<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders...................... 1
Performance Results......................... 3
Portfolio Highlights........................ 4
Portfolio Management Review................. 5
Portfolio of Investments.................... 7
Statement of Assets and Liabilities......... 10
Statement of Operations..................... 11
Statement of Changes in Net Assets.......... 12
Financial Highlights........................ 13
Notes to Financial Statements............... 16
</TABLE>
CORP SAR 4/97
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO OF DENNIS J. McDONNELL AND DON G. POWELL]
March 27, 1997
Dear Shareholder,
As mentioned in your previous report, VK/AC Holding, Inc., the parent company
of Van Kampen American Capital, Inc., was acquired by Morgan Stanley Group Inc.,
a world leader in asset management and investment banking. The transaction was
completed in October, and we look forward to exploring the opportunities it
creates for investors. As part of the acquisition, Van Kampen American Capital
became the distributor of Morgan Stanley retail funds on January 2, 1997.
More recently, on February 5, 1997, it was announced that Morgan Stanley
Group Inc. and Dean Witter, Discover & Co. agreed to merge. A proxy will be
mailed to you at the end of April that explains the transaction and asks for
your vote of approval. The combined company will be a preeminent global finan-
cial services firm, with leading market positions in securities, asset manage-
ment and credit services. As the financial industry continues to witness
unprecedented consolidations and new partnerships, we believe those firms that
want to offer investors the greatest opportunities and services in the next
century must be market leaders in all facets of their business.
ECONOMIC REVIEW
During the six-month reporting period, inflation remained low and the pace
of economic growth moderated. Early in 1996, various indicators pointed to an
overly robust rate of economic activity. Despite seeming evidence of infla-
tion, the Federal Reserve Board held short-term interest rates steady, and
events over the reporting period proved the wisdom of this stable monetary
policy. Economic growth slowed, commodity prices receded, and inflation re-
mained benign. Wholesale prices fell by 0.3 percent and 0.4 percent during
January and February 1997, respectively, and the producer price index, which
excludes food and energy sectors, rose only 0.5 percent over the 12 months
ended in February.
Other indicators signaled generally moderate economic growth as well. Hous-
ing starts and existing home sales fell slightly over the reporting period,
while industrial production and consumer confidence rose sharply. Unemployment
remained low at 5.3 percent, leading to the reemergence of mild upward pres-
sure on wages. Inflationary implications of higher labor costs were offset by
reports that the nation's businesses operated at only 83.3 percent of capacity
in February--well below the level usually associated with production bottle-
necks and price hikes.
Continued on page two
1
<PAGE>
MARKET REVIEW
Fixed-income markets benefited from receding inflationary expectations over
the past six months. At the height of investor concerns about inflation in Ju-
ly, the yield on the Treasury's benchmark 30-year bond reached 7.2 percent, up
from just 5.95 percent at the beginning of the year. Then, as the economy
slowed and the Federal Reserve held short-term rates steady, long-term yields
gradually fell to 6.64 percent by year-end. Renewed signs of economic vitality
pushed the yield on 30-year Treasury bonds back to 6.80 percent by the end of
the period.
Compared to 1995, when most sectors of the taxable fixed-income market gener-
ated double-digit gains, 1996 was a year of lackluster performance. The Lehman
Brothers Aggregate Bond Index returned 4.16 percent for the 12-month period
ended December 31, 1996, with short- and intermediate-term bonds outperforming
long-term issues. Lower-rated corporate bonds also outperformed other fixed-in-
come investments, as investors felt comfortable enough to stretch for yield
given the overall strength of the economy. For the year, 30-year Treasury bonds
lost approximately one percent on a total-return basis. Treasury-bond losses
might have been larger, but heavy foreign buying, especially among Japanese in-
vestors, helped control losses.
OUTLOOK
We expect that renewed momentum in the U.S. economy will lead to a series of
modest interest-rate hikes by the Federal Reserve. While we do not believe that
the threat of inflation is a serious concern, some warning signs are present,
including strong job growth, high consumer confidence, and a mild upturn in em-
ployment costs. In this environment, a moderate rise in interest rates is like-
ly.
In addition to the possibility of higher domestic rates, the risk of external
shocks to the fixed-income market is growing. Monetary policy has been unusu-
ally accommodative in many foreign countries. If these economies catch fire in
1997, the resulting demand for capital could divert buying power from the U.S.
credit market. Since foreign investors have become the marginal buyers of Amer-
ican bonds, we believe that increased competition for the global fixed-income
dollar could also exert mild downward pressure on bond prices over the year.
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 FEBRUARY 28, 1997
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/.............. 6.70% 6.31% 6.31%
Six-month total return/2/........................... 1.66% 2.31% 5.31%
One-year total return based on NAV/1/............... 5.79% 4.97% 4.97%
One-year total return/2/............................ .75% 1.05% 3.99%
Five-year average annual total return/2/............ 6.81% N/A N/A
Ten-year average annual total return/2/............. 7.60% N/A N/A
Life-of-Fund average annual total return/2/......... 8.28% 5.69% 4.27%
Commencement Date................................... 09/23/71 09/28/92 08/30/93
DISTRIBUTION RATE AND YIELD
Distribution Rate/3/................................ 6.75% 6.33% 6.33%
SEC Yield/4/........................................ 6.16% 5.71% 5.72%
</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 shares 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 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 February 28, 1997.
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.
Market forecasts provided in this report may not necessarily come to pass.
3
<PAGE>
PORTFOLIO HIGHLIGHTS
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
TOP TEN ISSUERS AS OF FEBRUARY 28, 1997
<TABLE>
<CAPTION>
PERCENTAGE OF FUND'S
LONG-TERM INVESTMENTS
<S> <C>
News America Holdings, Inc.............................................. 4.6%
Cox Communications, Inc................................................. 4.3%
Union Oil Co............................................................ 4.1%
United Mexican States................................................... 3.8%
Ashland Oil, Inc........................................................ 3.7%
Columbia Pictures Entertainment, Inc.................................... 3.4%
PDV America, Inc........................................................ 3.3%
United Airlines......................................................... 3.1%
Unisys Corp............................................................. 2.9%
TCI Communications, Inc................................................. 2.8%
</TABLE>
CREDIT QUALITY
[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]
As of February 28, 1997 As of August 31, 1996
AA............... 1.2% AA............... 1.2%
A................ 25.5% A................ 21.9%
BBB.............. 44.8% BBB.............. 50.1%
BB............... 19.6% BB............... 11.3%
B................ 8.9% B................ 15.5%
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 SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
AS OF FEBRUARY 28, 1997 AS OF AUGUST 31, 1996
Consumer Services... 21.4% Consumer Services... 23.4%
Energy.............. 14.8% Energy.............. 14.2%
Transportation...... 10.3% Transportation...... 12.8%
Utilities........... 9.9% Utilities........... 10.1%
Finance............. 8.1% Finance............. 8.7%
DURATION
AS OF FEBRUARY 28, 1997 AS OF AUGUST 31, 1996
Duration 5.9 years 5.8 years
4
<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 first half of the Fund's fiscal year. The team includes
David R. Troth, portfolio manager, and Peter W. Hegel, chief investment
officer for fixed-income investments. The following excerpts reflect their
views on the Fund's performance during the six-month period ended February 28,
1997.
Q WHAT WERE SOME OF THE KEY FORCES AT WORK IN THE MARKET OVER THE PAST SIX
MONTHS?
A It was an eventful six months in the corporate bond market. Beginning
with a fairly strong rally, fueled by signs of moderate economic growth
which extended through late November. After a brief sell-off, the market re-
bounded in February, only to fade once again in response to cautionary remarks
made by Federal Reserve Board Chairman Alan Greenspan.
Many of the market's sharpest fluctuations were triggered by Greenspan's
various comments throughout the reporting period. In early December, for exam-
ple, his warnings about the "irrational exuberance" of the stock market trig-
gered an abrupt one-day sell-off. His suggestion that Fed policy might include
preemptive tightening to ward off inflation helped weaken bond prices in late
February.
Over the reporting period as a whole, rates appear to have remained rela-
tively stable. However, by tracking their progress throughout the period, you
find rather significant volatility, marked by yield swings of more than a full
percentage point.
Q HOW DID YOU RESPOND TO THESE MARKET CONDITIONS?
A We followed several strategies. First, we maintained a slightly short du-
ration for the Fund. Duration, which is expressed in years, is a measure-
ment of a portfolio's price sensitivity to changes in interest rates. The
longer the Fund's duration, the greater the effect of interest rate movements
on net asset value (NAV). Typically, funds with shorter durations have per-
formed better in rising rate environments, while funds with longer durations
have performed better when rates are declining. The duration was nearly un-
changed over the course of the past six months, beginning the period at 5.8
years and ending on February 28, 1997 at 5.9 years. This compares to an aver-
age duration of 6.0 years for the Lehman Brothers BAA Corporate Bond Index.
Second, we increased our holdings in the energy sector to 14.8 percent of
long-term investments. We have also made a conscious effort to limit our expo-
sure to cyclical companies, which have tended to be more negatively affected
by slow economic growth, and have gravitated toward firms in the service in-
dustry, such as health care.
Our new holdings include AmerCredit (auto finance), Barnett Resources (ener-
gy), Transcontinental Gas (energy), and Rubbermaid (consumer nondurables). We
also added or increased positions in various sovereign debt issues, such as
government bonds issued by Mexico, Argentina, and South Africa. In fact, the
foreign segment of the Fund now represents approximately 10 percent of long-
term investments.
5
<PAGE>
Finally, we steadily increased the high-yield component of the portfolio to
attempt to enhance the Fund's dividend performance. By the end of the period,
19.6 percent of the Fund was invested in BB-rated securities. For additional
Fund portfolio highlights, please refer to page four.
Q HOW DID THE FUND PERFORM AS A RESULT?
A In October of 1996, we were able to increase the Fund's monthly divi-
dend--from $.0400 per share to $.0405 per share (Class A shares)--due in
large part to our allocation in the high yield sector. In general, the Fund
continued to meet its objective of providing shareholders with a high level of
current income. As of February 28, 1997, the Fund's annualized distribution
rate was 6.75 percent/3/, based on the maximum public offering price of $7.20
per Class A share.
For the six-month period ended February 28, 1997, the Fund achieved a total
return of 6.70 percent/1/ (Class A shares at net asset value). For the same
six-month period, the total return average for all funds in the Lipper Corpo-
rate Debt BB category was 6.46 percent. By comparison, the Lehman Brothers Cor-
porate Bond Index and the Lehman Brothers Baa Corporate Bond Index produced
total returns of 6.27 percent and 6.90 percent, respectively. These are broad-
based indices which reflect the performance of all publicly issued, fixed-rate,
non-convertible investment grade corporate debt. Keep in mind that these indi-
ces are unmanaged and do not reflect 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 NEXT SIX MONTHS?
A While the market's prospects aren't as strong as they were in 1996, they
still look quite favorable. The economy appears to be holding its own,
growing at a slow-but-steady pace, and inflation remains subdued. Although
there is a chance that stronger-than-expected growth could spur the Federal Re-
serve Board to further hike interest rates, the high yield sector of the market
should stay resilient. We believe that it would take a strong recessionary en-
vironment to trigger a significant downturn in the high yield market, which
does not appear imminent.
With its below-average duration, the Fund is already positioned defensively,
and we expect to continue this strategy in the near future. In addition, we
will increase the number of securities to further enhance diversification and
help reduce the Fund's exposure to credit risk.
/s/ Peter W. Hegel /s/ David R. Troth
Peter W. Hegel David R. Troth
Chief Investment Officer Portfolio Manager
Fixed Income Investments
Please see footnotes on page three
6
<PAGE>
PORTFOLIO OF INVESTMENTS
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Market
(000) Description Coupon Maturity Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS 88.0%
CONSUMER DISTRIBUTION 1.0%
$2,000 Nabisco, Inc............................. 7.550% 06/15/15 $ 1,984,400
-----------
CONSUMER DURABLES 0.5%
1,000 Chrysler Corp............................ 7.450 03/01/27 996,700
-----------
CONSUMER NON-DURABLES 1.5%
2,000 Coca Cola Enterprises, Inc............... 8.500 02/01/12 2,233,000
750 Dimon, Inc............................... 8.875 06/01/06 780,150
-----------
3,013,150
-----------
CONSUMER SERVICES 20.9%
1,000 Circus Circus Enterprises, Inc........... 6.450 02/01/06 946,800
6,215 Columbia Pictures Entertainment, Inc..... 9.875 02/01/98 6,433,147
5,000 Cox Communications, Inc.................. 6.875 06/15/05 4,933,500
3,500 Cox Communications, Inc.................. 7.250 11/15/15 3,375,400
1,250 Harcourt General, Inc.................... 8.875 06/01/22 1,429,125
5,000 ITT Corp................................. 6.750 11/15/05 4,744,000
2,000 News America Holdings, Inc............... 9.250 02/01/13 2,269,400
6,000 News America Holdings, Inc............... 8.875 04/26/23 6,552,000
2,500 TCI Communications, Inc.................. 8.750 08/01/15 2,539,500
3,000 TCI Communications, Inc.................. 6.875 02/15/06 2,796,600
2,000 Tele Communications, Inc................. 9.250 01/15/23 2,023,400
3,000 Viacom, Inc.............................. 7.750 06/01/05 3,019,800
-----------
41,062,672
-----------
ENERGY 14.5%
6,300 Ashland Oil, Inc......................... 8.800 11/15/12 7,028,910
750 Barrett Resources Corp................... 7.550 02/01/07 747,675
1,000 Lyondell Petrochemical Co................ 6.500 02/15/06 946,970
6,300 PDV America, Inc......................... 7.875 08/01/03 6,414,030
5,000 Phillips Petroleum Co.................... 8.860 05/15/22 5,327,000
3,000 Union Oil Co............................. 9.250 02/01/03 3,357,900
4,000 Union Oil Co............................. 9.125 02/15/06 4,574,800
-----------
28,397,285
-----------
FINANCE 8.0%
2,555 First PV Funding Corp.................... 10.300 01/15/14 2,727,463
3,480 PNPP II Funding Corp..................... 8.510 11/30/06 3,561,084
3,000 Royal Bank Scotland Group................ 6.375 02/01/11 2,769,900
4,500 Ryder Systems, Inc....................... 9.250 05/15/01 4,920,750
1,500 United Illuminating Co................... 10.240 01/02/20 1,621,500
-----------
15,600,697
-----------
</TABLE>
7
See Notes to Financial Statements
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Market
(000) Description Coupon Maturity Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
HEALTHCARE 5.0%
$2,000 Aetna Services, Inc...................... 7.125% 08/15/06 $ 1,999,720
1,000 Allegiance Corp.......................... 7.800 10/15/16 1,020,000
500 Manor Care, Inc.......................... 7.500 06/15/06 511,200
2,285 Quorum Health Group, Inc................. 11.875 12/15/02 2,504,931
3,500 Tenet Healthcare Corp.................... 10.125 03/01/05 3,867,500
-----------
9,903,351
-----------
OIL & GAS 0.5%
1,000 Transcontinental Gas Pipeline Corp....... 7.250 12/01/26 970,600
-----------
PRODUCER MANUFACTURING 3.9%
5,000 John Deere Capital Corp.................. 9.625 11/01/98 5,269,000
2,500 Rubbermaid, Inc.......................... 6.600 11/15/06 2,433,375
-----------
7,702,375
-----------
RAW MATERIALS/PROCESSING INDUSTRIES 6.9%
1,000 Carter Holt Harvey Ltd................... 8.375 04/15/15 1,070,210
4,000 Crown Cork & Seal, Inc................... 8.000 04/15/23 3,950,000
4,000 Federal Paper Board, Inc................. 8.875 07/01/12 4,570,400
3,000 Georgia Pacific Corp..................... 9.500 02/15/18 3,142,200
500 James River Corp......................... 8.375 11/15/01 527,565
300 Owens Corning Fiberglass Corp............ 9.375 06/01/12 350,010
-----------
13,610,385
-----------
TECHNOLOGY 5.5%
5,000 International Business Machines Corp..... 7.500 06/15/13 5,152,000
5,500 Unisys Corp.............................. 15.000 07/01/97 5,651,250
-----------
10,803,250
-----------
TRANSPORTATION 10.1%
3,000 AMR Corp................................. 9.500 05/15/01 3,299,400
750 CSX Corp................................. 8.625 05/15/22 841,125
1,560 Delta Airlines, Inc...................... 9.875 01/01/98 1,608,266
2,000 Delta Airlines, Inc...................... 9.750 05/15/21 2,403,600
1,500 Kansas City Southern Industries, Inc..... 7.875 07/01/02 1,565,850
4,000 Union Pacific Corp....................... 8.350 05/01/25 4,138,400
5,000 United Airlines.......................... 10.020 03/22/14 5,966,000
-----------
19,822,641
-----------
</TABLE>
See Notes to Financial Statements
8
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UTILITIES 9.7%
$1,000 360 Communications Co................... 7.125% 03/01/03 $ 994,360
1,000 AES Corp................................ 10.250 07/15/06 1,095,000
2,000 Arizona Public Service Co............... 9.500 04/15/21 2,207,000
1,000 Arizona Public Service Co............... 8.750 01/15/24 1,057,500
2,300 Cleveland Electric Illuminating Co...... 10.000 06/01/20 2,433,630
1,605 Consumers Power Co...................... 8.875 11/15/99 1,692,311
1,000 Gulf States Utilities Co................ 8.940 01/01/22 1,056,700
4,000 Long Island Lighting Co................. 9.750 05/01/21 4,180,000
1,000 Long Island Lighting Co................. 9.000 11/01/22 1,075,300
2,500 Texas Utilities Electric Co............. 8.875 02/01/22 2,684,250
500 UtiliCorp United, Inc................... 6.700 10/15/06 498,950
------------
18,975,001
------------
TOTAL CORPORATE BONDS.................................... 172,842,507
------------
FOREIGN GOVERNMENT OBLIGATIONS 9.6%
4,000 Province of Newfoundland (Canada)....... 9.000 10/15/21 4,643,600
650 Province of Saskatchewan (Canada)....... 8.000 02/01/13 696,215
1,000 Republic of Argentina................... 11.375 01/30/17 1,070,000
5,000 Republic of South Africa................ 8.375 10/17/06 5,092,500
2,500 United Mexican States (Mexico).......... 9.875 01/15/07 2,662,500
4,000 United Mexican States (Mexico).......... 11.375 09/15/16 4,626,000
------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS..................... 18,790,815
------------
TOTAL LONG-TERM INVESTMENTS 97.6%
(Cost $182,282,199)(a)........................................ 191,633,322
------------
REPURCHASE AGREEMENT 1.7%
Swiss Bank Corp. ($3,300,000 par collateralized by U.S. Gov-
ernment Obligations in a pooled cash account dated 02/28/97,
to be sold on 03/03/97 at $3,331,485)......................... 3,330,000
OTHER ASSETS IN EXCESS OF LIABILITIES 0.7%...................... 1,374,779
------------
NET ASSETS 100.0%............................................... $196,338,101
============
</TABLE>
(a) At February 28, 1997, cost for federal income tax purposes is $182,282,199;
the aggregate gross unrealized appreciation is $10,690,002 and the aggre-
gate gross unrealized depreciation is $1,338,879 resulting in net
unrealized appreciation of $9,351,123.
See Notes to Financial Statements
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $182,282,199) (Note
1).............................................................. $191,633,322
Short-Term Investments (Note 1)................................. 3,330,000
Cash............................................................ 4,495
Receivables:
Interest....................................................... 3,783,462
Fund Shares Sold............................................... 155,510
Other........................................................... 2,726
------------
Total Assets................................................... 198,909,515
------------
LIABILITIES:
Payables:
Investments Purchased.......................................... 995,140
Fund Shares Repurchased........................................ 870,692
Income Distributions........................................... 439,100
Distributor and Affiliates (Notes 2 and 6)..................... 79,520
Investment Advisory Fee (Note 2)............................... 74,255
Deferred Compensation and Retirement Plans (Note 2)............. 66,759
Accrued Expenses................................................ 45,948
------------
Total Liabilities.............................................. 2,571,414
------------
NET ASSETS...................................................... $196,338,101
============
NET ASSETS CONSIST OF:
Capital (Note 3)................................................ $210,157,614
Net Unrealized Appreciation on Securities....................... 9,351,123
Accumulated Undistributed Net Investment Income................. 289,897
Accumulated Net Realized Loss on Securities..................... (23,460,533)
------------
NET ASSETS...................................................... $196,338,101
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net
assets of $160,742,154 and 23,447,133 shares of beneficial
interest issued and outstanding) (Note 3).................... $ 6.86
Maximum sales charge (4.75%* of offering price).............. .34
------------
Maximum offering price to public............................. $ 7.20
============
Class B Shares:
Net asset value and offering price per share (Based on net
assets of $29,843,670 and 4,359,979 shares of beneficial
interest issued and outstanding) (Note 3).................... $ 6.84
============
Class C Shares:
Net asset value and offering price per share (Based on net
assets of $5,752,277 and 840,629 shares of beneficial
interest issued and outstanding) (Note 3).................... $ 6.84
============
</TABLE>
*On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
10
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.......................................................... $ 8,260,205
Other............................................................. 100,000
-----------
Total Income..................................................... 8,360,205
-----------
EXPENSES:
Investment Advisory Fee (Note 2).................................. 484,128
Distribution (12b-1) and Service Fees (Allocated to Classes A, B
and C of $164,127, $142,411 and $30,022, respectively) (Note 6).. 336,560
Shareholder Services (Note 2)..................................... 240,821
Legal (Note 2).................................................... 12,671
Trustees Fees and Expenses (Note 2)............................... 5,143
Other ............................................................ 213,200
-----------
Total Expenses................................................... 1,292,523
Less Expenses Reimbursed (Note 2)................................ (6,500)
-----------
Net Expenses..................................................... 1,286,023
-----------
NET INVESTMENT INCOME............................................. $ 7,074,182
===========
REALIZED AND UNREALIZED GAIN/LOSS ON SECURITIES:
Realized Loss on Securities:
Investments...................................................... $ (123,648)
Futures.......................................................... (73,194)
-----------
Net Realized Loss on Securities................................... (196,842)
-----------
Unrealized Appreciation/Depreciation on Securities:
Beginning of the Period.......................................... 3,261,825
End of the Period:
Investments...................................................... 9,351,123
-----------
Net Unrealized Appreciation on Securities During the Period....... 6,089,298
-----------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES.................... $ 5,892,456
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS........................ $12,966,638
===========
</TABLE>
See Notes to Financial Statements
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended February 28, 1997 and the Year Ended August 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, 1997 August 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income...................... $ 7,074,182 $ 13,391,386
Net Realized Gain/Loss on Securities....... (196,842) 1,735,360
Net Unrealized Appreciation/Depreciation on
Securities During the Period.............. 6,089,298 (9,979,200)
------------ ------------
Change in Net Assets from Operations....... 12,966,638 5,147,546
------------ ------------
Distributions from Net Investment Income:
Class A Shares............................ (5,827,427) (11,608,221)
Class B Shares............................ (914,125) (1,533,048)
Class C Shares............................ (190,869) (341,585)
------------ ------------
Total Distributions....................... (6,932,421) (13,482,854)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES................................. 6,034,217 (8,335,308)
------------ ------------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold.................. 16,808,448 44,740,308
Net Asset Value of Shares Issued Through
Dividend Reinvestment...................... 4,623,197 8,899,577
Cost of Shares Repurchased................. (26,933,740) (41,799,106)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS............................... (5,502,095) 11,840,779
------------ ------------
TOTAL INCREASE IN NET ASSETS............... 532,122 3,505,471
NET ASSETS:
Beginning of the Period.................... 195,805,979 192,300,508
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of
$289,897 and $148,136, respectively)...... $196,338,101 $195,805,979
============ ============
</TABLE>
See Notes to Financial Statements
12
<PAGE>
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended August 31,
February 28, -----------------------------
Class A Shares 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................. $6.650 $6.94 $6.62 $7.36 $6.98
------ ------ ------ ------ ------
Net Investment Income............. .249 .479 .48 .49 .51
Net Realized and Unrealized
Gain/Loss on Securities.......... .200 (.289) .32 (.745) .3875
------ ------ ------ ------ ------
Total from Investment Operations... .449 .190 .80 (.255) .8975
Less Distributions from Net
Investment Income.................. .243 .480 .48 .485 .5175
------ ------ ------ ------ ------
Net Asset Value, End of the Period. $6.856 $6.650 $6.94 $6.62 $7.36
====== ====== ====== ====== ======
Total Return (a)................... 6.70%* 2.71% 12.71% (3.55%) 13.48%
Net Assets at End of the Period (In
millions)......................... $160.7 $162.9 $169.0 $160.0 $190.8
Ratio of Expenses to Average Net
Assets (b) ........................ 1.14% 1.10% 1.13% 1.09% 1.05%
Ratio of Net Investment Income to
Average Net Assets (b) ........... 7.19% 6.90% 7.22% 7.06% 7.24%
Portfolio Turnover................. 11%* 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
13
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months September 28, 1992
Ended Year Ended August 31, (Commencement
February 28, --------------------- of Distribution) to
Class B Shares 1997 1996 1995 1994 August 31, 1993
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period. $6.642 $6.94 $6.62 $7.36 $7.05
------ ------ ------ ------ ------
Net Investment Income.. .220 .424 .42 .44 .43
Net Realized and
Unrealized Gain/Loss
on Securities......... .200 (.290) .33 (.755) .3465
------ ------ ------ ------ ------
Total from Investment
Operations............. .420 .134 .75 (.315) .7765
Less Distributions from
Net Investment Income.. .217 .432 .43 .425 .4665
------ ------ ------ ------ ------
Net Asset Value, End of
the Period............. $6.845 $6.642 $6.94 $6.62 $7.36
====== ====== ====== ====== ======
Total Return (a)........ 6.31%* 1.85% 11.86% (4.38%) 11.54%*
Net Assets at End of the
Period (In millions)... $29.8 $26.9 $19.2 $13.5 $8.4
Ratio of Expenses to
Average Net Assets (b). 1.94% 1.90% 1.94% 1.90% 1.96%
Ratio of Net Investment
Income to Average Net
Assets (b) ............ 6.39% 6.12% 6.40% 6.29% 6.21%
Portfolio Turnover...... 11%* 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
14
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended August 31,
February 28, -----------------------
Class C Shares 1997 1996 1995 1994 (a)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period................................. $6.639 $6.93 $6.62 $7.36
------ ------ ------ ------
Net Investment Income.................. .219 .426 .42 .44
Net Realized and Unrealized Gain/Loss
on Securities......................... .202 (.285) .32 (.755)
------ ------ ------ ------
Total from Investment Operations........ .421 .141 .74 (.315)
Less Distributions from Net Investment
Income ................................ .217 .432 .43 .425
------ ------ ------ ------
Net Asset Value, End of the Period...... $6.843 $6.639 $6.93 $6.62
====== ====== ====== ======
Total Return (b)........................ 6.31%* 2.00% 11.70% (4.51%)
Net Assets at End of the Period
(In millions).......................... $5.8 $5.9 $4.1 $2.3
Ratio of Expenses to Average Net Assets
(c).................................... 1.94% 1.90% 1.93% 1.93%
Ratio of Net Investment Income to
Average Net Assets (c)................. 6.39% 6.14% 6.40% 6.49%
Portfolio Turnover...................... 11%* 34% 25% 0%
</TABLE>
*Non-Annualized.
(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
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------
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 last sale price. Unlisted securities and listed securities for
which the last sales price is not available are valued at the mean of the bid
and asked prices. For those securities where quotations or prices are not
available, valuations are determined in accordance with procedures established
in good faith by the Board of Trustees. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost.
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 February 28, 1997,
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
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------
"Adviser") or its affiliates, the daily aggregate of which is invested in re-
purchase agreements. Repurchase agreements are fully collateralized by the un-
derlying debt security. The Fund will make payment for such securities only
upon physical delivery or evidence of book entry transfer to the account of
the custodian bank. The seller is required to maintain the value of the under-
lying 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 and pays monthly divi-
dends from net investment income. Net realized gains, if any, are distributed
annually. Distributions from net realized gains for book purposes may include
short-term capital gains and gains on option and futures transactions. All
short-term capital gains and a portion of option and futures gains are in-
cluded in ordinary income for tax purposes.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------
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 (Il-
linois), counsel to the Fund, of which a trustee of the Fund is an affiliated
person.
For the six months ended February 28, 1997, the Fund recognized expenses of
approximately $40,700 representing Van Kampen American Capital Distributors,
Inc.'s or its affiliates' (collectively "VKAC") cost of providing accounting
services to the Fund.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months
ended February 28, 1997, the Fund recognized expenses of approximately
$191,000, representing ACCESS' cost of providing transfer agency and share-
holder services plus a profit.
Additionally, for the six months ended February 28, 1997, the Fund paid VKAC
approximately $9,200 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. During the period ended
February 28, 1997, VKAC reimbursed the Fund for expenses related to the re-
tirement plan.
At February 28, 1997, VKAC owned 9,190 Class A shares.
3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of shares of beneficial interest, Clas-
ses A, B and C each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------
At February 28, 1997, capital aggregated $174,090,608, $30,256,021 and
$5,810,985 for Classes A, B and C, respectively. For the six months ended Feb-
ruary 28, 1997, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A............................................. 1,515,849 $ 10,425,870
Class B............................................. 845,849 5,790,466
Class C............................................. 86,749 592,112
---------- ------------
Total Sales.......................................... 2,448,447 $ 16,808,448
========== ============
Dividend Reinvestment:
Class A............................................. 573,935 $ 3,939,808
Class B............................................. 86,276 591,251
Class C............................................. 13,447 92,138
---------- ------------
Total Dividend Reinvestment.......................... 673,658 $ 4,623,197
========== ============
Repurchases:
Class A............................................. (3,144,396) $(21,583,965)
Class B............................................. (627,211) (4,299,142)
Class C............................................. (153,759) (1,050,633)
---------- ------------
Total Repurchases.................................... (3,925,366) $(26,933,740)
========== ============
</TABLE>
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------
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>
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>
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------
For the six months ended February, 28, 1997, VKAC, as Distributor for the
Fund, received commissions on sales of the Fund's Class A shares of approxi-
mately $9,100 and CDSC on redeemed shares of approximately $160,400. 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 $20,385,595 and $21,730,179 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,
except when taking delivery of a security underlying a futures contract. In
this instance the recognition of gain or loss is postponed until the disposal
of the security underlying the futures contract.
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).
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- -------------------------------------------------------------------------------
Transactions in futures contracts, each with a par value of $100,000, for
the six months ended February 28, 1997 were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- --------------------------------------------------------------------------------
<S> <C>
Outstanding at August 31, 1996....................................... 40
Futures Opened....................................................... 0
Futures Closed....................................................... (40)
---
Outstanding at February 28, 1997..................................... 0
===
</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 net assets and 1.00%
each of Class B and Class C net assets are accrued daily. Included in these
fees for the six months ended February 28, 1997 are payments to VKAC of ap-
proximately $120,500.
22
<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
Growth Fund
Pace Fund
Growth & Income
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
MORGAN STANLEY FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
Worldwide High Income 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 weekdays from 7:00 a.m. to 7:00
p.m. Central time at 1-800-341-2911 for Van Kampen American Capital funds, or
1-800-282-4404 for Morgan Stanley retail funds.
23
<PAGE>
RESULTS OF SHAREHOLDER VOTES
A Special Meeting of Shareholders of the Fund was held on October 25, 1996
where shareholders voted on a new investment advisory agreement, changes to
investment policies and the ratification of Price Waterhouse LLP as indepen-
dent public accountants. With regard to the approval of a new investment advi-
sory agreement between Van Kampen American Capital Asset Management, Inc. and
the Fund, 19,291,707 shares voted for the proposal, 365,586 shares voted
against and 1,210,546 shares abstained. With regard to the approval of certain
changes to the Fund's fundamental investment policies with respect to invest-
ment in other investment companies, 16,234,694 shares voted for the proposal,
472,830 shares voted against and 1,210,342 shares abstained. With regard to
the ratification of Price Waterhouse LLP as independent public accountants for
the Fund, 19,408,872 shares voted for the proposal, 276,465 shares voted
against and 1,182,503 shares abstained.
24
<PAGE>
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
DENNIS J. MCDONNELL*
JACK E. NELSON
JEROME L. ROBINSON
FERNANDO SISTO
WAYNE W. WHALEN* - Chairman
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
PETER W. HEGEL*
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 (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas 77002
*"Interested" persons of the Fund, as defined in the Investment Company Act of
1940.
(C)Van Kampen American Capital Distributors, Inc., 1997
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. After June 30, 1997, the report must
be accompanied by a quarterly performance update, if applicable.
25
