UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-02423
Van Kampen Corporate Bond 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: 8/31
Date of reporting period: 8/31/04
Item 1. Reports to Shareholders.
The Fund's 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
Corporate Bond Fund performed during the annual 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 August 31,
2004.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE
FUND BEING OFFERED. 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 THE FUND SHARES MAY THEREFORE BE LESS THAN
WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
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</Table>
Performance Summary as of 8/31/04
PERFORMANCE OF A $10,000 INVESTMENT
This chart compares your fund's performance to that of the Lehman Brothers
Credit Bond Index and the Lipper Corporate BBB-Rated Index from 8/31/94 through
8/31/04. Class A shares, adjusted for sales charges.
(LINE GRAPH)
<Table>
<Caption>
VAN KAMPEN CORPORATE LIPPER CORPORATE BBB- LEHMAN BROTHERS CREDIT
BOND FUND RATED INDEX BOND INDEX
-------------------- --------------------- ----------------------
8/94 9525 10000 10000
9367 9862 9814
12/94 9382 9853 9856
9857 10321 10440
10581 11043 11216
10859 11310 11481
12/95 11376 11841 12048
11009 11599 11737
11059 11649 11790
11242 11906 12026
12/96 11678 12343 12444
11594 12261 12319
12100 12772 12826
12615 13268 13329
12/97 12923 13613 13718
13163 13851 13927
13460 14133 14286
13604 14308 14804
12/98 13860 14428 14894
13661 14398 14788
13339 14230 14556
13373 14227 14597
12/99 13400 14267 14602
13554 14533 14811
13586 14607 14994
14002 14980 15454
12/00 14450 15386 15973
14931 15904 16656
15059 15978 16833
15575 16395 17478
12/01 15810 16533 17635
15568 16483 17587
15634 16789 18098
15851 17196 18909
12/02 16345 17722 19491
16692 18171 19959
17472 19048 20918
17633 19115 20888
12/03 17945 19450 20992
18339 19936 21678
17847 19394 20936
8/04 18406 19995 21694
</Table>
<Table>
<Caption>
A SHARES B SHARES C SHARES
since 09/23/71 since 09/28/92 since 08/30/93
- --------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
4.75% 4.00% 1.00%
AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE
Since Inception 7.94% 7.78% 5.97% 5.97% 5.08% 5.08%
10-year 6.81 6.29 6.32 6.32 5.98 5.98
5-year 6.81 5.76 6.00 5.76 6.00 6.00
1-year 7.55 2.41 6.59 2.59 6.59 5.59
- --------------------------------------------------------------------------------------------
30-Day SEC Yield 3.98% 3.45% 3.45%
</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 return with sales charges includes payment of the
maximum sales charge of 4.75 percent for Class A shares, a contingent deferred
sales charge of 4.00 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 and 1.00 percent for Class B and C shares.
The since inception and 10-year returns for Class B shares reflect the
conversion of Class B shares into Class A shares six years after purchase. The
since inception returns for Class C shares reflect the conversion of Class C
shares into Class A shares ten years after purchase. See footnote 3 in the Notes
to Financial Statements for additional information. Figures shown above assume
reinvestment of all dividends and capital gains. SEC yield is a calculation for
determining the amount of portfolio income, excluding non-income items as
prescribed by the SEC. Yields are subject to change.
Lehman Brothers Credit Bond Index is a market-weighted index of investment-grade
corporate fixed-rate debt issues with maturities of one year or more. Lipper
Corporate BBB-Rated Index is an index of funds with similar investment
objectives as this fund. Indexes are unmanaged and do not include any sales
charges or fees. Such costs would lower performance. It is not possible to
invest directly in an index. Source: Lipper Inc.
1
Fund Report
FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2004
Van Kampen Corporate Bond Fund is managed by the Adviser's Taxable Fixed Income
team. Members of the team include Sheila A. Finnerty, Managing Director of the
Adviser; and Gordon W. Loery and David S. Horowitz, Executive Directors of the
Adviser.(1)
MARKET CONDITIONS
During the 12 months under review, strong fundamentals such solid economic
growth, increasing corporate earnings and manufacturing activity, and growing
demand for higher-yielding securities worked in favor of the corporate bond
market. In the early months of the reporting period, the economy was still quite
sluggish and interest rates remained at near-record low levels. Investors
searching for yield in this low-interest-rate environment favored corporate
bonds for their relative yield advantage over Treasuries, which benefited all
areas of the market, but particularly lower-rated bonds which had been the most
beaten down in previous months.
Demand for longer-maturity bonds also grew during the period. Many issuers
called back bonds that were issued when rates were significantly higher in order
to refinance their debt at more attractive current rates. This left investors
with cash to reinvest, which many chose to put into long-dated bonds for their
higher yields.
In late 2003 and early 2004, the economic outlook began to brighten. Gross
Domestic Product (GDP) growth, consumer spending and job growth began to rise,
leading to greater consumer confidence and expectations of rising interest
rates, which were ultimately realized when the Federal Reserve raised the
federal funds rate a quarter point in June and again in August. This increase in
short-term rates, coupled with the decline in long-term rates due to the demand
for longer-maturity paper, led to a flattening of the yield curve.
The rebound in corporate-bond performance caused yield spreads (the difference
in yield between corporate bonds and similar-maturity Treasury bonds) to
contract significantly early in the period. This trend continued throughout the
reporting period, but waned somewhat in the latter months as bonds become more
fully valued. New issue supply also declined as improved corporate earnings
diminished the need for companies to borrow money.
(1)Team members may change without notice at any time.
2
PERFORMANCE ANALYSIS
For the 12-months ended August 31, 2004, the fund returned 7.55 percent (Class A
shares unadjusted for sales charges), outperforming the Lehman Brothers Credit
Bond Index but slightly underperforming the Lipper Corporate BBB Rated Index.
(See table below.)
The fund's continued emphasis on BBB rated bonds--the lowest tier of the
investment-grade market--contributed positively to performance given the fact
that lower-rated bonds generally outperformed higher-rated issues during the
reporting year. As of August 31, 2004, half of the fund's holdings fell within
this credit-quality tier. We maintained the fund's moderate exposure to below
investment-grade bonds at roughly 12 percent of total investments.
Given our expectations of an improving economic environment and rising interest
rates, we kept the fund's duration (sensitivity to interest-rate changes)
modestly lower than the benchmark indexes in an effort to reduce downside price
risk. This strategy held the fund back somewhat in the first half of the
reporting period when interest rates did not rise as soon as predicted. However,
when rates did begin to climb in March through June, the fund's modest duration
helped performance.
Another part of our interest-rate positioning strategy was to maintain the
fund's relative underweight in the middle portion of the yield curve--securities
with maturities of five-to-ten years--because we believed many bonds in this
part of the curve were simply too expensive and would be the most vulnerable to
rising interest rates. We overweighted the long end of the curve where we
believed rates were most likely to decline, a strategy that helped boost returns
as 30-year bond yields declined by roughly 30 basis points by the end of the
reporting year.
We overweighted certain sectors that we believed offered the opportunity to
capture better value as bond prices richened, such as insurance, health care,
energy and forest products. The fund's positions in the energy and electric
utilities sectors added to performance. Energy companies benefited from a
stronger economy and firm pricing and the fund's holdings here included Amerada
Hess and Kerr-McGee, two major oil and gas exploration and production companies.
The fund's holdings in the electric utilities sector
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2004
<Table>
<Caption>
- ------------------------------------------------------------------------
LEHMAN LIPPER
BROTHERS CORPORATE
CREDIT BOND BBB RATED
CLASS A CLASS B CLASS C INDEX INDEX
7.55% 6.59% 6.59% 6.38% 7.82%
- ------------------------------------------------------------------------
</Table>
The performance for the three 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.
3
included Cincinnati Gas and Electric, Arizona Public Services and Niagara Mohawk
Power and Ohio Edison. We also increased the fund's allocation in the banking
sector, though the fund's holdings here are still underweighted relative to the
benchmarks. We found less value in the telecommunication, media and
entertainment, and food and drug sectors and maintained an underweight in these
sectors relative to the benchmarks. As always, we continued to emphasize a high
level of diversification within the portfolio, with an average position size of
approximately 1 percent.
We believe the fund's strong performance is the result of strong security and
sector selection as well as the fund's relatively modest interest-rate
positioning. Going forward, we anticipate that individual security selection
will become increasingly more critical to performance as most highly rated
corporate bonds now appear to be fully valued. As such, we anticipate that
returns are likely to be driven primarily by bond coupons, with less
contribution from capital appreciation.
4
<Table>
<Caption>
RATINGS ALLOCATIONS AS OF 8/31/04
AAA/Aaa 4.9%
AA/Aa 6.0
A/A 27.0
BBB/Baa 50.2
BB/Ba 10.5
B/B 1.4
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 8/31/04
Electric 8.0%
Automotive 6.5
Banking 5.4
Health Care 5.1
Wireline Communications 4.9
Integrated Energy 4.3
Paper 4.2
Noncaptive--Consumer Finance 4.0
Food/Beverage 3.0
Property & Casualty 3.0
Retail 2.9
Media-Noncable 2.7
Diversified Manufacturing 2.5
Gaming 2.4
Lodging 2.4
U.S. Government Agency Obligations 2.4
Natural Gas Pipelines 2.0
Noncaptive--Diversified Finance 2.0
Brokerage 1.9
Government Obligations 1.9
Aerospace & Defense 1.7
Environmental Services 1.6
Media--Cable 1.6
Entertainment 1.2
Independent Energy 1.1
Railroads 1.1
Technology 1.1
Supermarkets 1.0
Metals 0.9
Real Estate Investment Trusts 0.9
Chemicals 0.8
Life Insurance 0.8
Pharmaceuticals 0.8
Tobacco 0.8
Airlines 0.6
Construction Machinery 0.6
Consumer Products 0.6
Oil Field Services 0.6
Transportation Services 0.4
Wireless Communications 0.4
Packaging 0.3
Home Construction 0.2
Refining 0.2
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 8/31/04
(continued from previous page)
Textile 0.2%
-----
Total Long-Term Investments 91.0%
Short-Term Investments 7.5
Other Assets in Excess of Liabilities 1.5
-----
Total 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 industries shown above. Ratings allocations are as a
percentage of long-term investments. Industry allocations are as a percentage of
net assets. 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. Ratings allocations based
upon ratings as issued by Standard and Poor's and Moody's, respectively.
6
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 1-202-942-8090. 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.
In addition to filing a complete schedule of portfolio holdings with the
SEC each fiscal quarter, each Van Kampen fund makes portfolio holdings
information available by periodically providing the information on its
public web site, www.vankampen.com. Each Van Kampen fund provides a
complete schedule of portfolio holdings on the public web site on a
calendar-quarter basis approximately 30 days after the close of the
calendar quarter. Furthermore, each Van Kampen open-end fund provides
partial lists of its portfolio holdings (such as top 10 or top 15 fund
holdings) to the public web site each month with a delay of approximately
15 days.
You may obtain copies of a fund's fiscal quarter filings, or its monthly
or calendar-quarter web site postings, by contacting Van Kampen Client
Relations at 1-800-847-2424.
7
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 twelvemonth period ended June 30 is available without charge, upon
request, by calling 1-800-847-2424 or 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.
8
Expense Example
As a shareholder of the Fund, you incur 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 costs (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 3/1/04 - 8/31/04.
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, an $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. Therefore, the second line of the table is useful in
comparing ongoing costs, and will not help you determine the relative total
costs of owning different funds that have transactional costs, such as sales
charges (loads), and redemption fees, or exchange fees.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
-------------------------------------------------------
3/1/04 8/31/04 3/1/04-8/31/04
Class A
Actual................................ $1,000.00 $1,010.90 $5.05
Hypothetical.......................... 1,000.00 1,020.14 5.08
(5% annual return before expenses)
Class B
Actual................................ 1,000.00 1,005.58 8.87
Hypothetical.......................... 1,000.00 1,016.34 8.92
(5% annual return before expenses)
Class C
Actual................................ 1,000.00 1,005.58 8.72
Hypothetical.......................... 1,000.00 1,016.44 8.77
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 1.00%, 1.76%,
and 1.73% for Class A, B, and C Shares, respectively, multiplied by the
average account value over the period, multiplied by 184/366 (to reflect the
one-half year period).
Assumes all dividends and distributions were reinvested.
9
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2004
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
CORPORATE BONDS 85.0%
AEROSPACE & DEFENSE 1.7%
$ 785 Lockheed Martin Corp. ..................... 7.700% 06/15/08 $ 897,748
1,000 Lockheed Martin Corp. ..................... 8.200 12/01/09 1,194,988
2,020 Northrop Grumman Corp. .................... 7.125 02/15/11 2,325,466
2,070 Raytheon Co. .............................. 4.500 11/15/07 2,144,025
1,960 Raytheon Co. .............................. 8.300 03/01/10 2,349,113
275 Raytheon Co. .............................. 4.850 01/15/11 282,741
------------
9,194,081
------------
AUTOMOTIVE 6.5%
1,035 AutoNation, Inc. .......................... 9.000 08/01/08 1,187,662
1,945 DaimlerChrysler NA Holding Corp. .......... 7.300 01/15/12 2,200,668
2,915 DaimlerChrysler NA Holding Corp. .......... 8.500 01/18/31 3,566,351
375 Ford Motor Co. ............................ 7.450 07/16/31 368,757
555 Ford Motor Credit Co. ..................... 7.375 10/28/09 608,102
9,015 Ford Motor Credit Co. ..................... 7.250 10/25/11 9,727,230
1,380 General Motors Acceptance Corp. ........... 4.500 07/15/06 1,409,416
8,515 General Motors Acceptance Corp. ........... 6.875 09/15/11 8,927,186
7,450 General Motors Acceptance Corp. ........... 8.000 11/01/31 7,740,893
------------
35,736,265
------------
BANKING 5.4%
5,120 Bank of America Corp. ..................... 3.375 02/17/09 5,049,523
1,945 Citigroup, Inc. ........................... 6.000 02/21/12 2,138,150
3,820 Citigroup, Inc. ........................... 5.625 08/27/12 4,083,240
160 Citigroup, Inc. ........................... 6.625 06/15/32 174,688
5,355 JPMorgan Chase & Co. ...................... 6.750 02/01/11 5,993,948
905 MBNA America Bank NA....................... 7.125 11/15/12 1,030,697
4,030 MBNA Corp. ................................ 6.125 03/01/13 4,313,317
3,100 Wachovia Corp. ............................ 3.625 02/17/09 3,084,822
1,690 Washington Mutual Bank FA.................. 5.500 01/15/13 1,753,524
1,710 Washington Mutual, Inc. ................... 8.250 04/01/10 2,031,649
------------
29,653,558
------------
BROKERAGE 1.3%
2,930 Goldman Sachs Group, Inc. ................. 6.875 01/15/11 3,311,586
380 Goldman Sachs Group, Inc. ................. 6.600 01/15/12 424,293
1,115 Goldman Sachs Group, Inc. ................. 5.250 10/15/13 1,134,653
2,000 Lehman Brothers Holdings, Inc. ............ 8.500 05/01/07 2,275,554
------------
7,146,086
------------
CHEMICALS 0.8%
120 FMC Corp. ................................. 10.250 11/01/09 140,250
1,420 ICI Wilmington, Inc. ...................... 4.375 12/01/08 1,432,513
2,835 Sealed Air Corp., 144A--Private Placement
(a)........................................ 5.625 07/15/13 2,908,390
------------
4,481,153
------------
CONSTRUCTION MACHINERY 0.6%
3,115 Kennametal, Inc. .......................... 7.200 06/15/12 3,394,646
------------
</Table>
10 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2004 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
CONSUMER PRODUCTS 0.6%
$3,115 Xerox Corp. ............................... 7.125% 06/15/10 $ 3,317,475
------------
DIVERSIFIED MANUFACTURING 2.5%
2,260 Cooper Industries, Inc. ................... 5.250 07/01/07 2,382,673
540 Honeywell International, Inc. ............. 7.500 03/01/10 629,955
4,370 Honeywell International, Inc. ............. 6.125 11/01/11 4,809,561
1,450 Hutchison Whampoa International Ltd.,
144A--Private Placement (Cayman Islands)
(a)........................................ 5.450 11/24/10 1,493,246
1,890 Hutchison Whampoa International Ltd.,
144A--Private Placement (Cayman Islands)
(a)........................................ 6.500 02/13/13 1,998,448
475 Tyco International Group SA (Luxembourg)... 5.800 08/01/06 499,359
255 Tyco International Group SA (Luxembourg)... 6.750 02/15/11 285,341
1,275 Tyco International Group SA (Luxembourg)... 6.375 10/15/11 1,398,809
------------
13,497,392
------------
ELECTRIC 8.0%
1,595 Appalachian Power Co., Ser H............... 5.950 05/15/33 1,560,696
3,145 Arizona Public Service Co. ................ 5.800 06/30/14 3,300,574
825 Centerpoint Energy......................... 7.750 02/15/11 957,563
1,140 Cincinnati Gas & Electric Co. ............. 5.700 09/15/12 1,206,069
910 Cincinnati Gas & Electric Co., Ser A....... 5.400 06/15/33 828,692
1,030 Cincinnati Gas & Electric Co., Ser B....... 5.375 06/15/33 934,483
1,705 Columbus Southern Power Co., Ser D......... 6.600 03/01/33 1,841,647
1,495 Detroit Edison Co. ........................ 6.125 10/01/10 1,636,914
1,640 Duquesne Light Co., Ser O.................. 6.700 04/15/12 1,844,400
1,580 Entergy Gulf States, Inc. ................. 3.600 06/01/08 1,563,476
3,835 Exelon Corp. .............................. 6.750 05/01/11 4,281,954
1,930 FirstEnergy Corp., Ser B................... 6.450 11/15/11 2,091,109
560 Indianapolis Power & Light Co.,
144A--Private Placement (a)................ 6.300 07/01/13 596,952
1,245 Monongahela Power Co. ..................... 5.000 10/01/06 1,283,121
910 Nevada Power Co. .......................... 9.000 08/15/13 1,023,750
2,457 Niagara Mohawk Power Corp., Ser F.......... 7.625 10/01/05 2,574,195
1,450 Nisource Finance Corp. .................... 7.625 11/15/05 1,534,413
2,775 Ohio Edison Co. ........................... 5.450 05/01/15 2,796,884
745 Ohio Power Co., Ser G...................... 6.600 02/15/33 806,791
2,975 Pacific Gas & Electric Co. ................ 6.050 03/01/34 2,995,852
590 PSEG Energy Holdings....................... 7.750 04/16/07 629,825
1,400 PSEG Energy Holdings....................... 8.625 02/15/08 1,540,000
440 Southern CA Edison Co. .................... 5.000 01/15/14 448,180
845 Texas-New Mexico Power Co. ................ 6.250 01/15/09 894,569
590 TXU Corp., Ser J........................... 6.375 06/15/06 626,240
1,790 TXU Energy Co. ............................ 7.000 03/15/13 2,009,606
1,835 Westar Energy, Inc. ....................... 6.000 07/01/14 1,956,730
140 Wisconsin Electric Power................... 5.625 05/15/33 138,727
------------
43,903,412
------------
</Table>
See Notes to Financial Statements 11
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2004 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
ENTERTAINMENT 1.2%
$ 400 Time Warner, Inc. ......................... 6.875% 05/01/12 $ 445,840
650 Time Warner, Inc. ......................... 6.625 05/15/29 664,770
3,090 Time Warner, Inc. ......................... 7.625 04/15/31 3,536,088
1,725 Time Warner, Inc. ......................... 7.700 05/01/32 1,994,133
------------
6,640,831
------------
ENVIRONMENTAL SERVICES 1.6%
535 Allied Waste North America, Inc. .......... 6.500 11/15/10 537,675
810 Allied Waste North America, Inc., Ser B.... 8.500 12/01/08 893,025
1,185 Republic Services, Inc. ................... 6.750 08/15/11 1,330,874
1,220 Waste Management, Inc. .................... 7.000 10/15/06 1,316,395
1,745 Waste Management, Inc. .................... 7.375 08/01/10 2,010,092
2,600 Waste Management, Inc. .................... 7.000 07/15/28 2,851,917
------------
8,939,978
------------
FOOD/BEVERAGE 3.0%
2,000 ConAgra Foods, Inc. ....................... 7.500 09/15/05 2,093,878
5,025 Kraft Foods, Inc. ......................... 5.625 11/01/11 5,327,379
1,015 Kraft Foods, Inc. ......................... 6.250 06/01/12 1,111,034
2,200 Miller Brewing Co., 144A--Private Placement
(a)........................................ 4.250 08/15/08 2,240,143
295 Smithfield Foods, Inc. .................... 7.750 05/15/13 315,650
310 Smithfield Foods, Inc., 144A--Private
Placement (a).............................. 7.000 08/01/11 322,400
2,970 Smithfield Foods, Inc., Ser B.............. 8.000 10/15/09 3,244,725
1,705 YUM! Brands, Inc. ......................... 8.875 04/15/11 2,114,515
------------
16,769,724
------------
GAMING 2.4%
1,555 Harrahs Operating Co., 144A--Private
Placement (a).............................. 5.500 07/01/10 1,594,175
3,620 Harrahs Operating Co., Inc. ............... 8.000 02/01/11 4,168,705
2,840 MGM Mirage, Inc. .......................... 8.500 09/15/10 3,209,200
1,110 MGM Mirage, Inc., 144A--Private Placement
(a)........................................ 6.750 09/01/12 1,137,750
1,385 Park Place Entertainment Corp. ............ 7.500 09/01/09 1,540,813
1,615 Station Casinos, Inc. ..................... 6.000 04/01/12 1,627,113
------------
13,277,756
------------
HEALTHCARE 5.1%
4,835 Aetna, Inc. ............................... 7.375 03/01/06 5,160,560
925 Aetna, Inc. ............................... 7.875 03/01/11 1,091,211
1,085 AmerisourceBergen Corp. ................... 8.125 09/01/08 1,196,213
4,420 Anthem Insurance Cos., Inc., 144A--Private
Placement (a).............................. 9.125 04/01/10 5,488,981
1,055 Fisher Scientific International,
144A--Private Placement (a)................ 6.750 08/15/14 1,094,563
2,055 HCA, Inc. ................................. 6.300 10/01/12 2,133,141
365 HCA, Inc. ................................. 9.000 12/15/14 444,139
</Table>
12 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2004 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
$1,010 HCA, Inc. ................................. 7.190% 11/15/15 $ 1,091,873
4,270 Health Net, Inc. (b)....................... 8.375/9.875 04/15/11 5,131,912
1,435 Tenet Healthcare Corp. .................... 7.375 02/01/13 1,334,550
2,370 Tenet Healthcare Corp. .................... 6.875 11/15/31 1,884,150
1,840 UnitedHealth Group, Inc. .................. 5.200 01/17/07 1,932,011
------------
27,983,304
------------
HOME CONSTRUCTION 0.2%
1,260 D.R. Horton, Inc. ......................... 6.875 05/01/13 1,360,800
------------
INDEPENDENT ENERGY 1.1%
540 Kerr-McGee Corp. .......................... 5.875 09/15/06 568,244
1,125 Kerr-McGee Corp. .......................... 6.625 10/15/07 1,223,184
945 Kerr-McGee Corp. .......................... 6.875 09/15/11 1,052,548
2,625 Kerr-McGee Corp. .......................... 7.875 09/15/31 3,061,055
------------
5,905,031
------------
INTEGRATED ENERGY 4.3%
4,520 Amerada Hess Corp. ........................ 7.875 10/01/29 5,169,547
1,870 Conoco Funding Co. (Canada)................ 6.350 10/15/11 2,089,441
475 Consumers Energy Co., Ser B................ 5.375 04/15/13 486,283
1,880 Consumers Energy Co., Ser F................ 4.000 05/15/10 1,836,980
510 Consumers Energy Co., Ser H................ 4.800 02/17/09 526,659
1,175 Marathon Oil Corp. ........................ 5.375 06/01/07 1,238,274
3,410 Pemex Project Funding Master Trust......... 8.000 11/15/11 3,895,925
2,860 Pemex Project Funding Master Trust......... 7.375 12/15/14 3,143,140
1,035 Pemex Project Funding Master Trust......... 8.625 02/01/22 1,182,488
995 Pemex Project, Inc. ....................... 9.125 10/13/10 1,193,503
150 Petro-Canada (Canada)...................... 4.000 07/15/13 139,855
1,905 Petro-Canada (Canada)...................... 5.350 07/15/33 1,714,576
650 Trans Continental Gas Pipe Line Corp., Ser
B.......................................... 8.875 07/15/12 791,375
------------
23,408,046
------------
LIFE INSURANCE 0.8%
190 Metlife, Inc. ............................. 6.125 12/01/11 207,695
920 Nationwide Financial Services, Inc. ....... 6.250 11/15/11 1,011,528
1,000 Prudential Hldgs, LLC, Ser B, 144A--Private
Placement (a).............................. 7.245 12/18/23 1,172,809
1,755 Prudential Hldgs, LLC, Ser C, 144A--Private
Placement (a).............................. 8.695 12/18/23 2,223,825
------------
4,615,857
------------
LODGING 2.4%
3,880 Hilton Hotels Corp. ....................... 7.625 12/01/12 4,452,300
2,360 Hyatt Equities, LLC, 144A--Private
Placement (a).............................. 6.875 06/15/07 2,532,735
1,080 Marriott International, Ser D.............. 8.125 04/01/05 1,114,312
1,085 Marriott International, Ser E.............. 7.000 01/15/08 1,191,981
</Table>
See Notes to Financial Statements 13
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2004 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
LODGING (CONTINUED)
$1,005 Starwood Hotels & Resorts Worldwide,
Inc. ...................................... 7.375% 05/01/07 $ 1,080,375
2,610 Starwood Hotels & Resorts Worldwide,
Inc. ...................................... 7.875 05/01/12 2,936,250
------------
13,307,953
------------
MEDIA-CABLE 1.6%
1,805 Comcast Cable Communications, Inc. ........ 8.375 05/01/07 2,030,468
2,070 Comcast Cable Communications, Inc. ........ 6.750 01/30/11 2,294,990
240 Comcast Cable Communications, Inc. ........ 7.125 06/15/13 271,297
1,755 Comcast Corp. ............................. 6.500 01/15/15 1,893,417
2,095 Echostar DBS Corp. ........................ 6.375 10/01/11 2,110,713
------------
8,600,885
------------
MEDIA-NONCABLE 2.7%
2,500 Clear Channel Communications, Inc. ........ 7.250 10/15/27 2,732,290
3,000 News America Hldg, Inc. ................... 8.875 04/26/23 3,882,357
510 News America, Inc. ........................ 7.125 04/08/28 565,390
2,135 News America, Inc. ........................ 7.300 04/30/28 2,416,002
1,650 News America, Inc. ........................ 7.280 06/30/28 1,861,913
3,150 WPP Finance Corp., 144A--Private Placement
(United Kingdom) (a)....................... 5.875 06/15/14 3,232,221
------------
14,690,173
------------
METALS 0.9%
1,615 Inco Ltd. (Canada)......................... 7.750 05/15/12 1,890,653
2,880 Inco Ltd. (Canada)......................... 7.200 09/15/32 3,212,876
------------
5,103,529
------------
NATURAL GAS PIPELINES 1.5%
735 Consolidated Natural Gas Co., Ser A........ 5.000 03/01/14 733,294
2,050 Consolidated Natural Gas Co., Ser C........ 6.250 11/01/11 2,241,033
1,735 Gulfterra Energy Partners LP, Ser B........ 6.250 06/01/10 1,919,344
982 Gulfterra Energy Partners LP, Ser B........ 8.500 06/01/10 1,152,623
490 Northwest Pipeline Corp. .................. 8.125 03/01/10 554,313
1,470 Texas Eastern Transmission Corp. .......... 7.000 07/15/32 1,653,596
------------
8,254,203
------------
NONCAPTIVE-CONSUMER FINANCE 4.0%
4,660 American Express Co. ...................... 5.500 09/12/06 4,904,981
4,500 American General Finance Corp. ............ 4.625 09/01/10 4,558,640
5,220 Countrywide Home Loans, Inc. .............. 3.250 05/21/08 5,141,079
1,000 Household Finance Corp. ................... 7.875 03/01/07 1,113,682
4,040 Household Finance Corp. ................... 6.750 05/15/11 4,544,842
1,980 Newcourt Credit Group, Ser B (Canada)...... 6.875 02/16/05 2,022,847
------------
22,286,071
------------
NONCAPTIVE-DIVERSIFIED FINANCE 2.0%
1,165 CIT Group, Inc. ........................... 7.375 04/02/07 1,285,504
3,845 General Electric Capital Corp. ............ 6.750 03/15/32 4,381,935
2,000 Heller Financial, Inc. .................... 6.375 03/15/06 2,112,392
</Table>
14 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2004 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
NONCAPTIVE-DIVERSIFIED FINANCE (CONTINUED)
$ 800 Household Finance Corp. ................... 4.125% 12/15/08 $ 810,391
2,500 International Lease Finance Corp. ......... 8.375 12/15/04 2,546,663
------------
11,136,885
------------
OIL FIELD SERVICES 0.6%
2,140 Nexen, Inc. (Canada)....................... 5.050 11/20/13 2,131,889
645 Panhandle Eastern Pipe Line Co. ........... 2.750 03/15/07 629,214
345 Plains E&P Co., 144A--Private Placement
(a)........................................ 7.125 06/15/14 367,425
------------
3,128,528
------------
PACKAGING 0.3%
1,455 Packaging Corp. of America................. 5.750 08/01/13 1,495,228
------------
PAPER 4.2%
3,430 Abitibi-Consolidated, Inc. (Canada)........ 8.550 08/01/10 3,704,400
2,490 Abitibi-Consolidated, Inc. (Canada)........ 8.850 08/01/30 2,483,775
6,010 Bowater Canada Finance (Canada)............ 7.950 11/15/11 6,400,848
2,025 International Paper Co. ................... 4.250 01/15/09 2,038,960
1,915 Sappi Papier Hldg AG, 144A--Private
Placement (Austria) (a).................... 6.750 06/15/12 2,087,342
1,100 Weyerhaeuser Co. .......................... 6.000 08/01/06 1,160,676
4,700 Weyerhaeuser Co. .......................... 6.750 03/15/12 5,266,773
------------
23,142,774
------------
PHARMACEUTICALS 0.8%
2,000 Abbott Laboratories........................ 5.625 07/01/06 2,104,754
2,000 Eli Lilly & Co. ........................... 5.500 07/15/06 2,101,856
------------
4,206,610
------------
PROPERTY & CASUALTY 3.0%
2,725 AIG Sunamerica Global Financial,
144A--Private Placement (a)................ 6.300 05/10/11 3,007,610
4,480 Farmers Exchange Capital, 144A--Private
Placement (a).............................. 7.050 07/15/28 4,565,559
2,721 Farmers Insurance Exchange Surplus,
144A--Private Placement (a)................ 8.625 05/01/24 3,221,903
575 Hartford Financial Services Group.......... 2.375 06/01/06 570,039
4,240 Mantis Reef Ltd., 144A--Private Placement
(Australia) (a)............................ 4.692 11/14/08 4,296,138
845 Nationwide Mutual Insurance Co.,
144A--Private Placement (a)................ 8.250 12/01/31 1,044,581
------------
16,705,830
------------
RAILROADS 1.1%
1,500 CSX Corp. ................................. 6.750 03/15/11 1,663,052
4,000 Union Pacific Corp. ....................... 8.350 05/01/25 4,319,160
------------
5,982,212
------------
REAL ESTATE INVESTMENT TRUSTS 0.9%
525 EOP Operating LP........................... 4.750 03/15/14 502,366
411 Istar Financial, Inc. ..................... 8.750 08/15/08 472,140
</Table>
See Notes to Financial Statements 15
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2004 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
$1,945 Reckson Operating Partnership.............. 5.150% 01/15/11 $ 1,945,969
1,345 Rouse Co. ................................. 3.625 03/15/09 1,257,923
545 Rouse Co. ................................. 5.375 11/26/13 513,517
------------
4,691,915
------------
REFINING 0.2%
895 Ashland, Inc. ............................. 7.830 08/15/05 933,032
250 Vintage Petroleum, Inc. ................... 7.875 05/15/11 262,500
------------
1,195,532
------------
RETAIL 2.9%
465 CVS Corp. ................................. 5.625 03/15/06 485,923
800 CVS Corp. ................................. 3.875 11/01/07 812,821
2,000 Federated Department Stores, Inc. ......... 6.625 09/01/08 2,198,622
1,500 Federated Department Stores, Inc. ......... 6.300 04/01/09 1,638,041
325 Federated Department Stores, Inc. ......... 6.900 04/01/29 355,449
870 Lowe's Companies, Inc. .................... 6.875 02/15/28 998,981
1,710 Lowe's Companies, Inc. .................... 6.500 03/15/29 1,885,885
2,970 May Department Stores Co. ................. 5.950 11/01/08 3,172,180
620 May Department Stores Co. ................. 6.700 09/15/28 646,906
1,904 May Department Stores Co. ................. 7.875 03/01/30 2,268,353
295 May Department Stores Co. ................. 6.900 01/15/32 311,978
365 Toys R US, Inc. ........................... 7.875 04/15/13 362,719
1,025 Toys R US, Inc. ........................... 7.375 10/15/18 940,438
------------
16,078,296
------------
SUPERMARKETS 1.0%
1,845 Albertson's, Inc. ......................... 7.500 02/15/11 2,141,004
2,810 Kroger Co. ................................ 7.500 04/01/31 3,264,329
------------
5,405,333
------------
TECHNOLOGY 1.1%
1,240 Electronic Data Systems Corp. ............. 7.125 10/15/09 1,323,472
1,675 Electronic Data Systems Corp., Ser B....... 6.500 08/01/13 1,660,283
1,437 Iron Mountain, Inc. ....................... 7.750 01/15/15 1,501,665
685 Iron Mountain, Inc. ....................... 6.625 01/01/16 647,325
680 Xerox Corp. ............................... 6.875 08/15/11 707,200
------------
5,839,945
------------
TEXTILE 0.2%
1,160 Mohawk Industries, Inc., Ser D............. 7.200 04/15/12 1,336,160
------------
TOBACCO 0.8%
2,165 Altria Group, Inc. ........................ 7.000 11/04/13 2,286,004
1,970 Altria Group, Inc. ........................ 7.750 01/15/27 2,088,728
------------
4,374,732
------------
TRANSPORTATION SERVICES 0.4%
2,300 Fedex Corp. ............................... 2.650 04/01/07 2,270,887
------------
</Table>
16 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2004 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
WIRELESS COMMUNICATIONS 0.4%
$1,690 AT&T Wireless Services, Inc. .............. 7.875% 03/01/11 $ 1,994,475
125 AT&T Wireless Services, Inc. .............. 8.750 03/01/31 162,269
------------
2,156,744
------------
WIRELINE COMMUNICATIONS 4.9%
2,355 AT&T Corp. (b)............................. 8.750/9.750 11/15/31 2,484,525
3,400 Deutsche Telekom International Finance BV
(Netherlands).............................. 8.750 06/15/30 4,371,230
1,595 France Telecom SA (Variable Rate Coupon)
(France)................................... 9.500 03/01/31 2,105,749
1,500 Sprint Capital Corp. ...................... 7.125 01/30/06 1,590,423
1,000 Sprint Capital Corp. ...................... 6.125 11/15/08 1,083,267
400 Sprint Capital Corp. ...................... 8.750 03/15/32 507,934
1,900 Telecom Italia Capital, 144A--Private
Placement (Luxembourg) (a)................. 4.000 11/15/08 1,909,988
1,000 Verizon Communications, Inc. .............. 7.510 04/01/09 1,138,196
5,570 Verizon Communications, Inc. 6.940 04/15/28 5,933,977
4,640 Verizon Global Funding Corp. .............. 7.750 12/01/30 5,511,759
265 Verizon New England, Inc. ................. 6.500 09/15/11 291,600
------------
26,928,648
------------
TOTAL CORPORATE BONDS 85.0%................................................. 467,544,468
------------
MORTGAGE BACKED SECURITIES 0.6%
2,190 World Financial Property, 144A--Private
Placement (a).............................. 6.910 09/01/13 2,446,881
881 World Financial Property, 144A--Private
Placement (a).............................. 6.950 09/01/13 986,852
------------
TOTAL MORTGAGE BACKED SECURITIES............................................. 3,433,733
------------
GOVERNMENT OBLIGATIONS 4.4%
2,000 United Mexican States (Mexico)............. 10.375 02/17/09 2,486,000
2,665 United Mexican States (Mexico)............. 8.375 01/14/11 3,143,367
560 United Mexican States (Mexico)............. 8.000 09/24/22 632,800
3,405 United Mexican States (Mexico)............. 8.300 08/15/31 3,912,345
6,113 United States Treasury Bonds (STRIPS)
(c)........................................ 0.000 02/15/25 6,875,404
6,607 United States Treasury Bonds (STRIPS)
(c)........................................ 0.000 05/15/25 7,052,262
------------
TOTAL GOVERNMENT OBLIGATIONS................................................. 24,102,178
------------
ASSET BACKED SECURITIES 1.0%
1,029 Continental Airlines, Inc. ................ 6.545 08/02/20 973,337
170 Continental Airlines, Inc. ................ 6.648 03/15/19 159,170
</Table>
See Notes to Financial Statements 17
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2004 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES (CONTINUED)
$1,991 Continental Airlines, Inc. ................ 6.900% 01/02/18 $ 1,897,634
2,115 Ras Laffan Liquefied Natural Gas Co. Ltd.,
144A--Private Placement (Qatar) (a)........ 8.294 03/15/14 2,499,613
------------
TOTAL ASSET BACKED SECURITIES................................................ 5,529,754
------------
TOTAL LONG-TERM INVESTMENTS 91.0%
(Cost $474,877,558)........................................................ 500,610,133
------------
SHORT-TERM INVESTMENTS 7.5%
REPURCHASE AGREEMENT 7.0%
Bank of America Securities LLC ($38,544,000 par collateralized by
U.S. Government obligations in a pooled cash account, interest rate
of 1.53%, dated 08/31/04, to be sold on 09/01/04 at $38,545,638)... 38,544,000
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS 0.5%
United States Treasury Bills ($1,500,000 par, yielding 1.684%,
01/13/05 maturity) (d)............................................. 1,490,598
United States Treasury Bills ($900,000 par, yielding 1.418%,
09/23/04 maturity) (d)............................................. 899,220
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS..................................... 2,389,818
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $40,934,276)......................................................... 40,933,818
------------
TOTAL INVESTMENTS 98.5%
(Cost $515,811,834)........................................................ 541,543,951
OTHER ASSETS IN EXCESS OF LIABILITIES 1.5%.................................. 8,299,018
------------
NET ASSETS 100.0%............................................................ $549,842,969
============
</Table>
Percentages are calculated as a percentage of net assets.
(a) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(b) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(c) Interest only strip.
(d) All or a portion of these securities have been physically segregated in
connection with open futures contracts.
18 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
August 31, 2004
<Table>
ASSETS:
Total Investments (Cost $515,811,834)....................... $541,543,951
Receivables:
Interest.................................................. 8,736,722
Fund Shares Sold.......................................... 1,262,289
Investments Sold.......................................... 1,111,788
Other....................................................... 118,184
------------
Total Assets............................................ 552,772,934
------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 1,293,651
Distributor and Affiliates................................ 486,115
Variation Margin on Futures............................... 367,682
Income Distributions...................................... 258,354
Investment Advisory Fee................................... 191,888
Custodian Bank............................................ 1,373
Trustees' Deferred Compensation and Retirement Plans........ 169,952
Accrued Expenses............................................ 160,950
------------
Total Liabilities....................................... 2,929,965
------------
NET ASSETS.................................................. $549,842,969
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $546,029,917
Net Unrealized Appreciation................................. 24,131,475
Accumulated Undistributed Net Investment Income............. (2,623,226)
Accumulated Net Realized Loss............................... (17,695,197)
------------
NET ASSETS.................................................. $549,842,969
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $394,675,155 and 58,737,812 shares of
beneficial interest issued and outstanding)............. $ 6.72
Maximum sales charge (4.75%* of offering price)......... .34
------------
Maximum offering price to public........................ $ 7.06
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $126,520,247 and 18,873,003 shares of
beneficial interest issued and outstanding)............. $ 6.70
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $28,647,567 and 4,272,285 shares of
beneficial interest issued and outstanding)............. $ 6.71
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements 19
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended August 31, 2004
<Table>
INVESTMENT INCOME:
Interest.................................................... $29,900,464
Other....................................................... 6,975
-----------
Total Income............................................ 29,907,439
-----------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $869,571, $1,345,223 and $289,881,
respectively)............................................. 2,504,675
Investment Advisory Fee..................................... 2,184,337
Shareholder Services........................................ 1,161,142
Custody..................................................... 66,425
Trustees' Fees and Related Expenses......................... 34,230
Legal....................................................... 20,562
Other....................................................... 361,249
-----------
Total Expenses.......................................... 6,332,620
Less Credits Earned on Cash Balances.................... 14,301
-----------
Net Expenses............................................ 6,318,319
-----------
NET INVESTMENT INCOME....................................... $23,589,120
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 7,407,742
Futures................................................... 1,610
-----------
Net Realized Gain........................................... 7,409,352
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 19,889,383
-----------
End of the Period:
Investments............................................. 25,732,117
Futures................................................. (1,600,642)
-----------
24,131,475
-----------
Net Unrealized Appreciation During the Period............... 4,242,092
-----------
NET REALIZED AND UNREALIZED GAIN............................ $11,651,444
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $35,240,564
===========
</Table>
20 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 2004 AUGUST 31, 2003
---------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income..................................... $ 23,589,120 $ 20,558,844
Net Realized Gain/Loss.................................... 7,409,352 (470,540)
Net Unrealized Appreciation During the Period............. 4,242,092 15,474,182
------------- -------------
Change in Net Assets from Operations...................... 35,240,564 35,562,486
------------- -------------
Distributions from Net Investment Income:
Class A Shares.......................................... (18,155,899) (16,543,987)
Class B Shares.......................................... (5,932,410) (6,542,723)
Class C Shares.......................................... (1,295,039) (1,386,369)
------------- -------------
(25,383,348) (24,473,079)
------------- -------------
Return of Capital Distribution:
Class A Shares.......................................... (148,842) -0-
Class B Shares.......................................... (45,956) -0-
Class C Shares.......................................... (10,002) -0-
------------- -------------
(204,800) -0-
------------- -------------
Total Distributions....................................... (25,588,148) (24,473,079)
------------- -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES....... 9,652,416 11,089,407
------------- -------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................. 213,332,113 295,935,507
Net Asset Value of Shares Issued Through Dividend
Reinvestment............................................ 21,916,096 20,028,626
Cost of Shares Repurchased................................ (178,594,538) (225,767,690)
------------- -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS........ 56,653,671 90,196,443
------------- -------------
TOTAL INCREASE IN NET ASSETS.............................. 66,306,087 101,285,850
NET ASSETS:
Beginning of the Period................................... 483,536,882 382,251,032
------------- -------------
End of the Period (Including accumulated undistributed net
investment income of ($2,623,226) and ($1,337,620),
respectively)........................................... $ 549,842,969 $ 483,536,882
============= =============
</Table>
See Notes to Financial Statements 21
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED AUGUST 31,
CLASS A SHARES ----------------------------------------------------
2004 2003 2002 (c) 2001 2000
----------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD... $ 6.58 $ 6.39 $ 6.75 $ 6.43 $ 6.53
------ ------ ------ ------ ------
Net Investment Income.................... .33 .33(a) .37 .41 .43(a)
Net Realized and Unrealized Gain/Loss.... .16 .25 (.33) .33 (.12)
------ ------ ------ ------ ------
Total from Investment Operations........... .49 .58 .04 .74 .31
Less Distributions from Net Investment
Income................................... .35 .39 .40 .42 .41
Return of Capital Distributions.......... -0-(d) -0- -0- -0- -0-
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD......... $ 6.72 $ 6.58 $ 6.39 $ 6.75 $ 6.43
====== ====== ====== ====== ======
Total Return (b)........................... 7.55% 9.20% 0.54% 12.10% 5.01%
Net Assets at End of the Period (In
millions)................................ $394.7 $318.4 $246.5 $221.4 $167.7
Ratio of Expenses to Average Net Assets.... .98% 1.01% 1.03% 1.07% 1.15%
Ratio of Net Investment Income to Average
Net Assets............................... 4.80% 4.98% 5.48% 6.56% 6.80%
Portfolio Turnover......................... 38% 46% 82% 112% 94%
</Table>
(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 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 4% may be
imposed on certain redemptions made within one year of purchase. If the
sales charges were included, total returns would be lower. These returns
include combined Rules 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.
(c) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium on fixed income securities. The effect of this
change for the year ended August 31, 2002, was to decrease net investment
income per share by $.03, increase net realized and unrealized gains and
losses per share by $.03 and decrease the Ratio of Net Investment Income to
Average Net Assets from 6.00% to 5.48%. Per share, ratios and supplemental
data for periods prior to August 31, 2002, have not been restated to reflect
this change in presentation.
(d) Amount is less than $.01.
22 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED AUGUST 31,
CLASS B SHARES ---------------------------------------------------
2004 2003 2002 (c) 2001 2000
---------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD... $ 6.57 $ 6.38 $ 6.74 $ 6.42 $6.51
------ ------ ------ ------ -----
Net Investment Income.................... .26 .28(a) .32 .37 .39(a)
Net Realized and Unrealized Gain/Loss.... .16 .25 (.33) .32 (.12)
------ ------ ------ ------ -----
Total from Investment Operations........... .42 .53 (.01) .69 .27
Less Distributions from Net Investment
Income................................... .29 .34 .35 .37 .36
Return of Capital Distributions.......... -0-(d) -0- -0- -0- -0-
------ ------ ------ ------ -----
NET ASSET VALUE, END OF THE PERIOD......... $ 6.70 $ 6.57 $ 6.38 $ 6.74 $6.42
====== ====== ====== ====== =====
Total Return (b)........................... 6.59% 8.38% -0.22% 11.28% 4.34%
Net Assets at End of the Period (In
millions)................................ $126.5 $135.6 $112.3 $ 93.8 $54.5
Ratio of Expenses to Average Net Assets.... 1.75% 1.77% 1.78% 1.82% 1.92%
Ratio of Net Investment Income to Average
Net Assets............................... 4.06% 4.23% 4.73% 5.81% 6.03%
Portfolio Turnover......................... 38% 46% 82% 112% 94%
</Table>
(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 4%, charged on certain redemptions
made within the first and second years 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 1%
and do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or redemption of Fund shares.
(c) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium on fixed income securities. The effect of this
change for the year ended August 31, 2002, was to decrease net investment
income per share by $.03, increase net realized and unrealized gains and
losses per share by $.03 and decrease the Ratio of Net Investment Income to
Average Net Assets from 5.25% to 4.73%. Per share, ratios and supplemental
data for periods prior to August 31, 2002, have not been restated to reflect
this change in presentation.
(d) Amount is less than $.01.
See Notes to Financial Statements 23
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED AUGUST 31,
CLASS C SHARES -------------------------------------------------
2004 2003 2002 (c) 2001 2000
-------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.... $6.57 $6.38 $ 6.74 $ 6.42 $6.51
----- ----- ------ ------ -----
Net Investment Income..................... .27 .28(a) .32 .37 .39(a)
Net Realized and Unrealized Gain/Loss..... .16 .25 (.33) .32 (.12)
----- ----- ------ ------ -----
Total from Investment Operations............ .43 .53 (.01) .69 .27
Less Distributions from Net Investment
Income.................................... .29 .34 .35 .37 .36
Return of Capital Distributions........... -0-(e) -0- -0- -0- -0-
----- ----- ------ ------ -----
NET ASSET VALUE, END OF THE PERIOD.......... $6.71 $6.57 $ 6.38 $ 6.74 $6.42
===== ===== ====== ====== =====
Total Return (b)............................ 6.59%(d) 8.38% -0.22% 11.28% 4.34%
Net Assets at End of the Period (In
millions)................................. $28.6 $29.6 $ 23.4 $ 18.9 $12.0
Ratio of Expenses to Average Net Assets..... 1.73%(d) 1.77% 1.78% 1.84% 1.92%
Ratio of Net Investment Income to Average
Net Assets................................ 4.07%(d) 4.22% 4.73% 5.79% 6.03%
Portfolio Turnover.......................... 38% 46% 82% 112% 94%
</Table>
(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 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(c) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium on fixed income securities. The effect of this
change for the year ended August 31, 2002, was to decrease net investment
income per share by $.03, increase net realized and unrealized gains and
losses per share by $.03 and decrease the Ratio of Net Investment Income to
Average Net Assets from 5.25% to 4.73%. Per share, ratios and supplemental
data for periods prior to August 31, 2002, have not been restated to reflect
this change in presentation.
(d) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
than 1% (See footnote 6).
(e) Amount is less than $.01.
24 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2004
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Corporate Bond 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 primary investment objective is to seek to provide current income with
preservation of capital. The Fund commenced investment operations on September
23, 1971. The distribution of the Fund's Class B and Class C Shares commenced on
September 28, 1992 and August 30, 1993, 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 Fixed income investments are stated at value using market
quotations or indications of value obtained from an independent pricing service.
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. Listed and
unlisted 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 as noted above, valuations are determined in
accordance with procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange in 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 invests in repurchase agreements, which are short-term investments
in which the Fund acquires ownership of a debt security and the seller agrees to
repurchase the security at a future time and specified price. The Fund may
invest independently in repurchase agreements, or transfer uninvested cash
balances into a pooled cash account along with other investment companies
advised by Van Kampen Asset Management (the "Adviser") or its affiliates, the
daily aggregate of which is invested in repurchase agreements. Repurchase
agreements are fully collateralized by the underlying debt security. The Fund
will make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian bank. The seller is required
to maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.
C. INCOME AND EXPENSES Interest income is recorded on an accrual basis.
Discounts on debt securities purchased 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
distribution and service fees and transfer agency costs which are unique to each
class of shares.
25
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2004 continued
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At August 31, 2004, the Fund had an accumulated capital loss carryforward
for tax purposes of $18,983,081 which will expire between August 31, 2008 and
August 31, 2012.
At August 31, 2004, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $518,040,444
============
Gross tax unrealized appreciation........................... $ 26,577,475
Gross tax unrealized depreciation........................... (3,073,968)
------------
Net tax unrealized appreciation on investments.............. $ 23,503,507
============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on futures transactions. All
short-term capital gains and a portion of futures gains are included in ordinary
income for tax purposes.
The tax character of distributions paid during 2004 and 2003 was as follows:
<Table>
<Caption>
2004 2003
Distribution paid from:
Ordinary Income........................................... $25,453,701 $24,512,386
Long-term capital gain.................................... -- --
Return of Capital......................................... 204,800 --
----------- -----------
$25,658,501 $24,512,386
=========== ===========
</Table>
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under U.S. generally accepted accounting principles and
federal income tax purposes, permanent differences between book and tax basis
reporting have been identified and appropriately reclassified on the Statement
of Assets and Liabilities. Permanent book and tax differences of $22,379 related
to the recognition of net realized losses of paydowns of mortgage pool
obligations, $2,950 related to investments in other regulated investment
companies were reclassified from accumulated net realized loss to accumulated
undistributed net investment income. In addition, permanent book and tax
differences of $6,200 relating to fee income received on tender offers were
reclassified from accumulated undistributed net investment income to accumulated
net realized loss. In addition, permanent book and tax differences of $204,800
relating to return of capital distributions, $4,015 relating to nondeductible
excise taxes paid have been reclassified from accumulated undistributed net
investment income to capital. Additionally, a permanent book and tax difference
of $485,478
26
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2004 continued
related to book to tax amortization differences were reclassified from
accumulated undistributed net investment income to accumulated net realized
loss.
Net realized gains or losses may differ for financial and tax reporting
purposes as a result of post October losses which are not realized for tax
purposes until the first day of the following fiscal year, gains or losses
recognized for tax purposes on open futures transactions at August 31, 2004 and
the deferral of losses relating to wash sale transactions.
F. EXPENSE REDUCTIONS During the year ended August 31, 2004, the Fund's custody
fee was reduced by $14,301 as a result of credits earned on cash balances.
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
First $150 million.......................................... .50%
Next $100 million........................................... .45%
Next $100 million........................................... .40%
Over $350 million........................................... .35%
</Table>
For the year ended August 31, 2004, the Fund recognized expenses of
approximately $20,600 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Fund, of which a trustee of the Fund
is an affiliated person.
Under an Accounting Services agreement, the Adviser provides accounting
services to the Fund. The Adviser allocates the cost of such services to each
fund. For the year ended August 31, 2004, the Fund recognized expenses of
approximately $34,400 representing Van Kampen Investments Inc.'s or its
affiliates (collectively "Van Kampen") cost of providing accounting services to
the Fund, which are reported as part of "Other" expenses in 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 year ended
August 31, 2004, the Fund recognized expenses of approximately $978,500
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
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 $72,000 are
included in "Other" assets on the Statement of Assets and Liabilities at August
31, 2004. 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
27
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2004 continued
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.
3. CAPITAL TRANSACTIONS
At August 31, 2004, capital aggregated $394,552,366, $123,314,283 and
$28,163,268 for Classes A, B and C, respectively. For the year ended August 31,
2004, transactions were as follows:
<Table>
<Caption>
SHARES VALUE
Sales:
Class A................................................... 25,621,755 $ 171,882,313
Class B................................................... 4,692,580 31,438,594
Class C................................................... 1,492,686 10,011,206
----------- -------------
Total Sales................................................. 31,807,021 $ 213,332,113
=========== =============
Dividend Reinvestment:
Class A................................................... 2,402,750 $ 16,118,720
Class B................................................... 721,928 4,835,848
Class C................................................... 143,536 961,528
----------- -------------
Total Dividend Reinvestment................................. 3,268,214 $ 21,916,096
=========== =============
Repurchases:
Class A................................................... (17,650,117) $(118,163,230)
Class B................................................... (7,184,406) (47,954,023)
Class C................................................... (1,866,395) (12,477,285)
----------- -------------
Total Repurchases........................................... (26,700,918) $(178,594,538)
=========== =============
</Table>
28
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2004 continued
At August 31, 2003, capital aggregated $324,864,449, $135,041,913 and
$29,678,699 for Classes A, B and C, respectively. For the year ended August 31,
2003, transactions were as follows:
<Table>
<Caption>
SHARES VALUE
Sales:
Class A................................................... 33,860,873 $ 223,054,574
Class B................................................... 8,733,393 57,165,431
Class C................................................... 2,395,255 15,715,502
----------- -------------
Total Sales................................................. 44,989,521 $ 295,935,507
=========== =============
Dividend Reinvestment:
Class A................................................... 2,118,750 $ 13,930,487
Class B................................................... 775,621 5,088,552
Class C................................................... 153,893 1,009,587
----------- -------------
Total Dividend Reinvestment................................. 3,048,264 $ 20,028,626
=========== =============
Repurchases:
Class A................................................... (26,177,791) $(172,148,255)
Class B................................................... (6,476,025) (42,378,021)
Class C................................................... (1,716,574) (11,241,414)
----------- -------------
Total Repurchases........................................... (34,370,390) $(225,767,690)
=========== =============
</Table>
Class B Shares purchased on or after June 1, 1996, and any dividend
reinvestment 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 years ended August 31, 2004 and 2003, 618,613
and 492,903 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 on such shares,
automatically convert to Class A Shares ten years after the end of the calendar
month in which the shares were purchased. Class C Shares purchased on or after
January 1, 1997 do not possess a conversion feature. For the years ended August
31, 2004 and 2003, no Class C Shares converted to Class A Shares. 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
redemptions made within five
29
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2004 continued
years of the purchase for Class B and one year of the purchase for Class C as
detailed in the following schedule.
<Table>
<Caption>
CONTINGENT DEFERRED
SALES CHARGE
AS A PERCENTAGE
OF DOLLAR AMOUNT
SUBJECT TO CHARGE
--------------------------
YEAR OF REDEMPTION CLASS B CLASS C
First....................................................... 4.00% 1.00%
Second...................................................... 4.00% None
Third....................................................... 3.00% None
Fourth...................................................... 2.50% None
Fifth....................................................... 1.50% None
Sixth and Thereafter........................................ None None
</Table>
For the year ended August 31, 2004, Van Kampen, as Distributor for the Fund,
received commissions on sales of the Fund's Class A Shares of approximately
$415,900 and CDSC on redeemed shares of approximately $337,300. 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 $211,368,796 and $183,749,966,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in 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. Risk may arise as a result of the potential inability of the
counterparties to meet the terms of their contracts.
During the period, the Fund invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in futures on U.S. Treasury Notes. 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 futures
commission merchant pursuant to rules and regulations promulgated under 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). The
30
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2004 continued
risk of loss associated with a futures contract is in excess of the variation
margin reflected on the statement of Assets and Liabilities.
Transactions in futures contracts for the year ended August 31, 2004, were
as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at August 31, 2003.............................. 1,173
Futures Opened.............................................. 5,145
Futures Closed.............................................. (5,473)
------
Outstanding at August 31, 2004.............................. 845
======
</Table>
The futures contracts outstanding as of August 31, 2004, and the
descriptions and unrealized appreciation/depreciation are as follows:
<Table>
<Caption>
UNREALIZED
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Bond Futures, December 2004 (Current
Notional Value of $111,313 per contract).............. 48 $ (28,512)
U.S. Treasury Bond Futures, September 2004 (Current
Notional Value of $112,531 per contract).............. 83 (656,186)
U.S. Treasury Notes 10-Year Futures, December 2004
(Current Notional Value of $112,313 per contract)..... 414 (525,211)
U.S. Treasury Notes 10-Year Futures, September 2004
(Current Notional Value of $113,469 per contract)..... 18 (89,768)
U.S. Treasury Notes 5-Year Futures, December 2004
(Current Notional Value of $110,672 per contract)..... 276 (277,705)
U.S. Treasury Notes 5-Year Futures, September 2004
(Current Notional Value of $111,516 per contract)..... 6 (23,260)
--- -----------
845 $(1,600,642)
=== ===========
</Table>
6. DISTRIBUTION AND SERVICE PLANS
With respect to its Class A Shares, Class B Shares and Class C 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 and Class C 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 and 1.00% each of Class B and Class C average daily net assets are
accrued daily. The annual fees for Class A 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 $2,176,046 and $0 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.
31
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2004 continued
Included in the fees for the year ended August 31, 2004, are payments
retained by Van Kampen of approximately $1,090,700 and payments made to Morgan
Stanley DW Inc., an affiliate of the Adviser, of approximately $199,200.
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. The 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 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 certain 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
proprietary 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 funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the consolidated complaint described in the
preceding paragraph.
The defendants have moved to dismiss each of 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.
32
VAN KAMPEN CORPORATE BOND FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
Van Kampen Corporate Bond Fund
We have audited the accompanying statement of assets and liabilities of Van
Kampen Corporate Bond Fund (the "Fund"), including the portfolio of investments,
as of August 31, 2004, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of August 31, 2004, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Van Kampen Corporate Bond Fund at August 31, 2004, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
October 7, 2004
33
VAN KAMPEN CORPORATE BOND FUND
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
J. MILES BRANAGAN
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
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 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.
34
VAN KAMPEN CORPORATE BOND FUND
TRUSTEES AND OFFICERS INFORMATION
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Fund
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments
Inc. ("Van Kampen Investments"), Van Kampen Asset Management (the "Adviser"),
Van Kampen Funds Inc. (the "Distributor"), Van Kampen Advisors Inc., Van Kampen
Exchange Corp. and Van Kampen Investor Services Inc. ("Investor Services"). The
term "Fund Complex" includes each of the investment companies advised by the
Adviser or its affiliates as of the date of this Statement of Additional
Information. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES:
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (58) Trustee Trustee Chairman and Chief 85 Trustee/Director/Managing
Blistex Inc. since 2003 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products
manufacturer. Director of
the Heartland Alliance, a
nonprofit organization
serving human needs based
in Chicago. Director of
St. Vincent de Paul
Center, a Chicago based
day care facility serving
the children of low
income families. Board
member of the Illinois
Manufacturer's
Association.
J. Miles Branagan (71) Trustee Trustee Private investor. 83 Trustee/Director/Managing
1632 Morning Mountain Road since 1991 Co-founder, and prior to General Partner of funds
Raleigh, NC 27614 August 1996, Chairman, in the Fund Complex.
Chief Executive Officer
and President, MDT
Corporation (now known as
Getinge/Castle, Inc., a
subsidiary of Getinge
Industrier AB), a company
which develops,
manufactures, markets and
services medical and
scientific equipment.
</Table>
35
<Table>
<Caption>
VAN KAMPEN CORPORATE BOND FUND
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jerry D. Choate (66) Trustee Trustee Prior to January 1999, 83 Trustee/Director/Managing
33971 Selva Road since 1999 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of Amgen Inc., a
("Allstate") and Allstate biotechnological company,
Insurance Company. Prior and Director of Valero
to January 1995, Energy Corporation, an
President and Chief independent refining
Executive Officer of company.
Allstate. Prior to August
1994, various management
positions at Allstate.
Rod Dammeyer (63) Trustee Trustee President of CAC, L.L.C., 85 Trustee/Director/Managing
CAC, L.L.C. since 2003 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Stericycle,
San Diego, CA 92122-6223 advisory services. Prior Inc., GATX Corporation,
to February 2001, Vice and Trustee of The
Chairman and Director of Scripps Research
Anixter International, Institute and the
Inc., a global University of Chicago
distributor of wire, Hospitals and Health
cable and communications Systems. Prior to January
connectivity products, 2004, Director of
and IMC Global Inc., an TeleTech Holdings Inc.
international company and Arris Group, Inc.
that mines, manufactures Prior to May 2002,
and sells essential crop Director of Peregrine
nutrients and feed Systems Inc. Prior to
ingredients to farmers. July 2000, Director of
Prior to July 2000, Allied Riser
Managing Partner of Communications Corp.,
Equity Group Corporate Matria Healthcare Inc.,
Investment (EGI), a Transmedia Networks,
company that makes Inc., CNA Surety, Corp.
private investments in and Grupo Azcarero Mexico
other companies. (GAM).
</Table>
36
<Table>
<Caption>
VAN KAMPEN CORPORATE BOND FUND
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Linda Hutton Heagy (56) Trustee Trustee Managing Partner of 83 Trustee/Director/Managing
Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive executive search firm. in the Fund Complex.
Suite 7000 Trustee on the University
Chicago, IL 60606 of Chicago Hospitals
Board, Vice Chair of the
Board of the YMCA of
Metropolitan Chicago and
a member of the Women's
Board of the University
of Chicago. Prior to
1997, Partner of Ray &
Berndtson, Inc., an
executive recruiting
firm. Prior to 1996,
Trustee of The
International House
Board, a fellowship and
housing organization for
international graduate
students. Prior to 1995,
Executive Vice President
of ABN AMRO, N.A., a bank
holding company. Prior to
1992, Executive Vice
President of La Salle
National Bank.
R. Craig Kennedy (52) Trustee Trustee Director and President of 83 Trustee/Director/Managing
1744 R Street, NW since 1995 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S.
foundation created to
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (68) Trustee Trustee Prior to 1998, President 85 Trustee/Director/Managing
736 North Western Avenue since 2003 and Chief Executive General Partner of funds
P.O. Box 317 Officer of Pocklington in the Fund Complex.
Lake Forest, IL 60045 Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the
Marrow Foundation.
</Table>
37
<Table>
<Caption>
VAN KAMPEN CORPORATE BOND FUND
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jack E. Nelson (68) Trustee Trustee President of Nelson 83 Trustee/Director/Managing
423 Country Club Drive since 1995 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of the NASD,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
Hugo F. Sonnenschein (63) Trustee Trustee President Emeritus and 85 Trustee/Director/Managing
1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Director of Winston
Distinguished Service Laboratories, Inc.
Professor in the
Department of Economics
at the University of
Chicago. Prior to July
2000, President of the
University of Chicago.
Trustee of the University
of Rochester and a member
of its investment
committee. Member of the
National Academy of
Sciences, the American
Philosophical Society and
a fellow of the American
Academy of Arts and
Sciences.
Suzanne H. Woolsey, Ph.D. Trustee Trustee Previously Chief 83 Trustee/Director/Managing
(62) since 1999 Communications Officer of General Partner of funds
815 Cumberstone Road the National Academy of in the Fund Complex.
Harwood, MD 20776 Sciences/National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction
institution, from 2001 to organization, since
November 2003 and Chief January 2004 and Director
Operating Officer from of Neurogen Corporation,
1993 to 2001. Director of a pharmaceutical company,
the Institute for Defense since January 1998.
Analyses, a federally
funded research and
development center,
Director of the German
Marshall Fund of the
United States, Director
of the Rocky Mountain
Institute and Trustee of
Colorado College. Prior
to 1993, Executive
Director of the
Commission on Behavioral
and Social Sciences and
Education at the National
Academy of
Sciences/National
Research Council. From
1980 through 1989,
Partner of Coopers &
Lybrand.
</Table>
38
VAN KAMPEN CORPORATE BOND FUND
TRUSTEE AND OFFICER INFORMATION continued
INTERESTED TRUSTEES:*
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Mitchell M. Merin* (51) Trustee, Trustee President and Chief 83 Trustee/Director/Managing
1221 Avenue of the Americas President since Executive Officer of General Partner of funds
New York, NY 10020 and Chief 1999; funds in the Fund in the Fund Complex.
Executive President Complex. Chairman,
Officer and Chief President, Chief
Executive Executive Officer and
Officer Director of the Adviser
since 2002 and Van Kampen Advisors
Inc. since December 2002.
Chairman, President and
Chief Executive Officer
of Van Kampen Investments
since December 2002.
Director of Van Kampen
Investments since
December 1999. Chairman
and Director of Van
Kampen Funds Inc. since
December 2002. President,
Director and Chief
Operating Officer of
Morgan Stanley Investment
Management since December
1998. President and
Director since April 1997
and Chief Executive
Officer since June 1998
of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc.
Chairman, Chief Executive
Officer and Director of
Morgan Stanley
Distributors Inc. since
June 1998. Chairman since
June 1998, and Director
since January 1998 of
Morgan Stanley Trust.
Director of various
Morgan Stanley
subsidiaries. President
of the Morgan Stanley
Funds since May 1999.
Previously Chief
Executive Officer of Van
Kampen Funds Inc. from
December 2002 to July
2003, Chief Strategic
Officer of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc. and
Executive Vice President
of Morgan Stanley
Distributors Inc. from
April 1997 to June 1998.
Chief Executive Officer
from September 2002 to
April 2003 and Vice
President from May 1997
to April 1999 of the
Morgan Stanley Funds.
</Table>
39
<Table>
<Caption>
VAN KAMPEN CORPORATE BOND FUND
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Richard F. Powers, III* (58) Trustee Trustee Advisory Director of 85 Trustee/Director/Managing
1 Parkview Plaza since 1999 Morgan Stanley. Prior to General Partner of funds
P.O. Box 5555 December 2002, Chairman, in the Fund Complex.
Oakbrook Terrace, IL 60181 Director, President,
Chief Executive Officer
and Managing Director of
Van Kampen Investments
and its investment
advisory, distribution
and other subsidiaries.
Prior to December 2002,
President and Chief
Executive Officer of
funds in the Fund
Complex. Prior to May
1998, Executive Vice
President and Director of
Marketing at Morgan
Stanley and Director of
Dean Witter, Discover &
Co. and Dean Witter
Realty. Prior to 1996,
Director of Dean Witter
Reynolds Inc.
Wayne W. Whalen* (65) Trustee Trustee Partner in the law firm 85 Trustee/Director/Managing
333 West Wacker Drive since 1995 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the
Fund Complex.
</Table>
* Such trustee is an "interested person" (within the meaning of Section
2(a)(19) of the 1940 Act). Mr. Whalen is an interested person of certain
funds in the Fund Complex by reason of his firm currently acting as legal
counsel to such funds in the Fund Complex. Messrs. Merin and Powers are
interested persons of funds in the Fund Complex and the Adviser by reason of
their current or former positions with Morgan Stanley or its affiliates.
40
VAN KAMPEN CORPORATE BOND FUND
TRUSTEE AND OFFICER INFORMATION continued
OFFICERS:
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Stefanie V. Chang (37) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas and Secretary since 2003 Vice President of funds in the Fund Complex.
New York, NY 10020
Amy Doberman (42) Vice President Officer Managing Director and General Counsel, U.S. Investment
1221 Avenue of the Americas since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10020 Management, Inc., Morgan Stanley Investment Advisers Inc.
and the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex as of August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeitus Investment Management,
Inc from January 1997 to July 2000.
James M. Dykas (38) Chief Financial Officer Officer Executive Director of Van Kampen Asset Management and Morgan
1 Parkview Plaza and Treasurer since 1999 Stanley Investment Management. Chief Financial Officer and
Oakbrook Terrace, IL 60181 Treasurer of funds in the Fund Complex. Prior to August
2004, Assistant Treasurer of funds in the Fund Complex.
Joseph J. McAlinden (61) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas President and Chief since 2002 Stanley Investment Advisors Inc., Morgan Stanley Investment
New York, NY 10020 Investment Officer Management Inc. and Morgan Stanley Investments LP and
Director of Morgan Stanley Trust for over 5 years. Executive
Vice President and Chief Investment Officer of funds in the
Fund Complex. Managing Director and Chief Investment Officer
of Van Kampen Investments, the Adviser and Van Kampen
Advisors Inc. since December 2002.
</Table>
41
<Table>
<Caption>
VAN KAMPEN CORPORATE BOND FUND
TRUSTEE AND OFFICER INFORMATION continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (65) Executive Vice Officer Principal Executive Officer--office of the Funds (since
1221 Avenue of the Americas President and since 2003 November 2003). Chief Executive Officer and Chairman of
New York, NY 10020 Principal Executive Investor Services. Executive Vice President and Principal
Officer Executive Officer of funds in the Fund Complex. Managing
Director of Morgan Stanley. Chief Administrative Officer,
Managing Director and Director of Morgan Stanley Investment
Advisors Inc., Morgan Stanley Services Company Inc. and
Managing Director and Director of Morgan Stanley
Distributors Inc. Chief Executive Officer and Director of
Morgan Stanley Trust. Executive Vice President and Principal
Executive Officer of the Institutional and Retail Morgan
Stanley Funds; Director of Morgan Stanley SICAV; previously
Chief Global Operations Officer and Managing Director of
Morgan Stanley Investment Management Inc.
John L. Sullivan (49) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza Officer since 1996 August 2004. Director and Managing Director of Van Kampen
Oakbrook Terrace, IL 60181 Investments, the Adviser, Van Kampen Advisors Inc. and
certain other subsidiaries of Van Kampen Investments. Prior
August 2004, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management. Prior
to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
</Table>
42
VAN KAMPEN
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.
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,
(continued on back)
VAN KAMPEN
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
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 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.
The Statement of Additional Information includes additional information about
Fund trustees and is available, without charge, upon request by calling
1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
(VAN KAMPEN INVESTMENTS LOGO)
Copyright (C)2004 Van Kampen
Funds Inc. All rights reserved.
Member NASD/SIPC. 17,117,217
CORP ANR
10/04 RN04-02350P-Y08/04
Item 2. Code of Ethics.
(a) The Fund has adopted a code of ethics (the "Code of Ethics") that applies to
its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Fund or a third
party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Due to personnel changes at the Adviser, the list of Covered Officers
set forth in Exhibit B and the General Counsel designee to whom questions about
the application of the Code should be referred in Exhibit C have been amended.
(d) The Fund has not granted a waiver or an implicit waiver from a
provision of its Code of Ethics.
(e) Not applicable.
(f)
(1) The Fund's Code of Ethics is attached hereto as Exhibit 11A.
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Fund's Board of Trustees has determined that it has three "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees : J. Miles Branagan, Jerry Choate and R. Craig Kennedy.
Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the audit committee and Board
of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2004
REGISTRANT COVERED ENTITIES(1)
AUDIT FEES........................ $29,000 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES...... $0 $159,500(2)
TAX FEES................... $2,000(3) $42,141(4)
ALL OTHER FEES........... $0 $222,168(5)
TOTAL NON-AUDIT FEES.......... $2,000 $423,809
TOTAL.............................. $31,000 $423,809
2003
REGISTRANT COVERED ENTITIES(1)
AUDIT FEES........................ $23,630 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES..... $0 $88,000(2)
TAX FEES.................. $1,370(3) $70,314(4)
ALL OTHER FEES........... $0 $331,980(6)
TOTAL NON-AUDIT FEES......... $1,370 $490,294
TOTAL.............................. $25,000 $490,294
N/A- Not applicable, as not required by Item 4.
(1) Covered Entities include the Adviser (excluding sub-advisors)
and any entity controlling, controlled by or under common
control with the Adviser that provides ongoing services to the
Registrant.
(2) Audit-Related Fees represent assurance and related services
provided that are reasonably related to the performance of the
audit of the financial statements of the Covered Entities' and
funds advised by the Adviser or its affiliates, specifically
attestation services provided in connection with a SAS 70
Report.
(3) Tax Fees represent tax advice and compliance services provided
in connection with the review of the Registrant's tax.
(4) Tax Fees represent tax advice services provided to Covered
Entities, including research and identification of PFIC
entities.
(5) All Other Fees represent attestation services provided in
connection with performance presentation standards.
(6) All Other Fees represent attestation services provided in
connection with performance presentation standards, general
industry education seminars provided, and a regulatory review
project performed.
(e)(1) The audit committee's pre-approval policies and procedures are as
follows:
JOINT AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
VAN KAMPEN FUNDS
AS ADOPTED JULY 23, 2003(1)
1. STATEMENT OF PRINCIPLES
The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.(2)
The SEC has issued rules specifying the types of services that an
independent auditor may not provide to its audit client, as well as the audit
committee's administration of the engagement of the independent auditor. The
SEC's rules establish two different approaches to pre-approving services, which
the SEC considers to be equally valid. Proposed services either: may be
pre-approved without consideration of specific case-by-case services by the
Audit Committee ("general pre-approval"); or require the specific pre-approval
of the Audit Committee ("specific pre-approval"). The Audit Committee believes
that the combination of these two approaches in this Policy will result in an
effective and efficient procedure to pre-approve services performed by the
Independent Auditors. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.
For both types of pre-approval, the Audit Committee will consider
whether such services are consistent with the SEC's rules on auditor
independence. The Audit Committee will also consider whether the Independent
Auditors are best positioned to provide the most effective and efficient
services, for reasons such as its familiarity with the Fund's business, people,
culture, accounting systems, risk profile and other factors, and whether the
service might enhance the Fund's ability to manage or control risk or improve
audit quality. All such factors will be considered as a whole, and no one factor
should necessarily be determinative.
The Audit Committee is also mindful of the relationship between fees
for audit and non-audit services in deciding whether to pre-approve any such
services and may determine for each fiscal year, the appropriate ratio between
the total amount of fees for Audit, Audit-related and Tax services for the Fund
(including any Audit-related or Tax service fees for Covered Entities that were
subject to pre-approval), and the total amount of fees for certain permissible
non-audit services classified as All Other services for the Fund (including any
such services for Covered Entities subject to pre-approval).
- ------------------------
(1) This Joint Audit Committee Audit and Non-Audit Services Pre-Approval
Policy and Procedures (the "Policy"), adopted as of the date above, supercedes
and replaces all prior versions that may have been adopted from time to time.
(2) Terms used in this Policy and not otherwise defined herein shall have
the meanings as defined in the Joint Audit Committee Charter.
The appendices to this Policy describe the Audit, Audit-related, Tax
and All Other services that have the general pre-approval of the Audit
Committee. The term of any general pre-approval is 12 months from the date of
pre-approval, unless the Audit Committee considers and provides a different
period and states otherwise. The Audit Committee will annually review and
pre-approve the services that may be provided by the Independent Auditors
without obtaining specific pre-approval from the Audit Committee. The Audit
Committee will add to or subtract from the list of general pre-approved services
from time to time, based on subsequent determinations.
The purpose of this Policy is to set forth the policy and procedures by
which the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.
The Fund's Independent Auditors have reviewed this Policy and believes
that implementation of the Policy will not adversely affect the Independent
Auditors' independence.
2. DELEGATION
As provided in the Act and the SEC's rules, the Audit Committee may
delegate either type of pre-approval authority to one or more of its members.
The member to whom such authority is delegated must report, for informational
purposes only, any pre-approval decisions to the Audit Committee at its next
scheduled meeting.
3. AUDIT SERVICES
The annual Audit services engagement terms and fees are subject to the
specific pre-approval of the Audit Committee. Audit services include the annual
financial statement audit and other procedures required to be performed by the
Independent Auditors to be able to form an opinion on the Fund's financial
statements. These other procedures include information systems and procedural
reviews and testing performed in order to understand and place reliance on the
systems of internal control, and consultations relating to the audit. The Audit
Committee will monitor the Audit services engagement as necessary, but no less
than on a quarterly basis, and will also approve, if necessary, any changes in
terms, conditions and fees resulting from changes in audit scope, Fund structure
or other items.
In addition to the annual Audit services engagement approved by the
Audit Committee, the Audit Committee may grant general pre-approval to other
Audit services, which are those services that only the Independent Auditors
reasonably can provide. Other Audit services may include statutory audits and
services associated with SEC registration statements (on Forms N-1A, N-2, N-3,
N-4, etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the following Audit services. All
other Audit services not listed below must be specifically pre-approved by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
has been delegated):
- Statutory audits or financial audits for the Fund
- Services associated with SEC registration statements (including new
funds), periodic reports and other documents filed with the SEC or
other documents issued in connection with securities offerings (e.g.,
comfort letters for closed-end fund offerings, consents), and
assistance in responding to SEC comment letters
- Consultations by the Fund's management as to the accounting or
disclosure treatment of transactions or events and/or the actual or
potential impact of final or proposed rules, standards or
interpretations by the SEC, FASB, or other regulatory or standard
setting
bodies (Note: Under SEC rules, some consultations may be "audit
related" services rather than "audit" services)
4. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the Fund's
financial statements or, to the extent they are Covered Services, the Covered
Entities' financial statements, or that are traditionally performed by the
Independent Auditors. Because the Audit Committee believes that the provision of
Audit-related services does not impair the independence of the auditor and is
consistent with the SEC's rules on auditor independence, the Audit Committee may
grant general pre-approval to Audit-related services. Audit-related services
include, among others, accounting consultations related to accounting, financial
reporting or disclosure matters not classified as "Audit services"; assistance
with understanding and implementing new accounting and financial reporting
guidance from rulemaking authorities; agreed-upon or expanded audit procedures
related to accounting and/or billing records required to respond to or comply
with financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the following Audit-related
services. All other Audit-related services not listed below must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated):
- Attest procedures not required by statute or regulation (including
agreed upon procedures related to the Closed-End Fund asset coverage
tests required by the rating agencies and/or lenders)
- Due diligence services pertaining to potential fund mergers
- Issuance of SAS-70 reports on internal controls of Morgan Stanley Trust
Co. and MSIM Trade Operations
- Consultations by the Fund's management as to the accounting or
disclosure treatment of transactions or events and/or the actual or
potential impact of final or proposed rules, standards or
interpretations by the SEC, FASB, or other regulatory or
standard-setting bodies (Note: Under SEC rules, some consultations may
be "audit" services rather than "audit-related" services)
- Information systems reviews not performed in connection with the audit
(e.g., application data center and technical reviews)
- General assistance with implementation of the requirements of SEC rules
or listing standards promulgated pursuant to the Sarbanes-Oxley Act
- Audit of record keeping services performed by Morgan Stanley Trust Fund
related to the New Jersey State Retirement Plan
5. TAX SERVICES
The Audit Committee believes that the Independent Auditors can provide
Tax services to the Fund and, to the extent they are Covered Services, the
Covered Entities, such as tax compliance, tax planning and tax advice without
impairing the auditor's independence, and the SEC has stated that the
Independent Auditors may provide such services. Hence, the Audit Committee
believes it may grant general pre-approval to those Tax services that have
historically been provided by the Independent Auditors, that the Audit Committee
has reviewed and believes would not impair the independence of the Independent
Auditors, and that are consistent with the SEC's rules on auditor independence.
The Audit Committee will not permit the retention of the Independent Auditors in
connection with a transaction initially recommended by the Independent Auditors,
the sole business purpose of which may be tax avoidance and the tax treatment of
which may not be supported in the Internal Revenue Code and related regulations.
The Audit
Committee will consult with Director of Tax or outside counsel to determine that
the tax planning and reporting positions are consistent with this policy.
Pursuant to the preceding paragraph, the Audit Committee has
pre-approved the following Tax Services. All Tax services involving large and
complex transactions not listed below must be specifically pre-approved by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
has been delegated), including tax services proposed to be provided by the
Independent Auditors to any executive officer or trustee/director/managing
general partner of the Fund, in his or her individual capacity, where such
services are paid for by the Fund (generally applicable only to internally
managed investment companies):
- U.S. federal, state and local tax planning and advice
- U.S. federal, state and local tax compliance
- International tax planning and advice
- International tax compliance
- Review of federal, state, local and international income, franchise,
and other tax returns
- Identification of Passive Foreign Investment Companies
- Review of closed-end funds pro rata allocation of taxable income and
capital gains to common and preferred shares.
- Domestic and foreign tax planning, compliance, and advice
- Asistance with tax audits and appeals before the IRS and similar
state, local and foreign agencies
- Tax advice and assistance regarding statutory, regulatory or
administrative developments (e.g., excise tax reviews, evaluation of
Fund's tax compliance function)
- Review the calculations of taxable income from corporate actions
including reorganizations related to bankruptcy filings and provide
guidance related to the foregoing
6. ALL OTHER SERVICES
The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.
The Audit Committee has pre-approved the following All Other services.
Permissible All Other services not listed below must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated):
- Risk management advisory services, e.g., assessment and testing of
security infrastructure controls
The following is a list of the SEC's prohibited non-audit services. The
SEC's rules and relevant guidance should be consulted to determine the precise
definitions of these services and the applicability of exceptions to certain of
the prohibitions:
- Bookkeeping or other services related to the accounting records or
financial statements of the audit client
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions or
Contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
- Management functions
- Human resources
- Broker-dealer, investment adviser or investment banking services
- Legal services
- Expert services unrelated to the audit
7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS
Pre-approval fee levels or budgeted amounts for all services to be
provided by the Independent Auditors will be established annually by the Audit
Committee. Any proposed services exceeding these levels or amounts will require
specific pre-approval by the Audit Committee. The Audit Committee is mindful of
the overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services. For each fiscal year, the Audit
Committee may determine the appropriate ratio between the total amount of fees
for Audit, Audit-related, and Tax services for the Fund (including any
Audit-related or Tax services fees for Covered Entities subject to
pre-approval), and the total amount of fees for certain permissible non-audit
services classified as All Other services for the Fund (including any such
services for Covered Entities subject to pre-approval).
8. PROCEDURES
All requests or applications for services to be provided by the
Independent Auditors that do not require specific approval by the Audit
Committee will be submitted to the Fund's Chief Financial Officer and must
include a detailed description of the services to be rendered. The Fund's Chief
Financial Officer will determine whether such services are included within the
list of services that have received the general pre-approval of the Audit
Committee. The Audit Committee will be informed on a timely basis of any such
services rendered by the Independent Auditors. Requests or applications to
provide services that require specific approval by the Audit Committee will be
submitted to the Audit Committee by both the Independent Auditors and the Fund's
Chief Financial Officer, and must include a joint statement as to whether, in
their view, the request or application is consistent with the SEC's rules on
auditor independence.
The Audit Committee has designated the Fund's Chief Financial Officer
to monitor the performance of all services provided by the Independent Auditors
and to determine whether such services are in compliance with this Policy. The
Fund's Chief Financial Officer will report to the Audit Committee on a periodic
basis on the results of its monitoring. Both the Fund's Chief Financial Officer
and management will immediately report to the chairman of the Audit Committee
any breach of this Policy that comes to the attention of the Fund's Chief
Financial Officer or any member of management.
9. ADDITIONAL REQUIREMENTS
The Audit Committee has determined to take additional measures on an
annual basis to meet its responsibility to oversee the work of the Independent
Auditors and to assure the auditor's independence from the Fund, such as
reviewing a formal written statement from the Independent Auditors delineating
all relationships between the Independent Auditors and the Fund, consistent with
Independence Standards Board No. 1, and discussing with the Independent Auditors
its methods and procedures for ensuring independence.
10. COVERED ENTITIES
Covered Entities include the Fund's investment adviser(s) and any
entity controlling, controlled by or under common control with the Fund's
investment adviser(s) that provides ongoing services to the Fund(s). Beginning
with non-audit service contracts entered into on or after May 6, 2003, the
Fund's audit committee must pre-approve non-audit services provided not
only to the Fund but also to the Covered Entities if the engagements relate
directly to the operations and financial reporting of the Fund. This list of
Covered Entities would include:
- Van Kampen Investments, Inc.
- Van Kampen Investment Advisory Corporation
- Van Kampen Asset Management Inc.
- Van Kampen Advisors Inc.
- Van Kampen Funds Inc.
- Van Kampen Trust Company
- Van Kampen Investor Services Inc.
- Van Kampen Management Inc.
- Morgan Stanley Investment Management Inc.
- Morgan Stanley Investments LP
- Morgan Stanley Trust Company
(e)(2) Beginning with non-audit service contracts entered into on or after May
6, 2003, the audit committee also is required to pre-approve services to Covered
Entities to the extent that the services are determined to have a direct impact
on the operations or financial reporting of the Registrant. 100% of such
services were pre-approved by the audit committee pursuant to the Audit
Committee's pre-approval policies and procedures (attached hereto).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors to the
Registrant and Covered Entities is compatible with maintaining the auditors'
independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
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. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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 11. Exhibits.
(a) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.
(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.
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 Corporate Bond Fund
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: October 20, 2004
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: October 20, 2004
By: /s/ James M. Dykas
--------------------
Name: James M. Dykas
Title: Principal Financial Officer
Date: October 20, 2004