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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-5707
Van Kampen High Income Trust
___________________________________________________________________________
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
___________________________________________________________________________
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
___________________________________________________________________________
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 12/31
Date of reporting period: 6/30/04
Item 1. Report to Shareholders.
The Trust's semi-annual report transmitted to shareholders pursuant to
Rule 30e-1 under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen High
Income Trust performed during the semiannual period. The portfolio
management team will provide an overview of the market conditions and
discuss some of the factors that affected investment performance during
the reporting period. In addition, this report includes the trust's
financial statements and a list of trust investments as of June 30, 2004.
Market forecasts provided in this report may not necessarily come to
pass. There is no assurance that the trust will achieve its investment
objective. Trusts are subject to market risk, which is the possibility
that the market values of securities owned by the trust will decline and
that the value of the trust shares may therefore be less than what you
paid for them. Accordingly, you can lose money investing in this trust.
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
Performance Summary as of 6/30/04
HIGH INCOME TRUST
SYMBOL: VIT
---------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (01/26/89) 5.19% 5.62%
10-year 5.60 3.36
5-year 2.39 0.64
1-year 10.96 4.64
6-month 0.98 -5.87
---------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, NET
ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
NAV per share is determined by dividing the value of the trust's portfolio
securities, cash and other assets, less all liabilities, by the total number of
common shares outstanding. The common share market price is the price the market
is willing to pay for shares of the trust at a given time. Common share market
price is influenced by a range of factors, including supply and demand and
market conditions. Total return assumes an investment at the beginning of the
period, reinvestment of all distributions for the period in accordance with the
trust's dividend reinvestment plan, and sale of all shares at the end of the
period.
The J.P. Morgan Global High Yield Index is generally representative of
high-yield securities. The index does not include any expenses, fees or sales
charges, which would lower performance. The index is unmanaged and should not be
considered an investment. It is not possible to invest directly in an index.
1
Trust Report
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2004
Van Kampen High Income Trust is managed by the Adviser's High Yield team.
Current team members include Gordon Loery, Executive Director of the Adviser;
Josh Givelber and Chad Liu, Vice Presidents of the Adviser; and Sheila Finnerty,
Managing Director of the Adviser.(1)
MARKET CONDITIONS
Coming off a banner year in 2003, high-yield bonds continued their strong
performance through the end of January 2004, endured a difficult period from
February through May, then staged a rally during June. The CSFB High Yield
Index, a broad benchmark for the high-yield market, returned 2.47 percent for
the first six months of 2004.
Over the past 18 months, whether the market was rallying or giving back some
gains, high-yield bonds have had strong fundamental factors in their favor.
These factors included an improving U.S. economic environment, better corporate
earnings overall and a low default rate for high-yield issuers. In 2003, and
continuing through January, technical factors, such as supply and demand within
the high-yield bond market, were also very positive. Though high-yield companies
were bringing a tremendous volume of new issues to market--made up mostly of
refinanced high-yield bonds or refinanced bank debt--through January 2004
new-issue supply was easily taken up by strong demand from mutual funds,
institutional investors and individuals. Beginning this past February, however,
demand slackened and money flowed out of high-yield funds as interest rates
began to rise and some investors took profits, while others shifted their
portfolio allocation out of high yield. Typically, high-yield and Treasury-bond
performance are not strongly correlated, but during the first half of 2004 there
was more correlation than usual because of narrow high-yield interest-rate
spreads compared with Treasuries. As Treasuries reacted negatively to
interest-rate fears, high-yield bonds followed, but to a lesser extent.
In addition, from February to May, financial markets experienced significantly
increased volatility--rarely helpful to high-yield performance. The rise in
volatility was attributable to terrorism fears, higher oil prices and higher
interest rates. Attitudes concerning the direction of interest rates underwent a
dramatic shift at that time. Investors went from thinking that interest rates
would remain relatively low for a long period to acknowledging that the Fed
could change direction in order to fight inflation, and push the federal funds
rate up--perhaps as much as 3 percent over the next 12 to 24 months.
Beginning in May, the market began to acclimate itself to the new interest-rate
environment and to settle down somewhat. As a result, the high-yield market
posted gains during June as some new money came into this market. Perhaps
(1)Team members may change without notice at any time.
2
more importantly, there were no significant outflows from most high-yield mutual
funds in June.
PERFORMANCE ANALYSIS
A closed-end fund's return can be calculated upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ significantly. On an NAV basis, the trust outperformed its
benchmark, the J.P. Morgan Global High Yield Index. (See table below.)
The trust's performance was helped by its lack of exposure to the airline
industry as well as favorable security selection within the utilities sector. In
addition, though the overall default rate with the high-yield bond asset class
was low, there were some defaults among high-yield companies during the period;
the fact that the trust did not hold these problem credits contributed to the
trust's performance. When selecting high-yield issues for the trust's portfolio,
we have historically avoided most start-up companies and attempt to look for
seasoned issuers with positive cash flow -- companies that we believe will
prosper in good or bad economic times.
Detracting from overall performance during the period was unfavorable security
selection within the chemicals, forest products and gaming/leisure sectors.
Other factors that detracted from the trust's performance were its relatively
low-yield, higher overall-quality composition and its shorter average maturity
compared with the overall market. During the period we worked to increase the
trust's yield and purchased lower-grade issues at longer maturities.
The trust uses leverage on an ongoing basis to enhance its dividend to common
shareholders. The trust borrows money at short-term rates through the issuance
of preferred shares. The proceeds are then invested in longer-term securities,
taking advantage of the difference between short- and longer-term rates. Though
short-term rates have risen since the start of 2004, using leverage through the
"carry trade" continued to be beneficial for the trust during the period.
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2004
--------------------------------------------------------
BASED ON BASED ON J.P. MORGAN GLOBAL
NAV MARKET PRICE HIGH YIELD INDEX
0.98% -5.87% 0.68%
--------------------------------------------------------
Past performance is no guarantee of future results. Investment return, net asset
value and common share market price will fluctuate and trust shares, when sold,
may be worth more or less than their original cost. See Performance Summary for
additional performance information and index definition.
3
Going forward, though we think interest rates will continue to rise as the Fed
persists in tightening credit, we believe that high-yield bonds should perform
reasonably well over the coming months for two reasons: First, the performance
of high-yield issues should continue to be driven by favorable fundamental
factors. Second, now that investors have seemingly come to terms with the
necessity for higher interest rates, the relationship between supply and demand
should gradually turn more favorable within the high-yield market.
TOP 5 SECTORS AS OF 6/30/04 RATINGS ALLOCATIONS AS OF 6/30/04
Energy 10.3% A/A 0.6%
Gaming & Leisure 9.7 BBB/Baa 7.4
Healthcare 7.3 BB/Ba 43.1
Forest Products 7.1 B/B 45.2
Diversified Media 6.7 CCC/Caa 3.5
Non-Rated 0.2
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. All percentages are as a percentage of
long-term investments. Securities are classified by sectors that represent broad
groupings of related industries. Ratings allocation based upon ratings as issued
by Standard and Poor's and Moody's, respectively. Van Kampen is a wholly owned
subsidiary of a global securities firm which is engaged in a wide range of
financial services including, for example, securities trading and brokerage
activities, investment banking, research and analysis, financing and financial
advisory services.
4
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen trust provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
trust's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to trust shareholders, and makes these reports available on its
public web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public web site, each trust files a
complete schedule of portfolio holdings with the SEC for the trust's
first and third fiscal quarters on Form N-Q. Van Kampen does not deliver
the reports for the first and third fiscal quarters to shareholders, nor
are the reports posted to the Van Kampen public web site. You may,
however, obtain the Form N-Q filings (as well as the Form N-CSR and
N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You
may also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at 1-202-942-8090. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
In addition to filing a complete schedule of portfolio holdings with the
SEC each fiscal quarter, each Van Kampen trust makes portfolio holdings
information available by periodically providing the information on its
public web site, www.vankampen.com. Each Van Kampen trust provides a
complete schedule of portfolio holdings on the public web site on a
calendar-quarter basis approximately 30 days after the close of the
calendar quarter. Furthermore, each Van Kampen trust provides partial
lists of its portfolio holdings (such as top 10 or top 15 fund holdings)
to the public web site each with a delay of approximately 15 days.
You may obtain copies of a trust's fiscal quarter filings, or its monthly
or calendar-quarter web site postings, by contacting Van Kampen Client
Relations at 1-800-847-2424.
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
The trust's policies and procedures with respect to the voting of proxies
relating to the trust's portfolio securities and information on how the
trust voted proxies relating to portfolio securities during the most
recent twelve-month period ended June 30 is available without charge,
upon request, by calling 1-800-847-2424 or by visiting our website at
www.vankampen.com. This information is also available on the Securities
and Exchange Commission's website at http://www.sec.gov.
5
VAN KAMPEN HIGH INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-----------------------------------------------------------------------------------------------
CORPORATE BONDS 168.8%
AEROSPACE 0.3%
$ 158 Dunlop Standard Aerospace Holdings, 144A--Private
Placement (United Kingdom) (a)................... 11.875% 05/15/09 $ 168,665
------------
BROADCASTING 3.2%
170 Granite Broadcasting Corp., 144A--Private
Placement (a).................................... 9.750 12/01/10 158,950
295 Salem Communications Corp. ...................... 7.750 12/15/10 302,744
1,080 TV Azteca SA (Mexico)............................ 10.500 02/15/07 1,107,000
------------
1,568,694
------------
CABLE 8.3%
575 Cablevision Systems Corp., 144A--Private
Placement (a) (b)................................ 5.670 04/01/09 592,250
1,005 Charter Communications Holdings LLC.............. 9.625 11/15/09 819,075
660 CSC Holdings, Inc. .............................. 8.125 07/15/09 689,700
500 DirecTV Holdings LLC............................. 8.375 03/15/13 555,625
855 Echostar DBS Corp. .............................. 6.375 10/01/11 846,450
505 Kabel Deutschland GmbH, 144A--Private Placement
(Germany) (a) (c)................................ 10.625 07/01/14 521,412
------------
4,024,512
------------
CHEMICALS 9.8%
610 Equistar Chemicals LP............................ 10.125 09/01/08 671,000
245 FMC Corp. ....................................... 10.250 11/01/09 282,975
190 Huntsman Advanced Materials LLC, 144A--Private
Placement (a).................................... 11.000 07/15/10 215,175
190 ISP Chemco, Inc. ................................ 10.250 07/01/11 212,325
900 ISP Holdings, Inc. .............................. 10.625 12/15/09 994,500
145 Koppers, Inc. ................................... 9.875 10/15/13 159,500
55 Millennium America, Inc. ........................ 7.000 11/15/06 56,787
520 Millennium America, Inc. ........................ 9.250 06/15/08 561,600
535 Nalco Co., 144A--Private Placement (a)........... 7.750 11/15/11 563,087
495 Rhodia SA, 144A--Private Placement (France)
(a).............................................. 8.875 06/01/11 420,750
330 Rockwood Specialties Group, Inc. ................ 10.625 05/15/11 353,100
210 Westlake Chemical Corp. ......................... 8.750 07/15/11 228,900
------------
4,719,699
------------
CONSUMER PRODUCTS 3.8%
270 Amscan Holdings, Inc., 144A-- Private Placement
(a).............................................. 8.750 05/01/14 266,625
210 Oxford Industrials, Inc., 144A-- Private
Placement (a).................................... 8.875 06/01/11 222,600
830 Phillips-Van Heusen Corp., 144A--Private
Placement (a).................................... 7.250 02/15/11 838,300
315 Rayovac Corp. ................................... 8.500 10/01/13 332,325
158 Tempur Pedic, Inc. .............................. 10.250 08/15/10 178,935
------------
1,838,785
------------
6 See Notes to Financial Statements
VAN KAMPEN HIGH INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-----------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA 11.6%
$ 834 Advanstar Communications, Inc. (b)............... 8.750% 08/15/08 $ 877,469
655 Alliance Atlantis Communications, Inc.
(Canada)......................................... 13.000 12/15/09 723,775
750 CanWest Media, Inc. (Canada)..................... 10.625 05/15/11 844,687
340 Dex Media East Finance Corp. LLC................. 12.125 11/15/12 398,650
350 Dex Media West Finance Corp. .................... 9.875 08/15/13 385,875
780 Nevada Power Co. ................................ 9.000 08/15/13 852,150
150 PEI Holdings, Inc. .............................. 11.000 03/15/10 174,750
690 Primedia, Inc. .................................. 8.875 05/15/11 686,550
145 Vivendi Universal SA (France).................... 6.250 07/15/08 154,473
420 Vivendi Universal SA (France).................... 9.250 04/15/10 496,419
------------
5,594,798
------------
ENERGY 17.8%
755 BRL Universal Equipment.......................... 8.875 02/15/08 812,569
455 CHC Helicopter Corp., 144A--Private Placement
(Canada) (a)..................................... 7.375 05/01/14 449,312
220 Citgo Petroleum Corp. ........................... 11.375 02/01/11 256,300
905 El Paso Production Holding Co. .................. 7.750 06/01/13 834,862
1,140 Frontier Oil Corp. .............................. 11.750 11/15/09 1,251,150
97 Gulfterra Energy Partners LP..................... 8.500 06/01/10 105,972
385 Gulfterra Energy Partners LP..................... 10.625 12/01/12 460,075
90 Hanover Compressor Co. .......................... 8.625 12/15/10 93,600
385 Hanover Compressor Co. .......................... 9.000 06/01/14 401,362
375 Hanover Equipment Trust.......................... 8.500 09/01/08 398,437
160 Hanover Equipment Trust.......................... 8.750 09/01/11 172,000
550 Hilcorp Energy Finance Corp., 144A--Private
Placement (a).................................... 10.500 09/01/10 598,125
290 Magnum Hunter Resources, Inc. ................... 9.600 03/15/12 320,450
85 MSW Energy Holdings LLC.......................... 8.500 09/01/10 90,312
405 MSW Energy Holdings LLC, 144A--Private Placement
(a).............................................. 7.375 09/01/10 405,000
195 Plains Exploration & Production Co., 144A--
Private Placement (a)............................ 7.125 06/15/14 199,387
327 Port Arthur Finance Corp. ....................... 12.500 01/15/09 379,413
320 Tesoro Petroleum Corp. .......................... 9.000 07/01/08 331,200
180 Tesoro Petroleum Corp. .......................... 9.625 04/01/12 202,950
815 Vintage Petroleum, Inc. ......................... 7.875 05/15/11 839,450
------------
8,601,926
------------
FINANCIAL 1.7%
455 General Motors Acceptance Corp. ................. 6.750 01/15/06 476,945
295 Istar Financial, Inc. ........................... 8.750 08/15/08 327,752
------------
804,697
------------
See Notes to Financial Statements 7
VAN KAMPEN HIGH INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-----------------------------------------------------------------------------------------------
FOOD & DRUG 2.4%
$ 690 Delhaize America, Inc. .......................... 8.125% 04/15/11 $ 756,606
1,570 Jitney-Jungle Stores America, Inc. (d) (e) (f)... 12.000 03/01/06 0
360 Rite Aid Corp. .................................. 8.125 05/01/10 380,700
------------
1,137,306
------------
FOOD & TOBACCO 8.3%
750 Constellation Brands, Inc. ...................... 8.000 02/15/08 810,000
340 Michael Foods, Inc. ............................. 8.000 11/15/13 352,750
765 Pilgrim's Pride Corp. ........................... 9.625 09/15/11 849,150
210 Pilgrim's Pride Corp. ........................... 9.250 11/15/13 224,700
600 Smithfield Foods, Inc. .......................... 7.625 02/15/08 633,000
1,050 Smithfield Foods, Inc. .......................... 8.000 10/15/09 1,136,625
------------
4,006,225
------------
FOREST PRODUCTS 12.3%
330 Abitibi-Consolidated, Inc. (Canada).............. 8.550 08/01/10 349,613
530 Abitibi-Consolidated, Inc. (Canada).............. 6.000 06/20/13 471,738
535 Georgia-Pacific Corp. ........................... 8.875 02/01/10 608,562
600 Graphic Packaging International Corp. ........... 9.500 08/15/13 654,000
620 MDP Acquisitions PLC (Ireland)................... 9.625 10/01/12 682,000
235 Norampac, Inc. (Canada).......................... 6.750 06/01/13 231,475
1,350 Owens-Brockway Glass Containers, Inc. ........... 8.875 02/15/09 1,464,750
495 Pliant Corp. .................................... 13.000 06/01/10 445,500
1,065 Tembec Industries, Inc. (Canada)................. 7.750 03/15/12 1,033,050
------------
5,940,688
------------
GAMING & LEISURE 16.7%
920 Harrahs Operating Co., Inc. ..................... 7.875 12/15/05 974,050
465 Hilton Hotels Corp. ............................. 7.950 04/15/07 504,525
290 Hilton Hotels Corp. ............................. 7.625 12/01/12 313,200
369 HMH Properties, Inc. ............................ 7.875 08/01/08 380,070
570 Horseshoe Gaming LLC............................. 8.625 05/15/09 597,075
1,080 MGM Mirage, Inc. ................................ 6.000 10/01/09 1,063,800
1,400 Mohegan Tribal Gaming Authority.................. 8.125 01/01/06 1,484,000
490 Park Place Entertainment Corp. .................. 7.875 12/15/05 516,337
425 Park Place Entertainment Corp. .................. 8.875 09/15/08 462,187
1,075 Starwood Hotels & Resorts Worldwide, Inc. ....... 7.375 05/01/07 1,136,812
625 Station Casinos, Inc. ........................... 6.000 04/01/12 607,813
------------
8,039,869
------------
HEALTHCARE 12.5%
655 AmerisourceBergen Corp. ......................... 8.125 09/01/08 709,038
860 Extendicare Health Services, Inc., 144A--Private
Placement (a).................................... 6.875 05/01/14 812,700
400 Fisher Scientific International, Inc. ........... 8.125 05/01/12 430,000
560 Fresenius Medical Care Capital Trust II.......... 7.875 02/01/08 592,200
235 Fresenius Medical Care Capital Trust IV.......... 7.875 06/15/11 250,275
1,045 HCA, Inc. ....................................... 6.910 06/15/05 1,076,223
190 HCA, Inc. ....................................... 6.300 10/01/12 190,400
8 See Notes to Financial Statements
VAN KAMPEN HIGH INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-----------------------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
$ 85 National Nephrology Associates, Inc., 144A--
Private Placement (a)............................ 9.000% 11/01/11 $ 97,750
380 Team Health, Inc., 144A--Private Placement (a)... 9.000 04/01/12 366,700
250 Tenet Healthcare Corp. .......................... 6.500 06/01/12 218,750
435 Tenet Healthcare Corp., 144A-- Private Placement
(a).............................................. 9.875 07/01/14 444,788
190 VWR International, Inc., 144A-- Private Placement
(a).............................................. 6.875 04/15/12 191,663
650 VWR International, Inc., 144A-- Private Placement
(a).............................................. 8.000 04/15/14 669,500
------------
6,049,987
------------
HOUSING 9.3%
104 CB Richard Ellis Service, Inc. .................. 9.750 05/15/10 114,920
545 CB Richard Ellis Service, Inc. .................. 11.250 06/15/11 624,025
575 D.R. Horton, Inc. ............................... 5.000 01/15/09 567,094
625 Interface, Inc., 144A--Private Placement (a)..... 9.500 02/01/14 625,000
425 LNR Property Corp. .............................. 7.625 07/15/13 425,000
860 Nortek Holdings, Inc., 144A--Private Placement
(a) (b).......................................... 4.870 12/31/10 879,350
240 Schuler Homes, Inc. ............................. 9.375 07/15/09 264,600
175 Technical Olympic USA, Inc. ..................... 9.000 07/01/10 180,250
290 Technical Olympic USA, Inc. ..................... 9.000 07/01/10 298,700
310 Technical Olympic USA, Inc. ..................... 10.375 07/01/12 324,725
190 WII Components, Inc., 144A--Private Placement
(a).............................................. 10.000 02/15/12 187,150
------------
4,490,814
------------
INFORMATION TECHNOLOGY 3.4%
770 Iron Mountain, Inc. ............................. 8.625 04/01/13 820,050
800 Xerox Corp. ..................................... 7.125 06/15/10 820,000
------------
1,640,050
------------
MANUFACTURING 5.8%
155 Flowserve Corp. ................................. 12.250 08/15/10 176,313
530 Johnsondiversey, Inc. ........................... 9.625 05/15/12 580,350
675 Manitowoc, Inc. ................................. 10.500 08/01/12 776,250
510 Trimas Corp. .................................... 9.875 06/15/12 543,150
670 Tyco Intl Group SA (Luxembourg).................. 6.375 02/15/06 703,707
------------
2,779,770
------------
METALS 2.6%
191 Doe Run Resources Corp. (Acquired 02/15/01, Cost
$157,190) (g) (h)................................ 11.750 11/01/08 148,214
210 General Cable Corp. ............................. 9.500 11/15/10 226,800
1,100 GS Technologies Operating, Inc. (d) (e) (f)...... 12.250 10/01/05 0
440 UCAR Finance, Inc. .............................. 10.250 02/15/12 491,700
337 United States Steel Corp. ....................... 9.750 05/15/10 374,913
------------
1,241,627
------------
See Notes to Financial Statements 9
VAN KAMPEN HIGH INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-----------------------------------------------------------------------------------------------
RETAIL 3.7%
$ 67 Big 5 Corp. ..................................... 10.875% 11/15/07 $ 70,015
290 General Nutrition Center, Inc., 144A--Private
Placement (a).................................... 8.500 12/01/10 302,325
465 Penney JC Co., Inc. ............................. 9.000 08/01/12 551,025
425 Petro Stopping Center Financial, 144A--Private
Placement (a).................................... 9.000 02/15/12 422,875
430 Toys R Us, Inc. ................................. 7.625 08/01/11 433,763
------------
1,780,003
------------
SERVICES 10.8%
1,500 Allied Waste North America, Inc. ................ 8.875 04/01/08 1,650,000
45 Allied Waste North America, Inc. ................ 7.875 04/15/13 47,250
775 Buhrmann US, Inc. ............................... 12.250 11/01/09 852,962
510 Buhrmann US, Inc., 144A--Private Placement (a)... 8.250 07/01/14 511,275
390 United Rentals North America, Inc. .............. 6.500 02/15/12 370,500
740 United Rentals North America, Inc. .............. 7.750 11/15/13 703,000
1,000 Waste Management, Inc. .......................... 7.125 10/01/07 1,097,683
------------
5,232,670
------------
TELECOMMUNICATIONS 3.5%
605 Axtel SA, 144A--Private Placement (Mexico) (a)... 11.000 12/15/13 576,263
280 Exodus Communications, Inc. (d) (e) (f).......... 11.250 07/01/08 0
430 Qwest Communications International, Inc., 144A--
Private Placement (a) (b)........................ 4.750 02/15/09 404,200
710 Qwest Corp. ..................................... 6.625 09/15/05 727,750
------------
1,708,213
------------
TRANSPORTATION 5.4%
450 Autonation, Inc. ................................ 9.000 08/01/08 510,750
585 Laidlaw International, Inc. ..................... 10.750 06/15/11 641,306
565 Sonic Automotive, Inc. .......................... 8.625 08/15/13 591,838
750 TRW Automotive, Inc. ............................ 9.375 02/15/13 849,375
------------
2,593,269
------------
UTILITY 10.8%
73 AES Corp. ....................................... 9.375 09/15/10 78,201
23 AES Corp. ....................................... 8.875 02/15/11 23,978
220 Allegheny Energy, Inc. .......................... 7.750 08/01/05 228,800
725 Calpine Corp., 144A--Private Placement (a)....... 8.500 07/15/10 603,563
65 CMS Energy Corp. ................................ 7.500 01/15/09 65,000
405 CMS Energy Corp. ................................ 8.500 04/15/11 415,125
605 Dynegy Holdings, Inc. ........................... 6.875 04/01/11 524,081
345 Dynegy Holdings, Inc., 144A--Private Placement
(a).............................................. 9.875 07/15/10 372,600
235 IPALCO Enterprises, Inc. ........................ 8.625 11/14/11 256,150
485 Monongahela Power Co. ........................... 5.000 10/01/06 497,619
375 Pacific Energy Partners, 144A-- Private Placement
(a).............................................. 7.125 06/15/14 382,500
385 PSEG Energy Holdings, Inc. ...................... 7.750 04/16/07 405,213
20 PSEG Energy Holdings, Inc. ...................... 8.625 02/15/08 21,600
10 See Notes to Financial Statements
VAN KAMPEN HIGH INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-----------------------------------------------------------------------------------------------
UTILITY (CONTINUED)
$ 195 Southern Natural Gas Co. ........................ 8.875% 03/15/10 $ 214,013
785 TNP Enterprises, Inc. ........................... 10.250 04/01/10 816,400
270 Transcontinental Gas Pipe Line Corp. ............ 8.875 07/15/12 306,450
------------
5,211,293
------------
WIRELESS COMMUNICATIONS 4.8%
590 Centennial Communications, 144A--Private
Placement (a).................................... 8.125 02/01/14 550,175
1,205 Nextel Communications, Inc. ..................... 9.375 11/15/09 1,293,869
250 Rural Cellular Corp., 144A-- Private Placement
(a) (b).......................................... 6.020 03/15/10 258,750
182 Telecorp PCS, Inc. .............................. 10.625 07/15/10 205,514
------------
2,308,308
------------
TOTAL CORPORATE BONDS 168.8%................................................... 81,481,868
------------
GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS 3.0%
545 Federal Republic of Brazil (Brazil).............. 11.250 07/26/07 589,963
750 United Mexican States (Mexico)................... 8.625 03/12/08 848,625
------------
TOTAL GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS.............................. 1,438,588
------------
DESCRIPTION
-----------
EQUITIES 0.5%
DecisionOne Corp. (3,033 common shares) (f) (i)................................. 0
DecisionOne Corp. (6,670 common stock warrants) (f) (i)......................... 0
Doe Run Resources Corp. (1 common stock warrant) (f) (i)........................ 0
HCI Direct, Inc. (30,357 common shares) (f) (i)................................. 236,784
Hosiery Corp of America, Inc. (500 common shares) (f) (i)....................... 0
VS Holdings, Inc. (11,316 common shares) (f) (i)................................ 2,113
------------
TOTAL EQUITIES.................................................................. 238,897
------------
TOTAL LONG-TERM INVESTMENTS 172.3%
(Cost $84,419,421)............................................................ 83,159,353
REPURCHASE AGREEMENT 4.1%
State Street Bank & Trust Co. ($1,987,000 par collateralized by U.S. Government
obligations in a pooled cash account, interest rate of 1.35%, dated 06/30/04,
to be sold on 07/01/04 at $1,987,075)
(Cost $1,987,000)............................................................. 1,987,000
------------
TOTAL INVESTMENTS 176.4%
(Cost $86,406,421)............................................................ 85,146,353
See Notes to Financial Statements 11
VAN KAMPEN HIGH INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED) continued
DESCRIPTION VALUE
------------------------------------------------------------------------------------------------
OTHER ASSETS IN EXCESS OF LIABILITIES 1.5%...................................... $ 736,988
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (77.9%)...................... (37,612,534)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................... $ 48,270,807
============
Percentages are calculated as a percentage of net assets applicable to common
shares.
(a) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(b) Variable rate security. Interest rate shown is that in effect at June 30,
2004.
(c) Securities purchased on a when-issued or delayed delivery basis.
(d) Non-income producing as security is in default.
(e) This borrower has filed for protection in federal bankruptcy court.
(f) Market value is determined in accordance with procedures established in good
faith by the Board of Trustees.
(g) Payment-in-kind security.
(h) These securities are restricted and may be resold only in transactions
exempt from registration which are normally those transactions with
qualified institutional buyers. Restricted securities comprise 0.3% of net
assets applicable to common shares.
(i) Non-income producing security.
12 See Notes to Financial Statements
VAN KAMPEN HIGH INCOME TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2004 (Unaudited)
ASSETS:
Total Investments (Cost $86,406,421)........................ $ 85,146,353
Cash........................................................ 419
Receivables:
Interest.................................................. 1,638,333
Investments Sold.......................................... 792,795
Other....................................................... 2,575
------------
Total Assets............................................ 87,580,475
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 1,378,944
Investment Advisory Fee................................... 49,069
Income Distributions--Common Shares....................... 19,348
Other Affiliates.......................................... 6,389
Trustees' Deferred Compensation and Retirement Plans........ 193,543
Accrued Expenses............................................ 49,841
------------
Total Liabilities....................................... 1,697,134
Preferred Shares (including accrued distributions).......... 37,612,534
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 48,270,807
============
NET ASSET VALUE PER COMMON SHARE ($48,270,807 divided by
13,710,760 shares outstanding)............................ $ 3.52
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 13,710,760 shares issued and
outstanding).............................................. $ 137,108
Paid in Surplus............................................. 84,024,417
Accumulated Undistributed Net Investment Income............. (609,037)
Net Unrealized Depreciation................................. (1,260,068)
Accumulated Net Realized Loss............................... (34,021,613)
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 48,270,807
============
PREFERRED SHARES
($.01 par value, authorized 1,000,000 shares, 376 issued
with liquidation preference of $100,000 per share)........ $ 37,600,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $ 85,870,807
============
See Notes to Financial Statements 13
VAN KAMPEN HIGH INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended June 30, 2004 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $ 3,279,348
Other....................................................... 25,490
-----------
Total Income............................................ 3,304,838
-----------
EXPENSES:
Investment Advisory Fee..................................... 302,317
Preferred Share Maintenance................................. 55,465
Trustees' Fees and Related Expenses......................... 22,502
Legal....................................................... 9,100
Custody..................................................... 7,909
Other....................................................... 93,710
-----------
Total Expenses.......................................... 491,003
-----------
NET INVESTMENT INCOME....................................... $ 2,813,835
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 740,751
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 1,289,421
End of the Period......................................... (1,260,068)
-----------
Net Unrealized Depreciation During the Period............... (2,549,489)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(1,808,738)
===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (219,741)
===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $ 785,356
===========
14 See Notes to Financial Statements
VAN KAMPEN HIGH INCOME TRUST
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2004 DECEMBER 31, 2003
-------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................. $ 2,813,835 $ 5,701,677
Net Realized Gain/Loss................................ 740,751 (7,269,381)
Net Unrealized Appreciation/Depreciation During the
Period.............................................. (2,549,489) 15,491,653
Distributions to Preferred Shareholders:
Net Investment Income............................... (219,741) (452,433)
----------- -----------
Change in Net Assets Applicable to Common Shares from
Operations.......................................... 785,356 13,471,516
Distributions to Common Shareholders:
Net Investment Income............................... (2,467,453) (4,881,353)
Return of Capital Distribution...................... -0- (122,439)
----------- -----------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES
FROM INVESTMENT ACTIVITIES.......................... (1,682,097) 8,467,724
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period............................... 49,952,904 41,485,180
----------- -----------
End of the Period (Including accumulated undistributed
net investment income of ($609,037) and ($735,678),
respectively)....................................... $48,270,807 $49,952,904
=========== ===========
See Notes to Financial Statements 15
VAN KAMPEN HIGH INCOME TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED
JUNE 30, --------------------
2004 2003 2002
----------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD................. $ 3.64 $ 3.03 $ 3.78
-------- -------- --------
Net Investment Income.................................. .21 .41 .47
Net Realized and Unrealized Gain/Loss.................. (.13) .59 (.69)
Common Share Equivalent of Distributions Paid to
Preferred Shareholders:
Net Investment Income.................................. (.02) (.03) (.06)
-------- -------- --------
Total from Investment Operations......................... .06 .97 (.28)
Distributions Paid to Common Shareholders:
Net Investment Income.................................. (.18) (.35) (.46)
Return of Capital Distributions........................ -0- (.01) (.01)
-------- -------- --------
NET ASSET VALUE, END OF THE PERIOD....................... $ 3.52 $ 3.64 $ 3.03
======== ======== ========
Common Share Market Price at End of the Period........... $ 3.75 $ 4.16 $ 3.10
Total Return (a)......................................... -5.87%* 47.66% -22.99%
Net Assets Applicable to Common Shares at End of the
Period (In millions)................................... $ 48.3 $ 50.0 $ 41.5
Ratio of Expenses to Average Net Assets Applicable to
Common Shares (b)...................................... 2.00% 2.10% 2.15%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (b)........................ 11.49% 12.36% 14.42%
Portfolio Turnover....................................... 37%* 73% 82%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including
Preferred Shares (b)................................... 1.14% 1.16% 1.12%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (d)........................ 10.59% 11.38% 12.75%
SENIOR SECURITIES:
Total Preferred Shares Outstanding....................... 376 376 376
Asset Coverage Per Preferred Share (e)................... $228,413 $232,928 $210,413
Involuntary Liquidating Preference Per Preferred Share... $100,000 $100,000 $100,000
Average Market Value Per Preferred Share................. $100,000 $100,000 $100,000
* Non-Annualized
(a)Total return assumes an investment at the common share market price at the
beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Trust's dividend reinvestment plan, and sale of
all shares at the closing common share market price at the end of the period
indicated.
(b)Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(c)As required, effective January 1, 2001, the Trust has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on fixed income securities. The effect of this change for
the year ended December 31, 2001 was to decrease net investment income per
share by $.02, increase net realized and unrealized gains and losses per
share by $.02 and decrease the ratio of net investment income to average net
assets applicable to common shares by .38%. Per share, ratios and
supplemental data for periods prior to December 31, 2001 have not been
restated to reflect this change in presentation.
(d)Ratios reflect the effect of dividend payments to preferred shareholders.
(e)Calculated by subtracting the Trust's total liabilities (not including the
preferred shares) from the Trust's total assets and dividing this by the
number of preferred shares outstanding.
16
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------
2001 (c) 2000 1999 1998 1997 1996 1995 1994
------------------------------------------------------------------------------------------
$ 4.22 $ 5.10 $ 5.86 $ 6.47 $ 6.35 $ 6.19 $ 5.62 $ 6.74
-------- -------- -------- -------- -------- -------- -------- --------
.71 .85 .88 .91 .93 .94 .98 1.00
(.44) (.85) (.75) (.58) .13 .15 .54 (.98)
(.15) (.26) (.22) (.24) (.24) (.23) (.25) (.19)
-------- -------- -------- -------- -------- -------- -------- --------
.12 (.26) (.09) .09 .82 .86 1.27 (.17)
(.56) (.61) (.67) (.70) (.70) (.70) (.70) (.95)
-0- (.01) -0- -0- -0- -0- -0- -0-
-------- -------- -------- -------- -------- -------- -------- --------
$ 3.78 $ 4.22 $ 5.10 $ 5.86 $ 6.47 $ 6.35 $ 6.19 $ 5.62
======== ======== ======== ======== ======== ======== ======== ========
$ 4.54 $ 4.125 $ 4.50 $ 6.375 $ 7.375 $ 6.75 $ 6.375 $ 5.50
23.76% 4.08% -21.20% -4.33% 20.29% 17.34% 29.17% -23.22%
$ 51.8 $ 57.9 $ 70.0 $ 80.4 $ 88.7 $ 87.0 $ 84.8 $ 77.1
1.98% 1.95% 1.92% 1.85% 1.76% 1.87% 1.92% 1.96%
16.80% 18.05% 16.13% 14.56% 14.60% 15.32% 16.39% 16.33%
64% 62% 57% 65% 102% 92% 119% 110%
1.07% 1.04% 1.07% 1.09% 1.05% 1.11% 1.12% 1.16%
13.32% 12.48% 12.09% 10.77% 10.90% 11.58% 12.16% 13.31%
450 500 588 588 588 588 588 588
$215,081 $215,271 $219,005 $236,742 $250,850 $247,974 $244,242 $231,106
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
See Notes to Financial Statements 17
VAN KAMPEN HIGH INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2004 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen High Income Trust (the "Trust") is registered as a diversified,
closed-end management investment company under the Investment Company Act of
1940, as amended. The Trust's investment objective is to provide high current
income, while seeking to preserve shareholders' capital through investment in a
professionally managed diversified portfolio of high yield, fixed income
securities. The Trust commenced investment operations on January 26, 1989.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principals
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Investments are stated at value using market quotations or
indications of value obtained from an independent pricing service. For those
securities where quotations or prices are not available, valuations are obtained
from yield data relating to instruments or securities with similar
characteristics in accordance with procedures established in good faith by the
Board of Trustees. Short-term securities with remaining maturities of 60 days or
less are valued at amortized cost, which approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
segregate assets with the custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
after payment is made. At June 30, 2004, the Trust had $430,000 of when-issued
and delayed delivery purchase commitments.
The Trust may invest in repurchase agreements, which are short-term
investments in which the Trust acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Trust may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Trust will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank. The seller
is required to maintain the value of the underlying security at not less than
the repurchase proceeds due the Trust.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
discount is accreted and premium is amortized over the expected life of each
applicable security. Other income is comprised primarily of consent fees.
Consent fees are earned as compensation for agreeing to changes in the terms of
debt instruments.
18
VAN KAMPEN HIGH INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2004 (UNAUDITED) continued
D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At December 31, 2003, the Trust had an accumulated capital loss carry
forward for tax purposes of $32,734,922 which expires between December 31, 2007
and December 31, 2011.
At June 30, 2004, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $86,807,302
===========
Gross tax unrealized appreciation........................... $ 3,734,521
Gross tax unrealized depreciation........................... (5,395,470)
-----------
Net tax unrealized depreciation on investments.............. $(1,660,949)
===========
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually to common shareholders. Distributions from net
realized gains for book purposes may include short-term capital gains which are
included in ordinary income for tax purposes.
For tax purposes, the determination of a return of capital distribution is
made at the end of the Fund's fiscal year. Therefore, while it is likely that a
portion of the Fund's distribution will ultimately be characterized as a return
of capital for tax purposes, no such designation has been made for the six
months ended June 30, 2004.
The tax character of distributions paid during the year ended December 31,
2003 was as follows:
Distributions paid from:
Ordinary income........................................... $5,315,792
Return of capital......................................... 122,439
----------
$5,438,231
==========
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Trust for an annual fee payable
monthly of .70% of the average daily net assets of the Trust.
For the six months ended June 30, 2004, the Trust recognized expenses of
approximately $2,500 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Trust, of which a trustee of the Trust
is an affiliated person.
Under separate Accounting Services and Legal Services agreements, the
Adviser provides accounting and legal services to the Trust. The Adviser
allocates the cost of such services to each trust. For the six months ended June
30, 2004, the Trust recognized expenses of approximately $12,800 representing
Van Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen")
cost of providing accounting and legal services to the Trust,
19
VAN KAMPEN HIGH INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2004 (UNAUDITED) continued
which are reported as part of "Other" and "Legal" expenses, respectively, in the
Statement of Operations.
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Trust.
The maximum annual benefit per trustee under the plan is $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $32,302,735 and $29,947,175,
respectively.
4. AUCTION MARKET PREFERRED SHARES
The Trust has outstanding 376 shares of Auction Market Preferred Shares ("AMPS")
at a liquidation value of $100,000 per share. Dividends are cumulative and the
rate is currently reset through an auction process every 28 days. The rate in
effect on June 30, 2004 was 1.50%. During the six months ended June 30, 2004,
the rates ranged from 1.00% to 1.50%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense. The AMPS are redeemable at the option of the Trust in whole or in part
at a price of $100,000 per share plus accumulated and unpaid dividends. The
Trust is subject to certain asset coverage tests, and the AMPS are subject to
mandatory redemption if the tests are not met.
5. INDEMNIFICATIONS
The Trust enters into contracts that contain a variety of indemnifications. The
Trust's maximum exposure under these arrangements is unknown. However, the Trust
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
20
VAN KAMPEN HIGH INCOME TRUST
DIVIDEND REINVESTMENT PLAN
The Trust offers a Dividend Reinvestment Plan (the "Plan") in which Common
Shareholders may elect to have dividends and capital gains distributions
automatically reinvested in Common Shares of the Trust. The service is entirely
voluntary and you may join or withdraw at any time.
HOW TO PARTICIPATE
If you wish to elect to participate in the Plan and your shares are held in
your own name, call 1-800-341-2929 for more information and a brochure. If your
shares are held in the name of a brokerage firm, bank, or other nominee, you
should contact your nominee to see if it would participate in the Plan on your
behalf. If you wish to participate in the Plan, but your brokerage firm, bank,
or nominee is unable to participate on your behalf, you should request that your
shares be re-registered in your own name which will enable your participation in
the Plan.
HOW THE PLAN WORKS
State Street Bank and Trust Company, as your Plan Agent, serves as agent for
the Common Shareholders in administering the Plan. After the Trust declares a
dividend or determines to make a capital gains distribution, the Plan Agent
will, as agent for the participants, receive the cash payment and use it to buy
Common Shares in the open market, on the New York Stock Exchange or elsewhere,
for the participants' accounts. The Trust will not issue any new Common Shares
in connection with the Plan. All reinvestments are in full and fractional Common
Shares, carried to three decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or capital gains distribution paid subsequent to written
notice of the change sent to all Common Shareholders of the Trust at least 90
days before the record date for the dividend or distribution. The Plan also may
be amended or terminated by the Plan Agent, with the written consent of the
Trust, by providing at least 90 days written notice to all Participants in the
Plan.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
21
VAN KAMPEN HIGH INCOME TRUST
DIVIDEND REINVESTMENT PLAN continued
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or capital gains distributions.
RIGHT TO WITHDRAW
You may withdraw from the Plan at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company. If you withdraw, you will receive,
without charge, a share certificate issued in your name for all full Common
Shares credited to your account under the Plan, and a cash payment will be made
for any fractional Common Share credited to your account under the Plan. You may
again elect to participate in the Plan at any time by calling 1-800-341-2929 or
writing to the Trust at:
2800 Post Oak Blvd.
Houston, TX 77056
Attn: Closed-End Funds
22
VAN KAMPEN HIGH INCOME TRUST
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
J. MILES BRANAGAN
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUSAN H. WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK AND TRUST COMPANY
c/o EquiServe
P.O. Box 43011
Providence, Rhode Island 02940-3011
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
23
VAN KAMPEN HIGH INCOME TRUST
RESULTS OF SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Trust was held on June 23, 2004, where
shareholders voted on the election of trustees.
With regard to the election of the following trustees by common shareholders of
the Trust:
# OF SHARES
------------------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------------
R. Craig Kennedy.......................................... 11,120,821 170,386
Jack E. Nelson............................................ 11,118,788 172,419
Richard F. Powers, III.................................... 11,128,333 162,874
With regards to the election of the following trustees by preferred shareholders
of the Trust:
# OF SHARES
------------------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------------
Hugo F. Sonnenschein...................................... 375 1
The other trustees of the Trust whose terms did not expire in 2004 are David C.
Arch, J. Miles Branagan, Jerry D. Choate, Rod Dammeyer, Linda Hutton Heagy,
Howard J Kerr, Mitchell M. Merin, Wayne W. Whalen and Susan H. Woolsey.
24
Van Kampen
Privacy Notice
The Van Kampen companies and investment products* respect your right to privacy.
We also know that you expect us to conduct and process your business in an
accurate and efficient manner. To do so, we must collect and maintain certain
nonpublic personal information about you. This is information we collect from
you on applications or other forms, and from the transactions you conduct with
us, our affiliates, or third parties. We may also collect information you
provide when using our web site, and text files (also known as "cookies") may be
placed on your computer to help us to recognize you and to facilitate
transactions you initiate. We do not disclose any nonpublic personal information
about you or any of our former customers to anyone, except as permitted by law.
For instance, so that we may continue to offer you Van Kampen investment
products and services that meet your investing needs, and to effect transactions
that you request or authorize, we may disclose the information we collect to
companies that perform services on our behalf, such as printers and mailers that
assist us in the distribution of investor materials. These companies will use
this information only for the services for which we hired them, and are not
permitted to use or share this information for any other purpose. To protect
your nonpublic personal information internally, we permit access to it only by
authorized employees, and maintain physical, electronic and procedural
safeguards to guard your nonpublic personal information.
* Includes Van Kampen Investments Inc., Van Kampen Asset Management, Van
Kampen Advisors Inc., Van Kampen Funds Inc., Van Kampen Investor Services
Inc., Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the
many Van Kampen mutual funds and Van Kampen unit investment trusts.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
(VAN KAMPEN INVESTMENTS LOGO)
Copyright (C)2004 Van Kampen
Funds Inc. All rights reserved.
Member NASD/SIPC. 902, 911, 104
VIT SAR 8/04 RN04-01501P-Y06/04
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. Controls and Procedures
(a) The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11. Exhibits.
(a) Code of Ethics -- Not applicable for semi-annual reports.
(b)(1) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(b)(2) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen High Income Trust
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: August 19, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: August 19, 2004
By: /s/ James M. Dykas
----------------------
Name: James M. Dykas
Title: Principal Financial Officer
Date: August 19, 2004