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
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(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
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(Address of principal executive offices) (Zip code)
Ronald Robison
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1221 Avenue of the Americas, New York, New York 10020
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(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: 8/31/05
Item 1. Report 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,
2005.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE
FUND BEING OFFERED.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND,
THEREFORE, THE VALUE OF THE FUND SHARES MAY BE LESS THAN WHAT YOU PAID
FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS FUND. PLEASE
SEE THE PROSPECTUS FOR MORE COMPLETE INFORMATION ON INVESTMENT RISKS.
<Table>
<Caption>
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NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
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NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
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</Table>
Performance Summary
This chart compares your fund's performance to that of the Lehman Brothers
Credit Bond Index and the Lipper Corporate BBB-Rated Index from 8/31/95 through
8/31/05. 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
-------------------- --------------------- ----------------------
8/95 9520 10000 10000
9630 10117 10119
12/95 10088 10591 10619
9762 10375 10345
9807 10420 10391
9969 10649 10599
12/96 10356 11040 10968
10281 10966 10858
10730 11423 11306
11186 11867 11749
12/97 11460 12175 12092
11673 12388 12277
11936 12640 12594
12064 12796 13051
12/98 12291 12904 13129
12115 12877 13036
11829 12727 12833
11859 12725 12869
12/99 11883 12761 12873
12019 12998 13057
12048 13066 13217
12417 13399 13623
12/00 12814 13762 14081
13240 14226 14682
13354 14292 14838
13812 14665 15406
12/01 14020 14789 15543
13805 14744 15501
13864 15017 15951
14056 15380 16665
12/02 14494 15851 17178
14802 16252 17591
15494 17037 18435
15636 17097 18409
12/03 15913 17396 18501
16263 17831 19106
15827 17346 18451
16437 17995 19228
12/04 16713 18318 19470
16544 18179 19266
17138 18676 19955
8/05 17267 18819 20055
</Table>
<Table>
<Caption>
A SHARES B SHARES C SHARES I SHARES
since 9/23/71 since 9/28/92 since 8/30/93 since 8/12/05
- ----------------------------------------------------------------------------------------------------------
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 W/O SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES
Since Inception 7.88% 7.72% 5.96% 5.96% 5.14% 5.14% 1.11%
10-year 6.14 5.61 5.65 5.65 5.35 5.35 n/a
5-year 6.97 5.93 6.14 5.90 6.17 6.17 n/a
1-year 5.79 0.70 5.01 1.01 5.17 4.17 n/a
- ----------------------------------------------------------------------------------------------------------
30-Day SEC Yield 3.73% 3.19% 3.18% 3.99%
</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 up to 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. Class I shares are available
for purchase exclusively by investors through (i) tax-exempt retirement plans
with assets of at least $1 million (including 401(k) plans, 457 plans,
employer-sponsored 403(b) plans, profit sharing and money purchase plans,
defined benefit plans and non-qualified deferred compensation plans), (ii)
fee-based investment programs with assets of at least $1 million and (iii)
institutional clients with assets of at least $1 million. Class I shares are
offered without any sales charges on purchases or sales and do not include
combined 12b-1 fees and service fees. Figures shown above assume reinvestment of
all dividends and capital gains. Figures shown above assume reinvestment of all
dividends and capital gains. SEC yield is a calculation for determining the
1
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.
2
Fund Report
FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2005
Van Kampen Corporate Bond Fund is managed by the Adviser's Taxable Fixed Income
team.(1) Members of the team include David S. Horowitz, Managing Director of the
Adviser and Gerhardt Herbert, Executive Director of the Adviser.
MARKET CONDITIONS
Throughout the reporting period, the Federal Open Market Committee (the "Fed")
continued the tightening cycle it began in June of 2004. In a series of eight 25
basis-point increases, the Fed brought the federal funds target rate from 1.50
percent at the start of the reporting period to 3.50 percent at the close.
Despite these steady increases, most U.S. Treasury yields see-sawed throughout
the period. Overall, the yield curve flattened as the yields of short-and
intermediate-term Treasuries rose while those of long-term Treasuries declined.
Within the corporate bond market, the period was generally uneventful until the
first quarter of 2005, when General Motors reported lower-than-expected
earnings. Shortly thereafter, the beleaguered auto manufacturer saw its debt
downgraded to below-investment grade, alongside that of Ford Motor and their
financial subsidiaries. Although the travails of the auto industry gave
investors pause, generally good corporate earnings announcements and positive
economic news helped the market regain its bearings in the following months. The
utilities sector garnered the highest gains during the annual period, while the
financials sector posted the lowest returns.
As the end of the period approached, it was apparent that the full effects of
the Fed's actions had yet to ripple through the economy. For the most part,
concerns about rising energy prices and inflation as well as faltering growth
had muted the impact of the Fed's rate increases, and the market reflected
neither underlying fundamental trends nor a more likely course for Fed policy.
Moreover, the final days of the reporting period brought heightened uncertainty
and anxiety as Hurricane Katrina unleashed catastrophic devastation to the Gulf
Coast. While the long-term economic impact remained immeasurable, the immediate
economic impact was most evident in the energy sector, as gasoline and natural
gas prices soared.
(1)Team members may change without notice from time to time.
3
PERFORMANCE ANALYSIS
The fund returned 5.79 percent for the 12 months ended August 31, 2005, (Class A
shares, unadjusted for sales charge). In comparison, the fund's benchmarks, the
Lehman Brothers Corporate Bond Index and the Lipper Corporate BBB-Rated Index,
returned 4.9 percent and 5.23 percent for the period, respectively.
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2005
<Table>
<Caption>
- ----------------------------------------------------------------------------
LEHMAN BROTHERS LIPPER CORPORATE
CORPORATE BOND BBB-RATED
CLASS A CLASS B CLASS C INDEX INDEX
5.79% 5.01% 5.17% 4.9% 5.23%
- ----------------------------------------------------------------------------
</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.
The fund's emphasis on medium-quality investment grade credits enhanced
performance during the period. As investors sought income, medium-quality
credits outpaced higher-quality bonds. (Bonds with higher credit qualities
typically offer lower yields.) Additionally, the fund's performance relative to
the Lehman index benefited from underweightings in the energy sector and the
banking and finance sector.
The fund's overall interest rate strategy produced mixed results for the period.
The low level of interest rates across the yield curve at the beginning of the
period led us to conclude that they had little room to fall. As a result, we
kept the fund's overall interest rate exposure below that of its benchmarks.
This posture was unfavorable to the fund's returns early in the period when the
market rallied, but was more beneficial during periods of rising rates,
especially in the later half of the period.
There is no guarantee that any sectors mentioned will continue to perform well
or that securities in such sectors will be held by the fund in the future.
4
<Table>
<Caption>
RATINGS ALLOCATIONS AS OF 8/31/05
AAA/Aaa 14.6%
AA/Aa 13.3
A/A 23.8
BBB/Baa 38.6
BB/Ba 9.4
B/B 0.3
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 8/31/05
Banking 12.1%
U.S. Government Agency Obligations 10.8
Electric 6.8
Wireline Communications 5.6
Noncaptive-Consumer Finance 4.8
Noncaptive-Diversified Finance 4.3
Automotive 4.1
Healthcare 3.6
Property & Casualty 3.5
Diversified Manufacturing 3.4
Integrated Energy 2.7
Food/Beverage 2.5
Life Insurance 2.5
Paper 2.3
Media-Noncable 2.2
Railroads 2.2
Media-Cable 1.9
Retail 1.8
Sovereigns 1.8
Natural Gas Pipelines 1.3
Wireless Communications 1.3
Consumer Products 1.2
Brokerage 1.0
Lodging 1.0
Aerospace & Defense 1.0
Environmental & Facilities Services 1.0
Tobacco 0.8
Construction Machinery 0.8
Textile 0.8
Transportation Services 0.6
Chemicals 0.6
Building Materials 0.5
Independent Energy 0.5
Natural Gas Distributors 0.4
Real Estate Investment Trusts 0.4
Pharmaceuticals 0.3
Supermarkets 0.3
Technology 0.3
Oil Field Services 0.1
Entertainment 0.1
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 8/31/05
(continued from previous page)
Refining 0.0
-----
Total Long-Term Investments 93.2%
Short-Term Investments 5.5
Other Assets in Excess of Liabilities 1.3
-----
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
1-800-SEC-0330. You can also request copies of these materials, upon
payment of a duplicating fee, by electronic request at the SEC's e-mail
address (publicinfo@sec.gov) or by writing the Public Reference section
of the SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at 1-800-847-2424.
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 POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the Fund's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free 800-847-2424 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the Fund voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 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 two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charge on redemptions of Class B and C Shares; and
(2) ongoing costs, including management fees; distribution and service (12b-1)
fees; and other Fund expenses. This example is intended to help you understand
your ongoing cost (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 3/1/05 - 8/31/05.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, 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
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
-------------------------------------------------
3/1/05 8/31/05 3/1/05-8/31/05
Class A
Actual..................................... $1,000.00 $1,027.87 $5.21
Hypothetical............................... 1,000.00 1,020.01 5.19
(5% annual return before expenses)
Class B
Actual..................................... 1,000.00 1,024.01 9.08
Hypothetical............................... 1,000.00 1,016.21 9.05
(5% annual return before expenses)
Class C
Actual..................................... 1,000.00 1,025.51 9.09
Hypothetical............................... 1,000.00 1,016.21 9.05
(5% annual return before expenses)
Class I
Actual..................................... 1,000.00 1,011.12 0.38
Hypothetical............................... 1,000.00 1,001.79 4.34
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 1.02%, 1.78%,
1.78% and 0.86% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 184/365 (to reflect
the one-half year period) except for Class I Shares "Actual" information
which reflects the period from Commencement of Operations through August 31,
2005.
Assumes all dividends and distributions were reinvested.
9
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
On May 25, 2005, the Board of Trustees, and the independent trustees voting
separately, determined that the terms of the investment advisory agreement are
fair and reasonable and approved the continuance of the investment advisory
contract as being in the best interests of the Fund and its shareholders. In
making its determination, the Board of Trustees considered materials that were
specifically prepared by the investment adviser at the request of the Board and
Fund counsel, and by an independent provider of investment company data
contracted to assist the Board, relating to the contract review process. The
Board also considered information received periodically about the portfolio,
performance, the investment strategy, portfolio management team and fees and
expenses of the Fund. Finally, the Board considered materials it had received in
approving a change in the advisory fee rate effective November 1, 2004. The
Board of Trustees considered the contract over a period of several months and
the non-management trustees held sessions both with the investment adviser and
separate from the investment adviser in reviewing and considering the contract.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
existing and alternative breakpoints in the Fund's investment advisory fee
schedule. The Board of Trustees considered comparative advisory fees of the Fund
and other investment companies and/or other products at different asset levels,
and considered the trends in the industry versus historical and projected assets
of the Fund. The Board of Trustees evaluated other benefits the investment
adviser and its affiliates derive from their relationship with the Fund. The
Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees,
10
evaluated all of the foregoing and does not believe any single factor or group
of factors control or dominate the review process, and, after considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund. The Fund
discloses information about its portfolio management team members and their
experience in its prospectus. The trustees also discuss certain other services
which are provided on a cost-reimbursement basis by the investment adviser or
its affiliates to the Van Kampen funds including certain accounting,
administrative and legal services. The Board has determined that the nature,
extent and quality of the services provided by the investment adviser support
its decision to approve the investment advisory contract.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, a performance committee of the
Board spends more focused time on the performance of the Fund and other funds in
the Van Kampen complex, paying specific attention to underperforming funds. The
trustees discuss with the investment adviser the performance goals and the
actual results achieved in managing the Fund. When considering a fund's
performance, the trustees and the investment adviser place emphasis on trends
and longer-term returns (focusing on one-year, three-year and five-year
performance with special attention to three-year performance) and, when a fund's
weighted performance is under the fund's benchmark, they discuss the causes and
where necessary seek to make specific changes to investment strategy or
investment personnel. The Fund discloses more information about its performance
elsewhere in this report and in the Fund's prospectus. The trustees discuss with
the investment adviser the level of advisory fees for this Fund relative to
comparable funds and other products advised by the adviser and others in the
marketplace. The trustees review not only the advisory fees but other fees and
expenses (whether paid to the adviser, its affiliates or others) and the Fund's
overall expense ratio. The Fund discloses more information about its fees and
expenses in its prospectus. The Board has determined that the performance, fees
and expenses of the Fund support its decision to approve the investment advisory
contract.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser. These profitability reports are
put
11
together by the investment adviser with the oversight of a special ad hoc
committee of the Board. The trustees discuss with the investment adviser its
revenues and expenses, including among other things, revenues for advisory
services, portfolio management-related expenses, revenue sharing arrangement
costs and allocated expenses both on an aggregate basis and per fund. The Board
has determined that the analysis of the investment adviser's expenses and
profitability support its decision to approve the investment advisory contract.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
and growth prospects of the Fund and how that relates to the Fund's expense
ratio and particularly the Fund's advisory fee rate. In conjunction with its
review of the investment adviser's profitability, the trustees discuss with the
investment adviser how more (or less) assets can affect the efficiency or
effectiveness of managing the Fund's portfolio and whether the advisory fee
level is appropriate relative to current and projected asset levels and/or
whether the advisory fee structure reflects economies of scale as asset levels
change. The Board has determined that its review of the actual and potential
economies of scale of the Fund support its decision to approve the investment
advisory contract.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory contract.
12
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
CORPORATE BONDS 80.2%
AEROSPACE & DEFENSE 1.0%
$ 992 Raytheon Co. ............................. 4.500% 11/15/07 $ 993,721
3,310 Raytheon Co. ............................. 6.150 11/01/08 3,475,695
1,960 Raytheon Co. ............................. 8.300 03/01/10 2,253,933
------------
6,723,349
------------
AUTOMOTIVE 4.1%
2,915 DaimlerChrysler NA Holding Corp. ......... 8.500 01/18/31 3,666,761
355 Ford Motor Credit Co. .................... 7.375 10/28/09 353,816
6,880 Ford Motor Credit Co. .................... 7.250 10/25/11 6,735,148
3,535 General Motors Acceptance Corp. .......... 6.875 09/15/11 3,351,611
7,105 General Motors Acceptance Corp. .......... 8.000 11/01/31 6,590,264
6,525 General Motors Corp. ..................... 8.375 07/15/33 5,513,625
1,045 Lear Corp. ............................... 8.110 05/15/09 1,089,940
785 Meritor Automotive, Inc. ................. 6.800 02/15/09 777,150
------------
28,078,315
------------
BANKING 12.1%
5,120 Bank of America Corp. .................... 3.375 02/17/09 4,975,068
6,000 Bank of Scotland, 144A-Private Placement
(United Kingdom) (a)...................... 3.500 11/30/07 5,909,574
1,945 Citigroup, Inc. .......................... 6.000 02/21/12 2,106,163
5,510 Citigroup, Inc. .......................... 5.625 08/27/12 5,855,268
160 Citigroup, Inc. .......................... 6.625 06/15/32 189,480
5,355 JPMorgan Chase & Co. ..................... 6.750 02/01/11 5,922,132
5,920 KeyCorp. ................................. 6.750 03/15/06 5,994,018
6,010 Marshall & Ilsley Bank.................... 3.800 02/08/08 5,944,972
905 MBNA America Bank NA...................... 7.125 11/15/12 1,040,976
4,750 MBNA Corp. ............................... 6.125 03/01/13 5,182,421
4,475 MBNA Corp. (Variable Rate Coupon)......... 4.163 05/05/08 4,515,530
6,160 National City Bank........................ 3.375 10/15/07 6,092,129
5,855 SunTrust Banks, Inc. ..................... 5.050 07/01/07 5,938,703
6,000 U.S. Bancorp.............................. 3.950 08/23/07 5,976,900
2,890 Wachovia Corp. ........................... 4.950 11/01/06 2,911,294
3,100 Wachovia Corp. ........................... 3.625 02/17/09 3,033,207
1,690 Washington Mutual Bank FA................. 5.500 01/15/13 1,766,353
2,960 Washington Mutual, Inc. .................. 8.250 04/01/10 3,372,772
5,820 Wells Fargo & Co. ........................ 5.125 02/15/07 5,889,101
------------
82,616,061
------------
BROKERAGE 0.6%
380 Goldman Sachs Group, Inc. ................ 6.600 01/15/12 419,424
1,560 Goldman Sachs Group, Inc. ................ 5.250 10/15/13 1,603,195
2,000 Lehman Brothers Holdings, Inc. ........... 8.500 05/01/07 2,132,158
------------
4,154,777
------------
BUILDING MATERIALS 0.5%
3,380 Masco Corp. .............................. 4.625 08/15/07 3,391,056
------------
</Table>
See Notes to Financial Statements 13
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
CHEMICALS 0.6%
$ 4,050 Sealed Air Corp., 144A-Private Placement
(a)....................................... 5.625% 07/15/13 $ 4,175,846
------------
CONSTRUCTION MACHINERY 0.8%
5,460 Caterpillar Financial Services Corp., Ser
F......................................... 3.625 11/15/07 5,397,483
------------
CONSUMER PRODUCTS 1.2%
3,950 Cendant Corp. ............................ 6.250 01/15/08 4,103,663
4,370 Clorox Co. (Variable Rate Coupon)......... 3.525 12/14/07 4,380,235
------------
8,483,898
------------
DIVERSIFIED MANUFACTURING 3.4%
3,095 Brascan Corp. (Canada).................... 7.125 06/15/12 3,492,964
2,260 Cooper Industries, Inc. .................. 5.250 07/01/07 2,296,318
1,450 Hutchison Whampoa International Ltd.,
144A-Private Placement (Cayman Islands)
(a)....................................... 5.450 11/24/10 1,500,769
3,610 Hutchison Whampoa International Ltd.,
144A-Private Placement (Cayman Islands)
(a)....................................... 6.500 02/13/13 3,901,529
475 Tyco International Group SA
(Luxembourg).............................. 5.800 08/01/06 480,820
6,200 Tyco International Group SA
(Luxembourg).............................. 6.125 11/01/08 6,509,572
5,050 United Technologies Corp. ................ 4.375 05/01/10 5,072,962
------------
23,254,934
------------
ELECTRIC 6.8%
2,325 Arizona Public Service Co. ............... 6.750 11/15/06 2,391,409
3,145 Arizona Public Service Co. ............... 5.800 06/30/14 3,372,887
2,155 Carolina Power & Light Co. ............... 6.800 08/15/07 2,251,846
2,381 CC Funding Trust I........................ 6.900 02/16/07 2,463,521
1,560 Cincinnati Gas & Electric Co. ............ 5.700 09/15/12 1,653,163
1,495 Detroit Edison Co. ....................... 6.125 10/01/10 1,607,542
1,980 Detroit Edison Co., Ser A, 144A-Private
Placement (a)............................. 4.800 02/15/15 1,976,670
1,640 Duquesne Light Co., Ser O................. 6.700 04/15/12 1,828,116
1,580 Entergy Gulf States, Inc. ................ 3.600 06/01/08 1,542,911
4,395 Entergy Gulf States, Inc. (Variable Rate
Coupon)................................... 3.730 12/01/09 4,411,543
3,835 Exelon Corp. ............................. 6.750 05/01/11 4,232,601
3,415 FPL Group Capital, Inc. .................. 3.250 04/11/06 3,402,754
560 Indianapolis Power & Light Co.,
144A-Private Placement (a)................ 6.300 07/01/13 606,893
1,245 Monongahela Power Co. .................... 5.000 10/01/06 1,255,155
591 Nevada Power Co. ......................... 9.000 08/15/13 666,353
2,457 Niagara Mohawk Power Corp., Ser F......... 7.625 10/01/05 2,463,429
2,450 NiSource Finance Corp. ................... 7.625 11/15/05 2,466,192
2,300 NiSource Finance Corp. (Variable Rate
Coupon)................................... 4.393 11/23/09 2,312,011
</Table>
14 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$ 2,390 Pacific Gas & Electric Co. ............... 6.050% 03/01/34 $ 2,624,242
590 PSEG Energy Holdings...................... 7.750 04/16/07 609,175
1,400 PSEG Energy Holdings...................... 8.625 02/15/08 1,484,000
590 TXU Corp., Ser J.......................... 6.375 06/15/06 600,602
------------
46,223,015
------------
ENTERTAINMENT 0.1%
400 Time Warner, Inc. ........................ 6.875 05/01/12 445,508
------------
ENVIRONMENTAL & FACILITIES SERVICES 1.0%
1,220 Waste Management, Inc. ................... 7.000 10/15/06 1,252,545
3,223 Waste Management, Inc. ................... 6.875 05/15/09 3,474,836
1,745 Waste Management, Inc. ................... 7.375 08/01/10 1,950,010
------------
6,677,391
------------
FOOD/BEVERAGE 2.5%
4,045 FBG Finance, Ltd., 144A-Private Placement
(Australia) (a)........................... 5.125 06/15/15 4,079,666
4,000 General Mills, Inc. ...................... 3.875 11/30/07 3,958,520
3,145 Kraft Foods, Inc. ........................ 5.625 11/01/11 3,332,539
6,015 Miller Brewing Co., 144A-Private Placement
(a)....................................... 4.250 08/15/08 5,980,221
------------
17,350,946
------------
HEALTHCARE 3.6%
4,835 Aetna, Inc. .............................. 7.375 03/01/06 4,905,146
1,135 Aetna, Inc. .............................. 7.875 03/01/11 1,314,624
670 AmerisourceBergen Corp. .................. 8.125 09/01/08 737,000
465 HCA, Inc. ................................ 7.875 02/01/11 512,305
2,055 HCA, Inc. ................................ 6.300 10/01/12 2,108,911
365 HCA, Inc. ................................ 9.000 12/15/14 437,553
1,010 HCA, Inc. ................................ 7.190 11/15/15 1,084,359
5,365 Health Net, Inc. ......................... 9.875 04/15/11 6,420,414
1,435 Tenet Healthcare Corp. ................... 7.375 02/01/13 1,406,300
1,840 UnitedHealth Group, Inc. ................. 5.200 01/17/07 1,859,695
2,410 Wellpoint, Inc. .......................... 3.750 12/14/07 2,372,958
1,510 Wellpoint, Inc. .......................... 4.250 12/15/09 1,498,563
------------
24,657,828
------------
INDEPENDENT ENERGY 0.5%
1,550 Kerr-McGee Corp. ......................... 5.875 09/15/06 1,578,844
1,540 Kerr-McGee Corp. ......................... 6.625 10/15/07 1,596,244
------------
3,175,088
------------
INTEGRATED ENERGY 2.7%
1,210 Chesapeake Energy Corp., 144A-Private
Placement (a)............................. 6.500 08/15/17 1,240,250
475 Consumers Energy Co., Ser B............... 5.375 04/15/13 490,317
1,880 Consumers Energy Co., Ser F............... 4.000 05/15/10 1,829,766
1,215 Consumers Energy Co., Ser H............... 4.800 02/17/09 1,224,984
</Table>
See Notes to Financial Statements 15
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
INTEGRATED ENERGY (CONTINUED)
$ 995 Pemex Project Funding Master Trust........ 9.125% 10/13/10 $ 1,169,125
3,410 Pemex Project Funding Master Trust........ 8.000 11/15/11 3,906,155
3,400 Pemex Project Funding Master Trust........ 7.375 12/15/14 3,843,700
2,535 Pemex Project Funding Master Trust........ 8.625 02/01/22 3,111,713
1,905 Petro-Canada (Canada)..................... 5.350 07/15/33 1,844,853
------------
18,660,863
------------
LIFE INSURANCE 2.5%
830 AXA Financial, Inc. ...................... 6.500 04/01/08 874,068
6,515 Marsh & McLennan Cos., Inc. .............. 5.875 08/01/33 6,165,131
190 Metlife, Inc. ............................ 6.125 12/01/11 205,911
2,730 Monumental Global Funding II, 144A-Private
Placement (a)............................. 3.850 03/03/08 2,698,984
920 Nationwide Financial Services, Inc. ...... 6.250 11/15/11 1,004,615
465 Prudential Hldgs LLC, Ser B, 144A-Private
Placement (a)............................. 7.245 12/18/23 574,784
5,595 Xlliac Global Funding, 144A-Private
Placement (a)............................. 4.800 08/10/10 5,644,879
------------
17,168,372
------------
LODGING 1.0%
2,755 Hyatt Equities, LLC, 144A-Private
Placement (a)............................. 6.875 06/15/07 2,828,732
1,525 Marriott International, Inc., Ser C....... 7.875 09/15/09 1,708,746
1,085 Marriott International, Inc., Ser E....... 7.000 01/15/08 1,145,289
1,005 Starwood Hotels & Resorts Worldwide,
Inc. ..................................... 7.375 05/01/07 1,046,456
------------
6,729,223
------------
MEDIA-CABLE 1.9%
4,455 Comcast Cable Communications, Inc. ....... 8.375 05/01/07 4,741,323
2,625 Comcast Cable Communications, Inc. ....... 6.750 01/30/11 2,875,987
240 Comcast Cable Communications, Inc. ....... 7.125 06/15/13 273,126
2,745 Cox Communications, Inc., 144A-Private
Placement (a)............................. 4.625 01/15/10 2,723,498
2,315 Echostar DBS Corp. ....................... 6.375 10/01/11 2,312,106
345 Echostar DBS Corp. ....................... 6.625 10/01/14 343,706
------------
13,269,746
------------
MEDIA-NONCABLE 2.2%
2,415 Interpublic Group of Cos., Inc. .......... 5.400 11/15/09 2,281,513
3,495 Knight Ridder, Inc. ...................... 5.750 09/01/17 3,556,921
2,600 News America Holdings, Inc. .............. 8.875 04/26/23 3,436,303
510 News America, Inc. ....................... 7.125 04/08/28 580,814
795 News America, Inc. ....................... 7.300 04/30/28 922,512
900 News America, Inc. ....................... 7.280 06/30/28 1,043,251
3,150 WPP Finance Corp. (United Kingdom)........ 5.875 06/15/14 3,347,023
------------
15,168,337
------------
NATURAL GAS DISTRIBUTORS 0.4%
2,570 Sempra Energy............................. 4.621 05/17/07 2,580,930
------------
</Table>
16 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
NATURAL GAS PIPELINES 1.3%
$ 2,230 Consolidated Natural Gas Co., Ser A....... 5.000% 12/01/14 $ 2,255,826
2,485 Consolidated Natural Gas Co., Ser C....... 6.250 11/01/11 2,702,100
2,115 Ras Laffan Liquefied Natural Gas Co.,
Ltd., 144A-Private Placement (Qatar)
(a)....................................... 8.294 03/15/14 2,506,992
1,470 Texas Eastern Transmission Corp. ......... 7.000 07/15/32 1,792,884
------------
9,257,802
------------
NONCAPTIVE-CONSUMER FINANCE 4.8%
4,660 American Express Co. ..................... 5.500 09/12/06 4,714,592
1,520 American General Finance Corp. ........... 4.625 05/15/09 1,519,669
4,500 American General Finance Corp. ........... 4.625 09/01/10 4,509,864
6,215 Countrywide Home Loans, Inc. ............. 3.250 05/21/08 6,032,683
1,000 HSBC Finance Corp. ....................... 7.875 03/01/07 1,052,470
800 HSBC Finance Corp. ....................... 4.125 12/15/08 794,593
1,175 HSBC Finance Corp. ....................... 4.125 11/16/09 1,161,900
4,700 HSBC Finance Corp. ....................... 6.750 05/15/11 5,200,386
3,475 Residential Capital Corp., 144A-Private
Placement (a)............................. 6.375 06/30/10 3,550,918
4,660 SLM Corp. ................................ 4.000 01/15/10 4,588,185
------------
33,125,260
------------
NONCAPTIVE-DIVERSIFIED FINANCE 4.3%
1,165 CIT Group, Inc. .......................... 7.375 04/02/07 1,220,504
940 CIT Group, Inc. .......................... 3.650 11/23/07 927,419
1,545 CIT Group, Inc. .......................... 4.750 08/15/08 1,563,209
6,000 General Electric Capital Corp., Ser A..... 4.250 01/15/08 6,008,742
5,440 General Electric Capital Corp., Ser A..... 5.875 02/15/12 5,852,787
2,235 General Electric Capital Corp., Ser A..... 4.750 09/15/14 2,265,143
3,845 General Electric Capital Corp., Ser A..... 6.750 03/15/32 4,706,941
6,750 Nationwide Building Society, 144A-Private
Placement (United Kingdom) (a)............ 4.250 02/01/10 6,700,307
------------
29,245,052
------------
OIL FIELD SERVICES 0.1%
760 Panhandle Eastern Pipe Line Co., Ser B.... 2.750 03/15/07 741,594
------------
PAPER 2.3%
2,465 Abitibi-Consolidated, Inc. (Canada)....... 8.550 08/01/10 2,532,788
3,475 Abitibi-Consolidated, Inc. (Canada)....... 8.850 08/01/30 3,301,250
6,420 Bowater Canada Finance (Canada)........... 7.950 11/15/11 6,644,700
1,915 Sappi Papier Hldg AG, 144A-Private
Placement (Austria) (a)................... 6.750 06/15/12 2,005,468
1,100 Weyerhaeuser Co. ......................... 6.000 08/01/06 1,114,136
------------
15,598,342
------------
PHARMACEUTICALS 0.3%
2,000 Abbott Laboratories....................... 5.625 07/01/06 2,024,128
------------
</Table>
See Notes to Financial Statements 17
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
PROPERTY & CASUALTY 3.5%
$ 3,575 AIG Sunamerica Global Financial,
144A-Private Placement (a)................ 6.300% 05/10/11 $ 3,901,265
4,710 Farmers Exchange Capital, 144A-Private
Placement (a)............................. 7.050 07/15/28 5,096,215
2,721 Farmers Insurance Exchange Surplus,
144A-Private Placement (a)................ 8.625 05/01/24 3,379,966
575 Hartford Financial Services Group,
Inc. ..................................... 2.375 06/01/06 566,984
4,610 Mantis Reef Ltd., 144A-Private Placement
(Australia) (a)........................... 4.692 11/14/08 4,589,891
900 Platinum Underwriters Hldgs, Ltd.,
144A-Private Placement (Bermuda) (a)...... 6.371 11/16/07 914,695
3,500 St. Paul Travelers Cos., Inc. ............ 5.010 08/16/07 3,534,066
2,290 Two-Rock Pass Through Trust, 144A-Private
Placement (Variable Rate Coupon) (Bermuda)
(a)....................................... 4.720 02/11/49 2,276,077
------------
24,259,159
------------
RAILROADS 2.2%
3,100 Burlington Northern Santa Fe Corp. ....... 6.125 03/15/09 3,272,214
1,670 Burlington Northern Santa Fe Railway
Co. ...................................... 4.575 01/15/21 1,664,922
1,500 CSX Corp. ................................ 6.750 03/15/11 1,654,127
565 Norfolk Southern Corp. ................... 7.350 05/15/07 592,485
7,375 Union Pacific Corp. ...................... 6.625 02/01/08 7,753,168
------------
14,936,916
------------
REAL ESTATE INVESTMENT TRUSTS 0.4%
525 EOP Operating LP.......................... 4.750 03/15/14 515,751
1,945 Reckson Operating Partnership LP.......... 5.150 01/15/11 1,962,421
------------
2,478,172
------------
REFINING 0.0%
250 Vintage Petroleum, Inc. .................. 7.875 05/15/11 262,500
------------
RETAIL 1.8%
465 CVS Corp. ................................ 5.625 03/15/06 468,090
800 CVS Corp. ................................ 3.875 11/01/07 794,314
2,000 Federated Department Stores, Inc. ........ 6.625 09/01/08 2,121,202
1,500 Federated Department Stores, Inc. ........ 6.300 04/01/09 1,586,708
2,000 Limited Brands, Inc. ..................... 6.950 03/01/33 2,092,148
2,970 May Department Stores Co. ................ 5.950 11/01/08 3,098,194
1,965 Penney J.C. Co., Inc. .................... 7.400 04/01/37 2,193,791
------------
12,354,447
------------
SUPERMARKETS 0.3%
1,800 Kroger Co. ............................... 7.250 06/01/09 1,957,347
------------
TECHNOLOGY 0.3%
1,960 LG Electronics, Inc., 144A-Private
Placement (South Korea) (a)............... 5.000 06/17/10 1,948,838
------------
</Table>
18 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
TEXTILE 0.8%
$ 2,845 Mohawk Industries, Inc., Ser C............ 6.500% 04/15/07 $ 2,935,619
2,090 Mohawk Industries, Inc., Ser D............ 7.200 04/15/12 2,373,726
------------
5,309,345
------------
TOBACCO 0.8%
2,770 Altria Group, Inc. ....................... 7.000 11/04/13 3,098,190
1,970 Altria Group, Inc. ....................... 7.750 01/15/27 2,377,420
------------
5,475,610
------------
TRANSPORTATION SERVICES 0.6%
2,300 FedEx Corp. .............................. 2.650 04/01/07 2,243,183
505 Hertz Corp. .............................. 7.400 03/01/11 500,308
1,500 Hertz Corp. .............................. 7.625 06/01/12 1,488,681
------------
4,232,172
------------
WIRELESS COMMUNICATIONS 1.3%
1,860 AT&T Wireless Services, Inc. ............. 7.875 03/01/11 2,152,191
385 AT&T Wireless Services, Inc. ............. 8.750 03/01/31 542,221
6,000 Verizon Wireless Capital LLC.............. 5.375 12/15/06 6,089,286
------------
8,783,698
------------
WIRELINE COMMUNICATIONS 5.6%
5,005 AT&T Corp. (Belgium)...................... 9.750 11/15/31 6,581,575
3,575 Deutsche Telekom International Finance BV
(Netherlands)............................. 8.750 06/15/30 4,845,208
3,565 France Telecom SA (France)................ 9.250 03/01/31 4,999,356
6,000 SBC Communications, Inc. ................. 4.125 09/15/09 5,931,186
1,500 Sprint Capital Corp. ..................... 7.125 01/30/06 1,517,511
6,650 Sprint Capital Corp. ..................... 6.125 11/15/08 6,983,764
710 Sprint Capital Corp. ..................... 8.750 03/15/32 993,829
1,900 Telecom Italia Capital, (Luxembourg)...... 4.000 11/15/08 1,873,666
3,035 Telecom Italia Capital, 144A-Private
Placement (Luxembourg) (a)................ 4.000 01/15/10 2,957,953
1,000 Verizon Communications, Inc. ............. 7.510 04/01/09 1,097,189
265 Verizon New England, Inc. ................ 6.500 09/15/11 288,585
------------
38,069,822
------------
TOTAL CORPORATE BONDS 80.2%................................................... 548,443,170
------------
MORTGAGE BACKED SECURITIES 0.4%
2,010 World Financial Property, 144A-Private
Placement (a)............................. 6.910 09/01/13 2,161,833
809 World Financial Property, 144A-Private
Placement (a)............................. 6.950 09/01/13 870,089
------------
TOTAL MORTGAGE BACKED SECURITIES............................................... 3,031,922
------------
</Table>
See Notes to Financial Statements 19
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS 12.6%
$ 2,835 Russian Federation, 144A-Private Placement
(a) (c)................................... 5.000/7.500% 03/31/30 $ 3,238,988
5,575 United Mexican States (Mexico)............ 8.375 01/14/11 6,514,388
2,000 United Mexican States (Mexico)............ 10.375 02/17/09 2,374,000
13,150 United States Treasury Bonds.............. 6.125 08/15/29 16,707,180
23,050 United States Treasury Bonds.............. 6.375 08/15/27 29,737,220
500 United States Treasury Bonds.............. 8.125 08/15/21 720,937
28,900 United States Treasury Bonds (STRIPS)
(b)....................................... 0.000 02/15/25 12,368,767
8,775 United States Treasury Bonds (STRIPS)
(b)....................................... 0.000 02/15/27 3,456,288
10,685 United States Treasury Notes.............. 4.250 08/15/13 10,885,354
------------
TOTAL GOVERNMENT OBLIGATIONS................................................... 86,003,122
------------
TOTAL LONG-TERM INVESTMENTS 93.2%
(Cost $618,034,051).......................................................... 637,478,214
------------
SHORT-TERM INVESTMENTS 5.5%
REPURCHASE AGREEMENT 5.4%
State Street Bank & Trust Co. ($36,701,000 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of 3.50%,
dated 08/31/05, to be sold on 09/01/05 at $36,704,568)....................... 36,701,000
U.S. GOVERNMENT AGENCY OBLIGATIONS 0.1%
United States Treasury Bills ($650,000 par, yielding 3.350%, 01/12/06 maturity)
(d).......................................................................... 641,663
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $37,342,955)........................................................... 37,342,663
------------
TOTAL INVESTMENTS 98.7%
(Cost $655,377,006).......................................................... 674,820,877
OTHER ASSETS IN EXCESS OF LIABILITIES 1.3%.................................... 9,230,776
------------
NET ASSETS 100.0%............................................................. $684,051,653
============
</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) Interest only strip.
(c) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
20 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
(d) All or a portion of these securities have been physically segregated in
connection with open futures contracts.
FUTURES CONTRACTS OUTSTANDING AS OF AUGUST 31, 2005:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
FUTURES CONTRACTS CONTRACTS DEPRECIATION
- ----------------------------------------------------------------------------------------
LONG CONTRACTS:
U.S. Treasury Bonds Futures, December 2005 (Current Notional
Value of $118,031 per contract)........................... 136 243,130
U.S. Treasury Notes 10-Year Futures, December 2005 (Current
Notional Value of $112,078 per contract).................. 723 1,015,785
----- -----------
859 1,258,915
----- -----------
SHORT CONTRACTS:
U.S. Treasury Notes 2-Year Futures, December 2005 (Current
Notional Value of $103,547 per contract).................. 475 (302,149)
U.S. Treasury Notes 2-Year Futures, September 2005 (Current
Notional Value of $103,656 per contract).................. 229 (154,270)
U.S. Treasury Notes 5-Year Futures, December 2005 (Current
Notional Value of $108,375 per contract).................. 547 (469,764)
U.S. Treasury Notes 5-Year Futures, September 2005 (Current
Notional Value of $108,531 per contract).................. 225 (155,849)
----- -----------
1,476 (1,082,032)
----- -----------
2,335 $ 176,883
===== ===========
</Table>
SWAP AGREEMENTS OUTSTANDING AT AUGUST 31, 2005:
CREDIT DEFAULT SWAPS
<Table>
<Caption>
PAY/
RECEIVE NOTIONAL UNREALIZED
BUY/SELL FIXED EXPIRATION AMOUNT APPRECIATION/
COUNTERPARTY REFERENCE ENTITY PROTECTION RATE DATE (000) DEPRECIATION
- ----------------------------------------------------------------------------------------------------------
Goldman Sachs Capital
Markets............ Country Wide
Home Loans, Inc. Sell 0.63% 09/20/10 $2,000 $6,865
</Table>
See Notes to Financial Statements 21
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
August 31, 2005
<Table>
ASSETS:
Total Investments, including repurchase agreements of
$36,701,000 (Cost $655,377,006)........................... $674,820,877
Cash........................................................ 925
Receivables:
Interest.................................................. 8,273,026
Fund Shares Sold.......................................... 3,654,601
Unrealized Appreciation on Swap Contracts................... 6,865
Other....................................................... 128,068
------------
Total Assets............................................ 686,884,362
------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 1,072,591
Distributor and Affiliates................................ 392,706
Investments Purchased..................................... 314,071
Income Distributions...................................... 233,441
Investment Advisory Fee................................... 227,924
Variation Margin on Futures............................... 187,897
Accrued Expenses............................................ 224,109
Trustees' Deferred Compensation and Retirement Plans........ 179,970
------------
Total Liabilities....................................... 2,832,709
------------
NET ASSETS.................................................. $684,051,653
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $674,036,464
Net Unrealized Appreciation................................. 19,627,619
Accumulated Undistributed Net Investment Income............. (3,236,929)
Accumulated Net Realized Loss............................... (6,375,501)
------------
NET ASSETS.................................................. $684,051,653
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $502,604,243 and 74,167,575 shares of
beneficial interest issued and outstanding)............. $ 6.78
Maximum sales charge (4.75%* of offering price)......... .34
------------
Maximum offering price to public........................ $ 7.12
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $123,603,215 and 18,279,315 shares of
beneficial interest issued and outstanding)............. $ 6.76
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $29,189,166 and 4,315,032 shares of
beneficial interest issued and outstanding)............. $ 6.76
============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $28,655,029 and 4,225,491 shares of
beneficial interest issued and outstanding)............. $ 6.78
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
22 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended August 31, 2005
<Table>
INVESTMENT INCOME:
Interest.................................................... $31,698,803
Other....................................................... 110,281
-----------
Total Income............................................ 31,809,084
-----------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $1,109,370, $1,239,788 and $272,932
respectively)............................................. 2,622,090
Investment Advisory Fee..................................... 2,462,952
Shareholder Services........................................ 1,414,044
Legal....................................................... 51,786
Custody..................................................... 66,658
Trustees' Fees and Related Expenses......................... 31,747
Other....................................................... 478,894
-----------
Total Expenses.......................................... 7,128,171
Less Credits Earned on Cash Balances.................... 29,388
-----------
Net Expenses............................................ 7,098,783
-----------
NET INVESTMENT INCOME....................................... $24,710,301
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $13,170,637
Futures................................................... (270,419)
-----------
Net Realized Gain........................................... 12,900,218
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 24,131,475
-----------
End of the Period:
Investments............................................. 19,443,871
Futures................................................. 176,883
Swaps................................................... 6,865
-----------
19,627,619
-----------
Net Unrealized Depreciation During the Period............... (4,503,856)
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 8,396,362
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $33,106,663
===========
</Table>
See Notes to Financial Statements 23
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, 2005 AUGUST 31, 2004
---------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income..................................... $ 24,710,301 $ 23,589,120
Net Realized Gain......................................... 12,900,218 7,409,352
Net Unrealized Appreciation/Depreciation During the
Period.................................................. (4,503,856) 4,242,092
------------- -------------
Change in Net Assets from Operations...................... 33,106,663 35,240,564
------------- -------------
Distributions from Net Investment Income:
Class A Shares.......................................... (21,278,452) (18,155,899)
Class B Shares.......................................... (4,977,341) (5,932,410)
Class C Shares.......................................... (1,142,953) (1,295,039)
Class I Shares.......................................... (62,399) -0-
------------- -------------
(27,461,145) (25,383,348)
------------- -------------
Return of Capital Distribution:
Class A Shares.......................................... -0- (148,842)
Class B Shares.......................................... -0- (45,956)
Class C Shares.......................................... -0- (10,002)
Class I Shares.......................................... -0- -0-
------------- -------------
-0- (204,800)
------------- -------------
Total Distributions....................................... (27,461,145) (25,588,148)
------------- -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES....... 5,645,518 9,652,416
------------- -------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................. 283,286,242 213,332,113
Net Asset Value of Shares Issued Through Dividend
Reinvestment............................................ 24,492,761 21,916,096
Cost of Shares Repurchased................................ (179,215,837) (178,594,538)
------------- -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS........ 128,563,166 56,653,671
------------- -------------
TOTAL INCREASE IN NET ASSETS.............................. 134,208,684 66,306,087
NET ASSETS:
Beginning of the Period................................... 549,842,969 483,536,882
------------- -------------
End of the Period (Including accumulated undistributed net
investment income of ($3,236,929) and ($2,623,226),
respectively)........................................... $ 684,051,653 $ 549,842,969
============= =============
</Table>
24 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED AUGUST 31,
CLASS A SHARES ------------------------------------------------
2005 2004 2003 2002 (c) 2001
------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.... $ 6.72 $ 6.58 $ 6.39 $ 6.75 $ 6.43
------ ------ ------ ------ ------
Net Investment Income..................... .29 .33 .33(a) .37 .41
Net Realized and Unrealized Gain/Loss..... .09 .16 .25 (.33) .33
------ ------ ------ ------ ------
Total from Investment Operations............ .38 .49 .58 .04 .74
------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income.................................. .32 .35 .39 .40 .42
Return of Capital Distributions........... -0- -0-(d) -0- -0- -0-
------ ------ ------ ------ ------
Total Distributions......................... .32 .35 .39 .40 .42
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD.......... $ 6.78 $ 6.72 $ 6.58 $ 6.39 $ 6.75
====== ====== ====== ====== ======
Total Return (b)............................ 5.79% 7.55% 9.20% 0.54% 12.10%
Net Assets at End of the Period (In
millions)................................. $502.6 $394.7 $318.4 $246.5 $221.4
Ratio of Expenses to Average Net Assets..... .99% .98% 1.01% 1.03% 1.07%
Ratio of Net Investment Income to Average
Net Assets................................ 4.29% 4.80% 4.98% 5.48% 6.56%
Portfolio Turnover.......................... 61% 38% 46% 82% 112%
</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 1% may be
imposed on certain redemptions made within eighteen months of purchases.
With respect to shares purchased prior to December 1, 2004, a CDSC of 1% may
be imposed on certain redemptions made within one year of purchase. If the
sales charges were included, total returns would be lower. These returns
include combined Rule 12b-1 fees and service fees of up to .25% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(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 by .52%. 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 25
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 ------------------------------------------------
2005 2004 2003 2002 (c) 2001
------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.... $ 6.70 $ 6.57 $ 6.38 $ 6.74 $ 6.42
------ ------ ------ ------ ------
Net Investment Income..................... .24 .26 .28(a) .32 .37
Net Realized and Unrealized Gain/Loss..... .09 .16 .25 (.33) .32
------ ------ ------ ------ ------
Total from Investment Operations............ .33 .42 .53 (.01) .69
------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income.................................. .27 .29 .34 .35 .37
Return of Capital Distributions........... -0- -0-(d) -0- -0- -0-
------ ------ ------ ------ ------
Total Distributions......................... .27 .29 .34 .35 .37
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD.......... $ 6.76 $ 6.70 $ 6.57 $ 6.38 $ 6.74
====== ====== ====== ====== ======
Total Return (b)............................ 5.01% 6.59% 8.38% -0.22% 11.28%
Net Assets at End of the Period (In
millions)................................. $123.6 $126.5 $135.6 $112.3 $ 93.8
Ratio of Expenses to Average Net Assets..... 1.75% 1.75% 1.77% 1.78% 1.82%
Ratio of Net Investment Income to Average
Net Assets................................ 3.55% 4.06% 4.23% 4.73% 5.81%
Portfolio Turnover.......................... 61% 38% 46% 82% 112%
</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 up
to 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 by .52%. 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.
26 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 C SHARES ---------------------------------------------
2005 2004 2003 2002 (c) 2001
---------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD...... $6.71 $6.57 $6.38 $ 6.74 $ 6.42
----- ----- ----- ------ ------
Net Investment Income....................... .24 .27 .28(a) .32 .37
Net Realized and Unrealized Gain/Loss....... .08 .16 .25 (.33) .32
----- ----- ----- ------ ------
Total from Investment Operations.............. .32 .43 .53 (.01) .69
----- ----- ----- ------ ------
Less:
Distributions from Net Investment Income.... .27 .29 .34 .35 .37
Return of Capital Distributions............. -0- -0-(e) -0- -0- -0-
----- ----- ----- ------ ------
Total Distributions........................... .27 .29 .34 .35 .37
----- ----- ----- ------ ------
NET ASSET VALUE, END OF THE PERIOD............ $6.76 $6.71 $6.57 $ 6.38 $ 6.74
===== ===== ===== ====== ======
Total Return (b).............................. 5.17%(d) 6.59%(d) 8.38% -0.22% 11.28%
Net Assets at End of the Period (In
millions)................................... $29.2 $28.6 $29.6 $ 23.4 $ 18.9
Ratio of Expenses to Average Net Assets....... 1.71%(d) 1.73%(d) 1.77% 1.78% 1.84%
Ratio of Net Investment Income to Average Net
Assets...................................... 3.59%(d) 4.07%(d) 4.22% 4.73% 5.79%
Portfolio Turnover............................ 61% 38% 46% 82% 112%
</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 up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(c) 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 by .52%. 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.
See Notes to Financial Statements 27
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<Table>
<Caption>
AUGUST 12, 2005
CLASS I SHARES (COMMENCEMENT OF OPERATIONS) TO
AUGUST 31, 2005
-------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $6.72
-----
Net Investment Income..................................... .03
Net Realized and Unrealized Gain.......................... .06
-----
Total from Investment Operations............................ .09
Less Distributions from Net Investment Income............... .03
-----
NET ASSET VALUE, END OF THE PERIOD.......................... $6.78
=====
Total Return (a)............................................ 1.11%*
Net Assets at End of the Period (In millions)............... $28.7
Ratio of Expenses to Average Net Assets..................... .86%
Ratio of Net Investment Income to Average Net Assets........ 4.32%
Portfolio Turnover.......................................... 61%
</Table>
(a) Assumes reinvestment of all distributions for the period. These returns do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund Shares.
* Non-Annualized
28 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005
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, Class C, and Class I Shares
commenced on September 28, 1992, August 30, 1993, and August 12, 2005,
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. 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. Credit default swaps are valued using market
quotations obtained from brokers. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements, which are short-term
investments 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. Other income is comprised
primarily of consent fees. Consent fees are earned as compensation for agreeing
to changes in the terms of debt instruments. Income and expenses of the Fund are
allocated on a pro rata basis to each class of shares, except for
29
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued
distribution and service fees and incremental transfer agency costs which are
unique to each class of shares.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
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. During the current fiscal year, the Fund utilized capital losses carried
forward of $12,985,784. At August 31, 2005, the Fund had an accumulated capital
loss carryforward for tax purposes of $5,997,297 which will expire according to
the following schedule:
<Table>
<Caption>
AMOUNT EXPIRATION
$5,560,726.................................................. August 31, 2011
436,571.................................................. August 31, 2012
</Table>
At August 31, 2005, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $658,428,892
============
Gross tax unrealized appreciation........................... $ 23,341,457
Gross tax unrealized depreciation........................... (6,944,532)
------------
Net tax unrealized appreciation on investments.............. $ 16,396,925
============
</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 future transactions. All
short-term capital gains and a portion of future gains are included in ordinary
income for tax purposes.
The tax character of distributions paid during the years ended August 31,
2005 and 2004 was as follows:
<Table>
<Caption>
2005 2004
Distribution paid from:
Ordinary Income........................................... $27,486,058 $25,453,701
Return of Capital......................................... -- 204,800
----------- -----------
$27,486,058 $25,658,501
=========== ===========
</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 relating to
distributions in excess of book income for the fiscal year 2005
30
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued
totaling $556,619 was reclassified to capital from accumulated undistributed net
investment income. In addition, permanent book and tax differences of $93
related to the Fund's investments in other regulated investment companies and
$99,410 related to fee income received on tender offers were reclassified from
accumulated undistributed net investment income to accumulated net realized
loss. Additionally, a permanent book and tax difference of $20,475 related to
the recognition of net realized losses on paydowns of mortgage pool obligations
and $1,659,550 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 gains or losses recognized for tax purposes on open
futures transactions at August 31, 2005 and the deferral of losses relating to
wash sales transactions.
F. EXPENSE REDUCTIONS During the year ended August 31, 2005, the Fund's custody
fee was reduced by $29,388 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 $500 million.......................................... .42%
Next $750 million........................................... .35%
Over $1.250 billion......................................... .22%
</Table>
Effective November 1, 2004, the management fee was reduced from .50% for the
first $150 million, .45% for the next $100 million, .40% for the next $100
million, and .35% for any average daily net assets greater than $350 million.
For the year ended August 31, 2005, the Fund recognized expenses of
approximately $41,100 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Fund, of which a Trustee of the Fund
is a partner of such firm and he and his law firm provide legal services as
legal counsel to the Fund.
Under separate Accounting Services and Chief Compliance Officer ("CCO")
Employment agreements, the Adviser provides accounting services and the CCO
provides compliance services to the Fund. The costs of these services are
allocated to each fund. For the year ended August 31, 2005, the Fund recognized
expenses of approximately $36,900, representing Van Kampen Investment Inc.'s or
its affiliates' (collectively "Van Kampen") cost of providing accounting
services to the Fund, as well as, the salary, benefits and related costs of the
CCO and related support staff paid by Van Kampen. Services provided pursuant to
the Accounting Services and CCO Employment agreement are reported as part of
"Other" expenses on the Statement of Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended
August 31, 2005, the Fund recognized expenses of approximately $1,216,900
representing transfer agency fees paid to VKIS. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees.
31
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued
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 $81,400 are
included in "Other" assets on the Statement of Assets and Liabilities at August
31, 2005. Appreciation/depreciation and distributions received from these
investments are recorded with an offsetting increase/decrease in the deferred
compensation obligation and do not affect the net asset value of the Fund.
Benefits under the retirement plan are payable upon retirement for a ten-year
period and are based upon each trustee's years of service to the Fund. The
maximum annual benefit per trustee under the plan is $2,500.
3. CAPITAL TRANSACTIONS
At August 31, 2005, capital aggregated $497,998,156, $119,236,940, 28,429,426
and $28,371,942 for Classes A, B, C and I, respectively. For the year ended
August 31, 2005, transactions were as follows:
<Table>
<Caption>
SHARES VALUE
Sales:
Class A................................................... 32,548,636 $ 218,937,427
Class B................................................... 4,094,787 27,489,442
Class C................................................... 1,210,343 8,129,287
Class I................................................... 4,275,162 28,730,086
----------- -------------
Total Sales................................................. 42,128,928 $ 283,286,242
=========== =============
Dividend Reinvestment:
Class A................................................... 2,871,301 $ 19,334,322
Class B................................................... 631,406 4,241,852
Class C................................................... 127,119 854,183
Class I................................................... 9,204 62,404
----------- -------------
Total Dividend Reinvestment................................. 3,639,030 $ 24,492,761
=========== =============
Repurchases:
Class A................................................... (19,990,174) $(134,416,986)
Class B................................................... (5,319,881) (35,708,060)
Class C................................................... (1,294,715) (8,693,560)
Class I................................................... (58,875) (397,231)
----------- -------------
Total Repurchases........................................... (26,663,645) $(179,215,837)
=========== =============
</Table>
32
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued
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>
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, 2005 and 2004,
1,420,934 and 618,613 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, 2005 and 2004, 46,298 and 0 Class C Shares converted to Class A Shares,
respectively, and are shown in the above tables as sales of Class A shares and
repurchases of Class C 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
33
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued
redemptions made within five years of the purchase for Class B and one year of
the purchase for Class C as detailed in the following schedule.
<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, 2005, Van Kampen, as Distributor for the Fund,
received commissions on sales of the Fund's Class A Shares of approximately
$663,800 and CDSC on redeemed shares of approximately $239,000. 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 $472,313,339 and $342,351,297,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index. The Fund has a variety of reasons to use derivative instruments, such
as to attempt to protect the Fund against possible changes in the market value
of its portfolio or to generate potential gain. All of the Fund's portfolio
holdings, including derivative instruments, are marked to market each day with
the change in value reflected in 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.
A. FUTURES 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
34
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued
variation margin). The risk of loss associated with a futures contract is in
excess of the variation margin reflected on the Statement of Assets and
Liabilities.
Transactions in futures contracts for the year ended August 31, 2005, were
as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at August 31, 2004.............................. 845
Futures Opened.............................................. 8,531
Futures Closed.............................................. (7,041)
------
Outstanding at August 31, 2005.............................. 2,335
======
</Table>
B. CREDIT DEFAULT SWAPS The Fund may enter into credit default swap contracts
for hedging purposes or to gain exposure to a credit in which the Fund may
otherwise invest. A credit default swap is an agreement between two parties to
exchange the credit risk of an issuer. A buyer of a credit default swap is said
to buy protection by paying periodic fees in return for a contingent payment
from the seller if the issuer has a credit event such as bankruptcy, a failure
to pay outstanding obligations or deteriorating credit while the swap is
outstanding. A seller of a credit default swap, as in the case of the Fund, is
said to sell protection and thus collects the periodic fees and profits if the
credit of the issuer remains stable or improves while the swap is outstanding
but the seller in a credit default swap contract would be required to pay an
agreed-upon amount, which approximates the notional amount of the swap as
disclosed in the table following the Portfolio of Investments, to the buyer in
the event of an adverse credit event of the issuer. The Fund accrues for the
periodic fees on swap contracts on a daily basis with the net amount accrued
recorded within unrealized appreciation/depreciation of swap contracts. Upon
cash settlement of the periodic fees, the net amount is recorded as realized
gain/loss on swaps on the Statement of Operations.
Credit default swaps may involve greater risks than if a Fund had invested
in the issuer directly. Credit default swaps are subject to general market risk,
counterparty risk and credit risk. If there is a default by the counterparty,
the Fund will have contractual remedies pursuant to the agreements related to
the transaction.
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 up to 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
35
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued
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 $1,662,700 and $0 for Class B and Class C Shares, respectively.
These amounts may be recovered from future payments under the plan or CDSC. To
the extent the unreimbursed receivable has been fully recovered, any excess
12b-1 fees will be refunded to the Fund on a quarterly basis.
Included in the fees for the year ended August 31, 2005, are payments
retained by Van Kampen of approximately $985,100 and payments made to Morgan
Stanley DW Inc., an affiliate of the Adviser, of approximately $221,500.
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 to investors rather than funds managed by other companies, and (ii)
that the funds advised by the Adviser or its affiliates, including the Fund,
allegedly paid excessive commissions to brokers in return for their alleged
efforts to steer investors to these funds. The complaint seeks, among other
things, unspecified compensatory damages, rescissionary damages, fees and costs.
Plaintiffs have filed a Motion for Leave to file a Supplemental Pleading that
would, among other things, expand the allegations and alleged class.
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. Plaintiff has sought leave to file a second amended
derivative complaint that alleges that the Adviser permitted or recklessly
disregarded market timing and late trading in its proprietary mutual funds in
order to increase assets under management and fees. However, pursuant to an
agreement between the parties, the plaintiff's proposed second amended
derivative complaint was withdrawn and the allegations regarding market timing
and late trading asserted therein were filed in a separate complaint and
coordinated with other cases related to market timing that have been centralized
in a federal court.
36
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued
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.
37
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, 2005, 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.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of August 31, 2005, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. 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, 2005, 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 12, 2005
38
VAN KAMPEN CORPORATE BOND FUND
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
JOSEPH J. MCALINDEN
Executive Vice President and
Chief Investment Officer
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 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.
39
VAN KAMPEN CORPORATE BOND FUND
TRUSTEES AND OFFICERS
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 as of the date of this Annual Report. 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 (60) Trustee Trustee Chairman and Chief 78 Trustee/Director/Managing
Blistex Inc. since 2003 Executive Officer of General Partner of
1800 Swift Drive Blistex Inc., a consumer funds in the Fund
Oak Brook, IL 60523 health care products Complex.
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
Manufacturers'
Association.
Jerry D. Choate (67) Trustee Trustee Prior to January 1999, 76 Trustee/Director/Managing
33971 Selva Road since 1999 Chairman and Chief General Partner of
Suite 130 Executive Officer of the funds in the Fund
Dana Point, CA 92629 Allstate Corporation Complex. Director of
("Allstate") and Allstate Amgen Inc., a
Insurance Company. Prior biotechnological
to January 1995, company, and Director
President and Chief of Valero Energy
Executive Officer of Corporation, an
Allstate. Prior to August independent refining
1994, various management company.
positions at Allstate.
</Table>
40
<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
Rod Dammeyer (64) Trustee Trustee President of CAC, L.L.C., 78 Trustee/Director/Managing
CAC, L.L.C. since 2003 a private company General Partner of
4350 LaJolla Village Drive offering capital funds in the Fund
Suite 980 investment and management Complex. Director of
San Diego, CA 92122-6223 advisory services. Prior Stericycle, Inc.,
to February 2001, Vice Ventana Medical
Chairman and Director of Systems, Inc., and GATX
Anixter International, Corporation, and
Inc., a global Trustee of The Scripps
distributor of wire, Research Institute.
cable and communications Prior to January 2005,
connectivity products. Trustee of the
Prior to July 2000, University of Chicago
Managing Partner of Hospitals and Health
Equity Group Corporate Systems. Prior to April
Investment (EGI), a 2004, Director of
company that makes TheraSense, Inc. Prior
private investments in to January 2004,
other companies. Director of TeleTech
Holdings Inc. and Arris
Group, Inc. Prior to
May 2002, Director of
Peregrine Systems Inc.
Prior to February 2001,
Director of IMC Global
Inc. Prior to July
2000, Director of
Allied Riser
Communications Corp.,
Matria Healthcare Inc.,
Transmedia Networks,
Inc., CNA Surety, Corp.
and Grupo Azcarero
Mexico (GAM).
</Table>
41
<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 (57) Trustee Trustee Managing Partner of 76 Trustee/Director/Managing
Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of
233 South Wacker Drive executive search firm. funds in the Fund
Suite 7000 Trustee on the University Complex.
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
1990, Executive Vice
President of The Exchange
National Bank.
R. Craig Kennedy (53) Trustee Trustee Director and President of 76 Trustee/Director/Managing
1744 R Street, NW since 1995 the German Marshall Fund General Partner of
Washington, DC 20009 of the United States, an funds in the Fund
independent U.S. Complex.
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 (69) Trustee Trustee Prior to 1998, President 78 Trustee/Director/Managing
14 Huron Trace since 2003 and Chief Executive General Partner of
Galena, IL 61036 Officer of Pocklington funds in the Fund
Corporation, Inc., an Complex. Director of
investment holding the Lake Forest Bank &
company. Director of the Trust.
Marrow Foundation.
</Table>
42
<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 (69) Trustee Trustee President of Nelson 76 Trustee/Director/Managing
423 Country Club Drive since 1995 Investment Planning General Partner of
Winter Park, FL 32789 Services, Inc., a funds in the Fund
financial planning Complex.
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 (64) Trustee Trustee President Emeritus and 78 Trustee/Director/Managing
1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of
Chicago, IL 60637 University of Chicago and funds in the Fund
the Adam Smith Complex. Director of
Distinguished Service Winston Laboratories,
Professor in the Inc.
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. (63) Trustee Trustee Chief Communications 76 Trustee/Director/Managing
815 Cumberstone Road since 1999 Officer of the National General Partner of
Harwood, MD 20776 Academy of funds in the Fund
Sciences/National Complex. Director of
Research Council, an Fluor Corp., an
independent, federally engineering,
chartered policy procurement and
institution, from 2001 to construction
November 2003 and Chief organization, since
Operating Officer from January 2004 and
1993 to 2001. Director of Director of Neurogen
the Institute for Defense Corporation, a
Analyses, a federally pharmaceutical company,
funded research and since January 1998.
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>
43
VAN KAMPEN CORPORATE BOND FUND
TRUSTEE AND OFFICER INFORMATION continued
INTERESTED TRUSTEE*
<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
Wayne W. Whalen* (66) Trustee Trustee Partner in the law firm 78 Trustee/Director/Managing
333 West Wacker Drive since 1995 of Skadden, Arps, Slate, General Partner of
Chicago, IL 60606 Meagher & Flom LLP, legal funds in the Fund
counsel to funds in the Complex. Director of
Fund Complex. the Abraham Lincoln
Presidential Library
Foundation.
</Table>
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
44
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
Ronald E. Robison (66) President and Officer President of funds in the Fund Complex since September 2005,
1221 Avenue of the Americas Principal Executive since 2003 Principal Executive Officer of funds in the Fund Complex
New York, NY 10020 Officer since 2003, and previously Executive Vice President of funds
in the Fund Complex from 2003-2005. Managing Director of
Morgan Stanley and Morgan Stanley & Co. Incorporated.
Managing Director of Morgan Stanley Investment Management
Inc. 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 of Morgan Stanley Investment Management Inc.
Joseph J. McAlinden (62) 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., and Morgan Stanley
New York, NY 10020 Investment Officer Investment Management Inc. 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.
Amy R. Doberman (43) 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 since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang (38) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas and Secretary since 2003 Vice President and Secretary of funds in the Fund Complex.
New York, NY 10020
</Table>
45
<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
John L. Sullivan (50) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza Officer since 1996 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen
Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, 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.
Phillip G. Goff (41) Chief Financial Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza Officer and since 2005 since June 2005. Chief Financial Officer and Treasurer of
Oakbrook Terrace, IL 60181 Treasurer funds in the Fund Complex since August 2005. Prior to June
2005, Vice President and Chief Financial Officer of
Enterprise Capital Management, Inc., an investment holding
company.
</Table>
46
Van Kampen Corporate Bond Fund
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
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Van Kampen Corporate Bond Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
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Van Kampen Corporate Bond Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
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
Copyright (C)2005 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
17, 117, 217
CORP ANR 10/05
(VAN KAMPEN INVESTMENTS SHINE LOGO) RN05-0476P-Y08/05
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) The Fund has amended its Code of Ethics during the period covered by the
shareholder report presented in Item 1 hereto to delete from the end of the
following paragraph on page 2 of the Code the phrase "to the detriment of the
Fund.":
"Each Covered Officer must not use his personal influence or personal
relationship improperly to influence investment decisions or financial reporting
by the Fund whereby the Covered Officer would benefit personally (directly or
indirectly)."
Further, 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 were amended during
the period. Exhibit B was then amended again in March 2005 and a third time in
August 2005 and a fourth time in September 2005. All four editions of Exhibit B
are attached. Additionally, Exhibit B was amended to remove Mitchell M. Merin as
a covered officer.
(d) Not applicable.
(e) Not applicable.
(f)
(1) The Fund's Code of Ethics is attached hereto as Exhibit 12A.
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Fund's Board of Trustees has determined that it has two "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees: 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:
2005
REGISTRANT COVERED ENTITIES(1)
AUDIT FEES.......................... $25,200 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES........ $0 $280,000(2)
TAX FEES.................. $2,500(3) $58,688(4)
ALL OTHER FEES............ $0 $655,125(5)
TOTAL NON-AUDIT FEES................ $2,500 $993,813
TOTAL............................... $27,700 $993,813
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(6)
TOTAL NON-AUDIT FEES................ $2,000 $423,809
TOTAL............................... $31,000 $423,809
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 and
assistance with compliance policies and procedures.
(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 AND AMENDED MAY 26, 20041
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).
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.
- ----------
1 This Joint Audit Committee Audit and Non-Audit Services Pre-Approval Policy
and Procedures (the "Policy"), amended as of the date above, supercedes and
replaces all prior versions that may have been amended 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. meanings as defined
in the Joint Audit Committee Charter.
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 Audit services in Appendix B.1. All
other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
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 Audit-related services in Appendix
B.2. All other Audit-related services not listed in Appendix B.2 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
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 Tax Services in Appendix B.3. All Tax services involving large and complex
transactions not listed in Appendix B.3 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).
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 All Other services in Appendix B.4.
Permissible All Other services not listed in Appendix B.4 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
A list of the SEC's prohibited non-audit services is attached to this policy
as Appendix B.5. 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.
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. A sample report is included as Appendix
B.7. 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 Asset Management
- Van Kampen Advisors Inc.
- Van Kampen Funds Inc.
- Van Kampen Investor Services Inc.
- Morgan Stanley Investment Management Inc.
- Morgan Stanley Trust Company
- Morgan Stanley Investment Management Ltd.
- Morgan Stanley Investment Management Company
- Morgan Stanley Asset & Investment Trust Management Company Ltd.
(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 (included herein).
(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.
(a) The Fund has a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: R.
Craig Kennedy, Jerry Choate, Rod Dammeyer.
(b) 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. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits.
(a) 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, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: October 20, 2005
By: /s/ Phillip G. Goff
------------------
Name: Phillip G. Goff
Title: Principal Financial Officer
Date: October 20, 2005