<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................... 1
Performance Results......................... 3
Portfolio Management Review................. 4
Portfolio of Investments.................... 6
Statement of Assets and Liabilities......... 9
Statement of Operations..................... 10
Statement of Changes in Net Assets.......... 11
Financial Highlights........................ 12
Notes to Financial Statements............... 15
</TABLE>
CORP SAR 4/96
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO APPEARS HERE]
DENNIS J. MCDONNELL AND DON G. POWELL
April 15, 1996
Dear Shareholder,
We are pleased to report continued positive results for the Van Kampen Amer-
ican Capital Corporate Bond Fund. For the six months ended February 29, 1996,
shareholders of Class A shares achieved a total return at net asset value of
3.29 percent/1/. Longer term, the Fund's one-year Class A share total return
at net asset value was 13.54 percent/1/ for the same ending period.
With experience in money management dating back to 1926, Van Kampen American
Capital has weathered widely ranging market conditions and emerged with a suc-
cessful investment record. Today, we manage over $2 billion in corporate
bonds. A central part of our investment philosophy has always been a disci-
plined, value-oriented approach that includes in-depth research, both qualita-
tive and quantitative. We believe this approach serves our investors well, as
we seek to provide a high level of current income and superior long-term per-
formance in our fixed-income portfolios.
You can read more about your Fund's performance on the following pages, in-
cluding a recent interview with the portfolio management team.
ECONOMIC OVERVIEW
The slowdown in the economy continued through the end of 1995, reflected in
weak consumer demand and disappointing retail sales during the holiday season.
Severe winter weather in many parts of the country further dampened retail ac-
tivity and hindered distribution and manufacturing. These conditions helped to
keep inflation in check, prompting the Federal Reserve Board to continue eas-
ing short-term interest rates. In turn, long-term interest rates declined,
causing the price of many bonds to increase.
The beginning of 1996 was marked by an increase in market volatility, which
effectively ended the decline in bond yields. This volatility was triggered in
part by three factors: fiscal uncertainty caused by two unprecedented shut-
downs of the federal government, presidential primary debates about impending
tax reform, and an unexpected reversal in a number of key economic indicators,
which consequently sent the market mixed signals on the direction of the econ-
omy.
Still, due to the government shutdowns and the unusually harsh weather, the
market remained skeptical of the predictive value of economic statistics
issued for January and February. Interest rates have fluctuated as the market
attempts to determine whether the economy will remain slow throughout 1996.
Continued on page two
1
<PAGE>
During the period, high-income corporate bonds, which generally move in par-
allel with stocks, were among the few bond sectors to show significant
strength. The sector continued to benefit from corporate takeover activity,
some of which has improved the balance sheets of highly leveraged companies.
ECONOMIC OUTLOOK
In general, we anticipate a pickup in economic activity during the first half
of the year, with possibilities of an increase in inflation and an economic
slowdown toward the end of the year. We believe the Federal Reserve Board will
be cautious in its monetary policy toward short-term interest rates, as mixed
economic news continues to be reported.
The Fed is expected to maintain its focus on growing the economy at an annual
rate of 2 to 3 percent, while striving to keep inflation at bay. Interest rates
are expected to remain within the range experienced over the past several
years, with a continuation of historically low rates.
LONG-TERM PERFORMANCE
Throughout the life of the Fund, the support of our shareholders and our com-
mitment to a disciplined investment approach have been important to our long-
term performance record. Thank you for your continued confidence in Van Kampen
American Capital and in your Fund's management team.
Sincerely,
/s/ Don G. Powell /s/ Dennis J. McDonnell
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Asset Management, Inc. Asset Management, Inc.
2
<PAGE>
PERFORMANCE RESULTS FOR THE PERIOD ENDED FEBRUARY 29, 1996
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS
Six-month total return based on NAV/1/.............. 3.29% 2.95% 2.95%
Six-month total return/2/........................... (1.67%) (1.05%) 1.95%
One-year total return/2/............................ 8.08% 8.58% 11.60%
Five-year average annual total return/2/............ 8.36% N/A N/A
Ten-year average annual total return/2/............. 8.07% N/A N/A
Life-of-Fund average annual total return/2/......... 8.37% 5.57% 3.85%
Commencement Date................................... 09/23/71 09/28/92 08/30/93
DISTRIBUTION RATE AND YIELD
Distribution Rate/3/................................ 6.59% 6.23% 6.24%
SEC Yield/4/........................................ 5.90% 5.40% 5.41%
</TABLE>
N/A = Not Applicable
/1/Assumes reinvestment of all distributions for the period and does not include
payment of the maximum sales charge (4.75% for A shares) or contingent
deferred sales charge for early withdrawal (4% for B and 1% for C shares).
/2/Standardized total return. Assumes reinvestment of all distributions for the
period and includes payment of the maximum sales charge (A shares) or
contingent deferred sales charge for the early withdrawal (B and C shares).
/3/Distribution rate represents the monthly annualized distributions of the Fund
at the end of the period and not the earnings of the Fund.
/4/SEC Yield is a standardized calculation prescribed by the Securities and
Exchange Commission for determining the amount of net income a portfolio
should theoretically generate for the 30-day period ending as shown above.
See the Prior Performance section of the current prospectus. Past performance
does not guarantee future results. Investment return and net asset value will
fluctuate with market conditions. Fund shares, when redeemed, may be worth
more or less than their original cost.
3
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
We recently spoke with the management team of the Van Kampen American Capital
Corporate Bond Fund about the key events and economic forces which shaped the
markets during the first half of the Fund's fiscal year. The team includes
David R. Troth, portfolio manager, and Robert C. Peck, Jr., executive vice
president for fixed-income investments. The following excerpts reflect their
views on the Fund's performance during the six-month period ended February 29,
1996.
Q HOW DID THE FUND PERFORM IN THE FIRST HALF OF THE FISCAL YEAR?
A Looking at the performance over the past six months (August 31, 1995
through February 29, 1996), the Fund performed very well into February,
when the market slightly corrected. The Fund's net asset value (Class A
shares) was virtually unchanged, starting the period at $6.94 per share and
ending the period at $6.93 per share. But shareholders still achieved a total
return of 3.29 percent/1/ (Class A shares, at NAV) for the period, stemming
from the Fund's income distributions, which remained steady at $.04 per share
every month. However, past performance does not guarantee future results.
For the same period, the total return of the Lehman Brothers Corporate Bond
Index was 4.33 percent. This index reflects the performance of all publicly
issued, fixed-rate nonconvertible investment grade corporate debt. The return
of this index, which is unmanaged, does not reflect any commissions or fees
that would be paid by an investor purchasing the securities it represents.
(Please refer to the chart on page three for additional Fund performance re-
sults.)
Q WHAT WERE THE MAIN FACTORS RESPONSIBLE FOR THE FUND'S PERFORMANCE?
A The Fund benefited from falling interest rates throughout most of the
six-month period, as rates on long Treasuries dropped and corporate bond
rates followed suit. (As interest rates fall, bonds appreciate in price, and
visa versa). Starting in February, however, the market has been troubled by
uncertainty regarding Federal Reserve policy. The prevalent consensus late in
1995 was that the Fed would gradually reduce interest rates, perhaps as much
as one full percentage point. We saw a quarter-point reduction in the fed
funds rate in December, and again in February. Then, as key indicators showed
the economy gaining strength, the market reversed course, believing that fur-
ther easing would be delayed.
Q WHAT DO YOU EXPECT TO HAPPEN OVER THE NEXT SIX MONTHS?
A We do not think a significant increase in interest rates is imminent.
Therefore, the Fund's portfolio is not positioned as defensively as in
1994, when the Fed was actively tightening. We believe there may be further
easing of interest rates, but that this may take place gradually.
The Fund's duration (a measure of the portfolio's sensitivity to interest
rate changes) now stands at 6.3 years, up slightly from 6.0 years at the be-
ginning of the period. This is due partly to our efforts over the past few
months to reduce our holdings in callable bonds, which may be paid in full,
prior to their maturity date. We recently trimmed our positions in some high-
coupon callable issues, such as Occidental Petroleum and Coastal Corp., while
emphasizing non-callable issues primarily in the 10-year maturity spectrum.
4
<PAGE>
Q HOW ARE YOU POSITIONING THE FUND TO ACHIEVE THE BEST PERFORMANCE GOING
FORWARD?
A The economy has seen a period of relative prosperity in the past few
years, which is always good for corporate cash flows. That's why we've
seen a trend favoring bond rating upgrades rather than downgrades. However, the
Fund's credit quality remains high, with 95 percent of the Fund's portfolio in
investment grade issues.
We have been concerned about the effect of recent economic activity on com-
pany earnings and cash flow. We have avoided more cyclical companies which may
be more negatively affected by slower economic growth, such as automobile,
steel, and retail companies. Instead, we've put our heaviest weighting in con-
sumer services firms, which are usually less vulnerable to a downturn. In addi-
tion, we have focused less heavily on the utilities sector because we are
concerned that competition in this industry will become more fierce, especially
with the announcement by AT&T that it will enter into local phone markets.
[PIE CHART PORTFOLIO HOLDINGS BY SECTOR AS OF FEBRUARY 29, 1996 APPEARS HERE]
Government 10%
Transportation 11%
Raw Materials/Processing Industries 7%
Finance 11%
Other 7%
Utilities 11%
Energy 14%
Consumer Services 25%
Consumer Distribution 4%
Other developments which will require attention include the recent trend of
corporations to disaggregate. AT&T recently split into three business units,
and 3M and Hansen PLC have announced similar spin-off plans. While the Fund
does not hold any of these issues, this trend creates a degree of uncertainty
because bondholders can not be sure which portion of the newly split company
will be responsible for servicing the outstanding bond issues. As a result, we
are taking steps to increase the diversification of the Fund to protect against
the risks associated with any one issuer. Over the past six months, we have al-
located the Fund's portfolio among 62 issues, up from 56 at the start of the
period. We expect to continue diversifying across more names and more indus-
tries in an attempt to give the Fund an even lower risk profile.
Overall, we have always taken a balanced approach toward managing risk. For
example, while we do have some callable bonds, which tend to offer stronger
yield potential, we also have a position in issues which should perform well if
interest rates decline. We will continue to pursue this balanced approach to
current income and appreciation potential in the future.
/s/ Robert C. Peck, Jr. /s/ David R. Troth
Robert C. Peck, Jr. David R. Troth
Executive Vice President Portfolio Manager
Fixed Income Investments
Please see footnotes on page three.
5
<PAGE>
PORTFOLIO OF INVESTMENTS
February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE OBLIGATIONS 88.1%
CONSUMER DISTRIBUTION 3.6%
$2,000 Grand Metropolitan Investment Corp...... 8.000% 09/15/22 $ 2,169,100
2,000 Nabisco Inc............................. 7.550 06/15/15 1,987,600
3,000 Sysco Corp.............................. 6.500 06/15/05 2,996,700
------------
7,153,400
------------
CONSUMER NON-DURABLES 1.2%
2,000 Coca Cola Enterprises Inc............... 8.500 02/01/12 2,313,400
------------
CONSUMER SERVICES 24.7%
1,000 Circus Circus........................... 6.450 02/01/06 967,500
6,215 Columbia Pictures Entertainment Inc..... 9.875 02/01/98 6,686,718
5,000 Cox Communications Inc.................. 6.875 06/15/05 5,039,550
3,500 Cox Communications Inc.................. 7.250 11/15/15 3,470,250
1,250 Harcourt General Inc.................... 8.875 06/01/22 1,453,000
2,000 ITT Corp................................ 6.250 11/15/00 2,004,800
5,000 ITT Corp................................ 6.750 11/15/05 4,969,850
2,250 ITT Corp................................ 7.375 11/15/15 2,233,350
4,000 Mayne Nickless Ltd...................... 6.250 02/01/06 3,851,760
1,125 New York Times Co....................... 8.250 03/15/25 1,203,187
6,000 News America Holdings Inc............... 8.875 04/26/23 6,549,600
2,000 News America Holdings Inc............... 9.250 02/01/13 2,320,600
2,500 TCI Communications Inc.................. 8.750 08/01/15 2,671,250
3,000 Tele Communications Inc................. 6.875 02/15/06 2,903,100
2,000 Tele Communications Inc................. 9.250 01/15/23 2,103,800
------------
48,428,315
------------
ENERGY 14.1%
6,300 Ashland Oil Inc......................... 8.800 11/15/12 7,183,890
1,000 Lyondell Petrochem...................... 6.500 02/15/06 967,790
6,300 PDV America Inc......................... 7.875 08/01/03 6,008,310
5,000 Phillips Petroleum Co................... 8.860 05/15/22 5,424,750
4,000 Union Oil Co............................ 9.125 02/15/06 4,666,200
3,000 Union Oil Co............................ 9.250 02/01/03 3,410,400
------------
27,661,340
------------
FINANCE 10.8%
Bank of America, Mtg. Pass Through
32 Certificate, Series 1980-1.............. 11.875 04/01/10 31,848
4,924 Beaver Valley II Funding Corp........... 9.000 06/01/17 4,111,540
3,500 First PV Funding Corp., Series 1986-A... 10.300 01/15/14 3,670,975
3,658 PNPP II Funding Corp.................... 8.510 11/30/06 3,904,915
3,000 Royal Bank of Scotland.................. 6.375 02/01/11 2,840,700
4,500 Ryder Systems Inc....................... 9.250 05/15/01 5,040,225
1,500 United Illuminating Co.................. 10.240 01/02/20 1,634,100
------------
21,234,303
------------
</TABLE>
See Notes to Financial Statements
6
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PRODUCER MANUFACTURING 2.8%
$ 5,000 John Deere Credit Corp................ 9.625% 11/01/98 $ 5,450,000
------------
RAW MATERIALS/PROCESSING INDUSTRIES
7.0%
1,000 Carter Holt Harvey Ltd................ 8.375 04/15/15 1,080,210
4,000 Crown Cork & Seal Co Inc.............. 8.000 04/15/23 4,074,000
4,000 Federal Paper Board Inc............... 8.875 07/01/12 4,606,000
3,000 Georgia Pacific Corp.................. 9.500 02/15/18 3,162,000
500 James River Corp...................... 8.375 11/15/01 541,235
300 Owens Corning Fiberglas Corp.......... 9.375 06/01/12 352,740
------------
13,816,185
------------
TECHNOLOGY 2.6%
5,000 International Business Machines Corp.. 7.500 06/15/13 5,225,000
------------
TRANSPORTATION 10.7%
3,000 AMR Corp.............................. 9.500 05/15/01 3,359,100
750 CSX Corp.............................. 8.625 05/15/22 854,400
1,500 Kansas City Southern Industries Inc... 7.875 07/01/02 1,603,800
700 Kansas City Southern Industries Inc... 8.800 07/01/22 765,296
8,000 Union Pacific Corp.................... 8.350 05/01/25 8,440,800
5,000 United Airlines, Pass-through
Certificates, Series 1991-A,
collateralized by equipment........... 10.020 03/22/14 5,952,000
------------
20,975,396
------------
UTILITIES 10.6%
1,000 Arizona Public Co., 1st Mtg........... 8.750 01/15/24 1,076,940
2,000 Arizona Public Co., 1st Mtg........... 9.500 04/15/21 2,145,560
Cleveland Electric Illuminating Co.,
2,300 1st Mtg............................... 10.000 06/01/20 2,401,430
Connecticut Yankee Atomic Power,
1,440 Series A.............................. 12.000 06/01/00 1,506,600
1,605 Consumers Power Co., 1st Mtg.......... 8.875 11/15/99 1,733,881
1,000 Gulf States Utilities................. 8.940 01/01/22 1,085,550
1,000 Long Island Lighting Co............... 9.000 11/01/22 983,800
4,000 Long Island Lighting Co............... 9.750 05/01/21 4,134,000
1,500 Niagara Mohawk Power Corp............. 8.500 07/15/23 1,406,700
2,500 Texas Utility Electric Co............. 8.875 02/01/22 2,721,250
1,500 Union Electric Co..................... 8.000 12/15/22 1,550,490
------------
20,746,201
------------
TOTAL CORPORATE OBLIGATIONS (Cost
$163,614,533)......................... 173,003,540
------------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
GOVERNMENT OBLIGATIONS 10.1%
$ 4,000 Province of Newfoundland (Canada)..... 9.000% 10/15/21 $ 4,686,000
4,650 Province of Nova Scotia (Canada)...... 8.250 07/30/22 5,071,058
650 Province of Saskatchewan (Canada)..... 8.000 02/01/13 709,280
2,000 Province of Saskatchewan (Canada)..... 8.500 07/15/22 2,264,980
7,000 United States Treasury Notes.......... 5.375 11/30/97 6,992,370
------------
TOTAL GOVERNMENT OBLIGATIONS (Cost
$18,204,524).......................... 19,723,688
------------
REPURCHASE AGREEMENT 0.5%
920 SBC Capital Markets, Inc., dated
02/29/96 (collateralized by U.S.
Government obligations in a pooled
cash account) repurchase proceeds
$920,139 (Cost $920,000).............. 5.450 03/01/96 920,000
------------
TOTAL INVESTMENTS (Cost $182,739,057) 98.7%..................... 193,647,228
OTHER ASSETS AND LIABILITIES, NET 1.3%.......................... 2,625,198
------------
NET ASSETS 100%................................................. $196,272,426
------------
</TABLE>
See Notes to Financial Statements
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $182,739,057)................. $193,647,228
Interest receivable.............................................. 3,413,682
Receivable for Fund shares sold.................................. 395,012
Other assets and receivables..................................... 24,745
------------
Total Assets.................................................... 197,480,667
------------
LIABILITIES
Payable for Fund shares redeemed................................. 456,314
Dividends payable................................................ 447,892
Due to Adviser................................................... 82,000
Due to shareholder service agent................................. 46,040
Due to Distributor............................................... 44,024
Deferred Trustees' compensation.................................. 41,081
Accrued expenses................................................. 90,890
------------
Total Liabilities............................................... 1,208,241
------------
NET ASSETS, equivalent to $6.93 per share for Class A, $6.92 per
share for Class B and Class C shares............................ $196,272,426
------------
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par: 24,021,571 Class A,
3,508,957 Class B and 793,761 Class C shares outstanding........ $ 283,243
Capital surplus.................................................. 207,766,794
Accumulated net realized loss on securities...................... (22,759,816)
Net unrealized appreciation of securities........................ 10,908,171
Undistributed net investment income.............................. 74,034
------------
NET ASSETS....................................................... $196,272,426
------------
</TABLE>
See Notes to Financial Statements
9
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended February 29, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest........................................................... $ 7,671,127
-----------
EXPENSES
Management fees.................................................... 487,698
Shareholder service agent's fees and expenses...................... 220,181
Accounting services................................................ 41,038
Service fees--Class A.............................................. 169,257
Distribution and service fees--Class B............................. 115,874
Distribution and service fees--Class C............................. 24,088
Trustees' fees and expenses........................................ 10,591
Audit fees......................................................... 19,755
Custodian fees..................................................... 2,158
Legal fees......................................................... 2,097
Reports to shareholders............................................ 23,605
Registration and filing fees....................................... 34,758
Miscellaneous...................................................... 6,068
-----------
Total expenses.................................................... 1,157,168
-----------
NET INVESTMENT INCOME.............................................. 6,513,959
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain on securities.................................... 2,239,235
Net unrealized depreciation of securities during the period........ (2,332,854)
-----------
NET REALIZED AND UNREALIZED LOSS ON SECURITIES..................... (93,619)
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $ 6,420,340
-----------
</TABLE>
See Notes to Financial Statements0
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
February 29, August 31,
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period.................... $192,300,508 $175,714,857
------------ ------------
OPERATIONS
Net investment income............................. 6,513,959 13,203,194
Net realized gain on securities................... 2,239,235 82,283
Net unrealized appreciation (depreciation) of
securities during the period..................... (2,332,854) 8,953,346
------------ ------------
Increase in net assets resulting from operations.. 6,420,340 22,238,823
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME
Class A........................................... (5,809,921) (12,019,043)
Class B........................................... (719,859) (1,038,877)
Class C........................................... (149,749) (203,409)
------------ ------------
(6,679,529) (13,261,329)
------------ ------------
NET EQUALIZATION DEBITS (see Note 1H).............. -- (45,347)
------------ ------------
CAPITAL TRANSACTIONS
Proceeds from shares sold
Class A........................................... 9,247,813 36,830,801
Class B........................................... 8,613,838 9,273,809
Class C........................................... 1,991,665 2,130,631
------------ ------------
19,853,316 48,235,241
------------ ------------
Proceeds from shares issued for distributions
reinvested
Class A........................................... 3,837,974 7,877,976
Class B........................................... 452,531 677,156
Class C........................................... 84,775 126,732
------------ ------------
4,375,280 8,681,864
------------ ------------
Costs of shares redeemed
Class A........................................... (15,522,475) (43,542,246)
Class B........................................... (3,829,303) (5,097,135)
Class C........................................... (645,711) (624,220)
------------ ------------
(19,997,489) (49,263,601)
------------ ------------
Increase in net assets from capital transactions.. 4,231,107 7,653,504
------------ ------------
INCREASE IN NET ASSETS............................ 3,971,918 16,585,651
------------ ------------
NET ASSETS, end of period (including undistributed
net investment income of $74,034 and $239,604,
respectively)..................................... $196,272,426 $192,300,508
------------ ------------
</TABLE>
See Notes to Financial Statements1
11
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
of the periods indicated. (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------
Six Months
Ended Year Ended August 31
February 29, ------------------------------------------
1996 1995 1994 1993(/1/) 1992 1991
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PER-
FORMANCE
Net asset value, begin-
ning of period......... $6.94 $6.62 $7.36 $6.98 $6.57 $6.34
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Investment income...... .27 .55 .57 .58 .60 .64
Expenses............... (.03) (.07) (.08) (.07) (.07) (.06)
------ ------ ------ ------ ------ ------
Net investment income... .24 .48 .49 .51 .53 .58
Net realized and
unrealized gain (loss)
on securities.......... (.01) .32 (.745) .3875 .44 .2425
------ ------ ------ ------ ------ ------
Total from investment
operations............. .23 .80 (.255) .8975 .97 .8225
------ ------ ------ ------ ------ ------
DISTRIBUTIONS FROM NET
INVESTMENT INCOME...... (.24) (.48) (.485) (.5175) (.56) (.5925)
------ ------ ------ ------ ------ ------
Net asset value, end of
period................. $6.93 $6.94 $6.62 $7.36 $6.98 $6.57
------ ------ ------ ------ ------ ------
TOTAL RETURN (/2/)...... 3.29% 12.71% (3.55%) 13.48% 15.38% 13.61%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of pe-
riod (millions)........ $166.5 $169.0 $160.0 $190.8 $191.8 $184.6
Average net assets (mil-
lions)................. $172.1 $166.2 $175.5 $188.0 $186.5 $189.0
Ratios to average net
assets (annualized)
Expenses............... 1.04% 1.13% 1.09% 1.05% 1.00% 1.00%
Net investment income.. 6.63% 7.22% 7.06% 7.24% 7.90% 9.03%
Portfolio turnover rate. 16% 25% 0% 19% 37% 15%
</TABLE>
(1) Based on average month-end shares outstanding.
(2) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
See Notes to Financial Statements2
12
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each
of the periods indicated. (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
----------------------------------------------
Six Months Year Ended September 28,
Ended August 31 1992(/1/) through
February 29, ------------ August 31,
1996 1995 1994 1993(/2/)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period........................ $6.94 $6.62 $7.36 $7.05
----- ----- ----- ------
INCOME FROM INVESTMENT
OPERATIONS
Investment income............. .27 .55 .57 .56
Expenses...................... (.06) (.13) (.13) (.13)
----- ----- ----- ------
Net investment income.......... .21 .42 .44 .43
Net realized and unrealized
gain (loss) on securities..... (.014) .33 (.755) .3465
----- ----- ----- ------
Total from investment
operations.................... .196 .75 (.315) .7765
----- ----- ----- ------
DISTRIBUTIONS FROM NET
INVESTMENT INCOME............. (.216) (.43) (.425) (.4665)
----- ----- ----- ------
Net asset value, end of period. $6.92 $6.94 $6.62 $7.36
----- ----- ----- ------
TOTAL RETURN (/3/)............. 2.95% 11.86% (4.38%) 11.54%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(millions).................... $24.3 $19.2 $13.5 $8.4
Average net assets (millions).. $23.2 $15.9 $11.5 $3.2
Ratios to average net assets
(annualized)
Expenses...................... 1.85% 1.94% 1.90% 1.96%
Net investment income......... 5.80% 6.40% 6.29% 6.21%
Portfolio turnover rate........ 16% 25% 0% 19%
</TABLE>
(1) Commencement of offering of sales
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
See Notes to Financial Statements3
13
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each
of the periods indicated. (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
-------------------------------
Six Months Year Ended
Ended August 31
February 29, -----------------
1996 1995 1994(/1/)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period......... $6.93 $6.62 $7.36(/2/)
----- ----- ----------
INCOME FROM INVESTMENT OPERATIONS
Investment income........................... .27 .55 .57
Expenses.................................... (.06) (.13) (.13)
----- ----- ----------
Net investment income........................ .21 .42 .44
Net realized and unrealized gain (loss) on
securities.................................. (.004) .32 (.755)
----- ----- ----------
Total from investment operations............. .206 .74 (.315)
----- ----- ----------
DISTRIBUTIONS FROM NET INVESTMENT INCOME..... (.216) (.43) (.425)
----- ----- ----------
Net asset value, end of period............... $6.92 $6.93 $6.62
----- ----- ----------
TOTAL RETURN (/3/)........................... 2.95% 11.70% (4.51%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)......... $5.5 $4.1 $2.3
Average net assets (millions)................ $4.8 $3.1 $1.2
Ratios to average net assets (annualized)
Expenses.................................... 1.85% 1.93% 1.93%
Net investment income....................... 5.80% 6.40% 6.49%
Portfolio turnover rate...................... 16% 25% 0%
</TABLE>
(1) Based on average month-end shares outstanding
(2) Sales of Class C shares commenced on August 30, 1993 at a net asset value
of $7.40 per share. At August 31, 1993, there were 68 Class C shares
outstanding with a per share net asset value of $7.36. The decrease in net
asset value was due principally to a $.0375 dividend, which was declared
as of August 31, 1993. Other financial highlights for the Class C shares
for this short period are not presented as they are not meaningful.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
See Notes to Financial Statements4
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Corporate Bond Fund (the "Fund") is registered un-
der the Investment Company Act of 1940, as amended, as a diversified open-end
management investment company. The Fund seeks to provide current income with
preservation of capital.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The prepa-
ration of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that effect
the amounts reported. Actual amounts may differ from the estimates.
A. INVESTMENT VALUATIONS-Securities listed or traded principally on a national
securities exchange are valued at the last sale price. Unlisted securities and
listed securities for which the last sale price is not available are valued at
the mean between the last reported bid and asked prices.
Short-term investments with a maturity of 60 days or less when purchased are
valued at amortized cost, which approximates market value. Short-term invest-
ments with a maturity of more than 60 days when purchased are valued based on
market quotations, until the remaining days to maturity becomes less than 61
days. From such time, until maturity, the investments are valued at amortized
cost.
B. FUTURES CONTRACTS-Transactions in futures contracts are utilized in strate-
gies to manage the market risk of the Fund's investments. The purchase of a
futures contract increases the impact on net asset value of changes in the mar-
ket price of investments. There is also a risk that the market movement of such
instruments may not be in the direction forecasted.
Upon entering into futures contracts, the Fund maintains, in a segregated ac-
count with its custodian, securities with a value equal to its obligation under
the futures contracts. A portion of these funds is held as collateral in an ac-
count in the name of the broker, the Fund's agent in acquiring the futures po-
sition. During the period the futures contract is open, changes in the value of
the contract ("variation margin") are recognized by marking the contract to
market on a daily basis. As unrealized gains or losses are incurred, variation
margin payments are received from or made to the broker. Upon the closing or
cash settlement of a contract, gains and losses are realized. The cost of secu-
rities acquired through delivery under a contract is adjusted by the unrealized
gain or loss on the contract.
C. REPURCHASE AGREEMENTS-A repurchase agreement is a short-term investment in
which the Fund acquires ownership of a debt security and the seller agrees to
repurchase the security
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
at a future time and specified price. The Fund may invest independently in re-
purchase agreements, or transfer uninvested cash balances into a pooled cash
account along with other investment companies advised by Van Kampen American
Capital Asset Management, Inc. (the "Adviser"), the daily aggregate of which
is invested in repurchase agreements. Repurchase agreements are collateralized
by the underlying debt security. The Fund makes 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 un-
derlying security at not less than the repurchase proceeds due the Fund.
D. FEDERAL INCOME TAXES-No provision for federal income taxes is required be-
cause the Fund has elected to be taxed as a "regulated investment company" un-
der the Internal Revenue Code and intends to maintain this qualification by
annually distributing all of its taxable net investment income and taxable net
realized capital gains to its shareholders. It is anticipated that no distri-
butions of capital gains will be made until tax basis capital loss
carryforwards expire or are offset by net realized capital gains.
The net realized capital loss carryforward for federal income tax purposes
of approximately $25.0 million at August 31, 1995 may be utilized to offset
current or future capital gains until expiration in 1997 through 2000.
E. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME-Investment transac-
tions are accounted for on the trade date. Realized gains and losses on in-
vestments are determined on the basis of identified cost. Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily.
F. DIVIDENDS AND DISTRIBUTIONS-Dividends and distributions to shareholders are
recorded on the record date. The Fund distributes tax basis earnings in accor-
dance with the minimum distribution requirements of the Internal Revenue Code,
which may result in dividends or distributions in excess of financial state-
ment earnings.
G. DEBT DISCOUNT OR PREMIUM-The Fund accounts for discounts and premiums on
the same basis as is used for federal income tax reporting. Accordingly, orig-
inal issue discounts on debt securities purchased are amortized over the life
of the security. Premiums on debt securities are not amortized. Market dis-
counts are recognized at the time of sale as realized gains for book purposes
and ordinary income for tax purposes.
H. EQUALIZATION-At December 1, 1994, the Fund discontinued the accounting
practice of equalization, which it had used since its inception. Equalization
is a practice whereby a portion of the proceeds from sales and costs of re-
demptions of Fund shares, equivalent on a per-share basis to the amount of the
undistributed net investment income, is charged or credited to undistributed
net investment income.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
The balance of equalization included in undistributed net investment income
at the date of change, $285,421, was reclassified to capital surplus. Such re-
classification had no effect on net assets, results of operations, or net as-
set value per share of the Fund.
NOTE 2--MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as investment manager of the Fund. Management fees are paid
monthly, based on the average daily net assets of the Fund at an annual rate
of .50% of the first $150 million, .45% of the next $100 million, .40% of the
next $100 million, and .35% of the amount in excess of $350 million.
Accounting services include the salaries and overhead expenses of the Fund's
Chief Accounting Officer and the personnel operating under his direction.
Charges are allocated among investment companies advised by the Adviser. For
the period, these charges included $3,327 as the Fund's share of the employee
costs attributable to the Fund's accounting officers. A portion of the ac-
counting services expense was paid to the Adviser in reimbursement of person-
nel, facilities and equipment costs attributable to the provision of
accounting services to the Fund. The services provided by the Adviser are at
cost.
ACCESS Investor Services, Inc., an affiliate of the Adviser, serves as the
Fund's shareholder service agent. These services are provided at cost plus a
profit. For the period, the fees for such services were $172,370.
The Fund has been advised that Van Kampen American Capital Distributors,
Inc. (the "Distributor") and Advantage Capital Corp. (the "Retail Dealer"),
both affiliates of the Adviser, received $14,443 and $12,873, respectively, as
their portion of the commissions charged on sales of Fund shares during the
period. As of January 2, 1996, Advantage Capital Corp. was no longer an affil-
iate of the Adviser.
Under the Distribution Plans, each class of shares pays up to .25% per annum
of its average daily net assets to reimburse the Distributor for expenses and
service fees incurred. Class B and C shares pay an additional fee of up to
.75% per annum of their average net assets to reimburse the Distributor for
its distribution expenses. Actual distribution expenses incurred by the Dis-
tributor for Class B and C shares may exceed the amounts reimbursed to the
Distributor by the Fund. At the end of the period, the unreimbursed expenses
incurred by the Distributor under the Class B and C plans aggregated approxi-
mately $906,000 and $38,000, respectively, and may be carried forward and re-
imbursed through either the collection of the contingent deferred sales
charges from share redemptions or, subject to the annual renewal of the plans,
future Fund reimbursements of distribution fees.
Legal fees during the period were for services rendered by former counsel of
the Fund, O'Melveny & Myers. A former trustee was of counsel to that firm.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- -------------------------------------------------------------------------------
Certain officers and trustees of the Fund are officers and trustees of the
Adviser, the Distributor, the Retail Dealer and the shareholder service agent.
NOTE 3--INVESTMENT ACTIVITY
During the period, the costs of purchases and proceeds from sales of invest-
ments, excluding short-term investments, were $34,634,471 and $30,098,052, re-
spectively.
The identified cost of investments owned at the end of the period was the
same for federal income tax and financial reporting purposes. Gross unrealized
appreciation of investments aggregated $12,513,525 and gross unrealized depre-
ciation aggregated $1,605,354.
NOTE 4--TRUSTEE COMPENSATION
Fund trustees who are not affiliated with the Adviser are compensated by the
Fund at the annual rate of $851 plus a fee of $24 per day for Board and Com-
mittee meetings attended. During the period, such fees aggregated $10,223.
The Fund has in effect a deferred compensation plan and a defined benefits
retirement plan for its trustees not affiliated with the Adviser. These plans
are not funded, and obligations under the plans will be paid solely out of the
Fund's general accounts. The Fund will not reserve or set aside funds for the
payment of its obligations under the plans by any form of trust or escrow.
Under the deferred compensation plan, trustees may elect to defer all or a
portion of their compensation to a later date. Each trustee under the plan
elects to earn on the deferred balances an amount equal to the total return of
the Fund or equal to the income earned by the Fund on its short-term invest-
ments.
Under the retirement plan which became effective in January, 1996, benefits
which are based on years of service will be received by the trustee for a ten
year period. The maximum annual benefit for each trustee is $2,500. Retirement
plan expenses for the period aggregated $1,500. During the calendar year 1996,
the Adviser has agreed to reimburse the Fund for these plan expenses.
NOTE 5--CAPITAL
The Fund offers three classes of shares at their respective net asset values
per share, plus a sales charge which is imposed either at the time of purchase
(the Class A shares) or at the time of redemption on a contingent deferred ba-
sis (the Class B and C shares). All classes of shares have the same rights,
except that Class B and C shares bear the cost of distribution fees and cer-
tain other class specific expenses. Realized and unrealized gains or losses,
investment income and expenses (other than class specific expenses) are allo-
cated daily to each class of shares based upon the relative proportion of net
assets of each class. Class B and C shares automatically convert to Class A
shares six years and ten years after purchase, respectively, subject to cer-
tain conditions.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
- --------------------------------------------------------------------------------
The Fund has an unlimited number of shares of each class of $.01 par value
beneficial interest authorized. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
February 29, August 31,
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Shares sold
Class A.............................................. 1,303,764 5,657,020
Class B.............................................. 1,219,126 1,394,371
Class C.............................................. 281,059 322,086
---------- ----------
2,803,949 7,373,477
---------- ----------
Shares issued for distributions reinvested
Class A.............................................. 542,487 1,192,850
Class B.............................................. 63,359 102,002
Class C.............................................. 11,999 19,080
---------- ----------
617,845 1,313,932
---------- ----------
Shares redeemed
Class A.............................................. (2,193,156) (6,655,261)
Class B.............................................. (538,224) (766,395)
Class C.............................................. (91,340) (94,193)
---------- ----------
(2,822,720) (7,515,849)
---------- ----------
Increase in Fund shares outstanding................. 599,074 1,171,560
---------- ----------
</TABLE>
NOTE 6--SUBSEQUENT DIVIDEND
The Board of Trustees of the Fund declared a dividend of $.04 per share for
Class A and $.036 per share for Class B and C shares from net investment in-
come, payable April 15, 1996 to shareholders of record on March 29, 1996.
19
<PAGE>
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Limited Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-421-5666 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
20
<PAGE>
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
LINDA HUTTON HEAGY
ROGER HILSMAN
R. CRAIG KENNEDY
DENNIS J. MCDONNELL
DONALD C. MILLER
JACK E. NELSON
DON G. POWELL
JEROME L. ROBINSON
FERNANDO SISTO*
WAYNE W. WHALEN
WILLIAM S. WOODSIDE
*Chairman of the Board
OFFICERS
DON G. POWELL
President and Chief Executive Officer
DENNIS J. MCDONNELL
Executive Vice President
RONALD A. NYBERG
Vice President and Secretary
EDWARD C. WOOD, III
Vice President and Chief Financial Officer
CURTIS W. MORELL
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN
Treasurer
TANYA M. LODEN
Controller
WILLIAM N. BROWN
PETER W. HEGEL
ROBERT C. PECK, JR.
ALAN T. SACHTLEBEN
PAUL R. WOLKENBERG
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
One Parkview Plaza Oakbrook Terrace, Illinois 60181
DISTRIBUTOR
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
One Parkview Plaza Oakbrook Terrace, Illinois 60181
SHAREHOLDER SERVICE AGENT
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256 Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK AND TRUST CO.
225 Franklin Street Boston, Massachusetts 02110
LEGAL COUNSEL
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
(C) Van Kampen American Capital Distributors, Inc., 1996
All rights reserved.
SM denotes a service mark of
Van Kampen American Capital Distributors, Inc.
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors un-
less it has been preceded or is accompanied by an effective prospectus of the
Fund which contains additional information on how to purchase shares, the
sales charge, and other pertinent data.
