<PAGE>
VAN KAMPEN
AGGRESSIVE EQUITY FUND
DISTRIBUTED BY VAN KAMPEN FUNDS INC.
SEMI-ANNUAL REPORT
DECEMBER 31, 1998
<PAGE>
VAN KAMPEN AGGRESSIVE EQUITY FUND
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Letter to Shareholders................................................ 1
Investment Overview................................................... 3
Portfolio of Investments.............................................. 7
Statement of Assets and Liabilities................................... 8
Statement of Operations............................................... 9
Statement of Changes in Net Assets.................................... 10
Financial Highlights ................................................. 11
Notes to Financial Statements......................................... 12
</TABLE>
MSAE SAR 2/99
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
January 20, 1999
Dear Shareholder,
The past decade has been a remarkable time for investors. Together, we've
witnessed one of the greatest bull markets in investment history, unprecedented
growth in mutual fund investing, and a surge in personal retirement planning.
The coming millennium promises to hold even more opportunities.
To lead us into this new era of investing, Richard F. Powers III has joined Van
Kampen as Chairman and Chief Executive Officer. He comes to us from our parent
company, Morgan Stanley Dean Witter & Co., where he served as Executive Vice
President and Director of Marketing. He brings 27 years of experience in the
financial services industry, including an extensive background in product
management, strategic planning and brand development.
Although former Chairman Don G. Powell retired on January 1, he will remain
active in the industry and the community. Mr. Powell plans to continue his
service as a member of the board of directors of the Investment Company
Institute, the leading mutual fund industry association, and he will remain a
trustee of your fund.
ECONOMIC OVERVIEW
Despite a stormy year in the global economy, the United States ended 1998 with
only a moderate slowdown in growth. The nation's gross domestic product, a
measure of economic health, grew 3.9 percent during the year, matching 1997's
growth rate and indicating that our nation's economy remains strong. A
continuation of low inflation--only a 1.6 percent increase in the consumer price
index over the last 12 months--also helped sustain the domestic economy and kept
inflation-adjusted interest rates attractive.
Although the year ended on a positive note, the economic environment was quite
unsettled in the third quarter, with the Asian financial crisis contributing to
slowing corporate profits in the United States. Given the uncertainty
surrounding emerging market nations and the near-collapse of a major U.S. hedge
fund, the stock and bond markets experienced significant volatility during this
period. With instability as a backdrop, American and foreign investors alike
pursued a flight to quality--seeking the relative safety of large-company stocks
and government bonds.
In the last few months of the year the global financial situation improved in
conjunction with the Federal Reserve's interest rate decreases. In response to
declining corporate profits and mounting international concerns, the Fed lowered
interest rates three times, with 0.25 percent cuts in September, October, and
November. These rate cuts, coupled with a wave of corporate mergers and
cost-cutting measures, lent the support needed to keep the economy growing.
Dozens of foreign central banks also reduced interest rates in an effort to
stimulate their economies. These actions gave a boost to investor confidence and
encouraged a return to a more diversified range of investments in the last few
months of the year.
MARKET REVIEW
Despite bouts of volatility, the stock market experienced impressive returns
during 1998. Large-company stocks were responsible for much of this as investors
favored the perceived stability of established, high-quality companies. The Dow
Jones Industrial Average rose more than 16 percent during the year and hit a
record high of 9374 in November before falling back to more moderate levels.
Technology companies generally fared well during the year, with the
technology-heavy Nasdaq composite index up almost 40 percent for the year. On
the other hand, commodity-based stocks--especially those of oil companies--
suffered from declining commodity prices. Small-company stocks also
significantly underperformed the rest of the market, with the Russell 2000 Stock
Index actually losing 3.45 percent during the 12-month period.
OUTLOOK
Our outlook for the domestic economy is positive, and we anticipate continued
low inflation and healthy economic growth. However, the aftereffects of the
global economic slowdown may continue to put pressure on corporate earnings in
the first half of the year. Internationally, we anticipate that low interest
rates and declining inflation will lead to improvements in troubled areas such
as Asia and Latin America. With the successful launch of the euro, the new
European transnational currency, we believe that many foreign markets will
become increasingly attractive in 1999.
In the long term, we are optimistic that the stock market will continue its
record growth, although we could experience additional volatility in the months
ahead if concerns about high stock valuations and increasing earnings pressure
become more pronounced. Combined with growing questions about corporate and
government reactions to the Year 2000 computer problem, we could see an
increasingly cautious market by mid-year.
------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Additional details about your fund, including an investment overview section
with your portfolio management team, are provided in this report. As always, we
are pleased to have the opportunity to share with you the progress of your
investment.
Sincerely,
<TABLE>
<S> <C>
/s/ Richard F. Powers III /s/ Dennis J. McDonnell
Richard F. Powers III Dennis J. McDonnell
Chairman President
Van Kampen Investment Advisory Corp. Van Kampen Investment Advisory Corp.
</TABLE>
- --------------
2
<PAGE>
VAN KAMPEN
AGGRESSIVE EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT OVERVIEW
(UNAUDITED)
COMPOSITION OF NET ASSETS (AT DECEMBER 31, 1998)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Goods 6.8%
Communication Services 13.3%
Consumer Cyclicals 15.4%
Consumer Staples 27.4%
Financial 16.9%
Health Care 6.0%
Technology 7.3%
Utilities 5.0%
Short Term Investment 1.9%
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURNS**
------------------------------------------------------------------------------
SIX MONTHS AVERAGE ANNUAL
---------------------- ONE YEAR SINCE INCEPTION
WITHOUT -------------------------- --------------------------
WITH SALES SALES WITH SALES WITHOUT WITH SALES WITHOUT
CHARGE* CHARGE CHARGE* SALES CHARGE CHARGE* SALES CHARGE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares -4.25 % 1.59 % 7.45 % 14.02 % 24.93 % 27.41 %
- ------------------------------------------------------------------------------------------------------
Class B Shares -3.36 % 1.27 % 8.18 % 13.18 % 25.90 % 26.53 %
- ------------------------------------------------------------------------------------------------------
Class C Shares 0.34 % 1.26 % 12.19 % 13.19 % 26.49 % 26.49 %
- ------------------------------------------------------------------------------------------------------
Lipper Capital
Appreciation Index N/A 4.62 % N/A 19.99 % N/A 18.19 %
- ------------------------------------------------------------------------------------------------------
S&P 500 Index N/A 9.22 % N/A 28.57 % N/A 27.95 %
- ------------------------------------------------------------------------------------------------------
</TABLE>
* The returns above are calculated using the applicable sales charge for Class
A shares and the applicable deferred sales charge for Class B and Class C
shares.
** Total returns for the Fund reflect expenses waived and reimbursed, if
applicable, by the Adviser. Without such waivers and reimbursements, total
returns would be lower.
THE LIPPER CAPITAL APPRECIATION FUND INDEX IS A COMPOSITE OF MUTUAL FUNDS
MANAGED FOR MAXIMUM CAPITAL GAINS. THE S&P 500 INDEX IS AN UNMANAGED INDEX OF
COMMON STOCKS. THE S&P 500 INDEX ASSUMES DIVIDENDS ARE REINVESTED.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
PERCENT OF
SECURITY INDUSTRY NET ASSETS
- --------------------------- ----------------- --------------
<S> <C> <C>
Loews Corp. Insurance 7.1%
(Multi-Line)
Tele-Communications Broadcasting 5.8%
Liberty Media Group 'A' (TV, Radio &
Cable)
SFX Entertainment, Inc. 'A' Entertainment 5.4%
Nielsen Media Research Services 5.1%
(Commercial &
Consumer)
Montana Power Co. Electric 5.0%
Companies
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SECTORS
VALUE PERCENT OF
SECTOR (000) NET ASSETS
- ---------------- --------- -------------
<S> <C> <C>
Consumer Staples $ 63,486 27.4%
Financial 39,159 16.9%
Consumer
Cyclicals 35,599 15.4%
Communication
Services 30,655 13.3%
Technology 16,902 7.3%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE PERFORMANCE RESULTS PROVIDED IN THIS OVERVIEW ARE FOR INFORMATIONAL PURPOSES
ONLY AND SHOULD NOT BE CONSTRUED AS A GUARANTEE OF THE FUND'S FUTURE
PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.The Van Kampen Aggressive Equity Fund seekslong-term capital appreciation
by investing primarily in a concentrated portfolio of equity securities of
predominantly U.S. corporations. The portfolio tends to hold between 30 and 40
issues (we held 34 securities as of December 31(st)), and we have the ability to
invest up to 25 percent of the Fund's total assets in a single security when our
conviction is very strong.
PERFORMANCE
While our returns for the semi-annual period ending December 31, 1998, were
disappointing, we were encouraged by our return in the fourth quarter. For the
quarter, the Fund's Class A shares at net asset value (NAV) returned 25.50
percent versus 21.26 percent for the Standard & Poor's 500 Index and 22.14
percent for the Lipper Capital Appreciation Fund Index. The S&P 500 Index is a
broad-based, unmanaged index that reflects the general performance of the stock
market, and the Lipper Capital Appreciation Fund Index reflects the average
performance of the 30 largest capital appreciation funds.
For the six month period ended December 31, 1998, the Fund's Class A Shares at
NAV returned 1.59 percent versus 9.22 percent for the S&P 500 Index and 4.62
percent for the Lipper Capital Appreciation Fund Index. The Fund's strong
performance in the fourth quarter was not enough to offset the negative
performance caused mainly by stocks such as Ingram Micro Inc. and Continental
Airlines for the period.
3------------------
<PAGE>
VAN KAMPEN
AGGRESSIVE EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT OVERVIEW
(CONT.)
(UNAUDITED)
MARKET OVERVIEW
The six-month reporting period was a volatile one for the stock market in
general. It began the reporting period on a high note with the Dow Jones
Industrial Average setting a then-record high on July 17. By August 31, in
response to fears of earnings problems resulting from exposure to lagging
international economies, the Dow had fallen 19 percent from its high. But
inflation remained tame, enabling the Federal Reserve Board to lower interest
rates in September and then again in October and November. By October, companies
began to report better-than-expected third-quarter earnings. The volatile stock
market began to rise again, with the Dow setting a new record in November before
declining modestly from its high by year-end.
STRATEGY
At year-end our largest position was Loews Corporation, which represented 7.1
percent of the portfolio. The 10 largest holdings accounted for 48 percent of
the Fund's assets. Our top 10 holdings as of December 31, 1998, were as follows:
<TABLE>
<CAPTION>
COMPANY % COMPANY %
- ------------------------------------------- --------- ------------------------------------------- ---------
<S> <C> <C> <C>
Loews Corp. 7.1 Clear Channel Communications, Inc. 4.3
Tele-Communications
Liberty Media Group 'A' 5.8 Associated Group, Inc. 'B' 4.2
SFX Entertainment, Inc. 'A' 5.4 USA Networks, Inc. 4.2
Nielsen Media Research 5.1 NTL, Inc. 3.8
Montana Power Co. 5.0 Genzyme Corp. 3.7
</TABLE>
The 48 percent weighting in our top 10 positions is much more concentrated than
most U.S. equity portfolios, but it is fairly typical for the Fund. Since the
Fund's inception in January 1996, the top 10 holdings have tended to account for
between 50 and 75 percent of assets. Our belief is that heavy concentration may
lead to greater than average volatility but not necessarily greater-than-average
risk. To us, risk is synonymous with lack of knowledge, which our strategy of
"seeking the information edge" attempts to avoid. We believe the ability to
concentrate the portfolio has been one of the primary contributors to our strong
performance in the past, and we remain committed to the strategy of
"opportunistic concentration" despite disappointing second- and third-quarter
1998 performance.
The portfolio is a balance of well-known names and less-traditional growth
opportunities. Loews, the Tisch-family holding company is our largest position
and offers a unique combination of growth and value characteristics. First, the
stock is compelling based on sum-of-the-parts valuation. With holdings in
tobacco, insurance (CNA Financial Corp.), offshore drilling (Diamond Offshore),
hotels, and cash, the company has been compounding book value at 15 percent for
more than a decade. Management has recently begun to repurchase stock again.
Loews is one of the more defensive holdings in our portfolio. However, given
positive company dynamics we expect it to perform well in a variety of stock
market conditions. We see a potential tobacco sale/spin-off as a catalyst to
move the stock towards its $140-plus underlying asset value over the next 12
months. The recently announced BAT/Rothmans transaction could highlight this
value.
We build the Fund's portfolio stock by stock, and sector allocation results from
the stock-selection process. That said, however, sector overweightings or
underweightings may result from our bottom-up process. A theme that emerged in
the latter half of the year was an overweighting in cable/media/ telephony. Our
intense research identified opportunities in Liberty Media, AT&T, Tele-
Communications Inc, SFX Entertainment, Clear Channel Communications, Chancellor
Media, Associated Group (A and B shares), Nielsen Media, Outdoor Systems, United
Video Satellite, and USA Networks. Montana Power is a utility that is, in part,
a telecommunications holding. In total, these securities accounted for about 46
percent of the portfolio.
Our largest position in this broad communications category is Liberty Media, a
portfolio of properties including the programming assets of Tele-Communications
Inc. Among Liberty's major investments are 57 million shares of Time Warner, a
49 percent interest in the Discovery Channel, a 43 percent interest in the QVC
shopping channel, and approximately 70 million shares in USA Networks. Liberty's
management has a long and accomplished track record for creating substantial
- -------------- 4
<PAGE>
VAN KAMPEN
AGGRESSIVE EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT OVERVIEW
(CONT.)
(UNAUDITED)
value. With the substantial liquidity for Liberty now being created as a result
of the AT&T/Tele-Communications merger, it now appears likely that substantial
additional asset value will be created.
SFX Entertainment is consolidating the fragmented live-entertainment industry,
which includes production, promotion, and venue operations. The company has
attained economies of scale and a platform or "network" to exploit the annual
audiences of more than 25 million people who attend SFX-managed events. Further,
corporate sponsorships and venue-naming rights we believe will provide for
financial results in excess of expectations. We expect SFX to meaningfully
improve operating margins, primarily through revenue growth, but also by
realizing cost synergies. With the stock at approximately 33 times after-tax
cash flow per share for 1998, we believe the stock will continue to outperform.
Montana Power represents an interesting play on the increasing need for
broadband capacity as a result of the explosion in demand for telecommunications
and Internet services. In addition to its traditional power-generation and
energy services, the company is currently building a 3,000-mile fiber optic
broadband network through its Touch America telecom subsidiary. We believe that
the market is not fully recognizing the value of the firm's telecommunications
business but should begin to as telecom becomes an increasingly important
earnings generator and as telecom service firms continue to prepay for future
capacity on Montana Power's network.
Clear Channel Communications, another large holding in the Fund, continues to
consolidate properties in the radio, television, and outdoor advertising
businesses and is becoming one of the dominant players in global media. The
company's most recent acquisition of Jacor Communications is scheduled to close
in the third quarter of 1999. In addition to adding to after-tax cash flow per
share, this acquisition represents a potentially powerful long-term strategic
combination. Clear Channel has been one of the best-performing stocks in the S&P
500 over the past several years. We expect the stock to continue to beat
consensus estimates as the company's strong management team consolidates an
industry with powerful trends. While some investors are concerned about the
Internet taking advertising dollars from more traditional media, we believe that
the lack of barriers to entry on the Internet will force new companies to use
traditional media to bring viewers to their Web sites. We remain overweighted in
the broadcasting/cable group with additional exposure to Chancellor Media,
Comcast, Time Warner, and AT&T.
Nielsen Media is the leading provider of television-rating services in the
United States and Canada. The company serves national and local customers,
including television networks and affiliates, independent stations, syndicates,
cable networks, cable systems, advertisers, and their agencies. We continue to
view these shares as undervalued given the firm's monopoly position in its core
business.
AT&T is at one of those rare moments in a company's history when it is
transforming itself from a mature slow-growth company into a more acknowledged
growth company. Chief executive Mike Armstrong is using the cash flow from the
mature long distance business to enter into high-growth businesses such as the
Internet, broadband, and wireless communications. Combining our position in
Tele-Communications Inc. with AT&T, we now hold about an 8 percent position in
the company.
OUTLOOK
We plan to continue investing in those companies our research determines have
the most likely prospects for success. In the near term, because of the
continued volatility of markets and possible economic slowdown, we expect that
the "classic" large-cap growth names may be the beneficiaries of investor
uncertainty.
We readily admit that we don't know what the next market will bring. Because
investing is uncertain by nature, we seek to increase our familiarity with what
we own. To us, risk is not doing enough homework about a company in which we
invest. Despite what may well be a volatile climate in 1999, part of the reason
we can approach the year with confidence is because we rely on our dedicated
5------------------
<PAGE>
VAN KAMPEN
AGGRESSIVE EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT OVERVIEW
(CONT.)
(UNAUDITED)
research staff to help us determine which investments we believe will enhance
the Fund's performance. Not all of our investments will turn out as we hope, of
course, but our discipline is designed to make the disappointments as small as
possible.
<TABLE>
<S> <C>
Philip Friedman Bill Auslander
PORTFOLIO MANAGER PORTFOLIO MANAGER
</TABLE>
- -------------- 6
<PAGE>
VAN KAMPEN
AGGRESSIVE EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<C> <S> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS (98.1%)
CAPITAL GOODS (6.8%)
METAL FABRICATORS (3.3%)
(a)447,800 CommScope, Inc................................... $ 7,529
--------
OFFICE EQUIPMENT & SUPPLIES (3.5%)
123,900 Pitney Bowes, Inc................................ 8,185
--------
TOTAL CAPITAL GOODS............................................. 15,714
--------
COMMUNICATION SERVICES (13.3%)
TELECOMMUNICATIONS (CELLULAR/WIRELESS) (11.3%)
(a)108,100 Associated Group, Inc., 'A'...................... 4,648
(a)228,400 Associated Group, Inc., 'B'...................... 9,707
(a)43,800 Cellular Communications International, Inc....... 2,979
(a)155,500 NTL, Inc......................................... 8,776
--------
26,110
--------
TELECOMMUNICATIONS (LONG DISTANCE) (2.0%)
60,400 American Telephone & Telegraph Co................ 4,545
--------
TOTAL COMMUNICATION SERVICES.................................... 30,655
--------
CONSUMER CYCLICALS (15.4%)
GAMING, LOTTERY & PARIMUTUEL COMPANIES (0.7%)
(a)97,900 Harrah's Entertainment, Inc...................... 1,536
--------
RETAIL (SPECIALTY) (4.8%)
(a)111,000 Abercrombie & Fitch Co. 'A'...................... 7,853
58,250 Gap, Inc......................................... 3,277
--------
11,130
--------
RETAIL (SPECIALTY/APPAREL) (0.8%)
(a)115,900 Toys `R' Us, Inc................................. 1,956
--------
RETAIL (COMPUTERS & ELECTRONICS) (2.5%)
114,400 Circuit City Stores-Circuit City Group........... 5,713
--------
SERVICES (ADVERTISING/MARKETING) (1.5%)
(a)113,900 Outdoor Systems, Inc............................. 3,417
--------
SERVICES (COMMERCIAL & CONSUMER) (5.1%)
658,196 Nielsen Media Research........................... 11,847
--------
TOTAL CONSUMER CYCLICALS........................................ 35,599
--------
CONSUMER STAPLES (27.4%)
BROADCASTING (TV, RADIO & CABLE) (20.8%)
(a)93,300 Chancellor Media Corp., 'A'...................... 4,467
183,900 Clear Channel Communications, Inc................ 10,022
(a)127,200 Tele-Communications, Inc., 'A'................... 7,036
(a)289,600 Tele-Communications Liberty Media Group 'A'...... 13,340
(a)165,700 United Video Satellite Group, Inc. 'A'........... 3,915
(a)280,800 USA Networks, Inc................................ 9,301
--------
48,081
--------
ENTERTAINMENT (5.4%)
(a)227,600 SFX Entertainment, Inc. 'A'...................... 12,490
--------
FOODS (1.2%)
(a)59,500 U.S. Foodservice, Inc............................ 2,915
--------
TOTAL CONSUMER STAPLES.......................................... 63,486
--------
FINANCIAL (16.9%)
INSURANCE (LIFE & HEALTH) (2.9%)
108,600 Reinsurance Group of America, Inc................ 6,598
--------
<CAPTION>
VALUE
SHARES (000)
<C> <S> <C>
- ----------------------------------------------------------------------------
INSURANCE (MULTI-LINE) (10.3%)
154,200 American Bankers Insurance Group, Inc............ $ 7,459
167,600 Loews Corp....................................... 16,467
--------
23,926
--------
INSURANCE (PROPERTY--CASUALTY) (3.7%)
158,000 Cincinnati Financial Corp........................ 5,787
11,500 General RE Corp.................................. 2,848
--------
8,635
--------
TOTAL FINANCIAL................................................. 39,159
--------
HEALTH CARE (6.0%)
HEALTH CARE (DRUGS--GENERIC & OTHERS) (6.0%)
(a)71,500 Amgen, Inc....................................... 7,476
(a)120,800 Forest Laboratories, Inc. 'A'.................... 6,425
(a)6 Genzyme Molecular Oncology....................... --
--------
13,901
--------
TECHNOLOGY (7.3%)
BIOTECHNOLOGY (3.7%)
(a)170,300 Genzyme Corp..................................... 8,472
--------
COMPUTERS (HARDWARE) (1.6%)
89,600 Compaq Computer Corp............................. 3,758
--------
COMPUTERS (NETWORKING) (1.8%)
(a)92,300 3Com Corp........................................ 4,136
--------
COMPUTERS (SOFTWARE & SERVICES) (0.2%)
(b) 3,700 America Online, Inc.............................. 536
--------
TOTAL TECHNOLOGY................................................ 16,902
--------
UTILITIES (5.0%)
ELECTRIC COMPANIES (5.0%)
206,500 Montana Power Co................................. 11,680
--------
TOTAL COMMON STOCKS (COST $187,288)............................. 227,096
--------
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
(000)
<C> <S> <C>
- ------------------------------------------------------------------
SHORT-TERM INVESTMENT (1.9%)
REPURCHASE AGREEMENT (1.9%)
$ 4,459 Chase Securities, Inc., 4.45%, dated 12/31/98,
due 1/4/99, to be repurchased at $4,461,
collateralized by $3,265 U.S. Treasury Bonds,
10.375%, due 11/15/12, valued at $4,571 (COST
$4,459)........................................ 4,459
--------
TOTAL INVESTMENTS (100.0%) (COST $191,747 )....................... 231,555
LIABILITIES IN EXCESS OF OTHER ASSETS (0.0%)...................... (94)
--------
NET ASSET (100%).................................................. $231,461
--------
--------
</TABLE>
- ---------------
(a) -- Non-income producing security
(b) -- Security valued at fair value -- see note A-1 to financial statements.
-----------------------
7
The accompanying notes are an integral part of the financial statements.
<PAGE>
VAN KAMPEN AGGRESSIVE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
(000)
<S> <C>
- --------------------------------------------------------
ASSETS:
Investments in Securities, at Value
(Investments at Cost $191,747) $ 231,555
Receivable for:
Investments Sold 1,703
Fund Shares Sold 121
Dividends 49
Interest 1
Deferred Organizational Costs 20
Other 82
--------
Total Assets 233,531
--------
LIABILITIES:
Payable for:
Investments Purchased 962
Fund Shares Redeemed 465
Distribution Fees 285
Investment Advisory Fees 129
Custody Fees 63
Administrative Fees 46
Shareholder Reporting Expenses 46
Transfer Agent Fees 38
Professional Fees 17
Filing and Registration Fees 10
Directors' Fees and Expenses 7
Other 2
--------
Total Liabilities 2,070
--------
NET ASSETS $ 231,461
--------
--------
NET ASSETS CONSIST OF:
Capital Stock at Par $ 12
Paid in Capital in Excess of Par 227,294
Accumulated Net Investment Loss (1,194)
Accumulated Net Realized Loss (34,459)
Unrealized Appreciation on
Investments 39,808
--------
NET ASSETS $ 231,461
--------
--------
CLASS A SHARES:
Net Assets $ 61,569
Shares Issued and Outstanding
($.001 par value) (Authorized
2,625,000,000) 3,309
Net Asset Value and Redemption
Price Per Share (Based on Net
Assets of $61,568,534 and
3,309,445 Shares Outstanding) $ 18.61
--------
--------
Maximum Sales Charge 5.75%
Maximum Offering Price Per Share
(Net Asset Value Per Share X 100/
(100 - maximum sales charge)) $ 19.75
--------
--------
CLASS B SHARES:
Net Assets $ 145,519
Shares Issued and Outstanding
($.001 par value) (Authorized
2,625,000,000) 8,002
Net Asset Value and Offering Price
Per Share (Based on Net Assets of
$145,519,314 and 8,002,405 Shares
Outstanding)* $ 18.19
--------
--------
CLASS C SHARES:
Net Assets $ 24,373
Shares Issued and Outstanding
($.001 par value) (Authorized
2,625,000,000) 1,341
Net Asset Value and Offering Price
Per Share (Based on Net Assets of
$24,372,807 and 1,341,200 Shares
Outstanding)* $ 18.18
--------
--------
</TABLE>
- ---------------
* Redemption price may be subject to a contingent deferred sales charge.
- ------------------
8
The accompanying notes are an integral part of the financial statements.
<PAGE>
VAN KAMPEN AGGRESSIVE EQUITY FUND
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
(000)
<S> <C>
- --------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 728
Interest 244
--------
Total Income 972
--------
EXPENSES:
Investment Advisory Fees 954
Less: Fees Waived (151)
--------
Net Investment Advisory Fees 803
Distribution Fees
Class A 74
Class B 646
Class C 117
Administrative Fees 267
Custodian Fees 63
Filing and Registration Fees 56
Transfer Agent Fees 54
Shareholder Reports 43
Professional Fees 28
Directors' Fees and Expenses 2
Amortization of Organizational
Costs 4
Other 5
--------
Net Expenses 2,162
--------
Net Investment Loss (1,190)
--------
NET REALIZED GAIN (LOSS) ON:
Investments (30,296)
Securities Sold Short (176)
--------
Net Realized Loss (30,472)
--------
CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION ON:
Investments 33,685
--------
Net Realized Loss and Change in
Unrealized
Appreciation/Depreciation 3,213
--------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,023
--------
--------
</TABLE>
-----------------------
9
The accompanying notes are an integral part of the financial statements.
<PAGE>
VAN KAMPEN AGGRESSIVE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, 1998 YEAR ENDED
(UNAUDITED) JUNE 30, 1998
(000) (000)
<S> <C> <C>
- ---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Loss $ (1,190) $ (1,097)
Net Realized Gain (Loss) (30,472) 23,029
Change in Unrealized Appreciation/Depreciation 33,685 2,644
---------- ---------------
Net Increase in Net Assets Resulting from
Operations 2,023 24,576
---------- ---------------
DISTRIBUTIONS:
Net Realized Gain:
Class A (4,959) (3,187)
Class B (11,754) (5,696)
Class C (2,021) (1,157)
---------- ---------------
Net Decrease in Net Assets Resulting from
Distributions (18,734) (10,040)
---------- ---------------
CAPITAL SHARE TRANSACTIONS (1):
Subscribed 58,860 171,376
Distributions Reinvested 17,353 9,563
Redeemed (47,445) (42,384)
---------- ---------------
Net Increase in Net Assets Resulting from
Capital Share Transactions 28,768 138,555
---------- ---------------
Total Increase in Net Assets 12,057 153,091
NET ASSETS--Beginning of Period 219,404 66,313
---------- ---------------
NET ASSETS--End of Period (Including accumulated
(undistributed) net investment loss of $(1,194)
and $(4), respectively) $ 231,461 $219,404
---------- ---------------
---------- ---------------
- ---------------------------------------------------------------------------------------
Capital Share Transactions:
(1) Class A:
---------------------
Shares:
Subscribed 988 3,038
Distributions Reinvested 266 177
Redeemed (1,145) (1,340)
---------- ---------------
Net Increase in Class A Shares Outstanding 109 1,875
---------- ---------------
---------- ---------------
Dollars:
Subscribed $ 18,131 $ 59,406
Distributions Reinvested 4,595 3,064
Redeemed (20,075) (26,003)
---------- ---------------
Net Increase $ 2,651 $ 36,467
---------- ---------------
---------- ---------------
Ending Paid in Capital $ 59,114 $ 56,463
---------- ---------------
---------- ---------------
Class B:
---------------------
Shares:
Subscribed 1,870 4,818
Distributions Reinvested 650 314
Redeemed (1,152) (539)
---------- ---------------
Net Increase in Class B Shares Outstanding 1,368 4,593
---------- ---------------
---------- ---------------
Dollars:
Subscribed $ 33,110 $ 92,956
Distributions Reinvested 10,965 5,363
Redeemed (19,367) (10,091)
---------- ---------------
Net Increase $ 24,708 $ 88,228
---------- ---------------
---------- ---------------
Ending Paid in Capital $ 144,800 $120,092
---------- ---------------
---------- ---------------
Class C:
---------------------
Shares:
Subscribed 434 982
Distributions Reinvested 106 67
Redeemed (464) (343)
---------- ---------------
Net Increase in Class C Shares Outstanding 76 706
---------- ---------------
---------- ---------------
Dollars:
Subscribed $ 7,619 $ 19,014
Distributions Reinvested 1,793 1,136
Redeemed (8,003) (6,290)
---------- ---------------
Net Increase $ 1,409 $ 13,860
---------- ---------------
---------- ---------------
Ending Paid in Capital $ 23,392 $ 21,983
---------- ---------------
---------- ---------------
- ---------------------------------------------------------------------------------------
</TABLE>
- --------------
10
The accompanying notes are an integral part of the financial statements.
<PAGE>
VAN KAMPEN AGGRESSIVE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------- -----------------
SIX MONTHS ENDED YEAR ENDED JUNE 30, SIX MONTHS ENDED
DECEMBER 31, 1998 ------------------- JANUARY 2, 1996* DECEMBER 31, 1998
SELECTED PER SHARE DATA AND RATIOS (UNAUDITED) 1998# 1997 TO JUNE 30, 1996 (UNAUDITED)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 20.01 $ 16.98 $ 14.40 $ 12.00 $ 19.67
------- ------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.05) (0.07) 0.01 0.06 (0.10)
Net Realized and Unrealized Gain 0.24 5.03 3.95 2.40 0.21
------- ------- ------- ------- --------
Total From Investment Operations 0.19 4.96 3.96 2.46 0.11
------- ------- ------- ------- --------
DISTRIBUTIONS
Net Investment Income -- -- (0.03) (0.06) --
Net Realized Gain (1.59) (1.93) (1.35) -- (1.59)
------- ------- ------- ------- --------
Total Distributions (1.59) (1.93) (1.38) (0.06) (1.59)
------- ------- ------- ------- --------
NET ASSET VALUE, END OF PERIOD $ 18.61 $ 20.01 $ 16.98 $ 14.40 $ 18.19
------- ------- ------- ------- --------
------- ------- ------- ------- --------
TOTAL RETURN (1) 1.59% 30.93% 28.93% 20.52% 1.27%
------- ------- ------- ------- --------
------- ------- ------- ------- --------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's) $ 61,569 $64,035 $22,521 $ 5,382 $ 145,519
Ratio of Expenses to Average Net
Assets 1.50%** 1.50% 1.57% 2.03%** 2.25%**
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.58)%** (0.37)% (0.04)% 1.22%** (1.33)%**
Portfolio Turnover Rate 182% 308% 241% 204% 182%
- -------------------------------------------------------------------------------------------------------------------------------
Effect of Voluntary Expense
Limitation During the Period
Per Share Benefit to Net Investment
Income $ 0.01 $ 0.04 $ 0.22 $ 0.06 $ 0.01
Ratios Before Expense Limitation:
Expenses to Average Net Assets 1.64%** 1.71% 2.38% 3.26%** 2.39%**
Net Investment Income (Loss) to
Average Net Assets (0.72)%** (0.59)% (0.85)% (0.01)%** (1.47)%**
Ratio of Expenses to Average Net
Assets excluding dividend expense
on securities sold short 1.50%** 1.50% 1.50% 1.50%** 1.50%**
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED JUNE 30,
-------------------- JANUARY 2, 1996*
SELECTED PER SHARE DATA AND RATIOS 1998# 1997 TO JUNE 30, 1996
<S> <C> <C> <C>
- -------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.85 $ 14.38 $ 12.00
-------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.21) (0.02) 0.03
Net Realized and Unrealized Gain 4.96 3.86 2.39
-------- ------- -------
Total From Investment Operations 4.75 3.84 2.42
-------- ------- -------
DISTRIBUTIONS
Net Investment Income -- (0.02) (0.04)
Net Realized Gain (1.93) (1.35) --
-------- ------- -------
Total Distributions (1.93) (1.37) (0.04)
-------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 19.67 $ 16.85 $ 14.38
-------- ------- -------
-------- ------- -------
TOTAL RETURN (1) 29.94% 28.01% 20.18%
-------- ------- -------
-------- ------- -------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's) $130,497 $34,382 $ 2,426
Ratio of Expenses to Average Net
Assets 2.25% 2.32% 2.67%**
Ratio of Net Investment Income (Loss)
to Average Net Assets (1.11)% (0.83)% 0.43%**
Portfolio Turnover Rate 308% 241% 204%
- -------------------------------------------------------------------------------------------------------
Effect of Voluntary Expense
Limitation During the Period
Per Share Benefit to Net Investment
Income $ 0.04 $ 0.02 $ 0.07
Ratios Before Expense Limitation:
Expenses to Average Net Assets 2.47% 2.88% 3.79%**
Net Investment Income (Loss) to
Average Net Assets (1.34)% (1.43)% (0.69)%**
Ratio of Expenses to Average Net
Assets excluding dividend expense
on securities sold short 2.25% 2.25% 2.25%**
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------
YEAR ENDED JUNE
SIX MONTHS ENDED 30,
DECEMBER 31, 1998 ------------------ JANUARY 2, 1996*
SELECTED PER SHARE DATA AND RATIOS (UNAUDITED) 1998# 1997 TO JUNE 30, 1996
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 19.66 $ 16.83 $14.37 $ 12.00
------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.11) (0.21) (0.06) 0.03
Net Realized and Unrealized Gain 0.22 4.97 3.89 2.38
------- ------- ------ ------
Total From Investment Operations 0.11 4.76 3.83 2.41
------- ------- ------ ------
DISTRIBUTIONS
Net Investment Income -- -- (0.02) (0.04)
Net Realized Gain (1.59) (1.93) (1.35) --
------- ------- ------ ------
Total Distributions (1.59) (1.93) (1.37) (0.04)
------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 18.18 $ 19.66 $16.83 $ 14.37
------- ------- ------ ------
------- ------- ------ ------
TOTAL RETURN (1) 1.26% 29.90% 28.04% 20.10%
------- ------- ------ ------
------- ------- ------ ------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's) $ 24,373 $24,872 $9,410 $ 2,582
Ratio of Expenses to Average Net
Assets 2.25%** 2.25% 2.32% 2.67%**
Ratio of Net Investment Income (Loss)
to Average Net Assets (1.33)%** (1.13)% (0.77)% 0.44%**
Portfolio Turnover Rate 182% 308% 241% 204%
- --------------------------------------------------------------------------------------------------------
Effect of Voluntary Expense
Limitation During the Period
Per Share Benefit to Net Investment
Income $ 0.01 $ 0.04 $ 0.07 $ 0.07
Ratios Before Expense Limitation:
Expenses to Average Net Assets 2.39%** 2.25% 3.23% 3.80%**
Net Investment Income (Loss) to
Average Net Assets (1.47)%** (1.35)% (1.67)% (0.69)%**
Ratio of Expenses to Average Net
Assets excluding dividend expense
on securities sold short 2.25%** 2.25% 2.25% 2.25%**
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations
** Annualized
(1) Total return is calculated exclusive of sales charges or deferred
sales charges. Total returns for periods of less than one year are not
annualized.
# Net investment income and capital changes per share are based upon
monthly average shares outstanding.
-----------------------
11
The accompanying notes are an integral part of the financial statements.
<PAGE>
VAN KAMPEN AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
The Van Kampen Aggressive Equity Fund (the "Fund") is organized as a Maryland
Corporation and is registered under the Investment Company Act of 1940, as
amended. The Fund is a portfolio of the Van Kampen Series Fund, Inc. The Fund
commenced operations on January 2, 1996.
The Fund currently offers three classes of shares, Class A, Class B, and Class C
Shares. Class A shares are sold with a front-end sales charge of up to 5.75%.
For certain purchases of Class A shares, the front-end sales charge may be
waived and a contingent deferred sales charge of 1.00% imposed in the event of
certain redemptions within one year of the purchase. Class B shares are sold
with a contingent deferred sales charge on redemptions made within 5 years of
purchase which declines annually from 5% for redemptions made in year one, down
to 1.50% in year five. The contingent deferred sales charge is based on the
lesser of the current market value of the shares redeemed or the total cost of
such shares. Class B shares will automatically convert to Class A shares after
the eighth year following purchase. Class C shares are sold with a contingent
deferred sales charge of 1% for shares that are redeemed within one year of
purchase, based on the lesser of the current market value of the shares redeemed
or the total cost of such shares. All three classes of shares have identical
voting, dividend, liquidation and other rights.
A. ACCOUNTING POLICIES: The following significant accounting policies are in
conformity with generally accepted accounting principles for investment
companies. Such policies are consistently followed by the Fund in the
preparation of the financial statements. Generally accepted accounting
principles require management to make estimates and assumptions that affect the
reported amounts and disclosures in the financial statements. Actual results may
differ from those estimates.
1. SECURITY VALUATION: Equity securities listed on a U.S. exchange and equity
securities traded on NASDAQ are valued at the latest quoted sales price on the
valuation date. Securities listed on a foreign exchange are valued at their
closing price. Unlisted securities and listed securities not traded on the
valuation date for which market quotations are readily available are valued at
the average between the current bid and asked prices obtained from reputable
brokers. Bonds and other fixed income securities may be valued according to the
broadest and most representative market. In addition, bonds and other fixed
income securities may be valued on the basis of prices provided by a pricing
service which takes into account institutional size trading in similar groups of
securities. Debt securities purchased with remaining maturities of 60 days or
less are valued at amortized cost, if it approximates market value. All other
securities and assets for which market values are not readily available are
valued at fair value as determined in good faith by the Board of Directors,
although the actual calculations may be done by others.
2. TAXES: It is the Fund's intention to qualify as a regulated investment
company and distribute all of its taxable income. Accordingly, no provision for
Federal income taxes is required in the financial statements. The Fund may be
subject to taxes imposed by countries in which it invests. Such taxes are
generally based on income earned or gains realized or repatriated. Taxes are
accrued and applied to net investment income, net realized capital gains and net
unrealized appreciation, as applicable, as the income is earned or capital gains
are recorded.
To the extent that capital loss carryforwards are used to offset any future net
capital gains realized during the carryforward period as provided by U.S.
Federal income tax regulations, no capital gains tax liability will be incurred
by the Fund for gains realized and not distributed. To the extent that capital
gains are so offset, such gains will not be distributed to shareholders.
Net capital losses incurred after October 31 and within the taxable year are
deemed to arise on the first business day of the Fund's next taxable year.
3. REPURCHASE AGREEMENTS: In connection with transactions in repurchase
agreements, a bank as custodian for the Fund takes possession of the underlying
securities, with a market value at least equal to the amount of the repurchase
transaction, including principal and accrued interest. To the extent that any
repurchase transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to determine the adequacy of the collateral.
In the event of default on the obligation to repurchase, the Fund has the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. In the event of default or bankruptcy by the counterparty to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
4. SHORT SALES: The Fund may sell securities short. A short sale is a
transaction in which the portfolio sell securities it may or may not own, but
has borrowed, in anticipation of a decline in the market price of the
securities. The Fund is obligated to purchase securities at the market price to
replace the borrowed securities at the time of replacement. The Fund may have to
pay a premium to borrow the securities as well as pay dividends or interests
payable on the securities until they are replaced. The Fund's obligation to
replace the securities borrowed in connection with a short sale will generally
be secured by collateral deposited with the broker that consists of cash, U.S.
government securities or other liquid, high grade debt obligations. In addition,
the Fund will place in a segregated account with its Custodian an amount of
cash, U.S. government securities or other liquid high grade debt obligations
equal to the difference, if any,
- -----------------------
12
<PAGE>
VAN KAMPEN AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONT.)
DECEMBER 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
between (1) the market value of the securities sold at the time they were sold
short, and (2) any cash, U.S. government securities, or other liquid high grade
debt obligations deposited as collateral with the broker in connection with the
short sale (not including the proceeds of the short sale). Short sales by the
Fund involve certain risks and special considerations. Possible losses from
short sales differ from losses that could be incurred from the purchase of a
security, because losses from short sales may be unlimited, whereas losses from
purchases cannot exceed the total amount invested.
5. ORGANIZATIONAL COSTS: The organizational costs of the Fund are being
amortized on a straight line basis over a period of five years beginning with
the Fund's commencement of operations. Van Kampen Investments Inc. has agreed
that in the event any of its initial shares in the Fund at its inception are
redeemed, the proceeds on redemption will be reduced by the pro-rata portion of
any unamortized organizational costs in the same proportion as the number of
shares redeemed bears to the initial shares held at the same time of redemption.
6. OTHER: Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the specific identified cost basis. Dividend income
is recorded on the ex-dividend date (except for certain foreign dividends which
may be recorded as soon as the Fund is informed of such dividends), net of
applicable withholding taxes where recovery of such taxes is not reasonably
assured. Interest income is recognized on the accrual basis except where
collection is in doubt. Income, expenses (other than class specific expenses)
and realized and unrealized gains or losses are allocated to each class of
shares based upon their relative net assets. Distributions from the Fund are
recorded on the ex-distribution date.
The amount and the character of income and capital gain distributions to be paid
by the Fund are determined in accordance with Federal income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing book and tax treatment for foreign
currency transactions, net operating losses, foreign taxes on net realized
gains, deductibility of interest expense on short sales and gains on certain
securities of corporations designated as "passive foreign investment companies."
Permanent book and tax basis differences relating to shareholder distributions
may result in reclassification among undistributed net investment income (loss),
accumulated net realized gain (loss) and paid in capital.
Permanent book and tax basis differences, if any, are not included in ending
undistributed (distributions in excess of) net investment income for the purpose
of presenting net investment income (loss) per share in the Financial
Highlights.
B. ADVISER: Van Kampen Investment Advisory Corp., (the "Adviser") a wholly owned
subsidiary of Van Kampen Investments Inc. (an indirect wholly owned subsidiary
of Morgan Stanley Dean Witter & Co.) and Morgan Stanley Dean Witter Investment
Management Inc. ("MSDWIM" or a "Sub-Adviser"), a wholly owned subsidiary of
Morgan Stanley Dean Witter & Co., provide the Fund with investment advisory
services at a fee paid monthly and calculated at the annual rates based on
average daily net assets as indicated below. The Adviser has agreed to reduce
advisory fees payable to it and to reimburse the Fund, if necessary, if the
annual operating expenses, as defined, expressed as a percentage of average
daily net assets, exceed the maximum ratios indicated as follows:
<TABLE>
<CAPTION>
CLASS B
CLASS A AND CLASS C
MAX. OPERATING MAX. OPERATING
ADVISORY FEE EXPENSE RATIO EXPENSE RATIO
- ------------ -------------- --------------
<S> <C> <C>
0.90%....... 1.50% 2.25%
</TABLE>
C. ADMINISTRATOR: Van Kampen Investment Advisory Corp. (the "Administrator")
also provides the Fund with administrative services pursuant to an
administrative agreement for a monthly fee which on an annual basis equals 0.25%
of the average daily net assets of the portfolio, plus reimbursement of
out-of-pocket expenses. Under an agreement between the Adviser and The Chase
Manhattan Bank ("Chase"), through its corporate affiliate Chase Global Funds
Services Company ("CGFSC"), Chase provides certain administrative services to
the Fund. Chase is compensated for such services by the Adviser from the fee it
receives from the Fund. Transfer Agency services are provided to the Fund by Van
Kampen Investor Services Inc., an affiliate of the Adviser.
D. DISTRIBUTOR: Van Kampen Funds Inc. the ("Distributor") a wholly owned
subsidiary of Van Kampen Investments Inc., an indirect wholly owned subsidiary
of Morgan Stanley Dean Witter & Co., serves as the Distributor of the Fund's
shares. The Distributor is entitled to receive from the Fund a distribution fee,
which is accrued daily and paid quarterly, of an amount of up to 0.25% of the
Class A shares and up to 1.00%, on an annualized basis, of the average daily net
assets attributable to the Class B and Class C shares of the Fund.
The Distributor may receive a front end sales charge for purchases of Class A
shares. In addition, the Distributor may receive a contingent deferred sales
charge for certain redemptions of Class B and Class C shares of the Fund
redeemed within one to five years following such purchase. For the six months
ended December 31, 1998, the Distributor has advised the Fund that it earned
initial sales charges of
------------------
13
<PAGE>
VAN KAMPEN AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONT.)
DECEMBER 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
$66,537 for Class A shares and deferred sales charges of $327,259 and $14,749
for Class B shares and Class C shares, respectively.
E. CUSTODIAN: The Chase Manhattan Bank and its affiliates serve as custodian for
the Fund. Prior to October 1, 1998, the Fund's assets held outside the United
States were held by Morgan Stanley Trust Company ("MSTC"), a former affiliate of
the Sub-Advisers. Custody fees are payable monthly based on assets held in
custody, investment purchase and sales activity, an account maintenance fee,
plus reimbursement for certain out-of-pocket expenses. On October 1, 1998, the
Chase Manhattan Bank purchased MSTC.
F. DIRECTORS' FEES: The Fund provides deferred compensation and retirement plans
for its Directors who are not officers of Van Kampen. Under the deferred
compensation plan, Directors 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 Director's years of service to the
Fund.
G. PURCHASES AND SALES: For the six months ended December 31, 1998, the Fund
made purchases of approximately $385,697,000 and sales of approximately
$370,609,000 of investment securities other than long-term U.S. Government
securities and short-term investments. There were no purchases or sales of
long-term U.S. Government securities.
H. OTHER: At December 31, 1998, cost and unrealized appreciation (depreciation)
for U.S. Federal income tax purposes of the investments of the Fund was:
<TABLE>
<CAPTION>
NET
COST APPREC. (DEPREC.) APPRECIATION
(000) (000) (000) (000)
- -------- ------- --------- --------------
<S> <C> <C> <C>
$191,747.. $40,546 $ (738 ) $ 39,808
</TABLE>
- -----------------------
14
<PAGE>
VAN KAMPEN FUNDS
- --------------------------------------------------------------------------------
EQUITY FUNDS
DOMESTIC
Aggressive Equity
Aggressive Growth
American Value
Comstock
Emerging Growth
Enterprise
Equity Growth
Equity Income
Growth
Growth and Income
Harbor
Pace
Real Estate Securities
Utility
Value
INTERNATIONAL/GLOBAL
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
Global Franchise
Global Managed Assets
International Magnum
Latin American
FIXED-INCOME FUNDS
INCOME
Corporate Bond
Global Fixed Income
Global Government Securities
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
Short-Term Global Income
Strategic Income
U.S. Government
U.S. Government Trust for Income
Worldwide High Income
TAX EXEMPT INCOME
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
CAPITAL PRESERVATION
Reserve
Tax Free Money
SENIOR LOAN FUNDS
Prime Rate Income Trust
Senior Floating Rate
To find out more about any of these funds, ask
your financial advisor for a prospectus, which
contains more complete information, including
sales charges, risks, and expenses. Please read
it carefully before you invest or send money.
To view a current Van Kampen fund
prospectus or to receive additional fund
information, choose from one of the following:
- - visit our Web site at WWW.VANKAMPEN.COM --
to view a prospectus, select DOWNLOAD A PROSPECTUS
- - call us at 1-800-341-2911 weekdays
from 7:00 a.m. to 7:00 p.m. Central time
(Telecommunications Device for the Deaf
users, call 1-800-421-2833)
- - e-mail us by visiting WWW.VANKAMPEN.COM
and selecting CONTACT US
YEAR 2000 READINESS DISCLOSURE
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Fund's investment adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Fund's
investment adviser is taking steps that it believes are reasonably designed to
address the Year 2000 Problem with respect to computer systems that it uses and
to obtain reasonable assurances that comparable steps are being taken by the
Fund's other major service providers. At this time, there can be no assurances
that these steps will be sufficient to avoid any adverse impact to the Fund. In
addition, the Year 2000 Problem may adversely affect the markets and the issuers
of securities in which the Fund may invest which, in turn, may adversely affect
the net asset value of the Fund. Improperly functioning trading systems may
result in settlement problems and liquidity issues. In addition, corporate and
governmental data processing errors may result in production problems for
individual companies or issuers and overall economic uncertainty. Earnings of
individual issuers will be affected by remediation costs, which may be
substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected. The
statements above are subject to the Year 2000 Information and Readiness
Disclosure Act which may limit the legal rights regarding the use of such
statements in the case of dispute.
<PAGE>
VAN KAMPEN FUNDS
- --------------------------------------------------------------------------------
DIRECTORS
Wayne W. Whalen
CHAIRMAN OF THE BOARD
Partner, Skadden, Arps, Slate, Meagher & Flom
(Illinois)
J. Miles Branagan
Private Investor; Formerly Chairman, Chief Executive Officer
and President, MDT Corporation
Richard M. DeMartini
President and Chief Operating Officer, Individual Asset
Management Group, a division of Morgan Stanley Dean Witter & Co.
Linda Hutton Heagy
Co-Managing Partner of Heldrick & Struggles
R. Craig Kennedy
President and Director, German Marshall Fund
of the United States
Jack E. Nelson
President, Nelson Investment Planning Services, Inc.
Don G. Powell
Chairman and Director,
Van Kampen Investments Inc.
Phillip B. Rooney
Vice Chairman and Director of The Servicemaster Company
Fernando Sisto
Professor Emeritus Stevens Institute of Technology;
Director, Dynalysis of Princeton
Paul G. Yovovich
Private Investor
INVESTMENT ADVISER AND ADMINISTRATOR
Van Kampen Investment Advisory Corp.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181
INVESTMENT SUB ADVISER
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181
CUSTODIAN
The Chase Manhattan Bank
3 MetroTech Center
Brooklyn, New York 11245
OFFICERS
Dennis J. McDonnell
PRESIDENT
John L. Sullivan
VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER
Curtis W. Morell
VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER
Peter W. Hegel
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Paul R. Wolkenberg
VICE PRESIDENT
Edward C. Wood III
VICE PRESIDENT
Tanya M. Loden
CONTROLLER
DIVIDEND DISBURSING AND TRANSFER AGENT
Van Kampen Investor Services Inc.
P.O. Box 418256
Kansas City, Missouri 64141
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
200 E. Randolph St.
Chicago, Illinois 60601
- --------------------------------------------------------------------------------
FOR INFORMATION ON HOW TO INVEST, PLEASE CONTACT YOUR ACCOUNT REPRESENTATIVE OR
THE FUND AT (800) 341-2911.
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY WHEN PRECEDED OR ACCOMPANIED BY
PROSPECTUSES OF THE VAN KAMPEN FUNDS INC. WHICH DESCRIBES IN DETAIL EACH OF THE
INVESTMENT FUNDS' INVESTMENT POLICIES, FEES, AND EXPENSES. PLEASE READ THE
PROSPECTUSES CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
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NOTES:
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1 Parkview Plaza n P.O. Box 5555 n Oakbrook Terrace, IL 60181-5555
n www.vankampen.com
-C- Van Kampen Funds Inc. 1999
