<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................................................... 1
Performance Results......................................................... 3
Portfolio Management Review................................................. 4
Portfolio of Investments.................................................... 6
Statement of Assets and Liabilities......................................... 12
Statement of Operations..................................................... 13
Statement of Changes in Net Assets.......................................... 14
Financial Highlights........................................................ 15
Notes to Financial Statements............................................... 17
</TABLE>
G&I SAR 7/95
<PAGE>
LETTER TO SHAREHOLDERS
DON G. POWELL
July 3, 1995
Dear Shareholder:
During the six-month period covered by this report, December 1, 1994 through
May 31, 1995, we saw the close of a challenging and difficult year in the fi-
nancial markets--and the beginning of a new year, with renewed optimism and
strength on many fronts.
MARKET OVERVIEW
Most of 1994 was a difficult period for both stock and bond investors as the
Federal Reserve Board's crusade against inflation drove interest rates markedly
higher. The yield on 30-year Treasury securities, for example, climbed from
6.35 percent as the year began to a high of 8.16 percent by early November. As
interest rates rose, fixed-income investments declined in value. Stock market
investors did not fare much better, despite a robust economy and stronger cor-
porate earnings.
In stark contrast, 1995 began more positively as the bond market got a boost
from growing sentiment that the Fed had stabilized economic growth while keep-
ing inflation under control. Subsequently, we saw the yield on 30-year Treasury
securities fall to 6.64 percent at the end of May. Falling yields have pushed
bond prices back up to February 1994 levels. For example, the Bond Buyer's Mu-
nicipal Index rose to 94.06 at the end of May--an increase of more than 16 per-
cent from its low of 80.81 in November. Meanwhile, the stock market continued
to climb through the first part of the year. The Dow Jones Industrial Average
broke the 4400 mark in May, setting a new record high and sustaining expecta-
tions for a stronger market in 1995. Mutual fund investors have been among the
beneficiaries in this impressive rally, as many funds (municipal bond funds in
particular) have earned back virtually all of last year's losses and posted at-
tractive returns.
This positive climate was apparently reflected in the public's sentiment to-
ward the economy. At the end of May, the Van Kampen American Capital Index of
Investor Intentions reached 145, an increase of 5 percent over its April-end
level of 138--with a total of 46 percent of those individuals surveyed saying
the next 60-90 days would be a "good" time to invest. The index, computed from
an independently conducted survey and published by Van Kampen American Capital,
measures the investment climate (the public's confidence) by asking 1,000 indi-
viduals about what they intend to do with their money over the next 60-90 days.
On the following pages, you can read about your Fund's performance during the
past six months, as well as portfolio management's outlook for the Fund in the
coming months. We hope that you will find the information contained in the
question-and-answer section helpful.
(Continued on page two)
1
<PAGE>
CORPORATE NEWS
As you may have already noticed, we have adopted a new design for our share-
holder reports that reflects our new identity as Van Kampen American Capital.
Going forward, we will continue to look for new ways to improve upon the pre-
sentation of information in your Fund's report.
In addition, we have developed a new corporate advertising campaign intro-
ducing Van Kampen American Capital and our wide range of investment opportuni-
ties designed to help you build and preserve wealth. Full page ads appeared in
The Wall Street Journal in the first quarter of 1995--watch for more advertis-
ing throughout the year.
We look forward to communicating with you on a regular basis, providing in-
formation about your Fund's performance, new investment opportunities, and our
newly created company. We appreciate your continued confidence in your invest-
ment with Van Kampen American Capital.
Sincerely,
/s/ Don G. Powell
Don G. Powell
Chairman
Van Kampen American Capital
Asset Management, Inc.
2
<PAGE>
PERFORMANCE RESULTS FOR THE PERIOD ENDED MAY 31, 1995
AMERICAN CAPITAL GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
TOTAL RETURNS
<S> <C> <C> <C>
Six-month total return
based on NAV/1/...................................... 17.24% 16.67% 16.75%
Six-month total return/2/............................ 10.48% 11.67% 15.75%
One-year total return/2/............................. 9.05% 9.74% 13.82%
Five-year average
annual total return/2/............................... 10.36% N/A N/A
Ten-year average
annual total return/2/............................... 11.55% N/A N/A
Life of Fund average
annual total return/2/............................... 9.36% 9.13% 11.12%
Commencement Date.................................... 08/01/46 08/02/93 08/02/93
</TABLE>
N/A = Not Applicable
/1/Assumes reinvestment of all distributions for the period ended May 31,
1995, and does not include payment of the maximum sales charge (5.75% for A
shares) or contingent deferred sales charge for early withdrawal (5% for B
shares and 1% for C shares).
/2/Standardized total return. Assumes reinvestment of all distributions for
the period ended May 31, 1995, and includes payment of the maximum sales
charge (5.75% for A shares) or contingent deferred sales charge for early
withdrawal (5% for B shares and 1% for C shares).
See the Prior Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. Fund shares, when redeemed, may be worth
more or less than their original cost.
3
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
AMERICAN CAPITAL GROWTH AND INCOME FUND
The following is an interview with the portfolio management team of American
Capital Growth and Income Fund. The team is led by James A. Gilligan,
portfolio manager, and Alan T. Sachtleben, executive vice president for equity
investments.
Q WHAT FACTORS HAD THE GREATEST IMPACT ON THE FUND'S PERFORMANCE DURING
THE SIX MONTHS ENDED MAY 31, 1995?
A The biggest boost to stock prices came from interest rates, which de-
clined during the reporting period. Since a drop in interest rates has a
positive effect on the economy, it usually causes the price of both stocks and
bonds to increase. As the stock market rose, it attracted new money and set
several record highs, as measured by the Dow Jones Industrial Average, an un-
managed index that reflects the performance of large, industrial companies.
Lower interest rates help companies for two reasons. First, they are an in-
dication that there is less concern about inflation. Second, lower rates re-
duce a company's cost of borrowing money.
The Fund also benefited from the continued slowing of economic growth rates
and a declining U.S. dollar. Slower growth rates means inflation is less
likely to force an increase in interest rates. The devaluing of the dollar
compared to the Japanese yen and European currencies meant U.S. exports were
more affordable and imports less affordable, both of which helped increase
sales for domestic companies.
Q WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO TO DEAL WITH THE CHANGING
MARKET CONDITIONS?
A In anticipation of a period of slower growth, we gradually repositioned
the Fund in the latter part of 1994, including reducing the portfolio's
holdings of cyclical stocks-- those most affected by changes in economic con-
ditions. As a result, we reduced the Fund's exposure to companies such as auto
manufacturers and retailers. Then, we increased the portfolio's holdings of
stocks in the financial services sectors, which usually benefit from lower in-
terest rates.
In the past, our careful stock selection strategy has provided an added ben-
efit: several of the stocks in the portfolio have increased in value as a re-
sult of corporate takeovers or restructurings. The companies involved in
takeover bids include Lotus (software), Dr. Pepper, U.S. Shoe and PET (con-
sumer non-durables), and E Systems (technology). Another stock in the portfo-
lio, W.R. Grace, benefited from a management change that greatly enhanced the
company's market value. Of course, not all of the stocks in the portfolio per-
formed this well, and past performance is not indicative of future perfor-
mance.
4
<PAGE>
Q HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A During the six months ended May 31, 1995, Class A Shares of the Fund
achieved a total return at net asset value of 17.24 percent/1/, includ-
ing reinvestment of dividends totaling $.1575 per share and a capital gains
distribution of $.8925 per share. By comparison, the Standard & Poor's 500-
Stock Index, a broad-based, unmanaged index that reflects general stock market
performance, achieved a total return of 19.17 percent. The index does not re-
flect any commissions or fees that would be paid by an investor purchasing the
securities it represents. (For more information on Fund performance, please
see the table on page three of this report.)
Q WHAT IS THE OUTLOOK FOR THE FUND FOR THE NEXT SIX MONTHS?
A We believe currently that stocks are fairly valued. However, certain
segments of the stock market remain attractive. We will continue to look
for stocks that have solid fundamentals and that we believe offer good pros-
pects for growth, regardless of economic conditions. Additionally, we intend
to continue to be fully invested and broadly diversified, two of the key com-
ponents of our strategy for generating consistent, long-term results.
/s/ Alan T. Sachtleben /s/ James A. Gilligan
Alan T. Sachtleben James A. Gilligan
Executive Vice President Portfolio Manager
Equity Investments
Please see footnotes on page three.
5
<PAGE>
See Notes to Financial Statements
PORTFOLIO OF INVESTMENTS
May 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
(000) Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCK 73.0%
CONSUMER DISTRIBUTION 2.0%
* 5 AmeriSource Health Corp............................... $ 102,375
19 Fleming Companies, Inc................................ 486,450
22 Gap, Inc.............................................. 756,250
30 May Department Stores Co.............................. 1,177,500
25 McKesson Corp......................................... 1,115,625
* 12 Michael's Stores, Inc................................. 266,975
* 32 Nine West Group, Inc.................................. 1,116,000
24 Nordstrom, Inc........................................ 996,000
------------
TOTAL CONSUMER DISTRIBUTION........................... 6,017,175
------------
CONSUMER DURABLES 2.2%
50 Black & Decker Corp................................... 1,650,000
35 Eastman Kodak Co...................................... 2,113,125
39 Echlin, Inc........................................... 1,404,000
22 Stanley Works......................................... 880,000
------------
TOTAL CONSUMER DURABLES............................... 6,047,125
------------
CONSUMER NON-DURABLES 6.1%
35 Coca-Cola Co.......................................... 2,165,625
30 CPC International, Inc................................ 1,822,500
12 Gillette Co........................................... 1,012,500
35 Heinz (H.J.) Co....................................... 1,583,750
25 Kellogg Co............................................ 1,678,125
16 Nike, Inc., Class B................................... 1,262,000
39 Procter & Gamble Co................................... 2,803,125
39 Ralston-Ralston Purina Group.......................... 1,959,750
30 RJR Nabisco Holdings Corp., CI A...................... 781,137
69 Sara Lee Corp......................................... 1,923,375
------------
TOTAL CONSUMER NON-DURABLES........................... 16,991,887
------------
CONSUMER SERVICES 4.2%
16 Capital Cities ABC, Inc............................... 1,544,000
41 Disney (Walt) Co...................................... 2,280,625
55 McDonald's Corp....................................... 2,083,125
26 Omnicom Group, Inc.................................... 1,498,250
26 Tribune Co............................................ 1,550,250
* 30 Viacom, Inc., Class B................................. 1,398,750
78 Wendy's International, Inc............................ 1,335,750
------------
TOTAL CONSUMER SERVICES............................... 11,690,750
------------
</TABLE>
6
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
Number
of Shares
(000) Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
ENERGY 7.8%
48 British Petroleum Co., PLC, ADR....................... $ 4,098,000
47 Exxon Corp............................................ 3,354,625
23 Mobil Corp............................................ 2,308,625
125 Pacific Enterprises................................... 3,156,250
101 Panhandle Eastern Corp................................ 2,537,625
32 Repsol SA, ADR........................................ 1,044,000
34 Royal Dutch Petroleum Co., ADR........................ 4,309,500
55 USX-Marathon Group.................................... 1,093,125
------------
TOTAL ENERGY.......................................... 21,901,750
------------
FINANCE 14.0%
65 Ahmanson (H.F.) & Co.................................. 1,478,750
32 American General Corp................................. 1,104,000
22 American International Group, Inc..................... 2,502,500
100 Banc One Corp......................................... 3,475,000
60 Bank Of Boston Corp................................... 2,190,000
38 Bankers Trust N Y Corp................................ 2,384,500
13 BayBanks, Inc......................................... 971,500
84 Chemical Banking Corp................................. 3,874,500
54 CoreStates Financial Corp............................. 1,795,500
55 Debartolo Realty Corp................................. 790,625
19 Duke Realty Investments, Inc.......................... 532,000
23 Equity Residential Properties Trust................... 658,375
44 Federal National Mortgage Association................. 4,092,000
11 General Re Corp....................................... 1,489,125
14 Health Care Property Investor, Inc.................... 444,500
41 Manufactured Home Communities, Inc.................... 639,450
54 Morgan (J. P.) & Co., Inc............................. 3,827,250
* 22 Nokia Corp., ADS...................................... 1,023,000
15 Post Properties, Inc.................................. 463,125
30 St. Paul Companies, Inc............................... 1,526,250
68 TIG Holdings, Inc..................................... 1,598,000
23 Transamerica Corp..................................... 1,374,250
29 Vornado Realty Trust.................................. 986,000
------------
TOTAL FINANCE......................................... 39,220,200
------------
HEALTH CARE 8.5%
43 Abbott Laboratories, Inc.............................. 1,720,000
20 American Home Products Corp........................... 1,472,500
* 31 Amgen, Inc............................................ 2,247,500
42 Baxter International, Inc............................. 1,464,750
* 30 Charter Medical Corp.................................. 513,750
</TABLE>
7
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
Number
of Shares
(000) Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
* 32 Foundation Health Corp................................ $ 900,000
17 Lilly (Eli) & Co...................................... 1,268,625
* 27 Lincare Holdings, Inc................................. 715,500
50 Merck & Co., Inc...................................... 2,356,250
38 Mylan Laboratories, Inc............................... 1,087,750
* 90 National Medical Enterprises, Inc..................... 1,496,250
* 30 Nellcor, Inc.......................................... 1,305,000
28 Pfizer, Inc........................................... 2,467,500
* 44 Physicians Corp. Of America........................... 968,000
29 Schering-Plough Corp.................................. 2,283,750
40 Upjohn Co............................................. 1,455,000
------------
TOTAL HEALTH CARE..................................... 23,722,125
------------
PRODUCER MANUFACTURING 5.7%
23 Allied-Signal, Inc.................................... 928,625
64 Browning-Ferris Industries, Inc....................... 2,280,000
23 Fluor Corp............................................ 1,138,500
47 General Electric Co................................... 2,726,000
40 Honeywell, Inc........................................ 1,585,000
26 Illinois Tool Works, Inc.............................. 1,293,500
* 69 Philip NV, ADR........................................ 2,768,625
19 Rockwell International Corp........................... 866,875
55 Wheelabrator Technologies, Inc........................ 838,750
58 WMX Technologies, Inc................................. 1,580,500
------------
TOTAL PRODUCER MANUFACTURING.......................... 16,006,375
------------
RAW MATERIALS/PROCESSING INDUSTRIES 6.0%
21 Air Products & Chemicals, Inc......................... 1,115,625
61 Bemis, Inc............................................ 1,738,500
32 Cabot Corp............................................ 1,348,000
26 Du Pont (E.I.) de Nemours & Co., Inc.................. 1,764,750
21 Eastman Chemical Co................................... 1,242,000
38 Ferro Corp............................................ 1,050,500
* 53 Fort Howard Corp...................................... 761,875
58 Grace (W.R.) & Co..................................... 3,726,500
12 International Paper Co................................ 943,500
12 Monsanto Co........................................... 999,000
27 Nalco Chemical Co..................................... 1,019,250
26 Sigma-Aldrich Corp.................................... 1,144,000
------------
TOTAL RAW MATERIALS/PROCESSING INDUSTRIES............. 16,853,500
------------
</TABLE>
8
<PAGE>
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
Number
of Shares
(000) Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
TECHNOLOGY 8.6%
36 Adobe Systems, Inc.................................... $ 1,872,000
* 32 Compaq Computer Corp.................................. 1,252,000
* 30 DSC Communications Corp............................... 1,110,000
68 International Business Machines Corp.................. 6,341,000
31 Loral Corp............................................ 1,484,125
* 23 Lotus Development Corp................................ 710,650
30 McDonnell Douglas Corp................................ 2,167,500
* 18 Microsoft Corp........................................ 1,524,375
17 Motorola, Inc......................................... 1,017,875
50 Northern Telecom, Ltd................................. 1,918,750
27 Northrop Grumman Corp................................. 1,414,125
* 27 Sterling Software, Inc................................ 914,625
20 Xerox Corp............................................ 2,267,500
------------
TOTAL TECHNOLOGY...................................... 23,994,525
------------
UTILITIES 7.9%
45 Ameritech Corp........................................ 1,996,875
27 AT&T Corp............................................. 1,370,250
85 Duke Power Co......................................... 3,548,750
86 Frontier Corp......................................... 1,956,500
35 General Public Utilities Corp......................... 1,050,000
68 GTE Corp.............................................. 2,269,500
72 National Power, LPC, ADR.............................. 918,000
135 PacifiCorp............................................ 2,666,250
93 Peco Energy Co........................................ 2,615,625
25 PowerGen PLC, ADR..................................... 340,200
24 SBC Communications, Inc............................... 1,080,000
17 Southern New England Telecommunications............... 571,625
45 U.S. West, Inc........................................ 1,856,250
------------
TOTAL UTILITIES....................................... 22,239,825
------------
TOTAL COMMON STOCK (Cost $174,932,419)................ 204,685,237
------------
CONVERTIBLE PREFERRED STOCK 3.3%
18 Citicorp, $5.375...................................... 2,637,000
45 James River Corp., DECS, $1.55........................ 1,085,625
40 NoRam Energy Corp., $3.00............................. 1,405,000
20 Occidental Petroleum Corp., $7.75..................... 1,130,000
23 SCI Finance, LLC, NV, 6.25%........................... 1,311,000
28 Williams Companies, $3.50............................. 1,666,000
------------
TOTAL CONVERTIBLE PREFERRED STOCK (Cost $7,768,105)... 9,234,625
------------
</TABLE>
9
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONVERTIBLE CORPORATE
OBLIGATIONS 10.4%
CONSUMER DISTRIBUTION 0.7%
$ 2,000 Price Co............................ 6.750% 03/01/01 $ 1,950,000
------------
CONSUMER NON-DURABLES 1.1%
3,000 Grand Metropolitan, PLC............. 6.500 01/31/00 3,195,000
------------
CONSUMER SERVICES 2.8%
5,000 New America Holdings, Inc........... ** 03/11/13 2,293,750
6,900 Time Warner, Inc.................... ** 12/17/12 2,285,625
5,900 Time Warner, Inc.................... ** 06/22/13 2,323,125
847 Time Warner, Inc.................... 8.750 01/10/15 876,645
------------
TOTAL CONSUMER SERVICES............. 7,779,145
------------
ENERGY 0.4%
900 Amoco Canada Petroleum Co........... 7.375 09/01/13 1,170,000
------------
FINANCE 0.5%
35 Allstate Corp....................... 6.760 04/15/98 1,351,124
------------
HEALTH CARE 1.1%
8,000 Roche Holdings Inc. ................ ** 04/20/10 3,080,000
------------
PRODUCER MANUFACTURING 1.0%
1,500 Browning Ferris Industries.......... 6.750 07/18/05 1,481,250
4,000 Valhi, Inc.......................... ** 10/20/07 1,430,000
------------
TOTAL PRODUCER MANUFACTURING........ 2,911,250
------------
RAW MATERIALS/PROCESSING
INDUSTRIES 0.5%
1,500 Albany International Co............. 5.250 03/15/02 1,421,250
------------
TECHNOLOGY 2.3%
50 American Express Co., ELKS.......... 6.250 10/15/96 2,472,987
3,000 Automatic Data Processing., Inc..... ** 02/20/12 1,312,500
1,000 General Instrument Corp............. 5.000 06/15/00 1,372,500
20 Salomon, Inc., ELKS................. 6.500 02/01/97 1,164,807
------------
TOTAL TECHNOLOGY.................... 6,322,794
------------
TOTAL CONVERTIBLE CORPORATE
OBLIGATIONS
(Cost $28,108,238)................. 29,180,563
------------
UNITED STATES GOVERNMENT
OBLIGATIONS 1.9%
5,000 United States Treasury Notes (Cost
$5,119,531)......................... 7.750 02/15/01 5,390,650
------------
</TABLE>
10
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM
INVESTMENTS 11.0%
$ #12,000 Federal Home Loan Mortgage
Corp...................... 5.920% 06/05/95 $ 11,990,167
#4,000 Federal National Mortgage
Association............... 6.160 10/10/95 3,915,680
11,025 Repurchase Agreement With
SBC Capital Markets, Inc.,
dated 5/31/95
(Collateralized by U.S.
Government obligations in
a pool cash account)
repurchase proceeds
$11,026,889............... 6.150 06/01/95 11,025,000
#4,000 United States Treasury
Bills..................... 5.66 to 5.72 7/20 to 8/10 3,958,853
------------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $30,886,391)....... 30,889,700
------------
TOTAL INVESTMENTS (Cost $246,814,684) 99.6%.................... 279,380,775
OTHER ASSETS AND LIABILITIES, NET 0.4%......................... 1,092,765
------------
NET ASSETS 100%................................................ $280,473,540
------------
</TABLE>
DECS--Dividend enhanced convertible stock
ELKS--Equity-linked securities, traded in shares
*Non-income producing securities
**Liquid yield option note, zero coupon
#Securities with a market value of approximately $18.9 million were placed as
collateral for futures contracts (see Note 1B)
11
<PAGE>
See Notes to Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $246,814,684)............... $ 279,380,775
Cash........................................................... 6,599
Receivable for investments sold................................ 6,284,573
Interest and dividends receivable.............................. 1,093,783
Receivable for Fund shares sold................................ 905,060
Receivable from broker-variation margin........................ 344,750
Other assets................................................... 2,310
--------------
TOTAL ASSETS.................................................. 288,017,850
--------------
LIABILITIES
Payable for investments purchased.............................. 6,591,709
Payable for Fund shares redeemed............................... 521,214
Due to Distributor............................................. 115,459
Due to Adviser................................................. 108,032
Due to shareholder service agent............................... 83,100
Deferred Directors' compensation............................... 42,169
Accrued expenses and other payables............................ 82,627
--------------
TOTAL LIABILITIES............................................. 7,544,310
--------------
NET ASSETS, equivalent to $13.15 per share for Class A, $13.14
per share for Class B and Class C shares...................... $ 280,473,540
--------------
NET ASSETS WERE COMPRISED OF:
Capital stock, at par; 18,592,133 Class A, 2,351,140 Class B
and 390,077 Class C shares outstanding........................ $ 213,334
Capital surplus................................................ 237,320,186
Undistributed net realized gain on securities.................. 7,214,508
Net unrealized appreciation of securities
Investments................................................... 32,566,091
Future contracts.............................................. 1,501,787
Undistributed net investment income............................ 1,657,634
--------------
NET ASSETS..................................................... $ 280,473,540
--------------
</TABLE>
12
<PAGE>
See Notes to Financial Statements
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends.......................................................... $ 3,169,540
Interest........................................................... 1,663,066
-----------
Investment income................................................. 4,832,606
-----------
EXPENSES
Management fees.................................................... 596,047
Shareholder service agent's fees and expenses...................... 420,924
Accounting services................................................ 40,311
Service fees--Class A.............................................. 185,161
Distribution and service fees--Class B............................. 118,880
Distribution and service fees--Class C............................. 20,354
Directors' fees and expenses....................................... 8,639
Audit fees......................................................... 14,700
Custodian fees..................................................... 7,338
Legal fees......................................................... 4,788
Reports to shareholders............................................ 55,500
Registration and filing fees....................................... 48,519
Miscellaneous...................................................... 5,518
-----------
Total expenses.................................................... 1,526,679
-----------
NET INVESTMENT INCOME.............................................. 3,305,927
-----------
REALIZED AND UNREALIZED GAIN ON SECURITIES
Net realized gain on securities
Investments....................................................... 6,616,044
Futures contracts................................................. 720,110
Net unrealized appreciation of securities during the period
Investments....................................................... 27,733,786
Futures contracts................................................. 1,667,134
-----------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES..................... 36,737,074
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $40,043,001
-----------
</TABLE>
13
<PAGE>
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 1995 November 30, 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period .......... $227,378,748 $206,581,841
------------ ------------
Operations
Net investment income.................... 3,305,927 4,903,267
Net realized gain on securities.......... 7,336,154 16,532,604
Net unrealized appreciation
(depreciation) of securities during the
period.................................. 29,400,920 (19,651,593)
------------ ------------
Increase in net assets resulting from
operations............................... 40,043,001 1,784,278
------------ ------------
Distributions to shareholders
from net investment income
Class A.................................. (2,739,791) (4,309,919)
Class B.................................. (202,959) (108,041)
Class C.................................. (35,722) (25,543)
------------ ------------
(2,978,472) (4,443,503)
------------ ------------
net realized gain on securities
Class A.................................. (15,006,137) (25,694,707)
Class B.................................. (1,394,125) (386,769)
Class C.................................. (257,766) (125,403)
------------ ------------
(16,658,028) (26,206,879)
------------ ------------
Total distributions...................... (19,636,500) (30,650,382)
------------ ------------
Capital transactions
Proceeds from shares sold
Class A.................................. 21,151,617 33,007,147
Class B.................................. 11,050,884 19,553,051
Class C.................................. 1,590,657 3,427,062
------------ ------------
33,793,158 55,987,260
------------ ------------
Proceeds from shares issued for
distributions reinvested
Class A.................................. 15,858,243 26,960,817
Class B.................................. 1,428,766 435,522
Class C.................................. 203,982 81,960
------------ ------------
17,490,991 27,478,299
------------ ------------
Cost of shares redeemed
Class A.................................. (15,783,378) (31,138,841)
Class B.................................. (2,280,026) (2,333,888)
Class C.................................. (532,454) (329,819)
------------ ------------
(18,595,858) (33,802,548)
------------ ------------
Increase in net assets resulting from
capital transactions...................... 32,688,291 49,663,011
------------ ------------
INCREASE IN NET ASSETS.................... 53,094,792 20,796,907
------------ ------------
NET ASSETS, end of period................. $280,473,540 $227,378,748
------------ ------------
</TABLE>
14
<PAGE>
See Notes to Financial Statements
FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout each of the
periods indicated (Unaudited).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
------------------------------------------------------
Six Months
Ended Year Ended November 30
May 31, ------------------------------------------
1995 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value,
beginning of period..... $12.26 $14.08 $13.42 $11.69 $9.93 $11.71
------- -------- ------- ------ ------ -------
INCOME FROM INVESTMENT
OPERATIONS:
Investment income....... .24 .43 .42 .46 .52 .45
Expenses................ (.07) (.14) (.15) (.145) (.13) (.12)
------- -------- ------- ------ ------ -------
Net investment income... .17 .29 .27 .315 .39 .33
Net realized and
unrealized gains or
losses on securities... 1.77 (.1025) 1.52 1.785 1.73 (1.12)
------- -------- ------- ------ ------ -------
Total from investment
operations.............. 1.94 .1875 1.79 2.10 2.12 (.79)
------- -------- ------- ------ ------ -------
LESS DISTRIBUTIONS FROM
Net investment income... (.1575) (.27) (.2825) (.37) (.36) (.3125)
Net realized gains on
securities............. (.8925) (1.7375) (.8475) -- -- (.6775)
------- -------- ------- ------ ------ -------
Total distributions..... (1.05) (2.0075) (1.13) (.37) (.36) (.99)
------- -------- ------- ------ ------ -------
Net asset value, end of
period.................. $13.15 $12.26 $14.08 $13.42 $11.69 $9.93
------- -------- ------- ------ ------ -------
TOTAL RETURN (/1/)...... 17.24% 1.21% 14.34% 18.25% 21.59% (7.29%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (millions)....... $244.5 $205.4 $204.3 $177.8 $157.1 $143.6
Average net assets
(millions).............. $221.1 $209.3 $193.4 $169.5 $157.3 $156.3
Ratios to average net
assets (annualized)
Expenses............... 1.13% 1.16% 1.16% 1.15% 1.14% 1.13%
Net investment income.. 2.75% 2.25% 2.15% 2.46% 3.40% 3.08%
Portfolio turnover rate. 55% 102% 134% 78% 89% 111%
</TABLE>
(1) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
15
<PAGE>
See Notes to Financial Statements
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of capital stock outstanding throughout each of the
periods indicated (Unaudited).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C
---------------------------- ---------------------------
Six Year August 2, Six Year August 2,
Months Ended 1993(/1/) Months Ended 1993(/1/)
Ended Novem- to Novem- Ended Novem- to Novem-
May 31, ber 30, ber 30, May 31, ber 30, ber 30,
1995 1994 1993(/2/) 1995 1994 1993(/2/)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value,
beginning of period..... $12.25 $14.07 $13.64 $12.26 $14.07 $13.64
------ -------- ------ ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Investment income....... .24 .40 .14 .24 .40 .14
Expenses................ (.12) (.23) (.08) (.12) (.23) (.08)
------ -------- ------ ------- ------- ------
Net investment income... .12 .17 .06 .12 .17 .06
Net realized and
unrealized gains or
losses on securities.... 1.78 (.1025) .4175 1.77 (.0925) .4175
------ -------- ------ ------- ------- ------
Total from investment
operations.............. 1.90 .0675 .4775 1.89 .0775 .4775
------ -------- ------ ------- ------- ------
LESS DISTRIBUTIONS FROM
Net investment income... (.1175) (.15) (.0475) (.1175) (.15) (.0475)
Net realized gains on
securities.............. (.8925) (1.7375) -- (.8925) (1.7375) --
------ -------- ------ ------- ------- ------
Total distributions..... (1.01) (1.8875) (.0475) (1.01) (1.8875) (.0475)
------ -------- ------ ------- ------- ------
Net asset value, end of
period.................. $13.14 $12.25 $14.07 $13.14 $12.26 $14.07
------ -------- ------ ------- ------- ------
TOTAL RETURN (/3/)...... 16.67% .36% 3.50% 16.75% .36% 3.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (millions)....... $30.9 $18.5 $1.7 $5.1 $3.5 $0.6
Average net assets
(millions).............. $23.8 $10.6 $0.4 $4.1 $2.4 $0.2
Ratios to average net
assets (annualized)
Expenses............... 1.97% 2.02% 2.02% 1.98% 2.01% 2.00%
Net investment income.. 1.93% 1.51% 1.51% 1.92% 1.50% 1.56%
Portfolio turnover rate. 55% 102% 134% 55% 102% 134%
</TABLE>
(1) Commencement of offering of shares.
(2) Based on average month-end shares outstanding
(3) Total return for periods of less than one year are not annualized. Total
return does not consider the effect of sales charges.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- -------------------------------------------------------------------------------
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
American Capital Growth and Income Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940, as amended, as a diversified open-end man-
agement investment company. The following is a summary of significant account-
ing policies consistently followed by the Fund in the preparation of its
financial statements.
A. INVESTMENT VALUATIONS-Securities listed or traded on a national securities
exchange are valued at the last sale price. Unlisted securities and listed se-
curities for which the last sale price is not available are valued at the most
recent bid price.
Short-term investments with a maturity of 60 days or less when purchased are
valued at amortized cost, which approximates market value. Short-term invest-
ments with a maturity of more than 60 days when purchased are valued based on
market quotations until the remaining days to maturity becomes less than 61
days. From such time, until maturity, investments are valued at amortized
cost.
B. OPTIONS AND FUTURES CONTRACTS-Transactions in options and futures contracts
are utilized in strategies to manage the market risk of the Fund's invest-
ments. The purchase of a futures contract or call option (or the writing of a
put option) increases the impact on net asset value of changes in the market
price of investments. There is also a risk that the market movement of such
instruments may not be in the direction forecasted. Note 3--Investment activ-
ity contains additional information.
Options purchased are recorded as investments, options written (sold) are
accounted for as liabilities. When an option expires the premium (original op-
tion value) is realized as a gain if the option was written or realized as a
loss if the option was purchased. When the exercise of an option results in a
cash settlement, the difference between the premium and the settlement pro-
ceeds is realized as a gain or loss. When an option is closed, the difference
between the premium and the cost to close the position is realized as a gain
or loss.
Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, securities with a value equal to its obligation
under the futures contracts. A portion of these funds is held as collateral in
an account in the name of the broker, the Fund's agent in acquiring the
futures position. During the period the futures contract is open, changes in
the value of the contract ("variation margin") are recognized by marking the
contract to market on a daily basis. As unrealized gains or losses are in-
curred, variation margin payments are received from or made to the broker.
Upon the closing or cash settlement of a contract, gains or losses are real-
ized. The cost of securities acquired through delivery under a contract is ad-
justed by the unrealized gain or loss on the contract.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
C. REPURCHASE AGREEMENTS-A repurchase agreement is a short-term investment in
which the Fund acquires ownership of a debt security and the seller agrees to
repurchase the security at a future time and specified price. The Fund may in-
vest independently in repurchase agreements, or transfer uninvested cash bal-
ances into a pooled cash account along with other investment companies advised
by Van Kampen American Capital Asset Management, Inc. (the "Adviser"), the
daily aggregate of which is invested in repurchase agreements. Repurchase
agreements are collateralized by the underlying debt security. The Fund will
make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian bank. The seller is re-
quired to maintain the value of the underlying security at not less than the
repurchase proceeds due the Fund.
D. FEDERAL INCOME TAXES-No provision for federal income taxes is required be-
cause the Fund has elected to be taxed as a "regulated investment company" un-
der the Internal Revenue Code and intends to maintain this qualification by
annually distributing all of its taxable net investment income and taxable net
realized gains to its shareholders. Additionally, approximately $77,000 in re-
alized losses are being deferred for tax purposes to the 1995 fiscal year.
E. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME-Investment transac-
tions are accounted for on the trade date. Realized gains and losses are de-
termined on the basis of identified cost. Dividend income is recorded on the
ex-dividend date. Interest income is accrued daily.
F. DIVIDENDS AND DISTRIBUTIONS-Dividends and distributions to shareholders are
recorded on the record date. The Fund distributes tax basis earnings in accor-
dance with the minimum distribution requirements of the Internal Revenue Code,
which may differ from generally accepted accounting principles. Such dividends
or distributions may exceed financial statement earnings.
G. DEBT DISCOUNT OR PREMIUM-The Fund accounts for discounts and premiums on
the same basis as is used for federal income tax reporting. Accordingly, orig-
inal issue discounts on debt securities purchased are amortized over the life
of the security. Premiums on debt securities are not amortized. Market dis-
counts are recognized at the time of sale as realized gains for book purposes
and ordinary income for tax purposes.
NOTE 2-MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as investment manager of the Fund. Management fees are paid
monthly, based on the average daily net assets of the Fund at an annual rate
of .50% of the first $150
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
million, .45% of the next $100 million, .40% of the next $100 million, and
.35% of the amount in excess of $350 million.
Accounting services include the salaries and overhead expenses of the Fund's
Treasurer and the personnel operating under his direction. Charges are allo-
cated among investment companies advised by the Adviser. For the period, these
charges included $6,508 as the Fund's share of the employee costs attributable
to the Fund's accounting officers. A portion of the accounting services ex-
pense was paid to the Adviser in reimbursement of personnel, facilities and
equipment costs attributable to the provision of accounting services to the
Fund. The services are provided by the Adviser at cost.
ACCESS Investor Services, Inc., an affiliate of the Adviser, serves as the
Fund's shareholder service agent. These services are provided at cost plus a
profit. For the period, the fees for such services aggregated $371,951.
The Fund was advised that Van Kampen American Capital Distributors, Inc.
(the "Distributor"), and Advantage Capital Corporation (the "Retail Dealer"),
both affiliates of the Adviser, received $53,278 and $35,574, respectively, as
their portion of the commissions charged on sales of Fund shares during the
period.
The Fund paid brokerage commissions of $24,415 to a company which was deemed
to be an affiliate of the Adviser's parent because it owned more than 5% of
the company's outstanding voting securities. As of December 20, 1994, the com-
pany was no longer an affiliate.
Under the Distribution Plans, each class of shares pays up to .25% per annum
of its average net assets to reimburse the Distributor for expenses and serv-
ice fees incurred. Class B shares and Class C shares pay an additional distri-
bution fee of up to .75% per annum of their average net assets to reimburse
the Distributor for its distribution expenses. Actual distribution expenses
incurred by the Distributor for Class B shares and Class C shares may exceed
the amounts reimbursed to the Distributor by the Fund. At the end of the peri-
od, the unreimbursed expenses incurred by the Distributor under the Class B
and Class C plans aggregated approximately $1 million and $56,000, respective-
ly, and may be carried forward and reimbursed through either the collection of
the contingent deferred sales charges from share redemptions or, subject to
the annual renewal of the plans, future Fund reimbursements of distribution
fees.
Legal fees of $4,762 were for services rendered by O'Melveny & Myers, coun-
sel for the Fund. Lawrence J. Sheehan, of counsel to that firm, is a director
of the Fund.
Certain officers and directors of the Fund are officers and directors of the
Adviser, the Distributor, the Retail Dealer and the shareholder service agent.
NOTE 3--INVESTMENT ACTIVITY
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments, were $131,099,849 and $121,676,829,
respectively.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- --------------------------------------------------------------------------------
For federal income tax purposes, the identified cost of investment owned at
the end of the period was $246,816,152. Net unrealized appreciation of invest-
ment aggregated $32,564,623, gross unrealized appreciation of investments ag-
gregated $34,740,962 and gross unrealized depreciation of investments
aggregated $2,176,339.
At the end of the period, the Fund held 70 long Standard & Poor's 500-Index
futures contracts expiring in June, 1995. The market value of such contracts
was $18,667,250 and the unrealized appreciation was $1,501,787.
NOTE 4--DIRECTOR COMPENSATION
Fund directors who are not affiliated with the Adviser are compensated by the
Fund at the annual rate of $1,070 plus a fee of $25 per day for Board and Com-
mittee meetings attended. The Chairman receives additional fees from the Fund
at the annual rate of $400. During the period, such fees aggregated $7,105.
The directors may participate in a voluntary Deferred Compensation Plan (the
"Plan"). The Plan is not funded, and obligations under the Plan will be paid
solely out of the Fund's general accounts. The Fund will not reserve or set
aside funds for the payments of its obligations under the Plan by any form of
trust or escrow. Each director covered by the Plan elects to be credited with
an earnings component on amounts deferred equal to the income earned by the
Fund on its short-term investments or equal to the total return of the Fund.
NOTE 5--CAPITAL
The Fund offers three classes of shares at their respective net asset values
per share, plus a sales charge which is imposed either at the time of purchase
(the Class A shares) or at the time of redemption on a contingent deferred ba-
sis (the Class B and Class C shares). All classes of shares have the same
rights, except that Class B and Class C shares bear the cost of distribution
fees and certain other class specific expenses. Class B and Class C shares au-
tomatically convert to Class A shares six years and ten years after purchase,
respectively, subject to certain conditions. Realized and unrealized gains or
losses, investment income and expenses (other than class specific expenses) are
allocated daily to each class of shares based upon the relative proportion of
net assets of each class. The Fund has 200 million of each
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
class of $.01 par value capital stock authorized. Transactions in shares of
capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MAY 31, NOVEMBER 30,
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Shares sold
Class A.............................................. 1,722,752 2,576,390
Class B.............................................. 905,261 1,537,292
Class C.............................................. 129,509 265,742
---------- ----------
2,757,522 4,379,424
---------- ----------
Shares issued for distributions reinvested
Class A.............................................. 1,394,315 2,116,024
Class B.............................................. 125,558 34,072
Class C.............................................. 17,915 6,406
---------- ----------
1,537,788 2,156,502
---------- ----------
Shares redeemed
Class A.............................................. (1,281,893) (2,440,283)
Class B.............................................. (187,230) (186,624)
Class C.............................................. (43,818) (26,112)
---------- ----------
(1,512,941) (2,653,019)
---------- ----------
Increase in capital outstanding....................... 2,782,369 3,882,907
---------- ----------
</TABLE>
NOTE 6--SUBSEQUENT DISTRIBUTIONS
The Board of Directors of the Fund declared distributions from net investment
income payable June 30, 1995 to shareholders of record on June 15, 1995 as
follows:
<TABLE>
<CAPTION>
CLASS INCOME DIVIDEND
----- ---------------
<S> <C>
A $.0675
B .0475
C .0475
</TABLE>
NOTE 7--SHAREHOLDER MEETING
On July 21, 1995, a shareholder meeting of the Fund will be held to vote on:
(1) the Reorganization of the Fund from a Maryland corporation to a Delaware
Business Trust and (2) an election of fourteen directors.
21
<PAGE>
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND INTERNATIONAL
Govett Emerging Markets Fund
AC Global Equity Fund
Govett Global Government Income Fund
AC Global Government Securities
AC Global Managed Assets Fund
Govett International Equity Fund
Govett Latin America Fund
Govett Pacific Strategy Fund
VKM Short-Term Global Income Fund
VKM Strategic Income Fund
EQUITY
Growth
AC Emerging Growth Fund
AC Enterprise Fund
AC Pace Fund
Govett Smaller Companies Fund
Growth & Income
VKM Balanced Fund
AC Comstock Fund
AC Equity Income Fund
AC Growth and Income Fund
VKM Growth and Income Fund
AC Harbor Fund
AC Real Estate Securities Fund
VKM Utility Fund
AC Utilities Income Fund
FIXED INCOME
VKM Adjustable Rate U.S. Government Fund
AC Corporate Bond Fund
AC Federal Mortgage Trust
AC Government Securities
VKM High Yield Fund
AC High Yield Investments
VKM Money Market Fund
VKM Prime Rate Income Trust
AC Reserve Fund
VKM U.S. Government Fund
AC U.S. Government Trust for Income
TAX-FREE
VKM California Insured Tax Free Fund
VKM Florida Insured Tax Free Income Fund
VKM Insured Tax Free Income Fund
VKM Limited Term Municipal Income Fund
AC Municipal Bond Fund
VKM Municipal Income Fund
VKM New Jersey Tax Free Income Fund
VKM New York Tax Free Income Fund
VKM Pennsylvania Tax Free Income Fund
AC Tax-Exempt Trust
--High Yield Municipal Portfolio
--Insured Municipal Portfolio
VKM Tax Free High Income Fund
VKM Tax Free Money Fund
AC Texas Municipal Securities
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-421-5666 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
22
<PAGE>
AMERICAN CAPITAL GROWTH AND INCOME FUND, INC.
BOARD OF DIRECTORS
J. MILES BRANAGAN
RICHARD E. CARUSO
ROGER HILSMAN
DON G. POWELL
DAVID REES
LAWRENCE J. SHEEHAN
FERNANDO SISTO*
WILLIAM S. WOODSIDE
*Chairman of the Board
OFFICERS
DON G. POWELL
President
CURTIS W. MORELL
Vice President and Treasurer
JAMES A. GILLIGAN
DENNIS J. MCDONNEIL
RONALD A. NYBERG
ALAN T. SACHTLEBEN
PAUL R. WOLKENBERG
Vice Presidents
TANYA M. LODEN
Vice President and Controller
NORI L. GABERT
Vice President and Secretary
J. DAVID WISE
Vice President and Assistant Secretary
PERRY F. FARRELL
M. ROBERT SULLIVAN
Assistant Treasurers
HUEY P. FALGOUT, JR.
Assistant Secretary
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
2800 Post Oak Blvd. Houston, Texas 77056
DISTRIBUTOR
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
2800 Post Oak Blvd. Houston, Texas 77056
SHAREHOLDER SERVICE AGENT
ACCESS INVESTORS SERVICES, INC.
P.O. Box 418256 Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK AND TRUST CO.
225 Franklin Street Boston, Massachusetts 02110
COUNSEL
O'MELVENY & MYERS
400 South Hope Street
Los Angeles, California 90071
(C)Van Kampen American Capital Distributors, Inc., 1995
All rights reserved.
SMdenotes a service mark of
Van Kampen American Capital Distributors, Inc.
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors un-
less it has been preceded or is accompanied by an effective prospectus of the
Fund which contains additional information on how to purchase shares, the
sales charge, and other pertinent data.
23
<PAGE>
AMERICAN CAPITAL GROWTH AND INCOME FUND, INC.
THIS PAGE INTENTIONALLY LEFT BLANK
24
