N-CSR 1 c18679nvcsr.txt CERTIFIED SHAREHOLDER REPORT 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 811-02423 Van Kampen Corporate Bond Fund (Exact name of registrant as specified in charter) 522 Fifth Avenue, New York, New York 10036 (Address of principal executive offices) (Zip code) Ronald Robison 522 Fifth Avenue, New York, New York 10036 (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: 8/31 Date of reporting period: 8/31/07 Item 1. Report to Shareholders. The Fund's 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 Corporate Bond Fund performed during the annual 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 August 31, 2007. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B, AND C SHARE OR CLASS I SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. TO OBTAIN AN ADDITIONAL PROSPECTUS, CONTACT YOUR FINANCIAL ADVISOR OR DOWNLOAD ONE AT VANKAMPEN.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. 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 as of 8/31/07 PERFORMANCE OF A $10,000 INVESTMENT This chart compares your Fund's performance to that of the Lehman Brothers Corporate Bond Index and the Lipper Corporate BBB-Rated Index from 8/31/97 through 8/31/07. Class A shares, adjusted for sales charges. (LINE GRAPH)
VAN KAMPEN CORPORATE LEHMAN BROTHERS CORPORATE LIPPER CORPORATE BBB- BOND FUND BOND INDEX RATED INDEX -------------------- ------------------------- --------------------- 8/97 9522.00 10000.00 10000.00 9686.00 10174.90 10175.90 9797.00 10303.90 10279.30 9853.00 10362.10 10329.50 9923.00 10471.80 10440.30 10064.00 10596.10 10573.60 10050.00 10592.70 10569.70 10108.00 10631.80 10623.40 10151.00 10698.90 10668.90 10266.00 10825.90 10760.10 10336.00 10906.00 10839.00 10334.00 10895.70 10830.60 8/98 10273.00 10946.70 10751.90 10446.00 11301.40 10973.60 10415.00 11127.00 10838.20 10634.00 11336.60 11038.60 10643.00 11369.70 11066.00 10697.00 11482.00 11162.30 10391.00 11209.50 10920.80 10490.00 11288.80 11042.50 10530.00 11321.80 11121.70 10326.00 11170.40 10971.70 10243.00 11112.20 10914.00 10206.00 11050.70 10859.00 8/99 10169.00 11023.80 10818.80 10269.00 11143.50 10911.80 10308.00 11194.70 10933.20 10330.00 11206.70 10959.70 10290.00 11147.40 10942.00 10265.00 11108.10 10909.90 10337.00 11211.00 11044.10 10408.00 11306.60 11145.80 10238.00 11207.30 11010.60 10147.00 11165.50 10926.90 10432.00 11445.90 11203.30 10555.00 11584.70 11251.30 8/00 10678.00 11729.80 11456.60 10752.00 11794.00 11489.20 10743.00 11796.90 11452.10 10851.00 11936.90 11558.20 11096.00 12159.50 11800.30 11309.00 12507.50 12085.70 11404.00 12613.20 12205.10 11465.00 12690.60 12197.50 11423.00 12649.10 12130.60 11502.00 12761.30 12240.00 11564.00 12825.30 12254.30 11854.00 13172.80 12532.30 8/01 11970.00 13343.90 12682.50 11960.00 13299.10 12574.10 12146.00 13626.40 12840.80 12172.00 13511.30 12757.70 12141.00 13413.50 12679.70 12164.00 13527.30 12749.10 12187.00 13616.60 12810.00 11954.00 13363.70 12642.10 11996.00 13532.20 12835.50 12130.00 13722.50 12937.00 12005.00 13723.80 12876.20 11880.00 13673.90 12811.70 8/02 12035.00 14036.60 13070.70 12171.00 14304.30 13188.40 12006.00 14112.30 13094.30 12259.00 14333.00 13283.00 12551.00 14770.50 13592.20 12614.00 14832.80 13682.20 12831.00 15137.50 13912.50 12817.00 15144.00 13936.30 13154.00 15446.20 14217.60 13453.00 15946.80 14589.90 13416.00 15910.40 14608.90 13023.00 15219.30 14111.00 8/03 13141.00 15345.80 14222.40 13540.00 15895.30 14660.40 13499.00 15728.20 14602.40 13598.00 15808.00 14702.70 13779.00 15988.00 14917.00 13880.00 16155.60 15052.80 13981.00 16356.80 15185.70 14083.00 16511.30 15290.10 13773.00 15992.20 14900.50 13648.00 15876.40 14787.20 13705.00 15946.50 14874.50 13845.00 16144.90 15029.90 8/04 14134.00 16528.80 15335.30 14233.00 16630.60 15430.30 14376.00 16792.90 15582.80 14265.00 16622.10 15531.10 14472.00 16849.50 15708.00 14574.00 16983.70 15791.30 14547.00 16882.50 15765.80 14326.00 16658.80 15588.60 14468.00 16874.90 15715.80 14654.00 17106.80 15879.50 14840.00 17247.00 16013.80 14764.00 17076.80 15939.60 8/05 14952.00 17338.20 16137.60 14744.00 17058.30 15976.60 14601.00 16861.30 15838.30 14680.00 16960.40 15903.30 14826.00 17131.90 16059.30 14816.00 17095.90 16118.00 14873.00 17173.10 16192.10 14705.00 16931.00 16015.00 14650.00 16871.80 16004.60 14639.00 16843.30 15965.90 14675.00 16864.50 15968.10 14871.00 17111.00 16189.10 8/06 15091.00 17429.80 16484.60 15242.00 17629.40 16647.30 15348.00 17772.00 16792.30 15524.00 18032.60 17025.20 15398.00 17868.50 16906.80 15413.00 17869.90 16930.60 15687.00 18237.90 17257.40 15631.00 18133.30 17194.80 15717.00 18266.30 17349.40 15565.00 18083.80 17240.70 15460.00 17995.30 17134.30 15524.00 18036.90 17111.60 8/07 15684.00 18182.90 17307.20
A SHARES B SHARES C SHARES I SHARES since 9/23/71 since 9/28/92 since 8/30/93 since 8/12/05 --------------------------------------------------------------------------------------------------- W/MAX W/MAX W/MAX 4.75% 4.00% 1.00% AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES W/O SALES TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES Since Inception 7.56% 7.42% 5.36% 5.36% 4.74% 4.74% 3.23% 10-year 5.12 4.60 4.49 4.49 4.33 4.33 -- 5-year 5.44 4.41 4.62 4.37 4.66 4.66 -- 1-year 3.93 -1.07 3.00 -0.95 3.20 2.21 4.19 --------------------------------------------------------------------------------------------------- 30-Day SEC Yield 4.72% 4.21% 4.21% 5.20%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. The returns shown in this report do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance of share classes will vary due to differences in sales charges and expenses. Average annual total return with sales charges includes payment of the maximum sales charge of 4.75 percent for Class A shares, a contingent deferred sales charge of 4.00 percent for Class B shares (in year one and declining to zero after year five), a contingent deferred sales charge of 1.00 percent for Class C shares in year one, and combined Rule 12b-1 fees and service fees of up to 0.25 percent for Class A shares and up to 1.00 percent for Class B and C shares. The since inception and 10-year returns for Class B shares reflect the conversion of Class B shares into Class A shares eight years after purchase. The since inception returns for Class C shares reflect the conversion of Class C shares into Class A shares ten years after purchase. Class I shares are available for purchase exclusively by investors through (i) tax-exempt retirement plans with assets of at least $1 million (including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase plans, defined benefit plans and nonqualified deferred compensation plans), (ii) fee-based investment programs with assets of at least $1 million, (iii) institutional clients with assets of at least $1 million and (iv) certain Van Kampen investment companies. Class I shares are offered without any sales charges on purchases or sales and do not include combined Rule 12b-1 fees and service fees. Figures shown above assume reinvestment of all 1 dividends and capital gains. SEC yield is a calculation for determining the amount of portfolio income, excluding non-income items as prescribed by the SEC. Yields are subject to change. The Lehman Brothers Corporate Bond Index is a market-weighted index of investment-grade corporate fixed-rate debt issues with maturities of one year or more. Lipper Corporate BBB Rated Index is an index of funds with similar investment objectives as this fund. Indexes are unmanaged and do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. 2 Fund Report FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2007 MARKET CONDITIONS Fears stemming from the residential housing downturn and subprime mortgage market troubles accelerated over the course of the one-year period. With them came growing concerns about the impact on financial markets, the financial system, and the broader economy as a re-pricing of risk across all credit markets put a considerable strain on liquidity. Although the Federal Open Market Committee (the "Fed") held "official interest rates", or the target federal funds rate, steady throughout the fiscal year, it did respond in other ways to the problems in the latter months of the period. The Fed issued a statement modifying its outlook to make it clear that economic growth risks were becoming skewed to the downside. In August 2007, following requests from a handful of district banks, it lowered the discount rate (the rate charged to banks to borrow directly from a central bank) by half a percent, from 6.25 percent to 5.75 percent, in an effort to encourage member banks to make greater use of the discount window and to inject cash into the system. This turn of events was the highlight of an eventful summer, one which brought with it a series of negative headlines and a strong dose of unfavorable news concerning the broader implications of the housing market downturn, especially with regard to its effect on mortgage securities and mortgage lenders. However, as we have seen before and will probably see again, markets tend to overreact and move excessively in one direction before correcting themselves. Clearly, the economic outlook has dimmed. Still, the Fed is on the case, and financial markets have exhibited a bit less volatility and rationality entering September. No one can say if the worst is over, but what we do know is that some areas of the bond market are already reflecting a set of extreme outcomes. Throughout the 12-month period, U.S. Treasury yields fluctuated but overall, shorter-dated Treasury yields experienced the greatest decline, while longer dated yields were little changed. As a result, the shape of the yield curve went from relatively flat to fairly steep. At the end of the reporting period, market expectations were for a reduction in the federal funds rate, which could push short-term rates even lower in the coming months. In the corporate bond market, spreads widened causing the sector to underperform other areas of the fixed income market for the overall period. Within the investment-grade corporate sector, lower-rated (BBB) and higher-rated (AAA) issues outpaced middle investment-grade issues. Utilities posted the highest returns, while financials, hit hardest by the recent liquidity crisis, posted the lowest returns. Within the below investment-grade sector, B-rated issues outperformed the other, lower-rated high yield segments. The mortgage market suffered from the turmoil surrounding residential housing, and especially by its spillover effects on secondary market activity, 3 most notably in the non-agency mortgage area. Much of the growth in mortgage issuance over the past few years has been in the non-agency sector. This was driven by the development of a new array of loan types with payment and interest-rate features appealing to a broader set of borrowers than those available in the traditional agency space. While this helped fuel both the housing boom and a vibrant secondary market for these non-agency mortgages, the subprime meltdown cast a pall across the entire non-agency sector, with little regard for whether or not the securities or loans in question were subprime or prime. The result was a further reduction in mortgage market liquidity, as well as a sharp diminishment in the availability of non-conforming mortgage loans to the general public. For market participants, it became a challenge to price some of these non-agency bonds, let alone trade them, and a process of price discovery unfolded throughout August. While most agency mortgage-backed issues outperformed equal-risk Treasuries, non-agency mortgage issues fared poorly in recent months. PERFORMANCE ANALYSIS All share classes of Van Kampen Corporate Bond Fund underperformed the Lehman Brothers Corporate Bond Index and the Lipper Corporate BBB-Rated Index for the 12 months ended August 31, 2007, assuming no deduction of applicable sales charges. TOTAL RETURNS FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2007
------------------------------------------------------------------------------------------- LEHMAN BROTHERS LIPPER CORPORATE CLASS A CLASS B CLASS C CLASS I CORPORATE BOND INDEX BBB-RATED INDEX 3.93% 3.00% 3.20% 4.19% 4.32% 4.99% -------------------------------------------------------------------------------------------
The performance for the four share classes varies because each has different expenses. The Fund's total return figures assume the reinvestment of all distributions, but do not reflect the deduction of any applicable sales charges. Such costs would lower performance. Past performance is no guarantee of future results. See Performance Summary for standardized performance information and index definitions. The primary contributor to the Fund's underperformance relative to the benchmark Lehman Brothers Corporate Bond Index was its mortgage position. The Fund holds a small allocation to the mortgage sector in the form of short-dated high coupon mortgage-backed securities. Despite the good performance of these issues initially, the recent turmoil in the mortgage market and the drying up of liquidity hurt price performance later in the period and the Fund's position detracted from overall returns. During the period, we kept the Fund's overall duration (a measure of interest-rate sensitivity) below that of the benchmark index, underweighting long-dated forward rates while overweighting the intermediate area of the curve. Although this position detracted from performance during periods of yield declines, the position benefited performance as yields rose and the yield curve 4 steepened. As of the end of the period, much of this defensive position has been removed. We have held an underweight corporate position in the Fund's portfolio for some time now, and this position detracted from relative performance in the first half of the period. However, as credit spreads widened in the latter months, the underweight to the sector was beneficial to performance. While we are looking for areas to take advantage of this spread widening and add to corporate positions, we are taking a cautious approach because we believe the credit market remains vulnerable to potential credit downgrades and/or an economic downturn. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. 5
RATINGS ALLOCATIONS AS OF 8/31/07 AAA/Aaa 20.3% AA/Aa 11.9 A/A 25.6 BBB/Baa 38.2 BB/Ba 2.4 B/B 1.6 SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 8/31/07 Banking 15.7% Electric 9.2 Collateralized Mortgage Obligations 8.1 United States Treasury Obligations 7.5 Wireline Communications 6.6 Food/Beverage 4.0 Noncaptive-Diversified Finance 4.0 Noncaptive-Consumer Finance 3.5 Property & Casualty Insurance 3.3 Retail 3.1 Brokerage 3.0 Life Insurance 2.8 Railroads 2.5 Natural Gas Pipelines 2.2 Automotive 2.1 Diversified Manufacturing 2.1 Health Care 1.7 Media-Cable 1.7 Integrated Energy 1.7 Consumer Products 1.6 Construction Machinery 1.6 Entertainment 1.2 Supermarkets 1.0 REITs 0.8 Pharmaceuticals 0.8 Environmental & Facilities Services 0.8 Media-Noncable 0.7 Independent Energy 0.7 Refining 0.6 Transportation Services 0.6 Other Utilities 0.6 Technology 0.6 Foreign Government Obligations 0.6 Aerospace & Defense 0.4 Chemicals 0.3
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6
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 8/31/07 (continued from previous page) Airlines 0.2 Tobacco 0.2 Natural Gas Distributors 0.2 ----- Total Long-Term Investments 98.3 Total Short-Term Investments 2.5 ----- Total Investments 100.8 Foreign Currency 0.0* Liabilities in Excess of Other Assets (0.8) ----- Net Assets 100.0%
* Amount is less than 0.1% Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned or securities in the industries shown above. Ratings allocations are as a percentage of long-term investments. Industry allocations are as a percentage of net assets. 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. Ratings allocations based upon ratings as issued by Standard and Poor's and Moody's, respectively. 7 FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS Each Van Kampen fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Van Kampen also delivers the semiannual and annual reports to fund shareholders, and makes these reports available on its public Web site, www.vankampen.com. In addition to the semiannual and annual reports that Van Kampen delivers to shareholders and makes available through the Van Kampen public Web site, each fund files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on Form N-Q. Van Kampen does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Van Kampen public Web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's Web site, http://www.sec.gov. You may also review and copy them at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102. You may obtain copies of a fund's fiscal quarter filings by contacting Van Kampen Client Relations at (800) 847-2424. 8 HOUSEHOLDING NOTICE To reduce Fund expenses, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents to investors who share an address, even if the accounts are registered under different names. The Fund's prospectuses and shareholder reports (including annual privacy notices) will be delivered to you in this manner indefinitely unless you instruct us otherwise. You can request multiple copies of these documents by either calling (800) 341-2911 or writing to Van Kampen Investor Services at 1 Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor Services has received your instructions, we will begin sending individual copies for each account within 30 days. PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD You may obtain a copy of the Fund's Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 847-2424 or by visiting our Web site at www.vankampen.com. It is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov. You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting our Web site at www.vankampen.com. This information is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov. 9 Expense Example As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments of Class A Shares and contingent deferred sales charges on redemptions of Class B and Class C Shares; and redemption fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 3/1/07 - 8/31/07. ACTUAL EXPENSE The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or contingent deferred sales charges or redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your cost would have been higher.
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* ------------------------------------------------ 3/1/07 8/31/07 3/1/07-8/31/07 Class A Actual...................................... $1,000.00 $ 999.80 $4.49 Hypothetical................................ 1,000.00 1,020.72 4.53 (5% annual return before expenses) Class B Actual...................................... 1,000.00 996.02 8.30 Hypothetical................................ 1,000.00 1,016.89 8.39 (5% annual return before expenses) Class C Actual...................................... 1,000.00 995.97 8.60 Hypothetical................................ 1,000.00 1,016.59 8.69 (5% annual return before expenses) Class I Actual...................................... 1,000.00 1,002.61 3.28 Hypothetical................................ 1,000.00 1,021.93 3.31 (5% annual return before expenses)
* Expenses are equal to the Fund's annualized expense ratio of 0.89%, 1.65%, 1.71%, and 0.65%, for Class A, B, C, and I Shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Assumes all dividends and distributions were reinvested. 10 Investment Advisory Agreement Approval Both the Investment Company Act of 1940 and the terms of the Fund's investment advisory agreement require that the investment advisory agreement between the Fund and its investment adviser be approved annually both by a majority of the Board of Trustees and by a majority of the independent trustees voting separately. At meetings held on April 17, 2007 and May 30, 2007, the Board of Trustees, and the independent trustees voting separately, considered and ultimately determined that the terms of the investment advisory agreement are fair and reasonable and approved the continuance of the investment advisory agreement as being in the best interests of the Fund and its shareholders. In making its determination, the Board of Trustees considered materials that were specifically prepared by the investment adviser at the request of the Board and Fund counsel, and by an independent provider of investment company data contracted to assist the Board, relating to the investment advisory agreement review process. The Board also considered information received periodically about the portfolio, performance, the investment strategy, portfolio management team and fees and expenses of the Fund. The Board of Trustees considered the investment advisory agreement over a period of several months and the trustees held sessions both with the investment adviser and separate from the investment adviser in reviewing and considering the investment advisory agreement. In approving the investment advisory agreement, the Board of Trustees considered, among other things, the nature, extent and quality of the services provided by the investment adviser, the performance, fees and expenses of the Fund compared to other similar funds and other products, the investment adviser's expenses in providing the services and the profitability of the investment adviser and its affiliated companies. The Board of Trustees considered the extent to which any economies of scale experienced by the investment adviser are shared with the Fund's shareholders, and the propriety of existing and alternative breakpoints in the Fund's investment advisory fee schedule. The Board of Trustees considered comparative advisory fees of the Fund and other investment companies and/or other products at different asset levels, and considered the trends in the industry versus historical and projected assets of the Fund. The Board of Trustees evaluated other benefits the investment adviser and its affiliates derive from their relationship with the Fund. The Board of Trustees reviewed information about the foregoing factors and considered changes, if any, in such information since its previous approval. The Board of Trustees discussed the financial strength of the investment adviser and its affiliated companies and the capability of the personnel of the investment adviser, and specifically the strength and background of its portfolio management personnel. The Board of Trustees reviewed the statutory and regulatory requirements for approval and disclosure of investment advisory agreements. The Board of Trustees, including the independent trustees, 11 evaluated all of the foregoing and does not believe any single factor or group of factors control or dominate the review process, and, after considering all factors together, has determined, in the exercise of its business judgment, that approval of the investment advisory agreement is in the best interests of the Fund and its shareholders. The following summary provides more detail on certain matters considered but does not detail all matters considered. Nature, Extent and Quality of the Services Provided. On a regular basis, the Board of Trustees considers the roles and responsibilities of the investment adviser as a whole and for those specific portfolio management, support and trading functions servicing the Fund. The trustees discuss with the investment adviser the resources available and used in managing the Fund and changes made in the Fund's investment policies over time. The Fund discloses information about its portfolio management team members and their experience in its prospectus. The trustees also discuss certain other services which are provided on a cost-reimbursement basis by the investment adviser or its affiliates to the Van Kampen funds including certain accounting, administrative and legal services. The Board has determined that the nature, extent and quality of the services provided by the investment adviser support its decision to approve the investment advisory agreement. Performance, Fees and Expenses of the Fund. On a regular basis, the Board of Trustees reviews the performance, fees and expenses of the Fund compared to its peers and to appropriate benchmarks. In addition, the Board spends more focused time on the performance of the Fund and other funds in the Van Kampen complex, paying specific attention to underperforming funds. The trustees discuss with the investment adviser the performance goals and the actual results achieved in managing the Fund. When considering a fund's performance, the trustees and the investment adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance with special attention to three-year performance) and, when a fund's weighted performance is under the fund's benchmark, they discuss the causes and where necessary seek to make specific changes to investment strategy or investment personnel. The Fund discloses more information about its performance elsewhere in this report and in the Fund's prospectus. The trustees discuss with the investment adviser the level of advisory fees for this Fund relative to comparable funds and other products advised by the adviser and others in the marketplace. The trustees review not only the advisory fees but other fees and expenses (whether paid to the adviser, its affiliates or others) and the Fund's overall expense ratio. The Fund discloses more information about its fees and expenses in its prospectus. The Board has determined that the performance, fees and expenses of the Fund support its decision to approve the investment advisory agreement. Investment Adviser's Expenses in Providing the Service and Profitability. At least annually, the trustees review the investment adviser's expenses in providing services to the Fund and other funds advised by the investment adviser and the 12 profitability of the investment adviser. These profitability reports are put together by the investment adviser with the oversight of the Board. The trustees discuss with the investment adviser its revenues and expenses, including among other things, revenues for advisory services, portfolio management-related expenses, revenue sharing arrangement costs and allocated expenses both on an aggregate basis and per fund. The Board has determined that the analysis of the investment adviser's expenses and profitability support its decision to approve the investment advisory agreement. Economies of Scale. On a regular basis, the Board of Trustees considers the size and growth prospects of the Fund and how that relates to the Fund's expense ratio and particularly the Fund's advisory fee rate. In conjunction with its review of the investment adviser's profitability, the trustees discuss with the investment adviser how more (or less) assets can affect the efficiency or effectiveness of managing the Fund's portfolio and whether the advisory fee level is appropriate relative to current and projected asset levels and/or whether the advisory fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and potential economies of scale of the Fund support its decision to approve the investment advisory agreement. Other Benefits of the Relationship. On a regular basis, the Board of Trustees considers other benefits to the investment adviser and its affiliates derived from its relationship with the Fund and other funds advised by the investment adviser. These benefits include, among other things, fees for transfer agency services provided to the funds, in certain cases research received by the adviser generated from commission dollars spent on funds' portfolio trading, and in certain cases distribution or service related fees related to funds' sales. The trustees review with the investment adviser each of these arrangements and the reasonableness of its costs relative to the services performed. The Board has determined that the other benefits received by the investment adviser or its affiliates support its decision to approve the investment advisory agreement. 13 VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ----------------------------------------------------------------------------------------- CORPORATE BONDS 81.8% AEROSPACE & DEFENSE 0.4% $ 2,090 DAE Aviation Holdings (a)................. 11.250% 08/01/15 $ 2,090,000 1,238 Raytheon Co. ............................. 4.500 11/15/07 1,234,938 ------------ 3,324,938 ------------ AIRLINES 0.2% 1,758 America West Airlines, Inc., Class G...... 7.100 04/02/21 1,856,185 ------------ AUTOMOTIVE 2.1% 2,155 ArvinMeritor, Inc. ....................... 8.750 03/01/12 2,144,225 3,365 DaimlerChrysler NA Holding Corp. ......... 8.500 01/18/31 4,174,777 245 Ford Motor Credit Co. .................... 7.000 10/01/13 218,448 6,005 Ford Motor Credit Co. .................... 7.250 10/25/11 5,478,932 6,315 General Motors Acceptance Corp. .......... 6.875 09/15/11 5,636,858 ------------ 17,653,240 ------------ BANKING 15.7% 5,120 Bank of America Corp. .................... 3.375 02/17/09 5,017,600 3,400 Bank of America Corp. .................... 4.875 09/15/12 3,345,590 6,000 Bank of Scotland (United Kingdom) (a)..... 3.500 11/30/07 5,991,792 25,710 Bank of Scotland (United Kingdom) (a)..... 5.250 02/21/17 25,971,214 8,347 Citigroup, Inc. .......................... 5.250 02/27/12 8,317,894 5,355 JPMorgan Chase & Co. ..................... 6.750 02/01/11 5,589,549 6,010 Marshall & Ilsley Bank.................... 3.800 02/08/08 5,960,057 4,475 MBNA Corp. (b)............................ 5.790 05/05/08 4,487,978 6,160 National City Bank........................ 3.375 10/15/07 6,142,364 1,580 National City Bank........................ 4.150 08/01/09 1,555,270 6,702 PNC Funding Corp. ........................ 6.125 02/15/09 6,774,589 5,200 Popular North America, Inc. .............. 4.250 04/01/08 5,150,600 2,820 Popular North America, Inc. .............. 5.650 04/15/09 2,835,050 9,650 Sovereign Bancorp, Inc. (b)............... 5.590 03/23/10 9,652,837 9,580 Unicredito Luxembourg Finance SA (Luxembourg) (a) (b)...................... 5.410 10/24/08 9,582,960 4,100 USB Capital IX............................ 6.189 04/15/42 4,120,262 10,935 Wachovia Capital Trust III................ 5.800 03/15/42 10,916,214 3,100 Wachovia Corp. ........................... 3.625 02/17/09 3,038,911 1,690 Washington Mutual Bank FA................. 5.500 01/15/13 1,633,160 4,797 Washington Mutual, Inc. .................. 8.250 04/01/10 5,011,340 ------------ 131,095,231 ------------ BROKERAGE 2.7% 3,530 Bear Stearns Co., Inc. ................... 5.550 01/22/17 3,255,776 8,290 Goldman Sachs Capital II.................. 5.793 12/29/49 7,614,614 4,800 Lehman Brothers Holdings, Inc. ........... 6.875 07/17/37 4,523,107 6,925 Merrill Lynch & Co., Inc. ................ 5.700 05/02/17 6,679,633 ------------ 22,073,130 ------------ CHEMICALS 0.3% 2,890 Ici Wilmington, Inc. ..................... 4.375 12/01/08 2,849,182 ------------
14 See Notes to Financial Statements VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ----------------------------------------------------------------------------------------- CONSTRUCTION MACHINERY 1.6% $ 5,460 Caterpillar Financial Services Corp....... 3.625% 11/15/07 $ 5,437,390 7,615 John Deere Capital Corp. (b).............. 5.410 04/15/08 7,618,099 ------------ 13,055,489 ------------ CONSUMER PRODUCTS 1.6% 6,120 Clorox Co. (b)............................ 5.485 12/14/07 6,122,289 7,250 Whirlpool Corp. .......................... 9.100 02/01/08 7,338,218 ------------ 13,460,507 ------------ DIVERSIFIED MANUFACTURING 2.1% 3,935 Brascan Corp. (Canada).................... 7.125 06/15/12 4,219,650 1,220 Brascan Corp. (Canada).................... 8.125 12/15/08 1,266,748 3,775 Brookfield Asset Management, Inc. (Canada).................................. 5.800 04/25/17 3,797,386 4,625 Cooper Industries, Inc. .................. 5.250 11/15/12 4,616,050 1,450 Hutchison Whampoa International Ltd. (Cayman Islands) (a)...................... 5.450 11/24/10 1,450,461 1,880 Hutchison Whampoa International Ltd. (Cayman Islands) (a)...................... 6.500 02/13/13 1,961,485 ------------ 17,311,780 ------------ ELECTRIC 9.2% 6,410 Arizona Public Service Co. ............... 5.800 06/30/14 6,385,174 1,795 Baltimore Gas & Electric Co. ............. 6.625 03/15/08 1,805,770 530 Detroit Edison Co. ....................... 5.200 10/15/12 527,999 2,685 Detroit Edison Co. ....................... 6.125 10/01/10 2,763,469 2,690 Duquesne Light Co., Ser O................. 6.700 04/15/12 2,855,083 2,860 Entergy Gulf States, Inc. ................ 3.600 06/01/08 2,803,976 4,395 Entergy Gulf States, Inc. (b)............. 5.760 12/01/09 4,356,271 1,965 Entergy Gulf States, Inc. (a) (b)......... 6.110 12/08/08 1,970,895 4,015 Exelon Corp. ............................. 6.750 05/01/11 4,167,381 560 Indianapolis Power & Light Co. (a)........ 6.300 07/01/13 579,241 4,285 MidAmerican Energy Holdings Co. .......... 3.500 05/15/08 4,223,223 3,585 MidAmerican Energy Holdings Co. .......... 4.625 10/01/07 3,582,189 5,550 NiSource Finance Corp. (b)................ 6.064 11/23/09 5,503,180 2,575 NiSource Finance Corp. ................... 7.875 11/15/10 2,736,921 4,085 Ohio Edison Co. .......................... 6.400 07/15/16 4,233,090 5,020 Ohio Power Co., Ser K..................... 6.000 06/01/16 5,098,518 5,700 Oncor Electric Delivery Co. .............. 5.000 09/01/07 5,700,000 572 PSEG Energy Holdings, LLC................. 8.625 02/15/08 579,906 2,045 Public Service Electric & Gas Co., Ser B......................................... 5.125 09/01/12 2,039,740 4,577 Texas-New Mexico Power Co. ............... 6.125 06/01/08 4,557,891 2,885 TXU Energy Co. ........................... 7.000 03/15/13 2,966,582 2,185 Union Electric Co. ....................... 6.400 06/15/17 2,270,294 5,100 Wisconsin Electric Power Co. ............. 3.500 12/01/07 5,075,071 ------------ 76,781,864 ------------
See Notes to Financial Statements 15 VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ----------------------------------------------------------------------------------------- ENTERTAINMENT 1.2% $ 5,745 Time Warner, Inc. (b)..................... 5.730% 11/13/09 $ 5,699,356 4,190 Time Warner, Inc. ........................ 5.875 11/15/16 4,113,021 ------------ 9,812,377 ------------ ENVIRONMENTAL & FACILITIES SERVICES 0.8% 4,518 Waste Management, Inc. ................... 6.875 05/15/09 4,660,281 1,745 Waste Management, Inc. ................... 7.375 08/01/10 1,842,727 ------------ 6,503,008 ------------ FOOD/BEVERAGE 4.0% 2,235 ConAgra, Inc. ............................ 7.000 10/01/28 2,334,516 2,040 ConAgra, Inc. ............................ 8.250 09/15/30 2,407,039 5,030 FBG Finance Ltd. (Australia) (a).......... 5.125 06/15/15 4,759,824 4,000 General Mills, Inc. ...................... 3.875 11/30/07 3,981,116 3,145 Kraft Foods, Inc. ........................ 5.625 11/01/11 3,160,901 235 Kraft Foods, Inc. ........................ 6.000 02/11/13 240,017 7,805 Miller Brewing Co. (a).................... 4.250 08/15/08 7,699,266 1,645 Pilgrim's Pride Corp. .................... 7.625 05/01/15 1,649,112 655 Pilgrim's Pride Corp. .................... 9.625 09/15/11 676,831 1,790 Smithfield Foods, Inc., Ser B............. 8.000 10/15/09 1,843,700 3,935 YUM! Brands, Inc. ........................ 8.875 04/15/11 4,384,054 ------------ 33,136,376 ------------ HEALTH CARE 1.7% 4,420 Baxter Finance Co. (Netherlands).......... 4.750 10/15/10 4,399,500 6,000 UnitedHealth Group, Inc. (b).............. 5.440 03/02/09 5,997,390 2,410 Wellpoint, Inc. .......................... 3.750 12/14/07 2,395,849 1,510 Wellpoint, Inc. .......................... 4.250 12/15/09 1,483,265 ------------ 14,276,004 ------------ INDEPENDENT ENERGY 0.7% 3,870 Devon Financing Corp. ULC................. 6.875 09/30/11 4,096,693 1,540 Kerr-McGee Corp. ......................... 6.625 10/15/07 1,541,073 ------------ 5,637,766 ------------ INTEGRATED ENERGY 1.7% 3,135 Amerada Hess Corp. ....................... 6.650% 08/15/11 3,275,849 1,990 Chesapeake Energy Corp. .................. 7.625 07/15/13 2,044,725 1,000 Consumers Energy Co., Ser A............... 6.375 02/01/08 1,002,534 1,880 Consumers Energy Co., Ser F............... 4.000 05/15/10 1,817,814 2,035 Consumers Energy Co., Ser H............... 4.800 02/17/09 2,019,660 3,470 Petro-Canada (Canada)..................... 5.350 07/15/33 3,006,575 615 Petro-Canada (Canada)..................... 5.950 05/15/35 575,176 ------------ 13,742,333 ------------ LIFE INSURANCE 2.8% 2,280 AXA Financial, Inc. ...................... 6.500 04/01/08 2,290,406 190 MetLife, Inc. ............................ 6.125 12/01/11 197,022 2,730 Monumental Global Funding II (a).......... 3.850 03/03/08 2,703,997 920 Nationwide Financial Services, Inc. ...... 6.250 11/15/11 942,679
16 See Notes to Financial Statements VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ----------------------------------------------------------------------------------------- LIFE INSURANCE (CONTINUED) $ 3,495 Platinum Underwriters Finance, Inc., Ser B......................................... 7.500% 06/01/17 $ 3,729,434 3,055 Platinum Underwriters Holdings Ltd., Ser B (Bermuda)................................. 6.371 11/16/07 3,048,227 4,510 Prudential Funding LLC (a)................ 6.600 05/15/08 4,528,595 6,095 Xlliac Global Funding (a)................. 4.800 08/10/10 6,035,586 ------------ 23,475,946 ------------ MEDIA-CABLE 1.7% 2,625 Comcast Cable Communications, Inc. ....... 6.750 01/30/11 2,728,273 2,725 Comcast Cable Communications, Inc. ....... 7.125 06/15/13 2,902,738 4,425 Comcast Corp. ............................ 6.500 01/15/15 4,571,100 2,495 Echostar DBS Corp. ....................... 6.375 10/01/11 2,457,575 1,205 Echostar DBS Corp. ....................... 6.625 10/01/14 1,168,850 ------------ 13,828,536 ------------ MEDIA-NONCABLE 0.7% 845 Interpublic Group of Cos., Inc. .......... 6.250 11/15/14 756,275 5,170 Viacom, Inc. ............................. 6.875 04/30/36 5,049,953 ------------ 5,806,228 ------------ NATURAL GAS DISTRIBUTORS 0.2% 1,470 KeySpan Corp. ............................ 4.900 05/16/08 1,463,553 ------------ NATURAL GAS PIPELINES 2.2% 1,355 CenterPoint Energy Resources Corp. ....... 6.250 02/01/37 1,348,755 970 CenterPoint Energy Resources Corp. ....... 7.875 04/01/13 1,061,296 3,260 Colorado Interstate Gas Co. .............. 6.800 11/15/15 3,380,434 2,115 Consolidated Natural Gas Co., Ser C....... 6.250 11/01/11 2,174,256 2,170 Kinder Morgan Energy Partners, LP......... 5.850 09/15/12 2,175,824 5,380 Kinder Morgan Finance Corp. (Canada)...... 5.700 01/05/16 4,797,201 2,895 Texas Eastern Transmission Corp. ......... 7.000 07/15/32 3,204,067 ------------ 18,141,833 ------------ NONCAPTIVE-CONSUMER FINANCE 3.5% 1,920 American General Finance Corp. ........... 4.625 05/15/09 1,908,918 5,120 American General Finance Corp. ........... 4.625 09/01/10 5,062,067 4,760 Countrywide Home Loans, Inc. ............. 3.250 05/21/08 4,593,814 800 Household Finance Corp. .................. 4.125 12/15/08 786,385 1,175 Household Finance Corp. .................. 4.125 11/16/09 1,146,650 2,150 Household Finance Corp. .................. 6.375 10/15/11 2,209,477 6,125 Household Finance Corp. .................. 6.750 05/15/11 6,360,182 5,010 SLM Corp. ................................ 4.000 01/15/10 4,648,844 1,230 SLM Corp. (b)............................. 5.520 07/26/10 1,159,820 1,500 Washington Mutual Preferred Funding II (a)....................................... 6.665 12/31/49 1,314,183 ------------ 29,190,340 ------------
See Notes to Financial Statements 17 VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ----------------------------------------------------------------------------------------- NONCAPTIVE-DIVERSIFIED FINANCE 4.0% $ 2,035 Capital One Financial Corp. (c)........... 6.750% 09/15/17 $ 2,027,841 4,545 Capmark Financial Group, Inc. (a)......... 5.875 05/10/12 4,029,252 1,840 Capmark Financial Group, Inc. (a)......... 6.300 05/10/17 1,497,131 940 CIT Group, Inc. .......................... 3.650 11/23/07 930,935 4,195 CIT Group, Inc. .......................... 5.650 02/13/17 3,676,313 2,235 General Electric Capital Corp., Ser A..... 4.750 09/15/14 2,146,127 5,440 General Electric Capital Corp., Ser A..... 5.875 02/15/12 5,578,268 6,000 General Electric Capital Corp., Ser A..... 4.250 01/15/08 5,970,624 8,095 Nationwide Building Society (United Kingdom) (a).............................. 4.250 02/01/10 7,962,460 ------------ 33,818,951 ------------ OTHER UTILITIES 0.6% 5,035 Plains All American Pipeline.............. 6.700 05/15/36 5,031,153 ------------ PHARMACEUTICALS 0.8% 6,650 Hospira, Inc. (b)......................... 5.840 03/30/10 6,670,681 ------------ PROPERTY & CASUALTY INSURANCE 3.3% 5,800 AIG SunAmerica Global Financing VI (a).... 6.300 05/10/11 5,986,940 5,675 Catlin Insurance Co., Ltd. (Bermuda) (a)....................................... 7.249 12/01/49 5,284,747 4,710 Farmers Exchange Capital (a).............. 7.050 07/15/28 4,759,092 2,721 Farmers Insurance Exchange Surplus (a).... 8.625 05/01/24 3,161,998 4,610 Mantis Reef Ltd. (Cayman Islands) (a)..... 4.692 11/14/08 4,593,704 3,315 Two-Rock Pass Through Trust (Bermuda) (a) (b)....................................... 6.440 02/11/49 3,267,231 ------------ 27,053,712 ------------ RAILROADS 2.5% 6,205 Burlington Northern Santa Fe Corp. ....... 6.125 03/15/09 6,287,130 3,640 CSX Corp. ................................ 6.750 03/15/11 3,793,357 3,720 Union Pacific Corp. ...................... 5.450 01/31/13 3,720,022 7,375 Union Pacific Corp. ...................... 6.625 02/01/08 7,396,284 ------------ 21,196,793 ------------ REFINING 0.6% 2,710 Enterprise Products Operating, LP......... 5.600 10/15/14 2,660,881 2,460 Valero Energy Corp. ...................... 3.500 04/01/09 2,404,955 ------------ 5,065,836 ------------ REITS 0.8% 7,195 iStar Financial, Inc. (b)................. 5.710 03/09/10 6,810,636 ------------ RETAIL 3.1% 3,290 CVS Caremark Corp. ....................... 5.750 06/01/17 3,221,324 800 CVS Corp. ................................ 3.875 11/01/07 797,043 2,265 CVS Corp. ................................ 5.750 08/15/11 2,291,211 4,874 CVS Lease Pass-Through Trust (a).......... 6.036 12/10/28 4,766,457 1,500 Federated Department Stores, Inc. ........ 6.300 04/01/09 1,510,056
18 See Notes to Financial Statements VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ----------------------------------------------------------------------------------------- RETAIL (CONTINUED) $ 2,000 Federated Department Stores, Inc. ........ 6.625% 09/01/08 $ 2,010,918 7,475 Home Depot, Inc. (b)...................... 5.485 12/16/09 7,387,438 1,290 JC Penney Corp., Inc. .................... 5.750 02/15/18 1,248,207 2,970 May Department Stores Co. ................ 5.950 11/01/08 2,967,517 ------------ 26,200,171 ------------ SUPERMARKETS 1.0% 3,127 Delhaize America, Inc. ................... 9.000 04/15/31 3,674,225 2,595 Fred Meyer, Inc. ......................... 7.450 03/01/08 2,615,609 1,800 Kroger Co., Ser B......................... 7.250 06/01/09 1,857,593 ------------ 8,147,427 ------------ TECHNOLOGY 0.6% 2,995 LG Electronics, Inc. (South Korea) (a).... 5.000 06/17/10 2,949,365 2,085 Xerox Corp. .............................. 5.500 05/15/12 2,063,302 ------------ 5,012,667 ------------ TOBACCO 0.2% 1,780 Reynolds American, Inc. .................. 6.500 07/15/10 1,825,388 ------------ TRANSPORTATION SERVICES 0.6% 5,000 FedEx Corp. .............................. 5.500 08/15/09 5,040,860 ------------ WIRELINE COMMUNICATIONS 6.6% 6,640 AT&T Corp. ............................... 8.000 11/15/31 7,924,402 7,615 BellSouth Corp. (b)....................... 5.683 11/15/07 7,616,553 5,355 France Telecom SA (France)................ 8.500 03/01/31 6,856,853 6,000 SBC Communications, Inc. ................. 4.125 09/15/09 5,872,284 3,155 SBC Communications, Inc. ................. 6.150 09/15/34 3,068,351 6,650 Sprint Capital Corp. ..................... 6.125 11/15/08 6,685,544 2,080 Sprint Capital Corp. ..................... 8.750 03/15/32 2,407,592 4,805 Telecom Italia Capital (Luxembourg)....... 4.000 01/15/10 4,651,144 1,900 Telecom Italia Capital Ser A (Luxembourg).............................. 4.000 11/15/08 1,866,452 5,715 Telefonica Europe BV (Netherlands)........ 8.250 09/15/30 6,721,411 1,000 Verizon Communications, Inc. ............. 7.510 04/01/09 1,029,831 265 Verizon New England, Inc. ................ 6.500 09/15/11 273,637 ------------ 54,974,054 ------------ TOTAL CORPORATE BONDS 81.8%.................................... 681,324,175 ------------ COLLATERALIZED MORTGAGE OBLIGATIONS 8.1% 2,577 American Home Mortgage Assets (b)......... 5.805 06/25/47 2,314,214 3,300 Banc of America Commercial Mortgage, Inc. (b)....................................... 5.838 06/10/49 3,292,376 3,225 Banc of America Commercial Mortgage, Inc. (b)....................................... 5.867 04/10/49 3,230,234 3,350 Bear Stearns Commercial Mortgage Securities (b)............................ 5.902 06/11/40 3,364,271
See Notes to Financial Statements 19 VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ----------------------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED) $ 3,225 Citigroup Commercial Mortgage Trust (b)... 5.889% 12/10/49 $ 3,236,341 6,300 Commercial Mortgage Pass-Through Certificates (b).......................... 6.010 12/10/49 6,373,378 1,300 Countrywide Alternative Loan Trust (b).... 6.025 10/25/46 879,489 2,000 Greenwich Capital Commercial Funding Corp. .................................... 5.444 03/10/39 1,961,757 6,300 GS Mortgage Securities Corp., II (b)...... 5.993 08/10/45 6,360,617 935 Harborview Mortgage Loan Trust (b)........ 6.088 08/21/36 644,299 887 Harborview Mortgage Loan Trust (b)........ 6.238 01/19/36 777,226 2,175 JP Morgan Chase Commercial Mortgage Securities Corp. ......................... 5.440 06/12/47 2,129,186 3,375 JP Morgan Chase Commercial Mortgage Securities Corp (b)....................... 5.937 02/12/49 3,388,022 4,925 JP Morgan Chase Commercial Mortgage Securities Corp (b)....................... 6.007 06/15/49 4,975,020 3,325 LB Commercial Conduit Mortgage Trust (b).. 6.134 07/15/44 3,395,523 2,175 LB-UBS Commercial Mortgage Trust.......... 5.430 02/15/40 2,130,087 1,195 Luminent Mortgage Trust (b)............... 5.865 07/25/36 1,047,607 2,225 Mastr Adjustable Rate Mortgages Trust (b)....................................... 6.355 05/25/47 1,661,797 5,200 Wachovia Bank Commercial Mortgage Trust... 5.342 12/15/43 5,053,501 6,500 Wachovia Bank Commercial Mortgage Trust (b)....................................... 5.929 06/15/49 6,512,865 5,000 Wachovia Bank Commercial Mortgage Trust (b)....................................... 6.100 02/15/51 5,097,421 ------------ TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 8.1%................. 67,825,231 ------------ UNITED STATES TREASURY OBLIGATIONS 7.5% 15,950 United States Treasury Bonds.............. 6.125 08/15/29 18,640,318 8,600 United States Treasury Bonds.............. 6.375 08/15/27 10,232,659 14,300 United States Treasury Notes (c).......... 4.250 11/15/14 14,163,707 6,000 United States Treasury Notes.............. 4.625 10/31/11 6,090,006 7,800 United States Treasury Notes.............. 4.750 01/31/12 7,954,783 5,000 United States Treasury Notes.............. 5.125 06/30/11 5,161,330 ------------ TOTAL UNITED STATES TREASURY OBLIGATIONS........................ 62,242,803 ------------ FOREIGN GOVERNMENT OBLIGATIONS 0.6% ARS 1,253 Argentina International Government Bond (Argentina)............................... 8.280 12/31/33 1,074,167 MXN 36,345 Mexican Fixed Rate Bond (Mexico).......... 9.500 12/18/14 3,605,491 ------------ TOTAL FOREIGN GOVERNMENT OBLIGATIONS............................ 4,679,658 ------------
20 See Notes to Financial Statements VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ----------------------------------------------------------------------------------------- MORTGAGE-BACKED SECURITIES 0.3% $ 1,612 World Financial Properties Ser 1996 (a)... 6.910% 09/01/13 $ 1,633,484 870 World Financial Properties Ser 1996 (a)... 6.950 09/01/13 882,271 ------------ TOTAL MORTGAGE-BACKED SECURITIES................................ 2,515,755 ------------ TOTAL LONG-TERM INVESTMENTS 98.3% (Cost $820,544,507)..................................................... 818,587,622 ------------
SHORT-TERM INVESTMENTS 2.5% REPURCHASE AGREEMENTS 1.2% Banc of America Securities ($3,283,821 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 5.30%, dated 08/31/07, to be sold on 09/04/07 at $3,285,755)............................ 3,283,821 Citigroup Global Markets, Inc. ($2,918,952 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 5.25%, dated 08/31/07, to be sold on 09/04/07 at $2,920,655)...................... 2,918,952 State Street Bank & Trust Co. ($3,545,227 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 4.83%, dated 08/31/07, to be sold on 09/04/07 at $3,547,130)...................... 3,545,227 ------------ TOTAL REPURCHASE AGREEMENTS.................................................. 9,748,000 ------------ UNITED STATES GOVERNMENT AGENCY OBLIGATIONS 1.3% United States Treasury Bill ($11,100,000 par, yielding 5.049%, 01/10/08 maturity) (d).............................................................. 10,904,302 ------------ TOTAL SHORT-TERM INVESTMENTS (Cost $20,652,302)......................................................... 20,652,302 ------------ TOTAL INVESTMENTS 100.8% (Cost $841,196,809)........................................................ 839,239,924 FOREIGN CURRENCY 0.0% (Cost $19,934)............................................................. 19,594 LIABILITIES IN EXCESS OF OTHER ASSETS (0.8%)................................ (6,815,498) ------------ NET ASSETS 100.0%........................................................... $832,444,020 ============
Percentages are calculated as a percentage of net assets. (a) 144A-Private Placement security which is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may only be resold in transactions exempt from registration which are normally those transactions with qualified institutional buyers. See Notes to Financial Statements 21 VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued (b) Floating Rate Coupon (c) Security purchased on a when-issued or delayed delivery basis. (d) All or a portion of this security has been physically segregated in connection with open futures contracts. ARS--Argentine Peso MXN--Mexican Peso FUTURES CONTRACTS OUTSTANDING AS OF AUGUST 31, 2007:
UNREALIZED APPRECIATION/ CONTRACTS DEPRECIATION LONG CONTRACTS: U.S. Treasury Notes 2-Year Futures, December 2007 (Current Notional Value of $206,156 per contract).................. 425 $ 45,263 U.S. Treasury Notes 5-Year Futures, December 2007 (Current Notional Value of $106,703 per contract).................. 811 307,258 SHORT CONTRACTS: U.S. Treasury Bonds Futures, September 2007 (Current Notional Value of $111,781 per contract).................. 48 (106,632) U.S. Treasury Bonds Futures, December 2007 (Current Notional Value of $111,563 per contract)........................... 481 (151,231) U.S. Treasury Notes 10-Year Futures, September 2007 (Current Notional Value of $109,484 per contract).................. 413 (168,404) U.S. Treasury Notes 10-Year Futures, December 2007 (Current Notional Value of $109,047 per contract).................. 1,119 (84,867) ----- --------- 3,297 $(158,613) ===== =========
22 See Notes to Financial Statements VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued SWAP AGREEMENTS OUTSTANDING AS OF AUGUST 31, 2007: CREDIT DEFAULT SWAPS
PAY/ RECEIVE NOTIONAL BUY/SELL FIXED EXPIRATION AMOUNT UPFRONT COUNTERPARTY REFERENCE ENTITY PROTECTION RATE DATE (000) PAYMENTS VALUE Bank of America, N.A. CenturyTel, Inc. Buy 0.88% 09/20/17 $2,050 $ 0 $(11,811) Bank of America, N.A. The Gap, Inc. Buy 1.19 03/20/12 4,750 0 (56,554) Tyco Citibank, N.A., New International., York Ltd. Buy 0.43 03/20/12 1,400 0 6,150 Goldman Sachs Capital Markets, L.P. Dell, Inc. Buy 0.22 03/20/12 4,000 0 (302) Goldman Sachs Capital Markets, Dow Jones CDX NA IG L.P. HVOL Buy 0.75 06/20/11 14,450 (4,480) 217,255 Goldman Sachs Capital Markets, Dow Jones CDX NA IG L.P. HVOL Buy 0.75 12/20/11 15,800 11,774 319,108 Goldman Sachs Capital Markets, L.P. Motorola, Inc. Buy 0.15 12/20/11 2,550 0 19,673 Goldman Sachs Capital Markets, L.P. Motorola, Inc. Buy 0.16 12/20/11 5,300 0 39,378 Goldman Sachs Capital Markets, L.P. The Chubb Corp. Buy 0.10 03/20/12 7,900 0 94,177 Goldman Sachs The Hartford Capital Markets, Financial Services L.P. Group, Inc. Buy 0.12 12/20/11 7,920 0 69,859 Goldman Sachs Tyco Capital Markets, International., L.P. Ltd. Buy 0.80 03/20/11 2,100 0 (28,312) JP Morgan Chase Bank, N.A. Belo Corp. Buy 1.18 06/20/14 1,460 0 (11,775) JP Morgan Chase Bank, N.A. Belo Corp. Buy 1.30 06/20/14 4,170 0 (62,475) JP Morgan Chase Tyco Bank, N.A. International.,Ltd. Buy 0.65 03/20/11 3,500 0 (29,030) JP Morgan Chase Bank, N.A. Union PacificCorp. Buy 0.19 12/20/11 3,950 0 19,021 ------- -------- TOTAL CREDIT DEFAULT SWAPS $ 7,294 $584,362 ======= ========
See Notes to Financial Statements 23 VAN KAMPEN CORPORATE BOND FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2007 continued INTEREST RATE SWAPS
PAY/ RECEIVE NOTIONAL FLOATING FIXED EXPIRATION AMOUNT UPFRONT COUNTERPARTY FLOATING RATE INDEX RATE RATE DATE (000) PAYMENTS VALUE Citibank, N.A., New York USD-LIBOR BBA Pay 5.414% 05/25/17 $164,775 $ 0 $ 4,655,150 Citibank, N.A., New York USD-LIBOR BBA Pay 5.440 05/29/17 25,300 0 755,370 JP Morgan Chase Bank, N.A. USD-LIBOR BBA Pay 5.448 05/29/17 25,325 0 772,087 JP Morgan Chase Bank, N.A. USD-LIBOR BBA Pay 5.454 06/04/17 89,450 0 1,538,488 ------- ----------- TOTAL INTEREST RATE SWAPS 0 7,721,095 ------- ----------- TOTAL SWAP AGREEMENTS $ 7,294 $ 8,305,457 ======= ===========
24 See Notes to Financial Statements VAN KAMPEN CORPORATE BOND FUND FINANCIAL STATEMENTS Statement of Assets and Liabilities August 31, 2007 ASSETS: Total Investments (Cost $841,196,809)....................... $839,239,924 Foreign Currency (Cost $19,934)............................. 19,594 Cash........................................................ 827 Receivables: Interest.................................................. 10,418,436 Fund Shares Sold.......................................... 974,202 Variation Margin on Futures............................... 407,390 Swap Contracts.............................................. 8,505,716 Other....................................................... 138,807 ------------ Total Assets............................................ 859,704,896 ------------ LIABILITIES: Payables: Investments Purchased..................................... 16,476,119 Swap Collateral........................................... 7,160,000 Fund Shares Repurchased................................... 1,987,751 Distributor and Affiliates................................ 474,682 Investment Advisory Fee................................... 275,837 Income Distributions...................................... 218,827 Trustees' Deferred Compensation and Retirement Plans........ 213,412 Swap Contracts.............................................. 200,259 Accrued Expenses............................................ 253,989 ------------ Total Liabilities....................................... 27,260,876 ------------ NET ASSETS.................................................. $832,444,020 ============ NET ASSETS CONSIST OF: Capital (Par value of $0.01 per share with an unlimited number of shares authorized).............................. $855,858,747 Net Unrealized Appreciation................................. 6,181,723 Accumulated Undistributed Net Investment Income............. (4,171,962) Accumulated Net Realized Loss............................... (25,424,488) ------------ NET ASSETS.................................................. $832,444,020 ============ MAXIMUM OFFERING PRICE PER SHARE: Class A Shares: Net asset value and redemption price per share (Based on net assets of $670,795,422 and 103,678,867 shares of beneficial interest issued and outstanding)............. $ 6.47 Maximum sales charge (4.75%* of offering price)......... 0.32 ------------ Maximum offering price to public........................ $ 6.79 ============ Class B Shares: Net asset value and offering price per share (Based on net assets of $87,322,145 and 13,528,716 shares of beneficial interest issued and outstanding)............. $ 6.45 ============ Class C Shares:........................................... Net asset value and offering price per share (Based on net assets of $31,014,455 and 4,802,234 shares of beneficial interest issued and outstanding)............. $ 6.46 ============ Class I Shares: Net asset value and offering price per share (Based on net assets of $43,311,998 and 6,689,058 shares of beneficial interest issued and outstanding)............. $ 6.48 ============
* On sales of $100,000 or more, the sales charge will be reduced. See Notes to Financial Statements 25 VAN KAMPEN CORPORATE BOND FUND FINANCIAL STATEMENTS continued Statement of Operations For the Year Ended August 31, 2007 INVESTMENT INCOME: Interest.................................................... $ 42,854,636 Other....................................................... 186,000 ------------ Total Income............................................ 43,040,636 ------------ EXPENSES: Investment Advisory Fee..................................... 3,149,006 Distribution (12b-1) and Service Fees Class A................................................... 1,582,131 Class B................................................... 938,126 Class C................................................... 286,162 Transfer Agent Fees......................................... 1,523,731 Reports to Shareholders..................................... 177,684 Accounting and Administrative Expenses...................... 151,133 Registration Fees........................................... 69,909 Custody..................................................... 54,512 Trustees' Fees and Related Expenses......................... 50,144 Professional Fees........................................... 39,737 Other....................................................... 40,291 ------------ Total Expenses.......................................... 8,062,566 Less Credits Earned on Cash Balances.................... 38,584 ------------ Net Expenses............................................ 8,023,982 ------------ NET INVESTMENT INCOME....................................... $ 35,016,654 ============ REALIZED AND UNREALIZED GAIN/LOSS: Realized Gain/Loss: Investments............................................... $ (3,012,255) Futures................................................... (4,581,381) Swap Contracts............................................ (6,561,474) Foreign Currency Transactions............................. (24,135) ------------ Net Realized Loss........................................... (14,179,245) ------------ Unrealized Appreciation/Depreciation: Beginning of the Period................................... (2,034,100) ------------ End of the Period: Investments............................................. (1,956,885) Futures................................................. (158,613) Swap Contracts.......................................... 8,298,163 Foreign Currency Translation............................ (942) ------------ 6,181,723 ------------ Net Unrealized Appreciation During the Period............... 8,215,823 ------------ NET REALIZED AND UNREALIZED LOSS............................ $ (5,963,422) ============ NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 29,053,232 ============
26 See Notes to Financial Statements VAN KAMPEN CORPORATE BOND FUND FINANCIAL STATEMENTS continued Statements of Changes in Net Assets
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2007 AUGUST 31, 2006 --------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income...................................... $ 35,016,654 $ 30,007,616 Net Realized Loss.......................................... (14,179,245) (769,804) Net Unrealized Appreciation/Depreciation During the Period................................................... 8,215,823 (21,661,719) ------------- ------------- Change in Net Assets from Operations....................... 29,053,232 7,576,093 ------------- ------------- Distributions from Net Investment Income: Class A Shares........................................... (30,504,356) (25,558,482) Class B Shares........................................... (3,797,623) (4,399,602) Class C Shares........................................... (1,211,915) (1,121,886) Class I Shares........................................... (2,032,038) (1,435,264) ------------- ------------- Total Distributions........................................ (37,545,932) (32,515,234) ------------- ------------- NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES........ (8,492,700) (24,939,141) ------------- ------------- FROM CAPITAL TRANSACTIONS: Proceeds from Shares Sold.................................. 249,847,615 274,997,260 Net Asset Value of Shares Issued Through Dividend Reinvestment............................................. 34,753,106 29,576,525 Cost of Shares Repurchased................................. (202,474,107) (204,876,191) ------------- ------------- NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS......... 82,126,614 99,697,594 ------------- ------------- TOTAL INCREASE IN NET ASSETS............................... 73,633,914 74,758,453 NET ASSETS: Beginning of the Period.................................... 758,810,106 684,051,653 ------------- ------------- End of the Period (Including accumulated undistributed net investment income of $(4,171,962) and $(4,258,122), respectively)............................................ $ 832,444,020 $ 758,810,106 ============= =============
See Notes to Financial Statements 27 VAN KAMPEN CORPORATE BOND FUND FINANCIAL HIGHLIGHTS THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED AUGUST 31, CLASS A SHARES ---------------------------------------------- 2007 2006 2005 2004 2003 ---------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD..... $ 6.53 $ 6.78 $ 6.72 $ 6.58 $ 6.39 ------ ------ ------ ------ ------ Net Investment Income...................... 0.29(a) 0.28(a) 0.29 0.33 0.33(a) Net Realized and Unrealized Gain/Loss...... (0.04) (0.22) 0.09 0.16 0.25 ------ ------ ------ ------ ------ Total from Investment Operations............. 0.25 0.06 0.38 0.49 0.58 ------ ------ ------ ------ ------ Less: Distributions from Net Investment Income... 0.31 0.31 0.32 0.35 0.39 Return of Capital Distributions............ -0- -0- -0- -0-(c) -0- ------ ------ ------ ------ ------ Total Distributions.......................... 0.31 0.31 0.32 0.35 0.39 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF THE PERIOD........... $ 6.47 $ 6.53 $ 6.78 $ 6.72 $ 6.58 ====== ====== ====== ====== ====== Total Return (b)............................. 3.93% 0.93% 5.79% 7.55% 9.20% Net Assets at End of the Period (In millions).................................. $670.8 $591.2 $502.6 $394.7 $318.4 Ratio of Expenses to Average Net Assets...... 0.91% 0.96% 0.99% 0.98% 1.01% Ratio of Net Investment Income to Average Net Assets..................................... 4.48% 4.33% 4.29% 4.80% 4.98% Portfolio Turnover........................... 119% 45% 61% 38% 46%
(a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 4.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to .25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. (c) Amount is less than $0.01 per share. 28 See Notes to Financial Statements VAN KAMPEN CORPORATE BOND FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED AUGUST 31, CLASS B SHARES --------------------------------------------- 2007 2006 2005 2004 2003 --------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD...... $6.52 $ 6.76 $ 6.70 $ 6.57 $ 6.38 ----- ------ ------ ------ ------ Net Investment Income....................... 0.24(a) 0.23(a) 0.24 0.26 0.28(a) Net Realized and Unrealized Gain/Loss....... (0.05) (0.21) 0.09 0.16 0.25 ----- ------ ------ ------ ------ Total from Investment Operations.............. 0.19 0.02 0.33 0.42 0.53 ----- ------ ------ ------ ------ Less: Distributions from Net Investment Income.... 0.26 0.26 0.27 0.29 0.34 Return of Capital Distributions............. -0- -0- -0- -0-(c) -0- ----- ------ ------ ------ ------ Total Distributions........................... 0.26 0.26 0.27 0.29 0.34 ----- ------ ------ ------ ------ NET ASSET VALUE, END OF THE PERIOD............ $6.45 $ 6.52 $ 6.76 $ 6.70 $ 6.57 ===== ====== ====== ====== ====== Total Return (b).............................. 3.00% 0.30% 5.01% 6.59% 8.38% Net Assets at End of the Period (In millions)................................... $87.3 $100.2 $123.6 $126.5 $135.6 Ratio of Expenses to Average Net Assets....... 1.67% 1.72% 1.75% 1.75% 1.77% Ratio of Net Investment Income to Average Net Assets...................................... 3.72% 3.57% 3.55% 4.06% 4.23% Portfolio Turnover............................ 119% 45% 61% 38% 46%
(a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 4%, charged on certain redemptions made within the first and second years of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. (c) Amount is less than $0.01 per share. See Notes to Financial Statements 29 VAN KAMPEN CORPORATE BOND FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED AUGUST 31, CLASS C SHARES ------------------------------------------------- 2007 2006 2005 2004 2003 ------------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD..... $6.52 $6.76 $6.71 $6.57 $6.38 ----- ----- ----- ----- ----- Net Investment Income...................... 0.25(a) 0.23(a) 0.24 0.27 0.28(a) Net Realized and Unrealized Gain/Loss...... (0.04) (0.21) 0.08 0.16 0.25 ----- ----- ----- ----- ----- Total from Investment Operations............. 0.21 0.02 0.32 0.43 0.53 ----- ----- ----- ----- ----- Less: Distributions from Net Investment Income... 0.27 0.26 0.27 0.29 0.34 Return of Capital Distributions............ -0- -0- -0- -0-(d) -0- ----- ----- ----- ----- ----- Total Distributions.......................... 0.27 0.26 0.27 0.29 0.34 ----- ----- ----- ----- ----- NET ASSET VALUE, END OF THE PERIOD........... $6.46 $6.52 $6.76 $6.71 $6.57 ===== ===== ===== ===== ===== Total Return (b)............................. 3.20%(c) 0.16%(c) 5.17%(c) 6.59%(c) 8.38% Net Assets at End of the Period (In millions).................................. $31.0 $28.6 $29.2 $28.6 $29.6 Ratio of Expenses to Average Net Assets...... 1.63%(c) 1.71%(c) 1.71%(c) 1.73%(c) 1.77% Ratio of Net Investment Income to Average Net Assets..................................... 3.76%(c) 3.58%(c) 3.59%(c) 4.07%(c) 4.22% Portfolio Turnover........................... 119% 45% 61% 38% 46%
(a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. (c) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net Investment Income to Average Net Assets reflect actual 12b-1 fees of less than 1% (See Footnote 7). (d) Amount is less than $0.01 per share. 30 See Notes to Financial Statements VAN KAMPEN CORPORATE BOND FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED AUGUST 12, 2005 AUGUST 31, (COMMENCEMENT OF CLASS I SHARES -------------- OPERATIONS) TO 2007 2006 AUGUST 31, 2005 ---------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD.............. $6.54 $6.78 $6.72 ----- ----- ----- Net Investment Income............................... 0.31(a) 0.29(a) 0.03 Net Realized and Unrealized Gain/Loss............... (0.04) (0.21) 0.06 ----- ----- ----- Total from Investment Operations...................... 0.27 0.08 0.09 ----- ----- ----- Less Distributions from Net Investment Income......... 0.33 0.32 0.03 ----- ----- ----- NET ASSET VALUE, END OF THE PERIOD.................... $6.48 $6.54 $6.78 ===== ===== ===== Total Return (b)...................................... 4.19% 1.33% 1.11%* Net Assets at End of the Period (In millions)......... $43.3 $38.8 $28.7 Ratio of Expenses to Average Net Assets............... 0.66% 0.72% 0.86% Ratio of Net Investment Income to Average Net Assets.............................................. 4.73% 4.59% 4.32% Portfolio Turnover.................................... 119% 45% 61%
* Non-Annualized (a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period. These returns do no reflect the deduction of taxes that a Shareholder would pay on Fund distributions or the redemption of Fund shares. See Notes to Financial Statements 31 VAN KAMPEN CORPORATE BOND FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2007 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen Corporate Bond Fund (the "Fund") is organized as a Delaware statutory trust, and is registered as a diversified open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's primary investment objective is to seek to provide current income with preservation of capital. Capital appreciation is a secondary objective that is sought only when consistent with the Fund's primary investment objective. The Fund commenced investment operations on September 23, 1971. The Fund offers Class A Shares, Class B Shares, Class C Shares and Class I Shares. Each class of shares differs by its initial sales load, contingent deferred sales charges, the allocation of class specific expenses and voting rights on matters affecting a single class. 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 U.S. 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 as of the close of such securities exchange. Listed and unlisted securities for which the last sale price is not available are valued at the mean of the last reported bid and asked prices. For those securities where quotations or prices are not readily available, 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 in which they are traded. Swaps are valued using market quotations obtained from brokers. 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 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. 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 the custodian having an aggregate value at least equal to the amount of the when-issued or delayed delivery purchase 32 VAN KAMPEN CORPORATE BOND FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2007 continued commitments until payment is made. At August 31, 2007, the Fund had $16,320,246 of when-issued or delayed delivery purchase commitments. C. INCOME AND EXPENSES Interest income is recorded on an accrual basis. Discounts on debt securities purchased are accreted and premiums are amortized over the expected life of each applicable security. Other income is comprised primarily of consent fees. Consent fees are earned as compensation for agreeing to changes in the terms of debt instruments. 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 incremental 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 Subchapter M 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. During the current fiscal year, the fund utilized capital losses carried forward of $917,462. At August 31, 2007, the Fund had an accumulated capital loss carryforward for tax purposes of $5,440,078, which will expire according to the following schedule:
AMOUNT EXPIRATION $4,643,264.................................................. August 31, 2011 436,571..................................................... August 31, 2012 360,243..................................................... August 31, 2014
At August 31, 2007, the cost and related gross unrealized appreciation and depreciation were as follows: Cost of investments for tax purposes........................ $845,144,879 ============ Gross tax unrealized appreciation........................... 7,129,366 Gross tax unrealized depreciation........................... (13,034,321) ------------ Net tax unrealized depreciation on investments.............. $ (5,904,955) ============
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 at least 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. 33 VAN KAMPEN CORPORATE BOND FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2007 continued The tax character of distributions paid during the years ended August 31, 2007 and 2006 were as follows:
2007 2006 Distributions paid from: Ordinary income........................................... $ 37,550,290 $32,525,490 Long-term capital gain.................................... -0- -0- ------------ ----------- $ 37,550,290 $32,525,490 ============ ===========
Permanent differences, primarily due to book to tax amortization differences, a reclassification of swap income and consent fee income received from tender offers, resulted in the following reclassifications among the Fund's components of net assets at August 31, 2007:
ACCUMULATED UNDISTRIBUTED ACCUMULATED NET INVESTMENT INCOME NET REALIZED LOSS CAPITAL $2,615,438 $(2,615,438) $-0-
As of August 31, 2007, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income............................... $213,392
Net realized gains or losses may differ for financial reporting and tax purposes primarily as a result of gains or losses recognized for tax purposes on open futures transactions at August 31, 2007, the deferral of losses relating to wash sale transactions, or gains or losses recognized on securities for tax purposes, but not for book purposes and post October losses which are not recognized for tax purposes until the first day of the following fiscal year. F. EXPENSE REDUCTIONS During the year ended August 31, 2007, the Fund's custody fee was reduced by $38,584 as a result of credits earned on cash balances. G. FOREIGN CURRENCY TRANSLATION Assets and liabilities denominated in foreign currencies and commitments under forward foreign currency contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated at the rate of exchange prevailing when such securities were acquired or sold. Realized gain and loss on foreign currency transactions on the Statement of Operations includes the net realized amount from the sale of foreign currency, the amount realized between trade date and settlement date on securities transactions and the foreign currency portion of gain and losses on the sale of securities. Income and expenses are translated at rates prevailing when accrued. 34 VAN KAMPEN CORPORATE BOND FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2007 continued 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 $500 million.......................................... .42% Next $750 million........................................... .35 Over $1.250 billion......................................... .22
For the year ended August 31, 2007, the Fund recognized expenses of approximately $10,400 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, of which a trustee of the Fund is a partner of such firm and he and his law firm provide legal services as legal counsel to the Fund. Under separate Accounting Services and Chief Compliance Officer (CCO) Employment agreements, the Adviser provides accounting services and the CCO provides compliance services to the Fund. The costs of these services are allocated to each fund. For the year ended August 31, 2007, the Fund recognized expenses of approximately $53,000 representing Van Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing accounting services to the Fund, as well as the salary, benefits and related costs of the CCO and related support staff paid by Van Kampen. Services provided pursuant to the Accounting Services and CCO Employment agreement are reported as part of "Accounting and Administrative Expenses" on the Statement of Operations. Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser, serves as the shareholder servicing agent for the Fund. For the year ended August 31, 2007, the Fund recognized expenses of approximately $1,348,200 representing transfer agency fees paid to VKIS. Transfer agency fees are determined through negotiations with the Fund's Board of Trustees. 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 also 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. Amounts deferred are retained by the Fund and, to the extent permitted by the 1940 Act, as amended, may be invested in the common shares of those funds selected by the trustees. Investments in such funds of $110,336 are included in "Other" assets on the Statement of Assets and Liabilities at August 31, 2007. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund. 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. For the year ended August 31, 2007, Van Kampen, as Distributor for the Fund, received commissions on sales of the Fund's Class A Shares of approximately $549,800 and contingent deferred sales charge (CDSC) on redeemed shares of approximately $165,800. Sales charges do not represent expenses of the Fund. 35 VAN KAMPEN CORPORATE BOND FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2007 continued 3. CAPITAL TRANSACTIONS For the years ended August 31, 2007 and 2006, transactions were as follows:
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2007 AUGUST 31, 2006 ---------------------------- ---------------------------- SHARES VALUE SHARES VALUE Sales: Class A....................... 31,653,760 $ 206,860,308 33,673,853 $ 220,273,129 Class B....................... 2,961,293 19,296,853 4,260,898 27,860,021 Class C....................... 1,665,757 10,866,145 1,353,140 8,843,562 Class I....................... 1,963,276 12,824,309 2,782,444 18,020,548 ----------- ------------- ----------- ------------- Total Sales..................... 38,244,086 $ 249,847,615 42,070,335 $ 274,997,260 =========== ============= =========== ============= Dividend Reinvestment: Class A....................... 4,360,460 $ 28,518,213 3,594,502 $ 23,444,306 Class B....................... 522,633 3,411,386 589,962 3,840,743 Class C....................... 147,931 966,076 131,477 856,217 Class I....................... 283,594 1,857,431 219,719 1,435,259 ----------- ------------- ----------- ------------- Total Dividend Reinvestment..... 5,314,618 $ 34,753,106 4,535,660 $ 29,576,525 =========== ============= =========== ============= Repurchases: Class A....................... (22,823,540) $(148,886,963) (20,947,743) $(136,661,300) Class B....................... (5,330,143) (34,719,828) (7,755,242) (50,546,695) Class C....................... (1,391,218) (9,072,827) (1,419,885) (9,258,547) Class I....................... (1,497,450) (9,794,489) (1,288,016) (8,409,649) ----------- ------------- ----------- ------------- Total Repurchases............... (31,042,351) $(202,474,107) (31,410,886) $(204,876,191) =========== ============= =========== =============
4. REDEMPTION FEE The Fund will assess a 2% redemption fee on the proceeds of Fund shares that are redeemed (either by sale or exchange) within seven days of purchase. The redemption fee is paid directly to the Fund and allocated on a pro rata basis to each class of shares. For the year ended August 31, 2007, the Fund received redemption fees of approximately $3,800, which are reported as part of "Cost of Shares Repurchased" on the Statement of Changes in Net Assets. The per share impact from redemption fees paid to the Fund was less than $0.01. 5. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments and U.S. Government securities, were $396,754,410 and $253,170,359, respectively. The cost of purchases and proceeds from sales of long-term U.S. Government securities, including paydowns on mortgage-backed securities, for the period were $666,060,106 and $661,190,950, respectively. 6. 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. 36 VAN KAMPEN CORPORATE BOND FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2007 continued The Fund may use derivative instruments for a variety of reasons, 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 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 these instances, the recognition of 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. Summarized below are the specific types of derivative financial instruments used by the Fund. A. FUTURES CONTRACTS 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 futures on U.S. Treasury Bonds or Notes. 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 year ended August 31, 2007, were as follows:
CONTRACTS Outstanding at August 31, 2006.............................. 2,266 Futures Opened.............................................. 16,604 Futures Closed.............................................. (15,573) ------- Outstanding at August 31, 2007.............................. 3,297 =======
B. SWAP CONTRACTS The Fund may enter into credit default swap contracts for hedging purposes or to gain exposure to a credit in which the Fund may otherwise invest. A credit default swap is an agreement between two parties to exchange the credit risk of an issuer. A buyer of a credit default swap is said to buy protection by paying periodic fees in return for a contingent payment from the seller if the issuer has a credit event such as bankruptcy, a failure to pay outstanding obligations or deteriorating credit while the swap is outstanding. A seller of a credit default swap is said to sell protection and thus collects the periodic fees and profits if the credit of the issuer remains stable or improves while the swap is outstanding but the seller in a credit default swap contract would be required to pay an agreed-upon amount, which approximates the notional amount of the swap as disclosed in the table following the Portfolio of Investments, to the buyer in the event of an adverse credit event of the issuer. The Fund accrues for the periodic fees on credit default swaps on a daily basis with the net amount accrued recorded within unrealized appreciation/depreciation of swap contracts. Upon cash settlement of the periodic fees, the net amount is recorded as realized gain/loss on swap contracts on the Statement of Operations. Net unrealized gains are recorded as an asset 37 VAN KAMPEN CORPORATE BOND FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2007 continued or net unrealized losses are reported as a liability on the Statement of Assets and Liabilities. The change in value of the swap contracts is reported as unrealized gains or losses on the Statement of Operations. Payments received or made upon entering into a credit default swap contract, if any, are recorded as realized gain or loss on the Statement of Operations upon termination or maturity of the swap. Credit default swaps may involve greater risks than if a Fund had invested in the issuer directly. Credit default swaps are subject to general market risk, counterparty risk and credit risk. The Fund may also enter into interest rate swaps primarily to preserve a return or spread on a particular investment or portion of its portfolio, as a duration management technique or to protect against any increase in the price of securities the Fund anticipates purchasing at a later date. Interest rate swaps are contractual agreements to exchange periodic interest payment streams calculated on a predetermined notional principal amount. Interest rate swaps generally involve one party paying a fixed interest rate and the other party paying a variable rate. The Fund will usually enter into interest rate swaps on a net basis, i.e., the two payment streams are netted out in a cash settlement on the payment date or dates specified in the instrument, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. The Fund accrues the net amount with respect to each interest rate swap on a daily basis. This net amount is recorded within unrealized appreciation/depreciation on swap contracts. Upon cash settlement of the periodic payments, the net amount is recorded as realized gain/loss on swap contracts on the Statement of Operations. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts. If there is a default by the counterparty to a swap agreement, the Fund will have contractual remedies pursuant to the agreements related to the transaction. Counterparties are required to pledge collateral daily (based on the valuation of each swap) on behalf of the Fund with a value approximately equal to the amount of any unrealized gain. Cash collateral, when received by the Fund, is recorded with an offsetting liability shown on the Statement of Assets and Liabilities. Reciprocally, when the Fund has an unrealized loss on a swap contract, the Fund has instructed the custodian to pledge cash or liquid securities as collateral with a value approximately equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate. Restricted cash, if any, for segregating purposes is shown on the Statement of Assets and Liabilities. 7. DISTRIBUTION AND SERVICE PLANS Shares of the Fund are distributed by Van Kampen Funds Inc. (the "Distributor"), an affiliate of the Adviser. The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively, the "Plans") for Class A Shares, Class B Shares and Class C Shares to compensate the Distributor for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to .25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets. These fees are accrued daily and paid to the Distributor monthly. The amount of distribution expenses incurred by the Distributor and not yet reimbursed ("unreimbursed receivable") was approximately $650,500 and $6,900 for Class B and Class C Shares, respectively. These amounts may be recovered from future payments under the 38 VAN KAMPEN CORPORATE BOND FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2007 continued distribution plan or CDSC. To the extent the unreimbursed receivable has been fully recovered, the distribution fee is reduced. 8. INDEMNIFICATIONS The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. 9. ACCOUNTING PRONOUNCEMENTS In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes--an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Recent SEC guidance allows implementing FIN 48 in the fund NAV calculations as late as the fund's last NAV calculation in the first required financial statement period. As a result, the Fund will incorporate FIN 48 in its semi-annual report on February 29, 2008. The impact to the Fund's financial statements, if any, is currently being assessed. In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures. 39 VAN KAMPEN CORPORATE BOND FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Trustees of Van Kampen Corporate Bond Fund We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Van Kampen Corporate Bond Fund (the "Fund") as of August 31, 2007, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2007, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Van Kampen Corporate Bond Fund at August 31, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Chicago, Illinois October 16, 2007 40 VAN KAMPEN CORPORATE BOND FUND BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES BOARD OF TRUSTEES DAVID C. ARCH JERRY D. CHOATE ROD DAMMEYER LINDA HUTTON HEAGY R. CRAIG KENNEDY HOWARD J KERR JACK E. NELSON HUGO F. SONNENSCHEIN WAYNE W. WHALEN* - Chairman SUZANNE H. WOOLSEY OFFICERS RONALD E. ROBISON President and Principal Executive Officer DENNIS SHEA Vice President J. DAVID GERMANY Vice President AMY R. DOBERMAN Vice President STEFANIE V. CHANG Vice President and Secretary JOHN L. SULLIVAN Chief Compliance Officer STUART N. SCHULDT Chief Financial Officer and Treasurer INVESTMENT ADVISER VAN KAMPEN ASSET MANAGEMENT 522 Fifth Avenue New York, New York 10036 DISTRIBUTOR VAN KAMPEN FUNDS INC. One Parkview Plaza -- Suite 100 P.O. Box 5555 Oakbrook Terrace, Illinois 60181-5555 SHAREHOLDER SERVICING AGENT VAN KAMPEN INVESTOR SERVICES INC. P.O. Box 947 Jersey City, New Jersey 07303-0947 CUSTODIAN STATE STREET BANK AND TRUST COMPANY One Lincoln Street Boston, Massachusetts 02111 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ERNST & YOUNG LLP 233 South Wacker Drive Chicago, Illinois 60606 * "Interested persons" of the Fund, as defined in the Investment Company Act of 1940, as amended. 41 VAN KAMPEN CORPORATE BOND FUND TRUSTEES AND OFFICERS The business and affairs of the Fund are managed under the direction of the Fund's Board of Trustees and the Fund's officers appointed by the Board of Trustees. The tables below list the trustees and executive officers of the Fund and their principal occupations during the last five years, other directorships held by trustees and their affiliations, if any, with Van Kampen Investments, the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange Corp. and Investor Services. The term "Fund Complex" includes each of the investment companies advised by the Adviser as of the date of this Annual Report. Trustees serve until reaching their retirement age or until their successors are duly elected and qualified. Officers are annually elected by the trustees. INDEPENDENT TRUSTEES
NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE David C. Arch (62) Trustee Trustee Chairman and Chief 73 Trustee/Director/Managing Blistex Inc. since 2003 Executive Officer of General Partner of funds 1800 Swift Drive Blistex Inc., a consumer in the Fund Complex. Oak Brook, IL 60523 health care products Director of the Heartland manufacturer. Alliance, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers' Association. Jerry D. Choate (69) Trustee Trustee Prior to January 1999, 73 Trustee/Director/Managing 33971 Selva Road since 1999 Chairman and Chief General Partner of funds Suite 130 Executive Officer of the in the Fund Complex. Dana Point, CA 92629 Allstate Corporation Director of H&R Block, ("Allstate") and Allstate Amgen Inc., a Insurance Company. Prior biotechnological company, to January 1995, and Valero Energy President and Chief Corporation, an Executive Officer of independent refining Allstate. Prior to August company. 1994, various management positions at Allstate.
42
VAN KAMPEN CORPORATE BOND FUND TRUSTEES AND OFFICERS continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Rod Dammeyer (66) Trustee Trustee President of CAC, L.L.C., 73 Trustee/Director/Managing CAC, L.L.C. since 2003 a private company General Partner of funds 4350 LaJolla Village Drive offering capital in the Fund Complex. Suite 980 investment and management Director of Quidel San Diego, CA 92122-6223 advisory services. Corporation, Stericycle, Inc., Ventana Medical Systems, Inc. and Trustee of The Scripps Research Institute. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. Prior to January 2004, Director of TeleTech Holdings Inc. and Arris Group, Inc. Linda Hutton Heagy+ (59) Trustee Trustee Managing Partner of 73 Trustee/Director/Managing Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of funds 233 South Wacker Drive international executive in the Fund Complex. Suite 7000 search firm. Prior to Trustee on the University Chicago, IL 60606 1997, Partner of Ray & of Chicago Hospitals Berndtson, Inc., an Board, Vice Chair of the executive recruiting Board of the YMCA of firm. Prior to 1995, Metropolitan Chicago and Executive Vice President a member of the Women's of ABN AMRO, N.A., a bank Board of the University holding company. Prior to of Chicago. 1990, Executive Vice President of The Exchange National Bank.
43
VAN KAMPEN CORPORATE BOND FUND TRUSTEES AND OFFICERS continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE R. Craig Kennedy (55) Trustee Trustee Director and President of 73 Trustee/Director/Managing 1744 R Street, NW since 1995 the German Marshall Fund General Partner of funds Washington, DC 20009 of the United States, an in the Fund Complex. independent U.S. foundation created to deepen understanding, promote collaboration and stimulate exchanges of practical experience between Americans and Europeans. Formerly, advisor to the Dennis Trading Group Inc., a managed futures and option company that invests money for individuals and institutions. Prior to 1992, President and Chief Executive Officer, Director and member of the Investment Committee of the Joyce Foundation, a private foundation. Howard J Kerr (71) Trustee Trustee Prior to 1998, President 73 Trustee/Director/Managing 14 Huron Trace since 2003 and Chief Executive General Partner of funds Galena, IL 61036 Officer of Pocklington in the Fund Complex. Corporation, Inc., an Director of the Lake investment holding Forest Bank & Trust. company. Director of the Marrow Foundation. Jack E. Nelson (71) Trustee Trustee President of Nelson 73 Trustee/Director/Managing 423 Country Club Drive since 1995 Investment Planning General Partner of funds Winter Park, FL 32789 Services, Inc., a in the Fund Complex. financial planning company and registered investment adviser in the State of Florida. President of Nelson Ivest Brokerage Services Inc., a member of FINRA, Securities Investors Protection Corp. and the Municipal Securities Rulemaking Board. President of Nelson Sales and Services Corporation, a marketing and services company to support affiliated companies.
44
VAN KAMPEN CORPORATE BOND FUND TRUSTEES AND OFFICERS continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Hugo F. Sonnenschein (66) Trustee Trustee President Emeritus and 73 Trustee/Director/Managing 1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of funds Chicago, IL 60637 University of Chicago and in the Fund Complex. the Adam Smith Trustee of the University Distinguished Service of Rochester and a member Professor in the of its investment Department of Economics committee. Member of the at the University of National Academy of Chicago. Prior to July Sciences, the American 2000, President of the Philosophical Society and University of Chicago. a fellow of the American Academy of Arts and Sciences.
45
VAN KAMPEN CORPORATE BOND FUND TRUSTEES AND OFFICERS continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Suzanne H. Woolsey, Ph.D. Trustee Trustee Chief Communications 73 Trustee/Director/Managing (65) since 1999 Officer of the National General Partner of funds 815 Cumberstone Road Academy of in the Fund Complex. Harwood, MD 20776 Sciences/National Director of Fluor Corp., Research Council, an an engineering, independent, federally procurement and chartered policy construction institution, from 2001 to organization, since November 2003 and Chief January 2004. Director of Operating Officer from Intelligent Medical 1993 to 2001. Prior to Devices, Inc., a symptom 1993, Executive Director based diagnostic tool for of the Commission on physicians and clinical Behavioral and Social labs. Director of the Sciences and Education at Institute for Defense the National Academy of Analyses, a federally Sciences/National funded research and Research Council. From development center, 1980 through 1989, Director of the German Partner of Coopers & Marshall Fund of the Lybrand. United States, Director of the Rocky Mountain Institute of Technology and the Colorado College.
46 VAN KAMPEN CORPORATE BOND FUND TRUSTEES AND OFFICERS continued INTERESTED TRUSTEE*
NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Wayne W. Whalen* (68) Trustee Trustee Partner in the law firm 73 Trustee/Director/Managing 333 West Wacker Drive since 1995 of Skadden, Arps, Slate, General Partner of funds Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex. counsel to funds in the Director of the Abraham Fund Complex. Lincoln Presidential Library Foundation.
+ As indicated above, Ms. Heagy is an employee of Heidrick and Struggles, an international executive search firm ("Heidrick"). Heidrick has been (and may continue to be) engaged by Morgan Stanley from time to time to perform executive searches. Such searches have been unrelated to Van Kampen's or Morgan Stanley's asset management businesses and have been done by professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall procedures exist to ensure that Ms. Heagy will not have any involvement with any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not receive any compensation, directly or indirectly, for searches performed by Heidrick for Morgan Stanley. Ms. Heagy does own common shares of Heidrick (representing less than 1% of Heidrick's outstanding common shares). * Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19) of the 1940 Act) of certain funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such funds in the Fund Complex. 47 VAN KAMPEN CORPORATE BOND FUND TRUSTEES AND OFFICERS continued OFFICERS
TERM OF OFFICE AND POSITION(S) LENGTH OF NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S) ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005 522 Fifth Avenue Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex New York, NY 10036 Officer since May 2003. Managing Director of Van Kampen Advisors Inc. since June 2003. Director of Investor Services since September 2002. Director of the Adviser, Van Kampen Investments and Van Kampen Exchange Corp. since January 2005. Managing Director of Morgan Stanley and Morgan Stanley & Co. Incorporated. Managing Director and Director of Morgan Stanley Investment Management Inc. Chief Administrative Officer, Managing Director and Director of Morgan Stanley Investment Advisors Inc. and Morgan Stanley Services Company Inc. Managing Director and Director of Morgan Stanley Distributors Inc. and Morgan Stanley Distribution Inc. Chief Executive Officer and Director of Morgan Stanley Trust. Executive Vice President and Principal Executive Officer of the Institutional and Retail Morgan Stanley Funds. Director of Morgan Stanley SICAV. Previously, Chief Global Operations Officer of Morgan Stanley Investment Management Inc. and Executive Vice President of funds in the Fund Complex from May 2003 to September 2005. Dennis Shea (54) Vice President Officer Managing Director of Morgan Stanley Investment Advisors 522 Fifth Avenue since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser New York, NY 10036 and Van Kampen Advisors Inc. Chief Investment Officer-- Global Equity of the same entities since February 2006. Vice President of Morgan Stanley Institutional and Retail Funds since February 2006. Vice President of funds in the Fund Complex since March 2006. Previously, Managing Director and Director of Global Equity Research at Morgan Stanley from April 2000 to February 2006. J. David Germany (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors 20 Bank Street, since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser Canary Wharf and Van Kampen Advisors Inc. Chief Investment Officer-- London, GBR E14 4AD Global Fixed Income of the same entities since December 2005. Managing Director and Director of Morgan Stanley Investment Management Ltd. Director of Morgan Stanley Investment Management (ACD) Limited since December 2003. Vice President of Morgan Stanley Institutional and Retail Funds since February 2006. Vice President of funds in the Fund Complex since March 2006.
48
VAN KAMPEN CORPORATE BOND FUND TRUSTEES AND OFFICERS continued TERM OF OFFICE AND POSITION(S) LENGTH OF NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S) ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS Amy R. Doberman (45) Vice President Officer Managing Director and General Counsel--U.S. Investment 522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and the Adviser. Vice President of the Morgan Stanley Institutional and Retail Funds since July 2004 and Vice President of funds in the Fund Complex since August 2004. Previously, Managing Director and General Counsel of Americas, UBS Global Asset Management from July 2000 to July 2004 and General Counsel of Aeltus Investment Management, Inc. from January 1997 to July 2000. Stefanie V. Chang (40) Vice President Officer Executive Director of Morgan Stanley Investment Management 522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund New York, NY 10036 Complex. John L. Sullivan (52) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since 1 Parkview Plaza - Suite 100 Officer since 1996 August 2004. Prior to August 2004, Director and Managing Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen Advisors Inc. and certain other subsidiaries of Van Kampen Investments, Vice President, Chief Financial Officer and Treasurer of funds in the Fund Complex and head of Fund Accounting for Morgan Stanley Investment Management Inc. Prior to December 2002, Executive Director of Van Kampen Investments, the Adviser and Van Kampen Advisors Inc. Stuart N. Schuldt (45) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management 1 Parkview Plaza - Suite 100 and Treasurer since 2007 Inc. since June 2007. Chief Financial Officer and Treasurer Oakbrook Terrace, IL 60181 of funds in the Fund Complex since June 2007. Prior to June 2007, Senior Vice President of Northern Trust Company, Treasurer and Principal Financial Officer for Northern Trust U.S. mutual fund complex.
49 Van Kampen Corporate Bond Fund An Important Notice Concerning Our U.S. Privacy Policy We are required by federal law to provide you with a copy of our Privacy Policy annually. The following Policy applies to current and former individual clients of Van Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange Corp., as well as current and former individual investors in Van Kampen mutual funds, unit investment trusts, and related companies. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, 529 Educational Savings Accounts, accounts subject to the Uniform Gifts to Minors Act, or similar accounts. Please note that we may amend this Policy at any time, and will inform you of any changes to this Policy as required by law. WE RESPECT YOUR PRIVACY We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Policy describes what non-public personal information we collect about you, why we collect it, and when we may share it with others. We hope this Policy will help you understand how we collect and share non-public personal information that we gather about you. Throughout this Policy, we refer to the non-public information that personally identifies you or your accounts as "personal information." 1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU? To serve you better and manage our business, it is important that we collect and maintain accurate information about you. We may obtain this information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources. (continued on next page) Van Kampen Corporate Bond Fund An Important Notice Concerning Our U.S. Privacy Policy continued For example: -- We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us. -- We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources. -- We may obtain information about your creditworthiness and credit history from consumer reporting agencies. -- We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements. -- If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." "Cookies" recognize your computer each time you return to one of our sites, and help to improve our sites' content and personalize your experience on our sites by, for example, suggesting offerings that may interest you. Please consult the Terms of Use of these sites for more details on our use of cookies. 2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU? To provide you with the products and services you request, to serve you better and to manage our business, we may disclose personal information we collect about you to our affiliated companies and to non-affiliated third parties as required or permitted by law. A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose personal information that we collect about you to our affiliated companies except to enable them to provide services on our behalf or as otherwise required or permitted by law. B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal information that we collect about you to non-affiliated third parties except to enable them to provide services on our behalf, to perform joint marketing agreements with (continued on back) Van Kampen Corporate Bond Fund An Important Notice Concerning Our U.S. Privacy Policy continued other financial institutions, or as otherwise required or permitted by law. For example, some instances where we may disclose information about you to non-affiliated third parties include: for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with these companies, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information with others except to fulfill that limited purpose. 3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU? We maintain physical, electronic and procedural security measures to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information. The Statement of Additional Information includes additional information about Fund trustees and is available, without charge, upon request by calling 1-800-847-2424. Van Kampen Funds Inc. 1 Parkview Plaza - Suite 100 P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com Copyright (C)2007 Van Kampen Funds Inc. All rights reserved. Member FINRA/SIPC. 17, 117, 217, 617 CORPANN 10/07 (VAN KAMPEN INVESTMENTS LOGO) IU07-03924P-Y08/07 Item 2. Code of Ethics. (a) The Fund has adopted a code of ethics (the "Code of Ethics") that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Fund or a third party. (b) No information need be disclosed pursuant to this paragraph. (c) Due to personnel changes at the Adviser, the list of covered officers set forth in Exhibit B was amended in November 2006 and June 2007 and the general counsel's designee set forth in Exhibit C was amended in October and December 2006. All three editions of Exhibit B and all three editions of Exhibit C are attached. (d) Not applicable. (e) Not applicable. (f) (1) The Fund's Code of Ethics is attached hereto as Exhibit 12(1). (2) Not applicable. (3) Not applicable. Item 3. Audit Committee Financial Expert. The Fund's Board of Trustees has determined that it has three "audit committee financial experts" serving on its audit committee, each of whom are "independent" Trustees : Rod Dammeyer, Jerry D. Choate and R. Craig Kennedy. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification. Item 4. Principal Accountant Fees and Services. (a)(b)(c)(d) and (g). Based on fees billed for the periods shown: 2007
REGISTRANT COVERED ENTITIES(1) ---------- ------------------- AUDIT FEES ................ $26,900 N/A NON-AUDIT FEES AUDIT-RELATED FEES ..... $ 0 $ 781,800(2) TAX FEES ............... $ 3,100(3) $ 63,070(4) ALL OTHER FEES ......... $ 0 $ 157,910(5) TOTAL NON-AUDIT FEES ...... $ 3,100 $1,002,780 TOTAL ..................... $30,000 $1,002,780
2006
REGISTRANT COVERED ENTITIES(1) ---------- ------------------- AUDIT FEES ................ $26,100 N/A NON-AUDIT FEES AUDIT-RELATED FEES ..... $ 0 $ 706,000(2) TAX FEES ............... $ 2,800(3) $ 75,537(4) ALL OTHER FEES ......... $ 0 $ 749,041(5) TOTAL NON-AUDIT FEES ...... $ 2,800 $1,530,578 TOTAL ..................... $28,900 $1,530,578
N/A- Not applicable, as not required by Item 4. (1) Covered Entities include the Adviser (excluding sub-advisors) and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Registrant. (2) Audit-Related Fees represent assurance and related services provided that are reasonably related to the performance of the audit of the financial statements of the Covered Entities' and funds advised by the Adviser or its affiliates, specifically attestation services provided in connection with a SAS 70 Report. (3) Tax Fees represent tax advice and compliance services provided in connection with the review of the Registrant's tax. (4) Tax Fees represent tax advice services provided to Covered Entities, including research and identification of PFIC entities. (5) All Other Fees represent attestation services provided in connection with performance presentation standards and assistance with compliance policies and procedures. (e)(1) The audit committee's pre-approval policies and procedures are as follows: JOINT AUDIT COMMITTEE AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY AND PROCEDURES OF THE VAN KAMPEN FUNDS AS ADOPTED JULY 23, 2003 AND AMENDED MAY 26, 2004(1) 1. STATEMENT OF PRINCIPLES The Audit Committee of the Board is required to review and, in its sole discretion, pre-approve all Covered Services to be provided by the Independent Auditors to the Fund and Covered Entities in order to assure that services performed by the Independent Auditors do not impair the auditor's independence from the Fund.(2) The SEC has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the audit committee's administration of the engagement of the independent auditor. The SEC's rules establish two different approaches to pre-approving services, which the SEC considers to be equally valid. Proposed services either: may be pre-approved without consideration of specific case-by-case services by the Audit Committee ("general pre-approval"); or require the specific pre-approval of the Audit Committee ("specific pre-approval"). The Audit Committee believes that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the Independent Auditors. As set forth in this Policy, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee (or by any member of the Audit Committee to which pre-approval authority has been delegated) if it is to be provided by the Independent Auditors. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit Committee. For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the SEC's rules on auditor independence. The Audit Committee will also consider whether the Independent Auditors are best positioned to provide the most effective and efficient services, for reasons such as its familiarity with the Fund's business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance the Fund's ability to manage or control risk or improve audit quality. All such factors will be considered as a whole, and no one factor should necessarily be determinative. The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services and may determine for each fiscal year, the appropriate ratio between the total amount of fees for Audit, Audit-related and Tax services for the Fund (including any Audit-related or Tax service fees for Covered Entities that were subject to pre-approval), and the total amount of fees for certain permissible non-audit services classified as All Other services for the Fund (including any such services for Covered Entities subject to pre-approval). The appendices to this Policy describe the Audit, Audit-related, Tax and All Other services that have the general pre-approval of the Audit Committee. The term of any general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers and provides a different period and states otherwise. The Audit Committee will annually review and pre-approve the services that may be provided by the Independent Auditors without obtaining specific pre-approval from the Audit Committee. The Audit Committee will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations. The purpose of this Policy is to set forth the policy and procedures by which the Audit Committee intends to fulfill its responsibilities. It does not delegate the Audit Committee's responsibilities to pre-approve services performed by the Independent Auditors to management. ---------- (1) This Joint Audit Committee Audit and Non-Audit Services Pre-Approval Policy and Procedures (the "Policy"), amended as of the date above, supercedes and replaces all prior versions that may have been amended from time to time. (2) Terms used in this Policy and not otherwise defined herein shall have the meanings as defined in the Joint Audit Committee Charter. The Fund's Independent Auditors have reviewed this Policy and believes that implementation of the Policy will not adversely affect the Independent Auditors' independence. 2. DELEGATION As provided in the Act and the SEC's rules, the Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. 3. AUDIT SERVICES The annual Audit services engagement terms and fees are subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by the Independent Auditors to be able to form an opinion on the Fund's financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit. The Audit Committee will monitor the Audit services engagement as necessary, but no less than on a quarterly basis, and will also approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund structure or other items. In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the Independent Auditors reasonably can provide. Other Audit services may include statutory audits and services associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings. The Audit Committee has pre-approved the Audit services in Appendix B.1. All other Audit services not listed in Appendix B.1 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated). 4. AUDIT-RELATED SERVICES Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Fund's financial statements or, to the extent they are Covered Services, the Covered Entities' financial statements, or that are traditionally performed by the Independent Auditors. Because the Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor and is consistent with the SEC's rules on auditor independence, the Audit Committee may grant general pre-approval to Audit-related services. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as "Audit services"; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements under Forms N-SAR and/or N-CSR. The Audit Committee has pre-approved the Audit-related services in Appendix B.2. All other Audit-related services not listed in Appendix B.2 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated). 5. TAX SERVICES The Audit Committee believes that the Independent Auditors can provide Tax services to the Fund and, to the extent they are Covered Services, the Covered Entities, such as tax compliance, tax planning and tax advice without impairing the auditor's independence, and the SEC has stated that the Independent Auditors may provide such services. Hence, the Audit Committee believes it may grant general pre-approval to those Tax services that have historically been provided by the Independent Auditors, that the Audit Committee has reviewed and believes would not impair the independence of the Independent Auditors, and that are consistent with the SEC's rules on auditor independence. The Audit Committee will not permit the retention of the Independent Auditors in connection with a transaction initially recommended by the Independent Auditors, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with Director of Tax or outside counsel to determine that the tax planning and reporting positions are consistent with this policy. Pursuant to the preceding paragraph, the Audit Committee has pre-approved the Tax Services in Appendix B.3. All Tax services involving large and complex transactions not listed in Appendix B.3 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated), including tax services proposed to be provided by the Independent Auditors to any executive officer or trustee/director/managing general partner of the Fund, in his or her individual capacity, where such services are paid for by the Fund (generally applicable only to internally managed investment companies). 6. ALL OTHER SERVICES The Audit Committee believes, based on the SEC's rules prohibiting the Independent Auditors from providing specific non-audit services, that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC's rules on auditor independence. The Audit Committee has pre-approved the All Other services in Appendix B.4. Permissible All Other services not listed in Appendix B.4 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated). A list of the SEC's prohibited non-audit services is attached to this policy as Appendix B.5. The SEC's rules and relevant guidance should be consulted to determine the precise definitions of these services and the applicability of exceptions to certain of the prohibitions. 7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS Pre-approval fee levels or budgeted amounts for all services to be provided by the Independent Auditors will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services. For each fiscal year, the Audit Committee may determine the appropriate ratio between the total amount of fees for Audit, Audit-related, and Tax services for the Fund (including any Audit-related or Tax services fees for Covered Entities subject to pre-approval), and the total amount of fees for certain permissible non-audit services classified as All Other services for the Fund (including any such services for Covered Entities subject to pre-approval). 8. PROCEDURES All requests or applications for services to be provided by the Independent Auditors that do not require specific approval by the Audit Committee will be submitted to the Fund's Chief Financial Officer and must include a detailed description of the services to be rendered. The Fund's Chief Financial Officer will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by the Independent Auditors. Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the Independent Auditors and the Fund's Chief Financial Officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence. The Audit Committee has designated the Fund's Chief Financial Officer to monitor the performance of all services provided by the Independent Auditors and to determine whether such services are in compliance with this Policy. The Fund's Chief Financial Officer will report to the Audit Committee on a periodic basis on the results of its monitoring. A sample report is included as Appendix B.7. Both the Fund's Chief Financial Officer and management will immediately report to the chairman of the Audit Committee any breach of this Policy that comes to the attention of the Fund's Chief Financial Officer or any member of management. 9. ADDITIONAL REQUIREMENTS The Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the Independent Auditors and to assure the auditor's independence from the Fund, such as reviewing a formal written statement from the Independent Auditors delineating all relationships between the Independent Auditors and the Fund, consistent with Independence Standards Board No. 1, and discussing with the Independent Auditors its methods and procedures for ensuring independence. 10. COVERED ENTITIES Covered Entities include the Fund's investment adviser(s) and any entity controlling, controlled by or under common control with the Fund's investment adviser(s) that provides ongoing services to the Fund(s). Beginning with non-audit service contracts entered into on or after May 6, 2003, the Fund's audit committee must pre-approve non-audit services provided not only to the Fund but also to the Covered Entities if the engagements relate directly to the operations and financial reporting of the Fund. This list of Covered Entities would include: - Van Kampen Investments Inc. - Van Kampen Asset Management - Van Kampen Advisors Inc. - Van Kampen Funds Inc. - Van Kampen Investor Services Inc. - Morgan Stanley Investment Management Inc. - Morgan Stanley Trust Company - Morgan Stanley Investment Management Ltd. - Morgan Stanley Investment Management Company - Morgan Stanley Asset & Investment Trust Management Company Ltd. (e)(2) Beginning with non-audit service contracts entered into on or after May 6, 2003, the audit committee also is required to pre-approve services to Covered Entities to the extent that the services are determined to have a direct impact on the operations or financial reporting of the Registrant. 100% of such services were pre-approved by the audit committee pursuant to the Audit Committee's pre-approval policies and procedures (included herein). (f) Not applicable. (g) See table above. (h) The audit committee of the Board of Trustees has considered whether the provision of services other than audit services performed by the auditors to the Registrant and Covered Entities is compatible with maintaining the auditors' independence in performing audit services. Item 5. Audit Committee of Listed Registrants. (a) The Fund has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: R. Craig Kennedy, Jerry D. Choate, Rod Dammeyer. (b) Not applicable. Item 6. Schedule of Investments. Please refer to Item #1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. Not applicable. Item 11. 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 Fund 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (1) The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto. (2)(a) A certification for the Principal Executive Officer of the registrant is attached hereto as part of EX-99.CERT. (2)(b) 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 Corporate Bond Fund By: /s/ Ronald E. Robison ---------------------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: October 18, 2007 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: October 18, 2007 By: /s/ Stuart N. Schuldt ---------------------------------- Name: Stuart N. Schuldt Title: Principal Financial Officer Date: October 18, 2007