-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JS0cQ/s4VYnVUFjtjqtixuuWsqJzQsfM4qXhU8OuC+kWDUXkbsmC3HHI5HtYXbT9 /oC54TXSNxOhr6V6eEwNdw== 0000950124-99-001437.txt : 19990225 0000950124-99-001437.hdr.sgml : 19990225 ACCESSION NUMBER: 0000950124-99-001437 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990224 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN BOND FUND CENTRAL INDEX KEY: 0000005094 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 520906083 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-02090 FILM NUMBER: 99549055 BUSINESS ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC STREET 2: ONE PARKVIEW PLAZA CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 BUSINESS PHONE: 6306846774 MAIL ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC STREET 2: ONE PARKVIEW PLAZA CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL BOND FUND DATE OF NAME CHANGE: 19970728 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL BOND FUND INC DATE OF NAME CHANGE: 19960102 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CAPITAL BOND FUND INC DATE OF NAME CHANGE: 19920703 N-30D 1 ANNUAL REPORT 1 TABLE OF CONTENTS Letter to Shareholders........................... 1 Performance Results.............................. 3 Glossary of Terms................................ 4 Portfolio Management Review...................... 5 Portfolio Highlights............................. 8 Portfolio of Investments......................... 9 Statement of Assets and Liabilities.............. 13 Statement of Operations.......................... 14 Statement of Changes in Net Assets............... 15 Financial Highlights............................. 16 Notes to Financial Statements.................... 18 Dividend Reinvestment Plan....................... 21
ACB SAR 2/99 2 LETTER TO SHAREHOLDERS January 20, 1999 Dear Shareholder, The past decade has been a remarkable time for investors. Together, we've witnessed one of the greatest bull markets in investment history, unprecedented growth in mutual fund investing, and a surge in personal retirement planning. The coming millennium promises to hold even more opportunities. To lead us into this new era of investing, Richard F. Powers III has joined Van Kampen as Chairman and Chief Executive Officer. He comes to us from our parent company, Morgan Stanley Dean Witter & Co., where he served as Executive Vice President and Director of Marketing. He brings 27 years of experience in the financial services industry, including an extensive background in product management, strategic planning and brand development. Although former Chairman Don G. Powell retired on January 1, he will remain active in the industry and the community. Mr. Powell plans to continue his service as a member of the board of directors of the Investment Company Institute, the leading mutual fund industry association, and he will remain a trustee of your fund. ECONOMIC OVERVIEW Despite a stormy year in the global economy, the United States ended 1998 with only a moderate slowdown in growth. The nation's gross domestic product, a measure of economic health, grew 3.9 percent during the year, matching 1997's growth rate and indicating that our nation's economy remains strong. A continuation of low inflation--only a 1.6 percent increase in the consumer price index over the last 12 months--also helped sustain the domestic economy and kept inflation-adjusted interest rates attractive. Although the year ended on a positive note, the economic environment was quite unsettled in the third quarter, with the Asian financial crisis contributing to slowing corporate profits in the United States. Given the uncertainty surrounding emerging market nations and the near-collapse of a major U.S. hedge fund, the stock and bond markets experienced significant volatility during this period. With instability as a backdrop, American and foreign investors alike pursued a flight to quality--seeking the relative safety of large-company stocks and government bonds. In the last few months of the year the global financial situation improved in conjunction with the Federal Reserve's interest rate decreases. In response to declining corporate profits and mounting international concerns, the Fed lowered interest rates three times, with 0.25 percent cuts in September, October, and November. These rate cuts, coupled with a wave of corporate mergers and cost-cutting measures, lent the support needed to keep the economy growing. Dozens of foreign central banks also reduced interest rates in an effort to stimulate their economies. These actions gave a boost to investor confidence and encouraged a return to a more diversified range of investments in the last few months of the year. Continued on page 2 1 3 MARKET REVIEW The bond market continued to rally as interest rates fell during the year, with U.S. Treasury securities outpacing corporate and municipal bonds in price appreciation. Investors' desire for safer investments amid the global economic storm led to strong demand for high-quality bonds. In fact, the U.S. Treasury bond was considered one of the most attractive places to invest by both domestic and international investors, propelling the 30-year Treasury yield to 4.71 percent in October--its lowest yield since the federal government began selling these bonds in 1977. However, higher-yielding bonds suffered--primarily during the third quarter--as investors' demand for quality increased. Corporate bond prices, especially among lower-rated issues, fell in conjunction with concerns about declining corporate profits. OUTLOOK Our outlook for the domestic economy is positive, and we anticipate continued low inflation and healthy economic growth. However, the aftereffects of the global economic slowdown may continue to put pressure on corporate earnings in the first half of the year. Internationally, we anticipate that low interest rates and declining inflation will lead to improvements in troubled areas such as Asia and Latin America. With the successful launch of the euro, the new European transnational currency, we believe that many foreign markets will become increasingly attractive in 1999. In the long term, we are optimistic that the stock market will continue its record growth, although we could experience additional volatility in the months ahead if concerns about high stock valuations and increasing earnings pressure become more pronounced. Combined with growing questions about corporate and government reactions to the Year 2000 computer problem, we could see an increasingly cautious market by mid-year. Additional details about your fund, including a question-and-answer section with your portfolio management team, are provided in this report. As always, we are pleased to have the opportunity to share with you the progress of your investment. Sincerely, [SIG] Richard F. Powers III Chairman Van Kampen Asset Management Inc. [SIG] Dennis J. McDonnell President Van Kampen Asset Management Inc. 2 4 PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31, 1998 VAN KAMPEN BOND FUND NYSE TICKER SYMBOL--VBF COMMON SHARE TOTAL RETURNS Six-month total return based on market price(1)........... 5.47% Six-month total return based on NAV(2).................... 3.03% DISTRIBUTION RATE Distribution rate as a % of closing common stock price(3).................................................. 7.08% SHARE VALUATIONS Net asset value........................................... $21.09 Closing common stock price................................ $20.0625 Six-month high common stock price (10/26/98).............. $20.9375 Six-month low common stock price (09/11/98)............... $19.1875
(1)Total return based on market price assumes an investment at the 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 stock price at the end of the period indicated. (2)Total return based on net asset value (NAV) assumes an investment at the beginning of the period indicated, reinvestment of all distributions for the period, and sale of all shares at the end of the period, all at NAV. (3)Distribution rate represents the quarterly annualized distributions of the Fund at the end of the period and not the earnings of the Fund. Past performance does not guarantee future results. Investment return, stock price and net asset value will fluctuate with market conditions. Fund shares, when sold, may be worth more or less than their original cost. 3 5 GLOSSARY OF TERMS BOND: A debt security issued by a government or corporation that pays a bondholder a stated rate of interest and repays the principal at the maturity date. CALL FEATURE: Allows the issuer to buy back a bond on specific dates at set prices before maturity. These dates and prices are set when the bond is issued. To compensate the bondholder for the potential loss of income and ownership, a bond's call price is usually higher than the face value of the bond. Bonds are usually called when interest rates drop so significantly that the issuer can save money by issuing new bonds at lower rates. CREDIT RATING: An evaluation of an issuer's credit history and capability of repaying obligations. Standard & Poor's and Moody's Investors Service are two companies that assign bond ratings. Standard & Poor's ratings range from a high of AAA to a low of D, while Moody's ratings range from a high of Aaa to a low of C. CYCLICAL STOCKS: Stocks within industries where earnings tend to rise quickly when the economy strengthens and fall quickly when the economy weakens. Examples of cyclical stocks include housing, automobile, and paper companies. Noncyclical or defensive stocks are typically less sensitive to changes in the economy. These include utilities, grocery stores, and pharmaceutical companies. DURATION: A measure of the sensitivity of a bond's price to changes in interest rates, expressed in years. Each year of duration represents an expected 1 percent change in the price of a bond for every 1 percent change in interest rates. The longer a bond's duration, the greater the effect of interest rate movements on net asset value. Typically, funds with shorter durations perform better in rising rate environments, while funds with longer durations perform better when rates decline. FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve System, which is the central bank system of the United States. Its policy-making committee, called the Federal Open Market Committee, meets eight times a year to establish monetary policy and monitor the economic pulse of the United States. INFLATION: A persistent and measurable rise in the general level of prices. Inflation is widely measured by the Consumer Price Index, an economic indicator that measures the change in the cost of purchased goods and services. INVESTMENT-GRADE BONDS: Securities rated BBB and above by Standard & Poor's or Baa and above by Moody's Investor Services. Bonds rated below BBB or Baa are noninvestment grade. YIELD: The annual rate of return on an investment, expressed as a percentage. For bonds and notes, the yield is the annual interest divided by the market price. YIELD SPREAD: The additional yield investors can earn by either investing in bonds with longer maturities or by investing in bonds with lower ratings. The spread is the difference in yield between bonds with short versus long maturities or the difference in yield between high-quality bonds and lower-quality bonds. 4 6 PORTFOLIO MANAGEMENT REVIEW VAN KAMPEN BOND FUND We recently spoke with the management team of the Van Kampen Bond Fund about the key events and economic forces that shaped the markets during the past six months. The team includes David R. Troth, portfolio manager, and Peter W. Hegel, chief investment officer for fixed-income investments. The following excerpts reflect their views on the Fund's performance during the six-month period ended December 31, 1998. Q HOW WOULD YOU CHARACTERIZE THE MARKET CONDITIONS IN WHICH THE FUND OPERATED DURING THE PAST SIX MONTHS? A The primary backdrop for the domestic fixed-income market was the lingering cloud of global volatility. Economic weakness in Asia spilled into other economies, including Russia and South America, during the third quarter. This environment further fueled the flight to quality that emerged in the first half of the year. As investors flocked to the relative safety of U.S. Treasury securities, the yield for the benchmark 30-year Treasury dropped below its second-quarter trading range. The biggest boost for the bond market came late in the third quarter and early in the fourth quarter, when the market was inspired by a string of interest rate cuts by the Federal Reserve Board. By year end, the yield for the 30-year Treasury bond--which, like all bond yields, moves in the opposite direction of its price--had fallen to 5.09 percent, near the record low level for long-term Treasuries set in the mid-1960s. For the first time since 1990, the returns for high-quality, low-risk bonds soundly exceeded those for higher- risk bonds. Q HOW DID YOU MANAGE THE FUND IN LIGHT OF THESE CONDITIONS? A In your June report, we discussed our emphasis on increasing diversification in the Fund's portfolio. During the last six months of 1998, our focus expanded to include maintaining a defensive portfolio profile, given the volatile nature of the domestic market. Approximately one-third of the Fund's assets are allocated to the non-cyclical sectors of consumer services (18.7 percent) and electric utilities (15.1 percent). We feel that the securities we hold in these sectors help provide the Fund with defensive characteristics that have the potential to serve the portfolio well despite economic ups and downs. At the same time, we held negligible positions in commodity issues, such as copper, steel, mining, and paper companies. Before adding securities to the portfolio, we also considered how they might be affected by a slowing economy. As a result, we were drawn to companies like Tyco International Ltd., which manufactures and distributes fire protection and electronic security equipment and medical supplies. We also added positions in Sprint, a telecommunications company whose growth pattern is independent of cyclical effects; Raytheon, a diversified technology company with operations in aircraft, engineering, and consumer and defense 5 7 electronics; Westpoint Stevens, a textiles company; and Niagara Mohawk, a New York utilities company. At the end of the reporting period, the portfolio was comprised of 85 issues. During the fourth quarter, a few of the Fund's holdings were tendered for very attractive prices relative to Treasury securities. This trend may continue through the new year, as companies take advantage of lower interest rates to refinance and reduce their debts in this favorable rate environment. Affected securities included Owens Corning, Keyspan Lighting, and Time Warner. In addition, we received an announcement that our preferred stock in Commonwealth Edison would be called in mid-January 1999. Fortunately, a supply of new issuance has enabled us to immediately recommit the assets from these sales into new securities. The majority of our holdings, specifically among the investment-grade securities, are noncallable securities. These securities, which dominated the field of new issuance during the period, typically move closely with Treasuries, whereas callable securities tend to lag the market in a falling rate environment such as this one. Noncallable securities contributed to the Fund's return, as Treasuries, which were boosted by high demand, performed well during the period. Q WHAT WAS THE STRUCTURE OF THE FUND'S PORTFOLIO AT THE END OF THE REPORTING PERIOD? A The credit quality allocation among the portfolio is little changed from the beginning of the reporting period, with the exception of a slight decrease in A-rated bonds. The portfolio is still concentrated in medium-quality securities, which are defined as A- and BBB-rated securities. At the end of the reporting period, approximately 83 percent of the portfolio was comprised of medium-quality securities, which represented a slight decrease from the June-end allocation of 85 percent. At the end of the period, the Fund's duration was 6.3 years, which is comparable to its June 30, 1998 duration of 6.1 years, as well as to the 6.3 year duration of its benchmark, the Lehman Brothers Corporate Bond Index. The slight lengthening since mid-year is due mostly to the new, longer-term purchases that were added to the portfolio during this time. When interest rates fall, as they did throughout most of the reporting period, the duration of bonds tends to fall because many bonds begin to trade to their call dates rather than maturity dates. We purchased long-duration bonds in order to offset this decline in the duration of portfolio holdings. Q HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD? A For the six months ended December 31, 1998, the Fund generated a total return of 5.47 percent(1) at market price and 3.03 percent(2) at net asset value. For the same period, the Lehman Brothers Corporate Bond Index returned 3.01 percent. Keep in mind that this index is a broad-based unmanaged index that reflects the general performance of corporate bonds. It does not reflect any commissions or fees that would be paid by an investor purchasing the securities it represents. 6 8 The Fund's return reflects an increase in market price per common share on the New York Stock Exchange from $19.6875 on June 30, 1998, to $20.0625 on December 31, 1998, which includes reinvestment of dividends totaling $.710 per share. Please refer to the chart on page 3 for additional Fund performance results. Q WHAT IS YOUR OUTLOOK FOR THE MARKET AND THE FUND OVER THE COMING MONTHS? A We expect that the U.S. economy will slow in 1999 due to a combination of factors, including difficulties in many foreign economies, a slowdown in consumer spending, dwindling corporate profits, and the Year 2000 computer problem. We also expect inflation to remain low--in the 1.5 percent range. However, a full-fledged recession seems unlikely at this time. The fundamentals underpinning the U.S. bond market are as healthy as at any time in recent memory, and we expect the market to remain strong in the months ahead. We believe the Fund's emphasis on high-quality investment-grade bonds and its relatively short duration will help to dampen potential price volatility due to changing market conditions. [SIG] David R. Troth Portfolio Manager [SIG] Peter W. Hegel Chief Investment Officer Fixed Income Investments Please see footnotes on page 3 7 9 PORTFOLIO HIGHLIGHTS VAN KAMPEN BOND FUND TOP TEN PORTFOLIO SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
AS OF DECEMBER 31, 1998 AS OF JUNE 30, 1998 Utilities.................... 24% Utilities.................... 25% Consumer Services............ 18% Consumer Services............ 18% Transportation............... 11% Transportation............... 11% Health Care.................. 10% Health Care.................. 9% Energy....................... 8% Raw Materials/Processing Raw Materials/Processing Industries................. 9% Industries................. 7% Energy....................... 8% Government................... 5% Government................... 5% Producer Manufacturing....... 4% Producer Manufacturing....... 4% Consumer Non-Durables........ 3% Finance...................... 4% Technology................... 3% Consumer Non-Durables........ 3%
PORTFOLIO COMPOSITION BY CREDIT QUALITY AS A PERCENTAGE OF LONG-TERM DEBT INVESTMENTS [PIE CHART]
AS OF DECEMBER 31, 1998 AS OF JUNE 30, 1998 AA.......... 3.60% AA.......... 2.40% A........... 28.70% A........... 31.50% BBB......... 54.40% [PIE CHART] BBB......... 53.50% [PIE CHART] BB.......... 12.80% BB.......... 11.70% B........... 0.50% B........... 0.90%
Based upon the highest credit quality ratings as issued by Standard & Poor's or Moody's. PORTFOLIO HOLDINGS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
PERCENTAGE OF TOP TEN HOLDINGS THESE INVESTMENTS AS OF DECEMBER 31, 1998 SIX MONTHS AGO Tele Communications, Inc. .................. 5.7% ......... 5.5% Ashland Oil, Inc. ....... 3.9% ......... 3.9% Tenet Healthcare Corp. ................. 3.8% ......... 3.6% Union Pacific Corp. ..... 3.3% ......... 3.4% Public Service Co. of Colorado ............. 3.3% ......... 3.5% United Airlines, Inc. ... 3.1% ......... 3.3% Saskatchewan Province Canada ............... 2.9% ......... 2.8% Federal Paper Board, Inc. .................. 2.6% ......... 2.6% Baxter International, Inc. .................. 2.6% ......... 2.6% United Telecommunications Kansas ............... 2.5% ......... 2.4%
8 10 PORTFOLIO OF INVESTMENTS December 31, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount Market (000) Description Coupon Maturity Value - ------------------------------------------------------------------------------------------ CORPORATE BONDS 90.6% CONSUMER DURABLES 0.8% $ 750 Brunswick Corp.............................. 7.125% 08/01/27 $ 738,030 1,000 Chrysler Corp............................... 7.450 03/01/27 1,161,800 ------------ 1,899,830 ------------ CONSUMER NON-DURABLES 3.2% 4,000 Coca Cola Enterprises, Inc.................. 8.500 02/01/12 5,010,040 750 Dimon, Inc.................................. 8.875 06/01/06 708,750 2,000 Westpoint Stevens, Inc...................... 7.875 06/15/05 2,042,500 ------------ 7,761,290 ------------ CONSUMER SERVICES 17.4% 1,250 Belo A H Corp............................... 7.125 06/01/07 1,316,475 2,500 Clear Channel Commerce, Inc................. 7.250 10/15/27 2,706,750 2,000 Comcast Cable Communications................ 8.125 05/01/04 2,200,160 3,000 Cox Communications, Inc..................... 7.250 11/15/15 3,318,000 1,250 CSC Holdings, Inc........................... 7.875 12/15/07 1,321,875 2,500 CSC Holdings, Inc........................... 7.875 02/15/18 2,537,500 5,000 Harcourt General, Inc....................... 9.500 03/15/00 5,211,200 1,750 Harcourt General, Inc....................... 8.875 06/01/22 2,060,818 1,000 Harcourt General, Inc....................... 7.200 08/01/27 943,830 1,000 News America Holdings, Inc.................. 8.875 04/26/23 1,214,500 250 Premier Parks, Inc.......................... 9.250 04/01/06 259,375 100 Premier Parks, Inc.......................... 9.750 01/15/07 109,000 375 Premier Parks, Inc. (b)..................... 0/10.00 04/01/08 255,000 3,500 Royal Caribbean Cruises Ltd................. 7.500 10/15/27 3,489,500 1,500 Stewart Enterprises, Inc.................... 6.400 05/01/03 1,521,030 11,000 Tele Communications, Inc.................... 9.250 01/15/23 13,295,700 ------------ 41,760,713 ------------ ENERGY 8.1% 7,400 Ashland Oil, Inc............................ 8.800 11/15/12 9,115,912 750 Barrett Resources Corp...................... 7.550 02/01/07 746,250 5,025 PDV America, Inc............................ 7.875 08/01/03 5,083,893 1,500 Petroliam Nasional Berhad, 144A Private Placement (a)............................... 7.625 10/15/26 1,078,650 250 Pride Petroleum Services, Inc............... 9.375 05/01/07 235,000 1,000 R & B Falcon Corp........................... 6.500 04/15/03 971,400 1,000 Transcontinental Gas Pipe Line Corp......... 7.250 12/01/26 1,053,080 1,000 Union Oil Co................................ 9.125 02/15/06 1,156,090 ------------ 19,440,275 ------------
See Notes to Financial Statements 9 11 PORTFOLIO OF INVESTMENTS (CONTINUED) December 31, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount Market (000) Description Coupon Maturity Value - ------------------------------------------------------------------------------------------ FINANCE 2.5% $ 1,000 Americredit Corp............................ 9.250% 02/01/04 $ 970,000 4,500 Hutchinson Whampoa Finance, 144A Private Placement (a)............................... 7.500 08/01/27 3,971,250 1,000 Royal Bank Scotland Group................... 6.375 02/01/11 1,016,475 ------------ 5,957,725 ------------ HEALTHCARE 10.0% 2,300 Aetna Services, Inc......................... 7.125 08/15/06 2,367,804 1,000 Allegiance Corp............................. 7.800 10/15/16 1,094,560 6,000 Baxter International, Inc................... 6.625 02/15/28 6,132,420 1,500 Beckman Coulter, Inc........................ 7.450 03/04/08 1,545,000 500 Manor Care, Inc............................. 7.500 06/15/06 527,825 1,000 Tenet Healthcare Corp....................... 8.625 01/15/07 1,052,500 8,500 Tenet Healthcare Corp., 144A Private Placement (a)............................... 8.125 12/01/08 8,797,500 2,500 Tyco International Group, 144A Private Placement (a)............................... 6.125 11/01/08 2,527,750 ------------ 24,045,359 ------------ PRODUCER MANUFACTURING 4.1% 1,750 IDEX Corp................................... 6.875 02/15/08 1,759,730 4,400 ITT Corp.................................... 6.750 11/15/05 4,092,000 1,000 ITT Corp.................................... 7.375 11/15/15 890,640 162 Rayovac Corp................................ 10.250 11/01/06 173,340 2,500 Rubbermaid, Inc............................. 6.600 11/15/06 2,691,300 250 U.S. Can Corp............................... 10.125 10/15/06 263,125 ------------ 9,870,135 ------------ RAW MATERIALS/PROCESSING INDUSTRIES 7.0% 2,000 Bowater, Inc................................ 9.375 12/15/21 2,549,540 1,000 Crown Cork & Seal, Inc...................... 8.000 04/15/23 1,020,330 5,000 Federal Paper Board, Inc.................... 8.875 07/01/12 6,147,350 4,000 IMC Global, Inc............................. 6.875 07/15/07 4,080,400 1,000 IMC Global, Inc............................. 7.300 01/15/28 973,400 1,250 Owens Illinois, Inc......................... 7.150 05/15/05 1,262,500 750 Smithfield Foods, Inc....................... 7.625 02/15/08 757,500 ------------ 16,791,020 ------------ TECHNOLOGY 3.2% 5,000 Computer Associates International, Inc...... 6.375 04/15/05 4,991,700 1,750 Raytheon Co................................. 6.150 11/01/08 1,798,650 750 Raytheon Co................................. 7.200 08/15/27 819,713 ------------ 7,610,063 ------------
See Notes to Financial Statements 10 12 PORTFOLIO OF INVESTMENTS (CONTINUED) December 31, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount Market (000) Description Coupon Maturity Value - ------------------------------------------------------------------------------------------ TRANSPORTATION 10.9% $ 3,000 AMR Corp.................................... 9.500% 05/15/01 $ 3,215,595 4,250 CSX Corp.................................... 8.625 05/15/22 5,174,630 2,500 Kansas City Southern Industries, Inc........ 7.875 07/01/02 2,658,825 7,000 Union Pacific Corp.......................... 8.350 05/01/25 7,802,900 6,000 United Airlines, Inc........................ 10.020 03/22/14 7,226,400 ------------ 26,078,350 ------------ UTILITIES 23.4% 1,000 AES Corp.................................... 10.250 07/15/06 1,083,750 3,000 Arizona Public Service Co................... 9.500 04/15/21 3,361,860 3,500 Arizona Public Service Co................... 8.750 01/15/24 3,910,760 2,000 Arizona Public Service Co................... 8.000 02/01/25 2,196,180 1,000 Commonwealth Edison Co...................... 8.625 02/01/22 1,099,420 5,000 GTE North, Inc.............................. 8.500 12/15/31 5,616,900 3,000 Gulf States Utilities Co.................... 8.940 01/01/22 3,203,250 4,150 Montana Power Co............................ 8.950 02/01/22 4,682,320 1,750 Niagara Mohawk Power Corp................... 7.625 10/01/05 1,826,563 7,000 Public Service Co. of Colorado.............. 8.750 03/01/22 7,722,400 2,000 Southern California Gas Co.................. 8.750 10/01/21 2,233,120 1,500 Sprint Capital Corp......................... 6.125 11/15/08 1,539,975 2,500 Texas Utilities Electric Co................. 8.875 02/01/22 2,810,325 5,000 United Telecommunications Kansas............ 9.500 04/01/03 5,751,300 500 UtiliCorp United, Inc....................... 6.700 10/15/06 525,095 3,000 UtiliCorp United, Inc....................... 9.000 11/15/21 3,339,300 4,750 Worldcom, Inc............................... 6.950 08/15/28 5,141,542 ------------ 56,044,060 ------------ TOTAL CORPORATE BONDS 90.6%............................................... 217,258,820 ------------
See Notes to Financial Statements 11 13 PORTFOLIO OF INVESTMENTS (CONTINUED) December 31, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount Market (000) Description Coupon Maturity Value - ------------------------------------------------------------------------------------------ GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS 5.0% $ 6 Federal Home Loan Mortgage Corp., Pool...... 7.375% 01/01/03 $ 6,236 1 Government National Mortgage Assn., Pool.... 10.000 10/15/16 1,037 8 Government National Mortgage Assn., Pool.... 10.000 07/15/20 8,249 4,000 Newfoundland Province Canada (US$).......... 9.000 10/15/21 5,158,280 5,500 Saskatchewan Province Canada (US$).......... 8.000 02/01/13 6,745,750 ------------ 11,919,552 ------------ PREFERRED STOCK 1.9% Commonwealth Edison Co. (44,830 preferred shares, 8.38% coupon)............ 4,547,443 ------------ TOTAL LONG-TERM INVESTMENTS 97.5% (Cost $212,840,759)...................................................... 233,725,815 REPURCHASE AGREEMENT 0.7% BA Securities ($1,530,000 par collateralized by U.S. Government obligations in a pooled cash account, dated 12/31/98, to be sold on 01/04/99 at $1,530,833) (Cost $1,530,000)........................................................ 1,530,000 ------------ TOTAL INVESTMENTS 98.2% (Cost $214,370,759)...................................................... 235,255,815 OTHER ASSETS IN EXCESS OF LIABILITIES 1.8%................................ 4,414,136 ------------ NET ASSETS 100.0%......................................................... $239,669,951 ------------
(a) 144A securities are those which are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold in transactions exempt from registration which are normally transactions with qualified institutional buyers. (b) Securities bond is a "step-up" bond where the coupon increases or steps up at a predetermined date. See Notes to Financial Statements 12 14 STATEMENT OF ASSETS AND LIABILITIES December 31, 1998 (Unaudited) - -------------------------------------------------------------------------------- ASSETS: Total Investments (Cost $214,370,759)....................... $235,255,815 Cash........................................................ 3,774,436 Interest Receivable......................................... 4,808,651 Other....................................................... 69,087 ------------ Total Assets.......................................... 243,907,989 ------------ LIABILITIES: Payables: Income Distributions...................................... 4,033,545 Investment Advisory Fee................................... 99,292 Affiliates................................................ 4,000 Accrued Expenses............................................ 59,660 Trustees' Deferred Compensation and Retirement Plans........ 41,541 ------------ Total Liabilities..................................... 4,238,038 ------------ NET ASSETS.................................................. $239,669,951 ============ NET ASSETS CONSIST OF: Common Shares ($1.00 par value with 15,000,000 shares authorized, 11,362,465 shares issued and outstanding)..... $ 11,362,465 Capital..................................................... 209,801,851 Net Unrealized Appreciation................................. 20,885,056 Accumulated Undistributed Net Investment Income............. 130,694 Accumulated Net Realized Loss............................... (2,510,115) ------------ NET ASSETS.................................................. $239,669,951 ============ NET ASSETS VALUE PER COMMON SHARE ($239,669,951 divided by 11,362,465 shares outstanding)... $ 21.09 ============
See Notes to Financial Statements 13 15 STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1998 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME: Interest.................................................... $ 8,727,008 Dividends................................................... 124,361 ----------- Total Income............................................ 8,851,369 ----------- EXPENSES: Investment Advisory Fee..................................... 584,831 Shareholder Services........................................ 62,535 Trustees' Fees and Expenses................................. 13,020 Custody..................................................... 11,848 Legal....................................................... 3,978 Other....................................................... 122,542 ----------- Total Expenses............................................ 798,754 ----------- NET INVESTMENT INCOME....................................... $ 8,052,615 =========== REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Gain........................................... $ 1,646,370 ----------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... 23,239,492 End of Period............................................. 20,885,056 ----------- Net Unrealized Depreciation During the Period............... (2,354,436) ----------- NET REALIZED AND UNREALIZED LOSS............................ $ (708,066) =========== NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 7,344,549 ===========
See Notes to Financial Statements 14 16 STATEMENT OF CHANGES IN NET ASSETS For the Six Months Ended December 31, 1998 and the Year Ended June 30, 1998 (Unaudited) - --------------------------------------------------------------------------------
Six Months Ended Year Ended December 31, 1998 June 30, 1998 - --------------------------------------------------------------------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income..................................... $ 8,052,615 $ 16,774,523 Net Realized Gain......................................... 1,646,370 1,867,201 Net Unrealized Appreciation/Depreciation During the Period.................................................. (2,354,436) 8,710,798 ------------ ------------ Change in Net Assets from Operations...................... 7,344,549 27,352,522 Distributions from Net Investment Income.................. (8,067,081) (17,157,454) ------------ ------------ NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES....... (722,532) 10,195,068 NET ASSETS: Beginning of the Period................................... 240,392,483 230,197,415 ------------ ------------ End of the Period (Including accumulated undistributed net investment income of $130,694 and $145,160, respectively).......... $239,669,951 $240,392,483 ============ ============
See Notes to Financial Statements 15 17 FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for one share of the Fund outstanding throughout the periods indicated. (Unaudited) - --------------------------------------------------------------------------------
Six Months Ended -------------------------------------- December 31, 1998 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of the Period........... $ 21.157 $ 20.259 $ 19.97 $ 20.41 $ 19.07 -------- -------- ------- ------- ------- Net Investment Income............... .709 1.476 1.556 1.54 1.52 Net Realized and Unrealized Gain/Loss......................... (.063) .932 .273 (.44) 1.36 -------- -------- ------- ------- ------- Total from Investment Operations.... .646 2.408 1.829 1.10 2.88 Less Distributions from Net Investment Income................. .710 1.510 1.540 1.54 1.54 -------- -------- ------- ------- ------- Net Asset Value, End of the Period............................ $ 21.093 $ 21.157 $20.259 $ 19.97 $ 20.41 ======== ======== ======= ======= ======= Market Price Per Share at End of the Period............................ $20.0625 $19.6875 $19.250 $18.125 $19.125 Total Investment Return at Market Price (a)(d)...................... 5.47%* 10.08% 15.06% 2.61% 14.89% Total Return at Net Asset Value (b)(d)...................... 3.03%* 12.19% 9.46% 5.94% 16.54% Net Assets at End of the Period (In millions) (d)..................... $ 239.7 $ 240.4 $ 230.2 $ 226.9 $ 231.9 Ratio of Operating Expenses to Average Net Assets................ .66% .65% .68% .67% .68% Ratio of Convertible Note Expenses to Average Net Assets (c)......... -- -- -- -- .39% Ratio of Net Investment Income to Average Net Assets................ 6.63% 7.04% 7.70% 7.47% 7.92% Portfolio Turnover.................. 4%* 27% 8% 11% 8% Assuming full dilution of debt (c): Net Asset Value, End of the Period.......................... -- -- -- -- -- Number of Shares Outstanding, End of Period (000)............. -- -- -- -- --
(a) Total Investment Return at Market Price reflects the change in market value of the common shares for the period indicated with reinvestment of dividends in accordance with the Fund's dividend reinvestment plan. (b) Total Return at Net Asset Value (NAV) reflects the change in value of the Fund's assets with reinvestment of dividends based upon NAV. (c) On January 3, 1995, the Fund paid off its outstanding convertible extendible note. (d) Prior to fiscal year end 1992, this item was not a required disclosure. * Non-Annualized See Notes to Financial Statements 16 18 - --------------------------------------------------------------------------------
Year Ended June 30 - ----------------------- 1994 1993 1992 1991 1990 - ----------------------------------------------------- $ 21.33 $ 19.85 $ 18.68 $ 18.72 $ 20.34 ------- ------- ------- ------- ------- 1.56 1.575 1.735 1.76 2.07 (2.28) 1.55 1.115 (.03) (1.615) ------- ------- ------- ------- ------- (.72) 3.125 2.85 1.73 .455 1.54 1.645 1.68 1.77 2.075 ------- ------- ------- ------- ------- $ 19.07 $ 21.33 $ 19.85 $ 18.68 $ 18.72 ======= ======= ======= ======= ======= $18.125 $20.750 $19.750 $18.375 $16.500 (5.59%) 13.76% 17.12% -- -- (3.37%) 16.35% 15.79% -- -- $ 216.6 $ 235.6 $ 218.5 -- -- .68% .71% .71% .72% .71% .82% .98% 1.05% 1.09% 1.55% 7.29% 7.65% 8.90% 9.42% 10.65% 2% 19% 39% 18% 14% $ 19.07 $ 21.09 $ 19.78 $ 18.74 $ 18.78 12,411 12,411 12,372 12,304 12,304
See Notes to Financial Statements 17 19 NOTES TO FINANCIAL STATEMENTS December 31, 1998 (Unaudited) - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen Bond Fund, formerly known as Van Kampen American Capital Bond Fund, (the "Fund") is registered as a diversified closed-end management investment company under the Investment Company Act of 1940, as amended. The Fund's investment objective is to provide current income with the preservation of capital through investing primarily in a diversified portfolio of 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 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. Investments in securities listed on a securities exchange are valued at their sale price as of the close of such securities exchange. Unlisted securities and listed securities for which the last sales price is not available are valued at the mean of the bid and asked prices. For those securities where quotations or prices are not available, valuations are determined in accordance with procedures established in good faith by the Board of Trustees. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost. B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date basis. Realized gains and losses are determined on an identified cost basis. The Fund may purchase and sell securities on a "when issued" or "delayed 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 maintain, in a segregated account with its custodian, assets having an aggregate value at least equal to the amount of the when issued or delayed delivery purchase commitments until payment is made. At December 31, 1998, there were no when issued or delayed delivery purchase commitments. The Fund may invest in repurchase agreements, which are short-term investments whereby 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 18 20 NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 (Unaudited) - -------------------------------------------------------------------------------- pooled cash account along with other investment companies advised by Van Kampen Asset Management Inc. (the "Adviser") or its affiliates, the daily aggregate of which is invested in repurchase agreements. Repurchase agreements are fully collateralized by the underlying debt security. The Fund will make payment for such securities only upon physical delivery or evidence of book entry transfer to the account of the custodian bank. The seller is required to maintain the value of the underlying security at not less than the repurchase proceeds due the Fund. C. INVESTMENT INCOME--Interest income is recorded on an accrual basis and dividend income is recorded on the ex-dividend date. Discounts are amortized over the expected life of each applicable security. Premiums on debt securities are not amortized. D. FEDERAL INCOME TAXES--It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. The Fund intends to utilize provisions of the federal income tax laws which allow it to carry a realized capital loss forward for eight years following the year of the loss and offset these losses against any future realized capital gains. At June 30, 1998, the Fund had an accumulated capital loss carryforward for tax purposes of $4,156,485 which will expire between June 30, 1999 and June 30, 2000. Of this amount, $953,175 will expire on June 30, 1999. At December 31, 1998, for federal income tax purposes, cost of long- and short-term investments is $214,370,759, the aggregate gross unrealized appreciation is $22,137,204 and the aggregate gross unrealized depreciation is $1,252,148, resulting in net unrealized appreciation on long- and short-term investments of $20,885,056. 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 option and futures transactions. All short-term capital gains and a portion of option and futures gains are included in ordinary income for tax purposes. Due to inherent differences in the recognition of certain expenses under generally accepted accounting principles and federal income tax purposes, the amount of net investment income may differ between book and federal income tax purposes for a 19 21 NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 1998 (Unaudited) - -------------------------------------------------------------------------------- particular period. These differences are temporary in nature, but may result in book basis distributions in excess of net investment income for certain periods. 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 NET ASSETS % PER ANNUM - ---------------------------------------------------------------------- First $150 million........................................ .50 of 1% Next $100 million......................................... .45 of 1% Next $100 million......................................... .40 of 1% Over $350 million......................................... .35 of 1%
For the six months ended December 31, 1998, the Fund recognized expenses of approximately $4,000 representing legal services provided by Skadden Arps, Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the Fund is an affiliated person. For the six months ended December 31, 1998, the Fund recognized expenses of approximately $36,500 representing Van Kampen Funds Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing accounting services to the Fund. Certain officers and trustees of the Fund are also officers and directors of Van Kampen. The Fund does not compensate its officers or trustees who are officers of Van Kampen. The Fund provides deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation to a later date. Benefits under the retirement plan are payable for a ten-year period and are based upon each trustee's years of service to the Fund. The maximum annual benefit per trustee under the plan is $2,500. 3. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $10,431,083 and $11,322,910, respectively. 20 22 DIVIDEND REINVESTMENT PLAN The Fund pays distributions in cash, but if you own more than 100 shares in your own name, you may elect to participate in the Fund's dividend reinvestment plan (the "Plan"). Under the Plan, shares will be issued by the Fund at net asset value on a date determined by the Board of Trustees between the record and payable dates on each distribution; however, if the market price including brokerage commissions, is less than the net asset value, the amount of the distribution will be paid to the Plan Agent, which will buy such shares as are available at prices below the net asset value. (If the market price is not significantly less than the net asset value, it is possible that open market purchases of shares may increase the market price so that such price plus brokerage commissions would equal or exceed the net asset value of such shares) if Plan Agent cannot buy the necessary shares at less than net asset value before the distribution date, the balance of the distribution will be made in authorized but unissued shares of the Fund at net asset value. The cost per share will be the average cost, including brokerage commissions, of all shares purchased. Since all shares purchased from the Fund are at net asset value, there will be no dilution, and no brokerage commissions are charged on such shares. You will receive tax information annually for your personal records and to help you prepare your federal income tax return. The automatic reinvestment of dividends and capital gain distributions does not relieve you of any income tax which may be payable (or required to be withheld) on dividends or distributions. You may begin or discontinue participation in the Plan at any time by written notice to the address below. If you withdraw from the Plan, you may rejoin at any time if you own the required 100 shares. Elections and terminations will be effective for distributions declared after receipt. If you withdraw from the Plan, a certificate for the whole shares and a check for the fractional shares, if any, credited to your Plan account will be sent as soon as practicable after receipt of your election to withdraw. Except for brokerage commissions, if any, which are borne by Plan participants, all costs of the Plan are borne by the Fund. The Fund reserves the right to amend or terminate the Plan on 30 days' written notice prior to the record date of the distribution for which such amendment or termination is effective. Record stockholders should address all notices, correspondence, questions or other communications about the Plan to: BOSTON EQUISERVE LP P.O. BOX 8200 BOSTON, MA 02266-8200 1-800-821-1238 If your shares are not held directly in your name, you should contact your brokerage firm, bank or other nominee for more information and to see if your nominee will participate in the Plan on your behalf. If you participate through your broker and choose to move your account to another broker, you will need to re-enroll in the Plan through your new broker. 21 23 VAN KAMPEN FUNDS EQUITY FUNDS Domestic Aggressive Equity Aggressive Growth American Value Comstock Emerging Growth Enterprise Equity Growth Equity Income Growth Growth and Income Harbor Pace Real Estate Securities Utility Value Global/International Asian Growth Emerging Markets European Equity Global Equity Global Equity Allocation Global Franchise Global Managed Assets International Magnum Latin American FIXED-INCOME FUNDS Income Corporate Bond Global Fixed Income Global Government Securities Government Securities High Income Corporate Bond High Yield High Yield & Total Return Limited Maturity Government Short-Term Global Income Strategic Income U.S. Government U.S. Government Trust for Income Worldwide High Income Tax Exempt Income California Insured Tax Free Florida Insured Tax Free Income High Yield Municipal Insured Tax Free Income Intermediate Term Municipal Income Municipal Income New York Tax Free Income Pennsylvania Tax Free Income Tax Free High Income Capital Preservation Reserve Tax Free Money Senior Loan Prime Rate Income Trust Senior Floating Rate To find out more about any of these funds, ask your financial advisor for a prospectus, which contains more complete information, including sales charges, risks, and expenses. Please read it carefully before you invest or send money. To view a current Van Kampen fund prospectus or to receive additional fund information, choose from one of the following: - - visit our Web site at WWW.VANKAMPEN.COM--to view a prospectus, select Download Prospectus - - call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time. Telecommunications Device for the Deaf users, call 1-800-421-2833. - - e-mail us by visiting WWW.VANKAMPEN.COM and selecting Contact Us 22 24 VAN KAMPEN BOND FUND BOARD OF TRUSTEES DAVID C. ARCH ROD DAMMEYER HOWARD J KERR DENNIS J. MCDONNELL*--Chairman STEVEN MULLER THEODORE A. MYERS DON G. POWELL* HUGO F. SONNENSCHEIN WAYNE W. WHALEN OFFICERS DENNIS J. MCDONNELL* President JOHN L. SULLIVAN* Vice President, Treasurer and Chief Financial Officer CURTIS W. MORELL* Vice President and Chief Accounting Officer TANYA M. LODEN* Controller PETER W. HEGEL* PAUL R. WOLKENBERG* EDWARD C. WOOD, III* Vice Presidents INVESTMENT ADVISER VAN KAMPEN ASSET MANAGEMENT INC. 1 Parkview Plaza P.O. Box 5555 Oakbrook Terrace, Illinois 60181-5555 CUSTODIAN STATE STREET BANK AND TRUST CO. 225 Franklin Street Boston, Massachusetts 02105 SHAREHOLDER SERVICING AGENT BOSTON EQUISERVE LP P.O. Box 8200 Boston, Massachusetts 02266-8200 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT ACCOUNTANTS ERNST & YOUNG LLP 1221 McKinney Suite 2400 Houston, Texas 77010 TAX NOTICE TO CORPORATE SHAREHOLDERS For 1998, 2.60% of the dividends taxable as ordinary income qualified for the 70% dividends received deduction for corporations. --------------------------------------- INQUIRIES ABOUT AN INVESTOR'S ACCOUNT SHOULD BE REFERRED TO THE FUND'S TRANSFER AGENT BOSTON EQUISERVE P.O. BOX 8200 BOSTON, MASSACHUSETTS 02266-8200 TELEPHONE: (800) 821-1238 ALASKA AND HAWAII CALL COLLECT: (781) 575-2000 ASK FOR CLOSED-END FUND ACCOUNT SERVICES --------------------------------------- * "Interested" persons of the Fund, as defined in the Investment Company Act of 1940. (C) Van Kampen Funds Inc., 1999. All rights reserved. (SM) denotes a service mark of Van Kampen Funds Inc. 23 25 YEAR 2000 READINESS DISCLOSURE Like other mutual funds, financial and business organizations and individuals around the world, the Fund could be adversely affected if the computer systems used by the Fund's investment adviser and other service providers do not properly process and calculate date-related information and data from and after January 1, 2000. This is commonly known as the "Year 2000 Problem." The Fund's investment adviser is taking steps that it believes are reasonably designed to address the Year 2000 Problem with respect to computer systems that it uses and to obtain reasonable assurances that comparable steps are being taken by the Fund's other major service providers. At this time, there can be no assurances that these steps will be sufficient to avoid any adverse impact to the Fund. In addition, the Year 2000 Problem may adversely affect the markets and the issuers of securities in which the Fund may invest that, in turn, may adversely affect the net asset value of the Fund. Improperly functioning trading systems may result in settlement problems and liquidity issues. In addition, corporate and governmental data processing errors may result in production problems for individual companies or issuers and overall economic uncertainty. Earnings of individual issuers will be affected by remediation costs, which may be substantial and may be reported inconsistently in U.S. and foreign financial statements. Accordingly, the Fund's investments may be adversely affected. The statements above are subject to the Year 2000 Information and Readiness Disclosure Act, which may limit the legal rights regarding the use of such statements in the case of dispute. 24 EX-27 2 FINANCIAL DATA SCHEDULE
6 11 BOND FUND 1 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 214,370,759 235,255,815 4,808,651 69,087 3,774,436 243,907,989 0 0 4,238,038 4,238,038 0 221,164,316 11,362,465 11,362,465 130,694 0 (2,510,115) 0 20,885,056 239,669,951 124,361 8,727,008 0 (798,754) 8,052,615 1,646,370 (2,354,436) 7,344,549 0 (8,067,081) 0 0 0 0 0 (722,532) 145,160 4,156,485 0 0 584,831 0 798,754 241,067,658 21.157 0.709 (0.063) (0.710) 0.000 0.000 21.093 0.66 0 0
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