-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E9gQMBcKe2IZCK+Syx+zHz/wBg0zJ0MEB7nPDfeARdKdMEWh9NxHv6Lp5zEWm8hw OnpS8et1PlDv1yIeDIQaeg== 0000950137-02-003979.txt : 20020719 0000950137-02-003979.hdr.sgml : 20020719 20020719123456 ACCESSION NUMBER: 0000950137-02-003979 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20020719 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN SENIOR FLOATING RATE FUND CENTRAL INDEX KEY: 0001052136 IRS NUMBER: 364201397 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: 1934 Act SEC FILE NUMBER: 005-53917 FILM NUMBER: 02706370 BUSINESS ADDRESS: STREET 1: ONE PARKVIEW PLAZA STREET 2: VAN KAMPEN INVESTMENTS INC CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 BUSINESS PHONE: 6306846774 MAIL ADDRESS: STREET 1: ONE PARKVIEW PLAZA STREET 2: VAN KAMPEN INVESTMENTS INC CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL SENIOR FLOATING RATE FUND DATE OF NAME CHANGE: 19971230 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN SENIOR FLOATING RATE FUND CENTRAL INDEX KEY: 0001052136 IRS NUMBER: 364201397 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: ONE PARKVIEW PLAZA STREET 2: VAN KAMPEN INVESTMENTS INC CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 BUSINESS PHONE: 6306846774 MAIL ADDRESS: STREET 1: ONE PARKVIEW PLAZA STREET 2: VAN KAMPEN INVESTMENTS INC CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL SENIOR FLOATING RATE FUND DATE OF NAME CHANGE: 19971230 SC TO-I 1 c70561sctovi.txt TENDER OFFER STATEMENT OF ISSUER AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 2002 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ SCHEDULE TO TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) VAN KAMPEN SENIOR FLOATING RATE FUND (NAME OF ISSUER) VAN KAMPEN SENIOR FLOATING RATE FUND (NAME OF PERSON(S) FILING STATEMENT) Common Shares of Beneficial Interest, Par Value $0.01 per Share (Title of Class of Securities) 920960-101 (CUSIP Number of Class of Securities) A. Thomas Smith III Managing Director Van Kampen Investments Inc. 1 Parkview Plaza P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 (630) 684-6000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Person(s) Filing Statement) Copies to: Wayne W. Whalen, Esq. Thomas A. Hale, Esq. Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 W. Wacker Drive Chicago, Illinois 60606 (312) 407-0700 CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Transaction Valuation $123,780,197(a) Amount of Filing Fees: $11,388.00(b) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (a) Calculated as the aggregate maximum purchase price to be paid for 15,869,256 shares in the offer. (b) Calculated as .0092% of the Transaction Valuation. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Form or Registration No.: Filing Party: Date Filed: [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [ ] third-party tender offer subject to Rule 14d-1. [X] issuer tender offer subject to Rule 13e-4. [ ] going-private transaction subject to Rule 13e-3. [ ] amendment to Schedule 13D under Rule 13d-2. [ ] Check the following box if the filing is a final amendment reporting the results of the tender offer. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 1. SUMMARY TERM SHEET. Reference is hereby made to the "Summary Term Sheet" of the Offer to Purchase, dated July 19, 2002 (the "Offer to Purchase"), which is attached hereto as Exhibit (a)(1)(ii) and incorporated herein by reference. ITEM 2. SUBJECT COMPANY INFORMATION. (a) Name and Address. The name of the issuer is Van Kampen Senior Floating Rate Fund, a non-diversified, closed-end management investment company organized as a Massachusetts business trust (the "Trust"). The principal executive office of the Trust is located at 1 Parkview Plaza, Oakbrook Terrace, IL 60181-5555. The telephone number of the principal executive office of the Trust is (630) 684-6000. (b) Securities. The title of the securities being sought is common shares of beneficial interest, par value $0.01 per share (the "Common Shares"). As of July 12, 2002 there were approximately 48,088,655 Common Shares issued and outstanding. (c) Trading Market and Price. The Common Shares are not currently traded on an established trading market. ITEM 3. IDENTITY AND BACKGROUND OF THE FILING PERSON. The name of the filing person is the Trust. The name, business address and business telephone number of the Trust is Van Kampen Senior Floating Rate Fund which is located at: 1 Parkview Plaza, Oakbrook Terrace, IL 60181-5555, and can be reached by telephone at (630) 684-6000. The filing person is the subject company. ITEM 4. TERMS OF THE TRANSACTION. The Trust is seeking tenders for 15,869,256 Common Shares at the net asset value per Common Share calculated on the day the tender offer expires, upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal (which together with the Offer to Purchase constitute the "Offer"). Tendering shareholders receive cash proceeds from the tender of Common Shares of the Trust, or tendering shareholders may elect to have the Trust's depositary invest the cash proceeds from the tender of Common Shares of the Trust in shares of other investment companies advised by Van Kampen Investment Advisory Corp. or Van Kampen Asset Management Inc. and distributed by Van Kampen Funds Inc. as described in the Offer to Purchase and related Letter of Transmittal. An "Early Withdrawal Charge" will be imposed on most Common Shares accepted for payment that have been held for less than one year. The scheduled expiration date is August 16, 2002, unless extended as described in the Offer to Purchase (the later of August 16, 2002 or the date of the extended expiration date is referred to as the "Expiration Date"). As described in the Offer to Purchase, shareholders may withdraw Common Shares tendered in the Offer at any time prior to 12:00 Midnight Eastern Time on the Expiration Date or, if not yet accepted for payment, after September 13, 2002. The procedures for tendering and withdrawing Common Shares, the manner in which Common Shares will be accepted for payment, the Trust's intentions in the event the Offer is oversubscribed and federal income tax consequences of the Offer are described in the Offer to Purchase. The Trust is not aware of any Common Shares to be purchased from any officer, trustee or affiliate of the Trust pursuant to the Offer. Copies of the Offer to Purchase and the form of Letter of Transmittal are attached hereto as Exhibit (a)(1)(ii) and Exhibit (a)(2), respectively and are incorporated herein by reference. ITEM 5. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. Reference is hereby made to Section 10 "Interest of Trustees and Executive Officers; Transactions and Arrangements Concerning the Common Shares" and Section 12 "Source and Amount of Funds" of the Offer to Purchase which is incorporated herein by reference. Except as set forth therein, the Trust does not know of any agreement, arrangement or understanding, whether or not legally enforceable, between the Trust, any of the Trust's executive officers or Trustees, any person controlling the Trust or any officer or director of any corporation ultimately in control of the Trust and any other person with respect to any securities of the Trust. 2 ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS. Reference is hereby made to Section 7 "Purpose of the Offer," Section 8 "Plans or Proposals of the Trust," Section 10 "Interest of Trustees and Executive Officers; Transactions and Arrangements Concerning the Common Shares," Section 11 "Certain Effects of the Offer," Section 12 "Source and Amount of Funds" and Section 13 "Certain Information about the Trust" of the Offer to Purchase, which are incorporated herein by reference. In addition, the Trust regularly purchases and sells assets in its ordinary course of business. Except as set forth above, the Trust has no plans or proposals which relate to or would result in (a) an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Trust; (b) any purchase, sale or transfer of a material amount of assets of the Trust; (c) any material change in the present dividend rate or policy, or indebtedness or capitalization of the Trust; (d) any change in the present Board of Trustees or management of the Trust, including, but not limited to, any plans or proposals to change the number or the term of Trustees, or to fill any existing vacancy on the Board of Trustees or to change any material term of the employment contract of any executive officer of the Trust; (e) any other material change in the Trust's corporate structure or business, including any plans or proposals to make any changes in its investment policy for which a vote would be required by Section 13 of the Investment Company Act of 1940, as amended; (f) a class of equity securities of the Trust to be delisted from a national securities exchange or to cease to be authorized to be quoted on an inter-dealer quotation system of a registered national securities association; (g) a class of equity security of the Trust becoming eligible for termination of registration under the Investment Company Act of 1940, as amended; (h) the suspension of the Trust's obligation to file reports pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended; (i) the acquisition by any person of additional securities of the Trust or the disposition of securities of the Trust; or (j) changes in the Trust's declaration of trust, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Trust by any person. ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Reference is hereby made to Section 12 "Source and Amounts of Funds" of the Offer to Purchase, which is incorporated herein by reference. ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. Reference is hereby made to Section 10 "Interest of Trustees and Executive Officers; Transactions and Arrangements Concerning the Common Shares" of the Offer to Purchase and the financial statements included as part of Exhibit (a)(1)(ii) attached hereto, which are incorporated herein by reference. Except as set forth therein, there have not been any transactions involving the Common Shares of the Trust that were effected during the past 60 days by the Trust, any executive officer or Trustee of the Trust, any person controlling the Trust, any executive officer or director of any corporation ultimately in control of the Trust or by any associate or subsidiary of any of the foregoing, including any executive officer or director of any such subsidiary. ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED. No persons have been employed, retained or are to be compensated by or on behalf of the Trust to make solicitations or recommendations in connection with the Offer. ITEM 10. FINANCIAL INFORMATION. (a)-(b) Reference is hereby made to the financial statements included as part of Exhibit (a)(1)(ii) attached hereto, which are incorporated herein by reference. 3 ITEM 11. ADDITIONAL INFORMATION. (a)(1) Reference is hereby made to Section 10 "Interests of Trustees and Executive Officers; Transactions and Arrangements Concerning the Common Shares" of the Offer to Purchase which is incorporated herein by reference. (a)(2) through (a)(5) Not applicable. (b) The Offer to Purchase, attached hereto as Exhibit (a)(1)(ii), is incorporated herein by reference in its entirety. ITEM 12. MATERIAL TO BE FILED AS EXHIBITS. (a)(1)(i) Advertisement printed in The Wall Street Journal. (ii) Offer to Purchase (including Financial Statements). (a)(2) Form of Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number). (a)(3)(i) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (ii) Form of Letter to Clients of Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (iii) Form of Letter to Selling Group Members. (iv) Form of Operations Notice. (a)(4) Form of Letter to Shareholders who have requested Offer to Purchase. (a)(5) Text of Press Release dated July 19, 2002. (b)(1) Fourth Amendment and Restatement of Credit Agreement between Van Kampen Prime Rate Income Trust, Van Kampen Senior Floating Rate Fund, Various Financial Institutions and Bank of America, N.A., as agent, dated as of November 9, 2001. Previously filed as Exhibit (b)(1) to the Trust's Form TO via EDGAR on April 19, 2002. (d)(1) Investment Advisory Agreement between Van Kampen Senior Floating Rate Fund and Van Kampen Investment Advisory Corp., dated as of December 19, 1997. Previously filed as Exhibit (d)(1) to the Trust's Form TO via EDGAR on April 19, 2002. (d)(2) Administration Agreement between Van Kampen Senior Floating Rate Fund and Van Kampen Investments Inc., dated as of December 19, 1997. Previously filed as Exhibit (d)(2) to the Trust's Form TO via EDGAR on April 19, 2002. (d)(3) Offering Agreement between Van Kampen Senior Floating Rate Fund and Van Kampen Funds Inc., dated as of December 19, 1997. Previously filed as Exhibit (d)(3) to the Trust's Form TO via EDGAR on April 19, 2002. (d)(4) Service Plan of Van Kampen Senior Floating Rate Fund. Previously filed as Exhibit (d)(4) to the Trust's Form TO via EDGAR on April 19, 2002. (g)-(h) Not applicable.
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3. Not applicable. 4 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. VAN KAMPEN SENIOR FLOATING RATE FUND Dated: July 19, 2002 /s/ A. THOMAS SMITH III ----------------------------------------------------------- A. Thomas Smith III, Vice President and Secretary
5 EXHIBIT INDEX
EXHIBIT DESCRIPTION ------- ----------- (a)(1)(i) Advertisement printed in The Wall Street Journal (a)(1)(ii) Offer to Purchase (including Financial Statements) (a)(2) Form of Letter of Transmittal (including Guidelines for Certification of Tax Identification Number) (a)(3)(i) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(3)(ii) Form of Letter to Clients of Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(3)(iii) Form of Letter to Selling Group Members (a)(3)(iv) Form of Operations Notice (a)(4) Form of Letter to Shareholders who have requested Offer to Purchase (a)(5) Text of Press Release dated July 19, 2002 (b)(1) Fourth Amendment and Restatement of Credit Agreement between Van Kampen Prime Rate Income Trust, Van Kampen Senior Floating Rate Fund, Various Financial Institutions and Bank of America, N.A., as agent, dated as of November 9, 2001. Previously filed as Exhibit (b)(1) to the Trust's Form TO via EDGAR on April 19, 2002. (d)(1) Investment Advisory Agreement between Van Kampen Senior Floating Rate Fund and Van Kampen Investment Advisory Corp., dated as of December 19, 1997. Previously filed as Exhibit (d)(1) to the Trust's Form TO via EDGAR on April 19, 2002. (d)(2) Administration Agreement between Van Kampen Senior Floating Rate Fund and Van Kampen Investments Inc., dated as of December 19, 1997. Previously filed as Exhibit (d)(2) to the Trust's Form TO via EDGAR on April 19, 2002. (d)(3) Offering Agreement between Van Kampen Senior Floating Rate Fund and Van Kampen Funds Inc., dated as of December 19, 1997. Previously filed as Exhibit (d)(3) to the Trust's Form TO via EDGAR on April 19, 2002. (d)(4) Service Plan of Van Kampen Senior Floating Rate Fund. Previously filed as Exhibit (d)(4) to the Trust's Form TO via EDGAR on April 19, 2002.
EX-99.(A)(1)(I) 3 c70561exv99wxayx1yxiy.txt ADVERTISEMENT EXHIBIT (a)(1)(i) This announcement is not an offer to purchase or a solicitation of an offer to sell Common Shares. The Offer is made only by the Offer to Purchase dated July 19, 2002 and the related Letter of Transmittal. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Common Shares in any jurisdiction in which making or accepting the Offer would violate that jurisdiction's laws. VAN KAMPEN SENIOR FLOATING RATE FUND NOTICE OF OFFER TO PURCHASE FOR CASH 15,869,256 OF ITS ISSUED AND OUTSTANDING COMMON SHARES AT NET ASSET VALUE PER COMMON SHARE - -------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT EASTERN TIME ON FRIDAY, AUGUST 16, 2002, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- Van Kampen Senior Floating Rate Fund (the "Trust") is offering to purchase 15,869,256 of its issued and outstanding common shares of beneficial interest, par value of $0.01 per share ("Common Shares"), at a price equal to the net asset value per Common Share ("NAV") determined as of 5:00 pm Eastern Time on Friday, August 16, 2002, unless extended by action of the Trust's Board of Trustees. The tendering, acceptance and withdrawal of tenders are subject to the terms and conditions set forth in the Offer to Purchase dated July 19, 2002 and the related Letter of Transmittal (which together constitute the "Offer"). An "Early Withdrawal Charge" will be imposed on most Common Shares accepted for payment that have been held for less than one year. The NAV on July 12, 2002 was $7.80. The purpose of the Offer is to attempt to provide liquidity to shareholders since the Trust is unaware of any secondary market which exists for the Common Shares. The Offer is not conditioned upon the tender of any minimum number of Common Shares, but is subject to certain conditions as set forth in the Offer. If more than 15,869,256 Common Shares are duly tendered prior to the expiration of the Offer, the Trust presently intends to (assuming no changes in the factors originally considered by the Board of Trustees when it determined to make the Offer and the other conditions set forth in the Offer) but is under no obligation to, extend the Offer period, if necessary, and increase the number of Common Shares that the Trust is offering to purchase to an amount which it believes will be sufficient to accommodate the excess Common Shares tendered as well as any Common Shares tendered during the extended Offer period, or purchase 15,869,256 Common Shares (or such greater number of Common Shares sought) on a pro rata basis. Common Shares tendered pursuant to the Offer may be withdrawn at any time prior to 12:00 Midnight Eastern Time on August 16, 2002, and, if not yet accepted for payment by the Trust, Common Shares may also be withdrawn after September 13, 2002. The information required to be disclosed by paragraph (d)(1) of Rule 13e-4 under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. Questions and requests for assistance, for current NAV quotations or for copies of the Offer to Purchase, Letter of Transmittal and any other tender offer document, may be directed to Van Kampen Funds Inc. at the address and telephone number below. Copies will be furnished promptly at no expense to you. Shareholders who do not own Common Shares directly may tender their Common Shares through their broker, dealer or nominee. - -------------------------------------------------------------------------------- THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. - -------------------------------------------------------------------------------- VAN KAMPEN FUNDS INC. 1 PARKVIEW PLAZA - P.O. BOX 5555 - OAKBROOK TERRACE, IL 60181-5555 800-421-5666 (Between the hours of 7:00 am to 7:00 pm Central Time) July 19, 2002 EX-99.(A)(1)(II) 4 c70561exv99wxayx1yxiiy.txt OFFER TO PURCHASE EXHIBIT (a)(1)(ii) VAN KAMPEN SENIOR FLOATING RATE FUND OFFER TO PURCHASE FOR CASH 15,869,256 OF ITS ISSUED AND OUTSTANDING COMMON SHARES AT NET ASSET VALUE PER COMMON SHARE - -------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT EASTERN TIME ON FRIDAY, AUGUST 16, 2002, UNLESS THE OFFER IS EXTENDED. TO ENSURE PROCESSING OF YOUR REQUEST, A LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT (TOGETHER WITH ANY CERTIFICATES FOR COMMON SHARES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY (AS DEFINED BELOW) ON OR BEFORE AUGUST 16, 2002. - -------------------------------------------------------------------------------- To the Holders of Common Shares of VAN KAMPEN SENIOR FLOATING RATE FUND: Van Kampen Senior Floating Rate Fund (the "Trust") is offering to purchase up to 15,869,256 of its common shares of beneficial interest, with par value of $0.01 per share ("Common Shares"), at a price (the "Purchase Price") equal to the net asset value per Common Share ("NAV") determined as of 5:00 P.M. Eastern Time on the Expiration Date (as defined herein). The tendering, acceptance and withdrawal of tenders are subject to the terms and conditions set forth in this Offer to Purchase and the related Letter of Transmittal (which together constitute the "Offer"). The Offer is scheduled to terminate as of 12:00 Midnight Eastern Time on August 16, 2002, unless extended by action of the Trust's Board of Trustees. An Early Withdrawal Charge (as defined in Section 3) will be imposed on most Common Shares accepted for payment that have been held for less than one year. The Common Shares are not currently traded on an established trading market. The purpose of the Offer is to attempt to provide liquidity to shareholders since the Trust is unaware of any secondary market which exists for the Common Shares. The NAV on July 12, 2002 was $7.80. You can obtain current NAV quotations from Van Kampen Funds Inc. ("VKFI") by calling (800) 341-2911 between the hours of 7:00 A.M. and 7:00 P.M. Central Time, Monday through Friday, except holidays. See Section 9. If more than 15,869,256 Common Shares are duly tendered prior to the expiration of the Offer, the Trust presently intends to (subject to the condition that there have been no changes in the factors originally considered by the Board of Trustees when it determined to make the Offer and the other conditions set forth in Section 6) but is under no obligation to, extend the Offer period, if necessary, and increase the number of Common Shares that the Trust is offering to purchase to an amount which it believes will be sufficient to accommodate the excess Common Shares tendered as well as any Common Shares tendered during the extended Offer period or purchase 15,869,256 Common Shares (or such greater number of Common Shares sought) on a pro rata basis. THIS OFFER IS BEING MADE TO ALL SHAREHOLDERS OF THE TRUST AND IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF COMMON SHARES BEING TENDERED. THIS OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE SECTION 6. 18 SFR006-07/02 SUMMARY TERM SHEET THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION IN THIS OFFER TO PURCHASE. YOU SHOULD CAREFULLY READ THE ENTIRE OFFER TO PURCHASE AND RELATED LETTER OF TRANSMITTAL FOR A MORE COMPLETE DESCRIPTION OF THE TERMS AND CONDITIONS OF THE OFFER AND TO FULLY UNDERSTAND THESE TERMS AND CONDITIONS. The Trust The Trust is a non-diversified, closed-end management investment company organized as a Massachusetts business trust. The Trust seeks to provide a high level of current income, consistent with preservation of capital. The Trust seeks to achieve its investment objective by investing primarily in adjustable rate senior loans. As of July 12, 2002, the Trust had net assets of approximately $375 million and had issued and outstanding approximately 48,088,655 Common Shares. As of July 12, 2002, the Trust's NAV was $7.80. For additional information about the Trust, see Sections 9, 10, 13 and 14. The Offer The Trust is offering to purchase for cash at the Purchase Price up to 15,869,256 of its outstanding Common Shares which are properly tendered and accepted for payment prior to the Expiration Date of the Offer. The tendering, acceptance and withdrawal of tenders are subject to the terms and conditions set forth in this Offer to Purchase and the related Letter of Transmittal. See Sections 1, 2, 5 and 6. An early withdrawal charge will be imposed on most Common Shares accepted for payment that have been held for less than one year. See Section 3. Purpose of the Offer The purpose of this Offer is to attempt to provide liquidity to the holders of Common Shares. The Trust currently does not believe that an active secondary market for its Common Shares exists or is likely to develop, and therefore the Trustees consider each quarter making a tender offer to purchase Common Shares at their NAV to attempt to provide liquidity to the holders of Common Shares. There can be no assurance that this Offer will provide sufficient liquidity to all holders of Common Shares that desire to sell their Common Shares or that the Trust will make any such tender offer in the future. The Trustees may terminate the Offer, amend its terms, reject Common Shares tendered for payment or postpone payment, if during the tender period, certain events occur which the Trustees consider make it inadvisable to proceed with the Offer. See Sections 6, 7, 11 and 16. The Purchase Price The purchase price is equal to the NAV determined as of 5:00 P.M. Eastern Time on the Expiration Date. See Section 1. The cost of purchasing the full 15,869,256 Common Shares pursuant to the Offer would be approximately $123,780,197 (assuming a NAV of $7.80 on the Expiration Date). The Trust anticipates that cash necessary to purchase any Common Shares acquired pursuant to the Offer will first be derived from cash on hand, such as proceeds from sales of new common shares of the Trust and specified payments of principal or interest from the senior loans in the Trust's portfolio, and then from the proceeds from the sale of cash equivalents held by the Trust. The Trust may also borrow amounts, if necessary, pursuant to a credit agreement which has been established to provide the Trust with additional liquidity for its tender offers. See Section 12. The Expiration Date The Offer is scheduled to terminate as of 12:00 Midnight Eastern Time on August 16, 2002, unless extended by action of the Trust's Board of Trustees. The later of August 16, 2002 or the latest time and date to which the Offer is extended is the "Expiration Date". If the expiration date is extended, the Trust will make a public announcement of the new expiration date. See Sections 1 and 16. Tendering Common Shares Shareholders seeking to tender their Common Shares pursuant to the Offer must send to the Trust's depositary on or before the Expiration Date a properly completed and executed Letter of Transmittal (or manually signed facsimile thereof), Common Share certificates (if applicable) and any other documents required by the Letter of Transmittal. See Section 3. Withdrawing Tenders Shareholders seeking to withdraw their tender of Common Shares must send to the Trust's depositary a written, telegraphic, telex or facsimile transmission notice of withdrawal that specifies the name of the person withdrawing a tender of Common Shares, the number of Common Shares to be withdrawn, and, if certificates representing such Common Shares have been delivered or otherwise identified to the depositary, the name of the registered holder(s) of such Common Shares. Shareholders may withdraw Common Shares tendered at any time up to 12:00 Midnight Eastern Time on the Expiration Date and, if the Common Shares have not yet been accepted for payment by the Trust, at any time after 12:00 Midnight Eastern Time on September 13, 2002. See Section 4.
2 IMPORTANT If you desire to tender all or any portion of your Common Shares, you should either (1) complete and sign the Letter of Transmittal and mail or deliver it along with any Common Share certificate(s) and any other required documents to Van Kampen Investor Services Inc. (the "Depositary") or (2) request your broker, dealer, commercial bank, trust company or other nominee to effect the transaction for you. If your Common Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact such broker, dealer, commercial bank, trust company or other nominee if you desire to tender your Common Shares. NEITHER THE TRUST NOR ITS BOARD OF TRUSTEES MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF SUCH SHAREHOLDER'S COMMON SHARES. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISERS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER COMMON SHARES AND, IF SO, HOW MANY COMMON SHARES TO TENDER. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE TRUST AS TO WHETHER SHAREHOLDERS SHOULD TENDER COMMON SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. Questions and requests for assistance may be directed to VKFI at the address and telephone number set forth below. Requests for additional copies of this Offer to Purchase and the related Letter of Transmittal should be directed to VKFI. July 19, 2002 VAN KAMPEN SENIOR FLOATING RATE FUND Van Kampen Funds Inc. Depositary: Van Kampen Investor Services Inc. 1 Parkview Plaza P.O. Box 5555 By Regular Mail, Oakbrook Terrace, IL 60181-5555 Van Kampen Investor Services Inc. (800) 341-2911 P.O. Box 218256 Kansas City, MO 64121-8256 Attn: Van Kampen Senior Floating Rate Fund By Certified, Registered, Overnight Mail or Courier, Van Kampen Investor Services Inc. 7501 Tiffany Springs Parkway Kansas City, MO 64153 Attn: Van Kampen Senior Floating Rate Fund
3 TABLE OF CONTENTS
SECTION PAGE - ------- ---- 1. Price; Number of Common Shares.............................. 5 2. Procedure for Tendering Common Shares....................... 5 3. Early Withdrawal Charge..................................... 7 4. Withdrawal Rights........................................... 8 5. Payment for Shares Tendered................................. 9 6. Certain Conditions of the Offer............................. 9 7. Purpose of the Offer........................................ 10 8. Plans or Proposals of the Trust............................. 10 9. Price Range of Common Shares; Dividends..................... 11 10. Interest of Trustees and Executive Officers; Transactions and Arrangements Concerning the Common Shares............... 11 11. Certain Effects of the Offer................................ 11 12. Source and Amount of Funds.................................. 11 13. Certain Information about the Trust......................... 14 14. Additional Information...................................... 15 15. Certain Federal Income Tax Consequences..................... 15 16. Extension of Tender Period; Termination; Amendments......... 16 17. Miscellaneous............................................... 16 EXHIBIT A: Unaudited Financial Statements for the Period Ended January 31, 2002.................................................... A-1 Audited Financial Statements for the Fiscal Year Ended July 31, 2001.................................................... A-25
4 1. PRICE; NUMBER OF COMMON SHARES. The Trust will, upon the terms and subject to the conditions of the Offer, accept for payment (and thereby purchase) 15,869,256 or such lesser number of its issued and outstanding Common Shares which are properly tendered (and not withdrawn in accordance with Section 4) prior to 12:00 Midnight Eastern Time on August 16, 2002 (such time and date being hereinafter called the "Initial Expiration Date"). The Trust reserves the right to extend the Offer. See Section 16. The later of the Initial Expiration Date or the latest time and date to which the Offer is extended is hereinafter called the "Expiration Date." The Purchase Price of the Common Shares will be their NAV determined as of 5:00 P.M. Eastern Time on the Expiration Date. The NAV on July 12, 2002 was $7.80. You can obtain current NAV quotations from VKFI by calling (800) 341-2911 between the hours of 7:00 A.M. and 7:00 P.M. Central Time, Monday through Friday, except holidays. Shareholders tendering Common Shares remain entitled to receive dividends declared on such shares up to the settlement date of the Offer. See Section 9. The Trust will not pay interest on the Purchase Price under any circumstances. An Early Withdrawal Charge will be imposed on most Common Shares accepted for payment that have been held for less than one year. See Section 3. The Offer is being made to all shareholders of the Trust and is not conditioned upon any minimum number of Common Shares being tendered. If the number of Common Shares properly tendered prior to the Expiration Date and not withdrawn is less than or equal to 15,869,256 Common Shares (or such greater number of Common Shares as the Trust may elect to purchase pursuant to the Offer), the Trust will, upon the terms and subject to the conditions of the Offer, purchase at NAV all Common Shares so tendered. If more than 15,869,256 Common Shares are duly tendered prior to the expiration of the Offer and not withdrawn, the Trust presently intends to, subject to the condition that there have been no changes in the factors originally considered by the Board of Trustees when it determined to make the Offer and the other conditions set forth in Section 6, but is not obligated to, extend the Offer period, if necessary, and increase the number of Common Shares that the Trust is offering to purchase to an amount which it believes will be sufficient to accommodate the excess Common Shares tendered as well as any Common Shares tendered during the extended Offer period or purchase 15,869,256 Common Shares (or such greater number of Common Shares sought) on a pro rata basis. On July 12, 2002 there were approximately 48,088,655 Common Shares issued and outstanding and there were approximately 12,677 holders of record of Common Shares. The Trust has been advised that no trustees, officers or affiliates of the Trust intend to tender any Common Shares pursuant to the Offer. The Trust reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and making a public announcement thereof. See Section 16. There can be no assurance, however, that the Trust will exercise its right to extend the Offer. If the Trust decides, in its sole discretion, to increase (except for any increase not in excess of 2% of the outstanding Common Shares) or decrease the number of Common Shares being sought and, at the time that notice of such increase or decrease is first published, sent or given to holders of Common Shares in the manner specified below, the Offer is scheduled to expire at any time earlier than the tenth business day from the date that such notice is first so published, sent or given, the Offer will be extended at least until the end of such ten business day period. 2. PROCEDURE FOR TENDERING COMMON SHARES. Proper Tender of Common Shares. Except as otherwise set forth under the heading "Procedures for Selling Group Members" below, for Common Shares to be properly tendered pursuant to the Offer, a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with any required signature guarantees, any certificates for such Common Shares, and any other documents required by the Letter of Transmittal, must be received on or before the Expiration Date by the Depositary at its address set forth on page 3 of this Offer to Purchase. It is a violation of Section 14(e) of the Securities and Exchange Act of 1934 (the "Exchange Act"), and Rule 14e-4 promulgated thereunder, for a person to tender Common Shares in a partial tender offer for such person's own account unless at the time of tender and until such time as the securities are accepted for payment the person so tendering has a net long position equal to or greater than the amount tendered in (i) the Common Shares and will deliver or cause to be delivered such shares for purposes of tender to the 5 Trust prior to or on the Expiration Date, or (ii) an equivalent security and, upon the acceptance of his or her tender will acquire the Common Shares by conversion, exchange, or exercise of such equivalent security to the extent required by the terms of the Offer, and will deliver or cause to be delivered the Common Shares so acquired for the purpose of tender to the Trust prior to or on the Expiration Date. Section 14(e) and Rule 14e-4 provide a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. The acceptance of Common Shares by the Trust for payment will constitute a binding agreement between the tendering shareholder and the Trust upon the terms and subject to the conditions of the Offer, including the tendering shareholder's representation that (i) such shareholder has a net long position in the Common Shares being tendered within the meaning of Rule 14e-4 promulgated under the Exchange Act and (ii) the tender of such Common Shares complies with Rule 14e-4. Signature Guarantees and Method of Delivery. Signatures on the Letter of Transmittal are not required to be guaranteed unless (1) the proceeds for the tendered Common Shares will amount to more than $100,000, (2) the Letter of Transmittal is signed by someone other than the registered holder of the Common Shares tendered therewith, or (3) payment for tendered Common Shares is to be sent to a payee other than the registered owner of such Common Shares and/or to an address other than the registered address of the registered owner of the Common Shares. In those instances, all signatures on the Letter of Transmittal must be guaranteed by a bank or trust company; a broker-dealer; a credit union; a national securities exchange, registered securities association or clearing agency; a savings and loan association; or a federal savings bank (an "Eligible Institution"). If Common Shares are registered in the name of a person or persons other than the signer of the Letter of Transmittal or (a) if payment is to be made to, (b) unpurchased Common Shares (see Sections 1 and 6) are to be registered in the name of or (c) any certificates for unpurchased Common Shares are to be returned to any person other than the registered owner, then the Letter of Transmittal and, if applicable, the tendered Common Share certificates must be endorsed or accompanied by appropriate authorizations, in either case signed exactly as such name or names appear on the registration of the Common Shares with the signatures on the certificates or authorizations guaranteed by an Eligible Institution. If signature is by attorney-in-fact, executor, administrator, Trustee, guardian, officer of a corporation or another acting in a fiduciary or representative capacity, other legal documents will be required. See Instructions 1 and 4 of the Letter of Transmittal. Payment for Common Shares tendered and accepted for payment pursuant to the Offer will be made only after receipt by the Depositary on or before the Expiration Date of a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) and any other documents required by the Letter of Transmittal. If your Common Shares are evidenced by certificates, those certificates must be received by the Depositary on or prior to the Expiration Date. THE METHOD OF DELIVERY OF ANY DOCUMENTS, INCLUDING CERTIFICATES FOR COMMON SHARES, IS AT THE ELECTION AND RISK OF THE PARTY TENDERING COMMON SHARES. IF DOCUMENTS ARE SENT BY MAIL, IT IS RECOMMENDED THAT THEY BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. Procedures for Selling Group Members. If you are a selling group member, in order for you to tender any Common Shares pursuant to the Offer, you may place a confirmed wire order with VKFI. All confirmed wire orders used to tender Common Shares pursuant to this Offer must be placed on the Expiration Date only (wire orders placed on any other date will not be accepted by the Trust). Common Shares tendered by a wire order are deemed to be tendered when VKFI receives the order but subject to the condition subsequent that the settlement instructions, including (with respect to tendered Common Shares for which the selling group member is not the registered owner) a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), any other documents required by the Letter of Transmittal and any Common Share certificates, are received by the Depository within three New York Stock Exchange trading days after receipt by VKFI of such order. Determinations of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of tenders will be determined by the Trust, in its sole discretion, whose determination shall be 6 final and binding. The Trust reserves the absolute right to reject any or all tenders determined by it not to be in appropriate form or the acceptance of or payment for which may, in the opinion of the Trust's counsel, be unlawful. The Trust also reserves the absolute right to waive any of the conditions of the Offer or any defect in any tender with respect to any particular Common Share(s) or any particular shareholder, and the Trust's interpretations of the terms and conditions of the Offer will be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such times as the Trust shall determine. Tendered Common Shares will not be accepted for payment unless the defects or irregularities have been cured within such time or waived. Neither the Trust, VKFI, the Depositary nor any other person shall be obligated to give notice of any defects or irregularities in tenders, nor shall any of them incur any liability for failure to give such notice. Federal Income Tax Withholding. The Depositary will withhold 30% of the gross payments payable to a Non-U.S. Shareholder unless the Non-U.S. Shareholder has provided to the Depositary a form on which it claims eligibility for a reduced rate of withholding or establishes an exemption from withholding. For this purpose, a Non-U.S. Shareholder, in general, is a shareholder that is not (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized under the laws of the United States or any state thereof, (iii) an estate, the income of which is subject to United States federal income taxation regardless of its source or (iv) a trust whose administration is subject to the primary jurisdiction of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust. To claim tax treaty benefits, Non-U.S. Shareholders will be required to provide the Depositary with a properly completed Internal Revenue Service ("IRS") Form W-8BEN certifying their entitlement thereto. In addition, in certain cases where payments are made to a Non-U.S. Shareholder that is a partnership or other pass-through entity, persons holding an interest in the entity will need to provide the required certification. For example, an individual Non-U.S. Shareholder who holds shares in the Trust through a non-United States partnership must provide an IRS Form W-8BEN to the Depositary to claim the benefits of an applicable tax treaty. The Depositary will determine a shareholder's status as a Non-U.S. Shareholder and eligibility for a reduced rate of, or an exemption from, withholding by reference to the Form W-8BEN or other appropriate Form W-8 provided by the Non-U.S. Shareholder unless facts and circumstances indicate that reliance is not warranted. A Non-U.S. Shareholder may be eligible to obtain a refund of tax withheld if such shareholder meets one of the three tests for capital gain or loss treatment described in Section 15 or is otherwise able to establish that no tax or a reduced amount of tax was due. To prevent backup federal income tax withholding of a percentage of the gross payments made pursuant to the Offer, each shareholder (other than a Non-U.S. Shareholder) who has not previously submitted a Form W-9 to the Trust or does not otherwise establish an exemption from such withholding must notify the Depositary of such shareholder's correct taxpayer identification number (or certify that such taxpayer is awaiting a taxpayer identification number) and provide certain other information by completing the Form W-9 enclosed with the Letter of Transmittal. Non-U.S. Shareholders who are resident aliens and who have not previously submitted a Form W-9, or other Non-U.S. Shareholders who have not previously submitted a Form W-8BEN or other appropriate Form W-8, to the Trust must do so in order to avoid backup withholding. Exemption from backup withholding does not exempt a Non-U.S. Shareholder from the 30% withholding described above. For a discussion of certain other federal income tax consequences to tendering shareholders, see Section 15. 3. EARLY WITHDRAWAL CHARGE. The Depositary will impose an early withdrawal charge (the "Early Withdrawal Charge") on most Common Shares accepted for payment which have been held less than one year. The Early Withdrawal Charge will be imposed on a number of Common Shares accepted for payment from a record holder of Common Shares the value of which exceeds the aggregate value at the time the tendered Common Shares are accepted for payment of (a) all Common Shares owned by such holder that were purchased more than one year prior to such acceptance, (b) all Common Shares owned by such holder that were acquired through reinvestment of distributions, and (c) the increase, if any, of value of all other Common Shares owned by such holder (namely, those purchased within the one year preceding acceptance for payment) over the purchase price of such Common Shares. The Early Withdrawal Charge will be paid to 7 VKFI on behalf of the holder of the Common Shares. In determining whether an Early Withdrawal Charge is payable, Common Shares accepted for payment pursuant to the Offer shall be deemed to be those Common Shares purchased earliest by the Shareholder. Any Early Withdrawal Charge which is required to be imposed will be made in accordance with the following schedule.
EARLY YEAR OF REPURCHASE WITHDRAWAL AFTER PURCHASE CHARGE ------------------ ---------- First....................................................... 1.0% Second and following........................................ 0.0%
Exchanges. Tendering shareholders may elect to have the Depositary invest the cash proceeds from the tender of Common Shares of the Trust in contingent deferred sales charge shares ("Class C Shares") of certain open-end investment companies advised by either Van Kampen Investment Advisory Corp. or Van Kampen Asset Management Inc. and distributed by VKFI (such funds are collectively referred to herein as the "VK Funds"), subject to certain limitations, at the net asset value of the Class C Shares of the respective VK Fund (or VK Funds) selected by the tendering shareholders on the date the Trust accepts for payment the Common Shares tendered. See Section 5 regarding acceptance and payment of proceeds for shares tendered. The Early Withdrawal Charge will be waived for Common Shares tendered pursuant to this election, however, such Class C Shares immediately become subject to a contingent deferred sales charge schedule equivalent to the Early Withdrawal Charge schedule of the Trust. Thus, shares of such VK Funds may be subject to a contingent deferred sales charge upon a subsequent redemption from the VK Funds. The purchase of shares of such VK Fund will be deemed to have occurred at the time of the purchase of the Common Shares of the Trust for calculating the applicable contingent deferred sales charge. The prospectus for each VK Fund describes its investment objectives and policies. Shareholders should obtain a VK Fund's prospectus and should consider the VK Fund's objectives and policies carefully before making the election described above. Shareholders can obtain a prospectus for a VK Fund without charge by calling (800) 341-2911. Tendering shareholders may purchase Class C Shares of a VK Fund only if shares of such VK Fund are available for sale. An exchange is still deemed to be a tender of Common Shares causing a taxable event and may result in a taxable gain or loss for the tendering shareholders. Please consult your tax adviser regarding the tax consequences of any exchange. A shareholder may make the election described above by completing the appropriate section on the Letter of Transmittal or by giving proper instructions to the shareholder's broker or dealer. Although this election to purchase Class C Shares of a VK Fund has been made available as a convenience to the Trust's shareholders, neither the Trust nor its Board of Trustees makes any recommendation as to whether shareholders should invest in shares of another VK Fund. VK Funds may offer certain shareholder services to investors that are not available to investors of the Trust. These shareholder services (including certain purchase, redemption or exchange privileges) are described in the VK Fund's prospectus. In order to use certain shareholder services on your VK Fund Class C Share account, a signature guarantee form will be required for such account. Shareholders may access materials to establish these shareholder services, including the signature guarantee form, by calling the Investor Services Department at (800) 341-2911 or accessing applicable forms at http://www.vankampen.com and selecting the Literature section and then Download Forms. 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4, tenders of Common Shares made pursuant to the Offer will be irrevocable. You may withdraw Common Shares tendered at any time prior to 12:00 Midnight Eastern Time on the Expiration Date and, if the Common Shares have not yet been accepted for payment by the Trust, at any time after 12:00 Midnight Eastern Time on September 13, 2002. To be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at the address set forth on page 3 of this Offer to Purchase. Any notice of withdrawal must specify the name of the person having tendered the Common Shares to be withdrawn, the number of Common Shares to be withdrawn, and, if certificates representing such Common Shares have been 8 delivered or otherwise identified to the Depositary, the name of the registered holder(s) of such Common Shares as set forth in such certificates if different from the name of the person tendering the Common Shares. If certificates have been delivered to the Depositary, then, prior to the release of such certificates, you must also submit the certificate numbers shown on the particular certificates evidencing such Common Shares and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Trust in its sole discretion, whose determination shall be final and binding. None of the Trust, VKFI, Van Kampen Investments Inc. ("VK Inc."), the Depositary or any other person is or will be obligated to give any notice of any defects or irregularities in any notice of withdrawal, and none of them will incur any liability for failure to give any such notice. Common Shares properly withdrawn shall not thereafter be deemed to be tendered for purposes of the Offer. However, withdrawn Common Shares may be retendered by following the procedures described in Section 2 prior to the Expiration Date. 5. PAYMENT FOR SHARES TENDERED. For purposes of the Offer, the Trust will be deemed to have accepted for payment (and thereby purchased) Common Shares which are tendered and not withdrawn when, as and if it gives oral or written notice to the Depositary of its acceptance of such Common Shares for payment pursuant to the Offer. Payment for Common Shares purchased pursuant to the Offer will be made by depositing the aggregate purchase price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from the Trust and either transmitting payment directly to the tendering shareholders or, in the case of tendering shareholders electing to invest such proceeds in another VK Fund, transmitting payment directly to the transfer agent for purchase of Class C Shares of the designated VK Fund for the account of such shareholders. In all cases, payment for Common Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary, as required pursuant to the Offer, of a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), any certificates representing such Common Shares, if issued, and any other required documents. Certificates for Common Shares not purchased (see Sections 1 and 6), or for Common Shares not tendered included in certificates forwarded to the Depositary, will be returned promptly following the termination, expiration or withdrawal of the Offer, without expense to the tendering shareholder. The Trust will pay all transfer taxes, if any, payable on the transfer to it of Common Shares purchased pursuant to the Offer. If, however, payment of the purchase price is to be made to, or (in the circumstances permitted by the Offer) if unpurchased Common Shares are to be registered in the name of any person other than the registered holder, or if tendered certificates, if any, are registered or the Common Shares tendered are held in the name of any person other than the person signing the Letter of Transmittal, the amount of any transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such person will be deducted from the Purchase Price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. Shareholders tendering Common Shares remain entitled to receive dividends declared on such shares up to the settlement date of the Offer. The Trust will not pay any interest on the Purchase Price under any circumstances. An Early Withdrawal Charge will be imposed on most Common Shares accepted for payment that have been held for less than one year. See Section 3. In addition, if certain events occur, the Trust may not be obligated to purchase Common Shares pursuant to the Offer. See Section 6. ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO HAS NOT PREVIOUSLY SUBMITTED A COMPLETED AND SIGNED FORM W-9 AND WHO FAILS TO COMPLETE FULLY AND SIGN THE FORM W-9 ENCLOSED WITH THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED FEDERAL INCOME TAX WITHHOLDING OF A PERCENTAGE OF THE GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 2. 6. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer, the Trust shall not be required to accept for payment, purchase or pay for any Common Shares tendered, and may terminate or amend the Offer or may postpone the acceptance for payment of, the purchase of and payment for Common Shares tendered, if at any time at or before the time of purchase of any such Common Shares, any of the following events shall have occurred (or shall have been determined by the Trust to have occurred) which, in 9 the Trust's sole judgment in any such case and regardless of the circumstances (including any action or omission to act by the Trust), makes it inadvisable to proceed with the Offer or with such purchase or payment: (1) in the reasonable judgment of the Trustees, there is not sufficient liquidity of the assets of the Trust; (2) such transactions, if consummated, would (a) impair the Trust's status as a regulated investment company under federal income tax law (which would make the Trust a taxable entity, causing the Trust's taxable income to be taxed at the Trust level) or (b) result in a failure to comply with applicable asset coverage requirements; or (3) there is, in the Board of Trustees' reasonable judgment, any (a) material legal action or proceeding instituted or threatened challenging such transactions or otherwise materially adversely affecting the Trust, (b) suspension of or limitation on prices for trading securities generally on any United States national securities exchange or in the over-the-counter market, (c) declaration of a banking moratorium by federal or state authorities or any suspension of payment by banks in the United States, (d) limitation affecting the Trust or the issuers of its portfolio securities imposed by federal or state authorities on the extension of credit by lending institutions, (e) commencement of war, a significant change in armed hostilities or other international or national calamity directly or indirectly involving the United States since the commencement of the Offer or (f) other event or condition which would have a material adverse effect on the Trust or the holders of its Common Shares if the tendered Common Shares are purchased. The foregoing conditions are for the Trust's sole benefit and may be asserted by the Trust regardless of the circumstances giving rise to any such condition (including any action or inaction by the Trust), and any such condition may be waived by the Trust in whole or in part, at any time and from time to time in its sole discretion. The Trust's failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts or circumstances; and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Trust concerning the events described in this Section 6 shall be final and shall be binding on all parties. If the Trust determines to terminate or amend the Offer or to postpone the acceptance for payment of or payment for Common Shares tendered, it will, to the extent necessary, extend the period of time during which the Offer is open as provided in Section 16. Moreover, in the event any of the foregoing conditions are modified or waived in whole or in part at any time, the Trust will promptly make a public announcement of such waiver and may, depending on the materiality of the modification or waiver, extend the Offer period as provided in Section 16. 7. PURPOSE OF THE OFFER. The Trust currently does not believe that an active secondary market for its Common Shares exists or is likely to develop. In recognition of the possibility that a secondary market may not develop for the Common Shares of the Trust, or, if such a market were to develop, the Common Shares might trade at a discount, the Trustees have determined that it would be in the best interest of its shareholders for the Trust to take action to attempt to provide liquidity to shareholders. To that end, the Trustees presently intend each quarter to consider making a tender offer to purchase Common Shares at their NAV. The purpose of this Offer is to attempt to provide liquidity to the holders of Common Shares. There can be no assurance that this Offer will provide sufficient liquidity to all holders of Common Shares that desire to sell their Common Shares or that the Trust will make any such tender offer in the future. NEITHER THE TRUST NOR ITS BOARD OF TRUSTEES MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF SUCH SHAREHOLDER'S COMMON SHARES AND HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISERS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER COMMON SHARES AND, IF SO, HOW MANY COMMON SHARES TO TENDER. 8. PLANS OR PROPOSALS OF THE TRUST. Except as set forth in this Section 8, the Trust has no present plans or proposals which relate to or would result in any extraordinary transaction such as a merger, reorganization or liquidation involving the Trust; any purchase, sale or transfer of a material amount of assets of the Trust other than in its ordinary course of business; any material changes in the Trust's present capitalization (except as resulting from the Offer or otherwise set forth herein); or any other material changes in the Trust's 10 structure or business. The Trust's fundamental investment policies and restrictions give the Trust the flexibility to pursue its investment objective through a fund structure commonly known as a "master-feeder" structure. If the Trust converts to a master-feeder structure, the existing shareholders of the Trust would continue to hold their shares of the Trust and the Trust would become a feeder-fund of the master-fund. The value of a shareholder's shares would be the same immediately after any conversion as the value immediately before such conversion. Use of this master-feeder structure potentially would result in increased assets invested among the collective investment vehicle of which the Trust would be a part, thus allowing operating expenses to be spread over a larger asset base, potentially achieving economies of scale. The Trust's Board of Trustees presently does not intend to affect any conversion to a master-feeder structure. 9. PRICE RANGE OF COMMON SHARES; DIVIDENDS. The Trust's NAV from July 12, 2000 through July 12, 2002 ranged from a high of $9.65 to a low of $7.80. On July 12, 2002, the NAV was $7.80. You can obtain current NAV quotations from VKFI by calling (800) 341-2911 between the hours of 7:00 A.M. and 7:00 P.M. Central Time, Monday through Friday, except holidays. NAV quotes also may be obtained through the ICI Pricing Service which is released each Friday evening and published by the Dow Jones Capital Markets Wire Service on each Friday; published in the New York Times on each Saturday; published in the Chicago Tribune on each Sunday; and published weekly in Barron's magazine. The Trust offers and sells its Common Shares to the public on a continuous basis through VKFI as principal underwriter. The Trust is not aware of any secondary market trading for the Common Shares. Dividends on the Common Shares are declared daily and paid monthly. Shareholders tendering Common Shares remain entitled to receive dividends declared on such Common Shares up to the settlement date of the Offer. 10. INTEREST OF TRUSTEES AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE COMMON SHARES. As of July 12, 2002, the trustees and executive officers of the Trust as a group beneficially owned no Common Shares. In connection with the Trust's organization on December 19, 1997, VK Inc., an affiliate of the Trust's investment adviser, was issued 10,000 Common Shares for $100,000. The Trust has been informed that no trustee or executive officer or affiliate of the Trust intends to tender any Common Shares pursuant to the Offer. Based upon the Trust's records and upon information provided to the Trust by its trustees, executive officers and affiliates (as such term is used in the Securities Exchange Act of 1934), neither the Trust nor, to the best of the Trust's knowledge, any of the trustees or executive officers of the Trust, nor any affiliates of any of the foregoing, has effected any transactions in the Common Shares during the 60 day period prior to the date hereof. Except as set forth in this Offer to Purchase, neither the Trust nor, to the best of the Trust's knowledge, any of its affiliates, trustees or executive officers, is a party to any agreement, arrangement or understanding, whether or not legally enforceable, between the Trust, any of the Trust's executive officers or trustees, any person controlling the Trust or any officer or director of any corporation ultimately in control of the Trust and any other person with respect to any securities of the Trust. 11. CERTAIN EFFECTS OF THE OFFER. The purchase of Common Shares pursuant to the Offer will have the effect of increasing the proportionate interest in the Trust of shareholders who do not tender their Common Shares. If you retain your Common Shares you will be subject to any increased risks that may result from the reduction in the Trust's aggregate assets resulting from payment for the tendered Common Shares (e.g., greater volatility due to decreased diversification and higher expenses). However, the Trust believes that since the Trust is engaged in a continuous offering of the Common Shares, those risks would be reduced to the extent new Common Shares of the Trust are sold. All Common Shares purchased by the Trust pursuant to the Offer will be held in treasury pending disposition. 12. SOURCE AND AMOUNT OF FUNDS. The total cost to the Trust of purchasing the full 15,869,256 Common Shares pursuant to the Offer would be approximately $123,780,197 (assuming a NAV of $7.80 on the Expiration Date). The Trust anticipates that the Purchase Price for any Common Shares acquired pursuant to the Offer will first be derived from cash on hand, such as proceeds from sales of new Common Shares of the Trust and specified pay-downs from the participation interests in senior corporate loans which it has acquired, 11 and then from the proceeds from the sale of cash equivalents held by the Trust. The Trust may from time to time enter into one or more credit agreements to provide the Trust with additional liquidity to meet its obligations to purchase Common Shares pursuant to any tender offer it may make. The Trust currently is a party to a credit agreement (described in more detail below). If, in the judgment of the Trustees, there is not sufficient liquidity of the assets of the Trust to pay for tendered Common Shares, the Trust may terminate the Offer. See Section 6. The Trust has entered into a Fourth Amendment and Restatement of Credit Agreement, dated as of November 9, 2001 (the "Credit Agreement"), among the Trust and Van Kampen Prime Rate Income Trust (the "Co-Borrower") as borrowers (collectively the "Borrowers"), the banks party thereto (the "Financial Institutions"), and Bank of America, N.A., ("BofA"), as agent, pursuant to which the Financial Institutions have committed to provide a credit facility of up to $500,000,000 (subject to an optional commitment increase upon approval of each Borrower's Board of Trustees and the Financial Institutions) (the "Credit Facility Commitment") to the Trust and the Co-Borrower, which is not secured by the assets of the Trust or Co-Borrower or other collateral. As of the date hereof, neither the Trust nor the Co-Borrower has any outstanding borrowing under the Credit Agreement. The proceeds of any amounts borrowed under the Credit Agreement may be used to provide the Trust with additional liquidity to meet its obligations to purchase Common Shares pursuant to any tender offer that it may make. The Credit Agreement has terms and conditions substantially similar to the following: a. Each of the Trust and the Co-Borrower is entitled to borrow money ("Loans") from the Financial Institutions in amounts which in the aggregate do not exceed the amount of the Credit Facility Commitment, provided that the aggregate amount of Loans to the Trust or the Co-Borrower on an individual basis cannot exceed twenty-five percent (25%) of the net asset value of the Trust or Co-Borrower, as the case may be (defined as total assets minus total liabilities minus assets subject to liens). b. Loans made under the Credit Agreement, if any, will bear interest daily at the option of the Trust or Co-Borrower, as applicable, (i) at a rate per annum equal to the federal funds rate from time to time plus 0.50%, or (ii) at a rate per annum equal to a reserve-adjusted interbank offered rate offered by BofA's Grand Cayman Branch ("IBOR") plus 0.50% per annum. Each of the Trust and Co-Borrower will bear the expenses of any borrowings attributable to it under the Credit Agreement. Such interest will be due, in arrears, on the outstanding principal amount of each Loan (i) as to any federal funds rate Loan on the last business day of each calendar quarter and (ii) as any offshore rate Loan, from one (1) day to sixty (60) days from the date of the Loan, as selected by the Trust or Co-Borrower, as applicable, in advance. Interest on the outstanding principal of the Loans will also be due on the date of any prepayment of any offshore rate Loan and on demand during the existence of an event of default under the Credit Agreement payable by the borrower subject to such event of default. Overdue payments of principal and interest will bear interest, payable upon demand, at a penalty rate. No Loan shall be outstanding for a period of more than sixty (60) days, and there shall be no more than three Interest Periods as defined in the Credit Agreement in effect. c. The Trust paid arrangement fees and expenses to BofA or its affiliates on the date the Credit Agreement was executed. In addition, during the term of the Credit Agreement, the Trust is obligated to pay its pro rata share (based on the relative net assets of the Trust and Co-Borrower) of a commitment fee computed at the rate of 0.11% per annum on the average daily unused amount of the facility. d. The principal amount of any Loan made under the Credit Agreement, if any, is required to be paid sixty (60) days from the date of the Loan. Each of the Trust and Co-Borrower is entitled to prepay a Loan made to it in multiples of $1,000,000, provided that the Trust or Co-Borrower, as applicable, gives sufficient notices of prepayment. On the Commitment Termination Date (as defined below), all outstanding principal and accrued interest under the Credit Agreement will be due and payable in full. 12 e. The Credit Agreement provides for BofA to elect to make swingline loans to each Borrower in amounts which in the aggregate do not exceed $25,000,000, provided that the aggregate amount of such swingline loans to the Trust or the Co-Borrower on an individual basis cannot exceed the lesser of (a) BofA's commitment under the Credit Agreement, (b) the combined commitment of all Financial Institutions under the Credit Agreement or (c) twenty-five percent (25%) of the net asset value of the Trust or Co-Borrower, as the case may be. Such swingline loans are due no later than the seventh business day following the day the swingline loan was made, bear interest at a rate per annum equal to the federal funds rate from time to time plus 0.50% due upon the repayment of such loan and, if unpaid when due or the Borrower otherwise elects, may convert to a traditional federal funds rate Loan under the Credit Agreement funded by BofA and all of the other Financial Institutions in accordance with the Credit Agreement's commitment schedule. f. The drawdown of the initial Loan or swingline loan, if any, under the Credit Agreement is subject to certain conditions, including, among other things, the Trust and Co-Borrower, as applicable, executing and delivering a promissory note made payable to the order of each Financial Institution, in the form attached to the Credit Agreement (the "Promissory Notes"). The drawdown of each Loan or swingline loan, if any, is further conditioned upon the satisfaction of additional conditions, including, without limitation, (i) the providing of notice with respect to the Loan; (ii) the asset coverage ratio for the applicable borrower being at least 4 to 1; (iii) there being no default or event of default in existence with respect to the applicable borrower; (iv) the representations and warranties with respect to the applicable borrower made in the Credit Agreement continuing to be true; and (v) there being no Loans outstanding with respect to the applicable borrower for more than sixty (60) days on the day preceding the proposed borrowing. g. The Credit Agreement contains various affirmative and negative covenants of the Trust and Co-Borrower, including, without limitation, obligations: (i) to provide periodic financial information; (ii) with limited exceptions, to not consolidate with or merge into any other entity or have any other entity merge into it and to not sell all or any substantial part of its assets; (iii) to continue to engage in its current type of business and to maintain its existence as a business trust; (iv) to comply with applicable laws, rules and regulations; (v) to maintain insurance on its property and business; (vi) to limit the amount of its debt based upon 25% of the net asset value of the applicable borrower; and (vii) to not create any lien on any of its assets, with certain exceptions. h. The Credit Agreement also contains various events of default (with certain specified grace periods), including, without limitation: (i) failure to pay when due any amounts required to be paid to the Financial Institutions under the Credit Agreement or the Promissory Notes; (ii) any material misrepresentations in the Credit Agreement or documents delivered to the Financial Institutions; (iii) failure to observe or perform certain terms, covenants and agreements contained in the Credit Agreement, the Promissory Notes or other documents delivered to the Financial Institutions; (iv) failure to comply with the Trust's or Co-Borrower's, as applicable, fundamental investment policies or investment restrictions; (v) failure to comply by the Trust or Co-Borrower, as applicable, with all material provisions of the Investment Company Act of 1940; (vi) the voluntary or involuntary bankruptcy of the Trust or Co-Borrower, as applicable; (vii) the entry of judgments for the payment of money in excess of $5,000,000 in the aggregate which remains unsatisfied or unstayed for a period of 30 days; and (viii) a change in control of the Trust's or Co-Borrower's, as applicable, investment adviser. i. The credit facility provided pursuant to the Credit Agreement will terminate on November 8, 2002 (the "Commitment Termination Date"), unless extended or earlier terminated pursuant to the terms thereof, and all accrued interest and principal will be due thereon. Pursuant to guidelines applicable to the Trust and the Co-Borrower, any Loans to the Trust and Co-Borrower will be made on a first-come, first-serve basis. If, at any time, the demand for borrowings by the Trust and Co-Borrower exceeds amounts available under the Credit Agreement, such borrowing will be allocated on a fair and equitable basis, taking into consideration factors, including without limitation, relative 13 net assets of the Trust and Co-Borrower, amounts requested by the Trust and Co-Borrower, and availability of other sources of cash to meet each parties needs. The Trust intends to repay any Loans under the Credit Agreement from proceeds from the specified pay-downs from the interests in Senior Loans (as defined below) which will be acquired and from proceeds from the sale of Common Shares. The foregoing descriptions of the Credit Agreement do not purport to be complete or final, and are qualified in their entirety by reference to the Credit Agreement included as Exhibit (b)(1) to the Issuer Tender Offer Statement on Schedule TO of the Trust. See Section 14. 13. CERTAIN INFORMATION ABOUT THE TRUST. The Trust was organized as a Massachusetts business trust on December 19, 1997 and is a non-diversified, closed-end management investment company under the Investment Company Act of 1940. The Trust's investment objective is to provide a high level of current income, consistent with preservation of capital. The Trust plans to invest at least 80% of its total assets in adjustable rate senior loans ("Senior Loans"). Senior Loans are business loans made to borrowers that may be corporations, partnerships or other entities ("Borrowers"). These Borrowers operate in a variety of industries and geographic regions. The interest rates on Senior Loans adjust periodically, and the Trust's portfolio of Senior Loans will at all times have a dollar-weighted average time until the next interest rate adjustment of 90 days or less. The Trust believes that investing in adjustable rate Senior Loans should limit fluctuations in its net asset value caused by changes in interest rates. The interest rates are adjusted based on a base rate plus a premium or spread over the base rate. The base rate usually is the London Inter-Bank Offered Rate ("LIBOR"), the prime rate offered by one or more major United States banks (the "Prime Rate") or the certificate of deposit ("CD") rate or other base lending rates used by commercial lenders. As short term interest rates rise, interest payable to the Fund should increase. As short term interest rates decline, interest payable to the Fund should decrease. The amount of time that will pass before the Fund experiences the effects of changing short-term interest rates will depend on the dollar-weighted average time until the next interest rate adjustment on the Fund's portfolio of Senior Loans. The Trust has registered as a "non-diversified" investment company so that, subject to its investment restrictions, it is able to invest more than 5% of the value of its assets in the obligations of any single issuer, including Senior Loans of a single Borrower or participations in Senior Loans purchased from a single lender. To the extent the Trust invests a relatively high percentage of its assets in obligations of a limited number of issuers, the Trust will be more susceptible than a more widely diversified investment company to any single corporate, economic, political or regulatory occurrence. The Trust is advised by Van Kampen Investment Advisory Corp. (the "Adviser") pursuant to an Investment Advisory Agreement under which the Trust accrues daily and pays monthly to the Adviser an investment management fee based on the per annum rate of: 0.95% of the first $4.0 billion of average daily net assets of the Trust, 0.90% on the next $3.5 billion, 0.875% on the next $2.5 billion and 0.85% on average daily net assets over $10.0 billion. The Trust is a party to an Administration Agreement with VK Inc. Under the Administration Agreement, the Trust pays VK Inc. a monthly fee based on the per annum rate of 0.25% of the Trust's average daily net assets. The Trust is a party to an Offering Agreement with VKFI. Under the Offering Agreement, the Trust offers and sells its Common Shares to the public on a continuous basis through VKFI as principal underwriter. VKFI compensates broker-dealers participating in the continuous offering of the Trust's Common Shares at a rate of 0.75% of the dollar value of Common Shares purchased from the Trust by such broker-dealers. VKFI also compensates broker-dealers who have entered into sales agreements with VKFI at an annual rate, paid quarterly, equal to an amount up to 0.75% of the value of Common Shares sold by each respective broker-dealer and remaining outstanding after one year from the date of their original purchase. VKFI also may provide, from time to time, additional cash incentives to broker-dealers which employ representatives who sell a minimum dollar amount of the Common Shares. All such compensation is or will be paid by VKFI out of its own assets, and not out of the assets of the Trust. The compensation paid to such broker-dealers and to VKFI, including the compensation paid at the time of purchase, the quarterly payments, any additional incentives paid from time to time and the Early Withdrawal Charge, if any, will not in the aggregate exceed applicable limitations. In addition, the Trust may make service fee payments pursuant to the Trust's Service 14 Plan for personal services and/or the maintenance of shareholder accounts to VKFI and broker-dealers and other persons in amounts not exceeding 0.25% of the Trust's average daily net assets for any fiscal year. The Trustees have initially implemented the Service Plan by authorizing service fee payments to VKFI and broker-dealers and other persons in amounts not expected to exceed 0.15% of the Trust's average daily net assets. The principal executive offices of the Trust are located at 1 Parkview Plaza, Oakbrook Terrace, IL 60181-5555. Reference is hereby made to Section 9 of this Offer to Purchase and the financial statements attached hereto as Exhibit A which are incorporated herein by reference. 14. ADDITIONAL INFORMATION. The Trust has filed an Issuer Tender Offer Statement on Schedule TO with the Securities and Exchange Commission (the "Commission") which includes certain additional information relating to the Offer. Such material may be inspected and copied at prescribed rates at the Commission's public reference facilities at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Jacob K. Javits Federal Building, 26 Federal Plaza, New York, New York 10278; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may also be obtained by mail at prescribed rates from the Public Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the Issuer Tender Offer Statement on Schedule TO is available along with other related materials at the Commission's internet website (http://www.sec.gov). 15. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion is a general summary of the federal income tax consequences of a sale of Common Shares pursuant to the Offer. Shareholders should consult their own tax advisers regarding the tax consequences of a sale of Common Shares pursuant to the Offer, as well as the effects of state, local and foreign tax laws and any proposed tax law changes. The sale of Common Shares pursuant to the Offer will be a taxable transaction for federal income tax purposes, either as a "sale or exchange" or, under certain circumstances, as a "dividend." Under Section 302(b) of the Internal Revenue Code of 1986, as amended (the "Code"), a sale of Common Shares pursuant to the Offer generally will be treated as a sale or exchange if the receipt of cash by the shareholder or by the Depositary on behalf of the shareholder, in the case of a tendering shareholder electing to invest cash proceeds from the tender of Common Shares in Class C Shares of a designated VK Fund: (a) results in a "complete redemption" of the shareholder's interest in the Trust, (b) is "substantially disproportionate" with respect to the shareholder or (c) is "not essentially equivalent to a dividend" with respect to the shareholder. In determining whether any of these tests has been met, Common Shares actually owned, as well as Common Shares considered to be owned by the shareholder by reason of certain constructive ownership rules set forth in Section 318 of the Code, generally must be taken into account. If any of these three tests for sale or exchange treatment is met, a shareholder will recognize gain or loss equal to the difference between the amount of cash received by the shareholder or, in the case of a tendering shareholder electing to invest cash proceeds from the tender of Common Shares in Class C Shares of a designated VK Fund, by the Depositary on behalf of the shareholder pursuant to the Offer and the tax basis of the Common Shares sold. If such Common Shares are held as a capital asset, the gain or loss will be a capital gain or loss. The maximum tax rate applicable to net capital gains recognized by individuals and other non-corporate taxpayers is (i) the same as the maximum ordinary income rate for capital assets held for one year or less or (ii) 20% for capital assets held for more than one year. The maximum long-term capital gains rate for corporations is 35%. If none of the tests set forth in Section 302(b) of the Code is met, amounts received by a shareholder or by the Depositary on behalf of a shareholder, as the case may be, who sells Common Shares pursuant to the Offer will be taxable to the shareholder as a "dividend" to the extent of such shareholder's allocable share of the Trust's current or accumulated earnings and profits. The excess of such amounts received over the portion that is taxable as a dividend would constitute a non-taxable return of capital (to the extent of the shareholder's tax basis in the Common Shares sold pursuant to the Offer). Any amounts in excess of the shareholder's tax basis would constitute taxable gain. Thus, a shareholder's tax basis in the Common Shares sold will not reduce the amount of the dividend. Any remaining tax basis in the Common Shares tendered to the Trust will be transferred to any remaining Common Shares held by such shareholder. In addition, if a tender of Common Shares is treated as a dividend to a tendering shareholder, a constructive dividend under Section 305(c) of the 15 Code may result to a non-tendering shareholder whose proportionate interest in the earnings and assets of the Trust has been increased by such tender. The Trust believes, however, that the nature of the repurchase will be such that a tendering shareholder will qualify for sale or exchange treatment (as opposed to dividend treatment). 16. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS. The Trust reserves the right, at any time and from time to time, to extend the period of time during which the Offer is pending by making a public announcement thereof. In the event that the Trust so elects to extend the tender period, the Purchase Price for the Common Shares tendered will be determined as of 5:00 P.M. Eastern Time on the Expiration Date, as extended, and the Offer will terminate as of 12:00 Midnight Eastern Time on the Expiration Date, as extended. During any such extension, all Common Shares previously tendered and not purchased or withdrawn will remain subject to the Offer. The Trust also reserves the right, at any time and from time to time up to and including the Expiration Date, to (a) terminate the Offer and not to purchase or pay for any Common Shares or, subject to applicable law, postpone payment for Common Shares upon the occurrence of any of the conditions specified in Section 6, and (b) amend the Offer in any respect by making a public announcement thereof. Such public announcement will be issued no later than 9:00 A.M. Eastern Time on the next business day after the previously scheduled Expiration Date and will disclose the approximate number of Common Shares tendered as of that date. Without limiting the manner in which the Trust may choose to make a public announcement of extension, termination or amendment, except as provided by applicable law, the Trust shall have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a release to the Dow Jones News Service. If the Trust materially changes the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Trust will extend the Offer to the extent required by Rule 13e-4 promulgated under the Exchange Act. These rules require that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. If (i) the Trust increases or decreases the price to be paid for Common Shares, or the Trust increases the number of Common Shares being sought by an amount exceeding 2% of the outstanding Common Shares, or the Trust decreases the number of Common Shares being sought and (ii) the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that notice of such increase or decrease is first published, sent or given, the Offer will be extended at least until the expiration of such period of ten business days. 17. MISCELLANEOUS. The Offer is not being made to, nor will the Trust accept tenders from, owners of Common Shares in any jurisdiction in which the Offer or its acceptance would not comply with the securities or Blue Sky laws of such jurisdiction. The Trust is not aware of any jurisdiction in which the making of the Offer or the tender of Common Shares would not be in compliance with the laws of such jurisdiction. However, the Trust reserves the right to exclude holders in any jurisdiction in which it is asserted that the Offer cannot lawfully be made. So long as the Trust makes a good-faith effort to comply with any state law deemed applicable to the Offer, the Trust believes that the exclusion of holders residing in such jurisdiction is permitted under Rule 13e-4(f)(9) promulgated under the Exchange Act. In any jurisdiction the securities or Blue Sky laws of which require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on the Trust's behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction. July 19, 2002 VAN KAMPEN SENIOR FLOATING RATE FUND 16 BY THE NUMBERS YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited) THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF THE REPORTING PERIOD.(1)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE VARIABLE RATE** SENIOR LOAN INTERESTS 82.9% AEROSPACE/DEFENSE 3.9% $ 2,916 Aerostructures Corp., Term Loan...................... NR BB- 12/31/03 $ 2,869,653 969 Alliant Techsystems, Inc., Term Loan................. Ba2 BB- 04/20/09 981,295 3,685 DeCrane Aircraft Holdings, Inc., Term Loan........... B2 B+ 09/30/05 3,615,864 2,095 DRS Technologies, Inc., Term Loan................. Ba3 BB- 09/30/08 2,113,735 2,088 EG&G Technical Services, Inc., Term Loan........... B1 NR 08/20/07 2,078,013 6,829 Fairchild Corp., Term Loan................. B1 B+ 04/30/06 5,890,426 1,781 United Defense Industries, Inc., Term Loan........... B1 BB- 08/13/09 1,788,857 ------------ 19,337,843 ------------ AUTOMOTIVE 6.2% 3,930 AMCAN Technologies, Inc., Term Loan................. NR NR 03/28/07 3,753,150 963 Breed Technologies, Inc., Term Loan................. NR NR 12/20/04 819,151 5,169 Citation Corp., Term Loan................. NR B+ 09/30/07 4,355,048 4,850 Federal-Mogul Corp., Term Loan (b).................. NR D 02/24/04 4,583,250 9,391 Metalforming Technologies, Inc., Term Loan........... NR NR 06/30/06 6,573,365 4,900 MetoKote Corp., Term Loan...................... NR NR 11/04/05 4,361,000 6,251 Safelite Glass Corp., Term Loan...................... NR NR 09/30/07 6,297,480 ------------ 30,742,444 ------------
See Notes to Financial Statements A-1 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE BEVERAGE, FOOD & TOBACCO 3.1% $ 2,457 Agrilink Foods, Inc., Term Loan...................... B1 B+ 09/30/04 to 09/30/05 $ 2,386,281 3,702 B & G Foods, Inc., Term Loan...................... B1 B+ 03/31/06 3,676,604 1,493 Hartz Mountain Corp., Term Loan...................... B1 NR 12/31/07 1,474,375 4,000 Land O' Lakes, Inc., Term Loan...................... Ba2 BBB- 10/10/08 3,995,000 1,833 Mafco Worldwide Corp., Term Loan................. NR NR 03/31/06 1,823,199 2,000 Pinnacle Foods, Inc., Term Loan...................... Ba3 BB- 06/20/08 2,003,750 ------------ 15,359,209 ------------ BROADCASTING -- CABLE 2.1% 8,765 Charter Communications, Inc., Term Loan........... Ba3 BBB- 03/18/08 to 12/30/08 8,655,220 1,680 Olympus Cable Holdings, LLC, Term Loan............ Ba2 BB 09/30/10 1,667,284 ------------ 10,322,504 ------------ BROADCASTING -- DIVERSIFIED 1.9% 7,542 Comcorp Broadcasting, Inc., Term Loan........... NR NR 06/30/07 6,372,670 3,432 White Knight Broadcasting, Inc., Term Loan........... NR NR 06/30/07 2,899,583 ------------ 9,272,253 ------------ BROADCASTING -- TELEVISION 1.5% 500 Gray Communications Systems, Inc., Term Loan................. Ba3 B+ 09/30/09 500,469 6,589 Quorum Broadcasting, Inc., Term Loan................. NR NR 09/30/07 6,028,914 1,000 Sinclair Broadcast Group, Inc., Term Loan........... Ba2 BB- 09/30/09 1,006,000 ------------ 7,535,383 ------------
See Notes to Financial Statements A-2 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE BUILDINGS & REAL ESTATE 1.6% $ 3,121 Builders FirstSource, Inc., Term Loan........... NR BB- 12/30/05 $ 3,027,272 4,979 Corrections Corp. of America, Term Loan........ B2 B 12/31/02 4,943,746 ------------ 7,971,018 ------------ CHEMICALS, PLASTICS & RUBBER 4.5% 4,924 Applied Tech Management Corp., Term Loan.......... B1 NR 04/30/07 4,910,376 3,482 Huntsman Corp., Term Loan...................... Caa2 NR 12/31/02 to 12/31/05 2,267,463 2,081 Huntsman Corp., Revolving Credit Agreement.......... Caa2 NR 02/07/03 1,310,875 1,000 Messer Griesheim, Term Loan...................... Ba3 BB 04/27/09 to 04/27/10 1,005,781 4,581 Nutrasweet Acquisition Corp., Term Loan.......... Ba3 NR 05/25/07 to 05/25/09 4,563,032 3,611 Pioneer Corp. of America, Term Loan................. NR NR 12/31/06 3,611,271 4,232 Sterling Pulp Chemicals, Inc., Term Loan........... NR NR 07/10/05 4,147,669 518 West American Rubber Co., LLC, Term Loan............ NR NR 11/09/03 518,421 ------------ 22,334,888 ------------ CONSTRUCTION MATERIAL 0.4% 875 Dayton Superior Corp., Term Loan................. Ba3 BB- 06/01/08 873,906 5,374 Flextek Components, Inc., Term Loan (a) (b)......... NR NR 08/31/03 96,734 1,069 Magnatrax Corp., Term Loan...................... NR NR 11/15/05 956,858 ------------ 1,927,498 ------------ CONTAINERS, PACKAGING & GLASS 1.4% 2,000 LLS Corp., Term Loan (a) (b)....................... NR NR 07/31/06 1,125,000 163 LLS Corp., Revolving Credit Agreement (b)...... NR NR 01/24/03 163,338 2,411 Pliant Corp., Term Loan... B2 B+ 05/31/08 2,391,629 3,277 Stone Container Corp., Term Loan................. Ba3 B+ 10/01/03 3,279,810 ------------ 6,959,777 ------------
See Notes to Financial Statements A-3 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE DIVERSIFIED MANUFACTURING 1.9% $ 2,407 Mueller Group, Inc., Term Loan...................... B1 B+ 08/16/07 $ 2,390,884 4,462 UCAR International, Inc., Term Loan................. Ba3 NR 12/31/07 4,405,069 2,500 Walter Industries, Inc., Term Loan................. NR NR 10/15/03 2,412,500 ------------ 9,208,453 ------------ ECOLOGICAL 1.6% 7,340 Allied Waste North America, Inc., Term Loan................. Ba3 BB 07/21/05 to 07/21/07 7,237,261 506 IT Group, Inc. Term Loan (a) (b)................... NR D 06/11/06 108,873 500 Stericycle, Inc., Term Loan................. B1 BB- 09/30/07 502,734 ------------ 7,848,868 ------------ ELECTRONICS 4.1% 3,338 Audio Visual Services Corp., Term Loan (a) (f) (g)....................... NR NR 10/01/01 1,452,052 1,154 Audio Visual Services Corp., Revolving Credit Agreement (a) (f) (g)..... NR NR 10/01/01 502,203 4,932 Dynamic Details, Inc., Term Loan................. Ba3 NR 04/22/05 4,315,049 3,750 Kinetic Group, Inc., Term Loan...................... B1 NR 02/28/06 3,400,001 4,704 Stratus Technologies, Inc., Term Loan........... NR NR 02/26/05 4,610,240 2,773 Superior Telecom, Inc., Term Loan................. B2 B+ 11/27/05 1,874,737 2,463 Veridian Corp., Term Loan................. NR NR 08/24/06 2,456,344 1,820 Viasystems, Inc., Term Loan................. B3 CCC 03/31/07 1,460,431 ------------ 20,071,057 ------------
See Notes to Financial Statements A-4 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE ENTERTAINMENT & LEISURE 2.8% $10,794 Fitness Holdings Worldwide, Inc., Term Loan................. NR B 11/02/06 to 11/02/07 $ 9,103,191 2,294 Six Flags Theme Parks, Inc., Term Loan........... Ba2 BB- 11/05/05 2,308,016 2,565 True Temper, Inc., Term Loan...................... B1 BB- 09/30/05 2,551,949 ------------ 13,963,156 ------------ FARMING & AGRICULTURE 0.7% 3,241 The Scotts Co., Term Loan................. Ba3 BB 12/31/07 3,259,259 ------------ FINANCE 1.9% 3,673 Mafco Finance Corp., Term Loan...................... NR NR 08/14/02 3,638,994 3,729 Outsourcing Solutions, Term Loan................. B2 NR 06/10/06 3,495,981 2,177 Rent-A-Center, Inc., Term Loan...................... Ba2 BB- 01/31/07 2,162,422 ------------ 9,297,397 ------------ HEALTHCARE 3.5% 586 Community Health Systems, Inc., Term Loan................. NR B+ 12/31/05 588,676 4,675 Genesis Health Ventures, Inc., Term Loan........... Ba3 BB- 03/30/07 to 04/02/07 4,703,542 2,000 Integrated Health Services, Inc., Term Loan (a) (b)................... NR NR 09/30/04 to 12/31/05 1,135,834 1,000 Integrated Health Services, Inc., Revolving Credit Agreement (b)...... NR NR 09/30/03 559,500 990 InteliStaf Group, Inc., Term Loan................. NR NR 10/31/07 984,122 7,244 Kindred Healthcare, Inc., Term Loan................. NR NR 04/13/08 7,249,573 1,745 Triad Hospitals, Inc., Term Loan................. Ba3 B+ 09/30/08 1,766,280 ------------ 16,987,527 ------------
See Notes to Financial Statements A-5 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE HEALTHCARE & BEAUTY 0.8% $ 4,000 Mary Kay, Inc., Term Loan................. Ba3 B+ 10/03/07 $ 4,000,000 ------------ HOME & OFFICE FURNISHINGS, HOUSEWARES & DURABLE CONSUMER PRODUCTS 1.1% 440 Formica Corp., Term Loan................. Caa1 CCC 04/30/06 366,700 2,463 Imperial Home Decor Group, Inc., Term Loan (e)............. NR NR 04/04/06 2,277,998 752 Sleepmaster, LLC, Term Loan (b).................. NR NR 12/31/06 620,448 1,481 Targus Group International, Inc., Term Loan...................... NR NR 12/20/06 1,440,470 977 Winsloew Furniture, Inc., Term Loan................. Ba3 B 03/31/06 923,523 ------------ 5,629,139 ------------ HOTELS, MOTELS, INNS & GAMING 1.7% 2,825 Aladdin Gaming, LLC, Term Loan (a) (b).............. NR NR 08/26/06 2,043,742 1,437 Isle of Capri Casinos, Inc., Term Loan........... Ba2 BB- 03/02/06 to 03/02/07 1,444,706 2,469 Scientific Games Corp., Term Loan................. B1 B+ 09/30/07 2,473,379 2,661 Wyndham International, Inc., Term Loan........... NR NR 06/30/06 2,322,083 ------------ 8,283,910 ------------ INSURANCE 1.6% 4,875 Brera GAB Robins, Inc., Term Loan................. NR NR 12/31/05 4,753,125 3,000 White Mountains Insurance Group, Ltd., Term Loan.... NR NR 03/31/07 3,009,999 ------------ 7,763,124 ------------ MACHINERY 3.4% 2,925 Alliance Laundry Systems, LLC, Term Loan............ B1 B 06/30/05 2,683,687 4,950 Ashtead Group, PLC, Term Loan...................... NR NR 06/01/07 4,838,625 4,223 Gleason Corp., Term Loan................. NR NR 02/17/08 4,222,674
See Notes to Financial Statements A-6 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE MACHINERY (CONTINUED) $ 1,223 Terex Corp., Term Loan.... Ba3 BB- 07/15/06 $ 1,225,702 993 United Rentals (North America), Inc., Term Loan................. Ba3 BB+ 08/31/07 1,000,812 2,947 Weigh-Tronix, LLC, Term Loan...................... NR NR 06/30/07 2,622,555 ------------ 16,594,055 ------------ MEDICAL PRODUCTS & SUPPLIES 3.7% 2,269 Alliance Imaging, Inc., Term Loan................. B1 B+ 11/02/07 to 11/02/08 2,281,889 998 Conmed Corp., Term Loan................. B1 BB- 12/30/04 989,820 7,582 Dade Behring, Inc., Term Loan...................... NR NR 06/30/06 to 06/30/07 7,322,268 345 DaVita, Inc., Term Loan... Ba2 BB- 03/31/06 347,534 4,875 National Nephrology Associates, Inc., Term Loan................. B1 B+ 12/31/05 4,838,812 2,610 Unilab Corp., Term Loan................. B1 BB- 11/23/06 2,626,427 ------------ 18,406,750 ------------ MINING, STEEL, IRON & NON-PRECIOUS METALS 1.1% 8,592 Ispat Inland, Term Loan... Caa2 CCC 07/16/05 to 07/16/06 5,219,844 ------------ NATURAL RESOURCES 1.3% 5,000 Ocean Rig ASA (Norway), Term Loan................. B3 NR 12/29/06 4,375,000 2,000 Premcor Refining Group, Inc., Term Loan........... Ba3 BB- 08/23/03 1,992,500 ------------ 6,367,500 ------------ NON-DURABLE CONSUMER PRODUCTS 1.6% 8,029 American Marketing Industries, Inc., Term Loan (a).................. NR NR 04/01/04 4,014,565 804 American Safety Razor Co., Term Loan................. B1 B 04/30/07 776,553 1,118 GFSI, Inc., Term Loan..... Ba3 NR 03/31/04 1,068,018 4,794 Norcorp, Inc., Term Loan................. NR NR 05/30/06 to 11/30/06 1,941,556 ------------ 7,800,692 ------------
See Notes to Financial Statements A-7 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE PAPER & FOREST PRODUCTS 0.2% $ 989 Port Townsend Paper Corp., Term Loan................. NR NR 03/16/07 $ 966,456 ------------ PERSONAL & MISCELLANEOUS SERVICES 4.0% 9,720 Aspen Marketing Group, Term Loan................. NR NR 06/30/06 8,262,000 1,500 Church & Dwight Co., Inc., Term Loan................. Ba2 BB 09/30/07 1,511,812 4,699 DIMAC Holdings, Inc., Term Loan (a) (b) (g).......... NR NR 01/01/02 to 12/31/05 1,691,746 4,150 DIMAC Marketing Partners, Inc., Term Loan (a) (b)... NR NR 07/01/03 to 01/01/05 1,494,137 370 DIMAC Marketing Partners, Inc., Revolving Credit Agreement (a) (b)......... NR NR 04/01/03 133,376 1,430 Stewart Enterprises, Inc., Term Loan................. Ba3 BB 06/30/06 1,438,669 10,205 Telespectrum Worldwide, Inc., Term Loan (a)....... NR NR 07/01/02 4,694,310 368 Veterinary Centers of America, Term Loan........ NR NR 09/30/08 370,666 ------------ 19,596,716 ------------ PHARMACEUTICALS 0.7% 2,481 Caremark Rx, Inc., Term Loan...................... Ba3 BB 03/15/06 2,506,839 998 MedPointe, Inc., Term Loan................. B1 B+ 09/30/08 994,072 ------------ 3,500,911 ------------ PRINTING & PUBLISHING 5.8% 2,923 21st Century Newspapers, Term Loan................. NR NR 09/15/05 2,733,261 1,928 American Media Operations, Inc., Term Loan........... Ba3 B+ 04/01/07 1,941,093 1,493 CommerceConnect Media, Inc., Term Loan........... NR NR 12/31/07 1,470,112 2,000 Goss Graphics Corp., Term Loan (a) (b).............. NR NR 09/30/03 140,000
See Notes to Financial Statements A-8 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE PRINTING & PUBLISHING (CONTINUED) $ 12 Goss Graphics Corp., Revolving Credit Agreement (b)....................... NR NR 03/17/02 $ 12,195 5,820 Haights Cross Communications, LLC, Term Loan...................... B2 B+ 02/28/09 5,689,348 800 Lamar Media Corp., Term Loan...................... Ba2 BB- 02/01/07 805,334 1,896 Liberty Group Operating, Inc., Term Loan........... B1 B 03/31/07 1,857,741 3,214 Medical Arts Press, Inc., Term Loan................. NR NR 05/16/06 3,157,646 1,590 Payment Processing Solutions, Inc., Term Loan................. NR NR 06/30/05 1,578,157 2,143 Penton Media, Inc., Term Loan...................... B2 B 06/30/07 1,789,746 995 PRIMEDIA, Inc., Term Loan................. NR BB- 06/30/09 929,081 5,771 Vutek, Inc., Term Loan.... B1 NR 12/30/07 5,713,592 969 Ziff-Davis Media, Inc., Term Loan................. B3 CCC- 03/31/07 744,290 ------------ 28,561,596 ------------ RESTAURANTS & FOOD SERVICE 0.9% 4,127 Domino's Pizza, Inc., Term Loan...................... B1 B+ 12/21/06 to 12/21/07 4,182,926 ------------ RETAIL -- OIL & GAS 2.7% 7,322 Barjan Products, LLC, Term Loan...................... NR NR 05/31/06 6,919,158 4,502 Kwik Trip, Term Loan...... NR NR 07/27/07 4,536,186 1,946 The Pantry, Inc., Term Loan................. B1 BB- 01/31/06 1,933,445 ------------ 13,388,789 ------------ RETAIL -- SPECIALTY 0.4% 2,010 Hollywood Entertainment Corp., Revolving Credit Agreement................. NR CCC 09/05/02 1,997,243 ------------
See Notes to Financial Statements A-9 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE RETAIL -- STORES 1.9% $ 5,894 Kirklands Holdings, Term Loan...................... NR NR 06/30/02 $ 5,657,932 3,882 Rite Aid Corp., Term Loan................. B1 BB- 06/27/05 3,821,912 ------------ 9,479,844 ------------ TELECOMMUNICATIONS -- LOCAL EXCHANGE CARRIERS 1.0% 2,000 Broadwing, Inc., Term Loan................. Ba1 BB+ 06/28/07 1,968,000 600 McLeodUSA, Inc., Term Loan (b)....................... Caa2 D 05/30/08 371,666 9,097 Orius Corp., Term Loan.... NR CC 12/14/06 2,479,040 ------------ 4,818,706 ------------ TELECOMMUNICATIONS -- LONG DISTANCE 0.5% 4,156 Pacific Crossing, Ltd., Term Loan................. NR NR 07/28/06 2,417,561 ------------ TELECOMMUNICATIONS-WIRELESS 2.5% 4,378 BCP SP Ltd., Term Loan.... NR NR 03/31/02 to 03/31/05 3,955,123 2,739 Crown Castle International Corp., Term Loan.......... Ba3 BB- 03/15/08 2,681,636 3,309 Nextel Finance Co., Term Loan...................... Ba2 BB- 06/30/08 to 12/31/08 2,945,919 192 Nextel Partners, Inc., Term Loan................. B1 B- 07/29/08 180,769 3,000 Spectrasite Communications, Inc., Term Loan...................... B3 B+ 12/31/07 2,572,314 ------------ 12,335,761 ------------ TEXTILES & LEATHER 1.0% 4,655 Glenoit Corp., Term Loan (b)....................... NR NR 12/31/03 to 06/30/04 3,049,047 1,685 Norcross Safety Products, LLC, Term Loan............ NR NR 10/02/05 1,596,951 499 The William Carter Co., Term Loan................. Ba3 BB- 09/30/08 500,309 ------------ 5,146,307 ------------
See Notes to Financial Statements A-10 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE TRANSPORTATION -- CARGO 1.7% $ 3,598 Evergreen International Aviation, Inc., Term Loan................. NR NR 05/07/04 $ 3,067,410 1,099 Gemini Leasing, Inc., Term Loan (h).................. B1 NR 08/12/05 673,203 497 Kansas City Southern Railway Co., Term Loan.... Ba1 BB+ 12/29/06 500,009 4,359 OmniTrax Railroads, LLC, Term Loan................. NR NR 05/13/05 4,348,000 ------------ 8,588,622 ------------ TRANSPORTATION -- PERSONAL 0.1% 509 Motor Coach Industries, Inc., Term Loan........... B2 B 06/16/06 396,798 ------------ TRANSPORTATION -- RAIL MANUFACTURING 0.1% 834 RailWorks Corp., Term Loan (a) (b)................... NR NR 09/30/06 525,182 ------------ TOTAL VARIABLE RATE** SENIOR LOAN INTERESTS 82.9%.......................... 408,366,966 ------------
DESCRIPTION VALUE EQUITIES 1.5% Breed Technologies, Inc. (126,731 common shares) (c)........ 363,718 DIMAC Holdings, Inc. (6,526 preferred shares) (c) (d)....... 0 DIMAC Holdings, Inc. (Warrants for 6,526 common shares) (c) (d)....................................................... 0 Flextex Components, Inc. (Warrants for 758 common shares) (c) (d)................................................... 0 Genesis Health Ventures, Inc. (1,070 preferred shares) (c) (d)....................................................... 128,582 Genesis Health Ventures, Inc. (91,986 common shares) (c) (d)....................................................... 1,471,776 Imperial Home Decor Group, Inc. (886,572 common shares) (c) (d) (e)................................................... 0 Imperial Home Decor Realty, Inc. (886,572 common shares) (c) (d) (e)................................................... 0 Kindred Healthcare, Inc. (55,081 common shares) (c) (d)..... 2,186,165 Pioneer Corp. of America (175,147 common shares) (c) (d).... 502,672 Safelite Glass Corp. (321,953 common shares) (c) (d)........ 2,192,500 Safelite Realty (21,732 common shares) (c) (d).............. 0
See Notes to Financial Statements A-11 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited)
DESCRIPTION VALUE Stellex Aerostructures, Inc. (33,390 common shares) (c) (d)....................................................... $ 504,923 West American Rubber Co., LLC (6.35% ownership interest) (c) (d)....................................................... 0 -------------- TOTAL EQUITIES 1.5%........................................ 7,350,336 -------------- TOTAL LONG-TERM INVESTMENTS 84.4% (Cost $477,156,695)....................................... 415,717,302 -------------- SHORT-TERM INVESTMENTS 15.4% COMMERCIAL PAPER 12.3% Conagra, Inc. ($10,000,000 par, maturing 02/12/02, yielding 1.99%).................................................... 9,993,920 Cox Communications, Inc. ($10,000,000 par, maturing 02/14/02, yielding 2.05%)................................. 9,992,597 General Mills, Inc. ($10,000,000 par, maturing 02/06/02, yielding 2.01%)........................................... 9,997,208 Kellogg Co. ($3,000,000 par, maturing 02/12/02, yielding 2.00%).................................................... 2,998,167 Phillips Petroleum Co. ($10,000,000 par, maturing 02/07/02, yielding 2.05%)........................................... 9,996,583 Sprint Capital Corp. ($13,000,000 par, maturing 02/14/02, yielding 2.16%)........................................... 12,989,860 Unum Corp. ($4,650,000 par, maturing 02/20/02, yielding 2.10%).................................................... 4,644,846 -------------- TOTAL COMMERCIAL PAPER...................................... 60,613,181 -------------- SHORT-TERM LOAN PARTICIPANTS 2.4% Conagra, Inc. ($2,000,000 par, maturing 02/01/02, yielding 2.15%).................................................... 2,000,000 Viacom, Inc. ($10,000,000 par, maturing 02/01/02, yielding 2.00%).................................................... 10,000,000 -------------- TOTAL SHORT-TERM LOAN PARTICIPATIONS........................ 12,000,000 -------------- TIME DEPOSIT 0.7% State Street Bank and Trust Corp. ($3,372,585 par, 0.75% coupon, dated 01/31/02, to be sold on 02/01/02 at $3,372,656)............................................... 3,372,585 -------------- TOTAL SHORT-TERM INVESTMENTS 15.4% (Cost $75,985,766)........................................ 75,985,766 -------------- TOTAL INVESTMENTS 99.8% (Cost $553,142,461)....................................... 491,703,068 OTHER ASSETS IN EXCESS OF LIABILITIES 0.2%................. 1,143,626 -------------- NET ASSETS 100.0%.......................................... $ 492,846,694 ==============
See Notes to Financial Statements A-12 YOUR FUND'S INVESTMENTS January 31, 2002 (Unaudited) NR--Not rated + Bank Loans rated below Baa by Moody's Investor Service, Inc. or BBB by Standard & Poor's Group are considered to be below investment grade. (1) Industry percentages are calculated as a percentage of net assets. (a) This Senior Loan interest is non-income producing. (b) This borrower has filed for protection in federal bankruptcy court. (c) Non-income producing security as this stock currently does not declare dividends. (d) Restricted security. (e) Affiliated company. See Notes to Financial Statements. (f) Subsequent to January 31, 2002, this borrower has emerged from bankruptcy. (g) The borrower is in the process of restructuring or amending the terms of this loan. (h) Subsequent to January 31, 2002, this borrower filed for protection in federal bankruptcy court. * Senior Loans in the Fund's portfolio generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for a Borrower to prepay, prepayments of Senior Loans in the Fund's portfolio may occur. As a result, the actual remaining maturity of Senior Loans held in the Fund's portfolio may be substantially less than the stated maturities shown. Although the Fund is unable to accurately estimate the actual remaining maturity of individual Senior Loans, the Fund estimates that the actual average maturity of the Senior Loans held in its portfolio will be approximately 18-24 months. ** Senior Loans in which the Fund invests generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as the London Inter-Bank Offered Rate ("LIBOR"), (ii) the prime rate offered by one or more major United States banks and (iii) the certificate of deposit rate. Senior Loans are generally considered to be restricted in that the Fund ordinarily is contractually obligated to receive approval from the Agent Bank and/or borrower prior to the disposition of a Senior Loan. See Notes to Financial Statements A-13 FINANCIAL STATEMENTS Statement of Assets and Liabilities January 31, 2002 (Unaudited) ASSETS: Total Investments (Cost $553,142,461)....................... $ 491,703,068 Cash........................................................ 2,748,926 Receivables: Interest and Fees......................................... 2,834,505 Investments Sold.......................................... 2,616,821 Fund Shares Sold.......................................... 42,273 Other....................................................... 492,809 ------------- Total Assets............................................ 500,438,402 ------------- LIABILITIES: Payables: Investments Purchased..................................... 4,965,085 Distributor and Affiliates................................ 529,800 Investment Advisory Fee................................... 395,905 Income Distributions...................................... 338,365 Administrative Fee........................................ 104,185 Accrued Expenses............................................ 1,152,132 Trustees' Deferred Compensation and Retirement Plans........ 106,236 ------------- Total Liabilities....................................... 7,591,708 ------------- NET ASSETS.................................................. $ 492,846,694 ============= NET ASSETS CONSIST OF: Common Shares ($.01 par value with an unlimited number of shares authorized, 61,791,190 shares issued and outstanding).............................................. $ 617,912 Paid in Surplus............................................. 728,029,292 Accumulated Undistributed Net Investment Income............. 1,707,311 Net Unrealized Depreciation................................. (61,439,393) Accumulated Net Realized Loss............................... (176,068,428) ------------- NET ASSETS.................................................. $ 492,846,694 ============= NET ASSET VALUE PER COMMON SHARE ($492,846,694 divided by 61,791,190 shares outstanding)............................ $ 7.98 =============
See Notes to Financial Statements A-14 Statement of Operations For the Six Months Ended January 31, 2002 (Unaudited) INVESTMENT INCOME: Interest.................................................... $ 19,104,082 Fees........................................................ 18,601 Other....................................................... 912,222 ------------ Total Income............................................ 20,034,905 ------------ EXPENSES: Investment Advisory Fee..................................... 2,674,462 Administrative Fee.......................................... 703,806 Service Fee................................................. 422,283 Shareholder Services........................................ 334,451 Legal....................................................... 243,242 Custody..................................................... 151,478 Trustees' Fees and Related Expenses......................... 20,396 Other....................................................... 481,763 ------------ Total Expenses.......................................... 5,031,881 ------------ NET INVESTMENT INCOME....................................... $ 15,003,024 ============ REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Loss........................................... $(41,694,733) ------------ Unrealized Appreciation/Depreciation: Beginning of the Period................................... (67,046,131) End of the Period......................................... (61,439,393) ------------ Net Unrealized Appreciation During the Period............... 5,606,738 ------------ NET REALIZED AND UNREALIZED LOSS............................ $(36,087,995) ============ NET DECREASE IN NET ASSETS FROM OPERATIONS.................. $(21,084,971) ============
See Notes to Financial Statements A-15 Statements of Changes in Net Assets For the Six Months Ended January 31, 2002 and the Year Ended July 31, 2001 (Unaudited)
SIX MONTHS ENDED YEAR ENDED JANUARY 31, 2002 JULY 31, 2001 ---------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income............................... $ 15,003,024 $ 79,684,458 Net Realized Loss................................... (41,694,733) (134,371,044) Net Unrealized Appreciation During the Period....... 5,606,738 18,050,440 ------------- -------------- Change in Net Assets from Operations................ (21,084,971) (36,636,146) ------------- -------------- Distributions from Net Investment Income............ (15,378,589) (81,218,673) Distributions from Net Realized Gain................ -0- (2,869,500) ------------- -------------- Total Distributions................................. (15,378,589) (84,088,173) ------------- -------------- NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES........................................ (36,463,560) (120,724,319) ------------- -------------- FROM CAPITAL TRANSACTIONS: Proceeds from Shares Sold........................... 6,789,740 78,021,054 Net Asset Value of Shares Issued Through Dividend Reinvestment...................................... 7,752,450 50,840,841 Cost of Shares Repurchased.......................... (167,842,066) (783,136,054) ------------- -------------- NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS.. (153,299,876) (654,274,159) ------------- -------------- TOTAL DECREASE IN NET ASSETS........................ (189,763,436) (774,998,478) NET ASSETS: Beginning of the Period............................. 682,610,130 1,457,608,608 ------------- -------------- End of the Period (Including accumulated undistributed net investment income of $1,707,311 and $2,082,876, respectively)..................... $ 492,846,694 $ 682,610,130 ============= ==============
See Notes to Financial Statements A-16 Statement of Cash Flows For the Six Months Ended January 31, 2002 (Unaudited) CHANGE IN NET ASSETS FROM OPERATIONS........................ $ (21,084,971) ------------- Adjustments to Reconcile the Change in Net Assets from Operations to Net Cash Used for Operating Activities: Decrease in Investments at Value.......................... 158,972,684 Decrease in Interest and Fees Receivables................. 1,931,935 Decrease in Receivable for Investments Sold............... 27,862,978 Decrease in Other Assets.................................. 13,201 Decrease in Investment Advisory Fee Payable............... (153,604) Decrease in Administrative Fee Payable.................... (40,484) Increase in Distributor and Affiliates Payable............ 39,018 Increase in Payable for Investments Purchased............. 2,584,420 Increase in Accrued Expenses.............................. 132,313 Increase in Trustees' Deferred Compensation and Retirement Plans................................................... 8,413 ------------- Total Adjustments....................................... 191,350,874 ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES................... 170,265,903 ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Shares Sold................................... 7,067,325 Payments on Shares Repurchased.............................. (167,846,315) Cash Dividends Paid......................................... (8,036,425) ------------- Net Cash Used for Financing Activities.................. (168,815,415) ------------- NET INCREASE IN CASH........................................ 1,450,488 Cash at Beginning of the Period............................. 1,298,438 ------------- CASH AT THE END OF THE PERIOD............................... $ 2,748,926 =============
See Notes to Financial Statements A-17 Financial Highlights (Unaudited) THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
MARCH 27, 1998 SIX MONTHS (COMMENCEMENT ENDED YEAR ENDED JULY 31, OF INVESTMENT JANUARY 31, ------------------------------ OPERATIONS) TO 2002 2001 2000 1999 JULY 31, 1998 --------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD............ $ 8.49 $ 9.58 $ 10.09 $ 10.04 $10.00 ------ ------ -------- -------- ------ Net Investment Income.... .23 .75 .72 .65 .21 Net Realized and Unrealized Gain/Loss... (.51) (1.07) (.50) .04 .04 ------ ------ -------- -------- ------ Total from Investment Operations............... (.28) (.32) .22 .69 .25 ------ ------ -------- -------- ------ Less: Distributions from Net Investment Income...... .23 .74 .72 .64 .21 Distributions from Net Realized Gain.......... -0- .03 .01 -0- -0- ------ ------ -------- -------- ------ Total Distributions........ .23 .77 .73 .64 .21 ------ ------ -------- -------- ------ NET ASSET VALUE, END OF THE PERIOD................... $ 7.98 $ 8.49 $ 9.58 $ 10.09 $10.04 ====== ====== ======== ======== ====== Total Return* (a).......... -3.42%** -3.59% 2.27% 7.09% 2.52%** Net Assets at End of the Period (In millions)..... $492.8 $682.6 $1,457.6 $1,472.0 $411.4 Ratio of Expenses to Average Net Assets*...... 1.79% 1.69% 1.64% 1.60% 1.70% Ratio of Net Investment Income to Average Net Assets*.................. 5.33% 8.07% 7.37% 6.66% 6.33% Portfolio Turnover (b)..... 63%** 25% 54% 23% 4%** * If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower and the ratios would have been as follows: Ratio of Expenses to Average Net Assets....... N/A N/A N/A 1.61% 1.92% Ratio of Net Investment Income to Average Net Assets................... N/A N/A N/A 6.65% 6.11%
** Non-Annualized (a) Total return assumes an investment at the beginning of the period indicated, reinvestment of all distributions for the period and tender of all shares at the end of the period indicated, excluding payment of 1% imposed on most shares accepted by the Fund for repurchase which have been held for less than one year. If the early withdrawal charge was included, total return would be lower. (b) Calculation includes the proceeds from principal repayments and sales of variable rate senior loan interests. N/A--Not Applicable. See Notes to Financial Statements A-18 NOTES TO FINANCIAL STATEMENTS January 31, 2002 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen Senior Floating Rate Fund (the "Fund") is registered as a non- diversified, closed-end management investment company under the Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's investment objective is to provide a high level of current income, consistent with preservation of capital. The Fund invests primarily in adjustable Senior Loans. Senior Loans are business loans that have a senior right to payment and are made to borrowers that may be corporations, partnerships or other entities. These borrowers operate in a variety of industries and geographic regions. The Fund commenced investment operations on March 27, 1998. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION The Fund's Senior Loans are valued by the Fund following valuation guidelines established and periodically reviewed by the Fund's Board of Trustees. Under the valuation guidelines, Senior Loans for which reliable market quotes are readily available are valued at the mean of such bid and ask quotes. Where reliable market quotes are not readily available, Senior Loans are valued, where possible, using independent pricing sources approved by the Board of Trustees. Other Senior Loans are valued by independent pricing sources approved by the Board of Trustees based upon pricing models developed, maintained and operated by those pricing sources or valued by Van Kampen Investment Advisory Corp. (the "Adviser") by considering a number of factors including consideration of market indicators, transactions in instruments which the Adviser believes may be comparable (including comparable credit quality, interest rate redetermination period and maturity), the credit worthiness of the Borrower, the current interest rate, the period until next interest rate redetermination and the maturity of such Senior Loans. Consideration of comparable instruments may include commercial paper, negotiable certificates of deposit and short-term variable rate securities which have adjustment periods comparable to the Senior Loans in the Fund's portfolio. The fair value of Senior Loans are reviewed and approved by the Fund's Valuation Committee and Board of Trustees. A-19 NOTES TO FINANCIAL STATEMENTS January 31, 2002 (Unaudited) Equity securities are valued on the basis of prices furnished by pricing services or as determined in good faith by the Adviser under the direction of the Board of Trustees. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market value. Short-term loan participations are valued at cost in the absence of any indication of impairment. B. SECURITY TRANSACTIONS Investment transactions are recorded on a trade date basis. Realized gains and losses are determined on an identified cost basis. C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Facility fees received are treated as market discounts. Market premiums are amortized and discounts are accreted over the stated life of each applicable Senior Loan, note, or fixed-income security. Other income is comprised primarily of amendment fees. Amendment fees are earned as compensation for agreeing to changes in loan agreements. D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. The Fund intends to utilize provisions of the federal income tax laws which allow it to carry a realized capital loss forward for eight years following the year of the loss and offset such losses against any future realized capital gains. At July 31, 2001, the Fund had an accumulated capital loss carryforward for tax purposes of $52,192,254 which will expire on July 31, 2009. Net realized gains or losses may differ for financial reporting and tax purposes primarily as a result of the deferral of losses relating to wash sale transactions and losses that were recognized for book purposes but not tax purposes. At January 31, 2002, for federal income tax purposes the cost of long- and short-term investments is $583,626,512, the aggregate gross unrealized appreciation is $3,401,938 and the aggregate gross unrealized depreciation is $95,325,382, resulting in net unrealized depreciation on long- and short-term investments of $91,923,444. E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly dividends from net investment income. Net realized gains, if any, are distributed at least annually. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income for tax purposes. A-20 NOTES TO FINANCIAL STATEMENTS January 31, 2002 (Unaudited) 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 $4.0 billion.......................................... .950% Next $3.5 billion........................................... .900% Next $2.5 billion........................................... .875% Over $10 billion............................................ .850%
In addition, the Fund will pay a monthly administrative fee to Van Kampen Investments Inc., the Fund's Administrator, at an annual rate of .25% of the average daily net assets of the Fund. The administrative services to be provided by the Administrator include monitoring the provisions of the loan agreements and any agreements with respect to participations and assignments, record keeping responsibilities with respect to interests in Senior Loans in the Fund's portfolio and providing certain services to the holders of the Fund's securities. For the six months ended January 31, 2002, the Fund recognized expenses of approximately $109,900 representing legal services provided by Skadden, Arps, Slate, Meagher, & Flom (Illinois), counsel to the Fund, of which a trustee of the Fund is an affiliated person. Under a Legal Services agreement, the Adviser provides legal services to the Fund. The Adviser allocates the cost of such services to each fund. For the six months ended January 31, 2002, the Fund recognized expenses of approximately $26,400 representing Van Kampen Investments Inc.'s, or its affiliates' (collectively "Van Kampen") cost of providing legal services to the Fund, which are reported as part of "Legal" expenses on the Statement of Operations. Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as the shareholder servicing agent of the Fund. For the six months ended January 31, 2002, the Fund recognized expenses for their services of approximately $252,600. Shareholder servicing fees are determined through negotiations with the Fund's Board of Trustees and are based on competitive market benchmarks. Certain officers and trustees of the Fund are also officers and directors of Van Kampen. The Fund does not compensate its officers or trustees who are officers of Van Kampen. The Fund provides deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation to a later A-21 NOTES TO FINANCIAL STATEMENTS January 31, 2002 (Unaudited) date. Benefits under the retirement plan are payable upon retirement for a ten-year period and are based upon each trustee's years of service to the Fund. The maximum annual benefit per trustee under the plan is $2,500. At January 31, 2002, Van Kampen owned 10,000 shares of the Fund. During the period, the Fund owned shares of the following affiliated companies. Affiliated companies are defined by the 1940 Act, as amended, as those companies in which a fund holds 5% or more of the outstanding voting securities.
REALIZED DIVIDEND MARKET VALUE NAME SHARES * GAIN/LOSS INCOME 01/31/02 Imperial Home Decor Group, Inc. ....... 886,572 -0- -0- -0- Imperial Home Decor Realty, Inc........ 886,572 -0- -0- -0-
* Shares were acquired through restructuring of senior loan interests. 3. CAPITAL TRANSACTIONS At January 31, 2002 and July 31, 2001, paid in surplus aggregated $728,029,292 and $881,143,047, respectively. Transactions in common shares were as follows:
SIX MONTHS ENDED YEAR ENDED JANUARY 31, 2002 JULY 31, 2001 ---------------- ------------- Beginning Shares..................................... 80,403,273 152,178,276 ----------- ----------- Shares Sold.......................................... 826,233 8,494,149 Shares Issued Through Dividend Reinvestment.......... 947,503 5,595,595 Shares Repurchased................................... (20,385,819) (85,864,747) ----------- ----------- Net Change in Shares Outstanding..................... (18,612,083) (71,775,003) ----------- ----------- Ending Shares........................................ 61,791,190 80,403,273 =========== ===========
4. INVESTMENT TRANSACTIONS During the period, the costs of purchases and proceeds from investments sold and repaid, excluding short-term investments, were $315,629,826 and $466,999,500, respectively. 5. TENDER OF SHARES The Board of Trustees currently intends, each quarter, to consider authorizing the Fund to make tender offers for all or a portion of its then outstanding common shares at the net asset value of the shares on the expiration date of the tender A-22 NOTES TO FINANCIAL STATEMENTS January 31, 2002 (Unaudited) offer. For the six months ended January 31, 2002, 20,385,819 shares were tendered and repurchased by the Fund. 6. EARLY WITHDRAWAL CHARGE An early withdrawal charge to recover offering expenses will be imposed in connection with most common shares held for less than one year which are accepted by the Fund for repurchase pursuant to tender offers. The early withdrawal charge of 1.00% will be payable to Van Kampen. For the six months ended January 31, 2002, Van Kampen received early withdrawal charges of approximately $187,000 in connection with tendered shares of the Fund. 7. COMMITMENTS/BORROWINGS Pursuant to the terms of certain Senior Loan agreements, the Fund had unfunded loan commitments of approximately $2,706,400 as of January 31, 2002. The Fund generally will maintain with its custodian short-term investments having an aggregate value at least equal to the amount of unfunded loan commitments. The Fund, along with the Van Kampen Prime Rate Income Trust, has entered into a revolving credit agreement with a syndicate led by Bank of America for an aggregate of $500,000,000, which will terminate on November 8, 2002. The proceeds of any borrowing by the Fund under the revolving credit agreement shall be used for temporary liquidity purposes and funding of shareholder tender offers. Annual commitment fees of .11% are charged on the unused portion of the credit line. Borrowings under this facility will bear interest at either the LIBOR rate or the Federal Funds rate plus .50%. At January 31, 2002, the Fund did not have any outstanding borrowings under this agreement. 8. SENIOR LOAN PARTICIPATION COMMITMENTS The Fund invests primarily in participations, assignments, or acts as a party to the primary lending syndicate of a Senior Loan interest to corporations, partnerships, and other entities. When the Fund purchases a participation of a Senior Loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation, but not with the borrower directly. As such, the Fund assumes the credit risk of the borrower, selling participant or other persons interpositioned between the Fund and the borrower. A-23 NOTES TO FINANCIAL STATEMENTS January 31, 2002 (Unaudited) At January 31, 2002, the following sets forth the selling participants with respect to interests in Senior Loans purchased by the Fund on a participation basis.
PRINCIPAL AMOUNT VALUE SELLING PARTICIPANT (000) (000) Bank of New York............................................ $ 738 $ 738 Canadian Imperial Bank of Commerce.......................... 3,277 3,280 Morgan Guaranty............................................. 1,500 852 ------ ------ Total....................................................... $5,515 $4,870 ====== ======
9. SERVICE PLAN The Fund has adopted a Service Plan (the "Plan") designed to meet the service fee requirements of the sales charge rule of the National Association of Securities Dealers, Inc. The Plan governs payments for personal services and/or the maintenance of shareholder accounts. Annual fees under the Plan of .15% (.25% maximum) of average daily net assets are accrued daily and paid quarterly. For the six months ended January 31, 2002, the Fund paid service fees of approximately $10,900 to Van Kampen and payments to Morgan Stanley DW Inc., an affiliate of the Adviser, of approximately $316,600. A-24 REPORT OF INDEPENDENT AUDITORS To the Shareholders and Board of Trustees of Van Kampen Senior Floating Rate Fund We have audited the accompanying statement of assets and liabilities of Van Kampen Senior Floating Rate Fund (the "Fund"), including the portfolio of investments, as of July 31, 2001, the related statements of operations and cash flows for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The Fund's financial highlights for the periods ended prior to July 31, 2000 were audited by other auditors whose report, dated September 14, 1999, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2001, by correspondence with the Fund's custodian, brokers, and selling or agent banks; where replies were not received, we performed alternative auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Van Kampen Senior Floating Rate Fund as of July 31, 2001, the results of its operations, cash flows, changes in net assets, and financial highlights for the respective stated periods, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP September 14, 2001 A-25 BY THE NUMBERS YOUR FUND'S INVESTMENTS July 31, 2001 THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF THE REPORTING PERIOD.(1)
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE VARIABLE RATE** SENIOR LOAN INTERESTS 82.7% AEROSPACE/DEFENSE 4.1% $ 2,959 Aerostructures Corp., Term Loan...................... NR BB- 12/31/03 $ 2,948,638 998 Alliant Techsystems, Inc., Term Loan................. Ba2 BB- 04/20/09 1,011,319 3,704 DeCrane Finance Co., Term Loan...................... NR NR 09/30/05 3,666,903 9,373 EG&G Technical Services, Inc., Term Loan........... B1 NR 08/20/07 8,786,979 6,867 Fairchild Corp., Term Loan...................... Ba3 BB- 04/30/06 6,644,105 4,892 Stellex Technologies, Inc., Term Loan (a) (b)... NR NR 09/30/06 3,021,009 1,653 Vought Aircraft Industries, Inc., Term Loan...................... NR NR 06/30/07 to 06/30/08 1,657,320 ------------ 27,736,273 ------------ AUTOMOTIVE 6.0% 3,950 AMCAN Technologies, Inc., Term Loan................. NR NR 03/28/07 3,772,250 963 Breed Technologies, Inc., Term Loan................. NR NR 12/20/04 890,774 4,605 Exide Corp., Term Loan.... Ba3 B+ 03/18/05 4,320,623 4,900 Federal-Mogul Corp., Term Loan...................... Caa1 CCC+ 02/24/05 4,795,875 4,985 J.L. French Automotive Castings, Inc., Term Loan...................... B1 NR 10/21/06 4,087,962 7,500 Meridian Automotive Systems, Inc., Term Loan...................... NR NR 03/31/07 4,875,000 9,439 Metalforming Technologies, Inc., Term Loan........... NR NR 06/30/06 8,022,877 3,789 Polypore, Inc., Term Loan...................... Ba3 B+ 12/31/06 3,802,887 6,883 Safelite Glass Corp., Term Loan...................... NR NR 09/30/07 6,262,867 ------------ 40,831,115 ------------
See Notes to Financial Statements A-26 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE BEVERAGE, FOOD & TOBACCO 1.5% $ 2,459 Agrilink Foods, Inc., Term Loan...................... B1 B+ 09/30/04 to 09/30/05 $ 2,373,387 3,714 B & G Foods, Inc., Term Loan...................... B1 B+ 03/31/06 3,605,345 1,944 Mafco Worldwide Corp., Term Loan................. NR NR 03/31/06 1,920,139 2,000 Pinnacle Foods, Inc., Term Loan...................... Ba3 BB- 05/22/08 1,995,000 ------------ 9,893,871 ------------ BROADCASTING--CABLE 1.5% 10,000 Charter Communications, Inc., Term Loan........... Ba3 BB+ 03/18/08 to 09/18/08 9,945,006 ------------ BROADCASTING--DIVERSIFIED 2.1% 10,000 Comcorp Broadcasting, Inc., Term Loan (a)....... NR NR 06/30/07 9,750,000 4,550 White Knight Broadcasting, Inc., Term Loan (a)....... NR NR 06/30/07 4,436,250 ------------ 14,186,250 ------------ BROADCASTING--RADIO 0.5% 3,250 Citadel Broadcasting Co., Term Loan................. NR NR 06/30/09 3,260,156 ------------ BROADCASTING--TELEVISION 1.0% 6,629 Quorum Broadcasting, Inc., Term Loan................. NR NR 09/30/07 6,081,304 1,000 Sinclair Broadcast Group, Inc., Term Loan........... Ba2 BB- 09/30/09 1,008,125 ------------ 7,089,429 ------------ BUILDINGS & REAL ESTATE 0.7% 3,379 Builders FirstSource, Inc., Term Loan........... NR BB- 12/30/05 3,336,286 1,330 Corrections Corp. of America, Term Loan........ B3 B 12/31/02 1,274,452 ------------ 4,610,738 ------------ CHEMICALS, PLASTICS & RUBBER 6.8% 4,950 Applied Tech Management Corp., Term Loan.......... B1 NR 04/30/07 4,833,420 4,913 Georgia Gulf Corp., Term Loan...................... Ba2 BBB- 11/12/06 4,910,190
See Notes to Financial Statements A-27 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE CHEMICALS, PLASTICS & RUBBER (CONTINUED) $ 4,628 Huntsman Corp., Term Loan...................... B1 NR 12/31/02 to 12/31/05 $ 3,906,170 2,081 Huntsman Corp., Revolving Credit Agreement.......... B1 NR 12/31/02 1,661,135 5,776 Lyondell Chemical Co., Term Loan................. Ba3 NR 06/30/05 to 05/17/06 5,858,151 1,000 Messer Griesheim, Term Loan...................... Ba3 BB 05/04/09 to 05/04/10 1,008,750 4,925 MetoKote Corp., Term Loan...................... NR NR 11/02/05 4,752,625 4,939 Nutrasweet Acquisition Corp., Term Loan.......... Ba3 NR 05/25/07 to 05/25/09 4,913,027 2,963 OM Group, Inc., Term Loan...................... Ba3 BB 03/31/07 2,972,993 8,000 Pioneer America Acquisition Corp., Term Loan (a) (b).............. NR NR 12/31/06 4,080,000 5,378 Sterling Pulp Chemicals, Inc., Term Loan........... NR NR 06/30/05 5,270,753 5,901 West American Rubber Co., Term Loan (a)............. NR NR 06/30/05 to 12/30/05 1,888,170 ------------ 46,055,384 ------------ CONSTRUCTION MATERIAL 0.9% 875 Dayton Superior Corp., Term Loan................. Ba3 BB- 06/16/08 877,461 5,717 Flextek Components, Inc., Term Loan (a)............. NR NR 08/31/03 743,235 5,092 Magnatrax Corp., Term Loan...................... NR NR 11/15/05 4,659,134 ------------ 6,279,830 ------------ CONTAINERS, PACKAGING & GLASS 3.7% 2,375 Dr. Pepper/Seven Up Bottling Group, Inc., Term Loan...................... NR NR 10/07/06 2,373,612 2,000 LLS Corp., Term Loan...... Caa1 B 07/31/06 1,540,000 13,843 Nexpak Corp., Term Loan... NR NR 12/31/05 to 12/31/06 10,036,208 2,411 Pliant Corp., Term Loan... B2 B+ 05/31/08 2,306,752
See Notes to Financial Statements A-28 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE CONTAINERS, PACKAGING & GLASS (CONTINUED) $ 3,862 Stone Container Corp., Term Loan................. Ba3 B+ 10/01/03 $ 3,878,905 4,950 Tekni-Plex, Inc., Term Loan...................... B1 B+ 06/26/08 4,793,248 ------------ 24,928,725 ------------ DIVERSIFIED MANUFACTURING 1.2% 7,182 Citation Corp., Term Loan...................... NR B+ 12/01/07 5,925,216 2,419 Mueller Group, Inc., Term Loan...................... B1 B+ 08/16/07 2,429,099 ------------ 8,354,315 ------------ ECOLOGICAL 1.9% 12,967 Allied Waste Industries, Inc., Term Loan........... Ba3 BB 07/21/05 to 07/21/06 12,893,684 ------------ ELECTRONICS 3.6% 838 Audio Visual Services Corp., Term Loan.......... NR NR 10/01/01 481,879 1,150 Audio Visual Services Corp., Revolving Credit Agreement................. NR NR 10/01/01 661,521 5,312 Dynamic Details, Inc., Term Loan................. Ba3 NR 04/22/05 5,303,670 4,500 Kinetic Group, Inc., Term Loan...................... B1 NR 02/28/06 4,404,375 4,735 Stratus Technologies, Inc., Term Loan........... NR NR 02/26/05 4,699,265 5,861 Superior Telecom, Inc., Term Loan................. B2 B+ 11/27/05 4,462,934 2,475 Veridian Corp., Term Loan...................... Ba3 BB- 08/24/06 2,475,000 2,483 Viasystems, Inc., Term Loan...................... B1 B+ 03/31/07 to 12/06/08 2,272,232 ------------ 24,760,876 ------------ ENTERTAINMENT & LEISURE 2.9% 10,838 Fitness Holdings Worldwide, Inc., Term Loan...................... NR B 11/02/06 to 11/02/07 10,296,272 2,000 Six Flags Theme Parks, Inc., Term Loan........... Ba2 BB- 09/30/05 2,021,500
See Notes to Financial Statements A-29 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE ENTERTAINMENT & LEISURE (CONTINUED) $ 2,590 True Temper, Inc., Term Loan...................... B1 BB- 09/30/05 $ 2,576,824 4,988 United Artists Theatre, Inc., Term Loan........... B3 B- 02/02/05 4,830,085 ------------ 19,724,681 ------------ FARMING & AGRICULTURE 0.6% 994 Hartz Mountain Corp., Term Loan...................... B1 NR 12/31/07 998,934 3,247 The Scotts Co., Term Loan...................... Ba3 BB 12/31/07 3,270,100 ------------ 4,269,034 ------------ FINANCE 1.2% 3,748 Outsourcing Solutions, Term Loan................. B2 BB- 12/10/06 3,535,726 4,884 Rent-A-Center, Inc., Term Loan...................... Ba2 BB- 01/31/06 to 01/31/07 4,849,671 ------------ 8,385,397 ------------ HEALTHCARE 1.9% 2,500 AMN Healthcare, Inc., Term Loan...................... NR NR 03/31/05 2,444,140 589 Community Health Systems, Inc., Term Loan........... NR NR 12/31/05 593,346 712 Genesis Health Ventures, Inc., Term Loan (a) (b)... NR NR 09/30/03 537,115 1,612 Genesis Health Ventures, Inc., Revolving Credit Agreement (a) (b)......... NR NR 05/30/06 1,195,298 995 InteliStaf Group, Inc., Term Loan................. NR NR 10/31/07 989,093 1,831 Kindred Healthcare, Inc., Term Loan (a)............. NR NR 04/13/08 1,703,084 853 Multicare Cos., Inc., Term Loan (a) (b).............. NR NR 09/30/03 667,472 694 Multicare Cos., Inc., Revolving Credit Agreement (a) (b)................... NR NR 09/30/03 543,055 1,750 Triad Hospitals, Inc., Term Loan................. Ba3 B+ 09/30/08 1,768,813 2,663 Unilab Corp., Term Loan... B1 B+ 11/23/06 2,668,919 ------------ 13,110,335 ------------
See Notes to Financial Statements A-30 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE HOME & OFFICE FURNISHINGS, HOUSEWARES & DURABLE CONSUMER PRODUCTS 1.2% $ 3,406 Formica Corp., Term Loan.. B1 B+ 04/30/06 $ 2,759,165 2,463 Imperial Home Decor Group, Inc., Term Loan........... NR NR 04/04/06 2,241,057 802 Sleepmaster, LLC, Term Loan...................... B1 BB- 12/31/06 787,124 1,492 Targus Group International, Inc., Term Loan...................... NR NR 08/31/06 1,466,363 992 Winsloew Furniture, Inc., Term Loan................. Ba3 B+ 03/31/06 983,741 ------------ 8,237,450 ------------ HOTELS, MOTELS, INNS & GAMING 1.4% 7,825 Aladdin Gaming, LLC, Term Loan...................... B1 NR 08/26/06 6,397,307 444 Isle of Capri Casinos, Inc., Term Loan........... Ba2 BB- 03/02/06 to 03/02/07 444,154 2,481 Scientific Games Corp., Term Loan................. B1 B+ 09/30/07 2,462,641 ------------ 9,304,102 ------------ INSURANCE 1.1% 4,925 Brera GAB Robins, Inc., Term Loan................. NR NR 12/01/05 4,801,875 3,000 White Mountains Insurance Group, Ltd., Term Loan.... NR NR 03/31/07 3,009,375 ------------ 7,811,250 ------------ MACHINERY 3.3% 2,985 Alliance Laundry Systems, LLC, Term Loan............ B1 B 06/30/05 2,746,200 4,950 Ashtead Group, PLC, Term Loan...................... NR NR 06/01/07 4,909,781 4,550 Gleason Corp., Term Loan.. NR NR 02/18/08 4,526,782 5,000 Ocean Rig ASA--(Norway), Term Loan................. NR NR 06/01/08 4,525,000 2,313 Terex Corp., Term Loan.... Ba3 BB- 03/06/06 2,320,167
See Notes to Financial Statements A-31 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE MACHINERY (CONTINUED) $ 998 United Rentals (North America), Inc., Term Loan...................... Ba3 BB+ 07/31/07 $ 999,006 2,978 Weigh-Tronix, LLC, Term Loan...................... NR NR 06/30/07 2,709,525 ------------ 22,736,461 ------------ MEDICAL PRODUCTS & SUPPLIES 3.4% 5,000 Alliance Imaging, Inc., Term Loan................. B1 B+ 11/02/07 to 11/02/08 5,009,375 4,800 Charles River Laboratories, Inc., Term Loan...................... Ba3 BB- 09/29/07 4,842,000 9,708 Dade Behring, Inc., Term Loan...................... NR D 06/30/06 to 06/30/07 7,805,185 995 DaVita, Inc., Term Loan... Ba2 BB- 03/31/06 1,004,683 4,900 National Nephrology Associates, Inc., Term Loan...................... B1 B+ 12/31/05 4,864,971 ------------ 23,526,214 ------------ MINING, STEEL, IRON & NON-PRECIOUS METALS 1.7% 8,637 Ispat Inland, Term Loan... B2 BB- 07/16/05 to 07/16/06 7,024,639 4,524 UCAR International, Inc., Term Loan................. Ba3 NR 12/31/01 4,448,236 ------------ 11,472,875 ------------ NON-DURABLE CONSUMER PRODUCTS 1.9% 8,051 American Marketing Industries, Inc., Term Loan...................... NR NR 11/30/04 to 11/30/05 6,521,242 987 American Safety Razor Co., Term Loan................. B1 NR 04/30/07 985,271 1,248 GFSI, Inc., Term Loan..... Ba3 NR 03/31/04 1,229,658 4,866 Norcorp, Inc., Term Loan...................... NR NR 05/12/06 to 11/30/06 4,379,539 ------------ 13,115,710 ------------ PAPER & FOREST PRODUCTS 0.1% 998 Port Townsend Paper Corp., Term Loan................. NR NR 03/16/07 985,031 ------------ PERSONAL & MISCELLANEOUS SERVICES 3.0% 9,790 Aspen Marketing Group, Term Loan................. NR NR 06/30/06 9,300,500 2,449 Coinmach Laundry Corp., Term Loan................. NR BB- 12/31/04 2,432,817
See Notes to Financial Statements A-32 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE PERSONAL & MISCELLANEOUS SERVICES (CONTINUED) $ 4,552 DIMAC Holdings, Inc., Term Loan (a).................. NR NR 12/31/05 $ 1,502,018 4,205 DIMAC Marketing Partners, Inc., Term Loan (a) (c)... NR NR 07/01/03 1,387,544 370 DIMAC Marketing Partners, Inc., Revolving Credit Agreement (a) (c)......... NR NR 04/01/03 122,261 9,945 Telespectrum Worldwide, Inc., Term Loan (a)....... NR NR 07/01/02 5,718,215 ------------ 20,463,355 ------------ PHARMACEUTICALS 0.5% 983 Bergen Brunswig Corp., Term Loan................. NR BB 03/31/06 984,298 2,494 Caremark Rx, Inc., Term Loan...................... Ba3 BB 03/15/06 2,514,792 ------------ 3,499,090 ------------ PRINTING & PUBLISHING 6.9% 4,949 21st Century Newspapers, Term Loan................. NR NR 09/15/05 4,917,919 4,938 American Reprographics Co., Term Loan............ NR NR 04/10/08 4,912,864 8,500 CommerceConnect Media, Inc., Term Loan........... NR NR 12/31/07 8,372,500 2,000 Goss Graphics Term Loan... NR NR 09/30/03 1,220,000 5,850 Haights Cross Communications, LLC, Term Loan...................... B2 B+ 12/10/06 5,791,500 1,905 Liberty Group Operating, Inc., Term Loan........... B1 B 03/31/07 1,890,987 4,825 Medical Arts Press, Inc., Term Loan................. NR NR 06/16/06 4,776,750 4,606 Payment Processing Solutions, Inc., Term Loan...................... NR NR 06/30/05 4,588,801 2,154 Penton Media, Inc., Term Loan...................... Ba3 BB- 06/30/07 2,139,478 1,000 PRIMEDIA, Inc., Term Loan...................... NR BB- 06/20/09 994,750
See Notes to Financial Statements A-33 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE PRINTING & PUBLISHING (CONTINUED) $ 5,955 Vutek, Inc., Term Loan.... NR NR 06/30/07 $ 5,940,112 1,475 Ziff-Davis Media, Inc., Term Loan................. Ba3 B+ 03/31/07 1,353,183 ------------ 46,898,844 ------------ RESTAURANTS & FOOD SERVICE 1.9% 7,500 Captain D's, Inc., Term Loan...................... B2 B+ 12/31/01 7,387,500 1,384 Carvel Corp., Term Loan... NR NR 08/17/01 1,342,238 4,263 Domino's Pizza, Inc., Term Loan...................... B1 B+ 12/21/06 to 12/21/07 4,302,091 ------------ 13,031,829 ------------ RETAIL--OIL & GAS 2.4% 7,359 Barjan Products, LLC, Term Loan...................... NR NR 05/31/06 7,027,871 4,612 Kwik Trip, Term Loan...... NR NR 07/27/07 4,635,506 4,964 The Pantry, Inc., Term Loan...................... B1 BB- 01/31/06 4,956,769 ------------ 16,620,146 ------------ RETAIL--STORES 1.5% 6,974 Kirklands Holdings, Term Loan...................... NR NR 06/30/02 6,329,192 4,000 Rite Aid Corp., Term Loan...................... B1 BB- 06/27/05 4,001,000 ------------ 10,330,192 ------------ TELECOMMUNICATIONS--HYBRID 0.1% 1,000 Broadwing, Inc., Term Loan...................... Ba1 BB+ 06/29/07 990,625 ------------ TELECOMMUNICATIONS--LOCAL EXCHANGE CARRIERS 1.1% 1,723 Alaska Communications Systems Holdings, Inc., Term Loan................. B1 BB 11/14/07 to 05/14/08 1,658,884 600 McLeodUSA, Inc., Term Loan...................... B2 B 05/31/08 498,225 9,144 Orius Corp., Term Loan.... NR B- 12/15/06 5,623,443 ------------ 7,780,552 ------------ TELECOMMUNICATIONS--LONG DISTANCE 0.6% 4,179 Pacific Crossing, Ltd., Term Loan................. NR NR 07/28/06 3,837,542 ------------
See Notes to Financial Statements A-34 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE TELECOMMUNICATIONS--PAGING 0.1% $10,973 TSR Wireless, LLC, Term Loan (a) (b).............. NR NR 06/30/05 $ 658,350 ------------ TELECOMMUNICATIONS--WIRELESS 3.7% 4,615 BCP SP Ltd., Term Loan.... B3 NR 03/31/02 to 03/31/05 4,217,473 5,000 Crown Castle International Corp., Term Loan.......... Ba3 BB- 03/15/08 4,992,190 3,500 Nextel Finance Co., Term Loan...................... Ba2 BB- 06/30/08 to 12/31/08 3,291,015 192 Nextel Partners, Inc., Term Loan................. B1 B- 07/29/08 183,974 3,000 Spectrasite Communications, Inc., Term Loan...................... B1 B+ 12/31/07 2,827,968 10,000 VoiceStream Wireless Corp., Term Loan.......... Baa1 NR 02/25/08 to 06/30/09 9,994,270 ------------ 25,506,890 ------------ TEXTILES & LEATHER 2.6% 18,673 Glenoit Corp., Term Loan (b)....................... NR NR 12/31/03 to 06/30/04 13,071,303 3,031 Joan Fabrics Corp., Term Loan...................... NR B+ 06/30/05 to 06/30/06 2,884,069 1,694 Norcross Safety Products, LLC, Term Loan............ NR NR 09/30/04 1,626,381 ------------ 17,581,753 ------------ TRANSPORTATION--CARGO 1.8% 3,598 Evergreen International Aviation, Inc., Term Loan...................... NR NR 05/07/03 2,878,508 3,099 Gemini Leasing, Inc., Term Loan...................... B1 NR 08/12/05 2,781,449 2,342 North American Van Lines, Inc., Term Loan........... B1 B+ 11/18/07 2,131,228 4,359 OmniTrax Railroads, LLC, Term Loan................. NR NR 05/13/05 4,348,000 ------------ 12,139,185 ------------ TRANSPORTATION--PERSONAL 0.1% 509 Motor Coach Industries, Inc., Term Loan........... B2 B 06/16/06 399,342 ------------
See Notes to Financial Statements A-35 YOUR FUND'S INVESTMENTS July 31, 2001
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- (000) BORROWER MOODY'S S&P STATED MATURITY* VALUE TRANSPORTATION--RAIL MANUFACTURING 0.1% $ 834 RailWorks Corp., Term Loan...................... Caa1 B 09/30/06 $ 654,393 ------------ UTILITIES 0.1% 965 Western Resources, Inc., Term Loan................. NR NR 03/17/03 968,986 ------------ TOTAL VARIABLE RATE** SENIOR LOAN INTERESTS 82.7%.......................... 564,865,266 ------------
EQUITIES 1.0% Breed Technologies, Inc. (126,731 common shares) (d)........ 646,328 DIMAC Holdings, Inc. (6,526 preferred shares) (d) (e)....... 0 DIMAC Holdings, Inc. (Warrants for 6,526 common shares) (d) (e)....................................................... 0 Flextek Components, Inc. (Warrants for 758 common shares) (d) (e)................................................... 0 Imperial Home Decor Group, Inc. (886,572 common shares) (d) (e)....................................................... 1,250,067 Imperial Home Decor Realty, Inc. (886,572 common shares) (d) (e)....................................................... 0 Kindred Healthcare, Inc. (59,981 common shares) (d) (e)..... 2,819,107 Safelite Glass Corp. (321,953 common shares) (d) (e)........ 2,140,987 Safelite Realty (21,732 common shares) (d) (e).............. 0 ------------ TOTAL EQUITIES.............................................. 6,856,489 ------------ TOTAL LONG-TERM INVESTMENTS 83.7% (Cost $638,767,886)....................................... 571,721,755 ------------ SHORT-TERM INVESTMENTS 11.6% COMMERCIAL PAPER 7.5% Centex Corp. ($5,000,000 par, maturing 08/17/01, yielding 3.90%).................................................... 4,991,334 Glencore Funding, Inc. ($10,000,000 par, maturing 08/16/01, yielding 3.90%)........................................... 9,983,458 Praxair, Inc. ($5,000,000 par, maturing 08/09/01, yielding 3.84%).................................................... 4,995,733 Praxair, Inc. ($5,000,000 par, maturing 08/09/01, yielding 3.85%).................................................... 4,995,722 Sprint Corp. ($14,000,000 par, maturing 08/02/01, yielding 4.07%).................................................... 13,998,417 Texas Utilities Co. ($12,000,000 par, maturing 08/09/01, yielding 4.00%)........................................... 11,989,333 ------------ TOTAL COMMERCIAL PAPER...................................... 50,953,997 ------------
See Notes to Financial Statements A-36 YOUR FUND'S INVESTMENTS July 31, 2001 SHORT-TERM LOAN PARTICIPANTS 4.1% Englehard Corp. ($10,000,000 par, maturing 08/03/01, yielding 3.90%)........................................... $ 10,000,000 Illinois Power Co. ($5,000,000 par, maturing 08/01/01, yielding 3.95%)........................................... 5,000,000 TRW, Inc. ($6,000,000 par, maturing 08/01/01, yielding 4.00%).................................................... 6,000,000 TRW, Inc. ($7,000,000 par, maturing 08/02/01, yielding 3.95%).................................................... 7,000,000 ------------ TOTAL SHORT-TERM LOAN PARTICIPATIONS........................ 28,000,000 ------------ TOTAL SHORT-TERM INVESTMENTS 11.6% (Cost $78,953,997)........................................ 78,953,997 ------------ TOTAL INVESTMENTS 95.3% (Cost $717,721,883)....................................... 650,675,752 OTHER ASSETS IN EXCESS OF LIABILITIES 4.7%................. 31,934,378 ------------ NET ASSETS 100.0%.......................................... $682,610,130 ============
NR--Not rated + Bank Loans rated below Baa by Moody's Investor Service, Inc. or BBB by Standard & Poor's Group are considered to be below investment grade. (Bank loan ratings are unaudited.) (1) Industry percentages are calculated as a percentage of net assets. (a) This Senior Loan interest is non-income producing. (b) This borrower has filed for protection in federal bankruptcy court. (c) Subsequent to July 31, 2001, this borrower filed for protection in federal bankruptcy court. (d) Non-income producing security as this stock currently does not declare dividends. (e) Restricted Security. * Senior Loans in the Fund's portfolio generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for a Borrower to prepay, prepayments of Senior Loans in the Fund's portfolio may occur. As a result, the actual remaining maturity of Senior Loans held in the Fund's portfolio may be substantially less than the stated maturities shown. Although the Fund is unable to accurately estimate the actual remaining maturity of individual Senior Loans, the Fund estimates that the actual average maturity of the Senior Loans held in its portfolio will be approximately 18-24 months. ** Senior Loans in which the Fund invests generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as the London Inter-Bank Offered Rate ("LIBOR"), (ii) the prime rate offered by one or more major United States banks and (iii) the certificate of deposit rate. Senior Loans are generally considered to be restricted in that the Fund ordinarily is contractually obligated to receive approval from the Agent Bank and/or borrower prior to the disposition of a Senior Loan. See Notes to Financial Statements A-37 FINANCIAL STATEMENTS Statement of Assets and Liabilities July 31, 2001 ASSETS: Total Investments (Cost $717,721,883)....................... $ 650,675,752 Cash........................................................ 1,298,438 Receivables: Investments Sold.......................................... 30,479,799 Interest and Fees......................................... 4,766,440 Fund Shares Sold.......................................... 319,858 Other....................................................... 506,010 ------------- Total Assets............................................ 688,046,297 ------------- LIABILITIES: Payables: Investments Purchased..................................... 2,380,665 Income Distributions...................................... 748,651 Investment Advisory Fee................................... 549,509 Distributor and Affiliates................................ 490,782 Administrative Fee........................................ 144,669 Initial Offering and Registration Costs................... 41,558 Fund Shares Repurchased................................... 4,249 Accrued Expenses............................................ 978,261 Trustees' Deferred Compensation and Retirement Plans........ 97,823 ------------- Total Liabilities....................................... 5,436,167 ------------- NET ASSETS.................................................. $ 682,610,130 ============= NET ASSETS CONSIST OF: Common Shares ($.01 par value with an unlimited number of shares authorized, 80,403,273 shares issued and outstanding).............................................. $ 804,033 Paid in Surplus............................................. 881,143,047 Accumulated Undistributed Net Investment Income............. 2,082,876 Net Unrealized Depreciation................................. (67,046,131) Accumulated Net Realized Loss............................... (134,373,695) ------------- NET ASSETS.................................................. $ 682,610,130 ============= NET ASSET VALUE PER COMMON SHARE ($682,610,130 divided by 80,403,273 shares outstanding)............................ $ 8.49 =============
See Notes to Financial Statements A-38 Statement of Operations For the Year Ended July 31, 2001 INVESTMENT INCOME: Interest.................................................... $ 94,340,173 Fees........................................................ 5,389 Other....................................................... 2,072,986 ------------- Total Income............................................ 96,418,548 ------------- EXPENSES: Investment Advisory Fee..................................... 9,381,752 Administrative Fee.......................................... 2,468,882 Service Fee................................................. 1,481,329 Shareholder Services........................................ 862,316 Legal....................................................... 602,195 Custody..................................................... 357,493 Trustees' Fees and Related Expenses......................... 57,293 Other....................................................... 1,504,919 ------------- Total Operating Expenses................................ 16,716,179 Less Credits Earned on Cash Balances.................... 362 ------------- Net Operating Expenses.................................. 16,715,817 Interest Expense........................................ 18,273 ------------- NET INVESTMENT INCOME....................................... $ 79,684,458 ============= REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Loss........................................... $(134,371,044) ------------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... (85,096,571) End of the Period......................................... (67,046,131) ------------- Net Unrealized Appreciation During the Period............... 18,050,440 ------------- NET REALIZED AND UNREALIZED LOSS............................ $(116,320,604) ============= NET DECREASE IN NET ASSETS FROM OPERATIONS.................. $ (36,636,146) =============
See Notes to Financial Statements A-39 Statements of Changes in Net Assets For the Years Ended July 31, 2001 and 2000
YEAR ENDED YEAR ENDED JULY 31, 2001 JULY 31, 2000 -------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income................................ $ 79,684,458 $ 116,971,614 Net Realized Gain/Loss............................... (134,371,044) 3,089,393 Net Unrealized Appreciation/Depreciation During the Period............................................. 18,050,440 (84,184,679) -------------- -------------- Change in Net Assets from Operations................. (36,636,146) 35,876,328 -------------- -------------- Distributions from Net Investment Income............. (81,218,673) (116,807,793) Distributions from and in Excess of Net Realized Gains.............................................. (2,869,500) (1,076,619) -------------- -------------- Total Distributions.................................. (84,088,173) (117,884,412) -------------- -------------- NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES.. (120,724,319) (82,008,084) -------------- -------------- FROM CAPITAL TRANSACTIONS: Proceeds from Shares Sold............................ 78,021,054 568,093,865 Net Asset Value of Shares Issued Through Dividend Reinvestment....................................... 50,840,841 81,211,399 Cost of Shares Repurchased........................... (783,136,054) (581,641,209) -------------- -------------- NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... (654,274,159) 67,664,055 -------------- -------------- TOTAL DECREASE IN NET ASSETS......................... (774,998,478) (14,344,029) NET ASSETS: Beginning of the Period.............................. 1,457,608,608 1,471,952,637 -------------- -------------- End of the Period (Including accumulated undistributed net investment income of $2,082,876 and $3,604,417, respectively)...................... $ 682,610,130 $1,457,608,608 ============== ==============
See Notes to Financial Statements A-40 Statement of Cash Flows For the Year Ended July 31, 2001 CHANGE IN NET ASSETS FROM OPERATIONS........................ $ (36,636,146) ------------- Adjustments to Reconcile the Change in Net Assets from Operations to Net Cash Used for Operating Activities: Decrease in Investments at Value.......................... 798,956,362 Decrease in Interest and Fees Receivables................. 6,265,446 Increase in Receivable for Investments Sold............... (30,479,799) Decrease in Prepaid Expenses and Other Assets............. 43,750 Decrease in Investment Advisory Fee Payable............... (683,531) Decrease in Administrative Fee Payable.................... (199,485) Increase in Distributor and Affiliates Payable............ 116,733 Increase in Payable for Investments Purchased............. 2,380,665 Increase in Accrued Expenses.............................. 213,880 Increase in Trustees' Deferred Compensation and Retirement Plans................................................... 31,778 ------------- Total Adjustments....................................... 776,645,799 ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES................... 740,009,653 ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Shares Sold................................... 80,379,377 Change in Intra-day Credit Line with Custodian Bank......... (1,527,645) Payments on Shares Repurchased.............................. (783,183,594) Cash Dividends Paid......................................... (31,509,853) Capital Gain Dividends Paid................................. (2,869,500) ------------- Net Cash Used for Financing Activities.................... (738,711,215) ------------- NET INCREASE IN CASH........................................ 1,298,438 Cash at Beginning of the Period............................. -0- ------------- CASH AT THE END OF THE PERIOD............................... $ 1,298,438 =============
See Notes to Financial Statements A-41 Financial Highlights THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
MARCH 27, 1998 (COMMENCEMENT YEAR ENDED JULY 31, OF INVESTMENT ------------------------------ OPERATIONS) TO 2001 2000 1999 JULY 31, 1998 ------------------------------------------------ NET ASSET VALUE, BEGINNING OF THE PERIOD.............................. $ 9.58 $ 10.09 $ 10.04 $10.00 ------ -------- -------- ------ Net Investment Income............... .75 .72 .65 .21 Net Realized and Unrealized Gain/Loss......................... (1.07) (.50) .04 .04 ------ -------- -------- ------ Total from Investment Operations...... (.32) .22 .69 .25 ------ -------- -------- ------ Less: Distributions from Net Investment Income............................ .74 .72 .64 .21 Distributions from and in Excess of Net Realized Gains................ .03 .01 -0- -0- ------ -------- -------- ------ Total Distributions................... .77 .73 .64 .21 ------ -------- -------- ------ NET ASSET VALUE, END OF THE PERIOD.... $ 8.49 $ 9.58 $ 10.09 $10.04 ====== ======== ======== ====== Total Return* (a)..................... -3.59% 2.27% 7.09% 2.52%** Net Assets at End of the Period (In millions)........................... $682.6 $1,457.6 $1,472.0 $411.4 Ratio of Expenses to Average Net Assets*............................. 1.69% 1.64% 1.60% 1.70% Ratio of Net Investment Income to Average Net Assets*................. 8.07% 7.37% 6.66% 6.33% Portfolio Turnover (b)................ 25% 54% 23% 4%** * If certain expenses had not been assumed by Van Kampen, total return would have been lower and the ratios would have been as follows: Ratio of Expenses to Average Net Assets.............................. N/A N/A 1.61% 1.92% Ratio of Net Investment Income to Average Net Assets.................. N/A N/A 6.65% 6.11%
** Non-Annualized (a) Total return assumes an investment at the beginning of the period indicated, reinvestment of all distributions for the period and tender of all shares at the end of the period indicated, excluding payment of 1% imposed on most common shares accepted by the Fund for repurchase which have been held for less than one year. If the early withdrawal charge was included, total return would be lower. (b) Calculation includes the proceeds from principal repayments and sales of variable rate senior loan interests. N/A--Not Applicable. See Notes to Financial Statements A-42 NOTES TO FINANCIAL STATEMENTS July 31, 2001 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen Senior Floating Rate Fund (the "Fund") is registered as a non- diversified, closed-end management investment company under the Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's investment objective is to provide a high level of current income, consistent with preservation of capital. The Fund invests primarily in adjustable Senior Loans. Senior Loans are business loans that have a senior right to payment and are made to borrowers that may be corporations, partnerships or other entities. These borrowers operate in a variety of industries and geographic regions. The Fund commenced investment operations on March 27, 1998. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION The Fund's Senior Loans are valued by the Fund following valuation guidelines established and periodically reviewed by the Fund's Board of Trustees. Under the valuation guidelines, Senior Loans for which reliable market quotes are readily available are valued at the mean of such bid and ask quotes. Where reliable market quotes are not readily available, Senior Loans are valued, where possible, using independent pricing sources approved by the Board of Trustees. Other Senior Loans are valued by independent pricing sources approved by the Board of Trustees based upon pricing models developed, maintained and operated by those pricing sources or valued by Van Kampen Investment Advisory Corp. (the "Adviser") by considering a number of factors including consideration of market indicators, transactions in instruments which the Adviser believes may be comparable (including comparable credit quality, interest rate redetermination period and maturity), the credit worthiness of the borrower, the current interest rate, the period until the next interest rate redetermination and the maturity of such Senior Loans. Consideration of comparable instruments may include commercial paper, negotiable certificates of deposit and short-term variable rate securities which have adjustment periods comparable to the Senior Loans in the Fund's portfolio. The fair value of Senior Loans are reviewed and approved by the Fund's Valuation Committee and Board of Trustees. A-43 NOTES TO FINANCIAL STATEMENTS July 31, 2001 Equity securities are valued on the basis of prices furnished by pricing services or as determined in good faith by the Adviser under the direction of the Board of Trustees. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market value. Short-term loan participations are valued at cost in the absence of any indication of impairment. B. SECURITY TRANSACTIONS Investment transactions are recorded on a trade date basis. Realized gains and losses are determined on an identified cost basis. C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Facility fees received are treated as market discounts. Market premiums are amortized and discounts are accreted over the stated life of each applicable security. Other income is comprised primarily of amendment fees. Amendment fees are earned as compensation for agreeing to changes in loan agreements. In November 2000 the American Institute of Certified Public Accountants ("AICPA") issued a revised version of the AICPA Audit and Accounting Guide for Investment Companies ("the Guide"). The revised version of the Guide is effective for annual financial statements issued for fiscal years beginning after December 15, 2000 and requires investment companies to amortize premiums and accrete discounts on fixed income securities. As noted above, the fund currently amortizes premiums and accretes discounts on fixed income securities; therefore, this accounting change has no impact to the Fund. D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. The Fund intends to utilize provisions of the federal income tax laws which allow it to carry a realized capital loss forward for eight years following the year of the loss and offset such losses against any future realized capital gains. At July 31, 2001, the Fund had an accumulated capital loss carryforward for tax purposes of $52,192,254 which will expire on July 31, 2009. Net realized gains or losses may differ for financial reporting and tax purposes primarily as a result of the deferral of losses relating to wash sale transactions, post October losses which may not be recognized for tax purposes until the first day of the following fiscal year and other losses that were recognized for book purposes but not tax purposes at the end of the fiscal year. At July 31, 2001, for federal income tax purposes the cost of long- and short-term investments is $748,286,189, the aggregate gross unrealized appreciation A-44 NOTES TO FINANCIAL STATEMENTS July 31, 2001 is $35,106,047 and the aggregate gross unrealized depreciation is $132,716,484, resulting in net unrealized depreciation on long- and short-term investments of $97,610,437. E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly dividends from net investment income. Net realized gains, if any, are distributed at least annually. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income for tax purposes. Due to inherent differences in the recognition of income, expenses and realized gains/losses under generally accepted accounting principles and federal income tax purposes, permanent differences between book and tax basis reporting for the 2001 fiscal year have been identified and appropriately reclassified. A permanent difference of $17,045 relating to expenses that are not deductible for tax purposes has been reclassified from accumulated undistributed net investment income to capital. Additionally, a permanent difference relating to a distribution reclassification totaling $4,371 has been reclassified from accumulated net realized loss to accumulated undistributed net investment income. F. EXPENSE REDUCTIONS During the year ended July 31, 2001, the Fund's custody fee was reduced by $362 as a result of credits earned on cash balances. 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Fund's Investment Advisory Agreement, the Adviser will provide investment advice and facilities to the Fund for an annual fee payable monthly as follows:
AVERAGE DAILY NET ASSETS % PER ANNUM First $4.0 billion.......................................... .950% Next $3.5 billion........................................... .900% Next $2.5 billion........................................... .875% Over $10 billion............................................ .850%
In addition, the Fund will pay a monthly administrative fee to Van Kampen Funds Inc., the Fund's Administrator, at an annual rate of .25% of the average daily net assets of the Fund. The administrative services to be provided by the Administrator include monitoring the provisions of the loan agreements and any agreements with respect to participations and assignments, record keeping responsibilities with respect to interests in Variable Rate Senior Loans in the Fund's portfolio and providing certain services to the holders of the Fund's securities. A-45 NOTES TO FINANCIAL STATEMENTS July 31, 2001 For the year ended July 31, 2001, the Fund recognized expenses of approximately $199,700 representing legal services provided by Skadden, Arps, Slate, Meagher, & Flom (Illinois), counsel to the Fund, of which a trustee of the Fund is an affiliated person. Under a Legal Services agreement, the Adviser provides legal services to the Fund. The Adviser allocates the cost of such services to each fund. For the year ended July 31, 2001, the Fund recognized expenses of approximately $62,900 representing Van Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing legal services to the Fund, which are reported as part of legal expenses on the Statement of Operations. Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as the shareholder servicing agent of the Fund. For the year ended July 31, 2001, the Fund recognized expenses for their services of approximately $673,400. Shareholder servicing fees are determined through negotiations with the Fund's Board of Trustees and are based on competitive market benchmarks. Certain officers and trustees of the Fund are also officers and directors of Van Kampen. The Fund does not compensate its officers or trustees who are officers of Van Kampen. The Fund provides deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation to a later date. Benefits under the retirement plan are payable upon retirement for a ten-year period and are based upon each trustee's years of service to the Fund. The maximum annual benefit per trustee under the plan is $2,500. At July 31, 2001, Van Kampen owned 10,000 shares of the Fund. 3. CAPITAL TRANSACTIONS At July 31, 2001 and July 31, 2000, paid in surplus aggregated $881,143,047 and $1,534,716,501, respectively. Transactions in common shares were as follows:
YEAR ENDED YEAR ENDED JULY 31, 2001 JULY 31, 2000 ------------- ------------- Beginning Shares..................................... 152,178,276 145,951,374 ----------- ----------- Shares Sold.......................................... 8,494,149 57,196,384 Shares Issued Through Dividend Reinvestment.......... 5,595,595 8,251,082 Shares Repurchased................................... (85,864,747) (59,220,564) ----------- ----------- Net Change in Shares Outstanding..................... (71,775,003) 6,226,902 ----------- ----------- Ending Shares........................................ 80,403,273 152,178,276 =========== ===========
A-46 NOTES TO FINANCIAL STATEMENTS July 31, 2001 4. INVESTMENT TRANSACTIONS During the period, the costs of purchases and proceeds from investments sold and repaid, excluding short-term investments, were $230,269,980 and $889,982,325, respectively. 5. TENDER OF SHARES The Board of Trustees currently intends, each quarter, to consider authorizing the Fund to make tender offers for all or a portion of its then outstanding common shares at the net asset value of the shares on the expiration date of the tender offer. For the year ended July 31, 2001, 85,864,747 shares were tendered and repurchased by the Fund. 6. EARLY WITHDRAWAL CHARGE An early withdrawal charge to recover offering expenses will be imposed in connection with most common shares held for less than one year which are accepted by the Fund for repurchase pursuant to tender offers. The early withdrawal charge of 1.00% will be payable to Van Kampen. For the year ended July 31, 2001, Van Kampen received early withdrawal charges of approximately $1,171,500 in connection with tendered shares of the Fund. 7. COMMITMENTS/BORROWINGS Pursuant to the terms of certain Senior Loan agreements, the Fund had unfunded loan commitments of approximately $5,165,500 as of July 31, 2001. The Fund generally will maintain with its custodian short-term investments having an aggregate value at least equal to the amount of unfunded loan commitments. The Fund, along with the Van Kampen Prime Rate Income Trust, has entered into a revolving credit agreement with a syndicate led by Bank of America for an aggregate of $500,000,000, which will terminate on November 9, 2001. The proceeds of any borrowing by the Fund under the revolving credit agreement shall be used for temporary liquidity purposes and funding of shareholder tender offers. Annual commitment fees of .09% are charged on the unused portion of the credit line. Borrowings under this facility will bear interest at either the LIBOR rate or the Federal Funds rate plus .50%. At July 31, 2001, the Fund did not have any outstanding borrowings under this agreement. 8. SENIOR LOAN PARTICIPATION COMMITMENTS The Fund invests primarily in participations, assignments, or acts as a party to the primary lending syndicate of a Senior Loan interest to corporations, partnerships, and other entities. When the Fund purchases a participation of a Senior Loan interest, the Fund typically enters into a contractual agreement with the lender or A-47 NOTES TO FINANCIAL STATEMENTS July 31, 2001 other third party selling the participation, but not with the borrower directly. As such, the Fund assumes the credit risk of the borrower, selling participant or other persons interpositioned between the Fund and the borrower. At July 31, 2001, the following sets forth the selling participants with respect to interests in Senior Loans purchased by the Fund on a participation basis.
PRINCIPAL AMOUNT VALUE SELLING PARTICIPANT (000) (000) Canadian Imperial Bank of Commerce.......................... $ 3,862 $ 3,879 ------- -------
9. SERVICE PLAN The Fund has adopted a Service Plan (the "Plan") designed to meet the service fee requirements of the sales charge rule of the National Association of Securities Dealers, Inc. The Plan governs payments for personal services and/or the maintenance of shareholder accounts. Annual fees under the Plan of .15% (.25% maximum) of the average daily net assets are accrued daily and paid quarterly. For the year ended July 31, 2001, the Fund paid service fees of approximately $1,590,400 to Van Kampen. A-48 EX-99.(A)(2) 5 c70561exv99wxayx2y.txt FORM OF LETTER OF TRANSMITTAL ------------------------------------------------------------------------------- EXHIBIT (a)(2) LETTER OF TRANSMITTAL REGARDING COMMON SHARES OF VAN KAMPEN SENIOR FLOATING RATE FUND TENDERED PURSUANT TO THE OFFER TO PURCHASE DATED JULY 19, 2002 THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT EASTERN TIME ON AUGUST 16, 2002, UNLESS THE OFFER IS EXTENDED Ladies and Gentlemen: The undersigned hereby tenders to the Van Kampen Senior Floating Rate Fund, a non-diversified, closed-end investment management company organized as a Massachusetts business trust (the "Trust"), the common shares of beneficial interest, par value $0.01 per share, of the Trust (the "Common Shares") described below in Box No. 1, at a price (the "Purchase Price") equal to the net asset value per Common Share ("NAV") determined as of 5:00 P.M. Eastern Time on the Expiration Date (as defined in the Offer to Purchase), upon the terms and conditions set forth in the Offer to Purchase, dated July 19, 2002, receipt of which is hereby acknowledged, and in this Letter of Transmittal and the Instructions hereto (which together constitute the "Offer"). An Early Withdrawal Charge (as defined in the Offer to Purchase) will be imposed on most Common Shares accepted for payment which have been held for less than one year. Subject to and effective upon acceptance for payment of the Common Shares tendered hereby in accordance with the terms of the Offer (including, if the Offer is extended or amended, the terms or conditions of any such extension or amendment), the undersigned hereby sells, assigns and transfers to or upon the order of the Trust all right, title and interest in and to all Common Shares tendered hereby that are purchased pursuant to the Offer and hereby irrevocably constitutes and appoints Van Kampen Investor Services Inc. (the "Depositary") as attorney-in-fact of the undersigned with respect to such Common Shares, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such Common Shares or transfer ownership of such Common Shares on the Trust's books, together in either such case with all accompanying evidences of transfer and authenticity, to or upon the order of the Trust, upon receipt by the Depositary, as the undersigned's agent, of the NAV per Common Share with respect to such Common Shares; (b) present certificates for such Common Shares, if any, for cancellation and transfer on the Trust's books; (c) deduct from the Purchase Price deposited with the Depositary any applicable Early Withdrawal Charge and remit such charge to Van Kampen Funds Inc.; and (d) receive all benefits and otherwise exercise all rights of beneficial ownership of such Common Shares, subject to the next paragraph, all in accordance with the terms of the Offer. (tear along dotted line) The undersigned hereby represents and warrants that: (a) the undersigned has a "net long position" in the Common Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the Securities Act of 1934, as amended, and has full power and authority to validly tender, sell, assign and transfer the Common Shares tendered hereby; (b) when and to the extent the Trust accepts the Common Shares for purchase, the Trust will acquire good, marketable and unencumbered title to them, free and clear of all security interests, liens, charges, encumbrances, conditional sales agreements or other obligations relating to their sale or transfer, and not subject to any adverse claim; (c) on request, the undersigned will execute and deliver any additional documents the Depositary or the Trust deems necessary or desirable to complete the assignment, transfer and purchase of the Common Shares tendered hereby; and (d) the undersigned has read and agrees to all of the terms of this Offer. The names and addresses of the registered owners should be printed, if they are not already printed, in Box 1 as they appear on the registration of the Common Shares. The tendering shareholder must select the "Cash" option to have the cash proceeds from the tendered Common Shares be paid in cash or select the "Exchange" option to have the Depositary invest the cash proceeds of the Offer in Class C Shares of certain open-end investment companies advised by either Van Kampen Investment Advisory Corp. or Van Kampen Asset Management Inc. and distributed by Van Kampen Funds Inc., subject to certain limitations. The tendering shareholder must further indicate one of several options, either (A) to specify all Common Shares be tendered, (B) a specified number of Common Shares be tendered or (C) that number of Common Shares tendered necessary to obtain a specific dollar amount. If the Common Shares tendered hereby are in certificate form, the certificates representing such Common Shares must be returned together with this Letter of Transmittal. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Trust may terminate or amend the Offer or may not be required to purchase any of the Common Shares tendered hereby. In any such event, the undersigned understands that certificate(s) for any Common Shares not purchased, if any, will be returned to the undersigned at the address indicated below in Box No. 1 unless otherwise indicated under the Special Payment and Delivery Instructions in Box No. 2. The undersigned understands that acceptance of Common Shares by the Trust for payment will constitute a binding agreement between the undersigned and the Trust upon the terms and subject to the conditions of the Offer. The check for the Purchase Price of the tendered Common Shares purchased, minus any applicable Early Withdrawal Charge, will be issued to the order of the undersigned and mailed to the address indicated below in Box No. 1, unless otherwise indicated in Box No. 2. Shareholders tendering Common Shares remain entitled to receive dividends declared on such shares up to the settlement date of the Offer. The Trust will not pay interest on the Purchase Price under any circumstances. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and all obligations of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. DELIVERY TO AN ADDRESS OTHER THAN THAT SHOWN BELOW DOES NOT CONSTITUTE VALID DELIVERY. SEND TO: VAN KAMPEN INVESTOR SERVICES INC., Depositary By Regular Mail, By Certified, Registered, Van Kampen Investor Services Inc. Overnight Mail or Courier, P.O. Box 218256 Van Kampen Investor Services Inc. Kansas City, MO 64121-8256 7501 Tiffany Springs Parkway Attn: Van Kampen Senior Kansas City, MO 64153 Floating Rate Fund Tender Attn: Van Kampen Senior Floating Rate Fund Tender
FOR ADDITIONAL INFORMATION CALL: (800) 341-2911 18 SFR004(a)-07/02 ------------------------------------------------------------------------------- SENIOR FLOATING RATE FUND THIS LETTER OF TRANSMITTAL IS TO BE USED ONLY IF THE COMMON SHARES TO BE TENDERED ARE REGISTERED IN THE SHAREHOLDER'S NAME AND THE NECESSARY DOCUMENTS WILL BE TRANSMITTED TO THE DEPOSITARY BY THE SHAREHOLDER OR HIS BROKER, DEALER OR OTHER SELLING GROUP MEMBER. DO NOT USE THIS FORM IF A BROKER, DEALER OR OTHER SELLING GROUP MEMBER IS THE REGISTERED OWNER OF THE COMMON SHARES AND IS EFFECTING THE TRANSACTION FOR THE SHAREHOLDER. IF THE COMMON SHARES TENDERED HEREBY ARE IN CERTIFICATE FORM, THE CERTIFICATES REPRESENTING SUCH COMMON SHARES MUST BE RETURNED TOGETHER WITH THIS LETTER OF TRANSMITTAL. PLEASE NOTE THAT WE SUGGEST THAT SUCH CERTIFICATES BE RETURNED VIA CERTIFIED OR REGISTERED MAIL. TO ENSURE PROCESSING OF YOUR REQUEST, THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT (TOGETHER WITH ANY CERTIFICATES FOR COMMON SHARES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE (AUGUST 16, 2002). - -------------------------------------------------------------------------------- BOX NO. 1: SHAREHOLDER INFORMATION - ----------------------------------------------------------------------------------------------------- Name and Address of Registered Owner Shareholder Information - ----------------------------------------------------------------------------------------------------- PLEASE PROVIDE: Social Security No./Tax Identification No. Confirm No. ------------------- (if applicable) ACCOUNT NO.: - -----------------------------------------------------------------------------------------------------
CHOOSE BETWEEN CASH OR EXCHANGE, THEN SELECT AN OPTION 1. CASH: I understand that an Early Withdrawal Charge will be imposed on most Common Shares accepted for payment that have been held for less than one year and that such charge, if any, will be deducted from the proceeds from the tender of such Common Shares. OPTION A: ______ (ALL) I hereby tender ALL Common Shares of the Trust. OPTION B: ______ (SHARES) I hereby tender ____________ Common Shares from the Trust. OPTION C: ______ (DOLLARS) I hereby tender that number of Common Shares of the Trust necessary to receive $____________ from the Trust after the Early Withdrawal Charge, if any, is deducted. 2. EXCHANGE: I elect to have the proceeds from such Tender invested into Class C shares of Van Kampen ____________________________________ Fund (Shareholder Acct. No. ____________________________________ if applicable). OPTION A: ______ (ALL) I hereby exchange ALL Common Shares of the Trust. OPTION B: ______ (SHARES) I hereby exchange ____________ Common Shares from the Trust. OPTION C: ______ (DOLLARS) I hereby exchange that number of Common Shares of the Trust necessary to have $____________ invested into Class C Shares of the above designated fund. PLEASE NOTE: 1. A TENDER REQUEST THAT DOES NOT SPECIFY CASH OR EXCHANGE AND THAT DOES NOT SPECIFY ALL, A NUMBER OF SHARES OR AN AMOUNT OF DOLLARS WILL BE REJECTED. 2. Alterations to this form (i.e. the expiration date or share class, etc.) are prohibited and the request will be rejected. 3. Additional legal documentation may be required. 4. For shareholders electing the "Exchange" option, in order to use certain shareholder services (including certain purchase, redemption and exchange privileges) on the Class C Share account, a signature guarantee form will be required for such account; shareholders may access materials to establish these privileges by calling the Investor Services Department at (800) 341-2911 or accessing applicable forms at http://www.vankampen.com and selecting the Literature section and then Download Forms. 5. If the account indicated by the account number in Box No. 1 is a State Street Bank and Trust Company retirement plan account, a distribution form MUST be submitted with this Letter of Transmittal. 6. If the social security number or tax identification number is not certified, OR the account is being transferred to a new social security number or tax identification number, a Form W-9 MUST be completed and signed by the account owner. (Estate accounts must be signed by the legal representative of the estate and bear the estate tax identification number and not the social security number of the deceased. Completion of the Form W-9 certifies the tax identification number. Certification will prevent backup withholding pursuant to the Internal Revenue Code and applicable Treasury Service regulations.) PLEASE BE SURE TO COMPLETE BOTH SIDES OF THIS FORM (tear along dotted line) ------------------------------------------------------------------------------------------------- BOX NO. 2: SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 2, 3 AND 4) ------------------------------------------------------------------------------------------------- To be completed ONLY if any checks are to be sent or wired to someone other than the undersigned and/or any checks or certificates for Common Shares not tendered or not purchased are to be sent to the undersigned at an address other than that shown above in Box No. 1. A SIGNATURE GUARANTEE IS REQUIRED IF THIS PORTION IS COMPLETED. ------------------------------------------------------------------------------------------------- CHECK/CERTIFICATE INFORMATION BANK WIRE INFORMATION ------------------------------------------------------------------------------------------------- PAYEE: Wire Proceeds To: [ ] Checking [ ] Savings If you would like the check and/or certificates (Minimum $5,000 to be wired) PAYABLE to someone other than who the account is registered, please provide the following: Bank ------------------------------------ (NAME) Name(s) ------------------------------------ (PLEASE PRINT) Address ------------------------------------ Address ------------------------------------ ABA Routing No. ---------------------------- ------------------------------------ Account No. -------------------------------- (INCLUDE ZIP CODE) (SHAREHOLDER'S BANK ACCOUNT NO.) MAILING: Bank Account Registration -------------------- If you would like the check and/or certificates (NAME) MAILED to an address other than the account Please attach a voided check or deposit slip if registration, please provide the following: possible. Name(s) ------------------------------------ (PLEASE PRINT) Address ------------------------------------ ------------------------------------ (INCLUDE ZIP CODE) -------------------------------------------------------------------------------------------------
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BOX NO. 3: SIGNATURES (SEE INSTRUCTIONS 2, 3 AND 4) - -------------------------------------------------------------------------------- A. By signing this Letter of Transmittal, you represent that you have read the letter printed on the other side of this page and the Instructions enclosed herewith, which Instructions form part of the terms and conditions of the Offer. B. This Letter of Transmittal must be signed by the registered owner(s) of the Common Shares tendered hereby or by person(s) authorized to become registered owner(s) by documents transmitted herewith. If signature is by attorney-in-fact, executor, administrator, trustee, guardian, officer of a corporation or another acting in a fiduciary or representative capacity, please set forth the name and full title of such authorized signor and include the required additional legal documentation regarding the authority of the signor. See Instruction 4. ---------------------------------------------------------------------- NOTE: ANY QUESTIONS REGARDING ADDITIONAL LEGAL DOCUMENTATION WHICH MAY BE REQUIRED SHOULD BE DIRECTED TO OUR INVESTOR SERVICES DEPARTMENT AT (800) 341-2911. C. YOUR SIGNATURE MUST BE GUARANTEED and you MUST complete the signature guarantee in this Box No. 3 if (i) the value of the Common Shares tendered herewith pursuant to the OFFER IS GREATER THAN $100,000, (ii) this LETTER OF TRANSMITTAL IS SIGNED BY SOMEONE OTHER THAN THE REGISTERED HOLDER OF THE COMMON SHARES TENDERED HEREWITH, or (iii) you REQUEST PAYMENT FOR THE COMMON SHARES TENDERED HEREWITH TO BE SENT TO A PERSON OTHER THAN THE REGISTERED OWNER of such Common Shares for the benefit of such owner(s) and/or TO AN ADDRESS OTHER THAN THE REGISTERED ADDRESS OF THE REGISTERED OWNER of the Common Shares. For information with respect to what constitutes an acceptable guarantee, please see Instruction 4(f). ---------------------------------------------------------------------- D. See Instruction 8 and Form W-9 enclosed herewith regarding backup withholding. (SIGNATURE(S) OF OWNER(S) EXACTLY AS REGISTERED) Dated ........., 20.... DAYTIME TELEPHONE NUMBER( ) ......... SIGNATURE GUARANTEE (IF APPLICABLE): ............................ Bank Name ............................ Print Name of Authorized Signer Telephone Number ( ) .... (Affix signature guarantee stamp above if required) - -------------------------------------------------------------------------------- 18 SFR004(b)-07/02 SRTND-8/02 ------------------------------------------------------------------------------- INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be used only if the Common Shares to be tendered are registered in the shareholder's name and the necessary documents will be transmitted to the Depositary by the shareholder or his broker, dealer or other selling group member. Do not use this form if a broker, dealer or other selling group member is the registered owner of the Common Shares and is effecting the transaction for the shareholder. A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL OR MANUALLY SIGNED FACSIMILE OF IT, ANY CERTIFICATES REPRESENTING COMMON SHARES TENDERED AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL SHOULD BE MAILED OR DELIVERED TO THE DEPOSITARY AT THE ADDRESS SET FORTH IN THE LETTER OF TRANSMITTAL AND MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE (AUGUST 16, 2002). THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR COMMON SHARES, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. THE TRUST WILL NOT ACCEPT ANY ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS. ALL TENDERING SHAREHOLDERS, BY EXECUTION OF THE LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE OF IT), WAIVE ANY RIGHT TO RECEIVE ANY NOTICE OF THE ACCEPTANCE OF THEIR TENDER. 2. COMPLETING THE LETTER OF TRANSMITTAL. If you intend to tender any Common Shares pursuant to the Offer, please complete the Letter of Transmittal as follows: (a) Read the Letter of Transmittal in its entirety. By signing the Letter of Transmittal in Box No. 3, you agree to its terms. (b) Complete Box No. 1 by providing your Social Security Number/Tax Identification Number, a Confirm Number, if applicable, and selecting either "Cash" or "Exchange" and selecting and completing either Option A, Option B or Option C. (c) Complete Box No. 2 if certificates for Common Shares not tendered or not purchased and/or any check issued in the name of a person other than the signer of the Letter of Transmittal are to be sent or wired to someone other than such signer or to the signer at an address other than that shown in Box No. 1. (d) Complete Box No. 3 in accordance with Instruction 4 set forth below. 3. PARTIAL TENDERS, UNPURCHASED SHARES AND EXCHANGES. If fewer than all of the Common Shares evidenced by any certificate submitted are to be tendered and if any tendered Common Shares are purchased, a new certificate for the remainder of the Common Shares evidenced by your old certificate(s) will be issued and sent to the registered owner, unless otherwise specified in Box No. 2 of the Letter of Transmittal, as soon as practicable after the Expiration Date of the Offer. Tendering shareholders who elect to have the Depositary invest the cash proceeds from the tender of Common Shares of the Trust in Class C Shares of certain open-end investment companies advised by either Van Kampen Investment Advisory Corp. or Van Kampen Asset Management Inc. and distributed by Van Kampen Funds Inc. should select "Exchange" and select and complete Option A, B or C. The Early Withdrawal Charge will be waived for Common Shares tendered for reinvestment pursuant to this election; however, such Class C Shares immediately become subject to a contingent deferred sales charge schedule equivalent to the Early Withdrawal Charge schedule of the Trust. 4. SIGNATURES ON LETTER OF TRANSMITTAL, AUTHORIZATIONS AND ENDORSEMENTS. (a) If this Letter of Transmittal is signed by the registered owner(s) of the Common Shares tendered hereby, the signature(s) must correspond exactly with the name(s) in which the Common Shares are registered. (b) If the Common Shares are held of record by two or more joint owners, each such owner must sign this Letter of Transmittal. (c) If any tendered Common Shares are registered in different names, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or manually signed facsimiles of it) as there are different registrations of Common Shares. (d) When this Letter of Transmittal is signed by the registered owner(s) of the Common Shares listed and transmitted hereby, no endorsements of any certificate(s) representing such Common Shares or separate authorizations are required. If, however, payment is to be made to a person other than the registered owner(s), any unpurchased Common Shares are to be registered in the name of any person other than the registered owner(s) or any certificates for unpurchased Common Shares are to be issued to a person other than the registered owner(s), then the Letter of Transmittal and, if applicable, the certificate(s) transmitted hereby, must be endorsed or accompanied by appropriate authorizations, in either case signed exactly as such name(s) appear on the registration of the Common Shares and on the face of the certificate(s) and such endorsements or authorizations must be guaranteed by an institution described in Box No. 3. (e) If this Letter of Transmittal or any certificates or authorizations are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence satisfactory to the Trust of their authority so to act. Please contact the Investor Services Department for assistance at (800) 341-2911. 18 SFR005-07/02 (tear along dotted line) (f) Your signature MUST be guaranteed and you MUST complete the signature guarantee in Box No. 3 if (i) the value of the Common Shares tendered herewith pursuant to the Offer is greater than $100,000, (ii) this Letter of Transmittal is signed by someone other than the registered holder of the Common Shares tendered herewith, or (iii) you request payment for the Common Shares tendered herewith to be sent to a payee other than the registered owner of such Common Shares and/or to an address other than the registered address of the registered owner of the Common Shares. An acceptable guarantee is one made by a bank or trust company; a broker-dealer; a credit union; a national securities exchange, registered securities association or clearing agency; a savings and loan association; or a federal savings bank. The guarantee must state the words "Signature Guaranteed" along with the name of the guarantor institution. Shareholders should verify with the institution that it is an eligible guarantor prior to signing. A signature guarantee may not be obtained from a notary public. 5. TRANSFER TAXES. The Trust will pay all share transfer taxes, if any, payable on the transfer to it of Common Shares purchased pursuant to the Offer. If, however, (a) payment of the Purchase Price is to be made to any person other than the registered owner(s), (b) (in the circumstances permitted by the Offer) unpurchased Common Shares are to be registered in the name(s) of any person other than the registered owner(s) or (c) tendered certificates are registered in the name(s) of any person other than the person(s) signing this Letter of Transmittal, the amount of any transfer taxes (whether imposed on the registered owner(s) or such other persons) payable on account of the transfer to such person(s) will be deducted from the Purchase Price by the Depositary unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. 6. IRREGULARITIES. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any tender of Common Shares will be determined by the Trust in its sole discretion, whose determination shall be final and binding on all parties. The Trust reserves the absolute right to reject any or all tenders determined by it not to be in appropriate form or the acceptance of or payment for any Common Shares which may, in the opinion of the Trust's counsel, be unlawful. The Trust also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in tender of any particular Common Shares or any particular shareholder, and the Trust's interpretations of the terms and conditions of the Offer (including these Instructions) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Trust shall determine. Tendered Common Shares will not be accepted for payment unless all defects and irregularities have either been cured within such time or waived by the Trust. None of the Trust, Van Kampen Funds Inc., Van Kampen Investments Inc., the Depositary, or any other person shall be obligated to give notice of defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notice. 7. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and requests for assistance may be directed to, and additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from Van Kampen Funds Inc., 1 Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181-5555, or by telephoning (800) 341-2911. 8. FORM W-9. Each tendering shareholder who has not already submitted a completed and signed Form W-9 to the Trust is required to provide the Depositary with a correct taxpayer identification number ("TIN") on Form W-9 which is enclosed herewith. Failure to provide the information on the form may subject the tendering shareholder to backup federal income tax withholding on the payments made to the shareholder or other payee with respect to Common Shares purchased pursuant to the Offer. 9. WITHHOLDING ON NON-U.S. SHAREHOLDERS. The Depositary will withhold federal income taxes equal to 30% of the gross payments payable to a non-U.S. shareholder unless the non-U.S. shareholder has provided to the Depositary a Form W-8 on which it claims eligibility for a reduced rate of withholding or establishes an exemption from withholding is applicable. For this purpose, a non-U.S. shareholder is any shareholder that is not (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized in or under the laws of the United States or any state thereof, (iii) any estate the income of which is subject to United States federal income taxation regardless of its source or (iv) a trust whose administration is subject to the primary jurisdiction of a United States court and which has one or more United States fiduciaries who have authority to control all substantial decisions of the trust. The Depositary will determine a shareholder's status as a non-U.S. shareholder and eligibility for a reduced rate of, or an exemption from, withholding by reference to certificates or statements provided by the non-U.S. shareholder concerning eligibility for a reduced rate of, or exemption from, withholding unless facts and circumstances indicate that reliance is not warranted. A non-U.S. shareholder who has not previously submitted the appropriate certificates or statements with respect to a reduced rate of, or an exemption from, withholding for which such shareholder may be eligible should consider doing so in order to avoid overwithholding. A non-U.S. shareholder may be eligible to obtain a refund of tax withheld if such shareholder meets one of the three tests for capital gain or loss treatment described in Section 15 of the Offer to Purchase or is otherwise able to establish that no tax or a reduced amount of tax was due. IMPORTANT: THE LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT (TOGETHER WITH ANY CERTIFICATES FOR COMMON SHARES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE. EX-99.(A)(3)(I) 6 c70561exv99wxayx3yxiy.txt FORM OF LETTER ------------------------------------------------------------------------------- EXHIBIT (a)(3)(i) OFFER BY VAN KAMPEN SENIOR FLOATING RATE FUND TO PURCHASE FOR CASH 15,869,256 OF ITS COMMON SHARES AT NET ASSET VALUE PER COMMON SHARE July 19, 2002 To Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees: Pursuant to your request, we are enclosing herewith the material listed below relating to the offer of Van Kampen Senior Floating Rate Fund (the "Trust") to purchase up to 15,869,256 of its common shares of beneficial interest with par value of $0.01 per share (the "Common Shares") at net asset value per Common Share ("NAV") determined as of 5:00 P.M. Eastern Time on the Expiration Date (defined below) upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 19, 2002 and in the related Letter of Transmittal (which together constitute the "Offer"). The Offer and withdrawal rights will expire at 12:00 Midnight Eastern Time on August 16, 2002, unless extended (the "Expiration Date"). An "Early Withdrawal Charge" will be imposed on most Common Shares accepted for payment which have been held for less than one year. The Offer is not conditioned upon any minimum number of Common Shares being tendered but is subject to certain conditions as set forth in the Offer to Purchase. If more than 15,869,256 Common Shares are duly tendered prior to the expiration of the Offer, the Trust presently intends to, assuming no changes in the factors originally considered by the Board of Trustees when it determined to make the Offer and the other conditions set forth in the Offer, but is not obligated to, extend the Offer period, if necessary, and increase the number of Common Shares that the Trust is offering to purchase to an amount which it believes will be sufficient to accommodate the excess Common Shares tendered as well as any Common Shares tendered during the extended Offer period or purchase 15,869,256 Common Shares (or such greater number of Common Shares sought) on a pro rata basis. No fees or commissions will be payable to brokers, dealers or other persons for soliciting tenders of Common Shares pursuant to the Offer. The Trust will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to those of your clients who have requested such materials. The Trust will pay all transfer taxes on its purchase of shares, subject to Instruction 5 of the Letter of Transmittal. However, backup tax withholding may be required unless an exemption is proved or unless the required tax identification information is or has previously been provided. See Section 15 of the Offer to Purchase and Instructions 8 and 9 to the Letter of Transmittal. For your information and for forwarding to those of your clients who have requested them, we are enclosing the following documents: (1) Offer to Purchase dated July 19, 2002; (2) Letter of Transmittal to be used by holders of Common Shares to tender such shares to the Depositary directly or through their broker, dealer or other nominee who is not the registered owner; (3) Guidelines for Certification of Taxpayer Identification Number; (4) Letter to Clients which may be sent to your clients for whose account you hold Common Shares registered in your name (or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer); and (5) Return envelope addressed to the Depositary. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT EASTERN TIME ON AUGUST 16, 2002, UNLESS THE OFFER IS EXTENDED. TO ENSURE PROCESSING OF YOUR OR YOUR CLIENT'S REQUEST, A LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT (TOGETHER WITH ANY CERTIFICATES FOR COMMON SHARES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE (AUGUST 16, 2002). 18 SFR009-07/02 BDR SRBDTND-8/02 (tear along dotted line) The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Common Shares residing in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. Additional copies of the enclosed material may be obtained from Van Kampen Funds Inc. at the address and telephone number set forth in the Offer to Purchase. Any questions you have with respect to the Offer should be directed to Van Kampen Funds Inc. at (800) 421-5666. Very truly yours, VAN KAMPEN SENIOR FLOATING RATE FUND - -------------------------------------------------------------------------------- NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE TRUST OR THE DEPOSITARY OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY MATERIAL ON THEIR BEHALF WITH RESPECT TO THE OFFER, OTHER THAN THE MATERIAL ENCLOSED HEREWITH AND THE STATEMENTS SPECIFICALLY SET FORTH IN SUCH MATERIAL. - -------------------------------------------------------------------------------- EX-99.(A)(3)(II) 7 c70561exv99wxayx3yxiiy.txt FORM OF LETTER TO CLIENTS - -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- EXHIBIT (a)(3)(ii) OFFER BY VAN KAMPEN SENIOR FLOATING RATE FUND TO PURCHASE FOR CASH 15,869,256 OF ITS COMMON SHARES AT NET ASSET VALUE PER COMMON SHARE To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated July 19, 2002, of Van Kampen Senior Floating Rate Fund (the "Trust") and related Letter of Transmittal pursuant to which the Trust is offering to purchase up to 15,869,256 of its common shares of beneficial interest with par value of $0.01 per share (the "Common Shares") at the net asset value per Common Share ("NAV") determined as of 5:00 P.M. Eastern Time on the Expiration Date (defined below) upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal (which together constitute the "Offer"). An "Early Withdrawal Charge" will be imposed on most Common Shares accepted for payment which have been held for less than one year. The Offer to Purchase and the related Letter of Transmittal are being forwarded to you as the beneficial owner of Common Shares held by us for your account but not registered in your name. A tender of such shares can be made only by us as the holder of record and only pursuant to your instructions. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION ONLY; YOU CANNOT USE IT TO TENDER COMMON SHARES WE HOLD FOR YOUR ACCOUNT. Your attention is called to the following: (1) The tender price is the NAV determined as of 5:00 P.M. Eastern Time on the Expiration Date. An "Early Withdrawal Charge" will be imposed on most Common Shares accepted for payment which have been held for less than one year. (2) The Offer is not conditioned upon any minimum number of Common Shares being tendered, but is subject to certain conditions set forth in the Offer to Purchase. (3) The Offer and withdrawal rights expire at 12:00 Midnight Eastern Time on August 16, 2002, unless extended (the "Expiration Date"). (4) The Offer is for 15,869,256 Common Shares. (5) Tendering shareholders will not be obligated to pay brokerage commissions or, subject to Instruction 5 of the Letter of Transmittal, transfer taxes on the purchase of Common Shares by the Trust pursuant to the Offer. However, a broker, dealer or selling group member may charge a fee for processing the transaction on your behalf. (6) If more than 15,869,256 Common Shares are duly tendered prior to the expiration of the Offer, the Trust presently intends to, assuming no changes in the factors originally considered by the Board of Trustees when it determined to make the Offer and the other conditions set forth in the Offer, but is under no obligation to, extend the Offer period, if necessary, and increase the number of Common Shares that the Trust is offering to purchase to an amount which it believes will be sufficient to accommodate the excess Common Shares tendered as well as any Common Shares tendered during the extended Offer period or purchase 15,869,256 Common Shares (or such greater number of Common Shares sought) on a pro rata basis. If you wish to have us tender any or all of your Common Shares, please so instruct us by completing, executing and returning to us the attached instruction form. An envelope to return your instructions to us is enclosed. If you authorize us to tender your Common Shares, all such Common Shares will be tendered 18 SFR007-07/02 (tear along dotted line) unless you specify otherwise on the attached instruction form. WE MUST RECEIVE YOUR INSTRUCTIONS, IF ANY, SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE (AUGUST 16, 2002) TO PROVIDE US WITH TIME TO PROCESS SUCH INSTRUCTIONS AND FORWARD THEM TO THE DEPOSITARY SO THAT THE DEPOSITARY WILL RECEIVE THEM ON OR PRIOR TO SUCH EXPIRATION DATE. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT EASTERN TIME ON AUGUST 16, 2002, UNLESS THE OFFER IS EXTENDED. The Trust is not making the Offer to, nor will it accept tenders from or on behalf of, owners of Common Shares in any jurisdiction in which the Offer or its acceptance would violate the securities, Blue Sky or other laws of such jurisdiction. In any jurisdiction the securities or Blue Sky laws of which require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on the Trust's behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction. ------------------------------------------------------------------------------- INSTRUCTIONS WITH RESPECT TO OFFER BY VAN KAMPEN SENIOR FLOATING RATE FUND TO PURCHASE FOR CASH 15,869,256 OF ITS COMMON SHARES AT NET ASSET VALUE PER COMMON SHARE THIS FORM IS NOT TO BE USED TO TENDER COMMON SHARES DIRECTLY TO THE DEPOSITARY. IT SHOULD BE SENT TO YOUR BROKER ONLY IF YOUR BROKER IS THE HOLDER OF RECORD OF YOUR COMMON SHARES AND WILL BE EFFECTING THE TENDER ON YOUR BEHALF. IT SHOULD BE SENT TO SUCH BROKER SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE (AUGUST 16, 2002) TO PROVIDE THE BROKER WITH TIME TO PROCESS THESE INSTRUCTIONS AND FORWARD THEM TO THE DEPOSITARY SO THAT THE DEPOSITARY WILL RECEIVE THEM ON OR PRIOR TO THE EXPIRATION DATE (AUGUST 16, 2002). The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated July 19, 2002, and the related Letter of Transmittal (which together constitute the "Offer"), in connection with the offer by Van Kampen Senior Floating Rate Fund (the "Trust") to purchase 15,869,256 common shares of beneficial interest with par value of $0.01 per share (the "Common Shares") at the net asset value per Common Share determined as of 5:00 P.M. Eastern Time on the Expiration Date on the terms and subject to the conditions of the Offer. The undersigned acknowledges that an "Early Withdrawal Charge" will be imposed on most Common Shares accepted for payment which have been held for less than one year. The undersigned hereby instructs you to tender to the Trust the number of Common Shares indicated below (or, if no number is indicated below, all Common Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions of the Offer. The undersigned hereby agrees to be bound by the terms and subject to the conditions set forth in the Offer. Aggregate number of Common Shares to be tendered (fill in number below): ______ Common Shares Unless otherwise indicated above, it will be assumed that all of the Common Shares held for the account of the undersigned are to be tendered. SIGNATURE(S) ---------------------------------------------------------------------- ...................................................................... ...................................................................... (SIGNATURES(S) OF BENEFICIAL OWNERS) ...................................................................... (ACCOUNT NUMBER) ...................................................................... (PLEASE PRINT NAME(S) AND ADDRESSES HERE) ...................................................................... (AREA CODE AND TELEPHONE NUMBER) ...................................................................... (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) ---------------------------------------------------------------------- Date: ---------------------------------------------------- ARROW 18 SFR008-07/02 (tear along dotted line) - -- EX-99.(A)(3)(III) 8 c70561exv99wxayx3yxiiiy.txt FORM OF LETTER TO SELLING GROUP MEMBERS ------------------------------------------------------------------------------- ARROW EXHIBIT (a)(3)(iii) [VAN KAMPEN LETTERHEAD] July 19, 2002 RE: VAN KAMPEN SENIOR FLOATING RATE FUND Commencement of Tender Offer To Our Dealer Friends: As you may be aware, it is the policy of the Board of Trustees of Van Kampen Senior Floating Rate Fund (the "Trust") to consider on a quarterly basis whether to make a tender offer for common shares of the Trust. We are pleased to announce that the Board has authorized the Trust's eighteenth quarterly tender offer commencing today, July 19, 2002, for the purpose of attempting to provide liquidity to its shareholders. The commencement of the tender offer was announced in the Wall Street Journal today. The Trust is offering to purchase up to 15,869,256 of its common shares at a price equal to the net asset value per common share of the Trust determined as of 5:00 P.M. Eastern Time on the expiration date of the offer. The offer is scheduled to terminate as of 12:00 Midnight Eastern Time on August 16, 2002, the expiration date of the offer (unless extended). An "Early Withdrawal Charge" will be imposed on most common shares accepted for payment that have been held for less than one year. Terms and conditions of the tender offer are contained in the Trust's Offer to Purchase dated July 19, 2002, and the related Letter of Transmittal, copies of which are available to you upon request. Should you have any questions regarding the tender offer, please contact Van Kampen's Investor Services Department at 1-800-421-5666. Sincerely, VAN KAMPEN FUNDS INC. 18 SFR003-07/02 EX-99.(A)(3)(IV) 9 c70561exv99wxayx3yxivy.txt FORM OF OPERATIONS NOTICE EXHIBIT (a)(3)(iv) ANNOUNCING . . . VAN KAMPEN SENIOR FLOATING RATE FUND COMMENCEMENT OF TENDER OFFER It is the policy of the Board of Trustees of the Van Kampen Senior Floating Rate Fund to consider on a quarterly basis whether to make a Tender Offer for common shares of the Trust. We are pleased to announce that the Board has authorized the Trust's eighteenth quarterly Tender Offer commencing on July 19, 2002. The purpose of the offer is to attempt to provide liquidity to its shareholders. The commencement of the Tender Offer is announced in today's Wall Street Journal. Shareholders of the Trust may elect to have the cash proceeds from the Tender Offer invested in Class C Shares of eligible open-end investment companies advised by either Van Kampen Investment Advisory Corp. or Van Kampen Asset Management Inc. and distributed by Van Kampen Funds Inc., subject to certain limitations. Please note that the Class C Shares acquired pursuant to this election are subject to a contingent deferred sales charge schedule equal to the "Early Withdrawal Charge" schedule of the Trust. The Trust is offering to purchase up to 15,869,256 of its common shares at a price equal to the net asset value per common share of the Trust as of 5:00 P.M., Eastern Time on August 16, 2002, the expiration date of the Tender Offer (unless extended). The Tender Offer and the withdrawal rights expire at 12:00 Midnight Eastern Time on August 16, 2002, unless the Tender Offer is extended. An "Early Withdrawal Charge" will be imposed on most common shares accepted for payment that have been held for less than one year. Terms and conditions of the tender offer are contained in the Trust's Offer to Purchase dated July 19, 2002, and the related Letter of Transmittal. Copies are available to you upon request by calling Van Kampen's Investor Services Department at (800) 341-2911. Shareholders may tender by completing and returning the Letter of Transmittal by August 16, 2002. Alternatively, Selling Firms may tender account positions with a wire order redemption via NSCC Fund/SERV or by calling Van Kampen's Brokerage Operations Support Services at (800) 421-3863, on August 16, 2002 (trade date of the Tender Offer).
- ---------------------------------------------------------------------------------------------------------- FUND NAME NUMBER SYMBOL CUSIP TENDER START TENDER END - ---------------------------------------------------------------------------------------------------------- VK Senior Floating Rate Fund 259 VKSFR 920960101 07/19/02 08/16/02 - ----------------------------------------------------------------------------------------------------------
PLEASE DIRECT YOUR TENDER QUESTIONS TO THE FOLLOWING AREAS: MAIN OFFICE OPERATIONS: BROKERAGE OPERATIONS SUPPORT SERVICES (BOSS) AT (800) 421-3863. REGISTERED REPRESENTATIVES: INVESTOR SERVICES DEPARTMENT AT (800) 341-2911. This material is prepared for internal or financial professional use only. It may not be reproduced or shown to members of the public or used in written form as sales literature. Such use would be in violation of the NASD code of conduct. This material is subject to change, please consult the prospectus. 3672F02-ANFP-07/02 Member NASD/SIPC EX-99.(A)(4) 10 c70561exv99wxayx4y.txt FORM OF LETTER TO SHAREHOLDERS EXHIBIT (a)(4) Dear Shareholder: As you requested, we are enclosing a copy of the Van Kampen Senior Floating Rate Fund ("Trust") Offer to Purchase 15,869,256 of its issued and outstanding common shares of beneficial interest ("Common Shares") and the related Letter of Transmittal (which together constitute the "Offer"). The Offer is at the net asset value per Common Share ("NAV") determined as of 5:00 P.M. Eastern Time on August 16, 2002, the expiration date of the Offer (unless extended). An "Early Withdrawal Charge" will be imposed on most Common Shares accepted for payment that have been held for less than one year. Please read carefully the enclosed documents. If, after reviewing the information set forth in the Offer, you wish to tender Common Shares for purchase by the Trust, please either follow the instructions contained in the Offer to Purchase and related Letter of Transmittal or, if your Common Shares are held of record in the name of a broker, dealer or other nominee, contact such broker, dealer or nominee to effect the tender for you. Neither the Trust nor its Board of Trustees is making any recommendation to any holder of Common Shares as to whether to tender Common Shares. Each shareholder is urged to consult his or her broker or tax adviser before deciding whether to tender any Common Shares. The Trust's NAV from July 12, 2000 through July 12, 2002 ranged from a high of $9.65 to a low of $7.80. On July 12, 2002 the NAV was $7.80. You can obtain current NAV quotations from Van Kampen Funds Inc. by calling (800) 341-2911 between the hours of 7:00 A.M. and 7:00 P.M. Central Time, Monday through Friday, except holidays. NAV quotes also may be obtained through the ICI Pricing Service which will be released each Friday evening and published by the Dow Jones Capital Markets Wire Service on each Friday; published in the New York Times on each Saturday; published in the Chicago Tribune on each Sunday; and published weekly in Barron's magazine. The Trust offers and sells its Common Shares to the public on a continuous basis. The Trust is not aware of any secondary market trading for the Common Shares. Should you have any questions on the enclosed material, please call Van Kampen Funds Inc. at (800) 341-2911 during ordinary business hours. We appreciate your continued interest in Van Kampen Senior Floating Rate Fund. Sincerely, VAN KAMPEN SENIOR FLOATING RATE FUND - -------------------------------------------------------------------------------- TO ENSURE PROCESSING OF YOUR REQUEST, A LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT (TOGETHER WITH ANY CERTIFICATES FOR COMMON SHARES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE (AUGUST 16, 2002). - -------------------------------------------------------------------------------- 18 SFR-010-07/02 S/0 SRSOTND-8/02 EX-99.(A)(5) 11 c70561exv99wxayx5y.txt TEXT OF PRESS RELEASE EXHIBIT (a)(5) [VAN KAMPEN FUNDS LOGO] NEWS RELEASE 1 Parkview Plaza - P.O. Box 5555 - Oakbrook Terrace, Illinois 60181-5555 - www.vankampen.com - -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT: Lou Anne McInnis or Natasha Kassian 800/869-6397 800/869-6397
VAN KAMPEN SENIOR FLOATING RATE FUND BEGINS TENDER OFFER FOR COMMON SHARES CHICAGO (July 19, 2002) -- Van Kampen Senior Floating Rate Fund, distributed by Van Kampen Funds Inc., a subsidiary of Van Kampen Investments Inc. ("Van Kampen"), announced today that it has commenced a tender offer for 15,869,256 of its outstanding common shares of beneficial interest. The offer is not conditioned on any minimum number of common shares that must be tendered. The offer is subject to the terms and conditions set forth in the Offer to Purchase and the related Letter of Transmittal. The common shares are being tendered for cash at a price equal to the net asset value per common share determined as of 5:00 p.m., Eastern Time, on August 16, 2002, the expiration date, unless extended. The offer and withdrawal rights will expire, as of 12:00 Midnight, Eastern Time, on August 16, 2002, unless extended. An early withdrawal charge will be imposed on most common shares accepted for payment that have been held for less than one year. As indicated in the Trust's current prospectus, the Board of Trustees currently intends, each quarter, to consider authorizing the Trust to make tender offers for its common shares in order to attempt to provide liquidity to its investors. The Van Kampen Senior Floating Rate Fund tender offer is being made only by the Offer to Purchase dated July 19, 2002 and the related Letter of Transmittal. Questions and requests for assistance, for current net asset value quotes, or for copies of the Offer to Purchase, Letter of Transmittal, and any other tender offer documents may be directed to Van Kampen by calling 1-800-341-2911. Van Kampen is one of the nation's largest investment management companies, with more than $74 billion in assets under management or supervision, as of June 30, 2002. With roots in money management dating back to 1927, Van Kampen has helped more than four generations of investors achieve their financial goals. Headquartered in the Chicagoland area, Van Kampen is a wholly owned subsidiary of Morgan Stanley (NYSE:MWD). # # # For more complete information, including risk considerations, fees, sales charges and ongoing expenses, please contact your financial advisor for a prospectus or download one at www.vankampen.com. Please read it carefully before you invest or send money. Copyright (C) 2002 Van Kampen Funds Inc. All Rights Reserved. 2998DO2 - QS - 3Q02 Member NASD/SIPC. -----END PRIVACY-ENHANCED MESSAGE-----