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 811-02090
Van Kampen Bond Fund
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(Exact name of registrant as specified in charter)
1221 Avenue of the Americas NY NY 10020
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(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas
New York, NY 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: 06/30/03
-----------
Date of reporting period: 06/30/03
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Item 1. Report to Shareholders
Welcome, Shareholder
In this update, you'll learn about how your fund performed during the
reporting period. The portfolio management team will provide an overview
of the market climate, and discuss some of the factors that helped or
hindered performance during the reporting period. In addition, this
report includes the fund's financial statements and a list of fund
investments, as well as other information.
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.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
Performance Summary
NET ASSET VALUE AND COMMON SHARE MARKET PRICE
(based upon quarter-end values--June 1993 through June 2003)
(LINE GRAPH)
NET ASSET VALUE COMMON SHARE MARKET PRICE
--------------- -------------------------
6/93 21.33 20.75
21.95 20.88
21.29 20.38
20.12 18.00
6/94 19.06 18.13
18.79 17.13
18.59 16.75
19.30 18.25
6/95 20.41 19.13
20.57 19.00
21.27 19.63
20.23 19.38
6/96 19.97 18.13
19.95 18.75
20.34 18.75
19.78 18.63
6/97 20.26 19.25
20.72 19.81
20.91 20.81
20.92 20.38
6/98 21.16 19.69
21.35 19.81
21.09 20.06
20.40 19.25
6/99 19.59 17.88
19.31 16.38
18.98 15.69
18.98 16.06
6/00 18.70 16.75
18.92 17.06
19.29 17.44
19.57 18.50
6/01 19.41 19.15
19.70 19.60
19.71 19.27
19.08 18.00
6/02 18.84 18.50
18.68 18.50
18.98 18.45
19.14 18.61
6/03 19.78 19.57
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 common share 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. Common share market price is influenced by a range of factors,
including supply and demand and market conditions.
----------------------------------------
AVERAGE ANNUAL MARKET
TOTAL RETURNS PRICE
10-year 7.24%
5-year 7.36
1-year 12.67
----------------------------------------
Past performance is no guarantee of future results. Investment return, common
share market price and net asset value will fluctuate and fund shares, when
sold, may be worth more or less than their original cost.
As a result of recent market activity, current performance may vary from the
figures shown. For more up-to-date information, please visit vankampen.com or
speak with your financial advisor. Total return assumes an investment at the
common share market price at the beginning of the period, reinvestment of all
distributions for the period in accordance with the fund's dividend reinvestment
plan, and sale of all shares at the closing common share market price at the end
of the period. Distribution rate is as a percent of closing common share market
price, and represents the annualized distributions of the fund at the end of the
period and not the earnings of the fund.
The Lehman Brothers BBB Corporate Bond Index is generally representative of
corporate bonds. The index does not include any expenses, fees or sales charges,
which would lower performance. The index is unmanaged and should not be
considered an investment.
1
Fund Report
FOR THE 12-MONTH PERIOD ENDED JUNE 30, 2003
Van Kampen Bond Fund is managed by the Adviser's Taxable Fixed Income
team. Members of the team include David S. Horowitz, Executive Director,
and Gordon W. Loery, Executive Director.(1) The following discussion
reflects their views on the fund's performance.
Q. BEFORE YOU DISCUSS HOW THE FUND PERFORMED, PLEASE DESCRIBE THE
OVERALL MARKET ENVIRONMENT.
A. As in the broader fixed-income markets, the corporate-bond sector was
highly volatile during the reporting period. Geopolitical concerns around
the war in Iraq and terrorism contributed to volatility, though the
tension in the market was somewhat eased by the end of the initial combat
phase of the war.
Ongoing concerns about the strength of the U.S. economy caused the
Federal Reserve Bank (the Fed) to cut interest rates several times over
the period, taking Treasury yields to 45-year lows.
The corporate sector was among the best-performing areas of the bond
market from October through the end of the period, with lower-quality
securities performing especially strongly in the 2003 rally.
Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A. -- The fund returned 12.67 percent for the 12 months ended June 30,
2003, based on common share market price.
-- By comparison, the fund's benchmark, the Lehman Brothers BBB
Corporate Bond Index, returned 18.33 percent.
-- The fund's quarterly dividend of $0.290 translated to a distribution
rate of 5.93 percent, based on the fund's common share market price
as of June 30, 2003.
See Performance Summary for additional information and index definitions.
Q. WHAT FACTORS HINDERED PERFORMANCE?
A. -- In light of recent business difficulties in the technology and
utilities sectors, we chose to underweight these sectors relative to
the benchmark. During the rally, which rewarded lower-quality
companies, these were two of the best-performing sectors. Therefore,
the fund did not benefit as it might have, had it held a larger
weighting. As of the end of the period, however, our outlook and
(1)Team members may change at any time without notice.
2
therefore, the fund's positions in these sectors, remain basically
unchanged.
-- The fund's lower interest-rate sensitivity caused it to lag when
interest rates declined.
Q. WHAT HELPED PERFORMANCE DURING THE REPORTING PERIOD?
A. -- We shifted assets from Treasuries into corporate securities, giving
the portfolio greater exposure to the strong performance of
corporate bonds.
-- The portfolio's overweight positions (versus the benchmark index) in
the financial, media and transportation sectors achieved solid,
double-digit performance during the reporting period.
-- Our analysis indicated that the consumer-nondurable and food/
tobacco sectors were fully priced, which led us to significantly
underweight the sectors versus the benchmark. This strategy added to
performance as these sectors underperformed for the period.
Q. PLEASE WALK US THROUGH HOW YOU POSITIONED THE FUND, HIGHLIGHTING KEY
THEMES.
A. Our expectations for the economy centered on an anticipated return to
positive growth in the relatively near term. This led us to keep the
portfolio's duration shorter than that of its benchmark in order to avoid
unwanted volatility. In a similar vein, we positioned assets in lower
investment-grade paper--paper believed to offer more value and wider
yield spreads in today's market. We also attempted to keep the portfolio
well-diversified across sectors and individual names to give it broader
exposure to opportunities as well as to help minimize overall risk.
TOP 5 SECTORS AS OF 6/30/03 RATING ALLOCATIONS AS OF 6/30/03
Captive Finance 10.7% AAA/Aaa 2.8%
Life Insurance 8.7 AA/Aa 4.8
Electric 6.0 A/A 29.7
Media-NonCable 5.1 BBB/Baa 57.3
Health care 4.9 BB/Ba 4.9
B/B 0.5
Subject to change daily. All percentages are as a percentage of long-term
investments. Provided for informational purposes only and should not be deemed
as a recommendation to buy securities in the sectors shown above. Securities are
classified by sectors that represent broad groupings of related industries.
Rating allocations based upon ratings as issued by Standard and Poor's and
Moody's, respectively. Morgan Stanley is a full-service securities firm engaged
in securities trading and brokerage activities, investment banking, research and
analysis, financing and financial advisory services.
3
Q. NOW THAT YOU'VE PROVIDED AN OVERVIEW OF THE FUND, DO YOU HAVE ANY
CLOSING THOUGHTS FOR THE SHAREHOLDERS?
A. We believe there are several factors that indicate rising interest rates
are more likely than falling rates over the near term. First, the
economy's underlying strength appears to remain fundamentally sound.
Second, Treasury yields ended the period at multi-decade lows that appear
to be unsustainable. Lastly, both fiscal and monetary policy remain
geared to spurring near-term economic growth.
That said, it is still difficult to predict with certainty where interest
rates are headed. We will continue to monitor the economy and markets
closely for potential opportunities.
PROXY VOTING POLICIES AND PROCEDURES
A description of the fund's policies and procedures with respect to the
voting of proxies relating to the Fund's portfolio securities is
available without charge, upon request, by Calling 1-800-847-2424. This
information is also available on the Securities and Exchange Commission's
website at http://www.sec.gov.
4
BY THE NUMBERS
YOUR FUND'S INVESTMENTS
June 30, 2003
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 96.6%
AEROSPACE & DEFENSE 2.0%
$ 165 Boeing Co. ..................................... 6.625% 02/15/38 $ 181,375
510 Goodrich Corp. ................................. 7.625 12/15/12 582,750
175 Lockheed Martin Corp. .......................... 7.750 05/01/26 218,988
1,820 Lockheed Martin Corp. .......................... 8.500 12/01/29 2,481,479
875 Raytheon Co. (a)................................ 8.300 03/01/10 1,076,385
------------
4,540,977
------------
AIRLINES 0.8%
544 Continental Airlines, Inc. ..................... 6.545 08/02/20 527,663
100 Continental Airlines, Inc. ..................... 6.648 03/15/19 96,730
1,150 Continental Airlines, Inc. ..................... 6.900 01/02/18 1,117,716
------------
1,742,109
------------
AUTOMOTIVE 3.5%
385 ArvinMeritor, Inc. ............................. 6.625 06/15/07 401,362
755 ArvinMeritor, Inc. ............................. 8.750 03/01/12 849,375
1,410 Daimler Chrysler NA Holding..................... 8.500 01/18/31 1,665,665
4,535 Ford Motor Co. (a).............................. 7.450 07/16/31 4,165,878
895 General Motors Corp. ........................... 8.375 07/15/33 880,957
------------
7,963,237
------------
BANKING 4.6%
2,110 Citigroup, Inc. (a)............................. 5.625 08/27/12 2,328,875
545 Citigroup, Inc. ................................ 6.000 02/21/12 621,037
75 Citigroup, Inc. ................................ 6.625 06/15/32 86,967
3,340 J.P. Morgan Chase & Co. (a)..................... 6.750 02/01/11 3,926,100
400 MBNA American Bank NA........................... 7.125 11/15/12 469,430
1,720 MBNA Corp. ..................................... 6.125 03/01/13 1,874,212
925 Washington Mutual Bank FA (a)................... 5.500 01/15/13 1,010,248
------------
10,316,869
------------
See Notes to Financial Statements 5
YOUR FUND'S INVESTMENTS
June 30, 2003
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
BROKERAGE 2.6%
$ 185 Goldman Sachs Group, Inc. ...................... 6.125% 02/15/33 $ 199,091
1,670 Goldman Sachs Group, Inc. (a)................... 6.875 01/15/11 1,973,482
2,000 Lehman Brothers Holdings, Inc. ................. 8.500 05/01/07 2,396,004
638 World Financial Prop., 144A-- Private Placement
(b)............................................. 6.910 09/01/13 729,577
480 World Financial Prop., 144A-- Private Placement
(b)............................................. 6.950 09/01/13 548,889
------------
5,847,043
------------
BUILDING MATERIALS 1.1%
750 Centex Corp. ................................... 7.500 01/15/12 893,013
515 Masco Corp. .................................... 6.500 08/15/32 573,563
810 Mohawk Industries, Inc. ........................ 7.200 04/15/12 950,767
------------
2,417,343
------------
CAPTIVE FINANCE 10.3%
1,445 Boeing Capital Corp. ........................... 5.800 01/15/13 1,564,554
570 Boeing Capital Corp. ........................... 6.100 03/01/11 630,114
265 Boeing Capital Corp. ........................... 6.500 02/15/12 299,348
2,045 Countrywide Home Loans, Inc. ................... 3.250 05/21/08 2,057,180
2,790 Ford Motor Credit Co. .......................... 7.250 10/25/11 2,872,779
1,870 General Electric Capital Corp. (a).............. 6.750 03/15/32 2,194,621
640 General Motors Acceptance Corp. ................ 4.500 07/15/06 643,501
1,895 General Motors Acceptance Corp. (a)............. 6.875 09/15/11 1,904,272
2,910 General Motors Acceptance Corp. ................ 8.000 11/01/31 2,863,070
2,000 Heller Financial, Inc. ......................... 6.375 03/15/06 2,231,980
1,555 Household Finance Corp. ........................ 6.750 05/15/11 1,808,746
1,000 Household Finance Corp. ........................ 7.875 03/01/07 1,179,577
150 Household Finance Corp. ........................ 8.000 07/15/10 186,339
2,500 International Lease Finance Corp. .............. 8.375 12/15/04 2,714,137
------------
23,150,218
------------
CHEMICALS 0.0%
60 FMC Corp., 144A--Private Placement (b).......... 10.250 11/01/09 67,800
------------
CONGLOMERATES 2.1%
1,275 Cooper Industries, Inc. ........................ 5.250 07/01/07 1,382,482
2,445 Honeywell International, Inc. .................. 6.125 11/01/11 2,790,234
505 Hutchison Whampoa International Ltd., 144A--
Private Placement (United Kingdom) (b).......... 6.500 02/13/13 530,954
------------
4,703,670
------------
6 See Notes to Financial Statements
YOUR FUND'S INVESTMENTS
June 30, 2003
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CONSTRUCTION MACHINERY 0.6%
$1,320 Kennametal, Inc. ............................... 7.200% 06/15/12 $ 1,447,557
------------
CONSUMER PRODUCTS 0.4%
780 Monsanto Co. ................................... 7.375 08/15/12 931,617
------------
ELECTRIC 5.8%
725 Appalachian Power Co. .......................... 5.950 05/15/33 723,028
625 Cincinnati Gas & Electric Co. .................. 5.700 09/15/12 687,907
425 Cincinnati Gas & Electric Co., Ser A............ 5.400 06/15/33 410,047
375 Cincinnati Gas & Electric Co., Ser B............ 5.375 06/15/33 360,459
820 Columbus Southern Power Co., Ser B, 144A--
Private Placement (b)........................... 6.600 03/01/33 913,288
230 Consumers Energy Co., Ser B, 144A--Private
Placement (b)................................... 5.375 04/15/13 241,929
790 Consumers Energy Co., Ser E, 144A--Private
Placement (b)................................... 4.000 05/15/10 788,633
865 Detroit Edison Co. ............................. 6.125 10/01/10 989,162
960 Duquesne Light Co. ............................. 6.700 04/15/12 1,107,767
645 El Paso Energy Partners LP, 144A--Private
Placement (b)................................... 8.500 06/01/10 693,375
585 Exelon Corp. ................................... 6.750 05/01/11 678,099
325 Florida Power & Light........................... 4.850 02/01/13 344,170
1,323 Niagara Mohawk Power Corp. (a).................. 7.625 10/01/05 1,479,648
685 Nisource Financial Corp. ....................... 7.625 11/15/05 749,353
285 Ohio Edison Co., 144A--Private Placement (b).... 5.450 05/01/15 299,123
65 Ohio Power Co., 144A--Private Placement (b)..... 6.600 02/15/33 72,797
650 PSEG Energy Holdings, Inc. (a).................. 8.625 02/15/08 699,551
1,290 PSEG Energy Holdings, Inc. (a).................. 9.125 02/10/04 1,328,935
65 Wisconsin Electric Power........................ 5.625 05/15/33 67,434
320 Wisconsin Energy Corp. ......................... 6.200 04/01/33 348,259
------------
12,982,964
------------
ENVIRONMENTAL SERVICES 1.9%
830 Republic Services, Inc. ........................ 6.750 08/15/11 963,410
1,500 Waste Management, Inc. (a)...................... 7.000 10/15/06 1,697,241
790 Waste Management, Inc. ......................... 7.000 07/15/28 903,474
550 Waste Management, Inc. ......................... 7.375 08/01/10 660,896
------------
4,225,021
------------
See Notes to Financial Statements 7
YOUR FUND'S INVESTMENTS
June 30, 2003
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
FOOD 1.9%
$2,000 ConAgra Foods, Inc. (a)......................... 7.500% 09/15/05 $ 2,231,438
125 Kraft Foods, Inc. .............................. 5.625 11/01/11 136,437
500 Kraft Foods, Inc. .............................. 6.250 06/01/12 566,573
1,190 Smithfield Foods, Inc. ......................... 8.000 10/15/09 1,294,125
105 Smithfield Foods, Inc., 144A-- Private Placement
(b)............................................. 7.750 05/15/13 113,137
------------
4,341,710
------------
GAMING 2.7%
1,730 Harrahs Operating Co., Inc. .................... 8.000 02/01/11 2,088,589
1,225 MGM Mirage, Inc. ............................... 8.500 09/15/10 1,445,500
180 Park Place Entertainment Corp. ................. 7.500 09/01/09 198,000
2,000 Park Place Entertainment Corp. (a).............. 7.950 08/01/03 2,007,500
300 Station Casinos, Inc. .......................... 8.375 02/15/08 325,500
------------
6,065,089
------------
HEALTHCARE 4.8%
3,205 Aetna, Inc. (a)................................. 7.375 03/01/06 3,604,635
640 AmerisourceBergen Corp. ........................ 8.125 09/01/08 707,200
800 HCA, Inc. ...................................... 6.300 10/01/12 819,312
1,275 HCA, Inc. (a)................................... 6.910 06/15/05 1,353,254
285 HCA, Inc. ...................................... 7.190 11/15/15 300,637
275 Omnicare, Inc. ................................. 6.125 06/01/13 281,875
1,945 Tenet Healthcare Corp. (a)...................... 6.875 11/15/31 1,721,325
750 Tenet Healthcare Corp. ......................... 7.375 02/01/13 727,500
1,130 UnitedHealth Group, Inc. ....................... 5.200 01/17/07 1,231,674
------------
10,747,412
------------
HOME CONSTRUCTION 1.3%
585 D.R. Horton, Inc. .............................. 6.875 05/01/13 618,638
355 MDC Holdings, Inc. ............................. 7.000 12/01/12 393,553
735 Pulte Homes, Inc. .............................. 6.375 05/15/33 743,817
1,025 Pulte Homes, Inc. .............................. 7.875 08/01/11 1,246,527
------------
3,002,535
------------
INTEGRATED ENERGY 3.5%
2,215 Conoco, Inc. ................................... 6.950 04/15/29 2,673,738
1,270 Constellation Energy Group...................... 7.600 04/01/32 1,531,550
65 Devon Financing Corp. .......................... 6.875 09/30/11 76,370
675 Devon Financing Corp. .......................... 7.875 09/30/31 859,907
285 Kerr McGee Corp. ............................... 5.875 09/15/06 311,046
490 Kerr McGee Corp. ............................... 6.875 09/15/11 568,841
8 See Notes to Financial Statements
YOUR FUND'S INVESTMENTS
June 30, 2003
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
INTEGRATED ENERGY (CONTINUED)
$1,015 Marathon Oil Corp. ............................. 6.800% 03/15/32 $ 1,152,076
575 Sempra Energy................................... 6.000 02/01/13 635,128
------------
7,808,656
------------
LIFE INSURANCE 8.4%
2,195 Anthem Insurance Cos., Inc., 144A--Private
Placement (a) (b)............................... 9.125 04/01/10 2,767,522
855 Cigna Corp. .................................... 6.375 10/15/11 958,895
125 Hartford Financial Services Group............... 2.375 06/01/06 124,978
1,805 Hartford Life, Inc. ............................ 7.375 03/01/31 2,144,730
1,835 Health Net, Inc. ............................... 8.375 04/15/11 2,233,722
2,050 John Hancock Co., 144A--Private Placement (b)... 7.375 02/15/24 2,425,004
475 John Hancock Financial Services, Inc. .......... 5.625 12/01/08 528,425
805 Metlife, Inc., 144A--Private Placement (b)...... 7.450 11/01/23 848,623
105 Metropolitan Life, Inc. ........................ 6.125 12/01/11 119,885
585 Nationwide Financial Services, Inc. ............ 6.250 11/15/11 657,472
635 Nationwide Mutual Insurance Co., 144A--Private
Placement (b)................................... 7.500 02/15/24 664,025
440 Nationwide Mutual Insurance Co., 144A--Private
Placement (b)................................... 8.250 12/01/31 545,567
1,070 Prudential Holdings, LLC, 144A--Private
Placement (a) (b)............................... 7.245 12/18/23 1,265,605
2,840 Prudential Holdings, LLC, 144A--Private
Placement (a) (b)............................... 8.695 12/18/23 3,605,528
------------
18,889,981
------------
LODGING 2.7%
1,055 Hilton Hotels Corp. ............................ 7.625 12/01/12 1,160,500
1,325 Hyatt Equities LLC, 144A--Private Placement
(b)............................................. 6.875 06/15/07 1,381,116
845 Marriott International.......................... 7.000 01/15/08 966,852
610 Marriott International.......................... 8.125 04/01/05 665,684
400 Starwood Hotels & Resorts Worldwide, Inc. ...... 7.375 05/01/07 423,000
1,375 Starwood Hotels & Resorts Worldwide, Inc. ...... 7.875 05/01/12 1,512,500
------------
6,109,652
------------
MEDIA-CABLE 2.7%
90 Comcast Cable Communications, Inc. ............. 7.125 06/15/13 105,386
2,000 Comcast Cable Communications, Inc. (a).......... 8.125 05/01/04 2,099,368
855 Comcast Cable Communications, Inc. ............. 8.375 05/01/07 1,009,938
480 Comcast Corp. .................................. 5.300 01/15/14 494,845
See Notes to Financial Statements 9
YOUR FUND'S INVESTMENTS
June 30, 2003
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
MEDIA-CABLE (CONTINUED)
$1,250 Cox Communications, Inc. ....................... 7.125% 10/01/12 $ 1,495,280
795 Echostar DBS Corp. ............................. 9.375 02/01/09 851,644
------------
6,056,461
------------
MEDIA-NONCABLE 4.9%
990 AOL Time Warner, Inc. .......................... 6.875 05/01/12 1,132,492
605 AOL Time Warner, Inc. .......................... 7.625 04/15/31 700,857
250 AOL Time Warner, Inc. .......................... 7.700 05/01/32 292,969
700 Belo Corp. ..................................... 8.000 11/01/08 848,540
2,500 Clear Channel Commerce, Inc. (a)................ 7.250 10/15/27 2,862,473
1,260 Liberty Media Corp. ............................ 5.700 05/15/13 1,283,702
2,880 News America Holdings, Inc. (a)................. 8.875 04/26/23 3,691,365
270 Time Warner, Inc. .............................. 6.625 05/15/29 279,450
------------
11,091,848
------------
METALS 0.5%
915 Phelps Dodge Corp. (a).......................... 8.750 06/01/11 1,077,369
------------
NATURAL GAS DISTRIBUTORS 0.5%
960 Consolidated Natural Gas Co. ................... 6.250 11/01/11 1,104,164
------------
NATURAL GAS PIPELINES 0.3%
670 Gulfterra Energy Partners LP, 144A--Private
Placement (b)................................... 6.250 06/01/10 671,675
------------
NONCAPTIVE-CONSUMER FINANCE 0.4%
935 Newcourt Credit Group, Inc., Ser B.............. 6.875 02/16/05 1,001,985
------------
OIL FIELD SERVICES 0.1%
270 Key Energy Services, Inc. ...................... 6.375 05/01/13 275,400
------------
PAPER 2.7%
1,005 International Paper Co. ........................ 5.850 10/30/12 1,097,324
980 International Paper Co., 144A--Private Placement
(b)............................................. 5.300 04/01/15 1,009,731
995 MeadWestvaco Corp. (a).......................... 6.850 04/01/12 1,150,519
405 Owens Brockway Glass Containers, Inc. .......... 8.750 11/15/12 441,450
505 Owens Brockway Glass Containers, Inc., 144A--
Private Placement (b)........................... 7.750 05/15/11 536,563
1,615 Weyerhaeuser Co. (a)............................ 6.750 03/15/12 1,836,425
------------
6,072,012
------------
10 See Notes to Financial Statements
YOUR FUND'S INVESTMENTS
June 30, 2003
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
PROPERTY & CASUALTY 1.7%
$2,000 Farmers Exchange Capital, 144A--Private
Placement (b)................................... 7.050% 07/15/28 $ 1,802,498
1,815 Farmers Insurance Exchange Surplus, 144A--
Private Placement (b)........................... 8.625 05/01/24 1,774,663
255 Florida Windstorm Underwriting, 144A--Private
Placement (b)................................... 7.125 02/25/19 304,262
------------
3,881,423
------------
RAILROADS 4.1%
1,000 CSX Corp. ...................................... 6.750 03/15/11 1,166,050
7,000 Union Pacific Corp. (a)......................... 8.350 05/01/25 8,012,963
------------
9,179,013
------------
REAL ESTATE INVESTMENT TRUSTS 3.3%
665 Boston Properties, Inc. ........................ 6.250 01/15/13 729,536
2,040 EOP Operating LP................................ 7.500 04/19/29 2,357,051
100 Istar Financial, Inc. .......................... 7.000 03/15/08 104,780
795 Istar Financial, Inc. .......................... 8.750 08/15/08 870,525
110 Simon Property Group LP......................... 6.350 08/28/12 122,097
2,125 Simon Property Group LP (a)..................... 6.375 11/15/07 2,373,100
835 Vornado Realty.................................. 5.625 06/15/07 896,729
------------
7,453,818
------------
REFINING 1.0%
1,200 Amerada Hess Corp. ............................. 7.875 10/01/29 1,465,031
430 Ashland, Inc. .................................. 7.830 08/15/05 464,595
250 Vintage Petroleum, Inc. ........................ 7.875 05/15/11 269,375
------------
2,199,001
------------
RETAIL 3.6%
270 CVS Corp. ...................................... 3.875 11/01/07 280,125
1,440 CVS Corp. (a)................................... 5.500 02/15/04 1,476,456
250 CVS Corp. (a)................................... 5.625 03/15/06 273,992
500 Federated Department Stores, Inc. .............. 6.300 04/01/09 566,719
1,500 Federated Department Stores, Inc. .............. 6.625 09/01/08 1,716,285
545 Gap, Inc. ...................................... 10.550 12/15/08 664,900
700 Lowe's Cos., Inc. .............................. 6.500 03/15/29 796,471
490 Lowe's Cos., Inc. .............................. 6.875 02/15/28 576,910
820 May Department Stores Co. ...................... 5.950 11/01/08 902,582
700 May Department Stores Co. ...................... 6.700 09/15/28 749,182
------------
8,003,622
------------
See Notes to Financial Statements 11
YOUR FUND'S INVESTMENTS
June 30, 2003
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
SERVICES 1.5%
$ 855 Cendant Corp. .................................. 7.125% 03/15/15 $ 993,736
1,170 Cendant Corp. .................................. 7.375 01/15/13 1,380,600
295 Iron Mountain, Inc. ............................ 6.625 01/01/16 292,050
562 Iron Mountain, Inc. ............................ 7.750 01/15/15 597,125
------------
3,263,511
------------
SUPERMARKETS 2.2%
500 Albertson's, Inc. .............................. 7.450 08/01/29 566,472
965 Albertson's, Inc. .............................. 7.500 02/15/11 1,129,048
2,645 Kroger Co. ..................................... 7.500 04/01/31 3,147,137
------------
4,842,657
------------
TECHNOLOGY 0.9%
965 Arrow Electronics, Inc. ........................ 6.875 07/01/13 957,424
220 Arrow Electronics, Inc. ........................ 6.875 06/01/18 213,411
780 Electronic Data Systems Corp., 144A--Private
Placement (b)................................... 6.000 08/01/13 762,121
------------
1,932,956
------------
TELECOMMUNICATIONS 4.7%
140 AT&T Corp. ..................................... 7.300 11/15/11 160,337
1,940 AT&T Corp. (a).................................. 8.500 11/15/31 2,207,396
915 AT&T Wireless Services, Inc. ................... 7.875 03/01/11 1,082,554
540 AT&T Wireless Services, Inc. ................... 8.750 03/01/31 669,853
805 British Telecommunications PLC (United
Kingdom)........................................ 8.875 12/15/30 1,102,565
2,935 Verizon Communications, Inc. ................... 6.940 04/15/28 3,343,358
1,035 Verizon Global Funding Corp. ................... 7.750 12/01/30 1,315,903
590 Verizon New England, Inc. ...................... 6.500 09/15/11 685,936
------------
10,567,902
------------
TOBACCO 0.1%
170 Altria Group, Inc. ............................. 7.750 01/15/27 182,719
------------
TRANSPORTATION SERVICES 0.4%
820 Hertz Corp. .................................... 7.625 06/01/12 834,205
------------
TOTAL CORPORATE BONDS 96.6%...................................... 216,993,201
------------
CONVERTIBLE CORPORATE OBLIGATION 0.1%
TECHNOLOGY 0.1%
325 Solectron Corp. (Convertible into 3,831 common
shares) LYON.................................... * 11/20/20 182,000
------------
12 See Notes to Financial Statements
YOUR FUND'S INVESTMENTS
June 30, 2003
MARKET
DESCRIPTION SHARES VALUE
EQUITIES 0.0%
TELECOMMUNICATIONS 0.0%
McLeodUSA, Inc. (Preferred Stock Warrants) (c).............. 970 $ 398
McLeodUSA, Inc. (Preferred Stock) (c)....................... 438 3,171
------------
TOTAL EQUITIES...................................................... 3,569
------------
TOTAL LONG-TERM INVESTMENTS 96.7%
(Cost $197,959,877)............................................... 217,178,770
------------
SHORT-TERM INVESTMENTS 1.3%
REPURCHASE AGREEMENT 0.9%
Bank of America Securities ($2,183,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated 06/30/03,
to be sold on 07/01/03 at $2,183,067)............................. 2,183,000
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS 0.4%
United States Treasury Bill ($250,000 par, yielding 1.216%, 07/17/03
maturity)......................................................... 249,865
United States Treasury Bill ($600,000 par, yielding 1.132%, 09/25/03
maturity)......................................................... 598,381
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS............................ 848,246
------------
TOTAL SHORT-TERM INVESTMENTS 1.3%
(Cost $3,031,246)................................................. 3,031,246
------------
TOTAL INVESTMENTS 98.0%
(Cost $200,991,123)............................................... 220,210,016
OTHER ASSETS IN EXCESS OF LIABILITIES 2.0%......................... 4,490,631
------------
NET ASSETS 100.0%.................................................. $224,700,647
============
See Notes to Financial Statements 13
YOUR FUND'S INVESTMENTS
June 30, 2003
* Zero coupon bond
(a) Asset segregated as collateral for open futures transactions.
(b) 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.
(c) Non-income producing security.
LYON--Liquid Yield Option Note
14 See Notes to Financial Statements
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2003
ASSETS:
Total Investments (Cost $200,991,123)....................... $220,210,016
Cash........................................................ 422
Receivables:
Investments Sold.......................................... 4,622,841
Interest.................................................. 3,407,086
Other....................................................... 38,574
------------
Total Assets............................................ 228,278,939
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 2,977,782
Variation Margin on Futures............................... 278,481
Investment Advisory Fee................................... 90,207
Affiliates................................................ 5,182
Trustees' Deferred Compensation and Retirement Plans........ 133,471
Accrued Expenses............................................ 93,169
------------
Total Liabilities....................................... 3,578,292
------------
NET ASSETS.................................................. $224,700,647
============
NET ASSET VALUE PER COMMON SHARE ($224,700,647 divided by
11,362,465 shares outstanding)............................ $ 19.78
============
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..................................................... 207,602,030
Net Unrealized Appreciation................................. 19,458,599
Accumulated Undistributed Net Investment Income............. (276,131)
Accumulated Net Realized Loss............................... (13,446,316)
------------
NET ASSETS.................................................. $224,700,647
============
See Notes to Financial Statements 15
Statement of Operations
For the Year Ended June 30, 2003
INVESTMENT INCOME:
Interest.................................................... $13,938,416
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,048,629
Shareholder Services........................................ 90,723
Trustees' Fees and Related Expenses......................... 39,266
Custody..................................................... 25,268
Legal....................................................... 12,890
Other....................................................... 195,949
-----------
Total Expenses.......................................... 1,412,725
Less Credits Earned on Cash Balances.................... 69
-----------
Net Expenses............................................ 1,412,656
-----------
NET INVESTMENT INCOME....................................... $12,525,760
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $(2,621,308)
Futures................................................... (3,677,761)
-----------
Net Realized Loss........................................... (6,299,069)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 615,636
-----------
End of the Period:
Investments............................................. 19,218,893
Futures................................................. 239,706
-----------
19,458,599
-----------
Net Unrealized Appreciation During the Period............... 18,842,963
-----------
NET REALIZED AND UNREALIZED GAIN............................ $12,543,894
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $25,069,654
===========
16 See Notes to Financial Statements
Statements of Changes in Net Assets
YEAR ENDED YEAR ENDED
JUNE 30, 2003 JUNE 30, 2002
-----------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income....................................... $ 12,525,760 $ 14,223,667
Net Realized Loss........................................... (6,299,069) (2,592,988)
Net Unrealized Appreciation/Depreciation During the
Period.................................................... 18,842,963 (3,734,449)
------------ ------------
Change in Net Assets from Operations........................ 25,069,654 7,896,230
Distributions from Net Investment Income.................... (13,747,783) (15,054,433)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES......... 11,321,871 (7,158,203)
NET ASSETS:
Beginning of the Period..................................... 213,378,776 220,536,979
------------ ------------
End of the Period (Including accumulated undistributed net
investment income of ($276,131) and ($599,949),
respectively)............................................. $224,700,647 $213,378,776
============ ============
See Notes to Financial Statements 17
Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
----------------------------
2003 2002 (a) 2001
----------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $18.78 $19.41 $18.70
------ ------ ------
Net Investment Income..................................... 1.10 1.26 1.40
Net Realized and Unrealized Gain/Loss..................... 1.11 (.56) .68
------ ------ ------
Total from Investment Operations............................ 2.21 .70 2.08
Distributions from Net Investment Income.................... (1.21) (1.33) (1.37)
------ ------ ------
NET ASSET VALUE, END OF THE PERIOD.......................... $19.78 $18.78 $19.41
====== ====== ======
Common Share Market Price at End of the Period.............. $19.57 $18.50 $19.15
Total Return (b)............................................ 12.67% 3.50% 23.10%
Net Assets at End of the Period (In millions)............... $224.7 $213.4 $220.5
Ratio of Operating Expenses to Average Net Assets........... .65% .65% .68%
Ratio of Convertible Note Expenses to Average Net Assets
(c)....................................................... -- -- --
Ratio of Net Investment Income to Average Net Assets........ 5.79% 6.39% 7.25%
Portfolio Turnover.......................................... 57% 107% 88%
Assuming full dilution of debt: (c)
Net Asset Value, End of the Period........................ -- -- --
Number of Shares Outstanding, End of the Period (000)..... -- -- --
(a) As required, effective July 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 June 30, 2002 was to decrease net investment income per share
by $.04, increase net realized and unrealized gains and losses per share by
$.04 and decrease the ratio of net investment income to average net assets
by .24%. Per share, ratios and supplemental data for periods prior to June
30, 2002 have not been restated to reflect this change in presentation.
(b) Total return based on common share market price assumes an investment at the
common share 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
common share price at the end of the period indicated.
(c) On January 3, 1995, the Fund paid off its outstanding convertible extendible
note.
18
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996 1995 1994
-----------------------------------------------------------------------
$19.59 $ 21.16 $ 20.26 $19.97 $ 20.41 $ 19.07 $ 21.33
------ ------- -------- ------ ------- ------- -------
1.43 1.41 1.48 1.56 1.54 1.52 1.56
(.93) (1.56) .93 .27 (.44) 1.36 (2.28)
------ ------- -------- ------ ------- ------- -------
.50 (.15) 2.41 1.83 1.10 2.88 (.72)
(1.39) (1.42) (1.51) (1.54) (1.54) (1.54) (1.54)
------ ------- -------- ------ ------- ------- -------
$18.70 $ 19.59 $ 21.16 $20.26 $ 19.97 $ 20.41 $ 19.07
====== ======= ======== ====== ======= ======= =======
$16.75 $17.875 $19.6875 $19.25 $18.125 $19.125 $18.125
1.88% -2.45% 10.08% 15.06% 2.61% 14.89% -5.59%
$212.4 $ 222.6 $ 240.4 $230.2 $ 226.9 $ 231.9 $ 216.6
.64% .66% .65% .68% .67% .68% .68%
-- -- -- -- -- .39% .82%
7.48% 6.79% 7.04% 7.70% 7.47% 7.92% 7.29%
71% 10% 27% 8% 11% 8% 2%
-- -- -- -- -- -- $ 19.07
-- -- -- -- -- -- 12,411
See Notes to Financial Statements 19
NOTES TO
FINANCIAL STATEMENTS
June 30, 2003
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 seek interest income while
conserving capital through investing in a diversified portfolio consisting
primarily of high-quality 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. Listed securities 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 on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may 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 June 30, 2003, there were no
when-issued or delayed delivery purchase commitments.
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 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.
20
NOTES TO
FINANCIAL STATEMENTS
June 30, 2003
C. INVESTMENT INCOME Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Premiums are amortized and
discounts are accreted over the expected life of each applicable security.
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, 2003, the Fund had an accumulated capital loss carryforward
for tax purposes of $11,597,056, which will expire between June 30, 2009 and
June 30, 2011.
At June 30, 2003, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $201,565,836
============
Gross tax unrealized appreciation........................... $ 19,012,901
Gross tax unrealized depreciation........................... (368,721)
------------
Net tax unrealized appreciation on investments.............. $ 18,644,180
============
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 futures transactions. All
short-term capital gains and a portion of futures gains are included in ordinary
income for tax purposes.
The tax character of distributions paid during the years ended June 30, 2003
and 2002 was as follows:
2003 2002
Distributions paid from:
Ordinary income........................................... $13,747,783 $15,283,368
Long-term capital gain.................................... -0- -0-
----------- -----------
$13,747,783 $15,283,368
=========== ===========
Due to inherent differences in the recognition of income, expenses and
realized gain/ losses under accounting principles generally accepted in the
United States of America 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 expenses which are not deductible for tax purposes
totaling $5,773 were reclassified from accumulated undistributed net investment
income to capital and $598 relating to the recognition of net realized losses on
paydowns of
21
NOTES TO
FINANCIAL STATEMENTS
June 30, 2003
mortgage pool obligations was reclassified from accumulated undistributed net
investment income to accumulated net realized loss. Additionally, a permanent
difference relating to book to tax amortization differences totaling $1,539,470
was reclassified from accumulated undistributed net investment income to
accumulated net realized loss.
As of June 30, 2003, the component of distributable earnings on a tax basis
was as follows:
Undistributed ordinary income............................... $392,256
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, gains or losses recognized for tax purposes on open future
transactions on June 30, 2003 and post-October losses which may not be
recognized for tax purposes until the first day of the following fiscal year.
F. EXPENSE REDUCTIONS During the year ended June 30, 2003, the Fund's custody
fee was reduced by $69 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:
AVERAGE DAILY NET ASSETS % PER ANNUM
First $150 million.......................................... .50%
Next $100 million........................................... .45%
Next $100 million........................................... .40%
Over $350 million........................................... .35%
For the year ended June 30, 2003, the Fund recognized expenses of
approximately $12,900 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
Under an Accounting Services agreement, the Adviser provides accounting
services to the Fund. The Adviser allocates cost of such services to each fund.
For the year ended June 30, 2003, the Fund recognized expenses of approximately
$19,500 representing Van Kampen Investments Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund,
which are reported as part of "Other" expenses on 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 upon retirement for a
ten-year period and are based upon each trustee's
22
NOTES TO
FINANCIAL STATEMENTS
June 30, 2003
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 $118,102,231 and $117,587,531,
respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or to generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/ depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract. Risks may arise as a result of the potential
inability of the counterparties to meet the terms of their contracts.
During the period, the Fund invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in exchange traded futures on U.S. Treasury Bonds and Notes
and typically closes the contract prior to the delivery date. Upon entering into
futures contracts, the Fund maintains an amount of cash or liquid securities
with a value equal to a percentage of the contract amount with either a futures
commission merchant pursuant to rules and regulations promulgated under the 1940
Act, as amended, or with its custodian in an account in the broker's name. This
amount is known as initial margin. During the period the futures contract is
open, payments are received from or made to the broker based upon changes in the
value of the contract (the variation margin). The 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 June 30, 2003, were as
follows:
CONTRACTS
Outstanding at June 30, 2002................................ 403
Futures Opened.............................................. 2,388
Futures Closed.............................................. (2,235)
------
Outstanding at June 30, 2003................................ 556
======
23
NOTES TO
FINANCIAL STATEMENTS
June 30, 2003
The futures contracts outstanding as of June 30, 2003 and the descriptions
and unrealized appreciation/depreciation are as follows:
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Bond Future, September 2003--
(Current Notional Value of $117,344 per contract)......... 286 $365,198
2-Year U.S. Treasury Note Future, September 2003--
(Current Notional Value of $216,297 per contract)......... 16 11,346
5-Year U.S. Treasury Note Future, September 2003--
(Current Notional Value of $115,125 per contract)......... 179 (67,733)
10-Year U.S. Treasury Note Future, September 2003--
(Current Notional Value of $117,438 per contract)......... 75 (69,105)
--- --------
556 $239,706
=== ========
24
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of Van Kampen Bond Fund:
We have audited the accompanying statement of assets and liabilities of Van
Kampen Bond Fund (the "Fund"), including the portfolio of investments, as of
June 30, 2003, 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 four 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. The Fund's financial highlights for the periods ended prior to June 30,
2000, were audited by other auditors whose report, dated July 23, 1999,
expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2003, by correspondence with the Fund's
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Bond Fund as of June 30, 2003, the results of its operations for the year
then ended, the changes in its net assets and the financial highlights for the
respective stated periods, in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
August 6, 2003
25
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:
State Street Bank and Trust Company
c/o EquiServe LLP
P.O. Box 8200
Boston, MA 02266-8200
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
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
VAN KAMPEN BOND FUND
BOARD OF TRUSTEES
DAVID C. ARCH
J. MILES BRANAGAN(1)
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*(1)
THEODORE A. MYERS
JACK E. NELSON(1)
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
CUSTODIAN AND SHAREHOLDER SERVICING AGENT
STATE STREET BANK
AND TRUST COMPANY
c/o 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
State Street Bank and Trust Company
c/o 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.
(1) Appointed to the Board of Trustees effective July 23, 2003.
27
RESULTS OF
SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Fund was held on June 24, 2003, where
shareholders voted on the election of trustees.
With regards to the election of the following trustees by the common
shareholders of the Fund:
# OF SHARES
-----------------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------------
Jerry D. Choate............................................ 9,360,460 85,048
Rod Dammeyer............................................... 9,359,189 86,319
Linda Hutton Heagy......................................... 9,354,378 91,130
R. Craig Kennedy........................................... 9,361,710 83,798
Wayne W. Whalen............................................ 9,254,865 190,643
Suzanne H. Woolsey......................................... 9,357,175 88,333
The other trustees of the Fund whose terms did not expire in 2003 are David C.
Arch, Howard J Kerr, Theodore A. Myers, Richard F. Powers, III, Hugo F.
Sonnenschein.
28
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 Investment Advisory Corp. ("Advisory
Corp."), Van Kampen Asset Management Inc. ("Asset Management"), Van Kampen Funds
Inc. (the "Distributor"), Van Kampen Advisors Inc., Van Kampen Exchange Corp.
and Van Kampen Investor Services Inc. ("Investor Services"). Advisory Corp. and
Asset Management sometimes are referred to herein collectively as the
"Advisers." The term "Fund Complex" includes each of the investment companies
advised by the Advisers or their affiliates as of the date of this Statement of
Additional Information. Trustees serve until reaching their retirement age or
until their successors are duly elected and qualified. Officers are annually
elected by the trustees.
INDEPENDENT TRUSTEES
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (58) Trustee Trustee Chairman and Chief 91 Trustee/Director/Managing
Blistex Inc. since 1997 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products
manufacturer. Former
Director of the World
Presidents
Organization-Chicago
Chapter. Director of the
Heartland Alliance, a
nonprofit organization
serving human needs based
in Chicago.
J. Miles Branagan (71) Trustee Trustee Private investor. 89 Trustee/Director/Managing
1632 Morning Mountain Road since 2003 Co-founder, and prior to General Partner of funds
Raleigh, NC 27614 August 1996, Chairman, in the Fund Complex.
Chief Executive Officer
and President, MDT
Corporation (now known as
Getinge/Castle, Inc., a
subsidiary of Getinge
Industrier AB), a company
which develops,
manufactures, markets and
services medical and
scientific equipment.
29
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jerry D. Choate (64) Trustee Trustee Prior to January 1999, 89 Trustee/Director/Managing
33971 Selva Road since 2003 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of Amgen Inc., a
("Allstate") and Allstate biotechnological company,
Insurance Company. Prior and Director of Valero
to January 1995, Energy Corporation, an
President and Chief independent refining
Executive Officer of company.
Allstate. Prior to August
1994, various management
positions at Allstate.
Rod Dammeyer (62) Trustee Trustee President of CAC, llc., a 91 Trustee/Director/Managing
CAC, llc. since 1997 private company offering General Partner of funds
4350 LaJolla Village Drive capital investment and in the Fund Complex.
Suite 980 management advisory Director of TeleTech
San Diego, CA 92122-6223 services. Prior to July Holdings Inc.,
2000, Managing Partner of Stericycle, Inc.,
Equity Group Corporate TheraSense, Inc., GATX
Investment (EGI), a Corporation, Arris Group,
company that makes Inc. and Trustee of the
private investments in University of Chicago
other companies. Hospitals and Health
Systems. Prior to May
2002, Director of
Peregrine Systems Inc.
Prior to February 2001,
Vice Chairman and
Director of Anixter
International, Inc. and
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). Prior to April
1999, Director of Metal
Management, Inc.
30
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 (55) Trustee Trustee Managing Partner of 89 Trustee/Director/Managing
Heidrick & Struggles since 2003 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive executive search firm. in the Fund Complex.
Suite 7000 Trustee on the University
Chicago, IL 60606 of Chicago Hospitals
Board, Vice Chair of the
Board of the YMCA of
Metropolitan Chicago and
a member of the Women's
Board of the University
of Chicago. Prior to
1997, Partner of Ray &
Berndtson, Inc., an
executive recruiting
firm. Prior to 1996,
Trustee of The
International House
Board, a fellowship and
housing organization for
international graduate
students. Prior to 1995,
Executive Vice President
of ABN AMRO, N.A., a bank
holding company. Prior to
1992, Executive Vice
President of La Salle
National Bank.
R. Craig Kennedy (51) Trustee Trustee Director and President of 89 Trustee/Director/Managing
11 DuPont Circle, N.W. since 2003 the German Marshall Fund General Partner of funds
Washington, D.C. 20016 of the United States, an in the Fund Complex.
independent U.S.
foundation created to
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (67) Trustee Trustee Prior to 1998, President 91 Trustee/Director/Managing
736 North Western Avenue since 1997 and Chief Executive General Partner of funds
P.O. Box 317 Officer of Pocklington in the Fund Complex.
Lake Forest, IL 60045 Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the
Marrow Foundation
31
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
Theodore A. Myers (72) Trustee Trustee Financial consultant. 36 Director of Met Life
350 Washington Avenue since 1997 Trustee or Managing Investors (formerly known
Glencoe, IL 60022 General Partner of other as COVA Financial Life
funds in the Closed-End Insurance). Prior to
Fund Complex. Prior to 1997, Director of McLouth
1998, Senior Financial Steel.
Advisor (and, prior to
1997, an Executive Vice
President, Chief
Financial Officer and
Director) of Qualitech
Steel Corporation, a
producer of high quality
engineered steels for
automotive,
transportation and
capital goods industries.
Prior to 1997, member of
the Arthur Andersen Chief
Financial Officers'
Advisory Committee.
Jack E. Nelson (67) Trustee Trustee President of Nelson 89 Trustee/Director/Managing
423 Country Club Drive since 2003 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of the NASD,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
Hugo F. Sonnenschein (62) Trustee Trustee President Emeritus and 91 Trustee/Director/Managing
1126 E. 59th Street since 1997 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Director of Winston
Distinguished Service Laboratories, Inc.
Professor in the
Department of Economics
at the University of
Chicago. Prior to July
2000, President of the
University of Chicago.
Trustee of the University
of Rochester and a member
of its investment
committee. Member of the
National Academy of
Sciences, the American
Philosophical Society and
a fellow of the American
Academy of Arts and
Sciences.
32
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
Suzanne H. Woolsey (61) Trustee Trustee Chief Communications 89 Trustee/Director/Managing
2101 Constitution Ave., N.W. since 2003 Officer of the National General Partner of funds
Room 285 Academy of in the Fund Complex.
Washington, D.C. 20418 Sciences/National Director of Neurogen
Research Council, an Corporation, a
independent, federally pharmaceutical company,
chartered policy since January 1998.
institution, since 2001
and previously Chief
Operating Officer from
1993 to 2001. Director of
the Institute for Defense
Analyses, a federally
funded research and
development center,
Director of the German
Marshall Fund of the
United States, 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.
33
INTERESTED TRUSTEES*
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Mitchell M. Merin* (50) Trustee and Trustee President of funds in the 89 Trustee/Director/Managing
1221 Avenue of the Americas President since 2003 Fund Complex. Chairman, General Partner of funds
New York, NY 10020 President, Chief in the Fund Complex.
Executive Officer and
Director of the Advisers
and VK Advisors Inc.
since December 2002.
Chairman, President and
Chief Executive Officer
of Van Kampen Investments
since December 2002.
Director of Van Kampen
Investments since
December 1999. Chairman
and Director of Van
Kampen Funds Inc. since
December 2002. President,
Director and Chief
Operating Officer of
Morgan Stanley Investment
Management since December
1998. President and
Director since April 1997
and Chief Executive
Officer since June 1998
of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc.
Chairman, Chief Executive
Officer and Director of
Morgan Stanley
Distributors Inc. since
June 1998. Chairman since
June 1998, and Director
since January 1998 of
Morgan Stanley Trust.
Director of various
Morgan Stanley
subsidiaries. President
of the Morgan Stanley
Funds since May 1999.
Previously Chief
Executive Officer of Van
Kampen Funds Inc. from
December 2002 to July
2003, Chief Strategic
Officer of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc. and
Executive Vice President
of Morgan Stanley
Distributors Inc. from
April 1997 to June 1998.
Chief Executive Officer
from September 2002 to
April 2003 and Vice
President from May 1997
to April 1999 of the
Morgan Stanley Funds.
34
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
Richard F. Powers, III* (57) Trustee Trustee Advisory Director of 91 Trustee/Director/Managing
1 Parkview Plaza since 1999 Morgan Stanley. Prior to General Partner of funds
P.O. Box 5555 December 2002, Chairman, in the Fund Complex.
Oakbrook Terrace, IL 60181 Director, President,
Chief Executive Officer
and Managing Director of
Van Kampen Investments
and its investment
advisory, distribution
and other subsidiaries.
Prior to December 2002,
President and Chief
Executive Officer of
funds in the Fund
Complex. Prior to May
1998, Executive Vice
President and Director of
Marketing at Morgan
Stanley and Director of
Dean Witter, Discover &
Co. and Dean Witter
Realty. Prior to 1996,
Director of Dean Witter
Reynolds Inc.
Wayne W. Whalen* (64) Trustee Trustee Partner in the law firm 91 Trustee/Director/Managing
333 West Wacker Drive since 1997 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom in the Fund Complex.
(Illinois), legal counsel
to funds in the Fund
Complex.
* Such trustee is an "interested person" (within the meaning of Section
2(a)(19) of the 1940 Act). Mr. Whalen is an interested person of certain
funds in the Fund Complex by reason of his firm currently acting as legal
counsel to such funds in the Fund Complex. Messrs. Merin and Powers are
interested persons of funds in the Fund Complex and the Advisers by reason
of their current or former positions with Morgan Stanley or its affiliates.
35
OFFICERS
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
Stephen L. Boyd (62) Vice President Officer Managing Director of Global Research Investment Management.
2800 Post Oak Blvd. since 1998 Vice President of funds in the Fund Complex. Prior to
45th Floor December 2002, Chief Investment Officer of Van Kampen
Houston, TX 77056 Investments and President and Chief Operations Officer of
the Advisers and Van Kampen Advisors Inc. Prior to May 2002,
Executive Vice President and Chief Investment Officer of
funds in the Fund Complex. Prior to May 2001, Managing
Director and Chief Investment Officer of Van Kampen
Investments, and Managing Director and President of the
Advisers and Van Kampen Advisors Inc. Prior to December
2000, Executive Vice President and Chief Investment Officer
of Van Kampen Investments, and President and Chief Operating
Officer of the Advisers. Prior to April 2000, Executive Vice
President and Chief Investment Officer for Equity
Investments of the Advisers. Prior to October 1998, Vice
President and Senior Portfolio Manager with AIM Capital
Management, Inc. Prior to February 1998, Senior Vice
President and Portfolio Manager of Van Kampen American
Capital Asset Management, Inc., Van Kampen American Capital
Investment Advisory Corp. and Van Kampen American Capital
Management, Inc.
Stefanie V. Chang (36) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas since 2003 Vice President of funds in the Fund Complex.
New York, NY 10020
Joseph J. McAlinden (60) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas President and Chief since 2002 Stanley Investment Advisors Inc., Morgan Stanley Investment
New York, NY 10020 Investment Officer Management Inc. and Morgan Stanley Investments LP and
Director of Morgan Stanley Trust for over 5 years. Executive
Vice President and Chief Investment Officer of funds in the
Fund Complex. Managing Director and Chief Investment Officer
of Van Kampen Investments, the Advisers and Van Kampen
Advisors Inc. since December 2002.
John R. Reynoldson (50) Vice President Officer Executive Director and Portfolio Specialist of the Advisers
1 Parkview Plaza since 2000 and Van Kampen Advisors Inc. Vice President of funds in the
P.O. Box 5555 Fund Complex. Prior to July 2001, Principal and Co-head of
Oakbrook Terrace, IL 60181 the Fixed Income Department of the Advisers and Van Kampen
Advisors Inc. Prior to December 2000, Senior Vice President
of the Advisers and Van Kampen Advisors Inc. Prior to May
2000, Senior Vice President of the investment grade taxable
group for the Advisers. Prior to June 1999, Senior Vice
President of the government securities bond group for Asset
Management.
36
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 (64) Executive Vice Officer Chief Executive Officer and Chairman of Investor Services.
1221 Avenue of the Americas President and since 2003 Executive Vice President and Principal Executive Officer of
New York, NY 10020 Principal Executive funds in the Fund Complex. Chief Global Operations Officer
Officer and Managing Director of Morgan Stanley Investment
Management Inc. Managing Director of Morgan Stanley.
Managing Director and Director of Morgan Stanley Investment
Advisors Inc. and Morgan Stanley Services Company Inc. Chief
Executive Officer and Director of Morgan Stanley Trust. Vice
President of the Morgan Stanley Funds.
A. Thomas Smith III (46) Vice President and Officer Managing Director of Morgan Stanley, Managing Director and
1221 Avenue of the Americas Secretary since 1999 Director of Van Kampen Investments, Director of the
New York, NY 10020 Advisers, Van Kampen Advisors Inc., the Distributor,
Investor Services and certain other subsidiaries of Van
Kampen Investments. Managing Director and General
Counsel-Mutual Funds of Morgan Stanley Investment Advisors,
Inc. Vice President and Secretary of funds in the Fund
Complex. Prior to July 2001, Managing Director, General
Counsel, Secretary and Director of Van Kampen Investments,
the Advisers, the Distributor, Investor Services, and
certain other subsidiaries of Van Kampen Investments. Prior
to December 2000, Executive Vice President, General Counsel,
Secretary and Director of Van Kampen Investments, the
Advisers, Van Kampen Advisors Inc., the Distributor,
Investor Services and certain other subsidiaries of Van
Kampen Investments. Prior to January 1999, Vice President
and Associate General Counsel to New York Life Insurance
Company ("New York Life"), and prior to March 1997,
Associate General Counsel of New York Life. Prior to
December 1993, Assistant General Counsel of The Dreyfus
Corporation. Prior to August 1991, Senior Associate, Willkie
Farr & Gallagher. Prior to January 1989, Staff Attorney at
the Securities and Exchange Commission, Division of
Investment Management, Office of Chief Counsel.
John L. Sullivan (47) Vice President, Chief Officer Director and Managing Director of Van Kampen Investments,
1 Parkview Plaza Financial Officer and since 1996 the Advisers, Van Kampen Advisors Inc. and certain other
P.O. Box 5555 Treasurer subsidiaries of Van Kampen Investments. Vice President,
Oakbrook Terrace, IL 60181 Chief Financial Officer and Treasurer of funds in the Fund
Complex. Head of Fund Accounting for Morgan Stanley
Investment Management. Prior to December 2002, Executive
Director of Van Kampen Investments, the Advisers and Van
Kampen Advisors Inc.
37
Van Kampen
Privacy Notice
The Van Kampen companies and investment products* respect your right to privacy.
We also know that you expect us to conduct and process your business in an
accurate and efficient manner. To do so, we must collect and maintain certain
nonpublic personal information about you. This is information we collect from
you on applications or other forms, and from the transactions you conduct with
us, our affiliates, or third parties. We may also collect information you
provide when using our Web site, and text files (also known as "cookies") may be
placed on your computer to help us to recognize you and to facilitate
transactions you initiate. We do not disclose any nonpublic personal information
about you or any of our former customers to anyone, except as permitted by law.
For instance, so that we may continue to offer you Van Kampen investment
products and services that meet your investing needs, and to effect transactions
that you request or authorize, we may disclose the information we collect to
companies that perform services on our behalf, such as printers and mailers that
assist us in the distribution of investor materials. These companies will use
this information only for the services for which we hired them, and are not
permitted to use or share this information for any other purpose. To protect
your nonpublic personal information internally, we permit access to it only by
authorized employees, and maintain physical, electronic and procedural
safeguards to guard your nonpublic personal information.
* Includes Van Kampen Investments Inc., Van Kampen Investment Advisory Corp.,
Van Kampen Asset Management Inc., Van Kampen Advisors Inc., Van Kampen
Management Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc.,
Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the many
Van Kampen mutual funds and Van Kampen unit investment trusts.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
(VAN KAMPEN INVESTMENTS LOGO)
Copyright (C)2003 Van Kampen
Funds Inc. All rights reserved.
Member NASD/SIPC.
VBF ANR 8/03 11610H03-AS-8/03
Item 2. Code of Ethics.
Applicable only for reports covering fiscal years ending on or after July 15,
2003.
Item 3. Audit Committee Financial Expert.
Applicable only for reports covering fiscal years ending on or after July 15,
2003.
Item 4. Principal Accountant Fees and Services.
Applicable only for reports covering fiscal years ending on or after December
15, 2003.
Item 5. Audit Committee of Listed Registrants.
Applicable only for reports covering periods ending on or after the earlier of
(i) the first annual shareholder meeting after January 15, 2004 or (ii) October
31, 2004.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Trust invests in exclusively non-voting securities and therefore this item
is not applicable to the Trust.
Item 8. [Reserved.]
Item 9.
The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust 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.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation.
Item 10. Exhibits.
(a) Code of Ethics - Applicable only for reports covering fiscal years ending on
or after July 15, 2003.
(b) Certifications of Principal Executive Officer and Principal Financial
Officer 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 Bond Fund
----------------------------------------------------------------
By: /s/ Ronald E. Robison
-------------------------------------------------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: August 19, 2003
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: August 19, 2003
By: /s/ John L. Sullivan
------------------------------------------------------------------------
Name: John L. Sullivan
Title: Principal Financial Officer
Date: August 19, 2003