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<SEC-DOCUMENT>0000950137-05-009289.txt : 20050729
<SEC-HEADER>0000950137-05-009289.hdr.sgml : 20050729
<ACCEPTANCE-DATETIME>20050729145659
ACCESSION NUMBER: 0000950137-05-009289
CONFORMED SUBMISSION TYPE: N-CSRS
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20050531
FILED AS OF DATE: 20050729
DATE AS OF CHANGE: 20050729
EFFECTIVENESS DATE: 20050729
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: VAN KAMPEN GROWTH & INCOME FUND
CENTRAL INDEX KEY: 0000039451
IRS NUMBER: 136062621
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1130
FILING VALUES:
FORM TYPE: N-CSRS
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-01228
FILM NUMBER: 05984461
BUSINESS ADDRESS:
STREET 1: VAN KAMPEN INVESTMENTS INC.
STREET 2: 1221 AVENUE OF THE AMERICAS
CITY: NEW YORK
STATE: NY
ZIP: 10020
BUSINESS PHONE: 2127625441
MAIL ADDRESS:
STREET 1: VAN KAMPEN INVESTMENTS INC.
STREET 2: 1221 AVENUE OF THE AMERICAS
CITY: NEW YORK
STATE: NY
ZIP: 10020
FORMER COMPANY:
FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL GROWTH & INCOME FUND/
DATE OF NAME CHANGE: 19970728
FORMER COMPANY:
FORMER CONFORMED NAME: AMERICAN CAPITAL GROWTH & INCOME FUND INC
DATE OF NAME CHANGE: 19920703
FORMER COMPANY:
FORMER CONFORMED NAME: FUND OF AMERICA INC
DATE OF NAME CHANGE: 19900805
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-CSRS
<SEQUENCE>1
<FILENAME>c96207nvcsrs.txt
<DESCRIPTION>SEMIANNUAL REPORT
<TEXT>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-01228
Van Kampen Growth and Income Fund
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 11/30
Date of reporting period: 5/31/05
<PAGE>
Item 1. Reports to Shareholders.
The Fund's semi-annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Growth and Income Fund performed during the semiannual period. The
portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the fund's financial statements and a list of fund investments
as of May 31, 2005.
THIS PIECE MUST BE PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS. THE
PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT
OBJECTIVES, RISKS, CHARGES AND EXPENSES. PLEASE READ THE PROSPECTUS
CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE
POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL
DECLINE AND THAT THE VALUE OF FUND SHARES MAY THEREFORE BE LESS THAN WHAT
YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
<Table>
<Caption>
<S> <C> <C>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
</Table>
<PAGE>
Performance Summary as of 5/31/05
<Table>
<Caption>
A SHARES B SHARES C SHARES R SHARES I SHARES
since 8/01/46 since 8/02/93 since 8/02/93 since 10/01/02 since 10/19/04
- ---------------------------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
W/O 5.75% W/O 5.00% W/O 1.00% W/O W/O
AVERAGE ANNUAL SALES SALES SALES SALES SALES SALES SALES SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES CHARGES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Since Inception 9.96% 9.86% 11.85% 11.85% 11.58% 11.58% 17.42% 12.66%
10-year 12.35 11.69 11.84 11.84 11.51 11.51 N/A N/A
5-year 5.48 4.24 4.68 4.43 4.71 4.71 N/A N/A
1-year 14.37 7.78 13.48 8.48 13.51 12.51 14.02 N/A
6-month 5.52 -0.53 5.12 0.12 5.11 4.11 5.39 5.69
- ---------------------------------------------------------------------------------------------------------------
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. Average annual total returns with sales charges include payment of the
maximum sales charge of 5.75 percent for Class A shares, a contingent deferred
sales charge of 5.00 percent for Class B shares (in year one and declining to
zero after year five), a contingent deferred sales charge of 1.00 percent for
Class C shares in year one and combined Rule 12b-1 fees and service fees of up
to 0.25 percent for Class A shares, up to 1.00 percent for Class B and C shares
and 0.50 percent for Class R shares. Class R shares are available for purchase
by investors through or in tax-exempt retirement plans (401(k) plans, 457 plans,
defined benefit plans, profit sharing and money purchase pension plans,
non-qualified deferred compensation plans, and employer sponsored 403(b) plans).
Class R shares are offered without any sales charges on purchases or sales.
Class I shares are available for purchase exclusively by investors through (i)
tax-exempt retirement plans with assets of at least $1 million (including 401(k)
plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money
purchase plans, defined benefit plans and non-qualified deferred compensation
plans), (ii) fee-based investment programs with assets of at least $1 million
and (iii) institutional clients with assets of at least $1 million. Class I
shares are offered without any sales charges on purchases or sales and do not
include combined 12b-1 fees and service fees. The since inception and 10-year
returns for Class B shares reflect the conversion to Class A shares after 6
years. The since inception return for Class C shares reflects the conversion to
Class A shares after 10 years. Figures shown above assume reinvestment of all
dividends and capital gains.
The Russell 1000(R) Index is generally representative of the U.S. market for
large-capitalization stocks. The S&P 500 Stock Index is generally representative
of the U.S. stock market. The index does not include any expenses, fees or sales
charges, which would lower performance. The index is unmanaged and should not be
considered an investment. It is not possible to invest directly in an index.
Index data source: Lipper Inc.
1
<PAGE>
Fund Report
FOR THE 6-MONTH PERIOD ENDED MAY 31, 2005
Van Kampen Growth and Income Fund is managed by the Adviser's Equity Income
team.(1) Current members include James A. Gilligan, Managing Director of the
Adviser; James O. Roeder, Executive Director of the Adviser; and Tom Bastian,
Sergio Marcheli, and Vincent E. Vizachero, Vice Presidents of the Adviser.
MARKET CONDITIONS
Domestic equity market conditions were mixed over the six months ended May 31,
2005. Many companies showed improved earnings growth and balance sheets.
Corporations became somewhat more willing to spend their cash stockpiles, which
translated into stock buy-backs, increased dividends, and measured capital
spending. Against the backdrop of economic recovery, the Federal Open Market
Committee raised the federal funds target rate a number of times over the
reporting period. Largely anticipated by investors, these increases did not
cause major market disruptions.
The fund's reporting period opened on a particularly bright note. Prior to the
reporting period, investors were apprehensive about the unfolding of events in
Iraq, the threat of terrorist attacks, rising oil prices, and the possibility of
another protracted outcome to the U.S. presidential election. Sentiment improved
as oil prices fell from their highs at the end of October and the presidential
election came to a quick and decisive close. These factors helped set the stage
for a stock rally in November and December.
After a brisk close to 2004, the U.S. equity market slowed its pace in 2005.
Despite the successful election in Iraq and the upward revision of fourth-
quarter gross domestic product numbers, investors became increasingly concerned
with rising oil prices, interest rates and the prospect for inflation. Weakening
retail sales and disappointing earnings announcements also weighed on the
market. As the period wound to a close, investor sentiment was boosted somewhat
by signs of a stable economy and tame inflation.
Overall, value stocks outperformed growth stocks, with most sectors within the
value-stock universe performing well.
(1)Team members may change without notice from time to time.
2
<PAGE>
PERFORMANCE ANALYSIS
The fund returned 5.52 percent for the six months ended May 31, 2005 (Class A
shares, unadjusted for sales charge). In comparison, the fund's benchmark
indexes, the Russell 1000 Index and the S&P 500 Index returned 3.31 percent and
2.42 percent for the period, respectively.
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED MAY 31, 2005
<Table>
<Caption>
- -------------------------------------------------------------------------------------
RUSSELL 1000 S&P 500
CLASS A CLASS B CLASS C CLASS I CLASS R INDEX INDEX
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5.52% 5.12% 5.11% 5.69% 5.39% 3.31% 2.42%
- -------------------------------------------------------------------------------------
</Table>
THE PERFORMANCE FOR THE FIVE SHARE CLASSES VARIES BECAUSE EACH HAS DIFFERENT
EXPENSES. THE FUND'S TOTAL RETURN FIGURES ASSUME THE REINVESTMENT OF ALL
DISTRIBUTIONS, BUT DO NOT REFLECT THE DEDUCTION OF ANY APPLICABLE SALES CHARGES.
SUCH COSTS WOULD LOWER PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS. SEE PERFORMANCE SUMMARY FOR STANDARDIZED PERFORMANCE INFORMATION AND
INDEX DEFINITIONS.
During the period, the fund's best-performing group of stocks, relative to the
Russell 1000 Index, was the financial sector. Stock selection--that is, we
underweighted banks and overweighted insurance stocks--drove performance in this
area. The rising interest-rate environment turned investors away from bank
stocks, and the fund's smaller weighting helped reduce the impact of poor
performance here. In contrast, the fund's overweight relative to the Russell
1000 Index in insurance stocks, which are somewhat immune to interest-rate
changes, benefited the fund.
The health care sector was also a standout area for the fund. After being beaten
down in 2004 and early 2005, pharmaceutical stocks rallied in April and May. A
more favorable litigation outlook at one drug company and improving fundamentals
at others helped boost the fund's pharmaceutical holdings.
Finally, technology stocks, especially hardware and equipment names, continued
to lag in the broad market during the period. Thanks to the fund's small
proportion of technology holdings, the fund was able to dodge some weak returns
in this sector.
Although the fund outperformed both of its benchmark indexes during the period,
certain factors detracted from performance. Relative to the Russell 1000 Index,
the fund lost ground in its consumer staples stocks. Food and staples retailing
performed strongly in the broad market as investors sought more defensive areas.
However, the fund did not participate in this upswing, as these stocks did not
meet our investment criteria. Industrials were also a source of lagging
performance for the fund. Rising oil prices meant higher fuel costs--costs that
are not easily passed on to clients--for some transportation and capital goods
companies. We continued to trim the fund's exposure to industrial stocks.
There is no guarantee the security sectors mentioned will continue to perform
well or beheld by the fund in the future.
3
<PAGE>
<Table>
<Caption>
TOP TEN HOLDINGS AS OF 5/31/05
<S> <C>
Bristol-Myers Squibb Co. 2.8%
J.P. Morgan Chase & Co. 2.8
Bayer AG 2.7
Citigroup, Inc. 2.4
Time Warner, Inc. 2.3
Roche Holdings, Inc. 2.3
General Electric Co. 2.2
Schering-Plough Corp. 2.1
Merrill Lynch & Co., Inc. 2.0
BP PLC 1.8
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 05/31/05
<S> <C>
Pharmaceuticals 12.2%
Integrated Oil & Gas 6.6
Other Diversified Financial Services 5.2
Investment Banking & Brokerage 5.1
Movies & Entertainment 4.9
Diversified Chemicals 4.1
Electric Utilities 3.4
Property & Casualty 3.3
Integrated Telecommunication Services 3.3
Packaged Foods & Meats 3.2
Industrial Conglomerates 3.2
Semiconductors 2.2
Aerospace & Defense 2.1
Oil & Gas Equipment & Services 1.8
Thrifts & Mortgage Finance 1.8
Broadcasting & Cable TV 1.8
Computer Hardware 1.7
Managed Health Care 1.6
Hypermarkets & Super Centers 1.6
Life & Health Insurance 1.5
Soft Drinks 1.5
Diversified Banks 1.5
Department Stores 1.4
Communications Equipment 1.4
Industrial Machinery 1.3
Automobile Manufacturers 1.3
Health Care Supplies 1.3
Biotechnology 1.2
Systems Software 1.2
Oil & Gas Refining & Marketing 1.2
</Table>
<Table>
<S> <C>
(continued on next page)
</Table>
4
<PAGE>
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 05/31/05
(continued from previous page)
<S> <C>
Gold 1.2
Household Products 1.1
Tobacco 1.0
Wireless Telecommunication Services 0.9
Railroads 0.8
Services 0.8
General Merchandise Stores 0.8
Multi-line Insurance 0.8
Asset Management & Custody Banks 0.8
Regional Banks 0.7
Hotels, Resorts & Cruise Lines 0.5
Restaurants 0.5
Consumer Finance 0.3
-----
Total Long Term Investments 94.1%
Short-Term Investments 6.7
Liabilities in Excess of Other Assets (0.8)
-----
Net Assets 100.0%
</Table>
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. All percentages are as a percentage of
long-term investments. Van Kampen is a wholly owned subsidiary of a global
securities firm which is engaged in a wide range of financial services
including, for example, securities trading and brokerage activities, investment
banking, research and analysis, financing and financial advisory services.
5
<PAGE>
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen fund provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
fund's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to fund shareholders, and makes these reports available on its
public Web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public Web site, each fund files a
complete schedule of portfolio holdings with the SEC for the fund's first
and third fiscal quarters on Form N-Q. Van Kampen does not deliver the
reports for the first and third fiscal quarters to shareholders, nor are
the reports posted to the Van Kampen public Web site. You may, however,
obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS
filings) by accessing the SEC's Web site, http://www.sec.gov. You may
also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at 1-800-847-2424.
6
<PAGE>
HOUSEHOLDING NOTICE
To reduce fund expenses, the fund attempts to eliminate duplicate
mailings to the same address. The fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling 1-800-341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
The fund's policies and procedures with respect to the voting of proxies
relating to the fund's portfolio securities and information on how the
fund voted proxies relating to portfolio securities during the most
recent twelve-month period ended June 30 is available without charge,
upon request, by visiting our Web site at www.vankampen.com. This
information is also available on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
7
<PAGE>
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charge on redemptions of Class B and Class C
Shares; and (2) ongoing costs, including management fees; distribution and
service (12b-1) fees; and other Fund expenses. This example is intended to help
you understand your ongoing cost (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 12/01/04 - 05/31/05.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, and $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
expenses based on the Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing cost of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your cost would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
-------------------------------------------------
12/1/04 5/31/05 12/1/04-5/31/05
<S> <C> <C> <C>
Class A
Actual..................................... $1,000.00 $1,055.20 $4.10
Hypothetical............................... 1,000.00 1,020.93 4.03
(5% annual return before expenses)
Class B
Actual..................................... 1,000.00 1,051.21 7.93
Hypothetical............................... 1,000.00 1,017.23 7.80
(5% annual return before expenses)
Class C
Actual..................................... 1,000.00 1,051.10 7.93
Hypothetical............................... 1,000.00 1,017.23 7.80
(5% annual return before expenses)
Class R
Actual..................................... 1,000.00 1,053.87 5.38
Hypothetical............................... 1,000.00 1,019.73 5.29
(5% annual return before expenses)
Class I
Actual..................................... 1,000.00 1,056.92 2.82
Hypothetical............................... 1,000.00 1,022.23 2.77
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.80%, 1.55%,
1.55%, 1.05% and 0.55% for Class A, B, C, R and I Shares, respectively,
multiplied by the average account value over the period, multiplied by
182/365 (to reflect the one-half year period).
Assumes all dividends and distributions were reinvested.
8
<PAGE>
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
On May 26, 2005, the Board of Trustees, and the independent trustees voting
separately, determined that the terms of the investment advisory agreement are
fair and reasonable and approved the continuance of the investment advisory
contract as being in the best interests of the Fund and its shareholders. In
making its determination, the Board of Trustees considered materials that were
specifically prepared by the investment adviser at the request of the Board and
Fund counsel, and by an independent provider of investment company data
contracted to assist the Board, all relating to the contract review process. The
Board also considered information received periodically about the portfolio,
performance, the investment strategy, portfolio management team and fees and
expenses of the Fund. The Board of Trustees considered the contract over a
period of several months and the non-management trustees held sessions both with
the investment adviser and separate from the investment adviser in reviewing and
considering the contract.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
existing breakpoints in the Fund's investment advisory fee schedule. The Board
of Trustees considered comparative advisory fees of the Fund and other
investment companies and/or other products at different asset levels, and
considered the trends in the industry versus historical and projected assets of
the Fund. The Board of Trustees also reviewed the benefit to the investment
adviser of receiving research paid for by Fund assets and the propriety of such
arrangements. The Board of Trustees evaluated other benefits the investment
adviser and its affiliates derive from their relationship with the Fund. The
Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees,
9
<PAGE>
evaluated all of the foregoing and does not believe any single factor or group
of factors control or dominate the review process, and, after considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with investment
adviser the resources available and used in managing the Fund. The Fund
discloses information about its portfolio management team members and their
experience in its prospectus. The trustees also discuss certain other services
which are provided on a cost-reimbursement basis by the investment adviser or
its affiliates to the Van Kampen funds including certain accounting,
administrative and legal services. The Board has determined that the nature,
extent and quality of the services provided by the investment adviser support
its decision to approve the investment advisory contract.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, a performance committee of the
Board spends more focused time on the performance of the Fund and other funds in
the Van Kampen complex, paying specific attention to underperforming funds. The
trustees discuss with the investment adviser the performance goals and the
actual results achieved in managing the Fund. When considering a fund's
performance, the trustees and the investment adviser place emphasis on trends
and longer-term returns (focusing on one-year, three-year and five-year
performance with special attention to three-year performance) and, when a fund's
weighted performance is under the fund's benchmark, they discuss the causes and
where necessary seek to make specific changes to investment strategy or
investment personnel. The Fund discloses more information about its performance
elsewhere in this report and in the Fund's prospectus. The trustees discuss with
the investment adviser the level of advisory fees for this Fund relative to
comparable funds and other products advised by the adviser and others in the
marketplace. The trustees review not only the advisory fees but other fees and
expenses (whether paid to the adviser, its affiliates or others) and the Fund's
overall expense ratio. The Fund discloses more information about its fees and
expenses in its prospectus. The Board has determined that the performance, fees
and expenses of the Fund support its decision to approve the investment advisory
contract.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser. These profitability reports are
put
10
<PAGE>
together by the investment adviser with the oversight of a special ad hoc
committee of the Board. The trustees discuss with the investment adviser its
revenues and expenses, including among other things, revenues for advisory
services, portfolio management-related expenses, revenue sharing arrangement
costs and allocated expenses both on an aggregate basis and per fund. The Board
has determined that the analysis of the investment adviser's expenses and
profitability support its decision to approve the investment advisory contract.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
and growth prospects of the Fund and how that relates to the Fund's expense
ratio and particularly the Fund's advisory fee rate. In conjunction with its
review of the investment adviser's profitability, the trustees discuss with the
investment adviser how more (or less) assets can affect the efficiency or
effectiveness of managing the Fund's portfolio and whether the advisory fee
level is appropriate relative to current and projected asset levels and/or
whether the advisory fee structure reflects economies of scale as asset levels
change. The Board has determined that its review of the actual and potential
economies of scale of the Fund support its decision to approve the investment
advisory contract.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and it affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory contract.
11
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 (UNAUDITED)
<Table>
<Caption>
NUMBER OF
DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 94.1%
AEROSPACE & DEFENSE 2.1%
Northrop Grumman Corp. ..................................... 1,510,000 $ 84,137,200
Raytheon Co. ............................................... 1,975,200 77,348,832
--------------
161,486,032
--------------
ASSET MANAGEMENT & CUSTODY BANKS 0.8%
State Street Corp. ......................................... 1,259,000 60,432,000
--------------
AUTOMOBILE MANUFACTURERS 1.3%
Honda Motor Co., Ltd.--ADR (Japan).......................... 4,079,000 100,832,880
--------------
BIOTECHNOLOGY 1.2%
Applera Corp.--Applied Biosystems Group..................... 919,300 19,682,213
Chiron Corp. (a)............................................ 2,029,000 76,168,660
--------------
95,850,873
--------------
BROADCASTING & CABLE TV 1.8%
Clear Channel Communications, Inc. ......................... 4,672,500 136,577,175
--------------
COMMUNICATIONS EQUIPMENT 1.4%
Motorola, Inc. ............................................. 6,021,600 104,595,192
--------------
COMPUTER HARDWARE 1.7%
Hewlett-Packard Co. ........................................ 4,638,000 104,401,380
International Business Machines Corp. ...................... 401,100 30,303,105
--------------
134,704,485
--------------
CONSUMER FINANCE 0.3%
MBNA Corp. ................................................. 968,000 20,415,120
--------------
DEPARTMENT STORES 1.4%
Kohl's Corp. (a)............................................ 2,149,300 104,649,417
--------------
DIVERSIFIED BANKS 1.5%
Bank of America Corp. ...................................... 2,417,900 111,997,128
--------------
DIVERSIFIED CHEMICALS 4.1%
Bayer AG--ADR (Germany)..................................... 6,115,300 206,880,599
Dow Chemical Co. ........................................... 2,069,250 93,716,332
Lanxess AG (Germany) (b).................................... 597,230 12,753,738
--------------
313,350,669
--------------
ELECTRIC UTILITIES 3.4%
American Electric Power Co., Inc. .......................... 1,806,000 64,456,140
Entergy Corp. .............................................. 1,020,900 73,331,247
Exelon Corp. ............................................... 1,230,000 57,625,500
FirstEnergy Corp. .......................................... 1,570,700 69,582,010
--------------
264,994,897
--------------
GENERAL MERCHANDISE STORES 0.8%
Target Corp. ............................................... 1,143,700 61,416,690
--------------
</Table>
12 See Notes to Financial Statements
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 (UNAUDITED) continued
<Table>
<Caption>
NUMBER OF
DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
GOLD 1.2%
Newmont Mining Corp. ....................................... 2,414,200 $ 89,904,808
--------------
HEALTH CARE SUPPLIES 1.3%
Bausch & Lomb, Inc. ........................................ 1,262,200 98,565,198
--------------
HOTELS, RESORTS & CRUISE LINES 0.5%
Marriott International, Inc., Class A....................... 596,900 40,314,626
--------------
HOUSEHOLD PRODUCTS 1.1%
Kimberly-Clark Corp. ....................................... 1,301,300 83,712,629
--------------
HYPERMARKETS & SUPER CENTERS 1.6%
Wal-Mart Stores, Inc. ...................................... 2,649,000 125,112,270
--------------
INDUSTRIAL CONGLOMERATES 3.2%
General Electric Co. ....................................... 4,710,800 171,849,984
Siemens AG--ADR (Germany)................................... 1,037,000 75,929,140
--------------
247,779,124
--------------
INDUSTRIAL MACHINERY 1.3%
Ingersoll-Rand Co., Class A (Bermuda)....................... 790,500 61,192,605
Parker Hannifin Corp. ...................................... 687,700 41,488,941
--------------
102,681,546
--------------
INTEGRATED OIL & GAS 6.6%
BP PLC--ADR (United Kingdom)................................ 2,346,140 141,237,628
ConocoPhillips.............................................. 1,167,040 125,853,594
Exxon Mobil Corp. .......................................... 1,849,400 103,936,280
Royal Dutch Petroleum Co. (Netherlands)..................... 2,387,800 139,877,324
--------------
510,904,826
--------------
INTEGRATED TELECOMMUNICATION SERVICES 3.3%
France Telecom--ADR (France)................................ 2,493,000 70,477,110
Sprint Corp. ............................................... 2,698,010 63,915,857
Verizon Communications, Inc. ............................... 3,307,114 117,005,693
--------------
251,398,660
--------------
INVESTMENT BANKING & BROKERAGE 5.1%
Charles Schwab Corp. ....................................... 7,398,500 83,898,990
Goldman Sachs Group, Inc. .................................. 255,000 24,862,500
Lehman Brothers Holdings, Inc. ............................. 1,373,900 126,673,580
Merrill Lynch & Co., Inc. .................................. 2,848,400 154,554,184
--------------
389,989,254
--------------
LIFE & HEALTH INSURANCE 1.5%
Aegon N.V. (Netherlands).................................... 1,964,000 25,237,400
Prudential Financial, Inc. ................................. 1,430,500 90,564,955
--------------
115,802,355
--------------
MANAGED HEALTH CARE 1.6%
Cigna Corp. ................................................ 1,298,500 126,279,125
--------------
MOVIES & ENTERTAINMENT 4.9%
Time Warner, Inc. (a)....................................... 10,297,900 179,183,460
</Table>
See Notes to Financial Statements 13
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 (UNAUDITED) continued
<Table>
<Caption>
NUMBER OF
DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
MOVIES & ENTERTAINMENT (CONTINUED)
Viacom, Inc., Class B....................................... 1,994,000 $ 68,374,260
Walt Disney Co. ............................................ 4,599,700 126,215,768
--------------
373,773,488
--------------
MULTI-LINE INSURANCE 0.8%
Hartford Financial Services Group, Inc. .................... 819,340 61,278,439
--------------
OIL & GAS EQUIPMENT & SERVICES 1.8%
Schlumberger, Ltd. ......................................... 2,040,320 139,496,678
--------------
OIL & GAS REFINING & MARKETING 1.2%
Valero Energy Corp. ........................................ 1,343,580 92,196,460
--------------
OTHER DIVERSIFIED FINANCIAL SERVICES 5.2%
Citigroup, Inc. ............................................ 3,906,200 184,021,082
J.P. Morgan Chase & Co. .................................... 6,022,012 215,286,929
--------------
399,308,011
--------------
PACKAGED FOODS & MEATS 3.2%
Cadbury Schweppes PLC--ADR (United Kingdom)................. 1,894,100 74,665,422
Kraft Foods, Inc. .......................................... 1,705,500 55,326,420
Unilever N.V. (Netherlands)................................. 1,799,200 119,718,768
--------------
249,710,610
--------------
PHARMACEUTICALS 12.2%
Bristol-Myers Squibb Co. ................................... 8,572,700 217,403,672
Eli Lilly & Co. ............................................ 1,923,000 112,110,900
GlaxoSmithKline PLC--ADR (United Kingdom)................... 1,374,000 68,287,800
Roche Holdings, Inc.--ADR (Switzerland)..................... 2,740,800 173,253,916
Sanofi Aventis--ADR (France)................................ 2,083,800 94,299,452
Schering-Plough Corp. ...................................... 8,320,100 162,241,950
Wyeth, Inc. ................................................ 2,590,400 112,345,648
--------------
939,943,338
--------------
PROPERTY & CASUALTY 3.3%
Chubb Corp. ................................................ 1,662,300 140,015,529
Saint Paul Travelers Cos., Inc. ............................ 2,978,886 112,840,202
--------------
252,855,731
--------------
RAILROADS 0.8%
Norfolk Southern Corp. ..................................... 2,029,260 64,773,979
--------------
REGIONAL BANKS 0.7%
PNC Financial Services Group, Inc. ......................... 948,800 51,851,920
--------------
RESTAURANTS 0.5%
McDonald's Corp. ........................................... 1,196,600 37,022,804
--------------
SEMICONDUCTORS 2.2%
Intel Corp. ................................................ 3,600,400 96,958,772
Micron Technology, Inc. (a)................................. 6,423,000 70,524,540
--------------
167,483,312
--------------
</Table>
14 See Notes to Financial Statements
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 (UNAUDITED) continued
<Table>
<Caption>
NUMBER OF
DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES 0.8%
Equifax, Inc. .............................................. 1,843,100 $ 63,937,139
--------------
SOFT DRINKS 1.5%
Coca-Cola Co. .............................................. 2,558,100 114,168,003
--------------
SYSTEMS SOFTWARE 1.2%
Symantec Corp. (a).......................................... 4,134,000 93,469,740
--------------
THRIFTS & MORTGAGE FINANCE 1.8%
Freddie Mac................................................. 2,113,400 137,455,536
--------------
TOBACCO 1.0%
Altria Group, Inc. ......................................... 1,141,400 76,633,596
--------------
WIRELESS TELECOMMUNICATION SERVICES 0.9%
Nextel Communications, Inc., Class A (a).................... 2,279,000 68,780,220
--------------
TOTAL LONG-TERM INVESTMENTS 94.1%
(Cost $6,197,767,363)................................................. 7,237,885,983
--------------
SHORT-TERM INVESTMENTS 6.7%
REPURCHASE AGREEMENT 3.7%
State Street Bank & Trust Co. ($284,759,000 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of
2.96%, dated 05/31/05, to be sold on 06/01/05 at $284,782,414)........ 284,759,000
U.S. GOVERNMENT AGENCY 3.0%
Federal National Mortgage Association ($228,775,000 par, yielding 2.98%,
06/01/05 maturity).................................................... 228,775,000
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $513,534,000)................................................... 513,534,000
--------------
TOTAL INVESTMENTS 100.8%
(Cost $6,711,301,363)................................................. 7,751,419,983
LIABILITIES IN EXCESS OF OTHER ASSETS (0.8%)........................... (64,787,380)
--------------
NET ASSETS 100.0%...................................................... $7,686,632,603
==============
</Table>
Percentages are calculated as a percentage of net assets.
(a) Non-income producing security as this stock currently does not declare
dividends.
(b) Securities with total market value equal to $12,753,738 have been valued at
their fair value as determined in good faith under procedures established by
and under the general supervision of the Fund's Trustees.
ADR--American Depositary Receipt
See Notes to Financial Statements 15
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
May 31, 2005 (Unaudited)
<Table>
<S> <C>
ASSETS:
Total Investments (Cost $6,711,301,363)..................... $7,751,419,983
Cash........................................................ 282
Receivables:
Investments Sold.......................................... 38,903,952
Fund Shares Sold.......................................... 17,766,321
Dividends................................................. 16,269,450
Interest.................................................. 23,413
Other....................................................... 227,935
--------------
Total Assets............................................ 7,824,611,336
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 120,381,733
Fund Shares Repurchased................................... 9,799,567
Distributor and Affiliates................................ 4,427,813
Investment Advisory Fee................................... 2,291,610
Accrued Expenses............................................ 761,842
Trustees' Deferred Compensation and Retirement Plans........ 316,168
--------------
Total Liabilities....................................... 137,978,733
--------------
NET ASSETS.................................................. $7,686,632,603
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $6,371,376,378
Net Unrealized Appreciation................................. 1,040,118,620
Accumulated Net Realized Gain............................... 247,078,311
Accumulated Undistributed Net Investment Income............. 28,059,294
--------------
NET ASSETS.................................................. $7,686,632,603
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $6,195,193,120 and 305,517,990 shares of
beneficial interest issued and outstanding)............. $ 20.28
Maximum sales charge (5.75%* of offering price)......... 1.24
--------------
Maximum offering price to public........................ $ 21.52
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $909,442,803 and 45,262,829 shares of
beneficial interest issued and outstanding)............. $ 20.09
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $503,034,960 and 24,989,314 shares of
beneficial interest issued and outstanding)............. $ 20.13
==============
Class R Shares:
Net asset value and offering price per share (Based on
net assets of $36,056,830 and 1,777,756 shares of
beneficial interest issued and outstanding)............. $ 20.28
==============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $42,904,890 and 2,114,875 shares of
beneficial interest issued and outstanding)............. $ 20.29
==============
</Table>
* On sales of $50,000 or more, the sales charge will be reduced.
16 See Notes to Financial Statements
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended May 31, 2005 (Unaudited)
<Table>
<S> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of
$3,317,251)............................................... $ 72,615,367
Interest.................................................... 5,961,934
--------------
Total Income............................................ 78,577,301
--------------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B, C, R and I of $7,248,086, $4,571,531, $2,445,546,
$68,956 and $0, respectively)............................. 14,334,119
Investment Advisory Fee..................................... 13,004,294
Shareholder Services........................................ 5,797,896
Custody..................................................... 267,036
Legal....................................................... 129,734
Trustees' Fees and Related Expenses......................... 34,246
Other....................................................... 946,059
--------------
Total Expenses.......................................... 34,513,384
Less Credits Earned on Cash Balances.................... 108,516
--------------
Net Expenses............................................ 34,404,868
--------------
NET INVESTMENT INCOME....................................... $ 44,172,433
==============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 289,374,906
--------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 990,805,609
End of the Period......................................... 1,040,118,620
--------------
Net Unrealized Appreciation During the Period............... 49,313,011
--------------
NET REALIZED AND UNREALIZED GAIN............................ $ 338,687,917
==============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 382,860,350
==============
</Table>
See Notes to Financial Statements 17
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2005 NOVEMBER 30, 2004
------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................... $ 44,172,433 $ 64,002,166
Net Realized Gain........................................ 289,374,906 259,365,208
Net Unrealized Appreciation During the Period............ 49,313,011 529,546,982
-------------- ---------------
Change in Net Assets from Operations..................... 382,860,350 852,914,356
-------------- ---------------
Distributions from Net Investment Income:
Class A Shares......................................... (33,066,311) (53,007,976)
Class B Shares......................................... (1,876,037) (3,991,781)
Class C Shares......................................... (990,408) (1,895,761)
Class R Shares......................................... (108,009) (112,029)
Class I Shares......................................... (264,822) -0-
-------------- ---------------
(36,305,587) (59,007,547)
-------------- ---------------
Distributions from Net Realized Gain:
Class A Shares......................................... (64,555,779) -0-
Class B Shares......................................... (10,382,687) -0-
Class C Shares......................................... (5,488,093) -0-
Class R Shares......................................... (271,078) -0-
Class I Shares......................................... (431,507) -0-
-------------- ---------------
(81,129,144) -0-
-------------- ---------------
Total Distributions...................................... (117,434,731) (59,007,547)
-------------- ---------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES...... 265,425,619 793,906,809
-------------- ---------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................ 1,087,554,930 2,540,673,075
Net Asset Value of Shares Issued Through Dividend
Reinvestment........................................... 105,771,897 52,107,205
Cost of Shares Repurchased............................... (646,136,515) (1,034,482,840)
-------------- ---------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS....... 547,190,312 1,558,297,440
-------------- ---------------
TOTAL INCREASE IN NET ASSETS............................. 812,615,931 2,352,204,249
NET ASSETS:
Beginning of the Period.................................. 6,874,016,672 4,521,812,423
-------------- ---------------
End of the Period (Including accumulated undistributed
net investment income of $28,059,294 and $20,192,448,
respectively).......................................... $7,686,632,603 $ 6,874,016,672
============== ===============
</Table>
18 See Notes to Financial Statements
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
CLASS A SHARES MAY 31, --------------------------------------------------------
2005 2004 2003 2002 2001 2000
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF THE PERIOD............ $ 19.55 $ 16.95 $ 14.70 $ 17.23 $ 20.04 $ 20.05
-------- -------- -------- -------- -------- --------
Net Investment Income.... .14(a) .23(a) .19(a) .17(a) .23(a) .23(a)
Net Realized and
Unrealized Gain/Loss... .93 2.59 2.22 (2.07) (.71) 2.58
-------- -------- -------- -------- -------- --------
Total from Investment
Operations............... 1.07 2.82 2.41 (1.90) (.48) 2.81
-------- -------- -------- -------- -------- --------
Less:
Distributions from Net
Investment Income...... .12 .22 .16 .19 .21 .19
Distributions from Net
Realized Gain.......... .22 -0- -0- .44 2.12 2.63
-------- -------- -------- -------- -------- --------
Total Distributions........ .34 .22 .16 .63 2.33 2.82
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD................... $ 20.28 $ 19.55 $ 16.95 $ 14.70 $ 17.23 $ 20.04
======== ======== ======== ======== ======== ========
Total Return (b)........... 5.52%* 16.72% 16.54% -11.48% -2.88% 16.39%
Net Assets at End of the
Period (In millions)..... $6,195.2 $5,447.7 $3,359.3 $2,064.2 $1,702.8 $1,286.3
Ratio of Expenses to
Average Net Assets....... .80% .81% .86% .85% .82% .88%
Ratio of Net Investment
Income to Average Net
Assets................... 1.35% 1.25% 1.24% 1.05% 1.29% 1.23%
Portfolio Turnover......... 25%* 45% 61% 66% 115% 97%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 5.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchase. With
respect to shares purchased prior to December 1, 2004, a CDSC of 1% may be
imposed on certain redemptions made within one year of purchase. If the
sales charge was included, total returns would be lower. These returns
include combined Rule 12b-1 fees and service fees of up to .25% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
See Notes to Financial Statements 19
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
CLASS B SHARES MAY 31, -------------------------------------------------------
2005 2004 2003 2002 2001 2000
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
THE PERIOD................. $19.37 $16.81 $14.57 $ 17.09 $19.88 $19.91
------ ------ ------ ------- ------ ------
Net Investment Income...... .06(a) .09(a) .07(a) .04(a) .09(a) .09(a)
Net Realized and Unrealized
Gain/Loss................ .92 2.55 2.22 (2.05) (.70) 2.56
------ ------ ------ ------- ------ ------
Total from Investment
Operations................. .98 2.64 2.29 (2.01) (.61) 2.65
------ ------ ------ ------- ------ ------
Less:
Distributions from Net
Investment Income........ .04 .08 .05 .07 .06 .05
Distributions from Net
Realized Gain............ .22 -0- -0- .44 2.12 2.63
------ ------ ------ ------- ------ ------
Total Distributions.......... .26 .08 .05 .51 2.18 2.68
------ ------ ------ ------- ------ ------
NET ASSET VALUE, END OF THE
PERIOD..................... $20.09 $19.37 $16.81 $ 14.57 $17.09 $19.88
====== ====== ====== ======= ====== ======
Total Return (b)............. 5.12%* 15.76% 15.73% -12.16% -3.63% 15.55%
Net Assets at End of the
Period (In millions)....... $909.4 $902.9 $808.1 $ 627.4 $705.3 $573.4
Ratio of Expenses to Average
Net Assets................. 1.55% 1.57% 1.62% 1.60% 1.59% 1.60%
Ratio of Net Investment
Income to Average Net
Assets..................... .58% .48% .49% .27% .52% .49%
Portfolio Turnover........... 25%* 45% 61% 66% 115% 97%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 5%, charged on certain redemptions
made within one year of purchase and declining to 0% after the fifth year.
If the sales charge was included, total returns would be lower. These
returns include combined Rule 12b-1 fees and service fees of up to 1% and do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
20 See Notes to Financial Statements
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
CLASS C SHARES MAY 31, -----------------------------------------------
2005 2004 2003 2002 2001 2000
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
THE PERIOD.................... $19.41 $16.83 $14.58 $ 17.15 $19.89 $19.92
------ ------ ------ ------- ------ ------
Net Investment Income......... .06(a) .09(a) .08(a) .05(a) .09(a) .10(a)
Net Realized and Unrealized
Gain/Loss................... .92 2.57 2.22 (2.11) (.65) 2.55
------ ------ ------ ------- ------ ------
Total from Investment
Operations.................... .98 2.66 2.30 (2.06) (.56) 2.65
------ ------ ------ ------- ------ ------
Less:
Distributions from Net
Investment Income........... .04 .08 .05 .07 .06 .05
Distributions from Net
Realized Gain............... .22 -0- -0- .44 2.12 2.63
------ ------ ------ ------- ------ ------
Total Distributions............. .26 .08 .05 .51 2.18 2.68
------ ------ ------ ------- ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................ $20.13 $19.41 $16.83 $ 14.58 $17.15 $19.89
====== ====== ====== ======= ====== ======
Total Return (b)................ 5.11%* 15.86% 15.79%(c) -12.15% -3.62% 15.54%
Net Assets at End of the Period
(In millions)................. $503.0 $468.7 $346.4 $ 209.1 $179.3 $ 97.9
Ratio of Expenses to Average Net
Assets........................ 1.55% 1.57% 1.62% 1.60% 1.59% 1.60%
Ratio of Net Investment Income
to Average Net Assets......... .59% .49% .52%(c) .29% .52% .53%
Portfolio Turnover.............. 25%* 45% 61% 66% 115% 97%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1%, charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(c) Certain non-recurring payments were made to Class C Shares, resulting in an
increase to the Ratio of Net Investment Income to Average Net Assets and
Total Return of .04%.
See Notes to Financial Statements 21
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
OCTOBER 1, 2002
SIX MONTHS YEAR ENDED (COMMENCEMENT
ENDED NOVEMBER 30, OF INVESTMENT
CLASS R SHARES MAY 31, ------------------ OPERATIONS) TO
2005 2004 2003 NOVEMBER 30, 2002
---------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD.................................. $19.55 $16.96 $14.70 $13.67
------ ------ ------ ------
Net Investment Income................... .12(a) .19(a) .14(a) .01(a)
Net Realized and Unrealized Gain........ .92 2.57 2.24 1.02
------ ------ ------ ------
Total from Investment Operations.......... 1.04 2.76 2.38 1.03
------ ------ ------ ------
Less:
Distributions from Net Investment
Income................................ .09 .17 .12 -0-
Distributions from Net Realized Gain.... .22 -0- -0- -0-
------ ------ ------ ------
Total Distributions....................... .31 .17 .12 -0-
------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD........ $20.28 $19.55 $16.96 $14.70
====== ====== ====== ======
Total Return (b).......................... 5.39%* 16.36% 16.31% 7.53%*
Net Assets at End of the Period (In
millions)............................... $ 36.1 $ 19.0 $ 8.0 $ .1
Ratio of Expenses to Average Net Assets... 1.05% 1.07% 1.15% 1.56%
Ratio of Net Investment Income to Average
Net Assets.............................. 1.14% 1.02% .89% 2.45%
Portfolio Turnover........................ 25%* 45% 61% 66%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period. These returns
include combined Rule 12b-1 fees and service fees of up to .50% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
22 See Notes to Financial Statements
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
OCTOBER 19, 2004
SIX MONTHS (COMMENCEMENT
ENDED OF INVESTMENT
CLASS I SHARES MAY 31, OPERATIONS) TO
2005 NOVEMBER 30, 2004
-------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $19.55 $18.34
------ ------
Net Investment Income..................................... .16(a) .05(a)
Net Realized and Unrealized Gain.......................... .94 1.16
------ ------
Total from Investment Operations............................ 1.10 1.21
------ ------
Less:
Distributions from Net Investment Income.................. .14 -0-
Distributions from Net Realized Gain...................... .22 -0-
------ ------
Total Distributions......................................... .36 -0-
------ ------
NET ASSET VALUE, END OF THE PERIOD.......................... $20.29 $19.55
====== ======
Total Return................................................ 5.69%* 6.60%*
Net Assets at End of the Period (In millions)............... $ 42.9 $ 35.6
Ratio of Expenses to Average Net Assets..................... .55% .62%
Ratio of Net Investment Income to Average Net Assets........ 1.60% 2.51%
Portfolio Turnover.......................................... 25%* 45%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
See Notes to Financial Statements 23
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2005 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Growth and Income Fund (the "Fund") is organized as a Delaware
statutory trust, and is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940 (the "1940 Act"), as
amended. The Fund's investment objective is to seek income and long-term growth
of capital. 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 distribution of the Fund's Class R and I Shares commenced on October
1, 2002 and October 19, 2004, respectively.
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 U.S. 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 last sale price as of the close of such securities exchange.
Equity securities traded on NASDAQ are valued at the NASDAQ Official Closing
Price. Fixed income investments are stated at value using market quotations or
indications of value obtained from an independent pricing service. Unlisted
securities and listed securities for which the last sales price is not available
are valued at the mean of the bid and asked prices. 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. Most foreign
markets close before the New York Stock Exchange (NYSE). Occasionally,
developments that could affect the closing prices of securities and other assets
may occur between the times at which valuations of such securities are
determined (that is, close of the foreign market on which the securities trade)
and the close of business on the NYSE. If these developments are expected to
materially affect the value of the securities, the valuations may be adjusted to
reflect the estimated fair value as of the close of the NYSE, as determined in
good faith under procedures established by the Board of Trustees. Futures
contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements, which are short-term
investments 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 Asset Management (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
24
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2005 (UNAUDITED) continued
the account of the custodian bank. The seller is required to maintain the value
of the underlying security at not less than the repurchase proceeds due the
Fund.
C. INCOME AND EXPENSES Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discounts are accreted and
premiums are amortized over the expected life of each applicable security.
Income and expenses of the Fund are allocated on a pro rata basis to each class
of shares, except for distributions and service fees and incremental transfer
agency costs which are unique to each class of shares.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
At May 31, 2005, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
<S> <C>
Cost of investments for tax purposes........................ $6,753,569,997
==============
Gross tax unrealized appreciation........................... $1,074,796,454
Gross tax unrealized depreciation........................... (76,946,468)
--------------
Net tax unrealized appreciation on investments.............. $ 997,849,986
==============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays dividends
quarterly from net investment income. Net realized gains, if any, are
distributed at least 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.
The tax character of distributions paid during the year ended November 30,
2004 was as follows:
<Table>
<S> <C>
Ordinary income............................................. $59,007,547
</Table>
As of November 30, 2004, the components of distributable earnings on a tax
basis were as follows:
<Table>
<S> <C>
Undistributed ordinary income............................... $20,484,571
Undistributed long-term capital gain........................ 81,084,686
</Table>
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of the deferral of losses relating to wash sale
transactions.
F. EXPENSE REDUCTIONS During the six months ended May 31, 2005, the Fund's
custody fee was reduced by $108,516 as a result of credits earned on cash
balances.
25
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2005 (UNAUDITED) continued
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS % PER ANNUM
<S> <C>
First $150 million.......................................... .50%
Next $100 million........................................... .45%
Next $100 million........................................... .40%
Over $350 million........................................... .35%
</Table>
For the six months ended May 31, 2005, the Fund recognized expenses of
approximately $129,700 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a trustee of the Fund is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Fund.
Under separate Accounting Services and Chief Compliance Officer ("CCO")
Employment agreements, the Adviser provides accounting services and the CCO
provides compliance services to the Fund. The costs of these services are
allocated to each fund. For the six months ended May 31, 2005, the Fund
recognized expenses of approximately $117,500, representing Van Kampen
Investment Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting services to the Fund, as well as, the salary, benefits and
related costs of the CCO and related support staff paid by Van Kampen. Services
provided pursuant to the Accounting Services and CCO Employment agreement are
reported as part of "Other" expenses on the Statement of Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
May 31, 2005, the Fund recognized expenses of approximately $5,387,400,
representing transfer agency fees paid to VKIS. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are also
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation.
Amounts deferred are retained by the Fund, and to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of approximately $196,700
are included in "Other" assets on the Statement of Assets and Liabilities at May
31, 2005. Appreciation/depreciation and distributions received from these
investments are recorded with an offsetting increase/decrease in the deferred
compensation obligation and do not affect the net asset value of the Fund.
Benefits under the retirement plan are payable upon retirement for a ten-year
period and are based upon each trustee's years of service to the Fund. The
maximum annual benefit per trustee under the plan is $2,500.
For the six months ended May 31, 2005, the Fund paid brokerage commissions
to Morgan Stanley DW Inc., an affiliate of the Adviser, totaling $14,000.
26
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2005 (UNAUDITED) continued
3. CAPITAL TRANSACTIONS
At May 31, 2005, capital aggregated $5,143,396,403, $737,087,747, $418,574,177,
$32,961,735 and $39,356,316 for Classes A, B, C, R and I, respectively. For the
six months ended May 31, 2005, transactions were as follows:
<Table>
<Caption>
SHARES VALUE
<S> <C> <C>
Sales:
Class A................................................... 47,169,821 $ 943,522,225
Class B................................................... 2,975,479 59,020,407
Class C................................................... 2,869,416 57,055,728
Class R................................................... 1,009,481 20,169,993
Class I................................................... 389,258 7,786,577
----------- --------------
Total Sales................................................. 54,413,455 $1,087,554,930
=========== ==============
Dividend Reinvestment:
Class A................................................... 4,457,416 $ 88,258,162
Class B................................................... 574,335 11,276,091
Class C................................................... 265,673 5,228,054
Class R................................................... 15,777 313,261
Class I................................................... 35,145 696,329
----------- --------------
Total Dividend Reinvestment................................. 5,348,346 $ 105,771,897
=========== ==============
Repurchases:
Class A................................................... (24,798,485) $ (496,236,938)
Class B................................................... (4,894,875) (97,131,850)
Class C................................................... (2,298,419) (45,704,324)
Class R................................................... (221,741) (4,452,448)
Class I................................................... (130,676) (2,610,955)
----------- --------------
Total Repurchases........................................... (32,344,196) $ (646,136,515)
=========== ==============
</Table>
27
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2005 (UNAUDITED) continued
At November 30, 2004, capital aggregated $4,607,852,954, $763,923,099,
$401,994,719, $16,930,929 and $33,484,365 for Classes A, B, C, R and I,
respectively. For the year ended November 30, 2004, transactions were as
follows:
<Table>
<Caption>
SHARES VALUE
<S> <C> <C>
Sales:
Class A................................................. 121,040,152 $ 2,220,774,009
Class B................................................. 7,610,966 138,196,249
Class C................................................. 7,493,627 136,192,401
Class R................................................. 645,196 11,832,319
Class I................................................. 1,831,353 33,678,097
----------- ---------------
Total Sales............................................... 138,621,294 $ 2,540,673,075
=========== ===============
Dividend Reinvestment:
Class A................................................. 2,582,239 $ 46,846,802
Class B................................................. 202,816 3,653,390
Class C................................................. 83,704 1,512,029
Class R................................................. 5,230 94,984
----------- ---------------
Total Dividend Reinvestment............................... 2,873,989 $ 52,107,205
=========== ===============
Repurchases:
Class A................................................. (43,072,076) $ (789,407,318)
Class B................................................. (9,288,760) (169,223,376)
Class C................................................. (4,001,674) (72,964,364)
Class R................................................. (146,905) (2,694,050)
Class I................................................. (10,205) (193,732)
----------- ---------------
Total Repurchases......................................... (56,519,620) $(1,034,482,840)
=========== ===============
</Table>
Class B Shares purchased on or after June 1, 1996, and any dividend
reinvestment plan Class B Shares received on such shares, automatically convert
to Class A Shares eight years after the end of the calendar month in which the
shares were purchased. Class B Shares purchased before June 1, 1996, and any
dividend reinvestment plan Class B Shares received on such shares, automatically
convert to Class A Shares six years after the end of the calendar month in which
the shares were purchased. For the six months ended May 31, 2005 and for the
year ended November 30, 2004, 1,714,356 and 2,071,316 Class B Shares
automatically converted to Class A Shares, respectively, and are shown in the
above tables as sales of Class A Shares and repurchases of Class B Shares. Class
C Shares purchased before January 1, 1997, and any dividend reinvestment plan
Class C Shares received thereon, automatically convert to Class A Shares ten
years after the end of the calendar month in which such shares were purchased.
Class C Shares purchased on or after January 1, 1997 do not possess a conversion
feature. For the six months ended May 31, 2005 and for the year ended November
30, 2004, 52,503 and 207,040 Class C Shares converted to Class A Shares,
respectively. 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 will be
imposed on most
28
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2005 (UNAUDITED) continued
redemptions made within five years of the purchase for Class B Shares and one
year of the purchase for Class C Shares as detailed in the following schedule.
<Table>
<Caption>
CONTINGENT DEFERRED
SALES CHARGE
AS A PERCENTAGE
OF DOLLAR AMOUNT
SUBJECT TO 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 six months ended May 31, 2005, Van Kampen, as Distributor for the
Fund, received net commissions on sales of the Fund's Class A Shares of
approximately $914,400 and CDSC on redeemed shares of Classes B and C of
approximately $551,300. 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 $2,177,302,000 and $1,741,278,456,
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 to 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. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract.
The Fund may invest 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 an amount of cash or liquid securities with a
value equal to a percentage of the contract amount with either a future
commission merchant pursuant to rules and regulations promulgated in the 1940
Act, as amended, or with its custodian in an account in the broker's name. This
amount is known as initial margin. 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). There were no open futures
contracts at May 31, 2005.
29
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2005 (UNAUDITED) continued
6. DISTRIBUTION AND SERVICE PLANS
With respect to its Class A Shares, Class B Shares, Class C Shares and Class R
Shares, the Fund and its shareholders have adopted a distribution plan pursuant
to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively,
the "Plans"). The Plans govern payments for: the distribution of the Fund's
Class A Shares, Class B Shares, Class C Shares and Class R Shares; the provision
of ongoing shareholder services with respect to such classes of shares; and the
maintenance of shareholder accounts with respect to such classes of shares.
Annual fees under the Plans of up to .25% of Class A average daily net
assets, up to 1.00% each for Class B and Class C average daily net assets, and
up to .50% of Class R average daily net assets are accrued daily. The annual
fees for Class A Shares and Class R Shares are paid quarterly and the annual
fees for Class C Shares are paid monthly. For Class B Shares, 75% of the annual
fees are paid monthly, while 25% of the annual fees are paid quarterly. The
amount of distribution expenses incurred by Van Kampen and not yet reimbursed
("unreimbursed receivable") was approximately $3,039,676 and $155,633, for Class
B and Class C shares, respectively. These amounts may be recovered from future
payments under the distribution plan or CDSC. To the extent the unreimbursed
receivable has been fully recovered, any excess 12b-1 fees will be refunded to
the Fund on a quarterly basis.
Included in these fees for the six months ended May 31, 2005, are payments
retained by Van Kampen of approximately $4,197,700, and payments made to Morgan
Stanley DW Inc., an affiliate of the Adviser, of approximately $1,324,000.
7. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar class action complaints which were recently
consolidated. This consolidated action also names as defendants certain
individual Trustees and Directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
Trustees of any Van Kampen funds. The consolidated amended complaint generally
alleges that defendants violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates to investors rather than funds managed by other companies, and (ii)
that the funds advised by the Adviser or its affiliates, including the Fund,
allegedly paid excessive commissions to brokers in return for their alleged
efforts to steer investors to these funds. The complaint seeks, among other
things, unspecified compensatory damages, rescissionary damages, fees and costs.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of the Van Kampen funds; the named investment companies,
including the Fund, are listed as nominal defendants. The complaint alleges that
defendants caused the Van Kampen funds to pay economic incentives to a propriety
sales force to promote the sale of proprietary mutual funds. The complaint also
alleges that the Van Kampen funds paid excessive commissions to Morgan Stanley
and its affiliates in connection with the sales of the funds. The complaint
seeks, among other things, the removal of the current Trustees of the funds,
rescission of the management contracts for the Van Kampen funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the
30
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2005 (UNAUDITED) continued
consolidated complaint described in the preceding paragraph. Plaintiff has
sought leave to file a second amended derivative complaint that alleges that the
Adviser permitted or recklessly disregarded market timing and late trading in
its proprietary mutual funds in order to increase assets under management and
fees. However, pursuant to an agreement between the parties, the plaintiff's
proposed second amended derivative complaint was withdrawn and the allegations
regarding market timing and late trading asserted therein were filed in a
separate complaint and coordinated with other cases related to market timing
that have been centralized in a federal court.
The defendants have moved to dismiss these actions and otherwise intend to
defend them vigorously. While the defendants believe that they have meritorious
defenses, the ultimate outcome of these matters is not presently determinable at
this early stage of litigation, and no provision has been made in the Fund's
financial statements for the effect, if any, of these matters.
8. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
31
<PAGE>
VAN KAMPEN GROWTH & INCOME FUND
BOARD OF TRUSTEES, OFFICERS, AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
MITCHELL M. MERIN
President and Chief Executive Officer
RONALD E. ROBISON
Executive Vice President and Principal Executive Officer
JOSEPH J. MCALINDEN
Executive Vice President and Chief Investment Officer
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
JAMES W. GARRETT
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 W. Franklin Street
P.O. Box 1713
Boston, Massachusetts 02110
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER, & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
32
<PAGE>
Van Kampen Growth and Income Fund
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
<PAGE>
Van Kampen Growth and Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
<PAGE>
Van Kampen Growth and Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2005 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
21, 121, 221, 321
GI SAR 7/05
(VAN KAMPEN INVESTMENTS SHINE LOGO) RN05-01552P-Y05/05
<PAGE>
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Schedule of Investments.
Please refer to Item #1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures
(a) The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits.
(a) Code of Ethics-- Not applicable for semi-annual reports.
(b)(1) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(b)(2) A certification for the Principal
Financial Officer of the registrant is attached hereto as part of EX-99.CERT.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Growth and Income Fund
By: /s/ Ronald E. Robison
------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: July 20, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
-----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: July 20, 2005
By: /s/ James W. Garrett
----------------------
Name: James W. Garrett
Title: Principal Financial Officer
Date: July 20, 2005
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.CERT
<SEQUENCE>2
<FILENAME>c96207exv99wcert.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
<PAGE>
I, Ronald E. Robison, certify that:
1. I have reviewed this report on Form N-CSR of Van Kampen Growth and Income
Fund;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net
assets, and cash flows (if the financial statements are required to
include a statement of cash flows) of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule30a-3(d)
under the Investment Company Act of 1940) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing date of this report based on such
evaluation; and
d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal half-year (the registrant's second fiscal half-year
in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize, and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: July 20, 2005
/s/ Ronald E. Robison
---------------------
Principal Executive Officer
<PAGE>
I, James W. Garrett, certify that:
1. I have reviewed this report on Form N-CSR of Van Kampen Growth and Income
Fund;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net
assets, and cash flows (if the financial statements are required to
include a statement of cash flows) of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule30a-3(d)
under the Investment Company Act of 1940) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing date of this report based on such
evaluation; and
d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal half-year (the registrant's second fiscal half-year
in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize, and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: July 20, 2005
/s/ James W. Garrett
--------------------
Principal Financial Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.906CERT
<SEQUENCE>3
<FILENAME>c96207exv99w906cert.txt
<DESCRIPTION>906 CERTIFICATION
<TEXT>
<PAGE>
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Name of Issuer: Van Kampen Growth and Income Fund
In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended May 31, 2005 that is accompanied by this
certification, the undersigned hereby certifies that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Issuer.
Date: July 20, 2005
/s/ Ronald E. Robison
---------------------
Ronald E. Robison
Principal Executive Officer
A signed original of this written statement required by Section 906 has been
provided to Van Kampen Growth and Income Fund and will be retained by Van Kampen
Growth and Income Fund and furnished to the Securities and Exchange Commission
or its staff upon request. This written statement required by Section 906 is
being furnished with this report, but not being filed as part of this Report.
<PAGE>
Cert ification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Name of Issuer: Van Kampen Growth and Income Fund
In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended May 31, 2005 that is accompanied by this
certification, the undersigned hereby certifies that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Issuer.
Date: July 20, 2005
/s/ James W. Garrett
--------------------
James W. Garrett
Principal Financial Officer
A signed original of this written statement required by Section 906 has been
provided to Van Kampen Growth and Income Fund and will be retained by Van Kampen
Growth and Income Fund and furnished to the Securities and Exchange Commission
or its staff upon request. This written statement required by Section 906 is
being furnished with this report, but not being filed as part of this Report.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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