Van Kampen American Capital
SMALL
CAPITALIZATION
FUND
Semi-Annual Report
April 30, 1997
SMALL CAPITALIZATION FUND
Management Discussion
The objective of the Van Kampen American Capital Small Capitalization
Fund is to achieve long-term capital appreciation by investing in a
portfolio of equity securities with a market capitalization between $125
million and $1 billion. During the six-month period ended April 30, 1997,
the Fund's performance was enhanced by a rising stock market, in general,
and favorable performance of small cap financial and consumer durable stocks,
in particular.
Stocks are selected for the Fund based on their attractiveness in terms of
recent earnings estimate revisions and relative valuations measures, such
as price-to-earnings ratio. Purchasing small cap stocks with recent earnings
estimate revisions and reasonable relative valuations has contributed to the
Fund's outperformance of the Wilshire Asset Management Next 1750 Index, a
small cap index. During the reporting period, the Fund avoided stocks with
extended valuations, or high P/E ratios, and this proved to be a favorable
decision.
For the six months ended April 30, 1997, the Fund achieved a total return at
net asset value of 3.65 percent. By comparison, the Wilshire Next 1750 Index
achieved a total return of 1.15 percent for the same period, and the Standard
& Poor's 500-Stock Index achieved a total return of 14.75 percent. The
Wilshire Asset Management Next 1750 Index is an unmanaged, monthly index that
reflects the general performance of small-capitalization stocks. The S&P
500-Stock Index is a broad-based, unmanaged index that reflects general stock
market performance. Keep in mind that neither index reflects any commissions
or fees that would be paid by an investor purchasing the securities they
represent.
At the end of April, the sectors emphasized in the portfolio included apparel,
EDP peripherals, major banks, and investment bankers and brokers. Specific
names with large, active positions in these industries currently include Liz
Claiborne, Inc., Western Digital Corp., Northern Trust Corp., and Paine Webber
Group, Inc.
<TABLE>
<CAPTION>
Average Annual
Six Months Since Inception (11/23/93)
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<S> <C> <C>
Total Return 3.650% 12.68%
</TABLE>
Past performance is not indicative of future performance.
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
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<S> <C> <C>
Common Stocks
Consumer Distribution 5.2%
Americredit Corp. (b) 20,000 $267,500
Brightpoint, Inc. (b) 2,500 54,063
Carson Pirie Scott & Co. (b) 23,000 675,610
Consolidated Stores Corp. (b) 20,000 790,000
DIMON, Inc. 5,000 100,000
Dollar Tree Stores, Inc. (b) 5,000 196,250
Food Lion, Inc., Class A 20,000 133,750
HON Industries, Inc. 19,000 793,250
Interstate Bakeries Corp. 5,000 259,375
J.C. Penney Co., Inc. 3,008 145,888
Just for Feet, Inc. (b) 6,000 93,750
Meyer (Fred), Inc. Delaware (b) 3,000 121,875
Neiman Marcus Group, Inc. (b) 4,000 105,000
Pier 1 Imports, Inc. 38,900 773,138
Premark International, Inc. 10,000 240,000
Proffitts, Inc. (b) 2,940 110,250
Rexel, Inc. (b) 6,000 105,750
Rite Aid Corp. 10,000 452,500
Ross Stores, Inc. 16,000 454,000
Safeway, Inc. (b) 19,950 905,231
Saks Holdings, Inc. (b) 5,000 95,625
Supervalue, Inc. 5,000 153,750
Tech Data Corp. (b) 5,000 121,250
Tiffany & Co. 16,000 620,000
TJX Cos., Inc. 17,000 807500
U.S. Office Products Co. (b) 5,000 125,000
Waban, Inc. (b) 13,000 347,750
Zale Corp. (b) 28,000 514,500
---------
9,562,555
---------
Consumer Durables 3.3%
Armstrong World Industries, Inc. 3,000 197,250
Arvin Industries, Inc. 21,500 567,063
Borg Warner Automotive, Inc. 8,000 341,000
Brunswick Corp. 39,000 1,096,875
Callaway Golf Co. 6,000 179,250
Ethan Allen Interiors, Inc. 19,000 840,750
Furniture Brands International, Inc. (b) 10,000 150,000
Galoob Toys, Inc. (b) 5,000 85,625
Harman International Industries, Inc. 2,400 94,200
Mohawk Industries, Inc. (b) 17,000 380,375
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
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<S> <C> <C>
Consumer Durables (Continued)
Smith (A.O.) Corp. 7,000 $243,250
Snap-On Tools, Inc. 21,000 808,500
Stanley Works 5,000 195,000
Sturm Ruger & Company, Inc. 8,000 122,000
Toro Co. 22,000 767,250
---------
6,068,388
---------
Consumer Non-Durables 11.1%
Alberto Culver Co., Class B 28,200 814,275
American Greetings Corp., Class A 15,000 480,938
Amway Asia Pacific Ltd. 10,000 418,750
Borders Group, Inc. (b) 10,000 212,500
Brown Group, Inc. 17,500 290,938
Burlington Industries, Inc. (b) 20,000 205,000
Dean Foods Co. 10,100 373,700
Donnkenny, Inc. (b) 25,000 85,938
First Brands Corp. 10,000 256,250
Fruit of the Loom, Inc. (b) 30,000 1,080,000
Griffon Corp. (b) 45,000 523,125
Guilford Mills, Inc. 30,000 847,500
Herbalife International, Inc. 35,000 568,750
Hillenbrand Industries, Inc. 20,000 862,500
Hormel Foods Corp. 10,000 246,250
Jones Apparel Group, Inc. (b) 39,000 1,628,250
Jostens Inc. 10,000 238,750
Kellwood Co. 14,000 330,750
Lancaster Colony Corp. 17,000 692,750
Liz Claiborne, Inc. 36,000 1,620,000
McCormick & Co., Inc. 5,000 118,750
Morningstar Group, Inc. (b) 30,000 742,500
Nautica Enterprises, Inc. (b) 37,000 804,750
Oakley, Inc. (b) 12,000 126,000
Paragon Trade Brands, Inc. (b) 17,000 272,000
Reebok International Ltd. 10,000 380,000
Revlon Inc., Class A (b) 20,600 754,475
Russ Berrie & Co., Inc. 20,000 380,000
Russell Corp. 31,300 868,575
Smithfield Foods, Inc. (b) 10,000 460,625
Springs Industries, Inc. 5,000 231,250
St. John Knits, Inc. 16,000 620,000
Tambrands, Inc. 7,000 329,000
Tultex Corp. (b) 85,000 552,500
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
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<S> <C> <C>
Consumer Non-Durables (Continued)
Unifi, Inc. 10,000 $310,000
Vans, Inc. (b) 20,000 192,500
Westpoint Stevens, Inc. (b) 35,000 1,378,125
Wolverine World Wide, Inc. 5,000 201,875
----------
20,499,839
----------
Consumer Services 5.5%
Amresco, Inc. (b) 10,000 146,250
APAC Teleservices, Inc. (b) 3,000 32,813
Applebee's International, Inc. 4,000 93,000
Banta Corp. 15,000 380,625
Boston Chicken, Inc. (b) 27,000 651,375
Choice Hotels Holdings, Inc. (b) 8,000 112,000
Equifax, Inc. 8,000 229,000
Firstplus Financial Group, Inc. (b) 5,000 112,500
Gartner Group, Inc., Class A (b) 11,000 283,250
Imperial Credit Industries, Inc. (b) 20,000 295,000
International Game Technology 10,000 160,000
Kelly Services, Inc., Class A 30,000 765,000
King World Productions, Inc. 20,000 737,500
Media General, Inc. Class A 5,300 157,013
MGM Grand, Inc. (b) 10,000 335,000
National Data Corp. 5,000 187,500
National Education Corp. (b) 7,000 140,875
New York Times Co. 14,000 602,000
Norrell Corp. 20,000 530,000
Omnicom Group 11,700 628,875
Papa John's International, Inc. (b) 14,250 370,500
PHH Corp. 16,400 793,350
Promus Hotel Corp. (b) 7,200 251,100
Regal Cinemas, Inc. (b) 30,250 816,750
Sbarro, Inc. 26,000 734,500
Sitel Corp. (b) 10,000 100,000
Sonic Corp. (b) 6,000 79,125
Station Casinos, Inc. (b) 5,000 44,375
Stewart Enterprises, Inc., Class A 5,000 164,375
Valassis Communications, Inc. (b) 7,000 170,625
----------
10,104,276
----------
Energy 8.7%
Apache Corp. 11,000 375,375
Ashland, Inc. 7,000 315,000
BJ Services Co. (b) 1,400 66,150
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
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<S> <C> <C>
Energy (Continued)
Brooklyn Union Gas Co. 15,000 $410,625
Canadian Occidental Petroleum Ltd. 8,000 158,000
Columbia Gas Systems, Inc. 8,000 495,000
Devon Energy Corp. 5,000 162,500
Eastern Enterprises 14,100 481,163
El Paso Natural Gas Co. 20,200 1,174,125
Global Marine, Inc. (b) 27,000 556,875
Helmerich and Payne, Inc. 7,000 334,250
Louisiana Land & Exploration Co. 3,000 149,625
MCN Corp. 30,000 851,250
Murphy Oil Corp. 5,000 218,750
NACCO Industries, Inc., Class A 836 38,770
National Fuel Gas Co. 5,000 208,750
Newfield Exploration Co. (b) 14,000 276,500
NGC Corp. 10,000 175,000
NICOR, Inc. 1,000 33,625
Noram Energy Corp. 10,000 146,250
Offshore Logistics, Inc. (b) 10,000 180,000
ONEOK, Inc. 24,400 725,900
Oryx Energy Co. (b) 28,000 556,500
Pacific Enterprises 30,000 915,000
Parker & Parsley Petroleum Co. 10,000 326,250
Pennzoil Co. 7,000 340,375
Pool Energy Services Co. (b) 45,000 568,125
Reading & Bates Corp. (b) 3,000 68,250
Rowan Cos., Inc. (b) 15,000 277,500
Seagull Energy Corp. (b) 7,688 131,657
Smith International, Inc. (b) 25,000 1,171,875
Tesoro Petroleum Corp. (b) 31,000 337,125
Tidewater, Inc. 5,000 203,125
Tosco Corp. 24,500 719,688
Union Texas Petroleum Holdings, Inc. 14,300 266,338
Valero Energy Corp. 6,000 210,750
Varco International, Inc. (b) 11,200 256,200
Vintage Petroleum, Inc. 15,000 416,250
Washington Gas & Light Co. 21,000 477,750
WICOR, Inc. 19,400 681,425
Williams Cos. 15,282 670,498
----------
16,128,164
----------
Finance 16.4%
20th Century Industries 7,700 136,675
Aames Financial Corp. 39,000 619,125
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
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<S> <C> <C>
Finance (Continued)
Alex. Brown, Inc. 6,000 $389,250
Alliance Capital Management, LP 35,000 949,375
Allied Group, Inc. 5,000 183,750
AMBAC, Inc. 15,000 967,500
American Financial Group, Inc. 14,000 493,500
Amsouth BanCorp. 8,900 471,700
Bancorp Hawaii, Inc. 5,000 214,375
California Federal Bancorp, Inc. (b) 1,300 20,150
Charter One Financial, Inc. 8,550 378,338
City National Corp. 43,000 989,000
Cityscape Financial Corp. (b) 10,000 133,750
CMAC Investment Corp. 18,000 677,250
Commercial Federal Corp. 12,000 403,500
Conseco, Inc. 19,118 798,177
Countrywide Credit Industries, Inc. 15,000 408,750
CRA Managed Care, Inc. (b) 3,000 105,750
Donaldson Lufkin & Jenrette, Inc. 16,000 698,000
Edwards (A. G.), Inc. 26,000 919,750
Finova Group, Inc. 2,000 136,750
First American Corp. 7,000 457,625
First American Financial Corp. 6,900 220,800
First Financial Corp. 4,480 117,600
Fremont General Corp. 25,450 699,875
Frontier Insurance Group, Inc. 5,000 257,500
Fund American Enterprises, Inc. 2,000 200,250
General Reinsurance Corp. 1,000 167,375
Greenpoint Financial Corp. 5,800 321,900
HCC Insurance Holdings, Inc. 5,000 124,375
Lehman Brothers Holdings, Inc. 25,000 846,875
Marshall & Ilsley Corp. 5,000 191,875
Mercantile Bankshares Corp. 5,000 183,125
Mercury General Corp. 5,000 310,000
MGIC Investment Corp. of Wisconsin 9,300 760,275
Money Store, Inc. 15,000 320,625
Nationsbank Corp. 14,000 847,000
North American Mortgage Co. 6,000 109,500
Northern Trust Corp. 24,000 1,077,000
Orion Capital Corp. 9,100 568,750
Paine Webber Group, Inc. 30,000 1,023,750
Penncorp Financial Group, Inc. 5,000 166,875
PMI Group, Inc. 2,000 102,000
Protective Life Corp. 15,000 660,000
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
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<S> <C> <C>
Finance (Continued)
Reliance Group Holdings, Inc. 5,600 $62,300
Republic New York Corp. 8,000 729,000
Roosevelt Financial Group, Inc. 10,500 243,469
Southtrust Corp. 20,500 768,750
Sovereign Bancorp, Inc. 76,380 926,108
Standard Federal BanCorp. 5,000 293,750
Star Banc Corp. 33,900 1,449,225
Synovus Financial Corp. 30,000 723,750
T R Financial Corp. 5,000 185,000
TCF Financial Corp. (b) 22,000 902,000
Transatlantic Holdings, Inc. 13,000 1,059,500
Union Planters Corp. 23,000 1,023,500
U.S. Trust Corp. 10,000 445,000
Unitrin, Inc. 5,000 253,125
Vesta Insurance Group, Inc. 5,000 208,125
Washington Federal, Inc. 16,500 393,938
Washington Mutual, Inc. 18,000 870,750
----------
30,366,655
----------
Healthcare 9.3%
Advanced Technology Labs, Inc. (b) 10,000 331,250
Agouron Pharmaceuticals, Inc. (b) 2,000 128,000
ALZA Corp. (b) 20,000 565,000
American HomePatient, Inc. (b) 5,000 95,625
Bausch & Lomb, Inc. 19,000 767,125
Beckman Industries, Inc. 13,000 542,750
Bio Rad Labs, Inc., Class A (b) 9,000 213,750
Biogen, Inc. (b) 5,000 161,250
Biomet, Inc. (b) 10,000 151,875
ClinTrials Research, Inc. (b) 15,000 120,000
Coherent, Inc. (b) 7,000 287,875
Curative Health Services, Inc. (b) 10,000 240,000
Dekalb Genetics Corp., Class B 10,000 635,000
Dura Pharmaceuticals, Inc. (b) 6,000 173,250
ESC Medical Systems, Ltd. (b) 5,000 133,750
FPA Medical Management, Inc. (b) 45,000 742,500
Haemonetics Corp. (b) 12,000 199,500
HBO & Co. 12,000 633,000
Health Care & Retirement Corp. (b) 6,700 211,050
Health Management Associates, Inc., Class A 34,500 935,813
Healthcare Compare Corp. (b) 7,000 303,188
Healthsouth Corp. (b) 36,800 726,800
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
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<S> <C> <C>
Healthcare (Continued)
Lincare Holdings, Inc. (b) 24,000 $933,000
Manor Care, Inc. 8,000 187,000
Medicis Pharmaceutical Corp., Class A (b) 18,000 445,500
MiniMed, Inc. (b) 7,200 181,800
NBTY, Inc. (b) 30,000 562,500
Omnicare, Inc. 20,000 490,000
Pacificare Health Systems, Inc., Class A 280 21,210
Parexel International Corp. (b) 10,000 277,500
Phycor, Inc. (b) 5,000 128,750
Quintiles Transnational Corp. (b) 13,000 650,000
Quorum Health Group, Inc. (b) 11,000 341,000
Renal Treatment Centers, Inc. (b) 19,800 428,175
Rexall Sundown, Inc. (b) 30000 611,250
RoTech Medical Corp. (b) 24,800 384,400
St. Jude Medical, Inc. (b) 5,000 158,750
Sybron International Corp. (b) 24,000 783,000
Talbert Medical Management Holdings Corp. (b 235 4,288
Tenet Healthcare Corp. (b) 20,250 529,031
U.S. Surgical Corp. 18,000 614,250
Universal Health Services, Inc., Class B (b) 6,800 258,400
Vivus, Inc. (b) 8,000 302,000
Watson Pharmaceuticals, Inc. (b) 20,320 718,820
----------
17,308,975
----------
Producer Manufacturing 7.6%
ACX Technologies, Inc. (b) 6,000 115,500
American Power Conversion Corp. (b) 17,000 325,125
American Standard Cos., Inc. (b) 7,300 303,863
Ametek, Inc. 5,000 110,625
Blount International, Inc., Class A 3,500 142,188
Briggs & Stratton Corp. 16,000 790,000
Camco International, Inc. 7,000 309,750
Crane Co. 7,500 280,313
Cummins Engine Co., Inc. 12,000 685,500
Danaher Corp. 21,000 952,875
Duriron Co., Inc. 2,500 62,500
Global Industrial Technologies, Inc. (b) 43,400 802,900
Global Industries, Ltd. (b) 6,000 123,000
Granite Construction, Inc. 10,500 200,813
Harnischfeger Industries, Inc. 6,000 250,500
Harsco Corp. 6,000 222,750
Hubbell, Inc. 5,000 218,125
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
Producer Manufacturing (Continued)
IDEX Corp. 20,250 $531,563
Intermet Corp. 25,000 306,250
Johnson Controls, Inc. 8,000 302,000
Kaydon Corp. 5,000 222,500
Litton Industries, Inc. (b) 5,000 214,375
Mastec, Inc. (b) 4,500 130,500
Mueller Industries, Inc. (b) 11,500 434,125
National Service Industries, Inc. 6000 252,000
PACCAR, Inc. 16,000 1,132,000
Republic Industries, Inc. 5,000 126,563
Ruddick Corp. 10,000 150,000
Southdown, Inc. 27,000 978,750
Tecumseh Products Co., Class A 10,000 547,500
Timken Co. 16,000 928,000
Trinity Industries, Inc. 18,000 468,000
U.S. Filter Corp. (b) 5,000 148,750
United Waste Systems, Inc. (b) 22,000 731,500
USA Waste Services, Inc. (b) 5,000 161,250
Wolverine Tube, Inc. (b) 18,000 472,500
----------
14,134,453
----------
Raw Materials/Processing Industries 5.1%
A K Steel Holding Corp. 2,000 72,750
Bemis, Inc. 5,000 193,750
Betz Laboratories, Inc. 5,000 320,000
Cleveland Cliffs, Inc. 12,000 505,500
Cytec Industries, Inc. (b) 25,000 937,500
Ecolab, Inc. 5,000 203,750
Glatfelter (P.H.) Co. 39,500 617,188
Goodrich (B.F.) Co. 5,000 200,000
Handy & Harman 31,000 434,000
IP Timberlands 22,000 269,500
Longview Fibre Co. 15,000 243,750
Lyondell Petrochemical Co. 16,000 322,000
Medusa Corp. 3,500 130,375
Mississippi Chemical Corp. 3,674 80,369
Nalco Chemical Co. 5,000 180,000
Owens-Illinois, Inc. (b) 47,000 1,245,500
Potlatch Corp. 7,000 287,000
Rayonier, Inc. 11,000 448,250
Safeskin Corp. (b) 14,000 311,500
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
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<S> <C> <C>
Raw Materials/Processing Industries (Continued)
Sealed Air Corp. (b) 5,000 $231,250
Terra Industries, Inc. 37,000 434,750
UCAR International, Inc. (b) 10,000 421,250
USG Corp. (b) 11,000 375,375
USX-US Steel Group, Inc. 10,000 292500
Valspar Corp. 10,000 283,750
Vulcan Materials Co. 5,000 326,875
----------
9,368,432
----------
Technology 16.0%
ACT Networks, Inc. (b) 5,000 68,750
Adaptec, Inc (b) 20,000 737,500
Altera Corp. (b) 12,000 596,250
Andrew Corp. (b) 3,750 93,750
Applied Magnetics Corp. (b) 15,000 378,750
Ascend Communications, Inc. (b) 5,000 225,000
Avnet, Inc. 5,000 306,250
Avx Corp. 5,000 110,000
BKC Industries, Inc. 5,000 143,750
BMC Software, Inc. (b) 16,000 686,000
Cadence Design Systems, Inc. (b) 3,000 93,375
Cambridge Technology Partners (b) 4,000 103,500
Cascade Communications Corp. (b) 4,700 144,525
Chips & Technologies, Inc. (b) 8,000 65,500
Ciber, Inc. (b) 30,000 1,065,000
Citrix Systems, Inc. (b) 50,000 731,250
Clarify, Inc. (b) 10,000 88,750
Compuware Corp. (b) 20,000 750,000
Data General Corp. (b) 30,000 558,750
Dell Computer Corp. (b) 11,000 930,875
Digital Microwave Corp. (b) 5,000 122,500
DSP Communications, Inc. (b) 12,000 94,500
Dynatech Corp. (b) 16,500 556,875
Electronic Arts (b) 5,000 120,313
Electronics for Imaging, Inc. (b) 8,000 318,000
Elsag Bailey Process Automotion N.V. (b) 15,000 211,875
Encad, Inc. (b) 25,000 921,875
ESS Technology, Inc. (b) 30,000 405,000
Fiserv, Inc. (b) 8,000 305,000
Gateway 2000, Inc. (b) 11,000 606,375
General Signal Corp. 5,000 196,250
GenRad, Inc. (b) 14,000 218,750
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
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Security Description Shares Market Value
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<S> <C> <C>
Technology (Continued)
Geotek Communications, Inc. (b) 20,000 $76,250
Harris Corp. 13,000 1,118,000
Hutchinson Technology, Inc. (b) 15,000 405,000
Hyperion Software Corp. (b) 18,000 285,750
Iomega Corp. (b) 10,000 172,500
Jabil Circuit, Inc. (b) 23,000 1,112,625
KLA Instruments Corp. (b) 10,000 455,000
Legato Systems, Inc. (b) 9,000 121,500
Linear Technology Corp. 2,000 100,500
Loral Space & Communications (b) 5,000 72,500
McAfee Associates, Inc. (b) 9,000 500,625
Medic Computer Systems, Inc. (b) 5,000 78,438
Micrel, Inc. (b) 5,000 212,500
Microchip Technology, Inc. (b) 5,000 160,625
Micron Electronics, Inc. (b) 25,000 525,000
Molex, Inc. 17,500 538,125
Network General Corp. (b) 8,000 110,000
P-Com, Inc. (b) 5,000 142,500
PairGain Technologies, Inc. (b) 12,000 288,000
Paychex, Inc. 7,500 342,188
Periphonics Corp. (b) 40,000 570,000
PictureTel Corp. (b) 3,000 26,250
Premisys Communications, Inc. (b) 5,000 42,500
Project Software & Dev, Inc. (b) 10,000 133,750
Radisys Corp. (b) 10,000 292,500
Rational Software Corp. (b) 6,000 78,750
Recoton Corp. (b) 9,000 103,500
Remedy Corp. (b) 18,000 621,000
Rohr Industries, Inc. (b) 10000 152,500
S3, Inc. (b) 75,000 703,125
Sanmina Corp. (b) 8,000 392,000
SCI Systems, Inc. (b) 10,000 606,250
Security Dynamics Technologies, Inc. (b) 5,000 135,625
Solectron Corp. (b) 8,000 463,000
Storage Technology Corp. (b) 21,000 742,875
Stratus Computer, Inc. (b) 10,000 387,500
Sundstrand Corp. 7,000 345,625
Symbol Technologies, Inc. 2,250 72,844
Systemsoft Corp. (b) 9,500 72,438
Tandem Computers, Inc. (b) 10,000 127,500
Thomas & Betts Corp. 5,000 226,875
Tracor, Inc. (b) 40,000 865,000
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
- ------------------------------------------------------------------------------
Security Description Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
Technology (Continued)
Unitrode Corp. (b) 19,000 $750,500
Vantive Corp. (b) 6,000 120,000
Varian Associates, Inc. 5,500 264,000
Veritas Software Co. (b) 5,000 170,625
Vitesse Semiconductor Corp. (b) 7,500 236,250
Western Digital Corp. (b) 18,000 1,156,500
Wyle Electronics, Inc. 9,000 308,250
Wyman-Gordon Co. (b) 5,000 106,250
Xircom, Inc. (b) 28,400 271,575
Xylan Corp. (b) 5,000 76,250
Yahoo, Inc. (b) 5,000 170,625
----------
29,564,696
----------
Transportation 1.5%
Alaska Air Group, Inc. (b) 5,000 126,250
Alexander & Baldwin, Inc. 5,000 133,750
Continental Airlines, Inc., Class B (b) 5,000 158,750
Expeditores International Washington, Inc. (b) 10,000 258,750
Halter Marine Group, Inc. (b) 6,264 125,280
Illinois Central Corp. 18,000 603,000
Northwest Airlines Corp., Class A (b) 2,000 78,000
Seacor Holdings, Inc. (b) 8,000 345,000
U.S. Air Group, Inc. (b) 10,000 331,250
UAL Corp. (b) 8,000 611,000
----------
2,771,030
----------
Utilities 8.1%
360 Communications Co. (b) 15,000 251,250
AES Corp. (b) 13,000 843,375
Boston Edison Co. 21,100 530,138
Calenergy, Inc. (b) 25,000 978,125
Centerior Energy Corp. 59,000 582,625
Central Hudson Gas & Electric Corp. 19,500 602,063
Century Telephone Enterprises, Inc. 1,000 29,875
Cincinnati Bell, Inc. 8,000 444,000
Citizens Utilities Co., Class A (b) 21,310 245,065
CMS Energy Corp. 10,000 318,750
Commonwealth Energy Systems Cos. 5,000 106,875
Comnet Cellular, Inc. (b) 30,000 770,625
Delmarva Power & Light Co. 19,000 332,500
Destec Energy, Inc. (b) 10,000 207,500
DQE, Inc. 22,000 607,750
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Portfolio of Investments (Continued)
April 30, 1997 (Unaudited)
- ------------------------------------------------------------------------------
Security Description Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
Utilities (Continued)
Enova Corp. 15,000 $331,875
Idaho Power Co. 5,000 146,250
Kansas City Power & Light Co. 8,000 225,000
LG & E Energy Corp. 10,000 240,000
Long Island Lighting Co. 46,900 1,066,975
MidAmerican Energy Holdings Co. 35,000 590,625
Montana Power Co. 15,000 333,750
Nevada Power Co. 10,000 197,500
New York State Electric & Gas Corp. 30,000 633,750
NIPSCO Industries, Inc. 24,000 948,000
Pinnacle West Capital Corp. 15,000 427,500
Portland General Corp. 6,000 218,250
Public Service Co. of Colorado 18,000 697,500
Public Service Co. of New Mexico 33,000 548,625
Scana Corp. 15,000 360,000
Sierra Pacific Resources 5,000 143,750
Southern New England Telecommunications Corp 9,200 335,800
United Illuminating Co. 6,400 158,400
Western Resources, Inc. 20,000 600,000
----------
15,054,066
----------
Total Long-Term Investments 97.8%
(Cost $152,142,076) (a) 180,931,529
Repurchase Agreement 2.1%
BankAmerica Corp. ($3,885,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated 04/30/97,
to be sold on 05/01/97 at $3,885,583) (Cost $3,885,000) (a)
3,885,000
Other Assets in Excess of Liabilities 0.1% 72,505
------------
Net Assets 100.0% $184,889,034
============
(a) At April 30, 1997, for federal income tax purposes, cost of long-term and
short-term investments is $156,054,202; the aggregate gross unrealized
appreciation is $40,240,755 and the aggregate gross unrealized depreciation
is $11,478,428, resulting in net unrealized appreciation of $28,762,327.
(b) Non-income producing security as this stock currently does not declare
dividends.
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Statement of Assets and Liabilities
April 30, 1997 (Unaudited)
ASSETS:
<S> <C>
Long-Term Investments, at Market Value (Cost $152,142,076) (Note 1) $ 180,931,529
Repurchase Agreement (Cost $3,885,000) (Note 1) 3,885,000
Cash 5,411
Receivables:
Investments Sold 1,475,161
Dividends 220,281
Unamortized Organizational Costs (Note 1) 23,758
------------
Total Assets 186,541,140
------------
LIABILITIES:
Payables:
Investments Purchased 1,606,262
Affiliates (Note 2) 5,050
Accrued Expenses 21,438
Deferred Compensation and Retirement Plans (Note 2) 19,356
------------
Total Liabilities 1,652,106
------------
NET ASSETS $ 184,889,034
============
NET ASSETS CONSIST OF:
Capital (Note 3) $ 145,765,896
Net Unrealized Appreciation on Investments 28,789,453
Accumulated Net Realized Gain on Investments 9,400,476
Accumulated Undistributed Net Investment Income 933,209
------------
NET ASSETS $ 184,889,034
============
Net Asset Value, Offering Price and Redemption Price Per Share (Based
on net assets of $184,889,034 and 14,026,448 shares of beneficial
interest issued and outstanding) $ 13.18
============
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Statement of Operations
For the Six Months Ended April 30, 1997 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Dividends $ 1,260,766
Interest 133,159
-----------
Total Income 1,393,925
-----------
EXPENSES:
Accounting Services (Note 2) 13,612
Audit 13,148
Shareholder Services (Note 2) 7,501
Trustees' Fees and Expenses (Note 2) 6,829
Printing 4,896
Amortization of Organizational Costs (Note 1) 3,099
Legal (Note 2) 2,863
Other 45,122
-----------
Total Expenses 97,070
Less Expenses Reimbursed 900
-----------
Net Expenses 96,170
-----------
NET INVESTMENT INCOME $ 1,297,755
===========
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Gain on Investments $ 9,533,495
-----------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period 32,939,261
End of the Period 28,789,453
-----------
Net Unrealized Depreciation on Investments During the Period (4,149,808)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS $ 5,383,687
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 6,681,442
===========
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Van Kampen American Capital Small Capitalization Fund
Statement of Changes in Net Assets
For the Six Months Ended April 30, 1997 and the Year Ended October 31, 1996 (Unaudited)
Six Months Ended Year Ended
April 30, 1997 October 31, 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income $ 1,297,755 $ 2,838,202
Net Realized Gain on Invesments 9,533,495 11,896,653
Net Unrealized Appreciation/Depreciation on Investment (4,149,808) 13,248,258
------------- -------------
Change in Net Assets from Operations 6,681,442 27,983,113
------------- -------------
Distributions from:
Net Investment Income (2,779,489) (2,187,156)
Net Realized Gain on Investments (Note 1) (11,913,960) (6,520,200)
------------- -------------
Total Distributions (14,693,449) (8,707,356)
------------- -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES (8,012,007) 19,275,757
------------- -------------
FROM CAPITAL TRANSACTIONS (Note 3):
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 (46,000,000) (125,124,342)
------------- -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (1,306,551) (25,412,986)
------------- -------------
TOTAL DECREASE IN NET ASSETS (9,318,558) (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 $933,209 and $2,414,943, respectively) $ 184,889,034 $ 194,207,592
============= =============
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
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. (Unaudited)
November 23, 1993
(Commencement
of Investment
Six Months Ended Year Ended October 31, Operations) to
April 30, 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 0.108 0.197 0.17 0.21
Net Realized and Unrealized Gain on Investmests 0.392 1.968 2.26 (0.37)
------------ ----------- ---------- ----------------
Total from Investment Operations 0.500 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 on
Investments (Note 1) 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 $ 13.181 $ 13.807 $ 12.17 $ 9.82
------------ ----------- ---------- ----------------
Total Return 3.65%* 18.50% 25.00% 1.80%*
Net Assets at End of the Period (In millions) $184.9 $194.2 $200.3 $20.7
Ratio of Expenses to Average Net Assets (b) 0.10% 0.10% 0.08% 0.30%
Ratio of Net Investment Income to Average Net 1.41% 1.45% 1.59% 1.99%
Assets (b)
Portfolio Turnover 35%* 75% 85% 34%*
Average Commission Paid Per Equity Share $0.0221 $0.0222 ---- ----
Traded (c)
(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
</TABLE>
Van Kampen American Capital Small Capitalization Fund
Notes to Financial Statements
April 30, 1997 (Unaudited)
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. 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.
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.
F. 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.
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.
Certain legal expenses are paid to 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 April 30, 1997, the Fund
recognized expenses of approximately $13,600, representing
VKAC's cost of providing accounting services to the Fund. These
services are provided by VKAC at cost.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of
the Adviser, serves as the shareholder servicing agent for the
Fund. For the six months ended April 30, 1997, the Fund
recognized expenses of approximately $7,500, 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 under the plan is equal to $2,500.
At April 30, 1997, the Fund was owned by two
investment companies advised by the Adviser; Common Sense Trust
Growth Fund owned 54.0% of the Fund and Van Kampen American
Capital Pace Fund owned 46.0% of the Fund.
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 April 30, 1997 and October 31 1996, capital
aggregated $145,765,896 and $147,072,447, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
Six Months Year Ended
Ended October 31,
April 30, 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 (3,252,808) (10,098,505)
----------- ------------
Net Decrease in Shares
Outstanding (39,430) (2,401,680)
----------- ------------
Ending Shares 14,026,448 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
$63,592,643 and $73,718,787, respectively.
Van Kampen American Capital
Small Capitalization Fund
Board of Trustees
J. Miles Branagan
Richard M. DeMartini*
Linda Hutton Heagy
R. Craig Kennedy
Jack E. Nelson
Jerome L. Robinson
Philip B. Rooney
Fernando Sisto
Wayne W. Whalen* - Chairman
Officers
Dennis J. McDonnell*
President
Ronald A. Nyberg*
Vice President and Secretary
Edward C. Wood, III*
Vice President and Chief Financial Officer
Curtis W. Morell*
Vice President and Chief Accounting Officer
John L. Sullivan*
Treasurer
Tanya M. Loden*
Controller
Peter W. Hegel*
Alan T. Sachtleben*
Paul R. Wolkenberg*
Vice Presidents
Investment Adviser
Van Kampen American Capital
Asset Management, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Distributor
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Shareholder Servicing Agent
ACCESS Investor
Services, Inc.
P.O. Box 418256
Kansas City, Missouri 64141-9256
Custodian
State Street Bank and Trust Company
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Independent Accountants
Price Waterhouse LLP
1201 Louisiana
Houston, Texas 77002
*"Interested" persons of the Fund as defined in the Investment
Company Act of 1940
