<PAGE>
VAN KAMPEN
GLOBAL MANAGED
ASSETS FUND
Semi-Annual Report
June 30, 1998
[PHOTO APPEARS HERE]
VAN KAMPEN
FUNDS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders............................... 1
Performance Results.................................. 3
Glossary of Terms.................................... 4
Portfolio Management Review.......................... 5
Portfolio Highlights................................. 8
Portfolio of Investments............................. 9
Statement of Assets and Liabilities.................. 31
Statement of Operations.............................. 32
Statement of Changes in Net Assets................... 33
Financial Highlights................................. 34
Notes to Financial Statements........................ 37
</TABLE>
GMA SAR 8/98
<PAGE>
LETTER TO SHAREHOLDERS
July 16, 1998
Dear Shareholder,
[PHOTO OF DENNIS J. MCDONNELL AND DON G. POWELL]
As you may know, Van Kampen American Capital is consolidating all of the
retail mutual funds that we distribute under the single name of Van Kampen
Funds. This move accompanies the change in our legal name to Van Kampen Funds
Inc.
You can be assured that the change in your fund's name will not affect its
management or daily operations. You will begin seeing the application of this
change with this report. In addition, as of August 31, your fund will be listed
in the daily newspapers by share class under the heading "Van Kampen Funds." For
your convenience, we have enclosed a separate brochure that covers additional
details related to these changes.
Economic Review
The economic crisis in Asia deepened late in the reporting period while growth
continued at a robust pace in the United States and Europe. After last fall's
currency crisis, signs of recovery began to appear in Asia early in 1998 as
equity markets rebounded and currency values stabilized. But a steep decline in
the Japanese yen beginning in February undermined investor confidence in the
region and ignited fears of yet another round of currency devaluations. At the
heart of the problem was a sudden worsening of economic conditions in Japan and
the perceived inability of Japanese leaders to rescue the country's ailing
banking system.
Despite the drag from Asia, the U.S. economy continued to expand at a healthy
rate. The nation's inflation-adjusted output of goods and services ran at 5.4
percent during the first quarter, an annualized rate considered by many
economists to be virtually unsustainable without leading to inflation. As the
reporting period ended, however, there were indications that the Asian financial
crisis was finally having a moderating impact on domestic economic growth. Also,
the Conference Board's index of leading indicators points toward a slowdown in
economic growth for later this year.
In Europe, economic growth accelerated as the region looked forward to
monetary union, set to begin in January 1999. At that time, a common currency
(the euro) will begin to replace the currencies of the 11 participant nations.
The elimination of foreign-exchange risk and widespread financial reforms has
led to a wave of mergers and acquisitions across the region.
Market Review
The wide variation of returns from global financial markets during the
reporting period reflected the vastly different circumstances in the three major
economic blocks of the United States, Europe, and Asia. In Europe, where
companies have relatively little exposure to Asia, stocks posted impressive
gains. During the six months ended in June, the Dow Jones Europe/Africa Index
climbed 24.48 percent in U.S. dollar terms. The rally was broad based, with
markets in Finland, France, Germany, Greece, Ireland, Italy, Portugal, and Spain
each climbing more than 30 percent.
1 Continued on page two
<PAGE>
European bonds also benefited from stable monetary policy and low inflation.
The average European bond market gained 5.50 percent in U.S. dollar terms during
the first six months of 1998.
Stock prices in the United States continued to move higher during the period,
but the Asian financial crisis had an uneven impact on corporate profits. The
Wilshire 5000 Index consisting of all publicly traded U.S. companies gained
14.68 percent during the first six months of 1998. Companies with heavy exposure
to domestic consumers benefited from strength in the American economy, while
commodity-related issues lagged. U.S. bonds benefited from a global flight to
quality and from a growing perception that domestic economic growth was slowing.
The yield on the Treasury's 30-year benchmark bond declined from 5.92 percent on
December 31, 1997 to 5.63 percent by the end of the period.
In Asia, renewed currency concerns caused major declines in nearly all equity
markets. Despite a solid rally in January, the Dow Jones Asia/Pacific Index
(excluding Japan) fell 48.77 percent during the 12 months through June and by
18.69 percent during the first half of 1998. The worst-performing Asian market
was Indonesia, where the average stock lost nearly two-thirds of its value amid
a deepening recession, political turmoil, and social unrest. For the 12 months
through June, the Dow Jones Indonesia Index declined by 87.66 percent in U.S.
dollar terms.
Outlook
We remain optimistic about the prospects for European equity markets, based on
the region's accelerating growth rate and the introduction of a common currency
next year. As interest rates decline, liquidity should increase as more European
investors leave the sanctuary of money-market funds in favor of equities.
Our outlook for Asia is guarded. As the reporting period ended, the Japanese
government announced a bank bailout package that ignited a rally in Asian
financial markets. While we view the latest reforms in a positive light, we are
concerned that investor reaction to the news may have been overly euphoric.
In the United States, economic growth is likely to slow in coming months as
the impact of the Asian crisis becomes more evident. With equities already
trading at record-high valuations, we are cautious about the ability of U.S.
stocks to rally significantly from current levels. On a longer-term basis,
however, the environment for domestic equities remains highly positive.
Several factors are helping to sustain a generally bullish environment for
global bonds. Extreme economic weakness in Asia is exerting downward pressure on
energy, commodity, and goods prices. Also, the strong dollar is containing U.S.
inflation despite a tight labor market and above-trend economic growth.
Additional details about your fund, including a question-and-answer section
with your portfolio management team, are provided in this report. As always, we
are pleased to have the opportunity to serve you and your family through our
diverse menu of quality investments.
Sincerely,
/s/ Don G. Powell
Don G. Powell
Chairman
Van Kampen Asset Management Inc.
/s/ Dennis J. McDonnell
Dennis J. McDonnell
President
Van Kampen Asset Management Inc.
2
<PAGE>
PERFORMANCE RESULTS FOR THE PERIOD ENDED JUNE 30, 1998
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
<TABLE>
<CAPTION>
A Shares B Shares C Shares
<S> <C> <C> <C>
TOTAL RETURNS
Six-month total return based on NAV/1/........ 12.15% 11.72% 11.69%
Six-month total return/2/..................... 6.79% 7.72% 10.69%
One-year total return/2/...................... 6.98% 7.39% 10.42%
Life-of-Fund average annual total return/2/... 9.58% 9.70% 10.01%
Commencement date............................. 05/16/94 05/16/94 05/16/94
</TABLE>
/1/ Assumes reinvestment of all distributions for the period 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 shares 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).
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. This performance was achieved during generally
rising stock prices. Fund shares, when redeemed, may be worth more or less than
their original cost.
Investment in foreign securities involves certain risks including fluctuations
in foreign exchange rates and possible political and economic developments.
Market forecasts provided in this report may not necessarily come to pass.
3
<PAGE>
Glossary of Terms
Blue-chip stocks: Stocks of large, well-known companies that have a long record
of growth. Examples of blue-chip stocks include General Motors, International
Business Machines (IBM), Coca-Cola, and General Electric.
Bottom-up investing: A management style that emphasizes the analysis of
individual stocks, rather than economic and market cycles.
Currency hedging: A technique used to offset the risks associated with the
changing value of currency.
Dow Jones Industrial Average: The oldest and most widely recognized stock market
average, which reflects the performance of 30 actively traded stocks of well-
established, blue-chip companies.
Emerging markets: The financial markets of developing economies. Many Latin
American and Asian countries are considered emerging markets.
European Monetary Union (EMU): A group of European countries creating one
currency for the entire region.
Growth investing: An investment strategy that seeks to identify stocks that tend
to offer greater-than-average earnings growth. Growth stocks typically trade
at higher prices than value stocks, due to their higher expected earnings
growth.
Market capitalization: The size of a company, as measured by the value of its
stock. Morningstar, an independent mutual fund rating service, defines
"small-cap" as less than $1 billion, "mid-cap" as between $1 billion and $5
billion, and "large-cap" as more than $5 billion.
Morgan Stanley Capital International (MSCI) EAFE Index: An international
index composed of equity securities from Europe, Australasia, and the Far
East.
Net asset value (NAV): The value of a mutual fund share, calculated by deducting
a fund's liabilities from its total assets and dividing this amount by the
number of shares outstanding. The NAV does not include any initial or
contingent deferred sales charge.
Top-down investing: A management style in which general asset allocation
decisions are based on the strength of various market sectors, industries, or
countries. Individual securities are then selected from within the favored
sectors.
Valuation: The estimated or determined relative worth of a stock, based on
financial measures such as the stock's current price relative to earnings,
revenue, book value, and cash flow.
Value investing: A strategy that seeks to identify stocks that are sound
investments but are temporarily out of favor in the marketplace. As a result,
the stocks trade at prices below the value that value investors believe they
are actually worth.
4
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
We recently spoke with the management team of the Van Kampen Global Managed
Assets Fund about the key events and economic forces that shaped the markets
during the past six months. The Fund is co-managed by portfolio managers Barton
M. Biggs, and Ann D. Thivierge, Morgan Stanley Asset Management, Inc. The
following excerpts reflect their views on the Fund's performance during the
six-month period ended June 30, 1998.
Q How would you describe the investment environment in which the Fund has
operated during the past six months?
A European stocks soared on strengthening economic growth, falling interest
rates, and low inflation. In May the European Monetary Union (EMU), set to
begin in January 1999, officially named its 11 participant nations. The effects
of the agreement to create a single European currency were to improve fiscal
discipline, business growth, and consumer confidence within Europe.
The U.S. economy enjoyed strong growth, steadily declining interest rates,
and a strong dollar. For most of the period, stocks continued their seven-year
bull run. However, evidence that drag from the Asian turmoil was beginning to
have a negative effect on earnings began to emerge. Furthermore, the market
started showing signs of excess capacity that could indicate a market
correction.
Asian stocks remained weak in the aftermath of the severe financial crisis
that shook the region last year. After rebounding at the beginning of the
period, most Asian markets fell back to 12-month lows as social and political
turmoil underscored the deepening recession. We started to see the beginning of
economic and corporate fallout through bankruptcies and consolidation in
industries. The one exception in Asia is China. Chinese leadership has been very
impressive, and although they have a tough challenge ahead, they continue to say
and do all of the right things.
We believe Asia cannot recover unless Japan revives its economy.
Unfortunately, Japan continued its struggle to overcome a banking crisis fueled
by corporate debt, excess capacity, and nonexistent public- and private-sector
confidence. For the most part, Japan's government and citizens have not appeared
committed to, or receptive to change. At the end of the period, the Japanese
government announced proposals designed to reduce the burden of nonperforming
loans on the banking system. The measure is a tiny step in the right direction,
but must lead to greater change before Japan can start its recovery.
Q What strategy did you employ to manage the Fund in this investment
environment?
A The Fund's portfolio mix of stocks and bonds provides us with increased
flexibility during a volatile market. As a result, we took advantage of
strong equity markets in Europe as well as select bond opportunities in the
United States and Western Europe.
Equity Strategy
During the period we built the Fund's cash and short-term securities
positions as a defensive measure in response to the continued turmoil in Asia.
As a result, we were underweight in Japanese equity holdings, at less than 4
percent compared to the Fund's benchmark, the Morgan Stanley
5
<PAGE>
Capital International (MSCI) World Index, which holds 10 percent. We also had
minimal exposure to Asian markets outside Japan, including Hong Kong, Singapore,
and Malaysia, and virtually no exposure in Australia and New Zealand.
Because of its broadening economy and potential for growth, we were
overweight in European equities, where at the end of period we had approximately
44 percent of long-term investments exposure compared to the MSCI benchmark of
35 percent. The increase in European stocks was offset by our decrease in U.S.
equity holdings, where we were underweight at approximately 37 percent of long-
term investments compared to the MSCI benchmark of nearly 50 percent.
Fixed-Income Strategy
During the first half of the year, we took advantage of fixed-income
opportunities in non-EMU countries, such as Sweden and the United Kingdom,
because compared to EMU participants their yield spreads provided greater return
potential. We also had an overweight exposure in Ireland, whose participation in
EMU had been uncertain prior to joining, that added to the value of the
portfolio.
Because of Japan's slow economic growth and increasing government debt, we
were underweight in Japanese bonds and currency. Unfortunately, yields fell
further than we anticipated, and we missed a chance at price appreciation. We
did, however, benefit from our underweight of the yen based on the country's
poor economic conditions and lack of support for the currency. For additional
Fund portfolio highlights, please refer to page eight.
Q How did the Fund perform during the reporting period?
A We are pleased with the performance of the Fund, which achieved a total
return of 12.15 percent/1/ (Class A shares at net asset value) for the six-month
period ended June 30, 1998. By comparison, the Morgan Stanley Capital
International (MSCI) World Index generated a total return of 15.92 percent. The
J.P. Morgan Global Traded Government Index achieved a total return of 5.87
percent. The MSCI World Index is a broad-based index that is used as a benchmark
to general equity funds. The J.P. Morgan Global Traded Government Index is a
broad-based index of major foreign and U.S. government bonds that are weighted
by the total market value of each country's securities and reflect variations in
currency value. These indices are broad-based statistical composites and do not
reflect any commissions or sales charges that would be paid by an investor
purchasing the securities they represent. Please refer to the chart on page
three for additional Fund performance results.
Q What is your outlook for the global markets and the Fund's portfolio in the
month's ahead?
A We believe that our overweight position in cash and liquid securities will
allow us to take advantage of potential opportunities in the coming months.
Persistent volatility in the global markets, however, forces us to remain
cautious about our choices.
Overall, we expect good news out of Europe to continue. We look for
monetary union to enhance a growth and ability to restructure its markets
and economies. And, we further expect to see an increasing number of crossborder
mergers and acquisitions, especially in the financial sector. European
businesses continue to increase their investment spending and rate of
restructuring, which should lead to deeper and more liquid financial markets.
Greater liquidity
6
<PAGE>
should also benefit European pension funds--government and private--and could
lead to mutual fund growth similar to the United States during the past few
years.
Strong economic growth and exceptionally low inflation in the United States
should help propel the domestic bond market, but we anticipate a slowdown in the
U.S. equity market. Unlike Europe, the U.S. corporate structure is mature and we
believe its stock valuations provide less growth potential. Furthermore, we feel
that without a meaningful recovery in sight, Asia's negative effect on U.S.
stock prices and emerging markets will continue to drive investors toward the
U.S. bond market.
We will continue to monitor the situation in Asia, especially in Japan.
Until we receive good news or see signs of a real recovery, we will continue to
position the Fund to take advantage of other markets and avoid the turmoil from
that region.
/s/ Barton M. Biggs /s/ Ann D. Thivierge
Barton M. Biggs Ann D. Thivierge
Portfolio Manager Portfolio Manager
Morgan Stanley Asset Management Inc. Morgan Stanley Asset Management Inc.
7 Please see footnotes on page three
<PAGE>
PORTFOLIO HIGHLIGHTS
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
Portfolio Holdings as a Percentage of Long-Term Investments
<TABLE>
<CAPTION>
Percentage of
Top Ten Holdings As of These Investments
June 30, 1998 Six Months Ago
<S> <C> <C>
U.S. Treasury Note....................... 7.7% ................ 10.6%
U.S. Treasury Bond....................... 4.5% ................ 4.7%
Microsoft Corp........................... 1.3% ................ 1.3%
General Electric Co...................... 1.0% ................ 1.1%
Royal Dutch Petroleum Co................. 1.0% ................ 0.5%
Coca-Cola Co............................. 0.9% ................ 1.4%
Ente Nazional Indrocarburi, SpA.......... 0.9% ................ 0.7%
Bristol-Myers Squibb Corp................ 0.8% ................ 0.5%
British Petroleum........................ 0.8% ................ 0.7%
Glaxo Wellcome........................... 0.8% ................ 0.7%
</TABLE>
Asset Allocation as a Percentage of Total Investments
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
As of June 30, 1998
<C> <S> <C>
[_] Common and Preferred Stocks...................... 62.0%
[_] U.S. Government Obligations...................... 8.7%
[_] Commercial Paper................................. 12.8%
[_] U.S. Government Agency Obligations............... 16.5%
[PIE CHART APPEARS HERE]
As of December 31, 1997
[_] Common and Preferred Stocks...................... 59.7%
[_] U.S. Government Obligations...................... 10.8%
[_] Repurchase Agreement............................. 9.7%
[_] U.S. Government Agency Obligations............... 19.8%
</TABLE>
Top Ten Countries as a Percentage of Long-Term Investments
<TABLE>
<CAPTION>
<S> <C>
As of June 30, 1998
United States........................................... 49.1%
United Kingdom.......................................... 11.7%
Germany................................................. 5.7%
Italy................................................... 5.7%
France.................................................. 5.1%
Japan................................................... 4.1%
Switzerland............................................. 3.8%
Netherlands............................................. 3.6%
Spain................................................... 3.5%
Canada.................................................. 2.1%
As of December 31, 1997
United States........................................... 51.3%
United Kingdom.......................................... 9.6%
Japan................................................... 9.4%
France.................................................. 5.5%
Germany................................................. 5.1%
Italy................................................... 3.7%
Switzerland............................................. 3.3%
Canada.................................................. 2.9%
Spain................................................... 2.4%
Sweden.................................................. 2.3%
</TABLE>
8
<PAGE>
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
===========================================================================================
Description Shares Market Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Common and Preferred Stocks and Equivalents 61.9%
Australia 0.0%
Broken Hill Proprietary Co., Ltd............................... 52 $ 441
Coles Myer, Ltd................................................ 36 141
GIO Australia Holding.......................................... 44 113
M.I.M. Holdings, Ltd........................................... 16 8
----------
703
----------
Austria 0.8%
Austrian Airlines.............................................. 100 3,295
Bank Austria, AG............................................... 332 27,028
Bank Austria, AG - Preferred Shares............................ 232 18,853
Bau Holding, AG................................................ 100 5,675
Boehler-Uddeholm, AG - ADR..................................... 100 6,613
EA-Generali, AG................................................ 100 29,398
Flughafen Wien, AG............................................. 100 4,800
Lenzing, AG (a)................................................ 100 7,645
Mayr-Melnhof Karton, AG........................................ 100 6,542
Oest Brau-Beteiligungs, AG..................................... 100 5,911
Oest Elektrizitats, Class A.................................... 200 23,961
OMV, AG........................................................ 100 13,407
RHI, AG........................................................ 100 4,847
Steyr-Daimler-Puch, AG......................................... 100 2,743
VA Technologie, AG............................................. 100 12,453
Wienerberger Baustoffindustrie, AG............................. 100 24,213
----------
197,384
----------
Canada 1.5%
Abitibi Consolidated, Inc...................................... 200 2,576
Alcan Aluminum, Ltd............................................ 300 8,257
Avenor, Inc.................................................... 100 2,338
Bank of Montreal............................................... 300 16,513
Bank of Nova Scotia............................................ 600 14,841
Barrick Gold Corp.............................................. 500 9,514
BCE, Inc....................................................... 600 25,421
Bombardier, Inc., Class B...................................... 400 10,873
Cameco Corp.................................................... 100 2,786
</TABLE>
9 See Notes to Financial Statements
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
====================================================================================
Description Shares Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Canada (Continued)
Canadian Imperial Bank................................. 500 $16,071
Canadian Natural Resources (a)......................... 200 3,425
Canadian Occidental Petroleum.......................... 200 4,268
Canadian Pacific....................................... 400 11,253
Cominco................................................ 100 1,481
Corel Corp. (a)........................................ 100 207
Dofasco, Inc........................................... 100 1,628
Echo Bay Mines (a)..................................... 200 428
Gulf Canada Resource (a)............................... 400 1,957
Imasco................................................. 600 11,070
Imperial Oil........................................... 600 10,479
Inco, Ltd.............................................. 200 2,725
IPL Energy, Inc........................................ 100 4,502
Loewen Group, Inc...................................... 100 2,684
MacMillan Bloedel...................................... 200 2,134
Magna International, Inc., Class A..................... 100 6,843
Moore Corp............................................. 100 1,325
Newbridge Networks Corp. (a)........................... 200 4,777
Noranda, Inc........................................... 400 6,904
Northern Telecom....................................... 600 34,005
Nova Corp.............................................. 700 8,015
Petro.................................................. 500 8,019
Placer Dome, Inc....................................... 400 4,648
Potash Corporation of Saskatchewan, Inc................ 100 7,529
Power Corporation of Canada............................ 100 4,689
Renaissance Energy (a)................................. 100 1,498
Rogers Communications, Inc., Class B (a)............... 200 1,780
Royal Bank of Canada................................... 400 24,056
Seagram Co., Ltd....................................... 400 16,296
Talisman Energy, Inc. (a).............................. 200 5,722
Teck Corp., Class B.................................... 100 1,091
TELUS Corp............................................. 200 5,171
Thomson Corp........................................... 700 20,312
TransCanada PipeLines.................................. 400 8,861
</TABLE>
10 See Notes to Financial Statements
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
===================================================================================
Description Shares Market Value
- -----------------------------------------------------------------------------------
<S> <C> <C>
Canada (Continued)
Westcoast Energy, Inc................................ 200 $ 4,451
Weston George........................................ 300 10,601
--------
354,024
--------
Denmark 0.1%
BG Bank.............................................. 100 6,200
Denmark Danske Bank.................................. 100 12,010
Uni-Denmark.......................................... 100 8,996
--------
27,206
--------
France 3.7%
Accor, SA............................................ 121 33,864
Air Liquide.......................................... 123 20,345
Alcatel Alsthom, SA.................................. 207 42,148
AXA-UAP.............................................. 417 46,903
Banque Nationale de Paris............................ 367 29,988
Banque Paribas....................................... 147 15,732
Canal Plus........................................... 45 8,411
Cap Gemini........................................... 85 13,357
Carrefour, SA........................................ 51 32,267
Casino-Guichard-Perrachon, SA........................ 150 11,979
Compagnie de Saint Gobain............................ 136 25,217
Credit Communications................................ 22 1,852
Dexia France......................................... 11 1,481
Elf Aquitaine, SA.................................... 316 44,428
France Telecom, SA................................... 940 64,836
Groupe Danone........................................ 125 34,467
Havas, SA............................................ 101 8,570
Klepierre............................................ 71 13,799
L'Oreal.............................................. 93 51,732
Lafarge, SA.......................................... 170 17,574
Legrand, SA.......................................... 40 10,586
LVMH (Moet Hennessy Louis Vuitton)................... 131 26,219
Michelin (CGDE), Class B............................. 237 13,681
Peugeot, SA.......................................... 83 17,847
Pinault-Printemps-Redoute, SA........................ 29 24,272
</TABLE>
11 See Notes to Financial Statements
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
France (Continued)
Pernod Ricard............................................. 94 $ 6,515
Promodes.................................................. 34 18,840
Rhone-Poulenc, SA......................................... 466 26,284
Sagem, SA................................................. 7 5,447
Sanofi, SA................................................ 145 17,053
Schneider, SA............................................. 194 15,470
Silic..................................................... 60 10,917
Simco..................................................... 168 13,783
Societe Generale.......................................... 156 32,434
Sodexho Alliance.......................................... 44 8,319
Sophia.................................................... 240 11,095
Suez Lyonnaise des Eaux................................... 196 32,257
Thomson CSF............................................... 211 8,027
Total, SA, Class B........................................ 316 41,083
Unibail, SA............................................... 106 13,711
Vivendi (a)............................................... 141 30,109
Vivendi - Warrants (a).................................... 200 394
--------
903,293
--------
Germany 4.0%
Adidas Salomon, AG........................................ 67 11,684
AGIV, AG (a).............................................. 117 3,244
Allianz, AG (Vinkulierte Regd)............................ 300 100,056
Allianz, AG (a)........................................... 8 2,646
AMB AACH & Mun Bet (Vinkulierte Regd)..................... 33 3,861
AXA Colonia Konz (Vinkulierte Regd)....................... 33 4,099
Bankgesell Berlin......................................... 50 1,031
BASF, AG.................................................. 717 34,092
Bayer Hypotheken Bank, AG................................. 383 24,295
Bayer Vereinsbank, AG..................................... 316 26,809
Bayer, AG................................................. 900 46,610
Bilfinger & Berger........................................ 67 2,298
Commerzbank, AG........................................... 100 3,809
Continental, AG........................................... 67 2,106
Daimler-Benz, AG.......................................... 850 83,659
</TABLE>
12 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
==============================================================
Description Shares Market Value
--------------------------------------------------------------
<S> <C> <C>
Germany (Continued)
Daimler-Benz, AG--Rights................. 850 $ 943
Degussa, AG.............................. 67 4,291
Deutsche Bank, AG........................ 750 63,462
Deutsche Telekom, AG..................... 2,550 69,849
Deutz, AG (a)............................ 33 391
Dresdner Bank, AG........................ 733 39,628
Fag Kugelfischer......................... 67 1,005
Heidelberg Zement........................ 33 3,129
Hochtief, AG............................. 133 6,387
Lufthansa, AG (Vinkulierte Regd)......... 283 7,132
Man, AG.................................. 50 19,518
Mannesmann, AG........................... 500 51,429
Merck KGaA............................... 200 8,972
Metro, AG................................ 317 19,159
Metro, AG ASP............................ 317 12
Munchener Ruckvers (Vinkulierte Regd).... 133 66,078
Preussag, AG............................. 17 6,089
RWE, AG.................................. 597 35,354
SAP, AG.................................. 67 40,680
SAP, AG--Preferred Shares................ 50 33,963
Schering, AG............................. 117 13,786
Siemens, AG.............................. 717 43,793
Thyssen, AG.............................. 50 12,726
Veba, AG................................. 583 39,229
Viag, AG................................. 17 11,708
Volkswagen, AG........................... 20 19,330
-------
968,342
-------
Hong Kong 0.0%
Bank of East Asia........................ 244 265
Cathay Pacific Air....................... 100 70
Hang Lung Development Co................. 800 795
Hong Kong & China Gas Co................. 200 227
Hong Kong & Shanghai Hotel............... 300 150
Hutchison Whampoa........................ 100 528
</TABLE>
See Notes to Financial Statements
13
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Hong Kong (Continued)
Hysan Development..................................... 300 $ 2
Johnson Electic Holdings.............................. 200 741
New World Development Co.............................. 500 968
Sino Land Co.......................................... 100 35
Sun Hung Kai Properties............................... 72 306
Swire Pacific......................................... 100 378
--------
4,465
--------
Italy 4.0%
Assicurazioni Generali................................ 3,190 103,773
Banca Commerciale Italiana............................ 15,000 89,743
Banca Intesa, SpA..................................... 3,000 16,792
BCO Di Roma (a)....................................... 2,500 5,206
Ciga Hotels (a)....................................... 12,250 14,237
Credito Italiano...................................... 5,000 26,185
Edison, SpA........................................... 2,000 16,057
Ente Nazionale Idrocarburi, SpA....................... 23,000 150,809
Fiat, SpA............................................. 10,200 44,664
Fiat, Di Risp, SpA.................................... 2,300 5,696
Fiat, Priv, SpA....................................... 2,400 5,977
Immobil Metanpoli..................................... 2,350 2,599
Instituto Mobiliare Italiano.......................... 1,750 27,578
Instituto Nazionale delle Assicurazioni (INA)......... 15,850 45,050
IST BC................................................ 3,000 43,309
Italcementi, SpA...................................... 1,000 8,994
Italgas, SpA.......................................... 2,000 8,150
Mediaset, SpA......................................... 3,500 22,348
Mediobanca, SpA....................................... 1,200 15,230
Mediobanca, SpA - Warrants............................ 200 957
Montedison, SpA....................................... 10,000 12,410
Olivetti, SpA (a)..................................... 8,000 11,909
Parmalat Finanziara, SpA.............................. 5,000 10,201
Pirelli, SpA.......................................... 5,000 15,618
RAS................................................... 750 9,772
Rinascente, SpA....................................... 1,000 9,962
</TABLE>
14 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Italy (Continued)
Sirti, SpA........................................... 1,000 $ 5,443
Telecom Italia Mob, SpA.............................. 20,000 122,356
Telecom Italia Mob, Di Risp, SpA..................... 2,500 8,442
Telecom Italia, SpA.................................. 12,500 92,057
Telecom Italia, Di Risp, SpA......................... 2,906 14,074
--------
965,598
--------
Japan 2.9%
Ajinomoto Co., Inc................................... 1,000 8,787
Asahi Bank, Ltd...................................... 900 3,970
Asahi Chemical Industry Co........................... 1,800 6,509
Asahi Glass Co....................................... 1,800 9,764
Bank of Tokyo........................................ 2,200 23,373
Bridgestone Corp..................................... 1,000 23,722
Dai Nippon Printing.................................. 1,800 28,835
Daiei, Inc........................................... 1,000 2,350
Daiwa House Industries............................... 1,000 8,859
Daiwa Securities..................................... 1,400 6,045
Fanuc................................................ 200 6,943
Fuji Bank............................................ 600 2,686
Fujitsu.............................................. 2,000 21,118
Hitachi.............................................. 1,800 11,781
Honda Motor Co....................................... 2,000 71,453
Japan Air Lines Co. (a).............................. 1,000 2,792
Japan Energy Co...................................... 1,000 1,063
Kajima Corp.......................................... 1,000 2,748
Kansai Electric Power................................ 400 6,972
Kao Corp............................................. 1,000 15,477
Kawasaki Steel Corp.................................. 1,000 1,808
Kirin Brewery Co..................................... 1,800 17,054
Kubota Corp.......................................... 800 1,851
Kumagai Gumi Co. (a)................................. 1,000 723
Kyocera Corp......................................... 200 9,807
Long-Term Credit Bank of Japan....................... 1,000 586
Marubeni Corp........................................ 3,800 7,613
</TABLE>
15 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Japan (Continued)
Matsushita Electric Industries........................ 2,000 $32,256
Mitsubishi Chemical................................... 800 1,452
Mitsubishi Corp....................................... 1,000 6,220
Mitsubishi Electric Corp.............................. 1,800 4,153
Mitsubishi Estate..................................... 1,800 15,882
Mitsubishi Heavy Industries........................... 2,000 7,579
Mitsubishi Trust & Banking Corp....................... 1,000 8,527
Miysui Fudosan Co..................................... 1,000 7,927
Mitsui Trust & Banking Co............................. 800 1,892
Mitsukoshi............................................ 1,000 2,886
NEC Corp.............................................. 1,000 9,351
Nippon Express Co..................................... 1,800 9,685
Nippon Oil Co......................................... 1,000 3,240
Nippon Steel Corp..................................... 1,800 3,176
Nippon Telegraph & Telephone Corp..................... 5 41,585
Nissan Fire & Marine Insurance........................ 700 2,415
Nissan Motor Co....................................... 1,800 5,689
NKK Corp.............................................. 2,000 1,924
Nomura Securities..................................... 1,400 16,352
Odakyu Electric Railway............................... 2,000 6,147
Osaka Gas Co.......................................... 2,000 5,149
Sakura Bank........................................... 1,800 4,686
Sanwa Bank............................................ 1,000 8,975
Sanyo Electric Co..................................... 1,000 3,038
Sega Enterprises...................................... 100 1,732
Sekisui Chemical Co................................... 1,000 5,135
Sekisui House......................................... 800 6,220
Sharp Corp............................................ 1,000 8,129
Shimizu Corp.......................................... 800 2,314
Softbank Corp......................................... 210 8,201
Sony Corp............................................. 200 17,285
Sumitomo Chemical..................................... 1,000 3,095
Sumitomo Corp......................................... 1,000 4,824
Sumitomo Metal Industries............................. 1,000 4,072
</TABLE>
16 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Japan (Continued)
Taisei Corp............................................ 1,800 $ 3,905
Takeda Chemical Industries............................. 1,000 26,687
Tobu Railway Co........................................ 800 2,123
Tokio Marine & Fire Insurance Co....................... 1,800 18,564
Tokyo Electric Power................................... 600 11,803
Tokyo Gas Co........................................... 1,800 4,023
Tokyu Corp............................................. 1,000 3,045
Toray Industries, Inc.................................. 1,000 5,207
Tostem Corp............................................ 500 6,502
Toyota Motor Corp...................................... 1,800 46,734
Yasuda Trust & Banking................................. 700 658
--------
705,133
--------
Netherlands 2.6%
ABN AMRO Holdings, NV.................................. 2,435 57,019
Ahold Koninklijke, NV.................................. 609 19,564
Akzo Nobel, NV......................................... 100 22,246
Elsevier, NV........................................... 800 12,082
ING Groep, NV.......................................... 1,645 107,788
KLM Royal Dutch Air Lines, NV.......................... 201 8,168
Kon KPN, NV (a)........................................ 716 27,580
Koninklijke KNP BT, NV................................. 200 5,165
Philips Electronics, NV................................ 600 50,474
Rodamco................................................ 665 18,255
Royal Dutch Petroleum Co............................... 3,000 166,472
TNT Post Groep, NV (a)................................. 716 18,316
Unilever, NV........................................... 800 63,520
Uni-Invest, NV......................................... 960 13,932
Wolters Kluwer, NV..................................... 201 27,608
--------
618,189
--------
Norway 0.2%
Choice Hotels (a)...................................... 3,600 10,803
Christiania Bank....................................... 1,900 7,957
Den Norske Bank........................................ 2,200 11,539
Linstow ASA (a)........................................ 2,003 14,373
</TABLE>
17 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Norway (Continued)
NCL Holdings ASA (a).................................. 55 $ 272
-------
44,944
-------
Portugal 1.2%
Banco Comercial Portugues............................. 1,397 39,692
Banco Espirito Santo e Comercial...................... 700 21,034
Banco Espirito Santo e Comercial...................... 700 4,361
Banco Totta & Acores.................................. 400 12,132
Bpi Soc Gestora....................................... 600 19,375
Cimpor-Cimentos de Portugal........................... 500 17,579
Corticeira Amorim, SA................................. 100 1,918
Elec De Portugal...................................... 2,300 53,501
Jeronimo Martins, SPGS, SA............................ 800 38,457
Portucel Industrial-Empresa Produtora de Celulose..... 600 4,775
Portugal Telecom, SA.................................. 1,200 63,640
Soares Da Costa, SA (a)............................... 100 829
Sonae Investimentos................................... 300 16,396
UNICER-Uniao Cervejeira, SA........................... 300 6,629
-------
300,318
-------
Spain 2.5%
Argentaria, SA........................................ 1,200 26,919
Autopistas Cesa....................................... 630 9,757
Autopistas Cesa....................................... 630 477
BCO Bilbao Vizcaya.................................... 2,000 102,640
BCO Central Hispan.................................... 900 28,288
BCO ESP De Credito (a)................................ 200 2,400
BCO Santander (a)..................................... 2,200 56,309
Corporacion Financiera Alba, SA....................... 100 10,987
Corporacion Mapfre.................................... 200 7,017
Empresa Nacional de Celulosas, SA..................... 100 1,761
Endesa, SA............................................ 2,800 61,259
Fomento Construcciones y Contratas, SA................ 400 20,633
Gas Natural SDG, SA................................... 400 28,901
Iberdrola, SA......................................... 2,300 37,346
Inmobiliaria Metropolitana Vasco Central, SA.......... 210 6,176
</TABLE>
18 See Notes to Financial Statements
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
=============================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
- ----------------------------------------------------------------------------
<S> <C> <C>
Spain (Continued)
Repsol, SA............................................ 800 $ 44,082
Tabacalera, SA, Class A............................... 500 10,238
Telefonica De Espana.................................. 2,509 116,000
Union Electrica Fenosa, SA............................ 800 10,303
Vallehermoso, SA...................................... 360 13,240
Viscofan Industria Navarra
De Envolturas Celulosicas, SA....................... 100 4,656
------------
599,389
------------
Sweden 1.5%
<S> <C> <C>
ABB, AB, Class A...................................... 400 5,567
ABB, AB............................................... 900 12,751
AGA, AB, Class B...................................... 200 3,134
Asticus, AB (a)....................................... 1,335 14,729
Astra, AB, Class A.................................... 300 5,980
Astra, AB............................................. 1,733 35,415
Atlas Copco, AB, Class A.............................. 200 5,454
Castellum, AB......................................... 300 3,536
Diligentia............................................ 1,620 14,015
Electrolux, AB, Class B (a)........................... 500 8,588
Ericsson Telefonaktiebolaget LM,
Class B (a)......................................... 2,400 70,108
Foreningssparbk....................................... 700 21,063
Hennes & Mauritz, AB, Class B......................... 300 19,145
Netcom Systems, AB.................................... 100 3,830
Nordbanken Holding.................................... 1,100 8,068
Piren, AB (a)......................................... 500 3,949
Sandvik, AB........................................... 200 5,529
Sandvik, AB........................................... 100 2,746
Securitas, AB, Class B................................ 200 9,792
Skandia Forsaekrings, AB.............................. 500 7,146
Skandinaviska Enskilda Banken, Class A................ 1,300 22,248
Skanska, AB, Class B.................................. 200 8,977
SKF, AB, Class B...................................... 100 1,818
Stora Kopparbergs Bergslags Aktiebolag,
Class A............................................. 500 7,867
Svenska Cellulosa, AB, Class B........................ 300 7,767
Svenska Handelsbkn, Class A........................... 500 23,195
</TABLE>
See Notes to Financial Statements
19
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
==============================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
<S> <C> <C>
Sweden (Continued)
Tornet Fatighet......................................... 250 $ 4,012
Volvo, AB, Class B...................................... 500 14,888
------------
351,317
------------
Switzerland 2.7%
ABB AG.................................................. 10 14,792
Alusuisse - Lonza Holding (a)........................... 10 12,706
Credit Suisse Group..................................... 200 44,575
Holderbank Financiere Glarus AG......................... 10 12,745
Nestle, AG............................................ 50 107,177
Novartis................................................ 80 133,341
Roche Holdings Bearer, AG............................... 2 29,684
Roche Holdings Genusscheine, AG......................... 8 78,690
SCHW Ruckversicher...................................... 20 50,664
SGS Holdings............................................ 5 8,489
Sulzer, AG.............................................. 10 7,904
Swatch Group............................................ 10 7,740
UBS, AG (a)............................................. 258 95,976
Zurich Versicherungs-Gesellschaft....................... 60 38,354
------------
642,837
------------
United Kingdom 8.3%
Abbey National.......................................... 1,800 32,008
Allied Irish Banks...................................... 1,400 20,337
Arjo Wiggins Apple...................................... 1,625 5,508
Bank of Scotland........................................ 100 1,120
B.A.T Industries........................................ 4,750 47,586
Barclays................................................ 2,475 71,410
Bass.................................................... 1,852 34,726
BG...................................................... 5,936 34,343
Blue Circle Industries.................................. 4,598 25,986
BOC Group............................................... 1,500 20,450
Boots Co................................................ 1,800 29,844
British Aerospace....................................... 2,300 17,627
British Airways......................................... 1,625 17,596
British Lan Co.......................................... 1,750 17,985
</TABLE>
See Notes to Financial Statements
20
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom (Continued)
British Petroleum..................................... 9,160 $133,673
British Sky Broadcast................................. 3,875 27,854
British Telecommunications............................ 8,650 106,876
BTR................................................... 7,048 20,007
Cable & Wireless...................................... 3,825 46,494
Capital Shop Centers.................................. 2,110 14,216
Centrica (a).......................................... 6,675 11,285
CGU................................................... 1,325 24,734
Diageo................................................ 5,411 64,147
EMI Group............................................. 1,360 11,899
General Electric...................................... 4,275 36,868
Glaxo Wellcome........................................ 4,450 133,669
Granada Group......................................... 825 15,180
Grantchester Holdings................................. 4,489 12,817
Great Universal Stores................................ 1,450 19,126
Hanson................................................ 1,150 6,994
HSBC Holdings-ADR..................................... 2,625 63,641
HSBC Holdings......................................... 100 2,540
Imperial Chemical Industries.......................... 1,525 24,495
Kingfisher............................................ 1,225 19,738
Ladbroke Group........................................ 1,625 8,927
Land Securities....................................... 2,510 38,829
Lloyds TSB Group...................................... 7,725 108,151
Marks & Spencer....................................... 3,900 35,522
MEPC.................................................. 1,500 13,199
National Power........................................ 2,100 19,776
National Westminster.................................. 200 3,577
P & O Finance......................................... 1,377 19,842
Prudential Corp....................................... 3,625 47,787
Reed International.................................... 3,025 27,376
Reuters Holdings...................................... 2,231 25,517
Rio Tinto............................................. 2,100 23,668
RMC Group............................................. 1,050 18,216
Royal Bank Scot Group................................. 1,350 23,443
</TABLE>
21 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom (Continued)
Royal Sun Alliance....................................... 2,100 $ 21,722
Safeway.................................................. 1,325 8,683
Sainsbury J Finance...................................... 2,375 21,176
Scottish Power........................................... 2,100 18,408
Smithkline Beecham....................................... 6,725 82,138
Standard Chartered....................................... 100 1,148
Tesco.................................................... 3,225 31,501
Thames Water............................................. 1,500 27,325
Thorn.................................................... 857 3,577
Unilever................................................. 4,100 43,676
Vodafone Group........................................... 4,850 61,586
Wates C of L Props (a)...................................11,250 18,221
Zeneca Group............................................. 1,500 64,417
----------
1,990,187
----------
United States 25.9%
AMR Corp. (a)............................................ 400 33,300
Abbott Laboratories, Inc................................. 300 12,263
Aeroquip-Vickers, Inc.................................... 200 11,675
Ahmanson H. F. and Co.................................... 100 7,100
Air Products & Chemicals, Inc............................ 200 8,000
Airtouch Communications, Inc. (a)........................ 500 29,219
Albertsons, Inc.......................................... 100 5,181
Allegheny Teldyne, Inc................................... 200 4,575
AlliedSignal, Inc........................................ 500 22,188
Allstate Corp............................................ 500 45,781
Alltel Corp.............................................. 200 9,300
Aluminum Company of America.............................. 300 19,781
Alza Corp................................................ 100 4,325
American Express Co...................................... 300 34,200
American Home Products Corp.............................. 800 41,400
American International Group, Inc. (b)................... 500 73,000
Ameritech Corp........................................... 600 26,925
Amgen, Inc. (a).......................................... 200 13,075
Amoco Corp............................................... 600 24,975
</TABLE>
22 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
Andarko Pete Corp...................................... 200 $ 13,438
Andrew Corp. (a)....................................... 200 3,613
Armco, Inc. (a)........................................ 4,200 26,775
Armstrong World Industries, Inc........................ 200 13,475
Associates First Capital Corp.......................... 299 23,011
Automatic Data Processing, Inc......................... 100 7,288
Avon Products, Inc..................................... 100 7,750
AT&T Corp. (b)......................................... 1,600 91,400
Banc One Corp.......................................... 500 27,906
Bank of New York Co., Inc.............................. 400 24,275
Bank America Corp...................................... 500 43,219
BankBoston Corp........................................ 400 22,250
Barrick Gold Corp...................................... 600 11,513
Bausch & Lomb, Inc..................................... 100 5,013
Baxter International, Inc.............................. 200 10,763
Becton, Dickinson & Co................................. 300 23,288
Bell Atlantic Corp..................................... 400 18,250
BellSouth Corp......................................... 700 46,987
Bestfoods.............................................. 10 5,806
Bethlehem Steel Corp. (a).............................. 1,800 22,388
Black & Decker Corp.................................... 100 6,100
Boeing Co.............................................. 500 22,281
Boston Scientific Corp. (a)............................ 100 7,163
Briggs & Stratton Corp................................. 100 3,744
Bristol-Myers Squibb Corp.............................. 1,200 137,925
Brunswick Corp......................................... 100 2,475
Burlington Northern Santa Fe Corp...................... 400 39,275
Burlington Resources, Inc.............................. 100 4,306
CBS Corp............................................... 200 6,350
CIGNA Corp............................................. 200 13,800
CVS Corp............................................... 200 7,788
Campbell Soup Co....................................... 100 5,313
Cardinal Health, Inc................................... 100 9,375
Case Corp.............................................. 300 14,475
</TABLE>
23 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
Caterpillar, Inc..................................... 500 $ 26,438
Cedant Corp. (a)..................................... 100 2,088
Chase Manhattan Corp. (b)............................ 1,000 75,500
Chevron Corp. (b).................................... 500 41,531
Chrysler Corp........................................ 500 28,188
Chubb Corp........................................... 200 16,075
Cincinnati Milacron, Inc............................. 200 4,863
Cinergy Corp......................................... 400 14,000
Circuit City Stores, Inc............................. 100 4,688
Cisco Systems, Inc. (a).............................. 700 64,443
Citicorp (b)......................................... 300 44,775
Clear Channel Communications (a)..................... 100 10,913
Clorox Co............................................ 100 9,538
Coastal Corp......................................... 100 6,981
Coca-Cola Co. (b).................................... 1,800 153,900
Colgate-Palmolive Co................................. 1,000 8,800
Columbia Energy Group................................ 300 16,688
Columbia/HCA Healthcare Corp......................... 200 5,825
Comerica, Inc........................................ 200 13,250
Compaq Computer Corp................................. 900 25,538
Computer Associates International, Inc............... 500 27,781
Computer Sciences Corp............................... 200 12,800
Conseco, Inc......................................... 100 4,675
Corning, Inc......................................... 100 3,475
Costco Companies, Inc. (a)........................... 200 12,613
Countrywide Credit Industries, Inc................... 100 5,075
Dana Corp............................................ 100 5,350
Darden Restaurants, Inc.............................. 400 6,350
Dayton Hudson Corp................................... 200 9,700
Deere & Co........................................... 700 37,013
Dell Computer Corp. (a).............................. 600 55,688
Delta Air Lines, Inc................................. 100 12,925
De Luxe Corp......................................... 300 10,744
Dillards, Inc........................................ 100 4,144
</TABLE>
24 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
Dominion Resources, Inc.............................. 500 $ 20,375
Dow Jones & Co., Inc................................. 300 16,725
Dresser Industries, Inc. (b)......................... 700 30,844
Duke Energy Corp..................................... 200 11,850
Eastern Enterprises.................................. 200 8,575
Eastman Chemical Co.................................. 100 6,225
Edison International................................. 700 20,694
E. I. Du Pont de Nemours & Co. (b)................... 700 52,238
EMC Corp. (a)........................................ 500 22,406
Emerson Electric Co.................................. 600 36,225
Engelhard Corp....................................... 100 2,025
Enron Corp........................................... 100 5,406
Entergy Corp......................................... 100 2,875
Exxon Corp........................................... 900 64,181
FPL Group, Inc....................................... 700 44,100
Federal Home Loan Mortgage Corp...................... 800 37,650
Federal National Mortgage Association................ 900 54,675
Federated Department Stores, Inc. (a)................ 100 5,381
First Chicago NBD Corp............................... 100 8,863
First Energy Corp.................................... 200 6,150
First UN Corp. (b)................................... 1,200 69,900
Fleet Financial Group, Inc........................... 300 25,050
Fleetwood Enterprises, Inc........................... 100 4,000
Fluor Corp........................................... 500 25,500
Ford Motor Co........................................ 1,000 59,000
Fort James Corp...................................... 200 8,900
Foster Wheeler Corp.................................. 100 2,144
Freeport-McMoran Copper and Gold, Inc................ 600 9,113
GPU, Inc............................................. 200 7,563
GTE Corp. (b)........................................ 1,100 61,188
Gannett, Inc......................................... 700 49,744
Gap, Inc............................................. 300 18,488
Gateway 2000, Inc. (a)............................... 100 5,063
General Electric Co. (b)............................. 1,900 172,900
</TABLE>
25 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
General Motors Corp................................... 200 $ 13,363
General Reinsurance Corp.............................. 100 25,350
Georgia-Pacific Corp.................................. 100 5,894
Gillette Co........................................... 1,000 56,688
Golden West Financial Corp............................ 100 10,631
B.F. Goodrich Co...................................... 600 29,775
Goodyear Tire & Rubber Co............................. 100 6,444
Great Lakes Chemical Corp............................. 100 3,944
Guidant Corp.......................................... 200 14,263
HBO & Co.............................................. 200 7,050
Halliburton Co........................................ 300 13,369
Harris Corp........................................... 200 8,938
Hartford Financial Services Group, Inc................ 300 34,313
Helmerich and Payne, Inc.............................. 500 11,125
Hercules, Inc......................................... 300 12,338
Hershey Foods Corp.................................... 300 20,700
Hewlett-Packard Co.................................... 500 29,938
Home Depot, Inc....................................... 700 58,144
Hong Kong Land Holding................................ 1,264 1,580
Houston Industries, Inc............................... 300 9,263
IKON Office Solutions, Inc............................ 100 1,456
Intel Corp. (b)....................................... 1,200 88,950
International Business Machines....................... 700 80,369
Interpublic Group..................................... 100 6,069
J.C. Penney, Inc...................................... 100 7,231
Johnson & Johnson, Inc................................ 900 66,375
Jostens, Inc.......................................... 300 7,163
Kmart Corp. (a)....................................... 300 5,775
Keycorp............................................... 500 17,813
Kimberly-Clark Corp................................... 200 9,175
King World Productions, Inc. (a)...................... 300 7,650
Knight Rider, Inc..................................... 200 11,013
LSI Logic Corp. (a)................................... 100 2,306
Latin American Discovery Fund (c)..................... 12,800 121,600
</TABLE>
26 See Notes to Financial Statements
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- ------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
Lehman Brothers Holdings, Inc......................... 300 $ 23,269
Eli Lilly & Co........................................ 900 59,456
Lockheed Martin Corp.................................. 200 21,175
Lowes Cos., Inc....................................... 400 16,225
Lucent Technologies, Inc. (b)......................... 1,000 83,188
MBNA Corp............................................. 100 3,300
MCI Communications Corp............................... 200 11,625
Mallinckrodt, Inc..................................... 200 5,938
Marsh & McLennan Co., Inc............................. 150 9,066
May Department Stores Co.............................. 100 6,550
Maytag Corp........................................... 400 19,750
McDermott International, Inc.......................... 400 13,775
McDonalds Corp........................................ 900 62,100
Media One Group, Inc.................................. 100 4,395
Medtronic, Inc........................................ 400 25,500
Mellon Bank Corp...................................... 100 6,962
Merck and Co., Inc. (b)............................... 600 80,250
Merrill Lynch & Co., Inc.............................. 200 18,450
Microsoft Corp. (a) (b)............................... 2,000 216,750
Minnesota Mining & Manufacturing Co................... 300 24,656
Mobil Corp............................................ 500 38,313
Monsanto Co........................................... 100 5,588
Morgan Stanley Asia Pacific Fund (c).................. 6,200 39,913
Motorola, Inc......................................... 200 10,513
National City Corp.................................... 200 14,200
NationsBank Corp. (b)................................. 800 61,200
Navistar International Corp., Inc. (a)................ 800 23,100
New York Times Co..................................... 200 15,850
Newmont Mining Corp................................... 300 7,088
Nicor, Inc............................................ 100 4,013
Northern Telecom, Ltd................................. 300 17,025
Northrop Grumman Corp................................. 100 10,313
Norwest Corp.......................................... 400 14,950
Novell, Inc. (a)...................................... 100 1,275
</TABLE>
See Notes to Financial Statements
27
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
Nucor Corp............................................. 100 $ 4,600
Oracle Systems Corp. (a)............................... 1,000 24,563
Owens-Illinois, Inc. (a)............................... 100 4,475
P P & L Resources, Inc................................. 500 11,344
Paccar, Inc............................................ 200 10,450
Peco Energy Co......................................... 300 8,756
PepsiCo, Inc........................................... 1,300 53,544
Pfizer, Inc. (b)....................................... 1,100 119,554
Philip Morris Cos., Inc. (b)........................... 2,700 106,311
Procter & Gamble Co. (b)............................... 1,300 118,380
Progressive Corp....................................... 100 14,100
Providian Financial Corp............................... 300 23,569
Pulte Corp............................................. 600 17,925
R.H. Donnelley Corp.................................... 300 10,838
Ralston Purina Co...................................... 300 35,044
Raychem Corp........................................... 200 5,913
Reebok International Ltd. (a).......................... 100 2,769
Republic New York Corp................................. 100 6,294
Rohm & Haas Co......................................... 100 10,394
Rowan Companies, Inc. (a).............................. 300 5,831
Royal Dutch Petroleum Co............................... 1,100 60,303
SBC Communications, Inc................................ 900 36,000
SAFECO Corp............................................ 100 4,544
Sara Lee Corp.......................................... 500 27,969
Schering-Plough Corp................................... 300 27,488
Schlumberger Ltd....................................... 300 20,494
Sealed Air Corp. (a)................................... 100 3,675
Sears, Roebuck & Co.................................... 400 24,425
Service Corp. International............................ 100 4,288
Sprint Corp............................................ 300 21,150
State Street Corp...................................... 100 6,950
Sun, Inc............................................... 700 27,169
Sun Microsystems, Inc. (a)............................. 400 17,375
</TABLE>
See Notes to Financial Statements
28
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
SunAmerica, Inc........................................ 300 $17,231
Suntrust Banks, Inc.................................... 300 24,394
SUPERVALU, Inc......................................... 300 13,313
TBX Companies, Inc..................................... 400 9,650
TRW, Inc............................................... 100 5,463
Tektronix, Inc......................................... 100 3,538
Tellabs, Inc. (a)...................................... 100 7,163
Texas Instruments, Inc................................. 100 5,831
Texas Utilities Co..................................... 200 8,325
Textron, Inc........................................... 100 7,169
Thomas & Betts Corp.................................... 400 19,700
Time Warner, Inc....................................... 300 25,631
Torchmark, Inc......................................... 300 13,725
Travelers Group, Inc................................... 1,200 72,750
Tupperware Corp........................................ 100 2,812
Tyco International Ltd................................. 700 44,100
USX-Marathon Group..................................... 200 6,863
UST, Inc............................................... 1,200 32,400
US Bancorp............................................. 300 12,900
US USX Steel Group..................................... 700 23,100
Unilever, NV........................................... 200 15,788
US WEST, Inc. (a)...................................... 303 14,228
United Technologies Corp............................... 200 18,500
Venator Group, Inc. (a)................................ 400 7,650
Viacom, Inc. (a)....................................... 300 17,475
Wal-Mart Stores, Inc. (b).............................. 1,600 97,200
Walt Disney Co. (b).................................... 400 42,025
Warner-Lambert Co...................................... 700 48,563
Washington Mutual, Inc................................. 100 4,344
Wendy's International, Inc............................. 100 2,350
Williams Companies, Inc................................ 100 3,375
Worldcom, Inc. (a)..................................... 600 29,063
</TABLE>
See Notes to Financial Statements
29
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Description Shares Market Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
United States (Continued)
W.R. Grace and Co. (a)............................................................ 600 $ 10,238
Xerox Corp........................................................................ 300 30,488
-----------
6,269,017
-----------
Total Common and Preferred Stocks and Equivalents 61.9%............................. 14,942,346
-----------
U. S. Government Obligations 8.7%
U. S. Treasury Bond ($600,000 par, 6.250% coupon, 08/15/23 maturity) (b).............. 642,372
U. S. Treasury Bond ($100,000 par, 8.125% coupon, 08/15/19 maturity) (b).............. 129,062
U. S. Treasury Note ($1,516 par, 3.625% coupon, 07/15/02 maturity).................... 1,500
U. S. Treasury Note ($210,000 par, 3.625% coupon, 01/15/08 maturity) (b).............. 207,572
U. S. Treasury Note ($350,000 par, 6.250% coupon, 10/01/31 maturity) (b).............. 357,273
U. S. Treasury Note ($690,000 par, 7.250% coupon, 05/15/04 maturity) (b).............. 748,492
-----------
Total U. S. Government Obligations.................................................. 2,086,271
-----------
Total Long-Term Investments 70.6%
(Cost $14,206,601).................................................................. 17,028,617
-----------
Short-Term Investments 29.3%
Commercial Paper 12.8%
State Street Bank & Trust Co. ($3,082,000 par collateralized by
U.S. Government Obligations in a pooled cash account, dated 06/30/98,
to be sold on 07/01/98 at $3,082,428) (b)............................................. 3,082,000
U.S. Government Agency Obligations 16.5%
Federal Farm Credit Bank Consolidated Discount Note
($4,000,000 par, 5.400% yield, 07/06/98 maturity) (b)................................. 3,997,000
-----------
Total Short-Term Investments
(Cost $7,079,000)................................................................... 7,079,000
-----------
Total Investments 99.9%
(Cost $21,285,601).................................................................. 24,107,617
Foreign Currency 0.4% (Various Denominations)
(Cost $93,418)...................................................................... 92,188
Liabilities in Excess of Other Assets (0.3%).......................................... (65,308)
-----------
Net Assets 100.0%..................................................................... $24,134,497
===========
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
(b) Assets segregated as collateral for forward purchase commitments.
(c) Related party transactions.
ADR--American Depository Receipt
See Notes to Financial Statements
30
<PAGE>
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Assets:
<S> <C>
Total Investments (Cost $21,285,601).................................................................... $24,107,617
Foreign Currency (Cost $93,418)......................................................................... 92,188
Cash.................................................................................................... 101
Deposit on Variation Margin............................................................................. 70,375
Receivables:
Variation Margin on Futures........................................................................... 98,750
Fund Shares Sold...................................................................................... 62,975
Dividends............................................................................................. 43,722
Interest.............................................................................................. 30,610
Investments Sold...................................................................................... 8,050
Unamortized Organizational Costs........................................................................ 2,697
Other................................................................................................... 1,208
-----------
Total Assets....................................................................................... 24,518,293
-----------
Liabilities:
Payables:
Fund Shares Repurchased............................................................................... 123,020
Investments Purchased................................................................................. 70,801
Distributor and Affiliates............................................................................ 34,920
Investment Advisory Fee............................................................................... 18,907
Accrued Expenses........................................................................................ 58,083
Forward Commitments and Foreign Currency Contracts...................................................... 53,711
Trustees' Deferred Compensation and Retirement Plans.................................................... 24,354
-----------
Total Liabilities.................................................................................. 383,796
-----------
Net Assets.............................................................................................. $24,134,497
===========
Net Assets Consist of:
Capital................................................................................................. $19,883,974
Net Unrealized Appreciation............................................................................. 2,771,824
Accumulated Net Realized Gain........................................................................... 1,781,576
Accumulated Net Investment Loss......................................................................... (302,877)
-----------
Net Assets.............................................................................................. $24,134,497
===========
Maximum Offering Price Per Share:
Class A Shares:
Net asset value and redemption price per share (Based on net assets
of $11,998,461 and 1,068,528 shares of beneficial interest issued
and outstanding)................................................................................... $ 11.23
Maximum sales charge (4.75%* of offering price).................................................... .56
-----------
Maximum offering price to public................................................................... $ 11.79
===========
Class B Shares:
Net asset value and offering price per share (Based on net assets
of $10,350,657 and 942,665 shares of beneficial interest issued
and outstanding)................................................................................... $ 10.98
===========
Class C Shares:
Net asset value and offering price per share (Based on net assets of
$1,785,379 and 162,309 shares of beneficial interest issued and outstanding)....................... $ 11.00
===========
*On sales of $100,000 or more, the sales charge will be reduced.
</TABLE>
31 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
For the Six Months Ended June 30, 1998 (Unaudited)
=================================================================================================================
<S> <C>
Investment Income:
Interest.......................................................................................... $ 233,870
Dividends (Net of foreign withholding taxes of $13,503)........................................... 264,169
----------
Total Income................................................................................. 498,039
----------
Expenses:
Custody........................................................................................... 128,700
Investment Advisory Fee........................................................................... 117,702
Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C
of $14,481, $50,939 and $8,836, respectively)................................................... 74,256
Shareholder Services.............................................................................. 49,935
Registration and Filing Fees...................................................................... 35,885
Audit............................................................................................. 27,919
Trustees' Fees and Expenses....................................................................... 6,800
Amortization of Organizational Costs.............................................................. 1,631
Legal............................................................................................. 905
Other............................................................................................. 51,145
----------
Total Expenses............................................................................... 494,878
----------
Net Investment Income............................................................................. $ 3,161
==========
Realized and Unrealized Gain/Loss:
Realized Gain/Loss:
Investments..................................................................................... $1,337,114
Futures......................................................................................... 342,432
Forward Commitments............................................................................. 140,733
Foreign Currency Transactions................................................................... 128,484
----------
Net Realized Gain................................................................................. 1,948,763
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period......................................................................... 2,108,124
----------
End of the Period:
Investments.................................................................................. 2,822,016
Futures...................................................................................... 8,781
Forward Commitments.......................................................................... 34,848
Forward Currency Contracts................................................................... (89,019)
Foreign Currency Translation................................................................. (4,802)
----------
2,771,824
----------
Net Unrealized Appreciation During the Period..................................................... 663,700
----------
Net Realized and Unrealized Gain.................................................................. $2,612,463
==========
Net Increase in Net Assets from Operations........................................................ $2,615,624
==========
</TABLE>
32 See Notes to Financial Statements
<PAGE>
Statement of Changes in Net Assets
For the Six Months Ended June 30, 1998 and the
Year Ended December 31, 1997 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31, 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income/Loss.................................................. $ 3,161 $ (247,078)
Net Realized Gain........................................................... 1,948,763 2,539,774
Net Unrealized Appreciation/Depreciation During the Period.................. 663,700 (471,761)
----------- -----------
Change in Net Assets from Operations........................................ 2,615,624 1,820,935
----------- -----------
Distributions from Net Investment Income.................................... (3,161) -0-
Distributions in Excess of Net Investment Income............................ (73,658) -0-
----------- -----------
Distributions from and in Excess of Net Investment Income*.................. (76,819) -0-
Distributions from Net Realized Gain*....................................... (175,094) (2,665,787)
----------- -----------
Total Distributions....................................................... (251,913) (2,665,787)
----------- -----------
Net Change in Net Assets from Investment
Activities.................................................................. 2,363,711 (844,852)
----------- -----------
From Capital Transactions:
Proceeds from Shares Sold................................................... 1,728,637 6,116,272
Net Asset Value of Shares Issued Through
Dividend Reinvestment....................................................... 236,945 2,487,060
Cost of Shares Repurchased.................................................. (3,188,690) (4,866,248)
----------- -----------
Net Change in Net Assets from Capital Transactions.......................... (1,223,108) 3,737,084
----------- -----------
Total Increase in Net Assets................................................ 1,140,603 2,892,232
Net Assets:
Beginning of the Period..................................................... 22,993,894 20,101,662
----------- -----------
End of the Period (Including accumulated net investment
loss of $302,877 and $229,219, respectively).............................. $24,134,497 $22,993,894
=========== ===========
Six Months Ended Year Ended
*Distributions by Class June 30, 1998 December 31, 1997
- -------------------------------------------------------------------------------------------------------------------
Distributions from and in Excess of Net Investment Income:
Class A Shares............................................................ $ (76,819) $ -0-
Class B Shares............................................................ -0- -0-
Class C Shares............................................................ -0- -0-
----------- -----------
$ (76,819) $ -0-
=========== ===========
Distributions from Net Realized Gain:
Class A Shares............................................................ $ (84,792) $(1,273,008)
Class B Shares............................................................ (76,917) (1,192,389)
Class C Shares............................................................ (13,385) (200,390)
----------- -----------
$ (175,094) $(2,665,787)
=========== ===========
</TABLE>
33 See Notes to Financial Statements
<PAGE>
Financial Highlights
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
May 16, 1994
Six Months (Commencement
Ended Year Ended December 31, of Investment
June 30, --------------------------- Operations) to
Class A Shares 1998 (b) 1997 1996(b) 1995 December 31, 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period ....... $10.162 $10.530 $ 10.15 $ 9.19 $ 9.44
------- ------- ------- ------- -------
Net Investment Income/Loss ................. .022 (0.088) -0- .08 .10
Net Realized and Unrealized Gain/Loss ...... 1.197 1.014 1.242 1.1375 (.2475)
------- ------- ------- ------- -------
Total from Investment Operations ............... 1.219 .926 1.242 1.2175 (.1475)
------- ------- ------- ------- -------
Less:
Distributions from and in Excess of Net
Investment Income ........................ .072 -0- -0- .0775 .075
Distributions from and in Excess of Net
Realized Gain ............................ .080 1.294 .862 .18 .0275
------- ------- ------- ------- -------
Total Distributions ............................ .152 1.294 .862 .2575 .1025
------- ------- ------- ------- -------
Net Asset Value, End of the Period ............. $11.229 $10.162 $10.530 $ 10.15 $ 9.19
======= ======= ======= ======= =======
Total Return* (a) .............................. 12.15%** 8.94% 12.44% 13.30% (1.57%)**
Net Assets at End of the Period (In millions) .. $ 12.0 $ 11.2 $ 8.5 $ 15.5 $ 11.5
Ratio of Expenses to Average Net Assets* ....... 3.84% 3.66% 2.87% 2.79% 2.75%
Ratio of Net Investment Income/Loss to Average
Net Assets* .................................. .42% (.67%) .00% .81% 1.54%
Portfolio Turnover ............................. 118%** 231% 91% 135% 50%**
* If certain expenses had not been assumed by
Van Kampen, total return would have been lower
and the ratios would have been as follows:
Ratio of Expenses to Average Net Assets ........ N/A N/A 3.17% 3.68% 2.76%
Ratio of Net Investment Income/Loss to Average
Net Assets ................................... N/A N/A (.30%) (.07%) 1.53%
</TABLE>
** Non-Annualized
(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(b) Based on average month-end shares outstanding.
N/A - Not Applicable.
See Notes to Financial Statements
34
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
<TABLE>
<CAPTION>
============================================================================================================================
May 16, 1994
Year Ended (Commencement
December 31, of Investment
Six Months Ended ------------------------------------- Operations) to
Class B Shares June 30, 1998 (b) 1997 1996 (b) 1995 December 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period.............. $ 9.911 $10.379 $ 10.10 $ 9.17 $ 9.44
--------- ------- ------- ------- ----------
Net Investment Income/Loss........... (.018) (.146) (.106) (.01) .01
Net Realized and Unrealized
Gain/Loss.......................... 1.167 .972 1.247 1.1375 (.2065)
--------- ------- ------- ------- ----------
Total from Investment
Operations............................ 1.149 .826 1.141 1.1275 (.1965)
--------- ------- ------- ------- ----------
Less:
Distributions from and in Excess
of Net Investment Income........... -0- -0- -0- .0175 .046
Distributions from and in Excess
of Net Realized Gain............... .080 1.294 .862 .18 .0275
--------- ------- ------- ------- ----------
Total Distributions..................... .080 1.294 .862 .1975 .0735
--------- ------- ------- ------- ----------
Net Asset Value,
End of the Period..................... $ 10.980 $ 9.911 $10.379 $ 10.10 $ 9.17
========= ======= ======= ======= ==========
Total Return* (a)....................... 11.72%** 8.10% 11.51% 12.31% (2.09%)**
Net Assets at End of the
Period (In millions).................. $ 10.4 $ 10.0 $ 9.9 $ 8.1 $ 7.4
Ratio of Expenses to Average
Net Assets*........................... 4.58% 4.42% 3.76% 3.73% 3.92%
Ratio of Net Investment Income/
Loss to Average Net Assets*........... (.35%) (1.45%) (1.01%) (.09%) .13%
Portfolio Turnover...................... 118%** 231% 91% 135% 50%**
*If certain expenses had not been assumed by Van Kampen, total return would have
been lower and the ratios would have been as follows:
Ratio of Expenses to Average
Net Assets............................ N/A N/A 4.06% 4.61% 3.93%
Ratio of Net Investment Income/
Loss to Average Net Assets............ N/A N/A (1.30%) (.97%) .12%
</TABLE>
** Non-Annualized
(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(b) Based on average month-end shares outstanding.
N/A - Not Applicable.
See Notes to Financial Statements
35
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
<TABLE>
<CAPTION>
========================================================================================================================
May 16, 1994
Year Ended (Commencement
December 31, of Investment
Six Months Ended ---------------------------------- Operations) to
Class C Shares June 30, 1998 (b) 1997 1996 (b) 1995 December 31, 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period................... $ 9.927 $10.395 $ 10.12 $ 9.20 $ 9.44
--------- ------- ------- ------- ----------
Net Investment Income/Loss................ (.019) (0.139) (.104) (.02) .05
Net Realized and Unrealized
Gain/Loss................................. 1.172 .965 1.241 1.1375 (.2165)
--------- ------- ------- ------- ----------
Total from Investment
Operations................................. 1.153 .826 1.137 1.1175 (.1665)
--------- ------- ------- ------- ----------
Less:
Distributions from and in Excess
of Net Investment Income................ -0- -0- -0- .0175 .046
Distributions from and in Excess
of Net Realized Gain.................... .080 1.294 .862 .18 .0275
--------- ------- ------- ------- ----------
Total Distributions.......................... .080 1.294 .862 .1975 .0735
--------- ------- ------- ------- ----------
Net Asset Value,
End of the Period.......................... $ 11.000 $ 9.927 $10.395 $ 10.12 $ 9.20
========= ======= ======= ======= ==========
Total Return* (a)............................ 11.69%** 8.09% 11.49% 12.16% (1.77%)**
Net Assets at End of the
Period (In millions)....................... $ 1.8 $ 1.7 $ 1.7 $ 1.9 $ 1.3
Ratio of Expenses to Average
Net Assets*................................ 4.63% 4.46% 3.78% 3.79% 3.36%
Ratio of Net Investment Income/
Loss to Average Net Assets*................ (.37%) (1.50%) (.99%) (.18%) .80%
Portfolio Turnover........................... 118%** 231% 91% 135% 50%**
*If certain expenses had not been assumed by Van Kampen,
total return would have been lower and the ratios
would have been as follows:
Ratio of Expenses
to Average Net Assets...................... N/A N/A 4.07% 4.67% 3.38%
Ratio of Net Investment Income/
Loss to Average Net Assets................. N/A N/A (1.28%) (1.06%) .78%
</TABLE>
** Non-Annualized
(a) Total Return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(b) Based on average month-end shares outstanding.
N/A - Not Applicable.
See Notes to Financial Statements
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
================================================================================
1. Significant Accounting Policies
Van Kampen Global Managed Assets Fund, formerly the Van Kampen American Capital
Global Managed Assets Fund, (the "Fund") is organized as a Delaware business
trust, and is registered as a non-diversified open-end management investment
company under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek total return through a managed balance of
foreign and domestic equity and debt securities. The Fund commenced investment
operations on May 16, 1994, with three classes of beneficial interest, Class A,
Class B and Class C shares.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuation--Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Unlisted securities and listed securities for which the last sales price is not
available are valued at their last quoted bid price. Fixed income securities are
stated at value using market quotations. For those securities where quotations
or prices are not available, valuations are determined in accordance with
procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost.
B. Security Transactions--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management Inc. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank. The seller
is required to maintain the value of the underlying security at not less than
the repurchase proceeds due the Fund.
37
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
C. Income and Expenses--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Accordingly, original issue
discounts on debt securities purchased are amortized over the life of the
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. Expenses of the Fund are allocated on a pro rata basis
to each class of shares, except for distribution and service fees and transfer
agency costs which are unique to each class of shares.
D. Foreign Currency Translation--Assets and liabilities denominated in foreign
currencies and commitments under forward currency contracts are translated into
U.S. dollars based on quoted exchange rates as of noon Eastern Time. Purchases
and sales of portfolio securities are translated at the rate of exchange
prevailing when such securities were acquired or sold. Income and expenses are
translated at rates prevailing when accrued. Realized and unrealized gains and
losses on securities are not segregated for financial reporting purposes between
amounts arising from changes in exchange rates and amounts arising from changes
in the market prices of securities. Realized gain and loss on foreign currency
includes the net realized amount from the sale of currency and the amount
realized between trade date and settlement date on security transactions.
E. Organizational Costs--The Fund has reimbursed Van Kampen Funds Inc. or its
affiliates (collectively "Van Kampen") for costs incurred in connection with the
Fund's organization in the amount of $15,000. These costs are being amortized on
a straight line basis over the 60-month period ending May 15, 1999. The Adviser
has agreed that in the event any of the initial shares of the Fund originally
purchased by Van Kampen are redeemed during the amortization period, the Fund
will be reimbursed for any unamortized organizational costs in the same
proportion as the number of shares redeemed bears to the number of initial
shares held at the time of redemption.
F. Federal Income Taxes--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
At June 30, 1998, for federal income tax purposes cost of long- and short-term
investments, including foreign currencies, is $21,436,867, the aggregate gross
unrealized appreciation is $3,378,444 and the aggregate gross unrealized
depreciation is $664,468, resulting in net unrealized appreciation including
open futures, forward commitments, forward currency contracts and foreign
currency translation of other assets and liabilities of $2,713,976.
Net realized gains or losses may differ for financial purposes primarily as a
result of wash sales and the mark to market of passive foreign investment
companies at June 30, 1998.
38
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
G. Distribution of Income and Gains--The Fund declares and pays dividends
annually from net investment income and from net realized gains on securities,
if any. Net investment income for federal income tax purposes includes gains and
losses realized on certain transactions in foreign currencies. These realized
gains and losses are included as net realized gains or losses for financial
reporting purposes.
2. Investment Advisory Agreement and Other Transactions with Affiliates
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly. The Adviser has entered into a subadvisory agreement with Morgan
Stanley Asset Management Inc. (the "Subadviser"), who provides advisory services
to the Fund and the Adviser with respect to the Fund's investment in foreign
securities. Investment advisory fees are calculated monthly, based on the
average daily net assets of the Fund at the annual rate of 1.00%. The Adviser
pays 50% of its investment advisory fee to the Subadviser.
For the six months ended June 30, 1998, the Fund recognized expenses of
approximately $900 representing legal services provided by Skadden, Arps, Slate,
Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the Fund
is an affiliated person.
For the six months ended June 30, 1998, the Fund recognized expenses of
approximately $12,100 representing Van Kampen's cost of providing accounting
services to the Fund.
Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as the
shareholder servicing agent for the Fund. For the six months ended June 30,
1998, the Fund recognized expenses of approximately $50,800. Beginning in 1998,
the transfer agency fees are determined through negotiations with the Fund's
Board of Trustees and are based on competitive market benchmarks.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its trustees
who are not officers of Van Kampen. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Fund. The maximum annual
benefit per trustee under the plan is $2,500.
39
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
During the period, the Fund owned shares of the following Morgan Stanley Funds
which were managed by the Subadviser:
<TABLE>
<CAPTION>
Transactions
During the Period
---------------------
% of Net Assets Cost of Proceeds
at June 30, 1998 Purchases of Sales
================================================================================
<S> <C> <C> <C>
Latin American Discovery Fund......... .50% -0- -0-
Morgan Stanley Asia Pacific Fund...... .17% -0- -0-
</TABLE>
At June 30, 1998, Van Kampen owned 10,604, 53 and 53 shares of Classes A, B
and C of the Fund, respectively.
3. Capital Transactions
The Fund has outstanding three classes of shares of beneficial interest, Classes
A, B and C, each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized.
At June 30, 1998, capital aggregated $9,518,554, $8,882,195 and $1,483,225 for
Classes A, B and C, respectively. For the six months ended June 30, 1998,
transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
-------- -----------
Sales:
<S> <C> <C>
Class A....................................... 99,090 $ 1,084,864
Class B....................................... 40,986 440,338
Class C....................................... 19,034 203,435
-------- -----------
Total Sales..................................... 159,110 $ 1,728,637
======== ===========
Dividend Reinvestment:
Class A....................................... 14,056 $ 155,316
Class B....................................... 6,469 69,995
Class C....................................... 1,073 11,634
-------- -----------
Total Dividend Reinvestment..................... 21,598 $ 236,945
======== ===========
Repurchases:
Class A....................................... (149,952) $(1,613,821)
Class B....................................... (118,017) (1,242,871)
Class C....................................... (31,041) (331,998)
-------- -----------
Total Repurchases............................... (299,010) $(3,188,690)
======== ===========
</TABLE>
40
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
At December 31, 1997, capital aggregated $9,892,195, $9,614,733 and $1,600,154
for Classes A, B and C, respectively. For the year ended December 31, 1997,
transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
===============================================================================
<S> <C> <C>
Sales:
Class A....................................... 326,563 $ 3,557,326
Class B....................................... 182,617 1,967,735
Class C....................................... 54,786 591,211
--------- -----------
Total Sales..................................... 563,966 $ 6,116,272
========= ===========
Dividend Reinvestment:
Class A....................................... 122,002 $ 1,233,093
Class B....................................... 110,121 1,086,423
Class C....................................... 16,955 167,544
--------- -----------
Total Dividend Reinvestment..................... 249,078 $ 2,487,060
========= ===========
Repurchases:
Class A....................................... (151,742) $(1,673,088)
Class B....................................... (233,838) (2,537,474)
Class C....................................... (60,449) (655,686)
--------- -----------
Total Repurchases............................... (446,029) $(4,866,248)
========= ===========
</TABLE>
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares will
automatically convert to Class A shares after the eighth year following
purchase. The CDSC will be imposed on most redemptions made within five years of
the purchase for Class B and one year of the purchase for Class C as detailed in
the following schedule.
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
---------------------------
Year of Redemption Class B Class C
===============================================================================
<S> <C> <C>
First............................................ 4.00% 1.00%
Second........................................... 4.00% None
Third............................................ 3.00% None
Fourth........................................... 2.50% None
Fifth............................................ 1.50% None
Sixth and Thereafter............................. None None
</TABLE>
41
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
For the six months ended June 30, 1998, Van Kampen, as Distributor for the
Fund, received net commissions on sales of the Fund's Class A shares of
approximately $1,400 and CDSC on the redeemed shares of approximately $11,800.
Sales charges do not represent expenses of the Fund.
4. Investment Transactions
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments and forward commitments, were $19,946,869 and
$20,920,731, respectively.
5. Derivative Financial Instruments
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio, manage the portfolio's effective yield, foreign currency exposure, or
generate potential gain. All of the Fund's portfolio holdings, including
derivative instruments, are marked to market each day with the change in value
reflected in unrealized appreciation/depreciation. Upon disposition, a realized
gain or loss is recognized accordingly, except when exercising a call option
contract or taking delivery of a security underlying a futures or forward
contract. In these instances, the recognition of gain or loss is postponed until
the disposal of the security underlying the contract. Purchasing securities on a
forward commitment involves a risk that the market value at the time of delivery
may be lower than the agreed upon purchase price resulting in an unrealized
loss. Selling securities on a forward commitment involves different risks and
can result in losses more significant than those arising from the purchase of
such securities.
Summarized on the following pages are the specific types of derivative
financial instruments used by the Fund.
Forward Purchase Commitments
The Fund trades certain securities under the terms of forward commitments,
whereby the settlement occurs at a specific future date. Forward commitments are
privately negotiated transactions between the Fund and dealers. While forward
commitments are outstanding, the Fund maintains sufficient collateral of cash or
securities in a segregated account with its custodian. The commitments are
marked to market on a daily basis with changes in value reflected as a component
of unrealized appreciation or depreciation on forwards. Risks may arise as a
result of the potential inability of the counterparties to meet the terms of
their contracts.
42
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
The following forward purchase commitments were outstanding as of June 30,
1998:
<TABLE>
<CAPTION>
Par Amount
in Local Unrealized
Currency Appreciation/
(000) Description Coupon Maturity Depreciation
- ------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Australia (Commonwealth)
175--AUD Settlement 07/30/98.......................... 7.500% 07/15/05 $ 385
200--AUD Settlement 08/13/98.......................... 9.000 09/15/04 809
150--AUD Settlement 10/22/98.......................... 12.000 11/15/01 940
Canada (Government of)
100--CAD Settlement 08/13/98.......................... 9.750 06/01/21 1,931
150--CAD Settlement 09/24/98.......................... 8.750 12/01/05 (680)
Denmark (Kingdom of)
1,400--DKK Settlement 10/07/98.......................... 8.000 03/15/06 (135)
Germany (Federal Republic of)
100--DEM Settlement 09/24/98.......................... 6.000 01/04/07 (197)
Germany Unity (Republic of)
300--DEM Settlement 08/06/98.......................... 8.000 01/21/02 1,895
400--DEM Settlement 08/13/98.......................... 8.000 01/21/02 1,650
Germany (Treuhandanstalt)
1,650--DEM Settlement 08/06/98.......................... 7.500 09/09/04 14,088
250--DEM Settlement 08/20/98.......................... 7.000 11/25/99 348
Italy (Republic of)
500,000--ITL Settlement 08/13/98.......................... 9.500 02/01/06 5,367
Japan
25,000--JPY Settlement 08/13/98.......................... 3.400 03/22/04 1,341
Sweden (Kingdom of)
3,100--SEK Settlement 08/13/98.......................... 6.000 02/09/05 9,519
United Kingdom
275--GBP Settlement 08/06/98.......................... 7.750 09/08/06 (2,413)
-------------
Total Forward Purchase Commitments
(Cost $3,992,720)............................ $ 34,848
=============
</TABLE>
Closed but Unsettled Forward Commitments
In certain situations, the Fund has entered into closing transactions for
outstanding forward commitments prior to settlement of the obligation. In doing
so, the Fund realizes a gain or loss on
43
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
the transaction at the time the forward commitment is closed. However,
settlement of both the purchase and sale is still scheduled to occur in the
denominated foreign currency at a future date. The net foreign currency
difference on the trade is marked to market daily and included as a component of
unrealized appreciation/depreciation on forwards.
The following closed but unsettled forward transactions were still
outstanding as of June 30, 1998.
<TABLE>
<CAPTION>
Local Currency
------------------------ US$ Net Unrealized
Description/Currency Receivable Payable Receivable Loss
============================================================================================
<S> <C> <C> <C> <C>
Japan -- Yen
(35,000,000 par, 5.500%, 03/20/02) 41,471,500 41,421,195 $378 $15
</TABLE>
Forward Currency Contracts
A forward currency contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated forward rate. Upon the settlement of
the contract, a realized gain or loss is recognized and is included as a
component of realized gain/loss on forwards. Risks may arise as a result of the
potential inability of the counterparties to meet the terms of their contracts.
The following forward currency contracts were outstanding as of June 30,
1998:
<TABLE>
<CAPTION>
Unrealized
Current Appreciation/
Description Value Depreciation
================================================================================
<S> <C> <C>
Long Contracts
Australian Dollar,
130,000 expiring 07/21/98.......................... $ 80,723 $(4,284)
British Pound Sterling,
290,000 expiring 07/17/98.......................... 483,768 12,518
113,000 expiring 07/29/98.......................... 188,380 (70)
Canadian Dollar,
110,000 expiring 07/17/98.......................... 74,780 (1,707)
335,000 expiring 07/17/98.......................... 227,740 (3,614)
Danish Krone,
1,535,000 expiring 07/22/98........................ 223,649 (3,422)
French Franc,
452,277 expiring 08/17/98.......................... 75,025 (1,927)
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
Unrealized
Current Appreciation/
Description Value Depreciation
- --------------------------------------------------------------------------------
Long Contracts (Continued)
<S> <C> <C>
German Mark,
76,793 expiring 07/09/98....................... $ 42,605 $ (1,057)
175,000 expiring 07/13/98...................... 97,114 (964)
600,000 expiring 07/13/98...................... 332,961 (7,426)
950,000 expiring 07/13/98...................... 527,189 (8,385)
250,000 expiring 07/13/98...................... 138,734 (475)
361,446 expiring 07/13/98...................... 200,604 (2,222)
855,000 expiring 07/13/98...................... 474,470 (4,944)
Hong Kong Dollar,
1,546,031 expiring 08/12/98.................... 198,779 9
Italian Lira,
174,522,400 expiring 07/15/98.................. 98,249 (316)
24,500,000 expiring 07/20/98................... 13,794 (82)
690,000,000 expiring 07/20/98.................. 388,470 (3,386)
343,519,400 expiring 08/06/98.................. 193,453 (2,547)
Japanese Yen,
80,000,000 expiring 07/16/98................... 579,965 (21,539)
25,000,000 expiring 07/16/98................... 181,239 (1,160)
11,487,000 expiring 08/19/98................... 83,684 (3,833)
Malaysian Ringgit,
41,040 expiring 08/04/98....................... 9,720 720
279,960 expiring 08/04/98...................... 66,309 (2,817)
Swedish Krona,
2,300,000 expiring 07/14/98.................... 288,525 (14,956)
---------- ---------
$5,269,929 (77,886)
========== ---------
Short Contracts
Canadian Dollar,
150,000 expiring 07/17/98...................... $ 101,973 165
French Franc,
63,362 expiring 08/04/98....................... 10,503 88
774,000 expiring 09/16/98...................... 128,611 (40)
German Mark,
76,793 expiring 07/09/98....................... 42,605 (605)
322,218 expiring 09/18/98...................... 179,510 490
321,921 expiring 10/02/98...................... 179,488 512
320,013 expiring 10/16/98...................... 178,563 1,437
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
Unrealized
Current Appreciation/
Description Value Depreciation
- --------------------------------------------------------------------------------
<S> <C> <C>
Short Contracts (Continued)
Hong Kong Dollar,
1,546,031 expiring 08/12/98.................... $ 198,779 $ 221
Italian Lira,
174,522,400 expiring 07/15/98.................. 98,248 (1,248)
Japanese Yen,
20,000,000 expiring 07/16/98................... 144,991 (7,629)
7,004,204 expiring 08/26/98.................... 51,076 1,326
26,694,000 expiring 09/10/98................... 195,077 484
21,776,000 expiring 09/21/98................... 159,392 608
15,757,440 expiring 09/28/98................... 115,456 544
3,339,000 expiring 09/28/98.................... 24,465 (780)
18,151,040 expiring 10/19/98................... 133,408 (5,408)
Malaysian Ringgit,
321,000 expiring 08/04/98...................... 76,030 (5,714)
Swiss Franc,
300,000 expiring 07/15/98...................... 198,411 4,416
---------- ---------
$2,216,586 (11,133)
========== ---------
$(89,019)
=========
</TABLE>
46
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
Futures Contracts
A futures contract is an agreement involving the delivery of a particular asset
on a specified future date at an agreed upon price. The Fund generally invests
in stock index futures as a substitute for purchasing and selling specific
securities. 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. During the period the futures contract
is open, payments are periodically received from or made to the broker based
upon changes in the value of the contract (the variation margin). The risk of
loss associated with a futures contract could be in excess of the variation
margin reflected on the Statement of Assets and Liabilities.
Transactions in futures contracts for the six months ended June 30, 1998,
were as follows:
<TABLE>
<CAPTION>
Contracts
================================================================================
<S> <C>
Outstanding at December 31, 1997.................................... 19
Futures Opened...................................................... 58
Futures Closed...................................................... (70)
--------
Outstanding at June 30, 1998........................................ 7
========
</TABLE>
47
<PAGE>
Notes to Financial Statements (Continued)
June 30, 1998 (Unaudited)
================================================================================
The futures contracts outstanding as of June 30, 1998, and the descriptions
and unrealized appreciation/depreciation are as follows:
<TABLE>
<CAPTION>
Unrealized
Appreciation/
Contracts Depreciation
========================================================================================
<S> <C> <C>
FSTE 100
September 1998--Long Contracts
(Current Notional Value of 58,910 GBP per contract).............. 2 $ (595)
S&P 500 Index Futures
September 1998--Long Contracts
(Current Notional Value of $285,750 per contract)................ 3 5,163
Matif CAC 40
September 1998--Long Contracts
(Current Notional Value of 848,700 FFR per contract)............. 1 414
MIB 30 Index
September 1998--Long Contracts
(Current Notional Value of 340,140,000 ITL per contract)......... 1 3,799
------ -------
7 $ 8,781
====== =======
</TABLE>
6. Distribution and Service Plans
The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a service plan (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.
Annual fees under the Plans of up to .25% for Class A and 1.00% each for
Class B and Class C shares are accrued daily. Included in these fees for the six
months ended June 30, 1998, are payments retained by Van Kampen of approximately
$43,200.
48
<PAGE>
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
Board of Trustees
J. Miles Branagan
Richard M. DeMartini*
Linda Hutton Heagy
R. Craig Kennedy
Jack E. Nelson
Don G. Powell*
Phillip B. Rooney
Fernando Sisto
Wayne W. Whalen* -- Chairman
Officers
Dennis J. McDonnell*
President
Ronald A. Nyberg*
Vice President and Secretary
Edward C. Wood, III*
Vice President and Chief Financial Officer
Curtis W. Morell*
Vice President and Chief Accounting Officer
John L. Sullivan*
Treasurer
Tanya M. Loden*
Controller
Peter W. Hegel*
Paul R. Wolkenberg*
Vice Presidents
Investment Adviser
Van Kampen Asset Management Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Investment Subadviser
Morgan Stanley Asset Management Inc.
1585 Broadway
New York, New York 10036
Distributor
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Shareholder Servicing Agent
Van Kampen Investor Services Inc.
P.O. Box 418256
Kansas City, Missouri 64141-9256
Custodian
State Street Bank
and Trust Company
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
Legal Counsel
Skadden, Arps, Slate,
Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Independent Accountants
PricewaterhouseCoopers LLP
200 E. Randolph Drive
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the Investment Company Act
of 1940.
(C) Van Kampen Funds Inc., 1998 All rights reserved.
/SM/ denotes a service mark of Van Kampen Funds Inc.
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless 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. After December 31, 1998, the report, if used with
prospective investors, must be accompanied by a quarterly performance update.
49
<PAGE>
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> GLOBAL MANAGED CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 21,379,019 <F1>
<INVESTMENTS-AT-VALUE> 24,199,805 <F1>
<RECEIVABLES> 244,107 <F1>
<ASSETS-OTHER> 3,905 <F1>
<OTHER-ITEMS-ASSETS> 70,476 <F1>
<TOTAL-ASSETS> 24,518,293 <F1>
<PAYABLE-FOR-SECURITIES> 70,801 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 312,995 <F1>
<TOTAL-LIABILITIES> 383,796 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,518,554
<SHARES-COMMON-STOCK> 1,068,528
<SHARES-COMMON-PRIOR> 1,105,334
<ACCUMULATED-NII-CURRENT> (302,877) <F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> 1,781,576 <F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 2,771,824 <F1>
<NET-ASSETS> 11,998,461
<DIVIDEND-INCOME> 264,169 <F1>
<INTEREST-INCOME> 233,870 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (494,878) <F1>
<NET-INVESTMENT-INCOME> 3,161 <F1>
<REALIZED-GAINS-CURRENT> 1,948,763 <F1>
<APPREC-INCREASE-CURRENT> 663,700 <F1>
<NET-CHANGE-FROM-OPS> 2,615,624 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> (76,819)
<DISTRIBUTIONS-OF-GAINS> (84,792)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 99,090
<NUMBER-OF-SHARES-REDEEMED> (149,952)
<SHARES-REINVESTED> 14,056
<NET-CHANGE-IN-ASSETS> 766,123
<ACCUMULATED-NII-PRIOR> (229,219) <F1>
<ACCUMULATED-GAINS-PRIOR> 7,907 <F1>
<OVERDISTRIB-NII-PRIOR> 0 <F1>
<OVERDIST-NET-GAINS-PRIOR> 0 <F1>
<GROSS-ADVISORY-FEES> 117,702 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 494,878 <F1>
<AVERAGE-NET-ASSETS> 11,594,673
<PER-SHARE-NAV-BEGIN> 10.162
<PER-SHARE-NII> 0.022
<PER-SHARE-GAIN-APPREC> 1.197
<PER-SHARE-DIVIDEND> (0.072)
<PER-SHARE-DISTRIBUTIONS> (0.080)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.229
<EXPENSE-RATIO> 3.84
<AVG-DEBT-OUTSTANDING> 0 <F1>
<AVG-DEBT-PER-SHARE> 0 <F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class
basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> GLOBAL MANAGED CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 21,379,019 <F1>
<INVESTMENTS-AT-VALUE> 24,199,805 <F1>
<RECEIVABLES> 244,107 <F1>
<ASSETS-OTHER> 3,905 <F1>
<OTHER-ITEMS-ASSETS> 70,476 <F1>
<TOTAL-ASSETS> 24,518,293 <F1>
<PAYABLE-FOR-SECURITIES> 70,801 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 312,995 <F1>
<TOTAL-LIABILITIES> 383,796 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,882,195
<SHARES-COMMON-STOCK> 942,665
<SHARES-COMMON-PRIOR> 1,013,227
<ACCUMULATED-NII-CURRENT> (302,877) <F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> 1,781,576 <F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 2,771,824 <F1>
<NET-ASSETS> 10,350,657
<DIVIDEND-INCOME> 264,169 <F1>
<INTEREST-INCOME> 233,870 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (494,878) <F1>
<NET-INVESTMENT-INCOME> 3,161 <F1>
<REALIZED-GAINS-CURRENT> 1,948,763 <F1>
<APPREC-INCREASE-CURRENT> 663,700 <F1>
<NET-CHANGE-FROM-OPS> 2,615,624 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (76,917)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 40,986
<NUMBER-OF-SHARES-REDEEMED> (118,017)
<SHARES-REINVESTED> 6,469
<NET-CHANGE-IN-ASSETS> 308,942
<ACCUMULATED-NII-PRIOR> (229,219) <F1>
<ACCUMULATED-GAINS-PRIOR> 7,907 <F1>
<OVERDISTRIB-NII-PRIOR> 0 <F1>
<OVERDIST-NET-GAINS-PRIOR> 0 <F1>
<GROSS-ADVISORY-FEES> 117,702 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 494,878 <F1>
<AVERAGE-NET-ASSETS> 10,255,738
<PER-SHARE-NAV-BEGIN> 9.911
<PER-SHARE-NII> (0.018)
<PER-SHARE-GAIN-APPREC> 1.167
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (0.080)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.980
<EXPENSE-RATIO> 4.58
<AVG-DEBT-OUTSTANDING> 0 <F1>
<AVG-DEBT-PER-SHARE> 0 <F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class
basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> GLOBAL MANAGED CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 21,379,019 <F1>
<INVESTMENTS-AT-VALUE> 24,199,805 <F1>
<RECEIVABLES> 244,107 <F1>
<ASSETS-OTHER> 3,905 <F1>
<OTHER-ITEMS-ASSETS> 70,476 <F1>
<TOTAL-ASSETS> 24,518,293 <F1>
<PAYABLE-FOR-SECURITIES> 70,801 <F1>
<SENIOR-LONG-TERM-DEBT> 0 <F1>
<OTHER-ITEMS-LIABILITIES> 312,995 <F1>
<TOTAL-LIABILITIES> 383,796 <F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,483,225
<SHARES-COMMON-STOCK> 162,309
<SHARES-COMMON-PRIOR> 173,243
<ACCUMULATED-NII-CURRENT> (302,877) <F1>
<OVERDISTRIBUTION-NII> 0 <F1>
<ACCUMULATED-NET-GAINS> 1,781,576 <F1>
<OVERDISTRIBUTION-GAINS> 0 <F1>
<ACCUM-APPREC-OR-DEPREC> 2,771,824 <F1>
<NET-ASSETS> 1,785,379
<DIVIDEND-INCOME> 264,169 <F1>
<INTEREST-INCOME> 233,870 <F1>
<OTHER-INCOME> 0 <F1>
<EXPENSES-NET> (494,878) <F1>
<NET-INVESTMENT-INCOME> 3,161 <F1>
<REALIZED-GAINS-CURRENT> 1,948,763 <F1>
<APPREC-INCREASE-CURRENT> 663,700 <F1>
<NET-CHANGE-FROM-OPS> 2,615,624 <F1>
<EQUALIZATION> 0 <F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (13,385)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,034
<NUMBER-OF-SHARES-REDEEMED> (31,041)
<SHARES-REINVESTED> 1,073
<NET-CHANGE-IN-ASSETS> 65,538
<ACCUMULATED-NII-PRIOR> (229,219) <F1>
<ACCUMULATED-GAINS-PRIOR> 7,907 <F1>
<OVERDISTRIB-NII-PRIOR> 0 <F1>
<OVERDIST-NET-GAINS-PRIOR> 0 <F1>
<GROSS-ADVISORY-FEES> 117,702 <F1>
<INTEREST-EXPENSE> 0 <F1>
<GROSS-EXPENSE> 494,878 <F1>
<AVERAGE-NET-ASSETS> 1,769,750
<PER-SHARE-NAV-BEGIN> 9.927
<PER-SHARE-NII> (0.019)
<PER-SHARE-GAIN-APPREC> 1.172
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (0.080)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.000
<EXPENSE-RATIO> 4.63
<AVG-DEBT-OUTSTANDING> 0 <F1>
<AVG-DEBT-PER-SHARE> 0 <F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class
basis
</FN>
</TABLE>
