-----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, Ln2vvoHR/SegWZZPXNKpj+riUrA80LftUo570k6UzMt264g/7fiZQlEqOBg/TXV1 tEqMImlxYvbkvPPPPkLAhQ== 0000950137-98-003378.txt : 19980826 0000950137-98-003378.hdr.sgml : 19980826 ACCESSION NUMBER: 0000950137-98-003378 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980825 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL INTERMEDIATE TERM HIGH INCOME TR CENTRAL INDEX KEY: 0000843506 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 363616859 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05707 FILM NUMBER: 98697370 BUSINESS ADDRESS: STREET 1: ONE PARKVIEW PLZ CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 BUSINESS PHONE: 7086846000 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN MERRITT INTERMEDIATE TERM HIGH INCOME TRUST DATE OF NAME CHANGE: 19920703 N-30D 1 FORM N-30D 1 TABLE OF CONTENTS Letter to Shareholders........................... 1 Performance Results.............................. 5 Glossary of Terms................................ 6 Portfolio of Investments......................... 8 Statement of Assets and Liabilities.............. 15 Statement of Operations.......................... 16 Statement of Changes in Net Assets............... 17 Financial Highlights............................. 18 Notes to Financial Statements.................... 20 Dividend Reinvestment Plan....................... 23
VIT SAR 8/98 2 LETTER TO SHAREHOLDERS July 23, 1998 Dear Shareholder, Recently, we decided to consolidate all Van Kampen American Capital mutual funds under the single name of Van Kampen Funds. This move accompanies the change in the legal [PHOTO] name of our firm to Van Kampen Funds Inc. Consequently, your Trust's name will be changing to Van Kampen High Income Trust on August 28. You can be assured that the change in your DENNIS J. MCDONNELL AND DON G. POWELL Trust's name will not affect its management or daily operations, and your Trust will continue to trade under its current ticker symbol. If you have any questions regarding your Trust or our new name, please contact your financial adviser. ECONOMIC REVIEW The economy staged an impressive performance during the first half of the year. Growth surged despite a sharp drop in exports to Asia, unemployment sank to a 28-year low, and consumer confidence jumped to its highest level since 1969. Even Alan Greenspan, chairman of the Federal Reserve Board, has sung the economy's praises. During the first quarter, economic growth surged at a 5.4 percent annualized rate--its highest quarterly rate in almost two years. At the same time, consumer prices rose 2.5 percent on an annual basis. Inflation was tempered by lower oil prices, a pending budget surplus, and a strong dollar, which reduced import prices and limited price hikes of competing U.S. goods. Comforted by the moderate inflation rate and concerned about Asia's financial future, the Fed refrained from raising interest rates during the reporting period. The Asian crisis, otherwise, had a limited impact on the U.S. economy. Heavy consumer spending and a large inventory buildup by manufacturers overcame the drop in exports to the region. MARKET OVERVIEW U.S. bonds rallied during the reporting period against this backdrop of steady Fed policy, economic crisis in Asia, and restrained price pressures. The yield of the 30-year Treasury bond, which moves in the opposite direction of its price, fell from 5.92 percent on December 31, 1997, to 5.63 percent six months later. The yield had dropped to a record 5.58 percent in June amid heavy buying by investors seeking a safe haven from the Asian tumult. Earlier in the reporting period, however, foreign sales of Treasury securities moved bond yields higher and bond prices lower. Fears of a Fed rate hike alternating with disappointment about the lack of a rate cut added to the volatility. The 30-year Treasury Continued on page two 1 3 bond yield periodically jumped above the pivotal 6 percent level, after initially dropping below it in December. By mid-May, bond yields resumed their decline and the rally gained momentum. High-yield bonds outperformed Treasuries during the first quarter but underperformed in the second. Early in the year, investors aggressively bought shares of high-yield bond funds, seeking the additional income that these securities provide. The vibrant economy and strong stock market convinced them that most issuing companies probably would not have a problem servicing their debt. As Asia's economic troubles worsened and the stock market rally faltered during the second quarter, investors preferred the safety of Treasury bonds over the extra income of high-yield bonds. The demand for high-yield bonds eased, and the heavy supply of new issues triggered an increase in their risk premium over Treasury bonds. The average yield of high-yield bonds dropped from 8.94 percent on December 31, 1997, to 8.70 percent on June 30, 1998, according to the KDP Investment Advisors Index. The yield on 10-year Treasury bonds, the benchmark against which high-yield bonds are measured, fell from 5.74 percent to 5.45 percent. As a result, the yield spread between high-yield bonds and 10-year Treasuries widened slightly, indicating investors' preference for Treasury securities. In the first quarter, when high-yield bonds outperformed Treasuries, the spread had narrowed. [CREDIT QUALITY GRAPH] Portfolio Composition by Credit Quality as of February 29, 1996 BB........................ 30.5% B......................... 66.4% CCC....................... 0.7% Non-Rated................. 2.4%
*As a Percentage of Long-Term Investments Based upon the highest credit quality ratings as issued by Standard & Poor's or Moody's. TRUST STRATEGY We used the following strategies to manage the Trust during the period: We maintained a portfolio consisting primarily of noninvestment-grade corporate bonds, which tend to pay higher yields than investment-grade securities but are less creditworthy. In order to help reduce the credit risk of the portfolio, we emphasized higher-quality noninvestment-grade bonds rated B or above. Market yields declined during the reporting period, and most of our acquisitions were designed to offset portfolio changes caused by shifts in market conditions. Due to the drop in interest rates, for example, several bonds in the portfolio were called, including many Continued on page three 2 4 investment-grade securities. As a result, the number of bonds in the portfolio rated BBB or higher declined. Much of the proceeds from calls were kept in cash during the spread expansion in the second quarter. We used that cash to purchase more bonds as favorable opportunities arose. Fallout from the Asian crisis or a decline in the stock market, for example, could cause high-yield bond prices to drop, making additional purchases more affordable. We don't expect the Asian crisis to affect the Trust negatively, because its exposure to Asian companies is minimal. Our purchases during the reporting period emphasized intermediate-term bonds in order to enhance the call protection of the Trust and extend its duration. As of June 30, 1998, less than 30 percent of the portfolio was priced to calls before the year 2000, compared with almost 50 percent of the Trust six months earlier. The average duration of the Trust, which is a measure of its sensitivity to changing interest rates, was 3.5 years as of June 30, 1998, compared with 4.53 years for the Lehman Brothers High Yield Bond Index. Our purchases also enhanced the sector diversification of the Trust in order to limit its credit risk. As of June 30, 1998, the largest sector concentration was 15.1 percent in telecommunications. TOP FIVE PORTFOLIO INDUSTRY SECTORS* AS OF JUNE 30, 1998 Telecommunications................................. 15.1% Printing, Publishing, and Broadcasting............. 10.2% Oil and Gas........................................ 8.9% Hotel, Motel, Inns, and Gaming..................... 8.1% Health Care........................................ 4.5%
*As a Percentage of Long-Term Investments PERFORMANCE SUMMARY For the six-month period ended June 30, 1998, the Trust generated a total return of -0.45 percent(1). This reflects a decrease in market price per common share from $7.375 on December 31, 1997, to $7.000 on June 30, 1998, plus reinvestment of dividends that totaled $.351 per common share. Based on the monthly dividend of $.0585 per share and the closing common stock price on June 30, 1998, the Trust generated a distribution rate of 10.03 percent(3). Please refer to the chart on page five for additional performance numbers. Continued on page four 3 5 SIX-MONTH DIVIDEND HISTORY FOR THE PERIOD ENDED JUNE 30, 1998 Distributions per Common Share Jan 1998........................ $.0585 Feb 1998........................ $.0585 Mar 1998........................ $.0585 Apr 1998........................ $.0585 May 1998........................ $.0585 Jun 1998........................ $.0585 The dividend history represents past performance of the Trust and does not predict the Trust's future distributions. ECONOMIC OUTLOOK We expect economic growth in the second half of 1998 will slacken from its brisk first-quarter pace due to the Asian economic crisis, General Motors strike, and slowing inventory buildup by American industry. The bond market itself is suggesting a slowdown: the yield spread between short-term and long-term Treasury securities is almost flat, a configuration that typically indicates economic moderation. We believe there is little chance that the Fed will raise rates during the coming months unless price pressures build and the economic slowdown is short-lived. One indicator we will be watching closely is the consumer price index, because its growth rate has begun to accelerate. If inflation rises sharply and the Fed does decide to raise rates, Treasury yields will likely top 6.00 percent. Otherwise, yields are likely to remain within their recent range between 5.50 percent and 6.00 percent. We believe the Trust is well positioned for any future market volatility, due to its intermediate-term average maturity and emphasis on high-quality noninvestment-grade bonds. In the meantime, we will closely monitor market developments and their effects on the performance of the Trust, adjusting the portfolio when appropriate. We remain committed to maximizing dividend distribution to our investors and enhancing the total returns of the Trust. Thank you for your continued support and confidence in Van Kampen and the management of your Trust. Sincerely, [SIG] Don G. Powell Chairman Van Kampen Investment Advisory Corp. [SIG] Dennis J. McDonnell President Van Kampen Investment Advisory Corp. 4 6 PERFORMANCE RESULTS FOR THE PERIOD ENDED JUNE 30, 1998 VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST (NYSE TICKER SYMBOL--VIT) COMMON SHARE TOTAL RETURNS Six-month total return based on market price(1)............ (0.45%) Six-month total return based on NAV(2)..................... 5.04% DISTRIBUTION RATE Distribution rate as a % of closing common stock price(3)................................................. 10.03% SHARE VALUATIONS Net asset value............................................ $ 6.44 Closing common stock price................................. $7.000 Six-month high common stock price (03/10/98)............... $7.625 Six-month low common stock price (04/30/98)................ $6.875 Preferred share rate(4).................................... 5.475%
(1)Total return based on market price assumes an investment at the 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 stock price at the end of the period indicated. (2)Total return based on net asset value (NAV) assumes an investment at the beginning of the period indicated, reinvestment of all distributions for the period, and sale of all shares at the end of the period, all at NAV. (3)Distribution rate represents the monthly annualized distributions of the Trust at the end of the period and not the earnings of the Trust. (4)See "Notes to Financial Statements" footnote #4, for more information concerning Preferred Share reset periods. Past performance does not guarantee future results. Investment return, stock price and net asset value will fluctuate with market conditions. Trust shares, when sold, may be worth more or less than their original cost. 5 7 GLOSSARY OF TERMS CALL FEATURE: Allows the issuer to buy back a bond on specific call dates before maturity. Call dates and prices are set when the bond is issued. To compensate the bondholder for loss of income and ownership, the initial call price is usually higher than the face value of the bond. Bonds are usually called when interest rates drop so significantly that the issuer can save money by issuing new bonds at lower rates. CREDIT RATING: An evaluation of an issuer's credit history and capability of repaying obligations. Standard & Poor's and Moody's Investors Service are two companies that assign bond ratings. Standard & Poor's ratings range from a high of AAA to a low of D, while Moody's ratings range from a high of Aaa to a low of C. CREDIT SPREAD: Also called quality spread, the difference in yield between higher-quality issues (such as Treasury securities) and lower-quality issues. Normally, lower-quality issues provide higher yields to compensate investors for the additional credit risk. DURATION: A measure of the sensitivity of a bond's price to changes in interest rates, expressed in years. Each year of duration represents an expected one percent change in the price of a bond for every one percent change in interest rates. The longer a fund's duration, the greater the effect of interest rate movements on net asset value. Typically, funds with shorter durations have performed better in rising rate environments, while funds with longer durations have performed better when rates decline. FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve System, which is the central bank system of the United States. Its policy-making committee, called the Federal Open Market Committee, meets eight times a year to establish monetary policy and monitor the economic pulse of the U.S. INFLATION: An economic state in which the money supply and business activity dramatically increase, accompanied by sharply rising prices. Inflation is widely measured by the Consumer Price Index, an economic indicator that measures the change in the cost of purchased goods and services. INVESTMENT GRADE BONDS: Securities rated BBB and above by Standard & Poor's or Baa and above by Moody's Investor Services. Bonds rated below BBB or Baa are noninvestment grade. MARKET PRICE: The price of a share of a closed-end fund trading on a stock exchange. When the price is less than a fund's net asset value, the fund is trading at a discount. When the price is more than the NAV, the fund is trading at a premium. MATURITY DATE: The date a bond expires, usually at face value. 6 8 MATURITY LENGTH: The time it takes for a bond to mature. A bond issued in 1998 and maturing in 2008 is a 10-year bond. For corporate bonds, short-term bonds usually mature in five years or less, intermediate-term bonds mature in five to ten years, and long-term bonds mature after ten years. NET ASSET VALUE (NAV): The value of a mutual fund share, calculated by deducting a fund's liabilities from its total assets and dividing this amount by the number of common shares outstanding. YIELD: The annual rate of return on an investment, expressed as a percentage. For bonds and notes, the yield is the annual interest divided by the market price. YIELD SPREAD: The difference between the yields of different bonds, due to their different credit ratings or maturities. When yield spreads between bonds of different credit quality are narrow, there is less incentive to own the lower-quality bond. When yield spreads between bonds of different maturities are narrow, there is less incentive to own the bond with the longer maturity. In both cases, the investor is not being compensated for the additional risk. 7 9 PORTFOLIO OF INVESTMENTS June 30, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount (000) Description Coupon Maturity Market Value - ----------------------------------------------------------------------------------------- CORPORATE BONDS 92.0% AEROSPACE & DEFENSE 3.5% $1,700 Dyncorp.................................... 9.500% 03/01/07 $ 1,751,000 2,800 Sequa Corp................................. 9.625 10/15/99 2,891,000 500 Sequa Corp................................. 9.375 12/15/03 522,500 ------------ 5,164,500 ------------ AUTOMOBILE 2.7% 400 Aetna Industries, Inc...................... 11.875 10/01/06 434,000 1,150 Collins & Aikman Products Co............... 11.500 04/15/06 1,285,125 800 Insilco Corp............................... 10.250 08/15/07 840,000 550 MCII Holdings, Inc. (a).................... 12.0/15.0 11/15/02 521,125 400 Venture Holdings, Inc...................... 9.750 04/01/04 403,000 500 Venture Holdings, Inc...................... 9.500 07/01/05 507,500 ------------ 3,990,750 ------------ BUILDINGS & REAL ESTATE 3.1% 3,050 American Standard, Inc..................... 10.875 05/15/99 3,172,000 550 Kevco, Inc................................. 10.375 12/01/07 573,375 825 Webb (Del E.), Inc......................... 9.375 05/01/09 818,813 ------------ 4,564,188 ------------ CHEMICAL 4.1% 975 Acetex Corp................................ 9.750 10/01/03 1,004,250 660 American Pacific Corp., 144A Private Placement (b).............................. 9.250 03/01/05 683,100 2,404 ISP Holdings, Inc.......................... 9.750 02/15/02 2,548,240 1,850 Pioneer Americas Acquisition Corp.......... 9.250 06/15/07 1,831,500 ------------ 6,067,090 ------------ CONTAINERS, PACKAGING & GLASS 4.0% 1,400 Fonda Group, Inc........................... 9.500 03/01/07 1,358,000 1,310 Printpack, Inc............................. 10.625 08/15/06 1,186,500 1,400 Radnor Holdings, Inc....................... 10.000 12/01/03 1,463,000 1,350 S.D. Warren Co............................. 12.000 12/15/04 1,491,750 325 Sweetheart Cup, Inc........................ 9.625 09/01/00 323,375 ------------ 5,822,625 ------------
See Notes to Financial Statements 8 10 PORTFOLIO OF INVESTMENTS (CONTINUED) June 30, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount (000) Description Coupon Maturity Market Value - ----------------------------------------------------------------------------------------- CONTAINERS, PACKAGING & GLASS (CONTINUED) DIVERSIFIED/CONGLOMERATE MANUFACTURING 1.0% $1,350 Communications & Power Industries, Inc..... 12.000% 08/01/05 $ 1,518,750 ------------ ECOLOGICAL 0.6% 600 Envirosource, Inc.......................... 9.750 06/15/03 606,000 200 Norcal Waste Systems, Inc.................. 13.000 11/15/05 232,500 ------------ 838,500 ------------ ELECTRONICS 1.2% 550 Advanced Micro Devices, Inc. (c)........... 11.000 08/01/03 585,750 1,100 Decisionone Corp........................... 9.750 08/01/07 1,061,500 200 Decisionone Corp. (Including 200 common stock warrants) (a)........................ 0/11.500 08/01/08 120,500 ------------ 1,767,750 ------------ FINANCE 3.0% 1,750 Americredit Corp........................... 9.250 02/01/04 1,785,000 1,200 Contifinancial Corp........................ 8.375 08/15/03 1,233,000 1,250 Trizec Finance............................. 10.875 10/15/05 1,406,250 ------------ 4,424,250 ------------ GROCERY 4.1% 1,250 Fleming Cos., Inc.......................... 10.500 12/01/04 1,296,875 300 Fleming Cos., Inc.......................... 10.625 07/31/07 313,500 1,400 Jitney Jungle Stores America, Inc.......... 12.000 03/01/06 1,582,000 857 Pantry, Inc................................ 12.500 11/15/00 929,845 1,200 Pantry, Inc................................ 10.250 10/15/07 1,221,000 565 Shoppers Food Warehouse, Inc............... 9.750 06/15/04 624,325 ------------ 5,967,545 ------------ HEALTHCARE 4.3% 650 Fisher Scientific International, Inc....... 7.125 12/15/05 601,250 1,500 Fresenius Medical Care Capital Trust....... 9.000 12/01/06 1,552,500 275 Imagyn Medical Technologies, Inc........... 12.500 04/01/04 110,000 650 Paragon Health Network, Inc................ 9.500 11/01/07 663,000 1,950 Sun Healthcare Group, Inc., 144A Private Placement (b).............................. 9.500 07/01/07 1,993,875 1,300 Tenet Healthcare Corp...................... 8.625 12/01/03 1,371,500 ------------ 6,292,125 ------------
See Notes to Financial Statements 9 11 PORTFOLIO OF INVESTMENTS (CONTINUED) June 30, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount (000) Description Coupon Maturity Market Value - ----------------------------------------------------------------------------------------- HOTEL, MOTEL, INNS & GAMING 7.6% $1,800 Argosy Gaming Co........................... 13.250% 06/01/04 $ 2,025,000 300 Booth Creek Ski Holdings................... 12.500 03/15/07 326,250 50 Booth Creek Ski Holdings, 144A Private Placement (b).............................. 12.500 03/15/07 54,375 848 Boyd Gaming Corp........................... 9.250 10/01/03 879,800 1,130 Casino America............................. 12.500 08/01/03 1,276,900 825 Casino Magic Louisiana..................... 13.000 08/15/03 965,250 1,075 Coast Hotels & Casinos, Inc................ 13.000 12/15/02 1,241,625 1,550 Grand Casinos, Inc......................... 9.000 10/15/04 1,681,750 1,130 Hollywood Casino Corp...................... 12.750 11/01/03 1,237,350 1,410 Majestic Star Casino....................... 12.750 05/15/03 1,543,950 ------------ 11,232,250 ------------ LEISURE/ENTERTAINMENT 2.9% 2,750 Selmer, Inc................................ 11.000 05/15/05 3,011,250 1,185 Viacom International, Inc.................. 10.250 09/15/01 1,309,425 ------------ 4,320,675 ------------ MINING, STEEL, IRON & NON-PRECIOUS METAL 3.7% 1,130 Armco, Inc................................. 9.000 09/15/07 1,118,700 1,130 Kaiser Aluminum & Chemical, Inc............ 10.875 10/15/06 1,214,750 1,700 Renco Metals, Inc.......................... 11.500 07/01/03 1,819,000 350 Renco Steel Holdings, Inc., 144A Private Placement (b).............................. 10.875 02/01/05 351,750 950 WCI Steel, Inc............................. 10.000 12/01/04 973,750 ------------ 5,477,950 ------------ OIL & GAS 8.4% 1,550 Benton Oil & Gas, Inc...................... 11.625 05/01/03 1,646,875 1,130 Chesapeake Energy, Inc..................... 7.875 03/15/04 1,050,900 500 Crown Century Petroleum, Inc............... 10.875 02/01/05 528,750 1,700 Dawson Production Services, Inc............ 9.375 02/01/07 1,712,750 1,507 Giant Industries, Inc...................... 9.750 11/15/03 1,574,815 1,950 Giant Industries, Inc...................... 9.000 09/01/07 2,032,875 550 KCS Energy, Inc............................ 11.000 01/15/03 591,250 600 Petroleum Heat & Power, Inc................ 12.250 02/01/05 595,500 1,000 Pride Petroleum Services, Inc.............. 9.375 05/01/07 1,057,500
See Notes to Financial Statements 10 12 PORTFOLIO OF INVESTMENTS (CONTINUED) June 30, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount (000) Description Coupon Maturity Market Value - ----------------------------------------------------------------------------------------- OIL & GAS (CONTINUED) $ 850 Universal Compression, Inc., 144A Private Placement (a)(b)........................... 0/9.875% 02/15/08 $ 539,750 1,000 Wainoco Oil Co., 144A Private Placement (b)........................................ 9.125 02/15/06 1,007,500 ------------ 12,338,465 ------------ PAPER 0.6% 850 Doman Industries........................... 9.250 11/15/07 854,250 ------------ PERSONAL & NON-DURABLE 2.6% 1,950 Cole National Group, Inc................... 9.875 12/31/06 2,110,875 1,700 Revlon Consumer Products Corp.............. 8.625 02/01/08 1,708,500 ------------ 3,819,375 ------------ PRINTING, PUBLISHING & BROADCASTING 8.3% 450 CSC Holdings, Inc.......................... 8.125 08/15/09 480,375 1,200 CSC Holdings, Inc.......................... 10.500 05/15/16 1,413,000 1,400 Fundy Cable Ltd............................ 11.000 11/15/05 1,540,000 1,100 Grupo Televisa, Inc........................ 11.875 05/15/06 1,226,500 1,130 Helicon Group, Inc......................... 11.000 11/01/03 1,209,100 1,000 International Cabletel, Inc. (a)........... 0/12.750 04/15/05 882,500 750 International Cabletel, Inc. (a)........... 0/11.500 02/01/06 613,125 1,500 K-III Communications Corp.................. 10.250 06/01/04 1,608,750 700 Northland Cable Television, Inc............ 10.250 11/15/07 749,000 1,350 United International Holdings, Inc. (a).... 0/10.750 02/15/08 840,375 550 Valassis Communications, Inc............... 9.550 12/01/03 618,750 950 Young Broadcasting, Inc.................... 11.750 11/15/04 1,054,500 ------------ 12,235,975 ------------ PRODUCER MANUFACTURING 0.7% 200 Associated Materials, Inc.................. 9.250 03/01/08 204,000 500 Carpenter W.R., Inc........................ 10.625 06/15/07 527,500 250 Numatics, Inc., 144A Private Placement (b)........................................ 9.625 04/01/08 253,750 ------------ 985,250 ------------ RETAIL 3.2% 200 Big 5 Corp................................. 10.875 11/15/07 206,000 700 Community Distributors, Inc................ 10.250 10/15/04 728,000
See Notes to Financial Statements 11 13 PORTFOLIO OF INVESTMENTS (CONTINUED) June 30, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount (000) Description Coupon Maturity Market Value - ----------------------------------------------------------------------------------------- RETAIL (CONTINUED) $ 500 Hosiery Corp. America, Inc. (Including 500 common stock warrants)..................... 13.750% 08/01/02 $ 551,250 825 Musicland Group............................ 9.875 03/15/08 820,875 2,090 United Stationers Supply Co................ 12.750 05/01/05 2,382,600 ------------ 4,688,725 ------------ TELECOMMUNICATIONS 14.2% 1,200 Capstar Broadcasting Partners (d).......... 9.250 07/01/07 1,260,000 1,625 Centennial Cellular Corp................... 8.875 11/01/01 1,698,125 1,325 Centennial Cellular Corp................... 10.125 05/15/05 1,490,625 600 Century Communications Corp................ * 03/15/03 408,000 300 Century Communications Corp................ 9.500 03/01/05 325,500 1,300 Century Communications Corp................ 8.875 01/15/07 1,381,250 1,500 Echostar Communications Corp. (a).......... 0/12.875 06/01/04 1,466,250 1,100 EZ Communications, Inc..................... 9.750 12/01/05 1,212,750 825 Fonorola, Inc.............................. 12.500 08/15/02 913,688 1,300 Gray Communications Systems, Inc........... 10.625 10/01/06 1,430,000 700 GST USA, Inc. (a).......................... 0/13.875 12/15/05 568,750 600 Intermedia Communications of Florida, Inc. (Including 600 common stock warrants)...... 13.500 06/01/05 705,000 250 Intermedia Communications, Inc............. 8.875 11/01/07 256,875 1,230 Intermedia Communications, Inc., 144A Private Placement (b)...................... 8.600 06/01/08 1,248,450 1,100 McLeod USA, Inc............................ 9.250 07/15/07 1,144,000 1,650 Pegasus Communications Corp................ 9.625 10/15/05 1,699,500 1,300 Pinnacle Holdings, Inc., 144A Private Placement (a)(b)........................... 0/10.000 03/15/08 854,750 1,650 Rogers Cantel, Inc. (c).................... 9.375 06/01/08 1,722,187 950 Teleport Communications Group.............. 9.875 07/01/06 1,087,750 ------------ 20,873,450 ------------
See Notes to Financial Statements 12 14 PORTFOLIO OF INVESTMENTS (CONTINUED) June 30, 1998 (Unaudited) - --------------------------------------------------------------------------------
Par Amount (000) Description Coupon Maturity Market Value - ----------------------------------------------------------------------------------------- TEXTILES 2.9% $1,350 Dan River, Inc............................. 10.125% 12/15/03 $ 1,434,375 1,230 Pillowtex Corp............................. 10.000 11/15/06 1,319,175 950 Pillowtex Corp............................. 9.000 12/15/07 978,500 550 Scoville Fasteners, Inc.................... 11.250 11/30/07 567,875 ------------ 4,299,925 ------------ TRANSPORTATION 1.5% 550 International Shipholding Corp............. 9.000 07/01/03 563,750 1,700 U.S. Air, Inc.............................. 8.625 09/01/98 1,705,508 ------------ 2,269,258 ------------ UTILITIES 3.8% 2,150 AES Corp................................... 10.250 07/15/06 2,343,500 400 AES Corp................................... 8.375 08/15/07 405,000 450 El Paso Electric Co........................ 8.250 02/01/03 480,375 1,050 El Paso Electric Co........................ 8.900 02/01/06 1,176,000 171 Midland Cogeneration Venture............... 10.330 07/23/02 184,437 1,100 National Energy Group, Inc................. 10.750 11/01/06 1,001,000 ------------ 5,590,312 ------------ TOTAL CORPORATE BONDS 92.0%............................................... 135,403,933 ------------ GOVERNMENT OBLIGATIONS 1.1% 1,700 Republic of Korea.......................... 8.750 04/15/03 1,610,750 ------------ EQUITIES 1.4% Hosiery Corp. America, Inc., 144A Private Placement (500 common shares) (b)...................................................................... 26,250 Intermedia Communications of Florida, Inc., 144A Private Placement (500 common stock warrants) (b).......................................... 95,120 Time Warner, Inc. (1,692 preferred shares)............................... 1,890,810 Urohealth Systems, Inc., 144A Private Placement (675 common stock warrants) (b)............................................................ 7 ------------ TOTAL EQUITIES............................................................. 2,012,187 ------------
See Notes to Financial Statements 13 15 PORTFOLIO OF INVESTMENTS (CONTINUED) June 30, 1998 (Unaudited) - --------------------------------------------------------------------------------
Description Market Value - ----------------------------------------------------------------------------------------- TOTAL LONG-TERM INVESTMENTS 94.5% (Cost $136,642,820)...................................................... $139,026,870 REPURCHASE AGREEMENT 5.5% J.P. Morgan Securities (U.S. Treasury Note, $6,084,000 par, 12.375% coupon, due 05/15/04, dated 06/30/98, to be sold on 07/01/98 at $8,053,230) (Cost $8,052,000)........................................................ 8,052,000 ------------ TOTAL INVESTMENTS 100.0% (Cost $144,694,820)...................................................... 147,078,870 LIABILITIES IN EXCESS OF OTHER ASSETS 0.0%%............................... (6,766) ------------ NET ASSETS 100.0%......................................................... $147,072,104 ============
*Zero coupon bond (a) Security is a "step-up" bond where the coupon increases or steps up at a predetermined rate. (b) 144A securities are those which are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold in transactions exempt from registration which are normally transactions with qualified institutional buyers. (c) Securities purchased on a when issued or delayed delivery basis. (d) Assets segregated as collateral for when issued or delayed delivery purchase commitments. See Notes to Financial Statements 14 16 STATEMENT OF ASSETS AND LIABILITIES June 30, 1998 (Unaudited) - -------------------------------------------------------------------------------- ASSETS: Total Investments (Cost $144,694,820)....................... $147,078,870 Cash........................................................ 389 Interest Receivable ........................................ 2,934,372 Other....................................................... 2,357 ------------ Total Assets.......................................... 150,015,988 ------------ LIABILITIES: Payables: Investments Purchased..................................... 2,342,685 Income Distributions--Common and Preferred Shares......... 303,578 Investment Advisory Fee................................... 90,642 Affiliates................................................ 10,136 Accrued Expenses............................................ 107,704 Trustees' Deferred Compensation and Retirement Plans........ 89,139 ------------ Total Liabilities..................................... 2,943,884 ------------ NET ASSETS.................................................. $147,072,104 ============ NET ASSETS CONSIST OF: Preferred Shares ($.01 par value, 1,000,000 shares authorized, 588 shares outstanding with liquidation preference of $100,000 per share)......................... $ 58,800,000 ------------ Common Shares ($.01 par value with an unlimited number of shares authorized, 13,710,760 shares issued and outstanding)................. 137,108 Paid in Surplus............................................. 124,423,989 Net Unrealized Appreciation................................. 2,384,050 Accumulated Undistributed Net Investment Income............. 970,336 Accumulated Net Realized Loss............................... (39,643,379) ------------ Net Assets Applicable to Common Shares................ 88,272,104 ------------ NET ASSETS.................................................. $147,072,104 ============ NET ASSET VALUE PER COMMON SHARE ($88,272,104 divided by 13,710,760 shares outstanding)....................................... $ 6.44 ============
See Notes to Financial Statements 15 17 STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1998 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME: Interest.................................................... $ 6,678,562 Dividends................................................... 86,715 Other....................................................... 322,655 ----------- Total Income............................................ 7,087,932 ----------- EXPENSES: Investment Advisory Fee..................................... 549,956 Preferred Share Maintenance................................. 91,629 Custody..................................................... 10,690 Trustees' Fees and Expenses................................. 9,427 Legal....................................................... 5,506 Other....................................................... 124,791 ----------- Total Expenses.......................................... 791,999 ----------- NET INVESTMENT INCOME....................................... $ 6,295,933 =========== REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Gain........................................... $ 1,274,266 ----------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... 3,948,231 End of the Period......................................... 2,384,050 ----------- Net Unrealized Depreciation During the Period............... (1,564,181) ----------- NET REALIZED AND UNREALIZED LOSS............................ $ (289,915) =========== NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 6,006,018 ===========
See Notes to Financial Statements 16 18 STATEMENT OF CHANGES IN NET ASSETS For the Six Months Ended June 30, 1998 and the Year Ended December 31, 1997 (Unaudited) - --------------------------------------------------------------------------------
Six Months Ended Year Ended June 30, 1998 December 31, 1997 - ------------------------------------------------------------------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income................................. $ 6,295,933 $ 12,749,953 Net Realized Gain..................................... 1,274,266 2,448,838 Net Unrealized Depreciation During the Period......... (1,564,181) (652,535) ----------- ------------- Change in Net Assets from Operations.................. 6,006,018 14,546,256 ----------- ------------- Distributions from Net Investment Income: Common Shares....................................... (4,812,215) (9,624,454) Preferred Shares.................................... (1,621,679) (3,230,780) ----------- ------------- Total Distributions................................... (6,433,894) (12,855,234) ----------- ------------- NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES... (427,876) 1,691,022 NET ASSETS: Beginning of the Period............................... 147,499,980 145,808,958 ----------- ------------- End of the Period (Including accumulated undistributed net investment income of $970,336 and $1,108,297, respectively)....................................... $147,072,104 $147,499,980 ============ ============
See Notes to Financial Statements 17 19 FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for one common share of the Trust outstanding throughout the periods indicated. (Unaudited) - --------------------------------------------------------------------------------
Six Months Ended ------------------------------------- June 30, 1998 1997 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Net Asset Value, Beginning of the Period (a)............................ $ 6.469 $6.346 $6.186 $5.623 $6.735 ------- ------- ------- ------- ------- Net Investment Income................... .459 .930 .946 .982 1.002 Net Realized and Unrealized Gain/Loss... (.021) .131 .147 .537 (.975) ------- ------- ------- ------- ------- Total from Investment Operations........ .438 1.061 1.093 1.519 .027 ------- ------- ------- ------- ------- Less Distributions from Net Investment Income: Paid to Common Shareholders........... .351 .702 .702 .702 .954 Common Share Equivalent of Distributions Paid to Preferred Shareholders........................ .118 .236 .231 .254 .185 ------- ------- ------- ------- ------- Total Distributions..................... .469 .938 .933 .956 1.139 ------- ------- ------- ------- ------- Net Asset Value, End of the Period...... $ 6.438 $6.469 $6.346 $6.186 $5.623 ======= ======= ======= ======= ======= Market Price Per Share at End of the Period................................ $ 7.000 $7.375 $6.750 $6.375 $5.500 Total Investment Return at Market Price (b)............................. (0.45%)* 20.29% 17.34% 29.17% (23.22%) Total Return at Net Asset Value (c)..... 5.04%* 13.69% 14.86% 23.70% (2.54%) Net Assets at End of the Period (In millions)............................. $ 147.1 $147.5 $145.8 $143.6 $135.9 Ratio of Expenses to Average Net Assets Applicable to Common Shares**.................... 1.79% 1.76% 1.87% 1.92% 1.96% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (d)..................... 10.58% 10.90% 11.58% 12.16% 13.31% Portfolio Turnover...................... 43%* 102% 92% 119% 110% * Non-Annualized ** Ratio of Expenses to Average Net Assets Including Preferred Shares.... 1.08% 1.05% 1.11% 1.12% 1.16%
(a) Net Asset Value at January 26, 1989 of $9.300 is adjusted for common and preferred share offering costs of $.198 per share. (b) Total Investment Return at Market Price reflects the change in market value of the common shares for the period indicated with reinvestment of dividends in accordance with the Trust's dividend reinvestment plan. (c) Total Return at Net Asset Value (NAV) reflects the change in value of the Trust's assets with reinvestment of dividends based on NAV. (d) Net Investment Income is adjusted for the common share equivalent of distributions paid to preferred shareholders. N/A = Not Applicable 18 20 - --------------------------------------------------------------------------------
January 26, 1989 (Commencement Year Ended December 31, of Investment - ------------------------------------------- Operations) to 1993 1992 1991 1990 December 31, 1989 - ----------------------------------------------------------------------- $6.228 $5.924 $4.603 $7.488 $9.102 ------ ------ ------ ------ ------ 1.109 1.206 1.150 1.566 1.387 .526 .174 1.282 (2.866) (1.653) ------ ------ ------ ------ ------ 1.635 1.380 2.432 (1.300) (.266) ------ ------ ------ ------ ------ .990 .908 .840 1.083 1.020 .138 .168 .271 .502 .328 ------ ------ ------ ------ ------ 1.128 1.076 1.111 1.585 1.348 ------ ------ ------ ------ ------ $6.735 $6.228 $5.924 $4.603 $7.488 ====== ====== ====== ====== ====== $8.125 $7.250 $6.875 $4.125 $7.375 26.12% 18.67% 92.24% (32.91%) (17.27%)* 25.46% 21.36% 48.77% (26.20%) (15.58%)* $151.1 $144.2 $140.0 $121.9 $187.7 1.72% 1.87% 2.51% 2.10% 1.56% 14.66% 16.48% 15.86% 17.24% 13.20% 99% 109% 78% 57% 33%* 1.04% 1.11% 1.42% 1.90% N/A
See Notes to Financial Statements 19 21 NOTES TO FINANCIAL STATEMENTS June 30, 1998 (Unaudited) - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen American Capital 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, consistent with preservation of capital, by investing in a portfolio of medium or lower grade fixed-income securities, or non-rated securities of comparable quality. 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 generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION--Investments are stated at value using market quotations, prices provided by market makers or estimates 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. 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 maintain, in a segregated account with its custodian, assets having an aggregate value at least equal to the amount of the when issued or delayed delivery purchase commitments until payment is made. 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. 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. 20 22 NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1998 (Unaudited) - -------------------------------------------------------------------------------- C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond premium and original issue discount are 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. 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, 1997, the Trust had an accumulated capital loss carry forward for tax purposes of $40,889,857 which expires between December 31, 1998 and December 31, 2003. Of this amount $18,764,165 will expire in 1998. Net realized gains or losses differ for financial reporting and tax purposes as a result of losses from wash sales. At June 30, 1998, for federal income tax purposes, cost for long- and short-term investments is $144,694,820 the aggregate gross unrealized appreciation is $3,370,194 and the aggregate gross unrealized depreciation is $986,144, resulting in net unrealized appreciation of $2,384,050. 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. 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Investment Advisory Corp. (the "Adviser") will provide investment advice and facilities to the Trust for an annual fee payable monthly of .75% of the average net assets of the Trust. For the six months ended June 30, 1998, the Trust recognized expenses of approximately $4,400 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. For the six months ended June 30, 1998, the Trust recognized expenses of approximately $24,100 representing Van Kampen Funds Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing accounting and legal services to the Trust. 21 23 NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1998 (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 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 $66,058,941 and $56,486,494, respectively. 4. AUCTION MARKET PREFERRED SHARES The Trust has outstanding 588 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, 1998, was 5.475%. During the six months ended June 30, 1998, the rates ranged from 5.400% to 5.700%. 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. 22 24 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. 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 23 25 VAN KAMPEN FUNDS EQUITY FUNDS Domestic Aggressive Equity Aggressive Growth American Value Comstock Emerging Growth Enterprise Equity Growth Equity Income Growth Growth and Income Harbor Pace Real Estate Securities U.S. Real Estate Utility Value International/Global Asian Growth Emerging Markets Global Equity Global Equity Allocation Global Managed Assets International Magnum Latin American FIXED-INCOME FUNDS Income Corporate Bond Global Fixed Income Global Government Securities Government Securities High Income Corporate Bond High Yield High Yield & Total Return Limited Maturity Government Short-Term Global Income Strategic Income U.S. Government U.S. Government Trust for Income Worldwide High Income Tax Exempt Income California Insured Tax Free Florida Insured Tax Free Income High Yield Municipal Insured Tax Free Income Intermediate Term Municipal Income Municipal Income New York Tax Free Income Pennsylvania Tax Free Income Tax Free High Income Capital Preservation and Senior Loan Fund Prime Rate Income Trust Reserve Senior Floating Rate Tax Free Money To find out more about any of these funds, ask your financial adviser for a prospectus, which contains more complete information, including sales charges, risks, and expenses. Please read it carefully before you invest or send money. To view a current Van Kampen fund prospectus or to receive additional fund information, choose from one of the following: - visit our web site at WWW.VAN-KAMPEN.COM -- to view prospectuses, select Investors' Place, then Download a Prospectus - call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time (Telecommunications Device for the Deaf users, call 1-800-421-2833) - e-mail us by visiting WWW.VAN-KAMPEN.COM and selecting Investors' Place 24 26 VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST BOARD OF TRUSTEES DAVID C. ARCH ROD DAMMEYER HOWARD J KERR DENNIS J. MCDONNELL*--Chairman STEVEN MULLER THEODORE A. MYERS DON G. POWELL* HUGO F. SONNENSCHEIN WAYNE W. WHALEN* OFFICERS DENNIS J. MCDONNELL* President RONALD A. NYBERG* Vice President and Secretary EDWARD C. WOOD, III* Vice President and Chief Financial Officer CURTIS W. MORELL* Vice President and Chief Accounting Officer JOHN L. SULLIVAN* Treasurer TANYA M. LODEN* Controller PETER W. HEGEL* Vice President INVESTMENT ADVISER VAN KAMPEN INVESTMENT ADVISORY CORP. One Parkview Plaza Oakbrook Terrace, Illinois 60181 CUSTODIAN AND TRANSFER AGENT STATE STREET BANK AND TRUST COMPANY 225 Franklin Street P.O. Box 1713 Boston, Massachusetts 02105 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT ACCOUNTANTS KPMG PEAT MARWICK LLP Peat Marwick Plaza 303 East Wacker Drive Chicago, Illinois 60601 * "Interested" persons of the Trust, as defined in the Investment Company Act of 1940. (C) Van Kampen Funds Inc., 1998. All rights reserved. (SM) denotes a service mark of Van Kampen Funds Inc. 25 EX-27 2 FDS
6 11 HIGH INCOME TRUST 1 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 144,694,820 147,078,870 2,934,372 2,357 389 150,015,988 2,342,685 0 601,199 2,943,884 58,800,000 124,561,097 13,710,760 13,710,760 970,336 0 (39,643,379) 0 2,384,050 147,072,104 86,715 6,678,562 322,655 (791,999) 6,295,933 1,274,266 (1,564,181) 6,006,018 0 (6,433,894) 0 0 0 0 0 (427,876) 1,108,297 (40,917,645) 0 0 549,956 0 791,999 89,102,406 6.469 0.459 (0.021) (0.469) 0.000 0.000 6.438 1.79 0 0
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