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 811-05273
Van Kampen Income Trust
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(Exact name of registrant as specified in charter)
1221 Avenue of the Americas New York, New York 10020
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(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas New York, New York 10020
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(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 12/31
Date of reporting period: 12/31/04
Item 1. Report to Shareholders.
The Trust's annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Income Trust performed during the annual period. The portfolio management
team will provide an overview of the market conditions and discuss some
of the factors that affected investment performance during the reporting
period. In addition, this report includes the trust's financial
statements and a list of trust investments as of December 31, 2004.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE TRUST IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE TRUST WILL DECLINE AND
THAT THE VALUE OF THE TRUST SHARES MAY THEREFORE BE LESS THAN WHAT YOU
PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS TRUST.
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NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
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NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
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Performance Summary as of 12/31/04
INCOME TRUST
SYMBOL: VIN
------------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (4/22/88) 7.21% 6.46%
10-year 7.38 7.34
5-year 5.73 8.41
1-year 7.86 6.62
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PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, NET
ASSET VALUE AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES, WHEN
SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
The NAV per share is determined by dividing the value of the trust's portfolio
securities, cash and other assets, less all liabilities, by the total number of
common shares outstanding. The common share market price is the price the market
is willing to pay for shares of the trust at a given time. Common share market
price is influenced by a range of factors, including supply and demand and
market conditions. Total return assumes an investment at the beginning of the
period, reinvestment of all distributions for the period in accordance with the
trust's dividend reinvestment plan, and sale of all shares at the end of the
period.
1
Trust Report
FOR THE 12-MONTH PERIOD ENDED DECEMBER 31, 2004
Van Kampen Income Trust is managed by the Adviser's Taxable Fixed-Income
team.(1) Current team members include Gordon Loery, Jaidip Singh and Menglin
Luo, Executive Directors of the Adviser.
MARKET CONDITIONS
The 12-month review period began with interest rates generally falling and still
near their historical lows. Continued low employment numbers and deflationary
pressures caused rates to follow this downward path throughout the first quarter
of 2004. The market then reversed course in April, after the release of March
employment numbers. The surprisingly strong employment data, coupled with
increasing oil prices, led investors to the conclusion that the Federal Reserve
Open Market Committee (the "Fed") would move to raise interest rates. At its
June meeting, the Fed initiated a series of 25 basis point rate increases that
continued through the end of the year.
Despite these rate increases, continued softness in the economy pushed yields on
intermediate and longer maturity government securities lower during the third
quarter of 2004 and into the beginning of the fourth. Investors became
increasingly concerned by increasing oil prices, and uneven employment gains.
While the bond market gained slightly following the conclusion of the election,
gains were largely limited to intermediate and longer-maturity securities.
High yield was the best-performing segment of the fixed income markets in 2004,
though its path was not entirely smooth. After a strong showing in January, the
market slowed from February through April as investors became less willing to
accept credit risk in the face of poor employment growth. The high yield market
worsened in April and May in sympathy with the broader fixed income sectors,
which were undermined by rising interest rates. In June, the high yield sector
rebounded as buyers returned to the market. The rest of the year was more
positive, with the high yield market as measured by the CSFB High Yield Index
gaining more than 1 percent for every month from June through December.
(1)Team members may change without notice at any time.
2
PERFORMANCE ANALYSIS
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns may differ significantly. The trust showed a 7.86 percent return on an
NAV basis and a 6.62 percent return on a market-price basis.
In keeping with its long-term objective, the trust's portfolio remained balanced
between government and high yield exposures. Within the government portion of
the portfolio, we kept the trust's interest-rate sensitivity somewhat low in
anticipation of rising interest rates. While rates did rise at the short end of
the market, this positioning limited the trust's participation in the decline in
intermediate and longer-term yields.
On a more positive note, the trust's government holdings benefited from an
emphasis on mortgage-backed securities with higher coupons, which outperformed
their Treasury counterparts. The trust also de-emphasized agency securities,
which underperformed in the wake of accounting scandals.
Three strategic decisions helped the trust's performance most within the high
yield component. First, the trust benefited from its lack of participation in
airlines issues, which were the worst-performing sector within the high yield
market during the 12-month period. Second, the trust's overweight in the
chemical sector added to performance as this sector generally reported better
results. Finally, security selection in the wireless communications and telecom
sectors added to performance. The trust avoided a few credits that had poor
results in favor of other holdings which generally posted solid gains.
Within high yield, the main detractor from performance during the period was
security selection in the utility, service and gaming/leisure sectors. The
trust's limited exposure to the metals/mining sector hurt performance as higher
metal prices led this sector to strong gains during 2004. The trust's returns
were also hampered by its focus on the more conservative tiers of the high yield
market, which lagged their more speculative peers.
There is no guarantee that any securities will continue to perform well or be
held by the trust in the future.
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED DECEMBER 31, 2004
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BASED ON
BASED ON NAV MARKET PRICE
7.86% 6.62%
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PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. INVESTMENT RETURN, NET ASSET VALUE AND COMMON SHARE MARKET PRICE WILL
FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. SEE PERFORMANCE SUMMARY FOR ADDITIONAL PERFORMANCE INFORMATION.
3
RATINGS ALLOCATION AS OF 12/31/04
AAA/Aaa 45.5%
BBB/Baa 31.8
BB/Ba 13.5
B/B 1.3
CCC/Caa 0.6
CC/Ca 6.2
Non-Rated 0.3
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 12/31/04
U.S. Government Obligations 38.6%
Chemicals 3.6
Media-Cable 3.3
Media-Noncable 3.3
Electric 2.7
Home Construction 2.7
Paper 2.5
Healthcare 2.4
Wireless Communications 2.3
Integrated Energy 2.2
Consumer Products 2.0
Gaming 2.0
Food/Beverage 1.4
Retail 1.4
Transportation Services 1.3
Building Materials 1.1
Oil Field Services 1.1
Wireline Communications 1.1
Metals 1.0
Natural Gas Pipelines 1.0
Services 0.9
Construction Machinery 0.8
Packaging 0.8
Refining 0.6
Supermarkets 0.6
Technology 0.6
Automotive 0.5
Brokerage 0.4
Wireless Telecommunication Services 0.4
Aerospace & Defense 0.3
Diversified Chemicals 0.3
Environmental Services 0.3
Independent Energy 0.3
Entertainment 0.2
Lodging 0.2
Railroads 0.2
Semiconductors 0.2
Sovereigns 0.2
Other Industrial 0.1
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Total Long-Term Investments 84.9%
Short-Term Investments 15.1
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Total Investments 100.0%
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the industries shown above. Ratings are as a percentage of
long-term investments and summary of investments by industry classification are
as a percentage of total investments. Van Kampen is a wholly owned subsidiary of
a global securities firm which is engaged in a wide range of financial services
including, for example, securities trading and brokerage activities, investment
banking, research and analysis, financing and financial advisory services.
4
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen trust provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
trust's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to trust shareholders, and makes these reports available on its
public web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public web site, each trust files a
complete schedule of portfolio holdings with the SEC for the trust's
first and third fiscal quarters on Form N-Q. Van Kampen does not deliver
the reports for the first and third fiscal quarters to shareholders, nor
are the reports posted to the Van Kampen public web site. You may,
however, obtain the Form N-Q filings (as well as the Form N-CSR and
N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You
may also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
In addition to filing a complete schedule of portfolio holdings with the
SEC each fiscal quarter, each Van Kampen trust makes portfolio holdings
information available by periodically providing the information on its
public web site, www.vankampen.com. Each Van Kampen trust provides a
complete schedule of portfolio holdings on the public web site on a
calendar-quarter basis approximately 30 days after the close of the
calendar quarter. Van Kampen closed-end funds do not presently provide
partial lists of their portfolio holdings on a monthly basis, but may do
so in the future.
You may obtain copies of a trust's fiscal quarter filings, or its monthly
or calendar-quarter web site postings, by contacting Van Kampen Client
Relations at 1-800-847-2424.
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
The trust's policies and procedures with respect to the voting of proxies
relating to the trust's portfolio securities and information on how the
trust voted proxies relating to portfolio securities during the most
recent twelve-month period ended June 30 is available without charge,
upon request, by calling 1-800-847-2424 or by visiting our 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.
5
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
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DOMESTIC CORPORATE BONDS 41.0%
AEROSPACE & DEFENSE 0.3%
$ 280 K & F Acquisition, Inc.,
144A--Private Placement (a).......... 7.750% 11/15/14 $ 290,500
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AUTOMOTIVE 0.5%
250 AutoNation, Inc. .................... 9.000 08/01/08 286,875
220 Cooper Standard Automotive Inc.,
144A--Private Placement (a).......... 8.375 12/15/14 220,550
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507,425
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BROKERAGE 0.4%
400 Refco Finance Holdings LLC, 144A--
Private Placement (a)................ 9.000 08/01/12 440,000
------------
BUILDING MATERIALS 1.2%
300 Brand Services, Inc. ................ 12.000 10/15/12 337,500
290 NMHG Holdings Co. ................... 10.000 05/15/09 321,900
200 Propex Fabrics, Inc., 144A--Private
Placement (a)........................ 10.000 12/01/12 208,500
355 Trimas Corp. ........................ 9.875 06/15/12 378,075
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1,245,975
------------
CHEMICALS 3.2%
100 Equistar Chemicals LP................ 10.625 05/01/11 116,500
120 FMC Corp. ........................... 10.250 11/01/09 138,300
110 Huntsman Advanced Materials LLC,
144A--Private Placement (a).......... 11.000 07/15/10 131,450
240 Huntsman ICI Chemicals LLC........... 10.125 07/01/09 253,800
80 Hydrochem Industrial Services, Inc.,
Ser B................................ 10.375 08/01/07 81,000
155 Innophos, Inc., 144A--Private
Placement (a)........................ 8.875 08/15/14 168,175
140 ISP Chemco, Inc., Ser B.............. 10.250 07/01/11 158,900
300 ISP Holdings, Inc., Ser B............ 10.625 12/15/09 333,750
230 JohnsonDiversey, Inc. ............... 9.625 05/15/12 258,175
80 Koppers, Inc. ....................... 9.875 10/15/13 91,600
225 Lyondell Chemical Co. ............... 10.500 06/01/13 268,875
225 Millennium America, Inc. ............ 7.000 11/15/06 235,125
95 Nalco Co. ........................... 7.750 11/15/11 103,075
370 Nalco Co. ........................... 8.875 11/15/13 407,925
280 Rockwood Specialties Group, Inc. .... 10.625 05/15/11 323,400
75 Rockwood Specialties Group, Inc.,
144A--Private Placement (a).......... 7.625 11/15/14 104,762
78 Westlake Chemical Corp. ............. 8.750 07/15/11 88,530
------------
3,263,342
------------
6 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
CONSTRUCTION MACHINERY 0.9%
$ 85 Flowserve Corp. ..................... 12.250% 08/15/10 $ 94,350
25 Manitowoc Co., Inc. (EUR)............ 10.375 05/15/11 38,265
214 Manitowoc, Inc. ..................... 10.500 08/01/12 247,170
230 United Rentals North America,
Inc. ................................ 6.500 02/15/12 225,400
290 United Rentals North America,
Inc. ................................ 7.750 11/15/13 285,650
------------
890,835
------------
CONSUMER PRODUCTS 1.7%
160 Amscan Holdings, Inc. ............... 8.750 05/01/14 160,800
310 Iron Mountain, Inc. ................. 8.625 04/01/13 330,925
155 Leiner Health Products, Inc. ........ 11.000 06/01/12 170,112
245 Muzak LLC............................ 9.875 03/15/09 172,419
120 Oxford Industrials, Inc. ............ 8.875 06/01/11 129,450
180 Rayovac Corp. ....................... 8.500 10/01/13 200,700
89 Tempur-Pedic, Inc. .................. 10.250 08/15/10 102,795
465 Xerox Corp. ......................... 7.125 06/15/10 504,525
------------
1,771,726
------------
ELECTRIC 2.4%
41 AES Corp. ........................... 9.375 09/15/10 47,867
26 AES Corp. ........................... 8.875 02/15/11 29,835
160 AES Corp. ........................... 7.750 03/01/14 174,400
260 AES Corp., 144A--Private Placement
(a).................................. 9.000 05/15/15 299,000
135 Allegheny Energy, Inc. .............. 7.750 08/01/05 137,531
35 CMS Energy Corp. .................... 7.500 01/15/09 37,450
220 CMS Energy Corp. .................... 8.500 04/15/11 251,075
200 Dynegy Holdings, Inc., 144A--Private
Placement (a)........................ 9.875 07/15/10 224,500
75 IPALCO Enterprises, Inc. ............ 7.625 11/14/11 84,375
260 Monongahela Power Co. ............... 5.000 10/01/06 265,995
170 Nevada Power Co. .................... 8.250 06/01/11 196,137
215 Nevada Power Co. .................... 9.000 08/15/13 252,625
20 PSEG Energy Holdings, Inc. .......... 7.750 04/16/07 21,250
205 PSEG Energy Holdings, Inc. .......... 8.625 02/15/08 226,012
160 Reliant Energy, Inc. ................ 6.750 12/15/14 159,800
------------
2,407,852
------------
ENTERTAINMENT 0.3%
105 Cinemark, Inc. (b)................... 0/9.750 03/15/14 79,800
180 Marquee, Inc., 144A--Private
Placement (Variable Rate Coupon)
(a).................................. 6.540 08/15/10 190,350
------------
270,150
------------
ENVIRONMENTAL SERVICES 0.3%
110 Allied Waste North America, Inc. .... 6.500 11/15/10 108,350
185 Allied Waste North America, Inc., Ser
B.................................... 9.250 09/01/12 201,187
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309,537
------------
See Notes to Financial Statements 7
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
FOOD/BEVERAGE 1.5%
$ 195 Michael Foods, Inc. ................. 8.000% 11/15/13 $ 206,700
435 Pilgrim's Pride Corp. ............... 9.625 09/15/11 491,550
125 Pilgrim's Pride Corp. ............... 9.250 11/15/13 140,625
430 Smithfield Foods, Inc. .............. 8.000 10/15/09 478,375
150 Smithfield Foods, Inc. .............. 7.000 08/01/11 160,875
------------
1,478,125
------------
GAMING 2.1%
250 Caesars Entertainment................ 8.875 09/15/08 283,750
210 Harrahs Operating Co., Inc. ......... 7.875 12/15/05 218,925
280 Isle of Capri Casinos, Inc. ......... 7.000 03/01/14 287,000
690 MGM Mirage, Inc. .................... 6.000 10/01/09 710,700
60 MGM Mirage, Inc. .................... 5.875 02/27/14 59,250
100 Station Casinos, Inc. ............... 6.000 04/01/12 102,375
260 Station Casinos, Inc. ............... 6.500 02/01/14 268,450
170 Venetian Casino Resort LLC........... 11.000 06/15/10 194,862
------------
2,125,312
------------
HEALTHCARE 2.6%
230 AmerisourceBergen Corp. ............. 8.125 09/01/08 257,025
200 Community Health Systems Inc., 144A--
Private Placement (a)................ 6.500 12/15/12 202,500
226 Fisher Scientific International,
Inc. ................................ 8.125 05/01/12 251,990
105 Fisher Scientific International,
Inc., 144A--Private Placement (a).... 6.750 08/15/14 113,137
165 Fresenius Medical Care Capital Trust
II................................... 7.875 02/01/08 179,437
240 Fresenius Medical Care Capital Trust
IV................................... 7.875 06/15/11 268,800
210 HCA, Inc. ........................... 8.750 09/01/10 240,320
55 HCA, Inc. ........................... 6.375 01/15/15 55,324
240 Medcath Holdings Corp. .............. 9.875 07/15/12 261,600
50 National Nephrology Associates, Inc.,
144A--Private Placement (a).......... 9.000 11/01/11 58,125
265 Team Health, Inc. ................... 9.000 04/01/12 260,362
50 Tenet Healthcare Corp. .............. 6.500 06/01/12 46,500
135 Tenet Healthcare Corp., 144A--Private
Placement (a)........................ 9.875 07/01/14 147,825
110 VWR International, Inc.,
144A--Private Placement (a).......... 6.875 04/15/12 115,500
140 VWR International, Inc.,
144A--Private Placement (a).......... 8.000 04/15/14 150,150
------------
2,608,595
------------
HOME CONSTRUCTION 2.9%
285 ACIH, Inc., 144A--Private Placement
(a) (b).............................. 0/11.500 12/15/12 207,337
725 Associated Materials, Inc. (b)....... 0/11.250 03/01/14 525,625
55 CB Richard Ellis Service, Inc. ...... 9.750 05/15/10 62,975
8 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
HOME CONSTRUCTION (CONTINUED)
$ 85 Goodman Global Holdings Inc., 144A--
Private Placement (Variable Rate
Coupon) (a).......................... 5.760% 06/15/12 $ 86,700
170 Goodman Global Holdings Inc., 144A--
Private Placement (a)................ 7.875 12/15/12 169,150
65 Interface, Inc. ..................... 7.300 04/01/08 66,787
75 Interface, Inc. ..................... 10.375 02/01/10 86,625
255 Interface, Inc. ..................... 9.500 02/01/14 279,225
360 Nortek Holdings, Inc., 144A--Private
Placement (a)........................ 8.500 09/01/14 378,000
340 Ply Gem Industries, Inc.,
144A--Private Placement (a).......... 9.000 02/15/12 346,800
260 RMCC Acquisition Co., 144A--Private
Placement (a)........................ 9.500 11/01/12 260,650
75 Technical Olympic USA, Inc. ......... 9.000 07/01/10 80,625
180 Technical Olympic USA, Inc. ......... 9.000 07/01/10 193,500
180 Technical Olympic USA, Inc. ......... 10.375 07/01/12 202,500
------------
2,946,499
------------
INDEPENDENT ENERGY 0.3%
240 Equistar Chemicals LP................ 10.125 09/01/08 277,800
------------
INTEGRATED ENERGY 2.1%
195 BRL Universal Equipment.............. 8.875 02/15/08 205,969
195 Calpine Corp., 144A--Private
Placement (a)........................ 8.500 07/15/10 168,187
345 Chesapeake Energy Corp. ............. 7.500 09/15/13 377,344
525 El Paso Production Holding Co. ...... 7.750 06/01/13 552,562
60 Hanover Compressor Co. .............. 8.625 12/15/10 65,850
95 Hanover Equipment Trust.............. 8.750 09/01/11 103,550
205 Hanover Equipment Trust, Ser A....... 8.500 09/01/08 221,400
50 MSW Energy Holdings LLC.............. 8.500 09/01/10 55,000
215 Pacific Energy Partners.............. 7.125 06/15/14 230,050
95 Transcontinental Gas Pipe Line Corp.,
Ser B................................ 8.875 07/15/12 116,019
------------
2,095,931
------------
LODGING 0.3%
190 Gaylord Entertainment Co., 144A--
Private Placement (a)................ 6.750 11/15/14 191,900
74 HMH Properties, Inc. ................ 7.875 08/01/08 76,405
------------
268,305
------------
MEDIA-CABLE 1.7%
63 Avalon Cable LLC..................... 11.875 12/01/08 66,093
565 Charter Communications Holdings
LLC.................................. 9.625 11/15/09 498,612
90 DirecTV Holdings LLC................. 8.375 03/15/13 101,363
320 Echostar DBS Corp. .................. 6.375 10/01/11 328,800
See Notes to Financial Statements 9
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
MEDIA-CABLE (CONTINUED)
$ 120 General Cable Corp. ................. 9.500% 11/15/10 $ 136,200
145 PanAmSat Corp., 144A--Private
Placement (a)........................ 9.000 08/15/14 162,581
440 PanAmSat Corp., 144A--Private
Placement (a) (b).................... 0/10.375 11/01/14 304,700
1,000 Park N View, Inc., Ser B (c) (d)
(e).................................. 13.000 05/15/08 0
135 Renaissance Media Group.............. 10.000 04/15/08 139,725
------------
1,738,074
------------
MEDIA-NONCABLE 2.9%
45 Advanstar Communications, Inc. ...... 10.750 08/15/10 51,019
395 Advanstar Communications, Inc.
(Variable Rate Coupon)............... 9.790 08/15/08 414,750
127 Dex Media East LLC................... 12.125 11/15/12 155,416
171 Dex Media West LLC, Ser B............ 9.875 08/15/13 197,933
350 Houghton Mifflin Co. ................ 9.875 02/01/13 385,000
65 Houghton Mifflin Co. (b)............. 0/11.500 10/15/13 48,100
205 Interep National Radio Sales, Inc.,
Ser B................................ 10.000 07/01/08 155,544
375 Interpublic Group of Companies
Inc. ................................ 6.250 11/15/14 381,323
145 Muzak LLC............................ 10.000 02/15/09 135,756
235 Nebraska Book Co., Inc. ............. 8.625 03/15/12 242,050
83 PEI Holdings, Inc. .................. 11.000 03/15/10 97,110
375 Primedia, Inc. ...................... 8.875 05/15/11 398,438
250 Vertis, Inc., 144A--Private Placement
(a).................................. 13.500 12/07/09 264,688
------------
2,927,127
------------
METALS 0.9%
361 Doe Run Resources Corp., (Acquired
03/06/98 to 10/15/04, Cost $524,900)
(i) (f).............................. 13.063 11/01/08 308,777
85 Foundation PA Coal Co., 144A--Private
Placement (a)........................ 7.250 08/01/14 90,950
750 GS Technologies Operating, Inc. (c)
(d) (e).............................. 12.000 09/01/04 75
245 UCAR Finance, Inc. .................. 10.250 02/15/12 281,138
189 United States Steel Corp. ........... 9.750 05/15/10 216,405
------------
897,345
------------
NATURAL GAS PIPELINES 1.0%
340 Dynegy Holdings, Inc. ............... 6.875 04/01/11 328,950
55 Northwest Pipeline Corp. ............ 8.125 03/01/10 61,119
105 Southern Natural Gas Co. ............ 8.875 03/15/10 118,125
470 Williams Cos., Inc. ................. 7.875 09/01/21 526,400
------------
1,034,594
------------
10 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
OIL FIELD SERVICES 1.2%
$ 225 Hanover Compressor Co. .............. 9.000% 06/01/14 $ 251,438
350 Hilcorp Energy Finance Corp., 144A--
Private Placement (a)................ 10.500 09/01/10 397,250
104 Magnum Hunter Resources, Inc. ....... 9.600 03/15/12 118,560
230 MSW Energy Holdings II LLC........... 7.375 09/01/10 242,650
160 Plains Exploration & Production
Co. ................................. 7.125 06/15/14 175,200
------------
1,185,098
------------
OTHER INDUSTRIAL 0.1%
70 Global Cash Access LLC............... 8.750 03/15/12 75,775
------------
PACKAGING 0.9%
65 Owens-Illinois, Inc. ................ 7.350 05/15/08 68,575
680 Owens-Illinois, Inc. ................ 7.500 05/15/10 725,050
120 Tekni-Plex, Inc., 144A--Private
Placement (a)........................ 8.750 11/15/13 120,000
------------
913,625
------------
PAPER 1.3%
435 Georgia-Pacific Corp. ............... 8.875 02/01/10 508,406
130 Graham Packaging Co., Inc., 144A--
Private Placement (a)................ 8.500 10/15/12 137,150
340 Graphic Packaging International,
Inc. ................................ 9.500 08/15/13 388,450
150 Pliant Corp. ........................ 13.000 06/01/10 147,000
185 Pliant Corp. ........................ 13.000 06/01/10 180,375
------------
1,361,381
------------
RAILROADS 0.3%
235 Amsted Industries, Inc., 144A--
Private Placement (a)................ 10.250 10/15/11 266,725
------------
REFINING 0.6%
80 CITGO Petroleum Corp., 144A--Private
Placement (a)........................ 6.000 10/15/11 80,000
135 Tesoro Petroleum Corp. .............. 9.625 04/01/12 155,925
390 Vintage Petroleum, Inc. ............. 7.875 05/15/11 417,300
------------
653,225
------------
RETAIL 1.0%
165 General Nutrition Center, Inc. ...... 8.500 12/01/10 156,750
350 Petro Shopping Center Financial...... 9.000 02/15/12 371,875
175 Rite Aid Corp. ...................... 7.125 01/15/07 175,875
65 Rite Aid Corp. ...................... 8.125 05/01/10 69,063
1,000 Sleepmaster LLC, Ser B (c) (d) (e)... 11.000 05/15/09 220,000
------------
993,563
------------
See Notes to Financial Statements 11
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
SERVICES 1.0%
$ 355 Allied Waste North America, Inc. .... 6.375% 04/15/11 $ 345,238
300 Buhrmann US, Inc. ................... 8.250 07/01/14 304,875
315 CB Richard Ellis Service, Inc. ...... 11.250 06/15/11 363,825
------------
1,013,938
------------
SUPERMARKETS 0.6%
325 Delhaize America, Inc. .............. 8.125 04/15/11 380,485
238 Kroger Co., 144A--Private Placement
(a).................................. 8.500 07/15/17 274,500
------------
654,985
------------
TECHNOLOGY 0.2%
170 Iron Mountain, Inc. ................. 7.750 01/15/15 173,400
------------
TRANSPORTATION SERVICES 1.1%
335 Laidlaw International, Inc. ......... 10.750 06/15/11 392,788
270 Sonic Automotive, Inc. .............. 8.625 08/15/13 289,238
391 TRW Automotive, Inc. ................ 9.375 02/15/13 455,515
------------
1,137,541
------------
WIRELESS COMMUNICATIONS 2.1%
85 AirGate PCS, Inc., 144A--Private
Placement (Variable Rate Coupon)
(a).................................. 6.410 10/15/11 87,763
52 American Tower Corp. ................ 9.375 02/01/09 55,250
185 American Tower Corp. ................ 7.500 05/01/12 195,175
190 American Tower Corp., 144A--Private
Placement (a)........................ 7.125 10/15/12 195,225
95 Centennial Communications Corp. ..... 8.125 02/01/14 98,088
275 MetroPCS, Inc. ...................... 10.750 10/01/11 295,625
250 Nextel Communications, Inc. ......... 6.875 10/31/13 272,500
145 Rural Cellular Corp. (Variable Rate
Coupon).............................. 6.990 03/15/10 150,800
360 SBA Communications Corp. (b)......... 0/9.750 12/15/11 305,100
190 SBA Communications Corp., 144A--
Private Placement (a)................ 8.500 12/01/12 194,750
35 UbiquiTel Operating Co. ............. 9.875 03/01/11 39,463
215 UbiquiTel Operating Co.,
144A--Private Placement (a).......... 9.875 03/01/11 242,413
------------
2,132,152
------------
WIRELINE COMMUNICATIONS 1.1%
250 Exodus Communications, Inc. (c) (d)
(e).................................. 11.250 07/01/08 0
400 Exodus Communications, Inc. (c) (d)
(e).................................. 11.625 07/15/10 0
415 Primus Telecommunications Holdings... 8.000 01/15/14 367,275
300 Qwest Communications International,
Inc., 144A--Private Placement
(Variable Rate Coupon) (a)........... 6.040 02/15/09 305,250
12 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
WIRELINE COMMUNICATIONS (CONTINUED)
$ 110 Qwest Corp. ......................... 6.625% 09/15/05 $ 112,750
310 Qwest Services Corp., 144A--Private
Placement (a)........................ 13.000 12/15/07 355,725
------------
1,141,000
------------
TOTAL DOMESTIC CORPORATE BONDS 41.0%.......................................... 41,497,457
------------
FOREIGN BONDS AND DEBT SECURITIES 7.8%
BELGIUM 0.6%
295 Telenet Communication NV, 144A--
Private Placement (EUR) (a).......... 9.000 12/15/13 447,527
215 Telenet Group Holding NV, 144A--
Private Placement (a) (b)............ 0/11.500 06/15/14 164,475
------------
612,002
------------
CANADA 3.2%
205 Abitibi-Consolidated, Inc. .......... 8.550 08/01/10 223,194
80 Abitibi-Consolidated, Inc. .......... 7.750 06/15/11 84,400
80 Abitibi-Consolidated, Inc. .......... 6.000 06/20/13 76,700
398 Canwest Media, Inc., 144A--Private
Placement (a)........................ 8.000 09/15/12 428,936
300 CHC Helicopter Corp. ................ 7.375 05/01/14 318,000
285 Husky Oil Ltd. (Variable Rate
Coupon).............................. 8.900 08/15/28 325,865
90 Jean Coutu Group (PJC), Inc., 144A--
Private Placement (a)................ 7.625 08/01/12 95,625
375 Jean Coutu Group (PJC), Inc., 144A--
Private Placement (a)................ 8.500 08/01/14 386,250
125 Norampac, Inc. ...................... 6.750 06/01/13 132,187
260 Nortel Networks Corp. ............... 4.250 09/01/08 254,150
250 Nortel Networks Ltd. ................ 6.125 02/15/06 255,625
125 Rogers Wireless Communications, Inc.,
144A--Private Placement (a).......... 8.000 12/15/12 132,812
170 Rogers Wireless Communications, Inc.,
144A--Private Placement (a).......... 7.500 03/15/15 180,200
350 Tembec Industries, Inc. ............. 7.750 03/15/12 340,375
------------
3,234,319
------------
FRANCE 0.3%
285 Rhodia SA............................ 8.875 06/01/11 288,563
------------
GERMANY 0.7%
260 Cognis Deutschland, 144A--Private
Placement (Variable Rate Coupon)
(EUR) (a)............................ 6.897 11/15/13 373,300
325 Kabel Deutschland, 144A--Private
Placement (a)........................ 10.625 07/01/14 375,375
------------
748,675
------------
See Notes to Financial Statements 13
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
IRELAND 0.5%
$ 325 JSG Funding PLC (EUR)................ 10.125% 10/01/12 $ 506,244
------------
LUXEMBOURG 1.7%
430 Cablecom Luxembourg, 144A--Private
Placement (EUR) (a).................. 9.375 04/15/14 649,415
110 JohnsonDiversey, Inc. (EUR).......... 9.625 05/15/12 168,364
200 Lighthouse Intl., 144A--Private
Placement (EUR) (a).................. 8.000 04/30/14 280,381
305 Safilo Capital International SA,
144A--Private Placement (EUR) (a).... 9.625 05/15/13 424,483
140 SGL Carbon Luxembourg SA, 144A--
Private Placement (EUR) (a).......... 8.500 02/01/12 214,282
------------
1,736,925
------------
MEXICO 0.6%
350 Axtel SA............................. 11.000 12/15/13 378,875
325 Satelites Mexicanos SA, Ser B (c).... 10.125 11/01/04 180,375
------------
559,250
------------
UNITED KINGDOM 0.2%
145 Avecia Group PLC..................... 11.000 07/01/09 150,075
------------
TOTAL FOREIGN BONDS AND DEBT SECURITIES 7.8%.................................. 7,836,053
------------
COLLATERALIZED MORTGAGE OBLIGATIONS 0.9%
855 Federal Home Loan Mortgage Corp.
(Interest Only)...................... 5.000 09/15/14 to 12/15/16 80,213
152 Federal Home Loan Mortgage Corp.
(Interest Only) (g).................. 5.600 03/15/32 14,396
283 Federal Home Loan Mortgage Corp.
(Interest Only)...................... 6.000 05/15/30 21,832
476 Federal National Mortgage
Association.......................... 2.810 12/18/32 478,629
801 Federal National Mortgage Association
(Interest Only)...................... 5.500 06/25/26 to 05/25/27 52,226
346 Federal National Mortgage Association
(Interest Only) REMIC................ 6.000 08/25/32 to 11/25/32 47,895
539 Federal National Mortgage Association
(Interest Only)...................... 6.500 07/01/31 to 05/25/33 107,811
61 Federal National Mortgage Association
(Interest Only)...................... 8.000 05/01/30 12,964
268 Federal National Mortgage Association
(Interest Only) REMIC................ 7.000 03/01/32 to 04/25/33 50,792
14 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$ 203 Government National Mortgage
Association (Interest Only) REMIC
(g).................................. 4.990% 05/16/32 $ 12,311
209 Government National Mortgage
Association (Interest Only) REMIC
(g).................................. 5.590 05/16/32 15,816
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 0.9%................................ 894,885
------------
MORTGAGE BACKED SECURITIES 18.0%
685 Federal Home Loan Mortgage Corp. .... 7.500 11/01/29 to 06/01/32 737,184
140 Federal Home Loan Mortgage Corp.
(ARM)................................ 3.637 07/01/34 139,073
370 Federal Home Loan Mortgage Corp.
(ARM)................................ 4.182 08/01/34 372,953
1,450 Federal Home Loan Mortgage Corp.,
January.............................. 5.000 TBA 1,472,202
725 Federal Home Loan Mortgage Corp.,
January.............................. 5.500 TBA 748,789
2,762 Federal National Mortgage
Association.......................... 6.500 06/01/15 to 05/01/34 2,901,242
2,509 Federal National Mortgage
Association.......................... 7.000 03/01/15 to 12/01/32 2,661,524
541 Federal National Mortgage
Association.......................... 7.500 03/01/15 to 03/01/32 579,114
183 Federal National Mortgage Association
(ARM)................................ 3.712 07/01/34 182,044
231 Federal National Mortgage Association
(ARM)................................ 4.111 09/01/34 232,803
199 Federal National Mortgage Association
(ARM)................................ 4.237 10/01/34 201,738
235 Federal National Mortgage Association
(ARM)................................ 4.269 10/01/34 236,776
400 Federal National Mortgage
Association, February................ 6.000 TBA 412,750
1,500 Federal National Mortgage
Association, January................. 4.500 TBA 1,480,156
2,275 Federal National Mortgage
Association, January................. 5.500 TBA 2,318,445
500 Federal National Mortgage
Association, January................. 6.000 TBA 517,031
500 Federal National Mortgage
Association, January................. 6.500 TBA 524,375
150 Government National Mortgage
Association.......................... 7.000 07/15/29 to 01/15/30 159,181
486 Government National Mortgage
Association.......................... 7.500 07/15/23 to 09/15/29 525,747
259 Government National Mortgage
Association.......................... 8.000 03/15/17 to 10/15/22 283,097
122 Government National Mortgage
Association.......................... 8.500 07/15/24 to 12/15/24 133,664
See Notes to Financial Statements 15
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
MORTGAGE BACKED SECURITIES (CONTINUED)
$ 286 Government National Mortgage
Association.......................... 9.000% 08/15/16 to 12/15/24 $ 321,443
82 Government National Mortgage
Association.......................... 9.500 11/15/09 to 01/15/17 92,294
1,000 Government National Mortgage
Association, January................. 5.500 TBA 1,020,625
------------
TOTAL MORTGAGE BACKED SECURITIES 18.0%........................................ 18,254,250
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS 10.4%
4,850 Federal Home Loan Mortgage Corp. .... 2.750 08/15/06 4,820,066
1,100 Federal Home Loan Mortgage Corp. .... 6.625 09/15/09 1,231,428
1,100 Federal Home Loan Mortgage Corp. .... 7.000 03/15/10 1,257,637
415 Federal National Mortgage
Association.......................... 6.625 11/15/30 496,203
1,250 Federal National Mortgage
Association.......................... 7.125 06/15/10 1,438,425
1,100 Federal National Mortgage
Association.......................... 7.250 01/15/10 1,265,584
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS....................................... 10,509,343
------------
UNITED STATES TREASURY OBLIGATIONS 12.2%
1,600 United States Treasury Bonds......... 5.250 02/15/29 1,678,875
3,010 United States Treasury Bonds......... 6.125 08/15/29 3,534,872
2,130 United States Treasury Bonds......... 7.625 02/15/25 2,885,402
3,535 United States Treasury Notes......... 3.875 02/15/13 3,488,883
2,000 United States Treasury Notes
(STRIPS)............................. 0.000 05/15/25 708,614
------------
TOTAL UNITED STATES TREASURY OBLIGATIONS....................................... 12,296,646
------------
FOREIGN GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATION 0.2%
180 United Mexican States (Mexico)....... 8.375 01/14/11 211,860
------------
EQUITIES 0.7%
Doe Run Resources Corp. (1 Common Stock Warrant) (e) (h)............. 0
HF Holdings, Inc. (5,260 Common Stock Warrants) (e) (h).............. 0
Optel, Inc. (500 Common Shares) (e) (h).............................. 0
Park N View, Inc., 144A--Private Placement (1,000 Common Stock
Warrants) (a) (e) (h)................................................ 0
16 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
DESCRIPTION VALUE
--------------------------------------------------------------------------------------------------
EQUITIES (CONTINUED)
Paxon Communications Corp. (3,000 Preferred Shares) (f)............................ $ 221,250
TNP Enterprises, Inc. (4,322 Preferred Shares) (f)................................. 502,452
------------
TOTAL EQUITIES 0.7%............................................................... 723,702
------------
TOTAL LONG-TERM INVESTMENTS 91.2%
(Cost $91,226,355)............................................................... 92,224,196
------------
SHORT-TERM INVESTMENTS 16.2%
REPURCHASE AGREEMENT 13.8%
Bank of America Securities LLC ($13,972,000 par collateralized by U.S. Government
obligations in a pooled cash account, interest rate of 2.00%, dated 12/31/04, to
be sold on 01/03/05 at $13,974,329).............................................. 13,972,000
U.S. GOVERNMENT AGENCY OBLIGATIONS 2.4%
Federal National Mortgage Association Discount Note ($2,400,000 par, yielding
1.804%, 01/13/05 maturity)....................................................... 2,398,557
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $16,370,288)............................................................... 16,370,557
------------
TOTAL INVESTMENTS 107.4%
(Cost $107,596,643).............................................................. 108,594,753
FOREIGN CURRENCY 0.0%
(Cost $568)...................................................................... 595
LIABILITIES IN EXCESS OF OTHER ASSETS (7.4%)...................................... (7,445,774)
------------
NET ASSETS 100.0%................................................................. $101,149,574
============
Percentages are calculated as a percentage of net assets.
(a) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(b) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(c) Non-income producing as security is in default.
(d) This borrower has filed for protection in federal bankruptcy court.
(e) Market value is determined in accordance with procedures established in good
faith by the Board of Trustees.
See Notes to Financial Statements 17
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 continued
(f) Payment-in-kind security.
(g) An Inverse Floating Rate security is one where the coupon is inversely
indexed to a short-term floating interest rate multiplied by a specific
factor. As the floating rate rises, the coupon is reduced. Conversely, as
the floating rate declines, the coupon is increased. The price of these
securities may be more volatile than the price of a comparable fixed rate
security. These instruments are typically used by the Trust to enhance the
yield of the portfolio. All of the Trust's portfolio holdings, including
derivative instruments, are marked to market each day with the change in
value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly.
(h) Non-income producing security.
(i) These securities are restricted and may be resold only in transactions
exempt from registration which are normally those transactions with
qualified institutional buyers. Restricted securities comprise 0.3% of net
assets.
ARM--Adjustable Rate Mortgage
EUR--Eurodollar
REMIC--Real Estate Mortgage Investment Conduits
STRIPS--Separate Trading of Registered Interest and Principal of Securities
TBA--To be announced, maturity date has not yet been established. Upon
settlement and delivery of the mortgage pools, maturity dates will be assigned.
18 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
December 31, 2004
ASSETS:
Total Investments, including repurchase agreement of
$13,972,000 (Cost $107,596,643)........................... $108,594,753
Foreign Currency (Cost $568)................................ 595
Cash........................................................ 169,320
Receivables:
Interest.................................................. 1,340,085
Investments Sold.......................................... 671,559
Other....................................................... 29,117
------------
Total Assets............................................ 110,805,429
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 9,147,764
Investment Advisory Fee................................... 55,601
Income Distributions...................................... 17,654
Other Affiliates.......................................... 4,145
Forward Foreign Currency Contracts.......................... 208,619
Trustees' Deferred Compensation and Retirement Plans........ 145,950
Accrued Expenses............................................ 76,122
------------
Total Liabilities....................................... 9,655,855
------------
NET ASSETS.................................................. $101,149,574
============
NET ASSET VALUE PER COMMON SHARE ($101,149,574 divided by
15,371,738 shares outstanding)............................ $ 6.58
============
NET ASSETS CONSIST OF:
Common Shares (no par value with unlimited shares
authorized, 15,371,738 shares issued and outstanding)..... $120,152,605
Net Unrealized Appreciation................................. 791,159
Accumulated Undistributed Net Investment Income............. (264,593)
Accumulated Net Realized Loss............................... (19,529,597)
------------
NET ASSETS.................................................. $101,149,574
============
See Notes to Financial Statements 19
VAN KAMPEN INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended December 31, 2004
INVESTMENT INCOME:
Interest.................................................... $5,876,174
Dividends................................................... 124,558
Other....................................................... 51,341
----------
Total Income............................................ 6,052,073
----------
EXPENSES:
Investment Advisory Fee..................................... 645,768
Accounting.................................................. 52,425
Trustees' Fees and Related Expenses......................... 52,141
Shareholder Reports......................................... 47,396
Custody..................................................... 32,190
Legal....................................................... 8,264
Other....................................................... 75,798
----------
Total Expenses.......................................... 913,982
Less Credits Earned on Cash Balances.................... 661
----------
Net Expenses............................................ 913,321
----------
NET INVESTMENT INCOME....................................... $5,138,752
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $1,004,692
Forward Foreign Currency Contracts........................ (133,597)
Foreign Currency Transactions............................. 26,407
----------
Net Realized Gain........................................... 897,502
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (42,524)
----------
End of the Period:
Investments............................................. 998,110
Forward Foreign Currency Contracts...................... (208,619)
Foreign Currency Translation............................ 1,668
----------
791,159
----------
Net Unrealized Appreciation During the Period............... 833,683
----------
NET REALIZED AND UNREALIZED GAIN............................ $1,731,185
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $6,869,937
==========
20 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
-------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................. $ 5,138,752 $ 4,979,071
Net Realized Gain/Loss................................ 897,502 (4,732,962)
Net Unrealized Appreciation During the Period......... 833,683 11,053,582
------------ -----------
Change in Net Assets from Operations.................. 6,869,937 11,299,691
------------ -----------
Distributions from Net Investment Income.............. (5,072,676) (5,291,984)
Return of Capital Distribution........................ -0- (464,494)
------------ -----------
Total Distributions................................... (5,072,676) (5,756,478)
------------ -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES... 1,797,261 5,543,213
NET ASSETS:
Beginning of the Period............................... 99,352,313 93,809,100
------------ -----------
End of the Period (Including accumulated undistributed
net investment income of $(264,593) and $(437,188),
respectively)....................................... $101,149,574 $99,352,313
============ ===========
See Notes to Financial Statements 21
VAN KAMPEN INCOME TRUST
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
------------------------------------------------
2004 2003 2002 2001 (A) 2000
------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.... $ 6.46 $6.10 $ 6.51 $ 6.85 $ 7.25
------ ----- ------ ------ -------
Net Investment Income..................... .33 .32 .39 .53 .60
Net Realized and Unrealized Gain/Loss..... .12 .41 (.33) (.29) (.40)
------ ----- ------ ------ -------
Total from Investment Operations............ .45 .73 .06 .24 .20
------ ----- ------ ------ -------
Less:
Distributions from Net Investment
Income.................................. .33 .34 .47 .58 .60
Return of Capital Distributions........... -0- .03 -0- -0- -0-
------ ----- ------ ------ -------
Total Distributions......................... .33 .37 .47 .58 .60
------ ----- ------ ------ -------
NET ASSET VALUE, END OF THE PERIOD.......... $ 6.58 $6.46 $ 6.10 $ 6.51 $ 6.85
====== ===== ====== ====== =======
Common Share Market Price at End of the
Period.................................... $ 5.85 $5.81 $ 5.71 $ 6.33 $6.5625
Total Return (b)............................ 6.62% 8.42% -2.59% 5.05% 26.59%
Net Assets at End of the Period (In
millions)................................. $101.1 $99.4 $ 93.8 $100.0 $ 104.8
Ratio of Expenses to Average Net Assets..... .92% .92% .89% .93% .96%
Ratio of Net Investment Income to Average
Net Assets................................ 5.17% 5.14% 6.29% 7.88% 8.51%
Portfolio Turnover.......................... 225% 299%(c) 101% 46% 60%
(a) As required, effective January 1, 2001, the Trust has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on fixed income securities and presenting paydown gains
and losses on mortgage- and asset-backed securities as interest income. The
effect of these changes for the year ended December 31, 2001 was an increase
in the ratio of net investment income to average net assets from 7.83% to
7.88%. Net investment income per share and net realized and unrealized gains
and losses per share were unaffected by the adjustments. Per share, ratios
and supplemental data for periods prior to December 31, 2001 have not been
restated to reflect this change in presentation.
(b) Total return assumes an investment at the common share market price at the
beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Trust's dividend reinvestment plan, and sale
of all shares at the closing common share price at the end of the period
indicated.
(c) The Trust's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for a fiscal year by the average
monthly value of the Trust's portfolio securities during such fiscal year.
The turnover rate may vary greatly from year to year as well as within a
year. The accounting treatment used by the Trust for mortgage pool forward
commitments now reflects them as purchases and sales, which had not been the
case in the past. This caused the reported portfolio turnover rate to be
higher during the current fiscal year than in previous fiscal years.
22
VAN KAMPEN INCOME TRUST
FINANCIAL HIGHLIGHTS continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
1999 1998 1997 1996 1995
------------------------------------------------
$ 7.84 $ 8.05 $ 7.93 $ 7.94 $ 7.28
------- ------ ------ ------ ------
.64 .66 .66 .66 .65
(.63) (.22) .18 (.01) .66
------- ------ ------ ------ ------
.01 .44 .84 .65 1.31
------- ------ ------ ------ ------
.60 .65 .72 .66 .65
-0- -0- -0- -0- -0-
------- ------ ------ ------ ------
.60 .65 .72 .66 .65
------- ------ ------ ------ ------
$ 7.25 $ 7.84 $ 8.05 $ 7.93 $ 7.94
======= ====== ====== ====== ======
$5.6875 $ 7.75 $ 8.00 $ 7.50 $ 7.25
-19.81% 5.05% 16.97% 12.95% 21.83%
$ 110.9 $120.0 $123.1 $121.2 $121.4
.95% .96% .91% 1.00% .94%
8.46% 8.17% 8.32% 8.40% 8.50%
28% 47% 55% 36% 34%
See Notes to Financial Statements 23
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2004
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Income Trust (the "Trust") is registered as a diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended. The Trust's investment objective is to provide current income through
investing in a portfolio of U.S. Government securities and in corporate fixed
income securities, including high-yielding, lower rated or nonrated securities
believed not to involve undue risk to income or principal. The Trust commenced
investment operations on April 22, 1988.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Fixed income investments are stated at value using market
quotations or indications of value obtained from an independent pricing service.
Investments in securities listed on a securities exchange are valued at their
sales price as of the close of such securities exchange. Securities listed on a
foreign exchange are valued at their closing price. Listed and unlisted
securities for which the last sales price is not available are valued at the
mean of the bid and asked prices. For those securities where quotations or
prices are not available, valuations are determined in accordance with
procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost, which approximates market value. Forward foreign currency contracts are
valued using quoted foreign exchange rates.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued", "delayed delivery" or
"forward commitment" basis, with settlement to occur at a later date. The price
of the underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The value of
the security so purchased is subject to market fluctuations during this period.
Purchasing securities on this basis involves a risk that the market value at the
time of delivery may be lower than the agreed upon purchase price resulting in
an unrealized loss. The Trust will maintain, in a segregated account with its
custodian, assets having an aggregate value at least equal to the amount of the
when-issued or delayed delivery purchase commitments until payment is made. At
December 31, 2004, the Trust had $9,147,764 of when-issued, delayed delivery and
forward purchase commitments.
The Trust may invest in repurchase agreements, which are short-term
investments whereby the Trust acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Trust may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Trust will make payment for such securities only upon physical delivery or
evidence of book entry transfer to
24
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2004 continued
the account of the custodian bank. The seller is required to maintain the value
of the underlying security at not less than the repurchase proceeds due the
Trust.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Discounts are accreted and
premiums are amortized over the expected life of each applicable security.
D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Trust 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. At December 31, 2004, the Trust had an accumulated capital loss
carryforward for tax purposes of $19,474,366, which will expire according to the
following schedule.
AMOUNT EXPIRATION
$1,416,375.................................................. December 31, 2007
1,347,021.................................................. December 31, 2008
5,081,926.................................................. December 31, 2009
6,212,026.................................................. December 31, 2010
4,974,996.................................................. December 31, 2011
442,022.................................................. December 31, 2012
At December 31, 2004, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $107,875,970
============
Gross tax unrealized appreciation........................... $ 4,680,365
Gross tax unrealized depreciation........................... (3,961,582)
------------
Net tax unrealized appreciation on investments.............. $ 718,783
============
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays dividends
monthly from net investment income to shareholders. Net realized gains, if any,
are distributed 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 December 31,
2004 and 2003 was as follows:
2004 2003
Distribution paid from:
Ordinary Income........................................... $5,081,293 $5,265,713
Return of Capital......................................... -0- 464,494
---------- ----------
$5,081,293 $5,730,207
========== ==========
25
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2004 continued
Due to inherent differences in the recognition of income, expenses, and
realized gains/ losses under accounting principles generally accepted in the
United States of America and federal income tax purposes, permanent differences
between book and tax basis reporting for the 2004 calendar year have been
identified and appropriately reclassified on the Statement of Assets and
Liabilities. A permanent book and tax difference relating to paydowns on
mortgage-backed securities totaling $183,066 was reclassified from accumulated
net realized loss to accumulated undistributed net investment income. A
permanent book and tax difference related to the recognition of net realized
gains on foreign currency transactions totaling $107,190 has been reclassified
to accumulated undistributed net investment income from accumulated net realized
loss. A permanent book and tax difference relating to consent fee income
totaling $50,305 has been reclassified from accumulated undistributed net
investment income to accumulated net realized loss. Also, a permanent book and
tax difference relating to the true-up of prior year adjustments totaling $1,242
was reclassified from accumulated undistributed net investment income to
accumulated net realized loss in the amount of $1,229 and capital in the amount
of $13. Additionally, a permanent difference relating to book to tax
amortization differences totaling $82,190 was reclassified from accumulated
undistributed net investment income to accumulated net realized loss.
As of December 31, 2004, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $186,578
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses relating to wash sale
transactions and post October currency losses in the amount of $168,673 which
are not recognized for tax purposes until the first day of the following fiscal
year.
F. FOREIGN CURRENCY TRANSLATION Asset and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars at the mean of the quoted bid and ask prices of
such currencies against the U.S. dollar. Purchases and sales of portfolio
securities are translated at the rate of exchange prevailing when such
securities were acquired or sold. Realized gain and loss on foreign currency
transactions on the Statement of Operations includes the net realized amount
from the sale of foreign currency and the amount realized between trade date and
settlement date on securities transactions. Income and expenses are translated
at rates prevailing when accrued.
G. EXPENSE REDUCTION During the year ended December 31, 2004, the Trust's
custody fee was reduced by $661 as a result of credits earned on cash balances.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Trust for an annual fee payable
monthly of .65% of the average daily net assets of the Trust.
For the year ended December 31, 2004, the Trust recognized expenses of
approximately $8,100 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP,
26
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2004 continued
counsel to the Trust, of which a trustee of the Trust is a partner of such firm
and he and his law firm provide legal services as legal counsel to the Trust.
Under an Accounting Services agreement, the Adviser provides accounting
services to the Trust. The Adviser allocates the cost of such services to each
trust. For the year ended December 31, 2004, the Trust recognized expenses of
approximately $9,300 representing Van Kampen Investments Inc.'s or its
affiliates' (collectively "Van Kampen") cost of providing accounting services to
the Trust, which is reported as part of "Accounting" expenses in the Statement
of Operations.
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
also officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Trust.
The maximum annual benefit per trustee under the plan is $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
including principal paydowns and excluding short-term investments, were
$212,809,455 and $212,575,108, respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio, foreign currency exposure, or generate potential gain. All of the
Trust's holdings, including derivative instruments, are marked to market each
day with the change in value reflected in unrealized appreciation/depreciation.
Upon disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a forward commitment. In this instance,
the recognition of gain or loss is postponed until the disposal of the security
underlying the forward commitment.
Purchasing securities on a forward commitment involves a risk that the
market value at the time of delivery may be lower than the agreed upon purchase
price resulting in an unrealized loss. Selling securities on a forward
commitment involves different risks and can result in losses more significant
than those arising from the purchase of such securities. Risks may arise as a
result of the potential inability of the counterparties to meet the terms of
their contracts.
A forward currency contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated forward rate. Upon the settlement of
the contract, a realized gain
27
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2004 continued
or loss is recognized and is included as a component of realized gain/loss on
forwards. The following forward foreign currency contracts were outstanding as
of December 31, 2004.
UNREALIZED
CURRENT APPRECIATION/
VALUE DEPRECIATION
SHORT CONTRACTS:
Euro Currency
1,310,000 expiring 1/26/05................................ $1,774,693 $(120,818)
680,000 expiring 1/26/05.................................. 921,215 (62,382)
45,000 expiring 1/26/05................................... 60,963 (4,128)
70,000 expiring 1/26/05................................... 94,831 (6,456)
75,000 expiring 1/26/05................................... 101,605 (4,583)
200,000 expiring 1/26/05.................................. 270,946 (10,252)
---------- ---------
$3,224,253 $(208,619)
========== =========
6. 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.
28
VAN KAMPEN INCOME TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Van Kampen Income Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen Income Trust (the "Trust"), including the portfolio of investments, as of
December 31, 2004, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The Fund's financial highlights for the periods ended prior to December
31, 2000, were audited by other auditors whose report, dated February 10, 2000,
expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes 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 December 31, 2004, by
correspondence with the Trust's custodian and brokers; where replies were not
received from brokers, 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 Income Trust as of December 31, 2004, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
February 11, 2005
29
VAN KAMPEN INCOME TRUST
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUSAN H. WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, NY 10020
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK AND TRUST COMPANY
C/O EQUISERVE
P.O. Box 43011
Providence, Rhode Island 02940-3011
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Trust during its taxable year ended
December 31, 2004. For corporate shareholders, 2% of the distributions qualify
for the dividends received deduction. Certain dividends paid by the Trust may
be subject to a maximum tax rate of 15%, as provided for by the Jobs and
Growth Tax Relief Reconciliation Act of 2003. The Trust intends to designate
up to a maximum of $5,081,293 as taxed at a maximum of 15%. In January, the
Trust provides tax information to shareholders for the preceding calendar
year.
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
30
VAN KAMPEN INCOME TRUST
TRUSTEE AND OFFICER INFORMATION
The business and affairs of the Trust are managed under the direction of the
Trust's Board of Trustees and the Trust's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Trust
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments
Inc. ("Van Kampen Investments"), Van Kampen Asset Management (the "Adviser"),
Van Kampen Funds Inc. (the "Distributor"), Van Kampen Advisors Inc., Van Kampen
Exchange Corp. and Van Kampen Investor Services Inc. ("Investor Services"). The
term "Fund Complex" includes each of the investment companies advised by the
Adviser or its affiliates as of the date of this Statement of Additional
Information. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES:
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (59) Trustee Trustee Chairman and Chief 83 Trustee/Director/Managing
Blistex Inc. since 1997 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products
manufacturer. Director of
the Heartland Alliance, a
nonprofit organization
serving human needs based
in Chicago. Director of
St. Vincent de Paul
Center, a Chicago based
day care facility serving
the children of low
income families. Board
member of the Illinois
Manufacturers'
Association.
Jerry D. Choate (66) Trustee Trustee Prior to January 1999, 81 Trustee/Director/Managing
33971 Selva Road since 2003 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 Director of Valero
to January 1995, Energy Corporation, an
President and Chief independent refining
Executive Officer of company.
Allstate. Prior to August
1994, various management
positions at Allstate.
31
VAN KAMPEN INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (64) Trustee Trustee President of CAC, L.L.C., 83 Trustee/Director/Managing
CAC, L.L.C. since 1997 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Stericycle,
San Diego, CA 92122-6223 advisory services. Prior Inc., Ventana Medical
to February 2001, Vice Systems, Inc., and GATX
Chairman and Director of Corporation, and Trustee
Anixter International, of The Scripps Research
Inc., a global Institute and the
distributor of wire, University of Chicago
cable and communications Hospitals and Health
connectivity products. Systems. Prior to January
Prior to July 2000, 2004, Director of
Managing Partner of TeleTech Holdings Inc.
Equity Group Corporate and Arris Group, Inc.
Investment (EGI), a Prior to May 2002,
company that makes Director of Peregrine
private investments in Systems Inc. Prior to
other companies. February 2001, Director
of IMC Global Inc. Prior
to July 2000, Director of
Allied Riser
Communications Corp.,
Matria Healthcare Inc.,
Transmedia Networks,
Inc., CNA Surety, Corp.
and Grupo Azcarero Mexico
(GAM).
32
VAN KAMPEN INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Linda Hutton Heagy (56) Trustee Trustee Managing Partner of 81 Trustee/Director/Managing
Heidrick & Struggles since 2003 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive executive search firm. in the Fund Complex.
Suite 7000 Trustee on the University
Chicago, IL 60606 of Chicago Hospitals
Board, Vice Chair of the
Board of the YMCA of
Metropolitan Chicago and
a member of the Women's
Board of the University
of Chicago. Prior to
1997, Partner of Ray &
Berndtson, Inc., an
executive recruiting
firm. Prior to 1996,
Trustee of The
International House
Board, a fellowship and
housing organization for
international graduate
students. Prior to 1995,
Executive Vice President
of ABN AMRO, N.A., a bank
holding company. Prior to
1992, Executive Vice
President of La Salle
National Bank.
R. Craig Kennedy (52) Trustee Trustee Director and President of 81 Trustee/Director/Managing
1744 R Street, NW since 2003 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S.
foundation created to
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (69) Trustee Trustee Prior to 1998, President 83 Trustee/Director/Managing
736 North Western Avenue since 1997 and Chief Executive General Partner of funds
P.O. Box 317 Officer of Pocklington in the Fund Complex.
Lake Forest, IL 60045 Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the
Marrow Foundation.
33
VAN KAMPEN INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jack E. Nelson (68) Trustee Trustee President of Nelson 81 Trustee/Director/Managing
423 Country Club Drive since 2003 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 NASD,
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 (64) Trustee Trustee President Emeritus and 83 Trustee/Director/Managing
1126 E. 59th Street since 1997 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Director of Winston
Distinguished Service Laboratories, Inc.
Professor in the
Department of Economics
at the University of
Chicago. Prior to July
2000, President of the
University of Chicago.
Trustee of the University
of Rochester and a member
of its investment
committee. Member of the
National Academy of
Sciences, the American
Philosophical Society and
a fellow of the American
Academy of Arts and
Sciences.
Suzanne H. Woolsey, Ph.D. Trustee Trustee Chief Communications 81 Trustee/Director/Managing
(63) since 2003 Officer of the National General Partner of funds
815 Cumberstone Road Academy of in the Fund Complex.
Harwood, MD 20776 Sciences/National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction
institution, from 2001 to organization, since
November 2003 and Chief January 2004 and Director
Operating Officer from of Neurogen Corporation,
1993 to 2001. Director of a pharmaceutical company,
the Institute for Defense since January 1998.
Analyses, a federally
funded research and
development center,
Director of the German
Marshall Fund of the
United States, Director
of the Rocky Mountain
Institute and Trustee of
Colorado College. Prior
to 1993, Executive
Director of the
Commission on Behavioral
and Social Sciences and
Education at the National
Academy of
Sciences/National
Research Council. From
1980 through 1989,
Partner of Coopers &
Lybrand.
34
VAN KAMPEN INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
INTERESTED TRUSTEES:*
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Mitchell M. Merin* (51) Trustee, Trustee President and Chief 81 Trustee/Director/Managing
1221 Avenue of the Americas President since Executive Officer of General Partner of funds
New York, NY 10020 and Chief 2003; funds in the Fund in the Fund Complex.
Executive President Complex. Chairman,
Officer and Chief President, Chief
Executive Executive Officer and
Officer Director of the Adviser
since 2002 and Van Kampen Advisors
Inc. since December 2002.
Chairman, President and
Chief Executive Officer
of Van Kampen Investments
since December 2002.
Director of Van Kampen
Investments since
December 1999. Chairman
and Director of Van
Kampen Funds Inc. since
December 2002. President,
Director and Chief
Operating Officer of
Morgan Stanley Investment
Management since December
1998. President and
Director since April 1997
and Chief Executive
Officer since June 1998
of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc.
Chairman, Chief Executive
Officer and Director of
Morgan Stanley
Distributors Inc. since
June 1998. Chairman since
June 1998, and Director
since January 1998 of
Morgan Stanley Trust.
Director of various
Morgan Stanley
subsidiaries. President
of the Morgan Stanley
Funds since May 1999.
Previously Chief
Executive Officer of Van
Kampen Funds Inc. from
December 2002 to July
2003, Chief Strategic
Officer of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc. and
Executive Vice President
of Morgan Stanley
Distributors Inc. from
April 1997 to June 1998.
Chief Executive Officer
from September 2002 to
April 2003 and Vice
President from May 1997
to April 1999 of the
Morgan Stanley Funds.
35
VAN KAMPEN INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Richard F. Powers, III* (58) Trustee Trustee Advisory Director of 83 Trustee/Director/Managing
1 Parkview Plaza since 1999 Morgan Stanley. Prior to General Partner of funds
P.O. Box 5555 December 2002, Chairman, in the Fund Complex.
Oakbrook Terrace, IL 60181 Director, President,
Chief Executive Officer
and Managing Director of
Van Kampen Investments
and its investment
advisory, distribution
and other subsidiaries.
Prior to December 2002,
President and Chief
Executive Officer of
funds in the Fund
Complex. Prior to May
1998, Executive Vice
President and Director of
Marketing at Morgan
Stanley and Director of
Dean Witter, Discover &
Co. and Dean Witter
Realty. Prior to 1996,
Director of Dean Witter
Reynolds Inc.
Wayne W. Whalen* (65) Trustee Trustee Partner in the law firm 83 Trustee/Director/Managing
333 West Wacker Drive since 1997 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the
Fund Complex.
* Such trustee is an "interested person" (within the meaning of Section
2(a)(19) of the 1940 Act). Messrs. Merin and Powers are interested persons
of funds in the Fund Complex and the Adviser by reason of their current or
former positions with Morgan Stanley or its affiliates. Mr. Whalen is an
interested person 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.
36
VAN KAMPEN INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
OFFICERS:
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS
Stefanie V. Chang (38) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas and Secretary since 2003 Vice President of funds in the Fund Complex.
New York, NY 10020
Amy R. Doberman (42) Vice President Officer Managing Director and General Counsel, U.S. Investment
1221 Avenue of the Americas since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10020 Management, Inc., Morgan Stanley Investment Advisers Inc.
and the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex as of August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeitus Investment Management,
Inc. from January 1997 to July 2000.
James W. Garrett (36) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas and Treasurer since 2005 Chief Financial Officer and Treasurer of the Morgan Stanley
New York, NY 10020 Institutional Funds since 2002 and funds in the Fund Complex
since January 2005.
Joseph J. McAlinden (62) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas President and Chief since 2002 Stanley Investment Advisors Inc., and Morgan Stanley
New York, NY 10020 Investment Officer Investment Management Inc. and Director of Morgan Stanley
Trust for over 5 years. Executive Vice President and Chief
Investment Officer of funds in the Fund Complex. Managing
Director and Chief Investment Officer of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc. since
December 2002.
37
VAN KAMPEN INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS
Ronald E. Robison (66) Executive Vice Officer Principal Executive Officer of funds in the Fund Complex
1221 Avenue of the Americas President and since 2003 since May 2003. Chief Executive Officer and Chairman of
New York, NY 10020 Principal Executive Investor Services. Executive Vice President and Principal
Officer Executive Officer of funds in the Fund Complex. Managing
Director of Morgan Stanley. Chief Administrative Officer,
Managing Director and Director of Morgan Stanley Investment
Advisors Inc., Morgan Stanley Services Company Inc. and
Managing Director and Director of Morgan Stanley
Distributors Inc. Chief Executive Officer and Director of
Morgan Stanley Trust. Executive Vice President and Principal
Executive Officer of the Institutional and Retail Morgan
Stanley Funds; Director of Morgan Stanley SICAV; previously
Chief Global Operations Officer and Managing Director of
Morgan Stanley Investment Management Inc.
John L. Sullivan (49) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza Officer since 1998 August 2004. Director and Managing Director of Van Kampen
Oakbrook Terrace, IL 60181 Investments, the Adviser, Van Kampen Advisors Inc. and
certain other subsidiaries of Van Kampen Investments. Prior
August 2004, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management. Prior
to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
38
VAN KAMPEN
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc.,
Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange
Corp., as well as current and former individual investors in Van Kampen mutual
funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised by
us. This Policy is, however, applicable to individuals who select us to be a
custodian of securities or assets in individual retirement accounts, 401(k)
accounts, 529 Educational Savings Accounts, accounts subject to the Uniform
Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we help
you achieve your financial objectives. This Policy describes what non-public
personal information we collect about you, why we collect it, and when we may
share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies you or
your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect and
maintain accurate information about you. We may obtain this information from
applications and other forms you submit to us, from your dealings with us, from
consumer reporting agencies, from our Web sites and from third parties and other
sources.
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser,
(continued on back)
VAN KAMPEN
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
your use of our Web sites and your product and service preferences,
through the use of "cookies." "Cookies" recognize your computer each
time you return to one of our sites, and help to improve our sites'
content and personalize your experience on our sites by, for example,
suggesting offerings that may interest you. Please consult the Terms of
Use of these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you better
and to manage our business, we may disclose personal information we collect
about you to our affiliated companies and to non-affiliated third parties as
required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise required
or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except to
enable them to provide services on our behalf, to perform joint marketing
agreements with other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
The Statement of Additional Information includes additional information about
Fund trustees and is available, without charge, upon request by calling
1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2004 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC. 920, 957, 107
VIN ANR 3/05 RN05-00265P-Y12/04
(VAN KAMPEN INVESTMENTS LOGO)
Item 2. Code of Ethics.
(a) The Trust has adopted a code of ethics (the "Code of Ethics") that applies
to its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Trust or a third
party.
(b) No information need be disclosed pursuant to this paragraph.
(c) The Trust has amended its Code of Ethics during the period covered by the
shareholder report presented in Item 1 hereto to delete from the end of the
following paragraph on page 2 of the Code the phrase "to the detriment of the
Fund.":
"Each Covered Officer must not use his personal influence or personal
relationship improperly to influence investment decisions or financial reporting
by the Fund whereby the Covered Officer would benefit personally (directly or
indirectly)."
Further, due to personnel changes at the Adviser, the list of Covered Officers
set forth in Exhibit B and the General Counsel designee to whom questions about
the application of the Code should be referred in Exhibit C were amended during
the period. Exhibit B was then amended again in February 2005. Both editions of
Exhibit B are attached.
(d) Not applicable.
(e) Not applicable.
(f)
(1) The Trust's Code of Ethics is attached hereto as Exhibit 11A.
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Trust's Board of Trustees has determined that it has two "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees : Jerry 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:
2004
REGISTRANT COVERED ENTITIES(1)
AUDIT FEES....................... $24,780 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES.......... $0 $198,000(2)
TAX FEES.................... $1550(3) $0
ALL OTHER FEES.............. $0 $0
TOTAL NON-AUDIT FEES............. $1550 $198,000
TOTAL............................ $26,330 $198,000
2003
REGISTRANT COVERED ENTITIES(1)
AUDIT FEES....................... $21,730 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES.......... $0 $230,000(2)
TAX FEES.................... $1,500(3) $0
ALL OTHER FEES.............. $0 $0
TOTAL NON-AUDIT FEES............. $1,500 $230,000
TOTAL............................ $23,230 $230,000
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 Trust has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are:
Craig Kennedy, Jerry Choate and Rod Dammeyer.
(b) Not applicable.
Item 6. Schedule of Investments.
Please refer to Item #1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Trust's and its investment advisor's Proxy Voting Policies and Procedures
are as follows:
I. POLICY STATEMENT
Introduction - Morgan Stanley Investment Management's ("MSIM") policies and
procedures for voting proxies with respect to securities held in the accounts of
clients applies to those MSIM entities that provide discretionary Investment
Management services and for which a MSIM entity has the authority to vote their
proxies. The policies and procedures and general guidelines in this section will
be reviewed and, as necessary, updated periodically to address new or revised
proxy voting issues. The MSIM entities covered by these policies and procedures
currently include the following: Morgan Stanley Investment Advisors Inc., Morgan
Stanley Alternative Investment Partners, L.P., Morgan Stanley AIP GP LP, Morgan
Stanley Investment Management Inc., Morgan Stanley Investment Group 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, Morgan Stanley Investments LP,
Morgan Stanley Hedge Fund Partners GP LP, Morgan Stanley Hedge Fund Partners LP,
Van Kampen Investment Advisory Corp., Van Kampen Asset Management Inc., and Van
Kampen Advisors Inc. (each a "MSIM Affiliate" and collectively referred to as
the "MSIM Affiliates").
Each MSIM Affiliate will 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 as the "MSIM Funds"), each MSIM Fund will vote
proxies pursuant to authority granted under its applicable investment advisory
agreement or, in the absence of such authority, as authorized by its Board of
Directors or Trustees. A 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 Agreement
does not authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will, in
a prudent and diligent manner, vote proxies in the best interests of clients,
including beneficiaries of and participants in a client's benefit plan(s) for
which we 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 a MSIM Affiliate with a statement of proxy voting
policy. In these
situations, the MSIM Affiliate will comply with the client's policy unless to do
so would be inconsistent with applicable laws or regulations or the MSIM
Affiliate's fiduciary responsibility.
Proxy Research Services - To assist the MSIM Affiliates in their responsibility
for voting proxies and the overall global proxy voting process, Institutional
Shareholder Services ("ISS") and the Investor Responsibility Research Center
("IRRC") have been retained as experts in the proxy voting and corporate
governance area. ISS and IRRC 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 to MSIM Affiliates include
in-depth research, global issuer analysis, and voting recommendations. In
addition to research, ISS provides vote execution, reporting, and recordkeeping.
MSIM's Proxy Review Committee (see Section IV.A. below) will carefully monitor
and supervise the services provided by the proxy research services.
Voting Proxies for certain Non-US Companies - While the proxy voting process is
well established in the United States and other developed markets with a number
of tools and services available to assist an investment manager, voting proxies
of non-US companies located in certain jurisdictions, particularly emerging
markets, may involve a number of problems that may restrict or prevent a MSIM
Affiliate's ability to vote such proxies. 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 the MSIM Affiliate's voting
instructions. As a result, clients' non-U.S. proxies will be voted on a best
efforts basis only, consistent with the Client Proxy Standard. ISS has been
retained to provide assistance to the MSIM Affiliates in connection with voting
their clients' non-US proxies.
II. GENERAL PROXY VOTING GUIDELINES
To ensure consistency in voting proxies on behalf of its clients, MSIM
Affiliates will follow (subject to any exception set forth herein) these Proxy
Voting Policies and Procedures, including the guidelines set forth below. These
guidelines address a broad range of issues, including board size and
composition, executive compensation, anti-takeover proposals, capital structure
proposals and social responsibility issues and are meant to be general voting
parameters on issues that arise most frequently. The MSIM Affiliates, however,
may vote in a manner that is contrary to the following general guidelines,
pursuant to the procedures set forth in Section IV. below, provided the vote is
consistent with the Client Proxy Standard.
III. GUIDELINES
A. MANAGEMENT PROPOSALS
1. When voting on routine ballot items the following proposals
are generally voted in support of management, subject to the
review and approval of the Proxy Review Committee, as
appropriate.
- Selection or ratification of auditors.
- Approval of financial statements, director and auditor
reports.
- Election of Directors.
- Limiting Directors' liability and broadening
indemnification of Directors.
- Requirement that a certain percentage (up to 66 2/3%) of
its Board's members be comprised of independent and
unaffiliated Directors.
- Requirement that members of the company's compensation,
nominating and audit committees be comprised of
independent or unaffiliated Directors.
- Recommendations to set retirement ages or require
specific levels of stock ownership by Directors.
- General updating/corrective amendments to the charter.
- Elimination of cumulative voting.
- Elimination of preemptive rights.
- Provisions for confidential voting and independent
tabulation of voting results.
- Proposals related to the conduct of the annual meeting
except those proposals that relate to the "transaction of
such other business which may come before the meeting."
2. The following non-routine proposals, which potentially may
have a substantive financial or best interest impact on a
shareholder, are generally voted in support of management,
subject to the review and approval of the Proxy Review
Committee, as appropriate.
Capitalization changes
- Capitalization changes that eliminate other classes of
stock and voting rights.
- Proposals to increase the authorization of existing
classes of common stock (or securities convertible into
common stock) if: (i) a clear and legitimate business
purpose is stated; (ii) the number of shares requested is
reasonable in relation to the purpose for which
authorization is requested; and (iii) the authorization
does not exceed 100% of shares currently authorized and
at least 30% of the new authorization will be
outstanding.
- Proposals to create a new class of preferred stock or for
issuances of preferred stock up to 50% of issued capital.
- Proposals for share repurchase plans.
- Proposals to reduce the number of authorized shares of
common or preferred stock, or to eliminate classes of
preferred stock.
- Proposals to effect stock splits.
- Proposals to effect reverse stock splits if management
proportionately reduces the authorized share amount set
forth in the corporate charter. Reverse stock splits that
do not adjust proportionately to the authorized share
amount will generally be approved if the resulting
increase in authorized shares coincides with the proxy
guidelines set forth above for common stock increases.
Compensation
- Director fees, provided the amounts are not excessive
relative to other companies in the country or industry.
- 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.
- Establishment of Employee Stock Option Plans and other
employee ownership plans.
Anti-Takeover Matters
- Modify or rescind existing supermajority vote
requirements to amend the charters or bylaws.
- Adoption of anti-greenmail provisions provided that the
proposal: (i) defines greenmail; (ii) prohibits buyback
offers to large block holders 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.
3. The following non-routine proposals, which potentially may
have a substantive financial or best interest impact on the
shareholder, are generally voted against (notwithstanding
management support), subject to the review and approval of the
Proxy Review Committee, as appropriate.
- Capitalization changes that add classes of stock which
substantially dilute the voting interests of existing
shareholders.
- Proposals to increase the authorized number of shares of
existing classes of stock that carry preemptive rights or
supervoting rights.
- Creation of "blank check" preferred stock.
- Changes in capitalization by 100% or more.
- Compensation proposals that allow for discounted stock
options that have not been offered to employees in
general.
- Amendments to bylaws that would require a supermajority
shareholder vote to pass or repeal certain provisions.
- Proposals to indemnify auditors.
4. The following types of non-routine proposals, which
potentially may have a potential financial or best interest
impact on an issuer, are voted as determined by the Proxy
Review Committee.
Corporate Transactions
- Mergers, acquisitions and other special corporate
transactions (i.e., takeovers, spin-offs, sales of
assets, reorganizations, restructurings and
recapitalizations) will be examined on a case-by-case
basis. In all cases, ISS and IRRC research and analysis
will be used along with MSIM Affiliates' research and
analysis, based on, among other things, MSIM internal
company-specific knowledge.
- Change-in-control provisions in non-salary compensation
plans, employment contracts, and severance agreements
that benefit management and would be costly to
shareholders if triggered.
- Shareholders rights plans that allow appropriate offers
to shareholders to be blocked by the board or trigger
provisions that prevent legitimate offers from
proceeding.
- Executive/Director stock option plans. Generally, stock
option plans should meet the following criteria:
(i) Whether the stock option plan is incentive based;
(ii) For mature companies, should be no more than 5% of
the issued capital at the time of approval;
(iii) For growth companies, should be no more than 10%
of the issued capital at the time of approval.
Anti-Takeover Provisions
- Proposals requiring shareholder ratification of poison
pills.
- Anti-takeover and related provisions that serve to
prevent the majority of shareholders from exercising
their rights or effectively deter the appropriate tender
offers and other offers.
B. SHAREHOLDER PROPOSALS
1. The following shareholder proposals are generally supported,
subject to the review and approval of the Proxy Review
Committee, as appropriate:
- Requiring auditors to attend the annual meeting of
shareholders.
- Requirement that members of the company's compensation,
nominating and audit committees be comprised of
independent or unaffiliated Directors.
- Requirement that a certain percentage of its Board's
members be comprised of independent and unaffiliated
Directors.
- Confidential voting.
- Reduction or elimination of supermajority vote
requirements.
2. The following shareholder proposals will be voted as
determined by the Proxy Review Committee.
- Proposals that limit tenure of directors.
- Proposals to limit golden parachutes.
- Proposals requiring directors to own large amounts of
stock to be eligible for election.
- Restoring cumulative voting in the election of directors.
- Proposals that request or require disclosure of executive
compensation in addition to the disclosure required by
the Securities and Exchange Commission ("SEC")
regulations.
- Proposals that limit retirement benefits or executive
compensation.
- Requiring shareholder approval for bylaw or charter
amendments.
- Requiring shareholder approval for shareholder rights
plan or poison pill.
- Requiring shareholder approval of golden parachutes.
- Elimination of certain anti-takeover related provisions.
- Prohibit payment of greenmail.
3. The following shareholder proposals are generally not
supported, subject to the review and approval of the
Committee, as appropriate.
- Requirements that the issuer prepare reports that are
costly to provide or that would require duplicative
efforts or expenditures that are of a non-business nature
or would provide no pertinent information from the
perspective of institutional shareholders.
- Restrictions related to social, political or special
interest issues that impact the ability of the company to
do business or be competitive and that have a significant
financial or best interest impact to the shareholders.
- Proposals that require inappropriate endorsements or
corporate actions.
IV. ADMINISTRATION OF PROXY POLICIES AND PROCEDURES
A. PROXY REVIEW COMMITTEE
1. The MSIM Proxy Review Committee ("Committee") is responsible
for creating and implementing MSIM's Proxy Voting Policy and
Procedures and, in this regard, has expressly adopted them.
Following are some of the functions and responsibilities of
the Committee.
(a) The Committee, which will consist of members
designated by MSIM's Chief Investment Officer, is
responsible for establishing MSIM's proxy voting
policies and guidelines and determining how MSIM will
vote proxies on an ongoing basis.
(b) The Committee will periodically review and have the
authority to amend as necessary MSIM's proxy voting
policies and guidelines (as expressed in these Proxy
Voting Policy and Procedures) and establish and
direct voting positions consistent with the Client
Proxy Standard.
(c) The Committee will meet at least monthly to (among
other matters): (1) address any outstanding issues
relating to MSIM's Proxy Voting Policy and
Procedures; and (2) generally review proposals at
upcoming shareholder meetings of MSIM portfolio
companies in accordance with this Policy and
Procedures including, as appropriate, the voting
results of prior shareholder meetings of the same
issuer where a similar proposal was presented to
shareholders. The Committee, or its designee, will
timely communicate to ISS MSIM's Proxy Voting Policy
and Procedures (and any amendments to them and/or any
additional guidelines or procedures it may adopt).
(d) 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 Procedures); (2) review and approve
upcoming votes, as appropriate, for matters for which
specific direction has been provided in Sections I,
II, and III above; and (3) determine how to vote
matters for which specific direction has not been
provided in Sections I, II and III above. Split votes
will generally not be approved within a single Global
Investor Group team. The Committee may take into
account ISS recommendations and the research provided
by IRRC as well as any other relevant information
they may request or receive.
(e) In addition to the procedures discussed above, if the
Committee determines that an issue raises a potential
material conflict of interest, or gives rise to the
appearance of a potential material conflict of
interest, the Committee will designate a special
committee to review, and recommend a course of action
with respect to, the conflict(s) in question
("Special Committee"). The Special Committee may
request the assistance of the Law and Compliance
Departments and will have sole discretion to cast a
vote. In addition to the research provided by ISS and
IRRC, the Special Committee may request analysis from
MSIM Affiliate investment professionals and outside
sources to the extent it deems appropriate.
(f) The Committee and the Special Committee, or their
designee(s), will document in writing all of their
decisions and actions, which documentation will be
maintained by the Committee and the Special
Committee, or their designee(s) for a period of at
least 6 years. To the extent these decisions relate
to a security held by a MSIM U.S. registered
investment company, the Committee and Special
Committee, or their designee(s), will report their
decisions to each applicable Board of
Trustees/Directors of those investment companies 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 Committee and Special Committee, or their designee(s), will timely
communicate to applicable PMs, the Compliance Departments and, as necessary to
ISS, decisions of the Committee and Special Committee so that, among other
things, ISS will vote proxies consistent with their decisions.
Item 8. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not Applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 10. Controls and Procedures
(a) The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
Item 11. Exhibits.
(a) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.
(b)(1) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(b)(2) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Income Trust
By: /s/ Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: February 17, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: February 17, 2005
By: /s/ James W. Garrett
---------------------
Name: James W. Garrett
Title: Principal Financial Officer
Date: February 17, 2005