<PAGE>
Van Kampen American Capital
GROWTH AND
INCOME FUND
Annual Report
November 30, 1997
[PHOTO]
----- A Wealth of Knowledge . A Knowledge of Wealth/SM/ -----
VAN KAMPEN AMERICAN CAPITAL
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders................ 1
Performance Results................... 3
Performance Perspective............... 4
Glossary of Terms..................... 5
Portfolio Management Review........... 6
Portfolio Highlights.................. 8
Portfolio of Investments.............. 9
Statement of Assets and Liabilities... 14
Statement of Operations............... 15
Statement of Changes in Net Assets.... 16
Financial Highlights.................. 17
Notes to Financial Statements......... 20
Report of Independent Accountants..... 26
</TABLE>
GI ANR 1/98
<PAGE>
Letter to Shareholders
[PHOTO]
Dennis J. McDonnell and Don G. Powell
January 5, 1998
Dear Shareholder,
On August 4, 1997, the announcement of exchange privileges between Van
Kampen American Capital and Morgan Stanley funds opened the door to even greater
investment opportunities. We are proud to offer an expanded family of mutual
funds covering virtually every market and continent. In our view, the rapid
appreciation of U.S. stock prices in recent years has created a need for
investors to examine their portfolios carefully to ensure proper diversification
among domestic and foreign investments. The Morgan Stanley funds, with their
emphasis on global markets, can be valuable tools for accomplishing this
diversification.
Economic Overview
Solid growth and robust job creation continued to characterize the U.S.
economic environment during the reporting period. The nation's output of goods
and services during the first quarter grew at its fastest pace in nine years and
slowed only modestly during the following six months. Meanwhile, unemployment
fell to 4.6 percent of the workforce in November, its lowest level since October
1973.
Despite the thriving labor market and the rapid pace of economic activity,
there was little evidence of inflation. Wholesale prices actually fell during
each of the first seven months of 1997, the longest stretch of consecutive
monthly declines in history. At the consumer level, prices increased by 1.8
percent over the 12 months through November.
Several factors contributed to keeping inflation in check. A strong rally
in the U.S. dollar helped limit price increases on imported goods. Also, a sharp
acceleration in productivity gains allowed employers to offset the cost of
higher worker salaries without significantly raising prices.
The inflationary implications of the nation's low unemployment rate caused
the Federal Reserve Board to raise short-term interest rates by 0.25 percent in
March. Signs that economic growth slowed modestly during the second and third
quarters, however, led Fed policy-makers to leave interest rates unchanged for
the rest of the year.
Market Review
The domestic equity market experienced a sharp increase in volatility
during the reporting period. In the spring, rapid economic growth led to
inflation worries, which pushed the Standard & Poor's 500-Stock Index lower by
about 8 percent. After rebounding to set a series of record highs, U.S. stocks
corrected again when the currency crisis that roiled most Southeast Asian
economies beginning in July created an avalanche of selling which ultimately
spread to the U.S. stock market. From its peak in early August, the Dow Jones
Industrial Average fell by nearly 16 percent by late October before rallying
during the final weeks of the reporting period.
Despite the choppy market conditions, U.S. stocks continued to gain ground.
Market leadership, however, underwent a significant shift. Early in the
reporting period, large-capitalization stocks continued to outperform smaller
issues. But beginning in April, investors poured money into small-caps,
attracted by the sector's favorable relative valuations and indications that the
strong U.S. dollar could undermine the earnings of large multinational
corporations. Overall, for the 12 months
1 Continued on page two
<PAGE>
through November, the Russell 1000 Index of large-capitalization stocks gained
25.73 percent compared to 21.41 percent for the Russell 2000 Index of small-
capitalization companies.
Outlook
We expect that the recent upheavals in Southeast Asia will have a mixed
impact on the domestic economy and financial markets. Overall, we believe that
lower currency values in Asia will result in less inflation in the U.S. and a
greater likelihood of stable or falling interest rates. This scenario is
favorable for high-quality bonds over the long term. While equities also
usually benefit from low inflation and declining interest rates, we anticipate
that corporate profits could be negatively impacted by lower foreign sales and
intense competitive pressure from imports.
The new economic environment must be viewed against a backdrop in which
U.S. equity prices have appreciated substantially in recent years. The return of
significant market volatility is a reminder of the ongoing need to monitor your
portfolio carefully for proper diversification among asset classes. We urge our
fund shareholders to use this opportunity to consider how their holdings are
currently divided among the three major asset classes of stocks, bonds, and
cash. Uneven moves in the various markets can distort a carefully planned
investment program. We encourage you to review your portfolio with an eye toward
correcting imbalances in the way your assets are allocated.
Sincerely,
/s/ Don G. Powell /s/ Dennis J. McDonnell
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Investment Advisory Corp. Investment Advisory Corp.
2
<PAGE>
Performance Results for the Period Ended November 30, 1997
Van Kampen American Capital Growth and Income Fund
<TABLE>
<CAPTION>
A Shares B Shares C Shares
Total Returns
<S> <C> <C> <C>
One-year total return based on NAV/1/ 21.27% 20.37% 20.28%
One-year total return/2/ 14.32% 15.37% 19.28%
Five-year average annual total return/2/ 16.63% N/A N/A
Ten-year average annual total return/2/ 15.56% N/A N/A
Life-of-Fund average annual total return/2/ 10.00% 17.23% 17.45%
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 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 and includes payment of the maximum sales charge (A shares) or contingent
deferred sales charge for early withdrawal (B and C shares).
See the Prior Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. Fund shares, when redeemed, may be worth more
or less than their original cost.
Market forecasts provided in this report may not necessarily come to pass.
3
<PAGE>
Putting Your Fund's Performance into Perspective
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment portfolio's performance at regular intervals.
A good starting point is a comparison of your investment holdings to an
applicable benchmark, such as a broad-based market index. Such a comparison can:
. Illustrate the general market environment in which your investments
are being managed
. Reflect the impact of favorable market trends or difficult market
conditions
. Help you evaluate the extent to which your Fund's management team has
responded to the opportunities and challenges presented to them over
the period measured
For these reasons, you may find it helpful to review the chart below, which
compares your Fund's performance to that of the Standard & Poor's 500-Stock
Index and the Lipper Growth and Income Fund Index over time. These indices are
unmanaged statistical composites and do not reflect any commissions or fees
which would be incurred by an investor purchasing the securities they represent.
Similarly, its performance does not reflect any sales charges or other costs
which would be applicable to an actively managed portfolio, such as that of the
Fund.
Growth of a Hypothetical $10,000 Investment
Van Kampen American Capital Growth and Income Fund vs. Standard & Poor's
500-Stock Index and the Lipper Growth and Income Fund Index (November 30, 1987
through November 30, 1997)
[CHART APPEARS HERE]
Fund's Total Return
1 Year Avg. Annual = 14.32%
5 Year Avg. Annual = 16.63% [PLOT POINTS TO COME]
10 Year Avg. Annual = 15.56%
Inception Avg. Annual = 10.00%
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 (5.75% 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>
Glossary of Terms
Blue-chip stocks:
Stocks of large, well-known companies that have a long record of growth and
a reputation for quality management. Examples of blue-chip stocks include
General Motors, International Business Machines (IBM), Coca-Cola, and General
Electric.
Capitalization:
The size of a company, as measured by the value of its stock. Morningstar,
Inc., an independent mutual fund rating service, defines "small-cap" as less
than $1 billion, "mid-cap" as between $1 billion and $5 billion, and "large-cap"
as more than $5 billion.
Dow Jones Industrial Average:
The oldest and most widely recognized stock market average, which reflects
the performance of 30 actively traded stocks of well-established, blue-chip
companies.
Federal Reserve Board (Fed):
A seven-member group that oversees the operations of the Federal Reserve
System, the central bank system of the United States. Currently led by Chairman
Alan Greenspan, the Fed meets eight times a year to establish monetary policy
and monitor the country's economic pulse.
Growth investing:
An investment strategy that seeks to identify stocks that tend to offer
greater-than-average earnings growth. Growth stocks typically trade at higher
prices than value stocks, due to their higher expected earnings growth.
Net asset value (NAV):
The value of a mutual fund share, calculated by deducting a fund's
liabilities from its total assets and dividing this amount by the number of
shares outstanding. The NAV does not include any initial or contingent deferred
sales charge.
P/E ratio:
The price-to-earnings ratio shows the "multiple" of earnings at which a
stock is selling. It is calculated by dividing a stock's current price by its
current earnings per share. A high multiple means that investors are optimistic
about future growth and have bid up the stock's price.
Standard and Poor's 500-Stock Index:
An index of the 500 largest, most actively traded stocks on the New York
Stock Exchange. It provides a guide to the overall health of the U.S. stock
market. The S&P 500 is a much broader index than the Dow Jones Industrial
Average and reflects the stock market more accurately.
Valuation:
The estimated or determined worth of a stock, based on its current price
relative to its earnings.
Value investing:
A strategy that seeks to identify stocks that are sound investments but are
temporarily out of favor in the marketplace, due to concerns about short-term
performance. As a result, they trade at prices below what value investors
believe they are actually worth.
5
<PAGE>
Portfolio Management Review
Van Kampen American Capital Growth and Income Fund
We recently spoke with the management team of the Van Kampen American Capital
Growth and Income Fund about the key events and economic forces that shaped the
markets during the 12 months ended November 30, 1997. The team is led by James
A. Gilligan, portfolio manager, Scott Carroll and Bret Stanley, assistant
portfolio managers, and Alan T. Sachtleben, chief investment officer for equity
investments. The following excerpts reflect their views on the Fund's
performance during this time.
Q What were the key market conditions in which the Fund operated during its
fiscal year?
A During the past 12 months, moderate economic growth and historically low
inflation provided a very favorable environment for equity investments and
drove the U.S. stock market to new heights. After a strong finish in 1996, the
market continued its climb, with large, well-established companies faring better
than their smaller competitors. As the economy flourished, investors began to
worry that inflation might start to rise. This concern increased volatility in
stock prices and sparked a month-long market correction in March that eroded
most year-to-date gains. Stocks rebounded quickly, and the Dow Jones Industrial
Average (DJIA) rallied to record-breaking heights in May. While the stock market
recouped its losses, small-cap stocks took center stage from blue-chip issues
and reached new highs.
Volatility in the last few months of the Fund's fiscal year overshadowed
what was a very positive period for the U.S. stock market. October was marked by
turbulence, as economic weakness in Asia had a worldwide ripple effect. The
widespread collapse of currencies and stock prices in the Far East led to
weakening economies and widening trade deficits in many Southeast Asian nations.
In response, U.S. markets became more volatile, and stocks continued their bumpy
ride through the end of the reporting period.
Q What effect did market conditions have on the Fund?
A In the shadow of steep valuations and a continued narrow universe of
attractive stocks, our focus on the Growth and Income Fund's value-oriented
strategy has proven to be increasingly important. In managing the Fund's
portfolio, we seek securities with what we feel are fair valuations relative to
the market and their peers, as well as strong fundamentals and positive earnings
growth. Consequently, we have shifted assets among different market sectors when
we have seen opportunities to benefit the Fund.
Q What were some of the sectors represented in the Fund's portfolio over the
reporting period?
A During the period, we eliminated some of the portfolio's higher-priced
stocks in the pharmaceutical sector, while adding new names with strong
fundamentals and attractive valuations. As a group, pharmaceutical stocks have
been fairly overpriced in the past year, but the sector enjoys continued high-
volume growth and support from the managed-care industry. As a result, we added
growth companies with attractive prices, such as American Home Products and
Rhone-Poulenc, and reinforced our positions in Pharmacia & Upjohn and SmithKline
Beecham. We plan to remain slightly overweighted in this sector, because we
believe it continues to show the potential for appreciation.
In sharp contrast to the first six months of 1997, the Fund's recent
performance has been supported by its holdings in the utility sector, as utility
stocks, in general, have bounced back with 20 percent-plus returns. Lingering
questions about the effects of deregulation on the electric utility industry
have been partially answered, with more states ushering in allowances for
competition. We also have taken advantage of buying opportunities in the
telecommunications industry, favoring regional telephone companies such as Bell
South.
6
<PAGE>
The financial sector also performed well during the period, with broad-
based growth of more than 40 percent. Banks in particular were star performers,
and the effects of merger and acquisition activity forced prices higher.
Valuations have been much more compelling in the insurance industry, and we
continue to search for those companies that we feel are operating efficiently.
Stand-out stocks with attractive valuations in the Fund's portfolio include
Allstate Corp., Chase Manhattan Corp., and BankAmerica Corp.
We scaled back the portfolio's percentage in energy in response to
overvaluations in this sector. However, we did strengthen our positions in
Coastal Oil and El Paso Natural Gas, which demonstrated favorable earnings
growth and reasonable price-to-earnings ratios. Industrial processing companies
have recently shown indications of positive changes and corporate restructuring,
particularly among paper companies. As a result, we added new positions in Boise
Cascade and Union Camp.
Finally, in the technology sector, we have increased our holding in IBM. As
one of the largest holdings in the Fund's portfolio, IBM is an example of the
type of company we seek. In addition to acceleration in both top-line and
earnings growth, this stock has an attractive price-to-earnings ratio and the
financial strength to buy back more than $15 billion in stock over the last two
years. For additional Fund portfolio highlights, please refer to page eight.
Q How did the Fund perform during the reporting period?
A The Fund achieved a total return of 21.27 percent/1/ (Class A shares at net
asset value) for the 12-month period ended November 30, 1997. By
comparison, the Standard & Poor's 500-Stock Index returned 28.56 percent, and
the Lipper Growth and Income Fund Index produced a total return of 23.65 percent
for the same period. The S&P 500-Stock Index is a broad-based, unmanaged index
that reflects the general performance of the stock market, and the Lipper Growth
and Income Fund Index reflects the average performance of all growth and income
funds. Keep in mind that these indices are unmanaged statistical composites that
do not reflect any commissions, fees, or sales charges that would be incurred by
an investor purchasing the securities they represent. Please refer to the chart
on page three for additional Fund performance results.
Q What is your economic outlook for the months ahead?
A We believe the market's current level of uncertainty could continue through
the next year. Although a slowdown in domestic GDP has emerged as a
possibility in the first quarter of 1998, it remains to be seen if ripple
effects from the turmoil overseas will have any significant impact on U.S.
economic growth, although U.S. investors have enjoyed a low level of market
volatility during the past few years, market movements in both directions are
normal. Investors who have long-term goals such as retirement or college tuition
must realize that short-term market fluctuations have historically posed little
threat over time to those goals. We encourage you to focus on your long-term
goals instead of short-term distractions that ultimately may have little impact
on your plans.
Remember that the U.S. stock market is still enjoying the best of all
possible environments: low inflation, moderate economic growth, and solid
corporate earnings. The economy continues to grow fast enough to produce further
earnings growth, and the absence of inflation suggests stable interest rates,
which in turn would provide support for high stock valuations.
/s/ Alan T. Sachtleben /s/ James A. Gilligan
- ---------------------------- ------------------------------
Alan T. Sachtleben James A. Gilligan
Chief Investment Officer Portfolio Manager
Equity Investments
7 Please see footnotes on page three
<PAGE>
Portfolio Highlights
Van Kampen American Capital Growth and Income Fund
<TABLE>
<CAPTION>
Top Ten Holdings as a Percentage of Long-Term Investments
As of November 30, 1997 As of May 31, 1997
<S> <C> <C>
International Business Machine Corp. 2.99% N/A
Philip Morris Cos., Inc. 2.25% 2.42%
BankAmerica Corp. 2.23% 2.13%
SmithKline Beecham PLC -- ADR (UK) 2.22% 1.62%
Texaco, Inc. 2.01% 2.35%
Chase Manhattan Corp. 1.78% 0.63%
PacifiCare Health Systems, Class B 1.49% 1.43%
Allstate Corp. 1.47% 1.40%
Ingersoll-Rand Co. 1.44% 1.01%
YPF Sociedad Anonima ADR (Argentina), Class D 1.42% N/A
Top Five Portfolio Holdings by Sector as a Percentage of Long-Term Investments
As of November 30, 1997 As of May 31, 1997
Finance 17.3% Finance 17.1%
Technology 13.4% Technology 14.6%
Health Care 11.8% Health Care 13.6%
Utilities 11.2% Energy 9.2%
Consumer Non-Durables 9.8% Producer Manufacturing 9.0%
Asset Allocation as a Percentage of Long-Term Investments
As of November 30, 1997 As of May 31, 1997
Common Stocks 86.6% 85.1%
Convertibles 4.4% 5.2%
Commercial Paper 2.1% 2.8%
U.S. Government Agency Obligations 6.9% 3.9%
Other N/A 3.0%
N/A=Not Applicable
</TABLE>
8
<PAGE>
Portfolio of Investments
November 30, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 84.6%
Consumer Durables 1.8%
Benckiser NV, Class B (a)............................ 84,500 $ 2,936,375
Black & Decker Corp.................................. 204,000 7,497,000
Eastman Kodak Co..................................... 122,600 7,432,625
Masco Corp........................................... 41,200 1,941,550
Whirlpool Corp....................................... 26,700 1,463,494
--------------
21,271,044
--------------
Consumer Non-Durables 7.3%
Adidas - ADS (Germany) (a)........................... 101,000 7,095,250
Avon Products, Inc................................... 70,000 4,046,875
Colgate-Palmolive Co................................. 186,000 12,427,125
CPC International, Inc............................... 38,500 3,979,937
Nabisco Holdings Corp., Class A...................... 291,000 13,567,875
Philip Morris Cos., Inc.............................. 529,000 23,011,500
Ralston Purina Group................................. 126,400 11,755,200
Tommy Hilfiger Corp. (a)............................. 203,800 7,999,150
--------------
83,882,912
--------------
Consumer Services 4.2%
Bell & Howell Co. (a)................................ 178,800 4,246,500
Cognizant Corp....................................... 301,000 12,905,375
Gannett Co., Inc..................................... 39,000 2,264,438
H&R Block, Inc....................................... 298,500 12,238,500
Lone Star Steakhouse & Saloon (a).................... 312,900 5,827,762
New York Times Co., Class A.......................... 30,000 1,781,250
Readers Digest Association, Inc., Class A............ 153,000 3,662,438
Walt Disney Co....................................... 63,000 5,981,062
--------------
48,907,325
--------------
Energy 8.6%
Coastal Corp......................................... 227,000 13,293,687
El Paso Natural Gas Co............................... 140,000 8,592,500
Exxon Corp........................................... 98,700 6,020,700
McDermott International, Inc......................... 221,300 6,970,950
Royal Dutch Petroleum Co. - ADR (Netherlands)........ 233,300 12,291,994
Texaco, Inc.......................................... 363,000 20,509,500
Unocal Corp.......................................... 45,600 1,815,450
USX-Marathon Group................................... 385,000 13,186,250
Valero Energy Corp................................... 70,000 2,196,250
YPF Sociedad Anonima, Class D - ADR (Argentina)...... 434,000 14,566,125
--------------
99,443,406
--------------
</TABLE>
9 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Description Shares Market Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Finance 14.5%
Aetna, Inc........................................................ 52,000 $ 3,919,500
Allstate Corp..................................................... 175,000 15,028,125
American General Corp............................................. 197,000 10,613,375
BankAmerica Corp.................................................. 312,000 22,776,000
BankBoston Corp................................................... 156,000 13,903,500
Bankers Trust New York Corp....................................... 41,000 4,861,063
Chase Manhattan Corp.............................................. 167,700 18,216,412
Conseco, Inc...................................................... 200,600 9,340,437
Equitable Cos., Inc............................................... 196,000 9,346,750
Everest Reinsurance Holdings, Inc................................. 170,300 6,460,756
First Union Corp.................................................. 181,000 8,823,750
Golden West Financial Corp........................................ 80,300 7,196,888
NationsBank Corp.................................................. 77,000 4,624,813
Provident Cos., Inc............................................... 302,000 9,909,375
Travelers Group Inc............................................... 190,500 9,620,250
Washington Mutual, Inc............................................ 145,000 10,023,125
Wells Fargo & Co.................................................. 8,700 2,673,075
-----------
167,337,194
-----------
Healthcare 9.6%
Alza Corp. (a).................................................... 237,000 6,324,938
American Home Products Corp....................................... 167,000 11,669,125
Merck & Co., Inc.................................................. 98,000 9,267,125
Mylan Laboratories, Inc........................................... 367,400 8,151,687
PacifiCare Health Systems, Class B (a)............................ 283,300 15,227,375
Pfizer, Inc....................................................... 45,000 3,273,750
Pharmacia & Upjohn, Inc........................................... 415,200 14,013,000
Rhone-Poulenc, SA - ADR (France), Warrants (expiring 11/05/01) (a) 225,000 759,375
Rhone-Poulenc, SA, Class A - ADR (France)......................... 255,000 11,443,125
SmithKline Beecham PLC - ADR (United Kingdom)..................... 457,000 22,678,625
Watson Pharmaceuticals, Inc. (a).................................. 248,400 7,389,900
-----------
110,198,025
-----------
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Description Shares Market Value
- -----------------------------------------------------------------------------
<S> <C> <C>
Producer Manufacturing 8.5%
AGCO Corp............................................. 304,700 $ 8,341,162
AlliedSignal, Inc..................................... 205,100 7,614,338
Canadian Pacific Ltd.................................. 502,000 14,212,875
Flowserve Corp........................................ 220,100 5,915,188
Fluor Corp............................................ 144,000 5,175,000
Ingersoll-Rand Co..................................... 360,300 14,727,262
ITT Corp. (a)......................................... 107,000 8,118,625
Johnson Controls, Inc................................. 224,200 10,271,162
Philips Electronics N.V............................... 178,000 11,926,000
Rockwell International Corp........................... 111,000 5,411,250
Waste Management, Inc................................. 236,100 5,813,963
-----------
97,526,825
-----------
Raw Materials/Processing Industries 4.8%
BetzDearborn, Inc..................................... 106,000 6,452,750
Boise Cascade Corp.................................... 288,000 9,702,000
Crown Cork & Seal Co., Inc............................ 234,000 11,422,125
Fort James Corp....................................... 175,000 6,846,875
Reynolds Metals Co.................................... 105,000 5,978,438
Union Camp Corp....................................... 123,800 7,435,737
W. R. Grace & Co...................................... 101,100 7,355,025
-----------
55,192,950
-----------
Retail 3.2%
Federated Department Stores, Inc. (a)................. 314,800 14,343,075
Gap, Inc.............................................. 222,100 11,923,994
Gymboree Corp. (a).................................... 354,200 10,227,525
-----------
36,494,594
-----------
Technology 11.1%
3Com Corp. (a)........................................ 176,900 6,412,625
Alcatel Alsthom CGE - ADR (France).................... 475,700 11,773,575
BMC Software, Inc. (a)................................ 156,000 10,120,500
Cabletron Systems, Inc. (a)........................... 236,000 5,428,000
Cisco Systems, Inc. (a)............................... 18,400 1,587,000
Computer Associates International, Inc................ 210,000 10,933,125
Creative Technology Ltd. (a).......................... 274,000 7,295,250
Ericsson (L M) Telephone Co., Class B - ADR (Sweden).. 183,900 7,436,456
International Business Machines Corp.................. 279,000 30,567,938
Motorola, Inc......................................... 161,000 10,122,875
Newbridge Networks Corp. (a).......................... 168,200 7,085,425
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Description Shares Market Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Technology (Continued)
Nokia Corp. - ADR (Finland)............................................................ 138,400 $ 11,504,500
Xerox Corp............................................................................. 88,000 6,836,500
-------------
127,103,769
-------------
Transportation 1.0%
Canadian National Railway Co........................................................... 216,700 11,200,681
-------------
Utilities 10.0%
AirTouch Communications, Inc. (a)...................................................... 152,000 5,966,000
AT&T Corp.............................................................................. 99,500 5,559,563
BellSouth Corp......................................................................... 224,000 12,264,000
Boston Edison Co....................................................................... 185,000 6,475,000
Cincinnati Bell, Inc................................................................... 317,000 9,351,500
Edison International................................................................... 209,000 5,603,813
FPL Group, Inc......................................................................... 129,000 7,215,937
GPU, Inc............................................................................... 273,000 10,783,500
GTE Corp............................................................................... 154,800 7,827,075
Houston Industries, Inc................................................................ 316,000 7,485,250
Northeast Utilities.................................................................... 626,000 8,098,875
PG&E Corp.............................................................................. 330,200 9,328,150
SBC Communications, Inc................................................................ 116,000 8,446,250
US WEST Media Group.................................................................... 227,000 10,257,562
-------------
114,662,475
-------------
Total Common Stocks 973,221,200
-------------
Preferred Stock 0.7%
Kmart Financing, 7.75% (convertible into common stock)................................. 50,500 2,796,438
Fresenius National Medcare, Inc. (convertible into common stock) (a)................... 10,000 650
Microsoft Corp. $2.196 dividend per share (convertible into common stock).............. 58,000 5,136,625
-------------
7,933,713
-------------
Convertible Corporate Obligations 3.6%
ADT Operations, Inc., LYON ($10,500,000 par, 0% coupon, 07/06/10 maturity)............. 11,182,500
Deutsche Finance-144A (Netherlands) ($18,000,000 par, 0% coupon,
02/12/17 maturity) (c)................................................................. 8,032,500
Grand Metropolitan, PLC-144A (United Kingdom) ($3,800,000 par, 6.50% coupon,
01/31/00 maturity) (c)................................................................. 5,092,000
Hewlett-Packard Co. LYON-144A ($8,375,000 par, 0% coupon, 10/14/17 maturity) (c)....... 4,344,531
Merrill Lynch STRYPES ($66,100 par, 6.00% coupon, 06/01/99 maturity)................... 1,916,607
Roche Holdings, Inc. LYON (Switzerland) ($17,000,000 par, 0% coupon, 04/20/10 maturity) 8,797,500
Sandoz Ltd. (Switzerland) ($1,310,000 par, 2.00% coupon, 10/06/02 maturity)............ 1,958,450
-------------
41,324,088
-------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Portfolio of Investments (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Description Market Value
- -------------------------------------------------------------------------------------------------
<S> <C>
Total Long-Term Investments 88.9%
(Cost $852,143,530)............................................................. $1,022,479,001
--------------
Short-Term Investments 8.8%
Commercial Paper 2.1%
Prudential Funding Corp. ($8,835,000 par, yielding 0%, 12/01/97 maturity)......... 8,830,803
General Electric Capital Corp.($15,000,000 par, yielding 0%, 12/01/97 maturity)... 14,997,667
--------------
23,828,470
--------------
U.S. Government Agency Obligations 6.7%
Federal Home Loan Bank Consolidated Discount Note
($8,000,000 par, yielding 5.42%, 01/08/98 maturity) (b)........................... 7,953,330
Federal Home Loan Bank Consolidated Discount Note
($3,300,000 par, yielding 5.41%, 01/09/98 maturity) (b)........................... 3,280,273
Federal Home Loan Bank Consolidated Discount Note
($12,000,000 par, yielding 5.62%, 03/13/98 maturity) (b).......................... 11,807,040
Federal Home Loan Bank Consolidated Discount Note
($15,000,000 par, yielding 5.65%, 05/15/98 maturity).............................. 14,615,700
Federal National Mortgage Association Discount Notes
($10,000,000 par, yielding 5.52%, 01/22/98 maturity) (b).......................... 9,919,322
Federal National Mortgage Association Discount Notes
($15,000,000 par, yielding 5.59%, 02/05/98 maturity) (b).......................... 14,840,700
Federal National Mortgage Association Discount Notes
($5,000,000 par, yielding 5.59%, 02/06/98 maturity)............................... 4,946,100
Federal National Mortgage Association Discount Notes
($10,000,000 par, yielding 5.63%, 04/24/98 maturity).............................. 9,775,400
--------------
77,137,865
--------------
Total Short-Term Investments
(Cost $100,990,139)............................................................. 100,966,335
--------------
Total Investments 97.7%
(Cost $953,133,669)............................................................. 1,123,445,336
Other Assets in Excess of Liabilities 2.3%........................................ 26,186,107
--------------
Net Assets 100.0%................................................................. $1,149,631,443
==============
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
(b) Assets segregated for open futures transactions.
(c) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933. These securities may be resold only in
transactions exempt from registration which are normally those transactions
with qualified institutional buyers.
LYON--Liquid yield option note.
STRYPES--Structured yield product exchangeable for common stock.
ADR--American Depository Receipt
13 See Notes to Financial Statements
<PAGE>
Statement of Assets and Liabilities
November 30, 1997
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Assets:
Total Investments (Cost $953,133,669)............................ $1,123,445,336
Cash............................................................. 1,110
Receivables:
Investments Sold................................................ 23,488,065
Fund Shares Sold................................................ 5,799,357
Dividends....................................................... 1,456,282
Interest........................................................ 109,227
Other............................................................ 50,472
--------------
Total Assets................................................. 1,154,349,849
--------------
Liabilities:
Payables:
Investments Purchased........................................... 1,927,043
Fund Shares Repurchased......................................... 1,379,265
Distributor and Affiliates...................................... 672,963
Investment Advisory Fee......................................... 356,334
Income Distributions............................................ 35,705
Variation Margin on Futures..................................... 4,250
Accrued Expenses................................................. 181,508
Trustees' Deferred Compensation and Retirement Plans............. 161,338
--------------
Total Liabilities............................................. 4,718,406
--------------
Net Assets....................................................... $1,149,631,443
==============
Net Assets Consist of:
Capital.......................................................... $ 839,864,917
Net Unrealized Appreciation...................................... 170,134,229
Accumulated Net Realized Gain.................................... 137,013,165
Accumulated Undistributed Net Investment Income.................. 2,619,132
--------------
Net Assets....................................................... $1,149,631,443
==============
Maximum Offering Price Per Share:
Class A Shares:
Net asset value and redemption price per share
(Based on net assets of $773,333,112 and 41,318,775
shares of beneficial interest issued and outstanding).......... $ 18.72
Maximum sales charge (5.75%* of offering price)................ 1.14
--------------
Maximum offering price to public............................... $ 19.86
==============
Class B Shares:
Net asset value and offering price per share
(Based on net assets of $340,768,761 and 18,291,695
shares of beneficial interest issued and outstanding).......... $ 18.63
==============
Class C Shares:
Net asset value and offering price per share
(Based on net assets of $35,529,570 and 1,905,824
shares of beneficial interest issued and outstanding).......... $ 18.64
==============
</TABLE>
*On sales of $50,000 or more, the sales charge will be reduced.
14 See Notes to Financial Statements
<PAGE>
Statement of Operations
For the Year Ended November 30, 1997
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends......................................................................................... $ 15,874,920
Interest.......................................................................................... 6,569,713
------------
Total Income................................................................................. 22,444,633
------------
Expenses:
Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C
of $1,582,407, $2,766,097 and $302,349, respectively)........................................... 4,650,853
Investment Advisory Fee........................................................................... 3,821,648
Shareholder Services.............................................................................. 2,448,519
Custody........................................................................................... 55,585
Legal............................................................................................. 43,887
Trustees' Fees and Expenses....................................................................... 25,562
Other............................................................................................. 653,453
------------
Total Expenses............................................................................... 11,699,507
Less Expenses Reimbursed..................................................................... 2,000
------------
Net Expenses................................................................................. 11,697,507
------------
Net Investment Income............................................................................. $ 10,747,126
============
Realized and Unrealized Gain/Loss:
Realized Gain/Loss:
Investments.................................................................................. $129,147,717
Futures...................................................................................... 13,626,900
------------
Net Realized Gain................................................................................. 142,774,617
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period.......................................................................... 138,408,479
------------
End of the Period:
Investments.................................................................................. 170,311,667
Futures...................................................................................... (177,438)
------------
170,134,229
------------
Net Unrealized Appreciation During the Period..................................................... 31,725,750
------------
Net Realized and Unrealized Gain.................................................................. $174,500,367
============
Net Increase in Net Assets From Operations........................................................ $185,247,493
============
</TABLE>
15 See Notes to Financial Statements
<PAGE>
Statement of Changes in Net Assets
For the Years Ended November 30, 1997 and 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Year Ended Year Ended
November 30, 1997 November 30, 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income.......................................... $ 10,747,126 $ 9,494,293
Net Realized Gain.............................................. 142,774,617 49,514,009
Net Unrealized Appreciation During the Period.................. 31,725,750 75,055,070
-------------- -------------
Change in Net Assets from Operations........................... 185,247,493 134,063,372
-------------- -------------
Distributions from Net Investment Income:
Class A Shares................................................ (8,812,655) (7,590,031)
Class B Shares................................................ (1,691,267) (1,336,135)
Class C Shares................................................ (185,706) (139,054)
-------------- -------------
(10,689,628) (9,065,220)
-------------- -------------
Distributions from Net Realized Gain:
Class A Shares................................................ (38,290,040) (22,535,642)
Class B Shares................................................ (13,977,897) (5,929,783)
Class C Shares................................................ (1,489,104) (615,197)
-------------- -------------
(53,757,041) (29,080,622)
-------------- -------------
Total Distributions.......................................... (64,446,669) (38,145,842)
-------------- -------------
Net Change in Net Assets from Investment Activities............ 120,800,824 95,917,530
-------------- -------------
From Capital Transactions:
Proceeds from Shares Sold...................................... 357,663,305 336,754,769
Net Asset Value of Shares Issued Through Dividend
Reinvestment.................................................. 58,449,265 34,235,104
Cost of Shares Repurchased..................................... (204,209,399) (140,390,309)
-------------- -------------
Net Change in Net Assets from Capital Transactions............. 211,903,171 230,599,564
-------------- -------------
Total Increase in Net Assets................................... 332,703,995 326,517,094
Net Assets:
Beginning of the Period........................................ 816,927,448 490,410,354
-------------- -------------
End of the Period (Including accumulated undistributed net
investment income of $2,619,132 and $2,561,634, respectively). $1,149,631,443 $ 816,927,448
============== =============
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Financial Highlights
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Year Ended November 30,
--------------------------------------------
Class A Shares 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period....... $16.786 $ 14.81 $12.26 $ 14.08 $13.42
------- ------- ------ ------- ------
Net Investment Income........................ .226 .243 .28 .29 .27
Net Realized and Unrealized Gain/Loss........ 3.032 2.851 3.455 (.1025) 1.52
------- ------- ------ ------- ------
Total from Investment Operations............... 3.258 3.094 3.735 .1875 1.79
------- ------- ------ ------- ------
Less:
Distributions from Net Investment Income..... .230 .250 .2925 .27 .2825
Distributions from Net Realized Gain......... 1.098 .868 .8925 1.7375 .8475
------- ------- ------ ------- ------
Total Distributions............................ 1.328 1.118 1.185 2.0075 1.13
------- ------- ------ ------- ------
Net Asset Value, End of the Period............. $18.716 $16.786 $14.81 $ 12.26 $14.08
======= ======= ====== ======= ======
Total Return (a)............................... 21.27% 22.35% 33.34% 1.21% 14.34%
Net Assets at End of the Period (In millions).. $ 773.3 $ 584.6 $381.6 $ 205.4 $204.3
Ratio of Expenses to Average Net Assets (b).... .94% 1.04% 1.15% 1.16% 1.16%
Ratio of Net Investment Income to Average
Net Assets (b)............................... 1.33% 1.68% 2.24% 2.25% 2.15%
Portfolio Turnover............................. 94% 110% 108% 102% 134%
Average Commission Paid Per
Equity Share Traded (c)...................... $ .0284 $ .0565 -- -- --
</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) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC's reimbursement of certain expenses was less than
0.01%.
(c) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.
17 See Notes to Financial Statements
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
From August 2, 1993
Year Ended November 30, (Commencement)
----------------------------------------- of Distribution) to
Class B Shares 1997 1996 1995 1994 November 30, 1993(a)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $16.721 $ 14.77 $12.25 $ 14.07 $ 13.64
------- ------- ------ ------- --------
Net Investment Income........................ .097 .142 .17 .17 .06
Net Realized and Unrealized Gain/Loss........ 3.020 2.827 3.455 (.1025) .4175
------- ------- ------ ------- --------
Total from Investment Operations............... 3.117 2.969 3.625 .0675 .4775
------- ------- ------ ------- --------
Less:
Distributions from Net Investment Income..... .110 .150 .2125 .15 .0475
Distributions from Net Realized Gain......... 1.098 .868 .8925 1.7375 -0-
------- ------- ------ ------- --------
Total Distributions............................ 1.208 1.018 1.105 1.8875 .0475
------- ------- ------ ------- --------
Net Asset Value, End of Period................. $18.630 $16.721 $14.77 $ 12.25 $ 14.07
======= ======= ====== ======= ========
Total Return (b)............................... 20.37% 21.38% 32.15% .36% 3.50%*
Net Assets at End of Period (In millions)...... $ 340.8 $ 210.3 $ 98.4 $ 18.5 $ 1.7
Ratio of Expenses to
Average Net Assets (c)....................... 1.72% 1.83% 1.99% 2.02% 2.02%
Ratio of Net Investment Income to
Average Net Assets (c)....................... .55% .89% 1.25% 1.51% 1.51%
Portfolio Turnover............................. 94% 110% 108% 102% 134%*
Average Commission Paid Per
Equity Share Traded (d)....................... $ .0284 $ .0565 -- -- --
</TABLE>
*Non-Annualized
(a) Based on average shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC's reimbursement of certain expenses was less than
0.01%.
(d) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.
18 See Notes to Financial Statements
<PAGE>
Financial Highlights (Continued)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
From August 2, 1993
Year Ended November 30, (Commencement
---------------------------- of Distribution) to
Class C Shares 1997 1996 1995 1994 November 30, 1993(a)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........ $16.734 $14.78 $12.26 $14.07 $13.64
------- ------ ------ ------ ------
Net Investment Income..................... .096 .139 .18 .17 .06
Net Realized and Unrealized Gain/Loss..... 3.021 2.833 3.445 (.0925) .4175
------- ------ ------ ------ ------
Total from Investment Operations............ 3.117 2.972 3.625 .0775 .4775
------- ------ ------ ------ ------
Less:
Distributions from Net Investment Income.. .110 .150 .2125 .15 .0475
Distributions from Net Realized Gain...... 1.098 .868 .8925 1.7375 -0-
------- ------ ------ ------ ------
Total Distributions......................... 1.208 1.018 1.105 1.8875 .0475
------- ------ ------ ------ ------
Net Asset Value, End of Period.............. $18.643 $16.734 $14.78 $ 12.26 $ 14.07
======= ======= ====== ======= =======
Total Return (b)............................ 20.28% 21.43% 32.23% .36% 3.50%*
Net Assets at End of Period (In millions)... $ 35.5 $ 22.1 $ 10.4 $ 3.5 $ 0.6
Ratio of Expenses to
Average Net Assets (c).................... 1.72% 1.83% 1.97% 2.01% 2.00%
Ratio of Net Investment Income to
Average Net Assets (c).................... .55% .89% 1.35% 1.50% 1.56%
Portfolio Turnover.......................... 94% 110% 108% 102% 134%*
Average Commission Paid per
Equity Share Traded (d)..................... $ .0284 $ .0565 -- -- --
</TABLE>
*Non-Annualized
(a) Based on average shares outstanding.
(b) Total Return is based upon Net Asset Value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC's reimbursement of certain expenses was less than
0.01%.
(d) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.
See Notes to Financial Statements
19
<PAGE>
Notes to Financial Statements
November 30, 1997
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Van Kampen American Capital Growth and Income Fund (the "Fund") is organized as
a Delaware business trust, and is registered as a diversified open-end
management investment company under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to provide income and long-term
growth of capital by investing principally in income-producing equity securities
including common stock and convertible securities. The Fund commenced investment
operations on August 1, 1946. The distribution of the Fund's Class B and Class C
shares commenced on August 2, 1993.
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. Fixed income investments are stated at value using market quotations.
Unlisted securities and listed securities for which the last sales price is not
available are valued at the last bid price. 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 purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made. At November 30, 1997, there were no
when issued or delayed delivery purchase commitments.
The Fund may invest in repurchase agreements, which are short-term
investments whereby 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 American Capital Asset Management, Inc. (the
"Adviser") or its affiliates, the daily aggregate of which is invested in
repurchase agreements. Repurchase agreements are fully collateralized by the
underlying debt security. The Fund will make payment for such securities only
upon physical delivery or evidence of book entry transfer to the account of the
custodian bank. The seller is required to maintain the value of the underlying
security at not less than the repurchase proceeds due the Fund.
C. Investment Income -- 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 expected life of each
applicable security. Premiums on debt securities are not amortized.
D. 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.
20
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997
- --------------------------------------------------------------------------------
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of gains or losses recognized for tax purposes on
open futures at November 30, 1997, and the deferral of losses for tax purposes
resulting from wash sales.
At November 30, 1997, for federal income tax purposes the cost of long- and
short-term investments is $954,492,749; the aggregate gross unrealized
appreciation is $201,250,439 and the aggregate gross unrealized depreciation is
$32,297,852, resulting in net unrealized appreciation of $168,952,587.
E. Distribution of Income and Gains -- The Fund declares and pays dividends
quarterly from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on option and futures
transactions. All short-term capital gains and a portion of option and futures
gains are included in ordinary income for tax purposes.
For the year ended November 30, 1997, the Fund paid long-term capital gains
totaling $36,410,581. In January, 1998, the Fund will provide tax information to
shareholders for the 1997 calendar year. For the calendar year ended December
31, 1997, approximately 19% of the dividends taxable as ordinary income
qualified for the 70% dividends received deduction for corporate shareholders.
For the fiscal year ended November 30, 1997, 33% of these dividends qualified
for the deduction.
2. Investment Advisory Agreement and Other Transactions with Affiliates
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide facilities and investment advice to the Fund for an annual fee payable
monthly as follows:
<TABLE>
<CAPTION>
Average Net Assets % Per Annum
- --------------------------------------------------------------------------------
<S> <C>
First $150 million .50 of 1%
Next $100 million .45 of 1%
Next $100 million .40 of 1%
Over $350 million .35 of 1%
</TABLE>
The Adviser agreed to reimburse the Fund for certain trustees' compensation
in connection with the July, 1995 increase in the number of trustees of the
Fund. This reimbursement was effective through December 31, 1996.
For the year ended November 30, 1997, the Fund recognized expenses of
approximately $43,900 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
For the year ended November 30, 1997, the Fund recognized expenses of
approximately $134,700 representing Van Kampen American Capital Distributors,
Inc.'s or its affiliates' (collectively "VKAC") cost of providing accounting
services to the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended
November 30, 1997, the Fund recognized expenses of approximately $1,784,300,
representing ACCESS' cost of providing transfer agency and shareholder services
plus a profit.
Certain officers and trustees of the Fund are also officers and directors
of VKAC. The Fund does not compensate its officers or trustees who are officers
of VKAC.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits
21
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997
- --------------------------------------------------------------------------------
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 equal to $2,500.
For the year ended November 30, 1997, the Fund paid brokerage commissions
to Morgan Stanley Group Inc., which is an affiliate of VKAC, totaling $8,127.
3. Capital Transactions
The Fund has outstanding three classes of shares of beneficial interest, Classes
A, B and C each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized.
At November 30, 1997, capital aggregated $539,145,381, $272,687,569 and
$28,031,967 for Classes A, B, and C, respectively. For the year ended November
30, 1997, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A........................................ 12,661,054 $ 214,097,873
Class B........................................ 7,448,409 127,830,907
Class C........................................ 936,448 15,734,525
----------- --------------
Total Sales...................................... 21,045,911 $ 357,663,305
=========== ==============
Dividend Reinvestment:
Class A........................................ 2,817,850 $ 43,169,689
Class B........................................ 925,904 14,037,324
Class C........................................ 81,806 1,242,252
----------- --------------
Total Dividend Reinvestment...................... 3,825,560 $ 58,449,265
=========== ==============
Repurchases:
Class A........................................ (8,984,896) $ (150,897,486)
Class B........................................ (2,659,743) (45,883,568)
Class C........................................ (431,229) (7,428,345)
----------- --------------
Total Repurchases................................ (12,075,868) $ (204,209,399)
=========== ==============
</TABLE>
22
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997
- --------------------------------------------------------------------------------
At November 30, 1996, capital aggregated $432,775,305, $176,702,906 and
$18,483,535 for Classes A, B, and C, respectively. For the year ended November
30, 1996, transactions were as follows:
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A......................................... 14,595,033 $ 217,405,247
Class B......................................... 7,221,613 107,814,586
Class C......................................... 769,530 11,534,936
---------- --------------
Total Sales....................................... 22,586,176 $ 336,754,769
========== ==============
Dividend Reinvestment:
Class A......................................... 1,914,879 $ 27,369,955
Class B......................................... 446,197 6,345,412
Class C......................................... 36,514 519,737
---------- --------------
Total Dividend Reinvestment....................... 2,397,590 $ 34,235,104
========== ==============
Repurchases:
Class A......................................... (7,456,132) $ (111,238,038)
Class B......................................... (1,753,404) (26,292,592)
Class C......................................... (190,946) (2,859,679)
---------- --------------
Total Repurchases................................. (9,400,482) $ (140,390,309)
========== ==============
</TABLE>
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC for Class B and C
shares will be imposed on most redemptions made within five years of the
purchase for Class B and one year of the purchase for Class C as detailed in the
following schedule. The Class B and C shares bear the expense of their
respective deferred sales arrangements, including higher distribution and
service fees and incremental transfer agency costs.
23
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Contingent Deferred
Sales Charge
------------------
Year of Redemption Class B Class C
- --------------------------------------------------------------------------------
<S> <C> <C>
First....................................................... 5.00% 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 November 30, 1997, VKAC, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A shares of approximately
$501,100 and CDSC on the redeemed shares of Classes B and C of approximately
$571,100. 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, were $958,038,083 and $840,622,351,
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 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 the unrealized appreciation/depreciation on securities.
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 contract. In these instances the recognition of gain or loss is
postponed until the disposal of the security underlying the option or futures
contract.
During the period, the Fund invested in futures contracts, a type of
derivative. 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 as
a substitute for purchasing and selling specific securities. Upon entering into
futures contracts, the Fund maintains, in a segregated account with its
custodian, securities with a value equal to its obligation under the futures
contracts. During the period the futures contract is open, payments are received
from or made to the broker based upon changes in the value of the contract (the
variation margin).
Transactions in futures contracts for the year ended November 30, 1997,
were as follows:
24
<PAGE>
Notes to Financial Statements (Continued)
November 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Contracts
- -------------------------------------------------------------------------------
<S> <C>
Outstanding at November 30, 1996.................................. 134
Futures Opened.................................................... 425
Futures Closed.................................................... (474)
Futures Split (S&P 500 Index Futures 2-for-1)..................... 85
----
Outstanding at November 30, 1997.................................. 170
====
</TABLE>
The futures contracts outstanding as of November 30, 1997, and the
description and unrealized depreciation are as follows:
<TABLE>
<CAPTION>
Unrealized
Contracts Depreciation
- -------------------------------------------------------------------------------
<S> <C> <C>
Long Contracts:
S&P 500 Index Futures
December 1997 (Current Notional Value of
$238,725 per contract).......................... 170 $177,438
=== ========
</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% of Class A net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these fees
for the year ended November 30, 1997, are payments to VKAC of approximately
$2,404,000.
7. Capital Gain Distribution
On December 22, 1997, the Fund declared and paid a capital gain of $2.2452 per
share, of which 54.1% is long-term and 45.9% is short-term, to shareholders of
record on that date.
25
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Trustees of
Van Kampen American Capital Growth and Income 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 American Capital Growth
and Income Fund (the "Fund") at November 30, 1997, 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 generally accepted accounting
principles. 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 generally accepted auditing standards 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 November 30, 1997 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Chicago, Illinois
January 9, 1998
26
<PAGE>
Funds Distributed by Van Kampen American Capital
GLOBAL AND INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Growth Fund
Pace Fund
Growth & Income
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal Income Fund
Municipal Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
MORGAN STANLEY FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
U.S. Real Estate Fund
Value Fund
Worldwide High Income Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us weekdays from 7:00 a.m. to 7:00 p.m.
Central time at 1-800-341-2911 for Van Kampen American Capital and Morgan
Stanley funds.
27
<PAGE>
Van Kampen American Capital Growth and Income Fund
Board of Trustees
J. Miles Branagan
Richard M. DeMartini*
Linda Hutton Heagy
R. Craig Kennedy
Jack E. Nelson
Jerome L. Robinson
Phillip B. Rooney
Fernando Sisto
Wayne W. Whalen* - Chairman
Officers
Dennis J. McDonnell*
President
Ronald A. Nyberg*
Vice President and Secretary
Edward C. Wood, III*
Vice President and Chief Financial Officer
Curtis W. Morell*
Vice President and Chief Accounting Officer
John L. Sullivan*
Treasurer
Tanya M. Loden*
Controller
Peter W. Hegel*
Alan T. Sachtleben*
Paul R. Wolkenberg*
Vice Presidents
Investment Adviser
Van Kampen American Capital
Asset Management, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Distributor
Van Kampen American Capital
Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Shareholder Servicing Agent
ACCESS Investor
Services, Inc.
P.O. Box 418256
Kansas City, Missouri 64141-9256
Custodian
State Street Bank
and Trust Company
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
Legal Counsel
Skadden, Arps, Slate,
Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Independent Accountants
Price Waterhouse LLP
200 E. Randolph Dr.
Chicago, IL 60601
* "Interested" persons of the Fund, as defined in the Investment Company Act
of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1998 All rights reserved.
SM denotes a service mark of Van Kampen American Capital Distributors, Inc.
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors 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 March 31, 1998, the report, if used with prospective
investors, must be accompanied by a quarterly performance update, if applicable.
28
<PAGE>
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
- ------------------
Bulk Rate
U.S. Postage
PAID
VAN KAMPEN
AMERICAN CAPITAL
- ------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> GROWTH AND INCOME FUND CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 953,133,669<F1>
<INVESTMENTS-AT-VALUE> 1,123,445,336<F1>
<RECEIVABLES> 30,852,931<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 51,582<F1>
<TOTAL-ASSETS> 1,154,349,849<F1>
<PAYABLE-FOR-SECURITIES> 1,927,043<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 2,791,363<F1>
<TOTAL-LIABILITIES> 4,718,406<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 539,145,381
<SHARES-COMMON-STOCK> 41,318,776
<SHARES-COMMON-PRIOR> 34,824,767
<ACCUMULATED-NII-CURRENT> 2,619,132<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 137,013,165<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 170,134,229<F1>
<NET-ASSETS> 773,333,112
<DIVIDEND-INCOME> 15,874,920<F1>
<INTEREST-INCOME> 6,569,713<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (11,697,507)<F1>
<NET-INVESTMENT-INCOME> 10,747,126<F1>
<REALIZED-GAINS-CURRENT> 142,774,617<F1>
<APPREC-INCREASE-CURRENT> 31,725,750<F1>
<NET-CHANGE-FROM-OPS> 185,247,493<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (8,812,655)
<DISTRIBUTIONS-OF-GAINS> (38,290,040)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,661,055
<NUMBER-OF-SHARES-REDEEMED> (8,984,896)
<SHARES-REINVESTED> 2,817,850
<NET-CHANGE-IN-ASSETS> 188,773,557
<ACCUMULATED-NII-PRIOR> 2,561,634<F1>
<ACCUMULATED-GAINS-PRIOR> 47,995,589<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 3,821,648<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 11,699,507<F1>
<AVERAGE-NET-ASSETS> 679,631,475
<PER-SHARE-NAV-BEGIN> 16.786
<PER-SHARE-NII> 0.226
<PER-SHARE-GAIN-APPREC> 3.032
<PER-SHARE-DIVIDEND> (0.230)
<PER-SHARE-DISTRIBUTIONS> (1.098)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 18.716
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> GROWTH AND INCOME FUND CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 953,133,669<F1>
<INVESTMENTS-AT-VALUE> 1,123,445,336<F1>
<RECEIVABLES> 30,852,931<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 51,582<F1>
<TOTAL-ASSETS> 1,154,349,849<F1>
<PAYABLE-FOR-SECURITIES> 1,927,043<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 2,791,363<F1>
<TOTAL-LIABILITIES> 4,718,406<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 272,687,569
<SHARES-COMMON-STOCK> 18,291,695
<SHARES-COMMON-PRIOR> 12,577,125
<ACCUMULATED-NII-CURRENT> 2,619,132<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 137,013,165<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 170,134,229<F1>
<NET-ASSETS> 340,768,761
<DIVIDEND-INCOME> 15,874,920<F1>
<INTEREST-INCOME> 6,569,713<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (11,697,507)<F1>
<NET-INVESTMENT-INCOME> 10,747,126<F1>
<REALIZED-GAINS-CURRENT> 142,774,617<F1>
<APPREC-INCREASE-CURRENT> 31,725,750<F1>
<NET-CHANGE-FROM-OPS> 185,247,493<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (1,691,267)
<DISTRIBUTIONS-OF-GAINS> (13,977,897)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,448,409
<NUMBER-OF-SHARES-REDEEMED> (2,659,743)
<SHARES-REINVESTED> 925,904
<NET-CHANGE-IN-ASSETS> 130,470,673
<ACCUMULATED-NII-PRIOR> 2,561,634<F1>
<ACCUMULATED-GAINS-PRIOR> 47,995,589<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 3,821,648<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 11,699,507<F1>
<AVERAGE-NET-ASSETS> 276,984,929
<PER-SHARE-NAV-BEGIN> 16.721
<PER-SHARE-NII> 0.097
<PER-SHARE-GAIN-APPREC> 3.020
<PER-SHARE-DIVIDEND> (0.110)
<PER-SHARE-DISTRIBUTIONS> (1.098)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 18.630
<EXPENSE-RATIO> 1.72
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> GROWTH AND INCOME FUND CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 953,133,669<F1>
<INVESTMENTS-AT-VALUE> 1,123,445,336<F1>
<RECEIVABLES> 30,852,931<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 51,582<F1>
<TOTAL-ASSETS> 1,154,349,849<F1>
<PAYABLE-FOR-SECURITIES> 1,927,043<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 2,791,363<F1>
<TOTAL-LIABILITIES> 4,718,406<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,031,967
<SHARES-COMMON-STOCK> 1,905,824
<SHARES-COMMON-PRIOR> 1,318,799
<ACCUMULATED-NII-CURRENT> 2,619,132<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 137,013,165<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 170,134,229<F1>
<NET-ASSETS> 35,529,570
<DIVIDEND-INCOME> 15,874,920<F1>
<INTEREST-INCOME> 6,569,713<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (11,697,507)<F1>
<NET-INVESTMENT-INCOME> 10,747,126<F1>
<REALIZED-GAINS-CURRENT> 142,774,617<F1>
<APPREC-INCREASE-CURRENT> 31,725,750<F1>
<NET-CHANGE-FROM-OPS> 185,247,493<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (185,706)
<DISTRIBUTIONS-OF-GAINS> (1,489,104)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 936,448
<NUMBER-OF-SHARES-REDEEMED> (431,229)
<SHARES-REINVESTED> 81,806
<NET-CHANGE-IN-ASSETS> 13,459,765
<ACCUMULATED-NII-PRIOR> 2,561,634<F1>
<ACCUMULATED-GAINS-PRIOR> 47,995,589<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 3,821,648<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 11,699,507<F1>
<AVERAGE-NET-ASSETS> 30,278,200
<PER-SHARE-NAV-BEGIN> 16.734
<PER-SHARE-NII> 0.096
<PER-SHARE-GAIN-APPREC> 3.021
<PER-SHARE-DIVIDEND> (0.110)
<PER-SHARE-DISTRIBUTIONS> (1.098)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 18.643
<EXPENSE-RATIO> 1.72
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
