N-CSRS 1 c78414nvcsrs.txt SEMI-ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-5707 Van Kampen High Income Trust -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 1221 Avenue of the Americas NY NY 10020 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Ronald Robison 1221 Avenue of the Americas New York, NY 10020 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 ----------------------------- Date of fiscal year end: 12/31 ----------- Date of reporting period: 6/30/03 ----------- Item 1. Report to Shareholders Welcome, Shareholder In this update, you'll learn about how your trust performed during the reporting period. The portfolio management team will provide an overview of the market climate, and discuss some of the factors that helped or hindered performance during the reporting period. In addition, this report includes the trust's financial statements and a list of investments, as well as other information. Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the trust will achieve its investment objective. The trust is subject to market risk, which is the possibility that the market values of securities owned by the trust will decline and, therefore, the value of the trust shares may be less than what you paid for them. Accordingly, you can lose money investing in this trust. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Performance Summary NET ASSET VALUE AND COMMON SHARE MARKET PRICE (based upon quarter-end values--June 1993 through June 2003) (LINE GRAPH)
NET ASSET VALUE COMMON SHARE MARKET PRICE --------------- ------------------------- 6/93 6.76 8.38 6.66 8.38 6.74 8.13 6.33 7.63 6/94 6.06 8.00 5.85 7.00 5.62 5.50 5.84 6.13 6/95 6.07 6.63 6.12 6.38 6.19 6.38 6.16 6.75 6/96 6.05 6.50 6.20 6.88 6.35 6.75 6.22 6.75 6/97 6.36 7.31 6.49 7.31 6.47 7.38 6.53 7.31 6/98 6.44 7.00 5.89 6.31 5.86 6.38 5.70 6.44 6/99 5.49 6.38 5.16 5.94 5.09 4.50 4.84 4.63 6/00 4.75 5.00 4.68 4.75 4.22 4.13 4.50 5.09 6/01 4.24 4.78 3.76 4.56 3.78 4.54 3.62 4.67 6/02 3.22 4.10 2.88 3.35 3.03 3.10 3.20 3.73 6/03 3.47 3.92
The solid line above represents the trust's net asset value (NAV), which indicates overall changes in value among the trust's underlying securities. The trust's common share market price is represented by the dashed line, which indicates the price the market is willing to pay for shares of the trust at a given time. Common share market price is influenced by a range of factors, including supply and demand and market conditions.
------------------------------------------ AVERAGE ANNUAL MARKET PRICE TOTAL RETURNS since 01/26/89 Since Inception 5.69% 10-year 3.64 5-year -0.04 1-year 7.10 6-month 32.84 ------------------------------------------
Past performance is no guarantee of future results. Investment return, common share market price and net asset value will fluctuate and trust shares, when sold, may be worth more or less than their original cost. 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. Total return assumes an investment at the common share market price at the beginning of the period, reinvestment of all distributions for the period in accordance with the trust's dividend reinvestment plan, and sale of all shares at the closing common share market price at the end of the period. Distribution rate represents the monthly annualized distributions of the trust at the end of the period and not the earnings of the trust. The Chase High Yield Index is generally representative of high-yield securities. The index does not include any expenses, fees or sales charges, which would lower performance. The index is unmanaged and should not be considered an investment. 1 Trust Report FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2003 Van Kampen High Income Trust is managed by the Adviser's High Yield team. Current members include Gordon Loery, Executive Director; Josh Givelber, Vice President; and Chad Liu, Vice President.(1) The following discussion reflects their views on the trust's performance. Q. BEFORE YOU DISCUSS HOW THE TRUST PERFORMED, PLEASE DESCRIBE THE OVERALL MARKET ENVIRONMENT. A. The high-yield market roared ahead in the first half of 2003, posting its best six-month return since 1991. High-yield mutual fund inflows during the period were at their highest level ever, reflecting enormous demand on the part of individual and institutional investors. The market was also boosted by declining default rates and better earnings results from many companies. Overall, performance seemed to be inversely related to credit rating, with many CCC credits strongly outperforming B and BB rated bonds. Sector performance was dominated by industries such as wireless communications, utilities, telecommunications and cable that were among the worst performers in 2002. Q. HOW DID THE TRUST PERFORM DURING THE REPORTING PERIOD? A. The trust outperformed its benchmark. -- The trust returned 32.84 percent for the six months ended June 30, 2003, based on common share market price. -- By comparison, the trust's benchmark, the Chase High Yield Index, returned 16.75 percent. -- The trust's monthly dividend of $0.03 translated to a distribution rate of 9.18 percent, based on the trust's common share market price as of June 30, 2003. See Performance Summary for additional information and index definition. Q. WHAT HELPED PERFORMANCE DURING THE REPORTING PERIOD? A. -- Strong security selection in the wireless sector helped the trust's performance. American Cellular performed especially well, rebounding strongly from a low valuation on the basis of its solid fundamentals. -- Housing companies such as CB Richard Ellis and Technical Olympic performed well as housing activity remained one of the economy's few bright spots. (1)Team members may change at any time without notice. 2 -- Our analysts found few compelling opportunities in the consumer- products sector, which led us to underweight the group relative to the benchmark. The sector's subsequent underperformance relative to the rest of the market supported their views. Q. WHAT FACTORS HINDERED PERFORMANCE? A. -- The portfolio's relatively high aggregate credit quality did not allow it to capitalize on the strong performance of the lowest-rated credits. -- The lack of compelling opportunities in the airline and utilities sectors led us to underweight those sectors, both of which enjoyed rallies coming off of their 2002 lows. Q. PLEASE WALK US THROUGH HOW YOU POSITIONED THE PORTFOLIO, HIGHLIGHTING KEY THEMES. A. -- Strong performance in the energy sector led us to take some profits there, though we maintained the portfolio's overweight position. -- Many of the transportation holdings are automobile-parts manufacturers; we reduced the portfolio's holdings in the sector because of concerns about the health of these companies going forward. -- We increased the portfolio's holdings of utilities to keep it in line with that sector's rapidly growing weighting in the benchmark. TOP 5 SECTORS AS OF 6/30/03 RATINGS ALLOCATION AS OF 6/30/03 Gaming & Leisure 12.9% AA/Aa 0.5% Energy 9.8 A/A 0.6 Forest Products 7.1 BBB/Baa 11.9 Housing 6.9 BB/Ba 49.0 Cable 6.7 B/B 35.3 CCC/Caa & below 2.4 Non Rated 0.3
Subject to change daily. Sector percentages are as a percentage of long-term investments. Ratings allocation percentages are as a percentage of long-term debt 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. Ratings allocation 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 -- Through selective purchases, we added to the portfolio's cable holdings when our analysts were able to identify attractive companies. Q. NOW THAT YOU'VE PROVIDED AN OVERVIEW OF THE TRUST, DO YOU HAVE ANY CLOSING THOUGHTS FOR THE SHAREHOLDERS? A. After the strong rally of the past six months, we believe future gains in the high-yield market are more likely to come from yield than from price improvements. If this proves to be the case, security selection will assume increasing importance as a driver of total returns. We hope to see ongoing improvement in the economy, which should be supportive of the high-yield market, and will continue monitoring the market for opportunities to capture value. 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. 4 BY THE NUMBERS YOUR TRUST'S INVESTMENTS June 30, 2003 (Unaudited) THE FOLLOWING PAGES DETAIL YOUR TRUST'S PORTFOLIO OF INVESTMENTS AT THE END OF THE REPORTING PERIOD.
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE CORPORATE BONDS 163.5% BROADCASTING 3.1% $ 745 Nextmedia Operating, Inc. ....................... 10.750% 07/01/11 $ 838,125 625 TV Azteca S.A. (Mexico).......................... 10.500 02/15/07 620,312 ------------ 1,458,437 ------------ CABLE 11.1% 1,425 British Sky Broadcasting (United Kingdom)........ 7.300 10/15/06 1,597,414 1,005 Charter Communication Holdings LLC............... 8.250 04/01/07 778,875 150 CSC Holdings, Inc. .............................. 7.250 07/15/08 150,750 360 CSC Holdings, Inc. .............................. 8.125 07/15/09 373,500 285 CSC Holdings, Inc. .............................. 9.875 02/15/13 299,250 600 DirecTV Holdings, LLC, 144A-- Private Placement (a).............................................. 8.375 03/15/13 672,000 1,125 Echostar DBS Corp. .............................. 9.375 02/01/09 1,205,156 220 Rogers Cable, Inc., 144A--Private Placement (Canada) (a)..................................... 6.250 06/15/13 220,550 ------------ 5,297,495 ------------ CHEMICALS 9.1% 360 Acetex Corp. (Canada)............................ 10.875 08/01/09 401,850 610 Equistar Chemicals LP............................ 10.125 09/01/08 631,350 245 FMC Corp. ....................................... 10.250 11/01/09 276,850 190 Huntsman Advanced Materials LLC, 144A--Private Placement (a).................................... 11.000 07/15/10 198,550 190 ISP Chemco, Inc. ................................ 10.250 07/01/11 215,650 900 ISP Holdings, Inc. .............................. 10.625 12/15/09 960,750 335 Lyondell Chemical Co. ........................... 9.875 05/01/07 329,975 265 Lyondell Chemical Co. ........................... 9.500 12/15/08 253,075 430 Millennium America, Inc. ........................ 9.250 06/15/08 464,400 50 PCI Chemicals Canada, Inc. (Canada).............. 10.000 12/31/08 43,864 16 Pioneer Cos., Inc. (g)........................... 4.790 12/31/06 13,612 495 Rhodia S.A., 144A--Private Placement (France) (a).............................................. 8.875 06/01/11 514,800 ------------ 4,304,726 ------------ CONSUMER PRODUCTS 1.1% 265 Elizabeth Arden, Inc. ........................... 11.750 02/01/11 296,800 210 Oxford Industrials, Inc., 144A-- Private Placement (a).................................... 8.875 06/01/11 221,550 ------------ 518,350 ------------
See Notes to Financial Statements 5 YOUR TRUST'S INVESTMENTS June 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE DIVERSIFIED MEDIA 5.9% $ 655 Alliance Atlantis Communications, Inc. (Canada)......................................... 13.000% 12/15/09 $ 749,975 230 Houghton Mifflin Co., 144A-- Private Placement (a).............................................. 8.250 02/01/11 243,800 190 Houghton Mifflin Co., 144A-- Private Placement (a).............................................. 9.875 02/01/13 207,100 215 PEI Holdings, Inc., 144A--Private Placement (a).............................................. 11.000 03/15/10 238,112 315 RH Donnelley Finance Corp. I, 144A--Private Placement (a).................................... 10.875 12/15/12 368,550 515 Salem Communications Corp. ...................... 7.750 12/15/10 535,600 420 Vivendi Universal S.A., 144A--Private Placement (France) (a)..................................... 9.250 04/15/10 479,850 ------------ 2,822,987 ------------ ENERGY 16.4% 910 BRL Universal Equipment.......................... 8.875 02/15/08 991,900 570 Chesapeake Energy Corp. ......................... 7.875 03/15/04 591,375 545 Chesapeake Energy Corp. ......................... 8.125 04/01/11 589,962 220 Citgo Petroleum Corp., 144A-- Private Placement (a).............................................. 11.375 02/01/11 246,400 135 El Paso Energy Partners LP, 144A--Private Placement (a).................................... 8.500 06/01/10 145,125 430 El Paso Production Holding Co., 144A--Private Placement (a).................................... 7.750 06/01/13 431,075 1,140 Frontier Oil Corp. .............................. 11.750 11/15/09 1,259,700 575 GulfTerra Energy Partners LP..................... 10.625 12/01/12 667,000 445 Hanover Equipment Trust.......................... 8.500 09/01/08 469,475 215 Hanover Equipment Trust.......................... 8.750 09/01/11 226,825 290 Magnum Hunter Resources, Inc. ................... 9.600 03/15/12 320,450 85 MSW Energy Holdings LLC, 144A--Private Placement (a).............................................. 8.500 09/01/10 87,762 357 Port Arthur Finance Corp. ....................... 12.500 01/15/09 419,969 320 Tesoro Petroleum Corp. .......................... 9.000 07/01/08 291,200 180 Tesoro Petroleum Corp. .......................... 9.625 04/01/12 165,600 815 Vintage Petroleum, Inc. ......................... 7.875 05/15/11 878,162 ------------ 7,781,980 ------------ FINANCIAL 3.1% 310 Banco Nacional de Comercio Exterior (Mexico)..... 7.250 02/02/04 320,259 410 Health Net, Inc. ................................ 8.375 04/15/11 499,088 585 Istar Financial, Inc. ........................... 8.750 08/15/08 640,575 ------------ 1,459,922 ------------
6 See Notes to Financial Statements YOUR TRUST'S INVESTMENTS June 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE FOOD & DRUG 3.6% $ 420 Ahold Finance USA, Inc. ......................... 8.250% 07/15/10 $ 432,600 690 Delhaize America, Inc. .......................... 8.125 04/15/11 759,000 265 Dominos, Inc., 144A--Private Placement (a)....... 8.250 07/01/11 274,937 1,570 Jitney-Jungle Stores America, Inc. (b) (c) (d)... 12.000 03/01/06 0 230 Merisant Co., 144A--Private Placement (a) (h).... 9.500 07/15/13 239,200 ------------ 1,705,737 ------------ FOOD & TOBACCO 6.1% 750 Constellation Brands, Inc. ...................... 8.000 02/15/08 826,875 295 Pilgrim's Pride Corp. ........................... 9.625 09/15/11 316,387 600 Smithfield Foods, Inc. .......................... 7.625 02/15/08 619,500 1,050 Smithfield Foods, Inc. .......................... 8.000 10/15/09 1,141,875 ------------ 2,904,637 ------------ FOREST PRODUCTS 11.9% 530 Abitibi-Consolidated, Inc. (Canada).............. 6.000 06/20/13 505,544 800 Georgia-Pacific Corp., 144A-- Private Placement (a).............................................. 8.875 02/01/10 872,000 620 MDP Acquisitions PLC (Ireland)................... 9.625 10/01/12 688,200 235 Norampac, Inc., 144A--Private Placement (Canada) (a).............................................. 6.750 06/01/13 247,925 390 Norske Skog Canada Ltd. (Canada)................. 8.625 06/15/11 409,500 1,350 Owens-Brockway Glass Containers, Inc. ........... 8.875 02/15/09 1,471,500 405 Pacifica Papers, Inc. (Canada)................... 10.000 03/15/09 433,350 1,065 Tembec Industries, Inc. (Canada)................. 7.750 03/15/12 1,038,375 ------------ 5,666,394 ------------ GAMING & LEISURE 21.6% 920 Harrahs Operating Co., Inc. ..................... 7.875 12/15/05 1,002,800 465 Hilton Hotels Corp. ............................. 7.950 04/15/07 502,200 230 Hilton Hotels Corp. ............................. 7.625 12/01/12 253,000 815 HMH Properties, Inc. ............................ 7.875 08/01/05 833,337 845 Horseshoe Gaming LLC............................. 8.625 05/15/09 899,925 1,425 International Game Technology.................... 7.875 05/15/04 1,498,607 240 LodgeNet Entertainment Corp. .................... 9.500 06/15/13 247,200 1,400 Mohegan Tribal Gaming Authority.................. 8.125 01/01/06 1,526,000 490 Park Place Entertainment Corp. .................. 7.875 12/15/05 523,687 425 Park Place Entertainment Corp. .................. 8.875 09/15/08 469,625 1,075 Starwood Hotels & Resorts Worldwide, Inc. ....... 7.375 05/01/07 1,136,813 780 Station Casinos, Inc. ........................... 8.375 02/15/08 846,300 475 Station Casinos, Inc. ........................... 9.875 07/01/10 524,875 ------------ 10,264,369 ------------
See Notes to Financial Statements 7 YOUR TRUST'S INVESTMENTS June 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE HEALTHCARE 10.6% $ 625 Amerisourcebergen Corp. ......................... 8.125% 09/01/08 $ 690,625 175 Apogent Technologies, Inc., 144A--Private Placement (a).................................... 6.500 05/15/13 181,563 650 Fisher Scientific International, Inc. ........... 7.125 12/15/05 682,500 95 Fisher Scientific International, Inc., 144A-- Private Placement (a)............................ 8.125 05/01/12 102,125 560 Fresenius Medical Care Capital Trust II.......... 7.875 02/01/08 590,800 235 Fresenius Medical Care Capital Trust IV.......... 7.875 06/15/11 249,100 1,045 HCA, Inc. ....................................... 6.910 06/15/05 1,109,138 50 Manor Care, Inc. ................................ 7.500 06/15/06 54,401 155 Manor Care, Inc. ................................ 8.000 03/01/08 175,150 125 Manor Care, Inc., 144A--Private Placement (a).... 6.250 05/01/13 130,000 265 Omnicare, Inc. .................................. 8.125 03/15/11 288,850 680 Tenet Healthcare Corp. .......................... 6.500 06/01/12 634,100 160 Tenet Healthcare Corp. .......................... 7.375 02/01/13 155,200 ------------ 5,043,552 ------------ HOUSING 11.6% 545 CB Richard Ellis Service, Inc. .................. 11.250 06/15/11 587,238 120 CBRE Escrow, Inc., 144A--Private Placement (a)... 9.750 05/15/10 126,750 475 KB Home.......................................... 7.750 02/01/10 515,969 610 LNR Property Corp., 144A--Private Placement (a).............................................. 7.625 07/15/13 619,150 355 Louisiana Pacific Corp. ......................... 10.875 11/15/08 406,475 200 Meritage Corp., 144A--Private Placement (a)...... 9.750 06/01/11 222,000 110 Nortek Holdings, Inc. ........................... 9.250 03/15/07 113,850 550 Schuler Homes, Inc. ............................. 9.375 07/15/09 624,250 175 Technical Olympic USA, Inc. ..................... 9.000 07/01/10 189,875 225 Technical Olympic USA, Inc. ..................... 9.000 07/01/10 241,875 360 Technical Olympic USA, Inc. ..................... 10.375 07/01/12 385,200 40 Technical Olympic USA, Inc., 144A--Private Placement (a).................................... 10.375 07/01/12 42,800 470 Toll Corp. ...................................... 8.250 02/01/11 526,400 825 Webb (Del E.) Corp. ............................. 10.250 02/15/10 903,375 ------------ 5,505,207 ------------ INFORMATION TECHNOLOGY 5.7% 560 Avaya, Inc. ..................................... 11.125 04/01/09 616,000 425 Fairchild Semiconductor Corp. ................... 10.500 02/01/09 480,250 770 Iron Mountain, Inc. ............................. 8.625 04/01/13 827,750 285 Xerox Capital Europe PLC (United Kingdom)........ 5.875 05/15/04 287,850 495 Xerox Corp. ..................................... 7.125 06/15/10 496,856 ------------ 2,708,706 ------------
8 See Notes to Financial Statements YOUR TRUST'S INVESTMENTS June 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE MANUFACTURING 8.2% $ 425 ABB Finance, Inc. ............................... 6.750% 06/03/04 $ 416,784 740 Communications & Power Industries, Inc. ......... 12.000 08/01/05 749,250 155 Flowserve Corp. ................................. 12.250 08/15/10 181,350 530 Johnsondiversey, Inc. ........................... 9.625 05/15/12 594,925 675 Manitowoc, Inc. ................................. 10.500 08/01/12 752,625 510 Trimas Corp. .................................... 9.875 06/15/12 525,300 670 Tyco Intl Group S.A. (Luxembourg)................ 6.375 02/15/06 701,825 ------------ 3,922,059 ------------ METALS 2.7% 171 Doe Run Resources Corp., 144A--Private Placement (a) (d) (e)...................................... 11.750 11/01/08 59,854 1,100 GS Technologies Operating, Inc. (b) (c) (d)...... 12.250 10/01/05 49,500 395 Oregon Steel Mills, Inc. ........................ 10.000 07/15/09 357,475 440 UCAR Finance, Inc. .............................. 10.250 02/15/12 433,400 400 United States Steel Corp. ....................... 9.750 05/15/10 408,000 ------------ 1,308,229 ------------ RETAIL 3.3% 169 Big 5 Corp. ..................................... 10.875 11/15/07 178,506 135 Gap, Inc. ....................................... 6.900 09/15/07 146,138 245 Gap, Inc. ....................................... 10.550 12/15/08 298,900 80 Penney JC Co., Inc. ............................. 7.600 04/01/07 84,400 320 Penney JC Co., Inc. ............................. 8.000 03/01/10 336,800 465 Penney JC Co., Inc. ............................. 9.000 08/01/12 506,850 ------------ 1,551,594 ------------ SERVICES 5.9% 1,500 Allied Waste North America, Inc. ................ 8.875 04/01/08 1,635,000 45 Allied Waste North America, Inc. ................ 7.875 04/15/13 47,306 1,000 Waste Management, Inc. .......................... 7.125 10/01/07 1,148,345 ------------ 2,830,651 ------------ TELECOMMUNICATIONS 1.1% 235 Exodus Communications, Inc. (b) (c) (d).......... 11.250 07/01/08 14,085 850 Frontier Corp. (b) (c)........................... 6.000 10/15/03 61,625 112 Globix Corp., 144A--Private Placement (a) (e).... 11.000 05/01/08 84,218 1,255 WorldCom, Inc. (b) (c)........................... 7.750 04/01/07 373,363 ------------ 533,291 ------------ TRANSPORTATION 9.0% 1,520 Aetna Industries, Inc. (b) (c) (d)............... 11.875 10/01/06 7,600 450 Autonation, Inc. ................................ 9.000 08/01/08 501,750 320 Collins & Aikman Products Co. ................... 10.750 12/31/11 283,200 455 General Motors Acceptance Corp. ................. 7.500 07/15/05 487,829 435 Intermet Corp. .................................. 9.750 06/15/09 419,775
See Notes to Financial Statements 9 YOUR TRUST'S INVESTMENTS June 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE TRANSPORTATION (CONTINUED) $ 485 Laidlaw International, Inc., 144A--Private Placement (a).................................... 10.750% 06/15/11 $ 511,675 820 Lear Corp. ...................................... 8.110 05/15/09 943,000 345 Metaldyne Corp. ................................. 11.000 06/15/12 288,075 245 Sonic Automotive, Inc. .......................... 11.000 08/01/08 260,925 520 TRW Automotive, Inc., 144A-- Private Placement (a).............................................. 9.375 02/15/13 566,800 ------------ 4,270,629 ------------ UTILITY 9.1% 73 AES Corp. ....................................... 9.375 09/15/10 73,730 23 AES Corp. ....................................... 8.875 02/15/11 22,598 160 Allegheny Energy, Inc. .......................... 7.750 08/01/05 160,800 320 Calpine Corp. ................................... 8.625 08/15/10 241,600 65 CMS Energy Corp. ................................ 7.500 01/15/09 64,594 405 CMS Energy Corp. ................................ 8.500 04/15/11 424,744 605 Dynegy Holdings, Inc. ........................... 6.875 04/01/11 511,225 235 IPALCO Enterprises, Inc. ........................ 8.625 11/14/11 258,500 485 Monongahela Power Co. ........................... 5.000 10/01/06 484,394 635 PSEG Energy Holdings, Inc. ...................... 9.125 02/10/04 654,166 220 PSEG Energy Holdings, Inc. ...................... 8.625 02/15/08 236,771 220 Southern California Edison Co., 144A--Private Placement (a).................................... 8.000 02/15/07 242,275 195 Southern Natural Gas Co., 144A--Private Placement (a).............................................. 8.875 03/15/10 213,525 410 TNP Enterprises, Inc. ........................... 10.250 04/01/10 412,050 270 Transcontinental Gas Pipe Line Corp. ............ 8.875 07/15/12 306,450 ------------ 4,307,422 ------------
10 See Notes to Financial Statements YOUR TRUST'S INVESTMENTS June 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE WIRELESS COMMUNICATIONS 3.3% $ 285 American Cellular Corp. (b)...................... 9.500% 10/15/09 $ 143,925 1,105 Nextel Communications, Inc. ..................... 9.375 11/15/09 1,192,019 182 Telecorp PCS, Inc. .............................. 10.625 07/15/10 220,675 ------------ 1,556,619 ------------ TOTAL CORPORATE BONDS 163.5%..................................................... 77,722,993 ------------ GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS 3.1% 545 Federal Republic of Brazil (Brazil).............. 11.250 07/26/07 569,525 750 United Mexican States (Mexico)................... 8.625 03/12/08 901,125 ------------ TOTAL GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS................................ 1,470,650 ------------ DESCRIPTION EQUITIES 0.6% DecisionOne Corp. (3,033 common shares) (d) (f)..................... $ 0 DecisionOne Corp. (6,670 common stock warrants) (d) (f)............. 0 Globix Corp. (11,697 common shares) (f)............................. 33,921 HCI Direct, Inc. (30,357 common shares) (d) (f)..................... 236,785 Hosiery Corp of America, Inc. (500 common shares) (d) (f)........... 0 McLeodUSA, Inc. (1,437 common stock warrants) (f)................... 589 McLeodUSA, Inc. (648 preferred shares) (f).......................... 4,691 Pioneer Cos., Inc. (3,251 common shares) (f)........................ 11,866 VS Holdings, Inc. (11,316 common shares) (d) (f).................... 2,113 XO Communications, Inc. (1,164 common shares) (f)................... 8,439 XO Communications, Inc. (2,331 common stock warrants Series A) (d) (f)................................................................. 2,331 XO Communications, Inc. (1,747 commons stock warrants Series B) (d) (f)................................................................. 0 XO Communications, Inc. (1,747 common stock warrants Series C) (d) (f)................................................................. 0 ------------
See Notes to Financial Statements 11 YOUR TRUST'S INVESTMENTS June 30, 2003 (Unaudited)
MARKET DESCRIPTION VALUE TOTAL EQUITIES 0.6%.............................................................. $ 300,735 ------------ TOTAL LONG-TERM INVESTMENTS 167.2% (Cost $83,519,827).............................................................. 79,494,378 REPURCHASE AGREEMENT 7.5% UBS Securities ($3,541,000 par collateralized by U.S. Government obligations in a pooled cash account, dated 06/30/03, to be sold on 07/01/03 at $3,541,108) (Cost $3,541,000)................................................... 3,541,000 ------------ TOTAL INVESTMENTS 174.7% (Cost $87,060,827).............................................................. 83,035,378 OTHER ASSETS IN EXCESS OF LIABILITIES 4.4%....................................... 2,112,638 PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (79.1%)....................... (37,606,392) ------------ NET ASSETS APPLICABLE TO COMMON SHARES 100.0%.................................... $ 47,541,624 ============
(a) 144A securities are those which are exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may only be resold in transactions exempt from registration which are normally those transactions with qualified institutional buyers. (b) Non-income producing as security is in default. (c) This borrower has filed for protection in federal bankruptcy court. (d) Market value is determined in accordance with procedures established in good faith by the Board of Trustees. (e) Payment-in-kind security. (f) Non-income producing security. (g) Variable rate security. Interest rate shown is that in effect at June 30, 2003. (h) Securities purchased on a when-issued or delayed delivery basis. 12 See Notes to Financial Statements FINANCIAL STATEMENTS Statement of Assets and Liabilities June 30, 2003 (Unaudited) ASSETS: Total Investments (Cost $87,060,827)........................ $ 83,035,378 Cash........................................................ 680 Receivables: Interest.................................................. 1,671,647 Investments Sold.......................................... 1,543,564 Other....................................................... 648 ------------ Total Assets............................................ 86,251,917 ------------ LIABILITIES: Payables: Investments Purchased..................................... 845,513 Investment Advisory Fee................................... 48,906 Affiliates................................................ 7,715 Trustees' Deferred Compensation and Retirement Plans........ 160,089 Accrued Expenses............................................ 41,678 ------------ Total Liabilities....................................... 1,103,901 Preferred Shares (including accrued distributions).......... 37,606,392 ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 47,541,624 ============ NET ASSET VALUE PER COMMON SHARE ($47,541,624 divided by 13,710,760 shares outstanding)............................ $ 3.47 ============ NET ASSETS CONSIST OF: Common Shares ($.01 par value with an unlimited number of shares authorized, 13,710,760 shares issued and outstanding).............................................. $ 137,108 Paid in Surplus............................................. 85,174,600 Accumulated Net Investment Income........................... (1,191,033) Net Unrealized Depreciation................................. (4,025,449) Accumulated Net Realized Loss............................... (32,553,602) ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 47,541,624 ------------ PREFERRED SHARES ($.01 par value, authorized 1,000,000 shares, 376 issued with liquidation preference of $100,000 per share)................................................ $ 37,600,000 ------------ NET ASSETS INCLUDING PREFERRED SHARES....................... $ 85,141,624 ============
See Notes to Financial Statements 13 Statement of Operations For the Six Months Ended June 30, 2003 (Unaudited) INVESTMENT INCOME: Interest.................................................... $ 3,329,144 Other....................................................... 9,589 ------------ Total Income............................................ 3,338,733 ------------ EXPENSES: Investment Advisory Fee..................................... 284,619 Preferred Share Maintenance................................. 55,550 Trustees' Fees and Related Expenses......................... 27,270 Legal....................................................... 12,937 Custody..................................................... 7,296 Other....................................................... 91,459 ------------ Total Expenses.......................................... 479,131 ------------ NET INVESTMENT INCOME....................................... $ 2,859,602 ============ REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Loss........................................... $ (4,203,320) ------------ Unrealized Appreciation/Depreciation: Beginning of the Period................................... (14,202,232) End of the Period......................................... (4,025,449) ------------ Net Unrealized Appreciation During the Period............... 10,176,783 ------------ NET REALIZED AND UNREALIZED GAIN............................ $ 5,973,463 ============ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (240,407) ============ NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS................................................ $ 8,592,658 ============
14 See Notes to Financial Statements Statements of Changes in Net Assets (Unaudited)
SIX MONTHS ENDED YEAR ENDED JUNE 30, 2003 DECEMBER 31, 2002 ------------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income................................. $ 2,859,602 $ 6,495,300 Net Realized Loss..................................... (4,203,320) (11,284,395) Net Unrealized Appreciation During the Period......... 10,176,783 1,747,640 Distributions to Preferred Shareholders: Net Investment Income............................. (240,407) (754,350) ----------- ------------ Change in Net Assets Applicable to Common Shares from Operations.......................................... 8,592,658 (3,795,805) Distributions to Common Shareholders: Net Investment Income............................... (2,536,214) (6,306,907) Return of Capital Distribution...................... -0- (198,341) ----------- ------------ NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM INVESTMENT ACTIVITIES.......................... 6,056,444 (10,301,053) NET ASSETS APPLICABLE TO COMMON SHARES: Beginning of the Period............................... 41,485,180 51,786,233 ----------- ------------ End of the Period (Including accumulated net investment income of ($1,191,033) and ($1,274,014), respectively)....................................... $47,541,624 $ 41,485,180 =========== ============
See Notes to Financial Statements 15 Financial Highlights (Unaudited) THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS ENDED JUNE 30, -------------------- 2003 2002 2001 (c) ---------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD................ $ 3.03 $ 3.78 $ 4.22 -------- -------- -------- Net Investment Income................................. .21 .47 .71 Net Realized and Unrealized Gain/Loss................. .43 (.69) (.44) Common Share Equivalent of Distributions Paid to Preferred Shareholders: Net Investment Income................................. (.02) (.06) (.15) -------- -------- -------- Total from Investment Operations........................ .62 (.28) .12 Distributions Paid to Common Shareholders: Net Investment Income................................. (.18) (.46) (.56) Return of Capital Distributions....................... -0- (.01) -0- -------- -------- -------- NET ASSET VALUE, END OF THE PERIOD...................... $ 3.47 $ 3.03 $ 3.78 ======== ======== ======== Common Share Market Price at End of the Period.......... $ 3.92 $ 3.10 $ 4.54 Total Return (a)........................................ 32.84%* -22.99% 23.76% Net Assets Applicable to Common Shares at End of the Period (In millions).................................. $ 47.5 $ 41.5 $ 51.8 Ratio of Expenses to Average Net Assets Applicable to Common Shares (b)..................................... 2.18% 2.15% 1.98% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (b)....................... 12.99% 14.42% 16.80% Portfolio Turnover...................................... 44%* 82% 64% SUPPLEMENTAL RATIOS: Ratio of Expenses to Average Net Assets Including Preferred Shares (b).................................. 1.18% 1.12% 1.07% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (d)....................... 11.90% 12.75% 13.32% SENIOR SECURITIES: Total Preferred Shares Outstanding...................... 376 376 450 Asset Coverage Per Preferred Share (e).................. $226,457 $210,413 $215,081 Involuntary Liquidating Preference Per Preferred Share................................................. $100,000 $100,000 $100,000 Average Market Value Per Preferred Share................ $100,000 $100,000 $100,000
* Non-Annualized (a) Total return assumes an investment at the common share market price at the beginning of the period indicated, reinvestment of all distributions for the period in accordance with the Trust's dividend reinvestment plan, and sale of all shares at the closing common share market price at the end of the period indicated. (b) Ratios do not reflect the effect of dividend payments to preferred shareholders. (c) As required, effective January 1, 2001, the Trust 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 December 31, 2001 was to decrease net investment income per share by $.02, increase net realized and unrealized gains and losses per share by $.02 and decrease the ratio of net investment income to average net assets applicable to common shares by .38%. Per share, ratios and supplemental data for periods prior to December 31, 2001 have not been restated to reflect this change in presentation. (d) Ratios reflect the effect of dividend payments to preferred shareholders. (e) Calculated by subtracting the Trust's total liabilities (not including the preferred shares) from the Trust's total assets and dividing this by the number of preferred shares outstanding. 16
YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------------ 2000 1999 1998 1997 1996 1995 1994 1993 ------------------------------------------------------------------------------------------ $ 5.10 $ 5.86 $ 6.47 $ 6.35 $ 6.19 $ 5.62 $ 6.74 $ 6.23 -------- -------- -------- -------- -------- -------- -------- -------- .85 .88 .91 .93 .94 .98 1.00 1.11 (.85) (.75) (.58) .13 .15 .54 (.98) .53 (.26) (.22) (.24) (.24) (.23) (.25) (.19) (.14) -------- -------- -------- -------- -------- -------- -------- -------- (.26) (.09) .09 .82 .86 1.27 (.17) 1.50 (.61) (.67) (.70) (.70) (.70) (.70) (.95) (.99) (.01) -0- -0- -0- -0- -0- -0- -0- -------- -------- -------- -------- -------- -------- -------- -------- $ 4.22 $ 5.10 $ 5.86 $ 6.47 $ 6.35 $ 6.19 $ 5.62 $ 6.74 ======== ======== ======== ======== ======== ======== ======== ======== $ 4.125 $ 4.50 $ 6.375 $ 7.375 $ 6.75 $ 6.375 $ 5.50 $ 8.125 4.08% -21.20% -4.33% 20.29% 17.34% 29.17% -23.22% 26.12% $ 57.9 $ 70.0 $ 80.4 $ 88.7 $ 87.0 $ 84.8 $ 77.1 $ 92.3 1.95% 1.92% 1.85% 1.76% 1.87% 1.92% 1.96% 1.72% 18.05% 16.13% 14.56% 14.60% 15.32% 16.39% 16.33% 16.75% 62% 57% 65% 102% 92% 119% 110% 99% 1.04% 1.07% 1.09% 1.05% 1.11% 1.12% 1.16% 1.04% 12.48% 12.09% 10.77% 10.90% 11.58% 12.16% 13.31% 14.66% 500 588 588 588 588 588 588 588 $215,271 $219,005 $236,742 $250,850 $247,974 $244,242 $231,106 $257,054 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
See Notes to Financial Statements 17 NOTES TO FINANCIAL STATEMENTS June 30, 2003 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen High Income Trust (the "Trust") is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. The Trust's investment objective is to provide high current income, while seeking to preserve shareholders' capital through investment in a professionally managed diversified portfolio of high yield, fixed income securities. The Trust commenced investment operations on January 26, 1989. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principals 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. 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 Trust may invest in repurchase agreements, which are short-term investments in which the Trust acquires ownership of a debt security and the seller agrees to repurchase the security at a future time and specified price. The Trust 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 Trust will make payment for such securities only upon physical delivery or evidence of book entry transfer to the account of the custodian bank. The seller is required to maintain the value of the underlying security at not less than the repurchase proceeds due the Trust. C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond discount is accreted and premium is amortized over the expected life of each applicable security. D. FEDERAL INCOME TAXES It is the Trust'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. 18 NOTES TO FINANCIAL STATEMENTS June 30, 2003 (Unaudited) The Trust 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 Trust had an accumulated capital loss carry forward for tax purposes of $26,230,148 which expires between December 31, 2003 and December 31, 2010. Of this amount, $1,028,010 will expire on December 31, 2003. At June 30, 2003, the cost and related gross unrealized appreciation and depreciation are as follows: Cost of investments for tax purposes........................ $87,431,045 =========== Gross tax unrealized appreciation........................... $ 4,976,457 Gross tax unrealized depreciation........................... (9,372,124) ----------- Net tax unrealized depreciation on investments.............. $(4,395,667) ===========
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly dividends from net investment income to common shareholders. Net realized gains, if any, are distributed annually to common shareholders. Distributions from net realized gains for book purposes may include short-term capital gains which are included in ordinary income for tax purposes. The tax character of distributions paid during the year ended December 31, 2002 was as follows:
2002 Distributions paid from: Ordinary income........................................... $7,081,715 Return of capital......................................... 198,341 ---------- $7,280,056
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Trust's Investment Advisory Agreement, the Adviser will provide investment advice and facilities to the Trust for an annual fee payable monthly of .70% of the average daily net assets of the Trust. For the six months ended June 30, 2003, the Trust recognized expenses of approximately $3,800 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of the Trust is an affiliated person. Under separate Accounting Services and Legal Services agreements, the Adviser provides accounting and legal services to the Trust. The Adviser allocates the cost of such services to each trust. For the six months ended June 30, 2003, the Trust recognized expenses of approximately $15,900 representing Van Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing accounting and legal services to the Trust, which are reported as part of "Other" and "Legal" expenses, respectively, in the Statement of Operations. 19 NOTES TO FINANCIAL STATEMENTS June 30, 2003 (Unaudited) Certain officers and trustees of the Trust are also officers and directors of Van Kampen. The Trust does not compensate its officers or trustees who are officers of Van Kampen. The Trust provides deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation to a later date. Benefits under the retirement plan are payable upon retirement for a ten-year period and are based upon each trustee's years of service to the Trust. The maximum annual benefit per trustee under the plan is $2,500. 3. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $34,064,316 and $34,480,349, respectively. 4. AUCTION MARKET PREFERRED SHARES The Trust has outstanding 376 shares of Auction Market Preferred Shares ("AMPS") at a liquidation value of $100,000 per share. Dividends are cumulative and the rate is currently reset through an auction process every 28 days. The rate in effect on June 30, 2003, was 1.020%. During the six months ended June 30, 2003, the rates ranged from 1.020% to 1.380%. The Trust pays annual fees equivalent to .25% of the preferred share liquidation value for the remarketing efforts associated with the preferred auctions. These fees are included as a component of Preferred Share Maintenance expense. The AMPS are redeemable at the option of the Trust in whole or in part at a price of $100,000 per share plus accumulated and unpaid dividends. The Trust is subject to certain asset coverage tests, and the AMPS are subject to mandatory redemption if the tests are not met. 20 DIVIDEND REINVESTMENT PLAN The Trust offers a Dividend Reinvestment Plan (the "Plan") in which Common Shareholders may elect to have dividends and capital gains distributions automatically reinvested in Common Shares of the Trust. The service is entirely voluntary and you may join or withdraw at any time. HOW TO PARTICIPATE If you wish to elect to participate in the Plan and your shares are held in your own name, call 1-800-341-2929 for more information and a brochure. If your shares are held in the name of a brokerage firm, bank, or other nominee, you should contact your nominee to see if it would participate in the Plan on your behalf. If you wish to participate in the Plan, but your brokerage firm, bank, or nominee is unable to participate on your behalf, you should request that your shares be re-registered in your own name which will enable your participation in the Plan. HOW THE PLAN WORKS State Street Bank and Trust Company, as your Plan Agent, serves as agent for the Common Shareholders in administering the Plan. After the Trust declares a dividend or determines to make a capital gains distribution, the Plan Agent will, as agent for the participants, receive the cash payment and use it to buy Common Shares in the open market, on the New York Stock Exchange or elsewhere, for the participants' accounts. The Trust will not issue any new Common Shares in connection with the Plan. All reinvestments are in full and fractional Common Shares, carried to three decimal places. Experience under the Plan may indicate that changes are desirable. Accordingly, the Trust reserves the right to amend or terminate the Plan as applied to any dividend or capital gains distribution paid subsequent to written notice of the change sent to all Common Shareholders of the Trust at least 90 days before the record date for the dividend or distribution. The Plan also may be amended or terminated by the Plan Agent, with the written consent of the Trust, by providing at least 90 days written notice to all Participants in the Plan. COSTS OF THE PLAN The Plan Agent's fees for the handling of the reinvestment of dividends and distributions will be paid by the Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of dividends and distributions. No other charges will be made to participants for reinvesting dividends or capital gains distributions, except for certain brokerage commissions, as described above. 21 TAX IMPLICATIONS You will receive tax information annually for your personal records and to help you prepare your federal income tax return. The automatic reinvestment of dividends and capital gains distributions does not relieve you of any income tax which may be payable on dividends or capital gains distributions. RIGHT TO WITHDRAW You may withdraw from the Plan at any time by calling 1-800-341-2929 or by writing State Street Bank and Trust Company. If you withdraw, you will receive, without charge, a share certificate issued in your name for all full Common Shares credited to your account under the Plan, and a cash payment will be made for any fractional Common Share credited to your account under the Plan. You may again elect to participate in the Plan at any time by calling 1-800-341-2929 or writing to the Trust at: 2800 Post Oak Blvd. Houston, TX 77056 Attn: Closed-End Funds 22 BOARD OF TRUSTEES AND IMPORTANT ADDRESSES VAN KAMPEN HIGH INCOME TRUST BOARD OF TRUSTEES DAVID C. ARCH J. MILES BRANAGAN(1) JERRY D. CHOATE ROD DAMMEYER LINDA HUTTON HEAGY R. CRAIG KENNEDY HOWARD J KERR MITCHELL M. MERIN*(1) THEODORE A. MYERS JACK E. NELSON(1) RICHARD F. POWERS, III* HUGO F. SONNENSCHEIN WAYNE W. WHALEN* - Chairman SUSAN H. WOOLSEY INVESTMENT ADVISOR VAN KAMPEN INVESTMENT ADVISORY CORP. 1 Parkview Plaza P.O. Box 5555 Oakbrook Terrace, Illinois 60181-5555 CUSTODIAN AND TRANSFER AGENT STATE STREET BANK AND TRUST COMPANY c/o EquiServe P.O. Box 43011 Providence, Rhode Island 02940-3011 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT AUDITORS DELOITTE & TOUCHE LLP, 180 North Stetson Avenue Chicago, Illinois 60601 (1) Appointed to the Board of Trustees effective July 23, 2003. * "Interested persons" of the Fund, as defined in the Investment Company Act of 1940, as amended. 23 RESULTS OF SHAREHOLDER VOTES The Annual Meeting of Shareholders of the Trust was held on June 24, 2003, where shareholders voted on the election of trustees and the amendment to the Declaration of Trust. With regard to the election of the following trustees by common shareholders of the Trust:
# OF SHARES ------------------------------ IN FAVOR WITHHELD ------------------------------------------------------------------------------------------ Jerry D. Choate........................................... 11,682,888 191,057 Linda Hutton Heagy........................................ 11,682,678 191,267 R. Craig Kennedy.......................................... 11,688,688 185,257 Wayne W. Whalen........................................... 11,673,986 199,959 Suzanne H. Woolsey........................................ 11,683,078 190,867
With regard to the election of the following trustee by preferred shareholders of the Trust:
# OF SHARES ---------------------------- IN FAVOR WITHHELD ------------------------------------------------------------------------------------------ Rod Dammeyer................................................ 319 57
The other trustees of the Trust whose terms did not expire in 2003 are David C. Arch, Howard J Kerr, Theodore A. Myers, Richard F. Powers, III and Hugo F. Sonnenschein With regard to the vote for the amendment to the Declaration of Trust by the common shareholders of the Trust, 11,208,156 shares voted in favor of the proposal, 462,971 shares voted against and 202,818 shares abstained. With regard to the vote for the amendment to the Declaration of Trust by the preferred shareholders of the Trust, 319 shares voted in favor of the proposal and 57 shares abstained. 24 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) Copyright (C)2003 Van Kampen Funds Inc. All rights reserved. Member NASD/SIPC. 920, 911, 104 VIT SAR 8/03 11614H03-AS-8/03 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. 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. Item 10. Exhibits. (a) Code of Ethics - Not applicable for semi-annual reports. (b) Certifications of Principal Executive Officer and Principal Financial Officer attached hereto as part of EX-99.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Van Kampen High Income Trust ------------------------------------------------------------------ By: /s/ Ronald E. Robison ---------------------------------------------------------------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: August 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: August 19, 2003 By: /s/ John L. Sullivan ---------------------------------------------------------------------------- Name: John L. Sullivan Title: Principal Financial Officer Date: August 19, 2003