1
Table of Contents
OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 4
PORTFOLIO AT A GLANCE
CREDIT QUALITY 5
SIX-MONTH DIVIDEND HISTORY 5
TOP FIVE SECTORS 6
NET ASSET VALUE AND MARKET PRICE 6
Q&A WITH YOUR PORTFOLIO MANAGERS 7
GLOSSARY OF TERMS 10
BY THE NUMBERS
YOUR FUND'S INVESTMENTS 11
FINANCIAL STATEMENTS 17
NOTES TO FINANCIAL STATEMENTS 22
DIVIDEND REINVESTMENT PLAN 26
FUND OFFICERS AND IMPORTANT ADDRESSES 27
Our generations of money- management experience may help you pursue life's true
wealth.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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OVERVIEW
LETTER TO SHAREHOLDERS
January 19, 2001
Dear Shareholder,
The year 2000 was an especially volatile one for the stock market. To manage
one's portfolio during such unpredictable times requires investment-management
experience, and the following pages should give you some insight into how we
have performed in this difficult environment.
In this report, the portfolio managers will explain how your investment
performed during the reporting period and describe the strategies they used to
manage your fund during that span. The report will also show you how your
investment has performed over time. Helpful charts summarize the fund's largest
investments, and you can examine the complete portfolio to see all of your
fund's holdings as of the end of your fund's reporting period.
At Van Kampen, we place a high priority on providing you and your financial
advisor with the information you need to help you monitor your investments
during all types of markets. With nearly four generations of
investment-management experience, we've been around long
enough to understand that by investing with Van Kampen you're
entrusting us with much more than your money. Your investments
may help make it possible to afford your next house, keep up
with rising college costs, or enjoy a comfortable retirement.
No matter what your reasons for investing, we're thankful that you've chosen to
place your investments with Van Kampen. We will continue to apply our
generations of money-management experience to helping you pursue life's true
wealth.
Sincerely,
[SIG]
Richard F. Powers, III
President and CEO
Van Kampen Asset Management Inc.
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ECONOMIC SNAPSHOT
ECONOMIC GROWTH
ECONOMIC GROWTH, WHICH SPED TOWARD NEAR-RECORD HIGHS IN 1999, SLOWED TO A MORE
SUSTAINABLE PACE IN 2000. GROSS DOMESTIC PRODUCT, THE PRIMARY MEASURE OF
ECONOMIC GROWTH, WAS UP A MODEST 2.2 PERCENT FOR THE THIRD QUARTER ON AN
ANNUALIZED BASIS--THE LATEST FIGURES AVAILABLE AT THE TIME THIS REPORT WAS
PRINTED. BOTH BUSINESS AND CONSUMER DEMAND AND SPENDING ON EXPORTS EASED AS
CONCERNS ABOUT THE COOLING ECONOMY MOUNTED--AND, IN DECEMBER, U.S. MANUFACTURING
ACTIVITY DROPPED TO ITS LOWEST MONTHLY LEVEL IN NEARLY 10 YEARS. ALL OF THESE
FACTORS POINTED TO A SLOWING ECONOMY, ALTHOUGH INDUSTRY ANALYSTS DISAGREE ABOUT
WHETHER THIS SUGGESTS A "SOFT LANDING" OR A RECESSION.
CONSUMER SPENDING AND EMPLOYMENT
CONCERNS ABOUT A WEAKENING STOCK MARKET AND COOLING ECONOMY OVERSHADOWED THE
HOLIDAY SHOPPING PERIOD AS CONSUMER SPENDING EASED INTO A MORE MODERATE PACE.
THESE CONCERNS, COUPLED WITH RISING ENERGY PRICES, HELPED KEEP SPENDING IN CHECK
AND INFLATION WORRIES AT BAY.
THE JOBLESS RATE CONTINUED TO HOLD AT HISTORICALLY LOW LEVELS, REMAINING AT 4.0
PERCENT IN DECEMBER FOR THE SECOND CONSECUTIVE MONTH. GROWTH IN OVERALL
COMPENSATION COSTS (SUCH AS WAGES AND BENEFITS) CONTINUED TO SLOW, FURTHER
RELIEVING INFLATIONARY PRESSURES.
INTEREST RATES AND INFLATION
THE CONSUMER PRICE INDEX, A COMMON MEASURE OF THE INFLATION RATE, ROSE A
MODERATE 3.4 PERCENT FOR THE 12 MONTHS ENDED DECEMBER 31, 2000. AT THE BEGINNING
OF THE YEAR, IN AN EFFORT TO WARD OFF INFLATION, THE FEDERAL RESERVE ATTEMPTED
TO CURB ECONOMIC GROWTH WITH THREE INTEREST-RATE HIKES. BY THE LATTER HALF OF
THE YEAR, THE ECONOMY BEGAN TO SHOW SIGNS THAT THE FED'S EFFORTS HAD ACHIEVED
THE DESIRED EFFECTS. WITH INFLATION CONCERNS SUBSIDING, FED POLICYMAKERS
GATHERED FOR THEIR DECEMBER MEETING AND OPTED NOT TO CHANGE INTEREST RATES--BUT
THEY DID SUGGEST FUTURE RATE
CUTS WERE POSSIBLE. (NOTE: THE FEDERAL RESERVE SURPRISED MANY OBSERVERS ON
JANUARY 3, 2001, BY ANNOUNCING AN INTEREST-RATE CUT OF 0.50 PERCENT PRIOR TO ITS
SCHEDULED LATE-JANUARY MEETING.)
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U.S. GROSS DOMESTIC PRODUCT
SEASONALLY ADJUSTED ANNUALIZED RATES
(September 30, 1998--September 30, 2000)
[BAR GRAPH]
U.S. GROSS DOMESTIC PRODUCT
---------------------------
Sep 98 3.8
Dec 98 5.9
Mar 99 3.5
Jun 99 2.5
Sep 99 5.7
Dec 99 8.3
Mar 00 4.8
Jun 00 5.6
Sep 00 2.2
Source: Bureau of Economic Analysis
INTEREST RATES AND INFLATION
(December 31, 1998--December 31, 2000)
[LINE GRAPH]
INTEREST RATES INFLATION
-------------- ---------
Dec 98 4.75 1.6
4.75 1.7
4.75 1.7
Mar 99 4.75 1.8
4.75 2.3
4.75 2.1
Jun 99 5 2
5 2.1
5.25 2.3
Sep 99 5.25 2.6
5.25 2.6
5.5 2.6
Dec 99 5.5 2.7
5.5 2.7
5.75 3.2
Mar 00 6 3.8
6 3.1
6.5 3.2
Jun 00 6.5 3.7
6.5 3.7
6.5 3.4
Sep 00 6.5 3.5
6.5 3.4
6.5 3.4
Dec 00 6.5 3.4
Interest rates are represented by the closing midline federal funds target rate
on the last day of each month. Inflation is indicated by the annual percent
change of the Consumer Price Index for all urban consumers at the end of each
month.
Source: Bloomberg
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PERFORMANCE SUMMARY
RETURN HIGHLIGHTS
(as of December 31, 2000)
------------------------------------------------------------------------
NYSE Ticker Symbol VBF
------------------------------------------------------------------------
Six month total return based on market price(1) 8.14%
------------------------------------------------------------------------
Six month total return based on NAV(2) 6.86%
------------------------------------------------------------------------
Distribution rate as a % of closing common stock
price(3) 7.80%
------------------------------------------------------------------------
Net asset value $19.29
------------------------------------------------------------------------
Closing common stock price $17.4375
------------------------------------------------------------------------
Six month high common stock price (12/19/00) $18.2500
------------------------------------------------------------------------
Six month low common stock price (10/18/00) $16.2500
------------------------------------------------------------------------
(1) Total return based on market price assumes an investment at the market price
at the beginning of the period indicated, reinvestment of all distributions
for the period in accordance with the Fund's dividend reinvestment plan, and
sale of all shares at the closing stock price at the end of the period
indicated.
(2) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3) Distribution rate represents the quarterly annualized distributions of the
Fund at the end of the period and not the earnings of the Fund.
Past performance is no guarantee of future results. Investment return, stock
price and net asset value will fluctuate with market conditions. As a result
of recent market activity, current performance may vary from the figures
shown. Fund shares, when sold, may be worth more or less than their original
cost.
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PORTFOLIO AT A GLANCE
CREDIT QUALITY
(as a percentage of long-term investments)
As of December 31, 2000
- AAA/Aaa............ 2.8% [PIE CHART]
- AA/Aa.............. 10.0%
- A/A................ 27.4%
- BBB/Baa............ 51.3%
- BB/Ba.............. 7.9%
- B/B................ 0.6%
As of June 30, 2000
- AAA/Aaa............ 3.9% [PIE CHART]
- AA/Aa.............. 13.1%
- A/A................ 23.7%
- BBB/Baa............ 49.9%
- BB/Ba.............. 9.0%
- B/B................ 0.4%
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
SIX-MONTH DIVIDEND HISTORY
(for the period ended December 31, 2000)
[BAR GRAPH]
DIVIDENDS
---------
9/00 0.34
12/00 0.34
The dividend history represents past performance of the fund and is no guarantee
of the fund's future dividends.
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TOP FIVE SECTORS
(as a percentage of long-term investments)
[BAR GRAPH]
DECEMBER 31, 2000 JUNE 30, 2000
----------------- -------------
Utilities 22.3 22.1
Consumer Services 19.4 19.4
Finance 15.5 13.2
Energy 9.5 10.5
Transportation 9 9.5
NET ASSET VALUE AND MARKET PRICE
(based upon quarter-end values--December 1990 through December 2000)
[LINE GRAPH]
NET ASSET VALUE MARKET PRICE
--------------- ------------
12/90 18.61 16.75
18.78 18.25
18.68 18.38
19.34 19.13
12/91 19.89 20.13
19.36 19.63
19.85 19.75
20.41 21.25
12/92 20.05 20.25
20.94 20.75
21.33 20.75
21.95 20.88
12/93 21.29 20.38
20.12 18
19.06 18.13
18.79 17.13
12/94 18.59 16.75
19.3 18.25
20.41 19.13
20.57 19
12/95 21.27 19.63
20.18 19.38
19.64 18.13
19.96 18.75
12/96 20.31 18.75
18.87 18.63
20.43 19.25
20.77 19.81
12/97 20.91 20.81
20.92 20.38
21.16 19.6875
21.35 19.8125
12/98 21.09 20.0625
20.4 19.25
19.59 17.875
19.31 16.375
12/99 18.98 15.6875
18.98 16.0625
18.7 16.75
18.92 17.0625
12/00 19.29 17.4375
The solid line above represents the fund's net asset value (NAV), which
indicates overall changes in value among the fund's underlying securities. The
fund's market price is represented by the dashed line, which indicates the price
the market is willing to pay for shares of the fund at a given time. Market
price is influenced by a range of factors, including supply and demand and
market conditions.
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[PHOTO]
Q&A WITH YOUR PORTFOLIO MANAGERS
WE RECENTLY SPOKE WITH THE MANAGEMENT TEAM OF THE VAN KAMPEN BOND FUND
ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS AND INFLUENCED
THE FUND'S RETURN DURING THE PAST SIX MONTHS. THE TEAM IS LED BY KELLY GILBERT,
PORTFOLIO MANAGER, WHO HAS MANAGED THE FUND SINCE JUNE 1999 AND HAS WORKED IN
THE INVESTMENT INDUSTRY SINCE 1995. THE FOLLOWING DISCUSSION REFLECTS HER VIEWS
ON THE FUND'S PERFORMANCE DURING THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2000.
Q HOW WOULD YOU DESCRIBE
THE MARKET ENVIRONMENT IN WHICH THE FUND OPERATED, AND HOW DID THE FUND
PERFORM IN THAT ENVIRONMENT?
A The fund performed surprisingly
well, considering that the past six months was one of the most difficult periods
in the last decade for investment-grade corporate bonds.
Amid heightened uncertainty about the economy's health, corporate earnings,
the presidential election, and other technical and fundamental factors, bond
investors traded up in quality, favoring the highest-rated, most liquid
corporate issues or opting instead for U.S. Treasury securities.
The government's decision to devote a portion of the federal budget surplus
to buying back long-term debt helped boost the Treasury market, often at the
expense of corporate bonds. At the same time, the Federal Reserve Board pushed
short-term interest rates higher over the first half of 2000, which contributed
to an inversion of the Treasury market yield curve (that is, short-term rates
were higher than long-term rates). As a result, the yield spread between
Treasuries and corporates hovered near a 10-year high by the close of the
reporting period, indicating that Treasuries were outperforming corporate bonds.
Adding to the corporate market's uneasiness was an increase in the default
rate, particularly in the high-yield market, and credit problems that led to
unexpected ratings downgrades among some of the more prominent corporate bond
issuers, such as JC Penney, Conseco, Xerox and Dillard's. Stock market
volatility and weakening corporate earnings also caused concern, as did soaring
energy prices, which hit oil-reliant industries like chemicals and airlines
especially hard.
Although the corporate market performed fairly well during the third quarter
of 2000, the fourth quarter brought negative earnings announcements by pivotal
companies, such as Lucent, Owens-Corning and Xerox. The last few months of the
year were
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haunted by fears that a slowing economy would further weaken corporate earnings
and make it harder for companies to repay their debt.
These events made investors extremely sensitive to bad news, and they were
quick to sell corporate bonds at the first sign of trouble. Furthermore, good
news was virtually ignored. As market performance suffered, investors retreated
into a "wait-and-see" mode and became reluctant to commit capital to the
corporate bond market.
Despite this challenging environment, the fund continued to provide
shareholders with an attractive level of income and a respectable total return.
The fund's quarterly dividend of $0.34 per share translates to a distribution
rate of 7.80 percent based on the fund's closing market price on December 31,
2000. For the six months through December 31, 2000, the fund produced a total
return of 8.14 percent based on market price, a figure that compares favorably
to its benchmark--the Lehman Brothers BBB Corporate Bond Index. The fund's
return reflects an increase in market price from $16.7500 per share on June 30,
2000, to $17.4375 per share on December 31, 2000. Of course, past performance is
no guarantee of future results. As a result of recent market activity, current
performance may vary from the figures shown. By comparison, the Lehman Brother
BBB Corporate Bond Index posted a total return of 2.33 percent for the same
period. This broad-based, unmanaged index, which reflects the general
performance of corporate bonds, does not reflect any commissions or fees that
would be paid by an investor purchasing the securities it represents. Such costs
would lower performance. It is not possible to invest directly in an index. For
additional performance results, please refer to the chart and footnotes on page
4.
Q WHAT SPECIFIC STRATEGIES DID
YOU EMPLOY IN POSITIONING THE PORTFOLIO?
A Like most investors in this hostile
market environment, we found it wise to allocate assets to the more liquid,
higher-quality issuers, such as Disney, ConAgra and Unilever. While these names
were well represented in the fund, we also added diversification across the
spectrum of issuer size and industry. By year-end, the portfolio contained 127
issues, an increase of 17 since June 30, 2000.
Our selection of investments favored some of the more defensive sectors,
such as energy, defense, and cable media. At the same time, we reduced the
fund's exposure to some of the more economically sensitive sectors, like retail,
and to oil-dependent industries such as chemicals.
Of course, the portfolio was not immune to the challenges of this difficult
market. Credit problems surfaced in association with some of the fund's
investments, such as downgrades in the credit rating of Conseco and Crown Cork &
Seal (holdings that have since been sold out of the portfolio).
Nevertheless, the fund's broad diversification, its emphasis on quality and
liquidity, and a relatively healthy credit-quality profile were all factors
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that contributed to the fund's solid performance for the last six months.
Q WHAT IS YOUR OUTLOOK FOR THE
MARKET AND THE FUND IN THE MONTHS AHEAD?
A The key to any rebound in the
corporate bond market will be the strength of the economy. If the economy
weakens too much, a rough road could lie ahead, because a recessionary period
would make it more difficult for companies to repay their debt. We will continue
to monitor the health of the economy, maintaining a broadly diversified
portfolio and an emphasis on high-quality, liquid securities in primarily
defensive market sectors.
We are cautiously optimistic as we look ahead to the upcoming year. The
market has experienced a significant decline amid a laundry list of negative
indicators, so we feel there is likely to be room for improvement in the near
term.
Other positive signs that bode well for the corporate bond market include a
low supply of newly issued bonds, light dealer inventories, and a fairly sizable
level of available cash that has built up as investors waited on the sidelines
for opportunities to reenter the market.
With corporate bonds trading at such wide spreads relative to Treasury
securities, we will be on the lookout for opportunities to capitalize on
attractive values from a total return perspective.
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GLOSSARY OF TERMS
A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.
BOND: A debt security issued by a government or corporation that pays a
bondholder a stated rate of interest and repays the principal at the maturity
date.
DEFENSIVE INVESTMENT STRATEGY: A method of portfolio allocation and management
aimed at minimizing the risk of losing principal. Defensive investors place a
high percentage of their investable assets in bonds, cash equivalents, and
stocks that are less volatile than average.
DIVERSIFICATION: A method of portfolio allocation and management aimed at
balancing investment risk and return; a balanced portfolio may combine stocks,
bonds, and cash equivalents.
FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve
System, which is the central bank of the United States. Its policy-making
committee, called the Federal Open Market Committee, meets at least eight times
a year to establish monetary policy and monitor the economic pulse of the United
States.
LIQUIDITY: The ease with which an investor can buy or sell a security at a
reasonable price.
YIELD CURVE: The pattern that results from viewing the yields of U.S. Treasury
securities maturing in 1, 5, 10, and 30 years. When grouped together and
graphed, a pattern of increasing yield is often reflected as the time to
maturity extends. This pattern creates an upward sloping "curve." A "flat" yield
curve represents little difference between short- and long-term interest rates,
while a "negative" yield curve represents decreasing yields as the time to
maturity extends.
YIELD SPREAD: The additional yield investors can earn by either investing in
bonds with longer maturities or by investing in bonds with lower credit ratings.
The spread is the difference in yield between bonds with short versus long
maturities or the difference in yield between high-quality bonds and
lower-quality bonds.
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BY THE NUMBERS
YOUR FUND'S INVESTMENTS
December 31, 2000 (Unaudited)
THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CORPORATE BONDS 91.0%
CHEMICAL 0.5%
$1,000 Dow Chemical Co. ............................ 7.375% 11/01/29 $ 1,019,110
------------
CONSUMER DISTRIBUTION 3.6%
1,000 Anheuser Busch Cos., Inc. ................... 6.800 01/15/31 1,001,580
2,000 ConAgra, Inc. ............................... 7.875 09/15/10 2,159,514
2,400 Kroger Co. .................................. 7.375 03/01/05 2,478,756
1,000 Pepsi Bottling Group, Inc. .................. 7.000 03/01/29 995,666
1,250 Wal Mart Stores, Inc. ....................... 6.875 08/10/09 1,309,237
------------
7,944,753
------------
CONSUMER DURABLES 0.3%
750 Brunswick Corp. ............................. 7.125 08/01/27 685,442
------------
CONSUMER NON-DURABLES 0.9%
1,500 Unilever Capital Corp. ...................... 6.875 11/01/05 1,549,872
500 Westpoint Stevens, Inc. ..................... 7.875 06/15/05 380,000
------------
1,929,872
------------
CONSUMER SERVICES 18.9%
250 Adelphia Communications Corp. ............... 9.250 10/01/02 244,375
1,000 AT&T Canada, Inc. (Canada)................... 7.650 09/15/06 980,691
500 Charter Communication Holdings, LLC.......... 8.250 04/01/07 457,500
2,500 Clear Channel Commerce, Inc. ................ 7.250 10/15/27 2,280,757
2,000 Comcast Cable Communications................. 8.125 05/01/04 2,084,274
1,250 CSC Holdings, Inc. .......................... 7.875 12/15/07 1,262,500
2,500 CSC Holdings, Inc. .......................... 7.875 02/15/18 2,400,000
1,750 Harcourt General, Inc. ...................... 8.875 06/01/22 1,812,702
1,000 Harcourt General, Inc. ...................... 7.200 08/01/27 844,799
1,750 Liberty Media Corp. ......................... 8.250 02/01/30 1,600,713
See Notes to Financial Statements
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YOUR FUND'S INVESTMENTS
December 31, 2000 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CONSUMER SERVICES (CONTINUED)
$2,880 News America Holdings, Inc. ................. 8.875% 04/26/23 $ 2,994,204
2,000 Park Place Entertainment Corp. .............. 7.950 08/01/03 2,028,244
1,500 Stewart Enterprises, Inc. ................... 6.400 05/01/13 997,901
11,000 Tele Communications, Inc. ................... 9.250 01/15/23 11,675,004
2,000 Time Warner Entertainment Co. ............... 8.375 07/15/33 2,176,814
1,000 Time Warner, Inc. ........................... 7.975 08/15/04 1,046,697
1,250 Verizon Global Fund Corp., 144A Private
Placement (a)................................ 6.750 12/01/05 1,260,012
1,000 Viacom, Inc. ................................ 7.750 06/01/05 1,042,985
500 Viacom, Inc. ................................ 7.875 07/30/30 514,058
2,000 Vodafone Airtouch PLC (United Kingdom)....... 7.750 02/15/10 2,073,060
1,500 Walt Disney Co. ............................. 7.300 02/08/05 1,564,359
------------
41,341,649
------------
ENERGY 9.3%
1,000 Amerada Hess Corp. .......................... 7.875 10/01/29 1,048,652
2,500 Ashland, Inc. ............................... 6.860 05/01/09 2,401,537
1,000 Ashland Oil, Inc. ........................... 8.800 11/15/12 1,119,349
750 Barrett Resources Corp. ..................... 7.550 02/01/07 722,813
500 Coastal Corporation.......................... 7.500 08/15/06 517,465
1,000 El Paso Energy Corp. ........................ 6.950 12/15/07 1,003,818
2,500 Enron Corp. ................................. 7.125 05/15/07 2,573,765
500 Grant Prideco, Inc. , 144A Private
Placement (a)................................ 9.625 12/01/07 516,250
2,000 Norcen Energy Resources Ltd. (Canada)........ 7.375 05/15/06 2,072,572
2,025 PDV America, Inc. ........................... 7.875 08/01/03 1,977,753
500 Pemex Project................................ 9.125 10/13/10 497,500
1,500 Petroliam Nasional Berhad, 144A Private
Placement (Malaysia) (a)..................... 7.625 10/15/26 1,334,218
1,000 R & B Falcon Corp. .......................... 6.500 04/15/03 970,000
1,500 Tosco Corp. ................................. 8.250 05/15/03 1,569,687
1,000 Transcontinental Gas Pipe Line Corp. ........ 7.250 12/01/26 952,655
1,000 Union Oil Co. ............................... 9.125 02/15/06 1,104,017
------------
20,382,051
------------
FINANCE 15.1%
2,000 Abbey National PLC (United Kingdom).......... 7.350 10/29/49 1,928,370
2,500 American Re Corp. ........................... 7.450 12/15/26 2,423,832
2,000 AvalonBay Communities, Inc. ................. 7.500 08/01/09 1,998,726
500 Banco Santiago (Chile)....................... 7.000 07/18/07 467,437
1,000 Bank One Corp. .............................. 7.625 08/01/05 1,039,779
600 Capital One Bank............................. 8.250 06/15/05 607,382
1,000 Citigroup, Inc. ............................. 7.250 10/01/10 1,032,166
See Notes to Financial Statements
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YOUR FUND'S INVESTMENTS
December 31, 2000 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
FINANCE (CONTINUED)
$2,000 Conseco, Inc. ............................... 8.500% 10/15/02 $ 1,750,000
1,900 EOP Operating LP............................. 7.750 11/15/07 1,941,804
2,000 Ford Motor Credit Co. ....................... 6.700 07/16/04 1,996,400
1,000 Ford Motor Credit Co. ....................... 7.375 10/28/09 1,001,580
1,750 General Electric Capital Corp. .............. 6.500 12/10/07 1,771,542
1,500 Household Finance Corp. ..................... 8.375 11/15/01 1,525,481
2,500 International Lease Finance Corp. ........... 8.375 12/15/04 2,669,885
1,000 Korea Development Bank (Korea)............... 7.375 09/17/04 1,003,517
2,000 Lehman Brothers Holdings, Inc. .............. 8.500 05/01/07 2,126,170
1,000 Liberty Property Trust....................... 8.500 08/01/10 1,050,883
1,000 National Australia Bank (Australia).......... 8.600 05/19/10 1,111,151
1,750 Nordbanken AB , 144A Private Placement
(Norway) (a)................................. 7.250 11/12/09 1,778,644
1,000 Paine Webber Group, Inc. .................... 6.375 05/15/04 1,004,505
1,500 PNC Funding Corp. ........................... 6.875 07/15/07 1,503,794
500 Societe Generale Real Estate Co., LLC , 144A
Private Placement (a)........................ 7.640 12/29/49 480,025
1,000 Washington Mutual Capital, Inc. ............. 8.375 06/01/27 935,029
------------
33,148,102
------------
HEALTHCARE 1.1%
1,000 Columbia HCA Healthcare Corp. ............... 6.910 06/15/05 964,479
1,500 Tenet Healthcare Corp. ...................... 8.000 01/15/05 1,522,500
------------
2,486,979
------------
PRODUCER MANUFACTURING 4.8%
2,000 Daimler Chrysler NA Holding.................. 7.750 05/27/03 2,026,228
1,000 Ford Motor Co. .............................. 7.450 07/16/31 943,100
1,750 IDEX Corp. .................................. 6.875 02/15/08 1,614,167
2,000 ITT Corp. ................................... 6.750 11/15/05 1,940,000
1,000 Lockheed Martin Corp. ....................... 8.500 12/01/29 1,138,113
162 Rayovac Corp. ............................... 10.250 11/01/06 164,430
1,750 USA Waste Services, Inc. .................... 7.000 10/01/04 1,715,621
1,000 USX Marathon Group........................... 6.650 02/01/06 1,000,841
------------
10,542,500
------------
RAW MATERIALS/PROCESSING INDUSTRIES 4.4%
1,400 Abitibi Consolidated, Inc. (Canada).......... 8.300 08/01/05 1,431,364
2,000 Bowater, Inc. ............................... 9.375 12/15/21 2,099,506
2,000 Georgia Pacific Corp. ....................... 9.950 06/15/02 2,006,266
See Notes to Financial Statements
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15
YOUR FUND'S INVESTMENTS
December 31, 2000 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
RAW MATERIALS/PROCESSING INDUSTRIES (CONTINUED)
$4,000 IMC Global, Inc. ............................ 6.875% 07/15/07 $ 3,000,580
1,000 IMC Global, Inc. ............................ 7.300 01/15/28 570,591
450 Sequa Corp. ................................. 9.000 08/01/09 448,875
------------
9,557,182
------------
TECHNOLOGY 1.6%
1,250 Northrop Grumman Corp. ...................... 7.000 03/01/06 1,253,572
1,150 Raytheon Co. ................................ 6.750 08/15/07 1,143,166
1,000 Sun Microsystems, Inc. ...................... 7.500 08/15/06 1,031,951
------------
3,428,689
------------
TRANSPORTATION 8.8%
3,000 AMR Corp. ................................... 9.500 05/15/01 3,011,712
1,625 Canadian National Railway Co. (Canada)....... 7.625 05/15/23 1,637,313
7,000 Union Pacific Corp. ......................... 8.350 05/01/25 7,828,044
6,000 United Airlines, Inc. ....................... 10.020 03/22/14 6,787,230
------------
19,264,299
------------
UTILITIES 21.7%
1,000 AES Corp. ................................... 9.500 06/01/09 1,030,000
3,000 Arizona Public Service Co. .................. 9.500 04/15/21 3,140,232
3,500 Arizona Public Service Co. .................. 8.750 01/15/24 3,687,180
1,000 Calpine Corporation.......................... 8.625 08/15/10 1,035,000
1,000 Cleveland Electric Illuminating Co. ......... 7.625 08/01/02 1,014,274
2,000 CMS Energy Corp. ............................ 6.750 01/15/04 1,895,000
1,000 Commonwealth Edison Co. ..................... 8.625 02/01/22 1,040,328
250 Dobson Communications Corp. ................. 10.875 07/01/10 246,250
935 Global Crossing Holdings Ltd. ............... 9.125 11/15/06 897,600
5,000 GTE North, Inc. ............................. 8.500 12/15/31 5,173,645
3,000 Gulf States Utilities Co. ................... 8.940 01/01/22 3,213,348
500 Israel Electric Corp., Ltd., 144A Private
Placement (Israel) (a)....................... 8.250 10/15/09 511,437
1,323 Niagara Mohawk Power Corp. .................. 7.625 10/01/05 1,376,098
7,000 Public Service Co. of Colorado............... 8.750 03/01/22 7,289,961
2,000 Qwest Capital Funding, Inc. , 144A Private
Placement (a)................................ 7.900 08/15/10 2,055,006
2,000 Southern California Gas Co. ................. 8.750 10/01/21 2,105,138
2,000 Southern Energy, Inc., 144A Private Placement
(a).......................................... 7.900 07/15/09 1,987,916
See Notes to Financial Statements
14
16
YOUR FUND'S INVESTMENTS
December 31, 2000 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
UTILITIES (CONTINUED)
$ 250 Spectrasite Holdings, Inc. , 144A Private
Placement (a)................................ 12.500% 11/15/10 $ 249,375
1,000 Sprint Capital Corp. ........................ 6.125 11/15/08 893,185
5,000 United Telecommunications Kansas............. 9.500 04/01/03 5,293,405
500 UtiliCorp United, Inc. ...................... 6.700 10/15/06 499,647
3,000 UtiliCorp United, Inc. ...................... 8.270 11/15/21 2,979,441
------------
47,613,466
------------
TOTAL CORPORATE BONDS 91.0%.............................................. 199,344,094
------------
GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS
GOVERNMENT 6.5%
2 Federal Home Loan Mortgage Corp., Pool....... 7.375 01/01/03 1,873
500 Federal National Mortgage Association........ 5.750 04/15/03 501,992
2,000 Federal National Mortgage Association........ 7.000 07/15/05 2,100,986
1 Government National Mortgage Assn., Pool..... 10.000 10/15/16 974
7 Government National Mortgage Assn., Pool..... 10.000 07/15/20 7,635
1,000 Malaysia (Malaysia).......................... 8.750 06/01/09 1,086,343
1,400 Ontario Province (Canada).................... 7.625 06/22/04 1,475,258
2,500 Quebec Province (Canada)..................... 8.800 04/15/03 2,652,650
3,000 Saskatchewan Province (Canada)............... 8.000 07/15/04 3,191,340
500 United Mexican States (Mexico)............... 8.500 02/01/06 505,625
1,000 United Mexican States (Mexico)............... 10.375 02/17/09 1,095,000
1,050 United States Treasury Notes................. 5.375 06/30/03 1,056,382
600 United States Treasury Notes................. 6.750 05/15/05 638,830
------------
TOTAL GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS........................ 14,314,888
------------
TOTAL LONG-TERM INVESTMENTS 97.5%
(Cost $210,081,708)..................................................... 213,658,982
------------
See Notes to Financial Statements
15
17
YOUR FUND'S INVESTMENTS
December 31, 2000 (Unaudited)
MARKET
DESCRIPTION VALUE
REPURCHASE AGREEMENT 0.5%
BankAmerica Securities ($1,110,000 par collateralized by U.S. Government
Obligations in a pooled cash account, dated 12/29/00, to be sold on 01/02/01
at $1,110,789) (Cost $1,110,000)............................................ $ 1,110,000
------------
TOTAL INVESTMENTS 98.0%
(Cost $211,191,708)......................................................... 214,768,982
OTHER ASSETS IN EXCESS OF LIABILITIES $2.0%.................................. 4,391,233
------------
NET ASSETS 100.0%............................................................ $219,160,215
============
(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
transactions with qualified institutional buyers.
See Notes to Financial Statements
16
18
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
December 31, 2000 (Unaudited)
ASSETS:
Total Investments (Cost $211,191,708)....................... $214,768,982
Cash........................................................ 70
Interest Receivable......................................... 4,540,951
Other....................................................... 47,431
------------
Total Assets............................................ 219,357,434
============
LIABILITIES:
Payables:
Investment Advisory Fee................................... 83,400
Affiliates................................................ 997
Accrued Expenses............................................ 56,709
Trustees' Deferred Compensation and Retirement Plans........ 56,113
------------
Total Liabilities....................................... 197,219
------------
NET ASSETS.................................................. $219,160,215
============
NET ASSETS CONSIST OF:
Common Shares ($1.00 par value with 15,000,000 shares
authorized, 11,362,465 shares issued and outstanding)..... $ 11,362,465
Capital..................................................... 207,645,504
Net Unrealized Appreciation................................. 3,577,274
Accumulated Undistributed Net Investment Income............. 827,009
Accumulated Net Realized Loss............................... (4,252,037)
------------
NET ASSETS.................................................. $219,160,215
============
NET ASSET VALUE PER COMMON SHARE ($219,160,215 divided by
11,362,465 shares outstanding)............................ $ 19.29
============
See Notes to Financial Statements
17
19
Statement of Operations
For the Six Months Ended December 31, 2000 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $ 8,769,078
Other....................................................... 11,000
-----------
Total Income............................................ 8,780,078
-----------
EXPENSES:
Investment Advisory Fee..................................... 527,688
Shareholder Services........................................ 60,050
Trustees' Fees and Related Expenses......................... 19,600
Custody..................................................... 11,212
Legal....................................................... 3,340
Other....................................................... 76,289
-----------
Total Expenses.......................................... 698,179
Less Credits Earned on Cash Balances.................... 217
-----------
Net Expenses............................................ 697,962
-----------
NET INVESTMENT INCOME....................................... $ 8,082,116
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... $ (109,796)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (2,902,755)
End of Period............................................. 3,577,274
-----------
Net Unrealized Appreciation During the Period............... 6,480,029
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 6,370,233
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $14,452,349
===========
See Notes to Financial Statements
18
20
Statement of Changes in Net Assets
For the Six Months Ended December 31, 2000 and the Year Ended June 30, 2000
(Unaudited)
SIX MONTHS
ENDED YEAR ENDED
DECEMBER 31, 2000 JUNE 30, 2000
----------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................... $ 8,082,116 $ 16,242,799
Net Realized Loss................................... (109,796) (4,142,167)
Net Unrealized Appreciation/Depreciation During the
Period............................................ 6,480,029 (6,420,944)
------------ ------------
Change in Net Assets from Operations................ 14,452,349 5,679,688
Distributions from Net Investment Income:........... (7,725,669) (15,861,856)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES........................................ 6,726,680 (10,182,168)
NET ASSETS:
Beginning of the Period............................. 212,433,535 222,615,703
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $827,009
and $470,562, respectively)....................... $219,160,215 $212,433,535
============ ============
See Notes to Financial Statements
19
21
Financial Highlights
(Unaudited)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED
DECEMBER 31, ----------------------------
2000 2000 1999 1998
-------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................. $ 18.70 $ 19.59 $ 21.16 $ 20.26
-------- ------- ------- --------
Net Investment Income.............. .71 1.43 1.41 1.48
Net Realized and Unrealized
Gain/Loss........................ .56 (.93) (1.56) .93
-------- ------- ------- --------
Total from Investment Operations..... 1.27 .50 (0.15) 2.41
Less Distributions from Net
Investment Income.................. .68 1.39 1.42 1.51
-------- ------- ------- --------
NET ASSET VALUE, END OF THE PERIOD... $ 19.29 $ 18.70 $ 19.59 $ 21.16
======== ======= ======= ========
Market Price Per Share at End of the
Period............................. $17.4375 $16.750 $17.875 $19.6875
Total Investment Return at Market
Price (a).......................... 8.14%* 1.88% -2.45% 10.08%
Total Return at Net Asset Value
(b)................................ 6.86%* 2.67% -0.87% 12.19%
Net Assets at End of the Period (In
millions).......................... $ 219.2 $ 212.4 $ 222.6 $ 240.4
Ratio of Operating Expenses to
Average Net Assets................. .64% .64% .66% .65%
Ratio of Convertible Note Expenses to
Average Net Assets (c)............. -- -- -- --
Ratio of Net Investment Income to
Average Net Assets................. 7.42% 7.48% 6.79% 7.04%
Portfolio Turnover................... 42%* 71% 10% 27%
Assuming full dilution of debt (c):
Net Asset Value, End of the
Period........................... -- -- -- --
Number of Shares Outstanding, End
of Period (000).................. -- -- -- --
* Non-Annualized
(a) Total return based on market price assumes an investment at the market price
at the beginning of the period indicated, reinvestment of all distributions
for the period in accordance with the Trust's dividend reinvestment plan,
and sale of all shares at the closing common stock price at the end of the
period indicated.
(b) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(c) On January 3, 1995, the Fund paid off its outstanding convertible extendible
note.
20
22
YEAR ENDED JUNE 30,
--------------------------------------------------------------
1997 1996 1995 1994 1993 1992
--------------------------------------------------------------
$ 19.97 $ 20.41 $ 19.07 $ 21.33 $ 19.85 $ 18.68
------- ------- ------- ------- ------- -------
1.56 1.54 1.52 1.56 1.58 1.74
.27 (.44) 1.36 (2.28) 1.55 1.11
------- ------- ------- ------- ------- -------
1.83 1.10 2.88 (.72) 3.13 2.85
1.54 1.54 1.54 1.54 1.65 1.68
------- ------- ------- ------- ------- -------
$ 20.26 $ 19.97 $ 20.41 $ 19.07 $ 21.33 $ 19.85
======= ======= ======= ======= ======= =======
$19.250 $18.125 $19.125 $18.125 $20.750 $19.750
15.06% 2.61% 14.89% -5.59% 13.76% 17.12%
9.46% 5.94% 16.54% -3.37% 16.35% 15.79%
$ 230.2 $ 226.9 $ 231.9 $ 216.6 $ 235.6 $ 218.5
.68% .67% .68% .68% .71% .71%
-- -- .39% .82% .98% 1.05%
7.70% 7.47% 7.92% 7.29% 7.65% 8.90%
8% 11% 8% 2% 19% 39%
-- -- -- $ 19.07 $ 21.09 $ 19.78
-- -- -- 12,411 12,411 12,372
See Notes to Financial Statements
21
23
NOTES TO
FINANCIAL STATEMENTS
December 31, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Bond Fund (the "Fund") is registered as a diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to provide current income with the
preservation of capital through investing primarily in a diversified portfolio
of debt securities.
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 accounting principles
generally accepted in the United States of America 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
sale price as of the close of such securities exchange. Unlisted securities and
listed securities for which the last sales price is not available are valued at
the mean of the bid and asked prices. For those securities where quotations or
prices are not available, valuations are determined in accordance with
procedures established in good faith by the Board of Trustees. 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 purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when-issued or delayed delivery
purchase commitments until payment is made. At December 31, 2000, there were no
when-issued or delayed delivery purchase commitments.
The Fund may invest in repurchase agreements, which are short-term
investments whereby the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies
22
24
NOTES TO
FINANCIAL STATEMENTS
December 31, 2000 (Unaudited)
advised by Van Kampen Asset Management Inc. (the "Adviser") or its affiliates,
the daily aggregate of which is invested in repurchase agreements. Repurchase
agreements are fully collateralized by the underlying debt security. The Fund
will make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian bank. The seller is required
to maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Discounts are accreted over
the expected life of each applicable security. Premiums on debt securities are
not amortized.
In November 2000, the American Institute of Certified Public Accountants
(AICPA) issued a revised version of the AICPA Audit and Accounting Guide for
Investment Companies (the Guide). The revised version of the Guide is effective
for annual financial statements issued for fiscal years beginning after December
15, 2000 and will require investment companies to amortize premiums and accrete
discounts on fixed income securities. The Fund currently does not amortize
premiums on fixed income securities. Upon adoption, the Fund will be required to
record a cumulative effect adjustment to reflect the amortization of premiums.
The adjustment will reduce accumulated undistributed net investment income and
increase unrealized appreciation on securities and therefore will not impact
total net assets. At this time, the Fund has not completed its analysis of the
impact of this accounting change.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At June 30, 2000, the Fund had an accumulated capital loss carryforward
for tax purposes of $636,020, which will expire on June 30, 2008. Net realized
gains or losses may differ for financial reporting and tax purposes primarily as
a result of the deferral of losses relating to wash sale transactions and
post-October losses which may not be recognized for tax purposes until the first
day of the following fiscal year.
At December 31, 2000, for federal income tax purposes, cost of long- and
short-term investments is $211,192,282, the aggregate gross unrealized
appreciation is $7,204,301 and the aggregate gross unrealized depreciation is
$3,627,601,
23
25
NOTES TO
FINANCIAL STATEMENTS
December 31, 2000 (Unaudited)
resulting in net unrealized appreciation on long- and short-term investments of
$3,576,700.
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays quarterly
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 option and futures
transactions. All short-term capital gains and a portion of option and futures
gains are included in ordinary income for tax purposes.
Due to inherent differences in the recognition of income, expenses and
realized gain/losses under generally accepted accounting principles and federal
income tax purposes, the amount of net investment income may differ between book
and federal income tax purposes for a particular period. These differences are
temporary in nature, but may result in book basis distributions in excess of net
investment income for certain periods.
F. EXPENSE REDUCTIONS During the six months ended December 31, 2000, the Fund's
custody fee was reduced by $217 as a result of credits earned on overnight 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:
AVERAGE DAILY NET ASSETS % PER ANNUM
First $150 million.......................................... .50 of 1%
Next $100 million........................................... .45 of 1%
Next $100 million........................................... .40 of 1%
Over $350 million........................................... .35 of 1%
For the six months ended December 31, 2000, the Fund recognized expenses of
approximately $3,300 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
Under an Accounting Services agreement, the Adviser provides accounting
services to the Fund. The Adviser allocates the cost of such services to each
fund. For the six months ended December 31, 2000, the Fund recognized expenses
of approximately $9,200 representing Van Kampen Investments Inc.'s or its
affiliates'
24
26
NOTES TO
FINANCIAL STATEMENTS
December 31, 2000 (Unaudited)
(collectively "Van Kampen") cost of providing accounting services to the Fund,
which are reported as part of other expenses in the statement of operations.
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 to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $89,800,860 and $91,013,258,
respectively.
25
27
DIVIDEND REINVESTMENT PLAN
The Fund pays distributions in cash, but if you own more than 100 shares in
your own name, you may elect to participate in the Fund's dividend reinvestment
plan (the "Plan"). Under the Plan, shares will be issued by the Fund at net
asset value on a date determined by the Board of Trustees between the record and
payable dates on each distribution; however, if the market price including
brokerage commissions, is less than the net asset value, the amount of the
distribution will be paid to the Plan Agent, which will buy such shares as are
available at prices below the net asset value. (If the market price is not
significantly less than the net asset value, it is possible that open market
purchases of shares may increase the market price so that such price plus
brokerage commissions would equal or exceed the net asset value of such shares.)
If the Plan Agent cannot buy the necessary shares at less than net asset value
before the distribution date, the balance of the distribution will be made in
authorized but unissued shares of the Fund at net asset value. The cost per
share will be the average cost, including brokerage commissions, of all shares
purchased. Since all shares purchased from the Fund are at net asset value,
there will be no dilution, and no brokerage commissions are charged on such
shares.
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gain distributions does not relieve you of any income tax
which may be payable (or required to be withheld) on dividends or distributions.
You may begin or discontinue participation in the Plan at any time by
written notice to the address below. If you withdraw from the Plan, you may
rejoin at any time if you own the required 100 shares. Elections and
terminations will be effective for distributions declared after receipt. If you
withdraw from the Plan, a certificate for the whole shares and a check for the
fractional shares, if any, credited to your Plan account will be sent as soon as
practicable after receipt of your election to withdraw. Except for brokerage
commissions, if any, which are borne by Plan participants, all costs of the Plan
are borne by the Fund. The Fund reserves the right to amend or terminate the
Plan on 30 days' written notice prior to the record date of the distribution for
which such amendment or termination is effective.
Record stockholders should address all notices, correspondence, questions or
other communications about the Plan to:
EQUISERVE LLP
P.O. BOX 43011
PROVIDENCE, RHODE ISLAND 02940-3011
1-800-821-1238
If your shares are not held directly in your name, you should contact your
brokerage firm, bank or other nominee for more information and to see if your
nominee will participate in the Plan on your behalf. If you participate through
your broker and choose to move your account to another broker, you will need to
re-enroll in the Plan through your new broker.
26
28
FUND OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN BOND FUND
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
THEODORE A. MYERS
RICHARD F. POWERS, III* - Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
RICHARD F. POWERS, III*
President
STEPHEN L. BOYD*
Executive Vice President and
Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer
RICHARD A. CICCARONE*
JOHN R. REYNOLDSON*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
CUSTODIAN
STATE STREET BANK AND TRUST CO.
225 Franklin Street
Boston, Massachusetts 02105
SHAREHOLDER SERVICING AGENT
EQUISERVE LLP
P.O. Box 43011
Providence, Rhode Island 02940-3011
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
INQUIRIES ABOUT AN INVESTOR'S ACCOUNT SHOULD BE REFERRED TO THE FUND'S TRANSFER
AGENT
EQUISERVE LLP
P.O. BOX 43011
PROVIDENCE, RHODE ISLAND 02940-3011
TELEPHONE: (800) 821-1238
ALASKA AND HAWAII
CALL COLLECT: (781) 575-2000
ASK FOR CLOSED-END FUND ACCOUNT SERVICES
* "Interested persons" of the Fund, as defined in the Investment Company Act of
1940,
as amended.
(C) Van Kampen Funds Inc. 2001 All rights reserved.
27