period ended May 31, 1998.
Q HOW WOULD YOU CHARACTERIZE THE MARKET CONDITIONS IN WHICH THE FUND OPERATED
DURING THE REPORTING PERIOD?
A During the period, there were several prevailing trends in the
global marketplace:
Asian stocks remained weak in the aftermath of the severe
financial crisis that shook the region last year. After rebounding
early in 1998, most Asian markets fell back toward 12-month lows
as social and political turmoil underscored the deepening
recession. And, chronic economic weakness in Japan has compounded
the difficulties for its Asian trading partners.
European stocks soared on strengthening economic growth, falling
interest rates, and low inflation. In May, the European Monetary
Union (EMU), set to begin in January 1999, officially named its 11
participant nations. We believe that monetary union will enhance
Europe's growth and ability to restructure its markets and
economies. We further expect to see continued cross-border mergers
and acquisitions, especially in the financial sector.
In the United States, stocks continued a more than seven-year
bull market, powered by robust economic growth and exceptionally
low inflation. As the reporting period ended, however, there was
tentative evidence that drag from Asia was beginning to have a
negative impact on earnings.
Q WHAT SIGNIFICANT INVESTMENT TECHNIQUES AND STRATEGIES DID YOU USE TO PURSUE
THE FUND'S INVESTMENT OBJECTIVE?
A As of the end of the reporting period, the Fund had the following regional
allocations relative to six months earlier:
MAY 31, 1998* NOVEMBER 30, 1997*
------------ -----------------
North America..................41.73% .......................40.99%
Europe ........................42.70% .......................38.64%
Japan ..........................4.46% ........................6.13%
Far East .......................0.02% ........................0.32%
Cash ...........................9.04% .......................12.54%
Other............................2.05%........................1.38%
*As a percentage of total assets.
We increased weightings in Europe, based on our view that the
economic environment is both improving and supportive of earnings growth.
We significantly underweighted the Fund's exposure to Asia and
Japan in the wake of the ongoing economic turbulence in the region.
We remained underweight in the United States because of concerns
about valuations and a looming deceleration in corporate profit growth.
We kept cash levels high, reflecting our preference to maintain
liquidity in order to capitalize on attractive buying opportunities
in the future.
6
<PAGE>
Q HOW HAS THE FUND PERFORMED DURING THE REPORTING PERIOD?
A The Fund's total return during the 12 months ended May 31, 1998 was 19.77
percent1 (Class A shares at net asset value). During the same period, the Morgan
Stanley Capital International World Index + Dividends returned 20.47 percent.
Please keep in mind that the MSCI World Index + Dividends is a broad-based index
used as a benchmark for general global equity funds. It does not reflect any
commissions or sales charges 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 We believe that a meaningful recovery in Asia is not yet in sight. Before
global confidence can be restored, significant political and economic reform
must take place. To date, such reform has generally been too little and too
late. While we do not expect the turmoil in Asia to cause a devaluation of the
Chinese currency, we nonetheless believe that it is too early to commit funds to
the region. We remain highly positive on Europe. Although valuations are not
particularly compelling, they are well supported by double-digit earnings growth
and the accelerating pace of economic activity. We also expect that monetary
union will be the catalyst for important corporate and government restructuring,
as well as further liberalization of markets and economies. Prior to monetary
union, for example, real or inflation-adjusted interest rates were typically
high throughout Europe, encouraging investors to park cash in money market
funds. The general decline of short-term rates throughout the Continent,
however, is motivating investors to increase their equity exposure. We are more
cautious about near-term prospects for stocks in the United States, where high
valuations and slowing profit growth could limit the equity market's upside
potential over the near term.
Barton M. Biggs Ann D. Thivierge
Portfolio Manager Portfolio Manager
Morgan Stanley Asset Management Inc. Morgan Stanley Asset Management Inc.
Francine J. Bovich Madhav Dhar
Portfolio Manager Portfolio Manager
Morgan Stanley Asset Management Inc. Morgan Stanley Asset Management Inc.
7 Please see footnotes on page four
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
May 31, 1998
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 78.6%
AUSTRALIA 0.0%
Broken Hill Proprietary Co. 980 $ 8,396
Coles Myer 230 1,037
GIO Australia Holding 288 812
M.I.M. Holdings 376 195
------------
10,440
------------
AUSTRIA 1.0%
AMS Austria Mikros 400 28,990
Austrian Airlines 2,200 76,929
Bau Holdings 600 36,800
BBAG Oest Brau Bet 800 51,548
Bk Austria (b) 6,500 585,567
Bk Austria (b) 2,664 239,356
Bohler Uddeholm 1,500 115,763
BWT Benckiser W 200 39,348
Creditanstalt Bank 2,000 237,365
EA-Generali 700 239,755
Flughafen Wien 3,300 177,164
Lenzing 500 37,437
Mayr-Melnhof Karton 1,700 124,441
Oest Elektrizitats, Class A 4,100 481,373
OMV 3,200 463,133
Radex-Heraklith 1,900 100,490
Steyr-Daimler-Puch 1,400 40,702
VA Technologie 1,700 230,203
Wienerberger Baust 1,200 296,786
------------
3,603,150
------------
BELGIUM 0.2%
Generale de Banque 400 292,743
Kredietbank (b) 400 280,511
------------
573,254
------------
CANADA 2.9%
Abitibi Consolidated, Inc. (b) 5,800 79,422
Agrium, Inc. 4,700 66,456
Air Canada, Inc. (b) 4,800 42,501
Alcan Aluminum 7,100 202,732
Avenor, Inc. 2,200 51,719
Bank of Montreal 8,500 477,538
Bank of Nova Scotia 15,400 412,245
Barrick Gold Corp. 13,600 261,844
BCE, Inc. 20,200 933,811
Bombardier, Inc., Class B 10,400 267,335
Cae, Inc. 4,400 36,694
Cameco Corp. 1,800 52,509
Canadian Imperial Bank 13,300 451,428
Canadian Natural Resources (b) 3,300 60,591
Canadian Occidental Petroleum 5,100 107,468
Canadian Pacific 11,200 324,415
Canadian Tire, Class A 3,000 80,719
Cominco 2,700 41,698
Corel Corp. (b) 2,400 5,354
</TABLE>
8
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
CANADA (CONTINUED)
Cott Corp. 1,900 $ 11,607
Dofasco, Inc. 3,300 55,948
Domtar, Inc. 5,200 41,046
Echo Bay Mines 5,100 13,477
Gulf Canada Resource (b) 8,000 35,967
Imasco 13,800 255,275
Imperial Oil 16,200 299,115
Inco 5,100 73,687
IPL Energy, Inc. 1,900 82,617
Laidlaw, Inc., Class B Non-Voting 9,400 116,782
Loewen Group, Inc. 2,300 62,832
MacMillan Bloedel 5,000 60,574
Magna International, Inc., Class A 2,300 161,658
Methanex Corp. (b) 5,600 48,816
Molson Companies, Class A 2,600 47,738
Moore Corp. 3,600 52,138
Newbridge Networks Corp. (b) 4,900 138,568
Noranda, Inc. 7,900 139,086
Northern Telecom 15,200 973,409
Nova Corp. 17,600 210,804
Petro 9,500 162,039
Placer Dome, Inc. 6,900 86,434
Potash Corp. of Saskatchewan, Inc. 1,800 154,932
Power Corp. of Canada 4,200 184,501
Provigo, Inc. (b) 4,300 26,121
Ranger Oil 4,400 28,540
Renaissance Energy (b) 4,200 73,801
Rogers Communications, Inc., Class B (b) 5,700 46,167
Royal Bank of Canada 10,000 610,886
Seagram 11,500 503,209
Suncor Energy, Inc. 2,600 91,907
Talisman Energy, Inc. (b) 4,300 116,583
Teck Corp., Class B 2,800 34,594
TELUS Corp. 3,500 91,770
Thomson Corp. 18,700 527,538
Transcanada Pipelines 7,800 180,960
Westcoast Energy, Inc. 4,000 93,623
Weston George 4,500 160,924
------------
10,012,152
------------
DENMARK 0.2%
BG Bank 1,200 70,610
Den Danske Bank 2,200 273,467
Jyske Bank A/S 400 47,662
Unidanmark 2,200 177,672
------------
569,411
------------
FRANCE 2.4%
Accor 534 146,464
Air Liquide 1,011 199,226
Alcatel Alsthom 2,027 433,655
AXA-UAP 4,286 487,843
Banque Nationale de Paris 4,081 348,553
BIC 712 54,766
Bouygues 364 65,828
</TABLE>
9
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
FRANCE (CONTINUED)
Canal Plus 453 $ 82,226
Carrefour 531 324,475
CIE de St. Gobain 1,162 229,176
Compagnie Financiere de Paribas 2,507 255,603
Credit Comm France 441 33,626
Danone 1,056 284,342
Dexia France 225 30,574
Elf Aquitaine 3,391 470,988
Erid Beghin Say 411 89,990
Essilor International 152 64,784
Eurafrance 54 31,860
France Telecom (b) 8,813 493,605
Havas 993 78,205
Imetal 219 30,747
L'Oreal 821 407,687
Lafarge - New 109 11,113
Lafarge 1,313 133,209
Lagardere S.C.A. 1,495 65,717
Legrand 420 115,828
LVMH (Moet Hennessy Louis Vuitton) (b) 1,182 247,938
Michelin (CGDE), Class B 1,645 101,785
Pathe 115 21,758
Pernod Ricard 928 68,774
Peugeot 705 137,748
Pin Printemps Redo 288 237,072
Promodes 257 125,171
Rhone-Poulenc 4,476 248,376
Sagem 67 51,501
Sanofi 1,466 171,764
Schneider 1,793 151,639
Simco 333 28,886
Societe Generale 1,888 373,940
Sodexho Alliance 440 80,896
Suez Lyonnaise des Eaux (b) 1,674 285,668
Thomson CSF 1,648 66,658
Total, Class B 3,242 402,608
Usinor Sacilor 3,414 57,119
Valeo 895 84,369
Vivendi, Warrants Expiring 05/02/01 3,550 6,171
Vivendi 1,672 335,909
------------
8,255,840
------------
GERMANY 2.9%
Adidas 650 114,754
AGIV (b) 450 12,610
Allianz - New 160 50,127
Allianz 2,950 932,493
Amb Aach & Mun Bet 50 5,745
Bankgesell Berlin 1,200 29,323
BASF 7,650 354,577
Bayerische 9,450 451,778
Bayerische Hypotheden Bank 4,450 280,081
Bayerische Vereinsbank 5,400 452,459
BHF-Bank 500 20,513
Bilfinger & Berger BAU 1,500 57,167
</TABLE>
10
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
GERMANY (CONTINUED)
Brau Und Brunnen (b) 100 $ 11,882
CKAG Colonia Konzern 550 72,748
Commerzbank 2,300 93,199
Continental 1,050 31,896
Daimler Benz 6,900 695,317
Degussa 1,250 79,795
Deutsche Bank 10,450 899,605
Deutsche Telekom 30,550 819,290
Dresdner Bank 8,450 475,009
Heidelberg Zement (b) 685 68,721
Hochtief 1,350 62,043
IKB Deutsche Industriebank 500 10,593
Karstadt 150 78,394
Klockner Humb Deut 650 7,286
Linde 150 110,971
Lufthansa 4,650 116,234
Man 200 79,585
Mannesmann 500 489,001
Merck KGaA 2,400 92,947
Metro 2,960 188,624
Muenchener Ruckversicherungs-Gesellschaft 1,050 476,965
Preussag 250 91,215
RWE 4,550 241,494
SAP 800 413,395
Schering 1,050 122,757
Siemens 7,100 458,411
Strabag (b) 50 4,371
Thyssen 450 117,276
Veba 6,700 440,095
Viag 350 196,161
Volkswagen 423 343,047
------------
10,149,954
------------
HONG KONG 0.0%
Bank of East Asia 139 186
Cathay Pacific Air 600 410
Hong Kong & China Gas Co. 900 1,179
Hong Kong & Shang Hotels 400 214
Hopewell Holdings 100 14
Hutchison Whampoa 600 3,136
Hysan Development 4,900 120
New World Development Co. 800 1,889
Sino Land Co. 1,200 410
South China Morning Post 1,200 681
Sun Hung Kai Properties 1,340 6,468
Swire Pacific, Class A 100 370
Television Broadcast 500 1,181
Varitronix International 600 1,258
------------
17,516
------------
ITALY 4.3%
Assic Generali 46,690 1,500,560
BCA Comm Italiana 78,000 460,546
BCA Fideuram Spa 10,000 62,599
BCA Intesa, Spa (b) 6,000 20,188
BCA Intesa, Spa 37,000 230,671
</TABLE>
11
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
ITALY (CONTINUED)
BCA Pop Bergam 1,000 23,521
BCA Pop Di Milano 2,000 $ 17,998
BCO Di Napoli 20,000 31,229
BCO Di Roma 45,000 92,790
Benetton Group 8,220 179,316
Burgo Cartiere 7,000 61,877
Credito Italiano 135,000 752,944
Edison 29,000 276,803
Ente Nazionale Idrocarburi 348,000 2,460,546
Falck Acciaierie & Ferriere Lombarde 5,000 33,845
Fiat 146,700 656,729
Fiat Di Risp 32,400 85,700
Fiat Priv 49,700 133,297
Impregilo (b) 15,000 15,785
Instituto Bancario San Paolo 45,500 713,040
Instituto Mobiliare Italiano 32,750 560,737
Instituto Nazionale delle Assicurazioni 184,000 573,037
Italcementi 10,500 109,032
Italcementi Di Risp 7,000 35,876
Italgas 30,000 138,225
Magneti Marelli 22,500 57,274
Magneti Marelli, Rights Expiring 06/02/98 22,500 7,833
Mediaset 52,500 336,711
Mediobanca Rinascente, Warrants
Expiring 12/31/99 (b) 1,400 1,672
Mediobanca, Warrants Expiring 12/20/00 (b) 4,400 0
Mediobanca (b) 31,400 422,417
Montedison (b) 125,000 172,781
Montedison Di Risp (b) 40,000 37,588
Olivetti & C. (b) 156,000 229,386
Parmalat Finanz (b) 70,000 146,132
Pirelli 70,000 230,944
RAS 13,000 205,944
Rinascente 10,400 102,107
Rinascente, Warrants Expiring 11/30/99 1,400 2,994
Sasib 7,000 31,476
Sirti 13,500 83,895
Snia BPD 30,000 40,956
Societa Assicuratrice Industriale 6,000 77,816
Telecom Italia 159,722 1,207,000
Telecom Italia 287,500 1,699,979
Telecom Italia Di Risp 43,779 236,078
Telecom Italia Di Risp 67,500 244,966
------------
14,802,840
------------
JAPAN 5.0%
Ajinomoto Co., Inc. 17,000 143,007
Aoki Corp. (b) 19,000 10,564
Asahi Breweries 12,000 150,769
Asahi Chemical Industry Co. 36,000 124,514
Asahi Glass Co. 32,000 172,836
Bank of Tokyo 55,600 572,099
Bridgestone Corp. 12,000 273,810
Canon, Inc. 14,000 333,598
Casio Computer Co. 7,000 65,203
</TABLE>
12
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Chugai Pharm Co. (b) 12,000 $ 69,319
Dai Nippon Printing 14,000 230,486
Daiei, Inc. (b) 12,000 33,793
Daikin Industries 12,000 71,659
Daiwa House Industries 12,000 93,494
Denso Corp. 12,000 203,625
East Japan Railway 69 327,836
Ebara Corp. 8,000 71,688
Fanuc 5,000 184,129
Fuji Photo Film Co. 7,000 237,057
Fujitsu (b) 27,000 309,986
Furukawa Electric 8,000 25,417
Hankyu Corp. 14,000 58,228
Hazama Corp. 11,000 6,434
Hitachi 59,000 388,960
Honda Motor Co. 14,000 477,146
Ito Yokado Co. 8,000 398,585
Japan Air Lines Co. (b) 37,000 94,844
Japan Energy Corp. 27,000 27,489
Jusco Co. 6,000 104,412
Kajima Corp. 22,000 59,095
Kansai Electric Power 15,700 249,971
Kao Corp. 14,000 209,257
Kawasaki Steel Corp. 17,000 27,251
Kinki Nippon Railway 26,000 125,034
Kirin Brewery Co. 23,000 214,073
Komatsu 21,000 87,949
Kubota Corp. 31,000 74,987
Kumagai Gumi Co. 37,000 24,045
Kyocera Corp. 3,300 161,080
Kyowa Hakko Kogyo 10,000 39,497
Long-Term Credit Bank of Japan 27,000 39,187
Marubeni Corp. 30,000 60,654
Marui Co. 3,000 46,032
Matsushita Electric Industries 31,000 485,739
Mitsubishi Chemical 36,000 64,467
Mitsubishi Corp. 31,000 187,133
Mitsubishi Electric Corp. 41,000 97,104
Mitsubishi Heavy Industries 64,000 222,745
Mitsubishi Materials Corp. 21,000 40,942
Mitsubishi Trust & Banking Corp. 16,000 142,104
Mitsui & Co. 31,000 158,928
Mitsui Engineering & Ship Building Co. (b) 22,000 17,156
Mitsukoshi 11,000 28,038
Mycal Corp. 7,000 42,357
NEC Corp. 20,000 203,625
NGK Insulators 12,000 108,138
Nippon Express Co. 9,000 49,455
Nippon Fire & Marine Insurance 10,000 38,270
Nippon Light Metal 10,000 11,481
Nippon Meat Packer 10,000 128,890
Nippon Oil Co. 33,000 102,462
Nippon Steel Corp. 131,000 222,290
Nippon Telegraph & Telephone Corp. 177 1,457,001
Nippon Yusen Kabushiki Kaisha 31,000 107,221
</TABLE>
13
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
Nissan Fire & Marine Insurance 350 $ 1,248
Nissan Motor Co. 40,000 121,308
NKK Corp. 69,000 58,791
Odakyu Electric Railway 12,000 39,079
Oji Paper Co. 23,000 97,155
Osaka Gas Co. 50,000 107,950
Penta Ocean Construction 10,000 20,940
Pioneer Electronic 3,000 58,488
Rohm Co. 1,000 103,979
Sakura Bank 40,000 118,709
Sankyo Co 9,000 217,055
Sanwa Bank 37,000 324,341
Sanyo Electric Co. 31,000 88,866
Secom Co. 3,000 170,482
Sega Enterprises 2,300 43,346
Sekisui House 12,000 88,815
Sharp Corp. 21,000 158,156
Shimano, Inc. 3,000 69,969
Shimizu Corp. 17,000 46,646
Shin Etsu Chemical Co. 4,000 74,374
Shiseido Co. 4,000 46,502
Showa Denko K.K. (b) 21,000 21,532
Softbank Corp. 700 26,789
Sony Corp. 5,400 456,206
Sumitomo Chemical 42,000 113,120
Sumitomo Corp. 22,000 116,442
Sumitomo Electric Industries 16,000 167,175
Sumitomo Metal Industries 42,000 65,203
Sumitomo Metal Mining Co. 11,000 46,704
Sumitomo Osaka Cement Co. 11,000 14,376
Taisei Corp. 23,000 44,841
Taisho Pharmacy Co. 7,000 134,703
Taiyo Yuden Co. 12,000 141,238
Takeda Chemical Industries 14,000 361,903
Teijin 23,000 69,420
Tobu Railway Co. 14,000 39,729
Tohoku Electric Power 8,200 111,019
Tokyo Electric Power 19,700 376,959
Tokyo Electron 1,000 31,771
Tokyo Gas Co. 47,000 97,401
Tokyo Marine & Fire Insurance Co. 36,000 341,050
Tokyu Corp. 17,000 55,852
Toppan Printing Co. 14,000 152,849
Toray Industries, Inc. 36,000 179,363
Toto 11,000 72,756
Toyobo Co. 23,000 31,222
Toyota Motor Corp. 47,000 1,164,055
Ube Industries 21,000 26,688
Yokogawa Electric 12,000 62,041
------------
17,173,251
------------
NETHERLANDS 3.3%
ABN Amro Holdings 44,762 1,083,966
Ahold Koninklijke 13,708 432,838
Akzo Nobel 2,200 459,680
</TABLE>
14
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
NETHERLANDS (CONTINUED)
Elsevier 15,700 $ 244,355
Getronics 2,206 109,694
Heineken 11,250 432,423
ING Groep NV 30,707 2,108,668
KLM Royal Dutch Air Lines 2,116 83,754
Koninklijke KNP BT 2,800 81,450
Koninklijke Nedlloyd 600 13,277
Koninklijke PTT Nederland 12,560 701,993
OCE 1,612 67,733
Philips Electronics 9,300 883,732
Royal Dutch Petroleum Co. 56,600 3,225,360
Stork 1,222 44,358
Unilever 16,900 1,342,891
Wolters Kluwer - New 1,310 0
Wolters Kluwer 1,910 268,305
------------
11,584,477
------------
NORWAY 0.1%
Christiania Bank 37,500 160,752
Den Norske Bank 43,500 233,812
Hafslund 100 551
NCL Holdings (b) 33 157
Norsk Hydro 100 4,539
Storebrand (b) 100 929
------------
400,740
------------
PORTUGAL 1.4%
Banco Comercial Portugues 19,800 655,628
Banco Comercial Portugues 2,966 49,528
Banco Espirito Santo Ecomercial 10,100 355,504
Banco Espirito Santo Ecomercial - Bond Rights 2,020 13,990
Banco Totta E Acores 7,300 270,178
Bpi Soc Gestora 9,600 388,941
Cimpor-Cimentos de Portugal 7,900 302,548
Cin Corp Ind Norte 400 30,441
Corticeira Amorim 1,800 39,025
Elec De Portugal (b) 35,000 919,792
Engil SGPS 600 6,928
INAPA Investimentos Participacoese Gestao 1,500 19,209
Jeronimo Martins 10,850 489,780
Portucel Industrial Empressa
Productora de Celulose 8,600 74,488
Portugal Telecom 17,900 940,816
Seguros Tranquilidade 800 26,718
Soares Da Costa (b) 1,200 11,136
Sonae Investimentos 3,900 224,199
UNICER-Uniao Cervejeira 1,100 25,168
------------
4,844,017
------------
SPAIN 2.8%
Acerinox 500 74,398
Aguas De Barcelona 1,700 94,226
Aguas De Barcelona - New 21 1,150
Argentaria, SA 5,920 504,304
Autopistas Cesa 8,610 138,908
Azucarera Ebro Agr (b) 2,000 49,885
</TABLE>
15
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
SPAIN (CONTINUED)
Bankinter 200 $ 13,131
BCO Bilbao Vizcaya 31,900 1,601,841
BCO Central Hispan 15,800 517,631
BCO Esp De Credito 4,200 52,794
BCO Popular ESP 800 63,451
BCO Santander 22,800 1,147,898
Corp Financiera Alba 600 72,451
Corp Mapfre 2,200 84,923
Dragados Y Construction 2,300 71,633
Emp Nac Electricid (b) 41,600 996,424
Empresa Nacl Celul 900 19,122
Ercros (b) 6,900 9,470
Fom Const Y Contra 2,400 121,465
Gas Natural SDG 6,000 410,162
Iberdrola 37,700 621,907
Metrovacesa 945 56,182
Portland Valderriv 300 37,908
Repsol 12,200 677,823
Tabacalera, Class A 7,500 161,580
Telefonica De Espana 41,454 1,851,822
Union Electrica Fenosa 11,800 146,381
Uralita 2,100 28,822
Vallehermoso 1,700 65,285
Viscofan Envoltura 900 41,570
Zardoya Otis 2,000 71,264
------------
9,805,811
------------
SWEDEN 1.4%
ABB, Class A 11,900 192,075
ABB, Class B 5,000 80,066
AGA, Class A 2,800 45,551
Astra, Class A 23,600 474,270
Astra, Class B 5,700 110,912
Atlas Copco, Class A 2,400 69,514
Atlas Copco, Class B 1,200 35,446
Electrolux, Class B 1,400 139,334
Ericsson Telefonaktiebolaget LM, Class B (b) 33,600 958,187
Esselte, Class B 300 7,043
Fastighets Ab Balder (b) 7,600 0
Foreningssparbk 11,900 357,578
Granges, (b) 50 925
Hennes & Mauritz, Class B 3,700 207,725
Netcom Systems (b) 2,000 76,557
Nordbanken Holding 21,800 154,377
Sandvik, Class A 3,300 100,003
Sandvik, Class B 1,400 42,336
Securitas, Class B 1,600 61,144
Skandia Foersaekrings 9,500 138,791
Skandinaviska Enskilda Banken, Class A 20,700 344,679
Skanska, Class B 2,200 103,862
SKF, Class B 1,700 36,224
SSAB Svenskt Stal 1,900 36,971
Stora Kopparbergs, Class A 5,800 93,986
Svenska Cellulosa, Class B 4,500 124,022
</TABLE>
16
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
SWEDEN (CONTINUED)
Svenska Handelsbkn, Class A (b) 7,600 $ 320,008
Svenska Handelsbkn, Class B (b) 800 31,797
Trelleborg, Class B 2,500 35,408
Volvo, Class A 300 9,474
Volvo, Class B 7,800 249,308
WM-Data 1,400 49,035
------------
4,686,608
------------
SWITZERLAND 3.9%
ABB 250 423,557
Adecco 450 185,285
Alusuisse-Lonza Holding 140 188,053
BQE Cant Vaudoise (b) 20 8,545
Credit Suisse Group 6,400 1,408,302
Georg Fischer 150 65,812
Gotthard Bank 40 30,294
Holderbk Fn Glarus 170 217,334
Nestle 970 2,077,496
Novartis (b) 1,566 2,651,048
Roche Holdings Bearer 40 661,492
Roche Holdings Genusscheine 171 1,758,478
Sairgroup (b) 450 137,597
SGS Holdings 45 87,327
SMH 130 112,055
Sulzer 100 85,521
Swiss Bank Corp. (b) 2,040 736,686
Swiss Reinsurance 350 806,311
Ubs Schw Bkgesell (b) 630 211,772
Union Bank of Switzerland 570 958,016
Valora Holding 170 46,186
Vontobel Holdings 40 56,699
Zurich Versicherun 1,170 730,510
------------
13,644,376
------------
UNITED KINGDOM 9.4%
Abbey National 34,200 610,538
Allied Irish Bank 27,400 359,586
Arjo Wiggins Apple 17,050 68,542
Associated British Foods 12,225 111,816
B.A.T Industries 75,625 681,204
Bank of Scotland 2,800 32,401
Barclays 45,100 1,203,635
Bass 23,950 440,073
BG 94,720 488,485
BICC 17,050 45,949
Blue Circle Industiries 32,595 209,225
BOC Group 17,050 270,123
Boots Co. 26,825 402,644
BPB 17,050 121,486
British Aerospace 48,900 433,685
British Airways 29,275 310,080
British Petroleum 142,543 2,093,012
British Sky Broadcast 39,025 274,718
British Steel 48,800 120,753
British Telecommunications 141,550 1,477,328
</TABLE>
17
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
BTR 83,281 $ 274,426
Burmah Castrol 7,300 145,581
Cable & Wireless 61,025 691,227
Cadbury Schweppes 26,825 410,312
Caradon 19,170 62,934
Centrica (b) 107,350 174,458
Coats Viyella 21,975 33,020
Commercial Union 17,050 309,946
Courtaulds 12,225 93,246
De Lousiana Rue 2,450 11,685
Diageo 77,328 874,627
Diageo, Class B 12,172 99,403
Elementis 19,035 54,407
EMI Group 12,860 108,802
General Electric 70,775 580,296
GKN 29,200 434,955
Glaxo Wellcome 78,075 2,101,529
Granada Group 17,050 319,971
Great University Stores 29,275 416,229
Guardian Royal Exchange 18,595 117,081
Hanson 14,675 86,347
HSBC Holdings (ADR) 57,900 1,430,816
HSBC Holdings (ADR) 2,000 52,266
Imperial Chemical Industries 21,975 416,704
Ladbroke Group 29,275 165,439
Land Securities 19,525 306,465
Lasmo 19,525 92,482
Legal & General Group 29,275 323,707
Lloyds TSB Group 146,775 2,132,378
Lonrho 4,881 23,916
Lonrho Africa (b) 4,881 5,899
Marks & Spencer 85,375 761,359
MEPC 14,675 131,828
National Power 34,200 318,396
National Westminster 4,000 73,107
P & O Finance (b) 19,936 274,656
Pilkington 36,575 87,217
Prudential Corp. 48,800 648,799
Rank Group 22,763 132,728
Reed International 33,725 312,596
Reuters Holdings 35,966 412,672
Rexam 14,675 74,423
Rio Tinto 29,275 366,023
RMC Group 7,300 137,712
Royal Bank Scot Group 14,225 240,237
Royal Sun Alliance 34,200 362,804
Safeway 21,975 133,607
Sainsbury J Finance 39,025 308,818
Schroders 7,275 213,643
Scottish Power 24,425 220,610
Sears 48,800 51,410
Sedgwick Group 14,675 35,474
Slough Estates 12,225 75,875
Smithkline Beecham 127,975 1,386,859
Southern Electric 12,225 105,726
</TABLE>
18
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Standard Chartered 2,300 $ 28,663
Tarmac 34,200 69,963
Taylor Woodrow 19,525 72,710
Tesco 46,325 407,065
Thames Water 17,050 276,946
Thorn 11,892 39,623
TI Group 12,225 118,006
Unilever 70,750 777,114
United Utilities 17,050 231,137
Vodafone Group 80,525 885,140
Zeneca Group 21,975 893,347
------------
32,772,130
------------
UNITED STATES 37.4%
AAR Corp. 100 2,644
Abbott Laboratories, Inc. 4,000 296,750
Access Health, Inc. (b) 700 17,938
AccuStaff, Inc. (b) 1,100 36,231
Action Performance Cos., Inc. (b) 700 19,469
ACX Technologies, Inc. (b) 800 18,150
Adobe Systems, Inc. 3,900 155,756
Advanced Fibre Communications, Inc. (b) 1,000 37,063
Aeroquip-Vickers, Inc. 1,200 74,100
Affiliated Computer Services, Inc. (b) 1,000 33,313
Air Express International Corp. 100 2,581
Air Products & Chemicals, Inc. 1,100 95,700
Airborne Freight Corp. 1,700 63,325
Alcan Aluminum, Ltd. 2,000 57,000
Allegheny Teldyne, Inc. 9,000 209,250
Allied Waste Industries, Inc. (b) 1,100 29,150
AlliedSignal, Inc. 4,500 192,375
Allmerica Financial Corp. 1,100 68,956
Allstate Corp. 8,700 818,888
Alltel Corp. 13,400 528,463
Alumax, Inc. (b) 1,400 65,538
Aluminum Company of America 4,800 333,000
AMBAC, Inc. 1,800 98,438
America West Holding Corp., Class B (b) 1,200 33,975
American Express Co. (a) 11,000 1,128,875
American General Corp. 500 33,563
American Greetings Corp. 5,700 270,750
American Home Products Corp. (a) 26,400 1,275,450
American International Group, Inc. 7,000 866,688
American Power Conversion Corp. (b) 1,000 30,000
American Water Works Co., Inc. 2,800 82,250
AmeriCredit Corp. (b) 1,800 58,725
AmeriSource Health Corp. (b) 300 16,313
Ameritech Corp. 12,600 534,712
AmerUs Life Holdings, Inc. 600 19,200
Amoco Corp. 14,200 593,737
AMP, Inc. 8,000 304,000
Amphenol Corp. (b) 300 16,313
AMR Corp. (b) 1,000 153,937
Andrew Corp. (b) 2,400 52,725
Anheuser Busch Cos., Inc. 2,700 124,031
</TABLE>
19
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Apple Computer (b) 2,400 $ 63,900
Applied Graphics Technologies, Inc. (b) 600 28,950
Applied Materials, Inc. (b) 10,300 329,600
Applied Power, Inc. 1,100 37,675
Armstrong World Industries, Inc. 3,100 260,787
Arrow International, Inc. 1,300 44,931
Arterial Vascular Engineering, Inc. (b) 600 18,544
Arvin Industries, Inc. 1,000 37,063
Aspect Development, Inc. (b) 400 22,875
Aspen Technology, Inc. (b) 1,100 48,984
Associates First Capital Corp., Class A 3,695 276,402
AT&T Corp. (a) 25,800 1,570,575
ATMI, Inc. (b) 1,300 23,563
Autodesk, Inc. 5,200 221,000
Avon Products, Inc. 3,800 310,887
Baker Hughes, Inc. 8,700 313,200
BancOne Corp. 16,100 887,512
Bandag, Inc. 400 18,500
BankAmerica Corp. (a) 16,800 1,389,150
BankBoston Corp. 4,000 421,500
Bard (C.R.), Inc. 1,300 45,094
Bausch & Lomb, Inc. 1,300 64,756
Baxter International, Inc. 9,700 554,719
BEC Energy 2,500 101,406
Becton, Dickinson & Co. 11,200 792,400
Bell Atlantic Corp. 9,600 879,600
BellSouth Corp. 14,200 915,900
Belo (A.H.) Corp. 1,000 51,500
Bemis, Inc. 6,600 278,437
Berg Electronics Corp. (b) 1,500 30,938
Bergen Brunswig Corp., Class A 700 29,050
Best Buy Co., Inc. (b) 1,400 45,675
Bestfoods 6,800 383,775
Bethlehem Steel Corp. (b) 5,200 63,700
Beverly Enterprises, Inc. (b) 2,800 40,075
Billing Concepts (b) 1,400 32,550
Biogen, Inc. (b) 700 30,800
Biomet, Inc. (b) 1,100 31,763
BISYS Group, Inc. (b) 800 29,700
BJ Services Co. (b) 2,700 88,256
Blanch (E.W.) Holdings, Inc. 1,000 37,625
Boeing Co. 15,400 733,425
Borders Group, Inc. (b) 1,100 34,100
Borg-Warner Automotive, Inc. 1,100 62,700
Brightpoint, Inc. (b) 1,900 30,044
Brinker International, Inc. (b) 3,600 78,300
Bristol-Myers Squibb Co. (a) 15,500 1,666,250
Broderbund Software, Inc. (b) 1,700 27,200
Brown-Forman Corp., Class B 3,400 195,925
Brunswick Corp. 1,300 40,869
Buckle, Inc. (b) 700 35,700
Budget Group, Inc. (b) 800 23,600
Burlington Industries, Inc. (b) 4,000 70,250
Burlington Northern Santa Fe Corp. 3,500 348,250
C&D Technologies 700 39,200
</TABLE>
20
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
CACI International, Inc. (b) 900 $ 17,775
CalEnergy, Inc. (b) 3,800 114,950
California Microwave, Inc. (b) 1,500 32,156
Cambridge Technology Partners, Inc. (b) 600 30,094
Campbell Soup Co. 4,800 261,600
Canandaigua Brands, Inc., Class A (b) 600 27,675
Capital One Financial Corp. 1,700 169,681
Carlisle Cos., Inc. 2,700 130,612
Caterpillar, Inc. 10,300 565,856
CDW Computer Centers, Inc. (b) 400 16,475
Centex Construction Products, Inc. 1,100 42,075
Centex Corp. 1,700 60,775
Centocor, Inc. (b) 300 11,700
Central Parking Corp. 1,000 44,813
Centura Banks, Inc. 1,600 105,200
Chancellor Media Corp. (b) 900 37,631
Chase Manhattan Corp. (a) 11,400 1,549,687
Chevron Corp. (a) 15,300 1,222,087
Chrysler Corp. (a) 29,700 1,652,062
Chubb Corp. 4,700 373,944
CIBER, Inc. (b) 800 25,650
CIGNA Corp. 6,900 472,650
Cincinnati Milacron, Inc. 5,700 170,644
CINERGY Corp. 4,700 151,869
Cintas Corp. 1,800 82,238
Cisco Systems, Inc. (b) 3,800 287,375
Citation Corp. (b) 1,500 28,688
Citicorp (a) 9,200 1,371,950
Citrix Systems, Inc. (b) 600 31,313
CKE Restaurants, Inc. 600 19,050
Clorox Co. 1,100 91,850
CMAC Investment Corp. 400 24,200
Coastal Corp. 3,900 274,950
Coca Cola Co. (a) 33,900 2,656,912
Colgate-Palmolive Co. 1,100 95,700
Coltec Industries, Inc. (b) 3,100 69,169
Columbia / HCA Healthcare Corp. 3,700 120,944
Columbia Energy Group 1,400 118,125
Comair Holdings, Inc. 700 18,638
Comdisco, Inc. 3,100 112,762
Commercial Federal Corp. 1,700 56,631
Commercial Metals Co. 600 18,413
Compaq Computer Corp. (b) 28,200 770,212
CompUSA, Inc. (b) 1,200 18,900
Computer Associates International, Inc. 10,600 556,500
Comverse Technology, Inc. (b) 1,600 79,950
Concord EFS, Inc. (b) 1,000 31,875
Consolidated Graphics, Inc. (b) 700 35,831
Consolidated Papers, Inc. 4,200 121,537
Cooper Industries, Inc. 5,000 321,875
Cordant Technologies, Inc. 1,400 69,825
CORT Business Services Corp. (b) 1,000 39,125
Countrywide Credit Industries, Inc. 1,100 50,875
Crompton & Knowles Corp. 1,000 26,938
Crown Cork & Seal Co., Inc. 1,300 67,437
</TABLE>
21
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
CSX Corp. 3,100 $ 147,637
Cullen/Frost Bankers, Inc. 700 37,931
Cytec Industries, Inc. (b) 1,100 53,900
Dallas Semiconductor Corp. 1,100 37,056
Dana Corp. 3,900 203,287
Danaher Corp. 300 21,694
Darden Restaurants, Inc. 2,200 33,963
Dayton Hudson Corp. 9,200 426,650
De Luxe Corp. 11,000 369,187
Dean Foods Co. 1,600 78,800
Deere & Co. 10,700 555,062
Dell Computer Corp. (b) 3,000 247,219
Delphi Financial Group, Inc. (b) 1,326 72,018
Delta Air Lines, Inc. 2,800 322,000
Diebold, Inc. 400 11,700
Digital Equipment Corp. (b) 1,300 71,337
Digital Microwave Corp. (b) 1,600 15,450
Dime Bancorp, Inc. 7,400 215,987
Dollar Tree Stores, Inc. (b) 700 36,225
DPL, Inc. 10,000 172,500
Dress Barn (b) 1,100 31,866
Dresser Industries, Inc. 3,000 139,687
D.R. Horton, Inc. (b) 2,200 39,600
DST Systems, Inc. (b) 900 47,588
Duke Energy Co. 3,000 172,875
Dun & Bradstreet Corp. 7,200 243,000
DuPont (E. I.) de Nemours & Co. (a) 15,600 1,201,200
DuPont Photomasks, Inc. (b) 700 29,816
Dura Pharmaceuticals, Inc. (b) 700 18,244
Eastern Enterprises 1,700 68,212
Eastman Kodak Co. 2,200 157,025
Ecolab, Inc. 1,800 55,575
Electronic Arts (b) 1,400 60,900
EMC Corp. (b) 11,500 476,531
Energen Corp. 1,100 22,344
Energy East Corp. 2,500 101,562
Engelhard Corp. 6,900 143,606
Enron Corp. 4,100 205,512
Entergy Corp. 6,100 160,506
Etec Systems, Inc. (b) 600 21,938
Ethan Allen Interiors, Inc. 1,600 80,500
EVI Weatherford, Inc. (b) 855 43,284
Extended Stay America, Inc. (b) 700 7,700
Exxon Corp. 10,600 747,300
Fairfield Communities, Inc. (b) 1,500 30,656
Family Dollar Stores, Inc. 5,600 92,750
FDX Corp. (b) 1,500 96,188
Federal National Mortgage Assocation 8,500 508,937
Fingerhut Cos., Inc. 1,800 52,762
FINOVA Group, Inc. 1,700 94,031
First Chicago NBD Corp. 300 26,231
First Commerce Corp. 300 20,756
First Colorado Bancorp, Inc. 1,100 31,350
First Security Corp. 1,200 27,300
First Union Corp. (a) 16,500 912,656
</TABLE>
22
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Fleet Financial Group, Inc. 7,100 $ 582,200
Florida Progress Corp. 3,700 152,625
Flowers Industries, Inc. 2,500 51,562
Flowserve Corp. 1,000 29,000
Foodmaker, Inc. (b) 1,800 30,375
Ford Motor Co. 14,100 731,437
FORE Systems (b) 2,100 46,200
Forest Labs, Inc. (b) 1,200 39,600
Fort James Corp. 3,100 148,219
Fortune Brands, Inc. 12,500 480,469
Foster Wheeler Corp. 9,100 230,912
Fred Meyer, Inc. (b) 900 38,700
Fremont General Corp. 600 34,313
Fruit of the Loom, Inc. (b) 1,000 35,938
Furniture Brands International, Inc. (b) 1,300 38,350
Gannett, Inc. 3,200 211,000
Gap, Inc. 1,500 81,000
General Dynamics Corp. 1,600 71,100
General Electric Co. (a) 36,800 3,068,201
General Mills, Inc. 500 34,125
General Motors Corp. 7,400 532,337
General Nutrition Cos., Inc. (b) 1,000 31,563
General Reinsurance Corp. (b) 1,600 351,800
General Signal Corp. 1,000 41,125
Genesis Health Ventures, Inc. (b) 800 20,250
Gentex Corp. (b) 1,100 40,288
Genzyme Corp. 1,300 35,588
Georgia Gulf Corp. 3,500 87,719
Gleason Corp. 2,700 79,819
Golden State Bancorp, Inc. (b) 1,000 38,313
Goodrich (B.F.) Co. 12,900 661,125
Goodyear Tire & Rubber Co. 2,300 165,312
Goody's Family Clothing, Inc. (b) 700 33,666
GPU, Inc. 10,000 385,000
Graco, Inc. 1,400 48,475
GTE Corp. (a) 17,600 1,026,300
Guilford Mills, Inc. 1,500 40,500
HA-LO Industries, Inc. (b) 1,000 30,938
Halliburton Co. 7,800 369,525
Hannaford Brothers Co. 1,700 75,119
Harland (John H.) Co. 34,500 618,844
Harris Corp. 8,600 414,412
Harte-Hanks Communications 3,600 81,450
Hartford Financial Services Group, Inc. 7,700 847,481
Hartford Life, Inc., Class A 400 20,600
Heartland Express, Inc. (b) 1,100 24,063
Hercules, Inc. 6,600 290,812
Hershey Foods Corp. 800 55,400
Hertz Corp, Class A 600 27,525
Hewlett-Packard Co. (a) 18,900 1,174,162
Hibernia Corp. Class A 1,900 39,900
Hilton Hotels Corp. 4,100 128,894
Home Depot, Inc. 15,900 1,249,144
Hong Kong Land Holding 12,643 16,689
HUBCO, Inc. 800 28,200
</TABLE>
23
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Huntington Bancshares, Inc. 4,800 $ 157,200
Hyperion Software Corp. (b) 700 22,619
Illinois Central Corp. 1,700 63,112
Imation Corp. (b) 800 14,550
Impac Mortgage Holdings, Inc. 2,800 43,925
Inland Steel Industries, Inc. 1,400 40,075
Input/Output, Inc. (b) 1,200 26,400
Intel Corp. (a) 21,100 1,507,331
Interface, Inc., Class A 1,100 43,106
International Business Machines Corp. (a) 13,600 1,596,300
International Network Services (b) 700 21,941
Interpublic Group of Cos., Inc. 7,800 462,637
Interstate Bakeries Corp. 800 25,800
Interstate Hotels Co. 300 9,731
IPALCO Enterprises, Inc. 2,500 105,312
ITT Industries, Inc. 4,700 173,312
Jefferson-Pilot Corp. 2,100 120,225
Johnson & Johnson, Inc. (a) 25,400 1,754,187
Johnson Controls, Inc. 11,300 672,350
Jones Apparel Group, Inc. (b) 1,100 69,712
Jostens Inc., Common Rights Callable
Through 08/19/98 18,200 459,550
Kansas City Southern Industries, Inc. 1,100 46,613
Kaufman & Broad Home Corp. 2,200 56,512
Kaydon Corp. 1,100 43,381
Keane, Inc. (b) 700 31,413
Kerr-McGee Corp. 800 50,600
Keycorp 12,200 462,837
Kimberly-Clark Corp. 9,700 480,756
Knight-Ridder, Inc. 6,200 353,787
Kuhlman Corp. 3,400 143,650
La Quinta Inns, Inc. 1,100 23,719
Laidlaw, Inc. 10,700 132,413
Latin American Discovery Fund, Inc. (c) 249,100 2,428,725
Legato Systems, Inc. (b) 1,200 34,350
Lennar Corp. 2,100 55,650
Level One Communications, Inc. (b) 900 24,019
Lexmark International Group, Inc., Class A (b) 1,600 88,800
Lilly (Eli) & Co. (b) 7,900 485,356
Linens 'n Things, Inc. (b) 1,400 44,975
Litton Industries, Inc. (b) 400 23,175
Lockheed Martin Corp. 3,800 426,550
Longs Drug Stores Corp. 3,200 97,000
LTV Corp. 4,600 50,312
Lubrizol Corp. 1,800 62,550
Lucent Technologies, Inc. 7,000 496,562
Lyondell Petrochemical Co. 2,400 74,850
Magna Group, Inc. 600 33,338
Mallinckrodt, Inc. 2,700 83,194
Manor Care, Inc. 18,500 583,906
Martin Marietta Materials, Inc. 300 13,800
MascoTech, Inc. 1,900 46,550
May Department Stores Co. 2,800 180,075
Maytag Corp. 1,400 70,612
MBIA, Inc. 6,200 462,287
McClatchy Newspapers, Inc. Class A 700 20,781
</TABLE>
24
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
McDonalds Corp. 20,100 $ 1,319,062
McGraw Hill, Inc. 6,900 539,494
MCN Corp. 2,400 86,400
MDU Resources Group, Inc. 1,300 43,306
Mead Corp. 6,100 189,862
MedQuist, Inc. (b) 800 35,100
Medtronic, Inc. 1,500 83,437
Mercantile Stores, Inc. 300 23,588
Merck & Co., Inc. (a) 13,900 1,627,169
Mercury General Corp. 4,200 268,013
Meredith Corp. 3,500 139,125
Meritor Automotive, Inc. 1 21
Merrill Lynch & Co., Inc. 11,300 1,011,350
Metris Cos., Inc. 700 40,075
Microsoft Corp. (a) (b) 34,300 2,909,069
Midas, Inc. 1 21
Midway Games, Inc. (b) 1,400 18,900
Midwest Express Holdings, Inc. (b) 1,350 38,728
Millennium Chemicals, Inc. 1,700 53,762
Miller (Herman), Inc. 2,200 60,912
Mobil Corp. 12,600 982,800
Monsanto Co. 6,300 348,862
Montana Power Co. 4,900 177,625
Morgan Stanley Asia Pacific Fund, Inc. (c) 124,800 842,400
Motorola, Inc. 10,100 534,669
Nabors Industries, Inc. (b) 1,700 40,056
National City Corp. 7,400 501,350
National Commerce Bancorp. 3,200 141,800
National Data Corp. 700 26,250
National Service Industries, Inc. 1,800 91,800
NationsBank Corp. 16,800 1,272,600
Nationwide Financial Services, Inc., Class A 1,100 47,781
Nautica Enterprises, Inc. (b) 1,400 40,950
Navistar International Corp. (b) 1,500 45,281
NBTY, Inc. (b) 1,200 20,925
Neiman Marcus Group, Inc. (b) 800 27,200
New Century Energies, Inc. 1,300 59,800
New York Times Co. 100 7,050
Newell Co. 1,100 53,075
Newpark Resources, Inc. (b) 2,600 47,288
Newport News Shipbuilding, Inc. 800 22,400
Nine West Group, Inc. (b) 1,500 42,281
NIPSCO Industries, Inc. 3,800 102,125
Noble Drilling Corp. (b) 1,700 50,150
Nordstrom, Inc. 400 28,825
Northern Telecom, Ltd. 4,800 307,200
Novacare, Inc. (b) 4,000 44,000
Novell, Inc. (b) 4,900 51,450
Nu Skin Enterprises, Inc. (b) 700 18,200
O' Reilly Automotive, Inc. (b) 100 3,250
Occidental Petroleum Corp. (b) 8,400 232,050
Ocean Energy, Inc. (b) 1,300 26,081
Office Depot, Inc. (b) 2,800 82,600
Office Max, Inc. (b) 2,100 34,519
Old Kent Financial Corp. 1,400 55,825
</TABLE>
25
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Old Republic International Corp. 4,050 $ 115,425
Olin Corp. 1,400 60,550
Oracle Systems Corp. (b) 4,400 103,950
Orbital Sciences Corp. (b) 700 28,613
Orion Capital Corp. 1,600 90,100
Pacific Enterprises, Common Rights
Callable Through 03/06/99 3,500 133,219
Palm Harbor Homes, Inc. (b) 600 25,013
Patterson Energy, Inc. (b) 3,200 35,800
Payless Shoesource, Inc. (b) 400 28,025
Peco Energy Co. 48,800 1,378,600
Penney (J.C.), Inc. 6,600 473,962
Pennzoil Co. 9,500 549,219
Peoples Energy Corp. 700 25,813
PepsiCo, Inc. 12,500 510,156
Perkin-Elmer Corp., Common Rights
Callable Through 04/30/99 2,300 157,550
Pfizer, Inc. (a) 22,400 2,347,800
PG&E Corp. 3,400 107,100
Pharmacia & Upjohn, Inc. 900 39,769
Philip Morris Cos., Inc. (a) 54,400 2,033,200
Pier 1 Imports, Inc. 1,500 36,094
Pinnacle West Capital Corp. 5,400 242,662
Platinum Technology, Inc. (b) 1,100 30,113
PMC-Sierra, Inc. (b) 700 27,256
Polaroid Corp. 2,200 89,237
Policy Management Systems Corp. (b) 400 33,000
Premiere Technologies, Inc. (b) 800 19,100
Primark Corp. (b) 700 23,406
Procter & Gamble Co. (a) 28,000 2,350,250
Promus Hotel Corp. (b) 1,400 60,550
Protective Life Corp. 1,200 43,200
Provident Cos., Inc. 1,100 40,563
Public Service Co. of New Mexico 2,100 45,544
Public Service Enterprise Group 10,000 330,625
Quintiles Transnational Corp. (b) 1,700 82,662
Quorum Health Group, Inc. (b) 2,000 60,125
R & B Falcon Corp. (b) 2,000 57,375
Raychem Corp. 9,300 349,912
Rayonier, Inc. 2,100 98,569
Raytheon Co. , Class B 4,800 262,500
Readers Digest Association, Inc.,
Class A Non-Voting 2,100 59,850
Reebok International Ltd. (b) 1,300 37,375
Regis Corp. 2,200 61,600
Reliastar Financial Corp. 5,400 233,550
Republic NY Corp. 2,300 295,406
Reynolds & Reynolds Co., Class A 3,100 64,906
Rio Hotel & Casino, Inc., (b) 1,800 39,150
Robert Half International, Inc. 1,600 81,000
Rochester Gas & Electric Corp. 4,100 126,075
Rockwell International Corp. 4,700 258,500
Rohm & Haas Co. 2,000 219,750
Rollins Truck Leasing Corp. 2,400 28,800
Ross Stores, Inc. 1,100 48,538
Royal Dutch Petroleum Co. 18,700 1,048,369
Rubbermaid, Inc. 3,200 104,400
Ruby Tuesday, Inc. 1,600 25,700
</TABLE>
26
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Rural/Metro Corp. (b) 800 $ 18,900
Russell Corp. 2,000 54,500
Ryder Systems, Inc. 1,100 37,469
Ryland Group, Inc. 1,100 22,069
SAFECO Corp. 2,500 116,250
Sapient Corp. (b) 600 26,850
Sara Lee Corp. 13,400 788,925
SBC Communications, Inc. 21,200 824,150
Schering-Plough Corp. 1,100 92,056
Scientific-Atlanta, Inc. 5,600 123,550
Sears Roebuck & Co. 9,700 599,581
Shared Medical Systems 1,500 109,125
Showbiz Pizza Time, Inc. (b) 1,100 39,050
Siebel Systems, Inc. (b) 1,200 27,300
Silicon Valley Bancshares (b) 2,200 72,050
Smith International, Inc. (b) 700 34,344
Snap-On, Inc. 1,600 70,200
Sofamor Danek Group, Inc. 500 41,563
Sonic Corp. (b) 2,550 52,753
Sonoco Products Co. 2,750 96,078
Sotheby's Holdings, Inc. 1,500 34,500
Southern Co. 21,800 579,063
Southern New England Telecommunications Corp. 3,200 206,000
SPX Corp. (b) 300 20,738
St. John Knits, Inc. 900 34,594
St. Jude Medical, Inc. (b) 700 25,025
St. Paul Cos., Inc. 2,764 122,665
StaffMark, Inc. (b) 1,100 40,425
Starbucks Corp. (b) 800 38,400
State Auto Financial Corp. 800 25,700
Station Casinos, Inc. (b) 2,300 34,213
Steris Corp. (b) 600 37,500
Sterling Commerce, Inc. (b) 1,000 39,688
Sterling Software, Inc. (b) 2,000 54,375
Stewart Enterprises, Inc., Class A 1,800 48,600
Storage Technology Corp. (b) 400 33,550
Stratus Computer, Inc. (b) 600 21,638
Suiza Foods Corp. (b) 400 23,375
Sun, Inc. 17,900 760,750
Sun Microsystems, Inc. (b) 9,500 380,594
SunAmerica, Inc. 8,400 408,450
Superior Industries International, Inc. 1,400 40,775
SUPERVALU, Inc. 9,400 393,625
Sybron International Corp. (b) 1,700 40,694
Symantec Corp. (b) 2,200 52,525
Symbol Technologies, Inc. 900 31,669
Systems & Computer Technology (b) 1,800 46,125
360 Communications Co.(b) 1,500 42,844
Tandy Corp. 700 30,975
TCA Cable TV, Inc. 900 54,844
Tech Data Corp. (b) 700 28,438
Tektronix, Inc. 4,300 164,475
Tele-Communications TCI Ventures Group,
Series A (b) 11,132 193,766
Telxon Corp. 1,400 46,550
Tenneco, Inc. 4,500 187,313
</TABLE>
27
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Texaco, Inc. 5,200 $ 300,300
Texas Instruments, Inc. 7,200 369,900
Texas Utilities Co. 7,300 288,350
Textron, Inc. 3,600 267,075
Thomas & Betts Corp. 3,500 187,031
Tidewater, Inc. 900 34,200
Tiffany & Co. 600 28,725
TIG Holdings, Inc. 2,700 66,825
Timken Co. 5,200 195,650
TJX Cos., Inc. 4,700 219,725
Torchmark, Inc. 5,800 248,675
Total Renal Care Holdings, Inc. (b) 700 21,481
Transaction Systems Architects, Inc. (b) 600 24,300
Transatlantic Holdings, Inc. 600 44,888
Transport Financial, Inc. 2,100 112,087
Travelers Group, Inc. 15,800 963,800
Triad Guaranty, Inc. (b) 1,100 36,300
Tribune Co. 100 6,688
Trigon Healthcare, Inc. (b) 1,100 37,400
Trinity Industries, Inc. 3,000 143,250
Triumph Group, Inc. (b) 700 34,300
Trustmark Corp. 5,400 115,425
TRW, Inc. 3,200 171,400
Tupperware Corp. 1,400 37,800
Tyco International Ltd. 13,200 730,950
U.S. Airways Group, Inc. (b) 400 28,000
U.S. Foodservice (b) 300 9,938
U.S. Surgical Corp. 3,500 139,125
U.S. WEST, Inc. 6,600 334,950
Unicom Corp. 11,000 378,125
Union Carbide Corp. 3,700 184,769
Union Pacific Corp. 3,500 169,312
Uniphase Corp. (b) 1,000 51,000
Unisys Corp. (b) 4,900 120,050
United Illuminating Co. 1,300 61,587
United States Filter Corp. (b) 300 9,131
United States Industries, Inc. 1,000 26,375
United Stationers, Inc. (b) 700 41,738
United Technologies Corp. 12,000 1,128,000
Universal Foods Corp. 1,800 42,863
Universal Health Services, Inc., Class B (b) 1,300 71,500
USFreightways Corp. 1,100 34,650
USG Corp. (b) 2,000 106,250
UST, Inc. 5,600 149,100
USX-Marathon Group 15,600 546,000
USX-U.S. Steel, Inc. 21,500 771,312
Utilicorp United, Inc. 2,500 88,906
Valspar Corp. 1,100 44,413
Varco International, Inc. (b) 1,800 46,913
Vencor, Inc. (b) 1,300 12,350
Ventas, Inc. (b) 1,300 20,963
Veritas DGC, Inc. (b) 600 31,088
Viking Office Products, Inc. (b) 2,400 68,625
Visio Corp. (b) 400 18,750
Vitesse Semiconductor Corp. (b) 1,400 35,875
</TABLE>
28
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Vlasic Foods International, Inc. (b) 480 $ 10,410
Vulcan Materials Co. 1,000 113,500
Wabash National Corp. 1,400 36,313
Walgreen Co. 100 3,519
Wal-Mart Stores, Inc. 28,600 1,578,362
Walt Disney Co. 9,400 1,063,375
Warner-Lambert Co. 2,100 134,006
Washington Gas Light Co. 1,500 39,094
Washington Mutual, Inc. 5,600 395,500
Waters Corp. (b) 1,100 64,075
Watson Pharmaceuticals, Inc. (b) 1,000 43,750
Webb (Del) Corp. 2,200 53,350
Webster Financial Corp. 2,600 87,750
Wendy's International, Inc. 2,100 51,844
WestPoint Stevens, Inc. (b) 800 26,200
Western Digital Corp. (b) 1,900 32,300
Weyerhaeuser Co. 3,900 198,169
Whitman Corp. 2,100 45,544
Whole Foods Market, Inc. (b) 400 22,000
WICOR, Inc. 900 41,175
Wolverine World Wide, Inc. 800 19,750
World Access, Inc. (b) 800 25,100
Worthington Industries, Inc. 3,600 63,450
Xerox Corp. 5,500 565,125
Yahoo!, Inc. (b) 300 32,850
York International Corp. 1,700 85,000
------------
129,714,035
------------
TOTAL COMMON STOCKS 272,620,002
------------
PREFERRED STOCK 0.4%
AUSTRIA 0.1%
Bau Holdings 200 9,638
Bk Austria Ag 1,464 130,488
Creditanstalt Bank 1,100 132,216
EA-Generali 100 23,736
Z-Laenderbank Bank Austria 2,200 197,491
------------
493,569
------------
FRANCE 0.1%
Casino Guichard Perrach 2,800 199,365
------------
GERMANY 0.2%
RWE 3,050 123,077
SAP, Non Voting (ADR) 600 332,913
Volkswagon 150 90,206
------------
546,196
------------
TOTAL PREFERRED STOCK 1,239,130
------------
</TABLE>
29
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Number
Description of Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE OBLIGATIONS 0.0%
FRANCE 0.0%
Simco (337 (FRF) par, 3.25% coupon,
01/01/06 maturity) $ 33,739
ITALY 0.0%
Mediobanca, SpA (11,200,000 (ITL) par,
4.50% coupon, 01/01/00 maturity) 6,326
PORTUGAL 0.0%
Jeronimo Martens (2,007 (PTE) par,
0.00% coupon, 12/30/04 maturity) 110
------------
TOTAL CORPORATE OBLIGATIONS 40,175
------------
273,899,307
------------
</TABLE>
REPURCHASE AGREEMENT 20.2%
State Street Bank & Trust Co. ($70,223,000 par,
collateralized by U.S. Government obligations in a
pooled cash account, dated 5/29/98 to be sold on
6/01/98 at $70,252,260) 70,223,000
------------
TOTAL INVESTMENTS 99.2% (COST $299,185,304) 344,122,307
OTHER ASSETS IN EXCESS OF LIABILITIES 0.8% 2,836,102
------------
NET ASSETS 100.0% $346,958,409
============
(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.
ADR - American Depository Receipts
30
<PAGE>
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1998
ASSETS:
<S> <C>
Total Investments, including repurchase
agreements of $70,223,000 (Cost $299,185,304) $ 344,122,307
Cash 659
Receivables:
Variation Margin on Futures 3,578,194
Investments Sold 1,313,975
Dividends 865,791
Fund Shares Sold 325,813
Interest 29,379
Forward Currency Contracts 591,285
Other 29,700
-------------------
Total Assets 350,857,103
-------------------
LIABILITIES:
Payables:
Fund Shares Repurchased 1,734,864
Investments Purchased 801,965
Distributor and Affiliates 412,636
Investment Advisory Fee 298,582
Accrued Expenses 574,336
Trustees' Deferred Compensation and Retirement Plans 76,311
-------------------
Total Liabilities 3,898,694
-------------------
NET ASSETS $ 346,958,409
==================
NET ASSETS CONSIST OF:
Capital $ 267,120,243
Net Unrealized Appreciation 47,292,959
Accumulated Net Realized Gain 29,393,730
Accumulated Undistributed Net Investment Income 3,151,477
-------------------
NET ASSETS $ 346,958,409
===================
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per
share (Based on net assets of $180,564,574
and 10,972,658 shares of beneficial interest
issued and outstanding) $ 16.46
Maximum sales charge (5.75%* of offering price) 1.00
-------------------
Maximum offering price to public $ 17.46
==================
Class B Shares:
Net asset value and offering price per
share (Based on net assets of $149,502,081
and 9,502,009 shares of beneficial interest
issued and outstanding) $ 15.73
==================
Class C Shares:
Net asset value and offering price per
share (Based on net assets of $16,891,754
and 1,062,133 shares of beneficial interest
issued and outstanding) $ 15.90
==================
</TABLE>
* On sales of $50,000 or more, the sales
charge will be reduced.
See Notes to Financial Statements
31
<PAGE>
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
STATEMENT OF OPERATIONS
For the Year Ended May 31, 1998
<S> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding
taxes of $425,488) $ 6,562,730
Interest (Net of foreign withholding
taxes of $131) 2,161,583
-------------------
Total Income 8,724,313
-------------------
EXPENSES:
Investment Advisory Fee 3,136,351
Distribution (12b-1) and Service
Fees (Attributed to Classes A, B and C of
of $398,020, $1,395,131 and $149,140,
respectively) 1,942,291
Shareholder Services 1,554,786
Custody 839,402
Legal 28,340
Trustees' Fees and Expenses 19,618
Other 307,208
-------------------
Total Expenses 7,827,996
NET INVESTMENT INCOME $ 896,317
-------------------
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments $ 26,238,237
Foreign Currency Transactions 3,333,529
Futures 4,450,162
-------------------
Net Realized Gain 34,021,928
-------------------
Unrealized Appreciation/Depreciation:
Beginning of the Period 26,931,817
-------------------
End of the Period:
Investments 44,937,003
Futures 1,793,269
Forward Currency Contracts 591,285
Foreign Currency Translation (28,598)
-------------------
47,292,959
-------------------
Net Unrealized Appreciation During the Period 20,361,142
-------------------
NET REALIZED AND UNREALIZED GAIN $ 54,383,070
===================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 55,279,387
===================
</TABLE>
32
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended May 31, 1998 and 1997
Year Ended Year Ended
May 31, 1998 May 31, 1997
-------------- -------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income/Loss $ 896,317 $ (1,952,191)
Net Realized Gain 34,021,928 42,112,838
Net Unrealized Appreciation/Depreciation During the Period 20,361,142 (810,153)
-------------- -------------
Change in Net Assets from Operations 55,279,387 39,350,494
-------------- -------------
Distributions from Net Investment Income* (207,732) 0
Distributions in Excess of Net Investment Income* 0 (1,377,948)
Distributions from Net Realized Gains* (39,971,513) (6,599,826)
-------------- -------------
Total Distributions (40,179,245) (7,977,774)
-------------- -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES 15,100,142 31,372,720
-------------- -------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold 135,842,241 127,851,283
Net Asset Value of Shares Issued Through Dividend Reinvestment 38,236,848 7,550,550
Cost of Shares Repurchased (116,284,739) (101,392,502)
-------------- -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 57,794,350 34,009,331
-------------- -------------
TOTAL INCREASE IN NET ASSETS 72,894,492 65,382,051
NET ASSETS:
Beginning of the Period 274,063,917 208,681,866
-------------- -------------
End of the Period (Including accumulated
undistributed net investment income
of $3,151,477 and ($879,465), respectively) $ 346,958,409 $ 274,063,917
============== ===============
<CAPTION>
Year Ended Year Ended
*Distributions by Class May 31, 1998 May 31, 1997
-------------- -------------
<S> <C> <C>
Distributions from and in Excess of Net Investment Income:
Class A Shares (207,732) (1,133,880)
Class B Shares 0 (221,577)
Class C Shares 0 (22,491)
-------------- -------------
(207,732) (1,377,948)
-------------- -------------
Distributions from Net Realized Gains:
Class A Shares (19,875,665) (3,319,275)
Class B Shares (18,167,343) (2,976,985)
Class C Shares (1,928,505) (303,566)
-------------- -------------
(39,971,513) (6,599,826)
-------------- -------------
</TABLE>
33
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.
Year Ended May 31,
------------------------------------------------------------------
Class A Shares 1998 1997 1996(a) 1995(a) 1994
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 15.838 $ 13.980 $ 11.79 $ 11.67 $ 10.76
---------- --------- -------- --------- --------
Net Investment Income/Loss 0.095 (0.064) (0.04) (0.04) (0.06)
Net Realized and Unrealized Gain 2.678 2.460 2.561 0.42 1.0125
---------- --------- -------- --------- --------
Total from Investment Operations 2.773 2.396 2.521 0.38 0.9525
---------- --------- -------- --------- --------
Less:
Distributions from and in Excess
of Net Investment Income 0.022 0.137 -0- -0- -0-
Distributions from Net Realized Gain 2.133 0.401 0.331 0.26 0.0425
---------- --------- -------- --------- --------
Total Distributions 2.155 0.538 0.331 0.26 0.0425
---------- --------- -------- --------- --------
"Net Asset Value, End of the Period" $ 16.456 $ 15.838 $ 13.98 $ 11.79 $ 11.67
========== ========= ======== ========= ========
Total Return (b) 19.77% 17.67% 21.85% 3.36% 9.17%
Net Assets at End of the Period (In millions) $180.6 $136.9 $106.7 $60.1 $41.8
Ratio of Expenses to Average Net Assets (c) 2.12% 2.09% 2.22% 2.29% 2.46%
Ratio of Net Investment Income/
Loss to Average Net Assets (c) 0.66% (0.46%) (0.30%) (0.35%) (0.46%)
Portfolio Turnover 96% 144% 94% 120% 116%
<FN>
(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%.
</FN>
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS (Continued)
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.
Year Ended May 31,
------------------------------------------------------------------
Class B Shares 1998 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 $ 11.480 $ 10.67
---------- --------- -------- --------- --------
Net Investment Income/Loss 0.003 (0.139) (0.14) (0.13) (0.13)
Net Realized and Unrealized Gain 2.546 2.358 2.501 0.41 0.9825
---------- --------- -------- --------- --------
Total from Investment Operations 2.549 2.219 2.361 0.28 0.8525
---------- --------- -------- --------- --------
Less:
Distributions from and in Excess of Net
Investment Income -0- 0.030 -0- -0- -0-
Distributions from Net Realized Gain 2.133 0.401 0.331 0.26 0.0425
---------- --------- -------- --------- --------
Total Distributions 2.133 0.431 0.331 0.26 0.0425
"Net Asset Value, End of the Period" $ 15.734 $ 15.318 $ 13.53 $ 11.50 $ 11.48
========== ======= ======== ========== ========
Total Return (b) 18.91% 16.83% 20.90% 2.62% 8.21%
Net Assets at End of the Period (In millions) $149.5 $124.1 $92.8 $64.7 $48.8
Ratio of Expenses to Average Net Assets (c) 2.88% 2.86% 2.99% 3.05% 3.21%
Ratio of Net Investment Income/
Loss to Average Net Assets (c) (0.10%) (1.22%) (1.11%) (1.11%) (1.19%)
Portfolio Turnover 96% 144% 94% 120% 116%
<FN>
(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%.
</FN>
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS (Continued)
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.
Year Ended May 31,
------------------------------------------------------------------
Class C Shares 1998 1997 1996(a) 1995(a) 1994
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 15.464 $ 13.66 $ 11.610 $ 11.59 $ 10.29
---------- --------- -------- --------- --------
Net Investment Income/Loss 0.006 (0.137) (0.14) (0.13) (0.13)
Net Realized and Unrealized Gain 2.567 2.372 2.521 0.41 1.4725
---------- --------- -------- --------- --------
Total from Investment Operations 2.573 2.235 2.381 0.280 1.3425
---------- --------- -------- --------- --------
Less:
Distributions from and in Excess of
Net Investment Income -0- 0.030 -0- -0- -0-
Distributions from Net Realized Gain 2.133 0.401 0.331 0.26 0.0425
---------- --------- -------- --------- --------
Total Distributions 2.133 0.431 0.331 0.26 0.0425
---------- --------- -------- --------- --------
"Net Asset Value, End of the Period" $ 15.904 $ 15.464 $ 13.66 $ 11.61 $ 11.59
========== ========= ========= ========= ========
Total Return (b) 18.86% 16.82% 20.87% 2.60% 13.06%*
Net Assets at End of the Period (In millions) $16.9 $13.0 $9.2 $6.6 $5.1
Ratio of Expenses to Average Net Assets (c) 2.89% 2.87% 3.00% 3.05% 3.21%
Ratio of Net Investment Income/
Loss to Average Net Assets (c) (0.11%) (1.23%) (1.10%) (1.13%) (1.15%)
Portfolio Turnover 96% 144% 94% 120% 116%
<FN>
*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%.
</FN>
</TABLE>
36
<PAGE>
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 Fundis 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 securities only upon physical
delivery or evidence of book entry transfer to the account of the custodian
bank. The seller is required to maintain the value of the underlying security
at not less than the repurchase proceeds due the Fund.
C. INCOME AND EXPENSES - Dividend income is recorded 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 as ordinary income for tax
purposes.
Expenses of the Fund are allocated on a pro rata basis to each class
of shares, except for distribution and service fees and transfer agency costs
which are unique to each class of shares.
D. 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 May 31, 1998, for federal income tax purposes, cost of long- and
short-term investments is $301,410,255; the aggregate gross unrealized
appreciation is $51,548,443 and the aggregate gross unrealized depreciation is
$8,836,391, resulting in net unrealized appreciation of $42,712,052. Net
realized gains or losses may differ for financial reporting purposes primarily
as a result of wash sales and the mark to market of open futures and open
forward currency contracts at May 31, 1998.
F. DISTRIBUTION OF INCOME AND GAINS - The Fund declares and pays dividends
annually from net investment income. Net realized gains, if any, are distributed
annually. Net investment income for federal income tax purposes includes gains
and losses realized on transactions in foreign currencies. These realized gains
and losses are included as net realized gains or losses for financial reporting
purposes.
37
<PAGE>
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, the following permanent differences between book and tax
basis reporting for the 1998 fiscal year have been identified and appropriately
reclassified as follows:
Accumulated Undistributed Net
Investment Income....................$ 3,342,357 (a)(b)
Accumulated Net Realized
Gain/Loss..........................$ (3,301,076)(a)(b)(c)
Capital.........................................$ (41,281)(c)
(a) Includes $3,333,529 of realized gains and losses on transactions in foreign
currencies which are included as ordinary income for federal income tax
purposes. These realized gains and losses are included in net realized gain/loss
for financial reporting purposes. (b) Includes $8,828 of realized gains and
losses on transactions in passive foreign investment companies which are
included as ordinary income for federal income tax purposes. These realized
gains and losses are included in net realized gain/loss for financial reporting
purposes. (c) Includes $41,281 of realized gains and losses reclassified to
capital for federal income tax purposes, but not for financial reporting
purposes.
For Federal income tax purposes, the following information is furnished
with respect to the distributions paid by the Fund from June 1, 1997 to May
31,1998. The Fund designated $26,207,295 as a 28% rate capital gain
distribution. Shareholders will receive a 1998 Form 1099-DIV in January 1999
representing their proportionate share of the capital gain distribution to be
reported on their income tax returns. The impact of any retroactive tax law
changes will be reflected in the 1998 Form 1099-DIV. For corporate shareholders
8.96% of the distributions qualify for the dividend received deductions.
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 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 "Subadviser") who provides advisory services to the Fund and the Adviser
with respect to the Fundis investments. The Adviser pays 50% of its investment
advisory fee to the Subadviser.
For the year ended May 31, 1998, the Fund recognized expenses of
approximately $28,300, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund of which a trustee of the
Fund is an affiliated person.
For the year ended May 31, 1998, the Fund recognized expenses of
approximately $28,800, representing Van Kampen American Capital Distributors,
Inc. or its affiliates (collectively iVKAC) 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 year ended May
31, 1998, the Fund recognized expenses of approximately $1,230,600. Beginning in
1998, the transfer agency fees are determined through negotiations with the
Fundis Board of Trustees and are based on competitive market benchmarks.
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:
Transactions
During the Period
% of Net ---------------------------
Assets At Cost of Proceeds
May 31, Purchases of Sales
1998
- ----------------------------------------------------------------------------
Latin American Discovery Fund .70% $1,494,859 $ -0-
Morgan Stanley Asia Pacific Fund .24% $ -0- $1,353,262
Morgan Stanley India Investment Fund N/A $ -0- $1,547,936
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.
38
<PAGE>
At May 31, 1998, capital aggregated $138,128,116 , $115,521,858 and
$13,511,550 for Classes A, B and C, respectively. For the year ended May 31,
1998, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Sales:
Class A 5,868,214 $ 95,701,798
Class B 2,246,366 35,185,146
Class C 314,263 4,955,297
---------- -------------
Total Sales 8,428,843 $ 135,842,241
========== =============
Dividend Reinvestment:
Class A 1,371,309 $ 19,280,600
Class B 1,270,926 17,144,795
Class C 132,902 1,811,453
---------- -------------
Total Dividend Reinvestment 2,775,137 $ 38,236,848
========== =============
Repurchases:
Class A (4,912,085) $ (80,027,803)
Class B (2,116,552) (32,686,504)
Class C (228,409) (3,570,432)
---------- -------------
Total Repurchases (7,257,046) $(116,284,739)
========== =============
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:
<CAPTION>
Shares Value
<S> <C> <C>
Sales:
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 Class C shares are offered without a front- end sales charge, but
are subject to a contingent deferred sales charge (CDSC). Class B and Class C
shares will automatically convert to Class A shares after the eighth and tenth
years, respectively.
The CDSC will be imposed on most redemptions made within five years of
the purchase for Class B and one year of the purchase for Class C as detailed in
the following schedule.
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
-------------------------------
Class B Class C
Year of Redemption Shares Shares
- ----------------------------------------------------------------------------
<S> <C> <C>
First 5.00% 1.00%
Second 4.00% None
Third 3.00% None
Fourth 2.50% None
Fifth 1.50% None
Sixth and Thereafter None None
</TABLE>
For the year ended May 31, 1998, VKAC, as Distributor for the Fund,
received commissions on sales of the Fundis Class A shares of approximately
$86,300 and CDSC on the redeemed shares of approximately $194,300. 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 $255,672,241 and $283,522,141,
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 commitment.
Purchasing securities on a forward commitment involves a risk that the
market value at the time of delivery may be lower than the agreed upon purchase
price resulting in an unrealized loss. Selling securities on a forward
commitment involves different risks and can result in losses more significant
than those arising from the purchase of such securities. Risks may arise as a
result of the potential inability of the counterparties to meet the terms of
their contracts.
39
<PAGE>
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 Fundis overall exposure to the equity
markets.
Upon entering into a futures contract, 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 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). The risk of loss associated
with a futures contract is in excess of the variation margin reflected on the
Statement of Assets and Liabilities.
Transactions in futures contracts for the year ended May 31, 1998, were
as follows:
CONTRACTS
Outstanding at May 31, 1997 25
Futures Opened 2,284
Futures Closed 2,011
-----
Outstanding at May 31, 1998 298
=====
The Futures contracts outstanding as of May 31, 1998, and the
description and unrealized appreciation/depreciation are as follows:
<TABLE>
<CAPTION>
Unrealized
Appreciation/
Description Contracts Depreciation
<S> <C> <C>
LONG CONTRACTS
FTSE 100 (United Kingdom) Index
Future, June 1997 (Current
Notional Value of $96,340 per
contract) 70 $ (7,994)
Milan (Italy) Stock Index Future,
June 1998 (Current Notional Value
of $197,920 per contract) 38 477,056
CAC 40 (France) Index Future,
June 1998 (Current Notional Value
of $134,868 per contract) 85 961,033
S&P 500 Stock Index Future,
June 1998 (Current Notional Value
of $272,750 per contract) 33 (220,475)
DAX (Germany) Index Future,
June 1998 (Current Notional Value
of $311,453 per contract) 38 602,395
SHORT CONTRACTS
Toronto (Canada) Index Future,
June 1998 (Current Notional Value
of $142,210 per contract) 15 (43,971)
Topix (Japan) Future,
June 1998 (Current Notional Value
of $88,322 per contract) 19 25,225
---------- -------------
298 $ 1,793,269
</TABLE>
<TABLE>
<CAPTION>
B. FORWARD 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. Risks may arise as a result of the
potential inability of the counterparties to meet the terms of their contracts.
At May 31, 1998, the Fund has outstanding forward currency contracts as
follows:
Unrealized
Current Appreciation/
Description Value Depreciation
<S> <C> <C>
LONG CONTRACTS
French Franc
41,533,392 expiring 8/17/98 $ 6,973,949 $ (92,678)
German Mark,
25,995,913 expiring 7/09/98-
8/14/98 14,620,380 (43,054)
Pound Sterling,
7,108,243 expiring 7/29/98 11,575,076 (279,340)
Hong Kong Dollar
26,904,047 expiring 8/12/98 3,448,788 (10,205)
Italian Lira,
15,400,262,000 expiring
7/15/98-8/06/98 8,764,937 31,554
Japanese Yen,
1,010,907,951 expiring
6/03/98-8/19/98 7,321,074 (215,677)
Malaysian Ringgit,
6,094,000 expiring 8/04/98 1,537,559 54,651
-------------
$ (554,749)
-------------
SHORT CONTRACTS
Canadian Dollar,
3,056,000 expiring 6/19/98 2,097,859 60,943
German Mark,
6,181,908 expiring 6/16/98-
8/14/98 3,479,087 11,771
Pound Sterling,
2,987,047 expiring 8/17/98 4,860,056 41,313
Hong Kong Dollar,
26,904,047 expiring 8/12/98 3,448,788 14,212
Italian Lira,
1,995,312,800 expiring
8/15/98 1,135,434 (26,434)
Japanese Yen,
2,426,585,869 expiring
6/03/98-9/10/98 17,554,764 1,246,848
Malaysian Ringgit,
6,094,000 expiring 8/04/98 1,537,559 (202,619)
-------------
$ 1,146,034
-------------
$ 591,285
=============
</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.
40
<PAGE>
Annual fees under the Plans of up to .25% of Class A net assets and
1.00% each of Class B and Class C net assets are accrued daily. Included in
these fees for the year ended May 31, 1998, are payments retained by VKAC of
approximately $1,220,557.
7. SUBSEQUENT EVENTS
On June 12, 1998, the Morgan Stanley Global Equity Allocation Fund acquired all
of the assets and liabilities of the Van Kampen American Capital Global Equity
Fund (the "VKAC Fund"), through a tax free reorganization approved by VKAC Fund
shareholders on June 4, 1998.
41
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Trustees of
The Van Kampen American Capital Global Equity Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen American Capital Global
Equity Fund (the "Fund"), a series of Van Kampen American Capital World
Portfolio Series Trust, at May 31, 1998, and the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at May 31,
1998 by correspondence with the custodian and brokers and the application of
alternative procedures where confirmations from brokers were not received,
provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
July 10, 1998
42
<PAGE>
Results of Shareholder Votes for the Global Equity Fund
A Special Meeting of Shareholders of the Fund was held on May 14, 1998,
where shareholders voted to approve an Agreement and Plan of Reorganization
pursuant to which VKAC Global Equity Fund would (i) transfer all of its assets
to the Morgan Stanley Global Equity Allocation Fund (the iMS Global Equity
Allocation Fundi) in exchange solely for Class A, B and C shares of common stock
of the MS Global Equity Allocation Fund and the MS Global Equity Allocation
Fundis assumption of the liabilities of the VKAC Global Equity Fund, (ii)
distribute such shares of the MS Global Equity Allocation Fund to the holders of
shares of the VKAC Global Equity Fund and (iii) be dissolved. The meeting was
adjourned until May 21, 1998 and later to June 4, 1998 to allow sufficient time
to reach quorum. A Special Meeting of Shareholders of the Fund was held on June
4, 1998, where shareholders voted to approve an Agreement and Plan of
Reorganization. With regard to the Plan of Reorganization 10,898,236 shares
voted in favor of the proposal, 549,823 shares voted against and 1,619,794
shares abstained.
43
<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
DON G. POWELL*
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*
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
PRICEWATERHOUSECOOPERS LLP
200 E. Randolph Drive
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the Investment Company Act
of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1998
All Rights Reserved.
SM denotes a service mark of Van Kampen American Capital Distributors, Inc.
TAX NOTICE TO SHAREHOLDERS
For the period January 1, 1998 to June 12, 1998, the Fund designated $8,962,857
as a 28% rate capital gain distribution and $2,249,169as 20% rate capital gain
distribution.
TAX NOTICE TO CORPORATE SHAREHOLDERS
For the period January 1, 1998 to June 12, 1998 15.24% of the dividends taxable
as ordinary income qualified for the 70% dividends received deduction for
corporations.
44
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> GLOB EQ CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 299,185,304 <F1>
<INVESTMENTS-AT-VALUE> 344,122,307 <F1>
<RECEIVABLES> 6,113,152 <F1>
<ASSETS-OTHER> 0 <F1>
<OTHER-ITEMS-ASSETS> 621,644 <F1>
<TOTAL-ASSETS> 350,857,103 <F1>
<PAYABLE-FOR-SECURITIES> 801,965 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 3,096,729 <F1>
<TOTAL-LIABILITIES> 3,898,694 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 138,128,116
<SHARES-COMMON-STOCK> 10,972,658
<SHARES-COMMON-PRIOR> 8,645,220
<ACCUMULATED-NII-CURRENT> 3,151,477 <F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> 29,393,730 <F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 47,292,959 <F1>
<NET-ASSETS> 180,564,574
<DIVIDEND-INCOME> 6,562,730 <F1>
<INTEREST-INCOME> 2,161,583 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (7,827,996)<F1>
<NET-INVESTMENT-INCOME> 896,317 <F1>
<REALIZED-GAINS-CURRENT> 34,021,928 <F1>
<APPREC-INCREASE-CURRENT> 20,361,142 <F1>
<NET-CHANGE-FROM-OPS> 55,279,387 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> (207,732)
<DISTRIBUTIONS-OF-GAINS> (19,875,665)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,868,214
<NUMBER-OF-SHARES-REDEEMED> (4,912,085)
<SHARES-REINVESTED> 1,371,309
<NET-CHANGE-IN-ASSETS> 43,639,969
<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> 3,136,351 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 7,827,996 <F1>
<AVERAGE-NET-ASSETS> 172,011,158
<PER-SHARE-NAV-BEGIN> 15.838
<PER-SHARE-NII> 0.095
<PER-SHARE-GAIN-APPREC> 2.678
<PER-SHARE-DIVIDEND> (2.155)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.456
<EXPENSE-RATIO> 2.12
<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> GLOB EQ CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 299,185,304 <F1>
<INVESTMENTS-AT-VALUE> 344,122,307 <F1>
<RECEIVABLES> 6,113,152 <F1>
<ASSETS-OTHER> 0 <F1>
<OTHER-ITEMS-ASSETS> 621,644 <F1>
<TOTAL-ASSETS> 350,857,103 <F1>
<PAYABLE-FOR-SECURITIES> 801,965 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 3,096,729 <F1>
<TOTAL-LIABILITIES> 3,898,694 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 115,521,858
<SHARES-COMMON-STOCK> 9,502,009
<SHARES-COMMON-PRIOR> 8,101,269
<ACCUMULATED-NII-CURRENT> 3,151,477 <F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> 29,393,730 <F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 47,292,959 <F1>
<NET-ASSETS> 149,502,081
<DIVIDEND-INCOME> 6,562,730 <F1>
<INTEREST-INCOME> 2,161,583 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (7,827,996)<F1>
<NET-INVESTMENT-INCOME> 896,317 <F1>
<REALIZED-GAINS-CURRENT> 34,021,928 <F1>
<APPREC-INCREASE-CURRENT> 20,361,142 <F1>
<NET-CHANGE-FROM-OPS> 55,279,387 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (18,167,343)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,246,366
<NUMBER-OF-SHARES-REDEEMED> (2,116,552)
<SHARES-REINVESTED> 1,270,926
<NET-CHANGE-IN-ASSETS> 25,405,353
<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> 3,136,351 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 7,827,996 <F1>
<AVERAGE-NET-ASSETS> 150,233,095
<PER-SHARE-NAV-BEGIN> 15.318
<PER-SHARE-NII> (0.004)
<PER-SHARE-GAIN-APPREC> 2.553
<PER-SHARE-DIVIDEND> (2.133)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 15.734
<EXPENSE-RATIO> 2.88
<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> 13
<NAME> GLOB EQ CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 299,185,304 <F1>
<INVESTMENTS-AT-VALUE> 344,122,307 <F1>
<RECEIVABLES> 6,113,152 <F1>
<ASSETS-OTHER> 0 <F1>
<OTHER-ITEMS-ASSETS> 621,644 <F1>
<TOTAL-ASSETS> 350,857,103 <F1>
<PAYABLE-FOR-SECURITIES> 801,965 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 3,096,729 <F1>
<TOTAL-LIABILITIES> 3,898,694 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,511,550
<SHARES-COMMON-STOCK> 1,062,133
<SHARES-COMMON-PRIOR> 843,377
<ACCUMULATED-NII-CURRENT> 3,151,477 <F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> 29,393,730 <F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 47,292,959 <F1>
<NET-ASSETS> 16,891,754
<DIVIDEND-INCOME> 6,562,730 <F1>
<INTEREST-INCOME> 2,161,583 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (7,827,996)<F1>
<NET-INVESTMENT-INCOME> 896,317 <F1>
<REALIZED-GAINS-CURRENT> 34,021,928 <F1>
<APPREC-INCREASE-CURRENT> 20,361,142 <F1>
<NET-CHANGE-FROM-OPS> 55,279,387 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,928,505)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 314,263
<NUMBER-OF-SHARES-REDEEMED> (228,409)
<SHARES-REINVESTED> 132,902
<NET-CHANGE-IN-ASSETS> 3,849,170
<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> 3,136,351 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 7,827,996 <F1>
<AVERAGE-NET-ASSETS> 16,082,382
<PER-SHARE-NAV-BEGIN> 15.464
<PER-SHARE-NII> (0.006)
<PER-SHARE-GAIN-APPREC> 2.579
<PER-SHARE-DIVIDEND> (2.133)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 15.904
<EXPENSE-RATIO> 1.78
<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 on a class basis
</FN>
</TABLE>
