-----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, PjnoT1AixEl4bc39nFiAs1nSsNhd9wnQvhFsEFJ0DCawJeAVSoOEpT6ugB2/L7R1 GctA0Z0STyfAc1QFnPkoMw== 0000950137-04-007340.txt : 20040830 0000950137-04-007340.hdr.sgml : 20040830 20040830143503 ACCESSION NUMBER: 0000950137-04-007340 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040830 DATE AS OF CHANGE: 20040830 EFFECTIVENESS DATE: 20040830 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN HIGH INCOME TRUST CENTRAL INDEX KEY: 0000843506 IRS NUMBER: 363616859 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05707 FILM NUMBER: 041005034 BUSINESS ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC. STREET 2: 1221 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2127625441 MAIL ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC. STREET 2: 1221 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10020 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL INTERMEDIATE TERM HIGH INCOME TR DATE OF NAME CHANGE: 19960102 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN MERRITT INTERMEDIATE TERM HIGH INCOME TRUST DATE OF NAME CHANGE: 19920703 N-CSRS 1 c86783nvcsrs.txt SEMIANNUAL REPORT ------------------------- OMB APPROVAL ------------------------- OMB Number: 3235-0570 Expires: October 31, 2006 Estimated average burden hours per response: 19.3 ------------------------- 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, 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: 12/31 Date of reporting period: 6/30/04 Item 1. Report to Shareholders. The Trust's semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: Welcome, Shareholder In this report, you'll learn about how your investment in Van Kampen High Income Trust 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 trust's financial statements and a list of trust investments as of June 30, 2004. Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the trust will achieve its investment objective. Trusts are subject to market risk, which is the possibility that the market values of securities owned by the trust will decline and that the value of the trust shares may therefore be less than what you paid for them. Accordingly, you can lose money investing in this trust.
--------------------------------------------------------------------------------------- NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE --------------------------------------------------------------------------------------- NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT ---------------------------------------------------------------------------------------
Performance Summary as of 6/30/04
HIGH INCOME TRUST SYMBOL: VIT - --------------------------------------------------------- AVERAGE ANNUAL BASED ON BASED ON TOTAL RETURNS NAV MARKET PRICE Since Inception (01/26/89) 5.19% 5.62% 10-year 5.60 3.36 5-year 2.39 0.64 1-year 10.96 4.64 6-month 0.98 -5.87 - ---------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, NET ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. NAV per share is determined by dividing the value of the trust's portfolio securities, cash and other assets, less all liabilities, by the total number of common shares outstanding. The common share market price is 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. Total return assumes an investment 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 end of the period. The J.P. Morgan Global 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. It is not possible to invest directly in an index. 1 Trust Report FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2004 Van Kampen High Income Trust is managed by the Adviser's High Yield team. Current team members include Gordon Loery, Executive Director of the Adviser; Josh Givelber and Chad Liu, Vice Presidents of the Adviser; and Sheila Finnerty, Managing Director of the Adviser.(1) MARKET CONDITIONS Coming off a banner year in 2003, high-yield bonds continued their strong performance through the end of January 2004, endured a difficult period from February through May, then staged a rally during June. The CSFB High Yield Index, a broad benchmark for the high-yield market, returned 2.47 percent for the first six months of 2004. Over the past 18 months, whether the market was rallying or giving back some gains, high-yield bonds have had strong fundamental factors in their favor. These factors included an improving U.S. economic environment, better corporate earnings overall and a low default rate for high-yield issuers. In 2003, and continuing through January, technical factors, such as supply and demand within the high-yield bond market, were also very positive. Though high-yield companies were bringing a tremendous volume of new issues to market--made up mostly of refinanced high-yield bonds or refinanced bank debt--through January 2004 new-issue supply was easily taken up by strong demand from mutual funds, institutional investors and individuals. Beginning this past February, however, demand slackened and money flowed out of high-yield funds as interest rates began to rise and some investors took profits, while others shifted their portfolio allocation out of high yield. Typically, high-yield and Treasury-bond performance are not strongly correlated, but during the first half of 2004 there was more correlation than usual because of narrow high-yield interest-rate spreads compared with Treasuries. As Treasuries reacted negatively to interest-rate fears, high-yield bonds followed, but to a lesser extent. In addition, from February to May, financial markets experienced significantly increased volatility--rarely helpful to high-yield performance. The rise in volatility was attributable to terrorism fears, higher oil prices and higher interest rates. Attitudes concerning the direction of interest rates underwent a dramatic shift at that time. Investors went from thinking that interest rates would remain relatively low for a long period to acknowledging that the Fed could change direction in order to fight inflation, and push the federal funds rate up--perhaps as much as 3 percent over the next 12 to 24 months. Beginning in May, the market began to acclimate itself to the new interest-rate environment and to settle down somewhat. As a result, the high-yield market posted gains during June as some new money came into this market. Perhaps (1)Team members may change without notice at any time. 2 more importantly, there were no significant outflows from most high-yield mutual funds in June. PERFORMANCE ANALYSIS A closed-end fund's return can be calculated upon either the market price or the net asset value (NAV) of its shares. NAV per share is determined by dividing the value of the trust's portfolio securities, cash and other assets, less all liabilities, by the total number of common shares outstanding, while market price reflects the supply and demand for the shares. As a result, the two returns can differ significantly. On an NAV basis, the trust outperformed its benchmark, the J.P. Morgan Global High Yield Index. (See table below.) The trust's performance was helped by its lack of exposure to the airline industry as well as favorable security selection within the utilities sector. In addition, though the overall default rate with the high-yield bond asset class was low, there were some defaults among high-yield companies during the period; the fact that the trust did not hold these problem credits contributed to the trust's performance. When selecting high-yield issues for the trust's portfolio, we have historically avoided most start-up companies and attempt to look for seasoned issuers with positive cash flow -- companies that we believe will prosper in good or bad economic times. Detracting from overall performance during the period was unfavorable security selection within the chemicals, forest products and gaming/leisure sectors. Other factors that detracted from the trust's performance were its relatively low-yield, higher overall-quality composition and its shorter average maturity compared with the overall market. During the period we worked to increase the trust's yield and purchased lower-grade issues at longer maturities. The trust uses leverage on an ongoing basis to enhance its dividend to common shareholders. The trust borrows money at short-term rates through the issuance of preferred shares. The proceeds are then invested in longer-term securities, taking advantage of the difference between short- and longer-term rates. Though short-term rates have risen since the start of 2004, using leverage through the "carry trade" continued to be beneficial for the trust during the period. TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2004
- -------------------------------------------------------- BASED ON BASED ON J.P. MORGAN GLOBAL NAV MARKET PRICE HIGH YIELD INDEX 0.98% -5.87% 0.68% - --------------------------------------------------------
Past performance is no guarantee of future results. Investment return, net asset value and common share market price will fluctuate and trust shares, when sold, may be worth more or less than their original cost. See Performance Summary for additional performance information and index definition. 3 Going forward, though we think interest rates will continue to rise as the Fed persists in tightening credit, we believe that high-yield bonds should perform reasonably well over the coming months for two reasons: First, the performance of high-yield issues should continue to be driven by favorable fundamental factors. Second, now that investors have seemingly come to terms with the necessity for higher interest rates, the relationship between supply and demand should gradually turn more favorable within the high-yield market. TOP 5 SECTORS AS OF 6/30/04 RATINGS ALLOCATIONS AS OF 6/30/04 Energy 10.3% A/A 0.6% Gaming & Leisure 9.7 BBB/Baa 7.4 Healthcare 7.3 BB/Ba 43.1 Forest Products 7.1 B/B 45.2 Diversified Media 6.7 CCC/Caa 3.5 Non-Rated 0.2
Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned or securities in the sectors shown above. All percentages are as a percentage of long-term investments. 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. Van Kampen is a wholly owned subsidiary of a global securities firm which is engaged in a wide range of financial services including, for example, securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. 4 FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS Each Van Kampen trust provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the trust's second and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semiannual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. Van Kampen also delivers the semiannual and annual reports to trust shareholders, and makes these reports available on its public web site, www.vankampen.com. In addition to the semiannual and annual reports that Van Kampen delivers to shareholders and makes available through the Van Kampen public web site, each trust files a complete schedule of portfolio holdings with the SEC for the trust's first and third fiscal quarters on Form N-Q. Van Kampen does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Van Kampen public web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You may also review and copy them at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling the SEC at 1-202-942-8090. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102. In addition to filing a complete schedule of portfolio holdings with the SEC each fiscal quarter, each Van Kampen trust makes portfolio holdings information available by periodically providing the information on its public web site, www.vankampen.com. Each Van Kampen trust provides a complete schedule of portfolio holdings on the public web site on a calendar-quarter basis approximately 30 days after the close of the calendar quarter. Furthermore, each Van Kampen trust provides partial lists of its portfolio holdings (such as top 10 or top 15 fund holdings) to the public web site each with a delay of approximately 15 days. You may obtain copies of a trust's fiscal quarter filings, or its monthly or calendar-quarter web site postings, by contacting Van Kampen Client Relations at 1-800-847-2424. PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD The trust's policies and procedures with respect to the voting of proxies relating to the trust's portfolio securities and information on how the trust voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge, upon request, by calling 1-800-847-2424 or by visiting our website at www.vankampen.com. This information is also available on the Securities and Exchange Commission's website at http://www.sec.gov. 5 VAN KAMPEN HIGH INCOME TRUST PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED)
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ----------------------------------------------------------------------------------------------- CORPORATE BONDS 168.8% AEROSPACE 0.3% $ 158 Dunlop Standard Aerospace Holdings, 144A--Private Placement (United Kingdom) (a)................... 11.875% 05/15/09 $ 168,665 ------------ BROADCASTING 3.2% 170 Granite Broadcasting Corp., 144A--Private Placement (a).................................... 9.750 12/01/10 158,950 295 Salem Communications Corp. ...................... 7.750 12/15/10 302,744 1,080 TV Azteca SA (Mexico)............................ 10.500 02/15/07 1,107,000 ------------ 1,568,694 ------------ CABLE 8.3% 575 Cablevision Systems Corp., 144A--Private Placement (a) (b)................................ 5.670 04/01/09 592,250 1,005 Charter Communications Holdings LLC.............. 9.625 11/15/09 819,075 660 CSC Holdings, Inc. .............................. 8.125 07/15/09 689,700 500 DirecTV Holdings LLC............................. 8.375 03/15/13 555,625 855 Echostar DBS Corp. .............................. 6.375 10/01/11 846,450 505 Kabel Deutschland GmbH, 144A--Private Placement (Germany) (a) (c)................................ 10.625 07/01/14 521,412 ------------ 4,024,512 ------------ CHEMICALS 9.8% 610 Equistar Chemicals LP............................ 10.125 09/01/08 671,000 245 FMC Corp. ....................................... 10.250 11/01/09 282,975 190 Huntsman Advanced Materials LLC, 144A--Private Placement (a).................................... 11.000 07/15/10 215,175 190 ISP Chemco, Inc. ................................ 10.250 07/01/11 212,325 900 ISP Holdings, Inc. .............................. 10.625 12/15/09 994,500 145 Koppers, Inc. ................................... 9.875 10/15/13 159,500 55 Millennium America, Inc. ........................ 7.000 11/15/06 56,787 520 Millennium America, Inc. ........................ 9.250 06/15/08 561,600 535 Nalco Co., 144A--Private Placement (a)........... 7.750 11/15/11 563,087 495 Rhodia SA, 144A--Private Placement (France) (a).............................................. 8.875 06/01/11 420,750 330 Rockwood Specialties Group, Inc. ................ 10.625 05/15/11 353,100 210 Westlake Chemical Corp. ......................... 8.750 07/15/11 228,900 ------------ 4,719,699 ------------ CONSUMER PRODUCTS 3.8% 270 Amscan Holdings, Inc., 144A-- Private Placement (a).............................................. 8.750 05/01/14 266,625 210 Oxford Industrials, Inc., 144A-- Private Placement (a).................................... 8.875 06/01/11 222,600 830 Phillips-Van Heusen Corp., 144A--Private Placement (a).................................... 7.250 02/15/11 838,300 315 Rayovac Corp. ................................... 8.500 10/01/13 332,325 158 Tempur Pedic, Inc. .............................. 10.250 08/15/10 178,935 ------------ 1,838,785 ------------
6 See Notes to Financial Statements VAN KAMPEN HIGH INCOME TRUST PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ----------------------------------------------------------------------------------------------- DIVERSIFIED MEDIA 11.6% $ 834 Advanstar Communications, Inc. (b)............... 8.750% 08/15/08 $ 877,469 655 Alliance Atlantis Communications, Inc. (Canada)......................................... 13.000 12/15/09 723,775 750 CanWest Media, Inc. (Canada)..................... 10.625 05/15/11 844,687 340 Dex Media East Finance Corp. LLC................. 12.125 11/15/12 398,650 350 Dex Media West Finance Corp. .................... 9.875 08/15/13 385,875 780 Nevada Power Co. ................................ 9.000 08/15/13 852,150 150 PEI Holdings, Inc. .............................. 11.000 03/15/10 174,750 690 Primedia, Inc. .................................. 8.875 05/15/11 686,550 145 Vivendi Universal SA (France).................... 6.250 07/15/08 154,473 420 Vivendi Universal SA (France).................... 9.250 04/15/10 496,419 ------------ 5,594,798 ------------ ENERGY 17.8% 755 BRL Universal Equipment.......................... 8.875 02/15/08 812,569 455 CHC Helicopter Corp., 144A--Private Placement (Canada) (a)..................................... 7.375 05/01/14 449,312 220 Citgo Petroleum Corp. ........................... 11.375 02/01/11 256,300 905 El Paso Production Holding Co. .................. 7.750 06/01/13 834,862 1,140 Frontier Oil Corp. .............................. 11.750 11/15/09 1,251,150 97 Gulfterra Energy Partners LP..................... 8.500 06/01/10 105,972 385 Gulfterra Energy Partners LP..................... 10.625 12/01/12 460,075 90 Hanover Compressor Co. .......................... 8.625 12/15/10 93,600 385 Hanover Compressor Co. .......................... 9.000 06/01/14 401,362 375 Hanover Equipment Trust.......................... 8.500 09/01/08 398,437 160 Hanover Equipment Trust.......................... 8.750 09/01/11 172,000 550 Hilcorp Energy Finance Corp., 144A--Private Placement (a).................................... 10.500 09/01/10 598,125 290 Magnum Hunter Resources, Inc. ................... 9.600 03/15/12 320,450 85 MSW Energy Holdings LLC.......................... 8.500 09/01/10 90,312 405 MSW Energy Holdings LLC, 144A--Private Placement (a).............................................. 7.375 09/01/10 405,000 195 Plains Exploration & Production Co., 144A-- Private Placement (a)............................ 7.125 06/15/14 199,387 327 Port Arthur Finance Corp. ....................... 12.500 01/15/09 379,413 320 Tesoro Petroleum Corp. .......................... 9.000 07/01/08 331,200 180 Tesoro Petroleum Corp. .......................... 9.625 04/01/12 202,950 815 Vintage Petroleum, Inc. ......................... 7.875 05/15/11 839,450 ------------ 8,601,926 ------------ FINANCIAL 1.7% 455 General Motors Acceptance Corp. ................. 6.750 01/15/06 476,945 295 Istar Financial, Inc. ........................... 8.750 08/15/08 327,752 ------------ 804,697 ------------
See Notes to Financial Statements 7 VAN KAMPEN HIGH INCOME TRUST PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ----------------------------------------------------------------------------------------------- FOOD & DRUG 2.4% $ 690 Delhaize America, Inc. .......................... 8.125% 04/15/11 $ 756,606 1,570 Jitney-Jungle Stores America, Inc. (d) (e) (f)... 12.000 03/01/06 0 360 Rite Aid Corp. .................................. 8.125 05/01/10 380,700 ------------ 1,137,306 ------------ FOOD & TOBACCO 8.3% 750 Constellation Brands, Inc. ...................... 8.000 02/15/08 810,000 340 Michael Foods, Inc. ............................. 8.000 11/15/13 352,750 765 Pilgrim's Pride Corp. ........................... 9.625 09/15/11 849,150 210 Pilgrim's Pride Corp. ........................... 9.250 11/15/13 224,700 600 Smithfield Foods, Inc. .......................... 7.625 02/15/08 633,000 1,050 Smithfield Foods, Inc. .......................... 8.000 10/15/09 1,136,625 ------------ 4,006,225 ------------ FOREST PRODUCTS 12.3% 330 Abitibi-Consolidated, Inc. (Canada).............. 8.550 08/01/10 349,613 530 Abitibi-Consolidated, Inc. (Canada).............. 6.000 06/20/13 471,738 535 Georgia-Pacific Corp. ........................... 8.875 02/01/10 608,562 600 Graphic Packaging International Corp. ........... 9.500 08/15/13 654,000 620 MDP Acquisitions PLC (Ireland)................... 9.625 10/01/12 682,000 235 Norampac, Inc. (Canada).......................... 6.750 06/01/13 231,475 1,350 Owens-Brockway Glass Containers, Inc. ........... 8.875 02/15/09 1,464,750 495 Pliant Corp. .................................... 13.000 06/01/10 445,500 1,065 Tembec Industries, Inc. (Canada)................. 7.750 03/15/12 1,033,050 ------------ 5,940,688 ------------ GAMING & LEISURE 16.7% 920 Harrahs Operating Co., Inc. ..................... 7.875 12/15/05 974,050 465 Hilton Hotels Corp. ............................. 7.950 04/15/07 504,525 290 Hilton Hotels Corp. ............................. 7.625 12/01/12 313,200 369 HMH Properties, Inc. ............................ 7.875 08/01/08 380,070 570 Horseshoe Gaming LLC............................. 8.625 05/15/09 597,075 1,080 MGM Mirage, Inc. ................................ 6.000 10/01/09 1,063,800 1,400 Mohegan Tribal Gaming Authority.................. 8.125 01/01/06 1,484,000 490 Park Place Entertainment Corp. .................. 7.875 12/15/05 516,337 425 Park Place Entertainment Corp. .................. 8.875 09/15/08 462,187 1,075 Starwood Hotels & Resorts Worldwide, Inc. ....... 7.375 05/01/07 1,136,812 625 Station Casinos, Inc. ........................... 6.000 04/01/12 607,813 ------------ 8,039,869 ------------ HEALTHCARE 12.5% 655 AmerisourceBergen Corp. ......................... 8.125 09/01/08 709,038 860 Extendicare Health Services, Inc., 144A--Private Placement (a).................................... 6.875 05/01/14 812,700 400 Fisher Scientific International, Inc. ........... 8.125 05/01/12 430,000 560 Fresenius Medical Care Capital Trust II.......... 7.875 02/01/08 592,200 235 Fresenius Medical Care Capital Trust IV.......... 7.875 06/15/11 250,275 1,045 HCA, Inc. ....................................... 6.910 06/15/05 1,076,223 190 HCA, Inc. ....................................... 6.300 10/01/12 190,400
8 See Notes to Financial Statements VAN KAMPEN HIGH INCOME TRUST PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ----------------------------------------------------------------------------------------------- HEALTHCARE (CONTINUED) $ 85 National Nephrology Associates, Inc., 144A-- Private Placement (a)............................ 9.000% 11/01/11 $ 97,750 380 Team Health, Inc., 144A--Private Placement (a)... 9.000 04/01/12 366,700 250 Tenet Healthcare Corp. .......................... 6.500 06/01/12 218,750 435 Tenet Healthcare Corp., 144A-- Private Placement (a).............................................. 9.875 07/01/14 444,788 190 VWR International, Inc., 144A-- Private Placement (a).............................................. 6.875 04/15/12 191,663 650 VWR International, Inc., 144A-- Private Placement (a).............................................. 8.000 04/15/14 669,500 ------------ 6,049,987 ------------ HOUSING 9.3% 104 CB Richard Ellis Service, Inc. .................. 9.750 05/15/10 114,920 545 CB Richard Ellis Service, Inc. .................. 11.250 06/15/11 624,025 575 D.R. Horton, Inc. ............................... 5.000 01/15/09 567,094 625 Interface, Inc., 144A--Private Placement (a)..... 9.500 02/01/14 625,000 425 LNR Property Corp. .............................. 7.625 07/15/13 425,000 860 Nortek Holdings, Inc., 144A--Private Placement (a) (b).......................................... 4.870 12/31/10 879,350 240 Schuler Homes, Inc. ............................. 9.375 07/15/09 264,600 175 Technical Olympic USA, Inc. ..................... 9.000 07/01/10 180,250 290 Technical Olympic USA, Inc. ..................... 9.000 07/01/10 298,700 310 Technical Olympic USA, Inc. ..................... 10.375 07/01/12 324,725 190 WII Components, Inc., 144A--Private Placement (a).............................................. 10.000 02/15/12 187,150 ------------ 4,490,814 ------------ INFORMATION TECHNOLOGY 3.4% 770 Iron Mountain, Inc. ............................. 8.625 04/01/13 820,050 800 Xerox Corp. ..................................... 7.125 06/15/10 820,000 ------------ 1,640,050 ------------ MANUFACTURING 5.8% 155 Flowserve Corp. ................................. 12.250 08/15/10 176,313 530 Johnsondiversey, Inc. ........................... 9.625 05/15/12 580,350 675 Manitowoc, Inc. ................................. 10.500 08/01/12 776,250 510 Trimas Corp. .................................... 9.875 06/15/12 543,150 670 Tyco Intl Group SA (Luxembourg).................. 6.375 02/15/06 703,707 ------------ 2,779,770 ------------ METALS 2.6% 191 Doe Run Resources Corp. (Acquired 02/15/01, Cost $157,190) (g) (h)................................ 11.750 11/01/08 148,214 210 General Cable Corp. ............................. 9.500 11/15/10 226,800 1,100 GS Technologies Operating, Inc. (d) (e) (f)...... 12.250 10/01/05 0 440 UCAR Finance, Inc. .............................. 10.250 02/15/12 491,700 337 United States Steel Corp. ....................... 9.750 05/15/10 374,913 ------------ 1,241,627 ------------
See Notes to Financial Statements 9 VAN KAMPEN HIGH INCOME TRUST PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ----------------------------------------------------------------------------------------------- RETAIL 3.7% $ 67 Big 5 Corp. ..................................... 10.875% 11/15/07 $ 70,015 290 General Nutrition Center, Inc., 144A--Private Placement (a).................................... 8.500 12/01/10 302,325 465 Penney JC Co., Inc. ............................. 9.000 08/01/12 551,025 425 Petro Stopping Center Financial, 144A--Private Placement (a).................................... 9.000 02/15/12 422,875 430 Toys R Us, Inc. ................................. 7.625 08/01/11 433,763 ------------ 1,780,003 ------------ SERVICES 10.8% 1,500 Allied Waste North America, Inc. ................ 8.875 04/01/08 1,650,000 45 Allied Waste North America, Inc. ................ 7.875 04/15/13 47,250 775 Buhrmann US, Inc. ............................... 12.250 11/01/09 852,962 510 Buhrmann US, Inc., 144A--Private Placement (a)... 8.250 07/01/14 511,275 390 United Rentals North America, Inc. .............. 6.500 02/15/12 370,500 740 United Rentals North America, Inc. .............. 7.750 11/15/13 703,000 1,000 Waste Management, Inc. .......................... 7.125 10/01/07 1,097,683 ------------ 5,232,670 ------------ TELECOMMUNICATIONS 3.5% 605 Axtel SA, 144A--Private Placement (Mexico) (a)... 11.000 12/15/13 576,263 280 Exodus Communications, Inc. (d) (e) (f).......... 11.250 07/01/08 0 430 Qwest Communications International, Inc., 144A-- Private Placement (a) (b)........................ 4.750 02/15/09 404,200 710 Qwest Corp. ..................................... 6.625 09/15/05 727,750 ------------ 1,708,213 ------------ TRANSPORTATION 5.4% 450 Autonation, Inc. ................................ 9.000 08/01/08 510,750 585 Laidlaw International, Inc. ..................... 10.750 06/15/11 641,306 565 Sonic Automotive, Inc. .......................... 8.625 08/15/13 591,838 750 TRW Automotive, Inc. ............................ 9.375 02/15/13 849,375 ------------ 2,593,269 ------------ UTILITY 10.8% 73 AES Corp. ....................................... 9.375 09/15/10 78,201 23 AES Corp. ....................................... 8.875 02/15/11 23,978 220 Allegheny Energy, Inc. .......................... 7.750 08/01/05 228,800 725 Calpine Corp., 144A--Private Placement (a)....... 8.500 07/15/10 603,563 65 CMS Energy Corp. ................................ 7.500 01/15/09 65,000 405 CMS Energy Corp. ................................ 8.500 04/15/11 415,125 605 Dynegy Holdings, Inc. ........................... 6.875 04/01/11 524,081 345 Dynegy Holdings, Inc., 144A--Private Placement (a).............................................. 9.875 07/15/10 372,600 235 IPALCO Enterprises, Inc. ........................ 8.625 11/14/11 256,150 485 Monongahela Power Co. ........................... 5.000 10/01/06 497,619 375 Pacific Energy Partners, 144A-- Private Placement (a).............................................. 7.125 06/15/14 382,500 385 PSEG Energy Holdings, Inc. ...................... 7.750 04/16/07 405,213 20 PSEG Energy Holdings, Inc. ...................... 8.625 02/15/08 21,600
10 See Notes to Financial Statements VAN KAMPEN HIGH INCOME TRUST PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - ----------------------------------------------------------------------------------------------- UTILITY (CONTINUED) $ 195 Southern Natural Gas Co. ........................ 8.875% 03/15/10 $ 214,013 785 TNP Enterprises, Inc. ........................... 10.250 04/01/10 816,400 270 Transcontinental Gas Pipe Line Corp. ............ 8.875 07/15/12 306,450 ------------ 5,211,293 ------------ WIRELESS COMMUNICATIONS 4.8% 590 Centennial Communications, 144A--Private Placement (a).................................... 8.125 02/01/14 550,175 1,205 Nextel Communications, Inc. ..................... 9.375 11/15/09 1,293,869 250 Rural Cellular Corp., 144A-- Private Placement (a) (b).......................................... 6.020 03/15/10 258,750 182 Telecorp PCS, Inc. .............................. 10.625 07/15/10 205,514 ------------ 2,308,308 ------------ TOTAL CORPORATE BONDS 168.8%................................................... 81,481,868 ------------ GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS 3.0% 545 Federal Republic of Brazil (Brazil).............. 11.250 07/26/07 589,963 750 United Mexican States (Mexico)................... 8.625 03/12/08 848,625 ------------ TOTAL GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS.............................. 1,438,588 ------------ DESCRIPTION - ----------- EQUITIES 0.5% DecisionOne Corp. (3,033 common shares) (f) (i)................................. 0 DecisionOne Corp. (6,670 common stock warrants) (f) (i)......................... 0 Doe Run Resources Corp. (1 common stock warrant) (f) (i)........................ 0 HCI Direct, Inc. (30,357 common shares) (f) (i)................................. 236,784 Hosiery Corp of America, Inc. (500 common shares) (f) (i)....................... 0 VS Holdings, Inc. (11,316 common shares) (f) (i)................................ 2,113 ------------ TOTAL EQUITIES.................................................................. 238,897 ------------ TOTAL LONG-TERM INVESTMENTS 172.3% (Cost $84,419,421)............................................................ 83,159,353 REPURCHASE AGREEMENT 4.1% State Street Bank & Trust Co. ($1,987,000 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 1.35%, dated 06/30/04, to be sold on 07/01/04 at $1,987,075) (Cost $1,987,000)............................................................. 1,987,000 ------------ TOTAL INVESTMENTS 176.4% (Cost $86,406,421)............................................................ 85,146,353
See Notes to Financial Statements 11 VAN KAMPEN HIGH INCOME TRUST PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
DESCRIPTION VALUE - ------------------------------------------------------------------------------------------------ OTHER ASSETS IN EXCESS OF LIABILITIES 1.5%...................................... $ 736,988 PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (77.9%)...................... (37,612,534) ------------ NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................... $ 48,270,807 ============
Percentages are calculated as a percentage of net assets applicable to common shares. (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) Variable rate security. Interest rate shown is that in effect at June 30, 2004. (c) Securities purchased on a when-issued or delayed delivery basis. (d) Non-income producing as security is in default. (e) This borrower has filed for protection in federal bankruptcy court. (f) Market value is determined in accordance with procedures established in good faith by the Board of Trustees. (g) Payment-in-kind security. (h) These securities are restricted and may be resold only in transactions exempt from registration which are normally those transactions with qualified institutional buyers. Restricted securities comprise 0.3% of net assets applicable to common shares. (i) Non-income producing security. 12 See Notes to Financial Statements VAN KAMPEN HIGH INCOME TRUST FINANCIAL STATEMENTS Statement of Assets and Liabilities June 30, 2004 (Unaudited) ASSETS: Total Investments (Cost $86,406,421)........................ $ 85,146,353 Cash........................................................ 419 Receivables: Interest.................................................. 1,638,333 Investments Sold.......................................... 792,795 Other....................................................... 2,575 ------------ Total Assets............................................ 87,580,475 ------------ LIABILITIES: Payables: Investments Purchased..................................... 1,378,944 Investment Advisory Fee................................... 49,069 Income Distributions--Common Shares....................... 19,348 Other Affiliates.......................................... 6,389 Trustees' Deferred Compensation and Retirement Plans........ 193,543 Accrued Expenses............................................ 49,841 ------------ Total Liabilities....................................... 1,697,134 Preferred Shares (including accrued distributions).......... 37,612,534 ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 48,270,807 ============ NET ASSET VALUE PER COMMON SHARE ($48,270,807 divided by 13,710,760 shares outstanding)............................ $ 3.52 ============ 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............................................. 84,024,417 Accumulated Undistributed Net Investment Income............. (609,037) Net Unrealized Depreciation................................. (1,260,068) Accumulated Net Realized Loss............................... (34,021,613) ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 48,270,807 ============ 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....................... $ 85,870,807 ============
See Notes to Financial Statements 13 VAN KAMPEN HIGH INCOME TRUST FINANCIAL STATEMENTS continued Statement of Operations For the Six Months Ended June 30, 2004 (Unaudited) INVESTMENT INCOME: Interest.................................................... $ 3,279,348 Other....................................................... 25,490 ----------- Total Income............................................ 3,304,838 ----------- EXPENSES: Investment Advisory Fee..................................... 302,317 Preferred Share Maintenance................................. 55,465 Trustees' Fees and Related Expenses......................... 22,502 Legal....................................................... 9,100 Custody..................................................... 7,909 Other....................................................... 93,710 ----------- Total Expenses.......................................... 491,003 ----------- NET INVESTMENT INCOME....................................... $ 2,813,835 =========== REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Gain........................................... $ 740,751 ----------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... 1,289,421 End of the Period......................................... (1,260,068) ----------- Net Unrealized Depreciation During the Period............... (2,549,489) ----------- NET REALIZED AND UNREALIZED LOSS............................ $(1,808,738) =========== DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (219,741) =========== NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS................................................ $ 785,356 ===========
14 See Notes to Financial Statements VAN KAMPEN HIGH INCOME TRUST FINANCIAL STATEMENTS continued Statements of Changes in Net Assets (Unaudited)
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, 2003 ------------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income................................. $ 2,813,835 $ 5,701,677 Net Realized Gain/Loss................................ 740,751 (7,269,381) Net Unrealized Appreciation/Depreciation During the Period.............................................. (2,549,489) 15,491,653 Distributions to Preferred Shareholders: Net Investment Income............................... (219,741) (452,433) ----------- ----------- Change in Net Assets Applicable to Common Shares from Operations.......................................... 785,356 13,471,516 Distributions to Common Shareholders: Net Investment Income............................... (2,467,453) (4,881,353) Return of Capital Distribution...................... -0- (122,439) ----------- ----------- NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM INVESTMENT ACTIVITIES.......................... (1,682,097) 8,467,724 NET ASSETS APPLICABLE TO COMMON SHARES: Beginning of the Period............................... 49,952,904 41,485,180 ----------- ----------- End of the Period (Including accumulated undistributed net investment income of ($609,037) and ($735,678), respectively)....................................... $48,270,807 $49,952,904 =========== ===========
See Notes to Financial Statements 15 VAN KAMPEN HIGH INCOME TRUST 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, -------------------- 2004 2003 2002 ---------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD................. $ 3.64 $ 3.03 $ 3.78 -------- -------- -------- Net Investment Income.................................. .21 .41 .47 Net Realized and Unrealized Gain/Loss.................. (.13) .59 (.69) Common Share Equivalent of Distributions Paid to Preferred Shareholders: Net Investment Income.................................. (.02) (.03) (.06) -------- -------- -------- Total from Investment Operations......................... .06 .97 (.28) Distributions Paid to Common Shareholders: Net Investment Income.................................. (.18) (.35) (.46) Return of Capital Distributions........................ -0- (.01) (.01) -------- -------- -------- NET ASSET VALUE, END OF THE PERIOD....................... $ 3.52 $ 3.64 $ 3.03 ======== ======== ======== Common Share Market Price at End of the Period........... $ 3.75 $ 4.16 $ 3.10 Total Return (a)......................................... -5.87%* 47.66% -22.99% Net Assets Applicable to Common Shares at End of the Period (In millions)................................... $ 48.3 $ 50.0 $ 41.5 Ratio of Expenses to Average Net Assets Applicable to Common Shares (b)...................................... 2.00% 2.10% 2.15% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (b)........................ 11.49% 12.36% 14.42% Portfolio Turnover....................................... 37%* 73% 82% SUPPLEMENTAL RATIOS: Ratio of Expenses to Average Net Assets Including Preferred Shares (b)................................... 1.14% 1.16% 1.12% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (d)........................ 10.59% 11.38% 12.75% SENIOR SECURITIES: Total Preferred Shares Outstanding....................... 376 376 376 Asset Coverage Per Preferred Share (e)................... $228,413 $232,928 $210,413 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, - ------------------------------------------------------------------------------------------ 2001 (c) 2000 1999 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------ $ 4.22 $ 5.10 $ 5.86 $ 6.47 $ 6.35 $ 6.19 $ 5.62 $ 6.74 -------- -------- -------- -------- -------- -------- -------- -------- .71 .85 .88 .91 .93 .94 .98 1.00 (.44) (.85) (.75) (.58) .13 .15 .54 (.98) (.15) (.26) (.22) (.24) (.24) (.23) (.25) (.19) -------- -------- -------- -------- -------- -------- -------- -------- .12 (.26) (.09) .09 .82 .86 1.27 (.17) (.56) (.61) (.67) (.70) (.70) (.70) (.70) (.95) -0- (.01) -0- -0- -0- -0- -0- -0- -------- -------- -------- -------- -------- -------- -------- -------- $ 3.78 $ 4.22 $ 5.10 $ 5.86 $ 6.47 $ 6.35 $ 6.19 $ 5.62 ======== ======== ======== ======== ======== ======== ======== ======== $ 4.54 $ 4.125 $ 4.50 $ 6.375 $ 7.375 $ 6.75 $ 6.375 $ 5.50 23.76% 4.08% -21.20% -4.33% 20.29% 17.34% 29.17% -23.22% $ 51.8 $ 57.9 $ 70.0 $ 80.4 $ 88.7 $ 87.0 $ 84.8 $ 77.1 1.98% 1.95% 1.92% 1.85% 1.76% 1.87% 1.92% 1.96% 16.80% 18.05% 16.13% 14.56% 14.60% 15.32% 16.39% 16.33% 64% 62% 57% 65% 102% 92% 119% 110% 1.07% 1.04% 1.07% 1.09% 1.05% 1.11% 1.12% 1.16% 13.32% 12.48% 12.09% 10.77% 10.90% 11.58% 12.16% 13.31% 450 500 588 588 588 588 588 588 $215,081 $215,271 $219,005 $236,742 $250,850 $247,974 $244,242 $231,106 $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 VAN KAMPEN HIGH INCOME TRUST NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2004 (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 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 Trust 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 after payment is made. At June 30, 2004, the Trust had $430,000 of when-issued and delayed delivery purchase commitments. 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 Asset Management (the "Adviser") or its affiliates, the daily aggregate of which is invested in repurchase agreements. Repurchase agreements are fully collateralized by the underlying debt security. The 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. Other income is comprised primarily of consent fees. Consent fees are earned as compensation for agreeing to changes in the terms of debt instruments. 18 VAN KAMPEN HIGH INCOME TRUST NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2004 (UNAUDITED) continued 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. 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, 2003, the Trust had an accumulated capital loss carry forward for tax purposes of $32,734,922 which expires between December 31, 2007 and December 31, 2011. At June 30, 2004, the cost and related gross unrealized appreciation and depreciation are as follows: Cost of investments for tax purposes........................ $86,807,302 =========== Gross tax unrealized appreciation........................... $ 3,734,521 Gross tax unrealized depreciation........................... (5,395,470) ----------- Net tax unrealized depreciation on investments.............. $(1,660,949) ===========
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. For tax purposes, the determination of a return of capital distribution is made at the end of the Fund's fiscal year. Therefore, while it is likely that a portion of the Fund's distribution will ultimately be characterized as a return of capital for tax purposes, no such designation has been made for the six months ended June 30, 2004. The tax character of distributions paid during the year ended December 31, 2003 was as follows: Distributions paid from: Ordinary income........................................... $5,315,792 Return of capital......................................... 122,439 ---------- $5,438,231 ==========
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, 2004, the Trust recognized expenses of approximately $2,500 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, 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, 2004, the Trust recognized expenses of approximately $12,800 representing Van Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing accounting and legal services to the Trust, 19 VAN KAMPEN HIGH INCOME TRUST NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2004 (UNAUDITED) continued which are reported as part of "Other" and "Legal" expenses, respectively, in the Statement of Operations. 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 $32,302,735 and $29,947,175, 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, 2004 was 1.50%. During the six months ended June 30, 2004, the rates ranged from 1.00% to 1.50%. 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. 5. INDEMNIFICATIONS The Trust enters into contracts that contain a variety of indemnifications. The Trust's maximum exposure under these arrangements is unknown. However, the Trust has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. 20 VAN KAMPEN HIGH INCOME TRUST 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 VAN KAMPEN HIGH INCOME TRUST DIVIDEND REINVESTMENT PLAN continued 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 VAN KAMPEN HIGH INCOME TRUST BOARD OF TRUSTEES AND IMPORTANT ADDRESSES 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 SUSAN H. WOOLSEY INVESTMENT ADVISER VAN KAMPEN ASSET MANAGEMENT 1221 Avenue of the Americas New York, New York 10020 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 LLP 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DELOITTE & TOUCHE LLP 180 North Stetson Avenue Chicago, Illinois 60601 * "Interested persons" of the Trust, as defined in the Investment Company Act of 1940, as amended. 23 VAN KAMPEN HIGH INCOME TRUST RESULTS OF SHAREHOLDER VOTES The Annual Meeting of Shareholders of the Trust was held on June 23, 2004, where shareholders voted on the election of trustees. With regard to the election of the following trustees by common shareholders of the Trust:
# OF SHARES ------------------------------ IN FAVOR WITHHELD - ------------------------------------------------------------------------------------------ R. Craig Kennedy.......................................... 11,120,821 170,386 Jack E. Nelson............................................ 11,118,788 172,419 Richard F. Powers, III.................................... 11,128,333 162,874
With regards to the election of the following trustees by preferred shareholders of the Trust:
# OF SHARES ------------------------------ IN FAVOR WITHHELD - ------------------------------------------------------------------------------------------ Hugo F. Sonnenschein...................................... 375 1
The other trustees of the Trust whose terms did not expire in 2004 are David C. Arch, J. Miles Branagan, Jerry D. Choate, Rod Dammeyer, Linda Hutton Heagy, Howard J Kerr, Mitchell M. Merin, Wayne W. Whalen and Susan H. Woolsey. 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 Asset Management, Van Kampen Advisors 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)2004 Van Kampen Funds Inc. All rights reserved. Member NASD/SIPC. 902, 911, 104 VIT SAR 8/04 RN04-01501P-Y06/04 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. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 9. Submission of Matters to a Vote of Security Holders. Not applicable. Item 10. Controls and Procedures (a) 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 Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. Exhibits. (a) Code of Ethics -- Not applicable for semi-annual reports. (b)(1) A certification for the Principal Executive Officer of the registrant is attached hereto as part of EX-99.CERT. (b)(2) A certification for the Principal Financial Officer of the registrant is attached hereto as part of EX-99.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Van Kampen High Income Trust By: /s/ Ronald E. Robison ---------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: August 19, 2004 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, 2004 By: /s/ James M. Dykas ---------------------- Name: James M. Dykas Title: Principal Financial Officer Date: August 19, 2004 EX-99.CERT 2 c86783exv99wcert.txt CERTIFICATION I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen High Income 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: August 19, 2004 /s/ Ronald E. Robison --------------------------- Principal Executive Officer I, James M. Dykas, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen High Income 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: August 19, 2004 /s/ James M. Dykas --------------------------- Principal Financial Officer EX-99.906CERT 3 c86783exv99w906cert.txt 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Issuer: Van Kampen High Income Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended June 30, 2004 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: August 19, 2004 /s/ Ronald E. Robison ---------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement required by Section 906 has been provided to Van Kampen High Income Trust and will be retained by Van Kampen High Income 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 High Income Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended June 30, 2004 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: August 19, 2004 /s/ James M. Dykas ------------------- James M. Dykas Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Van Kampen High Income Trust and will be retained by Van Kampen High Income 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-----