-----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, C2VvjKZAtabpbzGlVdqHGAFJBa9v7jBcsVUt5UBJCxlN5OtNrETEfnMHw0DQB8Ec op8/0DEobLQu5v5fua0q7w== 0001047469-03-040516.txt : 20031212 0001047469-03-040516.hdr.sgml : 20031212 20031212144552 ACCESSION NUMBER: 0001047469-03-040516 CONFORMED SUBMISSION TYPE: N-CSRS/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031212 EFFECTIVENESS DATE: 20031212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN TRUST CENTRAL INDEX KEY: 0000791069 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSRS/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-04629 FILM NUMBER: 031051623 BUSINESS ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC STREET 2: ONE PARKVIEW PLZ CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 BUSINESS PHONE: 6306846774 MAIL ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC STREET 2: ONE PARKVIEW PLAZA CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL TRUST DATE OF NAME CHANGE: 19951219 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN MERRITT TRUST /IL DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN MERRITT TRUST DATE OF NAME CHANGE: 19860915 N-CSRS/A 1 a2124567zn-csrsa.txt N-CSRS/A 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 811-4269 Van Kampen Trust - -------------------------------------------------------------------------------- (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: 3/31 Date of reporting period: 9/30/03 Item 1. Report to Shareholders VAN KAMPEN HIGH YIELD FUND SEMIANNUAL REPORT SEPTEMBER 30, 2003 [PHOTO OF MAN FISHING] [PHOTO OF MAN/WOMAN DANCING AT WEDDING] [PHOTO OF MAN/GIRL SAILING] [PHOTO OF MAN/WOMAN WALKING] ENJOY LIFE'S TRUE WEALTH [VAN KAMPEN INVESTMENTS LOGO] GENERATIONS OF EXPERIENCE(SM) PRIVACY NOTICE INFORMATION ON THE BACK. WELCOME, SHAREHOLDER In this report, you'll learn about how your investment in Van Kampen High Yield Fund performed during the semiannual period. The portfolio management team will provide an overview of the market conditions and discuss some of the factors that affected investment performance during the reporting period. In addition, this report includes the fund's financial statements and a list of fund investments as of September 30, 2003. This material must be preceded or accompanied by a prospectus for the fund being offered. Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the fund will achieve its investment objective. The fund is subject to market risk, which is the possibility that the market values of securities owned by the fund will decline and, therefore, the value of the fund shares may be less than what you paid for them. Accordingly, you can lose money investing in this fund. Please see the prospectus for more complete information on investment risks. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE PERFORMANCE SUMMARY
A SHARES B SHARES C SHARES SINCE 6/27/86 SINCE 5/17/93 SINCE 8/13/93 --------------------------------------------------------------- AVERAGE ANNUAL W/O SALES W/SALES W/O SALES W/SALES W/O SALES W/SALES TOTAL RETURNS CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES Since Inception 5.78% 5.49% 3.51% 3.51% 2.87% 2.87% 10-year 3.66 3.15 3.18 3.18 2.83 2.83 5-year 0.50 -0.47 -0.29 -0.47 -0.29 -0.29 1-year 24.86 19.01 23.83 19.83 23.88 22.88 6-months 11.06 5.77 10.61 6.61 10.63 9.63 - ------------------------------------------------------------------------------------ 30-Day Subsidized SEC Yield 6.47% 6.01% 6.02% 30-Day SEC Yield 6.37 5.91 5.92
Past performance is no guarantee of future results. Investment return 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. As a result of recent market activity, current performance may vary from the figures shown. For more up-to-date information, please visit vankampen.com or speak with your financial advisor. 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 year one and declining to zero after year six), 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 1.00 percent for Class B and C shares. The since inception and 10-year returns for Class B and C shares reflect their conversion into Class A shares six and 10 years after purchase, respectively. See footnote 3 in the Notes to Financial Statements for additional information. Figures shown above assume reinvestment of all dividends and capital gains. The fund's adviser has waived or reimbursed fees and expenses from time to time; absent such waivers/reimbursements the fund's returns would have been lower. SEC yield is a calculation for determining the amount of portfolio income, excluding non-income items as prescribed by the SEC. The subsidized SEC yields reflect some or all of the expenses that the adviser had voluntarily waived. Yields are subject to change. Distribution rate represents the monthly annualized distributions of the fund at the end of the period and not the earnings of the fund. The Credit Suisse First Boston High Yield Index is a broad based index, which reflects the general performance of a wide range of selected bonds within the public high-yield debt market. Index is unmanaged and does not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. 1 FUND REPORT FOR THE SIX-MONTH PERIOD ENDED SEPTEMBER 30, 2003 Van Kampen High Yield Fund is managed by the Adviser's Taxable Fixed Income team.(1) Members of the team include Gordon Loery, Executive Director, and Joshua Givelber and Chad Liu, Vice Presidents. The following discussion reflects their views on the fund's performance. Q. BEFORE YOU DISCUSS HOW THE FUND PERFORMED, PLEASE DESCRIBE THE OVERALL MARKET ENVIRONMENT. A. During the six-month period ended September 30, 2003, the high-yield market continued its remarkable rally that began in October 2002. This upsurge was triggered by a combination of improving fundamentals and declining default rates. In addition, the rallying market drew record high-yield mutual fund inflows, which propelled prices still higher. The ride was not completely smooth, however. In July and early August the high-yield market declined slightly as a consequence of heavy issuance of new debt coupled with a few weeks of outflows from mutual funds. The market bounced back in late August and September, however, as issuance slowed and investors returned to high-yield securities. Continued indications of economic recovery and a rally in Treasuries also supported the high-yield market in September. The strongest returns during the six-month period were earned by sectors and securities that were most heavily out of favor during the preceding years. Wireless communications, utilities, telecommunications and cable all soared. These sectors benefited from a combination of improved financial results (albeit based on greatly reduced expectations) and low valuations. In a similar vein, performance patterns across credit tiers differed dramatically as the lowest-rated credits rose far more than their higher-quality peers. Q. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD? A. The fund underperformed its benchmark index. - The fund returned 11.06 percent for the six months that ended September 30, 2003. Performance figures are for Class A shares, and assume the reinvestment of all distributions but do not reflect the deduction of any applicable sales charges. If sales charges were included, performance would be lower. Past performance is no guarantee of future results. (1) Team members may change at any time without notice. 2 - The fund's benchmark, the Credit Suisse First Boston High Yield Index, returned 13.08 percent for the same period. - The fund's monthly dividend of $0.0335 translated to a distribution rate of 7.17 percent based on the fund's maximum offering price (as of September 30, 2003, Class A shares adjusted for sales charges). See Performance Summary for additional information and index definition. Q. WHAT FACTORS HINDERED PERFORMANCE DURING THE REPORTING PERIOD? A. The primary driver of the fund's underperformance was its relatively high credit quality. Lower-rated categories of bonds such as those rated CCC had experienced price gains that made them unattractive to us from a relative-value perspective. This stance held the fund back because of the strong performance of CCC-rated debt during the period. The fund's performance was also dampened somewhat by our security selection within the utilities sector. Here again, the portfolio's utilities holdings were generally at the higher end of the quality spectrum than most constituent companies in that sector. As a result, the fund's holdings lagged when lower-grade bonds rallied strongly. Q. WHAT HELPED PERFORMANCE? A. The fund's performance was helped by strong security selection in several key sectors that appreciated sharply during the period. For example, the wireless communications sector entered the period with generally low valuations for most of its component companies given the sector's poor performance for most of 2002. Our analysts identified several companies, TOP 5 SECTORS AS OF 9/30/03 Energy 9.1% Utility 7.9% Forest Products 7.1% Chemicals 6.9% Gaming & Leisure 6.9%
RATING ALLOCATION AS OF 9/30/03 BBB/Baa 5.6% BB/Ba 35.9% B/B 48.3% CCC/Caa 7.0% CC/Ca 1.0% Non-Rated 2.2%
Subject to change daily. All percentages are as a percentage of long-term investments. Provided for informational purposes only and should not be deemed as a recommendation to buy securities in the sectors shown above. Securities are classified by sectors that represent broad groupings of related industries. Rating allocations based upon ratings as issued by Standard and Poor's and Moody's, respectively. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. 3 such as American Cellular, SBA Communications and Dobson Communications, that appeared to be undervalued relative to their prospects. These companies all provided solid gains to the portfolio during the period on the basis of improving financial results. The fund also benefited from good bond picks in the diversified-media sector. The portfolio's best performers in this sector included Vivendi, which posted strong financial results and attracted further attention by announcing their intention to sell assets and reduce debt. R.H. Donnelly continued to post solid results from their publishing business. Q. PLEASE WALK US THROUGH HOW YOU POSITIONED THE FUND, HIGHLIGHTING KEY ISSUES. A. We follow a bottom-up investment strategy. Therefore, the fund's positions are the result of our valuation of individual securities, rather than market sectors. We found selected companies in economically-sensitive sectors such as chemicals and manufacturing that we believed to be undervalued, and we added exposure in these areas. We also added positions in consumer products and utilities companies where our analysts believed the fundamentals to be solid and the bonds undervalued. We also took advantage of strong market demand to trim some of the fund's holdings in lower-rated securities that had met our price targets, and reinvested the proceeds in bonds that offered better total-return potential. We also followed this policy with our purchase of new securities for the portfolio, avoiding CCC-rated bonds and focusing instead on middle-tier credits in the BB and B categories. Q. NOW THAT YOU'VE PROVIDED AN OVERVIEW FOR THE FUND, DO YOU HAVE ANY CLOSING THOUGHTS? A. We continue to believe that the fundamentals of the high-yield market will likely remain positive for many months to come. We also believe that such a scenario has already been priced into the market. Consequently, we expect that the majority of the return in the high-yield market in the near future will be driven by the coupons available from higher-yielding bonds rather than price appreciation. We will continue to watch the market closely for opportunities. 4 ANNUAL 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 POLICIES AND PROCEDURES A description of the fund's policies and procedures with respect to the voting of proxies relating to the fund's portfolio securities is available without charge, upon request, by calling 1-800-847-2424. This information is also available on the Securities and Exchange Commission's website at http://www.sec.gov. 5 BY THE NUMBERS YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE DOMESTIC CORPORATE BONDS 82.4% BROADCASTING 1.1% $1,672 Interep National Radio Sales, Inc., Ser B 10.000% 07/01/08 $ 1,521,520 1,809 Nextmedia Operating, Inc. 10.750 07/01/11 2,035,125 ----------- 3,556,645 ----------- BUILDING MATERIALS 0.2% 530 Koppers, Inc.,144A--Private Placement (a) (b) 9.875 10/15/13 530,000 ----------- CABLE 5.9% 635 Avalon Cable, LLC (c) 0/11.875 12/01/08 654,050 1,300 Charter Communications Holdings 8.250 04/01/07 1,111,500 245 Charter Communications Holdings 8.625 04/01/09 188,650 585 Charter Communications Holdings 10.750 10/01/09 481,162 2,275 Charter Communications Holdings (c) 0/11.750 01/15/10 1,615,250 400 CSC Holdings, Inc. 7.250 07/15/08 401,000 1,240 CSC Holdings, Inc. 8.125 07/15/09 1,283,400 1,075 CSC Holdings, Inc. 9.875 02/15/13 1,124,719 395 CSC Holdings, Inc. 10.500 05/15/16 436,475 3,060 DirecTV Holdings, LLC, 144A--Private Placement (b) 8.375 03/15/13 3,465,450 1,616 Echostar DBS Corp. 9.125 01/15/09 1,838,200 1,560 Echostar DBS Corp. 9.375 02/01/09 1,671,150 1,585 Echostar DBS Corp., 144A--Private Placement (a) (b) 6.375 10/01/11 1,592,925 800 NTL, Inc. (d) 19.000 01/01/10 788,000 1,156 Pegasus Communications Corp., Ser B 9.750 12/01/06 919,020 790 Renaissance Media Group 10.000 04/15/08 793,950 ----------- 18,364,901 ----------- CHEMICALS 5.0% 1,747 Equistar Chemicals LP 10.125 09/01/08 1,738,265 620 Equistar Chemicals LP, 144A--Private Placement (b) 10.625 05/01/11 616,900 722 FMC Corp. 10.250 11/01/09 826,690 755 Huntsman Advanced Materials LLC, 144A--Private Placement (b) 11.000 07/15/10 788,975 1,733 Huntsman ICI Chemicals, LLC 10.125 07/01/09 1,655,015 1,200 Huntsman International, LLC (EUR) (e) 10.125 07/01/09 1,244,433
SEE NOTES TO FINANCIAL STATEMENTS 6 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE CHEMICALS (CONTINUED) $ 480 Huntsman International, LLC, 144A--Private Placement (b) 9.875% 03/01/09 $ 506,400 2,980 ISP Holdings, Inc. 10.625 12/15/09 3,263,100 1,045 Millennium America, Inc. 7.000 11/15/06 1,024,100 1,210 Millennium America, Inc. 9.250 06/15/08 1,261,425 1,250 Rockwood Specialties Group, Inc., 144A--Private Placement (b) 10.625 05/15/11 1,337,500 1,265 Westlake Chemical Corp., 144A--Private Placement (b) 8.750 07/15/11 1,318,762 ----------- 15,581,565 ----------- CONSUMER PRODUCTS 1.5% 890 Elizabeth Arden, Inc., Ser B 11.750 02/01/11 1,019,050 805 Oxford Industries, Inc., 144A--Private Placement (b) 8.875 06/01/11 861,350 960 Rayovac Corp., 144A--Private Placement (b) 8.500 10/01/13 993,600 1,800 Sleepmaster, LLC (f) (g) 11.000 05/15/09 497,250 1,260 Tempur Pedic, Inc., 144A--Private Placement (b) 10.250 08/15/10 1,373,400 ----------- 4,744,650 ----------- DIVERSIFIED MEDIA 4.2% 365 Advanstar Communications, Inc., 144A--Private Placement (b) 10.750 08/15/10 378,687 2,580 Advanstar Communications, Inc., 144A--Private Placement (Variable Rate Coupon) (b) 8.630 08/15/08 2,615,475 1,305 Dex Media West Finance Corp. I, 144A--Private Placement (b) 9.875 08/15/13 1,481,175 1,270 Muzak, Inc. 10.000 02/15/09 1,333,500 1,741 Muzak, Inc. 9.875 03/15/09 1,653,950 715 PEI Holdings, Inc. 11.000 03/15/10 793,650 2,000 Primedia, Inc. 8.875 05/15/11 2,085,000 910 RH Donnelley Finance Corp. I, 144A--Private Placement (b) 10.875 12/15/12 1,078,350 1,700 Salem Communications Corp. 7.750 12/15/10 1,751,000 ----------- 13,170,787 ----------- ENERGY 8.4% 2,053 BRL Universal Equipment 8.875 02/15/08 2,227,505 1,880 Chesapeake Energy Corp. 8.125 04/01/11 2,049,200 840 Citgo Petroleum Corp., 144A--Private Placement (b) 11.375 02/01/11 953,400 617 DI Industries, Inc. 8.875 07/01/07 632,425
SEE NOTES TO FINANCIAL STATEMENTS 7 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE ENERGY (CONTINUED) $2,645 El Paso Production Holding Co., 144A--Private Placement (b) 7.750% 06/01/13 $ 2,525,975 1,915 Frontier Oil Corp. 11.750 11/15/09 2,173,525 520 GulfTerra Energy Partner LP, Ser B 8.500 06/01/10 562,900 1,943 GulfTerra Energy Partner LP, Ser B 10.625 12/01/12 2,287,882 245 Hanover Equipment Trust 8.500 09/01/08 253,575 1,038 Hanover Equipment Trust 8.750 09/01/11 1,074,330 1,695 Hilcorp Energy Finance Corp. I, 144A--Private Placement (b) 10.500 09/01/10 1,809,412 957 Magnum Hunter Resources, Inc. 9.600 03/15/12 1,047,915 335 MSW Energy Holdings Finance Corp I, 144A--Private Placement (b) 8.500 09/01/10 351,750 2,840 Pemex Project Funding Master Trust 8.625 02/01/22 3,180,800 1,360 Port Arthur Finance Corp., Ser A 12.500 01/15/09 1,584,109 895 Tesoro Petroleum Corp. 9.000 07/01/08 877,100 1,030 Tesoro Petroleum Corp. 9.625 04/01/12 1,030,000 1,760 Vintage Petroleum, Inc. 7.875 05/15/11 1,834,800 ----------- 26,456,603 ----------- FOOD & DRUG 2.0% 3,135 Delhaize America, Inc. 8.125 04/15/11 3,464,175 500 Jitney-Jungle Stores America, Inc. (f) (g) (h) 12.000 03/01/06 0 1,469 Kroger Co., 144A--Private Placement (b) 8.500 07/15/17 1,673,165 1,040 Merisant Co., 144A--Private Placement (b) 9.500 07/15/13 1,118,000 ----------- 6,255,340 ----------- FOOD & TOBACCO 2.4% 1,280 Michael Foods, Inc., Ser B 11.750 04/01/11 1,504,000 745 National Beef Packing Co., 144A--Private Placement (b) 10.500 08/01/11 815,775 1,700 Pilgrim's Pride Corp. 9.625 09/15/11 1,844,500 1,850 Smithfield Foods, Inc. 7.625 02/15/08 1,933,250 515 Smithfield Foods, Inc. 8.000 10/15/09 563,925 900 Smithfield Foods, Inc., 144A--Private Placement (b) 7.750 05/15/13 969,750 ----------- 7,631,200 ----------- FOREST PRODUCTS 4.1% 2,925 Georgia-Pacific Corp. 8.875 02/01/10 3,217,500 1,345 Graphic Packaging International, Inc., 144A--Private Placement (b) 9.500 08/15/13 1,482,862 580 Louisiana Pacific Corp. 10.875 11/15/08 677,150 547 Louisiana Pacific Corp. 8.875 08/15/10 638,622 130 Owens-Brockway Glass Containers, Inc. 8.875 02/15/09 139,100 150 Owens-Brockway Glass Containers, Inc. 7.750 05/15/11 156,000
SEE NOTES TO FINANCIAL STATEMENTS 8 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE FOREST PRODUCTS (CONTINUED) $1,270 Owens-Brockway Glass Containers, Inc. 8.750% 11/15/12 $ 1,368,425 585 Owens-Illinois, Inc. 7.350 05/15/08 570,375 1,730 Owens-Illinois, Inc. 7.500 05/15/10 1,678,100 200 Pliant Corp. 13.000 06/01/10 187,000 1,266 Pliant Corp. 13.000 06/01/10 1,183,710 1,747 Tekni-Plex, Inc., Ser B 12.750 06/15/10 1,720,795 ----------- 13,019,639 ----------- GAMING & LEISURE 6.7% 2,530 Harrahs Operating Co., Inc. 7.875 12/15/05 2,745,050 432 Hilton Hotels Corp. 7.950 04/15/07 475,200 1,215 Hilton Hotels Corp. 7.625 12/01/12 1,333,462 223 HMH Properties, Inc. 7.875 08/01/05 229,690 1,506 HMH Properties, Inc. 7.875 08/01/08 1,554,945 2,006 Horseshoe Gaming, LLC, Ser B 8.625 05/15/09 2,158,957 950 LodgeNet Entertainment Corp. 9.500 06/15/13 1,011,750 2,510 MGM Mirage, Inc., Ser B 6.000 10/01/09 2,535,100 2,050 Park Place Entertainment Corp. 7.875 12/15/05 2,180,687 475 Park Place Entertainment Corp. 7.000 04/15/13 493,406 386 Starwood Hotels & Resorts Worldwide, Inc. 7.375 05/01/07 415,915 1,361 Starwood Hotels & Resorts Worldwide, Inc. 7.875 05/01/12 1,497,100 1,825 Station Casinos, Inc. 8.875 12/01/08 1,916,250 975 Station Casinos, Inc. 9.875 07/01/10 1,083,469 1,174 Venetian Casino Resort, LLC 11.000 06/15/10 1,344,230 ----------- 20,975,211 ----------- HEALTHCARE 4.6% 1,825 AmerisourceBergen Corp. 7.250 11/15/12 1,866,062 1,000 Fisher Scientific International, Inc. 8.125 05/01/12 1,067,500 620 Fresenius Medical Care Capital Trust II 7.875 02/01/08 646,350 2,210 Fresenius Medical Care Capital Trust IV 7.875 06/15/11 2,320,500 1,104 HCA, Inc. 8.750 09/01/10 1,286,302 1,100 HCA, Inc. 6.950 05/01/12 1,168,824 445 HCA, Inc. 6.300 10/01/12 454,329 115 HCA, Inc. 7.190 11/15/15 122,417 210 Manor Care, Inc. 7.500 06/15/06 228,900 478 Manor Care, Inc. 8.000 03/01/08 537,750 505 Manor Care, Inc. 6.250 05/01/13 520,150 705 Medco Health Solutions, Inc. 7.250 08/15/13 752,774 607 Omnicare, Inc. 8.125 03/15/11 660,112 805 Omnicare, Inc. 6.125 06/01/13 792,925 940 Tenet Healthcare Corp. 6.500 06/01/12 902,400 945 Tenet Healthcare Corp. 7.375 02/01/13 956,812 ----------- 14,284,107 -----------
SEE NOTES TO FINANCIAL STATEMENTS 9 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE HOUSING 4.8% $1,869 CB Richard Ellis Service, Inc. 11.250% 06/15/11 $ 2,032,538 735 CBRE Escrow, Inc., 144A--Private Placement (b) 9.750 05/15/10 799,313 1,405 D.R. Horton, Inc. 6.875 05/01/13 1,419,050 1,719 Istar Financial, Inc. 8.750 08/15/08 1,933,875 1,400 KB Home 7.750 02/01/10 1,484,000 2,290 LNR Property Corp., 144A--Private Placement (b) 7.625 07/15/13 2,370,150 620 Meritage Corp. 9.750 06/01/11 682,000 347 Nortek Holdings, Inc. 9.250 03/15/07 359,145 599 Tech Olympic USA, Inc. 9.000 07/01/10 634,940 725 Tech Olympic USA, Inc. 9.000 07/01/10 768,500 1,074 Tech Olympic USA, Inc. 10.375 07/01/12 1,159,920 1,377 Toll Corp 8.250 02/01/11 1,507,815 ----------- 15,151,246 ----------- INFORMATION TECHNOLOGY 1.9% 2,120 Avaya, Inc. 11.125 04/01/09 2,464,500 1,255 Iron Mountain, Inc. 8.625 04/01/13 1,342,850 1,325 Iron Mountain, Inc. 7.750 01/15/15 1,374,688 750 Iron Mountain, Inc. 6.625 01/01/16 714,375 ----------- 5,896,413 ----------- MANUFACTURING 4.2% 295 ABB Finance, Inc. 6.750 06/03/04 298,107 691 Brand Services, Inc., 144A--Private Placement (b) 12.000 10/15/12 767,010 2,205 Communications & Power Industries, Inc., Ser B 12.000 08/01/05 2,249,100 480 Flowserve Corp. 12.250 08/15/10 556,800 1,470 Jacuzzi Brands, Inc., 144A--Private Placement (b) 9.625 07/01/10 1,532,475 637 Johnsondiversey, Inc. (EUR) (e) 9.625 05/15/12 801,611 1,567 Johnsondiversey, Inc., Ser B 9.625 05/15/12 1,708,030 1,345 Manitowoc, Inc. 10.500 08/01/12 1,540,025 961 NMHG Holdings Co. 10.000 05/15/09 1,061,905 2,768 Trimas Corp. 9.875 06/15/12 2,823,360 ----------- 13,338,423 ----------- METALS 2.4% 2,455 Doe Run Resources Corp., 144A--Private Placement (b) (d) (h) 11.750 11/01/08 859,334 1,600 GS Technologies Operating, Inc. (f) (g) (h) 12.000 09/01/04 160 1,050 GS Technologies Operating, Inc. (f) (g) (h) 12.250 10/01/05 0 1,454 Intermet Corp. 9.750 06/15/09 1,439,460 995 Oregon Steel Mills, Inc. 10.000 07/15/09 820,875
SEE NOTES TO FINANCIAL STATEMENTS 10 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE METALS (CONTINUED) $ 805 Republic Engineered Products, LLC (e) (j) 10.000% 08/16/09 $ 213,247 1,730 UCAR Finance, Inc. 10.250 02/15/12 1,898,675 2,085 United States Steel Corp. 9.750 05/15/10 2,147,550 ----------- 7,379,301 ----------- RETAIL 3.0% 1,660 AutoNation, Inc. 9.000 08/01/08 1,867,500 890 Big 5 Corp., Ser B 10.875 11/15/07 940,063 525 Gap, Inc. 6.900 09/15/07 567,000 932 Gap, Inc. 10.550 12/15/08 1,125,390 2,535 Payless Shoesource, Inc., 144A--Private Placement (b) 8.250 08/01/13 2,585,700 250 Penney, JC Co., Inc. 7.600 04/01/07 271,250 935 Penney, JC Co., Inc. 8.000 03/01/10 1,030,838 690 Penney, JC Co., Inc. 9.000 08/01/12 783,150 222 Penney, JC Co., Inc. 6.875 10/15/15 219,780 ----------- 9,390,671 ----------- SERVICES 1.5% 440 Allied Waste North America, Inc. 8.875 04/01/08 478,500 1,650 Allied Waste North America, Inc. 10.000 08/01/09 1,796,438 1,305 Allied Waste North America, Inc. 7.875 04/15/13 1,373,513 900 Encompass Services Corp. (f) (g) (h) 10.500 05/01/09 0 1,500 Hydrochem Industrial Services, Inc., Ser B 10.375 08/01/07 1,057,500 ----------- 4,705,951 ----------- TELECOMMUNICATIONS 3.2% 2,080 Cincinnati Bell, Inc., 144A--Private Placement (b) 7.250 07/15/13 2,069,600 1,820 Exodus Communications, Inc. (f) (g) (h) 11.250 07/01/08 13,650 440 Exodus Communications, Inc. (f) (g) (h) 11.625 07/15/10 3,300 1,250 Exodus Communications, Inc. (EUR) (e) (f) (g) (h) 11.375 07/15/08 10,924 2,945 GST Network Funding, Inc. (f) (g) (h) 10.500 05/01/08 295 1,863 Knology, Inc., 144A--Private Placement (b) (d) 12.000 11/30/09 1,779,583 1,000 Park N View, Inc., Ser B (f) (g) 13.000 05/15/08 0 1,193 Primus Telecom Group 9.875 05/15/08 1,175,105 120 Primus Telecom Group 11.250 01/15/09 124,800 1,425 US West Communications, Inc. 6.625 09/15/05 1,464,188 3,545 US West Communications, Inc. 5.625 11/15/08 3,474,100 ----------- 10,115,545 ----------- TRANSPORTATION 3.6% 5,435 Aetna Industries, Inc. (f) (g) (h) 11.875 10/01/06 27,175 1,495 Amsted Industries Inc., 144A--Private Placement (b) 10.250 10/15/11 1,616,469 957 Collins & Aikman Products Co. 10.750 12/31/11 832,590
SEE NOTES TO FINANCIAL STATEMENTS 11 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE TRANSPORTATION (CONTINUED) $1,660 Laidlaw International, Inc., 144A--Private Placement (b) 10.750% 06/15/11 $ 1,788,650 2,050 Lear Corp. 8.110 05/15/09 2,367,750 2,155 Sonic Automotive Inc., 144A--Private Placement (b) 8.625 08/15/13 2,338,175 2,195 TRW Automotive, Inc., 144A--Private Placement (b) 9.375 02/15/13 2,480,350 ----------- 11,451,159 ----------- UTILITY 7.0% 252 AES Corp. 9.375 09/15/10 258,300 183 AES Corp. 8.875 02/15/11 183,000 1,585 AES Corp., 144A--Private Placement (b) 9.000 05/15/15 1,684,063 660 Allegheny Energy, Inc. 7.750 08/01/05 666,600 1,625 Calpine Corp. 8.625 08/15/10 1,153,750 850 Calpine Corp., 144A--Private Placement (b) 8.500 07/15/10 786,250 425 CMS Energy Corp. 7.500 01/15/09 422,875 1,350 CMS Energy Corp. 8.500 04/15/11 1,380,375 1,990 Dynegy Holdings, Inc. 6.875 04/01/11 1,676,575 1,480 Dynegy Holdings, Inc., 144A--Private Placement (a) (b) 9.875 07/15/10 1,554,000 470 IPALCO Enterprises, Inc. 7.625 11/14/11 512,300 1,555 Monongahela Power Co. 5.000 10/01/06 1,566,663 1,000 Nevada Power Co., 144A--Private Placement (b) 9.000 08/15/13 1,037,500 330 Northwest Pipeline Corp. 8.125 03/01/10 359,700 840 PG & E Corp., 144A--Private Placement (b) 6.875 07/15/08 886,200 360 PSEG Energy Holdings, Inc. 7.750 04/16/07 360,000 1,016 PSEG Energy Holdings, Inc. 8.625 02/15/08 1,038,860 870 Southern California Edison Co., 144A--Private Placement (b) 8.000 02/15/07 976,575 665 Southern Natural Gas Co. 8.875 03/15/10 714,875 1,000 The Williams Cos., Inc. 6.750 01/15/06 1,010,000 2,435 The Williams Cos., Inc. 7.875 09/01/21 2,313,250 600 TNP Enterprises, Inc. 10.250 04/01/10 621,000 575 Transcontinental Gas Pipe Line Corp., Ser B 8.875 07/15/12 653,344 ----------- 21,816,055 ----------- WIRELESS COMMUNICATIONS 4.7% 325 American Tower Corp. 9.375 02/01/09 333,125 3,230 American Tower Corp. 6.250 10/15/09 3,092,725 1,365 Dobson Communications Corp. 10.875 07/01/10 1,494,675 1,355 MetroPCS, Inc., 144A--Private Placement (b) 10.750 10/01/11 1,388,875 3,640 Nextel Communications, Inc. 9.375 11/15/09 3,967,600
SEE NOTES TO FINANCIAL STATEMENTS 12 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE WIRELESS COMMUNICATIONS (CONTINUED) $ 385 Nextel Communications, Inc. 7.375% 08/01/15 $ 390,775 1,585 Nextel Partners, Inc. 11.000 03/15/10 1,739,538 1,669 SBA Communications Corp. 12.000 03/01/08 1,769,140 532 SBA Communications Corp. 10.250 02/01/09 481,460 ----------- 14,657,913 ----------- TOTAL DOMESTIC CORPORATE BONDS 82.4% 258,473,325 ----------- PAR AMOUNT IN LOCAL CURRENCY (000) FOREIGN BONDS AND DEBT SECURITIES 12.4% BRAZIL 0.1% 775 Multicanal Participacoes, Ser B (US $) (f) 12.625 06/18/04 275,125 ----------- CANADA 4.5% 1,200 360 Networks, Inc. (EUR) (f) (g) (h) 13.000 05/01/08 0 1,140 360 Networks, Inc. (US $) (f) (g) 13.000 05/01/08 0 1,590 Abitibi-Consolidated, Inc. (US $) 6.000 06/20/13 1,499,365 796 Acetex Corp. (US $) 10.875 08/01/09 885,550 1,888 Air Canada, Inc. (US $) (f) (g) 10.250 03/15/11 736,320 1,730 Alliance Atlantis Communications, Inc. (US $) 13.000 12/15/09 1,993,825 2,975 Hollinger Participation, 144A--Private Placement (US$) (b) (d) 12.125 11/15/10 3,365,376 1,200 Husky Oil Ltd. (US $) 8.900 08/15/28 1,411,500 915 Norampac, Inc., 144A--Private Placement (US $) (b) 6.750 06/01/13 937,875 795 Pacifica Papers, Inc. (US $) 10.000 03/15/09 846,675 500 Tembec Industries, Inc. (US $) 8.625 06/30/09 495,000 2,165 Tembec Industries, Inc. (US $) 7.750 03/15/12 2,045,925 2,750 Worldwide Fiber, Inc. (US $) (f) (g) 12.000 08/01/09 275 ----------- 14,217,686 ----------- COLUMBIA 0.3% 760 Republic of Columbia (US $) 9.750 04/09/11 848,902 -----------
SEE NOTES TO FINANCIAL STATEMENTS 13 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
PAR AMOUNT IN LOCAL CURRENCY MARKET (000) DESCRIPTION COUPON MATURITY VALUE FRANCE 1.3% 1,905 Rhodia SA, 144A--Private Placement (US $) (b) 8.875% 06/01/11 $ 1,881,187 685 Vivendi Universal SA, 144A--Private Placement (US $) (b) 6.250 07/15/08 708,975 1,235 Vivendi Universal SA, 144A--Private Placement (US $) (b) 9.250 04/15/10 1,424,881 ----------- 4,015,043 ----------- GERMANY 0.5% 1,255 Messer Griesham (EUR) 10.375 06/01/11 1,674,363 ----------- GUERNSEY 0.4% 885 ABB International Finance Ltd. (EUR) 11.000 01/15/08 1,145,765 ----------- IRELAND 0.1% 270 MDP Acquisitions PLC (US $) 9.625 10/01/12 297,000 ----------- LUXEMBOURG 1.4% 1,840 Safilo Capital International SA, 144A--Private Placement (EUR) (b) 9.625 05/15/13 1,875,971 1,415 Tyco International Group SA (US $) 6.750 02/15/11 1,499,900 995 Tyco International Group SA (US $) 6.375 10/15/11 1,031,069 ----------- 4,406,940 ----------- MEXICO 1.4% 3,283 Satelites Mexicanos SA, Ser B (US $) (f) 10.125 11/01/04 1,592,255 2,608 TV Axteca SA, Ser B (US $) 10.500 02/15/07 2,738,400 ----------- 4,330,655 ----------- SINGAPORE 0.3% 920 Flextronics Intl Ltd., 144A--Private Placement (US $) (b) 6.500 05/15/13 917,700 ----------- UNITED KINGDOM 2.1% 1,230 Avecia Group PLC (US $) 11.000 07/01/09 1,082,400 1,910 JSG Funding PLC (EUR) 10.125 10/01/12 2,425,829 525 Xerox Capital Europe PLC (US $) 5.875 05/15/04 530,250 2,515 Xerox Corp. (US $) 7.125 06/15/10 2,508,713 ----------- 6,547,192 ----------- TOTAL FOREIGN BONDS AND DEBT SECURITIES 12.4% 38,676,371 -----------
SEE NOTES TO FINANCIAL STATEMENTS 14 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
MARKET DESCRIPTION VALUE EQUITIES 2.8% Decisionone Corp. (2,671 common stock warrants Class A) (h) (i) $ 0 Decisionone Corp. (4,603 common stock warrants Class B) (h) (i) 0 Decisionone Corp. (2,730 common stock warrants Class C) (h) (i) 0 Decisionone Corp. (5,234 common shares) (h) (i) 0 Dobson Communications Corp. (17,924 preferred shares) (d) 1,922,375 Dobson Communications Corp., 144A--Private Placement (2,759 convertible preferred shares) (b) (i) 556,973 Doe Run Resources Corp. (9 common stock warrants) (h) 0 HCI Direct, Inc. (106,250 common shares) (h) (i) 828,750 Hosiery Corp. of America, Inc. (1,000 common shares) 0 ICG Communications, Inc. (2,085 common stock warrants) (h) (i) 0 Jazztel PLC (United Kingdom) (EUR) (1,550 common stock warrants) (h) (i) 0 McLeodUSA, Inc. (1,750 common shares) (i) 2,432 McLeodUSA, Inc. (12,020 preferred shares) (i) 85,222 McLeodUSA, Inc. (26,689 preferred stock warrants) (i) 13,878 Mediq, Inc. (3,684 common shares) (h) (i) 20,004 Microcell Telecommunications (Canada) (94 common shares Class A) 1,187 Microcell Telecommunications (Canada) (11,250 common shares Class B) 133,365 Microcell Telecommunications (Canada) (11,317 convertible preferred shares) 144,557 Microcell Telecommunications (Canada) (4,179 common stock warrants) 4,889 Microcell Telecommunications (Canada) (6,965 common stock warrants) 12,016 Motient Corp. (79,326 common shares) (i) 432,327 Park N View, Inc., (1,000 common stock warrants) 144A--Private Placement (b) (g) (i) 0 Paxson Communications Corp. (24,200 preferred shares) (d) 2,184,050 Republic Technologies International, Inc., (4,275 common stock warrants Class D) 144A--Private Placement (b) (h) (i) 43 Startec Global Communications, (3,000 common stock warrants) 144A--Private Placement (b) (h) (i) 0 TNP Enterprises, Inc. (26,685 preferred shares) (d) 2,461,726 Ventelo (United Kingdom) (EUR) (73,021 common shares) 144A--Private Placement (b) (h) (i) 0 VS Holdings, Inc. (378,785 common shares) (h) (i) 70,719 XO Communications (6,215 common stock warrants Class A) (h) 0 XO Communications (4,661 common stock warrants Class B) (h) 0 XO Communications (4,661 common stock warrants Class C) (h) 0 XO Communications, Inc. (3,106 common shares) (i) 18,015 ------------ TOTAL EQUITIES 8,892,528 ------------ TOTAL LONG-TERM INVESTMENTS 97.6% (Cost $326,412,047) 306,042,224
SEE NOTES TO FINANCIAL STATEMENTS 15 YOUR FUND'S INVESTMENTS SEPTEMBER 30, 2003 (UNAUDITED)
MARKET DESCRIPTION VALUE REPURCHASE AGREEMENT 1.8% State Street Bank & Trust Co. ($5,626,000 par collateralized by U.S. Government obligations in a pooled cash account, dated 09/30/03, to be sold on 10/01/03 at $5,626,138) (Cost $5,626,000) $ 5,626,000 ------------ TOTAL INVESTMENTS 99.4% (Cost $332,038,047) 311,668,224 OTHER ASSETS IN EXCESS OF LIABILITIES 0.6% 2,005,599 ------------ NET ASSETS 100.0% $313,673,823 ============
(a) Securities purchased on a when-issued or delayed delivery basis. (b) 144A securities are those which are exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may only be resold in transactions exempt from registration which are normally those transactions with qualified institutional buyers. (c) Security is a "step-up" bond where the coupon increases or steps up at a predetermined date. (d) Payment-in-kind security. (e) This security is a United States company denominated in a foreign currency. (f) Non-income producing as security is in default. (g) This borrower has filed for protection in federal bankruptcy court. (h) Market value is determined in accordance with procedures established in good faith by the Board of Trustees. (i) Non-income producing security. (j) Subsequent to September 30, 2003, borrower filed for protection in federal bankruptcy court. (EUR)--Eurodollar (US$)--United States Dollar SEE NOTES TO FINANCIAL STATEMENTS 16 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2003 (UNAUDITED) ASSETS: Total Investments (Cost $332,038,047) $ 311,668,224 Cash 10,288 Receivables: Interest 6,608,603 Investments Sold 5,017,895 Fund Shares Sold 1,028,956 Other 126,794 ------------- Total Assets 324,460,760 ------------- LIABILITIES: Payables: Fund Shares Repurchased 6,464,037 Investments Purchased 2,623,827 Income Distributions 691,175 Distributor and Affiliates 226,263 Investment Advisory Fee 171,864 Forward Foreign Currency Contracts 270,781 Trustees' Deferred Compensation and Retirement Plans 172,283 Accrued Expenses 166,707 ------------- Total Liabilities 10,786,937 ------------- NET ASSETS $ 313,673,823 ============= NET ASSETS CONSIST OF: Capital (Par value of $.01 per share with an unlimited number of shares authorized) $ 504,019,585 Accumulated Undistributed Net Investment Income (7,277,284) Net Unrealized Depreciation (20,624,566) Accumulated Net Realized Loss (162,443,912) ------------- NET ASSETS $ 313,673,823 ============= MAXIMUM OFFERING PRICE PER SHARE: Class A Shares: Net asset value and redemption price per share (Based on net assets of $194,402,943 and 36,452,040 shares of beneficial interest issued and outstanding) $ 5.33 Maximum sales charge (4.75%* of offering price) .27 ------------- Maximum offering price to public $ 5.60 ============= Class B Shares: Net asset value and offering price per share (Based on net assets of $93,458,292 and 17,436,004 shares of beneficial interest issued and outstanding) $ 5.36 ============= Class C Shares: Net asset value and offering price per share (Based on net assets of $25,812,588 and 4,824,014 shares of beneficial interest issued and outstanding) $ 5.35 =============
* On sales of $100,000 or more, the sales charge will be reduced. SEE NOTES TO FINANCIAL STATEMENTS 17 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) INVESTMENT INCOME: Interest $ 13,170,838 Dividends 318,070 Other 51,797 ------------- Total Income 13,540,705 ------------- EXPENSES: Investment Advisory Fee 1,192,754 Distribution (12b-1) and Service Fees (Attributed to Classes A, B and C ofc $247,560, $453,234 and $126,508, respectively) 827,302 Shareholder Services 236,786 Custody 27,603 Legal 14,091 Trustees' Fees and Related Expenses 11,390 Other 181,412 ------------- Total Expenses 2,491,338 Investment Advisory Fee Reduction 159,034 Less Credits Earned on Cash Balances 1,585 ------------- Net Expenses 2,330,719 ------------- NET INVESTMENT INCOME $ 11,209,986 ============= REALIZED AND UNREALIZED GAIN/LOSS: Realized Gain/Loss: Investments $ (18,912,368) Forward Commitments (415,835) Foreign Currency Transactions 216,370 ------------- Net Realized Loss (19,111,833) ------------- Unrealized Appreciation/Depreciation: Beginning of the Period (61,087,183) End of the Period: Investments (20,369,823) Forward Commitments (270,781) Foreign Currency Translation 16,038 ------------- (20,624,566) ------------- Net Unrealized Appreciation During the Period 40,462,617 ------------- NET REALIZED AND UNREALIZED GAIN $ 21,350,784 ============= NET INCREASE IN NET ASSETS FROM OPERATIONS $ 32,560,770 =============
SEE NOTES TO FINANCIAL STATEMENTS 18 STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 2003 MARCH 31, 2003 ---------------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income $ 11,209,986 $ 22,182,353 Net Realized Loss (19,111,833) (76,863,348) Net Unrealized Appreciation During the Period 40,462,617 52,034,729 ------------- ------------- Change in Net Assets from Operations 32,560,770 (2,646,266) ------------- ------------- Distributions from Net Investment Income: Class A Shares (7,977,078) (16,893,277) Class B Shares (3,221,257) (6,675,480) Class C Shares (896,377) (1,538,765) ------------- ------------- (12,094,712) (25,107,522) ------------- ------------- Return of Capital Distribution: Class A Shares -0- (1,933,073) Class B Shares -0- (767,383) Class C Shares -0- (174,600) ------------- ------------- -0- (2,875,056) ------------- ------------- Total Distributions (12,094,712) (27,982,578) ------------- ------------- NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES 20,466,058 (30,628,844) ------------- ------------- FROM CAPITAL TRANSACTIONS: Proceeds from Shares Sold 161,201,119 288,184,693 Net Asset Value of Shares Issued Through Dividend Reinvestment 7,566,146 15,920,667 Cost of Shares Repurchased (165,950,629) (256,822,526) ------------- ------------- NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 2,816,636 47,282,834 ------------- ------------- TOTAL INCREASE IN NET ASSETS 23,282,694 16,653,990 NET ASSETS: Beginning of the Period 290,391,129 273,737,139 ------------- ------------- End of the Period (Including accumulated undistributed net investment income of ($7,277,284) and ($6,392,558), respectively) $ 313,673,823 $ 290,391,129 ============= =============
SEE NOTES TO FINANCIAL STATEMENTS 19 THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED. FINANCIAL HIGHLIGHTS (UNAUDITED)
SIX MONTHS NINE MONTHS ENDED YEAR ENDED MARCH 31, ENDED SEPTEMBER 30, ----------------------------------------------------- MARCH 31, CLASS A SHARES 2003 2003 2002 (c) 2001 2000 1999 -------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD $ 5.00 $ 5.69 $ 7.18 $ 8.48 $ 9.03 $ 9.89 ------- ------- -------- -------- ------- ------- Net Investment Income .19 .48 .69 .94 .85 .62 Net Realized and Unrealized Gain/Loss .35 (.60) (1.38) (1.40) (.56) (.85) ------- ------- -------- -------- ------- ------- Total from Investment Operations .54 (.12) (.69) (.46) .29 (.23) ------- ------- -------- -------- ------- ------- Less: Distributions from Net Investment Income .21 .51 .77 .84 .83 .62 Return of Capital Distributions -0- .06 .03 -0- .01 .01 ------- ------- -------- -------- ------- ------- Total Distributions .21 .57 .80 .84 .84 .63 ------- ------- -------- -------- ------- ------- NET ASSET VALUE, END OF THE PERIOD $ 5.33 $ 5.00 $ 5.69 $ 7.18 $ 8.48 $ 9.03 ======= ======= ======== ======== ======= ======= Total Return *(a) 11.06%** -1.62% -10.05% -5.64% 3.50% -2.13%** Net Assets at End of the Period (In millions) $ 194.4 191.0 $ 177.2 $ 205.8 $ 230.6 $ 277.9 Ratio of Expenses to Average Net Assets *(b) 1.19% 1.21% 1.22% 1.17% 1.15% 1.17% Ratio of Net Investment Income to Average Net Assets * 7.31% 8.94% 10.90% 12.00% 9.96% 8.98% Portfolio Turnover 58%** 101% 78% 85% 109% 104%**
* If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower and the ratios would have been as follows: Ratio of Expenses to Average Net Assets 1.29% 1.31% 1.32% 1.27% 1.25% 1.27% Ratio of Net Investment Income to Average Net Assets 7.21% 8.84% 10.80% 11.90% 9.86% 8.88%
** Non-Annualized (a) 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 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 .25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. (b) 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 period ended March 31, 2001. (c) As required, effective April 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on fixed income securities. The effect of this change for the year ended March 31, 2002 was to decrease net investment income per share by $.01, increase net realized and unrealized gains and losses per share by $.01 and decrease the Ratio of Net Investment Income to Average Net Assets by .09%. Per share, ratios and supplemental data for periods prior to March 31, 2002 have not been restated to reflect this change in presentation. SEE NOTES TO FINANCIAL STATEMENTS 20 THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED. FINANCIAL HIGHLIGHTS (UNAUDITED)
SIX MONTHS NINE MONTHS ENDED YEAR ENDED MARCH 31, ENDED SEPTEMBER 30, ------------------------------------------------------- MARCH 31, CLASS B SHARES 2003 2003 2002 (c) 2001 2000 1999 -------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD $ 5.02 $ 5.71 $ 7.20 $ 8.49 $ 9.03 $ 9.89 ------- ------- -------- -------- ------- ------- Net Investment Income .17 .43 .63 .87 .80 .56 Net Realized and Unrealized Gain/Loss .36 (.59) (1.38) (1.39) (.58) (.84) ------- ------- -------- -------- ------- ------- Total from Investment Operations .53 (.16) (.75) (.52) .22 (.28) ------- ------- -------- -------- ------- ------- Less: Distributions from Net Investment Income .19 .47 .72 .77 .75 .57 Return of Capital Distributions -0- .06 .02 -0- .01 .01 ------- ------- -------- -------- ------- ------- Total Distributions .19 .53 .74 .77 .76 .58 ------- ------- -------- -------- ------- ------- NET ASSET VALUE, END OF THE PERIOD $ 5.36 $ 5.02 $ 5.71 $ 7.20 $ 8.49 $ 9.03 ======= ======= ======== ======== ======= ======= Total Return *(a) 10.61%** -2.37% -10.70% -6.39% 2.65% -2.71%** Net Assets at End of the Period (In millions) $ 93.5 $ 79.6 $ 78.8 $ 92.5 $ 109.2 $ 135.4 Ratio of Expenses to Average Net Assets *(b) 1.95% 1.96% 1.98% 1.92% 1.93% 1.93% Ratio of Net Investment Income to Average Net Assets * 6.55% 8.23% 10.13% 11.22% 9.17% 8.19% Portfolio Turnover 58%** 101% 78% 85% 109% 104%**
* If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower and the ratios would have been as follows: Ratio of Expenses to Average Net Assets 2.05% 2.06% 2.08% 2.02% 2.03% 2.03% Ratio of Net Investment Income to Average Net Assets 6.45% 8.13% 10.03% 11.12% 9.07% 8.09%
** Non-Annualized (a) 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 one year of purchase and declining to 0% after the sixth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. (b) 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 period ended March 31, 2001. (c) As required, effective April 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on fixed income securities. The effect of this change for the year ended March 31, 2002 was to decrease net investment income per share by $.01, increase net realized and unrealized gains and losses per share by $.01 and decrease the Ratio of Net Investment Income to Average Net Assets by .10%. Per share, ratios and supplemental data for periods prior to March 31, 2002 have not been restated to reflect this change in presentation. SEE NOTES TO FINANCIAL STATEMENTS 21 THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED. FINANCIAL HIGHLIGHTS (UNAUDITED)
SIX MONTHS NINE MONTHS ENDED YEAR ENDED MARCH 31, ENDED SEPTEMBER 30, ------------------------------------------------------- MARCH 31, CLASS C SHARES 2003 2003 2002 (c) 2001(d) 2000 1999 -------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD $ 5.01 $ 5.70 $ 7.19 $ 8.47 $ 9.02 $ 9.88 ------- ------- -------- -------- ------- ------- Net Investment Income .17 .44 .63 .87 .80 .56 Net Realized and Unrealized Gain/Loss .36 (.60) (1.38) (1.38) (.58) (.85) ------- ------- -------- -------- ------- ------- Total from Investment Operations .53 (.16) (.75) (.51) .22 (.29) ------- ------- -------- -------- ------- ------- Less: Distributions from Net Investment Income .19 .47 .71 .77 .76 .56 Return of Capital Distributions -0- .06 .03 -0- .01 .01 ------- ------- -------- -------- ------- ------- Total Distributions .19 .53 .74 .77 .77 .57 ------- ------- -------- -------- ------- ------- NET ASSET VALUE, END OF THE PERIOD $ 5.35 $ 5.01 $ 5.70 $ 7.19 $ 8.47 $ 9.02 ======= ======= ======== ======== ======= ======= Total Return *(a) 10.63%** -2.38% -10.72% -6.40% 2.65% -2.71%** Net Assets at End of the Period (In millions) $ 25.8 $ 19.8 $ 17.7 $ 14.7 $ 13.0 $ 14.7 Ratio of Expenses to Average Net Assets *(b) 1.94% 1.97% 1.97% 1.92% 1.93% 1.93% Ratio of Net Investment Income to Average Net Assets * 6.51% 8.23% 10.10% 11.19% 9.17% 8.25% Portfolio Turnover 58%** 101% 78% 85% 109% 104%**
* If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower and the ratios would have been as follows: Ratio of Expenses to Average Net Assets 2.04% 2.07% 2.07% 2.02% 2.03% 2.03% Ratio of Net Investment Income to Average Net Assets 6.41% 8.13% 10.00% 11.09% 9.07% 8.15%
** Non-Annualized (a) 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 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. (b) 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 period ended March 31, 2001. (c) As required, effective April 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on fixed income securities. The effect of this change for the year ended March 31, 2002 was to decrease net investment income per share by $.01, increase net realized and unrealized gains and losses per share by $.01 and decrease the Ratio of Net Investment Income to Average Net Assets by .09%. Per share, ratios and supplemental data for periods prior to March 31, 2002 have not been restated to reflect this change in presentation. (d) Based on average shares outstanding. SEE NOTES TO FINANCIAL STATEMENTS 22 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen High Yield Fund (the "Fund") is organized as a series of Van Kampen Trust, a Delaware business trust (the "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 provide a high level of current income. As a secondary investment objective, the Fund seeks capital appreciation. The Fund invests primarily in a portfolio of medium and lower grade domestic corporate debt securities. The Fund also may invest up to 35% of its assets in foreign government and corporate debt securities of similar quality. The Fund commenced investment operations on June 27, 1986. The Fund commenced distribution of its Class B and C Shares on May 17, 1993 and August 13, 1993, respectively. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION Investments are stated at value using market quotations or indications of value obtained from an independent pricing service. For those securities where quotations or prices are not available, valuations are obtained from yield data relating to instruments or securities with similar characteristics in accordance with procedures established in good faith by the board of Trustees. Forward foreign currency contracts are valued using quoted foreign exchange rates. 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 September 30, 2003, the Fund had $2,623,827 of when-issued or delayed delivery 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 Investment Advisory Corp. (the "Adviser") or its affiliates, the daily aggregate of which is invested in repurchase agreements. Repurchase agreements are fully collateralized by the underlying debt security. The Fund will make payment for such securities only upon physical delivery or evidence of book entry transfer to the account of the custodian 23 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (UNAUDITED) 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 EXPENSE Interest income is recorded on an accrual basis and dividend income is recorded net of applicable withholding taxes on the ex-dividend date. Bond premium is amortized and discount is accreted 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 the 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 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 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. Although the Fund's fiscal year end is March 31, the Fund's tax year end is December 31. 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 December 31, 2002, the Fund had an accumulated capital loss carryforward for tax purposes of $117,136,050, which will expire between December 31, 2003 and December 31, 2010. Of this amount, $3,655,578 will expire on December 31, 2003. At September 30, 2003, the cost and related gross unrealized appreciation and depreciation are as follows: Cost of investments for tax purposes $332,884,787 ============ Gross tax unrealized appreciation $ 22,037,396 Gross tax unrealized depreciation $(43,253,959) ------------ Net tax unrealized depreciation on investments $(21,216,563) ============
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares and pays monthly dividends from net investment income. Net investment income for federal income tax purposes includes gains and losses realized on foreign currency transactions. These gains and losses are included as net realized gains and losses for financial reporting purposes. 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 as ordinary income for tax purposes. 24 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (UNAUDITED) The tax character of distributions paid during the year ended December 31, 2002 was as follows:
12/31/2002 Distributions paid from: Ordinary income $26,728,627 Long-term capital gain -0- Return of Capital 4,046,957 ----------- $30,775,584 ===========
Net realized gains or losses may differ for financial and tax reporting purposes primarily as a result of the difference in the Fund's tax year end and the deferral of losses related to wash sale transactions. F. CURRENCY TRANSLATION Assets and liabilities denominated in foreign currencies and commitments under forward currency contracts are translated into U.S. dollars at the mean of the quoted bid and ask prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated at the rate of exchange prevailing when such securities were acquired or sold. Realized gain and loss on foreign currency transactions on the Statement of Operations includes the net realized amount from the sale of foreign currency and the amount realized between trade date and settlement date on securities transactions. Income and expenses are translated at rates prevailing when accrued. G. EXPENSE REDUCTIONS During the six months ended September 30, 2003, the Fund's custody fee was reduced by $1,585 as a result of credits earned on cash balances. 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Fund's Investment Advisory Agreement, the Adviser will provide investment advice and facilities to the Fund for an annual fee payable monthly as follows:
AVERAGE DAILY NET ASSETS % PER ANNUM First $500 million .75% Over $500 million .65%
For the six months ended September 30, 2003, the Adviser waived approximately $159,000 of its advisory fee. This waiver is voluntary in nature and can be discontinued at any time. For the six months ended September 30, 2003, the Fund recognized expenses of approximately $4,400 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the Fund is an affiliated person. Under separate Accounting and Legal Services agreements the Adviser provides accounting and legal services to the Fund. The Adviser allocates the cost of such services to each fund. For the six months ended September 30, 2003, the Fund recognized expenses of approximately $28,200, representing Van Kampen Investments Inc. or its affiliates' (collectively "Van Kampen") cost of 25 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (UNAUDITED) providing accounting and legal services to the Fund, which are reported as part of "Other" and "Legal" expenses, respectively, in the Statement of Operations. Van Kampen Investor Services Inc.(VKIS), an affiliate of the Adviser, serves as the shareholder servicing agent for the Fund. For the six months ended September 30, 2003, the Fund recognized expenses of approximately $192,100 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 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 may be invested in the common shares of those funds selected by the trustees. Investments in such funds of approximately $102,200 are included in "Other" assets on the Statement of Assets and Liabilities at September 30, 2003. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund. Benefits under the retirement plan are payable upon retirement for a ten-year period and are based upon each trustee's years of service to the Fund. The maximum annual benefit per trustee under the plan is $2,500. 3. CAPITAL TRANSACTIONS At September 30, 2003, capital aggregated $351,777,102, $122,249,179 and $29,993,304 for Class A, B, and C Shares, respectively. For the six months ended September 30, 2003, transactions were as follows:
SHARES VALUE Sales: Class A 23,952,497 $ 124,583,299 Class B 4,541,236 23,747,914 Class C 2,465,066 12,869,906 ----------- ------------- Total Sales 30,958,799 $ 161,201,119 =========== ============= Dividend Reinvestment: Class A 963,847 $ 5,055,819 Class B 369,827 1,948,604 Class C 106,807 561,723 ----------- ------------- Total Dividend Reinvestment 1,440,481 $ 7,566,146 =========== ============= Repurchases: Class A (26,684,179) $(139,712,913) Class B (3,331,036) (17,407,522) Class C (1,693,477) (8,830,194) ----------- ------------- Total Repurchases (31,708,692) $(165,950,629) =========== =============
26 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (UNAUDITED) At March 31, 2003, capital aggregated $361,850,897, $113,960,183 and $25,391,869 for Class A, B, and C Shares, respectively. For the year ended March 31, 2003, transactions were as follows:
SHARES VALUE Sales: Class A 49,085,334 $ 242,136,134 Class B 6,554,210 33,000,674 Class C 2,604,338 13,047,885 ----------- ------------- Total Sales 58,243,882 $ 288,184,693 =========== ============= Dividend Reinvestment: Class A 2,222,567 $ 11,052,890 Class B 803,902 4,017,200 Class C 170,575 850,577 ----------- ------------- Total Dividend Reinvestment 3,197,044 $ 15,920,667 =========== ============= Repurchases: Class A (44,232,268) $(220,091,027) Class B (5,310,124) (26,941,815) Class C (1,933,529) (9,789,684) ----------- ------------- Total Repurchases (51,475,921) $(256,822,526) =========== =============
Class B Shares purchased on or after June 1, 1996, and any dividend reinvestment plan Class B Shares received thereon, automatically convert to Class A Shares eight years after the end of the calendar month in which the shares were purchased. Class B Shares purchased before June 1, 1996, and any dividend reinvestment plan Class B Shares received thereon, automatically convert to Class A Shares six years after the end of the calendar month in which the shares were purchased. For the six months ended September 30, 2003 and the year ended March 31, 2003, 251,365 and 689,004 Class B Shares converted to Class A Shares, and are shown in the above tables as sales of Class A Shares and repurchases of Class B Shares. Class C Shares purchased before January 1, 1997, and any dividend reinvestment plan Class C Shares received thereon, automatically convert to Class A Shares ten years after the end of the calendar month in which such shares were purchased. Class C Shares purchased on or after January 1, 1997 do not possess a conversion feature. For the six months ended September 30, 2003 and the year ended March 31, 2003, no Class C Shares converted to Class A Shares. 27 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (UNAUDITED) Class B and C Shares are offered without a front end sales charge, but are subject to a contingent deferred sales charge (CDSC). The CDSC will be imposed on most redemptions made within six years of the purchase for Class B and one year of the purchase for Class C as detailed in the following schedule.
CONTINGENT DEFERRED SALES CHARGE AS A PERCENTAGE OF DOLLAR AMOUNT SUBJECT TO CHARGE ------------------------- YEAR OF REDEMPTION CLASS B CLASS C First 4.00% 1.00% Second 3.75% None Third 3.50% None Fourth 2.50% None Fifth 1.50% None Sixth 1.00% None Seventh and Thereafter None None
For the six months ended September 30, 2003, Van Kampen, as Distributor for the Fund, received commissions on sales of the Fund's Class A Shares of approximately $59,700, and CDSC on redeemed shares of Classes B and C of approximately $115,400. Sales charges do not represent expenses of the Fund. 4. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $193,340,906 and $173,160,777, respectively. 5. DERIVATIVE FINANCIAL INSTRUMENTS A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate or index. The Fund has a variety of reasons to use derivative instruments, such as to attempt to protect the Fund against possible changes in the market value of its portfolio and to manage the portfolio's effective yield, foreign currency exposure, maturity and duration, or generate potential gain. All of the Fund's portfolio 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 exercising a call option contract or taking delivery of a security underlying a futures or forward contract. In these instances, the recognition of gain or loss is postponed until the disposal of the security underlying the option, futures or forward contract. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts. 28 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (UNAUDITED) Summarized below are the specific types of derivative financial instruments used by the Fund. A. FORWARD CURRENCY CONTRACTS These instruments are commitments to purchase or sell a foreign currency at a future date at a negotiated forward rate. The gain or loss arising from the difference between the original value of the contract and the closing value of such contract is included as a component of realized gain/loss on forwards. At September 30, 2003, the Fund had outstanding forward currency contracts as follows:
UNREALIZED CURRENT APPRECIATION/ VALUE DEPRECIATION LONG CONTRACTS: Euro Currency 600,000 expiring 10/24/03 $ 698,633 $ 18,143 SHORT CONTRACTS: Euro Currency 3,910,000 expiring 10/24/03 4,552,758 (134,458) Euro Currency 3,725,000 expiring 10/24/03 4,337,346 (124,371) Euro Currency 700,000 expiring 10/24/03 815,072 (30,095) --------- (288,924) --------- $(270,781) =========
6. DISTRIBUTION AND SERVICE PLANS With respect to its Class A Shares, Class B Shares and Class C Shares, the Fund and its shareholders have adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively, the "Plans"). The Plans govern payments for: the distribution of the Fund's Class A Shares, Class B Shares and Class C Shares; the provision of ongoing shareholder services with respect to such classes of shares; and the maintenance of shareholder accounts with respect to such classes of shares. Annual fees under the Plans of up to .25% of Class A average daily net assets and 1.00% each for Class B and Class C average daily net assets are accrued daily. The amount of distribution expenses incurred by Van Kampen and not yet reimbursed ("unreimbursed receivable") was approximately $1,543,300 and $56,600 for Class B and Class C shares, respectively. These amounts may be recovered from future payments under the distribution plan or CDSC. To the extent the unreimbursed receivable has been fully recovered, any excess 12b-1 fees will be refunded to the Fund on a quarterly basis. Included in these fees for the six months ended September 30, 2003, are payments retained by Van Kampen of approximately $407,100 and payments made to Morgan Stanley DW Inc., an affiliate of the Adviser, of approximately $34,300. 29 VAN KAMPEN INVESTMENTS THE VAN KAMPEN FAMILY OF FUNDS GLOBAL/INTERNATIONAL Emerging Markets Emerging Markets Income European Value Equity Global Equity Allocation Global Franchise Global Value Equity International Advantage International Magnum GROWTH Aggressive Growth American Value Emerging Growth Enterprise Equity Growth Focus Equity Growth Mid Cap Growth Pace Select Growth Small Cap Growth Small Cap Value Technology GROWTH AND INCOME Comstock Equity and Income Growth and Income Harbor Real Estate Securities Utility Value Value Opportunities INCOME Corporate Bond Government Securities High Income Corporate Bond High Yield Limited Maturity Government U.S. Government TAX FREE California Insured Tax Free High Yield Municipal* Insured Tax Free Income Intermediate Term Municipal Income Municipal Income New York Tax Free Income Pennsylvania Tax Free Income Strategic Municipal Income CAPITAL PRESERVATION Reserve Tax Free Money SENIOR LOAN Senior Loan Fund For more complete information, including risk considerations, fees, sales charges and ongoing expenses, please contact your financial advisor for a prospectus. Please read it carefully before you invest or send money. To view a current Van Kampen fund prospectus or to receive additional fund information, choose from one of the following: [ILLUSTRATION OF COMPUTER] - - Visit our Web site at vankampen.com. To view a prospectus select LITERATURE, DOWNLOAD FUND INFO. [ILLUSTRATION OF PHONE] - - Call us at (800) 847-2424 Telecommunications Device for the Deaf (TDD) users, call (800) 421-2833. [ILLUSTRATION OF ENVELOPES] - - E-mail us by visiting vankampen.com and selecting CONTACT US * Open to new investors for a limited time 30 BOARD OF TRUSTEES AND IMPORTANT ADDRESSES VAN KAMPEN HIGH YIELD FUND BOARD OF TRUSTEES DAVID C. ARCH J. MILES BRANAGAN JERRY D. CHOATE ROD DAMMEYER LINDA HUTTON HEAGY R. CRAIG KENNEDY HOWARD J KERR MITCHELL M. MERIN* JACK E. NELSON RICHARD F. POWERS, III* HUGO F. SONNENSCHEIN WAYNE W. WHALEN* - Chairman SUZANNE H. WOOLSEY INVESTMENT ADVISER VAN KAMPEN INVESTMENT ADVISORY CORP. 1 Parkview Plaza P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 DISTRIBUTOR VAN KAMPEN FUNDS INC. 1 Parkview Plaza P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 SHAREHOLDER SERVICING AGENT VAN KAMPEN INVESTOR SERVICES INC. P.O. Box 947 Jersey City, New Jersey 07303-0947 CUSTODIAN STATE STREET BANK AND TRUST COMPANY 225 Franklin Street P.O. Box 1713 Boston, Massachusetts 02110 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT AUDITORS 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. 31 YOUR NOTES VAN KAMPEN PRIVACY NOTICE The Van Kampen companies and investment products* respect your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain nonpublic personal information about you. This is information we collect from you on applications or other forms, and from the transactions you conduct with us, our affiliates, or third parties. We may also collect information you provide when using our Web site, and text files (also known as "cookies") may be placed on your computer to help us to recognize you and to facilitate transactions you initiate. We do not disclose any nonpublic personal information about you or any of our former customers to anyone, except as permitted by law. For instance, so that we may continue to offer you Van Kampen investment products and services that meet your investing needs, and to effect transactions that you request or authorize, we may disclose the information we collect to companies that perform services on our behalf, such as printers and mailers that assist us in the distribution of investor materials. These companies will use this information only for the services for which we hired them, and are not permitted to use or share this information for any other purpose. To protect your nonpublic personal information internally, we permit access to it only by authorized employees, and maintain physical, electronic and procedural safeguards to guard your nonpublic personal information. * Includes Van Kampen Investments Inc., Van Kampen Investment Advisory Corp., Van Kampen Asset Management Inc., Van Kampen Advisors Inc., Van Kampen Management Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc., Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the many Van Kampen mutual funds and Van Kampen unit investment trusts. Van Kampen Funds Inc. 1 Parkview Plaza, P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com [VAN KAMPEN INVESTMENTS LOGO] GENERATIONS OF EXPERIENCE(SM) Copyright(C)2003 Van Kampen Funds Inc. All rights reserved. Member NASD/SIPC. 42, 342, 542 HYF SAR 11/03 12222K03-AP-11/03 Item 2. Code of Ethics. Not applicable for semi-annual reports. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semi-annual reports. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semi-annual reports. Item 8. [Reserved.] Item 9. Controls and Procedures The Trust's principal executive officer and principal financial officer have concluded that the Trust's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust 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. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Trust's internal controls or in other factors that could significantly affect the Trust's internal controls subsequent to the date of their evaluation. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a) Code of Ethics - Not applicable for semi-annual reports. (b) A separate certification for each Principal Executive Officer and Principal Financial Officer of the registrant are 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 Trust ------------------------ By: /s/ Ronald E. Robison ------------------------ Name: Ronald E. Robison Title: Principal Executive Officer Date: November 19, 2003 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: November 19, 2003 By: /s/ John L. Sullivan ------------------------------------------------------------- Name: John L. Sullivan Title: Principal Financial Officer Date: November 19, 2003 EX-99.CERT 3 a2124567zex-99_cert.txt EXHIBIT 99.CERT Exhibit 99.Cert I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen Trust; 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-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; 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; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 19, 2003 /s/ Ronald E. Robison ------------------------------ Principal Executive Officer I, John L. Sullivan, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen Trust; 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-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; 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; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 19, 2003 /s/ John L. Sullivan ------------------------------ Principal Financial Officer I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen Trust; 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) 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) Omitted.] c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: December 8, 2003 /s/ Ronald E. Robison ------------------------------ Principal Executive Officer I, John L. Sullivan, certify that: 6. I have reviewed this report on Form N-CSR of Van Kampen Trust; 7. 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; 8. 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; 9. 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) for the registrant and have: b) 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) Omitted.] e) 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 f) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 10. 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): c) 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 d) 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: December 8, 2003 /s/ John L. Sullivan ------------------------------ Principal Executive Officer EX-99.906CERT 4 a2124567zex-99_906cert.txt EXHIBIT 99.906CERT Exhibit 99.906Cert 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 Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended September 30, 2003 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: November 19, 2003 /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 Trust and will be retained by Van Kampen Trust 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 Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended September 30, 2003 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: November 19, 2003 /s/ John L. Sullivan -------------------------------- John L. Sullivan Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Van Kampen Trust and will be retained by Van Kampen Trust 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 Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended September 30, 2003 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: December 8, 2003 /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 Trust and will be retained by Van Kampen Trust 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 Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended September 30, 2003 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: December 8, 2003 /s/ John L. Sullivan ------------------------------ John L. Sullivan Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Van Kampen Trust and will be retained by Van Kampen Trust 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-----