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)
Jerry W. Miller
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 7/31
Date of reporting period: 7/31/08
Item 1. 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, 2008.
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 7/31/08
CURRENT DISTRIBUTIONS
(JULY 31, 1998-- JULY 31, 2008)
(LINE GRAPH)
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
(CLASS IB) 3 MONTH T-BILL (GENERIC)
--------------------------- ------------------------
7/98 6.7884 5.075
6.8089 4.825
6.8157 4.361
6.475 4.318
6.1807 4.483
6.1994 4.452
6.2119 4.452
6.1994 4.670
6.2119 4.475
6.1994 4.535
6.2245 4.627
6.4397 4.779
7/99 6.4848 4.745
6.551 4.967
6.5644 4.851
6.5846 5.088
6.5914 5.301
6.5914 5.328
6.9016 5.692
6.9592 5.781
7.1369 5.871
7.2251 5.829
7.2479 5.619
7.5057 5.855
7/00 7.571 6.219
7.603 6.307
7.980 6.210
8.3117 6.389
8.4026 6.202
8.5333 5.895
8.6292 4.994
8.7372 4.859
8.0914 4.286
7.1972 3.883
6.7517 3.616
6.5353 3.656
7/01 6.2923 3.524
5.9653 3.367
5.796 2.371
5.2777 2.012
4.7107 1.726
4.4658 1.725
4.1877 1.757
3.9661 1.757
3.9281 1.777
3.9046 1.767
3.9234 1.726
3.9517 1.685
7/02 4.1481 1.695
4.3158 1.675
4.3266 1.552
4.4785 1.450
4.4785 1.215
4.2481 1.195
4.093 1.174
4.1089 1.195
4.0983 1.113
3.8127 1.113
3.7509 1.103
3.6732 0.851
7/03 3.5405 0.943
3.3629 0.973
3.3349 0.943
3.2881 0.953
3.2425 0.932
3.2313 0.922
3.1873 0.912
3.0814 0.943
3.0607 0.943
2.9765 0.963
2.9832 1.065
2.9633 1.266
7/04 2.960 1.440
2.9633 1.583
3.160 1.705
3.3163 1.899
3.3053 2.228
3.5022 2.217
3.7178 2.463
3.8905 2.750
3.8862 2.772
3.882 2.894
4.1584 2.945
4.4044 3.121
7/05 4.3947 3.398
4.6073 3.503
4.7789 3.543
4.7894 3.883
4.9007 3.937
5.2508 4.079
5.2566 4.465
5.4846 4.621
5.9471 4.607
5.9537 4.763
6.2781 4.838
6.612 4.981
7/06 6.6193 5.074
6.9103 5.035
7.8405 4.877
7.8492 5.078
8.0488 5.024
8.0488 5.011
8.031 5.108
7.9693 5.129
7.9868 5.033
7.5991 4.845
7.5908 4.736
7.462 4.807
7/07 7.6302 4.946
7.6694 4.111
7.6338 3.801
7.5986 3.916
7.778 3.150
7.8522 3.242
8.1737 1.946
8.7723 1.843
8.9633 1.321
8.7143 1.382
6.1895 1.884
6.133 1.736
7/08 6.2804 1.665
</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 2/18/05 since 2/18/05 since 2/18/05 10/4/89 6/13/03
- ---------------------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
W/O 3.25% W/O 3.00% W/O 1.00%
AVERAGE ANNUAL SALES SALES SALES SALES SALES SALES W/O SALES W/O SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES CHARGES
Since Inception 0.89% -0.08% 0.14% -0.10% 0.14% 0.14% 5.09% 3.88%
10-year -- -- -- -- -- -- 2.92 --
5-year -- -- -- -- -- -- 3.61 3.57
1-year -6.70 -9.73 -7.43 -10.02 -7.43 -8.29 -6.69 -6.69
- ---------------------------------------------------------------------------------------------------------
</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, 2008
MARKET CONDITIONS
The U.S. economic picture weakened over the course of the 12-month reporting
period as the pace of growth slowed while inflationary pressures, particularly
rising food and oil prices, began to grow. These factors, coupled with the
declining housing market, weighed on consumers and translated into slower
earnings growth for many corporate borrowers in the senior loan market as demand
for their products and services declined. At the same time, the dislocations
stemming from the problems in the subprime mortgage sector permeated the capital
markets, leading to a significant contraction in credit and liquidity and
considerable losses for many financial firms.
The Federal Reserve (the "Fed") took several steps to help support both the
economy and market liquidity, including reducing the target federal funds rate a
total of 325 basis points during the period, bringing the rate to 2.0 percent by
the end of April. In the final months of the period, the Fed held rates steady
in an effort to limit inflationary pressures, although concerns of an economic
recession remained.
In the aggregate, it was a volatile and challenging period for the financial
markets. The uncertain environment prompted many investors to shun riskier
assets, which resulted in diminished performance for most sectors of the market.
The senior loan market faced additional challenges. While demand for senior
loans was declining, the supply of loans coming to market--particularly in the
fourth quarter of 2007--was rising, creating a technical demand/supply imbalance
that put considerable pressure on prices, which reached a low for the period in
March. Tighter lending standards and increased selling by retail and relative
value investors also contributed to price declines. In April, the technical
picture began to improve as large underwriting banks made substantial progress
working down the inventory of underwritten but not yet syndicated leveraged
loans while low loan prices attracted new money into the asset class from
private equity and credit opportunity funds. As a result, loan prices rose,
reaching their highest level for the calendar year so far in mid-June. At the
end of June, however, the market reversed course again due in large part to
concerns about underlying credit fundamentals amid negative news regarding the
auto industry and mortgage lenders Fannie Mae (FNMA) and Freddie Mac (FHLMC).
Although the default rate in the senior loan market increased to approximately
three percent by period end, it still remained below the historical average.
Given the weaker economic outlook, we anticipate defaults may continue to rise,
but we believe the senior loan asset class remains compelling due to the senior
secured nature of loans and their attractive current yields.
2
PERFORMANCE ANALYSIS
The Fund returned -6.70% percent for the 12 months ended July 31, 2008 (Class A
shares, unadjusted for sales charges).
TOTAL RETURNS FOR THE 12-MONTH PERIOD ENDED JULY 31, 2008
<Table>
<Caption>
- -------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS IB CLASS IC
-6.70% -7.43% -7.43% -6.69% -6.69%
- -------------------------------------------------------------
</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, and have not relaxed our rigorous credit standards. We
believe this approach should enable us to limit our credit losses during this
down cycle and may allow us to take advantage of opportunities that arise during
volatile periods such as we are currently experiencing.
We continued to position the portfolio defensively, generally avoiding sectors
or industries that we believe are vulnerable to cyclical economic downturns. For
example, the Fund remained underweighted in the auto and airline industries
because of their susceptibility to high fuel prices. We made relatively few
changes to the portfolio during the reporting year, and as of the end of the
period, the Fund's largest sector weightings were Printing & Publishing; Hotels,
Motels, Inns & Gaming; and Healthcare.
The Fund remained fully invested in senior secured loans, and used a modest
amount of leverage which may allow us to enhance the Fund's yield while keeping
credit standards high. Leverage involves borrowing at a floating short-term rate
and reinvesting the proceeds at a higher rate. Unlike other fixed-income asset
classes, using leverage in conjunction with senior loans does not involve the
same degree of risk from rising short-term interest rates since the income from
senior loans adjusts to changes in interest rates, as do the rates which
determine the Fund's borrowing costs. (Similarly, should short-term rates fall,
borrowing costs would also decline.) While we believe this portfolio structure
(fully invested, modest leverage) adds value for shareholders over a full cycle,
it has been a drag on performance in the short term. Because the recent market
volatility has been driven as much by technical factors as by changes in
underlying fundamentals, we have not altered the use of leverage in the Fund as
we believe it is difficult to "time" technical events in the market. Therefore,
portfolio composition continues to be driven by fundamental credit research.
Although it has been a difficult period, it has created attractive investment
opportunities. Loans coming to market today are offering better spreads and
3
stronger credit structures than we have seen in the past few years. These more
investor-friendly terms may lead to attractive risk/reward characteristics for
investors going forward. Current prices and yields in the secondary market also
offer compelling opportunities. In addition, merger and acquisition activity
continues, which has historically meant continued deal flows for senior secured
lenders. Going forward, we will remain focused on ensuring the Fund has
sufficient liquidity while maintaining a high quality, well-diversified
portfolio of issuers with stable cash flows, strong management teams, and
collateral value which we believe can be sufficient to provide a solid second
way out in a worst-case 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 7/31/08
Printing & Publishing 13.6%
Hotels, Motels, Inns & Gaming 11.1
Healthcare 8.5
Beverage, Food & Tobacco 8.1
Chemicals, Plastics & Rubber 6.8
Entertainment & Leisure 5.5
Finance 5.2
Broadcasting--Cable 5.2
Broadcasting--Television 4.6
Business Equipment & Services 4.6
Containers, Packaging & Glass 4.0
Utilities 3.7
Insurance 3.6
Automotive 3.4
Retail--Stores 3.3
Education & Child Care 3.1
Electronics 2.9
Buildings & Real Estate 2.8
Non-Durable Consumer Products 2.7
Broadcasting--Radio 2.6
Restaurants & Food Service 2.2
Aerospace/Defense 2.0
Medical Products & Services 1.9
Construction Material 1.8
Textiles & Leather 1.6
Diversified Manufacturing 1.3
Telecommunications--Local Exchange Carriers 1.3
Natural Resources 1.2
Telecommunications--Wireless 1.1
Broadcasting--Diversified 1.0
Home & Office Furnishings, Housewares & Durable Consumer
Products 1.0
Health & Beauty 0.8
Paper & Forest Products 0.8
Retail--Specialty 0.7
Banking 0.7
Transportation--Cargo 0.5
Ecological 0.5
Transportation-Rail Manufacturing 0.3
Machinery 0.3
Transportation--Personal 0.3
Pharmaceuticals 0.3
Retail--Oil & Gas 0.3
Telecommunications--Long Distance 0.2
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 7/31/08
(continued from previous page)
Durable Consumer Products 0.2
Farming & Agriculture 0.1
Grocery 0.1
Personal & Miscellaneous Services 0.1
Mining, Steel, Iron & Non-Precious Metals 0.0*
-----
Total Long-Term Investments 127.9
Total Short-Term Investments 1.8
-----
Total Investments 129.7
Borrowings (28.3)
Liabilities in excess of Other Assets (1.4)
-----
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 P.O.
Box 219286, Kansas City, MO 64121-9286. 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 redemptions fees; and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees; and other Fund expenses. This example is
intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other
mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 2/1/08 - 7/31/08.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges or redemption fees.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
2/1/08 7/31/08 2/1/08-7/31/08
Class A
Actual...................................... $1,000.00 $ 976.40 $11.15
Hypothetical................................ 1,000.00 1,013.58 11.36
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 973.76 14.82
Hypothetical................................ 1,000.00 1,009.85 15.09
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 973.76 14.82
Hypothetical................................ 1,000.00 1,009.85 15.09
(5% annual return before expenses)
Class IB
Actual...................................... 1,000.00 977.68 11.16
Hypothetical................................ 1,000.00 1,013.58 11.36
(5% annual return before expenses)
Class IC
Actual...................................... 1,000.00 977.69 11.16
Hypothetical................................ 1,000.00 1,013.58 11.36
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 2.27%, 3.02%,
3.02%, 2.27% and 2.27% for Class A, B, C, IB and IC Shares, respectively,
multiplied by the average account value over the period, multiplied by
182/366 (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 15, 2008 and May 8, 2008, the Board of Trustees, and
the independent trustees voting separately, considered and ultimately determined
that the terms of the investment advisory agreement are fair and reasonable and
approved the continuance of the investment advisory agreement as being in the
best interests of the Fund and its shareholders. In making its determination,
the Board of Trustees considered materials that were specifically prepared by
the investment adviser at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to assist the Board,
relating to the investment advisory agreement review process. The Board also
considered information received periodically about the portfolio, performance,
the investment strategy, portfolio management team and fees and expenses of the
Fund. The Board of Trustees considered the investment advisory agreement over a
period of several months and the trustees held sessions both with the investment
adviser and separate from the investment adviser in reviewing and considering
the investment advisory agreement.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
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 and the Fund's portfolio management
strategy 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
11
services to the Fund and other funds advised by the investment adviser and the
profitability of the investment adviser. These profitability reports are put
together by the investment adviser with the oversight of the Board. The trustees
discuss with the investment adviser its revenues and expenses, including among
other things, revenues for advisory services, portfolio management-related
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, 2008
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
VARIABLE RATE** SENIOR LOAN INTERESTS 127.2%
AEROSPACE/DEFENSE 2.0%
$10,382 Alion Science and
Technology Corp., Term
Loan....................... 5.37 to 5.49% 02/06/13 $ 8,824,570
2,305 Apptis, Inc., Term Loan.... 5.72 to 6.06 12/20/12 2,028,062
3,247 DeCrane Aircraft Holdings,
Inc., Term Loan............ 5.54 02/21/13 3,003,662
9,054 IAP Worldwide Services,
Inc., Term Loan (a)........ 8.25 to 10.50 12/30/12 to 06/30/13 7,037,324
2,944 ILC Industries, Inc., Term
Loan....................... 4.80 02/24/12 2,811,520
3,546 Primus International, Inc.,
Term Loan.................. 4.96 06/07/12 3,227,211
889 Tri-Star Electronics
International, Term Loan... 5.80 to 6.11 02/02/13 790,987
4,819 Vangent, Inc., Term Loan... 4.64 02/14/13 4,530,234
625 Wesco Aircraft Hardware
Corp., Term Loan........... 8.56 03/28/14 610,547
--------------
32,864,117
--------------
AUTOMOTIVE 3.4%
3,283 Acument Global
Technologies, Inc., Term
Loan....................... 6.30 08/11/13 3,086,303
952 Affinia Group, Inc., Term
Loan....................... 5.80 11/30/11 890,012
2,992 Dana Corp., Term Loan...... 6.75 01/31/15 2,776,463
1,714 Delphi Corp., Term Loan.... 7.25 12/31/08 1,708,608
22,379 Ford Motor Co., Term Loan.. 5.46 12/15/13 17,679,494
2,268 Heartland Automotive
Holdings, Inc., Term Loan
(b)........................ 7.75 02/27/12 1,531,219
7,728 Metokote Corp., Term Loan.. 5.47 to 5.80 11/27/11 7,264,249
1,820 Navistar International
Corp., Revolving Credit
Agreement.................. 5.90 to 6.05 01/19/12 1,690,325
5,005 Navistar International
Corp., Term Loan........... 6.05 to 6.29 01/19/12 4,648,394
500 Performance Transportation
Services, Inc., Revolving
Credit Agreement (b) (c)
(d)........................ 7.29 01/26/12 150,092
344 Performance Transportation
Services, Inc., Term Loan
(b) (c) (d)................ 9.25 01/26/12 103,067
1,930 Polypore, Inc., Term
Loan....................... 4.72 07/03/14 1,814,200
</Table>
See Notes to Financial Statements 13
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
AUTOMOTIVE (CONTINUED)
$ 1,105 Precision Partners, Inc.,
Term Loan.................. 10.00% 10/27/13 $ 1,091,445
6,735 Sensata Technologies, Inc.,
Term Loan.................. 4.41 to 4.54 04/27/13 5,887,184
6,067 Veyance Technologies, Inc.,
Term Loan.................. 4.97 to 5.30 07/31/14 5,384,629
--------------
55,705,684
--------------
BANKING 0.7%
13,312 Dollar Financial Corp.,
Term Loan.................. 5.56 to 5.81 10/30/12 11,315,549
--------------
BEVERAGE, FOOD & TOBACCO 8.1%
7,748 Acosta, Inc., Term Loan
(e)........................ 4.72 07/28/13 7,259,305
3,305 BE Foods Investments, Inc.,
Term Loan (a).............. 7.17 07/11/12 3,048,876
13,248 Coleman Natural Foods, LLC,
Term Loan (a).............. 6.96 to 12.16 08/22/12 to 08/22/13 11,822,370
7,412 Culligan International Co.,
Term Loan.................. 4.71 to 5.05 11/24/12 5,207,248
4,913 DCI Cheese Co., Term Loan.. 8.05 08/07/13 4,298,438
31,006 Dole Food Co., Inc., Term
Loan....................... 4.50 to 6.00 04/12/13 28,668,557
7,323 DS Waters of America, Inc.,
Term Loan.................. 4.71 10/25/12 6,846,764
4,050 DSW Holdings, Inc., Term
Loan....................... 6.47 03/07/12 3,523,500
8,297 Farley's & Sathers Candy
Co., Inc., Term Loan....... 6.53 to 11.12 06/15/10 to 03/24/11 7,959,063
5,553 FSB Holdings, Inc., Term
Loan....................... 4.94 to 8.44 09/29/13 to 03/29/14 4,964,663
7,425 LJVH Holdings, Inc.,
(Canada) Term Loan......... 5.30 07/19/14 7,025,906
5,709 Bellisio Foods, Inc., Term
Loan....................... 5.75 04/02/11 5,480,178
5,673 OSI Group, LLC, Term Loan.. 4.80 09/02/11 5,602,059
6,631 PBM Products, LLC, Term
Loan....................... 4.97 09/29/12 6,133,425
6,800 Pierre Foods, Inc., Term
Loan (b)................... 6.97 06/30/10 5,423,131
</Table>
14 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
BEVERAGE, FOOD & TOBACCO (CONTINUED)
$19,458 Pinnacle Foods Finance,
LLC, Term Loan............. 5.21 to 5.56% 04/02/14 $ 17,820,114
894 Smart Balance, Inc., Term
Loan....................... 5.80 05/18/14 858,645
--------------
131,942,242
--------------
BROADCASTING--CABLE 5.2%
3,711 Cequel Communications, LLC,
Term Loan.................. 4.69 to 6.00 11/05/13 3,452,073
68,213 Charter Communications
Operating, LLC, Term Loan.. 4.67 to 5.30 03/06/14 to 09/06/14 59,366,581
744 CW Media Holdings, Inc.,
(Canada) Term Loan......... 6.05 02/15/15 712,739
6,492 Knology, Inc., Term Loan... 5.04 06/30/12 6,037,543
6,345 MCC Iowa, LLC, Term Loan... 3.96 to 4.22 03/31/10 to 01/31/15 5,867,490
1,576 Mediacom Illinois, LLC,
Term Loan.................. 4.21 to 4.22 01/31/15 1,445,980
7,444 RCN Corp., Term Loan....... 5.06 05/25/14 6,705,533
--------------
83,587,939
--------------
BROADCASTING--DIVERSIFIED 1.0%
8,438 Alpha Topco Ltd., (United
Kingdom) Term Loan (e)..... 4.71 to 6.63 12/31/13 to 06/30/14 7,677,706
5,861 Cumulus Media, Inc., Term
Loan....................... 4.21 06/11/14 5,059,914
4,311 NEP II, Inc., Term Loan.... 5.05 02/16/14 3,911,813
--------------
16,649,433
--------------
BROADCASTING--RADIO 2.6%
5,000 Citadel Broadcasting Corp.,
Term Loan.................. 4.10 to 4.44 06/12/14 4,100,000
7,805 CMP KC, LLC, Term Loan..... 6.50 05/03/11 5,073,393
14,000 CMP Susquehanna Corp., Term
Loan....................... 4.49 05/05/13 11,549,845
5,561 Emmis Operating Co., Term
Loan....................... 4.46 to 4.80 11/01/13 4,910,912
1,173 LBI Media, Inc., Term
Loan....................... 3.96 03/31/12 1,014,645
3,988 Multicultural Radio
Broadcasting, Inc., Term
Loan....................... 5.42 to 8.42 12/18/12 to 06/18/13 3,711,421
4,368 NextMedia Operating, Inc.,
Term Loan (a).............. 6.46 to 10.46 11/15/12 to 11/15/13 3,724,830
</Table>
See Notes to Financial Statements 15
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
BROADCASTING--RADIO (CONTINUED)
$ 2,147 Regent Broadcasting, LLC,
Term Loan.................. 5.05% 11/21/13 $ 1,948,153
8,346 Spanish Broadcasting
Systems, Inc., Term Loan... 4.56 06/11/12 6,551,708
--------------
42,584,907
--------------
BROADCASTING--TELEVISION 4.6%
970 Barrington Broadcasting,
LLC, Term Loan............. 4.97 to 5.05 08/12/13 907,009
3,000 FoxCo Acquisition, LLC,
Term Loan.................. 7.25 07/14/15 2,955,000
4,605 Newport Television, LLC,
Term Loan.................. 8.00 09/14/16 4,346,415
4,135 NV Broadcasting, LLC, Term
Loan....................... 5.69 11/01/13 3,732,214
2,421 Sunshine Acquisition, Ltd.,
Term Loan.................. 4.79 03/20/12 2,106,518
72,705 Univision Communications,
Inc., Term Loan............ 4.71 to 5.05 03/29/09 to 09/29/14 60,761,492
--------------
74,808,648
--------------
BUILDINGS & REAL ESTATE 2.8%
2,370 California Coastal
Communities, Inc., Term
Loan....................... 5.22 09/15/11 2,157,064
4,880 Contech Construction
Products, Inc., Term
Loan....................... 4.47 to 4.77 01/31/13 4,270,195
2,500 El Ad IDB Las Vegas, LLC,
Term Loan.................. 5.21 02/10/09 2,312,500
13,880 Ginn LA CS Borrower, LLC,
Term Loan (a) (c).......... 5.97 to 13.50 06/08/11 to 06/08/12 5,244,800
4,489 Kuilima Resort Co., Term
Loan (c)................... 19.46 to 27.48 10/01/08 to 09/30/11 542,624
9,800 Kyle Acquisition Group,
LLC, Term Loan (c)......... 6.00 07/20/09 to 07/20/11 3,405,500
602 Lake at Las Vegas Joint
Venture, LLC, Revolving
Credit Agreement (a) (b)
(c)........................ 16.10 06/20/12 120,370
1,000 Lake at Las Vegas Joint
Venture, LLC, Term Loan (b)
(f)........................ 12.00 03/17/08 1,000,000
5,164 Lake at Las Vegas Joint
Venture, LLC, Term Loan (a)
(b) (c).................... 16.10 06/20/12 1,032,810
3,212 Landsource Communities
Development, LLC, Term Loan
(a) (b) (c)................ 8.25 05/31/09 2,216,421
</Table>
16 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
BUILDINGS & REAL ESTATE (CONTINUED)
$ 2,816 LNR Property Corp., Term
Loan....................... 6.03% 07/12/11 $ 2,271,574
2,805 NLV Holdings, LLC, Term
Loan....................... 6.46 to 10.71 05/09/11 to 05/30/12 1,236,050
4,938 Realogy Corp., Term Loan... 5.46 10/10/13 4,061,145
1,163 Shea Capital I, LLC, Term
Loan....................... 4.46 to 5.00 10/27/11 825,596
1,546 Shea Mountain House, LLC,
Term Loan.................. 4.46 05/11/11 1,190,482
3,272 South Edge, LLC, Term
Loan....................... 5.25 to 7.25 10/31/08 to 10/31/09 2,142,205
360 Standard Pacific Corp.,
Term Loan.................. 4.47 05/05/13 295,800
3,964 Tamarack Resorts, LLC, Term
Loan (c)................... 8.05 to 9.25 05/19/11 2,616,240
3,689 WCI Communities, Inc., Term
Loan....................... 7.72 12/23/10 3,356,619
6,145 Yellowstone Mountain Club,
LLC, Term Loan............. 4.84 09/30/10 5,208,108
--------------
45,506,103
--------------
BUSINESS EQUIPMENT & SERVICES 4.6%
5,181 Affinion Group, Inc., Term
Loan (e)................... 4.96 to 5.18 10/17/12 4,971,505
1,340 Audio Visual Services
Corp., Term Loan........... 5.06 02/28/14 1,142,243
736 BakerCorp, Term Loan....... 4.71 to 5.27 05/08/14 675,867
3,000 Brand Services, Inc., Term
Loan....................... 8.69 to 8.81 02/07/15 2,782,500
4,097 First American Payment
Systems, LP, Term Loan..... 5.63 to 5.69 10/06/13 3,871,901
1,783 GSI Holdings, LLC, Term
Loan....................... 5.65 08/01/14 1,640,491
4,950 HydroChem Industrial
Services, Inc., Term
Loan....................... 4.97 07/12/13 4,776,750
1,149 Information Resources,
Inc., Term Loan............ 4.40 to 5.75 05/16/14 999,204
2,232 InfoUSA, Inc., Term Loan... 4.81 02/14/12 2,131,570
4,487 KAR Holdings, Inc., Term
Loan....................... 5.06 10/20/13 4,011,091
2,564 Katun Corp., Term Loan..... 8.30 06/30/09 2,461,049
7,576 NCO Financial Systems, Term
Loan....................... 6.89 to 7.06 05/15/13 7,372,539
29,266 Nielsen Finance, LLC, Term
Loan....................... 4.73 08/09/13 27,276,218
</Table>
See Notes to Financial Statements 17
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES (CONTINUED)
$ 4,950 RGIS Services, LLC, Term
Loan....................... 4.96 to 5.30% 04/30/14 $ 4,133,250
3,889 Sedgwick CMS Holdings,
Inc., Term Loan............ 5.05 01/31/13 3,704,371
1,990 SMG Holdings, Inc., Term
Loan....................... 5.63 to 6.19 07/27/14 1,870,553
--------------
73,821,102
--------------
CHEMICALS, PLASTICS & RUBBER 6.8%
841 Arizona Chemical Co., Term
Loan....................... 4.64 02/28/13 727,098
2,689 Becker-Underwood, Inc.,
Term Loan.................. 6.21 to 6.55 03/31/10 to 09/30/11 2,615,494
1,300 Bond US Holdings, Inc.,
Term Loan.................. 5.47 07/10/14 1,020,500
12,600 Brenntag Holdings GmbH &
Co. KG, (Germany) Term
Loan....................... 5.07 to 7.07 01/17/14 to 07/17/15 11,396,500
995 Cristal Inorganic Chemicals
US, Inc., Term Loan........ 5.05 05/15/14 843,263
9,839 Ferro Corp., Term Loan..... 4.47 to 4.80 06/06/12 9,371,296
2,905 Fibervisions Delaware
Corp., Term Loan........... 7.05 03/31/13 2,178,498
1,536 Foamex LP, Term Loan....... 5.71 to 7.25 02/12/13 1,209,971
25,528 Hexion Specialty Chemicals,
Inc., Term Loan............ 5.06 05/05/13 22,272,773
14,819 Huntsman International,
LLC, Term Loan............. 4.21 04/19/14 13,937,814
5,708 Ineos Holdings, Ltd.,
(United Kingdom) Term
Loan....................... 4.89 to 5.39 12/16/13 to 12/23/14 4,773,453
8,487 Kraton Polymers, LLC, Term
Loan....................... 4.50 05/12/13 8,046,566
7,386 Lucite International Group
Holdings, Ltd., (United
Kingdom) Term Loan......... 4.92 to 5.05 07/07/13 6,074,622
1,250 Lyondell Chemical Co.,
Revolving Credit
Agreement.................. 5.97 12/30/13 968,750
4,156 Lyondell Chemical Co., Term
Loan....................... 7.00 12/20/14 3,492,405
2,536 MacDermid, Inc., Term
Loan....................... 4.80 04/12/14 2,345,771
2,892 OMNOVA Solutions, Inc.,
Term Loan.................. 4.96 to 5.15 05/22/14 2,385,925
5,000 PQ Corp., Term Loan........ 5.92 to 6.05 07/30/14 4,701,565
896 Solutia, Inc., Term Loan... 8.50 02/28/14 853,804
4,975 Univar, Inc., Term Loan.... 5.80 10/11/14 4,578,557
</Table>
18 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
CHEMICALS, PLASTICS & RUBBER (CONTINUED)
$ 4,328 Valley National Gases,
Inc., Term Loan............ 4.71 to 5.05% 02/28/14 $ 3,938,162
6,050 Wellman, Inc., Term Loan
(b) (c).................... 7.24 to 9.99 02/10/09 to 02/10/10 2,185,000
--------------
109,917,787
--------------
CONSTRUCTION MATERIAL 1.4%
7,346 Axia, Inc., Term Loan...... 5.00 12/21/12 5,509,521
3,537 Beacon Sales Acquisition,
Inc., Term Loan............ 4.65 to 4.78 09/30/13 3,183,300
7,864 Building Materials Corp. of
America, Term Loan......... 5.44 to 8.25 02/22/14 to 09/15/14 6,756,934
5,389 Building Materials Holding
Corp., Term Loan........... 7.30 to 7.50 11/10/11 4,203,080
1,500 Custom Building Products,
Inc., Term Loan............ 7.80 04/29/12 1,192,500
1,996 Panolam Industries
International, Inc., Term
Loan....................... 5.55 09/30/12 1,795,987
--------------
22,641,322
--------------
CONTAINERS, PACKAGING & GLASS 4.0%
3,119 Anchor Glass Container
Corp., Term Loan (e)....... 7.75 06/20/14 3,066,414
3,476 Berlin Packaging, LLC, Term
Loan....................... 5.46 to 5.96 08/17/14 3,250,282
7,461 Berry Plastics Group, Inc.,
Term Loan (e).............. 4.78 04/03/15 6,589,284
9,371 Consolidated Container Co.,
LLC, Term Loan............. 4.71 to 8.30 03/28/14 to 09/28/14 6,352,896
100 Fleming Packaging Corp.,
Revolving Credit Agreement
(b) (c) (d) (f)............ 10.75 03/31/03 0
871 Fleming Packaging Corp.,
Term Loan (b) (c) (d)
(f)........................ 10.75 08/31/04 0
3,613 Graham Packaging Co., Term
Loan....................... 4.88 to 5.06 10/07/11 3,449,775
688 Graphic Packaging
International, Inc.,
Revolving Credit
Agreement.................. 4.71 to 5.04 05/16/13 639,375
9,095 Graphic Packaging
International, Inc., Term
Loan....................... 4.79 to 4.80 05/16/14 8,558,840
1,181 Kranson Industries, Inc.,
Revolving Credit
Agreement.................. 4.71 to 6.25 07/31/13 1,071,568
13,359 Kranson Industries, Inc.,
Term Loan.................. 5.05 07/31/13 12,424,190
</Table>
See Notes to Financial Statements 19
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
CONTAINERS, PACKAGING & GLASS (CONTINUED)
$ 5,885 Packaging Dynamics
Operating Co., Term Loan... 4.80% 06/09/13 $ 4,472,543
4,045 Pertus Sechzehnte GmbH,
(Germany) Term Loan........ 4.84 to 5.09 06/13/15 to 06/13/16 3,112,944
4,743 Smurfit-Stone Container
Corp., Revolving Credit
Agreement.................. 4.75 to 6.25 11/01/09 4,339,845
4,615 Tegrant Holding Corp., Term
Loan....................... 5.56 to 8.31 03/08/14 to 03/08/15 2,819,792
5,482 Unifrax Corp., Term Loan... 4.75 05/02/13 5,180,742
--------------
65,328,490
--------------
DIVERSIFIED MANUFACTURING 1.3%
1,657 Arnold Magnectic
Technologies Corp., Term
Loan....................... 8.56 to 10.25 03/06/11 to 03/06/12 1,623,878
3,500 Euramax International,
Inc., Term Loan............ 10.79 06/29/13 2,467,500
2,406 Jason, Inc., Term Loan..... 4.96 04/30/10 2,165,091
6,016 Mueller Water Products,
Inc., Term Loan............ 4.21 to 4.55 05/24/14 5,650,491
6,714 MW Industries, Inc., Term
Loan....................... 5.81 to 7.56 11/01/13 6,339,944
2,224 Wire Rope Corp. of America,
Inc., Term Loan............ 5.05 02/08/14 2,057,018
--------------
20,303,922
--------------
DURABLE CONSUMER PRODUCTS 0.2%
3,181 Brown Jordan International,
Inc., Term Loan............ 6.66 to 8.00 04/30/12 2,973,992
--------------
ECOLOGICAL 0.5%
980 Energy Solutions, LLC, Term
Loan....................... 4.71 05/28/13 958,420
1,162 Environmental Systems
Products Holdings, Term
Loan....................... 13.50 09/12/12 1,103,980
2,844 LVI Services, Inc., Term
Loan....................... 7.67 to 7.80 11/16/11 2,395,764
1,350 Synagro Technologies, Inc.,
Term Loan.................. 7.44 10/02/14 924,750
2,729 Waste Services, Inc., Term
Loan....................... 5.15 03/31/11 2,711,977
--------------
8,094,891
--------------
</Table>
20 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
EDUCATION & CHILD CARE 3.1%
$ 6,000 Bright Horizons Family
Solutions, Inc., Term
Loan....................... 7.50% 05/28/15 $ 5,919,378
24,813 Cengage Learning Holdings
II, LP, Term Loan.......... 4.96 07/05/14 21,986,207
3,182 Educate, Inc., Term Loan... 5.05 to 8.06 06/14/13 to 06/14/14 2,923,595
9,474 Education Management, LLC,
Term Loan.................. 4.56 06/01/13 8,700,669
12,406 Nelson Education, Ltd.,
(Canada) Term Loan......... 5.30 07/05/14 11,010,547
--------------
50,540,396
--------------
ELECTRONICS 2.9%
7,802 Dealer Computer Services,
Inc., Term Loan............ 4.80 to 8.30 10/26/12 to 10/26/13 7,252,219
1,439 Deutsche Connector Group,
(France) Term Loan......... 5.38 to 5.63 06/22/14 to 06/22/15 1,328,577
4,303 Edwards Ltd., (Cayman
Islands II) Term Loan...... 4.64 to 8.39 05/31/14 to 11/30/14 3,236,223
815 H3C Holdings, Ltd., (Cayman
Islands) Term Loan......... 5.63 09/28/12 704,975
4,913 Infor Enterprise Solutions
Holdings, Inc., Term
Loan....................... 6.55 07/28/12 4,101,938
1,687 Intergraph Corp., Term
Loan....................... 4.65 05/29/14 1,610,885
7,371 Kronos, Inc., Term Loan.... 5.05 06/11/14 6,781,714
2,621 Network Solutions, LLC,
Term Loan.................. 4.97 to 5.31 03/07/14 2,201,605
2,462 Nuance Communications,
Inc., Term Loan............ 4.97 03/31/13 2,321,666
1,343 ON Semiconductor Corp.,
Term Loan.................. 4.55 09/03/13 1,278,831
13,474 Open Solutions, Inc., Term
Loan....................... 5.15 01/23/14 11,958,455
392 Stratus Technologies, Inc.,
Term Loan.................. 6.55 03/29/11 309,680
198 Sungard Data Systems, Inc.,
Revolving Credit
Agreement.................. 4.46 to 6.00 08/11/11 178,294
2,713 Verint Systems, Inc., Term
Loan....................... 5.87 05/25/14 2,469,265
1,985 X-Rite, Inc., Term Loan.... 9.51 10/24/12 1,707,100
--------------
47,441,427
--------------
</Table>
See Notes to Financial Statements 21
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
ENTERTAINMENT & LEISURE 5.5%
$ 7,377 Bombardier Recreational
Products, Inc., (Canada)
Term Loan.................. 5.29% 06/28/13 $ 6,750,152
3,776 Cedar Fair, LP, Term
Loan....................... 4.46 to 6.00 08/30/12 3,561,798
407 Cinemark USA, Inc., Term
Loan....................... 4.43 to 4.93 10/05/13 384,927
8,741 Fender Musical Instruments
Corp., Term Loan........... 5.05 to 5.17 06/09/14 8,085,733
1,998 Gibson Guitar Corp., Term
Loan....................... 5.30 12/29/13 1,857,861
4,000 Hicks Sports Group, LLC,
Term Loan.................. 5.31 12/22/10 3,520,000
53,972 Metro-Goldwyn-Mayer
Studios, Inc., Term Loan... 6.05 04/08/12 41,423,383
1,949 Mets, LP, Term Loan........ 4.46 07/25/10 1,773,200
5,670 Panavision, Inc., Term
Loan....................... 6.15 to 6.30 03/30/11 4,819,669
3,739 Playcore Holdings, Inc.,
Term Loan.................. 5.31 to 6.50 02/21/14 3,402,313
3,957 Regal Cinemas, Inc., Term
Loan....................... 4.30 10/27/13 3,737,133
500 True Temper Sports, Inc.,
Revolving Credit
Agreement.................. 6.05 03/15/09 440,000
10,236 True Temper Sports, Inc.,
Term Loan.................. 5.89 to 8.30 03/15/11 to 06/30/11 9,089,577
--------------
88,845,746
--------------
FARMING & AGRICULTURE 0.1%
2,000 WM. Bolthouse Farms, Inc.,
Term Loan.................. 8.30 12/16/13 1,910,000
--------------
FINANCE 5.2%
3,270 DCS Business Services,
Inc., Term Loan............ 8.50 to 11.25 02/04/11 to 08/04/11 2,831,151
27,837 First Data Corp., Term
Loan....................... 5.21 to 5.55 09/24/14 25,671,603
3,726 Grosvenor Capital
Management Holdings, LLP,
Term Loan.................. 4.46 to 4.68 12/05/13 3,558,631
10,352 iPayment, Inc., Term
Loan....................... 4.46 to 4.80 05/10/13 8,954,126
8,372 LPL Holdings, Inc., Term
Loan....................... 4.46 to 4.80 06/28/13 7,953,178
3,491 Metavante Corp., Term
Loan....................... 4.62 11/03/14 3,277,411
</Table>
22 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
FINANCE (CONTINUED)
$ 8,400 National Processing Co.
Group, Inc., Term Loan..... 5.47 to 9.30% 09/29/12 to 09/29/14 $ 6,977,250
3,325 Nuveen Investments, Inc.,
Term Loan.................. 5.46 11/13/14 3,083,937
10,061 Oxford Acquisition III,
Ltd., (United Kingdom) Term
Loan....................... 4.55 05/11/14 9,157,599
7,463 RJO Holdings Corp., Term
Loan....................... 5.47 to 9.22 07/12/14 to 07/12/15 4,787,187
10,139 Transfirst Holdings, Inc.,
Term Loan.................. 5.56 to 8.81 06/15/14 to 06/15/15 8,778,981
--------------
85,031,054
--------------
GROCERY 0.1%
1,919 Roundy's Supermarkets,
Inc., Term Loan............ 5.21 11/03/11 1,844,665
--------------
HEALTH & BEAUTY 0.8%
5,725 American Safety Razor Co.,
Term Loan.................. 4.97 to 8.89 07/31/13 to 01/30/14 5,315,415
10,365 Marietta Intermediate
Holding Corp., Term Loan
(a)........................ 7.67 to 12.00 12/17/10 to 12/17/11 2,765,568
5,622 Philosophy, Inc., Term
Loan....................... 4.47 03/16/14 4,947,642
--------------
13,028,625
--------------
HEALTHCARE 8.5%
6,849 American Medical Systems,
Inc., Term Loan............ 4.94 07/20/12 6,455,479
7,425 Catalent Pharma Solutions,
Inc., Term Loan............ 5.05 04/10/14 6,515,438
14,764 Community Health Systems,
Inc., Term Loan............ 4.71 to 4.90 07/25/14 13,999,999
2,228 Concentra, Inc., Term
Loan....................... 5.05 06/25/14 1,932,356
4,997 CRC Health Group, Inc.,
Term Loan.................. 5.05 02/06/13 4,634,895
7,052 DSI Renal, Inc., Term
Loan....................... 5.05 03/31/13 6,100,099
694 Genoa Healthcare Group,
LLC, Term Loan............. 6.75 to 7.00 08/10/12 670,560
361 Golden Living, Term Loan... 5.21 03/14/11 340,512
8,165 Harlan Sprague Dawley,
Inc., Term Loan............ 4.96 to 6.50 07/11/14 7,634,700
6,178 HCA, Inc., Term Loan....... 4.30 to 5.05 11/17/12 to 11/17/13 5,810,743
7,409 HCR Healthcare, LLC, Term
Loan....................... 4.96 11/09/14 6,871,785
</Table>
See Notes to Financial Statements 23
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
$14,996 Health Management
Associates, Inc., Term
Loan....................... 4.55% 02/28/14 $ 13,894,617
5,948 Iasis Healthcare, LLC, Term
Loan....................... 4.46 03/15/14 5,558,577
10,890 Inverness Medical
Innovations, Inc., Term
Loan....................... 4.81 06/26/14 10,291,050
18,587 Multiplan, Inc., Term
Loan....................... 5.00 04/12/13 17,616,867
1,000 Select Medical Corp.,
Revolving Credit
Agreement.................. 4.96 to 5.37 02/24/11 847,500
2,406 Sterigenics International,
Inc., Term Loan............ 5.03 to 5.39 11/21/13 2,213,597
2,423 Sun Healthcare Group, Inc.,
Term Loan.................. 4.65 to 5.04 04/12/14 2,268,836
336 Surgical Care Affiliates,
LLC, Revolving Credit
Agreement.................. 5.05 06/29/13 278,880
11,880 Surgical Care Affiliates,
LLC, Term Loan............. 5.05 12/29/14 10,513,800
10,687 United Surgical Partners
International, Inc., Term
Loan....................... 4.47 to 5.02 04/19/14 9,725,358
4,455 Viant Holdings, Inc., Term
Loan....................... 5.05 06/25/14 3,831,300
--------------
138,006,948
--------------
HOME & OFFICE FURNISHINGS, HOUSEWARES & DURABLE CONSUMER PRODUCTS 1.0%
9,868 Generation Brands, LLC,
Term Loan.................. 7.13 to 9.06 12/20/12 to 06/20/13 5,263,599
625 Hunter Fan Co., Revolving
Credit Agreement........... 4.46 04/16/13 481,250
2,207 Hunter Fan Co., Term Loan.. 5.18 to 9.47 04/16/14 to 10/16/14 1,672,725
494 Lenox, Inc., Term Loan..... 7.30 to 7.31 04/20/13 357,969
2,321 Mattress Holding Corp.,
Inc., Term Loan............ 4.72 01/18/14 1,682,495
7,400 National Bedding Co., LLC,
Term Loan.................. 7.46 08/31/12 5,291,000
1,250 Sealy Mattress Co.,
Revolving Credit
Agreement.................. 4.21 to 4.55 04/06/10 1,112,500
--------------
15,861,538
--------------
</Table>
24 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
HOTELS, MOTELS, INNS & GAMING 11.1%
$ 7,610 BLB Worldwide Holdings,
Inc., Term Loan (a)........ 6.72 to 7.19% 08/23/11 to 07/18/12 $ 4,988,109
13,428 Cannery Casino Resorts,
LLC, Term Loan............. 4.93 to 6.95 05/18/13 to 05/18/14 12,848,891
4,117 Golden Nugget, Inc., Term
Loan....................... 4.46 to 5.72 06/30/14 to 12/31/14 3,202,322
8,937 Greektown Casino, LLC, Term
Loan (b)................... 7.44 to 7.50 12/03/12 8,202,218
883 Greektown Holdings, LLC,
Term Loan.................. 9.75 06/01/09 887,202
14,772 Green Valley Ranch Gaming,
LLC, Term Loan............. 4.64 to 4.80 02/16/14 11,841,836
4,292 Greenwood Racing, Inc.,
Term Loan.................. 4.72 11/28/11 4,013,166
52,481 Harrah's Operating Co.,
Inc., Term Loan............ 5.80 to 9.25 01/28/15 to 01/28/18 42,867,946
7,927 Isle of Capri Casinos,
Inc., Term Loan............ 4.55 07/26/14 6,863,509
37,628 Las Vegas Sands, LLC/
Venetian Casino, Term
Loan....................... 4.56 05/23/14 32,600,014
3,700 Magnolia Hill, LLC, Term
Loan....................... 5.72 10/30/13 3,478,000
20,912 New World Gaming Partners
Holdings, Ltd., Term
Loan....................... 5.28 09/30/14 18,063,172
2,315 Penn National Gaming, Inc,
Term Loan.................. 4.55 10/03/12 2,227,066
11,835 Venetian Macau, Ltd., Term
Loan....................... 5.06 05/25/12 to 05/26/13 12,280,443
6,667 Wynn Resorts, Ltd., Term
Loan....................... 4.72 06/21/10 6,233,333
9,464 Yonkers Racing Corp., Term
Loan....................... 10.50 08/12/11 9,417,138
--------------
180,014,365
--------------
INSURANCE 3.6%
5,624 Alliant Holdings I, Inc.,
Term Loan.................. 5.80 11/01/14 5,202,354
9,900 AmWins Group, Inc., Term
Loan....................... 4.96 to 5.15 06/08/13 8,068,500
653 Applied Systems, Inc., Term
Loan....................... 5.30 09/26/13 620,496
2,377 Audatex North America,
Inc., Term Loan............ 4.79 05/16/14 2,234,517
3,069 Conseco, Inc., Term Loan... 4.46 10/10/13 2,691,008
9,991 HMSC Holdings Corp., Term
Loan....................... 5.04 to 8.29 04/03/14 to 10/03/14 7,345,812
</Table>
See Notes to Financial Statements 25
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
INSURANCE (CONTINUED)
$ 8,028 Mitchell International,
Inc., Term Loan............ 4.80 to 8.06% 03/28/14 to 03/28/15 $ 7,697,369
4,167 USI Holdings Corp.,
Revolving Credit
Agreement.................. 4.97 05/05/13 3,625,000
13,200 USI Holdings Corp., Term
Loan....................... 5.56 05/05/14 12,210,000
9,994 Vertafore, Inc., Term
Loan....................... 5.14 to 8.64 01/31/12 to 01/31/13 9,108,543
--------------
58,803,599
--------------
MACHINERY 0.3%
1,930 Goodman Global, Inc., Term
Loan....................... 7.50 02/13/14 1,909,494
2,978 Mold-Masters Luxembourg
Holdings, S.A., Term
Loan....................... 6.00 10/11/14 2,709,525
--------------
4,619,019
--------------
MEDICAL PRODUCTS & SERVICES 1.9%
3,473 Accellent, Inc., Term
Loan....................... 5.14 11/22/12 3,143,042
4,197 Advanced Medical Optics,
Inc., Term Loan............ 4.42 to 4.63 04/02/14 3,855,879
8,780 AGA Medical Corp., Term
Loan....................... 4.70 to 4.72 04/28/13 8,340,641
8,880 Carestream Health, Inc.,
Term Loan.................. 4.46 to 4.80 04/30/13 7,836,794
8,500 VWR Funding, Inc., Term
Loan....................... 4.96 06/29/14 7,724,375
--------------
30,900,731
--------------
MINING, STEEL, IRON & NON-PRECIOUS METALS 0.0%
775 John Maneely Co., Term
Loan....................... 6.02 to 6.04 12/08/13 711,598
--------------
NATURAL RESOURCES 1.1%
255 Boston Generating, LLC,
Revolving Credit Agreement
(e)........................ 5.05 12/20/13 238,185
4,966 Boston Generating, LLC,
Term Loan (e).............. 5.05 to 5.18 12/20/13 4,637,963
1,120 CDX Funding, LLC, Term Loan
(c)........................ 12.25 03/31/13 907,200
2,912 Dresser, Inc., Term Loan... 4.71 to 4.97 05/04/14 2,800,115
10,433 Western Refining, Inc.,
Term Loan.................. 7.75 05/30/14 9,455,265
--------------
18,038,728
--------------
</Table>
26 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
NON-DURABLE CONSUMER PRODUCTS 2.7%
$ 4,049 Amscan Holdings, Inc., Term
Loan....................... 4.89 to 5.05% 05/25/13 $ 3,562,900
6,118 Easton-Bell Sports, Inc.,
Term Loan.................. 4.39 to 4.40 03/16/12 5,559,514
11,009 Huish Detergents, Inc.,
Term Loan.................. 4.81 to 7.06 04/26/14 to 10/26/14 10,067,470
8,764 KIK Custom Products, Inc.,
Term Loan.................. 4.72 to 7.46 05/31/14 to 11/30/14 5,350,640
2,164 Mega Brands, Inc., (Canada)
Term Loan.................. 4.75 to 8.25 07/26/12 1,893,500
651 Spectrum Brands, Inc.,
Revolving Credit
Agreement.................. 6.47 03/30/13 583,122
12,864 Spectrum Brands, Inc., Term
Loan....................... 6.46 to 6.79 03/30/13 11,518,524
1,800 Targus Group International,
Inc., Term Loan............ 11.35 05/22/13 1,408,500
4,155 Yankee Candle Co., Inc.,
Term Loan.................. 4.46 to 4.81 02/06/14 3,760,014
--------------
43,704,184
--------------
PAPER & FOREST PRODUCTS 0.8%
2,400 Ainsworth Lumber Co., Ltd.,
Term Loan.................. 7.50 06/26/14 2,133,000
1,971 Tidi Products, LLC, Term
Loan....................... 5.79 to 7.29 12/31/11 1,853,193
373 Verso Paper Holdings, LLC,
Term Loan.................. 9.03 02/01/13 310,797
7,244 White Birch Paper Co.,
(Canada) Term Loan......... 5.56% 05/08/14 5,323,988
3,042 Xerium Technologies, Inc.,
Term Loan.................. 8.30 05/18/12 2,684,891
--------------
12,305,869
--------------
PERSONAL & MISCELLANEOUS SERVICES 0.1%
1,484 Omniflight Helicopters,
Inc., Term Loan............ 7.86 to 9.25 06/30/11 to 09/30/12 1,379,841
--------------
1,379,841
--------------
PHARMACEUTICALS 0.3%
4,478 Generics International,
Inc., Term Loan............ 6.30 10/31/14 4,208,850
--------------
PRINTING & PUBLISHING 13.6%
4,950 Advanstar Communications,
Inc., Term Loan............ 5.05 05/31/14 3,786,750
3,232 American Media Operations,
Inc., Term Loan............ 5.99 01/31/13 3,013,968
</Table>
See Notes to Financial Statements 27
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
PRINTING & PUBLISHING (CONTINUED)
$ 1,671 Ascend Media Holdings, LLC,
Term Loan.................. 6.68 to 6.81% 01/31/12 $ 877,404
1,929 Black Press Group, Ltd.,
(Canada) Term Loan......... 4.65 08/02/13 1,755,120
5,329 Canon Communications, LLC,
Term Loan.................. 5.46 05/31/11 5,168,976
1,956 Caribe Media, Inc., Term
Loan....................... 4.72 to 5.04 03/31/13 1,750,631
10,491 Cygnus Business Media,
Inc., Term Loan............ 6.46 to 6.79 07/13/09 9,966,687
2,500 Dex Media West, LLC, Term
Loan....................... 7.00 10/24/14 2,369,533
995 DRI Holdings, Inc., Term
Loan....................... 5.81 07/03/14 885,622
13,946 Endurance Business Media,
Inc., Term Loan............ 5.22 to 9.72 07/26/13 to 01/26/14 11,129,448
5,586 Hanley Wood, LLC, Term
Loan....................... 4.71 03/08/14 4,412,674
8,110 F&W Publications, Inc.,
Term Loan.................. 5.02 to 7.05 02/05/13 to 08/05/13 5,677,250
2,078 Gatehouse Media, Inc.,
Revolving Credit
Agreement.................. 4.46 to 6.00 02/28/14 1,350,375
12,375 Gatehouse Media, Inc., Term
Loan....................... 4.65 to 4.80 08/28/14 7,440,469
8,240 Haights Cross Operating
Co., Term Loan............. 6.18 to 7.18 08/20/08 7,992,377
4,433 Idearc, Inc., Term Loan.... 4.47 to 4.80 11/17/14 3,318,834
1,551 Intermedia Outdoor, Inc.,
Term Loan.................. 5.80 01/31/13 1,291,520
1,598 Knowledgepoint360 Group,
LLC, Term Loan............. 5.93 to 9.68 04/26/14 to 04/26/15 1,508,130
2,500 Local Insight Regatta
Holdings, Inc., Term
Loan....................... 7.75 04/23/15 2,281,250
2,262 MC Communications, LLC,
Term Loan.................. 4.97 to 5.52 12/31/10 1,187,459
7,303 MediaNews Group, Inc., Term
Loan....................... 5.75 to 6.25 12/30/10 to 08/02/13 6,026,726
11,188 Merrill Communications,
LLC, Term Loan............. 4.92 to 9.52 05/15/11 to 11/15/13 9,194,715
3,711 Network Communications,
Inc., Term Loan............ 4.81 to 5.18 11/30/12 3,247,205
7,404 Penton Media, Inc., Term
Loan....................... 4.71 to 7.80 02/01/13 to 02/01/14 5,594,875
3,337 Proquest CSA, LLC, Term
Loan....................... 5.14 to 5.30 02/09/14 3,186,517
</Table>
28 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
PRINTING & PUBLISHING (CONTINUED)
$ 3,703 Questex Media Group, Inc.,
Term Loan.................. 5.68 to 5.72% 05/04/14 $ 3,406,300
12,936 Reader's Digest
Association, Inc., Term
Loan....................... 4.46 to 4.68 03/02/14 10,930,710
6,955 R.H. Donnelley, Inc., Term
Loan....................... 6.43 to 6.75 06/30/11 6,637,042
791 SGS International, Inc.,
Term Loan.................. 5.31 12/30/11 736,081
1,625 Source Media, Inc., Term
Loan....................... 7.81 11/08/11 1,518,982
1,489 Summit Business Media
Intermediate, Term Loan.... 5.22 07/06/14 1,265,437
3,545 Thomas Nelson Publishers,
Term Loan.................. 6.25 06/12/12 3,066,737
66,667 Tribune Co., Bridge Loan... 8.29 12/20/15 40,000,000
54,400 Tribune Co., Term Loan..... 5.79 05/19/14 39,066,000
10,313 Yell Group, PLC, (United
Kingdom) Term Loan......... 3.71 to 4.46 04/30/11 to 02/10/13 8,991,042
--------------
220,032,846
--------------
RESTAURANTS & FOOD SERVICE 2.2%
9,322 Advantage Sales &
Marketing, LLC, Term Loan
(e)........................ 4.46 to 4.81 03/29/13 8,743,687
5,022 Arby's Restaurant Group,
Inc., Term Loan (e)........ 4.71 to 5.05 07/25/12 4,737,316
3,168 Center Cut Hospitality,
Inc., Term Loan............ 5.16 07/06/14 2,882,880
5,859 NPC International, Inc.,
Term Loan.................. 4.21 to 4.56 05/03/13 5,419,911
262 OSI Restaurant Partners,
LLC, Revolving Credit
Agreement.................. 4.85 06/14/13 220,054
2,938 OSI Restaurant Partners,
LLC, Term Loan............. 5.13 06/14/14 2,468,203
5,900 Sagittarius Restaurants,
LLC, Term Loan............. 9.50 03/29/13 4,645,873
1,900 Sbarro, Inc., Term Loan.... 4.96 01/31/14 1,567,108
1,091 Volume Services America,
Inc., Revolving Credit
Agreement.................. 7.50 to 8.50 04/01/10 992,535
3,571 Volume Services America,
Inc., Term Loan............ 7.50 to 8.50 10/01/10 3,249,692
--------------
34,927,259
--------------
</Table>
See Notes to Financial Statements 29
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
RETAIL--OIL & GAS 0.3%
$ 4,466 The Pantry, Inc., Term
Loan....................... 4.22% 05/15/14 $ 4,019,734
--------------
RETAIL--SPECIALTY 0.7%
11,568 Nebraska Book Co., Inc.,
Term Loan.................. 5.13 03/04/11 10,874,174
718 Visant Holding Corp.,
Revolving Credit
Agreement.................. 4.21 to 5.75 10/04/10 710,325
--------------
11,584,499
--------------
RETAIL--STORES 3.3%
20,000 Dollar General Corp., Term
Loan....................... 5.21 to 5.55 07/06/14 18,572,920
7,327 General Nutrition Centers,
Inc., Term Loan............ 5.04 to 5.06 09/16/13 6,521,430
9,500 Guitar Center, Inc., Term
Loan....................... 5.96 10/09/14 8,288,750
13,084 Michael's Stores, Inc.,
Term Loan.................. 4.75 10/31/13 10,562,240
3,496 Rite Aid Corp, Term Loan... 6.00 06/04/14 3,144,181
3,081 Sally Holdings, Inc., Term
Loan....................... 4.96 to 5.14 11/16/13 2,948,799
4,318 Savers, Inc., Term Loan.... 5.55 08/11/12 4,101,945
--------------
54,140,265
--------------
TELECOMMUNICATIONS--LOCAL EXCHANGE CARRIERS 1.1%
3,947 Global Tel*Link Corp., Term
Loan....................... 6.30 02/14/13 3,710,599
1,364 Hargray Acquisition Co.,
Term Loan.................. 5.05 06/29/14 1,251,416
3,069 NuVox Transition
Subsidiary, LLC, Term
Loan....................... 6.03 05/31/14 2,827,316
5,699 Orius Corp., LLC, Term Loan
(b) (c) (d)................ 8.50 to 9.00 01/23/09 to 01/23/10 77,500
2,194 Paetec Holding Corp., Term
Loan....................... 4.96 02/28/13 2,107,145
8,027 Sorenson Communications,
Inc., Term Loan............ 5.30 to 9.81 02/16/14 to 04/27/14 7,798,140
--------------
17,772,116
--------------
TELECOMMUNICATIONS--LONG DISTANCE 0.2%
4,000 Level 3 Communications,
Inc., Term Loan............ 4.71 to 5.04 03/13/14 3,640,000
--------------
</Table>
30 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--WIRELESS 1.1%
$ 3,960 Alltel Communications,
Inc., Term Loan (e)........ 5.21% 05/18/15 $ 3,945,797
5,785 Asurion Corp., Term Loan
(e)........................ 5.78 07/03/14 5,456,723
7,481 CommScope, Inc., Term
Loan....................... 4.96 to 5.30 12/27/14 7,210,009
1,326 MetroPCS Wireless, Inc.,
Term Loan.................. 4.75 to 5.13 11/03/13 1,263,538
--------------
17,876,067
--------------
TEXTILES & LEATHER 1.6%
10,906 Gold Toe Investment Corp.,
Term Loan.................. 5.40 to 8.65 10/30/13 to 04/30/14 9,038,777
855 HanesBrands, Inc., Term
Loan....................... 4.15 09/05/12 828,119
5,850 HBI Branded Apparel Ltd.,
Inc., Term Loan............ 6.55 03/05/14 5,724,471
4,300 Levi Strauss & Co., Term
Loan....................... 4.71 03/27/14 3,716,812
3,358 St. John Knits
International, Inc., Term
Loan....................... 5.46 03/21/12 3,139,451
2,957 Varsity Brands, Inc., Term
Loan....................... 5.44 to 5.81 02/22/14 2,794,706
--------------
25,242,336
--------------
TRANSPORTATION--CARGO 0.5%
885 Cardinal Logistics
Management, Inc., Term
Loan....................... 6.21 09/23/13 743,719
4,950 JHCI Acquisitions, Inc.,
Term Loan.................. 4.99 06/19/14 3,879,563
1,633 Kenan Advantage Group,
Inc., Term Loan............ 5.80 12/16/11 1,501,956
2,425 Rail America, Inc., Term
Loan....................... 6.79 08/14/09 2,421,969
--------------
8,547,207
--------------
TRANSPORTATION--PERSONAL 0.3%
7,169 Coach America Holdings,
Inc., Term Loan............ 5.21 to 9.31 04/20/14 to 10/20/14 4,280,982
--------------
TRANSPORTATION-RAIL MANUFACTURING 0.3%
5,001 Helm Holding Corp., Term
Loan....................... 4.71 to 5.01 07/08/11 4,675,582
--------------
</Table>
See Notes to Financial Statements 31
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
PRINCIPAL
AMOUNT STATED
(000) BORROWER COUPON MATURITY* VALUE
- -----------------------------------------------------------------------------------------------
UTILITIES 3.7%
$ 2,256 Bicent Power, LLC, Term
Loan....................... 4.81% 06/30/14 $ 2,107,875
12,953 First Light Power
Resources, Inc., Term
Loan....................... 5.31 to 7.31 11/01/13 to 05/01/14 12,109,603
2,073 InfrastruX Group, Inc.,
Term Loan (a).............. 7.46 11/03/12 1,865,375
2,800 Longview Power, LLC, Term
Loan....................... 5.06 02/28/14 2,495,500
2,000 Mach Gen, LLC, Term Loan... 4.81 02/22/13 to 02/22/14 1,920,500
10,448 NRG Energy, Inc., Term
Loan....................... 4.30 02/01/13 9,965,191
2,112 NSG Holdings, LLC, Term
Loan....................... 4.28 06/15/14 1,990,651
4,200 Primary Energy Operating,
LLC, Term Loan............. 6.47 08/24/09 3,948,000
11,404 Texas Competitive Electric
Holdings Co., LLC, Term
Loan....................... 5.96 to 6.48 10/13/14 10,572,416
8,533 TPF Generation Holdings,
LLC, Term Loan............. 4.80 to 7.05 12/15/13 to 12/15/14 7,942,254
4,694 USPF Holdings, LLC, Term
Loan....................... 4.21 04/11/14 4,318,704
--------------
59,236,069
--------------
TOTAL VARIABLE RATE** SENIOR LOAN INTERESTS 127.2%............... $2,061,218,273
--------------
</Table>
<Table>
<Caption>
DESCRIPTION VALUE
- ---------------------------------------------------------------------------------------------
NOTES 0.7%
Builders FirstSource, Inc. ($6,300,000 par, 6.93% coupon, maturing 02/15/12)
(g)......................................................................... 4,394,250
Compression Polymers Corp. ($2,300,000 par, 9.90% coupon, maturing 07/01/12)
(g)......................................................................... 1,782,500
Environmental Systems Products Holdings, Inc. ($367,153 par, 8.00% coupon,
maturing 03/31/15) (a)...................................................... 152,993
Qwest Corp. ($3,500,000 par, 6.03% coupon, maturing 06/15/13) (g)............ 3,263,750
Verso Paper Holdings, LLC ($1,500,000 par, 6.03% coupon, maturing 08/01/14)
(g) (h)..................................................................... 1,327,500
--------------
TOTAL NOTES 0.7%............................................................ 10,920,993
--------------
EQUITIES 0.0%
Aladdin Gaming Holdings, LLC (8.63% ownership interest, Acquired date
09/03/04, Cost $27,398) (i)................................................. 53,798
DecorateToday.com (198,600 common shares, Acquired date 12/31/98, Cost
$3,505,909) (i) (j) (k)..................................................... 0
</Table>
32 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
<Table>
<Caption>
DESCRIPTION VALUE
- ---------------------------------------------------------------------------------------------
EQUITIES (CONTINUED)
Environmental Systems Products Holdings, Inc. (6,195 common shares, Acquired
date 09/27/07, Cost $0) (i) (k)............................................. $ 0
Environmental Systems Products Holdings, Inc. (2,838 preferred shares,
Acquired date 09/27/07, Cost $70,950) (i) (k)............................... 0
Gentek, Inc. (Canada) (Warrants for 1,597 common shares, Acquired date
10/17/06, Expiration date 10/31/10, Cost $0) (i) (k)........................ 55,768
Gentek, Inc. (Canada) (1,040 common shares, Acquired date 10/17/06, Cost $0)
(i) (k)..................................................................... 30,014
IAP Worldwide Services, Inc. (Warrants for 58,792 common shares, Expiration
date 06/11/15, Acquired date 06/18/08, Cost $0) (i) (k)..................... 0
IAP Worldwide Services, Inc. (Warrants for 25,936 common shares, Expiration
date 06/11/15, Acquired date 06/18/08, Cost $0) (i) (k)..................... 0
IDT Corp. (22,898 common shares) (i)......................................... 40,530
Safelite Realty (48,903 common shares, Acquired date 10/20/00, Cost $0) (i)
(j) (k)..................................................................... 0
--------------
TOTAL EQUITIES 0.0%......................................................... 180,110
--------------
TOTAL LONG-TERM INVESTMENTS 127.9%
(Cost $2,419,348,167)....................................................... 2,072,319,376
--------------
SHORT-TERM INVESTMENTS 1.8%
REPURCHASE AGREEMENTS 1.7%
State Street Bank & Trust Co. ($27,700,000 par collateralized by U.S.
Government obligations in a pooled cash account, interest rate of 1.82%,
dated 07/31/08, to be sold on 08/01/08 at $27,701,400) (e).................. 27,700,000
TIME DEPOSIT 0.1%
State Street Bank & Trust Co. ($1,280,655 par, 0.85% coupon, dated 07/31/08,
to be sold on 08/01/08 at $1,280,685) (e)................................... 1,280,655
--------------
TOTAL SHORT-TERM INVESTMENTS 1.8%
(Cost $28,980,655).......................................................... 28,980,655
--------------
TOTAL INVESTMENTS 129.7%
(Cost $2,448,328,822)....................................................... 2,101,300,031
BORROWINGS (28.3%).......................................................... (458,000,000)
LIABILITIES IN EXCESS OF OTHER ASSETS (1.4%)................................ (22,717,327)
--------------
NET ASSETS 100.0%........................................................... $1,620,582,704
==============
</Table>
Percentages are calculated as a percentage of net assets.
(a) All or a portion of this security is payment-in-kind.
(b) This borrower has filed for protection in federal bankruptcy court.
See Notes to Financial Statements 33
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
(c) This Senior Loan interest is non-income producing.
(d) This borrower is currently in liquidation.
(e) All or a portion of this security is designated in connection with unfunded
loan commitments.
(f) The borrower is in the process of restructuring or amending the terms of
this loan.
(g) Variable rate security. Interest rate shown is that in effect at July 31,
2008.
(h) 144A-Private Placement security which is exempt from registration under Rule
144A of the Securities Act of 1933, as amended. This security may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(i) Non-income producing security.
(j) Affiliated Company
(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 0.01%
of the net assets of the Fund.
* 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.
RATINGS ALLOCATION AS OF 7/31/08 (UNAUDITED)
<Table>
BBB/Baa 0.2%
BB/Ba 37.7
B/B 35.3
CCC/Caa 6.9
CC/Ca 0.3
Non-Rated 19.6
</Table>
RATINGS ALLOCATIONS ARE AS A PERCENTAGE OF DEBT OBLIGATIONS. RATINGS ALLOCATIONS
BASED UPON RATINGS AS ISSUED BY STANDARD AND POOR'S AND MOODY'S, RESPECTIVELY.
BANK LOANS RATED BELOW BBB BY STANDARD AND POOR'S OR BAA BY MOODY'S ARE
CONSIDERED TO BE BELOW INVESTMENT GRADE.
34 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
PORTFOLIO OF INVESTMENTS -- JULY 31, 2008 continued
SWAP AGREEMENTS OUTSTANDING AS OF JULY 31, 2008:
CREDIT DEFAULT SWAPS
<Table>
<Caption>
PAY/
RECEIVE NOTIONAL
REFERENCE BUY/SELL FIXED EXPIRATION AMOUNT UPFRONT
COUNTERPARTY ENTITY/INDEX PROTECTION RATE DATE (000) PAYMENTS VALUE
Goldman Sachs Capital Boston
Markets, LP ............. Generating, LLC Sell 2.00% 06/20/09 $3,000 $0 $ 18,662
Texas
Competitive
Electric
Goldman Sachs Capital Holdings Co.,
Markets, LP ............. LLC Sell 2.85 06/20/10 5,000 0 52,234
K. Hovnanian
Goldman Sachs Credit Enterprises,
Partners, LP ............ Inc. Sell 2.15 06/20/09 1,500 0 (127,460)
K. Hovnanian
Goldman Sachs Credit Enterprises,
Partners, LP ............ Inc. Sell 3.75 06/20/12 1,500 0 (355,131)
Goldman Sachs Credit Standard Pacific
Partners, LP ............ Corp. Sell 3.40 03/20/14 2,500 0 (262,711)
Goldman Sachs Credit Standard Pacific
Partners, LP ............ Corp. Sell 3.70 06/20/14 2,500 0 (237,266)
-------- ---------
TOTAL CREDIT DEFAULT SWAPS................................................................. $0 $(911,672)
======== =========
SWAP COLLATERAL PLEDGED TO COUNTERPARTY
Goldman Sachs Capital Markets, LP.................................................................... 850,000
---------
TOTAL SWAP AGREEMENTS................................................................................. $ (61,672)
=========
</Table>
See Notes to Financial Statements 35
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
July 31, 2008
<Table>
ASSETS:
Unaffiliated Investments (Cost $2,444,822,913).............. $ 2,101,300,031
Affiliated Investments (Cost $3,505,909).................... -0-
---------------
Total Investments (Cost $2,448,328,822).................. 2,101,300,031
Receivables:
Investments Sold........................................... 11,540,520
Interest and Fees.......................................... 10,909,740
Fund Shares Sold........................................... 447,049
Other....................................................... 35,467
---------------
Total Assets............................................. 2,124,232,807
---------------
LIABILITIES:
Payables:
Borrowings................................................. 458,000,000
Investments Purchased...................................... 27,072,141
Income Distributions....................................... 1,599,229
Investment Advisory Fee.................................... 1,202,534
Distributor and Affiliates................................. 715,962
Fund Shares Repurchased.................................... 378,111
Administrative Fee......................................... 348,363
Unfunded Commitments........................................ 9,940,227
Trustees' Deferred Compensation and Retirement Plans........ 1,267,516
Accrued Interest Expense.................................... 1,041,318
Swap Contracts.............................................. 61,672
Accrued Expenses............................................ 2,023,030
---------------
Total Liabilities........................................ 503,650,103
---------------
NET ASSETS.................................................. $ 1,620,582,704
===============
NET ASSETS CONSIST OF:
Capital..................................................... $ 3,160,011,676
Accumulated Undistributed Net Investment Income............. (5,727,631)
Net Unrealized Depreciation................................. (357,880,690)
Accumulated Net Realized Loss............................... (1,175,820,651)
---------------
NET ASSETS.................................................. $ 1,620,582,704
===============
NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $281,436,062 and 37,612,452 shares of
beneficial interest issued and outstanding).............. $ 7.48
Maximum sales charge (3.25%* of offering price).......... 0.25
---------------
Maximum offering price to public......................... $ 7.73
===============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $29,589,431 and 3,955,973 shares of
beneficial interest issued and outstanding).............. $ 7.48
===============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $338,551,434 and 45,262,373 shares of
beneficial interest issued and outstanding).............. $ 7.48
===============
Class IB Shares:
Net asset value and offering price per share (Based on
net assets of $815,140,501 and 108,831,846 shares of
beneficial interest issued and outstanding).............. $ 7.49
===============
Class IC Shares:
Net asset value and offering price per share (Based on
net assets of $155,865,276 and 20,819,136 shares of
beneficial interest issued and outstanding).............. $ 7.49
===============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
36 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended July 31, 2008
<Table>
INVESTMENT INCOME:
Interest from Unaffiliated Investments...................... $ 198,752,344
Other....................................................... 6,377,470
-------------
Total Income............................................ 205,129,814
-------------
EXPENSES:
Investment Advisory Fee..................................... 17,520,494
Distribution and Service Fees
Class A................................................... 1,002,393
Class B................................................... 367,089
Class C................................................... 4,609,444
Class IC.................................................. 288,025
Administration Fee.......................................... 5,119,941
Transfer Agent Fees......................................... 1,898,099
Credit Line................................................. 1,589,881
Professional Fees........................................... 587,796
Custody..................................................... 527,572
Reports to Shareholders..................................... 486,765
Accounting and Administrative Expenses...................... 253,252
Registration Fees........................................... 81,776
Trustees' Fees and Related Expenses......................... 23,491
Depreciation in Trustees' Deferred Compensation Accounts.... (179,993)
Other....................................................... 1,718,012
-------------
Total Operating Expenses................................ 35,894,037
Service Fee Reimbursement............................... 2,534,551
Less Credits Earned on Cash Balances.................... 60,967
-------------
Net Operating Expenses.................................. 33,298,519
Interest Expense........................................ 21,480,499
-------------
Total Expenses.......................................... 54,779,018
-------------
NET INVESTMENT INCOME....................................... $ 150,350,796
=============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Unaffiliated Investments.................................. $(105,017,144)
Affiliated Investments.................................... (1,074,607)
Swap Contracts............................................ 301,942
-------------
Net Realized Loss........................................... (105,789,809)
-------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (159,325,913)
-------------
End of the Period:
Investments........................................... (347,028,791)
Swap Contracts........................................ (911,672)
Unfunded Commitments.................................. (9,940,227)
-------------
(357,880,690)
-------------
Net Unrealized Depreciation During the Period............... (198,554,777)
-------------
NET REALIZED AND UNREALIZED LOSS............................ $(304,344,586)
=============
NET DECREASE IN NET ASSETS FROM OPERATIONS.................. $(153,993,790)
=============
</Table>
See Notes to Financial Statements 37
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, 2008 JULY 31, 2007
--------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 150,350,796 $ 151,757,983
Net Realized Loss....................................... (105,789,809) (30,974,360)
Net Unrealized Depreciation During the Period........... (198,554,777) (66,612,904)
-------------- --------------
Change in Net Assets from Operations.................... (153,993,790) 54,170,719
-------------- --------------
Distributions from Net Investment Income:
Class A Shares........................................ (30,558,128) (20,566,767)
Class B Shares........................................ (2,505,637) (1,891,994)
Class C Shares........................................ (31,496,092) (17,252,543)
Class IB Shares....................................... (72,684,411) (98,251,723)
Class IC Shares....................................... (14,604,503) (21,257,308)
-------------- --------------
Total Distributions..................................... (151,848,771) (159,220,335)
-------------- --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (305,842,561) (105,049,616)
-------------- --------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................... 236,728,243 1,129,759,191
Net Asset Value of Shares Issued Through Dividend
Reinvestment.......................................... 86,607,702 91,115,595
Cost of Shares Repurchased.............................. (918,036,034) (374,391,451)
-------------- --------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS...... (594,700,089) 846,483,335
-------------- --------------
TOTAL INCREASE/DECREASE IN NET ASSETS................... (900,542,650) 741,433,719
NET ASSETS:
Beginning of the Period................................. 2,521,125,354 1,779,691,635
-------------- --------------
End of the Period (Including accumulated undistributed
net investment income of $(5,727,631) and
$(5,136,703), respectively)........................... $1,620,582,704 $2,521,125,354
============== ==============
</Table>
38 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL STATEMENTS continued
Statement of Cash Flows
For the Year Ended July 31, 2008
<Table>
CHANGE IN NET ASSETS FROM OPERATIONS........................ $ (153,993,790)
--------------
Adjustments to Reconcile the Change in Net Assets from
Operations to Net Cash Provided by Operating Activities:
Purchase of Investments................................... (880,390,593)
Principal Repayments/Sales of Investments................. 1,568,794,585
Net Purchases of Short-Term Investments................... 29,981,948
Amortization of Loan Fees................................. 206,367
Net Loan Fees Received.................................... 4,044,722
Accretion of Discounts.................................... (1,635,584)
Net Realized Gain/Loss on Investments..................... 106,091,751
Net Change in Unrealized Appreciation/Depreciation on
Investments............................................. 193,687,482
Decrease in Restricted Cash............................... 712,302
Increase in Receivable for Investments Sold............... (8,734,677)
Decrease in Interest and Fees Receivables and Other
Assets.................................................. 11,739,338
Decrease in Payable for Investments Purchased............. (37,301,083)
Increase in Accrued Expenses and Other Payables........... 8,747
Net Change in Swap Contracts.............................. (1,013,646)
Net Change in Unfunded Commitments........................ 5,030,941
Decrease in Trustees' Deferred Compensation and Retirement
Plans................................................... (177,495)
--------------
Total Adjustments....................................... 991,045,105
--------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 837,051,315
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Shares Sold................................... 245,873,303
Change in Bank Borrowings................................... (97,000,000)
Change in Accrued Interest Expense.......................... (1,324,958)
Payments on Shares Repurchased.............................. (917,854,435)
Cash Distributions Paid..................................... (66,745,225)
--------------
Net Cash from Financing Activities...................... (837,051,315)
--------------
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...................... $ 22,805,457
==============
</Table>
See Notes to Financial Statements 39
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
FEBRUARY 18, 2005
YEAR ENDED JULY 31, (COMMENCEMENT OF
CLASS A SHARES ------------------------------ OPERATIONS) TO
2008 2007 2006 JULY 31, 2005
--------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................... $ 8.65 $ 8.99 $ 9.10 $ 9.12
-------- -------- -------- --------
Net Investment Income (a)............ 0.61 0.66 0.54 0.18
Net Realized and Unrealized Loss..... (1.17) (0.29) (0.15) (0.04)
-------- -------- -------- --------
Total from Investment Operations....... (0.56) 0.37 0.39 0.14
Less Distributions from Net Investment
Income............................... 0.61 0.71 0.50 0.16
-------- -------- -------- --------
NET ASSET VALUE, END OF THE PERIOD..... $ 7.48 $ 8.65 $ 8.99 $ 9.10
======== ======== ======== ========
Total Return (b)....................... -6.70% 4.06% 4.39% 1.75%**
Net Assets at End of the Period (In
millions)............................ $ 281.4 $ 544.7 $ 91.0 $ 54.0
Ratios to Average Net Assets:*
Operating Expense.................... 1.44% 1.41% 1.39% 1.42%
Interest Expense..................... 1.07% 1.09% 0.10% 0.04%
Total Net Expense.................... 2.51% 2.50% 1.49% 1.46%
Net Investment Income................ 7.55% 7.34% 5.95% 4.44%
Portfolio Turnover (c)................. 35% 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................. 1.69% 1.66% 1.64% 1.67%
Interest Expense.................. 1.07% 1.09% 0.10% 0.04%
Total Gross Expense............... 2.76% 2.75% 1.74% 1.71%
Net Investment Income............. 7.30% 7.09% 5.70% 4.19%
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In
thousands)........................... $458,000 $555,000 $195,000 $123,000
Asset Coverage Per $1,000 Unit of
Senior Indebtedness (d).............. $ 4,538 $ 5,543 $ 10,127 $ 18,767
</Table>
(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.
** Non-Annualized
40 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
FEBRUARY 18, 2005
YEAR ENDED JULY 31, (COMMENCEMENT OF
CLASS B SHARES -------------------------------- OPERATIONS) TO
2008 2007 2006 JULY 31, 2005
----------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................... $ 8.65 $ 8.99 $ 9.10 $ 9.12
-------- -------- -------- --------
Net Investment Income (a)............ 0.55 0.60 0.47 0.14
Net Realized and Unrealized Loss..... (1.17) (0.30) (0.14) (0.03)
-------- -------- -------- --------
Total from Investment Operations....... (0.62) 0.30 0.33 0.11
Less Distributions from Net Investment
Income............................... 0.55 0.64 0.44 0.13
-------- -------- -------- --------
NET ASSET VALUE, END OF THE PERIOD..... $ 7.48 $ 8.65 $ 8.99 $ 9.10
======== ======== ======== ========
Total Return (b)....................... -7.43% 3.29% 3.63% 1.41%**
Net Assets at End of the Period (In
millions)............................ $ 29.6 $ 41.5 $ 17.8 $ 10.8
Ratios to Average Net Assets:*
Operating Expense.................... 2.20% 2.18% 2.14% 2.18%
Interest Expense..................... 1.04% 1.10% 0.10% 0.04%
Total Net Expense.................... 3.24% 3.28% 2.24% 2.22%
Net Investment Income................ 6.76% 6.67% 5.24% 3.73%
Portfolio Turnover (c)................. 35% 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................. 2.45% 2.43% 2.39% 2.43%
Interest Expense.................. 1.04% 1.10% 0.10% 0.04%
Total Gross Expense............... 3.49% 3.53% 2.49% 2.47%
Net Investment Income............. 6.51% 6.42% 4.99% 3.48%
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In
thousands)........................... $458,000 $555,000 $195,000 $123,000
Asset Coverage Per $1,000 Unit of
Senior Indebtedness (d).............. $ 4,538 $ 5,543 $ 10,127 $ 18,767
</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
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.
** Non-Annualized
See Notes to Financial Statements 41
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
FEBRUARY 18, 2005
YEAR ENDED JULY 31, (COMMENCEMENT OF
CLASS C SHARES -------------------------------- OPERATIONS) TO
2008 2007 2006 JULY 31, 2005
----------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................... $ 8.65 $ 8.99 $ 9.10 $ 9.12
-------- -------- -------- --------
Net Investment Income (a)............ 0.55 0.59 0.47 0.14
Net Realized and Unrealized Loss..... (1.17) (0.29) (0.14) (0.03)
-------- -------- -------- --------
Total from Investment Operations....... (0.62) 0.30 0.33 0.11
Less Distributions from Net Investment
Income............................... 0.55 0.64 0.44 0.13
-------- -------- -------- --------
NET ASSET VALUE, END OF THE PERIOD..... $ 7.48 $ 8.65 $ 8.99 $ 9.10
======== ======== ======== ========
Total Return (b)....................... -7.43% 3.29% 3.63% 1.41%**
Net Assets at End of the Period (In
millions)............................ $ 338.6 $ 563.5 $ 72.5 $ 55.7
Ratios to Average Net Assets:*
Operating Expense.................... 2.20% 2.16% 2.14% 2.17%
Interest Expense..................... 1.06% 1.09% 0.10% 0.04%
Total Net Expense.................... 3.26% 3.25% 2.24% 2.21%
Net Investment Income................ 6.79% 6.55% 5.19% 3.66%
Portfolio Turnover (c)................. 35% 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................. 2.45% 2.41% 2.39% 2.42%
Interest Expense.................. 1.06% 1.09% 0.10% 0.04%
Total Gross Expense............... 3.51% 3.50% 2.49% 2.46%
Net Investment Income............. 6.54% 6.30% 4.94% 3.41%
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In
thousands)........................... $458,000 $555,000 $195,000 $123,000
Asset Coverage Per $1,000 Unit of
Senior Indebtedness (d).............. $ 4,538 $ 5,543 $ 10,127 $ 18,767
</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 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.
** Non-Annualized
42 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS IB SHARES --------------------------------------------------------
2008 2007 2006 2005 2004
--------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $ 8.66 $ 9.01 $ 9.11 $ 9.00 $ 8.29
-------- -------- -------- -------- --------
Net Investment Income (a)........ 0.61 0.68 0.54 0.37 0.30
Net Realized and Unrealized
Gain/Loss...................... (1.17) (0.32) (0.14) 0.08 0.68
-------- -------- -------- -------- --------
Total from Investment Operations... (0.56) 0.36 0.40 0.45 0.98
-------- -------- -------- -------- --------
Less:
Distributions from Net Investment
Income......................... 0.61 0.71 0.50 0.34 0.25
Return of Capital
Distributions.................. -0- -0- -0- -0- 0.02
-------- -------- -------- -------- --------
Total Distributions................ 0.61 0.71 0.50 0.34 0.27
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD........................... $ 7.49 $ 8.66 $ 9.01 $ 9.11 $ 9.00
======== ======== ======== ======== ========
Total Return (b)................... -6.69% 4.05% 4.38% 5.18% 12.03%
Net Assets at End of the Period (In
millions)........................ $ 815.1 $1,131.8 $1,307.2 $1,639.0 $1,703.1
Ratios to Average Net Assets:
Operating Expense................ 1.45% 1.43% 1.39% 1.38% 1.48%
Interest Expense................. 1.04% 1.11% 0.10% 0.04% 0.00%(e)
Total Net Expense................ 2.49% 2.54% 1.49% 1.42% 1.48%
Net Investment Income............ 7.51% 7.49% 5.87% 4.09% 3.44%
Portfolio Turnover (c)............. 35% 74% 84% 90% 94%
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In
thousands)....................... $458,000 $555,000 $195,000 $123,000 -0-
Asset Coverage Per $1,000 Unit of
Senior Indebtedness (d).......... $ 4,538 $ 5,543 $ 10,127 $ 18,767 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 43
VAN KAMPEN SENIOR LOAN FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS IC SHARES --------------------------------------------------
2008 2007 2006 2005 2004
--------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD................................ $ 8.66 $ 9.00 $ 9.11 $ 9.00 $ 8.29
-------- -------- -------- -------- ------
Net Investment Income (a)............. 0.61 0.68 0.54 0.37 0.28
Net Realized and Unrealized
Gain/Loss........................... (1.17) (0.31) (0.15) 0.07 0.69
-------- -------- -------- -------- ------
Total from Investment Operations........ (0.56) 0.37 0.39 0.44 0.97
-------- -------- -------- -------- ------
Less:
Distributions from Net Investment
Income.............................. 0.61 0.71 0.50 0.33 0.24
Return of Capital Distributions....... -0- -0- -0- -0- 0.02
-------- -------- -------- -------- ------
Total Distributions..................... 0.61 0.71 0.50 0.33 0.26
-------- -------- -------- -------- ------
NET ASSET VALUE, END OF THE PERIOD...... $ 7.49 $ 8.66 $ 9.00 $ 9.11 $ 9.00
======== ======== ======== ======== ======
Total Return (b)........................ -6.69% 4.06% 4.50% 4.98% 11.86%
Net Assets at End of the Period (In
millions)............................. $ 155.9 $ 239.6 $ 291.3 $ 426.0 $332.0
Ratios to Average Net Assets:*
Operating Expense..................... 1.45% 1.43% 1.39% 1.44% 1.62%
Interest Expense...................... 1.04% 1.11% 0.10% 0.04% 0.00%(e)
Total Net Expense..................... 2.49% 2.54% 1.49% 1.48% 1.62%
Net Investment Income................. 7.52% 7.49% 5.85% 4.07% 3.26%
Portfolio Turnover (c).................. 35% 74% 84% 90% 94%
* 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.................. 1.60% 1.58% 1.54% 1.52% N/A
Interest Expense................... 1.04% 1.11% 0.10% 0.04% N/A
Total Gross Expense................ 2.64% 2.69% 1.64% 1.56% N/A
Net Investment Income.............. 7.37% 7.34% 5.70% 3.99% N/A
SENIOR INDEBTEDNESS:
Total Borrowing Outstanding (In
thousands)............................ $458,000 $555,000 $195,000 $123,000 -0-
Asset Coverage Per $1,000 Unit of Senior
Indebtedness (d)...................... $ 4,538 $ 5,543 $ 10,127 $ 18,767 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 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) 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
44 See Notes to Financial Statements
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Senior Loan Fund (the "Fund") is registered as a diversified,
closed-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"). 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.
45
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 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, 2008, 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 adopted the provisions of the Financial Accounting Standards Board ("FASB")
Interpretation No. 48 ("FIN 48") Accounting for Uncertainty in Income Taxes on
July 31, 2008. FIN 48 sets forth a minimum threshold for financial statement
recognition of the benefit of a tax position taken or expected to be taken in a
tax return. The implementation of FIN 48 did not result in any unrecognized tax
benefits in the accompanying financial statements. If applicable, the Fund
recognizes interest accrued related to unrecognized tax benefits in "Interest
Expense" and penalties in "Other" expenses on the Statement of Operations. The
Fund files tax returns with the U.S. Internal Revenue Service and various
states. Generally, each of the tax years in the four year period ended July 31,
2008, remains subject to examination by taxing authorities.
The 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 these losses against any future realized capital
gains. The Fund had capital loss carryforward of $28,927,103, that expired
during the current fiscal year. At July 31, 2008, the Fund had an
46
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
accumulated capital loss carryforward for tax purposes of $1,053,372,268, which
will expire according to the following schedule.
<Table>
<Caption>
AMOUNT EXPIRATION
$ 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
48,144,741 ............................................................ July 31, 2015
10,160,798 ............................................................ July 31, 2016
</Table>
Due to a merger with another regulated investment company, a portion of the
capital loss carry forward referred to above may be limited under Internal
Revenue Code Section 382.
At July 31, 2008, the cost and related gross unrealized appreciation and
depreciation were as follows:
<Table>
Cost of investments for tax purposes........................ $2,449,390,981
==============
Gross tax unrealized appreciation........................... 5,989,595
Gross tax unrealized depreciation........................... (354,080,545)
--------------
Net tax unrealized depreciation on investments.............. $ (348,090,950)
==============
</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, 2008
and 2007 were as follows:
<Table>
<Caption>
2008 2007
Distributions paid from:
Ordinary income........................................... $153,352,927 $158,093,206
============ ============
</Table>
Permanent differences, primarily due to 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, 2008.
<Table>
<Caption>
ACCUMULATED UNDISTRIBUTED ACCUMULATED NET
NET INVESTMENT INCOME REALIZED LOSS CAPITAL
$907,047 $28,020,056 $(28,927,103)
</Table>
47
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
As of July 31, 2008, the components of distributable earnings on tax basis
were as follows:
<Table>
Undistributed ordinary income............................... $241,066
</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, gains or losses recognized on securities for tax purposes but not
for book purposes and post October losses of $104,019,266, which are not
recognized for tax purposes until the first day of the following fiscal year.
F. CREDITS EARNED ON CASH BALANCES During the year ended July 31, 2008, the
Fund's custody fee was reduced by $60,967 as a result of credits earned on cash
balances.
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, 2008, the Fund recognized expenses of
approximately $214,100 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a Trustee of the Fund is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Fund.
Under separate 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, 2008, the Fund recognized expenses of approximately
$131,600 representing Van Kampen Investments Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing legal services to the 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, 2008, the Fund recognized expenses of approximately $1,074,200 representing
transfer agency fees paid to
48
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
VKIS and its affiliates. 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, 2008, Van Kampen, as Distributor for the Fund,
received net commissions on sales of the Fund's Class A Shares of approximately
$81,600 and contingent deferred sales charge (CDSC) on redeemed shares of
approximately $1,025,500. 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 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 7/31/2008 COST
DecorateToday.com--Common Shares.............. 198,600 $-0- $-0- $3,505,909
Safelite Realty--Common Shares................ 48,903 -0- -0- -0-
--------- --------- ----------
$-0- $-0- $3,505,909
========= ========= ==========
</Table>
* Shares were acquired through the restructuring of senior loan interests.
Affiliate transactions during the year ended July 31, 2008 were as follows:
<Table>
<Caption>
PAR/SHARES PAR/SHARES REALIZED INTEREST/
AS OF GROSS GROSS AS OF GAIN/ DIVIDEND
NAME 7/31/2007 ADDITIONS REDUCTIONS 7/31/2008 (LOSS) INCOME
Neoplan USA Corp.--Revolver**... $589,367 $-0- $(589,367) $-0- $ -0- $-0-
Neoplan USA Corp.--Common
Shares**....................... 8,517 -0- (8,517) -0- (85) -0-
Neoplan USA Corp.--Preferred
Shares**....................... 2,262 -0- (2,262) -0- (1,074,522) -0-
----------- ---------
$(1,074,607) $-0-
=========== =========
</Table>
** Due to transactions during the year, the issue is no longer an affiliated
company.
49
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
3. CAPITAL TRANSACTIONS
For the years ended July 31, 2008 and 2007, transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JULY 31, 2008 JULY 31, 2007
----------------------------- -----------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A..................... 13,878,719 $ 114,737,828 60,949,393 $ 551,496,214
Class B..................... 836,922 6,902,503 3,189,043 28,836,440
Class C..................... 12,926,214 106,752,567 59,772,959 540,812,266
Class IB.................... 666,398 5,257,495 510,976 4,619,719
Class IC.................... 386,439 3,077,850 442,098 3,994,552
------------ ------------- ----------- --------------
Total Sales................... 28,694,692 $ 236,728,243 124,864,469 $1,129,759,191
============ ============= =========== ==============
Dividend Reinvestment:
Class A..................... 2,423,210 $ 19,639,786 1,489,889 $ 13,442,544
Class B..................... 169,000 1,366,334 122,843 1,108,324
Class C..................... 1,985,170 16,114,304 1,019,867 9,195,222
Class IB.................... 5,277,787 42,470,643 6,321,648 57,140,202
Class IC.................... 870,220 7,016,635 1,132,161 10,229,303
------------ ------------- ----------- --------------
Total Dividend Reinvestment... 10,725,387 $ 86,607,702 10,086,408 $ 91,115,595
============ ============= =========== ==============
Repurchases:
Class A..................... (41,638,073) $(337,998,500) (9,602,050) $ (86,649,107)
Class B..................... (1,842,800) (14,534,180) (493,624) (4,455,429)
Class C..................... (34,797,603) (276,019,369) (3,701,287) (33,378,803)
Class IB.................... (27,750,464) (224,001,324) (21,362,284) (193,268,547)
Class IC.................... (8,101,152) (65,482,661) (6,266,028) (56,639,565)
------------ ------------- ----------- --------------
Total Repurchases............. (114,130,092) $(918,036,034) (41,425,273) $ (374,391,451)
============ ============= =========== ==============
</Table>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from investments sold and
repaid, excluding short-term investments, were $880,390,593 and $1,568,794,585,
respectively.
5. REPURCHASE OF SHARES
The Fund has a policy of making monthly repurchase offers ("Repurchase Offers")
for the Fund's shares pursuant to Rule 23c-3(b) of the 1940 Act; 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
50
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
15% during any one quarter, the Fund's present intent for monthly offers is up
to between 5% and 8% (However, the Board of Trustees may authorize an additional
2%, if necessary, without extending the repurchase offer.). 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, 2008, the Fund had no quarterly
Repurchase Offers and twelve monthly Repurchase Offers as follows:
<Table>
<Caption>
PERCENT OF
PERCENTAGE OF OUTSTANDING
REPURCHASE OUTSTANDING SHARES NUMBER OF SHARES
REQUEST THE FUND OFFERED SHARES TENDERED TENDERED
DEADLINES TO REPURCHASE (ALL CLASSES) (ALL CLASSES)
August 17, 2007..................... 5.0% 13,371,913 4.5%
September 21, 2007.................. 5.0 8,268,558 2.9
October 19, 2007.................... 5.0 5,545,251 1.9
November 16, 2007................... 5.0 9,949,692 3.5
December 21, 2007................... 5.0 16,587,388 6.0
January 18, 2008.................... 5.0 11,035,963 4.2
February 15, 2008................... 5.0 17,749,669 7.0
March 20, 2008...................... 5.0 12,262,495 5.2
April 18, 2008...................... 5.0 5,349,762 2.3
May 16, 2008........................ 5.0 4,287,456 1.9
June 20, 2008....................... 5.0 5,028,391 2.3
July 17, 2008....................... 5.0 4,693,555 2.1
</Table>
6. COMMITMENTS
Pursuant to the terms of certain of the Senior Loan agreements, the Fund had
unfunded loan commitments of approximately $84,041,300 as of July 31, 2008. 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 $9,940,227 as of July 31, 2008 is reported
as "Unfunded Commitments" on the Statement of Assets and Liabilities.
7. BORROWINGS
The Fund may utilize financial leverage to the maximum extent allowable under
the 1940 Act. Under the 1940 Act, a fund generally may not borrow money greater
than 33 1/3 of the fund's total assets.
The Fund has entered into a $700 million annual revolving credit and
security agreement. This revolving credit agreement is secured by the assets of
the Fund. In connection with this agreement, for the year ended July 31, 2008,
the Fund incurred fees of approximately $1,589,900. For the year ended July 31,
2008, the average daily balance of borrowings under the Amended and Restated
Revolving Credit and Security Agreement was $487,674,863 with a weighted average
interest rate of 4.23%. Effective August 1, 2008, the Fund changed its Credit
and Security Agreement to $500 million.
51
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
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 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, 2008, 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)
Merrill Lynch............................................... $20,000 $12,000
JP Morgan Chase............................................. 20,000 12,000
Citicorp North America...................................... 16,667 10,000
Bank of America, NA......................................... 10,000 6,000
------- -------
$66,667 $40,000
------- -------
</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 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, 2008, the Distributor waived service fees of
$2,534,551. 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 $596,700 and $2,707,500
for Class B Shares and Class C Shares, respectively. These amounts may be
recovered from future payments
52
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
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 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. Payments received or made upon entering into a credit default
swap contract, if any, are recorded as realized gain or loss on the Statement of
Operations upon termination or maturity of the swap. Credit default swaps may
involve greater risks than if a Fund had invested in the issuer directly. Credit
default swaps are subject to general market risk, counterparty risk and credit
risk.
The Fund may also enter into interest rate swaps primarily to preserve a
return or spread on a particular investment or portion of its portfolio, as a
duration management technique or to protect against any increase in the price of
securities the Fund anticipates purchasing at a later date. Interest rate swaps
are contractual agreements to exchange periodic interest payment streams
calculated on a predetermined notional principal amount. Interest rate swaps
generally involve one party paying a fixed interest rate and the other party
paying a variable rate. The Fund will usually enter into interest rate swaps on
a net basis, i.e., the two payment streams are netted out in a cash settlement
on the payment date or dates specified in the instrument, with the Fund
receiving or paying, as the case may be, only the net amount of the two
payments. The Fund accrues the net amount with respect to each interest rate
swap on a daily basis. This net amount is recorded within unrealized
appreciation/depreciation on swap contracts. Upon cash settlement of the
periodic payments,
53
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
the net amount is recorded as realized gain/loss on swap contracts on the
Statement of Operations. Risks may arise as a result of the potential inability
of the counterparties to meet the terms of their contracts.
If there is a default by the counterparty to a swap agreement, the Fund will
have contractual remedies pursuant to the agreements related to the transaction.
Counterparties are required to pledge collateral daily (based on the valuation
of each swap) on behalf of the 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. Cash collateral is disclosed
in the table following the Portfolio of Investments. Cash collateral has been
offset against open swap contracts under the provisions of FASB Interpretation
No. 39: Offsetting of Amounts Related to Certain Contracts an interpretation of
APB Opinion No. 10 and FASB Statement No. 105 and are included within "Swap
Contracts" on the Statement of Assets and Liabilities. For cash collateral
received, the Fund pays a monthly fee to the counterparty based on the effective
rate for Federal Funds. This fee, when paid, is included within realized loss on
swap contracts on the Statement of Operations.
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 PRONOUNCEMENT
In September 2006, Statement of Financial Accounting Standards No. 157, Fair
Value Measurements (FAS 157), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. As of July 31, 2008, the Adviser does not believe the adoption of
FAS 157 will impact the amounts reported in the financial statements, however,
additional disclosures will be required about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported on
the Statement of Operations for a fiscal period.
On March 19, 2008, Financial Accounting Standards Board released Statement
of Financial Accounting Standards No. 161, Disclosures about Derivative
Instruments and Hedging Activities (FAS 161). FAS 161 requires qualitative
disclosures about objectives and strategies for using derivatives, quantitative
disclosures about fair value amounts of and gains and losses on derivative
instruments, and disclosures about credit-risk-related contingent features in
derivative agreements. The application of FAS 161 is required for fiscal years
and interim periods beginning after November 15, 2008. At this time, management
is evaluating the implications of FAS 161 and its impact on the financial
statements has not yet been determined.
13. LEGAL MATTERS
The Fund is one of numerous defendants ("Lenders") that have been named in an
adversary proceeding pending in the Bankruptcy Court of the Southern District of
Florida. The action
54
VAN KAMPEN SENIOR LOAN FUND
NOTES TO FINANCIAL STATEMENTS -- JULY 31, 2008 continued
was filed on July 15, 2008, by the Official Committee of Unsecured Creditors of
home building companies to which the Lenders loaned money through credit
agreements. Plaintiff alleges that monies used to repay the Lenders should be
avoided as fraudulent and preferential transfers under the bankruptcy laws. More
specifically, Plaintiff alleges that subsidiaries of the home building companies
were allegedly forced to become co-borrowers and guarantors of the monies used
to repay the Lenders, and that the subsidiaries did not receive fair
consideration or reasonably equivalent value when they transferred the proceeds
to repay the Lenders. Plaintiff seeks to avoid the transfers and other equitable
relief. The Lenders have moved to dismiss the complaint. That motion is now
pending.
55
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, 2008, the related statements of operations and cash flows for the
year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the 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, 2008, 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, 2008, the results of its operations and
its cash flows for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
September 19, 2008
56
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
JERRY W. MILLER
President and Principal Executive Officer
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
STUART N. SCHULDT
Chief Financial Officer and Treasurer
KEVIN KLINGERT
Vice President
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
522 Fifth Avenue
New York, New York 10036
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
522 Fifth Avenue
New York, New York 10036
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 219286
Kansas City, Missouri 64121-9286
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.
57
VAN KAMPEN SENIOR LOAN FUND
TRUSTEE AND OFFICER INFORMATION
The business and affairs of each 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 each 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 EACH FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (63) Trustee Trustee Chairman and Chief 71 Trustee/Director/Managing
Blistex Inc. since 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. Member of
the Board of Visitors,
Institute for the
Humanities, University of
Michigan.
</Table>
58
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE EACH FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jerry D. Choate (70) Trustee Trustee Prior to January 1999, 71 Trustee/Director/Managing
33971 Selva Road since 2006 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of Amgen Inc., a
("Allstate") and Allstate biotechnological company,
Insurance Company. Prior and Valero Energy
to January 1995, Corporation, an
President and Chief independent refining
Executive Officer of company.
Allstate. Prior to August
1994, various management
positions at Allstate.
Rod Dammeyer (67) Trustee Trustee President of CAC, L.L.C., 71 Trustee/Director/Managing
CAC, L.L.C. since 1988 a private company General Partner of funds
4350 La Jolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Quidel
San Diego, CA 92122-6223 advisory services. Corporation, Stericycle,
Inc. and Trustee of The
Scripps Research
Institute. Prior to
February 2008, Director
of Ventana Medical
Systems, Inc. Prior to
April 2007, Director of
GATX Corporation. Prior
to April 2004, Director
of TheraSense, Inc. Prior
to January 2004, Director
of TeleTech Holdings Inc.
and Arris Group, Inc.
</Table>
59
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE EACH FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Linda Hutton Heagy++ (60) Trustee Trustee Prior to February 2008, 71 Trustee/Director/Managing
4939 South Greenwood since 2006 Managing Partner of General Partner of funds
Chicago, IL 60615 Heidrick & Struggles, an in the Fund Complex.
international executive Trustee on the University
search firm. Prior to of Chicago Medical Center
1997, Partner of Ray & Board, Vice Chair of the
Berndtson, Inc., an Board of the YMCA of
executive recruiting Metropolitan Chicago and
firm. Prior to 1995, a member of the Women's
Executive Vice President Board of the University
of ABN AMRO, N.A., a bank of Chicago.
holding company. Prior to
1990, Executive Vice
President of The Exchange
National Bank.
R. Craig Kennedy (56) Trustee Trustee Director and President of 71 Trustee/Director/Managing
1744 R Street, NW since 2006 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S. Director of First Solar,
foundation created to Inc.
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (72) Trustee Trustee Prior to 1998, President 71 Trustee/Director/Managing
14 Huron Trace since 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.
</Table>
60
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE EACH FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jack E. Nelson (72) Trustee Trustee President of Nelson 71 Trustee/Director/Managing
423 Country Club Drive since 2006 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of the Financial
Industry Regulatory
Authority ("FINRA"),
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
Hugo F. Sonnenschein (67) Trustee Trustee President Emeritus and 71 Trustee/Director/Managing
1126 E. 59th Street since 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>
61
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE EACH FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. (66) Trustee Trustee Chief Communications 71 Trustee/Director/Managing
815 Cumberstone Road since 2006 Officer of the National General Partner of funds
Harwood, MD 20776 Academy of in the Fund Complex.
Sciences/National Trustee of Changing World
Research Council, an Technologies, Inc., an
independent, federally energy manufacturing
chartered policy company, since July 2008.
institution, from 2001 to Director of Fluor Corp.,
November 2003 and Chief an engineering,
Operating Officer from procurement and
1993 to 2001. Prior to construction
1993, Executive Director organization, since
of the Commission on January 2004. Director of
Behavioral and Social Intelligent Medical
Sciences and Education at Devices, Inc., a symptom
the National Academy of based diagnostic tool for
Sciences/National physicians and clinical
Research Council. From labs. Director of the
1980 through 1989, Institute for Defense
Partner of Coopers & Analyses, a federally
Lybrand. funded research and
development center,
Director of the German
Marshall Fund of the
United States, Director
of the Rocky Mountain
Institute and Trustee of
California Institute of
Technology and the
Colorado College.
</Table>
62
VAN KAMPEN SENIOR LOAN FUND
TRUSTEE AND OFFICER INFORMATION 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 INTERESTED TRUSTEE EACH FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (69) Trustee Trustee Partner in the law firm 71 Trustee/Director/Managing
333 West Wacker Drive since 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>
- ------------------------------------
+ See Table D below.
++ As indicated above, prior to February 2008, Ms. Heagy was an employee of
Heidrick and Struggles, an international executive search firm ("Heidrick").
Heidrick has been (and may continue to be) engaged by Morgan Stanley from
time to time to perform executive searches. Such searches have been done by
professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall
procedures exist to ensure that Ms. Heagy will not have any involvement with
any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not
receive any compensation, directly or indirectly, for searches performed by
Heidrick for Morgan Stanley.
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
63
VAN KAMPEN SENIOR LOAN FUND
TRUSTEE AND OFFICER INFORMATION continued
OFFICERS
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER EACH FUND SERVED DURING PAST 5 YEARS
Jerry W. Miller (47) President and Officer President and Principal Executive Officer of funds in the
522 Fifth Avenue Principal Executive since 2008 Fund Complex since May 2008. President and Chief Executive
New York, NY 10036 Officer Officer of Van Kampen Investments since June 2008. Central
Division Director for Morgan Stanley's Global Wealth
Management Group from March 2006 to June 2008. Previously,
Chief Operating Officer of the global proprietary business
of Merrill Lynch Investment Management from 2002 to 2006.
Kevin Klingert (46) Vice President Officer Vice President of funds in the Fund Complex since March
522 Fifth Avenue since 2008 2008. Chief Operating Officer of the Fixed Income portion of
New York, NY 10036 Morgan Stanley Investment Management Inc. since March 2008.
Head of Global Liquidity Portfolio Management and co-Head of
Liquidity Credit Research of Morgan Stanley Investment
Management since December 2007. Managing Director of Morgan
Stanley Investment Management Inc. from December 2007 to
March 2008. Previously, Managing Director on the Management
Committee and head of Municipal Portfolio Management and
Liquidity at BlackRock from October 1991 to January 2007.
Assistant Vice President municipal portfolio manager at
Merrill Lynch from March 1985 to October 1991.
Amy R. Doberman (46) Vice President Officer Managing Director and General Counsel - U.S. Investment
522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and
the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang Yu (41) Vice President Officer Managing Director of Morgan Stanley Investment Management
522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10036 Complex.
</Table>
64
<Table>
<Caption>
VAN KAMPEN SENIOR LOAN FUND
TRUSTEE AND OFFICER INFORMATION continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER EACH FUND SERVED DURING PAST 5 YEARS
John L. Sullivan (53) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza -- Suite Officer since 1996 August 2004. Prior to August 2004, Director and Managing
100 Director of Van Kampen Investments, the Adviser, Van Kampen
Oakbrook Terrace, IL 60181 Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Stuart N. Schuldt (46) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza -- Suite and Treasurer since 2007 Inc. since June 2007. Chief Financial Officer and Treasurer
100 of funds in the Fund Complex since June 2007. Prior to June
Oakbrook Terrace, IL 60181 2007, Senior Vice President of Northern Trust Company,
Treasurer and Principal Financial Officer for Northern Trust
U.S. mutual fund complex.
</Table>
65
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.
522 Fifth Avenue
New York, New York 10036
www.vankampen.com
Copyright (C)2008 Van Kampen Funds Inc.
All rights reserved. Member FINRA/SIPC
18, 118, 218, 59, 359
SLFANN 9/08
(VAN KAMPEN INVESTMENTS LOGO) IU08-04810P-Y07/08
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 June 2008 and the general counsel's
designee set forth in Exhibit C was amended in January 2008. Both editions
of Exhibit B and both editions of Exhibit C are attached.
(d) Not applicable.
(e) Not applicable.
(f)
(1) The 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 Trust's Board of Trustees has determined that it has three "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees: Rod Dammeyer, Jerry D. Choate and R. Craig Kennedy.
Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the audit committee and Board
of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2008
REGISTRANT COVERED ENTITIES(1)
---------- ----------------
AUDIT FEES.............. $128,815 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES... $ 0 $215,000(2)
TAX FEES............. $ 3,000(3) $ 0
ALL OTHER FEES....... $ 0 $ 0
TOTAL NON-AUDIT FEES.... $ 3,000 $215,000
-------- --------
TOTAL................... $131,815 $215,000
======== ========
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
======== ========
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: R.
Craig Kennedy, Jerry D. Choate, Rod Dammeyer
(b) Not applicable.
Item 6. Schedule of Investments.
(a) Please refer to Item #1.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The 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 an MSIM entity has authority to
vote proxies. This Policy is reviewed and updated as necessary to address new
and evolving proxy voting issues and standards.
The MSIM entities covered by this Policy currently include the following: Morgan
Stanley Investment Advisors Inc., Morgan Stanley AIP GP LP, Morgan Stanley
Investment Management Inc., Morgan Stanley Investment Management Limited, Morgan
Stanley Investment Management Company, Morgan Stanley Asset & Investment Trust
Management Co., Limited, Morgan Stanley Investment Management Private Limited,
Van Kampen Asset Management, and Van Kampen Advisors Inc. (each an "MSIM
Affiliate" and collectively referred to as the "MSIM Affiliates" or as "we"
below).
Each MSIM Affiliate will use its best efforts to vote proxies as part of its
authority to manage, acquire and dispose of account assets. With respect to the
MSIM registered management investment companies (Van Kampen, Institutional and
Advisor Funds--collectively referred to herein as the "MSIM Funds"), each MSIM
Affiliate will vote proxies under this Policy pursuant to authority granted
under its applicable investment advisory agreement or, in the absence of such
authority, as authorized by the Board of Directors/Trustees of the MSIM Funds.
An MSIM Affiliate will not vote proxies if the "named fiduciary" for an ERISA
account has reserved the authority for itself, or in the case of an account not
governed by ERISA, the investment management or investment advisory agreement
does not authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will vote
proxies
in a prudent and diligent manner and in the best interests of clients, including
beneficiaries of and participants in a client's benefit plan(s) for which the
MSIM Affiliates manage assets, consistent with the objective of maximizing
long-term investment returns ("Client Proxy Standard"). In certain situations, a
client or its fiduciary may provide an MSIM Affiliate with a proxy voting
policy. In these situations, the MSIM Affiliate will comply with the client's
policy.
Proxy Research Services - RiskMetrics Group ISS Governance Services ("ISS") and
Glass Lewis (together with other proxy research providers as we may retain from
time to time, the "Research Providers") are independent advisers that specialize
in providing a variety of fiduciary-level proxy-related services to
institutional investment managers, plan sponsors, custodians, consultants, and
other institutional investors. The services provided include in-depth research,
global issuer analysis, and voting recommendations. While we may review and
utilize the recommendations of the Research Providers in making proxy voting
decisions, we are in no way obligated to follow such recommendations. In
addition to research, ISS provides vote execution, reporting, and recordkeeping.
Voting Proxies for Certain Non-U.S. Companies - Voting proxies of companies
located in some jurisdictions, particularly emerging markets, may involve
several problems that can restrict or prevent the ability to vote such proxies
or entail significant costs. These problems include, but are not limited to: (i)
proxy statements and ballots being written in a language other than English;
(ii) untimely and/or inadequate notice of shareholder meetings; (iii)
restrictions on the ability of holders outside the issuer's jurisdiction of
organization to exercise votes; (iv) requirements to vote proxies in person; (v)
the imposition of restrictions on the sale of the securities for a period of
time in proximity to the shareholder meeting; and (vi) requirements to provide
local agents with power of attorney to facilitate our voting instructions. As a
result, we vote clients' non-U.S. proxies on a best efforts basis only, after
weighing the costs and benefits of voting such proxies, consistent with the
Client Proxy Standard. ISS has been retained to provide assistance in connection
with voting non-U.S. proxies.
II. GENERAL PROXY VOTING GUIDELINES
To promote consistency in voting proxies on behalf of its clients, we follow
this Policy (subject to any exception set forth herein), including the
guidelines set forth below. These guidelines address a broad range of issues,
and provide general voting parameters on proposals that arise most frequently.
However, details of specific proposals vary, and those details affect particular
voting decisions, as do factors specific to a given company. Pursuant to the
procedures set forth herein, we may vote in a manner that is not in accordance
with the following general guidelines, provided the vote is approved by the
Proxy Review Committee (see Section III for description) and is consistent with
the Client Proxy Standard. Morgan Stanley AIP GP LP will follow the procedures
as described in Appendix A.
We endeavor to integrate governance and proxy voting policy with investment
goals and to follow the Client Proxy Standard for each client. At times, this
may result in split votes, for example when different clients have varying
economic interests in the outcome of a particular voting matter (such as a case
in which varied ownership interests in two companies involved in a merger result
in different stakes in the outcome). We also may split votes at times based on
differing views of portfolio managers, but such a split vote must be approved by
the Proxy Review Committee.
We may abstain on matters for which disclosure is inadequate.
A. ROUTINE MATTERS. We generally support routine management proposals. The
following are examples of routine management proposals:
- Approval of financial statements and auditor reports.
- General updating/corrective amendments to the charter, articles of
association or bylaws.
- Most proposals related to the conduct of the annual meeting, with the
following exceptions. We generally oppose proposals that relate to
"the transaction of such other business which may come before the
meeting," and open-ended requests for adjournment. However, where
management specifically states the reason for requesting an
adjournment and the requested
adjournment would facilitate passage of a proposal that would
otherwise be supported under this Policy (i.e. an uncontested
corporate transaction), the adjournment request will be supported.
We generally support shareholder proposals advocating confidential voting
procedures and independent tabulation of voting results.
B. BOARD OF DIRECTORS
1. Election of directors: In the absence of a proxy contest, we generally
support the board's nominees for director except as follows:
a. We consider withholding support from or voting against interested
directors if the company's board does not meet market standards
for director independence, or if otherwise we believe board
independence is insufficient. We refer to prevalent market
standards as promulgated by a stock exchange or other authority
within a given market (e.g., New York Stock Exchange or Nasdaq
rules for most U.S. companies, and The Combined Code on Corporate
Governance in the United Kingdom). Thus, for an NYSE company with
no controlling shareholder, we would expect that at a minimum a
majority of directors should be independent as defined by NYSE.
Where we view market standards as inadequate, we may withhold
votes based on stronger independence standards. Market standards
notwithstanding, we generally do not view long board tenure alone
as a basis to classify a director as non-independent, although
lack of board turnover and fresh perspective can be a negative
factor in voting on directors.
i. At a company with a shareholder or group that controls the
company by virtue of a majority economic interest in the
company, we have a reduced expectation for board
independence, although we believe the presence of
independent directors can be helpful, particularly in
staffing the audit committee, and at times we may withhold
support from or vote against a nominee on the view the board
or its committees are not sufficiently independent.
ii. We consider withholding support from or voting against a
nominee if he or she is affiliated with a major shareholder
that has representation on a board disproportionate to its
economic interest.
b. Depending on market standards, we consider withholding support
from or voting against a nominee who is interested and who is
standing for election as a member of the company's compensation,
nominating or audit committee.
c. We consider withholding support from or voting against a nominee
if we believe a direct conflict exists between the interests of
the nominee and the public shareholders, including failure to
meet fiduciary standards of care and/or loyalty. We may oppose
directors where we conclude that actions of directors are
unlawful, unethical or negligent. We consider opposing individual
board members or an entire slate if we believe the board is
entrenched and/or dealing inadequately with performance problems,
and/or acting with insufficient independence between the board
and management.
d. We consider withholding support from or voting against a nominee
standing for election if the board has not taken action to
implement generally accepted governance practices for which there
is a "bright line" test. For example, in the context of the U.S.
market, failure to eliminate a dead hand or slow hand poison
pills would be seen as a basis for opposing one or more incumbent
nominees.
e. In markets that encourage designated audit committee financial
experts, we consider voting against members of an audit committee
if no members are designated as such.
f. We consider withholding support from or voting against a nominee
who has failed to attend at least 75% of board meetings within a
given year without a reasonable excuse.
g. We consider withholding support from or voting against a nominee
who serves on the board of directors of more than six companies
(excluding investment companies). We also consider voting against
a director who otherwise appears to have too many commitments to
serve adequately on the board of the company.
2. Board independence: We generally support U.S. shareholder proposals
requiring that a certain percentage (up to 66 2/3%) of the company's
board members be independent directors, and promoting all-independent
audit, compensation and nominating/governance committees.
3. Board diversity: We consider on a case-by-case basis shareholder
proposals urging diversity of board membership with respect to social,
religious or ethnic group.
4. Majority voting: We generally support proposals requesting or
requiring majority voting policies in election of directors, so long
as there is a carve-out for plurality voting in the case of contested
elections.
5. Proxy access: We consider on a case-by-case basis shareholder
proposals to provide procedures for inclusion of shareholder nominees
in company proxy statements.
6. Proposals to elect all directors annually: We generally support
proposals to elect all directors annually at public companies (to
"declassify" the Board of Directors) where such action is supported by
the board, and otherwise consider the issue on a case-by-case basis
based in part on overall takeover defenses at a company.
7. Cumulative voting: We generally support proposals to eliminate
cumulative voting in the U.S. market context. (Cumulative voting
provides that shareholders may concentrate their votes for one or a
handful of candidates, a system that can enable a minority bloc to
place representation on a board). U.S. proposals to establish
cumulative voting in the election of directors generally will not be
supported.
8. Separation of Chairman and CEO positions: We vote on shareholder
proposals to separate the Chairman and CEO positions and/or to appoint
a non-executive Chairman based in part on prevailing practice in
particular markets, since the context for such a practice varies. In
many non-U.S. markets, we view separation of the roles as a market
standard practice, and support division of the roles in that context.
9. Director retirement age and term limits: Proposals recommending set
director retirement ages or director term limits are voted on a
case-by-case basis.
10. Proposals to limit directors' liability and/or broaden indemnification
of directors. Generally, we will support such proposals provided that
the officers and directors are eligible for indemnification and
liability protection if they have acted in good faith on company
business and were found innocent of any civil or criminal charges for
duties performed on behalf of the company.
C. CORPORATE TRANSACTIONS AND PROXY FIGHTS. We examine proposals relating to
mergers, acquisitions and other special corporate transactions (i.e., takeovers,
spin-offs, sales of assets, reorganizations, restructurings and
recapitalizations) on a case-by-case basis. However, proposals for mergers or
other significant transactions that are friendly and approved by the Research
Providers generally will be supported and in those instances will not need to be
reviewed by the Proxy Review
Committee, where there is no portfolio manager objection and where there is no
material conflict of interest. We also analyze proxy contests on a case-by-case
basis.
D. CHANGES IN CAPITAL STRUCTURE.
1. We generally support the following:
- Management and shareholder proposals aimed at eliminating unequal
voting rights, assuming fair economic treatment of classes of
shares we hold.
- Management proposals to increase the authorization of existing
classes of common stock (or securities convertible into common
stock) if: (i) a clear business purpose is stated that we can
support and the number of shares requested is reasonable in
relation to the purpose for which authorization is requested;
and/or (ii) the authorization does not exceed 100% of shares
currently authorized and at least 30% of the total new
authorization will be outstanding.
- Management proposals to create a new class of preferred stock or
for issuances of preferred stock up to 50% of issued capital,
unless we have concerns about use of the authority for
anti-takeover purposes.
- Management proposals to authorize share repurchase plans, except
in some cases in which we believe there are insufficient
protections against use of an authorization for anti-takeover
purposes.
- Management proposals to reduce the number of authorized shares of
common or preferred stock, or to eliminate classes of preferred
stock.
- Management proposals to effect stock splits.
- Management proposals to effect reverse stock splits if management
proportionately reduces the authorized share amount set forth in
the corporate charter. Reverse stock splits that do not adjust
proportionately to the authorized share amount generally will be
approved if the resulting increase in authorized shares coincides
with the proxy guidelines set forth above for common stock
increases.
- Management proposals for higher dividend payouts.
2. We generally oppose the following (notwithstanding management
support):
- Proposals to add classes of stock that would substantially dilute
the voting interests of existing shareholders.
- Proposals to increase the authorized or issued number of shares
of existing classes of stock that are unreasonably dilutive,
particularly if there are no preemptive rights for existing
shareholders.
- Proposals that authorize share issuance at a discount to market
rates, except where authority for such issuance is de minimis, or
if there is a special situation that we believe justifies such
authorization (as may be the case, for example, at a company
under severe stress and risk of bankruptcy).
- Proposals relating to changes in capitalization by 100% or more.
We consider on a case-by-case basis shareholder proposals to increase dividend
payout ratios, in light of market practice and perceived market weaknesses, as
well as individual company payout history and current circumstances. For
example, currently we perceive low payouts to shareholders as a
concern at some Japanese companies, but may deem a low payout ratio as
appropriate for a growth company making good use of its cash, notwithstanding
the broader market concern.
E. TAKEOVER DEFENSES AND SHAREHOLDER RIGHTS
1. Shareholder rights plans: We generally support proposals to require
shareholder approval or ratification of shareholder rights plans
(poison pills). In voting on rights plans or similar takeover
defenses, we consider on a case-by-case basis whether the company has
demonstrated a need for the defense in the context of promoting
long-term share value; whether provisions of the defense are in line
with generally accepted governance principles; and the specific
context if the proposal is made in the midst of a takeover bid or
contest for control.
2. Supermajority voting requirements: We generally oppose requirements
for supermajority votes to amend the charter or bylaws, unless the
provisions protect minority shareholders where there is a large
shareholder. In line with this view, in the absence of a large
shareholder we support reasonable shareholder proposals to limit such
supermajority voting requirements.
3. Shareholder rights to call meetings: We consider proposals to enhance
shareholder rights to call meetings on a case-by-case basis.
4. Reincorporation: We consider management and shareholder proposals to
reincorporate to a different jurisdiction on a case-by-case basis. We
oppose such proposals if we believe the main purpose is to take
advantage of laws or judicial precedents that reduce shareholder
rights.
5. Anti-greenmail provisions: Proposals relating to the adoption of
anti-greenmail provisions will be supported, provided that the
proposal: (i) defines greenmail; (ii) prohibits buyback offers to
large block holders (holders of at least 1% of the outstanding shares
and in certain cases, a greater amount, as determined by the Proxy
Review Committee) not made to all shareholders or not approved by
disinterested shareholders; and (iii) contains no anti-takeover
measures or other provisions restricting the rights of shareholders.
6. Bundled proposals: We may consider opposing or abstaining on proposals
if disparate issues are "bundled" and presented for a single vote.
F. AUDITORS. We generally support management proposals for selection or
ratification of independent auditors. However, we may consider opposing such
proposals with reference to incumbent audit firms if the company has suffered
from serious accounting irregularities and we believe rotation of the audit firm
is appropriate, or if fees paid to the auditor for non-audit-related services
are excessive. Generally, to determine if non-audit fees are excessive, a 50%
test will be applied (i.e., non-audit-related fees should be less than 50% of
the total fees paid to the auditor). We generally vote against proposals to
indemnify auditors.
G. EXECUTIVE AND DIRECTOR REMUNERATION.
1. We generally support the following proposals:
- Proposals for employee equity compensation plans and other
employee ownership plans, provided that our research does not
indicate that approval of the plan would be against shareholder
interest. Such approval may be against shareholder interest if it
authorizes excessive dilution and shareholder cost, particularly
in the context of high usage ("run rate") of equity compensation
in the recent past; or if there are objectionable plan design and
provisions.
- Proposals relating to fees to outside directors, provided the
amounts are not excessive relative to other companies in the
country or industry, and provided that the structure is
appropriate within the market context. While stock-based
compensation to outside directors is positive if moderate and
appropriately structured, we are wary of significant stock option
awards or other performance-based awards for outside directors,
as well as provisions that could result in significant forfeiture
of value on a director's decision to resign from a board (such
forfeiture can undercut director independence).
- Proposals for employee stock purchase plans that permit discounts
up to 15%, but only for grants that are part of a broad-based
employee plan, including all non-executive employees.
- Proposals for the establishment of employee retirement and
severance plans, provided that our research does not indicate
that approval of the plan would be against shareholder interest.
2. Shareholder proposals requiring shareholder approval of all severance
agreements will not be supported, but proposals that require
shareholder approval for agreements in excess of three times the
annual compensation (salary and bonus) generally will be supported. We
generally oppose shareholder proposals that would establish arbitrary
caps on pay. We consider on a case-by-case basis shareholder proposals
that seek to limit Supplemental Executive Retirement Plans (SERPs),
but support such proposals where we consider SERPs to be excessive.
3. Shareholder proposals advocating stronger and/or particular
pay-for-performance models will be evaluated on a case-by-case basis,
with consideration of the merits of the individual proposal within the
context of the particular company and its labor markets, and the
company's current and past practices. While we generally support
emphasis on long-term components of senior executive pay and strong
linkage of pay to performance, we consider whether a proposal may be
overly prescriptive, and the impact of the proposal, if implemented as
written, on recruitment and retention.
4. We consider shareholder proposals for U.K.-style advisory votes on pay
on a case-by-case basis.
5. We generally support proposals advocating reasonable senior executive
and director stock ownership guidelines and holding requirements for
shares gained in option exercises.
6. Management proposals effectively to re-price stock options are
considered on a case-by-case basis. Considerations include the
company's reasons and justifications for a re-pricing, the company's
competitive position, whether senior executives and outside directors
are excluded, potential cost to shareholders, whether the re-pricing
or share exchange is on a value-for-value basis, and whether vesting
requirements are extended.
H. SOCIAL, POLITICAL AND ENVIRONMENTAL ISSUES. We consider proposals relating to
social, political and environmental issues on a case-by-case basis to determine
whether they will have a financial impact on shareholder value. However, we
generally vote against proposals requesting reports that are duplicative,
related to matters not material to the business, or that would impose
unnecessary or excessive costs. We may abstain from voting on proposals that do
not have a readily
determinable financial impact on shareholder value. We generally oppose
proposals requiring adherence to workplace standards that are not required or
customary in market(s) to which the proposals relate.
I. FUND OF FUNDS. Certain Funds advised by an MSIM Affiliate invest only in
other MSIM Funds. If an underlying fund has a shareholder meeting, in order to
avoid any potential conflict of interest, such proposals will be voted in the
same proportion as the votes of the other shareholders of the underlying fund,
unless otherwise determined by the Proxy Review Committee.
III. ADMINISTRATION OF POLICY
The MSIM Proxy Review Committee (the "Committee") has overall responsibility for
creating and implementing the Policy, working with an MSIM staff group (the
"Corporate Governance Team"). The Committee, which is appointed by MSIM's Chief
Investment Officer of Global Equities ("CIO"), consists of senior investment
professionals who represent the different investment disciplines and geographic
locations of the firm. Because proxy voting is an investment responsibility and
impacts shareholder value, and because of their knowledge of companies and
markets, portfolio managers and other members of investment staff play a key
role in proxy voting, although the Committee has final authority over proxy
votes.
The Committee Chairperson is the head of the Corporate Governance Team, and is
responsible for identifying issues that require Committee deliberation or
ratification. The Corporate Governance Team, working with advice of investment
teams and the Committee, is responsible for voting on routine items and on
matters that can be addressed in line with these Policy guidelines. The
Corporate Governance Team has responsibility for voting case-by-case where
guidelines and precedent provide adequate guidance, and to refer other
case-by-case decisions to the Proxy Review Committee.
The Committee will periodically review and have the authority to amend, as
necessary, the Policy and establish and direct voting positions consistent with
the Client Proxy Standard.
A. COMMITTEE PROCEDURES
The Committee will meet at least monthly to (among other matters) address any
outstanding issues relating to the Policy or its implementation. The Corporate
Governance Team will timely communicate to ISS MSIM's Policy (and any amendments
and/or any additional guidelines or procedures the Committee may adopt).
The Committee will meet on an ad hoc basis to (among other matters): (1)
authorize "split voting" (i.e., allowing certain shares of the same issuer that
are the subject of the same proxy solicitation and held by one or more MSIM
portfolios to be voted differently than other shares) and/or "override voting"
(i.e., voting all MSIM portfolio shares in a manner contrary to the Policy); (2)
review and approve upcoming votes, as appropriate, for matters for which
specific direction has been provided in this Policy; and (3) determine how to
vote matters for which specific direction has not been provided in this Policy.
Members of the Committee may take into account Research Providers'
recommendations and research as well as any other relevant information they may
request or receive, including portfolio manager and/or analyst research, as
applicable. Generally, proxies related to securities held in accounts that are
managed pursuant to quantitative, index or index-like strategies ("Index
Strategies") will be voted in the same manner as those held in actively managed
accounts, unless economic interests of the accounts differ. Because accounts
managed using Index Strategies are passively managed accounts, research from
portfolio managers and/or analysts related to securities held in these accounts
may not be available. If the affected securities are held only in accounts that
are managed pursuant to Index Strategies, and the proxy relates to a matter that
is not described in this Policy, the Committee will consider all available
information from the Research Providers, and to the extent that the holdings are
significant, from the portfolio managers and/or analysts.
B. MATERIAL CONFLICTS OF INTEREST
In addition to the procedures discussed above, if the Committee determines that
an issue raises a material conflict of interest, the Committee will request a
special committee to review, and recommend a course of action with respect to,
the conflict(s) in question ("Special Committee").
The Special Committee shall be comprised of the Chairperson of the Proxy Review
Committee, the Chief Compliance Officer or his/her designee, a senior portfolio
manager (if practicable, one who is a member of the Proxy Review Committee)
designated by the Proxy Review Committee, and MSIM's relevant Chief Investment
Officer or his/her designee, and any other persons deemed necessary by the
Chairperson. The Special Committee may request the assistance of MSIM's General
Counsel or his/her designee who will have sole discretion to cast a vote. In
addition to the research provided by Research Providers, the Special Committee
may request analysis from MSIM Affiliate investment professionals and outside
sources to the extent it deems appropriate.
C. IDENTIFICATION OF MATERIAL CONFLICTS OF INTEREST
A potential material conflict of interest could exist in the following
situations, among others:
1. The issuer soliciting the vote is a client of MSIM or an affiliate of
MSIM and the vote is on a material matter affecting the issuer.
2. The proxy relates to Morgan Stanley common stock or any other security
issued by Morgan Stanley or its affiliates except if echo voting is
used, as with MSIM Funds, as described herein.
3. Morgan Stanley has a material pecuniary interest in the matter
submitted for a vote (e.g., acting as a financial advisor to a party
to a merger or acquisition for which Morgan Stanley will be paid a
success fee if completed).
If the Chairperson of the Committee determines that an issue raises a potential
material conflict of interest, depending on the facts and circumstances, the
Chairperson will address the issue as follows:
1. If the matter relates to a topic that is discussed in this Policy, the
proposal will be voted as per the Policy.
2. If the matter is not discussed in this Policy or the Policy indicates
that the issue is to be decided case-by-case, the proposal will be
voted in a manner consistent with the Research Providers, provided
that all the Research Providers have the same recommendation, no
portfolio manager objects to that vote, and the vote is consistent
with MSIM's Client Proxy Standard.
3. If the Research Providers' recommendations differ, the Chairperson
will refer the matter to the Committee to vote on the proposal. If the
Committee determines that an issue raises a material conflict of
interest, the Committee will request a Special Committee to review and
recommend a course of action, as described above. Notwithstanding the
above, the Chairperson of the Committee may request a Special
Committee to review a matter at any time as he/she deems necessary to
resolve a conflict.
D. PROXY VOTING REPORTING
The Committee and the Special Committee, or their designee(s), will document in
writing all of their decisions and actions, which documentation will be
maintained by the Committee and the Special Committee, or their designee(s), for
a period of at least 6 years. To the extent these decisions relate to a security
held by an MSIM Fund, the Committee and Special Committee, or their designee(s),
will report their decisions to each applicable Board of Trustees/Directors of
those Funds at each Board's next regularly scheduled Board meeting. The report
will contain information concerning decisions made by the Committee and Special
Committee during the most recently ended calendar quarter immediately preceding
the Board meeting.
The Corporate Governance Team will timely communicate to applicable portfolio
managers and to ISS, decisions of the Committee and Special Committee so that,
among other things, ISS will vote proxies consistent with their decisions.
MSIM will promptly provide a copy of this Policy to any client requesting it.
MSIM will also, upon client request, promptly provide a report indicating how
each proxy was voted with respect to securities held in that client's account.
MSIM's Legal Department is responsible for filing an annual Form N-PX on behalf
of each MSIM Fund for which such filing is required, indicating how all proxies
were voted with respect to such Fund's holdings.
APPENDIX A
The following procedures apply to accounts managed by Morgan Stanley AIP GP LP
("AIP").
Generally, AIP will follow the guidelines set forth in Section II of MSIM's
Proxy Voting Policy and Procedures. To the extent that such guidelines do not
provide specific direction, or AIP determines that consistent with the Client
Proxy Standard, the guidelines should not be followed, the Proxy Review
Committee has delegated the voting authority to vote securities held by accounts
managed by AIP to the Liquid Markets investment team and the Private Markets
investment team of AIP. A summary of decisions made by the investment teams will
be made available to the Proxy Review Committee for its information at the next
scheduled meeting of the Proxy Review Committee.
In certain cases, AIP may determine to abstain from determining (or
recommending) how a proxy should be voted (and therefore abstain from voting
such proxy or recommending how such proxy should be voted), such as where the
expected cost of giving due consideration to the proxy does not justify the
potential benefits to the affected account(s) that might result from adopting or
rejecting (as the case may be) the measure in question.
Waiver of Voting Rights
For regulatory reasons, AIP may either 1) invest in a class of securities of an
underlying fund (the "Fund") that does not provide for voting rights; or 2)
waive 100% of its voting rights with respect to the following:
1. Any rights with respect to the removal or replacement of a director,
general partner, managing member or other person acting in a similar
capacity for or on behalf of the Fund (each individually a "Designated
Person," and collectively, the "Designated Persons"), which may
include, but are not limited to, voting on the election or removal of
a Designated Person in the event of such Designated Person's death,
disability, insolvency, bankruptcy, incapacity, or other event
requiring a vote of interest holders of the Fund to remove or replace
a Designated Person; and
2. Any rights in connection with a determination to renew, dissolve,
liquidate, or otherwise terminate or continue the Fund, which may
include, but are not limited to, voting on the renewal, dissolution,
liquidation, termination or continuance of the Fund upon the
occurrence of an event described in the Fund's organizational
documents; provided, however, that, if the Fund's organizational
documents require the consent of the Fund's general partner or
manager, as the case may be, for any such termination or continuation
of the Fund to be effective, then AIP may exercise its voting rights
with respect to such matter.
APPENDIX B
The following procedures apply to the portion of the Van Kampen Dynamic Credit
Opportunities Fund ("VK Fund") sub advised by Avenue Europe International
Management, L.P. ("Avenue"). (The portion of the VK Fund managed solely by Van
Kampen Asset Management will continue to be subject to MSIM's Policy.)
1. Generally: With respect to Avenue's portion of the VK Fund, the Board
of Trustees of the VK Fund will retain sole authority and
responsibility for proxy voting. The Adviser's involvement in the
voting process of Avenue's portion of the VK Fund is a purely
administrative function, and serves to execute and deliver the proxy
voting decisions made by the VK Fund Board in connection with the
Avenue portion of the VK Fund, which may, from time to time, include
related administrative tasks such as receiving proxies, following up
on missing proxies, and collecting data related to proxies. As such,
the Adviser shall not be deemed to have voting power or shared voting
power with Avenue with respect to Avenue's portion of the Fund.
2. Voting Guidelines: All proxies, with respect to Avenue's portion of
the VK Fund, will be considered by the VK Fund Board or such
subcommittee as the VK Fund Board may designate from time to time for
determination and voting approval. The VK Board or its subcommittee
will timely communicate to MSIM's Corporate Governance Group its proxy
voting decisions, so that among other things the votes will be
effected consistent with the VK Board's authority.
Administration: The VK Board or its subcommittee will meet on an
adhoc basis as may be required from time to time to review
proxies that require its review and determination. The VK Board
or its subcommittee will document in writing all of its decisions
and actions which will be maintained by the VK Fund, or its
designee(s), for a period of at least 6 years. If a subcommittee
is designated, a summary of decisions made by such subcommittee
will be made available to the full VK Board for its information
at its next scheduled respective meetings.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
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/ Jerry W. Miller
---------------------------------
Name: Jerry W. Miller
Title: Principal Executive Officer
Date: September 18, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Jerry W. Miller
---------------------------------
Name: Jerry W. Miller
Title: Principal Executive Officer
Date: September 18, 2008
By: /s/ Stuart N. Schuldt
---------------------------------
Name: Stuart N. Schuldt
Title: Principal Financial Officer
Date: September 18, 2008