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
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(Exact name of registrant as specified in charter)
1221 Avenue of the Americas New York, New York 10020
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(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas New York, New York 10020
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(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 7/31
Date of reporting period: 7/31/04
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, 2004.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE TRUST IS 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.
PLEASE SEE THE PROSPECTUS FOR MORE COMPLETE INFORMATION ON INVESTMENT
RISKS.
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 7/31/04
SENIOR INCOME TRUST
SYMBOL: VVR
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AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET
Since Inception
(06/24/98) 5.20% 5.62%
5-year 4.53% 6.14%
1-year 11.62% 18.13%
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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, NET
ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES,
WHEN TENDERED, 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, 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, 2004
Van Kampen Senior Income Trust is managed by the Adviser's Senior Loans team,
led by Howard Tiffen, Managing Director of the Adviser.(1)
MARKET OVERVIEW
The fiscal year ended July 31, 2004 was a highly favorable period for the
senior-loan market. Strong fundamental factors worked in the market's favor:
Gross Domestic Product (GDP) growth topped 4 percent at an annual rate for three
of the last four calendar quarters, inflation remained in check, and interest
rates finally began to rise in early 2004. As the economy continued to improve,
so too did corporate financial performance. Over the past few years, companies
have had to become much more efficient in order to thrive in an era of lower
prices and greater competition. Companies' gains in efficiency have led to
considerable operating leverage, which has helped boost profits. These factors,
coupled with improving credit quality and rising productivity, all contributed
to the senior loan market's strong performance during the period.
Yield spreads in the senior-loan market (the yield differential between senior
loans and short-term lending rates, such as LIBOR) continued to contract,
reaching near-historic lows by the end of the reporting period. This narrowing
of spreads enabled more companies to access the senior-loan market at very
favorable terms. At the same time, demand for and inflows into senior loans
continued to rise, particularly from institutional investors, as the asset class
has gained growing recognition as a defensive investment. Significantly lower
default rates also added to the attractiveness of the senior-loan market. As a
result, investors readily absorbed the record amounts of new issues that came to
market during the period, and demand and supply remained in equilibrium.
PERFORMANCE ANALYSIS
A closed-end fund's return can be calculated upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED JULY 31, 2004
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BASED ON NAV BASED ON MARKET PRICE
11.62% 18.13%
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Past performance is no guarantee of future results. Investment return, net asset
value and common share market price will fluctuate and trust shares, when sold,
may be worth more or less than their original cost. See Performance Summary for
additional performance information.
(1)Team members may change without notice at any time.
2
can differ significantly, as they did during the reporting period. For the 12-
months ended July 31, 2004, the trust returned 18.13 percent on a market-price
basis, and 11.62 percent on an NAV basis.
We believe that the trust's strong performance is the result, in part, of our
successfully working through the more challenging credits of the past--a process
that can take up to two years to complete. It is also a reflection of our
larger, experienced team of analysts and the thorough fundamental research they
conduct, which we believe has led to better investment decisions. We continue to
focus on identifying those companies that exhibit strong management, solid and
predictable cash flows, and collateral that is sufficient to provide a healthy
"second way out." This bottom-up security-selection process resulted in an
emphasis on the cable, printing and publishing, and health-care sectors during
the reporting period. We also identified some attractive opportunities in
telecommunications, and we added slightly to the portfolio's holdings in this
sector. The trust's allocation to hotels, motels and gaming also increased
during the reporting period. This industry has been strong this year as
consumers are generally traveling and spending more, and our analysis identified
issuers that offered compelling returns with strong asset coverage.
The trust also benefited during the period from our use of leverage. This
strategy involves borrowing at a short-term lending rate such as LIBOR and
reinvesting the proceeds at a spread above that rate. We use leverage on an
ongoing basis in an effort to enhance the trust's dividend, as it did during the
reporting period. Our strategy entails less interest-rate risks than that
inherent in more traditional leverage strategies, which involve borrowing at
short-term rates and lending at long-term rates.
In an effort to limit risk, we continued to keep the trust broadly diversified,
which helps enhance the portfolio's defensive characteristics. In addition,
while we do not practice sector selection, we do avoid certain industries that
have historically been poor performers in the senior-loan arena, such as fashion
and retail.
Looking ahead, while growth in corporate profits may level off, we believe that
absolute profitability and pricing power are likely to remain strong and that
companies will be able to continue to generate free cash flow. For these
reasons, we believe the environment for senior loans should continue to be quite
favorable in the coming months. We will continue with our disciplined investment
approach, seeking a relatively stable net asset value for the trust and
attractive yields.
3
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 07/31/04
INDUSTRY PERCENT OF TOTAL INVESTMENTS
Printing & Publishing 7.7%
Broadcasting--Cable 7.1
Hotels, Motels, Inns & Gaming 6.8
Beverage, Food & Tobacco 6.8
Entertainment & Leisure 6.4
Chemicals, Plastics & Rubber 5.5
Containers, Packaging & Glass 5.1
Medical Products & Services 4.9
Telecommunications--Wireless 3.9
Healthcare 3.8
Automotive 3.7
Ecological 3.1
Electronics 2.9
Retail--Stores 2.6
Buildings & Real Estate 2.3
Utilities 2.2
Aerospace/Defense 2.2
Natural Resources 1.8
Construction Material 1.5
Finance 1.3
Insurance 1.3
Home & Office Furnishings, Housewares & Durable Consumer
Products 1.3
Transportation--Personal 1.2
Telecommunications--Local Exchange Carriers 1.1
Healthcare & Beauty 1.1
Non-Durable Consumer Products 1.0
Personal & Miscellaneous Services 0.9
Retail--Oil & Gas 0.9
Retail--Specialty 0.8
Diversified Manufacturing 0.7
Broadcasting--Diversified 0.7
Machinery 0.7
Transportation--Cargo 0.6
Business Equipment 0.5
Farming & Agriculture 0.5
Pharmaceuticals 0.4
Broadcasting--Radio 0.4
Telecommunications--Long Distance 0.4
Grocery 0.4
Mining, Steel, Iron & Non-Precious Metals 0.4
Broadcasting--Television 0.3
Education & Child Care 0.2
Transportation--Rail Manufacturing 0.1
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Total Long-Term Investments 97.5%
Short-Term Investments 2.5
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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 industries shown above. All percentages are as a percentage of
total investments. Van Kampen is a wholly owned subsidiary of a global
securities firm which is engaged in a wide range of financial services
including, for example, securities trading and brokerage activities, investment
banking, research and analysis, financing and financial advisory services.
4
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen trust provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
trust's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to trust shareholders, and makes these reports available on its
public web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public web site, each trust files a
complete schedule of portfolio holdings with the SEC for the trust's
first and third fiscal quarters on Form N-Q. Van Kampen does not deliver
the reports for the first and third fiscal quarters to shareholders, nor
are the reports posted to the Van Kampen public web site. You may,
however, obtain the Form N-Q filings (as well as the Form N-CSR and
N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You
may also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at 1-202-942-8090. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
In addition to filing a complete schedule of portfolio holdings with the
SEC each fiscal quarter, each Van Kampen trust makes portfolio holdings
information available by periodically providing the information on its
public web site, www.vankampen.com. Each Van Kampen trust provides a
complete schedule of portfolio holdings on the public web site on a
calendar-quarter basis approximately 30 days after the close of the
calendar quarter. Furthermore, each Van Kampen trust provides partial
lists of its portfolio holdings (such as top 10 or top 15 trust holdings)
to the public web site each with a delay of approximately 15 days.
You may obtain copies of a trust's fiscal quarter filings, or its monthly
or calendar-quarter web site postings, by contacting Van Kampen Client
Relations at 1-800-847-2424.
5
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
The trust's policies and procedures with respect to the voting of proxies
relating to the trust's portfolio securities and information on how the
trust voted proxies relating to portfolio securities during the most
recent twelve-month period ended June 30 is available without charge,
upon request, by calling 1-800-847-2424 or by visiting our 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.
INVESTMENT POLICY CHANGES
At a meeting held on May 26, 2004, the Board of Trustees approved changes
to certain of the Trust's investment policies in order to expand the
investment options available to the Trust as the Trust seeks to achieve
its investment objective of high level of current income, consistent with
preservation of capital. The Trust's investment policy of investing at
least 80% of its total assets in senior loans remains unchanged. The
changes to the Trust's investment policies are as follows:
1. The Trust may now invest up to 5% of its total assets in senior loans
or other assets which are denominated in non-U.S. dollars;
2. The Trust's investments in senior loans now may also include up to 5%
of its total assets in senior debt obligations that are in the form of
notes in addition to investments in loan agreements, participations and
assignments;
3. The Trust's investment policy of investing up to 20% of its total
assets in warrants, equity securities and junior debt acquired in
connection with the Trust's investments in senior loans has been expanded
so that the Trust may invest up to 20% of its total assets in junior debt
securities directly and not necessarily in connection with an investment
in senior loans and the Trust may also invest in warrants and equity
securities directly provided that the Trust must own or acquire a senior
loan of the same issuer;
4. The Trust's ability to invest up to 5% of its total assets in
structured notes has been clarified to include credit-linked notes and
other types of structured investments (referred to collectively as
"structured products"). A structured note is a derivative security that
has one or more special features, such as an interest rate based on a
spread over an index or a benchmark interest rate or other reference
indicator, that may or may not correlate to the total rate of return on
one or more underlying investments (such as senior loan interests)
referenced in such notes. A credit-linked note is a derivative instrument
that is a synthetic obligation between two or more parties where the
payment of principal and/or interest is based on the performance of some
obligation (a reference obligation). Generally, investments in structured
6
products are interests in entities organized and operated for the purpose
of restructuring the investment characteristics of underlying investment
interests or securities. This generally involves the deposit or purchase
of the underlying investments (such as senior loan interests) and the
issuance of one or more classes of securities backed by or representing
interests in, the underlying investments or referencing an indicator
related to such underlying investments. The cash flow or rate of return
on the underlying investments may be apportioned among the newly issued
classes of securities to create different investment characteristics,
such as varying maturities, credit quality, payment priorities and
interest rate provisions. The cash flow or rate of return on a structured
product may be determined by applying a multiplier to the rate of total
return on the underlying investments or referenced indicator. Application
of a multiplier is comparable to the use of financial leverage, a
speculative technique. Leverage magnifies the potential for gain or the
risk of loss. As a result, a relatively small decline in the value of the
underlying investments or referenced indicator could result in a
relatively large loss in the value of the structured product. Holders of
structured products bear risks of the underlying index or reference
obligation and are subject to counterparty risk. Structured products
where the rate of return is determined by reference to a Senior Loan will
be treated as senior loans for the purposes of complying with the Trust's
policy of normally investing at least 80% of its total assets in senior
loans; and
5. The Trust's ability to invest up to 20% of its total assets in high
quality, short-term debt securities with remaining maturities of one year
or less has been expanded so that the Trust may also invest in Treasury
Inflation Protected Securities ("U.S. TIPS") and other inflation-indexed
bonds issued by the U.S. government, its agencies or instrumentalities
(and such U.S. TIPS and other inflation--indexed bonds may have any
maturity). U.S. TIPS are fixed income securities issued by the U.S.
Department of the Treasury, the principal amounts of which are adjusted
daily based upon changes in the rate of inflation (currently represented
by the non-seasonally adjusted Consumer Price Index for All Urban
Consumers. The Trust may purchase U.S. TIPS of other inflation-indexed
bonds of any maturity. U.S. TIPS pay interest on a periodic basis, equal
to a fixed interest rate applied to the inflation-indexed principal
amount. The interest on these bonds is fixed at issuance, but over the
life of the bond, this interest may be paid on an increasing or
decreasing principal value that has been adjusted for inflation.
Repayment of the original bond principal upon maturity (as adjusted for
inflation) is guaranteed even during a period of deflation. However,
because the principal amount of U.S. TIPS would be adjusted downward
during a period of deflation, the Trust will be subject to deflation risk
with respect to its investments in these securities. In addition, the
current market value of the bonds is not guaranteed, and
7
will fluctuate. If the Trust purchases U.S. TIPS in the secondary market
whose principal values have been adjusted upward due to inflation since
issuance, the Trust may experience a loss if there is a subsequent period
of deflation. If inflation is lower than expected during the period the
Trust holds a U.S. TIPS, the Trust may earn less on the security than on
a conventional bond. The Trust may invest in inflation-indexed securities
issued by the U.S. government, its agencies and instrumentalities with
other structures or characteristics as such securities become available
in the market.
8
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
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VARIABLE RATE** SENIOR LOAN INTERESTS 168.2%
AEROSPACE/DEFENSE 3.9%
$ 2,985 Anteon International Corp.,
Term Loan (i).............. Ba3 BB 12/31/10 $ 3,024,178
4,988 ARINC, Inc., Term Loan..... Ba3 BB 03/10/11 5,056,078
6,983 CACI International, Inc.,
Term Loan (i).............. Ba2 BB 05/03/11 7,017,412
5,930 DRS Technologies, Inc.,
Term Loan.................. Ba3 BB- 11/04/10 5,987,924
3,663 ILC Industries, Inc., Term
Loan....................... NR NR 08/05/10 3,727,302
15,595 The Titan Corp., Term
Loan....................... Ba3 BB- 06/30/09 15,676,152
1,174 The Titan Corp., Revolving
Credit Agreement........... Ba3 BB- 05/23/08 1,147,764
6,979 Transdigm, Inc., Term
Loan....................... B1 B+ 07/22/10 7,077,990
5,611 United Defense Industries,
Inc., Term Loan............ Ba2 BB 08/13/09 5,663,779
5,865 Vought Aircraft Industries,
Inc., Term Loan............ Ba3 B+ 12/31/06 to 06/30/08 5,930,795
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60,309,374
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AUTOMOTIVE 6.2%
2,766 AMCAN Consolidate
Technologies, Inc., Term
Loan....................... NR NR 03/28/07 2,365,310
7,105 Citation Corp., Term Loan
(k)........................ NR B- 12/01/05 to 12/01/07 6,297,072
955 Eagle Picher Industries,
Term Loan.................. B2 B+ 08/07/09 963,492
20,525 Federal-Mogul Corp., Term
Loan (c)................... NR NR 02/05/05 to 02/06/05 20,691,249
15,187 Federal-Mogul Corp.,
Revolving Credit Agreement
(c)........................ NR NR 02/05/05 15,148,890
11,618 Goodyear Tire & Rubber Co.,
Term Loan.................. B1 BB 03/31/06 11,796,027
9,950 MetoKote Corp., Term Loan.. B1 B+ 08/13/10 10,099,250
4,800 Polypore, Inc., Term
Loan....................... B1 B+ 11/12/11 4,887,000
12,687 Safelite Glass Corp., Term
Loan....................... NR NR 09/30/07 12,211,600
3,483 Tenneco Automotive, Inc.,
Term Loan.................. B1 B+ 12/12/10 3,551,426
See Notes to Financial Statements 9
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
AUTOMOTIVE (CONTINUED)
$ 6,464 TRW Automotive, Inc., Term
Loan....................... Ba2 BB+ 02/28/09 to 02/28/11 $ 6,574,222
2,142 United Components, Inc.,
Term Loan.................. B1 BB- 06/30/10 2,172,453
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96,757,991
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BEVERAGE, FOOD & TOBACCO 11.8%
3,860 Atkins Nutritionals, Inc.,
Term Loan.................. NR NR 10/29/09 3,792,450
9,739 B & G Foods, Inc., Term
Loan....................... B1 B 08/31/09 9,811,948
12,142 Birds Eye Foods, Inc., Term
Loan (i)................... B1 B+ 06/30/08 12,307,254
4,938 Burns Philp, Inc., Term
Loan (i)................... B1 B+ 02/20/09 5,005,391
5,482 Commonwealth Brands, Inc.,
Term Loan.................. NR NR 08/28/07 5,577,948
6,375 Constellation Brands, Inc.,
Term Loan.................. Ba1 BB 11/30/08 6,474,042
14,097 Dean Foods Co., Term Loan.. Ba1 BBB- 07/15/08 14,112,232
6,834 Del Monte Corp., Term
Loan....................... Ba3 BB- 12/20/10 6,941,570
6,929 Doane Pet Care Co., Term
Loan....................... B1 B- 03/31/05 to 12/29/06 6,972,581
488 Doane Pet Care Co.,
Revolving Credit
Agreement.................. B1 B- 12/29/05 474,653
15,020 Dole Food Co., Inc., Term
Loan....................... Ba3 BB 09/28/08 to 07/21/10 15,146,037
20,497 DS Waters Enterprises, LP,
Term Loan.................. B1 B+ 11/07/09 20,247,305
17,770 Land O' Lakes, Inc., Term
Loan....................... B1 B+ 10/10/08 18,084,804
4,987 Luigino's, Inc., Term
Loan....................... B1 B+ 04/02/11 5,068,547
1,055 Mafco Worldwide Corp., Term
Loan....................... NR NR 03/31/06 1,044,362
2,084 Merisant Co., Term Loan.... B1 B+ 01/11/10 2,095,400
5,970 Michael Foods, Inc., Term
Loan....................... B1 B+ 11/21/10 6,068,881
4,500 Pierre Foods, Inc., Term
Loan....................... B1 B+ 06/30/10 4,557,659
29,925 Pinnacle Foods, Inc., Term
Loan....................... B1 BB- 11/25/10 30,364,538
10 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
BEVERAGE, FOOD & TOBACCO (CONTINUED)
$ 5,962 Southern Wine & Spirits of
America, Inc., Term Loan... NR NR 07/02/08 $ 6,034,911
3,901 Swift & Co., Term Loan..... Ba2 BB 09/19/08 3,930,361
--------------
184,112,874
--------------
BROADCASTING--CABLE 12.6%
2,244 Cebridge Connections, Inc.,
Term Loan.................. NR NR 02/23/09 2,272,430
78,000 Charter Communications
Operating, LLC, Term Loan.. B2 B 04/27/10 to 04/27/11 76,957,807
9,593 Frontiervision Operating
Partners, LP, Term Loan
(c)........................ NR NR 09/30/05 to 03/31/06 9,607,130
2,354 Frontiervision Operating
Partners, LP, Revolving
Credit Agreement (c)....... NR NR 10/31/05 2,357,294
4,676 Hilton Head Communications,
LP, Term Loan (c).......... NR NR 03/31/08 4,476,342
7,300 Hilton Head Communications,
LP, Revolving Credit
Agreement (c).............. NR NR 09/30/07 6,956,951
18,408 Insight Midwest Holdings,
LLC, Term Loan............. Ba3 BB+ 12/31/09 18,707,892
5,050 MCC Iowa, LLC, Term Loan... Ba3 BB+ 09/30/10 5,109,575
2,956 Mediacom Illinois, LLC,
Term Loan.................. Ba3 BB+ 12/31/08 2,985,749
7,901 Mediacom Illinois, LLC,
Revolving Credit
Agreement.................. Ba3 BB+ 06/30/08 7,605,011
1,901 Mediacom Southeast, LLC,
Term Loan.................. Ba3 BB+ 09/30/08 1,924,962
6,903 Mediacom Southeast, LLC,
Revolving Credit
Agreement.................. Ba3 BB+ 03/31/08 6,626,711
31,245 Olympus Cable Holdings,
LLC, Term Loan (c)......... NR NR 06/30/10 to 09/30/10 30,195,543
10,871 Parnassos, LP, Term Loan
(c)........................ NR NR 06/30/07 10,754,317
See Notes to Financial Statements 11
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
BROADCASTING--CABLE (CONTINUED)
$ 4,753 Parnassos, LP, Revolving
Credit Agreement (c)....... NR NR 06/30/07 $ 4,699,340
4,461 Rainbow Media Holdings,
Inc., Term Loan............ Ba2 BB+ 03/31/09 4,480,289
--------------
195,717,343
--------------
BROADCASTING--DIVERSIFIED 1.2%
8,259 DirecTV Holdings, LLC, Term
Loan....................... Ba2 BB 03/06/10 8,383,071
10,000 Emmis Operating Co., Term
Loan....................... Ba2 B+ 11/10/11 10,121,090
--------------
18,504,161
--------------
BROADCASTING--RADIO 0.7%
7,711 Spanish Broadcasting
System, Inc., Term Loan.... B1 B+ 10/30/09 7,836,558
3,500 Susquehanna Media Co., Term
Loan....................... Ba2 BB- 03/31/12 3,545,938
--------------
11,382,496
--------------
BROADCASTING--TELEVISION 0.5%
7,500 Gray Communications
Systems, Inc., Term Loan... Ba2 B+ 06/30/11 7,579,688
--------------
BUILDINGS & REAL ESTATE 4.1%
8,000 AIMCO Properties, LP, Term
Loan (i)................... NR NR 05/30/08 8,075,000
7,897 CB Richard Ellis Services,
Inc., Term Loan (i)........ B1 B+ 03/31/10 7,948,747
4,910 Central Parking Corp., Term
Loan....................... Ba3 BB- 03/31/10 4,974,355
6,068 Corrections Corp. of
America, Term Loan......... Ba3 BB- 03/31/08 6,164,977
5,206 Crescent Real Estate
Equities Co., Term Loan.... NR NR 01/12/06 5,260,959
4,695 General Growth, LLC, Term
Loan....................... Ba1 NR 04/16/06 4,724,561
1,584 GEO Group, Inc., Term
Loan....................... Ba3 BB- 07/09/09 1,601,306
6,000 Landsource Communities
Development, LLC, Term
Loan....................... NR NR 03/31/10 6,093,750
10,820 Ventas, Inc., Term Loan.... NR NR 04/17/07 10,873,694
2,676 Ventas, Inc., Revolving
Credit Agreement........... NR NR 04/17/05 2,642,414
5,000 WFP Tower Co., LP, Term
Loan (i)................... NR NR 03/31/06 5,007,815
--------------
63,367,578
--------------
12 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
BUSINESS EQUIPMENT 0.9%
$ 4,900 Katun Corp., Term Loan..... NR B+ 06/30/09 $ 4,896,937
4,200 Verifone, Inc., Term
Loan....................... B1 B+ 06/30/11 to 12/31/11 4,278,375
5,520 Vertafore, Inc., Term
Loan....................... NR NR 03/30/08 to 03/30/10 5,568,300
--------------
14,743,612
--------------
CHEMICALS, PLASTICS & RUBBER 9.0%
6,500 Brenntag AG, Term Loan
(i)........................ B1 BB- 02/27/12 6,607,659
7,553 Celanase AG, Term Loan
(i)........................ B1 B+ 04/06/11 to 12/08/11 7,732,759
7,137 CP Kelco ApS, Term Loan.... B3 B 09/30/06 to 09/30/08 7,178,398
1,496 Hercules, Inc., Term
Loan....................... Ba1 BB 10/08/10 1,507,472
20,565 Huntsman Corp., Term Loan.. B2 B 03/31/07 20,676,748
22,500 Huntsman ICI Chemicals,
LLC, Term Loan............. B1 B 12/31/10 22,868,438
11,047 ISP Chemco, Inc., Term
Loan....................... Ba2 BB+ 03/27/11 11,157,786
15,500 KOSA B.V., Term Loan....... Ba3 BB 04/29/11 15,742,188
7,798 Krayton Polymers, LLC.,
Term Loan.................. B1 BB- 12/23/10 7,929,216
26,095 Nalco Co., Term Loan....... B1 BB- 11/04/09 to 11/04/10 26,516,076
1,489 Nutrasweet Acquisition
Corp., Term Loan........... NR NR 06/30/06 to 05/25/09 1,485,346
9,156 Rhodia Inc., Term Loan..... NR NR 06/27/06 9,047,361
1,975 Unifrax Corp., Term Loan... B1 B+ 05/19/10 2,005,610
--------------
140,455,057
--------------
CONSTRUCTION MATERIAL 2.6%
10,474 Builders FirstSource, Inc.,
Term Loan (i).............. NR NR 02/25/10 10,565,395
1,980 Building Materials Holding
Corp., Term Loan (i)....... Ba2 BB- 08/21/10 1,987,425
5,486 Compression Polymers Corp.,
Term Loan.................. B1 B 03/12/10 5,517,110
4,750 Interline Brands, Inc.,
Term Loan.................. B2 B+ 11/30/09 4,782,656
2,000 Itron, Inc., Term Loan..... Ba3 BB- 06/28/11 2,020,000
1,898 National Waterworks, Inc.,
Term Loan.................. B1 BB- 11/22/09 1,925,242
993 Sensus Metering Systems,
Inc., Term Loan............ B2 B+ 12/17/10 1,004,706
2,985 St. Mary's Cement, Inc.,
Term Loan.................. B1 BB- 12/04/09 3,026,044
9,304 Werner Holding Co., Inc.,
Term Loan.................. B1 B 06/11/09 9,065,747
--------------
39,894,325
--------------
See Notes to Financial Statements 13
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
CONTAINERS, PACKAGING & GLASS 9.0%
$ 3,600 BWAY Corp., Term Loan (i).. B1 B+ 06/30/11 $ 3,661,877
9,669 Crown Cork & Seal Co.,
Inc., Term Loan............ Ba3 BB 02/26/08 9,824,359
21,314 Dr. Pepper/Seven Up
Bottling Group, Inc., Term
Loan....................... B1 NR 12/19/10 21,567,233
17,532 Graphic Packaging
International Corp., Term
Loan....................... B1 B+ 08/08/09 to 08/09/10 17,809,445
222 Graphic Packaging
International Corp.,
Revolving Credit
Agreement.................. B1 B+ 08/08/09 214,062
4,276 Impress Metal Packaging
Holding B.V., Term Loan.... NR B+ 12/31/06 4,286,593
2,214 Jefferson Smurfit Corp.,
Revolving Credit
Agreement.................. NR NR 03/31/05 2,197,488
43,310 Owens-Illinois, Inc., Term
Loan....................... B2 BB- 04/01/07 to 04/01/08 43,803,264
5,356 Packaging Dynamics, Term
Loan....................... NR NR 09/29/08 to 09/29/09 5,367,391
2,963 Ranpak Corp., Term Loan.... NR NR 03/15/10 2,966,203
689 Smurfit-Stone Container
Corp., Term Loan........... NR NR 06/30/09 696,847
1,043 Smurfit-Stone Container
Corp., Revolving Credit
Agreement.................. NR NR 12/31/05 1,033,001
7,481 Solo Cup, Inc., Term
Loan....................... B1 B+ 02/27/11 7,577,885
5,242 Stone Container Corp., Term
Loan....................... NR NR 06/30/09 5,287,882
1,841 Tekni-Plex, Inc., Term
Loan....................... B1 B+ 06/21/08 1,854,870
5,086 Tekni-Plex, Inc., Revolving
Credit Agreement........... B1 B+ 06/21/06 5,009,301
5,985 U.S. Can Corp., Term Loan.. B2 B 01/10/10 6,056,072
--------------
139,213,773
--------------
DIVERSIFIED MANUFACTURING 1.3%
990 Amsted Industries, Inc.,
Term Loan (i).............. B1 BB- 10/15/10 1,013,512
3,305 Chart Industries, Inc, Term
Loan....................... NR NR 09/15/09 3,298,842
14 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING (CONTINUED)
$ 2,891 Juno Lighting, Inc., Term
Loan....................... B1 B+ 11/21/10 $ 2,934,273
12,284 Mueller Group, Inc., Term
Loan....................... B2 B+ 04/23/11 12,411,093
--------------
19,657,720
--------------
ECOLOGICAL 5.4%
62,506 Allied Waste North America,
Inc., Term Loan (i)........ Ba2 BB 01/15/10 63,436,954
7,609 Duratek, Inc., Term Loan... B1 BB- 12/16/09 7,608,696
3,022 Environmental Systems
Products Holdings, Term
Loan....................... B2 NR 12/12/08 to 12/12/10 3,077,355
3,499 Great Lakes Dredge & Dock
Corp., Term Loan........... B2 B- 12/22/10 3,498,673
2,978 IESI Corp., Term Loan...... B1 B+ 09/30/10 3,030,538
3,591 Waste Services, Inc., Term
Loan....................... B1 B+ 03/31/11 3,617,933
--------------
84,270,149
--------------
EDUCATION & CHILD CARE 0.3%
4,190 Educate Operating Co., LLC,
Term Loan.................. B1 B+ 03/31/11 4,239,250
656 TEC Worldwide, Inc., Term
Loan....................... NR NR 02/28/05 655,078
--------------
4,894,328
--------------
ELECTRONICS 5.1%
1,985 AMI Semiconductor, Inc.,
Term Loan.................. B1 BB- 09/26/08 2,007,331
8,872 Audio Visual Services
Corp., Term Loan........... NR NR 03/04/06 9,359,848
4,178 Automata, Inc., Term Loan
(a) (c) (g) (j)............ NR NR 02/28/03 to 02/28/04 0
6,940 Knowles Electronics, Inc.,
Term Loan.................. B3 NR 06/29/07 6,993,956
4,620 Memec Group Ltd., Term
Loan....................... Ba3 B 06/15/09 to 06/15/10 4,619,850
17,182 Rayovac Corp., Term Loan... B1 B+ 09/30/09 17,411,171
11,760 Seagate Technologies, Inc.,
Term Loan.................. Ba1 BB+ 05/13/07 11,954,040
17,415 Semiconductor Components
Industries, LLC, Term
Loan....................... B3 B 08/04/09 17,593,099
See Notes to Financial Statements 15
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
ELECTRONICS (CONTINUED)
$ 5,400 UGS Corp., Term Loan....... B1 B+ 05/27/11 $ 5,459,065
3,533 Viasystems, Inc., Term
Loan....................... NR NR 09/30/08 3,570,963
--------------
78,969,323
--------------
ENTERTAINMENT & LEISURE 11.3%
2,487 24 Hour Fitness, Inc., Term
Loan....................... B1 B 07/01/09 2,518,594
4,215 Bell Sports, Inc., Term
Loan....................... Ba3 NR 12/31/05 4,008,934
5,993 Detroit Red Wings, Inc.,
Term Loan.................. NR NR 08/30/06 6,008,162
4,597 Festival Fun Parks, LLC,
Term Loan.................. NR NR 06/30/07 to 12/31/07 4,577,890
3,034 GT Brands Holdings, Term
Loan....................... NR NR 09/30/07 3,034,091
5,910 Kerasotes Theatres, Inc.,
Term Loan.................. NR NR 12/31/08 5,976,488
60,000 Metro-Goldwyn-Mayer, Inc.,
Term Loan.................. NR NR 04/30/11 60,360,000
8,958 Mets II, LLC, Term Loan.... NR NR 10/31/06 9,025,521
4,000 New Jersey Basketball, LLC,
Term Loan.................. NR NR 10/16/04 4,005,000
4,592 Playcore Wisconsin, Inc.,
Term Loan.................. NR NR 07/01/07 4,583,985
4,738 Pure Fishing, Term Loan.... B1 BB- 09/30/10 4,815,120
26,114 Regal Cinemas, Inc., Term
Loan....................... NR BB- 11/10/10 26,457,069
2,359 Riddell Sports Group, Inc.,
Term Loan.................. NR NR 06/30/08 2,361,588
8,786 Six Flags Theme Parks,
Inc., Term Loan............ Ba3 B+ 06/30/09 8,895,853
124 Six Flags Theme Parks,
Inc., Revolving Credit
Agreement.................. Ba3 B+ 06/30/08 119,930
9,227 True Temper, Inc., Term
Loan....................... B1 B+ 03/15/11 9,342,211
12,469 Warner Music Group, Term
Loan....................... B1 B+ 02/28/11 12,664,684
4,571 Worldwide Sports &
Recreation, Inc., Term
Loan....................... NR NR 12/31/06 4,597,758
16 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
ENTERTAINMENT & LEISURE (CONTINUED)
$ 2,057 YankeeNets, LLC, Term
Loan....................... NR NR 06/25/07 $ 2,082,857
943 Yankees Holdings, LP, Term
Loan....................... NR NR 06/25/07 954,643
--------------
176,390,378
--------------
FARMING & AGRICULTURE 0.9%
3,000 Ames True Temper, Inc.,
Term Loan.................. B2 B 07/02/11 3,049,374
2,228 Central Garden & Pet Co.,
Term Loan.................. Ba2 BB+ 05/15/09 2,246,991
3,990 The Scotts Co., Term Loan.. Ba1 BB 09/30/10 4,020,994
4,888 United Industries Corp.,
Term Loan.................. B1 B+ 04/29/11 4,970,231
--------------
14,287,590
--------------
FINANCE 2.2%
3,359 DCS Business Services,
Inc., Term Loan............ NR NR 12/31/08 to 12/31/09 3,367,147
4,392 Outsourcing Solutions, Term
Loan....................... NR NR 12/09/08 4,370,316
7 Outsourcing Solutions,
Revolving Credit
Agreement.................. NR NR 12/09/08 6,941
7,047 Rent-A-Center, Inc., Term
Loan....................... Ba2 BB+ 06/30/10 7,139,471
8,157 Risk Management Assurance
Co., Term Loan............. NR NR 12/21/06 8,203,744
10,800 Transfirst Holdings, Inc.,
Term Loan.................. NR NR 03/31/10 to 03/31/11 10,864,500
--------------
33,952,119
--------------
GROCERY 0.7%
7,604 Fleming Cos., Inc., Term
Loan (c)................... NR NR 06/18/08 7,575,323
3,117 Fleming Cos., Inc.,
Revolving Credit Agreement
(c)........................ NR NR 06/18/07 3,098,946
--------------
10,674,269
--------------
HEALTHCARE 5.6%
6,849 Ameripath, Inc., Term
Loan....................... B2 B+ 03/27/10 6,900,255
8,608 AMN Healthcare Services,
Inc., Term Loan............ Ba2 BB- 10/02/08 8,661,742
35,607 Community Health Systems,
Inc., Term Loan............ Ba3 BB- 07/16/10 to 01/16/11 35,745,607
1,485 Concentra Operating Corp.,
Term Loan.................. B1 B+ 06/30/09 1,506,347
See Notes to Financial Statements 17
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
$ 6,219 FHC Health Systems, Inc.,
Term Loan.................. B2 B 10/31/06 $ 6,278,277
6,028 Genesis Healthcare Corp.,
Term Loan.................. Ba3 BB- 12/01/10 6,110,814
7,363 InteliStaf Group, Inc.,
Term Loan.................. NR NR 10/31/05 to 10/31/07 7,307,925
2,400 Medcath Holdings Corp.,
Term Loan.................. B2 B+ 06/30/11 2,435,251
3,491 Multiplan, Inc., Term
Loan....................... NR B+ 03/04/09 3,526,163
3,000 Sterigenics International,
Inc., Term Loan............ B2 B+ 06/14/11 3,037,500
4,945 Triad Hospitals, Inc., Term
Loan....................... Ba2 BB 09/30/08 5,036,240
--------------
86,546,121
--------------
HEALTHCARE & BEAUTY 2.0%
6,284 American Safety Razor Co.,
Term Loan.................. B2 B 04/29/11 6,358,875
3,281 Jafra Cosmetics
International, Inc., Term
Loan....................... B1 B+ 05/20/08 3,279,199
474 Mary Kay, Inc., Term Loan.. Ba2 BB 10/03/07 478,781
19,970 Prestige Brands Holdings,
Inc., Term Loan............ B1 B 04/06/11 to 10/06/11 20,261,994
--------------
30,378,849
--------------
HOME & OFFICE FURNISHINGS, HOUSEWARES & DURABLE CONSUMER
PRODUCTS 2.3%
6,223 Formica Corp., Term Loan... NR NR 06/10/10 6,315,918
2,400 Holmes Group, Inc., Term
Loan....................... B1 B 11/08/10 2,424,000
2,843 Hunter Fan Co., Term Loan.. NR NR 04/30/10 2,890,467
1,422 Imperial Home Decor Group,
Inc., Term Loan (a) (d).... NR NR 04/04/06 35,557
7,009 National Bedding Co., Term
Loan....................... Ba3 BB- 08/31/08 7,092,551
16,058 Sealy Mattress Co., Term
Loan....................... B2 B+ 04/06/12 16,322,319
--------------
35,080,812
--------------
18 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
HOTELS, MOTELS, INNS & GAMING 12.0%
$37,993 Aladdin Gaming, LLC, Term
Loan (a) (l)............... NR NR 02/25/05 to 02/26/08 $ 38,183,066
12,100 Alliance Gaming Corp., Term
Loan (i)................... Ba3 BB- 09/04/09 12,258,812
2,618 Ameristar Casinos, Inc.,
Term Loan.................. Ba3 BB- 12/20/06 2,653,028
5,000 Boyd Gaming Corp., Term
Loan (i)................... Ba2 BB 06/30/11 5,066,405
43,488 CNL Hospitality Partners,
LP, Term Loan.............. NR NR 01/03/05 43,487,620
2,963 Global Cash Access, LLC,
Term Loan.................. B2 B+ 03/10/10 3,012,492
5,275 Greektown Casino, LLC, Term
Loan....................... NR NR 12/31/05 5,294,797
1,990 Green Valley Ranch Gaming,
LLC, Term Loan............. B1 B+ 12/24/10 2,014,875
2,482 Isle of Capri Casinos,
Inc., Term Loan............ Ba2 BB- 04/26/08 2,513,087
10,315 Mandalay Resort Group, Term
Loan....................... NR NR 06/30/08 10,327,589
5,641 Marina District Finance
Co., Term Loan............. B2 B+ 12/15/07 5,700,232
3,595 Penn National Gaming, Inc.,
Term Loan.................. Ba3 BB- 09/01/07 3,654,738
7,200 Ruffin Gaming, LLC, Term
Loan....................... NR NR 07/14/07 7,209,000
16,941 Scientific Games Corp.,
Term Loan.................. Ba3 BB- 12/31/09 17,181,124
4,436 United Auburn Indian
Community, Term Loan....... Ba3 BB 01/24/09 4,458,475
22,720 Wyndham International,
Inc., Term Loan............ NR NR 04/01/06 to 06/30/06 22,642,114
1,339 Wyndham International,
Inc., Revolving Credit
Agreement.................. NR NR 04/01/06 1,320,753
--------------
186,978,207
--------------
INSURANCE 2.3%
10,000 Alea Group Holdings, Term
Loan....................... NR BBB- 03/31/07 10,025,000
4,988 Bristol West Holdings,
Inc., Term Loan............ Ba1 BB+ 02/18/11 5,012,437
12,000 Conseco, Inc., Term Loan... B3 BB- 06/22/10 12,183,756
3,022 Hilb, Rogal & Hamilton Co.,
Term Loan.................. Ba3 BB- 06/30/07 3,063,215
See Notes to Financial Statements 19
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
INSURANCE (CONTINUED)
$ 4,148 Universal American
Financial Corp., Term
Loan....................... NR BBB- 03/31/09 $ 4,157,869
1,980 USI Holdings Corp., Term
Loan....................... B1 BB- 08/11/08 2,002,275
--------------
36,444,552
--------------
MACHINERY 1.2%
3,756 Alliance Laundry Holdings,
LLC, Term Loan............. B1 B 08/02/07 3,770,562
4,581 Ashtead Group, PLC, Term
Loan....................... NR NR 06/01/07 4,511,962
2,596 Douglas Dynamics, LLC, Term
Loan....................... NR B+ 03/31/10 2,628,619
1,414 Flowserve Corp., Term
Loan....................... Ba3 BB- 06/30/09 1,434,690
1,245 Goodman Global Holdings,
Inc., Term Loan............ NR NR 11/21/09 1,262,897
2,494 United Rentals (North
America), Inc., Term
Loan....................... Ba3 BB 02/14/11 2,541,131
2,094 Weigh-Tronix, LLC, Term
Loan....................... NR NR 09/30/05 2,015,744
--------------
18,165,605
--------------
MEDICAL PRODUCTS & SERVICES 7.7%
3,000 Advanced Medical Optics,
Inc., Term Loan (i)........ B1 BB- 06/25/09 3,047,814
6,525 Alliance Imaging, Inc.,
Term Loan (i).............. B1 B+ 06/10/08 6,498,927
2,850 Colgate Medical, Ltd., Term
Loan....................... Ba2 BB- 12/30/08 2,881,173
10,910 CONMED Corp., Term Loan.... Ba3 BB- 12/15/09 11,060,036
6,928 Dade Behring, Inc., Term
Loan....................... Ba3 BB 10/03/08 7,018,947
34,225 DaVita, Inc., Term Loan.... Ba2 BB 03/31/07 to 03/31/09 34,617,160
13,672 Fisher Scientific
International, Inc., Term
Loan....................... Ba3 BBB 03/31/10 13,748,633
14,618 Fresenius Medical Care
Holding, Inc., Term Loan... Ba1 BB+ 02/21/10 14,762,825
10,094 Insight Health, Term
Loan....................... B1 B+ 10/17/08 10,156,626
6,212 Kinetics Concepts, Inc.,
Term Loan.................. Ba3 BB- 08/11/10 6,301,805
572 Rotech Healthcare, Inc.,
Term Loan.................. Ba2 BB 03/31/08 579,348
20 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES (CONTINUED)
$ 5,731 Symmetry Medical, Inc.,
Term Loan.................. NR NR 06/30/08 to 06/30/09 $ 5,732,232
3,204 VWR International, Inc.,
Term Loan.................. B1 BB- 04/07/11 3,268,141
--------------
119,673,667
--------------
MINING, STEEL, IRON & NON-PRECIOUS METALS 0.7%
3,353 CII Carbon, LLC, Term
Loan....................... NR NR 06/25/08 3,227,056
4,427 Fairmount Minerals, Ltd.,
Term Loan.................. NR NR 04/07/10 4,449,009
2,469 Techs Industries, Inc.,
Term Loan.................. NR NR 01/14/10 2,474,922
--------------
10,150,987
--------------
NATURAL RESOURCES 3.3%
4,959 El Paso Corp., Revolving
Credit Agreement........... B3 NR 06/30/05 4,936,104
7,024 La Grange Acquisition, LP,
Term Loan.................. NR NR 01/18/08 7,135,949
6,600 LYONDELL-CITGO Refining,
LP, Term Loan.............. NR NR 05/21/07 6,732,000
15,000 Ocean Rig ASA--(Norway),
Term Loan.................. B3 CCC 06/01/08 14,100,000
6,938 Peabody Energy Corp., Term
Loan....................... Ba1 BB+ 03/21/10 7,022,639
7,500 Transwestern Pipeline Co.,
Term Loan.................. B1 BB 04/30/09 7,567,185
3,199 U.S. Synthetic Corp., Term
Loan....................... NR NR 05/31/05 3,055,142
--------------
50,549,019
--------------
NON-DURABLE CONSUMER PRODUCTS 1.8%
2,058 Aero Products
International, Inc., Term
Loan....................... NR NR 12/19/08 1,950,401
5,000 Amscan Holdings, Inc., Term
Loan (i)................... B1 B+ 04/30/12 5,081,250
3,721 Boyds Collection, Ltd.,
Term Loan.................. B1 B 04/21/05 3,646,199
6,000 Church & Dwight Co., Inc.,
Term Loan.................. Ba2 BB 05/30/11 6,082,500
7,755 General Binding Corp., Term
Loan....................... B2 B+ 01/15/08 7,774,387
4,097 JohnsonDiversey, Inc., Term
Loan....................... Ba3 BB- 11/03/09 4,167,390
--------------
28,702,127
--------------
See Notes to Financial Statements 21
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
PERSONAL & MISCELLANEOUS SERVICES 1.5%
$ 2,326 Alderwoods Group, Inc.,
Term Loan (i).............. B1 BB- 09/29/08 $ 2,363,651
8,795 Coinmach Laundry Corp.,
Term Loan.................. B1 B+ 07/25/09 8,893,841
3,000 Coinstar, Inc., Term
Loan....................... Ba3 BB- 07/07/11 3,052,500
2,869 Encompass Service Corp.,
Term Loan (a) (c) (j)...... Caa1 NR 05/10/07 200,839
4,489 Global Imaging Systems,
Inc., Term Loan............ Ba3 BB- 05/10/10 4,539,248
2,300 InfoUSA, Inc., Term Loan... Ba3 BB 03/25/09 2,328,750
1,081 Iron Mountain, Inc., Term
Loan....................... B1 BB- 04/02/11 1,090,203
969 Stewart Enterprises, Inc.,
Term Loan.................. Ba3 BB 01/31/06 976,372
--------------
23,445,404
--------------
PHARMACEUTICALS 0.8%
11,742 MedPointe, Inc., Term
Loan....................... B1 B 09/30/07 to 09/30/08 11,781,650
--------------
PRINTING & PUBLISHING 13.5%
4,752 21st Century Newspapers,
Term Loan.................. NR NR 08/27/08 4,751,923
10,500 Adams Outdoor Advertising,
LP, Term Loan (i).......... B1 B+ 10/15/11 to 04/15/12 10,637,659
431 Advanstar Communications,
Inc., Term Loan (i)........ B2 B 10/11/07 433,453
7,215 American Media Operations,
Inc., Term Loan (i)........ Ba3 B+ 04/01/07 7,329,041
7,463 American Reprographics Co.,
Term Loan (i).............. B1 BB- 06/18/09 7,574,437
1,485 CanWest Media, Inc., Term
Loan (i)................... Ba3 B+ 08/15/09 1,505,957
10,000 Cygnus Business Media,
Inc., Term Loan............ B3 B 07/13/09 9,975,000
1,652 Daily News, LP, Term Loan.. NR NR 03/19/08 1,660,336
4,852 Day International Group,
Inc., Term Loan............ B1 B 09/16/09 4,891,670
8,650 Dex Media East, LLC, Term
Loan....................... Ba2 BB- 11/08/08 to 05/08/09 8,771,890
40,376 Dex Media West, LLC, Term
Loan....................... Ba2 BB- 09/09/09 to 03/09/10 41,069,316
9,978 F&W Publications, Inc.,
Term Loan.................. NR NR 12/31/09 10,084,396
22 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
PRINTING & PUBLISHING (CONTINUED)
$ 7,500 Freedom Communications,
Term Loan.................. Ba3 BB 05/18/12 $ 7,623,045
7,363 Haights Cross
Communications, LLC, Term
Loan....................... B3 B- 08/20/08 7,564,969
4,050 Herald Media, Inc., Term
Loan....................... NR NR 07/31/11 to 01/31/12 4,102,125
7,751 Journal Register Co., Term
Loan....................... Ba1 BB+ 09/29/06 7,748,307
5,867 Lamar Media Corp., Term
Loan....................... Ba2 BB- 06/30/10 5,935,600
3,112 Liberty Group Operating,
Inc., Term Loan............ B1 B 03/31/07 3,139,705
2,488 MediaNews Group, Inc., Term
Loan....................... NR NR 12/30/10 2,522,740
7,000 Morris Publishing Group,
LLC, Term Loan............. Ba1 BB 03/31/11 7,089,691
4,800 Network Communications,
Inc., Term Loan............ NR NR 06/30/11 4,854,000
7,808 Primedia, Inc., Term
Loan....................... B3 B 06/30/08 to 06/30/09 7,496,183
5,874 R.H. Donnelley, Inc., Term
Loan....................... Ba3 BB 12/31/08 to 06/30/10 5,949,977
10,983 TransWestern Publishing
Co., LLC, Term Loan........ B1 BB- 02/25/11 11,130,083
3,600 Vutek, Inc., Term Loan..... B1 NR 06/25/10 3,633,750
16,500 Xerox Corp., Term Loan..... NR BB- 09/30/08 16,601,409
5,936 Ziff-Davis Media, Inc.,
Term Loan.................. B3 CCC 03/31/07 5,885,101
--------------
209,961,763
--------------
RETAIL--OIL & GAS 1.6%
1,236 Barjan Products, LLC, Term
Loan....................... NR NR 04/30/07 1,006,197
888 Barjan Products, LLC,
Revolving Credit
Agreement.................. NR NR 04/30/07 887,627
7,500 Getty Petroleum Marketing,
Inc., Term Loan............ B1 B+ 05/19/10 7,626,563
14,826 The Pantry, Inc., Term
Loan....................... B1 B+ 03/12/11 15,048,478
--------------
24,568,865
--------------
RETAIL--SPECIALTY 1.4%
3,177 DRL Acquisition, Inc., Term
Loan....................... NR NR 04/30/09 3,168,933
1,984 Home Interiors & Gifts,
Inc., Term Loan............ B2 B 03/31/11 1,919,264
See Notes to Financial Statements 23
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
RETAIL--SPECIALTY (CONTINUED)
$ 5,604 Jostens, Inc., Term Loan... Ba3 B+ 07/29/10 $ 5,687,889
11,272 Nebraska Book Co., Inc.,
Term Loan.................. B2 B 03/04/11 11,405,602
--------------
22,181,688
--------------
RETAIL--STORES 4.5%
2,448 Advance Stores Co., Inc.,
Term Loan (i).............. Ba2 BB 11/30/06 to 11/30/07 2,481,556
1,523 Alimentation Couche-Tard,
Inc., Term Loan (i)........ Ba2 BB 12/17/10 1,543,900
6,219 CSK Auto, Inc., Term
Loan....................... Ba3 B+ 06/19/09 6,306,204
2,438 Murray's Discount Auto
Stores, Inc., Term Loan.... NR NR 08/08/09 2,440,547
56,450 Rite Aid Corp., Term
Loan....................... Ba3 BB 04/30/08 57,734,238
--------------
70,506,445
--------------
TELECOMMUNICATIONS--LOCAL EXCHANGE CARRIERS 2.0%
8,980 Cincinnati Bell, Inc., Term
Loan....................... B1 B+ 06/30/08 9,087,265
3,000 Fairpoint Communications,
Inc., Term Loan............ B1 BB- 03/31/07 3,011,250
4,987 McLeod USA, Inc., Term
Loan....................... Caa3 NR 05/30/08 2,468,766
1,719 Orius Corp., LLC, Term
Loan....................... NR NR 01/23/09 to 01/23/10 501,419
1,127 Orius Corp., LLC, Revolving
Credit Agreement........... NR NR 01/23/05 873,119
14,581 Qwest Corp., Term Loan..... Ba3 BB- 06/30/07 15,150,528
7,500 WCI Capital Corp., Term
Loan (a) (c)............... NR NR 09/30/07 18,750
1,747 WCI Capital Corp.,
Revolving Credit Agreement
(a) (c).................... NR NR 12/31/04 61,153
--------------
31,172,250
--------------
TELECOMMUNICATIONS--LONG DISTANCE 0.7%
3,000 360networks Holdings, Inc.,
Term Loan.................. NR NR 11/12/07 2,940,000
20,807 Pacific Crossing, Ltd.,
Term Loan (a) (c).......... NR NR 07/28/06 1,378,492
6,691 Williams Communications,
LLC, Term Loan............. NR NR 09/08/06 6,682,636
--------------
11,001,128
--------------
TELECOMMUNICATIONS--WIRELESS 6.3%
2,400 American Tower, LP, Term
Loan (i)................... B1 B 08/31/11 2,438,251
2,400 Cellular South, Inc., Term
Loan....................... NR NR 05/04/11 2,434,500
24 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--WIRELESS (CONTINUED)
$12,968 Centennial Cellular, Inc.,
Term Loan.................. B2 B- 02/09/11 $ 13,047,393
3,970 Crown Castle International
Corp., Term Loan........... B1 B- 09/30/10 3,986,817
8,936 Dobson Cellular Systems,
Inc., Term Loan............ B1 B- 03/31/10 8,965,551
8,690 Microcell Solutions, Inc.,
Term Loan.................. B3 B- 03/17/11 8,737,074
31,153 Nextel Finance Co., Term
Loan....................... Ba1 BBB 12/15/10 31,401,857
10,200 Nextel Partners, Inc., Term
Loan....................... B1 B+ 05/31/11 10,377,225
3,695 Spectrasite Communications,
Inc., Term Loan............ B1 B+ 06/30/07 3,734,885
905 Syniverse Holding, LLC.,
Term Loan.................. Ba3 B+ 12/31/06 918,427
12,000 Western Wireless Corp.,
Term Loan.................. B2 B- 05/31/11 12,186,432
--------------
98,228,412
--------------
TEXTILES & LEATHER 0.0%
1,995 Malden Mills Industries,
Inc., Term Loan (a)........ NR NR 10/01/08 15,985
--------------
TRANSPORTATION--CARGO 1.1%
7,579 American Commercial Lines,
LLC, Term Loan (c)......... Caa1 NR 06/30/06 to 06/30/07 7,366,666
972 Horizon Lines, LLC,
Revolving Credit
Agreement.................. B2 B+ 07/07/09 940,410
5,382 Pacer International, Inc.,
Term Loan.................. B1 BB- 06/10/10 5,459,724
1,489 Quality Distribution, Inc.,
Term Loan.................. B2 B+ 11/13/09 1,481,306
2,400 Transport Industries, LP,
Term Loan.................. B2 B+ 06/13/10 2,404,500
--------------
17,652,606
--------------
TRANSPORTATION--PERSONAL 2.0%
22,533 Laidlaw Investments Ltd.,
Term Loan.................. Ba3 BB+ 06/19/09 22,969,990
911 Neoplan USA Corp.,
Revolving Credit Agreement
(d)........................ NR NR 06/30/06 911,250
7,740 Transcore Holdings, Inc.,
Term Loan.................. NR NR 01/05/08 7,836,685
--------------
31,717,925
--------------
See Notes to Financial Statements 25
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT --------------
(000) BORROWER MOODY'S S&P STATED MATURITY* VALUE
----------------------------------------------------------------------------------------------
TRANSPORTATION--RAIL MANUFACTURING 0.2%
$ 3,000 Helm, Inc., Term Loan...... NR NR 07/02/10 $ 3,038,124
--------------
UTILITIES 4.0%
6,800 AES Corp., Term Loan (i)... Ba3 B+ 04/30/08 6,897,145
22,444 Allegheny Energy, Inc.,
Term Loan (i).............. B1 B 03/08/11 to 06/08/11 22,847,462
2,547 CenterPoint Energy, Inc.,
Revolving Credit
Agreement.................. Ba1 BBB- 10/07/06 2,541,530
4,190 Midwest Generation, LLC,
Term Loan.................. Ba3 B+ 04/27/11 4,249,724
20,071 Mission Energy Holdings
Co., Term Loan............. Caa2 CCC 12/11/06 20,171,133
4,764 Pike Electric, Inc., Term
Loan....................... NR NR 07/01/12 4,853,324
--------------
61,560,318
--------------
TOTAL VARIABLE RATE** SENIOR LOAN INTERESTS 168.2%.......................... 2,614,636,657
--------------
NOTES 1.5%
Alderwoods Group, Inc. ($2,120,200 par, 12.25% coupon, maturing 01/02/09).... 2,350,772
American Home Patient, Inc. ($5,430,689 par, 6.79% to 8.57% coupon, maturing
7/1/09).................................................................... 4,190,683
Barjan Products, LLC ($1,122,526 par, 5.00% coupon, maturing 04/30/07) (k)... 0
Commonwealth Brands, Inc. ($1,500,000 par, 8.74% coupon, maturing 04/15/08)
(h)........................................................................ 1,567,500
Dade Behring, Inc. ($5,034,823 par, 11.91% coupon, maturing 10/03/10)........ 5,613,827
Pioneer Cos., Inc. ($1,624,077 par, 5.09% coupon, maturing 12/31/06) (h)..... 1,542,873
Satelites Mexicanos ($7,385,000 par, 5.84% coupon, maturing 06/30/04), 144A
Private Placement (b) (g) (h).............................................. 6,388,025
US Unwired, Inc. ($1,200,000 par, 5.79% coupon, maturing 06/15/10) (h)....... 1,215,000
--------------
TOTAL NOTES.................................................................. 22,868,680
--------------
EQUITIES 2.4%
Barjan Products, Inc. (2,201,571 preferred shares, Acquired 06/21/04, Cost
$3,104,488) (e) (f)........................................................ 0
Dade Behring Holdings, Inc. (166,320 common shares) (e)...................... 8,264,441
Environmental Systems Products Holdings, Inc. (3,275 common shares, Acquired
06/22/04, Cost $0) (e) (f)................................................. 33
Gentek, Inc. (183,978 common shares) (e)..................................... 8,095,032
Gentek, Inc. (Warrants for 271 common shares) (e)............................ 0
Holmes Group, Inc. (Warrants for 1,851 common shares, Acquired 05/24/04, Cost
$0) (f).................................................................... 5,183
IDT Corp. (22,898 common shares) (e)......................................... 360,644
26 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
DESCRIPTION VALUE
----------------------------------------------------------------------------------------------
EQUITIES (CONTINUED)
Imperial Home Decor Group, Inc. (512,023 common shares, Acquired 04/26/01,
Cost $522,263) (d) (e) (f)................................................. $ 0
Malden Mills Industries (263,436 common shares, Acquired 10/29/03, Cost $0)
(e) (f).................................................................... 0
Malden Mills Industries (860,902 preferred shares, Acquired 10/29/03, Cost
$0) (e) (f)................................................................ 0
NeighborCare, Inc. (512,640 common shares) (e)............................... 13,144,090
Neoplan USA Corp. (2,262 preferred shares, Acquired 09/04/03, Cost
$1,074,522) (d) (e) (f).................................................... 1,072,775
Neoplan USA Corp. (8,517 common shares, Acquired 09/04/03, Cost $85) (d) (e)
(f)........................................................................ 85
Orius Corp. (315,080 common shares, Acquired 02/03/03, Cost $0) (e) (f)...... 0
Outsourcing Solutions (74,835 common shares, Acquired 01/30/04, Cost
$3,399,503) (e) (f)........................................................ 2,619,225
Railworks Corp. (186 preferred shares, Acquired 02/10/03, Cost $2,135,664)
(e) (f).................................................................... 0
Railworks Corp. (Warrants for 3,282 common shares, Acquired 02/10/03, Cost
$0) (e) (f)................................................................ 0
Rotech Medical Corp. (48,485 common shares, Acquired 06/12/02, Cost $193,940)
(e) (f).................................................................... 0
Safelite Glass Corp. (421,447 common shares, Acquired 10/20/00, Cost
$1,714,995) (e) (f)........................................................ 3,991,103
Safelite Realty (28,448 common shares, Acquired 10/06/00, Cost $0) (f)....... 0
Targus Group International (Warrants for 28,689 common shares, Acquired
01/30/04, Cost $0) (e) (f)................................................. 1,147
--------------
TOTAL EQUITIES 2.4%......................................................... 37,553,758
--------------
TOTAL LONG-TERM INVESTMENTS 172.1%
(Cost $2,683,027,599)...................................................... 2,675,059,095
--------------
SHORT-TERM INVESTMENTS 4.4%
REPURCHASE AGREEMENT 3.0%
State Street Bank & Trust Corp. ($47,200,000 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of 1.25%,
dated 07/30/04, to be sold on 08/02/04 at $47,203,278) (i)................. 47,200,000
--------------
See Notes to Financial Statements 27
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
DESCRIPTION VALUE
----------------------------------------------------------------------------------------------
TIME DEPOSIT 1.4%
State Street Bank & Trust Corp. ($21,730,406 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of 0.75%,
dated 07/30/04, to be sold on 08/02/04 at $21,731,311) (i)................. $ 21,730,406
--------------
TOTAL SHORT-TERM INVESTMENTS 4.4%
(Cost $68,930,406)......................................................... 68,930,406
--------------
TOTAL INVESTMENTS 176.5%
(Cost $2,751,958,005)...................................................... 2,743,989,501
BORROWINGS (29.0)%.......................................................... (450,000,000)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (45.0)%................... (700,130,072)
LIABILITIES IN EXCESS OF OTHER ASSETS (2.5)%................................ (39,750,662)
--------------
NET ASSETS 100.0%........................................................... $1,554,108,767
==============
NR--Not rated
+ Bank Loans rated below Baa by Moody's Investor Service, Inc. or BBB by
Standard & Poor's Group are considered to be below investment grade. (Bank
loan ratings are unaudited.)
Industry percentages are calculated as a percentage of net assets.
(a) This Senior Loan interest is non-income producing.
(b) 144A Securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally
transactions with qualified institutional buyers.
(c) This borrower has filed for protection in federal bankruptcy court.
(d) Affiliated company. See Notes to Financial Statements.
(e) Non-income producing security as this stock or warrant currently does not
declare dividends.
(f) 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 0.49%
of the net assets of the Trust.
(g) The borrower is in the process of restructuring or amending the terms of
this loan.
(h) Variable rate security. Interest rate shown is that in effect at July 31,
2004.
(i) A portion of this security is designated in connection with unfunded
commitments.
(j) This borrower is currently in liquidation.
28 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JULY 31, 2004 continued
(k) Payment-in-kind security.
(1) Subsequent to July 31, 2004, this borrower has emerged from bankruptcy.
* 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 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 and (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.
See Notes to Financial Statements 29
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
July 31, 2004
ASSETS:
Total Investments (Cost $2,751,958,005)..................... $2,743,989,501
Cash........................................................ 6
Receivables:
Interest and Fees......................................... 9,467,250
Investments Sold.......................................... 5,216,213
Other....................................................... 163,729
--------------
Total Assets............................................ 2,758,836,699
--------------
LIABILITIES:
Payables:
Borrowings................................................ 450,000,000
Investments Purchased..................................... 50,429,602
Investment Advisory Fee................................... 1,930,136
Administrative Fee........................................ 454,150
Distributor and Other Affiliates.......................... 304,588
Income Distributions--Common Shares....................... 94,426
Accrued Expenses............................................ 530,818
Accrued Interest Expense.................................... 494,407
Trustees' Deferred Compensation and Retirement Plans........ 359,733
--------------
Total Liabilities....................................... 504,597,860
Preferred Shares (including accrued distributions).......... 700,130,072
--------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $1,554,108,767
==============
NET ASSET VALUE PER COMMON SHARE ($1,554,108,767 divided by
180,010,000 shares outstanding)........................... $ 8.63
==============
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............................................. 1,788,750,056
Accumulated Undistributed Net Investment Income............. 538,614
Net Unrealized Depreciation................................. (7,968,504)
Accumulated Net Realized Loss............................... (229,011,499)
--------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $1,554,108,767
==============
PREFERRED SHARES
($.01 par value, authorized 28,000 shares, 28,000 issued
with liquidation preference of $25,000 per share)......... $ 700,000,000
==============
NET ASSETS INCLUDING PREFERRED SHARES....................... $2,254,108,767
==============
30 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended July 31, 2004
INVESTMENT INCOME:
Interest ($29,987 received as interest income from
affiliates)............................................... $105,424,904
Dividends................................................... 95,820
Other....................................................... 5,145,059
------------
Total Income............................................ 110,665,783
------------
EXPENSES:
Investment Advisory Fee..................................... 19,020,872
Administrative Fee.......................................... 4,475,499
Credit Line................................................. 1,951,307
Legal....................................................... 959,561
Preferred Share Maintenance................................. 830,950
Custody..................................................... 587,917
Trustees' Fees and Related Expenses......................... 104,879
Other....................................................... 1,147,580
------------
Total Operating Expenses................................ 29,078,565
------------
Interest Expense........................................ 4,718,735
------------
NET INVESTMENT INCOME....................................... $ 76,868,483
============
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain ($57,947 from affiliates)................. $ 21,290,086
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (87,962,378)
End of the Period......................................... (7,968,504)
------------
Net Unrealized Appreciation During the Period............... 79,993,874
------------
NET REALIZED AND UNREALIZED GAIN............................ $101,283,960
============
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (3,970,944)
============
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $174,181,499
============
See Notes to Financial Statements 31
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JULY 31, 2004 JULY 31, 2003
--------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 76,868,483 $ 83,693,834
Net Realized Gain/Loss.................................. 21,290,086 (33,874,642)
Net Unrealized Appreciation During the Period........... 79,993,874 58,694,953
Distributions to Preferred Shareholders:
Net Investment Income................................. (3,970,944) -0-
-------------- --------------
Change in Net Assets Applicable to Common Shares from
Operations............................................ 174,181,499 108,514,145
Distributions to Common Shareholders:
Net Investment Income................................. (71,823,861) (79,888,289)
-------------- --------------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES
FROM INVESTMENT ACTIVITIES............................ 102,357,638 28,625,856
FROM CAPITAL TRANSACTIONS:
Offering Costs on Preferred Shares...................... (6,835,194) -0-
-------------- --------------
TOTAL INCREASE IN NET ASSETS APPLICABLE TO COMMON
SHARES................................................ 95,522,444 28,625,856
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................. 1,458,586,323 1,429,960,467
-------------- --------------
End of the Period (Including accumulated undistributed
net investment income of $538,614 and $1,189,293,
respectively)......................................... $1,554,108,767 $1,458,586,323
============== ==============
32 See Notes to Financial Statements
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Cash Flows
For the Year Ended July 31, 2004
CHANGE IN NET ASSETS FROM OPERATIONS (EXCLUDING PREFERRED
SHARE DISTRIBUTIONS)...................................... $ 178,152,443
---------------
Adjustments to Reconcile the Change in Net Assets from
Operations to Net Cash Used for Operating Activities:
Increase in Investments at Value.......................... (825,273,371)
Increase in Interest and Fees Receivables................. (2,238,002)
Decrease in Receivable for Investments Sold............... 18,197,560
Decrease in Other Assets.................................. 15,319
Increase in Investment Advisory Fee Payable............... 586,757
Increase in Administrative Fee Payable.................... 138,061
Increase in Distributor and Affiliates Payable............ 230,192
Decrease in Payable for Investments Purchased............. (36,503,470)
Decrease in Accrued Expenses.............................. (13,578)
Increase in Trustees' Deferred Compensation and Retirement
Plans................................................... 44,313
Change in Accrued Interest Expense........................ 137,645
---------------
Total Adjustments....................................... (844,678,574)
---------------
NET CASH USED FOR OPERATING ACTIVITIES...................... (666,526,131)
---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Preferred Shares................................ 700,000,000
Change in Offering Costs on Preferred Shares................ (6,835,194)
Change in Bank Borrowings................................... 49,000,000
Change in Intra-day Credit Line with Custodian Bank......... (68,362)
Cash Distributions Paid..................................... (75,570,307)
---------------
Net Cash Provided by Financing Activities............... 666,526,137
---------------
NET INCREASE IN CASH........................................ 6
Cash at Beginning of the Period............................. -0-
---------------
CASH AT THE END OF THE PERIOD............................... $ 6
===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for Interest...................... $ 4,581,090
===============
See Notes to Financial Statements 33
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE TRUST
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
-------------------
2004 2003
-------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD (a)................ $ 8.10 $ 7.94
-------- --------
Net Investment Income...................................... .42 .46
Net Realized and Unrealized Gain/Loss...................... .57 .14
Common Share Equivalent of Distributions Paid to Preferred
Shareholders:
Net Investment Income.................................... (.02) -0-
-------- --------
Total from Investment Operations............................ .97 .60
-------- --------
Distributions To Common Shareholders:
Net Investment Income...................................... (.40) (.44)
Net Realized Gain.......................................... -0- -0-
Dilutive impact from the offering of Money Market Cumulative
Preferred Shares........................................... (.04) -0-
-------- --------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 8.63 $ 8.10
======== ========
Common Share Market Price at End of the Period.............. $ 8.84 $ 7.84
Total Return* (b)........................................... 18.13% 25.06%
Net Assets Applicable to Common Shares at End of the Period
(In millions).............................................. $1,554.1 $1,458.6
Ratios to Average Net Assets applicable to Common Shares
excluding Borrowings:
Operating Expense* (f)..................................... 1.91% 1.59%
Interest Expense (f)....................................... .31% .62%
Gross Expense* (f)......................................... 2.22% 2.21%
Net Investment Income* (f)................................. 5.06% 5.98%
Net Investment Income* (g)................................. 4.80% N/A
Portfolio Turnover (c)...................................... 84% 78%
SUPPLEMENTAL RATIOS:
Ratios to Average Net Assets including Preferred Shares and
Borrowings:
Operating Expense* (f)..................................... 1.30% 1.19%
Interest Expense (f)....................................... .21% .46%
Gross Expense* (f)......................................... 1.51% 1.65%
Net Investment Income* (f)................................. 3.44% 4.47%
Net Investment Income* (g)................................. 3.26% N/A
SENIOR INDEBTEDNESS:
Total Preferred Shares Outstanding......................... 28,000 N/A
Asset Coverage Per Preferred Share (h)..................... $ 80,509 N/A
Involuntary Liquidating Preference Per Preferred Share..... $ 25,000 N/A
Average Market Value Per Preferred Share................... $ 25,000 N/A
Total Borrowing Outstanding (In thousands)................. $450,000 $401,000
Asset Coverage Per $1,000 Unit of Senior Indebtedness
(d)...................................................... 6,009 4,637
* If certain expenses had not been voluntarily assumed by Van Kampen, total
return would have been lower and the Ratio of Operating Expenses to Average
Net Assets, Ratio of Gross Expenses to Average Net Assets and the Ratio of
Net Investment Income to Average Net Assets would have been 1.21%, 1.49% and
6.90% for the period ended July 31, 1998.
** Non-Annualized
(a)Net asset value on June 24, 1998 of $10.00 is adjusted for common share
offering costs of $.013.
(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)Calculation includes the proceeds from principal repayments and sales of
variable rate senior loan interests.
(d)Calculated by subtracting the Trust's total liabilities (not including 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.
34
VAN KAMPEN SENIOR INCOME TRUST
FINANCIAL HIGHLIGHTS continued
JUNE 24, 1998
(COMMENCEMENT
YEAR ENDED JULY 31, OF INVESTMENT
---------------------------------------------- OPERATIONS) TO
2002 (E) 2001 2000 1999 JULY 31, 1998
---------------------------------------------------------------
$ 8.51 $ 9.65 $ 10.08 $ 10.07 $ 9.99
-------- -------- -------- -------- --------
.49 .79 .81 .77 .07
(.55) (1.10) (.42) -0- .01
-0- -0- -0- -0- -0-
-------- -------- -------- -------- --------
(.06) (.31) .39 .77 .08
-------- -------- -------- -------- --------
(.51) (.83) (.81) (.76) -0-
-0- -0- (.01) -0- -0-
-0- -0- -0- -0- -0-
-------- -------- -------- -------- --------
$ 7.94 $ 8.51 $ 9.65 $ 10.08 $ 10.07
======== ======== ======== ======== ========
$ 6.67 $ 7.79 $ 8.75 $ 9.5625 $10.0625
-8.05% -1.42% .61% 2.98% .63%**
$1,430.0 $1,532.7 $1,736.5 $1,815.1 $1,812.1
1.48% 1.63% 1.75% 1.66% 1.18%
.53% 2.15% 2.49% 2.37% .28%
2.01% 3.78% 4.24% 4.03% 1.46%
6.02% 8.90% 8.19% 7.72% 6.94%
N/A N/A N/A N/A N/A
65% 55% 57% 28% 3%**
1.22% 1.20% 1.24% 1.18% N/A
.44% 1.58% 1.77% 1.67% N/A
1.66% 2.78% 3.01% 2.85% N/A
4.95% 6.55% 5.83% 5.46% N/A
N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A
$370,159 $375,000 $700,000 $800,000 $400,000
4,863 5,087 3,481 3,269 5,530
(e)As required, effective August 1, 2001, the Trust has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on fixed income securities. The effect of this change for
the year ended July 31, 2002 was to decrease the ratio of net investment
income to average net asset applicable to common shares by .01%. Net
investment income per share and net realized and unrealized gains and losses
per share were unaffected by the adjustments. Per share, ratios and
supplemental data for the periods prior to July 31, 2002 have not been
restated to reflect this change in presentation.
(f)Ratios do not reflect the effect of distributions to preferred shareholders.
(g)Ratios reflect the effect of distributions to preferred shareholders.
(h)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.
N/A=Not Applicable.
See Notes to Financial Statements 35
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2004
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Senior Income Trust (the "Trust") is registered as a non-diversified,
closed-end management investment company under the Investment Company Act of
1940, as amended. The Trust's investment objective is 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 24, 1998. Effective November 30, 2003, the Trust's investment adviser,
Van Kampen Investment Advisory Corp. merged into its affiliate, Van Kampen Asset
Management.
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 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 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 are
valued, where possible, using independent market indicators provided by
independent pricing sources approved by the Board of Trustees. Other Senior
Loans 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.
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.
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
36
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2004 continued
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.
B. SECURITY TRANSACTIONS Investment transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
Legal expenditures that are expected to result in the restructuring of or a plan
of reorganization for an investment are recorded as realized losses.
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 the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At July 31, 2004, the Trust had an accumulated capital loss carryforward
for tax purposes of $209,217,198, which will expire between July 31, 2009 and
July 31, 2012.
At July 31, 2004, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $2,766,702,504
==============
Gross tax unrealized appreciation........................... $ 52,984,198
Gross tax unrealized depreciation........................... (75,943,781)
--------------
Net tax unrealized depreciation on investments.............. $ (22,959,583)
==============
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 to be 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.
37
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2004 continued
The tax character of distributions paid for the years ended July 31, 2004
and 2003 was as follows:
2004 2003
Distributions paid from:
Ordinary income........................................... $75,570,307 $79,888,289
Long-term capital gain.................................... -0- -0-
----------- -----------
$75,570,307 $79,888,289
=========== ===========
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under accounting principles generally accepted in the
United States of America and federal income tax purposes, permanent differences
between book and tax basis reporting have been identified and appropriately
reclassified on the Statement of Assets and Liabilities. A permanent difference
related to book to tax amortization differences totaling $1,808,397 has been
reclassified from accumulated undistributed net investment income to accumulated
net realized loss. A permanent book and tax difference related to excise taxes
which are not deductible for tax purposes totaling $84,040 has been reclassified
to paid in surplus from accumulated undistributed net investment income.
As of July 31, 2004, the components of distributable earnings on a tax basis
were as follows:
Undistributed ordinary income............................... $1,498,215
Net realized gains and losses may differ for financial and tax reporting
purposes primarily as a result of the deferral of losses resulting from wash
sale transactions, other losses that were recognized for book purposes but not
tax purposes at the end of the fiscal year 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, 2004, the Trust recognized expenses of
approximately $194,100 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Trust, of which a trustee of the Trust
is an affiliated person.
Under a Legal Services agreement, the Adviser provides legal services to the
Trust. The Adviser allocates the cost of such services to each Trust. For the
year ended July 31, 2004, the
38
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2004 continued
Trust recognized expenses of approximately $78,800 representing Van Kampen
Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing legal services to the Trust, which are reported as "Legal" expenses in
the Statement of Operations.
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to deter all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable 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.
During the period, the Trust owned shares of the following affiliated
companies. Affiliated companies are defined by the Investment Company Act of
1940 as those companies in which a fund holds 5% or more of the outstanding
voting securities.
INTEREST/
PAR/ REALIZED DIVIDEND MARKET VALUE
NAME SHARES * GAIN/(LOSS) INCOME 7/31/04 COST
Imperial Home Decor Group,
Inc., Term Loan............. 1,422,288 -0- -0- $ 35,557 $1,367,833
Imperial Home Decor Group,
Inc., Common Stock.......... 512,023 -0- -0- -0- 522,263
Neoplan USA Corp., Revolving
Credit Agreement............ 911,250 -0- 29,987 911,250 911,250
Neoplan USA Corp., Common
Stock....................... 8,517 -0- -0- 85 85
Neoplan USA Corp., Preferred
Stock C..................... 532 -0- -0- 532 532
Neoplan USA Corp., Preferred
Stock D..................... 1,730 -0- -0- 1,072,243 1,073,989
----------- ---------
Total......................... -0- 29,987
=========== =========
* Shares were acquired through the restructuring of Senior loan interests.
SHARES SHARES
AS OF GROSS GROSS AS OF REALIZED
NAME 7/31/2003 ADDITIONS REDUCTIONS 7/31/2004 GAIN/(LOSS)
Imperial Home Decor Realty, Inc.,
Common Stock................... 512,023 -0- 512,023 -0- 57,947
Neoplan USA Corp., Revolving
Credit Agreement............... 900,000 11,250 -0- 911,250 -0-
At July 31, 2004, Van Kampen owned 10,000 common shares of the Trust.
3. INVESTMENT TRANSACTIONS
During the period, the costs of purchases and proceeds from investments sold and
repaid, excluding short-term investments, were $2,571,311,474 and
$1,890,374,351, respectively.
39
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2004 continued
4. COMMITMENTS
Pursuant to the terms of certain of the Variable Rate Senior Loan agreements,
the Trust had unfunded loan commitments of approximately $133,470,400 as of July
31, 2004. The Trust intends to reserve against such contingent obligations by
segregating cash, liquid securities and liquid Senior Loans as a reserve.
5. 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.
At July 31, 2004, 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)
Bank of America............................................. $4,436 $4,458
------ ------
Total....................................................... $4,436 $4,458
====== ======
6. BORROWINGS
As of April 29, 2004, the shareholders approved amending the Trust's fundamental
investment restriction regarding the Trust's use of financial leverage. The
Trust is now able to utilize financial leverage to the maximum extent allowable
under the Investment Company Act of 1940, as amended. Under the 1940 Act, a fund
generally may not (i) borrow money greater than 33 1/3% of the fund's total
assets or (ii) issue preferred shares greater than 50% of the fund'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 Fund's total assets based on the relative amounts
borrowed or preferred shares issued.
The Trust had entered into a $700 million revolving credit and security
agreement. Annual commitment fees of .13% are charged on the unused portion of
the credit line. This revolving credit agreement is secured by the assets of the
Trust. For the year ended July 31, 2004, the average daily balance of borrowings
under the revolving credit agreement was $408,658,470 with a weighted average
interest rate of 1.18%.
7. PREFERRED SHARES ISSUANCE
As of February 20, 2004, the Trust issued 5,600 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 $700 million. The
Trust used the net proceeds of the offering to pay down existing borrowings.
Dividends are cumulative and the dividend rates are generally reset every seven
days through an auction process. The average rate in effect on
40
VAN KAMPEN SENIOR INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2004 continued
July 31, 2004 was 1.68%. During the year ended July 31, 2004, the rates ranged
from 1.030% to 1.890%.
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 in 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.
8. 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.
41
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, 2004, 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 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. The Trust's financial highlights for the period ended prior
to July 31, 2000 were audited by other auditors whose report, dated September
14, 1999, expressed an unqualified opinion on those financial statements.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2004, by correspondence with the Trust's
custodian, brokers, and selling or agent banks; where replies were not received,
we performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. 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, 2004, the results of its operations,
its cash flows, the changes in its net assets and the financial highlights for
the respective stated periods, in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
September 10, 2004
42
VAN KAMPEN SENIOR INCOME TRUST
DIVIDEND REINVESTMENT PLAN
The Trust offers a Dividend Reinvestment Plan (the "Plan") pursuant to which
Common Shareholders who are participants in the Plan may have all distributions
of dividends and capital gains automatically reinvested in Common Shares of the
Trust. Common Shareholders who elect not to participate in the Plan will receive
all distributions of dividends and capital gains in cash paid by check mailed
directly to the Common Shareholder by the Trust's dividend disbursing agent.
HOW THE PLAN WORKS
State Street Bank and Trust Company, as your Plan Agent, serves as agent for
the Common Shareholders in administering the Plan. After the Trust declares a
dividend or determines to make a capital gains distribution, the Plan Agent
will, as agent for the participants, receive the cash payment and use it to buy
Common Shares in the open market, on the New York Stock Exchange or elsewhere,
for the participants' accounts. The Trust will not issue any new Common Shares
in connection with the Plan. All reinvestments are in full and fractional Common
Shares, carried to three decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or capital gains distribution paid subsequent to written
notice of the change sent to all Common Shareholders of the Trust at least 90
days before the record date for the dividend or distribution. The Plan also may
be amended or terminated by the Plan Agent, with the written consent of the
Trust, by providing at least 90 days written notice to all Participants in the
Plan.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
43
VAN KAMPEN SENIOR INCOME TRUST
DIVIDEND REINVESTMENT PLAN continued
RIGHT TO WITHDRAW
You may withdraw from the Plan at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company. If you withdraw, you will receive,
without charge, a share certificate issued in your name for all full Common
Shares credited to your account under the Plan, and a cash payment will be made
for any fractional Common Share credited to your account under the Plan. You may
again elect to participate in the Plan at any time by calling 1-800-341-2929 or
writing to the Trust at:
2800 Post Oak Blvd.
Attn: Closed-End Funds
Houston, TX 77056
44
VAN KAMPEN SENIOR INCOME TRUST
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
RICHARD F. POWERS, III* - Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, NY 10020
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
c/o EquiServe
P.O. Box 43011
Providence, Rhode Island 02940-3011
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
45
VAN KAMPEN SENIOR INCOME TRUST
RESULTS OF SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Trust was held on June 23, 2004, where
shareholders voted on the election of trustees.
With regards to the election of the following trustees by the shareholders of
the Trust:
# OF SHARES
--------------------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------------
Richard F. Powers, III.................................. 167,914,875 2,695,790
Hugo Sonnenschein....................................... 24,080 -0-
The other trustees who terms did not expire in 2004 are David C. Arch, Howard J
Kerr, Rod Dammeyer and Wayne W. Whalen.
A Special Meeting of Shareholders of the Trust was held on April 29, 2004, where
shareholders voted to amend the fundamental investment restriction regarding the
Trust's use of financial leverage.
# OF SHARES
-------------------------------------
IN FAVOR AGAINST ABSTAIN
---------- ---------- ---------
Amendment of Investment Restriction................. 73,365,075 12,435,342 7,922,190
46
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION
The business and affairs of the 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 the Trust
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments
Inc. ("Van Kampen Investments"), Van Kampen Asset Management (the "Adviser"),
Van Kampen Funds Inc. (the "Distributor"), Van Kampen Advisors Inc., Van Kampen
Exchange Corp. and Van Kampen Investor Services Inc. ("Investor Services"). The
term "Fund Complex" includes each of the investment companies advised by the
Adviser or its affiliates as of the date of this Statement of Additional
Information. Trustees serve until reaching their retirement age 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 TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (58) Trustee Trustee Chairman and Chief 85 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
manufacturer. Director of
the Heartland Alliance, a
nonprofit organization
serving human needs based
in Chicago. Director of
St. Vincent de Paul
Center, a Chicago based
day care facility serving
the children of low
income families. Board
member of the Illinois
Manufacturer's
Association.
47
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 TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (63) Trustee Trustee President of CAC, L.L.C., 85 Trustee/Director/Managing
CAC, L.L.C. since 1998 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Stericycle,
San Diego, CA 92122-6223 advisory services. Prior Inc., TheraSense, Inc.,
to February 2001, Vice GATX Corporation, Vantana
Chairman and Director of Medical Systems, Inc. and
Anixter International, Trustee of The Scripps
Inc. and IMG Global Inc. Research Institute and
Prior to July 2000, the University of Chicago
Managing Partner of Hospitals and Health
Equity Group Corporate Systems. Prior to January
Investment (EGI), a 2004, Director of
company that makes TeleTech Holdings Inc.
private investments in and Arris Group, Inc.
other companies. Prior to May 2002,
Director of Peregrine
Systems Inc. Prior to
February 2001, Vice
Chairman and Director of
Anixter International,
Inc. and IMC Global Inc.
Prior to July 2000,
Director of Allied Riser
Communications Corp.,
Matria Healthcare Inc.,
Transmedia Networks,
Inc., CNA Surety, Corp.
and Grupo Azcarero Mexico
(GAM). Prior to April
1999, Director of Metal
Management, Inc.
48
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 TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Howard J Kerr (68) Trustee Trustee Prior to 1998, President 85 Trustee/Director/Managing
736 North Western Avenue since 1998 and Chief Executive General Partner of funds
P.O. Box 317 Officer of Pocklington in the Fund Complex.
Lake Forest, IL 60045 Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the
Marrow Foundation.
Hugo F. Sonnenschein (63) Trustee Trustee President Emeritus and 85 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 Director of Winston
Distinguished Service Laboratories, Inc.
Professor in the
Department of Economics
at the University of
Chicago. Prior to July
2000, President of the
University of Chicago.
Trustee of the University
of Rochester and a member
of its investment
committee. Member of the
National Academy of
Sciences, the American
Philosophical Society and
a fellow of the American
Academy of Arts and
Sciences.
49
VAN KAMPEN SENIOR INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
INTERESTED 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 INTERESTED TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Richard F. Powers, III* (58) Trustee Trustee Advisory Director of 85 Trustee/Director/Managing
1 Parkview Plaza since 1999 Morgan Stanley. Prior to General Partner of funds
P.O. Box 5555 December 2002, Chairman, in the Fund Complex.
Oakbrook Terrace, IL 60181 Director, President,
Chief Executive Officer
and Managing Director of
Van Kampen Investments
and its investment
advisory, distribution
and other subsidiaries.
Prior to December 2002,
President and Chief
Executive Officer of
funds in the Fund
Complex. Prior to May
1998, Executive Vice
President and Director of
Marketing at Morgan
Stanley and Director of
Dean Witter, Discover &
Co. and Dean Witter
Realty. Prior to 1996,
Director of Dean Witter
Reynolds Inc.
Wayne W. Whalen* (65) Trustee Trustee Partner in the law firm 85 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
Fund Complex.
* Such trustee is an "interested person" (within the meaning of Section
2(a)(19) of the 1940 Act). Mr. Whalen is an interested person of certain
funds in the Fund Complex by reason of his firm currently acting as legal
counsel to such funds in the Fund Complex. Messrs. Merin and Powers are
interested persons of funds in the Fund Complex and the Adviser by reason of
their current or former positions with Morgan Stanley or its affiliates.
50
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 TRUST SERVED DURING PAST 5 YEARS
Stefanie V. Chang (37) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas and Secretary since 2003 Vice President of funds in the Fund Complex.
New York, NY 10020
Amy Doberman (42) Vice President Officer Managing Director and General Counsel, U.S. Investment
1221 Avenue of the Americas since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10020 Management, Inc., Morgan Stanley Investment Advisers 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 as of August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeitus Investment Management,
Inc from January 1997 to July 2000.
James M. Dykas (38) Chief Financial Officer Executive Director of Van Kampen Asset Management and Morgan
1 Parkview Plaza Officer and since 1999 Stanley Investment Management. Chief Financial Officer and
Oakbrook Terrace, IL 60181 Treasurer Treasurer of funds in the Fund Complex. Prior to August
2004, Assistant Treasurer of funds in the Fund Complex.
Joseph J. McAlinden (61) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas President and since 2002 Stanley Investment Advisors Inc., Morgan Stanley Investment
New York, NY 10020 Chief Investment Management Inc. and Morgan Stanley Investments LP and
Officer Director of Morgan Stanley Trust for over 5 years. Executive
Vice President and Chief Investment Officer of funds in the
Fund Complex. Managing Director and Chief Investment Officer
of Van Kampen Investments, the Adviser and Van Kampen
Advisors Inc. since December 2002.
Ronald E. Robison (65) Executive Vice Officer Principal Executive Officer--office of the Funds (since
1221 Avenue of the Americas President and since 2003 November 2003). Chief Executive Officer and Chairman of
New York, NY 10020 Principal Investor Services. Executive Vice President and Principal
Executive Executive Officer of funds in the Fund Complex. Managing
Officer Director of Morgan Stanley. Chief Administrative Officer,
Managing Director and Director of Morgan Stanley Investment
Advisors Inc., Morgan Stanley Services Company Inc. and
Managing Director and Director of Morgan Stanley
Distributors Inc. Chief Executive Officer and Director of
Morgan Stanley Trust. Executive Vice President and Principal
Executive Officer of the Institutional and Retail Morgan
Stanley Funds; Director of Morgan Stanley SICAV; previously
Chief Global Operations Officer and Managing Director of
Morgan Stanley Investment Management Inc.
51
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 TRUST SERVED DURING PAST 5 YEARS
James L. Sullivan (49) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza Officer since 1998 August 2004. Director and Managing Director of Van Kampen
Oakbrook Terrace, IL 60181 Investments, the Adviser, Van Kampen Advisors Inc. and
certain other subsidiaries of Van Kampen Investments. Prior
August 2004, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management. Prior
to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Howard Tiffen (56) Vice President Officer Managing Director of the Advisers and Van Kampen Advisors
1 Parkview Plaza since 2000 Inc. Vice President of the senior loan funds advised by the
P.O. Box 5555 Adviser. Prior to 1999, senior portfolio manager for Pilgrim
Oakbrook Terrace, IL 60181 Investments. Associate of the Chartered Institute of Bankers
and a member of the Economic Club of Chicago.
52
VAN KAMPEN
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.
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,
(continued on back)
VAN KAMPEN
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
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 other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
(VAN KAMPEN INVESTMENTS LOGO)
Copyright (C)2004 Van Kampen
Funds Inc. All rights reserved.
Member NASD/SIPC.
VVR ANR 9/04 RN04-01955P-Y07/04
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) The Trust has amended its Code of Ethics during the period covered by
the shareholder report presented in Item 1 hereto.
(d) The Trust has not granted a waiver or an implicit waiver from a
provision of its Code of Ethics.
(e) Not applicable.
(f)
(1) The Trust's Code of Ethics is attached hereto as Exhibit 11A.
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Trust's Board of Trustees has determined that it has one "audit committee
financial expert" serving on its audit committee, "independent" Trustee Rod
Dammeyer. 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:
2004
REGISTRANT COVERED ENTITIES(1)
AUDIT FEES............................ $72,780 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES.......... $21,500(7) $230,000(2)
TAX FEES.................... $ 2,300(3) $0(4)
ALL OTHER FEES.............. $0 $0(5)
TOTAL NON-AUDIT FEES.................. $23,800 $230,000
TOTAL................................. $96,580 $230,000
2003
REGISTRANT COVERED ENTITIES(1)
AUDIT FEES............................ $63,600 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES.......... $0 $95,000(2)
TAX FEES.................... $ 2,200(3) $0(4)
ALL OTHER FEES.............. $0 $0(6)
TOTAL NON-AUDIT FEES.................. $ 2,200 $95,000
TOTAL................................. $65,800 $95,000
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 assurance and related services
provided that are reasonably related to the performance of the
audit of the financial statements of the Covered Entities' and
funds advised by the Adviser or its affiliates, specifically
attestation services provided in connection with a SAS 70
Report.
(3) Tax Fees represent tax advice and compliance services provided
in connection with the review of the Registrant's tax.
(4) Tax Fees represent tax advice services provided to Covered
Entities, including research and identification of PFIC
entities.
(5) All Other Fees represent attestation services provided in
connection with performance presentation standards.
(6) All Other Fees represent attestation services provided in
connection with performance presentation standards, general
industry education seminars provided, and a regulatory review
project performed.
(7) Audit-Related Fees represent agreed upon procedures, and
letters provided to underwriters related to the offering and
issuance of Preferred Shares by the Registrant.
(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(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
----------
(1) This Joint Audit Committee Audit and Non-Audit Services Pre-Approval
Policy and Procedures (the "Policy"), adopted as of the date above, supercedes
and replaces all prior versions that may have been adopted 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 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 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 following Audit services. All
other Audit services not listed below must be specifically pre-approved by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
has been delegated):
- Statutory audits or financial audits for the Fund
- Services associated with SEC registration statements (including new
funds), periodic reports and other documents filed with the SEC or
other documents issued in connection with securities offerings (e.g.,
comfort letters for closed-end fund offerings, consents), and
assistance in responding to SEC comment letters
- Consultations by the Fund's management as to the accounting or
disclosure treatment of transactions or events and/or the actual or
potential impact of final or proposed rules, standards or
interpretations by the SEC, FASB, or other regulatory or standard
setting bodies (Note: Under SEC rules, some consultations may be "audit
related" services rather than "audit" services)
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 following Audit-related
services. All other Audit-related services not listed below must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated):
- Attest procedures not required by statute or regulation (including
agreed upon procedures related to the Closed-End Fund asset coverage
tests required by the rating agencies and/or lenders)
- Due diligence services pertaining to potential fund mergers
- Issuance of SAS-70 reports on internal controls of Morgan Stanley Trust
Co. and MSIM Trade Operations
- Consultations by the Fund's management as to the accounting or
disclosure treatment of transactions or events and/or the actual or
potential impact of final or proposed rules, standards or
interpretations by the SEC, FASB, or other regulatory or
standard-setting bodies (Note: Under SEC rules, some consultations may
be "audit" services rather than "audit-related" services)
- Information systems reviews not performed in connection with the audit
(e.g., application data center and technical reviews)
- General assistance with implementation of the requirements of SEC rules
or listing standards promulgated pursuant to the Sarbanes-Oxley Act
- Audit of record keeping services performed by Morgan Stanley Trust Fund
related to the New Jersey State Retirement Plan
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 following Tax Services. All Tax services involving large and
complex transactions not listed below 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):
- U.S. federal, state and local tax planning and advice
- U.S. federal, state and local tax compliance
- International tax planning and advice
- International tax compliance
- Review of federal, state, local and international income, franchise,
and other tax returns
- Identification of Passive Foreign Investment Companies
- Review of closed-end funds pro rata allocation of taxable income and
capital gains to common and preferred shares.
- Domestic and foreign tax planning, compliance, and advice
- Assistance with tax audits and appeals before the IRS and similar
state, local and foreign agencies
- Tax advice and assistance regarding statutory, regulatory or
administrative developments (e.g., excise tax reviews, evaluation of
Fund's tax compliance function)
- Review the calculations of taxable income from corporate actions
including reorganizations related to bankruptcy filings and provide
guidance related to the foregoing
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 following All Other services.
Permissible All Other services not listed below must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated):
- Risk management advisory services, e.g., assessment and testing of
security infrastructure controls
The following is a list of the SEC's prohibited non-audit services. 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:
- Bookkeeping or other services related to the accounting records or
financial statements of the audit client
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions or
contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
- Management functions
- Human resources
- Broker-dealer, investment adviser or investment banking services
- Legal services
- Expert services unrelated to the audit
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. 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 Investment Advisory Corporation
- Van Kampen Asset Management Inc.
- Van Kampen Advisors Inc.
- Van Kampen Funds Inc.
- Van Kampen Trust Company
- Van Kampen Investor Services Inc.
- Van Kampen Management Inc.
- Morgan Stanley Investment Management Inc.
- Morgan Stanley Investments LP
- Morgan Stanley Trust Company
(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 (attached hereto).
(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.
Not applicable.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Trust invests in exclusively non-voting securities and therefore this item
is not applicable to the Trust.
Item 8. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not Applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 10. Controls and Procedures
(a) The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the 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 registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11. Exhibits.
(a) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.
(b)(1) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(b)(2) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Senior Income Trust
By: /s/ Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: September 20, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: September 20, 2004
By: /s/ James M. Dykas
------------------
Name: James M. Dykas
Title: Principal Financial Officer
Date: September 20, 2004