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<PAGE>
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
SEMI-ANNUAL REPORT
(UNAUDITED)
APRIL 30, 1996
<PAGE>
Investment Portfolio
April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Common Stock 97.8%
CONSUMER DISTRIBUTION 5.8%
15,000 Big B Inc $ 165,000
* 1,200 Boise Cascade Office Products Corp 92,400
* 16,000 Books A Million Inc 176,000
10,060 Cardinal Health Inc 631,265
* 23,000 Carson Pirie Scott & Co 566,375
37,500 Claire's Stores Inc 801,563
* 29,000 Consolidated Stores Corp 1,044,000
* 9,800 Eckerd Corp 470,400
52,000 Fingerhut Companies Inc 669,500
* 26,000 General Nutrition Companies Inc 533,000
* 7,000 Health Mangement Inc 37,625
* 8,000 Lear Seating Corp 261,000
* 10,000 Micro Warehouse Inc 430,000
4,000 Neiman Marcus Group Inc 95,500
* 13,000 OfficeMax Inc 341,250
38,900 Pier 1 Imports Inc 525,149
* 2,940 Proffitts Inc 96,285
* 11,000 Revco D.S. Inc 259,875
* 21,000 Rexel Inc 275,625
10,000 Rite Aid Corp 296,250
14,000 Ross Stores Inc 486,500
* 25,800 Stop & Shop Companies Inc 848,175
8,000 Tiffany & Co 522,000
10,000 TJX Companies Inc 293,750
* 14,000 Vons Companies Inc 451,500
* 32,000 Waban Inc 788,000
* 21,000 Zale Corp 399,000
-----------
11,556,987
-----------
CONSUMER DURABLES 3.3%
8,000 Borg Warner Automotive Inc 306,000
24,500 Breed Technologies Inc 520,625
39,000 Brunswick Corp 858,000
13,000 Callaway Golf Co 347,750
* 10,500 Champion Enterprises Inc 404,250
* 9,000 Department 56 Inc 223,875
24,000 Echlin Inc 828,000
12,000 Fleetwood Enterprises Inc 315,000
14,400 Harman International Industries Inc 687,600
14,000 Outboard Marine Corp 276,500
7,000 Smith (A.O.) Corp 161,875
14,000 Snap On Tools Inc 672,000
5,000 Stanley Works 310,625
22,000 Toro Co 704,000
-----------
6,616,100
-----------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio
April 30, 1996 (Unaudited)
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
CONSUMER NON-DURABLES 9.1%
14,100 Alberto Culver Co, Class B 528,749
15,000 American Greetings Corp, Class A 412,500
5,000 Amway Asia Pacific Ltd 149,375
29,000 Barefoot Inc 357,063
* 20,000 Burlington Industries Inc 235,000
50,000 Carter Wallace Inc 787,500
6,000 Dean Foods Co 141,000
10,000 Dial Corp 280,000
10,000 First Brands Corp 265,000
* 15,000 Fruit of the Loom 391,875
19,400 Hillenbrand Industries Inc 739,625
26,000 Hormel (Geo A.) & Co 695,500
26,000 IBP Inc 698,750
* 17,000 Jones Apparel Group Inc 873,375
10,000 Jostens Inc 223,750
17,000 Lancaster Colony Corp 586,500
41,000 Liz Claiborne Inc 1,470,875
10,000 McCormick & Co Inc 222,500
* 23,000 Nautica Enterprises Inc 1,035,000
* 33,000 Nu Kote Holdings Inc, Class A 581,625
* 13,000 Oakley Inc 594,750
24,000 Phillips Van Heusen Corp 315,000
10,000 Russell Corp 260,000
* 8,000 Smithfield Foods Inc 236,000
15,000 Springs Industries Inc 682,500
8,000 St John Knits Inc 475,000
* 42,000 Starbucks Corp 1,149,750
7,000 Tambrands Inc 336,875
19,000 Unifi Inc 510,625
22,000 Universal Foods Corp 748,000
25,000 Warnaco Group Inc 671,875
* 18,000 Westpoint Stevens Inc 380,250
25,000 Whitman Corp 631,250
18,000 Wolverine World Wide Inc 553,500
----------
18,220,937
----------
CONSUMER SERVICES 6.1%
4,000 Advo Inc 40,000
15,000 Banta Corp 369,375
* 27,000 Boston Chicken Inc 864,000
30,000 Bowne & Co Inc 543,750
13,000 Equifax Inc 320,125
* 16,000 Gartner Group Inc 556,000
30,000 Kelly Services Inc 952,500
* 20,000 King World Productions Inc 862,500
4,000 La Quinta Inns Inc 117,500
5,300 Media General Inc, Class A 204,050
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio
April 30, 1996 (Unaudited)
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
* 4,000 Mirage Resorts Inc 209,500
19,000 New York Times Co, Class A 622,250
24,000 Olsten Corp 732,000
16,700 Omnicom Group 726,450
* 9,000 Outback Steakhouse Inc 361,125
* 11,500 Papa John's International Inc 566,375
8,200 PHH Corp 466,375
* 25,500 Players International Inc 291,656
* 28,500 Regal Cinemas Inc 1,168,500
12,900 Reynolds & Reynolds Co 599,850
8,000 Robert Half International Inc 467,000
26,000 Sbarro Inc 682,500
* 12,500 Scientific Games Holdings Corp 409,375
* 6,000 Sonic Corp 114,000
----------
12,246,756
----------
ENERGY 9.3%
7,000 Ashland Inc 287,875
* 17,000 BJ Services Co 650,250
20,000 Brooklyn Union Gas Co 510,000
9,000 Canadian Occidental Petroleum 312,750
5,000 Columbia Gas System Inc 243,125
24,100 Eastern Enterprises 870,613
38,000 El Paso Natural Gas Co 1,406,000
* 20,000 Global Marine Inc 232,500
30,000 MCN Corp 735,000
* 91,000 Nabors Industries Inc 1,399,125
14,000 NACCO Industries Inc, Class A 875,000
2,500 National Fuel Gas Co 88,124
27,000 NICOR Inc 752,625
* 22,000 Nuevo Energy Co. 624,250
* 8,000 Offshore Logistics Inc 117,000
24,400 ONEOK Inc 631,350
30,000 Pacific Enterprises 776,250
7,000 Pennzoil Co 309,750
10,000 Questar Corp 350,000
* 35,000 Reading & Bates Corp 857,500
* 51,000 Smith International Inc 1,517,250
5,000 Sonat Offshore Drilling Inc 275,625
41,000 Tesoro Petroleum Corp 456,125
8,000 Tidewater Inc 333,000
7,500 Tosco Corp 398,438
25,000 Union Texas Petroleum Holdings Inc 487,500
31,000 Valero Energy Corp 891,250
* 30,000 Varco International Inc 502,500
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio
April 30, 1996 (Unaudited)
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
21,000 Washington Gas & Light Co 438,375
* 2,500 Weatherford Enterra Inc 88,438
19,400 Wicor Inc 666,875
10,188 Williams Companies 520,861
----------
18,605,324
----------
FINANCE 12.5%
12,000 ADVANTA Corp, Class A 681,000
20,000 AMBAC Inc 980,000
9,000 American Financial Group Inc 275,625
20,000 American Re Corp 832,500
39,000 Bankers Life Holdings Corp 784,875
* 49,000 Cal Fed Bancorp Inc 882,000
11,000 Charter One Financial Inc 382,250
48,000 City National Corp 678,000
15,000 CMAC Investment Corp 847,500
13,000 Commercial Federal Corp 490,750
35,500 Countrywide Credit Industries Inc 772,125
26,000 Edwards (A.G.) Inc 611,000
10,000 Finova Group Inc 557,500
7,000 First American Corp 299,250
10,000 First USA Inc 566,250
30,450 Fremont General Corp 765,056
46,500 Mercury Finance Co 534,750
12,300 MGIC Investment Corp 670,350
10,000 NationsBank Corp 791,250
40,000 North American Mortage Co 685,000
21,000 North Fork Bancorporation 498,750
12,000 Northern Trust Corp 678,000
80 Norwest Corp 2,900
30,000 Paine Webber Group Inc 630,000
10,000 PennCorp Financial Group Inc 310,000
36,000 Peoples Heritage Financial Group Inc 751,500
20,000 Protective Life Corp 695,000
31,500 Reliance Group Holdings Inc 252,000
7,000 Reliastar Financial Corp 305,375
10,000 Republic New York Corp 591,250
3,000 Roosevelt Financial Group Inc 57,750
20,500 SouthTrust Corp 558,624
43,650 Sovereign Bancorp Inc 485,606
13,300 Star Banc Corp 882,788
10,000 Summit Bancorp 356,250
22,000 TCF Financial Corp 764,500
6,000 TIG Holdings Inc 182,250
13,000 Transatlantic Holdings Inc 849,875
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio
April 30, 1996 (Unaudited)
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
28,000 Union Planters Corp 843,500
17,500 Vesta Insurance Group Inc 570,938
28,000 Washington Mutual Inc 778,750
15,000 Webb (Del) Corp 271,875
9,000 Zions Bancorporation 672,750
----------
25,077,262
----------
HEALTH CARE 11.3%
* 20,000 Advanced Technology Labs Inc 645,000
* 25,000 ALZA Corp 709,375
9,000 Ballard Medical Products 178,875
24,000 Bausch & Lomb Inc 954,000
14,000 Beckman Instruments Inc 519,750
* 6,000 Bio Rad Labs Inc, Class A 279,000
* 5,000 Biogen Inc 326,250
* 25,000 Biomet Inc 365,625
* 15,000 Centocor Inc 600,000
* 24,100 CNS Inc 463,925
* 25,000 Cor Therapeutics Inc 262,500
* 12,000 Foundation Health Corp 474,000
12,000 Guidant Corp 675,000
* 22,000 Haemonetics Corp 426,250
4,000 HBO & Co 474,000
* 23,000 Health Mangement Associates Inc, Class A 736,000
* 10,000 Healthcare COMPARE Corp 463,750
* 10,000 Healthcare & Retirement Corp 370,000
* 7,000 Healthsource Inc 239,750
* 21,000 Healthsouth Rehabilitation 777,000
* 24,000 Horizon Healthcare Corp 318,000
37,535 ICN Pharmaceuticals Inc 839,845
* 31,000 Immunex Corp 488,250
* 29,000 Lincare Holdings Inc 1,131,000
* 28,000 Liposome Inc 675,500
8,000 Manor Care Inc 318,000
* 1,000 Maxicare Health Plans 20,000
* 32,000 MediSense Inc 1,440,000
* 3,722 MedPartners/Mullikin Inc 107,938
47,500 Mylan Laboratories Inc 932,188
* 16,000 Nellcor Inc 784,000
10,000 Omnicare Inc 598,750
* 20,000 OrNda Healthcorp 555,000
* 2,000 Orthofix International, NV 20,000
* 7,000 Pacificare Health Systems Inc, Class B 577,500
* 6,000 Quintiles Transnational Corp 432,000
* 1,000 Quorum Health Group Inc 25,563
* 9,800 Renal Treatment Centers Inc 279,300
* 9,000 Rexall Sundown Inc 267,750
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio
April 30, 1996 (Unaudited)
Number Market
of Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
* 24,000 Sybron Corp 600,000
* 12,000 Universal Health Services Inc, Class B 673,500
* 17,000 Vencor Inc 575,875
* 25,320 Watson's Pharmaceuticals Inc 1,148,895
----------
22,748,904
----------
PRODUCER MANUFACTURING 7.8%
12,000 AGCO Corp 312,000
* 8,000 Alliant Techsystems Inc 375,000
5,000 AMETEK Inc 96,875
19,600 Aptar Group Inc 735,000
12,000 Blount International Inc, Class A 370,500
16,000 Briggs & Stratton Corp 724,000
* 12,000 Cognex Corp 315,000
12,000 Cummins Engine Co Inc 561,000
26,000 Danaher Corp 1,027,000
* 22,000 Detroit Diesel Corp 418,000
* 7,500 Glenayre Technologies 348,750
* 27,000 Global Industrial Tech Inc 502,875
10,500 Granite Construction Inc 207,375
6,000 Harnischfeger Industries Inc 245,250
18,500 IDEX Corp 728,438
4,000 Johnson Controls Inc 280,500
5,000 Juno Lighting Inc 74,062
1,000 Kennametal Inc 38,000
* 8,000 Kent Electronics Corp 335,000
* 13,500 Kulicke & Soffa Industries Inc 248,063
* 16,000 Litton Industires Inc 728,000
* 11,500 Mueller Industries Inc 470,063
6,000 National Service Industries Inc 222,750
* 14,000 Navistar International Corp 166,250
19,000 PACCAR Inc 945,250
27,000 Southdown Inc 641,250
* 70,000 Sterling Chemicals Inc 805,000
* 1,000 Symmetricom Inc 11,313
11,000 Teledyne Inc 404,250
* 30,375 Thermo Instrument Systems Inc 1,006,172
16,000 Timken Co 636,000
* 11,000 United Waste Systems Inc 605,000
* 6,000 Varity Corp 255,750
13,000 Watts Industries Inc, Class A 268,125
12,000 Wellman Inc 288,000
* 9,000 Wolverine Tube Inc 330,750
----------
15,726,611
----------
</TABLE>
6
<PAGE>
PAGE
<TABLE>
<CAPTION>
Investment Portfolio
April 30, 1996 (Unaudited)
Number Market
of Shares Value
- -----------------------------------------------------------------------------------------------
<C> <S> <C>
RAW MATERIALS/PROCESSING INDUSTRIES 6.7%
7,000 A K Steel Holding Corp 266,000
15,000 Allegheny Ludlum Corp 294,375
12,000 Cleveland Cliffs Inc 498,000
* 4,000 Cytec Industries Inc 331,500
12,500 Delta & Pine Land Co 548,437
6,000 First Mississippi Corp 140,250
4,000 Georgia Gulf Corp 147,000
10,000 Goodrich (B.F.) Co 397,500
46,000 Handy & Harman 787,750
30,000 Homestake Mining 596,250
10,000 IMC Global Inc 368,750
8,000 Inland Steel Industries Inc 200,000
15,100 J&L Specialty Steel Inc 268,025
25,000 Longview Fibre Co 440,625
25,000 Lyondell Petrochemical Co 734,375
3,000 Medusa Corp 88,125
8,000 Olin Corp 710,000
47,000 Owens Illinois Inc 746,125
30,000 Pegasus Gold Inc 420,000
12,000 Potlatch Corp 508,500
3,000 Quanex Corp 66,000
11,000 Rayonier Inc 397,375
35,000 Rexene Corp 437,500
13,000 Sigma Aldrich Corp 703,625
33,000 Sonoco Products Co 936,375
10,000 Tecumseh Products Co, Class A 560,000
52,000 Terra Industries Inc 650,000
5,000 Texas Industries Inc 320,000
* 10,000 UCAR International Inc 416,250
* 1,000 USG Corp 26,375
6,000 Vulcan Materials Co 345,750
10,000 Worthington Industries Inc 205,000
---------------
13,555,837
---------------
TECHNOLOGY 15.6%
* 5,000 Adaptec Inc 289,375
* 4,000 Altera Corp 214,500
15,000 America Online Inc 963,750
2,000 Analysts International Corp 74,750
* 15,000 Andrew Corp 706,875
* 10,000 Ascend Communications Inc 618,750
* 13,900 Aspect Telecommunications Corp 785,350
* 16,000 Auspex Systems Inc 304,000
5,000 Avnet Inc 264,375
20,000 BMC Industries Inc 535,000
* 10,000 BMC Software Inc 611,250
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio
April 30, 1996 (Unaudited)
Number Market
of Shares Value
- -----------------------------------------------------------------------------------------------
<C> <S> <C>
* 38,000 Borland International Inc 627,000
* 12,000 Cadence Design Systems Inc 631,500
* 6,000 Cascade Communications 589,500
* 11,500 Checkpoint Systems Inc 346,437
* 21,000 Cidco Inc 740,250
* 22,000 Credence Systems Corp 484,000
* 7,000 Dell Computer Corp 322,875
* 22,000 Dynatech Corp 572,000
* 24,000 Electroglas Inc 471,000
* 8,000 Fiserv Inc 248,000
* 8,000 FORE Systems Inc 622,000
* 34,000 Gateway 2000 Inc 1,211,250
13,000 Harris Corp 799,500
* 18,000 Hyperion Software Corp 226,125
* 23,000 In Focus Systems Inc 1,161,500
* 15,000 Input/Output Inc 525,000
* 24,000 Integrated Device Technology Inc 351,000
* 38,900 International Rectifier Corp 880,113
* 37,000 Intervoice Inc 1,073,000
* 13,000 Iomega Corp 667,875
* 24,000 KLA Instruments Corp 690,000
* 16,000 Komag Inc 526,000
* 18,000 Lam Research Corp 729,000
* 15,000 Macromedia Inc 570,000
* 10,000 Microchip Technology Inc 255,000
19,000 Molex Inc 612,750
* 24,000 Network Equipment Technologies 633,000
* 7,000 Network General Corp 308,875
* 5,500 Novellus Systems Inc 297,000
5,000 Paychex Inc 342,500
15,000 Perkin Elmer Corp 823,125
4,500 Pioneer Standard Electronics Inc 74,250
* 1,688 Premier Farnell, PLC,ADR 37,136
* 23,000 Read Rite Corp 477,250
* 9,000 Recoton Corp 164,250
* 5,000 SCI Systems Inc 213,125
15,000 Scientific Atlanta Inc 279,375
* 16,000 Seagate Technology 920,000
* 21,800 Sequent Computer Systems Inc 318,825
* 6,000 Shiva Corp 358,500
* 15,000 Solectron Corp 671,250
* 5,000 Sterling Software Inc 379,375
* 38,000 S3 Inc 532,000
* 5,000 Storage Technology Corp 153,750
7,000 Sundstrand Corp 259,875
* 10,000 Sunguard Data Systems Inc 337,500
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio
April 30, 1996 (Unaudited)
Number Market
of Shares Value
- ------------------------------------------------------------------------------
<S> <C>
* 20,000 Teradyne Inc 412,500
* 19,000 Unitrode Corp 513,000
13,500 Varian Associates Inc 774,562
19,000 Wyle Electronics Inc 802,750
-------------
31,384,423
-------------
TRANSPORTATION 1.6%
* 2,500 Continental Airlines Inc, Class B 142,500
18,000 Illinois Central Corp 540,000
* 12,000 Northwest Airlines Inc, Class A 546,000
18,000 Pittston Brinks Group 499,500
19,000 Pittston Burlington Group 375,250
* 7,000 Royal Caribbean Cruises 197,750
* 6,000 Stolt Nielsen, SA 122,250
* 2,000 Stolt-Nielsen, Class B, SA, ADR 41,125
11,000 TNT Freightways Corp 247,500
* 1,000 UAL Corp 210,250
* 20,200 USAir Group Inc 353,500
-------------
3,275,625
-------------
UTILITIES 8.7%
* 29,000 AES Corp 667,000
19,000 AT&T Capital Corp 738,625
34,100 Boston Edison Co 831,187
* 15,000 Calenergy Inc 391,875
59,000 Centerior Energy Corp 405,625
1,000 Central Hudson Gas & Electric Corp 29,000
21,000 Century Telephone Enterprises Inc 690,375
8,000 Cincinnati Bell Inc 398,000
* 20,000 Citizens Utilities Co, Class A 230,000
15,000 CMS Energy Group 438,750
* 13,000 CommNet Cellular Inc 434,688
* 15,500 C-TEC Corp 472,750
19,000 Delmarva Power & Light Co 372,875
22,000 DQE Inc 585,750
8,000 Eastern Utilities Associates 164,000
5,000 Idaho Power Co 143,125
36,000 Illinova Corp 922,500
22,000 Kansas City Power & Light Co 577,500
* 30,000 LCI International Inc 772,500
36,900 Long Island Lighting Co 599,625
15,000 MidAmerican Energy Co 256,875
15,000 Montana Power Co 330,000
12,000 New England Electric Systems 426,000
10,000 New York State Electric & Gas Corp 227,500
24,000 NIPSCO Industries Inc 870,000
16,500 Oklahoma Gas & Electric Co 620,813
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio
April 30, 1996 (Unaudited)
Number Market
of Shares Value
- ------------------------------------------------------------------------------
<S> <C>
6,000 Orange/Rockland Utilities 205,500
20,000 Pinnacle West Capital Corp 532,500
32,000 Portland General Corp 936,000
18,000 Public Service Co of Colorado 594,000
33,000 Public Service Co of New Mexico 573,375
20,000 Rochester Gas & Electric 410,000
14,200 Southern New England Telecommunications 626,575
5,000 Southwestern Public Service Co 160,625
3,200 Washington Water Power Co 58,400
20,000 Western Resources Inc 600,000
5,000 WPL Holdings Inc 148,750
-------------
17,442,663
-------------
Total Common Stock (Cost $167,955,121) 196,457,429
-------------
Convertible Preferred Stock 0.0%
* 1,360 Premier Farnell, PLC, ADR (Cost $35,870) 36,040
-------------
Par
Amount
(000) Short-Term Investments 8.8%
-----
U.S. GOVERNMENT OBLIGATIONS 3.5%
$2,025 Federal Home Loan Mtg. Corp, 5.22%, 05/13/96 2,021,190
5,000 Federal National Mtg. Assn., 5.25%, 07/03/96 4,954,200
-------------
6,975,390
-------------
REPURCHASE AGREEMENT 5.3%
10,720 Lehman Government Securities, 4/30/96, 5.30%, due
5/01/96 (collateralized by U.S. Government
obligations in a pooled cash account)
repurchase proceeds $10,721,578 10,720,000
-------------
Total Short-Term Securities (Cost $17,694,968) 17,695,390
-------------
Total Investments (Cost $185,685,959) 106.6% 214,188,859
Other assets and liabilities (6.6%) (13,280,171)
-------------
NET ASSETS 100% $200,908,688
=============
</TABLE>
* Non-income producing security.
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
April 30, 1996 (Unaudited)
ASSETS
<S> <C>
Investments, at market value (Cost $185,685,959) $214,188,859
Cash 7,771
Dividends receivable 127,723
Other assets 34,254
-------------
Total assets 214,358,607
-------------
LIABILITIES
Investments purchased 13,408,363
Due to shareholder service agent 1,250
Deferred trustees' compensation 7,420
Accrued expenses and other liabilities 32,886
-------------
Total liabilities 13,449,919
-------------
Net Assets, equivalent to $13.34 per share $200,908,688
=============
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par; 15,061,332
shares outstanding $ 150,613
Capital surplus 162,171,834
Undistributed net realized gain on securities 9,245,805
Net unrealized appreciation of securities 28,502,900
Undistributed net investment income 837,536
-------------
NET ASSETS $200,908,688
=============
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
Six Months Ended April 30, 1996 (Unaudited)
<S> <C>
Investment Income
Dividends $ 1,236,561
Interest 135,429
-------------
Investment income 1,371,990
-------------
Expenses
Shareholder service agent's fees 7,298
Accounting services 68,539
Trustees' fees and expenses 9,282
Audit fees 10,553
Legal fees 2,375
Reports to shareholders 3,847
Organization expenses 6,198
Insurance 2,222
Miscellaneous 2,082
Retirement plan expense reimbursement (see Note 4) (1,200)
-------------
Total expenses 111,196
-------------
Net investment income 1,260,794
-------------
Realized and Unrealized Gain on Securities
Net realized gain on securities 9,361,517
Net unrealized appreciation of securities 8,811,897
-------------
Net realized and unrealized gain on securities 18,173,414
-------------
Increase in net assets resulting from operations $19,434,208
=============
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
(Unaudited)
Six Months Year
Ended Ended
April 30, 1996 October 31, 1995
-------------- ----------------
<S> <C> <C>
NET ASSETS, beginning of period $200,344,821 $20,659,532
-------------- ----------------
Operations
Net investment income 1,260,794 1,931,971
Net realized gain on securities 9,361,517 7,254,104
Net unrealized appreciation of securities 8,811,897 19,737,220
-------------- ----------------
Increase in net assets resulting from operations 19,434,208 28,923,295
-------------- ----------------
Distributions to shareholders from
Net investment income (2,187,155) (501,439)
Net realized gain on securities (6,520,200) -
-------------- ----------------
(8,707,355) (501,439)
-------------- ----------------
Capital transactions
Proceeds from shares sold 64,254,000 200,761,987
Proceeds from shares issued for distributions reinvested 8,707,355 501,439
Cost of shares redeemed (83,124,341) (49,999,993)
-------------- ----------------
Increase (decrease) in net assets resulting from capital transactions (10,162,986) 151,263,433
-------------- ----------------
Increase in Net Assets 563,867 179,685,289
-------------- ----------------
NET ASSETS, end of period $200,908,688 $200,344,821
-------------- ----------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Financial Highlights
Selected data for a share of benefical interest outstanding throughout the
periods indicated. (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Six Months Year Nov. 23, 1993(1)
Ended Ended through
April 30, 1996 Oct. 31, 1995(2) Oct. 31, 1994(2)
-------------- ---------------- ----------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of the period $12.17 $ 9.82 $10.00
Income from investment operations -------- -------- --------
Investment income 0.09 0.18 0.24
Expenses (4) (0.01) (0.01) (0.03)
-------- -------- --------
Net investment income 0.08 0.17 0.21
Net realized and unrealized gain (loss) on securities 1.6175 2.26 (0.37)
-------- -------- --------
Total from investment operations 1.6975 2.43 (0.16)
-------- -------- --------
Less distributions from
Net investment income (0.1325) (0.08) (0.02)
Realized gain on securities (0.3950) -- --
-------- -------- --------
Total distributions (0.5275) (0.08) (0.02)
-------- -------- --------
Net asset value, end of the period $13.34 $12.17 $9.82
-------- -------- --------
TOTAL RETURN (3) 14.47% 25.00% (1.80%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of the period (millions) $200.9 $200.3 $ 20.7
Average net assets (millions) $168.6 $121.5 $ 20.1
Ratios to average net assets (annualized) (4)
Expenses 0.13% 0.08% 0.30%
Expenses, without expense reimbursement 0.13% -- --
Net investment income 1.50% 1.59% 1.99%
Net investment income, without expense reimbursement 1.50% -- --
Average commission rate per equity stock traded $ 0.02 -- --
Portfolio turnover rate 47% 85% 34%
(1) Commencement of operations
(2) Based on average shares outstanding
(3) Total return has not been annualized
(4) See Note 4
See Notes to Financial Statements.
</TABLE>
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Small Capitalization Fund (the "Fund") is registered
under the Investment Company Act of 1940, as amended, as a diversified open-end
management investment company. The Fund invests primarily in common stocks of
small capitalization companies. Only funds that Van Kampen American Capital
Management, Inc. (the "Adviser") manages may invest in the Fund.
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 amounts reported. Actual amounts may differ from the estimates.
A. INVESTMENT VALUATIONS
Securities listed or traded on a national securities exchange are valued
using prices as of 2:00 p.m. Eastern Time. Unlisted and listed securities
for which the last sale price at 2:00 p.m. Eastern Time is not available
are valued at the last reported bid price.
Short-term investments with a maturity of 60 days or less when purchased
are valued at amortized cost, which approximates market value. Short-term
investments with a maturity of more than 60 days when purchased are valued
based on market quotations until the remaining days to maturity becomes
less than 61 days. From such time, until maturity, the investments are
valued at amortized cost.
B. REPURCHASE AGREEMENTS
A repurchase agreement is a short-term investment in which the Fund
acquires ownership of a debt security and the seller agrees to repurchase
the security at a future time and specified price. The Fund may 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"), the daily aggregate of which is invested in repurchase
agreements. Repurchase agreements are collateralized by the underlying debt
security. The Fund will make payment for such securities only upon physical
delivery or evidence of book entry transfer to the account of the custodian
bank. The seller is required to maintain the value of the underlying
security at not less than the repurchase proceeds due the Fund.
C. FEDERAL INCOME TAXES
No provision for federal income taxes is required because the Fund has
elected to be taxed as a "regulated investment company" under the Internal
Revenue Code and intends to maintain this qualification by annually
distributing all of its taxable net investment income and taxable net
realized gains on investments to its shareholders.
15
<PAGE>
D. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains
and losses on investments are determined on the basis of identified cost.
Dividend income is recorded on the ex-dividend date. Interest income is
accrued daily.
E. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the record
date. The Fund distributes tax basis earnings in accordance with the
minimum distribution requirements of the Internal Revenue code, which may
differ from generally accepted accounting principles. Such dividends and
distributions may exceed financial statement earnings.
F. ORGANIZATION COSTS
Organization expenses of approximately $62,000 were deferred and are being
amortized over a five year period ending October 1998.
NOTE 2 - MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as investment manager of the Fund. The Adviser receives no
compensation for its investment management services.
Accounting services include the salaries and overhead expenses of the Fund's
Chief Accounting Officer and the personnel operating under his direction.
Charges are allocated among investment companies advised by the Adviser. For the
period, these charges included $3,200 as the Fund's share of the employee costs
attributable to the Fund's accounting officers. A portion of the accounting
services expense was paid to the Adviser in reimbursement of personnel,
facilities and equipment cost attributable to the provision of accounting
services to the Fund. The accounting services provided by the Adviser are at
cost.
ACCESS Investor Services, Inc., an affiliate of the Adviser, serves as the
Fund's shareholder service agent. These services are provided at cost plus a
profit.
At the end of the period, the Fund was owned by three investment companies
advised by the Adviser. Van Kampen American Capital Pace Fund, Common Sense
Trust Growth Fund, and Common Sense Trust II Growth Fund owned 47.30%, 51.05%,
and 1.65%, respectively, of the Fund.
Legal fees during the period were for services rendered by former counsel of the
Fund, O'Melveny & Myers. A former trustee was of counsel to that firm.
Certain officers and trustees of the Fund are officers and trustees of the
Adviser and the shareholder service agent.
16
<PAGE>
NOTE 3 - INVESTMENT ACTIVITY
During the period, the cost of purchases of investments and proceeds from sales
of investments, excluding short-term investments, were $78,120,080 and
$94,163,115, respectively.
For federal income tax purposes, the identified cost of investments owned at the
end of the period was $185,731,843. Net unrealized appreciation aggregated
$28,457,016, gross unrealized appreciation aggregated $33,115,191 and gross
unrealized depreciation aggregated $4,658,175.
NOTE 4 - TRUSTEE COMPENSATION
Fund trustees who are not affiliated with the Adviser are compensated by the
Fund at the annual rate of $729 plus a fee of $21 per day for the Board and
Committee meetings attended. During the period, such fees aggregated $7,528.
The Fund has in effect a deferred compensation plan and a defined benefits
retirement plan for its trustees not affiliated with the Adviser. These plans
are not funded, and obligations under the plans will be paid solely out of the
Fund's general accounts. The Fund will not reserve or set aside funds for the
payment of its obligations under the plans by any form of trust or escrow.
Under the deferred compensation plan, trustees may elect to defer all or a
portion of their compensation to a later date. Each trustee covered under the
plan elects to earn on the deferred balances an amount equal to the total return
of the Fund or equal to the income earned by the Fund on its short-term
investments.
Under the retirement plan which became effective in January, 1996, benefits
which are based on years of service will be received by the trustee for a ten
year period. The maximum annual benefit for each trustee is $2,500. Retirement
plan expenses for the period aggregated $1,200. During the calendar 1996, the
adviser has agreed to reimbuse the Fund for these plan expenses.
NOTE 5 - CAPITAL
The Fund has an unlimited number of shares of $.01 par value of beneficial
interest authorized. Fund shares are only available for purchase by publicly
offered Funds for which the Adviser serves as investment adviser. Transactions
in shares for the period were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1996 October 31, 1995
---------------- ----------------
<S> <C> <C>
Shares sold 4,939,362 18,994,170
Shares issued for distributions
reinvested 731,096 54,151
Shares redeemed (7,076,684) (4,684,893)
---------- ----------
Increase (decrease) in shares
outstanding (1,406,226) 14,363,428
---------- ----------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Board of Trustees Investment Adviser
J. Miles Branagan Van Kampen American Capital Asset Management, Inc.
Linda Hutton Heagy One Parkview Plaza
Roger Hilsman Oakbrook Terrace, Illinois 60181
R. Craig Kennedy
Dennis J. McDonnell Shareholder Service Agent
Donald C. Miller ACCESS Investor Services, Inc.
Jack E. Nelson P.O. Box 418256
Don G. Powell Kansas City, Missouri 64141-9256
Jerome L. Robinson
Fernando Sisto* Custodian
Wayne W. Whalen State Street Bank and Trust Co.
William S. Woodside 225 Franklin Street
* Chairman of the Board Boston, Massachusetts 02110
Legal Counsel
Officers Skadden, Arps, Slate, Meagher, & Flom
Don G. Powell 333 West Wacker Drive
President and Chief Executive Officer Chicago, Illinois 60606
Dennis J. McDonnell
Executive Vice President
Ronald A. Nyberg
Vice President and Secretary
Edward C. Wood, III
Vice President and Chief Financial Officer
Curtis W. Morell
Vice President and Chief Accounting Officer
John L. Sullivan
Treasurer
Tanya M. Loden
Controller
William N. Brown
Peter W. Hagel
Robert C. Peck, Jr.
Alan T. Sachtleben
Paul R. Wolkenberg
Vice Presidents
</TABLE>
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