<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................... 1
Performance Results......................... 3
Portfolio Management Review................. 4
Portfolio of Investments.................... 6
Statement of Assets and Liabilities......... 7
Statement of Operations..................... 8
Statement of Changes in Net Assets.......... 9
Financial Highlights........................ 10
Notes to Financial Statements............... 13
</TABLE>
GTI SAR 5/96
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO APPEARS HERE]
DENNIS J. MCDONNELL AND DON G. POWELL
May 9, 1996
Dear Shareholder,
Amidst a relatively volatile market at the start of 1996, Class A shares of
your Fund generated a total return of 1.94 percent/1/, based on net asset
value for the six months ended March 31, 1996. Longer term, the Fund's one-
year and three-year average annual total returns (Class A shares at NAV) were
8.13 percent/1/ and 3.91 percent/1/, respectively, for the same ending period.
You can read more about your Fund's performance and investment strategies on
the following pages, including a recent interview with the Fund's portfolio
management team.
ECONOMIC OVERVIEW
The economy continued to grow at a slow pace through the end of 1995, re-
flected in weak consumer demand and disappointing retail sales during the hol-
iday season. Severe winter weather in many parts of the country further
dampened retail activity and hindered distribution and manufacturing. These
conditions helped to keep inflation in check, prompting the Federal Reserve
Board to continue easing short-term interest rates. In turn, long-term inter-
est rates declined, causing bond prices to rise. By year-end, the yield on 10-
year Treasury securities had been pushed down to 5.57 percent from 7.80
percent at the beginning of 1995. This bond market rally was reflected in your
Fund's twelve-month total return performance of 15.51 percent for the period
ended December 31, 1995, based on net asset value for Class A shareholders.
In contrast, at the beginning of 1996, the market experienced a higher level
of volatility, and an abrupt end to the rally in bond prices. This volatility
was triggered in part by three factors: fiscal uncertainty caused by two shut-
downs of the federal government, presidential primary debates laced heavily
with discussion of impending tax reform, and unexpected reversals in a number
of key economic indicators, which sent the market mixed signals on the direc-
tion of the economy.
Mortgage-backed securities, in which your Fund invests, fared relatively
well compared to other fixed-income securities during the first quarter, in-
cluding government and corporate bonds. According to the Lehman Brothers U.S.
Mortgage Index, mortgage-backed securities returned -0.4 percent for the first
three months of the year. This compares favorably to the government and corpo-
rate bond sectors, which returned -2.3 and -2.6 percent, respectively, accord-
ing to the Lehman Brothers General U.S. Government and Corporate Bond indices.
Continued on page two
1
<PAGE>
ECONOMIC OUTLOOK
In general, we anticipate a pickup in economic activity during the first half
of the year and a slowdown toward the end of the year, with possibilities of an
increase in inflation. Overall, we are impressed by the benign trend of infla-
tion, particularly in light of the noticeable increases in commodity prices,
such as oil and grain, in the first part of the year.
We believe the Federal Reserve Board will be cautious in its monetary policy
toward short-term interest rates, as mixed economic news continues to be re-
ported. The Fed is expected to focus on maintaining economic growth at an an-
nual rate of 2 to 3 percent, while striving to keep inflation at bay. Long-term
rates have risen substantially to current levels that we view as attractive. We
look for long-term rates to move back in a trading range of 6 1/2 and 7 1/4
percent, as measured by long-term U.S. Treasury bonds over the near term.
Our long-term outlook for the fixed-income sector continues to be positive,
as market fundamentals such as modest growth, low inflation, and a trend toward
lower interest rates remain in place.
LONG-TERM PERFORMANCE
Throughout the life of the Fund, the support of our shareholders and our com-
mitment to a disciplined investment approach have been important to our long-
term performance record. Thank you for your continued confidence in Van Kampen
American Capital and in your Fund's management team.
Sincerely,
/s/ Don G. Powell /s/ Dennis J. McDonnell
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Asset Management, Inc. Asset Management, Inc.
2
<PAGE>
PERFORMANCE RESULTS FOR THE PERIOD ENDED MARCH 31, 1996
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
TOTAL RETURNS
<S> <C> <C> <C>
Six-month total return based on NAV/1/......... 1.94% 2.14% 2.14%
Six-month total return/2/...................... (2.92%) (1.81%) 1.15%
One-year total return/2/....................... 2.99% 3.24% 6.24%
Three-year total return/2/..................... 2.23% 2.24% N/A
Life-of-Fund average annual total return/2/.... 3.38%/3/ 3.40%/3/ 2.93%
Commencement Date.............................. 10/06/92 10/06/92 04/12/93
DISTRIBUTION RATE AND YIELD
Distribution Rate/4/........................... 6.40% 6.00% 6.00%
SEC Yield/5/................................... 4.98% 4.40% 4.44%
</TABLE>
N/A=Not applicable.
/1/Assumes reinvestment of all distributions for the period ended and does not
include payment of the maximum sales charge (4.75% for A shares) or contingent
deferred sales charge for early withdrawal (4% for B and 1% for C shares).
/2/Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (A shares) or
contingent deferred sales charge for early withdrawal (B and C shares).
/3/Total return from November 2, 1992 (date the Fund's investment strategy was
implemented) through the period ended.
/4/Distribution rate represents the monthly annualized distributions of the Fund
at the end of the period and not the earnings of the Fund.
/5/SEC Yield is a standardized calculation prescribed by the Securities and
Exchange Commission for determining the amount of net income a portfolio
should theoretically generate for the 30-day period ending as shown above.
See the Prior Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. Fund shares, when redeemed, may be worth
more or less than their original cost.
3
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
We recently spoke with the management team of Van Kampen American Capital U.S.
Government Trust for Income about the key events and economic forces that
shaped the markets during the first half of the Fund's fiscal year. The team
includes Ted V. Mundy, portfolio manager, and Robert C. Peck, Jr., executive
vice president for fixed-income investments. The following excerpts reflect
their views on the Fund's performance during the six-month period ended March
31, 1996.
Q WHAT MARKET CONDITIONS AFFECTED THE FUND MOST SIGNIFICANTLY OVER THE PAST
SIX MONTHS?
A Within the past six months, we have experienced both the benefits of a
market rally and the difficulties of a market decline. More specifically,
the market rallied from October 1995 to mid-February 1996. The price of fixed-
income securities moved steadily higher in response to a gradual decline in
interest rates. Then, from mid-February through the end of March, fixed-income
market prices declined and yields rose. We saw not only a sharp increase in
interest rates but an increased level of volatility. While the general levels
of interest rates at the beginning and end of the six-month period are rela-
tively similar, in the brief period between mid-February and the end of March,
benchmark 5-year Treasury notes increased in yield over 1 percent--a large in-
crease for such a short time period. Overall, these two market environments
required very different investment strategies in seeking optimum Fund perfor-
mance.
Q HOW HAS THE FUND RESPONDED TO MARKET CONDITIONS DURING THIS REPORTING
PERIOD?
A Throughout the period, changes were made to better position the Fund in
response to the prevailing market environment. While the market rallied,
the Fund's duration(a measure of the portfolio's sensitivity to interest rate
changes) remained slightly more aggressive, at 4.5 years, in order to take ad-
vantage of the positive market environment. Additionally, because interest
rates were low enough to encourage homeowners to refinance their mortgages, we
reduced the Fund's holdings of higher-coupon rate mortgage securities from 60
to 50 percent. We also purchased mortgage securities that more closely re-
flected current interest rates, believing that these would initially have less
exposure to prepayment risk. Finally, we added Treasury securities to the
portfolio, because they typically have performed well when interest rates de-
cline.
In response to the dramatic shift the market experienced in mid-February, we
reduced the Fund's duration to 4.2 years, creating a more defensive position
against rising rates. We also decreased our position in Treasury securities,
favoring mortgage securities which generally have performed better in a rising
interest rate environment.
4
<PAGE>
[Pie Chart: Holdings by Sector as a Percentage of
Net Assets as of March 31, 1996 appears here.]
AAA/AA CMO 23%
GNMA 17%
Treasury Bonds and Notes 45%
FNMA 10%
Other 5%
Q HOW HAS THE FUND PERFORMED FOR THIS REPORTING PERIOD?
A For the six-month period ended March 31, 1996, the Fund achieved a total
return of 1.94 percent/1/ (Class A shares based on net asset value). Addi-
tionally, the Fund's Class A shares provided shareholders with a competitive
monthly distribution of $0.04625 per share, which equates to a distribution
rate of 6.40 percent/4/. In contrast, yields on 2- and 10-year Treasuries were
approximately 5.76 and 6.33 percent, respectively.
For this same period, the Merrill Lynch Intermediate-Term Government Index
had a total return of 2.66 percent. This broad-based index attempts to measure
the market performance of government securities with maturities between one and
ten years. The index, which is unmanaged, does not reflect in its performance
any commissions or fees that would be paid by an investor purchasing the secu-
rities it represents. (For additional Fund performance results, please refer to
the chart on page three.)
Q WHAT IS YOUR OUTLOOK FOR THE MARKET IN THE MONTHS AHEAD?
A While the first quarter of 1996 appears to mimic the rising interest rate
environment of 1994, we do not believe this will be a year-long trend. In
1994, interest rates rose and volatility increased due to rapid economic
growth--fueled by factors such as manufacturing activity, capital investment
and increased consumer spending. Because these factors do not appear as strong
in 1996, we believe that the recent increase in interest rates will lose momen-
tum.
We feel the market will continue to exhibit an above-average level of vola-
tility during the year. We believe that a constructive fixed-income environment
may not emerge until later in the year or in 1997. We expect, therefore, to keep
the Fund's duration relatively neutral, in a range between 4 and 4.25 years, and
to maintain an emphasis on mortgage-backed securities, which should provide
value and extra yield in a volatile market environment.
/s/ Robert C. Peck, Jr. /s/ Ted V. Mundy
Robert C. Peck, Jr. Ted V. Mundy
Executive Vice President Portfolio Manager
Fixed Income Investments
Please see footnotes on page three
5
<PAGE>
PORTFOLIO OF INVESTMENTS
March 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UNITED STATES TREASURY OBLIGATIONS 44.8%
$10,000 Treasury Bonds....................... 7.625% 02/15/25 $ 11,014,100
*10,000 Treasury Bonds....................... 10.750 08/15/05 13,004,700
*25,000 Treasury Notes....................... 8.875 11/15/97 26,195,250
31,500 Treasury Notes....................... 9.250 08/15/98 33,813,360
*22,000 Treasury Notes....................... 11.625 11/15/02 28,356,020
------------
TOTAL UNITED STATES TREASURY
OBLIGATIONS
(Cost $113,859,844).................. 112,383,430
------------
UNITED STATES AGENCIES
OBLIGATIONS 30.9%
9,881 Federal Home Loan Mortgage Corp...... 7.500 02/01/26 9,874,769
15,136 Federal National Mortgage
Association, Pools................... 7.000 various 14,757,318
9,810 Federal National Mortgage
Association, 15 yr................... 7.000 10/01/09 9,810,013
24,697 Government National Mortgage
Association, Pools................... 7.500 various 24,650,522
17,904 Government National Mortgage
Association, Pools................... 8.000 various 18,267,507
------------
TOTAL UNITED STATES AGENCIES
OBLIGATIONS
(Cost $77,686,860)................... 77,360,129
------------
COLLATERALIZED MORTGAGE
OBLIGATIONS 23.0%
4,344 Capstead Mortgage.................... 9.742 08/25/23 4,415,776
9,618 Federal Home Loan Mortgage Corp...... 5.838 04/15/99 9,649,486
14,331 Federal National Mortgage
Association.......................... 5.744 09/25/00 14,369,344
13,718 Federal National Mortgage
Association.......................... 5.794 03/25/09 13,754,817
5,327 Prudential Home Mortgage Securities,
Series 93-23 A7...................... 10.000 06/25/08 5,506,715
10,000 Salomon Brothers Mortgage Securities,
Series 93-5 A3....................... 7.370 10/25/23 9,934,400
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $58,908,562)................... 57,630,538
------------
REPURCHASE AGREEMENT 2.4%
6,055 Lehman Government Securities, dated
3/29/96 (Collateralized by U.S.
Government obligations in a pooled
cash account) repurchase proceeds
$6,057,649 (Cost $6,055,000)......... 5.250 04/01/96 6,055,000
------------
TOTAL INVESTMENTS (Cost $256,510,266) 101.1% .................. 253,429,097
OTHER ASSETS AND LIABILITIES, NET (1.1%)....................... (2,737,471)
------------
NET ASSETS 100%................................................ $250,691,626
------------
</TABLE>
* Securities with a market value of approximately $67.6 were placed as
collateral for forward commitments and futures contracts (see Note 1B).
See Notes to Financial Statements
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $256,510,266)................. $253,429,097
Cash............................................................. 6,726
Receivable for investments sold.................................. 70,191,423
Interest receivable.............................................. 3,105,684
Receivable for Fund shares sold.................................. 89,217
Other assets..................................................... 23,747
------------
Total Assets.................................................... 326,845,894
------------
LIABILITIES
Payable for investments purchased................................ 71,373,884
Unrealized depreciation of forward commitments................... 1,831,325
Payable for Fund shares redeemed................................. 1,287,545
Dividends payable................................................ 805,210
Due to Distributor............................................... 225,141
Due to Adviser................................................... 127,409
Payable for variation margin..................................... 47,630
Due to shareholder service agent................................. 39,275
Deferred Trustees' compensation.................................. 13,313
Accrued expenses................................................. 403,536
------------
Total Liabilities............................................... 76,154,268
------------
NET ASSETS, equivalent to $8.26 per share for Class A, and $8.25
per share for Class B and
Class C shares.................................................. $250,691,626
------------
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par; 6,614,058 Class A,
21,035,005 Class B, and 2,726,208 Class C shares outstanding.... $ 303,753
Capital surplus.................................................. 298,171,068
Accumulated net realized loss on securities...................... (42,720,939)
Net unrealized appreciation (depreciation) of securities
Investments..................................................... (3,081,169)
Forward commitments............................................. (1,831,325)
Futures contracts............................................... 9,557
Accumulated net investment loss.................................. (159,319)
------------
NET ASSETS....................................................... $250,691,626
------------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended March 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest.......................................................... $10,773,044
-----------
EXPENSES
Management fees................................................... 830,911
Shareholder service agent's fees and expenses..................... 199,802
Accounting services............................................... 53,261
Service fees--Class A............................................. 74,719
Distribution and service fees--Class B............................ 945,531
Distribution and service fees--Class C............................ 127,993
Trustees' fees and expenses....................................... 9,024
Audit fees........................................................ 21,003
Custodian fees.................................................... 18,725
Legal fees........................................................ 2,409
Reports to shareholders........................................... 16,872
Registration and filing fees...................................... 42,345
Organization expenses............................................. 1,500
Miscellaneous..................................................... 14,962
-----------
Total expenses................................................... 2,359,057
-----------
NET INVESTMENT INCOME............................................. 8,413,987
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain (loss) on securities
Investments...................................................... (1,462,303)
Forward commitments.............................................. 1,947,109
Futures contracts................................................ 1,136,021
Net unrealized depreciation of securities during the period
Investments...................................................... (2,966,373)
Forward commitments.............................................. (1,872,603)
Futures contracts................................................ (111,093)
-----------
NET REALIZED AND UNREALIZED LOSS ON SECURITIES.................... (3,329,242)
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $ 5,084,745
-----------
</TABLE>
See Notes to Financial Statements
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
March 31, September 30,
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period................... $298,497,618 $339,482,495
------------ ------------
OPERATIONS
Net investment income............................ 8,413,987 22,165,708
Net realized gain (loss) on securities........... 1,620,827 (14,887,473)
Net unrealized appreciation (depreciation) of se-
curities during the period...................... (4,950,069) 23,095,865
------------ ------------
Increase in net assets resulting from operations. 5,084,745 30,374,100
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (see Note 1F)
Net investment income
Class A.......................................... (2,076,349) (5,658,550)
Class B.......................................... (5,581,137) (14,806,014)
Class C.......................................... (756,501) (2,231,929)
------------ ------------
(8,413,987) (22,696,493)
------------ ------------
Excess of book-basis net investment income
Class A.......................................... (31,330) --
Class B.......................................... (144,238) --
Class C.......................................... (19,365) --
------------ ------------
(194,933) --
------------ ------------
Excess of book-basis net realized gain on
securities
Class A.......................................... -- (44,467)
Class B.......................................... -- (131,320)
Class C.......................................... -- (20,769)
------------ ------------
-- (196,556)
------------ ------------
Total distributions to shareholders.............. (8,608,920) (22,893,049)
------------ ------------
CAPITAL TRANSACTIONS
Proceeds from shares sold
Class A.......................................... 3,265,302 8,966,043
Class B.......................................... 5,540,762 13,459,583
Class C.......................................... 1,516,051 4,514,085
------------ ------------
10,322,115 26,939,711
------------ ------------
Proceeds from shares issued for distributions re-
invested
Class A.......................................... 842,783 2,282,526
Class B.......................................... 2,266,760 5,967,976
Class C.......................................... 380,108 1,122,891
------------ ------------
3,489,651 9,373,393
------------ ------------
Cost of shares redeemed
Class A.......................................... (18,962,847) (18,106,434)
Class B.......................................... (31,967,971) (50,895,128)
Class C.......................................... (7,162,765) (15,777,470)
------------ ------------
(58,093,583) (84,779,032)
------------ ------------
Decrease in net assets resulting from capital
transactions.................................... (44,281,817) (48,465,928)
------------ ------------
DECREASE IN NET ASSETS............................ (47,805,992) (40,984,877)
------------ ------------
NET ASSETS, end of period (including accumulated
net investment loss of $(159,319) and
undistributed net investment income of $35,614,
respectively).................................... $250,691,626 $298,497,618
------------ ------------
</TABLE>
See Notes to Financial Statements
9
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-------------------------------------------------
Six Months Year Ended October 6, 1992(/1/)
Ended September 30 through
March 31, --------------- September 30,
1996 1995 1994 1993(/2/)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PER-
FORMANCE
Net asset value, begin-
ning of period......... $8.38 $8.17 $9.26 $9.43
------ ------ ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Investment income...... .32 .72 .76 .91
Expenses............... (.05) (.09) (.09) (.10)
------ ------ ------- ------
Net investment income... .27 .63 .67 .81
Net realized and
unrealized gain (loss)
on securities.......... (.1125) .23 (1.0085) (.1795)
------ ------ ------- ------
Total from investment
operations............. .1575 .86 (.3385) .6305
------ ------ ------- ------
LESS DISTRIBUTIONS FROM
(see Note 1F)
Net investment income.. (.27) (.645) (.674) (.8005)
Excess of book-basis
net investment income. (.0075) -- -- --
Excess of book-basis
net realized gain on
securities............ -- (.005) (.0775) --
------ ------ ------- ------
Total distributions..... (.2775) (.65) (.7515) (.8005)
------ ------ ------- ------
Net asset value, end of
period................. $8.26 $8.38 $8.17 $9.26
------ ------ ------- ------
TOTAL RETURN (/3/)...... 1.94% 10.97% (3.82%) 8.07%(/4/)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of the
period (millions)...... $54.6 $70.2 $75.3 $92.4
Average net assets (mil-
lions)................. $62.3 $72.2 $86.5 $50.9
Ratios to average net
assets
(annualized)(/5/)
Expenses............... 1.11% 1.09% 1.07% 1.07%
Expenses, without ex-
pense reimbursement... N/A N/A N/A 1.15%
Net investment income.. 6.67% 7.67% 7.89% 8.71%
Net investment income,
without expense reim-
bursement............. N/A N/A N/A 8.64%
Portfolio turnover rate. 209% 262% 122% 281%
</TABLE>
N/A Not applicable.
(1) Commencement of operations.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(4) Total return from November 2, 1992 (date the Fund's investment strategy was
implemented) through September 30, 1993.
(5) See Note 2.
See Notes to Financial Statements
10
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
-------------------------------------------------
Six Months Year Ended October 6, 1992(/1/)
Ended September 30 through
March 31, --------------- September 30,
1996 1995 1994 1993(/2/)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PER-
FORMANCE
Net asset value, begin-
ning of period......... $8.38 $8.17 $9.26 $9.43
------ ------ ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Investment income...... .32 .72 .76 .86
Expenses............... (.08) (.15) (.15) (.16)
------ ------ ------- ------
Net investment income... .24 .57 .61 .70
Net realized and
unrealized gain (loss)
on securities.......... (.1225) .228 (1.0205) (.1475)
------ ------ ------- ------
Total from investment
operations............. .1175 .798 (.4105) .5525
------ ------ ------- ------
LESS DISTRIBUTIONS FROM
(see Note 1F)
Net investment income.. (.24) (.583) (.602) (.7225)
Excess of book-basis
net investment income. (.0075) -- -- --
Excess of book-basis
net realized gain on
securities............ -- (.005) (.0775) --
------ ------ ------- ------
Total distributions..... (.2475) (.588) (.6795) (.7225)
------ ------ ------- ------
Net asset value, end of
period................. $8.25 $8.38 $8.17 $9.26
------ ------ ------- ------
TOTAL RETURN (/3/)...... 2.14% 10.14% (4.61%) 7.24%(/4/)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of the
period (millions)...... $173.6 $200.2 $226.7 $242.8
Average net assets (mil-
lions)................. $189.1 $208.8 $252.4 $108.6
Ratios to average net
assets
(annualized)(/5/)
Expenses............... 1.88% 1.85% 1.82% 1.81%
Expenses, without ex-
pense reimbursement... N/A N/A N/A 1.89%
Net investment income.. 5.90% 6.92% 7.11% 7.70%
Net investment income,
without expense reim-
bursement............. N/A N/A N/A 7.62%
Portfolio turnover rate. 209% 262% 122% 281%
</TABLE>
N/A not applicable
(1) Commencement of operations.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(4) Total return from November 2, 1992 (date the Fund's investment strategy was
implemented) through September 30, 1993.
(5) See Note 2.
See Notes to Financial Statements
11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
------------------------------------------------
Six Months Year Ended
Ended September 30 April 12, 1993(/1/)
March 31, --------------- through September
1996 1995 1994 30, 1993(/2/)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFOR-
MANCE
Net asset value, beginning of
period...................... $8.38 $8.17 $9.25 $9.41
------ ------ ------- ------
INCOME FROM INVESTMENT OPERA-
TIONS
Investment income........... .32 .72 .79 .41
Expenses.................... (.08) (.15) (.16) (.08)
------ ------ ------- ------
Net investment income........ .24 .57 .63 .33
Net realized and unrealized
gain (loss) on securities... (.1225) .228 (1.0305) (.1561)
------ ------ ------- ------
Total from investment opera-
tions....................... .1175 .798 (.4005) .1739
------ ------ ------- ------
LESS DISTRIBUTIONS FROM (see
Note 1F)
Net investment income....... (.24) (.583) (.602) (.3339)
Excess of book-basis net in-
vestment income............ (.0075) -- -- --
Excess of book-basis net re-
alized gain on securities.. -- (.005) (.0775) --
------ ------ ------- ------
Total distributions.......... (.2475) (.588) (.6795) (.3339)
------ ------ ------- ------
Net asset value, end of peri-
od.......................... $8.25 $8.38 $8.17 $9.25
------ ------ ------- ------
TOTAL RETURN (/3/)........... 2.14% 10.14% (4.51%) 2.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(millions).................. $22.5 $28.1 $37.5 $37.8
Average net assets (mil-
lions)...................... $25.6 $31.4 $44.8 $19.2
Ratios to average net assets
(annualized)(/4/)
Expenses.................... 1.88% 1.85% 1.82% 1.76%
Expenses, without expense
reimbursement.............. N/A N/A N/A 1.83%
Net investment income....... 5.91% 6.94% 7.08% 7.26%
Net investment income,
without expense
reimbursement.............. N/A N/A N/A 7.18%
Portfolio turnover rate...... 209% 262% 122% 281%
</TABLE>
N/A not applicable
(1) Commencement of operations.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(4) See Note 2.
See Notes to Financial Statements
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- -------------------------------------------------------------------------------
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital U.S. Government Trust for Income (the "Fund") is
registered under the Investment Company Act of 1940, as amended, as a diversi-
fied open-end management investment company. The Fund seeks a high level of
income by primarily investing in debt securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The prep-
aration of financial statements in conformity with generally accepted account-
ing principles requires management to make estimates and assumptions that
effect the amounts reported. Actual amounts may differ from the estimates.
A. INVESTMENT VALUATIONS-All debt securities are valued at the last reported
bid price. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the direction
of the Board of Trustees of the Fund.
Short-term investments with a maturity of 60 days or less when purchased are
valued at amortized cost, which approximates market value. Short-term invest-
ments 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. FUTURES CONTRACTS AND FORWARD COMMITMENTS-Transactions in futures contracts
and forward commitments are utilized in strategies to manage the market risk
of the Fund's investments. The purchase of a futures contract or forward com-
mitment increases the impact on net asset value of changes in the market price
of investments. Forward commitments have a risk of loss due to nonperformance
of counterparties. There is also a risk that the market movement of such in-
struments may not be in the direction forecasted. Note 3--Investment Activity
contains additional information.
Futures Contracts--Upon entering into futures contracts, the Fund maintains,
in a segregated account with its custodian, securities with a value equal to
its obligation under the futures contracts. A portion of these funds is held
as collateral in an account in the name of the broker, the Fund's agent in ac-
quiring the futures position. During the period the futures contract is open,
changes in the value of the contract ("variation margin") are recognized by
marking the contract to market on a daily basis. As unrealized gains or losses
are incurred, variation margin payments are received from or made to the bro-
ker. Upon the closing or cash settlement of a contract, gains or losses are
realized. The cost of securities acquired through delivery under a contract is
adjusted by the unrealized gain or loss on the contract.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
Forward Commitments--The Fund trades certain securities under the terms of
forward commitments, whereby the settlement for payment and delivery occurs at
a specified future date. Forward commitments are privately negotiated transac-
tions between the Fund and dealers. Upon executing a forward commitment and
during the period of obligation, the Fund maintains collateral of cash or se-
curities in a segregated account with its custodian in an amount sufficient to
relieve the obligation. If the intent of the Fund is to accept delivery of a
security traded under a forward purchase commitment, the commitment is re-
corded as a long-term purchase. For forward purchase commitments for which se-
curity settlement is not intended by the Fund and all forward sales
commitments, changes in the value of the commitment are recognized by marking
the commitment to market on a daily basis. During the commitment, the Fund may
either resell or repurchase the forward commitment and enter into a new for-
ward commitment, the effect of which is to extend the settlement date. In ad-
dition, the Fund may occasionally close such forward commitments prior to
delivery. Gains and losses are realized upon the closing or cash settlement of
forward commitments.
C. 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 in-
vest independently in repurchase agreements, or transfer uninvested cash bal-
ances 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 re-
quired to maintain the value of the underlying security at not less than the
repurchase proceeds due the Fund.
D. FEDERAL INCOME TAXES-No provision for federal income taxes is required be-
cause the Fund has elected to be taxed as a "regulated investment company" un-
der the Internal Revenue Code and intends to maintain this qualification by
annually distributing all of its taxable net investment income and taxable net
realized capital gains on investments to its shareholders. It is anticipated
that no distributions of capital gains will be made until tax basis capital
loss carryforwards expire or are offset by net realized capital gains.
The net realized capital loss carryforward of approximately $35.8 million
for federal income tax purposes at September 30, 1995 may be utilized to off-
set current or future capital gains until expiration in 2003. Additionally,
approximately $8.4 million of post October losses are being deferred for tax
purposes to the 1996 fiscal year.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
E. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME-Investment transac-
tions are accounted for on the trade date. Realized gains and losses on in-
vestments are determined on the basis of identified cost. Interest income is
accrued daily.
F. DIVIDENDS AND DISTRIBUTIONS-Dividends and distributions to shareholders are
recorded on the record date. The Fund distributes tax basis earnings in accor-
dance with the minimum distribution requirements of the Internal Revenue Code
which may differ from generally accepted accounting principles. Such dividends
or distributions may exceed financial statement earnings.
G. DEBT DISCOUNT AND PREMIUM-For financial reporting purposes, discounts or
premiums are accounted for on the same basis as is used for federal income tax
reporting. Accordingly, original issue discounts on debt securities purchased
are amortized over the life of a security. Premiums on debt securities are not
amortized. Market discounts are recognized at the time of sale as realized
gains for book purposes and ordinary income for tax purposes.
H. ORGANIZATION COSTS-Organization expenses of approximately $15,000 were de-
ferred and are being amortized over a five year period ending September, 1997.
NOTE 2--MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as investment manager of the Fund. Management fees are paid
monthly, based on the average daily net assets of the Fund at an annual rate
of .60%. From time to time, the Adviser may voluntarily elect to reimburse a
portion of the Fund's expenses. Such reimbursement may be discontinued at any
time without prior notice.
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 $3,699 as the Fund's share of the employee
costs attributable to the Fund's accounting officers. A portion of the ac-
counting services expense was paid to the Adviser in reimbursement of person-
nel, facilities and equipment costs attributable to the provision of
accounting services to the Fund. The 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. For the period, the fees for these services aggregated $165,405.
The Fund has been advised that Van Kampen American Capital Distributors,
Inc. (the "Distributor"), an affiliate of the Adviser, received $4,093, as its
portion of the commissions charged on sales of Fund shares during the period.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
Under the Distribution Plans, each class of shares pays up to .25% per annum
of its average net assets to reimburse the Distributor for expenses and serv-
ice fees incurred. Class B and C shares pay an additional distribution fee of
up to .75% per annum of their average net assets to reimburse the Distributor
for its distribution expenses. Actual distribution expenses incurred by the
Distributor for Class B and C shares may exceed the amounts reimbursed to the
Distributor by the Fund. At the end of the period, the unreimbursed expenses
incurred by the Distributor under the Class B and C plans aggregated approxi-
mately $11.0 million and $617,000, respectively, and may be carried forward
and reimbursed through either the collection of the contingent deferred sales
charges from share redemptions or, subject to the annual renewal of the plans,
future Fund reimbursements of distribution fees.
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, the Distributor, and the shareholder service agent.
NOTE 3--INVESTMENT ACTIVITY
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments and forward purchase commitments, were
$564,975,773 and $617,323,086, respectively.
For federal income tax purposes, the identified cost of investments owned at
the end of the period was the same for federal income tax and financial re-
porting purposes. Gross unrealized depreciation of investments aggregated
$3,806,653 and gross unrealized appreciation aggregated $725,484.
At the end of the period, the Fund held the following forward purchase com-
mitments for which delivery was not intended:
<TABLE>
<CAPTION>
Par
Amount Unrealized
(000) Security Market Value Depreciation
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
Government National Mtg Assoc.
$20,000 7.00%, settlement 4/96.................. $ 19,475,000 $ (737,500)
Federal Home Loan Mtg Assoc.
25,000 6.50%, settlement 4/96.................. 23,789,000 (789,125)
10,000 7.00%, settlement 5/96.................. 9,745,300 (304,700)
------------ -----------
$ 53,009,300 $(1,831,325)
------------ -----------
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
At the end of the period, the Fund held the following short U.S. Treasury
Notes futures contracts expiring in June, 1996.
<TABLE>
<CAPTION>
Market Unrealized
Contracts Value Appreciation
- --------------------------------------------------------------------------------
<S> <C> <C>
60 (Five year)........................................ $(6,417,188) $9,557
----------- ------
</TABLE>
NOTE 4--TRUSTEE COMPENSATION
Trustees who are not affiliated with the Adviser are compensated by the Fund
at the annual rate of $1,002 plus a fee of $29 per day for Board meetings at-
tended. During the period, such fees aggregated $8,426.
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 re-
turn 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 $800. During the calendar year 1996,
the Adviser has agreed to reimburse the Fund for these plan expenses.
NOTE 5--CAPITAL
The Fund offers three classes of shares at their respective net asset values
per share, plus a sales charge which is imposed either at the time of purchase
(Class A shares) or at the time of redemption on a contingent deferred basis
(Class B and C shares). All classes of shares have the same rights, except
that Class B and C shares bear the cost of distribution fees and certain other
class specific expenses. Realized and unrealized gains or losses, investment
income and expenses (other than class specific expenses) are allocated daily
to each class of shares based upon the relative proportion of net assets of
each class. Class B and C shares automatically convert to Class A shares six
years and ten years after purchase, respectively, subject to certain condi-
tions.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
The Fund has an unlimited number of shares of $.01 par value beneficial in-
terest authorized. Transactions in shares of beneficial interest were as fol-
lows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1996 September 30, 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold
Class A................................ 386,313 1,088,787
Class B................................ 657,266 1,628,971
Class C................................ 179,555 550,021
---------- -----------
1,223,134 3,267,779
---------- -----------
Shares issued for distributions rein-
vested
Class A................................ 99,811 277,298
Class B................................ 268,628 725,355
Class C................................ 45,050 136,641
---------- -----------
413,489 1,139,294
---------- -----------
Shares redeemed
Class A................................ (2,247,916) (2,204,895)
Class B................................ (3,783,364) (6,211,959)
Class C................................ (847,810) (1,929,164)
---------- -----------
(6,879,090) (10,346,018)
---------- -----------
Decrease in shares outstanding.......... (5,242,467) (5,938,945)
---------- -----------
</TABLE>
18
<PAGE>
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Limited Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-341-2911 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
19
<PAGE>
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
BOARD OF TRUSTEES
J. MILES BRANAGAN
LINDA HUTTON HEAGY
ROGER HILSMAN
R. CRAIG KENNEDY
DENNIS J. MCDONNELL
DONALD C. MILLER
JACK E. NELSON
DON G. POWELL
JEROME L. ROBINSON
FERNANDO SISTO*
WAYNE W. WHALEN
WILLIAM S. WOODSIDE
*Chairman of the Board
OFFICERS
DON G. POWELL
President and Chief Executive Officer
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. HEGEL
ROBERT C. PECK, JR.
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 SERVICE AGENT
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK AND TRUST CO.
225 Franklin Street
Boston, Massachusetts 02110
LEGAL COUNSEL
SKADDEN, ARPS, SLATE
MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
(C) Van Kampen American Capital Distributors, Inc., 1996
All rights reserved.
SM denotes a service mark of
Van Kampen American Capital Distributors, Inc.
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors un-
less it has been preceded or is accompanied by an effective prospectus of the
Fund which contains additional information on how to purchase shares, the
sales charge, and other pertinent data.
20
