<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
A Farewell from the Chairman..................... 3
Performance Results.............................. 4
Glossary of Terms................................ 5
Portfolio Management Review...................... 6
Portfolio of Investments......................... 9
Statement of Assets and Liabilities.............. 10
Statement of Operations.......................... 11
Statement of Changes in Net Assets............... 12
Financial Highlights............................. 13
Notes to Financial Statements.................... 16
</TABLE>
GGS SAR 1/99
<PAGE> 2
LETTER TO SHAREHOLDERS
December 21, 1998
Dear Shareholder,
The past decade has been a
remarkable time for investors.
Together, we've witnessed one of the
greatest bull markets in investment [PHOTO]
history, unprecedented growth in
mutual fund investing, and a surge in
personal retirement planning. The
coming millennium promises to hold DENNIS J. MCDONNELL AND DON G. POWELL
even more opportunities.
To lead us into this new era of
investing, we are proud to announce
that Richard F. Powers III has joined
Van Kampen as President and Chief Executive Officer, and he will assume the
additional role of Chairman of Van Kampen in 1999. He comes to us from our
parent company, Morgan Stanley Dean Witter & Co., where he served as Executive
Vice President and Director of Marketing. Dick Powers brings 27 years of
experience in the financial services industry, including vast expertise in
product management, strategic planning, and brand development. While at Morgan
Stanley Dean Witter, he developed many of the firm's core products and services.
You'll hear more from Dick Powers in the coming months as he becomes
increasingly involved in matters related to your fund and joins Dennis McDonnell
in addressing you in future shareholder reports. (See Don Powell's farewell to
shareholders on page 3.)
ECONOMIC REVIEW
The economic picture changed from rosy to uncertain during the reporting
period, as the Asian financial crisis led to slowing corporate profits in the
United States. Given the uncertainty surrounding emerging market nations and the
near-collapse of a major U.S. hedge fund, the stock and bond markets experienced
significant volatility during the past several months. With this backdrop,
American and foreign investors alike pursued a flight to quality--seeking the
relative safety of large-cap stocks and government bonds. In recent weeks,
however, the global financial situation has improved as dozens of foreign
central banks have reduced interest rates in an effort to stimulate their
economies.
Despite the global turmoil, the United States experienced only a moderate
slowdown in growth. In response to declining corporate profits and mounting
international concerns, the Federal Reserve lowered interest rates three times,
with 0.25 percent cuts in the federal funds rate in September, October, and
November. These rate cuts, coupled with a wave of corporate mergers and
cost-cutting measures, lent the support needed to keep the economy growing,
albeit slowly. A continuation of low inflation--only a 1.5 percent increase in
the consumer price index over the last 12 months--also helped sustain the
domestic economy and keep inflation-adjusted interest rates attractive.
Continued on page 2
1
<PAGE> 3
MARKET OVERVIEW
A number of foreign central banks followed the U.S. Federal Reserve's lead
and lowered interest rates during the reporting period. In fact, there were more
than 40 central bank easings worldwide in October and November, creating an
excellent environment for global government securities. In addition to
benefiting from lower interest rates, these bonds performed well as a result of
the global flight to quality as investors pulled assets from riskier investments
and diverted them to government bonds. In fact, the U.S. Treasury bond was
considered one of the most attractive places to invest by both domestic and
international investors, propelling the 30-year Treasury bond to 4.71 percent in
October--its lowest yield since the federal government began selling these bonds
in 1977. This increased demand for high-quality government bonds kept yields low
in most parts of the world, resulting in significant price appreciation for
older, higher-yielding bonds purchased prior to the rate cuts.
OUTLOOK
We anticipate that the U.S. economy will continue to grow at a moderate pace
and that inflation will remain low. The global financial situation is already
showing signs of improvement, although the road to recovery will be steep and
slow. It should be aided in January by the launch of the euro, the new European
transnational currency.
In addition, we believe the global bond market may experience short-term
volatility given the continued weakness in global economic conditions. However,
we still anticipate high demand and low yields for government bonds as investors
show their preference for the relative safety of these securities. In the
long-term, we are optimistic that the stock market will continue its record
growth, although we anticipate significant volatility as the strength of the
market is tested. With declining profits and limited pricing power, many
corporations may produce disappointing earnings in 1999. Combined with growing
questions about corporate and government reactions to the Y2K computer problem,
we could see an increasingly nervous market by mid-year.
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 share with you the progress of your
investment.
Sincerely,
[sig]
Don G. Powell
Chairman
Van Kampen Asset Management Inc.
[sig]
Dennis J. McDonnell
President
Van Kampen Asset Management Inc.
2
<PAGE> 4
A FAREWELL FROM THE CHAIRMAN
----------- - -----------
Dear Shareholder,
Since I became president and chief executive officer in 1987, much has
changed in our business. However, one thing has remained constant through these
years--my commitment to you, the fund shareholder. Through the many events at
Van Kampen that have marked the passage of time--including several mergers,
company name changes, and leadership changes--we have always focused on
providing superior investment results and the highest level of customer service
to help you meet your investment objectives. I'm proud to say that during my
tenure, Van Kampen won eight consecutive awards for high-quality customer
service--more consecutive service awards than any other firm in the financial
services industry.(1) My successor, Dick Powers, shares this commitment to
meeting your needs and providing innovative and efficient ways to help you work
with your financial advisor to reach your financial goals.
Although my official retirement begins on January 1, 1999, I will remain
active in the industry and the community. I plan to continue my service as a
member of the board of directors of the Investment Company Institute, the
leading mutual fund industry association, and I will remain a trustee of your
Fund.
In closing, I want to say farewell to all of you. Thank you for your support
of Van Kampen over the years and for giving me the opportunity to serve you.
Best wishes,
[sig]
Don G. Powell
----------- - -----------
(1)American Capital, which merged with Van Kampen in 1995, received the DALBAR
Service Award annually from 1990 to 1994. The award was called the Quality
Tested Service Seal until 1997.
3
<PAGE> 5
PERFORMANCE RESULTS FOR THE PERIOD ENDED NOVEMBER 30, 1998
VAN KAMPEN GLOBAL GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
TOTAL RETURNS
<S> <C> <C> <C>
Six-month total return based on NAV(1)... 7.71% 7.25% 7.32%
Six-month total return(2)................ 2.55% 3.25% 6.32%
One-year total return(2)................. 5.27% 5.62% 8.71%
Five-year average annual total
return(2)................................ 3.38% 3.36% 3.61%
Life-of-Fund average annual total
return(2)................................ 4.59% 4.56% 4.49%
Commencement Date........................ 11/15/91 11/15/91 04/12/93
DISTRIBUTION RATE AND YIELD
Distribution rate(3)..................... 5.43% 4.91% 4.95%
SEC Yield(4)............................. 3.37% 2.62% 2.61%
</TABLE>
N/A-Not Applicable.
(1)Assumes reinvestment of all distributions for the period and does not include
payment of the maximum sales charge (4.75% for A shares) or contingent deferred
sales charge for early withdrawal (4% for B shares and 1% for C shares).
(2)Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (A shares) or contingent
deferred sales charge for early withdrawal (B and C shares).
(3)Distribution rate represents the monthly annualized distributions of the Fund
at the end of the period and not the earnings of the Fund.
(4)SEC Yield is a standardized calculation prescribed by the Securities and
Exchange Commission for determining the amount of net income a portfolio should
theoretically generate for the 30-day period ending November 30, 1998.
See the Prior Performance section of the current prospectus. An investment
should be made with an understanding of the risks that an investment in equity
securities entails. These include the risk that the financial condition of the
issuers of the securities in the portfolio, or the condition of the stock market
in general, may worsen and therefore, the value of Fund shares may decline. Past
performance does not guarantee future results. Investment return and net asset
value will fluctuate with market conditions. Market volatility may have
adversely affected fund performance since November 30, 1998. 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> 6
GLOSSARY OF TERMS
BASIS POINT: A measure used in quoting bond yields. One hundred basis points is
equal to 1 percent. For example, if a bond's yield changes from 7.00 to 6.65
percent, it is a 35 basis-point move.
BOND: A debt security issued by a government or corporation that generally pays
a bondholder a stated rate of interest and repays the principal at the
maturity date.
CREDIT SPREAD: Also called quality spread, the difference in yield between
higher-quality issues (such as Treasury securities) and lower-quality
issues. Normally, lower-quality issues provide higher yields to compensate
investors for the additional credit risk.
EUROPEAN MONETARY UNION (EMU): A group of European countries creating one
currency for the entire region.
FEDERAL FUNDS RATE: The interest rate charged by one financial institution
lending federal funds to another. This overnight rate is used to meet banks'
daily reserve requirements. The Federal Reserve Board uses the federal funds
rate to affect the direction of interest rates.
FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve
System, which is the central bank system of the United States. Its
policy-making committee, called the Federal Open Market Committee, meets
eight times a year to establish monetary policy and monitor the economic
pulse of the United States.
INVESTMENT GRADE BONDS: Securities rated BBB and above by Standard & Poor's or
Baa and above by Moody's Investor Services. Bonds rated below BBB or Baa are
noninvestment grade.
NET ASSET VALUE (NAV): The value of a mutual fund share, calculated by deducting
a fund's liabilities from its total assets and dividing this amount by the
number of shares outstanding. The NAV does not include any initial or
contingent deferred sales charge.
VOLATILITY: A measure of the fluctuation in the market price of a security. A
security that is volatile has frequent and large swings in price.
YIELD: The annual rate of return on an investment, expressed as a percentage.
For bonds and notes, the yield is the annual interest divided by the market
price.
5
<PAGE> 7
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN GLOBAL GOVERNMENT SECURITIES FUND
We recently spoke with the management team of the Van Kampen Global Government
Securities Fund about the key events and economic forces that shaped the markets
during the past six months. The team is led by portfolio managers Michael B.
Kushma, J. David Germany, and Paul F. O'Brien, Morgan Stanley Dean Witter
Investment Management Inc., subadviser to the Fund. The following excerpts
reflect their views on the Fund's performance during the six-month period ended
November 30, 1998.
Q HOW WOULD YOU CHARACTERIZE THE MARKET CONDITIONS IN WHICH THE FUND
OPERATED DURING THE SIX-MONTH PERIOD ENDED NOVEMBER 30, 1998?
A Because interest rates continued to decline during the past six months in
all of the major government bond markets, we experienced favorable conditions in
most of the markets in which we invest. Continued weakness in Asia, primarily in
the Japanese banking system, spread to Russia and Latin America during the
period and increased investor demand for high-quality, investment-grade
government bonds, which included bonds in the United States and Germany. In
addition, fears caused by weakness in the U.S. equity markets during August led
to a gradual decline in the strength of the U.S. dollar compared to European
currencies and the Japanese yen.
Q MANY BELIEVE THAT THE U.S. FEDERAL RESERVE BOARD HAS BEEN LOWERING
INTEREST RATES TO HELP STABILIZE THE GLOBAL ECONOMY. WHAT IS YOUR OPINION?
A Although the global economy may benefit from such moves, the Fed's purpose
is not to rescue foreign currencies, banks, and governments. In reality,
weakness in the U.S. equity market hinted that the Asian and Russian problems
were beginning to affect the U.S. banking system. In addition, the September
collapse of Long Term Capital Management, a high-profile hedge fund, was the
equivalent of a large U.S. bank going bankrupt. As a result, the Fed feared that
banks would begin to curtail credit and cause a severe credit contraction in the
U.S. economy.
During the latter portion of the period, three reductions by the Fed lowered
interest rates by a total of 0.75 percent (75 basis points). In addition to
helping protect the U.S. banking system from a credit crunch, the reduction of
U.S. interest rates should provide liquidity and a level of stability to the
global financial system as capital should begin to flow out of the United
States.
Q HOW DID ALL OF THIS AFFECT THE FUND DURING THE PERIOD?
A The Fund benefited because all of its assets were invested in the
government bonds of industrialized countries. Two positions that helped the Fund
during the period were large positions in the United States and Germany.
6
<PAGE> 8
Investing heavily in Germany was our strategy to take advantage of the
convergence of interest rates in the European market. With European economic and
monetary union (EMU) beginning in January 1999, interest rates have declined
throughout Europe. As a result, we felt that investing large positions in
multiple European markets would not yield additional opportunities. Because
Germany is considered the dominant country in Europe, however, we felt that it
would benefit from the flight toward high-quality investments, and it did.
In addition, the Fund benefited during the second half of the period from a
decline in value of the U.S. dollar relative to other currencies. During this
time we had approximately 60 percent of the Fund invested in assets outside the
United States.
Q WHAT ABOUT DISAPPOINTMENTS?
A Our exposure to Australia, Sweden, and Denmark did not help the Fund's
performance. Because these three markets are smaller and less liquid than major
industrialized markets such as the United States and Germany, they are viewed as
riskier and were hurt by the flight toward higher-quality government bonds.
One market that we missed that performed well due to the flight toward
high-quality government bonds was France. But, we were comfortable with our
decision because its performance was similar to that of Germany, our European
overweight position.
Q HOW HAS THE FUND PERFORMED DURING THE REPORTING PERIOD?
A We are pleased with the total return generated by Fund during the past six
months. For Class A shares at net asset value, the Fund generated a total return
of 7.71 percent(1) for the six months ended November 30, 1998, and a total
return of 10.54 percent(1) for the 12 months ended November 30, 1998. By
comparison, the J.P. Morgan Global Traded Government Index generated a total
return of 9.90 percent and 13.06 percent for the same six-month and 12-month
periods, respectively. This is a broad-based index composed of major foreign and
U.S. government bonds, weighted by the total market value of each country's
securities. It reflects variations in currency value with all results measured
in U.S. dollar terms. This index 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 4 for additional Fund performance
results.
Q IN ADDITION TO THE FED'S MOVE TO LOWER U.S. INTEREST RATES, ARE THERE ANY
ADDITIONAL DEVELOPMENTS THAT AFFECTED OR COULD AFFECT THE GLOBAL ECONOMY?
A We believe that in addition to the Fed's move to lower interest rates,
several other developments helped stabilize the global economic situation. In
October, the United States and other major industrial countries agreed to
replenish the International Money Fund (IMF), Brazil's reelection of President
Cardoso was viewed as positive news for financial markets, and the Japanese
announced a major bank bailout package.
While we view these developments as positive, many questions that we will
monitor still remain. We don't expect Japan's bank bailout package to have much
of an effect on
7
<PAGE> 9
that country's short-term macroeconomic performance. In addition, we are
concerned that Brazil, with its fixed exchange-rate policy, may be vulnerable to
exchange rate collapse and a possible recession during the next year. This
would, in turn, place downward economic pressure on the rest of Latin America,
including Mexico.
Despite what are still strong economic conditions in the United States,
recent moves by the Fed indicate that it is concerned about the economy's
performance in the future. Going forward, we expect the Fed to continue
monitoring interest rates, but we don't expect further action until early 1999.
Q IN RESPONSE TO THIS, HOW HAVE YOU POSITIONED THE FUND?
A We currently have large positions in foreign currencies but expect to
maintain an underweight position in the Japanese yen. Given the Bank of Japan's
strategy--attempting to create inflation and lower interest rates by printing
additional currency--we don't expect the yen to strengthen as much as it has in
recent months.
During the next six months, we expect interest rates worldwide to drop
further and we anticipate opportunities between the major regions. For example,
we may look to reduce European market interest rate exposure and move that
exposure toward the U.S. market, but will also remain cautious due to the
unsettled global economic situation.
Q WILL THE ARRIVAL OF EMU AFFECT ANY OF YOUR STRATEGIES?
A We don't expect EMU to affect the Fund's positioning. We believe that
since the May announcement of the 11 participant nations most of the financial
implications from EMU have already been reflected in the market.
We do expect, however, to monitor the actions of the new European Central
Bank (ECB). Because the goal of the ECB will be to gain credibility for the new
euro currency, we anticipate that the ECB's policies will be cautious in the
early stages of monetary union. This could put downward pressure on the European
economy and may provide additional opportunities in high-quality government bond
markets. Therefore, in the coming months we expect to emphasize the core markets
within Europe, including Germany, the United Kingdom, and France.
[SIG]
Michael B. Kushma
Portfolio Manager
Morgan Stanley Dean Witter
Investment Management Inc.
[SIG]
J. David Germany
Portfolio Manager
Morgan Stanley Dean Witter
Investment Management Inc.
[SIG]
Paul F. O'Brien
Portfolio Manager
Morgan Stanley Dean Witter
Investment Management Inc.
Please see footnotes on page 4
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UNITED STATES GOVERNMENT & GOVERNMENT
AGENCY OBLIGATIONS 55.4%
$ 474 Government National Mortgage
Association Pools.................... 8.000% 11/15/00 to 12/15/25 $ 492,906
3,900 United States Treasury Bonds (a)..... 12.000 05/15/05 5,444,751
3,070 United States Treasury Bonds (a)..... 8.125 08/15/19 4,130,102
2,350 United States Treasury Bonds (a)..... 6.250 08/15/23 2,647,416
16,500 United States Treasury Notes (a)..... 8.875 05/15/00 17,472,015
------------
TOTAL LONG-TERM INVESTMENTS
(Cost $29,407,299)............................................................ 30,187,190
------------
SHORT-TERM INVESTMENTS 44.9%
FOREIGN GOVERNMENT OBLIGATIONS 3.7%
240,000 (b) Japan Treasury Bill (yielding 0.13%, 02/22/99 maturity)............. 2,007,243
------------
COMMERCIAL PAPER 20.8%
1,000 Canada Government (yielding 4.71%, 12/10/98 maturity)............... 998,738
2,000 Canada Government (yielding 5.11%, 01/11/99 maturity)............... 1,988,406
1,650 Coca-Cola Company (yielding 4.61%, 12/01/98 maturity)............... 1,650,000
1,700 DuPont, (E.I.) de Nemours & Co (yielding 4.65%, 12/04/98
maturity)........................................................... 1,699,263
1,750 General Electric Capital Corp. (yielding 4.65%, 12/04/98
maturity)........................................................... 1,749,245
2,000 KFW International Finance, Inc. (yielding 4.69%, 12/09/98
maturity)........................................................... 1,997,711
260 Motorola, Inc. (yielding 5.12%, 01/26/99 maturity).................. 257,877
1,000 UBS Finance, Inc. (yielding 4.63%, 12/02/98 maturity)............... 999,858
------------
TOTAL COMMERCIAL PAPER.............................................. 11,341,098
------------
UNITED STATES GOVERNMENT & GOVERNMENT
AGENCY OBLIGATIONS 19.3%
2,750 Federal Farm Credit Bank Discount Note (yielding 4.73%, 01/08/99
maturity) (a)....................................................... 2,735,863
2,000 Federal Home Loan Bank Discount Note (yielding 4.71%, 12/30/98
maturity)........................................................... 1,992,025
2,750 Federal Home Loan Mortgage Discount Note (yielding 4.77%, 01/22/99
maturity) (a)....................................................... 2,730,655
1,675 Federal Home Loan Mortgage Discount Note (yielding 4.25%, 12/08/98
maturity)........................................................... 1,673,372
1,375 Federal Home Loan Mortgage Discount Note (yielding 4.65%, 12/23/98
maturity)........................................................... 1,370,790
------------
TOTAL UNITED STATES GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS...... 10,502,705
------------
REPURCHASE AGREEMENT 1.1%
State Street Bank & Trust Co. (Collateralized by U.S. Government
Obligations, $568,000 par, 4.00% coupon, dated 11/30/98, to be sold
on 12/01/98 at $568,063)............................................ 568,000
TOTAL SHORT-TERM INVESTMENTS
(Cost $24,419,046)............................................................ 24,419,046
------------
TOTAL INVESTMENTS 100.3%
(Cost $53,826,345)............................................................ 54,606,236
FOREIGN CURRENCY (VARIOUS DENOMINATIONS) 1.1%
(Cost $597,626)............................................................... 594,632
LIABILITIES IN EXCESS OF OTHER ASSETS (1.4%)................................... (781,641)
------------
NET ASSETS 100.0%.............................................................. $ 54,419,227
============
</TABLE>
(a) Assets segregated as collateral for forward purchase commitments.
(b) Par amount is expressed in Japanese Yen.
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $53,826,345)........................ $ 54,606,236
Foreign Currency (Cost $597,626)............................ 594,632
Cash........................................................ 873
Receivables:
Interest.................................................. 205,323
Fund Shares Sold.......................................... 19,939
Forward Currency Contracts and Forward Commitments.......... 254,666
Other....................................................... 28,216
------------
Total Assets.......................................... 55,709,885
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 597,626
Fund Shares Repurchased................................... 307,518
Income Distributions...................................... 117,781
Distributor and Affiliates................................ 65,964
Investment Advisory Fee................................... 33,817
Accrued Expenses............................................ 91,362
Trustees' Deferred Compensation and Retirement Plans........ 76,590
------------
Total Liabilities..................................... 1,290,658
------------
NET ASSETS.................................................. $ 54,419,227
============
NET ASSETS CONSIST OF:
Capital..................................................... $ 89,305,597
Accumulated Undistributed Net Investment Income............. 835,185
Net Unrealized Appreciation................................. 1,074,020
Accumulated Net Realized Loss............................... (36,795,575)
------------
NET ASSETS.................................................. $ 54,419,227
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $22,430,975 and 2,839,860 shares of
beneficial interest issued and outstanding)........... $ 7.90
Maximum sales charge (4.75%* of offering price)......... .39
------------
Maximum offering price to public........................ $ 8.29
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $28,914,073 and 3,638,824 shares of
beneficial interest issued and outstanding)........... $ 7.95
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $3,074,179 and 390,148 shares of
beneficial interest issued and outstanding)........... $ 7.88
============
</TABLE>
* On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF OPERATIONS
For the Six Months Ended November 30, 1998 (Unaudited)
- -------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (Net of foreign withholding taxes of $7,798)....... $ 1,956,639
-----------
EXPENSES:
Investment Advisory Fee..................................... 228,459
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $27,023, $179,770 and $16,748,
respectively)............................................. 223,541
Shareholder Services........................................ 41,847
Custody..................................................... 37,552
Accounting Services......................................... 36,556
Trustees' Fees and Expenses................................. 13,067
Legal....................................................... 1,284
Other....................................................... 47,400
-----------
Total Expenses.......................................... 629,706
-----------
NET INVESTMENT INCOME....................................... $ 1,326,933
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 462,059
Forward Commitments....................................... 1,282,778
Foreign Currency Transactions............................. 783,592
-----------
Net Realized Gain........................................... 2,528,429
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 438,434
-----------
End of the Period:
Investments............................................. 779,891
Forward Commitments..................................... 297,123
Foreign Currency Translation............................ (2,994)
-----------
1,074,020
-----------
Net Unrealized Appreciation During the Period............... 635,586
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 3,164,015
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 4,490,948
===========
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended November 30, 1998
and the Year Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
November 30, 1998 May 31, 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income..................................... $ 1,326,933 $ 3,199,850
Net Realized Gain......................................... 2,528,429 2,027,252
Net Unrealized Appreciation/Depreciation During the
Period.................................................. 635,586 (1,174,814)
----------- -----------
Change in Net Assets from Operations...................... 4,490,948 4,052,288
----------- -----------
Distributions from Net Investment Income.................. (1,618,584) (3,294,238)
Distributions in Excess of Net Investment Income.......... -0- (1,178,795)
----------- -----------
Distributions from and in Excess of Net Investment
Income*................................................. (1,618,584) (4,473,033)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES....... 2,872,364 (420,745)
----------- -----------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................. 7,674,500 14,155,976
Net Asset Value of Shares Issued Through Dividend
Reinvestment............................................ 999,710 2,660,059
Cost of Shares Repurchased................................ (22,015,930) (39,710,065)
----------- -----------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS........ (13,341,720) (22,894,030)
----------- -----------
TOTAL DECREASE IN NET ASSETS.............................. (10,469,356) (23,314,775)
NET ASSETS:
Beginning of the Period................................... 64,888,583 88,203,358
----------- -----------
End of the Period
(Including accumulated undistributed net investment
income of $835,185 and $1,126,836, respectively)........ $54,419,227 $64,888,583
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended
November 30, 1998 May 31, 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
*Distributions from and in Excess of Net Investment
Income:
Class A Shares.......................................... $ (629,147) $(1,462,620)
Class B Shares.......................................... (904,703) (2,753,416)
Class C Shares.......................................... (84,734) (256,997)
----------- -----------
$(1,618,584) $(4,473,033)
=========== ===========
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended May 31,
November 30, ------------------------------------
Class A Shares 1998(a) 1998(a) 1997(a) 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period.... $7.553 $7.604 $ 7.92 $ 8.24 $ 8.26
------ ------ ------- ------ -------
Net Investment Income..................... .185 .352 .526 .56 .60
Net Realized and Unrealized Gain/Loss..... .386 .088 (.310) (.328) (.016)
------ ------ ------- ------ -------
Total from Investment Operations............ .571 .440 .216 .232 .584
------ ------ ------- ------ -------
Less Distributions from and in Excess of Net
Investment Income......................... .225 .491 .532 .552 .604
------ ------ ------- ------ -------
Net Asset Value, End of the Period.......... $7.899 $7.553 $ 7.604 $ 7.92 $ 8.24
====== ====== ======= ====== =======
Total Return (b)............................ 7.71%* 5.98% 2.65% 2.81% 7.52%
Net Assets at End of the Period (In
millions)................................. $ 22.4 $ 21.9 $ 25.7 $ 36.4 $ 47.9
Ratio of Expenses to Average Net Assets
(c)....................................... 1.57% 1.95% 1.57% 1.51% 1.42%
Ratio of Net Investment Income to Average
Net Assets (c)............................ 4.83% 4.69% 6.58% 6.66% 7.18%
Portfolio Turnover.......................... 91%* 276% 161% 239% 209%
</TABLE>
(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) For the years ended through May 31, 1997, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
* Non-Annualized.
See Notes to Financial Statements
13
<PAGE> 15
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended May 31,
November 30, ------------------------------------
Class B Shares 1998(a) 1998(a) 1997(a) 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period... $7.596 $7.645 $ 7.96 $ 8.28 $ 8.30
------ ------ ------- ------ -------
Net Investment Income.................... .162 .299 .477 .49 .53
Net Realized and Unrealized Gain/Loss.... .383 .083 (.320) (.318) (.006)
------ ------ ------- ------ -------
Total from Investment Operations........... .545 .382 .157 .172 .524
------ ------ ------- ------ -------
Less Distributions from and in Excess of
Net Investment Income.................... .195 .431 .472 .492 .544
------ ------ ------- ------ -------
Net Asset Value, End of the Period......... $7.946 $7.596 $ 7.645 $ 7.96 $ 8.28
====== ====== ======= ====== =======
Total Return (b)........................... 7.25%* 4.98% 2.00% 2.06% 6.69%
Net Assets at End of the Period (In
millions)................................ $ 28.9 $ 39.5 $ 56.9 $ 97.7 $ 123.4
Ratio of Expenses to Average Net Assets
(c)...................................... 2.34% 2.72% 2.33% 2.27% 2.18%
Ratio of Net Investment Income to Average
Net Asset (c)............................ 4.09% 3.91% 5.86% 5.91% 6.41%
Portfolio Turnover......................... 91%* 276% 161% 239% 209%
</TABLE>
(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) For the years ended through May 31, 1997, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
* Non-Annualized
See Notes to Financial Statements
14
<PAGE> 16
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended May 31,
November 30, ----------------------------------
Class C Shares 1998(a) 1998(a) 1997(a) 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period...... $7.534 $7.585 $ 7.91 $ 8.22 $8.25
------ ------ ------ ------ -----
Net Investment Income....................... .158 .293 .471 .46 .51
Net Realized and Unrealized Gain/Loss....... .383 .087 (.324) (.278) .004
------ ------ ------ ------ -----
Total from Investment Operations.............. .541 .380 .147 .182 .514
------ ------ ------ ------ -----
Less Distributions from and in Excess of Net
Investment Income........................... .195 .431 .472 .492 .544
------ ------ ------ ------ -----
Net Asset Value, End of the Period............ $7.880 $7.534 $7.585 $ 7.91 $8.22
====== ====== ====== ====== =====
Total Return (b).............................. 7.32%* 5.02% 1.88% 2.20% 6.60%
Net Assets at End of the Period (In
millions)................................... $ 3.1 $ 3.5 $ 5.6 $ 9.5 $18.5
Ratio of Expenses to Average Net Assets (c)... 2.34% 2.72% 2.33% 2.27% 2.18%
Ratio of Net Investment Income to Average Net
Assets (c).................................. 4.09% 3.90% 5.84% 5.91% 6.42%
Portfolio Turnover............................ 91%* 276% 161% 239% 209%
</TABLE>
(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) For the years ended through May 31, 1997, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
* Non-Annualized.
See Notes to Financial Statements
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Global Government Securities Fund, formerly known as Van Kampen
American Capital Global Government Securities Fund, (the "Fund") is organized as
a series of Van Kampen World Portfolio Series Trust, a Delaware business trust,
and is registered as a non-diversified open-end management investment company
under the Investment Company Act of 1940, as amended. The Fund's investment
objective is to seek total return through a managed balance of foreign and
domestic debt securities. 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 November 15, 1991. The distribution of the Fund's Class C shares
commenced on April 12, 1993.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
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 are stated at values using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in 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 Asset Management Inc. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase
16
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
agreements. Repurchase agreements are collateralized by the underlying debt
security. The Fund will make payment for such securities only upon physical
delivery or evidence of book entry transfer to the account of the custodian
bank. The seller is required to maintain the value of the underlying security at
not less than the repurchase proceeds due the Fund.
C. INCOME AND EXPENSES--Interest income is recorded on an accrual basis. The
Fund accounts for discounts and premiums on the same basis as is used for
federal income tax reporting. Accordingly, original issue discounts on debt
securities purchased are amortized over the life of the security. Premiums on
debt securities are not amortized. Market discounts are recognized at the time
of sale as realized gains for book purposes and ordinary income for tax
purposes.
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 November 30, 1998, for federal income tax purposes the cost of long- and
short-term investments is $53,831,267, the aggregate gross unrealized
appreciation is $959,243 and the aggregate gross unrealized depreciation is
$184,274, resulting in net unrealized appreciation on long- and short-term
investments of $774,969.
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At May 31, 1998, the Fund had an accumulated capital loss carryforward
for tax purposes of $38,133,185, which expires between May 31, 2003 and May 31,
2006. Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of post October 31 losses which are not
recognized for tax purposes until the first day of the following fiscal year,
wash sales, and the mark to market of open forward currency contracts at May 31,
1998.
F. DISTRIBUTION OF INCOME AND GAINS--The Fund declares daily and pays monthly
dividends from net investment income. 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. Net realized gains, if any, are
distributed annually.
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 .75%. The Adviser has entered
into a subadvisory agreement with Morgan Stanley Dean Witter Investment
Management Inc. (the "Subadviser"), who provides advisory services to the Fund
and the Adviser with respect to the Fund's investments. The Adviser pays 50% of
its investment advisory fee to the Subadviser.
For the six months ended November 30, 1998, the Fund recognized expenses of
approximately $1,300, 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 six months ended November 30, 1998, the Fund recognized expenses of
approximately $36,600 representing Van Kampen Investments Inc.'s or its
affiliates' (collectively "Van Kampen") cost of providing accounting services to
the Fund. These services are provided by Van Kampen at cost.
Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the six months ended November
30, 1998, the Fund recognized expenses of approximately $25,200. Beginning in
1998, the transfer agency fees are determined through negotiations with the
Fund's Board of Trustees and are based on competitive market benchmarks.
18
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.
3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of shares of beneficial interest, Classes
A, B and C, each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized.
At November 30, 1998, capital aggregated $32,421,360, $50,405,591 and
$6,478,646 for Classes A, B and C, respectively. For the six months ended
November 30, 1998, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A...................................... 603,613 $ 4,676,407
Class B...................................... 382,215 2,930,579
Class C...................................... 8,800 67,514
---------- ------------
Total Sales.................................... 994,628 $ 7,674,500
========== ============
Dividend Reinvestment:
Class A...................................... 50,099 $ 388,202
Class B...................................... 72,739 566,210
Class C...................................... 5,869 45,298
---------- ------------
Total Dividend Reinvestment.................... 128,707 $ 999,710
========== ============
Repurchases:
Class A...................................... (713,287) $ (5,507,539)
Class B...................................... (2,012,991) (15,803,760)
Class C...................................... (91,052) (704,631)
---------- ------------
Total Repurchases.............................. (2,817,330) $(22,015,930)
========== ============
</TABLE>
19
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
At May 31, 1998, capital aggregated $32,864,290, $62,712,562 and $7,070,465
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...................................... 752,769 $ 5,695,255
Class B...................................... 1,071,748 8,110,111
Class C...................................... 46,375 350,610
---------- ------------
Total Sales.................................... 1,870,892 $ 14,155,976
========== ============
Dividend Reinvestment:
Class A...................................... 122,857 $ 929,454
Class B...................................... 209,735 1,595,886
Class C...................................... 17,848 134,719
---------- ------------
Total Dividend Reinvestment.................... 350,440 $ 2,660,059
========== ============
Repurchases:
Class A...................................... (1,350,521) $(10,227,695)
Class B...................................... (3,525,942) (26,883,122)
Class C...................................... (343,258) (2,599,248)
---------- ------------
Total Repurchases.............................. (5,219,721) $(39,710,065)
========== ============
</TABLE>
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B 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
------------------
YEAR OF REDEMPTION CLASS B CLASS C
- -------------------------------------------------------------------------
<S> <C> <C>
First................................................. 4.00% 1.00%
Second................................................ 4.00% None
Third................................................. 3.00% None
Fourth................................................ 2.50% None
Fifth................................................. 1.50% None
Sixth and Thereafter.................................. None None
</TABLE>
20
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
For the six months ended November 30, 1998, Van Kampen, as Distributor for
the Fund, received commissions on sales of the Fund's Class A shares of
approximately $700 and CDSC on the redeemed shares of approximately $40,600.
Sales charges do not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments and forward commitments, were $30,867,516 and
$36,018,909, 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 forward commitment. In this instance, the recognition of
gain or loss is postponed until the disposal of the security underlying the
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.
A. FORWARD PURCHASE COMMITMENTS--The Fund trades certain securities under the
terms of forward purchase commitments, whereby the settlement occurs at a
specific future date. Forward purchase commitments are privately negotiated
transactions between the Fund and dealers. While forward purchase commitments
are outstanding, the Fund maintains sufficient collateral of cash or securities
in a segregated account with its custodian. The forward purchase commitments are
marked to market on a daily basis with changes in value reflected as a component
of unrealized appreciation/depreciation.
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The following forward purchase commitments were outstanding at November 30,
1998:
<TABLE>
<CAPTION>
PAR AMOUNT
IN LOCAL UNREALIZED
CURRENCY SETTLEMENT CURRENT APPRECIATION/
(000) DESCRIPTION DATE VALUE DEPRECIATION
- -----------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
2,000-CA$ Canada (Government of),
8.75%, 12/01/05
maturity................. 01/14/99 $ 1,596,973 $ 20,718
2,000-CA$ Canada (Government of),
5.25%, 09/01/03
maturity................. 12/18/98 1,333,210 17,107
6,500-DKK Denmark (Kingdom of),
8.00%, 05/15/03
maturity................. 02/26/99 1,161,904 3,112
1,200-XEU France (Government of),
8.25%, 04/25/22
maturity................. 02/19/99 2,043,015 82,088
2,150-XEU France (Government of),
7.50%, 04/25/05
maturity................. 01/28/99 3,002,277 (15,953)
2,000-XEU France (Republic of),
4.50%, 07/12/03
maturity................. 02/12/99 2,399,988 7,796
2,650-XEU France (Republic of),
5.25%, 04/25/08
maturity................. 01/14/99 3,339,025 28,656
180,000-JPY Japan (Government of),
3.40%, 03/22/04
maturity................. 02/26/99 1,648,653 (11,467)
1,000-NZD New Zealand (Government
of), 8.00%, 04/15/04
maturity................. 12/02/98 590,511 1,431
3,600-XEU Spain (Government of),
5.15%, 07/30/09
maturity................. 02/19/99 4,339,100 103,319
7,000-SEK Sweden (Kingdom of),
6.00%, 02/09/05
maturity................. 02/26/99 942,620 4,071
3,000-GBP United Kingdom, 7.75%,
09/08/06 maturity........ 02/19/99 5,893,855 114,185
3,900-ECU United Kingdom, 4.25%,
01/29/01 maturity........ 02/12/99 4,600,089 3,904
----------- -------------
$32,891,220 $ 358,967
=========== =============
</TABLE>
B. CLOSED BUT UNSETTLED FORWARD COMMITMENTS--In certain situations, the Fund has
entered into offsetting transactions for outstanding forward commitments prior
to settlement of the obligation. In doing so, the Fund realizes a gain or loss
on the transaction at the time the forward commitment is closed. However,
settlement of both the purchase and sale is still scheduled to occur in the
denominated foreign currency at a future date. The net difference in the amount
of foreign currency on the trade is marked
22
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
to market daily with any fluctuation included as a component of unrealized
gain/loss on forwards.
The following closed but unsettled forward transactions were outstanding at
November 30, 1998:
<TABLE>
<CAPTION>
UNREALIZED
GAIN
LOCAL CURRENCY ON NET US$ NET
-------------- CURRENCY RECEIVABLE
DESCRIPTION/CURRENCY RECEIVABLE PAYABLE DIFFERENCE (PAYABLE)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA (COMMONWEALTH OF) --
DOLLAR
(500,000 par, 7.50%, 07/15/05)... 574,030 579,332 $ 23 $ (3,332)
FRANCE (GOVERNMENT OF) -- FRANC
(5,000,000 par, 7.25%,
04/25/06)...................... 6,366,900 6,182,900 544 32,342
FRANCE (GOVERNMENT OF) -- ECU
(1,000,000 par, 7.50%,
04/25/05)...................... 1,251,788 1,255,648 23 (4,467)
FRANCE (GOVERNMENT OF) -- ECU
(5,600,000 par, 8.25%,
04/25/22)...................... 8,248,296 8,285,225 746 (42,747)
UNITED KINGDOM (TREAS NOTES) -- ECU
(900,000 par, 4.25%, 01/29/01)... 915,601 917,671 20,552 (2,365)
---------- ----------
$ 21,888 $ (20,569)
========== ==========
</TABLE>
C. FORWARD CURRENCY CONTRACTS--A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. Upon the settlement of the contract, a realized gain or loss is recognized
and is included as a component of realized gain/loss on forwards. Risks may
arise as a result of the potential inability of the counterparties to meet the
terms of their contracts.
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The following forward currency contracts were outstanding as of November 30,
1998:
<TABLE>
<CAPTION>
UNREALIZED
CURRENT APPRECIATION/
VALUE DEPRECIATION
- -------------------------------------------------------------------------
<S> <C> <C>
LONG CONTRACTS
Australian Dollar,
800,000 expiring 01/12/99................ $ 503,030 $ 30,054
Canadian Dollar,
1,400,000 expiring 01/08/99.............. 918,811 6,521
1,000,000 expiring 01/13/99.............. 656,299 9,928
German Mark,
1,949,650 expiring 01/15/99.............. 1,151,916 (17,710)
1,947,989 expiring 01/15/99.............. 1,150,934 (2,609)
12,200,000 expiring 01/19/99............. 7,209,307 (41,377)
11,605,000 expiring 01/19/99............. 6,857,705 (27,369)
Danish Krone,
17,400,000 expiring 01/11/99............. 2,701,474 68,302
Swiss Franc,
900,000 expiring 01/15/99................ 647,725 662
British Pound Sterling,
1,330,000 expiring 01/08/99.............. 2,190,487 (37,662)
1,100,000 expiring 01/14/99.............. 1,811,233 (22,192)
Italian Lira,
4,600,000,000 expiring 12/09/98.......... 2,739,791 (50,963)
4,600,000,000 expiring 01/11/99.......... 2,744,210 27,990
Japanese Yen,
340,000,000 expiring 01/21/99............ 2,781,230 (52,434)
280,000,000 expiring 01/21/99............ 2,290,424 (55,381)
Swedish Krona,
8,365,000 expiring 01/15/99.............. 1,030,477 2,647
European Currency Unit (ECU),
300,000 expiring 12/18/98................ 347,553 (4,587)
3,500,000 expiring 12/18/98.............. 4,054,788 (38,427)
----------- -------------
TOTAL LONG CONTRACTS..................... 41,787,394 (204,607)
----------- -------------
</TABLE>
24
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
CURRENT APPRECIATION/
VALUE DEPRECIATION
- -------------------------------------------------------------------------
<S> <C> <C>
SHORT CONTRACTS
Swiss Franc,
1,600,000 expiring 01/15/99.............. $ 1,151,512 $ 18,115
1,600,000 expiring 01/15/99.............. 1,151,512 2,031
German Mark,
1,093,959 expiring 01/15/99.............. 646,346 717
Danish Krone,
10,400,000 expiring 01/11/99............. 1,614,674 5,011
British Pound Sterling,
250,000 expiring 01/08/99................ 411,746 5,574
Japanese Yen,
40,000,000 expiring 01/21/99............. 327,203 7,217
240,000,000 expiring 02/22/99............ 1,971,724 74,312
New Zealand Dollar,
1,130,000 expiring 03/02/99.............. 596,678 2,900
Italian Lira,
900,000,000 expiring 12/09/98............ 536,046 4,998
----------- -------------
TOTAL SHORT CONTRACTS............ $ 8,407,441 120,875
=========== -------------
$ (83,732)
=============
</TABLE>
6. DISTRIBUTION AND SERVICE PLANS
The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a service plan (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.
Annual fees under the Plans of up to .25% for Class A and 1.00% each for
Class B and Class C shares are accrued daily. Included in these fees for the six
months ended November 30, 1998, are payments retained by Van Kampen of
approximately $139,884.
25
<PAGE> 27
VAN KAMPEN FUNDS
EQUITY FUNDS
Domestic
Aggressive Equity
Aggressive Growth
American Value
Comstock
Emerging Growth
Enterprise
Equity Growth
Equity Income
Growth
Growth and Income
Harbor
Pace
Real Estate Securities
U.S. Real Estate
Utility
Value
International/Global
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
Global Franchise
Global Managed Assets
International Magnum
Latin American
FIXED-INCOME FUNDS
Income
Corporate Bond
Global Fixed Income
Global Government Securities
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
Short-Term Global Income
Strategic Income
U.S. Government
U.S. Government Trust for Income
Worldwide High Income
Tax Exempt Income
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
Capital Preservation
Reserve
Tax Free Money
Senior Loan
Prime Rate Income Trust
Senior Floating Rate
To find out more about any of these funds, ask your financial adviser for a
prospectus, which contains more complete information, including sales charges,
risks, and expenses. Please read it carefully before you invest or send money.
To view a current Van Kampen fund prospectus or to receive additional fund
information, choose from one of the following:
- - visit our web site at
WWW.VANKAMPEN.COM -- to view a prospectus, select Download Prospectus
- - call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time
(Telecommunications Device for the Deaf users, call 1-800-421-2833)
- - e-mail us by visiting
WWW.VANKAMPEN.COM and selecting Contact Us
26
<PAGE> 28
VAN KAMPEN GLOBAL GOVERNMENT SECURITIES 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
PAUL G. YOVOVICH
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
PAUL R. WOLKENBERG*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
ASSET MANAGEMENT INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
INVESTMENT SUBADVISER
MORGAN STANLEY DEAN WITTER
INVESTMENT MANAGEMENT, INC.
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
200 E. Randolph
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the
Investment Company Act of 1940.
(C) Van Kampen Funds Inc., 1999
All rights reserved.
(SM) denotes a service mark of
Van Kampen Funds Inc.
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless it
has been preceded or is accompanied by an effective prospectus of the Fund which
contains additional information on how to purchase shares, the sales charge, and
other pertinent data. After June 30, 1999, the report, if used with prospective
investors, must be accompanied by a quarterly performance update.
27
<PAGE> 29
YEAR 2000 READINESS DISCLOSURE
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Fund's investment adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Fund's
investment adviser is taking steps that it believes are reasonably designed to
address the Year 2000 Problem with respect to computer systems that it uses and
to obtain reasonable assurances that comparable steps are being taken by the
Fund's other major service providers. At this time, there can be no assurances
that these steps will be sufficient to avoid any adverse impact to the Fund. In
addition, the Year 2000 Problem may adversely affect the markets and the issuers
of securities in which the Fund may invest which, in turn, may adversely affect
the net asset value of the Fund. Improperly functioning trading systems may
result in settlement problems and liquidity issues. In addition, corporate and
governmental data processing errors may result in production problems for
individual companies or issuers and overall economic uncertainty. Earnings of
individual issuers will be affected by redemption costs, which may be
substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected. The
statements above are subject to the Year 2000 Information and Readiness
Disclosure Act which may limit the legal rights regarding the use of such
statements in the case of dispute.
28
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> GLOBAL GOV A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 54423971<F1>
<INVESTMENTS-AT-VALUE> 55200868<F1>
<RECEIVABLES> 225262<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 283755<F1>
<TOTAL-ASSETS> 55709885<F1>
<PAYABLE-FOR-SECURITIES> 597626<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 693032<F1>
<TOTAL-LIABILITIES> 1290658<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32421360
<SHARES-COMMON-STOCK> 2839860
<SHARES-COMMON-PRIOR> 2899435
<ACCUMULATED-NII-CURRENT> 835185<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (36795575)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 1074020<F1>
<NET-ASSETS> 22430975
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 1956639<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (629706)<F1>
<NET-INVESTMENT-INCOME> 1326933<F1>
<REALIZED-GAINS-CURRENT> 2528429<F1>
<APPREC-INCREASE-CURRENT> 635586<F1>
<NET-CHANGE-FROM-OPS> 4490948<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (629147)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 603613
<NUMBER-OF-SHARES-REDEEMED> (713287)
<SHARES-REINVESTED> 50099
<NET-CHANGE-IN-ASSETS> 532794
<ACCUMULATED-NII-PRIOR> 1126836<F1>
<ACCUMULATED-GAINS-PRIOR> (39324004)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 228459<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 629706<F1>
<AVERAGE-NET-ASSETS> 21559764
<PER-SHARE-NAV-BEGIN> 7.553
<PER-SHARE-NII> 0.185
<PER-SHARE-GAIN-APPREC> 0.386
<PER-SHARE-DIVIDEND> (0.225)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 7.899
<EXPENSE-RATIO> 1.57
<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>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> GLOBAL GOV B
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 54423971<F1>
<INVESTMENTS-AT-VALUE> 55200868<F1>
<RECEIVABLES> 225262<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 283755<F1>
<TOTAL-ASSETS> 55709885<F1>
<PAYABLE-FOR-SECURITIES> 597626<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 693032<F1>
<TOTAL-LIABILITIES> 1290658<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50405591
<SHARES-COMMON-STOCK> 3638824
<SHARES-COMMON-PRIOR> 5196861
<ACCUMULATED-NII-CURRENT> 835185<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (36795575)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 1074020<F1>
<NET-ASSETS> 28914073
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 1956639<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (629706)<F1>
<NET-INVESTMENT-INCOME> 1326933<F1>
<REALIZED-GAINS-CURRENT> 2528429<F1>
<APPREC-INCREASE-CURRENT> 635586<F1>
<NET-CHANGE-FROM-OPS> 4490948<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (904703)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 382215
<NUMBER-OF-SHARES-REDEEMED> (2012991)
<SHARES-REINVESTED> 72739
<NET-CHANGE-IN-ASSETS> (10561566)
<ACCUMULATED-NII-PRIOR> 1126836<F1>
<ACCUMULATED-GAINS-PRIOR> (39324004)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 228459<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 629706<F1>
<AVERAGE-NET-ASSETS> 35855680
<PER-SHARE-NAV-BEGIN> 7.596
<PER-SHARE-NII> 0.162
<PER-SHARE-GAIN-APPREC> 0.383
<PER-SHARE-DIVIDEND> (0.195)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 7.946
<EXPENSE-RATIO> 2.34
<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>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> GLOBAL GOV C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 54423971<F1>
<INVESTMENTS-AT-VALUE> 55200868<F1>
<RECEIVABLES> 225262<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 283755<F1>
<TOTAL-ASSETS> 55709885<F1>
<PAYABLE-FOR-SECURITIES> 597626<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 693032<F1>
<TOTAL-LIABILITIES> 1290658<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6478646
<SHARES-COMMON-STOCK> 390148
<SHARES-COMMON-PRIOR> 466531
<ACCUMULATED-NII-CURRENT> 835185<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (36795575)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 1074020<F1>
<NET-ASSETS> 3074179
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 1956639<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (629706)<F1>
<NET-INVESTMENT-INCOME> 1326933<F1>
<REALIZED-GAINS-CURRENT> 2528429<F1>
<APPREC-INCREASE-CURRENT> 635586<F1>
<NET-CHANGE-FROM-OPS> 4490948<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (84734)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8800
<NUMBER-OF-SHARES-REDEEMED> (91052)
<SHARES-REINVESTED> 5869
<NET-CHANGE-IN-ASSETS> (440584)
<ACCUMULATED-NII-PRIOR> 1126836<F1>
<ACCUMULATED-GAINS-PRIOR> (39324004)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 228459<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 629706<F1>
<AVERAGE-NET-ASSETS> 3340439
<PER-SHARE-NAV-BEGIN> 7.534
<PER-SHARE-NII> 0.158
<PER-SHARE-GAIN-APPREC> 0.383
<PER-SHARE-DIVIDEND> (0.195)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 7.880
<EXPENSE-RATIO> 2.34
<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>
