UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-02090
Van Kampen Bond Fund
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 6/30
Date of reporting period: 12/31/03
Item 1. Report to Shareholders.
The Fund's semi-annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen Bond
Fund performed during the semiannual period. The portfolio management
team will provide an overview of the market conditions and discuss some
of the factors that affected investment performance during the reporting
period. In addition, this report includes the fund's financial statements
and a list of fund investments as of December 31, 2003.
Market forecasts provided in this report may not necessarily come to
pass. There is no assurance that the fund will achieve its investment
objective. The fund is subject to market risk, which is the possibility
that the market values of securities owned by the fund will decline and,
therefore, the value of the fund shares may be less than what you paid
for them. Accordingly, you can lose money investing in this fund.
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
Performance Summary
AVERAGE ANNUAL TOTAL RETURNS
BOND FUND
SYMBOL: VBF
-------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
10-year 7.00% 6.48%
5-year 6.01 5.13
1-year 10.53 3.73
6-month 2.97 -5.06
-------------------------------------------------------
Past performance is no guarantee of future results. Investment return, net asset
value (NAV) and common share market price will fluctuate and fund shares, when
sold, may be worth more or less than their original cost.
As a result of recent market activity, current performance may vary from the
figures shown. For more up-to-date information, please visit vankampen.com or
speak with your financial advisor. The NAV per share is determined by dividing
the value of the fund's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding. The common share
market price is the price the market is willing to pay for shares of the fund at
a given time. Common share market price is influenced by a range of factors,
including supply and demand and market conditions. Total return assumes an
investment at the beginning of the period, reinvestment of all distributions for
the period in accordance with the fund's dividend reinvestment plan, and sale of
all shares at the end of the period.
The Lehman Brothers BBB Corporate Bond Index is generally representative of
corporate bonds. The index does not include any expenses, fees or sales charges,
which would lower performance. The index is unmanaged and should not be
considered an investment.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2003
Van Kampen Bond Fund is managed by the adviser's Taxable Fixed Income team.(1)
Current team members include David S. Horowitz, Executive Director, and Gordon
W. Loery, Executive Director.
MARKET CONDITIONS
Throughout the reporting period there was mounting evidence that the economy was
moving into a recovery. By September, both consumer and corporate spending
showed strength, and GDP growth topped 8 percent. Although the Federal Reserve
(the Fed) cut the federal funds target rate by 25 basis points just prior to the
beginning of the period, in mid-June, the reduction was half of what had been
expected. This appeared to signal that the Fed was less concerned about
deflation than had been previously thought. Interest rates moved sharply higher
through August in one of their strongest upward moves in decades, and remained
largely unchanged through the end of the year.
Non-Treasury sectors of the market generally benefited from high investor
demand. Yield spreads in corporate bonds remained wide following the corporate
governance scandals in 2002, and investors were drawn to the bonds' attractive
relative yields. This pattern continued throughout the period as the economy
showed ongoing signs of improvement, and corporate bonds closed the year with
strong returns. Sector performance was varied, with economically sensitive
segments such as telecommunications, electrics, industrials, media and basic
materials leading the pack.
PERFORMANCE ANALYSIS
Closed-end fund returns can be calculated based upon either the market price or
the net asset value (NAV) of its shares. NAV per share is determined by dividing
the value of the fund's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2003
----------------------------------------------------------
BASED ON BASED ON LEHMAN BROTHERS BBB
NAV MARKET PRICE CORPORATE BOND INDEX
2.97% -5.06% 0.49%
----------------------------------------------------------
Past performance is no guarantee of future results. Investment return, net asset
value and common share market price will fluctuate and fund shares, when sold,
may be worth more or less than their original cost. See Performance Summary for
additional performance information and index definition.
(1)Team members may change without notice at any time.
2
can differ significantly. The fund's return at NAV outperformed the return of
its benchmark, the Lehman Brothers BBB Corporate Bond Index. (See performance
table.)
The fund benefited from our strategy of emphasizing sectors of the market that
we believed were best positioned to gain from an increase in economic activity.
This approach led us to emphasize the financials and transportation sectors,
both of which performed strongly. We also selectively added to the portfolio's
holdings of utilities companies such as Monongahela Power Company, Indianapolis
Power & Light and Ohio Edison as regulatory changes took effect and our analysts
developed greater comfort with the companies' prospects.
With interest rates earlier in the year at record low levels we kept the
portfolio's duration (a measure of interest-rate sensitivity) below that of its
benchmark in an effort to mitigate the risk of rising interest rates. We
achieved this by moving some assets out of longer-term paper and into
shorter-maturity securities. This strategy helped performance when interest
rates rose early in the period. The lower yields earned on the shorter-maturity
investments however, detracted somewhat from overall returns.
Our strategy in the telecommunications sector was less beneficial to the fund.
We were generally conservative in our allocations out of concern over the
sector's volatile performance in recent years. The sector went on to rebound off
of its lows, and the fund was not able to participate fully.
PROXY VOTING POLICIES AND PROCEDURES
A description of the fund's policies and procedures with respect to the
voting of proxies relating to the fund's portfolio securities is
available without charge, upon request, by calling 1-800-847-2424. This
information is also available on the Securities and Exchange Commission's
website at http://www.sec.gov.
TOP 5 SECTORS AS OF 12/31/03 RATINGS ALLOCATIONS AS OF 12/31/03
Automotive 8.5% AAA/Aaa 1.8%
Electric 8.0 AA/Aa 4.8
Healthcare 6.6 A/A 31.3
Banking 4.7 BBB/Baa 52.4
Railroads 4.3 BB/Ba 8.6
B/B 1.1
Subject to change daily. All percentages are as a percentage of long-term
investments. Provided for informational purposes only and should not be deemed
as a recommendation to buy securities in the sectors shown above. Securities are
classified by sectors that represent broad groupings of related industries.
Ratings allocation based upon ratings as issued by Standard and Poor's and
Moody's, respectively. Van Kampen is a wholly owned subsidiary of a global
securities firm which is engaged in a wide range of financial services
including, for example, securities trading and brokerage activities, investment
banking, research and analysis, financing and financial advisory services.
3
BY THE NUMBERS
YOUR FUND'S INVESTMENTS
December 31, 2003 (Unaudited)
THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CORPORATE BONDS 93.4%
AEROSPACE & DEFENSE 2.4%
$ 275 Boeing Capital Corp. ........................... 6.100% 03/01/11 $ 297,246
265 Boeing Capital Corp. ........................... 6.500 02/15/12 290,196
430 Boeing Capital Corp. ........................... 5.800 01/15/13 451,778
165 Boeing Co. ..................................... 6.625 02/15/38 173,552
510 Goodrich Corp. ................................. 7.625 12/15/12 590,207
1,820 Lockheed Martin Corp. .......................... 8.500 12/01/29 2,392,148
875 Raytheon Co. ................................... 8.300 03/01/10 1,051,220
65 Raytheon Co. ................................... 4.850 01/15/11 65,182
------------
5,311,529
------------
AIRLINES 0.8%
100 Continental Airlines, Inc. ..................... 6.648 09/15/17 97,455
1,142 Continental Airlines, Inc. ..................... 6.900 01/02/18 1,127,780
542 Continental Airlines, Inc. ..................... 6.545 02/02/19 536,483
------------
1,761,718
------------
AUTOMOTIVE 8.0%
1,710 DaimlerChrysler North America Holding Corp. .... 7.300 01/15/12 1,906,925
1,410 DaimlerChrysler North America Holding Corp. .... 8.500 01/18/31 1,689,604
4,535 Ford Motor Co. ................................. 7.450 07/16/31 4,596,154
3,610 Ford Motor Credit Co. .......................... 7.250 10/25/11 3,921,153
640 General Motors Acceptance Corp. ................ 4.500 07/15/06 658,800
1,860 General Motors Acceptance Corp. ................ 6.875 09/15/11 2,006,466
2,750 General Motors Acceptance Corp. ................ 8.000 11/01/31 3,097,380
------------
17,876,482
------------
BANKING 4.4%
545 Citigroup, Inc. ................................ 6.000 02/21/12 596,513
2,110 Citigroup, Inc. ................................ 5.625 08/27/12 2,231,224
75 Citigroup, Inc. ................................ 6.625 06/15/32 81,517
3,340 J.P. Morgan Chase & Co. ........................ 6.750 02/01/11 3,771,521
400 MBNA America Bank NA............................ 7.125 11/15/12 458,197
1,720 MBNA Corp. ..................................... 6.125 03/01/13 1,850,133
925 Washington Mutual Bank FA....................... 5.500 01/15/13 955,875
------------
9,944,980
------------
BROKERAGE 2.7%
1,670 Goldman Sachs Group, Inc. ...................... 6.875 01/15/11 1,899,149
185 Goldman Sachs Group, Inc. ...................... 5.250 10/15/13 187,132
2,000 Lehman Brothers Holdings, Inc. ................. 8.500 05/01/07 2,339,356
4 See Notes to Financial Statements
YOUR FUND'S INVESTMENTS
December 31, 2003 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
BROKERAGE (CONTINUED)
$1,019 World Financial Prop., 144A--
Private Placement (a)........................... 6.910% 09/01/13 $ 1,127,569
463 World Financial Prop., 144A--
Private Placement (a)........................... 6.950 09/01/13 513,476
------------
6,066,682
------------
CHEMICALS 0.3%
60 FMC Corp. ...................................... 10.250 11/01/09 70,500
640 ICI Wilmington, Inc. ........................... 4.375 12/01/08 638,291
------------
708,791
------------
CONSTRUCTION MACHINERY 0.6%
1,320 Kennametal, Inc. ............................... 7.200 06/15/12 1,402,735
------------
CONSUMER PRODUCTS 0.4%
900 Xerox Corp. .................................... 7.125 06/15/10 967,500
------------
DIVERSIFIED MANUFACTURING 2.5%
1,275 Cooper Industries, Inc. ........................ 5.250 07/01/07 1,364,283
2,445 Honeywell International, Inc. .................. 6.125 11/01/11 2,692,759
705 Hutchison Whampoa International Ltd., 144A--
Private Placement (Cayman Islands) (a).......... 5.450 11/24/10 716,309
850 Hutchison Whampoa International Ltd., 144A--
Private Placement (Cayman Islands) (a).......... 6.500 02/13/13 887,102
------------
5,660,453
------------
ELECTRIC 7.4%
725 Appalachian Power Co., Ser H.................... 5.950 05/15/33 697,378
625 Cincinnati Gas & Electric Co. .................. 5.700 09/15/12 658,675
425 Cincinnati Gas & Electric Co., Ser A............ 5.400 06/15/33 384,550
375 Cincinnati Gas & Electric Co., Ser B............ 5.375 06/15/33 338,034
820 Columbus Southern Power Co., Ser D.............. 6.600 03/01/33 881,737
230 Consumers Energy Co., Ser B, 144A--Private
Placement (a)................................... 5.375 04/15/13 231,482
790 Consumers Energy Co., Ser E, 144A--Private
Placement (a)................................... 4.000 05/15/10 765,467
190 Consumers Energy Co., Ser G, 144A--Private
Placement (a)................................... 4.800 02/17/09 194,432
865 Detroit Edison Co. ............................. 6.125 10/01/10 950,282
960 Duquesne Light Co. ............................. 6.700 04/15/12 1,070,918
540 Entergy Gulf States, Inc., 144A--Private
Placement (a)................................... 3.600 06/01/08 521,038
940 Exelon Corp. ................................... 6.750 05/01/11 1,051,742
885 FirstEnergy Corp., Ser B........................ 6.450 11/15/11 918,948
540 FirstEnergy Corp., Ser C........................ 7.375 11/15/31 554,389
255 Indianapolis Power & Light Co., 144A--Private
Placement (a)................................... 6.300 07/01/13 263,542
See Notes to Financial Statements 5
YOUR FUND'S INVESTMENTS
December 31, 2003 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
ELECTRIC (CONTINUED)
$ 440 Monongahela Power Co. .......................... 5.000% 10/01/06 $ 449,900
1,323 Niagara Mohawk Power Corp., Ser F............... 7.625 10/01/05 1,436,165
685 Nisource Finance Corp. ......................... 7.625 11/15/05 748,689
1,240 Ohio Edison Co., 144A--Private Placement (a).... 5.450 05/01/15 1,201,099
65 Ohio Power Co., Ser G........................... 6.600 02/15/33 69,990
1,290 PSEG Energy Holdings, Inc. ..................... 9.125 02/10/04 1,302,900
650 PSEG Energy Holdings, Inc. ..................... 8.625 02/15/08 712,562
805 TXU Energy Co. ................................. 7.000 03/15/13 892,165
65 Wisconsin Electric Power........................ 5.625 05/15/33 63,345
320 Wisconsin Energy Corp. ......................... 6.200 04/01/33 319,876
------------
16,679,305
------------
ENTERTAINMENT 1.3%
990 AOL Time Warner, Inc. .......................... 6.875 05/01/12 1,116,205
605 AOL Time Warner, Inc. .......................... 7.625 04/15/31 700,635
505 AOL Time Warner, Inc. .......................... 7.700 05/01/32 591,618
180 Park Place Entertainment Corp. ................. 7.500 09/01/09 198,900
270 Time Warner, Inc. .............................. 6.625 05/15/29 278,507
------------
2,885,865
------------
ENVIRONMENTAL SERVICES 2.1%
245 Allied Waste North America, Inc., 144A--Private
Placement (a)................................... 6.500 11/15/10 252,350
365 Allied Waste North America, Inc., Ser B......... 8.500 12/01/08 407,887
830 Republic Services, Inc. ........................ 6.750 08/15/11 929,169
1,500 Waste Management, Inc. ......................... 7.000 10/15/06 1,654,774
550 Waste Management, Inc. ......................... 7.375 08/01/10 636,385
790 Waste Management, Inc. ......................... 7.000 07/15/28 852,873
------------
4,733,438
------------
FOOD/BEVERAGE 2.2%
2,000 ConAgra Foods, Inc. ............................ 7.500 09/15/05 2,173,784
515 Kraft Foods, Inc. .............................. 5.625 11/01/11 543,487
500 Kraft Foods, Inc. .............................. 6.250 06/01/12 545,829
1,420 Smithfield Foods, Inc. ......................... 8.000 10/15/09 1,505,200
105 Smithfield Foods, Inc. ......................... 7.750 05/15/13 109,725
------------
4,878,025
------------
GAMING 1.6%
1,495 Harrahs Operating Co., Inc. .................... 8.000 02/01/11 1,758,563
1,225 MGM Mirage, Inc. ............................... 8.500 09/15/10 1,411,812
300 Station Casinos, Inc. .......................... 8.375 02/15/08 322,875
------------
3,493,250
------------
HEALTHCARE 6.1%
3,205 Aetna, Inc. .................................... 7.375 03/01/06 3,527,923
640 AmerisourceBergen Corp. ........................ 8.125 09/01/08 724,800
760 Cigna Corp. .................................... 6.375 10/15/11 823,560
6 See Notes to Financial Statements
YOUR FUND'S INVESTMENTS
December 31, 2003 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
HEALTHCARE (CONTINUED)
$1,275 HCA, Inc. ...................................... 6.910% 06/15/05 $ 1,343,510
800 HCA, Inc. ...................................... 6.300 10/01/12 826,194
285 HCA, Inc. ...................................... 7.190 11/15/15 306,305
1,835 Health Net, Inc. ............................... 8.375 04/15/11 2,207,984
205 Medco Health Solutions, Inc. ................... 7.250 08/15/13 224,036
275 Omnicare, Inc. ................................. 6.125 06/01/13 277,062
750 Tenet Healthcare Corp. ......................... 7.375 02/01/13 757,500
1,695 Tenet Healthcare Corp. ......................... 6.875 11/15/31 1,525,500
1,130 UnitedHealth Group, Inc. ....................... 5.200 01/17/07 1,210,041
------------
13,754,415
------------
HOME CONSTRUCTION 1.1%
750 Centex Corp. ................................... 7.500 01/15/12 866,518
605 D.R. Horton, Inc. .............................. 6.875 05/01/13 647,350
160 Pulte Homes, Inc. .............................. 7.875 08/01/11 188,857
735 Pulte Homes, Inc. .............................. 6.375 05/15/33 717,779
------------
2,420,504
------------
INDEPENDENT ENERGY 0.8%
285 Kerr-McGee Corp. ............................... 5.875 09/15/06 306,025
490 Kerr-McGee Corp. ............................... 6.875 09/15/11 545,966
825 Kerr-McGee Corp. ............................... 7.875 09/15/31 939,928
------------
1,791,919
------------
INTEGRATED ENERGY 3.4%
2,700 Amerada Hess Corp. ............................. 7.875 10/01/29 2,970,972
2,290 Conoco, Inc. ................................... 6.950 04/15/29 2,605,166
745 Constellation Energy Group...................... 7.600 04/01/32 874,716
1,015 Marathon Oil Corp. ............................. 6.800 03/15/32 1,090,559
------------
7,541,413
------------
LIFE INSURANCE 3.7%
2,195 Anthem Insurance Cos., Inc., 144A--Private
Placement (a)................................... 9.125 04/01/10 2,762,831
475 John Hancock Financial Services, Inc. .......... 5.625 12/01/08 513,651
105 Metlife, Inc. .................................. 6.125 12/01/11 114,693
585 Nationwide Financial Services, Inc. ............ 6.250 11/15/11 626,134
1,070 Prudential Holdings, LLC, 144A--Private
Placement (a)................................... 7.245 12/18/23 1,209,000
2,420 Prudential Holdings, LLC, 144A--Private
Placement (a)................................... 8.695 12/18/23 2,995,987
------------
8,222,296
------------
LODGING 2.5%
1,055 Hilton Hotels Corp. ............................ 7.625 12/01/12 1,190,831
1,325 Hyatt Equities LLC, 144A--Private Placement
(a)............................................. 6.875 06/15/07 1,424,538
610 Marriott International.......................... 8.125 04/01/05 654,347
375 Marriott International.......................... 7.000 01/15/08 418,154
See Notes to Financial Statements 7
YOUR FUND'S INVESTMENTS
December 31, 2003 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
LODGING (CONTINUED)
$ 400 Starwood Hotels & Resorts Worldwide, Inc. ...... 7.375% 05/01/07 $ 434,000
1,375 Starwood Hotels & Resorts Worldwide, Inc. ...... 7.875 05/01/12 1,553,750
------------
5,675,620
------------
MEDIA-CABLE 2.3%
2,000 Comcast Cable Communications, Inc. ............. 8.125 05/01/04 2,039,630
855 Comcast Cable Communications, Inc. ............. 8.375 05/01/07 992,146
90 Comcast Cable Communications, Inc. ............. 7.125 06/15/13 102,700
480 Comcast Corp. .................................. 5.300 01/15/14 479,512
795 Echostar DBS Corp. ............................. 9.375 02/01/09 835,744
765 Echostar DBS Corp., 144A--Private Placement
(a)............................................. 6.375 10/01/11 787,950
------------
5,237,682
------------
MEDIA-NONCABLE 2.9%
2,500 Clear Channel Communications, Inc. ............. 7.250 10/15/27 2,833,393
2,800 News America Holdings, Inc. .................... 8.875 04/26/23 3,598,759
------------
6,432,152
------------
NATURAL GAS PIPELINES 1.5%
960 Consolidated Natural Gas Co. ................... 6.250 11/01/11 1,062,117
285 Consolidated Natural Gas Co. ................... 5.000 03/01/14 283,815
548 Gulfterra Energy Partners LP.................... 8.500 06/01/10 624,720
670 Gulfterra Energy Partners LP, Ser B............. 6.250 06/01/10 700,150
675 Texas Eastern Transmission Corp. ............... 7.000 07/15/32 749,253
------------
3,420,055
------------
NONCAPTIVE-CONSUMER FINANCE 3.3%
2,000 American General Finance Corp. ................. 4.625 09/01/10 2,028,018
2,245 Countrywide Home Loans, Inc. ................... 3.250 05/21/08 2,210,272
1,000 Household Finance Corp. ........................ 7.875 03/01/07 1,143,587
150 Household Finance Corp. ........................ 8.000 07/15/10 179,872
1,555 Household Finance Corp. ........................ 6.750 05/15/11 1,753,105
------------
7,314,854
------------
NONCAPTIVE-DIVERSIFIED FINANCE 2.8%
415 General Electric Capital Corp. ................. 6.750 03/15/32 460,982
2,000 Heller Financial, Inc. ......................... 6.375 03/15/06 2,182,810
2,500 International Lease Finance Corp. .............. 8.375 12/15/04 2,661,668
935 Newcourt Credit Group, Inc., Ser B (Canada)..... 6.875 02/16/05 986,490
------------
6,291,950
------------
OIL FIELD SERVICES 0.2%
455 Key Energy Services, Inc. ...................... 6.375 05/01/13 464,100
------------
PACKAGING 0.7%
585 Packaging Corp. of America...................... 5.750 08/01/13 592,049
895 Sealed Air Corp., 144A--Private Placement (a)... 5.625 07/15/13 917,527
------------
1,509,576
------------
8 See Notes to Financial Statements
YOUR FUND'S INVESTMENTS
December 31, 2003 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
PAPER 2.5%
$ 905 International Paper Co. ........................ 4.250% 01/15/09 $ 909,730
995 MeadWestvaco Corp. ............................. 6.850 04/01/12 1,096,219
505 Owens-Brockway Glass Containers, Inc. .......... 7.750 05/15/11 544,769
405 Owens-Brockway Glass Containers, Inc. .......... 8.750 11/15/12 453,094
455 Weyerhaeuser Co. ............................... 6.000 08/01/06 487,504
1,980 Weyerhaeuser Co. ............................... 6.750 03/15/12 2,163,491
------------
5,654,807
------------
PHARMACEUTICALS 0.2%
550 Schering-Plough Corp. .......................... 5.300 12/01/13 560,885
------------
PROPERTY & CASUALTY 2.7%
1,545 Farmers Exchange Capital, 144A--Private
Placement (a)................................... 7.050 07/15/28 1,450,129
1,565 Farmers Insurance Exchange Surplus, 144A--
Private Placement (a)........................... 8.625 05/01/24 1,640,215
125 Hartford Financial Services Group............... 2.375 06/01/06 124,446
1,600 Mantis Reef Ltd., 144A--Private Placement
(Australia) (a)................................. 4.692 11/14/08 1,610,059
635 Nationwide Mutual Insurance Co., 144A--Private
Placement (a)................................... 7.500 02/15/24 653,082
440 Nationwide Mutual Insurance Co., 144A--Private
Placement (a)................................... 8.250 12/01/31 530,367
------------
6,008,298
------------
RAILROADS 4.0%
1,000 CSX Corp. ...................................... 6.750 03/15/11 1,127,365
7,000 Union Pacific Corp. ............................ 8.350 05/01/25 7,776,188
------------
8,903,553
------------
REAL ESTATE INVESTMENT TRUSTS 2.8%
2,040 EOP Operating LP................................ 7.500 04/19/29 2,289,904
100 Istar Financial, Inc. .......................... 7.000 03/15/08 108,500
795 Istar Financial, Inc. .......................... 8.750 08/15/08 922,200
245 Rouse Co. ...................................... 5.375 11/26/13 244,179
1,630 Simon Property Group LP......................... 6.375 11/15/07 1,799,124
835 Vornado Realty.................................. 5.625 06/15/07 892,182
------------
6,256,089
------------
REFINING 0.3%
430 Ashland, Inc. .................................. 7.830 08/15/05 459,957
250 Vintage Petroleum, Inc. ........................ 7.875 05/15/11 265,000
------------
724,957
------------
RETAIL 3.9%
1,440 CVS Corp. ...................................... 5.500 02/15/04 1,446,420
250 CVS Corp. ...................................... 5.625 03/15/06 267,490
270 CVS Corp. ...................................... 3.875 11/01/07 277,458
See Notes to Financial Statements 9
YOUR FUND'S INVESTMENTS
December 31, 2003 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
RETAIL (CONTINUED)
$1,500 Federated Department Stores, Inc. .............. 6.625% 09/01/08 $ 1,662,537
500 Federated Department Stores, Inc. .............. 6.300 04/01/09 549,158
490 Lowe's Cos., Inc. .............................. 6.875 02/15/28 554,087
700 Lowe's Cos., Inc. .............................. 6.500 03/15/29 759,791
1,275 May Department Stores Co. ...................... 5.950 11/01/08 1,384,656
700 May Department Stores Co. ...................... 6.700 09/15/28 725,614
90 May Department Stores Co. ...................... 7.875 03/01/30 107,958
895 Toys "R" Us, Inc. .............................. 7.375 10/15/18 896,367
------------
8,631,536
------------
SERVICES 1.4%
1,045 Cendant Corp. .................................. 7.375 01/15/13 1,200,308
855 Cendant Corp. .................................. 7.125 03/15/15 967,351
562 Iron Mountain, Inc. ............................ 7.750 01/15/15 591,505
295 Iron Mountain, Inc. ............................ 6.625 01/01/16 288,363
------------
3,047,527
------------
SUPERMARKETS 1.1%
770 Albertson's, Inc. .............................. 7.500 02/15/11 883,933
1,285 Kroger Co. ..................................... 7.500 04/01/31 1,485,316
------------
2,369,249
------------
TECHNOLOGY 1.2%
965 Arrow Electronics, Inc. ........................ 6.875 07/01/13 1,030,069
220 Arrow Electronics, Inc. ........................ 6.875 06/01/18 228,982
195 Avnet, Inc. .................................... 9.750 02/15/08 227,663
465 Electronic Data Systems Corp. .................. 7.125 10/15/09 497,095
780 Electronic Data Systems Corp., Ser B............ 6.000 08/01/13 768,107
------------
2,751,916
------------
TEXTILE 0.4%
810 Mohawk Industries, Inc. ........................ 7.200 04/15/12 921,526
------------
TOBACCO 0.7%
580 Altria Group, Inc. ............................. 7.000 11/04/13 619,848
890 Altria Group, Inc. ............................. 7.750 01/15/27 962,952
------------
1,582,800
------------
WIRELESS COMMUNICATIONS 0.8%
915 AT&T Wireless Services, Inc. ................... 7.875 03/01/11 1,060,565
620 AT&T Wireless Services, Inc. ................... 8.750 03/01/31 767,680
------------
1,828,245
------------
WIRELINE COMMUNICATIONS 3.4%
140 AT&T Corp. ..................................... 8.050 11/15/11 161,425
1,940 AT&T Corp. ..................................... 8.750 11/15/31 2,274,842
2,935 Verizon Communications, Inc. ................... 6.940 04/15/28 3,090,482
10 See Notes to Financial Statements
YOUR FUND'S INVESTMENTS
December 31, 2003 (Unaudited)
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
WIRELINE COMMUNICATIONS (CONTINUED)
$1,315 Verizon Global Funding Corp. ................... 7.750% 12/01/30 $ 1,550,476
590 Verizon New England, Inc. ...................... 6.500 09/15/11 651,309
------------
7,728,534
------------
TOTAL CORPORATE BONDS.............................................. 209,417,211
------------
CONVERTIBLE CORPORATE OBLIGATION 0.1%
TECHNOLOGY 0.1%
325 Solectron Corp. (Convertible into 3,831 common
shares) LYON.................................... * 11/20/20 186,062
------------
TOTAL LONG-TERM INVESTMENTS 93.5%
(Cost $195,010,401)........................................................ 209,603,273
------------
SHORT-TERM INVESTMENTS 5.1%
REPURCHASE AGREEMENT 4.7%
Bank of America Securities ($10,519,000 par collateralized by U.S. Government
obligations in a pooled cash account, dated 12/31/03, to be sold on
01/02/04 at $10,519,514)................................................... 10,519,000
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS 0.4%
United States Treasury Bill ($250,000 par, yielding 0.823%,
01/15/04 maturity) (b)..................................................... 249,920
United States Treasury Bill ($600,000 par, yielding 0.852%,
03/25/04 maturity) (b)..................................................... 598,809
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS..................................... 848,729
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $11,367,509)......................................................... 11,367,729
------------
TOTAL INVESTMENTS 98.6%
(Cost $206,377,910)........................................................ 220,971,002
OTHER ASSETS IN EXCESS OF LIABILITIES 1.4%.................................. 3,086,471
------------
NET ASSETS 100.0%........................................................... $224,057,473
============
* Zero coupon bond
See Notes to Financial Statements 11
YOUR FUND'S INVESTMENTS
December 31, 2003 (Unaudited)
(a) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(b) All or a portion of these securities have been physically segregated in
connection with open futures contracts.
LYON--Liquid Yield Option Note
12 See Notes to Financial Statements
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
December 31, 2003 (Unaudited)
ASSETS:
Total Investments (Cost $206,377,910)....................... $220,971,002
Cash........................................................ 70
Receivables:
Interest.................................................. 3,333,553
Investments Sold.......................................... 306,423
Other....................................................... 35,677
------------
Total Assets............................................ 224,646,725
------------
LIABILITIES:
Payables:
Income Distributions...................................... 203,670
Investment Advisory Fee................................... 91,873
Variation Margin on Futures............................... 51,750
Other Affiliates.......................................... 6,463
Trustees' Deferred Compensation and Retirement Plans........ 147,073
Accrued Expenses............................................ 88,423
------------
Total Liabilities....................................... 589,252
------------
NET ASSETS.................................................. $224,057,473
============
NET ASSET VALUE PER COMMON SHARE ($224,057,473 divided by
11,362,465 shares outstanding)............................ $ 19.72
============
NET ASSETS CONSIST OF:
Common Shares ($1.00 par value with 15,000,000 shares
authorized, 11,362,465 shares issued and outstanding)..... $ 11,362,465
Capital..................................................... 207,602,030
Net Unrealized Appreciation................................. 14,414,074
Accumulated Undistributed Net Investment Income............. (884,273)
Accumulated Net Realized Loss............................... (8,436,823)
------------
NET ASSETS.................................................. $224,057,473
============
See Notes to Financial Statements 13
Statement of Operations
For the Six Months Ended December 31, 2003 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $ 6,764,953
Other....................................................... 375
-----------
Total Income............................................ 6,765,328
-----------
EXPENSES:
Investment Advisory Fee..................................... 540,822
Shareholder Services........................................ 42,812
Trustees' Fees and Related Expenses......................... 32,568
Custody..................................................... 13,746
Legal....................................................... 7,486
Other....................................................... 88,092
-----------
Total Expenses.......................................... 725,526
Less Credits Earned on Cash Balances.................... 54
-----------
Net Expenses............................................ 725,472
-----------
NET INVESTMENT INCOME....................................... $ 6,039,856
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 2,150,948
Futures................................................... 2,858,545
-----------
Net Realized Gain........................................... 5,009,493
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 19,458,599
-----------
End of the Period:
Investments............................................. 14,593,092
Futures................................................. (179,018)
-----------
14,414,074
-----------
Net Unrealized Depreciation During the Period............... (5,044,525)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $ (35,032)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 6,004,824
===========
14 See Notes to Financial Statements
Statements of Changes in Net Assets
(Unaudited)
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 2003 JUNE 30, 2003
----------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 6,039,856 $ 12,525,760
Net Realized Gain/Loss.................................. 5,009,493 (6,299,069)
Net Unrealized Appreciation/Depreciation During the
Period................................................ (5,044,525) 18,842,963
------------ ------------
Change in Net Assets from Operations.................... 6,004,824 25,069,654
Distributions from Net Investment Income................ (6,647,998) (13,747,783)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (643,174) 11,321,871
NET ASSETS:
Beginning of the Period................................. 224,700,647 213,378,776
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of ($884,273) and ($276,131),
respectively)......................................... $224,057,473 $224,700,647
============ ============
See Notes to Financial Statements 15
Financial Highlights
(Unaudited)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX
MONTHS
ENDED
DECEMBER 31, ------------------
2003 2003 2002 (a)
----------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.................. $19.78 $18.78 $19.41
------ ------ ------
Net Investment Income................................... .53 1.10 1.26
Net Realized and Unrealized Gain/Loss................... -0- 1.11 (.56)
------ ------ ------
Total from Investment Operations.......................... .53 2.21 .70
Distributions from Net Investment Income.................. (.59) (1.21) (1.33)
------ ------ ------
NET ASSET VALUE, END OF THE PERIOD........................ $19.72 $19.78 $18.78
====== ====== ======
Common Share Market Price at End of the Period............ $17.99 $19.57 $18.50
Total Return (b).......................................... -5.06%* 12.67% 3.50%
Net Assets at End of the Period (In millions)............. $224.1 $224.7 $213.4
Ratio of Operating Expenses to Average Net Assets......... .65% .65% .65%
Ratio of Convertible Note Expenses to Average Net Assets
(c)..................................................... -- -- --
Ratio of Net Investment Income to Average Net Assets...... 5.40% 5.79% 6.39%
Portfolio Turnover........................................ 19%* 57% 107%
Assuming full dilution of debt: (c)
Net Asset Value, End of the Period...................... -- -- --
Number of Shares Outstanding, End of the Period (000)... -- -- --
* Non-Annualized
(a) As required, effective July 1, 2001, the Fund has adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on fixed income securities. The effect of this change for
the year ended June 30, 2002 was to decrease net investment income per share
by $.04, increase net realized and unrealized gains and losses per share by
$.04 and decrease the ratio of net investment income to average net assets
by .24%. Per share, ratios and supplemental data for periods prior to June
30, 2002 have not been restated to reflect this change in presentation.
(b) Total return based on common share market price assumes an investment at the
common share market price at the beginning of the period indicated,
reinvestment of all distributions for the period in accordance with the
Fund's dividend reinvestment plan, and sale of all shares at the closing
common share market price at the end of the period indicated.
(c) On January 3, 1995, the Fund paid off its outstanding convertible extendible
note.
16
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995 1994
--------------------------------------------------------------------------------
$18.70 $19.59 $ 21.16 $ 20.26 $19.97 $ 20.41 $ 19.07 $ 21.33
------ ------ ------- -------- ------ ------- ------- -------
1.40 1.43 1.41 1.48 1.56 1.54 1.52 1.56
.68 (.93) (1.56) .93 .27 (.44) 1.36 (2.28)
------ ------ ------- -------- ------ ------- ------- -------
2.08 .50 (.15) 2.41 1.83 1.10 2.88 (.72)
(1.37) (1.39) (1.42) (1.51) (1.54) (1.54) (1.54) (1.54)
------ ------ ------- -------- ------ ------- ------- -------
$19.41 $18.70 $ 19.59 $ 21.16 $20.26 $ 19.97 $ 20.41 $ 19.07
====== ====== ======= ======== ====== ======= ======= =======
$19.15 $16.75 $17.875 $19.6875 $19.25 $18.125 $19.125 $18.125
23.10% 1.88% -2.45% 10.08% 15.06% 2.61% 14.89% -5.59%
$220.5 $212.4 $ 222.6 $ 240.4 $230.2 $ 226.9 $ 231.9 $ 216.6
.68% .64% .66% .65% .68% .67% .68% .68%
-- -- -- -- -- -- .39% .82%
7.25% 7.48% 6.79% 7.04% 7.70% 7.47% 7.92% 7.29%
88% 71% 10% 27% 8% 11% 8% 2%
-- -- -- -- -- -- -- $ 19.07
-- -- -- -- -- -- -- 12,411
See Notes to Financial Statements 17
NOTES TO
FINANCIAL STATEMENTS
December 31, 2003 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Bond Fund (the "Fund") is registered as a diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek interest income while
conserving capital through investing in a diversified portfolio consisting
primarily of high-quality debt securities.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Fixed income investments are stated at value using market
quotations or indications of value obtained from an independent pricing service.
Investments in securities listed on a securities exchange are valued at their
sale price as of the close of such securities exchange. Listed securities and
unlisted securities for which the last sales price is not available are valued
at the mean of the bid and asked prices. For those securities where quotations
or prices are not available as noted above, valuations are determined in
accordance with procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
segregate assets with its custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
payment is made. At December 31, 2003, there were no when-issued or delayed
delivery purchase commitments.
The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management (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.
18
NOTES TO
FINANCIAL STATEMENTS
December 31, 2003 (Unaudited)
C. INVESTMENT INCOME Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Premiums are amortized and
discounts are accreted over the expected life of each applicable security.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At June 30, 2003, the Fund had an accumulated capital loss carryforward
for tax purposes of $11,597,056, which will expire between June 30, 2009 and
June 30, 2011.
At December 31, 2003, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $207,173,370
============
Gross tax unrealized appreciation........................... $ 14,441,301
Gross tax unrealized depreciation........................... (643,669)
------------
Net tax unrealized appreciation on investments.............. $ 13,797,632
============
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays quarterly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on futures transactions. All
short-term capital gains and a portion of futures gains are included in ordinary
income for tax purposes.
The tax character of distributions paid during the year ended June 30, 2003
was as follows:
2003
Distributions paid from:
Ordinary income........................................... $13,747,783
Long-term capital gain.................................... -0-
-----------
$13,747,783
===========
As of June 30, 2003, the component of distributable earnings on a tax basis
were as follows:
Undistributed ordinary income............................... $392,256
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses relating to wash sale
transactions.
19
NOTES TO
FINANCIAL STATEMENTS
December 31, 2003 (Unaudited)
F. EXPENSE REDUCTIONS During the six months ended December 31, 2003, the Fund's
custody fee was reduced by $54 as a result of credits earned on cash balances.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
AVERAGE DAILY NET ASSETS % PER ANNUM
First $150 million.......................................... .50%
Next $100 million........................................... .45%
Next $100 million........................................... .40%
Over $350 million........................................... .35%
For the six months ended December 31, 2003, the Fund recognized expenses of
approximately $7,500 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
Under an Accounting Services agreement, the Adviser provides accounting
services to the Fund. The Adviser allocates the cost of such services to each
fund. For the six months ended December 31, 2003, the Fund recognized expenses
of approximately $9,000 representing Van Kampen Investments Inc.'s or its
affiliates' (collectively "Van Kampen") cost of providing accounting services to
the Fund, which are reported as part of "Other" expenses on the Statement of
Operations.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Fund.
The maximum annual benefit per trustee under the plan is $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $40,309,177 and $44,344,692,
respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or to generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/ depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the recognition of
20
NOTES TO
FINANCIAL STATEMENTS
December 31, 2003 (Unaudited)
gain or loss is postponed until the disposal of the security underlying the
futures contract. Risks may arise as a result of the potential inability of the
counterparties to meet the terms of their contracts.
During the period, the Fund invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in exchange traded futures on U.S. Treasury Bonds and Notes
and typically closes the contract prior to delivery date. Upon entering into
futures contracts, the Fund maintains an amount of cash or liquid securities
with a value equal to a percentage of the contract amount with either a futures
commission merchant pursuant to rules and regulations promulgated under the 1940
Act, as amended, or with its custodian in an account in the broker's name. This
amount is known as initial margin. During the period the futures contract is
open, payments are received from or made to the broker based upon changes in the
value of the contract (the variation margin). The risk of loss associated with a
futures contract is in excess of the variation margin reflected on the Statement
of Assets and Liabilities.
Transactions in futures contracts for the six months ended December 31,
2003, were as follows:
CONTRACTS
Outstanding at June 30, 2003................................ 556
Futures Opened.............................................. 1,042
Futures Closed.............................................. (1,215)
------
Outstanding at December 31, 2003............................ 383
======
The futures contracts outstanding as of December 31, 2003 and the
descriptions and unrealized appreciation/depreciation are as follows:
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
LONG CONTRACTS:
2-Year U.S. Treasury Note Future, March 2004--
(Current Notional Value of $214,047 per contract)......... 1 $ 966
SHORT CONTRACTS:
U.S. Treasury Bond Future, March 2004--
(Current Notional Value of $109,313 per contract)......... 161 (27,260)
5-Year U.S. Treasury Note Future, March 2004--
(Current Notional Value of $111,625 per contract)......... 92 (76,815)
10-Year U.S. Treasury Note Future, March 2004--
(Current Notional Value of $112,266 per contract)......... 129 (75,909)
--- ----------
383 $ (179,018)
=== ==========
21
DIVIDEND REINVESTMENT PLAN
The Fund pays distributions in cash, but if you own more than 100 shares in
your own name, you may elect to participate in the Fund's dividend reinvestment
plan (the "Plan"). Under the Plan, shares will be issued by the Fund at net
asset value on a date determined by the Board of Trustees between the record and
payable dates on each distribution; however, if the market price including
brokerage commissions, is less than the net asset value, the amount of the
distribution will be paid to the Plan Agent, which will buy such shares as are
available at prices below the net asset value. (If the market price is not
significantly less than the net asset value, it is possible that open market
purchases of shares may increase the market price so that such price plus
brokerage commissions would equal or exceed the net asset value of such shares.)
If the Plan Agent cannot buy the necessary shares at less than net asset value
before the distribution date, the balance of the distribution will be made in
authorized but unissued shares of the Fund at net asset value. The cost per
share will be the average cost, including brokerage commissions, of all shares
purchased. Since all shares purchased from the Fund are at net asset value,
there will be no dilution, and no brokerage commissions are charged on such
shares.
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gain distributions does not relieve you of any income tax
which may be payable (or required to be withheld) on dividends or distributions.
You may begin or discontinue participation in the Plan at any time by
written notice to the address below. If you withdraw from the Plan, you may
rejoin at any time if you own the required 100 shares. Elections and
terminations will be effective for distributions declared after receipt. If you
withdraw from the Plan, a certificate for the whole shares and a check for the
fractional shares, if any, credited to your Plan account will be sent as soon as
practicable after receipt of your election to withdraw. Except for brokerage
commissions, if any, which are borne by Plan participants, all costs of the Plan
are borne by the Fund. The Fund reserves the right to amend or terminate the
Plan on 30 days' written notice prior to the record date of the distribution for
which such amendment or termination is effective.
Record stockholders should address all notices, correspondence, questions or
other communications about the Plan to:
State Street Bank and Trust Company
c/o EquiServe LLP
P.O. Box 8200
Boston, MA 02266-8200
1-800-821-1238
If your shares are not held directly in your name, you should contact your
brokerage firm, bank or other nominee for more information and to see if your
nominee will participate in the Plan on your behalf. If you participate through
your broker and choose to move your account to another broker, you will need to
re-enroll in the Plan through your new broker.
22
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
VAN KAMPEN BOND FUND
BOARD OF TRUSTEES
DAVID C. ARCH
J. MILES BRANAGAN
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1220 Avenue of the Americas
New York, New York 10020
CUSTODIAN AND SHAREHOLDER SERVICING AGENT
STATE STREET BANK AND TRUST COMPANY
c/o EquiServe LLP
P.O. Box 43011
Providence, Rhode Island 02940-3011
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
Inquiries about an investor's account should be referred to the Fund's
transfer agent
State Street Bank and Trust Company
c/o EQUISERVE LLP
P.O. Box 43011
Providence, Rhode Island 02940-3011
Telephone: (800) 821-1238
Alaska and Hawaii
Call Collect: (781) 575-2000
Ask for Closed-End Fund Account Services
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
23
Van Kampen
Privacy Notice
The Van Kampen companies and investment products* respect your right to privacy.
We also know that you expect us to conduct and process your business in an
accurate and efficient manner. To do so, we must collect and maintain certain
nonpublic personal information about you. This is information we collect from
you on applications or other forms, and from the transactions you conduct with
us, our affiliates, or third parties. We may also collect information you
provide when using our Web site, and text files (also known as "cookies") may be
placed on your computer to help us to recognize you and to facilitate
transactions you initiate. We do not disclose any nonpublic personal information
about you or any of our former customers to anyone, except as permitted by law.
For instance, so that we may continue to offer you Van Kampen investment
products and services that meet your investing needs, and to effect transactions
that you request or authorize, we may disclose the information we collect to
companies that perform services on our behalf, such as printers and mailers that
assist us in the distribution of investor materials. These companies will use
this information only for the services for which we hired them, and are not
permitted to use or share this information for any other purpose. To protect
your nonpublic personal information internally, we permit access to it only by
authorized employees, and maintain physical, electronic and procedural
safeguards to guard your nonpublic personal information.
* Includes Van Kampen Investments Inc., Van Kampen Asset Management, Van
Kampen Advisors Inc., Van Kampen Funds Inc., Van Kampen Investor Services
Inc., Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the
many Van Kampen mutual funds and Van Kampen unit investment trusts.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
(VAN KAMPEN INVESTMENTS LOGO)
Copyright (C)2004 Van Kampen
Funds Inc. All rights reserved.
Member NASD/SIPC.
VBF SAR 2/04 13661B04-AS-2/04
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved.]
Item 9. Controls and Procedures
(a)The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b)There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a) Code of Ethics - Not applicable for semi-annual reports.
(b)(1) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(b)(2) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Bond Fund
--------------------------------
By: /s/ Ronald E. Robison
------------------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: February 18, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
------------------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: February 18, 2004
By: /s/ John L. Sullivan
------------------------------------------
Name: John L. Sullivan
Title: Principal Financial Officer
Date: February 18, 2004