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 811-02851
Van Kampen High Yield 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: 8/31
Date of reporting period: 2/28/05
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 High
Yield 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 February 28,
2005.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE
FUND BEING OFFERED. THE PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND,
INCLUDING THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL 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 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 2/28/05
A SHARES B SHARES C SHARES
since 10/02/78 since 7/02/92 since 7/06/93
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W/MAX W/MAX W/MAX
4.75% 4.00% 1.00%
AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE
Since Inception 7.59% 7.39% 5.66% 5.66% 4.43% 4.43%
10-year 5.42 4.90 4.92 4.92 4.59 4.59
5-year 2.18 1.18 1.37 1.18 1.40 1.40
1-year 11.04 5.78 10.17 6.17 10.32 9.32
6-month 6.60 1.57 6.19 2.19 6.27 5.27
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30-Day SEC Yield 5.92% 5.43% 5.50%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. Average annual total return with sales charges includes payment of the
maximum sales charge of 4.75 percent for Class A shares, a contingent deferred
sales charge of 4.00 percent for Class B shares (in years one and two and
declining to zero after year five), a contingent deferred sales charge of 1.00
percent for Class C shares in year one and combined Rule 12b-1 fees and service
fees of up to 0.25 percent for Class A shares and up to 1.00 percent for Class B
and C shares. The since inception and 10-year returns for Class B shares reflect
the conversion of Class B shares into Class A shares six years after purchase.
The since inception returns for Class C shares reflect the conversion of Class C
shares into Class A shares 10 years after purchase. See footnote 3 in the Notes
to Financial Statements for additional information. Figures shown above assume
reinvestment of all dividends and capital gains. SEC yield is a calculation for
determining the amount of portfolio income, excluding non-income items as
prescribed by the SEC. Yields are subject to change.
J.P. Morgan Global High Yield Index is a broad-based index that reflects the
general performance of the global high-yield corporate debt market. Lipper High
Yield Bond Fund Index is an index of funds with similar return objectives as
this fund. Indexes do not include any expenses, fees or sales charges, which
would lower performance. Indexes are unmanaged and should not be considered an
investment. Source: Lipper Inc.
1
Fund Report
FOR THE 6-MONTH PERIOD ENDED FEBRUARY 28, 2005
Van Kampen High Yield Fund is managed by the Adviser's Taxable Fixed Income
team.(1) Members of the team include Sheila A. Finnerty, Managing Director of
the Adviser; Gordon Loery, Executive Director of the Adviser; and Joshua
Givelber and Chad Liu, Vice Presidents of the Adviser.
MARKET CONDITIONS
The high yield market saw strong performance for the six months ended February
28, 2005. The market was supported by strong fundamentals, as economic growth
continued and defaults remained very low. Although new issuance levels remained
high for much of the period, demand from yield-seeking investors resulted in
this issuance being absorbed with little difficulty. This demand led to a
general decline in yield spreads (the extra yield over Treasuries demanded by
investors as compensation for assuming credit risk) over the period in spite of
a steadily rising federal funds rate.
The high yield market weakened in January due to outflows from mutual funds, a
declining equity market and the continuing high level of new issuance, causing
high yield spreads to widen slightly and the index's yield to maturity to rise.
In February, the high yield market went on to rebound, showing strong
performance despite a declining Treasury market. High yield spreads tightened
significantly for the month, and by the end of the period the high yield market
reached near-record tightness in spreads.
PERFORMANCE ANALYSIS
Van Kampen High Yield Fund returned 6.60 percent (Class A shares, assuming no
front-end sales charge was paid), underperforming its benchmark, the J. P.
Morgan Global High Yield Index and the Lipper High Yield Bond Fund Index, an
index of funds with similar investment objectives, for the six months ended
February 28, 2005. (See table below.)
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDING FEBRUARY 28, 2005
---------------------------------------------------------------------------------
J. P. MORGAN GLOBAL LIPPER HIGH YIELD
CLASS A CLASS B CLASS C HIGH YIELD INDEX BOND FUND INDEX
6.60% 6.19% 6.27% 7.37% 7.59%
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THE PERFORMANCE FOR THE THREE SHARE CLASSES VARIES BECAUSE EACH HAS DIFFERENT
EXPENSES. THE FUND'S TOTAL RETURN FIGURES ASSUME THE REINVESTMENT OF ALL
DISTRIBUTIONS, BUT DO NOT REFLECT THE DEDUCTION OF ANY APPLICABLE SALES CHARGES.
SUCH COSTS WOULD LOWER PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS. SEE PERFORMANCE SUMMARY FOR STANDARDIZED PERFORMANCE INFORMATION AND
INDEX DEFINITIONS.
(1)Team members may change without notice at any time.
2
The bulk of the fund's underperformance was driven by its emphasis on less-
risky securities. While the fund's credit ratings exposures were broadly similar
to those of the J. P. Morgan Global High Yield Index, its portfolio emphasized
the less yield-driven names that did not rally as strongly as the more
speculative areas of the market. One example was airline bonds, which the fund
has avoided since before the period due to concerns about these distressed
companies' ability to pay interest on their debt. These were among the
speculative parts of the market that enjoyed a brief rally during the period,
and the fund's strategy limited its participation in that rally.
The fund's positive return was driven by strong security selection in several
key sectors. Within cable, the fund benefited from allocations to several
European cable companies which performed well. The fund also benefited from
gains in holdings in the telecommunications and media sectors.
There is no guarantee the security sectors mentioned will continue to perform
well or be held by the fund in the future.
3
RATINGS ALLOCATION AS OF 2/28/2005
BBB/Baa 1.2%
BB/Ba 23.1
B/B 60.7
CCC/Caa 13.0
CC/Ca 0.5
NR 1.5
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 2/28/2005
Utility 9.1%
Chemicals 8.3
Energy 7.2
Housing 6.7
Forest Products 6.6
Diversified Media 6.3
Cable 6.2
Healthcare 5.8
Wireless Communications 4.3
Transportation 4.1
Manufacturing 4.1
Telecommunications 4.0
Metals 3.5
Consumer Products 3.4
Gaming & Leisure 3.1
Services 2.9
Information Technology 2.8
Food & Drug 2.6
Food & Tobacco 2.5
Retail 1.2
Financial 0.8
Aerospace 0.8
Broadcasting 0.1
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Total Long-Term Investments 96.4%
Short-Term Investments 2.2
Other Assets in Excess of Liabilities 1.4
-----
Total Net Assets 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. Ratings allocations are as a
percentage of corporate debt obligations. Industry allocations are as a
percentage of net assets. Van Kampen is a wholly owned subsidiary of a global
securities firm which is engaged in a wide range of financial services
including, for example, securities trading and brokerage activities, investment
banking, research and analysis, financing and financial advisory services.
Ratings allocations based upon ratings as issued by Standard and Poor's and
Moody's, respectively.
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 1-800-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 1-800-847-2424.
5
HOUSEHOLDING NOTICE
To reduce fund expenses, the fund attempts to eliminate duplicate
mailings to the same address. The fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling 1-800-341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
A description of the fund's policies and procedures with respect to the
voting of proxies relating to the fund's portfolio securities and
information on how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge, upon request, by calling 1-800-847-2424 or by
visiting our website at www.vankampen .com. This information is also
available on the Securities and Exchange Commission's website at
http://www.sec.gov.
6
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charge on redemptions of Class B and C Shares; and
(2) ongoing costs, including management fees; distribution and service (12b-1)
fees; and other Fund expenses. This example is intended to help you understand
your ongoing cost (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 9/1/04 - 2/28/05.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
expenses based on the Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing cost of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
9/1/04 2/28/05 9/1/04-2/28/05
Class A
Actual...................................... $1,000.00 $1,066.17 $5.33
Hypothetical................................ 1,000.00 1,019.59 5.21
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 1,062.03 9.25
Hypothetical................................ 1,000.00 1,015.79 9.05
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 1,062.90 9.10
Hypothetical................................ 1,000.00 1,015.99 8.90
(5% annual return before expenses)
* Expenses are equal to the Fund's annualized expense ratio of 1.04%, 1.80%,
and 1.78% for Class A, B, and C Shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Assumes all dividends and distributions were reinvested.
7
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
CORPORATE BONDS 94.4%
AEROSPACE 0.8%
$6,625 K&F Acquisition, Inc., 144A - Private
Placement (a)................................... 7.750% 11/15/14 $ 6,740,937
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BROADCASTING 0.1%
1,185 Salem Communications Corp. ..................... 7.750 12/15/10 1,267,950
------------
CABLE 5.8%
1,156 Avalon Cable LLC................................ 11.875 12/01/08 1,207,029
6,900 Cablecom Luxembourg SCA, 144A - Private
Placement (Euro) (Luxembourg) (a)............... 9.375 04/15/14 10,515,059
1,425 Cablevision Systems Corp., 144A - Private
Placement (Variable Rate Coupon) (a)............ 6.669 04/01/09 1,596,000
1,145 Charter Communications Holdings LLC............. 10.750 10/01/09 993,287
5,275 Charter Communications Holdings LLC............. 9.625 11/15/09 4,391,437
3,375 Charter Communications Holdings LLC............. 11.750 01/15/10 3,062,812
2,745 Echostar DBS Corp. ............................. 6.375 10/01/11 2,841,075
5,670 Kabel Deutschland GmbH, 144A - Private Placement
(Germany) (a)................................... 10.625 07/01/14 6,548,850
1,420 PanAmSat Corp. ................................. 9.000 08/15/14 1,569,100
7,410 PanAmSat Holding Corp., 144A - Private Placement
(a) (b)......................................... 0/10.375 11/01/14 5,168,475
2,360 Renaissance Media Group......................... 10.000 04/15/08 2,424,900
5,553 Satelites Mexicanos SA, Ser B (Mexico) (c)...... 10.125 11/01/04 2,693,205
3,210 Telenet Communication NV, 144A - Private
Placement (Euro) (Belgium) (a).................. 9.000 12/15/13 4,913,057
3,855 Telenet Group Holding NV, 144A - Private
Placement (Belgium) (a) (b)..................... 0/11.500 06/15/14 3,064,725
------------
50,989,011
------------
CHEMICALS 8.3%
4,560 Cognis Deutschland GmbH & Co., 144A - Private
Placement (Euro) (Variable Rate Coupon)
(Germany) (a)................................... 6.979 11/15/13 6,390,135
5,090 Equistar Chemicals LP........................... 10.125 09/01/08 5,866,225
620 Equistar Chemicals LP........................... 10.625 05/01/11 719,200
2,286 FMC Corp. ...................................... 10.250 11/01/09 2,600,325
2,230 Huntsman Advanced Materials LLC, 144A - Private
Placement (a)................................... 11.000 07/15/10 2,636,975
952 Huntsman International, LLC..................... 10.125 07/01/09 1,005,550
4,000 Huntsman International, LLC (Euro).............. 10.125 07/01/09 5,665,013
4,190 Innophos, Inc.,144A - Private Placement (a)..... 8.875 08/15/14 4,525,200
1,550 Innophos, Inc.,144A - Private Placement
(Variable Rate Coupon) (a)...................... 10.771 02/15/15 1,567,437
1,280 ISP Chemco, Inc., Ser B......................... 10.250 07/01/11 1,440,000
6,410 ISP Holdings, Inc., Ser B....................... 10.625 12/15/09 7,018,950
1,530 Koppers, Inc. .................................. 9.875 10/15/13 1,751,850
8 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
CHEMICALS (CONTINUED)
$2,535 Lyondell Chemical Co. .......................... 10.500% 06/01/13 $ 3,010,312
2,700 Millennium America, Inc. ....................... 7.000 11/15/06 2,794,500
1,985 Millennium America, Inc. ....................... 9.250 06/15/08 2,218,237
1,690 Nalco Co. ...................................... 7.750 11/15/11 1,816,750
5,995 Nalco Co. ...................................... 8.875 11/15/13 6,654,450
5,470 Rhodia SA (France).............................. 8.875 06/01/11 5,702,475
1,925 Rhodia SA (Euro) (France)....................... 8.000 06/01/10 2,742,231
4,360 Rockwood Specialties Group, Inc. ............... 10.625 05/15/11 4,970,400
1,390 Rockwood Specialties Group, Inc., 144A - Private
Placement (Euro) (a)............................ 7.625 11/15/14 1,966,290
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73,062,505
------------
CONSUMER PRODUCTS 3.2%
2,810 Amscan Holdings, Inc. .......................... 8.750 05/01/14 2,802,975
3,640 Del Laboratories, Inc., 144A - Private
Placement (a)................................... 8.000 02/01/12 3,612,700
2,360 Oxford Industrials, Inc. ....................... 8.875 06/01/11 2,537,000
6,235 Rayovac Corp. .................................. 8.500 10/01/13 6,850,706
1,385 Rayovac Corp., 144A - Private Placement (a)..... 7.375 02/01/15 1,423,087
5,400 Safilo Capital International SA, 144A - Private
Placement (Euro) (Luxembourg) (a)............... 9.625 05/15/13 7,585,154
5,800 Sleepmaster LLC, Ser B (c) (d) (e).............. 11.000 05/15/09 1,276,000
1,667 Tempur Pedic, Inc. ............................. 10.250 08/15/10 1,908,715
------------
27,996,337
------------
DIVERSIFIED MEDIA 6.3%
1,185 Advanstar Communications, Inc. ................. 10.750 08/15/10 1,347,937
5,821 Advanstar Communications, Inc. (Variable Rate
Coupon)......................................... 10.294 08/15/08 6,170,631
255 Advanstar Communications, Inc., Ser B........... 12.000 02/15/11 277,950
6,767 Canwest Media, Inc., 144A - Private Placement
(Canada) (a).................................... 8.000 09/15/12 7,325,113
2,347 Dex Media East/Finance Corp., LLC............... 12.125 11/15/12 2,851,605
3,692 Dex Media West/Finance Corp., LLC, Ser B........ 9.875 08/15/13 4,255,030
5,830 Houghton Mifflin Co. ........................... 9.875 02/01/13 6,194,375
3,040 Houghton Mifflin Co. (b)........................ 0/11.500 10/15/13 2,158,400
2,920 Marquee, Inc., 144A - Private Placement
(Variable Rate Coupon) (a)...................... 7.044 08/15/10 3,080,600
2,095 Muzak LLC....................................... 10.000 02/15/09 1,885,500
4,113 Muzak LLC....................................... 9.875 03/15/09 2,488,365
4,205 Nebraska Book Co., Inc. ........................ 8.625 03/15/12 4,247,050
1,523 PEI Holdings, Inc. ............................. 11.000 03/15/10 1,810,466
6,420 Primedia, Inc. ................................. 8.875 05/15/11 6,965,700
4,455 Vertis, Inc., 144A - Private Placement (a)...... 13.500 12/07/09 4,432,725
------------
55,491,447
------------
See Notes to Financial Statements 9
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
ENERGY 7.2%
$5,285 CHC Helicopter Corp. (Canada)................... 7.375% 05/01/14 $ 5,536,037
5,140 Chesapeake Energy Corp. ........................ 7.500 09/15/13 5,731,100
2,785 CITGO Petroleum Corp., 144A - Private Placement
(a)............................................. 6.000 10/15/11 2,882,475
8,650 El Paso Production Holding Co. ................. 7.750 06/01/13 9,320,375
3,625 Hanover Compressor Co. ......................... 8.625 12/15/10 3,951,250
920 Hanover Compressor Co. ......................... 9.000 06/01/14 1,028,100
245 Hanover Equipment Trust, Ser A.................. 8.500 09/01/08 261,537
3,042 Hanover Equipment Trust, Ser B.................. 8.750 09/01/11 3,315,780
5,765 Hilcorp Energy/Finance Corp., 144A - Private
Placement (a)................................... 10.500 09/01/10 6,586,512
3,570 Husky Oil Ltd. (Variable Rate Coupon)
(Canada)........................................ 8.900 08/15/28 4,009,156
1,918 Magnum Hunter Resources, Inc.................... 9.600 03/15/12 2,196,110
3,550 Pacific Energy Partners......................... 7.125 06/15/14 3,789,625
2,630 Plains E & P Co. ............................... 7.125 06/15/14 2,919,300
3,327 Port Arthur Finance Corp., Ser A................ 12.500 01/15/09 3,876,211
2,984 Tesoro Petroleum Corp. ......................... 9.625 04/01/12 3,401,760
4,547 Vintage Petroleum, Inc. ........................ 7.875 05/15/11 4,899,392
------------
63,704,720
------------
FINANCIAL 0.8%
6,765 RefcoFinance Holdings LLC, 144A - Private
Placement (a)................................... 9.000 08/01/12 7,407,675
------------
FOOD & DRUG 2.6%
4,010 Delhaize America, Inc. ......................... 8.125 04/15/11 4,631,867
1,000 Jean Coutu Group (PJC), Inc. (Canada)........... 8.500 08/01/14 1,030,000
1,490 Jean Coutu Group (PJC), Inc., 144A - Private
Placement (Canada) (a).......................... 7.625 08/01/12 1,571,950
6,350 Jean Coutu Group (PJC), Inc., 144A - Private
Placement (Canada) (a).......................... 8.500 08/01/14 6,540,500
1,700 Jitney-Jungle Stores America, Inc. (c) (d)
(e)............................................. 12.000 03/01/06 0
4,202 Kroger Co., 144A - Private Placement (a)........ 8.500 07/15/17 4,782,268
3,160 Rite Aid Corp. ................................. 7.125 01/15/07 3,223,200
1,155 Rite Aid Corp. ................................. 8.125 05/01/10 1,212,750
------------
22,992,535
------------
FOOD & TOBACCO 2.5%
3,645 Michael Foods, Inc. ............................ 8.000 11/15/13 3,872,812
7,450 Pilgrim's Pride Corp. .......................... 9.625 09/15/11 8,306,750
870 Pilgrim's Pride Corp. .......................... 9.250 11/15/13 991,800
1,115 Smithfield Foods, Inc. ......................... 8.000 10/15/09 1,240,437
6,285 Smithfield Foods, Inc. ......................... 7.000 08/01/11 6,787,800
450 Smithfield Foods, Inc., Ser B................... 7.750 05/15/13 506,812
------------
21,706,411
------------
10 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
FOREST PRODUCTS 6.6%
$1,510 Abitibi-Consolidated, Inc. (Canada)............. 7.750% 06/15/11 $ 1,562,850
5,305 Abitibi-Consolidated, Inc. (Canada)............. 6.000 06/20/13 4,973,437
2,030 Crown European Holdings, 144A - Private
Placement (Euro) (France) (a)................... 6.250 09/01/11 2,918,707
6,925 Georgia-Pacific Corp. .......................... 8.875 02/01/10 8,102,250
2,175 Graham Packaging Co., Inc., 144A - Private
Placement (a)................................... 8.500 10/15/12 2,332,687
4,750 Graphic Packaging International, Inc. .......... 9.500 08/15/13 5,403,125
270 JSG Funding PLC (Ireland)....................... 9.625 10/01/12 300,375
4,460 JSG Funding PLC (Euro) (Ireland)................ 10.125 10/01/12 6,855,792
2,700 Norampac, Inc. (Canada)......................... 6.750 06/01/13 2,848,500
130 Owens-Brockway Glass Containers, Inc............ 8.875 02/15/09 141,050
2,160 Owens-Illinois, Inc. ........................... 7.350 05/15/08 2,278,800
8,500 Owens-Illinois, Inc. ........................... 7.500 05/15/10 9,052,500
2,475 Pliant Corp. ................................... 13.000 06/01/10 2,431,687
1,885 Pliant Corp. ................................... 13.000 06/01/10 1,852,013
500 Tembec Industries, Inc. (Canada)................ 8.500 02/01/11 502,500
6,965 Tembec Industries, Inc. (Canada)................ 7.750 03/15/12 6,756,050
------------
58,312,323
------------
GAMING & LEISURE 3.1%
993 Caesars Entertainment........................... 8.875 09/15/08 1,125,814
475 Caesars Entertainment........................... 7.000 04/15/13 530,813
3,195 Gaylord Entertainment Co., 144A - Private
Placement (a)................................... 6.750 11/15/14 3,242,925
974 HMH Properties, Inc., Ser B..................... 7.875 08/01/08 1,005,655
6,145 Isle of Capri Casinos, Inc. .................... 7.000 03/01/14 6,406,163
10,820 MGM Mirage, Inc. ............................... 6.000 10/01/09 11,144,600
285 Station Casinos, Inc. .......................... 6.000 04/01/12 296,756
3,850 Station Casinos, Inc. .......................... 6.500 02/01/14 4,042,500
------------
27,795,226
------------
HEALTHCARE 5.8%
5,600 AmerisourceBergen Corp. ........................ 7.250 11/15/12 6,244,000
3,305 Community Health Systems, Inc., 144A - Private
Placement (a)................................... 6.500 12/15/12 3,342,181
2,376 Fisher Scientific International, Inc. .......... 8.125 05/01/12 2,619,540
475 Fisher Scientific International, Inc. .......... 8.000 09/01/13 530,813
2,830 Fisher Scientific International, Inc., 144A -
Private Placement (a)........................... 6.750 08/15/14 2,999,800
30 Fresenius Medical Care Capital Trust II......... 7.875 02/01/08 321,750
7,000 Fresenius Medical Care Capital Trust IV......... 7.875 06/15/11 7,822,500
303 HCA, Inc. ...................................... 8.750 09/01/10 348,093
3,665 HCA, Inc. ...................................... 6.300 10/01/12 3,747,261
935 HCA, Inc. ...................................... 6.375 01/15/15 953,664
115 HCA, Inc. ...................................... 7.190 11/15/15 121,982
4,095 Medcath Holdings Corp. ......................... 9.875 07/15/12 4,524,975
See Notes to Financial Statements 11
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
$ 875 National Nephrology Associates, Inc., 144A -
Private Placement (a)........................... 9.000% 11/01/11 $ 995,313
4,485 Team Health, Inc., 144A - Private Placement
(a)............................................. 9.000 04/01/12 4,485,000
1,080 Tenet Healthcare Corp. ......................... 6.500 06/01/12 1,001,700
2,280 Tenet Healthcare Corp., 144A - Private Placement
(a)............................................. 9.875 07/01/14 2,439,600
2,030 VWR International, Inc., 144A - Private
Placement (a)................................... 6.875 04/15/12 2,101,050
2,510 VWR International, Inc., 144A - Private
Placement (a)................................... 8.000 04/15/14 2,622,950
4,085 Warner Chilcott Corp., 144A - Private
Placement (a)................................... 8.750 02/01/15 4,268,825
------------
51,490,997
------------
HOUSING 6.7%
4,775 ACIH, Inc., 144A - Private Placement (a) (b).... 0/11.500 12/15/12 3,605,125
12,315 Associated Materials, Inc. (b).................. 0/11.250 03/01/14 8,989,950
1,164 CB Richard Ellis Service, Inc. ................. 9.750 05/15/10 1,335,690
4,090 Goodman Global Holdings, Inc., 144A - Private
Placement (a)................................... 7.875 12/15/12 4,018,425
1,390 Goodman Global Holdings, Inc., 144A - Private
Placement (Variable Rate Coupon) (a)............ 5.760 06/15/12 1,431,700
1,180 Interface, Inc. ................................ 7.300 04/01/08 1,212,450
1,475 Interface, Inc. ................................ 10.375 02/01/10 1,718,375
4,590 Interface, Inc., Ser B.......................... 9.500 02/01/14 5,014,575
6,085 Nortek, Inc., 144A - Private Placement (a)...... 8.500 09/01/14 6,237,125
6,135 NTK Holdings, Inc., 144A - Private
Placement (a) (b)............................... 0/10.750 03/01/14 3,803,700
5,360 Ply Gem Industries, Inc. ....................... 9.000 02/15/12 5,386,800
3,360 Propex Fabrics, Inc., 144A - Private
Placement (a)................................... 10.000 12/01/12 3,410,400
4,470 RMCC Acquisition Co., 144A - Private
Placement (a)................................... 9.500 11/01/12 4,492,350
1,596 Technical Olympic USA, Inc. .................... 9.000 07/01/10 1,735,650
2,735 Technical Olympic USA, Inc. .................... 9.000 07/01/10 2,974,313
3,047 Technical Olympic USA, Inc. .................... 10.375 07/01/12 3,427,875
860 Technical Olympic USA, Inc., 144A - Private
Placement (a)................................... 7.500 01/15/15 855,700
------------
59,650,203
------------
INFORMATION TECHNOLOGY 2.3%
4,300 Iron Mountain, Inc. ............................ 8.625 04/01/13 4,525,750
3,365 Iron Mountain, Inc. ............................ 7.750 01/15/15 3,440,713
525 Iron Mountain, Inc. ............................ 6.625 01/01/16 493,500
3,025 Nortel Networks Ltd. (Canada)................... 6.125 02/15/06 3,085,500
12 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY (CONTINUED)
$2,670 Sanmina-SCI Corp., 144A - Private
Placement (a)................................... 6.750% 03/01/13 $ 2,693,363
5,765 Xerox Corp. .................................... 7.125 06/15/10 6,255,025
------------
20,493,851
------------
MANUFACTURING 4.1%
5,011 Brand Services, Inc. ........................... 12.000 10/15/12 5,674,958
1,470 Flowserve Corp. ................................ 12.250 08/15/10 1,609,650
3,855 Hexcel Corp., 144A - Private Placement (a)...... 6.750 02/01/15 3,888,731
2,014 Johnsondiversey, Inc. (Euro).................... 9.625 05/15/12 3,042,490
4,588 Johnsondiversey, Inc., Ser B.................... 9.625 05/15/12 5,161,500
2,574 Manitowoc Co., Inc. ............................ 10.500 08/01/12 2,992,275
55 Manitowoc Co., Inc. (Euro)...................... 10.375 05/15/11 81,629
5,000 NMHG Holdings Co. .............................. 10.000 05/15/09 5,550,000
7,582 Trimas Corp. ................................... 9.875 06/15/12 7,885,280
------------
35,886,513
------------
METALS 3.5%
6,679 Doe Run Resources Corp. (Acquired 09/15/00 to
10/15/04, Cost $6,280,647) (f) (g).............. 13.062 11/01/08 6,244,516
1,380 Foundation PA Coal Co., 144A - Private Placement
(a)............................................. 7.250 08/01/14 1,469,700
2,250 General Cable Corp. ............................ 9.500 11/15/10 2,542,500
8,255 GS Technologies Operating, Inc. (c) (d) (e)..... 12.000 09/01/04 826
6,800 Novelis, Inc. - 144A - Private Placement
(Canada) (a).................................... 7.250 02/15/15 7,072,000
2,515 Sgl Carbon Luxembourg SA, 144A - Private
Placement (Euro) (Luxembourg) (a)............... 8.500 02/01/12 3,782,672
4,238 UCAR Finance, Inc. ............................. 10.250 02/15/12 4,735,965
4,277 United States Steel Corp. ...................... 9.750 05/15/10 4,897,165
------------
30,745,344
------------
RETAIL 1.2%
4,870 General Nutrition Center, Inc. ................. 8.500 12/01/10 4,151,675
5,885 Petro Stopping Center/Financial................. 9.000 02/15/12 6,238,100
------------
10,389,775
------------
SERVICES 2.9%
3,480 Allied Waste North America, Inc. ............... 6.375 04/15/11 3,401,700
3,055 Allied Waste North America, Inc. ............... 7.875 04/15/13 3,207,750
2,155 Allied Waste North America, Inc., Ser B......... 9.250 09/01/12 2,392,050
4,950 Buhrmann US, Inc. .............................. 8.250 07/01/14 5,160,375
1,635 Buhrmann US, Inc., 144A - Private
Placement (a) (h)............................... 7.875 03/01/15 1,655,438
4,245 MSW Energy Holdings LLC, Ser B.................. 7.375 09/01/10 4,457,250
985 MSW Energy Holdings/Finance..................... 8.500 09/01/10 1,078,575
4,435 United Rentals North America, Inc. ............. 6.500 02/15/12 4,490,438
------------
25,843,576
------------
See Notes to Financial Statements 13
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 4.0%
$6,625 Axtel SA (Mexico)............................... 11.000% 12/15/13 $ 7,212,969
6,030 Exodus Communications, Inc. (c) (d) (e)......... 11.250 07/01/08 0
770 Exodus Communications, Inc. (c) (d) (e)......... 11.625 07/15/10 0
4,000 Exodus Communications, Inc. (Euro) (c) (d)
(e)............................................. 11.375 07/15/08 0
8,250 GST Network Funding, Inc. (c) (d) (e)........... 10.500 05/01/08 825
460 Intelsat Bermuda Ltd, 144A - Private Placement
(Bermuda) (a)................................... 8.250 01/15/13 484,150
4,445 Intelsat Bermuda Ltd, 144A - Private Placement
(Bermuda) (a)................................... 8.625 01/15/15 4,767,263
3,350 Intelsat Bermuda Ltd, 144A - Private Placement
(Variable Rate Coupon) (Bermuda) (a)............ 7.805 01/15/12 3,458,875
4,000 Park N View, Inc., Ser B (c) (d) (e)............ 13.000 05/15/08 0
7,085 Primus Telecommunications Holdings.............. 8.000 01/15/14 5,455,450
4,530 Qwest Communications International, Inc., 144A -
Private Placement (Variable Rate Coupon) (a).... 6.294 02/15/09 4,643,250
1,020 Qwest Corp...................................... 5.625 11/15/08 1,030,200
3,095 Qwest Services Corp., 144A - Private
Placement (a)................................... 13.500 12/15/07 3,505,088
4,480 Valor Telecommunications Enterprise, 144A -
Private Placement (a)........................... 7.750 02/15/15 4,670,400
------------
35,228,470
------------
TRANSPORTATION 4.1%
4,310 Amsted Industries, Inc., 144A - Private
Placement (a)................................... 10.250 10/15/11 4,891,850
4,920 Autonation, Inc. ............................... 9.000 08/01/08 5,584,200
7,545 Cooper Standard Automotive, 144A - Private
Placement (a)................................... 8.375 12/15/14 7,167,750
6,225 Laidlaw International, Inc. .................... 10.750 06/15/11 7,166,531
5,040 Sonic Automotive, Inc., Ser B................... 8.625 08/15/13 5,455,800
5,626 TRW Automotive, Inc. ........................... 9.375 02/15/13 6,385,510
------------
36,651,641
------------
UTILITY 8.2%
760 AES Corp. ...................................... 9.375 09/15/10 889,200
543 AES Corp. ...................................... 8.875 02/15/11 624,450
950 AES Corp. ...................................... 7.750 03/01/14 1,055,688
4,510 AES Corp., 144A - Private Placement (a)......... 9.000 05/15/15 5,192,138
2,660 Allegheny Energy, Inc. ......................... 7.750 08/01/05 2,706,550
1,200 CMS Energy Corp. ............................... 7.500 01/15/09 1,290,000
4,130 CMS Energy Corp. ............................... 8.500 04/15/11 4,728,850
5,095 Dynegy Holdings, Inc. .......................... 6.875 04/01/11 4,770,194
3,940 Dynegy Holdings, Inc., 144A - Private
Placement (a)................................... 9.875 07/15/10 4,432,500
1,395 IPALCO Enterprises, Inc. ....................... 8.625 11/14/11 1,646,100
4,775 Monongahela Power Co. .......................... 5.000 10/01/06 4,849,175
3,985 Nevada Power Co. ............................... 9.000 08/15/13 4,622,600
2,945 Nevada Power Co., Ser A......................... 8.250 06/01/11 3,379,388
14 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
UTILITY (CONTINUED)
$1,025 Northwest Pipeline Corp. ....................... 8.125% 03/01/10 $ 1,131,344
6,532 Ormat Funding Corp., 144A - Private
Placement (a)................................... 8.250 12/30/20 6,630,356
1,310 PSEG Energy Holdings, Inc. ..................... 7.750 04/16/07 1,385,325
2,965 PSEG Energy Holdings, Inc. ..................... 8.625 02/15/08 3,239,263
8,675 Reliant Energy, Inc. ........................... 6.750 12/15/14 8,653,313
2,010 Southern Natural Gas Co. ....................... 8.875 03/15/10 2,236,125
875 TNP Enterprises, Inc., Ser B.................... 10.250 04/01/10 931,875
7,280 Williams Cos., Inc. ............................ 7.875 09/01/21 8,590,400
------------
72,984,834
------------
WIRELESS COMMUNICATIONS 4.3%
3,175 American Tower Corp. ........................... 7.500 05/01/12 3,357,563
3,180 American Tower Corp., 144A - Private Placement
(a)............................................. 7.125 10/15/12 3,323,100
5,190 Metropcs, Inc. ................................. 10.750 10/01/11 5,605,200
2,800 Nextel Communications, Inc. .................... 6.875 10/31/13 3,038,000
2,045 Rogers Wireless, Inc. (Canada).................. 8.000 12/15/12 2,226,494
2,945 Rogers Wireless, Inc. (Canada).................. 7.500 03/15/15 3,239,500
3,975 Rural Cellular Corp. (Variable Rate Coupon)..... 6.990 03/15/10 4,193,625
6,700 SBA Communications Corp. (b).................... 0/9.750 12/15/11 5,896,000
2,680 SBA Communications Corp., 144A - Private
Placement (a)................................... 8.500 12/01/12 2,907,800
575 UbiquiTel Operating Co. ........................ 9.875 03/01/11 652,625
3,580 UbiquiTel Operating Co., 144A - Private
Placement (a)................................... 9.875 03/01/11 4,063,300
------------
38,503,207
------------
TOTAL CORPORATE BONDS 94.4%...................................... 835,335,488
------------
FOREIGN CONVERTIBLE CORPORATE OBLIGATION 0.5%
4,380 Nortel Networks Corp. (Canada).................. 4.250 09/01/08 4,210,275
------------
EQUITIES 1.5%
DecisionOne Corp. (19,895 Common Shares) (e) (i)............................. 0
DecisionOne Corp. (10,890 Common Stock Warrants Class A) (e) (i)............. 0
DecisionOne Corp. (18,765 Common Stock Warrants Class B) (e) (i)............. 0
DecisionOne Corp. (11,130 Common Stock Warrants Class C) (e) (i)............. 0
Doe Run Resources Corp. (29 Common Stock Warrants) (e) (i)................... 0
HCI Direct, Inc. (106,250 Common Shares) (e) (i)............................. 1,593,750
HF Holdings, Inc. (36,820 Common Stock Warrants) (e) (i)..................... 0
Hosiery Corp. of America, Inc., 144A - Private Placement (1,000 common
shares, Class A) (a) (e)................................................... 0
Jazztel, PLC, 144A - Private Placement (5,000 Common Stock Warrants) (Euro)
(United Kingdom) (a) (e) (i)............................................... 0
Optel, Inc. (3,275 Common Shares) (e) (i).................................... 0
Park N View, Inc., 144A - Private Placement (4,000 Common Stock Warrants) (a)
(d) (e) (i)................................................................ 0
See Notes to Financial Statements 15
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
DESCRIPTION VALUE
--------------------------------------------------------------------------------------------
EQUITIES (CONTINUED)
Paxon Communications Corp. (437 Preferred Shares) (f)........................ $ 3,540,792
Reunion Industries, Inc. (107,947 Common Stock Warrants) (e) (i)............. 0
TNP Enterprises, Inc. (6,681 Preferred Shares, Ser D) (f).................... 7,833,548
Ventelo, Inc., 144A - Private Placement (73,021 Common Shares) (Euro)
(Germany) (a) (e) (i)...................................................... 0
Viatel Holding Bermuda Ltd. (7,852 common shares) (United Kingdom) (i)....... 7,459
VS Holdings, Inc. (946,962 Common Shares) (e) (i)............................ 0
------------
TOTAL EQUITIES 1.5%......................................................... 12,975,549
------------
TOTAL LONG-TERM INVESTMENTS 96.4%
(Cost $844,932,401)........................................................ 852,521,312
REPURCHASE AGREEMENT 2.2%
Bank of America Securities LLC ($19,321,000 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of 2.570%,
dated 02/28/05, to be sold on 03/01/05 at $19,322,379) (Cost
$19,321,000)............................................................... 19,321,000
------------
TOTAL INVESTMENTS 98.6%
(Cost $864,253,401)........................................................ 871,842,312
OTHER ASSETS IN EXCESS OF LIABILITIES 1.4%.................................. 12,612,014
------------
NET ASSETS 100.0%........................................................... $884,454,326
============
Percentages are calculated as a percentage of net assets.
(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) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(c) This corporate bond is non-income producing as security is in default.
(d) This borrower has filed for protection in federal bankruptcy court.
(e) Market value is determined in accordance with procedures established in good
faith by the Board of Trustees.
(f) Payment-in-kind security.
(g) This security is restricted and may be resold only in transactions exempt
from registration which are normally those transactions with qualified
institutional buyers. This restricted security comprises 0.7% of net assets.
(h) Security purchased on a when-issued or delayed delivery basis.
(i) Non-income producing security as this stock currently does not declare
dividends.
(Euro)--Eurodollar
16 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
February 28, 2005 (Unaudited)
ASSETS:
Total Investments (Cost $864,253,401)....................... $ 871,842,312
Receivables:
Interest.................................................. 16,298,625
Investments Sold.......................................... 6,144,343
Fund Shares Sold.......................................... 2,591,012
Other....................................................... 285,626
--------------
Total Assets............................................ 897,161,918
--------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 4,555,254
Investments Purchased..................................... 4,499,967
Income Distributions...................................... 1,286,656
Distributor and Affiliates................................ 473,611
Investment Advisory Fee................................... 359,651
Custodian Bank............................................ 11,799
Forward Foreign Currency Contracts.......................... 864,813
Trustees' Deferred Compensation and Retirement Plans........ 365,584
Accrued Expenses............................................ 290,257
--------------
Total Liabilities....................................... 12,707,592
--------------
NET ASSETS.................................................. $ 884,454,326
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $1,275,002,226
Net Unrealized Appreciation................................. 6,739,730
Accumulated Undistributed Net Investment Income............. (4,760,348)
Accumulated Net Realized Loss............................... (392,527,282)
--------------
NET ASSETS.................................................. $ 884,454,326
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $588,974,462 and 157,228,183 shares of
beneficial interest issued and outstanding)............. $ 3.75
Maximum sales charge (4.75%* of offering price)......... .19
--------------
Maximum offering price to public........................ $ 3.94
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $228,999,546 and 60,852,084 shares of
beneficial interest issued and outstanding)............. $ 3.76
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $66,480,318 and 17,865,466 shares of
beneficial interest issued and outstanding)............. $ 3.72
==============
* On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements 17
VAN KAMPEN HIGH YIELD FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended February 28, 2005 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $27,041,891
Dividends................................................... 1,496,799
Other....................................................... 287,178
-----------
Total Income............................................ 28,825,868
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,890,340
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $558,147, $941,283 and $250,403,
respectively)............................................. 1,749,833
Shareholder Services........................................ 640,336
Custody..................................................... 42,786
Legal....................................................... 24,287
Trustees' Fees and Related Expenses......................... 16,263
Other....................................................... 207,363
-----------
Total Expenses.......................................... 4,571,208
Less Credits Earned on Cash Balances.................... 10,413
-----------
Net Expenses............................................ 4,560,795
-----------
NET INVESTMENT INCOME....................................... $24,265,073
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 4,961,405
Forward Foreign Currency Contracts........................ 53
Foreign Currency Transactions............................. (1,810,292)
-----------
Net Realized Gain........................................... 3,151,166
-----------
Net Unrealized Appreciation During the Period............... 14,225,183
-----------
NET REALIZED AND UNREALIZED GAIN............................ $17,376,349
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $41,641,422
===========
18 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2005 AUGUST 31, 2004
------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................. $ 24,265,073 $ 42,538,299
Net Realized Gain/Loss................................. 3,151,166 (37,759,344)
Net Unrealized Appreciation During the Period.......... 14,225,183 71,411,903
------------- -------------
Change in Net Assets from Operations................... 41,641,422 76,190,858
------------- -------------
Distributions from Net Investment Income:
Class A Shares....................................... (16,082,094) (26,354,660)
Class B Shares....................................... (5,792,337) (10,773,678)
Class C Shares....................................... (1,605,219) (2,702,792)
------------- -------------
(23,479,650) (39,831,130)
------------- -------------
Return of Capital Distribution:
Class A Shares....................................... -0- (889,262)
Class B Shares....................................... -0- (358,702)
Class C Shares....................................... -0- (90,962)
------------- -------------
-0- (1,338,926)
------------- -------------
Total Distributions.................................... (23,479,650) (41,170,056)
------------- -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES.... 18,161,772 35,020,802
------------- -------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold.............................. 367,687,028 187,187,625
Net Asset Value of Shares Issued Through Dividend
Reinvestment......................................... 17,170,573 29,609,310
Cost of Shares Repurchased............................. (100,179,597) (295,963,620)
------------- -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS..... 284,678,004 (79,166,685)
------------- -------------
TOTAL INCREASE/DECREASE IN NET ASSETS.................. 302,839,776 (44,145,883)
NET ASSETS:
Beginning of the Period................................ 581,614,550 625,760,433
------------- -------------
End of the Period (Including accumulated undistributed
net investment income of $(4,760,348) and
$(4,885,475), respectively).......................... $ 884,454,326 $ 581,614,550
============= =============
See Notes to Financial Statements 19
VAN KAMPEN HIGH YIELD 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 AUGUST 31,
CLASS A SHARES FEBRUARY 28, ------------------------------------------------
2005 2004 2003 2002 (a) 2001 2000
----------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
THE PERIOD.................. $ 3.64 $ 3.43 $ 3.15 $ 4.23 $ 5.24 $ 5.68
------ ------ ------ ------- ------ ------
Net Investment Income....... .14 .26 .29 .39 .51 .59
Net Realized and Unrealized
Gain/Loss................. .10 .21 .29 (1.01) (.96) (.43)
------ ------ ------ ------- ------ ------
Total from Investment
Operations.................. .24 .47 .58 (.62) (.45) .16
------ ------ ------ ------- ------ ------
Less:
Distributions from Net
Investment Income......... .13 .25 .24 .43 .55 .60
Return of Capital
Distributions............. -0- .01 .06 .03 .01 -0-
------ ------ ------ ------- ------ ------
Total Distributions........... .13 .26 .30 .46 .56 .60
------ ------ ------ ------- ------ ------
NET ASSET VALUE, END OF THE
PERIOD...................... $ 3.75 $ 3.64 $ 3.43 $ 3.15 $ 4.23 $ 5.24
====== ====== ====== ======= ====== ======
Total Return (b).............. 6.60%* 14.02% 19.26% -15.75% -9.04% 3.09%
Net Assets at End of the
Period (In millions)........ $589.0 $379.5 $408.7 $ 308.5 $394.4 $465.0
Ratio of Expenses to Average
Net Assets.................. 1.04% 1.06% 1.12% 1.08% 1.05% 1.03%
Ratio of Net Investment Income
to Average Net Assets....... 7.15% 7.45% 8.36% 10.39% 10.93% 10.90%
Portfolio Turnover............ 41%* 88% 95% 83% 80% 68%
* Non-Annualized
(a) As required, effective September 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 and presenting
paydown gains and losses on mortgage- and asset-backed securities as
interest income. The effect of these changes for the period ended August 31,
2002 was to decrease the ratio of net investment income to average net
assets from 10.49% to 10.39%. Net investment income per share and net
realized gains and losses per share were unaffected by the adjustments. Per
share, ratios and supplemental data for periods prior to August 31, 2002
have not been restated to reflect this change in presentation.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchase. With
respect to shares purchased prior to December 1, 2004, a CDSC of 1% may be
imposed on certain redemptions made within one year of purchase. If the
sales charges were included, total returns would be lower. These returns
include Rule 12b-1 fees and service fees of up to .25% and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or
the redemption of Fund shares.
20 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS B SHARES FEBRUARY 28, --------------------------------------------
2005 2004 2003 2002 (a) 2001 2000
-----------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
THE PERIOD.................... $ 3.65 $ 3.44 $ 3.16 $ 4.24 $ 5.25 $ 5.68
------ ------ ------ ------- ------ ------
Net Investment Income......... .13 .23 .25 .35 .48 .55
Net Realized and Unrealized
Gain/Loss................... .09 .21 .30 (1.01) (.97) (.43)
------ ------ ------ ------- ------ ------
Total from Investment
Operations.................... .22 .44 .55 (.66) (.49) .12
------ ------ ------ ------- ------ ------
Less:
Distributions from Net
Investment Income........... .11 .22 .21 .39 .51 .55
Return of Capital
Distributions............... -0- .01 .06 .03 .01 -0-
------ ------ ------ ------- ------ ------
Total Distributions............. .11 .23 .27 .42 .52 .55
------ ------ ------ ------- ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................ $ 3.76 $ 3.65 $ 3.44 $ 3.16 $ 4.24 $ 5.25
====== ====== ====== ======= ====== ======
Total Return (b)................ 6.19%* 12.79% 18.27% -16.12% -9.80% 2.43%
Net Assets at End of the Period
(In millions)................. $229.0 $160.7 $175.6 $ 168.8 $249.6 $268.7
Ratio of Expenses to Average Net
Assets........................ 1.80% 1.82% 1.89% 1.84% 1.83% 1.78%
Ratio of Net Investment Income
to Average Net Assets......... 6.39% 6.70% 7.68% 9.67% 10.13% 10.15%
Portfolio Turnover.............. 41%* 88% 95% 83% 80% 68%
* Non-Annualized
(a) As required, effective September 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 and presenting
paydown gains and losses on mortgage- and asset-backed securities as
interest income. The effect of these changes for the period ended August 31,
2002 was to decrease the ratio of net investment income to average net
assets from 9.77% to 9.67%. Net investment income per share and net realized
gains and losses per share were unaffected by the adjustments. Per share,
ratios and supplemental data for periods prior to August 31, 2002 have not
been restated to reflect this change in presentation.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 4%, charged on certain redemptions
made within the first and second year of purchase and declining to 0% after
the fifth year. If the sales charge was included, total returns would be
lower. These returns include combined Rule 12b-1 fees and service fees of up
to 1% and do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
See Notes to Financial Statements 21
VAN KAMPEN HIGH YIELD FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS C SHARES FEBRUARY 28, -------------------------------------------------
2005 2004 2003 2002 (a) 2001 2000
-----------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
THE PERIOD.................. $3.61 $ 3.41 $ 3.13 $ 4.20 $ 5.22 $ 5.65
----- ------ ------ ------- ------- ------
Net Investment Income....... .13 .23 .25 .35 .48 .55
Net Realized and Unrealized
Gain/Loss................. .09 .20 .30 (1.00) (.98) (.43)
----- ------ ------ ------- ------- ------
Total from Investment
Operations.................. .22 .43 .55 (.65) (.50) .12
----- ------ ------ ------- ------- ------
Less:
Distributions from Net
Investment Income......... .11 .22 .21 .39 .51 .55
Return of Capital
Distributions............. -0- .01 .06 .03 .01 -0-
----- ------ ------ ------- ------- ------
Total Distributions........... .11 .23 .27 .42 .52 .55
----- ------ ------ ------- ------- ------
NET ASSET VALUE, END OF THE
PERIOD...................... $3.72 $ 3.61 $ 3.41 $ 3.13 $ 4.20 $ 5.22
===== ====== ====== ======= ======= ======
Total Return (b).............. 6.27%*(d) 12.98%(d) 18.14%(c) -16.04% -10.06% 2.45%
Net Assets at End of the
Period (In millions)........ $66.5 $ 41.4 $ 41.5 $ 36.7 $ 58.7 $ 59.4
Ratio of Expenses to Average
Net Assets.................. 1.78%(d) 1.81%(d) 1.86% 1.84% 1.82% 1.78%
Ratio of Net Investment Income
to Average Net Assets....... 6.43%(d) 6.71%(d) 7.68%(c) 9.68% 10.12% 10.15%
Portfolio Turnover............ 41%* 88% 95% 83% 80% 68%
* Non-Annualized
(a) As required, effective September 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 and presenting
paydown gains and losses on mortgage- and asset-backed securities as
interest income. The effect of these changes for the period ended August 31,
2002 was to decrease the ratio of net investment income to average net
assets from 9.78% to 9.68%. Net investment income per share and net realized
gains and losses per share were unaffected by the adjustments. Per share,
ratios and supplemental data for periods prior to August 31, 2002 have not
been restated to reflect this change in presentation.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1% charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(c) Certain non-recurring payments were made to Class C Shares, resulting in an
increase to the Total Return and Ratio of Net Investment Income to Average
Net Assets of .01%.
(d) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
than 1% (See footnote 6).
22 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen High Yield Fund (the "Fund"), formerly Van Kampen High Income
Corporate Bond Fund, is organized as a Delaware statutory trust, and is
registered as a diversified, open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's primary
investment objective is to seek to maximize current income. Capital appreciation
is a secondary objective which is sought only when consistent with the Fund's
primary investment objective. The Fund commenced investment operations on
October 2, 1978. The distribution of the Fund's Class B and Class C Shares
commenced on July 2, 1992 and July 6, 1993, respectively. The Fund registered
Class I Shares on September 1, 2004. There were no sales of Class I Shares for
the period ended February 28, 2005.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION Fixed income investments and preferred stock are stated at
value using market quotations or indications of value obtained from an
independent pricing service. Investments in securities listed on a securities
exchange are valued at their sale price as of the close of such securities
exchange. Equity securities traded on NASDAQ are valued at the NASDAQ Official
Closing Price. Unlisted securities and listed securities for which the last
sales price is not available are valued at the mean of the last reported bid and
asked price. 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, which approximates market
value. Forward foreign currency contracts are valued using quoted foreign
exchange rates.
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 the 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 February 28, 2005, the Fund had $1,621,119 of when-issued,
delayed delivery, or forward 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
23
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
payment for such securities only upon physical delivery or evidence of book
entry transfer to the account of the custodian bank. The seller is required to
maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.
C. INCOME AND EXPENSES Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Discounts on debt
securities are accreted and premiums are amortized over the expected life of
each applicable security. Income and expenses of the Fund are allocated on a pro
rata basis to each class of shares, except for distribution and service fees and
incremental transfer agency costs which are unique to each class of shares.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At August 31, 2004, the Fund had an accumulated capital loss carryforward
for tax purposes of $361,788,463 which will expire according to the following
schedule.
AMOUNT EXPIRATION
$ 5,614,460................................................ August 31, 2007
22,019,503................................................ August 31, 2008
25,447,687................................................ August 31, 2009
79,198,661................................................ August 31, 2010
120,089,012................................................ August 31, 2011
109,419,140................................................ August 31, 2012
At February 28, 2005, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $866,357,241
============
Gross tax unrealized appreciation........................... $ 64,269,664
Gross tax unrealized depreciation........................... (58,784,593)
------------
Net tax unrealized appreciation on investments.............. $ 5,485,071
============
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains which are included in ordinary income for
tax purposes.
For tax purposes, the determination of a return of capital distribution is
made at the end of the Fund's fiscal year. Therefore, while it is likely that a
portion of the Fund's distribution will ultimately be characterized as a return
of capital for tax purposes, no such designation has been made for the six
months ended February 28, 2005.
24
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
The tax character of distributions paid during the year ended August 31,
2004 was as follows:
Distributions paid from:
Ordinary income........................................... $40,015,705
Long-term capital gain.................................... -0-
Return of capital......................................... 1,338,926
-----------
$41,354,631
===========
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses relating to wash sales
transactions.
F. EXPENSE REDUCTIONS During the six months ended February 28, 2005, the Fund's
custody fee was reduced by $10,413 as a result of credits earned on cash
balances.
G. FOREIGN CURRENCY TRANSLATION Asset and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars at the mean of the quoted bid and ask prices of
such currencies against the U.S. dollar. Purchases and sales of portfolio
securities are translated at the rate of exchange prevailing when such
securities were acquired or sold. Realized gain and loss on foreign currency
transactions on the Statement of Operations includes the net realized amount
from the sale of foreign currency and the amount realized between trade date and
settlement date on securities transactions. Income and expenses are translated
at rates prevailing when accrued.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
AVERAGE DAILY NET ASSETS % PER ANNUM
First $150 million.......................................... .625%
Next $150 million........................................... .550%
Over $300 million........................................... .500%
For the six months ended February 28, 2005, the Fund recognized expenses of
approximately $17,700 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 an Accounting Services Agreement, the Adviser provides accounting
services to the Fund. The Adviser allocates the cost of such services to each
fund. For the six months ended February 28, 2005, the Fund recognized expenses
of approximately $18,000 representing Van Kampen Investments Inc.'s or its
affiliates' (collectively "Van Kampen") cost of providing accounting services to
the Fund which are reported as part of "Other" expenses in the Statement of
Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
February 28, 2005, the Fund
25
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
recognized expenses of approximately $533,000 representing transfer agency fees
paid to VKIS. Transfer agency fees are determined through negotiations with the
Fund's Board of Trustees.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are also
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation.
Amounts deferred are retained by the Fund and to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of $249,834 are included in
"Other" assets on the Statement of Assets and Liabilities at February 28, 2005.
Appreciation/ depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligation and do not affect the net asset value of the Fund. Benefits under the
retirement plan are payable upon retirement for a ten-year period and are based
upon each trustee's years of service to the Fund. The maximum annual benefit per
trustee under the plan is $2,500.
3. CAPITAL TRANSACTIONS
At February 28, 2005, capital aggregated $901,977,637, $294,429,190 and
$78,595,399 for Classes A, B and C, respectively. For the six months ended
February 28, 2005, transactions were as follows:
SHARES VALUE
Sales:
Class A................................................... 65,369,645 $ 243,611,129
Class B................................................... 24,697,972 92,535,597
Class C................................................... 8,508,964 31,540,302
----------- -------------
Total Sales................................................. 98,576,581 $ 367,687,028
=========== =============
Dividend Reinvestment:
Class A................................................... 3,218,278 $ 11,975,623
Class B................................................... 1,091,662 4,074,062
Class C................................................... 303,537 1,120,888
----------- -------------
Total Dividend Reinvestment................................. 4,613,477 $ 17,170,573
=========== =============
Repurchases:
Class A................................................... (15,623,794) $ (58,063,230)
Class B................................................... (8,896,843) (33,208,730)
Class C................................................... (2,412,246) (8,907,637)
----------- -------------
Total Repurchases........................................... (26,932,883) $(100,179,597)
=========== =============
26
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
At August 31, 2004, capital aggregated $709,335,080, $226,435,317, and
$58,356,021 for Classes A, B and C, respectively. For the year ended August 31,
2004, transactions were as follows:
SHARES VALUE
Sales:
Class A................................................... 42,743,427 $ 152,677,314
Class B................................................... 6,551,925 23,512,637
Class C................................................... 3,096,714 10,997,674
----------- -------------
Total Sales................................................. 52,392,066 $ 187,187,625
=========== =============
Dividend Reinvestment:
Class A................................................... 5,607,636 $ 20,120,077
Class B................................................... 2,113,467 7,614,931
Class C................................................... 525,673 1,874,302
----------- -------------
Total Dividend Reinvestment................................. 8,246,776 $ 29,609,310
=========== =============
Repurchases:
Class A................................................... (63,202,465) $(224,432,571)
Class B................................................... (15,674,574) (56,222,037)
Class C................................................... (4,315,074) (15,309,012)
----------- -------------
Total Repurchases........................................... (83,192,113) $(295,963,620)
=========== =============
Class B Shares purchased on or after June 1, 1996, and any dividend
reinvestment plan Class B Shares received thereon, automatically convert to
Class A Shares eight years after the end of the calendar month in which the
shares were purchased. Class B Shares purchased before June 1, 1996, and any
dividend reinvestment plan Class B Shares received thereon, automatically
convert to Class A Shares six years after the end of the calendar month in which
the shares were purchased. For the six months ended February 28, 2005 and the
year ended August 31, 2004, 2,446,250, and 1,296,337 Class B Shares
automatically converted to Class A Shares, respectively, and are shown in the
above table as sales of Class A Shares and repurchases of Class B Shares. Class
C Shares purchased before January 1, 1997, and any dividend reinvestment plan
Class C Shares received on such shares, automatically convert to Class A Shares
ten years after the end of the calendar month in which such shares were
purchased. Class C Shares purchased on or after January 1, 1997 do not possess a
conversion feature. For the six months ended February 28, 2005 and the year
ended August 31, 2004, 47,696 and 9,894 Class C Shares converted to Class A
Shares, respectively, and are shown in the above table as sales of Class A
Shares and repurchases of Class C Shares. Class B and C Shares are offered
without a front end sales charge, but are subject to a contingent deferred sales
charge (CDSC). The CDSC will be imposed on most redemptions made within five
27
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
years of the purchase for Class B Shares and one year of the purchase for Class
C Shares as detailed in the following schedule.
CONTINGENT DEFERRED
SALES CHARGE
AS A PERCENTAGE
OF DOLLAR AMOUNT
SUBJECT TO CHARGE
--------------------------
YEAR OF REDEMPTION CLASS B CLASS C
First....................................................... 4.00% 1.00%
Second...................................................... 4.00% None
Third....................................................... 3.00% None
Fourth...................................................... 2.50% None
Fifth....................................................... 1.50% None
Sixth and Thereafter........................................ None None
For the six months ended February 28, 2005, Van Kampen, as Distributor for
the Fund, received net commissions on sales of the Fund's Class A Shares of
approximately $80,200 and CDSC on redeemed shares of approximately $124,700.
Sales charges do not represent expenses of the Fund.
On December 17, 2004, the Fund acquired all of the assets and liabilities of
the Van Kampen High Yield Fund ("High Yield") through a tax free reorganization
approved by High Yield shareholders on December 7, 2004. The Fund issued
49,903,883, 21,224,359 and 7,028,101 shares of Classes A, B and C valued at
$186,141,484, $79,591,347 and $26,074,256, respectively, in exchange for High
Yield's net assets. The shares of High Yield were converted into Fund shares at
a ratio 1 to 1.515, 1 to 1.514 and 1 to 1.529 for Classes A, B and C,
respectively. Net unrealized appreciation of High Yield as of December 17, 2004
was $3,802,196. The Fund assumed High Yield's book to tax amortization
differences, which resulted in a $660,296 decrease to accumulated undistributed
net investment income and a corresponding increase to net unrealized
appreciation. Shares issued in connection with this reorganization are included
in proceeds from shares sold for the six months ended February 28, 2005.
Combined net assets of both funds on the day of reorganization were
$893,763,227.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $564,535,730 and $285,728,083,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio, manage the Fund's effective yield, foreign currency exposure,
maturity and duration or generate potential gain. All of the Fund's holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in unrealized appreciation/depreciation. Upon disposition, a
realized gain or loss is recognized accordingly, except when taking delivery of
a
28
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
security underlying a forward commitment. In this instance, the recognition of
gain or loss is postponed until the disposal of the security underlying the
forward commitment.
Purchasing securities on a forward commitment involves a risk that the
market value at the time of delivery may be lower than the agreed upon purchase
price resulting in an unrealized loss. Selling securities on a forward
commitment involves different risks and can result in losses more significant
than those arising from the purchase of such securities. Risks may arise as a
result of the potential inability of the counterparties to meet the terms of
their contracts.
A forward foreign currency contract is a commitment to purchase or sell a
foreign currency at a future date at a negotiated forward rate. Upon the
settlement of the contract, a realized gain or loss is recognized and is
included as a component of realized gain/loss on forward foreign currency
contracts. Risks may arise as a result of the potential inability of the
counterparties to meet the terms of their contracts. Risks may also arise from
the unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
The following forward foreign currency contracts were outstanding as of
February 28, 2005:
UNREALIZED
CURRENT APPRECIATION/
VALUE DEPRECIATION
LONG CONTRACTS:
Euro Currency,
3,765,000 expiring 04/26/05............................... $ 4,994,270 $ 83,091
----------- ---------
SHORT CONTRACTS:
Euro Currency,
19,335,000 expiring 04/26/05.............................. 25,647,866 (386,495)
10,195,000 expiring 04/26/05.............................. 13,523,662 (201,774)
675,000 expiring 04/26/05................................. 895,387 (13,837)
10,145,000 expiring 04/26/05.............................. 13,457,337 (201,068)
2,000,000 expiring 04/26/05............................... 2,652,999 (95,069)
2,255,000 expiring 04/26/05............................... 2,991,256 (49,661)
----------- ---------
59,168,507 (947,904)
----------- ---------
$64,162,777 $(864,813)
=========== =========
6. DISTRIBUTION AND SERVICE PLANS
With respect to its Class A Shares, Class B Shares and Class C Shares, the Fund
and its shareholders have adopted a distribution plan pursuant to Rule 12b-1
under the 1940 Act, as amended, and a service plan (collectively the "Plans").
The Plans govern payments for: the distribution of the Fund's Class A Shares,
Class B Shares and Class C Shares; the provision of ongoing shareholder services
with respect to such classes of shares; and maintenance of shareholder accounts
with respect to such classes of shares.
Annual fees under the Plans of up to .25% of Class A average daily net
assets and up to 1.00% each for Class B and Class C average daily net assets are
accrued daily. The annual fees for Class A Shares are paid quarterly and the
annual fees for Class C Shares are paid monthly. For Class B Shares, 75% of the
annual fees are paid monthly, while 25% of the annual fees are paid quarterly.
The amount of distribution expenses incurred by Van Kampen and not yet
reimbursed ("unreimbursed receivable") was approximately $4,174,300 and $5,100
for Class B and Class C Shares, respectively. These amounts may be recovered
from future payments under the
29
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
distribution plan or CDSC. To the extent the unreimbursed receivable has been
fully recovered, any excess 12b-1 fees will be refunded to the Fund on a
quarterly basis.
Included in the fees for the six months ended February 28, 2005 are payments
retained by Van Kampen of approximately $820,600 and payments made to Morgan
Stanley DW Inc., an affiliate of the Adviser, of approximately $88,900.
7. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar class action complaints which were recently
consolidated. The consolidated action also names as defendants certain
individual Trustees and Directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
Trustees of any Van Kampen funds. The consolidated amended complaint generally
alleges that defendants violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates rather than funds managed by other companies, and (ii) that the funds
advised by the Adviser or its affiliates, including the Fund, allegedly paid
excessive commissions to brokers in return for their alleged efforts to steer
investors to these funds. The complaint seeks, among other things, unspecified
compensatory damages, rescissionary damages, fees and costs.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of certain Van Kampen funds; the named investment companies,
including the Fund, are listed as nominal defendants. The complaint alleges that
defendants caused the Van Kampen funds to pay economic incentives to a
proprietary sales force to promote the sale of proprietary mutual funds. The
complaint also alleges that the Van Kampen funds paid excessive commissions to
Morgan Stanley and its affiliates in connection with the sales of the funds. The
complaint seeks, among other things, the removal of the current Trustees of the
funds, rescission of the management contracts for the funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the consolidated complaint described in the
preceding paragraph. Plaintiff has sought leave to file a second amended
derivative compliant that alleges that the Adviser permitted or recklessly
disregarded market timing and late trading in its proprietary mutual funds in
order to increase assets under management and fees. However, pursuant to an
agreement between the parties, the plaintiff's proposed second amended
derivative complaint was withdrawn and the allegations regarding market timing
and late trading asserted therein were filed in a separate complaint and
coordinated with other cases related to market timing that have been centralized
in a federal court.
The defendants have moved to dismiss each of these actions and otherwise
intend to defend them vigorously. While the defendants believe that they have
meritorious defenses, the ultimate outcome of these matters is not presently
determinable at this early stage of litigation, and no provision has been made
in the Fund's financial statements for the effect, if any, of these matters.
30
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
8. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
31
VAN KAMPEN HIGH YIELD FUND
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02110
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
32
VAN KAMPEN
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.
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,
(continued on back)
VAN KAMPEN
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
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 other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
The Statement of Additional Information includes additional information about
Fund trustees and is available, without charge, upon request by calling
1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza, 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. 28, 128, 228
HYI SAR 4/04 RN05-00656P-Y02/05
(VAN KAMPEN INVESTMENTS LOGO)
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.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures
(a) The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the 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 High Yield Fund
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: April 19, 2005
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: April 19, 2005
By: /s/ James W. Garrett
--------------------
Name: James W. Garrett
Title: Principal Financial Officer
Date: April 19, 2005