<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Performance in Perspective....................... 4
Portfolio Management Review...................... 5
Glossary of Terms................................ 9
Portfolio Highlights............................. 10
Portfolio of Investments......................... 12
Statement of Assets and Liabilities.............. 36
Statement of Operations.......................... 37
Statement of Changes in Net Assets............... 38
Financial Highlights............................. 39
Notes to Financial Statements.................... 42
Report of Independent Accountants................ 53
</TABLE>
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2
LETTER TO SHAREHOLDERS
January 20, 2000
Dear Shareholder:
As we enter a new century--and millennium--it seems appropriate to take a
look back at the progress that's been made over the last 100 years and how the
world of investing has changed over the generations. Although rapid advances in
technology and science have dramatically altered the world that we live in
today, one of the greatest shifts we've seen is the increasing importance of
investing for many Americans.
Once considered primarily for the wealthy, investing in the stock market is
now available to most people. In fact, almost 79 million individuals--who
represent almost half of all U.S. households--own stocks either directly or
through mutual funds. This is even more impressive when considering that just 16
years earlier, only 19 percent of households owned stocks. Another important
shift has been the need for retirement planning beyond a pension plan or Social
Security. The Investment Company Institute, the leading mutual fund industry
association, reports that 77 percent of all mutual fund shareholders earmarked
retirement as their primary financial goal in 1998.
Through all the changes in the investment environment over the past century,
the general principles that have made generations of investors successful remain
the same. Some that have stood the test of time include:
- INVESTING FOR THE LONG-TERM
- BASING INVESTMENT DECISIONS ON SOUND RESEARCH
- BUILDING A DIVERSIFIED PORTFOLIO
- BELIEVING IN THE VALUE OF PROFESSIONAL INVESTMENT ADVICE
While no one can predict the future, at Van Kampen we believe that these
ideas will remain important tenets for investors well into this century. As we
continue to focus on these principles, we hope that our decades of investment
experience can help bring you closer to your financial goals as we welcome the
new millennium.
Sincerely,
[SIG]
Richard F. Powers, III
Chairman
Van Kampen Asset Management Inc.
[SIG]
Dennis J. McDonnell
President
Van Kampen Asset Management Inc.
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
The nation's brisk rate of economic growth continued throughout 1999,
bringing the United States to the verge of its longest economic expansion on
record. High levels of consumer spending, a host of new jobs, and increasing
productivity kept the economy strong. Gross domestic product, the primary
measure of economic growth, increased 4.2 percent for the year, including an
impressive annualized rate of 5.7 percent for the third quarter and 5.8 percent
in the fourth quarter.
EMPLOYMENT
The job market remained vibrant throughout the year, with more than 2.7
million U.S. jobs created in 1999. In addition, unemployment dropped to 4.1
percent in October--its lowest rate in three decades. With jobs plentiful and
wages on the rise, most Americans were optimistic about the future. At the end
of the year the consumer confidence index hit its highest level since 1968.
Although wage pressures caused some concerns about the potential erosion of
corporate profits, productivity gains helped keep those concerns muted through
the end of the year.
INFLATION AND INTEREST RATES
Although the Consumer Price Index continued to reflect historically low
inflation--rising only 2.7 percent during 1999--concerns about future increases
in inflation were prevalent throughout the reporting period. The Federal Reserve
Board remained active in guarding against inflation and trying to temper
economic growth. The Fed reversed its three interest-rate cuts from the fall of
1998 by raising rates in June, August, and November 1999.
U.S. GROSS DOMESTIC PRODUCT
Seasonally Adjusted Annualized Rates
Third Quarter 1997 through Fourth Quarter 1999
[BAR GRAPH]
<TABLE>
<S> <C>
97Q3 4.0
97Q4 3.1
98Q1 6.7
98Q2 2.1
98Q3 3.8
98Q4 5.9
99Q1 3.7
99Q2 1.9
99Q3 5.7
99Q4 5.8
</TABLE>
Source: Bureau of Economic Analysis
2
<PAGE> 4
PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31, 1999
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS
One-year total return based on NAV(1).... 11.51% 10.72% 10.79%
One-year total return(2)................. 6.17% 6.72% 9.79%
Five year total return(2)................ 11.29% 11.30% 11.47%
Life-of-Fund average annual total
return(2).............................. 9.67% 9.74% 9.78%
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). If the
sales charge was included, total return would be lower.
(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 Comparative Performance section of the current prospectus. There is no
assurance the Fund will achieve its investment objective. Investing in
international markets involves certain risks not typically associated with
investing solely in the United States, including fluctuations in currency rates,
withholding tax, restrictions on foreign investment and on repatriation of
capital, limited publicly available information, less governmental supervision
and regulation, less liquidity, and the potential for market volatility and
political and economic instability. In addition, the Fund is subject to other
risks. These risks include, but are not limited to: market risk--the possibility
that the market values of securities owned by the Fund will decline: credit
risk--refers to an issuer's ability to make timely payments of interest or
principal; non-diversification risk--the fund may invest a greater portion of
its assets in a more limited number of issuers than a "diversified" fund;
derivative investments risk--a derivative investment is one whose value depends
on (or is derived from) the value of an underlying asset, interest rate or index
and involves risks different from investment in the underlying security; and
manager risk--management may not be successful in selecting the best performing
securities and the Fund's performance may lag behind that of similar funds.
Please read the Fund's prospectus and "Foreign Investment" in the Additional
Investment Information section for more detailed information on global
investing. Fund shares, when redeemed, may be worth more or less than their
original cost. Past performance does not guarantee future results. Investment
return and net asset value will fluctuate with market conditions.
Market forecasts provided in this report may not necessarily come to pass.
3
<PAGE> 5
PUTTING YOUR FUND'S PERFORMANCE IN PERSPECTIVE
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment performance at regular intervals. A
comparison of your Fund's performance to an applicable benchmark can:
- Illustrate the market environment in which your Fund is being managed.
- Reflect the impact of favorable market trends or difficult market
conditions.
- Help you evaluate how your Fund's management team has responded to
opportunities and challenges.
The following graph compares your Fund's performance to that of the Morgan
Stanley Capital International World Index and the J.P. Morgan Global Traded
Government Index over time. These indices are broad-based, statistical
composites that do not include any commissions or fees that would be paid by an
investor purchasing the securities they represent. Such costs would lower the
performance of these indices. An investment cannot be made directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Van Kampen Global Managed Assets Fund vs. the Morgan Stanley Capital
International World Index and the J.P. Morgan Global Traded Government Index
(May 16, 1994, through December 31, 1999)
[INVESTMENT PERFORMANCE GRAPH]
- ------------------------------
Fund's Total Return
1 Year Avg. Annual = 6.17%
5 Year Avg. Annual = 11.29%
Inception Avg. Annual = 9.67%
- ------------------------------
<TABLE>
<CAPTION>
VAN KAMPEN GLOBAL MORGAN STANLEY CAPITAL J.P. MORGAN GLOBAL TRADED
MANAGED ASSETS FUND INTERNATIONAL WORLD INDEX GOVERNMENT INDEX
------------------- ------------------------- -------------------------
<S> <C> <C> <C>
5/16/94 9526.00 10000.00 10000.00
6/30/94 9422.00 9966.00 10119.00
9605.00 10139.00 10214.00
9676.00 10428.00 10188.00
9531.00 10138.00 10238.00
9653.00 10409.00 10391.00
9379.00 9941.00 10280.00
12/31/94 9376.00 10021.00 10284.00
9213.00 9854.00 10492.00
9294.00 9980.00 10763.00
9567.00 10443.00 11310.00
9752.00 10790.00 11491.00
9915.00 10864.00 11811.00
6/30/95 10036.00 10843.00 11885.00
10405.00 11367.00 11941.00
10292.00 11096.00 11609.00
10479.00 11401.00 11871.00
10346.00 11204.00 11987.00
10469.00 11575.00 12121.00
12/31/95 10623.00 11895.00 12271.00
10791.00 12092.00 12145.00
10864.00 12147.00 12074.00
11021.00 12331.00 12055.00
11343.00 12602.00 12011.00
11385.00 12594.00 12023.00
6/30/96 11406.00 12639.00 12128.00
10974.00 12173.00 12351.00
11227.00 12294.00 12403.00
11638.00 12756.00 12471.00
11607.00 12826.00 12719.00
12007.00 13526.00 12900.00
12/31/96 11945.00 13290.00 12810.00
12104.00 13431.00 12490.00
12149.00 13566.00 12404.00
11982.00 13278.00 12309.00
12073.00 13693.00 12240.00
12554.00 14519.00 12529.00
6/30/97 12989.00 15224.00 12671.00
13389.00 15906.00 12625.00
12749.00 14822.00 12609.00
13252.00 15608.00 12889.00
12771.00 14767.00 13162.00
12840.00 15009.00 13004.00
12/31/97 13013.00 15172.00 12990.00
13256.00 15576.00 13121.00
13922.00 16609.00 13218.00
14373.00 17291.00 13118.00
14438.00 17439.00 13320.00
14425.00 17201.00 13378.00
6/30/98 14594.00 17589.00 13415.00
14646.00 17540.00 13451.00
13464.00 15181.00 13823.00
13659.00 15428.00 14545.00
14295.00 16802.00 14870.00
14711.00 17781.00 14702.00
12/31/98 15073.00 18629.00 14979.00
15117.00 19016.00 14658.00
14665.00 18489.00 14360.00
15064.00 19238.00 14395.00
15425.00 19975.00 14392.00
14884.00 19224.00 14139.00
15245.00 20100.00 13902.00
15260.00 20018.00 14207.00
15185.00 19961.00 14244.00
15109.00 19746.00 14449.00
15440.00 20751.00 14431.00
15726.00 21313.00 14259.00
12/31/99 16730.00 23018.00 14219.00
</TABLE>
The above chart reflects the performance of Class A shares of the Fund. The
performance of Class A shares will differ from that of other share classes of
the Fund because of the difference in sales charges and/or expenses paid by
shareholders investing in the different share classes. The Fund's performance
assumes reinvestment of all distributions and includes payment of the maximum
sales charge (4.75% for A shares).
While past performance is not indicative of future performance, the above
information provides a broader vantage point from which to evaluate the
discussion of the Fund's performance found in the following pages.
4
<PAGE> 6
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
We recently spoke with the representatives of the subadviser of the Van Kampen
Global Managed Assets Fund about the key events and economic forces that shaped
the markets during the past 12 months. The Fund is managed by Barton M. Biggs,
Ann D. Thivierge, J. David Germany, Michael B. Kushma, and Paul E. O'Brien of
Morgan Stanley Dean Witter Investment Management.
Since 1997, Mr. Biggs and Ms. Thivierge have managed the equity portion of the
Fund's portfolio, while Mr. Germany, Mr. Kushma, and Mr. O'Brien have managed
the fixed-income portion. The following excerpts reflect their views on the
Fund's performance during the 12-month period ended December 31, 1999.
Q HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT IN WHICH THE FUND
OPERATED DURING THE PAST 12 MONTHS?
A Global economic recovery was the story of 1999, as economic activity
increased in most regions of the world. The U.S. economy resumed its
impressive climb with strong growth and minimal inflation. Meanwhile,
declining interest rates and a focus on corporate cost-cutting fiscal reforms
helped revive many emerging markets. In particular, Japan and other Asian
nations emerged from devastating depressions and bear markets.
Global economic growth was more robust than expected, particularly in
regions of the world that had struggled earlier in the year. Commodity prices,
led by oil, continued to march higher, while investor confidence finally started
to rebound from the shocks of late 1998. Compared to the U.S. dollar, the
Japanese yen rose approximately 10 percent, and the European euro gained
approximately 14 percent.
Q WHAT WAS YOUR ASSET ALLOCATION BREAKDOWN?
A Our asset allocation of stocks, bonds, and cash is based on market
conditions. At the beginning of the period, the allocation was 66 percent
stocks and 34 percent bonds. On December 31, 1999, the allocation was 73
percent stocks, 24 percent bonds, and 3 percent cash.
Q WHAT STRATEGIES WERE PURSUED IN THE EQUITY PORTION OF THE PORTFOLIO?
A Throughout the period, the Fund remained underweighted in the United
States because stocks appeared overpriced and therefore highly vulnerable
in the event of a market downturn. This strategy hindered performance in
the first half of the year as the U.S. economy continued its strong growth, but
it benefited the portfolio in the second half when international markets
surpassed the U.S. stock market.
Early in the year we visited Singapore, Hong Kong, and Japan to talk with
government officials, central bankers, businesses, and other investors. At the
time, these meetings
5
<PAGE> 7
reinforced our belief that Asia had a long way to go in its recoveries. However,
as the year progressed, we've seen evidence of its commitment to restructuring,
particularly in Singapore and Japan. In response, we significantly increased the
Fund's exposure to Singapore. The leading economic indicators were higher and
point to even stronger economic growth. We believed stock prices were
reasonable, and earnings growth and earnings momentum were the highest in the
Fund's investment universe during the reporting period. We gave Singapore high
marks for the government and corporate environment. Additionally, while
Singapore remains dependent on consumer electronics and electronics exports, its
economy is broadening into other areas, which can help lessen the impact of any
downturns in the electronics sector. In Japan, following a strong performance in
the first half of 1999, stock prices were not as attractive in the second half
of the year. However, Japan remains attractive because we believe that cost
cutting and further corporate rationalization should improve earnings.
In Europe, we scaled back our U.K. weighting after the Bank of England
raised interest rates at the beginning of September. We expect more rate hikes
in the new year as the central bank aggressively attempts to smooth the economic
cycle. Although Germany lagged Europe during the year, we expect recent tax
reform proposals should unleash a massive corporate restructuring in this
largest of European economies, increasing capital efficiencies in Germany and
sending competitive shock waves across the continent. The fact that these
proposals came from the ruling party, Sozialdemokratische Partei Deutschland,
which 18 months ago proposed marking all corporate assets to market for
immediate tax assessments, illustrates the extent of cultural leadership change.
Similarly, the very negative local press resulting from the recent disclosure of
illegal funding (i.e. suitcases of cash) for Germany's Christian Democratic
Union, former Chancellor Kohl's party, should help to expose and weaken the
unhealthy post-World War II based relationships between German politicians and
companies, banks, and utilities. This weakening is important to the continuation
of the process of privatization and deregulation. Only through dynamic reform
can Europe's economy finally enjoy a long cycle of strong growth and low
inflation. We believe this change is occurring--and at an accelerating pace.
Since the third quarter, the Fund has been fully invested, meaning that it
no longer holds a significant cash position. The Fund's defensive position in
the second quarter of 1999 detracted from its performance earlier in the year,
but the current fully invested position proved helpful in the second half of the
year.
Q WHAT STRATEGIES WERE PURSUED IN THE FIXED-INCOME PORTION OF THE PORTFOLIO?
A Although we increased the Fund's exposure to Japan in the first quarter of
1999 in order to take advantage of the volatility in that market, we made
a good decision to decrease exposure to Japanese bonds later in the year
due to the rise in interest rates. However, the Fund missed out on potential
currency appreciation from the increase in the Japanese yen, which hurt its
return. We did increase the Fund's exposure to the yen later in the period,
which eventually helped returns.
6
<PAGE> 8
The significant exposure to Europe detracted from the Fund's performance
because it wasn't prepared for the market's reaction to stronger growth in
Europe. Accelerating economic growth, rising commodity prices, and a weak euro
led the market to expect sharp interest-rate increases over the next 12 months.
We held the Fund's exposure in Europe because we believed the economic
fundamentals were attractive, but performance suffered as expectations of rate
increases led to a decline in bond prices. The Fund benefited from its exposure
to other European currencies, however, such as the Swedish krona, which
appreciated versus the euro.
Q HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A The Fund achieved a total return of 11.51 percent(1) (Class A shares at
net asset value) for the 12-month period ended December 31, 1999. By
comparison, the Morgan Stanley Capital International (MSCI) World Index
generated a total return of 28.27 percent and the J.P. Morgan Global Traded
Government Index achieved a total return of -5.08 percent. Past performance does
not guarantee future results.
The MSCI World Index is used as a benchmark to general equity funds. The
J.P. Morgan Global Traded Government Index is an 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. Keep in mind that 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 and footnotes on page 3 for
additional Fund performance results.
Q WHAT IS YOUR OUTLOOK FOR THE GLOBAL EQUITY MARKETS AND THE FUND'S
PORTFOLIO IN THE MONTHS AHEAD?
A We believe that consumer spending in Japan may experience a revival, which
will boost its GDP above consensus growth expectations next year as
investors continue to gain confidence in Japanese markets. The ongoing
recovery in the rest of Asia should aid Japan as well.
Our outlook for European equities is positive with the markets supported by
strong earnings growth, upward earnings estimates, and little threat in the
short-term from either interest rates or bond yields. For the third quarter,
earnings growth was strong and positive surprises outnumbered negative surprises
and we believe these trends may continue. Liquidity remains powerful with strong
individual investor buying. Importantly we expect the euro to strengthen from
current levels, which would provide a boost for U.S. dollar-based investors.
We are cautious about the U.S. equity market due to expensive valuations and
a more compelling case for fundamental change in the international arena. As
long as the U.S. market remains relatively stable, we believe that many European
and Asian markets can perform well given their rising economic growth, continued
restructuring, and improving earnings. While we are encouraged by the present
lack of meaningful inflation in the U.S., we continue to watch the Federal
Reserve Board, hoping that policy makers tap the brakes
7
<PAGE> 9
cautiously without causing global reverberations. We expect the international
markets to outperform the United States not for months, but for years.
Q WHAT IS YOUR OUTLOOK FOR FIXED-INCOME MARKETS?
A Today, we remain confident in the global bond markets. In October, we
began decreasing the Fund's exposure to the United Kingdom in favor of
German bonds because the price differential between U.K. and German bonds
was greater than the market has seen in approximately 20 years. During the
period, the U.K. bond market performed well, but we don't expect that to
continue in the near future given the bonds' elevated price levels. In the
short-term, we do not see signs of inflation in the United States or Europe, and
we don't expect the European Central Bank or the Federal Reserve Board to raise
interest rates as much as the market has anticipated.
With regard to commodities, we expect oil and other energy prices to
continue to rise. We've seen a pattern among commodity-based economies in which
economic recovery generally leads to currency strength. As a result, the Fund
has currency exposure to Canada and Australia, which are commodity-based
economies.
Among the currencies of Europe, Japan, and the United States, we expect the
euro to rebound versus the yen. Compared to the yen, it is significantly
undervalued, and the strong economic recovery in Europe should provide good
fundamental support. In addition, we believe a recovery in the global bond
markets cannot happen unless inflation and interest-rate fears subside.
8
<PAGE> 10
GLOSSARY OF TERMS
BOND: A debt security issued by a government or corporation that pays a
bondholder a stated rate of interest and repays the principal at the
maturity date.
CLASS A SHARES: When Class A shares of a fund are purchased, the share price
includes the net asset value plus a one-time sales charge (or "load"). In
most cases, there is no redemption fee (contingent deferred sales charge).
DEFENSIVE INVESTMENT STRATEGY: A method of portfolio allocation and management
aimed at minimizing the risk of losing principal. Defensive investors place
a high percentage of their investable assets in bonds, cash equivalents, and
stocks that are less volatile than average. The effect of taking such a
strategy may be that a fund does not achieve its investment objective.
EMERGING MARKETS: The financial markets of developing economies. Many Latin
American and Asian countries are considered emerging markets.
FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve
System, which is the central bank of the United States. Its policy-making
committee, called the Federal Open Market Committee, meets eight times a
year to establish monetary policy and monitor the economic pulse of the
United States.
FUNDAMENTALS: Characteristics of a company, such as revenue growth, earnings
growth, financial strength, market share, and quality of management.
LEVERAGE: The degree to which a business is using borrowed money.
NET ASSET VALUE (NAV): The value of a mutual fund share, calculated by deducting
a fund's liabilities from the total assets in its portfolio and dividing
this amount by the number of shares outstanding. The NAV does not include
any initial or contingent deferred sales charge.
VALUATION: The estimated or determined worth of a stock, based on financial
measures such as the stock's current price relative to earnings, revenue,
book value, and cash flow.
VOLATILITY: A measure of the fluctuation in the market price of a security. A
security that is volatile had frequent and significant swings in price.
9
<PAGE> 11
PORTFOLIO HIGHLIGHTS
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
TOP FIVE PORTFOLIO HOLDINGS AS OF DECEMBER 31, 1999*
<TABLE>
<S> <C>
United States Treasury Bond, 8.125% Coupon, 08/15/19
Maturity ............................................ 3.3%
Government of France, 4.500% Coupon, 07/12/03
Maturity ............................................ 2.3%
Bundersrepublik Deut, 6.500% Coupon, 07/04/27
Maturity ............................................ 1.9%
United States Treasury Bond, 12.000% Coupon, 05/15/05
Maturity ............................................ 1.8%
Sony Corp. ............................................ 1.6%
</TABLE>
TOP FIVE EQUITY HOLDINGS AS OF DECEMBER 31, 1999*
<TABLE>
<S> <C>
SONY manufactures consumer electronics such as TVs,
VCRs, stereo systems, cameras, DVD players, batteries,
and game systems, and also owns and operates
entertainment businesses (movies, TV shows, and record
labels)............................................... 1.6%
MICROSOFT develops, manufactures, licenses, and
supports a range of software products................. 1.5%
GENERAL ELECTRIC is a diversified industrial
corporation whose products include appliances,
lighting products, aircraft engines, and plastics..... 1.4%
FUJITSU is a computer and information technology
provider, selling everything from supercomputers and
software development to e-commerce and web design..... 1.3%
SOFTBANK is a holding company invested in
computer-related ventures, and one of Japan's top
software and hardware distributors.................... 1.2%
</TABLE>
* As a percentage of long-term investments
10
<PAGE> 12
PORTFOLIO HIGHLIGHTS (CONTINUED)
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
TOP FIVE COUNTRIES AS A PERCENTAGE OF LONG-TERM INVESTMENTS
[BAR GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
United States 33.4 47.1
Japan 20.2 7.7
United Kingdom 7 12.6
Germany 6.1 3.2
Italy 4 3.2
</TABLE>
ASSET ALLOCATION AS A PERCENTAGE OF TOTAL INVESTMENTS
[BAR GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
Common and Preferred Stocks 74.1 65.5
Non-U.S. Government Obligations 15.8 18.4
U.S. Government Agency Obligations 6.5 7.7
Repurchase Agreements 1.8 7.2
Supra-National 1.8 0
Commercial Paper 0 1.2
</TABLE>
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCKS 73.3%
AUSTRALIA 1.6%
Amcor, Ltd.............................................. 967 $ 4,529
AMP, Group Finance Services, Ltd. (a)................... 28 1,689
AMP, Ltd. (a)........................................... 1,411 15,590
AMP Diversified Property Trust.......................... 673 1,038
AMP Reinsurance Note (a)................................ 1,004 -0-
Australian Gas & Light Co., Ltd......................... 577 3,388
Brambles Industries, Ltd................................ 325 8,987
Broken Hill Proprietary Co., Ltd........................ 1,506 19,775
Coca-Cola Amati, Ltd.................................... 1,425 3,892
Coles Myer, Ltd......................................... 1,675 8,652
Colonial, Ltd. (a)...................................... 1,354 6,053
CSL, Ltd................................................ 158 2,272
Email, Ltd.............................................. 437 694
FH Faulding & Co., Ltd.................................. 162 1,064
Fosters Brewing Group, Ltd.............................. 2,627 7,537
General Property Trust.................................. 2,107 3,431
Goodman Fielder, Ltd.................................... 1,644 1,468
Leighton Holdings, Ltd.................................. 377 1,460
Lend Lease Corp......................................... 807 11,306
Mayne Nickless, Ltd..................................... 562 1,450
National Australia Bank, Ltd............................ 2,056 31,447
News Corp., Ltd......................................... 2,793 27,119
News Corp., Ltd. - Preferred Shares..................... 2,480 21,247
Normandy Mining, Ltd.................................... 1,463 1,037
North, Ltd.............................................. 627 1,478
Orica, Ltd.............................................. 91 490
Pacific Dunlop, Ltd..................................... 1,594 2,256
Publishing & Broadcasting Ltd........................... 163 1,245
QBE Insurance Group, Ltd................................ 508 2,368
Rio Tinto, Ltd.......................................... 167 3,587
Santos, Ltd............................................. 896 2,441
Southcorp Holdings, Ltd................................. 963 3,395
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
AUSTRALIA (CONTINUED)
Stockland Trust Group (a)............................... 13 $ 27
Stockland Trust Group................................... 378 794
Suncorp Metway.......................................... 470 2,533
TAB Corp. Holdings, Ltd................................. 484 3,277
Telstra Corp., Ltd...................................... 6,106 33,191
Wesfarmers, Ltd......................................... 281 2,319
Westfield Trust......................................... 1,946 3,820
Westfield Trust (a)..................................... 65 128
Westpac Banking Corp., Ltd.............................. 2,820 19,453
WMC, Ltd................................................ 1,335 7,362
Woolworths, Ltd......................................... 1,713 5,893
-----------
281,182
-----------
AUSTRIA 0.8%
Austria Tabakwerke, AG.................................. 149 7,205
Austrian Airlines....................................... 199 3,769
Bank Austria, AG........................................ 711 40,109
Bau Holdings, AG........................................ 31 1,171
BBAG Oest Brau-Beteiligungs, AG......................... 59 2,377
Bohler-Uddeholm, AG..................................... 37 1,707
BWT, AG................................................. 11 1,479
Flughafen Wien, AG...................................... 142 4,937
Generali, AG............................................ 47 7,881
Lenzing, AG............................................. 6 326
Mayr Melnhof Karton, AG................................. 80 3,707
Oest Elektrizitats, Class A............................. 204 28,667
OMV, AG................................................. 174 16,914
VA Technologie, AG...................................... 94 6,202
Wienerberger Baustoffindustrie, AG...................... 456 9,917
-----------
136,368
-----------
CANADA 1.4%
Abitibi Consolidated, Inc............................... 200 2,342
Agnico-Eagle Mines, Ltd................................. 700 5,140
Alberta Energy Co., Ltd................................. 100 3,118
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
CANADA (CONTINUED)
Alcan Aluminum.......................................... 200 $ 8,230
Bank of Montreal........................................ 200 6,831
Bank of Nova Scotia..................................... 300 6,453
Barrick Gold Corp....................................... 200 3,568
BCE, Inc................................................ 300 27,257
BCT.Telus Communications, Inc........................... 58 1,412
BCT.Telus Communications, Inc. - Non Voting Shares...... 19 459
Bombardier, Inc., Class B............................... 500 10,270
Canadian Imperial Bank of Commerce...................... 200 4,780
Canadian Occidental Petroleum........................... 100 1,974
Canadian Pacific........................................ 200 4,302
Gulf Canada Resource (a)................................ 500 1,645
Imasco, Ltd............................................. 300 8,303
Imperial Oil, Ltd....................................... 400 8,590
International Forest Products, Ltd., Class A (a)........ 500 1,368
Laidlaw, Inc............................................ 200 1,046
National Bank of Canada................................. 100 1,282
Newbridge Networks Corp. (a)............................ 100 2,255
Nexfor, Inc............................................. 87 506
Noranda, Inc............................................ 200 2,688
Nortel Networks Corp.................................... 800 80,831
Petro CDA............................................... 300 4,250
Placer Dome, Inc........................................ 200 2,134
Power Corp. of Canada................................... 200 3,429
Royal Bank of Canada.................................... 200 8,798
Seagram Co., Ltd........................................ 200 8,964
Suncor Energy, Inc...................................... 100 4,184
Talisman Energy, Inc. (a)............................... 100 2,556
Thomson Corp............................................ 400 10,530
TransCanada PipeLines, Ltd.............................. 564 4,884
Weston George, Ltd...................................... 100 3,828
-----------
248,207
-----------
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
FINLAND 1.3%
Kesko (a)............................................... 158 $ 2,005
Merita Oyj.............................................. 889 5,239
Metra Oyj............................................... 61 1,137
Metso Oyj (a)........................................... 141 1,832
Nokia Oyj............................................... 998 180,960
Outokumpu Oyj (a)....................................... 85 1,203
Oyj Hartwall Abp........................................ 57 827
Raisio Group, PLC (a)................................... 147 582
Sampo, Ser A............................................ 96 3,356
Sonera Oyj.............................................. 322 22,073
Tietoenator Oyj......................................... 65 4,060
UPM-Kymmene Oyj (a)..................................... 244 9,832
-----------
233,106
-----------
FRANCE 3.7%
Accor, SA............................................... 210 10,148
Air Liquide............................................. 38 6,362
Alcatel, SA............................................. 125 28,709
Aventis, SA............................................. 441 25,633
AXA-UAP................................................. 251 34,994
Banque Nationale de Paris (a)........................... 242 22,330
Banque Nationale de Paris (a)........................... 26 120
Canal Plus.............................................. 108 15,721
Cap Gemini.............................................. 51 12,946
Carrefour, SA........................................... 306 56,440
CIE Fonciere Klepierre (a).............................. 170 16,440
Compagnie de Saint Gobain............................... 82 15,422
France Telecom.......................................... 572 75,656
Groupe Danone........................................... 75 17,679
Groupe Le Fin De Cons (a)............................... 50 5,641
Immeubles De Franc (a).................................. 115 2,100
L'Oreal................................................. 41 32,897
LVMH (Moet Hennessy Louis Vuitton)...................... 79 35,389
Michelin (CGDE), Class B................................ 144 5,657
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
FRANCE (CONTINUED)
Pernod Ricard........................................... 57 $ 3,261
Peugeot Citroen......................................... 50 11,353
Pinault-Printemps-Redoute, SA........................... 87 22,962
Sagem, SA............................................... 10 6,951
Sanofi, SA (a).......................................... 348 14,492
Schneider, SA........................................... 117 9,187
Silic................................................... 10 1,603
Simco................................................... 168 13,598
Societe Fonciere Lyonnaise.............................. 60 7,851
Societe Generale........................................ 70 16,289
Sodexho Alliance........................................ 26 4,602
Suez Lyonnaise des Eaux................................. 118 18,912
Thomson CSF............................................. 127 4,195
Total, SA, Class B (a).................................. 456 60,864
Unibail, SA............................................. 33 4,165
Vivendi (a)............................................. 273 24,654
-----------
645,223
-----------
GERMANY 4.1%
Allianz, AG (Vinkulierte Regd).......................... 208 69,878
BASF, AG................................................ 267 13,717
Bayer Hypo Vereinsbank, AG.............................. 365 24,929
Bayer, AG............................................... 250 11,836
Beiersdorf, AG.......................................... 150 10,073
Continental, AG......................................... 117 2,340
DaimlerChrysler, AG (a)................................. 752 58,481
Deutsche Bank, AG....................................... 450 38,010
Deutsche Telekom, AG.................................... 2,036 145,003
Douglas Hldg, AG........................................ 100 4,306
Dresdner Bank, AG....................................... 333 18,114
Fresenius Medical....................................... 50 4,276
Gehe, AG................................................ 50 1,939
IVG Holding, AG......................................... 145 2,257
Linde, AG............................................... 100 5,470
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
GERMANY (CONTINUED)
Lufthansa, AG (Vinkulierte Regd)........................ 333 $ 7,749
Man, AG - Preferred Shares.............................. 100 3,757
Mannesmann, AG.......................................... 340 82,028
Metro, AG............................................... 217 11,673
Munchener Ruckvers (a).................................. 150 38,048
Preussag, AG............................................ 120 6,685
RWE, AG................................................. 397 15,557
SAP, AG................................................. 17 8,374
SAP, AG - Non Voting Preferred Shares................... 50 30,120
Siemens, AG............................................. 467 59,416
Thyssen Krupp, AG....................................... 200 6,094
Veba, AG................................................ 433 21,046
Viag, AG................................................ 642 11,770
Volkswagen, AG.......................................... 250 14,090
Volkswagen, AG - Non Voting Preferred Shares............ 100 3,203
-----------
730,239
-----------
HONG KONG 0.0%
Hong Kong Land Holding - $US (a)........................ 86 127
-----------
ITALY 3.0%
Alitalia, SpA........................................... 1,909 4,548
Assicurazioni Generali.................................. 1,425 47,084
Autogrill, SpA (a)...................................... 274 3,450
Banca Commerciale Italiana.............................. 435 2,368
Banco Ambrosiano Veneto, SpA............................ 6,290 25,535
BCA Intesa SpA.......................................... 435 747
BCA Pop Di Milano....................................... 726 5,653
BCO Di Roma............................................. 5,668 7,286
Benetton Group, SpA..................................... 3,535 8,119
Beni Stabili SpA (a).................................... 1,832 646
Burgo (Cartiere), SpA................................... 1 7
Credito Italiano........................................ 5,724 28,138
Enel, SpA (a)........................................... 8,070 33,818
Ente Nazionale Idrocarburi, SpA......................... 10,812 59,467
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
ITALY (CONTINUED)
Fiat, Priv, SpA......................................... 3 $ 43
Fiat, SpA............................................... 260 7,425
Impregilo, SpA.......................................... 8 5
Instituto Nazionale delle Assicurazioni (INA)........... 4,368 11,572
La Rinascente, SpA...................................... 2 13
Magneti Marelli......................................... 353 1,348
Mediaset, SpA........................................... 1,740 27,063
Mediobanca, SpA......................................... 901 9,194
Montedison, SpA......................................... 3,764 6,161
Montedison, Di Risp, SpA................................ 3,514 3,363
Olivetti, SpA........................................... 2,581 7,475
Parmalat Finanziara, SpA................................ 3 4
Pirelli, SpA............................................ 3,306 9,075
Reno de Medici, SpA..................................... 1 3
Riunione Adriatica di Sicurta, SpA...................... 798 8,006
Sao Paolo Imi, SpA (a).................................. 1,832 24,895
Sirti, SpA.............................................. 1 4
Telecom Italia, Di Risp, SpA............................ 517 3,151
Telecom Italia, SpA..................................... 3,810 53,732
Telecom Italia Mob, Di Risp, SpA........................ 1,770 8,434
Telecom Italia Mob, SpA................................. 9,983 111,525
-----------
519,357
-----------
JAPAN 16.8%
Acom Co., Ltd........................................... 100 9,797
Advantest............................................... 200 52,853
Ajinomoto Co., Inc...................................... 1,000 10,424
Asahi Bank, Ltd......................................... 2,900 17,882
Asahi Breweries......................................... 1,000 10,943
Asahi Chemical Industry Co.............................. 800 4,111
Asahi Glass Co.......................................... 2,800 21,678
Bank of Tokyo........................................... 3,200 44,600
Benesse Corp............................................ 100 24,078
Bridgestone Corp........................................ 1,000 22,022
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Canon, Inc.............................................. 2,000 $ 79,475
Central Japan Railway................................... 2 12,548
CSK Corp................................................ 100 16,247
Dai Nippon Printing..................................... 800 12,763
Daiwa House Industries.................................. 1,000 7,439
Daiwa Securities........................................ 1,400 21,911
Denso Corp.............................................. 1,000 23,882
East Japan Railway...................................... 4 21,572
Fanuc................................................... 400 50,935
Fuji Bank............................................... 3,600 34,989
Fuji Photo Film Co...................................... 1,000 36,508
Fujitsu................................................. 5,000 228,051
Hitachi................................................. 6,800 109,151
Honda Motor Co.......................................... 1,000 37,193
Industrial Bank of Japan (a)............................ 3,000 28,922
Ito-Yokado Co., Ltd..................................... 1,000 108,642
Japan Air Lines Co...................................... 6,000 17,794
Jusco Co................................................ 1,000 17,432
Kajima Corp............................................. 6,000 17,911
Kansai Electric Power................................... 1,000 17,432
Kao Corp................................................ 1,000 28,531
Kinki Nippon Railway.................................... 6,000 24,078
Kirin Brewery Co........................................ 1,800 18,939
Kyocera Corp............................................ 500 129,686
Marui Co................................................ 1,000 14,936
Matsushita Electric Industries.......................... 5,000 138,495
Mitsubishi Chemical..................................... 800 2,819
Mitsubishi Electric Corp................................ 4,800 31,007
Mitsubishi Estate....................................... 1,800 17,565
Mitsubishi Heavy Industries............................. 6,000 20,025
Mitsubishi Trust & Banking Co........................... 2,000 17,618
NEC Corp................................................ 2,000 47,666
Nintendo Co............................................. 200 33,239
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Nippon Express Co....................................... 2,800 $ 15,484
Nippon Oil Co........................................... 3,000 13,213
Nippon Steel Corp....................................... 9,800 22,925
Nippon Telegraph & Telephone Corp....................... 10 171,283
Nissan Motor Co. (a).................................... 2,800 11,017
Nomura Securities....................................... 1,400 25,281
Oji Paper Co............................................ 3,000 18,058
Osaka Gas Co............................................ 3,000 7,223
Promise Co.............................................. 100 5,090
Sakura Bank............................................. 3,800 22,018
Sankyo Co............................................... 1,000 20,554
Sanyo Electric Co....................................... 4,000 16,247
Sekisui House........................................... 1,800 15,944
Sharp Corp.............................................. 2,000 51,189
Softbank Corp........................................... 210 201,018
Sony Corp............................................... 900 266,908
Sumitomo Bank, Ltd...................................... 2,000 27,386
Sumitomo Chemical....................................... 1,000 4,698
Sumitomo Electric Industries............................ 2,000 23,118
Taisho Pharmacy Co...................................... 1,000 29,363
Takeda Chemical Industries.............................. 1,000 49,427
Takefuji Corp........................................... 100 12,518
Toho Co................................................. 100 14,623
Tohoku Electric Power................................... 1,400 20,828
Tokai Bank.............................................. 3,000 18,910
Tokyo Electric Power.................................... 1,300 34,863
Tokyo Marine & Fire Insurance Co........................ 800 9,357
Toray Industries, Inc................................... 1,000 3,876
Toshiba Corp............................................ 7,000 53,440
Toyota Motor Corp....................................... 2,800 135,656
Yasuda Trust & Banking.................................. 400 622
-----------
2,965,926
-----------
</TABLE>
See Notes to Financial Statements
20
<PAGE> 22
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
NETHERLANDS 2.3%
ABN AMRO Holdings, NV................................... 1,080 $ 26,981
AEGON, NV............................................... 385 37,193
Ahold Koninklijke, NV................................... 407 12,050
Akzo Nobel, NV.......................................... 92 4,615
Buhrmann, NV............................................ 246 3,705
Elsevier, NV............................................ 189 2,258
Hagemeyer, NV........................................... 94 2,177
Heineken, NV............................................ 194 9,462
ING Groep, NV........................................... 774 46,735
KLM Royal Dutch Air Lines, NV........................... 78 2,004
Kon KPN, NV............................................. 347 33,871
Philips Electronics, NV................................. 249 33,862
Rodamco................................................. 100 4,039
Royal Dutch Petroleum Co................................ 1,565 95,930
STMicroelectronics...................................... 174 26,783
TNT Post Groep, NV...................................... 410 11,750
Uni-Invest, NV.......................................... 730 9,413
Unilever, NV............................................ 416 22,981
Unilever, NV - Preferred Shares (a)..................... 466 2,361
Vedior, NV.............................................. 95 976
Wolters Kluwer, NV...................................... 388 13,133
-----------
402,279
-----------
NORWAY 0.0%
Steen & Strom Invest ASA................................ 10 134
-----------
PORTUGAL 1.2%
BCO Comercial Portugues, SA............................. 5,985 33,220
BCO Espirito Santo e Comercial de Lisboa................ 500 14,052
BPI-SGPS, SA............................................ 3,330 14,189
Brisa-Auto Estradas de Portugal, SA..................... 1,500 11,514
Corticeira Amorim SGPS, SA.............................. 100 983
Elec De Portugal........................................ 3,100 54,118
Jeronimo Martins, SPGS, SA.............................. 400 10,235
Portucel Industrial-Empresa Produtora de Celulose....... 500 3,440
</TABLE>
See Notes to Financial Statements
21
<PAGE> 23
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
PORTUGAL (CONTINUED)
Portugal Telecom, SA.................................... 5,155 $ 56,551
Soares Da Costa, SA..................................... 100 306
Sonae Investimentos..................................... 300 15,836
UNICER-Uniao Cervejeira, SA............................. 300 5,947
-----------
220,391
-----------
SINGAPORE 0.8%
City Developments, Ltd.................................. 1,000 5,854
Creative Technologies Corp.............................. 100 1,813
DBS Group Holdings, Ltd................................. 1,163 19,063
DBS Land, Ltd........................................... 1,500 2,954
Hotel Properties........................................ 1,000 901
Keppel Corp., Ltd....................................... 1,000 2,618
NatSteel, Ltd........................................... 1,000 1,993
Neptune Orient Lines, Ltd............................... 537 719
Overseas Chinese Bank................................... 2,100 19,292
Parkway Holdings, Ltd................................... 1,000 2,270
Sembcorp Industries, Ltd. (a)........................... 2,000 2,726
Singapore Airlines, Ltd................................. 2,000 22,696
Singapore Press Holdings, Ltd........................... 1,000 21,675
Singapore Tech Engineering.............................. 4,000 6,196
Singapore Telecommunications............................ 6,300 13,012
United Industrial Corp., Ltd............................ 2,000 1,129
United Overseas Bank, Ltd............................... 1,056 9,320
United Overseas Land, Ltd............................... 1,000 937
-----------
135,168
-----------
SPAIN 1.3%
Acerinox, SA............................................ 24 959
Argentaria Corp......................................... 488 11,469
Autopistas Cesa......................................... 300 2,916
Azucarera Ebro Agricolas, SA ........................... 83 1,211
BCO Bilbao Vizcaya, SA.................................. 1,756 25,012
BCO Santander Central Hispanoamericano (a).............. 2,824 31,975
Corporacion Mapfre, SA.................................. 136 2,252
</TABLE>
See Notes to Financial Statements
22
<PAGE> 24
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
SPAIN (CONTINUED)
Empresa Nacional de Celulosas, SA....................... 48 $ 960
Endesa, SA.............................................. 855 16,976
Fomento Construcciones y Contratas, SA.................. 150 3,052
Gas Natural SDG, SA..................................... 288 6,635
Iberdrola, SA........................................... 926 12,835
Inmobiliaria Colonial, SA (a)........................... 100 453
Metrovacesa, SA......................................... 443 7,676
Prima Inmobiliaria, SA.................................. 720 6,237
Respol, SA.............................................. 903 20,940
Tabacalera, SA, Class A................................. 183 2,618
Telefonica, SA (a)...................................... 2,298 57,409
TelePizza, SA (a)....................................... 215 910
Union Electrica Fenosa, SA.............................. 228 3,983
Vallehermoso, SA........................................ 1,960 13,821
Viscofan Industria Navarra De Envolturas Celulosicas,
SA.................................................... 78 621
-----------
230,920
-----------
SWEDEN 1.6%
Atlas Copco, AB, Class A................................ 100 2,956
Castellum, AB........................................... 720 7,023
Diligentia.............................................. 1,040 8,555
Drott AB, Class B....................................... 595 6,783
Electrolux, AB.......................................... 400 10,060
Ericsson Telefon LM, Class B............................ 1,900 122,141
Foreningssparbk......................................... 550 8,080
Hennes & Mauritz, AB, Class B........................... 800 26,795
Netcom Systems, AB...................................... 100 7,028
OM Gruppen, AB.......................................... 100 2,174
Sandvik, AB............................................. 400 12,528
Securitas, AB, Class B.................................. 200 3,620
Skandia Forsakrings, AB................................. 500 15,102
Skandinaviska Enskilda Banken, Class A.................. 600 6,064
Skanska, AB, Class B.................................... 100 3,725
SKF, AB, Class B........................................ 100 2,433
</TABLE>
See Notes to Financial Statements
23
<PAGE> 25
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
SWEDEN (CONTINUED)
SSAB Svenska Stal, AB, Class A.......................... 50 $ 776
Svenska Cellulosa, AB, Class B.......................... 200 5,923
Svenska Handelsbanken, Class A (a)...................... 700 8,802
Tornet Fastighet........................................ 385 5,339
Trelleborg, AB, Class B................................. 100 899
Volvo, AB, Class A...................................... 100 2,527
Volvo, AB, Class B...................................... 400 10,342
WM-Data, AB............................................. 100 6,182
-----------
285,857
-----------
SWITZERLAND 2.2%
ABB, AG................................................. 200 24,461
Credit Suisse Group..................................... 200 39,754
Nestle, SA.............................................. 30 54,958
Novartis, AG............................................ 50 73,416
Roche Holdings Bearer, AG............................... 1 16,328
Roche Holdings Genusscheine, AG......................... 5 59,348
Schweizerische Rueckversicherungs-Gesellschaft.......... 10 20,543
SGS Holdings............................................ 5 6,374
Sulzer, AG.............................................. 10 6,500
Swatch Group, AG........................................ 10 11,518
Swisscom, AG (a)........................................ 40 16,178
UBS, AG (a)............................................. 157 42,398
Zurich Allied, AG (a)................................... 40 22,810
-----------
394,586
-----------
UNITED KINGDOM 5.1%
31 Group, PLC........................................... 126 2,249
Abbey National.......................................... 279 4,473
Albert Fisher Group..................................... 809 150
Alldays, PLC............................................ 29 29
Allders................................................. 38 76
Allied Zurich........................................... 289 3,408
AMEC.................................................... 113 447
Amvescap, PLC (a)....................................... 143 1,663
</TABLE>
See Notes to Financial Statements
24
<PAGE> 26
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Anglian Water........................................... 587 $ 5,253
Arm Holdings, PLC (a)................................... 40 2,704
Associated British Ports Holdings....................... 2,175 9,978
BAA, PLC (a)............................................ 464 3,238
BBA Group............................................... 19 157
Barclays................................................ 352 10,115
Barratt Developments.................................... 277 1,289
Bass.................................................... 233 2,932
Beazer Group............................................ 936 2,177
Berisford............................................... 502 2,733
Berkeley Group.......................................... 204 2,346
BG Group, PLC........................................... 894 5,734
BICC Group.............................................. 115 169
BOC Group............................................... 687 14,815
Boots Co................................................ 262 2,565
BP Amoco, PLC........................................... 4,296 43,365
BPB..................................................... 1,000 5,977
British Aerospace....................................... 955 6,278
British Airways......................................... 347 2,264
British American Tobacco................................ 629 3,556
British Land Co......................................... 8,070 53,706
British Sky Broadcast................................... 422 6,817
British Telecommunications.............................. 1,134 27,476
Burford Holdings........................................ 1,610 2,653
Burmah Castrol.......................................... 514 9,083
Cable & Wireless........................................ 851 14,598
Cadbury Schweppes, PLC.................................. 722 4,350
Canary Wharf Group, PLC (a)............................. 145 902
Capita Group, PLC....................................... 44 800
Capital Shop Centers.................................... 1,880 10,264
Caradon................................................. 1,305 3,267
Carpetright............................................. 351 3,033
Centrica, PLC........................................... 1,103 3,203
</TABLE>
See Notes to Financial Statements
25
<PAGE> 27
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Cobham, PLC............................................. 431 $ 5,448
Commercial Union........................................ 334 5,390
Delta................................................... 64 129
Diageo.................................................. 932 7,437
Dialog Corp............................................. 70 106
Dixons Group, PLC....................................... 92 2,214
Emap.................................................... 122 2,522
EMI Group............................................... 1,108 10,917
Enterprise Oil.......................................... 752 5,102
FirstGroup.............................................. 726 2,814
FKI..................................................... 635 2,487
Frogmore Estates, PLC................................... 150 1,144
GKN, PLC................................................ 648 10,614
Glaxo Wellcome.......................................... 748 21,193
Granada Group........................................... 469 4,735
Grantchester Holdings................................... 9,420 23,128
Great Portland Estates, PLC............................. 4,210 13,057
Great Universal Stores.................................. 201 1,169
Halifax Group........................................... 710 7,753
Hammerson, PLC.......................................... 2,340 16,064
Hanson.................................................. 726 6,086
Hays.................................................... 188 3,000
House Of Fraser......................................... 218 268
HSBC Holdings........................................... 1,763 24,434
Hyder................................................... 1,080 5,042
IMI..................................................... 699 2,992
Imperial Chemical Industries............................ 79 835
Invensys, PLC........................................... 2,486 13,144
Jarvis.................................................. 437 1,609
Johnson Matthey......................................... 837 8,234
Kingfisher.............................................. 484 5,371
Laird Group............................................. 49 192
Land Securities......................................... 5,554 62,239
</TABLE>
See Notes to Financial Statements
26
<PAGE> 28
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Lasmo................................................... 1,975 $ 3,828
Legal & General Group................................... 1,556 4,248
Lex Service............................................. 783 4,705
LIMIT................................................... 1,752 4,217
Lloyds TSB Group........................................ 1,388 17,241
Logica (a).............................................. 84 2,171
London Clubs International.............................. 616 1,214
London Forfaiting....................................... 113 58
Lonmin, PLC............................................. 516 5,226
Low & Bonar............................................. 10 23
Marconi................................................. 828 14,605
Marks & Spencer......................................... 571 2,730
Mayflower Corp.......................................... 3 11
Meggitt................................................. 14 44
MEPC.................................................... 4,569 34,318
Misys................................................... 1,050 16,299
National Power.......................................... 430 2,480
Next.................................................... 456 4,375
NFC..................................................... 1,159 4,662
Nycomed Amersham (a).................................... 135 850
Ocean Group............................................. 13 243
P & O Finance........................................... 201 3,334
Parity Group, PLC....................................... 816 5,009
Pennon Group............................................ 446 3,876
Pilkington.............................................. 3,266 4,447
Prudential Corp......................................... 585 11,415
Psion (a)............................................... 16 672
Quintain Estate & Dev................................... 200 562
Racal Electronics....................................... 315 2,837
Railtrack Group......................................... 115 1,932
Rank Group.............................................. 805 2,601
Reed International...................................... 299 2,246
Rentokil Initial........................................ 577 2,097
</TABLE>
See Notes to Financial Statements
27
<PAGE> 29
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Reuters Group........................................... 318 $ 4,417
Rexam................................................... 35 142
Rio Tinto............................................... 136 3,264
Rolls Royce............................................. 1,073 3,726
Rugby Group............................................. 388 852
Sage Group, Ltd. (a).................................... 260 3,183
Sainsbury J Finance..................................... 646 3,650
Schlumberger, Ltd. - US$................................ 300 16,875
Scotia Holdings......................................... 90 189
Scottish & Southern Energy, PLC......................... 651 5,179
Sema Group.............................................. 98 1,757
Skillsgroup............................................. 45 218
Slough Estates, PLC..................................... 1,585 9,025
Smith & Nephew (a)...................................... 238 800
Smithkline Beecham...................................... 1,157 14,671
Smiths Industries....................................... 160 2,391
Stagecoach Holdings..................................... 1,292 3,318
TBI, PLC................................................ 450 549
Tesco................................................... 1,082 3,286
Torotrak................................................ 15 66
Trinity Mirror, PLC..................................... 214 2,280
Unilever................................................ 782 5,747
Vodafone AirTouch....................................... 8,277 41,258
Vodafone AirTouch PLC - US$ (b)......................... 200 9,900
Wates City Of London Properties, PLC.................... 1,010 1,485
Wickes.................................................. 17 74
William Baird........................................... 669 616
WPP Group............................................... 1,023 16,029
Yorkshire Water......................................... 545 3,055
Zeneca Group............................................ 386 16,037
-----------
895,776
-----------
</TABLE>
See Notes to Financial Statements
28
<PAGE> 30
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES 26.1%
Abbott Laboratories, Inc. (b)........................... 900 $ 32,681
Adobe Systems, Inc. (b)................................. 400 26,900
Albertson's, Inc........................................ 300 9,675
Alcoa, Inc. (b)......................................... 500 41,500
Allegheny Technologies Inc.............................. 350 7,766
Allstate Corp........................................... 500 12,000
Amazon.com, Inc......................................... 100 7,613
America Online, Inc. (b)................................ 600 45,262
American Express Co. (b)................................ 200 33,250
American Home Products Corp. (b)........................ 700 27,606
American International Group, Inc. (b).................. 738 79,796
American Power Conversion Corp.......................... 200 5,275
AMR Corp. (a)........................................... 200 13,400
Anheuser-Busch Cos., Inc. (b)........................... 300 21,262
Applied Materials, Inc. (a)............................. 200 25,337
AT&T Corp. (b).......................................... 1,798 91,248
AT&T Corp. - Liberty Media Group., Class A (b).......... 600 34,050
Automatic Data Processing, Inc.......................... 300 16,163
Avon Products, Inc...................................... 300 9,900
Baker Hughes, Inc....................................... 300 6,319
Bank of New York Co., Inc............................... 400 16,000
Bank One Corp........................................... 600 19,237
Baxter International, Inc............................... 100 6,281
Bell Atlantic Corp. (b)................................. 1,100 67,719
BellSouth Corp. (b)..................................... 900 42,131
Boeing Co. (b).......................................... 500 20,781
Bristol-Myers Squibb Co. (b)............................ 1,000 64,187
Burlington Northern Santa Fe Corp....................... 400 9,700
Campbell Soup Co........................................ 300 11,606
Caterpillar, Inc........................................ 200 9,413
CBS Corp................................................ 200 12,788
Cendant Corp. (a)....................................... 500 13,281
Champion International Corp............................. 100 6,194
</TABLE>
See Notes to Financial Statements
29
<PAGE> 31
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Charles Schwab Corp..................................... 400 $ 15,350
Chase Manhattan Corp.................................... 200 15,538
Chevron Corp. (b)....................................... 300 25,987
CIGNA Corp.............................................. 300 24,169
Cisco Systems, Inc. (a) (b)............................. 1,500 160,687
Citigroup, Inc. (b)..................................... 1,650 91,678
Clorox Co............................................... 200 10,075
Coca-Cola Co. (b)....................................... 1,200 69,900
Computer Associates International, Inc.................. 300 20,981
Constellation Energy Group.............................. 500 14,500
Corning, Inc............................................ 200 25,787
Crown Cork & Seal Co., Inc.............................. 300 6,713
CVS Corp................................................ 200 7,988
Dayton Hudson Corp...................................... 300 22,031
Deere & Co.............................................. 200 8,675
Dell Computer Corp. (a) (b)............................. 1,100 56,100
Delphi Automotive Systems Corp.......................... 479 7,544
Dow Chemical Co. (b).................................... 200 26,725
Duke Energy Corp. (b)................................... 500 25,062
E. I. Du Pont de Nemours & Co. (b)...................... 500 32,937
Eastman Kodak Co........................................ 100 6,625
eBay, Inc............................................... 100 12,519
Electronic Data Systems Corp. (b)....................... 400 26,775
Eli Lilly & Co. (b)..................................... 600 39,900
EMC Corp. (a) (b)....................................... 500 54,625
Equity Office Properties Trust.......................... 300 7,388
Exxon Mobil Corp. (b)................................... 1,628 131,156
FDX Corp. (a)........................................... 200 8,188
Federal National Mortgage Assn (b)...................... 500 31,219
First Data Corp......................................... 300 14,794
First Union Corp........................................ 500 16,406
Ford Motor Co. (b)...................................... 500 26,719
Gannett, Inc. (b)....................................... 300 24,469
</TABLE>
See Notes to Financial Statements
30
<PAGE> 32
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Gap, Inc................................................ 550 $ 25,300
General Electric Co. (b)................................ 1,500 232,125
General Motors Corp..................................... 300 21,806
Genuine Parts Co........................................ 500 12,406
Gillette Co. (b)........................................ 700 28,831
H. J. Heinz & Co........................................ 400 15,925
HEALTHSOUTH Corp. (a)................................... 400 2,150
Hewlett-Packard Co. (b)................................. 500 56,969
Hilton Hotels Corp...................................... 300 2,888
Home Depot, Inc. (b).................................... 900 61,706
Household International, Inc............................ 300 11,175
Illinois Tool Works, Inc................................ 200 13,513
Intel Corp. (b)......................................... 1,500 123,469
International Business Machines Corp. (b)............... 800 86,400
International Paper Co.................................. 200 11,288
Johnson & Johnson, Inc. (b)............................. 600 55,875
JP Morgan & Co., Inc. (b)............................... 400 50,650
Kimberly Clark Corp..................................... 300 19,575
Kroger Co. (a).......................................... 500 9,438
Latin American Discovery Fund, Inc. (b) (c)............. 12,800 137,600
Lucent Technologies, Inc. (b)........................... 1,365 102,119
Marsh & McLennan Cos., Inc.............................. 200 19,137
Masco Corp.............................................. 400 10,150
MBNA Corp............................................... 600 16,350
McDonald's Corp. (b).................................... 700 28,219
MCI WorldCom, Inc. (a) (b).............................. 1,200 63,675
Mckesson HBOC, Inc...................................... 74 1,670
Merck & Co., Inc. (b)................................... 1,000 67,062
Merrill Lynch & Co., Inc................................ 300 25,050
Micron Technology, Inc. (a)............................. 200 15,550
Microsoft Corp. (a) (b)................................. 2,200 256,850
Minnesota Mining & Manufacturing Co. (b)................ 300 29,362
Monsanto Co. (b)........................................ 800 28,500
</TABLE>
See Notes to Financial Statements
31
<PAGE> 33
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Morgan Stanley Asia Pacific Fund, Inc. (b) (c).......... 6,200 $ 73,237
Motorola, Inc. (b)...................................... 400 58,900
National City Corp...................................... 500 11,844
Newmont Mining Corp..................................... 400 9,800
Nike, Inc., Class B..................................... 200 9,913
Omnicom Group, Inc...................................... 100 10,000
Oracle Corp. (a) (b).................................... 750 84,047
PE Corp. - PE Biosystems Group.......................... 100 12,031
Peoplesoft, Inc. (a).................................... 100 2,131
Pfizer, Inc. (b)........................................ 1,600 51,900
Philip Morris Cos., Inc. (b)............................ 1,100 25,506
PNC Bank Corp........................................... 200 8,900
Procter & Gamble Co. (b)................................ 600 65,737
Readers Digest Association, Inc., Class A............... 200 5,850
Sara Lee Corp........................................... 700 15,444
SBC Communications, Inc. (b)............................ 700 34,125
Sears, Roebuck & Co..................................... 300 9,131
Southern Co............................................. 500 11,750
Staples, Inc............................................ 100 2,075
Starwood Hotels & Resorts, Class B...................... 200 4,700
SunTrust Banks, Inc..................................... 300 20,644
Teledyne Technologies, Inc.............................. 100 944
Tenet Healthcare Corp. (a).............................. 200 4,700
Texas Instruments, Inc. (b)............................. 300 29,062
Time Warner, Inc. (b)................................... 600 43,462
Transocean Sedco Forex, Inc............................. 58 1,957
United Technologies Corp................................ 400 26,000
UnumProvident Corp...................................... 200 6,413
US Bancorp.............................................. 300 7,144
USX - Marathon Group.................................... 300 7,406
Viacom, Inc., Class B (a)............................... 400 24,175
Vulcan Materials Co..................................... 100 3,994
Wachovia Corp........................................... 100 6,800
</TABLE>
See Notes to Financial Statements
32
<PAGE> 34
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Wal-Mart Stores, Inc. (b)............................... 2,000 $ 138,250
Walgreen Co............................................. 500 14,625
Walt Disney Co. (b)..................................... 1,100 32,175
Washington Mutual, Inc.................................. 200 5,200
Waste Management, Inc................................... 500 8,594
Water Pik Tech, Inc..................................... 35 335
Wells Fargo & Co. (b)................................... 900 36,394
Whirlpool Corp.......................................... 100 6,506
Williams Cos., Inc...................................... 200 6,113
Xerox Corp.............................................. 400 9,075
Yahoo!, Inc. (b)........................................ 200 86,537
-----------
4,591,840
-----------
TOTAL COMMON AND PREFERRED STOCKS AND EQUIVALENTS 73.3%.... 12,916,686
-----------
GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS 22.1%
Canada Government - CA$
(200,000 par, 5.250% coupon, 09/01/03 maturity)............... 134,305
Canada Government - CA$
(70,000 par, 8.750% coupon, 12/01/05 maturity)................ 54,383
Denmark Kingdom - DKK
(1,000,000 par, 7.000% coupon, 11/15/07 maturity)............. 147,830
Government of France - FRF
(400,000 par, 4.500% coupon, 07/12/03 maturity)............... 400,804
Government of France - FRF
(150,000 par, 5.250% coupon, 04/25/08 maturity)............... 150,271
Government of France - FRF
(100,000 par, 5.500% coupon, 10/25/07 maturity)............... 102,186
Bundesrepublik Deut - DEM
(300,000 par, 6.500% coupon, 07/04/27 maturity)............... 322,272
Republic of Italy - ITL
(150,000 par, 6.750% coupon, 02/01/07 maturity)............... 162,594
Republic of Italy - JPY
(10,000,000 par, 3.750% coupon, 06/08/05 maturity)............ 111,647
Republic of Italy - JPY
(15,000,000 par, 5.000% coupon, 12/15/04 maturity)............ 175,463
</TABLE>
See Notes to Financial Statements
33
<PAGE> 35
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Market Value
- --------------------------------------------------------------------------------
<S> <C>
GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
Kingdom of Netherlands - NLG
(220,000 par, 3.000% coupon, 02/15/02 maturity)............... $ 215,622
Kingdom of Sweden - SEK
(700,000 par, 6.000% coupon, 02/09/05 maturity)............... 84,154
Kingdom of Sweden - SEK
(1,000,000 par, 13.000% coupon, 06/15/01 maturity)............ 130,767
United Kingdom Treasury - GBP
(90,000 par, 8.000% coupon, 12/07/00 maturity)................ 147,122
United Kingdom Treasury - GBP
(80,000 par, 8.500% coupon, 07/16/07 maturity)................ 149,383
Federal National Mortgage Association - AUD
(50,000 par, 6.375% coupon, 08/15/07 maturity)................ 30,836
Federal National Mortgage Association - AUD
(60,000 par, 6.500% coupon, 07/10/02 maturity)................ 39,175
Federal National Mortgage Association - JPY
(10,000,000 par, 2.125% coupon, 10/09/07 maturity)............ 102,365
KFW International Finance - JPY
(10,000,000 par, 1.000% coupon, 12/20/04 maturity)............ 98,135
U.S. Treasury Bonds - US $(500,000 par, 8.125% coupon,
08/15/19 maturity) (b)........................................ 569,764
U.S. Treasury Bonds - US $(250,000 par, 12.000% coupon,
05/15/05 maturity) (b)........................................ 310,585
U.S. Treasury Notes - US $(150,000 par, 6.250% coupon,
02/15/07 maturity) (b)........................................ 147,587
U.S. Treasury Notes - US $(100,000 par, 7.250% coupon,
05/15/04 maturity) (b)........................................ 103,250
-----------
TOTAL GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS 22.1%... 3,890,500
-----------
SUPRA-NATIONAL 1.8%
European Investment Bank - JPY
(15,000,000 par, 4.625% coupon, 02/26/03 maturity)............ 166,061
Inter-American Development Bank - JPY
(15,000,000 par, 1.900% coupon, 07/08/09 maturity)............ 149,604
-----------
TOTAL SUPRA-NATIONAL............................................ 315,665
-----------
</TABLE>
See Notes to Financial Statements
34
<PAGE> 36
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Market Value
- --------------------------------------------------------------------------------
<S> <C>
CORPORATE OBLIGATIONS 0.0%
Jeronimo Martins - PTE (174,000 par, 0.000% coupon, 12/30/04
maturity)..................................................... $ 102
-----------
TOTAL LONG-TERM INVESTMENTS 97.2%
(Cost $14,089,612)............................................ 17,122,953
-----------
REPURCHASE AGREEMENT 1.8%
State Street Bank & Trust Co., dated 12/31/99, due 01/03/00, to
be repurchased at $317,066, collateralized by $265,000 U.S.
Treasury Bill, 10.375%, due 11/15/12, valued at $325,619 (Cost
$317,000) (b)................................................. 317,000
-----------
TOTAL INVESTMENTS 99.0%
(Cost $14,406,612)............................................ 17,439,953
FOREIGN CURRENCY 0.3% (VARIOUS DENOMINATIONS)
(Cost $50,567)................................................ 50,520
OTHER ASSETS IN EXCESS OF LIABILITIES 0.7%...................... 133,426
-----------
NET ASSETS 100.0%............................................... $17,623,899
===========
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends
(b) Assets segregated as collateral for open futures transactions and foreign
currency contracts.
(c) Related party security. See notes to Financial Statements.
AUD - Australian Dollar
CA$ - Canadian Dollar
DEM - German Mark
DKK - Danish Krone
FRF - French Franc
GBP - British Pound
ITL - Italian Lira
JPY - Japanese Yen
NLG - Dutch Guilder
PTE - Portuguese Escudo
SEK - Swedish Krona
US$ - United States Dollar
See Notes to Financial Statements
35
<PAGE> 37
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $14,406,612)........................ $17,439,953
Foreign Currency (Cost $50,567)............................. 50,520
Cash........................................................ 393
Margin Deposit on Futures................................... 32,895
Receivables:
Variation Margin on Futures............................... 247,461
Interest.................................................. 91,555
Dividends................................................. 16,356
Investments Sold.......................................... 3,902
Fund Shares Sold.......................................... 1,068
Other....................................................... 3,509
-----------
Total Assets.......................................... 17,887,612
-----------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 55,183
Investment Advisory Fee................................... 29,143
Distributor and Affiliates................................ 17,521
Capital Gain Distribution................................. 1,133
Trustees' Deferred Compensation and Retirement Plans........ 36,294
Foreign Currency Contracts.................................. 20,704
Accrued Expenses............................................ 103,735
-----------
Total Liabilities..................................... 263,713
-----------
NET ASSETS.................................................. $17,623,899
===========
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $14,550,228
Net Unrealized Appreciation................................. 3,043,747
Accumulated Net Realized Gain............................... 65,744
Accumulated Net Investment Loss............................. (35,820)
-----------
NET ASSETS.................................................. $17,623,899
===========
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $7,325,862 and 687,166 shares of
beneficial interest issued and outstanding)............. $ 10.66
Maximum sales charge (4.75%* of offering price)......... .53
-----------
Maximum offering price to public........................ $ 11.19
===========
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $8,612,541 and 837,387 shares of
beneficial interest issued and outstanding)............. $ 10.29
===========
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $1,685,496 and 163,274 shares of
beneficial interest issued and outstanding)............. $ 10.32
===========
</TABLE>
*On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
36
<PAGE> 38
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 287,237
Dividends (Net of foreign withholding taxes of $15,649)..... 199,246
----------
Total Income............................................ 486,483
----------
EXPENSES:
Custody..................................................... 188,766
Investment Advisory Fee..................................... 172,979
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $17,370, $88,266 and $15,232,
respectively)............................................. 120,868
Shareholder Services........................................ 94,565
Reports to Shareholders..................................... 67,870
Registration................................................ 49,030
Trustees' Fees and Related Expenses......................... 12,461
Amortization of Organizational Costs........................ 1,040
Legal....................................................... 960
Other....................................................... 44,990
----------
Total Expenses.......................................... 753,529
----------
NET INVESTMENT LOSS......................................... $ (267,046)
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $1,430,447
Futures................................................... 87,342
Forward Commitments....................................... (86,179)
Foreign Currency Transactions............................. (262,871)
----------
Net Realized Gain........................................... 1,168,739
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 2,216,687
----------
End of the Period:
Investments............................................. 3,033,341
Futures................................................. 31,899
Foreign Currency Translation............................ (789)
Forward Currency Contracts.............................. (20,704)
----------
3,043,747
----------
Net Unrealized Appreciation During the Period............... 827,060
----------
NET REALIZED AND UNREALIZED GAIN............................ $1,995,799
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $1,728,753
==========
</TABLE>
See Notes to Financial Statements
37
<PAGE> 39
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Loss............................. $ (267,046) $ (230,552)
Net Realized Gain............................... 1,168,739 3,218,575
Net Unrealized Appreciation During the Period... 827,060 108,563
----------- -----------
Change in Net Assets from Operations............ 1,728,753 3,096,586
----------- -----------
Distributions in Excess of Net Investment
Income*....................................... (25,278) (76,480)
Distributions from Net Realized Gain*........... (1,266,539) (2,388,475)
----------- -----------
Total Distributions............................. (1,291,817) (2,464,955)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES.................................... 436,936 631,631
----------- -----------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold....................... 3,136,039 6,233,096
Net Asset Value of Shares Issued Through
Dividend Reinvestment......................... 1,177,360 2,280,988
Cost of Shares Repurchased...................... (6,686,875) (12,579,170)
----------- -----------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS.................................. (2,373,476) (4,065,086)
----------- -----------
TOTAL DECREASE IN NET ASSETS.................... (1,936,540) (3,433,455)
NET ASSETS:
Beginning of the Period......................... 19,560,439 22,993,894
----------- -----------
End of the Period (Including accumulated net
investment loss of $35,820 and $23,161,
respectively)................................. $17,623,899 $19,560,439
=========== ===========
*Distributions by Class
- --------------------------------------------------------------------------------------
Distributions in Excess of Net Investment
Income:
Class A Shares................................ $ (25,278) $ (76,480)
Class B Shares................................ -0- -0-
Class C Shares................................ -0- -0-
----------- -----------
$ (25,278) $ (76,480)
=========== ===========
Distributions from Net Realized Gain:
Class A Shares................................ $ (501,835) $(1,080,329)
Class B Shares................................ (647,697) (1,144,103)
Class C Shares................................ (117,007) (164,043)
----------- -----------
$(1,266,539) $(2,388,475)
=========== ===========
</TABLE>
See Notes to Financial Statements
38
<PAGE> 40
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
Class A Shares 1999(b) 1998(b) 1997 1996(b) 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................... $10.339 $10.162 $10.530 $ 10.15 $ 9.19
------- ------- ------- ------- -------
Net Investment Income/Loss..... (.111) (.066) (.088) -0- .08
Net Realized and Unrealized
Gain......................... 1.231 1.643 1.014 1.242 1.1375
------- ------- ------- ------- -------
Total from Investment
Operations................... 1.120 1.577 .926 1.242 1.2175
------- ------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Investment
Income..................... .038 .072 -0- -0- .0775
Distributions from and in
Excess of Net Realized
Gain....................... .760 1.328 1.294 .862 .18
------- ------- ------- ------- -------
Total Distributions............ .798 1.400 1.294 .862 .2575
------- ------- ------- ------- -------
Net Asset Value, End of the
Period....................... $10.661 $10.339 $10.162 $10.530 $ 10.15
======= ======= ======= ======= =======
Total Return* (a).............. 11.51% 15.84% 8.94% 12.44% 13.30%
Net Assets at End of the Period
(In millions)................ $ 7.3 $ 8.5 $ 11.2 $ 8.5 $ 15.5
Ratio of Expenses to Average
Net Assets*.................. 3.88% 4.11% 3.66% 2.87% 2.79%
Ratio of Net Investment
Income/Loss to Average Net
Assets*...................... (1.08%) (.60%) (.67%) .00% .81%
Portfolio Turnover............. 193% 222% 231% 91% 135%
* 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 N/A 3.17% 3.68%
Ratio of Net Investment
Income/Loss to Average Net
Assets....................... N/A N/A N/A (.30%) (.07%)
</TABLE>
(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 shares outstanding.
N/A -- Not Applicable.
See Notes to Financial Statements
39
<PAGE> 41
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
Class B Shares 1999(b) 1998(b) 1997 1996(b) 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................... $10.038 $ 9.911 $10.379 $ 10.10 $ 9.17
------- ------- ------- ------- -------
Net Investment Loss............ (.185) (.151) (.146) (.106) (.01)
Net Realized and Unrealized
Gain......................... 1.192 1.606 .972 1.247 1.1375
------- ------- ------- ------- -------
Total from Investment
Operations................... 1.007 1.455 .826 1.141 1.1275
------- ------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Investment
Income....................... -0- -0- -0- -0- .0175
Distributions from and in
Excess of Net Realized
Gain....................... .760 1.328 1.294 .862 .18
------- ------- ------- ------- -------
Total Distributions............ .760 1.328 1.294 .862 .1975
------- ------- ------- ------- -------
Net Asset Value, End of the
Period....................... $10.285 $10.038 $ 9.911 $10.379 $ 10.10
======= ======= ======= ======= =======
Total Return* (a).............. 10.72% 14.96% 8.10% 11.51% 12.31%
Net Assets at End of the Period
(In millions)................ $ 8.6 $ 9.6 $ 10.0 $ 9.9 $ 8.1
Ratio of Expenses to Average
Net Assets*.................. 4.67% 4.89% 4.42% 3.76% 3.73%
Ratio of Net Investment Loss to
Average Net Assets*.......... (1.85%) (1.42%) (1.45%) (1.01%) (.09%)
Portfolio Turnover............. 193% 222% 231% 91% 135%
*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 N/A 4.06% 4.61%
Ratio of Net Investment Loss to
Average Net Assets........... N/A N/A N/A (1.30%) (.97%)
</TABLE>
(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 shares outstanding.
N/A -- Not Applicable.
See Notes to Financial Statements
40
<PAGE> 42
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of
the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
Class C Shares 1999(b) 1998(b) 1997 1996(b) 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period................... $10.057 $ 9.927 $10.395 $ 10.12 $ 9.20
------- ------- ------- ------- -------
Net Investment Loss............ (.182) (.147) (.139) (.104) (.02)
Net Realized and Unrealized
Gain......................... 1.208 1.605 .965 1.241 1.1375
------- ------- ------- ------- -------
Total from Investment
Operations................... 1.026 1.458 .826 1.137 1.1175
------- ------- ------- ------- -------
Less:
Distributions from and in
Excess of Net Investment
Income..................... -0- -0- -0- -0- .0175
Distributions from and in
Excess of Net Realized
Gain....................... .760 1.328 1.294 .862 .18
------- ------- ------- ------- -------
Total Distributions............ .760 1.328 1.294 .862 .1975
------- ------- ------- ------- -------
Net Asset Value, End of the
Period....................... $10.323 $10.057 $ 9.927 $10.395 $ 10.12
======= ======= ======= ======= =======
Total Return* (a).............. 10.79% 14.93% 8.09% 11.49% 12.16%
Net Assets at End of the Period
(In millions)................ $ 1.7 $ 1.4 $ 1.7 $ 1.7 $ 1.9
Ratio of Expenses to Average
Net Assets*.................. 4.65% 4.91% 4.46% 3.78% 3.79%
Ratio of Net Investment Loss to
Average Net Assets*.......... (1.84%) (1.38%) (1.50%) (.99%) (.18%)
Portfolio Turnover............. 193% 222% 231% 91% 135%
* 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 N/A 4.07% 4.67%
Ratio of Net Investment Loss to
Average Net Assets........... N/A N/A N/A (1.28%) (1.06%)
</TABLE>
(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 shares outstanding.
N/A -- Not Applicable.
See Notes to Financial Statements
41
<PAGE> 43
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen 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 to provide 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 sale price is not
available, are valued at the mean of the last reported bid and asked price.
Fixed income securities are stated at value using market quotations or
indications of value obtained from an independent pricing service. 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
42
<PAGE> 44
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
book entry transfer to the account of the custodian bank. The seller is required
to maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.
C. INCOME AND EXPENSES--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. 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. Income and 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 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 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 were amortized on a
straight line basis over the 60-month period ending May 15, 1999.
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 December 31, 1999, for federal income tax purposes cost of long- and
short-term investments is $14,451,991, the aggregate gross unrealized
appreciation is $3,760,739
43
<PAGE> 45
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
and the aggregate gross unrealized depreciation is $772,777, resulting in net
unrealized appreciation on long- and short-term investments of $2,987,962.
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of the deferral of losses relating to wash sale
transactions.
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.
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between book and tax basis reporting
have been identified and appropriately reclassified. As a result, permanent book
and tax basis differences relating to net realized currency gains totaling
$154,319 and net gains of $6,999 from Passive Foreign Investment Companies sold
were reclassified from accumulated net realized gain/loss to accumulated net
investment loss. A permanent difference of $55 related to distributions was
reclassified from accumulated net investment loss to accumulated net realized
gain/loss. A permanent difference related to a net operating loss totaling
$118,292 has been reclassified from accumulated net investment loss to capital.
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 Dean Witter Investment 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 year ended December 31, 1999, the Fund recognized expenses of
approximately $1,000 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.
44
<PAGE> 46
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
For the year ended December 31, 1999, the Fund recognized expenses of
approximately $9,100 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 year ended December 31,
1999, the Fund recognized expenses of approximately $73,400. 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.
During the period, the Fund owned shares of the following Morgan Stanley
Funds which are managed by the Subadviser:
<TABLE>
<CAPTION>
TRANSACTIONS
DURING THE PERIOD
---------------------
% OF NET ASSETS COST OF PROCEEDS
AT DECEMBER 31, 1999 PURCHASES OF SALES
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Latin American Discovery
Fund, Inc.................. .78% -0- -0-
Morgan Stanley Asia Pacific
Fund, Inc.................. .42% -0- -0-
</TABLE>
At December 31, 1999, Van Kampen owned 10,604, 53 and 53 shares of Classes
A, B and C of the Fund, respectively.
45
<PAGE> 47
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
3. CAPITAL TRANSACTIONS
At December 31, 1999, capital aggregated $5,397,978, $7,694,972 and
$1,457,278 for Classes A, B and C, respectively. For the year ended December 31,
1999, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A......................................... 165,799 $ 1,687,560
Class B......................................... 107,809 1,063,957
Class C......................................... 38,631 384,522
-------- -----------
Total Sales....................................... 312,239 $ 3,136,039
======== ===========
Dividend Reinvestment:
Class A......................................... 49,856 $ 502,652
Class B......................................... 59,993 585,510
Class C......................................... 9,104 89,198
-------- -----------
Total Dividend Reinvestment....................... 118,953 $ 1,177,360
======== ===========
Repurchases:
Class A......................................... (348,962) $(3,554,541)
Class B......................................... (289,679) (2,853,251)
Class C......................................... (28,422) (279,083)
-------- -----------
Total Repurchases................................. (667,063) $(6,686,875)
======== ===========
</TABLE>
46
<PAGE> 48
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
At December 31, 1998, capital aggregated $6,809,856, $8,959,090 and
$1,273,050 for Classes A, B and C, respectively. For the year ended December 31,
1998, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................... 425,556 $ 4,563,674
Class B.................................... 85,315 901,857
Class C.................................... 73,498 767,565
---------- ------------
Total Sales.................................. 584,369 $ 6,233,096
========== ============
Dividend Reinvestment:
Class A.................................... 108,757 $ 1,109,902
Class B.................................... 105,262 1,037,178
Class C.................................... 13,537 133,908
---------- ------------
Total Dividend Reinvestment.................. 227,556 $ 2,280,988
========== ============
Repurchases:
Class A.................................... (819,174) $ (8,755,915)
Class B.................................... (244,540) (2,594,678)
Class C.................................... (116,317) (1,228,577)
---------- ------------
Total Repurchases............................ (1,180,031) $(12,579,170)
========== ============
</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 purchased
on or after June 1, 1996, and any dividend reinvestment plan Class B shares
received on such shares, automatically convert to Class A shares eight years
after the end of the calendar month in which the shares were purchased. Class B
shares purchased before June 1, 1996, and any dividend reinvestment plan Class B
shares received on such shares, automatically convert to Class A shares six
years after the end of the calendar month in which the shares were purchased.
For the year ended December 31, 1999, no Class B shares converted to Class A
shares. Class C shares purchased before January 1, 1997, and any dividend
reinvestment plan Class C shares received on such shares, automatically convert
to Class A shares ten years after the end of the calendar month in which such
shares were purchased. Class C shares purchased on or after January 1, 1997 do
not possess a conversion feature. For the year ended December 31, 1999, no Class
C shares converted to Class A shares. The CDSC will be imposed on most
redemptions made within five years
47
<PAGE> 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
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>
For the year ended December 31, 1999, Van Kampen, as Distributor for the
Fund, received net commissions on sales of the Fund's Class A shares of
approximately $3,000 and CDSC on the redeemed shares of approximately $10,100.
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 $27,178,896 and
$31,035,103, 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. Forward commitments are
privately negotiated transactions between the Fund and dealers. Purchasing
securities on a forward basis involves a risk that the market value at the time
of delivery may be lower than the agreed upon purchase
48
<PAGE> 50
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
price resulting in an unrealized loss. Selling securities on a forward basis
involves different risks and can result in losses more significant than those
arising from the purchase of such securities. Risks may arise as a result of the
potential inability of the counterparties to meet the terms of their
commitments. While forward commitments are outstanding, the Fund maintains
sufficient collateral of cash or securities in a segregated account with its
custodian.
Summarized on the following pages are the specific types of derivative
financial instruments used by the Fund.
A. FORWARD PURCHASE COMMITMENTS--The Fund trades certain securities under the
terms of forward commitments, whereby the settlement occurs at a specific future
date. The commitments are marked to market on a daily basis with changes in
value reflected as a component of unrealized appreciation or depreciation on
forward commitments. There were no forward purchase commitments open as of
December 31, 1999.
B. 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
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 foreign currency translation. There were
no closed but unsettled forward commitments open as of December 31, 1999.
C. 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.
49
<PAGE> 51
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
The following forward currency contracts were outstanding as of December 31,
1999:
<TABLE>
<CAPTION>
UNREALIZED
CURRENT APPRECIATION/
DESCRIPTION VALUE DEPRECIATION
- ------------------------------------------------------------------------
<S> <C> <C>
LONG CONTRACTS
European Currency Unit,
60,000 expiring 02/02/00.................. $ 60,589 $ (1,115)
90,000 expiring 02/02/00.................. 90,661 (226)
14,832 expiring 03/07/00.................. 15,018 18
128,000 expiring 03/10/00................. 129,625 (8,820)
Japanese Yen,
34,601,000 expiring 03/17/00.............. 342,895 22,040
7,232,770 expiring 03/17/00............... 71,676 676
---------- --------
$ 710,464 $ 12,573
---------- --------
SHORT CONTRACTS
European Currency Unit,
150,000 expiring 02/02/00................. 151,472 293
Japanese Yen,
10,425,400 expiring 03/17/00.............. 103,315 (6,640)
27,246,380 expiring 03/17/00.............. 270,011 (4,011)
27,390,020 expiring 03/17/00.............. 271,434 (5,434)
102,430 expiring 03/17/00................. 1,015 (15)
102,970 expiring 03/17/00................. 1,020 (20)
53,744,000 expiring 03/17/00.............. 532,601 (14,986)
10,166,000 expiring 03/17/00.............. 100,745 (745)
8,583,000 expiring 03/17/00............... 85,057 (1,719)
---------- --------
$1,516,670 (33,277)
---------- --------
$(20,704)
========
</TABLE>
D. 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. These contracts are generally
used to provide the return of an Index without purchasing all of the securities
underlying the Index or to manage the Fund's overall exposure to the equity
markets. Upon entering into futures contracts, the Fund maintains, in a
segregated account with its custodian, cash or liquid securities with a value
equal to its obligation under the futures contracts. During the period the
futures
50
<PAGE> 52
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
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 is in excess of the variation margin
reflected on the Statement of Assets and Liabilities.
Transactions in futures contracts for the year ended December 31, 1999, were
as follows:
<TABLE>
<CAPTION>
CONTRACTS
- ----------------------------------------------------------------------
<S> <C>
Outstanding at December 31, 1998............................ 5
Futures Opened.............................................. 116
Futures Closed.............................................. (120)
Futures Split (Matif CAC 40 8-for-1)........................ 7
----
Outstanding at December 31, 1999............................ 8
====
</TABLE>
The futures contracts outstanding as of December 31, 1999, and the
descriptions and unrealized appreciation/depreciation are as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
- -------------------------------------------------------------------------
<S> <C> <C>
OSA NIKKEI 300
March 2000--Long Contracts
(Current Notional Value of 3,223,000 JPY
per contract)........................... 7 $ 7,263
EURX-DAX
March 2000--Long Contract
(Current Notional Value of 175,675 EUR per
contract)............................... 1 24,636
-- -------
8 $31,899
== =======
</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
year ended December 31, 1999, are payments retained by Van Kampen of
approximately $78,200.
51
<PAGE> 53
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
- --------------------------------------------------------------------------------
7. BORROWINGS
In accordance with its investment policies, the Fund may borrow from banks for
temporary purposes and is subject to certain other customary restrictions.
Effective November 30, 1999, the Fund, in conjunction with certain other funds
of Van Kampen, has entered in to a $650,000,000 committed line of credit
facility with a group of banks which expires on November 28, 2000, but is
renewable with the consent of the participating banks. Each Fund is permitted to
utilize the facility in accordance with the restrictions of its prospectus. In
the event the demand for the facility meets or exceeds $650 million on a
complex-wide basis, each Fund will be limited to its pro-rata percentage based
on the net assets of each participating fund. Interest on borrowings is charged
under the agreement at a rate of 0.50% above the federal funds rate per annum.
An annual commitment fee of 0.09% per annum is charged on the unused portion of
the credit facility, which each Fund incurs based on its pro-rata percentage of
quarterly net assets. The Fund did not borrow against the credit facility during
the period.
8. SUBSEQUENT EVENT
On January 27, 2000, the Board approved a Plan of Liquidation for the Fund. The
Plan of Liquidation will be presented to the shareholders of the Fund for
approval. As a result of the Board's approval, the Fund is suspending the
continuous offering of its shares to new investors of the Fund effective at the
close of business February 2, 2000. Currently, existing shareholders of the Fund
as of February 2, 2000 may continue to purchase shares of the Fund. Dividends
subject to automatic reinvestment in the Fund according to previous instructions
of existing shareholders will continue to be reinvested in shares of the Fund.
52
<PAGE> 54
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Van Kampen Global Managed Assets Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen Global Managed Assets
Fund (the "Fund") at December 31, 1999, and the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
February 11, 2000
53
<PAGE> 55
VAN KAMPEN FUNDS
GROWTH
Aggressive Growth*
American Value*
Emerging Growth
Enterprise
Equity Growth
Focus Equity
Growth
Mid Cap Growth
Pace
Small Cap Value
Technology
GROWTH AND INCOME
Comstock
Equity Income
Growth and Income
Harbor
Real Estate Securities
Utility
Value
GLOBAL/INTERNATIONAL
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
Global Fixed Income*
Global Franchise
Global Government Securities*
Global Managed Assets*
International Magnum
Latin American
Strategic Income
Worldwide High Income
INCOME
Corporate Bond
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
U.S. Government
U.S. Government Trust for Income
CAPITAL PRESERVATION
Reserve
Tax Free Money
SENIOR LOAN
Prime Rate Income Trust
Senior Floating Rate
TAX FREE
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal**
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
To find out more about any of these
funds, ask your financial advisor for
a prospectus, which contains more
complete information, including sales
charges, risks, and ongoing expenses.
Please read it carefully before you
invest or send money.
To view a current Van Kampen fund
prospectus or to receive additional
fund information, choose from one of
the following:
- - visit our Web site at
WWW.VANKAMPEN.COM--to view a prospectus, select Download Prospectus
- - call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time.
Telecommunications Device for the Deaf users, call 1-800-421-2833.
- - e-mail us by visiting
WWW.VANKAMPEN.COM and
selecting Contact Us
* Closed to new investors
** Open to new investors for a
limited time
54
<PAGE> 56
GLOBAL MANAGED ASSETS FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
JERRY D. CHOATE
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN* - Chairman
SUSANNE H. WOOLSEY, PH.D.
PAUL G. YOVOVICH
OFFICERS
RICHARD F. POWERS, III*
President
DENNIS J. MCDONNELL*
Executive Vice President and
Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and Chief
Financial Officer
STEPHEN L. BOYD*
PETER W. HEGEL*
MICHAEL H. SANTO*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
ASSET MANAGEMENT INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
INVESTMENT SUBADVISER
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
1585 Broadway
New York, New York 10036
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR
SERVICES INC.
P.O. Box 218256
Kansas City, Missouri 64121-8256
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
<TABLE>
<C> <S>
* "Interested" persons of the
Fund, as defined in the Investment
Company Act of 1940.
(C) Van Kampen Funds Inc., 2000
All rights reserved.
(SM) denotes a service mark of Van
Kampen Funds Inc.
</TABLE>
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 June 30, 2000, the report, if used with prospective
investors, must be accompanied by a quarterly performance update, if applicable.
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
December 31, 1999. The Fund designated and paid $1,130,485 as a 20% rate gain
distribution. Shareholders were sent a 1999 Form 1099-DIV in January 2000
representing their proportionate share of the capital gain distribution to be
reported on their income tax returns.
55
<PAGE> 57
RESULT OF SHAREHOLDER VOTES
A Joint Special Meeting of the Shareholders of the Portfolio was held on
December 15, 1999, where shareholders voted on the election of trustees and
independent public accountants.
1) With regard to the election of the following trustees by shareholders:
<TABLE>
<CAPTION>
# OF SHARES
--------------------
IN FAVOR WITHHELD
- ----------------------------------------------------------------------
<S> <C> <C>
J. Miles Branagan 941,124 16,140
Jerry D. Choate 941,124 16,140
Linda Hutton Heagy 941,752 15,512
R. Craig Kennedy 941,752 15,512
Mitchell M. Merin 941,752 15,512
Jack E. Nelson 941,752 15,512
Richard F. Powers, III 941,752 15,512
Phillip B. Rooney 941,752 15,512
Fernando Sisto 941,124 16,140
Wayne W. Whalen 941,119 16,145
Suzanne H. Woolsey, PhD. 941,752 15,512
Paul G. Yovovich 941,752 15,512
</TABLE>
2) With regard to the ratification of PriceWaterhouseCoopers LLP to act as
independent public accounts for the Portfolio, 930,632 shares were voted
in the affirmative and 5,275 shares were voted against the proposal and
21,355 shares abstained from voting.
56
<PAGE> 58
YEAR 2000 UPDATE
As we enter the new century, it's "business as usual" for Van Kampen. Thank you
for the confidence you showed in us during the changeover on January 1, 2000,
and for entrusting us with your investment portfolio. We look forward to
continuing to serve your investment needs.
