-----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, PejO1FY7qkUwEpYQgc9cqkZvZLU1deUS3nBy0IsI6fmGZ5X+V8d/j6YfrJoXz4rL FFHCRRPzjxsuR0LBbkzdJQ== 0000950137-07-014789.txt : 20070928 0000950137-07-014789.hdr.sgml : 20070928 20070928103706 ACCESSION NUMBER: 0000950137-07-014789 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070731 FILED AS OF DATE: 20070928 DATE AS OF CHANGE: 20070928 EFFECTIVENESS DATE: 20070928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN SENIOR LOAN FUND CENTRAL INDEX KEY: 0000853180 IRS NUMBER: 366911789 STATE OF INCORPORATION: MA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-05845 FILM NUMBER: 071140952 BUSINESS ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC. STREET 2: 522 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 212-296-6963 MAIL ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC. STREET 2: 522 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN PRIME RATE INCOME TRUST DATE OF NAME CHANGE: 19981006 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST DATE OF NAME CHANGE: 19951018 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN MERRITT PRIME RATE INCOME TRUST DATE OF NAME CHANGE: 19920703 N-CSR 1 c17994nvcsr.txt CERTIFIED SHAREHOLDER REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-5845 Van Kampen Senior Loan Fund (Exact name of registrant as specified in charter) 522 Fifth Avenue, New York, New York 10036 (Address of principal executive offices) (Zip code) Ronald Robison 522 Fifth Avenue, New York, New York 10036 (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: 7/31 Date of reporting period: 7/31/07 Item 1. Report to Shareholders. The Fund's annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: Welcome, Shareholder In this report, you'll learn about how your investment in Van Kampen Senior Loan Fund performed during the annual period. The portfolio management team will provide an overview of the market conditions and discuss some of the factors that affected investment performance during the reporting period. In addition, this report includes the fund's financial statements and a list of fund investments as of July 31, 2007. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B, C, IB OR IC SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. TO OBTAIN AN ADDITIONAL PROSPECTUS, CONTACT YOUR FINANCIAL ADVISOR OR DOWNLOAD ONE AT VANKAMPEN.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND THAT THE VALUE OF THE FUND SHARES MAY THEREFORE BE LESS THAN WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS FUND. AN INVESTMENT IN SENIOR LOANS IS SUBJECT TO CERTAIN RISKS SUCH AS LOAN DEFAULTS AND ILLIQUIDITY DUE TO INSUFFICIENT COLLATERAL BACKING.
--------------------------------------------------------------------------------------- NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE --------------------------------------------------------------------------------------- NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT ---------------------------------------------------------------------------------------
Performance Summary as of 7/31/07 CURRENT DISTRIBUTIONS (JULY 31, 1997-- JULY 31, 2007) (LINE GRAPH)
VAN KAMPEN SENIOR LOAN FUND (CLASS IB) 3 MONTH T-BILL (GENERIC) --------------------------- ------------------------ 7/25/1997 6.8835 5.3000 8/25/1997 6.7952 5.2800 9/25/1997 6.7952 5.1600 10/24/1997 6.7952 5.2600 11/25/1997 6.7884 5.2600 12/24/1997 6.7884 5.4100 12/31/1997 6.7884 5.4100 1/23/1998 6.7884 5.2400 2/25/1998 6.7816 5.3800 3/25/1998 6.7884 5.1800 4/24/1998 6.7884 5.0300 5/22/1998 6.7884 5.0700 6/25/1998 6.7748 5.1400 7/24/1998 6.7884 5.1300 8/25/1998 6.8089 4.8800 9/25/1998 6.8157 4.4000 10/23/1998 6.4750 4.3600 11/25/1998 6.1807 4.5300 12/24/1998 6.1994 4.5000 12/31/1998 6.2497 4.5000 1/25/1999 6.2119 4.5000 2/25/1999 6.1994 4.7200 3/25/1999 6.2119 4.5200 4/23/1999 6.1994 4.5800 5/25/1999 6.2245 4.6800 6/25/1999 6.4397 4.8300 7/23/1999 6.4848 4.8000 8/25/1999 6.5510 5.0200 9/24/1999 6.5644 4.9100 10/25/1999 6.5846 5.1500 11/24/1999 6.5914 5.3700 12/23/1999 6.5914 5.3900 12/31/1999 6.6511 5.3900 1/25/2000 6.6924 5.7700 2/25/2000 6.9592 5.8600 3/24/2000 7.1369 5.9500 4/25/2000 7.2251 5.9100 5/25/2000 7.2479 5.6900 6/23/2000 7.5057 5.9400 7/25/2000 7.5710 6.3100 8/25/2000 7.6030 6.4000 9/25/2000 7.9800 6.3000 10/25/2000 8.3117 6.4900 11/24/2000 8.4026 6.2900 12/22/2000 8.5333 5.9800 12/29/2000 8.5523 5.9800 1/25/2001 8.6292 5.0500 2/23/2001 8.7372 4.9100 3/23/2001 8.0914 4.3300 4/25/2001 7.1972 3.9200 5/25/2001 6.7517 3.6400 6/25/2001 6.5353 3.6800 7/25/2001 6.2923 3.5500 8/24/2001 5.9653 3.3900 9/25/2001 5.7960 2.3800 10/25/2001 5.2777 2.0200 11/23/2001 4.7107 1.7300 12/24/2001 4.4658 1.7300 12/31/2001 4.1777 1.7300 1/25/2002 4.1877 1.7600 2/25/2002 3.9661 1.7600 3/25/2002 3.9281 1.7800 4/25/2002 3.9046 1.7700 5/24/2002 3.9234 1.7300 6/25/2002 3.9517 1.6900 7/25/2002 4.1481 1.7000 8/23/2002 4.3158 1.6800 9/25/2002 4.3266 1.5500 10/25/2002 4.4785 1.4500 11/25/2002 4.4785 1.2100 12/24/2002 4.2481 1.1900 12/31/2002 4.0983 1.1900 1/24/2003 4.0930 1.1700 2/25/2003 4.1089 1.1900 3/25/2003 4.0983 1.1100 4/25/2003 3.8127 1.1100 5/23/2003 3.7509 1.1000 6/25/2003 3.6732 0.8500 7/25/2003 3.5405 0.9400 8/25/2003 3.3629 0.9700 9/25/2003 3.3349 0.9400 10/24/2003 3.2881 0.9500 11/25/2003 3.2425 0.9300 12/24/2003 3.2313 0.9200 12/31/2003 3.2202 0.9200 1/23/2004 3.1873 0.9100 2/25/2004 3.0814 0.9400 3/25/2004 3.0607 0.9400 4/23/2004 2.9765 0.9600 5/25/2004 2.9832 1.0600 6/25/2004 2.9633 1.2600 7/23/2004 2.9600 1.4300 8/25/2004 2.9633 1.5800 9/24/2004 3.1600 1.7100 10/25/2004 3.3163 1.9000 11/24/2004 3.3053 2.2300 12/23/2004 3.5022 2.2200 12/31/2004 3.7137 2.2200 1/25/2005 3.7178 2.4600 2/25/2005 3.8905 2.7500 3/24/2005 3.8862 2.7700 4/25/2005 3.8820 2.8900 5/25/2005 4.1584 2.9500 6/24/2005 4.4044 3.1200 7/25/2005 4.3947 3.4000 8/25/2005 4.6073 3.5000 9/23/2005 4.7789 3.5400 10/25/2005 4.7894 3.8800 11/25/2005 4.9007 3.9400 12/23/2005 5.2508 4.0800 12/30/2005 5.3042 4.0800 1/25/2006 5.2566 4.4700 2/24/2006 5.4846 4.6200 3/24/2006 5.9471 4.6100 4/25/2006 5.9537 4.7600 5/25/2006 6.2781 4.8400 6/23/2006 6.6120 4.9800 7/25/2006 6.6193 5.0700 8/25/2006 6.9103 5.0400 9/25/2006 7.8405 4.8800 10/25/2006 7.8492 5.0800 11/24/2006 8.0488 5.0200 12/22/2006 8.0488 5.0100 12/29/2006 8.1336 5.0100 1/25/2007 8.0310 5.1100 2/23/2007 7.9693 5.1300 3/23/2007 7.9868 5.0300 4/25/2007 7.5991 4.8500 5/25/2007 7.5908 4.7400 6/25/2007 7.4620 4.8100 7/25/2007 7.6302 4.9500
Data provided for the fund reflects distributions that occur on the 25th of each month or the prior business day if the 25th falls on a weekend or holiday, whereas benchmark data is as of the month end. *Source: Bloomberg
IB SHARES IC SHARES A SHARES B SHARES C SHARES SINCE SINCE since 2/18/2005 since 2/18/2005 since 2/18/2005 10/4/1989 6/13/2003 - ------------------------------------------------------------------------------------------------------------ AVERAGE W/MAX W/MAX W/MAX ANNUAL W/O 3.25% W/O 3.00% W/O 1.00% TOTAL SALES SALES SALES SALES SALES SALES W/O SALES W/O SALES RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES CHARGES Since Inception 4.17% 2.76% 3.41% 2.85% 3.41% 3.41% 5.79% 6.62% 10-year -- -- -- -- -- -- 4.36 -- 5-year -- -- -- -- -- -- 6.40 -- 1-year 4.06 0.70 3.29 0.41 3.29 2.33 4.05 4.06 - ------------------------------------------------------------------------------------------------------------
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 AND PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. The returns shown in this report do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance of share classes will vary due to differences in sales charges and expenses. Average annual total return with sales charges includes payment of the maximum sales charge of 3.25 percent for Class A shares, an early withdrawal charge of 3.00 percent for Class B shares (in year one and declining to zero after year five), an early withdrawal charge of 1.00 percent for Class C shares in year one, and combined distribution fees and service fees of up to 0.25 percent for Class A shares and up to 1.00 percent for Class B and C shares and a service fee of up to 0.15 percent for Class IC shares. Effective 2/18/05, contingent deferred sales charges for Class IB and Class IC shares have been terminated. New investments are not available in Class IB and IC shares. Figures shown above assume reinvestment of all distributions. The fund's adviser has waived or reimbursed fees and expenses from time to time; absent such waivers/reimbursements, the fund's returns would have been lower. 1 Fund Report FOR THE 12-MONTH PERIOD ENDED JULY 31, 2007 MARKET CONDITIONS The senior loan market benefited from strong fundamental and technical factors throughout most of the 12-month reporting period. Economic growth was generally solid, slowing somewhat in the first quarter of this year, but accelerating again in the second quarter. Inflation remained contained and the Federal Open Market Committee (the "Fed"), while still concerned about potential inflation risks, held the target federal funds rate steady at 5.25 percent, where it has stood since June 2006. In terms of the credit markets, corporate productivity increased, cash flows continued to be strong, and borrowing costs remained low. In addition, the overall credit quality in the market improved and default rates remained low. Together, these factors turned out to be quite supportive of the senior loan market. New-issue senior loan volume climbed throughout the period, setting new records in each consecutive calendar quarter to reach an unprecedented $204 billion in the second quarter of 2007. As a result, supply for the first half of 2007 totaled $390 billion, a 55 percent increase over the first half of 2006. Helping to fuel this heavy supply was a high amount of merger and acquisition and private equity activity during the period, as well as record-setting second- lien loan volume. The record supply was met by robust demand, as institutional investors and traditional high-yield investors continued to be increasingly active in the market. In fact, demand for senior loans surpassed the available supply for much of the period, causing yield spreads to narrow from December 2006 through the end of June 2007. At that time, however, volatility in the market rose and the demand/supply dynamics changed. In our view, the increased volatility in the last month of the period was primarily driven by technical factors in the market, as opposed to credit fundamentals. The first of these factors is the size of the forward calendar (transactions announced but not yet syndicated in the market). As of the end of the reporting period, the forward calendar was rather large, which likely left some buyers waiting on the sidelines until this supply comes to market. The second and larger factor contributing to the recent volatility, in our opinion, is an overall tightening of lending standards and an increasing demand for both protection and higher compensation by investors. The well-publicized news of stress in other segments of the credit markets--most notably the subprime mortgage market--prompted investors to re-price risk across all credit markets. While the senior loan market is completely separate from the subprime mortgage market, the negative news in the subprime mortgage arena has caused lenders in the senior loan market to tighten their credit standards and to demand higher spreads over LIBOR as compensation for assuming any lending risk. 2 While the recent volatility has not been pleasant, we are pleased to see lenders tighten their underwriting standards, and believe this is a healthy event for the market as it may ultimately serve to improve credit quality and the risk/reward relationship for loans. We have seen signs of greater stability in the senior loan market in the weeks immediately following the end of the reporting period, but all money markets remain relatively nervous. Overall, the fundamentals of the loan market remain strong, credit quality continues to be robust, and default rates continue to be at historic low levels. PERFORMANCE ANALYSIS The Fund returned 4.06 percent for the 12 months ended July 31, 2007 (Class A shares, unadjusted for sales charges). TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED JULY 31, 2007
- ------------------------------------------------------------- CLASS A CLASS B CLASS C CLASS IB CLASS IC 4.06% 3.29% 3.29% 4.05% 4.06% - -------------------------------------------------------------
The performance for the five share classes varies because each has different expenses. The Fund's total return figures assume the reinvestment of all distributions, but do not reflect the deduction of any applicable sales charges. Such costs would lower performance. Past performance is no guarantee of future results. See Performance Summary for standardized performance information. We continued to adhere to our research-intensive investment process, employing a bottom-up asset selection process driven by thorough analysis of individual company fundamentals. We do, however, analyze overall sector and industry trends as well and generally avoid those which we believe are vulnerable to cyclical economic downturns. For example, we have taken a cautious approach to the auto and airline industries during the period because of their susceptibility to high fuel prices. Given the fall off in the residential housing market, we have also generally avoided investments in the building and real estate sectors. We have been very selective regarding investments in the healthcare industry, particularly those assets with inherent reimbursement and regulatory risks. Certain healthcare providers, however, are not exposed to these risks. One such provider is a large hospital which, in our view, has a strong management team and is well secured. We added this company to the portfolio during the period, which resulted in an increase in the portfolio's exposure to the healthcare sector. Otherwise, our bottom-up security selection process led to few changes in the Fund's healthcare weightings. As of the end of the period, the printing and publishing, beverage, food and tobacco, healthcare, and entertainment and leisure sectors continued to be represented in the Fund's top holdings. The Fund benefited from our use of leverage during the period. Leverage involves borrowing at a floating short-term rate and reinvesting the proceeds at a higher rate. We used this strategy on an ongoing basis in an effort to enhance 3 the Fund's dividend. Unlike other fixed-income asset classes, using leverage in conjunction with senior loans does not involve the same degree of risk from rising short-term interest rates since the income from senior loans adjusts to changes in interest rates, as do the rates which determine the Fund's borrowing costs. (Similarly, should short-term rates fall, borrowing costs would also decline. The use of leverage may increase the Fund's volatility.) We might reduce leverage in periods of weaker credit quality conditions to prevent magnifying erosion of the Fund's net asset value. Over the course of the reporting period, our use of leverage served to improve the Fund's current yield. In closing, it is important to note that the portfolio's overall credit quality remains strong and its default rate is well below the market average, which is at an all-time low. Going forward, we will continue to focus on seeking to maintain a high quality, portfolio of issuers with stable cash flows, strong management teams, and collateral value sufficient to help provide a solid second way out in a default scenario. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. 4
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 7/31/07 Printing & Publishing 10.3% Beverage, Food & Tobacco 8.5 Healthcare 8.2 Entertainment & Leisure 6.4 Chemicals, Plastics & Rubber 5.8 Broadcasting--Cable 5.7 Business Equipment & Services 5.5 Hotels, Motels, Inns & Gaming 5.2 Utilities 4.4 Buildings & Real Estate 3.8 Electronics 3.6 Non-Durable Consumer Products 3.4 Automotive 3.2 Finance 3.0 Containers, Packaging & Glass 3.0 Paper & Forest Products 2.9 Broadcasting--Television 2.8 Ecological 2.8 Aerospace/Defense 2.7 Insurance 2.6 Restaurants & Food Service 2.5 Medical Products & Services 2.3 Construction Material 2.3 Retail--Stores 1.9 Natural Resources 1.8 Broadcasting--Radio 1.6 Textiles & Leather 1.5 Telecommunications--Local Exchange Carriers 1.5 Diversified Manufacturing 1.4 Telecommunications--Wireless 1.3 Health & Beauty 1.3 Machinery 1.0 Home & Office Furnishings, Housewares & Durable Consumer Products 0.9 Pharmaceuticals 0.8 Personal & Miscellaneous Services 0.8 Retail--Specialty 0.8 Education & Child Care 0.6 Telecommunications--Long Distance 0.6 Banking 0.4 Transportation--Cargo 0.4 Transportation-Rail Manufacturing 0.4 Grocery 0.3 Retail--Office Products 0.3 Broadcasting--Diversified 0.3 Farming & Agriculture 0.3 Transportation--Personal 0.2
(continued on next page)
5
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 7/31/07 (continued from previous page) Durable Consumer Products 0.1 Retail--Oil & Gas 0.1 Mining, Steel, Iron & Non-Precious Metals 0.0* ----- Total Long-Term Investments 121.5 Total Short-Term Investments 2.3 ----- Total Investments 123.8 Borrowings (22.0) Liabilities in Excess of Other Assets (1.8) ----- Net Assets 100.0%
* Amount is less than 0.1% Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned or securities in the sectors shown above. Summary of investments by industry classification percentages are as a percentage of net assets. Securities are classified by sectors that represent broad groupings of related industries. 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. 6 FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS Each Van Kampen fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Van Kampen also delivers the semiannual and annual reports to fund shareholders, and makes these reports available on its public Web site, www.vankampen.com. In addition to the semiannual and annual reports that Van Kampen delivers to shareholders and makes available through the Van Kampen public Web site, each fund files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on Form N-Q. Van Kampen does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Van Kampen public Web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's Web site, http://www.sec.gov. You may also review and copy them at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102. You may obtain copies of a fund's fiscal quarter filings by contacting Van Kampen Client Relations at (800) 847-2424. 7 HOUSEHOLDING NOTICE To reduce Fund expenses, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents to investors who share an address, even if the accounts are registered under different names. The Fund's prospectuses and shareholder reports (including annual privacy notices) will be delivered to you in this manner indefinitely unless you instruct us otherwise. You can request multiple copies of these documents by either calling (800) 341-2911 or writing to Van Kampen Investor Services at 1 Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor Services has received your instructions, we will begin sending individual copies for each account within 30 days. PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD You may obtain a copy of the Fund's Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 847-2424 or by visiting our Web site at www.vankampen.com. It is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov. You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting our Web site at www.vankampen.com. This information is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov. 8 Expense Example As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments of Class A Shares and contingent deferred sales charges on redemptions of Class B and Class C Shares; and redemption fees; (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. This example is intended to help you understand your ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 2/1/07 - 7/31/07. ACTUAL EXPENSE The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or contingent deferred sales charges or redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* ------------------------------------------------ 2/1/07 7/31/07 2/1/07-7/31/07 Class A Actual...................................... $1,000.00 $ 994.50 $12.21 Hypothetical................................ 1,000.00 1,012.55 12.33 (5% annual return before expenses) Class B Actual...................................... 1,000.00 991.91 16.00 Hypothetical................................ 1,000.00 1,008.73 16.14 (5% annual return before expenses) Class C Actual...................................... 1,000.00 991.92 15.90 Hypothetical................................ 1,000.00 1,008.83 16.04 (5% annual return before expenses) Class IB Actual...................................... 1,000.00 994.50 12.31 Hypothetical................................ 1,000.00 1,012.45 12.42 (5% annual return before expenses) Class IC Actual...................................... 1,000.00 995.62 12.32 Hypothetical................................ 1,000.00 1,012.45 12.42 (5% annual return before expenses)
* Expenses are equal to the Fund's annualized expense ratio of 2.47%, 3.24%, 3.22%, 2.49% and 2.49%, for Class A, B, C, IB, and IC Shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). These expense ratios reflect an expense waiver. Assumes all dividends and distributions were reinvested. 9 Investment Advisory Agreement Approval Both the Investment Company Act of 1940 and the terms of the Fund's investment advisory agreement require that the investment advisory agreement between the Fund and its investment adviser be approved annually both by a majority of the Board of Trustees and by a majority of the independent trustees voting separately. At meetings held on April 17, 2007 and May 30, 2007, the Board of Trustees, and the independent trustees voting separately, considered and ultimately determined that the terms of the investment advisory agreement are fair and reasonable and approved the continuance of the investment advisory agreement as being in the best interests of the Fund and its shareholders. In making its determination, the Board of Trustees considered materials that were specifically prepared by the investment adviser at the request of the Board and Fund counsel, and by an independent provider of investment company data contracted to assist the Board, relating to the investment advisory agreement review process. The Board also considered information received periodically about the portfolio, performance, the investment strategy, portfolio management team and fees and expenses of the Fund. The Board of Trustees considered the investment advisory agreement over a period of several months and the trustees held sessions both with the investment adviser and separate from the investment adviser in reviewing and considering the investment advisory agreement. In approving the investment advisory agreement, the Board of Trustees considered, among other things, the nature, extent and quality of the services provided by the investment adviser, the performance, fees and expenses of the Fund compared to other similar funds and other products, the investment adviser's expenses in providing the services and the profitability of the investment adviser and its affiliated companies. The Board of Trustees considered the extent to which any economies of scale experienced by the investment adviser are shared with the Fund's shareholders, and the propriety of existing and alternative breakpoints in the Fund's investment advisory fee schedule. The Board of Trustees considered comparative advisory fees of the Fund and other investment companies and/or other products at different asset levels, and considered the trends in the industry versus historical and projected assets of the Fund. The Board of Trustees evaluated other benefits the investment adviser and its affiliates derive from their relationship with the Fund. The Board of Trustees reviewed information about the foregoing factors and considered changes, if any, in such information since its previous approval. The Board of Trustees discussed the financial strength of the investment adviser and its affiliated companies and the capability of the personnel of the investment adviser, and specifically the strength and background of its portfolio management personnel. The Board of Trustees reviewed the statutory and regulatory requirements for approval and disclosure of investment advisory agreements. The Board of Trustees, including the independent trustees, 10 evaluated all of the foregoing and does not believe any single factor or group of factors control or dominate the review process, and, after considering all factors together, has determined, in the exercise of its business judgment, that approval of the investment advisory agreement is in the best interests of the Fund and its shareholders. The following summary provides more detail on certain matters considered but does not detail all matters considered. Nature, Extent and Quality of the Services Provided. On a regular basis, the Board of Trustees considers the roles and responsibilities of the investment adviser as a whole and for those specific portfolio management, support and trading functions servicing the Fund. The trustees discuss with the investment adviser the resources available and used in managing the Fund and changes made in the Fund's portfolio management team over time. The Fund discloses information about its portfolio management team members and their experience in its prospectus. The trustees also discuss certain other services which are provided on a cost-reimbursement basis by the investment adviser or its affiliates to the Van Kampen funds including certain accounting, administrative and legal services. The Board has determined that the nature, extent and quality of the services provided by the investment adviser support its decision to approve the investment advisory agreement. Performance, Fees and Expenses of the Fund. On a regular basis, the Board of Trustees reviews the performance, fees and expenses of the Fund compared to its peers and to appropriate benchmarks. In addition, the Board spends more focused time on the performance of the Fund and other funds in the Van Kampen complex, paying specific attention to underperforming funds. The trustees discuss with the investment adviser the performance goals and the actual results achieved in managing the Fund. When considering a fund's performance, the trustees and the investment adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance with special attention to three-year performance) and, when a fund's weighted performance is under the fund's benchmark, they discuss the causes and where necessary seek to make specific changes to investment strategy or investment personnel. The Fund discloses more information about its performance elsewhere in this report and in the Fund's prospectus. The trustees discuss with the investment adviser the level of advisory fees for this Fund relative to comparable funds and other products advised by the adviser and others in the marketplace. The trustees review not only the advisory fees but other fees and expenses (whether paid to the adviser, its affiliates or others) and the Fund's overall expense ratio. The Fund discloses more information about its fees and expenses in its prospectus. The Board has determined that the performance, fees and expenses of the Fund support its decision to approve the investment advisory agreement. Investment Adviser's Expenses in Providing the Service and Profitability. At least annually, the trustees review the investment adviser's expenses in providing services to the Fund and other funds advised by the investment adviser and the 11 profitability of the investment adviser. These profitability reports are put together by the investment adviser with the oversight of the Board. The trustees discuss with the investment adviser its revenues and expenses, including among other things, revenues for advisory services, portfolio management-related expenses, revenue sharing arrangement costs and allocated expenses both on an aggregate basis and per fund. The Board has determined that the analysis of the investment adviser's expenses and profitability support its decision to approve the investment advisory agreement. Economies of Scale. On a regular basis, the Board of Trustees considers the size and growth prospects of the Fund and how that relates to the Fund's expense ratio and particularly the Fund's advisory fee rate. In conjunction with its review of the investment adviser's profitability, the trustees discuss with the investment adviser how more (or less) assets can affect the efficiency or effectiveness of managing the Fund's portfolio and whether the advisory fee level is appropriate relative to current and projected asset levels and/or whether the advisory fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and potential economies of scale of the Fund support its decision to approve the investment advisory agreement. Other Benefits of the Relationship. On a regular basis, the Board of Trustees considers other benefits to the investment adviser and its affiliates derived from its relationship with the Fund and other funds advised by the investment adviser. These benefits include, among other things, fees for transfer agency services provided to the funds, in certain cases research received by the adviser generated from commission dollars spent on funds' portfolio trading, and in certain cases distribution or service related fees related to funds' sales. The trustees review with the investment adviser each of these arrangements and the reasonableness of its costs relative to the services performed. The Board has determined that the other benefits received by the investment adviser or its affiliates support its decision to approve the investment advisory agreement. 12 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- VARIABLE RATE** SENIOR LOAN INTERESTS 120.6% AEROSPACE/DEFENSE 2.7% $10,487 Alion Science and Technology Corp., Term Loan........... Ba2 BB- 7.82 to 7.86% 08/02/09 $ 10,067,758 2,786 Apptis, Inc., Term Loan................ Ba3 BB- 8.57 to 10.50 12/20/12 2,758,140 630 ARINC, Inc., Term Loan................ Ba3 BB 7.32 03/10/11 630,464 2,193 Atlantic Marine Services, Term Loan................ B1 BB- 7.38 03/22/14 2,171,412 3,441 DeCrane Aircraft Holdings, Inc., Term Loan................ B1 B+ 8.10 to 10.00 02/21/13 3,406,961 1,235 DynCorp International, LLC, Term Loan........... Ba2 BB 7.63 02/11/11 1,205,571 1,015 Hawker Beechraft Acquisition Co., Revolving Credit Agreement........... Ba3 BB 7.35 03/26/14 967,880 11,963 Hawker Beechraft Acquisition Co., Term Loan........... Ba3 BB 7.36 03/26/14 11,409,986 10,651 IAP Worldwide Services, Inc., Term Loan................ B1 B 9.69 to 15.19 12/30/12 to 06/30/13 9,422,962 3,491 ILC Industries, Inc., Term Loan..... NR NR 7.61 02/24/12 3,429,580 3,582 Primus International, Inc., Term Loan........... NR NR 7.82 to 7.83 06/07/12 3,546,547 3,895 SI International, Inc., Term Loan..... Ba3 NR 7.32 to 7.34 02/09/11 3,906,935 898 Tri-Star Electronics International, Term Loan................ NR NR 8.36 to 8.40 02/02/13 888,773 4,239 Vangent, Inc., Term Loan................ Ba3 BB 7.61 to 7.62 02/14/13 4,218,178 3,521 Wesco Aircraft Hardware Corp., Term Loan................ Ba3 BB- 7.61 to 11.11 09/29/13 to 03/28/14 3,367,580 6,201 Wyle Laboratories, Inc., Term Loan..... NR BB- 8.11 01/28/11 6,092,188 -------------- 67,490,915 --------------
See Notes to Financial Statements 13 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- AUTOMOTIVE 3.2% $ 2,864 Accuride Corp., Term Loan................ Ba3 BB- 7.38% 01/31/12 $ 2,783,733 1,985 Acument Global Technologies, Inc., Term Loan (a)....... B2 B+ 8.86 08/11/13 1,975,075 952 Affinia Group, Inc., Term Loan........... Ba3 BB- 8.36 11/30/11 940,581 3,550 Dana Corp., Term Loan................ B2 BB- 7.88 04/13/08 3,501,187 4,000 Federal-Mogul Corp., Term Loan........... NR BBB+ 7.07 12/31/07 3,960,000 20,659 Ford Motor Co., Term Loan................ Ba3 B+ 8.36 12/15/13 19,523,915 2,220 Heartland Automotive Holdings, Inc., Term Loan................ NR NR 9.11 02/27/12 2,206,455 10,094 MetoKote Corp., Term Loan................ B2 BB- 8.36 11/27/11 10,125,651 1,820 Navistar International Corp., Revolving Credit Agreement........... NR BB- 8.42 to 8.61 01/19/12 1,742,650 5,005 Navistar International Corp., Term Loan........... NR BB- 8.61 01/19/12 4,792,287 11,443 Oshkosh Truck Corp., Term Loan........... Ba3 BBB- 7.11 12/06/13 11,080,448 504 Performance Transportation Services, Inc., Revolving Credit Agreement........... Caa1 NR 8.57 01/26/12 476,116 344 Performance Transportation Services, Inc., Term Loan................ NR NR 8.57 01/26/12 325,480 1,489 Precision Partners, Inc., Term Loan..... B2 B+ 8.86 10/27/13 1,449,670 9,811 Sensata Technologies, Inc., Term Loan........... Ba3 BB 7.09 to 7.11 04/27/13 9,515,589 700 Tenneco Automotive, Inc., Term Loan..... Ba1 BB+ 6.82 03/16/14 686,000
14 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- AUTOMOTIVE (CONTINUED) $ 2,250 TRW Automotive, Inc., Term Loan..... Baa3 BBB 6.88% 02/09/14 $ 2,214,563 2,491 United Components, Inc., Term Loan..... Ba3 BB- 7.36 06/30/12 2,416,107 -------------- 79,715,507 -------------- BANKING 0.4% 11,211 Dollar Financial Corp., Term Loan.... B3 BB- 8.11 to 8.36 10/30/12 10,895,470 -------------- BEVERAGE, FOOD & TOBACCO 8.5% 14,850 Acosta Sales Co., Inc., Term Loan..... NR NR 7.57 07/28/13 14,367,375 8,692 Advantage Sales & Marketing, LLC, Term Loan................ NR NR 7.36 03/29/13 8,333,560 4,707 Alliance One International, Inc., Term Loan (a)....... B1 BB 7.57 03/30/11 4,718,664 1,583 B&G Foods, Inc., Term Loan........... Ba2 BB- 7.36 02/23/13 1,558,870 8,833 Birds Eye Foods, Inc., Term Loan..... B1 B+ 7.11 to 10.61 07/11/12 to 03/22/13 8,611,880 13,385 Coleman Natural Foods, LLC, Term Loan................ NR NR 9.86 08/22/12 12,916,093 3,515 Coleman Natural Foods, LLC, Term Loan (b)............ NR NR 14.86 08/22/13 3,022,638 7,500 Culligan International Co., Term Loan........... Ba3 B+ 7.57 11/24/12 7,087,500 4,963 DCI Cheese Co., Term Loan................ NR NR 8.61 08/07/13 4,950,094 29,925 Dean Foods Co., Term Loan................ Ba3 BB+ 6.86 04/02/14 28,937,475 35,450 Dole Food Co., Inc., Term Loan........... Ba3 BB- 5.23 to 9.25 04/12/13 33,588,453 7,612 DS Waters of America, Inc., Term Loan................ Ba3 B- 7.61 10/25/12 7,516,603 4,050 DSW Holdings, Inc., Term Loan........... NR NR 9.36 03/07/12 4,019,625 3,361 Farley's & Sathers Candy Co., Inc., Term Loan........... NR NR 8.11 to 11.38 06/15/10 to 03/24/11 3,369,403
See Notes to Financial Statements 15 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- BEVERAGE, FOOD & TOBACCO (CONTINUED) $ 5,575 FSB Holdings, Inc., Term Loan........... NR NR 7.88 to 11.13% 09/29/13 to 03/29/14 $ 5,586,000 1,500 Interstate Brands Corp., Term Loan (c)(g).............. NR NR 9.61 07/19/07 1,441,249 5,776 Luigino's, Inc., Term Loan........... B1 B 8.38 04/02/11 5,704,243 842 Mafco Worldwide Corp., Term Loan.... B1 BB- 7.32 to 9.25 12/08/11 825,071 5,090 National Dairy Holdings, LP, Term Loan................ NR NR 7.32 03/15/12 5,090,397 1,645 OSI Foods GMBH & Co. KG, Term Loan....... NR NR 7.36 09/02/11 1,578,227 6,428 OSI Group, LLC, Term Loan................ NR NR 7.36 09/02/11 6,175,308 8,654 PBM Products, LLC, Term Loan........... NR NR 7.82 09/29/12 8,675,616 12,891 Pierre Foods, Inc., Term Loan........... Ba3 BB- 7.57 06/30/10 12,762,131 19,654 Pinnacle Foods, Inc., Term Loan..... B2 B 8.11 04/02/14 18,622,510 1,347 Smart Balance, Inc., Term Loan........... B2 B 8.61 05/18/14 1,326,426 358 Volume Services America, Inc., Revolving Credit Agreement........... B2 NR 3.50 04/01/10 347,395 3,910 Volume Services America, Inc., Term Loan................ B2 NR 8.61 to 9.50 10/01/10 3,917,331 -------------- 215,050,137 -------------- BROADCASTING--CABLE 5.7% 4,688 Cequel Communications, LLC, Term Loan........... B1 BB- 7.36 to 9.25 11/05/13 4,480,795 73,500 Charter Communications Operating, LLC, Term Loan................ B1 B+ 7.36 to 7.86 03/06/14 to 09/06/14 70,081,250 38,965 CSC Holdings, Inc., Term Loan........... Ba2 BB 7.07 03/29/13 37,525,124
16 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- BROADCASTING--CABLE (CONTINUED) $10,000 Discovery Communications Holding, LLC, Term Loan................ NR NR 7.36% 05/14/14 $ 9,775,000 5,550 Knology, Inc., Term Loan................ Ba3 B 7.61 06/30/12 5,494,500 7,535 MCC Iowa, LLC, Term Loan................ Ba3 BB- 7.07 01/31/15 7,231,086 1,987 Mediacom Communications Corp., Term Loan.... Ba3 BB- 6.82 to 6.86 03/31/10 1,919,718 1,592 Mediacom Illinois, LLC, Term Loan...... Ba3 BB 7.07 to 7.11 01/31/15 1,540,260 5,000 RCN Corp., Term Loan................ B1 NR 7.69 05/25/14 4,875,000 -------------- 142,922,733 -------------- BROADCASTING--DIVERSIFIED 0.3% 4,933 Cumulus Media, Inc., Term Loan........... Ba3 B 7.07 to 7.11 06/11/14 4,874,750 2,344 NEP II, Inc., Term Loan................ NR NR 7.61 02/16/14 2,273,798 -------------- 7,148,548 -------------- BROADCASTING--RADIO 1.6% 5,000 Citadel Broadcasting Corp., Term Loan.... Ba3 BB- 6.99 06/12/14 4,704,165 7,886 CMP KC, LLC, Term Loan................ Caa1 CCC+ 9.38 05/03/11 7,925,224 11,493 CMP Susquehanna Corp., Term Loan.... Ba3 B- 7.35 to 7.39 05/05/13 11,141,242 3,157 Emmis Operating Co., Term Loan........... B1 B+ 7.32 to 7.36 11/01/13 3,080,582 1,185 LBI Media, Inc., Term Loan........... Ba1 B+ 6.82 03/31/12 1,155,375 4,208 Multicultural Radio Broadcasting, Inc., Term Loan........... B2 B 8.11 to 11.11 12/18/12 to 06/18/13 4,192,313 3,713 NextMedia Operating, Inc., Term Loan..... B1 B+ 7.32 to 9.82 11/15/12 to 11/15/13 3,582,779
See Notes to Financial Statements 17 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- BROADCASTING--RADIO (CONTINUED) $ 2,239 Regent Broadcasting, LLC, Term Loan...... B1 B+ 7.61% 11/21/13 $ 2,182,781 3,404 Spanish Broadcasting System, Inc., Term Loan................ B1 B- 7.11 06/11/12 3,370,025 -------------- 41,334,486 -------------- BROADCASTING--TELEVISION 2.8% 1,985 Barrington Broadcasting, LLC, Term Loan........... Ba3 BB- 7.61 08/12/13 1,945,300 3,242 Sunshine Acquisition, Ltd., (United Kingdom) Term Loan........... Ba3 B+ 7.34 03/20/12 3,140,204 71,074 Univision Communications, Inc., Term Loan..... Ba3 B+ 7.61 to 7.82 03/29/09 to 09/29/14 66,351,113 -------------- 71,436,617 -------------- BUILDINGS & REAL ESTATE 3.8% 3,333 BioMed Realty, LP, Term Loan (a)....... NR NR 7.57 05/30/10 3,337,500 2,500 California Coastal Communities, Inc., Term Loan........... NR NR 8.07 09/15/11 2,487,500 5,172 Edge-Star Partners, Term Loan........... NR NR 9.36 to 15.36 11/18/07 5,188,578 8,921 General Growth Properties, Inc., Term Loan........... Ba2 BB+ 6.57 02/24/10 8,612,536 13,931 Ginn LA CS Borrower, LLC, Term Loan...... B3 B- 8.86 to 12.86 06/08/11 to 06/08/12 12,442,021 9,800 Kyle Acquisition Group, LLC, Term Loan................ NR NR 8.88 07/20/08 to 07/20/10 9,591,750 602 Lake at Las Vegas Joint Venture, LLC, Revolving Credit Agreement........... Caa1 CCC+ 15.46 06/20/12 595,833 4,398 Lake at Las Vegas Joint Venture, LLC, Term Loan........... Caa1 CCC+ 15.42 06/20/12 4,112,268
18 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- BUILDINGS & REAL ESTATE (CONTINUED) $ 3,582 Landsource Communities Development, LLC, Term Loan........... Ba2 BB+ 8.11% 02/27/13 $ 3,373,051 3,200 LNR Property Corp., Term Loan........... B2 B+ 8.11 07/12/11 3,080,573 4,316 London Arena & Waterfront Finance, LLC, (United Kingdom) Term Loan................ NR NR 7.86 03/08/12 4,293,997 552 Maguire Properties Holdings III, LLC, Term Loan........... Ba3 BB- 7.32 04/24/12 549,643 3,047 NLV Holdings, LLC, Term Loan........... Caa1 B+ 8.07 to 12.32 05/09/11 to 05/30/12 3,059,898 7,500 Realogy Corp., Term Loan................ Ba3 BB 8.32 to 8.36 10/10/13 7,076,782 2,900 Re/Max International, Inc., Term Loan........... NR NR 7.07 12/15/07 2,871,000 2,382 Shea Capital I, LLC, Term Loan........... NR NR 7.36 10/27/11 2,215,260 1,546 Shea Mountain House, LLC, Term Loan...... NR NR 7.36 05/11/11 1,437,855 4,424 South Edge, LLC, Term Loan........... NR NR 7.13 to 7.38 10/31/07 to 10/31/09 4,250,532 400 Standard Pacific Corp., Term Loan.... NR NR 6.86 05/05/13 379,500 3,970 Tamarack Resort, LLC, Term Loan...... NR NR 8.61 to 10.50 05/19/11 3,870,750 8,000 WCI Communities, Inc, Term Loan...... NR NR 7.82 12/23/10 7,710,000 6,738 Yellowstone Development, LLC, Term Loan........... NR NR 7.70 09/30/10 6,590,378 -------------- 97,127,205 -------------- BUSINESS EQUIPMENT & SERVICES 5.5% 12,624 Affiliated Computer Services, Inc., Term Loan................ Ba2 BB 7.32 03/20/13 12,422,951 9,801 AlixPartners, LLP, Term Loan (a)....... B1 BB- 7.61 10/12/13 9,702,743
See Notes to Financial Statements 19 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- BUSINESS EQUIPMENT & SERVICES (CONTINUED) $ 3,150 Audio Visual Services Corp., Term Loan (a)............ Ba3 B+ 7.61% 02/28/14 $ 3,134,250 1,247 BakerCorp, Term Loan (a)................. B1 B 7.57 to 7.61 05/08/14 1,236,355 3,367 Brickman Group Holdings, Inc., Term Loan (a)............ NR B+ 7.34 01/23/14 3,332,897 4,878 Cellnet Group, Inc., Term Loan........... NR NR 2.00 to 7.36 07/22/11 4,865,828 1,921 Contec, LLC, Term Loan................ NR NR 7.88 06/15/12 1,925,692 10,667 Crawford & Co., Term Loan................ B1 BB- 7.61 10/30/13 10,680,694 5,500 Edwards (Cayman Islands II), Ltd., Term Loan........... B1 BB 7.36 to 11.11 05/31/14 to 11/30/14 5,098,750 1,740 Euronet Worldwide, Inc., Term Loan..... Ba2 BB 7.32 to 7.36 04/14/14 1,687,800 4,466 First American Payment Systems, LP, Term Loan........... NR NR 8.63 10/06/13 4,455,084 2,500 Information Resources, Inc., Term Loan........... NR NR 7.07 to 7.12 05/16/14 2,375,000 2,255 InfoUSA, Inc., Term Loan................ Ba2 BB 7.36 02/14/12 2,220,850 2,494 Itron, Inc., Term Loan................ Ba3 B+ 7.36 04/18/14 2,425,172 18,000 KAR Holdings, Inc., Term Loan........... Ba3 B+ 7.61 10/20/13 16,616,250 4,071 Katun Corp., Term Loan................ NR B 11.25 06/30/09 4,060,411 7,714 NCO Financial Systems, Term Loan.. Ba3 BB- 8.36 05/15/13 7,636,606 4,762 RGIS Services, LLC, Term Loan........... Ba3 B- 7.82 04/30/14 4,666,667 9,060 Sedgwick Claims Management Services, Inc., Term Loan..... B1 B+ 7.61 01/31/13 8,878,998 1,018 Valassis Communications, Inc., Term Loan..... Ba2 BB 7.11 03/02/14 975,827
20 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- BUSINESS EQUIPMENT & SERVICES (CONTINUED) $ 1,069 Verifone, Inc., Term Loan................ B1 BB 7.09 to 7.11% 10/31/13 $ 1,052,719 29,564 VNU, Inc., Term Loan................ Ba3 B+ 7.36 08/09/13 28,842,407 -------------- 138,293,951 -------------- CHEMICALS, PLASTICS & RUBBER 5.8% 898 Arizona Chemical Co., Term Loan...... B1 BB- 7.36 02/28/13 872,501 1,443 Becker-Underwood, Inc., Term Loan..... NR NR 8.86 to 9.11 03/31/10 to 09/30/11 1,430,439 12,600 Brenntag Holdings GmbH & Co. KG, (Germany) Term Loan................ Caa1 B+ 7.39 to 9.39 01/17/14 to 07/17/15 12,403,500 3,031 Celanese Holdings, LLC, Term Loan (a).. Ba3 BB 5.32 to 7.11 04/02/14 2,859,044 1,000 Cristal Inorganic Chemicals US, Inc., Term Loan........... Ba3 B+ 7.61 05/15/14 961,667 10,090 Ferro Corp., Term Loan................ NR B+ 7.32 to 7.36 06/06/12 10,014,738 2,934 Fibervisions Delaware Corp., Term Loan................ B1 B+ 8.86 03/31/13 2,831,603 1,882 Foamex LP, Term Loan................ B1 B+ 7.57 to 7.61 02/12/13 1,832,156 3,728 Georgia Gulf Corp., Term Loan........... Ba2 BB 7.82 10/03/13 3,642,683 27,809 Hexion Specialty Chemicals, Inc., Term Loan........... Ba3 B+ 7.63 05/05/13 26,830,869 25,781 Huntsman International, LLC, Term Loan........... Ba1 BB+ 7.07 08/16/12 25,152,866 5,940 Ineos Holdings, Ltd., (United Kingdom) Term Loan................ Ba2 BB- 7.58 to 8.08 12/16/13 to 12/23/14 5,773,680 2,352 INVISTA (Netherlands), Term Loan................ Ba1 BBB- 6.86 04/30/10 to 04/29/11 2,265,292 7,500 ISP Chemco Inc., Term Loan........... Ba3 BB- 7.13 06/04/14 7,203,750 9,875 Kraton Polymers, LLC, Term Loan...... Ba3 B+ 7.38 05/12/13 9,529,375
See Notes to Financial Statements 21 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- CHEMICALS, PLASTICS & RUBBER (CONTINUED) $ 7,461 Lucite International Group Holdings, Ltd., (United Kingdom) Term Loan................ Ba3 BB- 7.61% 07/07/13 $ 7,162,308 3,142 MacDermid, Inc., Term Loan........... B1 BB- 7.36 04/12/14 3,091,065 781 Nusil Technology, LLC, Term Loan...... NR NR 8.07 10/24/13 773,388 3,000 OMNOVA Solutions, Inc., Term Loan..... B2 B+ 7.82 to 7.88 05/22/14 2,970,000 8,570 Rockwood Specialties Group, Inc., Term Loan................ Ba2 BB 7.11 12/13/13 8,363,928 4,371 Valley National Gases, Inc., Term Loan................ Ba3 BB- 7.61 02/28/14 4,262,080 6,050 Wellman, Inc., Term Loan................ Caa1 CCC 9.36 to 12.11 02/10/09 to 02/10/10 5,659,050 -------------- 145,885,982 -------------- CONSTRUCTION MATERIAL 2.0% 7,880 AXIA, Inc., Term Loan................ B2 B 10.11 12/21/12 7,131,400 3,573 Beacon Sales Acquisition, Inc., Term Loan........... NR NR 7.34 to 7.36 09/30/13 3,483,675 3,000 Brand Services, Inc., Term Loan..... Caa1 CCC+ 11.36 02/07/15 2,949,999 538 Builders FirstSource, Inc., Term Loan........... Ba2 BB 7.86 08/11/11 527,332 14,933 Building Materials Corp. of America, Term Loan........... B2 BB 8.13 to 11.13 03/15/14 to 09/15/14 13,836,665 4,020 Building Materials Holdings Corp., Term Loan................ B1 BB+ 7.86 11/10/13 3,919,134 4,930 Contech Construction Products, Inc., Term Loan................ Ba3 BB 7.32 to 7.34 01/31/13 4,757,689 1,500 Custom Building Products, Inc., Term Loan................ NR NR 10.32 04/29/12 1,440,000 2,138 Lanoga Corp., Term Loan................ Ba3 NR 9.00 06/29/13 2,116,125
22 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- CONSTRUCTION MATERIAL (CONTINUED) $ 1,780 Nortek, Inc., Term Loan................ Ba2 B+ 7.61 to 9.50% 08/27/11 $ 1,715,157 2,174 Panolam Industries International, Inc. (Canada), Term Loan................ Ba3 BB- 8.11 09/30/12 2,087,188 2,439 Pro-Build Holdings, Inc., Term Loan..... Ba3 NR 9.00 06/29/13 2,414,669 3,766 Professional Paint, Inc., Term Loan..... NR NR 7.88 to 11.63 05/31/12 to 05/31/13 3,575,700 -------------- 49,954,733 -------------- CONTAINERS, PACKAGING & GLASS 3.0% 1,584 Altivity Packaging, LLC, Term Loan...... Ba3 BB 7.57 to 7.61 06/30/13 1,552,980 1,716 Anchor Glass Container Corp., Term Loan........... NR NR 7.61 05/03/13 1,707,580 7,536 Berry Plastics Group, Inc., Term Loan................ Ba3 BB- 7.36 04/03/15 7,092,029 888 Captive Plastics, Inc., Term Loan..... NR NR 8.11 08/18/11 883,717 9,434 Consolidated Container Co., LLC, Term Loan........... B1 B 7.59 to 10.86 03/28/14 to 09/28/14 8,823,310 100 Fleming Packaging Corp., Revolving Credit Agreement (c) (d) (e)............. NR NR 8.75 03/31/03 1,000 871 Fleming Packaging Corp., Term Loan (c) (d) (e)............. NR NR 12.25 08/31/04 8,711 3,650 Graham Packaging Co., Term Loan...... B1 B+ 7.63 10/07/11 3,482,534 9,453 Graphic Packaging International Corp., Term Loan........... Ba2 BB- 7.32 to 7.36 05/16/14 9,277,629 785 Kranson Industries, Inc., Revolving Credit Agreement.... NR NR 10.00 07/31/13 761,069 12,033 Kranson Industries, Inc., Term Loan..... NR NR 7.61 07/31/13 11,882,663 5,945 Packaging Dynamics, Term Loan........... NR BB 7.36 06/09/13 5,855,800
See Notes to Financial Statements 23 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- CONTAINERS, PACKAGING & GLASS (CONTINUED) $ 4,045 Pertus Sechzehnte GMBH, (Germany) Term Loan................ NR NR 7.70 to 7.95% 06/13/15 to 06/13/16 $ 3,984,301 2,913 Ranpak Corp., Term Loan................ NR NR 7.82 12/14/11 2,861,906 3,322 Smurfit-Stone Container Corp., Revolving Credit Agreement........... Ba2 BB- 7.63 11/01/09 3,247,418 4,148 Smurfit-Stone Container Corp., Term Loan........... Ba2 BB- 7.38 11/01/11 4,056,711 5,663 Tegrant Holding Corp., Term Loan.... NR NR 8.11 to 10.86 03/08/14 to 03/08/15 5,323,781 5,538 Unifrax Corp., Term Loan................ Ba3 BB- 7.63 05/02/13 5,392,970 -------------- 76,196,109 -------------- DIVERSIFIED MANUFACTURING 1.4% 2,063 Arnold Magnectic Technologies Corp., Term Loan........... NR NR 9.11 to 11.50 03/06/11 to 03/06/12 2,054,278 1,122 Chart Industries, Inc., Term Loan..... Ba2 BB 7.38 10/17/12 1,102,030 3,500 Euramax International, Inc., Term Loan........... B1 CCC+ 13.36 06/29/13 3,327,648 3,500 Jason, Inc., Term Loan................ NR NR 7.82 04/30/10 3,421,250 12,138 Mueller Water Products, Inc., Term Loan................ Ba3 BB+ 7.07 to 7.11 05/24/14 11,667,529 6,312 MW Industries, Inc., Term Loan........... NR NR 8.36 11/01/13 6,359,657 1,860 Wire Rope Corp. of America, Inc., Term Loan................ B2 B+ 7.59 to 7.61 02/08/14 1,831,731 6,175 X-Rite, Inc., Term Loan................ Ba3 BB- 7.61 to 10.36 06/30/12 to 06/30/13 6,155,759 -------------- 35,919,882 -------------- DURABLE CONSUMER PRODUCTS 0.1% 3,350 Brown Jordan International, Inc., Term Loan........... NR NR 9.36 to 11.25 04/30/12 3,332,939 --------------
24 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- ECOLOGICAL 2.8% $24,424 Allied Waste North America, Inc., Term Loan................ Ba3 BBB- 6.86 to 7.14% 01/15/12 $ 23,511,097 4,477 Casella Waste Systems, Inc., Term Loan................ NR NR 7.36 04/28/10 4,297,783 10,787 Energy Solutions, LLC, Term Loan...... NR NR 7.57 to 7.66 06/07/11 to 06/07/13 10,652,636 2,493 Environmental Systems Products Holdings, Term Loan (e)................. Caa1 NR 17.25 12/12/10 1,505,437 7,500 Iron Mountain, Inc., Term Loan........... Ba3 BB+ 6.87 04/16/14 7,406,250 3,058 LVI Services, Inc., Term Loan........... NR NR 10.34 to 10.39 11/16/11 3,033,625 4,950 Synagro Technologies, Inc., Term Loan........... Ba3 BB- 7.36 to 10.11 04/02/14 to 10/02/14 4,752,000 12,709 Waste Services, Inc., Term Loan..... Ba3 BB- 7.57 03/31/11 12,327,710 3,059 WasteQuip, Inc., Term Loan (a)....... Ba3 BB- 7.61 02/05/13 3,045,530 -------------- 70,532,068 -------------- EDUCATION & CHILD CARE 0.6% 6,222 Educate, Inc., Term Loan................ Ba3 CCC+ 7.57 to 10.59 06/14/13 to 06/14/14 5,986,812 9,761 Education Management, LLC, Term Loan........... B2 B+ 7.13 06/01/13 9,286,136 -------------- 15,272,948 -------------- ELECTRONICS 3.6% 12,783 Dealer Computer Services, Inc., Term Loan................ Ba2 BB- 7.36 to 10.86 10/26/12 to 10/26/13 12,492,262 1,500 Deutsche Connector Group, (France) Term Loan................ NR NR 7.89 to 8.14 06/22/14 to 06/22/15 1,483,500 937 GXS Worldwide, Inc., Term Loan........... Ba3 BB- 10.36 to 12.25 07/29/11 934,325 1,000 H3C Holdings, Ltd., Term Loan........... NR NR 8.37 09/28/12 1,002,500 4,963 Infor Enterprise Solutions Holdings, Inc., Term Loan..... B1 B+ 9.11 07/28/12 4,875,656
See Notes to Financial Statements 25 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- ELECTRONICS (CONTINUED) $ 3,868 Intergraph Corp., Term Loan........... B1 B+ 7.57 to 7.61% 05/29/14 $ 3,751,590 7,500 Kronos, Inc., Term Loan................ Ba3 B+ 7.61 06/11/14 7,171,875 2,922 Network Solutions, LLC, Term Loan...... B1 B 7.86 03/07/14 2,854,007 2,487 Nuance Communications, Inc., Term Loan..... B1 B+ 7.32 03/31/13 2,377,544 1,356 ON Semiconductor Corp., Term Loan.... Ba1 BB 7.11 09/03/13 1,295,172 12,720 Open Solutions, Inc., Term Loan..... Ba3 BB- 7.45 01/23/14 12,116,145 4,441 Open Text Corp., Term Loan........... Ba3 BB 7.82 10/02/13 4,419,278 396 Stratus Technologies, Inc., Term Loan........... NR B- 9.11 03/29/11 382,635 29,607 Sungard Data Systems, Inc., Term Loan................ Ba3 BB 7.36 02/28/14 28,499,517 7,038 Verint Systems, Inc., Term Loan..... NR B+ 8.09 05/25/14 6,994,471 -------------- 90,650,477 -------------- ENTERTAINMENT & LEISURE 6.4% 1,955 Alliance Atlantis Communications, Inc., Term Loan (a)................. Ba1 BB 6.85 12/20/11 1,955,000 1,970 AMC Entertainment, Inc., Term Loan..... Ba3 BB- 7.07 01/26/13 1,904,334 7,377 Bombardier Capital, Inc., (Canada) Term Loan................ B1 B+ 7.86 06/28/13 7,225,060 23,615 Cedar Fair, LP, Term Loan (a)............ Ba3 BB 7.32 to 9.25 08/30/12 22,851,400 5,459 Cinemark USA, Inc., Term Loan........... Ba3 B 7.04 to 7.15 10/05/13 5,281,341 5,867 Fender Musical Instruments Corp., Term Loan........... B2 B+ 7.65 06/09/14 5,690,667 4,000 Hicks Sports Group, LLC, Term Loan...... NR NR 7.88 12/22/10 3,980,000 7,500 Lodgenet Entertainment Corp., Term Loan........... B1 B+ 7.36 04/04/14 7,343,752
26 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- ENTERTAINMENT & LEISURE (CONTINUED) $54,524 Metro-Goldwyn-Mayer Studios, Inc., Term Loan................ NR NR 8.61% 04/08/12 $ 51,649,090 1,971 Mets, LP, Term Loan................ NR NR 7.38 07/25/10 1,932,000 5,728 Panavision, Inc., Term Loan........... B1 B+ 8.86 03/30/11 5,584,854 3,883 Playcore Holdings, Inc., Term Loan..... NR NR 7.82 to 9.75 02/21/14 3,863,917 22,576 Regal Cinemas, Inc., Term Loan........... Ba2 BB- 6.86 10/27/13 21,978,859 2,660 Tigers Ballpark, LLC, Term Loan...... NR NR 7.11 08/15/10 2,660,000 10,273 True Temper Sports, Inc., Term Loan..... Ba3 B+ 8.54 to 10.86 03/15/11 to 06/30/11 10,259,488 7,172 Universal City Development Partners, LP, Term Loan................ Ba1 BB 7.36 06/09/11 6,992,966 -------------- 161,152,728 -------------- FARMING & AGRICULTURE 0.3% 6,925 Wm. Bolthouse Farms, Inc., Term Loan (a)................. B1 B+ 7.63 to 10.86 12/16/12 to 12/16/13 6,833,815 -------------- FINANCE 3.0% 3,672 DCS Business Services, Inc., Term Loan................ NR NR 10.32 to 12.57 02/04/11 to 08/04/11 3,193,043 6,269 Grosvenor Capital Management Holdings, LLP, Term Loan...... NR NR 7.61 to 7.63 12/05/13 6,080,445 10,588 iPayment, Inc., Term Loan................ B1 B 7.32 to 7.36 05/10/13 10,190,843 8,457 LPL Holdings, Inc., Term Loan........... B1 B 7.36 06/28/13 8,181,706 1,634 Munder Capital Management, Term Loan................ NR NR 7.32 to 7.36 12/29/12 1,617,469 8,715 National Processing Company Group, Term Loan................ B2 B+ 8.32 to 11.86 09/29/12 to 09/29/14 8,573,269
See Notes to Financial Statements 27 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- FINANCE (CONTINUED) $ 7,950 Outsourcing Solutions, Inc., Term Loan........... NR NR 10.82% 09/30/10 $ 7,989,277 9,900 Oxford Acquisition III, Ltd., (United Kingdom) Term Loan........... Ba3 BB+ 7.11 05/11/14 9,615,375 4,191 Riskmetrics Group Holdings, LLC, Term Loan................ Ba3 BB- 7.61 to 10.86 01/11/14 to 07/11/14 4,139,367 7,500 RJO Holdings Corp., Term Loan........... B2 CCC 8.32 to 12.07 07/12/14 to 07/12/15 7,418,750 10,169 Transfirst Holdings, Inc., Term Loan..... B2 B 8.11 to 11.36 06/15/14 to 06/15/15 9,795,208 -------------- 76,794,752 -------------- GROCERY 0.3% 8,496 Roundy's Supermarkets, Inc., Term Loan........... Ba3 B+ 8.11 11/03/11 8,294,207 -------------- HEALTH & BEAUTY 1.3% 7,265 American Safety Razor Co., Term Loan (a)................. B3 B- 7.83 to 11.63 07/31/13 to 01/30/14 7,140,375 4,904 Bare Escentuals Beauty, Inc., Term Loan (a)............ B1 BB- 7.57 02/18/12 4,855,190 9,994 Marietta Intermediate Holdings Corp., Term Loan (b)............ NR NR 9.32 to 13.32 12/17/10 to 12/17/11 9,145,559 13,147 Prestige Brands Holdings, Inc., Term Loan................ Ba3 BB- 7.63 04/06/11 12,851,281 -------------- 33,992,405 -------------- HEALTHCARE 8.2% 9,205 American Medical Systems, Inc., Term Loan (a)............ Ba3 BB 7.63 to 7.69 07/20/12 9,158,478 15,086 Capella Healthcare, Inc., Term Loan..... B1 B+ 7.86 to 10.86 11/30/12 to 11/30/13 14,558,108 2,250 Concentra, Inc., Term Loan........... B1 B+ 7.61 06/25/14 2,176,875 5,048 CRC Health Group, Inc., Term Loan..... Ba3 BB- 7.61 02/06/13 4,947,093
28 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- HEALTHCARE (CONTINUED) $ 7,493 DSI Renal, Inc., Term Loan........... NR NR 7.63% 03/31/13 $ 7,117,894 878 Emdeon Business Services, LLC, Term Loan................ B1 BB- 7.61 11/16/13 849,097 2,367 FHC Health Systems, Inc., Term Loan..... Ba3 B 12.07 to 14.07 12/18/09 2,391,077 701 Genoa Healthcare Group, LLC, Term Loan................ Ba3 BB- 8.34 to 10.25 08/10/12 662,005 365 Golden Gate National Senior Care, LLC, Term Loan........... Ba3 BB- 8.07 03/14/11 363,459 65,820 HCA, Inc., Term Loan................ Ba3 BB 7.36 to 7.61 11/17/12 to 11/17/13 63,507,943 15,860 Health Management Associates, Inc., Term Loan........... Ba2 BB- 7.11 02/28/14 15,463,744 3,343 HealthCare Partners, LLC, Term Loan...... Ba2 BB 7.13 10/31/13 3,175,714 5,618 Iasis Healthcare, LLC, Term Loan...... Ba2 B+ 7.36 to 7.62 03/15/14 5,364,724 11,000 Inverness Medical Innovations, Inc., Term Loan........... B1 BB 7.34 06/26/14 10,505,000 17,402 Lifepoint Hospitals, Inc., Term Loan..... Ba2 BB 6.99 04/15/12 16,596,806 615 Matria Healthcare, Inc., Term Loan..... Ba3 BB- 7.36 01/19/12 599,234 20,402 Multiplan, Inc., Term Loan........... B1 B+ 7.82 04/12/13 19,713,540 400 Select Medical Corp., Revolving Credit Agreement.... Ba2 BB- 2.25 02/24/11 376,000 2,456 Sterigenics International, Inc., Term Loan........... B2 BB- 7.61 11/21/13 2,444,155 2,385 Sun Healthcare Group, Inc., Term Loan................ Ba2 B+ 7.36 to 7.38 04/12/14 2,367,170 12,000 Surgical Care Affiliates, LLC, Term Loan........... Ba3 B 7.57 12/29/14 11,400,000
See Notes to Financial Statements 29 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- HEALTHCARE (CONTINUED) $ 8,638 United Surgical Partners International, Inc., Term Loan........... Ba3 B 7.37 to 7.38% 04/19/14 $ 8,168,223 4,500 Viant Holdings, Inc., Term Loan..... Ba3 B+ 7.61 06/25/14 4,376,250 -------------- 206,282,589 -------------- HOME & OFFICE FURNISHINGS, HOUSEWARES & DURABLE CONSUMER PRODUCTS 0.9% 9,978 Generation Brands, LLC, Term Loan...... Caa1 CCC+ 7.82 to 11.63 12/20/12 to 06/20/13 9,441,063 5,371 Hunter Fan Co., Term Loan................ B1 B+ 7.86 to 12.11 04/16/14 to 10/16/14 5,022,857 499 Lenox, Inc., Term Loan................ NR B- 9.82 to 9.86 04/20/13 486,281 7,400 National Bedding Co., LLC, Term Loan................ Caa1 B+ 10.36 08/31/12 7,067,000 -------------- 22,017,201 -------------- HOTELS, MOTELS, INNS & GAMING 5.2% 7,677 Cannery Casino Resorts, LLC, Term Loan................ B2 BB 2.25 to 7.61 05/18/13 7,408,465 10,664 Greektown Casino, LLC, Term Loan...... Ba3 BB- 7.87 to 7.88 12/03/12 10,450,295 8,880 Green Valley Ranch Gaming, LLC, Term Loan................ B1 BB- 7.36 02/16/14 8,657,640 4,336 Greenwood Racing, Inc., Term Loan..... B2 BB- 7.57 11/28/11 4,162,302 9,511 Herbst Gaming, Inc., Term Loan........... Ba3 BB 8.36 12/02/11 9,214,544 3,649 Kuilima Resort Co., Term Loan (e)....... NR NR 13.75 09/30/11 2,681,977 30,345 Las Vegas Sands, LLC/Venetian Casino, Term Loan........... Ba3 BB 7.11 05/23/14 29,088,886 12,500 MGM Mirage, Term Loan................ NR NR 6.49 to 6.53 10/03/11 12,304,687 2,500 Riviera Holdings Corp., Term Loan.... B2 BB- 7.36 06/08/14 2,431,250 502 Scientific Games Corp., Revolving Credit Agreement.... Ba1 BBB- 7.32 12/23/09 491,960
30 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- HOTELS, MOTELS, INNS & GAMING (CONTINUED) $ 4,209 Seminole Tribe of Flordia, Term Loan.. Ba1 BBB- 0.75 to 6.88% 03/05/14 $ 4,055,944 10,700 Venetian Macau, Ltd., Term Loan..... B1 BB- 7.61 05/26/12 to 05/26/13 10,356,070 7,642 Wembley, Inc., Term Loan (a)............ Ba3 B+ 7.82 to 9.63 08/23/11 to 07/18/12 7,651,156 10,530 Wimar OpCo, LLC, Term Loan........... Ba3 BB- 7.61 01/03/12 10,297,018 11,566 Yonkers Racing Corp., Term Loan.... NR NR 8.88 08/12/11 11,471,657 -------------- 130,723,851 -------------- INSURANCE 2.6% 4,963 Applied Systems, Inc., Term Loan..... NR NR 7.86 09/26/13 4,850,844 8,214 ARG Holdings, LLC, Term Loan (a)....... B2 NR 8.38 to 12.63 11/30/11 to 11/30/12 8,146,330 2,494 Audatex North America, Inc., Term Loan................ B1 B+ 7.38 05/16/14 2,365,945 2,212 CCC Information Services Group, Inc., Term Loan..... NR NR 7.86 02/10/13 2,156,729 7,500 Concord Re, Ltd., Term Loan........... Ba2 BB+ 9.61 02/29/12 7,481,250 10,078 HMSC Holdings Corp., Term Loan........... B2 B 7.61 to 10.86 04/03/14 to 10/03/14 9,402,797 8,046 Mitchell International, Inc., Term Loan........... Caa1 CCC+ 7.38 to 10.63 03/28/14 to 03/28/15 7,679,135 13,333 USI Holdings Corp., Term Loan........... B2 B- 8.11 05/05/14 12,666,666 10,039 Vertafore, Inc., Term Loan........... NR NR 7.86 to 11.36 01/31/12 to 01/31/13 9,631,894 -------------- 64,381,590 -------------- MACHINERY 1.0% 5,391 Alliance Laundry Holdings, LLC, Term Loan................ Ba3 BB- 7.61 01/27/12 5,323,815 3,168 Baldor Electric Co., Term Loan........... Ba3 BB+ 7.13 03/31/14 3,085,700 3,990 Douglas Dynamics, LLC, Term Loan...... Ba2 BB 7.61 05/21/13 3,970,050
See Notes to Financial Statements 31 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- MACHINERY (CONTINUED) $ 2,978 FR X Ohmstede Acquisitions Co., Term Loan........... B1 B 7.88% 08/09/13 $ 2,989,429 1,076 Gleason, Corp., Term Loan................ NR NR 7.38 06/30/13 1,058,873 4,653 Goodman Global Holdings, Inc., Term Loan................ Ba2 BB 7.13 12/23/11 4,547,967 4,485 Stolle Machinery Co., LLC, Term Loan................ Caa1 B 7.82 to 11.34 09/29/12 to 09/29/13 4,295,675 1,096 United Rentals (North America), Inc., Term Loan..... Ba1 BB- 7.32 02/14/11 1,077,184 -------------- 26,348,693 -------------- MEDICAL PRODUCTS & SERVICES 2.3% 3,509 Accellent, Inc., Term Loan........... B1 BB- 7.86 11/22/12 3,333,165 4,239 Advanced Medical Optics, Inc. Term Loan................ Ba1 BB 7.09 to 7.11 04/02/14 4,138,690 6,780 AGA Medical Corp., Term Loan........... B1 BB- 7.36 04/28/13 6,716,063 7,500 Carestream Health, Inc., Term Loan..... Ba2 BB 7.32 to 7.39 04/30/13 7,106,250 442 Conmed Corp., Term Loan................ Ba2 BB- 6.82 04/12/13 428,686 25,292 DaVita, Inc., Term Loan................ Ba1 BB+ 6.86 to 6.88 10/05/12 24,003,047 3,259 Fresenius Medical Care Holdings, Inc., Term Loan........... NR BBB- 6.74 03/31/13 3,142,972 8,500 VWR Funding, Inc., Term Loan........... B1 B+ 7.86 06/29/14 8,266,250 -------------- 57,135,123 -------------- MINING, STEEL, IRON & NON-PRECIOUS METALS 0.0% 832 John Maneely Co., Term Loan........... B3 B+ 8.61 to 8.62 12/08/13 748,190 -------------- NATURAL RESOURCES 1.8% 401 Boston Generating, LLC, Revolving Credit Agreement.... B1 BB- 7.61 12/20/13 391,111 7,867 Boston Generating, LLC, Term Loan...... B1 BB- 7.61 12/20/13 7,678,901
32 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- NATURAL RESOURCES (CONTINUED) $ 2,800 CDX Funding, LLC, Term Loan (a)....... NR NR 11.57% 03/31/13 $ 2,801,750 3,000 Dresser, Inc., Term Loan................ B2 B+ 7.86 05/04/14 2,903,250 3,682 El Paso Corp., Term Loan................ Ba1 BB 7.42 08/01/11 3,553,322 1,210 Hudson Products Holdings, Inc., Term Loan................ B1 B+ 7.86 to 7.89 12/05/13 1,200,640 1,576 Key Energy Services Group, Inc., Term Loan................ NR NR 7.82 to 7.86 06/30/12 1,544,480 1,038 Targa Resources, Inc., Term Loan..... B1 B+ 7.32 to 7.36 10/31/12 1,029,965 20,000 Western Refining, Inc., Term Loan..... B1 BB+ 7.07 05/30/14 19,225,000 4,500 Willbros USA, Inc., Term Loan........... NR NR 10.26 10/27/09 4,455,000 -------------- 44,783,419 -------------- NON-DURABLE CONSUMER PRODUCTS 3.2% 11,245 Aearo Technologies, Inc., Term Loan..... Caa1 B- 7.61 to 10.86 09/24/13 to 06/01/14 10,911,488 4,090 Amscan Holdings, Inc., Term Loan..... Ba3 B 7.57 to 7.62 05/25/13 3,967,058 1,097 Chattem, Inc., Term Loan................ Ba3 BB- 7.09 to 7.11 01/02/13 1,069,453 7,366 Easton-Bell Sports, Inc., Term Loan..... Ba3 BB- 7.11 03/16/12 7,057,169 2,239 Gibson Guitar Corp., Term Loan........... Ba3 B 7.86 12/29/13 2,227,556 11,107 Huish Detergents, Inc., Term Loan..... B1 B+ 7.32 to 9.57 04/26/14 to 10/26/14 10,292,143 8,776 JohnsonDiversey, Inc., Term Loan..... Ba2 BB- 7.86 12/16/10 to 12/16/11 8,468,445 4,000 KIK Custom Products, Inc., (Canada), Term Loan................ B1 B 10.36 11/30/14 3,630,000 4,800 KIK Custom Products, Inc., Term Loan..... B1 B 7.61 05/31/14 4,368,000 2,344 Mattress Holdings Corp., Inc., Term Loan................ B1 B 7.61 01/18/14 2,203,477
See Notes to Financial Statements 33 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- NON-DURABLE CONSUMER PRODUCTS (CONTINUED) $ 1,176 Mega Brands, Inc. (Canada), Term Loan................ Ba3 B+ 7.63% 07/26/12 $ 1,146,600 5,679 Philosophy, Inc., Term Loan........... B2 B+ 7.34 to 7.36 03/16/14 5,579,727 506 Spectrum Brands, Inc., Revolving Credit Agreement.... B1 B- 5.17 03/30/13 490,619 12,053 Spectrum Brands, Inc., Term Loan..... B1 B- 9.32 to 9.36 03/30/13 11,655,022 1,800 Targus Group International, Inc., Term Loan........... Caa2 CCC+ 13.87 05/22/13 1,566,000 1,958 UCG Paper Crafts, Inc., Term Loan..... NR NR 10.50 02/17/13 1,958,067 4,489 Yankee Candle Co., Inc., Term Loan..... Ba3 BB- 7.36 02/06/14 4,264,312 -------------- 80,855,136 -------------- PAPER & FOREST PRODUCTS 2.7% 3,000 Ainsworth Lumber Co., Ltd., Term Loan................ Ba3 B- 8.36 06/26/14 2,925,000 4,860 Domtar Corp., Term Loan................ Ba1 BB+ 6.70 03/07/14 4,694,760 43,037 Georgia-Pacific Corp., Term Loan.... Ba2 BB+ 7.11 12/20/12 40,769,597 3,155 NewPage Corp., Term Loan................ Ba2 BB- 7.63 05/02/11 3,113,275 2,105 Tidi Products, LLC, Term Loan........... NR NR 8.61 to 9.86 12/31/11 2,094,830 7,317 White Birch Paper Co. (Canada), Term Loan................ B1 BB- 8.13 05/08/14 7,078,895 6,764 Xerium Technologies, Inc., Term Loan..... B2 B+ 8.11 05/18/12 6,459,560 -------------- 67,135,917 --------------
34 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- PERSONAL & MISCELLANEOUS SERVICES 0.8% $10,774 Affinion Group, Inc., Term Loan (a)................. Ba2 BB 7.82 to 7.86% 10/17/12 $ 10,708,701 6,759 Coinmach Laundry Corp., Term Loan.... B2 B+ 7.88 12/19/12 6,674,357 1,635 Omniflight Helicopters, Inc., Term Loan........... NR NR 10.25 to 10.75 06/30/11 to 09/30/12 1,618,292 -------------- 19,001,350 -------------- PHARMACEUTICALS 0.8% 1,890 Bradley Pharmaceuticals, Inc., Term Loan..... NR NR 11.25 11/14/10 1,892,362 2,239 Stiefel Laboratories, Inc., Term Loan........... Ba3 BB- 7.61 12/28/13 2,205,169 15,602 Warner Chilcott Holdings Co., Term Loan................ B1 BB- 7.36 01/18/12 15,141,459 -------------- 19,238,990 -------------- PRINTING & PUBLISHING 10.3% 5,000 Advanstar Communications, Inc., Term Loan..... B1 B+ 7.61 05/31/14 4,751,565 5,376 ALM Media Holdings, Inc., Term Loan..... B1 B- 7.82 03/05/10 5,362,658 3,300 American Media Operations, Inc., Term Loan........... B1 B- 8.59 01/31/13 3,102,000 3,050 Ascend Media Holdings, LLC, Term Loan................ NR NR 8.60 to 8.84 01/31/12 2,820,818 1,985 Black Press Group, Ltd., (Canada) Term Loan................ Ba3 BB- 7.36 08/02/13 1,951,503 5,383 Canon Communications, LLC, Term Loan........... B2 B+ 8.32 05/31/11 5,369,898 2,173 Caribe Information Investment, Inc., Term Loan........... B1 B+ 7.61 03/31/13 2,129,774 10,600 Cygnus Business Media, Inc., Term Loan................ B2 CCC+ 8.86 to 8.91 07/13/09 10,600,250 1,000 DRI Holdings, Inc., Term Loan........... NR NR 8.32 07/03/14 995,000
See Notes to Financial Statements 35 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- PRINTING & PUBLISHING (CONTINUED) $14,279 Endurance Business Media, Inc., Term Loan................ B1 B+ 8.07 to 12.57% 07/26/13 to 01/26/14 $ 14,244,729 8,176 F&W Publications, Inc., Term Loan..... NR NR 7.61 to 9.61 02/05/13 7,993,566 12,375 Gatehouse Media, Inc., Term Loan..... B1 BB- 7.36 08/28/14 11,766,558 8,326 Haights Cross Operating Co., Term Loan................ B3 B- 8.86 to 9.86 08/20/08 8,242,652 7,950 Hanley-Wood, LLC, Term Loan........... NR B 7.61 03/08/14 7,406,294 4,478 Idearc, Inc., Term Loan................ Ba2 BBB- 7.36 11/17/14 4,287,206 1,567 Intermedia Outdoor, Inc., Term Loan..... NR NR 8.36 01/31/13 1,571,043 2,000 Knowledgepoint360 Group, LLC, Term Loan................ B1 BB+ 8.57 to 12.32 04/26/14 to 04/26/15 2,005,000 2,376 MC Communications, LLC, Term Loan...... NR NR 7.82 to 7.89 12/31/10 2,280,513 12,642 MediaNews Group, Inc., Term Loan..... Ba2 BB- 6.59 to 7.09 12/30/10 to 08/02/13 12,414,425 2,233 MediMedia USA, Inc., Term Loan........... Ba3 BB- 7.52 to 7.63 10/05/13 2,143,800 11,270 Merrill Communications, LLC, Term Loan........... B1 BB- 7.57 to 11.82 05/15/11 to 11/15/13 11,122,572 7,441 Penton Media, Inc., Term Loan........... B1 BB- 7.61 to 10.36 02/01/13 to 02/01/14 7,240,595 8,688 Primedia, Inc., Term Loan................ NR NR 7.57 09/30/13 8,640,385 2,631 Questex Media Group, Inc., Term Loan..... NR NR 8.36 05/04/14 2,578,625 18,105 Reader's Digest Association, Inc., Term Loan........... B1 B+ 7.33 to 7.38 03/02/14 16,837,301 9,571 R.H. Donnelley, Inc., Term Loan..... Ba1 BB+ 6.57 to 6.86 12/31/09 to 06/30/11 9,259,337 18,260 Riverdeep Interactive Learning USA, Inc., Term Loan................ B1 B 8.11 12/20/13 17,712,371 2,574 SGS International, Inc., Term Loan..... Ba2 BB 2.50 to 7.88 12/30/11 2,548,645
36 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- PRINTING & PUBLISHING (CONTINUED) $ 1,724 Source Media, Inc., Term Loan........... B1 NR 7.61% 11/08/11 $ 1,730,532 1,500 Summit Business Media Intermediate, Term Loan........... NR NR 8.09 07/06/14 1,488,750 3,616 Thomas Nelson Publishers, Term Loan................ NR NR 7.54 to 7.61 06/12/12 3,453,025 60,000 Tribune Co., Term Loan................ Ba2 BB- 8.36 05/19/14 54,685,740 10,438 Yell Group, PLC, (United Kingdom) Term Loan........... NR NR 6.82 to 7.32 04/30/11 to 02/10/13 10,264,023 -------------- 259,001,153 -------------- RESTAURANTS & FOOD SERVICE 2.5% 24,851 Aramark Corp., Term Loan................ Ba3 BB- 7.36 01/26/14 23,453,143 7,238 Arby's, LLC, Term Loan................ Ba3 BB 7.59 to 7.61 07/25/12 7,050,877 488 CBRL Group Inc., Term Loan........... Ba2 BB 6.84 04/27/13 468,338 3,200 Center Cut Hospitality, Inc., Term Loan........... NR NR 8.07 07/06/14 3,136,000 1,533 Denny's Corp., Term Loan................ Ba2 BB- 7.33 to 7.40 03/31/12 1,513,208 6,420 Landry's Restaurants, Inc., Term Loan........... Ba2 CCC+ 7.08 to 7.11 12/28/10 6,428,356 6,138 NPC International, Inc., Term Loan..... Ba3 BB- 7.07 to 7.14 05/03/13 5,953,448 451 OSI Restaurant Partners, LLC, Revolving Credit Agreement........... B1 BB 7.43 06/14/13 431,278 7,049 OSI Restaurant Partners, LLC, Term Loan................ B1 BB 7.63 06/14/13 6,738,722 5,960 Sagittarius Restaurants, LLC, Term Loan........... B1 B+ 7.61 03/29/13 5,849,992 2,893 Sbarro, Inc., Term Loan................ Ba3 B+ 7.86 to 7.88 01/31/14 2,820,431 -------------- 63,843,793 --------------
See Notes to Financial Statements 37 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- RETAIL--OFFICE PRODUCTS 0.3% $ 8,315 Corporate Express US Finance, Inc., (Netherlands) Term Loan................ Ba2 BB+ 7.11 to 7.36% 12/23/10 to 12/31/10 $ 8,106,668 -------------- RETAIL--OIL & GAS 0.1% 2,722 The Pantry, Inc., Term Loan........... Ba3 BB+ 7.07 05/15/14 2,524,861 -------------- RETAIL--SPECIALTY 0.8% 1,050 General Nutrition Centers, Inc., Revolving Credit Agreement........... Ba3 B- 7.61 09/16/13 1,025,063 5,387 General Nutrition Centers, Inc., Term Loan................ Ba3 B- 7.61 09/16/13 5,231,638 11,689 Nebraska Book Co., Inc., Term Loan..... B2 B 7.83 03/04/11 11,747,393 696 Visant Holding Corp., Term Loan.... Ba1 BB 7.33 10/04/11 700,546 -------------- 18,704,640 -------------- RETAIL--STORES 1.9% 5,955 Csk Auto, Inc., Term Loan................ Ba3 B+ 8.38 06/29/12 5,925,337 13,217 Michael's Stores, Inc., Term Loan..... B2 B 7.63 10/31/13 12,405,123 14,977 Neiman Marcus Group, Inc., Term Loan..... Ba3 B+ 7.09 to 7.11 04/06/13 14,374,602 10,000 Rite Aid Corp., Term Loan................ Ba3 BB- 7.07 06/04/14 9,993,750 3,123 Sally Holdings, Inc., Term Loan..... B2 BB- 7.86 11/16/13 3,030,304 2,910 Savers, Inc., Term Loan................ B1 BB- 8.11 08/11/12 2,865,862 -------------- 48,594,978 -------------- TELECOMMUNICATIONS--LOCAL EXCHANGE CARRIERS 1.3% 400 Alaska Communications Systems Group, Inc., Term Loan........... B1 BB- 7.11 02/01/12 391,000 2,257 CavTel Holdings, LLC, Term Loan (a)................. B2 NR 10.11 12/31/12 2,286,142
38 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- TELECOMMUNICATIONS--LOCAL EXCHANGE CARRIERS (CONTINUED) $11,200 Fairpoint Communications, Inc., Term Loan..... B1 BB- 7.13% 02/08/12 $ 10,836,000 4,093 Global Tel*Link Corp., Term Loan.... Ba3 BB 6.36 to 8.86 02/14/13 4,051,790 1,500 Hargray Acquisition Co., Term Loan...... B1 B 7.57 06/29/14 1,458,750 3,100 NuVox Transition Subsidiary, LLC, Term Loan........... B2 CCC+ 8.59 to 8.66 05/31/14 3,069,000 6,316 Orius Corp., LLC, Term Loan (c) (d) (e)................. NR NR 11.75 to 12.25 01/23/09 to 01/23/10 1,121,076 2,261 Paetec Holding Corp., Term Loan.... Ba3 B- 7.82 02/28/13 2,223,021 8,298 Sorenson Communications, Inc., Term Loan..... NR NR 7.86 to 12.36 02/16/14 to 04/27/14 8,202,793 -------------- 33,639,572 -------------- TELECOMMUNICATIONS--LONG DISTANCE 0.6% 3,150 Intelsat, Ltd., (Bermuda) Term Loan................ B2 B 7.86 02/01/14 3,077,720 4,000 Level 3 Communications, Inc., Term Loan..... B1 B+ 7.61 03/13/14 3,846,668 7,440 Time Warner Telecom, Inc., Term Loan..... Ba2 B 7.36 01/07/13 7,277,360 -------------- 14,201,748 -------------- TELECOMMUNICATIONS--WIRELESS 1.3% 5,985 American Cellular Corp., Term Loan (a)................. B1 B- 7.36 03/15/14 5,926,395 10,000 Asurion Corp., Term Loan................ NR NR 8.32 07/03/14 9,362,500 3,000 Cellular South, Inc., Term Loan..... NR NR 7.11 to 8.25 05/29/14 2,917,500 8,708 Centennial Cellular, Inc., Term Loan..... Ba2 BB- 7.36 02/09/11 8,485,182
See Notes to Financial Statements 39 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- TELECOMMUNICATIONS--WIRELESS (CONTINUED) $ 6,138 Cricket Communications, Inc., Term Loan..... Ba2 B+ 7.36% 06/16/13 $ 5,975,343 1,340 MetroPCS Wireless, Inc., Term Loan..... B1 B+ 7.63 11/03/13 1,306,378 -------------- 33,973,298 -------------- TEXTILES & LEATHER 1.5% 10,937 Gold Toe Investment Corp., Term Loan.... B1 CCC+ 8.09 to 11.36 10/30/13 to 04/30/14 10,897,155 8,788 HanesBrands, Inc., Term Loan........... Ba2 BB 7.07 to 9.11 09/05/13 8,530,472 5,850 HBI Branded Apparel Limited, Inc., Term Loan................ Ba3 BB 9.11 09/05/13 5,730,075 3,150 Levi Strauss & Co, Term Loan........... B2 B 7.57 03/27/14 2,995,124 2,915 Propex Fabrics, Inc., Term Loan..... Ba3 B+ 8.36 07/31/12 2,871,603 3,673 St. John Knits International, Inc., Term Loan........... B1 BB 8.36 03/21/12 3,690,911 3,005 Varsity Brands, Inc., Term Loan..... NR NR 8.13 to 9.75 02/22/14 2,959,894 -------------- 37,675,234 -------------- TRANSPORTATION--CARGO 0.4% 898 Cardinal Logistics Management, Inc., Term Loan........... NR NR 9.07 09/23/13 893,261 5,000 JHCI Acquisition, Inc., Term Loan..... Ba3 B+ 7.86 06/19/14 4,712,500 1,649 Kenan Advantage Group, Inc., Term Loan................ NR NR 8.36 12/16/11 1,632,775 2,131 Quality Distribution, Inc., Term Loan........... Ba3 B 8.32 11/13/09 2,120,581 -------------- 9,359,117 -------------- TRANSPORTATION--PERSONAL 0.2% 339 Coach America Holdings, Inc., Revolving Credit Agreement........... B1 CCC+ 5.26 10/20/14 328,814 4,319 Coach America Holdings, Inc., Term Loan................ B1 B+ 8.11 to 11.86 04/20/14 4,211,667
40 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- TRANSPORTATION--PERSONAL (CONTINUED) $ 589 Neoplan USA Corp., Revolving Credit Agreement (c) (d) (e) (f)............. NR NR 8.54% 06/30/06 $ 551,058 500 US Airways Group, Inc., Term Loan..... B2 B+ 7.86 03/24/14 478,750 -------------- 5,570,289 -------------- TRANSPORTATION-RAIL MANUFACTURING 0.4% 7,378 Helm Holding Corp., Term Loan........... NR NR 7.57 to 7.61 07/08/11 7,401,142 1,587 Standard Steel, LLC, Term Loan........... B2 BB- 7.82 to 7.86 06/30/12 1,531,133 -------------- 8,932,275 -------------- UTILITIES 4.4% 800 Astoria Generating Co., LP, Term Loan.. B3 B 9.11 08/23/13 788,438 4,000 Bicent Power, LLC, Term Loan........... Ba3 BB- 7.36 06/30/14 3,880,000 4,988 Calpine Corp., Term Loan................ NR NR 7.61 03/29/09 4,845,147 5,000 Dynegy Holdings, Inc., Term Loan..... Ba1 BB- 6.82 04/02/13 4,762,500 13,211 First Light Power Resources, Term Loan................ B1 BB- 7.86 to 9.88 11/01/13 to 05/01/14 12,940,851 2,509 InfrastruX Group, Inc., Term Loan..... B2 B+ 8.57 11/03/12 2,515,493 2,400 Longview Power LLC, Term Loan........... Ba3 BB 7.63 02/28/14 2,256,000 170 Mirant North America LLC, Revolving Credit Agreement.... Ba3 BB- 7.61 01/03/12 159,999 40,735 NRG Energy, Inc., Term Loan........... Ba1 BB 7.11 02/01/13 39,445,444 2,460 NSG Holdings, LLC, Term Loan........... Ba2 BB 6.86 06/15/14 2,401,884 4,200 Primary Energy Operating, LLC, Term Loan................ NR NR 8.11 08/24/09 4,179,000 22,500 Thermal North America, Term Loan.. B1 BB 8.07 to 8.11 10/24/08 22,443,750
See Notes to Financial Statements 41 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
BANK LOAN PRINCIPAL RATINGS+ AMOUNT -------------- STATED (000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE - ----------------------------------------------------------------------------------------------------- UTILITIES (CONTINUED) $ 6,057 TPF Generation Holdings, LLC, Term Loan................ Ba3 BB- 7.36 to 9.61% 12/15/13 to 12/15/14 $ 5,921,756 212 TPF Generation Holdings, LLC, Revolving Credit Agreement........... Ba3 BB- 7.46 12/15/13 206,737 5,000 USPF Holdings, LLC, Term Loan........... Ba2 BB+ 7.10 04/11/14 4,962,500 -------------- 111,709,499 -------------- TOTAL VARIABLE RATE** SENIOR LOAN INTERESTS 120.6%........................ 3,040,717,788 --------------
DESCRIPTION VALUE - --------------------------------------------------------------------------------------------- NOTES 0.9% Boise Cascade, LLC ($2,800,000 par, 8.24% coupon, maturing 10/15/12) (h)..... 2,758,000 Builders FirstSource, Inc., ($6,300,000 par, 9.61% coupon, maturing 02/15/12) (h)......................................................................... 6,237,000 Compression Polymers Corp. ($2,300,000 par, 12.12% coupon, maturing 07/01/12) (h)......................................................................... 2,346,000 Del Laboratories, Inc. ($5,600,000 par, 10.36% coupon, maturing 11/01/11) (h)......................................................................... 5,572,000 Qwest Corp. ($3,500,000 par, 8.61% coupon, maturing 06/15/13) (h)............ 3,640,000 Verso Paper Holdings, LLC ($1,500,000 par, 9.11% coupon, maturing 08/01/14) (h) (i)..................................................................... 1,477,500 -------------- TOTAL NOTES 0.9%............................................................ 22,030,500 -------------- EQUITIES 0.0% Aladdin Gaming Holdings, LLC (8.63% ownership interest, Acquisition date 09/03/04, Cost $240,062) (j) (k)............................................ 53,798 DecorateToday.com (198,600 common shares, Acquisition date 12/31/98, Cost $3,505,909) (f) (j) (k)..................................................... 0 Environmental Systems Products Holdings, Inc. (2,183 common shares, Acquisition date 06/22/04, Cost $0) (j) (k)................................. 0 Gentek, Inc. (Canada) (1,040 common shares, Acquisition date 09/19/06, Cost $0) (j) (k)................................................................. 30,795 Gentek, Inc. (Canada) (Warrants for 1,597 common shares, Acquisition date 10/17/06, Expiration date 10/31/10, Cost $0) (j) (k)........................ 56,703 IDT Corp. (22,898 common shares) (j)......................................... 228,522 London Fog Industries, Inc. (515,922 common shares) (j)...................... 0 Neoplan USA Corp. (2,262 preferred shares, Acquisition date 09/04/03, Cost $1,074,522) (c) (f) (j) (k)................................................. 0 Neoplan USA Corp. (8,517 common shares, Acquisition date 09/04/03, Cost $85) (c) (f) (j) (k)............................................................. 0 Railworks Corp. (Warrants for 1,037 common shares, Acquisition date 07/28/05, Expiration date 06/14/11, Cost $2,557,518) (j) (k).......................... 0
42 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
DESCRIPTION VALUE - --------------------------------------------------------------------------------------------- EQUITIES (CONTINUED) Rotech Medical Corp. (94,289 common shares, Acquisition date 06/12/02, Cost $377,156) (j) (k)........................................................... $ 0 Safelite Realty (48,903 common shares, Acquisition date 10/20/00, Cost $0) (f) (j) (k)................................................................. 0 -------------- TOTAL EQUITIES 0.0%......................................................... 369,818 -------------- TOTAL LONG-TERM INVESTMENTS 121.5% (Cost $3,216,459,415)....................................................... 3,063,118,106 -------------- SHORT-TERM INVESTMENTS 2.3% REPURCHASE AGREEMENTS 2.0% State Street Bank & Trust Corp. ($51,000,000 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 5.03%, dated 07/31/07, to be sold on 08/01/07 at $51,007,126) (a).................. 51,000,000 TIME DEPOSIT 0.3% State Street Bank & Trust Corp. ($7,962,603 par, 4.05% coupon, dated 07/31/07, to be sold on 08/01/07 at $7,963,499) (a)......................... 7,962,603 -------------- TOTAL SHORT-TERM INVESTMENTS (Cost $58,962,603).......................................................... 58,962,603 -------------- TOTAL INVESTMENTS 123.8% (Cost $3,275,422,018)....................................................... 3,122,080,709 BORROWINGS (22.0%)........................................................... (555,000,000) LIABILITIES IN EXCESS OF OTHER ASSETS (1.8%)................................ (45,955,355) -------------- NET ASSETS 100.0%........................................................... $2,521,125,354 ==============
NR--Not rated Industry percentages are calculated as a percentage of net assets. (a) All or a portion of this security is designated in connection with unfunded loan commitments. (b) Payment-in-kind security. (c) This borrower has filed for protection in federal bankruptcy court. (d) This borrower is currently in liquidation. (e) This Senior Loan interest is non-income producing. (f) Affiliated company (g) The borrower is in the process of restructuring or amending the terms of this loan. See Notes to Financial Statements 43 VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued (h) Variable rate security. Interest rate shown is that in effect at July 31, 2007. (i) 144A-Private Placement security which is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may only be resold in transactions exempt from registration which are normally those transactions with qualified institutional buyers. (j) Non-income producing security as the stock or warrant currently does not declare dividends. (k) Restricted security. Securities were acquired through the restructuring of senior loans. These securities are restricted as they are not allowed to be deposited via the Depository Trust Company. If at a later point in time, the company wishes to register, the issuer will bear the costs associated with registration. The aggregate value of restricted securities represents less than 0.1% of the net assets of the Fund. + Bank Loans rated below Baa by Moody's Investor Service, Inc. or BBB by Standard & Poor's Group are considered to be below investment grade. Bank Loan ratings are unaudited. * Senior Loans in the Fund's portfolio generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for a Borrower to prepay, prepayments of Senior Loans in the Fund's portfolio may occur. As a result, the actual remaining maturity of Senior Loans held in the Fund's portfolio may be substantially less than the stated maturities shown. Although the Fund is unable to accurately estimate the actual remaining maturity of individual Senior Loans, the Fund estimates that the actual average maturity of the Senior Loans held in its portfolio will be approximately 18-24 months. ** Senior Loans in which the Fund invests generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as the London Inter-Bank Offered Rate ("LIBOR"), (ii) the prime rate offered by one or more major United States banks or (iii) the certificate of deposit rate. Senior Loans are generally considered to be restricted in that the Fund ordinarily is contractually obligated to receive approval from the Agent Bank and/or Borrower prior to the disposition of a Senior Loan. 44 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued SWAP AGREEMENTS OUTSTANDING AS OF JULY 31, 2007: CREDIT DEFAULT SWAPS
PAY/ RECEIVE NOTIONAL UNREALIZED REFERENCE BUY/SELL FIXED EXPIRATION AMOUNT APPRECIATION/ COUNTERPARTY ENTITY/INDEX PROTECTION RATE DATE (000) DEPRECIATION Goldman Sachs Credit Partners, L.P. ........... Standard Pacific Corporation Sell 3.40% 03/20/14 $2,500 $ (406,395) Goldman Sachs Credit Partners, L.P. ........... Standard Pacific Corporation Sell 3.70 06/20/14 2,500 (385,554) Goldman Sachs Credit Partners, L.P. ........... K. Hovnanian Enterprises, Inc. Sell 3.75 06/20/12 1,500 (185,345) Goldman Sachs Credit Partners, L.P. ........... K. Hovnanian Enterprises, Inc. Sell 2.15 06/20/09 1,500 (98,024) ----------- TOTAL CREDIT DEFAULT SWAPS.................................................................. $(1,075,318) ===========
See Notes to Financial Statements 45 VAN KAMPEN SENIOR LOAN FUND FINANCIAL STATEMENTS Statement of Assets and Liabilities July 31, 2007 ASSETS: Unaffiliated Investments (Cost $3,270,252,135).............. $ 3,121,529,651 Affiliated Investments (Cost $5,169,883).................... 551,058 --------------- Total Investments (Cost $3,275,422,018).................. 3,122,080,709 Restricted Cash............................................. 712,302 Interest and Fees.......................................... 22,632,191 Fund Shares Sold........................................... 9,592,109 Investments Sold........................................... 2,805,843 Other....................................................... 52,354 --------------- Total Assets............................................. 3,157,875,508 --------------- LIABILITIES: Payables: Borrowings................................................. 555,000,000 Investments Purchased...................................... 64,373,224 Income Distributions....................................... 3,103,385 Investment Advisory Fee.................................... 1,863,738 Swap Contracts............................................. 1,075,318 Distributor and Affiliates................................. 784,120 Administration Fee......................................... 549,242 Fund Shares Repurchased.................................... 196,512 Unfunded Commitments........................................ 4,909,286 Accrued Interest Expense.................................... 2,366,276 Trustees' Deferred Compensation and Retirement Plans........ 1,445,011 Accrued Expenses............................................ 1,084,042 --------------- Total Liabilities........................................ 636,750,154 --------------- NET ASSETS.................................................. $ 2,521,125,354 =============== NET ASSETS CONSIST OF: Capital..................................................... $ 3,783,638,868 Accumulated Undistributed Net Investment Income............. (5,136,703) Net Unrealized Depreciation................................. (159,325,913) Accumulated Net Realized Loss............................... (1,098,050,898) --------------- NET ASSETS.................................................. $ 2,521,125,354 =============== NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares: Net asset value per share (Based on net assets of $544,722,636 and 62,948,596 shares of beneficial interest issued and outstanding).................................. $ 8.65 Maximum sales charge (3.25%* of offering price).......... 0.29 --------------- Maximum offering price to public......................... $ 8.94 =============== Class B Shares: Net asset value and offering price per share (Based on net assets of $41,460,800 and 4,792,851 shares of beneficial interest issued and outstanding).............. $ 8.65 =============== Class C Shares: Net asset value and offering price per share (Based on net assets of $563,547,568 and 65,148,592 shares of beneficial interest issued and outstanding).............. $ 8.65 =============== Class IB Shares: Net asset value and offering price per share (Based on net assets of $1,131,807,091 and 130,638,125 shares of beneficial interest issued and outstanding).............. $ 8.66 =============== Class IC Shares: Net asset value and offering price per share (Based on net assets of $239,587,259 and 27,663,629 shares of beneficial interest issued and outstanding).............. $ 8.66 ===============
* On sales of $100,000 or more, the sales charge will be reduced. 46 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND FINANCIAL STATEMENTS continued Statement of Operations For the Year Ended July 31, 2007 INVESTMENT INCOME: Interest from Unaffiliated Investments...................... $ 200,770,776 Interest from Affiliated Investments........................ 362,886 Dividends................................................... 21,266 Other....................................................... 4,821,168 ------------- Total Income............................................ 205,976,096 ------------- EXPENSES: Investment Advisory Fee..................................... 17,669,186 Administration Fee.......................................... 5,165,573 Distribution and Service Fees Class A................................................... 667,154 Class B................................................... 268,388 Class C................................................... 2,488,237 Class IC.................................................. 406,458 Credit Line................................................. 1,801,510 Transfer Agent Fees......................................... 1,635,787 Professional Fees........................................... 1,014,403 Custody..................................................... 523,122 Accounting and Administrative Expenses...................... 281,689 Trustees' Fees and Related Expenses......................... 234,317 Reports to Shareholders..................................... 167,114 Registration Fees........................................... 54,660 Other....................................................... 952,515 ------------- Total Operating Expenses................................ 33,330,113 Service Fee Reimbursement............................... 1,762,769 Less Credits Earned on Cash Balances.................... 146,212 ------------- Net Operating Expenses.................................. 31,421,132 Interest Expense........................................ 22,796,981 ------------- Total Expenses.......................................... 54,218,113 ------------- NET INVESTMENT INCOME....................................... $ 151,757,983 ============= REALIZED AND UNREALIZED GAIN/LOSS: Realized Gain/Loss: Unaffiliated Investments.................................. $ (4,467,958) Affiliated Investments.................................... (26,706,416) Swap Contracts............................................ 190,592 Foreign Currency Transactions............................. 9,422 ------------- Net Realized Loss........................................... (30,974,360) ------------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... (92,713,009) ------------- End of the Period: Investments............................................. (153,341,309) Swap Contracts.......................................... (1,075,318) Unfunded Commitments.................................... (4,909,286) ------------- (159,325,913) ------------- Net Unrealized Depreciation During the Period............... (66,612,904) ------------- NET REALIZED AND UNREALIZED LOSS............................ $ (97,587,264) ============= NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 54,170,719 =============
See Notes to Financial Statements 47 VAN KAMPEN SENIOR LOAN FUND FINANCIAL STATEMENTS continued Statements of Changes in Net Assets
FOR THE FOR THE YEAR ENDED YEAR ENDED JULY 31, 2007 JULY 31, 2006 -------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income................................... $ 151,757,983 $ 118,418,127 Net Realized Loss....................................... (30,974,360) (4,980,255) Net Unrealized Depreciation During the Period........... (66,612,904) (24,358,875) -------------- -------------- Change in Net Assets from Operations.................... 54,170,719 89,078,997 -------------- -------------- Distributions from Net Investment Income: Class A Shares........................................ (20,566,767) (4,106,348) Class B Shares........................................ (1,891,994) (689,736) Class C Shares........................................ (17,252,543) (3,401,184) Class IB Shares....................................... (98,251,723) (83,511,213) Class IC Shares....................................... (21,257,308) (20,911,291) -------------- -------------- Total Distributions..................................... (159,220,335) (112,619,772) -------------- -------------- NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (105,049,616) (23,540,775) -------------- -------------- FROM CAPITAL TRANSACTIONS: Proceeds from Shares Sold............................... 1,129,759,191 115,282,367 Net Asset Value of Shares Issued Through Dividend Reinvestment.......................................... 91,115,595 59,986,676 Cost of Shares Repurchased.............................. (374,391,451) (557,406,980) -------------- -------------- NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS...... 846,483,335 (382,137,937) -------------- -------------- TOTAL INCREASE/DECREASE IN NET ASSETS................... 741,433,719 (405,678,712) NET ASSETS: Beginning of the Period................................. 1,779,691,635 2,185,370,347 -------------- -------------- End of the Period (Including accumulated undistributed net investment income of $(5,136,703) and $1,719,850, respectively)......................................... $2,521,125,354 $1,779,691,635 ============== ==============
48 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND FINANCIAL STATEMENTS continued Statement of Cash Flows For the Year Ended July 31, 2007 CHANGE IN NET ASSETS FROM OPERATIONS........................ $ 54,170,719 --------------- Adjustments to Reconcile the Change in Net Assets from Operations to Net Cash Provided by Operating Activities: Purchase of Investments................................... (2,952,140,736) Principal Repayments/Sales of Investments................. 1,846,257,938 Net Purchases of Short-Term Investments................... (9,711,299) Amortization of Loan Fees................................. 848,508 Net Loan Fees Received.................................... 11,616 Accretion of Discounts.................................... (1,034,258) Net Realized Gain/Loss on Investments..................... 31,174,374 Net Change in Unrealized Appreciation/Depreciation on Investments............................................. 62,638,051 Increase in Restricted Cash............................... (712,302) Decrease in Receivable for Investments Sold............... 799,657 Increase in Interest Receivables, Receivables for Investments Sold and Other Assets....................... (8,712,396) Decrease in Payable for Investments Purchased............. (70,773,338) Decrease in Accrued Expenses and Other Payables........... (9,160) Net Change in Unrealized Depreciation on Swap Contracts... 1,075,318 Net Change in Unfunded Commitments........................ 2,899,535 Increase in Trustees' Deferred Compensation and Retirement Plans................................................... 206,271 --------------- Total Adjustments....................................... (1,097,182,221) --------------- NET CASH PROVIDED BY OPERATING ACTIVITIES................... (1,043,011,502) --------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Shares Sold................................... 1,123,889,402 Change in Bank Borrowings................................... 360,000,000 Change in Accrued Interest Expense.......................... 2,160,384 Payments on Shares Repurchased.............................. (376,060,673) Cash Distributions Paid..................................... (66,977,611) --------------- Net Cash from Financing Activities...................... 1,043,011,502 --------------- NET INCREASE IN CASH........................................ -0- Cash at Beginning of the Period............................. -0- --------------- CASH AT END OF THE PERIOD................................... $ -0- =============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Year for Interest...................... $ 20,636,597 ===============
See Notes to Financial Statements 49 VAN KAMPEN SENIOR LOAN FUND FINANCIAL HIGHLIGHTS THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
FEBRUARY 18, 2005 (COMMENCEMENT OF YEAR ENDED JULY 31, OPERATIONS) TO CLASS A SHARES ------------------- JULY 31, 2007 2006 2005 --------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD............. $ 8.99 $ 9.10 $ 9.12 -------- -------- -------- Net Investment Income (a).......................... 0.66 0.54 0.18 Net Realized and Unrealized Loss................... (0.29) (0.15) (0.04) -------- -------- -------- Total from Investment Operations..................... 0.37 0.39 0.14 Less Distributions from Net Investment Income........ 0.71 0.50 0.16 -------- -------- -------- NET ASSET VALUE, END OF THE PERIOD................... $ 8.65 $ 8.99 $ 9.10 ======== ======== ======== Total Return (b)..................................... 4.06% 4.39% 1.75%** Net Assets at End of the Period (In millions)........ $ 544.7 $ 91.0 $ 54.0 Ratios to Average Net Assets:* Operating Expense.................................. 1.41% 1.39% 1.42% Interest Expense................................... 1.09% 0.10% 0.04% Total Net Expense.................................. 2.50% 1.49% 1.46% Net Investment Income.............................. 7.34% 5.95% 4.44% Portfolio Turnover (c)............................... 74% 84% 90% * If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower and the ratios would have been as follows: Ratios to Average Net Assets: Operating Expense.................................. 1.66% 1.64% 1.67% Interest Expense................................... 1.09% 0.10% 0.04% Total Gross Expense................................ 2.75% 1.74% 1.71% Net Investment Income.............................. 7.09% 5.70% 4.19% SENIOR INDEBTEDNESS: Total Borrowing Outstanding (In thousands)........... $555,000 $195,000 $123,000 Asset Coverage Per $1,000 Unit of Senior Indebtedness (d)................................................ $ 5,543 $ 10,127 $ 18,767
** Non-Annualized (a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 3.25% or early withdrawal charge. On purchases of $1 million or more, an early withdrawal charge of 1% may be imposed on certain repurchases by the Fund made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined distribution and service fees of up to .25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the repurchases by the Fund of Fund shares. (c) Calculation includes the proceeds from principal repayments and sales of variable rate senior loan interests. (d) Calculated by subtracting the Fund's total liabilities (not including the Borrowings) from the Fund's total assets and dividing by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. 50 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
FEBRUARY 18, 2005 (COMMENCEMENT OF YEAR ENDED JULY 31, OPERATIONS) TO CLASS B SHARES ------------------- JULY 31, 2007 2006 2005 --------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD............. $ 8.99 $ 9.10 $ 9.12 -------- -------- -------- Net Investment Income (a).......................... 0.60 0.47 0.14 Net Realized and Unrealized Loss................... (0.30) (0.14) (0.03) -------- -------- -------- Total from Investment Operations..................... 0.30 0.33 0.11 Less Distributions from Net Investment Income........ 0.64 0.44 0.13 -------- -------- -------- NET ASSET VALUE, END OF THE PERIOD................... $ 8.65 $ 8.99 $ 9.10 ======== ======== ======== Total Return (b)..................................... 3.29% 3.63% 1.41%** Net Assets at End of the Period (In millions)........ $ 41.5 $ 17.8 $ 10.8 Ratios to Average Net Assets:* Operating Expense.................................. 2.18% 2.14% 2.18% Interest Expense................................... 1.10% 0.10% 0.04% Total Net Expense.................................. 3.28% 2.24% 2.22% Net Investment Income.............................. 6.67% 5.24% 3.73% Portfolio Turnover (c)............................... 74% 84% 90% * If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower and the ratios would have been as follows: Ratios to Average Net Assets: Operating Expense.................................. 2.43% 2.39% 2.43% Interest Expense................................... 1.10% 0.10% 0.04% Total Gross Expense................................ 3.53% 2.49% 2.47% Net Investment Income.............................. 6.42% 4.99% 3.48% SENIOR INDEBTEDNESS: Total Borrowing Outstanding (In thousands)........... $555,000 $195,000 $123,000 Asset Coverage Per $1,000 Unit of Senior Indebtedness (d)................................................ $ 5,543 $ 10,127 $ 18,767
** Non-Annualized (a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum early withdrawal charge of 3%, charged on certain repurchases by the Fund made within one year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined distribution and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the repurchases by the Fund of Fund shares. (c) Calculation includes the proceeds from principal repayments and sales of variable rate senior loan interests. (d) Calculated by subtracting the Fund's total liabilities (not including the Borrowings) from the Fund's total assets and dividing by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. See Notes to Financial Statements 51 VAN KAMPEN SENIOR LOAN FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
FEBRUARY 18, 2005 (COMMENCEMENT OF YEAR ENDED JULY 31, OPERATIONS) TO CLASS C SHARES ------------------- JULY 31, 2007 2006 2005 --------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD............. $ 8.99 $ 9.10 $ 9.12 -------- -------- -------- Net Investment Income (a).......................... 0.59 0.47 0.14 Net Realized and Unrealized Loss................... (0.29) (0.14) (0.03) -------- -------- -------- Total from Investment Operations..................... 0.30 0.33 0.11 Less Distributions from Net Investment Income........ 0.64 0.44 0.13 -------- -------- -------- NET ASSET VALUE, END OF THE PERIOD................... $ 8.65 $ 8.99 $ 9.10 ======== ======== ======== Total Return (b)..................................... 3.29% 3.63% 1.41%** Net Assets at End of the Period (In millions)........ $ 563.5 $ 72.5 $ 55.7 Ratios to Average Net Assets:* Operating Expense..... 2.16% 2.14% 2.17% Interest Expense................................... 1.09% 0.10% 0.04% Total Net Expense.................................. 3.25% 2.24% 2.21% Net Investment Income.............................. 6.55% 5.19% 3.66% Portfolio Turnover (c)............................... 74% 84% 90% * If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower and the ratios would have been as follows: Ratios to Average Net Assets: Operating Expense.................................. 2.41% 2.39% 2.42% Interest Expense................................... 1.09% 0.10% 0.04% Total Gross Expense................................ 3.50% 2.49% 2.46% Net Investment Income.............................. 6.30% 4.94% 3.41% SENIOR INDEBTEDNESS: Total Borrowing Outstanding (In thousands)........... $555,000 $195,000 $123,000 Asset Coverage Per $1,000 Unit of Senior Indebtedness (d)................................................ $ 5,543 $ 10,127 $ 18,767
** Non-Annualized (a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum early withdrawal charge of 1%, charged on certain repurchases by the Fund made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined distribution and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the repurchases by the Fund of Fund shares. (c) Calculation includes the proceeds from principal repayments and sales of variable rate senior loan interests. (d) Calculated by subtracting the Fund's total liabilities (not including the Borrowings) from the Fund's total assets and dividing by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. 52 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED JULY 31, CLASS IB SHARES -------------------------------------------------------- 2007 2006 2005 2004 2003 -------------------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD............................ $ 9.01 $ 9.11 $ 9.00 $ 8.29 $ 8.09 -------- -------- -------- -------- -------- Net Investment Income (a)......... 0.68 0.54 0.37 0.30 0.33 Net Realized and Unrealized Gain/Loss....................... (0.32) (0.14) 0.08 0.68 0.19 -------- -------- -------- -------- -------- Total from Investment Operations.... 0.36 0.40 0.45 0.98 0.52 -------- -------- -------- -------- -------- Less: Distributions from Net Investment Income.......................... 0.71 0.50 0.34 0.25 0.29 Return of Capital Distributions... -0- -0- -0- 0.02 0.03 -------- -------- -------- -------- -------- Total Distributions................. 0.71 0.50 0.34 0.27 0.32 -------- -------- -------- -------- -------- NET ASSET VALUE, END OF THE PERIOD............................ $ 8.66 $ 9.01 $ 9.11 $ 9.00 $ 8.29 ======== ======== ======== ======== ======== Total Return (b).................... 4.05% 4.38% 5.18% 12.03% 6.58% Net Assets at End of the Period (In millions)......................... $1,131.8 $1,307.2 $1,639.0 $1,703.1 $1,876.1 Ratios to Average Net Assets: Operating Expense................. 1.43% 1.39% 1.38% 1.48% 1.54% Interest Expense.................. 1.11% 0.10% 0.04% 0.00%(e) 0.00%(e) Total Net Expense................. 2.54% 1.49% 1.42% 1.48% 1.54% Net Investment Income............. 7.49% 5.87% 4.09% 3.44% 4.21% Portfolio Turnover (c).............. 74% 84% 90% 94% 49% SENIOR INDEBTEDNESS: Total Borrowing Outstanding (In thousands)........................ $555,000 $195,000 $123,000 -0- -0- Asset Coverage Per $1,000 Unit of Senior Indebtedness (d)........... $ 5,543 $ 10,127 $ 18,767 N/A N/A
(a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum early withdrawal charge of 3%, charged on repurchases by the Fund made within one year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or repurchases by the Fund of Fund shares. The early withdrawal charge was terminated effective February 18, 2005. (c) Calculation includes the proceeds from principal repayments and sales of variable rate senior loan interests. (d) Calculated by subtracting the Fund's total liabilities (not including the Borrowings) from the Fund's total assets and dividing by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. (e) Amount is less than 0.01% N/A=Not Applicable See Notes to Financial Statements 53 VAN KAMPEN SENIOR LOAN FUND FINANCIAL HIGHLIGHTS continued THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
JUNE 13, 2003 YEAR ENDED JULY 31, (COMMENCEMENT OF CLASS IC SHARES ------------------------------------------ OPERATIONS) TO 2007 2006 2005 2004 JULY 31, 2003 -------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD................................... $ 9.00 $ 9.11 $ 9.00 $ 8.29 $ 8.16 -------- -------- -------- ------ -------- Net Investment Income (a)................ 0.68 0.54 0.37 0.28 0.04 Net Realized and Unrealized Gain/Loss.... (0.31) (0.15) 0.07 0.69 0.12 -------- -------- -------- ------ -------- Total from Investment Operations.......... 0.37 0.39 0.44 0.97 0.16 -------- -------- -------- ------ -------- Less: Distributions from Net Investment Income................................. 0.71 0.50 0.33 0.24 0.03 Return of Capital Distributions.......... -0- -0- -0- 0.02 -0- -------- -------- -------- ------ -------- Total Distributions....................... 0.71 0.50 0.33 0.26 0.03 -------- -------- -------- ------ -------- NET ASSET VALUE, END OF THE PERIOD........ $ 8.66 $ 9.00 $ 9.11 $ 9.00 $ 8.29 ======== ======== ======== ====== ======== Total Return (b).......................... 4.06% 4.50% 4.98% 11.86% 2.02%** Net Assets at End of the Period (In millions)................................ $ 239.6 $ 291.3 $ 426.0 $332.0 $ 246.1 Ratios to Average Net Assets:* Operating Expense........................ 1.43% 1.39% 1.44% 1.62% 1.56% Interest Expense......................... 1.11% 0.10% 0.04% 0.00%(d) 0.00%(d) Total Net Expense........................ 2.54% 1.49% 1.48% 1.62% 1.56% Net Investment Income.................... 7.49% 5.85% 4.07% 3.26% 3.89% Portfolio Turnover (c).................... 74% 84% 90% 94% 49% * If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower and the ratios would have been as follows: Ratios to Average Net Assets: Operating Expense........................ 1.58% 1.54% 1.52% N/A N/A Interest Expense......................... 1.11% 0.10% 0.04% N/A N/A Total Gross Expense...................... 2.69% 1.64% 1.56% N/A N/A Net Investment Income.................... 7.34% 5.70% 3.99% N/A N/A SENIOR INDEBTEDNESS: Total Borrowing Outstanding (In thousands)............................... $555,000 $195,000 $123,000 -0- -0- Asset Coverage Per $1,000 Unit of Senior Indebtedness (e)......................... $ 5,543 $ 10,127 $ 18,767 N/A N/A
** Non-Annualized (a) Based on average shares outstanding. (b) Assumes reinvestment of all distributions for the period and does not include payment of the maximum early withdrawal charge of 1%, charged on repurchases by the Fund made within one year of purchase. If the sales charge was included, total returns would be lower. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or repurchases by the Fund of Fund shares. The early withdrawal charge was terminated effective February 18, 2005. (c) Calculation includes the proceeds from principal repayments and sales of variable rate senior loan interests. (d) Amount is less than 0.01% (e) Calculated by subtracting the Fund's total liabilities (not including the Borrowings) from the Fund's total assets and dividing by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. N/A=Not Applicable 54 See Notes to Financial Statements VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen Senior Loan Fund (the "Fund") is registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's investment objective is to provide a high level of current income, consistent with preservation of capital. The Fund invests primarily in adjustable rate Senior Loans. Senior Loans are business loans that have a senior right to payment and are made to borrowers that may be corporations, partnerships, or other entities. These borrowers operate in a variety of industries and geographic regions. The Fund commenced investment operations on October 4, 1989. The Fund continuously offers Class A Shares, Class B Shares and Class C Shares. Class IB Shares and Class IC Shares are not continuously offered. Each class of shares differs by its initial sales load, contingent deferred sales charges, the allocation of class-specific expenses and voting rights on matters affecting a single class. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION The Fund's Senior Loans and notes are valued by the Fund following valuation guidelines established and periodically reviewed by the Fund's Board of Trustees. Under the valuation guidelines, Senior Loans and notes for which reliable market quotes are readily available are valued at the mean of such bid and ask quotes. Where reliable market quotes are not readily available, Senior Loans and notes are valued, where possible, using independent market indicators provided by independent pricing sources approved by the Board of Trustees. Other Senior Loans and notes are valued by independent pricing sources approved by the Board of Trustees based upon pricing models developed, maintained and operated by those pricing sources or valued by Van Kampen Asset Management (the "Adviser") by considering a number of factors including consideration of market indicators, transactions in instruments which the Adviser believes may be comparable (including comparable credit quality, interest rate redetermination period and maturity), the credit worthiness of the Borrower, the current interest rate, the period until the next interest rate redetermination and the maturity of such Senior Loans. Consideration of comparable instruments may include commercial paper, negotiable certificates of deposit and short-term variable rate securities which have adjustment periods comparable to the Senior Loans in the Fund's portfolio. The fair value of Senior Loans are reviewed and approved by the Fund's Valuation Committee and Board of Trustees. Equity securities are valued on the basis of prices furnished by pricing services or at fair value as determined in good faith by the Adviser under the direction of the Board of Trustees. Credit default swaps are valued using market quotations from brokers. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market value. Short-term loan participations are valued at cost in the absence of any indication of impairment. 55 VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued B. SECURITY TRANSACTIONS Investment transactions are recorded on a trade date basis. Realized gains and losses are determined on an identified cost basis. Legal expenditures that are expected to result in the restructuring of or a plan of reorganization for an investment are recorded as realized losses. The Fund may purchase and sell securities on a "when-issued" or "delayed delivery" basis with settlement to occur at a later date. The value of the security so purchased is subject to market fluctuations during this period. The Fund will segregate assets with the custodian having an aggregate value at least equal to the amount of the when-issued or delayed delivery purchase commitments until after payment is made. At July 31, 2007, the Fund had no when-issued or delayed delivery purchase commitments. The Fund may invest in repurchase agreements, which are short-term investments in which the Fund acquires ownership of a debt security and the seller agrees to repurchase the security at a future time and specified price. Repurchase agreements are fully collateralized by the underlying debt security. The Fund will make payment for such securities only upon physical delivery or evidence of book entry transfer to the account of the custodian bank. The seller is required to maintain the value of the underlying security at not less than the repurchase proceeds due the Fund. C. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Facility fees on senior loans purchased are treated as market discounts. Market premiums are amortized and discounts are accreted over the stated life of each applicable senior loan, note or other fixed-income security. Other income is comprised primarily of amendment fees which are recorded when received. Amendment fees are earned as compensation for agreeing to changes in loan agreements. Income, expenses and realized and unrealized gains or losses are allocated on a pro-rata basis to each class of shares except for distribution and service fees, which are unique to each class of shares. D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. The Fund intends to utilize provisions of the federal income tax laws which allow it to carry a realized capital loss forward for eight years following the year of the loss and offset such losses against any future realized capital gains. At July 31, 2007, the Fund had an accumulated capital loss carryforward for tax purposes of $1,072,209,351, which will expire according to the following schedule.
AMOUNT EXPIRATION $ 28,927,103................................................ July 31, 2008 90,868,001................................................ July 31, 2009 445,144,583................................................ July 31, 2010 215,755,020................................................ July 31, 2011 153,257,861................................................ July 31, 2012 68,141,145................................................ July 31, 2013 21,900,119................................................ July 31, 2014 48,215,519................................................ July 31, 2015
56 VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued Due to a merger with another regulated investment company, a portion of the capital loss carryforward referred to above may be limited under Internal Revenue Code Section 382. At July 31, 2007, the cost and related gross unrealized appreciation and depreciation were as follows: Cost of investments for tax purposes........................ $3,283,541,278 ============== Gross tax unrealized appreciation........................... 2,092,522 Gross tax unrealized depreciation........................... (163,553,091) -------------- Net tax unrealized depreciation on investments.............. $ (161,460,569) ==============
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly dividends from net investment income. Net realized gains, if any, are distributed at least annually. Distributions from net realized gains for book purposes may include short-term capital gains, which are included in ordinary income for tax purposes. The tax character of distributions paid during the years ended July 31, 2007 and 2006 was as follows:
2007 2006 Distributions paid from: Ordinary income........................................... $158,093,206 $112,254,712 Long-term capital gain.................................... -0- -0- ------------ ------------ $158,093,206 $112,254,712 ============ ============
Permanent differences, primarily due a portion of capital loss carryforward expiring in the current year, resulted in the following reclassifications among the Fund's components of net assets at July 31, 2007.
ACCUMULATED UNDISTRIBUTED ACCUMULATED NET NET INVESTMENT INCOME REALIZED LOSS CAPITAL $605,799 $24,735,488 $(25,341,287)
As of July 31, 2007, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income............................... $692,799
Net realized gains or losses may differ for financial reporting and tax purposes primarily as a result of the deferral of losses related to wash sale transactions and gains or losses recognized on securities for tax purposes but not for book purposes. F. CREDITS EARNED ON CASH BALANCES During the year ended July 31, 2007, the Fund's custody fee was reduced by $146,212 as a result of credits earned on cash balances. 57 VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Fund's Investment Advisory Agreement, the Adviser provides investment advice and facilities to the Fund for an annual fee payable monthly as follows:
AVERAGE DAILY NET ASSETS % PER ANNUM First $500 million.......................................... .900% Next $1.0 billion........................................... .850% Next $1.0 billion........................................... .825% Next $500 million........................................... .800% Over $3.0 billion........................................... .775%
In addition, the Fund will pay a monthly administration fee to Van Kampen Funds Inc., the Fund's Administrator, at an annual rate of .25% of the average daily net assets of the Fund. The administration services provided by the Administrator include monitoring the provisions of the loan agreements and any agreements with respect to participations and assignments, record keeping responsibilities with respect to interests in Senior Loans in the Fund's portfolio and providing certain services to the holders of the Fund's securities. For the year ended July 31, 2007, the Fund recognized expenses of approximately $279,500 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, of which a Trustee of the Fund is a partner of such firm and he and his law firm provide legal services as legal counsel to the Fund. Under separate Legal Services and Chief Compliance Officer (CCO) Employment agreements, the Adviser provides legal services and the CCO provides compliance services to the Fund. The costs of these services are allocated to each fund. For the year ended July 31, 2007, the Fund recognized expenses of approximately $127,800 representing Van Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing legal services to the Fund, as well as the salary, benefits and related costs of the CCO and related support staff paid by Van Kampen. Services provided pursuant to the Legal Services agreement are reported as part of "Professional Fees" on the Statement of Operations. Services provided pursuant to the CCO Employment agreement are reported as part of "Accounting and Administrative Expenses" on the Statement of Operations. Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser, serves as the shareholder servicing agent for the Fund. For the year ended July 31, 2007, the Fund recognized expenses of approximately $1,335,400 representing transfer agency fees paid to VKIS. Transfer agency fees are determined through negotiations with the Fund's Board of Trustees. Certain officers and trustees of the Fund are also officers and directors of Van Kampen. The Fund does not compensate its officers or trustees who are also officers of Van Kampen. The Fund provides deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation 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 Fund. The maximum annual benefit per trustee under the plan is $2,500. For the year ended July 31, 2007, Van Kampen, as Distributor for the Fund, received net commissions on sales of the Fund's Class A Shares of approximately $455,200 and contingent 58 VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued deferred sales charge (CDSC) on redeemed shares of approximately $206,900. Sales charges do not represent expenses of the Fund. During the period, the Fund owned shares of the following affiliated companies. Affiliated companies are defined by the 1940 Act, as amended, as those companies in which a Fund holds 5% or more of the outstanding voting securities.
INTEREST/ MARKET PAR/ DIVIDEND VALUE NAME SHARES* INCOME 7/31/2007 COST DecorateToday.com, Common Shares......... 198,600 $ -0- $ -0- $3,505,909 Neoplan USA Corp., Revolver.............. $589,367 49,122 551,058 589,367 Neoplan USA Corp., Common Shares......... 8,517 -0- -0- 85 Neoplan USA Corp., Preferred Shares...... 2,262 -0- -0- 1,074,522 Safelite Realty, Common Shares........... 48,903 -0- -0- -0- ------- -------- ---------- $49,122 $551,058 $5,169,883 ------- -------- ----------
* Shares were acquired through the restructuring of senior loan interests. Affiliate transactions during the year ended July 31, 2007 were as follows:
PAR/SHARES PAR/SHARES REALIZED INTEREST/ AS OF GROSS GROSS AS OF GAIN/ DIVIDEND NAME 7/31/06 ADDITIONS REDUCTIONS 7/31/07 (LOSS) INCOME Neoplan USA Corp., Revolver... $ 933,750 $-0- $ (344,383) $ 589,367 $ -0- $ -0- Orius Corp., Term Loan**...... $6,579,313 $-0- $ (263,392) $6,315,921 79,268 17,900 Orius Corp., Revolver**....... $2,375,171 $-0- $ (2,375,171) $ -0- -0- 107,220 Orius Corp., Common Shares**.. 1,211,236 -0- (1,211,236) -0- -0- -0- Safelite Glass Corp., Term Loan......................... $13,876,959 $-0- $(13,876,959) $ -0- -0- 188,644 Safelite Glass Corp., Common Shares....................... 724,479 -0- (724,479) -0- 10,120,972 -0- Trans World Entertainment Corp., Common Shares......... 2,982,699 -0- (2,982,699) -0- (36,906,656) -0- ------------ -------- $(26,706,416) $313,764 ------------ --------
** Due to transactions during the year, the issue is no longer an affiliated company. 59 VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued 3. CAPITAL TRANSACTIONS For the years ended July 31, 2007 and 2006, transactions were as follows:
FOR THE FOR THE YEAR ENDED YEAR ENDED JULY 31, 2007 JULY 31, 2006 ----------------------------- ---------------------------- SHARES VALUE SHARES VALUE Sales: Class A...................... 60,949,393 $ 551,496,214 6,742,273 $ 60,997,257 Class B...................... 3,189,043 28,836,440 1,080,970 9,778,004 Class C...................... 59,772,959 540,812,266 3,980,684 36,028,686 Class IB..................... 510,976 4,619,719 521,304 4,723,809 Class IC..................... 442,098 3,994,552 414,647 3,754,611 ----------- -------------- ----------- ------------- Total Sales.................... 124,864,469 $1,129,759,191 12,739,878 $ 115,282,367 =========== ============== =========== ============= Dividend Reinvestment: Class A...................... 1,489,889 $ 13,442,544 263,133 $ 2,380,078 Class B...................... 122,843 1,108,324 45,840 414,650 Class C...................... 1,019,867 9,195,222 174,345 1,577,151 Class IB..................... 6,321,648 57,140,202 5,101,091 46,209,105 Class IC..................... 1,132,161 10,229,303 1,038,754 9,405,692 ----------- -------------- ----------- ------------- Total Dividend Reinvestment.... 10,086,408 $ 91,115,595 6,623,163 $ 59,986,676 =========== ============== =========== ============= Repurchases: Class A...................... (9,602,050) $ (86,649,107) (2,823,718) $ (25,525,490) Class B...................... (493,624) (4,455,429) (334,884) (3,026,298) Class C...................... (3,701,287) (33,378,803) (2,216,956) (20,010,345) Class IB..................... (21,362,284) (193,268,547) (40,369,751) (365,337,480) Class IC..................... (6,266,028) (56,639,565) (15,875,976) (143,507,367) ----------- -------------- ----------- ------------- Total Repurchases.............. (41,425,273) $ (374,391,451) (61,621,285) $(557,406,980) =========== ============== =========== =============
4. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from investments sold and repaid, excluding short-term investments, were $2,952,140,736 and $1,846,257,938, respectively. 5. REPURCHASE OF SHARES The Fund has a policy of making monthly repurchase offers ("Repurchase Offers") for the Fund's common shares pursuant to Rule 23c-3(b) of the 1940 Act, as amended; until October 2006 Repurchase Offers had been made at quarterly intervals. On June 23, 2006, the shareholders of the Fund approved an amendment to the Fund's fundamental policy regarding the Fund's offer to repurchase its shares to allow the Fund to repurchase its shares on a monthly basis. In addition, on June 7, 2006, the Fund obtained exemptive relief from the Securities and Exchange Commission to enable the Fund to conduct monthly Repurchase Offers, subject to certain conditions. The Fund began conducting monthly offers to repurchase its outstanding shares commencing in October 2006. The Repurchase Offers will continue to be for between 5% and 25% of the Fund's outstanding shares; however, whereas the Fund's present intent for quarterly offers was up to 60 VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued 15% during any one quarter, the Fund's present intent for monthly offers is up to 5% (although the initial two monthly Repurchase Offers were up to 10%, provided, however, the aggregate percentage of common shares subject to repurchase in any 3-month period will not exceed 25%). The repurchase request deadline will be the third Friday of each calendar month (or the preceding business day if such third Friday is not a business day). To accommodate monthly Repurchase Offers, the Fund has shorter notice periods before each offer, shorter repurchase periods and shorter payment periods after each offer. During the year ended July 31, 2007, the Fund made one quarterly Repurchase Offer and nine monthly Repurchase Offers as follows:
PERCENTAGE OF REPURCHASE OUTSTANDING SHARES NUMBER OF PERCENT OF REQUEST THE FUND OFFERED TO SHARES TENDERED OUTSTANDING SHARES TENDERED DEADLINES REPURCHASE (ALL CLASSES) (ALL CLASSES) October 20, 2006........... 5% 8,973,132 4.4% November 17, 2006.......... 5 3,418,350 1.7 December 15, 2006.......... 5 2,644,408 1.3 January 19, 2007........... 5 3,288,566 1.5 February 16, 2007.......... 5 3,544,602 1.6 March 16, 2007............. 5 3,157,956 1.4 April 20, 2007............. 5 3,525,835 1.4 May 18, 2007............... 5 3,191,191 1.2 June 15, 2007.............. 5 3,316,583 1.2 July 20, 2007.............. 5 6,364,650 2.2
6. COMMITMENTS Pursuant to the terms of certain of the Senior Loan agreements, the Fund had unfunded loan commitments of approximately $122,180,300 as of July 31, 2007. The Fund intends to reserve against such contingent obligations by designating cash, liquid securities, and liquid senior loans as a reserve. The unrealized depreciation on these commitments of $4,909,286 as of July 31, 2007 is reported as "Unfunded Commitments" on the Statement of Assets and Liabilities. 7. BORROWINGS The Fund has entered into a $700 million Amended and Restated Revolving Credit and Security Agreement to finance the repurchases of shares or to purchase additional securities for investment purposes. This revolving credit agreement is secured by the assets of the Fund. Annual commitment fees of .13% are charged on the unused portion of the credit line. For the year ended July 31, 2007, the Fund recognized commitment fee expenses of approximately $1,801,500. For the year ended July 31, 2007, the average daily balance of borrowings under the Amended and Restated Revolving Credit and Security Agreement was $420,947,802 with a weighted average interest rate of 5.34%. 8. SENIOR LOAN PARTICIPATION COMMITMENTS The Fund invests primarily in participations, assignments, or acts as a party to the primary lending syndicate of a Senior Loan interest to corporations, partnerships, and other entities. When the Fund purchases a participation of a Senior Loan interest, the Fund typically enters 61 VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued into a contractual agreement with the lender or other third party selling the participation, but not with the borrower directly. As such, the Fund assumes the credit risk of the borrower, selling participant or other persons interpositioned between the Fund and the borrower. At July 31, 2007, the following sets forth the selling participants with respect to interests in Senior Loans purchased by the Fund on a participation basis.
PRINCIPAL AMOUNT VALUE SELLING PARTICIPANT (000) (000) General Electric............................................ $5,000 $4,838 ------ ------
9. DISTRIBUTION AND SERVICE PLAN Shares of the Fund are distributed by Van Kampen Funds, Inc. ("the Distributor"), an affiliate of the Adviser. The Fund has adopted a distribution plan (the "Distribution Plan") with respect to each of its Class A Shares, Class B Shares and Class C Shares and in so doing has agreed to comply with rule 12b-1 under the 1940 Act, as amended, as if the Fund were an open-end investment company. The Fund also has adopted a service plan (the "Service Plan") with respect to each of its Class A Shares, Class B Shares, Class C Shares and Class IC Shares. There is no Distribution Plan or Service Plan for Class IB Shares and no Distribution Plan for Class IC Shares. All service fees under the Service Plan applicable to Class A Shares, Class B Shares, Class C Shares and Class IC Shares are currently being waived. For the year ended July 31, 2007, the Distributor waived service fees of $1,762,769. This waiver is voluntary in nature and can be discontinued at any time. Under the Distribution Plan and Service Plan, the Fund pays distribution fees in connection with the sale and distribution of its Shares and service fees in connection with the provision of ongoing services to shareholders of each such class and the maintenance of shareholder accounts. Under the Distribution Plan and Service Plan, the Fund may spend up to a total of 0.25%, 1.00%, 1.00%, and 0.15% (0.25% maximum) per year of the average daily net assets of Class A Shares, Class B Shares, Class C Shares, and Class IC Shares, respectively. Due to voluntary fee waivers by the Distributor, the aggregate distribution and service fees are currently 0.00%, 0.75%, 0.75%, and 0.00% per year of the average daily net assets for Class A Shares, Class B Shares, Class C Shares, and Class IC Shares, respectively. Annual fees under the Distribution Plan and Service Plan are accrued daily. The net annual fees for Class B Shares and Class C Shares are paid monthly to the Distributor. The amount of distribution expenses incurred by the Distributor and not yet reimbursed ("unreimbursed receivable") was approximately $565,700 and $2,889,500 for Class B Shares and Class C Shares, respectively. These amounts may be recovered from future payments under the Distribution Plan. To the extent the unreimbursed receivable has been fully recovered, any excess fees will be refunded to the Fund on a quarterly basis. 10. DERIVATIVE FINANCIAL INSTRUMENTS A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate or index. The Fund may use derivative instruments for a variety of reasons, such as to attempt to protect the Fund against possible changes in the market value of its portfolio or to generate 62 VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued potential gain. All of the Fund's portfolio holdings, including derivative instruments, are marked to market each day with the change in value reflected in unrealized appreciation/depreciation. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Fund may enter into credit default swap contracts for hedging purposes or to gain exposure to a credit in which the Fund may otherwise invest. A credit default swap is an agreement between two parties to exchange the credit risk of an issuer. A buyer of a credit default swap is said to buy protection by paying periodic fees in return for a contingent payment from the seller if the issuer has a credit event such as bankruptcy, a failure to pay outstanding obligations or deteriorating credit while the swap is outstanding. A seller of a credit default swap is said to sell protection and thus collects the periodic fees and profits if the credit of the issuer remains stable or improves while the swap is outstanding but the seller in a credit default swap contract would be required to pay an agreed-upon amount, which approximates the notional amount of the swap as disclosed in the table following the Portfolio of Investments, to the buyer in the event of an adverse credit event of the issuer. The Fund accrues for the periodic fees on credit default swaps on a daily basis with the net amount accrued recorded within unrealized appreciation/depreciation of swap contracts. Upon cash settlement of the periodic fees, the net amount is recorded as realized gain/loss on swap contracts on the Statement of Operations. Net unrealized gains are recorded as an asset or net unrealized losses are reported as a liability on the Statement of Assets and Liabilities. The change in value of the swap contracts is reported as unrealized gains or losses on the Statement of Operations. Credit default swaps may involve greater risks than if a Fund had invested in the issuer directly. Credit default swaps are subject to general market risk, counterparty risk and credit risk. If there is a default by the counterparty, the Fund will have contractual remedies pursuant to the agreements related to the transaction. In addition, all counterparties are required to pledge collateral daily (based on the valuation of each swap) on behalf of the Fund with a value approximately equal to the amount of any unrealized gain. Reciprocally, when the Fund has an unrealized loss on a swap contract, the Fund has instructed the custodian to pledge cash or liquid securities as collateral with a value approximately equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate. Restricted cash, if any, for segregating purposes is shown on the Statement of Assets and Liabilities. 11. INDEMNIFICATIONS The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. 12. ACCOUNTING PRONOUNCEMENTS In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes -- an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. FIN 48 is effective for the fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Recent SEC guidance allows 63 VAN KAMPEN SENIOR LOAN FUND NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued implementing FIN 48 in the fund's NAV calculations as late as the fund's last NAV calculation in the first required financial statement period. As a result, the Fund will incorporate FIN 48 in its semi annual report on January 31, 2008. The impact to the Fund's financial statements, if any, is currently being assessed. In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures. 64 VAN KAMPEN SENIOR LOAN FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Trustees of Van Kampen Senior Loan Fund We have audited the accompanying statement of assets and liabilities of Van Kampen Senior Loan Fund (the "Fund"), including the portfolio of investments, as of July 31, 2007, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2007, by correspondence with the Fund's custodian, brokers, and selling or agent banks; where replies were not received, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Van Kampen Senior Loan Fund as of July 31, 2007, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Chicago, Illinois September 21, 2007 65 VAN KAMPEN SENIOR LOAN FUND BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES BOARD OF TRUSTEES DAVID C. ARCH JERRY D. CHOATE ROD DAMMEYER LINDA HUTTON HEAGY R. CRAIG KENNEDY HOWARD J KERR JACK E. NELSON HUGO F. SONNENSCHEIN WAYNE W. WHALEN* - Chairman SUZANNE H. WOOLSEY OFFICERS RONALD E. ROBISON President and Principal Executive Officer AMY R. DOBERMAN Vice President STEFANIE V. CHANG Vice President and Secretary JOHN L. SULLIVAN Chief Compliance Officer STUART N. SCHULDT Chief Financial Officer and Treasurer HOWARD TIFFEN Vice President INVESTMENT ADVISER VAN KAMPEN ASSET MANAGEMENT 522 Fifth Avenue New York, New York 10036 DISTRIBUTOR VAN KAMPEN FUNDS INC. One Parkview Plaza-Suite 100 P.O. Box 5555 Oakbrook Terrace, Illinois 60181-5555 SHAREHOLDER SERVICING AGENT VAN KAMPEN INVESTOR SERVICES INC. P.O. Box 947 Jersey City, New Jersey 07303-0947 CUSTODIAN STATE STREET BANK AND TRUST COMPANY One Lincoln Street Boston, Massachusetts 02111 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DELOITTE & TOUCHE LLP 111 South Wacker Drive Chicago, Illinois 60606 * "Interested persons" of the Fund, as defined in the Investment Company Act of 1940, as amended. 66 VAN KAMPEN SENIOR LOAN FUND TRUSTEES AND OFFICERS The business and affairs of the Fund are managed under the direction of the Fund's Board of Trustees and the Fund's officers appointed by the Board of Trustees. The tables below list the trustees and executive officers of the Fund and their principal occupations during the last five years, other directorships held by trustees and their affiliations, if any, with Van Kampen Investments, the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange Corp. and Investor Services. The term "Fund Complex" includes each of the investment companies advised by the Adviser as of the date of this Annual Report. Trustees of the Fund generally serve three year terms or until their successors are duly elected and qualified. Officers are annually elected by the trustees. INDEPENDENT TRUSTEES
NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE David C. Arch (62) Trustee Trustee Chairman and Chief 73 Trustee/Director/Managing Blistex Inc. since 1988 Executive Officer of General Partner of funds 1800 Swift Drive Blistex Inc., a consumer in the Fund Complex. Oak Brook, IL 60523 health care products Director of the Heartland manufacturer. Alliance, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers' Association. Jerry D. Choate (69) Trustee Trustee Prior to January 1999, 73 Trustee/Director/Managing 33971 Selva Road since 2006 Chairman and Chief General Partner of funds Suite 130 Executive Officer of the in the Fund Complex. Dana Point, CA 92629 Allstate Corporation Director of H&R Block, ("Allstate") and Allstate Amgen Inc., a Insurance Company. Prior biotechnological company, to January 1995, and Valero Energy President and Chief Corporation, an Executive Officer of independent refining Allstate. Prior to August company. 1994, various management positions at Allstate.
67
VAN KAMPEN SENIOR LOAN FUND TRUSTEES AND OFFICERS continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Rod Dammeyer (66) Trustee Trustee President of CAC, L.L.C., 73 Trustee/Director/Managing CAC, L.L.C. since 1988 a private company General Partner of funds 4350 LaJolla Village Drive offering capital in the Fund Complex. Suite 980 investment and management Director of Quidel San Diego, CA 92122-6223 advisory services. Corporation, Stericycle, Inc., and Ventana Medical Systems, Inc. and Trustee of The Scripps Research Institute. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. Prior to January 2004, Director of TeleTech Holdings Inc. and Arris Group, Inc. Linda Hutton Heagy+ (59) Trustee Trustee Managing Partner of 73 Trustee/Director/Managing Heidrick & Struggles since 2006 Heidrick & Struggles, an General Partner of funds 233 South Wacker Drive international executive in the Fund Complex. Suite 7000 search firm. Prior to Trustee on the University Chicago, IL 60606 1997, Partner of Ray & of Chicago Hospitals Berndtson, Inc., an Board, Vice Chair of the executive recruiting Board of the YMCA of firm. Prior to 1995, Metropolitan Chicago and Executive Vice President a member of the Women's of ABN AMRO, N.A., a bank Board of the University holding company. Prior to of Chicago. 1990, Executive Vice President of The Exchange National Bank.
68
VAN KAMPEN SENIOR LOAN FUND TRUSTEES AND OFFICERS continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE R. Craig Kennedy (55) Trustee Trustee Director and President of 73 Trustee/Director/Managing 1744 R Street, NW since 2006 the German Marshall Fund General Partner of funds Washington, DC 20009 of the United States, an in the Fund Complex. independent U.S. foundation created to deepen understanding, promote collaboration and stimulate exchanges of practical experience between Americans and Europeans. Formerly, advisor to the Dennis Trading Group Inc., a managed futures and option company that invests money for individuals and institutions. Prior to 1992, President and Chief Executive Officer, Director and member of the Investment Committee of the Joyce Foundation, a private foundation. Howard J Kerr (71) Trustee Trustee Prior to 1998, President 73 Trustee/Director/Managing 14 Huron Trace since 1992 and Chief Executive General Partner of funds Galena, IL 61036 Officer of Pocklington in the Fund Complex. Corporation, Inc., an Director of the Lake investment holding Forest Bank & Trust. company. Director of the Marrow Foundation. Jack E. Nelson (71) Trustee Trustee President of Nelson 73 Trustee/Director/Managing 423 Country Club Drive since 2006 Investment Planning General Partner of funds Winter Park, FL 32789 Services, Inc., a in the Fund Complex. financial planning company and registered investment adviser in the State of Florida. President of Nelson Ivest Brokerage Services Inc., a member of the FINRA, Securities Investors Protection Corp. and the Municipal Securities Rulemaking Board. President of Nelson Sales and Services Corporation, a marketing and services company to support affiliated companies.
69
VAN KAMPEN SENIOR LOAN FUND TRUSTEES AND OFFICERS continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Hugo F. Sonnenschein (66) Trustee Trustee President Emeritus and 73 Trustee/Director/Managing 1126 E. 59th Street since 1994 Honorary Trustee of the General Partner of funds Chicago, IL 60637 University of Chicago and in the Fund Complex. the Adam Smith Trustee of the University Distinguished Service of Rochester and a member Professor in the of its investment Department of Economics committee. Member of the at the University of National Academy of Chicago. Prior to July Sciences, the American 2000, President of the Philosophical Society and University of Chicago. a fellow of the American Academy of Arts and Sciences.
70
VAN KAMPEN SENIOR LOAN FUND TRUSTEES AND OFFICERS continued NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Suzanne H. Woolsey, Ph.D. (65) Trustee Trustee Chief Communications 73 Trustee/Director/Managing 815 Cumberstone Road since 2006 Officer of the National General Partner of funds Harwood, MD 20776 Academy of in the Fund Complex. Sciences/National Director of Fluor Corp., Research Council, an an engineering, independent, federally procurement and chartered policy construction institution, from 2001 to organization, since November 2003 and Chief January 2004. Director of Operating Officer from Intelligent Medical 1993 to 2001. Prior to Devices, Inc., a symptom 1993, Executive Director based diagnostic tool for of the Commission on physicians and clinical Behavioral and Social labs. Director of the Sciences and Education at Institute for Defense the National Academy of Analyses, a federally Sciences/National funded research and Research Council. From development center, 1980 through 1989, Director of the German Partner of Coopers & Marshall Fund of the Lybrand. United States, Director of the Rocky Mountain Institute and Trustee of California Institute of Technology and the Colorado College.
71 VAN KAMPEN SENIOR LOAN FUND TRUSTEES AND OFFICERS continued INTERESTED TRUSTEE:*
NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Wayne W. Whalen* (68) Trustee Trustee Partner in the law firm 73 Trustee/Director/Managing 333 West Wacker Drive since 1988 of Skadden, Arps, Slate, General Partner of funds Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex. counsel to funds in the Director of the Abraham Fund Complex. Lincoln Presidential Library Foundation.
+ As indicated above, Ms. Heagy is an employee of Heidrick and Struggles, an international executive search firm ("Heidrick"). Heidrick has been (and may continue to be) engaged by Morgan Stanley from time to time to perform executive searches. Such searches have been unrelated to Van Kampen's or Morgan Stanley's asset management businesses and have been done by professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall procedures exist to ensure that Ms. Heagy will not have any involvement with any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not receive any compensation, directly or indirectly, for searches performed by Heidrick for Morgan Stanley. Ms. Heagy does own common shares of Heidrick (representing less than 1% of Heidrick's outstanding common shares). * Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19) of the 1940 Act) of certain funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such funds in the Fund Complex. 72 VAN KAMPEN SENIOR LOAN FUND TRUSTEES AND OFFICERS continued OFFICERS:
TERM OF OFFICE AND POSITION(S) LENGTH OF NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S) ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005 522 Fifth Avenue Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex New York, NY 10036 Officer since May 2003. Managing Director of Van Kampen Advisors Inc. since June 2003. Director of Investor Services since September 2002. Director of the Adviser, Van Kampen Investments and Van Kampen Exchange Corp. since January 2005. Managing Director of Morgan Stanley and Morgan Stanley & Co. Incorporated. Managing Director and Director of Morgan Stanley Investment Management Inc. Chief Administrative Officer, Managing Director and Director of Morgan Stanley Investment Advisors Inc. and Morgan Stanley Services Company Inc. Managing Director and Director of Morgan Stanley Distributors Inc. and Morgan Stanley Distribution Inc. Chief Executive Officer and Director of Morgan Stanley Trust. Executive Vice President and Principal Executive Officer of the Institutional and Retail Morgan Stanley Funds. Director of Morgan Stanley SICAV. Previously, Chief Global Operations Officer of Morgan Stanley Investment Management Inc. and Executive Vice President of funds in the Fund Complex from May 2003 to September 2005. Amy R. Doberman (45) Vice President Officer Managing Director and General Counsel--U.S. Investment 522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and the Adviser. Vice President of the Morgan Stanley Institutional and Retail Funds since July 2004 and Vice President of funds in the Fund Complex since August 2004. Previously, Managing Director and General Counsel of Americas, UBS Global Asset Management from July 2000 to July 2004 and General Counsel of Aeltus Investment Management, Inc. from January 1997 to July 2000. Stefanie V. Chang (40) Vice President Officer Executive Director of Morgan Stanley Investment Management 522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund New York, NY 10036 Complex.
73
VAN KAMPEN SENIOR LOAN FUND TRUSTEES AND OFFICERS continued TERM OF OFFICE AND POSITION(S) LENGTH OF NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S) ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS John L. Sullivan (52) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since 1 Parkview Plaza - Suite 100 Officer since 1996 August 2004. Prior to August 2004, Director and Managing P.O. Box 5555 Director of Van Kampen Investments, the Adviser, Van Kampen Oakbrook Terrace, IL 60181 Advisors Inc. and certain other subsidiaries of Van Kampen Investments, Vice President, Chief Financial Officer and Treasurer of funds in the Fund Complex and head of Fund Accounting for Morgan Stanley Investment Management Inc. Prior to December 2002, Executive Director of Van Kampen Investments, the Adviser and Van Kampen Advisors Inc. Stuart N. Schuldt (45) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management 1 Parkview Plaza - Suite 100 and Treasurer since 2007 Inc. since June 2007; Chief Financial Officer and Treasurer P.O. Box 5555 of funds in the Fund Complex since June 2007. Prior to June Oakbrook Terrace, IL 60181 2007, Senior Vice President of Northern Trust Company, Treasurer and Principal Financial Officer of Northern Trust U.S. mutual fund complex. Howard Tiffen (59) Vice President Officer Managing Director of the Adviser and Van Kampen Advisors 1 Parkview Plaza - Suite 100 since 2000 Inc. Vice President of the senior loan funds advised by the P.O. Box 5555 Adviser. Prior to 1999, senior portfolio manager for Pilgrim Oakbrook Terrace, IL 60181 Investments. Associate of the Chartered Institute of Bankers and a member of the Economic Club of Chicago.
74 Van Kampen Senior Loan Fund An Important Notice Concerning Our U.S. Privacy Policy We are required by federal law to provide you with a copy of our Privacy Policy annually. The following Policy applies to current and former individual clients of Van Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange Corp., as well as current and former individual investors in Van Kampen mutual funds, unit investment trusts, and related companies. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, 529 Educational Savings Accounts, accounts subject to the Uniform Gifts to Minors Act, or similar accounts. Please note that we may amend this Policy at any time, and will inform you of any changes to this Policy as required by law. WE RESPECT YOUR PRIVACY We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Policy describes what non-public personal information we collect about you, why we collect it, and when we may share it with others. We hope this Policy will help you understand how we collect and share non-public personal information that we gather about you. Throughout this Policy, we refer to the non-public information that personally identifies you or your accounts as "personal information." 1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU? To serve you better and manage our business, it is important that we collect and maintain accurate information about you. We may obtain this information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources. (continued on next page) Van Kampen Senior Loan Fund An Important Notice Concerning Our U.S. Privacy Policy continued For example: -- We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us. -- We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources. -- We may obtain information about your creditworthiness and credit history from consumer reporting agencies. -- We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements. -- If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." "Cookies" recognize your computer each time you return to one of our sites, and help to improve our sites' content and personalize your experience on our sites by, for example, suggesting offerings that may interest you. Please consult the Terms of Use of these sites for more details on our use of cookies. 2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU? To provide you with the products and services you request, to serve you better and to manage our business, we may disclose personal information we collect about you to our affiliated companies and to non-affiliated third parties as required or permitted by law. A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose personal information that we collect about you to our affiliated companies except to enable them to provide services on our behalf or as otherwise required or permitted by law. B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal information that we collect about you to non-affiliated third parties except to enable them to provide services on our behalf, to perform joint marketing agreements with (continued on back) Van Kampen Senior Loan Fund An Important Notice Concerning Our U.S. Privacy Policy continued other financial institutions, or as otherwise required or permitted by law. For example, some instances where we may disclose information about you to non-affiliated third parties include: for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with these companies, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information with others except to fulfill that limited purpose. 3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU? We maintain physical, electronic and procedural security measures to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information. The Statement of Additional Information includes additional information about Fund trustees and is available, without charge, upon request by calling 1-800-847-2424. Van Kampen Funds Inc. 1 Parkview Plaza, Suite 100 P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com Copyright (C)2007 Van Kampen Funds Inc. All rights reserved. Member FINRA/SIPC. 18, 118, 218, 59, 359 SLFANN 9/07 (VAN KAMPEN INVESTMENTS LOGO) IU07-03450P-Y07/07 Item 2. Code of Ethics. (a) The Fund has adopted a code of ethics (the "Code of Ethics") that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Fund or a third party. (b) No information need be disclosed pursuant to this paragraph. (c) Due to personnel changes at the Adviser, the list of covered officers set forth in Exhibit B was amended in November 2006 and June 2007 and the general counsel's designee set forth in Exhibit C was amended in October and December 2006. All three editions of Exhibit B and all three editions of Exhibit C are attached. (d) Not applicable. (e) Not applicable. (f) (1) The Fund's Code of Ethics is attached hereto as Exhibit 12(1). (2) Not applicable. (3) Not applicable. Item 3. Audit Committee Financial Expert. The Fund's Board of Trustees has determined that it has three "audit committee financial experts" serving on its audit committee, each of whom are "independent" Trustees: Rod Dammeyer, Jerry D. Choate and R. Craig Kennedy. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification. Item 4. Principal Accountant Fees and Services. (a)(b)(c)(d) and (g). Based on fees billed for the periods shown: 2007
REGISTRANT COVERED ENTITIES(1) ---------- ------------------- AUDIT FEES .................... $121,975 N/A NON-AUDIT FEES AUDIT-RELATED FEES ......... $ 0 $211,000(2) TAX FEES ................... $ 2,375(3) $ 0 ALL OTHER FEES ............. $ 0 $ 0 TOTAL NON-AUDIT FEES .......... $ 2,375 $211,000 TOTAL ......................... $124,350 $211,000
2006
REGISTRANT COVERED ENTITIES(1) ---------- ------------------- AUDIT FEES .................... $118,300 N/A NON-AUDIT FEES AUDIT-RELATED FEES ......... $ 0 $244,200(2) TAX FEES ................... $ 2,200(3) $ 0 ALL OTHER FEES ............. $ 0 $ 0 TOTAL NON-AUDIT FEES .......... $ 2,200 $244,200 TOTAL ......................... $120,500 $244,200
N/A- Not applicable, as not required by Item 4. (1) Covered Entities include the Adviser (excluding sub-advisors) and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Registrant. (2) Audit-Related Fees represent assurance and related services provided that are reasonably related to the performance of the audit of the financial statements of the Covered Entities' and funds advised by the Adviser or its affiliates, specifically attestation services provided in connection with a SAS 70 Report. (3) Tax Fees represent tax advice and compliance services provided in connection with the review of the Registrant's tax. (e)(1) The audit committee's pre-approval policies and procedures are as follows: JOINT AUDIT COMMITTEE AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY AND PROCEDURES OF THE VAN KAMPEN FUNDS AS ADOPTED JULY 23, 2003 AND AMENDED MAY 26, 2004(1) 1. STATEMENT OF PRINCIPLES The Audit Committee of the Board is required to review and, in its sole discretion, pre-approve all Covered Services to be provided by the Independent Auditors to the Fund and Covered Entities in order to assure that services performed by the Independent Auditors do not impair the auditor's independence from the Fund.(2) The SEC has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the audit committee's administration of the engagement of the independent auditor. The SEC's rules establish two different approaches to pre-approving services, which the SEC considers to be equally valid. Proposed services either: may be pre-approved without consideration of specific case-by-case services by the Audit Committee ("general pre-approval"); or require the specific pre-approval of the Audit Committee ("specific pre-approval"). The Audit Committee believes that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the Independent Auditors. As set forth in this Policy, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee (or by any member of the Audit Committee to which pre-approval authority has been delegated) if it is to be provided by the Independent Auditors. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit Committee. For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the SEC's rules on auditor independence. The Audit Committee will also consider whether the Independent Auditors are best positioned to provide the most effective and efficient services, for reasons such as its familiarity with the Fund's business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance the Fund's ability to manage or control risk or improve audit quality. All such factors will be considered as a whole, and no one factor should necessarily be determinative. The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services and may determine for each fiscal year, the appropriate ratio between the total amount of fees for Audit, Audit-related and Tax services for the Fund (including any Audit-related or Tax service fees for Covered Entities that were subject to pre-approval), and the total amount of fees for certain permissible non-audit services classified as All Other services for the Fund (including any such services for Covered Entities subject to pre-approval). The appendices to this Policy describe the Audit, Audit-related, Tax and All Other services that have the general pre-approval of the Audit Committee. The term of any general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers and provides a different period and states otherwise. The Audit Committee will annually review and pre-approve the services that may be provided by the Independent Auditors without obtaining specific pre-approval - ---------- (1) This Joint Audit Committee Audit and Non-Audit Services Pre-Approval Policy and Procedures (the "Policy"), amended as of the date above, supercedes and replaces all prior versions that may have been amended from time to time. (2) Terms used in this Policy and not otherwise defined herein shall have the meanings as defined in the Joint Audit Committee Charter. from the Audit Committee. The Audit Committee will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations. The purpose of this Policy is to set forth the policy and procedures by which the Audit Committee intends to fulfill its responsibilities. It does not delegate the Audit Committee's responsibilities to pre-approve services performed by the Independent Auditors to management. The Fund's Independent Auditors have reviewed this Policy and believes that implementation of the Policy will not adversely affect the Independent Auditors' independence. 2. DELEGATION As provided in the Act and the SEC's rules, the Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. 3. AUDIT SERVICES The annual Audit services engagement terms and fees are subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by the Independent Auditors to be able to form an opinion on the Fund's financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit. The Audit Committee will monitor the Audit services engagement as necessary, but no less than on a quarterly basis, and will also approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund structure or other items. In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the Independent Auditors reasonably can provide. Other Audit services may include statutory audits and services associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings. The Audit Committee has pre-approved the Audit services in Appendix B.1. All other Audit services not listed in Appendix B.1 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated). 4. AUDIT-RELATED SERVICES Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Fund's financial statements or, to the extent they are Covered Services, the Covered Entities' financial statements, or that are traditionally performed by the Independent Auditors. Because the Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor and is consistent with the SEC's rules on auditor independence, the Audit Committee may grant general pre-approval to Audit-related services. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as "Audit services"; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements under Forms N-SAR and/or N-CSR. The Audit Committee has pre-approved the Audit-related services in Appendix B.2. All other Audit-related services not listed in Appendix B.2 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated). 5. TAX SERVICES The Audit Committee believes that the Independent Auditors can provide Tax services to the Fund and, to the extent they are Covered Services, the Covered Entities, such as tax compliance, tax planning and tax advice without impairing the auditor's independence, and the SEC has stated that the Independent Auditors may provide such services. Hence, the Audit Committee believes it may grant general pre-approval to those Tax services that have historically been provided by the Independent Auditors, that the Audit Committee has reviewed and believes would not impair the independence of the Independent Auditors, and that are consistent with the SEC's rules on auditor independence. The Audit Committee will not permit the retention of the Independent Auditors in connection with a transaction initially recommended by the Independent Auditors, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with Director of Tax or outside counsel to determine that the tax planning and reporting positions are consistent with this policy. Pursuant to the preceding paragraph, the Audit Committee has pre-approved the Tax Services in Appendix B.3. All Tax services involving large and complex transactions not listed in Appendix B.3 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated), including tax services proposed to be provided by the Independent Auditors to any executive officer or trustee/director/managing general partner of the Fund, in his or her individual capacity, where such services are paid for by the Fund (generally applicable only to internally managed investment companies). 6. ALL OTHER SERVICES The Audit Committee believes, based on the SEC's rules prohibiting the Independent Auditors from providing specific non-audit services, that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC's rules on auditor independence. The Audit Committee has pre-approved the All Other services in Appendix B.4. Permissible All Other services not listed in Appendix B.4 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated). A list of the SEC's prohibited non-audit services is attached to this policy as Appendix B.5. The SEC's rules and relevant guidance should be consulted to determine the precise definitions of these services and the applicability of exceptions to certain of the prohibitions. 7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS Pre-approval fee levels or budgeted amounts for all services to be provided by the Independent Auditors will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services. For each fiscal year, the Audit Committee may determine the appropriate ratio between the total amount of fees for Audit, Audit-related, and Tax services for the Fund (including any Audit-related or Tax services fees for Covered Entities subject to pre-approval), and the total amount of fees for certain permissible non-audit services classified as All Other services for the Fund (including any such services for Covered Entities subject to pre-approval). 8. PROCEDURES All requests or applications for services to be provided by the Independent Auditors that do not require specific approval by the Audit Committee will be submitted to the Fund's Chief Financial Officer and must include a detailed description of the services to be rendered. The Fund's Chief Financial Officer will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by the Independent Auditors. Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the Independent Auditors and the Fund's Chief Financial Officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence. The Audit Committee has designated the Fund's Chief Financial Officer to monitor the performance of all services provided by the Independent Auditors and to determine whether such services are in compliance with this Policy. The Fund's Chief Financial Officer will report to the Audit Committee on a periodic basis on the results of its monitoring. A sample report is included as Appendix B.7. Both the Fund's Chief Financial Officer and management will immediately report to the chairman of the Audit Committee any breach of this Policy that comes to the attention of the Fund's Chief Financial Officer or any member of management. 9. ADDITIONAL REQUIREMENTS The Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the Independent Auditors and to assure the auditor's independence from the Fund, such as reviewing a formal written statement from the Independent Auditors delineating all relationships between the Independent Auditors and the Fund, consistent with Independence Standards Board No. 1, and discussing with the Independent Auditors its methods and procedures for ensuring independence. 10. COVERED ENTITIES Covered Entities include the Fund's investment adviser(s) and any entity controlling, controlled by or under common control with the Fund's investment adviser(s) that provides ongoing services to the Fund(s). Beginning with non-audit service contracts entered into on or after May 6, 2003, the Fund's audit committee must pre-approve non-audit services provided not only to the Fund but also to the Covered Entities if the engagements relate directly to the operations and financial reporting of the Fund. This list of Covered Entities would include: - Van Kampen Investments Inc. - Van Kampen Asset Management - Van Kampen Advisors Inc. - Van Kampen Funds Inc. - Van Kampen Investor Services Inc. - Morgan Stanley Investment Management Inc. - Morgan Stanley Trust Company - Morgan Stanley Investment Management Ltd. - Morgan Stanley Investment Management Company - Morgan Stanley Asset & Investment Trust Management Company Ltd. (e)(2) Beginning with non-audit service contracts entered into on or after May 6, 2003, the audit committee also is required to pre-approve services to Covered Entities to the extent that the services are determined to have a direct impact on the operations or financial reporting of the Registrant. 100% of such services were pre-approved by the audit committee pursuant to the Audit Committee's pre-approval policies and procedures (included herein). (f) Not applicable. (g) See table above. (h) The audit committee of the Board of Trustees has considered whether the provision of services other than audit services performed by the auditors to the Registrant and Covered Entities is compatible with maintaining the auditors' independence in performing audit services. Item 5. Audit Committee of Listed Registrants. (a) The Fund has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: David C. Arch, Rod Dammeyer, Howard J Kerr, Hugo F. Sonnenschein. (b) Not applicable. Item 6. Schedule of Investments. Please refer to Item #1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. The Fund's and its investment advisor's Proxy Voting Policies and Procedures are as follows: MORGAN STANLEY INVESTMENT MANAGEMENT PROXY VOTING POLICY AND PROCEDURES I. POLICY STATEMENT Introduction - Morgan Stanley Investment Management's ("MSIM") policy and procedures for voting proxies ("Policy") with respect to securities held in the accounts of clients applies to those MSIM entities that provide discretionary investment management services and for which a MSIM entity has authority to vote proxies. This Policy is reviewed and updated as necessary to address new and evolving proxy voting issues and standards. The MSIM entities covered by this Policy currently include the following: Morgan Stanley Investment Advisors Inc., Morgan Stanley AIP GP LP, Morgan Stanley Investment Management Inc., Morgan Stanley Investment Management Limited, Morgan Stanley Investment Management Company, Morgan Stanley Asset & Investment Trust Management Co., Limited, Morgan Stanley Investment Management Private Limited, Van Kampen Asset Management, and Van Kampen Advisors Inc. (each an "MSIM Affiliate" and collectively referred to as the "MSIM Affiliates" or as "we" below). Each MSIM Affiliate will use its best efforts to vote proxies as part of its authority to manage, acquire and dispose of account assets. With respect to the MSIM registered management investment companies (Van Kampen, Institutional and Advisor Funds--collectively referred to herein as the "MSIM Funds"), each MSIM Affiliate will vote proxies under this Policy pursuant to authority granted under its applicable investment advisory agreement or, in the absence of such authority, as authorized by the Board of Directors/Trustees of the MSIM Funds. An MSIM Affiliate will not vote proxies if the "named fiduciary" for an ERISA account has reserved the authority for itself, or in the case of an account not governed by ERISA, the investment management or investment advisory agreement does not authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will vote proxies in a prudent and diligent manner and in the best interests of clients, including beneficiaries of and participants in a client's benefit plan(s) for which the MSIM Affiliates manage assets, consistent with the objective of maximizing long-term investment returns ("Client Proxy Standard"). In certain situations, a client or its fiduciary may provide an MSIM Affiliate with a proxy voting policy. In these situations, the MSIM Affiliate will comply with the client's policy. Proxy Research Services - Institutional Shareholder Services ("ISS") and Glass Lewis (together with other proxy research providers as we may retain from time to time, the "Research Providers") are independent advisers that specialize in providing a variety of fiduciary-level proxy-related services to institutional investment managers, plan sponsors, custodians, consultants, and other institutional investors. The services provided include in-depth research, global issuer analysis, and voting recommendations. While we may review and utilize the recommendations of the Research Providers in making proxy voting decisions, we are in no way obligated to follow such recommendations. In addition to research, ISS provides vote execution, reporting, and recordkeeping. Voting Proxies for Certain Non-U.S. Companies - Voting proxies of companies located in some jurisdictions, particularly emerging markets, may involve several problems that can restrict or prevent the ability to vote such proxies or entail significant costs. These problems include, but are not limited to: (i) proxy statements and ballots being written in a language other than English; (ii) untimely and/or inadequate notice of shareholder meetings; (iii) restrictions on the ability of holders outside the issuer's jurisdiction of organization to exercise votes; (iv) requirements to vote proxies in person; (v) the imposition of restrictions on the sale of the securities for a period of time in proximity to the shareholder meeting; and (vi) requirements to provide local agents with power of attorney to facilitate our voting instructions. As a result, we vote clients' non-U.S. proxies on a best efforts basis only, after weighing the costs and benefits of voting such proxies, consistent with the Client Proxy Standard. ISS has been retained to provide assistance in connection with voting non-U.S. proxies. II. GENERAL PROXY VOTING GUIDELINES To promote consistency in voting proxies on behalf of its clients, we follow this Policy (subject to any exception set forth herein), including the guidelines set forth below. These guidelines address a broad range of issues, and provide general voting parameters on proposals that arise most frequently. However, details of specific proposals vary, and those details affect particular voting decisions, as do factors specific to a given company. Pursuant to the procedures set forth herein, we may vote in a manner that is not in accordance with the following general guidelines, provided the vote is approved by the Proxy Review Committee and is consistent with the Client Proxy Standard. Morgan Stanley AIP GP LP will follow the procedures as described in Appendix A. We endeavor to integrate governance and proxy voting policy with investment goals and to follow the Client Proxy Standard for each client. At times, this may result in split votes, for example when different clients have varying economic interests in the outcome of a particular voting matter (such as a case in which varied ownership interests in two companies involved in a merger result in different stakes in the outcome). We also may split votes at times based on differing views of portfolio managers, but such a split vote must be approved by the Proxy Review Committee. A. ROUTINE MATTERS. We generally support routine management proposals. The following are examples of routine management proposals: - Approval of financial statements and auditor reports. - General updating/corrective amendments to the charter. - Most proposals related to the conduct of the annual meeting, with the following exceptions. We may oppose proposals that relate to "the transaction of such other business which may come before the meeting," and open-ended requests for adjournment. However, where management specifically states the reason for requesting an adjournment and the requested adjournment is necessary to permit a proposal that would otherwise be supported under this Policy to be carried out (i.e. an uncontested corporate transaction), the adjournment request will be supported. Finally, we generally support shareholder proposals advocating confidential voting procedures and independent tabulation of voting results. B. BOARD OF DIRECTORS 1. Election of directors: In the absence of a proxy contest, we generally support the board's nominees for director except as follows: a. We withhold or vote against interested directors if the company's board does not meet market standards for director independence, or if otherwise we believe board independence is insufficient. We refer to prevalent market standards, generally as promulgated by a stock exchange or other authority within a given market (e.g., New York Stock Exchange or Nasdaq rules for most U.S. companies, and The Combined Code on Corporate Governance in the United Kingdom). Thus, for a NYSE company with dispersed ownership, we would expect that at a minimum a majority of directors should be independent as defined by NYSE. Non-independent directors under NYSE standards include an employee or an individual with an immediate family member who is an executive (or in either case was in such position within the previous three years). A director's consulting arrangements with the company, or material business relationships between the director's employer and the company, also impair independence. Market standards notwithstanding, we generally do not view long board tenure alone as a basis to classify a director as non-independent. Where we view market standards as inadequate, we may withhold votes based on stronger independence standards. b. Depending on market standards, we consider withholding support from or voting against a nominee who is interested and who is standing for election as a member of the company's compensation, nominating or audit committees. c. We consider withholding support or voting against a nominee if we believe a direct conflict exists between the interests of the nominee and the public shareholders. This includes consideration for withholding support or voting against individual board members or an entire slate if we believe the board is entrenched and dealing inadequately with performance problems, and/or with insufficient independence between the board and management. d. We consider withholding support from or voting against a nominee standing for election if the board has not taken action to implement generally accepted governance practices for which there is a "bright line" test. In the context of the U.S. market, these would include elimination of dead hand or slow hand poison pills, requiring audit, compensation or nominating committees to be composed of independent directors and requiring a majority independent board. e. We generally withhold support from or vote against a nominee who has failed to attend at least 75% of board meetings within a given year without a reasonable excuse. f. We consider withholding support from or voting against a nominee who serves on the board of directors of more than six companies (excluding investment companies). We also consider voting against a director who otherwise appears to have too many commitments to serve adequately on the board of the company. 2. Board independence: We generally support proposals requiring that a certain percentage (up to 66 2/3%) of the company's board members be independent directors, and promoting all-independent audit, compensation and nominating/governance committees. 3. Board diversity: We consider on a case-by-case basis proposals urging diversity of board membership with respect to social, religious or ethnic group. 4. Majority voting: We generally support proposals requesting or requiring majority voting policies in election of directors, so long as there is a carve-out for plurality voting in the case of contested elections. 5. Proposals to elect all directors annually: We generally support proposals to elect all directors annually at public companies (to "declassify" the Board of Directors) where such action is supported by the board, and otherwise consider the issue on a case-by-case basis. 6. Cumulative voting: We generally support proposals to eliminate cumulative voting (which provides that shareholders may concentrate their votes for one or a handful of candidates, a system that can enable a minority bloc to place representation on a board). Proposals to establish cumulative voting in the election of directors generally will not be supported. 7. Separation of Chairman and CEO positions: We vote on shareholder proposals to separate the Chairman and CEO positions and/or to appoint a non-executive Chairman based in part on prevailing practice in particular markets, since the context for such a practice varies. In many non-U.S. markets, we view separation of the roles as a market standard practice, and support division of the roles in that context. 8. Director retirement age: Proposals recommending set director retirement ages are voted on a case-by-case basis. 9. Proposals to limit directors' liability and/or broaden indemnification of directors. Generally, we will support such proposals provided that the officers and directors are eligible for indemnification and liability protection if they have acted in good faith on company business and were found innocent of any civil or criminal charges for duties performed on behalf of the company. C. CORPORATE TRANSACTIONS AND PROXY FIGHTS. We examine proposals relating to mergers, acquisitions and other special corporate transactions (i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings and recapitalizations) on a case-by-case basis. However, proposals for mergers or other significant transactions that are friendly and approved by the Research Providers generally will be supported and in those instances will not need to be reviewed by the Proxy Review Committee, where there is no portfolio manager objection and where there is no material conflict of interest. We also analyze proxy contests on a case-by-case basis. D. CHANGES IN LEGAL AND CAPITAL STRUCTURE. We generally vote in favor of management proposals for technical and administrative changes to a company's charter, articles of association or bylaws. We review non-routine proposals, including reincorporation to a different jurisdiction, on a case-by-case basis. 1. We generally support the following: - Proposals that eliminate other classes of stock and/or eliminate unequal voting rights. - Proposals to increase the authorization of existing classes of common stock (or securities convertible into common stock) if: (i) a clear and legitimate business purpose is stated; (ii) the number of shares requested is reasonable in relation to the purpose for which authorization is requested; and (iii) the authorization does not exceed 100% of shares currently authorized and at least 30% of the new authorization will be outstanding. - Proposals to create a new class of preferred stock or for issuances of preferred stock up to 50% of issued capital. - Proposals to authorize share repurchase plans. - Proposals to reduce the number of authorized shares of common or preferred stock, or to eliminate classes of preferred stock. - Proposals to effect stock splits. - Proposals to effect reverse stock splits if management proportionately reduces the authorized share amount set forth in the corporate charter. Reverse stock splits that do not adjust proportionately to the authorized share amount generally will be approved if the resulting increase in authorized shares coincides with the proxy guidelines set forth above for common stock increases. - Proposals for higher dividend payouts. 2. We generally oppose the following (notwithstanding management support): - Proposals that add classes of stock that would substantially dilute the voting interests of existing shareholders. - Proposals to increase the authorized number of shares of existing classes of stock that carry preemptive rights or supervoting rights. - Proposals to create "blank check" preferred stock. - Proposals relating to changes in capitalization by 100% or more. E. TAKEOVER DEFENSES AND SHAREHOLDER RIGHTS 1. Shareholder rights plans: We support proposals to require shareholder approval or ratification of shareholder rights plans (poison pills). 2. Supermajority voting requirements: We generally oppose requirements for supermajority votes to amend the charter or bylaws, unless the provisions protect minority shareholders where there is a large shareholder. In line with this view, in the absence of a large shareholder we support reasonable shareholder proposals to limit such supermajority voting requirements. 3. Shareholder rights to call meetings: We consider proposals to enhance shareholder rights to call meetings on a case-by-case basis. 4. Anti-greenmail provisions: Proposals relating to the adoption of anti-greenmail provisions will be supported, provided that the proposal: (i) defines greenmail; (ii) prohibits buyback offers to large block holders (holders of at least 1% of the outstanding shares and in certain cases, a greater amount, as determined by the Proxy Review Committee) not made to all shareholders or not approved by disinterested shareholders; and (iii) contains no anti-takeover measures or other provisions restricting the rights of shareholders. F. AUDITORS. We generally support management proposals for selection or ratification of independent auditors. However, we may consider opposing such proposals with reference to incumbent audit firms if the company has suffered from serious accounting irregularities, or if fees paid to the auditor for non-audit-related services are excessive. Generally, to determine if non-audit fees are excessive, a 50% test will be applied (i.e., non-audit-related fees should be less than 50% of the total fees paid to the auditor). Proposals requiring auditors to attend the annual meeting of shareholders will be supported. We generally vote against proposals to indemnify auditors. G. EXECUTIVE AND DIRECTOR REMUNERATION. 1. We generally support the following proposals: - Proposals relating to director fees, provided the amounts are not excessive relative to other companies in the country or industry. - Proposals for employee stock purchase plans that permit discounts up to 15%, but only for grants that are part of a broad-based employee plan, including all non-executive employees. - Proposals for employee equity compensation plans and other employee ownership plans, provided that our research does not indicate that approval of the plan would be against shareholder interest. Such approval may be against shareholder interest if it authorizes excessive dilution and shareholder cost, particularly in the context of high usage ("run rate") of equity compensation in the recent past; or if there are objectionable plan design and provisions. - Proposals for the establishment of employee retirement and severance plans, provided that our research does not indicate that approval of the plan would be against shareholder interest. 2. Blanket proposals requiring shareholder approval of all severance agreements will not be supported, but proposals that require shareholder approval for agreements in excess of three times the annual compensation (salary and bonus) generally will be supported. 3. Proposals advocating stronger and/or particular pay-for-performance models will be evaluated on a case-by-case basis, with consideration of the merits of the individual proposal within the context of the particular company and its current and past practices. 4. Proposals to U.S. companies that request disclosure of executive compensation in addition to the disclosure required by the Securities and Exchange Commission ("SEC") regulations generally will not be supported. 5. We generally support proposals advocating reasonable senior executive and director stock ownership guidelines and holding requirements for shares gained in option exercises. 6. Management proposals effectively to re-price stock options are considered on a case-by-case basis. Considerations include the company's reasons and justifications for a re-pricing, the company's competitive position, whether senior executives and outside directors are excluded, potential cost to shareholders, whether the re-pricing or share exchange is on a value-for-value basis, and whether vesting requirements are extended. H. SOCIAL, POLITICAL AND ENVIRONMENTAL ISSUES. We consider proposals relating to social, political and environmental issues on a case-by-case basis to determine whether they will have a financial impact on shareholder value. However, we generally vote against proposals requesting reports that are duplicative, related to matters not material to the business, or that would impose unnecessary or excessive costs. We may abstain from voting on proposals that do not have a readily determinable financial impact on shareholder value. We generally oppose proposals requiring adherence to workplace standards that are not required or customary in market(s) to which the proposals relate. I. FUND OF FUNDS. Certain Funds advised by an MSIM Affiliate invest only in other MSIM Funds. If an underlying fund has a shareholder meeting, in order to avoid any potential conflict of interest, such proposals will be voted in the same proportion as the votes of the other shareholders of the underlying fund, unless otherwise determined by the Proxy Review Committee. III. ADMINISTRATION OF POLICY The MSIM Proxy Review Committee (the "Committee") has overall responsibility for creating and implementing the Policy, working with an MSIM staff group (the "Corporate Governance Team"). The Committee, which is appointed by MSIM's Chief Investment Officer of Global Equities ("CIO"), consists of senior investment professionals who represent the different investment disciplines and geographic locations of the firm. Because proxy voting is an investment responsibility and impacts shareholder value, and because of their knowledge of companies and markets, portfolio managers and other members of investment staff play a key role in proxy voting, although the Committee has final authority over proxy votes. The Committee Chairperson is the head of the Corporate Governance Team, and is responsible for identifying issues that require Committee deliberation or ratification. The Corporate Governance Team, working with advice of investment teams and the Committee, is responsible for voting on routine items and on matters that can be addressed in line with these Policy guidelines. The Corporate Governance Team has responsibility for voting case-by-case where guidelines and precedent provide adequate guidance, and to refer other case-by-case decisions to the Proxy Review Committee. The Committee will periodically review and have the authority to amend, as necessary, the Policy and establish and direct voting positions consistent with the Client Proxy Standard. A. COMMITTEE PROCEDURES The Committee will meet at least monthly to (among other matters) address any outstanding issues relating to the Policy or its implementation. The Corporate Governance Team will timely communicate to ISS MSIM's Policy (and any amendments and/or any additional guidelines or procedures the Committee may adopt). The Committee will meet on an ad hoc basis to (among other matters): (1) authorize "split voting" (i.e., allowing certain shares of the same issuer that are the subject of the same proxy solicitation and held by one or more MSIM portfolios to be voted differently than other shares) and/or "override voting" (i.e., voting all MSIM portfolio shares in a manner contrary to the Policy); (2) review and approve upcoming votes, as appropriate, for matters for which specific direction has been provided in this Policy; and (3) determine how to vote matters for which specific direction has not been provided in this Policy. Members of the Committee may take into account Research Providers' recommendations and research as well as any other relevant information they may request or receive, including portfolio manager and/or analyst research, as applicable. Generally, proxies related to securities held in accounts that are managed pursuant to quantitative, index or index-like strategies ("Index Strategies") will be voted in the same manner as those held in actively managed accounts, unless economic interests of the accounts differ. Because accounts managed using Index Strategies are passively managed accounts, research from portfolio managers and/or analysts related to securities held in these accounts may not be available. If the affected securities are held only in accounts that are managed pursuant to Index Strategies, and the proxy relates to a matter that is not described in this Policy, the Committee will consider all available information from the Research Providers, and to the extent that the holdings are significant, from the portfolio managers and/or analysts. B. MATERIAL CONFLICTS OF INTEREST In addition to the procedures discussed above, if the Committee determines that an issue raises a material conflict of interest, the Committee will request a special committee to review, and recommend a course of action with respect to, the conflict(s) in question ("Special Committee"). The Special Committee shall be comprised of the Chairperson of the Proxy Review Committee, the Chief Compliance Officer or his/her designee, a senior portfolio manager (if practicable, one who is a member of the Proxy Review Committee) designated by the Proxy Review Committee, and MSIM's relevant Chief Investment Officer or his/her designee, and any other persons deemed necessary by the Chairperson. The Special Committee may request the assistance of MSIM's General Counsel or his/her designee who will have sole discretion to cast a vote. In addition to the research provided by Research Providers, the Special Committee may request analysis from MSIM Affiliate investment professionals and outside sources to the extent it deems appropriate. C. IDENTIFICATION OF MATERIAL CONFLICTS OF INTEREST A potential material conflict of interest could exist in the following situations, among others: 1. The issuer soliciting the vote is a client of MSIM or an affiliate of MSIM and the vote is on a material matter affecting the issuer. 2. The proxy relates to Morgan Stanley common stock or any other security issued by Morgan Stanley or its affiliates except if echo voting is used, as with MSIM Funds, as described herein. 3. Morgan Stanley has a material pecuniary interest in the matter submitted for a vote (e.g., acting as a financial advisor to a party to a merger or acquisition for which Morgan Stanley will be paid a success fee if completed). If the Chairperson of the Committee determines that an issue raises a potential material conflict of interest, depending on the facts and circumstances, the Chairperson will address the issue as follows: 1. If the matter relates to a topic that is discussed in this Policy, the proposal will be voted as per the Policy. 2. If the matter is not discussed in this Policy or the Policy indicates that the issue is to be decided case-by-case, the proposal will be voted in a manner consistent with the Research Providers, provided that all the Research Providers have the same recommendation, no portfolio manager objects to that vote, and the vote is consistent with MSIM's Client Proxy Standard. 3. If the Research Providers' recommendations differ, the Chairperson will refer the matter to the Committee to vote on the proposal. If the Committee determines that an issue raises a material conflict of interest, the Committee will request a Special Committee to review and recommend a course of action, as described above. Notwithstanding the above, the Chairperson of the Committee may request a Special Committee to review a matter at any time as he/she deems necessary to resolve a conflict. D. PROXY VOTING REPORTING The Committee and the Special Committee, or their designee(s), will document in writing all of their decisions and actions, which documentation will be maintained by the Committee and the Special Committee, or their designee(s), for a period of at least 6 years. To the extent these decisions relate to a security held by a MSIM Fund, the Committee and Special Committee, or their designee(s), will report their decisions to each applicable Board of Trustees/Directors of those Funds at each Board's next regularly scheduled Board meeting. The report will contain information concerning decisions made by the Committee and Special Committee during the most recently ended calendar quarter immediately preceding the Board meeting. The Corporate Governance Team will timely communicate to applicable portfolio managers and to ISS, decisions of the Committee and Special Committee so that, among other things, ISS will vote proxies consistent with their decisions. MSIM will promptly provide a copy of this Policy to any client requesting it. MSIM will also, upon client request, promptly provide a report indicating how each proxy was voted with respect to securities held in that client's account. MSIM's Legal Department is responsible for filing an annual Form N-PX on behalf of each MSIM Fund for which such filing is required, indicating how all proxies were voted with respect to such Fund's holdings. APPENDIX A The following procedures apply to accounts managed by Morgan Stanley AIP GP LP ("AIP"). Generally, AIP will follow the guidelines set forth in Section II of MSIM's Proxy Voting Policy and Procedures. To the extent that such guidelines do not provide specific direction, or AIP determines that consistent with the Client Proxy Standard, the guidelines should not be followed, the Proxy Review Committee has delegated the voting authority to vote securities held by accounts managed by AIP to the Liquid Markets investment team and the Private Markets investment team of AIP. A summary of decisions made by the investment teams will be made available to the Proxy Review Committee for its information at the next scheduled meeting of the Proxy Review Committee. In certain cases, AIP may determine to abstain from determining (or recommending) how a proxy should be voted (and therefore abstain from voting such proxy or recommending how such proxy should be voted), such as where the expected cost of giving due consideration to the proxy does not justify the potential benefits to the affected account(s) that might result from adopting or rejecting (as the case may be) the measure in question. Waiver of Voting Rights For regulatory reasons, AIP may either 1) invest in a class of securities of an underlying fund (the "Fund") that does not provide for voting rights; or 2) waive 100% of its voting rights with respect to the following: 1. Any rights with respect to the removal or replacement of a director, general partner, managing member or other person acting in a similar capacity for or on behalf of the Fund (each individually a "Designated Person," and collectively, the "Designated Persons"), which may include, but are not limited to, voting on the election or removal of a Designated Person in the event of such Designated Person's death, disability, insolvency, bankruptcy, incapacity, or other event requiring a vote of interest holders of the Fund to remove or replace a Designated Person; and 2. Any rights in connection with a determination to renew, dissolve, liquidate, or otherwise terminate or continue the Fund, which may include, but are not limited to, voting on the renewal, dissolution, liquidation, termination or continuance of the Fund upon the occurrence of an event described in the Fund's organizational documents; provided, however, that, if the Fund's organizational documents require the consent of the Fund's general partner or manager, as the case may be, for any such termination or continuation of the Fund to be effective, then AIP may exercise its voting rights with respect to such matter. Item 8. Portfolio Managers of Closed-End Management Investment Companies. FUND MANAGEMENT PORTFOLIO MANAGEMENT. As of the date of this report, the Fund is managed by members of the Taxable Fixed Income team. The team consists of portfolio managers and analysts. Current members of the team jointly and primarily responsible for the day-to-day management of the Fund's portfolio and the overall execution of the strategy of the Fund are Howard T. Tiffen, a Managing Director of the Adviser and Christina Jamieson, an Executive Director of the Adviser. Mr. Tiffen has been associated with the Adviser in an investment management capacity since December 1999 and began managing the Fund in December 1999. Ms. Jamieson has been associated with the Adviser in an investment management capacity since March 2000 and began managing the Fund in June 2005. The composition of the team may change from time to time. OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS As of July 31, 2007, Mr. Tiffen managed six registered investment companies with a total of approximately $7.8 billion in assets; no pooled investment vehicles other than registered investment companies; and one other account with a total of approximately $586.7 million in assets. As of July 31, 2007, Ms. Jamieson managed three registered investment companies with a total of approximately $6.0 billion in assets; no pooled investment vehicles other than registered investment companies; and no other accounts. Because the portfolio managers manage assets for other investment companies, pooled investment vehicles, and/or other accounts (including institutional clients, pension plans and certain high net worth individuals), there may be an incentive to favor one client over another resulting in conflicts of interest. For instance, the Adviser may receive fees from certain accounts that are higher than the fee it receives from the Fund, or it may receive a performance-based fee on certain accounts. In those instances, the portfolio managers may have an incentive to favor the higher and/or performance-based fee accounts over the Fund. The portfolio managers of the Fund do not currently manage accounts for other investment companies, pooled investment vehicles or other accounts that charge a performance-based fee. In addition, a conflict of interest could exist to the extent the Adviser has proprietary investments in certain accounts, where portfolio managers have personal investments in certain accounts or when certain accounts are investment options in the Adviser's employee benefits and/or deferred compensation plans. The portfolio manager may have an incentive to favor these accounts over others. If the Adviser manages accounts that engage in short sales of securities of the type in which the Fund invests, the Adviser could be seen as harming the performance of the Fund for the benefit of the accounts engaged in short sales if the short sales cause the market value of the securities to fall. The Adviser has adopted trade allocation and other policies and procedures that it believes are reasonably designed to address these and other conflicts of interest. PORTFOLIO MANAGER COMPENSATION STRUCTURE Portfolio managers receive a combination of base compensation and discretionary compensation, comprised of a cash bonus and several deferred compensation programs described below. The methodology used to determine portfolio manager compensation is applied across all accounts managed by the portfolio manager. BASE SALARY COMPENSATION. Generally, portfolio managers receive base salary compensation based on the level of their position with the Adviser. DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio managers may receive discretionary compensation. Discretionary compensation can include: - - Cash Bonus; - - Morgan Stanley's Long-Term Incentive Compensation Program awards -- a mandatory program that defers a portion of discretionary year-end compensation into restricted stock units or other awards or other investments based on Morgan Stanley common stock that are subject to vesting and other conditions; - - Investment Management Alignment Plan (IMAP) awards -- a mandatory program that defers a portion of discretionary year-end compensation and notionally invests it in designated funds advised by the Adviser or its affiliates. The award is subject to vesting and other conditions. Portfolio managers must notionally invest a minimum of 25% to a maximum of 100% of the IMAP deferral into a combination of the designated open-end funds they manage that are included in the IMAP Fund menu; - - Voluntary Deferred Compensation Plans -- voluntary programs that permit certain employees to elect to defer a portion of their discretionary year-end compensation and directly or notionally invest the deferred amount: (1) across a range of designated investment funds, including funds advised by the Adviser or its affiliates; and/or (2) in Morgan Stanley stock units. Several factors determine discretionary compensation, which can vary by portfolio management team and circumstances. In order of relative importance, these factors include: - - Investment performance. A portfolio manager's compensation is linked to the pre-tax investment performance of the funds/accounts managed by the portfolio manager. Investment performance is calculated for one-, three- and five-year periods measured against an appropriate securities market index (or indices) for the funds/accounts managed by the portfolio manager. The assets managed by the portfolio managers in funds, pooled investment vehicles and other accounts are described in "Other Accounts Managed by the Portfolio Managers" above. Generally, the greatest weight is placed on the three- and five-year periods. - - Revenues generated by the investment companies, pooled investment vehicles and other accounts managed by the portfolio manager. - - Contribution to the business objectives of the Adviser. - - The dollar amount of assets managed by the portfolio manager. - - Market compensation survey research by independent third parties. - - Other qualitative factors, such as contributions to client objectives. - - Performance of Morgan Stanley and Morgan Stanley Investment Management Inc., and the overall performance of the investment team(s) of which the portfolio is a member. SECURITIES OWNERSHIP OF PORTFOLIO MANAGERS As of July 31, 2007, the portfolio managers did not own any shares of the Fund. Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not Applicable. Item 10. Submission of Matters to a Vote of Security Holders. Not Applicable. Item 11. Controls and Procedures (a) The Fund's principal executive officer and principal financial officer have concluded that the Fund's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (1) The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto. (2)(a) A certification for the Principal Executive Officer of the registrant is attached hereto as part of EX-99.CERT. (2)(b) A certification for the Principal Financial Officer of the registrant is attached hereto as part of EX-99.CERT. (3) Written solicitations to purchase securities under Rule 23c-1 during the period are attached hereto. 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 Senior Loan Fund By: /s/ Ronald E. Robison --------------------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: September 20, 2007 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: September 20, 2007 By: /s/ Stuart N. Schuldt --------------------------------- Name: Stuart N. Schuldt Title: Principal Financial Officer Date: September 20, 2007 EX-99.CODE 2 c17994exv99wcode.txt CODE OF ETHICS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS ADOPTED JULY 23, 2003, AS AMENDED AUGUST 10, 2005, SEPTEMBER 22, 2005 AND SEPTEMBER 22, 2006 I. This Code of Ethics (the "Code") for the investment companies within the Van Kampen complex identified in Exhibit A (collectively, "Funds" and each, a "Fund") applies to each Fund's Principal Executive Officer, President, Principal Financial Officer and Treasurer (or persons performing similar functions) ("Covered Officers" each of whom are set forth in Exhibit B) for the purpose of promoting: - honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. - full, fair, accurate, timely and understandable disclosure in reports and documents that a company files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; - compliance with applicable laws and governmental rules and regulations; - prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and - accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. Any question about the application of the Code should be referred to the General Counsel or his/her designee (who is set forth in Exhibit C). II. COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF INTEREST OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private interest interferes, or appears to interfere, with the interests of, or his service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" (as defined in the Investment Company Act) of the Fund. The Fund's and its investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside the parameters of this Code, unless or until the General Counsel determines that any violation of such programs and procedures is also a violation of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between the Fund and its investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund or for the investment adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Fund and its investment adviser. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the investment adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Directors/Trustees ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund. Each Covered Officer must not: - use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally (directly or indirectly); - cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Fund; or - use material non-public knowledge of portfolio transactions made or contemplated for, or actions proposed to be taken by, the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions. Each Covered Officer must, at the time of signing this Code, report to the General Counsel all affiliations or significant business relationships outside the Morgan Stanley complex and must update the report annually. Conflict of interest situations should always be approved by the General Counsel and communicated to the relevant Fund or Fund's Board. Any activity or relationship that would present such a conflict for a Covered Officer would likely also present a conflict for the Covered Officer if an immediate member of the Covered Officer's family living in the same household engages in such an activity or has such a relationship. Examples of these include: - service or significant business relationships as a director on the board of any public or private company; - accepting directly or indirectly, anything of value, including gifts and gratuities in excess of $100 per year from any person or entity with which the Fund has current or prospective business dealings, not including occasional meals or tickets for theatre or sporting events or other similar entertainment; provided it is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; - any ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than its investment adviser, principal underwriter, or any affiliated person thereof; and - a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. DISCLOSURE AND COMPLIANCE - Each Covered Officer should familiarize himself/herself with the disclosure and compliance requirements generally applicable to the Funds; - each Covered Officer must not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's Directors/Trustees and auditors, or to governmental regulators and self-regulatory organizations; - each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and their investment advisers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and - it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. REPORTING AND ACCOUNTABILITY Each Covered Officer must: - upon adoption of the Code (thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Boards that he has received, read and understands the Code; - annually thereafter affirm to the Boards that he has complied with the requirements of the Code; - not retaliate against any other Covered Officer, other officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and - notify the General Counsel promptly if he/she knows or suspects of any violation of this Code. Failure to do so is itself a violation of this Code. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any waivers(3) sought by a Covered Officer must be considered by the Board of the relevant Fund or Funds. The Funds will follow these procedures in investigating and enforcing this Code: - the General Counsel will take all appropriate action to investigate any potential violations reported to him; - if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; - any matter that the General Counsel believes is a violation will be reported to the relevant Fund's Audit Committee; - if the directors/trustees/managing general partners who are not "interested persons" as defined by the Investment Company Act (the "Independent Directors/Trustees/Managing General Partners") of the relevant Fund concur that a violation has occurred, they will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer or other appropriate disciplinary actions; - the Independent Directors/Trustees/Managing General Partners of the relevant Fund will be responsible for granting waivers of this Code, as appropriate; and - any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' investment advisers, principal underwriters, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code unless any provision of this Code conflicts with any applicable federal or state law, in which case the requirements of such law will govern. The Funds' and their investment advisers' and principal underwriters' codes of ethics under Rule 17j-1 under the Investment Company Act and Morgan Stanley's Code of Ethics are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. AMENDMENTS Any amendments to this Code, other than amendments to Exhibits A, B or C, must be approved or ratified by a majority vote of the Board of each Fund, including a majority of Independent Directors/Trustees/Managing General Partners. VII. CONFIDENTIALITY - ---------- (3) Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of a material departure from a provision of the code of ethics." All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Independent Directors/Trustees/Managing General Partners of the relevant Fund or Funds and their counsel, the relevant Fund or Funds and their counsel and the relevant investment adviser and its counsel. VIII. INTERNAL USE The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion I have read and understand the terms of the above Code. I recognize the responsibilities and obligations incurred by me as a result of my being subject to the Code. I hereby agree to abide by the above Code. - ------------------------------------- Date: ------------------------------- EXHIBIT B COVERED OFFICERS Ronald E. Robison - President and Principal Executive Officer Stuart N. Schuldt - Chief Financial Officer and Treasurer EXHIBIT B (PRIOR TO JUNE 4, 2007) COVERED OFFICERS Ronald E. Robison - President and Principal Executive Officer James Garrett - Chief Financial Officer and Treasurer EXHIBIT B (PRIOR TO NOVEMBER 15, 2006) COVERED OFFICERS Ronald E. Robison - President and Principal Executive Officer Phillip G. Goff - Chief Financial Officer and Treasurer EXHIBIT C GENERAL COUNSEL'S DESIGNEE Arthur Lev EXHIBIT C (PRIOR TO DECEMBER 1, 2006) GENERAL COUNSEL'S DESIGNEE Barry Fink EXHIBIT C (PRIOR TO OCTOBER 1, 2006) GENERAL COUNSEL'S DESIGNEE Amy Doberman EX-99.CERT 3 c17994exv99wcert.txt CERTIFICATION I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen Senior Loan Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: September 20, 2007 /s/ Ronald E. Robison ---------------------------------------- Principal Executive Officer I, Stuart N. Schuldt, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen Senior Loan Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: September 20, 2007 /s/ Stuart N. Schuldt ---------------------------------------- Principal Financial Officer EX-99.906CERT 4 c17994exv99w906cert.txt SECTION 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 Senior Loan Fund In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended July 31, 2007 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: September 20, 2007 /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 Senior Loan Fund and will be retained by Van Kampen Senior Loan Fund and furnished to the Securities and Exchange Commission or its staff upon request. This written statement required by Section 906 is being furnished with this Report, but not being filed as part of this Report. Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Issuer: Van Kampen Senior Loan Fund In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended July 31, 2007 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: September 20, 2007 /s/ Stuart N. Schuldt ---------------------------------------- Stuart N. Schuldt Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Van Kampen Senior Loan Fund and will be retained by Van Kampen Senior Loan Fund and furnished to the Securities and Exchange Commission or its staff upon request. This written statement required by Section 906 is being furnished with this Report, but not being filed as part of this Report. -----END PRIVACY-ENHANCED MESSAGE-----