UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-02090
Van Kampen Bond Fund
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(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
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(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
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(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 6/30
Date of reporting period: 12/31/05
ITEM 1. REPORTS TO SHAREHOLDERS.
The Fund's semi-annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen Bond
Fund performed during the semiannual period. The portfolio management
team will provide an overview of the market conditions and discuss some
of the factors that affected investment performance during the reporting
period. In addition, this report includes the fund's financial statements
and a list of fund investments as of December 31, 2005.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND
THAT THE VALUE OF THE FUND SHARES MAY THEREFORE BE LESS THAN WHAT YOU
PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS FUND.
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NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
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NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
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Performance Summary as of 12/31/2005
BOND FUND
SYMBOL: VBF
------------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS MARKET PRICE NAV
10-year 5.75% 6.21%
5-year 5.96 6.45
1-year 1.01 3.34
6-month -1.78 0.49
------------------------------------------------------------
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, NET
ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND FUND SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
The NAV per share is determined by dividing the value of the fund's portfolio
securities, cash and other assets, less all liabilities, by the total number of
common shares outstanding. The common share market price is the price the market
is willing to pay for shares of the fund at a given time. Common share market
price is influenced by a range of factors, including supply and demand and
market conditions. Total return assumes an investment at the beginning of the
period, reinvestment of all distributions for the period in accordance with the
fund's dividend reinvestment plan, and sale of all shares at the end of the
period.
The Lehman Brothers BBB Corporate Bond Index is generally representative of
corporate bonds. The index does not include any expenses, fees or sales charges,
which would lower performance. The index is unmanaged and should not be
considered an investment. It is not possible to invest directly in an index.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2005
Van Kampen Bond Fund is managed by the Adviser's Taxable Fixed-Income team.(1)
Current team members include David S. Horowitz and Gordon W. Loery, Executive
Directors of the Adviser.
MARKET CONDITIONS
As was widely anticipated, the Federal Open Market Committee (the Fed) continued
to raise the federal funds target rate during the reporting period. At each of
its meetings in the second half of 2005, the Fed raised the benchmark overnight
rate by 25 basis points, bringing it to 4.25 percent as of year-end. The minutes
from the Fed's December meeting, however, indicated that this "measured pace" of
increases may slow in the future. In addition, these minutes were noticeably
missing the term "accommodation" in reference to the Fed's policy, implying that
the Committee may believe the fed funds rate is no longer at a level that
stimulates economic growth.
In the wake of Hurricane Katrina, some observers initially believed that the
economy would suffer lingering after effects. As the weeks progressed, however,
it became apparent that the impact on the economy could be smaller and more
temporary than anticipated. Even sharply higher energy prices failed to
interrupt the positive economic momentum, and real gross domestic product growth
averaged near 4 percent throughout the year.
In response to stronger-than-expected economic data and the Fed's ongoing
tightening, U. S. Treasury yields continued to rise in the second half of the
year. However, short- and intermediate-term yields rose more than long-term
yields, which caused the yield curve to flatten.
Within the investment-grade corporate sector, higher quality corporate bonds
generally outperformed lower credit quality bonds. Among the corporate sub-
sectors, utilities, energy, and banking issues posted the highest returns, while
the industrial sector posted the lowest returns.
(1)Team members may change without notice from time to time.
2
PERFORMANCE ANALYSIS
The fund's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the fund's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ, as they did during the reporting period. On an NAV basis,
the fund outperformed its benchmark index, the Lehman Brothers BBB Corporate
Bond Index. On a market price basis, the fund underperformed its benchmark.
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2005
--------------------------------------------------------------
BASED ON LEHMAN BROTHERS BBB
BASED ON NAV MARKET PRICE CORPORATE BOND INDEX
0.49% -1.78% -0.58%
--------------------------------------------------------------
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. Investment return, net asset value and common share market price will
fluctuate and fund shares, when sold, may be worth more or less than their
original cost. See Performance Summary for additional performance information
and index definition.
Although the fund invested modestly in high yield securities, the bulk of the
portfolio focused on investment-grade bonds. Within the investment-grade
portion, the fund gained from its security selection in the insurance sector,
which outperformed other sectors for the period. Additionally, a focus on
higher-quality credits, strong security selection in the energy sector, and an
underweight to the automotive sector further enhanced performance.
During the period, we kept the fund's overall interest-rate exposure well below
that of its benchmark. This posture was beneficial as interest rates rose across
the short-term and intermediate-term portions of the curve. However, in periods
of rate declines, such as we saw periodically during the reporting period, this
defensive positioning detracted from relative performance.
There is no guarantee that any sectors mentioned will continue to perform well
or that securities in such sectors will be held by the fund in the future.
3
RATINGS ALLOCATION AS OF 12/31/05
AAA/Aaa 21.4%
AA/Aa 24.9
A/A 21.5
BBB/Baa 26.2
BB/Ba 4.3
B/B 1.7
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 12/31/05
United States Government Agency Obligations 20.1%
Banking 13.2
Electric 7.6
Noncaptive-Consumer Finance 5.2
Healthcare 5.1
Wireline Communications 4.1
Property & Casualty 3.7
Life Insurance 2.9
Automotive 2.4
Noncaptive-Diversified Finance 2.4
Retail 2.4
Railroads 2.4
Diversified Manufacturing 2.1
Natural Gas Pipelines 1.6
Media-Cable 1.5
Brokerage 1.5
Media-Noncable 1.2
Chemicals 1.0
Supermarkets 1.0
Environmental & Facilities Services 0.9
Construction Machinery 0.9
Gaming 0.7
Lodging 0.7
Consumer Products 0.6
Aerospace & Defense 0.6
Real Estate Investment Trusts 0.5
Integrated Energy 0.5
Textile 0.5
Transportation Services 0.4
Natural Gas Distributors 0.4
Independent Energy 0.3
Food/Beverage 0.3
Technology 0.2
Oil Field Services 0.2
Refining 0.1
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Total Long-Term Investments 89.2%
Total Short-Term Investments 10.8
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Total Investments 100.0%
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. All percentages are as a percentage of
total investments. 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.
4
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 by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. 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 e-mail 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.
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.
5
VAN KAMPEN BOND FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
CORPORATE BONDS 74.6%
AEROSPACE & DEFENSE 0.6%
$ 407 Raytheon Co. ................................... 4.500% 11/15/07 $ 403,671
875 Raytheon Co. ................................... 8.300 03/01/10 980,946
------------
1,384,617
------------
AUTOMOTIVE 2.6%
1,280 DaimlerChrysler NA Holding Corp. ............... 8.500 01/18/31 1,553,288
1,165 General Motors Acceptance Corp. ................ 6.875 09/15/11 1,063,628
4,075 General Motors Corp. ........................... 8.375 07/15/33 2,709,875
470 Lear Corp. ..................................... 8.110 05/15/09 437,743
------------
5,764,534
------------
BANKING 14.3%
2,230 Bank of America Corp. .......................... 3.375 02/17/09 2,133,341
2,250 Bank of Scotland, 144A-Private Placement (United
Kingdom) (a).................................... 3.500 11/30/07 2,196,740
2,150 Citigroup, Inc. ................................ 5.625 08/27/12 2,219,090
545 Citigroup, Inc. ................................ 6.000 02/21/12 572,733
3,340 JPMorgan Chase & Co. ........................... 6.750 02/01/11 3,581,245
2,250 KeyCorp. ....................................... 6.750 03/15/06 2,258,345
2,255 M & I Marshall & Ilsley Bank.................... 3.800 02/08/08 2,213,533
400 MBNA America Bank NA............................ 7.125 11/15/12 447,775
920 MBNA Corp. ..................................... 6.125 03/01/13 977,000
1,635 MBNA Corp. (Variable Rate Coupon)............... 4.721 05/05/08 1,647,951
2,315 National City Bank.............................. 3.375 10/15/07 2,255,356
2,195 SunTrust Banks, Inc. ........................... 5.050 07/01/07 2,200,439
2,250 U.S. Bancorp.................................... 3.950 08/23/07 2,221,711
1,350 Wachovia Corp. ................................. 3.625 02/17/09 1,303,005
885 Wachovia Corp. ................................. 4.950 11/01/06 885,245
925 Washington Mutual Bank FA....................... 5.500 01/15/13 940,801
900 Washington Mutual, Inc. ........................ 8.250 04/01/10 1,003,020
2,190 Wells Fargo & Co. .............................. 5.125 02/15/07 2,195,142
------------
31,252,472
------------
BROKERAGE 1.6%
185 Goldman Sachs Group, Inc. ...................... 5.250 10/15/13 185,248
2,000 Lehman Brothers Holdings, Inc. ................. 8.500 05/01/07 2,089,780
862 World Financial Prop., 144A-Private Placement
(a)............................................. 6.910 09/01/13 905,916
392 World Financial Prop., 144A-Private Placement
(a)............................................. 6.950 09/01/13 411,961
------------
3,592,905
------------
CHEMICALS 1.1%
640 ICI Wilmington, Inc. ........................... 4.375 12/01/08 624,068
1,785 Sealed Air Corp., 144A-Private Placement (a).... 5.625 07/15/13 1,774,577
------------
2,398,645
------------
CONSTRUCTION MACHINERY 0.9%
2,045 Caterpillar Financial Services Corp., Ser F..... 3.625 11/15/07 2,000,926
------------
6 See Notes to Financial Statements
VAN KAMPEN BOND FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
CONSUMER PRODUCTS 0.7%
$1,495 Clorox Co. (Variable Rate Coupon)............... 4.614% 12/14/07 $ 1,498,518
------------
DIVERSIFIED MANUFACTURING 2.3%
1,070 Brascan Corp. (Canada).......................... 7.125 06/15/12 1,168,015
1,275 Cooper Industries, Inc. ........................ 5.250 07/01/07 1,280,871
720 Cooper Industries, Inc., 144A-Private Placement
(a)............................................. 5.250 11/15/12 725,191
1,845 United Technologies Corp. ...................... 4.375 05/01/10 1,817,081
------------
4,991,158
------------
ELECTRIC 8.2%
1,200 Ameren Corp. ................................... 4.263 05/15/07 1,183,198
1,340 Arizona Public Service Co. ..................... 5.800 06/30/14 1,383,362
795 Arizona Public Service Co. ..................... 6.750 11/15/06 805,613
805 Carolina Power & Light Co. ..................... 6.800 08/15/07 827,294
1,460 CC Funding Trust I.............................. 6.900 02/16/07 1,488,482
625 Cincinnati Gas & Electric Co. .................. 5.700 09/15/12 642,388
865 Detroit Edison Co. ............................. 6.125 10/01/10 903,231
960 Duquesne Light Co., Ser O....................... 6.700 04/15/12 1,043,091
655 Entergy Gulf States, Inc. ...................... 3.600 06/01/08 630,217
1,600 Entergy Gulf States, Inc. (Variable Rate
Coupon)......................................... 4.810 12/01/09 1,562,517
425 Entergy Gulf States, Inc., 144A-Private
Placement (Variable Rate Coupon) (a)............ 5.207 12/08/08 425,252
1,660 Exelon Corp. ................................... 6.750 05/01/11 1,769,246
1,290 FPL Group Capital, Inc. ........................ 3.250 04/11/06 1,285,004
255 Indianapolis Power & Light Co., 144A-Private
Placement (a)................................... 6.300 07/01/13 268,645
655 Monongahela Power Co. .......................... 5.000 10/01/06 654,785
900 NiSource Finance Corp. (Variable Rate Coupon)... 4.950 11/23/09 903,772
650 Pacific Gas & Electric Co. ..................... 6.050 03/01/34 675,031
80 PSE&G Energy Holdings, LLC...................... 7.750 04/16/07 83,200
650 PSE&G Energy Holdings, LLC...................... 8.625 02/15/08 679,250
255 TXU Corp., Ser J................................ 6.375 06/15/06 257,574
560 Wisconsin Electric Power........................ 3.500 12/01/07 545,536
------------
18,016,688
------------
ENVIRONMENTAL & FACILITIES SERVICES 1.0%
1,500 Waste Management, Inc. ......................... 7.000 10/15/06 1,520,903
550 Waste Management, Inc. ......................... 7.375 08/01/10 599,144
------------
2,120,047
------------
FOOD/BEVERAGE 0.3%
410 ConAgra Foods, Inc. ............................ 7.000 10/01/28 446,742
105 ConAgra Foods, Inc. ............................ 8.250 09/15/30 130,074
------------
576,816
------------
GAMING 0.8%
1,675 Harrah's Operating Co., Inc. ................... 5.625 06/01/15 1,648,522
------------
See Notes to Financial Statements 7
VAN KAMPEN BOND FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
HEALTHCARE 5.5%
$3,205 Aetna, Inc. .................................... 7.375% 03/01/06 $ 3,217,826
600 AmerisourceBergen Corp., 144A--Private Placement
(a)............................................. 5.625 09/15/12 603,000
1,425 Baxter Finco BV, 144A--Private Placement
(Netherlands) (a)............................... 4.750 10/15/10 1,406,828
1,250 HCA, Inc. ...................................... 6.300 10/01/12 1,262,491
285 HCA, Inc. ...................................... 7.190 11/15/15 301,054
205 HCA, Inc. ...................................... 7.875 02/01/11 221,432
1,885 Health Net, Inc. ............................... 9.875 04/15/11 2,202,247
620 Tenet Healthcare Corp. ......................... 7.375 02/01/13 575,050
1,130 UnitedHealth Group, Inc. ....................... 5.200 01/17/07 1,129,560
650 Wellpoint, Inc. ................................ 3.750 12/14/07 635,857
590 Wellpoint, Inc. ................................ 4.250 12/15/09 575,196
------------
12,130,541
------------
INDEPENDENT ENERGY 0.4%
285 Kerr-McGee Corp. ............................... 5.875 09/15/06 287,413
470 Kerr-McGee Corp. ............................... 6.625 10/15/07 482,286
------------
769,699
------------
INTEGRATED ENERGY 0.6%
790 Consumers Energy Co., Ser F..................... 4.000 05/15/10 750,965
455 Consumers Energy Co., Ser H..................... 4.800 02/17/09 449,389
------------
1,200,354
------------
LIFE INSURANCE 3.1%
315 AXA Financial, Inc. ............................ 6.500 04/01/08 326,576
475 John Hancock Financial Services, Inc. .......... 5.625 12/01/08 484,722
2,365 Marsh & McLennan Cos., Inc. .................... 5.875 08/01/33 2,271,452
105 Metlife, Inc. .................................. 6.125 12/01/11 111,402
1,030 Monumental Global Funding II, 144A-Private
Placement (a)................................... 3.850 03/03/08 1,008,369
585 Nationwide Financial Services, Inc. ............ 6.250 11/15/11 616,474
100 Prudential Holdings, LLC, 144A- Private
Placement (a)................................... 7.245 12/18/23 119,880
1,895 Xlliac Global Funding, 144A-Private Placement
(a)............................................. 4.800 08/10/10 1,873,016
------------
6,811,891
------------
LODGING 0.7%
1,325 Hyatt Equities, LLC, 144A-Private Placement
(a)............................................. 6.875 06/15/07 1,352,324
185 Starwood Hotels & Resorts Worldwide, Inc. ...... 7.375 05/01/07 189,625
------------
1,541,949
------------
MEDIA-CABLE 1.7%
1,835 Comcast Cable Communications, Inc. ............. 6.750 01/30/11 1,944,992
90 Comcast Cable Communications, Inc. ............. 7.125 06/15/13 97,967
490 Comcast Cable Communications, Inc. ............. 8.375 05/01/07 511,137
935 Echostar DBS Corp. ............................. 6.375 10/01/11 904,612
180 Echostar DBS Corp. ............................. 6.625 10/01/14 173,475
------------
3,632,183
------------
8 See Notes to Financial Statements
VAN KAMPEN BOND FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
MEDIA-NONCABLE 1.3%
$ 950 Interpublic Group of Cos., Inc. ................ 5.400% 11/15/09 $ 869,250
915 Knight-Ridder, Inc. ............................ 5.750 09/01/17 777,638
970 News America Holdings, Inc. .................... 8.875 04/26/23 1,209,577
------------
2,856,465
------------
NATURAL GAS DISTRIBUTORS 0.4%
890 Sempra Energy................................... 4.621 05/17/07 883,984
------------
NATURAL GAS PIPELINES 1.7%
765 Consolidated Natural Gas Co., Ser A............. 5.000 12/01/14 743,499
1,065 Consolidated Natural Gas Co., Ser C............. 6.250 11/01/11 1,116,595
945 Ras Laffan Liquefied Natural Gas Co., Ltd.,
144A-Private Placement (Qatar) (a).............. 8.294 03/15/14 1,094,445
675 Texas Eastern Transmission Corp. ............... 7.000 07/15/32 789,619
------------
3,744,158
------------
NONCAPTIVE-CONSUMER FINANCE 5.6%
1,000 American Express Co. ........................... 4.750 06/17/09 994,217
230 American General Finance Corp. ................. 4.625 05/15/09 227,867
2,000 American General Finance Corp. ................. 4.625 09/01/10 1,959,256
2,245 Countrywide Home Loans, Inc. ................... 3.250 05/21/08 2,157,025
1,555 HSBC Finance Corp. ............................. 6.750 05/15/11 1,670,661
1,000 HSBC Finance Corp. ............................. 7.875 03/01/07 1,032,529
150 HSBC Finance Corp. ............................. 8.000 07/15/10 167,497
2,595 Residential Capital Corp. ...................... 6.375 06/30/10 2,639,367
1,330 SLM Corp. ...................................... 5.000 10/01/13 1,316,622
------------
12,165,041
------------
NONCAPTIVE-DIVERSIFIED FINANCE 2.6%
415 CIT Group, Inc. ................................ 3.650 11/23/07 405,868
415 CIT Group, Inc. ................................ 7.375 04/02/07 427,213
2,100 General Electric Capital Corp., Ser A........... 4.750 09/15/14 2,069,000
90 General Electric Capital Corp., Ser A........... 5.875 02/15/12 93,995
415 General Electric Capital Corp., Ser A........... 6.750 03/15/32 488,767
2,240 Nationwide Building Society, 144A-Private
Placement (United Kingdom) (a).................. 4.250 02/01/10 2,184,748
------------
5,669,591
------------
OIL FIELD SERVICES 0.2%
380 Panhandle Eastern Pipe Line Co., Ser B.......... 2.750 03/15/07 369,613
------------
PROPERTY & CASUALTY 4.0%
1,195 AIG Sunamerica Global Financial, 144A-Private
Placement (a)................................... 6.300 05/10/11 1,270,958
1,545 Farmers Exchange Capital, 144A-Private Placement
(a)............................................. 7.050 07/15/28 1,638,873
1,230 Farmers Insurance Exchange Surplus, 144A-Private
Placement (a)................................... 8.625 05/01/24 1,496,684
125 Hartford Financial Services Group, Inc. ........ 2.375 06/01/06 123,800
See Notes to Financial Statements 9
VAN KAMPEN BOND FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
PROPERTY & CASUALTY (CONTINUED)
$1,800 Mantis Reef Ltd., 144A-Private Placement
(Australia) (a)................................. 4.692% 11/14/08 $ 1,769,717
1,415 St. Paul Travelers Cos., Inc. .................. 5.010 08/16/07 1,414,875
1,035 Two-Rock Pass Through Trust, 144A-Private
Placement (Variable Rate Coupon) (Bermuda)
(a)............................................. 5.270 02/11/49 1,029,463
------------
8,744,370
------------
RAILROADS 2.5%
590 Burlington Northern Santa Fe Corp. ............. 6.125 03/15/09 610,661
653 Burlington Northern Santa Fe Railway Co. ....... 4.575 01/15/21 632,781
1,000 CSX Corp. ...................................... 6.750 03/15/11 1,072,816
520 Norfolk Southern Corp. ......................... 7.350 05/15/07 536,788
2,600 Union Pacific Corp. ............................ 6.625 02/01/08 2,686,551
------------
5,539,597
------------
REAL ESTATE INVESTMENT TRUSTS 0.6%
250 EOP Operating LP................................ 4.750 03/15/14 236,641
175 EOP Operating LP................................ 7.875 07/15/31 207,125
850 Reckson Operating Partnership LP................ 5.150 01/15/11 839,467
------------
1,283,233
------------
REFINING 0.1%
250 Vintage Petroleum, Inc. ........................ 7.875 05/15/11 262,500
------------
RETAIL 2.6%
270 CVS Corp. ...................................... 3.875 11/01/07 264,965
250 CVS Corp. ...................................... 5.625 03/15/06 250,302
500 Federated Department Stores, Inc. .............. 6.300 04/01/09 515,996
1,500 Federated Department Stores, Inc. .............. 6.625 09/01/08 1,555,484
705 J.C. Penny Co., Inc. ........................... 7.400 04/01/37 791,161
920 Limited Brands, Inc. ........................... 6.950 03/01/33 934,012
1,275 May Department Stores Co. ...................... 5.950 11/01/08 1,303,921
------------
5,615,841
------------
SUPERMARKETS 1.1%
1,630 Kroger Co. ..................................... 7.500 04/01/31 1,825,144
520 Safeway, Inc. .................................. 7.250 02/01/31 562,802
------------
2,387,946
------------
TECHNOLOGY 0.2%
450 Eastman Kodak Co. .............................. 7.250 11/15/13 432,367
------------
TEXTILE 0.5%
995 Mohawk Industries, Inc., Ser D.................. 7.200 04/15/12 1,098,032
------------
TRANSPORTATION SERVICES 0.4%
1,000 FedEx Corp. .................................... 2.650 04/01/07 973,008
------------
WIRELINE COMMUNICATIONS 4.4%
1,785 AT&T Corp. ..................................... 9.750 11/15/31 2,248,830
970 Cox Communications, Inc. ....................... 4.625 01/15/10 939,860
10 See Notes to Financial Statements
VAN KAMPEN BOND FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
WIRELINE COMMUNICATIONS (CONTINUED)
$1,400 Deutsche Telekom International Finance BV
(Netherlands)................................... 8.750% 06/15/30 $ 1,785,934
1,335 France Telecom SA (France)...................... 8.500 03/01/31 1,786,655
995 SBC Communications, Inc. ....................... 6.150 09/15/34 1,002,806
1,010 Sprint Capital Corp. ........................... 8.750 03/15/32 1,344,410
590 Verizon New England, Inc. ...................... 6.500 09/15/11 605,929
------------
9,714,424
------------
TOTAL CORPORATE BONDS 74.6%...................................... 163,072,635
------------
UNITED STATES GOVERNMENT AGENCY
OBLIGATIONS 21.7%
12,005 United States Treasury Bonds (STRIPS)........... * 02/15/25 4,966,468
3,255 United States Treasury Bonds (STRIPS)........... * 02/15/27 1,232,913
7,180 United States Treasury Bonds.................... 6.125 08/15/29 8,748,105
6,000 United States Treasury Bonds.................... 6.375 08/15/27 7,434,612
21,250 United States Treasury Notes (c)................ 4.250 08/15/13 21,066,570
4,000 United States Treasury Notes.................... 4.250 11/15/13 3,963,128
------------
TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS................. 47,411,796
------------
TOTAL LONG-TERM INVESTMENTS 96.3%
(Cost $208,141,856)....................................... 210,484,431
------------
SHORT-TERM INVESTMENTS 11.6%
REPURCHASE AGREEMENT 11.5%
State Street Bank & Trust Co. ($25,263,000 par
collateralized by U.S. Government obligations in a pooled
cash account, interest rate of
4.12%, dated 12/30/05, to be sold on 01/03/06 at
$25,274,565)..............................................
25,263,000
UNITED STATES GOVERNMENT OBLIGATIONS 0.1%
United States Treasury Bills ($300,000 par, yielding
3.167%, 01/12/06 maturity) (b)............................
299,710
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $25,562,693)........................................
25,562,710
------------
TOTAL INVESTMENTS 107.9%
(Cost $233,704,549).......................................
236,047,141
LIABILITIES IN EXCESS OF OTHER ASSETS (7.9%)...............
(17,369,549)
------------
NET ASSETS 100.0%..........................................
$218,677,592
============
See Notes to Financial Statements 11
VAN KAMPEN BOND FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED) continued
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(b) All or a portion of this security has been physically segregated in
connection with open futures contracts.
(c) Security purchased on a when-issued or delayed delivery basis.
STRIPS--Separate Trading of Registered Interest & Principal of Securities.
FUTURES CONTRACTS OUTSTANDING AS OF DECEMBER 31, 2005:
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
LONG CONTRACTS:
U.S. Treasury Notes 10-Year Futures March 2006 (Current
Notional Value of $109,406 per contract).................. 143 $ 132,478
U.S. Treasury Bonds Futures March 2006 (Current Notional
Value of $114,188 per contract)........................... 4 6,736
SHORT CONTRACTS:
U.S. Treasury Notes 5-Year Futures March 2006 (Current
Notional Value of $106,344 per contract).................. 142 (31,324)
U.S. Treasury Notes 2-Year Futures March 2006 (Current
Notional Value of $205,188 per contract).................. 143 (20,940)
--- ---------
432 $ 86,950
=== =========
12 See Notes to Financial Statements
VAN KAMPEN BOND FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
December 31, 2005 (Unaudited)
ASSETS:
Total Investments, including repurchase agreement of
$25,263,000 (Cost $233,704,549)........................... $236,047,141
Cash........................................................ 913
Interest Receivable......................................... 3,177,640
Other....................................................... 22,386
------------
Total Assets............................................ 239,248,080
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 20,040,725
Income Distributions...................................... 137,408
Investment Advisory Fee................................... 77,877
Variation Margin on Futures............................... 7,750
Other Affiliates.......................................... 5,605
Trustees' Deferred Compensation and Retirement Plans........ 203,267
Accrued Expenses............................................ 97,856
------------
Total Liabilities....................................... 20,570,488
------------
NET ASSETS.................................................. $218,677,592
============
NET ASSET VALUE PER COMMON SHARE ($218,677,592 divided by
11,362,465 shares outstanding)............................ $ 19.25
============
NET ASSETS CONSIST OF:
Common Shares ($1.00 par value with 15,000,000 shares
authorized, 11,362,465 shares issued and outstanding)..... $ 11,362,465
Paid in Surplus............................................. 207,602,030
Net Unrealized Appreciation................................. 2,429,542
Accumulated Net Realized Loss............................... (1,174,669)
Accumulated Undistributed Net Investment Income............. (1,541,776)
------------
NET ASSETS.................................................. $218,677,592
============
See Notes to Financial Statements 13
VAN KAMPEN BOND FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended December 31, 2005 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $ 5,635,571
Other....................................................... 30,606
-----------
Total Income............................................ 5,666,177
-----------
EXPENSES:
Investment Advisory Fee..................................... 467,126
Shareholder Reports......................................... 35,889
Trustees' Fees and Related Expenses......................... 28,939
Legal....................................................... 5,345
Custody..................................................... 14,608
Other....................................................... 102,450
-----------
Total Expenses.......................................... 654,357
Less Credits Earned on Cash Balances.................... 178
-----------
Net Expenses............................................ 654,179
-----------
NET INVESTMENT INCOME....................................... $ 5,011,998
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 339,806
Futures................................................... 376,673
-----------
Net Realized Gain........................................... 716,479
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 7,764,627
-----------
End of the Period:
Investments............................................. 2,342,592
Futures................................................. 86,950
-----------
2,429,542
-----------
Net Unrealized Depreciation During the Period............... (5,335,085)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(4,618,606)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 393,392
===========
14 See Notes to Financial Statements
VAN KAMPEN BOND FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 2005 JUNE 30, 2005
----------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 5,011,998 $ 10,914,053
Net Realized Gain....................................... 716,479 4,772,518
Net Unrealized Appreciation/Depreciation During the
Period................................................ (5,335,085) 2,110,710
------------ ------------
Change in Net Assets from Operations.................... 393,392 17,797,281
Distributions from Net Investment Income................ (5,476,518) (11,589,525)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (5,083,126) 6,207,756
NET ASSETS:
Beginning of the Period................................. 223,760,718 217,552,962
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $(1,541,776) and
$(1,077,256), respectively)........................... $218,677,592 $223,760,718
============ ============
See Notes to Financial Statements 15
VAN KAMPEN BOND FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ------------------------------------------------
2005 2005 2004 2003 2002 (A) 2001
----------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
THE PERIOD.................. $19.69 $19.15 $19.78 $18.78 $19.41 $18.70
------ ------ ------ ------ ------ ------
Net Investment Income....... .44 .96 1.03 1.10 1.26 1.40
Net Realized and Unrealized
Gain/Loss................. (.40) .60 (.54) 1.11 (.56) .68
------ ------ ------ ------ ------ ------
Total from Investment
Operations.................. .04 1.56 .49 2.21 .70 2.08
Less Distributions from Net
Investment Income........... .48 1.02 1.12 1.21 1.33 1.37
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD...................... $19.25 $19.69 $19.15 $19.78 $18.78 $19.41
====== ====== ====== ====== ====== ======
Common Share Market Price at
End of the Period........... $17.01 $17.80 $17.02 $19.57 $18.50 $19.15
Total Return (b).............. -1.78%* 10.69% -7.44% 12.67% 3.50% 23.10%
Net Assets at End of the
Period (In millions)........ $218.7 $223.8 $217.6 $224.7 $213.4 $220.5
Ratio of Expenses to Average
Net Assets.................. .59% .60% .65% .65% .65% .68%
Ratio of Net Investment Income
to Average Net Assets....... 4.51% 4.90% 5.24% 5.79% 6.39% 7.25%
Portfolio Turnover............ 31%* 61% 41% 57% 107% 88%
* Non-Annualized
(a) As required, effective July 1, 2001, the Fund has adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on fixed income securities. The effect of this change for
the year ended June 30, 2002 was to decrease net investment income per share
by $.04, increase net realized and unrealized gains and losses per share by
$.04 and decrease the ratio of net investment income to average net assets
by .24%. Per share, ratios and supplemental data for periods prior to June
30, 2002 have not been restated to reflect this change in presentation.
(b) Total return based on common share market price assumes an investment at the
common share market price at the beginning of the period indicated,
reinvestment of all distributions for the period in accordance with the
Fund's dividend reinvestment plan, and sale of all shares at the closing
common share market price at the end of the period indicated.
16 See Notes to Financial Statements
VAN KAMPEN BOND FUND
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2005 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Bond Fund (the "Fund") is registered as a diversified, closed-end
management investment company under the Investment Company Act of 1940 (the
"1940 Act"), as amended. The Fund's investment objective is to seek interest
income while conserving capital through investing in a diversified portfolio
consisting primarily of high-quality debt securities.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Fixed income investments are stated at value using market
quotations or indications of value obtained from an independent pricing service.
Investments in securities listed on a securities exchange are valued at their
last sales price as of the close of such securities exchange. Listed securities
and unlisted securities for which the last sales price is not available are
valued at the mean of the bid and asked prices. For those securities where
quotations or prices are not available as noted above, valuations are determined
in accordance with procedures established in good faith by the Board of
Trustees. Futures contracts are valued at the settlement price established each
day on the exchange on which they are traded. Short-term securities with
remaining maturities of 60 days or less are valued at amortized cost, which
approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
segregate assets with its custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
payment is made. At December 31, 2005, the Fund had $20,040,725 of when-issued
or delayed delivery purchase commitments.
The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank. The seller
is required to maintain the value of the underlying security at not less than
the repurchase proceeds due the Fund.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Premiums are amortized and
discounts are accreted over the expected life of each applicable security.
17
VAN KAMPEN BOND FUND
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2005 (UNAUDITED) continued
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. At June 30, 2005, the Fund had an accumulated capital loss carryforward
for tax purposes of $1,768,004, which will expire on June 30, 2011.
At December 31, 2005, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $235,293,054
============
Gross tax unrealized appreciation........................... $ 3,910,851
Gross tax unrealized depreciation........................... (3,156,764)
------------
Net tax unrealized appreciation on investments.............. $ 754,087
============
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays quarterly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on futures transactions. All
short-term capital gains and a portion of futures gains are included in ordinary
income for tax purposes.
The tax character of distributions paid during the year ended June 30, 2005
was as follows:
2005
Distributions paid from:
Ordinary income........................................... $11,599,970
Long-term capital gain.................................... -0-
-----------
$11,599,970
===========
As of June 30, 2005, the components of distributable earnings on a tax basis
were as follows:
Undistributed ordinary income............................... $157,731
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of the deferral of losses relating to wash sale
transactions.
F. EXPENSE REDUCTIONS During the six months ended December 31, 2005, the Fund's
custody fee was reduced by $178 as a result of credits earned on cash balances.
18
VAN KAMPEN BOND FUND
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2005 (UNAUDITED) 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%
Over $500 million........................................... .35%
For the six months ended December 31, 2005, the Fund recognized expenses of
approximately $5,300 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 six months ended December 31, 2005, the Fund
recognized expenses of approximately $7,600, 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 "Other" expenses on the Statement of Operations.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are 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 to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Fund.
The maximum annual benefit per trustee under the plan is $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments and U.S. Government securities, were
$25,626,668 and $38,702,566, respectively. The cost of purchases and proceeds
from sales of long-term U.S. Government securities for the period were
$41,667,821 and $25,171,658, respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or to generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the recognition of gain or loss is postponed until the disposal of the security
underlying the
19
VAN KAMPEN BOND FUND
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2005 (UNAUDITED) continued
futures contract. Risks may arise as a result of the potential inability of the
counterparties to meet the terms of their contracts.
During the period, the Fund invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in exchange traded futures on U.S. Treasury Bonds and Notes
and typically closes the contract prior to delivery date. Upon entering into
futures contracts, the Fund maintains an amount of cash or liquid securities
with a value equal to a percentage of the contract amount with either a futures
commission merchant pursuant to rules and regulations promulgated under the 1940
Act, as amended, or with its custodian in an account in the broker's name. This
amount is known as initial margin. During the period the futures contract is
open, payments are received from or made to the broker based upon changes in the
value of the contract (the variation margin). The risk of loss associated with a
futures contract is in excess of the variation margin reflected on the Statement
of Assets and Liabilities.
Transactions in futures contracts for the six months ended December 31,
2005, were as follows:
CONTRACTS
Outstanding at June 30, 2005................................ 400
Futures Opened.............................................. 1,275
Futures Closed.............................................. (1,243)
------
Outstanding at December 31, 2005............................ 432
======
5. 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.
20
VAN KAMPEN 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
JOSEPH J. MCALINDEN
Executive Vice President and
Chief Investment Officer
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02110
TRANSFER AGENT
EQUISERVE TRUST COMPANY, N. A.
C/O COMPUTERSHARE INVESTOR SERVICES
P.O. Box 43010
Providence, Rhode Island 02940-3010
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
111 South Wacker Drive
Chicago, Illinois 60606-4301
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
21
Van Kampen 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 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 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.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2005 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
VBF SAR 2/06
(VAN KAMPEN INVESTMENTS SHINE LOGO) RN06-00319P-Y12/05
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. 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 for semi-annual reports.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable for semi-annual reports.
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-CSRS
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits.
(a) Code of Ethics - Not applicable for semi-annual reports.
(b)(1) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(b)(2) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Bond Fund
By: /s/ Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: February 9, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: February 9, 2006
By: /s/ Phillip G. Goff
-------------------
Name: Phillip G. Goff
Title: Principal Financial Officer
Date: February 9, 2006