UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-02851
Van Kampen High Yield Fund
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(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
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(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
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(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 8/31
Date of reporting period: 2/28/06
Item 1. Reports to Shareholders.
The Fund's semiannual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen High
Yield Fund performed during the semiannual period. The portfolio
management team will provide an overview of the market conditions and
discuss some of the factors that affected investment performance during
the reporting period. In addition, this report includes the fund's
financial statements and a list of fund investments as of February 28,
2006.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE
FUND BEING OFFERED.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND,
THEREFORE, THE VALUE OF THE FUND SHARES MAY BE LESS THAN WHAT YOU PAID
FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS FUND. PLEASE
SEE THE PROSPECTUS FOR MORE COMPLETE INFORMATION ON INVESTMENT RISKS.
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NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
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NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
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Performance Summary as of 2/28/06
A SHARES B SHARES C SHARES I SHARES
since 10/2/78 since 7/2/92 since 7/6/93 since 3/23/05
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W/MAX W/MAX W/MAX
W/O 4.75% W/O 4.00% W/O 1.00% W/O
AVERAGE ANNUAL SALES SALES SALES SALES SALES SALES SALES
TOTAL RETURNS CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES
Since Inception 7.37% 7.18% 5.36% 5.36% 4.21% 4.21% 4.24%
10-year 3.98 3.46 3.49 3.49 3.20 3.20 N/A
5-year 3.13 2.13 2.38 2.17 2.42 2.42 N/A
1-year 1.64 -3.26 1.13 -2.66 1.19 0.24 N/A
6-month 1.36 -3.42 0.97 -2.93 1.29 0.31 1.50
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30-Day SEC Yield 6.16% 5.67% 5.76% 6.73%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY
BE LOWER OR HIGHER THAN THE FIGURES SHOWN. FOR MORE UP-TO-DATE INFORMATION,
INCLUDING 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. As a result of recent market activity, current performance may vary
from the figures shown. Average annual total return with sales charges includes
payment of the maximum sales charge of 4.75 percent for Class A shares, a
contingent deferred sales charge of 4.00 percent for Class B shares (in years
one and two and declining to zero after year five), a contingent deferred sales
charge of 1.00 percent for Class C shares in year one and combined Rule 12b-1
fees and service fees of up to 0.25 percent for Class A shares and up to 1.00
percent for Class B and C shares. The since inception and ten-year returns for
Class B shares reflect the conversion of Class B shares into Class A shares six
years after purchase. The since inception returns for Class C shares reflect the
conversion of Class C shares into Class A shares ten years after purchase.
Figures shown above assume reinvestment of all dividends and capital gains.
Class I shares are available for purchase exclusively by investors through (i)
tax-exempt retirement plans with assets of at least $1 million (including 401(k)
plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money
purchase plans, defined benefit plans and non-qualified deferred compensation
plans), (ii) fee-based investment programs with assets of at least $1 million
and (iii) institutional clients with assets of at least $1 million. Class I
shares are offered without any sales charges on purchases or sales and do not
include combined 12b-1 fees and service fees. Figures shown above assume
reinvestment of all dividends and capital gains. SEC yield is a calculation for
determining the amount of portfolio income, excluding non-income items as
prescribed by the SEC. Yields are subject to change.
JP Morgan Global High Yield Index is a broad-based index that reflects the
general performance of the global high-yield corporate debt market. Lipper High
Yield Bond Fund Index is an index of funds with similar return objectives as
this fund. Indexes do not include any expenses, fees or sales charges, which
would lower performance. Indexes are unmanaged and should not be considered an
investment. Source for index performance: Lipper Inc.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2006
MARKET CONDITIONS
As the reporting period opened, investors confronted the possibility that Gulf
Coast hurricane damage could result in a slowdown in economic growth and
increased inflation. An unfavorable supply-demand outlook (large outflows from
high yield mutual funds and a robust high yield bond issuance calendar), a
high-profile default by auto parts manufacturer Delphi and an accounting scandal
at Refco added to investors' concerns. Against this backdrop, the prices of high
yield bonds moved lower in September and October. The market regained a degree
of traction in November and December, however. Although a declining appetite for
corporate credit risk and a rising federal funds target rate weighed on
sentiment, good economic growth and an improved equity market provided support.
Reflecting investors' heightened apprehension, single B rated bonds demonstrated
the greatest resiliency and the lower-rated segment of the high yield market
struggled most during the final months of 2005.
The high yield market started 2006 on a very positive note. Investors were
increasingly heartened by economic growth data and a briskly rising equity
market. In addition, investors' rekindled interest in moving further up the
risk/reward spectrum provided further support to the high yield market. This
improved sentiment offset less positive factors elsewhere, including a very
heavy new issue calendar, rising yields in the Treasury market, rising oil
prices and outflows from mutual funds. In a reversal of the trends of the final
months of 2005, the riskiest segment of the high-yield market garnered the most
favor with investors, as securities rated CCC and below led.
Industry returns varied across sectors, and were often influenced significantly
by individual companies. Within the JP Morgan Global High Yield Index, leading
sectors included telecommunications, wireless communications and services. The
auto and auto-related areas of the market struggled most, as an ongoing
deterioration in fundamentals exacted an extended toll. Other lagging sectors
included cable and financials.
2
PERFORMANCE ANALYSIS
The fund returned 1.36 percent for the six months ended February 28, 2006 (Class
A shares, unadjusted for sales charges). In comparison, the fund's benchmarks,
the JP Morgan Global High Yield Index and the Lipper High Yield Bond Fund Index,
returned 2.16 percent and 2.49 percent for the period, respectively.
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2006
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JP MORGAN LIPPER HIGH
GLOBAL YIELD
HIGH YIELD BOND FUND
CLASS A CLASS B CLASS C CLASS I INDEX INDEX
1.36% 0.97% 1.29% 1.50% 2.16% 2.49%
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The performance for the four 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 and
index definitions.
The fund's performance versus the JP Morgan Global High Yield Index benefited
from its underweighting to the transportation sector, particularly the troubled
auto and auto-related industries. In addition, good security selection in
transportation, cable and chemicals also added to relative performance. In
contrast, security selection in financials, forest products and building
materials detracted from relative returns. Additionally, as investors' appetite
for risk increased in 2006, the fund's more defensive emphasis on the upper
tiers of the high yield market tempered performance.
As of the close of the reporting period, the fund's portfolio included
overweightings relative to the JP Morgan Global High Yield Index in the
chemicals, energy, food/tobacco and wireless communications sectors. The fund's
major sector underweights included utilities, information technology, metals,
housing and financials. In regards to overall credit risk, the fund is
positioned defensively versus its JP Morgan benchmark. Also reflecting a
defensive bias, we reduced some of the riskier positions in the fund throughout
the period.
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.
3
RATINGS ALLOCATIONS AS OF 2/28/06
A/A 0.7%
BBB/Baa 3.1
BB/Ba 31.5
B/B 57.2
CCC/Caa 6.3
Non-Rated 1.2
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 2/28/06
Energy 9.2%
Transportation 8.0
Healthcare 7.4
Utility 6.8
Gaming & Leisure 6.2
Cable 6.1
Chemicals 5.7
Forest Products 5.4
Food & Tobacco 4.4
Diversified Media 4.3
Metals 3.8
Manufacturing 3.2
Consumer Products 3.1
Services 2.9
Wireless Communications 2.9
Food & Drug 2.7
Housing 2.7
Information Technology 2.3
Telecommunications 2.2
Aerospace 1.5
Broadcasting 1.2
Retail 1.2
Financial 0.5
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Total Long-Term Investments 93.7%
Short-Term Investments 4.7
Other Assets in Excess of Liabilities 1.6
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Total Net Assets 100.0%
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 industries shown above. Ratings allocations are as a
percentage of corporate debt obligations. Industry allocations are as a
percentage of net assets. Van Kampen is a wholly owned subsidiary of a global
securities firm 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. Ratings
allocations based upon ratings as issued by Standard and Poor's and Moody's,
respectively.
4
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 by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to 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 e-mail 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.
5
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.
6
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 charge on redemptions of Class B and C Shares; and
(2) ongoing costs, including management fees; distribution and service (12b-1)
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 9/1/05 - 2/28/06.
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 cost 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. 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*
------------------------------------------------
9/1/05 2/28/06 9/1/05-2/28/06
Class A
Actual...................................... $1,000.00 $1,013.65 $4.59
Hypothetical................................ 1,000.00 1,020.29 4.61
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 1,009.68 8.37
Hypothetical................................ 1,000.00 1,016.49 8.40
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 1,012.86 8.09
Hypothetical................................ 1,000.00 1,016.79 8.10
(5% annual return before expenses)
Class I
Actual...................................... 1,000.00 1,015.02 3.10
Hypothetical................................ 1,000.00 1,021.69 3.11
(5% annual return before expenses)
* Expenses are equal to the Fund's annualized expense ratio of 0.92%, 1.68%,
1.62% and 0.62% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 181/365 (to reflect
the one-half year period).
Assumes all dividends and distributions were reinvested.
7
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2006 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
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CORPORATE BONDS 93.0%
AEROSPACE 1.5%
$3,745 Hexcel Corp. ................................... 6.750% 02/01/15 $ 3,773,087
6,440 K & F Acquisition, Inc. ........................ 7.750 11/15/14 6,601,000
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10,374,087
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BROADCASTING 1.2%
5,825 Lin Television Corp. ........................... 6.500 05/15/13 5,555,594
1,905 Lin Television Corp., Ser B..................... 6.500 05/15/13 1,816,894
1,185 Salem Communications Corp. ..................... 7.750 12/15/10 1,222,031
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8,594,519
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CABLE 6.1%
4,815 Cablecom Luxembourg SCA, 144A--Private Placement
(Euro) (Luxembourg) (a)......................... 9.375 04/15/14 6,522,030
6,005 Cablevision Systems Corp. (Variable
Rate Coupon).................................... 8.716 04/01/09 6,237,694
3,794 CCH I, LLC, 144A--Private Placement (a)......... 11.000 10/01/15 3,210,672
7,820 Echostar DBS Corp. ............................. 6.375 10/01/11 7,683,150
1,290 Echostar DBS Corp. ............................. 6.625 10/01/14 1,260,975
460 Intelsat Bermuda Ltd., 144A--Private Placement
(Bermuda) (a)................................... 8.500 01/15/13 472,650
4,315 Intelsat Bermuda Ltd., 144A--Private Placement
(Bermuda) (a)................................... 8.875 01/15/15 4,498,387
3,255 Intelsat Bermuda Ltd., 144A--Private Placement
(Variable Rate Coupon) (Bermuda) (a)............ 9.614 01/15/12 3,336,375
898 PanAmSat Corp. ................................. 9.000 08/15/14 951,880
7,205 PanAmSat Holding Corp. (b)...................... 0/10.375 11/01/14 5,160,581
2,295 Renaissance Media Group......................... 10.000 04/15/08 2,303,606
630 Satelites Mexicanos SA, Ser B (Mexico) (c)
(e)............................................. 10.125 11/01/04 396,900
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42,034,900
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CHEMICALS 5.7%
2,855 Cognis Deutschland GmbH & Co., 144A--Private
Placement (Euro) (Variable Rate Coupon)
(Germany) (a)................................... 7.226 11/15/13 3,518,311
4,950 Equistar Chemicals LP........................... 10.125 09/01/08 5,346,000
620 Equistar Chemicals LP........................... 10.625 05/01/11 677,350
952 Huntsman International LLC...................... 10.125 07/01/09 980,560
4,000 Huntsman International LLC (Euro)............... 10.125 07/01/09 4,982,977
2,308 Innophos Investments Holdings, Inc.,
144A--Private Placement (Variable Rate Coupon)
(a)............................................. 12.749 02/15/15 2,227,407
4,075 Innophos, Inc., 144A--Private Placement (a)..... 8.875 08/15/14 4,217,625
1,485 Koppers, Inc. .................................. 9.875 10/15/13 1,611,225
1,930 Millennium America, Inc. ....................... 9.250 06/15/08 1,992,725
1,640 Nalco Co. ...................................... 7.750 11/15/11 1,676,900
5,110 Nalco Co. ...................................... 8.875 11/15/13 5,378,275
2,268 Rockwood Specialties Group, Inc. ............... 10.625 05/15/11 2,506,140
8 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
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CHEMICALS (CONTINUED)
$1,390 Rockwood Specialties Group, Inc., 144A--Private
Placement (Euro) (a)............................ 7.625% 11/15/14 $ 1,723,299
2,940 Westlake Chemical Corp. ........................ 6.625 01/15/16 2,951,025
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39,789,819
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CONSUMER PRODUCTS 2.9%
8,210 Levi Strauss & Co. (Variable Rate Coupon)....... 9.280 04/01/12 8,517,875
2,295 Oxford Industrials, Inc. ....................... 8.875 06/01/11 2,375,325
4,635 Rayovac Corp. .................................. 8.500 10/01/13 4,252,612
2,860 Spectrum Brands, Inc. .......................... 7.375 02/01/15 2,481,050
2,632 Tempur Pedic, Inc. ............................. 10.250 08/15/10 2,829,400
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20,456,262
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DIVERSIFIED MEDIA 4.3%
1,155 Advanstar Communications, Inc. ................. 10.750 08/15/10 1,264,725
2,840 AMC Entertainment, Inc. (Variable Rate
Coupon)......................................... 8.999 08/15/10 2,953,600
6,187 CanWest Media, Inc. (Canada).................... 8.000 09/15/12 6,372,453
2,282 Dex Media East/Finance Corp., LLC............... 12.125 11/15/12 2,644,267
3,587 Dex Media West/Finance Corp., LLC, Ser B........ 9.875 08/15/13 3,990,537
1,870 Houghton Mifflin Co. ........................... 8.250 02/01/11 1,963,500
5,405 Houghton Mifflin Co. ........................... 9.875 02/01/13 5,918,475
1,525 Nebraska Book Co., Inc. ........................ 8.625 03/15/12 1,441,125
3,730 Primedia, Inc. ................................. 8.875 05/15/11 3,608,775
------------
30,157,457
------------
ENERGY 9.2%
4,925 Chaparral Energy, Inc., 144A--Private
Placement (a)................................... 8.500 12/01/15 5,232,812
6,870 CHC Helicopter Corp. (Canada)................... 7.375 05/01/14 7,050,337
2,325 Chesapeake Energy Corp. ........................ 6.375 06/15/15 2,336,625
3,200 Chesapeake Energy Corp. ........................ 6.625 01/15/16 3,264,000
5,320 Chesapeake Energy Corp. ........................ 7.500 09/15/13 5,685,750
1,645 Compagnie Generale de Geophysique SA (France)... 7.500 05/15/15 1,727,250
5,120 El Paso Production Holding Co. ................. 7.750 06/01/13 5,427,200
1,800 Hanover Compressor Co. ......................... 8.625 12/15/10 1,910,250
890 Hanover Compressor Co. ......................... 9.000 06/01/14 974,550
109 Hanover Equipment Trust, Ser A.................. 8.500 09/01/08 113,087
3,042 Hanover Equipment Trust, Ser B.................. 8.750 09/01/11 3,224,520
5,460 Hilcorp Energy/Finance Corp., 144A--Private
Placement (a)................................... 7.750 11/01/15 5,555,550
2,731 Hilcorp Energy/Finance Corp., 144A--Private
Placement (a)................................... 10.500 09/01/10 3,045,065
3,460 Husky Oil Ltd. (Variable Rate Coupon)
(Canada)........................................ 8.900 08/15/28 3,690,311
1,863 Magnum Hunter Resources, Inc. .................. 9.600 03/15/12 2,021,355
3,450 Pacific Energy Partners......................... 7.125 06/15/14 3,579,375
See Notes to Financial Statements 9
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
ENERGY (CONTINUED)
$4,020 Pogo Producing Co. ............................. 6.875% 10/01/17 $ 4,070,250
4,422 Vintage Petroleum, Inc. ........................ 7.875 05/15/11 4,614,498
------------
63,522,785
------------
FINANCIAL 0.5%
3,395 Residential Capital Corp. ...................... 6.375 06/30/10 3,431,157
------------
FOOD & DRUG 2.7%
1,800 Albertson's, Inc. .............................. 7.250 05/01/13 1,797,289
1,450 Albertson's, Inc. .............................. 7.500 02/15/11 1,475,278
2,625 Delhaize America, Inc. ......................... 8.125 04/15/11 2,865,967
1,450 Jean Coutu Group (PJC), Inc. (Canada)........... 7.625 08/01/12 1,457,250
3,740 Jean Coutu Group (PJC), Inc. (Canada)........... 8.500 08/01/14 3,590,400
1,700 Jitney-Jungle Stores America, Inc. (c) (e)
(f)............................................. 12.000 03/01/06 0
3,856 Kroger Co., 144A--Private Placement (a)......... 8.500 07/15/17 4,188,631
3,130 Rite Aid Corp. ................................. 8.125 05/01/10 3,208,250
------------
18,583,065
------------
FOOD & TOBACCO 4.4%
3,125 Michael Foods, Inc. ............................ 8.000 11/15/13 3,203,125
4,420 Pilgrim's Pride Corp. .......................... 9.250 11/15/13 4,652,050
7,095 Pilgrim's Pride Corp. .......................... 9.625 09/15/11 7,547,306
7,685 RJ Reynolds Tobacco Holdings, Inc. ............. 6.500 07/15/10 7,761,850
5,545 Smithfield Foods, Inc. ......................... 7.000 08/01/11 5,642,037
450 Smithfield Foods, Inc., Ser B................... 7.750 05/15/13 473,062
1,080 Smithfield Foods, Inc., Ser B................... 8.000 10/15/09 1,134,000
------------
30,413,430
------------
FOREST PRODUCTS 5.4%
4,090 Abitibi-Consolidated, Inc. (Canada)............. 6.000 06/20/13 3,435,600
1,470 Abitibi-Consolidated, Inc. (Canada)............. 7.750 06/15/11 1,394,662
3,815 Covalence Specialty Materials Corp.,
144A--Private Placement (a)..................... 10.250 03/01/16 3,972,369
2,015 Crown Americas, 144A--Private Placement (a)..... 7.625 11/15/13 2,110,713
1,975 Crown European Holdings SA (Euro) (France)...... 6.250 09/01/11 2,551,578
3,840 Graham Packaging Co., Inc. ..................... 8.500 10/15/12 3,931,200
3,965 Graham Packaging Co., Inc. ..................... 9.875 10/15/14 4,044,300
4,870 Graphic Packaging International, Inc. .......... 9.500 08/15/13 4,650,850
1,535 JSG Funding PLC (Euro) (Ireland)................ 10.125 10/01/12 2,031,159
130 Owens-Brockway Glass Containers, Inc. .......... 8.875 02/15/09 136,013
2,100 Owens-Illinois, Inc. ........................... 7.350 05/15/08 2,136,750
5,540 Owens-Illinois, Inc. ........................... 7.500 05/15/10 5,636,950
855 Pliant Corp. (c) (e)............................ 11.125 09/01/09 790,875
1,985 Pliant Corp. (c) (e)............................ 13.000 06/01/10 496,250
1,495 Pliant Corp. (c) (e)............................ 13.000 06/01/10 373,750
------------
37,693,019
------------
10 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
GAMING & LEISURE 6.2%
$ 475 Caesars Entertainment........................... 7.000% 04/15/13 $ 503,344
993 Caesars Entertainment........................... 8.875 09/15/08 1,073,681
434 HMH Properties, Inc., Ser B..................... 7.875 08/01/08 438,883
5,365 Host Marriott LP................................ 6.375 03/15/15 5,378,413
4,240 Host Marriott LP................................ 7.125 11/01/13 4,399,000
7,200 Isle of Capri Casinos, Inc. .................... 7.000 03/01/14 7,236,000
5,440 Las Vegas Sands Corp. .......................... 6.375 02/15/15 5,304,000
9,470 MGM Mirage, Inc. ............................... 6.000 10/01/09 9,470,000
1,835 Starwood Hotels & Resorts Worldwide, Inc. ...... 7.875 05/01/12 2,023,088
3,005 Station Casinos, Inc. .......................... 6.000 04/01/12 3,020,025
3,795 Station Casinos, Inc. .......................... 6.875 03/01/16 3,880,388
------------
42,726,822
------------
HEALTHCARE 7.4%
4,145 AmerisourceBergen Corp., 144A--Private Placement
(a)............................................. 5.625 09/15/12 4,144,105
2,860 Community Health Systems, Inc. ................. 6.500 12/15/12 2,845,700
3,275 DaVita, Inc. ................................... 6.625 03/15/13 3,340,500
3,375 Fisher Scientific International, Inc. .......... 6.125 07/01/15 3,396,094
6,805 Fresenius Medical Care Capital Trust IV......... 7.875 06/15/11 7,247,325
3,750 HCA, Inc. ...................................... 6.300 10/01/12 3,755,175
2,085 HCA, Inc. ...................................... 8.700 02/10/10 2,267,260
940 HCA, Inc. ...................................... 8.750 09/01/10 1,038,595
3,980 Medcath Holdings Corp. ......................... 9.875 07/15/12 4,154,125
850 National Nephrology Associates, Inc.,
144A--Private Placement (a)..................... 9.000 11/01/11 947,147
3,680 Omnicare, Inc. ................................. 6.750 12/15/13 3,762,800
1,480 Tenet Healthcare Corp. ......................... 7.375 02/01/13 1,365,300
3,880 Tenet Healthcare Corp. ......................... 9.875 07/01/14 3,967,300
4,900 VWR International, Inc. ........................ 6.875 04/15/12 4,900,000
3,975 Warner Chilcott Corp., 144A--Private Placement
(Variable Rate Coupon) (a)...................... 9.000 02/01/15 3,925,313
------------
51,056,739
------------
HOUSING 2.7%
1,495 Associated Materials, Inc. (b).................. 0/11.250 03/01/14 799,825
1,350 Goodman Global Holdings, Inc., Ser B (Variable
Rate Coupon).................................... 7.491 06/15/12 1,380,375
1,180 Interface, Inc. ................................ 7.300 04/01/08 1,209,500
4,465 Interface, Inc. ................................ 9.500 02/01/14 4,598,950
1,435 Interface, Inc. ................................ 10.375 02/01/10 1,574,913
5,915 Nortek, Inc. ................................... 8.500 09/01/14 5,929,788
1,870 Technical Olympic USA, Inc. .................... 9.000 07/01/10 1,935,450
1,612 Technical Olympic USA, Inc. .................... 10.375 07/01/12 1,643,837
------------
19,072,638
------------
See Notes to Financial Statements 11
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY 1.8%
$ 525 Iron Mountain, Inc. ............................ 6.625% 01/01/16 $ 497,438
2,300 Iron Mountain, Inc. ............................ 7.750 01/15/15 2,340,250
5,045 Iron Mountain, Inc. ............................ 8.625 04/01/13 5,284,638
3,540 Sungard Data Systems, Inc., 144A--Private
Placement (a)................................... 9.125 08/15/13 3,783,375
320 Sungard Data Systems, Inc., 144A--Private
Placement (Variable Rate Coupon) (a)............ 9.431 08/15/13 339,200
------------
12,244,901
------------
MANUFACTURING 3.2%
2,185 General Cable Corp. ............................ 9.500 11/15/10 2,359,800
1,959 JohnsonDiversey, Inc. (Euro).................... 9.625 05/15/12 2,440,413
4,463 JohnsonDiversey, Inc., Ser B.................... 9.625 05/15/12 4,596,890
2,574 Manitowoc Co., Inc. ............................ 10.500 08/01/12 2,863,575
55 Manitowoc Co., Inc. (Euro)...................... 10.375 05/15/11 70,483
6,525 NMHG Holdings Co. .............................. 10.000 05/15/09 6,916,500
3,265 Propex Fabrics, Inc. ........................... 10.000 12/01/12 2,922,175
------------
22,169,836
------------
METALS 3.8%
1,340 Foundation PA Coal Co. ......................... 7.250 08/01/14 1,380,200
6,170 Massey Energy Co., 144A--Private Placement
(a)............................................. 6.875 12/15/13 6,185,425
9,300 Novelis, Inc., 144A--Private Placement (Canada)
(a)............................................. 7.250 02/15/15 9,067,500
2,445 SGL Carbon Luxembourg SA, 144A--Private
Placement (Euro) (Luxembourg) (a)............... 8.500 02/01/12 3,191,579
5,992 UCAR Finance, Inc. ............................. 10.250 02/15/12 6,411,440
------------
26,236,144
------------
RETAIL 1.2%
3,110 Brown Shoe Co., Inc. ........................... 8.750 05/01/12 3,296,600
5,005 Linens 'n Things, Inc., 144A--Private Placement
(Variable Rate Coupon) (a)...................... 10.366 01/15/14 5,055,050
------------
8,351,650
------------
SERVICES 2.9%
5,715 Allied Waste North America, Inc. ............... 6.375 04/15/11 5,657,850
1,850 Allied Waste North America, Inc. ............... 7.875 04/15/13 1,933,250
1,437 Allied Waste North America, Inc., Ser B......... 9.250 09/01/12 1,566,330
1,590 Buhrmann US, Inc. .............................. 7.875 03/01/15 1,593,975
3,580 Buhrmann US, Inc. .............................. 8.250 07/01/14 3,696,350
4,245 MSW Energy Holdings LLC, Ser B.................. 7.375 09/01/10 4,414,800
985 MSW Energy Holdings/Finance..................... 8.500 09/01/10 1,053,950
------------
19,916,505
------------
TELECOMMUNICATIONS 2.2%
4,186 Axtel SA (Mexico)............................... 11.000 12/15/13 4,855,760
6,030 Exodus Communications, Inc. (c) (e) (f)......... 11.250 07/01/08 0
770 Exodus Communications, Inc. (c) (e) (f)......... 11.625 07/15/10 0
4,000 Exodus Communications, Inc. (Euro) (c) (e)
(f)............................................. 11.375 07/15/08 0
12 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
$8,250 GST Network Funding, Inc. (c) (e) (f)........... 10.500% 05/01/08 $ 825
4,000 Park N View, Inc., Ser B (c) (e) (f)............ 13.000 05/15/08 0
4,405 Qwest Communications International, Inc.
(Variable Rate Coupon).......................... 8.249 02/15/09 4,520,631
990 Qwest Corp. .................................... 5.625 11/15/08 985,050
4,480 Wind Acquisition Finance SA, 144A--Private
Placement (Luxembourg) (a) (d).................. 10.750 12/01/15 4,816,000
------------
15,178,266
------------
TRANSPORTATION 8.0%
6,725 Amsted Industries, Inc., 144A--Private
Placement (a)................................... 10.250 10/15/11 7,330,250
1,765 Arvinmeritor, Inc. ............................. 8.750 03/01/12 1,738,525
4,800 Ford Motor Co. ................................. 7.450 07/16/31 3,432,000
3,935 Ford Motor Credit Co. .......................... 5.625 10/01/08 3,575,738
4,450 General Motors Acceptance Corp. ................ 4.375 12/10/07 4,096,127
1,740 General Motors Acceptance Corp. ................ 6.875 09/15/11 1,559,677
1,690 General Motors Corp. ........................... 7.125 07/15/13 1,208,350
8,435 General Motors Corp. ........................... 8.375 07/15/33 5,988,850
7,040 Lear Corp., Ser B............................... 8.110 05/15/09 6,216,982
5,720 Petro Stopping Centers, LP...................... 9.000 02/15/12 5,820,100
8,425 Sonic Automotive, Inc., Ser B................... 8.625 08/15/13 8,488,188
5,471 TRW Automotive, Inc. ........................... 9.375 02/15/13 5,963,390
------------
55,418,177
------------
UTILITY 6.8%
925 AES Corp. ...................................... 7.750 03/01/14 981,656
528 AES Corp. ...................................... 8.875 02/15/11 574,200
740 AES Corp. ...................................... 9.375 09/15/10 815,850
3,035 AES Corp., 144A--Private Placement (a).......... 9.000 05/15/15 3,323,325
5,930 CMS Energy Corp. ............................... 7.500 01/15/09 6,152,375
2,825 Colorado Interstate Gas Co., 144A--Private
Placement (a)................................... 6.800 11/15/15 2,972,070
1,355 IPALCO Enterprises, Inc. ....................... 8.625 11/14/11 1,507,438
4,645 Monongahela Power Co. .......................... 5.000 10/01/06 4,637,261
2,515 Nevada Power Co. ............................... 9.000 08/15/13 2,793,551
2,945 Nevada Power Co., Ser A......................... 8.250 06/01/11 3,280,877
995 Northwest Pipeline Corp. ....................... 8.125 03/01/10 1,058,431
5,695 Ormat Funding Corp. ............................ 8.250 12/30/20 5,780,439
4,030 PSEG Energy Holdings............................ 8.625 02/15/08 4,261,725
1,955 Southern Natural Gas Co. ....................... 8.875 03/15/10 2,100,884
6,210 Williams Cos., Inc. ............................ 7.875 09/01/21 6,970,725
------------
47,210,807
------------
WIRELESS COMMUNICATIONS 2.9%
3,090 American Tower Corp. ........................... 7.125 10/15/12 3,252,225
3,085 American Tower Corp. ........................... 7.500 05/01/12 3,270,100
3,865 Rural Cellular Corp. (Variable Rate Coupon)..... 8.991 03/15/10 3,961,625
See Notes to Financial Statements 13
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
WIRELESS COMMUNICATIONS (CONTINUED)
$4,249 SBA Communications Corp. (b).................... 0/9.750% 12/15/11 $ 4,047,173
1,148 SBA Communications Corp. ....................... 8.500 12/01/12 1,268,540
4,040 UbiquiTel Operating Co. ........................ 9.875 03/01/11 4,464,200
------------
20,263,863
------------
TOTAL CORPORATE BONDS 93.0%........................................ 644,896,848
------------
FOREIGN CONVERTIBLE CORPORATE OBLIGATION 0.5%
3,980 Nortel Networks Corp. (Canada).................. 4.250 09/01/08 3,776,025
------------
EQUITIES 0.2%
DecisionOne Corp. (10,890 Common Stock Warrants Class A) (f) (g).............. 0
DecisionOne Corp. (18,765 Common Stock Warrants Class B) (f) (g).............. 0
DecisionOne Corp. (11,130 Common Stock Warrants Class C) (f) (g).............. 0
DecisionOne Corp. (19,895 Common Shares) (f) (g).............................. 0
Doe Run Resources Corp. (29 Common Stock Warrants) (f) (g).................... 0
HCI Direct, Inc. (106,250 Common Shares Class A) (f) (g)...................... 1,275,000
HF Holdings, Inc. (36,820 Common Stock Warrants) (f) (g)...................... 0
Hosiery Corp. of America, Inc., 144A--Private Placement (1,000 Common Shares
Class A) (a) (f) (g).......................................................... 0
Jazztel, Plc, 144A--Private Placement (5,000 Common Stock Warrants) (Euro)
(United Kingdom) (a) (f) (g).................................................. 0
OpTel, Inc., 144A--Private Placement (3,275 Common Shares) (a) (f) (g)........ 0
Park N View, Inc., 144A--Private Placement (4,000 Common Stock Warrants) (a)
(e) (f) (g)................................................................... 0
Reunion Industries, Inc. (107,947 Common Stock Warrants) (f) (g).............. 0
Ventelo, Inc., 144A--Private Placement (73,021 Common Shares) (Euro) (United
Kingdom) (a) (f) (g).......................................................... 0
14 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
DESCRIPTION VALUE
-------------------------------------------------------------------------------------------------
EQUITIES (CONTINUED)
Viatel Holding Bermuda Ltd$. (7,852 Common Shares) (Bermuda) (g).................. $ 324
VS Holdings, Inc. (946,962 Common Shares) (f) (g)................................. 0
------------
TOTAL EQUITIES.................................................................... 1,275,324
------------
TOTAL LONG-TERM INVESTMENTS 93.7%
(Cost $682,512,863)............................................................. 649,948,197
REPURCHASE AGREEMENT 4.7%
State Street Bank & Trust Co. ($32,719,000 par collateralized by U.S. Government
obligations in a pooled cash account, interest rate of 4.49%, dated 02/28/06, to
be sold on 03/01/06 at $32,723,081)
(Cost $32,719,000).............................................................. 32,719,000
------------
TOTAL INVESTMENTS 98.4%
(Cost $715,231,863)............................................................. 682,667,197
OTHER ASSETS IN EXCESS OF LIABILITIES 1.6%....................................... 10,883,294
------------
NET ASSETS 100.0%................................................................ $693,550,491
============
Percentages are calculated as a percentage of net assets.
(a) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(b) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(c) Non-income producing as security is in default.
(d) All or a portion of this security was purchased on a when-issued or delayed
delivery basis.
(e) This borrower has filed for protection in federal bankruptcy court.
(f) Market value is determined in accordance with procedures established in good
faith by the Board of Trustees.
(g) Non-income producing security as this stock currently does not declare
dividends.
(Euro)--Eurodollar
See Notes to Financial Statements 15
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
SWAP AGREEMENTS OUTSTANDING AT FEBRUARY 28, 2006:
CREDIT DEFAULT SWAPS
NOTIONAL UNREALIZED
BUY/SELL PAY/RECEIVE EXPIRATION AMOUNT APPRECIATION/
COUNTERPARTY REFERENCE ENTITY PROTECTION FIXED RATE DATE (000) DEPRECIATION
---------------------------------------------------------------------------------------------------------------
Goldman Sachs Capital
Markets Eastman Kodak Co. Sell 2.87% 3/20/11 $5,200 $130,984
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AS OF FEBRUARY 28, 2006:
UNREALIZED
IN CURRENT APPRECIATION/
FORWARD CONTRACTS EXCHANGE FOR VALUE DEPRECIATION
----------------------------------------------------------------------------------------
SHORT CONTRACTS:
Euro Currency
11,073,000 expiring 3/27/06................. US$ $13,220,908 $421,471
11,420,000 expiring 3/27/06................. US$ 13,635,218 431,138
--------
$852,609
--------
16 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
February 28, 2006 (Unaudited)
ASSETS:
Total Investments (Cost $715,231,863)....................... $ 682,667,197
Cash........................................................ 328
Receivables:
Interest.................................................. 13,367,248
Investments Sold.......................................... 1,134,200
Fund Shares Sold.......................................... 682,503
Forward Foreign Currency Contracts.......................... 852,609
Swap Contracts.............................................. 130,984
Other....................................................... 296,143
--------------
Total Assets............................................ 699,131,212
--------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 2,267,985
Income Distributions...................................... 1,062,096
Investments Purchased..................................... 849,975
Distributor and Affiliates................................ 526,022
Investment Advisory Fee................................... 213,292
Trustees' Deferred Compensation and Retirement Plans........ 385,663
Accrued Expenses............................................ 275,688
--------------
Total Liabilities....................................... 5,580,721
--------------
NET ASSETS.................................................. $ 693,550,491
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $1,296,754,104
Accumulated Undistributed Net Investment Income............. (3,418,912)
Net Unrealized Depreciation................................. (31,583,459)
Accumulated Net Realized Loss............................... (568,201,242)
--------------
NET ASSETS.................................................. $ 693,550,491
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $487,270,544 and 137,632,787 shares of
beneficial interest issued and outstanding)............. $ 3.54
Maximum sales charge (4.75%* of offering price)......... .18
--------------
Maximum offering price to public........................ $ 3.72
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $158,433,652 and 44,511,173 shares of
beneficial interest issued and outstanding)............. $ 3.56
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $45,858,169 and 13,040,495 shares of
beneficial interest issued and outstanding)............. $ 3.52
==============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $1,988,126 and 561,372 shares of
beneficial interest issued and outstanding)............. $ 3.54
==============
* On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements 17
VAN KAMPEN HIGH YIELD FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended February 28, 2006 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $ 28,416,743
Dividends................................................... 2,451
Other....................................................... 581,958
------------
Total Income............................................ 29,001,152
------------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $589,577, $839,161 and $223,012,
respectively)............................................. 1,651,750
Investment Advisory Fee..................................... 1,411,465
Shareholder Services........................................ 778,848
Custody..................................................... 68,632
Trustees' Fees and Related Expenses......................... 25,253
Legal....................................................... 19,361
Other....................................................... 97,128
------------
Total Expenses.......................................... 4,052,437
Less Credits Earned on Cash Balances.................... 37,022
------------
Net Expenses............................................ 4,015,415
------------
NET INVESTMENT INCOME....................................... $ 24,985,737
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ (5,843,682)
Foreign Currency Transactions............................. (106,755)
------------
Net Realized Loss........................................... (5,950,437)
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (20,395,111)
------------
End of the Period:
Investments............................................. (32,564,666)
Forward Foreign Currency Contracts...................... 852,609
Swap Contracts.......................................... 130,984
Foreign Currency Translation............................ (2,386)
------------
(31,583,459)
------------
Net Unrealized Depreciation During the Period............... (11,188,348)
------------
NET REALIZED AND UNREALIZED LOSS............................ $(17,138,785)
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 7,846,952
============
18 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2006 AUGUST 31, 2005
------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 24,985,737 $ 51,865,645
Net Realized Gain/Loss.................................. (5,950,437) 3,062,032
Net Unrealized Depreciation During the Period........... (11,188,348) (12,909,658)
------------- -------------
Change in Net Assets from Operations.................... 7,846,952 42,018,019
------------- -------------
Distributions from Net Investment Income:
Class A Shares........................................ (18,915,985) (35,174,855)
Class B Shares........................................ (5,840,189) (12,164,487)
Class C Shares........................................ (1,682,121) (3,384,973)
Class I Shares........................................ (413,748) (82,724)
------------- -------------
Total Distributions..................................... (26,852,043) (50,807,039)
------------- -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (19,005,091) (8,789,020)
------------- -------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................... 79,974,830 489,332,752
Net Asset Value of Shares Issued Through Dividend
Reinvestment.......................................... 19,471,025 37,014,423
Cost of Shares Repurchased.............................. (187,767,424) (298,295,554)
------------- -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS...... (88,321,569) 228,051,621
------------- -------------
TOTAL INCREASE/DECREASE IN NET ASSETS................... (107,326,660) 219,262,601
NET ASSETS:
Beginning of the Period................................. 800,877,151 581,614,550
------------- -------------
End of the Period (Including accumulated undistributed
net investment income of $(3,418,912) and
$(1,552,606), respectively)........................... $ 693,550,491 $ 800,877,151
============= =============
See Notes to Financial Statements 19
VAN KAMPEN HIGH YIELD FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS A SHARES FEBRUARY 28, --------------------------------------------
2006 2005 2004 2003 2002 (A) 2001
-----------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD......................... $ 3.63 $ 3.64 $ 3.43 $ 3.15 $ 4.23 $ 5.24
------ ------ ------ ------ ------- ------
Net Investment Income.......... .13(b) .26 .26 .29 .39 .51
Net Realized and Unrealized
Gain/Loss.................... (.08) (.02) .21 .29 (1.01) (.96)
------ ------ ------ ------ ------- ------
Total from Investment
Operations..................... .05 .24 .47 .58 (.62) (.45)
------ ------ ------ ------ ------- ------
Less:
Distributions from Net
Investment Income............ .14 .25 .25 .24 .43 .55
Return of Capital
Distributions................ -0- -0- .01 .06 .03 .01
------ ------ ------ ------ ------- ------
Total Distributions.............. .14 .25 .26 .30 .46 .56
------ ------ ------ ------ ------- ------
NET ASSET VALUE, END OF THE
PERIOD......................... $ 3.54 $ 3.63 $ 3.64 $ 3.43 $ 3.15 $ 4.23
====== ====== ====== ====== ======= ======
Total Return (c)................. 1.36%* 6.89% 14.02% 19.26% -15.75% -9.04%
Net Assets at End of the Period
(In millions).................. $487.3 $532.0 $379.5 $408.7 $ 308.5 $394.4
Ratio of Expenses to Average Net
Assets (d)..................... .92% 1.06% 1.06% 1.12% 1.08% 1.05%
Ratio of Net Investment Income to
Average Net Assets............. 7.25% 7.11% 7.45% 8.36% 10.39% 10.93%
Portfolio Turnover............... 26%* 84% 88% 95% 83% 80%
* Non-Annualized
(a) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium on fixed income securities and presenting
paydown gains and losses on mortgage- and asset-backed securities as
interest income. The effect of these changes for the period ended August 31,
2002 was to decrease the ratio of net investment income to average net
assets from 10.49% to 10.39%. Net investment income per share and net
realized gains and losses per share were unaffected by the adjustments. Per
share, ratios and supplemental data for periods prior to August 31, 2002
have not been restated to reflect this change in presentation.
(b) Based on average shares outstanding.
(c) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchase. If
the sales charges were included, total returns would be lower. These returns
include Rule 12b-1 fees and service fees of up to .25% and do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or
the redemption of Fund shares.
(d) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on cash balances. If these credits were reflected as a reduction of
expenses, the ratio would decrease by .01% for the six months ended February
28, 2006.
20 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS B SHARES FEBRUARY 28, --------------------------------------------
2006 2005 2004 2003 2002 (A) 2001
-----------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD......................... $ 3.65 $ 3.65 $ 3.44 $ 3.16 $ 4.24 $ 5.25
------ ------ ------ ------ ------- ------
Net Investment Income.......... .12(b) .25 .23 .25 .35 .48
Net Realized and Unrealized
Gain/Loss.................... (.09) (.02) .21 .30 (1.01) (.97)
------ ------ ------ ------ ------- ------
Total from Investment
Operations..................... .03 .23 .44 .55 (.66) (.49)
------ ------ ------ ------ ------- ------
Less:
Distributions from Net
Investment Income............ .12 .23 .22 .21 .39 .51
Return of Capital
Distributions................ -0- -0- .01 .06 .03 .01
------ ------ ------ ------ ------- ------
Total Distributions.............. .12 .23 .23 .27 .42 .52
------ ------ ------ ------ ------- ------
NET ASSET VALUE, END OF THE
PERIOD......................... $ 3.56 $ 3.65 $ 3.65 $ 3.44 $ 3.16 $ 4.24
====== ====== ====== ====== ======= ======
Total Return (c)................. .97%* 6.36% 12.79% 18.27% -16.12% -9.80%
Net Assets at End of the Period
(In millions).................. $158.4 $191.0 $160.7 $175.6 $ 168.8 $249.6
Ratio of Expenses to Average Net
Assets (d)..................... 1.68% 1.83% 1.82% 1.89% 1.84% 1.83%
Ratio of Net Investment Income to
Average Net Assets............. 6.49% 6.33% 6.70% 7.68% 9.67% 10.13%
Portfolio Turnover............... 26%* 84% 88% 95% 83% 80%
* Non-Annualized
(a) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium on fixed income securities and presenting
paydown gains and losses on mortgage- and asset-backed securities as
interest income. The effect of these changes for the period ended August 31,
2002 was to decrease the ratio of net investment income to average net
assets from 9.77% to 9.67%. Net investment income per share and net realized
gains and losses per share were unaffected by the adjustments. Per share,
ratios and supplemental data for periods prior to August 31, 2002 have not
been restated to reflect this change in presentation.
(b) Based on average shares outstanding.
(c) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 4%, charged on certain redemptions
made within the first and second 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 Rule 12b-1 fees 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 redemption of Fund shares.
(d) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on cash balances. If these credits were reflected as a reduction of
expenses, the ratio would decrease by .01% for the six months ended February
28, 2006.
See Notes to Financial Statements 21
VAN KAMPEN HIGH YIELD FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS C SHARES FEBRUARY 28, -------------------------------------------------
2006 2005 2004 2003 2002 (A) 2001
-----------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF THE PERIOD............. $ 3.60 $ 3.61 $ 3.41 $ 3.13 $ 4.20 $ 5.22
------ ------ ------ ------ ------- -------
Net Investment Income..... .11(b) .25 .23 .25 .35 .48
Net Realized and
Unrealized Gain/Loss.... (.07) (.03) .20 .30 (1.00) (.98)
------ ------ ------ ------ ------- -------
Total from Investment
Operations................ .04 .22 .43 .55 (.65) (.50)
------ ------ ------ ------ ------- -------
Less:
Distributions from Net
Investment Income....... .12 .23 .22 .21 .39 .51
Return of Capital
Distributions........... -0- -0- .01 .06 .03 .01
------ ------ ------ ------ ------- -------
Total Distributions......... .12 .23 .23 .27 .42 .52
------ ------ ------ ------ ------- -------
NET ASSET VALUE, END OF THE
PERIOD.................... $ 3.52 $ 3.60 $ 3.61 $ 3.41 $ 3.13 $ 4.20
====== ====== ====== ====== ======= =======
Total Return (c)............ 1.29%(e)* 6.17%(e) 12.98%(e) 18.14%(f) -16.04% -10.06%
Net Assets at End of the
Period (In millions)...... $ 45.9 $ 54.5 $ 41.4 $ 41.5 $ 36.7 $ 58.7
Ratio of Expenses to Average
Net Assets (d)............ 1.62%(e) 1.82%(e) 1.81%(e) 1.86% 1.84% 1.82%
Ratio of Net Investment
Income to Average Net
Assets.................... 6.55%(e) 6.34%(e) 6.71%(e) 7.68%(f) 9.68% 10.12%
Portfolio Turnover.......... 26%* 84% 88% 95% 83% 80%
* Non-Annualized
(a) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium on fixed income securities and presenting
paydown gains and losses on mortgage- and asset-backed securities as
interest income. The effect of these changes for the period ended August 31,
2002 was to decrease the ratio of net investment income to average net
assets from 9.78% to 9.68%. Net investment income per share and net realized
gains and losses per share were unaffected by the adjustments. Per share,
ratios and supplemental data for periods prior to August 31, 2002 have not
been restated to reflect this change in presentation.
(b) Based on average shares outstanding.
(c) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1% charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(d) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on cash balances. If these credits were reflected as a reduction of
expenses, the ratio would decrease by .01% for the six months ended February
28, 2006.
(e) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
than 1% (See footnote 7).
(f) Certain non-recurring payments were made to Class C Shares, resulting in an
increase to the Total Return and Ratio of Net Investment Income to Average
Net Assets of .01%.
22 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
MARCH 23, 2005
SIX MONTHS (COMMENCEMENT OF
ENDED OPERATIONS) TO
CLASS I SHARES FEBRUARY 28, AUGUST 31,
2006 2005
--------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.................. $ 3.63 $ 3.65
------ ------
Net Investment Income................................... .14(a) .12
Net Realized and Unrealized Loss........................ (.09) (.02)
------ ------
Total from Investment Operations.......................... .05 .10
Less Distributions from Net Investment Income............. .14 .12
------ ------
NET ASSET VALUE, END OF THE PERIOD........................ $ 3.54 $ 3.63
====== ======
Total Return (b).......................................... 1.50%* 2.69%*
Net Assets at End of the Period (In millions)............. $ 2.0 $ 23.3
Ratio of Expenses to Average Net Assets (c)............... .62% .85%
Ratio of Net Investment Income to Average Net Assets...... 7.58% 6.97%
Portfolio Turnover........................................ 26%* 84%
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period. These returns do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) The Ratio of Expenses to Average Net Assets does not reflect credits earned
on cash balances. If these credits were reflected as a reduction of
expenses, the ratio would decrease by .01% for the six months ended February
28, 2006.
See Notes to Financial Statements 23
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2006 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen High Yield Fund (the "Fund"), formerly Van Kampen High Income
Corporate Bond Fund, is organized as a Delaware statutory trust, and is
registered as a diversified, open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's primary
investment objective is to seek to maximize current income. Capital appreciation
is a secondary objective which is sought only when consistent with the Fund's
primary investment objective. The Fund commenced investment operations on
October 2, 1978. The Fund offers Class A Shares, Class B Shares, Class C Shares
and Class I Shares. 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 U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION Fixed income investments and preferred stock are stated at
value using market quotations or indications of value obtained from an
independent pricing service. Investments in securities listed on a securities
exchange are valued at their last sale price as of the close of such securities
exchange. Equity securities traded on NASDAQ are valued at the NASDAQ Official
Closing Price. Unlisted securities and listed securities for which the last
sales price is not available are valued at the mean of the last reported bid and
asked price. For those securities where quotations or prices are not available,
valuations are determined in accordance with procedures established in good
faith by the Board of Trustees. Short-term securities with remaining maturities
of 60 days or less are valued at amortized cost, which approximates market
value. Forward foreign currency contracts are valued using quoted foreign
exchange rates.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
segregate assets with the custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
payment is made. At February 28, 2006, the Fund had $849,975 of when-issued,
delayed delivery, or forward purchase commitments.
The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund will make
24
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
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. INCOME AND EXPENSES Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Discounts on debt
securities are accreted and premiums are amortized over the expected life of
each applicable security. Income and expenses of the Fund are allocated on a pro
rata basis to each class of shares, except for distribution and service fees and
incremental transfer agency costs which are unique to each class of shares.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of 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 August 31, 2005, the Fund had an accumulated capital loss carryforward
for tax purposes of $560,990,126 which will expire according to the following
schedule:
AMOUNT EXPIRATION
$ 6,411,333................................................ August 31, 2006
15,213,979................................................ August 31, 2007
33,682,013................................................ August 31, 2008
51,935,293................................................ August 31, 2009
138,518,165................................................ August 31, 2010
165,406,856................................................ August 31, 2011
117,018,188................................................ August 31, 2012
32,804,299................................................ August 31, 2013
Part of the capital loss carryforward above was acquired due to a merger
with another regulated investment company. Please see Footnote 3 for details.
At February 28, 2006, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $717,422,010
============
Gross tax unrealized appreciation........................... $ 25,595,536
Gross tax unrealized depreciation........................... (60,350,349)
------------
Net tax unrealized depreciation on investments.............. $(34,754,813)
============
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 annually. Distributions from net realized gains for book purposes
may include short-term capital gains which are included in ordinary income for
tax purposes.
25
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
The tax character of distributions paid during the year ended August 31,
2005 was as follows:
Distributions paid from:
Ordinary income........................................... $50,502,624
Long-term capital gain.................................... -0-
Return of capital......................................... -0-
-----------
$50,502,624
===========
As of August 31, 2005, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $3,564,658
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses relating to wash sales
transactions.
F. EXPENSE REDUCTIONS During the six months ended February 28, 2006, the Fund's
custody fee was reduced by $37,022 as a result of credits earned on cash
balances.
G. FOREIGN CURRENCY TRANSLATION Assets and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars at the mean of the quoted bid and ask prices of
such currencies against the U.S. dollar. Purchases and sales of portfolio
securities are translated at the rate of exchange prevailing when such
securities were acquired or sold. Realized gain and loss on foreign currency
transactions on the Statement of Operations includes the net realized amount
from the sale of foreign currency and the amount realized between trade date and
settlement date on securities transactions. Income and expenses are translated
at rates prevailing when accrued.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
AVERAGE DAILY NET ASSETS % PER ANNUM
First $500 million.......................................... .420%
Next $250 million........................................... .345
Next $250 million........................................... .295
Next $1 billion............................................. .270
Next $1 billion............................................. .245
Over $3 billion............................................. .220
For the six months ended February 28, 2006, the Fund recognized expenses of
approximately $19,300 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 Accounting Services and Chief Compliance Officer ("CCO")
Employment agreements, the Adviser provides accounting services and the CCO
provides
26
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
compliance services to the Fund. The costs of these services are allocated to
each fund. For the six months ended February 28, 2006, the Fund recognized
expenses of approximately $23,400 representing Van Kampen Investments Inc.'s or
its affiliates' (collectively "Van Kampen") cost of providing accounting
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 Accounting Services and CCO Employment agreement are reported as part of
"Other" 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 six months ended
February 28, 2006, the Fund recognized expenses of approximately $649,900
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.
Amounts deferred are retained by the Fund and to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of $260,814 are included in
"Other" assets on the Statement of Assets and Liabilities at February 28, 2006.
Appreciation/depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligation and do not affect the net asset value of the Fund. Benefits under the
retirement plan are payable upon retirement for a ten-year period and are based
upon each trustee's years of service to the Fund. The maximum annual benefit per
trustee under the plan is $2,500.
For the six months ended February 28, 2006, Van Kampen, as Distributor for
the Fund, received net commissions on sales of the Fund's Class A Shares of
approximately $51,300 and CDSC on redeemed shares of approximately $144,900.
Sales charges do not represent expenses to the Fund.
27
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
3. CAPITAL TRANSACTIONS
For the six months ended February 28, 2006 and the year ended August 31, 2005,
transactions were as follows:
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2006 AUGUST 31, 2005
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A....................... 17,185,530 $ 60,709,146 86,725,464 $ 320,410,088
Class B....................... 3,579,695 12,693,886 28,208,023 105,232,841
Class C....................... 1,785,385 6,240,799 10,910,339 40,075,471
Class I....................... 97,607 330,999 6,506,107 23,614,352
----------- ------------- ----------- -------------
Total Sales..................... 22,648,217 $ 79,974,830 132,349,933 $ 489,332,752
=========== ============= =========== =============
Dividend Reinvestment:
Class A....................... 3,908,973 $ 13,802,449 7,137,575 $ 26,066,021
Class B....................... 1,160,425 4,117,854 2,331,043 8,551,256
Class C....................... 324,357 1,136,981 637,802 2,314,420
Class I....................... 117,066 413,741 22,802 82,726
----------- ------------- ----------- -------------
Total Dividend Reinvestment..... 5,510,821 $ 19,471,025 10,129,222 $ 37,014,423
=========== ============= =========== =============
Repurchases:
Class A....................... (30,122,767) $(106,839,377) (51,466,042) $(188,120,153)
Class B....................... (12,613,113) (44,869,799) (22,114,193) (81,191,619)
Class C....................... (4,201,801) (14,795,701) (7,880,798) (28,567,020)
Class I....................... (6,067,456) (21,262,547) (114,754) (416,762)
----------- ------------- ----------- -------------
Total Repurchases............... (53,005,137) $(187,767,424) (81,575,787) $(298,295,554)
=========== ============= =========== =============
On December 17, 2004, the Fund acquired all of the assets and liabilities of
the Van Kampen High Yield Fund ("High Yield") through a tax free reorganization
approved by High Yield shareholders on December 7, 2004. The Fund issued
49,903,883, 21,224,359 and 7,028,101 shares of Classes A, B and C valued at
$186,141,484, $79,591,347 and $26,074,256, respectively, in exchange for High
Yield's net assets. The shares of High Yield were converted into Fund shares at
a ratio 1 to 1.515, 1 to 1.514 and 1 to 1.529 for Classes A, B and C,
respectively. Net unrealized appreciation of High Yield as of December 17, 2004
was $3,802,196. The Fund assumed High Yield's book to tax amortization
differences, which resulted in a $660,296 decrease to accumulated undistributed
net investment income and a corresponding increase to net unrealized
appreciation. Shares issued in connection with this reorganization are included
in proceeds from shares sold for the year ended August 31, 2005. Combined net
assets of both funds on the day of reorganization were $893,763,227. Included in
these net assets was a capital loss carryforward of $166,397,364, deferred
compensation of $155,071, the deferral of losses related to wash sale
transactions of $290,140, non-accrual interest income of $864,492 and marked to
market of $821,478, all carried forward from the High Yield Fund.
28
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
4. REDEMPTION FEE
Effective September 26, 2005, the Fund assesses a 2% redemption fee on the
proceeds of Fund shares that are redeemed (either by sales or exchange) within
30 days of purchase. The redemption fee is paid directly to the Fund. For the
six months ended February 28, 2006, the Fund received redemption fees of
approximately $8,000, which are reported as part of "Cost of Shares Repurchased"
in the Statement of Changes in Net Assets.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $178,843,632 and $277,727,378,
respectively.
6. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio, manage the Fund's effective yield, foreign currency exposure,
maturity and duration or generate potential gain. All of the Fund's holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in unrealized appreciation/depreciation. Upon disposition, a
realized gain or loss is recognized accordingly, except when taking delivery of
a security underlying a forward commitment. In this instance, the recognition of
gain or loss is postponed until the disposal of the security underlying the
forward commitment.
Purchasing securities or foreign currency on a forward commitment involves a
risk that the market value at the time of delivery may be lower than the agreed
upon purchase price resulting in an unrealized loss. Selling securities or
foreign currency on a forward commitment involves different risks and can result
in losses more significant than those arising from the purchase of such
securities. Risks may arise as a result of the potential inability of the
counterparties to meet the terms of their contracts.
A. FORWARD FOREIGN CURRENCY CONTRACTS A forward foreign currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. Upon the settlement of the contract, a realized gain or
loss is recognized and is included as a component of realized gain/loss on
forward foreign currency contracts. Risks may arise as a result of the potential
inability of the counterparties to meet the terms of their contracts. Risks may
also arise from the unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
B. CREDIT DEFAULT SWAPS 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,
29
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
which approximates the notional amount of the swap, to the buyer in the event of
an adverse credit event of the issuer. The Fund accrues for the periodic fees on
swap contracts 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.
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.
7. DISTRIBUTION AND SERVICE PLANS
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 pursuant
to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively,
the "Plans") for Class A Shares, Class B Shares and Class C Shares to compensate
the Distributor for the distribution, shareholder servicing and maintenance of
shareholder accounts for these shares. Under the Plans, the Fund will incur
annual fees of up to .25% of Class A average daily net assets and up to 1.00%
each of Class B and Class C average daily net assets. These fees are accrued
daily and paid to the Distributor monthly.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed receivable") was approximately $2,691,000 and $0 for
Class B and Class C Shares, respectively. These amounts may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed receivable has been fully recovered, the distribution fee is
reduced.
8. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar class action complaints which were
consolidated. The consolidated action also names as defendants certain
individual Trustees and Directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
Trustees of any Van Kampen funds. The consolidated amended complaint generally
alleges that defendants violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates rather than funds managed by other companies, and (ii) that the funds
advised by the Adviser or its affiliates, including the Fund, allegedly paid
excessive commissions to brokers in return for their alleged efforts to steer
investors to these funds. The complaint seeks, among other things, unspecified
compensatory damages, rescissionary damages, fees and costs. Plaintiffs have
filed a Motion for Leave to file a Supplemental Pleading that would, among other
things, expand the allegations and alleged class.
The defendants have moved to dismiss this action and otherwise intend to
defend it vigorously.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of certain Van Kampen funds; the named investment companies,
including the Fund, are listed as
30
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2006 (UNAUDITED) continued
nominal defendants. The complaint alleges that defendants caused the Van Kampen
funds to pay economic incentives to a proprietary sales force to promote the
sale of proprietary mutual funds. The complaint also alleges that the Van Kampen
funds paid excessive commissions to Morgan Stanley and its affiliates in
connection with the sales of the funds. The complaint seeks, among other things,
the removal of the current Trustees of the funds, rescission of the management
contracts for the funds, disgorgement of profits by Morgan Stanley and its
affiliates and monetary damages. This complaint has been coordinated with the
consolidated complaint described in the preceding paragraph. Defendants moved to
dismiss the complaint and intend otherwise to vigorously defend it. Plaintiff
sought leave to file a second amended derivative complaint that alleges that the
Adviser permitted or recklessly disregarded market timing and late trading in
its proprietary mutual funds in order to increase assets under management and
fees. However, pursuant to an agreement between the parties, the plaintiff's
proposed second amended derivative complaint was withdrawn and the allegations
regarding market timing and late trading asserted therein were filed in a
separate complaint and coordinated with other cases related to market timing
that have been centralized in a federal court. The defendants moved to dismiss
this matter, which motion was granted in part and denied in part. Defendants
moved for reconsideration of those claims that were denied. Plaintiff
subsequently dismissed the trustee defendants from the action, in exchange for
the execution of a tolling agreement by the trustees permitting plaintiff to
bring the same claims against the trustees at a later date should plaintiff deem
necessary.
While the defendants believe that they have meritorious defenses, the
ultimate outcome of these matters is not presently determinable, and no
provision has been made in the Fund's financial statements for the effect, if
any, of these matters.
9. 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.
31
VAN KAMPEN HIGH YIELD 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
J. DAVID GERMANY
Vice President
DENNIS SHEA
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
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
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
32
Van Kampen High Yield 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 High Yield 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 High Yield 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.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2006 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
28, 128, 228
HYI SAR 4/06
(VAN KAMPEN INVESTMENTS SHINE LOGO) RN06-01005P-Y02/06
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Schedule of Investments.
Please refer to Item #1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases 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-CSRS
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) Code of Ethics -- Not applicable for semi-annual reports.
(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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen High Yield Fund
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: April 19, 2006
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: April 19, 2006
By: /s/ Phillip G. Goff
--------------------
Name: Phillip G. Goff
Title: Principal Financial Officer
Date: April 19, 2006