<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................... 1
Performance Results......................... 3
Portfolio Highlights........................ 4
Performance in Perspective.................. 5
Portfolio Management Review................. 6
Portfolio of Investments.................... 9
Statement of Assets and Liabilities......... 12
Statement of Operations..................... 13
Statement of Changes in Net Assets.......... 14
Financial Highlights........................ 15
Notes to Financial Statements............... 18
Independent Accountants' Report............. 25
</TABLE>
CORP ANR 10/96
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO APPEARS HERE]
DENNIS J. MCDONNELL AND DON G. POWELL
September 26, 1996
Dear Shareholder,
As you may be aware, an agreement was reached in late June for VK/AC Holding
Inc., the parent company of Van Kampen American Capital, Inc., to be acquired
by Morgan Stanley Group Inc. While this announcement may appear commonplace in
an ever-changing financial industry, we believe it represents an exciting
opportunity for shareholders of our investment products.
With Morgan Stanley's global leadership in investment banking and asset man-
agement and Van Kampen American Capital's reputation for competitive long-term
performance and superior investor services, together we will offer a broader
range of investment opportunities and expertise.
The new ownership will not affect our commitment to pursuing excellence in
all aspects of our business. We expect very little change in the way your mu-
tual fund account is maintained and serviced.
A proxy was mailed to you that explains the acquisition and asks for your
vote of approval. We value our relationship with you and look forward to com-
municating more details of this transaction, which is anticipated to close in
October.
ECONOMIC OVERVIEW
The economy demonstrated an acceleration in growth during the last half of
the 12-month reporting period. After a nominal 0.3 percent rise in the last
quarter of 1995, real GDP (the nation's gross domestic product, adjusted for
inflation) rose by 2.0 percent in this year's first quarter. And, as antici-
pated, the economy grew by a much stronger 4.7 percent in the second quarter,
partly reflecting a rebound from the effects of labor strikes earlier in the
year and extreme weather conditions across the country. Upward momentum has
been assisted by consumer spending, as indicated by a 3.0 percent rise in re-
tail sales in the first eight months of this calendar year (a 4.3 percent rise
during the Fund's fiscal year).
In the manufacturing sector, economic reports, such as the National Associa-
tion of Purchasing Managers Index, suggest a continued rebound in production
from last winter's lower levels. In June, this index reached an 18-month high.
Strong exports and a replenishing of inventories have helped support this mo-
mentum.
Surprisingly healthy economic activity led to concerns that inflation may
rise and the Federal Reserve Board might tighten monetary policy. Inflation
remains modest, however, with consumer prices rising at about a 3 percent an-
nual rate over the past year. Meanwhile, the closely watched "core" Consumer
Price Index, which excludes volatile food and energy components, has risen
year over year at rates between 2.7 and 3.0 percent per year. In general, re-
cent reports have suggested an upward creep in labor-related costs. The Pro-
ducer Price Index, which measures prices paid by wholesalers to producers, has
indicated low wholesale prices in each of the past three months, from June
through August.
1
Continued on page two
<PAGE>
OUTLOOK
We anticipate that reasonably strong economic growth will continue during the
balance of 1996, albeit at rates more moderate than the second quarter's swift
pace. While we expect rates of inflation to remain near current levels, the Fed
may lean toward greater restraint in its monetary policy in the coming months.
That suggests an upward bias for short-term interest rates and a continuation
of the current trading range for yields on long-term bonds.
Additional details about your Fund, including a question and answer section
with your portfolio management team, is provided in this report. We appreciate
your continued confidence in your investment with Van Kampen American Capital.
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 AUGUST 31, 1996
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
TOTAL RETURNS
One-year total return based on NAV/1/............. 2.71% 1.85% 2.00%
One-year total return2............................ (2.22%) (1.98%) 1.04%
Five-year average annual total return2............ 6.84% N/A N/A
Ten-year average annual total return2............. 7.79% N/A N/A
Life-of-Fund average annual total return2......... 8.17% 4.56% 2.87%
Commencement Date................................. 09/23/71 09/28/92 08/30/93
DISTRIBUTION RATE AND YIELD
Distribution Rate3................................ 6.88% 6.51% 6.51%
SEC Yield4........................................ 6.34% 5.81% 5.82%
</TABLE>
N/A = Not Applicable
1Assumes 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 shares and 1% for C
shares).
2Standardized 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 early withdrawal (B and C shares).
3Distribution rate represents the monthly annualized distributions of the Fund
at the end of the period and not the earnings of the Fund.
4SEC 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 August 31, 1996.
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 HIGHLIGHTS
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
TOP TEN ISSUERS AS OF AUGUST 31, 1996
PERCENTAGE OF FUND'S LONG-TERM INVESTMENTS
<TABLE>
<S> <C>
ITT Corp................................................................ 4.7%
News America Holdings, Inc.............................................. 4.5%
Cox Communications, Inc................................................. 4.3%
Union Pacific Corp...................................................... 4.3%
Union Oil Co............................................................ 4.1%
Ashland Oil, Inc........................................................ 3.6%
Columbia Pictures Entertainment, Inc.................................... 3.5%
Unisys Corp............................................................. 3.4%
PDV America, Inc........................................................ 3.2%
United Airlines, Pass-through Certificates, Series 1991-A............... 3.1%
</TABLE>
CREDIT QUALITY
[GRAPHS APPEAR HERE]
As of August 31, 1996
AA.............. 1.2%
A............... 21.9%
BBB............. 50.1%
BB.............. 11.3%
B............... 15.5%
As of February 29, 1996
AA.............. 3.6%
A............... 28.3%
BBB............. 50.0%
BB.............. 12.4%
B............... 2.1%
Non Related..... 3.6%
Based on credit quality ratings issued by Standard & Poor's. For securities
not rated by Standard & Poor's, the Moody's rating is used.
TOP FIVE PORTFOLIO HOLDINGS BY SECTOR
<TABLE>
<CAPTION>
AS OF AUGUST 31, 1996
<S> <C>
Consumer Services..... 22%
Energy................ 14%
Transportation........ 12%
Utilities............. 10%
Finance............... 8%
</TABLE>
<TABLE>
<CAPTION>
AS OF FEBRUARY 29, 1996
<S> <C>
Consumer Services..... 25%
Energy................ 14%
Finance............... 11%
Transportation........ 11%
Utilities............. 11%
</TABLE>
DURATION
AS OF AUGUST 31, 1996
Duration 5.8 years
AS OF FEBRUARY 29, 1996
6.3 years
4
<PAGE>
PUTTING YOUR FUND'S PERFORMANCE IN PERSPECTIVE
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment portfolio's performance at regular intervals.
A good starting point is a comparison of your investment holdings to an
applicable benchmark, such as a broad-based market index. Such a comparison
can:
. Illustrate the general market environment in which your investments are
being managed
. Reflect the impact of favorable market trends or difficult market
conditions
. Help you evaluate the extent to which your fund's management team has
responded to the opportunities and challenges presented to them over
the period measured
For these reasons, you may find it helpful to review the chart below, which
compares your fund's performance to that of the Lehman Brothers Corporate Bond
Index and the Lipper Corporate BBB-Rated Index over time. These indices are
unmanaged statistical composites, and do not reflect any commissions or fees
which would be incurred by an investor purchasing the securities they repre-
sent. Similarly, their performance does not reflect any sales charges or other
costs which would be applicable to an actively managed portfolio, such as that
of the Fund.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Van Kampen American Capital Corporate Bond Fund vs. Lehman Brothers
Corporate Bond Index and the Lipper Corporate BBB-Rated Index (August 1986
through August 1996)
[LINE GRAPH APPEARS HERE]
-------------------------------
Fund's Total Return
1 Year Avg. Annual = -2.22%
5 Year Avg. Annual = 6.84%
10 Year Avg. Annual = 7.79%
Inception Avg. Annual = 8.17%
-------------------------------
<TABLE>
<CAPTION>
VKAC Corporate Lehman Brothers Corporate Lipper Corporate
Bond Fund Bond Index* BBB-Rated Index
-------------- ------------------------- ----------------
<S> <C> <C> <C>
Aug 1986 9,526 10,000.00 10,000
Dec 1986 9,966 10,377.00 10,366
Dec 1987 10,588 10,641.61 10,622
Dec 1988 11,949 11,623.83 11,601
Dec 1989 12,426 13,263.83 12,822
Dec 1990 13,301 14,200.39 13,656
Dec 1991 15,527 16,830.31 16,010
Dec 1992 16,846 18,292.86 17,308
Dec 1993 18,813 20,519.10 19,523
Dec 1994 18,009 19,714.75 18,636
Dec 1995 21,836 24,099.31 22,396
Aug 1996 21,165 23,554.67 22,074
</TABLE>
The above chart reflects the performance of Class A shares of the Fund. The
performance of Class A shares will differ from that of other share classes of
the Fund because of the difference in sales charges and/or expenses paid by
shareholders investing in the different share classes. The Fund's performance
assumes reinvestment of all distributions for the period ended August 31,
1996, and includes payment of the maximum sales charge (4.75% for A shares).
While past performance is not indicative of future performance, the above in-
formation provides a broader vantage point from which to evaluate the discus-
sion of the Fund's performance found in the following pages.
5
<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 that shaped the
markets during the Fund's past 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 12-month period ended August 31, 1996.
THE FOLLOWING KEY TERMS ARE LISTED IN THE ORDER IN WHICH YOU WILL FIND THEM IN
THIS REPORT.
BASIS POINT: A measure used in quoting yields on bonds. One hundred basis
points is equal to one percent. For example, if a bond's yield changes from
7.00 to 6.65 percent, it would be considered a 35 basis point move.
DURATION: A measure of a bond's sensitivity to changes in interest rates. To
understand the importance of duration, consider that it has a direct impact on
a fund's net asset value. The higher the duration, the greater the effect of
changes in interest rate movements on net asset value.
YIELD SPREAD: To compensate investors for the added risk, low-quality fixed-
income securities typically offer investors higher yields than high-quality
fixed-income securities. The difference in yields is referred to as the yield
spread and is commonly expressed in basis points.
YANKEE BONDS: U.S. dollar-denominated bonds issued in the U.S. by foreign
governments, banks, and corporations.
Q HOW WOULD YOU CHARACTERIZE THE MARKET CONDITIONS IN WHICH THE FUND OPER-
ATED DURING THE 12-MONTH PERIOD ENDED AUGUST 31, 1996?
A Corporate issues performed well from August 1995 through January 1996,
as interest rates were falling and inflation remained moderate (bonds
appreciate in value when interest rates decline). For example, 10-year Trea-
sury notes appreciated in value by over 4 percent, as their yield declined ap-
proximately 60 basis points from August 1995 to February 1996. Corporate bonds
have typically reacted to interest rate movements in similar fashion to U.S.
Treasury securities.
From mid-February through period end, the performance of the corporate bond
market steadily deteriorated. In February, key economic indicators showed the
economy gaining strength, and the bond market reversed course on fears that
inflation would pick up as a result. This reversal caused the higher-quality
portion of the fixed-income market to sell off and higher-quality bond funds
to underperform. The Lipper Corporate Debt BBB category recorded an average
total return of -2.21 percent from January through August 1996. In addition,
10-year Treasury notes declined in value by approximately 10 percent from Jan-
uary through August 1996.
6
<PAGE>
Q WHAT SIGNIFICANT TECHNIQUES AND STRATEGIES WERE USED TO PURSUE THE
FUND'S INVESTMENT OBJECTIVES?
A In response to rising interest rates, we adopted a more defensive strat-
egy. The Fund's duration was reduced from 6.4 years at the end of Decem-
ber 1995 to 5.8 years at the end of August 1996. This shorter duration reduced
the sensitivity of the Fund's net asset value to rising interest rates. In or-
der to reduce duration, the Fund took profits on long-maturity Canadian bonds
and utility issues and reinvested the monies in shorter maturity issues of
health care, media, and airline companies.
In addition to shortening the Fund's duration, we significantly increased
the Fund's position in below-investment grade issues. In August 1995, 5.3 per-
cent of assets were invested in bonds rated BB or lower, but by period end
that number had risen to 26.8 percent. We look for these issues to provide
higher income and greater total return potential in the current environment of
a flat-to-rising trend in interest rates.
Finally, we continue to take steps to increase the diversification of the
Fund to seek to protect against the risks associated with any one issuer. Over
the fiscal year, we have allocated the Fund's portfolio among 67 issues, up
from 55 at the beginning of the period. For additional Fund portfolio high-
lights, please refer to page four.
Q HOW HAS THE FUND PERFORMED DURING THE REPORTING PERIOD?
A The Fund's one-year total return of 2.71 percent/1/ (Class A shares at
net asset value) reflects the bond market's recent decline. The Fund's
monthly dividend has remained unchanged since November 1993 at $0.04 per share
for Class A shares. Based on the maximum offering price of $6.98 per share as
of August 31, 1996, the Fund continues to provide a respectable level of in-
come with a distribution rate of 6.88 percent/3/.
For the same one-year period, the average total return for all funds in the
Lipper Corporate Debt BBB category was 3.64 percent. The one-year total re-
turns for the Lehman Brothers Corporate Bond Index and the Lehman Brothers Baa
Corporate Bond Index were 3.79 percent and 3.86 percent, respectively. These
are broad-based indexes which reflect the performance of all publicly issued,
fixed-rate, non-convertible investment grade corporate debt. Keep in mind that
these indexes are unmanaged and do not include any commissions or fees that
would be paid by an investor purchasing the securities they represent. Please
refer to the chart on page three for additional Fund performance results.
Q WHAT IS YOUR OUTLOOK FOR THE MONTHS AHEAD?
A Going forward, we expect to maintain a defensive strategy. We will con-
tinue to reduce the Fund's exposure to longer-term investment grade is-
sues, while selectively adding to the Fund's position in intermediate-term
issues.
With regard to specific sector allocations, we anticipate a continued reduc-
tion to the Fund's exposure to utilities. We are concerned about rising compe-
tition in this industry and the reorganization of entities into either
generators of power or distributors. As consumers are allowed to purchase
power outside their immediate supplier, utility company finances could come
under pressure. To offset this trend, many utility companies are reducing
fixed costs and are renegotiating long-term contracts with larger industrial
clients. However, we believe this shift will be gradual, as the industry has
only recently been deregulated.
7
<PAGE>
We think the energy sector and emerging markets will continue to display im-
proving characteristics. We expect energy issues to benefit from firm market
pricing for their products. Also, certain emerging market Yankee bonds appear
to have the potential for price appreciation as their value becomes more widely
recognized. As such, we anticipate increasing the portfolio's position in Yan-
kee bonds.
/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
8
<PAGE>
PORTFOLIO OF INVESTMENTS
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS 92.2%
CONSUMER DISTRIBUTION 1.0%
$2,000 Nabisco, Inc............................. 7.550% 06/15/15 $ 1,909,000
------------
CONSUMER NON-DURABLES 1.5%
2,000 Coca Cola Enterprises, Inc............... 8.500 02/01/12 2,161,800
750 Dimon, Inc............................... 8.875 06/01/06 743,775
------------
2,905,575
------------
CONSUMER SERVICES 22.4%
1,000 Circus Circus............................ 6.450 02/01/06 919,200
6,215 Columbia Pictures Entertainment, Inc..... 9.875 02/01/98 6,503,998
5,000 Cox Communications, Inc.................. 6.875 06/15/05 4,788,900
3,500 Cox Communications, Inc.................. 7.250 11/15/15 3,268,020
1,250 Harcourt General, Inc.................... 8.875 06/01/22 1,376,000
2,000 ITT Corp................................. 6.250 11/15/00 1,932,800
5,000 ITT Corp................................. 6.750 11/15/05 4,681,500
2,250 ITT Corp................................. 7.375 11/15/15 2,084,850
2,000 News America Holdings, Inc............... 9.250 02/01/13 2,161,400
6,000 News America Holdings, Inc............... 8.875 04/26/23 6,206,400
2,500 TCI Communications, Inc.................. 8.750 08/01/15 2,393,750
3,000 Tele Communications, Inc................. 6.875 02/15/06 2,675,400
2,000 Tele Communications, Inc................. 9.250 01/15/23 1,926,200
3,000 Viacom, Inc.............................. 7.750 06/01/05 2,893,500
------------
43,811,918
------------
ENERGY 13.6%
6,300 Ashland Oil, Inc......................... 8.800 11/15/12 6,795,810
1,000 Lyondell Petrochem....................... 6.500 02/15/06 920,550
6,300 PDV America, Inc......................... 7.875 08/01/03 6,044,220
5,000 Phillips Petroleum Co.................... 8.860 05/15/22 5,184,000
3,000 Union Oil Co............................. 9.250 02/01/03 3,295,200
4,000 Union Oil Co............................. 9.125 02/15/06 4,431,200
------------
26,670,980
------------
FINANCE 8.3%
3,500 First PV Funding Corp., Series 1986-A.... 10.300 01/15/14 3,718,750
3,576 PNPP II Funding Corp..................... 8.510 11/30/06 3,487,494
3,000 Royal Bank of Scotland................... 6.375 02/01/11 2,646,300
4,500 Ryder Systems, Inc....................... 9.250 05/15/01 4,887,450
1,500 United Illuminating Co................... 10.240 01/02/20 1,620,300
------------
16,360,294
------------
HEALTH CARE 8.2%
4,000 Aetna Services, Inc...................... 7.125 08/15/06 3,892,600
500 Manor Care, Inc.......................... 7.500 06/15/06 496,300
5,000 OrNda Healthcorp......................... 12.250 05/15/02 5,375,000
</TABLE>
See Notes to Financial Statements
9
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
HEALTH CARE (CONTINUED)
$2,285 Quorum Health Group..................... 11.875% 12/15/02 $ 2,522,069
3,500 Tenet Healthcare........................ 10.125 03/01/05 3,771,250
------------
16,057,219
------------
PRODUCER MANUFACTURING 2.7%
5,000 John Deere Credit Corp.................. 9.625 11/01/98 5,305,000
------------
RAW MATERIALS/PROCESSING INDUSTRIES 6.9%
1,000 Carter Holt Harvey, Ltd................. 8.375 04/15/15 1,028,150
4,000 Crown Cork and Seal Co., Inc............ 8.000 04/15/23 3,848,800
4,000 Federal Paper Board, Inc................ 8.875 07/01/12 4,378,000
3,000 Georgia Pacific Corp.................... 9.500 02/15/18 3,153,000
170 IMC Fertilizer Group.................... 9.450 12/15/11 180,837
500 James River Corp........................ 8.375 11/15/01 521,284
300 Owens Corning Fiberglass Corp........... 9.375 06/01/12 335,160
------------
13,445,231
------------
TECHNOLOGY 5.8%
5,000 International Business Machines Corp.... 7.500 06/15/13 4,977,000
6,000 Unisys Corp............................. 15.000 07/01/97 6,330,000
------------
11,307,000
------------
TRANSPORTATION 12.2%
3,000 AMR Corp................................ 9.500 05/15/01 3,256,500
750 CSX Corp................................ 8.625 05/15/22 814,913
1,560 Delta Airlines, Inc..................... 9.875 01/01/98 1,624,475
2,000 Delta Airlines, Inc..................... 9.750 05/15/21 2,256,400
1,500 Kansas City Southern Industries, Inc.... 7.875 07/01/02 1,545,150
700 Kansas City Southern Industries, Inc.... 8.800 07/01/22 720,440
8,000 Union Pacific Corp...................... 8.350 05/01/25 8,000,000
United Airlines, Pass-through
5,000 Certificates, Series 1991-A............. 10.020 03/22/14 5,741,000
------------
23,958,878
------------
UTILITIES 9.6%
1,000 360 Communications Co................... 7.125 03/01/03 958,740
1,000 AES Corp................................ 10.250 07/15/06 1,022,500
2,000 Arizona Public Services Co., 1st Mtg.... 9.500 04/15/21 2,103,720
1,000 Arizona Public Services Co., 1st Mtg.... 8.750 01/15/24 1,039,350
Cleveland Electric Illuminating Co., 1st
2,300 Mtg..................................... 10.000 06/01/20 2,274,240
1,160 Connecticut Yankee Power Mtg., Series A. 12.000 06/01/00 1,202,572
1,605 Consumers Power Co., 1st Mtg............ 8.875 11/15/99 1,693,596
1,000 Gulf States Utilities................... 8.940 01/01/22 1,036,650
4,000 Long Island Lighting Co................. 9.750 05/01/21 4,010,000
</TABLE>
See Notes to Financial Statements
10
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UTILITIES (CONTINUED)
$1,000 Long Island Lighting Co................... 9.000% 11/01/22 $ 938,750
2,500 Texas Utility Electric Co................. 8.875 02/01/22 2,592,000
------------
18,872,118
------------
TOTAL CORPORATE BONDS...................................... 180,603,213
------------
FOREIGN GOVERNMENT OBLIGATIONS 2.6%
4,000 Province of Newfoundland (Canada) CA$..... 9.000 10/15/21 4,435,600
650 Province of Saskatchewan (Canada) CA$..... 8.000 02/01/13 673,010
------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS....................... 5,108,610
------------
EQUITIES 0.7%
Ford Motor Co. (50,000 preferred shares)................... 1,343,750
------------
TOTAL LONG-TERM INVESTMENTS 95.5%
(Cost $183,750,432) (a)................................... 187,055,573
------------
SHORT-TERM INVESTMENTS AT AMORTIZED
COST 3.1%
Repurchase Agreement (Bank of America Securities,
$1,940,000 par, collateralized by U.S. Government
obligations in a pooled cash account, dated 08/30/96, to
be sold on 09/03/96 at $1,941,132) (b).................... 1,940,000
U.S. States Treasury Bill ($3,000,000 par, yielding
4.941%, maturing 09/05/96) (b)............................. 2,997,942
U.S. States Treasury Bill ($1,000,000 par, yielding
5.086%, maturing 09/19/96) (b)............................. 997,321
------------
TOTAL SHORT-TERM INVESTMENTS AT AMORTIZED COST ................. 5,935,263
OTHER ASSETS IN EXCESS OF LIABILITIES 1.4%...................... 2,815,143
------------
NET ASSETS 100%................................................. $195,805,979
------------
</TABLE>
(a) At August 31, 1996, for federal income tax purposes, cost of long-term
investments is $183,750,432, the aggregate gross unrealized appreciation is
$6,259,757 and the aggregate gross unrealized depreciation is $2,954,616
resulting in net unrealized appreciation of $3,305,141.
(b) Assets segregated as collateral for open futures transactions.
See Notes to Financial Statements
11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $183,750,432) (Note 1)....... $187,055,573
Short-Term Investments (Note 1)................................. 5,935,263
Cash............................................................ 887
Receivables:
Interest....................................................... 3,811,765
Fund Shares Sold............................................... 186,513
Dividends...................................................... 25,781
Variation Margin on Futures (Note 5)........................... 32,500
Other........................................................... 53,373
------------
Total Assets................................................... 197,101,655
------------
LIABILITIES:
Payables:
Fund Shares Repurchased........................................ 556,643
Income Distributions........................................... 435,511
Distributor and Affiliates (Notes 2 and 6)..................... 92,208
Investment Advisory Fee (Note 2)............................... 81,142
Accrued Expenses................................................ 75,237
Deferred Compensation and Retirement Plans (Note 2)............. 54,935
------------
Total Liabilities.............................................. 1,295,676
------------
NET ASSETS...................................................... $195,805,979
------------
NET ASSETS CONSIST OF:
Capital (Note 3)................................................ $215,659,709
Net Unrealized Appreciation on Securities....................... 3,261,825
Accumulated Undistributed Net Investment Income................. 148,136
Accumulated Net Realized Loss on Securities..................... (23,263,691)
------------
NET ASSETS...................................................... $195,805,979
------------
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net
assets of $162,937,379 and 24,501,745 shares of beneficial
interest issued and outstanding) (Note 3)...................... $ 6.65
Maximum sales charge (4.75%* of offering price)................ .33
------------
Maximum offering price to public............................... $ 6.98
------------
Class B Shares:
Net asset value and offering price per share (Based on net
assets of $26,931,772 and 4,055,065 shares of beneficial
interest issued and outstanding) (Note 3)...................... $ 6.64
------------
Class C Shares:
Net asset value and offering price per share (Based on net
assets of $5,936,828 and 894,192 shares of beneficial interest
issued and outstanding) (Note 3)............................... $ 6.64
------------
</TABLE>
*On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
12
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.......................................................... $15,746,165
Dividends......................................................... 51,562
-----------
Total Income..................................................... 15,797,727
-----------
EXPENSES:
Investment Advisory Fee (Note 2).................................. 963,864
Distribution (12b-1) and Service Fees (Allocated to Classes A, B
and C of $359,561, $241,966 and $53,953, respectively) (Note 6).. 655,480
Shareholder Services (Note 2)..................................... 470,266
Trustees Fees and Expenses (Note 2)............................... 28,077
Legal (Note 2).................................................... 9,408
Other ............................................................ 289,746
-----------
Total Expenses................................................... 2,416,841
Less Expenses Reimbursed......................................... 10,500
-----------
Net Expenses..................................................... 2,406,341
-----------
NET INVESTMENT INCOME............................................. $13,391,386
-----------
REALIZED AND UNREALIZED GAIN/LOSS ON SECURITIES:
Net Realized Gain on Investments.................................. $ 1,735,360
-----------
Unrealized Appreciation/Depreciation on Securities:
Beginning of the Period.......................................... 13,241,025
-----------
End of the Period:
Investments...................................................... 3,305,141
Futures.......................................................... (43,316)
-----------
3,261,825
-----------
Net Unrealized Depreciation on Securities During the Period....... (9,979,200)
-----------
NET REALIZED AND UNREALIZED LOSS ON SECURITIES.................... $(8,243,840)
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS........................ $ 5,147,546
-----------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended August 31, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, 1996 August 31, 1995
- ---------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income......................... $ 13,391,386 $ 13,203,194
Net Realized Gain on Securities............... 1,735,360 82,283
Net Unrealized Appreciation/Depreciation on
Securities During the Period................. (9,979,200) 8,953,346
------------ ------------
Change in Net Assets from Operations.......... 5,147,546 22,238,823
------------ ------------
Distributions from Net Investment Income:
Class A Shares............................... (11,608,221) (12,019,043)
Class B Shares............................... (1,533,048) (1,038,877)
Class C Shares............................... (341,585) (203,409)
------------ ------------
Total Distributions.......................... (13,482,854) (13,261,329)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES.................................... (8,335,308) 8,977,494
------------ ------------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold..................... 44,740,308 48,235,241
Net Asset Value of Shares Issued Through
Dividend Reinvestment......................... 8,899,577 8,681,864
Cost of Shares Repurchased.................... (41,799,106) (49,263,601)
Net Equalization Debits (Note 1).............. -0- (45,347)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS.................................. 11,840,779 7,608,157
------------ ------------
TOTAL INCREASE IN NET ASSETS.................. 3,505,471 16,585,651
NET ASSETS:
Beginning of the Period....................... 192,300,508 175,714,857
------------ ------------
End of the Period (Including undistributed net
investment income of $148,136 and $239,604,
respectively)................................ $195,805,979 $192,300,508
------------ ------------
</TABLE>
See Notes to Financial Statements
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended August 31,
------------------------------------
Class A Shares 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period.. $6.94 $6.62 $7.36 $6.98 $6.57
------ ------ ------ ------ ------
Net Investment Income.................... .479 .48 .49 .51 .53
Net Realized and Unrealized Gain/Loss on
Securities.............................. (.289) .32 (.745) .3875 .44
------ ------ ------ ------ ------
Total from Investment Operations.......... .190 .80 (.255) .8975 .97
Less Distributions from Net Investment
Income.................................... .480 .48 .485 .5175 .56
------ ------ ------ ------ ------
Net Asset Value, End of the Period........ $6.650 $6.94 $6.62 $7.36 $6.98
------ ------ ------ ------ ------
Total Return (a).......................... 2.71% 12.71% (3.55%) 13.48% 15.38%
Net Assets at End of the Period (In
millions)................................. $162.9 $169.0 $160.0 $190.8 $191.8
Ratio of Expenses to Average Net Assets
(b) ...................................... 1.10% 1.13% 1.09% 1.05% 1.00%
Ratio of Net Investment Income to Average
Net Assets (b) ........................... 6.90% 7.22% 7.06% 7.24% 7.90%
Portfolio Turnover........................ 34% 25% 0% 19% 37%
</TABLE>
(a) Total return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(b) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC's reimbursement of expenses was less than 0.01%.
See Notes to Financial Statements
15
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended August September 28, 1992
31, (Commencement
--------------------- of Distribution) to
Class B Shares 1996 1995 1994 August 31, 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................. $6.94 $6.62 $7.36 $7.05
------ ------ ------ ------
Net Investment Income............. .424 .42 .44 .43
Net Realized and Unrealized
Gain/Loss on Securities.......... (.290) .33 (.755) .3465
------ ------ ------ ------
Total from Investment Operations... .134 .75 (.315) .7765
Less Distributions from Net
Investment Income................. .432 .43 .425 .4665
------ ------ ------ ------
Net Asset Value, End of the Period. $6.642 $6.94 $6.62 $7.36
------ ------ ------ ------
Total Return (a)................... 1.85% 11.86% (4.38%) 11.54%*
Net Assets at End of the Period
(In millions)..................... $26.9 $19.2 $13.5 $8.4
Ratio of Expenses to Average Net
Assets (b) ....................... 1.90% 1.94% 1.90% 1.96%
Ratio of Net Investment Income to
Average Net Assets (b) ........... 6.12% 6.40% 6.29% 6.21%
Portfolio Turnover................. 34% 25% 0% 19%
</TABLE>
*Non-Annualized
(a) Total return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(b) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC's reimbursement of expenses was less than 0.01%.
See Notes to Financial Statements
16
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended August 31,
-----------------------
Class C Shares 1996 1995 1994 (a)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period.............. $6.93 $6.62 $7.36
------ ------ ------
Net Investment Income................................ .426 .42 .44
Net Realized and Unrealized Gain/Loss on Securities.. (.285) .32 (.755)
------ ------ ------
Total from Investment Operations...................... .141 .74 (.315)
Less Distributions from Net Investment Income ........ .432 .43 .425
------ ------ ------
Net Asset Value, End of the Period.................... $6.639 $6.93 $6.62
------ ------ ------
Total Return (b)...................................... 2.00% 11.70% (4.51%)
Net Assets at End of the Period (In millions)......... $5.9 $4.1 $2.3
Ratio of Expenses to Average Net Assets (c)........... 1.90% 1.93% 1.93%
Ratio of Net Investment Income to Average Net Assets
(c).................................................. 6.14% 6.40% 6.49%
Portfolio Turnover.................................... 34% 25% 0%
</TABLE>
(a) This class of shares commenced distribution on August 30, 1993. Therefore,
no information is presented for the 1993 fiscal year.
(b) Total return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(c) The impact on the Ratios of Expenses and Net Investment Income to Average
Net Assets due to VKAC's reimbursement of expenses was less than 0.01%.
See Notes to Financial Statements
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Corporate Bond Fund (the "Fund") is organized as a
Delaware business trust, and is registered as a diversified open-end manage-
ment investment company under the Investment Company Act of 1940, as amended.
The Fund's investment objective is to provide current income with preservation
of capital through investing primarily in a diversified portfolio of corporate
debt securities. The Fund commenced investment operations on September 23,
1971. The distribution of the Fund's Class B and Class C shares commenced on
September 28, 1992 and August 30, 1993, respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The prep-
aration of financial statements in conformity with generally accepted account-
ing principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of con-
tingent 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 mar-
ket quotations. Investments in securities listed on a securities exchange are
valued at their sale price as of the close of such securities exchange. Un-
listed securities and listed securities for which the last sales price is not
available are valued at the mean of the bid and asked prices. For those secu-
rities where quotations or prices are not available, valuations are determined
in accordance with procedures established in good faith by the Board of Trust-
ees. Short-term securities with remaining maturities of 60 or less days are
valued at amortized cost.
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 de-
livery" basis, with settlement to occur at a later date. The value of the se-
curity 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 August 31, 1996, there
were no when issued or delayed delivery purchase commitments.
The Fund invests in repurchase agreements, which are short-term investments
in which the Fund acquires ownership of a debt security and the seller agrees
to repurchase the security at a future time and specified price. The Fund may
invest independently in repurchase agreements, or transfer uninvested cash
balances into a pooled cash account along with other investment companies ad-
vised by Van Kampen American Capital Asset Management, Inc. (the
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1996
- -------------------------------------------------------------------------------
"Adviser"), the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt securi-
ty. The Fund will make payment for such securities only upon physical delivery
or evidence of book entry transfer to the account of the custodian bank. The
seller is required to maintain the value of the underlying security at not
less than the repurchase proceeds due the Fund.
C. INVESTMENT INCOME-Interest income is recorded on an accrual basis and divi-
dend income is recorded on the ex-dividend date. Original issue discount is
amortized over the expected life of each applicable security. Premiums on debt
securities are not amortized. Market discounts are recognized at the time of
sale as realized gains for book purposes and ordinary income for tax purposes.
D. FEDERAL INCOME TAXES-It is the Fund's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment compa-
nies 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 capi-
tal gains. At August 31, 1996, the Fund had an accumulated capital loss
carryforward for tax purposes of $23,307,021 which will expire between 1998
and 2000. Net realized loss differs for financial and tax reporting purposes
primarily as a result of gains or losses recognized for tax purposes on open
futures positions.
E. DISTRIBUTION OF INCOME AND GAINS-The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are distrib-
uted annually. Distributions from net realized gains for book purposes may in-
clude short-term capital gains and gains on option and futures transactions.
All short-term capital gains and a portion of option and futures gains are in-
cluded in ordinary income for tax purposes.
F. 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.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1996
- -------------------------------------------------------------------------------
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS % PER ANNUM
- --------------------------------------------------------------------------------
<S> <C>
First $150 million.................................................. .50 of 1%
Next $100 million................................................... .45 of 1%
Next $100 million................................................... .40 of 1%
Over $350 million................................................... .35 of 1%
</TABLE>
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.
For the year ended August 31, 1996, the Fund recognized expenses of approxi-
mately $89,200 representing Van Kampen American Capital Distributors, Inc.'s
or its affiliates' (collectively "VKAC") cost of providing accounting services
to the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended Au-
gust 31, 1996, the Fund recognized expenses of approximately $362,700, repre-
senting ACCESS' cost of providing transfer agency and shareholder services
plus a profit.
Additionally, for the year ended August 31, 1996, the Fund paid VKAC approx-
imately $31,200 related to the direct cost of consolidating the VKAC open-end
fund complex. Payment was contingent upon the realization by the Fund of cost
efficiencies resulting from the consolidation.
Certain officers and trustees of the Fund are also officers and directors of
VKAC. The Fund does not compensate its officers or trustees who are officers
of VKAC.
The Fund has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer
all or a portion of their compensation to a later date. The retirement plan
covers those trustees who are not officers of VKAC.
At August 31, 1996, VKAC owned 9,190, 71 and 68 shares of Classes A, B and
C, respectively.
3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of common shares, Classes A, B and C
each with a par value of $.01 per share. There are an unlimited number of
shares of each class authorized.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1996
- -------------------------------------------------------------------------------
At August 31, 1996, capital aggregated $181,308,895, $28,173,446 and
$6,177,368 for Classes A, B and C, respectively. For the year ended August 31,
1996, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A............................................. 3,701,661 $ 25,469,554
Class B............................................. 2,251,770 15,599,691
Class C............................................. 528,401 3,671,063
---------- ------------
Total Sales.......................................... 6,481,832 $ 44,740,308
---------- ------------
Dividend Reinvestment:
Class A............................................. 1,123,125 $ 7,745,474
Class B............................................. 140,880 973,474
Class C............................................. 26,263 180,629
---------- ------------
Total Dividend Reinvestment.......................... 1,290,268 $ 8,899,577
---------- ------------
Repurchases:
Class A............................................. (4,691,517) $(32,409,201)
Class B............................................. (1,102,281) (7,655,822)
Class C............................................. (252,515) (1,734,083)
---------- ------------
Total Repurchases.................................... (6,046,313) $(41,799,106)
---------- ------------
</TABLE>
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1996
- -------------------------------------------------------------------------------
At August 31, 1995, capital aggregated $180,503,068, $19,256,103 and
$4,059,759 for Classes A, B and C, respectively. For the year ended August 31,
1995, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A............................................. 5,657,020 $ 36,830,801
Class B............................................. 1,394,371 9,273,809
Class C............................................. 322,086 2,130,631
---------- ------------
Total Sales.......................................... 7,373,477 $ 48,235,241
---------- ------------
Dividend Reinvestment:
Class A............................................. 1,192,850 $ 7,877,976
Class B............................................. 102,002 677,156
Class C............................................. 19,080 126,732
---------- ------------
Total Dividend Reinvestment.......................... 1,313,932 $ 8,681,864
---------- ------------
Repurchases:
Class A............................................. (6,655,261) $(43,542,246)
Class B............................................. (766,395) (5,097,135)
Class C............................................. (94,193) (624,220)
---------- ------------
Total Repurchases.................................... (7,515,849) $(49,263,601)
---------- ------------
</TABLE>
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC will be imposed
on most redemptions made within five years of the purchase for Class B and one
year of the purchase for Class C as detailed in the following schedule. The
Class B and C shares bear the expense of their respective deferred sales ar-
rangements, including higher distribution and service fees and incremental
transfer agency costs.
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED SALES
CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C>
First........................................................... 4.00% 1.00%
Second.......................................................... 4.00% None
Third........................................................... 3.00% None
Fourth.......................................................... 2.50% None
Fifth........................................................... 1.50% None
Sixth and Thereafter............................................ None None
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1996
- -------------------------------------------------------------------------------
For the year ended August 31, 1996, VKAC, as Distributor for the Fund, re-
ceived commissions on sales of the Fund's Class A shares of approximately
$39,300 and CDSC on redeemed shares of approximately $80,000. Sales charges do
not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments, were $69,489,860 and $62,518,191, re-
spectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of
its portfolio or generate potential gain. All of the Fund's portfolio hold-
ings, including derivative instruments, are marked to market each day with the
change in value reflected in the unrealized appreciation/depreciation on secu-
rities. Upon disposition, a realized gain or loss is recognized accordingly.
During the period, the Fund invested in futures contracts, a type of deriva-
tive. A futures contract is an agreement involving the delivery of a particu-
lar asset on a specified future date at an agreed upon price. The Fund
generally invests in exchange traded futures contracts on U.S. Treasury Bonds
and typically closes the contract prior to the delivery date. These contracts
are generally used to manage the portfolio's effective maturity and duration.
Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, securities with a value equal to its obligation
under the futures contracts. 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).
Transactions in futures contracts, each with a par value of $100,000, for
the year ended August 31, 1996, were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- --------------------------------------------------------------------------------
<S> <C>
Outstanding at August 31, 1995........................................ 0
Futures Opened........................................................ 40
Futures Closed........................................................ 0
---
Outstanding at August 31, 1996........................................ 40
---
</TABLE>
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1996
- -------------------------------------------------------------------------------
The futures contracts outstanding at August 31, 1996, and the description
and unrealized depreciation are as follows:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS DEPRECIATION
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Long Bond Future
Sept 1996--Sells to Open.............................. 40 $43,316
--- -------
</TABLE>
6. DISTRIBUTION AND SERVICE PLANS
The Fund and its shareholders have adopted a distribution plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940 and a service plan (col-
lectively the "Plans"). The Plans govern payments for the distribution of the
Fund's shares, ongoing shareholder services and maintenance of shareholder ac-
counts.
Annual fees under the Plans of up to .25% of Class A shares and 1.00% each
of Class B and Class C shares are accrued daily. Included in these fees for
the year ended August 31, 1996, are payments to VKAC of approximately
$252,300.
24
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all mate-
rial respects, the financial position of Van Kampen American Capital Corporate
Bond Fund (the "Fund") at August 31, 1996, the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as "finan-
cial statements") are the responsibility of the Fund's management; our respon-
sibility is to express an opinion on these financial statements based on our
audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and per-
form the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presenta-
tion. We believe that our audits, which included confirmation of securities at
August 31, 1996 by correspondence with the custodian, provide a reasonable ba-
sis for the opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
October 16, 1996
25
<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
Aggressive Growth Fund
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
Intermediate 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
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 1-800-341-2911 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
26
<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 - Co-Chairman
JACK E. NELSON
JEROME L. ROBINSON
FERNANDO SISTO - Co-Chairman
WAYNE W. WHALEN*
WILLIAM S. WOODSIDE
OFFICERS
DENNIS J. MCDONNELL*
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 SERVICING AGENT
ACCESS INVESTOR
SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas 77002
*"Interested" persons of the Fund, as de-
fined in the
Investment Company Act of 1940.
(C)Van Kampen American Capital Distribu-
tors, Inc., 1996
All rights reserved.
SMdenotes 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.
27
<PAGE>
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
THIS PAGE INTENTIONALLY LEFT BLANK
28
