-----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, BwA0lhY4hLtDjEYzrbMuJYHJoTpA0KbZZqUON/ActQmvTOINrS2gngVS8c48rul1 hTGH2XYZYnHkt0YjfxnLiw== 0000950137-06-011573.txt : 20061030 0000950137-06-011573.hdr.sgml : 20061030 20061030130454 ACCESSION NUMBER: 0000950137-06-011573 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060831 FILED AS OF DATE: 20061030 DATE AS OF CHANGE: 20061030 EFFECTIVENESS DATE: 20061030 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: 061171243 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 0000276242 S000002331 VAN KAMPEN HIGH YIELD FUND C000006106 Class A Shares ACHYX C000006107 Class B Shares ACHZX C000006108 Class C Shares ACHWX C000006109 Class I Shares ACHVX N-CSR 1 c08291nvcsr.txt CERTIFIED SHAREHOLDER 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: 8/31/06 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, 2006. THIS PIECE MUST BE PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS. THE PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE IS NO ASSURANCE THAT 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 J.P. Morgan Global High Yield Index(R), the Lipper High Yield Bond Fund and the Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap(R) from 8/31/96 through 8/31/06. Class A shares, adjusted for sales charges. (LINE GRAPH)
LEHMAN BROTHERS US VAN KAMPEN HIGH J.P. MORGAN GLOBAL LIPPER HIGH YIELD CORP HIGH YIELD 2% YIELD FUND HIGH YIELD INDEX BOND FUND INDEX ISSUER CAP INDEX --------------- ------------------ ----------------- ------------------ 8/96 9531 10000 10000 10000 9756 10237 10261 10240 9817 10332 10310 10316 9940 10522 10488 10519 10052 10634 10617 10597 10161 10718 10722 10701 10319 10902 10902 10878 10192 10725 10665 10717 10256 10825 10756 10830 10498 11075 11041 11062 10661 11220 11230 11215 10874 11519 11530 11522 8/97 10907 11526 11556 11496 11157 11755 11836 11724 11040 11739 11790 11733 11192 11844 11876 11845 11282 11951 12016 11958 11523 12136 12249 12174 11662 12230 12364 12245 11837 12352 12543 12361 11943 12414 12582 12409 11978 12431 12568 12451 11942 12457 12591 12496 12050 12562 12677 12567 8/98 11089 11748 11711 11873 10963 11736 11640 11927 10725 11484 11376 11682 11398 12117 12044 12167 11334 12066 12007 12180 11470 12210 12224 12361 11434 12149 12175 12288 11649 12298 12389 12405 11885 12611 12710 12645 11652 12430 12469 12474 11614 12430 12470 12448 11677 12432 12474 12498 8/99 11578 12308 12348 12359 11540 12219 12251 12270 11542 12152 12216 12189 11669 12350 12431 12333 11777 12471 12580 12471 11821 12424 12518 12418 11904 12473 12607 12441 11728 12260 12389 12180 11703 12258 12335 12199 11568 12084 12115 12075 11830 12322 12339 12321 11894 12430 12361 12415 8/00 11936 12526 12426 12499 11750 12362 12243 12388 11262 11999 11824 11999 10699 11541 11165 11528 10809 11744 11358 11750 11464 12456 12111 12631 11552 12600 12149 12806 11159 12353 11746 12511 10957 12224 11592 12357 11097 12463 11717 12583 10736 12249 11373 12232 10799 12373 11440 12412 8/01 10857 12533 11490 12560 10094 11706 10679 11717 10282 11999 10924 12004 10630 12407 11271 12441 10523 12391 11241 12391 10440 12481 11268 12478 10030 12388 11068 12308 10244 12668 11287 12605 10343 12860 11406 12804 10220 12816 11292 12740 9525 12355 10656 11976 9109 12012 10307 11464 8/02 9147 12122 10484 11767 9025 11980 10338 11616 8930 11894 10273 11497 9456 12510 10865 12197 9531 12655 10970 12362 9668 12984 11212 12760 9835 13174 11363 12924 10091 13490 11647 13289 10564 14159 12219 14075 10669 14356 12364 14218 10926 14775 12697 14630 10807 14680 12599 14484 8/03 10909 14826 12768 14639 11202 15235 13078 15038 11433 15518 13371 15340 11569 15736 13526 15571 11835 16134 13861 15919 11970 16429 14083 16225 11941 16442 14055 16188 12011 16570 14108 16298 12015 16509 14076 16189 11852 16253 13859 15913 12024 16500 14053 16141 12197 16708 14166 16360 8/04 12438 16989 14397 16683 12613 17232 14597 16923 12824 17521 14857 17228 12932 17718 15068 17434 13075 17994 15295 17692 13079 17996 15257 17669 13259 18240 15490 17929 12839 17788 15080 17409 12665 17635 14903 17240 12813 17894 15142 17545 13033 18199 15384 17861 13218 18441 15624 18143 8/05 13296 18553 15699 18200 13153 18397 15597 18038 13011 18256 15469 17877 13126 18383 15610 18017 13242 18551 15753 18182 13359 18781 15957 18399 13477 18955 16091 18579 13520 19069 16157 18657 13601 19204 16250 18773 13565 19222 16215 18748 13489 19124 16124 18643 13609 19300 16246 18804 8/06 13768 19578 16467 19082
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 7.31% 7.13% 5.21% 5.21% 4.21% 4.21% 4.55% 10-year 3.75 3.25 3.09 3.09 2.95 2.95 -- 5-year 4.87 3.85 4.10 3.89 4.12 4.12 -- 1-year 3.55 -1.34 2.75 -1.10 2.83 1.87 3.82 - -------------------------------------------------------------------------------------------------------- 30-Day SEC Yield 6.68% 6.20% 6.32% 7.26%
THE PERFORMANCE DATA REPRESENTS PAST PERFORMANCE WHICH, 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 eight 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. 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 Rule 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 including domestic and international issues. Lipper High Yield Bond Fund Index is an index of funds with similar return investment as this fund. The Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index is generally representative of high yield securities. Indexes do not include any expenses, fees or sales charges, which would lower performance. Indexes are unmanaged and should not be considered an investment. Source for index performance: Lipper Inc. 1 Fund Report FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2006 MARKET CONDITIONS In the early months of the reporting period, the economy continued to show resilience, inflation remained in check and the equity market improved. Together, these factors provided support for the high yield market, helping to keep returns in positive territory despite a declining appetite for corporate credit risk and rising interest rates. In the first quarter of 2006, the high yield market benefited from a rekindled investor interest in adding risk, which was fueled by continued solid economic growth and a briskly rising equity market. The healthy gains in high yield came despite declining Treasury prices, tight credit spreads, moderate new issuance and outflows from mutual funds. Against this backdrop, the riskiest segment of the bond market--securities rated CCC and below--had the best showing, outperforming higher-quality issues. Although returns dipped in the second quarter, the high yield market still fared better than most other asset classes, including equities. The low positive returns of high yield came despite robust new issuance, increased market volatility and lower Treasury prices. Lower-rated bonds continued to outperform their higher-rated counterparts, with CCC-rated securities turning in the best returns. In the last months of the reporting period, high yield prices rebounded nicely as investors appeared confident that good economic growth and loose credit conditions would continue to be positive for high yield credits. High yield bonds again outpaced equities. However, because of their high correlation to Treasuries, which rallied in July, higher-quality fixed-income securities posted better overall returns than lower-rated, high yield bonds. Of note, the Federal Open Market Committee (the "Fed") finally paused in its two-year long series of interest-rate increases, electing not to raise the target federal funds rate at its August meeting. Industry returns varied considerably across individual sectors, many of which were significantly influenced by individual companies. For example, the aerospace sector benefited from a rebound in airline issues, while poor performance of auto-related companies hindered the transportation sector. In the second half of the period, however, transportation and manufacturing were the best performing sectors due to strong gains by the auto industry. In July, the health care sector was hurt by the announcement that HCA, one of the larger issuers in high yield, had agreed to be bought out in a highly leveraged transaction. 2 PERFORMANCE ANALYSIS The fund returned 3.55 percent for the 12 months ended August 31, 2006 (Class A shares, unadjusted for sales charges). In comparison, the fund's benchmarks, the Lehman Brothers U.S. High Yield 2% Issuer Cap Index, the J.P. Morgan Global High Yield Index and the Lipper High Yield Bond Fund Index, returned 4.82 percent, 5.21 percent and 4.90 percent for the period, respectively. TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED AUGUST 31, 2006
- ------------------------------------------------------------------------------------ LEHMAN BROTHERS U.S. HIGH J.P. MORGAN LIPPER YIELD 2% GLOBAL HIGH YIELD ISSUER CAP HIGH YIELD BOND FUND CLASS A CLASS B CLASS C CLASS I INDEX INDEX INDEX 3.55% 2.75% 2.83% 3.82% 4.82% 5.21% 4.90% - ------------------------------------------------------------------------------------------
The performance for the four 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. In general, the fund was overweighted versus the benchmark, the Lehman Brothers U.S. High Yield 2% Issuer Cap Index, in the chemicals and food/tobacco sectors, and underweighted in utilities throughout the reporting year which detracted from performance. Early in the period, the fund was also underweight versus the index in the transportation sector, which was beneficial to performance given the struggles in the auto industry. From January through August, the fund had an overweight in transportation companies relative to the index, which helped performance as the sector rebounded. Strong security selection in the sector, as well as in the utilities sector, also added to performance. On a less positive note, security selection in forest products detracted from performance. In regard to credit risk, the fund's overall average credit quality was in line with the Lehman Brothers U.S. High Yield 2% Issuer Cap Index early in the period but its yield-to-maturity was comparatively lower, signifying less relative credit risk. We began reducing the risk in the portfolio in order to take advantage of our belief that high yield prices may move lower and that spreads, which were tighter than historical averages, may widen. We continued this defensive strategy throughout the duration of the reporting period, which tempered the fund's returns from February through May, but was additive to performance over the last three months of the period when higher-rated bonds outperformed lower-quality issues. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the fund in the future. 3
RATINGS ALLOCATIONS AS OF 8/31/06 A/A 0.6% BBB/Baa 4.4 BB/Ba 33.5 B/B 53.8 CCC/Caa 6.8 Non-Rated 0.9 SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 8/31/06 Energy 10.1% Transportation 8.6 Healthcare 8.3 Utility 7.8 Chemicals 6.9 Gaming & Leisure 6.7 Cable 5.1 Forest Products 5.1 Diversified Media 4.5 Food & Tobacco 4.3 Manufacturing 2.9 Metals 2.9 Telecommunications 2.9 Services 2.7 Housing 2.6 Information Technology 2.5 Consumer Products 2.2 Food & Drug 1.9 Aerospace 1.7 Wireless Communications 1.7 Retail 1.6 Broadcasting 0.8 Financial 0.6 Sovereigns 0.6 Apparel, Accessories & Luxury Goods 0.2 Integrated Telecommunication Services 0.0* Alternative Carriers 0.0* Broadcasting & Cable TV 0.0* IT Consulting & Other Services 0.0* Wireless Telecommunication Services 0.0* ----- Total Long-Term Investments 95.2% Short-Term Investments 3.0 Other Assets in Excess of Liabilities 1.8 ----- Total Net Assets 100.0%
*Amounts are less than 0.1% 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 engaged in a wide range of financial services including, for example, securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. Ratings allocations based upon ratings as issued by Standard and Poor's and Moody's, respectively. 4 FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS Each Van Kampen fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Van Kampen also delivers the semiannual and annual reports to fund shareholders, and makes these reports available on its public Web site, www.vankampen.com. In addition to the semiannual and annual reports that Van Kampen delivers to shareholders and makes available through the Van Kampen public Web site, each fund files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on Form N-Q. Van Kampen does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Van Kampen public Web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's Web site, http://www.sec.gov. You may also review and copy them at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102. You may obtain copies of a fund's fiscal quarter filings by contacting Van Kampen Client Relations at (800) 847-2424. 5 HOUSEHOLDING NOTICE To reduce fund expenses, the fund attempts to eliminate duplicate mailings to the same address. The fund delivers a single copy of certain shareholder documents to investors who share an address, even if the accounts are registered under different names. The fund's prospectuses and shareholder reports (including annual privacy notices) will be delivered to you in this manner indefinitely unless you instruct us otherwise. You can request multiple copies of these documents by either calling (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 (800) 847-2424 or by visiting our Web site at www.vankampen.com. It is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov. You may obtain information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting our Web site at www.vankampen.com. This information is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov. 6 Expense Example As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments of Class A Shares and contingent deferred sales charges on redemptions of Class B and C Shares; and redemption fees; 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 3/1/06 - 8/31/06. 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 or redemption fees. 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* ------------------------------------------------ 3/1/06 8/31/06 3/1/06-8/31/06 Class A Actual...................................... $1,000.00 $1,021.59 $4.74 Hypothetical................................ 1,000.00 1,020.51 4.74 (5% annual return before expenses) Class B Actual...................................... 1,000.00 1,017.62 8.59 Hypothetical................................ 1,000.00 1,016.71 8.59 (5% annual return before expenses) Class C Actual...................................... 1,000.00 1,015.21 8.43 Hypothetical................................ 1,000.00 1,016.81 8.44 (5% annual return before expenses) Class I Actual...................................... 1,000.00 1,022.87 3.42 Hypothetical................................ 1,000.00 1,021.81 3.41 (5% annual return before expenses)
* Expenses are equal to the Fund's annualized expense ratio of 0.93%, 1.69%, 1.66% and 0.67% 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). Assumes all dividends and distributions were reinvested. 7 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 22, 2006, 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. 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. Finally, the Board considered materials it had received in approving a proposed reduction in the advisory fee rate 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 regulatory requirements for approval and disclosure of investment advisory agreements. The Board of Trustees, including the independent trustees, 8 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, 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. 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 9 profitability of the investment adviser. These profitability reports are put together by the investment adviser with the oversight 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. 10 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2006
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ---------------------------------------------------------------------------------------------- CORPORATE BONDS 93.8% AEROSPACE 1.7% $ 4,645 Hexcel Corp. ................................... 6.750% 02/01/15 $ 4,401,137 6,440 K & F Acquisition, Inc. ........................ 7.750 11/15/14 6,440,000 ------------ 10,841,137 ------------ BROADCASTING 0.8% 3,740 Lin Television Corp. ........................... 6.500 05/15/13 3,468,850 1,645 Lin Television Corp., Ser B..................... 6.500 05/15/13 1,525,737 ------------ 4,994,587 ------------ CABLE 5.1% 4,815 Cablecom Luxembourg SCA, (Euro) (Luxembourg) (a)............................................. 9.375 04/15/14 6,901,272 6,005 Cablevision Systems Corp. (Floating Rate Coupon)......................................... 9.620 04/01/09 6,432,856 1,839 CCH I, LLC...................................... 11.000 10/01/15 1,641,307 5,320 Echostar DBS Corp. ............................. 6.375 10/01/11 5,193,650 1,290 Echostar DBS Corp. ............................. 6.625 10/01/14 1,243,237 460 Intelsat Subsidiary Holding Co., Ltd. (Bermuda)....................................... 8.250 01/15/13 461,150 4,315 Intelsat Subsidiary Holding Co., Ltd. (Bermuda)....................................... 8.625 01/15/15 4,379,725 3,255 Intelsat Subsidiary Holding Co., Ltd. (Floating Rate Coupon) (Bermuda).......................... 10.484 01/15/12 3,320,100 655 NTL Cable, Plc (United Kingdom)................. 8.750 04/15/14 682,837 360 NTL Cable, Plc (United Kingdom)................. 9.125 08/15/16 374,400 898 PanAmSat Corp. ................................. 9.000 08/15/14 918,205 ------------ 31,548,739 ------------ CHEMICALS 6.9% 2,855 Cognis Deutschland GmbH & Co. (Euro) (Floating Rate Coupon) (Germany) (a)...................... 7.816 11/15/13 3,749,124 4,950 Equistar Chemicals, LP.......................... 10.125 09/01/08 5,247,000 620 Equistar Chemicals, LP.......................... 10.625 05/01/11 669,600 952 Huntsman International, LLC..................... 10.125 07/01/09 975,800 4,000 Huntsman International, LLC (Euro).............. 10.125 07/01/09 5,252,713 3,345 Innophos Investments Holdings, Inc. (b)......... 13.405 02/15/15 3,478,567 3,245 Innophos, Inc. ................................. 8.875 08/15/14 3,261,225 2,585 Koppers Holdings, Inc. (c)...................... 0/9.875 11/15/14 1,919,362 1,730 Koppers, Inc. .................................. 9.875 10/15/13 1,881,375 1,930 Millennium America, Inc. ....................... 9.250 06/15/08 1,983,075 2,775 Nalco Co. ...................................... 7.750 11/15/11 2,837,437 3,960 Nalco Co. ...................................... 8.875 11/15/13 4,098,600 2,268 Rockwood Specialties Group, Inc. ............... 10.625 05/15/11 2,443,770 1,390 Rockwood Specialties Group, Inc. (Euro) (United Kingdom) (a).................................... 7.625 11/15/14 1,838,674 2,940 Westlake Chemical Corp. ........................ 6.625 01/15/16 2,807,700 ------------ 42,444,022 ------------
See Notes to Financial Statements 11 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2006 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ---------------------------------------------------------------------------------------------- CONSUMER PRODUCTS 2.2% $ 8,210 Levi Strauss & Co. (Floating Rate Coupon)....... 10.258% 04/01/12 $ 8,517,875 2,295 Oxford Industrials, Inc. ....................... 8.875 06/01/11 2,329,425 2,632 Tempur Pedic, Inc. ............................. 10.250 08/15/10 2,770,180 ------------ 13,617,480 ------------ DIVERSIFIED MEDIA 4.5% 1,155 Advanstar Communications, Inc. ................. 10.750 08/15/10 1,253,175 2,840 AMC Entertainment, Inc. (Floating Rate Coupon)......................................... 9.655 08/15/10 2,939,400 6,187 CanWest Media, Inc. (Canada).................... 8.000 09/15/12 6,016,710 2,282 Dex Media East/Finance Corp., LLC............... 12.125 11/15/12 2,555,840 3,587 Dex Media West/Finance Corp., LLC, Ser B........ 9.875 08/15/13 3,869,476 3,290 Houghton Mifflin Co. ........................... 8.250 02/01/11 3,339,350 2,070 Houghton Mifflin Co. ........................... 9.875 02/01/13 2,152,800 1,525 Nebraska Book Co., Inc. ........................ 8.625 03/15/12 1,399,187 4,290 Quebecor World Capital Corp. (Canada) (a)....... 8.750 03/15/16 4,054,050 ------------ 27,579,988 ------------ ENERGY 10.1% 4,925 Chaparral Energy, Inc. ......................... 8.500 12/01/15 4,986,562 6,870 CHC Helicopter Corp. (Canada)................... 7.375 05/01/14 6,492,150 960 Chesapeake Energy Corp. ........................ 7.625 07/15/13 984,000 4,360 Chesapeake Energy Corp. ........................ 7.500 09/15/13 4,425,400 2,325 Chesapeake Energy Corp. ........................ 6.375 06/15/15 2,220,375 3,200 Chesapeake Energy Corp. ........................ 6.625 01/15/16 3,088,000 1,645 Compagnie Generale de Geophysique SA (France)... 7.500 05/15/15 1,645,000 5,120 El Paso Production Holding Co. ................. 7.750 06/01/13 5,222,400 1,800 Hanover Compressor Co. ......................... 8.625 12/15/10 1,881,000 890 Hanover Compressor Co. ......................... 9.000 06/01/14 947,850 109 Hanover Equipment Trust, Ser A.................. 8.500 09/01/08 111,452 3,042 Hanover Equipment Trust, Ser B.................. 8.750 09/01/11 3,178,890 2,731 Hilcorp Energy/Finance Corp. (a)................ 10.500 09/01/10 2,976,790 5,460 Hilcorp Energy/Finance Corp. (a)................ 7.750 11/01/15 5,391,750 3,460 Husky Oil Ltd. (Canada)......................... 8.900 08/15/28 3,676,856 1,863 Magnum Hunter Resources, Inc. .................. 9.600 03/15/12 1,979,438 6,170 Massey Energy Co. .............................. 6.875 12/15/13 5,753,525 3,450 Pacific Energy Partners......................... 7.125 06/15/14 3,501,750 4,020 Pogo Producing Co. ............................. 6.875 10/01/17 3,849,150 ------------ 62,312,338 ------------ FINANCIAL 0.6% 3,395 Residential Capital Corp. ...................... 6.375 06/30/10 3,427,320 ------------ FOOD & DRUG 1.9% 1,025 Albertson's, Inc. .............................. 7.500 02/15/11 1,033,760 3,750 Albertson's, Inc. .............................. 7.250 05/01/13 3,660,638 2,625 Delhaize America, Inc. ......................... 8.125 04/15/11 2,826,143 3,672 Kroger Co. (a).................................. 8.500 07/15/17 3,965,432 ------------ 11,485,973 ------------
12 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2006 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ---------------------------------------------------------------------------------------------- FOOD & TOBACCO 4.3% $ 3,125 Michael Foods, Inc. ............................ 8.000% 11/15/13 $ 3,203,125 7,095 Pilgrim's Pride Corp. .......................... 9.625 09/15/11 7,467,488 4,720 Pilgrim's Pride Corp. .......................... 9.250 11/15/13 4,767,200 4,595 Reynolds American, Inc. (a)..................... 6.500 07/15/10 4,655,107 4,950 Smithfield Foods, Inc. ......................... 7.000 08/01/11 4,993,313 1,080 Smithfield Foods, Inc., Ser B................... 8.000 10/15/09 1,125,900 450 Smithfield Foods, Inc., Ser B................... 7.750 05/15/13 462,375 ------------ 26,674,508 ------------ FOREST PRODUCTS 5.1% 3,815 Covalence Specialty Materials Corp. (a)......... 10.250 03/01/16 3,681,475 1,490 Crown Americas.................................. 7.625 11/15/13 1,504,900 1,975 Crown European Holdings SA (Euro) (France)...... 6.250 09/01/11 2,675,761 3,840 Graham Packaging Co., Inc. ..................... 8.500 10/15/12 3,734,400 3,965 Graham Packaging Co., Inc. ..................... 9.875 10/15/14 3,836,138 4,870 Graphic Packaging International, Inc. .......... 9.500 08/15/13 4,918,700 1,535 JSG Funding Plc (Euro) (Ireland)................ 10.125 10/01/12 2,165,679 114 Owens-Brockway Glass Containers, Inc. .......... 8.875 02/15/09 117,705 2,100 Owens-Illinois, Inc. ........................... 7.350 05/15/08 2,110,500 5,540 Owens-Illinois, Inc. ........................... 7.500 05/15/10 5,512,300 1,085 P.H. Glatfelter (a)............................. 7.125 05/01/16 1,075,005 ------------ 31,332,563 ------------ GAMING & LEISURE 6.7% 993 Ceasars Entertainment........................... 8.875 09/15/08 1,043,891 475 Ceasars Entertainment........................... 7.000 04/15/13 490,959 4,240 Host Marriott LP................................ 7.125 11/01/13 4,303,600 5,365 Host Marriott LP................................ 6.375 03/15/15 5,177,225 6,935 Isle of Capri Casinos, Inc. .................... 7.000 03/01/14 6,622,925 5,440 Las Vegas Sands Corp. .......................... 6.375 02/15/15 5,086,400 9,470 MGM Mirage, Inc. ............................... 6.000 10/01/09 9,304,275 1,835 Starwood Hotels & Resorts Worldwide, Inc. ...... 7.875 05/01/12 1,995,563 3,005 Station Casinos, Inc. .......................... 6.000 04/01/12 2,888,556 3,795 Station Casinos, Inc. .......................... 6.875 03/01/16 3,534,094 1,085 Station Casinos, Inc. .......................... 7.750 08/15/16 1,124,331 ------------ 41,571,819 ------------ HEALTHCARE 8.3% 3,180 AmerisourceBergen Corp. ........................ 5.625 09/15/12 3,110,339 5,310 Community Health Systems, Inc. ................. 6.500 12/15/12 4,991,400 3,275 DaVita, Inc. ................................... 6.625 03/15/13 3,209,500 4,895 Fisher Scientific International, Inc. .......... 6.125 07/01/15 4,864,406 6,805 Fresenius Medical Care Capital Trust IV......... 7.875 06/15/11 6,975,125 940 HCA, Inc. ...................................... 8.750 09/01/10 949,400 1,205 HCA, Inc. ...................................... 6.300 10/01/12 1,012,200 2,545 HCA, Inc. ...................................... 5.750 03/15/14 1,985,100 3,635 HCA, Inc. ...................................... 6.500 02/15/16 2,880,738
See Notes to Financial Statements 13 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2006 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ---------------------------------------------------------------------------------------------- HEALTHCARE (CONTINUED) $ 3,980 Medcath Holdings Corp. ......................... 9.875% 07/15/12 $ 4,238,700 2,655 National Mentor Holdings, Inc. (a).............. 11.250 07/01/14 2,747,925 3,680 Omnicare, Inc. ................................. 6.750 12/15/13 3,551,200 1,480 Tenet Healthcare Corp. ......................... 7.375 02/01/13 1,324,600 900 Tenet Healthcare Corp. ......................... 9.875 07/01/14 882,000 4,900 VWR International, Inc. ........................ 6.875 04/15/12 4,802,000 3,975 Warner Chilcott Corp. .......................... 8.750 02/01/15 3,994,875 ------------ 51,519,508 ------------ HOUSING 2.6% 968 Goodman Global Holdings, Inc., Ser B (Floating Rate Coupon).................................... 8.329 06/15/12 970,420 1,180 Interface, Inc. ................................ 7.300 04/01/08 1,187,375 1,435 Interface, Inc. ................................ 10.375 02/01/10 1,569,531 4,465 Interface, Inc. ................................ 9.500 02/01/14 4,610,113 5,130 Nortek, Inc. ................................... 8.500 09/01/14 4,796,550 1,870 Technical Olympic USA, Inc. .................... 9.000 07/01/10 1,813,900 1,612 Technical Olympic USA, Inc. .................... 10.375 07/01/12 1,450,800 ------------ 16,398,689 ------------ INFORMATION TECHNOLOGY 1.9% 5,045 Iron Mountain, Inc. ............................ 8.625 04/01/13 5,177,431 2,300 Iron Mountain, Inc. ............................ 7.750 01/15/15 2,288,500 525 Iron Mountain, Inc. ............................ 6.625 01/01/16 490,875 3,540 Sungard Data Systems, Inc. ..................... 9.125 08/15/13 3,672,750 320 Sungard Data Systems, Inc. (Floating Rate Coupon)......................................... 9.973 08/15/13 336,000 ------------ 11,965,556 ------------ MANUFACTURING 2.9% 2,185 General Cable Corp. ............................ 9.500 11/15/10 2,348,875 1,959 JohnsonDiversey, Inc. (Euro) (Luxembourg)....... 9.625 05/15/12 2,622,712 4,463 JohnsonDiversey, Inc., Ser B.................... 9.625 05/15/12 4,418,370 2,574 Manitowoc Co., Inc. ............................ 10.500 08/01/12 2,779,920 2,440 Propex Fabrics, Inc. ........................... 10.000 12/01/12 2,214,300 3,475 RBS Global & Rexnord Corp. (a).................. 9.500 08/01/14 3,509,750 ------------ 17,893,927 ------------ METALS 2.9% 1,340 Foundation PA Coal Co. ......................... 7.250 08/01/14 1,309,850 7,050 Novelis, Inc. (Canada) (a)...................... 8.250 02/15/15 6,732,750 2,445 SGL Carbon Luxembourg SA (Euro) (Luxembourg) (a)............................................. 8.500 02/01/12 3,414,328 5,992 UCAR Finance, Inc. ............................. 10.250 02/15/12 6,321,560 ------------ 17,778,488 ------------
14 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2006 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ---------------------------------------------------------------------------------------------- RETAIL 1.6% $ 3,110 Brown Shoe Co., Inc. ........................... 8.750% 05/01/12 $ 3,218,850 5,005 Linens 'n Things, Inc. (Floating Rate Coupon) (a)............................................. 11.132 01/15/14 4,692,188 2,020 Phillips Van-Heusen Corp. ...................... 7.250 02/15/11 2,025,050 ------------ 9,936,088 ------------ SERVICES 2.7% 5,715 Allied Waste North America, Inc. ............... 6.375 04/15/11 5,572,125 1,850 Allied Waste North America, Inc. ............... 7.875 04/15/13 1,882,375 1,437 Allied Waste North America, Inc., Ser B......... 9.250 09/01/12 1,544,775 1,500 Buhrmann US, Inc. .............................. 8.250 07/01/14 1,507,500 1,590 Buhrmann US, Inc. .............................. 7.875 03/01/15 1,550,250 3,625 MSW Energy Holdings LLC, Ser B.................. 7.375 09/01/10 3,661,250 985 MSW Energy Holdings/Finance..................... 8.500 09/01/10 1,019,475 ------------ 16,737,750 ------------ TELECOMMUNICATIONS 2.9% 3,986 Axtel SA (Mexico)............................... 11.000 12/15/13 4,504,180 6,030 Exodus Communications, Inc. (d) (e) (f)......... 11.250 07/01/08 0 770 Exodus Communications, Inc. (d) (e) (f)......... 11.625 07/15/10 0 4,000 Exodus Communications, Inc. (Euro) (d) (e) (f)............................................. 11.375 07/15/08 0 8,250 GST Network Funding, Inc. (d) (e) (f)........... 10.500 05/01/08 825 1,320 Nordic Telephone Co. Holdings (Denmark) (a)..... 8.875 05/01/16 1,379,400 4,000 Park N View, Inc., Ser B (d) (e) (f)............ 13.000 05/15/08 0 4,405 Qwest Communications International, Inc. (Floating Rate Coupon).......................... 8.905 02/15/09 4,493,100 990 Qwest Corp. .................................... 5.625 11/15/08 982,575 1,100 TDC A S (Euro) (Denmark)........................ 6.500 04/19/12 1,437,582 4,480 Wind Acquisition Finance SA (Luxembourg) (a).... 10.750 12/01/15 4,888,800 ------------ 17,686,462 ------------ TRANSPORTATION 8.6% 6,725 Amsted Industries, Inc. (a)..................... 10.250 10/15/11 7,296,625 3,435 Arvinmeritor, Inc. ............................. 8.750 03/01/12 3,366,300 4,800 Ford Motor Co. ................................. 7.450 07/16/31 3,792,000 3,675 Ford Motor Credit Co. .......................... 5.800 01/12/09 3,522,374 4,450 General Motors Acceptance Corp. ................ 4.375 12/10/07 4,329,142 6,220 General Motors Acceptance Corp. ................ 6.875 09/15/11 6,132,348 1,690 General Motors Corp. ........................... 7.125 07/15/13 1,449,175 4,095 General Motors Corp. ........................... 8.375 07/15/33 3,450,038 5,720 Petro Stopping Centers, LP...................... 9.000 02/15/12 5,777,200 8,425 Sonic Automotive, Inc., Ser B................... 8.625 08/15/13 8,403,938 5,471 TRW Automotive, Inc. ........................... 9.375 02/15/13 5,867,648 ------------ 53,386,788 ------------ UTILITY 7.8% 740 AES Corp. ...................................... 9.375 09/15/10 802,900 528 AES Corp. ...................................... 8.875 02/15/11 567,600 925 AES Corp. ...................................... 7.750 03/01/14 957,375 3,035 AES Corp. (a)................................... 9.000 05/15/15 3,289,181
See Notes to Financial Statements 15 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2006 continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ---------------------------------------------------------------------------------------------- UTILITY (CONTINUED) $ 5,930 CMS Energy Corp. ............................... 7.500% 01/15/09 $ 6,122,725 2,825 Colorado Interstate Gas Co. .................... 6.800 11/15/15 2,813,886 2,585 IPALCO Enterprises, Inc. ....................... 8.375 11/14/08 2,681,938 1,355 IPALCO Enterprises, Inc. ....................... 8.625 11/14/11 1,460,013 4,645 Monongahela Power Co. .......................... 5.000 10/01/06 4,642,115 2,945 Nevada Power Co., Ser A......................... 8.250 06/01/11 3,240,766 2,515 Nevada Power Co., Ser G......................... 9.000 08/15/13 2,754,121 995 Northwest Pipeline Corp. ....................... 8.125 03/01/10 1,039,775 5,549 Ormat Funding Corp. ............................ 8.250 12/30/20 5,618,206 4,030 PSEG Energy Holdings............................ 8.625 02/15/08 4,171,050 1,955 Southern Natural Gas Co. ....................... 8.875 03/15/10 2,060,662 6,210 Williams Cos., Inc. ............................ 7.875 09/01/21 6,349,725 ------------ 48,572,038 ------------ WIRELESS COMMUNICATIONS 1.7% 3,085 American Tower Corp. ........................... 7.500 05/01/12 3,154,413 3,090 American Tower Corp. ........................... 7.125 10/15/12 3,144,075 4,040 UbiquiTel Operating Co. ........................ 9.875 03/01/11 4,413,700 ------------ 10,712,188 ------------ TOTAL CORPORATE BONDS 93.8%................................................... 580,417,956 ------------ FOREIGN CONVERTIBLE CORPORATE OBLIGATION 0.6% 3,980 Nortel Networks Corp. (Canada).................. 4.250 09/01/08 3,785,975 ------------ FOREIGN GOVERNMENT OBLIGATION 0.6% 32,575 Mexico (United Mexican States) (Peso) (Mexico)........................................ 10.000 12/05/24 3,421,092 ------------
DESCRIPTION VALUE - -------------------------------------------------------------------------------------------- EQUITIES 0.2% DecisionOne Corp. (19,895 Common Shares) (f) (g)............................. 0 Doe Run Resources Corp. (29 Common Stock Warrants) (f) (g)................... 146,515 HCI Direct, Inc. (106,250 Common Shares Class A) (f) (g)..................... 1,275,000 HF Holdings, Inc. (36,820 Common Stock Warrants) (f) (g)..................... 0 Hosiery Corp. of America, Inc. (1,000 Common Shares Class A) (a) (f) (g)..... 0 Jazztel, Plc (5,000 Common Stock Warrants) (Euro) (United Kingdom) (a) (f) (g)........................................................................ 0 OpTel, Inc. (3,275 Common Shares) (a) (f) (g)................................ 0 Park N View, Inc. (4,000 Common Stock Warrants) (a) (e) (f) (g).............. 0 Reunion Industries, Inc. (107,947 Common Stock Warrants) (f) (g)............. 0 Ventelo, Inc. (73,021 Common Shares) (Euro) (United Kingdom) (a) (f) (g)..... 0 Viatel Holding Bermuda Ltd. (7,852 Common Shares) (Bermuda) (g).............. 216 VS Holdings, Inc. (946,962 Common Shares) (f) (g)............................ 0 XO Holdings, Inc. (3,469 Common Shares) (g).................................. 16,027
16 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2006 continued
DESCRIPTION VALUE - -------------------------------------------------------------------------------------------- EQUITIES (CONTINUED) XO Holdings, Inc., Ser A (6,941 Common Stock Warrants) (g)................... $ 6,073 XO Holdings, Inc., Ser B (5,205 Common Stock Warrants) (g)................... 2,993 XO Holdings, Inc., Ser C (5,205 Common Stock Warrants) (g)................... 1,978 ------------ TOTAL EQUITIES............................................................... 1,448,802 ------------ TOTAL LONG-TERM INVESTMENTS 95.2% (Cost $624,970,297)........................................................ 589,073,825 REPURCHASE AGREEMENT 3.0% State Street Bank & Trust Co. ($18,747,000 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 5.10%, dated 08/31/06, to be sold on 09/01/06 at $18,749,656) (Cost $18,747,000)......................................................... 18,747,000 ------------ TOTAL INVESTMENTS 98.2% (Cost $643,717,297)........................................................ 607,820,825 FOREIGN CURRENCY 0.0% (Cost $1,095).............................................................. 1,094 OTHER ASSETS IN EXCESS OF LIABILITIES 1.8%.................................. 10,977,911 ------------ NET ASSETS 100.0%........................................................... $618,799,830 ============
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) Payment-in-kind security. (c) Security is a "step-up" bond where the coupon increases or steps up at a predetermined date. (d) Non-income producing as security is in default. (e) This borrower has filed for protection in federal bankruptcy court. (f) Market value is determined in accordance with procedures established in good faith by the Board of Trustees. (g) Non-income producing security as this stock currently does not declare dividends. See Notes to Financial Statements 17 VAN KAMPEN HIGH YIELD FUND PORTFOLIO OF INVESTMENTS -- AUGUST 31, 2006 continued FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AS OF AUGUST 31, 2006:
UNREALIZED IN EXCHANGE APPRECIATION/ FOR CURRENT VALUE DEPRECIATION SHORT CONTRACTS: Euro Currency 11,073,000 expiring 9/27/06.................... US $ $14,209,883 $(254,581) 12,546,000 expiring 9/27/06.................... US $ 16,100,171 (294,469) --------- $(549,050) =========
18 See Notes to Financial Statements VAN KAMPEN HIGH YIELD FUND FINANCIAL STATEMENTS Statement of Assets and Liabilities August 31, 2006 ASSETS: Total Investments (Cost $643,717,297)....................... $ 607,820,825 Foreign Currency (Cost $1,095).............................. 1,094 Cash........................................................ 103 Receivables: Interest.................................................. 12,708,082 Fund Shares Sold.......................................... 1,914,208 Other....................................................... 301,612 -------------- Total Assets............................................ 622,745,924 -------------- LIABILITIES: Payables: Fund Shares Repurchased................................... 1,223,125 Income Distributions...................................... 972,029 Distributor and Affiliates................................ 338,869 Investment Advisory Fee................................... 212,098 Forward Foreign Currency Contracts.......................... 549,050 Trustees' Deferred Compensation and Retirement Plans........ 391,967 Accrued Expenses............................................ 258,956 -------------- Total Liabilities....................................... 3,946,094 -------------- NET ASSETS.................................................. $ 618,799,830 ============== NET ASSETS CONSIST OF: Capital (Par value of $.01 per share with an unlimited number of shares authorized).............................. $1,225,870,716 Accumulated Undistributed Net Investment Income............. (3,780,148) Net Unrealized Depreciation................................. (37,098,761) Accumulated Net Realized Loss............................... (566,191,977) -------------- NET ASSETS.................................................. $ 618,799,830 ============== MAXIMUM OFFERING PRICE PER SHARE: Class A Shares: Net asset value and redemption price per share (Based on net assets of $457,745,028 and 131,307,908 shares of beneficial interest issued and outstanding)............. $ 3.49 Maximum sales charge (4.75%* of offering price)......... .17 -------------- Maximum offering price to public........................ $ 3.66 ============== Class B Shares: Net asset value and offering price per share (Based on net assets of $115,758,717 and 33,021,621 shares of beneficial interest issued and outstanding)............. $ 3.51 ============== Class C Shares: Net asset value and offering price per share (Based on net assets of $43,622,129 and 12,601,990 shares of beneficial interest issued and outstanding)............. $ 3.46 ============== Class I Shares: Net asset value and offering price per share (Based on net assets of $1,673,956 and 480,044 shares of beneficial interest issued and outstanding)............. $ 3.49 ==============
* On sales of $100,000 or more, the sales charge will be reduced. See Notes to Financial Statements 19 VAN KAMPEN HIGH YIELD FUND FINANCIAL STATEMENTS continued Statement of Operations For the Year Ended August 31, 2006 INVESTMENT INCOME: Interest.................................................... $ 53,163,828 Dividends................................................... 2,451 Other....................................................... 912,286 ------------ Total Income............................................ 54,078,565 ------------ EXPENSES: Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C of $1,170,684, $1,513,622 and $429,390, respectively)............................................. 3,113,696 Investment Advisory Fee..................................... 2,719,921 Shareholder Services........................................ 1,379,011 Custody..................................................... 61,649 Trustees' Fees and Related Expenses......................... 45,781 Legal....................................................... 19,361 Other....................................................... 390,507 ------------ Total Expenses.......................................... 7,729,926 Less Credits Earned on Cash Balances.................... 60,555 ------------ Net Expenses............................................ 7,669,371 ------------ NET INVESTMENT INCOME....................................... $ 46,409,194 ============ REALIZED AND UNREALIZED GAIN/LOSS: Realized Gain/Loss: Investments............................................... $(10,282,462) Swap Contracts............................................ 125,670 Foreign Currency Transactions............................. (340,147) ------------ Net Realized Loss........................................... (10,496,939) ------------ Net Unrealized Depreciation During the Period............... (16,043,354) ------------ NET REALIZED AND UNREALIZED LOSS............................ $(26,540,293) ============ NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 19,868,901 ============
20 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, 2006 AUGUST 31, 2005 ---------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income.................................... $ 46,409,194 $ 51,865,645 Net Realized Gain/Loss................................... (10,496,939) 3,062,032 Net Unrealized Depreciation During the Period............ (16,043,354) (12,909,658) ------------- ------------- Change in Net Assets from Operations..................... 19,868,901 42,018,019 ------------- ------------- Distributions from Net Investment Income: Class A Shares......................................... (35,559,226) (35,174,855) Class B Shares......................................... (10,076,519) (12,164,487) Class C Shares......................................... (3,035,788) (3,384,973) Class I Shares......................................... (481,065) (82,724) ------------- ------------- Total Distributions...................................... (49,152,598) (50,807,039) ------------- ------------- NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES...... (29,283,697) (8,789,020) ------------- ------------- FROM CAPITAL TRANSACTIONS: Proceeds from Shares Sold................................ 137,558,848 489,332,752 Net Asset Value of Shares Issued Through Dividend Reinvestment........................................... 35,523,788 37,014,423 Cost of Shares Repurchased............................... (325,876,260) (298,295,554) ------------- ------------- NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS....... (152,793,624) 228,051,621 ------------- ------------- TOTAL INCREASE/DECREASE IN NET ASSETS.................... (182,077,321) 219,262,601 NET ASSETS: Beginning of the Period.................................. 800,877,151 581,614,550 ------------- ------------- End of the Period (Including accumulated undistributed net investment income of $(3,780,148) and $(1,552,606), respectively).......................................... $ 618,799,830 $ 800,877,151 ============= =============
See Notes to Financial Statements 21 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 ----------------------------------------------- 2006 2005 2004 2003 2002 ----------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD... $ 3.63 $ 3.64 $ 3.43 $ 3.15 $ 4.23 ------ ------ ------ ------ ------- Net Investment Income.................... .25(a) .26 .26 .29 .39 Net Realized and Unrealized Gain/Loss.... (.13) (.02) .21 .29 (1.01) ------ ------ ------ ------ ------- Total from Investment Operations........... .12 .24 .47 .58 (.62) ------ ------ ------ ------ ------- Less: Distributions from Net Investment Income................................. .26 .25 .25 .24 .43 Return of Capital Distributions.......... -0- -0- .01 .06 .03 ------ ------ ------ ------ ------- Total Distributions........................ .26 .25 .26 .30 .46 ------ ------ ------ ------ ------- NET ASSET VALUE, END OF THE PERIOD......... $ 3.49 $ 3.63 $ 3.64 $ 3.43 $ 3.15 ====== ====== ====== ====== ======= Total Return (b)........................... 3.55% 6.89% 14.02% 19.26% -15.75% Net Assets at End of the Period (In millions)................................ $457.7 $532.0 $379.5 $408.7 $ 308.5 Ratio of Expenses to Average Net Assets (c)...................................... .92% 1.06% 1.06% 1.12% 1.08% Ratio of Net Investment Income to Average Net Assets............................... 7.04% 7.11% 7.45% 8.36% 10.39% Portfolio Turnover......................... 44% 84% 88% 95% 83%
(a) Based on average shares outstanding. (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. If the sales charges were included, total returns would be lower. These returns include combined 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. (c) The Ratio of Expenses to Average Net Assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratio would decrease by .01% for the year ended August 31, 2006. 22 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 ----------------------------------------------- 2006 2005 2004 2003 2002 ----------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD... $ 3.65 $ 3.65 $ 3.44 $ 3.16 $ 4.24 ------ ------ ------ ------ ------- Net Investment Income.................... .22(a) .25 .23 .25 .35 Net Realized and Unrealized Gain/Loss.... (.13) (.02) .21 .30 (1.01) ------ ------ ------ ------ ------- Total from Investment Operations........... .09 .23 .44 .55 (.66) ------ ------ ------ ------ ------- Less: Distributions from Net Investment Income................................. .23 .23 .22 .21 .39 Return of Capital Distributions.......... -0- -0- .01 .06 .03 ------ ------ ------ ------ ------- Total Distributions........................ .23 .23 .23 .27 .42 ------ ------ ------ ------ ------- NET ASSET VALUE, END OF THE PERIOD......... $ 3.51 $ 3.65 $ 3.65 $ 3.44 $ 3.16 ====== ====== ====== ====== ======= Total Return (b)........................... 2.75% 6.36% 12.79% 18.27% -16.12% Net Assets at End of the Period (In millions)................................ $115.8 $191.0 $160.7 $175.6 $ 168.8 Ratio of Expenses to Average Net Assets (c)...................................... 1.68% 1.83% 1.82% 1.89% 1.84% Ratio of Net Investment Income to Average Net Assets............................... 6.28% 6.33% 6.70% 7.68% 9.67% Portfolio Turnover......................... 44% 84% 88% 95% 83%
(a) Based on average shares outstanding. (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. (c) The Ratio of Expenses to Average Net Assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratio would decrease by .01% for the year ended August 31, 2006. See Notes to Financial Statements 23 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 --------------------------------------------- 2006 2005 2004 2003 2002 --------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD.... $3.60 $3.61 $ 3.41 $ 3.13 $ 4.20 ----- ----- ------ ------ ------- Net Investment Income..................... .22(a) .25 .23 .25 .35 Net Realized and Unrealized Gain/Loss..... (.12) (.03) .20 .30 (1.00) ----- ----- ------ ------ ------- Total from Investment Operations............ .10 .22 .43 .55 (.65) ----- ----- ------ ------ ------- Less: Distributions from Net Investment Income.................................. .24 .23 .22 .21 .39 Return of Capital Distributions........... -0- -0- .01 .06 .03 ----- ----- ------ ------ ------- Total Distributions......................... .24 .23 .23 .27 .42 ----- ----- ------ ------ ------- NET ASSET VALUE, END OF THE PERIOD.......... $3.46 $3.60 $ 3.61 $ 3.41 $ 3.13 ===== ===== ====== ====== ======= Total Return (b)............................ 2.83%(d) 6.17%(d) 12.98%(d) 18.14%(e) -16.04% Net Assets at End of the Period (In millions)................................. $43.6 $54.5 $ 41.4 $ 41.5 $ 36.7 Ratio of Expenses to Average Net Assets (c)....................................... 1.64%(d) 1.82%(d) 1.81%(d) 1.86% 1.84% Ratio of Net Investment Income to Average Net Assets................................ 6.32%(d) 6.34%(d) 6.71%(d) 7.68%(e) 9.68% Portfolio Turnover.......................... 44% 84% 88% 95% 83%
(a) Based on average shares outstanding. (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) The Ratio of Expenses to Average Net Assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratio would decrease by .01% for the year ended August 31, 2006. (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 7). (e) 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%. 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.
MARCH 23, 2005 YEAR ENDED (COMMENCEMENT OF CLASS I SHARES AUGUST 31, OPERATIONS) TO 2006 AUGUST 31, 2005 ------------------------------ NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $3.63 $3.65 ----- ----- Net Investment Income..................................... .26(a) .12 Net Realized and Unrealized Loss.......................... (.13) (.02) ----- ----- Total from Investment Operations............................ .13 .10 Less Distributions from Net Investment Income............... .27 .12 ----- ----- NET ASSET VALUE, END OF THE PERIOD.......................... $3.49 $3.63 ===== ===== Total Return (b)............................................ 3.82% 2.69%* Net Assets at End of the Period (In millions)............... $ 1.7 $23.3 Ratio of Expenses to Average Net Assets (c)................. .63% .85% Ratio of Net Investment Income to Average Net Assets........ 7.37% 6.97% Portfolio Turnover.......................................... 44% 84%
* Non-Annualized (a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. (c) The Ratio of Expenses to Average Net Assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expense, the ratio would decrease by .01% for the year ended August 31, 2006. See Notes to Financial Statements 25 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2006 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen High Yield Fund (the "Fund"), formerly known as 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 Fund offers Class A Shares, Class B Shares, Class C Shares and Class I Shares. Each class of shares differs by its initial sales load, contingent deferred sales charges, the allocation of class-specific expenses and voting rights on matters affecting a single class. 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 readily available, valuations are determined in accordance with procedures established in good faith by the Board of Trustees. Forward foreign currency contracts are valued using quoted foreign exchange rates. Credit default swaps are valued using market quotations obtained from brokers. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market value. B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date basis. Realized gains and losses are determined on an identified cost basis. The Fund may purchase and sell securities on a "when-issued" or "delayed delivery" basis, with settlement to occur at a later date. The value of the security so purchased is subject to market fluctuations during this period. The Fund will segregate assets with 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, 2006, 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 26 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2006 continued payment for such securities only upon physical delivery or evidence of book entry transfer to the account of the custodian bank. The seller is required to maintain the value of the underlying security at not less than the repurchase proceeds due the Fund. C. INCOME AND EXPENSES Interest income is recorded on an accrual basis and dividend income is recorded on the ex-dividend date. Discounts on debt securities are accreted and premiums are amortized over the expected life of each applicable security. Other income is comprised primarily of consent fees. Consent fees are earned as compensation for agreeing to changes in terms of debt instruments. 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, 2006, the Fund had an accumulated capital loss carryforward for tax purposes of $559,992,005 which will expire according to the following schedule:
AMOUNT EXPIRATION $ 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 5,413,212................................................ August 31, 2014
Part of the capital loss carryforward referred to above was acquired due to a merger with another regulated investment company. Please see Footnote 3 for details. At August 31, 2006, the cost and related gross unrealized appreciation and depreciation are as follows: Cost of investments for tax purposes........................ $646,367,161 ============ Gross tax unrealized appreciation........................... $ 15,993,008 Gross tax unrealized depreciation........................... (54,539,344) ------------ Net tax unrealized depreciation on investments.............. $(38,546,336) ============
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. 27 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2006 continued The tax character of distributions paid during the years ended August 31, 2006 and 2005 was as follows:
2006 2005 Distributions paid from: Ordinary income........................................... $49,344,799 $50,502,624 Long-term capital gain.................................... -0- -0- ----------- ----------- $49,344,799 $50,502,624 =========== ===========
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. Permanent book and tax differences of $894,224 relating to consent fee income received from tender offers and $13,003 relating to the Fund's investment in other Regulated Investment Companies have been reclassified from accumulated undistributed net investment income to accumulated net realized loss. A permanent book and tax difference of $310,452 relating to net realized losses on foreign currency transactions has been reclassified from accumulated net realized loss to accumulated undistributed net investment income. A permanent book and tax difference of $125,671 relating to income from swap transactions has been reclassified from accumulated net realized loss to accumulated undistributed net investment income. Permanent book and tax differences of $935,071 and $660,296 relating to book to tax amortization differences were reclassified from accumulated undistributed net investment loss to accumulated net realized loss and net unrealized depreciation, respectively. Also, a permanent book and tax difference of $12,503 relating to net realized losses on paydowns of mortgage pool obligations were reclassified from accumulated undistributed net investment income to accumulated net realized loss. Finally, a permanent book and tax difference of $6,411,333 relating to the portion of capital loss carry-forward expiring in the current year has been reclassified from accumulated net realized loss to capital. As of August 31, 2006, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income............................... $1,345,993
Net realized gains or losses may differ for financial reporting and tax purposes primarily as a result of post October losses which are not recognized 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, 2006, the Fund's custody and accounting fees were reduced by $51,797 and $8,758, respectively, 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 28 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2006 continued securities were acquired or sold. Realized gain and loss on foreign currency transactions on the Statement of Operations includes the net realized amount from the sale of foreign currency and the amount realized between trade date and settlement date on securities transactions. Income and expenses are translated at rates prevailing when accrued. 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Fund's Investment Advisory Agreement, the Adviser will provide investment advice and facilities to the Fund for an annual fee payable monthly as follows:
AVERAGE DAILY NET ASSETS % PER ANNUM First $500 million.......................................... .420% Next $250 million........................................... .345 Next $250 million........................................... .295 Next $1 billion............................................. .270 Next $1 billion............................................. .245 Over $3 billion............................................. .220
For the year ended August 31, 2006, the Fund recognized expenses of approximately $19,400 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, 2006, the Fund recognized expenses of approximately $48,700 representing Van Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing accounting services to the Fund, as well as, the salary, benefits and related costs of the CCO and related support staff paid by Van Kampen. Services provided pursuant to the Accounting Services and CCO Employment agreement are reported as part of "Other" expenses on the Statement of Operations. 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, 2006, the Fund recognized expenses of approximately $1,094,600 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 $262,423 are included in "Other" assets on the Statement of Assets and Liabilities at August 31, 2006. 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 29 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2006 continued 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. For the year ended August 31, 2006, Van Kampen, as Distributor for the Fund, received net commissions on sales of the Fund's Class A Shares of approximately $103,400 and contingent deferred sales charge (CDSC) on redeemed shares of approximately $274,800. Sales charges do not represent expenses to the Fund. 3. CAPITAL TRANSACTIONS For the years ended August 31, 2006 and 2005, transactions were as follows:
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2006 AUGUST 31, 2005 ---------------------------- ---------------------------- SHARES VALUE SHARES VALUE Sales: Class A....................... 29,290,990 $ 103,011,978 86,725,464 $ 320,410,088 Class B....................... 5,193,622 18,355,586 28,208,023 105,232,841 Class C....................... 4,549,191 15,796,883 10,910,339 40,075,471 Class I....................... 115,790 394,401 6,506,107 23,614,352 ----------- ------------- ----------- ------------- Total Sales..................... 39,149,593 $ 137,558,848 132,349,933 $ 489,332,752 =========== ============= =========== ============= Dividend Reinvestment: Class A....................... 7,372,644 $ 25,916,242 7,137,575 $ 26,066,021 Class B....................... 1,998,462 7,065,215 2,331,043 8,551,256 Class C....................... 590,646 2,061,273 637,802 2,314,420 Class I....................... 136,311 481,058 22,802 82,726 ----------- ------------- ----------- ------------- Total Dividend Reinvestment..... 10,098,063 $ 35,523,788 10,129,222 $ 37,014,423 =========== ============= =========== ============= Repurchases: Class A....................... (52,016,777) $(183,438,639) (51,466,042) $(188,120,153) Class B....................... (26,554,629) (93,925,102) (22,114,193) (81,191,619) Class C....................... (7,670,401) (26,835,230) (7,880,798) (28,567,020) Class I....................... (6,186,212) (21,677,289) (114,754) (416,762) ----------- ------------- ----------- ------------- Total Repurchases............... (92,428,019) $(325,876,260) (81,575,787) $(298,295,554) =========== ============= =========== =============
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 ratios of 1 to 1.515, 1 to 1.514 and 1 to 1.529 for Classes A, B and C, respectively. Net unrealized appreciation of High Yield as of December 17, 2004 was $3,802,196. The Fund assumed High Yield's book to tax amortization differences, which resulted in a $660,296 decrease to accumulated undistributed net investment income and a corresponding increase to net unrealized appreciation. Shares issued in connection with this reorganization are included in proceeds from shares sold for the year ended August 31, 2005. Combined net assets of both funds on the day of reorganization were $893,763,227. Included 30 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2006 continued in these net assets was a capital loss carryforward of $166,397,364, 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 marked to market $821,478, all carried forward from the High Yield Fund. 4. REDEMPTION FEE Effective September 26, 2005, the Fund assesses a 2% redemption fee on the proceeds of Fund shares that are redeemed (either by sales or exchange) within 30 days of purchase. The redemption fee is paid directly to the Fund. For the year ended August 31, 2006, the Fund received redemption fees of approximately $21,400, which are reported as part of "Cost of Shares Repurchased" on the Statement of Changes in Net Assets. The per share impact from redemption fees paid to the Fund was less than $0.01. 5. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $287,795,818 and $444,478,411, respectively. 6. 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 may use derivative instruments, to earn income, to facilitate portfolio management and to mitigate risks. 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 basis 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 basis 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. Summarized below are the specific types of derivative financial instruments used by the Fund. A. FORWARD FOREIGN CURRENCY 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. B. CREDIT DEFAULT SWAPS The Fund may enter into credit default swap contracts for hedging purposes or to gain exposure to a credit in which the Fund may otherwise invest. A credit 31 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2006 continued default swap is an agreement between two parties to exchange the credit risk of an issuer. A buyer of a credit default swap is said to buy protection by paying periodic fees in return for a contingent payment from the seller if the issuer has a credit event such as bankruptcy, a failure to pay outstanding obligations or deteriorating credit while the swap is outstanding. A seller of a credit default swap is said to sell protection and thus collects the periodic fees and profits if the credit of the issuer remains stable or improves while the swap is outstanding but the seller in a credit default swap contract would be required to pay an agreed-upon amount, which approximates the notional amount of the swap to the buyer in the event of an adverse credit event of the issuer. The Fund accrues for the periodic fees on swap contracts on a daily basis with the net amount accrued recorded within unrealized appreciation/depreciation of swap contracts. Upon cash settlement of the periodic fees, the net amount is recorded as realized gain/loss on swap contracts on the Statement of Operations. Net unrealized gains are recorded as an asset or net unrealized losses are reported as a liability on the Statement of Assets and Liabilities. The change in value of the swaps is reported as unrealized gains or losses on the Statement of Operations. Credit default swaps may involve greater risks than if a Fund had invested in the issuer directly. Credit default swaps are subject to general market risk, counterparty risk and credit risk. If there is a default by the counterparty, the Fund will have contractual remedies pursuant to the agreements related to the transaction. 7. DISTRIBUTION AND SERVICE PLANS Shares of the Fund are distributed by Van Kampen Funds Inc. (the "Distributor"), an affiliate of the Adviser. The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively, the "Plans") for Class A Shares, Class B Shares and Class C Shares to compensate the Distributor for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to .25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets. These fees are accrued daily and paid to the Distributor monthly. The amount of distribution expenses incurred by the Distributor and not yet reimbursed ("unreimbursed receivable") was approximately $2,081,100 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, the distribution fee is reduced. 8. LEGAL MATTERS The Adviser and certain affiliates of the Adviser are named as defendants in a derivative action 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 Van Kampen 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 derivative action was coordinated with a direct action 32 VAN KAMPEN HIGH YIELD FUND NOTES TO FINANCIAL STATEMENTS -- AUGUST 31, 2006 continued alleging related violations of defendants' statutory disclosure obligations and fiduciary duties with respect to the payments described above. In addition, this derivative action was stayed by agreement of the parties pending rulings on the motion to dismiss the direct action and the motion to dismiss another derivative action brought by the same plaintiff that brought this derivative action, alleging market timing and late trading in the Van Kampen funds. In April 2006, the court granted defendants' motion to dismiss the direct action. In June 2006, the court granted defendants' motion to dismiss the market timing action. Accordingly, the stay on this action was lifted. Plaintiff and defendants have agreed that this action should be dismissed in light of the rulings dismissing the two cases discussed above. The Court has approved a notice to shareholders regarding the dismissal, which is located at the back of this Report. 9. 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. 10. NEW ACCOUNTING PRONOUNCEMENT In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes--an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006. The impact to the Fund's financial statements, if any, is currently being assessed. 33 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 (the "Fund"), including the portfolio of investments, as of August 31, 2006, 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, 2006, by correspondence with the custodian. 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, 2006, 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 13, 2006 34 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 DENNIS SHEA Vice President J. DAVID GERMANY Vice President AMY R. DOBERMAN Vice President STEFANIE V. CHANG Vice President and Secretary JOHN L. SULLIVAN Chief Compliance Officer JAMES W. GARRETT 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 One Lincoln Street Boston, Massachusetts 02111 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ERNST & YOUNG LLP 233 South Wacker Drive Chicago, Illinois 60606 * "Interested persons" of the Fund, as defined in the Investment Company Act of 1940, as amended. 35 VAN KAMPEN HIGH YIELD FUND TRUSTEE AND OFFICER INFORMATION 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, the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange Corp. and 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 (61) Trustee Trustee Chairman and Chief 71 Trustee/Director/Managing Blistex Inc. since 2003 Executive Officer of General Partner of funds 1800 Swift Drive Blistex Inc., a consumer in the Fund Complex. Oak Brook, IL 60523 health care products 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 (68) Trustee Trustee Prior to January 1999, 71 Trustee/Director/Managing 33971 Selva Road since 1999 Chairman and Chief General Partner of funds Suite 130 Executive Officer of the in the Fund Complex. Dana Point, CA 92629 Allstate Corporation Director of Amgen Inc., a ("Allstate") and Allstate biotechnological company, Insurance Company. Prior and Director of Valero to January 1995, Energy Corporation, an President and Chief independent refining Executive Officer of company. Allstate. Prior to August 1994, various management positions at Allstate.
36
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 (65) Trustee Trustee President of CAC, L.L.C., 71 Trustee/Director/Managing CAC, L.L.C. since 2003 a private company General Partner of funds 4350 LaJolla Village Drive offering capital in the Fund Complex. Suite 980 investment and management Director of Quidel San Diego, CA 92122-6223 advisory services. Prior Corporation, Stericycle, to February 2001, Vice Inc., Ventana Medical Chairman and Director of Systems, Inc., and GATX Anixter International, Corporation, and Trustee Inc., a global of The Scripps Research distributor of wire, Institute. Prior to cable and communications January 2005, Trustee of connectivity products. the University of Chicago Prior to July 2000, Hospitals and Health Managing Partner of Systems. Prior to April Equity Group Corporate 2004, Director of Investment (EGI), a TheraSense, Inc. Prior to company that makes January 2004, Director of private investments in TeleTech Holdings Inc. other companies. 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).
37
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 (58) Trustee Trustee Managing Partner of 71 Trustee/Director/Managing Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of funds 233 South Wacker Drive executive search firm. in the Fund Complex. Suite 7000 Trustee on the University 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 (54) Trustee Trustee Director and President of 71 Trustee/Director/Managing 1744 R Street, NW since 1995 the German Marshall Fund General Partner of funds Washington, DC 20009 of the United States, an in the Fund Complex. independent U.S. 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 (70) Trustee Trustee Prior to 1998, President 71 Trustee/Director/Managing 14 Huron Trace since 2003 and Chief Executive General Partner of funds Galena, IL 61036 Officer of Pocklington in the Fund Complex. Corporation, Inc., an Director of the Lake investment holding Forest Bank & Trust. company. Director of the Marrow Foundation.
38
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 (70) Trustee Trustee President of Nelson 71 Trustee/Director/Managing 423 Country Club Drive since 1995 Investment Planning General Partner of funds Winter Park, FL 32789 Services, Inc., a in the Fund Complex. financial planning 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 (65) Trustee Trustee President Emeritus and 71 Trustee/Director/Managing 1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of funds Chicago, IL 60637 University of Chicago and in the Fund Complex. the Adam Smith Director of Winston Distinguished Service Laboratories, Inc. Professor in the 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. Trustee Trustee Chief Communications 71 Trustee/Director/Managing (64) since 1999 Officer of the National General Partner of funds 815 Cumberstone Road Academy of in the Fund Complex. Harwood, MD 20776 Sciences/National Director of Fluor Corp., Research Council, an an engineering, independent, federally procurement and chartered policy construction institution, from 2001 to organization, since November 2003 and Chief January 2004 and Director Operating Officer from of Neurogen Corporation, 1993 to 2001. Director of a pharmaceutical company, the Institute for Defense since January 1998. Analyses, a federally funded research and 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.
39 VAN KAMPEN HIGH YIELD FUND TRUSTEE AND OFFICER INFORMATION continued INTERESTED TRUSTEE:*
NUMBER OF FUNDS IN TERM OF FUND OFFICE AND COMPLEX POSITION(S) LENGTH OF OVERSEEN NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) BY OTHER DIRECTORSHIPS OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE Wayne W. Whalen* (67) Trustee Trustee Partner in the law firm 71 Trustee/Director/ 333 West Wacker Drive since 1995 of Skadden, Arps, Slate, Managing General Chicago, IL 60606 Meagher & Flom LLP, legal Partner of funds in counsel to funds in the the Fund Complex. Fund Complex. Director of 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. 40 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 (67) President and Officer President of funds in the Fund Complex since September 2005 1221 Avenue of the Americas Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex New York, NY 10020 Officer since May 2003. Managing Director of Van Kampen Advisors Inc. since June 2003. Director of Investor Services since September 2002. Director of the Adviser, Van Kampen Investments and Van Kampen Exchange Corp. since January 2005. Managing Director of Morgan Stanley and Morgan Stanley & Co. Incorporated. Managing Director and Director of Morgan Stanley Investment Management Inc. Chief Administrative Officer, Managing Director and Director of Morgan Stanley Investment Advisors Inc. and Morgan Stanley Services Company Inc. Managing Director and Director of Morgan Stanley Distributors Inc. and Morgan Stanley Distribution 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. and Executive Vice President of funds in the Fund Complex from May 2003 to September 2005. Dennis Shea (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors 1221 Avenue of the Americas since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser New York, NY 10020 and Van Kampen Advisors Inc. Chief Investment Officer-Global Equity of the same entities since February 2006. Vice President of Morgan Stanley Institutional and Retail Funds since February 2006. Vice President of funds in the Fund Complex since March 2006. Previously, Managing Director and Director of Global Equity Research at Morgan Stanley from April 2000 to February 2006. J. David Germany (52) Vice President Officer Managing Director of Morgan Stanley Investment Advisors 25 Cabot Square since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser Canary Wharf and Van Kampen Advisors Inc. Chief Investment Officer - London, GBR E14 4QA Global Fixed Income of the same entities since December 2005. Managing Director and Director of Morgan Stanley Investment Management Ltd. Director of Morgan Stanley Investment Management (ACD) Limited since December 2003. Vice President of Morgan Stanley Institutional and Retail Funds since February 2006. Vice President of funds in the Fund Complex since March 2006.
41
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 Amy R. Doberman (44) 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 Advisors 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 (39) Vice President Officer Executive Director of Morgan Stanley Investment Management 1221 Avenue of the Americas and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund New York, NY 10020 Complex. John L. Sullivan (51) 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 Inc. Prior to December 2002, Executive Director of Van Kampen Investments, the Adviser and Van Kampen Advisors Inc. James W. Garrett (37) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management. 1221 Avenue of the Americas and Treasurer since 2006 Chief Financial Officer and Treasurer of Morgan Stanley New York, NY 10020 Institutional Funds since 2002 and of Funds in the Fund Complex from January 2005 to August 2005 and since September 2006.
42 Notice to Fund Shareholders As previously disclosed, a derivative action was filed on behalf of the Fund against the Fund's investment adviser, broker-dealer, distributor, and Trustees. The complaint alleges that defendants violated federal securities laws and state laws in connection with certain economic incentive programs. The case is pending before the Honorable Richard Owen, United States District Judge in the Southern District of New York. Defendants have filed a motion to dismiss the complaint in its entirety on numerous grounds, and that motion is still pending. On April 18, 2006, Judge Owen dismissed a separate lawsuit against Morgan Stanley and all of the same corporate defendants that are named in the derivative action. The Morgan Stanley suit related to the same incentive programs that are at issue in the derivative action, and asserted many of the same legal claims. In his decision, Judge Owen found that the programs do not violate federal law, and that defendants had made the appropriate disclosures concerning the programs. The plaintiffs in the Morgan Stanley suit did not appeal from the decision, and that decision is now final. In light of this decision by Judge Owen--as well as several other decisions by other judges in the Southern District of New York and certain other courts that have dismissed similar complaints against other investment funds--plaintiff in the derivative action has determined that the suit would be unsuccessful, if pursued further. Accordingly, plaintiff has asked Judge Owen to dismiss the action. No attorneys' fees will be paid by defendants and no consideration will be paid to the named plaintiff. All investors in the Fund are hereby provided notice of this proposed dismissal. If you object to the proposed dismissal, your objection must be mailed no later than November 29, 2006, in writing, to the Honorable Richard Owen, United States District Judge, United States Courthouse, Room 640, 500 Pearl Street, New York, NY 10007-1312. Copies of the objection must also be mailed to Denise Davis Schwartzman, Esquire, Chimicles & Tikellis LLP, 361 West Lancaster Avenue, Haverford, PA 19041; and Richard A. Rosen, Esquire, Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, NY 10019-6064. 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)2006 Van Kampen Funds Inc. All rights reserved. Member NASD/SIPC. 28, 128, 228 HYI ANR 10/06 (VAN KAMPEN INVESTMENTS SHINE LOGO) RN06-02826P-Y08/06 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) Not applicable. (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 three "audit committee financial experts" serving on its audit committee, each of whom are "independent" Trustees : Rod Dammeyer, Jerry D. 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: 2006
REGISTRANT COVERED ENTITIES(1) ---------- ------------------- AUDIT FEES ............. $42,400 N/A NON-AUDIT FEES AUDIT-RELATED FEES .. $ 0 $ 706,000(2) TAX FEES ............ $ 2,800(3) $ 75,537(4) ALL OTHER FEES ...... $ 0 $ 749,041(5) TOTAL NON-AUDIT FEES ... $ 2,800 $1,530,578 TOTAL .................. $45,200 $1,530,578
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
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. (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 D. 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (1) The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto. (2)(a) A certification for the Principal Executive Officer of the registrant is attached hereto as part of EX-99.CERT. (2)(b) 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 19, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Ronald E. Robison --------------------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: October 19, 2006 By: /s/ James W. Garrett --------------------------------- Name: James W. Garrett Title: Principal Financial Officer Date: October 19, 2006 EX-99.CODE 2 c08291exv99wcode.txt CODE OF ETHICS 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: - honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. - 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; - compliance with applicable laws and governmental rules and regulations; - prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and - 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: - 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); - 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 - 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: - service or significant business relationships as a director on the board of any public or private company; - 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; - 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 - 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 - Each Covered Officer should familiarize himself/herself with the disclosure and compliance requirements generally applicable to the Funds; - 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; - 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 - 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: - 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; - annually thereafter affirm to the Boards that he has complied with the requirements of the Code; - 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 - 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: - the General Counsel will take all appropriate action to investigate any potential violations reported to him; - if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; - any matter that the General Counsel believes is a violation will be reported to the relevant Fund's Audit Committee; - 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; - the Independent Directors/Trustees/Managing General Partners of the relevant Fund will be responsible for granting waivers of this Code, as appropriate; and - 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 C GENERAL COUNSEL'S DESIGNEE Amy Doberman EX-99.CERT 3 c08291exv99wcert.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 Rule30a-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 second fiscal quarter of the period covered by this 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 19, 2006 /s/ Ronald E. Robison ---------------------------------------- Principal Executive Officer I, James W. Garrett, 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 Rule30a-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 second fiscal quarter of the period covered by this 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 19, 2006 /s/ James W. Garrett ---------------------------------------- Principal Financial Officer EX-99.906CERT 4 c08291exv99w906cert.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, 2006 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 19, 2006 /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, 2006 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 19, 2006 /s/ James W. Garrett ---------------------------------------- James W. Garrett 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-----