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: 2/28/07
Item 1. Reports to Shareholders.
The Fund's semi-annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen High
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,
2007.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B, AND C
SHARE OR CLASS I SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE
PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT
OBJECTIVES, RISKS, CHARGES AND EXPENSES. TO OBTAIN AN ADDITIONAL
PROSPECTUS, CONTACT YOUR FINANCIAL ADVISOR OR DOWNLOAD ONE AT
VANKAMPEN.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT 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 2/28/07
A SHARES B SHARES C SHARES I SHARES
since 10/2/78 since 7/2/92 since 7/6/93 since 3/23/05
------------------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
AVERAGE 4.75% 4.00% 1.00%
ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES W/O SALES
TOTAL RETURNS CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES
Since Inception 7.41% 7.23% 5.47% 5.47% 4.52% 4.52% 6.76%
10-year 3.56 3.06 2.94 2.94 2.78 2.78 --
5-year 7.86 6.83 7.07 6.85 7.08 7.08 --
1-year 8.64 3.38 7.78 3.78 7.72 6.72 8.90
6-month 6.34 1.40 5.92 1.92 6.11 5.11 6.47
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30-Day SEC Yield 6.30% 5.81% 5.92% 6.88%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. 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
eight 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. 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 Rule 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.
J.P. Morgan Global High Yield Index is a broad-based index that reflects the
general performance of the global high-yield corporate debt market including
domestic and international issues. Based on the fund's asset composition, the
fund's investment adviser believes the Lehman Brothers U.S. Corporate High Yield
2% Issuer Cap Index is a more appropriate broad-based benchmark for the fund
than the J.P. Morgan Global High Yield Index. Accordingly, the J.P. Morgan
Global High Yield Index will not be shown in future reports. The Lehman Brothers
U.S. Corporate High Yield 2% Issuer Cap Index is a broad-based index that
reflects the general performance of the U.S. dollar denominated, fixed-rate,
non-investment grade, taxable corporate bond market. Issuers are capped at 2% of
the index. Lipper High Yield Bond Fund Index is an index of funds with similar
investment 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.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2007
MARKET CONDITIONS
The economic environment continued to be quite favorable for the high-yield
asset class throughout the six-month reporting period. Inflation remained
moderate and the economy expanded, but at a slower pace than earlier in the
year, prompting the Federal Open Market Committee (the "Fed") to leave its
target federal funds rate unchanged. These factors, coupled with generally loose
credit conditions and rising equity prices, helped to boost investor confidence
in the high-yield market. As a result, demand for high-yield bonds continued to
be strong, pushing prices steadily higher. In fact, the high-yield market
realized returns in excess of 1 percent in every month of the reporting period,
outperforming 10-year Treasuries until the last days in February when the a
sell-off in the Chinese equity market and comments by ex-Fed Chairman Greenspan
caused a sudden and significant decline in the S&P 500 Index and a flight to
quality.
The constructive market conditions and low level of prevailing interest rates
led many investors to assume more risk in exchange for potentially higher
returns. This quest for yield caused lower-rated securities to turn in the best
performance, with CCC rated bonds outperforming higher-rated high-yield issues
for most of the period. The ongoing appetite for lower-quality credits, as well
as low market volatility and default rates, caused high-yield credit spreads to
tighten throughout much of the period. Although spreads widened slightly at the
end of February, they still remained much tighter than historical averages,
ending the period at 288 basis points over Treasuries. The supply of high-yield
bonds remained robust, reaching a monthly record high in November, when more
than $32 billion in new issues came to market.
Although the performance of individual sectors varied, all industries exhibited
positive returns throughout the entire period. Overall, insurance, cable,
wireless communications and building materials were among the best performing
sectors. Conversely, lodging, the food and beverage sector, and energy were some
of the worst performers. However, the returns of each of these sectors still
remained in positive territory for all of the reporting period.
2
PERFORMANCE ANALYSIS
The fund returned 6.34 percent for the six months ended February 28, 2007 (Class
A shares, unadjusted for sales charges). In comparison, the fund's benchmarks,
the Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index, the J.P.
Morgan Global High Yield Index and the Lipper High Yield Bond Fund Index,
returned 8.31 percent, 8.34 percent and 7.90 percent for the period,
respectively.
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2007
---------------------------------------------------------------------------------------------
LEHMAN
BROTHERS
U.S. CORPORATE LIPPER
HIGH YIELD 2% J.P. MORGAN HIGH YIELD
ISSUER CAP GLOBAL HIGH BOND FUND
CLASS A CLASS B CLASS C CLASS I INDEX YIELD INDEX INDEX
6.34% 5.92% 6.11% 6.47% 8.31% 8.34% 7.90%
---------------------------------------------------------------------------------------------
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 fact that spreads in the high-yield market continued to be tight versus
historical averages and that inflation, while contained, remained above the
Fed's target range led us to maintain the portfolio's defensive positioning in
terms of both its duration (or interest-rate sensitivity) and its credit
quality. The fund's lower duration relative to the Lehman Brothers U.S.
Corporate High Yield 2% Issuer Cap Index did not have much of a material effect
on performance as interest rates were only slightly lower during the period. Our
strategy of keeping the fund's overall credit quality higher than that of the
Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index, however, did
detract from returns and was the primary contributor to the fund's relative
underperformance. Security selection within the cable and telecom sectors also
tempered returns at various times during the period.
On a more positive note, security selection within the automotive/vehicle parts,
media, retail, and metals/mining sectors helped performance. The fund also
benefited from a reduction in automotive/vehicle parts holdings as the
performance of this sector waned at the end of the period. As of the end of the
period, the fund's major overweights relative to the Lehman Brothers U.S.
Corporate High Yield 2% Issuer Cap Index were in the energy, banking,
diversified manufacturing, and food and tobacco sectors while the major sector
underweights included technology, cable, telecom, auto/vehicle parts, and
utilities.
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 ALLOCATION AS OF 2/28/07
BBB/Baa 4.3%
BB/Ba 29.8
B/B 59.8
CCC/Caa 4.0
Non Rated 2.1
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 2/28/07
Energy 9.9%
Transportation 9.5
Health Care 7.9
Chemicals 7.5
Utility 6.7
Gaming & Leisure 6.3
Forest Products 5.4
Cable 4.9
Diversified Media 4.4
Food & Tobacco 4.0
Information Technology 3.7
Manufacturing 3.3
Telecommunications 2.9
Consumer Products 2.3
Housing 2.0
Metals 2.0
Services 1.9
Aerospace 1.8
Wireless Communications 1.7
Financial 1.7
Retail 1.5
Food & Drug 1.1
Broadcasting 0.6
Sovereigns 0.4
Apparel, Accessories & Luxury Goods 0.2
Integrated Telecommunication Services 0.0*
Alternative Carriers 0.0*
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Total Long Term Investments 93.6
Total Repurchase Agreements 6.1
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Total Investments 99.7
Foreign Currency 0.0*
Other Assets in Excess of Liabilities 0.3
-----
Net Assets 100.0%
* Amount is less than 0.1%
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the industries shown above. Ratings allocations are as a
percentage of 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. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Van Kampen
also delivers the semiannual and annual reports to fund shareholders, and
makes these reports available on its public Web site, www.vankampen.com.
In addition to the semiannual and annual reports that Van Kampen delivers
to shareholders and makes available through the Van Kampen public Web
site, each fund files a complete schedule of portfolio holdings with the
SEC for the fund's first and third fiscal quarters on Form N-Q. Van
Kampen does not deliver the reports for the first and third fiscal
quarters to shareholders, nor are the reports posted to the Van Kampen
public Web site. You may, however, obtain the Form N-Q filings (as well
as the Form N-CSR and N-CSRS filings) by accessing the SEC's Web site,
http://www.sec.gov. You may also review and copy them at the SEC's Public
Reference Room in Washington, DC. Information on the operation of the
SEC's Public Reference Room may be obtained by calling the SEC at (800)
SEC-0330. You can also request copies of these materials, upon payment of
a duplicating fee, by electronic request at the SEC's 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 charges on redemptions of Class B and C Shares;
and redemption fees; 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 costs (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 9/1/06 - 2/28/07.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing 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 or redemption fees.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
cost would have been higher.
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
9/1/06 2/28/07 9/1/06-2/28/07
Class A
Actual...................................... $1,000.00 $1,063.42 $4.86
Hypothetical................................ 1,000.00 1,020.09 4.76
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 1,059.17 8.68
Hypothetical................................ 1,000.00 1,016.39 8.50
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 1,061.06 8.69
Hypothetical................................ 1,000.00 1,016.39 8.50
(5% annual return before expenses)
Class I
Actual...................................... 1,000.00 1,064.67 3.58
Hypothetical................................ 1,000.00 1,021.29 3.51
(5% annual return before expenses)
* Expenses are equal to the Fund's annualized expense ratio of 0.95%, 1.70%,
1.70% and 0.70% 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, 2007 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
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CORPORATE BONDS 92.4%
AEROSPACE 1.8%
$ 4,645 Hexcel Corp. ................................ 6.750% 02/01/15 $ 4,633,388
6,440 K & F Acquisition, Inc. ..................... 7.750 11/15/14 6,681,500
------------
11,314,888
------------
BROADCASTING 0.6%
3,740 Lin Television Corp. ........................ 6.500 05/15/13 3,665,200
------------
CABLE 4.9%
4,815 Cablecom Luxembourg SCA, (EUR) (Luxembourg)
(a).......................................... 9.375 04/15/14 7,017,088
6,005 Cablevision Systems Corp. (b)................ 9.870 04/01/09 6,425,350
1,839 CCH I, LLC................................... 11.000 10/01/15 1,921,755
5,320 Echostar DBS Corp. .......................... 6.375 10/01/11 5,359,900
1,290 Echostar DBS Corp. .......................... 6.625 10/01/14 1,306,125
1,505 Intelsat Bermuda Ltd. (Bermuda) (a) (b)...... 8.872 01/15/15 1,548,269
460 Intelsat Subsidiary Holding Co., Ltd.
(Bermuda).................................... 8.250 01/15/13 481,850
4,315 Intelsat Subsidiary Holding Co., Ltd.
(Bermuda).................................... 8.625 01/15/15 4,660,200
655 NTL Cable, PLC (United Kingdom).............. 8.750 04/15/14 686,112
360 NTL Cable, PLC (United Kingdom).............. 9.125 08/15/16 384,300
898 PanAmSat Corp. .............................. 9.000 08/15/14 974,330
------------
30,765,279
------------
CHEMICALS 7.5%
6,115 Berry Plastics Holding Corp. ................ 8.875 09/15/14 6,359,600
2,855 Cognis Deutschland GmbH & Co. (EUR) (Germany)
(a) (b)...................................... 8.477 11/15/13 3,844,282
4,950 Equistar Chemicals, LP....................... 10.125 09/01/08 5,259,375
620 Equistar Chemicals, LP....................... 10.625 05/01/11 658,750
1,824 Huntsman International, LLC (EUR) (a)........ 10.125 07/01/09 2,462,066
2,700 Innophos, Inc. .............................. 8.875 08/15/14 2,814,750
1,412 Innophos Investments Holdings, Inc. (b)
(c).......................................... 13.374 02/15/15 1,483,864
2,585 Koppers Holdings, Inc. (d)................... 0/9.875 11/15/14 2,184,325
1,730 Koppers, Inc. ............................... 9.875 10/15/13 1,894,350
1,930 Millennium America, Inc. .................... 9.250 06/15/08 2,016,850
2,775 Nalco Co. ................................... 7.750 11/15/11 2,879,062
3,960 Nalco Co. ................................... 8.875 11/15/13 4,237,200
2,268 Rockwood Specialties Group, Inc. ............ 10.625 05/15/11 2,404,080
1,390 Rockwood Specialties Group, Inc. (EUR)....... 7.625 11/15/14 1,940,627
3,185 Terra Capital, Inc. (a)...................... 7.000 02/01/17 3,185,000
2,940 Westlake Chemical Corp. ..................... 6.625 01/15/16 2,895,900
------------
46,520,081
------------
8 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
CONSUMER PRODUCTS 2.3%
$ 3,565 Jarden Corp. ................................ 7.500% 05/01/17 $ 3,631,844
8,210 Levi Strauss & Co. (b)....................... 10.110 04/01/12 8,425,512
2,460 Oxford Industrials, Inc. .................... 8.875 06/01/11 2,570,700
------------
14,628,056
------------
DIVERSIFIED MEDIA 4.4%
1,155 Advanstar Communications, Inc. .............. 10.750 08/15/10 1,244,512
2,840 AMC Entertainment, Inc. (b).................. 9.610 08/15/10 2,942,950
6,187 CanWest Media, Inc. (Canada)................. 8.000 09/15/12 6,403,388
2,282 Dex Media East/Finance Corp., LLC............ 12.125 11/15/12 2,507,347
3,587 Dex Media West/Finance Corp., LLC Ser B...... 9.875 08/15/13 3,923,281
4,700 Idearc, Inc. (a)............................. 8.000 11/15/16 4,852,750
2,250 Interpublic Group of Cos., Inc. ............. 6.250 11/15/14 2,126,250
3,765 Valassis Communications, Inc. (a)............ 8.250 03/01/15 3,761,863
------------
27,762,341
------------
ENERGY 9.9%
4,700 Chaparral Energy, Inc. ...................... 8.500 12/01/15 4,711,750
705 Chaparral Energy, Inc. (a)................... 8.875 02/01/17 722,625
6,870 CHC Helicopter Corp. (Canada)................ 7.375 05/01/14 6,784,125
2,325 Chesapeake Energy Corp. ..................... 6.375 06/15/15 2,319,187
4,360 Chesapeake Energy Corp. ..................... 7.500 09/15/13 4,567,100
2,220 Compagnie Generale de Geophysique SA
(France)..................................... 7.500 05/15/15 2,275,500
5,120 El Paso Production Holding Co. .............. 7.750 06/01/13 5,376,000
1,800 Hanover Compressor Co. ...................... 8.625 12/15/10 1,899,000
890 Hanover Compressor Co. ...................... 9.000 06/01/14 970,100
109 Hanover Equipment Trust Ser A................ 8.500 09/01/08 109,818
3,042 Hanover Equipment Trust Ser B................ 8.750 09/01/11 3,178,890
6,685 Hilcorp Energy/Finance Corp. (a)............. 7.750 11/01/15 6,718,425
3,460 Husky Oil Ltd. (Canada)...................... 8.900 08/15/28 3,627,232
1,863 Magnum Hunter Resources, Inc. ............... 9.600 03/15/12 1,958,479
6,170 Massey Energy Co. ........................... 6.875 12/15/13 5,954,050
2,635 OPTI Canada, Inc. (Canada) (a)............... 8.250 12/15/14 2,740,400
3,450 Pacific Energy Partners...................... 7.125 06/15/14 3,621,541
4,020 Pogo Producing Co. .......................... 6.875 10/01/17 3,939,600
------------
61,473,822
------------
FINANCIAL 1.7%
3,395 Residential Capital Corp. ................... 6.375 06/30/10 3,427,212
2,825 Residential Capital LLC...................... 6.500 04/17/13 2,855,866
4,130 UCAR Finance, Inc. .......................... 10.250 02/15/12 4,367,475
------------
10,650,553
------------
FOOD & DRUG 1.1%
2,625 Delhaize America, Inc. ...................... 8.125 04/15/11 2,881,806
3,480 Kroger Co. (a)............................... 8.500 07/15/17 3,771,650
------------
6,653,456
------------
See Notes to Financial Statements 9
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
FOOD & TOBACCO 4.0%
$ 3,000 Michael Foods, Inc. ......................... 8.000% 11/15/13 $ 3,082,500
4,720 Pilgrim's Pride Corp. ....................... 7.625 05/01/15 4,684,600
7,600 Pilgrim's Pride Corp. ....................... 9.625 09/15/11 7,999,000
3,055 Reynolds American, Inc. ..................... 6.500 07/15/10 3,137,781
4,565 Smithfield Foods, Inc. ...................... 7.000 08/01/11 4,667,713
450 Smithfield Foods, Inc. Ser B................. 7.750 05/15/13 468,562
1,080 Smithfield Foods, Inc. Ser B................. 8.000 10/15/09 1,135,350
------------
25,175,506
------------
FOREST PRODUCTS 5.4%
3,815 Covalence Specialty Materials Corp. (a)...... 10.250 03/01/16 3,652,862
1,490 Crown Americas............................... 7.625 11/15/13 1,545,875
1,975 Crown European Holdings SA (EUR) (France).... 6.250 09/01/11 2,718,161
3,610 Georgia-Pacific Corp. (a).................... 7.125 01/15/17 3,628,050
1,345 Graham Packaging Co., Inc. .................. 8.500 10/15/12 1,371,900
3,965 Graham Packaging Co., Inc. .................. 9.875 10/15/14 4,103,775
4,870 Graphic Packaging International, Inc. ....... 9.500 08/15/13 5,216,988
1,535 JSG Funding PLC (EUR) (Ireland).............. 10.125 10/01/12 2,204,006
114 Owens-Brockway Glass Containers, Inc. ....... 8.875 02/15/09 117,135
2,100 Owens-Illinois, Inc. ........................ 7.350 05/15/08 2,131,500
5,540 Owens-Illinois, Inc. ........................ 7.500 05/15/10 5,706,200
1,085 P.H. Glatfelter.............................. 7.125 05/01/16 1,106,700
------------
33,503,152
------------
GAMING & LEISURE 6.3%
993 Caesars Entertainment........................ 8.875 09/15/08 1,041,409
5,000 Host Marriott LP............................. 6.375 03/15/15 4,962,500
4,000 Host Marriott LP Ser J....................... 7.125 11/01/13 4,100,000
6,935 Isle of Capri Casinos, Inc. ................. 7.000 03/01/14 6,813,637
5,440 Las Vegas Sands Corp. ....................... 6.375 02/15/15 5,276,800
9,470 MGM Mirage, Inc. ............................ 6.000 10/01/09 9,505,513
3,005 Station Casinos, Inc. ....................... 6.000 04/01/12 2,929,875
3,795 Station Casinos, Inc. ....................... 6.875 03/01/16 3,543,581
1,085 Station Casinos, Inc. ....................... 7.750 08/15/16 1,120,263
------------
39,293,578
------------
HEALTH CARE 7.9%
5,310 Community Health Systems, Inc. .............. 6.500 12/15/12 5,363,100
3,275 DaVita, Inc. ................................ 6.625 03/15/13 3,283,187
4,895 Fisher Scientific International, Inc. ....... 6.125 07/01/15 4,905,421
7,480 Fresenius Medical Care Capital Trust IV...... 7.875 06/15/11 7,910,100
2,545 HCA, Inc. ................................... 5.750 03/15/14 2,179,156
1,845 HCA, Inc. ................................... 6.250 02/15/13 1,676,644
940 HCA, Inc. ................................... 6.300 10/01/12 877,725
4,795 HCA, Inc. ................................... 6.500 02/15/16 4,135,688
940 HCA, Inc. ................................... 8.750 09/01/10 984,650
680 Invacare Corp. (a)........................... 9.750 02/15/15 695,300
2,655 National Mentor Holdings, Inc. (a)........... 11.250 07/01/14 2,953,688
10 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
HEALTH CARE (CONTINUED)
$ 3,680 Omnicare, Inc. .............................. 6.750% 12/15/13 $ 3,661,600
1,480 Tenet Healthcare Corp. ...................... 7.375 02/01/13 1,391,200
1,710 Tenet Healthcare Corp. ...................... 9.875 07/01/14 1,748,475
4,900 VWR International, Inc. ..................... 6.875 04/15/12 4,875,500
2,584 Warner Chilcott Corp. ....................... 8.750 02/01/15 2,706,740
------------
49,348,174
------------
HOUSING 2.0%
968 Goodman Global Holdings, Inc. Ser B (b)...... 8.360 06/15/12 982,520
1,180 Interface, Inc. ............................. 7.300 04/01/08 1,206,550
3,365 Interface, Inc. ............................. 9.500 02/01/14 3,625,788
1,435 Interface, Inc. ............................. 10.375 02/01/10 1,596,437
5,130 Nortek, Inc. ................................ 8.500 09/01/14 5,245,425
------------
12,656,720
------------
INFORMATION TECHNOLOGY 3.1%
4,700 Freescale Semiconductor, Inc. (a)............ 8.875 12/15/14 4,788,125
525 Iron Mountain, Inc. ......................... 6.625 01/01/16 506,625
2,050 Iron Mountain, Inc. ......................... 7.750 01/15/15 2,106,375
5,045 Iron Mountain, Inc. ......................... 8.625 04/01/13 5,196,350
2,275 PGS Solutions, Inc. (a)...................... 9.625 02/15/15 2,355,246
3,540 Sungard Data Systems, Inc. .................. 9.125 08/15/13 3,796,650
320 Sungard Data Systems, Inc. (b)............... 9.900 08/15/13 336,000
------------
19,085,371
------------
MANUFACTURING 3.3%
1,645 Baldor Electric Co. ......................... 8.625 02/15/17 1,737,532
2,185 General Cable Corp. ......................... 9.500 11/15/10 2,327,025
1,959 JohnsonDiversey, Inc. (EUR).................. 9.625 05/15/12 2,747,989
3,463 JohnsonDiversey, Inc. Ser B.................. 9.625 05/15/12 3,649,136
2,574 Manitowoc Co., Inc. ......................... 10.500 08/01/12 2,754,180
3,235 Propex Fabrics, Inc. ........................ 10.000 12/01/12 2,814,450
4,250 RBS Global & Rexnord Corp. (a)............... 9.500 08/01/14 4,505,000
------------
20,535,312
------------
METALS 2.0%
1,340 Foundation PA Coal Co. ...................... 7.250 08/01/14 1,363,450
7,050 Novelis, Inc. (Canada) (a)................... 7.250 02/15/15 7,367,250
2,445 SGL Carbon Luxembourg SA (EUR) (Luxembourg)
(a).......................................... 8.500 02/01/12 3,482,305
------------
12,213,005
------------
RETAIL 1.5%
3,110 Brown Shoe Co., Inc. ........................ 8.750 05/01/12 3,312,150
4,015 Linens 'n Things, Inc. (b)................... 10.985 01/15/14 3,954,775
2,020 Phillips Van-Heusen Corp. ................... 7.250 02/15/11 2,065,450
------------
9,332,375
------------
SERVICES 1.9%
5,715 Allied Waste North America, Inc. ............ 6.375 04/15/11 5,757,863
1,850 Allied Waste North America, Inc. ............ 7.875 04/15/13 1,937,875
See Notes to Financial Statements 11
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
SERVICES (CONTINUED)
$ 1,437 Allied Waste North America, Inc. Ser B....... 9.250% 09/01/12 $ 1,526,812
505 Aramark Corp. (a)............................ 8.500 02/01/15 527,094
250 Aramark Corp. (a)............................ 8.860 02/01/15 259,375
1,750 Aramark Services Inc. ....................... 5.000 06/01/12 1,598,308
------------
11,607,327
------------
TELECOMMUNICATIONS 2.9%
3,986 Axtel SA (Mexico)............................ 11.000 12/15/13 4,464,320
6,030 Exodus Communications, Inc. (e) (f) (g)...... 11.250 07/01/08 0
770 Exodus Communications, Inc. (e) (f) (g)...... 11.625 07/15/10 0
4,000 Exodus Communications, Inc. (EUR) (e) (f)
(g).......................................... 11.375 07/15/08 0
8,250 GST Network Funding, Inc. (e) (f) (g)........ 10.500 05/01/08 825
1,320 Nordic Telephone Co. Holdings (Denmark)
(a).......................................... 8.875 05/01/16 1,428,900
4,000 Park N View, Inc. Ser B (e) (f) (g).......... 13.000 05/15/08 0
4,405 Qwest Communications International, Inc.
(b).......................................... 8.860 02/15/09 4,471,075
990 Qwest Corp. ................................. 5.625 11/15/08 993,712
1,100 TDC A S (EUR) (Denmark)...................... 6.500 04/19/12 1,520,463
4,480 Wind Acquisition Finance SA (Luxembourg)
(a).......................................... 10.750 12/01/15 5,185,600
------------
18,064,895
------------
TRANSPORTATION 9.5%
6,725 Amsted Industries, Inc. (a).................. 10.250 10/15/11 7,237,781
5,705 Arvinmeritor, Inc. .......................... 8.750 03/01/12 6,018,775
3,675 Ford Motor Credit Co. ....................... 5.800 01/12/09 3,611,298
4,195 Ford Motor Credit Co. ....................... 7.250 10/25/11 4,130,603
4,450 General Motors Acceptance Corp. ............. 4.375 12/10/07 4,388,448
6,220 General Motors Acceptance Corp. ............. 6.875 09/15/11 6,300,711
1,690 General Motors Corp. ........................ 7.125 07/15/13 1,613,950
2,195 General Motors Corp. ........................ 8.375 07/15/33 2,046,837
5,720 Petro Stopping Center, LP.................... 9.000 02/15/12 5,977,400
8,425 Sonic Automotive, Inc. Ser B................. 8.625 08/15/13 8,804,125
5,471 TRW Automotive, Inc. ........................ 9.375 02/15/13 5,901,841
2,955 United Auto Group, Inc. (a).................. 7.750 12/15/16 3,021,487
------------
59,053,256
------------
UTILITY 6.7%
925 AES Corp. ................................... 7.750 03/01/14 973,562
528 AES Corp. ................................... 8.875 02/15/11 570,240
3,035 AES Corp. (a)................................ 9.000 05/15/15 3,266,419
740 AES Corp. ................................... 9.375 09/15/10 806,600
5,930 CMS Energy Corp. ............................ 7.500 01/15/09 6,093,075
2,825 Colorado Interstate Gas Co. ................. 6.800 11/15/15 3,035,157
2,585 IPALCO Enterprises, Inc. .................... 8.375 11/14/08 2,681,937
1,355 IPALCO Enterprises, Inc. .................... 8.625 11/14/11 1,475,256
2,945 Nevada Power Co. Ser A....................... 8.250 06/01/11 3,273,091
2,515 Nevada Power Co. Ser G....................... 9.000 08/15/13 2,732,520
995 Northwest Pipeline Corp. .................... 8.125 03/01/10 1,037,288
5,397 Ormat Funding Corp. ......................... 8.250 12/30/20 5,491,005
12 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
UTILITY (CONTINUED)
$ 1,646 PSEG Energy Holdings......................... 8.625% 02/15/08 $ 1,687,150
1,955 Southern Natural Gas Co. .................... 8.875 03/15/10 2,051,538
6,210 Williams Cos., Inc. ......................... 7.875 09/01/21 6,831,000
------------
42,005,838
------------
WIRELESS COMMUNICATIONS 1.7%
3,090 American Tower Corp. ........................ 7.125 10/15/12 3,209,737
3,085 American Tower Corp. ........................ 7.500 05/01/12 3,219,969
4,040 UbiquiTel Operating Co. ..................... 9.875 03/01/11 4,347,638
------------
10,777,344
------------
TOTAL CORPORATE BONDS 92.4%.................................................... 576,085,529
------------
FOREIGN CONVERTIBLE CORPORATE OBLIGATION 0.6%
3,980 Nortel Networks Corp. (Canada)............... 4.250 09/01/08 3,905,375
------------
FOREIGN GOVERNMENT OBLIGATION 0.4%
24,425 Mexico (United Mexican States) (MXN)
(Mexico)..................................... 9.500 12/18/14 2,380,760
------------
EQUITIES 0.2%
DecisionOne Corp. (19,895 Common Shares) (g) (h)............................. 0
HCI Direct, Inc. (106,250 Common Shares Class A) (g) (h)..................... 1,275,000
HF Holdings, Inc. (36,820 Common Stock Warrants, expiring 09/27/09) (g)
(h)........................................................................ 0
Hosiery Corp. of America, Inc. (1,000 Common Shares) (a) (g) (h)............. 0
Jazztel, PLC (5,000 Common Stock Warrants, expiring 07/15/10) (a) (g) (h).... 0
OpTel, Inc. (3,275 Common Shares) (a) (g) (h)................................ 0
Park N View, Inc. (4,000 Common Stock Warrants, expiring 05/15/08) (a) (f)
(g) (h).................................................................... 0
Reunion Industries, Inc. (107,947 Common Stock Warrants, expiring 12/02/08)
(g) (h).................................................................... 0
Ventelo, Inc. (73,021 Common Shares) (EUR) (United Kingdom) (a) (g) (h)...... 0
Viatel Holding Bermuda Ltd. (7,852 Common Shares) (Bermuda) (h).............. 255
VS Holdings, Inc. (946,962 Common Shares) (g) (h)............................ 0
XO Holdings, Inc. (3,469 Common Shares) (h).................................. 15,784
XO Holdings, Inc., Ser A (6,941 Common Stock Warrants, expiring 01/16/10)
(h)........................................................................ 4,998
XO Holdings, Inc., Ser B (5,205 Common Stock Warrants, expiring 01/16/10)
(h)........................................................................ 2,186
XO Holdings, Inc., Ser C (5,205 Common Stock Warrants, expiring 01/16/10)
(h)........................................................................ 1,301
------------
TOTAL EQUITIES............................................................... 1,299,524
------------
TOTAL LONG-TERM INVESTMENTS 93.6%
(Cost $607,466,026)........................................................ 583,671,188
------------
See Notes to Financial Statements 13
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
DESCRIPTION VALUE
--------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 6.1%
Citigroup Global Markets, Inc. ($8,335,884 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of 5.27%,
dated 02/28/07, to be sold on 03/01/07 at $8,337,104)...................... $ 8,335,884
State Street Bank & Trust Co. ($29,601,116 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of 5.12%,
dated 02/28/07, to be sold on 03/01/07 at $29,605,326)..................... 29,601,116
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $37,937,000)......................................................... 37,937,000
------------
TOTAL INVESTMENTS 99.7%
(Cost $645,403,026)........................................................ 621,608,188
FOREIGN CURRENCY 0.0%
(Cost $237,615)............................................................ 242,054
OTHER ASSETS IN EXCESS OF LIABILITIES 0.3%.................................. 1,816,379
------------
NET ASSETS 100.0%........................................................... $623,666,621
============
Percentages are calculated as a percentage of net assets.
(a) 144A-Private Placement security which is exempt from registration under Rule
144A of the Securities Act of 1933, as amended. This security may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(b) Floating Rate Coupon
(c) Payment-in-kind security.
(d) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(e) Non-income producing as security is in default.
(f) This borrower has filed for protection in federal bankruptcy court.
(g) Market value is determined in accordance with procedures established in good
faith by the Board of Trustees.
(h) Non-income producing security as this stock currently does not declare
dividends.
Currency Abbreviations:
EUR--Euro
MXN--Mexican peso
14 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AS OF FEBRUARY 28, 2007:
UNREALIZED
APPRECIATION/
IN EXCHANGE FOR CURRENT VALUE DEPRECIATION
SHORT CONTRACTS:
Euro Currency
10,369,000 expiring 04/30/07................ US$ $13,753,333 $(242,008)
11,073,000 expiring 04/30/07................ US$ 14,687,112 (257,221)
---------
$(499,229)
---------
See Notes to Financial Statements 15
VAN KAMPEN HIGH YIELD FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
February 28, 2007 (Unaudited)
ASSETS:
Total Investments (Cost $645,403,026)....................... $ 621,608,188
Foreign Currency (Cost $237,615)............................ 242,054
Cash........................................................ 581
Receivables:
Interest.................................................. 12,183,214
Fund Shares Sold.......................................... 242,542
Investments Sold.......................................... 216,662
Other....................................................... 291,154
--------------
Total Assets............................................ 634,784,395
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 6,682,977
Fund Shares Repurchased................................... 1,718,641
Income Distributions...................................... 861,519
Distributor and Affiliates................................ 421,029
Investment Advisory Fee................................... 194,329
Forward Foreign Currency Contracts.......................... 499,229
Trustees' Deferred Compensation and Retirement Plans........ 403,865
Accrued Expenses............................................ 336,185
--------------
Total Liabilities....................................... 11,117,774
--------------
NET ASSETS.................................................. $ 623,666,621
==============
NET ASSETS CONSIST OF:
Capital (Par value of $0.01 per share with an unlimited
number of shares authorized).............................. $1,212,643,336
Accumulated Undistributed Net Investment Income............. (3,780,926)
Net Unrealized Depreciation................................. (24,276,595)
Accumulated Net Realized Loss............................... (560,919,194)
--------------
NET ASSETS.................................................. $ 623,666,621
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $472,210,057 and 43,857,402 shares of
beneficial interest issued and outstanding)............. $ 10.77
Maximum sales charge (4.75%* of offering price)......... 0.54
--------------
Maximum offering price to public........................ $ 11.31
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $101,743,577 and 9,396,694 shares of
beneficial interest issued and outstanding)............. $ 10.83
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $45,754,233 and 4,280,846 shares of
beneficial interest issued and outstanding)............. $ 10.69
==============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $3,958,754 and 367,590 shares of
beneficial interest issued and outstanding)............. $ 10.77
==============
* On sales of $100,000 or more, the sales charge will be reduced.
16 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended February 28, 2007 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $ 24,181,843
Other....................................................... 432,621
------------
Total Income............................................ 24,614,464
------------
EXPENSES:
Distribution (12b-1) and Service Fees
Class A................................................... 573,487
Class B................................................... 539,826
Class C................................................... 223,628
Investment Advisory Fee..................................... 1,250,916
Transfer Agent Fees......................................... 616,614
Reports to Shareholders..................................... 81,727
Accounting and Administrative Expenses...................... 63,133
Registration Fees........................................... 40,435
Custody..................................................... 31,201
Trustees' Fees and Related Expenses......................... 30,859
Professional Fees........................................... 23,604
Other....................................................... 18,686
------------
Total Expenses.......................................... 3,494,116
Less Credits Earned on Cash Balances.................... 26,877
------------
Net Expenses............................................ 3,467,239
------------
NET INVESTMENT INCOME....................................... $ 21,147,225
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 5,132,988
Foreign Currency Transactions............................. 139,795
------------
Net Realized Gain........................................... 5,272,783
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (37,098,761)
------------
End of the Period:
Investments............................................. (23,794,838)
Forward Foreign Currency Contracts...................... (499,229)
Foreign Currency Translation............................ 17,472
------------
(24,276,595)
------------
Net Unrealized Appreciation During the Period............... 12,822,166
------------
NET REALIZED AND UNREALIZED GAIN............................ $ 18,094,949
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 39,242,174
============
See Notes to Financial Statements 17
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, 2007 AUGUST 31, 2006
-----------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................... $ 21,147,225 $ 46,409,194
Net Realized Gain/Loss................................... 5,272,783 (10,496,939)
Net Unrealized Appreciation/Depreciation During the
Period................................................. 12,822,166 (16,043,354)
------------ -------------
Change in Net Assets from Operations..................... 39,242,174 19,868,901
------------ -------------
Distributions from Net Investment Income:
Class A Shares......................................... (16,260,324) (35,559,226)
Class B Shares......................................... (3,373,342) (10,076,519)
Class C Shares......................................... (1,429,414) (3,035,788)
Class I Shares......................................... (84,923) (481,065)
------------ -------------
Total Distributions...................................... (21,148,003) (49,152,598)
------------ -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES...... 18,094,171 (29,283,697)
------------ -------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................ 65,717,575 137,558,848
Net Asset Value of Shares Issued Through Dividend
Reinvestment........................................... 15,516,387 35,523,788
Cost of Shares Repurchased............................... (94,461,342) (325,876,260)
------------ -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS....... (13,227,380) (152,793,624)
------------ -------------
TOTAL INCREASE/DECREASE IN NET ASSETS.................... 4,866,791 (182,077,321)
NET ASSETS:
Beginning of the Period.................................. 618,799,830 800,877,151
------------ -------------
End of the Period (Including accumulated undistributed
net investment income of $(3,780,926) and $(3,780,148),
respectively).......................................... $623,666,621 $ 618,799,830
============ =============
18 See Notes to Financial Statements
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.
ALL SHARE AMOUNTS AND NET ASSET VALUES HAVE BEEN ADJUSTED AS A RESULT OF THE
1-FOR-3 REVERSE SHARE SPLIT ON SEPTEMBER 5, 2006.
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS A SHARES FEBRUARY 28, -----------------------------------------------
2007 2006 2005 2004 2003 2002
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
THE PERIOD.................... $10.47 $10.89 $10.92 $10.29 $ 9.45 $ 12.69
------ ------ ------ ------ ------ -------
Net Investment Income......... 0.37(a) 0.75(a) 0.78 0.78 0.87 1.17
Net Realized and Unrealized
Gain/Loss................... 0.30 (0.39) (0.06) 0.63 0.87 (3.03)
------ ------ ------ ------ ------ -------
Total from Investment
Operations.................... 0.67 0.36 0.72 1.41 1.74 (1.86)
------ ------ ------ ------ ------ -------
Less:
Distributions from Net
Investment Income........... 0.37 0.78 0.75 0.75 0.72 1.29
Return of Capital
Distributions............... -0- -0- -0- 0.03 0.18 0.09
------ ------ ------ ------ ------ -------
Total Distributions............. 0.37 0.78 0.75 0.78 0.90 1.38
------ ------ ------ ------ ------ -------
NET ASSET VALUE, END OF THE
PERIOD........................ $10.77 $10.47 $10.89 $10.92 $10.29 $ 9.45
====== ====== ====== ====== ====== =======
Total Return (b)................ 6.34%* 3.55% 6.89% 14.02% 19.26% -15.75%
Net Assets at End of the Period
(In millions)................. $472.2 $457.7 $532.0 $379.5 $408.7 $ 308.5
Ratio of Expenses to Average Net
Assets (c).................... 0.95% 0.92% 1.06% 1.06% 1.12% 1.08%
Ratio of Net Investment Income
to Average Net Assets......... 7.04% 7.04% 7.11% 7.45% 8.36% 10.39%
Portfolio Turnover.............. 20%* 44% 84% 88% 95% 83%
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charges 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 combined 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.
(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 year ended August 31,
2006.
See Notes to Financial Statements 19
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.
ALL SHARE AMOUNTS AND NET ASSET VALUES HAVE BEEN ADJUSTED AS A RESULT OF THE
1-FOR-3 REVERSE SHARE SPLIT ON SEPTEMBER 5, 2006.
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS B SHARES FEBRUARY 28, -----------------------------------------------
2007 2006 2005 2004 2003 2002
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD......................... $10.53 $10.95 $10.95 $10.32 $ 9.48 $ 12.72
------ ------ ------ ------ ------ -------
Net Investment Income.......... 0.33(a) 0.66(a) 0.75 0.69 0.75 1.05
Net Realized and Unrealized
Gain/Loss.................... 0.30 (0.39) (0.06) 0.63 0.90 (3.03)
------ ------ ------ ------ ------ -------
Total from Investment
Operations..................... 0.63 0.27 0.69 1.32 1.65 (1.98)
------ ------ ------ ------ ------ -------
Less:
Distributions from Net
Investment Income............ 0.33 0.69 0.69 0.66 0.63 1.17
Return of Capital
Distributions................ -0- -0- -0- 0.03 0.18 0.09
------ ------ ------ ------ ------ -------
Total Distributions.............. 0.33 0.69 0.69 0.69 0.81 1.26
------ ------ ------ ------ ------ -------
NET ASSET VALUE, END OF THE
PERIOD......................... $10.83 $10.53 $10.95 $10.95 $10.32 $ 9.48
====== ====== ====== ====== ====== =======
Total Return (b)................. 5.92%* 2.75% 6.36% 12.79% 18.27% -16.12%
Net Assets at End of the Period
(In millions).................. $101.7 $115.8 $191.0 $160.7 $175.6 $ 168.8
Ratio of Expenses to Average Net
Assets (c)..................... 1.70% 1.68% 1.83% 1.82% 1.89% 1.84%
Ratio of Net Investment Income to
Average Net Assets............. 6.33% 6.28% 6.33% 6.70% 7.68% 9.67%
Portfolio Turnover............... 20%* 44% 84% 88% 95% 83%
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum 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.
(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 year ended August 31,
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.
ALL SHARE AMOUNTS AND NET ASSET VALUES HAVE BEEN ADJUSTED AS A RESULT OF THE
1-FOR-3 REVERSE SHARE SPLIT ON SEPTEMBER 5, 2006.
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS C SHARES FEBRUARY 28, -----------------------------------------------
2007 2006 2005 2004 2003 2002
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
THE PERIOD.................... $10.38 $10.80 $10.83 $10.23 $ 9.39 $ 12.60
------ ------ ------ ------ ------ -------
Net Investment Income......... 0.33(a) 0.66(a) 0.75 0.69 0.75 1.05
Net Realized and Unrealized
Gain/Loss................... 0.31 (0.36) (0.09) 0.60 0.90 (3.00)
------ ------ ------ ------ ------ -------
Total from Investment
Operations.................... 0.64 0.30 0.66 1.29 1.65 (1.95)
------ ------ ------ ------ ------ -------
Less:
Distributions from Net
Investment Income........... 0.33 0.72 0.69 0.66 0.63 1.17
Return of Capital
Distributions............... -0- -0- -0- 0.03 0.18 0.09
------ ------ ------ ------ ------ -------
Total Distributions............. 0.33 0.72 0.69 0.69 0.81 1.26
------ ------ ------ ------ ------ -------
NET ASSET VALUE, END OF THE
PERIOD........................ $10.69 $10.38 $10.80 $10.83 $10.23 $ 9.39
====== ====== ====== ====== ====== =======
Total Return (b)................ 6.11%*(d) 2.83%(d) 6.17%(d) 12.98%(d) 18.14%(e) -16.04%
Net Assets at End of the Period
(In millions)................. $ 45.8 $ 43.6 $ 54.5 $ 41.4 $ 41.5 $ 36.7
Ratio of Expenses to Average Net
Assets (c).................... 1.70%(d) 1.64%(d) 1.82%(d) 1.81%(d) 1.86% 1.84%
Ratio of Net Investment Income
to Average Net Assets......... 6.28%(d) 6.32%(d) 6.34%(d) 6.71%(d) 7.68%(e) 9.68%
Portfolio Turnover.............. 20%* 44% 84% 88% 95% 83%
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum 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.
(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 year ended August 31,
2006.
(d) 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).
(e) 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%.
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.
ALL SHARE AMOUNTS AND NET ASSET VALUES HAVE BEEN ADJUSTED AS A RESULT OF THE
1-FOR-3 REVERSE SHARE SPLIT ON SEPTEMBER 5, 2006.
MARCH 23, 2005
CLASS I SHARES (COMMENCEMENT OF
SIX MONTHS YEAR ENDED OPERATIONS) TO
ENDED AUGUST 31, AUGUST 31,
FEBRUARY 28, 2007 2006 2005
---------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD.................................. $10.47 $10.89 $10.95
------ ------ ------
Net Investment Income................... 0.29(a) 0.78(a) 0.36
Net Realized and Unrealized Gain/Loss... 0.39 (0.39) (0.06)
------ ------ ------
Total from Investment Operations.......... 0.68 0.39 0.30
Less Distributions from Net Investment
Income.................................. 0.38 0.81 0.36
------ ------ ------
NET ASSET VALUE, END OF THE PERIOD........ $10.77 $10.47 $10.89
====== ====== ======
Total Return (b).......................... 6.47%* 3.82% 2.69%*
Net Assets at End of the Period
(In millions)........................... $ 4.0 $ 1.7 $ 23.3
Ratio of Expenses to Average
Net Assets (c).......................... 0.70% 0.63% 0.85%
Ratio of Net Investment Income to Average
Net Assets.............................. 5.44% 7.37% 6.97%
Portfolio Turnover........................ 20%* 44% 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 year ended August 31,
2006.
22 See Notes to Financial Statements
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2007 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen High Yield Fund (the "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 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 stocks 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 readily
available, valuations are determined in accordance with procedures established
in good faith by the Board of Trustees. Forward foreign currency contracts are
valued using quoted foreign exchange rates. Credit default swaps are valued
using market quotations obtained from brokers. Short-term securities with
remaining maturities of 60 days or less are valued at amortized cost, which
approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
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, 2007, there were no when-issued or delayed
delivery purchase commitments.
The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
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
23
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2007 (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. Other income is comprised primarily of consent fees.
Consent fees are earned as compensation for agreeing to changes in terms of debt
instruments. 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 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, 2006, the Fund had an accumulated capital loss carryforward
for tax purposes of $559,992,005 which will expire according to the following
schedule:
AMOUNT EXPIRATION
$ 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
5,413,212................................................ August 31, 2014
Part of the capital loss carryforward referred to above was acquired due to
a merger with another regulated investment company which occurred during a prior
fiscal year.
At February 28, 2007, the cost and related gross unrealized appreciation and
depreciation were as follows:
Cost of investments for tax purposes........................ $647,768,242
============
Gross tax unrealized appreciation........................... $ 21,437,353
Gross tax unrealized depreciation........................... (47,597,407)
------------
Net tax unrealized depreciation on investments.............. $(26,160,054)
============
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed at least annually. Distributions from net realized gains for book
purposes may include short-term capital gains which are included as ordinary
income for tax purposes.
24
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
The tax character of distributions paid during the year ended August 31,
2006 was as follows:
Distributions paid from:
Ordinary income........................................... $49,344,799
Long-term capital gain.................................... -0-
-----------
$49,344,799
===========
As of August 31, 2006, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $1,345,993
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, 2007, the Fund's
custody fee was reduced by $26,877 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 asked 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, 2007, the Fund recognized expenses of
approximately $4,100 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 compliance
25
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
services to the Fund. The costs of these services are allocated to each fund.
For the six months ended February 28, 2007, the Fund recognized expenses of
approximately $21,400 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
"Accounting and Administrative Expenses" on the Statement of Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
February 28, 2007, the Fund recognized expenses of approximately $468,500
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 $263,193 are included in
"Other" assets on the Statement of Assets and Liabilities at February 28, 2007.
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, 2007, Van Kampen, as Distributor for
the Fund, received net commissions on sales of the Fund's Class A Shares of
approximately $50,000 and contingent deferred sales charge (CDSC) on redeemed
shares of approximately $101,400. Sales charges do not represent expenses to the
Fund.
26
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
3. CAPITAL TRANSACTIONS
For the six months ended February 28, 2007 and the year ended August 31, 2006,
transactions were as follows:
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
FEBRUARY 28, 2007 AUGUST 31, 2006
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A....................... 4,533,885 $ 47,563,501 29,290,990 $ 103,011,978
Class B....................... 853,946 9,077,296 5,193,622 18,355,586
Class C....................... 654,841 6,751,074 4,549,191 15,796,883
Class I....................... 217,596 2,325,704 115,790 394,401
------------ ------------ ----------- -------------
Total Sales..................... 6,260,268 $ 65,717,575 39,149,593 $ 137,558,848
============ ============ =========== =============
Dividend Reinvestment:
Class A....................... 1,131,146 $ 12,033,678 7,372,644 $ 25,916,242
Class B....................... 222,145 2,375,623 1,998,462 7,065,215
Class C....................... 98,908 1,046,519 590,646 2,061,273
Class I....................... 5,691 60,567 136,311 481,058
------------ ------------ ----------- -------------
Total Dividend Reinvestment..... 1,457,890 $ 15,516,387 10,098,063 $ 35,523,788
============ ============ =========== =============
Repurchases:
Class A....................... (93,115,537)* $(58,672,255) (52,016,777) $(183,438,639)
Class B....................... (24,701,018)* (28,652,300) (26,554,629) (93,925,102)
Class C....................... (9,074,893)* (6,969,701) (7,670,401) (26,835,230)
Class I....................... (335,741)* (167,086) (6,186,212) (21,677,289)
------------ ------------ ----------- -------------
Total Repurchases............... (127,227,189) $(94,461,342) (92,428,019) $(325,876,260)
============ ============ =========== =============
* Includes 87,378,893, 21,991,341, 8,405,187, and 319,870 shares redeemed in
1-for-3 reverse share split for Class A Shares, Class B Shares, Class C
Shares and Class I Shares, respectively.
4. REDEMPTION FEE
The Fund assesses a 2% redemption fee on the proceeds of Fund shares that are
redeemed (either by sale or exchange) within 30 days of purchase. The redemption
fee is paid directly to the Fund. For the six months ended February 28, 2007,
the Fund received redemption fees of approximately $4,200 which are reported as
part of "Cost of Shares Repurchased" on the Statement of Changes in Net Assets.
The per share impact from redemption fees paid to the Fund was less than $0.01.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $120,282,396 and $143,911,376,
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.
27
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
The fund may use derivative instruments, to earn income, to facilitate
portfolio management and to mitigate risks. 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 basis
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 basis 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.
Summarized below are the specific types of derivative financial instruments
used by the Fund.
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, 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 Statements of Operations. Net unrealized gains are recorded as
an asset or net unrealized losses are reported as a liability on the Statement
of Assets and Liabilities. The change in value of the swaps is reported as
unrealized gains or losses on the Statement of Operations.
Credit default swaps may involve greater risks than if a Fund had invested
in the issuer directly. Credit default swaps are subject to general market risk,
counterparty risk and credit risk. If there is a default by the counterparty,
the Fund will have contractual remedies pursuant to the agreements related to
the transaction.
28
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
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 sale, 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 $1,731,700 and $35,500
for Class B and Class C Shares, respectively. These amounts may be recovered for
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 and certain affiliates of the Adviser are named as defendants in a
derivative action which additionally names as defendants certain individual
trustees of certain Van Kampen funds. The named investment companies, including
the Fund, are listed as 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 Van Kampen 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
derivative action was coordinated with a direct action alleging related
violations of defendants' statutory disclosure obligations and fiduciary duties
with respect to the payments described above. In addition, this derivative
action was stayed by agreement of the parties pending rulings on the motion to
dismiss the direct action and the motion to dismiss another derivative action
brought by the same plaintiff that brought this derivative action, alleging
market timing and late trading in the Van Kampen funds. In April 2006, the court
granted defendants' motion to dismiss the direct action. In June 2006, the court
granted defendants' motion to dismiss the market timing action. Accordingly, the
stay on this action was lifted. Plaintiff and defendants have agreed that this
action should be dismissed in light of the rulings dismissing the two cases
discussed above. The Court has approved a notice to shareholders regarding the
dismissal.
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.
10. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes--an interpretation
of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes
by prescribing the minimum
29
VAN KAMPEN HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2007 (UNAUDITED) continued
recognition threshold a tax position must meet before being recognized in the
financial statements. FIN 48 is effective for fiscal years beginning after
December 15, 2006 and is to be applied to all open tax years as of the effective
date. Recent SEC guidance allows implementing FIN 48 in the fund NAV
calculations as late as the fund's last NAV calculation in the first required
financial statement period. As a result, the Fund will incorporate FIN 48 in its
semi annual report on February 29, 2008. The impact to the Fund's financial
statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
30
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
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
JAMES W. GARRETT
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.
31
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.
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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
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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)2007 Van Kampen Funds Inc.
All rights reserved. Member NASD/SIPC.
28, 128, 228, 628
HYISAR 4/07
(VAN KAMPEN INVESTMENTS LOGO) IU07-00172P-Y02/07
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, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: April 19, 2007
By: /s/ James W. Garrett
--------------------
Name: James W. Garrett
Title: Principal Financial Officer
Date: April 19, 2007