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Previous: LORD ABBETT TAX FREE INCOME TRUST, NSAR-B, 1997-12-23 |
Next: INFONOW CORP /DE, 8-K, 1997-12-23 |
<PAGE> 1
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Description Shares Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK 98.9%
CONSUMER DISTRIBUTION 4.9%
Americredit Corp. (a) 9,200 $ 274,275
BJ's Wholesale Club, Inc. (a) 1,400 40,075
Brightpoint, Inc. (a) 1,100 35,750
DIMON, Inc. 2,300 59,800
Food Lion, Inc. 9,200 71,588
Homebase, Inc. (a) 1,400 13,563
HON Industries, Inc. 4,100 207,050
Meyer (Fred), Inc. Delaware (a) 2,800 79,100
Neiman Marcus Group, Inc. (a) 1,800 59,737
Premark International, Inc. 4,600 126,212
Proffitts, Inc. (a) 2,680 76,380
Rite Aid Corp. 4,600 272,263
Safeway, Inc. (a) 6,850 405,006
Saks Holdings, Inc. (a) 2,300 48,588
Supervalue, Inc. 2,300 84,237
Tech Data Corp. (a) 2,300 102,638
TJX Cos., Inc. 15,600 464,100
U.S. Office Products Co. (a) 2,300 72,594
Zale Corp. (a) 12,900 324,113
-------------
2,817,069
-------------
CONSUMER DURABLES 2.9%
Arvin Industries, Inc. 9,900 371,869
Borg Warner Automotive, Inc. 3,700 200,725
Callaway Golf Co. 2,800 90,125
Culligan Water Technologies, Inc. (a) 225 9,563
Furniture Brands International, Inc. (a) 13,800 232,875
Galoob Toys, Inc. (a) 200 2,625
Harman International Industries, Inc. 1,100 58,850
Mohawk Industries, Inc. (a) 7,800 239,850
Snap-On Tools, Inc. 9,600 408,600
Sturm Ruger & Co., Inc. 3,700 68,450
-------------
1,683,532
-------------
CONSUMER NON-DURABLES 10.1%
Alberto Culver Co., Class B 3,800 114,712
American Greetings Corp., Class A 6,900 244,088
Borders Group, Inc. (a) 4,600 118,738
Brown Group, Inc. 8,000 121,000
Burlington Industries, Inc. (a) 9,200 136,275
Dean Foods Co. 4,600 218,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 2
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Description Shares Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-DURABLES (CONTINUED)
Donnkenny, Inc. (a) 11,500 $ 43,125
Fruit of the Loom, Inc. (a) 16,100 420,613
Griffon Corp. (a) 20,700 324,731
Guilford Mills, Inc. 20,700 499,388
Herbalife International, Inc. 16,100 400,488
Lancaster Colony Corp. 3,200 158,400
Liz Claiborne, Inc. 5,500 278,781
McCormick & Co., Inc. 2,300 57,356
Nautica Enterprises, Inc. (a) 12,400 330,925
Reebok International Ltd. 4,600 170,200
Revlon, Inc. Class A (a) 4,800 177,600
Russ Berrie & Co., Inc. 9,200 248,400
Russell Corp. 14,400 422,100
Smithfield Foods, Inc. (a) 13,800 410,550
St. John Knits, Inc. 7,400 298,775
Tultex Corp. (a) 39,100 195,500
Unifi, Inc. 4,600 177,675
Westpoint Stevens, Inc. (a) 6,900 288,075
-------------
5,855,995
-------------
CONSUMER SERVICES 6.2%
Amresco, Inc. (a) 9,200 287,500
APAC Teleservices, Inc. (a) 1,400 18,988
Applebee's International, Inc. 1,800 40,162
Banta Corp. 6,900 180,262
Darden Restaurants, Inc. 10,000 110,625
Firstplus Financial Group, Inc. (a) 2,300 124,056
Imperial Credit Industries, Inc. (a) 8,000 200,000
International Game Technology 4,600 114,138
King World Productions, Inc. (a) 9,200 439,300
Media General, Inc., Class A 2,400 98,100
MGM Grand, Inc. (a) 4,600 197,800
New York Times Co., Class A 6,400 345,200
Norrell Corp. 9,200 263,925
Omnicom Group 5,400 378,338
Papa John's International, Inc. (a) 6,550 194,044
Promus Hotel Corp. (a) 3,300 129,525
Regal Cinemas, Inc. (a) 9,350 215,050
Sonic Corp. (a) 2,800 72,275
Stewart Enterprises, Inc., Class A 2,300 96,600
Sunburst Hospitality Corp. (a) 1,233 12,330
Valassis Communications, Inc. (a) 3,200 95,000
-------------
3,613,218
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 3
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Description Shares Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY 8.8%
Apache Corp. 5,100 $ 209,419
Ashland, Inc. 3,200 152,200
BJ Services Co. (a) 600 51,188
Canadian Occidental Petroleum Ltd. 3,700 95,044
Cliffs Drilling Co. (a) 2,800 203,000
Columbia Gas Systems, Inc. 3,700 267,556
Devon Energy Corp. 2,300 100,913
El Paso Natural Gas Co. 4,700 281,413
KeySpan Energy Corp. 6,900 213,900
MCN Corp. 500 17,281
Murphy Oil Corp. 2,300 133,400
National Fuel Gas Co. 2,300 101,631
Newfield Exploration Co. (a) 1,800 48,038
NGC Corp. 4,600 87,975
NICOR, Inc. 500 19,187
Offshore Logistics, Inc. (a) 4,600 95,450
ONEOK, Inc. 11,200 382,900
Pennzoil Co. 3,200 236,800
Pool Energy Services Co. (a) 11,500 385,250
Reading & Bates Corp. (a) 1,400 59,850
Seagull Energy Corp. (a) 3,488 85,020
Smith International, Inc. (a) 2,300 174,081
Tesoro Petroleum Corp. (a) 14,200 233,412
Tidewater, Inc. 2,300 151,369
Union Texas Petroleum Holdings, Inc. 6,600 149,737
Valero Energy Corp. 5,800 174,363
Vintage Petroleum, Inc. 13,800 310,500
Washington Gas & Light Co. 7,400 190,088
WICOR, Inc. 8,900 381,587
Williams Cos. 2,382 121,780
-------------
5,114,332
-------------
FINANCE 15.8%
20th Century Industries 3,500 87,063
Alliance Capital Management, LP 9,200 317,975
Allied Group, Inc. 2,300 108,531
AMBAC, Inc. 8,200 347,987
American Financial Group, Inc. 6,400 243,200
Amsouth Bancorp. 6,150 294,047
Associated Bancorp. 1,591 79,550
California Federal Bancorp, Inc. (a) 600 13,350
Charter One Financial, Inc. 4,147 237,934
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Description Shares Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (CONTINUED)
Choice Hotels International, Inc. (a) 3,700 $ 63,825
City National Corp. 10,600 318,662
Cityscape Financial Corp. (a) 4,600 6,900
CMAC Investment Corp. 8,300 454,944
Concentra Managed Care, Inc. (a) 2,500 82,188
Conseco, Inc. 8,818 387,992
Countrywide Credit Industries, Inc. 6,900 235,031
Donaldson Lufkin & Jenrette, Inc. 2,800 195,125
Edwards (A.G.), Inc. 7,650 249,103
Finova Group, Inc. 1,800 78,187
First American Financial Corp. 3,200 192,200
Fremont General Corp. 7,050 328,706
Frontier Insurance Group, Inc. 4,600 156,112
Fund American Enterprises, Inc. 900 107,775
Greenpoint Financial Corp. 2,700 173,981
HCC Insurance Holdings, Inc. 2,300 55,631
Lehman Brothers Holdings, Inc. 1,400 65,975
Mercantile Bankshares Corp. 3,400 117,725
Mercury General Corp. 4,600 194,925
MGIC Investment Corp. of Wisconsin 1,700 102,850
Money Store, Inc. 6,900 196,650
Nationwide Financial Services, Inc., Class A 10,000 302,500
New York Bancorp, Inc. 6,133 208,522
Orion Capital Corp. 8,400 378,000
Pacific Century Financial Corp. 2,300 116,150
Paine Webber Group, Inc. 2,300 101,775
Penncorp Financial Group, Inc. 2,300 74,175
PMI Group, Inc. 900 54,169
Protective Life Corp. 6,900 365,269
Reliance Group Holdings, Inc. 2,600 32,825
Republic New York Corp. 2,300 243,225
Resource Bancshares Management Group, Inc. 9,200 120,175
Southtrust Corp. 4,800 231,600
Sovereign Bancorp, Inc. 25,880 462,605
T R Financial Corp. 4,600 148,925
Transatlantic Holdings, Inc. 6,000 416,250
U.S. Trust Corp. 2,300 134,550
Unitrin, Inc. 2,300 146,337
Vesta Insurance Group, Inc. 2,300 133,400
-------------
9,164,576
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Description Shares Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE 11.7%
ADAC Laboratories (a) 4,600 $ 90,850
Agouron Pharmaceuticals, Inc. (a) 1,800 82,125
Beckman Industries, Inc. 6,000 238,500
Biomet, Inc. 4,600 112,125
Coherent, Inc. (a) 3,200 124,400
Curative Health Services, Inc. (a) 4,600 136,706
Dekalb Genetics Corp., Class B 9,200 329,475
Dura Pharmaceuticals, Inc. (a) 2,800 136,850
ESC Medical Systems, Ltd. (a) 7,300 286,525
FPA Medical Management, Inc. (a) 11,500 267,375
Haemonetics Corp. (a) 5,500 84,219
HBO & Co. 3,600 158,850
Health Management Associates, Inc., Class A (a) 23,850 591,778
Healthcare & Retirement Corp. (a) 3,100 117,025
Healthcare Compare Corp. (a) 900 49,275
Healthsouth Corp. (a) 12,300 328,256
Integrated Health Services, Inc. 2,903 91,807
Lincare Holdings, Inc. (a) 8,700 464,363
Manor Care, Inc. 3,700 125,106
Medicis Pharmaceutical Corp., Class A (a) 3,700 171,125
Minimed, Inc. (a) 3,300 127,050
NBTY, Inc. (a) 13,800 300,150
Pacificare Health Systems, Inc., Class A 80 5,150
Phycor, Inc. (a) 2,300 54,913
Quorum Health Group, Inc. (a) 7,650 185,513
Renal Treatment Centers, Inc. (a) 9,100 300,300
Rexall Sundown, Inc. (a) 18,400 405,950
Sybron International Corp. (a) 8,700 351,806
Tenet Healthcare Corp. (a) 4,750 142,500
Total Renal Care Holdings, Inc. (a) 3,833 118,583
U.S. Surgical Corp. 1,400 37,363
Vivus, Inc. (a) 7,400 194,250
Watson Pharmaceuticals, Inc. (a) 18,640 592,985
-------------
6,803,248
-------------
PRODUCER MANUFACTURING 7.5%
ACX Technologies, Inc. (a) 2,800 73,325
American Standard Cos., Inc. (a) 3,400 121,337
Ametek, Inc. 2,300 54,625
Blount International, Inc., Class A 1,600 83,700
Camco International, Inc. 3,200 232,000
Cummins Engine Co., Inc. 4,100 249,075
Flowserve Corp. 1,100 32,450
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Description Shares Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
PRODUCT MANUFACTURING (CONTINUED)
Global Industrial Technologies, Inc. (a) 19,900 $ 340,787
Harnischfeger Industries, Inc. 2,800 110,775
Harsco Corp. 2,800 115,325
IDEX Corp. 9,350 308,550
Intermet Corp. 2,300 42,909
Johnson Controls, Inc. 3,700 166,500
Kaydon Corp. 4,600 139,725
Manitowoc Co., Inc. 3,400 102,850
Mastec, Inc. (a) 2,100 68,250
Mueller Industries, Inc. (a) 5,300 231,875
National Service Industries, Inc. 2,800 124,075
PACCAR, Inc. 3,800 174,562
Republic Industries, Inc. (a) 2,300 68,425
Robbins & Myers, Inc. 5,000 185,312
Ruddick Corp. 4,600 73,025
Southdown, Inc. 4,000 222,000
Tecumseh Products Co., Class A 4,600 238,050
Timken Co. 10,100 340,244
Trinity Industries, Inc. 8,300 371,944
U.S. Filter Corp. (a) 2,300 91,425
-------------
4,363,120
-------------
RAW MATERIALS/PROCESSING INDUSTRIES 4.7%
A K Steel Holding Corp. 900 37,912
Cytec Industries, Inc. (a) 9,500 469,063
Fuller (H. B.) Co. 2,300 109,250
Handy & Harman 14,200 353,225
IP Timberlands 10,100 106,681
Lyondell Petrochemical Co. 7,400 190,550
Medusa Corp. 1,600 67,500
Mississippi Chemical Corp. 1,674 30,760
Potlatch Corp. 900 44,494
Rayonier, Inc. 5,100 223,444
Terra Industries, Inc. 17,000 205,062
UCAR International, Inc. (a) 4,600 172,212
USG Corp. (a) 5,100 239,700
USX-US Steel Group, Inc. 4,600 156,112
Valspar Corp. 4,100 120,950
Vulcan Materials Co. 2,300 202,113
-------------
2,729,028
-------------
</TABLE>
<PAGE> 7
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Description Shares Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY 16.9%
Adaptec, Inc. (a) 4,600 $ 221,375
Altera Corp. (a) 5,500 236,500
Applied Magnetics Corp. (a) 11,500 265,937
Avnet, Inc. 2,300 144,756
Avx Corp. 2,300 64,831
BancTec, Inc. (a) 9,200 211,600
BMC Software, Inc. (a) 5,100 305,044
Boston Technology, Inc. (a) 4,600 119,887
Cadence Design Systems, Inc. (a) 1,400 72,975
Cambridge Technology Partners (a) 1,800 66,150
CellStar Corp. (a) 10,000 339,375
Citrix Systems, Inc. (a) 9,200 661,250
Cymer, Inc. (a) 6,000 138,750
Data General Corp. (a) 13,800 264,788
Davox Corp. (a) 6,900 243,225
Digital Microwave Corp. (a) 2,300 80,500
Elsag Bailey Process Automation N.V. (a) 6,900 126,788
Fiserv, Inc. (a) 3,700 163,262
General Signal Corp. 2,300 92,144
GenRad, Inc. (a) 6,400 186,000
Harris Corp. 4,600 201,825
Hutchinson Technology, Inc. (a) 6,900 186,300
Hyperion Software Corp. (a) 3,300 119,419
Iomega Corp. (a) 4,600 122,762
Jabil Circuit, Inc. (a) 7,400 344,100
Linear Technology Corp. 900 56,812
Loral Corp. (a) 2,300 48,444
Manugistics Group, Inc. (a) 3,000 106,875
McAfee Associates, Inc. (a) 4,100 208,075
Medic Computer Systems, Inc. (a) 2,300 79,637
Microchip Technology, Inc. (a) 2,300 90,419
Micron Electronics, Inc. (a) 4,600 64,975
Periphonics Corp. (a) 13,600 129,200
Project Software & Dev, Inc. (a) 4,600 107,525
Quantum Corp. (a) 3,000 93,000
Radisys Corp. (a) 4,600 216,200
Rational Software Corp. (a) 2,800 25,375
Recoton Corp. (a) 4,100 53,300
Remedy Corp. (a) 8,300 388,025
Rohr, Inc. (a) 4,600 138,862
Sanmina Corp. (a) 3,700 274,725
SCI Systems, Inc. (a) 9,200 395,025
Solectron Corp. (a) 3,700 141,294
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Description Shares Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Storage Technology Corp. (a) 9,600 $ 563,400
Stratus Computer, Inc. (a) 4,600 156,975
Sundstrand Corp. 3,200 174,000
Symbol Technologies, Inc. 1,050 42,131
Systems & Computer Technology Corp. (a) 2,000 84,750
Tekelec (a) 5,000 205,000
Tracor, Inc. (a) 13,800 359,662
Unitrode Corp. (a) 10,800 287,550
Western Digital Corp. (a) 9,600 289,800
Wyman-Gordan Co. (a) 2,300 55,200
-------------
9,815,779
-------------
TRANSPORTATION 2.0%
Continental Airlines, Inc., Class B (a) 2,300 99,188
Expeditors International of Washington, Inc. 4,600 164,738
Halter Marine Group, Inc. (a) 2,864 149,644
Seacor Holdings, Inc. (a) 3,700 238,650
UAL Corp. (a) 1,400 122,413
U.S. Air Group, Inc. (a) 4,600 214,188
USFreightways Corp. 4,600 148,925
-------------
1,137,746
-------------
UTILITIES 7.4%
Boston Edison Co. 9,700 307,369
Centerior Energy Corp. 27,100 350,606
Central Hudson Gas & Electric Corp. 9,000 318,937
Century Telephone Enterprises, Inc. 500 21,219
Cincinnati Bell, Inc. 5,100 137,700
Commonwealth Energy System Cos. 2,300 66,700
Comnet Cellular, Inc. (a) 6,900 238,050
DQE, Inc. 5,500 170,156
Kansas City Power & Light Co. 3,700 107,994
LG & E Energy Corp. 4,600 99,762
Long Island Lighting Co. 21,600 546,750
MidAmerican Energy Holdings Co. 6,900 125,063
Montana Power Co. 6,900 173,794
New Century Energies, Inc. 3,700 152,856
New York State Electric & Gas Corp. 13,800 369,150
NIPSCO Industries, Inc. 1,800 79,312
Pacific Gas & Electric Co. 1,524 38,386
Pinnacle West Capital Corp. 4,600 161,575
Public Service Co. of New Mexico 15,200 295,450
Sierra Pacific Resources 2,300 70,294
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Description Shares Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (CONTINUED)
UNITED ILLUMINATING CO. 2,900 $ 113,281
Western Resources, Inc. 9,200 339,825
-------------
4,284,229
-------------
TOTAL LONG-TERM INVESTMENTS 98.9%
(Cost $38,849,010) 57,381,872
REPURCHASE AGREEMENT 1.1%
Lehman Brothers, Inc. ($615,000 par, collateralized by U.S. government
obligations in a pooled cash account, dated 10/31/97, to be sold on
11/03/97 at $615,291) (Cost $615,000) 615,000
-------------
TOTAL INVESTMENTS 100.0%
(Cost $39,464,010) 57,996,872
OTHER ASSETS IN EXCESS OF LIABILITIES 0.0% 13,367
-------------
NET ASSETS 100.0% $58,010,239
-------------
</TABLE>
(a) Non-income producing security as this stock
currently does not declare dividends.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $39,464,010) $ 57,996,872
Cash 3,228
Dividends Receivable 52,358
Unamortized Organizational Costs 14,427
----------------
Total Assets 58,066,885
----------------
LIABILITIES:
Accrued Expenses 25,539
Trustees' Deferred Compensation and Retirement Plans 25,282
Payable to Affiliates 5,825
----------------
Total Liabilities 56,646
----------------
NET ASSETS $ 58,010,239
================
NET ASSETS CONSIST OF:
Capital $ 18,534,720
Accumulated Net Realized Gain 20,086,340
Net Unrealized Appreciation 18,532,862
Accumulated Undistributed Net Investment Income 856,317
----------------
NET ASSETS $ 58,010,239
================
Net Asset Value, Offering Price and Redemption Price Per Share (Based on net assets of
$58,010,239 and 3,474,702 shares of beneficial interest issued and outstanding) $ 16.70
================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 2,077,715
Interest 211,190
-------------
Total Income 2,288,905
-------------
EXPENSES:
Accounting Services 28,029
Audit 27,293
Shareholder Services 15,001
Trustees' Fees and Expenses 12,994
Amortization of Organizational Costs 12,430
Shareholder Reports 11,442
Legal 4,753
Other 57,535
-------------
Total Expenses 169,477
Less Expenses Reimbursed 900
-------------
Net Expenses 168,577
-------------
NET INVESTMENT INCOME $ 2,120,328
=============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain $ 59,842,669
-------------
Unrealized Appreciation/Depreciation:
Beginning of the Period 32,939,261
End of the Period 18,532,862
-------------
Net Unrealized Depreciation During the Period (14,406,399)
-------------
NET REALIZED AND UNREALIZED GAIN $ 45,436,270
=============
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 47,556,598
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 12
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income $ 2,120,328 $ 2,838,202
Net Realized Gain 59,842,669 11,896,653
Net Unrealized Appreciation/Depreciation During the Period (14,406,399) 13,248,258
------------------ -----------------
Change in Net Assets from Operations 47,556,598 27,983,113
------------------ -----------------
Distributions from:
Net Investment Income (2,779,489) (2,187,156)
Net Realized Gain (11,913,960) (6,520,200)
------------------ -----------------
Total Distributions (14,693,449) (8,707,356)
------------------ -----------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES 32,863,149 19,275,757
------------------ -----------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold 30,000,000 91,004,000
Net Asset Value of Shares Issued Through Dividend Reinvestment 14,693,449 8,707,356
Cost of Shares Repurchased (213,753,951) (125,124,342)
------------------ -----------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (169,060,502) (25,412,986)
------------------ -----------------
TOTAL DECREASE IN NET ASSETS (136,197,353) (6,137,229)
NET ASSETS:
Beginning of the Period 194,207,592 200,344,821
------------------ -----------------
End of the Period (Including accumulated undistributed net investment
income of $856,317 and $2,414,943, respectively) $ 58,010,239 $ 194,207,592
================== =================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 13
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
NOVEMBER 23, 1993
(COMMENCEMENT
OF INVESTMENT
YEAR ENDED OCTOBER 31, OPERATIONS) TO
1997 1996 1995 (a) OCTOBER 31, 1994 (a)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period $ 13.807 $ 12.17 $ 9.82 $ 10.00
------------ ----------- ------------ ------------------
Net Investment Income 0.546 0.197 0.17 0.21
Net Realized and Unrealized Gain 3.468 1.968 2.26 (0.37)
------------ ----------- ------------ ------------------
Total from Investment Operations 4.014 2.165 2.43 (0.16)
------------ ----------- ------------ ------------------
Less:
Distributions from Net Investment Income 0.213 0.133 0.08 0.02
Distributions from Net Realized Gain 0.913 0.395 0.00 0.00
------------ ----------- ------------ ------------------
Total Distributions 1.126 0.528 0.08 0.02
------------ ----------- ------------ ------------------
Net Asset Value, End of the Period $ 16.695 $ 13.807 $ 12.17 $ 9.82
============ =========== ============ ==================
Total Return 31.34% 18.50% 25.00% 1.80%*
Net Assets at End of the Period (In millions) $58.0 $194.2 $200.3 $20.7
Ratio of Expenses to Average Net Assets (b) 0.11% 0.10% 0.08% 0.30%
Ratio of Net Investment Income to Average Net Assets (b) 1.34% 1.45% 1.59% 1.99%
Portfolio Turnover 47% 75% 85% 34%*
Average Commission Paid Per Equity Share Traded (c) $0.0115 $0.0222
</TABLE>
(a) Based on average shares outstanding.
(b) The impact on the Ratios of Expenses to Average Net Assets and Net
Investment Income to Average Net Assets due to VKAC's reimbursement of
certain expenses was less than 0.01%.
(c) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.
* Non-Annualized
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 14
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
The Van Kampen American Capital Small Capitalization Fund (the "Fund") is
organized as a Delaware business trust, and is registered as a diversified
open-end management investment company under the Investment Company Act of
1940, as amended. The Fund's investment objective is to approximate the
performance of the small capitalization sector of the equities market by
investing primarily in common stocks of small capitalization companies. The
Fund commenced investment operations on November 23, 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 listed or traded on a national securities
exchange are stated at value using market quotations as of 2:00PM Eastern
Standard Time. Unlisted and listed securities for which the last sale price at
2:00PM Eastern Standard Time is not available are valued at the last reported
bid price. 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 specific price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen American Capital Asset Management, Inc. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are collateralized by the
underlying debt security. The Fund will make payment for such securities only
upon physical delivery or evidence of book entry transfer to the account of the
custodian bank. The seller is required to maintain the value of the underlying
security at not less than the repurchase proceeds due the Fund.
C. INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis.
D. ORGANIZATIONAL COSTS - The Fund will reimburse Van Kampen American
Capital Distributors, Inc. or its affiliates ("collectively VKAC") for costs
incurred in connection with the Fund's organization in the amount of $62,000.
These costs are being amortized on a straight line basis over the 60 month
period ending October, 1998. The Adviser has agreed that in the event any of
the initial shares of the Fund originally purchased by VKAC are redeemed during
the amortization period, the Fund will be reimbursed for any unamortized
organizational costs in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.
E. IN-KIND TRANSACTION - For the year ended October 31, 1997, the Fund
realized gains from in-kind redemptions of $16,444,841.
F. 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 and gains
to its shareholders. Therefore, no provision for federal income taxes is
required.
At October 31, 1997, for federal income tax purposes cost of long- and
short-term investments is $39,522,197, the aggregate gross unrealized
appreciation is $19,583,953 and the aggregate gross unrealized depreciation is
$1,109,278, resulting in net unrealized appreciation of $18,474,675.
Net realized gains or losses may differ for financial and tax reporting
purposes as a result of the deferral of losses for tax purposes resulting from
wash sales.
G. DISTRIBUTION OF INCOME AND GAINS - The Fund declares and pays dividends
annually from net investment income and net realized gains on securities, if
any. Distributions from net realized gains for book purposes may include
short-term capital gains, which are included as ordinary income for tax
purposes.
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and
federal income tax purposes, permanent differences between book and tax basis
reporting for the 1997 fiscal year have been identified and appropriately
reclassified. Permanent book and tax basis differences relating to in-kind
distributions of $23,199,194 and $884,472 were reclassified from
<PAGE> 15
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
accumulated net realized gain and accumulated net investment income,
respectively, to capital. Permanent differences relating to the realized gain
on in-kind redemptions of $16,444,841 were reclassified from accumulated net
realized gain to capital. Additionally, miscellaneous permanent differences of
($20,725) were reclassified from accumulated net investment income to
accumulated net realized gain and $5,732 was reclassified from accumulated net
investment income to capital.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as the investment manager of the Fund, but receives no
compensation for its investment management services.
For the year ended October 31, 1997, the Trust recognized expenses of
approximately $4,800 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of
the Fund is an affiliated person.
For the year ended October 31, 1997, the Fund recognized expenses of
approximately $28,000, representing VKAC's cost of providing accounting
services to the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended
October 31, 1997, the Fund recognized expenses of approximately $15,000,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit.
Certain officers and trustees of the Fund are also officers and
directors of VKAC. The Fund does not compensate its officers or trustees who
are officers of VKAC.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Fund. The maximum annual
benefit per trustee under the plan is equal to $2,500.
At October 31, 1997, the Fund was 100% owned by the Van Kampen
American Capital Pace Fund, which is an investment company advised by the
Adviser.
3. CAPITAL TRANSACTIONS
The Fund is authorized to issue an unlimited number of shares of beneficial
interest with a par value of $.01 per share. Fund shares are only available
for purchase by Funds for which VKAC serves as investment adviser.
At October 31, 1997 and October 31 1996, capital aggregated
$18,534,720 and $147,072,447, respectively. Transactions in common shares were
as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 1996
----------- -----------
<S> <C> <C>
Beginning Shares 14,065,878 16,467,558
----------- -----------
Shares Sold 2,090,026 6,965,729
Shares Issued Through
Dividend Reinvestment 1,123,352 731,096
Shares Redeemed (13,804,554) (10,098,505)
----------- -----------
Net Decrease in Shares
Outstanding (10,591,176) (2,401,680)
----------- -----------
Ending Shares 3,474,702 14,065,878
=========== ===========
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of
investments, excluding short-term investments, were $71,631,433 and
$245,359,818, respectively.
<PAGE> 16
[PRICE WATERHOUSE LLP LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Van Kampen American Capital
Small Capitalization Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen American Capital Small
Capitalization Fund (the "Fund") at October 31, 1997 and the results of its
operations, the changes in its net assets and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1997 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Chicago, Illinois
December 5, 1997
<PAGE> 17
VAN KAMPEN AMERICAN CAPITAL
SMALL CAPITALIZATION FUND
================================================================================
<TABLE>
<CAPTION>
BOARD OF TRUSTEES INVESTMENT ADVISER
<S> <C>
J. MILES BRANAGAN VAN KAMPEN AMERICAN CAPITAL
RICHARD M. DEMARTINI* ASSET MANAGEMENT, INC.
LINDA HUTTON HEAGY One Parkview Plaza
R. CRAIG KENNEDY Oakbrook Terrace, Illinois 60181
JACK E. NELSON
DON G. POWELL* DISTRIBUTOR
JEROME L. ROBINSON
PHILIP B. ROONEY VAN KAMPEN AMERICAN CAPITAL
FERNANDO SISTO DISTRIBUTORS, INC.
WAYNE W. WHALEN* - Chairman One Parkview Plaza
Oakbrook Terrace, Illinois 60181
OFFICERS
SHAREHOLDER SERVICING AGENT
DENNIS J. MCDONNELL*
President ACCESS INVESTOR
SERVICES, INC.
RONALD A. NYBERG* P.O. Box 418256
Vice President and Secretary Kansas City, Missouri 64141-9256
EDWARD C. WOOD, III* CUSTODIAN
Vice President and Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY
CURTIS W. MORELL* 225 Franklin Street
Vice President and Chief Accounting Officer P.O. Box 1713
Boston, Massachusetts 02105
JOHN L. SULLIVAN*
Treasurer LEGAL COUNSEL
TANYA M. LODEN* SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
Controller 333 West Wacker Drive
Chicago, Illinois 60606
PETER W. HEGEL*
ALAN T. SACHTLEBEN* INDEPENDENT ACCOUNTANTS
PAUL R. WOLKENBERG*
Vice Presidents PRICE WATERHOUSE LLP
200 E. Randolph
Chicago, Illinois 60601
</TABLE>
*"Interested" persons of the Fund as defined in the
Investment Company Act of 1940
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 39,464,010
<INVESTMENTS-AT-VALUE> 57,996,872
<RECEIVABLES> 52,358
<ASSETS-OTHER> 14,427
<OTHER-ITEMS-ASSETS> 3,228
<TOTAL-ASSETS> 58,066,885
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56,646
<TOTAL-LIABILITIES> 56,646
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,534,720
<SHARES-COMMON-STOCK> 3,474,702
<SHARES-COMMON-PRIOR> 14,065,878
<ACCUMULATED-NII-CURRENT> 856,317
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20,086,340
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18,532,862
<NET-ASSETS> 58,010,239
<DIVIDEND-INCOME> 2,077,715
<INTEREST-INCOME> 211,190
<OTHER-INCOME> 0
<EXPENSES-NET> (168,577)
<NET-INVESTMENT-INCOME> 2,120,328
<REALIZED-GAINS-CURRENT> 59,842,669
<APPREC-INCREASE-CURRENT> (14,406,399)
<NET-CHANGE-FROM-OPS> 47,556,598
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,779,489)
<DISTRIBUTIONS-OF-GAINS> (11,913,960)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,090,026
<NUMBER-OF-SHARES-REDEEMED> (13,804,554)
<SHARES-REINVESTED> 1,123,352
<NET-CHANGE-IN-ASSETS> (136,197,353)
<ACCUMULATED-NII-PRIOR> 2,414,943
<ACCUMULATED-GAINS-PRIOR> 11,780,941
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 169,477
<AVERAGE-NET-ASSETS> 158,445,934
<PER-SHARE-NAV-BEGIN> 13.807
<PER-SHARE-NII> 0.546
<PER-SHARE-GAIN-APPREC> 3.468
<PER-SHARE-DIVIDEND> (0.213)
<PER-SHARE-DISTRIBUTIONS> (0.913)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.695
<EXPENSE-RATIO> 0.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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