-----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, V2SXkRkOhOKxZxegxSrhp90dKcWolXOqQF3V6oXBL6qfXyUIzkmT9/wFD3g/rE0D 982KOglGKim44ATSKKNfww== 0000950137-05-013063.txt : 20051028 0000950137-05-013063.hdr.sgml : 20051028 20051028171927 ACCESSION NUMBER: 0000950137-05-013063 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050831 FILED AS OF DATE: 20051028 DATE AS OF CHANGE: 20051028 EFFECTIVENESS DATE: 20051028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN HIGH YIELD FUND CENTRAL INDEX KEY: 0000276242 IRS NUMBER: 741993121 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02851 FILM NUMBER: 051164166 BUSINESS ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC. STREET 2: 1221 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2127625441 MAIL ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC. STREET 2: 1221 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10020 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST DATE OF NAME CHANGE: 19970909 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL HIGH INCOME CORPORATE BOND FUND DATE OF NAME CHANGE: 19951219 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN HIGH INCOME CORPORATE BOND FUND DATE OF NAME CHANGE: 19920703 N-CSR 1 c98565nvcsr.txt ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-02851 Van Kampen High Yield Fund - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Ronald Robison 1221 Avenue of the Americas, New York, New York 10020 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: 8/31 Date of reporting period: 8/31/05 Item 1. Reports to Shareholders. The Fund's annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: Welcome, Shareholder In this report, you'll learn about how your investment in Van Kampen High Yield Fund performed during the annual period. The portfolio management team will provide an overview of the market conditions and discuss some of the factors that affected investment performance during the reporting period. In addition, this report includes the fund's financial statements and a list of fund investments as of August 31, 2005. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE FUND BEING OFFERED. MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND, THEREFORE, THE VALUE OF THE FUND SHARES MAY BE LESS THAN WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS FUND. PLEASE SEE THE PROSPECTUS FOR MORE COMPLETE INFORMATION ON INVESTMENT RISKS.
--------------------------------------------------------------------------------------- NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE --------------------------------------------------------------------------------------- NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT ---------------------------------------------------------------------------------------
Performance Summary PERFORMANCE OF A $10,000 INVESTMENT This chart compares your fund's performance to that of the Lipper High Yield Bond Fund Index and the J.P. Morgan Global High Yield Index from 8/31/95 through 8/31/05. Class A shares, adjusted for sales charges. (LINE GRAPH)
VAN KAMPEN HIGH YIELD J.P. MORGAN GLOBAL HIGH LIPPER HIGH YIELD BOND FUND YIELD INDEX FUND INDEX --------------------- ----------------------- ---------------------- 8/95 9520 10000 10000 9658 10119 10109 12/95 9952 10446 10404 10268 10673 10699 10543 10867 10912 10979 11364 11416 12/96 11311 11805 11829 11469 11906 11916 11997 12457 12529 12555 13050 13214 12/97 12696 13268 13387 13320 13714 13938 13439 13830 14088 12336 13029 13070 12/98 12754 13396 13412 13108 13653 13786 13069 13800 13881 12986 13568 13665 12/99 13252 13849 14002 13198 13615 13805 13313 13683 13761 13223 13727 13635 12/00 12163 13042 12753 12557 13718 13254 12081 13601 12956 11358 12997 12310 12/01 11841 13756 12958 11528 14064 13089 10719 13718 12469 10155 13303 12030 12/02 10726 14052 12740 11356 14979 13449 12294 16405 14591 12605 16917 14973 12/03 13318 17917 15818 13515 18402 16101 13530 18327 15998 14194 19140 16648 12/04 14713 19988 17377 14448 19759 17104 14666 20215 17419 8/05 14961 20607 17772
A SHARES B SHARES C SHARES I SHARES since 10/2/78 since 7/2/92 since 7/6/93 since 3/23/05 - ------------------------------------------------------------------------------------------------------------- W/MAX W/MAX W/MAX 4.75% 4.00% 1.00% AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES W/O SALES TOTAL RETURNS CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES Since Inception 7.46% 7.26% 5.46% 5.46% 4.26% 4.26% 2.69% 10-year 4.62 4.11 4.13 4.13 3.80 3.80 n/a 5-year 2.18 1.20 1.43 1.23 1.37 1.37 n/a 1-year 6.89 1.85 6.36 2.36 6.17 5.18 n/a - ------------------------------------------------------------------------------------------------------------- 30 Day SEC Yield 6.10% 5.60% 5.69% 6.65%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES SHOWN. FOR MORE UP-TO-DATE INFORMATION, INCLUDING MONTH-END PERFORMANCE FIGURES, PLEASE VISIT VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE RETURNS SHOWN IN THIS REPORT DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. PERFORMANCE OF SHARE CLASSES WILL VARY DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES. As a result of recent market activity, current performance may vary from the figures shown. Average annual total return with sales charges includes payment of the maximum sales charge of 4.75 percent for Class A shares, a contingent deferred sales charge of 4.00 percent for Class B shares (in years one and two and declining to zero after year five), a contingent deferred sales charge of 1.00 percent for Class C shares in year one and combined Rule 12b-1 fees and service fees of up to 0.25 percent for Class A shares and up to 1.00 percent for Class B and C shares. The since inception and ten-year returns for Class B shares reflect the conversion of Class B shares into Class A shares six years after purchase. The since inception returns for Class C shares reflect the conversion of Class C shares into Class A shares ten years after purchase. See footnote 3 in the Notes to Financial Statements for additional information. Figures shown above assume reinvestment of all dividends and capital gains. Class I shares are available for purchase exclusively by investors through (i) tax-exempt retirement plans with assets of at least $1 million (including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase plans, defined benefit plans and non-qualified deferred compensation plans), (ii) fee-based investment programs with assets of at least $1 million and (iii) institutional clients with assets of at least $1 million. Class I shares are offered without any sales charges on purchases or sales and do not include combined 12b-1 fees and service fees. Figures shown above assume reinvestment of all dividends and capital gains. SEC yield is a calculation for determining the amount of portfolio income, excluding non-income items as prescribed by the SEC. Yields are subject to change. J.P. Morgan Global High Yield Index is a broad-based index that reflects the general performance of the global high-yield corporate debt market. Lipper High Yield Bond Fund Index is an index of funds with similar return objectives as this fund. Indexes do not include any expenses, fees or sales charges, which would lower performance. Indexes are unmanaged and should not be considered an investment. 1 Fund Report FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2005 Van Kampen High Yield Fund is managed by the adviser's Taxable Fixed Income team. Members of the team include Gordon Loery, Executive Director; Sheila A. Finnerty, Managing Director; and Joshua Givelber, Vice President.(1) MARKET CONDITIONS Good economic growth and corporate earnings, strong underlying company fundamentals, low default rates and improving credit qualities were among the factors supporting the high yield market during the 12-month reporting period. As long-term rates generally declined, investors also rewarded high yield bonds for their enhanced income potential. Yet, the period was also defined by significant volatility. After enjoying particularly robust performance in the final months of 2004, the market retreated markedly during the first months of 2005. In January, heavy new issuance contributed to concerns that supply could outpace demand. More importantly, however, was General Motors' mid-March announcement of production cuts and poor earnings for the next quarter. The struggles of this bellwether company exacerbated the woes of the auto industry and called into question the strength of corporations overall. High yield markets were unsettled by the prospect that General Motors would move from the high grade to the high yield universe. Such a move, it was feared, could trigger a sell-off of other high yield bonds, as investors moved to purchase General Motors debt. Amid these pressures, the market declined through mid-May. The reporting period finished with considerably more strength, however. The market came to terms with inclusion of General Motors and Ford Motor in the high yield arena, and the pace of new issuance slowed. Investors refocused on favorable economic data, the overall strength of corporate earnings and company fundamentals, and the continued low default rate of the high yield universe overall. That said, the final months were not entirely upbeat, as continued high oil prices cast doubt on the pace of economic growth and consumer confidence. The final days of the reporting period brought heightened apprehension as Hurricane Katrina unleashed catastrophic devastation to the Gulf Coast. While the long-term economic impact remained immeasurable, the immediate economic impact was most evident in the energy sector, as gasoline and natural gas prices soared. From an industry perspective, wireless communications, telecommunications and utilities fared the best during the 12-month period, while transportation, airlines and forest products lagged most significantly. (1)Team members may change without notice from time to time. 2 PERFORMANCE ANALYSIS The fund returned 6.89 percent for the 12 months ended August 31, 2005 (Class A shares, unadjusted for sales charges). In comparison, the JP Morgan Global High Yield Index, the fund's benchmark, and the Lipper High Yield Bond Fund Index, an index of funds with similar investment objectives, returned 9.20 percent and 9.04 percent for the period, respectively. TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2005
- ------------------------------------------------------------------------------------------------- JP MORGAN GLOBAL LIPPER HIGH YIELD CLASS A CLASS B CLASS C HIGH YIELD INDEX BOND FUND INDEX 6.89% 6.36% 6.17% 9.20% 9.04% - -------------------------------------------------------------------------------------------------
THE PERFORMANCE FOR THE THREE SHARE CLASSES VARIES BECAUSE EACH HAS DIFFERENT EXPENSES. THE FUND'S TOTAL RETURN FIGURES ASSUME THE REINVESTMENT OF ALL DISTRIBUTIONS, BUT DO NOT REFLECT THE DEDUCTION OF ANY APPLICABLE SALES CHARGES. SUCH COSTS WOULD LOWER PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SEE PERFORMANCE SUMMARY FOR STANDARDIZED PERFORMANCE INFORMATION AND INDEX DEFINITIONS. Led by precipitous declines in the beleaguered auto and airline industries, a cloud of negative sentiment cloaked the transportation sector as a whole. In this environment, the fund's relative performance benefited from underweighting in transportation versus the JP Morgan benchmark. In particular, the fund was well served by the decision to de-emphasize auto, auto-related and airline issues, which experienced the brunt of investor disfavor. The fund's wireless communications securities also contributed positively. Strong fundamentals combined with broadly favorable trends to support solid gains. Also on the upside, company-specific results and improving fundamentals boosted consumer product issues. In contrast, the fund's pace was slowed by housing securities. Amid concerns of declines in new home construction, building product securities slipped. These companies are often highly leveraged, and could be particularly susceptible to a downturn in the real estate market. Forest product securities lagged due to company specific reasons. Telecommunications and media securities also clipped performance. During the final months of the reporting period, we sought opportunities to position the portfolio more conservatively by reducing exposures that we believe to be more risky, such as building products. As a result of individual security decisions, chemicals, housing, energy and wireless communications issues are among the more prominent themes in the portfolio. At the close of the reporting period, the portfolio's average credit quality was B, in-line with the JP Morgan benchmark, while a lower average yield to maturity reflects our efforts to reduce relative risk. 3 We believe that many of the fundamental trends that benefited the high yield market during the annual period remain intact, and will likely continue to provide support to the market in upcoming months. This optimism is balanced by our view that the market has already "priced-in" these fundamentals. (In other words, most securities are already trading at prices that reflect these positives.) Consequently, we would not be surprised if the returns of high yield securities were driven primarily by income, rather than price appreciation, in the months to come. There is no guarantee that any sectors mentioned will continue to perform well or that securities in such sectors will be held by the fund in the future. 4
RATINGS ALLOCATIONS AS OF 8/31/05 BBB/Baa 3.3% BB/Ba 29.2 B/B 54.7 CCC/Caa 10.8 CC/Ca 0.5 Non-Rated 1.5 SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 8/31/05 Energy 8.6% Chemicals 7.5 Utility 7.0 Cable 6.4 Forest Products 6.1 Healthcare 5.9 Gaming & Leisure 5.6 Housing 5.0 Diversified Media 4.7 Transportation 4.0 Telecommunications 3.8 Manufacturing 3.6 Metals 3.6 Consumer Products 3.5 Wireless Communications 3.5 Food & Tobacco 3.4 Services 3.2 Information Technology 3.1 Automotive 2.0 Retail 1.6 Food & Drug 1.5 Financial 1.2 Aerospace 0.8 Broadcasting 0.1 ----- Total Long-Term Investments 95.7% Short-Term Investments 2.1 Other Assets in Excess of Liabilities 2.2 ----- Total Net Assets 100.0%
Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned or securities in the industries shown above. Ratings allocations are as a percentage of corporate debt obligations. Industry allocations are as a percentage of net assets. Van Kampen is a wholly owned subsidiary of a global securities firm which is engaged in a wide range of financial services including, for example, securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. Ratings allocations based upon ratings as issued by Standard and Poor's and Moody's, respectively. 5 FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS Each Van Kampen fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semiannual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. Van Kampen also delivers the semiannual and annual reports to fund shareholders, and makes these reports available on its public Web site, www.vankampen.com. In addition to the semiannual and annual reports that Van Kampen delivers to shareholders and makes available through the Van Kampen public Web site, each fund files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on Form N-Q. Van Kampen does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Van Kampen public Web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's Web site, http://www.sec.gov. You may also review and copy them at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102. You may obtain copies of a fund's fiscal quarter filings by contacting Van Kampen Client Relations at 1-800-847-2424. 6 HOUSEHOLDING NOTICE To reduce fund expenses, the fund attempts to eliminate duplicate mailings to the same address. The fund delivers a single copy of certain shareholder documents to investors who share an address, even if the accounts are registered under different names. The fund's prospectuses and shareholder reports (including annual privacy notices) will be delivered to you in this manner indefinitely unless you instruct us otherwise. You can request multiple copies of these documents by either calling 1-800-341-2911 or writing to Van Kampen Investor Services at 1 Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor Services has received your instructions, we will begin sending individual copies for each account within 30 days. PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD You may obtain a copy of the fund's Proxy Voting Policy and Procedures without charge, upon request, by calling toll free 1-800-847-2424 or by visiting our Web site at www.vankampen.com. It is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov. You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 by visiting our Web site at www.vankampen.com. This information is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov. 7 Expense Example As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments of Class A Shares and contingent deferred sales charge on redemptions of Class B and C Shares; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 3/1/05 - 8/31/05. ACTUAL EXPENSE The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or contingent deferred sales charges. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* ------------------------------------------------- 3/1/05 8/31/05 3/1/05-8/31/05 Class A Actual..................................... $1,000.00 $1,002.76 $5.45 Hypothetical............................... 1,000.00 1,019.71 5.50 (5% annual return before expenses) Class B Actual..................................... 1,000.00 1,001.61 9.33 Hypothetical............................... 1,000.00 1,015.91 9.40 (5% annual return before expenses) Class C Actual..................................... 1,000.00 999.06 9.37 Hypothetical............................... 1,000.00 1,015.81 9.45 (5% annual return before expenses) Class I Actual..................................... 1,000.00 1,026.93 3.80 Hypothetical............................... 1,000.00 1,018.35 4.32 (5% annual return before expenses)
* Expenses are equal to the Fund's annualized expense ratio of 1.08%, 1.85%, 1.86% and 0.85% for Class A, B, C and I Shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period) except for Class I Shares "Actual" information which reflects the period from Commencement of Operations through August 31, 2005. Assumes all dividends and distributions were reinvested. 8 Investment Advisory Agreement Approval Both the Investment Company Act of 1940 and the terms of the Fund's investment advisory agreement require that the investment advisory agreement between the Fund and its investment adviser be approved annually both by a majority of the Board of Trustees and by a majority of the independent trustees voting separately. On May 25, 2005, the Board of Trustees, and the independent trustees voting separately, determined that the terms of the investment advisory agreement are fair and reasonable and approved the continuance of the investment advisory contract as being in the best interests of the Fund and its shareholders subject to implementing a fee rate reduction effective June 1, 2005. In making its determination, the Board of Trustees considered materials that were specifically prepared by the investment adviser at the request of the Board and Fund counsel, and by an independent provider of investment company data contracted to assist the Board, relating to the contract review process. The Board also considered information received periodically about the portfolio, performance, the investment strategy, portfolio management team and fees and expenses of the Fund. Also, the Board considered materials it had received in approving a reorganization and name of the Fund. Finally, the Board considered materials it had received in approving a proposed reduction in the advisory fee rate to be effective June 1, 2005. The Board of Trustees considered the contract over a period of several months and the non-management trustees held sessions both with the investment adviser and separate from the investment adviser in reviewing and considering the contract. In approving the investment advisory agreement, the Board of Trustees considered, among other things, the nature, extent and quality of the services provided by the investment adviser, the performance, fees and expenses of the Fund compared to other similar funds and other products, the investment adviser's expenses in providing the services and the profitability of the investment adviser and its affiliated companies. The Board of Trustees considered the extent to which any economies of scale experienced by the investment adviser are shared with the Fund's shareholders, and the propriety of existing and alternative breakpoints in the Fund's investment advisory fee schedule. The Board of Trustees considered comparative advisory fees of the Fund and other investment companies and/or other products at different asset levels, and considered the trends in the industry versus historical and projected assets of the Fund. The Board of Trustees evaluated other benefits the investment adviser and its affiliates derive from their relationship with the Fund. The Board of Trustees reviewed information about the foregoing factors and considered changes, if any, in such information since its previous approval. The Board of Trustees discussed the financial strength of the investment adviser and its affiliated companies and the capability of the personnel of the investment adviser, and specifically the strength and background of its portfolio management personnel. The Board of Trustees reviewed the statutory and 9 regulatory requirements for approval and disclosure of investment advisory agreements. The Board of Trustees, including the independent trustees, evaluated all of the foregoing and does not believe any single factor or group of factors control or dominate the review process, and, after considering all factors together, has determined, in the exercise of its business judgment, that approval of the investment advisory agreement is in the best interests of the Fund and its shareholders. The following summary provides more detail on certain matters considered but does not detail all matters considered. Nature, Extent and Quality of the Services Provided. On a regular basis, the Board of Trustees considers the roles and responsibilities of the investment adviser as a whole and for those specific portfolio management, support and trading functions servicing the Fund. The trustees discuss with the investment adviser the resources available and used in managing the Fund and changes made in the Fund's portfolio management team over time. The Fund discloses information about its portfolio management team members and their experience in its prospectus. The trustees also discuss certain other services which are provided on a cost-reimbursement basis by the investment adviser or its affiliates to the Van Kampen funds including certain accounting, administrative and legal services. The Board has determined that the nature, extent and quality of the services provided by the investment adviser support its decision to approve the investment advisory contract. Performance, Fees and Expenses of the Fund. On a regular basis, the Board of Trustees reviews the performance, fees and expenses of the Fund compared to its peers and to appropriate benchmarks. In addition, a performance committee of the Board spends more focused time on the performance of the Fund and other funds in the Van Kampen complex, paying specific attention to underperforming funds. The trustees discuss with the investment adviser the performance goals and the actual results achieved in managing the Fund. When considering a fund's performance, the trustees and the investment adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance with special attention to three-year performance) and, when a fund's weighted performance is under the fund's benchmark, they discuss the causes and where necessary seek to make specific changes to investment strategy or investment personnel. The Fund discloses more information about its performance elsewhere in this report and in the Fund's prospectus. The trustees discuss with the investment adviser the level of advisory fees for this Fund relative to comparable funds and other products advised by the adviser and others in the marketplace. The trustees review not only the advisory fees but other fees and expenses (whether paid to the adviser, its affiliates or others) and the Fund's overall expense ratio. The Fund discloses more information about its fees and expenses in its prospectus. The Board has determined that the performance, fees and expenses of the Fund support its decision to approve the investment advisory contract. 10 Investment Adviser's Expenses in Providing the Service and Profitability. At least annually, the trustees review the investment adviser's expenses in providing services to the Fund and other funds advised by the investment adviser and the profitability of the investment adviser. These profitability reports are put together by the investment adviser with the oversight of a special ad hoc committee of the Board. The trustees discuss with the investment adviser its revenues and expenses, including among other things, revenues for advisory services, portfolio management-related expenses, revenue sharing arrangement costs and allocated expenses both on an aggregate basis and per fund. The Board has determined that the analysis of the investment adviser's expenses and profitability support its decision to approve the investment advisory contract. Economies of Scale. On a regular basis, the Board of Trustees considers the size and growth prospects of the Fund and how that relates to the Fund's expense ratio and particularly the Fund's advisory fee rate. In conjunction with its review of the investment adviser's profitability, the trustees discuss with the investment adviser how more (or less) assets can affect the efficiency or effectiveness of managing the Fund's portfolio and whether the advisory fee level is appropriate relative to current and projected asset levels and/or whether the advisory fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and potential economies of scale of the Fund support its decision to approve the investment advisory contract. Other Benefits of the Relationship. On a regular basis, the Board of Trustees considers other benefits to the investment adviser and its affiliates derived from its relationship with the Fund and other funds advised by the investment adviser. These benefits include, among other things, fees for transfer agency services provided to the funds, in certain cases research received by the adviser generated from commission dollars spent on funds' portfolio trading, and in certain cases distribution or service related fees related to funds' sales. The trustees review with the investment adviser each of these arrangements and the reasonableness of its costs relative to the services performed. The Board has determined that the other benefits received by the investment adviser or its affiliates support its decision to approve the investment advisory contract. 11 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- CORPORATE BONDS 94.9% AEROSPACE 0.8% $6,625 K & F Acquisition, Inc.......................... 7.750% 11/15/14 $ 6,807,187 ------------ AUTOMOTIVE 2.0% 4,050 Ford Motor Credit Co. .......................... 5.625 10/01/08 3,897,659 4,370 Ford Motor Credit Co. .......................... 5.800 01/12/09 4,185,088 4,580 General Motors Acceptance Corp. ................ 4.375 12/10/07 4,358,081 2,920 General Motors Acceptance Corp. ................ 6.875 09/15/11 2,768,516 915 General Motors Acceptance Corp. ................ 6.875 08/28/12 861,324 ------------ 16,070,668 ------------ BROADCASTING 0.1% 1,185 Salem Communications Corp. ..................... 7.750 12/15/10 1,245,731 ------------ CABLE 6.4% 4,950 Cablecom Luxembourg SCA, 144A -- Private Placement (Euro) (Luxembourg) (a)............... 9.375 04/15/14 6,831,998 6,175 Cablevision Systems Corp. (Variable Rate Coupon)......................................... 7.890 04/01/09 6,406,562 3,525 Charter Communications Holdings LLC............. 9.625 11/15/09 2,930,156 625 Charter Communications Holdings LLC............. 10.750 10/01/09 534,375 3,375 Charter Communications Holdings LLC............. 11.750 01/15/10 2,885,625 2,745 Echostar DBS Corp. ............................. 6.375 10/01/11 2,741,569 1,290 Echostar DBS Corp. ............................. 6.625 10/01/14 1,285,162 460 Intelsat Bermuda Ltd., 144A -- Private Placement (Bermuda) (a)................................... 8.250 01/15/13 470,350 4,445 Intelsat Bermuda Ltd., 144A -- Private Placement (Bermuda) (a)................................... 8.625 01/15/15 4,633,912 3,350 Intelsat Bermuda Ltd., 144A -- Private Placement (Variable Rate Coupon) (Bermuda) (a)............ 8.695 01/15/12 3,425,375 5,670 Kabel Deutschland GmbH, 144A -- Private Placement (Germany) (a)......................... 10.625 07/01/14 6,364,575 923 PanAmSat Corp. ................................. 9.000 08/15/14 976,072 7,410 PanAmSat Holding Corp. (b) (c).................. 0/10.375 11/01/14 5,131,425 2,360 Renaissance Media Group......................... 10.000 04/15/08 2,351,150 1,645 Satelites Mexicanos SA, Ser B (Mexico) (c)...... 10.125 11/01/04 896,525 3,855 Telenet Group Holding NV, 144A -- Private Placement (Belgium) (a) (b) (c)................. 0/11.500 06/15/14 3,132,187 ------------ 50,997,018 ------------ CHEMICALS 7.5% 2,935 Cognis Deutschland GmbH & Co., 144A -- Private Placement (Euro) (Variable Rate Coupon) (Germany) (a) (c)............................... 6.916 11/15/13 3,738,588 5,090 Equistar Chemicals LP........................... 10.125 09/01/08 5,599,000 620 Equistar Chemicals LP........................... 10.625 05/01/11 691,300 2,230 Huntsman Advanced Materials LLC................. 11.000 07/15/10 2,542,200 952 Huntsman International LLC...................... 10.125 07/01/09 985,320
12 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- CHEMICALS (CONTINUED) $4,000 Huntsman International LLC (Euro)............... 10.125% 07/01/09 $ 5,126,022 2,227 Innophos Investments Holdings, Inc., 144A -- Private Placement (Variable Rate Coupon) (a).... 11.790 02/15/15 2,126,542 4,190 Innophos, Inc.,144A -- Private Placement (a).... 8.875 08/15/14 4,331,412 1,280 ISP Chemco, Inc., Ser B......................... 10.250 07/01/11 1,387,200 6,410 ISP Holdings, Inc., Ser B....................... 10.625 12/15/09 6,826,650 1,530 Koppers, Inc. .................................. 9.875 10/15/13 1,705,950 2,700 Millennium America, Inc. ....................... 7.000 11/15/06 2,777,625 1,985 Millennium America, Inc. ....................... 9.250 06/15/08 2,148,762 1,690 Nalco Co. ...................................... 7.750 11/15/11 1,778,725 5,995 Nalco Co. ...................................... 8.875 11/15/13 6,482,094 4,945 Rhodia SA (France).............................. 8.875 06/01/11 4,846,100 1,925 Rhodia SA (Euro) (France)....................... 8.000 06/01/10 2,392,684 2,333 Rockwood Specialties Group, Inc. ............... 10.625 05/15/11 2,577,965 1,390 Rockwood Specialties Group, Inc., 144A -- Private Placement (Euro) (a)............ 7.625 11/15/14 1,794,154 ------------ 59,858,293 ------------ CONSUMER PRODUCTS 3.3% 2,810 Amscan Holdings, Inc. .......................... 8.750 05/01/14 2,690,575 8,445 Levi Strauss & Co. (Variable Rate Coupon)....... 8.254 04/01/12 8,529,450 2,360 Oxford Industrials, Inc. ....................... 8.875 06/01/11 2,542,900 5,585 Rayovac Corp. .................................. 8.500 10/01/13 5,780,475 5,800 Sleepmaster LLC, Ser B (c) (d) (e).............. 11.000 05/15/09 3,207,400 2,120 Spectrum Brands, Inc. .......................... 7.375 02/01/15 2,051,100 1,667 Tempur Pedic, Inc. ............................. 10.250 08/15/10 1,862,872 ------------ 26,664,772 ------------ DIVERSIFIED MEDIA 4.6% 1,185 Advanstar Communications, Inc. ................. 10.750 08/15/10 1,346,456 2,920 AMC Entertainment, Inc. (Variable Rate Coupon)......................................... 8.040 08/15/10 3,033,150 6,367 CanWest Media, Inc. (Canada).................... 8.000 09/15/12 6,717,025 2,347 Dex Media East/Finance Corp. LLC................ 12.125 11/15/12 2,787,062 3,692 Dex Media West/Finance Corp. LLC, Ser B......... 9.875 08/15/13 4,195,035 1,925 Houghton Mifflin Co. ........................... 8.250 02/01/11 2,018,844 5,555 Houghton Mifflin Co. ........................... 9.875 02/01/13 6,027,175 4,205 Nebraska Book Co., Inc. ........................ 8.625 03/15/12 4,068,337 6,420 Primedia, Inc. ................................. 8.875 05/15/11 6,757,050 ------------ 36,950,134 ------------ ENERGY 8.6% 5,285 CHC Helicopter Corp. (Canada)................... 7.375 05/01/14 5,397,306 3,100 CHC Helicopter Corp., 144A -- Private Placement (Canada) (a).................................... 7.375 05/01/14 3,165,875 3,300 Chesapeake Energy Corp. ........................ 6.625 01/15/16 3,399,000 4,165 Chesapeake Energy Corp. ........................ 7.500 09/15/13 4,498,200 6,315 CITGO Petroleum Corp. .......................... 6.000 10/15/11 6,346,575
See Notes to Financial Statements 13 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- ENERGY (CONTINUED) $1,695 Compagnie Generale de Geophysique SA, 144A -- Private Placement (France) (a).................. 7.500% 05/15/15 $ 1,796,700 7,650 El Paso Production Holding Co. ................. 7.750 06/01/13 8,128,125 3,625 Hanover Compressor Co. ......................... 8.625 12/15/10 3,915,000 920 Hanover Compressor Co. ......................... 9.000 06/01/14 1,018,900 109 Hanover Equipment Trust, Ser A.................. 8.500 09/01/08 114,177 3,042 Hanover Equipment Trust, Ser B.................. 8.750 09/01/11 3,277,755 5,765 Hilcorp Energy/Finance Corp., 144A -- Private Placement (a)................................... 10.500 09/01/10 6,427,975 3,570 Husky Oil Ltd. (Variable Rate Coupon) (Canada)........................................ 8.900 08/15/28 3,930,027 1,918 Magnum Hunter Resources, Inc. .................. 9.600 03/15/12 2,119,390 3,550 Pacific Energy Partners......................... 7.125 06/15/14 3,736,375 2,931 Port Arthur Finance Corp., Ser A................ 12.500 01/15/09 3,333,916 2,984 Tesoro Petroleum Corp. ......................... 9.625 04/01/12 3,319,700 4,547 Vintage Petroleum, Inc. ........................ 7.875 05/15/11 4,774,350 ------------ 68,699,346 ------------ FINANCIAL 1.2% 4,950 Dow Jones CDX HY, 144A -- Private Placement (a)............................................. 8.250 06/29/10 5,033,531 4,397 Refco Finance Holdings LLC...................... 9.000 08/01/12 4,814,715 ------------ 9,848,246 ------------ FOOD & DRUG 1.5% 1,490 Jean Coutu Group (PJC), Inc. (Canada)........... 7.625 08/01/12 1,560,775 2,725 Jean Coutu Group (PJC), Inc. (Canada)........... 8.500 08/01/14 2,806,750 1,700 Jitney-Jungle Stores America, Inc. (c) (d) (e)............................................. 12.000 03/01/06 0 4,032 Kroger Co., 144A -- Private Placement (a)....... 8.500 07/15/17 4,564,033 3,220 Rite Aid Corp. ................................. 8.125 05/01/10 3,292,450 ------------ 12,224,008 ------------ FOOD & TOBACCO 3.4% 3,215 Michael Foods, Inc. ............................ 8.000 11/15/13 3,319,487 1,845 Pilgrim's Pride Corp. .......................... 9.250 11/15/13 2,047,950 7,450 Pilgrim's Pride Corp. .......................... 9.625 09/15/11 8,101,875 3,960 RJ Reynolds Tobacco Holdings, Inc., 144A -- Private Placement (a)................... 6.500 07/15/10 3,979,800 7,500 Smithfield Foods, Inc. ......................... 7.000 08/01/11 7,762,500 1,115 Smithfield Foods, Inc. ......................... 8.000 10/15/09 1,193,050 450 Smithfield Foods, Inc., Ser B................... 7.750 05/15/13 486,000 ------------ 26,890,662 ------------ FOREST PRODUCTS 6.1% 4,205 Abitibi-Consolidated, Inc. (Canada)............. 6.000 06/20/13 3,795,012 1,510 Abitibi-Consolidated, Inc. (Canada)............. 7.750 06/15/11 1,510,000 2,030 Crown European Holdings SA (Euro) (France)...... 6.250 09/01/11 2,670,328 6,925 Georgia-Pacific Corp. .......................... 8.875 02/01/10 7,790,625 4,075 Graham Packaging Co., Inc. ..................... 9.875 10/15/14 4,238,000
14 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- FOREST PRODUCTS (CONTINUED) $3,950 Graham Packaging Co., Inc., 144A -- Private Placement (a)................................... 8.500% 10/15/12 $ 4,088,250 5,540 Graphic Packaging International, Inc. .......... 9.500 08/15/13 5,706,200 2,390 JSG Funding PLC (Euro) (Ireland)................ 10.125 10/01/12 3,247,082 130 Owens-Brockway Glass Containers, Inc. .......... 8.875 02/15/09 138,125 2,160 Owens-Illinois, Inc. ........................... 7.350 05/15/08 2,241,000 5,700 Owens-Illinois, Inc. ........................... 7.500 05/15/10 5,928,000 2,475 Pliant Corp. ................................... 13.000 06/01/10 1,794,375 1,885 Pliant Corp. ................................... 13.000 06/01/10 1,366,625 5,070 Tembec Industries, Inc. (Canada)................ 7.750 03/15/12 3,777,150 400 Tembec Industries, Inc. (Canada)................ 8.500 02/01/11 309,000 ------------ 48,599,772 ------------ GAMING & LEISURE 5.6% 475 Caesars Entertainment........................... 7.000 04/15/13 531,739 993 Caesars Entertainment........................... 8.875 09/15/08 1,094,782 434 HMH Properties, Inc., Ser B..................... 7.875 08/01/08 442,137 5,520 Host Marriott LP................................ 6.375 03/15/15 5,499,300 4,365 Host Marriott LP................................ 7.125 11/01/13 4,583,250 6,145 Isle of Capri Casinos, Inc. .................... 7.000 03/01/14 6,068,187 3,735 Las Vegas Sands Corp. .......................... 6.375 02/15/15 3,622,950 13,620 MGM Mirage, Inc. ............................... 6.000 10/01/09 13,637,025 1,840 Starwood Hotels & Resorts Worldwide, Inc. ...... 7.875 05/01/12 2,047,000 3,090 Station Casinos, Inc. .......................... 6.000 04/01/12 3,128,625 3,905 Station Casinos, Inc., 144A -- Private Placement (a)............................................. 6.875 03/01/16 4,031,912 ------------ 44,686,907 ------------ HEALTHCARE 5.9% 5,600 AmerisourceBergen Corp. ........................ 7.250 11/15/12 6,510,000 3,305 Community Health Systems, Inc. ................. 6.500 12/15/12 3,358,706 3,370 DaVita, Inc., 144A -- Private Placement (a)..... 6.625 03/15/13 3,437,400 2,830 Fisher Scientific International, Inc. .......... 6.750 08/15/14 2,964,425 530 Fisher Scientific International, Inc., 144A -- Private Placement (a)................... 6.125 07/01/15 532,650 7,000 Fresenius Medical Care Capital Trust IV......... 7.875 06/15/11 7,525,000 1,525 HCA, Inc. ...................................... 6.300 10/01/12 1,565,007 2,145 HCA, Inc. ...................................... 8.700 02/10/10 2,398,610 970 HCA, Inc. ...................................... 8.750 09/01/10 1,098,818 4,095 Medcath Holdings Corp. ......................... 9.875 07/15/12 4,565,925 875 National Nephrology Associates, Inc., 144A -- Private Placement (a)........................... 9.000 11/01/11 980,000 855 Tenet Healthcare Corp. ......................... 7.375 02/01/13 837,900 2,280 Tenet Healthcare Corp. ......................... 9.875 07/01/14 2,439,600 3,340 VWR International, Inc. ........................ 6.875 04/15/12 3,348,350
See Notes to Financial Statements 15 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- HEALTHCARE (CONTINUED) $1,700 VWR International, Inc. ........................ 8.000% 04/15/14 $ 1,695,750 4,085 Warner Chilcott Corp., 144A -- Private Placement (a)............................................. 8.750 02/01/15 4,064,575 ------------ 47,322,716 ------------ HOUSING 5.0% 12,315 Associated Materials, Inc. (b).................. 0/11.250 03/01/14 7,265,850 6,000 Goodman Global Holdings, Inc., 144A -- Private Placement (a)................................... 7.875 12/15/12 5,700,000 1,390 Goodman Global Holdings, Inc., 144A -- Private Placement (Variable Rate Coupon) (a)............ 6.410 06/15/12 1,390,000 1,180 Interface, Inc. ................................ 7.300 04/01/08 1,209,500 4,590 Interface, Inc. ................................ 9.500 02/01/14 4,704,750 1,475 Interface, Inc. ................................ 10.375 02/01/10 1,640,937 6,085 Nortek, Inc. ................................... 8.500 09/01/14 5,948,088 1,000 Ply Gem Industries, Inc. ....................... 9.000 02/15/12 900,000 2,735 RMCC Acquisition Co., 144A -- Private Placement (a)............................................. 9.500 11/01/12 2,776,025 860 Technical Olympic USA, Inc. .................... 7.500 01/15/15 801,950 1,596 Technical Olympic USA, Inc. .................... 9.000 07/01/10 1,669,815 2,735 Technical Olympic USA, Inc. .................... 9.000 07/01/10 2,861,494 3,047 Technical Olympic USA, Inc. .................... 10.375 07/01/12 3,267,908 ------------ 40,136,317 ------------ INFORMATION TECHNOLOGY 2.6% 525 Iron Mountain, Inc. ............................ 6.625 01/01/16 500,063 2,365 Iron Mountain, Inc. ............................ 7.750 01/15/15 2,432,994 5,195 Iron Mountain, Inc. ............................ 8.625 04/01/13 5,487,219 3,025 Nortel Networks Ltd. (Canada)................... 6.125 02/15/06 3,047,688 5,335 Sanmina-SCI Corp. .............................. 6.750 03/01/13 5,121,600 3,540 Sungard Data Systems, Inc., 144A -- Private Placement (a)................................... 9.125 08/15/13 3,734,700 330 Sungard Data Systems, Inc., 144A -- Private Placement (Variable Rate Coupon) (a)............ 8.525 08/15/13 343,200 ------------ 20,667,464 ------------ MANUFACTURING 3.6% 1,470 Flowserve Corp. ................................ 12.250 08/15/10 1,570,901 3,855 Hexcel Corp. ................................... 6.750 02/01/15 3,883,913 2,014 JohnsonDiversey, Inc. (Euro).................... 9.625 05/15/12 2,571,635 4,588 JohnsonDiversey, Inc., Ser B.................... 9.625 05/15/12 4,714,170 2,574 Manitowoc Co., Inc. ............................ 10.500 08/01/12 2,921,490 55 Manitowoc Co., Inc. (Euro)...................... 10.375 05/15/11 74,639 5,310 NMHG Holdings Co. .............................. 10.000 05/15/09 5,708,250 3,360 Propex Fabrics, Inc. ........................... 10.000 12/01/12 3,259,200 4,407 Trimas Corp. ................................... 9.875 06/15/12 3,790,020 ------------ 28,494,218 ------------
16 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- METALS 3.6% $6,679 Doe Run Resources Corp. (Acquired 9/15/00 to 10/15/04, Cost $6,280,647), 144A -- Private Placement (a) (f) (g)........................... 8.500% 11/01/08 $ 5,276,115 1,380 Foundation PA Coal Co. ......................... 7.250 08/01/14 1,457,625 2,250 General Cable Corp. ............................ 9.500 11/15/10 2,396,250 7,175 Novelis, Inc., 144A -- Private Placement (Canada) (a).................................... 7.250 02/15/15 7,228,813 2,515 SGL Carbon Luxembourg SA, 144A -- Private Placement (Euro) (Luxembourg) (a)............... 8.500 02/01/12 3,424,666 4,238 UCAR Finance, Inc. ............................. 10.250 02/15/12 4,555,850 4,277 United States Steel Corp. ...................... 9.750 05/15/10 4,704,700 ------------ 29,044,019 ------------ RETAIL 1.6% 3,200 Brown Shoe Co., Inc. ........................... 8.750 05/01/12 3,432,000 3,780 General Nutrition Center, Inc. ................. 8.500 12/01/10 3,364,200 5,885 Petro Stopping Center/Financial................. 9.000 02/15/12 6,032,125 ------------ 12,828,325 ------------ SERVICES 3.2% 6,120 Allied Waste North America, Inc. ............... 6.375 04/15/11 5,928,750 1,850 Allied Waste North America, Inc. ............... 7.875 04/15/13 1,914,750 3,775 Allied Waste North America, Inc., 144A -- Private Placement (a)................... 7.250 03/15/15 3,765,563 1,437 Allied Waste North America, Inc., Ser B......... 9.250 09/01/12 1,577,108 4,950 Buhrmann US, Inc. .............................. 8.250 07/01/14 5,110,875 1,635 Buhrmann US, Inc., 144A -- Private Placement (a)............................................. 7.875 03/01/15 1,663,613 4,245 MSW Energy Holdings LLC, Ser B.................. 7.375 09/01/10 4,436,025 985 MSW Energy Holdings/Finance..................... 8.500 09/01/10 1,063,800 ------------ 25,460,484 ------------ TELECOMMUNICATIONS 3.8% 6,625 Axtel SA (Mexico)............................... 11.000 12/15/13 7,353,750 6,030 Exodus Communications, Inc. (c) (d) (e)......... 11.250 07/01/08 0 770 Exodus Communications, Inc. (c) (d) (e)......... 11.625 07/15/10 0 4,000 Exodus Communications, Inc. (Euro) (c) (d) (e)............................................. 11.375 07/15/08 0 8,250 GST Network Funding, Inc. (c) (d) (e)........... 10.500 05/01/08 825 4,000 Park N View, Inc., Ser B (c) (d) (e)............ 13.000 05/15/08 0 4,530 Qwest Communications International, Inc. (Variable Rate Coupon).......................... 7.290 02/15/09 4,530,000 1,020 Qwest Corp. .................................... 5.625 11/15/08 1,012,350 13,285 Qwest Services Corp. ........................... 13.500 12/15/10 15,377,388 1,480 Qwest Services Corp. ........................... 14.000 12/15/14 1,820,400 ------------ 30,094,713 ------------
See Notes to Financial Statements 17 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- TRANSPORTATION 4.0% $5,990 Amsted Industries, Inc., 144A -- Private Placement (a)................................... 10.250% 10/15/11 $ 6,618,950 1,815 Arvinmeritor, Inc. ............................. 8.750 03/01/12 1,892,138 1,040 Hertz Corp. .................................... 7.400 03/01/11 1,030,336 2,930 Hertz Corp. .................................... 7.625 06/01/12 2,907,890 3,095 Lear Corp. ..................................... 8.110 05/15/09 3,228,100 2,250 Meritor Automotive, Inc. ....................... 6.800 02/15/09 2,227,500 7,905 Sonic Automotive, Inc., Ser B................... 8.625 08/15/13 8,181,675 5,626 TRW Automotive, Inc. ........................... 9.375 02/15/13 6,272,990 ------------ 32,359,579 ------------ UTILITY 7.0% 950 AES Corp. ...................................... 7.750 03/01/14 1,036,688 543 AES Corp. ...................................... 8.875 02/15/11 604,088 760 AES Corp. ...................................... 9.375 09/15/10 856,900 3,130 AES Corp., 144A -- Private Placement (a)........ 9.000 05/15/15 3,474,300 6,100 CMS Energy Corp. ............................... 7.500 01/15/09 6,466,000 1,795 Dynegy Holdings, Inc. .......................... 6.875 04/01/11 1,786,025 3,940 Dynegy Holdings, Inc., 144A -- Private Placement (a)............................................. 9.875 07/15/10 4,314,300 1,395 IPALCO Enterprises, Inc. ....................... 8.625 11/14/11 1,576,350 4,775 Monongahela Power Co. .......................... 5.000 10/01/06 4,813,950 2,590 Nevada Power Co. ............................... 9.000 08/15/13 2,920,225 2,945 Nevada Power Co., Ser A......................... 8.250 06/01/11 3,335,213 1,025 Northwest Pipeline Corp. ....................... 8.125 03/01/10 1,104,438 5,792 Ormat Funding Corp. ............................ 8.250 12/30/20 5,878,376 625 PSEG Energy Holdings............................ 7.750 04/16/07 645,313 2,965 PSEG Energy Holdings............................ 8.625 02/15/08 3,142,900 3,595 Reliant Energy, Inc. ........................... 6.750 12/15/14 3,559,050 2,010 Southern Natural Gas Co. ....................... 8.875 03/15/10 2,202,872 7,280 Williams Cos., Inc. ............................ 7.875 09/01/21 8,244,600 ------------ 55,961,588 ------------ WIRELESS COMMUNICATIONS 3.5% 3,180 American Tower Corp. ........................... 7.125 10/15/12 3,346,950 3,175 American Tower Corp. ........................... 7.500 05/01/12 3,373,438 2,945 Rogers Wireless, Inc. (Canada).................. 7.500 03/15/15 3,235,819 2,365 Rural Cellular Corp. ........................... 9.625 05/15/08 2,388,650 3,975 Rural Cellular Corp. (Variable Rate Coupon)..... 7.910 03/15/10 4,134,000 5,245 SBA Communications Corp. (b) (c)................ 0/9.750 12/15/11 4,838,513 1,820 SBA Communications Corp. (c).................... 8.500 12/01/12 1,995,175 4,155 UbiquiTel Operating Co. ........................ 9.875 03/01/11 4,653,600 ------------ 27,966,145 ------------ TOTAL CORPORATE BONDS 94.9%........................................ 759,878,312 ------------ FOREIGN CONVERTIBLE CORPORATE OBLIGATION 0.5% 3,980 Nortel Networks Corp. (Canada).................. 4.250 09/01/08 3,800,900 ------------
18 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued
DESCRIPTION VALUE - ------------------------------------------------------------------------------------------------- EQUITIES 0.3% DecisionOne Corp. (19,895 Common Shares) (e) (h).................................. $ 0 DecisionOne Corp. (10,890 Common Stock Warrants Class A) (e) (h).................. 0 DecisionOne Corp. (18,765 Common Stock Warrants Class B) (e) (h).................. 0 DecisionOne Corp. (11,130 Common Stock Warrants Class C) (e) (h).................. 0 Doe Run Resources Corp. (29 Common Stock Warrants) (e) (h)........................ 0 HCI Direct, Inc. (106,250 Common Shares, Class 1) (e) (h)......................... 1,593,750 HF Holdings, Inc. (36,820 Common Stock Warrants) (e) (h).......................... 0 Hosiery Corp. of America, Inc., 144A -- Private Placement (1,000 Common Shares Class A) (a) (e) (h).............................................................. 0 Jazztel, PLC, 144A -- Private Placement (5,000 Common Stock Warrants) (Euro) (United Kingdom) (a) (e) (h)...................................................... 0 OpTel, Inc., 144A -- Private Placement (3,275 Common Shares) (a) (e) (h).......... 0 Park N View, Inc., 144A -- Private Placement (4,000 Common Stock Warrants) (a) (d) (e) (h)........................................................................... 0 Paxon Communications Corp. (147 Preferred Shares) (f)............................. 999,967 Reunion Industries, Inc. (107,947 Common Stock Warrants) (e) (h).................. 0 Ventelo, Inc., 144A -- Private Placement (73,021 Common Shares) (Euro) (United Kingdom) (a) (e) (h).............................................................. 0 Viatel Holding Bermuda Ltd. (7,852 Common Shares) (Bermuda) (h)................... 1,963 VS Holdings, Inc. (946,962 Common Shares) (e) (h)................................. 0 ------------ TOTAL EQUITIES.................................................................... 2,595,680 ------------ TOTAL LONG-TERM INVESTMENTS 95.7% (Cost $786,174,755)............................................................. 766,274,892 REPURCHASE AGREEMENT 2.1% State Street Bank & Trust Co. ($17,100,000 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 3.50%, dated 08/31/05, to be sold on 09/01/05 at $17,101,663) (Cost $17,100,000).............................................................. 17,100,000 ------------ TOTAL INVESTMENTS 97.8% (Cost $803,274,755)............................................................. 783,374,892 OTHER ASSETS IN EXCESS OF LIABILITIES 2.2%....................................... 17,502,259 ------------ NET ASSETS 100.0%................................................................ $800,877,151 ============
Percentages are calculated as a percentage of net assets. (a) 144A securities are those which are exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may only be resold in transactions exempt from registration which are normally those transactions with qualified institutional buyers. (b) Security is a "step-up" bond where the coupon increases or steps up at a predetermined date. See Notes to Financial Statements 19 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2005 continued (c) Non-income producing as security is in default. (d) This borrower has filed for protection in federal bankruptcy court. (e) Market value is determined in accordance with procedures established in good faith by the Board of Trustees. (f) Payment-in-kind security. (g) This security is restricted and may be resold only in transactions exempt from registration which are normally those transactions with qualified institutional buyers. This restricted security comprises 0.7% of net assets. (h) Non-income producing security as this stock currently does not declare dividends. (Euro)--Eurodollar 20 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND FINANCIAL STATEMENTS Statement of Assets and Liabilities August 31, 2005 ASSETS: Total Investments (Cost $803,274,755)....................... $ 783,374,892 Cash........................................................ 951 Receivables: Interest.................................................. 16,154,619 Investments Sold.......................................... 7,001,172 Fund Shares Sold.......................................... 599,480 Other....................................................... 302,139 -------------- Total Assets............................................ 807,433,253 -------------- LIABILITIES: Payables: Fund Shares Repurchased................................... 2,660,516 Income Distributions...................................... 1,164,230 Investments Purchased..................................... 698,238 Distributor and Affiliates................................ 491,857 Investment Advisory Fee................................... 264,526 Forward Foreign Currency Contracts.......................... 493,149 Trustees' Deferred Compensation and Retirement Plans........ 373,654 Accrued Expenses............................................ 409,932 -------------- Total Liabilities....................................... 6,556,102 -------------- NET ASSETS.................................................. $ 800,877,151 ============== NET ASSETS CONSIST OF: Capital (Par value of $.01 per share with an unlimited number of shares authorized).............................. $1,385,075,673 Accumulated Undistributed Net Investment Income............. (1,552,606) Net Unrealized Depreciation................................. (20,395,111) Accumulated Net Realized Loss............................... (562,250,805) -------------- NET ASSETS.................................................. $ 800,877,151 ============== MAXIMUM OFFERING PRICE PER SHARE: Class A Shares: Net asset value and redemption price per share (Based on net assets of $532,040,247 and 146,661,051 shares of beneficial interest issued and outstanding)............. $ 3.63 Maximum sales charge (4.75%* of offering price)......... .18 -------------- Maximum offering price to public........................ $ 3.81 ============== Class B Shares: Net asset value and offering price per share (Based on net assets of $191,021,750 and 52,384,166 shares of beneficial interest issued and outstanding)............. $ 3.65 ============== Class C Shares: Net asset value and offering price per share (Based on net assets of $54,533,666 and 15,132,554 shares of beneficial interest issued and outstanding)............. $ 3.60 ============== Class I Shares: Net asset value and offering price per share (Based on net assets of $23,281,488 and 6,414,155 shares of beneficial interest issued and outstanding)............. $ 3.63 ==============
* On sales of $100,000 or more, the sales charge will be reduced. See Notes to Financial Statements 21 VAN KAMPEN HIGH YIELD FUND FINANCIAL STATEMENTS continued Statement of Operations For the Year Ended August 31, 2005 INVESTMENT INCOME: Interest.................................................... $ 58,445,983 Dividends................................................... 2,369,451 Other....................................................... 960,289 ------------ Total Income............................................ 61,775,723 ------------ EXPENSES: Investment Advisory Fee..................................... 3,756,871 Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C of $1,221,247, $1,967,429 and $537,696, respectively)............................................. 3,726,372 Shareholder Services........................................ 1,528,945 Custody..................................................... 112,651 Legal....................................................... 63,022 Trustees' Fees and Related Expenses......................... 28,946 Other....................................................... 737,901 ------------ Total Expenses.......................................... 9,954,708 Less Credits Earned on Cash Balances.................... 44,630 ------------ Net Expenses............................................ 9,910,078 ------------ NET INVESTMENT INCOME....................................... $ 51,865,645 ============ REALIZED AND UNREALIZED GAIN/LOSS: Realized Gain/Loss: Investments............................................... $ 326,738 Forward Foreign Currency Contracts........................ 53 Foreign Currency Transactions............................. 2,735,241 ------------ Net Realized Gain........................................... 3,062,032 ------------ Net Unrealized Depreciation During the Period............... (12,909,658) ------------ NET REALIZED AND UNREALIZED LOSS............................ $ (9,847,626) ============ NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 42,018,019 ============
22 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND FINANCIAL STATEMENTS continued Statements of Changes in Net Assets
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ---------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income..................................... $ 51,865,645 $ 42,538,299 Net Realized Gain/Loss.................................... 3,062,032 (37,759,344) Net Unrealized Appreciation/Depreciation During the Period.................................................. (12,909,658) 71,411,903 ------------- ------------- Change in Net Assets from Operations...................... 42,018,019 76,190,858 ------------- ------------- Distributions from Net Investment Income: Class A Shares.......................................... (35,174,855) (26,354,660) Class B Shares.......................................... (12,164,487) (10,773,678) Class C Shares.......................................... (3,384,973) (2,702,792) Class I Shares.......................................... (82,724) -0- ------------- ------------- (50,807,039) (39,831,130) ------------- ------------- Return of Capital Distribution: Class A Shares.......................................... -0- (889,262) Class B Shares.......................................... -0- (358,702) Class C Shares.......................................... -0- (90,962) Class I Shares.......................................... -0- -0- ------------- ------------- -0- (1,338,926) ------------- ------------- Total Distributions....................................... (50,807,039) (41,170,056) ------------- ------------- NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES....... (8,789,020) 35,020,802 ------------- ------------- FROM CAPITAL TRANSACTIONS: Proceeds from Shares Sold................................. 489,332,752 187,187,625 Net Asset Value of Shares Issued Through Dividend Reinvestment............................................ 37,014,423 29,609,310 Cost of Shares Repurchased................................ (298,295,554) (295,963,620) ------------- ------------- NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS........ 228,051,621 (79,166,685) ------------- ------------- TOTAL INCREASE/DECREASE IN NET ASSETS..................... 219,262,601 (44,145,883) NET ASSETS: Beginning of the Period................................... 581,614,550 625,760,433 ------------- ------------- End of the Period (Including accumulated undistributed net investment income of $(1,552,606) and $(4,885,475), respectively)........................................... $ 800,877,151 $ 581,614,550 ============= =============
See Notes to Financial Statements 23 VAN KAMPEN HIGH YIELD FUND FINANCIAL HIGHLIGHTS THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED AUGUST 31, CLASS A SHARES ------------------------------------------------ 2005 2004 2003 2002 (a) 2001 ------------------------------------------------ NET ASSET VALUE, BEGINNING OF THE PERIOD... $ 3.64 $ 3.43 $ 3.15 $ 4.23 $ 5.24 ------ ------ ------ ------- ------ Net Investment Income.................... .26 .26 .29 .39 .51 Net Realized and Unrealized Gain/Loss.... (.02) .21 .29 (1.01) (.96) ------ ------ ------ ------- ------ Total from Investment Operations........... .24 .47 .58 (.62) (.45) ------ ------ ------ ------- ------ Less: Distributions from Net Investment Income...................... .25 .25 .24 .43 .55 Return of Capital Distributions.......... -0- .01 .06 .03 .01 ------ ------ ------ ------- ------ Total Distributions........................ .25 .26 .30 .46 .56 ------ ------ ------ ------- ------ NET ASSET VALUE, END OF THE PERIOD......... $ 3.63 $ 3.64 $ 3.43 $ 3.15 $ 4.23 ====== ====== ====== ======= ====== Total Return (b)........................... 6.89% 14.02% 19.26% -15.75% -9.04% Net Assets at End of the Period (In millions)............................ $532.0 $379.5 $408.7 $ 308.5 $394.4 Ratio of Expenses to Average Net Assets.... 1.06% 1.06% 1.12% 1.08% 1.05% Ratio of Net Investment Income to Average Net Assets............................... 7.11% 7.45% 8.36% 10.39% 10.93% Portfolio Turnover......................... 84% 88% 95% 83% 80%
(a) As required, effective September 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on fixed income securities and presenting paydown gains and losses on mortgage- and asset-backed securities as interest income. The effect of these changes for the period ended August 31, 2002 was to decrease the ratio of net investment income to average net assets from 10.49% to 10.39%. Net investment income per share and net realized gains and losses per share were unaffected by the adjustments. Per share, ratios and supplemental data for periods prior to August 31, 2002 have not been restated to reflect this change in presentation. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 4.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. With respect to shares purchased prior to December 1, 2004, a CDSC of 1% may be imposed on certain redemptions made within one year of purchase. If the sales charges were included, total returns would be lower. These returns include Rule 12b-1 fees and service fees of up to .25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 24 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED AUGUST 31, CLASS B SHARES ------------------------------------------------ 2005 2004 2003 2002 (a) 2001 ------------------------------------------------ NET ASSET VALUE, BEGINNING OF THE PERIOD... $ 3.65 $ 3.44 $ 3.16 $ 4.24 $ 5.25 ------ ------ ------ ------- ------ Net Investment Income.................... .25 .23 .25 .35 .48 Net Realized and Unrealized Gain/Loss.... (.02) .21 .30 (1.01) (.97) ------ ------ ------ ------- ------ Total from Investment Operations........... .23 .44 .55 (.66) (.49) ------ ------ ------ ------- ------ Less: Distributions from Net Investment Income...................... .23 .22 .21 .39 .51 Return of Capital Distributions.......... -0- .01 .06 .03 .01 ------ ------ ------ ------- ------ Total Distributions........................ .23 .23 .27 .42 .52 ------ ------ ------ ------- ------ NET ASSET VALUE, END OF THE PERIOD......... $ 3.65 $ 3.65 $ 3.44 $ 3.16 $ 4.24 ====== ====== ====== ======= ====== Total Return (b)........................... 6.36% 12.79% 18.27% -16.12% -9.80% Net Assets at End of the Period (In millions)............................ $191.0 $160.7 $175.6 $ 168.8 $249.6 Ratio of Expenses to Average Net Assets.... 1.83% 1.82% 1.89% 1.84% 1.83% Ratio of Net Investment Income to Average Net Assets............................... 6.33% 6.70% 7.68% 9.67% 10.13% Portfolio Turnover......................... 84% 88% 95% 83% 80%
(a) As required, effective September 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on fixed income securities and presenting paydown gains and losses on mortgage- and asset-backed securities as interest income. The effect of these changes for the period ended August 31, 2002 was to decrease the ratio of net investment income to average net assets from 9.77% to 9.67%. Net investment income per share and net realized gains and losses per share were unaffected by the adjustments. Per share, ratios and supplemental data for periods prior to August 31, 2002 have not been restated to reflect this change in presentation. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 4%, charged on certain redemptions made within the first and second year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. See Notes to Financial Statements 25 VAN KAMPEN HIGH YIELD FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED AUGUST 31, CLASS C SHARES ------------------------------------------------ 2005 2004 2003 2002 (a) 2001 ------------------------------------------------ NET ASSET VALUE, BEGINNING OF THE PERIOD.................................. $3.61 $ 3.41 $ 3.13 $ 4.20 $ 5.22 ----- ------ ------ ------- ------- Net Investment Income................... .25 .23 .25 .35 .48 Net Realized and Unrealized Gain/Loss............................. (.03) .20 .30 (1.00) (.98) ----- ------ ------ ------- ------- Total from Investment Operations.......... .22 .43 .55 (.65) (.50) ----- ------ ------ ------- ------- Less: Distributions from Net Investment Income..................... .23 .22 .21 .39 .51 Return of Capital Distributions......... -0- .01 .06 .03 .01 ----- ------ ------ ------- ------- Total Distributions....................... .23 .23 .27 .42 .52 ----- ------ ------ ------- ------- NET ASSET VALUE, END OF THE PERIOD........ $3.60 $ 3.61 $ 3.41 $ 3.13 $ 4.20 ===== ====== ====== ======= ======= Total Return (b).......................... 6.17%(d) 12.98%(d) 18.14%(c) -16.04% -10.06% Net Assets at End of the Period (In millions)........................... $54.5 $ 41.4 $ 41.5 $ 36.7 $ 58.7 Ratio of Expenses to Average Net Assets... 1.82%(d) 1.81%(d) 1.86% 1.84% 1.82% Ratio of Net Investment Income to Average Net Assets.............................. 6.34%(d) 6.71%(d) 7.68%(c) 9.68% 10.12% Portfolio Turnover........................ 84% 88% 95% 83% 80%
(a) As required, effective September 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on fixed income securities and presenting paydown gains and losses on mortgage- and asset-backed securities as interest income. The effect of these changes for the period ended August 31, 2002 was to decrease the ratio of net investment income to average net assets from 9.78% to 9.68%. Net investment income per share and net realized gains and losses per share were unaffected by the adjustments. Per share, ratios and supplemental data for periods prior to August 31, 2002 have not been restated to reflect this change in presentation. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1% charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. (c) Certain non-recurring payments were made to Class C Shares, resulting in an increase to the Total Return and Ratio of Net Investment Income to Average Net Assets of .01%. (d) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net Investment Income to Average Net Assets reflect actual 12b-1 fees of less than 1% (See footnote 6). 26 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
CLASS I SHARES MARCH 23, 2005 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 2005 ---------------- NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $3.65 ----- Net Investment Income..................................... .12 Net Realized and Unrealized Loss.......................... (.02) ----- Total from Investment Operations............................ .10 Less Distributions from Net Investment Income............... .12 ----- NET ASSET VALUE, END OF THE PERIOD.......................... $3.63 ===== Total Return (a)............................................ 2.69%* Net Assets at End of the Period (In millions)............... $23.3 Ratio of Expenses to Average Net Assets..................... .85% Ratio of Net Investment Income to Average Net Assets........ 6.97% Portfolio Turnover.......................................... 84%
* Non-Annualized (a) Assumes reinvestment of all distributions for the period. Return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. See Notes to Financial Statements 27 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen High Yield Fund (the "Fund"), formerly Van Kampen High Income Corporate Bond Fund, is organized as a Delaware statutory trust, and is registered as a diversified, open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's primary investment objective is to seek to maximize current income. Capital appreciation is a secondary objective which is sought only when consistent with the Fund's primary investment objective. The Fund commenced investment operations on October 2, 1978. The distribution of the Fund's Class B, Class C and Class I Shares commenced on July 2, 1992, July 6, 1993 and March 23, 2005, respectively. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION Fixed income investments and preferred stock are stated at value using market quotations or indications of value obtained from an independent pricing service. Investments in securities listed on a securities exchange are valued at their last sale price as of the close of such securities exchange. Equity securities traded on NASDAQ are valued at the NASDAQ Official Closing Price. Unlisted securities and listed securities for which the last sales price is not available are valued at the mean of the last reported bid and asked price. For those securities where quotations or prices are not available, valuations are determined in accordance with procedures established in good faith by the Board of Trustees. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market value. Forward foreign currency contracts are valued using quoted foreign exchange rates. B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date basis. Realized gains and losses are determined on an identified cost basis. The Fund may purchase and sell securities on a "when-issued" or "delayed delivery" basis, with settlement to occur at a later date. The value of the security so purchased is subject to market fluctuations during this period. The Fund will segregate assets with the custodian having an aggregate value at least equal to the amount of the when-issued or delayed delivery purchase commitments until payment is made. At August 31, 2005, there were no when-issued, delayed delivery, or forward purchase commitments. The Fund may invest in repurchase agreements, which are short-term investments in which the Fund acquires ownership of a debt security and the seller agrees to repurchase the security at a future time and specified price. The Fund may invest independently in repurchase agreements, or transfer uninvested cash balances into a pooled cash account along with other investment companies advised by Van Kampen Asset Management (the "Adviser") or its affiliates, the daily aggregate of which is invested in repurchase agreements. Repurchase agreements are fully collateralized by the underlying debt security. The Fund will make payment for such securities only upon physical delivery or evidence of book entry transfer to 28 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued the account of the custodian bank. The seller is required to maintain the value of the underlying security at not less than the repurchase proceeds due the Fund. C. INCOME AND EXPENSES Interest income is recorded on an accrual basis and dividend income is recorded on the ex-dividend date. Discounts on debt securities are accreted and premiums are amortized over the expected life of each applicable security. Income and expenses of the Fund are allocated on a pro rata basis to each class of shares, except for distribution and service fees and incremental transfer agency costs which are unique to each class of shares. D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. The Fund intends to utilize provisions of the federal income tax laws which allow it to carry a realized capital loss forward for eight years following the year of the loss and offset such losses against any future realized capital gains. At August 31, 2005, the Fund had an accumulated capital loss carryforward for tax purposes of $560,990,126 which will expire according to the following schedule.
AMOUNT EXPIRATION $ 6,411,333................................................ August 31, 2006 15,213,979................................................ August 31, 2007 33,682,013................................................ August 31, 2008 51,935,293................................................ August 31, 2009 138,518,165................................................ August 31, 2010 165,406,856................................................ August 31, 2011 117,018,188................................................ August 31, 2012 32,804,299................................................ August 31, 2013
Part of the capital loss carryforward above was acquired due to a merger with another regulated investment company, please see Footnote 3 for details. At August 31, 2005, the cost and related gross unrealized appreciation and depreciation are as follows: Cost of investments for tax purposes........................ $805,887,505 ============ Gross tax unrealized appreciation........................... $ 37,229,476 Gross tax unrealized depreciation........................... (59,742,089) ------------ Net tax unrealized depreciation on investments.............. $(22,512,613) ============
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly dividends from net investment income. Net realized gains, if any, are distributed annually. Distributions from net realized gains for book purposes may include short-term capital gains which are included in ordinary income for tax purposes. 29 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued The tax character of distributions paid during the years ended August 31, 2005 and 2004 was as follows:
2005 2004 Distributions paid from: Ordinary income........................................... $50,502,624 $40,015,705 Long-term capital gain.................................... -0- -0- Return of capital......................................... -0- 1,338,926 ----------- ----------- $50,502,624 $41,354,631 =========== ===========
Due to inherent differences in the recognition of income, expenses, and realized gains/ losses under U.S. generally accepted accounting principles and federal income tax purposes, permanent differences between book and tax basis reporting have been identified and appropriately reclassified on the Statement of Assets and Liabilities. A permanent book and tax difference relating to consent fee income received from tender offers of $896,857 has been reclassified from accumulated undistributed net investment income to accumulated net realized loss. Permanent book and tax differences of $2,735,294 related to the recognition of net realized gains on foreign currency transactions and $4,354 related to the Fund's investment in other regulated investment companies have been reclassified from accumulated net realized loss to accumulated undistributed net investment income. A permanent book and tax difference related to nondeductible merger costs of $185,759 has been reclassified from accumulated undistributed net investment income to capital. Additionally, permanent book and tax differences of $7,674 relating to paydowns on mortgage-backed securities and $1,096,420 relating to book to tax amortization differences were reclassified from accumulated undistributed net investment income to accumulated net realized loss. As of August 31, 2005, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income............................... $3,564,658
Net realized gains or losses may differ for financial reporting and tax purposes primarily as a result of post October losses which are not realized for tax purposes until the first day of the following fiscal year and the deferral of losses relating to wash sales transactions. F. EXPENSE REDUCTIONS During the year ended August 31, 2005, the Fund's custody fee was reduced by $44,630 as a result of credits earned on cash balances. G. FOREIGN CURRENCY TRANSLATION Asset and liabilities denominated in foreign currencies and commitments under forward foreign currency contracts are translated into U.S. dollars at the mean of the quoted bid and ask prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated at the rate of exchange prevailing when such securities were acquired or sold. Realized gain and loss on foreign currency transactions on the Statement of Operations includes the net realized amount from the sale of foreign currency and the amount realized between trade date and settlement date on securities transactions. Income and expenses are translated at rates prevailing when accrued. 30 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Fund's Investment Advisory Agreement, the Adviser will provide investment advice and facilities to the Fund for an annual fee payable monthly as follows:
AVERAGE DAILY NET ASSETS % PER ANNUM First $500 million.......................................... .420% Next $250 million........................................... .345% Next $250 million........................................... .295% Next $1 billion............................................. .270% Next $1 billion............................................. .245% Over $3 billion............................................. .220%
Effective June 1, 2005, the investment advisory fee was reduced from .625% for the first $150 million, .550% for the next $150 million and .500% for any average daily net assets greater than $300 million. For the year ended August 31, 2005, the Fund recognized expenses of approximately $47,700 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, of which a trustee of the Fund is a partner of such firm and he and his law firm provide legal services as legal counsel to the Fund. Under separate Accounting Services and Chief Compliance Officer ("CCO") Employment agreements, the Adviser provides accounting services and the CCO provides compliance services to the Fund. The costs of these services are allocated to each fund. For the year ended August 31, 2005, the Fund recognized expenses of approximately $48,600 representing Van Kampen Investment Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing accounting services to the Fund, as well as, the salary, benefits and related costs of the CCO and related support staff paid by Van Kampen. Services provided pursuant to the Accounting Services and CCO Employment agreement are reported as part of "Other" expenses on the Statement of Operations. Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser, serves as the shareholder servicing agent for the Fund. For the year ended August 31, 2005, the Fund recognized expenses of approximately $1,275,300 representing transfer agency fees paid to VKIS. Transfer agency fees are determined through negotiations with the Fund's Board of Trustees. Certain officers and trustees of the Fund are also officers and directors of Van Kampen. The Fund does not compensate its officers or trustees who are also officers of Van Kampen. The Fund provides deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation. Amounts deferred are retained by the Fund and to the extent permitted by the 1940 Act, as amended, may be invested in the common shares of those funds selected by the trustees. Investments in such funds of $255,220 are included in "Other" assets on the Statement of Assets and Liabilities at August 31, 2005. Appreciation/ depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund. Benefits under the retirement plan are payable upon retirement for a ten-year period and are based upon each trustee's years of service to the Fund. The maximum annual benefit per trustee under the plan is $2,500. 31 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued 3. CAPITAL TRANSACTIONS At August 31, 2005, capital aggregated $973,552,423, $303,381,260, $80,015,712 and $28,126,278 for Classes A, B, C and I, respectively. For the year ended August 31, 2005, transactions were as follows:
SHARES VALUE Sales: Class A................................................... 86,725,464 $ 320,410,088 Class B................................................... 28,208,023 105,232,841 Class C................................................... 10,910,339 40,075,471 Class I................................................... 6,506,107 23,614,352 ----------- ------------- Total Sales................................................. 132,349,933 $ 489,332,752 =========== ============= Dividend Reinvestment: Class A................................................... 7,137,575 $ 26,066,021 Class B................................................... 2,331,043 8,551,256 Class C................................................... 637,802 2,314,420 Class I................................................... 22,802 82,726 ----------- ------------- Total Dividend Reinvestment................................. 10,129,222 $ 37,014,423 =========== ============= Repurchases: Class A................................................... (51,466,042) $(188,120,153) Class B................................................... (22,114,193) (81,191,619) Class C................................................... (7,880,798) (28,567,020) Class I................................................... (114,754) (416,762) ----------- ------------- Total Repurchases........................................... (81,575,787) $(298,295,554) =========== =============
32 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued At August 31, 2004, capital aggregated $709,335,080, $226,435,317, and $58,356,021 for Classes A, B and C, respectively. For the year ended August 31, 2004, transactions were as follows:
SHARES VALUE Sales: Class A................................................... 42,743,427 $ 152,677,314 Class B................................................... 6,551,925 23,512,637 Class C................................................... 3,096,714 10,997,674 ----------- ------------- Total Sales................................................. 52,392,066 $ 187,187,625 =========== ============= Dividend Reinvestment: Class A................................................... 5,607,636 $ 20,120,077 Class B................................................... 2,113,467 7,614,931 Class C................................................... 525,673 1,874,302 ----------- ------------- Total Dividend Reinvestment................................. 8,246,776 $ 29,609,310 =========== ============= Repurchases: Class A................................................... (63,202,465) $(224,432,571) Class B................................................... (15,674,574) (56,222,037) Class C................................................... (4,315,074) (15,309,012) ----------- ------------- Total Repurchases........................................... (83,192,113) $(295,963,620) =========== =============
Class B Shares purchased on or after June 1, 1996, and any dividend reinvestment plan Class B Shares received thereon, automatically convert to Class A Shares eight years after the end of the calendar month in which the shares were purchased. Class B Shares purchased before June 1, 1996, and any dividend reinvestment plan Class B Shares received thereon, automatically convert to Class A Shares six years after the end of the calendar month in which the shares were purchased. For the years ended August 31, 2005 and 2004, 5,481,366, and 1,296,337 Class B Shares automatically converted to Class A Shares, respectively, and are shown in the above table as sales of Class A Shares and repurchases of Class B Shares. Class C Shares purchased before January 1, 1997, and any dividend reinvestment plan Class C Shares received on such shares, automatically convert to Class A Shares ten years after the end of the calendar month in which such shares were purchased. Class C Shares purchased on or after January 1, 1997 do not possess a conversion feature. For the years ended August 31, 2005 and 2004, 252,275 and 9,894 Class C Shares converted to Class A Shares, respectively, and are shown in the above table as sales of Class A Shares and repurchases of Class C Shares. Class B and C Shares are offered without a front end sales charge, but are subject to a contingent deferred sales charge (CDSC). The CDSC will be imposed on most 33 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued redemptions made within five years of the purchase for Class B Shares and one year of the purchase for Class C Shares as detailed in the following schedule.
CONTINGENT DEFERRED SALES CHARGE AS A PERCENTAGE OF DOLLAR AMOUNT SUBJECT TO CHARGE -------------------------- YEAR OF REDEMPTION CLASS B CLASS C First....................................................... 4.00% 1.00% Second...................................................... 4.00% None Third....................................................... 3.00% None Fourth...................................................... 2.50% None Fifth....................................................... 1.50% None Sixth and Thereafter........................................ None None
For the year ended August 31, 2005, Van Kampen, as Distributor for the Fund, received net commissions on sales of the Fund's Class A Shares of approximately $144,400 and CDSC on redeemed shares of approximately $329,800. Sales charges do not represent expenses of the Fund. On December 17, 2004, the Fund acquired all of the assets and liabilities of the Van Kampen High Yield Fund ("High Yield") through a tax free reorganization approved by High Yield shareholders on December 7, 2004. The Fund issued 49,903,883, 21,224,359 and 7,028,101 shares of Classes A, B and C valued at $186,141,484, $79,591,347 and $26,074,256, respectively, in exchange for High Yield's net assets. The shares of High Yield were converted into Fund shares at a ratio 1 to 1.515, 1 to 1.514 and 1 to 1.529 for Classes A, B and C, respectively. Net unrealized appreciation on High Yield as of December 17, 2004 was $3,802,196. The Fund assumed High Yield's book to tax amortization differences, which resulted in a $660,296 decrease to accumulated undistributed net investment income and a corresponding increase to net unrealized appreciation. Shares issued in connection with this reorganization are included in proceeds from shares sold for the year ended August 31, 2005. Combined net assets of both funds on the day of reorganization were $893,763,227. Included in these net assets was a capital loss carryforward of $166,397,364 of which $95,994,761 can be utilized, deferred compensation of $155,071, the deferral of losses related to wash sale transactions of $290,140, non-accrual interest income of $864,492 and gains recognized on futures held on December 17, 2004 of $821,478, all carried forward from the High Yield Fund. 4. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $606,901,243 and $666,413,270, respectively. 5. DERIVATIVE FINANCIAL INSTRUMENTS A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate or index. The Fund has a variety of reasons to use derivative instruments, such as to attempt to protect the Fund against possible changes in the market value of its portfolio, manage the 34 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued Fund's effective yield, foreign currency exposure, maturity and duration or generate potential gain. All of the Fund's holdings, including derivative instruments, are marked to market each day with the change in value reflected in unrealized appreciation/depreciation. Upon disposition, a realized gain or loss is recognized accordingly, except when taking delivery of a security underlying a forward commitment. In this instance, the recognition of gain or loss is postponed until the disposal of the security underlying the forward commitment. Purchasing securities or foreign currency on a forward commitment involves a risk that the market value at the time of delivery may be lower than the agreed upon purchase price resulting in an unrealized loss. Selling securities or foreign currency on a forward commitment involves different risks and can result in losses more significant than those arising from the purchase of such securities. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts. A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. Upon the settlement of the contract, a realized gain or loss is recognized and is included as a component of realized gain/loss on forward foreign currency contracts. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts. Risks may also arise from the unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The following forward foreign currency contracts were outstanding as of August 31, 2005:
IN UNREALIZED EXCHANGE CURRENT APPRECIATION/ FOR VALUE DEPRECIATION SHORT CONTRACTS: Euro Currency, 11,673,000 Expiring 10/26/05...................... US $ $14,437,129 $(218,948) 12,725,000 Expiring 10/26/05...................... US $ 15,738,240 (260,568) 675,000 Expiring 10/26/05...................... US $ 834,838 (13,633) ----------- --------- $31,010,207 $(493,149) =========== =========
6. DISTRIBUTION AND SERVICE PLANS With respect to its Class A Shares, Class B Shares and Class C Shares, the Fund and its shareholders have adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively the "Plans"). The Plans govern payments for: the distribution of the Fund's Class A Shares, Class B Shares and Class C Shares; the provision of ongoing shareholder services with respect to such classes of shares; and maintenance of shareholder accounts with respect to such classes of shares. Annual fees under the Plans of up to .25% of Class A average daily net assets and up to 1.00% each for Class B and Class C average daily net assets are accrued daily. The annual fees for Class A Shares are paid quarterly and the annual fees for Class C Shares are paid monthly. For Class B Shares, 75% of the annual fees are paid monthly, while 25% of the annual fees are paid quarterly. The amount of distribution expenses incurred by Van Kampen and not yet reimbursed ("unreimbursed receivable") was approximately $3,745,800 and $0 for Class B and Class C Shares, respectively. These amounts may be recovered from future payments under the distribution plan or CDSC. To the extent the unreimbursed receivable has been fully recovered, any excess 12b-1 fees will be refunded to the Fund on a quarterly basis. 35 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued Included in the fees for the year ended August 31, 2005 are payments retained by Van Kampen of approximately $1,566,900 and payments made to Morgan Stanley DW Inc., an affiliate of the Adviser, of approximately $198,900. 7. LEGAL MATTERS The Adviser, certain affiliates of the Adviser, and certain investment companies advised by the Adviser or its affiliates, including the Fund, are named as defendants in a number of similar class action complaints which were recently consolidated. The consolidated action also names as defendants certain individual Trustees and Directors of certain investment companies advised by affiliates of the Adviser; the complaint does not, however, name the individual Trustees of any Van Kampen funds. The consolidated amended complaint generally alleges that defendants violated their statutory disclosure obligations and fiduciary duties by failing properly to disclose (i) that the Adviser and certain affiliates of the Adviser allegedly offered economic incentives to brokers and others to steer investors to the funds advised by the Adviser or its affiliates rather than funds managed by other companies, and (ii) that the funds advised by the Adviser or its affiliates, including the Fund, allegedly paid excessive commissions to brokers in return for their alleged efforts to steer investors to these funds. The complaint seeks, among other things, unspecified compensatory damages, rescissionary damages, fees and costs. Plaintiffs have filed a Motion for Leave to file a Supplemental Pleading that would, among other things, expand the allegations and alleged class. The Adviser and certain affiliates of the Adviser are also named as defendants in a derivative suit which additionally names as defendants certain individual Trustees of certain Van Kampen funds; the named investment companies, including the Fund, are listed as nominal defendants. The complaint alleges that defendants caused the Van Kampen funds to pay economic incentives to a proprietary sales force to promote the sale of proprietary mutual funds. The complaint also alleges that the Van Kampen funds paid excessive commissions to Morgan Stanley and its affiliates in connection with the sales of the funds. The complaint seeks, among other things, the removal of the current Trustees of the funds, rescission of the management contracts for the funds, disgorgement of profits by Morgan Stanley and its affiliates and monetary damages. This complaint has been coordinated with the consolidated complaint described in the preceding paragraph. Plaintiff has sought leave to file a second amended derivative compliant that alleges that the Adviser permitted or recklessly disregarded market timing and late trading in its proprietary mutual funds in order to increase assets under management and fees. However, pursuant to an agreement between the parties, the plaintiff's proposed second amended derivative complaint was withdrawn and the allegations regarding market timing and late trading asserted therein were filed in a separate complaint and coordinated with other cases related to market timing that have been centralized in a federal court. The defendants have moved to dismiss each of these actions and otherwise intend to defend them vigorously. While the defendants believe that they have meritorious defenses, the ultimate outcome of these matters is not presently determinable at this early stage of litigation, and no provision has been made in the Fund's financial statements for the effect, if any, of these matters. 36 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2005 continued 8. INDEMNIFICATIONS The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. 37 VAN KAMPEN HIGH YIELD FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Trustees of Van Kampen High Yield Fund We have audited the accompanying statement of assets and liabilities of Van Kampen High Yield Fund (formerly the Van Kampen High Income Corporate Bond Fund) (the "Fund"), including the portfolio of investments, as of August 31, 2005, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2005, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Van Kampen High Yield Fund at August 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with U.S. generally accepted accounting principles. -s- Ernst & Young LLP Chicago, Illinois October 12, 2005 38 VAN KAMPEN HIGH YIELD FUND BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES BOARD OF TRUSTEES DAVID C. ARCH JERRY D. CHOATE ROD DAMMEYER LINDA HUTTON HEAGY R. CRAIG KENNEDY HOWARD J KERR JACK E. NELSON HUGO F. SONNENSCHEIN WAYNE W. WHALEN* - Chairman SUZANNE H. WOOLSEY OFFICERS RONALD E. ROBISON President and Principal Executive Officer JOSEPH J. MCALINDEN Executive Vice President and Chief Investment Officer AMY R. DOBERMAN Vice President STEFANIE V. CHANG Vice President and Secretary JOHN L. SULLIVAN Chief Compliance Officer PHILLIP G. GOFF Chief Financial Officer and Treasurer INVESTMENT ADVISER VAN KAMPEN ASSET MANAGEMENT 1221 Avenue of the Americas New York, New York 10020 DISTRIBUTOR VAN KAMPEN FUNDS INC. 1221 Avenue of the Americas New York, New York 10020 SHAREHOLDER SERVICING AGENT VAN KAMPEN INVESTOR SERVICES INC. P.O. Box 947 Jersey City, New Jersey 07303-0947 CUSTODIAN STATE STREET BANK AND TRUST COMPANY 225 Franklin Street P.O. Box 1713 Boston, Massachusetts 02110 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ERNST & YOUNG LLP 233 South Wacker Drive Chicago, Illinois 60606 For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended August 31, 2005. For corporate shareholders, 4% of the distributions qualify for the dividends received deduction. Certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund intends to designate up to a maximum of $2,369,451 as taxed at a maximum of 15%. In January, the Fund provides tax information to shareholders for the preceding calendar year. * "Interested persons" of the Fund, as defined in the Investment Company Act of 1940, as amended. 39 VAN KAMPEN HIGH YIELD FUND TRUSTEES AND OFFICERS The business and affairs of the Fund are managed under the direction of the Fund's Board of Trustees and the Fund's officers appointed by the Board of Trustees. The tables below list the trustees and executive officers of the Fund and their principal occupations during the last five years, other directorships held by trustees and their affiliations, if any, with Van Kampen Investments Inc. ("Van Kampen Investments"), Van Kampen Asset Management (the "Adviser"), Van Kampen Funds Inc. (the "Distributor"), Van Kampen Advisors Inc., Van Kampen Exchange Corp. and Van Kampen Investor Services Inc. ("Investor Services"). The term "Fund Complex" includes each of the investment companies advised by the Adviser as of the date of this Annual Report. Trustees serve until reaching their retirement age or until their successors are duly elected and qualified. Officers are annually elected by the trustees. INDEPENDENT TRUSTEES
NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE David C. Arch (60) Trustee Trustee Chairman and Chief 78 Trustee/Director/Managing Blistex Inc. since 2003 Executive Officer of General Partner of 1800 Swift Drive Blistex Inc., a consumer funds in the Fund Oak Brook, IL 60523 health care products Complex. manufacturer. Director of the Heartland Alliance, a nonprofit organization serving human needs based in Chicago. Director of St. Vincent de Paul Center, a Chicago based day care facility serving the children of low income families. Board member of the Illinois Manufacturers' Association. Jerry D. Choate (67) Trustee Trustee Prior to January 1999, 76 Trustee/Director/Managing 33971 Selva Road since 1999 Chairman and Chief General Partner of Suite 130 Executive Officer of the funds in the Fund Dana Point, CA 92629 Allstate Corporation Complex. Director of ("Allstate") and Allstate Amgen Inc., a Insurance Company. Prior biotechnological to January 1995, company, and Director President and Chief of Valero Energy Executive Officer of Corporation, an Allstate. Prior to August independent refining 1994, various management company. positions at Allstate.
40
VAN KAMPEN HIGH YIELD FUND TRUSTEE AND OFfiCER INFORMATION continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Rod Dammeyer (64) Trustee Trustee President of CAC, L.L.C., 78 Trustee/Director/Managing CAC, L.L.C. since 2003 a private company General Partner of 4350 LaJolla Village Drive offering capital funds in the Fund Suite 980 investment and management Complex. Director of San Diego, CA 92122-6223 advisory services. Prior Stericycle, Inc., to February 2001, Vice Ventana Medical Chairman and Director of Systems, Inc., and GATX Anixter International, Corporation, and Inc., a global Trustee of The Scripps distributor of wire, Research Institute. cable and communications Prior to January 2005, connectivity products. Trustee of the Prior to July 2000, University of Chicago Managing Partner of Hospitals and Health Equity Group Corporate Systems. Prior to April Investment (EGI), a 2004, Director of company that makes TheraSense, Inc. Prior private investments in to January 2004, other companies. Director of TeleTech Holdings Inc. and Arris Group, Inc. Prior to May 2002, Director of Peregrine Systems Inc. Prior to February 2001, Director of IMC Global Inc. Prior to July 2000, Director of Allied Riser Communications Corp., Matria Healthcare Inc., Transmedia Networks, Inc., CNA Surety, Corp. and Grupo Azcarero Mexico (GAM).
41
VAN KAMPEN HIGH YIELD FUND TRUSTEE AND OFfiCER INFORMATION continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Linda Hutton Heagy (57) Trustee Trustee Managing Partner of 76 Trustee/Director/Managing Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of 233 South Wacker Drive executive search firm. funds in the Fund Suite 7000 Trustee on the University Complex. Chicago, IL 60606 of Chicago Hospitals Board, Vice Chair of the Board of the YMCA of Metropolitan Chicago and a member of the Women's Board of the University of Chicago. Prior to 1997, Partner of Ray & Berndtson, Inc., an executive recruiting firm. Prior to 1996, Trustee of The International House Board, a fellowship and housing organization for international graduate students. Prior to 1995, Executive Vice President of ABN AMRO, N.A., a bank holding company. Prior to 1990, Executive Vice President of The Exchange National Bank. R. Craig Kennedy (53) Trustee Trustee Director and President of 76 Trustee/Director/Managing 1744 R Street, NW since 1995 the German Marshall Fund General Partner of Washington, DC 20009 of the United States, an funds in the Fund independent U.S. Complex. foundation created to deepen understanding, promote collaboration and stimulate exchanges of practical experience between Americans and Europeans. Formerly, advisor to the Dennis Trading Group Inc., a managed futures and option company that invests money for individuals and institutions. Prior to 1992, President and Chief Executive Officer, Director and member of the Investment Committee of the Joyce Foundation, a private foundation. Howard J Kerr (69) Trustee Trustee Prior to 1998, President 78 Trustee/Director/Managing 14 Huron Trace since 2003 and Chief Executive General Partner of Galena, IL 61036 Officer of Pocklington funds in the Fund Corporation, Inc., an Complex. Director of investment holding the Lake Forest Bank & company. Director of the Trust. Marrow Foundation.
42
VAN KAMPEN HIGH YIELD FUND TRUSTEE AND OFfiCER INFORMATION continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Jack E. Nelson (69) Trustee Trustee President of Nelson 76 Trustee/Director/Managing 423 Country Club Drive since 1995 Investment Planning General Partner of Winter Park, FL 32789 Services, Inc., a funds in the Fund financial planning Complex. company and registered investment adviser in the State of Florida. President of Nelson Ivest Brokerage Services Inc., a member of the NASD, Securities Investors Protection Corp. and the Municipal Securities Rulemaking Board. President of Nelson Sales and Services Corporation, a marketing and services company to support affiliated companies. Hugo F. Sonnenschein (64) Trustee Trustee President Emeritus and 78 Trustee/Director/Managing 1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of Chicago, IL 60637 University of Chicago and funds in the Fund the Adam Smith Complex. Director of Distinguished Service Winston Laboratories, Professor in the Inc. Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences. Suzanne H. Woolsey, Ph.D. (63) Trustee Trustee Chief Communications 76 Trustee/Director/Managing 815 Cumberstone Road since 1999 Officer of the National General Partner of Harwood, MD 20776 Academy of funds in the Fund Sciences/National Complex. Director of Research Council, an Fluor Corp., an independent, federally engineering, chartered policy procurement and institution, from 2001 to construction November 2003 and Chief organization, since Operating Officer from January 2004 and 1993 to 2001. Director of Director of Neurogen the Institute for Defense Corporation, a Analyses, a federally pharmaceutical company, funded research and since January 1998. development center, Director of the German Marshall Fund of the United States, Director of the Rocky Mountain Institute and Trustee of Colorado College. Prior to 1993, Executive Director of the Commission on Behavioral and Social Sciences and Education at the National Academy of Sciences/National Research Council. From 1980 through 1989, Partner of Coopers & Lybrand.
43 VAN KAMPEN HIGH YIELD FUND TRUSTEE AND OFFICER INFORMATION continued INTERESTED TRUSTEE*
NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Wayne W. Whalen* (66) Trustee Trustee Partner in the law firm 78 Trustee/Director/Managing 333 West Wacker Drive since 1995 of Skadden, Arps, Slate, General Partner of Chicago, IL 60606 Meagher & Flom LLP, legal funds in the Fund counsel to funds in the Complex. Director of Fund Complex. the Abraham Lincoln Presidential Library Foundation.
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19) of the 1940 Act) of certain funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such funds in the Fund Complex. 44 VAN KAMPEN HIGH YIELD FUND TRUSTEE AND OFFICER INFORMATION continued OFFICERS
TERM OF OFFICE AND POSITION(S) LENGTH OF NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S) ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS Ronald E. Robison (66) President and Officer President of funds in the Fund Complex since September 2005, 1221 Avenue of the Americas Principal Executive since 2003 Principal Executive Officer of funds in the Fund Complex New York, NY 10020 Officer since 2003, and previously Executive Vice President of funds in the Fund Complex from 2003-2005. Managing Director of Morgan Stanley and Morgan Stanley & Co. Incorporated. Managing Director of Morgan Stanley Investment Management Inc. Chief Administrative Officer, Managing Director and Director of Morgan Stanley Investment Advisors Inc., Morgan Stanley Services Company Inc. and Managing Director and Director of Morgan Stanley Distributors Inc. Chief Executive Officer and Director of Morgan Stanley Trust. Executive Vice President and Principal Executive Officer of the Institutional and Retail Morgan Stanley Funds; Director of Morgan Stanley SICAV; previously Chief Global Operations Officer of Morgan Stanley Investment Management Inc. Joseph J. McAlinden (62) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan 1221 Avenue of the Americas President and Chief since 2002 Stanley Investment Advisors Inc., and Morgan Stanley New York, NY 10020 Investment Officer Investment Management Inc. and Director of Morgan Stanley Trust for over 5 years. Executive Vice President and Chief Investment Officer of funds in the Fund Complex. Managing Director and Chief Investment Officer of Van Kampen Investments, the Adviser and Van Kampen Advisors Inc. since December 2002. Amy R. Doberman (43) Vice President Officer Managing Director and General Counsel, U.S. Investment 1221 Avenue of the Americas since 2004 Management; Managing Director of Morgan Stanley Investment New York, NY 10020 Management, Inc., Morgan Stanley Investment Advisers Inc. and the Adviser. Vice President of the Morgan Stanley Institutional and Retail Funds since July 2004 and Vice President of funds in the Fund Complex since August 2004. Previously, Managing Director and General Counsel of Americas, UBS Global Asset Management from July 2000 to July 2004 and General Counsel of Aeltus Investment Management, Inc. from January 1997 to July 2000. Stefanie V. Chang (38) Vice President Officer Executive Director of Morgan Stanley Investment Management. 1221 Avenue of the Americas and Secretary since 2003 Vice President and Secretary of funds in the Fund Complex. New York, NY 10020
45
VAN KAMPEN HIGH YIELD FUND TRUSTEE AND OFfiCER INFORMATION continued TERM OF OFFICE AND POSITION(S) LENGTH OF NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S) ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS John L. Sullivan (50) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since 1 Parkview Plaza Officer since 1996 August 2004. Prior to August 2004, Director and Managing Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen Advisors Inc. and certain other subsidiaries of Van Kampen Investments, Vice President, Chief Financial Officer and Treasurer of funds in the Fund Complex and head of Fund Accounting for Morgan Stanley Investment Management. Prior to December 2002, Executive Director of Van Kampen Investments, the Adviser and Van Kampen Advisors Inc. Phillip G. Goff (41) Chief Financial Officer Executive Director of Morgan Stanley Investment Management 1 Parkview Plaza Officer and since 2005 since June 2005. Chief Financial Officer and Treasurer of Oakbrook Terrace, IL 60181 Treasurer funds in the Fund Complex since August 2005. Prior to June 2005, Vice President and Chief Financial Officer of Enterprise Capital Management, Inc., an investment holding company.
46 Van Kampen High Yield Fund An Important Notice Concerning Our U.S. Privacy Policy We are required by federal law to provide you with a copy of our Privacy Policy annually. The following Policy applies to current and former individual clients of Van Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange Corp., as well as current and former individual investors in Van Kampen mutual funds, unit investment trusts, and related companies. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, 529 Educational Savings Accounts, accounts subject to the Uniform Gifts to Minors Act, or similar accounts. Please note that we may amend this Policy at any time, and will inform you of any changes to this Policy as required by law. WE RESPECT YOUR PRIVACY We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Policy describes what non-public personal information we collect about you, why we collect it, and when we may share it with others. We hope this Policy will help you understand how we collect and share non-public personal information that we gather about you. Throughout this Policy, we refer to the non-public information that personally identifies you or your accounts as "personal information." 1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU? To serve you better and manage our business, it is important that we collect and maintain accurate information about you. We may obtain this information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources. (continued on next page) Van Kampen High Yield Fund An Important Notice Concerning Our U.S. Privacy Policy continued For example: -- We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us. -- We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources. -- We may obtain information about your creditworthiness and credit history from consumer reporting agencies. -- We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements. -- If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." "Cookies" recognize your computer each time you return to one of our sites, and help to improve our sites' content and personalize your experience on our sites by, for example, suggesting offerings that may interest you. Please consult the Terms of Use of these sites for more details on our use of cookies. 2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU? To provide you with the products and services you request, to serve you better and to manage our business, we may disclose personal information we collect about you to our affiliated companies and to non-affiliated third parties as required or permitted by law. A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose personal information that we collect about you to our affiliated companies except to enable them to provide services on our behalf or as otherwise required or permitted by law. B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal information that we collect about you to non-affiliated third parties except to enable them to provide services on our behalf, to perform joint marketing agreements with (continued on back) Van Kampen High Yield Fund An Important Notice Concerning Our U.S. Privacy Policy continued other financial institutions, or as otherwise required or permitted by law. For example, some instances where we may disclose information about you to non-affiliated third parties include: for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with these companies, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information with others except to fulfill that limited purpose. 3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU? We maintain physical, electronic and procedural security measures to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information. The Statement of Additional Information includes additional information about Fund trustees and is available, without charge, upon request by calling 1-800-847-2424. Van Kampen Funds Inc. 1 Parkview Plaza P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com Copyright (C)2005 Van Kampen Funds Inc. All rights reserved. Member NASD/SIPC. 28, 128, 228 HYI ANR 10/05 (VAN KAMPEN INVESTMENTS SHINE LOGO) RN05-02477P-Y08/05 Item 2. Code of Ethics. (a) The Fund has adopted a code of ethics (the "Code of Ethics") that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Fund or a third party. (b) No information need be disclosed pursuant to this paragraph. (c) The Fund has amended its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto to delete from the end of the following paragraph on page 2 of the Code the phrase "to the detriment of the Fund.": "Each Covered Officer must not use his personal influence or personal relationship improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally (directly or indirectly)." Further, due to personnel changes at the Adviser, the list of Covered Officers set forth in Exhibit B and the General Counsel designee to whom questions about the application of the Code should be referred in Exhibit C were amended during the period. Exhibit B was then amended again in March 2005 and a third time in August 2005 and a fourth time in September 2005. All four editions of Exhibit B are attached. Additionally, Exhibit B was amended to remove Mitchell M. Merin as a covered officer. (d) Not applicable. (e) Not applicable. (f) (1) The Fund's Code of Ethics is attached hereto as Exhibit 12A. (2) Not applicable. (3) Not applicable. Item 3. Audit Committee Financial Expert. The Fund's Board of Trustees has determined that it has two "audit committee financial experts" serving on its audit committee, each of whom are "independent" Trustees : Jerry Choate and R. Craig Kennedy. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification. Item 4. Principal Accountant Fees and Services. (a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2005 REGISTRANT COVERED ENTITIES(1) AUDIT FEES................ $41,000 N/A NON-AUDIT FEES AUDIT-RELATED FEES... $0 $280,000(2) TAX FEES............. $2,500(3) $58,688(4) ALL OTHER FEES....... $0 $655,125(5) TOTAL NON-AUDIT FEES...... $2,500 $993,813 TOTAL..................... $43,500 $993,813
2004 REGISTRANT COVERED ENTITIES(1) AUDIT FEES................ $41,500 N/A NON-AUDIT FEES AUDIT-RELATED FEES... $0 $159,500(2) TAX FEES............. $2,000(3) $42,141(4) ALL OTHER FEES....... $0 $222,168(6) TOTAL NON-AUDIT FEES...... $2,000 $423,809 TOTAL..................... $43,500 $423,809
N/A- Not applicable, as not required by Item 4. (1) Covered Entities include the Adviser (excluding sub-advisors) and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Registrant. (2) Audit-Related Fees represent assurance and related services provided that are reasonably related to the performance of the audit of the financial statements of the Covered Entities' and funds advised by the Adviser or its affiliates, specifically attestation services provided in connection with a SAS 70 Report. (3) Tax Fees represent tax advice and compliance services provided in connection with the review of the Registrant's tax. (4) Tax Fees represent tax advice services provided to Covered Entities, including research and identification of PFIC entities. (5) All Other Fees represent attestation services provided in connection with performance presentation standards and assistance with compliance policies and procedures. (6) All Other Fees represent attestation services provided in connection with performance presentation standards, general industry education seminars provided, and a regulatory review project performed. (e)(1) The audit committee's pre-approval policies and procedures are as follows: JOINT AUDIT COMMITTEE AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY AND PROCEDURES OF THE VAN KAMPEN FUNDS AS ADOPTED JULY 23, 2003 AND AMENDED MAY 26, 2004(1) 1. STATEMENT OF PRINCIPLES The Audit Committee of the Board is required to review and, in its sole discretion, pre-approve all Covered Services to be provided by the Independent Auditors to the Fund and Covered Entities in order to assure that services performed by the Independent Auditors do not impair the auditor's independence from the Fund.(2) The SEC has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the audit committee's administration of the engagement of the independent auditor. The SEC's rules establish two different approaches to pre-approving services, which the SEC considers to be equally valid. Proposed services either: may be pre-approved without consideration of specific case-by-case services by the Audit Committee ("general pre-approval"); or require the specific pre-approval of the Audit Committee ("specific pre-approval"). The Audit Committee believes that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the Independent Auditors. As set forth in this Policy, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee (or by any member of the Audit Committee to which pre-approval authority has been delegated) if it is to be provided by the Independent Auditors. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit Committee. For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the SEC's rules on auditor independence. The Audit Committee will also consider whether the Independent Auditors are best positioned to provide the most effective and efficient services, for reasons such as its familiarity with the Fund's business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance the Fund's ability to manage or control risk or improve audit quality. All such factors will be considered as a whole, and no one factor should necessarily be determinative. The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services and may determine for each fiscal year, the appropriate ratio between the total amount of fees for Audit, Audit-related and Tax services for the Fund (including any Audit-related or Tax service fees for Covered Entities that were subject to pre-approval), and the total amount of fees for certain permissible non-audit services classified as All Other services for the Fund (including any such services for Covered Entities subject to pre-approval). The appendices to this Policy describe the Audit, Audit-related, Tax and All Other services that have the general pre-approval of the Audit Committee. The term of any general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers and provides a different period and states otherwise. The Audit Committee will annually review and pre-approve the services that may be provided by the Independent Auditors without obtaining specific pre-approval from the Audit Committee. The Audit Committee will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations. The purpose of this Policy is to set forth the policy and procedures by which the Audit Committee intends to fulfill its responsibilities. It does not delegate the Audit Committee's responsibilities to pre-approve services performed by the Independent Auditors to management. - ------------------ (1) This Joint Audit Committee Audit and Non-Audit Services Pre-Approval Policy and Procedures (the "Policy"), amended as of the date above, supercedes and replaces all prior versions that may have been amended from time to time. (2) Terms used in this Policy and not otherwise defined herein shall have the meanings as defined in the Joint Audit Committee Charter. The Fund's Independent Auditors have reviewed this Policy and believes that implementation of the Policy will not adversely affect the Independent Auditors' independence. 2. DELEGATION As provided in the Act and the SEC's rules, the Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. 3. AUDIT SERVICES The annual Audit services engagement terms and fees are subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by the Independent Auditors to be able to form an opinion on the Fund's financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit. The Audit Committee will monitor the Audit services engagement as necessary, but no less than on a quarterly basis, and will also approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund structure or other items. In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the Independent Auditors reasonably can provide. Other Audit services may include statutory audits and services associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings. The Audit Committee has pre-approved the Audit services in Appendix B.1. All other Audit services not listed in Appendix B.1 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated). 4. AUDIT-RELATED SERVICES Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Fund's financial statements or, to the extent they are Covered Services, the Covered Entities' financial statements, or that are traditionally performed by the Independent Auditors. Because the Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor and is consistent with the SEC's rules on auditor independence, the Audit Committee may grant general pre-approval to Audit-related services. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as "Audit services"; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements under Forms N-SAR and/or N-CSR. The Audit Committee has pre-approved the Audit-related services in Appendix B.2. All other Audit-related services not listed in Appendix B.2 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated). 5. TAX SERVICES The Audit Committee believes that the Independent Auditors can provide Tax services to the Fund and, to the extent they are Covered Services, the Covered Entities, such as tax compliance, tax planning and tax advice without impairing the auditor's independence, and the SEC has stated that the Independent Auditors may provide such services. Hence, the Audit Committee believes it may grant general pre-approval to those Tax services that have historically been provided by the Independent Auditors, that the Audit Committee has reviewed and believes would not impair the independence of the Independent Auditors, and that are consistent with the SEC's rules on auditor independence. The Audit Committee will not permit the retention of the Independent Auditors in connection with a transaction initially recommended by the Independent Auditors, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with Director of Tax or outside counsel to determine that the tax planning and reporting positions are consistent with this policy. Pursuant to the preceding paragraph, the Audit Committee has pre-approved the Tax Services in Appendix B.3. All Tax services involving large and complex transactions not listed in Appendix B.3 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated), including tax services proposed to be provided by the Independent Auditors to any executive officer or trustee/director/managing general partner of the Fund, in his or her individual capacity, where such services are paid for by the Fund (generally applicable only to internally managed investment companies). 6 ALL OTHER SERVICES The Audit Committee believes, based on the SEC's rules prohibiting the Independent Auditors from providing specific non-audit services, that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC's rules on auditor independence. The Audit Committee has pre-approved the All Other services in Appendix B.4. Permissible All Other services not listed in Appendix B.4 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated). A list of the SEC's prohibited non-audit services is attached to this policy as Appendix B.5. The SEC's rules and relevant guidance should be consulted to determine the precise definitions of these services and the applicability of exceptions to certain of the prohibitions. 7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS Pre-approval fee levels or budgeted amounts for all services to be provided by the Independent Auditors will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services. For each fiscal year, the Audit Committee may determine the appropriate ratio between the total amount of fees for Audit, Audit-related, and Tax services for the Fund (including any Audit-related or Tax services fees for Covered Entities subject to pre-approval), and the total amount of fees for certain permissible non-audit services classified as All Other services for the Fund (including any such services for Covered Entities subject to pre-approval). 8. PROCEDURES All requests or applications for services to be provided by the Independent Auditors that do not require specific approval by the Audit Committee will be submitted to the Fund's Chief Financial Officer and must include a detailed description of the services to be rendered. The Fund's Chief Financial Officer will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by the Independent Auditors. Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the Independent Auditors and the Fund's Chief Financial Officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence. The Audit Committee has designated the Fund's Chief Financial Officer to monitor the performance of all services provided by the Independent Auditors and to determine whether such services are in compliance with this Policy. The Fund's Chief Financial Officer will report to the Audit Committee on a periodic basis on the results of its monitoring. A sample report is included as Appendix B.7. Both the Fund's Chief Financial Officer and management will immediately report to the chairman of the Audit Committee any breach of this Policy that comes to the attention of the Fund's Chief Financial Officer or any member of management. 9. ADDITIONAL REQUIREMENTS The Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the Independent Auditors and to assure the auditor's independence from the Fund, such as reviewing a formal written statement from the Independent Auditors delineating all relationships between the Independent Auditors and the Fund, consistent with Independence Standards Board No. 1, and discussing with the Independent Auditors its methods and procedures for ensuring independence. 10. COVERED ENTITIES Covered Entities include the Fund's investment adviser(s) and any entity controlling, controlled by or under common control with the Fund's investment adviser(s) that provides ongoing services to the Fund(s). Beginning with non-audit service contracts entered into on or after May 6, 2003, the Fund's audit committee must pre-approve non-audit services provided not only to the Fund but also to the Covered Entities if the engagements relate directly to the operations and financial reporting of the Fund. This list of Covered Entities would include: - Van Kampen Investments Inc. - Van Kampen Asset Management - Van Kampen Advisors Inc. - Van Kampen Funds Inc. - Van Kampen Investor Services Inc. - Morgan Stanley Investment Management Inc. - Morgan Stanley Trust Company - Morgan Stanley Investment Management Ltd. - Morgan Stanley Investment Management Company - Morgan Stanley Asset & Investment Trust Management Company Ltd. (e)(2) Beginning with non-audit service contracts entered into on or after May 6, 2003, the audit committee also is required to pre-approve services to Covered Entities to the extent that the services are determined to have a direct impact on the operations or financial reporting of the Registrant. 100% of such services were pre-approved by the audit committee pursuant to the Audit Committee's pre-approval policies and procedures (included herein). (f) Not applicable. (g) See table above. (h) The audit committee of the Board of Trustees has considered whether the provision of services other than audit services performed by the auditors to the Registrant and Covered Entities is compatible with maintaining the auditors' independence in performing audit services. Item 5. Audit Committee of Listed Registrants. (a) The Fund has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: R. Craig Kennedy, Jerry Choate, Rod Dammeyer. (b) Not applicable. Item 6. Schedule of Investments. Please refer to Item #1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. Not applicable. Item 11. Controls and Procedures. (a) The Fund's principal executive officer and principal financial officer have concluded that the Fund's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a) The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto. (b)(1) A certification for the Principal Executive Officer of the registrant is attached hereto as part of EX-99.CERT. (b)(2) A certification for the Principal Financial Officer of the registrant is attached hereto as part of EX-99.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Van Kampen High Yield Fund By: /s/ Ronald E. Robison ---------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: October 20, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Ronald E. Robison ---------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: October 20, 2005 By: /s/ Phillip G. Goff ---------------------- Name: Phillip G. Goff Title: Principal Financial Officer Date: October 20, 2005 EX-99.CODE 2 c98565exv99wcode.txt CERTIFICATION CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS ADOPTED JULY 23, 2003, AS AMENDED AUGUST 10, 2005 AND SEPTEMBER 22, 2005 I. This Code of Ethics (the "Code") for the investment companies within the Van Kampen complex identified in Exhibit A (collectively, "Funds" and each, a "Fund") applies to each Fund's Principal Executive Officer, President, Principal Financial Officer and Treasurer (or persons performing similar functions) ("Covered Officers" each of whom are set forth in Exhibit B) for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. o full, fair, accurate, timely and understandable disclosure in reports and documents that a company files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; o compliance with applicable laws and governmental rules and regulations; o prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. Any question about the application of the Code should be referred to the General Counsel or his/her designee (who is set forth in Exhibit C). II. COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF INTEREST OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private interest interferes, or appears to interfere, with the interests of, or his service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" (as defined in the Investment Company Act) of the Fund. The Fund's and its investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside the parameters of this Code, unless or until the General Counsel determines that any violation of such programs and procedures is also a violation of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between the Fund and its investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund or for the investment adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Fund and its investment adviser. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the investment adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Directors/Trustees ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund. Each Covered Officer must not: o use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally (directly or indirectly); o cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Fund; or o use material non-public knowledge of portfolio transactions made or contemplated for, or actions proposed to be taken by, the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions. Each Covered Officer must, at the time of signing this Code, report to the General Counsel all affiliations or significant business relationships outside the Morgan Stanley complex and must update the report annually. Conflict of interest situations should always be approved by the General Counsel and communicated to the relevant Fund or Fund's Board. Any activity or relationship that would present such a conflict for a Covered Officer would likely also present a conflict for the Covered Officer if an immediate member of the Covered Officer's family living in the same household engages in such an activity or has such a relationship. Examples of these include: o service or significant business relationships as a director on the board of any public or private company; o accepting directly or indirectly, anything of value, including gifts and gratuities in excess of $100 per year from any person or entity with which the Fund has current or prospective business dealings, not including occasional meals or tickets for theatre or sporting events or other similar entertainment; provided it is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; o any ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than its investment adviser, principal underwriter, or any affiliated person thereof; and o a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. DISCLOSURE AND COMPLIANCE o Each Covered Officer should familiarize himself/herself with the disclosure and compliance requirements generally applicable to the Funds; o each Covered Officer must not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's Directors/Trustees and auditors, or to governmental regulators and self-regulatory organizations; o each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and their investment advisers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and o it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. REPORTING AND ACCOUNTABILITY Each Covered Officer must: o upon adoption of the Code (thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Boards that he has received, read and understands the Code; o annually thereafter affirm to the Boards that he has complied with the requirements of the Code; o not retaliate against any other Covered Officer, other officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and o notify the General Counsel promptly if he/she knows or suspects of any violation of this Code. Failure to do so is itself a violation of this Code. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any waivers(3) sought by a Covered Officer must be considered by the Board of the relevant Fund or Funds. The Funds will follow these procedures in investigating and enforcing this Code: o the General Counsel will take all appropriate action to investigate any potential violations reported to him; o if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; o any matter that the General Counsel believes is a violation will be reported to the relevant Fund's Audit Committee; o if the directors/trustees/managing general partners who are not "interested persons" as defined by the Investment Company Act (the "Independent Directors/Trustees/Managing General Partners") of the relevant Fund concur that a violation has occurred, they will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer or other appropriate disciplinary actions; o the Independent Directors/Trustees/Managing General Partners of the relevant Fund will be responsible for granting waivers of this Code, as appropriate; and o any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' investment advisers, principal underwriters, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code unless any provision of this Code conflicts with any applicable federal or state law, in which case the requirements of such law will govern. The Funds' and their investment advisers' and principal underwriters' codes of ethics under Rule 17j-1 under the Investment Company Act and Morgan Stanley's Code of Ethics are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. AMENDMENTS Any amendments to this Code, other than amendments to Exhibits A, B or C, must be approved or ratified by a majority vote of the Board of each Fund, including a majority of Independent Directors/Trustees/Managing General Partners. VII. CONFIDENTIALITY - ------------------ (3)Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of a material departure from a provision of the code of ethics." All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Independent Directors/Trustees/Managing General Partners of the relevant Fund or Funds and their counsel, the relevant Fund or Funds and their counsel and the relevant investment adviser and its counsel. VIII. INTERNAL USE The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion I have read and understand the terms of the above Code. I recognize the responsibilities and obligations incurred by me as a result of my being subject to the Code. I hereby agree to abide by the above Code. __________________________ Date:_____________________ EXHIBIT B COVERED OFFICERS Ronald E. Robison - President and Principal Executive Officer Phillip G. Goff - Chief Financial Officer and Treasurer EXHIBIT B (PRIOR TO SEPTEMBER 22, 2005) COVERED OFFICERS Mitchell M. Merin - President Ronald E. Robison - Executive Vice President and Principal Executive Officer Phillip G. Goff - Chief Financial Officer and Treasurer EXHIBIT B (PRIOR TO AUGUST 10, 2005) COVERED OFFICERS Mitchell M. Merin - President Ronald E. Robison - Executive Vice President and Principal Executive Officer James W. Garrett - Chief Financial Officer and Treasurer EXHIBIT B (PRIOR TO MARCH 2, 2005) COVERED OFFICERS Mitchell M. Merin - President Ronald E. Robison - Executive Vice President and Principal Executive Officer James M. Dykas - Chief Financial Officer and Treasurer EXHIBIT C GENERAL COUNSEL'S DESIGNEE Amy Doberman EX-99.CERT 3 c98565exv99wcert.txt CERTIFICATION I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen High Yield Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: October 20, 2005 /s/ Ronald E. Robison ---------------------------- Principal Executive Officer I, Phillip G. Goff, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen High Yield Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: October 20, 2005 /s/ Phillip G. Goff ------------------- Principal Financial Officer EX-99.906CERT 4 c98565exv99w906cert.txt CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Issuer: Van Kampen High Yield Fund In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended August 31, 2005 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: October 20, 2005 /s/ Ronald E. Robison --------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement required by Section 906 has been provided to Van Kampen High Yield Fund and will be retained by Van Kampen High Yield Fund and furnished to the Securities and Exchange Commission or its staff upon request. This written statement required by Section 906 is being furnished with this report, but not being filed as part of this Report. Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Issuer: Van Kampen High Yield Fund In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended August 31, 2005 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: October 20, 2005 /s/ Phillip G. Goff ------------------- Phillip G. Goff Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Van Kampen High Yield Fund and will be retained by Van Kampen High Yield Fund and furnished to the Securities and Exchange Commission or its staff upon request. This written statement required by Section 906 is being furnished with this report, but not being filed as part of this Report. -----END PRIVACY-ENHANCED MESSAGE-----