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 811-08743
Van Kampen Senior Income Trust
(Exact name of registrant as specified in charter)
522 Fifth Avenue, New York, New York 10036
(Address of principal executive offices) (Zip code)
Jerry W. Miller
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 7/31
Date of reporting period: 7/31/08
Item 1. Reports to Shareholders.
The Trust's annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Senior Income Trust performed during the annual period. The portfolio
management team will provide an overview of the market conditions and
discuss some of the factors that affected investment performance during
the reporting period. In addition, this report includes the trust's
financial statements and a list of trust investments as of July 31, 2008.
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.
AN INVESTMENT IN SENIOR LOANS IS SUBJECT TO CERTAIN RISKS SUCH AS LOAN
DEFAULTS AND ILLIQUIDITY DUE TO INSUFFICIENT COLLATERAL BACKING.
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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 7/31/08
SENIOR INCOME TRUST
SYMBOL: VVR
------------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (6/23/98) 3.38% 1.72%
10-year 3.35 1.67
5-year 2.77 0.10
1-year -11.59 -24.32
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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 TRUST SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
The NAV per share is determined by dividing the value of the trust's portfolio
securities, cash and other assets, less all liabilities and preferred shares, 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.
1
Trust Report
FOR THE 12-MONTH PERIOD ENDED JULY 31, 2008
MARKET CONDITIONS
The U.S. economic picture weakened over the course of the 12-month reporting
period as the pace of growth slowed while inflationary pressures, particularly
rising food and oil prices, began to grow. These factors, coupled with the
declining housing market, weighed on consumers and translated into slower
earnings growth for many corporate borrowers in the senior loan market as demand
for their products and services declined. At the same time, the dislocations
stemming from the problems in the subprime mortgage sector permeated the capital
markets, leading to a significant contraction in credit and liquidity and
considerable losses for many financial firms.
The Federal Reserve (the "Fed") took several steps to help support both the
economy and market liquidity, including reducing the target federal funds rate a
total of 325 basis points during the period, bringing the rate to 2.0 percent by
the end of April. In the final months of the period the Fed held rates steady in
an effort to limit inflationary pressures, although concerns of an economic
recession remained.
In the aggregate, it was a volatile and challenging period for the financial
markets. The uncertain environment prompted many investors to shun riskier
assets, which resulted in diminished performance for most sectors of the market.
The senior loan market faced additional challenges. While demand for senior
loans was declining, the supply of loans coming to market--particularly in the
fourth quarter of 2007--was rising, creating a technical demand/supply imbalance
that put considerable pressure on prices, which reached a low for the period in
March. Tighter lending standards and increased selling by retail and relative
value investors also contributed to price declines. In April, the technical
picture began to improve as large underwriting banks made substantial progress
working down the inventory of underwritten but not yet syndicated leveraged
loans while low loan prices attracted new money into the asset class from
private equity and credit opportunity funds. As a result, loan prices rose,
reaching their highest level for the calendar year so far in mid-June. At the
end of June, however, the market reversed course again due in large part to
concerns about underlying credit fundamentals amid negative news regarding the
auto industry and mortgage lenders Fannie Mae (FNMA) and Freddie Mac (FHLMC).
Although the default rate in the senior loan market increased to approximately
three percent by period end, it still remained below the historical average.
Given the weaker economic outlook, we anticipate defaults may continue to rise,
but we believe the senior loan asset class remains compelling due to the senior
secured nature of loans and their attractive current yields.
2
PERFORMANCE ANALYSIS
The Trust's return can be calculated based 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 and preferred shares, 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, as they did during the reporting
period. For the 12 months ended July 31, 2008, the Trust returned -24.32 percent
on a market price basis and -11.59 percent on an NAV basis.
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED JULY 31, 2008
---------------------------------------
BASED ON
BASED ON NAV MARKET PRICE
-11.59% -24.32%
---------------------------------------
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. 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.
We continued to adhere to our research-intensive investment process, employing a
bottom-up asset selection process driven by thorough analysis of individual
company fundamentals, and have not relaxed our rigorous credit standards. We
believe this approach may enable us to limit our credit losses during this down
cycle and allow us to take advantage of opportunities that arise during volatile
periods such as that we are currently experiencing.
We continued to position the portfolio defensively, generally avoiding sectors
or industries that we believe are vulnerable to cyclical economic downturns. For
example, the Trust remained underweighted in the auto and airline industries
because of their susceptibility to high fuel prices. We made relatively few
changes to the portfolio during the reporting year, and as of the end of the
period, the Trust's largest sector weightings were Printing & Publishing;
Beverage, Food & Tobacco; and Hotels, Motels, Inns & Gaming.
The Trust remained fully invested in senior secured loans, and used a modest
amount of leverage which may allow us to enhance the Trust's yield while keeping
credit standards high. Leverage involves borrowing at a floating short-term rate
and reinvesting the proceeds at a higher rate. Unlike other fixed-income asset
classes, using leverage in conjunction with senior loans does not involve the
same degree of risk from rising short-term interest rates since the income from
senior loans adjusts to changes in interest rates, as do the rates which
determine the Trust's borrowing costs. (Similarly, should short-term rates fall,
borrowing costs would also decline.) While we believe this portfolio structure
(fully invested, modest leverage) adds value for shareholders over a full cycle,
it has been a drag on performance in the short term. Because the recent
3
market volatility has been driven as much by technical factors as by changes in
underlying fundamentals, we have not altered the use of leverage in the Trust as
we believe it is difficult to "time" technical events in the market. Therefore,
portfolio composition continues to be driven by fundamental credit research.
Although it has been a difficult period, we believe it has created attractive
investment opportunities. Loans coming to market today are offering better
spreads and stronger credit structures than we have seen in the past few years.
These more investor-friendly terms may lead to attractive risk/reward
characteristics for investors going forward. Current prices and yields in the
secondary market also offer compelling opportunities. In addition, merger and
acquisition activity continues, which has historically meant continued deal
flows for senior secured lenders. Going forward, we will remain focused on
ensuring the Trust has sufficient liquidity while maintaining a high quality,
well-diversified portfolio of issuers with stable cash flows, strong management
teams.
The Trust's procedure for reinvesting all dividends and distributions in common
shares is through purchases in the open market. This method helps support the
market value of the Trust's shares. In addition, we would like to remind you
that the Trustees have approved a procedure whereby the Trust may, when
appropriate, purchase shares in the open market or in privately negotiated
transactions at a price not above market value or net asset value, whichever is
lower at the time of purchase.
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 Trust in
the future.
4
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 7/31/08
Printing & Publishing 9.5%
Beverage, Food & Tobacco 7.6
Hotels, Motels, Inns & Gaming 7.4
Healthcare 6.7
Chemicals, Plastics & Rubber 4.5
Entertainment & Leisure 4.5
Finance 4.1
Business Equipment & Services 3.8
Broadcasting -- Cable 3.7
Containers, Packaging & Glass 3.2
Broadcasting -- Television 3.1
Automotive 3.0
Retail -- Stores 2.9
Utilities 2.8
Insurance 2.5
Buildings & Real Estate 2.5
Broadcasting -- Radio 2.3
Education & Child Care 2.3
Electronics 2.2
Non-Durable Consumer Products 2.1
Construction Material 1.8
Aerospace/Defense 1.7
Restaurants & Food Service 1.5
Medical Products & Services 1.4
Natural Resources 1.1
Textiles & Leather 1.1
Telecommunications -- Local Exchange Carriers 0.9
Telecommunications -- Wireless 0.9
Diversified Manufacturing 0.9
Home & Office Furnishings, Housewares & Durable Consumer
Products 0.8
Broadcasting -- Diversified 0.8
Paper & Forest Products 0.7
Retail -- Specialty 0.7
Banking 0.5
Health & Beauty 0.5
Ecological 0.5
Transportation -- Cargo 0.4
Machinery 0.4
Grocery 0.3
Transportation-Rail Manufacturing 0.3
Telecommunications -- Long Distance 0.3
Pharmaceuticals 0.2
Retail -- Oil & Gas 0.2
Mining, Steel, Iron & Non-Precious Metals 0.2
Durable Consumer Products 0.2
Transportation -- Personal 0.1
Farming & Agriculture 0.1
Personal & Miscellaneous Services 0.1
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Total Long-Term Investments 99.3
Short-Term Investments 0.7
-----
Total Investments 100.0%
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Summary of investments by industry
classification percentages are as a percentage of total investments. Securities
are classified by sectors that represent broad groupings of related industries.
Van Kampen is a wholly owned subsidiary of a global securities firm which is
engaged in a wide range of financial services including, for example, securities
trading and brokerage activities, investment banking, research and analysis,
financing and financial advisory services.
5
PORTFOLIO MANAGEMENT CHANGES
Van Kampen Senior Income Trust is managed by members of the Adviser's
Senior Loan Group, which currently includes Howard Tiffen, Senior Adviser
of the Adviser, Philip Yarrow, Executive Director and portfolio manager
of the Adviser, Gerard Fogarty, Vice President and assistant portfolio
manager of the Adviser, and Jeffrey Scott, Vice President and assistant
portfolio manager of the Adviser. Mr. Yarrow, who previously managed the
Trust with Christina Jamieson, is primarily responsible for the
day-to-day management of the Trust's portfolio. Mr. Tiffen is currently
associated with the Adviser and members of the Senior Loan Group in a
senior adviser capacity.
Mr. Yarrow joined the Adviser in 2005 and began managing the Trust in
March 2007. Mr. Yarrow has over 13 years of investment experience. Prior
to joining the Adviser, Mr. Yarrow was a credit analyst and a portfolio
manager at Bank One/JPMorgan. Mr. Yarrow received a bachelor's degree in
mathematics and economics from the University of Nottingham and an M.B.A.
in finance from Northwestern University. Mr. Yarrow also holds the
Chartered Financial Analyst designation.
Mr. Fogarty joined the Adviser in 2007 and began managing the Trust in
July 2008. Mr. Fogarty has approximately 11 years of investment
experience. From 2003 to 2007 and prior to joining the Adviser, Mr.
Fogarty was employed by JPMorgan and held a number of positions including
Director in the financial institutions group, and, most recently as a
Credit Executive in the commercial real estate group. Prior to joining
JPMorgan, Mr. Fogarty was employed as an Associate in the financial
institutions group at Bank of America. Mr. Fogarty received a B.S. from
Indiana University and an M.B.A. from the University of Chicago Graduate
School of Business.
Mr. Scott joined the Adviser in 2005 and began managing the Trust in July
2008. Mr. Scott has approximately 18 years of investment industry
experience. Prior to joining the Adviser, Mr. Scott was employed by State
Farm Insurance Companies where he served as an Assistant Vice President
in the Mutual Fund Group responsible for product development and strategy
as well as a Regional Vice President for Sales for the Financial Services
Division. Mr. Scott received a B.S. from Elmhurst College and an M.B.A.
from the University of Chicago Graduate School of Business. Mr. Scott
also holds the Chartered Financial Analyst designation.
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
6
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, D.C.
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) 341-2929.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the Trust's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 341-2929 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 Trust 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.
7
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
At meetings held on April 15, 2008 and May 8, 2008, the Board of Trustees, and
the independent trustees voting separately, considered and ultimately determined
that the terms of the investment advisory agreement are fair and reasonable and
approved the continuance of the investment advisory agreement as being in the
best interests of the Fund and its shareholders. In making its determination,
the Board of Trustees considered materials that were specifically prepared by
the investment adviser at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to assist the Board,
relating to the investment advisory agreement review process. The Board also
considered information received periodically about the portfolio, performance,
the investment strategy, portfolio management team and fees and expenses of the
Fund. The Board of Trustees considered the investment advisory agreement over a
period of several months and the trustees held sessions both with the investment
adviser and separate from the investment adviser in reviewing and considering
the investment advisory agreement.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
breakpoints in the Fund's investment advisory fee schedule. The Board of
Trustees considered comparative advisory fees of the Fund and other investment
companies and/or other products at different asset levels, and considered the
trends in the industry. The Board of Trustees evaluated other benefits the
investment adviser and its affiliates derive from their relationship with the
Fund. The Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees, evaluated
all of the foregoing and does not believe any single factor or group of
8
factors control or dominate the review process, and, after considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund and changes made
in the Fund's portfolio management team and the Fund's portfolio management
strategy over time. The trustees also discuss certain other services which are
provided on a cost-reimbursement basis by the investment adviser or its
affiliates to the Van Kampen funds including certain accounting, administrative
and legal services. The Board has determined that the nature, extent and quality
of the services provided by the investment adviser support its decision to
approve the investment advisory agreement.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report. The
trustees discuss with the investment adviser the level of advisory fees for this
Fund relative to comparable funds and other products advised by the adviser and
others in the marketplace. The trustees review not only the advisory fees but
other fees and expenses (whether paid to the adviser, its affiliates or others)
and the Fund's overall expense ratio. The Board has determined that the
performance, fees and expenses of the Fund support its decision to approve the
investment advisory agreement.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser. These profitability reports are
put together by the investment adviser with the oversight of the Board. The
trustees discuss with the investment adviser its revenues and expenses,
including among other things, revenues for advisory services, portfolio
management-related
9
expenses, revenue sharing arrangement costs and allocated expenses both on an
aggregate basis and per fund. The Board has determined that the analysis of the
investment adviser's expenses and profitability support its decision to approve
the investment advisory agreement.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
of the Fund and how that relates to the Fund's expense ratio and particularly
the Fund's advisory fee rate. In conjunction with its review of the investment
adviser's profitability, the trustees discuss with the investment adviser how
more (or less) assets can affect the efficiency or effectiveness of managing the
Fund's portfolio and whether the advisory fee level is appropriate relative to
current asset levels and/or whether the advisory fee structure reflects
economies of scale as asset levels change. The Board has determined that its
review of the actual and potential economies of scale of the Fund support its
decision to approve the investment advisory agreement.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory agreement.
10
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
VARIABLE RATE** SENIOR LOAN INTERESTS 176.9%
AEROSPACE/DEFENSE 3.0%
$ 9,636 Alion Science and
Technology Corp., Term
Loan....................... 5.37 to 5.49% 02/06/13 $ 8,190,474
2,634 Apptis, Inc., Term Loan.... 5.72 to 6.06 12/20/12 2,317,785
2,170 Atlantic Marine Services,
Term Loan.................. 6.00 03/22/14 2,083,104
3,341 DeCrane Aircraft Holdings,
Inc., Term Loan............ 5.54 02/21/13 3,090,724
8,027 IAP Worldwide Services,
Inc., Term Loan (a)........ 8.25 to 10.50 12/30/12 to 06/30/13 6,291,652
4,416 ILC Industries, Inc., Term
Loan....................... 4.80 02/24/12 4,217,280
2,677 Primus International, Inc.,
Term Loan.................. 4.96 06/07/12 2,436,215
1,086 Tri-Star Electronics
International, Term Loan... 5.80 to 6.11 02/02/13 966,762
4,819 Vangent, Inc., Term Loan... 4.64 02/14/13 4,530,168
625 Wesco Aircraft Hardware
Corp., Term Loan........... 8.56 03/28/14 610,547
--------------
34,734,711
--------------
AUTOMOTIVE 5.4%
3,283 Acument Global
Technologies, Inc., Term
Loan....................... 6.30 08/11/13 3,086,304
2,992 Dana Corp., Term Loan...... 6.75 01/31/15 2,776,463
1,714 Delphi Corp., Term Loan.... 7.25 12/31/08 1,708,608
21,865 Ford Motor Co., Term Loan.. 5.46 12/15/13 17,273,642
3,403 Heartland Automotive
Holdings, Inc., Term Loan
(b)........................ 7.75 02/27/12 2,296,829
7,790 Metokote Corp., Term
Loan....................... 5.47 to 5.80 11/27/11 7,322,722
2,180 Navistar International
Corp., Revolving Credit
Agreement.................. 5.90 to 6.05 01/19/12 2,024,675
5,995 Navistar International
Corp., Term Loan........... 6.05 to 6.29 01/19/12 5,567,856
611 Performance Transportation
Services, Inc., Revolving
Credit Agreement (b) (c)
(d)........................ 7.29 01/26/12 183,446
420 Performance Transportation
Services, Inc., Term Loan
(b) (c) (d)................ 9.25 01/26/12 125,971
6,930 Polypore, Inc., Term
Loan....................... 4.72 07/03/14 6,514,200
1,105 Precision Partners, Inc.,
Term Loan.................. 10.00 10/27/13 1,091,445
See Notes to Financial Statements 11
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
AUTOMOTIVE (CONTINUED)
$ 7,355 Sensata Technologies, Inc.,
Term Loan.................. 4.41 to 4.54% 04/27/13 $ 6,429,432
2,000 United Components, Inc.,
Term Loan.................. 4.58 to 4.72 06/30/12 1,930,000
4,854 Veyance Technologies, Inc.,
Term Loan.................. 4.97 to 5.30 07/31/14 4,307,703
--------------
62,639,296
--------------
BANKING 1.0%
13,455 Dollar Financial Corp.,
Term Loan.................. 5.56 to 5.81 10/30/12 11,436,607
--------------
BEVERAGE, FOOD & TOBACCO 13.6%
7,759 Acosta Sales Co., Inc.,
Term Loan (e).............. 4.72 07/28/13 7,269,194
3,301 BE Foods Investments, Inc.,
Term Loan (a).............. 7.17 07/11/12 3,045,375
5,953 Birds Eye Foods, Inc., Term
Loan....................... 4.56 03/22/13 5,685,379
11,298 Coleman Natural Foods, LLC,
Term Loan (a).............. 6.96 to 12.16 08/22/12 to 08/22/13 10,062,967
7,412 Culligan International Co.,
Term Loan.................. 4.71 to 5.05 11/24/12 5,207,248
4,913 DCI Cheese Co., Term Loan.. 8.05 08/07/13 4,298,437
37,582 Dole Food Co., Inc., Term
Loan....................... 4.50 to 6.00 04/12/13 34,748,767
10,290 DS Waters of America, Inc.,
Term Loan.................. 4.71 10/25/12 9,620,976
4,950 DSW Holdings, Inc., Term
Loan....................... 6.47 03/07/12 4,306,500
9,964 Farley's & Sathers Candy
Co., Inc., Term Loan....... 6.53 to 11.12 06/15/10 to 03/24/11 9,556,880
5,903 FSB Holdings, Inc., Term
Loan....................... 4.94 to 8.44 09/29/13 to 03/29/14 5,269,162
6,462 Bellisio Foods, Inc., Term
Loan....................... 5.75 04/02/11 6,203,410
6,210 OSI Group, LLC, Term
Loan....................... 4.80 09/02/11 6,132,830
6,665 PBM Products, LLC, Term
Loan....................... 4.97 09/29/12 6,164,964
8,495 Pierre Foods, Inc., Term
Loan (b)................... 6.97 06/30/10 6,774,511
12 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
BEVERAGE, FOOD & TOBACCO (CONTINUED)
$36,405 Pinnacle Foods Finance,
LLC, Term Loan............. 5.21 to 5.56% 04/02/14 $ 33,340,877
1,093 Smart Balance, Inc., Term
Loan....................... 5.80 05/18/14 1,049,455
--------------
158,736,932
--------------
BROADCASTING--CABLE 6.6%
4,184 Cequel Communications, LLC,
Term Loan.................. 4.69 to 6.00 11/05/13 3,892,763
56,250 Charter Communications
Operating, LLC, Term
Loan....................... 4.67 to 5.30 03/06/14 to 09/06/14 49,335,163
744 CW Media Holdings, Inc.,
(Canada) Term Loan......... 6.05 02/15/15 712,739
7,383 Knology, Inc., Term Loan... 5.04 06/30/12 6,866,173
8,502 MCC Iowa, LLC, Term Loan... 3.96 to 4.22 03/31/10 to 01/31/15 7,843,569
2,364 Mediacom Illinois, LLC,
Term Loan.................. 4.21 to 4.22 01/31/15 2,168,970
7,444 RCN Corp., Term Loan....... 5.06 05/25/14 6,705,533
--------------
77,524,910
--------------
BROADCASTING--DIVERSIFIED 1.4%
8,438 Alpha Topco, Ltd., (United
Kingdom) Term Loan (e)..... 4.71 to 6.63 12/31/13 to 06/30/14 7,677,705
4,843 Cumulus Media, Inc., Term
Loan....................... 4.21 06/11/14 4,181,469
4,607 NEP II, Inc., Term Loan.... 5.05 02/16/14 4,180,658
--------------
16,039,832
--------------
BROADCASTING--RADIO 4.1%
5,000 Citadel Broadcasting Corp.,
Term Loan.................. 4.10 to 4.44 06/12/14 4,100,000
6,781 CMP KC, LLC, Term Loan..... 6.50 05/03/11 4,407,530
14,812 CMP Susquehanna Corp., Term
Loan....................... 4.49 05/05/13 12,220,124
6,042 Emmis Operating Co., Term
Loan....................... 4.46 to 4.80 11/01/13 5,335,584
1,759 LBI Media, Inc., Term
Loan....................... 3.96 03/31/12 1,521,968
4,874 Multicultural Radio
Broadcasting, Inc., Term
Loan....................... 5.42 to 8.42 12/18/12 to 06/18/13 4,536,181
8,023 Nextmedia Operating, Inc.,
Term Loan (a).............. 6.46 to 10.46 11/15/12 to 11/15/13 7,114,233
2,624 Regent Broadcasting, LLC,
Term Loan.................. 5.05 11/21/13 2,381,076
8,346 Spanish Broadcasting
Systems, Inc., Term Loan... 4.56 06/11/12 6,551,708
--------------
48,168,404
--------------
See Notes to Financial Statements 13
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
BROADCASTING--TELEVISION 5.5%
$ 970 Barrington Broadcasting,
LLC, Term Loan............. 4.97 to 5.05% 08/12/13 $ 907,009
3,000 FoxCo Acquisition, LLC,
Term Loan.................. 7.25 07/14/15 2,955,000
4,605 Newport Television, LLC,
Term Loan.................. 8.00 09/14/16 4,346,415
4,135 NV Broadcasting, LLC,
Term Loan.................. 5.69 11/01/13 3,732,214
3,632 Sunshine Acquisition, Ltd.,
Term Loan.................. 4.79 03/20/12 3,159,777
58,852 Univision Communications,
Inc., Term Loan............ 4.71 to 5.05 03/29/09 to 09/29/14 48,855,361
--------------
63,955,776
--------------
BUILDINGS & REAL ESTATE 4.5%
2,370 California Coastal
Communities, Inc., Term
Loan....................... 5.22 09/15/11 2,157,064
4,836 Contech Construction
Products, Inc., Term
Loan....................... 4.47 to 4.77 01/31/13 4,231,649
2,500 El Ad IDB Las Vegas, LLC,
Term Loan.................. 5.21 02/10/09 2,312,500
20,820 Ginn LA CS Borrower, LLC,
Term Loan (a)(c)........... 5.97 to 13.50 06/08/11 to 06/08/12 7,867,200
6,583 Kuilima Resort Co., Term
Loan (c)................... 19.46 to 27.48 10/01/08 to 09/30/11 795,665
5,200 Kyle Acquisition Group,
LLC, Term Loan (c)......... 6.00 07/20/09 to 07/20/11 1,807,000
602 Lake at Las Vegas Joint
Venture, LLC, Revolving
Credit Agreement (a) (b)
(c)........................ 16.10 06/20/12 120,370
1,000 Lake at Las Vegas Joint
Venture, LLC, Term Loan (b)
(f)........................ 12.00 03/17/08 1,000,000
5,164 Lake at Las Vegas Joint
Venture, LLC, Term Loan (a)
(b) (c).................... 16.10 06/20/12 1,032,810
3,926 Landsource Communities
Development, LLC, Term Loan
(a) (b) (c)................ 8.25 05/31/09 2,708,959
4,224 LNR Property Corp., Term
Loan....................... 6.03 07/12/11 3,407,362
4,208 NLV Holdings, LLC, Term
Loan....................... 6.46 to 10.71 05/09/11 to 05/30/12 1,854,075
4,938 Realogy Corp., Term Loan... 5.46 10/10/13 4,061,145
1,744 Shea Capital I, LLC, Term
Loan....................... 4.46 to 5.00 10/27/11 1,238,394
14 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
BUILDINGS & REAL ESTATE (CONTINUED)
$ 1,546 Shea Mountain House, LLC,
Term Loan.................. 4.46% 05/11/11 $ 1,190,482
3,908 South Edge, LLC, Term
Loan....................... 5.25 10/31/08 to 10/31/09 2,603,307
540 Standard Pacific Corp.,
Term Loan.................. 4.47 05/05/13 443,700
5,946 Tamarack Resorts, LLC, Term
Loan (c)................... 8.05 to 9.25 05/19/11 3,924,360
5,533 WCI Communities, Inc., Term
Loan....................... 7.72 12/23/10 5,034,928
5,260 Yellowstone Mountain Club,
LLC, Term Loan............. 4.84 09/30/10 4,457,724
--------------
52,248,694
--------------
BUSINESS EQUIPMENT & SERVICES 6.8%
5,509 Affinion Group, Inc.,
Term Loan (e).............. 4.96 to 5.18 10/17/12 5,286,588
1,638 Audio Visual Services
Corp., Term Loan........... 5.06 02/28/14 1,396,075
736 BakerCorp, Term Loan....... 4.71 to 5.27 05/08/14 675,867
4,097 First American Payment
Systems, LP, Term Loan..... 5.63 to 5.69 10/06/13 3,871,901
2,179 GSI Holdings, LLC, Term
Loan....................... 5.65 08/01/14 2,005,044
4,950 HydroChem Industrial
Services, Inc., Term
Loan....................... 4.97 07/12/13 4,776,750
1,149 Information Resources,
Inc., Term Loan............ 4.40 to 5.75 05/16/14 999,204
3,348 InfoUSA, Inc., Term Loan... 4.81 02/14/12 3,197,354
3,418 KAR Holdings, Inc., Term
Loan....................... 5.06 10/20/13 3,056,013
2,564 Katun Corp., Term Loan..... 8.30 06/30/09 2,461,049
8,062 NCO Financial Systems, Term
Loan....................... 6.89 to 7.06 05/15/13 7,845,650
27,418 Nielsen Finance, LLC, Term
Loan....................... 4.73 08/09/13 25,553,050
6,890 RGIS Services, LLC Term
Loan....................... 4.96 to 5.30 04/30/14 5,753,318
10,211 Sedgwick CMS Holdings,
Inc., Term Loan............ 5.05 01/31/13 9,726,373
1,980 SMG Holdings, Inc., Term
Loan....................... 5.63 to 6.19 07/27/14 1,861,200
1,418 Valassis Communications,
Inc., Term Loan............ 4.56 03/02/14 1,332,781
--------------
79,798,217
--------------
See Notes to Financial Statements 15
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
CHEMICALS, PLASTICS & RUBBER 8.1%
$ 1,027 Arizona Chemical Co., Term
Loan....................... 4.64% 02/28/13 $ 888,676
3,964 Becker-Underwood, Inc.,
Term Loan.................. 6.21 to 6.55 03/31/10 to 09/30/11 3,855,145
1,300 Bond US Holdings, Inc.,
Term Loan.................. 5.47 07/10/14 1,020,500
11,400 Brenntag Holdings GmbH &
Co. KG, (Germany) Term
Loan....................... 5.07 to 7.07 01/17/14 to 07/17/15 10,213,500
995 Cristal Inorganic Chemicals
US, Inc., Term Loan........ 5.05 05/15/14 843,263
9,839 Ferro Corp., Term Loan..... 4.47 to 4.80 06/06/12 9,371,296
4,119 Fibervisions Delaware
Corp., Term Loan........... 7.05 03/31/13 3,089,416
2,305 Foamex, LP, Term Loan...... 5.71 to 7.25 02/12/13 1,814,956
15,145 Hexion Specialty Chemicals,
Inc., Term Loan............ 5.06 05/05/13 13,213,731
5,005 Huntsman International,
LLC, Term Loan............. 4.21 04/19/14 4,707,236
8,562 Ineos Holdings, Ltd.,
(United Kingdom) Term
Loan....................... 4.88 to 5.38 12/16/13 to 12/23/14 7,160,180
2,450 ISP Chemco, Inc.,
Term Loan.................. 4.00 to 4.25 06/04/14 2,264,325
9,827 Kraton Polymers, LLC, Term
Loan....................... 4.50 05/12/13 9,316,982
1,250 Lyondell Chemical Co.,
Revolving Credit
Agreement.................. 5.97 12/20/13 968,750
4,156 Lyondell Chemical Co., Term
Loan....................... 7.00 12/20/14 3,492,405
3,100 MACDermid, Inc.,
Term Loan.................. 4.80 04/12/14 2,867,054
2,892 OMNOVA Solutions, Inc.,
Term Loan.................. 4.96 to 5.15 05/22/14 2,385,925
5,000 PQ Corp., Term Loan........ 5.92 to 6.05 07/30/14 4,701,565
896 Solutia, Inc., Term Loan... 8.50 02/28/14 853,804
4,975 Univar, Inc., Term Loan.... 5.80 10/11/14 4,578,557
4,474 Valley National Gases,
Inc., Term Loan............ 4.71 to 5.05 02/28/14 4,071,658
7,950 Wellman, Inc., Term Loan
(b) (c).................... 7.24 to 9.99 02/10/09 to 02/10/10 2,715,000
--------------
94,393,924
--------------
CONSTRUCTION MATERIAL 2.4%
11,019 AXIA, Inc., Term Loan...... 5.00 12/21/12 8,264,282
4,323 Beacon Sales Acquisition,
Inc., Term Loan............ 4.65 to 4.78 09/30/13 3,890,700
16 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
CONSTRUCTION MATERIAL (CONTINUED)
$ 9,789 Building Materials Corp. of
America, Term Loan......... 5.44 to 8.25% 02/22/14 to 09/15/14 $ 8,413,500
5,291 Building Materials Holding
Corp., Term Loan........... 7.30 to 7.50 11/10/11 4,127,348
1,500 Custom Building Products,
Inc., Term Loan............ 7.80 04/29/12 1,192,500
2,993 Panolam Industries
International, Inc., Term
Loan....................... 5.55 09/30/12 2,693,981
--------------
28,582,311
--------------
CONTAINERS, PACKAGING & GLASS 5.7%
3,119 Anchor Glass Container
Corp., Term Loan (e)....... 7.75 06/20/14 3,066,413
3,476 Berlin Packaging, LLC, Term
Loan....................... 5.46 to 5.96 08/17/14 3,250,282
5,382 Berry Plastics Group, Inc.,
Term Loan (e).............. 4.78 04/03/15 4,753,347
11,454 Consolidated Container Co.,
LLC, Term Loan............. 4.71 to 8.30 03/28/14 to 09/28/14 7,764,650
9,224 Graham Packaging Co., Term
Loan....................... 4.88 to 5.06 10/07/11 8,806,995
688 Graphic Packaging
International, Inc.,
Revolving Credit
Agreement.................. 4.71 to 5.04 05/16/13 639,375
6,223 Graphic Packaging
International, Inc., Term
Loan....................... 4.79 to 4.80 05/16/14 5,856,049
1,181 Kranson Industries, Inc.,
Revolving Credit
Agreement.................. 4.71 to 6.25 07/31/13 1,071,568
13,359 Kranson Industries, Inc.,
Term Loan.................. 5.05 07/31/13 12,424,190
5,885 Packaging Dynamics
Operating Co., Term Loan... 4.80 06/09/13 4,472,543
4,045 Pertus Sechzehnte GmbH,
(Germany) Term Loan........ 4.84 to 5.09 06/13/15 to 06/13/16 3,112,945
5,967 Smurfit-Stone Container
Corp., Revolving Credit
Agreement.................. 4.75 to 6.25 11/01/09 5,459,805
4,765 Tegrant Holding Corp., Term
Loan....................... 5.56 to 8.31 03/08/14 to 03/08/15 2,868,542
2,550 Unifrax Corp., Term Loan... 4.75 05/02/13 2,409,530
--------------
65,956,234
--------------
See Notes to Financial Statements 17
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING 1.6%
$ 2,486 Arnold Magnetic
Technologies Corp., Term
Loan....................... 8.56 to 10.25% 03/06/11 to 03/06/12 $ 2,435,817
4,500 Euramax International,
Inc., Term Loan............ 10.79 06/29/13 3,172,500
2,406 Jason, Inc., Term Loan..... 4.96 04/30/10 2,165,091
1,492 Mueller Water Products,
Inc., Term Loan............ 4.21 to 4.55 05/24/14 1,401,671
6,714 MW Industries, Inc., Term
Loan....................... 5.81 to 7.56 11/01/13 6,339,944
2,718 Wire Rope Corp. of America,
Inc., Term Loan............ 5.05 02/08/14 2,514,133
--------------
18,029,156
--------------
DURABLE CONSUMER PRODUCTS 0.3%
3,888 Brown Jordan International,
Inc., Term Loan............ 6.66 to 8.00 04/30/12 3,634,879
--------------
ECOLOGICAL 0.8%
1,471 Energy Solutions, LLC, Term
Loan....................... 4.71 05/28/13 1,437,630
1,751 Environmental Systems
Products Holdings, Term
Loan....................... 13.50 09/12/12 1,663,189
4,034 LVI Services, Inc.,
Term Loan.................. 7.67 to 7.80 11/16/11 3,398,805
1,650 Synagro Technologies, Inc.,
Term Loan.................. 7.44 10/02/14 1,130,250
2,278 Waste Services, Inc., Term
Loan....................... 5.15 03/31/11 2,263,474
--------------
9,893,348
--------------
EDUCATION & CHILD CARE 4.1%
6,000 Bright Horizons Family
Solutions, Inc., Term
Loan....................... 7.50 05/28/15 5,919,378
26,840 Cengage Learning Holdings
II, LP, Term Loan.......... 4.96 07/05/14 23,782,630
1,709 Educate, Inc., Term Loan... 5.05 to 8.06 06/14/13 to 06/14/14 1,561,067
6,170 Education Management, LLC,
Term Loan.................. 4.56 06/01/13 5,666,851
12,406 Nelson Education, Ltd.,
(Canada) Term Loan......... 5.30 07/05/14 11,010,547
--------------
47,940,473
--------------
18 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
ELECTRONICS 4.0%
$10,496 Dealer Computer Services,
Inc., Term Loan............ 4.80 to 8.30% 10/26/12 to 10/26/13 $ 9,757,565
1,439 Deutsche Connector Group,
(France) Term Loan......... 5.38 to 5.63 06/22/14 to 06/22/15 1,328,577
4,303 Edwards (Cayman Islands II)
Ltd., Term Loan............ 4.64 to 8.39 05/31/14 to 11/30/14 3,236,223
815 H3C Holdings, Ltd., (Cayman
Islands) Term Loan......... 5.63 09/28/12 704,975
4,913 Infor Enterprise Solutions
Holdings, Inc., Term
Loan....................... 6.55 07/28/12 4,101,938
1,382 Intergraph Corp.,
Term Loan.................. 4.65 05/29/14 1,319,503
7,371 Kronos, Inc., Term Loan.... 5.05 06/11/14 6,781,714
2,621 Network Solutions, LLC,
Term Loan.................. 4.97 to 5.31 03/07/14 2,201,605
2,462 Nuance Communications,
Inc., Term Loan............ 4.97 03/31/13 2,321,666
9,894 Open Solutions, Inc., Term
Loan....................... 5.15 01/23/14 8,781,332
588 Stratus Technologies, Inc.,
Term Loan.................. 6.55 03/29/11 464,520
296 Sungard Data Systems, Inc.,
Revolving Credit
Agreement.................. 4.46 to 6.00 08/11/11 267,441
3,841 Verint Systems, Inc., Term
Loan....................... 5.87 05/25/14 3,494,890
1,985 X-Rite, Inc., Term Loan.... 9.50 10/24/12 1,707,100
--------------
46,469,049
--------------
ENTERTAINMENT & LEISURE 8.0%
7,382 Bombardier Capital, Inc.,
Term Loan.................. 5.29 06/28/13 6,754,785
4,071 Cedar Fair, LP, Term
Loan....................... 4.46 to 6.00 08/30/12 3,839,792
2,407 Cinemark USA, Inc., Term
Loan....................... 4.43 to 4.93 10/05/13 2,275,285
8,741 Fender Musical Instruments
Corp., Term Loan........... 5.05 to 5.17 06/09/14 8,085,733
2,442 Gibson Guitar Corp., Term
Loan....................... 5.30 12/29/13 2,270,719
6,000 Hicks Sports Group, LLC,
Term Loan.................. 5.31 12/22/10 5,280,000
48,257 Metro-Goldwyn-Mayer
Studios, Inc., Term Loan... 6.05 04/08/12 37,036,940
4,871 Mets, LP, Term Loan........ 4.46 07/25/10 4,433,000
5,670 Panavision, Inc., Term
Loan....................... 6.15 to 6.30 03/30/11 4,819,669
2,056 Playcore Holdings, Inc.,
Term Loan.................. 5.31 to 6.50 02/21/14 1,871,272
See Notes to Financial Statements 19
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
ENTERTAINMENT & LEISURE (CONTINUED)
$ 5,187 Regal Cinemas, Inc., Term
Loan....................... 4.30% 10/27/13 $ 4,898,507
750 True Temper Sports, Inc.,
Revolving Credit
Agreement.................. 6.05 03/15/09 660,000
12,431 True Temper Sports, Inc.,
Term Loan.................. 5.89 to 8.30 03/15/11 to 06/30/11 11,056,895
--------------
93,282,597
--------------
FARMING & AGRICULTURE 0.2%
3,000 Wm. Bolthouse Farms, Inc.,
Term Loan.................. 8.30 12/16/13 2,865,000
--------------
FINANCE 7.3%
3,270 DCS Business Services,
Inc., Term Loan............ 8.50 to 11.25 02/04/11 to 08/04/11 2,831,151
27,845 First Data Corp., Term
Loan....................... 5.21 to 5.55 09/24/14 25,678,556
4,690 Grosvenor Capital
Management Holdings, LLP,
Term Loan.................. 4.46 to 4.68 12/05/13 4,479,004
6,144 iPayment, Inc., Term
Loan....................... 4.47 to 4.80 05/10/13 5,314,577
11,509 LPL Holdings, Inc., Term
Loan....................... 4.46 to 4.80 06/28/13 10,933,214
3,491 Metavante Corp.,
Term Loan.................. 4.62 11/03/14 3,277,411
10,267 National Processing Company
Group, Inc., Term Loan..... 5.47 to 9.30 09/29/12 to 09/29/14 8,527,750
3,325 Nuveen Investments, Inc.,
Term Loan.................. 5.46 11/13/14 3,083,937
10,244 Oxford Acquisition III,
Ltd., (United Kingdom) Term
Loan....................... 4.55 05/11/14 9,324,472
7,463 RJO Holdings Corp., Term
Loan....................... 5.47 to 9.22 07/12/14 to 07/12/15 4,787,188
7,301 Transfirst Holdings, Inc.,
Term Loan.................. 5.56 to 8.81 06/15/14 to 06/15/15 6,338,219
--------------
84,575,479
--------------
GROCERY 0.6%
7,544 Roundy's Supermarkets,
Inc., Term Loan............ 5.21 11/03/11 7,252,047
--------------
20 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
HEALTH & BEAUTY 1.0%
$ 6,125 American Safety Razor Co.,
Term Loan.................. 4.97 to 8.89% 07/31/13 to 01/30/14 $ 5,683,416
6,817 Marietta Intermediate
Holding Corp., Term Loan
(a)........................ 7.67 to 12.00 12/17/10 to 12/17/11 2,002,382
4,242 Philosophy, Inc., Term
Loan....................... 4.47 03/16/14 3,733,382
--------------
11,419,180
--------------
HEALTHCARE 12.1%
6,849 American Medical Systems,
Inc., Term Loan............ 4.94 07/20/12 6,455,480
7,425 Catalent Pharma Solutions,
Inc., Term Loan............ 5.05 04/10/14 6,515,438
10,922 Community Health Systems,
Inc., Term Loan............ 4.71 to 4.90 07/25/14 10,357,150
2,228 Concentra, Inc., Term
Loan....................... 5.05 06/25/14 1,932,356
5,347 CRC Health Group, Inc.,
Term Loan.................. 5.05 02/06/13 4,959,146
8,824 DSI Renal, Inc., Term
Loan....................... 5.05 03/31/13 7,632,541
1,041 Genoa Healthcare Group,
LLC, Term Loan............. 6.75 to 7.00 08/10/12 1,005,840
542 Golden Living, Term Loan... 5.21 03/14/11 510,768
8,165 Harlan Sprague Dawley,
Inc., Term Loan............ 4.96 to 6.50 07/11/14 7,634,700
8,438 HCA, Inc., Term Loan....... 4.30 to 5.05 11/17/12 to 11/17/13 7,934,922
7,409 HCR Healthcare, LLC, Term
Loan....................... 4.96 11/09/14 6,871,785
15,234 Health Management
Associates, Inc., Term
Loan....................... 4.55 02/28/14 14,115,460
5,948 Iasis Healthcare, LLC, Term
Loan....................... 4.46 03/15/14 5,558,577
10,890 Inverness Medical
Innovations, Inc., Term
Loan....................... 4.81 06/26/14 10,291,050
23,818 Multiplan, Inc., Term
Loan....................... 5.00 04/12/13 22,574,940
1,500 Select Medical Corp.,
Revolving Credit
Agreement.................. 4.96 to 5.37 02/24/11 1,271,250
2,941 Sterigenics International,
Inc., Term Loan............ 5.03 to 5.39 11/21/13 2,705,508
2,423 Sun Healthcare Group, Inc.,
Term Loan.................. 4.65 to 5.04 04/12/14 2,268,836
336 Surgical Care Affiliates,
LLC, Revolving Credit
Agreement.................. 5.05 06/29/13 278,880
11,880 Surgical Care Affiliates,
LLC, Term Loan............. 5.05 12/29/14 10,513,800
See Notes to Financial Statements 21
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
$ 5,750 United Surgical Partners
International, Inc., Term
Loan....................... 4.47 to 5.02% 04/19/14 $ 5,232,233
4,455 Viant Holdings, Inc., Term
Loan....................... 5.05 06/25/14 3,831,300
--------------
140,451,960
--------------
HOME & OFFICE FURNISHINGS, HOUSEWARES & DURABLE
CONSUMER PRODUCTS 1.5%
7,802 Generation Brands, LLC,
Term Loan.................. 7.13 to 9.06 12/20/12 to 06/20/13 4,395,399
125 Hunter Fan Co., Revolving
Credit Agreement........... 4.46 04/16/13 96,250
2,207 Hunter Fan Co., Term
Loan....................... 5.18 to 9.47 04/16/14 to 10/16/14 1,672,725
494 Lenox, Inc., Term Loan..... 7.30 to 7.31 04/20/13 357,969
2,617 Mattress Holdings Corp.,
Inc., Term Loan............ 4.72 01/18/14 1,897,282
11,100 National Bedding Co., LLC,
Term Loan.................. 7.46 08/31/12 7,936,500
1,250 Sealy Mattress Co.,
Revolving Credit
Agreement.................. 4.21 to 4.55 04/06/10 1,112,500
--------------
17,468,625
--------------
HOTELS, MOTELS, INNS & GAMING 13.2%
7,610 BLB Worldwide Holdings,
Inc., Term Loan (a)........ 6.72 to 7.19 08/23/11 to 07/18/12 4,988,194
11,434 Cannery Casino Resorts,
LLC, Term Loan............. 4.93 to 6.95 05/18/13 to 05/18/14 10,939,184
6,833 Golden Nugget, Inc., Term
Loan....................... 4.46 to 5.72 06/30/14 to 12/31/14 5,264,583
8,751 Greektown Casino, LLC, Term
Loan (b)................... 7.44 to 7.50 12/03/12 8,031,551
883 Greektown Holdings, LLC,
Term Loan.................. 9.75 06/01/09 887,202
6,667 Green Valley Ranch Gaming,
LLC, Term Loan............. 4.64 to 4.80 02/16/14 5,344,406
1,625 Greenwood Racing, Inc.,
Term Loan.................. 4.72 11/28/11 1,519,609
62,481 Harrah's Operating Co.,
Inc., Bridge Loan.......... 5.80 to 9.25 01/28/15 to 01/28/18 50,917,946
7,953 Isle of Capri Casinos,
Inc., Term Loan............ 4.55 07/26/14 6,886,371
22,709 Las Vegas Sands,
LLC/Venetian Casino, Term
Loan....................... 4.56 05/23/14 19,674,864
3,700 Magnolia Hill, LLC, Term
Loan....................... 5.72 10/30/13 3,478,000
22 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
HOTELS, MOTELS, INNS & GAMING (CONTINUED)
$ 8,962 New World Gaming Partners
Holdings, Ltd., Term
Loan....................... 5.28% 09/30/14 $ 7,741,360
2,315 Penn National Gaming, Inc,
Term Loan.................. 4.55 10/03/12 2,227,066
12,300 Venetian Macau, Ltd., Term
Loan....................... 5.06 05/25/12 to 05/26/13 11,893,657
6,667 Wynn Resorts, Ltd., Term
Loan....................... 4.72 06/21/10 6,233,333
7,997 Yonkers Racing Corp., Term
Loan....................... 10.50 08/12/11 7,956,916
--------------
153,984,242
--------------
INSURANCE 4.5%
5,624 Alliant Holdings I, Inc.,
Term Loan.................. 5.80 11/01/14 5,202,354
9,900 AmWins Group, Inc., Term
Loan....................... 4.96 to 5.15 06/08/13 8,068,500
653 Applied Systems, Inc., Term
Loan....................... 5.30 09/26/13 620,496
2,377 Audatex North America,
Inc., Term Loan............ 4.79 05/16/14 2,234,517
3,069 Conseco, Inc.,
Term Loan (e).............. 4.46 10/10/13 2,691,008
7,822 HMSC Holdings Corp., Term
Loan....................... 5.04 to 8.29 04/03/14 to 10/03/14 5,730,437
8,423 Mitchell International,
Inc., Term Loan............ 4.80 to 8.06 03/28/14 to 03/28/15 8,081,506
2,083 USI Holdings Corp.,
Revolving Credit
Agreement.................. 4.97 05/05/13 1,812,500
6,600 USI Holdings Corp., Term
Loan....................... 5.56 05/05/14 6,105,000
12,882 Vertafore, Inc., Term
Loan....................... 5.14 to 8.64 01/31/12 to 01/31/13 11,727,665
--------------
52,273,983
--------------
MACHINERY 0.7%
3,510 Gleason, Inc., Term Loan... 4.44 to 4.56 06/30/13 3,334,199
1,930 Goodman Global, Inc., Term
Loan....................... 7.50 02/13/14 1,909,494
2,978 Mold-Masters Luxembourg
Holdings SA, Term Loan..... 6.00 10/11/14 2,709,525
--------------
7,953,218
--------------
MEDICAL PRODUCTS & SERVICES 2.5%
2,340 Accellent, Inc., Term
Loan....................... 5.14 11/22/12 2,117,700
3,703 Advanced Medical Optics,
Inc., Term Loan............ 4.42 to 4.63 04/02/14 3,402,246
8,170 AGA Medical Corp., Term
Loan....................... 4.70 to 4.72 04/28/13 7,761,555
See Notes to Financial Statements 23
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES (CONTINUED)
$ 8,880 Carestream Health, Inc.,
Term Loan.................. 4.46 to 4.80% 04/30/13 $ 7,836,795
8,500 VWR Funding, Inc., Term
Loan....................... 4.96 06/29/14 7,724,375
--------------
28,842,671
--------------
MINING, STEEL, IRON & NON-PRECIOUS METALS 0.3%
947 John Maneely Co.,
Term Loan.................. 6.02 to 6.04 12/08/13 869,730
2,913 Novelis Corp., Term Loan... 4.81 07/06/14 2,776,673
--------------
3,646,403
--------------
NATURAL RESOURCES 2.0%
741 Boston Generating, LLC,
Revolving Credit Agreement
(e)........................ 5.05 12/20/13 692,313
15,828 Boston Generating, LLC,
Term Loan (e).............. 5.05 to 5.18 12/20/13 14,783,572
1,680 CDX Funding, LLC, Term Loan
(c)........................ 12.25 03/31/13 1,360,800
2,912 Dresser, Inc., Term Loan... 4.71 to 4.97 05/04/14 2,800,115
4,240 Western Refining, Inc.,
Term Loan.................. 7.75 05/30/14 3,842,909
--------------
23,479,709
--------------
NON-DURABLE CONSUMER PRODUCTS 3.8%
4,049 Amscan Holdings, Inc., Term
Loan....................... 4.89 to 5.05 05/25/13 3,562,900
6,441 Easton-Bell Sports, Inc.,
Term Loan.................. 4.39 to 4.40 03/16/12 5,853,350
9,311 Huish Detergents, Inc.,
Term Loan.................. 4.81 to 7.06 04/26/14 to 10/26/14 8,506,098
8,764 KIK Custom Products, Inc.,
Term Loan.................. 4.72 to 7.46 05/31/14 to 11/30/14 5,350,640
2,746 Mega Brands, Inc., (Canada)
Term Loan.................. 8.25 07/26/12 2,402,750
646 Spectrum Brands, Inc.,
Revolving Credit
Agreement.................. 6.47 03/30/13 578,879
12,770 Spectrum Brands, Inc., Term
Loan....................... 6.46 to 6.79 03/30/13 11,434,508
2,200 Targus Group International,
Inc., Term Loan............ 11.35 05/22/13 1,721,500
5,231 Yankee Candle Co., Inc.,
Term Loan.................. 4.46 to 4.81 02/06/14 4,734,455
--------------
44,145,080
--------------
24 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS 1.2%
$ 2,400 Ainsworth Lumber Co., Ltd.,
Term Loan.................. 7.50% 06/26/14 $ 2,133,000
2,410 Tidi Products, LLC, Term
Loan....................... 5.79 to 7.29 12/31/11 2,265,014
373 Verso Paper Holdings, LLC,
Term Loan.................. 9.03 02/01/13 310,797
7,606 White Birch Paper Co.,
(Canada) Term Loan......... 5.56 05/08/14 5,590,762
4,004 Xerium Technologies, Inc.,
Term Loan.................. 8.30 05/18/12 3,533,928
--------------
13,833,501
--------------
PERSONAL & MISCELLANEOUS SERVICES 0.2%
2,226 Omniflight Helicopters,
Inc., Term Loan............ 7.86 to 9.25 06/30/11 to 09/30/12 2,069,761
--------------
PHARMACEUTICALS 0.4%
4,478 Generics International,
Inc., Term Loan............ 6.30 10/31/14 4,208,850
--------------
PRINTING & PUBLISHING 17.1%
4,950 Advanstar Communications,
Inc., Term Loan............ 5.05 05/31/14 3,786,750
4,848 American Media Operations,
Inc., Term Loan............ 5.99 01/31/13 4,520,952
1,960 Ascend Media Holdings, LLC,
Term Loan.................. 6.68 to 6.81 01/31/12 1,029,023
1,929 Black Press Group, Ltd.,
(Canada) Term Loan......... 4.65 08/02/13 1,755,120
6,538 Canon Communications, LLC,
Term Loan.................. 5.46 05/31/11 6,341,868
1,583 Caribe Media, Inc., Term
Loan....................... 4.72 to 5.04 03/31/13 1,416,689
10,684 Cygnus Business Media,
Inc., Term Loan............ 6.46 to 6.79 07/13/09 10,149,562
2,500 Dex Media West, LLC, Term
Loan....................... 7.00 10/24/14 2,369,533
995 DRI Holdings, Inc.,
Term Loan.................. 5.81 07/03/14 885,622
11,298 Endurance Business Media,
Inc., Term Loan............ 5.22 to 9.72 07/26/13 to 01/26/14 9,003,938
1,624 Hanley-Wood, LLC, Term
Loan....................... 4.71 03/08/14 1,283,311
11,727 F&W Publications, Inc.,
Term Loan.................. 5.02 to 7.05 02/05/13 to 08/05/13 8,290,775
1,385 Gatehouse Media, Inc.,
Revolving Credit
Agreement.................. 4.46 to 6.00 02/28/14 900,250
See Notes to Financial Statements 25
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
PRINTING & PUBLISHING (CONTINUED)
$11,125 Gatehouse Media, Inc.,
Term Loan.................. 4.65 to 4.80% 08/28/14 $ 6,688,906
9,978 Haights Cross Operating
Co., Term Loan............. 6.18 to 7.18 08/20/08 9,678,753
5,418 Idearc, Inc., Term Loan.... 4.47 to 4.80 11/17/14 4,056,353
1,896 Intermedia Outdoor, Inc.,
Term Loan.................. 5.80 01/31/13 1,578,524
1,598 Knowledgepoint360 Group,
LLC, Term Loan............. 5.93 to 9.68 04/26/14 to 04/26/15 1,508,130
2,500 Local Insight Regatta
Holdings, Inc., Term
Loan....................... 7.75 04/23/15 2,281,250
3,393 MC Communications, LLC,
Term Loan.................. 4.97 to 5.52 12/31/10 1,781,188
4,167 MediaNews Group, Inc., Term
Loan....................... 5.75 to 6.25 12/30/10 to 08/02/13 3,444,266
13,362 Merrill Communications,
LLC, Term Loan............. 4.92 to 9.52 05/15/11 to 11/15/13 10,972,785
5,567 Network Communications,
Inc., Term Loan............ 4.81 to 5.18 11/30/12 4,870,807
8,496 Penton Media, Inc., Term
Loan....................... 4.71 to 7.80 02/01/13 to 02/01/14 6,425,125
477 Proquest CSA, LLC, Term
Loan....................... 5.14 to 5.30 02/09/14 455,217
3,703 Questex Media Group, Inc.,
Term Loan.................. 5.68 to 5.72 05/04/14 3,406,300
13,330 Reader's Digest
Association, Inc., Term
Loan....................... 4.46 to 4.68 03/02/14 11,263,937
1,118 SGS International, Inc.,
Term Loan.................. 5.31 12/30/11 1,040,505
2,437 Source Media, Inc., Term
Loan....................... 7.81 11/08/11 2,278,474
1,489 Summit Business Media
Intermediate, Term Loan.... 5.22 07/06/14 1,265,438
3,740 Thomas Nelson Publishers,
Term Loan.................. 6.25 06/12/12 3,235,094
66,667 Tribune Co., Bridge Loan... 8.29 12/20/15 40,000,000
29,700 Tribune Co., Term Loan..... 5.79 05/19/14 21,328,313
11,313 Yell Group, PLC, (United
Kingdom) Term Loan......... 3.71 to 4.46 04/30/11 to 02/10/13 9,867,292
--------------
199,160,050
--------------
RESTAURANTS & FOOD SERVICE 2.7%
9,233 Advantage Sales &
Marketing, Inc., Term Loan
(e)........................ 4.46 to 4.81 03/29/13 8,659,901
7,193 Arby's Restaurant Group,
Inc., Term Loan (e)........ 4.71 to 5.05 07/25/12 6,785,547
26 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
RESTAURANTS & FOOD SERVICE (CONTINUED)
$ 3,168 Center Cut Hospitality,
Inc., Term Loan............ 5.16% 07/06/14 $ 2,882,880
3,216 NPC International, Inc.,
Term Loan.................. 4.21 to 4.56 05/03/13 2,974,342
262 OSI Restaurant Partners,
LLC, Revolving Credit
Agreement.................. 4.85 06/14/13 220,054
2,938 OSI Restaurant Partners,
LLC, Term Loan............. 5.13 06/14/14 2,468,203
2,446 Sagittarius Restaurants,
LLC, Term Loan............. 9.50 03/29/13 1,926,382
2,031 Sbarro, Inc., Term Loan.... 4.96 01/31/14 1,675,184
1,091 Volume Services America,
Inc., Revolving Credit
Agreement.................. 7.50 to 8.50 04/01/10 992,535
3,571 Volume Services America,
Inc., Term Loan............ 7.50 to 8.50 10/01/10 3,249,692
--------------
31,834,720
--------------
RETAIL--OIL & GAS 0.3%
4,466 The Pantry, Inc.,
Term Loan.................. 4.22 05/15/14 4,019,734
--------------
RETAIL--SPECIALTY 1.3%
15,190 Nebraska Book Co., Inc.,
Term Loan.................. 5.13 03/04/11 14,278,778
718 Visant Holding Corp.,
Revolving Credit
Agreement.................. 4.21 to 5.75 10/04/10 710,325
--------------
14,989,103
--------------
RETAIL--STORES 5.2%
20,000 Dollar General Corp., Term
Loan....................... 5.21 to 5.55 07/06/14 18,572,920
11,492 General Nutrition Centers,
Inc., Term Loan............ 5.04 to 5.06 09/16/13 10,228,157
9,500 Guitar Center, Inc., Term
Loan....................... 5.96 10/09/14 8,288,750
13,577 Michael's Stores, Inc.,
Term Loan.................. 4.75 10/31/13 10,960,815
3,496 Rite Aid Corp, Term Loan... 6.00 to 7.45 06/04/14 3,144,181
5,763 Sally Holdings, Inc., Term
Loan....................... 4.96 to 5.14 11/16/13 5,515,261
4,318 Savers, Inc., Term Loan.... 5.55 08/11/12 4,101,945
--------------
60,812,029
--------------
See Notes to Financial Statements 27
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--LOCAL EXCHANGE CARRIERS 1.3%
$ 4,187 Global Tel*Link Corp., Term
Loan....................... 6.30% 02/14/13 $ 3,935,484
1,364 Hargray Acquisition Co.,
Term Loan.................. 5.05 06/29/14 1,251,416
3,069 NuVox Transition
Subsidiary, LLC, Term
Loan....................... 6.03 05/31/14 2,827,316
1,482 Orius Corp., LLC, Term Loan
(b) (c) (d)................ 8.50 to 9.00 01/23/09 to 01/23/10 20,160
2,820 Paetec Holding Corp., Term
Loan....................... 4.96 02/28/13 2,709,187
5,027 Sorenson Communications,
Inc., Term Loan............ 5.30 to 9.81 02/16/14 to 04/27/14 4,858,140
--------------
15,601,703
--------------
TELECOMMUNICATIONS--LONG DISTANCE 0.5%
6,000 Level 3 Communications,
Inc., Term Loan............ 4.71 to 5.04 03/13/14 5,460,000
--------------
TELECOMMUNICATIONS--WIRELESS 1.6%
3,960 Alltel Communications,
Inc., Term Loan (e)........ 5.21 05/18/15 3,945,797
5,785 Asurion Corp.,
Term Loan (e).............. 5.78 07/03/14 5,456,723
7,481 CommScope, Inc.,
Term Loan.................. 4.96 to 5.30 12/27/14 7,210,009
1,990 MetroPCS Wireless, Inc.,
Term Loan.................. 4.75 to 5.13 11/03/13 1,895,603
--------------
18,508,132
--------------
TEXTILES & LEATHER 1.9%
6,001 Gold Toe Investment Corp.,
Term Loan.................. 5.40 to 8.65 10/30/13 to 04/30/14 4,995,578
6,150 HBI Branded Apparel Ltd.,
Inc., Term Loan............ 6.55 03/05/14 6,018,033
4,850 Levi Strauss & Co.,
Term Loan.................. 4.71 03/27/14 4,192,219
3,682 St. John Knits
International, Inc., Term
Loan....................... 5.46 03/21/12 3,442,639
3,424 Varsity Brands, Inc., Term
Loan....................... 5.44 to 5.81 02/22/14 3,235,365
--------------
21,883,834
--------------
TRANSPORTATION--CARGO 0.8%
1,082 Cardinal Logistics
Management, Inc., Term
Loan....................... 6.21 09/23/13 908,990
4,950 JHCI Acquisitions, Inc.,
Term Loan.................. 4.99 06/19/14 3,879,562
28 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
-----------------------------------------------------------------------------------------------
TRANSPORTATION--CARGO (CONTINUED)
$ 2,081 Kenan Advantage Group,
Inc., Term Loan............ 5.80% 12/16/11 $ 1,914,859
2,425 Rail America, Inc.,
Term Loan.................. 6.79 08/14/09 2,421,969
--------------
9,125,380
--------------
TRANSPORTATION--PERSONAL 0.3%
4,169 Coach America Holdings,
Inc., Term Loan............ 5.21 to 5.54 04/20/14 3,043,482
--------------
TRANSPORTATION--RAIL MANUFACTURING 0.5%
6,298 Helm Holding Corp., Term
Loan....................... 4.71 to 5.01 07/08/11 5,888,310
--------------
UTILITIES 5.0%
2,256 Bicent Power, LLC, Term
Loan....................... 4.81 06/30/14 2,107,875
14,470 First Light Power
Resources, Inc., Term
Loan....................... 5.31 to 7.31 11/01/13 to 05/01/14 13,506,173
2,533 InfrastruX Group, Inc.,
Term Loan (a).............. 6.71 11/03/12 2,279,903
5,500 Longview Power, LLC, Term
Loan....................... 5.06 02/28/14 4,901,875
2,000 Mach Gen, LLC, Term Loan... 4.81 02/22/13 to 02/22/14 1,920,500
3,278 NRG Energy, Inc., Term
Loan....................... 4.30 02/01/13 3,126,230
2,112 NSG Holdings, LLC, Term
Loan....................... 4.28 06/15/14 1,990,651
6,300 Primary Energy Operating,
LLC, Term Loan............. 6.47 08/24/09 5,922,000
9,764 Texas Competitive Electric
Holdings Co., LLC, Term
Loan....................... 5.96 to 6.48 10/13/14 9,096,782
9,874 TPF Generation Holdings,
LLC, Term Loan............. 4.80 to 7.05 12/15/13 to 12/15/14 9,207,663
4,694 USPF Holdings, LLC, Term
Loan....................... 4.21 04/11/14 4,318,705
--------------
58,378,357
--------------
TOTAL VARIABLE RATE** SENIOR LOAN INTERESTS 176.9%................ 2,060,639,893
--------------
See Notes to Financial Statements 29
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
DESCRIPTION VALUE
----------------------------------------------------------------------------------------------
NOTES 1.1%
Builders FirstSource, Inc. ($8,700,000 par, 6.93% coupon, maturing 02/15/12)
(g)........................................................................ $ 6,068,250
Compression Polymers Corp. ($2,700,000 par, 9.90% coupon, maturing 07/01/12)
(g)........................................................................ 2,092,500
Environmental Systems Products Holdings, ($553,129 par, 8.00% coupon,
maturing 03/31/15) (a)..................................................... 230,489
Qwest Corp. ($3,500,000 par, 6.03% coupon, maturing 06/15/13) (g)............ 3,263,750
Verso Paper Holding, LLC ($1,500,000 par, 6.55% coupon, maturing 08/01/14)
(g) (h).................................................................... 1,327,500
--------------
TOTAL NOTES 1.1%............................................................ 12,982,489
--------------
EQUITIES 0.0%
Aladdin Gaming Holdings, LLC (7.84% ownership interest, Acquired 09/03/04,
Cost $0) (i)............................................................... 15,250
Environmental Systems Products Holdings, Inc. (9,333 common shares, Acquired
09/27/07, Cost $0) (i) (j)................................................. 0
Environmental Systems Products Holdings, Inc. (4,275 preferred shares,
Acquired 09/27/07, Cost $106,875) (i) (j).................................. 0
Gentek, Inc. (Canada) (1,600 common shares, Acquired 10/17/06, Cost $0) (i)
(j)........................................................................ 46,176
Gentek, Inc. (Canada) (Warrants for 2,501 common shares, Expiration date
ranging from 10/31/08 to 10/31/10, Acquired 10/17/06, Cost $0) (i) (j)..... 87,362
IAP Worldwide Services, Inc. (Warrants for 57,447 common shares, Expiration
date 06/11/15, Acquired 06/18/08, Cost $0) (i) (j)......................... 0
IDT Corp. (22,898 common shares) (i)......................................... 40,529
Safelite Realty (28,448 common shares, Acquired 10/26/00, Cost $0) (i) (j)... 0
--------------
TOTAL EQUITIES 0.0%......................................................... 189,317
--------------
TOTAL LONG-TERM INVESTMENTS 178.0%
(Cost $2,390,194,494)...................................................... 2,073,811,699
--------------
SHORT-TERM INVESTMENTS 1.2%
REPURCHASE AGREEMENT 1.1%
State Street Bank & Trust Co. ($13,200,000 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of 1.82%,
dated 07/31/08, to be sold on 08/01/08 at $13,200,667) (e)................. 13,200,000
--------------
30 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
DESCRIPTION VALUE
----------------------------------------------------------------------------------------------
TIME DEPOSIT 0.1%
State Street Bank & Trust Co. ($1,065,647 par, 0.85% coupon, dated 07/31/08,
to be sold on 08/01/08 at $1,065,672) (e).................................. $ 1,065,647
--------------
TOTAL SHORT-TERM INVESTMENTS 1.2%
(Cost $14,265,647)......................................................... 14,265,647
--------------
TOTAL INVESTMENTS 179.2%
(Cost $2,404,460,141)...................................................... 2,088,077,346
BORROWINGS (47.3%).......................................................... (551,000,000)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (30.0%).................. (350,129,180)
LIABILITIES IN EXCESS OF OTHER ASSETS (1.9%)................................ (21,773,475)
--------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................ $1,165,174,691
==============
Percentages are calculated as a percentage of net assets applicable to common
shares.
(a) All or a portion of this security is payment-in-kind.
(b) This borrower has filed for protection in federal bankruptcy court.
(c) This Senior Loan interest is non-income producing.
(d) This borrower is currently in liquidation.
(e) All or a portion of this security is designated in connection with unfunded
loan commitments.
(f) The borrower is in the process of restructuring or amending the terms of
this loan.
(g) Variable rate security. Interest rate shown is that in effect at July 31,
2008.
(h) 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.
(i) Non-income producing security.
(j) Restricted security. Securities were acquired through the restructuring of
senior loans. These securities are restricted as they are not allowed to be
deposited via the Depository Trust Company. If at a later point in time, the
company wishes to register, the issuer will bear the costs associated with
registration. The aggregate value of restricted securities represents less
than 0.1% of the net assets applicable to common shares of the Trust.
* Senior Loans in the Trust's portfolio generally are subject to mandatory
and/or optional prepayment. Because of these mandatory prepayment conditions
and because there may be significant economic incentives for a Borrower to
prepay, prepayments of Senior Loans in the Trust's portfolio may occur. As a
result, the actual remaining maturity of Senior Loans held in the Trust's
portfolio may be substantially less than the stated maturities shown.
Although the Trust is unable to accurately estimate
See Notes to Financial Statements 31
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
the actual remaining maturity of individual Senior Loans, the Trust
estimates that the actual average maturity of the Senior Loans held in its
portfolio will be approximately 18-24 months.
** Senior Loans in which the Trust invests generally pay interest at rates
which are periodically redetermined by reference to a base lending rate plus
a premium. These base lending rates are generally (i) the lending rate
offered by one or more major European banks, such as the London Inter-Bank
Offered Rate ("LIBOR"), (ii) the prime rate offered by one or more major
United States banks or (iii) the certificate of deposit rate. Senior Loans
are generally considered to be restricted in that the Trust ordinarily is
contractually obligated to receive approval from the Agent Bank and/or
Borrower prior to the disposition of a Senior Loan.
RATINGS ALLOCATION AS OF 7/31/08 (UNAUDITED)
BBB/Baa..................................................... 0.1%
BB/Ba....................................................... 36.0
B/B......................................................... 35.8
CCC/Caa..................................................... 6.4
CC/Ca....................................................... 0.2
Non-Rated................................................... 21.5
RATINGS ALLOCATIONS ARE AS A PERCENTAGE OF LONG-TERM DEBT OBLIGATIONS. RATINGS
ALLOCATIONS BASED UPON RATINGS AS ISSUED BY STANDARD AND POOR'S AND MOODY'S,
RESPECTIVELY. BANK LOANS RATED BELOW BBB BY STANDARD AND POOR'S OR BAA BY
MOODY'S ARE CONSIDERED TO BE BELOW INVESTMENT GRADE.
32 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
SWAP AGREEMENTS OUTSTANDING AS OF JULY 31, 2008:
CREDIT DEFAULT SWAPS
PAY/
RECEIVE NOTIONAL
REFERENCE BUY/SELL FIXED EXPIRATION AMOUNT UPFRONT
COUNTERPARTY ENTITY PROTECTION RATE DATE (000) PAYMENTS VALUE
Goldman Sachs Capital Boston
Markets, LP.......... Generating, LLC Sell 2.00% 06/20/09 $3,000 $0 $ 18,662
Texas Competitive
Goldman Sachs Capital Electric Holdings
Markets, LP.......... Co., LLC Sell 2.85 06/20/10 5,000 0 52,234
Goldman Sachs Credit K. Hovnanian
Partners, LP......... Enterprises, Inc. Sell 2.15 06/20/09 1,500 0 (127,460)
Goldman Sachs Credit K. Hovnanian
Partners, LP......... Enterprises, Inc. Sell 3.75 06/20/12 1,500 0 (355,131)
Goldman Sachs Credit Standard Pacific
Partners, LP......... Corp. Sell 3.40 03/20/14 2,500 0 (262,711)
Goldman Sachs Credit Standard Pacific
Partners, LP......... Corp. Sell 3.70 06/20/14 2,500 0 (237,266)
-------- ---------
TOTAL CREDIT DEFAULT SWAPS............................................................... $0 $(911,672)
======== =========
SWAP COLLATERAL PLEDGED FROM COUNTERPARTY
Goldman Sachs International................................. 850,000
--------
Total Swap Agreements....................................... $(61,672)
========
See Notes to Financial Statements 33
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
July 31, 2008
ASSETS:
Total Unaffiliated Investments (Cost $2,404,460,141)........ $2,088,077,346
Receivables:
Interest and Fees......................................... 11,045,704
Investments Sold.......................................... 5,682,084
Other....................................................... 91,934
--------------
Total Assets............................................ 2,104,897,068
--------------
LIABILITIES:
Payables:
Borrowings................................................ 551,000,000
Investments Purchased..................................... 24,111,834
Investment Advisory Fee................................... 1,493,629
Administrative Fee........................................ 351,442
Distributor and Other Affiliates.......................... 313,129
Income Distributions-Common Shares........................ 141,126
Unfunded Commitments........................................ 9,431,217
Accrued Interest Expense.................................... 1,330,175
Accrued Expenses............................................ 789,184
Trustees' Deferred Compensation and Retirement Plans........ 569,789
Swap Contracts.............................................. 61,672
--------------
Total Liabilities....................................... 589,593,197
Preferred Shares (including accrued distributions).......... 350,129,180
--------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $1,165,174,691
==============
NET ASSET VALUE PER COMMON SHARE ($1,165,174,691 divided by
180,010,000 shares outstanding)........................... $ 6.47
==============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized,180,010,000 shares issued and
outstanding).............................................. $ 1,800,100
Paid in Surplus............................................. 1,788,233,938
Accumulated Undistributed Net Investment Income............. (3,838,900)
Accumulated Net Realized Loss............................... (294,294,763)
Net Unrealized Depreciation................................. (326,725,684)
--------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $1,165,174,691
==============
Preferred Shares ($0.01 par value, authorized 28,000 shares,
14,000 issued with liquidation preference of $25,000 per
share).................................................... $ 350,000,000
==============
NET ASSETS INCLUDING PREFERRED SHARES....................... $1,515,174,691
==============
34 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended July 31, 2008
INVESTMENT INCOME:
Interest from Unaffiliated Investments...................... $ 181,787,222
Dividends................................................... 36,990
Other....................................................... 7,096,820
-------------
Total Income.............................................. 188,921,032
-------------
EXPENSES:
Investment Advisory Fee..................................... 19,487,785
Administration Fee.......................................... 4,585,186
Credit Line................................................. 1,741,232
Preferred Share Maintenance................................. 1,651,904
Custody..................................................... 549,041
Professional Fees........................................... 521,444
Accounting and Administrative Expenses...................... 232,953
Reports to Shareholders..................................... 191,828
Trustees' Fees and Related Expenses......................... 28,811
Transfer Agent.............................................. 25,079
Depreciation in Trustees' Deferred Compensation Accounts.... (65,503)
Other....................................................... 210,333
-------------
Total Operating Expenses................................ 29,160,093
Interest Expense........................................ 16,317,711
-------------
Total Expenses.......................................... 45,477,804
-------------
NET INVESTMENT INCOME....................................... $ 143,443,228
=============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Unaffiliated Investments.................................. $ (47,048,371)
Affiliated Investments.................................... (1,074,607)
Swap Contracts............................................ 301,942
-------------
Net Realized Loss........................................... (47,821,036)
-------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (92,918,730)
-------------
End of the Period:
Unaffiliated Investments................................ (316,382,795)
Swap Contracts.......................................... (911,672)
Unfunded Commitments.................................... (9,431,217)
-------------
(326,725,684)
-------------
Net Unrealized Depreciation During the Period............... (233,806,954)
-------------
NET REALIZED AND UNREALIZED LOSS............................ $(281,627,990)
=============
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (31,521,869)
=============
NET DECREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $(169,706,631)
=============
See Notes to Financial Statements 35
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JULY 31, 2008 JULY 31, 2007
-------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 143,443,228 $ 166,683,679
Net Realized Loss....................................... (47,821,036) (7,600,277)
Net Unrealized Depreciation During the Period........... (233,806,954) (77,965,886)
Distributions to Preferred Shareholders:
Net Investment Income................................. (31,521,869) (36,203,219)
-------------- --------------
Change in Net Assets Applicable to Common Shares from
Operations............................................ (169,706,631) 44,914,297
Distributions to Common Shareholders:
Net Investment Income................................. (115,188,402) (137,725,653)
-------------- --------------
TOTAL DECREASE IN NET ASSETS APPLICABLE TO COMMON
SHARES................................................ (284,895,033) (92,811,356)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................. 1,450,069,724 1,542,881,080
-------------- --------------
End of the Period (Including accumulated undistributed
net investment income of $(3,838,900) and
$(1,698,123), respectively)........................... $1,165,174,691 $1,450,069,724
============== ==============
36 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Cash Flows
For the Year Ended July 31, 2008
CHANGE IN NET ASSETS FROM OPERATIONS (INCLUDING PREFERRED
SHARE DISTRIBUTIONS)...................................... $ (169,706,631)
---------------
Adjustments to Reconcile the Change in Net Assets from
Operations to Net Cash Provided by Operating Activities:
Purchases of Investments.................................. (1,060,121,855)
Principal Repayments/Sales of Investments................. 1,315,826,769
Net Purchases of Short-Term Investments................... 11,219,271
Amortization of Loan Fees................................. 14,927
Net Loan Fees Received.................................... 19,103,593
Accretion of Discounts.................................... (1,873,011)
Net Realized Gain/Loss on Investments..................... 48,122,978
Net Change in Unrealized Depreciation on Investments...... 228,561,839
Decrease in Restricted Cash............................... 1,002,302
Decrease in Receivables for Investments Sold.............. 50,141,683
Decrease in Interest and Fees Receivables and Other
Assets.................................................. 10,114,319
Decrease in Payable for Investments Purchased............. (38,527,890)
Decrease in Accrued Expenses and Other Payables........... (1,637,267)
Net Change in Swap Contracts.............................. (1,014,610)
Net Change in Unfunded Commitments........................ 5,409,725
Decrease in Trustees' Deferred Compensation and Retirement
Plans................................................... (61,609)
---------------
Total Adjustments....................................... 586,281,164
---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 416,574,533
---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in Bank Borrowings................................... 49,000,000
Change in Preferred Shares.................................. (350,000,000)
Cash Distributions Paid..................................... (115,574,533)
---------------
Net Cash Used for Financing Activities.................. (416,574,533)
---------------
NET INCREASE IN CASH........................................ -0-
Cash at Beginning of the Period............................. -0-
---------------
CASH AT THE END OF THE PERIOD............................... $ -0-
===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid During the Year for Interest...................... $ 17,499,316
===============
See Notes to Financial Statements 37
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED JULY 31,
------------------------------------------------------------
2008 2007 2006 2005 2004
------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD....... $ 8.06 $ 8.57 $ 8.67 $ 8.63 $ 8.10
-------- -------- -------- -------- --------
Net Investment Income......................... .80(a) .93(a) .79(a) .60 .42
Net Realized and Unrealized Gain/Loss......... (1.57) (.47) (.10) .01 .57
Common Share Equivalent of Distributions Paid
to Preferred Shareholders:
Net Investment Income......................... (.18) (.20) (.17) (.10) (.02)
-------- -------- -------- -------- --------
Total from Investment Operations............... (.95) .26 .52 .51 0.97
-------- -------- -------- -------- --------
Distributions Paid to Common Shareholders:
Net Investment Income......................... (.64) (.77) (.62) (.47) (.40)
Dilutive Impact from the Offering of Money
Market Cumulative Preferred Shares............ -0- -0- -0- -0- (.04)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF THE PERIOD............. $ 6.47 $ 8.06 $ 8.57 $ 8.67 $ 8.63
======== ======== ======== ======== ========
Common Share Market Price at End of the
Period........................................ $ 5.49 $ 7.98 $ 8.38 $ 8.19 $ 8.84
Total Return (b)............................... -24.32% 3.94% 10.41% -2.03% 18.13%
Net Assets Applicable to Common Shares at End
of the Period (In millions)................... $1,165.2 $1,450.1 $1,542.9 $1,560.7 $1,554.1
Ratios to Average Net Assets Applicable to
Common Shares excluding Borrowings:
Operating Expense (c)......................... 2.26% 2.35% 2.31% 2.26% 1.91%
Interest Expense (c).......................... 1.26% 1.95% 1.63% .82% .31%
Gross Expense (c)............................. 3.52% 4.30% 3.94% 3.08% 2.22%
Net Investment Income (c)..................... 11.11% 10.80% 9.17% 6.87% 5.06%
Net Investment Income (d)..................... 8.67% 8.46% 7.23% 5.75% 4.80%
Portfolio Turnover (e)......................... 46% 85% 75% 94% 84%
SUPPLEMENTAL RATIOS:
Ratios to Average Net Assets Including
Preferred Shares and Borrowings:
Operating Expense (c)......................... 1.27% 1.30% 1.28% 1.27% 1.30%
Interest Expense (c).......................... .71% 1.08% .90% .46% .21%
Gross Expense (c)............................. 1.98% 2.37% 2.18% 1.73% 1.51%
Net Investment Income (c)..................... 6.26% 5.95% 5.06% 3.86% 3.44%
Net Investment Income (d)..................... 4.88% 4.66% 3.99% 3.23% 3.26%
SENIOR INDEBTEDNESS:
Total Preferred Shares Outstanding............ 14,000 28,000 28,000 28,000 28,000
Asset Coverage Per Preferred Share (f)........ $108,236 $ 76,803 $ 80,119 $ 80,750 $ 80,509
Involuntary Liquidating Preference Per
Preferred Share............................. $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Average Market Value Per Preferred Share...... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Total Borrowing Outstanding (In thousands).... $551,000 $502,000 $557,000 $524,000 $450,000
Asset Coverage Per $1,000 Unit of Senior
Indebtedness (g)............................ $ 3,750 $ 5,284 $ 5,028 $ 5,315 $ 6,009
(a)Based on average shares outstanding.
(b)Total return based on common share market price 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.
(c)Ratios do not reflect the effect of distributions to preferred shareholders.
(d)Ratios reflect the effect of distributions to preferred shareholders.
(e)Calculation includes the proceeds from principal repayments and sales of
senior loan interests.
(f)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.
(g)Calculated by subtracting the Trust's total liabilities (not including the
preferred shares and the borrowings) from the Trust's total assets and
dividing by the total number of senior indebtedness units, where one unit
equals $1,000 of senior indebtedness.
38 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Senior Income Trust (the "Trust") is registered as a diversified,
closed-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"). The Trust's investment objective is to seek
to provide a high level of current income, consistent with preservation of
capital. The Trust seeks to achieve its objective by investing primarily in a
portfolio of interests in floating or variable rate senior loans to
corporations, partnerships and other entities which operate in a variety of
industries and geographical regions. The Trust borrows money for investment
purposes which will create the opportunity for enhanced return, but also should
be considered a speculative technique and may increase the Trust's volatility.
The Trust commenced investment operations on June 23, 1998.
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 principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION The Trust's Senior Loans and notes are valued by the Trust
following valuation guidelines established and periodically reviewed by the
Trust's Board of Trustees. Under the valuation guidelines, Senior Loans and
notes for which reliable market quotes are readily available are valued at the
mean of such bid and ask quotes. Where reliable market quotes are not readily
available, Senior Loans and notes are valued, where possible, using independent
market indicators provided by independent pricing sources approved by the Board
of Trustees. Other Senior Loans and notes are valued by independent pricing
sources approved by the Board of Trustees based upon pricing models developed,
maintained and operated by those pricing sources or valued by Van Kampen Asset
Management (the "Adviser") by considering a number of factors including
consideration of market indicators, transactions in instruments which the
Adviser believes may be comparable (including comparable credit quality,
interest rate, interest rate redetermination period and maturity), the credit
worthiness of the Borrower, the current interest rate, the period until next
interest rate redetermination and the maturity of such Senior Loan.
Consideration of comparable instruments may include commercial paper, negotiable
certificates of deposit and short-term variable rate securities which have
adjustment periods comparable to the Senior Loans in the Trust's portfolio. The
fair value of Senior Loans are reviewed and approved by the Trust's Valuation
Committee and the Board of Trustees.
Credit default swaps are valued using market quotations obtained from
brokers.
Equity securities are valued on the basis of prices furnished by pricing
services or as determined in good faith by the Adviser under the direction of
the Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are
valued at amortized cost, which approximates market value. Short-term loan
participations are valued at cost in the absence of any indication of
impairment.
B. SECURITY TRANSACTIONS Investment transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
Legal expenditures that are
39
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
expected to result in the restructuring of a plan of reorganization for an
investment are recorded as realized losses. 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 payment is made. At
July 31, 2008, the Trust had no when-issued or 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.
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 Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Facility fees received are
treated as market discounts. Market premiums are amortized and discounts are
accreted over the stated life of each applicable senior loan, note, or other
fixed income security. Other income is comprised primarily of amendment fees
which are recorded when received. Amendment fees are earned as compensation for
agreeing to changes in loan agreements.
D. FEDERAL INCOME TAXES It is the Trust'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
Trust adopted the provisions of the Financial Accounting Standards Board
("FASB") Interpretation No. 48 ("FIN 48") Accounting for Uncertainty in Income
Taxes on January 31, 2008. FIN 48 sets forth a minimum threshold for financial
statement recognition of the benefit of a tax position taken or expected to be
taken in a tax return. The implementation of FIN 48 did not result in any
unrecognized tax benefits in the accompanying financial statements. If
applicable, the Trust recognizes interest accrued related to unrecognized tax
benefits in "Interest Expense" and penalties in "Other" expenses on the
Statement of Operations. The Trust files tax returns with the U.S. Internal
Revenue Service and various states. Generally, each of the tax years in the four
year period ended July 31, 2008, remains subject to examination by taxing
authorities.
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 July 31, 2008, the Trust had
40
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
an accumulated capital loss carryforward for tax purposes of $247,685,516 which
will expire according to the following schedule.
AMOUNT EXPIRATION
$ 4,851,995 ............................................................ July 31, 2009
122,716,095 ............................................................ July 31, 2010
52,014,750 ............................................................ July 31, 2011
29,634,358 ............................................................ July 31, 2012
2,190,907 ............................................................ July 31, 2013
6,730,384 ............................................................ July 31, 2014
11,934,630 ............................................................ July 31, 2015
17,612,397 ............................................................ July 31, 2016
At July 31, 2008, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $2,409,849,748
==============
Gross tax unrealized appreciation........................... $ 6,263,969
Gross tax unrealized depreciation........................... (328,036,371)
--------------
Net tax unrealized depreciation on investments.............. $ (321,772,402)
==============
E. DISTRIBUTION OF INCOME AND GAINS The Trust intends to declare and pay monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed at least annually to common shareholders. Distributions
from net realized gains for book purposes may include short term capital gains,
which are included as ordinary income for tax purposes.
The tax character of distributions paid for the years ended July 31, 2008
and 2007 were as follows:
2008 2007
Distributions paid from:
Ordinary income........................................... $147,096,403 $173,875,890
Long-term capital gain.................................... -0- -0-
------------ ------------
$147,096,403 $173,875,890
============ ============
Permanent differences, primarily due to overdistribution of ordinary income,
resulted in the following reclassifications among the Trust's components of net
assets at July 31, 2008:
ACCUMULATED UNDISTRIBUTED ACCUMULATED NET
NET INVESTMENT INCOME REALIZED LOSS PAID IN SURPLUS
$1,126,266 $(611,912) $(514,354)
41
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
As of July 31, 2008, the components of distributable earnings on a tax basis
were as follows:
Undistributed ordinary income............................... $-0-
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses resulting from wash
sale transactions, gains and losses recognized on securities for tax purposes
but not for book purposes and post October losses which are not realized for tax
purposes until the first day of the following fiscal year.
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 of .85%
of the average daily managed assets. Managed assets are defined as the gross
asset value of the Trust minus the sum of accrued liabilities, other than the
aggregate amount of borrowings undertaken by the Trust. In addition, the Trust
will pay a monthly administrative fee to Van Kampen Investments Inc., the
Trust's Administrator, at an annual rate of .20% of the average daily managed
assets of the Trust. The administrative services provided by the Administrator
include monitoring the provisions of the loan agreements and any agreements with
respect to participations and assignments, record keeping responsibilities with
respect to interests in Variable Rate Senior Loans in the Trust's portfolio and
providing certain services to the holders of the Trust's securities.
For the year ended July 31, 2008, the Trust recognized expenses of
approximately $235,300 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a trustee of the Trust is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Trust.
Under separate Legal Services and Chief Compliance Officer (CCO) Employment
agreements, the Adviser provides legal services and the CCO provides compliance
services to the Trust. The costs of these services are allocated to each trust.
For the year ended July 31, 2008, the Trust recognized expenses of approximately
$131,600 representing Van Kampen Investments Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing legal services to the Trust, as
well as the salary, benefits and related costs of the CCO and related support
staff paid by Van Kampen. Services provided pursuant to the Legal Services
agreement are reported as part of "Professional Fees" on the Statement of
Operations. Services provided pursuant to the CCO Employment agreement are
reported as part of "Accounting and Administrative Expenses" on the Statement of
Operations.
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
also 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.
42
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
As of July 31, 2008, the Trust did not own shares of affiliated companies.
Affiliated companies are defined by the 1940 Act, as those companies in which a
fund holds 5% or more of the outstanding voting securities.
Affiliate transactions during the year ended July 31, 2008 were as follows:
PAR/SHARES PAR/SHARES
AS OF GROSS GROSS AS OF REALIZED GAIN/
NAME 7/31/07 ADDITIONS REDUCTIONS 7/31/08 (LOSS)
Neoplan USA Corp., Revolving
Credit Agreement............... $589,367 $-0- $589,367 $-0- $ -0-
Neoplan USA Corp., Common
Stock.......................... 8,517 -0- 8,517 -0- (85)
Neoplan USA Corp., Preferred
Stock C........................ 532 -0- 532 -0- (533)
Neoplan USA Corp., Preferred
Stock D........................ 1,730 -0- 1,730 -0- (1,073,989)
-----------
$(1,074,607)
-----------
3. CAPITAL TRANSACTIONS
The Board of Trustees have approved a share repurchase program whereby the Trust
may, when appropriate, repurchase its shares in the open market or in privately
negotiated transactions at a price not above market value or NAV, whichever is
lower at the time of purchase.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from investments sold and
repaid, excluding short-term investments, were $1,060,121,855 and
$1,315,826,769, respectively.
5. COMMITMENTS
Pursuant to the terms of certain Senior Loan agreements, the Trust had unfunded
loan commitments of approximately $85,029,397 as of July 31, 2008. The Trust
intends to reserve against such contingent obligations by designating cash,
liquid securities and liquid Senior Loans as a reserve. The unrealized
depreciation on these commitments of $9,431,217 as of July 31, 2008 is reported
as "Unfunded Commitments" on the Statement of Assets and Liabilities.
6. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust may use derivative instruments for a variety of reasons, such as
to attempt to protect the Trust against possible changes in the market value of
its portfolio or to generate potential gain. All of the Trust's portfolio
holdings, including derivative instruments, are marked to market each day with
the change in value reflected in unrealized appreciation/depreciation. Risks may
arise as a result of the potential inability of the counterparties to meet the
terms of their contracts.
43
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
The Trust may enter into credit default swap contracts for hedging purposes
or to gain exposure to a credit in which the Trust may otherwise invest. A
credit default swap is an agreement between two parties to exchange the credit
risk of an issuer. A buyer of a credit default swap is said to buy protection by
paying periodic fees in return for a contingent payment from the seller if the
issuer has a credit event such as bankruptcy, a failure to pay outstanding
obligations or deteriorating credit while the swap is outstanding. A seller of a
credit default swap is said to sell protection and thus collects the periodic
fees and profits if the credit of the issuer remains stable or improves while
the swap is outstanding but the seller in a credit default swap contract would
be required to pay an agreed-upon amount, which approximates the notional amount
of the swap as disclosed in the table following the Portfolio of Investments, to
the buyer in the event of an adverse credit event of the issuer. The Trust
accrues for the periodic fees on credit default swaps on a daily basis with the
net amount accrued recorded within unrealized appreciation/depreciation of swap
contracts. Upon cash settlement of the periodic fees, the net amount is recorded
as realized gain/loss on swap contracts on the Statement of Operations. Net
unrealized gains are recorded as an asset or net unrealized losses are reported
as a liability on the Statement of Assets and Liabilities. The change in value
of the swap contracts is reported as unrealized gains or losses on the Statement
of Operations. Payments received or made upon entering into a credit default
swap contract, if any, are recorded as realized gain or loss on the Statement of
Operations upon termination or maturity of the swap. Credit default swaps may
involve greater risks than if the Trust 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 to a swap agreement, the Trust
will have contractual remedies pursuant to the agreements related to the
transaction. Counterparties are required to pledge collateral daily (based on
the valuation of each swap) on behalf of the Trust with a value approximately
equal to the amount of any unrealized gain. Reciprocally, when the Trust has an
unrealized loss on a swap contract, the Trust has instructed the custodian to
pledge cash or liquid securities as collateral with a value approximately equal
to the amount of the unrealized loss. Collateral pledges are monitored and
subsequently adjusted if and when the swap valuations fluctuate. Cash collateral
is disclosed in the table following the Portfolio of Investments. Cash
collateral has been offset against open swap contracts under the provisions of
FASB Interpretation No. 39: Offsetting of Amounts Related to Certain Contracts
an Interpretation of APB Opinion No. 10 and FASB Statement No. 105 and are
included within "Swap Contracts" on the Statement of Assets and Liabilities. For
cash collateral received, the Trust pays a monthly fee to the counterparty based
on the effective rate for Federal Funds. This fee, when paid, is included within
realized loss on swap contracts on the Statement of Operations.
7. SENIOR LOAN PARTICIPATION COMMITMENTS
The Trust invests primarily in participations, assignments, or acts as a party
to the primary lending syndicate of a Variable Rate Senior Loan interest to
United States and foreign corporations, partnerships, and other entities. When
the Trust purchases a participation of a Senior Loan interest, the Trust
typically enters into a contractual agreement with the lender or other third
party selling the participation, but not with the borrower directly. As such,
the Trust assumes the credit risk of the borrower, selling participant or other
persons interpositioned between the Trust and the borrower.
44
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
At July 31, 2008, the following sets forth the selling participants with
respect to interests in Senior Loans purchased by the Trust on a participation
basis.
PRINCIPAL
AMOUNT VALUE
SELLING PARTICIPANT (000) (000)
Merrill Lynch............................................... $20,000 $12,000
JP Morgan Chase............................................. 20,000 12,000
Citicorp North America...................................... 16,667 10,000
Bank of America, NA......................................... 10,000 6,000
------- -------
$66,667 $40,000
======= =======
8. BORROWINGS
The Trust may utilize financial leverage to the maximum extent allowable under
the 1940 Act. Under the 1940 Act, a Trust generally may not (i) borrow money
greater than 33 1/3% of the Trust's total assets or (ii) issue preferred shares
greater than 50% of the Trust's total assets. In using a combination of
borrowing money and issuing preferred shares, the maximum allowable leverage is
somewhere between 33 1/3% and 50% (but in no event more than 50%) of the Trust's
total assets based on the relative amounts borrowed or preferred shares issued.
The Trust has entered into a $700 million annual revolving credit and
security agreement. This revolving credit agreement is secured by the assets of
the Trust. In connection with this agreement, for the year ended July 31, 2008,
the Trust incurred fees of approximately $1,741,200. For the year ended July 31,
2008, the average daily balance of borrowings under the Amended and Restated
Revolving Credit and Security Agreement was $370,852,459 with a weighted average
interest rate of 4.73%. Effective September 13, 2008, the Trust changed its
Credit and Security Agreement to $625 million.
9. PREFERRED SHARES ISSUANCE
The Trust has outstanding 2,800 shares each of Series M, Series T, Series W,
Series TH and Series F Auction Preferred Shares (APS), $.01 Par Value, $25,000
liquidation preference, for a total issuance of $350 million. This reflects the
Trust's redemption of 2,800 shares of each class, which occurred between May 19,
2008 and May 23, 2008. Dividends are cumulative and the dividend rates are
generally reset every seven days through an auction process. Beginning on
February 12, 2008 and continuing through July 31, 2008, all series of preferred
shares of the Trust were not successfully remarketed. As a result, the dividend
rates of these preferred shares were reset to the maximum applicable rate on
APS. The average rate in effect on July 31, 2008 was 3.925%. During the year
ended July 31, 2008, the rates ranged from 3.794% to 6.300%.
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 the "Preferred Share
Maintenance" expense on the Statement of Operations.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $25,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the APS are subject to
mandatory redemption if the tests are not met.
45
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
10. 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.
11. ACCOUNTING PRONOUNCEMENTS
In September 2006, Statement of Financial Accounting Standards No. 157, Fair
Value Measurements (FAS 157), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. As of July 31, 2008, the Adviser does not believe the adoption of
FAS 157 will impact the amounts reported in the financial statements, however,
additional disclosures will be required about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported on
the Statement of Operations for a fiscal period.
On March 19, 2008, FASB released Statement of Financial Accounting Standards
No. 161, Disclosures about Derivative Instruments and Hedging Activities (FAS
161). FAS 161 requires qualitative disclosures about objectives and strategies
for using derivatives, quantitative disclosures about fair value amounts of and
gains and losses on derivative instruments, and disclosures about
credit-risk-related contingent features in derivative agreements. The
application of FAS 161 is required for fiscal years and interim periods
beginning after November 15, 2008. At this time, management is evaluating the
implications of FAS 161 and its impact on the financial statements has not yet
been determined.
12. LEGAL MATTERS
The Trust is one of numerous defendants ("Lenders") that have been named in an
adversary proceeding pending in the Bankruptcy Court of the Southern District of
Florida. The action was filed on July 15, 2008, by the Official Committee of
Unsecured Creditors of home building companies to which the Lenders loaned money
through credit agreements. Plaintiff alleges that monies used to repay the
Lenders should be avoided as fraudulent and preferential transfers under the
bankruptcy laws. More specifically, Plaintiff alleges that subsidiaries of the
home building companies were allegedly forced to become co-borrowers and
guarantors of the monies used to repay the Lenders, and that the subsidiaries
did not receive fair consideration or reasonably equivalent value when they
transferred the proceeds to repay the Lenders. Plaintiff seeks to avoid the
transfers and other equitable relief. The Lenders have moved to dismiss the
complaint. That motion is now pending.
46
VAN KAMPEN SENIOR INCOME TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of Van Kampen Senior Income Trust
We have audited the accompanying statement of assets and liabilities of Van
Kampen Senior Income Trust (the "Trust"), including the portfolio of
investments, as of July 31, 2008, the related statements of operations and cash
flows for the year then ended, the statements of changes in net assets for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Trust is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Trust's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of July 31, 2008, by correspondence with the Trust's
custodian, brokers and selling or agent banks; where replies were not received,
we performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Senior Income Trust as of July 31, 2008, the results of its operations
and its cash flows for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
September 19, 2008
47
VAN KAMPEN SENIOR INCOME TRUST
DIVIDEND REINVESTMENT PLAN
The dividend reinvestment plan (the "Plan") offers you a prompt and simple
way to reinvest your dividends and capital gains distributions into additional
shares of the Trust. Under the Plan, the money you earn from dividends and
capital gains distributions will be reinvested automatically in more shares of
the Trust, allowing you to potentially increase your investment over time.
PLAN BENEFITS
- ADD TO YOUR ACCOUNT
You may increase your shares in the Trust easily and automatically with the
Plan.
- LOW TRANSACTION COSTS
Transaction costs are low because the new shares are bought in blocks and the
brokerage commission is shared among all participants.
- CONVENIENCE
You will receive a detailed account statement from Computershare Trust Company,
N.A., which administers the Plan, whenever shares are reinvested for you. The
statement shows your total distributions, date of investment, shares acquired,
and price per share, as well as the total number of shares in your reinvestment
account. You can also access your account via the Internet. To do this, please
go to vankampen.com.
- SAFEKEEPING
Computershare Trust Company, N.A. will hold the shares it has acquired for you
in safekeeping.
HOW TO PARTICIPATE IN THE PLAN
If you own shares in your own name, you can participate directly in the
Plan. If your shares are held in "street name"--in the name of your brokerage
firm, bank, or other financial institution--you must instruct that entity to
participate on your behalf. If they are unable to participate on your behalf,
you may request that they reregister your shares in your own name so that you
may enroll in the Plan.
If you choose to participate in the Plan, whenever the Trust declares a
dividend or capital gains distribution, it will be invested in additional shares
of your Trust that are purchased on the open market.
HOW TO ENROLL
To enroll in the Plan, please read the Terms and Conditions in the Plan
brochure. You can obtain a copy of the Plan Brochure and enroll in the Plan by
visiting vankampen.com, calling toll-free (800) 341-2929 or notifying us in
writing at Van Kampen Closed End Funds, Computershare Trust Company,
48
VAN KAMPEN SENIOR INCOME TRUST
DIVIDEND REINVESTMENT PLAN continued
N.A., P.O. Box 43078, Providence, RI 02940-3078. Please include the Trust name
and account number and ensure that all shareholders listed on the account sign
these written instructions. Your participation in the Plan will begin with the
next dividend or capital gains distribution payable after Computershare Trust
Company, N.A. receives your authorization, as long as they receive it before the
"record date," which is generally ten business days before the dividend is paid.
If your authorization arrives after such record date, your participation in the
Plan will begin with the following dividend or distribution.
COSTS OF THE PLAN
There is no direct charge to you for reinvesting dividends and capital gains
distributions because the Plan's fees are paid by the Trust. However, when
applicable, you will pay your portion of any brokerage commissions incurred when
the new shares are purchased on the open market. These brokerage commissions are
typically less than the standard brokerage charges for individual transactions,
because shares are purchased for all participants in blocks, resulting in lower
commissions for each individual participant. Any brokerage commissions or
service fees are averaged into the purchase price.
TAX IMPLICATIONS
The automatic reinvestment of dividends and capital gains distributions does
not relieve you of any income tax that may be due on dividends or distributions.
You will receive tax information annually to help you prepare your federal and
state income tax returns.
Van Kampen does not offer tax advice. The tax information contained herein
is general and is not exhaustive by nature. It was not intended or written to be
used, and it cannot be used by any taxpayer, for avoiding penalties that may be
imposed on the taxpayer under U.S. federal tax laws. Federal and state tax laws
are complex and constantly changing. Shareholders should always consult a legal
or tax advisor for information concerning their individual situation.
HOW TO WITHDRAW FROM THE PLAN
To withdraw from the Plan please visit vankampen.com or call (800) 341-2929
or notify us in writing at the address below.
Van Kampen Closed-End Funds
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
All shareholders listed on the account must sign any written withdrawal
49
VAN KAMPEN SENIOR INCOME TRUST
DIVIDEND REINVESTMENT PLAN continued
instructions. If you withdraw, you have three options with regard to the shares
held in your account:
1. If you opt to continue to hold your non-certificated shares, they will be
held by Computershare Trust Company N.A.
2. If you opt to sell your shares through Van Kampen, we will sell all full and
fractional shares and send the proceeds via check to your address of record
after deducting brokerage commissions and a $2.50 service fee.
3. You may sell your shares through your financial advisor through the Direct
Registration Systems ("DRS"). DRS is a service within the securities industry
that allows Trust shares to be held in your name in electronic format. You
retain full ownership of your shares, without having to hold a stock
certificate.
The Trust and Computershare Trust Company, N.A. may amend or terminate the Plan.
Participants will receive written notice at least 30 days before the effective
date of any amendment. In the case of termination, Participants will receive
written notice at least 30 days before the record date for the payment of any
dividend or capital gains distribution by the Trust. In the case of amendment or
termination necessary or appropriate to comply with applicable law or the rules
and policies of the Securities and Exchange Commission or any other regulatory
authority, such written notice will not be required.
TO OBTAIN A COMPLETE COPY OF THE DIVIDEND REINVESTMENT PLAN, PLEASE CALL OUR
CLIENT RELATIONS DEPARTMENT AT 800-341-2929 OR VISIT VANKAMPEN.COM.
50
VAN KAMPEN SENIOR INCOME TRUST
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
JERRY W. MILLER
President and Principal Executive Officer
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
STUART N. SCHULDT
Chief Financial Officer and Treasurer
KEVIN KLINGERT
Vice President
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
522 Fifth Avenue
New York, New York 10036
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
TRANSFER AGENT
COMPUTERSHARE TRUST COMPANY, N.A.
C/O COMPUTERSHARE INVESTOR SERVICES
P.O. Box 43078
Providence, Rhode Island 02940-3078
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
111 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
51
VAN KAMPEN SENIOR INCOME TRUST
RESULTS OF SHAREHOLDERS VOTES
The Annual Meeting of Shareholders of the Trust was held on June 18, 2008, where
shareholders voted on the election of trustees.
With regards to the election of the following trustees by the common
shareholders of the Trust:
# OF SHARES
--------------------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------------
David C. Arch........................................... 161,558,977 4,275,284
Jerry D. Choate......................................... 161,427,390 4,406,871
Howard J Kerr........................................... 161,465,608 4,368,653
Suzanne H. Woolsey...................................... 161,444,114 4,390,147
The other trustees of the Trust whose terms did not expire in 2008 are Rod
Dammeyer, Linda Hutton Heagy, R. Craig Kennedy, Jack E. Nelson, Hugo F.
Sonnenschein and Wayne W. Whalen.
52
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION
The business and affairs of each Trust are managed under the direction of the
Trust's Board of Trustees and the Trust's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of each
Trust and their principal occupations during the last five years, other
directorships held by trustees and their affiliations, if any, with Van Kampen
Investments, the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen
Exchange Corp. and Investor Services. The term "Fund Complex" includes each of
the investment companies advised by the Adviser as of the date of this Annual
Report. Trustees of the Trust generally serve three year terms or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE EACH TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (63) Trustee Trustee Chairman and Chief 71 Trustee/Director/Managing
Blistex Inc. since 1998 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products Director of the Heartland
manufacturer. Alliance, a nonprofit
organization serving
human needs based in
Chicago. Board member of
the Illinois
Manufacturers'
Association. Member of
the Board of Visitors,
Institute for the
Humanities, University of
Michigan.
53
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE EACH TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jerry D. Choate (70) Trustee Trustee Prior to January 1999, 71 Trustee/Director/Managing
33971 Selva Road since 2006 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of Amgen Inc., a
("Allstate") and Allstate biotechnological company,
Insurance Company. Prior and Valero Energy
to January 1995, Corporation, an
President and Chief independent refining
Executive Officer of company.
Allstate. Prior to August
1994, various management
positions at Allstate.
Rod Dammeyer (67) Trustee Trustee President of CAC, L.L.C., 71 Trustee/Director/Managing
CAC, L.L.C. since 1998 a private company General Partner of funds
4350 La Jolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Quidel
San Diego, CA 92122-6223 advisory services. Corporation, Stericycle,
Inc. and Trustee of The
Scripps Research
Institute. Prior to
February 2008, Director
of Ventana Medical
Systems, Inc. Prior to
April 2007, Director of
GATX Corporation. Prior
to April 2004, Director
of TheraSense, Inc. Prior
to January 2004, Director
of TeleTech Holdings Inc.
and Arris Group, Inc.
54
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE EACH TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Linda Hutton Heagy++ (60) Trustee Trustee Prior to February 2008, 71 Trustee/Director/Managing
4939 South Greenwood since 2006 Managing Partner of General Partner of funds
Chicago, IL 60615 Heidrick & Struggles, an in the Fund Complex.
international executive Trustee on the University
search firm. Prior to of Chicago Medical Center
1997, Partner of Ray & Board, Vice Chair of the
Berndtson, Inc., an Board of the YMCA of
executive recruiting Metropolitan Chicago and
firm. Prior to 1995, a member of the Women's
Executive Vice President Board of the University
of ABN AMRO, N.A., a bank of Chicago.
holding company. Prior to
1990, Executive Vice
President of The Exchange
National Bank.
R. Craig Kennedy (56) Trustee Trustee Director and President of 71 Trustee/Director/Managing
1744 R Street, NW since 2006 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S. Director of First Solar,
foundation created to Inc.
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (72) Trustee Trustee Prior to 1998, President 71 Trustee/Director/Managing
14 Huron Trace since 1998 and Chief Executive General Partner of funds
Galena, IL 61036 Officer of Pocklington in the Fund Complex.
Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the Marrow
Foundation.
55
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE EACH TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jack E. Nelson (72) Trustee Trustee President of Nelson 71 Trustee/Director/Managing
423 Country Club Drive since 2006 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of the Financial
Industry Regulatory
Authority ("FINRA"),
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
Hugo F. Sonnenschein (67) Trustee Trustee President Emeritus and 71 Trustee/Director/Managing
1126 E. 59th Street since 1998 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Trustee of the University
Distinguished Service of Rochester and a member
Professor in the of its investment
Department of Economics committee. Member of the
at the University of National Academy of
Chicago. Prior to July Sciences, the American
2000, President of the Philosophical Society and
University of Chicago. a fellow of the American
Academy of Arts and
Sciences.
56
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE EACH TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. (66) Trustee Trustee Chief Communications 71 Trustee/Director/Managing
815 Cumberstone Road since 2006 Officer of the National General Partner of funds
Harwood, MD 20776 Academy of in the Fund Complex.
Sciences/National Trustee of Changing World
Research Council, an Technologies, Inc., an
independent, federally energy manufacturing
chartered policy company, since July 2008.
institution, from 2001 to Director of Fluor Corp.,
November 2003 and Chief an engineering,
Operating Officer from procurement and
1993 to 2001. Prior to construction
1993, Executive Director organization, since
of the Commission on January 2004. Director of
Behavioral and Social Intelligent Medical
Sciences and Education at Devices, Inc., a symptom
the National Academy of based diagnostic tool for
Sciences/National physicians and clinical
Research Council. From labs. Director of the
1980 through 1989, Institute for Defense
Partner of Coopers & Analyses, a federally
Lybrand. funded research and
development center,
Director of the German
Marshall Fund of the
United States, Director
of the Rocky Mountain
Institute and Trustee of
California Institute of
Technology and the
Colorado College.
57
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
INTERESTED TRUSTEE*
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE EACH TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (69) Trustee Trustee Partner in the law firm 71 Trustee/Director/Managing
333 West Wacker Drive since 1998 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the Director of the Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
------------------------------------
+ See Table D below.
++ As indicated above, prior to February 2008, Ms. Heagy was an employee of
Heidrick and Struggles, an international executive search firm ("Heidrick").
Heidrick has been (and may continue to be) engaged by Morgan Stanley from
time to time to perform executive searches. Such searches have been done by
professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall
procedures exist to ensure that Ms. Heagy will not have any involvement with
any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not
receive any compensation, directly or indirectly, for searches performed by
Heidrick for Morgan Stanley.
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
58
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
OFFICERS
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER EACH TRUST SERVED DURING PAST 5 YEARS
Jerry W. Miller (47) President and Officer President and Principal Executive Officer of funds in the
522 Fifth Avenue Principal Executive since 2008 Fund Complex since May 2008. President and Chief Executive
New York, NY 10036 Officer Officer of Van Kampen Investments since June 2008. Central
Division Director for Morgan Stanley's Global Wealth
Management Group from March 2006 to June 2008. Previously,
Chief Operating Officer of the global proprietary business
of Merrill Lynch Investment Management from 2002 to 2006.
Kevin Klingert (46) Vice President Officer Vice President of funds in the Fund Complex since March
522 Fifth Avenue since 2008 2008. Chief Operating Officer of the Fixed Income portion of
New York, NY 10036 Morgan Stanley Investment Management Inc. since March 2008.
Head of Global Liquidity Portfolio Management and co-Head of
Liquidity Credit Research of Morgan Stanley Investment
Management since December 2007. Managing Director of Morgan
Stanley Investment Management Inc. from December 2007 to
March 2008. Previously, Managing Director on the Management
Committee and head of Municipal Portfolio Management and
Liquidity at BlackRock from October 1991 to January 2007.
Assistant Vice President municipal portfolio manager at
Merrill Lynch from March 1985 to October 1991.
Amy R. Doberman (46) Vice President Officer Managing Director and General Counsel - U.S. Investment
522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and
the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang Yu (41) Vice President Officer Managing Director of Morgan Stanley Investment Management
522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10036 Complex.
59
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER EACH TRUST SERVED DURING PAST 5 YEARS
John L. Sullivan (53) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza -- Suite Officer since 1998 August 2004. Prior to August 2004, Director and Managing
100 Director of Van Kampen Investments, the Adviser, Van Kampen
Oakbrook Terrace, IL 60181 Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Stuart N. Schuldt (46) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza -- Suite and Treasurer since 2007 Inc. since June 2007. Chief Financial Officer and Treasurer
100 of funds in the Fund Complex since June 2007. Prior to June
Oakbrook Terrace, IL 60181 2007, Senior Vice President of Northern Trust Company,
Treasurer and Principal Financial Officer for Northern Trust
U.S. mutual fund complex.
In accordance with Section 303A.12(a) of the New York Stock Exchange Listed
Company Manual, the Trust's Chief Executive Officer has certified to the New
York Stock Exchange that, as of June 25, 2008, he was not aware of any violation
by the Trust of NYSE corporate governance listing standards.
The certifications by the Trust's principal executive officer and principal
financial officer required by Rule 30a-2 under the 1940 Act were filed with the
Trust's report to the SEC on Form N-CSR and are available on the Securities and
Exchange Commission's web site at http://www.sec.gov.
60
Van Kampen Senior Income Trust
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 Senior Income Trust
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen Senior Income Trust
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.
522 Fifth Avenue
New York, New York 10036
www.vankampen.com
Copyright (C)2008 Van Kampen Funds Inc.
All rights reserved. Member FINRA/SIPC
VVRANN 9/08
(VAN KAMPEN INVESTMENTS LOGO) IU08-04680P-Y07/08
Item 2. Code of Ethics.
(a) The Trust has adopted a code of ethics (the "Code of Ethics") that applies
to its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Trust or a
third party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Due to personnel changes at the Adviser, the list of covered officers set
forth in Exhibit B was amended in June 2008 and the general counsel's
designee set forth in Exhibit C was amended in January 2008. Both editions
of Exhibit B and both editions of Exhibit C are attached.
(d) Not applicable.
(e) Not applicable.
(f)
(1) The Trust's Code of Ethics is attached hereto as Exhibit 12(1).
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Trust's Board of Trustees has determined that it has three "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees: Rod Dammeyer, Jerry D. Choate and R. Craig Kennedy.
Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the audit committee and Board
of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2008
REGISTRANT COVERED ENTITIES(1)
---------- -------------------
AUDIT FEES .............. $ 82,830 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES ... $ 17,850(2) $215,000(3)
TAX FEES ............. $ 3,250(4) $ 0
ALL OTHER FEES ....... $ 0 $ 0
TOTAL NON-AUDIT FEES .... $ 21,100 $215,000
TOTAL ................... $103,930 $215,000
2007
REGISTRANT COVERED ENTITIES(1)
---------- -------------------
AUDIT FEES .............. $78,175 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES ... $17,000(2) $211,000(3)
TAX FEES ............. $ 2,575(4) $ 0
ALL OTHER FEES ....... $ 0 $ 0
TOTAL NON-AUDIT FEES .... $19,575 $211,000
TOTAL ................... $97,750 $211,000
N/A- Not applicable, as not required by Item 4.
(1) Covered Entities include the Adviser (excluding sub-advisors) and any
entity controlling, controlled by or under common control with the Adviser
that provides ongoing services to the Registrant.
(2) Audit-Related Fees represent agreed upon procedures, and letters provided
to underwriters related to the offering and issuance of Preferred Shares by
the Registrant.
(3) Audit-Related Fees represent assurance and related services provided that
are reasonably related to the performance of the audit of the financial
statements of the Covered Entities' and funds advised by the Adviser or its
affiliates, specifically attestation services provided in connection with a
SAS 70 Report.
(4) Tax Fees represent tax advice and compliance services provided in
connection with the review of the Registrant's tax.
(e)(1) The audit committee's pre-approval policies and procedures are as
follows:
JOINT AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
VAN KAMPEN FUNDS
AS ADOPTED JULY 23, 2003 AND AMENDED MAY 26, 2004(1)
1. STATEMENT OF PRINCIPLES
The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.(2)
The SEC has issued rules specifying the types of services that an
independent auditor may not provide to its audit client, as well as the audit
committee's administration of the engagement of the independent auditor. The
SEC's rules establish two different approaches to pre-approving services, which
the SEC considers to be equally valid. Proposed services either: may be
pre-approved without consideration of specific case-by-case services by the
Audit Committee ("general pre-approval"); or require the specific pre-approval
of the Audit Committee ("specific pre-approval"). The Audit Committee believes
that the combination of these two approaches in this Policy will result in an
effective and efficient procedure to pre-approve services performed by the
Independent Auditors. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.
For both types of pre-approval, the Audit Committee will consider whether
such services are consistent with the SEC's rules on auditor independence. The
Audit Committee will also consider whether the Independent Auditors are best
positioned to provide the most effective and efficient services, for reasons
such as its familiarity with the Fund's business, people, culture, accounting
systems, risk profile and other factors, and whether the service might enhance
the Fund's ability to manage or control risk or improve audit quality. All such
factors will be considered as a whole, and no one factor should necessarily be
determinative.
The Audit Committee is also mindful of the relationship between fees for
audit and non-audit services in deciding whether to pre-approve any such
services and may determine for each fiscal year, the appropriate ratio between
the total amount of fees for Audit, Audit-related and Tax services for the Fund
(including any Audit-related or Tax service fees for Covered Entities that were
subject to pre-approval), and the total amount of fees for certain permissible
non-audit services classified as All Other services for the Fund (including any
such services for Covered Entities subject to pre-approval).
The appendices to this Policy describe the Audit, Audit-related, Tax and
All Other services that have the general pre-approval of the Audit Committee.
The term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will annually review and pre-approve the services
that may be provided by the Independent Auditors without obtaining specific
pre-approval
----------
(1) This Joint Audit Committee Audit and Non-Audit Services Pre-Approval Policy
and Procedures (the "Policy"), amended as of the date above, supercedes and
replaces all prior versions that may have been amended from time to time.
(2) Terms used in this Policy and not otherwise defined herein shall have the
meanings as defined in the Joint Audit Committee Charter.
from the Audit Committee. The Audit Committee will add to or subtract from the
list of general pre-approved services from time to time, based on subsequent
determinations.
The purpose of this Policy is to set forth the policy and procedures by
which the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.
The Fund's Independent Auditors have reviewed this Policy and believes that
implementation of the Policy will not adversely affect the Independent Auditors'
independence.
2. DELEGATION
As provided in the Act and the SEC's rules, the Audit Committee may
delegate either type of pre-approval authority to one or more of its members.
The member to whom such authority is delegated must report, for informational
purposes only, any pre-approval decisions to the Audit Committee at its next
scheduled meeting.
3. AUDIT SERVICES
The annual Audit services engagement terms and fees are subject to the
specific pre-approval of the Audit Committee. Audit services include the annual
financial statement audit and other procedures required to be performed by the
Independent Auditors to be able to form an opinion on the Fund's financial
statements. These other procedures include information systems and procedural
reviews and testing performed in order to understand and place reliance on the
systems of internal control, and consultations relating to the audit. The Audit
Committee will monitor the Audit services engagement as necessary, but no less
than on a quarterly basis, and will also approve, if necessary, any changes in
terms, conditions and fees resulting from changes in audit scope, Fund structure
or other items.
In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the Independent Auditors reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1.
All other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
4. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the Fund's
financial statements or, to the extent they are Covered Services, the Covered
Entities' financial statements, or that are traditionally performed by the
Independent Auditors. Because the Audit Committee believes that the provision of
Audit-related services does not impair the independence of the auditor and is
consistent with the SEC's rules on auditor independence, the Audit Committee may
grant general pre-approval to Audit-related services. Audit-related services
include, among others, accounting consultations related to accounting, financial
reporting or disclosure matters not classified as "Audit services"; assistance
with understanding and implementing new accounting and financial reporting
guidance from rulemaking authorities; agreed-upon or expanded audit procedures
related to accounting and/or billing records required to respond to or comply
with financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix
B.2. All other Audit-related services not listed in Appendix B.2 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
5. TAX SERVICES
The Audit Committee believes that the Independent Auditors can provide Tax
services to the Fund and, to the extent they are Covered Services, the Covered
Entities, such as tax compliance, tax planning and tax advice without impairing
the auditor's independence, and the SEC has stated that the Independent Auditors
may provide such services. Hence, the Audit Committee believes it may grant
general pre-approval to those Tax services that have historically been provided
by the Independent Auditors, that the Audit Committee has reviewed and believes
would not impair the independence of the Independent Auditors, and that are
consistent with the SEC's rules on auditor independence. The Audit Committee
will not permit the retention of the Independent Auditors in connection with a
transaction initially recommended by the Independent Auditors, the sole business
purpose of which may be tax avoidance and the tax treatment of which may not be
supported in the Internal Revenue Code and related regulations. The Audit
Committee will consult with Director of Tax or outside counsel to determine that
the tax planning and reporting positions are consistent with this policy.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved
the Tax Services in Appendix B.3. All Tax services involving large and complex
transactions not listed in Appendix B.3 must be specifically pre-approved by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
has been delegated), including tax services proposed to be provided by the
Independent Auditors to any executive officer or trustee/director/managing
general partner of the Fund, in his or her individual capacity, where such
services are paid for by the Fund (generally applicable only to internally
managed investment companies).
6. ALL OTHER SERVICES
The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix
B.4. Permissible All Other services not listed in Appendix B.4 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
A list of the SEC's prohibited non-audit services is attached to this
policy as Appendix B.5. The SEC's rules and relevant guidance should be
consulted to determine the precise definitions of these services and the
applicability of exceptions to certain of the prohibitions.
7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS
Pre-approval fee levels or budgeted amounts for all services to be provided
by the Independent Auditors will be established annually by the Audit Committee.
Any proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services. For each fiscal year, the Audit
Committee may determine the appropriate ratio between the total amount of fees
for Audit, Audit-related, and Tax services for the Fund (including any
Audit-related or Tax services fees for Covered Entities subject to
pre-approval), and the total amount of fees for certain permissible non-audit
services classified as All Other services for the Fund (including any such
services for Covered Entities subject to pre-approval).
8. PROCEDURES
All requests or applications for services to be provided by the Independent
Auditors that do not require specific approval by the Audit Committee will be
submitted to the Fund's Chief Financial Officer and must include a detailed
description of the services to be rendered. The Fund's Chief Financial Officer
will determine whether such services are included within the list of services
that have received the general pre-approval of the Audit Committee. The Audit
Committee will be informed on a timely basis of any such services rendered by
the Independent Auditors. Requests or applications to provide services that
require specific approval by the Audit Committee will be submitted to the Audit
Committee by both the Independent Auditors and the Fund's Chief Financial
Officer, and must include a joint statement as to whether, in their view, the
request or application is consistent with the SEC's rules on auditor
independence.
The Audit Committee has designated the Fund's Chief Financial Officer to
monitor the performance of all services provided by the Independent Auditors and
to determine whether such services are in compliance with this Policy. The
Fund's Chief Financial Officer will report to the Audit Committee on a periodic
basis on the results of its monitoring. A sample report is included as Appendix
B.7. Both the Fund's Chief Financial Officer and management will immediately
report to the chairman of the Audit Committee any breach of this Policy that
comes to the attention of the Fund's Chief Financial Officer or any member of
management.
9. ADDITIONAL REQUIREMENTS
The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the Independent Auditors
and to assure the auditor's independence from the Fund, such as reviewing a
formal written statement from the Independent Auditors delineating all
relationships between the Independent Auditors and the Fund, consistent with
Independence Standards Board No. 1, and discussing with the Independent Auditors
its methods and procedures for ensuring independence.
10. COVERED ENTITIES
Covered Entities include the Fund's investment adviser(s) and any entity
controlling, controlled by or under common control with the Fund's investment
adviser(s) that provides ongoing services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Fund's
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund. This list of Covered Entities
would include:
- Van Kampen Investments Inc.
- Van Kampen Asset Management
- Van Kampen Advisors Inc.
- Van Kampen Funds Inc.
- Van Kampen Investor Services Inc.
- Morgan Stanley Investment Management Inc.
- Morgan Stanley Trust Company
- Morgan Stanley Investment Management Ltd.
- Morgan Stanley Investment Management Company
- Morgan Stanley Asset & Investment Trust Management Company Ltd.
(e)(2) Beginning with non-audit service contracts entered into on or after May
6, 2003, the audit committee also is required to pre-approve services to
Covered Entities to the extent that the services
are determined to have a direct impact on the operations or financial reporting
of the Registrant. 100% of such services were pre-approved by the audit
committee pursuant to the Audit Committee's pre-approval policies and procedures
(included herein).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors
to the Registrant and Covered Entities is compatible with maintaining the
auditors' independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
(a) The Trust has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act whose members
are: R. Craig Kennedy, Jerry D. Choate, Rod Dammeyer
(b) Not applicable.
Item 6. Schedule of Investments.
(a) Please refer to Item #1.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Trust's and its investment advisor's Proxy Voting Policies and Procedures
are as follows:
MORGAN STANLEY INVESTMENT MANAGEMENT
PROXY VOTING POLICY AND PROCEDURES
I. POLICY STATEMENT
Introduction - Morgan Stanley Investment Management's ("MSIM") policy and
procedures for voting proxies ("Policy") with respect to securities held in the
accounts of clients applies to those MSIM entities that provide discretionary
investment management services and for which an MSIM entity has authority to
vote proxies. This Policy is reviewed and updated as necessary to address new
and evolving proxy voting issues and standards.
The MSIM entities covered by this Policy currently include the following: Morgan
Stanley Investment Advisors Inc., Morgan Stanley AIP GP LP, Morgan Stanley
Investment Management Inc., Morgan Stanley Investment Management Limited, Morgan
Stanley Investment Management Company, Morgan Stanley Asset & Investment Trust
Management Co., Limited, Morgan Stanley Investment Management Private Limited,
Van Kampen Asset Management, and Van Kampen Advisors Inc. (each an "MSIM
Affiliate" and collectively referred to as the "MSIM Affiliates" or as "we"
below).
Each MSIM Affiliate will use its best efforts to vote proxies as part of its
authority to manage, acquire and dispose of account assets. With respect to the
MSIM registered management investment companies (Van Kampen, Institutional and
Advisor Funds--collectively referred to herein as the "MSIM Funds"), each MSIM
Affiliate will vote proxies under this Policy pursuant to authority granted
under its applicable investment advisory agreement or, in the absence of such
authority, as authorized by the Board of Directors/Trustees of the MSIM Funds.
An MSIM Affiliate will not vote proxies if the "named fiduciary" for an ERISA
account has reserved the authority for itself, or in the case of an account not
governed by ERISA, the investment management or investment advisory agreement
does not authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will vote
proxies
in a prudent and diligent manner and in the best interests of clients, including
beneficiaries of and participants in a client's benefit plan(s) for which the
MSIM Affiliates manage assets, consistent with the objective of maximizing
long-term investment returns ("Client Proxy Standard"). In certain situations, a
client or its fiduciary may provide an MSIM Affiliate with a proxy voting
policy. In these situations, the MSIM Affiliate will comply with the client's
policy.
Proxy Research Services - RiskMetrics Group ISS Governance Services ("ISS") and
Glass Lewis (together with other proxy research providers as we may retain from
time to time, the "Research Providers") are independent advisers that specialize
in providing a variety of fiduciary-level proxy-related services to
institutional investment managers, plan sponsors, custodians, consultants, and
other institutional investors. The services provided include in-depth research,
global issuer analysis, and voting recommendations. While we may review and
utilize the recommendations of the Research Providers in making proxy voting
decisions, we are in no way obligated to follow such recommendations. In
addition to research, ISS provides vote execution, reporting, and recordkeeping.
Voting Proxies for Certain Non-U.S. Companies - Voting proxies of companies
located in some jurisdictions, particularly emerging markets, may involve
several problems that can restrict or prevent the ability to vote such proxies
or entail significant costs. These problems include, but are not limited to: (i)
proxy statements and ballots being written in a language other than English;
(ii) untimely and/or inadequate notice of shareholder meetings; (iii)
restrictions on the ability of holders outside the issuer's jurisdiction of
organization to exercise votes; (iv) requirements to vote proxies in person; (v)
the imposition of restrictions on the sale of the securities for a period of
time in proximity to the shareholder meeting; and (vi) requirements to provide
local agents with power of attorney to facilitate our voting instructions. As a
result, we vote clients' non-U.S. proxies on a best efforts basis only, after
weighing the costs and benefits of voting such proxies, consistent with the
Client Proxy Standard. ISS has been retained to provide assistance in connection
with voting non-U.S. proxies.
II. GENERAL PROXY VOTING GUIDELINES
To promote consistency in voting proxies on behalf of its clients, we follow
this Policy (subject to any exception set forth herein), including the
guidelines set forth below. These guidelines address a broad range of issues,
and provide general voting parameters on proposals that arise most frequently.
However, details of specific proposals vary, and those details affect particular
voting decisions, as do factors specific to a given company. Pursuant to the
procedures set forth herein, we may vote in a manner that is not in accordance
with the following general guidelines, provided the vote is approved by the
Proxy Review Committee (see Section III for description) and is consistent with
the Client Proxy Standard. Morgan Stanley AIP GP LP will follow the procedures
as described in Appendix A.
We endeavor to integrate governance and proxy voting policy with investment
goals and to follow the Client Proxy Standard for each client. At times, this
may result in split votes, for example when different clients have varying
economic interests in the outcome of a particular voting matter (such as a case
in which varied ownership interests in two companies involved in a merger result
in different stakes in the outcome). We also may split votes at times based on
differing views of portfolio managers, but such a split vote must be approved by
the Proxy Review Committee.
We may abstain on matters for which disclosure is inadequate.
A. ROUTINE MATTERS. We generally support routine management proposals. The
following are examples of routine management proposals:
- Approval of financial statements and auditor reports.
- General updating/corrective amendments to the charter, articles of
association or bylaws.
- Most proposals related to the conduct of the annual meeting, with the
following exceptions. We generally oppose proposals that relate to
"the transaction of such other business which may come before the
meeting," and open-ended requests for adjournment. However, where
management specifically states the reason for requesting an
adjournment and the requested
adjournment would facilitate passage of a proposal that would
otherwise be supported under this Policy (i.e. an uncontested
corporate transaction), the adjournment request will be supported.
We generally support shareholder proposals advocating confidential voting
procedures and independent tabulation of voting results.
B. BOARD OF DIRECTORS
1. Election of directors: In the absence of a proxy contest, we generally
support the board's nominees for director except as follows:
a. We consider withholding support from or voting against interested
directors if the company's board does not meet market standards
for director independence, or if otherwise we believe board
independence is insufficient. We refer to prevalent market
standards as promulgated by a stock exchange or other authority
within a given market (e.g., New York Stock Exchange or Nasdaq
rules for most U.S. companies, and The Combined Code on Corporate
Governance in the United Kingdom). Thus, for an NYSE company with
no controlling shareholder, we would expect that at a minimum a
majority of directors should be independent as defined by NYSE.
Where we view market standards as inadequate, we may withhold
votes based on stronger independence standards. Market standards
notwithstanding, we generally do not view long board tenure alone
as a basis to classify a director as non-independent, although
lack of board turnover and fresh perspective can be a negative
factor in voting on directors.
i. At a company with a shareholder or group that controls the
company by virtue of a majority economic interest in the
company, we have a reduced expectation for board
independence, although we believe the presence of
independent directors can be helpful, particularly in
staffing the audit committee, and at times we may withhold
support from or vote against a nominee on the view the board
or its committees are not sufficiently independent.
ii. We consider withholding support from or voting against a
nominee if he or she is affiliated with a major shareholder
that has representation on a board disproportionate to its
economic interest.
b. Depending on market standards, we consider withholding support
from or voting against a nominee who is interested and who is
standing for election as a member of the company's compensation,
nominating or audit committee.
c. We consider withholding support from or voting against a nominee
if we believe a direct conflict exists between the interests of
the nominee and the public shareholders, including failure to
meet fiduciary standards of care and/or loyalty. We may oppose
directors where we conclude that actions of directors are
unlawful, unethical or negligent. We consider opposing individual
board members or an entire slate if we believe the board is
entrenched and/or dealing inadequately with performance problems,
and/or acting with insufficient independence between the board
and management.
d. We consider withholding support from or voting against a nominee
standing for election if the board has not taken action to
implement generally accepted governance practices for which there
is a "bright line" test. For example, in the context of the U.S.
market, failure to eliminate a dead hand or slow hand poison
pills would be seen as a basis for opposing one or more incumbent
nominees.
e. In markets that encourage designated audit committee financial
experts, we consider voting against members of an audit committee
if no members are designated as such.
f. We consider withholding support from or voting against a nominee
who has failed to attend at least 75% of board meetings within a
given year without a reasonable excuse.
g. We consider withholding support from or voting against a nominee
who serves on the board of directors of more than six companies
(excluding investment companies). We also consider voting against
a director who otherwise appears to have too many commitments to
serve adequately on the board of the company.
2. Board independence: We generally support U.S. shareholder proposals
requiring that a certain percentage (up to 66 2/3%) of the company's
board members be independent directors, and promoting all-independent
audit, compensation and nominating/governance committees.
3. Board diversity: We consider on a case-by-case basis shareholder
proposals urging diversity of board membership with respect to social,
religious or ethnic group.
4. Majority voting: We generally support proposals requesting or
requiring majority voting policies in election of directors, so long
as there is a carve-out for plurality voting in the case of contested
elections.
5. Proxy access: We consider on a case-by-case basis shareholder
proposals to provide procedures for inclusion of shareholder nominees
in company proxy statements.
6. Proposals to elect all directors annually: We generally support
proposals to elect all directors annually at public companies (to
"declassify" the Board of Directors) where such action is supported by
the board, and otherwise consider the issue on a case-by-case basis
based in part on overall takeover defenses at a company.
7. Cumulative voting: We generally support proposals to eliminate
cumulative voting in the U.S. market context. (Cumulative voting
provides that shareholders may concentrate their votes for one or a
handful of candidates, a system that can enable a minority bloc to
place representation on a board). U.S. proposals to establish
cumulative voting in the election of directors generally will not be
supported.
8. Separation of Chairman and CEO positions: We vote on shareholder
proposals to separate the Chairman and CEO positions and/or to appoint
a non-executive Chairman based in part on prevailing practice in
particular markets, since the context for such a practice varies. In
many non-U.S. markets, we view separation of the roles as a market
standard practice, and support division of the roles in that context.
9. Director retirement age and term limits: Proposals recommending set
director retirement ages or director term limits are voted on a
case-by-case basis.
10. Proposals to limit directors' liability and/or broaden indemnification
of directors. Generally, we will support such proposals provided that
the officers and directors are eligible for indemnification and
liability protection if they have acted in good faith on company
business and were found innocent of any civil or criminal charges for
duties performed on behalf of the company.
C. CORPORATE TRANSACTIONS AND PROXY FIGHTS. We examine proposals relating to
mergers, acquisitions and other special corporate transactions (i.e., takeovers,
spin-offs, sales of assets, reorganizations, restructurings and
recapitalizations) on a case-by-case basis. However, proposals for mergers or
other significant transactions that are friendly and approved by the Research
Providers generally will be supported and in those instances will not need to be
reviewed by the Proxy Review
Committee, where there is no portfolio manager objection and where there is no
material conflict of interest. We also analyze proxy contests on a case-by-case
basis.
D. CHANGES IN CAPITAL STRUCTURE.
1. We generally support the following:
- Management and shareholder proposals aimed at eliminating unequal
voting rights, assuming fair economic treatment of classes of
shares we hold.
- Management proposals to increase the authorization of existing
classes of common stock (or securities convertible into common
stock) if: (i) a clear business purpose is stated that we can
support and the number of shares requested is reasonable in
relation to the purpose for which authorization is requested;
and/or (ii) the authorization does not exceed 100% of shares
currently authorized and at least 30% of the total new
authorization will be outstanding.
- Management proposals to create a new class of preferred stock or
for issuances of preferred stock up to 50% of issued capital,
unless we have concerns about use of the authority for
anti-takeover purposes.
- Management proposals to authorize share repurchase plans, except
in some cases in which we believe there are insufficient
protections against use of an authorization for anti-takeover
purposes.
- Management proposals to reduce the number of authorized shares of
common or preferred stock, or to eliminate classes of preferred
stock.
- Management proposals to effect stock splits.
- Management proposals to effect reverse stock splits if management
proportionately reduces the authorized share amount set forth in
the corporate charter. Reverse stock splits that do not adjust
proportionately to the authorized share amount generally will be
approved if the resulting increase in authorized shares coincides
with the proxy guidelines set forth above for common stock
increases.
- Management proposals for higher dividend payouts.
2. We generally oppose the following (notwithstanding management
support):
- Proposals to add classes of stock that would substantially dilute
the voting interests of existing shareholders.
- Proposals to increase the authorized or issued number of shares
of existing classes of stock that are unreasonably dilutive,
particularly if there are no preemptive rights for existing
shareholders.
- Proposals that authorize share issuance at a discount to market
rates, except where authority for such issuance is de minimis, or
if there is a special situation that we believe justifies such
authorization (as may be the case, for example, at a company
under severe stress and risk of bankruptcy).
- Proposals relating to changes in capitalization by 100% or more.
We consider on a case-by-case basis shareholder proposals to increase dividend
payout ratios, in light of market practice and perceived market weaknesses, as
well as individual company payout history and current circumstances. For
example, currently we perceive low payouts to shareholders as a
concern at some Japanese companies, but may deem a low payout ratio as
appropriate for a growth company making good use of its cash, notwithstanding
the broader market concern.
E. TAKEOVER DEFENSES AND SHAREHOLDER RIGHTS
1. Shareholder rights plans: We generally support proposals to require
shareholder approval or ratification of shareholder rights plans
(poison pills). In voting on rights plans or similar takeover
defenses, we consider on a case-by-case basis whether the company has
demonstrated a need for the defense in the context of promoting
long-term share value; whether provisions of the defense are in line
with generally accepted governance principles; and the specific
context if the proposal is made in the midst of a takeover bid or
contest for control.
2. Supermajority voting requirements: We generally oppose requirements
for supermajority votes to amend the charter or bylaws, unless the
provisions protect minority shareholders where there is a large
shareholder. In line with this view, in the absence of a large
shareholder we support reasonable shareholder proposals to limit such
supermajority voting requirements.
3. Shareholder rights to call meetings: We consider proposals to enhance
shareholder rights to call meetings on a case-by-case basis.
4. Reincorporation: We consider management and shareholder proposals to
reincorporate to a different jurisdiction on a case-by-case basis. We
oppose such proposals if we believe the main purpose is to take
advantage of laws or judicial precedents that reduce shareholder
rights.
5. Anti-greenmail provisions: Proposals relating to the adoption of
anti-greenmail provisions will be supported, provided that the
proposal: (i) defines greenmail; (ii) prohibits buyback offers to
large block holders (holders of at least 1% of the outstanding shares
and in certain cases, a greater amount, as determined by the Proxy
Review Committee) not made to all shareholders or not approved by
disinterested shareholders; and (iii) contains no anti-takeover
measures or other provisions restricting the rights of shareholders.
6. Bundled proposals: We may consider opposing or abstaining on proposals
if disparate issues are "bundled" and presented for a single vote.
F. AUDITORS. We generally support management proposals for selection or
ratification of independent auditors. However, we may consider opposing such
proposals with reference to incumbent audit firms if the company has suffered
from serious accounting irregularities and we believe rotation of the audit firm
is appropriate, or if fees paid to the auditor for non-audit-related services
are excessive. Generally, to determine if non-audit fees are excessive, a 50%
test will be applied (i.e., non-audit-related fees should be less than 50% of
the total fees paid to the auditor). We generally vote against proposals to
indemnify auditors.
G. EXECUTIVE AND DIRECTOR REMUNERATION.
1. We generally support the following proposals:
- Proposals for employee equity compensation plans and other
employee ownership plans, provided that our research does not
indicate that approval of the plan would be against shareholder
interest. Such approval may be against shareholder interest if it
authorizes excessive dilution and shareholder cost, particularly
in the context of high usage ("run rate") of equity compensation
in the recent past; or if there are objectionable plan design and
provisions.
- Proposals relating to fees to outside directors, provided the
amounts are not excessive relative to other companies in the
country or industry, and provided that the structure is
appropriate within the market context. While stock-based
compensation to outside directors is positive if moderate and
appropriately structured, we are wary of significant stock option
awards or other performance-based awards for outside directors,
as well as provisions that could result in significant forfeiture
of value on a director's decision to resign from a board (such
forfeiture can undercut director independence).
- Proposals for employee stock purchase plans that permit discounts
up to 15%, but only for grants that are part of a broad-based
employee plan, including all non-executive employees.
- Proposals for the establishment of employee retirement and
severance plans, provided that our research does not indicate
that approval of the plan would be against shareholder interest.
2. Shareholder proposals requiring shareholder approval of all severance
agreements will not be supported, but proposals that require
shareholder approval for agreements in excess of three times the
annual compensation (salary and bonus) generally will be supported. We
generally oppose shareholder proposals that would establish arbitrary
caps on pay. We consider on a case-by-case basis shareholder proposals
that seek to limit Supplemental Executive Retirement Plans (SERPs),
but support such proposals where we consider SERPs to be excessive.
3. Shareholder proposals advocating stronger and/or particular
pay-for-performance models will be evaluated on a case-by-case basis,
with consideration of the merits of the individual proposal within the
context of the particular company and its labor markets, and the
company's current and past practices. While we generally support
emphasis on long-term components of senior executive pay and strong
linkage of pay to performance, we consider whether a proposal may be
overly prescriptive, and the impact of the proposal, if implemented as
written, on recruitment and retention.
4. We consider shareholder proposals for U.K.-style advisory votes on pay
on a case-by-case basis.
5. We generally support proposals advocating reasonable senior executive
and director stock ownership guidelines and holding requirements for
shares gained in option exercises.
6. Management proposals effectively to re-price stock options are
considered on a case-by-case basis. Considerations include the
company's reasons and justifications for a re-pricing, the company's
competitive position, whether senior executives and outside directors
are excluded, potential cost to shareholders, whether the re-pricing
or share exchange is on a value-for-value basis, and whether vesting
requirements are extended.
H. SOCIAL, POLITICAL AND ENVIRONMENTAL ISSUES. We consider proposals relating to
social, political and environmental issues on a case-by-case basis to determine
whether they will have a financial impact on shareholder value. However, we
generally vote against proposals requesting reports that are duplicative,
related to matters not material to the business, or that would impose
unnecessary or excessive costs. We may abstain from voting on proposals that do
not have a readily
determinable financial impact on shareholder value. We generally oppose
proposals requiring adherence to workplace standards that are not required or
customary in market(s) to which the proposals relate.
I. FUND OF FUNDS. Certain Funds advised by an MSIM Affiliate invest only in
other MSIM Funds. If an underlying fund has a shareholder meeting, in order to
avoid any potential conflict of interest, such proposals will be voted in the
same proportion as the votes of the other shareholders of the underlying fund,
unless otherwise determined by the Proxy Review Committee.
III. ADMINISTRATION OF POLICY
The MSIM Proxy Review Committee (the "Committee") has overall responsibility for
creating and implementing the Policy, working with an MSIM staff group (the
"Corporate Governance Team"). The Committee, which is appointed by MSIM's Chief
Investment Officer of Global Equities ("CIO"), consists of senior investment
professionals who represent the different investment disciplines and geographic
locations of the firm. Because proxy voting is an investment responsibility and
impacts shareholder value, and because of their knowledge of companies and
markets, portfolio managers and other members of investment staff play a key
role in proxy voting, although the Committee has final authority over proxy
votes.
The Committee Chairperson is the head of the Corporate Governance Team, and is
responsible for identifying issues that require Committee deliberation or
ratification. The Corporate Governance Team, working with advice of investment
teams and the Committee, is responsible for voting on routine items and on
matters that can be addressed in line with these Policy guidelines. The
Corporate Governance Team has responsibility for voting case-by-case where
guidelines and precedent provide adequate guidance, and to refer other
case-by-case decisions to the Proxy Review Committee.
The Committee will periodically review and have the authority to amend, as
necessary, the Policy and establish and direct voting positions consistent with
the Client Proxy Standard.
A. COMMITTEE PROCEDURES
The Committee will meet at least monthly to (among other matters) address any
outstanding issues relating to the Policy or its implementation. The Corporate
Governance Team will timely communicate to ISS MSIM's Policy (and any amendments
and/or any additional guidelines or procedures the Committee may adopt).
The Committee will meet on an ad hoc basis to (among other matters): (1)
authorize "split voting" (i.e., allowing certain shares of the same issuer that
are the subject of the same proxy solicitation and held by one or more MSIM
portfolios to be voted differently than other shares) and/or "override voting"
(i.e., voting all MSIM portfolio shares in a manner contrary to the Policy); (2)
review and approve upcoming votes, as appropriate, for matters for which
specific direction has been provided in this Policy; and (3) determine how to
vote matters for which specific direction has not been provided in this Policy.
Members of the Committee may take into account Research Providers'
recommendations and research as well as any other relevant information they may
request or receive, including portfolio manager and/or analyst research, as
applicable. Generally, proxies related to securities held in accounts that are
managed pursuant to quantitative, index or index-like strategies ("Index
Strategies") will be voted in the same manner as those held in actively managed
accounts, unless economic interests of the accounts differ. Because accounts
managed using Index Strategies are passively managed accounts, research from
portfolio managers and/or analysts related to securities held in these accounts
may not be available. If the affected securities are held only in accounts that
are managed pursuant to Index Strategies, and the proxy relates to a matter that
is not described in this Policy, the Committee will consider all available
information from the Research Providers, and to the extent that the holdings are
significant, from the portfolio managers and/or analysts.
B. MATERIAL CONFLICTS OF INTEREST
In addition to the procedures discussed above, if the Committee determines that
an issue raises a material conflict of interest, the Committee will request a
special committee to review, and recommend a course of action with respect to,
the conflict(s) in question ("Special Committee").
The Special Committee shall be comprised of the Chairperson of the Proxy Review
Committee, the Chief Compliance Officer or his/her designee, a senior portfolio
manager (if practicable, one who is a member of the Proxy Review Committee)
designated by the Proxy Review Committee, and MSIM's relevant Chief Investment
Officer or his/her designee, and any other persons deemed necessary by the
Chairperson. The Special Committee may request the assistance of MSIM's General
Counsel or his/her designee who will have sole discretion to cast a vote. In
addition to the research provided by Research Providers, the Special Committee
may request analysis from MSIM Affiliate investment professionals and outside
sources to the extent it deems appropriate.
C. IDENTIFICATION OF MATERIAL CONFLICTS OF INTEREST
A potential material conflict of interest could exist in the following
situations, among others:
1. The issuer soliciting the vote is a client of MSIM or an affiliate of
MSIM and the vote is on a material matter affecting the issuer.
2. The proxy relates to Morgan Stanley common stock or any other security
issued by Morgan Stanley or its affiliates except if echo voting is
used, as with MSIM Funds, as described herein.
3. Morgan Stanley has a material pecuniary interest in the matter
submitted for a vote (e.g., acting as a financial advisor to a party
to a merger or acquisition for which Morgan Stanley will be paid a
success fee if completed).
If the Chairperson of the Committee determines that an issue raises a potential
material conflict of interest, depending on the facts and circumstances, the
Chairperson will address the issue as follows:
1. If the matter relates to a topic that is discussed in this Policy, the
proposal will be voted as per the Policy.
2. If the matter is not discussed in this Policy or the Policy indicates
that the issue is to be decided case-by-case, the proposal will be
voted in a manner consistent with the Research Providers, provided
that all the Research Providers have the same recommendation, no
portfolio manager objects to that vote, and the vote is consistent
with MSIM's Client Proxy Standard.
3. If the Research Providers' recommendations differ, the Chairperson
will refer the matter to the Committee to vote on the proposal. If the
Committee determines that an issue raises a material conflict of
interest, the Committee will request a Special Committee to review and
recommend a course of action, as described above. Notwithstanding the
above, the Chairperson of the Committee may request a Special
Committee to review a matter at any time as he/she deems necessary to
resolve a conflict.
D. PROXY VOTING REPORTING
The Committee and the Special Committee, or their designee(s), will document in
writing all of their decisions and actions, which documentation will be
maintained by the Committee and the Special Committee, or their designee(s), for
a period of at least 6 years. To the extent these decisions relate to a security
held by an MSIM Fund, the Committee and Special Committee, or their designee(s),
will report their decisions to each applicable Board of Trustees/Directors of
those Funds at each Board's next regularly scheduled Board meeting. The report
will contain information concerning decisions made by the Committee and Special
Committee during the most recently ended calendar quarter immediately preceding
the Board meeting.
The Corporate Governance Team will timely communicate to applicable portfolio
managers and to ISS, decisions of the Committee and Special Committee so that,
among other things, ISS will vote proxies consistent with their decisions.
MSIM will promptly provide a copy of this Policy to any client requesting it.
MSIM will also, upon client request, promptly provide a report indicating how
each proxy was voted with respect to securities held in that client's account.
MSIM's Legal Department is responsible for filing an annual Form N-PX on behalf
of each MSIM Fund for which such filing is required, indicating how all proxies
were voted with respect to such Fund's holdings.
APPENDIX A
The following procedures apply to accounts managed by Morgan Stanley AIP GP LP
("AIP").
Generally, AIP will follow the guidelines set forth in Section II of MSIM's
Proxy Voting Policy and Procedures. To the extent that such guidelines do not
provide specific direction, or AIP determines that consistent with the Client
Proxy Standard, the guidelines should not be followed, the Proxy Review
Committee has delegated the voting authority to vote securities held by accounts
managed by AIP to the Liquid Markets investment team and the Private Markets
investment team of AIP. A summary of decisions made by the investment teams will
be made available to the Proxy Review Committee for its information at the next
scheduled meeting of the Proxy Review Committee.
In certain cases, AIP may determine to abstain from determining (or
recommending) how a proxy should be voted (and therefore abstain from voting
such proxy or recommending how such proxy should be voted), such as where the
expected cost of giving due consideration to the proxy does not justify the
potential benefits to the affected account(s) that might result from adopting or
rejecting (as the case may be) the measure in question.
Waiver of Voting Rights
For regulatory reasons, AIP may either 1) invest in a class of securities of an
underlying fund (the "Fund") that does not provide for voting rights; or 2)
waive 100% of its voting rights with respect to the following:
1. Any rights with respect to the removal or replacement of a director,
general partner, managing member or other person acting in a similar
capacity for or on behalf of the Fund (each individually a "Designated
Person," and collectively, the "Designated Persons"), which may
include, but are not limited to, voting on the election or removal of
a Designated Person in the event of such Designated Person's death,
disability, insolvency, bankruptcy, incapacity, or other event
requiring a vote of interest holders of the Fund to remove or replace
a Designated Person; and
2. Any rights in connection with a determination to renew, dissolve,
liquidate, or otherwise terminate or continue the Fund, which may
include, but are not limited to, voting on the renewal, dissolution,
liquidation, termination or continuance of the Fund upon the
occurrence of an event described in the Fund's organizational
documents; provided, however, that, if the Fund's organizational
documents require the consent of the Fund's general partner or
manager, as the case may be, for any such termination or continuation
of the Fund to be effective, then AIP may exercise its voting rights
with respect to such matter.
APPENDIX B
The following procedures apply to the portion of the Van Kampen Dynamic Credit
Opportunities Fund ("VK Fund") sub advised by Avenue Europe International
Management, L.P. ("Avenue"). (The portion of the VK Fund managed solely by Van
Kampen Asset Management will continue to be subject to MSIM's Policy.)
1. Generally: With respect to Avenue's portion of the VK Fund, the Board
of Trustees of the VK Fund will retain sole authority and
responsibility for proxy voting. The Adviser's involvement in the
voting process of Avenue's portion of the VK Fund is a purely
administrative function, and serves to execute and deliver the proxy
voting decisions made by the VK Fund Board in connection with the
Avenue portion of the VK Fund, which may, from time to time, include
related administrative tasks such as receiving proxies, following up
on missing proxies, and collecting data related to proxies. As such,
the Adviser shall not be deemed to have voting power or shared voting
power with Avenue with respect to Avenue's portion of the Fund.
2. Voting Guidelines: All proxies, with respect to Avenue's portion of
the VK Fund, will be considered by the VK Fund Board or such
subcommittee as the VK Fund Board may designate from time to time for
determination and voting approval. The VK Board or its subcommittee
will timely communicate to MSIM's Corporate Governance Group its proxy
voting decisions, so that among other things the votes will be
effected consistent with the VK Board's authority.
Administration: The VK Board or its subcommittee will meet on an
adhoc basis as may be required from time to time to review
proxies that require its review and determination. The VK Board
or its subcommittee will document in writing all of its decisions
and actions which will be maintained by the VK Fund, or its
designee(s), for a period of at least 6 years. If a subcommittee
is designated, a summary of decisions made by such subcommittee
will be made available to the full VK Board for its information
at its next scheduled respective meetings.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
VAN KAMPEN DYNAMIC CREDIT OPPORTUNITIES FUND
VAN KAMPEN SENIOR INCOME TRUST
FUND MANAGEMENT
PORTFOLIO MANAGEMENT. As of the date of this report, the Fund is managed by
members of the Adviser's Senior Loan Group, which currently includes Howard
Tiffen, Senior Adviser of the Adviser, Philip Yarrow, Executive Director and
portfolio manager of the Adviser, Gerard Fogarty, Vice President and assistant
portfolio manager of the Adviser, and Jeffrey Scott, Vice President and
assistant portfolio manager of the Adviser. Mr. Yarrow is primarily responsible
for the day-to-day management of the Fund.
Mr. Tiffen joined the Adviser in 1999 and is currently associated with the
Adviser and members of the Senior Loan Group in a senior adviser capacity. Mr.
Yarrow joined the Adviser in 2005 and began managing the Fund in July 2008.
Prior to joining the Adviser in 2005, Mr. Yarrow was a credit analyst and a
portfolio manager at Bank One/JPMorgan. Mr. Fogarty joined the Adviser in 2007
and began managing the Fund in July 2008. From 2003 to 2007 and prior to joining
the Adviser, Mr. Fogarty was employed by JP Morgan and held a number of
positions including Director in the financial institutions group, and, most
recently as a Credit Executive in the commercial real estate group. Prior to
joining JP Morgan, Mr. Fogarty was employed as an Associate in the financial
institutions group at Bank of America. Mr. Scott joined the Adviser in 2005 and
began managing the Fund in July 2008. Prior to joining the Adviser, Mr. Scott
was employed by State Farm Insurance Companies where he served as an Assistant
Vice President in the Mutual Fund Group responsible for product development and
strategy as well as a Regional Vice President for Sales for the Financial
Services Division.
The composition of the team may change from time to time.
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
As of July 31, 2008, Mr. Tiffen managed six registered investment companies with
a total of approximately $6 billion in assets; no pooled investment vehicles
other than registered investment companies; and one other account with a total
of approximately $597.7 million in assets.
As of July 31, 2008, Phillip Yarrow managed three registered investment
companies with a total of approximately $4.3 billion in assets; no pooled
investment vehicles other than registered investment companies; and no other
accounts.
As of July 31, 2008, Gerard Fogarty managed three registered investment
companies with a total of approximately $4.3 billion in assets; no pooled
investment vehicles other than registered investment companies; and no other
accounts.
As of July 31, 2008, Jeffrey Scott managed three registered investment companies
with a total of approximately $4.3 billion in assets; no pooled investment
vehicles other than registered investment companies; and no other accounts.
Because the portfolio managers manages assets for other investment companies,
pooled investment vehicles, and/or other accounts (including institutional
clients, pension plans and certain high net worth individuals), there may be an
incentive to favor one client over another resulting in conflicts of interest.
For instance, the Adviser may receive fees from certain accounts that are higher
than the fee it receives from the Fund, or it may receive a performance-based
fee on certain accounts. In those instances, the portfolio manager may have an
incentive to favor the higher and/or performance-based fee accounts over the
Fund. In addition, a conflict of interest could exist to the extent the Adviser
has proprietary investments in certain accounts, where portfolio managers have
personal investments in certain accounts or when certain accounts are investment
options in the Adviser's employee benefits and/or deferred compensation plans.
The portfolio manager may have an incentive to favor these accounts over others.
If the Adviser manages accounts that engage in short sales of securities of the
type in which the Fund invests, the Adviser could be seen as harming the
performance of the Fund for the benefit of the accounts engaged in short sales
if the short sales cause the market value of the securities to fall. The Adviser
has adopted trade allocation and other policies and procedures that it believes
are reasonably designed to address these and other conflicts of interest.
PORTFOLIO MANAGERS COMPENSATION STRUCTURE
Portfolio managers receive a combination of base compensation and discretionary
compensation, comprised of a cash bonus and several deferred compensation
programs described below. The methodology used to determine portfolio manager
compensation is applied across all accounts managed by the portfolio manager.
BASE SALARY COMPENSATION. Generally, portfolio managers receive base salary
compensation based on the level of their position with the Adviser.
DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio managers
may receive discretionary compensation.
Discretionary compensation can include:
- Cash Bonus;
- Morgan Stanley's Long-Term Incentive Compensation Program awards -- a
mandatory program that defers a portion of discretionary year-end
compensation into restricted stock units or other awards based on Morgan
Stanley common stock that are subject to vesting and other conditions;
- Investment Management Alignment Plan (IMAP) awards -- a mandatory program
that defers a portion of discretionary year-end compensation and notionally
invests it in designated funds advised by the Adviser or its affiliates.
The award is subject to vesting and other conditions. Portfolio managers
must notionally invest a minimum of 25% to a maximum of 100% of the IMAP
deferral
into a combination of the designated open-end funds they manage that are
included in the IMAP Fund menu;
- Voluntary Deferred Compensation Plans -- voluntary programs that permit
certain employees to elect to defer a portion of their discretionary
year-end compensation and directly or notionally invest the deferred
amount: (1) across a range of designated investment funds, including funds
advised by the Adviser or its affiliates; and/or (2) in Morgan Stanley
stock units.
Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:
- Investment performance. A portfolio manager's compensation is linked to the
pre-tax investment performance of the funds/accounts managed by the
portfolio manager. Investment performance is calculated for one-, three-
and five-year periods measured against an appropriate securities market
index (or indices) for the funds/accounts managed by the portfolio manager.
Other funds/accounts managed by the same portfolio manager may be measured
against this same index and same rankings or ratings, if appropriate, or
against other indices and other rankings or ratings that are deemed more
appropriate given the size and/or style of such funds/accounts as set forth
in such funds'/accounts' disclosure materials and guidelines. The assets
managed by the portfolio manager in funds, pooled investment vehicles and
other accounts are described in "Other Accounts Managed by the Portfolio
Manager" above. Generally, the greatest weight is placed on the three- and
five-year periods.
- Revenues generated by the investment companies, pooled investment vehicles
and other accounts managed by the portfolio manager.
- Contribution to the business objectives of the Adviser.
- The dollar amount of assets managed by the portfolio manager.
- Market compensation survey research by independent third parties.
- Other qualitative factors, such as contributions to client objectives.
- Performance of Morgan Stanley and Morgan Stanley Investment Management
Inc., and the overall performance of the investment team(s) of which the
portfolio manager is a member.
SECURITIES OWNERSHIP OF PORTFOLIO MANAGERS
As of July 31, 2008, the portfolio managers did not own any shares of the Fund.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not Applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 11. Controls and Procedures
(a) The 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 Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(1) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.
(2)(a) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(2)(b) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Senior Income Trust
By: /s/ Jerry W. Miller
----------------------------------
Name: Jerry W. Miller
Title: Principal Executive Officer
Date: September 18, 2008
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/ Jerry W. Miller
----------------------------------
Name: Jerry W. Miller
Title: Principal Executive Officer
Date: September 18, 2008
By: /s/ Stuart N. Schuldt
----------------------------------
Name: Stuart N. Schuldt
Title: Principal Financial Officer
Date: September 18, 2008