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 811-5845
Van Kampen Senior Loan Fund
(Exact name of registrant as specified in charter)
522 Fifth Avenue, New York, New York 10036
(Address of principal executive offices) (Zip code)
Ronald Robison
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 7/31
Date of reporting period: 7/31/07
Item 1. Report to Shareholders.
The Fund'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 Loan Fund 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 fund's
financial statements and a list of fund investments as of July 31, 2007.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B, C, IB OR
IC SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE PROSPECTUS CONTAINS
INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT OBJECTIVES, RISKS,
CHARGES AND EXPENSES. TO OBTAIN AN ADDITIONAL PROSPECTUS, CONTACT YOUR
FINANCIAL ADVISOR OR DOWNLOAD ONE AT VANKAMPEN.COM. PLEASE READ THE
PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE
POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL
DECLINE AND THAT THE VALUE OF THE FUND SHARES MAY THEREFORE BE LESS THAN
WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
AN INVESTMENT IN SENIOR LOANS IS SUBJECT TO CERTAIN RISKS SUCH AS LOAN
DEFAULTS AND ILLIQUIDITY DUE TO INSUFFICIENT COLLATERAL BACKING.
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
</Table>
Performance Summary as of 7/31/07
CURRENT DISTRIBUTIONS (JULY 31, 1997-- JULY 31, 2007)
(LINE GRAPH)
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
(CLASS IB) 3 MONTH T-BILL (GENERIC)
--------------------------- ------------------------
7/25/1997 6.8835 5.3000
8/25/1997 6.7952 5.2800
9/25/1997 6.7952 5.1600
10/24/1997 6.7952 5.2600
11/25/1997 6.7884 5.2600
12/24/1997 6.7884 5.4100
12/31/1997 6.7884 5.4100
1/23/1998 6.7884 5.2400
2/25/1998 6.7816 5.3800
3/25/1998 6.7884 5.1800
4/24/1998 6.7884 5.0300
5/22/1998 6.7884 5.0700
6/25/1998 6.7748 5.1400
7/24/1998 6.7884 5.1300
8/25/1998 6.8089 4.8800
9/25/1998 6.8157 4.4000
10/23/1998 6.4750 4.3600
11/25/1998 6.1807 4.5300
12/24/1998 6.1994 4.5000
12/31/1998 6.2497 4.5000
1/25/1999 6.2119 4.5000
2/25/1999 6.1994 4.7200
3/25/1999 6.2119 4.5200
4/23/1999 6.1994 4.5800
5/25/1999 6.2245 4.6800
6/25/1999 6.4397 4.8300
7/23/1999 6.4848 4.8000
8/25/1999 6.5510 5.0200
9/24/1999 6.5644 4.9100
10/25/1999 6.5846 5.1500
11/24/1999 6.5914 5.3700
12/23/1999 6.5914 5.3900
12/31/1999 6.6511 5.3900
1/25/2000 6.6924 5.7700
2/25/2000 6.9592 5.8600
3/24/2000 7.1369 5.9500
4/25/2000 7.2251 5.9100
5/25/2000 7.2479 5.6900
6/23/2000 7.5057 5.9400
7/25/2000 7.5710 6.3100
8/25/2000 7.6030 6.4000
9/25/2000 7.9800 6.3000
10/25/2000 8.3117 6.4900
11/24/2000 8.4026 6.2900
12/22/2000 8.5333 5.9800
12/29/2000 8.5523 5.9800
1/25/2001 8.6292 5.0500
2/23/2001 8.7372 4.9100
3/23/2001 8.0914 4.3300
4/25/2001 7.1972 3.9200
5/25/2001 6.7517 3.6400
6/25/2001 6.5353 3.6800
7/25/2001 6.2923 3.5500
8/24/2001 5.9653 3.3900
9/25/2001 5.7960 2.3800
10/25/2001 5.2777 2.0200
11/23/2001 4.7107 1.7300
12/24/2001 4.4658 1.7300
12/31/2001 4.1777 1.7300
1/25/2002 4.1877 1.7600
2/25/2002 3.9661 1.7600
3/25/2002 3.9281 1.7800
4/25/2002 3.9046 1.7700
5/24/2002 3.9234 1.7300
6/25/2002 3.9517 1.6900
7/25/2002 4.1481 1.7000
8/23/2002 4.3158 1.6800
9/25/2002 4.3266 1.5500
10/25/2002 4.4785 1.4500
11/25/2002 4.4785 1.2100
12/24/2002 4.2481 1.1900
12/31/2002 4.0983 1.1900
1/24/2003 4.0930 1.1700
2/25/2003 4.1089 1.1900
3/25/2003 4.0983 1.1100
4/25/2003 3.8127 1.1100
5/23/2003 3.7509 1.1000
6/25/2003 3.6732 0.8500
7/25/2003 3.5405 0.9400
8/25/2003 3.3629 0.9700
9/25/2003 3.3349 0.9400
10/24/2003 3.2881 0.9500
11/25/2003 3.2425 0.9300
12/24/2003 3.2313 0.9200
12/31/2003 3.2202 0.9200
1/23/2004 3.1873 0.9100
2/25/2004 3.0814 0.9400
3/25/2004 3.0607 0.9400
4/23/2004 2.9765 0.9600
5/25/2004 2.9832 1.0600
6/25/2004 2.9633 1.2600
7/23/2004 2.9600 1.4300
8/25/2004 2.9633 1.5800
9/24/2004 3.1600 1.7100
10/25/2004 3.3163 1.9000
11/24/2004 3.3053 2.2300
12/23/2004 3.5022 2.2200
12/31/2004 3.7137 2.2200
1/25/2005 3.7178 2.4600
2/25/2005 3.8905 2.7500
3/24/2005 3.8862 2.7700
4/25/2005 3.8820 2.8900
5/25/2005 4.1584 2.9500
6/24/2005 4.4044 3.1200
7/25/2005 4.3947 3.4000
8/25/2005 4.6073 3.5000
9/23/2005 4.7789 3.5400
10/25/2005 4.7894 3.8800
11/25/2005 4.9007 3.9400
12/23/2005 5.2508 4.0800
12/30/2005 5.3042 4.0800
1/25/2006 5.2566 4.4700
2/24/2006 5.4846 4.6200
3/24/2006 5.9471 4.6100
4/25/2006 5.9537 4.7600
5/25/2006 6.2781 4.8400
6/23/2006 6.6120 4.9800
7/25/2006 6.6193 5.0700
8/25/2006 6.9103 5.0400
9/25/2006 7.8405 4.8800
10/25/2006 7.8492 5.0800
11/24/2006 8.0488 5.0200
12/22/2006 8.0488 5.0100
12/29/2006 8.1336 5.0100
1/25/2007 8.0310 5.1100
2/23/2007 7.9693 5.1300
3/23/2007 7.9868 5.0300
4/25/2007 7.5991 4.8500
5/25/2007 7.5908 4.7400
6/25/2007 7.4620 4.8100
7/25/2007 7.6302 4.9500
</Table>
Data provided for the fund reflects distributions that occur on the 25th of each
month or the prior business day if the 25th falls on a weekend or holiday,
whereas benchmark data is as of the month end.
*Source: Bloomberg
<Table>
<Caption>
IB SHARES IC SHARES
A SHARES B SHARES C SHARES SINCE SINCE
since 2/18/2005 since 2/18/2005 since 2/18/2005 10/4/1989 6/13/2003
- ------------------------------------------------------------------------------------------------------------
AVERAGE W/MAX W/MAX W/MAX
ANNUAL W/O 3.25% W/O 3.00% W/O 1.00%
TOTAL SALES SALES SALES SALES SALES SALES W/O SALES W/O SALES
RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES CHARGES
Since Inception 4.17% 2.76% 3.41% 2.85% 3.41% 3.41% 5.79% 6.62%
10-year -- -- -- -- -- -- 4.36 --
5-year -- -- -- -- -- -- 6.40 --
1-year 4.06 0.70 3.29 0.41 3.29 2.33 4.05 4.06
- ------------------------------------------------------------------------------------------------------------
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. Average annual total return with sales charges includes payment of the
maximum sales charge of 3.25 percent for Class A shares, an early withdrawal
charge of 3.00 percent for Class B shares (in year one and declining to zero
after year five), an early withdrawal charge of 1.00 percent for Class C shares
in year one, and combined distribution fees and service fees of up to 0.25
percent for Class A shares and up to 1.00 percent for Class B and C shares and a
service fee of up to 0.15 percent for Class IC shares. Effective 2/18/05,
contingent deferred sales charges for Class IB and Class IC shares have been
terminated. New investments are not available in Class IB and IC shares. Figures
shown above assume reinvestment of all distributions. The fund's adviser has
waived or reimbursed fees and expenses from time to time; absent such
waivers/reimbursements, the fund's returns would have been lower.
1
Fund Report
FOR THE 12-MONTH PERIOD ENDED JULY 31, 2007
MARKET CONDITIONS
The senior loan market benefited from strong fundamental and technical factors
throughout most of the 12-month reporting period. Economic growth was generally
solid, slowing somewhat in the first quarter of this year, but accelerating
again in the second quarter. Inflation remained contained and the Federal Open
Market Committee (the "Fed"), while still concerned about potential inflation
risks, held the target federal funds rate steady at 5.25 percent, where it has
stood since June 2006.
In terms of the credit markets, corporate productivity increased, cash flows
continued to be strong, and borrowing costs remained low. In addition, the
overall credit quality in the market improved and default rates remained low.
Together, these factors turned out to be quite supportive of the senior loan
market. New-issue senior loan volume climbed throughout the period, setting new
records in each consecutive calendar quarter to reach an unprecedented $204
billion in the second quarter of 2007. As a result, supply for the first half of
2007 totaled $390 billion, a 55 percent increase over the first half of 2006.
Helping to fuel this heavy supply was a high amount of merger and acquisition
and private equity activity during the period, as well as record-setting second-
lien loan volume. The record supply was met by robust demand, as institutional
investors and traditional high-yield investors continued to be increasingly
active in the market. In fact, demand for senior loans surpassed the available
supply for much of the period, causing yield spreads to narrow from December
2006 through the end of June 2007. At that time, however, volatility in the
market rose and the demand/supply dynamics changed.
In our view, the increased volatility in the last month of the period was
primarily driven by technical factors in the market, as opposed to credit
fundamentals. The first of these factors is the size of the forward calendar
(transactions announced but not yet syndicated in the market). As of the end of
the reporting period, the forward calendar was rather large, which likely left
some buyers waiting on the sidelines until this supply comes to market. The
second and larger factor contributing to the recent volatility, in our opinion,
is an overall tightening of lending standards and an increasing demand for both
protection and higher compensation by investors. The well-publicized news of
stress in other segments of the credit markets--most notably the subprime
mortgage market--prompted investors to re-price risk across all credit markets.
While the senior loan market is completely separate from the subprime mortgage
market, the negative news in the subprime mortgage arena has caused lenders in
the senior loan market to tighten their credit standards and to demand higher
spreads over LIBOR as compensation for assuming any lending risk.
2
While the recent volatility has not been pleasant, we are pleased to see lenders
tighten their underwriting standards, and believe this is a healthy event for
the market as it may ultimately serve to improve credit quality and the
risk/reward relationship for loans. We have seen signs of greater stability in
the senior loan market in the weeks immediately following the end of the
reporting period, but all money markets remain relatively nervous. Overall, the
fundamentals of the loan market remain strong, credit quality continues to be
robust, and default rates continue to be at historic low levels.
PERFORMANCE ANALYSIS
The Fund returned 4.06 percent for the 12 months ended July 31, 2007 (Class A
shares, unadjusted for sales charges).
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED JULY 31, 2007
<Table>
<Caption>
- -------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS IB CLASS IC
4.06% 3.29% 3.29% 4.05% 4.06%
- -------------------------------------------------------------
</Table>
The performance for the five share classes varies because each has different
expenses. The Fund's total return figures assume the reinvestment of all
distributions, but do not reflect the deduction of any applicable sales charges.
Such costs would lower performance. Past performance is no guarantee of future
results. See Performance Summary for standardized performance information.
We continued to adhere to our research-intensive investment process, employing a
bottom-up asset selection process driven by thorough analysis of individual
company fundamentals. We do, however, analyze overall sector and industry trends
as well and generally avoid those which we believe are vulnerable to cyclical
economic downturns. For example, we have taken a cautious approach to the auto
and airline industries during the period because of their susceptibility to high
fuel prices. Given the fall off in the residential housing market, we have also
generally avoided investments in the building and real estate sectors.
We have been very selective regarding investments in the healthcare industry,
particularly those assets with inherent reimbursement and regulatory risks.
Certain healthcare providers, however, are not exposed to these risks. One such
provider is a large hospital which, in our view, has a strong management team
and is well secured. We added this company to the portfolio during the period,
which resulted in an increase in the portfolio's exposure to the healthcare
sector. Otherwise, our bottom-up security selection process led to few changes
in the Fund's healthcare weightings. As of the end of the period, the printing
and publishing, beverage, food and tobacco, healthcare, and entertainment and
leisure sectors continued to be represented in the Fund's top holdings.
The Fund benefited from our use of leverage during the period. Leverage involves
borrowing at a floating short-term rate and reinvesting the proceeds at a higher
rate. We used this strategy on an ongoing basis in an effort to enhance
3
the Fund's dividend. Unlike other fixed-income asset classes, using leverage in
conjunction with senior loans does not involve the same degree of risk from
rising short-term interest rates since the income from senior loans adjusts to
changes in interest rates, as do the rates which determine the Fund's borrowing
costs. (Similarly, should short-term rates fall, borrowing costs would also
decline. The use of leverage may increase the Fund's volatility.) We might
reduce leverage in periods of weaker credit quality conditions to prevent
magnifying erosion of the Fund's net asset value. Over the course of the
reporting period, our use of leverage served to improve the Fund's current
yield.
In closing, it is important to note that the portfolio's overall credit quality
remains strong and its default rate is well below the market average, which is
at an all-time low. Going forward, we will continue to focus on seeking to
maintain a high quality, portfolio of issuers with stable cash flows, strong
management teams, and collateral value sufficient to help provide a solid second
way out in a default scenario.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the Fund in
the future.
4
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 7/31/07
Printing & Publishing 10.3%
Beverage, Food & Tobacco 8.5
Healthcare 8.2
Entertainment & Leisure 6.4
Chemicals, Plastics & Rubber 5.8
Broadcasting--Cable 5.7
Business Equipment & Services 5.5
Hotels, Motels, Inns & Gaming 5.2
Utilities 4.4
Buildings & Real Estate 3.8
Electronics 3.6
Non-Durable Consumer Products 3.4
Automotive 3.2
Finance 3.0
Containers, Packaging & Glass 3.0
Paper & Forest Products 2.9
Broadcasting--Television 2.8
Ecological 2.8
Aerospace/Defense 2.7
Insurance 2.6
Restaurants & Food Service 2.5
Medical Products & Services 2.3
Construction Material 2.3
Retail--Stores 1.9
Natural Resources 1.8
Broadcasting--Radio 1.6
Textiles & Leather 1.5
Telecommunications--Local Exchange Carriers 1.5
Diversified Manufacturing 1.4
Telecommunications--Wireless 1.3
Health & Beauty 1.3
Machinery 1.0
Home & Office Furnishings, Housewares & Durable Consumer
Products 0.9
Pharmaceuticals 0.8
Personal & Miscellaneous Services 0.8
Retail--Specialty 0.8
Education & Child Care 0.6
Telecommunications--Long Distance 0.6
Banking 0.4
Transportation--Cargo 0.4
Transportation-Rail Manufacturing 0.4
Grocery 0.3
Retail--Office Products 0.3
Broadcasting--Diversified 0.3
Farming & Agriculture 0.3
Transportation--Personal 0.2
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 7/31/07
(continued from previous page)
Durable Consumer Products 0.1
Retail--Oil & Gas 0.1
Mining, Steel, Iron & Non-Precious Metals 0.0*
-----
Total Long-Term Investments 121.5
Total Short-Term Investments 2.3
-----
Total Investments 123.8
Borrowings (22.0)
Liabilities in Excess of Other Assets (1.8)
-----
Net Assets 100.0%
</Table>
* Amount is less than 0.1%
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Summary of investments by industry
classification percentages are as a percentage of net assets. Securities are
classified by sectors that represent broad groupings of related industries. Van
Kampen is a wholly owned subsidiary of a global securities firm which is engaged
in a wide range of financial services including, for example, securities trading
and brokerage activities, investment banking, research and analysis, financing
and financial advisory services.
6
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen fund provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
fund's second and fourth fiscal quarters. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Van Kampen
also delivers the semiannual and annual reports to fund shareholders, and
makes these reports available on its public Web site, www.vankampen.com.
In addition to the semiannual and annual reports that Van Kampen delivers
to shareholders and makes available through the Van Kampen public Web
site, each fund files a complete schedule of portfolio holdings with the
SEC for the fund's first and third fiscal quarters on Form N-Q. Van
Kampen does not deliver the reports for the first and third fiscal
quarters to shareholders, nor are the reports posted to the Van Kampen
public Web site. You may, however, obtain the Form N-Q filings (as well
as the Form N-CSR and N-CSRS filings) by accessing the SEC's Web site,
http://www.sec.gov. You may also review and copy them at the SEC's Public
Reference Room in Washington, DC. Information on the operation of the
SEC's Public Reference Room may be obtained by calling the SEC at (800)
SEC-0330. You can also request copies of these materials, upon payment of
a duplicating fee, by electronic request at the SEC's email address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at (800) 847-2424.
7
HOUSEHOLDING NOTICE
To reduce Fund expenses, the Fund attempts to eliminate duplicate
mailings to the same address. The Fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The Fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling (800) 341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the Fund's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 847-2424 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the Fund voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge by visiting our Web site at www.vankampen.com.
This information is also available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
8
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charges on redemptions of Class B and Class C
Shares; and redemption fees; (2) ongoing costs, including management fees;
distribution and service fees; and other Fund expenses. This example is intended
to help you understand your ongoing cost (in dollars) of investing in the Fund
and to compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 2/1/07 - 7/31/07.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges or redemption fees.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
2/1/07 7/31/07 2/1/07-7/31/07
Class A
Actual...................................... $1,000.00 $ 994.50 $12.21
Hypothetical................................ 1,000.00 1,012.55 12.33
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 991.91 16.00
Hypothetical................................ 1,000.00 1,008.73 16.14
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 991.92 15.90
Hypothetical................................ 1,000.00 1,008.83 16.04
(5% annual return before expenses)
Class IB
Actual...................................... 1,000.00 994.50 12.31
Hypothetical................................ 1,000.00 1,012.45 12.42
(5% annual return before expenses)
Class IC
Actual...................................... 1,000.00 995.62 12.32
Hypothetical................................ 1,000.00 1,012.45 12.42
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 2.47%, 3.24%,
3.22%, 2.49% and 2.49%, for Class A, B, C, IB, and IC Shares, respectively,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period). These expense ratios reflect
an expense waiver.
Assumes all dividends and distributions were reinvested.
9
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
At meetings held on April 17, 2007 and May 30, 2007, the Board of Trustees, and
the independent trustees voting separately, considered and ultimately determined
that the terms of the investment advisory agreement are fair and reasonable and
approved the continuance of the investment advisory agreement as being in the
best interests of the Fund and its shareholders. In making its determination,
the Board of Trustees considered materials that were specifically prepared by
the investment adviser at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to assist the Board,
relating to the investment advisory agreement review process. The Board also
considered information received periodically about the portfolio, performance,
the investment strategy, portfolio management team and fees and expenses of the
Fund. The Board of Trustees considered the investment advisory agreement over a
period of several months and the trustees held sessions both with the investment
adviser and separate from the investment adviser in reviewing and considering
the investment advisory agreement.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
existing and alternative breakpoints in the Fund's investment advisory fee
schedule. The Board of Trustees considered comparative advisory fees of the Fund
and other investment companies and/or other products at different asset levels,
and considered the trends in the industry versus historical and projected assets
of the Fund. The Board of Trustees evaluated other benefits the investment
adviser and its affiliates derive from their relationship with the Fund. The
Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees,
10
evaluated all of the foregoing and does not believe any single factor or group
of factors control or dominate the review process, and, after considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund and changes made
in the Fund's portfolio management team over time. The Fund discloses
information about its portfolio management team members and their experience in
its prospectus. The trustees also discuss certain other services which are
provided on a cost-reimbursement basis by the investment adviser or its
affiliates to the Van Kampen funds including certain accounting, administrative
and legal services. The Board has determined that the nature, extent and quality
of the services provided by the investment adviser support its decision to
approve the investment advisory agreement.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report and in
the Fund's prospectus. The trustees discuss with the investment adviser the
level of advisory fees for this Fund relative to comparable funds and other
products advised by the adviser and others in the marketplace. The trustees
review not only the advisory fees but other fees and expenses (whether paid to
the adviser, its affiliates or others) and the Fund's overall expense ratio. The
Fund discloses more information about its fees and expenses in its prospectus.
The Board has determined that the performance, fees and expenses of the Fund
support its decision to approve the investment advisory agreement.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the
11
profitability of the investment adviser. These profitability reports are put
together by the investment adviser with the oversight of the Board. The trustees
discuss with the investment adviser its revenues and expenses, including among
other things, revenues for advisory services, portfolio management-related
expenses, revenue sharing arrangement costs and allocated expenses both on an
aggregate basis and per fund. The Board has determined that the analysis of the
investment adviser's expenses and profitability support its decision to approve
the investment advisory agreement.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
and growth prospects of the Fund and how that relates to the Fund's expense
ratio and particularly the Fund's advisory fee rate. In conjunction with its
review of the investment adviser's profitability, the trustees discuss with the
investment adviser how more (or less) assets can affect the efficiency or
effectiveness of managing the Fund's portfolio and whether the advisory fee
level is appropriate relative to current and projected asset levels and/or
whether the advisory fee structure reflects economies of scale as asset levels
change. The Board has determined that its review of the actual and potential
economies of scale of the Fund support its decision to approve the investment
advisory agreement.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory agreement.
12
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
VARIABLE RATE** SENIOR LOAN INTERESTS 120.6%
AEROSPACE/DEFENSE 2.7%
$10,487 Alion Science and
Technology Corp.,
Term Loan........... Ba2 BB- 7.82 to 7.86% 08/02/09 $ 10,067,758
2,786 Apptis, Inc., Term
Loan................ Ba3 BB- 8.57 to 10.50 12/20/12 2,758,140
630 ARINC, Inc., Term
Loan................ Ba3 BB 7.32 03/10/11 630,464
2,193 Atlantic Marine
Services, Term
Loan................ B1 BB- 7.38 03/22/14 2,171,412
3,441 DeCrane Aircraft
Holdings, Inc., Term
Loan................ B1 B+ 8.10 to 10.00 02/21/13 3,406,961
1,235 DynCorp
International, LLC,
Term Loan........... Ba2 BB 7.63 02/11/11 1,205,571
1,015 Hawker Beechraft
Acquisition Co.,
Revolving Credit
Agreement........... Ba3 BB 7.35 03/26/14 967,880
11,963 Hawker Beechraft
Acquisition Co.,
Term Loan........... Ba3 BB 7.36 03/26/14 11,409,986
10,651 IAP Worldwide
Services, Inc., Term
Loan................ B1 B 9.69 to 15.19 12/30/12 to 06/30/13 9,422,962
3,491 ILC Industries,
Inc., Term Loan..... NR NR 7.61 02/24/12 3,429,580
3,582 Primus
International, Inc.,
Term Loan........... NR NR 7.82 to 7.83 06/07/12 3,546,547
3,895 SI International,
Inc., Term Loan..... Ba3 NR 7.32 to 7.34 02/09/11 3,906,935
898 Tri-Star Electronics
International, Term
Loan................ NR NR 8.36 to 8.40 02/02/13 888,773
4,239 Vangent, Inc., Term
Loan................ Ba3 BB 7.61 to 7.62 02/14/13 4,218,178
3,521 Wesco Aircraft
Hardware Corp., Term
Loan................ Ba3 BB- 7.61 to 11.11 09/29/13 to 03/28/14 3,367,580
6,201 Wyle Laboratories,
Inc., Term Loan..... NR BB- 8.11 01/28/11 6,092,188
--------------
67,490,915
--------------
</Table>
See Notes to Financial Statements 13
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
AUTOMOTIVE 3.2%
$ 2,864 Accuride Corp., Term
Loan................ Ba3 BB- 7.38% 01/31/12 $ 2,783,733
1,985 Acument Global
Technologies, Inc.,
Term Loan (a)....... B2 B+ 8.86 08/11/13 1,975,075
952 Affinia Group, Inc.,
Term Loan........... Ba3 BB- 8.36 11/30/11 940,581
3,550 Dana Corp., Term
Loan................ B2 BB- 7.88 04/13/08 3,501,187
4,000 Federal-Mogul Corp.,
Term Loan........... NR BBB+ 7.07 12/31/07 3,960,000
20,659 Ford Motor Co., Term
Loan................ Ba3 B+ 8.36 12/15/13 19,523,915
2,220 Heartland Automotive
Holdings, Inc., Term
Loan................ NR NR 9.11 02/27/12 2,206,455
10,094 MetoKote Corp., Term
Loan................ B2 BB- 8.36 11/27/11 10,125,651
1,820 Navistar
International Corp.,
Revolving Credit
Agreement........... NR BB- 8.42 to 8.61 01/19/12 1,742,650
5,005 Navistar
International Corp.,
Term Loan........... NR BB- 8.61 01/19/12 4,792,287
11,443 Oshkosh Truck Corp.,
Term Loan........... Ba3 BBB- 7.11 12/06/13 11,080,448
504 Performance
Transportation
Services, Inc.,
Revolving Credit
Agreement........... Caa1 NR 8.57 01/26/12 476,116
344 Performance
Transportation
Services, Inc., Term
Loan................ NR NR 8.57 01/26/12 325,480
1,489 Precision Partners,
Inc., Term Loan..... B2 B+ 8.86 10/27/13 1,449,670
9,811 Sensata
Technologies, Inc.,
Term Loan........... Ba3 BB 7.09 to 7.11 04/27/13 9,515,589
700 Tenneco Automotive,
Inc., Term Loan..... Ba1 BB+ 6.82 03/16/14 686,000
</Table>
14 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
AUTOMOTIVE (CONTINUED)
$ 2,250 TRW Automotive,
Inc., Term Loan..... Baa3 BBB 6.88% 02/09/14 $ 2,214,563
2,491 United Components,
Inc., Term Loan..... Ba3 BB- 7.36 06/30/12 2,416,107
--------------
79,715,507
--------------
BANKING 0.4%
11,211 Dollar Financial
Corp., Term Loan.... B3 BB- 8.11 to 8.36 10/30/12 10,895,470
--------------
BEVERAGE, FOOD & TOBACCO 8.5%
14,850 Acosta Sales Co.,
Inc., Term Loan..... NR NR 7.57 07/28/13 14,367,375
8,692 Advantage Sales &
Marketing, LLC, Term
Loan................ NR NR 7.36 03/29/13 8,333,560
4,707 Alliance One
International, Inc.,
Term Loan (a)....... B1 BB 7.57 03/30/11 4,718,664
1,583 B&G Foods, Inc.,
Term Loan........... Ba2 BB- 7.36 02/23/13 1,558,870
8,833 Birds Eye Foods,
Inc., Term Loan..... B1 B+ 7.11 to 10.61 07/11/12 to 03/22/13 8,611,880
13,385 Coleman Natural
Foods, LLC, Term
Loan................ NR NR 9.86 08/22/12 12,916,093
3,515 Coleman Natural
Foods, LLC, Term
Loan (b)............ NR NR 14.86 08/22/13 3,022,638
7,500 Culligan
International Co.,
Term Loan........... Ba3 B+ 7.57 11/24/12 7,087,500
4,963 DCI Cheese Co., Term
Loan................ NR NR 8.61 08/07/13 4,950,094
29,925 Dean Foods Co., Term
Loan................ Ba3 BB+ 6.86 04/02/14 28,937,475
35,450 Dole Food Co., Inc.,
Term Loan........... Ba3 BB- 5.23 to 9.25 04/12/13 33,588,453
7,612 DS Waters of
America, Inc., Term
Loan................ Ba3 B- 7.61 10/25/12 7,516,603
4,050 DSW Holdings, Inc.,
Term Loan........... NR NR 9.36 03/07/12 4,019,625
3,361 Farley's & Sathers
Candy Co., Inc.,
Term Loan........... NR NR 8.11 to 11.38 06/15/10 to 03/24/11 3,369,403
</Table>
See Notes to Financial Statements 15
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
BEVERAGE, FOOD & TOBACCO (CONTINUED)
$ 5,575 FSB Holdings, Inc.,
Term Loan........... NR NR 7.88 to 11.13% 09/29/13 to 03/29/14 $ 5,586,000
1,500 Interstate Brands
Corp., Term Loan
(c)(g).............. NR NR 9.61 07/19/07 1,441,249
5,776 Luigino's, Inc.,
Term Loan........... B1 B 8.38 04/02/11 5,704,243
842 Mafco Worldwide
Corp., Term Loan.... B1 BB- 7.32 to 9.25 12/08/11 825,071
5,090 National Dairy
Holdings, LP, Term
Loan................ NR NR 7.32 03/15/12 5,090,397
1,645 OSI Foods GMBH & Co.
KG, Term Loan....... NR NR 7.36 09/02/11 1,578,227
6,428 OSI Group, LLC, Term
Loan................ NR NR 7.36 09/02/11 6,175,308
8,654 PBM Products, LLC,
Term Loan........... NR NR 7.82 09/29/12 8,675,616
12,891 Pierre Foods, Inc.,
Term Loan........... Ba3 BB- 7.57 06/30/10 12,762,131
19,654 Pinnacle Foods,
Inc., Term Loan..... B2 B 8.11 04/02/14 18,622,510
1,347 Smart Balance, Inc.,
Term Loan........... B2 B 8.61 05/18/14 1,326,426
358 Volume Services
America, Inc.,
Revolving Credit
Agreement........... B2 NR 3.50 04/01/10 347,395
3,910 Volume Services
America, Inc., Term
Loan................ B2 NR 8.61 to 9.50 10/01/10 3,917,331
--------------
215,050,137
--------------
BROADCASTING--CABLE 5.7%
4,688 Cequel
Communications, LLC,
Term Loan........... B1 BB- 7.36 to 9.25 11/05/13 4,480,795
73,500 Charter
Communications
Operating, LLC, Term
Loan................ B1 B+ 7.36 to 7.86 03/06/14 to 09/06/14 70,081,250
38,965 CSC Holdings, Inc.,
Term Loan........... Ba2 BB 7.07 03/29/13 37,525,124
</Table>
16 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
BROADCASTING--CABLE (CONTINUED)
$10,000 Discovery
Communications
Holding, LLC, Term
Loan................ NR NR 7.36% 05/14/14 $ 9,775,000
5,550 Knology, Inc., Term
Loan................ Ba3 B 7.61 06/30/12 5,494,500
7,535 MCC Iowa, LLC, Term
Loan................ Ba3 BB- 7.07 01/31/15 7,231,086
1,987 Mediacom
Communications
Corp., Term Loan.... Ba3 BB- 6.82 to 6.86 03/31/10 1,919,718
1,592 Mediacom Illinois,
LLC, Term Loan...... Ba3 BB 7.07 to 7.11 01/31/15 1,540,260
5,000 RCN Corp., Term
Loan................ B1 NR 7.69 05/25/14 4,875,000
--------------
142,922,733
--------------
BROADCASTING--DIVERSIFIED 0.3%
4,933 Cumulus Media, Inc.,
Term Loan........... Ba3 B 7.07 to 7.11 06/11/14 4,874,750
2,344 NEP II, Inc., Term
Loan................ NR NR 7.61 02/16/14 2,273,798
--------------
7,148,548
--------------
BROADCASTING--RADIO 1.6%
5,000 Citadel Broadcasting
Corp., Term Loan.... Ba3 BB- 6.99 06/12/14 4,704,165
7,886 CMP KC, LLC, Term
Loan................ Caa1 CCC+ 9.38 05/03/11 7,925,224
11,493 CMP Susquehanna
Corp., Term Loan.... Ba3 B- 7.35 to 7.39 05/05/13 11,141,242
3,157 Emmis Operating Co.,
Term Loan........... B1 B+ 7.32 to 7.36 11/01/13 3,080,582
1,185 LBI Media, Inc.,
Term Loan........... Ba1 B+ 6.82 03/31/12 1,155,375
4,208 Multicultural Radio
Broadcasting, Inc.,
Term Loan........... B2 B 8.11 to 11.11 12/18/12 to 06/18/13 4,192,313
3,713 NextMedia Operating,
Inc., Term Loan..... B1 B+ 7.32 to 9.82 11/15/12 to 11/15/13 3,582,779
</Table>
See Notes to Financial Statements 17
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
BROADCASTING--RADIO (CONTINUED)
$ 2,239 Regent Broadcasting,
LLC, Term Loan...... B1 B+ 7.61% 11/21/13 $ 2,182,781
3,404 Spanish Broadcasting
System, Inc., Term
Loan................ B1 B- 7.11 06/11/12 3,370,025
--------------
41,334,486
--------------
BROADCASTING--TELEVISION 2.8%
1,985 Barrington
Broadcasting, LLC,
Term Loan........... Ba3 BB- 7.61 08/12/13 1,945,300
3,242 Sunshine
Acquisition, Ltd.,
(United Kingdom)
Term Loan........... Ba3 B+ 7.34 03/20/12 3,140,204
71,074 Univision
Communications,
Inc., Term Loan..... Ba3 B+ 7.61 to 7.82 03/29/09 to 09/29/14 66,351,113
--------------
71,436,617
--------------
BUILDINGS & REAL ESTATE 3.8%
3,333 BioMed Realty, LP,
Term Loan (a)....... NR NR 7.57 05/30/10 3,337,500
2,500 California Coastal
Communities, Inc.,
Term Loan........... NR NR 8.07 09/15/11 2,487,500
5,172 Edge-Star Partners,
Term Loan........... NR NR 9.36 to 15.36 11/18/07 5,188,578
8,921 General Growth
Properties, Inc.,
Term Loan........... Ba2 BB+ 6.57 02/24/10 8,612,536
13,931 Ginn LA CS Borrower,
LLC, Term Loan...... B3 B- 8.86 to 12.86 06/08/11 to 06/08/12 12,442,021
9,800 Kyle Acquisition
Group, LLC, Term
Loan................ NR NR 8.88 07/20/08 to 07/20/10 9,591,750
602 Lake at Las Vegas
Joint Venture, LLC,
Revolving Credit
Agreement........... Caa1 CCC+ 15.46 06/20/12 595,833
4,398 Lake at Las Vegas
Joint Venture, LLC,
Term Loan........... Caa1 CCC+ 15.42 06/20/12 4,112,268
</Table>
18 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
BUILDINGS & REAL ESTATE (CONTINUED)
$ 3,582 Landsource
Communities
Development, LLC,
Term Loan........... Ba2 BB+ 8.11% 02/27/13 $ 3,373,051
3,200 LNR Property Corp.,
Term Loan........... B2 B+ 8.11 07/12/11 3,080,573
4,316 London Arena &
Waterfront Finance,
LLC, (United
Kingdom) Term
Loan................ NR NR 7.86 03/08/12 4,293,997
552 Maguire Properties
Holdings III, LLC,
Term Loan........... Ba3 BB- 7.32 04/24/12 549,643
3,047 NLV Holdings, LLC,
Term Loan........... Caa1 B+ 8.07 to 12.32 05/09/11 to 05/30/12 3,059,898
7,500 Realogy Corp., Term
Loan................ Ba3 BB 8.32 to 8.36 10/10/13 7,076,782
2,900 Re/Max
International, Inc.,
Term Loan........... NR NR 7.07 12/15/07 2,871,000
2,382 Shea Capital I, LLC,
Term Loan........... NR NR 7.36 10/27/11 2,215,260
1,546 Shea Mountain House,
LLC, Term Loan...... NR NR 7.36 05/11/11 1,437,855
4,424 South Edge, LLC,
Term Loan........... NR NR 7.13 to 7.38 10/31/07 to 10/31/09 4,250,532
400 Standard Pacific
Corp., Term Loan.... NR NR 6.86 05/05/13 379,500
3,970 Tamarack Resort,
LLC, Term Loan...... NR NR 8.61 to 10.50 05/19/11 3,870,750
8,000 WCI Communities,
Inc, Term Loan...... NR NR 7.82 12/23/10 7,710,000
6,738 Yellowstone
Development, LLC,
Term Loan........... NR NR 7.70 09/30/10 6,590,378
--------------
97,127,205
--------------
BUSINESS EQUIPMENT & SERVICES 5.5%
12,624 Affiliated Computer
Services, Inc., Term
Loan................ Ba2 BB 7.32 03/20/13 12,422,951
9,801 AlixPartners, LLP,
Term Loan (a)....... B1 BB- 7.61 10/12/13 9,702,743
</Table>
See Notes to Financial Statements 19
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES (CONTINUED)
$ 3,150 Audio Visual
Services Corp., Term
Loan (a)............ Ba3 B+ 7.61% 02/28/14 $ 3,134,250
1,247 BakerCorp, Term Loan
(a)................. B1 B 7.57 to 7.61 05/08/14 1,236,355
3,367 Brickman Group
Holdings, Inc., Term
Loan (a)............ NR B+ 7.34 01/23/14 3,332,897
4,878 Cellnet Group, Inc.,
Term Loan........... NR NR 2.00 to 7.36 07/22/11 4,865,828
1,921 Contec, LLC, Term
Loan................ NR NR 7.88 06/15/12 1,925,692
10,667 Crawford & Co., Term
Loan................ B1 BB- 7.61 10/30/13 10,680,694
5,500 Edwards (Cayman
Islands II), Ltd.,
Term Loan........... B1 BB 7.36 to 11.11 05/31/14 to 11/30/14 5,098,750
1,740 Euronet Worldwide,
Inc., Term Loan..... Ba2 BB 7.32 to 7.36 04/14/14 1,687,800
4,466 First American
Payment Systems, LP,
Term Loan........... NR NR 8.63 10/06/13 4,455,084
2,500 Information
Resources, Inc.,
Term Loan........... NR NR 7.07 to 7.12 05/16/14 2,375,000
2,255 InfoUSA, Inc., Term
Loan................ Ba2 BB 7.36 02/14/12 2,220,850
2,494 Itron, Inc., Term
Loan................ Ba3 B+ 7.36 04/18/14 2,425,172
18,000 KAR Holdings, Inc.,
Term Loan........... Ba3 B+ 7.61 10/20/13 16,616,250
4,071 Katun Corp., Term
Loan................ NR B 11.25 06/30/09 4,060,411
7,714 NCO Financial
Systems, Term Loan.. Ba3 BB- 8.36 05/15/13 7,636,606
4,762 RGIS Services, LLC,
Term Loan........... Ba3 B- 7.82 04/30/14 4,666,667
9,060 Sedgwick Claims
Management Services,
Inc., Term Loan..... B1 B+ 7.61 01/31/13 8,878,998
1,018 Valassis
Communications,
Inc., Term Loan..... Ba2 BB 7.11 03/02/14 975,827
</Table>
20 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES (CONTINUED)
$ 1,069 Verifone, Inc., Term
Loan................ B1 BB 7.09 to 7.11% 10/31/13 $ 1,052,719
29,564 VNU, Inc., Term
Loan................ Ba3 B+ 7.36 08/09/13 28,842,407
--------------
138,293,951
--------------
CHEMICALS, PLASTICS & RUBBER 5.8%
898 Arizona Chemical
Co., Term Loan...... B1 BB- 7.36 02/28/13 872,501
1,443 Becker-Underwood,
Inc., Term Loan..... NR NR 8.86 to 9.11 03/31/10 to 09/30/11 1,430,439
12,600 Brenntag Holdings
GmbH & Co. KG,
(Germany) Term
Loan................ Caa1 B+ 7.39 to 9.39 01/17/14 to 07/17/15 12,403,500
3,031 Celanese Holdings,
LLC, Term Loan (a).. Ba3 BB 5.32 to 7.11 04/02/14 2,859,044
1,000 Cristal Inorganic
Chemicals US, Inc.,
Term Loan........... Ba3 B+ 7.61 05/15/14 961,667
10,090 Ferro Corp., Term
Loan................ NR B+ 7.32 to 7.36 06/06/12 10,014,738
2,934 Fibervisions
Delaware Corp., Term
Loan................ B1 B+ 8.86 03/31/13 2,831,603
1,882 Foamex LP, Term
Loan................ B1 B+ 7.57 to 7.61 02/12/13 1,832,156
3,728 Georgia Gulf Corp.,
Term Loan........... Ba2 BB 7.82 10/03/13 3,642,683
27,809 Hexion Specialty
Chemicals, Inc.,
Term Loan........... Ba3 B+ 7.63 05/05/13 26,830,869
25,781 Huntsman
International, LLC,
Term Loan........... Ba1 BB+ 7.07 08/16/12 25,152,866
5,940 Ineos Holdings,
Ltd., (United
Kingdom) Term
Loan................ Ba2 BB- 7.58 to 8.08 12/16/13 to 12/23/14 5,773,680
2,352 INVISTA
(Netherlands), Term
Loan................ Ba1 BBB- 6.86 04/30/10 to 04/29/11 2,265,292
7,500 ISP Chemco Inc.,
Term Loan........... Ba3 BB- 7.13 06/04/14 7,203,750
9,875 Kraton Polymers,
LLC, Term Loan...... Ba3 B+ 7.38 05/12/13 9,529,375
</Table>
See Notes to Financial Statements 21
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
CHEMICALS, PLASTICS & RUBBER (CONTINUED)
$ 7,461 Lucite International
Group Holdings,
Ltd., (United
Kingdom) Term
Loan................ Ba3 BB- 7.61% 07/07/13 $ 7,162,308
3,142 MacDermid, Inc.,
Term Loan........... B1 BB- 7.36 04/12/14 3,091,065
781 Nusil Technology,
LLC, Term Loan...... NR NR 8.07 10/24/13 773,388
3,000 OMNOVA Solutions,
Inc., Term Loan..... B2 B+ 7.82 to 7.88 05/22/14 2,970,000
8,570 Rockwood Specialties
Group, Inc., Term
Loan................ Ba2 BB 7.11 12/13/13 8,363,928
4,371 Valley National
Gases, Inc., Term
Loan................ Ba3 BB- 7.61 02/28/14 4,262,080
6,050 Wellman, Inc., Term
Loan................ Caa1 CCC 9.36 to 12.11 02/10/09 to 02/10/10 5,659,050
--------------
145,885,982
--------------
CONSTRUCTION MATERIAL 2.0%
7,880 AXIA, Inc., Term
Loan................ B2 B 10.11 12/21/12 7,131,400
3,573 Beacon Sales
Acquisition, Inc.,
Term Loan........... NR NR 7.34 to 7.36 09/30/13 3,483,675
3,000 Brand Services,
Inc., Term Loan..... Caa1 CCC+ 11.36 02/07/15 2,949,999
538 Builders
FirstSource, Inc.,
Term Loan........... Ba2 BB 7.86 08/11/11 527,332
14,933 Building Materials
Corp. of America,
Term Loan........... B2 BB 8.13 to 11.13 03/15/14 to 09/15/14 13,836,665
4,020 Building Materials
Holdings Corp., Term
Loan................ B1 BB+ 7.86 11/10/13 3,919,134
4,930 Contech Construction
Products, Inc., Term
Loan................ Ba3 BB 7.32 to 7.34 01/31/13 4,757,689
1,500 Custom Building
Products, Inc., Term
Loan................ NR NR 10.32 04/29/12 1,440,000
2,138 Lanoga Corp., Term
Loan................ Ba3 NR 9.00 06/29/13 2,116,125
</Table>
22 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
CONSTRUCTION MATERIAL (CONTINUED)
$ 1,780 Nortek, Inc., Term
Loan................ Ba2 B+ 7.61 to 9.50% 08/27/11 $ 1,715,157
2,174 Panolam Industries
International, Inc.
(Canada), Term
Loan................ Ba3 BB- 8.11 09/30/12 2,087,188
2,439 Pro-Build Holdings,
Inc., Term Loan..... Ba3 NR 9.00 06/29/13 2,414,669
3,766 Professional Paint,
Inc., Term Loan..... NR NR 7.88 to 11.63 05/31/12 to 05/31/13 3,575,700
--------------
49,954,733
--------------
CONTAINERS, PACKAGING & GLASS 3.0%
1,584 Altivity Packaging,
LLC, Term Loan...... Ba3 BB 7.57 to 7.61 06/30/13 1,552,980
1,716 Anchor Glass
Container Corp.,
Term Loan........... NR NR 7.61 05/03/13 1,707,580
7,536 Berry Plastics
Group, Inc., Term
Loan................ Ba3 BB- 7.36 04/03/15 7,092,029
888 Captive Plastics,
Inc., Term Loan..... NR NR 8.11 08/18/11 883,717
9,434 Consolidated
Container Co., LLC,
Term Loan........... B1 B 7.59 to 10.86 03/28/14 to 09/28/14 8,823,310
100 Fleming Packaging
Corp., Revolving
Credit Agreement (c)
(d) (e)............. NR NR 8.75 03/31/03 1,000
871 Fleming Packaging
Corp., Term Loan (c)
(d) (e)............. NR NR 12.25 08/31/04 8,711
3,650 Graham Packaging
Co., Term Loan...... B1 B+ 7.63 10/07/11 3,482,534
9,453 Graphic Packaging
International Corp.,
Term Loan........... Ba2 BB- 7.32 to 7.36 05/16/14 9,277,629
785 Kranson Industries,
Inc., Revolving
Credit Agreement.... NR NR 10.00 07/31/13 761,069
12,033 Kranson Industries,
Inc., Term Loan..... NR NR 7.61 07/31/13 11,882,663
5,945 Packaging Dynamics,
Term Loan........... NR BB 7.36 06/09/13 5,855,800
</Table>
See Notes to Financial Statements 23
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
CONTAINERS, PACKAGING & GLASS (CONTINUED)
$ 4,045 Pertus Sechzehnte
GMBH, (Germany) Term
Loan................ NR NR 7.70 to 7.95% 06/13/15 to 06/13/16 $ 3,984,301
2,913 Ranpak Corp., Term
Loan................ NR NR 7.82 12/14/11 2,861,906
3,322 Smurfit-Stone
Container Corp.,
Revolving Credit
Agreement........... Ba2 BB- 7.63 11/01/09 3,247,418
4,148 Smurfit-Stone
Container Corp.,
Term Loan........... Ba2 BB- 7.38 11/01/11 4,056,711
5,663 Tegrant Holding
Corp., Term Loan.... NR NR 8.11 to 10.86 03/08/14 to 03/08/15 5,323,781
5,538 Unifrax Corp., Term
Loan................ Ba3 BB- 7.63 05/02/13 5,392,970
--------------
76,196,109
--------------
DIVERSIFIED MANUFACTURING 1.4%
2,063 Arnold Magnectic
Technologies Corp.,
Term Loan........... NR NR 9.11 to 11.50 03/06/11 to 03/06/12 2,054,278
1,122 Chart Industries,
Inc., Term Loan..... Ba2 BB 7.38 10/17/12 1,102,030
3,500 Euramax
International, Inc.,
Term Loan........... B1 CCC+ 13.36 06/29/13 3,327,648
3,500 Jason, Inc., Term
Loan................ NR NR 7.82 04/30/10 3,421,250
12,138 Mueller Water
Products, Inc., Term
Loan................ Ba3 BB+ 7.07 to 7.11 05/24/14 11,667,529
6,312 MW Industries, Inc.,
Term Loan........... NR NR 8.36 11/01/13 6,359,657
1,860 Wire Rope Corp. of
America, Inc., Term
Loan................ B2 B+ 7.59 to 7.61 02/08/14 1,831,731
6,175 X-Rite, Inc., Term
Loan................ Ba3 BB- 7.61 to 10.36 06/30/12 to 06/30/13 6,155,759
--------------
35,919,882
--------------
DURABLE CONSUMER PRODUCTS 0.1%
3,350 Brown Jordan
International, Inc.,
Term Loan........... NR NR 9.36 to 11.25 04/30/12 3,332,939
--------------
</Table>
24 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
ECOLOGICAL 2.8%
$24,424 Allied Waste North
America, Inc., Term
Loan................ Ba3 BBB- 6.86 to 7.14% 01/15/12 $ 23,511,097
4,477 Casella Waste
Systems, Inc., Term
Loan................ NR NR 7.36 04/28/10 4,297,783
10,787 Energy Solutions,
LLC, Term Loan...... NR NR 7.57 to 7.66 06/07/11 to 06/07/13 10,652,636
2,493 Environmental
Systems Products
Holdings, Term Loan
(e)................. Caa1 NR 17.25 12/12/10 1,505,437
7,500 Iron Mountain, Inc.,
Term Loan........... Ba3 BB+ 6.87 04/16/14 7,406,250
3,058 LVI Services, Inc.,
Term Loan........... NR NR 10.34 to 10.39 11/16/11 3,033,625
4,950 Synagro
Technologies, Inc.,
Term Loan........... Ba3 BB- 7.36 to 10.11 04/02/14 to 10/02/14 4,752,000
12,709 Waste Services,
Inc., Term Loan..... Ba3 BB- 7.57 03/31/11 12,327,710
3,059 WasteQuip, Inc.,
Term Loan (a)....... Ba3 BB- 7.61 02/05/13 3,045,530
--------------
70,532,068
--------------
EDUCATION & CHILD CARE 0.6%
6,222 Educate, Inc., Term
Loan................ Ba3 CCC+ 7.57 to 10.59 06/14/13 to 06/14/14 5,986,812
9,761 Education
Management, LLC,
Term Loan........... B2 B+ 7.13 06/01/13 9,286,136
--------------
15,272,948
--------------
ELECTRONICS 3.6%
12,783 Dealer Computer
Services, Inc., Term
Loan................ Ba2 BB- 7.36 to 10.86 10/26/12 to 10/26/13 12,492,262
1,500 Deutsche Connector
Group, (France) Term
Loan................ NR NR 7.89 to 8.14 06/22/14 to 06/22/15 1,483,500
937 GXS Worldwide, Inc.,
Term Loan........... Ba3 BB- 10.36 to 12.25 07/29/11 934,325
1,000 H3C Holdings, Ltd.,
Term Loan........... NR NR 8.37 09/28/12 1,002,500
4,963 Infor Enterprise
Solutions Holdings,
Inc., Term Loan..... B1 B+ 9.11 07/28/12 4,875,656
</Table>
See Notes to Financial Statements 25
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
ELECTRONICS (CONTINUED)
$ 3,868 Intergraph Corp.,
Term Loan........... B1 B+ 7.57 to 7.61% 05/29/14 $ 3,751,590
7,500 Kronos, Inc., Term
Loan................ Ba3 B+ 7.61 06/11/14 7,171,875
2,922 Network Solutions,
LLC, Term Loan...... B1 B 7.86 03/07/14 2,854,007
2,487 Nuance
Communications,
Inc., Term Loan..... B1 B+ 7.32 03/31/13 2,377,544
1,356 ON Semiconductor
Corp., Term Loan.... Ba1 BB 7.11 09/03/13 1,295,172
12,720 Open Solutions,
Inc., Term Loan..... Ba3 BB- 7.45 01/23/14 12,116,145
4,441 Open Text Corp.,
Term Loan........... Ba3 BB 7.82 10/02/13 4,419,278
396 Stratus
Technologies, Inc.,
Term Loan........... NR B- 9.11 03/29/11 382,635
29,607 Sungard Data
Systems, Inc., Term
Loan................ Ba3 BB 7.36 02/28/14 28,499,517
7,038 Verint Systems,
Inc., Term Loan..... NR B+ 8.09 05/25/14 6,994,471
--------------
90,650,477
--------------
ENTERTAINMENT & LEISURE 6.4%
1,955 Alliance Atlantis
Communications,
Inc., Term Loan
(a)................. Ba1 BB 6.85 12/20/11 1,955,000
1,970 AMC Entertainment,
Inc., Term Loan..... Ba3 BB- 7.07 01/26/13 1,904,334
7,377 Bombardier Capital,
Inc., (Canada) Term
Loan................ B1 B+ 7.86 06/28/13 7,225,060
23,615 Cedar Fair, LP, Term
Loan (a)............ Ba3 BB 7.32 to 9.25 08/30/12 22,851,400
5,459 Cinemark USA, Inc.,
Term Loan........... Ba3 B 7.04 to 7.15 10/05/13 5,281,341
5,867 Fender Musical
Instruments Corp.,
Term Loan........... B2 B+ 7.65 06/09/14 5,690,667
4,000 Hicks Sports Group,
LLC, Term Loan...... NR NR 7.88 12/22/10 3,980,000
7,500 Lodgenet
Entertainment Corp.,
Term Loan........... B1 B+ 7.36 04/04/14 7,343,752
</Table>
26 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
ENTERTAINMENT & LEISURE (CONTINUED)
$54,524 Metro-Goldwyn-Mayer
Studios, Inc., Term
Loan................ NR NR 8.61% 04/08/12 $ 51,649,090
1,971 Mets, LP, Term
Loan................ NR NR 7.38 07/25/10 1,932,000
5,728 Panavision, Inc.,
Term Loan........... B1 B+ 8.86 03/30/11 5,584,854
3,883 Playcore Holdings,
Inc., Term Loan..... NR NR 7.82 to 9.75 02/21/14 3,863,917
22,576 Regal Cinemas, Inc.,
Term Loan........... Ba2 BB- 6.86 10/27/13 21,978,859
2,660 Tigers Ballpark,
LLC, Term Loan...... NR NR 7.11 08/15/10 2,660,000
10,273 True Temper Sports,
Inc., Term Loan..... Ba3 B+ 8.54 to 10.86 03/15/11 to 06/30/11 10,259,488
7,172 Universal City
Development
Partners, LP, Term
Loan................ Ba1 BB 7.36 06/09/11 6,992,966
--------------
161,152,728
--------------
FARMING & AGRICULTURE 0.3%
6,925 Wm. Bolthouse Farms,
Inc., Term Loan
(a)................. B1 B+ 7.63 to 10.86 12/16/12 to 12/16/13 6,833,815
--------------
FINANCE 3.0%
3,672 DCS Business
Services, Inc., Term
Loan................ NR NR 10.32 to 12.57 02/04/11 to 08/04/11 3,193,043
6,269 Grosvenor Capital
Management Holdings,
LLP, Term Loan...... NR NR 7.61 to 7.63 12/05/13 6,080,445
10,588 iPayment, Inc., Term
Loan................ B1 B 7.32 to 7.36 05/10/13 10,190,843
8,457 LPL Holdings, Inc.,
Term Loan........... B1 B 7.36 06/28/13 8,181,706
1,634 Munder Capital
Management, Term
Loan................ NR NR 7.32 to 7.36 12/29/12 1,617,469
8,715 National Processing
Company Group, Term
Loan................ B2 B+ 8.32 to 11.86 09/29/12 to 09/29/14 8,573,269
</Table>
See Notes to Financial Statements 27
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
FINANCE (CONTINUED)
$ 7,950 Outsourcing
Solutions, Inc.,
Term Loan........... NR NR 10.82% 09/30/10 $ 7,989,277
9,900 Oxford Acquisition
III, Ltd.,
(United Kingdom)
Term Loan........... Ba3 BB+ 7.11 05/11/14 9,615,375
4,191 Riskmetrics Group
Holdings, LLC, Term
Loan................ Ba3 BB- 7.61 to 10.86 01/11/14 to 07/11/14 4,139,367
7,500 RJO Holdings Corp.,
Term Loan........... B2 CCC 8.32 to 12.07 07/12/14 to 07/12/15 7,418,750
10,169 Transfirst Holdings,
Inc., Term Loan..... B2 B 8.11 to 11.36 06/15/14 to 06/15/15 9,795,208
--------------
76,794,752
--------------
GROCERY 0.3%
8,496 Roundy's
Supermarkets, Inc.,
Term Loan........... Ba3 B+ 8.11 11/03/11 8,294,207
--------------
HEALTH & BEAUTY 1.3%
7,265 American Safety
Razor Co., Term Loan
(a)................. B3 B- 7.83 to 11.63 07/31/13 to 01/30/14 7,140,375
4,904 Bare Escentuals
Beauty, Inc., Term
Loan (a)............ B1 BB- 7.57 02/18/12 4,855,190
9,994 Marietta
Intermediate
Holdings Corp., Term
Loan (b)............ NR NR 9.32 to 13.32 12/17/10 to 12/17/11 9,145,559
13,147 Prestige Brands
Holdings, Inc., Term
Loan................ Ba3 BB- 7.63 04/06/11 12,851,281
--------------
33,992,405
--------------
HEALTHCARE 8.2%
9,205 American Medical
Systems, Inc., Term
Loan (a)............ Ba3 BB 7.63 to 7.69 07/20/12 9,158,478
15,086 Capella Healthcare,
Inc., Term Loan..... B1 B+ 7.86 to 10.86 11/30/12 to 11/30/13 14,558,108
2,250 Concentra, Inc.,
Term Loan........... B1 B+ 7.61 06/25/14 2,176,875
5,048 CRC Health Group,
Inc., Term Loan..... Ba3 BB- 7.61 02/06/13 4,947,093
</Table>
28 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
$ 7,493 DSI Renal, Inc.,
Term Loan........... NR NR 7.63% 03/31/13 $ 7,117,894
878 Emdeon Business
Services, LLC, Term
Loan................ B1 BB- 7.61 11/16/13 849,097
2,367 FHC Health Systems,
Inc., Term Loan..... Ba3 B 12.07 to 14.07 12/18/09 2,391,077
701 Genoa Healthcare
Group, LLC, Term
Loan................ Ba3 BB- 8.34 to 10.25 08/10/12 662,005
365 Golden Gate National
Senior Care, LLC,
Term Loan........... Ba3 BB- 8.07 03/14/11 363,459
65,820 HCA, Inc., Term
Loan................ Ba3 BB 7.36 to 7.61 11/17/12 to 11/17/13 63,507,943
15,860 Health Management
Associates, Inc.,
Term Loan........... Ba2 BB- 7.11 02/28/14 15,463,744
3,343 HealthCare Partners,
LLC, Term Loan...... Ba2 BB 7.13 10/31/13 3,175,714
5,618 Iasis Healthcare,
LLC, Term Loan...... Ba2 B+ 7.36 to 7.62 03/15/14 5,364,724
11,000 Inverness Medical
Innovations, Inc.,
Term Loan........... B1 BB 7.34 06/26/14 10,505,000
17,402 Lifepoint Hospitals,
Inc., Term Loan..... Ba2 BB 6.99 04/15/12 16,596,806
615 Matria Healthcare,
Inc., Term Loan..... Ba3 BB- 7.36 01/19/12 599,234
20,402 Multiplan, Inc.,
Term Loan........... B1 B+ 7.82 04/12/13 19,713,540
400 Select Medical
Corp., Revolving
Credit Agreement.... Ba2 BB- 2.25 02/24/11 376,000
2,456 Sterigenics
International, Inc.,
Term Loan........... B2 BB- 7.61 11/21/13 2,444,155
2,385 Sun Healthcare
Group, Inc., Term
Loan................ Ba2 B+ 7.36 to 7.38 04/12/14 2,367,170
12,000 Surgical Care
Affiliates, LLC,
Term Loan........... Ba3 B 7.57 12/29/14 11,400,000
</Table>
See Notes to Financial Statements 29
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
$ 8,638 United Surgical
Partners
International, Inc.,
Term Loan........... Ba3 B 7.37 to 7.38% 04/19/14 $ 8,168,223
4,500 Viant Holdings,
Inc., Term Loan..... Ba3 B+ 7.61 06/25/14 4,376,250
--------------
206,282,589
--------------
HOME & OFFICE FURNISHINGS, HOUSEWARES & DURABLE CONSUMER PRODUCTS 0.9%
9,978 Generation Brands,
LLC, Term Loan...... Caa1 CCC+ 7.82 to 11.63 12/20/12 to 06/20/13 9,441,063
5,371 Hunter Fan Co., Term
Loan................ B1 B+ 7.86 to 12.11 04/16/14 to 10/16/14 5,022,857
499 Lenox, Inc., Term
Loan................ NR B- 9.82 to 9.86 04/20/13 486,281
7,400 National Bedding
Co., LLC, Term
Loan................ Caa1 B+ 10.36 08/31/12 7,067,000
--------------
22,017,201
--------------
HOTELS, MOTELS, INNS & GAMING 5.2%
7,677 Cannery Casino
Resorts, LLC, Term
Loan................ B2 BB 2.25 to 7.61 05/18/13 7,408,465
10,664 Greektown Casino,
LLC, Term Loan...... Ba3 BB- 7.87 to 7.88 12/03/12 10,450,295
8,880 Green Valley Ranch
Gaming, LLC, Term
Loan................ B1 BB- 7.36 02/16/14 8,657,640
4,336 Greenwood Racing,
Inc., Term Loan..... B2 BB- 7.57 11/28/11 4,162,302
9,511 Herbst Gaming, Inc.,
Term Loan........... Ba3 BB 8.36 12/02/11 9,214,544
3,649 Kuilima Resort Co.,
Term Loan (e)....... NR NR 13.75 09/30/11 2,681,977
30,345 Las Vegas Sands,
LLC/Venetian Casino,
Term Loan........... Ba3 BB 7.11 05/23/14 29,088,886
12,500 MGM Mirage, Term
Loan................ NR NR 6.49 to 6.53 10/03/11 12,304,687
2,500 Riviera Holdings
Corp., Term Loan.... B2 BB- 7.36 06/08/14 2,431,250
502 Scientific Games
Corp., Revolving
Credit Agreement.... Ba1 BBB- 7.32 12/23/09 491,960
</Table>
30 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
HOTELS, MOTELS, INNS & GAMING (CONTINUED)
$ 4,209 Seminole Tribe of
Flordia, Term Loan.. Ba1 BBB- 0.75 to 6.88% 03/05/14 $ 4,055,944
10,700 Venetian Macau,
Ltd., Term Loan..... B1 BB- 7.61 05/26/12 to 05/26/13 10,356,070
7,642 Wembley, Inc., Term
Loan (a)............ Ba3 B+ 7.82 to 9.63 08/23/11 to 07/18/12 7,651,156
10,530 Wimar OpCo, LLC,
Term Loan........... Ba3 BB- 7.61 01/03/12 10,297,018
11,566 Yonkers Racing
Corp., Term Loan.... NR NR 8.88 08/12/11 11,471,657
--------------
130,723,851
--------------
INSURANCE 2.6%
4,963 Applied Systems,
Inc., Term Loan..... NR NR 7.86 09/26/13 4,850,844
8,214 ARG Holdings, LLC,
Term Loan (a)....... B2 NR 8.38 to 12.63 11/30/11 to 11/30/12 8,146,330
2,494 Audatex North
America, Inc., Term
Loan................ B1 B+ 7.38 05/16/14 2,365,945
2,212 CCC Information
Services Group,
Inc., Term Loan..... NR NR 7.86 02/10/13 2,156,729
7,500 Concord Re, Ltd.,
Term Loan........... Ba2 BB+ 9.61 02/29/12 7,481,250
10,078 HMSC Holdings Corp.,
Term Loan........... B2 B 7.61 to 10.86 04/03/14 to 10/03/14 9,402,797
8,046 Mitchell
International, Inc.,
Term Loan........... Caa1 CCC+ 7.38 to 10.63 03/28/14 to 03/28/15 7,679,135
13,333 USI Holdings Corp.,
Term Loan........... B2 B- 8.11 05/05/14 12,666,666
10,039 Vertafore, Inc.,
Term Loan........... NR NR 7.86 to 11.36 01/31/12 to 01/31/13 9,631,894
--------------
64,381,590
--------------
MACHINERY 1.0%
5,391 Alliance Laundry
Holdings, LLC, Term
Loan................ Ba3 BB- 7.61 01/27/12 5,323,815
3,168 Baldor Electric Co.,
Term Loan........... Ba3 BB+ 7.13 03/31/14 3,085,700
3,990 Douglas Dynamics,
LLC, Term Loan...... Ba2 BB 7.61 05/21/13 3,970,050
</Table>
See Notes to Financial Statements 31
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
MACHINERY (CONTINUED)
$ 2,978 FR X Ohmstede
Acquisitions Co.,
Term Loan........... B1 B 7.88% 08/09/13 $ 2,989,429
1,076 Gleason, Corp., Term
Loan................ NR NR 7.38 06/30/13 1,058,873
4,653 Goodman Global
Holdings, Inc., Term
Loan................ Ba2 BB 7.13 12/23/11 4,547,967
4,485 Stolle Machinery
Co., LLC, Term
Loan................ Caa1 B 7.82 to 11.34 09/29/12 to 09/29/13 4,295,675
1,096 United Rentals
(North America),
Inc., Term Loan..... Ba1 BB- 7.32 02/14/11 1,077,184
--------------
26,348,693
--------------
MEDICAL PRODUCTS & SERVICES 2.3%
3,509 Accellent, Inc.,
Term Loan........... B1 BB- 7.86 11/22/12 3,333,165
4,239 Advanced Medical
Optics, Inc. Term
Loan................ Ba1 BB 7.09 to 7.11 04/02/14 4,138,690
6,780 AGA Medical Corp.,
Term Loan........... B1 BB- 7.36 04/28/13 6,716,063
7,500 Carestream Health,
Inc., Term Loan..... Ba2 BB 7.32 to 7.39 04/30/13 7,106,250
442 Conmed Corp., Term
Loan................ Ba2 BB- 6.82 04/12/13 428,686
25,292 DaVita, Inc., Term
Loan................ Ba1 BB+ 6.86 to 6.88 10/05/12 24,003,047
3,259 Fresenius Medical
Care Holdings, Inc.,
Term Loan........... NR BBB- 6.74 03/31/13 3,142,972
8,500 VWR Funding, Inc.,
Term Loan........... B1 B+ 7.86 06/29/14 8,266,250
--------------
57,135,123
--------------
MINING, STEEL, IRON & NON-PRECIOUS METALS 0.0%
832 John Maneely Co.,
Term Loan........... B3 B+ 8.61 to 8.62 12/08/13 748,190
--------------
NATURAL RESOURCES 1.8%
401 Boston Generating,
LLC, Revolving
Credit Agreement.... B1 BB- 7.61 12/20/13 391,111
7,867 Boston Generating,
LLC, Term Loan...... B1 BB- 7.61 12/20/13 7,678,901
</Table>
32 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
NATURAL RESOURCES (CONTINUED)
$ 2,800 CDX Funding, LLC,
Term Loan (a)....... NR NR 11.57% 03/31/13 $ 2,801,750
3,000 Dresser, Inc., Term
Loan................ B2 B+ 7.86 05/04/14 2,903,250
3,682 El Paso Corp., Term
Loan................ Ba1 BB 7.42 08/01/11 3,553,322
1,210 Hudson Products
Holdings, Inc., Term
Loan................ B1 B+ 7.86 to 7.89 12/05/13 1,200,640
1,576 Key Energy Services
Group, Inc., Term
Loan................ NR NR 7.82 to 7.86 06/30/12 1,544,480
1,038 Targa Resources,
Inc., Term Loan..... B1 B+ 7.32 to 7.36 10/31/12 1,029,965
20,000 Western Refining,
Inc., Term Loan..... B1 BB+ 7.07 05/30/14 19,225,000
4,500 Willbros USA, Inc.,
Term Loan........... NR NR 10.26 10/27/09 4,455,000
--------------
44,783,419
--------------
NON-DURABLE CONSUMER PRODUCTS 3.2%
11,245 Aearo Technologies,
Inc., Term Loan..... Caa1 B- 7.61 to 10.86 09/24/13 to 06/01/14 10,911,488
4,090 Amscan Holdings,
Inc., Term Loan..... Ba3 B 7.57 to 7.62 05/25/13 3,967,058
1,097 Chattem, Inc., Term
Loan................ Ba3 BB- 7.09 to 7.11 01/02/13 1,069,453
7,366 Easton-Bell Sports,
Inc., Term Loan..... Ba3 BB- 7.11 03/16/12 7,057,169
2,239 Gibson Guitar Corp.,
Term Loan........... Ba3 B 7.86 12/29/13 2,227,556
11,107 Huish Detergents,
Inc., Term Loan..... B1 B+ 7.32 to 9.57 04/26/14 to 10/26/14 10,292,143
8,776 JohnsonDiversey,
Inc., Term Loan..... Ba2 BB- 7.86 12/16/10 to 12/16/11 8,468,445
4,000 KIK Custom Products,
Inc., (Canada), Term
Loan................ B1 B 10.36 11/30/14 3,630,000
4,800 KIK Custom Products,
Inc., Term Loan..... B1 B 7.61 05/31/14 4,368,000
2,344 Mattress Holdings
Corp., Inc., Term
Loan................ B1 B 7.61 01/18/14 2,203,477
</Table>
See Notes to Financial Statements 33
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
NON-DURABLE CONSUMER PRODUCTS (CONTINUED)
$ 1,176 Mega Brands, Inc.
(Canada), Term
Loan................ Ba3 B+ 7.63% 07/26/12 $ 1,146,600
5,679 Philosophy, Inc.,
Term Loan........... B2 B+ 7.34 to 7.36 03/16/14 5,579,727
506 Spectrum Brands,
Inc., Revolving
Credit Agreement.... B1 B- 5.17 03/30/13 490,619
12,053 Spectrum Brands,
Inc., Term Loan..... B1 B- 9.32 to 9.36 03/30/13 11,655,022
1,800 Targus Group
International, Inc.,
Term Loan........... Caa2 CCC+ 13.87 05/22/13 1,566,000
1,958 UCG Paper Crafts,
Inc., Term Loan..... NR NR 10.50 02/17/13 1,958,067
4,489 Yankee Candle Co.,
Inc., Term Loan..... Ba3 BB- 7.36 02/06/14 4,264,312
--------------
80,855,136
--------------
PAPER & FOREST PRODUCTS 2.7%
3,000 Ainsworth Lumber
Co., Ltd., Term
Loan................ Ba3 B- 8.36 06/26/14 2,925,000
4,860 Domtar Corp., Term
Loan................ Ba1 BB+ 6.70 03/07/14 4,694,760
43,037 Georgia-Pacific
Corp., Term Loan.... Ba2 BB+ 7.11 12/20/12 40,769,597
3,155 NewPage Corp., Term
Loan................ Ba2 BB- 7.63 05/02/11 3,113,275
2,105 Tidi Products, LLC,
Term Loan........... NR NR 8.61 to 9.86 12/31/11 2,094,830
7,317 White Birch Paper
Co. (Canada), Term
Loan................ B1 BB- 8.13 05/08/14 7,078,895
6,764 Xerium Technologies,
Inc., Term Loan..... B2 B+ 8.11 05/18/12 6,459,560
--------------
67,135,917
--------------
</Table>
34 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
PERSONAL & MISCELLANEOUS SERVICES 0.8%
$10,774 Affinion Group,
Inc., Term Loan
(a)................. Ba2 BB 7.82 to 7.86% 10/17/12 $ 10,708,701
6,759 Coinmach Laundry
Corp., Term Loan.... B2 B+ 7.88 12/19/12 6,674,357
1,635 Omniflight
Helicopters, Inc.,
Term Loan........... NR NR 10.25 to 10.75 06/30/11 to 09/30/12 1,618,292
--------------
19,001,350
--------------
PHARMACEUTICALS 0.8%
1,890 Bradley
Pharmaceuticals,
Inc., Term Loan..... NR NR 11.25 11/14/10 1,892,362
2,239 Stiefel
Laboratories, Inc.,
Term Loan........... Ba3 BB- 7.61 12/28/13 2,205,169
15,602 Warner Chilcott
Holdings Co., Term
Loan................ B1 BB- 7.36 01/18/12 15,141,459
--------------
19,238,990
--------------
PRINTING & PUBLISHING 10.3%
5,000 Advanstar
Communications,
Inc., Term Loan..... B1 B+ 7.61 05/31/14 4,751,565
5,376 ALM Media Holdings,
Inc., Term Loan..... B1 B- 7.82 03/05/10 5,362,658
3,300 American Media
Operations, Inc.,
Term Loan........... B1 B- 8.59 01/31/13 3,102,000
3,050 Ascend Media
Holdings, LLC, Term
Loan................ NR NR 8.60 to 8.84 01/31/12 2,820,818
1,985 Black Press Group,
Ltd., (Canada) Term
Loan................ Ba3 BB- 7.36 08/02/13 1,951,503
5,383 Canon
Communications, LLC,
Term Loan........... B2 B+ 8.32 05/31/11 5,369,898
2,173 Caribe Information
Investment, Inc.,
Term Loan........... B1 B+ 7.61 03/31/13 2,129,774
10,600 Cygnus Business
Media, Inc., Term
Loan................ B2 CCC+ 8.86 to 8.91 07/13/09 10,600,250
1,000 DRI Holdings, Inc.,
Term Loan........... NR NR 8.32 07/03/14 995,000
</Table>
See Notes to Financial Statements 35
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
PRINTING & PUBLISHING (CONTINUED)
$14,279 Endurance Business
Media, Inc., Term
Loan................ B1 B+ 8.07 to 12.57% 07/26/13 to 01/26/14 $ 14,244,729
8,176 F&W Publications,
Inc., Term Loan..... NR NR 7.61 to 9.61 02/05/13 7,993,566
12,375 Gatehouse Media,
Inc., Term Loan..... B1 BB- 7.36 08/28/14 11,766,558
8,326 Haights Cross
Operating Co., Term
Loan................ B3 B- 8.86 to 9.86 08/20/08 8,242,652
7,950 Hanley-Wood, LLC,
Term Loan........... NR B 7.61 03/08/14 7,406,294
4,478 Idearc, Inc., Term
Loan................ Ba2 BBB- 7.36 11/17/14 4,287,206
1,567 Intermedia Outdoor,
Inc., Term Loan..... NR NR 8.36 01/31/13 1,571,043
2,000 Knowledgepoint360
Group, LLC, Term
Loan................ B1 BB+ 8.57 to 12.32 04/26/14 to 04/26/15 2,005,000
2,376 MC Communications,
LLC, Term Loan...... NR NR 7.82 to 7.89 12/31/10 2,280,513
12,642 MediaNews Group,
Inc., Term Loan..... Ba2 BB- 6.59 to 7.09 12/30/10 to 08/02/13 12,414,425
2,233 MediMedia USA, Inc.,
Term Loan........... Ba3 BB- 7.52 to 7.63 10/05/13 2,143,800
11,270 Merrill
Communications, LLC,
Term Loan........... B1 BB- 7.57 to 11.82 05/15/11 to 11/15/13 11,122,572
7,441 Penton Media, Inc.,
Term Loan........... B1 BB- 7.61 to 10.36 02/01/13 to 02/01/14 7,240,595
8,688 Primedia, Inc., Term
Loan................ NR NR 7.57 09/30/13 8,640,385
2,631 Questex Media Group,
Inc., Term Loan..... NR NR 8.36 05/04/14 2,578,625
18,105 Reader's Digest
Association, Inc.,
Term Loan........... B1 B+ 7.33 to 7.38 03/02/14 16,837,301
9,571 R.H. Donnelley,
Inc., Term Loan..... Ba1 BB+ 6.57 to 6.86 12/31/09 to 06/30/11 9,259,337
18,260 Riverdeep
Interactive Learning
USA, Inc., Term
Loan................ B1 B 8.11 12/20/13 17,712,371
2,574 SGS International,
Inc., Term Loan..... Ba2 BB 2.50 to 7.88 12/30/11 2,548,645
</Table>
36 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
PRINTING & PUBLISHING (CONTINUED)
$ 1,724 Source Media, Inc.,
Term Loan........... B1 NR 7.61% 11/08/11 $ 1,730,532
1,500 Summit Business
Media Intermediate,
Term Loan........... NR NR 8.09 07/06/14 1,488,750
3,616 Thomas Nelson
Publishers, Term
Loan................ NR NR 7.54 to 7.61 06/12/12 3,453,025
60,000 Tribune Co., Term
Loan................ Ba2 BB- 8.36 05/19/14 54,685,740
10,438 Yell Group, PLC,
(United Kingdom)
Term Loan........... NR NR 6.82 to 7.32 04/30/11 to 02/10/13 10,264,023
--------------
259,001,153
--------------
RESTAURANTS & FOOD SERVICE 2.5%
24,851 Aramark Corp., Term
Loan................ Ba3 BB- 7.36 01/26/14 23,453,143
7,238 Arby's, LLC, Term
Loan................ Ba3 BB 7.59 to 7.61 07/25/12 7,050,877
488 CBRL Group Inc.,
Term Loan........... Ba2 BB 6.84 04/27/13 468,338
3,200 Center Cut
Hospitality, Inc.,
Term Loan........... NR NR 8.07 07/06/14 3,136,000
1,533 Denny's Corp., Term
Loan................ Ba2 BB- 7.33 to 7.40 03/31/12 1,513,208
6,420 Landry's
Restaurants, Inc.,
Term Loan........... Ba2 CCC+ 7.08 to 7.11 12/28/10 6,428,356
6,138 NPC International,
Inc., Term Loan..... Ba3 BB- 7.07 to 7.14 05/03/13 5,953,448
451 OSI Restaurant
Partners, LLC,
Revolving Credit
Agreement........... B1 BB 7.43 06/14/13 431,278
7,049 OSI Restaurant
Partners, LLC, Term
Loan................ B1 BB 7.63 06/14/13 6,738,722
5,960 Sagittarius
Restaurants, LLC,
Term Loan........... B1 B+ 7.61 03/29/13 5,849,992
2,893 Sbarro, Inc., Term
Loan................ Ba3 B+ 7.86 to 7.88 01/31/14 2,820,431
--------------
63,843,793
--------------
</Table>
See Notes to Financial Statements 37
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
RETAIL--OFFICE PRODUCTS 0.3%
$ 8,315 Corporate Express US
Finance, Inc.,
(Netherlands) Term
Loan................ Ba2 BB+ 7.11 to 7.36% 12/23/10 to 12/31/10 $ 8,106,668
--------------
RETAIL--OIL & GAS 0.1%
2,722 The Pantry, Inc.,
Term Loan........... Ba3 BB+ 7.07 05/15/14 2,524,861
--------------
RETAIL--SPECIALTY 0.8%
1,050 General Nutrition
Centers, Inc.,
Revolving Credit
Agreement........... Ba3 B- 7.61 09/16/13 1,025,063
5,387 General Nutrition
Centers, Inc., Term
Loan................ Ba3 B- 7.61 09/16/13 5,231,638
11,689 Nebraska Book Co.,
Inc., Term Loan..... B2 B 7.83 03/04/11 11,747,393
696 Visant Holding
Corp., Term Loan.... Ba1 BB 7.33 10/04/11 700,546
--------------
18,704,640
--------------
RETAIL--STORES 1.9%
5,955 Csk Auto, Inc., Term
Loan................ Ba3 B+ 8.38 06/29/12 5,925,337
13,217 Michael's Stores,
Inc., Term Loan..... B2 B 7.63 10/31/13 12,405,123
14,977 Neiman Marcus Group,
Inc., Term Loan..... Ba3 B+ 7.09 to 7.11 04/06/13 14,374,602
10,000 Rite Aid Corp., Term
Loan................ Ba3 BB- 7.07 06/04/14 9,993,750
3,123 Sally Holdings,
Inc., Term Loan..... B2 BB- 7.86 11/16/13 3,030,304
2,910 Savers, Inc., Term
Loan................ B1 BB- 8.11 08/11/12 2,865,862
--------------
48,594,978
--------------
TELECOMMUNICATIONS--LOCAL EXCHANGE CARRIERS 1.3%
400 Alaska
Communications
Systems Group, Inc.,
Term Loan........... B1 BB- 7.11 02/01/12 391,000
2,257 CavTel Holdings,
LLC, Term Loan
(a)................. B2 NR 10.11 12/31/12 2,286,142
</Table>
38 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--LOCAL EXCHANGE CARRIERS (CONTINUED)
$11,200 Fairpoint
Communications,
Inc., Term Loan..... B1 BB- 7.13% 02/08/12 $ 10,836,000
4,093 Global Tel*Link
Corp., Term Loan.... Ba3 BB 6.36 to 8.86 02/14/13 4,051,790
1,500 Hargray Acquisition
Co., Term Loan...... B1 B 7.57 06/29/14 1,458,750
3,100 NuVox Transition
Subsidiary, LLC,
Term Loan........... B2 CCC+ 8.59 to 8.66 05/31/14 3,069,000
6,316 Orius Corp., LLC,
Term Loan (c) (d)
(e)................. NR NR 11.75 to 12.25 01/23/09 to 01/23/10 1,121,076
2,261 Paetec Holding
Corp., Term Loan.... Ba3 B- 7.82 02/28/13 2,223,021
8,298 Sorenson
Communications,
Inc., Term Loan..... NR NR 7.86 to 12.36 02/16/14 to 04/27/14 8,202,793
--------------
33,639,572
--------------
TELECOMMUNICATIONS--LONG DISTANCE 0.6%
3,150 Intelsat, Ltd.,
(Bermuda) Term
Loan................ B2 B 7.86 02/01/14 3,077,720
4,000 Level 3
Communications,
Inc., Term Loan..... B1 B+ 7.61 03/13/14 3,846,668
7,440 Time Warner Telecom,
Inc., Term Loan..... Ba2 B 7.36 01/07/13 7,277,360
--------------
14,201,748
--------------
TELECOMMUNICATIONS--WIRELESS 1.3%
5,985 American Cellular
Corp., Term Loan
(a)................. B1 B- 7.36 03/15/14 5,926,395
10,000 Asurion Corp., Term
Loan................ NR NR 8.32 07/03/14 9,362,500
3,000 Cellular South,
Inc., Term Loan..... NR NR 7.11 to 8.25 05/29/14 2,917,500
8,708 Centennial Cellular,
Inc., Term Loan..... Ba2 BB- 7.36 02/09/11 8,485,182
</Table>
See Notes to Financial Statements 39
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--WIRELESS (CONTINUED)
$ 6,138 Cricket
Communications,
Inc., Term Loan..... Ba2 B+ 7.36% 06/16/13 $ 5,975,343
1,340 MetroPCS Wireless,
Inc., Term Loan..... B1 B+ 7.63 11/03/13 1,306,378
--------------
33,973,298
--------------
TEXTILES & LEATHER 1.5%
10,937 Gold Toe Investment
Corp., Term Loan.... B1 CCC+ 8.09 to 11.36 10/30/13 to 04/30/14 10,897,155
8,788 HanesBrands, Inc.,
Term Loan........... Ba2 BB 7.07 to 9.11 09/05/13 8,530,472
5,850 HBI Branded Apparel
Limited, Inc., Term
Loan................ Ba3 BB 9.11 09/05/13 5,730,075
3,150 Levi Strauss & Co,
Term Loan........... B2 B 7.57 03/27/14 2,995,124
2,915 Propex Fabrics,
Inc., Term Loan..... Ba3 B+ 8.36 07/31/12 2,871,603
3,673 St. John Knits
International, Inc.,
Term Loan........... B1 BB 8.36 03/21/12 3,690,911
3,005 Varsity Brands,
Inc., Term Loan..... NR NR 8.13 to 9.75 02/22/14 2,959,894
--------------
37,675,234
--------------
TRANSPORTATION--CARGO 0.4%
898 Cardinal Logistics
Management, Inc.,
Term Loan........... NR NR 9.07 09/23/13 893,261
5,000 JHCI Acquisition,
Inc., Term Loan..... Ba3 B+ 7.86 06/19/14 4,712,500
1,649 Kenan Advantage
Group, Inc., Term
Loan................ NR NR 8.36 12/16/11 1,632,775
2,131 Quality
Distribution, Inc.,
Term Loan........... Ba3 B 8.32 11/13/09 2,120,581
--------------
9,359,117
--------------
TRANSPORTATION--PERSONAL 0.2%
339 Coach America
Holdings, Inc.,
Revolving Credit
Agreement........... B1 CCC+ 5.26 10/20/14 328,814
4,319 Coach America
Holdings, Inc., Term
Loan................ B1 B+ 8.11 to 11.86 04/20/14 4,211,667
</Table>
40 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
TRANSPORTATION--PERSONAL (CONTINUED)
$ 589 Neoplan USA Corp.,
Revolving Credit
Agreement (c) (d)
(e) (f)............. NR NR 8.54% 06/30/06 $ 551,058
500 US Airways Group,
Inc., Term Loan..... B2 B+ 7.86 03/24/14 478,750
--------------
5,570,289
--------------
TRANSPORTATION-RAIL MANUFACTURING 0.4%
7,378 Helm Holding Corp.,
Term Loan........... NR NR 7.57 to 7.61 07/08/11 7,401,142
1,587 Standard Steel, LLC,
Term Loan........... B2 BB- 7.82 to 7.86 06/30/12 1,531,133
--------------
8,932,275
--------------
UTILITIES 4.4%
800 Astoria Generating
Co., LP, Term Loan.. B3 B 9.11 08/23/13 788,438
4,000 Bicent Power, LLC,
Term Loan........... Ba3 BB- 7.36 06/30/14 3,880,000
4,988 Calpine Corp., Term
Loan................ NR NR 7.61 03/29/09 4,845,147
5,000 Dynegy Holdings,
Inc., Term Loan..... Ba1 BB- 6.82 04/02/13 4,762,500
13,211 First Light Power
Resources, Term
Loan................ B1 BB- 7.86 to 9.88 11/01/13 to 05/01/14 12,940,851
2,509 InfrastruX Group,
Inc., Term Loan..... B2 B+ 8.57 11/03/12 2,515,493
2,400 Longview Power LLC,
Term Loan........... Ba3 BB 7.63 02/28/14 2,256,000
170 Mirant North America
LLC, Revolving
Credit Agreement.... Ba3 BB- 7.61 01/03/12 159,999
40,735 NRG Energy, Inc.,
Term Loan........... Ba1 BB 7.11 02/01/13 39,445,444
2,460 NSG Holdings, LLC,
Term Loan........... Ba2 BB 6.86 06/15/14 2,401,884
4,200 Primary Energy
Operating, LLC, Term
Loan................ NR NR 8.11 08/24/09 4,179,000
22,500 Thermal North
America, Term Loan.. B1 BB 8.07 to 8.11 10/24/08 22,443,750
</Table>
See Notes to Financial Statements 41
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
BANK LOAN
PRINCIPAL RATINGS+
AMOUNT -------------- STATED
(000) BORROWER MOODY'S S&P COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------------
UTILITIES (CONTINUED)
$ 6,057 TPF Generation
Holdings, LLC, Term
Loan................ Ba3 BB- 7.36 to 9.61% 12/15/13 to 12/15/14 $ 5,921,756
212 TPF Generation
Holdings, LLC,
Revolving Credit
Agreement........... Ba3 BB- 7.46 12/15/13 206,737
5,000 USPF Holdings, LLC,
Term Loan........... Ba2 BB+ 7.10 04/11/14 4,962,500
--------------
111,709,499
--------------
TOTAL VARIABLE RATE** SENIOR LOAN INTERESTS 120.6%........................ 3,040,717,788
--------------
</Table>
<Table>
DESCRIPTION VALUE
- ---------------------------------------------------------------------------------------------
NOTES 0.9%
Boise Cascade, LLC ($2,800,000 par, 8.24% coupon, maturing 10/15/12) (h)..... 2,758,000
Builders FirstSource, Inc., ($6,300,000 par, 9.61% coupon, maturing 02/15/12)
(h)......................................................................... 6,237,000
Compression Polymers Corp. ($2,300,000 par, 12.12% coupon, maturing 07/01/12)
(h)......................................................................... 2,346,000
Del Laboratories, Inc. ($5,600,000 par, 10.36% coupon, maturing 11/01/11)
(h)......................................................................... 5,572,000
Qwest Corp. ($3,500,000 par, 8.61% coupon, maturing 06/15/13) (h)............ 3,640,000
Verso Paper Holdings, LLC ($1,500,000 par, 9.11% coupon, maturing 08/01/14)
(h) (i)..................................................................... 1,477,500
--------------
TOTAL NOTES 0.9%............................................................ 22,030,500
--------------
EQUITIES 0.0%
Aladdin Gaming Holdings, LLC (8.63% ownership interest, Acquisition date
09/03/04, Cost $240,062) (j) (k)............................................ 53,798
DecorateToday.com (198,600 common shares, Acquisition date 12/31/98, Cost
$3,505,909) (f) (j) (k)..................................................... 0
Environmental Systems Products Holdings, Inc. (2,183 common shares,
Acquisition date 06/22/04, Cost $0) (j) (k)................................. 0
Gentek, Inc. (Canada) (1,040 common shares, Acquisition date 09/19/06, Cost
$0) (j) (k)................................................................. 30,795
Gentek, Inc. (Canada) (Warrants for 1,597 common shares, Acquisition date
10/17/06, Expiration date 10/31/10, Cost $0) (j) (k)........................ 56,703
IDT Corp. (22,898 common shares) (j)......................................... 228,522
London Fog Industries, Inc. (515,922 common shares) (j)...................... 0
Neoplan USA Corp. (2,262 preferred shares, Acquisition date 09/04/03, Cost
$1,074,522) (c) (f) (j) (k)................................................. 0
Neoplan USA Corp. (8,517 common shares, Acquisition date 09/04/03, Cost $85)
(c) (f) (j) (k)............................................................. 0
Railworks Corp. (Warrants for 1,037 common shares, Acquisition date 07/28/05,
Expiration date 06/14/11, Cost $2,557,518) (j) (k).......................... 0
</Table>
42 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
<Table>
<Caption>
DESCRIPTION VALUE
- ---------------------------------------------------------------------------------------------
EQUITIES (CONTINUED)
Rotech Medical Corp. (94,289 common shares, Acquisition date 06/12/02, Cost
$377,156) (j) (k)........................................................... $ 0
Safelite Realty (48,903 common shares, Acquisition date 10/20/00, Cost $0)
(f) (j) (k)................................................................. 0
--------------
TOTAL EQUITIES 0.0%......................................................... 369,818
--------------
TOTAL LONG-TERM INVESTMENTS 121.5%
(Cost $3,216,459,415)....................................................... 3,063,118,106
--------------
SHORT-TERM INVESTMENTS 2.3%
REPURCHASE AGREEMENTS 2.0%
State Street Bank & Trust Corp. ($51,000,000 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of 5.03%,
dated 07/31/07, to be sold on 08/01/07 at $51,007,126) (a).................. 51,000,000
TIME DEPOSIT 0.3%
State Street Bank & Trust Corp. ($7,962,603 par, 4.05% coupon, dated
07/31/07, to be sold on 08/01/07 at $7,963,499) (a)......................... 7,962,603
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $58,962,603).......................................................... 58,962,603
--------------
TOTAL INVESTMENTS 123.8%
(Cost $3,275,422,018)....................................................... 3,122,080,709
BORROWINGS (22.0%)........................................................... (555,000,000)
LIABILITIES IN EXCESS OF OTHER ASSETS (1.8%)................................ (45,955,355)
--------------
NET ASSETS 100.0%........................................................... $2,521,125,354
==============
</Table>
NR--Not rated
Industry percentages are calculated as a percentage of net assets.
(a) All or a portion of this security is designated in connection with unfunded
loan commitments.
(b) Payment-in-kind security.
(c) This borrower has filed for protection in federal bankruptcy court.
(d) This borrower is currently in liquidation.
(e) This Senior Loan interest is non-income producing.
(f) Affiliated company
(g) The borrower is in the process of restructuring or amending the terms of
this loan.
See Notes to Financial Statements 43
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
(h) Variable rate security. Interest rate shown is that in effect at July 31,
2007.
(i) 144A-Private Placement security which is exempt from registration under Rule
144A of the Securities Act of 1933, as amended. This security may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(j) Non-income producing security as the stock or warrant currently does not
declare dividends.
(k) Restricted security. Securities were acquired through the restructuring of
senior loans. These securities are restricted as they are not allowed to be
deposited via the Depository Trust Company. If at a later point in time, the
company wishes to register, the issuer will bear the costs associated with
registration. The aggregate value of restricted securities represents less
than 0.1% of the net assets of the Fund.
+ 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.
* Senior Loans in the Fund'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 Fund's portfolio may occur. As a
result, the actual remaining maturity of Senior Loans held in the Fund's
portfolio may be substantially less than the stated maturities shown.
Although the Fund is unable to accurately estimate the actual remaining
maturity of individual Senior Loans, the Fund 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 Fund invests generally pay interest at rates which
are periodically redetermined by reference to a base lending rate plus a
premium. These base lending rates are generally (i) the lending rate offered
by one or more major European banks, such as the London Inter-Bank Offered
Rate ("LIBOR"), (ii) the prime rate offered by one or more major United
States banks or (iii) the certificate of deposit rate. Senior Loans are
generally considered to be restricted in that the Fund ordinarily is
contractually obligated to receive approval from the Agent Bank and/or
Borrower prior to the disposition of a Senior Loan.
44 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2007 continued
SWAP AGREEMENTS OUTSTANDING AS OF JULY 31, 2007:
CREDIT DEFAULT SWAPS
<Table>
<Caption>
PAY/
RECEIVE NOTIONAL UNREALIZED
REFERENCE BUY/SELL FIXED EXPIRATION AMOUNT APPRECIATION/
COUNTERPARTY ENTITY/INDEX PROTECTION RATE DATE (000) DEPRECIATION
Goldman Sachs Credit
Partners, L.P. ........... Standard Pacific
Corporation Sell 3.40% 03/20/14 $2,500 $ (406,395)
Goldman Sachs Credit
Partners, L.P. ........... Standard Pacific
Corporation Sell 3.70 06/20/14 2,500 (385,554)
Goldman Sachs Credit
Partners, L.P. ........... K. Hovnanian
Enterprises, Inc. Sell 3.75 06/20/12 1,500 (185,345)
Goldman Sachs Credit
Partners, L.P. ........... K. Hovnanian
Enterprises, Inc. Sell 2.15 06/20/09 1,500 (98,024)
-----------
TOTAL CREDIT DEFAULT SWAPS.................................................................. $(1,075,318)
===========
</Table>
See Notes to Financial Statements 45
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
July 31, 2007
<Table>
ASSETS:
Unaffiliated Investments (Cost $3,270,252,135).............. $ 3,121,529,651
Affiliated Investments (Cost $5,169,883).................... 551,058
---------------
Total Investments (Cost $3,275,422,018).................. 3,122,080,709
Restricted Cash............................................. 712,302
Interest and Fees.......................................... 22,632,191
Fund Shares Sold........................................... 9,592,109
Investments Sold........................................... 2,805,843
Other....................................................... 52,354
---------------
Total Assets............................................. 3,157,875,508
---------------
LIABILITIES:
Payables:
Borrowings................................................. 555,000,000
Investments Purchased...................................... 64,373,224
Income Distributions....................................... 3,103,385
Investment Advisory Fee.................................... 1,863,738
Swap Contracts............................................. 1,075,318
Distributor and Affiliates................................. 784,120
Administration Fee......................................... 549,242
Fund Shares Repurchased.................................... 196,512
Unfunded Commitments........................................ 4,909,286
Accrued Interest Expense.................................... 2,366,276
Trustees' Deferred Compensation and Retirement Plans........ 1,445,011
Accrued Expenses............................................ 1,084,042
---------------
Total Liabilities........................................ 636,750,154
---------------
NET ASSETS.................................................. $ 2,521,125,354
===============
NET ASSETS CONSIST OF:
Capital..................................................... $ 3,783,638,868
Accumulated Undistributed Net Investment Income............. (5,136,703)
Net Unrealized Depreciation................................. (159,325,913)
Accumulated Net Realized Loss............................... (1,098,050,898)
---------------
NET ASSETS.................................................. $ 2,521,125,354
===============
NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value per share (Based on net assets of
$544,722,636 and 62,948,596 shares of beneficial interest
issued and outstanding).................................. $ 8.65
Maximum sales charge (3.25%* of offering price).......... 0.29
---------------
Maximum offering price to public......................... $ 8.94
===============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $41,460,800 and 4,792,851 shares of
beneficial interest issued and outstanding).............. $ 8.65
===============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $563,547,568 and 65,148,592 shares of
beneficial interest issued and outstanding).............. $ 8.65
===============
Class IB Shares:
Net asset value and offering price per share (Based on
net assets of $1,131,807,091 and 130,638,125 shares of
beneficial interest issued and outstanding).............. $ 8.66
===============
Class IC Shares:
Net asset value and offering price per share (Based on
net assets of $239,587,259 and 27,663,629 shares of
beneficial interest issued and outstanding).............. $ 8.66
===============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
46 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended July 31, 2007
<Table>
INVESTMENT INCOME:
Interest from Unaffiliated Investments...................... $ 200,770,776
Interest from Affiliated Investments........................ 362,886
Dividends................................................... 21,266
Other....................................................... 4,821,168
-------------
Total Income............................................ 205,976,096
-------------
EXPENSES:
Investment Advisory Fee..................................... 17,669,186
Administration Fee.......................................... 5,165,573
Distribution and Service Fees
Class A................................................... 667,154
Class B................................................... 268,388
Class C................................................... 2,488,237
Class IC.................................................. 406,458
Credit Line................................................. 1,801,510
Transfer Agent Fees......................................... 1,635,787
Professional Fees........................................... 1,014,403
Custody..................................................... 523,122
Accounting and Administrative Expenses...................... 281,689
Trustees' Fees and Related Expenses......................... 234,317
Reports to Shareholders..................................... 167,114
Registration Fees........................................... 54,660
Other....................................................... 952,515
-------------
Total Operating Expenses................................ 33,330,113
Service Fee Reimbursement............................... 1,762,769
Less Credits Earned on Cash Balances.................... 146,212
-------------
Net Operating Expenses.................................. 31,421,132
Interest Expense........................................ 22,796,981
-------------
Total Expenses.......................................... 54,218,113
-------------
NET INVESTMENT INCOME....................................... $ 151,757,983
=============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Unaffiliated Investments.................................. $ (4,467,958)
Affiliated Investments.................................... (26,706,416)
Swap Contracts............................................ 190,592
Foreign Currency Transactions............................. 9,422
-------------
Net Realized Loss........................................... (30,974,360)
-------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (92,713,009)
-------------
End of the Period:
Investments............................................. (153,341,309)
Swap Contracts.......................................... (1,075,318)
Unfunded Commitments.................................... (4,909,286)
-------------
(159,325,913)
-------------
Net Unrealized Depreciation During the Period............... (66,612,904)
-------------
NET REALIZED AND UNREALIZED LOSS............................ $ (97,587,264)
=============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 54,170,719
=============
</Table>
See Notes to Financial Statements 47
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JULY 31, 2007 JULY 31, 2006
--------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 151,757,983 $ 118,418,127
Net Realized Loss....................................... (30,974,360) (4,980,255)
Net Unrealized Depreciation During the Period........... (66,612,904) (24,358,875)
-------------- --------------
Change in Net Assets from Operations.................... 54,170,719 89,078,997
-------------- --------------
Distributions from Net Investment Income:
Class A Shares........................................ (20,566,767) (4,106,348)
Class B Shares........................................ (1,891,994) (689,736)
Class C Shares........................................ (17,252,543) (3,401,184)
Class IB Shares....................................... (98,251,723) (83,511,213)
Class IC Shares....................................... (21,257,308) (20,911,291)
-------------- --------------
Total Distributions..................................... (159,220,335) (112,619,772)
-------------- --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (105,049,616) (23,540,775)
-------------- --------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................... 1,129,759,191 115,282,367
Net Asset Value of Shares Issued Through Dividend
Reinvestment.......................................... 91,115,595 59,986,676
Cost of Shares Repurchased.............................. (374,391,451) (557,406,980)
-------------- --------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS...... 846,483,335 (382,137,937)
-------------- --------------
TOTAL INCREASE/DECREASE IN NET ASSETS................... 741,433,719 (405,678,712)
NET ASSETS:
Beginning of the Period................................. 1,779,691,635 2,185,370,347
-------------- --------------
End of the Period (Including accumulated undistributed
net investment income of $(5,136,703) and $1,719,850,
respectively)......................................... $2,521,125,354 $1,779,691,635
============== ==============
</Table>
48 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL STATEMENTS continued
Statement of Cash Flows
For the Year Ended July 31, 2007
<Table>
CHANGE IN NET ASSETS FROM OPERATIONS........................ $ 54,170,719
---------------
Adjustments to Reconcile the Change in Net Assets from
Operations to Net Cash Provided by Operating Activities:
Purchase of Investments................................... (2,952,140,736)
Principal Repayments/Sales of Investments................. 1,846,257,938
Net Purchases of Short-Term Investments................... (9,711,299)
Amortization of Loan Fees................................. 848,508
Net Loan Fees Received.................................... 11,616
Accretion of Discounts.................................... (1,034,258)
Net Realized Gain/Loss on Investments..................... 31,174,374
Net Change in Unrealized Appreciation/Depreciation on
Investments............................................. 62,638,051
Increase in Restricted Cash............................... (712,302)
Decrease in Receivable for Investments Sold............... 799,657
Increase in Interest Receivables, Receivables for
Investments Sold and Other Assets....................... (8,712,396)
Decrease in Payable for Investments Purchased............. (70,773,338)
Decrease in Accrued Expenses and Other Payables........... (9,160)
Net Change in Unrealized Depreciation on Swap Contracts... 1,075,318
Net Change in Unfunded Commitments........................ 2,899,535
Increase in Trustees' Deferred Compensation and Retirement
Plans................................................... 206,271
---------------
Total Adjustments....................................... (1,097,182,221)
---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... (1,043,011,502)
---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Shares Sold................................... 1,123,889,402
Change in Bank Borrowings................................... 360,000,000
Change in Accrued Interest Expense.......................... 2,160,384
Payments on Shares Repurchased.............................. (376,060,673)
Cash Distributions Paid..................................... (66,977,611)
---------------
Net Cash from Financing Activities...................... 1,043,011,502
---------------
NET INCREASE IN CASH........................................ -0-
Cash at Beginning of the Period............................. -0-
---------------
CASH AT END OF THE PERIOD................................... $ -0-
===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid During the Year for Interest...................... $ 20,636,597
===============
</Table>
See Notes to Financial Statements 49
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
FEBRUARY 18, 2005
(COMMENCEMENT OF
YEAR ENDED JULY 31, OPERATIONS) TO
CLASS A SHARES ------------------- JULY 31,
2007 2006 2005
---------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD............. $ 8.99 $ 9.10 $ 9.12
-------- -------- --------
Net Investment Income (a).......................... 0.66 0.54 0.18
Net Realized and Unrealized Loss................... (0.29) (0.15) (0.04)
-------- -------- --------
Total from Investment Operations..................... 0.37 0.39 0.14
Less Distributions from Net Investment Income........ 0.71 0.50 0.16
-------- -------- --------
NET ASSET VALUE, END OF THE PERIOD................... $ 8.65 $ 8.99 $ 9.10
======== ======== ========
Total Return (b)..................................... 4.06% 4.39% 1.75%**
Net Assets at End of the Period (In millions)........ $ 544.7 $ 91.0 $ 54.0
Ratios to Average Net Assets:*
Operating Expense.................................. 1.41% 1.39% 1.42%
Interest Expense................................... 1.09% 0.10% 0.04%
Total Net Expense.................................. 2.50% 1.49% 1.46%
Net Investment Income.............................. 7.34% 5.95% 4.44%
Portfolio Turnover (c)............................... 74% 84% 90%
* If certain expenses had not been voluntarily assumed by Van Kampen, total return would have
been lower and the ratios would have been as follows:
Ratios to Average Net Assets:
Operating Expense.................................. 1.66% 1.64% 1.67%
Interest Expense................................... 1.09% 0.10% 0.04%
Total Gross Expense................................ 2.75% 1.74% 1.71%
Net Investment Income.............................. 7.09% 5.70% 4.19%
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In thousands)........... $555,000 $195,000 $123,000
Asset Coverage Per $1,000 Unit of Senior Indebtedness
(d)................................................ $ 5,543 $ 10,127 $ 18,767
</Table>
** Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 3.25% or early withdrawal
charge. On purchases of $1 million or more, an early withdrawal charge of 1%
may be imposed on certain repurchases by the Fund made within eighteen
months of purchase. If the sales charges were included, total returns would
be lower. These returns include combined distribution and service fees of up
to .25% and do not reflect the deduction of taxes that a shareholder would
pay on Fund distributions or the repurchases by the Fund of Fund shares.
(c) Calculation includes the proceeds from principal repayments and sales of
variable rate senior loan interests.
(d) Calculated by subtracting the Fund's total liabilities (not including the
Borrowings) from the Fund's total assets and dividing by the total number of
senior indebtedness units, where one unit equals $1,000 of senior
indebtedness.
50 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
FEBRUARY 18, 2005
(COMMENCEMENT OF
YEAR ENDED JULY 31, OPERATIONS) TO
CLASS B SHARES ------------------- JULY 31,
2007 2006 2005
---------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD............. $ 8.99 $ 9.10 $ 9.12
-------- -------- --------
Net Investment Income (a).......................... 0.60 0.47 0.14
Net Realized and Unrealized Loss................... (0.30) (0.14) (0.03)
-------- -------- --------
Total from Investment Operations..................... 0.30 0.33 0.11
Less Distributions from Net Investment Income........ 0.64 0.44 0.13
-------- -------- --------
NET ASSET VALUE, END OF THE PERIOD................... $ 8.65 $ 8.99 $ 9.10
======== ======== ========
Total Return (b)..................................... 3.29% 3.63% 1.41%**
Net Assets at End of the Period (In millions)........ $ 41.5 $ 17.8 $ 10.8
Ratios to Average Net Assets:*
Operating Expense.................................. 2.18% 2.14% 2.18%
Interest Expense................................... 1.10% 0.10% 0.04%
Total Net Expense.................................. 3.28% 2.24% 2.22%
Net Investment Income.............................. 6.67% 5.24% 3.73%
Portfolio Turnover (c)............................... 74% 84% 90%
* If certain expenses had not been voluntarily assumed by Van Kampen, total return would have
been lower and the ratios would have been as follows:
Ratios to Average Net Assets:
Operating Expense.................................. 2.43% 2.39% 2.43%
Interest Expense................................... 1.10% 0.10% 0.04%
Total Gross Expense................................ 3.53% 2.49% 2.47%
Net Investment Income.............................. 6.42% 4.99% 3.48%
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In thousands)........... $555,000 $195,000 $123,000
Asset Coverage Per $1,000 Unit of Senior Indebtedness
(d)................................................ $ 5,543 $ 10,127 $ 18,767
</Table>
** Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum early withdrawal charge of 3%, charged on
certain repurchases by the Fund made within one year of purchase and
declining to 0% after the fifth year. If the sales charge was included,
total returns would be lower. These returns include combined distribution
and service fees of up to 1% and do not reflect the deduction of taxes that
a shareholder would pay on Fund distributions or the repurchases by the Fund
of Fund shares.
(c) Calculation includes the proceeds from principal repayments and sales of
variable rate senior loan interests.
(d) Calculated by subtracting the Fund's total liabilities (not including the
Borrowings) from the Fund's total assets and dividing by the total number of
senior indebtedness units, where one unit equals $1,000 of senior
indebtedness.
See Notes to Financial Statements 51
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
FEBRUARY 18, 2005
(COMMENCEMENT OF
YEAR ENDED JULY 31, OPERATIONS) TO
CLASS C SHARES ------------------- JULY 31,
2007 2006 2005
---------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD............. $ 8.99 $ 9.10 $ 9.12
-------- -------- --------
Net Investment Income (a).......................... 0.59 0.47 0.14
Net Realized and Unrealized Loss................... (0.29) (0.14) (0.03)
-------- -------- --------
Total from Investment Operations..................... 0.30 0.33 0.11
Less Distributions from Net Investment Income........ 0.64 0.44 0.13
-------- -------- --------
NET ASSET VALUE, END OF THE PERIOD................... $ 8.65 $ 8.99 $ 9.10
======== ======== ========
Total Return (b)..................................... 3.29% 3.63% 1.41%**
Net Assets at End of the Period (In millions)........ $ 563.5 $ 72.5 $ 55.7
Ratios to Average Net Assets:* Operating Expense..... 2.16% 2.14% 2.17%
Interest Expense................................... 1.09% 0.10% 0.04%
Total Net Expense.................................. 3.25% 2.24% 2.21%
Net Investment Income.............................. 6.55% 5.19% 3.66%
Portfolio Turnover (c)............................... 74% 84% 90%
* If certain expenses had not been voluntarily assumed by Van Kampen, total return would have
been lower and the ratios would have been as follows:
Ratios to Average Net Assets:
Operating Expense.................................. 2.41% 2.39% 2.42%
Interest Expense................................... 1.09% 0.10% 0.04%
Total Gross Expense................................ 3.50% 2.49% 2.46%
Net Investment Income.............................. 6.30% 4.94% 3.41%
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In thousands)........... $555,000 $195,000 $123,000
Asset Coverage Per $1,000 Unit of Senior Indebtedness
(d)................................................ $ 5,543 $ 10,127 $ 18,767
</Table>
** Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum early withdrawal charge of 1%, charged on
certain repurchases by the Fund made within one year of purchase. If the
sales charge was included, total returns would be lower. These returns
include combined distribution and service fees of up to 1% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the repurchases by the Fund of Fund shares.
(c) Calculation includes the proceeds from principal repayments and sales of
variable rate senior loan interests.
(d) Calculated by subtracting the Fund's total liabilities (not including the
Borrowings) from the Fund's total assets and dividing by the total number of
senior indebtedness units, where one unit equals $1,000 of senior
indebtedness.
52 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS IB SHARES --------------------------------------------------------
2007 2006 2005 2004 2003
--------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 9.01 $ 9.11 $ 9.00 $ 8.29 $ 8.09
-------- -------- -------- -------- --------
Net Investment Income (a)......... 0.68 0.54 0.37 0.30 0.33
Net Realized and Unrealized
Gain/Loss....................... (0.32) (0.14) 0.08 0.68 0.19
-------- -------- -------- -------- --------
Total from Investment Operations.... 0.36 0.40 0.45 0.98 0.52
-------- -------- -------- -------- --------
Less:
Distributions from Net Investment
Income.......................... 0.71 0.50 0.34 0.25 0.29
Return of Capital Distributions... -0- -0- -0- 0.02 0.03
-------- -------- -------- -------- --------
Total Distributions................. 0.71 0.50 0.34 0.27 0.32
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 8.66 $ 9.01 $ 9.11 $ 9.00 $ 8.29
======== ======== ======== ======== ========
Total Return (b).................... 4.05% 4.38% 5.18% 12.03% 6.58%
Net Assets at End of the Period (In
millions)......................... $1,131.8 $1,307.2 $1,639.0 $1,703.1 $1,876.1
Ratios to Average Net Assets:
Operating Expense................. 1.43% 1.39% 1.38% 1.48% 1.54%
Interest Expense.................. 1.11% 0.10% 0.04% 0.00%(e) 0.00%(e)
Total Net Expense................. 2.54% 1.49% 1.42% 1.48% 1.54%
Net Investment Income............. 7.49% 5.87% 4.09% 3.44% 4.21%
Portfolio Turnover (c).............. 74% 84% 90% 94% 49%
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In
thousands)........................ $555,000 $195,000 $123,000 -0- -0-
Asset Coverage Per $1,000 Unit of
Senior Indebtedness (d)........... $ 5,543 $ 10,127 $ 18,767 N/A N/A
</Table>
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum early withdrawal charge of 3%, charged on
repurchases by the Fund made within one year of purchase and declining to 0%
after the fifth year. If the sales charge was included, total returns would
be lower. These returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or repurchases by the Fund of
Fund shares. The early withdrawal charge was terminated effective February
18, 2005.
(c) Calculation includes the proceeds from principal repayments and sales of
variable rate senior loan interests.
(d) Calculated by subtracting the Fund's total liabilities (not including the
Borrowings) from the Fund's total assets and dividing by the total number of
senior indebtedness units, where one unit equals $1,000 of senior
indebtedness.
(e) Amount is less than 0.01%
N/A=Not Applicable
See Notes to Financial Statements 53
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
FUND OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
JUNE 13, 2003
YEAR ENDED JULY 31, (COMMENCEMENT OF
CLASS IC SHARES ------------------------------------------ OPERATIONS) TO
2007 2006 2005 2004 JULY 31, 2003
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD................................... $ 9.00 $ 9.11 $ 9.00 $ 8.29 $ 8.16
-------- -------- -------- ------ --------
Net Investment Income (a)................ 0.68 0.54 0.37 0.28 0.04
Net Realized and Unrealized Gain/Loss.... (0.31) (0.15) 0.07 0.69 0.12
-------- -------- -------- ------ --------
Total from Investment Operations.......... 0.37 0.39 0.44 0.97 0.16
-------- -------- -------- ------ --------
Less:
Distributions from Net Investment
Income................................. 0.71 0.50 0.33 0.24 0.03
Return of Capital Distributions.......... -0- -0- -0- 0.02 -0-
-------- -------- -------- ------ --------
Total Distributions....................... 0.71 0.50 0.33 0.26 0.03
-------- -------- -------- ------ --------
NET ASSET VALUE, END OF THE PERIOD........ $ 8.66 $ 9.00 $ 9.11 $ 9.00 $ 8.29
======== ======== ======== ====== ========
Total Return (b).......................... 4.06% 4.50% 4.98% 11.86% 2.02%**
Net Assets at End of the Period (In
millions)................................ $ 239.6 $ 291.3 $ 426.0 $332.0 $ 246.1
Ratios to Average Net Assets:*
Operating Expense........................ 1.43% 1.39% 1.44% 1.62% 1.56%
Interest Expense......................... 1.11% 0.10% 0.04% 0.00%(d) 0.00%(d)
Total Net Expense........................ 2.54% 1.49% 1.48% 1.62% 1.56%
Net Investment Income.................... 7.49% 5.85% 4.07% 3.26% 3.89%
Portfolio Turnover (c).................... 74% 84% 90% 94% 49%
* If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower
and the ratios would have been as follows:
Ratios to Average Net Assets:
Operating Expense........................ 1.58% 1.54% 1.52% N/A N/A
Interest Expense......................... 1.11% 0.10% 0.04% N/A N/A
Total Gross Expense...................... 2.69% 1.64% 1.56% N/A N/A
Net Investment Income.................... 7.34% 5.70% 3.99% N/A N/A
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In
thousands)............................... $555,000 $195,000 $123,000 -0- -0-
Asset Coverage Per $1,000 Unit of Senior
Indebtedness (e)......................... $ 5,543 $ 10,127 $ 18,767 N/A N/A
</Table>
** Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum early withdrawal charge of 1%, charged on
repurchases by the Fund made within one year of purchase. If the sales
charge was included, total returns would be lower. These returns do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or repurchases by the Fund of Fund shares. The early
withdrawal charge was terminated effective February 18, 2005.
(c) Calculation includes the proceeds from principal repayments and sales of
variable rate senior loan interests.
(d) Amount is less than 0.01%
(e) Calculated by subtracting the Fund's total liabilities (not including the
Borrowings) from the Fund's total assets and dividing by the total number of
senior indebtedness units, where one unit equals $1,000 of senior
indebtedness.
N/A=Not Applicable
54 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Senior Loan Fund (the "Fund") is registered as a non-diversified,
closed-end management investment company under the Investment Company Act of
1940 (the "1940 Act"), as amended. The Fund's investment objective is to provide
a high level of current income, consistent with preservation of capital. The
Fund invests primarily in adjustable rate Senior Loans. Senior Loans are
business loans that have a senior right to payment and are made to borrowers
that may be corporations, partnerships, or other entities. These borrowers
operate in a variety of industries and geographic regions. The Fund commenced
investment operations on October 4, 1989. The Fund continuously offers Class A
Shares, Class B Shares and Class C Shares. Class IB Shares and Class IC Shares
are not continuously offered. Each class of shares differs by its initial sales
load, contingent deferred sales charges, the allocation of class-specific
expenses and voting rights on matters affecting a single class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with 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 Fund's Senior Loans and notes are valued by the Fund
following valuation guidelines established and periodically reviewed by the
Fund's Board of Trustees. Under the valuation guidelines, Senior Loans and notes
for which reliable market quotes are readily available are valued at the mean of
such bid and ask quotes. Where reliable market quotes are not readily available,
Senior Loans and notes are valued, where possible, using independent market
indicators provided by independent pricing sources approved by the Board of
Trustees. Other Senior Loans and notes are valued by independent pricing sources
approved by the Board of Trustees based upon pricing models developed,
maintained and operated by those pricing sources or valued by Van Kampen Asset
Management (the "Adviser") by considering a number of factors including
consideration of market indicators, transactions in instruments which the
Adviser believes may be comparable (including comparable credit quality,
interest rate redetermination period and maturity), the credit worthiness of the
Borrower, the current interest rate, the period until the next interest rate
redetermination and the maturity of such Senior Loans. 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 Fund's portfolio. The fair value of Senior
Loans are reviewed and approved by the Fund's Valuation Committee and Board of
Trustees.
Equity securities are valued on the basis of prices furnished by pricing
services or at fair value as determined in good faith by the Adviser under the
direction of the Board of Trustees. Credit default swaps are valued using market
quotations from brokers.
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.
55
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued
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.
The Fund may purchase and sell securities on a "when-issued" or "delayed
delivery" basis with settlement to occur at a later date. The value of the
security so purchased is subject to market fluctuations during this period. The
Fund will segregate assets with the custodian having an aggregate value at least
equal to the amount of the when-issued or delayed delivery purchase commitments
until after payment is made. At July 31, 2007, the Fund had no when-issued or
delayed delivery purchase commitments.
The Fund may invest in repurchase agreements, which are short-term
investments in which the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund 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 Fund.
C. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Facility fees on senior loans
purchased 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. Income, expenses and realized and unrealized gains or losses
are allocated on a pro-rata basis to each class of shares except for
distribution and service fees, which are unique to each class of shares.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At July 31, 2007, the Fund had an accumulated capital loss carryforward
for tax purposes of $1,072,209,351, which will expire according to the following
schedule.
<Table>
<Caption>
AMOUNT EXPIRATION
$ 28,927,103................................................ July 31, 2008
90,868,001................................................ July 31, 2009
445,144,583................................................ July 31, 2010
215,755,020................................................ July 31, 2011
153,257,861................................................ July 31, 2012
68,141,145................................................ July 31, 2013
21,900,119................................................ July 31, 2014
48,215,519................................................ July 31, 2015
</Table>
56
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued
Due to a merger with another regulated investment company, a portion of the
capital loss carryforward referred to above may be limited under Internal
Revenue Code Section 382.
At July 31, 2007, the cost and related gross unrealized appreciation and
depreciation were as follows:
<Table>
Cost of investments for tax purposes........................ $3,283,541,278
==============
Gross tax unrealized appreciation........................... 2,092,522
Gross tax unrealized depreciation........................... (163,553,091)
--------------
Net tax unrealized depreciation on investments.............. $ (161,460,569)
==============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed at least annually. Distributions from net realized gains for book
purposes may include short-term capital gains, which are included in ordinary
income for tax purposes.
The tax character of distributions paid during the years ended July 31, 2007
and 2006 was as follows:
<Table>
<Caption>
2007 2006
Distributions paid from:
Ordinary income........................................... $158,093,206 $112,254,712
Long-term capital gain.................................... -0- -0-
------------ ------------
$158,093,206 $112,254,712
============ ============
</Table>
Permanent differences, primarily due a portion of capital loss carryforward
expiring in the current year, resulted in the following reclassifications among
the Fund's components of net assets at July 31, 2007.
<Table>
<Caption>
ACCUMULATED
UNDISTRIBUTED ACCUMULATED NET
NET INVESTMENT INCOME REALIZED LOSS CAPITAL
$605,799 $24,735,488 $(25,341,287)
</Table>
As of July 31, 2007, the components of distributable earnings on a tax basis
were as follows:
<Table>
Undistributed ordinary income............................... $692,799
</Table>
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses related to wash sale
transactions and gains or losses recognized on securities for tax purposes but
not for book purposes.
F. CREDITS EARNED ON CASH BALANCES During the year ended July 31, 2007, the
Fund's custody fee was reduced by $146,212 as a result of credits earned on cash
balances.
57
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser
provides investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS % PER ANNUM
First $500 million.......................................... .900%
Next $1.0 billion........................................... .850%
Next $1.0 billion........................................... .825%
Next $500 million........................................... .800%
Over $3.0 billion........................................... .775%
</Table>
In addition, the Fund will pay a monthly administration fee to Van Kampen
Funds Inc., the Fund's Administrator, at an annual rate of .25% of the average
daily net assets of the Fund. The administration 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 Senior Loans in the Fund's
portfolio and providing certain services to the holders of the Fund's
securities.
For the year ended July 31, 2007, the Fund recognized expenses of
approximately $279,500 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a Trustee of the Fund is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Fund.
Under separate Legal Services and Chief Compliance Officer (CCO) Employment
agreements, the Adviser provides legal services and the CCO provides compliance
services to the Fund. The costs of these services are allocated to each fund.
For the year ended July 31, 2007, the Fund recognized expenses of approximately
$127,800 representing Van Kampen Investments Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing legal services to the Fund, as
well as the salary, benefits and related costs of the CCO and related support
staff paid by Van Kampen. Services provided pursuant to the Legal Services
agreement are reported as part of "Professional Fees" on the Statement of
Operations. Services provided pursuant to the CCO Employment agreement are
reported as part of "Accounting and Administrative Expenses" on the Statement of
Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended July
31, 2007, the Fund recognized expenses of approximately $1,335,400 representing
transfer agency fees paid to VKIS. Transfer agency fees are determined through
negotiations with the Fund's Board of Trustees.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are also
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Fund.
The maximum annual benefit per trustee under the plan is $2,500.
For the year ended July 31, 2007, Van Kampen, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A Shares of approximately
$455,200 and contingent
58
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued
deferred sales charge (CDSC) on redeemed shares of approximately $206,900. Sales
charges do not represent expenses of the Fund.
During the period, the Fund owned shares of the following affiliated
companies. Affiliated companies are defined by the 1940 Act, as amended, as
those companies in which a Fund holds 5% or more of the outstanding voting
securities.
<Table>
<Caption>
INTEREST/ MARKET
PAR/ DIVIDEND VALUE
NAME SHARES* INCOME 7/31/2007 COST
DecorateToday.com, Common Shares......... 198,600 $ -0- $ -0- $3,505,909
Neoplan USA Corp., Revolver.............. $589,367 49,122 551,058 589,367
Neoplan USA Corp., Common Shares......... 8,517 -0- -0- 85
Neoplan USA Corp., Preferred Shares...... 2,262 -0- -0- 1,074,522
Safelite Realty, Common Shares........... 48,903 -0- -0- -0-
------- -------- ----------
$49,122 $551,058 $5,169,883
------- -------- ----------
</Table>
* Shares were acquired through the restructuring of senior loan interests.
Affiliate transactions during the year ended July 31, 2007 were as follows:
<Table>
<Caption>
PAR/SHARES PAR/SHARES REALIZED INTEREST/
AS OF GROSS GROSS AS OF GAIN/ DIVIDEND
NAME 7/31/06 ADDITIONS REDUCTIONS 7/31/07 (LOSS) INCOME
Neoplan USA Corp., Revolver... $ 933,750 $-0- $ (344,383) $ 589,367 $ -0- $ -0-
Orius Corp., Term Loan**...... $6,579,313 $-0- $ (263,392) $6,315,921 79,268 17,900
Orius Corp., Revolver**....... $2,375,171 $-0- $ (2,375,171) $ -0- -0- 107,220
Orius Corp., Common Shares**.. 1,211,236 -0- (1,211,236) -0- -0- -0-
Safelite Glass Corp., Term
Loan......................... $13,876,959 $-0- $(13,876,959) $ -0- -0- 188,644
Safelite Glass Corp., Common
Shares....................... 724,479 -0- (724,479) -0- 10,120,972 -0-
Trans World Entertainment
Corp., Common Shares......... 2,982,699 -0- (2,982,699) -0- (36,906,656) -0-
------------ --------
$(26,706,416) $313,764
------------ --------
</Table>
** Due to transactions during the year, the issue is no longer an affiliated
company.
59
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued
3. CAPITAL TRANSACTIONS
For the years ended July 31, 2007 and 2006, transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JULY 31, 2007 JULY 31, 2006
----------------------------- ----------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A...................... 60,949,393 $ 551,496,214 6,742,273 $ 60,997,257
Class B...................... 3,189,043 28,836,440 1,080,970 9,778,004
Class C...................... 59,772,959 540,812,266 3,980,684 36,028,686
Class IB..................... 510,976 4,619,719 521,304 4,723,809
Class IC..................... 442,098 3,994,552 414,647 3,754,611
----------- -------------- ----------- -------------
Total Sales.................... 124,864,469 $1,129,759,191 12,739,878 $ 115,282,367
=========== ============== =========== =============
Dividend Reinvestment:
Class A...................... 1,489,889 $ 13,442,544 263,133 $ 2,380,078
Class B...................... 122,843 1,108,324 45,840 414,650
Class C...................... 1,019,867 9,195,222 174,345 1,577,151
Class IB..................... 6,321,648 57,140,202 5,101,091 46,209,105
Class IC..................... 1,132,161 10,229,303 1,038,754 9,405,692
----------- -------------- ----------- -------------
Total Dividend Reinvestment.... 10,086,408 $ 91,115,595 6,623,163 $ 59,986,676
=========== ============== =========== =============
Repurchases:
Class A...................... (9,602,050) $ (86,649,107) (2,823,718) $ (25,525,490)
Class B...................... (493,624) (4,455,429) (334,884) (3,026,298)
Class C...................... (3,701,287) (33,378,803) (2,216,956) (20,010,345)
Class IB..................... (21,362,284) (193,268,547) (40,369,751) (365,337,480)
Class IC..................... (6,266,028) (56,639,565) (15,875,976) (143,507,367)
----------- -------------- ----------- -------------
Total Repurchases.............. (41,425,273) $ (374,391,451) (61,621,285) $(557,406,980)
=========== ============== =========== =============
</Table>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from investments sold and
repaid, excluding short-term investments, were $2,952,140,736 and
$1,846,257,938, respectively.
5. REPURCHASE OF SHARES
The Fund has a policy of making monthly repurchase offers ("Repurchase Offers")
for the Fund's common shares pursuant to Rule 23c-3(b) of the 1940 Act, as
amended; until October 2006 Repurchase Offers had been made at quarterly
intervals.
On June 23, 2006, the shareholders of the Fund approved an amendment to the
Fund's fundamental policy regarding the Fund's offer to repurchase its shares to
allow the Fund to repurchase its shares on a monthly basis. In addition, on June
7, 2006, the Fund obtained exemptive relief from the Securities and Exchange
Commission to enable the Fund to conduct monthly Repurchase Offers, subject to
certain conditions. The Fund began conducting monthly offers to repurchase its
outstanding shares commencing in October 2006.
The Repurchase Offers will continue to be for between 5% and 25% of the
Fund's outstanding shares; however, whereas the Fund's present intent for
quarterly offers was up to
60
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued
15% during any one quarter, the Fund's present intent for monthly offers is up
to 5% (although the initial two monthly Repurchase Offers were up to 10%,
provided, however, the aggregate percentage of common shares subject to
repurchase in any 3-month period will not exceed 25%). The repurchase request
deadline will be the third Friday of each calendar month (or the preceding
business day if such third Friday is not a business day). To accommodate monthly
Repurchase Offers, the Fund has shorter notice periods before each offer,
shorter repurchase periods and shorter payment periods after each offer. During
the year ended July 31, 2007, the Fund made one quarterly Repurchase Offer and
nine monthly Repurchase Offers as follows:
<Table>
<Caption>
PERCENTAGE OF
REPURCHASE OUTSTANDING SHARES NUMBER OF PERCENT OF
REQUEST THE FUND OFFERED TO SHARES TENDERED OUTSTANDING SHARES TENDERED
DEADLINES REPURCHASE (ALL CLASSES) (ALL CLASSES)
October 20, 2006........... 5% 8,973,132 4.4%
November 17, 2006.......... 5 3,418,350 1.7
December 15, 2006.......... 5 2,644,408 1.3
January 19, 2007........... 5 3,288,566 1.5
February 16, 2007.......... 5 3,544,602 1.6
March 16, 2007............. 5 3,157,956 1.4
April 20, 2007............. 5 3,525,835 1.4
May 18, 2007............... 5 3,191,191 1.2
June 15, 2007.............. 5 3,316,583 1.2
July 20, 2007.............. 5 6,364,650 2.2
</Table>
6. COMMITMENTS
Pursuant to the terms of certain of the Senior Loan agreements, the Fund had
unfunded loan commitments of approximately $122,180,300 as of July 31, 2007. The
Fund intends to reserve against such contingent obligations by designating cash,
liquid securities, and liquid senior loans as a reserve. The unrealized
depreciation on these commitments of $4,909,286 as of July 31, 2007 is reported
as "Unfunded Commitments" on the Statement of Assets and Liabilities.
7. BORROWINGS
The Fund has entered into a $700 million Amended and Restated Revolving Credit
and Security Agreement to finance the repurchases of shares or to purchase
additional securities for investment purposes. This revolving credit agreement
is secured by the assets of the Fund.
Annual commitment fees of .13% are charged on the unused portion of the
credit line. For the year ended July 31, 2007, the Fund recognized commitment
fee expenses of approximately $1,801,500. For the year ended July 31, 2007, the
average daily balance of borrowings under the Amended and Restated Revolving
Credit and Security Agreement was $420,947,802 with a weighted average interest
rate of 5.34%.
8. SENIOR LOAN PARTICIPATION COMMITMENTS
The Fund invests primarily in participations, assignments, or acts as a party to
the primary lending syndicate of a Senior Loan interest to corporations,
partnerships, and other entities. When the Fund purchases a participation of a
Senior Loan interest, the Fund typically enters
61
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued
into a contractual agreement with the lender or other third party selling the
participation, but not with the borrower directly. As such, the Fund assumes the
credit risk of the borrower, selling participant or other persons
interpositioned between the Fund and the borrower.
At July 31, 2007, the following sets forth the selling participants with
respect to interests in Senior Loans purchased by the Fund on a participation
basis.
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SELLING PARTICIPANT (000) (000)
General Electric............................................ $5,000 $4,838
------ ------
</Table>
9. DISTRIBUTION AND SERVICE PLAN
Shares of the Fund are distributed by Van Kampen Funds, Inc. ("the
Distributor"), an affiliate of the Adviser. The Fund has adopted a distribution
plan (the "Distribution Plan") with respect to each of its Class A Shares, Class
B Shares and Class C Shares and in so doing has agreed to comply with rule 12b-1
under the 1940 Act, as amended, as if the Fund were an open-end investment
company. The Fund also has adopted a service plan (the "Service Plan") with
respect to each of its Class A Shares, Class B Shares, Class C Shares and Class
IC Shares. There is no Distribution Plan or Service Plan for Class IB Shares and
no Distribution Plan for Class IC Shares. All service fees under the Service
Plan applicable to Class A Shares, Class B Shares, Class C Shares and Class IC
Shares are currently being waived. For the year ended July 31, 2007, the
Distributor waived service fees of $1,762,769. This waiver is voluntary in
nature and can be discontinued at any time. Under the Distribution Plan and
Service Plan, the Fund pays distribution fees in connection with the sale and
distribution of its Shares and service fees in connection with the provision of
ongoing services to shareholders of each such class and the maintenance of
shareholder accounts.
Under the Distribution Plan and Service Plan, the Fund may spend up to a
total of 0.25%, 1.00%, 1.00%, and 0.15% (0.25% maximum) per year of the average
daily net assets of Class A Shares, Class B Shares, Class C Shares, and Class IC
Shares, respectively. Due to voluntary fee waivers by the Distributor, the
aggregate distribution and service fees are currently 0.00%, 0.75%, 0.75%, and
0.00% per year of the average daily net assets for Class A Shares, Class B
Shares, Class C Shares, and Class IC Shares, respectively. Annual fees under the
Distribution Plan and Service Plan are accrued daily. The net annual fees for
Class B Shares and Class C Shares are paid monthly to the Distributor.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed receivable") was approximately $565,700 and $2,889,500
for Class B Shares and Class C Shares, respectively. These amounts may be
recovered from future payments under the Distribution Plan. To the extent the
unreimbursed receivable has been fully recovered, any excess fees will be
refunded to the Fund on a quarterly basis.
10. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund may use derivative instruments for a variety of reasons, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or to generate
62
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued
potential gain. All of the Fund's portfolio holdings, including derivative
instruments, are marked to market each day with the change in value reflected in
unrealized appreciation/depreciation. Risks may arise as a result of the
potential inability of the counterparties to meet the terms of their contracts.
The Fund may enter into credit default swap contracts for hedging purposes
or to gain exposure to a credit in which the Fund may otherwise invest. A credit
default swap is an agreement between two parties to exchange the credit risk of
an issuer. A buyer of a credit default swap is said to buy protection by paying
periodic fees in return for a contingent payment from the seller if the issuer
has a credit event such as bankruptcy, a failure to pay outstanding obligations
or deteriorating credit while the swap is outstanding. A seller of a credit
default swap is said to sell protection and thus collects the periodic fees and
profits if the credit of the issuer remains stable or improves while the swap is
outstanding but the seller in a credit default swap contract would be required
to pay an agreed-upon amount, which approximates the notional amount of the swap
as disclosed in the table following the Portfolio of Investments, to the buyer
in the event of an adverse credit event of the issuer. The Fund accrues for the
periodic fees on credit default swaps on a daily basis with the net amount
accrued recorded within unrealized appreciation/depreciation of swap contracts.
Upon cash settlement of the periodic fees, the net amount is recorded as
realized gain/loss on swap contracts on the Statement of Operations. Net
unrealized gains are recorded as an asset or net unrealized losses are reported
as a liability on the Statement of Assets and Liabilities. The change in value
of the swap contracts is reported as unrealized gains or losses on the Statement
of Operations.
Credit default swaps may involve greater risks than if a Fund had invested
in the issuer directly. Credit default swaps are subject to general market risk,
counterparty risk and credit risk. If there is a default by the counterparty,
the Fund will have contractual remedies pursuant to the agreements related to
the transaction. In addition, all counterparties are required to pledge
collateral daily (based on the valuation of each swap) on behalf of the Fund
with a value approximately equal to the amount of any unrealized gain.
Reciprocally, when the Fund has an unrealized loss on a swap contract, the Fund
has instructed the custodian to pledge cash or liquid securities as collateral
with a value approximately equal to the amount of the unrealized loss.
Collateral pledges are monitored and subsequently adjusted if and when the swap
valuations fluctuate. Restricted cash, if any, for segregating purposes is shown
on the Statement of Assets and Liabilities.
11. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
12. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
for income taxes by prescribing the minimum recognition threshold a tax position
must meet before being recognized in the financial statements. FIN 48 is
effective for the fiscal years beginning after December 15, 2006 and is to be
applied to all open tax years as of the effective date. Recent SEC guidance
allows
63
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2007 continued
implementing FIN 48 in the fund's NAV calculations as late as the fund's last
NAV calculation in the first required financial statement period. As a result,
the Fund will incorporate FIN 48 in its semi annual report on January 31, 2008.
The impact to the Fund's financial statements, if any, is currently being
assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
64
VAN KAMPEN SENIOR LOAN FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of Van Kampen Senior Loan Fund
We have audited the accompanying statement of assets and liabilities of Van
Kampen Senior Loan Fund (the "Fund"), including the portfolio of investments, as
of July 31, 2007, and the related statements of operations and cash flows for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of July 31, 2007, by correspondence with the Fund's
custodian, brokers, and selling or agent banks; where replies were not received,
we performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Senior Loan Fund as of July 31, 2007, the results of its operations and
its cash flows for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
September 21, 2007
65
VAN KAMPEN SENIOR LOAN FUND
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
STUART N. SCHULDT
Chief Financial Officer and Treasurer
HOWARD TIFFEN
Vice President
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
522 Fifth Avenue
New York, New York 10036
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
One Parkview Plaza-Suite 100
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
111 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
66
VAN KAMPEN SENIOR LOAN FUND
TRUSTEES AND OFFICERS
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Fund
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments,
the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange
Corp. and Investor Services. The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Annual
Report. Trustees of the Fund generally serve three year terms or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES
<Table>
<Caption>
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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (62) Trustee Trustee Chairman and Chief 73 Trustee/Director/Managing
Blistex Inc. since 1988 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products Director of the Heartland
manufacturer. Alliance, a nonprofit
organization serving
human needs based in
Chicago. Board member of
the Illinois
Manufacturers'
Association.
Jerry D. Choate (69) Trustee Trustee Prior to January 1999, 73 Trustee/Director/Managing
33971 Selva Road since 2006 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of H&R Block,
("Allstate") and Allstate Amgen Inc., a
Insurance Company. Prior biotechnological company,
to January 1995, and Valero Energy
President and Chief Corporation, an
Executive Officer of independent refining
Allstate. Prior to August company.
1994, various management
positions at Allstate.
</Table>
67
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEES AND OFFICERS 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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (66) Trustee Trustee President of CAC, L.L.C., 73 Trustee/Director/Managing
CAC, L.L.C. since 1988 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Quidel
San Diego, CA 92122-6223 advisory services. Corporation, Stericycle,
Inc., and Ventana Medical
Systems, Inc. and Trustee
of The Scripps Research
Institute. Prior to April
2007, Director of GATX
Corporation. Prior to
April 2004, Director of
TheraSense, Inc. Prior to
January 2004, Director of
TeleTech Holdings Inc.
and Arris Group, Inc.
Linda Hutton Heagy+ (59) Trustee Trustee Managing Partner of 73 Trustee/Director/Managing
Heidrick & Struggles since 2006 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive international executive in the Fund Complex.
Suite 7000 search firm. Prior to Trustee on the University
Chicago, IL 60606 1997, Partner of Ray & of Chicago Hospitals
Berndtson, Inc., an Board, Vice Chair of the
executive recruiting Board of the YMCA of
firm. Prior to 1995, Metropolitan Chicago and
Executive Vice President a member of the Women's
of ABN AMRO, N.A., a bank Board of the University
holding company. Prior to of Chicago.
1990, Executive Vice
President of The Exchange
National Bank.
</Table>
68
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEES AND OFFICERS 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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy (55) Trustee Trustee Director and President of 73 Trustee/Director/Managing
1744 R Street, NW since 2006 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S.
foundation created to
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (71) Trustee Trustee Prior to 1998, President 73 Trustee/Director/Managing
14 Huron Trace since 1992 and Chief Executive General Partner of funds
Galena, IL 61036 Officer of Pocklington in the Fund Complex.
Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the Marrow
Foundation.
Jack E. Nelson (71) Trustee Trustee President of Nelson 73 Trustee/Director/Managing
423 Country Club Drive since 2006 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of the FINRA,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
</Table>
69
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEES AND OFFICERS 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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Hugo F. Sonnenschein (66) Trustee Trustee President Emeritus and 73 Trustee/Director/Managing
1126 E. 59th Street since 1994 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Trustee of the University
Distinguished Service of Rochester and a member
Professor in the of its investment
Department of Economics committee. Member of the
at the University of National Academy of
Chicago. Prior to July Sciences, the American
2000, President of the Philosophical Society and
University of Chicago. a fellow of the American
Academy of Arts and
Sciences.
</Table>
70
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEES AND OFFICERS 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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. (65) Trustee Trustee Chief Communications 73 Trustee/Director/Managing
815 Cumberstone Road since 2006 Officer of the National General Partner of funds
Harwood, MD 20776 Academy of in the Fund Complex.
Sciences/National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction
institution, from 2001 to organization, since
November 2003 and Chief January 2004. Director of
Operating Officer from Intelligent Medical
1993 to 2001. Prior to Devices, Inc., a symptom
1993, Executive Director based diagnostic tool for
of the Commission on physicians and clinical
Behavioral and Social labs. Director of the
Sciences and Education at Institute for Defense
the National Academy of Analyses, a federally
Sciences/National funded research and
Research Council. From development center,
1980 through 1989, Director of the German
Partner of Coopers & Marshall Fund of the
Lybrand. United States, Director
of the Rocky Mountain
Institute and Trustee of
California Institute of
Technology and the
Colorado College.
</Table>
71
VAN KAMPEN SENIOR LOAN FUND
TRUSTEES AND OFFICERS continued
INTERESTED TRUSTEE:*
<Table>
<Caption>
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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (68) Trustee Trustee Partner in the law firm 73 Trustee/Director/Managing
333 West Wacker Drive since 1988 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the Director of the Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
</Table>
+ As indicated above, Ms. Heagy is an employee of Heidrick and Struggles, an
international executive search firm ("Heidrick"). Heidrick has been (and may
continue to be) engaged by Morgan Stanley from time to time to perform
executive searches. Such searches have been unrelated to Van Kampen's or
Morgan Stanley's asset management businesses and have been done by
professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall
procedures exist to ensure that Ms. Heagy will not have any involvement with
any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not
receive any compensation, directly or indirectly, for searches performed by
Heidrick for Morgan Stanley. Ms. Heagy does own common shares of Heidrick
(representing less than 1% of Heidrick's outstanding common shares).
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
72
VAN KAMPEN SENIOR LOAN FUND
TRUSTEES AND OFFICERS continued
OFFICERS:
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005
522 Fifth Avenue Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex
New York, NY 10036 Officer since May 2003. Managing Director of Van Kampen Advisors
Inc. since June 2003. Director of Investor Services since
September 2002. Director of the Adviser, Van Kampen
Investments and Van Kampen Exchange Corp. since January
2005. Managing Director of Morgan Stanley and Morgan Stanley
& Co. Incorporated. Managing Director and Director of Morgan
Stanley Investment Management Inc. Chief Administrative
Officer, Managing Director and Director of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley Services Company
Inc. Managing Director and Director of Morgan Stanley
Distributors Inc. and Morgan Stanley Distribution 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 of Morgan Stanley Investment Management Inc. and
Executive Vice President of funds in the Fund Complex from
May 2003 to September 2005.
Amy R. Doberman (45) Vice President Officer Managing Director and General Counsel--U.S. Investment
522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and
the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang (40) Vice President Officer Executive Director of Morgan Stanley Investment Management
522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10036 Complex.
</Table>
73
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEES AND OFFICERS continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
John L. Sullivan (52) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza - Suite 100 Officer since 1996 August 2004. Prior to August 2004, Director and Managing
P.O. Box 5555 Director of Van Kampen Investments, the Adviser, Van Kampen
Oakbrook Terrace, IL 60181 Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Stuart N. Schuldt (45) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza - Suite 100 and Treasurer since 2007 Inc. since June 2007; Chief Financial Officer and Treasurer
P.O. Box 5555 of funds in the Fund Complex since June 2007. Prior to June
Oakbrook Terrace, IL 60181 2007, Senior Vice President of Northern Trust Company,
Treasurer and Principal Financial Officer of Northern Trust
U.S. mutual fund complex.
Howard Tiffen (59) Vice President Officer Managing Director of the Adviser and Van Kampen Advisors
1 Parkview Plaza - Suite 100 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.
</Table>
74
Van Kampen Senior Loan Fund
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
Van Kampen Senior Loan Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen Senior Loan Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
The Statement of Additional Information includes additional information
about Fund trustees and is available, without charge, upon request by
calling 1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza, Suite 100
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2007 Van Kampen Funds Inc.
All rights reserved. Member FINRA/SIPC.
18, 118, 218, 59, 359
SLFANN 9/07
(VAN KAMPEN INVESTMENTS LOGO) IU07-03450P-Y07/07
Item 2. Code of Ethics.
(a) The Fund 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 Fund or a third
party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Due to personnel changes at the Adviser, the list of covered officers set
forth in Exhibit B was amended in November 2006 and June 2007 and the
general counsel's designee set forth in Exhibit C was amended in October
and December 2006. All three editions of Exhibit B and all three editions
of Exhibit C are attached.
(d) Not applicable.
(e) Not applicable.
(f) (1) The Fund's Code of Ethics is attached hereto as Exhibit 12(1).
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Fund's Board of Trustees has determined that it has three "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees: Rod Dammeyer, Jerry D. Choate and R. Craig Kennedy.
Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the audit committee and Board
of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2007
REGISTRANT COVERED ENTITIES(1)
---------- -------------------
AUDIT FEES .................... $121,975 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES ......... $ 0 $211,000(2)
TAX FEES ................... $ 2,375(3) $ 0
ALL OTHER FEES ............. $ 0 $ 0
TOTAL NON-AUDIT FEES .......... $ 2,375 $211,000
TOTAL ......................... $124,350 $211,000
2006
REGISTRANT COVERED ENTITIES(1)
---------- -------------------
AUDIT FEES .................... $118,300 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES ......... $ 0 $244,200(2)
TAX FEES ................... $ 2,200(3) $ 0
ALL OTHER FEES ............. $ 0 $ 0
TOTAL NON-AUDIT FEES .......... $ 2,200 $244,200
TOTAL ......................... $120,500 $244,200
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.
(e)(1) The audit committee's pre-approval policies and procedures are as
follows:
JOINT AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
VAN KAMPEN FUNDS
AS ADOPTED JULY 23, 2003 AND AMENDED MAY 26, 2004(1)
1. STATEMENT OF PRINCIPLES
The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.(2)
The SEC has issued rules specifying the types of services that an
independent auditor may not provide to its audit client, as well as the audit
committee's administration of the engagement of the independent auditor. The
SEC's rules establish two different approaches to pre-approving services, which
the SEC considers to be equally valid. Proposed services either: may be
pre-approved without consideration of specific case-by-case services by the
Audit Committee ("general pre-approval"); or require the specific pre-approval
of the Audit Committee ("specific pre-approval"). The Audit Committee believes
that the combination of these two approaches in this Policy will result in an
effective and efficient procedure to pre-approve services performed by the
Independent Auditors. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.
For both types of pre-approval, the Audit Committee will consider whether
such services are consistent with the SEC's rules on auditor independence. The
Audit Committee will also consider whether the Independent Auditors are best
positioned to provide the most effective and efficient services, for reasons
such as its familiarity with the Fund's business, people, culture, accounting
systems, risk profile and other factors, and whether the service might enhance
the Fund's ability to manage or control risk or improve audit quality. All such
factors will be considered as a whole, and no one factor should necessarily be
determinative.
The Audit Committee is also mindful of the relationship between fees for
audit and non-audit services in deciding whether to pre-approve any such
services and may determine for each fiscal year, the appropriate ratio between
the total amount of fees for Audit, Audit-related and Tax services for the Fund
(including any Audit-related or Tax service fees for Covered Entities that were
subject to pre-approval), and the total amount of fees for certain permissible
non-audit services classified as All Other services for the Fund (including any
such services for Covered Entities subject to pre-approval).
The appendices to this Policy describe the Audit, Audit-related, Tax and
All Other services that have the general pre-approval of the Audit Committee.
The term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will annually review and pre-approve the services
that may be provided by the Independent Auditors without obtaining specific
pre-approval
- ----------
(1) This Joint Audit Committee Audit and Non-Audit Services Pre-Approval Policy
and Procedures (the "Policy"), amended as of the date above, supercedes and
replaces all prior versions that may have been amended from time to time.
(2) Terms used in this Policy and not otherwise defined herein shall have the
meanings as defined in the Joint Audit Committee Charter.
from the Audit Committee. The Audit Committee will add to or subtract from the
list of general pre-approved services from time to time, based on subsequent
determinations.
The purpose of this Policy is to set forth the policy and procedures by
which the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.
The Fund's Independent Auditors have reviewed this Policy and believes that
implementation of the Policy will not adversely affect the Independent Auditors'
independence.
2. DELEGATION
As provided in the Act and the SEC's rules, the Audit Committee may
delegate either type of pre-approval authority to one or more of its members.
The member to whom such authority is delegated must report, for informational
purposes only, any pre-approval decisions to the Audit Committee at its next
scheduled meeting.
3. AUDIT SERVICES
The annual Audit services engagement terms and fees are subject to the
specific pre-approval of the Audit Committee. Audit services include the annual
financial statement audit and other procedures required to be performed by the
Independent Auditors to be able to form an opinion on the Fund's financial
statements. These other procedures include information systems and procedural
reviews and testing performed in order to understand and place reliance on the
systems of internal control, and consultations relating to the audit. The Audit
Committee will monitor the Audit services engagement as necessary, but no less
than on a quarterly basis, and will also approve, if necessary, any changes in
terms, conditions and fees resulting from changes in audit scope, Fund structure
or other items.
In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the Independent Auditors reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1.
All other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
4. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the Fund's
financial statements or, to the extent they are Covered Services, the Covered
Entities' financial statements, or that are traditionally performed by the
Independent Auditors. Because the Audit Committee believes that the provision of
Audit-related services does not impair the independence of the auditor and is
consistent with the SEC's rules on auditor independence, the Audit Committee may
grant general pre-approval to Audit-related services. Audit-related services
include, among others, accounting consultations related to accounting, financial
reporting or disclosure matters not classified as "Audit services"; assistance
with understanding and implementing new accounting and financial reporting
guidance from rulemaking authorities; agreed-upon or expanded audit procedures
related to accounting and/or billing records required to respond to or comply
with financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix
B.2. All other Audit-related services not listed in Appendix B.2 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
5. TAX SERVICES
The Audit Committee believes that the Independent Auditors can provide Tax
services to the Fund and, to the extent they are Covered Services, the Covered
Entities, such as tax compliance, tax planning and tax advice without impairing
the auditor's independence, and the SEC has stated that the Independent Auditors
may provide such services. Hence, the Audit Committee believes it may grant
general pre-approval to those Tax services that have historically been provided
by the Independent Auditors, that the Audit Committee has reviewed and believes
would not impair the independence of the Independent Auditors, and that are
consistent with the SEC's rules on auditor independence. The Audit Committee
will not permit the retention of the Independent Auditors in connection with a
transaction initially recommended by the Independent Auditors, the sole business
purpose of which may be tax avoidance and the tax treatment of which may not be
supported in the Internal Revenue Code and related regulations. The Audit
Committee will consult with Director of Tax or outside counsel to determine that
the tax planning and reporting positions are consistent with this policy.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved
the Tax Services in Appendix B.3. All Tax services involving large and complex
transactions not listed in Appendix B.3 must be specifically pre-approved by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
has been delegated), including tax services proposed to be provided by the
Independent Auditors to any executive officer or trustee/director/managing
general partner of the Fund, in his or her individual capacity, where such
services are paid for by the Fund (generally applicable only to internally
managed investment companies).
6. ALL OTHER SERVICES
The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix
B.4. Permissible All Other services not listed in Appendix B.4 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
A list of the SEC's prohibited non-audit services is attached to this
policy as Appendix B.5. The SEC's rules and relevant guidance should be
consulted to determine the precise definitions of these services and the
applicability of exceptions to certain of the prohibitions.
7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS
Pre-approval fee levels or budgeted amounts for all services to be provided
by the Independent Auditors will be established annually by the Audit Committee.
Any proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services. For each fiscal year, the Audit
Committee may determine the appropriate ratio between the total amount of fees
for Audit, Audit-related, and Tax services for the Fund (including any
Audit-related or Tax services fees for Covered Entities subject to
pre-approval), and the total amount of fees for certain permissible non-audit
services classified as All Other services for the Fund (including any such
services for Covered Entities subject to pre-approval).
8. PROCEDURES
All requests or applications for services to be provided by the Independent
Auditors that do not require specific approval by the Audit Committee will be
submitted to the Fund's Chief Financial Officer and must include a detailed
description of the services to be rendered. The Fund's Chief Financial Officer
will determine whether such services are included within the list of services
that have received the general pre-approval of the Audit Committee. The Audit
Committee will be informed on a timely basis of any such services rendered by
the Independent Auditors. Requests or applications to provide services that
require specific approval by the Audit Committee will be submitted to the Audit
Committee by both the Independent Auditors and the Fund's Chief Financial
Officer, and must include a joint statement as to whether, in their view, the
request or application is consistent with the SEC's rules on auditor
independence.
The Audit Committee has designated the Fund's Chief Financial Officer to
monitor the performance of all services provided by the Independent Auditors and
to determine whether such services are in compliance with this Policy. The
Fund's Chief Financial Officer will report to the Audit Committee on a periodic
basis on the results of its monitoring. A sample report is included as Appendix
B.7. Both the Fund's Chief Financial Officer and management will immediately
report to the chairman of the Audit Committee any breach of this Policy that
comes to the attention of the Fund's Chief Financial Officer or any member of
management.
9. ADDITIONAL REQUIREMENTS
The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the Independent Auditors
and to assure the auditor's independence from the Fund, such as reviewing a
formal written statement from the Independent Auditors delineating all
relationships between the Independent Auditors and the Fund, consistent with
Independence Standards Board No. 1, and discussing with the Independent Auditors
its methods and procedures for ensuring independence.
10. COVERED ENTITIES
Covered Entities include the Fund's investment adviser(s) and any entity
controlling, controlled by or under common control with the Fund's investment
adviser(s) that provides ongoing services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Fund's
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund. This list of Covered Entities
would include:
- Van Kampen Investments Inc.
- Van Kampen Asset Management
- Van Kampen Advisors Inc.
- Van Kampen Funds Inc.
- Van Kampen Investor Services Inc.
- Morgan Stanley Investment Management Inc.
- Morgan Stanley Trust Company
- Morgan Stanley Investment Management Ltd.
- Morgan Stanley Investment Management Company
- Morgan Stanley Asset & Investment Trust Management Company Ltd.
(e)(2) Beginning with non-audit service contracts entered into on or after May
6, 2003, the audit committee also is required to pre-approve services to Covered
Entities to the extent that the services
are determined to have a direct impact on the operations or financial reporting
of the Registrant. 100% of such services were pre-approved by the audit
committee pursuant to the Audit Committee's pre-approval policies and procedures
(included herein).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors to the
Registrant and Covered Entities is compatible with maintaining the auditors'
independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
(a) The Fund has a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: David
C. Arch, Rod Dammeyer, Howard J Kerr, Hugo F. Sonnenschein.
(b) Not applicable.
Item 6. Schedule of Investments.
Please refer to Item #1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Fund's and its investment advisor's Proxy Voting Policies and Procedures are
as follows:
MORGAN STANLEY INVESTMENT MANAGEMENT
PROXY VOTING POLICY AND PROCEDURES
I. POLICY STATEMENT
Introduction - Morgan Stanley Investment Management's ("MSIM") policy and
procedures for voting proxies ("Policy") with respect to securities held in the
accounts of clients applies to those MSIM entities that provide discretionary
investment management services and for which a MSIM entity has authority to vote
proxies. This Policy is reviewed and updated as necessary to address new and
evolving proxy voting issues and standards.
The MSIM entities covered by this Policy currently include the following: Morgan
Stanley Investment Advisors Inc., Morgan Stanley AIP GP LP, Morgan Stanley
Investment Management Inc., Morgan Stanley Investment Management Limited, Morgan
Stanley Investment Management Company, Morgan Stanley Asset & Investment Trust
Management Co., Limited, Morgan Stanley Investment Management Private Limited,
Van Kampen Asset Management, and Van Kampen Advisors Inc. (each an "MSIM
Affiliate" and collectively referred to as the "MSIM Affiliates" or as "we"
below).
Each MSIM Affiliate will use its best efforts to vote proxies as part of its
authority to manage, acquire and dispose of account assets. With respect to the
MSIM registered management investment companies (Van Kampen, Institutional and
Advisor Funds--collectively referred to herein as the "MSIM Funds"), each MSIM
Affiliate will vote proxies under this Policy pursuant to authority granted
under its applicable investment advisory agreement or, in the absence of such
authority, as authorized by the Board of Directors/Trustees of the MSIM Funds.
An MSIM Affiliate will not vote proxies if the "named fiduciary" for an ERISA
account has reserved the authority for itself, or in the case of an account not
governed by ERISA, the investment management or investment advisory agreement
does not authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will vote
proxies in a prudent and diligent manner and in the best interests of clients,
including beneficiaries of and participants in a client's benefit plan(s) for
which the MSIM Affiliates manage assets, consistent with
the objective of maximizing long-term investment returns ("Client Proxy
Standard"). In certain situations, a client or its fiduciary may provide an MSIM
Affiliate with a proxy voting policy. In these situations, the MSIM Affiliate
will comply with the client's policy.
Proxy Research Services - Institutional Shareholder Services ("ISS") and Glass
Lewis (together with other proxy research providers as we may retain from time
to time, the "Research Providers") are independent advisers that specialize in
providing a variety of fiduciary-level proxy-related services to institutional
investment managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided include in-depth research, global
issuer analysis, and voting recommendations. While we may review and utilize the
recommendations of the Research Providers in making proxy voting decisions, we
are in no way obligated to follow such recommendations. In addition to research,
ISS provides vote execution, reporting, and recordkeeping.
Voting Proxies for Certain Non-U.S. Companies - Voting proxies of companies
located in some jurisdictions, particularly emerging markets, may involve
several problems that can restrict or prevent the ability to vote such proxies
or entail significant costs. These problems include, but are not limited to: (i)
proxy statements and ballots being written in a language other than English;
(ii) untimely and/or inadequate notice of shareholder meetings; (iii)
restrictions on the ability of holders outside the issuer's jurisdiction of
organization to exercise votes; (iv) requirements to vote proxies in person; (v)
the imposition of restrictions on the sale of the securities for a period of
time in proximity to the shareholder meeting; and (vi) requirements to provide
local agents with power of attorney to facilitate our voting instructions. As a
result, we vote clients' non-U.S. proxies on a best efforts basis only, after
weighing the costs and benefits of voting such proxies, consistent with the
Client Proxy Standard. ISS has been retained to provide assistance in connection
with voting non-U.S. proxies.
II. GENERAL PROXY VOTING GUIDELINES
To promote consistency in voting proxies on behalf of its clients, we follow
this Policy (subject to any exception set forth herein), including the
guidelines set forth below. These guidelines address a broad range of issues,
and provide general voting parameters on proposals that arise most frequently.
However, details of specific proposals vary, and those details affect particular
voting decisions, as do factors specific to a given company. Pursuant to the
procedures set forth herein, we may vote in a manner that is not in accordance
with the following general guidelines, provided the vote is approved by the
Proxy Review Committee and is consistent with the Client Proxy Standard. Morgan
Stanley AIP GP LP will follow the procedures as described in Appendix A.
We endeavor to integrate governance and proxy voting policy with investment
goals and to follow the Client Proxy Standard for each client. At times, this
may result in split votes, for example when different clients have varying
economic interests in the outcome of a particular voting matter (such as a case
in which varied ownership interests in two companies involved in a merger result
in different stakes in the outcome). We also may split votes at times based on
differing views of portfolio managers, but such a split vote must be approved by
the Proxy Review Committee.
A. ROUTINE MATTERS. We generally support routine management proposals. The
following are examples of routine management proposals:
- Approval of financial statements and auditor reports.
- General updating/corrective amendments to the charter.
- Most proposals related to the conduct of the annual meeting, with the
following exceptions. We may oppose proposals that relate to "the
transaction of such other business which may come before the meeting,"
and open-ended requests for adjournment. However, where management
specifically states the reason for requesting an adjournment and the
requested adjournment is necessary to permit a proposal that would
otherwise be supported under this Policy to be carried out (i.e. an
uncontested corporate transaction), the adjournment request will be
supported. Finally, we generally support shareholder proposals
advocating confidential voting procedures and independent tabulation
of voting results.
B. BOARD OF DIRECTORS
1. Election of directors: In the absence of a proxy contest, we generally
support the board's nominees for director except as follows:
a. We withhold or vote against interested directors if the company's
board does not meet market standards for director independence,
or if otherwise we believe board independence is insufficient. We
refer to prevalent market standards, generally as promulgated by
a stock exchange or other authority within a given market (e.g.,
New York Stock Exchange or Nasdaq rules for most U.S. companies,
and The Combined Code on Corporate Governance in the United
Kingdom). Thus, for a NYSE company with dispersed ownership, we
would expect that at a minimum a majority of directors should be
independent as defined by NYSE. Non-independent directors under
NYSE standards include an employee or an individual with an
immediate family member who is an executive (or in either case
was in such position within the previous three years). A
director's consulting arrangements with the company, or material
business relationships between the director's employer and the
company, also impair independence. Market standards
notwithstanding, we generally do not view long board tenure alone
as a basis to classify a director as non-independent. Where we
view market standards as inadequate, we may withhold votes based
on stronger independence standards.
b. Depending on market standards, we consider withholding support
from or voting against a nominee who is interested and who is
standing for election as a member of the company's compensation,
nominating or audit committees.
c. We consider withholding support or voting against a nominee if we
believe a direct conflict exists between the interests of the
nominee and the public shareholders. This includes consideration
for withholding support or voting against individual board
members or an entire slate if we believe the board is entrenched
and dealing inadequately with performance problems, and/or with
insufficient independence between the board and management.
d. We consider withholding support from or voting against a nominee
standing for election if the board has not taken action to
implement generally accepted governance practices for which there
is a "bright line" test. In the context of the U.S. market, these
would include elimination of dead hand or slow hand poison pills,
requiring audit, compensation or nominating committees to be
composed of independent directors and requiring a majority
independent board.
e. We generally withhold support from or vote against a nominee who
has failed to attend at least 75% of board meetings within a
given year without a reasonable excuse.
f. We consider withholding support from or voting against a nominee
who serves on the board of directors of more than six companies
(excluding investment companies). We also consider voting against
a director who otherwise appears to have too many commitments to
serve adequately on the board of the company.
2. Board independence: We generally support proposals requiring that a
certain percentage (up to 66 2/3%) of the company's board members be
independent directors, and promoting all-independent audit,
compensation and nominating/governance committees.
3. Board diversity: We consider on a case-by-case basis proposals urging
diversity of board membership with respect to social, religious or
ethnic group.
4. Majority voting: We generally support proposals requesting or
requiring majority voting policies in election of directors, so long
as there is a carve-out for plurality voting in the case of contested
elections.
5. Proposals to elect all directors annually: We generally support
proposals to elect all directors annually at public companies (to
"declassify" the Board of Directors) where such action is supported by
the board, and otherwise consider the issue on a case-by-case basis.
6. Cumulative voting: We generally support proposals to eliminate
cumulative voting (which provides that shareholders may concentrate
their votes for one or a handful of candidates, a system that can
enable a minority bloc to place representation on a board). Proposals
to establish cumulative voting in the election of directors generally
will not be supported.
7. Separation of Chairman and CEO positions: We vote on shareholder
proposals to separate the Chairman and CEO positions and/or to appoint
a non-executive Chairman based in part on prevailing practice in
particular markets, since the context for such a practice varies. In
many non-U.S. markets, we view separation of the roles as a market
standard practice, and support division of the roles in that context.
8. Director retirement age: Proposals recommending set director
retirement ages are voted on a case-by-case basis.
9. Proposals to limit directors' liability and/or broaden indemnification
of directors. Generally, we will support such proposals provided that
the officers and directors are eligible for indemnification and
liability protection if they have acted in good faith on company
business and were found innocent of any civil or criminal charges for
duties performed on behalf of the company.
C. CORPORATE TRANSACTIONS AND PROXY FIGHTS. We examine proposals relating to
mergers, acquisitions and other special corporate transactions (i.e., takeovers,
spin-offs, sales of assets, reorganizations, restructurings and
recapitalizations) on a case-by-case basis. However, proposals for mergers or
other significant transactions that are friendly and approved by the Research
Providers generally will be supported and in those instances will not need to be
reviewed by the Proxy Review Committee, where there is no portfolio manager
objection and where there is no material conflict of interest. We also analyze
proxy contests on a case-by-case basis.
D. CHANGES IN LEGAL AND CAPITAL STRUCTURE. We generally vote in favor of
management proposals for technical and administrative changes to a company's
charter, articles of association or bylaws. We review non-routine proposals,
including reincorporation to a different jurisdiction, on a case-by-case basis.
1. We generally support the following:
- Proposals that eliminate other classes of stock and/or eliminate
unequal voting rights.
- Proposals to increase the authorization of existing classes of
common stock (or securities convertible into common stock) if:
(i) a clear and legitimate business purpose is stated; (ii) the
number of shares requested is reasonable in relation to the
purpose for which authorization is requested; and (iii) the
authorization does not exceed 100% of shares currently authorized
and at least 30% of the new authorization will be outstanding.
- Proposals to create a new class of preferred stock or for
issuances of preferred stock up to 50% of issued capital.
- Proposals to authorize share repurchase plans.
- Proposals to reduce the number of authorized shares of common or
preferred stock, or to eliminate classes of preferred stock.
- Proposals to effect stock splits.
- Proposals to effect reverse stock splits if management
proportionately reduces the authorized share amount set forth in
the corporate charter. Reverse stock splits that do not adjust
proportionately to the authorized share amount generally will be
approved if the resulting increase in authorized shares coincides
with the proxy guidelines set forth above for common stock
increases.
- Proposals for higher dividend payouts.
2. We generally oppose the following (notwithstanding management
support):
- Proposals that add classes of stock that would substantially
dilute the voting interests of existing shareholders.
- Proposals to increase the authorized number of shares of existing
classes of stock that carry preemptive rights or supervoting
rights.
- Proposals to create "blank check" preferred stock.
- Proposals relating to changes in capitalization by 100% or more.
E. TAKEOVER DEFENSES AND SHAREHOLDER RIGHTS
1. Shareholder rights plans: We support proposals to require shareholder
approval or ratification of shareholder rights plans (poison pills).
2. Supermajority voting requirements: We generally oppose requirements
for supermajority votes to amend the charter or bylaws, unless the
provisions protect minority shareholders where there is a large
shareholder. In line with this view, in the absence of a large
shareholder we support reasonable shareholder proposals to limit such
supermajority voting requirements.
3. Shareholder rights to call meetings: We consider proposals to enhance
shareholder rights to call meetings on a case-by-case basis.
4. Anti-greenmail provisions: Proposals relating to the adoption of
anti-greenmail provisions will be supported, provided that the
proposal: (i) defines greenmail; (ii) prohibits buyback offers to
large block holders (holders of at least 1% of the outstanding shares
and in certain cases, a greater amount, as determined by the Proxy
Review Committee) not made to all shareholders or not approved by
disinterested shareholders; and (iii) contains no anti-takeover
measures or other provisions restricting the rights of shareholders.
F. AUDITORS. We generally support management proposals for selection or
ratification of independent auditors. However, we may consider opposing such
proposals with reference to incumbent audit firms if the company has suffered
from serious accounting irregularities, or if fees paid to the auditor for
non-audit-related services are excessive. Generally, to determine if non-audit
fees are excessive, a 50% test will be applied (i.e., non-audit-related fees
should be less than 50% of the total fees paid to the auditor). Proposals
requiring auditors to attend the annual meeting of shareholders will be
supported. We generally vote against proposals to indemnify auditors.
G. EXECUTIVE AND DIRECTOR REMUNERATION.
1. We generally support the following proposals:
- Proposals relating to director fees, provided the amounts are not
excessive relative to other companies in the country or industry.
- Proposals for employee stock purchase plans that permit discounts
up to 15%, but only for grants that are part of a broad-based
employee plan, including all non-executive employees.
- Proposals for employee equity compensation plans and other
employee ownership plans, provided that our research does not
indicate that approval of the plan would be against shareholder
interest. Such approval may be against shareholder interest if it
authorizes excessive dilution and shareholder cost, particularly
in the context of high usage ("run rate") of equity compensation
in the recent past; or if there are objectionable plan design and
provisions.
- Proposals for the establishment of employee retirement and
severance plans, provided that our research does not indicate
that approval of the plan would be against shareholder interest.
2. Blanket proposals requiring shareholder approval of all severance
agreements will not be supported, but proposals that require
shareholder approval for agreements in excess of three times the
annual compensation (salary and bonus) generally will be supported.
3. Proposals advocating stronger and/or particular pay-for-performance
models will be evaluated on a case-by-case basis, with consideration
of the merits of the individual proposal within the context of the
particular company and its current and past practices.
4. Proposals to U.S. companies that request disclosure of executive
compensation in addition to the disclosure required by the Securities
and Exchange Commission ("SEC") regulations generally will not be
supported.
5. We generally support proposals advocating reasonable senior executive
and director stock ownership guidelines and holding requirements for
shares gained in option exercises.
6. Management proposals effectively to re-price stock options are
considered on a case-by-case basis. Considerations include the
company's reasons and justifications for a re-pricing, the company's
competitive position, whether senior executives and outside directors
are excluded, potential cost to shareholders, whether the re-pricing
or share exchange is on a value-for-value basis, and whether vesting
requirements are extended.
H. SOCIAL, POLITICAL AND ENVIRONMENTAL ISSUES. We consider proposals relating to
social, political and environmental issues on a case-by-case basis to determine
whether they will have a financial impact on shareholder value. However, we
generally vote against proposals requesting reports that are duplicative,
related to matters not material to the business, or that would impose
unnecessary or excessive costs. We may abstain from voting on proposals that do
not have a readily determinable financial impact on shareholder value. We
generally oppose proposals requiring adherence to workplace standards that are
not required or customary in market(s) to which the proposals relate.
I. FUND OF FUNDS. Certain Funds advised by an MSIM Affiliate invest only in
other MSIM Funds. If an underlying fund has a shareholder meeting, in order to
avoid any potential conflict of interest, such proposals will be voted in the
same proportion as the votes of the other shareholders of the underlying fund,
unless otherwise determined by the Proxy Review Committee.
III. ADMINISTRATION OF POLICY
The MSIM Proxy Review Committee (the "Committee") has overall responsibility for
creating and implementing the Policy, working with an MSIM staff group (the
"Corporate Governance Team"). The Committee, which is appointed by MSIM's Chief
Investment Officer of Global Equities ("CIO"), consists of senior investment
professionals who represent the different investment disciplines and geographic
locations of the firm. Because proxy voting is an investment responsibility and
impacts shareholder value, and because of their knowledge of companies and
markets, portfolio managers and other members of investment staff play a key
role in proxy voting, although the Committee has final authority over proxy
votes.
The Committee Chairperson is the head of the Corporate Governance Team, and is
responsible for identifying issues that require Committee deliberation or
ratification. The Corporate Governance Team, working with advice of investment
teams and the Committee, is responsible for voting on routine items and on
matters that can be addressed in line with these Policy guidelines. The
Corporate Governance Team has responsibility for voting case-by-case where
guidelines and precedent provide adequate guidance, and to refer other
case-by-case decisions to the Proxy Review Committee.
The Committee will periodically review and have the authority to amend, as
necessary, the Policy and establish and direct voting positions consistent with
the Client Proxy Standard.
A. COMMITTEE PROCEDURES
The Committee will meet at least monthly to (among other matters) address any
outstanding issues relating to the Policy or its implementation. The Corporate
Governance Team will timely communicate to ISS MSIM's Policy (and any amendments
and/or any additional guidelines or procedures the Committee may adopt).
The Committee will meet on an ad hoc basis to (among other matters): (1)
authorize "split voting" (i.e., allowing certain shares of the same issuer that
are the subject of the same proxy solicitation and held by one or more MSIM
portfolios to be voted differently than other shares) and/or "override voting"
(i.e., voting all MSIM portfolio shares in a manner contrary to the Policy); (2)
review and approve upcoming votes, as appropriate, for matters for which
specific direction has been provided in this Policy; and (3) determine how to
vote matters for which specific direction has not been provided in this Policy.
Members of the Committee may take into account Research Providers'
recommendations and research as well as any other relevant information they may
request or receive, including portfolio manager and/or analyst research, as
applicable. Generally, proxies related to securities held in accounts that are
managed pursuant to quantitative, index or index-like strategies ("Index
Strategies") will be voted in the same manner as those held in actively managed
accounts, unless economic interests of the accounts differ. Because accounts
managed using Index Strategies are passively managed accounts, research from
portfolio managers and/or analysts related to securities held in these accounts
may not be available. If the affected securities are held only in accounts that
are managed pursuant to Index Strategies, and the proxy relates to a matter that
is not described in this Policy, the Committee will consider all available
information from the Research Providers, and to the extent that the holdings are
significant, from the portfolio managers and/or analysts.
B. MATERIAL CONFLICTS OF INTEREST
In addition to the procedures discussed above, if the Committee determines that
an issue raises a material conflict of interest, the Committee will request a
special committee to review, and recommend a course of action with respect to,
the conflict(s) in question ("Special Committee").
The Special Committee shall be comprised of the Chairperson of the Proxy Review
Committee, the Chief Compliance Officer or his/her designee, a senior portfolio
manager (if practicable, one who is a member of the Proxy Review Committee)
designated by the Proxy Review Committee, and MSIM's relevant Chief Investment
Officer or his/her designee, and any other persons deemed necessary by the
Chairperson. The Special Committee may request the assistance of MSIM's General
Counsel or his/her designee who will have sole discretion to cast a vote. In
addition to the research provided by Research Providers, the Special Committee
may request analysis from MSIM Affiliate investment professionals and outside
sources to the extent it deems appropriate.
C. IDENTIFICATION OF MATERIAL CONFLICTS OF INTEREST
A potential material conflict of interest could exist in the following
situations, among others:
1. The issuer soliciting the vote is a client of MSIM or an affiliate of
MSIM and the vote is on a material matter affecting the issuer.
2. The proxy relates to Morgan Stanley common stock or any other security
issued by Morgan Stanley or its affiliates except if echo voting is
used, as with MSIM Funds, as described herein.
3. Morgan Stanley has a material pecuniary interest in the matter
submitted for a vote (e.g., acting as a financial advisor to a party
to a merger or acquisition for which Morgan Stanley will be paid a
success fee if completed).
If the Chairperson of the Committee determines that an issue raises a potential
material conflict of interest, depending on the facts and circumstances, the
Chairperson will address the issue as follows:
1. If the matter relates to a topic that is discussed in this Policy, the
proposal will be voted as per the Policy.
2. If the matter is not discussed in this Policy or the Policy indicates
that the issue is to be decided case-by-case, the proposal will be
voted in a manner consistent with the Research Providers, provided
that all the Research Providers have the same recommendation, no
portfolio manager objects to that vote, and the vote is consistent
with MSIM's Client Proxy Standard.
3. If the Research Providers' recommendations differ, the Chairperson
will refer the matter to the Committee to vote on the proposal. If the
Committee determines that an issue raises a material conflict of
interest, the Committee will request a Special Committee to review and
recommend a course of action, as described above. Notwithstanding the
above, the Chairperson of the Committee may request a Special
Committee to review a matter at any time as he/she deems necessary to
resolve a conflict.
D. PROXY VOTING REPORTING
The Committee and the Special Committee, or their designee(s), will document in
writing all of their decisions and actions, which documentation will be
maintained by the Committee and the Special Committee, or their designee(s), for
a period of at least 6 years. To the extent these decisions relate to a security
held by a MSIM Fund, the Committee and Special Committee, or their designee(s),
will report their decisions to each applicable Board of Trustees/Directors of
those Funds at each Board's next regularly scheduled Board meeting. The report
will contain information concerning decisions made by the Committee and Special
Committee during the most recently ended calendar quarter immediately preceding
the Board meeting.
The Corporate Governance Team will timely communicate to applicable portfolio
managers and to ISS, decisions of the Committee and Special Committee so that,
among other things, ISS will vote proxies consistent with their decisions.
MSIM will promptly provide a copy of this Policy to any client requesting it.
MSIM will also, upon client request, promptly provide a report indicating how
each proxy was voted with respect to securities held in that client's account.
MSIM's Legal Department is responsible for filing an annual Form N-PX on behalf
of each MSIM Fund for which such filing is required, indicating how all proxies
were voted with respect to such Fund's holdings.
APPENDIX A
The following procedures apply to accounts managed by Morgan Stanley AIP GP LP
("AIP").
Generally, AIP will follow the guidelines set forth in Section II of MSIM's
Proxy Voting Policy and Procedures. To the extent that such guidelines do not
provide specific direction, or AIP determines that consistent with the Client
Proxy Standard, the guidelines should not be followed, the Proxy Review
Committee has delegated the voting authority to vote securities held by accounts
managed by AIP to the Liquid Markets investment team and the Private Markets
investment team of AIP. A summary of decisions made by the investment teams will
be made available to the Proxy Review Committee for its information at the next
scheduled meeting of the Proxy Review Committee.
In certain cases, AIP may determine to abstain from determining (or
recommending) how a proxy should be voted (and therefore abstain from voting
such proxy or recommending how such proxy should be voted), such as where the
expected cost of giving due consideration to the proxy does not justify the
potential benefits to the affected account(s) that might result from adopting or
rejecting (as the case may be) the measure in question.
Waiver of Voting Rights
For regulatory reasons, AIP may either 1) invest in a class of securities of an
underlying fund (the "Fund") that does not provide for voting rights; or 2)
waive 100% of its voting rights with respect to the following:
1. Any rights with respect to the removal or replacement of a director,
general partner, managing member or other person acting in a similar
capacity for or on behalf of the Fund (each individually a "Designated
Person," and collectively, the "Designated Persons"), which may
include, but are not limited to, voting on the election or removal of
a Designated Person in the event of such Designated Person's death,
disability, insolvency, bankruptcy, incapacity, or other event
requiring a vote of interest holders of the Fund to remove or replace
a Designated Person; and
2. Any rights in connection with a determination to renew, dissolve,
liquidate, or otherwise terminate or continue the Fund, which may
include, but are not limited to, voting on the renewal, dissolution,
liquidation, termination or continuance of the Fund upon the
occurrence of an event described in the Fund's organizational
documents; provided, however, that, if the Fund's organizational
documents require the consent of the Fund's general partner or
manager, as the case may be, for any such termination or continuation
of the Fund to be effective, then AIP may exercise its voting rights
with respect to such matter.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
FUND MANAGEMENT
PORTFOLIO MANAGEMENT. As of the date of this report, the Fund is managed by
members of the Taxable Fixed Income team. The team consists of portfolio
managers and analysts. Current members of the team jointly and primarily
responsible for the day-to-day management of the Fund's portfolio and the
overall execution of the strategy of the Fund are Howard T. Tiffen, a Managing
Director of the Adviser and Christina Jamieson, an Executive Director of the
Adviser.
Mr. Tiffen has been associated with the Adviser in an investment management
capacity since December 1999 and began managing the Fund in December 1999. Ms.
Jamieson has been associated with the Adviser in an investment management
capacity since March 2000 and began managing the Fund in June 2005.
The composition of the team may change from time to time.
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
As of July 31, 2007, Mr. Tiffen managed six registered investment companies with
a total of approximately $7.8 billion in assets; no pooled investment vehicles
other than registered investment companies; and one other account with a total
of approximately $586.7 million in assets.
As of July 31, 2007, Ms. Jamieson managed three registered investment companies
with a total of approximately $6.0 billion in assets; no pooled investment
vehicles other than registered investment companies; and no other accounts.
Because the portfolio managers manage assets for other investment companies,
pooled investment vehicles, and/or other accounts (including institutional
clients, pension plans and certain high net worth individuals), there may be an
incentive to favor one client over another resulting in conflicts of interest.
For instance, the Adviser may receive fees from certain accounts that are higher
than the fee it receives from the Fund, or it may receive a performance-based
fee on certain accounts. In those instances, the portfolio managers may have an
incentive to favor the higher and/or performance-based fee accounts over the
Fund. The portfolio managers of the Fund do not currently manage accounts for
other investment companies, pooled investment vehicles or other accounts that
charge a performance-based fee. In addition, a conflict of interest could exist
to the extent the Adviser has proprietary investments in certain accounts, where
portfolio managers have personal investments in certain accounts or when certain
accounts are investment options in the Adviser's employee benefits and/or
deferred compensation plans. The portfolio manager may have an incentive to
favor these accounts over others. If the Adviser manages accounts that engage in
short sales of securities of the type in which the Fund invests, the Adviser
could be seen as harming the performance of the Fund for the benefit of the
accounts engaged in short sales if the short sales cause the market value of the
securities to fall. The Adviser has adopted trade allocation and other policies
and procedures that it believes are reasonably designed to address these and
other conflicts of interest.
PORTFOLIO MANAGER COMPENSATION STRUCTURE
Portfolio managers receive a combination of base compensation and discretionary
compensation, comprised of a cash bonus and several deferred compensation
programs described below. The methodology used to determine portfolio manager
compensation is applied across all accounts managed by the portfolio manager.
BASE SALARY COMPENSATION. Generally, portfolio managers receive base salary
compensation based on the level of their position with the Adviser.
DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio managers
may receive discretionary compensation.
Discretionary compensation can include:
- - Cash Bonus;
- - Morgan Stanley's Long-Term Incentive Compensation Program awards -- a
mandatory program that defers a portion of discretionary year-end
compensation into restricted stock units or other awards or other
investments based on Morgan Stanley common stock that are subject to
vesting and other conditions;
- - Investment Management Alignment Plan (IMAP) awards -- a mandatory program
that defers a portion of discretionary year-end compensation and notionally
invests it in designated funds advised by the Adviser or its affiliates.
The award is subject to vesting and other conditions. Portfolio managers
must notionally invest a minimum of 25% to a maximum of 100% of the IMAP
deferral into a combination of the designated open-end funds they manage
that are included in the IMAP Fund menu;
- - Voluntary Deferred Compensation Plans -- voluntary programs that permit
certain employees to elect to defer a portion of their discretionary
year-end compensation and directly or notionally invest the deferred
amount: (1) across a range of designated investment funds, including funds
advised by the Adviser or its affiliates; and/or (2) in Morgan Stanley
stock units.
Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:
- - Investment performance. A portfolio manager's compensation is linked to the
pre-tax investment performance of the funds/accounts managed by the
portfolio manager. Investment performance is calculated for one-, three-
and five-year periods measured against an appropriate securities market
index (or indices) for the funds/accounts managed by the portfolio manager.
The assets managed by the portfolio managers in funds, pooled investment
vehicles and other accounts are described in "Other Accounts Managed by the
Portfolio Managers" above. Generally, the greatest weight is placed on the
three- and five-year periods.
- - Revenues generated by the investment companies, pooled investment vehicles
and other accounts managed by the portfolio manager.
- - Contribution to the business objectives of the Adviser.
- - The dollar amount of assets managed by the portfolio manager.
- - Market compensation survey research by independent third parties.
- - Other qualitative factors, such as contributions to client objectives.
- - Performance of Morgan Stanley and Morgan Stanley Investment Management
Inc., and the overall performance of the investment team(s) of which the
portfolio is a member.
SECURITIES OWNERSHIP OF PORTFOLIO MANAGERS
As of July 31, 2007, the portfolio managers did not own any shares of the Fund.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not Applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 11. Controls and Procedures
(a) The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(1) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.
(2)(a) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(2)(b) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
(3) Written solicitations to purchase securities under Rule 23c-1 during the
period are attached hereto.
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 Loan Fund
By: /s/ Ronald E. Robison
---------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: September 20, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
---------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: September 20, 2007
By: /s/ Stuart N. Schuldt
---------------------------------
Name: Stuart N. Schuldt
Title: Principal Financial Officer
Date: September 20, 2007