UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05273
Van Kampen Income Trust
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
(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: 6/30/06
Item 1. Report to Shareholders.
The Trust's semiannual 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 semiannual 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 June 30, 2006.
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 6/30/2006
INCOME TRUST
SYMBOL: VIN
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AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (4/22/88) 6.84% 6.17%
10-year 5.71 5.26
5-year 5.45 1.99
1-year 2.35 2.68
6-month 0.79 2.66
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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 SIX-MONTH PERIOD ENDED JUNE 30, 2006
MARKET CONDITIONS
The first six months of 2006 provided few surprises in the bond market. To
virtually no one's surprise, the Federal Open Market Committee (the "Fed")
continued to raise the target federal funds rate by 25 basis points at each of
its meetings during the first half of the year, bringing the rate to 5.25
percent at the end of June. In the Fed's view, the U.S. economy remains on solid
footing, and core inflation is still relatively low, though most measures of
core inflation are either at or above the high end of the range historically
viewed as acceptable by the Fed.
Also as expected, longtime Fed Chairman Alan Greenspan retired in January after
a term of more than 18 years. Ben S. Bernanke replaced Greenspan as Chairman,
and in his first Congressional testimony in the role acknowledged some risks to
the Fed's relatively contained inflation forecast, as well as the potential for
upward pressure on inflation in the event of continued high energy prices and
other building inflationary pressures.
Comments made by Fed members after their May and June meetings indicated that
they will likely rely heavily on economic data in making future decisions
concerning the direction of interest rates. In fact, based on these comments it
appears that the Fed will be driven by the weight of the economic data more so
now than perhaps at anytime over the past few years.
Due mainly to concerns over inflation and increased risk in the corporate
market, the credit sector had trouble keeping pace with other fixed income
sectors, and posted its lowest six-month return since 1999. Within the
investment-grade portion of the sector, lower-rated issues (BBB- and A-rated)
outpaced higher-rated issues (AA-rated and above). Industrials posted the
highest returns, followed by utilities and financials. Overall, longer dated
corporate issues underperformed shorter-dated issues.
The high-yield portion of the corporate market finished ahead of the
investment-grade portion, with lower rated issues (CC- and CCC-rated) outpacing
higher quality high yield issues. Furthermore, similar to the investment grade
sector, higher yield industrial issues outpaced both utilities and financials.
The financial and automotive sectors posted the highest returns, while energy
producers posted the lowest.
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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, as they did during the reporting period. The trust returned
0.79 percent on an NAV basis and 2.66 percent on a market price basis.
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006
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BASED ON NAV BASED ON MARKET PRICE
0.79% 2.66%
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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.
During the period, we kept the trust's overall duration (a measure of interest
rate sensitivity) at a modest level. This posture was beneficial as interest
rates rose across the market, especially in the short- and intermediate-portions
of the yield curve.
Our focus on higher-coupon mortgage backed securities with slow prepayments
boosted the trust's yield, and benefited performance. Gains from these
securities were offset, however, by a large underweight in lower- and
current-coupon issues, which detracted from the trust's relative performance.
Within the high yield portion of the portfolio, we adopted a relatively
defensive stance by focusing on securities with higher credit quality. This
approach detracted from performance as higher-rated issues underperformed the
riskier segments of the high yield market.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the trust in
the future.
CHANGES IN INVESTMENT POLICIES
The Trust approved changes in its investment policies to allow the Trust to
enter into the following transactions.
ASSET-BACKED SECURITIES AND COMMERCIAL PAPER
Under normal market conditions, the Trust may invest up to 20% of its net assets
in asset-backed securities and/or commercial paper. The asset-backed securities
in which the Trust may invest must be rated at the time of purchase
3
in the highest investment grade (currently Aaa by Moody's Investors Service,
Inc. ("Moody's"), AAA by Standard & Poor's ("S&P") or an equivalent rating by
another nationally recognized statistical rating organization ("NRSRO")). The
commercial paper in which the Trust may invest must be rated at the time of
purchase in the highest investment grade (currently P1 by Moody's, A1 by S&P or
an equivalent rating by another NRSRO).
Asset-Backed Securities. Asset-backed securities are similar to mortgage-related
securities, however, the underlying assets include assets such as automobile and
credit card receivables. The assets are securitized either in a pass-through
structure (similar to a mortgage pass-through structure) or in a pay-through
structure. Although the collateral supporting asset-backed securities generally
is of a shorter maturity than mortgage loans and historically has been less
likely to experience substantial prepayments, no assurance can be given as to
the actual maturity of an asset-backed security because prepayments of principal
may be made at any time.
Investments in asset-backed securities present certain risks not ordinarily
associated with investments in mortgage-backed securities because asset-backed
securities do not have the benefit of the same type of security interest in the
related collateral as mortgage-backed securities. Credit card receivables are
generally unsecured and a number of state and federal consumer credit laws give
debtors the right to set off certain amounts owed on the credit cards, thereby
reducing the outstanding balance. In the case of automobile receivables, there
is a risk that the holders may not have either a proper or first security
interest in all of the obligations backing such receivables due to the large
number of vehicles involved in a typical issuance, and technical requirements
under state laws. Therefore, recoveries on repossessed collateral may not always
be available to support payments on the securities.
The rate of principal payment generally depends on the rate of principal
payments received on the underlying assets. Such rate of payments may be
affected by economic and various other factors. Therefore, the yield may be
difficult to predict and actual yield to maturity may be more or less than the
anticipated yield to maturity. The credit quality of most asset-backed
securities depends primarily on the credit quality of the assets underlying such
securities, how well the entity issuing the security is insulated from the
credit risk of the originator or affiliated entities, and the amount of credit
support provided to the securities.
Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures
by obligor on underlying assets to make payments, such securities may contain
elements of credit support. Such credit support falls into two categories: (i)
liquidity protection and (ii) protection against losses resulting from ultimate
default by an obligor on the underlying assets. Liquidity protection refers to
the provision of advances, generally by the entity administering the pool of
assets, to ensure that the receipt of payments due on the underlying pool is
timely.
4
Protection against losses resulting from ultimate default enhances the
likelihood of payment of the obligations on at least some of the assets in the
pool. Such protection may be provided through guarantees, insurance policies or
letters of credit obtained by the issuer or sponsor from third parties, through
various means of structuring the transaction or through a combination of such
approaches. The Trust will not pay any additional fees for such credit support,
although the existence of credit support may increase the price of a security.
Examples of credit support arising out of the structure of the transaction
include "senior-subordinated securities" (multiple class securities with one or
more classes subordinate to other classes as to the payment of principal thereof
and interest thereon, with the result that defaults on the underlying assets are
borne first by the holders of the subordinated class), creation of "reserve
funds" (where cash or investments, sometimes funded from a portion of the
payments on the underlying assets, are held in reserve against future losses)
and "over-collaterization" (where the scheduled payments on, or the principal
amount of, the underlying assets exceeds that required to make payment of the
securities and pay any servicing or other fees). The degree of credit support
provided for each issue is generally based on historical information respecting
the level of credit risk associated with the underlying assets. Delinquencies or
losses in excess of those anticipated could adversely affect the return on an
investment in such issue.]
Commercial paper. Commercial paper consists of short-term (usually 1 to 270
days) unsecured promissory notes issued by corporations in order to finance
their current operations.
CERTAIN DERIVATIVE 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.
Swaps. The Trust may enter into interest rate and index swaps and the purchase
or sale of related caps, floors and collars. The Trust expects to enter into
these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, as a duration management technique or to
protect against any increase in the price of securities the Trust anticipates
purchasing at a later date. The Trust intends to use these transactions as
hedges and not as speculative investments and will not sell interest rate caps
or floors where it does not own securities or other instruments providing the
income stream the Trust may be obligated to pay.
Interest rate swaps involve the exchange by the Trust with another party of
their respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments with respect to a notional amount
of principal. The purchase of an interest rate cap entitles the purchaser, to
the extent that a specified index exceeds a predetermined interest rate, to
receive
5
payments of interest on a contractually-based principal amount from the party
selling the interest rate cap. The purchase of an interest rate floor entitles
the purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually-based
principal amount from the party selling the interest rate floor. An interest
rate collar combines the elements of purchasing a cap and selling a floor. The
collar protects against an interest rate rise above the maximum amount but
foregoes the benefit of an interest rate decline below the minimum amount.
An index swap is an agreement to swap cash flows on a notional amount based on
changes in the values of the reference indices. The purchase of a cap entitles
the purchaser to receive payments on a notional principal amount from the party
selling such cap to the extent that a specified index exceeds a predetermined
interest rate or amount. The purchase of a floor entitles the purchaser to
receive payments on a notional principal amount from the party selling such
floor to the extent that a specified index falls below a predetermined interest
rate or amount. A collar is a combination of a cap and a floor that preserves a
certain return within a predetermined range of interest rates or values.
The Trust may enter into credit default swap contracts or credit-linked notes
for hedging purposes or to gain exposure to a credit in which the Trust may
otherwise invest. A credit default swap is an agreement between two parties to
exchange the credit risk of an issuer (reference entity). A buyer of a credit
default swap is said to buy protection by paying periodic fees in return for a
contingent payment from the seller if the reference entity has a credit event
such as a bankruptcy, a failure to pay outstanding obligations or deteriorating
credit while the swap is outstanding. A seller of a credit default swap is said
to sell protection and thus collects the periodic fees and profits if the credit
of the reference entity remains stable or improves while the swap is outstanding
but the seller in a credit default swap contract would be required to pay an
agreed-upon amount to the buyer in the event of an adverse credit event of the
reference entity. A credit-linked note is a synthetic security, typically issued
by a special purpose vehicle, that trades like a bond issued by the reference
entity but with the economics of the credit default swap. For this security, the
buyer of protection sells the note. The buyer of protection (note seller) will
pay periodic payments and profit if the reference entity defaults. Unlike the
swap, the buyer of protection in a credit-linked note will receive money at the
time of transaction from the sale of the note, and will return this money at the
contract's maturity if no credit event occurs. Conversely, the seller of
protection purchases the notes. As with a credit default swap, the note
purchaser (protection seller) receives periodic payments. Unlike the swap
transaction, the protection seller must pay for the note at the time of the
transaction and will collect this money at the contract's maturity if no credit
event occurs.
The Trust will enter into swap, cap or floor transactions only with
counterparties approved by the Adviser in accordance with guidelines
6
established by the Trust's Board of Trustees. The Adviser will monitor the
creditworthiness of counterparties to the Trust's swap, cap, floor and collar
transactions on an ongoing basis. If there is a default by the other party to
such a transaction, the Trust will have contractual remedies pursuant to the
agreements related to the transaction. The Trust may enter into swaps on either
an asset-based or liability-based basis, and will usually enter into swaps on a
net basis, i.e., the two payment streams are netted out, with the Trust
receiving or paying, as the case may be, only the net amount of the two
payments. The net amount of the excess, if any, of the Trust's obligations over
its entitlements with respect to each swap will be accrued on a daily basis and
the Trust segregates an amount of cash and/or liquid securities having an
aggregate net asset value at least equal to the accrued excess. If the Trust
enters into a swap transaction on other than a net basis, the Trust would
segregate the full amount accrued on a daily basis of the Trust's obligations
with respect to the swap. To the extent the Trust sells (i.e. writes) caps,
floors and collars, it will segregate cash and/or liquid securities having an
aggregate net asset value at least equal to the full amount, accrued on a daily
basis, of the Trust's net obligations with respect to the caps, floors or
collars.
The use of swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. If the Adviser is incorrect in its forecasts of the
market values, interest rates and other applicable factors, the investment
performance of the Trust would diminish compared with what it would have been if
these investment techniques were not used. The use of swaps, caps, collars and
floors may also have the effect of shifting the recognition of income between
current and future periods.
Inverse Floating Rate Obligations. The Trust may invest up to 10% of its net
assets in "inverse floating rate obligations." Floating rate obligations bear
rates of interest that are adjusted periodically to reflect changes in market
rates of interest. Inverse floating rate obligations have rates that vary
inversely with changes in market rates of interest. These securities have
varying degrees of liquidity and the market value of such securities generally
will fluctuate in response to changes in market rates of interest to a greater
extent than the value of an equal principal amount of a fixed rate security
having similar credit quality, redemption provisions and maturity.
Foreign Currency Exchange Risks. To the extent the Trust invests in securities
denominated or quoted in currencies other than the U.S. dollar, the Trust will
be affected by changes in foreign currency exchange rates (and exchange control
regulations) which affect the value of investments in the Trust and the income
and appreciation or depreciation of the investments. Changes in foreign currency
exchange ratios relative to the U.S. dollar will affect the U.S. dollar value of
the Trust's assets denominated in that currency and the Trust's yield on such
assets. In addition, the Trust will incur costs in connection with conversions
between various currencies.
7
The Trust's foreign currency exchange transactions may be conducted on a spot
basis (that is, cash basis) at the spot rate for purchasing or selling currency
prevailing in the foreign currency exchange market. The Trust also may enter
into contracts with banks, brokers or dealers to purchase or sell securities or
foreign currencies at a future date ("forward contracts"). A foreign currency
forward contract is a negotiated agreement between the contracting parties to
exchange a specified amount of currency at a specified future time at a
specified rate. The rate can be higher or lower than the spot rate between the
currencies that are the subject of the contract.
The Trust may attempt to protect against adverse changes in the value of the
U.S. dollar in relation to a foreign currency by entering into a forward
contract for the purchase or sale of the amount of foreign currency invested or
to be invested or by buying or selling a foreign currency option or futures
contract for such amount. Such strategies may be employed before the Trust
purchases a foreign security traded in the currency which the Trust anticipates
acquiring or between the date the foreign security is purchased or sold and the
date on which payment therefor is made or received. Seeking to protect against a
change in the value of a foreign currency in the foregoing manner does not
eliminate fluctuations in the prices of portfolio securities or prevent losses
if the prices of such securities decline. Furthermore, such transactions reduce
or preclude the opportunity for gain if the value of the currency should move in
the direction opposite to the position taken. Unanticipated changes in currency
prices may result in poorer overall performance for the Trust than if it had not
entered into such contracts. The Trust is not required to enter into such
transactions with regard to its foreign currency-denominated securities. It also
should be realized that this method of protecting the value of portfolio
securities against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It simply establishes a
rate of exchange which one can achieve at some future point in time. In
addition, although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time, they tend to
limit any potential gain which might result should the value of such currency
increase.
The Trust may cross-hedge currencies by entering into a transaction to purchase
or sell one or more currencies that are expected to decline in value relative to
other currencies to which a portfolio has or expects to have portfolio exposure.
The Trust may also engage in proxy hedging, which is defined as entering into
positions in one currency to hedge investments denominated in another currency,
where two currencies are economically linked. The Trust's entry into forward
contracts, as well as any use of proxy or cross hedging techniques, will
generally require the Trust to segregate cash and/or liquid securities at least
equal to the Trust's obligations throughout the duration of the contract. The
Trust may combine forward contracts with investments in securities denominated
in other currencies to achieve desired security and currency exposures. Such
combinations are generally referred to as synthetic securities. For example, in
lieu of purchasing a foreign bond, the Trust may purchase a
8
U.S. dollar-denominated security and at the same time enter into a forward
contract to exchange U.S. dollars for the contract's underlying currency at a
future date. By matching the amount of U.S. dollars to be exchanged with the
anticipated value of the U.S. dollar-denominated security, the Trust may be able
to lock in the foreign currency value of the security and adopt a synthetic
position reflecting the credit quality of the U.S. dollar-denominated security.
To the extent required by the rules and regulations of the SEC, the Trust will
segregate cash and/or liquid securities in an amount at least equal to the value
of the Trust's total assets committed to the consummation of forward foreign
currency exchange contracts. If the value of the segregated assets declines,
additional cash and/or liquid securities will be segregated on a daily basis so
that the value of the segregated assets will be at least equal to the amount of
the Trust's commitments with respect to such contracts.
Collateralized Mortgage Obligations and Multiclass Pass-Through Securities. The
Trust may invest in collateralized mortgage obligations ("CMOs"). CMOs are debt
obligations collateralized by mortgage loans or mortgage pass-through
securities. Typically, CMOs are collateralized by GNMA, FNMA or FHLMC
certificates, but also may be collateralized by whole loans or private pass-
through securities (such collateral collectively hereinafter referred to as
"Mortgage Assets"). Multiclass pass-through securities are equity interests in a
trust composed of Mortgage Assets. Unless the context indicates otherwise, all
references herein to CMOs include multiclass pass-through securities. Payments
of principal of and interest on the Mortgage Assets, and any reinvestment income
thereon, provide the funds to pay debt service on the CMOs or make scheduled
distributions on the multiclass pass-through securities. CMOs deemed to be U.S.
government securities are those issued or guaranteed as to principal and
interest by a person controlled or supervised by and acting as an agency or
instrumentality of the U.S. government. The issuer of a series of CMOs may elect
to be treated as a Real Estate Mortgage Investment Conduit (a "REMIC").
In a CMO, a series of bonds or certificates is issued in multiple classes. Each
class of CMOs, often referred to as a "tranche," is issued at a specific fixed
or floating coupon rate and has a stated maturity or final distribution date.
Principal prepayments on the Mortgage Assets may cause the CMOs to be retired
substantially earlier than their stated maturities or final distribution dates.
Interest is paid or accrues on all classes of the CMOs on a monthly, quarterly
or semi-annual basis. The principal of and interest on the Mortgage Assets may
be allocated among the several classes of a series of a CMO in innumerable ways.
The Trust may invest in, among others, parallel pay CMOs and Planned
Authorization Class CMOs ("PAC Bonds"). Parallel pay CMOs are structured to
provide payments of principal on each payment date to more than one class. These
simultaneous payments are taken into account in calculating the stated maturity
date or final distribution date of each class, which, as with other CMO
structures, must be retired by its stated maturity date or final distribution
date
9
but may be retired earlier. PAC Bonds generally require payments of a specified
amount of principal on each payment date. PAC Bonds are always parallel pay CMOs
with the required principal payment on such securities having the highest
priority after interest has been paid to all classes. Substantially all of the
CMOs in which the Trust invests are PAC Bonds.
Stripped Mortgage-Backed Securities. The Trust also may invest in stripped
mortgage-backed securities ("SMBS"). An SMBS is a derivative multiclass mortgage
security. SMBS usually are structured with two classes that receive different
proportions of the interest and principal distribution on a pool of Mortgage
Assets. In the most extreme case, one class will receive all of the interest
(the interest-only or "IO" class), while the other class will receive all of the
principal (the principal-only or "PO" class). The yield to maturity on an IO
class is extremely sensitive to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on such security's yield
to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Trust may fail to fully recoup its
initial investment in these securities. Conversely, if the underlying mortgage
assets experience less than anticipated prepayments of principal, the yield of
POs could be materially adversely affected. The market values of IOs and POs are
subject to greater risk of fluctuation in response to changes in market rates of
interest than many other types of government securities and, to the extent the
Trust invests in IOs and POs, increases the risk of fluctuations in the net
asset value of the Trust. The Adviser will seek to manage these risks (and
potential benefits) by investing in a variety of such securities and through the
use of derivative transactions.
ASSET-BACKED SECURITIES AND COMMERCIAL PAPER
Under normal market conditions, the Trust may invest up to 20% of its net assets
in asset-backed securities and/or commercial paper. The asset-backed securities
in which the Trust may invest must be rated at the time of purchase in the
highest investment grade (currently Aaa by Moody's Investors Service, Inc.
("Moody's"), AAA by Standard & Poor's ("S&P") or an equivalent rating by another
nationally recognized statistical rating organization ("NRSRO")). The commercial
paper in which the Trust may invest must be rated at the time of purchase in the
highest investment grade (currently P1 by Moody's, A1 by S&P or an equivalent
rating by another NRSRO).
Asset-Backed Securities. Asset-backed securities are similar to mortgage-related
securities, however, the underlying assets include assets such as automobile and
credit card receivables. The assets are securitized either in a pass-through
structure (similar to a mortgage pass-through structure) or in a pay-through
structure. Although the collateral supporting asset-backed securities generally
is of a shorter maturity than mortgage loans and historically has been less
likely to experience substantial prepayments, no assurance can be given as to
the actual
10
maturity of an asset-backed security because prepayments of principal may be
made at any time.
Investments in asset-backed securities present certain risks not ordinarily
associated with investments in mortgage-backed securities because asset-backed
securities do not have the benefit of the same type of security interest in the
related collateral as mortgage-backed securities. Credit card receivables are
generally unsecured and a number of state and federal consumer credit laws give
debtors the right to set off certain amounts owed on the credit cards, thereby
reducing the outstanding balance. In the case of automobile receivables, there
is a risk that the holders may not have either a proper or first security
interest in all of the obligations backing such receivables due to the large
number of vehicles involved in a typical issuance, and technical requirements
under state laws. Therefore, recoveries on repossessed collateral may not always
be available to support payments on the securities.
[The rate of principal payment generally depends on the rate of principal
payments received on the underlying assets. Such rate of payments may be
affected by economic and various other factors. Therefore, the yield may be
difficult to predict and actual yield to maturity may be more or less than the
anticipated yield to maturity. The credit quality of most asset-backed
securities depends primarily on the credit quality of the assets underlying such
securities, how well the entity issuing the security is insulated from the
credit risk of the originator or affiliated entities, and the amount of credit
support provided to the securities.
Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures
by obligor on underlying assets to make payments, such securities may contain
elements of credit support. Such credit support falls into two categories: (i)
liquidity protection and (ii) protection against losses resulting from ultimate
default by an obligor on the underlying assets. Liquidity protection refers to
the provision of advances, generally by the entity administering the pool of
assets, to ensure that the receipt of payments due on the underlying pool is
timely. Protection against losses resulting from ultimate default enhances the
likelihood of payment of the obligations on at least some of the assets in the
pool. Such protection may be provided through guarantees, insurance policies or
letters of credit obtained by the issuer or sponsor from third parties, through
various means of structuring the transaction or through a combination of such
approaches. The Fund will not pay any additional fees for such credit support,
although the existence of credit support may increase the price of a security.
Examples of credit support arising out of the structure of the transaction
include "senior-subordinated securities" (multiple class securities with one or
more classes subordinate to other classes as to the payment of principal thereof
and interest thereon, with the result that defaults on the underlying assets are
borne first by the holders of the subordinated class), creation of "reserve
funds" (where cash or investments, sometimes funded from a portion of the
payments
11
on the underlying assets, are held in reserve against future losses) and "over-
collateralization" (where the scheduled payments on, or the principal amount of,
the underlying assets exceeds that required to make payment of the securities
and pay any servicing or other fees). The degree of credit support provided for
each issue is generally based on historical information respecting the level of
credit risk associated with the underlying assets. Delinquencies or losses in
excess of those anticipated could adversely affect the return on an investment
in such issue.]
COMMERCIAL PAPER. Commercial paper consists of short-term (usually 1 to 270
days) unsecured promissory notes issued by corporations in order to finance
their current operations.
12
RATINGS ALLOCATION AS OF 6/30/06
AAA/Aaa 38.8%
A/A 0.3
BBB/Baa 3.1
BB/Ba 24.1
B/B 29.5
CCC/Caa 4.2
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF
6/30/06
U.S. Government Agency Obligations 32.3%
Healthcare 5.8
Media-Cable 3.5
Integrated Energy 3.3
Electric 2.9
Chemicals 2.7
Gaming 2.5
Retail 2.3
Automotive 2.2
Consumer Products 2.1
Media-Noncable 2.0
Food/Beverage 1.8
Metals 1.7
Paper 1.7
Transportation Services 1.6
Wireless Communications 1.4
Oil Field Services 1.2
Packaging 1.1
Home Construction 1.1
Lodging 0.9
Natural Gas Pipelines 0.9
Supermarkets 0.9
Independent Energy 0.7
Technology 0.7
Wireline Communications 0.7
Environmental & Facilities Services 0.7
Construction Machinery 0.7
Tobacco 0.6
Railroads 0.6
Diversified Manufacturing 0.5
Aerospace & Defense 0.4
Services 0.4
(continued on next page)
13
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 6/30/06
(continued from previous page)
Pharmaceuticals 0.3
Noncaptive-Consumer Finance 0.3
Sovereigns 0.2
Integrated Telecommunication Services 0.1
-----
Total Long-Term Investments 82.8%
Purchased Options* 0.0
Total Short-Term Investments 17.2
-----
Total Investments 100.0%
* Amount less than 0.1%
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the industries shown above. Ratings are as a percentage of
long-term debt 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.
14
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
fund's second and fourth fiscal quarters. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Van Kampen
also delivers the semiannual and annual reports to 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
(800) SEC-0330. You can also request copies of these materials, upon
payment of a duplicating fee, by electronic request at the SEC's e-mail
address (publicinfo@sec.gov) or by writing the Public Reference section
of the SEC, Washington, DC 20549-0102.
You may obtain copies of a trust's fiscal quarter filings by contacting
Van Kampen Client Relations at (800) 341-2929.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the trust's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 341-2929 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the trust voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge by visiting our Web site at www.vankampen.com.
This information is also available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
15
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
On May 22, 2006, the Board of Trustees, and the independent trustees voting
separately, determined that the terms of the investment advisory agreement are
fair and reasonable and approved the continuance of the investment advisory
contract as being in the best interests of the Fund and its shareholders. In
making its determination, the Board of Trustees considered materials that were
specifically prepared by the investment adviser at the request of the Board and
Fund counsel, and by an independent provider of investment company data
contracted to assist the Board, relating to the contract review process. The
Board also considered information received periodically about the portfolio,
performance, the investment strategy, portfolio management team and fees and
expenses of the Fund. The Board of Trustees considered the contract over a
period of several months and the non-management trustees held sessions both with
the investment adviser and separate from the investment adviser in reviewing and
considering the contract.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
breakpoints in the Fund's investment advisory fee schedule. The Board of
Trustees considered comparative advisory fees of the Fund and other investment
companies and/or other products at different asset levels, and considered the
trends in the industry. The Board of Trustees evaluated other benefits the
investment adviser and its affiliates derive from their relationship with the
Fund. The Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees, evaluated
all of the foregoing and does not believe any single factor or group of factors
control or dominate the review process, and, after considering all factors
together, has determined, in the exercise of its business judgment, that
approval
16
of the investment advisory agreement is in the best interests of the Fund and
its shareholders. The following summary provides more detail on certain matters
considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund. The trustees also
discuss certain other services which are provided on a cost-reimbursement basis
by the investment adviser or its affiliates to the Van Kampen funds including
certain accounting, administrative and legal services. The Board has determined
that the nature, extent and quality of the services provided by the investment
adviser support its decision to approve the investment advisory contract.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report. The
trustees discuss with the investment adviser the level of advisory fees for this
Fund relative to comparable funds and other products advised by the adviser and
others in the marketplace. The trustees review not only the advisory fees but
other fees and expenses (whether paid to the adviser, its affiliates or others)
and the Fund's overall expense ratio. The Board has determined that the
performance, fees and expenses of the Fund support its decision to approve the
investment advisory contract.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser. These profitability reports are
put together by the investment adviser with the oversight of the Board. The
trustees discuss with the investment adviser its revenues and expenses,
including among other things, revenues for advisory services, portfolio
management-related expenses, revenue sharing arrangement costs and allocated
expenses both on an aggregate basis and per fund. The Board has determined that
the analysis of the
17
investment adviser's expenses and profitability support its decision to approve
the investment advisory contract.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
of the Fund and how that relates to the Fund's expense ratio and particularly
the Fund's advisory fee rate. In conjunction with its review of the investment
adviser's profitability, the trustees discuss with the investment adviser how
more (or less) assets can affect the efficiency or effectiveness of managing the
Fund's portfolio and whether the advisory fee level is appropriate relative to
current asset levels and/or whether the advisory fee structure reflects
economies of scale as asset levels change. The Board has determined that its
review of the actual and potential economies of scale of the Fund support its
decision to approve the investment advisory contract.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory contract.
18
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
DOMESTIC CORPORATE BONDS 43.7%
AEROSPACE & DEFENSE 0.4%
$ 400 K & F Acquisition, Inc. .............. 7.750% 11/15/14 $ 396,000
-----------
AUTOMOTIVE 2.2%
115 Arvin Meritor, Inc. .................. 8.750 03/01/12 112,700
355 Ford Motor Co. ....................... 7.450 07/16/31 258,262
335 Ford Motor Credit Co. ................ 5.800 01/12/09 306,218
300 General Motors Acceptance Corp. ...... 4.375 12/10/07 287,859
535 General Motors Acceptance Corp. ...... 6.875 09/15/11 511,020
125 General Motors Corp. ................. 7.125 07/15/13 103,437
620 General Motors Corp. ................. 8.375 07/15/33 502,200
-----------
2,081,696
-----------
CHEMICALS 2.5%
100 Equistar Chemicals LP................. 10.625 05/01/11 107,875
240 Huntsman ICI Chemicals LLC............ 10.125 07/01/09 244,800
218 Innophos Investments (Floating Rate
Coupon)............................... 13.170 02/15/15 219,049
190 Innophos, Inc. (Variable Rate
Coupon)............................... 8.875 08/15/14 188,100
230 JohnsonDiversey, Inc. ................ 9.625 05/15/12 230,000
150 Koppers, Inc. ........................ 9.875 10/15/13 161,625
225 Lyondell Chemical Co. ................ 10.500 06/01/13 248,625
210 Nalco Co. ............................ 7.750 11/15/11 210,525
295 Nalco Co. ............................ 8.875 11/15/13 298,687
204 Rockwood Specialties Group, Inc. ..... 10.625 05/15/11 219,045
75 Rockwood Specialties Group, Inc.
(EUR)................................. 7.625 11/15/14 97,608
215 Westlake Chemicals Corp. ............. 6.625 01/15/16 199,681
-----------
2,425,620
-----------
CONSTRUCTION MACHINERY 0.7%
425 Case New Holland, Inc., 144A--Private
Placement (a)......................... 7.125 03/01/14 408,000
214 Manitowoc, Inc. ...................... 10.500 08/01/12 233,260
-----------
641,260
-----------
CONSUMER PRODUCTS 2.1%
370 Iron Mountain, Inc. .................. 8.625 04/01/13 371,850
545 Levi Strauss & Co. (Floating Rate
Coupon)............................... 9.740 04/01/12 557,262
120 Oxford Industrials, Inc. ............. 8.875 06/01/11 120,600
515 Phillips Van-Heusen Corp. ............ 7.250 02/15/11 512,425
260 Steinway Musical Instruments,
144A--Private Placement (a)........... 7.000 03/01/14 252,850
194 Tempur-Pedic, Inc. ................... 10.250 08/15/10 205,640
-----------
2,020,627
-----------
See Notes to Financial Statements 19
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING 0.5%
$ 365 Hexcel Corp. ......................... 6.750% 02/01/15 $ 343,100
160 Propex Fabrics, Inc. ................. 10.000 12/01/12 147,200
-----------
490,300
-----------
ELECTRIC 2.8%
41 AES Corp. ............................ 9.375 09/15/10 44,075
26 AES Corp. ............................ 8.875 02/15/11 27,430
160 AES Corp. ............................ 7.750 03/01/14 161,600
260 AES Corp., 144A--Private Placement
(a)................................... 9.000... 05/15/15 280,800
535 CMS Energy Corp. ..................... 7.500 01/15/09 544,362
100 CMS Energy Corp. ..................... 6.300 02/01/12 95,000
240 IPALCO Enterprises, Inc. (Variable
Rate Coupon).......................... 8.375 11/14/08 247,800
75 IPALCO Enterprises, Inc. (Variable
Rate Coupon).......................... 8.625 11/14/11 79,875
260 Monongahela Power Co. ................ 5.000 10/01/06 259,403
170 Nevada Power Co. ..................... 8.250 06/01/11 182,567
140 Nevada Power Co. ..................... 9.000 08/15/13 152,228
625 PSEG Energy Holdings.................. 8.625 02/15/08 643,750
-----------
2,718,890
-----------
ENVIRONMENTAL & FACILITIES
SERVICES 0.7%
110 Allied Waste North America, Inc. ..... 6.500 11/15/10 106,700
115 Allied Waste North America, Inc. ..... 5.750 02/15/11 107,812
310 Allied Waste North America, Inc. ..... 6.375 04/15/11 299,150
123 Allied Waste North America, Inc., Ser
B..................................... 9.250 09/01/12 130,995
-----------
644,657
-----------
FOOD/BEVERAGE 1.8%
195 Michael Foods, Inc. .................. 8.000 11/15/13 192,562
580 Pilgrim's Pride Corp. ................ 9.625 09/15/11 606,100
330 Pilgrim's Pride Corp. ................ 9.250 11/15/13 330,825
150 Smithfield Foods, Inc. ............... 7.000 08/01/11 145,875
430 Smithfield Foods, Inc., Ser B......... 8.000 10/15/09 436,450
-----------
1,711,812
-----------
GAMING 2.4%
250 Caesars Entertainment................. 8.875 09/15/08 263,125
520 Isle of Capri Casinos, Inc. .......... 7.000 03/01/14 493,350
405 Las Vegas Sands Corp. ................ 6.375 02/15/15 377,662
725 MGM Mirage, Inc. ..................... 6.000 10/01/09 708,687
60 MGM Mirage, Inc. ..................... 5.875 02/27/14 54,075
465 Station Casinos, Inc. ................ 6.000 04/01/12 437,681
-----------
2,334,580
-----------
20 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
HEALTHCARE 5.7%
$ 520 AmerisourceBergen Corp., 144A--Private
Placement (a)......................... 5.625% 09/15/12 $ 499,200
540 Community Health Systems, Inc. ....... 6.500 12/15/12 515,025
535 Davita, Inc. ......................... 6.625 03/15/13 510,925
665 Fisher Scientific International,
Inc. ................................. 6.125 07/01/15 644,219
38 Fresenius Medical Care Capital Trust
II.................................... 7.875 02/01/08 381,563
315 Fresenius Medical Care Capital Trust
IV.................................... 7.875 06/15/11 319,725
140 HCA, Inc. ............................ 8.700 02/10/10 147,186
355 HCA, Inc. ............................ 8.750 09/01/10 376,039
105 HCA, Inc. ............................ 6.300 10/01/12 99,280
240 Medcath Holdings Corp. ............... 9.875 07/15/12 249,000
220 National Mentor Holdings,
144A--Private Placement (a)........... 11.250 07/01/14 224,950
260 Omnicare, Inc. ....................... 6.750 12/15/13 248,950
250 Res-Care, Inc. ....................... 7.750 10/15/13 249,375
120 Tenet Healthcare Corp. ............... 7.375 02/01/13 110,100
70 Tenet Healthcare Corp. ............... 9.875 07/01/14 70,350
480 Ventas Realty Ltd Partnership......... 6.750 06/01/10 477,600
335 VWR International, Inc. .............. 6.875 04/15/12 321,600
-----------
5,445,087
-----------
HOME CONSTRUCTION 1.1%
61 Goodman Global Holdings, Inc.
(Floating Rate Coupon)................ 8.329 06/15/12 61,305
65 Interface, Inc. ...................... 7.300 04/01/08 65,650
75 Interface, Inc. ...................... 10.375 02/01/10 82,406
255 Interface, Inc. ...................... 9.500 02/01/14 264,563
360 Nortek, Inc. ......................... 8.500 09/01/14 350,100
140 Technical Olympic USA, Inc. .......... 9.000 07/01/10 136,850
115 Technical Olympic USA, Inc. .......... 10.375 07/01/12 110,975
-----------
1,071,849
-----------
INDEPENDENT ENERGY 0.7%
240 Equistar Chemicals LP................. 10.125 09/01/08 253,800
465 Massey Energy Co. .................... 6.875 12/15/13 434,775
-----------
688,575
-----------
INTEGRATED ENERGY 2.9%
370 Chaparral Energy, Inc., 144A--Private
Placement (a)......................... 8.500 12/01/15 370,000
80 Chesapeake Energy Corp. .............. 7.625 07/15/13 80,900
305 Chesapeake Energy Corp. .............. 7.500 09/15/13 307,288
100 Chesapeake Energy Corp. .............. 6.375 06/15/15 93,250
260 Chesapeake Energy Corp. .............. 6.625 01/15/16 243,100
350 El Paso Production Holding Co. ....... 7.750 06/01/13 354,375
60 Hanover Compressor Co. ............... 8.625 12/15/10 62,400
See Notes to Financial Statements 21
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
INTEGRATED ENERGY (CONTINUED)
$ 95 Hanover Equipment Trust (Variable Rate
Coupon)............................... 8.750% 09/01/11 $ 98,325
91 Hanover Equipment Trust, Ser A
(Variable Rate Coupon)................ 8.500 09/01/08 93,730
435 Hilcorp Energy Finance Corp.,
144A--Private Placement (a)........... 7.750 11/01/15 417,600
400 Kinder Morgan, Inc. .................. 6.500 09/01/12 380,549
50 MSW Energy Holdings LLC............... 8.500 09/01/10 51,750
215 Pacific Energy Partners............... 7.125 06/15/14 218,225
-----------
2,771,492
-----------
LODGING 0.9%
240 Host Marriott LP...................... 7.125 11/01/13 240,300
500 Host Marriott LP...................... 6.375 03/15/15 472,500
140 Starwood Hotels & Resorts Worldwide,
Inc. ................................. 7.875 05/01/12 146,825
-----------
859,625
-----------
MEDIA-CABLE 2.3%
400 Cablevision Systems Corp. (Floating
Rate Coupon).......................... 9.620 04/01/09 426,000
148 CCH I LLC............................. 11.000 10/01/15 130,240
135 Echostar DBS Corp. ................... 5.750 10/01/08 132,300
470 Echostar DBS Corp. ................... 6.375 10/01/11 451,200
200 Echostar DBS Corp. ................... 6.625 10/01/14 188,500
120 General Cable Corp. .................. 9.500 11/15/10 127,800
295 Lin Television Corp. ................. 6.500 05/15/13 270,663
120 Lin Television Corp., Ser B........... 6.500 05/15/13 110,100
45 PanAmSat Corp. ....................... 9.000 08/15/14 45,900
440 PanAmSat Holding Corp. (b)............ 0/10.375 11/01/14 327,444
1,000 Park N View, Inc., Ser B (c) (d)
(e)................................... 13.000 05/15/08 0
-----------
2,210,147
-----------
MEDIA-NONCABLE 1.2%
45 Advanstar Communications, Inc. ....... 10.750 08/15/10 48,488
175 AMC Entertainment, Inc. (Floating Rate
Coupon)............................... 9.420 08/15/10 181,125
127 Dex Media East LLC.................... 12.125 11/15/12 143,193
171 Dex Media West LLC, Ser B............. 9.875 08/15/13 186,175
245 Houghton Mifflin Co. ................. 8.250 02/01/11 249,288
255 Houghton Mifflin Co. ................. 9.875 02/01/13 265,838
110 Nebraska Book Co., Inc. .............. 8.625 03/15/12 102,850
-----------
1,176,957
-----------
METALS 0.7%
85 Foundation, PA Coal Co. .............. 7.250 08/01/14 83,300
390 UCAR Finance, Inc. ................... 10.250 02/15/12 413,400
189 United States Steel Corp. ............ 9.750 05/15/10 202,230
-----------
698,930
-----------
22 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
NATURAL GAS PIPELINES 0.9%
$ 210 Colorado Interstate Gas............... 6.800% 11/15/15 $ 203,457
55 Northwest Pipeline Corp. ............. 8.125 03/01/10 57,475
105 Southern Natural Gas Co. ............. 8.875 03/15/10 111,432
470 Williams Cos., Inc. .................. 7.875 09/01/21 479,400
-----------
851,764
-----------
NONCAPTIVE-CONSUMER FINANCE 0.3%
255 Residential Capital Corp. ............ 6.375 06/30/10 251,747
-----------
OIL FIELD SERVICES 1.1%
225 Hanover Compressor Co. ............... 9.000 06/01/14 236,250
170 Hilcorp Energy Finance Corp.,
144A--Private Placement (a)........... 10.500 09/01/10 184,025
104 Magnum Hunter Resources, Inc. ........ 9.600 03/15/12 110,240
230 MSW Energy Holdings II LLC............ 7.375 09/01/10 231,150
300 Pogo Producing Co. ................... 6.875 10/01/17 279,375
-----------
1,041,040
-----------
PACKAGING 1.0%
180 Crown Americas LLC, 144A--Private
Placement (a)......................... 7.625 11/15/13 177,750
65 Owens-Illinois, Inc. ................. 7.350 05/15/08 65,813
680 Owens-Illinois, Inc. ................. 7.500 05/15/10 668,100
-----------
911,663
-----------
PAPER 1.3%
285 Covalence Specialty Material,
144A--Private Placement (a)........... 10.250 03/01/16 275,025
230 Graham Packaging Co. ................. 8.500 10/15/12 226,550
285 Graham Packaging Co. ................. 9.875 10/15/14 283,575
350 Graphic Packaging International,
Inc. ................................. 9.500 08/15/13 348,250
115 P.H. Glatfelter, 144A--Private
Placement (a)......................... 7.125 05/01/16 114,094
-----------
1,247,494
-----------
PHARMACEUTICALS 0.3%
245 Warner Chilcott Corp. (Variable Rate
Coupon)............................... 8.750 02/01/15 253,575
-----------
RAILROADS 0.6%
505 Amsted Industries, Inc., 144A--Private
Placement (a)......................... 10.250 10/15/11 542,875
-----------
RETAIL 2.0%
210 Brown Shoe Co., Inc. ................. 8.750 05/01/12 216,825
480 JC Penny Co., Inc. ................... 8.000 03/01/10 511,797
300 Limited Brands, Inc. ................. 6.125 12/01/12 295,029
See Notes to Financial Statements 23
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
RETAIL (CONTINUED)
$ 370 Linens 'N Things, Inc., 144A--Private
Placement (Floating Rate Coupon)
(a)................................... 10.702% 01/15/14 $ 352,425
350 Petro Shopping Center Financial....... 9.000 02/15/12 349,125
210 Rite Aid Corp. ....................... 8.125 05/01/10 212,100
-----------
1,937,301
-----------
SERVICES 0.4%
280 Buhrmann US, Inc. .................... 8.250 07/01/14 280,000
100 Buhrmann US, Inc. .................... 7.875 03/01/15 99,250
-----------
379,250
-----------
SUPERMARKETS 0.9%
110 Albertson's, Inc. .................... 7.500 02/15/11 109,238
280 Albertson's, Inc. .................... 7.250 05/01/13 267,820
225 Delhaize America, Inc. ............... 8.125 04/15/11 237,754
209 Kroger Co., 144A--Private Placement
(a)................................... 8.500 07/15/17 222,125
-----------
836,937
-----------
TECHNOLOGY 0.4%
170 Iron Mountain, Inc. .................. 7.750 01/15/15 163,200
235 Sungard Data Sys, Inc., 144A--Private
Placement (a)......................... 9.125 08/15/13 244,988
20 Sungard Data Sys, Inc., 144A--Private
Placement (Floating Rate Coupon)
(a)................................... 9.431 08/15/13 21,025
-----------
429,213
-----------
TOBACCO 0.6%
570 Reynolds American, Inc., 144A--Private
Placement (a)......................... 6.500 07/15/10 554,325
-----------
TRANSPORTATION SERVICES 1.1%
640 Sonic Automotive, Inc. ............... 8.625 08/15/13 636,800
356 TRW Automotive, Inc. ................. 9.375 02/15/13 380,030
-----------
1,016,830
-----------
WIRELESS COMMUNICATIONS 0.9%
185 American Tower Corp. ................. 7.500 05/01/12 187,775
190 American Tower Corp. ................. 7.125 10/15/12 190,475
250 Nextel Communications Inc., Ser E..... 6.875 10/31/13 251,742
250 UbiquiTel Operating Co. .............. 9.875 03/01/11 273,125
-----------
903,117
-----------
24 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
WIRELINE COMMUNICATIONS 0.3%
$ 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
300 Quest Communications International,
Inc. (Floating Rate Coupon)........... 8.670 02/15/09 307,125
-----------
307,125
-----------
TOTAL DOMESTIC CORPORATE BONDS 43.7% 41,852,360
-----------
FOREIGN BONDS AND DEBT SECURITIES 0.5% (US$)
Bermuda 6.1%
25 Intelsat Subsidiary Hldg Co. Ltd...... 8.250 01/15/13 24,937
270 Intelsat Subsidiary Hldg Co. Ltd...... 8.625 01/15/15 272,025
205 Intelsat Subsidiary Hldg Co. Ltd
(Floating Rate Coupon)................ 9.613 01/15/12 208,075
-----------
505,037
-----------
CANADA 2.9%
49 Abitibi-Consolidated, Inc. ........... 8.550 08/01/10 46,672
80 Abitibi-Consolidated, Inc. ........... 7.750 06/15/11 73,800
60 Abitibi-Consolidated, Inc. ........... 6.000 06/20/13 48,900
398 CanWest Media, Inc. .................. 8.000 09/15/12 396,094
500 CHC Helicopter Corp. ................. 7.375 05/01/14 482,500
285 Husky Oil Ltd. (Variable Rate
Coupon)............................... 8.900 08/15/28 301,102
255 Jean Coutu Group (PJC), Inc. ......... 7.625 08/01/12 248,625
260 Nortel Networks Corp. ................ 4.250 09/01/08 246,350
685 Novelis, Inc., 144A--Private Placement
(a)................................... 7.250 02/15/15 661,025
335 Quebecor World Capital Corp.,
144A--Private Placement (a)........... 8.750 03/15/16 307,362
-----------
2,812,430
-----------
DENMARK 0.2%
105 Nordic Tel Co. Holdings, 144A--Private
Placement (a)......................... 8.875 05/01/16 108,413
85 TDC AS................................ 6.500 04/19/12 111,187
-----------
219,600
-----------
FRANCE 0.3%
115 Compagnie Generale de Geophysique,
SA.................................... 7.500 05/15/15 112,988
125 Crown European Holdings SA (EUR)...... 6.250 09/01/11 166,676
-----------
279,664
-----------
GERMANY 0.4%
260 Cognis Deutschland, 144A--Private
Placement (Floating Rate Coupon) (EUR)
(a)................................... 7.816 11/15/13 342,530
-----------
See Notes to Financial Statements 25
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
IRELAND 0.1%
$ 100 JSG Funding Plc (EUR)................. 10.125% 10/01/12 $ 140,056
-----------
LUXEMBOURG 1.3%
345 Cablecom Luxembourg, 144A--Private
Placement (EUR) (a)................... 9.375 04/15/14 492,570
110 JohnsonDiversey, Inc. (EUR)........... 9.625 05/15/12 144,916
140 SGL Carbon Luxembourg SA,
144A--Private Placement (EUR) (a)..... 8.500 02/01/12 195,183
355 Wind Acquisition Finance SA,
144A--Private Placement (a)........... 10.750 12/01/15 378,963
-----------
1,211,632
-----------
MEXICO 0.3%
228 Axtel SA.............................. 11.000 12/15/13 250,800
-----------
UNITED KINGDOM 0.1%
55 NTL Cable Plc, 144A--Private Placement
(a)................................... 8.750 04/15/14 54,863
-----------
TOTAL FOREIGN BONDS AND DEBT SECURITIES 6.1% 5,816,612
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS 3.0%
294 Federal Home Loan Mortgage Corp.
(Floating Rate Coupon)................ 5.473 09/25/45 295,096
217 Federal Home Loan Mortgage Corp.
(Floating Rate Coupon)................ 5.799 03/15/34 219,124
80 Federal Home Loan Mortgage Corp.
(Floating Rate Coupon) (Interest
Only)................................. 2.801 03/15/32 3,666
241 Federal Home Loan Mortgage Corp.
(Floating Rate Coupon) (Interest Only)
REMIC................................. 1.688 06/17/27 6,765
484 Federal Home Loan Mortgage Corp.
(Interest Only)....................... 5.000 09/15/14 to 12/15/16 36,953
73 Federal Home Loan Mortgage Corp.
(Interest Only)....................... 6.000 05/15/30 3,220
643 Federal National Mortgage Association
(Floating Rate Coupon)................ 5.373 11/25/28 643,406
422 Federal National Mortgage Association
(Floating Rate Coupon)................ 5.433 03/25/36 422,246
284 Federal National Mortgage Association
(Floating Rate Coupon)................ 5.523 05/25/35 284,963
278 Federal National Mortgage Association
(Floating Rate Coupon)................ 5.652 12/18/32 280,885
4,987 Federal National Mortgage Association
(Interest Only)....................... * 03/25/36 130,921
26 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$ 110 Federal National Mortgage Association
(Interest Only)....................... 5.500% 06/25/26 $ 3,190
244 Federal National Mortgage Association
(Interest Only)....................... 6.000 11/25/32 to 07/25/33 47,608
528 Federal National Mortgage Association
(Interest Only)....................... 6.500 05/25/33 132,856
240 Federal National Mortgage Association
(Floating Rate Coupon) REMIC.......... 5.697 05/28/35 240,205
65 Federal National Mortgage Association
(Floating Rate Coupon) REMIC.......... 5.708 05/28/35 65,276
23 Federal National Mortgage Association
(Interest Only) REMIC................. 6.000 08/25/32 3,625
102 Federal National Mortgage Association
(Interest Only) REMIC................. 7.000 04/25/33 26,825
78 Federal National Mortgage Association
(Interest Only) (STRIPS).............. 6.500 06/01/31 19,734
41 Federal National Mortgage Association
(Interest Only) (STRIPS).............. 7.000 03/01/32 11,257
34 Federal National Mortgage Association
(Interest Only) (STRIPS).............. 8.000 05/01/30 8,403
102 Government National Mortgage
Association (Floating Coupon Rate)
(Interest Only)....................... 2.192 05/16/32 3,476
97 Government National Mortgage
Association (Floating Coupon Rate)
(Interest Only) REMIC................. 2.792 05/16/32 5,103
218 Government National Mortgage
Association (Floating Coupon Rate)
(Interest Only) REMIC................. 3.192 06/16/27 7,911
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 3.0% 2,902,714
-----------
MORTGAGE BACKED SECURITIES 17.0%
277 Federal Home Loan Mortgage Corp. ..... 7.500 11/01/29 to 06/01/32 287,584
86 Federal Home Loan Mortgage Corp.
(ARM)................................. 3.536 07/01/34 84,014
210 Federal Home Loan Mortgage Corp.
(ARM)................................. 4.158 08/01/34 206,590
1,150 Federal Home Loan Mortgage Corp.,
July.................................. 5.500 TBA 1,128,079
250 Federal National Mortgage Association
(f)................................... 0.720 07/25/36 258,437
652 Federal National Mortgage
Association........................... 6.500 06/01/15 to 11/01/33 657,978
3,309 Federal National Mortgage
Association........................... 7.000 03/01/15 to 06/01/36 3,391,768
514 Federal National Mortgage
Association........................... 7.500 03/01/15 to 09/01/35 532,506
See Notes to Financial Statements 27
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
MORTGAGE BACKED SECURITIES (CONTINUED)
$ 449 Federal National Mortgage Association
(ARM)................................. 6.612% 05/01/36 $ 463,998
425 Federal National Mortgage Association
(ARM)................................. 1.354 07/01/36 439,477
105 Federal National Mortgage Association
(ARM)................................. 3.573 07/01/34 103,706
135 Federal National Mortgage Association
(ARM)................................. 4.109 09/01/34 133,054
117 Federal National Mortgage Association
(ARM)................................. 4.129 10/01/34 116,615
376 Federal National Mortgage Association
(ARM)................................. 4.329 02/01/34 366,792
112 Federal National Mortgage Association
(ARM)................................. 4.375 10/01/34 110,646
1,297 Federal National Mortgage Association
(ARM)................................. 4.724 01/01/35 1,273,209
181 Federal National Mortgage Association
(ARM)................................. 5.164 07/01/33 182,087
477 Federal National Mortgage Association
(ARM)................................. 5.973 03/01/36 486,882
892 Federal National Mortgage Association
(ARM)................................. 6.030 01/01/36 916,611
878 Federal National Mortgage Association
(ARM)................................. 6.034 01/01/36 906,961
424 Federal National Mortgage Association
(ARM)................................. 6.039 03/01/36 435,221
373 Federal National Mortgage Association
(ARM)................................. 6.107 03/01/36 385,073
549 Federal National Mortgage Association
(ARM)................................. 6.265 04/01/36 567,159
874 Federal National Mortgage Association
(ARM)................................. 6.448 04/01/36 913,165
500 Federal National Mortgage Association,
August................................ 4.500 TBA 452,969
450 Federal National Mortgage Association,
August................................ 7.000 TBA 459,985
111 Government National Mortgage
Association........................... 7.000 07/15/29 to 01/15/30 114,487
304 Government National Mortgage
Association........................... 7.500 07/15/23 to 09/15/29 318,412
179 Government National Mortgage
Association........................... 8.000 03/15/17 to 10/15/22 188,851
113 Government National Mortgage
Association........................... 8.500 07/15/24 to 12/15/24 121,915
28 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
MORTGAGE BACKED SECURITIES (CONTINUED)
$ 196 Government National Mortgage
Association........................... 9.000% 08/15/16 to 12/15/24 $ 211,529
58 Government National Mortgage
Association........................... 9.500 11/15/09 to 01/15/17 62,996
-----------
TOTAL MORTGAGE BACKED SECURITIES 17.0% 16,584,237
-----------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS 3.6%
1,100 Federal Home Loan Mortgage Corp. ..... 7.000 03/15/10 1,156,412
785 Federal National Mortgage
Association........................... 6.625 11/15/30 891,777
1,250 Federal National Mortgage
Association........................... 7.125 06/15/10 1,323,724
100 Federal National Mortgage
Association........................... 7.250 01/15/10 105,758
-----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS......................... 3,477,671
-----------
UNITED STATES TREASURY OBLIGATIONS 7.7%
1,600 United States Treasury Bonds.......... 5.250 02/15/29 1,593,501
840 United States Treasury Bonds.......... 6.125 08/15/29 934,238
1,230 United States Treasury Bonds.......... 6.375 08/15/27 1,396,531
1,810 United States Treasury Bonds.......... 7.625 02/15/25 2,299,266
180 United States Treasury Notes.......... 3.875 02/15/13 167,611
1,000 United States Treasury Notes.......... 4.250 11/15/13 946,641
-----------
TOTAL UNITED STATES TREASURY OBLIGATIONS........................................ 7,337,788
-----------
GOVERNMENT AND GOVERNMENT AGENCY OBLIGATION 0.3%
2,535 United Mexican States (Mexico)........ 10.000 12/05/24 234,160
-----------
DESCRIPTION VALUE
----------------------------------------------------------------------------------------------
EQUITIES 0.0%
Doe Run Resources Corp. (1 Common Stock Warrant) (e) (g)........................ 5,465
HF Holdings, Inc. (5,260 Common Stock Warrants) (e) (g)......................... 0
Optel, Inc. (500 Common Shares) (e) (g)......................................... 0
Park N View, Inc., 144A--Private Placement (1,000 Common
Stock Warrants) (a) (d) (e) (g)............................................... 0
XO Holdings, Inc. (164 Common Shares) (g)....................................... 722
XO Holdings, Inc., Ser A (330 Common Stock Warrants) (g)........................ 284
See Notes to Financial Statements 29
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
DESCRIPTION VALUE
--------------------------------------------------------------------------------------------------
EQUITIES (CONTINUED)
XO Holdings, Inc., Ser B (248 Common Stock Warrants) (g)............................ $ 121
XO Holdings, Inc., Ser C (248 Common Stock Warrants) (g)............................ 90
-----------
TOTAL EQUITIES 0.0% 6,682
-----------
TOTAL LONG-TERM INVESTMENTS 81.4%
(Cost $80,449,866)................................................................ 77,906,743
-----------
PURCHASED OPTIONS 0.0%
CONTRACTS EXPIRATION DATE EXERCISE PRICE VALUE
--------------------------------------------------------------------------------------------------
EuroDollar Futures Put
(Cost $3,245)........................... 12 06/22/07 94.25 $5,250
SHORT-TERM INVESTMENTS 16.9%
REPURCHASE AGREEMENT 8.4%
State Street Bank & Trust Co. ($8,052,000 par collateralized by U.S. Government
obligations in a pooled cash account, interest rate of 5.10%, dated 06/30/06, to
be sold on 07/03/06 at $8,055,422)................................................ 8,052,000
U.S. GOVERNMENT AGENCY OBLIGATIONS 8.5%
Federal Home Loan Discount Note ($8,000,000 par, yielding 4.950%, 07/03/06
maturity)......................................................................... 7,997,800
United States Treasury Bills ($100,000 par, yielding 4.354%, 07/13/06 maturity)
(h)............................................................................... 99,858
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS............................................ 8,097,658
-----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $16,149,658)................................................................ 16,149,658
-----------
TOTAL INVESTMENTS 98.3%
(Cost $96,602,769)................................................................ 94,061,651
FOREIGN CURRENCY 0.0%
(Cost $374)....................................................................... 380
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES 1.7%......................................... 1,621,290
-----------
NET ASSETS 100.0%.................................................................. $95,683,321
===========
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
30 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
(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.
(f) Securities purchased on a when-issued or delayed delivery basis.
(g) Non-income producing security.
(h) All or a portion of this security has been physically segregated in
connection with open futures contracts.
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 date will be assigned.
The obligations of certain United States Government sponsored entities are
neither issued or guaranteed by the United States Treasury.
FUTURES CONTRACTS OUTSTANDING AS OF JUNE 30, 2006:
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
LONG CONTRACTS:
U.S. Treasury Notes 10-Year Futures September 2006
(Current Notional Value of $104,859 per contract)......... 127 $(58,227)
SHORT CONTRACTS:
U.S. Treasury Notes 5-Year Futures September 2006
(Current Notional Value of $103,406 per contract)......... 29 11,965
U.S. Treasury Notes 2-Year Futures September 2006
(Current Notional Value of $202,781 per contract)......... 39 22,605
--- --------
68 34,570
--- --------
195 $(23,657)
=== ========
See Notes to Financial Statements 31
VAN KAMPEN INCOME TRUST
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 (UNAUDITED) continued
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AS OF JUNE 30, 2006:
UNREALIZED
APPRECIATION/
IN EXCHANGE FOR CURRENT VALUE DEPRECIATION
SHORT CONTRACTS:
Euro Currency
874,000 expiring 9/27/06 US $ $1,124,507 $(23,005)
233,000 expiring 9/27/06 US $ 299,783 (6,062)
212,000 expiring 9/27/06 US $ 272,764 (5,682)
------------- -------------
$1,697,054 $(34,749)
============= =============
32 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2006 (Unaudited)
ASSETS:
Total Investments (Cost $96,602,769)........................ $ 94,061,651
Foreign Currency (Cost $374)................................ 380
Cash........................................................ 92
Receivables:
Investments Sold.......................................... 3,581,359
Interest.................................................. 1,310,638
Variation Margin on Futures............................... 44,656
Other....................................................... 58,707
------------
Total Assets............................................ 99,057,483
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 3,013,592
Investment Advisory Fee................................... 51,235
Forward Foreign Currency Contracts........................ 34,749
Income Distributions...................................... 14,467
Other Affiliates.......................................... 695
Trustees' Deferred Compensation and Retirement Plans........ 183,438
Accrued Expenses............................................ 75,986
------------
Total Liabilities....................................... 3,374,162
------------
NET ASSETS.................................................. $ 95,683,321
============
NET ASSET VALUE PER COMMON SHARE ($95,683,321 divided by
15,371,738 shares outstanding)............................ $ 6.22
============
NET ASSETS CONSIST OF:
Common Shares (no par value with unlimited shares
authorized, 15,371,738 shares issued and outstanding)..... $120,152,605
Accumulated Undistributed Net Investment Income............. (546,822)
Net Unrealized Depreciation................................. (2,599,243)
Accumulated Net Realized Loss............................... (21,323,219)
------------
NET ASSETS.................................................. $ 95,683,321
============
See Notes to Financial Statements 33
VAN KAMPEN INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended June 30, 2006 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $ 3,123,301
Other....................................................... 14,590
-----------
Total Income.......................................... 3,137,891
-----------
EXPENSES:
Investment Advisory Fee..................................... 312,827
Trustees' Fees and Related Expenses......................... 30,085
Custody..................................................... 23,190
Legal....................................................... 3,122
Other....................................................... 118,807
-----------
Total Expenses........................................ 488,031
Less Credits Earned on Cash Balances.................. 565
-----------
Net Expenses.......................................... 487,466
-----------
NET INVESTMENT INCOME....................................... $ 2,650,425
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ (353,594)
Futures................................................... (181,439)
Foreign Currency Transactions............................. (54,951)
-----------
Net Realized Loss........................................... (589,984)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (1,123,764)
-----------
End of the Period:
Investments............................................. (2,541,118)
Futures................................................. (23,657)
Forward Foreign Currency Contracts...................... (34,749)
Foreign Currency Translation............................ 281
-----------
(2,599,243)
-----------
Net Unrealized Depreciation During the Period............... (1,475,479)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(2,065,463)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 584,962
===========
34 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2006 DECEMBER 31, 2005
-------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................. $ 2,650,425 $ 5,220,518
Net Realized Loss..................................... (589,984) (765,638)
Net Unrealized Depreciation During the Period......... (1,475,479) (1,914,923)
----------- ------------
Change in Net Assets from Operations.................. 584,962 2,539,957
Distributions from Net Investment Income.............. (2,766,914) (5,824,258)
----------- ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES... (2,181,952) (3,284,301)
NET ASSETS:
Beginning of the Period............................... 97,865,273 101,149,574
----------- ------------
End of the Period (Including accumulated undistributed
net investment income of ($546,822) and $(430,333),
respectively)....................................... $95,683,321 $ 97,865,273
=========== ============
See Notes to Financial Statements 35
VAN KAMPEN INCOME TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE TRUST
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -------------------------------------------
2006 2005 2004 2003 2002 2001
---------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD.......................... $6.37 $6.58 $ 6.46 $6.10 $ 6.51 $ 6.85
----- ----- ------ ----- ------ ------
Net Investment Income........... .17(a) .34 .33 .32 .39 .53
Net Realized and Unrealized
Gain/Loss..................... (.14) (.17) .12 .41 (.33) (.29)
----- ----- ------ ----- ------ ------
Total from Investment
Operations...................... .03 .17 .45 .73 .06 .24
----- ----- ------ ----- ------ ------
Less:
Distributions from Net
Investment Income............. .18 .38 .33 .34 .47 .58
Return of Capital
Distributions................. -0- -0- -0- .03 -0- -0-
----- ----- ------ ----- ------ ------
Total Distributions............... .18 .38 .33 .37 .47 .58
----- ----- ------ ----- ------ ------
NET ASSET VALUE, END OF THE
PERIOD.......................... $6.22 $6.37 $ 6.58 $6.46 $ 6.10 $ 6.51
===== ===== ====== ===== ====== ======
Common Share Market Price at End
of the Period................... $5.55 $5.58 $ 5.85 $5.81 $ 5.71 $ 6.33
Total Return (b).................. 2.66%* 1.83% 6.62% 8.42% -2.59% 5.05%
Net Assets at End of the Period
(In millions)................... $95.7 $97.9 $101.1 $99.4 $ 93.8 $100.0
Ratio of Expenses to Average Net
Assets.......................... 1.01% .93% .92% .92% .89% .93%
Ratio of Net Investment Income to
Average Net Assets.............. 5.83% 5.25% 5.17% 5.14% 6.29% 7.88%
Portfolio Turnover................ 75%* 180% 225% 299%(c) 101% 46%
* Non-Annualized
(a) Based on average shares outstanding.
(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. Beginning with the fiscal year ended December 31, 2003, the Trust's
portfolio turnover rate reflects mortgage pool forward commitments as
purchases and sales, which had not been the case in the past. This caused
the reported portfolio turnover rate to be higher in previous fiscal years.
36 See Notes to Financial Statements
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 (UNAUDITED)
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. Options are valued at the last sale
price. Futures contracts are valued at the settlement price established each day
on the exchange on which they are traded.
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 segregate assets with the custodian having an
aggregate value at least equal to the amount of the when-issued, delayed
delivery, or forward purchase commitments until payment is made. At June 30,
2006, the Trust had $2,308,210 of when-issued, delayed delivery or 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
37
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 (UNAUDITED) continued
agreements are fully collateralized by the underlying debt security. The Trust
will make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian bank. The seller is required
to maintain the value of the underlying security at not less than the repurchase
proceeds due the Trust.
C. INVESTMENT INCOME 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, 2005 the Trust had an accumulated capital loss
carryforward for tax purposes of $20,554,644, 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
1,080,278.................................................. December 31, 2013
At June 30, 2006, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $96,934,451
===========
Gross tax unrealized appreciation........................... $ 1,085,429
Gross tax unrealized depreciation........................... (3,958,228)
-----------
Net tax unrealized depreciation on investments.............. $(2,872,799)
===========
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 and a portion of future gains,
which are included in ordinary income for tax purposes.
38
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 (UNAUDITED) continued
The tax character of distributions paid during the year ended December 31,
2005 was as follows:
Distribution paid from:
Ordinary income........................................... $5,803,454
Long-term capital gains................................... -0-
----------
$5,803,454
==========
As of December 31, 2005, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $78,218
Undistributed long-term capital gains....................... -0-
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.
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 six months ended June 30, 2006, the Trust's
custody fee was reduced by $565 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 six months ended June 30, 2006, the Trust recognized expenses of
approximately $3,100 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a trustee of the Trust is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Trust.
Under separate Accounting Services and Chief Compliance Officer (CCO)
Employment agreements, the Adviser provides accounting services and the CCO
provides compliance services to the Trust. The costs of these services are
allocated to each trust. For the six months ended June 30, 2006, the Trust
recognized expenses of approximately $5,600 representing Van Kampen Investments
Inc.'s or its affiliates' (collectively "Van Kampen") cost of providing
accounting services to the Trust, as well as, the salary, benefits and related
costs of the CCO and related support staff paid by Van Kampen. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Other" expenses on the Statement of Operations.
39
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 (UNAUDITED) continued
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,
excluding short-term investments and U.S. Government securities, were
$14,136,332 and $13,814,863, respectively. The cost of purchases and proceeds
from sales of long-term U.S. Government securities, including paydowns on
mortgage-backed securities, for the period were $47,617,447 and $45,866,130,
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.
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 exercising an option contract or taking
delivery of a security underlying a futures contract. In these instances, the
recognition of gain or loss is postponed until the disposal of the securities
underlying the option or futures contract.
Risks may arise as a result of the potential inability of the counterparties
to meet the terms of their contracts.
Summarized below are the specific types of derivative financial instruments
used by the Trust.
A. FORWARD FOREIGN CURRENCY CONTRACTS 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 or loss is recognized and is included as a
component of realized gain/loss on forward foreign currency contacts.
B. FUTURES CONTRACTS A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in exchange traded futures contracts on U.S. Treasury
Bonds and Notes for duration and risk management purposes and typically closes
the contract prior to the delivery date. Upon entering into futures contracts,
the Trust maintains an amount of cash or liquid securities
40
VAN KAMPEN INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 (UNAUDITED) continued
with a value equal to a percentage of the contract amount with either a futures
commission merchant pursuant to rules and regulations promulgated under the 1940
Act, as amended, or with its custodian in an account in the broker's name. This
amount is known as initial margin. During the period the futures contract is
open, payments are received from or made to the broker based upon changes in the
value of the contract (the variation margin). The risk of loss associated with a
futures contract is in excess of the variation margin reflected on the Statement
of Assets and Liabilities.
Transactions in futures contracts for the six months ended June 30, 2006,
were as follows:
CONTRACTS
Outstanding at December 31, 2005............................ 181
Futures Opened.............................................. 542
Futures Closed.............................................. (528)
----
Outstanding at June 30, 2006................................ 195
====
C. PURCHASED OPTIONS CONTRACTS An option contract gives the buyer the right, but
not the obligation to buy (call) or sell (put) an underlying item at a fixed
exercise (strike) price during a specified period. The Trust may purchase put
and call options. Purchasing call options tends to increase the Trust's exposure
to the underlying (or similar) instrument. Purchasing put options tends to
decrease the Trust's exposure to the underlying (or similar) instrument. The
risk associated with purchasing put and call options is limited to the premium
paid. Purchased options are reported as part of "Total Investments" on the
Statement of Assets and Liabilities. Premiums paid for purchasing options which
expire are treated as realized losses.
5. INDEMNIFICATIONS
THE TRUST ENTERS INTO CONTRACTS THAT CONTAIN A VARIETY OF INDEMNIFICATIONS. THE
TRUST'S MAXIMUM EXPOSURE UNDER THESE ARRANGEMENTS IS UNKNOWN. HOWEVER, THE TRUST
HAS NOT HAD PRIOR CLAIMS OR LOSSES PURSUANT TO THESE CONTRACTS AND EXPECTS THE
RISK OF LOSS TO BE REMOTE.
41
VAN KAMPEN INCOME TRUST
DIVIDEND REINVESTMENT PLAN
The Fund pays distributions in cash, but you may elect to participate in the
Fund's dividend reinvestment plan (the "Plan"). Under the Plan, shares will be
issued by the Fund at net asset value on a date determined by the Board of
Trustees between the record and payable dates on each distribution; however, if
the market price including brokerage commissions, is less than the net asset
value, the amount of the distribution will be paid to the Plan Agent, which will
buy such shares as are available at prices below the net asset value. (If the
market price is not significantly less than the net asset value, it is possible
that open market purchases of shares may increase the market price so that such
price plus brokerage commissions would equal or exceed the net asset value of
such shares.) If the Plan Agent cannot buy the necessary shares at less than net
asset value before the distribution date, the balance of the distribution will
be made in authorized but unissued shares of the Fund at net asset value. The
cost per share will be the average cost, including brokerage commissions, of all
shares purchased. Since all shares purchased from the Fund are at net asset
value, there will be no dilution, and no brokerage commissions are charged on
such shares.
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gain distributions does not relieve you of any income tax
which may be payable (or required to be withheld) on dividends or distributions.
You may begin or discontinue participation in the Plan at any time by
written notice to the address below. If you withdraw from the Plan, you may
rejoin at any time. Elections and terminations will be effective for
distributions declared after receipt. If you withdraw from the Plan, a
certificate for the whole shares and a check for the fractional shares, if any,
credited to your Plan account will be sent as soon as practicable after receipt
of your election to withdraw. Except for brokerage commissions, if any, which
are borne by Plan participants, all costs of the Plan are borne by the Fund. The
Fund reserves the right to amend or terminate the Plan on 30 days' written
notice prior to the record date of the distribution for which such amendment or
termination is effective.
Record stockholders should address all notices, correspondence, questions or
other communications about the Plan to:
Van Kampen Closed End Funds
c/o Computershare Trust Company, N.A.
PO Box 43011
Providence, RI 02940-3011
1-800-341-2929
If your shares are not held directly in your name, you should contact your
brokerage firm, bank or other nominee for more information and to see if your
nominee will participate in the Plan on your behalf. If you participate through
your broker and choose to move your account to another broker, you will need to
re-enroll in the Plan through your new broker.
To obtain a complete copy of the Dividend Reinvestment Plan, please call our
Client Relations department at 1-800-341-2929.
42
VAN KAMPEN INCOME TRUST
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
TRANSFER AGENT
COMPUTERSHARE TRUST COMPANY, N.A.
c/o Computershare Investor Services
P.O. Box 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
111 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
43
Van Kampen Income Trust
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
Van Kampen Income Trust
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen Income Trust
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2006 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
920, 957, 107
VIN SAR 8/06
(VAN KAMPEN INVESTMENTS SHINE LOGO) RN06-02178P-Y06/06
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
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.
Not applicable for semi-annual reports.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable for semi-annual reports.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures
(a) The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form
N-CSRS was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(1) Code of Ethics - Not applicable for semi-annual reports.
(2)(a) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(2)(b) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Income Trust
By: /s/ Ronald E. Robison
---------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: August 10, 2006
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: August 10, 2006
By: /s/ Phillip G. Goff
---------------------------------
Name: Phillip G. Goff
Title: Principal Financial Officer
Date: August 10, 2006