<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Performance in Perspective....................... 4
Portfolio Management Review...................... 5
Glossary of Terms................................ 8
Portfolio Highlights............................. 9
Portfolio of Investments......................... 10
Statement of Assets and Liabilities.............. 15
Statement of Operations.......................... 16
Statement of Changes in Net Assets............... 17
Financial Highlights............................. 18
Notes to Financial Statements.................... 21
Report of Independent Accountants................ 28
</TABLE>
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2
LETTER TO SHAREHOLDERS
September 20, 1999
Dear Shareholder,
With the volatility that we've experienced recently in many financial
markets, some investors have sold securities because of uncertainty about where
the markets were going, only to be left rethinking whether they made the right
decision. We've witnessed this kind of market activity numerous times over the
past several years, sparked by concerns such as the impact of the Asian economic
crisis, high stock valuations, or, most recently, the stability of many
high-flying technology companies. While these fears eventually subsided,
investors who may have sold during this period were unable to reap the benefits
of the subsequent rally. That's partly because most of the recent big gains
happened in relatively short periods of time. This kind of volatility--and the
danger of making short-term decisions--highlights the importance of investing
for the long term, in accordance with your individual financial objectives.
Although the worst of the Asian crisis appears to be behind us, new concerns
are always emerging. In the coming months, we'll likely hear more about how the
year 2000 computer problem may affect the markets or that we're overdue for a
correction. While the markets could undoubtedly suffer as a result of these or
any number of other events, we encourage you to focus on your long-term
investment goals. Although nothing is certain, history has shown us that over
time, the markets tend to recover--and most investors want to be positioned to
take advantage of any recovery.
If you have concerns about market volatility or questions about how your
portfolio is structured to respond to these events, we encourage you to contact
your financial advisor. Your advisor can talk with you about sustaining a
long-term investment plan through a variety of market conditions. We hope that
Van Kampen Funds will play an important role as you and your advisor build a
portfolio designed to help you weather what the markets have in store.
Sincerely,
[SIG]
Richard F. Powers III
Chairman
Van Kampen Asset Management Inc.
[SIG]
Dennis J. McDonnell
President
Van Kampen Asset Management Inc.
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
Americans continued their spending spree over the past 12 months, keeping
the economy growing at a healthy pace. Although the economic environment
remained positive, we experienced a slowdown over the last several months from
the rapid growth early in the reporting period. The nation's gross domestic
product (GDP) peaked at 6.0 percent in the fourth quarter of 1998, then fell to
more sustainable levels in the first and second quarters of 1999.
EMPLOYMENT SITUATION
The strong job market helped encourage continued economic growth by making
consumers confident enough to spend at a brisk pace. During the reporting
period, the unemployment rate reached its lowest level in almost 30 years, and
wages and the number of jobs created continued to climb. However, some
economists expressed concerns about the job market in recent months, with wages
still increasing but productivity remaining stagnant. This has pushed the cost
of labor higher, as evidenced by the Employment Cost Index, which jumped sharply
in the second quarter of 1999.
INFLATION AND INTEREST RATES
In addition to strong growth levels, inflation remained tame throughout most
of the reporting period, although a sharp increase in oil prices contributed to
a spike in April's consumer price index (CPI) report. The Federal Reserve
remained active in guarding against inflation and tempering the economy during
this environment. The Fed lowered interest rates 0.25 percent three times in the
fall of 1998 in response to economic pressures, but, during the summer of 1999,
reversed two of those decreases to keep the economy from overheating.
INTEREST RATES AND INFLATION
August 31, 1997, through August 31, 1999
[Interest Rates and Inflation Graph]
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Aug 1997 5.5000 2.2000
6.2500 2.2000
5.7500 2.1000
Nov 1997 5.6875 1.8000
6.5000 1.7000
5.5625 1.6000
Feb 1998 5.6250 1.4000
6.1250 1.4000
5.6250 1.4000
May 1998 5.6875 1.7000
6.0000 1.7000
5.5625 1.7000
Aug 1998 5.9375 1.6000
5.7500 1.5000
5.2500 1.5000
Nov 1998 4.8750 1.5000
4.0000 1.6000
4.8125 1.7000
Feb 1999 4.8750 1.6000
5.1250 1.7000
4.9375 2.3000
May 1999 4.5000 2.1000
4.0000 2.0000
4.7500 2.1000
Aug 1999 5.4375 2.3000
</TABLE>
Interest rates are represented by the closing midline federal funds rate
on the last day of each month. Inflation is indicated by the annual
percent change of the Consumer Price Index for all urban consumers at
the end of each month.
2
<PAGE> 4
PERFORMANCE RESULTS FOR THE PERIOD ENDED AUGUST 31, 1999
VAN KAMPEN 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).... (1.02%) (1.78%) (1.78%)
One-year total return(2)................. (5.71%) (5.50%) (2.71%)
Five-year average annual total
return(2)................................ 5.78% 5.73% 5.97%
Ten-year average annual total
return(2)................................ 6.94% N/A N/A
Life-of-Fund average annual total
return(2)................................ 7.98% 5.29% 4.16%
Commencement date........................ 09/23/71 09/28/92 08/30/93
DISTRIBUTION RATE AND YIELD
Distribution rate(3)..................... 6.30% 5.82% 5.82%
SEC Yield(4)............................. 6.43% 5.98% 5.97%
</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 August 31, 1999.
See the Comparative 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.
Investing in high-yield, lower rated securities involves certain risks, which
may include the potential for greater sensitivity to general economic downturns
and greater market price volatility.
Market forecasts provided in this report may not necessarily come to pass.
3
<PAGE> 5
PUTTING YOUR FUND'S PERFORMANCE IN PERSPECTIVE
As you evaluate your progress toward achieving your financial goals, it is
important to track your investment performance at regular intervals. A
comparison of your Fund's performance to an applicable benchmark can:
- Illustrate the market environment in which your Fund is being managed.
- Reflect the impact of favorable market trends or difficult market
conditions.
- Help you evaluate how your Fund's management team has responded to
opportunities and challenges.
The following graph compares your Fund's performance to that of the Lehman
Brothers Corporate Bond Index and the Lipper Corporate BBB-Rated Index over
time.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Van Kampen Corporate Bond Fund vs. the Lehman Brothers Corporate Bond Index
and the Lipper Corporate BBB-Rated Index (August 31, 1989, through
August 31, 1999)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
LIPPER CORPORATE BBB-RATED LEHMAN BROTHERS CORPORATE
VK CORPORATE BOND FUND INDEX BOND INDEX
---------------------- -------------------------- -------------------------
<S> <C> <C> <C>
Aug 1989 9523 10000 10000
9439 10017 10046
9531 10179 10277.1
9595 10250 10348
9559 10247 10360
9479 10098 10229.9
9457 10103 10259.5
9472 10123 10268.8
9398 10035 10162
9653 10306 10490.2
9758 10473 10669.6
9926 10605 10790.1
Aug 1990 9803 10445 10618.6
9819 10479 10667.4
9834 10542 10715.4
10054 10757 10936.2
10232 10914 11090.4
10304 11044 11231.2
10442 11175 11423.3
10580 11269 11563.8
10719 11415 11714.1
10810 11489 11794.9
10802 11460 11793.8
10910 11585 11963.6
Aug 1991 11138 11665 12234
11366 12123 12486
11478 12234 12604.6
11572 12332 12728.1
11945 12795 13144.3
11831 12640 12980
11893 12710 13104.6
11919 12667 13048.3
11964 12733 13113.5
12188 12992 13406
12378 13182 13615.1
12732 13544 13978.6
Aug 1992 12851 13669 14087.6
12971 13835 14258.1
12739 13591 14004.3
12748 13607 14026.7
12959 13833 14286.2
13210 14135 14619.1
13462 14469 14955.3
13581 14558 15007.7
13682 14667 15123.2
13726 14702 15141.4
14023 15033 15509.3
14184 15173 15621
Aug 1993 14583 15526 16009.9
14608 15571 16048.4
14633 15679 16128.6
14452 15499 15930.2
14472 15603 16024.2
14716 15874 16335.1
14471 15528 15949.6
14102 15085 15459.9
13896 14903 15311.5
13792 14865 15254.9
13771 14804 15216.7
14044 15057 15601.7
Aug 1994 14065 15116 15618.9
13832 14907 15328.4
13768 14860 15293.1
13768 14820 15268.6
13854 14894 15395.4
14116 15135 15721.7
14422 15480 16174.5
14555 15602 16307.1
14799 15883 16582.7
15558 16588 17363.8
15625 16693 17520.1
15557 16654 17443
Aug 1995 15853 16899 17723.8
16035 17097 17933
16265 17324 18166.1
16519 17609 18513
16798 17899 18818.5
16891 18044 18940.8
16375 17664 18490
16257 17534 18332.9
16090 17422 18180.7
16114 17410 18148
16330 17610 18414.8
16330 17653 18449.8
Aug 1996 16282 17645 18392.6
16600 17998 18782.5
17020 18429 19295.2
17393 18840 19708.2
17245 18658 19436.2
17321 18718 19463.4
17373 18824 19545.2
17120 18534 19240.2
17402 18807 19532.7
17635 19023 19753.4
17868 19307 20033.9
18597 19974 20767.2
Aug 1997 18311 19709 20459.8
18627 20056 20817.8
18840 20260 22846.2
18948 20359 22974.2
19083 20577 23217.7
19353 20840 23494
19327 20832 23486.9
19437 20938 23573.8
19521 21028 23722.3
19742 21208 24004.6
19876 21363 24182.3
19872 21346 24160.5
Aug 1998 19756 21192 24274.1
20089 21628 25060.5
20028 21361 24674.6
20450 21756 25138.5
20467 21810 25211.4
20570 21998 25461
19982 21524 24857.6
20173 21764 25034
20249 21921 25106.9
19856 21625 24770.5
19697 21511 24641.7
19626 21402 24506.1
Aug 1999 19555 21323 24447.3
</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 and includes payment of the maximum
sales charge (4.75% for A shares).
While past performance is not indicative of future performance, the above
information provides a broader vantage point from which to evaluate the
discussion of the Fund's performance found in the following pages.
4
<PAGE> 6
PORTFOLIO MANAGEMENT REVIEW
CORPORATE BOND FUND ANNUAL REPORT
We recently spoke with the management team of the Van Kampen Corporate Bond Fund
about the key events and economic forces that shaped the markets during the
Fund's fiscal year. The team includes C. Kelly Gilbert, portfolio manager, Reid
J. Hill, assistant portfolio manager, and Peter W. Hegel, chief investment
officer for fixed-income investments. Ms. Gilbert assumed management
responsibilities for the Fund on June 1, 1999. The following excerpts reflect
their views on the Fund's performance during the 12-month reporting period ended
August 31, 1999.
Q HOW WOULD YOU CHARACTERIZE THE MARKET CONDITIONS IN WHICH THE FUND
OPERATED DURING THE PAST 12 MONTHS?
A The last quarter of 1998 was marked by a series of interest-rate cuts by
the Federal Reserve Board, implemented to restore order to a volatile
market. This intervention paved the way for recovery in the first quarter
of 1999, as investors gained confidence in the strength of the economy and
inflation remained moderate. Consequently, yield spreads narrowed between
Treasuries and other types of bonds (such as corporate, high-yield, and
mortgage-backed securities).
However, the good news for the fixed-income market was quelled in the second
quarter of 1999, as investors became distracted by expectations of rising
inflation and warnings of additional action from the Fed. This development
prompted yield spreads to widen once again, although not to the record-high
levels seen last fall. The market breathed a sigh of relief at the end of the
second quarter, as the Fed announced a 0.25 percent rate hike while reassuring
fixed-income investors that additional action seemed unnecessary at that time.
By the beginning of August, however, rumblings of another rate hike were
once again triggered by indications of a further increase in inflation and a
strengthening economy. At the end of the month, the Fed boosted rates a second
time to 5.25 percent. Bond prices grew erratic at the possibility of a third
increase by the end of the year, and dropped for the final four days of the
reporting period.
Q HOW DID THE CORPORATE BOND MARKET BEHAVE DURING THIS TIME?
A At the beginning of 1999, corporate bonds initially participated in the
cautious recovery of the fixed-income market. However, yield spreads
between investment-grade corporate bonds and Treasuries widened during the
second quarter, erasing nearly all of the significant tightening that corporate
bond yields had achieved in early 1999. Uncertainty over movement by the Fed,
widening spreads, and a substantial increase in new issuance decreased liquidity
and put pressure on the corporate bond market. Expectations of record-high
levels of supply in September, and concerns about how that supply would be
greeted by the market, caused spreads to widen through the end of August.
Because so many issuers are expected to release new bonds into the market in
5
<PAGE> 7
the third quarter, to precede any year 2000 uncertainties, it remains to be seen
how this issuance will be received by investors.
Q HOW DID YOU MANAGE THE FUND IN LIGHT OF THESE CONDITIONS?
A The volatility and uncertainty that dominated much of the Fund's reporting
period underlined the importance of a disciplined investment strategy. As
a result, we looked to the Fund's benchmark, the Lehman Brothers BBB
Corporate Bond Index, as a guide for establishing market weightings within the
sectors held in the portfolio. Aligning the Fund's portfolio with the benchmark
weightings enabled us to maintain diversification in different sectors and
securities, enhance liquidity by choosing larger issues, and seek to reduce
risk.
As a result, we decreased the Fund's significant exposure to the industrial
sector in favor of increased weightings in the finance and utilities sectors. We
accomplished this by decreasing or eliminating industrial holdings, such as
Tenet, which was reduced due to concerns about the welfare of health-care
companies. In turn, we added to positions like Niagara Mohawk and, more
recently, Texas Utilities, which boosted our exposure to the utilities sector.
Our additions in the utilities sector were well-timed: we were able to
capitalize on widening spreads in the sector, which contributed to the Fund's
return.
We also looked for ways to improve the Fund's credit quality, which was
aided by an increase in the level of BBB rated and higher issuance during the
period. We also pursued this objective by selling some of our lower-rated Yankee
bonds, such as Argentina and South Africa, which were plagued by political
turmoil. We added higher-rated Yankee bonds, including A rated Quebec, and
increased our exposure to U.S. Treasuries. As we're able to monitor the quality
and variety of fourth-quarter issuance, we'll look for opportunities to redeploy
these assets into similar credit quality bonds.
Q WHAT WAS THE STRUCTURE OF THE FUND'S PORTFOLIO AT THE END OF THE REPORTING
PERIOD?
A The Fund's credit quality allocation continued to be concentrated in
medium-quality securities, which are defined as A and BBB rated
securities. At the end of the reporting period, approximately 35 percent
of the portfolio was allocated to A rated and higher securities, and 50 percent
of the portfolio was invested in BBB rated securities. The remaining 15 percent
was allocated to securities rated BB and below. This allocation benefited the
Fund during the last six months of the reporting period, as BBB and BB rated
securities outperformed A rated securities by 90 basis points and 363 basis
points, respectively.
We also continued to focus on managing the Fund's duration during the
period. Duration, which is expressed in years, is a measurement of a bond's
price sensitivity to changes in interest rates. For most of the period, the
Fund's duration was held equivalent to or slightly longer than that of its
benchmark, the Lehman Brothers BBB Corporate Bond Index. Because interest rates
rose during the second half of the reporting period, the long duration position
contributed negatively to the Fund's return during this time. At the end of the
period, the Fund's duration was 6.21 years, which is slightly longer than the
6
<PAGE> 8
benchmark duration of 5.94 years. For additional Fund portfolio highlights,
please refer to page 9.
Q HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
A For the 12 months ended August 31, 1999, the Fund generated a total return
of -1.02 percent(1) (Class A shares at net asset value). For the same
period, the return for the Lipper Corporate Debt BBB fund category average
was 0.78 percent. By comparison, the Lehman Brothers Corporate Bond Index and
the Lehman Brothers BBB Corporate Bond Index produced total returns of 0.70 and
1.21 percent, respectively. These broad-based, unmanaged indices reflect the
performance of all publicly issued, fixed-rate, non-convertible investment grade
corporate debt. Past performance does not guarantee future results. Please refer
to the chart and footnotes on page 3 for additional Fund performance results.
Q WHAT IS YOUR OUTLOOK FOR THE MARKET AND THE FUND OVER THE COMING MONTHS?
A Generally, the picture for the corporate bond market has improved from six
months ago, and certainly from 12 months ago. The story for the remainder
of the year will hinge on the market's preparation for year 2000, and how
the market reacts to issuers rushing to bring new bonds to the market as
investors catch up from a relatively sluggish summer. We'll continue to monitor
the level of supply for opportunities to add new securities to the portfolio.
As we manage the Fund going forward, our focus on fundamental, in-depth
research and assessment of corporate bonds will remain unchanged. We will look
beyond the sector, credit rating, or structure of a bond to identify those
issuers that we believe will remain financially sound and perform well in a
range of market conditions. We'll also search for value in out-of-favor areas of
the market in our quest for opportunities to diversify the portfolio and
contribute to the Fund's performance.
[SIG]
C. Kelly Gilbert
Portfolio Manager
[SIG]
Reid J. Hill
Assistant Portfolio
Manager
[SIG]
Peter W. Hegel
Chief Investment
Officer
Fixed Income
Investments
7
<PAGE> 9
GLOSSARY OF TERMS
BOND: A debt security issued by a government or corporation that generally pays
a bondholder a stated rate of interest and repays the principal at maturity
date.
CREDIT RATING: An evaluation of an issuer's credit history and capability of
repaying obligations. Standard & Poor's and Moody's Investors Service are
two companies that assign bond ratings. Standard & Poor's ratings range from
a high of AAA to a low of D, while Moody's ratings range from a high of Aaa
to a low of C.
CREDIT SPREAD: Also called quality spread, the difference in yield between
higher-quality issues (such as Treasury securities) and lower-quality
issues. Normally, lower-quality issues provide higher yields to compensate
investors for the additional credit risk.
FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve
System, which is the central bank system of the United States. Its
policy-making committee, called the Federal Open Market Committee, meets
eight times a year to establish monetary policy and monitor the economic
pulse of the United States.
INFLATION: A persistent and measurable rise in the general level of prices.
Inflation is widely measured by the Consumer Price Index, an economic
indicator that measures the change in the cost of purchased goods and
services.
YANKEE BONDS: U.S. dollar-denominated bonds issued in the United States by
foreign governments, banks, and corporations.
YIELD: The annual rate of return on an investment, expressed as a percentage.
YIELD SPREAD: The additional yield investors can earn by either investing in
bonds with longer maturities or by investing in bonds with lower ratings.
The spread is the difference in yield between bonds with short versus long
maturities or the difference in yield between high-quality bonds and
lower-quality bonds.
8
<PAGE> 10
PORTFOLIO HIGHLIGHTS
VAN KAMPEN CORPORATE BOND FUND
CREDIT QUALITY*
AS OF AUGUST 31, 1999
[PIE CHART]
<TABLE>
<CAPTION>
AAA/AAA AA/AA A/A BBB/BAA BB/BA B/B NON-RATED
- ------- ----- --- ------- ----- --- ---------
<S> <C> <C> <C> <C> <C> <C>
5.2% 4.3% 24.9% 50.1% 14.3% 0.4% 0.8%
</TABLE>
AS OF AUGUST 31, 1998
[PIE CHART]
<TABLE>
<CAPTION>
AAA/AAA AA/AA A/A BBB/BAA BB/BA B/B
- ------- ----- --- ------- ----- ---
<S> <C> <C> <C> <C> <C>
2.2% 4.2% 21.8% 55.1% 16.5% 0.2%
</TABLE>
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
DIVIDEND HISTORY FOR THE PERIOD ENDED AUGUST 31, 1999
[BAR GRAPH]
<TABLE>
<CAPTION>
DIVIDEND
--------
<S> <C>
'Sep 1998' $ .0385
'Oct 1998' $ .0385
'Nov 1998' $ .0385
'Dec 1998' $ .0360
'Jan 1999' $ .0360
'Feb 1999' $ .0360
'Mar 1999' $ .0360
'Apr 1999' $ .0360
'May 1999' $ .0360
'Jun 1999' $ .0360
'Jul 1999' $ .0360
'Aug 1999' $ .0360
</TABLE>
The dividend history represents past performance of the Fund's Class A shares
and does not predict the Fund's future distributions.
TOP FIVE PORTFOLIO INDUSTRIES*
[BAR GRAPH]
<TABLE>
<CAPTION>
AUGUST 31, 1999 AUGUST 31, 1998
--------------- ---------------
<S> <C> <C>
Consumer Services 17.1% 20.9%
Finance 15.4% 11.2%
Utilities 14.9% 8.8%
Energy 10.7% 11.9%
Raw Materials/Processing Industries 8.7% 9.6%
</TABLE>
*As a Percentage of Long-Term Investments
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BOND 90.0%
CONSUMER DISTRIBUTION 2.6%
$3,000 Kroger Co., 144A --
Private Placement (a)................ 7.250% 06/01/09 $ 2,907,993
2,000 Nabisco, Inc......................... 7.550 06/15/15 1,953,372
1,500 Safeway, Inc......................... 6.050 11/15/03 1,444,901
------------
6,306,266
------------
CONSUMER DURABLES 1.7%
750 Brunswick Corp....................... 7.125 08/01/27 667,265
1,000 Chrysler Corp........................ 7.450 03/01/27 982,356
2,500 Ford Motor Co........................ 7.450 07/16/31 2,460,750
------------
4,110,371
------------
CONSUMER NON-DURABLES 2.0%
750 Dimon, Inc........................... 8.875 06/01/06 678,750
2,500 Pepsi Bottling Group, Inc............ 7.000 03/01/29 2,278,600
2,000 Westpoint Stevens, Inc., 144A --
Private Placement (a)................ 7.875 06/15/05 1,940,000
------------
4,897,350
------------
CONSUMER SERVICES 16.8%
1,250 A.H. Belo Corp....................... 7.125 06/01/07 1,199,173
2,500 Clear Channel Communications, Inc.... 7.250 10/15/27 2,236,100
4,000 Comcast Cable Communications, Inc.... 6.200 11/15/08 3,660,000
5,000 Cox Communications, Inc.............. 6.875 06/15/05 4,847,535
1,250 CSC Holdings, Inc.................... 7.875 12/15/07 1,210,937
2,500 CSC Holdings, Inc.................... 7.875 02/15/18 2,300,000
1,000 Harcourt General, Inc................ 7.200 08/01/27 889,643
1,250 Harcourt General, Inc................ 8.875 06/01/22 1,312,007
5,000 ITT Corp............................. 6.750 11/15/05 4,462,500
6,000 News America Holdings, Inc........... 8.875 04/26/23 6,337,656
2,500 Park Place Entertainment Corp., 144A
--Private Placement (a).............. 7.950 08/01/03 2,472,125
375 Premier Parks, Inc. (b).............. 0/10.000 04/01/08 249,375
250 Premier Parks, Inc................... 9.250 04/01/06 244,063
200 Premier Parks, Inc................... 9.750 06/15/07 199,750
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONSUMER SERVICES (CONTINUED)
$2,500 Royal Caribbean Cruises Ltd.......... 7.500% 10/15/27 $ 2,268,192
1,500 Stewart Enterprises, Inc............. 6.400 05/01/03 1,448,658
2,000 TCI Communications, Inc.............. 9.250 01/15/23 2,149,420
3,000 Viacom, Inc.......................... 7.750 06/01/05 3,030,000
------------
40,517,134
------------
ENERGY 10.6%
6,300 Ashland Oil, Inc..................... 8.800 11/15/12 6,852,415
750 Barrett Resources Corp............... 7.550 02/01/07 703,125
1,500 Conoco, Inc.......................... 5.900 04/15/04 1,444,278
5,300 PDV America, Inc..................... 7.875 08/01/03 4,921,050
1,500 Petroliam Nasional Berhad, 144A --
Private Placement (Malaysia) (a)..... 7.625 10/15/26 1,173,399
5,000 Phillips Petroleum Co................ 8.860 05/15/22 5,208,035
1,000 R & B Falcon Corp.................... 6.500 04/15/03 890,000
4,000 Union Oil Co......................... 9.125 02/15/06 4,285,320
------------
25,477,622
------------
FINANCE 15.2%
3,500 American Re Corp., Ser B............. 7.450 12/15/26 3,416,178
5,000 Associates Corp. North America....... 5.500 02/15/04 4,708,120
2,000 Avalonbay Communities................ 7.500 08/01/09 1,920,718
3,000 Cez Finance B V (Netherlands)........ 7.125 07/15/07 2,737,500
1,500 Household Finance Corp............... 8.375 11/15/01 1,556,463
2,500 International Lease Finance Corp..... 8.375 12/15/04 2,635,960
4,000 Lehman Brothers Holdings, Inc........ 8.500 05/01/07 4,151,892
2,903 PNPP II Funding Corp................. 8.510 11/30/06 2,989,593
3,000 Royal Bank Scotland Group............ 6.375 02/01/11 2,746,128
4,500 Ryder Systems, Inc................... 9.250 05/15/01 4,682,079
5,000 Suntrust Bank Atlanta................ 7.250 09/15/06 5,016,095
------------
36,560,726
------------
HEALTHCARE 5.6%
2,000 Aetna Services, Inc.................. 7.125 08/15/06 1,975,066
1,000 Allegiance Corp...................... 7.800 10/15/16 1,021,781
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
HEALTHCARE (CONTINUED)
$4,000 Baxter International, Inc............ 6.625% 02/15/28 $ 3,538,344
1,500 Beckman Coulter, Inc................. 7.450 03/04/08 1,408,125
500 Manor Care, Inc...................... 7.500 06/15/06 484,297
3,000 Tenet Healthcare Corp., Ser B........ 8.125 12/01/08 2,805,000
2,500 Tyco International Group SA.......... 6.125 11/01/08 2,304,373
------------
13,536,986
------------
OIL & GAS 0.4%
1,000 Transcontinental Gas Pipeline
Corp................................. 7.250 12/01/26 917,699
------------
PRODUCER MANUFACTURING 2.6%
1,000 Cemex SA de C.V., 144A --
Private Placement (Mexico) (a)....... 9.250 06/17/02 1,015,000
5,000 Federal-Mogul Corp................... 7.875 07/01/10 4,675,000
750 Waste Management, Inc................ 7.000 10/01/04 693,959
------------
6,383,959
------------
RAW MATERIALS/PROCESSING
INDUSTRIES 8.6%
1,000 Carter Holt Harvey Ltd............... 8.375 04/15/15 1,019,528
4,000 Crown Cork & Seal, Inc............... 8.000 04/15/23 3,627,320
4,000 Federal Paper Board, Inc............. 8.875 07/01/12 4,391,916
1,750 Idex Corp............................ 6.875 02/15/08 1,593,277
4,000 IMC Global, Inc...................... 6.875 07/15/07 3,786,668
1,000 IMC Global, Inc...................... 7.300 01/15/28 903,798
3,000 Lafarge Corp......................... 6.500 07/15/08 2,809,971
1,250 Owens Illinois, Inc.................. 7.150 05/15/05 1,181,250
250 Pride International, Inc............. 9.375 05/01/07 251,250
450 Sequa Corp........................... 9.000 08/01/09 443,813
750 Smithfield Foods, Inc................ 7.625 02/15/08 697,500
------------
20,706,291
------------
TECHNOLOGY 3.3%
5,000 Lucent Technologies.................. 6.450 03/15/29 4,475,920
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
<-> TECHNOLOGY (CONTINUED)
$ 500 Raytheon Co.......................... 7.200% 08/15/27 $ 470,206
3,000 Sun Microsystems, Inc................ 7.500 08/15/06 2,971,947
------------
7,918,073
------------
TRANSPORTATION 6.2%
3,000 AMR Corp............................. 9.500 05/15/01 3,117,711
2,000 Delta Airlines, Inc.................. 9.750 05/15/21 2,280,218
4,000 Union Pacific Corp................... 8.350 05/01/25 3,987,804
5,000 United Airlines, Inc., Ser 91A2...... 10.020 03/22/14 5,542,775
------------
14,928,508
------------
UTILITIES 14.4%
1,000 360 Communications Co................ 7.125 03/01/03 1,006,417
1,000 AES Corp............................. 9.500 06/01/09 1,008,750
1,000 Arizona Public Service Co............ 8.750 01/15/24 1,011,082
2,000 Arizona Public Service Co............ 9.500 04/15/21 2,079,534
1,000 CMS Energy Corp...................... 7.500 01/15/09 913,750
2,000 CMS Energy Corp., Ser B.............. 6.750 01/15/04 1,890,000
2,500 Edison Mission Energy, 144A --
Private Placement (a)................ 7.730 06/15/09 2,502,885
1,000 Gulf States Utilities Co............. 8.940 01/01/22 1,052,232
4,750 MCI Worldcom, Inc.................... 6.950 08/15/28 4,412,451
250 Metronet Communications Corp.
(Canada) (b)......................... 0/9.950 06/15/08 191,250
1,250 Niagara Mohawk Power Corp............ 7.375 08/01/03 1,268,591
3,250 Niagara Mohawk Power Corp............ 7.625 10/01/05 3,250,000
5,000 Southern Energy, Inc., 144A --
Private Placement (a)................ 7.900 07/15/09 4,863,580
4,000 Sprint Capital Corp.................. 6.125 11/15/08 3,663,420
750 Telefonica De Argentina SA, 144A --
Private Placement (Argentina) (a).... 9.875 07/01/02 746,250
2,500 Texas Utilities Electric Co.......... 8.250 04/01/04 2,626,452
500 UtiliCorp United, Inc................ 6.700 10/15/06 498,456
2,000 Yorkshire Power Finance Ltd., Ser
B.................................... 6.496 02/25/08 1,816,168
------------
34,801,268
------------
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TOTAL CORPORATE BOND 90.0%......................................... $217,062,253
------------
GOVERNMENT OBLIGATIONS 8.4%
650 Providence of Saskatchewan
(Canada)............................. 8.000% 02/01/13 688,798
2,500 Quebec Province (Canada)............. 8.800 04/15/03 2,665,525
2,500 United Mexican States (Mexico)....... 9.875 01/15/07 2,490,625
2,000 United Mexican States (Mexico)....... 10.375 02/17/09 2,002,500
5,500 United States Treasury Notes......... 5.250 05/15/04 5,354,800
7,000 United States Treasury Notes......... 5.750 10/31/02 6,979,280
------------
TOTAL GOVERNMENT OBLIGATIONS........................................ 20,181,528
------------
TOTAL LONG-TERM INVESTMENTS 98.4%
(Cost $243,300,729)................................................. 237,243,781
REPURCHASE AGREEMENT 0.3%
BankAmerica Securities ($810,000 par collateralized by U.S.
Government obligations in a pooled cash account, dated 08/31/99 to
be sold on 09/01/99 at $810,123)
(Cost $810,000)..................................................... 810,000
------------
TOTAL INVESTMENTS 98.7%
(Cost $244,110,729)................................................. 238,053,781
OTHER ASSETS IN EXCESS OF LIABILITIES 1.3%........................... 3,182,059
------------
NET ASSETS 100.0%.................................................... $241,235,840
============
</TABLE>
(a) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933. These securities may be resold only in
transactions exempt from registration which are normally those transactions
with qualified institutional buyers.
(b) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
See Notes to Financial Statements
14
<PAGE> 16
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $244,110,729)....................... $238,053,781
Receivables:
Interest.................................................. 4,542,227
Fund Shares Sold.......................................... 215,561
Other....................................................... 60,435
------------
Total Assets.......................................... 242,872,004
------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 728,643
Income Distributions...................................... 399,747
Distributor and Affiliates................................ 185,969
Investment Advisory Fee................................... 98,648
Custodian Bank............................................ 1,640
Trustees' Deferred Compensation and Retirement Plans........ 143,636
Accrued Expenses............................................ 77,881
------------
Total Liabilities..................................... 1,636,164
------------
NET ASSETS.................................................. $241,235,840
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $249,697,897
Accumulated Distributions in Excess of Net Investment
Income.................................................... (496,663)
Accumulated Net Realized Loss............................... (1,908,446)
Net Unrealized Depreciation................................. (6,056,948)
------------
NET ASSETS.................................................. $241,235,840
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $172,943,017 and 26,483,965 shares of
beneficial interest issued and outstanding)............. $ 6.53
Maximum sales charge (4.75%* of offering price)......... .33
------------
Maximum offering price to public........................ $ 6.86
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $53,983,514 and 8,286,570 shares of
beneficial interest issued and outstanding)............. $ 6.51
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $14,309,309 and 2,196,756 shares of
beneficial interest issued and outstanding)............. $ 6.51
============
</TABLE>
*On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements
15
<PAGE> 17
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 19,125,343
Other....................................................... 13,760
------------
Total Income............................................ 19,139,103
------------
EXPENSES:
Investment Advisory Fee..................................... 1,243,046
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $431,219, $592,171 and $140,497,
respectively)............................................. 1,163,887
Shareholder Services........................................ 635,030
Trustees' Fees and Related Expenses......................... 34,072
Custody..................................................... 28,740
Legal....................................................... 12,975
Other....................................................... 279,546
------------
Total Expenses.......................................... 3,397,296
Less Credits Earned on Overnight Cash Balances.......... 4,875
------------
Net Expenses............................................ 3,392,421
------------
NET INVESTMENT INCOME....................................... $ 15,746,682
============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 325,887
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 13,342,797
End of the Period......................................... (6,056,948)
------------
Net Unrealized Depreciation During the Period............... (19,399,745)
------------
NET REALIZED AND UNREALIZED LOSS............................ $(19,073,858)
============
NET DECREASE IN NET ASSETS FROM OPERATIONS.................. $ (3,327,176)
============
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended August 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, 1999 August 31, 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................... $ 15,746,682 $ 14,055,824
Net Realized Gain................................... 325,887 897,823
Net Unrealized Appreciation/Depreciation During the
Period............................................ (19,399,745) 911,483
------------ ------------
Change in Net Assets from Operations................ (3,327,176) 15,865,130
------------ ------------
Distributions from Net Investment Income*........... (15,746,682) (14,433,446)
Distributions in Excess of Net Investment Income*... (288,603) (430,640)
------------ ------------
Total Distributions............................... (16,035,285) (14,864,086)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES........................................ (19,362,461) 1,001,044
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold........................... 91,705,930 92,822,340
Net Asset Value of Shares Issued Through Dividend
Reinvestment...................................... 11,420,680 10,139,695
Cost of Shares Repurchased.......................... (92,118,867) (54,403,687)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS...................................... 11,007,743 48,558,348
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS............... (8,354,718) 49,559,392
NET ASSETS:
Beginning of the Period............................. 249,590,558 200,031,166
------------ ------------
End of the Period (Including accumulated
distributions in excess of net investment income
of $496,663 and $386,213, respectively)........... $241,235,840 $249,590,558
============ ============
</TABLE>
<TABLE>
<CAPTION>
*Distributions by Class
- --------------------------------------------------------------------------------
<S> <C> <C>
Distributions from and in Excess of
Net Investment Income:
Class A Shares.................................... $(11,936,650) $(11,934,964)
Class B Shares.................................... (3,314,387) (2,562,029)
Class C Shares.................................... (784,248) (367,093)
------------ ------------
$(16,035,285) $(14,864,086)
============ ============
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
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 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period........................... $7.026 $6.967 $6.650 $ 6.94 $ 6.62
------ ------ ------ ------ ------
Net Investment Income............ .433 .454 .494 .479 .48
Net Realized and Unrealized
Gain/Loss...................... (.489) .085 .309 (.289) .32
------ ------ ------ ------ ------
Total from Investment Operations... (.056) .539 .803 .190 .80
Less Distributions from and in
Excess of Net Investment
Income........................... .440 .480 .486 .480 .48
------ ------ ------ ------ ------
Net Asset Value, End of the
Period........................... $6.530 $7.026 $6.967 $6.650 $ 6.94
====== ====== ====== ====== ======
Total Return (a)................... (1.02%) 7.89% 12.46% 2.71% 12.71%
Net Assets at End of the Period (In
millions)........................ $172.9 $186.0 $160.9 $162.9 $169.0
Ratio of Expenses to Average Net
Assets (b)....................... 1.08% 1.08% 1.13% 1.10% 1.13%
Ratio of Net Investment Income to
Average Net Assets (b)........... 6.26% 6.40% 7.16% 6.90% 7.22%
Portfolio Turnover................. 43% 17% 18% 34% 25%
</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) For the years ended August 31, 1997 and 1996, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
See Notes to Financial Statements
18
<PAGE> 20
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 B Shares 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period........................... $7.011 $6.955 $6.642 $ 6.94 $ 6.62
------ ------ ------ ------ ------
Net Investment Income............ .379 .412 .438 .424 .42
Net Realized and Unrealized
Gain/Loss...................... (.490) .071 .308 (.290) .33
------ ------ ------ ------ ------
Total from Investment Operations... (.111) .483 .746 .134 .75
Less Distributions from and in
Excess of Net Investment
Income........................... .386 .427 .433 .432 .43
------ ------ ------ ------ ------
Net Asset Value, End of the
Period........................... $6.514 $7.011 $6.955 $6.642 $ 6.94
====== ====== ====== ====== ======
Total Return (a)................... (1.78%) 6.95% 12.19% 1.85% 11.86%
Net Assets at End of the Period (In
millions)........................ $ 54.0 $ 53.8 $ 34.0 $ 26.9 $ 19.2
Ratio of Expenses to Average Net
Assets (b)....................... 1.86% 1.85% 1.91% 1.90% 1.94%
Ratio of Net Investment Income to
Average Net Assets (b)........... 5.47% 5.59% 6.37% 6.12% 6.40%
Portfolio Turnover................. 43% 17% 18% 34% 25%
</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) For the years ended August 31, 1997 and 1996, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
See Notes to Financial Statements
19
<PAGE> 21
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 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period........................... $7.011 $6.956 $6.639 $ 6.93 $ 6.62
------ ------ ------ ------ ------
Net Investment Income............ .388 .419 .434 .426 .42
Net Realized and Unrealized
Gain/Loss...................... (.499) .063 .316 (.285) .32
------ ------ ------ ------ ------
Total from Investment Operations... (.111) .482 .750 .141 .74
Less Distributions from and in
Excess of Net Investment
Income........................... .386 .427 .433 .432 .43
------ ------ ------ ------ ------
Net Asset Value, End of the
Period........................... $6.514 $7.011 $6.956 $6.639 $ 6.93
====== ====== ====== ====== ======
Total Return (a)................... (1.78%) 6.95% 11.63% 2.00% 11.70%
Net Assets at End of the Period (In
millions)........................ $ 14.3 $ 9.8 $ 5.1 $ 5.9 $ 4.1
Ratio of Expenses to Average Net
Assets (b)....................... 1.86% 1.85% 1.92% 1.90% 1.93%
Ratio of Net Investment Income to
Average Net Assets (b)........... 5.47% 5.55% 6.38% 6.14% 6.40%
Portfolio Turnover................. 43% 17% 18% 34% 25%
</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) For the years ended August 31, 1997 and 1996, the impact on the Ratios of
Expenses and Net Investment Income to Average Net Assets due to Van Kampen's
reimbursement of certain expenses was less than 0.01%.
See Notes to Financial Statements
20
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Corporate Bond Fund (the "Fund") is organized as a Delaware business
trust, and is registered as a diversified open-end management 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
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Fixed income investments are stated at value using market
quotations or indications of value obtained from an independent pricing service.
Investments in securities listed on a securities exchange are valued at their
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 as noted
above, 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 delivery"
basis, with settlement to occur at a later date. The value of the security
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, 1999, 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
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
the security at a future time and specified price. The Fund may invest
independently in repurchase agreements, or transfer uninvested cash balances
into a pooled cash account along with other investment companies advised by Van
Kampen Asset Management Inc. (the "Adviser") or its affiliates, the daily
aggregate of which is invested in repurchase agreements. Repurchase agreements
are fully collateralized by the underlying debt security. The Fund will make
payment for such securities only upon physical delivery or evidence of book
entry transfer to the account of the custodian bank. The seller is required to
maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.
C. INCOME AND EXPENSES--Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Discount is amortized over
the expected life of each applicable security. Premiums on debt securities are
not amortized. Income and expenses of the Fund are allocated on a pro rata basis
to each class of shares, except for distribution and service fees and transfer
agency costs which are unique to each class of shares.
D. FEDERAL INCOME TAXES--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At August 31, 1999, the Fund had an accumulated capital loss carryforward
for tax purposes of $1,868,760 which will expire between August 31, 2000 and
August 31, 2005. Of this amount, $1,821,919 will expire on August 31, 2000. Net
realized gains or losses may differ for financial reporting and tax purposes
primarily as a result of the deferral of losses relating to wash sale
transactions.
At August 31, 1999, for federal income tax purposes the cost of long- and
short-term investments is $244,150,417; the aggregate gross unrealized
appreciation is $2,712,574 and the aggregate gross unrealized depreciation is
$8,809,210, resulting in net unrealized depreciation on long- and short-term
investments of $6,096,636.
22
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
E. DISTRIBUTION OF INCOME AND GAINS--The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on option and futures
transactions. All short-term capital gains and a portion of option and futures
gains are included in ordinary income for tax purposes.
Due to the inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between book and tax basis reporting
for the 1999 fiscal year have been identified and appropriately reclassified.
Permanent differences totaling $5,000 related to consent fee income were
reclassified from accumulated undistributed net investment income to accumulated
net realized gain/loss and $13,514,655 related to the expiration of a portion of
the capital loss carryforward was reclassified from accumulated net realized
gain/loss to capital. Additionally, $183,153 relating to distributions in excess
of taxable income for the fiscal year 1999 was reclassified from accumulated
undistributed net investment income to capital.
F. EXPENSE REDUCTIONS--During the year ended August 31, 1999, the Fund's custody
fee was reduced by $4,875 as a result of credits earned on overnight cash
balances.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser
will provide investment advice and facilities to the Fund for an annual fee
payable monthly as follows:
<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>
For the year ended August 31, 1999, the Fund recognized expenses of
approximately $13,000 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
For the year ended August 31, 1999, the Fund recognized expenses of
approximately $96,800 representing Van Kampen Funds Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund.
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the year ended August 31,
1999, the Fund recognized expenses of approximately $442,400. Transfer agency
fees are determined through negotiations with the Fund's Board of Trustees and
are based on competitive market benchmarks.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.
3. CAPITAL TRANSACTIONS
At August 31, 1999, capital aggregated $181,252,139, $53,996,437 and $14,449,321
for Classes A, B and C, respectively. For the year ended August 31, 1999,
transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A..................................... 7,268,437 $ 50,418,909
Class B..................................... 4,481,690 31,108,300
Class C..................................... 1,466,291 10,178,721
----------- ------------
Total Sales................................... 13,216,418 $ 91,705,930
=========== ============
Dividend Reinvestment:
Class A..................................... 1,243,608 $ 8,574,540
Class B..................................... 337,181 2,317,850
Class C..................................... 77,099 528,290
----------- ------------
Total Dividend Reinvestment................... 1,657,888 $ 11,420,680
=========== ============
Repurchases:
Class A..................................... (8,495,350) $(58,320,540)
Class B..................................... (4,206,917) (28,714,694)
Class C..................................... (746,885) (5,083,633)
----------- ------------
Total Repurchases............................. (13,449,152) $(92,118,867)
=========== ============
</TABLE>
24
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
At August 31, 1998, capital aggregated $190,399,189, $52,350,550 and
$9,638,223 for Classes A, B and C, respectively. For the year ended August 31,
1998, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A.................................... 7,628,952 $ 54,313,505
Class B.................................... 4,450,037 31,604,203
Class C.................................... 971,515 6,904,632
---------- ------------
Total Sales.................................. 13,050,504 $ 92,822,340
========== ============
Dividend Reinvestment:
Class A.................................... 1,165,005 $ 8,276,050
Class B.................................... 236,853 1,679,288
Class C.................................... 26,012 184,357
---------- ------------
Total Dividend Reinvestment.................. 1,427,870 $ 10,139,695
========== ============
Repurchases:
Class A.................................... (5,430,218) $(38,590,584)
Class B.................................... (1,897,082) (13,463,546)
Class C.................................... (331,118) (2,349,557)
---------- ------------
Total Repurchases............................ (7,658,418) $(54,403,687)
========== ============
</TABLE>
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). Class B shares purchased
on or after June 1, 1996, will automatically convert to Class A shares after the
eighth year following purchase. Class B shares purchased before June 1, 1996,
automatically convert to Class A shares after the sixth year following purchase.
For the year ended August 31, 1999, 814,389 Class B shares automatically
converted to Class A shares. The CDSC will
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
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.
<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>
For the year ended August 31, 1999, Van Kampen, as Distributor for the Fund,
received commissions on sales of the Fund's Class A shares of approximately
$66,400 and CDSC on redeemed shares of approximately $138,500. Sales charges do
not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $125,262,306 and $106,333,266,
respectively.
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 holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance
the recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract.
The Fund may invest in futures contracts, a type of derivative. A futures
contract is an agreement involving the delivery of a particular asset on a
specified future date at an agreed upon price. The Fund generally invests in
exchange traded futures contracts on
26
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1999
- --------------------------------------------------------------------------------
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, cash or liquid 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).
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 (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.
Annual fees under the Plans of up to .25% of Class A average net assets and
1.00% each of Class B and Class C average net assets are accrued daily. Included
in these fees for the year ended August 31, 1999 are payments retained by Van
Kampen of approximately $570,000.
27
<PAGE> 29
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Van Kampen 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
material respects, the financial position of Van Kampen Corporate Bond Fund (the
"Fund") at August 31, 1999, 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 "financial
statements") are the responsibility of the Fund's management; our responsibility
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 perform 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 presentation. We believe that our
audits, which included confirmation of securities at August 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
October 6, 1999
28
<PAGE> 30
VAN KAMPEN FUNDS
GROWTH
Aggressive Equity
Aggressive Growth
American Value
Emerging Growth
Enterprise
Equity Growth
Growth
Pace
Small Cap Value
Technology
GROWTH AND INCOME
Comstock
Equity Income
Growth and Income
Harbor
Real Estate Securities
Utility
Value
GLOBAL/INTERNATIONAL
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
Global Fixed Income
Global Franchise
Global Government Securities
Global Managed Assets
International Magnum
Latin American
Short-Term Global Income
Strategic Income
Worldwide High Income
INCOME
Corporate Bond
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
U.S. Government
U.S. Government Trust for Income
CAPITAL PRESERVATION
Reserve
Tax Free Money
SENIOR LOAN
Prime Rate Income Trust
Senior Floating Rate
TAX FREE
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
To find out more about any of these
funds, ask your financial advisor for
a prospectus, which contains more
complete information, including sales
charges, risks, and ongoing expenses.
Please read it carefully before you
invest or send money.
To view a current Van Kampen fund
prospectus or to receive additional
fund information, choose from one of
the following:
- - visit our Web site at WWW.VANKAMPEN.COM--to view a prospectus, select
Download Prospectus
- - call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time.
Telecommunications Device for the Deaf users, call 1-800-421-2833.
- - e-mail us by visiting WWW.VANKAMPEN.COM and selecting Contact Us
29
<PAGE> 31
VAN KAMPEN CORPORATE BOND FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
JERRY D. CHOATE
RICHARD M. DEMARTINI*
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
JACK E. NELSON
DON G. POWELL*
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY, PH.D.
PAUL G. YOVOVICH
OFFICERS
RICHARD F. POWERS, III*
President
DENNIS J. MCDONNELL*
Executive Vice President and Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
TANYA M. LODEN*
Controller
STEPHEN L. BOYD*
PETER W. HEGEL*
MICHAEL SANTO*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
ASSET MANAGEMENT INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR
SERVICES INC.
P.O. Box 218256
Kansas City, Missouri 64121-8256
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
PRICEWATERHOUSECOOPERS LLP
200 East Randolph Drive
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the
Investment Company Act of 1940.
(C)Van Kampen Funds Inc., 1999.
All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless 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 January 31, 2000, the report must be accompanied by
a quarterly performance update, if applicable.
30
<PAGE> 32
YEAR 2000 READINESS DISCLOSURE
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Fund's investment adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Fund's
investment adviser is taking steps that it believes are reasonably designed to
address the Year 2000 Problem with respect to computer systems that it uses and
to obtain reasonable assurances that comparable steps are being taken by the
Fund's other major service providers. At this time, there can be no assurances
that these steps will be sufficient to avoid any adverse impact to the Fund. In
addition, the Year 2000 Problem may adversely affect the markets and the issuers
of securities in which the Fund may invest that, in turn, may adversely affect
the net asset value of the Fund. Improperly functioning trading systems may
result in settlement problems and liquidity issues. In addition, corporate and
governmental data processing errors may result in production problems for
individual companies or issuers and overall economic uncertainty. Earnings of
individual issuers will be affected by remediation costs, which may be
substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected. The
statements above are subject to the Year 2000 Information and Readiness
Disclosure Act, which may limit the legal rights regarding the use of such
statements in the case of dispute.
31
<PAGE> 33
VAN KAMPEN FUNDS
YOUR NOTES:
32
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> CORPORATE BOND CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> AUG-31-1999
<INVESTMENTS-AT-COST> 244,110,729<F1>
<INVESTMENTS-AT-VALUE> 238,053,781<F1>
<RECEIVABLES> 4,757,788<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 60,435<F1>
<TOTAL-ASSETS> 242,872,004<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,636,164<F1>
<TOTAL-LIABILITIES> 1,636,164<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 181,252,139
<SHARES-COMMON-STOCK> 26,483,965
<SHARES-COMMON-PRIOR> 26,467,270
<ACCUMULATED-NII-CURRENT> (496,663)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (1,908,446)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> (6,056,948)<F1>
<NET-ASSETS> 172,943,017
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 19,125,343<F1>
<OTHER-INCOME> 13,760<F1>
<EXPENSES-NET> (3,392,421)<F1>
<NET-INVESTMENT-INCOME> 15,746,682<F1>
<REALIZED-GAINS-CURRENT> 325,887<F1>
<APPREC-INCREASE-CURRENT> (19,399,745)<F1>
<NET-CHANGE-FROM-OPS> (3,327,176)<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (11,936,650)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,268,437
<NUMBER-OF-SHARES-REDEEMED> (8,495,350)
<SHARES-REINVESTED> 1,243,608
<NET-CHANGE-IN-ASSETS> (13,020,916)
<ACCUMULATED-NII-PRIOR> (386,213)<F1>
<ACCUMULATED-GAINS-PRIOR> (15,753,988)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,243,046<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 3,397,296<F1>
<AVERAGE-NET-ASSETS> 187,696,403
<PER-SHARE-NAV-BEGIN> 7.026
<PER-SHARE-NII> 0.433
<PER-SHARE-GAIN-APPREC> (0.489)
<PER-SHARE-DIVIDEND> (0.440)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 6.530
<EXPENSE-RATIO> 1.08
<FN>
<F1>This item relates to the fund on a composite basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> CORPORATE BOND CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> AUG-31-1999
<INVESTMENTS-AT-COST> 244,110,729<F1>
<INVESTMENTS-AT-VALUE> 238,053,781<F1>
<RECEIVABLES> 4,757,788<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 60,435<F1>
<TOTAL-ASSETS> 242,872,004<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,636,164<F1>
<TOTAL-LIABILITIES> 1,636,164<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,996,437
<SHARES-COMMON-STOCK> 8,286,570
<SHARES-COMMON-PRIOR> 7,674,616
<ACCUMULATED-NII-CURRENT> (496,663)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (1,908,446)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> (6,056,948)<F1>
<NET-ASSETS> 53,983,514
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 19,125,343<F1>
<OTHER-INCOME> 13,760<F1>
<EXPENSES-NET> (3,392,421)<F1>
<NET-INVESTMENT-INCOME> 15,746,682<F1>
<REALIZED-GAINS-CURRENT> 325,887<F1>
<APPREC-INCREASE-CURRENT> (19,399,745)<F1>
<NET-CHANGE-FROM-OPS> (3,327,176)<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (3,314,387)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,481,690
<NUMBER-OF-SHARES-REDEEMED> (4,206,917)
<SHARES-REINVESTED> 337,181
<NET-CHANGE-IN-ASSETS> 173,936
<ACCUMULATED-NII-PRIOR> (386,213)<F1>
<ACCUMULATED-GAINS-PRIOR> (15,753,988)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,243,046<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 3,397,296<F1>
<AVERAGE-NET-ASSETS> 59,186,336
<PER-SHARE-NAV-BEGIN> 7.011
<PER-SHARE-NII> 0.379
<PER-SHARE-GAIN-APPREC> (0.490)
<PER-SHARE-DIVIDEND> (0.386)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 6.514
<EXPENSE-RATIO> 1.86
<FN>
<F1> This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> CORPORATE BOND CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> AUG-31-1999
<INVESTMENTS-AT-COST> 244,110,729<F1>
<INVESTMENTS-AT-VALUE> 238,053,781<F1>
<RECEIVABLES> 4,757,788<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 60,435<F1>
<TOTAL-ASSETS> 242,872,004<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,636,164<F1>
<TOTAL-LIABILITIES> 1,636,164<F1>
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,449,321
<SHARES-COMMON-STOCK> 2,196,756
<SHARES-COMMON-PRIOR> 1,400,251
<ACCUMULATED-NII-CURRENT> (496,663)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (1,908,446)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> (6,056,948)<F1>
<NET-ASSETS> 14,309,309
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 19,125,343<F1>
<OTHER-INCOME> 13,760<F1>
<EXPENSES-NET> (3,392,421)<F1>
<NET-INVESTMENT-INCOME> 15,746,682<F1>
<REALIZED-GAINS-CURRENT> 325,887<F1>
<APPREC-INCREASE-CURRENT> (19,399,745)<F1>
<NET-CHANGE-FROM-OPS> (3,327,176)<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (784,248)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,466,291
<NUMBER-OF-SHARES-REDEEMED> (746,885)
<SHARES-REINVESTED> 77,099
<NET-CHANGE-IN-ASSETS> 4,492,262
<ACCUMULATED-NII-PRIOR> (386,213)<F1>
<ACCUMULATED-GAINS-PRIOR> (15,753,988)<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,243,046<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 3,397,296<F1>
<AVERAGE-NET-ASSETS> 14,042,468
<PER-SHARE-NAV-BEGIN> 7.011
<PER-SHARE-NII> 0.388
<PER-SHARE-GAIN-APPREC> (0.499)
<PER-SHARE-DIVIDEND> (0.386)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 6.514
<EXPENSE-RATIO> 1.86
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class basis
</FN>
</TABLE>
