N-CSR
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22043
Van Kampen Dynamic Credit Opportunities Fund
(Exact name of registrant as specified in charter)
522 Fifth Avenue, New York, New York 10036
(Address of principal executive offices) (Zip code)
Edward C. Wood III
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrants telephone number, including area code: 212-762-4000
Date of fiscal year end: 7/31
Date of reporting period: 7/31/09
Item 1. Report to Shareholders.
The
Funds annual report transmitted to shareholders pursuant
to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
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MUTUAL FUNDS
Van Kampen
Dynamic Credit
Opportunities Fund
(VTA)
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Privacy Notice information on the
back.
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Welcome, Shareholder
In this report, youll learn about how your investment in
Van Kampen Dynamic Credit Opportunities Fund performed
during the annual period. The portfolio management team will
provide an overview of the market conditions and discuss some of
the factors that affected investment performance during the
reporting period. In addition, this report includes the
funds financial statements and a list of fund investments
as of July 31, 2009.
Market forecasts provided in this report may not necessarily
come to pass. There is no assurance that the fund will achieve
its investment objective. The fund is subject to market risk,
which is the possibility that the market values of securities
owned by the fund will decline and that the value of the fund
shares may therefore be less than what you paid for them.
Accordingly, you can lose money investing in this fund. Please
see the prospectus for more complete information on investment
risks.
An investment in senior loans is subject to certain risks
such as loan defaults and illiquidity due to insufficient
collateral backing.
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NOT FDIC INSURED
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OFFER NO BANK GUARANTEE
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MAY LOSE VALUE
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NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
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NOT A DEPOSIT
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Performance
Summary as
of 7/31/09 (Unaudited)
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Dynamic
Credit Opportunities Fund
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Symbol:
VTA
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Average Annual
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Based on
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Based on
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Total
Returns
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NAV
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Market
Price
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Since Inception (6/26/07)
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12.93
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%
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18.64
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%
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1-year
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17.77
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11.84
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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 and principal value
will fluctuate and fund shares, when redeemed, may be worth more
or less than their original cost.
The NAV per share is
determined by dividing the value of the funds 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 fund 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 funds dividend
reinvestment plan, and sale of all shares at the end of the
period. Periods of less than one year are not annualized.
1
Fund Report
For the
12-month
period ended July 31, 2009
Market
Conditions
The senior loan market rallied strongly in 2009, returning
38.4 percent through July 31 as measured by the S&P
LSTA Leveraged Loan Index (the Index). In the second
quarter of the year the Index advanced 20.4 percent, the
highest quarterly return on record, eclipsing the previous
record of 9.8 percent set in the first quarter of 2009. The
Index has now recovered a substantial amount of the losses
experienced in the fourth quarter of 2008.
In the latter months of 2008, risk aversion, tight credit
conditions, forced selling and rising corporate defaults made
for a difficult environment for senior loans. In 2009 to date,
however, technical factors in the market improved considerably.
Flows into the asset class increased at an accelerating rate;
retail fund inflows totaled $1.4 billion in the second
quarter, nearly double the amount of inflows in the first
quarter. At the same time, the pool of investable assets
contracted at an increasing pace as loan prepayments
accelerated. These prepayments came primarily from two sources.
The first was the significant issuance of high yield bonds used
to repay senior loans. This bond for loan take-out
trend had the double impact of reducing the pool of investable
loans and providing loan funds with cash to redeploy into other
loans. Secondly, loan buybacks further reduced the supply of
loans, although the pace of buybacks did slow in the second
quarter. These factors, combined with a lack of new issuance,
led loan managers to put their cash to work buying loans in the
secondary market and thus, bidding up the market price of loans.
In the first quarter of 2009, loan managers focused on higher
quality leveraged loans and therefore, BB rated loans saw the
most gain. In the second quarter, however, investor risk
appetite increased and lower-quality loans began to outperform,
leading to substantial gains for B and CCC rated loans.
The rally in the loan market has come in spite of the fact that
economic data has remained generally weak. Gross domestic
product (GDP) continued to contract and the unemployment rate
approached 10 percent while the housing market remained
weak and consumers showed no signs of increasing spending in the
near future. In addition, corporate defaults continued to rise,
with the senior loan default rate increasing to 9.4 percent
as of July 31. We believe that this trend will continue and
the default rate may potentially peak in the low teens around
calendar year end before beginning to decline in 2010.
The European high yield market has followed much the same trend
as the U.S. market. The loan and bond markets have bounced
back strongly in 2009 after a difficult 2008. Many of the
technical factors noted above that have driven the
U.S. market have also been in play in Europe. The European
bond market has seen new issuance surge, while the European loan
market remains closed to new issues. As in the U.S., the
European market has rallied in spite of difficult economic
conditions and increasing defaults.
2
Performance
Analysis
The Funds 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 Funds
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 can differ, as they did
during the reporting period. For the 12 months ended
July 31, 2009, the Fund returned -11.84 percent on a
market price basis and -17.77 percent on an NAV basis.
Total return for
the 12-month
period ended July 31, 2009
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Based
on NAV
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Based
on Market Price
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17.77
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%
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11.84
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%
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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 Fund shares, when
sold, may be worth more or less than their original cost. See
Performance Summary for additional performance
information.
We continued to adhere to our research-intensive investment
process, employing a
bottom-up
security selection process driven by thorough analysis of
individual company fundamentals, and have not relaxed our
rigorous credit standards. With defaults continuing to rise
despite some nascent signs of recovery in the economy, we have
increased our exposure to industries we believe exhibit greater
defensive characteristics such as health care, utilities, and
food. These industries have historically tended to have
consistent cash flows and hard assets where being senior secured
can provide for better recoveries in the event of default.
Conversely, we avoided sectors or industries we believed were
more cyclical, or vulnerable to an economic downturn. For
example, the Fund remained underweighted in the auto, airline
and retail industries because of their susceptibility to the
weakening economy. We did look to take advantage of certain
dislocations in the market, particularly in the financial
sector. Concentrations in the portfolio by both industry and
borrower remain low, reflecting our belief that, after credit
selection, diversification is the best way to guard against
defaults in what we believe will continue to be a rising default
environment over the near term.
The Fund remained fully invested in senior secured loans and
high yield bonds, and used a modest amount of leverage, which
enhanced returns during the market rally we experienced over the
past several months. In fact, year to date through July 31,
the Fund returned 47.12 percent on an NAV basis and
54.17 percent on a market-price basis, although past
performance is no guarantee of future results. Leverage involves
borrowing at a floating short-term rate and reinvesting the
proceeds at a higher rate. Unlike other fixed-income asset
classes, using leverage in conjunction with senior loans does
not involve the same degree of risk from rising short-term
interest rates since the income from senior loans adjusts to
changes in interest rates,
3
as do the rates which determine the Funds borrowing costs.
(Similarly, should short-term rates fall, borrowing costs would
also decline. The use of leverage, though, may result in greater
volatility.) While the amount of leverage used has been reduced,
we continue to believe that a modest amount of leverage will be
beneficial going forward.
As of the end of the reporting period, approximately
41 percent of the Funds assets were invested
internationally, primarily in Europe, and continued to be
managed by Van Kampens subadvisor, Avenue Capital.
This exposure to non-dollar assets was entirely hedged into
U.S. dollars, effectively eliminating currency risk in the
portfolio. As of July 31, more than 60 percent of the
international assets are high yield bonds versus loans, whereas
the vast majority of the portfolios U.S. assets are
senior secured loans.
The Fund also uses a limited amount of credit derivatives for
investment purposes. Credit derivatives provide the opportunity
to gain exposure in loans and bonds often at higher yields than
if we invested in the underlying loan or bond directly albeit at
greater volatility risk. We adhere to the same
research-intensive investment process when investing in credit
derivatives. At the end of the reporting period, credit
derivatives accounted for approximately 19 percent of the
Funds total investments.
Market
Outlook
Despite the increase in the default rate and the large rally in
loan prices, we still see value in the leveraged loan asset
class over the longer term. In the near term, however, we expect
the loan market to have some volatility. On the one hand, the
technical factors in the market remain strong and show no signs
of abating, and the recent economic news has been encouraging.
But our optimism with respect to the rally continuing with its
current momentum is tempered by our view that the timing and
speed of an economic recovery remains uncertain.
There is no guarantee that any sectors mentioned will
continue to perform as discussed herein or that securities in
such sectors will be held by the Fund in the future.
4
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Summary
of Investments by Industry Classification as of 7/31/09
(Unaudited)
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Hotels, Motels, Inns & Gaming
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7.4
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%
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Finance
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7.1
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Containers, Packaging & Glass
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6.2
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TelecommunicationsEquipment & Services
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6.1
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Beverage, Food & Tobacco
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6.0
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Printing & Publishing
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5.5
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Healthcare
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4.8
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Chemicals, Plastics & Rubber
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4.8
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Non-Durable Consumer Products
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4.5
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Utilities
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4.3
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BroadcastingCable
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4.2
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TransportationCargo
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3.7
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Mining, Steel, Iron & Non-Precious Metals
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3.4
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Electronics
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2.2
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Entertainment & Leisure
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2.1
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TelecommunicationsWireless
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2.1
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Business Equipment & Services
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2.1
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Automotive
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1.8
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RetailSpecialty
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1.5
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Insurance
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1.5
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RetailStores
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1.5
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Buildings & Real Estate
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1.3
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BroadcastingTelevision
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1.2
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Education & Child Care
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1.2
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TelecommunicationsLocal Exchange Carriers
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1.0
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Home & Office Furnishings, Housewares &
Durable Consumer Pro
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0.8
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Machinery
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0.8
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Health & Beauty
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0.8
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Construction Material
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0.7
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Paper & Forest Products
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0.7
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BroadcastingDiversified
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0.7
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Textiles & Leather
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0.6
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Pharmaceuticals
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0.6
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BroadcastingRadio
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0.6
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Medical Products & Services
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0.5
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TelecommunicationsLong Distance
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0.4
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Aerospace/Defense
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0.4
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Farming & Agriculture
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0.4
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Natural Resources
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0.4
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Restaurants & Food Service
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0.4
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Ecological
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0.4
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RetailOil & Gas
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0.4
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Banking
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0.4
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Diversified Manufacturing
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0.2
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Total Long-Term Investments
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97.7
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Total Short-Term Investments
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2.3
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Total Investments
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100.0
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%
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Subject to change
daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities
mentioned or securities in the sectors shown above. Summary of
investments by industry classification percentages are as a
percentage of total investments. Securities are classified by
sectors that represent broad groupings of related industries.
Van Kampen is a wholly owned subsidiary of a global
securities firm which is engaged in a wide range of financial
services including, for example, securities trading and
brokerage activities, investment banking, research and analysis,
financing and financial advisory services.
5
Portfolio
Management
Van Kampen Dynamic Credit Opportunities Fund is managed by
members of the Advisers Senior Loan Group, which currently
includes Gerard Fogarty and Jeffrey Scott, each a Vice President
of the Adviser, and Philip Yarrow, an Executive Director of the
Adviser. All team members are responsible for the
day-to-day
management of the Advisers portion of Funds
portfolio.
Mr. Fogarty joined the Adviser in 2007 and began managing
the Fund in July 2008. Mr. Fogarty has approximately
11 years of investment experience. From 2003 to 2007 and
prior to joining the Adviser, Mr. Fogarty was employed by
JPMorgan and held a number of positions including Director in
the financial institutions group, and, most recently as a Credit
Executive in the commercial real estate group. Prior to joining
JPMorgan, Mr. Fogarty was employed as an Associate in the
financial institutions group at Bank of America.
Mr. Fogarty received a B.S. from Indiana University and an
M.B.A. from the University of Chicago Graduate School of
Business.
Mr. Scott joined the Adviser in 2005 and began managing the
Fund in July 2008. Mr. Scott has approximately
18 years of investment industry experience. Prior to
joining the Adviser, Mr. Scott was employed by State Farm
Insurance Companies where he served as an Assistant Vice
President in the Mutual Fund Group responsible for product
development and strategy as well as a Regional Vice President
for Sales for the Financial Services Division. Mr. Scott
received a B.S. from Elmhurst College and an M.B.A. from the
University of Chicago Graduate School of Business.
Mr. Scott also holds the Chartered Financial Analyst
designation.
Mr. Yarrow joined the Adviser in 2005 and began managing
the Fund in June 2007. Mr. Yarrow has over 13 years of
investment experience. Prior to joining the Adviser,
Mr. Yarrow was a credit analyst and a portfolio manager at
Bank One/JPMorgan. Mr. Yarrow received a bachelors
degree in mathematics and economics from the University of
Nottingham and an M.B.A. in finance from Northwestern
University. Mr. Yarrow also holds the Chartered Financial
Analyst designation.
The Fund is also managed by Avenue Europe International
Management, L.P., the Funds investment subadviser (the
Subadviser). Richard Furst, Senior Portfolio Manager
of the Subadviser, and Raul Ramirez, a Portfolio Manager of the
Subadviser, are responsible for the
day-to-day
management of the Subadvisers portion of Funds
portfolio.
Mr. Furst has been associated with the Subadviser in an
investment management capacity since 2004. Prior to joining the
Subadviser, he was a portfolio manager with Moore Capital Group,
managing approximately $1 billion of U.S. and European
distressed and high yield securities. Prior to that, he was a
Managing Director and Head of U.S. Special Situations
Trading group for Bank of America. Previously, Mr. Furst
was a Vice President in the High Yield and Distressed Trading
and Research department
6
of Salomon Brothers, Inc., after serving as an Analyst in their
Mergers, Acquisitions, and Restructuring group.
Mr. Ramirez has been associated with the Subadviser in an
investment management capacity since 2006. Prior to joining the
Subadviser, Mr. Ramirez was a portfolio manager based in
London at Goldentree Asset Management UK, focused on European
investments. Previously, Mr. Ramirez was Executive Director
of the Special Situations Group at Morgan Stanley, focused on
the European energy sector. While at Morgan Stanley,
Mr. Ramirez was also the Head of European Distressed
Research.
For More
Information About Portfolio Holdings
Each Van Kampen fund provides a complete schedule of
portfolio holdings in its semiannual and annual reports within
60 days of the end of the funds second and fourth
fiscal quarters. The semiannual reports and the annual reports
are filed electronically with the Securities and Exchange
Commission (SEC) on
Form N-CSRS
and
Form N-CSR,
respectively. Van Kampen also delivers the semiannual and
annual reports to fund shareholders, and makes these reports
available on its public Web site, www.vankampen.com. In addition
to the semiannual and annual reports that Van Kampen
delivers to shareholders and makes available through the
Van Kampen public Web site, each fund files a complete
schedule of portfolio holdings with the SEC for the funds
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 SECs Web site,
http://www.sec.gov.
You may also review and copy them at the SECs Public
Reference Room in Washington, DC. Information on the
operation of the SECs 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 SECs email
address (publicinfo@sec.gov) or by writing the Public Reference
section of the SEC, Washington, DC
20549-0102.
You may obtain copies of a funds fiscal quarter filings by
contacting Van Kampen Client Relations at
(800) 847-2424.
7
Proxy Voting
Policy and Procedures and Proxy Voting Record
You may obtain a copy of the Funds Proxy Voting Policy and
Procedures without charge, upon request, by calling toll free
(800) 847-2424
or by visiting our Web site at www.vankampen.com. It is also
available on the Securities and Exchange Commissions Web
site at
http://www.sec.gov.
You may obtain information regarding how the Fund voted proxies
relating to portfolio securities during the most recent
twelve-month period ended June 30 without charge by visiting our
Web site at www.vankampen.com. This information is also
available on the Securities and Exchange Commissions Web
site at
http://www.sec.gov.
8
Investment Advisory Agreement Approval
The Investment Company Act of 1940 requires that the investment
advisory agreement between the Fund and its investment adviser
and the subadvisory agreement between the investment adviser and
the investment subadviser be approved both by a majority of the
Board of Trustees and by a majority of the independent trustees
voting separately.
At meetings held on April 17, 2009 and May
20-21, 2009,
the Board of Trustees, and the independent trustees voting
separately, considered and ultimately determined that the terms
of the investment advisory agreement and the investment
subadvisory agreement are fair and reasonable and approved the
continuance of the investment advisory agreement and the
investment subadvisory agreement, subject to the amendment
thereto discussed below, 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 and the investment subadviser
at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to
assist the Board, relating to the investment advisory agreement
review process. The Board also considered information received
periodically about the portfolio, performance, the investment
strategy, portfolio management team and fees and expenses of the
Fund. Finally, the Board considered materials it had received in
connection with the consideration of a share repurchase program
for the Fund. The Board of Trustees considered the investment
advisory agreement and the investment subadvisory agreement over
a period of several months and the trustees held sessions both
with management and separate from management in reviewing and
considering the investment advisory agreement and the investment
subadvisory agreement.
In approving the investment advisory agreement and the
investment subadvisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality
of the services provided by the investment adviser and the
investment subadviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the
investment advisers and the investment subadvisers
expenses in providing the services and the profitability of the
investment adviser and the investment subadviser. The Board of
Trustees considered the extent to which any economies of scale
experienced by the investment adviser are shared with the
Funds shareholders, and the propriety of breakpoints in
the Funds 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
investment subadviser and the capability of the personnel of the
investment adviser and the investment subadviser, and
specifically the strength and background of its portfolio
management
9
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 of the investment advisory
agreement and the investment subadvisory 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 each of the investment adviser and the
investment subadviser, including those specific to portfolio
management, support and trading functions servicing the Fund.
The trustees discuss with management the resources available and
used in managing the Fund and changes made in the Funds
portfolio management team over time. 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 and the investment subadviser support its
decision to approve the investment advisory agreement and the
investment subadvisory agreement.
Performance, Fees and Expenses of the Fund. On a regular basis,
the Board of Trustees reviews the performance, fees and expenses
of the Fund compared to its peers and to appropriate benchmarks.
In addition, the Board spends more focused time on the
performance of the Fund and other funds in the Van Kampen
complex, paying specific attention to underperforming funds. The
trustees discuss with management the performance goals and the
actual results achieved in managing the Fund. When considering a
funds performance, the trustees and management 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 funds
weighted performance is under the funds benchmark or
peers, 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 management
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 discuss with management the level
of subadvisory fees paid by the investment adviser to the
investment subadviser. The trustees review not only the advisory
fees but other fees and expenses (whether paid to the adviser,
its affiliates or others) and the Funds overall expense
ratio. The Board has determined that the performance, fees and
expenses of the Fund support its decision to approve the
investment advisory agreement and the investment subadvisory
agreement.
Expenses in Providing the Service and Profitability. At least
annually, the trustees review the expenses of providing services
to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser and the
investment
10
subadviser. These profitability reports are put together by
management with the oversight of the Board. The trustees discuss
with management the investment advisers (and, as
applicable, the investment subadvisers) 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 expenses and profitability support its decision to approve
the investment advisory agreement and the investment subadvisory
agreement.
Economies of Scale. On a regular basis, the Board of Trustees
considers the size of the Fund and how that relates to the
Funds expense ratio and particularly the Funds
advisory fee rate. In conjunction with its review of
profitability, the trustees discuss with management how more (or
less) assets can affect the efficiency or effectiveness of
managing the Funds 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
agreement and the investment subadvisory agreement.
Other Benefits of the Relationship. On a regular basis, the
Board of Trustees considers other benefits to the investment
adviser and its affiliates derived from the investment
advisers 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
management each of these arrangements and the reasonableness of
its costs relative to the services performed. The Board has
determined that the other benefits received by the investment
adviser or its affiliates support its decision to approve the
investment advisory agreement and the investment subadvisory
agreement.
Amendment to Subadvisory Agreement. In addition, at meetings
held on April 17, 2009 and May
20-21, 2009,
the Board of Trustees, and the independent trustees voting
separately, considered and ultimately approved an amendment to
the investment sub-advisory agreement. Pursuant to this
amendment, the method of calculation of the fee paid by the
investment adviser to the subadviser was changed from 1.25% of
the portion of the average daily managed assets of the Fund
managed by the subadviser, provided that to the extent that the
investment advisory fee payable to the investment adviser is
decreased, the subadvisory fee will be proportionately
decreased, to a fee, equal to 40% of the compensation received
from the Fund by the investment adviser, less $200,000 per
annum, which represents certain out of pocket expenses incurred
by the investment adviser. The Board considered this amendment
in the context of their consideration of the continuation of the
advisory agreement and subadvisory agreement, paying particular
attention to the Funds performance and the allocation of
assets between the investment adviser and investment subadviser,
and approved the amendment to the subadvisory agreement as being
in the best interests of the Fund and its shareholders.
11
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio of
Investments n July 31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
Variable Rate Senior Loan Interests** 93.4%
Aerospace/Defense 0.5%
|
$
|
1,564
|
|
|
DeCrane Aircraft Holdings, Inc., Term Loan
|
|
|
6.38
|
%
|
|
02/21/13
|
|
$
|
1,180,810
|
|
|
2,251
|
|
|
IAP Worldwide Services, Inc., Term Loan (a)
|
|
|
9.25
|
|
|
12/30/12
|
|
|
1,609,430
|
|
|
2,000
|
|
|
Wesco Aircraft Hardware Corp., Term Loan
|
|
|
6.04
|
|
|
03/28/14
|
|
|
1,570,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,360,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive 2.3%
|
|
3,188
|
|
|
Acument Global Technologies, Inc., Term Loan
|
|
|
5.10
|
|
|
08/11/13
|
|
|
1,474,676
|
|
|
3,990
|
|
|
Federal-Mogul Corp., Term Loan
|
|
|
2.23 to 2.25
|
|
|
12/27/14 to 12/27/15
|
|
|
3,022,329
|
|
|
8,638
|
|
|
Ford Motor Co., Term Loan
|
|
|
3.28 to 3.51
|
|
|
12/16/13
|
|
|
7,374,459
|
|
|
4,145
|
|
|
Metokote Corp., Term Loan
|
|
|
3.29 to 5.25
|
|
|
11/27/11
|
|
|
2,228,079
|
|
|
533
|
|
|
Navistar International Corp., Revolving Credit Agreement
|
|
|
3.54
|
|
|
01/19/12
|
|
|
496,889
|
|
|
1,467
|
|
|
Navistar International Corp., Term Loan
|
|
|
3.54
|
|
|
01/19/12
|
|
|
1,366,445
|
|
|
2,087
|
|
|
Oshkosh Truck Corp., Term Loan
|
|
|
6.60 to 6.64
|
|
|
12/06/13
|
|
|
2,072,505
|
|
|
499
|
|
|
TRW Automotive, Inc., Term Loan
|
|
|
6.31
|
|
|
02/09/14
|
|
|
474,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,510,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking 0.4%
|
|
3,946
|
|
|
Dollar Financial Corp., Term Loan
|
|
|
3.35
|
|
|
10/30/12
|
|
|
3,620,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beverage, Food & Tobacco 7.5%
|
|
10,359
|
|
|
BE Foods Investments, Inc., Term Loan (a)
|
|
|
6.05
|
|
|
07/11/12
|
|
|
9,167,373
|
|
|
4,710
|
|
|
Coleman Natural Foods, LLC, Term Loan
|
|
|
6.92 to 7.60
|
|
|
08/22/12
|
|
|
2,825,973
|
|
|
8,103
|
|
|
Dole Food Co., Inc., Term Loan
|
|
|
7.37 to 8.00
|
|
|
04/12/13
|
|
|
8,178,232
|
|
|
10,000
|
|
|
DSW Holdings, Inc., Term Loan
|
|
|
4.29
|
|
|
03/02/12
|
|
|
8,350,000
|
|
|
12,000
|
|
|
Farleys & Sathers Candy Co., Inc., Term Loan
|
|
|
8.29 to 8.30
|
|
|
03/24/11
|
|
|
9,960,000
|
|
|
1,276
|
|
|
Foodvest Limited, Term Loan (Sweden) (b)
|
|
|
5.85
|
|
|
10/02/16
|
|
|
1,582,931
|
|
|
5,000
|
|
|
FSB Holdings, Inc., Term Loan
|
|
|
6.06
|
|
|
03/29/14
|
|
|
3,900,000
|
|
|
1,957
|
|
|
Liberator Midco Limited, Term Loan (United Kingdom)
|
|
|
2.79 to 3.17
|
|
|
10/27/14 to 10/27/15
|
|
|
2,689,760
|
|
|
3,000
|
|
|
LJVH Holdings, Inc., Term Loan (Canada)
|
|
|
6.10
|
|
|
01/19/15
|
|
|
2,460,000
|
|
|
3,561
|
|
|
Panrico, Inc., Term Loan (Spain) (b)
|
|
|
3.84 to 4.22
|
|
|
05/31/14 to 05/31/15
|
|
|
3,341,173
|
|
|
9,068
|
|
|
Pinnacle Foods Finance, LLC, Term Loan
|
|
|
3.06
|
|
|
04/02/14
|
|
|
8,297,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,752,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
BroadcastingCable 4.6%
|
$
|
16,485
|
|
|
Charter Communications Operating, LLC, Term Loan (c)
|
|
|
6.25 to 6.75
|
%
|
|
03/06/14 to 09/06/14
|
|
$
|
14,735,384
|
|
|
3,229
|
|
|
CSC Holdings, Inc., Term Loan
|
|
|
1.29
|
|
|
02/24/12
|
|
|
3,129,410
|
|
|
1,197
|
|
|
Discovery Communications Holdings, LLC, Term Loan
|
|
|
5.25
|
|
|
05/14/14
|
|
|
1,216,451
|
|
|
10,000
|
|
|
Kabel Baden-Wurttemberg GmbH, Term Loan (Germany)
|
|
|
3.10 to 3.60
|
|
|
06/09/14 to 06/09/15
|
|
|
13,362,181
|
|
|
4,147
|
|
|
Knology, Inc., Term Loan
|
|
|
2.54
|
|
|
06/30/12
|
|
|
3,877,408
|
|
|
997
|
|
|
TWCC Holding Corp., Term Loan
|
|
|
7.25
|
|
|
09/12/15
|
|
|
1,009,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,329,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BroadcastingDiversified 0.8%
|
|
7,713
|
|
|
Alpha Topco, Ltd., Term Loan (United Kingdom)
|
|
|
2.54 to 3.79
|
|
|
12/31/13 to 06/30/14
|
|
|
5,554,871
|
|
|
890
|
|
|
Cumulus Media, Inc., Term Loan
|
|
|
4.29
|
|
|
06/11/14
|
|
|
600,429
|
|
|
544
|
|
|
NEP II, Inc., Term Loan
|
|
|
2.54
|
|
|
02/16/14
|
|
|
478,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,634,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BroadcastingRadio 0.7%
|
|
1,862
|
|
|
CMP KC, LLC, Term Loan (d)
|
|
|
6.25
|
|
|
05/03/11
|
|
|
567,981
|
|
|
4,822
|
|
|
CMP Susquehanna Corp., Term Loan
|
|
|
2.31
|
|
|
05/05/13
|
|
|
2,628,155
|
|
|
1,800
|
|
|
Multicultural Radio Broadcasting, Inc., Term Loan
|
|
|
3.05
|
|
|
12/18/12
|
|
|
1,305,000
|
|
|
1,261
|
|
|
NextMedia Operating, Inc., Term Loan
|
|
|
8.25
|
|
|
11/15/12
|
|
|
850,919
|
|
|
4,557
|
|
|
NextMedia Operating, Inc., Term Loan (a) (e)
|
|
|
11.25
|
|
|
11/15/13
|
|
|
341,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,693,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BroadcastingTelevision 1.5%
|
|
2,687
|
|
|
FoxCo Acquisition, LLC, Term Loan
|
|
|
7.25
|
|
|
07/14/15
|
|
|
2,140,620
|
|
|
641
|
|
|
High Plains Broadcasting Operating Co., LLC, Term Loan
|
|
|
7.25
|
|
|
09/14/16
|
|
|
446,916
|
|
|
2,420
|
|
|
Newport Television, LLC, Term Loan
|
|
|
7.25 to 8.00
|
|
|
09/14/16
|
|
|
1,688,155
|
|
|
100
|
|
|
NV Broadcasting, LLC, Term Loan
|
|
|
13.00
|
|
|
02/28/10
|
|
|
99,664
|
|
|
11,646
|
|
|
NV Broadcasting, LLC, Term Loan (e)
|
|
|
5.25 to 8.75
|
|
|
11/01/13 to 11/01/14
|
|
|
652,604
|
|
|
9,301
|
|
|
Univision Communications, Inc., Term Loan
|
|
|
2.54
|
|
|
09/29/14
|
|
|
7,531,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,559,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings & Real Estate 1.7%
|
|
2,000
|
|
|
El Ad IDB Las Vegas, LLC, Term Loan
|
|
|
4.30
|
|
|
08/09/12
|
|
|
1,550,000
|
|
|
3,000
|
|
|
FX Luxury Las Vegas I, LLC, Term Loan (e) (f)
|
|
|
11.25
|
|
|
07/06/09
|
|
|
31,500
|
|
|
4,500
|
|
|
Ginn LA CS Borrower, LLC, Term Loan (d) (e)
|
|
|
10.20
|
|
|
06/08/12
|
|
|
7,502
|
|
13
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
Buildings & Real Estate (Continued)
|
$
|
2,979
|
|
|
Ginn LA CS Borrower, LLC, Term Loan (e)
|
|
|
6.20 to 7.75
|
%
|
|
06/08/11
|
|
$
|
302,899
|
|
|
615
|
|
|
KAG Property, LLC (d) (i)
|
|
|
6.28
|
|
|
09/23/09
|
|
|
592,963
|
|
|
3,721
|
|
|
Kuilima Resort Co., Term Loan (a) (d) (e)
|
|
|
22.25
|
|
|
09/30/11
|
|
|
0
|
|
|
63
|
|
|
Kuilima Resort Co., Term Loan (a) (d) (e) (f)
|
|
|
30.25
|
|
|
10/01/08
|
|
|
0
|
|
|
2,618
|
|
|
Kyle Acquisition Group, LLC, Term Loan (e)
|
|
|
6.00
|
|
|
07/20/11
|
|
|
215,949
|
|
|
2,382
|
|
|
Kyle Acquisition Group, LLC, Term Loan (e) (f)
|
|
|
5.75
|
|
|
07/20/09
|
|
|
196,551
|
|
|
1,806
|
|
|
Lake at Las Vegas Joint Venture, LLC,
Revolving Credit
Agreement (a) (c) (e)
|
|
|
14.35
|
|
|
12/22/12
|
|
|
111,343
|
|
|
18,198
|
|
|
Lake at Las Vegas Joint Venture, LLC, Term
Loan (a) (c) (e)
|
|
|
14.35
|
|
|
12/22/12
|
|
|
1,122,224
|
|
|
31
|
|
|
Lake at Las Vegas Joint Venture, LLC, Term Loan (c) (e)
|
|
|
20.00
|
|
|
10/01/09
|
|
|
1,908
|
|
|
3,000
|
|
|
Lake at Las Vegas Joint Venture, LLC, Term Loan (c)
|
|
|
7.79
|
|
|
08/07/09
|
|
|
2,220,000
|
|
|
2,322
|
|
|
Landsource Communities Development, LLC, Term
Loan (a) (c) (e)
|
|
|
8.25
|
|
|
07/31/09
|
|
|
294,173
|
|
|
2,018
|
|
|
NLV Holdings, LLC, Term Loan (a) (c)
|
|
|
12.50
|
|
|
05/09/12
|
|
|
151,363
|
|
|
3,872
|
|
|
Realogy Corp., Term Loan
|
|
|
3.31
|
|
|
10/10/13
|
|
|
3,001,044
|
|
|
4,522
|
|
|
Rhodes Ranch General Partnership, Term
Loan (a) (c) (e)
|
|
|
3.25 to 9.75
|
|
|
11/21/10 to 11/21/11
|
|
|
620,814
|
|
|
2,000
|
|
|
Standard Pacific Corp., Term Loan
|
|
|
2.60
|
|
|
05/05/13
|
|
|
1,410,000
|
|
|
2,496
|
|
|
Tamarack Resorts, LLC, Term Loan (d) (e)
|
|
|
7.50 to 8.05
|
|
|
05/19/11
|
|
|
374,433
|
|
|
209
|
|
|
Tamarack Resorts, LLC, Term Loan (d) (e) (f)
|
|
|
18.00
|
|
|
07/02/09
|
|
|
201,045
|
|
|
1,499
|
|
|
WCI Communities, Inc., Term Loan (c)
|
|
|
5.55
|
|
|
12/23/10
|
|
|
864,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,270,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Equipment & Services 2.6%
|
|
2,948
|
|
|
GSI Holdings, LLC, Term Loan
|
|
|
3.68
|
|
|
08/01/14
|
|
|
2,446,425
|
|
|
2,791
|
|
|
NCO Financial Systems, Term Loan
|
|
|
7.50
|
|
|
05/15/13
|
|
|
2,540,158
|
|
|
9,897
|
|
|
Nielsen Finance, LLC, Term Loan
|
|
|
2.30
|
|
|
08/09/13
|
|
|
9,290,977
|
|
|
3,909
|
|
|
RGIS Services, LLC, Term Loan
|
|
|
2.99 to 3.10
|
|
|
04/30/14
|
|
|
3,342,287
|
|
|
3,925
|
|
|
SMG Holdings, Inc., Term Loan
|
|
|
3.31 to 4.12
|
|
|
07/27/14
|
|
|
3,414,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,034,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemicals, Plastics & Rubber 5.1%
|
|
3,949
|
|
|
Ashland Chemicals, Term Loan
|
|
|
6.75 to 7.65
|
|
|
11/13/13 to 05/13/14
|
|
|
4,003,378
|
|
|
10,757
|
|
|
Borsodchem, Term Loan (Hungary)
|
|
|
4.56 to 5.06
|
|
|
11/28/14 to 11/28/15
|
|
|
5,698,330
|
|
14
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
Chemicals, Plastics & Rubber (Continued)
|
$
|
5,000
|
|
|
Brenntag Holdings GmbH & Co. KG, Term Loan (Germany)
|
|
|
4.29
|
%
|
|
07/07/15
|
|
$
|
4,137,500
|
|
|
9,104
|
|
|
Hexion Specialty Chemicals, Inc., Term Loan
|
|
|
2.88 to 3.31
|
|
|
05/06/13
|
|
|
6,672,403
|
|
|
13,447
|
|
|
Lyondell Chemical Co., Term Loan (c)
|
|
|
3.79 to 13.00
|
|
|
12/15/09 to 12/22/14
|
|
|
6,737,397
|
|
|
160
|
|
|
Lyondell Chemical Co., Revolving Credit Agreement (c)
|
|
|
3.76 to 7.00
|
|
|
12/20/13
|
|
|
68,921
|
|
|
1,009
|
|
|
Nalco Co., Term Loan
|
|
|
6.50
|
|
|
05/13/16
|
|
|
1,023,279
|
|
|
4,950
|
|
|
PQ Corp., Term Loan
|
|
|
3.54 to 3.75
|
|
|
07/30/14
|
|
|
3,894,002
|
|
|
4,987
|
|
|
Solutia, Inc., Term Loan
|
|
|
7.25
|
|
|
02/28/14
|
|
|
4,883,440
|
|
|
4,733
|
|
|
Univar Inc., Term Loan
|
|
|
3.29
|
|
|
10/10/14
|
|
|
4,271,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,389,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Material 0.7%
|
|
6,541
|
|
|
Axia, Inc., Term Loan (a) (g)
|
|
|
5.00 to 17.95
|
|
|
12/21/12
|
|
|
1,565,677
|
|
|
2,315
|
|
|
Building Materials Holding Corp., Term Loan (c) (e)
|
|
|
6.50
|
|
|
11/10/11
|
|
|
648,066
|
|
|
2,403
|
|
|
Contech Construction Products, Inc., Term Loan
|
|
|
2.30
|
|
|
01/31/13
|
|
|
2,084,792
|
|
|
2,000
|
|
|
Custom Building Products, Inc., Term Loan
|
|
|
10.75
|
|
|
04/20/12
|
|
|
1,690,000
|
|
|
76
|
|
|
United Subcontractors, Inc., Term Loan
|
|
|
6.25
|
|
|
06/30/15
|
|
|
68,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,057,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Containers, Packaging & Glass 1.9%
|
|
1,239
|
|
|
Anchor Glass Container Corp., Term Loan
|
|
|
6.75
|
|
|
06/20/14
|
|
|
1,213,254
|
|
|
8,858
|
|
|
Berlin Packaging LLC, Term Loan
|
|
|
3.29 to 7.33
|
|
|
08/17/14 to 08/17/15
|
|
|
6,426,173
|
|
|
2,032
|
|
|
Berry Plastics Group, Inc., Term Loan
|
|
|
2.30
|
|
|
04/03/15
|
|
|
1,732,811
|
|
|
6,072
|
|
|
Graham Packaging Co., L.P., Term Loan
|
|
|
2.56 to 6.75
|
|
|
10/07/11 to 04/05/14
|
|
|
6,067,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,439,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Manufacturing 0.2%
|
|
4,995
|
|
|
Euramax International, Inc., Term Loan (a)
|
|
|
10.00 to 14.00
|
|
|
06/29/13
|
|
|
1,885,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ecological 0.5%
|
|
6,850
|
|
|
Synagro Technologies, Inc., Term Loan
|
|
|
5.05
|
|
|
10/02/14
|
|
|
3,836,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Education & Child Care 1.5%
|
|
764
|
|
|
Bright Horizons Family Solutions, Inc., Revolving Credit
Agreement
|
|
|
3.50 to 5.75
|
|
|
05/28/14
|
|
|
573,000
|
|
|
6,982
|
|
|
Cengage Learning, Holdings II, LP, Term Loan (h)
|
|
|
2.79
|
|
|
07/03/14
|
|
|
6,016,360
|
|
15
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
Education & Child Care (Continued)
|
$
|
500
|
|
|
Educate, Inc., Term Loan
|
|
|
5.85
|
%
|
|
06/16/14
|
|
$
|
435,000
|
|
|
1,974
|
|
|
Education Management LLC, Term Loan
|
|
|
2.38
|
|
|
06/03/13
|
|
|
1,895,089
|
|
|
5,000
|
|
|
Nelson Education Ltd., Term Loan (Canada)
|
|
|
6.60
|
|
|
07/03/15
|
|
|
2,875,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,794,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronics 2.7%
|
|
9,257
|
|
|
Edwards Ltd., Term Loan (Cayman Islands) (a)
|
|
|
2.29 to 6.79
|
|
|
05/31/14 to 11/30/14
|
|
|
4,432,929
|
|
|
4,447
|
|
|
Infor Enterprise Solutions Holdings, Inc., Term Loan
|
|
|
4.04
|
|
|
07/28/12
|
|
|
3,824,394
|
|
|
7,840
|
|
|
Open Solutions, Inc., Term Loan
|
|
|
2.63
|
|
|
01/23/14
|
|
|
5,589,004
|
|
|
4,879
|
|
|
Stratus Technologies, Inc., Term Loan
|
|
|
4.36
|
|
|
03/29/11
|
|
|
3,061,758
|
|
|
1,957
|
|
|
Sungard Data Systems, Inc., Term Loan
|
|
|
2.05 to 6.75
|
|
|
02/28/14 to 02/26/16
|
|
|
1,896,455
|
|
|
3,103
|
|
|
Verint Systems Inc., Term Loan
|
|
|
3.54
|
|
|
05/25/14
|
|
|
2,709,522
|
|
|
715
|
|
|
X-Rite, Inc., Term Loan
|
|
|
7.25 to 8.00
|
|
|
10/24/12
|
|
|
562,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,076,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entertainment & Leisure 2.7%
|
|
3,535
|
|
|
Fender Musical Instruments Corp., Term Loan
|
|
|
2.54 to 2.85
|
|
|
06/09/14
|
|
|
2,686,388
|
|
|
29,950
|
|
|
Metro-Goldwyn-Mayer
Studios, Inc., Term Loan
|
|
|
3.54
|
|
|
04/08/12
|
|
|
17,521,029
|
|
|
1,500
|
|
|
Ticketmaster Entertainment, Inc., Term Loan
|
|
|
3.60
|
|
|
07/25/14
|
|
|
1,455,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,662,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farming & Agriculture 0.5%
|
|
5,000
|
|
|
WM. Bolthouse Farms, Inc., Term Loan
|
|
|
5.79
|
|
|
12/16/13
|
|
|
4,343,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance 4.1%
|
|
3,926
|
|
|
C.G. JCF Corp., Term Loan
|
|
|
3.29
|
|
|
08/01/14
|
|
|
3,180,398
|
|
|
14,429
|
|
|
First Data Corp., Term Loan
|
|
|
3.04
|
|
|
09/24/14
|
|
|
12,214,113
|
|
|
5,847
|
|
|
National Processing Co. Group, Term Loan
|
|
|
3.31 to 7.08
|
|
|
09/29/13 to 09/29/14
|
|
|
4,265,842
|
|
|
4,934
|
|
|
Nuveen Investments, Inc., Term Loan
|
|
|
3.29 to 3.49
|
|
|
11/13/14
|
|
|
4,024,370
|
|
|
7,599
|
|
|
Oxford Acquisition III, Ltd., Term Loan (United Kingdom)
|
|
|
2.50
|
|
|
05/12/14
|
|
|
4,065,203
|
|
|
9,742
|
|
|
RJO Holdings Corp., Term Loan
|
|
|
3.30 to 7.05
|
|
|
07/12/14 to 07/12/15
|
|
|
2,386,416
|
|
|
5,450
|
|
|
Transfirst Holdings, Inc., Term Loan
|
|
|
3.04 to 7.04
|
|
|
06/15/14 to 06/15/15
|
|
|
3,557,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,693,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
Health & Beauty 0.9%
|
$
|
5,081
|
|
|
American Safety Razor Co., Term Loan
|
|
|
6.54
|
%
|
|
01/30/14
|
|
$
|
3,658,064
|
|
|
7,709
|
|
|
Marietta Intermediate Holding Corp, Term Loan (a)
|
|
|
5.29 to 12.00
|
|
|
11/30/10 to 12/31/12
|
|
|
1,087,970
|
|
|
4,776
|
|
|
Philosophy, Inc., Term Loan
|
|
|
2.29
|
|
|
03/16/14
|
|
|
2,889,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,635,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare 5.5%
|
|
1,990
|
|
|
Catalent Pharma Solutions, Inc., Term Loan
|
|
|
2.54
|
|
|
04/10/14
|
|
|
1,704,637
|
|
|
5,551
|
|
|
Community Health Systems, Inc., Term Loan
|
|
|
2.54 to 2.92
|
|
|
07/25/14
|
|
|
5,228,558
|
|
|
4,162
|
|
|
Concentra Inc., Term Loan (a)
|
|
|
2.85 to 6.85
|
|
|
06/25/14 to 06/25/15
|
|
|
3,065,322
|
|
|
8,017
|
|
|
HCA, Inc., Term Loan
|
|
|
2.85
|
|
|
11/18/13
|
|
|
7,540,983
|
|
|
4,376
|
|
|
HCR Healthcare, LLC, Term Loan
|
|
|
2.79
|
|
|
12/22/14
|
|
|
3,960,713
|
|
|
6,175
|
|
|
Health Management Associates, Inc., Term Loan
|
|
|
2.35
|
|
|
02/28/14
|
|
|
5,749,211
|
|
|
1,708
|
|
|
Healthcare Partners, LLC, Term Loan
|
|
|
2.04
|
|
|
10/31/13
|
|
|
1,563,031
|
|
|
2,940
|
|
|
Inverness Medical Innovations, Inc., Term Loan
|
|
|
2.29 to 2.60
|
|
|
06/26/14
|
|
|
2,832,199
|
|
|
700
|
|
|
Surgical Care Affiliates, LLC, Revolving Credit Agreement
|
|
|
2.60
|
|
|
06/28/13
|
|
|
511,000
|
|
|
5,902
|
|
|
Surgical Care Affiliates, LLC, Term Loan
|
|
|
2.60
|
|
|
12/29/14
|
|
|
5,371,017
|
|
|
3,948
|
|
|
United Surgical Partners International, Inc., Term Loan
|
|
|
2.29 to 2.51
|
|
|
04/19/14
|
|
|
3,656,425
|
|
|
4,104
|
|
|
Viant Holdings, Inc., Term Loan
|
|
|
2.85
|
|
|
06/25/14
|
|
|
3,570,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,753,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home & Office Furnishings, Housewares & Durable
Consumer Products 1.1%
|
|
8,651
|
|
|
Hunter Fan Co., Term Loan
|
|
|
2.81 to 7.04
|
|
|
04/16/14 to 10/16/14
|
|
|
3,561,767
|
|
|
4,900
|
|
|
Mattress Holdings Corp., Term Loan
|
|
|
2.54
|
|
|
01/18/14
|
|
|
2,793,000
|
|
|
3,267
|
|
|
National Bedding Co., LLC, Term Loan
|
|
|
5.31
|
|
|
02/28/14
|
|
|
2,167,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,521,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotels, Motels, Inns & Gaming 9.3%
|
|
5,500
|
|
|
BLB Worldwide Holdings, Inc., Term Loan (e)
|
|
|
6.50
|
|
|
07/18/12
|
|
|
440,000
|
|
|
1,996
|
|
|
BLB Worldwide Holdings, Inc., Term Loan (a)
|
|
|
4.75
|
|
|
07/18/11
|
|
|
1,118,020
|
|
|
7,580
|
|
|
Cannery Casino Resorts, LLC, Term Loan
|
|
|
2.54 to 4.54
|
|
|
05/18/13 to 05/16/14
|
|
|
6,485,063
|
|
|
£ 2,182
|
|
|
Gala Group Ltd, Term Loan (United Kingdom)
|
|
|
4.60
|
|
|
12/01/12
|
|
|
3,062,068
|
|
17
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
Hotels, Motels, Inns & Gaming (Continued)
|
$
|
10,000
|
|
|
Gateway Casinos & Entertainment, Term Loan
|
|
|
6.10
|
%
|
|
03/31/15
|
|
$
|
2,075,000
|
|
|
2,694
|
|
|
Golden Nugget, Inc., Term Loan
|
|
|
2.29 to 3.54
|
|
|
06/30/14 to 12/31/14
|
|
|
1,437,140
|
|
|
842
|
|
|
Greektown Casino, LLC, Term Loan (c) (e)
|
|
|
7.00
|
|
|
12/03/12
|
|
|
621,256
|
|
|
5,519
|
|
|
Greektown Holdings, LLC, Term Loan (a)
|
|
|
16.75
|
|
|
09/01/09
|
|
|
5,484,224
|
|
|
4,974
|
|
|
Green Valley Ranch Gaming, LLC, Term Loan
|
|
|
2.54 to 4.00
|
|
|
02/16/14 to 08/16/14
|
|
|
1,932,108
|
|
|
10,227
|
|
|
Harrahs Operating Co., Inc., Term Loan
|
|
|
3.50 to 3.60
|
|
|
01/28/15
|
|
|
8,221,701
|
|
|
6,985
|
|
|
Las Vegas Sands, LLC/Venetian Casino, Term Loan
|
|
|
2.09
|
|
|
05/23/14
|
|
|
5,531,929
|
|
|
9,923
|
|
|
Magnolia Hill, LLC, Term Loan
|
|
|
3.54 to 14.00
|
|
|
10/30/13 to 04/30/14
|
|
|
9,131,898
|
|
|
2,850
|
|
|
MGM Mirage, Term Loan
|
|
|
6.00
|
|
|
10/03/11
|
|
|
2,443,875
|
|
|
20,500
|
|
|
Regency Entertainment SA, Term Loan (Greece)
|
|
|
3.23 to 3.60
|
|
|
03/02/14 to 03/02/15
|
|
|
23,813,189
|
|
|
3,990
|
|
|
Venetian Macau, Ltd., Term Loan
|
|
|
2.85
|
|
|
05/25/12 to 05/25/13
|
|
|
3,704,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,501,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance 1.9%
|
|
3,913
|
|
|
Alliant Holdings I, Inc., Term Loan
|
|
|
3.60
|
|
|
08/21/14
|
|
|
3,571,032
|
|
|
6,049
|
|
|
AmWins Group, Inc., Term Loan
|
|
|
3.11 to 3.16
|
|
|
06/08/13
|
|
|
3,894,213
|
|
|
3,038
|
|
|
Conseco, Inc., Term Loan
|
|
|
6.50
|
|
|
10/10/13
|
|
|
2,217,508
|
|
|
3,500
|
|
|
HMSC Corp., Term Loan
|
|
|
5.79
|
|
|
10/03/14
|
|
|
1,400,000
|
|
|
3,654
|
|
|
Mitchell International, Inc., Term Loan
|
|
|
5.88
|
|
|
03/30/15
|
|
|
2,192,118
|
|
|
2,480
|
|
|
Vertafore, Inc., Term Loan
|
|
|
4.91 to 6.66
|
|
|
01/31/12 to 01/31/13
|
|
|
2,295,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,570,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Machinery 1.0%
|
|
5,790
|
|
|
Goodman Global, Inc., Term Loan
|
|
|
6.50
|
|
|
02/13/14
|
|
|
5,670,581
|
|
|
3,930
|
|
|
Mold-Masters Luxembourg Holdings, SA, Term Loan
|
|
|
3.81
|
|
|
10/11/14
|
|
|
2,809,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,480,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Products & Services 0.6%
|
|
1,133
|
|
|
AGA Medical Corp., Term Loan
|
|
|
2.30 to 2.37
|
|
|
04/28/13
|
|
|
967,382
|
|
|
1,846
|
|
|
Biomet, Inc., Term Loan
|
|
|
3.29 to 3.61
|
|
|
03/25/15
|
|
|
1,754,162
|
|
|
1,745
|
|
|
Carestream Health, Inc., Term Loan
|
|
|
2.29
|
|
|
04/30/13
|
|
|
1,612,363
|
|
|
788
|
|
|
VWR International, Inc., Term Loan
|
|
|
2.79
|
|
|
06/30/14
|
|
|
723,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,057,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining, Steel, Iron & Non-Precious
Metals 0.5%
|
|
5,401
|
|
|
John Maneely Co., Term Loan
|
|
|
3.54 to 3.76
|
|
|
12/09/13
|
|
|
4,229,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
Natural Resources 0.5%
|
$
|
3,200
|
|
|
CDX Funding, LLC, Term Loan (c) (e)
|
|
|
7.50
|
%
|
|
03/31/13
|
|
$
|
800,000
|
|
|
3,000
|
|
|
Dresser, Inc., Term Loan
|
|
|
6.04
|
|
|
05/04/15
|
|
|
2,312,499
|
|
|
842
|
|
|
Western Refining, Inc., Term Loan
|
|
|
8.25
|
|
|
05/30/14
|
|
|
811,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,923,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Durable Consumer Products 5.6%
|
|
6,652
|
|
|
Amscan Holdings, Inc., Term Loan
|
|
|
2.54 to 3.38
|
|
|
05/25/13
|
|
|
5,870,302
|
|
|
1,948
|
|
|
Huish Detergents, Inc., Term Loan
|
|
|
2.04
|
|
|
04/26/14
|
|
|
1,840,477
|
|
|
8,366
|
|
|
KIK Custom Products, Inc., Term Loan
|
|
|
2.54 to 5.29
|
|
|
06/02/14 to 11/30/14
|
|
|
4,247,166
|
|
|
2,946
|
|
|
Mega Brands, Inc., Term Loan (Canada)
|
|
|
9.75
|
|
|
07/26/12
|
|
|
1,171,166
|
|
|
16,679
|
|
|
Ontex, Term Loan (Belgium)
|
|
|
4.00 to 4.75
|
|
|
07/06/12 to 07/05/13
|
|
|
22,227,714
|
|
|
475
|
|
|
Spectrum Brands, Inc., Revolving Credit Agreement (c)
|
|
|
4.31 to 6.25
|
|
|
03/30/13
|
|
|
435,683
|
|
|
9,249
|
|
|
Spectrum Brands, Inc., Term Loan (c)
|
|
|
6.25
|
|
|
03/30/13
|
|
|
8,477,976
|
|
|
5,000
|
|
|
Targus Group International, Inc., Term Loan
|
|
|
9.17
|
|
|
05/22/13
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,770,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paper & Forest Products 0.9%
|
|
3,200
|
|
|
Ainsworth Lumber Co., Ltd, Term Loan (d)
|
|
|
5.31
|
|
|
06/26/14
|
|
|
2,000,000
|
|
|
3,343
|
|
|
New Page, Term Loan
|
|
|
4.06
|
|
|
12/21/14
|
|
|
2,906,139
|
|
|
1,905
|
|
|
SP Newsprint Co., Term Loan
|
|
|
11.00
|
|
|
03/31/10
|
|
|
1,381,091
|
|
|
393
|
|
|
Verso Paper Holding, LLC, Term Loan (a)
|
|
|
7.28 to 8.03
|
|
|
02/01/13
|
|
|
88,337
|
|
|
3,328
|
|
|
White Birch Paper Co., Term Loan (Canada)
|
|
|
3.35
|
|
|
05/08/14
|
|
|
989,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,365,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals 0.8%
|
|
6,919
|
|
|
Nyco Holdings 2 Aps, Term Loan (Denmark) (b)
|
|
|
2.85 to 3.60
|
|
|
12/29/13 to 12/29/15
|
|
|
6,274,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printing & Publishing 6.9%
|
|
1,823
|
|
|
Ascend Media Holdings, LLC, Term Loan (d) (e)
|
|
|
10.25
|
|
|
01/31/12
|
|
|
74,763
|
|
|
989
|
|
|
DRI Holdings, Inc., Term Loan
|
|
|
3.29 to 3.60
|
|
|
07/03/14
|
|
|
884,727
|
|
|
4,000
|
|
|
Endurance Business Media, Inc., Term Loan (d) (e)
|
|
|
11.25
|
|
|
01/26/14
|
|
|
0
|
|
|
4,123
|
|
|
Gatehouse Media, Inc., Term Loan
|
|
|
2.29 to 2.30
|
|
|
08/28/14
|
|
|
1,042,480
|
|
|
7,766
|
|
|
Idearc, Inc., Term Loan (c) (e)
|
|
|
5.75
|
|
|
11/15/13
|
|
|
3,525,304
|
|
|
3,427
|
|
|
Intermedia Outdoor, Inc., Term Loan
|
|
|
3.60
|
|
|
01/31/13
|
|
|
1,713,618
|
|
|
3,176
|
|
|
Knowledgepoint 360 Group, LLC, Term Loan
|
|
|
4.11 to 7.86
|
|
|
04/14/14 to 04/13/15
|
|
|
2,211,448
|
|
19
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
Printing & Publishing (Continued)
|
$
|
5,731
|
|
|
MediaNews Group, Inc., Term Loan
|
|
|
6.79
|
%
|
|
12/30/10 to 08/02/13
|
|
$
|
1,166,102
|
|
|
9,880
|
|
|
Merrill Communications, LLC, Term Loan (a)
|
|
|
14.75 to 15.00
|
|
|
11/15/13
|
|
|
5,236,332
|
|
|
2,333
|
|
|
Newsday, LLC, Term Loan
|
|
|
6.01
|
|
|
08/01/13
|
|
|
2,312,917
|
|
|
11,888
|
|
|
Primacom, Term Loan (Germany)
|
|
|
4.95 to 5.45
|
|
|
11/21/15 to 11/21/16
|
|
|
12,284,513
|
|
|
1,455
|
|
|
Primedia, Inc., Term Loan
|
|
|
2.54 to 2.85
|
|
|
08/01/14
|
|
|
1,171,412
|
|
|
13,000
|
|
|
Prosiebensat.1 Media AG, Term Loan (Germany) (b)
|
|
|
3.14
|
|
|
07/03/15
|
|
|
14,346,661
|
|
|
1,893
|
|
|
R.H. Donnelley, Inc., Term Loan (c)
|
|
|
6.75
|
|
|
06/30/11
|
|
|
1,451,111
|
|
|
1,746
|
|
|
Thomas Nelson Publishers, Term Loan
|
|
|
8.75
|
|
|
06/12/12
|
|
|
1,182,952
|
|
|
16,000
|
|
|
Tribune Co., Bridge Loan (c) (d) (e)
|
|
|
8.25
|
|
|
12/20/15
|
|
|
130,000
|
|
|
17,146
|
|
|
Tribune Co., Term Loan (c) (e)
|
|
|
5.25
|
|
|
06/04/14
|
|
|
7,201,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,935,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurants & Food Service 0.5%
|
|
1,568
|
|
|
Center Cut Hospitality, Inc., Term Loan
|
|
|
3.17
|
|
|
07/06/14
|
|
|
1,176,000
|
|
|
3,280
|
|
|
Volume Services America, Inc., Term Loan
|
|
|
8.25
|
|
|
12/31/12
|
|
|
2,705,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,881,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RetailOil & Gas 0.5%
|
|
3,878
|
|
|
The Pantry, Inc., Term Loan
|
|
|
1.79
|
|
|
05/15/14
|
|
|
3,638,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RetailSpecialty 1.9%
|
|
7,796
|
|
|
Travelport LLC, Term Loan
|
|
|
3.62
|
|
|
08/23/13
|
|
|
8,666,714
|
|
|
6,500
|
|
|
Zapf, Term Loan (Germany) (d)
|
|
|
4.62
|
|
|
11/30/12
|
|
|
6,948,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,615,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RetailStores 1.8%
|
|
5,000
|
|
|
Dollar General Corp., Term Loan
|
|
|
3.04
|
|
|
07/07/14
|
|
|
4,838,875
|
|
|
6,552
|
|
|
General Nutrition Centers, Inc., Term Loan
|
|
|
2.54 to 2.85
|
|
|
09/16/13
|
|
|
5,991,008
|
|
|
4,157
|
|
|
Guitar Center, Inc., Term Loan
|
|
|
3.79
|
|
|
10/09/14
|
|
|
3,125,023
|
|
|
1,043
|
|
|
Sally Holdings, Inc., Term Loan
|
|
|
2.54 to 2.93
|
|
|
11/16/13
|
|
|
1,002,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,957,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TelecommunicationsEquipment &
Services 1.8%
|
|
10,000
|
|
|
Fibernet, Term Loan (Bulgaria) (d)
|
|
|
3.65 to 4.15
|
|
|
12/20/14 to 12/20/15
|
|
|
9,977,095
|
|
|
4,774
|
|
|
Orion, Term Loan (Germany)
|
|
|
4.22 to 5.20
|
|
|
10/31/14 to 10/30/15
|
|
|
5,005,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,982,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TelecommunicationsLocal Exchange
Carriers 1.1%
|
|
6,663
|
|
|
Global Tel*Link Corp., Term Loan
|
|
|
9.00
|
|
|
02/14/13
|
|
|
5,996,585
|
|
|
3,181
|
|
|
Hawaiian Telcom Communications, Inc, Term Loan (a) (c)
|
|
|
4.75
|
|
|
06/01/14
|
|
|
1,956,145
|
|
|
1,389
|
|
|
Sorenson Communications, Inc., Term Loan
|
|
|
2.79
|
|
|
08/16/13
|
|
|
1,321,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,274,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
TelecommunicationsLong Distance 0.6%
|
$
|
5,167
|
|
|
Level 3 Communications, Inc., Term Loan
|
|
|
2.54 to 11.50
|
%
|
|
03/13/14
|
|
$
|
4,472,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TelecommunicationsWireless 0.8%
|
|
2,923
|
|
|
Asurion Corp., Term Loan
|
|
|
3.29 to 4.02
|
|
|
07/03/14
|
|
|
2,822,765
|
|
|
3,808
|
|
|
MetroPCS Wireless, Inc., Term Loan
|
|
|
2.56 to 3.31
|
|
|
11/04/13
|
|
|
3,649,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,471,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Textiles & Leather 0.8%
|
|
3,474
|
|
|
Gold Toe Investment Corp., Term Loan
|
|
|
8.50 to 11.75
|
|
|
10/30/13 to 04/30/14
|
|
|
2,027,267
|
|
|
5,000
|
|
|
Levi Strauss & Co., Term Loan
|
|
|
2.54
|
|
|
03/27/14
|
|
|
4,275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,302,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TransportationCargo 0.3%
|
|
4,000
|
|
|
JHCI Acquisition, Inc., Term Loan
|
|
|
5.79
|
|
|
12/19/14
|
|
|
2,255,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities 5.3%
|
|
5,000
|
|
|
Bicent Power LLC, Term Loan
|
|
|
4.60
|
|
|
12/31/14
|
|
|
3,125,000
|
|
|
2,290
|
|
|
BRSP, LLC, Term Loan
|
|
|
7.50
|
|
|
06/24/14
|
|
|
2,158,629
|
|
|
20,308
|
|
|
Calpine Corp., Term Loan
|
|
|
3.48
|
|
|
03/29/14
|
|
|
18,692,019
|
|
|
4,853
|
|
|
First Light Power Resources, Inc., Term Loan
|
|
|
3.13 to 5.13
|
|
|
11/01/13 to 05/01/14
|
|
|
3,998,539
|
|
|
187
|
|
|
Mach Gen, LLC, Term Loan
|
|
|
2.60
|
|
|
02/22/13
|
|
|
169,320
|
|
|
3,992
|
|
|
NRG Energy, Inc., Term Loan
|
|
|
1.79 to 2.10
|
|
|
02/01/13
|
|
|
3,795,012
|
|
|
8,048
|
|
|
Texas Competitive Electric Holdings Co., LLC, Term Loan
|
|
|
3.79 to 3.80
|
|
|
10/10/14
|
|
|
6,228,399
|
|
|
6,000
|
|
|
TPF Generation Holdings, LLC, Term Loan
|
|
|
4.54
|
|
|
12/15/14
|
|
|
5,080,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,246,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Variable Rate Senior Loan Interests
** 93.4%
|
|
|
759,470,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes 28.5%
BroadcastingCable 0.7%
|
|
5,000
|
|
|
Kabel Deutschland GmbH (Germany)
|
|
|
10.63
|
|
|
07/01/14
|
|
|
5,262,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemicals, Plastics & Rubber 0.8%
|
|
5,000
|
|
|
Cognis GmbH (Germany) (b)
|
|
|
2.63
|
|
|
09/15/13
|
|
|
4,200,000
|
|
|
1,893
|
|
|
Wellman, Inc. (d)
|
|
|
5.00
|
|
|
01/30/19
|
|
|
1,893,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,093,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Material 0.2%
|
|
2,000
|
|
|
Compression Polymers Corp. (b) (i)
|
|
|
7.87
|
|
|
07/01/12
|
|
|
1,410,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Stated
|
|
|
(000)
|
|
Borrower
|
|
Coupon
|
|
Maturity*
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
Containers, Packaging & Glass 5.8%
|
|
8,321
|
|
|
Ardagh Glass Finance BV (Ireland) (b)
|
|
|
8.88
|
%
|
|
07/01/13
|
|
$
|
11,652,367
|
|
|
9,200
|
|
|
Ardagh Glass Finance (Ireland) (b)
|
|
|
7.13
|
|
|
06/15/17
|
|
|
11,364,391
|
|
|
6,000
|
|
|
Impress Metal Packaging Holdings BV (Netherlands) (b)
|
|
|
4.12
|
|
|
09/15/13
|
|
|
7,910,412
|
|
|
12,725
|
|
|
Pregis Corp.
|
|
|
6.00
|
|
|
04/15/13
|
|
|
16,504,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,431,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance 4.8%
|
£
|
10,000
|
|
|
Bank of America Corp (b)
|
|
|
1.36
|
|
|
06/11/12
|
|
|
15,218,236
|
|
£
|
15,000
|
|
|
GE Capital (Ireland) (b)
|
|
|
1.54
|
|
|
08/01/11
|
|
|
23,573,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,792,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare 0.5%
|
$
|
4,167
|
|
|
Apria Healthcare Group, Inc.
|
|
|
11.25
|
|
|
11/01/14
|
|
|
4,260,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining, Steel, Iron & Non-Precious
Metals 3.7%
|
|
18,000
|
|
|
FMG Finance Pty Ltd (Australia) (b)
|
|
|
10.63
|
|
|
09/01/16
|
|
|
18,675,000
|
|
|
6,285
|
|
|
Xstrata PLC (b)
|
|
|
5.25
|
|
|
06/13/17
|
|
|
8,365,703
|
|
|
3,305
|
|
|
Xstrata PLC (b)
|
|
|
7.25
|
|
|
07/15/12
|
|
|
3,417,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,457,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TelecommunicationsEquipment &
Services 5.8%
|
|
6,000
|
|
|
Iesy Hessen Gmbh & Co, Kg (Germany) (b)
|
|
|
3.78
|
|
|
04/15/13
|
|
|
8,209,724
|
|
|
11,825
|
|
|
Magyar Telecom (Invtel) (Netherlands) (b)
|
|
|
10.75
|
|
|
08/15/12
|
|
|
12,219,270
|
|
|
24,150
|
|
|
Versatel AG (Germany) (b)
|
|
|
4.03
|
|
|
06/15/14
|
|
|
26,951,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,380,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TelecommunicationsLocal Exchange
Carriers 0.1%
|
|
1,000
|
|
|
Qwest Corp. (i)
|
|
|
3.88
|
|
|
06/15/13
|
|
|
945,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TelecommunicationsWireless 1.8%
|
|
14,000
|
|
|
Wind Acquisition Fin SA (Italy) (b)
|
|
|
10.75
|
|
|
12/01/15
|
|
|
14,910,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TransportationCargo 4.3%
|
|
27,297
|
|
|
CB Bus AB (Sweden) (b) (d)
|
|
|
9.13
|
|
|
08/01/12
|
|
|
35,268,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Notes 28.5%
|
|
|
232,212,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Value
|
|
|
Equities 0.1%
|
|
|
|
|
Axia, Inc. (Warrants for 6,352 common shares, Expiration
date 12/31/18, Acquired 09/24/08,
Cost $0) (d) (g) (j)
|
|
|
0
|
|
Building Materials Holding Corp. (Warrants for
15,357 common shares, Expiration date 09/30/15, Acquired
10/09/08, Cost $0) (d) (j) (e)
|
|
|
0
|
|
Euramax International (1,870 common shares, Acquired
7/09/09, Cost $1,962,106) (d)
|
|
|
95,360
|
|
22
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Value
|
|
|
Equities (Continued)
|
|
|
|
|
United Subcontractors, Inc. (3,259 common shares, Acquired
7/01/09, Cost $142,531) (d)
|
|
$
|
14,163
|
|
Wellman, Inc. (1,892 common shares, Acquired 02/12/09
& 6/16/09, Cost $4,958,713) (d)
|
|
|
1,103,660
|
|
|
|
|
|
|
|
|
|
|
|
Total Equities 0.1%
|
|
|
1,213,183
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term Investments 122.0%
(Cost 1,302,601,584)
|
|
|
993,488,575
|
|
|
|
|
|
|
|
|
|
|
|
Time Deposit 2.9%
State Street Bank & Trust Corp. ($23,304,202 par,
0.01% coupon, dated 7/31/09, to be sold on 8/03/09
at $23,304,221) (Cost $23,304,202) (h)
|
|
|
23,304,202
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments 124.9%
(Cost $1,325,905,786)
|
|
|
1,016,792,777
|
|
|
|
|
|
|
Foreign Currency 0.0%
(Cost $352,045)
|
|
|
352,045
|
|
|
|
|
|
|
Borrowings (26.3%)
|
|
|
(214,000,000
|
)
|
|
|
|
|
|
Other Assets in Excess of Liabilities 1.4%
|
|
|
11,255,963
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets 100.0%
|
|
$
|
814,400,785
|
|
|
|
|
|
|
Par amounts are
denominated in US currency unless otherwise noted.
-Euro
£-Great Britain
Pound
Percentages are
calculated as a percentage of net assets.
|
|
|
(a)
|
|
All
or a portion of this security is
payment-in-kind.
|
|
(b)
|
|
144A-Private
Placement security which is exempt from registration under
Rule 144A of the Securities Act of 1933, as amended. This
security may only be resold in transactions exempt from
registration which are normally those transactions with
qualified institutional buyers.
|
|
(c)
|
|
This
borrower has filed for protection in federal bankruptcy court.
|
|
(d)
|
|
Market
value is determined in accordance with procedures established in
good faith by the Board of Trustees.
|
|
(e)
|
|
This
Senior Loan interest is non-income producing.
|
|
(f)
|
|
Senior
loan is past due.
|
|
(g)
|
|
Affiliated
company.
|
|
(h)
|
|
All
or a portion of this security is designated in connection with
unfunded loan commitments.
|
23
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
(i)
|
|
Variable
rate security. Interest rate shown is that in effect at
July 31, 2009.
|
|
(j)
|
|
Restricted
security. Securities were acquired through the restructuring of
senior loans. These securities are restricted, as they are not
allowed to be deposited via the Depository Trust Company.
If at a later point in time, the company wishes to register, the
issuer will bear the costs associated with registration. The
aggregate value of restricted securities represents less than
0.01% of the net assets of the Fund.
|
|
*
|
|
Senior
Loans in the Funds portfolio generally are subject to
mandatory and/or optional prepayment. Because of these mandatory
prepayment conditions and because there may be significant
economic incentives for a Borrower to prepay, prepayments of
Senior Loans in the Funds portfolio may occur. As a
result, the actual remaining maturity of Senior Loans held in
the Funds portfolio may be substantially less than the
stated maturities shown. Although the Fund is unable to
accurately estimate the actual remaining maturity of individual
Senior Loans, the Fund estimates that the actual average
maturity of the Senior Loans held in its portfolio will be
approximately
18-24 months.
|
|
**
|
|
Senior
Loans in which the Fund invests generally pay interest at rates
which are periodically redetermined by reference to a base
lending rate plus a premium. These base lending rates are
generally (i) the lending rate offered by one or more major
European banks, such as the London Inter-Bank Offered Rate
(LIBOR), (ii) the prime rate offered by one or
more major United States banks or (iii) the certificate of
deposit rate. Senior Loans are generally considered to be
restricted in that the Fund ordinarily is contractually
obligated to receive approval from the Agent Bank and/or
Borrower prior to the disposition of a Senior Loan.
|
Swap agreements
outstanding as of July 31, 2009:
Credit Default Swaps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pay/
|
|
|
|
|
|
|
|
|
|
Credit
|
|
|
|
|
|
|
Receive
|
|
|
|
Notional
|
|
|
|
|
|
Rating of
|
|
|
|
|
Buy/Sell
|
|
Fixed
|
|
Expiration
|
|
Amount
|
|
Upfront
|
|
|
|
Reference
|
Counterparty
|
|
Reference
Entity
|
|
Protection
|
|
Rate
|
|
Date
|
|
(000)
|
|
Payments
|
|
Value
|
|
Equity*
|
|
Bank of America N.A.
|
|
Cognis GMBH
|
|
|
Sell
|
|
|
|
3.900
|
%
|
|
12/20/09
|
|
$
|
7,126
|
|
|
$
|
0
|
|
|
$
|
46,445
|
|
|
|
B
|
|
Bank of America N.A.
|
|
Seat Pagine
Gialle S.P.A
|
|
|
Sell
|
|
|
|
3.350
|
|
|
09/20/12
|
|
|
7,126
|
|
|
|
0
|
|
|
|
(2,130,645
|
)
|
|
|
BB
|
|
Bank of America N.A.
|
|
Seat Pagine
Gialle S.P.A
|
|
|
Sell
|
|
|
|
3.650
|
|
|
12/20/12
|
|
|
7,126
|
|
|
|
0
|
|
|
|
(2,169,140
|
)
|
|
|
BB
|
|
Citigroup
|
|
M-Real Oyj
|
|
|
Sell
|
|
|
|
4.250
|
|
|
12/20/09
|
|
|
7,126
|
|
|
|
0
|
|
|
|
(99,446
|
)
|
|
|
CCC+
|
|
Credit Suisse International
|
|
Codere Finance
Luxenburg SA
|
|
|
Sell
|
|
|
|
3.420
|
|
|
09/20/12
|
|
|
7,126
|
|
|
|
0
|
|
|
|
(1,275,959
|
)
|
|
|
B
|
|
Goldman Sachs International
|
|
ArcelorMittal
|
|
|
Sell
|
|
|
|
5.400
|
|
|
06/20/11
|
|
|
7,126
|
|
|
|
0
|
|
|
|
260,721
|
|
|
|
BBB
|
|
Goldman Sachs International
|
|
ArcelorMittal
|
|
|
Sell
|
|
|
|
5.650
|
|
|
06/20/12
|
|
|
7,126
|
|
|
|
0
|
|
|
|
285,286
|
|
|
|
BBB
|
|
Goldman Sachs International
|
|
ArcelorMittal
|
|
|
Sell
|
|
|
|
5.750
|
|
|
06/20/10
|
|
|
7,126
|
|
|
|
0
|
|
|
|
240,501
|
|
|
|
BBB
|
|
Goldman Sachs International
|
|
ArcelorMittal
|
|
|
Sell
|
|
|
|
6.000
|
|
|
06/20/14
|
|
|
7,126
|
|
|
|
0
|
|
|
|
766,243
|
|
|
|
BBB
|
|
Goldman Sachs International
|
|
Calpine
Corporation
|
|
|
Sell
|
|
|
|
5.000
|
|
|
03/20/10
|
|
|
1,500
|
|
|
|
(165,000
|
)
|
|
|
1,584
|
|
|
|
B
|
|
Goldman Sachs International
|
|
CDX.NA.HY.9
|
|
|
Sell
|
|
|
|
3.750
|
|
|
12/20/12
|
|
|
17,200
|
|
|
|
(715,500
|
)
|
|
|
(1,386,717
|
)
|
|
|
NR
|
|
Goldman Sachs International
|
|
Citgo Petroleum
Corp.
|
|
|
Sell
|
|
|
|
4.150
|
|
|
12/20/10
|
|
|
5,000
|
|
|
|
0
|
|
|
|
(27,691
|
)
|
|
|
BB
|
|
Goldman Sachs International
|
|
Gala Group
Finance
|
|
|
Sell
|
|
|
|
3.450
|
|
|
12/20/12
|
|
|
7,126
|
|
|
|
0
|
|
|
|
(1,364,723
|
)
|
|
|
NR
|
|
Goldman Sachs International
|
|
Gala Group
Finance
|
|
|
Sell
|
|
|
|
4.150
|
|
|
03/20/13
|
|
|
7,126
|
|
|
|
0
|
|
|
|
(1,339,673
|
)
|
|
|
NR
|
|
Goldman Sachs International
|
|
Grohe Holding
GMBH
|
|
|
Sell
|
|
|
|
4.250
|
|
|
12/20/09
|
|
|
14,253
|
|
|
|
0
|
|
|
|
(420,810
|
)
|
|
|
B
|
|
24
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pay/
|
|
|
|
|
|
|
|
|
|
Credit
|
|
|
|
|
|
|
Receive
|
|
|
|
Notional
|
|
|
|
|
|
Rating of
|
|
|
|
|
Buy/Sell
|
|
Fixed
|
|
Expiration
|
|
Amount
|
|
Upfront
|
|
|
|
Reference
|
Counterparty
|
|
Reference
Entity
|
|
Protection
|
|
Rate
|
|
Date
|
|
(000)
|
|
Payments
|
|
Value
|
|
Equity*
|
|
Goldman Sachs International
|
|
LCDX.NA.10
|
|
|
Sell
|
|
|
|
3.250
|
%
|
|
06/20/13
|
|
$
|
49,800
|
|
|
$
|
(5,341,000
|
)
|
|
$
|
(4,351,967
|
)
|
|
|
NR
|
|
Goldman Sachs International
|
|
LCDX9
|
|
|
Sell
|
|
|
|
2.250
|
|
|
12/20/12
|
|
|
42,000
|
|
|
|
(3,383,000
|
)
|
|
|
(3,990,000
|
)
|
|
|
NR
|
|
Goldman Sachs International
|
|
Peermont Global
|
|
|
Sell
|
|
|
|
3.500
|
|
|
09/20/12
|
|
|
7,126
|
|
|
|
0
|
|
|
|
(783,365
|
)
|
|
|
B
|
|
Goldman Sachs International
|
|
Texas
Competitive
Electric
|
|
|
Sell
|
|
|
|
2.850
|
|
|
06/20/10
|
|
|
5,000
|
|
|
|
0
|
|
|
|
(270,030
|
)
|
|
|
B
|
|
Goldman Sachs International
|
|
Texas
Competitive
Electric
|
|
|
Sell
|
|
|
|
5.000
|
|
|
06/20/10
|
|
|
3,000
|
|
|
|
(97,500
|
)
|
|
|
(104,770
|
)
|
|
|
B
|
|
Goldman Sachs International
|
|
UPC Holding
|
|
|
Sell
|
|
|
|
3.450
|
|
|
09/20/12
|
|
|
7,126
|
|
|
|
0
|
|
|
|
(268,326
|
)
|
|
|
B+
|
|
Goldman Sachs International
|
|
Xstrata PLC
|
|
|
Sell
|
|
|
|
5.800
|
|
|
06/20/10
|
|
|
7,126
|
|
|
|
0
|
|
|
|
318,416
|
|
|
|
BBB
|
|
UBS AG
|
|
CDX.NA.HY.10
|
|
|
Sell
|
|
|
|
5.000
|
|
|
06/20/13
|
|
|
17,400
|
|
|
|
(1,128,250
|
)
|
|
|
(887,210
|
)
|
|
|
NR
|
|
UBS AG
|
|
CDX.NA.HY.9
|
|
|
Sell
|
|
|
|
3.750
|
|
|
12/20/12
|
|
|
17,200
|
|
|
|
(715,500
|
)
|
|
|
(1,386,717
|
)
|
|
|
NR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Credit Default Swaps
|
|
$
|
272,117
|
|
|
$
|
(11,545,750
|
)
|
|
$
|
(20,337,993
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swap Collateral
Pledged to Counterparty
|
|
|
|
Goldman Sachs International
|
|
|
14,355,000
|
|
Bank of America
|
|
|
4,430,000
|
|
UBS AG
|
|
|
2,443,000
|
|
Credit Suisse
|
|
|
1,448,000
|
|
Citi Global Markets
|
|
|
211,000
|
|
|
|
|
|
|
Total Swap Collateral Pledged
|
|
$
|
22,887,000
|
|
|
|
|
|
|
Total Swap Agreements
|
|
$
|
2,549,007
|
|
|
|
|
|
|
NRNot Rated
|
|
|
*
|
|
Credit
ratings as issued by Standard &
Poors (Unaudited)
|
25
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
Forward foreign
currency contracts outstanding as of July 31,
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
Appreciation/
|
|
|
In Exchange
for
|
|
Current
Value
|
|
Depreciation
|
|
Long Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro
|
|
|
|
|
|
|
|
|
|
|
|
|
857,689 expiring 08/04/09
|
|
|
US$
|
|
|
|
$1,222,464
|
|
|
$
|
26,600
|
|
1,073,000 expiring 09/08/09
|
|
|
US$
|
|
|
|
1,529,452
|
|
|
|
19,767
|
|
211,199,324 expiring 08/04/09
|
|
|
US$
|
|
|
|
301,022,259
|
|
|
|
4,785,428
|
|
799,819 expiring 08/04/09
|
|
|
US$
|
|
|
|
1,139,981
|
|
|
|
4,112
|
|
4,212,250 expiring 08/04/09
|
|
|
US$
|
|
|
|
6,003,717
|
|
|
|
141,558
|
|
4,023,899 expiring 08/04/09
|
|
|
US$
|
|
|
|
5,735,261
|
|
|
|
157,296
|
|
778,500 expiring 08/04/09
|
|
|
US$
|
|
|
|
1,109,595
|
|
|
|
25,353
|
|
1,790,875 expiring 08/04/09
|
|
|
US$
|
|
|
|
2,552,533
|
|
|
|
53,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,214,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pound Sterling
|
|
|
|
|
|
|
|
|
|
|
|
|
24,939,036 expiring 08/04/09
|
|
|
US$
|
|
|
|
41,659,419
|
|
|
|
819,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Long Contracts
|
|
|
|
|
|
|
|
|
|
|
6,033,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro
|
|
|
|
|
|
|
|
|
|
|
|
|
1,073,000 expiring 09/08/09
|
|
|
US$
|
|
|
|
1,529,452
|
|
|
|
(21,578
|
)
|
210,021,170 expiring 09/08/09
|
|
|
US$
|
|
|
|
299,363,767
|
|
|
|
(4,857,172
|
)
|
3,433,732 expiring 08/04/09
|
|
|
US$
|
|
|
|
4,894,096
|
|
|
|
(16,737
|
)
|
6,496,122 expiring 08/04/09
|
|
|
US$
|
|
|
|
9,258,918
|
|
|
|
(42,383
|
)
|
1,810,228 expiring 08/04/09
|
|
|
US$
|
|
|
|
2,580,117
|
|
|
|
(25,060
|
)
|
1,810,000 expiring 08/04/09
|
|
|
US$
|
|
|
|
2,579,792
|
|
|
|
(49,958
|
)
|
1,691,401 expiring 08/04/09
|
|
|
US$
|
|
|
|
2,410,753
|
|
|
|
(35,507
|
)
|
4,048,617 expiring 08/04/09
|
|
|
US$
|
|
|
|
5,770,491
|
|
|
|
(104,314
|
)
|
204,372,256 expiring 08/04/09
|
|
|
US$
|
|
|
|
291,291,643
|
|
|
|
(2,098,566
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,251,275
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pound Sterling
|
|
|
|
|
|
|
|
|
|
|
|
|
25,179,297 expiring 09/08/09
|
|
|
US$
|
|
|
|
42,057,449
|
|
|
|
(831,385
|
)
|
24,939,036 expiring 08/04/09
|
|
|
US$
|
|
|
|
41,659,418
|
|
|
|
(552,281
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,383,666
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Short Contracts
|
|
|
|
|
|
|
|
|
|
|
(8,634,941
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Forward Foreign Currency Contracts
|
|
|
|
|
|
|
|
|
|
$
|
(2,601,454
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
Ratings
Allocation as of
7/31/09
(Unaudited)
|
|
|
|
|
AA/Aa
|
|
|
2.4%
|
|
A/A
|
|
|
1.5%
|
|
BBB/Baa
|
|
|
2.3%
|
|
BB/Ba
|
|
|
23.4%
|
|
B/B
|
|
|
35.7%
|
|
CCC/Caa
|
|
|
8.4%
|
|
CC/Ca
|
|
|
0.3%
|
|
C/C
|
|
|
0.6%
|
|
Non-Rated
|
|
|
25.4%
|
|
Ratings
allocations are as a percentage of debt obligations. Ratings
allocations based upon ratings as issued by Standard and
Poors and Moodys, respectively. Bank loans rated
below BBB by Standard and Poors or Baa by Moodys are
considered to be below investment grade.
Summary of
Long-Term Investments by Country Classification
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
Long-Term
|
Country
|
|
Value
|
|
Investment
|
|
United States
|
|
$
|
645,207,748
|
|
|
|
64.9
|
%
|
Germany
|
|
|
100,708,160
|
|
|
|
10.1
|
|
Ireland
|
|
|
46,590,679
|
|
|
|
4.7
|
|
Sweden
|
|
|
35,268,648
|
|
|
|
3.6
|
|
Greece
|
|
|
23,813,189
|
|
|
|
2.4
|
|
Belgium
|
|
|
22,227,714
|
|
|
|
2.3
|
|
Netherlands
|
|
|
20,129,682
|
|
|
|
2.0
|
|
Canada
|
|
|
19,279,067
|
|
|
|
1.9
|
|
Australia
|
|
|
18,675,000
|
|
|
|
1.9
|
|
United Kingdom
|
|
|
16,954,834
|
|
|
|
1.7
|
|
Italy
|
|
|
14,910,000
|
|
|
|
1.5
|
|
Bulgaria
|
|
|
9,977,095
|
|
|
|
1.0
|
|
Denmark
|
|
|
6,274,327
|
|
|
|
0.6
|
|
Hungary
|
|
|
5,698,330
|
|
|
|
0.6
|
|
Cayman Islands
|
|
|
4,432,929
|
|
|
|
0.5
|
|
Spain
|
|
|
3,341,173
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
993,488,575
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
27
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Portfolio
of
Investments n July 31,
2009 continued
Fair Value
Measurements
Various inputs are
used in determining the value of the Funds investments.
These inputs are summarized in the three broad levels listed
below. (See Note 1(B) to the financial statements for
further information regarding fair value measurements.)
The following is a
summary of the inputs used as of July 31, 2009 in valuing
the Funds investments carried at value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
Other
Significant
|
|
Unobservable
|
|
|
Investment
Type
|
|
Quoted
Prices
|
|
Observable
Inputs
|
|
Inputs
|
|
Total
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Rate Senior Loan Interests
|
|
$
|
|
|
|
$
|
739,189,212
|
|
|
$
|
20,874,117
|
|
|
$
|
760,063,329
|
|
Notes
|
|
|
|
|
|
|
195,050,415
|
|
|
|
37,161,648
|
|
|
|
232,212,063
|
|
Equities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemicals,Plastics & Rubber
|
|
|
|
|
|
|
|
|
|
|
1,103,660
|
|
|
|
1,103,660
|
|
Construction Materials
|
|
|
|
|
|
|
|
|
|
|
14,163
|
|
|
|
14,163
|
|
Diversified Manufacturing
|
|
|
|
|
|
|
|
|
|
|
95,360
|
|
|
|
95,360
|
|
Short-term Investments
|
|
|
|
|
|
|
23,304,202
|
|
|
|
|
|
|
|
23,304,202
|
|
Forward Foreign Currency Contracts
|
|
|
|
|
|
|
6,033,487
|
|
|
|
|
|
|
|
6,033,487
|
|
Credit Default Swap
|
|
|
|
|
|
|
1,919,196
|
|
|
|
|
|
|
|
1,919,196
|
|
Unfunded Commitments
|
|
|
|
|
|
|
9,841
|
|
|
|
|
|
|
|
9,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
0
|
|
|
|
965,506,353
|
|
|
|
59,248,948
|
|
|
|
1,024,755,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts
|
|
|
|
|
|
|
(8,634,941
|
)
|
|
|
|
|
|
|
(8,634,941
|
)
|
Credit Default Swap
|
|
|
|
|
|
|
(22,257,189
|
)
|
|
|
|
|
|
|
(22,257,189
|
)
|
Unfunded Commitments
|
|
|
|
|
|
|
(5,302,560
|
)
|
|
|
(13,947
|
)
|
|
|
(5,316,507
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
0
|
|
|
$
|
(36,194,690
|
)
|
|
$
|
(13,947
|
)
|
|
$
|
(36,208,637
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Following is a
reconciliation of investments in which significant unobservable
inputs (Level 3) were used in determining value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in
Loans and Securities
|
|
|
|
|
|
|
Variable
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
|
|
Equities
|
|
|
|
|
|
|
Senior
|
|
|
|
Chemicals,
|
|
|
|
|
|
|
|
|
|
|
Loan
|
|
|
|
Plastics
&
|
|
Construction
|
|
Diversified
|
|
|
|
Unfunded
|
|
|
Interest
|
|
Notes
|
|
Rubber
|
|
Materials
|
|
Manufacturing
|
|
Total
|
|
Commitments
|
|
Balance as of 8/1/08
|
|
$
|
38,724,141
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
38,724,141
|
|
|
$
|
|
|
Accrued Discounts/Premiums
|
|
|
317,525
|
|
|
|
20,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
338,416
|
|
|
|
|
|
Realized Gain/Loss
|
|
|
(536,842
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(536,842
|
)
|
|
|
|
|
Change in Unrealized Appreciation/Depreciation
|
|
|
(32,774,868
|
)
|
|
|
(9,250,966
|
)
|
|
|
(3,855,053
|
)
|
|
|
(128,368
|
)
|
|
|
(1,866,746
|
)
|
|
|
(47,876,001
|
)
|
|
|
(13,947
|
)
|
Net Purchases/Sales
|
|
|
(7,238,612
|
)
|
|
|
46,391,723
|
|
|
|
4,958,713
|
|
|
|
142,531
|
|
|
|
1,962,106
|
|
|
|
46,216,461
|
|
|
|
|
|
Net Transfers In and/or Out of Level 3*
|
|
|
22,382,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,382,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 7/31/09
|
|
$
|
20,874,117
|
|
|
$
|
37,161,648
|
|
|
$
|
1,103,660
|
|
|
$
|
14,163
|
|
|
$
|
95,360
|
|
|
$
|
59,248,948
|
|
|
$
|
(13,947
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Unrealized Appreciation/Depreciation from
Investments Still Held as of 7/31/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(48,229,178
|
)
|
|
$
|
(13,947
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
The
value of Net Transfers In and/or Out of Level 3 was
measured using the market value as of the beginning of the
period for transfer in and the market value as of the end of the
period for transfers out.
|
28
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Financial Statements
Statement
of Assets and Liabilities
July 31, 2009
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
Unaffiliated Investments (Cost $1,320,629,224)
|
|
$
|
1,015,227,100
|
|
|
|
Affiliated Investments (Cost $5,276,562)
|
|
|
1,565,677
|
|
|
|
|
|
|
|
|
|
|
Total Investments (Cost $1,325,905,786)
|
|
|
1,016,792,777
|
|
|
|
Foreign Currency (Cost $352,045)
|
|
|
352,045
|
|
|
|
Receivables:
|
|
|
|
|
|
|
Investments Sold
|
|
|
55,950,129
|
|
|
|
Interest
|
|
|
7,295,922
|
|
|
|
Forward Foreign Currency Contracts
|
|
|
6,033,487
|
|
|
|
Swap Contracts
|
|
|
2,549,007
|
|
|
|
Other
|
|
|
43,919
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
1,089,017,286
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Payables:
|
|
|
|
|
|
|
Borrowings
|
|
|
214,000,000
|
|
|
|
Investments Purchased
|
|
|
43,788,961
|
|
|
|
Investment Advisory Fee
|
|
|
1,062,106
|
|
|
|
Income Distributions
|
|
|
710,944
|
|
|
|
Other Affiliates
|
|
|
235,921
|
|
|
|
Forward Foreign Currency Contracts
|
|
|
8,634,941
|
|
|
|
Unfunded Commitments
|
|
|
5,306,666
|
|
|
|
Accrued Interest Expense
|
|
|
88,655
|
|
|
|
Trustees Deferred Compensation and Retirement Plans
|
|
|
50,028
|
|
|
|
Accrued Expenses
|
|
|
738,279
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
274,616,501
|
|
|
|
|
|
|
|
|
|
|
Net Assets
|
|
$
|
814,400,785
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value Per Common Share ($814,400,785 divided by
74,005,236 shares outstanding)
|
|
$
|
11.00
|
|
|
|
|
|
|
|
|
|
|
Net Assets Consist of:
|
|
|
|
|
|
|
Common Shares ($.01 par value with an unlimited number of
shares authorized, 74,005,236 shares issued and outstanding)
|
|
$
|
740,052
|
|
|
|
Paid in Surplus
|
|
|
1,409,867,771
|
|
|
|
Accumulated Undistributed Net Investment Income
|
|
|
(3,791,452
|
)
|
|
|
Accumulated Net Realized Loss
|
|
|
(267,802,262
|
)
|
|
|
Net Unrealized Depreciation
|
|
|
(324,613,324
|
)
|
|
|
|
|
|
|
|
|
|
Net Assets
|
|
$
|
814,400,785
|
|
|
|
|
|
|
|
|
|
|
29
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Financial
Statements continued
Statement
of Operations
For the Year Ended July 31,
2009
|
|
|
|
|
|
|
Investment Income:
|
|
|
|
|
|
|
Interest from Unaffiliated Investments
|
|
$
|
105,111,276
|
|
|
|
Interest from Affiliated Investments
|
|
|
26,018
|
|
|
|
|
|
|
|
|
|
|
Total Interest Income
|
|
|
105,137,294
|
|
|
|
Other
|
|
|
2,898,979
|
|
|
|
|
|
|
|
|
|
|
Total Income
|
|
|
108,036,273
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Investment Advisory Fee
|
|
|
13,607,123
|
|
|
|
Credit Line
|
|
|
5,660,412
|
|
|
|
Excise Tax
|
|
|
2,039,357
|
|
|
|
Custody
|
|
|
399,158
|
|
|
|
Accounting & Administrative Expenses
|
|
|
299,563
|
|
|
|
Professional Fees
|
|
|
290,947
|
|
|
|
Reports to Shareholders
|
|
|
128,732
|
|
|
|
Registration Fees
|
|
|
52,038
|
|
|
|
Transfer Agent Fees
|
|
|
50,845
|
|
|
|
Trustees Fees and Related Expenses
|
|
|
32,815
|
|
|
|
Other
|
|
|
41,252
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expense
|
|
|
22,602,242
|
|
|
|
Interest Expense
|
|
|
6,038,523
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
28,640,765
|
|
|
|
|
|
|
|
|
|
|
Net Investment Income
|
|
$
|
79,395,508
|
|
|
|
|
|
|
|
|
|
|
Realized and Unrealized Gain/Loss:
|
|
|
|
|
|
|
Realized Gain/Loss:
|
|
|
|
|
|
|
Unaffiliated Investments
|
|
$
|
(222,584,169
|
)
|
|
|
Forward Foreign Currency Contracts
|
|
|
39,064,738
|
|
|
|
Foreign Currency Transactions
|
|
|
(6,944,272
|
)
|
|
|
Swap Contracts
|
|
|
(12,090,260
|
)
|
|
|
|
|
|
|
|
|
|
Net Realized Loss
|
|
|
(202,553,963
|
)
|
|
|
|
|
|
|
|
|
|
Unrealized Appreciation/Depreciation:
|
|
|
|
|
|
|
Beginning of the Period
|
|
|
(200,955,666
|
)
|
|
|
|
|
|
|
|
|
|
End of the Period:
|
|
|
|
|
|
|
Investments
|
|
|
(309,113,009
|
)
|
|
|
Foreign Currency Translation
|
|
|
1,200,048
|
|
|
|
Forward Foreign Currency Contracts
|
|
|
(2,601,454
|
)
|
|
|
Unfunded Commitments
|
|
|
(5,306,666
|
)
|
|
|
Swap Contracts
|
|
|
(8,792,243
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(324,613,324
|
)
|
|
|
|
|
|
|
|
|
|
Net Unrealized Depreciation During the Period
|
|
|
(123,657,658
|
)
|
|
|
|
|
|
|
|
|
|
Net Realized and Unrealized Loss
|
|
$
|
(326,211,621
|
)
|
|
|
|
|
|
|
|
|
|
Net Decrease in Net Assets From Operations
|
|
$
|
(246,816,113
|
)
|
|
|
|
|
|
|
|
|
|
30
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Financial
Statements continued
Statements
of Changes in Net Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
|
|
For the
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
|
|
|
July 31,
2009
|
|
July 31,
2008
|
|
|
|
|
|
|
From Investment Activities:
|
|
|
|
|
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
|
Net Investment Income
|
|
$
|
79,395,508
|
|
|
$
|
106,542,295
|
|
|
|
Net Realized Loss
|
|
|
(202,553,963
|
)
|
|
|
(45,622,524
|
)
|
|
|
Net Unrealized Depreciation During the Period
|
|
|
(123,657,658
|
)
|
|
|
(161,987,204
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Net Assets from Operations
|
|
|
(246,816,113
|
)
|
|
|
(101,067,433
|
)
|
|
|
Distributions from Net Investment Income
|
|
|
(100,106,883
|
)
|
|
|
(117,202,092
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Net Assets from Investment Activities
|
|
|
(346,922,996
|
)
|
|
|
(218,269,525
|
)
|
|
|
From Capital Transactions:
|
|
|
|
|
|
|
|
|
|
|
Additional Cost from the 2007 Initial Public Offering
|
|
|
-0-
|
|
|
|
(252,820
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Net Assets
|
|
|
(346,922,996
|
)
|
|
|
(218,522,345
|
)
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
|
|
Beginning of the Period
|
|
|
1,161,323,781
|
|
|
|
1,379,846,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of the Period (Including accumulated undistributed net
investment income of $(3,791,452) and $(30,110,711),
respectively)
|
|
$
|
814,400,785
|
|
|
$
|
1,161,323,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Financial
Statements continued
Statement
of Cash Flows
For the Year Ended July 31,
2009
|
|
|
|
|
|
|
Change in Net Assets from Operations
|
|
$
|
(246,816,113
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments to Reconcile the Change in Net Assets from
Operations to
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities:
|
|
|
|
|
|
|
Purchases of Investments
|
|
|
(404,238,551
|
)
|
|
|
Principal Repayments/Sales of Investments
|
|
|
692,489,787
|
|
|
|
Net Purchases of Short-Term Investments
|
|
|
(10,239,387
|
)
|
|
|
Purchases of Foreign Currency
|
|
|
(3,459,947,004
|
)
|
|
|
Sales of Foreign Currency
|
|
|
3,516,782,784
|
|
|
|
Amortization of Loan Fees
|
|
|
(110,370
|
)
|
|
|
Net Loan Fees Received
|
|
|
57,572
|
|
|
|
Accretion of Discount
|
|
|
(11,736,364
|
)
|
|
|
Net Realized Loss on Investments
|
|
|
222,584,169
|
|
|
|
Net Realized Loss on Foreign Currency Transactions
|
|
|
6,944,272
|
|
|
|
Net Realized Gain on Forward Foreign Currency Contracts
|
|
|
(39,064,738
|
)
|
|
|
Net Change in Unrealized Depreciation on Investments
|
|
|
122,830,355
|
|
|
|
Net Change in Unrealized Appreciation on Foreign Currency
Transactions
|
|
|
21,127
|
|
|
|
Net Change in Unrealized Depreciation on Forward Foreign
Currency Contracts
|
|
|
(1,179,167
|
)
|
|
|
Decrease in Restricted Cash
|
|
|
3,329,790
|
|
|
|
Decrease in Interest Receivables
|
|
|
8,536,361
|
|
|
|
Decrease in Other Assets
|
|
|
17,508
|
|
|
|
Increase in Accrued Expenses
|
|
|
225,746
|
|
|
|
Decrease in Other Affiliates Payables
|
|
|
(26,080
|
)
|
|
|
Decrease in Investment Advisory Fees Payable
|
|
|
(717,456
|
)
|
|
|
Increase in Deferred Compensation and Retirement Plans
|
|
|
22,031
|
|
|
|
Decrease in Accrued Interest Expenses
|
|
|
(1,102,548
|
)
|
|
|
Net Change in Swap Contracts
|
|
|
(6,678,100
|
)
|
|
|
Net Change in Upfront Payments on Swap Contracts
|
|
|
3,100,500
|
|
|
|
Net Change in Unfunded Commitments
|
|
|
1,524,232
|
|
|
|
|
|
|
|
|
|
|
Total Adjustments
|
|
|
643,426,469
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
396,610,356
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
Cash Distributions Paid
|
|
|
(100,610,356
|
)
|
|
|
Proceeds from Borrowings
|
|
|
156,000,000
|
|
|
|
Repayments of Borrowings
|
|
|
(452,000,000
|
)
|
|
|
|
|
|
|
|
|
|
Net Cash Used for Financing Activities
|
|
|
(396,610,356
|
)
|
|
|
|
|
|
|
|
|
|
Net Decrease in Cash
|
|
|
-0-
|
|
|
|
Cash at the Beginning of the Period
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Cash at the End of the Period
|
|
$
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information
|
|
|
|
|
|
|
Cash Paid During the Year for Interest
|
|
$
|
6,038,235
|
|
|
|
|
|
|
|
|
|
|
32
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Financial
Highlights
The
following schedule presents financial highlights for one common
share of the Fund outstanding throughout the periods
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 26, 2007
|
|
|
|
|
|
|
(Commencement
|
|
|
Year Ended July
31,
|
|
of Operations)
to
|
|
|
2009
|
|
2008
|
|
July 31,
2007
|
|
|
|
|
Net Asset Value, Beginning of the Period
|
|
$
|
15.69
|
|
|
$
|
18.65
|
|
|
$
|
19.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Income (a)
|
|
|
1.07
|
|
|
|
1.44
|
|
|
|
0.08
|
|
Net Realized and Unrealized Loss
|
|
|
(4.41
|
)
|
|
|
(2.82
|
)
|
|
|
(0.53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from Investment Operations
|
|
|
(3.34
|
)
|
|
|
(1.38
|
)
|
|
|
(0.45
|
)
|
Less Distributions from Net Investment Income
|
|
|
(1.35
|
)
|
|
|
(1.58
|
)
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value, End of the Period
|
|
$
|
11.00
|
|
|
$
|
15.69
|
|
|
$
|
18.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share Market Price at End of the Period
|
|
$
|
10.00
|
|
|
$
|
13.30
|
|
|
$
|
19.75
|
|
Total Return (b)
|
|
|
11.84%
|
|
|
|
25.46%
|
|
|
|
1.25%
|
*
|
Net Assets at End of Period (In millions)
|
|
$
|
814.4
|
|
|
$
|
1,161.3
|
|
|
$
|
1,379.8
|
|
Ratio to Average Net Assets excluding Borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expense
|
|
|
2.97%
|
|
|
|
1.79%
|
|
|
|
1.54%
|
|
Interest Expense
|
|
|
0.79%
|
|
|
|
0.99%
|
|
|
|
N/A
|
|
Gross Expense
|
|
|
3.76%
|
|
|
|
2.78%
|
|
|
|
1.54%
|
|
Net Investment Income
|
|
|
10.42%
|
|
|
|
8.38%
|
|
|
|
4.58%
|
|
Portfolio Turnover (c)
|
|
|
36%
|
|
|
|
43%
|
|
|
|
0%
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio to Average Net Assets including Borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expense
|
|
|
2.08%
|
|
|
|
1.36%
|
|
|
|
N/A
|
|
Interest Expense
|
|
|
0.56%
|
|
|
|
0.75%
|
|
|
|
N/A
|
|
Gross Expense
|
|
|
2.63%
|
|
|
|
2.11%
|
|
|
|
N/A
|
|
Net Investment Income
|
|
|
7.30%
|
|
|
|
6.37%
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Indebtedness:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Borrowing Outstanding (In thousands)
|
|
$
|
214,000
|
|
|
$
|
510,000
|
|
|
$
|
-0-
|
|
Asset Coverage per $1,000 Unit of Senior Indebtedness (d)
|
|
$
|
4,806
|
|
|
$
|
3,277
|
|
|
|
N/A
|
|
* Non-Annualized
|
|
|
|
(a)
|
|
Based
on average shares outstanding.
|
|
(b)
|
|
Total
return based on common share market price assumes an investment
at the common share market price at the beginning of the period
indicated, reinvestment of all distributions for the period in
accordance with the Funds dividend reinvestment plan, and
sale of all shares at the closing common share market price at
the end of the period indicated.
|
|
(c)
|
|
Calculation
includes the proceeds from principal repayments and sales of
variable rate senior loan interests.
|
|
(d)
|
|
Calculated
by subtracting the Funds total liabilities (not including
the borrowings) from the Funds total assets and dividing
by the total number of senior indebtedness units, where one unit
equals $1,000 of senior indebtedness.
|
N/A=Not Applicable
33
See Notes to Financial
Statements
Van Kampen
Dynamic Credit Opportunities Fund
Notes to Financial
Statements n July 31,
2009
1. Significant
Accounting Policies
Van Kampen Dynamic Credit Opportunities Fund (the
Fund) is a statutory trust organized under the laws
of the State of Delaware pursuant to an Agreement and
Declaration of Trust dated March 15, 2007. The Fund is
registered as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended
(the 1940 Act). The Funds investment objective
is to seek a high level of current income, with a secondary
objective of capital appreciation. The Fund seeks to achieve its
investment objectives by opportunistically investing primarily
in credit securities of issuers which operate in a variety of
industries and geographic regions located throughout the world.
The Fund will invest in a combination of (i) senior secured
floating rate and fixed rate loans; (ii) second lien or
other subordinated or unsecured floating rate loans or debt;
(iii) other debt obligations, including high yield, high
risk obligations; and (iv) structured products including
collateralized debt and loan obligations. The Fund intends to
borrow money for investment purposes which will create the
opportunity for enhanced return, but also should be considered a
speculative technique and may increase the Funds
volatility.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its
financial statements. The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
A. Security Valuation The Funds
loans and debt obligations are valued by the Fund following
valuation guidelines established and periodically reviewed by
the Funds Board of Trustees. Under the valuation
guidelines, loans and debt obligations for which reliable market
quotes are readily available are valued at the mean of such bid
and ask quotes. Where reliable market quotes are not readily
available, loans and debt obligations are valued, where
possible, using independent market indicators provided by
independent pricing sources approved by the Board of Trustees.
Other loans and debt obligations are valued by independent
pricing sources approved by the Board of Trustees based upon
pricing models developed, maintained and operated by those
pricing sources or valued by Van Kampen Asset Management
(the Adviser) by considering a number of factors
including consideration of market indicators, transactions in
instruments which the Adviser believes may be comparable
(including comparable credit quality, interest rate, interest
rate redetermination period and maturity), the credit worthiness
of the Borrower, the current interest rate, the period until
next interest rate redetermination and the maturity of such
loan. Consideration of comparable instruments may include
commercial paper, negotiable certificates of deposit and
short-term variable rate securities which have adjustment
periods comparable to the loans in the Funds portfolio.
The fair value of loans are reviewed and approved by the
Funds Valuation Committee and the Board of Trustees.
Forward foreign currency contracts are valued using quoted
foreign exchange rates. Credit default swaps are valued using
quotations obtained from brokers.
Short-term securities with remaining maturities of 60 days
or less are valued at amortized cost, which approximates market
value. Short-term loan participations are valued at cost in the
absence of any indication of impairment.
34
Van Kampen
Dynamic Credit Opportunities Fund
Notes
to Financial
Statements n July 31,
2009 continued
B. Fair Value Measurements The Fund
adopted Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 157, Fair Value
Measurements (FAS 157), effective August 1, 2008.
In accordance with FAS 157, fair value is defined as the
price that the Fund would receive to sell an investment or pay
to transfer a liability in an orderly transaction with an
independent buyer in the principal market, or in the absence of
a principal market the most advantageous market for the
investment or liability. FAS 157 establishes a three-tier
hierarchy to distinguish between (1) inputs that reflect
the assumptions market participants would use in pricing an
asset or liability developed based on market data obtained from
sources independent of the reporting entity (observable inputs)
and (2) inputs that reflect the reporting entitys own
assumptions about the assumptions market participants would use
in pricing an asset or liability developed based on the best
information available in the circumstances (unobservable inputs)
and to establish classification of fair value measurements for
disclosure purposes. Various inputs are used in determining the
value of the Funds investments. The inputs are summarized
in the three broad levels listed below.
Various inputs are used in determining the value of the
Funds investments. The inputs are summarized in the three
broad levels listed below.
|
|
Level 1
|
quoted prices in active markets for identical investments
|
Level 2
|
other significant observable inputs (including quoted prices for
similar investments, interest rates, prepayment speeds, credit
risk, etc.)
|
Level 3
|
significant unobservable inputs (including the Funds own
assumptions in determining the fair value of investments)
|
The inputs or methodology used for valuing securities are not
necessarily an indication of the risk associated with investing
in those securities.
C. Security Transactions Investment
transactions are recorded on a trade date basis. Realized gains
and losses are determined on an identified cost basis. Legal
expenditures that are expected to result in the restructuring of
or a plan of reorganization for an investment are recorded as
realized losses. The Fund may purchase and sell securities on a
when-issued or delayed delivery basis,
with settlement to occur at a later date. The value of the
security so purchased is subject to market fluctuations during
this period. The Fund will segregate assets with the custodian
having an aggregate value at least equal to the amount of the
when-issued or delayed delivery until payment is made. At
July 31, 2009, the Fund had no when-issued or delayed
delivery purchase commitments.
The Fund may invest in repurchase agreements, which are
short-term investments in which the Fund acquires ownership of a
debt security and the seller agrees to repurchase the security
at a future time and specified price. Repurchase agreements are
fully collateralized by the underlying debt security. The Fund
will make payment for such securities only upon physical
delivery or evidence of book entry transfer to the account of
the custodian bank. The seller is required to maintain the value
of the underlying security at not less than the repurchase
proceeds due the Fund. At July 31, 2009, the Fund had no
repurchase agreements.
D. Investment Income Dividend income is
recorded on the ex-dividend date and interest income is recorded
on an accrual basis. Facility fees received are treated as
market discounts. Market premiums are amortized and discounts
are accreted over the stated life of each applicable loan or
other debt obligation. Other income is comprised primarily of
amendment
35
Van Kampen
Dynamic Credit Opportunities Fund
Notes
to Financial
Statements n July 31,
2009 continued
fees which are recorded when
received. Amendment fees are earned as compensation for agreeing
to changes in loan agreements.
E. Federal Income Taxes It is the
Funds policy to comply with the requirements of Subchapter
M of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no provision for
federal income taxes is required. The Fund may be subject to
taxes imposed by countries in which it invests. Such taxes are
generally based on income earned or gains realized or
repatriated. Taxes are accrued and applied to net investment
income, net realized capital gains and net unrealized
appreciation, as applicable as the income is earned or capital
gains are recorded. Financial Accounting Standards Board
Interpretation No. 48 Accounting for Uncertainty in
Income Taxes sets forth a minimum threshold for financial
statement recognition of the benefit of a tax position taken or
expected to be taken in a tax return. Management has concluded
there are no significant uncertain tax positions that would
require recognition in the financial statements. If applicable,
the Fund recognizes interest accrued related to unrecognized tax
benefits in Interest Expense and penalties in
Other expenses on the Statement of Operations. The
Fund files tax returns with the U.S. Internal Revenue
Service and various states. Generally, each of the tax years in
the three year period ended July 31, 2009, remains subject
to examination by taxing authorities.
The Fund intends to utilize provisions of the federal income tax
laws which allow it to carry a realized capital loss forward for
eight years following the year of the loss and offset these
losses against any future realized capital gains. At
July 31, 2009, the Fund had an accumulated capital loss
carryforward for tax purposes of $77,214,579 which will expire
according to the following schedule:
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
Expiration
|
|
$
|
431,578
|
|
|
|
|
|
July 31, 2016
|
|
|
76,783,001
|
|
|
|
|
|
July 31, 2017
|
|
At July 31, 2009, the cost and related gross unrealized
appreciation and depreciation are as follows:
|
|
|
|
|
Cost of investments for tax purposes
|
|
$
|
1,328,537,787
|
|
|
|
|
|
|
Gross tax unrealized appreciation
|
|
|
92,974,589
|
|
Gross tax unrealized depreciation
|
|
|
(404,719,599
|
)
|
|
|
|
|
|
Net tax unrealized depreciation on investments
|
|
$
|
(311,745,010
|
)
|
|
|
|
|
|
F. Distribution of Income and Gains The
Fund intends to declare and pay monthly dividends from net
investment income. Net realized gains, if any, are distributed
at least annually to its shareholders. Distributions from net
realized gains for book purposes may include short term capital
gains, which are included as ordinary income for tax purposes.
The tax character of distributions paid during the years ended
July 31, 2009 and 2008, were as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
Distributions paid from:
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
100,610,355
|
|
|
$
|
115,987,675
|
|
|
|
|
|
|
|
|
|
|
36
Van Kampen
Dynamic Credit Opportunities Fund
Notes
to Financial
Statements n July 31,
2009 continued
Permanent differences, primarily due to reclassification of
currency, excise tax and swap gains and losses, resulted in the
following reclassifications among the Funds components of
net assets at July 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Undistributed
|
|
Accumulated
|
|
|
Net Investment
Income
|
|
Net Realized
Loss
|
|
Paid in
Surplus
|
|
$
|
47,030,634
|
|
|
$
|
(44,991,277
|
)
|
|
$
|
(2,039,357
|
)
|
As of July 31, 2009, the components of distributable
earnings on a tax basis were as follows:
|
|
|
|
|
Undistributed ordinary income
|
|
$
|
57,056,025
|
|
Net realized gains or losses may differ for financial reporting
and tax purposes primarily as a result of gains and losses
recognized on securities for tax purposes but not for book
purposes and post October losses in the amount of $189,422,440,
which are not realized for tax purposes until the first day of
the following fiscal year.
G. Foreign Currency Translation and Foreign
Investments Assets and liabilities denominated in
foreign currencies and commitments under forward foreign
currency contracts are translated into U.S. dollars at the
mean of the last quoted bid and asked 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. Income and expense
are translated at rates prevailing when accrued. Unrealized
gains and losses on securities resulting from changes in
exchange rates and the unrealized gains or losses on
translations of other assets or liabilities denominated in
foreign currencies are included in foreign currency translation
on the Statement of Operations. Realized gains and losses on
securities resulting from changes in exchange rates and the
realized gains or losses on translations of other assets or
liabilities denominated in foreign currencies are included in
foreign currency transactions on the Statement of Operations.
The Fund invests in issuers located in foreign markets. There
are certain risks inherent in these securities not typically
associated with issuers in the United States, including the
smaller size of the markets themselves, lesser liquidity,
greater volatility, and potentially less publicly available
information. Foreign markets may be subject to a greater degree
of government involvement in the economy and greater economic
and political uncertainty, which has the potential to extend to
government imposed restrictions on exchange traded transactions
and currency transactions. These restrictions may impact the
Funds ability to buy or sell certain securities or to
repatriate certain currencies to U.S. dollars. Additionally
changes in currency exchange rates will affect the value of and
investment income from such securities.
H. Reporting Subsequent Events In
accordance with the provisions set forth in Financial Accounting
Standards Board Statement of Financial Accounting Standards
No. 165, Subsequent Events, adopted by the Fund as of
July 31, 2009, management has evaluated the possibility of
subsequent events existing in the Funds financial
statements through September 22, 2009. Management has
determined that there are no material events or transactions
that would effect the Funds financial statements or
require disclosure in the Funds financial statements
through this date.
37
Van Kampen
Dynamic Credit Opportunities Fund
Notes
to Financial
Statements n July 31,
2009 continued
2. Investment
Advisory Agreement and Other Transactions with
Affiliates
Under the terms of the Funds Investment Advisory
Agreement, the Adviser will provide certain
day-to-day
investment management services to the Fund for an annual fee of
1.25% of the average daily managed assets. Average daily managed
assets are defined as the average daily total asset value of the
Fund minus the sum of accrued liabilities other than the
aggregate amount of borrowings for investment purposes. The
Adviser has entered into a subadvisory agreement with Avenue
Europe International Management, L.P. (the
Subadviser). Under the subadvisory agreement, the
Adviser retains the Subadviser to manage that portion of the
Funds assets that are allocated to the Subadviser. The
Adviser pays the Subadviser on a monthly basis a portion of the
net advisory fees the Adviser receives from the Fund.
For the year ended July 31, 2009, the Fund recognized
expenses of approximately $112,900 representing legal services
provided by Skadden, Arps, Slate, Meagher & Flom LLP,
of which a trustee of the Fund is a partner of such firm and he
and his law firm provide legal services as legal counsel to the
Fund.
Under separate Legal Services, Accounting Services and Chief
Compliance Officer (CCO) Employment agreements, the Adviser
provides accounting and legal services and the CCO provides
compliance services to the Fund. The costs of these services are
allocated to each fund. For the year ended July 31, 2009,
the Fund recognized expenses of approximately $119,200
representing Van Kampen Investments Inc.s or its
affiliates (collectively Van Kampen) cost
of providing accounting and legal services to the Fund as well
as the salary, benefits and related costs of the CCO and related
support staff paid by Van Kampen. Services provided
pursuant to the Legal Services agreement are reported as part of
Professional Fees on the Statement of Operations.
Services provided pursuant to the Accounting and CCO Employment
agreements are reported as part of Accounting and
Administrative Expenses on the Statement of Operations.
Certain officers and trustees of the Fund are also officers and
directors of Van Kampen. The Fund does not compensate its
officers or trustees who are also officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for
its Trustees who are not officers of Van Kampen. Under the
deferred compensation plan, Trustees may elect to defer all or a
portion of their compensation to a later date. Benefits under
the retirement plan are payable for a ten-year period and are
based upon each Trustees years of service to the Fund. The
maximum annual benefit per Trustee under the plan is $2,500.
At July 31, 2009, Van Kampen Investments Inc., an
affiliate of the Adviser, owned 5,236 shares of common
stock at an aggregate purchase price of $100,000.
During the period, the Fund owned shares of the following
affiliated company. Affiliated companies are defined by the 1940
Act as those company in which a Fund holds 5% or more of the
outstanding voting securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest/
|
|
Market
|
|
|
|
|
Par/
|
|
Dividend
|
|
Value
|
|
|
Name
|
|
Shares*
|
|
Income
|
|
7/31/2009
|
|
Cost
|
|
Axia, Inc.Warrants*
|
|
|
6,352
|
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
Axia, Inc.Term Loan
|
|
$
|
6,541,418
|
|
|
|
647,035
|
|
|
|
1,565,677
|
|
|
|
5,276,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
647,035
|
|
|
$
|
1,565,677
|
|
|
$
|
5,276,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Shares
were acquired through the restructuring of senior loan interests.
|
38
Van Kampen
Dynamic Credit Opportunities Fund
Notes
to Financial
Statements n July 31,
2009 continued
Affiliate transactions during the year ended July 31, 2009
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Par/Shares
|
|
|
|
|
|
Par/Shares
|
|
Realized
|
|
Interest/
|
|
|
as of
|
|
Gross
|
|
Gross
|
|
as of
|
|
Gain/
|
|
Dividend
|
Name
|
|
7/31/2008
|
|
Addition
|
|
Reduction
|
|
7/31/2009
|
|
(Loss)
|
|
Income
|
|
Axia, Inc.Warrants
|
|
|
-0-
|
|
|
$
|
6,352
|
|
|
$
|
-0-
|
|
|
|
6,352
|
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
Axia, Inc.Term Loan
|
|
$
|
3,733,693
|
|
|
|
2,807,725
|
|
|
|
-0-
|
|
|
|
6,541,418
|
|
|
|
-0-
|
|
|
$
|
647,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-0-
|
|
|
$
|
647,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Capital
Transactions
The Board of Trustees have approved a share repurchase program
whereby the Fund may, when appropriate, repurchase its shares in
the open market or in privately negotiated transactions at a
price not above market value or NAV, whichever is lower at the
time of purchase.
For the year ended July 31, 2009 there was no activity in
capital transactions.
The Fund is authorized to issue an unlimited number of common
shares of beneficial interest, par value $0.01 per share. The
Fund had no operations until June 26, 2007, other than
matters relating to its organization and registration and sale
and issuance to Van Kampen Investments Inc., an affiliate
of the Adviser, of 5,236 shares of common stock at an
aggregate purchase price of $100,000. The Adviser, on behalf of
the Fund, will incur all of the Funds organizational cost,
estimated at $10,000. The Adviser also has agreed to pay the
amount by which the offering costs of the Fund (other than the
sales load) exceed $0.04 per share of the Funds common
shares. On June 26, 2007, the Fund sold 71,000,000 common
shares in an initial public offering. Proceeds to the Fund were
$1,355,500,000 after deducting underwriting commissions and
estimated $600,000 of offering expenses. On July 23, 2007
the Fund sold 3,000,000 common shares, pursuant to an over
allotment agreement with the underwriters for net proceeds of
$57,300,000 after deducting underwriting commissions. For the
year ended July 31, 2008, the Fund incurred additional
costs of $252,820 from the 2007 initial public offering.
4. Investment
Transactions
During the period, the cost of purchases and proceeds from
investments sold and repaid, excluding short-term investments,
were $393,090,782 and $741,591,421, respectively.
5. Commitments
Pursuant to the terms of certain loan agreements, the Fund had
unfunded loan commitments of approximately $28,482,400 as of
July 31, 2009. The Fund intends to reserve against such
contingent obligations by designating cash, liquid securities
and liquid loans as a reserve. The
39
Van Kampen
Dynamic Credit Opportunities Fund
Notes
to Financial
Statements n July 31,
2009 continued
unrealized depreciation on these
commitments of $5,306,666 as of July 31, 2009 and is
reported as Unfunded Commitments on the Statement of
Assets and Liabilities.
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Type
|
|
Commitment
|
|
App/(Dep)
|
|
Bright Horizons Family Solutions, Inc.
|
|
|
Revolver
|
|
|
|
2,236,000
|
|
|
|
(559,000
|
)
|
Community Health Systems, Inc.
|
|
|
Revolver
|
|
|
|
10,000,000
|
|
|
|
(1,550,000
|
)
|
Graphic Packaging International, Inc.
|
|
|
Revolver
|
|
|
|
4,972,558
|
|
|
|
(895,060
|
)
|
KAG Property LLC
|
|
|
Delayed Draw Note
|
|
|
|
384,733
|
|
|
|
(13,947
|
)
|
Lyondell Chemical Company
|
|
|
DIP Term Loan
|
|
|
|
264,389
|
|
|
|
9,841
|
|
NV Broadcasting LLC
|
|
|
DIP Term Loan
|
|
|
|
74,748
|
|
|
|
|
|
Surgical Care Affiliates, Inc.
|
|
|
Revolver
|
|
|
|
5,550,000
|
|
|
|
(1,498,500
|
)
|
LJVH Holdings, Inc.
|
|
|
Revolver
|
|
|
|
5,000,000
|
|
|
|
(800,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,482,429
|
|
|
|
(5,306,666
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6. Borrowings
The Fund may utilize financial leverage to the maximum extent
allowable under the 1940 Act. Under the 1940 Act, a fund
generally may not borrow money greater than
331/3%
of the Funds total assets.
The Fund had entered into a $750 million revolving credit
and security agreement. Effective October 16, 2008, this
credit line was reduced to $550 million. The revolving
credit agreement was secured by the assets of the Fund. In
connection with this agreement, for the year ended July 31,
2009, the Fund incurred fees of approximately $5,660,400, as
disclosed on the Statement of Operations. For the year ended
July 31, 2009, the average daily balance of borrowings
under the revolving credit and security agreement was
$325,205,479 with a weighted average interest rate of 1.84%.
The Fund has also entered into a $400 million revolving
credit and security agreement as of August 24, 2009. This
revolving credit agreement is secured by the assets of the Fund.
7. Derivative
Financial Instruments
A derivative financial instrument in very general terms refers
to a security whose value is derived from the value
of an underlying asset, reference rate or index.
The Fund may use derivative instruments for a variety of
reasons, such as to attempt to protect the Fund against possible
changes in the market value of its portfolio or to generate
potential gain. All of the Funds portfolio holdings,
including derivative instruments, are marked to market each day
with the change in value reflected in unrealized appreciation/
depreciation. Risks may arise as a result of the potential
inability of the counterparties to meet the terms of their
contracts.
Summarized below are specific types of derivative financial
instruments used by the Fund.
A. Forward Foreign Currency Contracts A
forward foreign currency contract is a commitment to purchase or
sell a foreign currency at a future date at a negotiated forward
rate. The Fund may enter into forward foreign currency contracts
to attempt to protect securities and related receivables and
payables against changes in future foreign currency exchange
rates. The market value of the contract will fluctuate with
changes in currency exchange rates. The contract is
marked-to-market
daily and the change in market value is recorded by the Fund as
unrealized appreciation/depreciation on foreign currency
translation on the Statement of Operations. The gain or loss
arising from the difference between the
40
Van Kampen
Dynamic Credit Opportunities Fund
Notes
to Financial
Statements n July 31,
2009 continued
original value of the contract and
the closing value of such contract is included as a component of
realized gain/loss on foreign currency transactions. Risks may
arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their
contracts. Risks may also arise from the unanticipated movements
in the value of a foreign currency relative to the
U.S. dollar.
During the year ended July 31, 2009, the cost of purchases
and the proceeds from sales of forward foreign currency
contracts were $3,459,947,004 and $3,516,782,784, respectively.
B. Credit Default Swaps The Fund is
subject to credit risk in the normal course of pursuing its
investment objectives. The Fund may enter into credit default
swaps to manage its exposure to the market or certain sectors of
the market, to reduce its risk exposure to defaults of corporate
and sovereign issuers, or to create exposure to corporate or
sovereign issuers to which it is not otherwise exposed. A credit
default swap is an agreement between two parties to exchange the
credit risk of an issuer or index of issuers. A buyer of a
credit default swap is said to buy protection by paying periodic
fees in return for a contingent payment from the seller if the
issuer has a credit event such as bankruptcy, a failure to pay
outstanding obligations or deteriorating credit while the swap
is outstanding. A seller of a credit default swap is said to
sell protection and thus collects the periodic fees and profits
if the credit of the issuer remains stable or improves while the
swap is outstanding. 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 issuer. This
agreed-upon
amount approximates the notional amount of the swap as disclosed
in the table following the Portfolio of Investments and is
estimated to be the maximum potential future payment that the
seller could be required to make under the credit default swap
contract. In the event of an adverse credit event, the seller
generally does not have any contractual remedies against the
issuer or any other third party. However, if a physical
settlement is elected, the seller would receive the defaulted
credit and, as a result, become a creditor of the issuer.
The current credit rating of each individual issuer is listed in
the table following the Portfolio of Investments and serves as
an indicator of the current status of the payment/ performance
risk of the credit derivative. Alternatively, for credit default
swaps on an index of credits, the quoted market prices and
current values serve as an indicator of the current status of
the payment/performance risk of the credit derivative.
Generally, lower credit ratings and increasing market values, in
absolute terms, represent a deterioration of the credit and a
greater likelihood of an adverse credit event of the issuer.
The Fund accrues for the periodic fees on credit default swaps
on a daily basis with the net amount accrued recorded within
unrealized appreciation/depreciation of swap contracts. Upon
cash settlement of the periodic fees, the net amount is recorded
as realized gain/loss on swap contracts on the Statement of
Operations. Net unrealized gains are recorded as an asset or net
unrealized losses are reported as a liability on the Statement
of Assets and Liabilities. The change in value of the swap
contracts is reported as unrealized gains or losses on the
Statement of Operations. Payments received or made upon entering
into a credit default swap contract, if any, are recorded as
realized gain or loss on the Statement of Operations upon
termination or maturity of the swap. Credit default swaps may
involve greater risks than if a fund had invested in the issuer
directly. The Funds maximum risk or loss from counterparty
risk, either as the protection seller or as the protection
buyer, is the fair value of the contract. This risk is mitigated
by having a master netting arrangement between the fund and the
41
Van Kampen
Dynamic Credit Opportunities Fund
Notes
to Financial
Statements n July 31,
2009 continued
counterparty and by the posting of
collateral by the counterparty to the Fund to cover the
Funds exposure to the counterparty.
The Fund may sell credit default swaps which expose it to risk
of loss from credit risk related events specified in the
contract. Although contract-specific, credit events are
generally defined as bankruptcy, failure to pay, restructuring,
obligation acceleration, obligation default, or
repudiation/moratorium. As disclosed in the footnotes to the
Portfolio of Investments, the aggregate fair value of credit
default swaps in a net liability position as of July 31,
2009 was $22,257,189. The aggregate fair value of assets posted
as collateral, net of assets received as collateral, for these
swaps was $22,887,000. If a defined credit event had occurred as
of July 31, 2009, the swaps credit-risk-related
contingent features would have been triggered and the Fund would
have been required to pay $272,117,000 less the value of the
contracts related reference obligations.
Swap agreements are not entered into or traded on exchanges and
there is no central clearing or guaranty function for swaps.
Therefore, swaps are subject to the risk of default or
non-performance by the counterparty. If there is a default by
the counterparty to a swap agreement, the Fund will have
contractual remedies pursuant to the agreements related to the
transaction. Counterparties are required to pledge collateral
daily (based on the valuation of each swap) on behalf of the
Fund with a value approximately equal to the amount of any
unrealized gain. Reciprocally, when the Fund has an unrealized
loss on a swap contract, the Fund has instructed the custodian
to pledge cash or liquid securities as collateral with a value
approximately equal to the amount of the unrealized loss.
Collateral pledges are monitored and subsequently adjusted if
and when the swap valuations fluctuate. Cash collateral is
disclosed in the table following the Portfolio of Investments.
Cash collateral has been offset against open swap contracts
under the provisions of Financial Accounting Standards Board
Interpretation No. 39 Offsetting of Amounts Related to
Certain Contracts an interpretation of APB Opinion No. 10
and FASB Statement No. 105 and are included within
Swap Contracts on the Statement of Assets and
Liabilities. For cash collateral received, the Fund pays a
monthly fee to the counterparty based on the effective rate for
Federal Funds. This fee, when paid, is included within realized
loss on swap contracts on the Statement of Operations.
The Fund adopted Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities
(FAS 161), effective February 1, 2009. FAS 161 is
intended to improve financial reporting about derivative
instruments by requiring enhanced disclosures to enable
investors to better understand how and why the Fund uses
derivative instruments, how these derivative instruments are
accounted for and their effects on the Funds financial
position and results of operations.
The following table sets forth the fair value of the Funds
derivative contracts by primary risk exposure as of
July 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Derivatives
|
|
Liability
Derivatives
|
|
|
Balance Sheet
|
|
|
|
Balance Sheet
|
|
|
Primary Risk
Exposure
|
|
Location
|
|
Fair
Value
|
|
Location
|
|
Fair
Value
|
|
Currency Contracts
|
|
Forward Foreign
Currency Contracts
|
|
$
|
6,033,487
|
|
|
Forward Foreign
Currency Contracts
|
|
$
|
8,634,941
|
|
Credit Contracts
|
|
Swap Contracts
|
|
|
2,549,007
|
|
|
Swap Contracts
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
8,582,494
|
|
|
|
|
$
|
8,634,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
Van Kampen
Dynamic Credit Opportunities Fund
Notes
to Financial
Statements n July 31,
2009 continued
The following tables set forth by primary risk exposure the
Funds realized gains/losses and change in unrealized
gains/losses by type of derivative contract for the year ended
July 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of
Realized Gain/Loss on Derivative Contracts
|
|
|
Forwards
Foreign
|
|
|
|
|
Primary Risk
Exposure
|
|
Currency
Contracts
|
|
Swaps
|
|
Total
|
|
Currency Contracts
|
|
$
|
39,064,738
|
|
|
$
|
-0-
|
|
|
$
|
39,064,738
|
|
Credit Contracts
|
|
|
-0-
|
|
|
|
(12,090,260
|
)
|
|
|
(12,090,260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
39,064,738
|
|
|
$
|
(12,090,260
|
)
|
|
$
|
26,974,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Unrealized Appreciation/Depreciation on Derivative
Contracts
|
|
|
Forwards
Foreign
|
|
|
|
|
Primary Risk
Exposure
|
|
Currency
Contracts
|
|
Swaps
|
|
Total
|
|
Currency Contracts
|
|
$
|
1,179,167
|
|
|
$
|
-0-
|
|
|
$
|
1,179,167
|
|
Credit Contracts
|
|
|
-0-
|
|
|
|
(1,085,900
|
)
|
|
|
(1,085,900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,179,167
|
|
|
$
|
(1,085,900
|
)
|
|
$
|
93,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8. Indemnifications
The Fund enters into contracts that contain a variety of
indemnifications. The Funds maximum exposure under these
arrangements is unknown. However, the Fund has not had prior
claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
9. Legal
Matters
The Fund is one of numerous defendants (Lenders)
that have been named in an adversary proceeding pending in the
Bankruptcy Court of the Southern District of Florida (the
Court). The action, entitled In re Tousa Inc., et
al., was filed on July 15, 2008, by the Official
Committee of Unsecured Creditors of home building companies to
which the Lenders loaned money through different lending
facilities. An amended complaint was filed on October 17,
2008. Plaintiff alleges that monies used to repay the Lenders
should be avoided as fraudulent and preferential transfers under
the bankruptcy laws. More specifically, Plaintiff alleges that
subsidiaries of the home building companies were allegedly
forced to become co-borrowers and guarantors of the monies used
to repay the Lenders, and that the subsidiaries did not receive
fair consideration or reasonably equivalent value when they
transferred the proceeds to repay the Lenders. Plaintiff seeks
to avoid the transfers and other equitable relief. The Fund and
the other Lenders are named as defendants in two separate
lending capacities; first, as lenders in a credit agreement (the
Credit Lenders); and second, as lenders in a term
loan (the Term Loan Lenders). The Fund, as Credit
Lender, moved to dismiss the amended complaint. The Court denied
the motion to dismiss on December 4, 2008. The Fund and the
other Credit Lenders filed a motion for leave to appeal the
dismissal, which was denied on February 23, 2009. Plaintiff
thereafter filed a Second Amended Complaint that was superseded
by a Third Amended Complaint. The Fund filed two answers to the
Third Amended Complaint in its respective capacities as a Credit
Lender and a Term Loan Lender. A court-ordered mediation took
place in March, 2009, but no resolution was reached. The case
went to trial, which concluded in August 2009. A final decision
is currently expected in late 2009. In managements
opinion, there is no material impact to the Fund as a result of
this legal matter.
43
Van Kampen
Dynamic Credit Opportunities Fund
Report of Independent Registered Public Accounting
Firm
To the Shareholders and Board of Trustees of Van Kampen
Dynamic Credit
Opportunities Fund
We have audited the accompanying statement of assets and
liabilities of Van Kampen Dynamic Credit Opportunities Fund
(the Fund), including the portfolio of investments,
as of July 31, 2009, the related statements of operations
and cash flows for the year then ended, the statements of
changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the two
years in the period then ended and for the period from
June 26, 2007 (commencement of operations) to July 31,
2007. These financial statements and financial highlights are
the responsibility of the Funds management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Funds
internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. Our
procedures included confirmation of securities owned as of
July 31, 2009, by correspondence with the Funds
custodian, brokers and selling or agent banks; where replies
were not received, we performed other auditing procedures. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of Van Kampen Dynamic
Credit Opportunities Fund as of July 31, 2009, the results
of its operations and its cash flows for the year then ended,
the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the
respective periods stated, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
September 22, 2009
44
Van
Kampen Dynamic Credit Opportunities Fund
Dividend Reinvestment Plan
The dividend reinvestment plan (the Plan) offers you a prompt
and simple way to reinvest your dividends and capital gains
(Distributions) into additional shares of Van Kampen Dynamic
Credit Opportunities Fund (the Fund). Under the Plan, the money
you earn from Distributions will be reinvested automatically in
more shares of the Fund, allowing you to potentially increase
your investment over time. All shareholders in the Fund are
automatically enrolled in the Plan when shares are purchased.
Plan
benefits
Add
to your account
You may increase your shares in the Fund easily and
automatically with the Plan.
Low
transaction costs
Shareholders who participate in the Plan are able to buy shares
at below-market prices when the Fund is trading at a premium to
its net asset value (NAV). In addition, transaction costs are
low because when new shares are issued by the Fund, there is no
brokerage fee, and when shares are bought in blocks on the open
market, the brokerage commission is shared among all
participants.
Convenience
You will receive a detailed account statement from Computershare
Trust Company, N.A. (The Agent), which administers the Plan. The
statement shows your total distributions, date of investment,
shares acquired, and price per share, as well as the total
number of shares in your reinvestment account. You can also
access your account via the Internet at vankampen.com.
Safekeeping
The Agent will hold the shares it has acquired for you in
safekeeping.
How to
participate in the Plan
If you own shares in your own name, you can participate directly
in the Plan. If your shares are held in street
namein the name of your brokerage firm, bank, or
other financial institutionyou must instruct that entity
to participate on your behalf. If they are unable to participate
on your behalf, you may request that they reregister your shares
in your own name so that you may enroll in the Plan.
If you choose to participate in the Plan, your Distributions
will be promptly reinvested for you, automatically increasing
your shares. If the Fund is trading at a share price that is
equal to its net asset value (NAV), youll pay that amount
for your
45
Van
Kampen Dynamic Credit Opportunities Fund
Dividend
Reinvestment
Plan continued
reinvested shares. However, if the Fund is trading above or
below NAV, the price is determined by one of two ways:
|
|
|
|
1.
|
Premium If the Fund is trading at a premiuma
market price that is higher than its NAVyoull pay
either the NAV or 95 percent of the market price, whichever
is greater. When the Fund trades at a premium, youll pay
less for your reinvested shares than an ordinary investor
purchasing shares on the stock exchange. Keep in mind, a portion
of your price reduction may be taxable because you are receiving
shares at less than market price.
|
|
2.
|
Discount If the Fund is trading at a discounta
market price that is lower than its NAVyoull pay the
market price for your reinvested shares.
|
How to
enroll
To enroll in the Plan, please read the Terms and Conditions in
the Plan brochure. You can obtain a copy of the Plan Brochure
and enroll in the Plan by visiting vankampen.com, calling
toll-free
(800) 341-2929
or notifying us in writing at Van Kampen Closed End Funds,
Computershare Trust Company, N.A., P.O. Box 43078,
Providence, RI 02940-3078. Please include the Fund name and
account number and ensure that all shareholders listed on the
account sign these written instructions. Your participation in
the Plan will begin with the next Distribution payable after The
Agent receives your authorization, as long as they receive it
before the record date, which is generally ten
business days before the Distribution is paid. If your
authorization arrives after such record date, your participation
in the Plan will begin with the following Distribution.
Costs of the
plan
There is no direct charge to you for reinvesting Distributions
because the Plans fees are paid by the Fund. However, when
applicable, you will pay your portion of any brokerage
commissions incurred when the new shares are purchased on the
open market. These brokerage commissions are typically less than
the standard brokerage charges for individual transactions,
because shares are purchased for all participants in blocks,
resulting in lower commissions for each individual participant.
Any brokerage commissions or service fees are averaged into the
purchase price.
Tax
implications
The automatic reinvestment of Distributions does not relieve you
of any income tax that may be due on Distributions. You will
receive tax information annually to help you prepare your
federal and state income tax returns.
Van Kampen does not offer tax advice. The tax information
contained herein is general and is not exhaustive by nature. It
was not intended or written to be used, and it cannot be used by
any taxpayer, for avoiding penalties that may be imposed on the
taxpayer under U.S. federal tax laws. Federal and state tax laws
are complex and
46
Van
Kampen Dynamic Credit Opportunities Fund
Dividend
Reinvestment
Plan continued
constantly changing. Shareholders should always consult a
legal or tax advisor for information concerning their individual
situation.
How to withdraw
from the plan
To withdraw from the Plan please visit www.vankampen.com or call
(800) 341-2929
or notify us in writing at the address below.
Van Kampen Closed-End Funds
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
All shareholders listed on the account must sign any written
withdrawal instructions. If you withdraw, you have three options
with regard to the shares held in The Plan:
|
|
|
|
1.
|
If you opt to continue to hold your non-certificated whole
shares, they will be held by Computershare Trust Company N.A. as
Direct Registration Book-Shares (Book-Entry Shares) and
fractional shares will be sold at the then current market price.
Proceeds will be sent via check to your address of record after
deducting applicable fees and brokerage commission.
|
|
2.
|
If you opt to sell your shares through The Agent, we will sell
all full and fractional shares and send the proceeds via check
to your address of record after deducting brokerage commissions
and a $2.50 service fee.
|
|
3.
|
You may sell your shares through your financial advisor through
the Direct Registration Systems (DRS). DRS is a
service within the securities industry that allows Fund shares
to be held in your name in electronic format. You retain full
ownership of your shares, without having to hold a share
certificate.
|
The Fund and Computershare Trust Company, N.A. may amend
or terminate the Plan. Participants will receive written notice
at least 30 days before the effective date of any
amendment. In the case of termination, Participants will receive
written notice at least 30 days before the record date for
the payment of any dividend or capital gains distribution by the
Fund. In the case of amendment or termination necessary or
appropriate to comply with applicable law or the rules and
policies of the Securities and Exchange Commission or any other
regulatory authority, such written notice will not be
required.
To obtain a
complete copy of the Dividend Reinvestment Plan, please call our
Client Relations department at
800-341-2929
or visit vankampen.com.
47
Van Kampen
Dynamic Credit Opportunities Fund
Board of Trustees, Officers and Important Addresses
|
|
|
Board
of Trustees
David C. Arch
Jerry D. Choate
Rod Dammeyer
Linda Hutton Heagy
R. Craig Kennedy
Howard J Kerr
Jack E. Nelson
Hugo F. Sonnenschein
Wayne W. Whalen* Chairman
Suzanne H. Woolsey
Officers
Edward C. Wood III
President and Principal Executive Officer
Kevin Klingert
Vice President
Stefanie V. Chang Yu
Vice President and Secretary
John L. Sullivan
Chief Compliance Officer
Stuart N. Schuldt
Chief Financial Officer and Treasurer
|
|
Investment
Adviser
Van Kampen Asset Management
522 Fifth Avenue
New York, New York 10036
Subadviser
Avenue-Europe International Management, L.P.
535 Madison Avenue, 15th Floor
New York, New York 10022
Custodian
State Street Bank
and Fund Company
One Lincoln Street
Boston, Massachusetts 02111
Transfer
Agent
Computershare Fund Company, N.A.
c/o Computershare Investor Services
P.O. Box 43078
Providence, Rhode Island 02940-3078
Legal
Counsel
Skadden, Arps, Slate,
Meagher & Flom LLP
155 North Wacker Drive
Chicago, Illinois 60606
Independent
Registered
Public Accounting Firm
Deloitte & Touche LLP
111 South Wacker Drive
Chicago, Illinois 60606-4301
|
|
|
|
*
|
|
Interested
persons of the Fund, as defined in the Investment Company
Act of 1940, as amended.
|
48
Van
Kampen Dynamic Credit Opportunities Fund
Results of Shareholder Votes
The Annual Meeting of Shareholders of the Fund was held on
June 17, 2009, where shareholders voted on the election of
trustees.
With regard to the election of the following trustees by common
shareholders of the Fund:
|
|
|
|
|
|
|
|
|
|
|
# of
Shares
|
|
|
In
Favor
|
|
Withheld
|
|
|
Linda Hutton Heagy
|
|
|
63,536,734
|
|
|
|
2,724,729
|
|
Wayne W. Whalen
|
|
|
63,445,457
|
|
|
|
2,816,006
|
|
Rod Dammeyer
|
|
|
63,471,622
|
|
|
|
2,789,841
|
|
The other trustees of the Fund whose terms did not expire in
2009 are David C. Arch, Jerry D. Choate, R. Craig Kennedy,
Howard J Kerr, Jack E. Nelson, Hugo F. Sonnenschein and Suzanne
H. Woolsey.
49
Van
Kampen Dynamic Credit Opportunities Fund
Trustee
and Officer Information
The business and affairs of each Fund are managed under the
direction of the Funds Board of Trustees and the
Funds officers appointed by the Board of Trustees. The
tables below list the trustees and executive officers of each
Fund and their principal occupations during the last five years,
other directorships held by trustees and their affiliations, if
any, with Van Kampen Investments, the Adviser, the
Distributor, Van Kampen Advisors Inc., Van Kampen
Exchange Corp. and Investor Services. The term Fund
Complex includes each of the investment companies advised
by the Adviser as of the date of this Annual Report. Trustees of
the fund generally serve three year terms or until their
successors are duly elected and qualified. Officers are annually
elected by the trustees.
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent
Trustees:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Term of
|
|
|
|
Funds in
|
|
|
|
|
|
|
Office and
|
|
|
|
Fund
|
|
|
|
|
Position(s)
|
|
Length of
|
|
|
|
Complex
|
|
|
Name, Age and
Address
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
|
Overseen
|
|
Other
Directorships
|
of Independent
Trustee
|
|
each
Fund
|
|
Served
|
|
During Past 5
Years
|
|
By
Trustee
|
|
Held by
Trustee
|
|
David C. Arch (64)
Blistex Inc.
1800 Swift Drive
Oak Brook, IL 60523
|
|
Trustee
|
|
Trustee
since 2007
|
|
Chairman and Chief Executive Officer of Blistex Inc., a consumer
health care products manufacturer.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex. Member of the Heartland Alliance advisory board, a
nonprofit organization serving human needs based
in Chicago. Board member of the Illinois
Manufacturers Association. Member of the Board of
Visitors, Institute for the Humanities, University of Michigan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
Van
Kampen Dynamic Credit Opportunities Fund
|
Trustee and
Officer
Information continued
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Term of
|
|
|
|
Funds in
|
|
|
|
|
|
|
Office and
|
|
|
|
Fund
|
|
|
|
|
Position(s)
|
|
Length of
|
|
|
|
Complex
|
|
|
Name, Age and
Address
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
|
Overseen
|
|
Other
Directorships
|
of Independent
Trustee
|
|
each
Fund
|
|
Served
|
|
During Past 5
Years
|
|
By
Trustee
|
|
Held by
Trustee
|
|
Jerry D. Choate (70)
33971 Selva Road
Suite 130
Dana Point, CA 92629
|
|
Trustee
|
|
Trustee
since 2007
|
|
Prior to January 1999, Chairman and Chief Executive Officer
of the Allstate Corporation (Allstate) and Allstate
Insurance Company. Prior to January 1995, President and
Chief Executive Officer of Allstate. Prior to August 1994,
various management positions at Allstate.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex. Director of Amgen Inc., a biotechnological company, and
Valero Energy Corporation, an independent refining company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rod Dammeyer (68)
CAC, LLC
4350 La Jolla Village Drive
Suite 685
San Diego, CA 92122-1249
|
|
Trustee
|
|
Trustee
since 2007
|
|
President of CAC, L.L.C., a private company offering capital
investment and management advisory services.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex. Director of Quidel Corporation, Stericycle, Inc. Prior
to May 2008, Trustee of The Scripps Research Institute. Prior to
February 2008, Director of Ventana Medical Systems, Inc. Prior
to April 2007, Director of GATX Corporation. Prior to April
2004, Director of TheraSense, Inc. Prior to January 2004,
Director of TeleTech Holdings Inc. and Arris Group, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
Van
Kampen Dynamic Credit Opportunities Fund
|
Trustee and
Officer
Information continued
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Term of
|
|
|
|
Funds in
|
|
|
|
|
|
|
Office and
|
|
|
|
Fund
|
|
|
|
|
Position(s)
|
|
Length of
|
|
|
|
Complex
|
|
|
Name, Age and
Address
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
|
Overseen
|
|
Other
Directorships
|
of Independent
Trustee
|
|
each
Fund
|
|
Served
|
|
During Past 5
Years
|
|
By
Trustee
|
|
Held by
Trustee
|
|
Linda Hutton Heagy (61)
4939 South Greenwood
Chicago, IL 60615
|
|
Trustee
|
|
Trustee
since 2007
|
|
Prior to February 2008, Managing Partner of Heidrick &
Struggles, an international executive search firm. Prior to
1997, Partner of Ray & Berndtson, Inc., an executive
recruiting firm. Prior to 1995, Executive Vice President of ABN
AMRO, N.A., a bank holding company. Prior to 1990, Executive
Vice President of The Exchange National Bank.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex. Trustee on the University of Chicago Medical Center
Board, Vice Chair of the Board of the YMCA of Metropolitan
Chicago and a member of the Womens Board of the University
of Chicago.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Craig Kennedy (57)
1744 R Street, NW
Washington, DC 20009
|
|
Trustee
|
|
Trustee
since 2007
|
|
Director and President of the German Marshall Fund of the United
States, an independent U.S. foundation created to deepen
understanding, promote collaboration and stimulate exchanges of
practical experience between Americans and Europeans. Formerly,
advisor to the Dennis Trading Group Inc., a managed futures and
option company that invests money for individuals and
institutions. Prior to 1992, President and Chief Executive
Officer, Director and member of the Investment Committee of the
Joyce Foundation, a private foundation.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex. Director of First Solar, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard J Kerr (73)
14 Huron Trace
Galena, IL 61036
|
|
Trustee
|
|
Trustee
since 2007
|
|
Prior to 1998, President and Chief Executive Officer of
Pocklington Corporation, Inc., an investment holding company.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex. Director of the Lake Forest Bank & Trust.
Director of the Marrow Foundation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
Van
Kampen Dynamic Credit Opportunities Fund
|
Trustee and
Officer
Information continued
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Term of
|
|
|
|
Funds in
|
|
|
|
|
|
|
Office and
|
|
|
|
Fund
|
|
|
|
|
Position(s)
|
|
Length of
|
|
|
|
Complex
|
|
|
Name, Age and
Address
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
|
Overseen
|
|
Other
Directorships
|
of Independent
Trustee
|
|
each
Fund
|
|
Served
|
|
During Past 5
Years
|
|
By
Trustee
|
|
Held by
Trustee
|
|
Jack E. Nelson (73)
423 Country Club Drive
Winter Park, FL 32789
|
|
Trustee
|
|
Trustee
since 2007
|
|
President of Nelson Investment Planning Services, Inc., a
financial planning company and registered investment adviser in
the State of Florida. President of Nelson Ivest Brokerage
Services Inc., a member of the Financial Industry Regulatory
Authority (FINRA), Securities Investors Protection
Corp. and the Municipal Securities Rulemaking Board. President
of Nelson Sales and Services Corporation, a marketing and
services company to support affiliated companies.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hugo F. Sonnenschein (68)
1126 E. 59th Street
Chicago, IL 60637
|
|
Trustee
|
|
Trustee
since 2007
|
|
President Emeritus and Honorary Trustee of the University of
Chicago and the Adam Smith Distinguished Service Professor in
the Department of Economics at the University of Chicago. Prior
to July 2000, President of the University of Chicago.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex. Trustee of the University of Rochester and a member of
its investment committee. Member of the National Academy of
Sciences, the American Philosophical Society and a fellow of the
American Academy of Arts and Sciences.
|
|
|
|
|
|
|
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|
|
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
Van
Kampen Dynamic Credit Opportunities Fund
|
Trustee and
Officer
Information continued
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Term of
|
|
|
|
Funds in
|
|
|
|
|
|
|
Office and
|
|
|
|
Fund
|
|
|
|
|
Position(s)
|
|
Length of
|
|
|
|
Complex
|
|
|
Name, Age and
Address
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
|
Overseen
|
|
Other
Directorships
|
of Independent
Trustee
|
|
each
Fund
|
|
Served
|
|
During Past 5
Years
|
|
By
Trustee
|
|
Held by
Trustee
|
|
Suzanne H. Woolsey, Ph.D. (67)
815 Cumberstone Road
Harwood, MD 20776
|
|
Trustee
|
|
Trustee
since 2007
|
|
Chief Communications Officer of the National Academy of
Sciences/National Research Council, an independent, federally
chartered policy institution, from 2001 to November 2003 and
Chief Operating Officer from 1993 to 2001. Prior to 1993,
Executive Director of the Commission on Behavioral and Social
Sciences and Education at the National Academy of
Sciences/National Research Council. From 1980 through 1989,
Partner of Coopers & Lybrand.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex. Trustee of Changing World Technologies, Inc., an energy
manufacturing company, since July 2008. Director of Fluor Corp.,
an engineering, procurement and construction organization, since
January 2004. Director of Intelligent Medical Devices, Inc., a
symptom based diagnostic tool for physicians and clinical labs.
Director of the Institute for Defense Analyses, a federally
funded research and development center, Director of the German
Marshall Fund of the United States, Director of the Rocky
Mountain Institute and Trustee of California Institute of
Technology and the Colorado College.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
Van
Kampen Dynamic Credit Opportunities Fund
|
Trustee and
Officer
Information continued
|
Interested
Trustee:*
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Term of
|
|
|
|
Funds in
|
|
|
|
|
|
|
Office and
|
|
|
|
Fund
|
|
|
|
|
Position(s)
|
|
Length of
|
|
|
|
Complex
|
|
|
Name, Age and
Address
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
|
Overseen
|
|
Other
Directorships
|
of Interested
Trustee
|
|
each
Fund
|
|
Served
|
|
During Past 5
Years
|
|
By
Trustee
|
|
Held by
Trustee
|
|
Wayne W. Whalen* (69)
333 West Wacker Drive
Chicago, IL 60606
|
|
Trustee
|
|
Trustee
since 2007
|
|
Partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP, legal counsel to funds in the Fund
Complex.
|
|
|
89
|
|
|
Trustee/Director/Managing General Partner of funds in the Fund
Complex. Director of the Abraham Lincoln Presidential Library
Foundation.
|
|
|
|
|
|
As
indicated above, prior to February 2008, Ms. Heagy was an
employee of Heidrick and Struggles, an international executive
search firm (Heidrick). Heidrick has been (and may
continue to be) engaged by Morgan Stanley from time to time to
perform executive searches. Such searches have been done by
professionals at Heidrick without any involvement by
Ms. Heagy. Ethical wall procedures exist to ensure that
Ms. Heagy will not have any involvement with any searches
performed by Heidrick for Morgan Stanley. Ms. Heagy does
not receive any compensation, directly or indirectly, for
searches performed by Heidrick for Morgan Stanley.
|
|
*
|
|
Mr.
Whalen is an interested person (within the meaning
of Section 2(a)(19) of the 1940 Act) of certain funds in
the Fund Complex by reason of he and his firm currently
providing legal services as legal counsel to such funds in the
Fund Complex.
|
55
Van
Kampen Dynamic Credit Opportunities Fund
Trustee
and Officer
Information continued
|
|
|
|
|
|
|
Officers:
|
|
|
|
|
Term of
|
|
|
|
|
|
|
Office and
|
|
|
|
|
Position(s)
|
|
Length of
|
|
|
Name, Age and
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
Address of
Officer
|
|
each
Fund
|
|
Served
|
|
During Past 5
Years
|
|
Edward C. Wood III (53)
1 Parkview Plaza Suite 100
Oakbrook Terrace, IL 60181
|
|
President and
Principal Executive
Officer
|
|
Officer
since 2008
|
|
President and Principal Executive Officer of funds in the Fund
Complex since November 2008. Managing Director of
Van Kampen Investments Inc., the Adviser, the Distributor,
Van Kampen Advisors Inc. and Van Kampen Exchange Corp.
since December 2003. Chief Administrative Officer of the
Adviser, Van Kampen Advisors Inc. and Van Kampen
Exchange Corp. since December 2002. Chief Operating Officer of
the Distributor since December 2002. Director of Van Kampen
Advisors Inc., the Distributor and Van Kampen Exchange
Corp. since March 2004. Director of the Adviser since August
2008. Director of Van Kampen Investments Inc. and
Van Kampen Investor Services Inc. since June 2008.
Previously, Director of the Adviser and Van Kampen
Investments Inc. from March 2004 to January 2005 and Chief
Administrative Officer of Van Kampen Investments Inc. from
2002 to 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Klingert (46)
522 Fifth Avenue
New York, NY 10036
|
|
Vice President
|
|
Officer
since 2008
|
|
Vice President of funds in the Fund Complex since May 2008.
Global Head, Chief Operating Officer and acting Chief Investment
Officer of the Fixed Income Group of Morgan Stanley Investment
Management Inc. since April 2008. Head of Global Liquidity
Portfolio Management and co-Head of Liquidity Credit Research of
Morgan Stanley Investment Management since December 2007.
Managing Director of Morgan Stanley Investment Management Inc.
from December 2007 to March 2008. Previously, Managing Director
on the Management Committee and head of Municipal Portfolio
Management and Liquidity at BlackRock from October 1991 to
January 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stefanie V. Chang Yu (42)
522 Fifth Avenue
New York, NY 10036
|
|
Vice President
and Secretary
|
|
Officer
since 2007
|
|
Managing Director of Morgan Stanley Investment Management Inc.
Vice President and Secretary of funds in the Fund Complex.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John L. Sullivan (53)
1 Parkview Plaza Suite 100
Oakbrook Terrace, IL 60181
|
|
Chief Compliance Officer
|
|
Officer
since 2007
|
|
Chief Compliance Officer of funds in the Fund Complex since
August 2004. Prior to August 2004, Director and Managing
Director of Van Kampen Investments, the Adviser,
Van Kampen Advisors Inc. and certain other subsidiaries of
Van Kampen Investments, Vice President, Chief Financial
Officer and Treasurer of funds in the Fund Complex and head of
Fund Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
|
|
|
|
|
|
|
|
56
|
|
|
|
|
|
|
Van
Kampen Dynamic Credit Opportunities Fund
|
Trustee and
Officer
Information continued
|
|
|
|
|
Term of
|
|
|
|
|
|
|
Office and
|
|
|
|
|
Position(s)
|
|
Length of
|
|
|
Name, Age and
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
Address of
Officer
|
|
each
Fund
|
|
Served
|
|
During Past 5
Years
|
|
Stuart N. Schuldt (47)
1 Parkview Plaza Suite 100
Oakbrook Terrace, IL 60181
|
|
Chief Financial Officer
and Treasurer
|
|
Officer
since 2007
|
|
Executive Director of Morgan Stanley Investment Management Inc.
since June 2007. Chief Financial Officer and Treasurer of funds
in the Fund Complex since June 2007. Prior to June 2007, Senior
Vice President of Northern Trust Company, Treasurer and
Principal Financial Officer for Northern Trust U.S. mutual fund
complex.
|
|
|
|
|
|
|
|
|
In accordance with Section 303A. 12(a) of the New York
Stock Exchange Listed Company Manual, the Funds Chief
Executive Officer has certified to the New York Stock Exchange
that, as of July 1, 2009, he was not aware of any violation
by the Fund of NYSE corporate governance listing standards.
|
|
|
|
|
|
|
|
|
The certifications by the Funds principal executive
officer and principal financial officer required by
Rule 30a-2
under the 1940 Act were filed with the Funds report to the
SEC on
Form N-CSR
and are available on the Securities and Exchange
Commissions web site at http://www.sec.gov.
|
57
Van
Kampen Dynamic Credit Opportunities Fund
An Important Notice Concerning Our
U.S.
Privacy Policy
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
(Policy) annually.
This Policy applies
to current and former individual clients of certain
Van Kampen closed-end funds 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. 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
and understand your concerns about safeguarding such
information. We strive to maintain the privacy of such
information while we help you achieve your financial objectives.
This Policy describes what nonpublic personal information we
collect about you, how we collect it, when we may share it with
others, and how others may use it. It discusses the steps you
may take to limit our sharing of information about you with
affiliated Van Kampen companies (affiliated
companies). It also discloses how you may limit our
affiliates use of shared information for marketing
purposes. Throughout this Policy, we refer to the nonpublic
information that personally identifies you or your accounts as
personal information.
1. What
Personal Information Do We Collect About
You?
To better serve you
and manage our business, it is important that we collect and
maintain accurate information about you. We obtain this
information from applications and other forms you submit to us,
from your dealings with us, from consumer reporting agencies,
from our websites and from third parties and other sources. For
example:
|
|
|
|
|
|
We collect
information such as your name, address,
e-mail
address, telephone/fax numbers, assets, income and investment
objectives through application forms you submit to us.
|
|
(continued
on next page)
Van
Kampen Dynamic Credit Opportunities Fund
An Important Notice Concerning Our
U.S. Privacy Policy continued
|
|
|
|
|
|
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 computers
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 better serve you, to
manage our business and as otherwise required or permitted by
law, we may disclose personal information we collect about you
to other affiliated companies and to nonaffiliated third
parties.
a. Information
We Disclose to Our Affiliated
Companies.
In order to manage your account(s) effectively, including
servicing and processing your transactions, to let you know
about products and services offered by us and affiliated
companies, to manage our business, and as otherwise required or
permitted by law, we may disclose personal information about you
to other affiliated companies. Offers for products and services
from affiliated companies are developed under conditions
designed to safeguard your personal information.
b. Information
We Disclose to Third
Parties.
We do not disclose personal information that we collect about
you to nonaffiliated third parties except to enable them to
provide marketing services on our behalf, to perform joint
marketing agreements with other financial institutions, and as
otherwise required or permitted by law. For example, some
instances where we may disclose information about you to third
(continued
on next page)
Van
Kampen Dynamic Credit Opportunities Fund
An Important Notice Concerning Our
U.S. Privacy Policy continued
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 a
nonaffiliated third party, they are required to limit their use
of personal information about you to the particular purpose for
which it was shared and they are not allowed to share personal
information about you with others except to fulfill that limited
purpose or as may be required by law.
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
about you, and we require them to adhere to confidentiality
standards with respect to such information.
4. How Can
You Limit Our Sharing Of Certain Personal Information About You
With Our Affiliated Companies For Eligibility
Determination?
We respect your
privacy and offer you choices as to whether we share with our
affiliated companies personal information that was collected to
determine your eligibility for products and services such as
credit reports and other information that you have provided to
us or that we may obtain from third parties (eligibility
information). Please note that, even if you direct us not
to share certain eligibility information with our affiliated
companies, we may still share your personal information,
including eligibility information, with those companies under
circumstances that are permitted under applicable law, such as
to process transactions or to service your account. We may also
share certain other types of personal information with
affiliated companiessuch as your name, address, telephone
number,
e-mail
address and account number(s), and information about your
transactions and experiences with us.
5. How Can
You Limit the Use of Certain Personal Information About You by
our Affiliated Companies for
Marketing?
You may limit our
affiliated companies from using certain personal information
about you that we may share with them for marketing their
products or services to you. This information includes our
transactions and other experiences with you such as your
(continued
on next page)
Van
Kampen Dynamic Credit Opportunities Fund
An Important Notice Concerning Our
U.S. Privacy Policy continued
assets and account
history. Please note that, even if you choose to limit our
affiliated companies from using certain personal information
about you that we may share with them for marketing their
products and services to you, we may still share such personal
information about you with them, including our transactions and
experiences with you, for other purposes as permitted under
applicable law.
6. How Can
You Send Us an Opt-Out
Instruction?
If you wish to limit
our sharing of certain personal information about you with our
affiliated companies for eligibility purposes and
for our affiliated companies use in marketing products and
services to you as described in this notice, you may do so by:
|
|
|
|
|
|
Calling us at
(800) 341-2929
Monday-Friday between 9 a.m. and 6 p.m. (EST)
|
|
|
|
|
Writing to us at the
following address:
|
|
Van Kampen
Closed-End Privacy Department
Harborside Financial Center, Plaza Two, 3rd Floor
Jersey City, NJ 07311
If you choose to
write to us, your written request should include: your name,
address, telephone number and account number(s) to which the
opt-out applies and should not be sent with any other
correspondence. In order to process your request, we require
that the request be provided by you directly and not through a
third party. Once you have informed us about your privacy
preferences, your opt-out preference will remain in effect with
respect to this Policy (as it may be amended) until you notify
us otherwise. If you are a joint account owner, we will accept
instructions from any one of you and apply those instructions to
the entire account. Please allow approximately 30 days from
our receipt of your opt-out for your instructions to become
effective.
Please understand
that if you opt-out, you and any joint account holders may not
receive certain Van Kampen or our affiliated
companies products and services that could help you manage
your financial resources and achieve your investment objectives.
If you have more
than one account with us or our affiliates, you may receive
multiple privacy policies from us, and would need to follow the
directions stated in each particular policy for each account you
have with us.
(continued
on next page)
Van
Kampen Dynamic Credit Opportunities Fund
An Important Notice Concerning Our
U.S. Privacy Policy continued
SPECIAL NOTICE TO
RESIDENTS OF
VERMONT
This section
supplements our Policy with respect to our individual clients
who have a Vermont address and supersedes anything to the
contrary in the above Policy with respect to those clients
only.
The State of Vermont
requires financial institutions to obtain your consent prior to
sharing personal information that they collect about you with
affiliated companies and nonaffiliated third parties other than
in certain limited circumstances. Except as permitted by law, we
will not share personal information we collect about you with
nonaffiliated third parties or other affiliated companies unless
you provide us with your written consent to share such
information (opt-in).
If you wish to
receive offers for investment products and services offered by
or through other affiliated companies, please notify us in
writing at the following address:
|
|
|
|
|
|
Van Kampen
Closed-End Privacy Department
Harborside Financial Center, Plaza Two, 3rd Floor
Jersey City, NJ 07311
|
|
Your authorization
should include: your name, address, telephone number and account
number(s) to which the opt-in applies and should not be sent
with any other correspondence. In order to process your
authorization, we require that the authorization be provided by
you directly and not through a third-party.
522
Fifth Avenue
New
York, New York 10036
www.vankampen.com
Copyright
©2009
Van Kampen Funds Inc.
All
rights reserved. Member FINRA/SIPC
VTAANN
09/09
IU09-04049P-Y07/09
Item 2. Code of Ethics.
(a) The Fund has adopted a code of ethics (the Code of Ethics) that applies to its principal
executive officer, principal financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these individuals are employed by the
Fund or a third party. |
(b) |
|
No information need be disclosed pursuant to this paragraph. |
|
(c) |
|
Due to personnel changes at the Adviser, the list of covered officers set forth in Exhibit B
was amended in November 2008 and the general counsels designee set forth in Exhibit C was
amended in April 2009. Both editions of Exhibit B and both editions of Exhibit C are
attached. |
|
(d) |
|
Not applicable. |
|
(e) |
|
Not applicable. |
|
(f) |
|
|
|
(1) |
|
The Funds Code of Ethics is attached hereto as Exhibit 12(1). |
|
|
(2) |
|
Not applicable. |
|
|
(3) |
|
Not applicable. |
Item 3. Audit Committee Financial Expert.
The Trusts Board of Trustees has determined that it has three audit committee financial experts
serving on its audit committee, each of whom are independent Trustees: Rod Dammeyer, Jerry D.
Choate and R. Craig Kennedy. Under applicable securities laws, a person who is determined to be an
audit committee financial expert will not be deemed an expert for any purpose, including without
limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being
designated or identified as an audit committee financial expert. The designation or identification
of a person as an audit committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed
on such person as a member of the audit committee and Board of Trustees in the absence of such
designation or identification.
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2009
|
|
|
|
|
|
|
|
|
|
|
Registrant |
|
Covered Entities(1) |
Audit Fees |
|
$ |
79,500 |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
Non-Audit Fees |
|
|
|
|
|
|
|
|
Audit-Related Fees |
|
$ |
0 |
|
|
$ |
498,000 |
(2) |
Tax Fees |
|
$ |
3,720 |
(3) |
|
$ |
0 |
|
All Other Fees |
|
$ |
0 |
|
|
$ |
5,000 |
|
Total Non-Audit Fees |
|
$ |
3,720 |
|
|
$ |
503,000 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
83,220 |
|
|
$ |
503,000 |
|
2008
|
|
|
|
|
|
|
|
|
|
|
Registrant |
|
Covered Entities |
Audit Fees |
|
$ |
81,255 |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
Non-Audit Fees |
|
|
|
|
|
|
|
|
Audit-Related Fees |
|
$ |
0 |
|
|
$ |
215,000 |
(2) |
Tax Fees |
|
$ |
3,000 |
(3) |
|
$ |
0 |
|
All Other Fees |
|
$ |
0 |
|
|
$ |
0 |
|
Total Non-Audit Fees |
|
$ |
3,000 |
|
|
$ |
215,000 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
84,255 |
|
|
$ |
215,000 |
|
|
|
|
N/A- |
|
Not applicable, as not required by Item 4. |
|
(1) |
|
Covered Entities include the Adviser (excluding sub-advisors) and
any entity controlling, controlled by or under common control with the Adviser
that provides ongoing services to the Registrant. |
|
(2) |
|
Audit-Related Fees represent assurance and related services provided
that are reasonably related to the performance of the audit of the financial
statements of the Covered Entities and funds advised by the Adviser or its
affiliates, specifically attestation services provided in connection with a SAS
70 Report. |
|
(3) |
|
Tax Fees represent tax advice and compliance services provided in
connection with the review of the Registrants tax. |
(e)(1) The audit committees pre-approval policies and procedures are as follows:
JOINT AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
VAN KAMPEN FUNDS
AS ADOPTED JULY 23, 2003 AND AMENDED MAY 26, 20041
1. STATEMENT OF PRINCIPLES
The Audit Committee of the Board is required to review and, in its sole discretion,
pre-approve all Covered Services to be provided by the Independent Auditors to the Fund and Covered
Entities in order to assure that services performed by the Independent Auditors do not impair the
auditors independence from the Fund.2
The SEC has issued rules specifying the types of services that an independent auditor may not
provide to its audit client, as well as the audit committees administration of the engagement of
the independent auditor. The SECs rules establish two different approaches to pre-approving
services, which the SEC considers to be equally valid. Proposed services either: may be
pre-approved without consideration of specific case-by-case services by the Audit Committee
(general pre-approval); or require the specific pre-approval of the Audit Committee
(specific pre-approval). The Audit Committee believes that the combination of these two
approaches in this Policy will result in an effective and efficient procedure to pre-approve
services performed by the Independent Auditors. As set forth in this Policy, unless a type of
service has received general pre-approval, it will require specific pre-approval by the Audit
Committee (or by any member of the Audit Committee to which pre-approval authority has been
delegated) if it is to be provided by the Independent Auditors. Any proposed services exceeding
pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit
Committee.
For both types of pre-approval, the Audit Committee will consider whether such services are
consistent with the SECs rules on auditor independence. The Audit Committee will also consider
whether the Independent Auditors are best positioned to provide the most effective and efficient
services, for reasons such as its familiarity with the Funds business, people, culture, accounting
systems, risk profile and other factors, and whether the service might enhance the Funds ability
to manage or control risk or improve audit quality. All such factors will be considered as a whole,
and no one factor should necessarily be determinative.
The Audit Committee is also mindful of the relationship between fees for audit and non-audit
services in deciding whether to pre-approve any such services and may determine for each fiscal
year, the appropriate ratio between the total amount of fees for Audit, Audit-related and Tax
services for the Fund (including any Audit-related or Tax service fees for Covered Entities that
were subject to pre-approval), and the total amount of fees for certain permissible non-audit
services classified as All Other services for the Fund (including any such services for Covered
Entities subject to pre-approval).
The appendices to this Policy describe the Audit, Audit-related, Tax and All Other services
that have the general pre-approval of the Audit Committee. The term of any general pre-approval is
12 months from the date of pre-approval, unless the Audit Committee considers and provides a
different period and states otherwise. The Audit Committee will annually review and pre-approve the
services that may be provided by the Independent Auditors without obtaining specific pre-approval
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1 |
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This Joint Audit Committee Audit and Non-Audit Services
Pre-Approval Policy and Procedures (the Policy), amended as of the
date above, supercedes and replaces all prior versions that may have been
amended from time to time. |
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2 |
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Terms used in this Policy and not otherwise defined
herein shall have the meanings as defined in the Joint Audit Committee
Charter. |
from the Audit Committee. The Audit Committee will add to or subtract from the list of general
pre-approved services from time to time, based on subsequent determinations.
The purpose of this Policy is to set forth the policy and procedures by which the Audit
Committee intends to fulfill its responsibilities. It does not delegate the Audit Committees
responsibilities to pre-approve services performed by the Independent Auditors to management.
The Funds Independent Auditors have reviewed this Policy and believes that implementation of
the Policy will not adversely affect the Independent Auditors independence.
2. Delegation
As provided in the Act and the SECs rules, the Audit Committee may delegate either type of
pre-approval authority to one or more of its members. The member to whom such authority is
delegated must report, for informational purposes only, any pre-approval decisions to the Audit
Committee at its next scheduled meeting.
3. Audit Services
The annual Audit services engagement terms and fees are subject to the specific pre-approval
of the Audit Committee. Audit services include the annual financial statement audit and other
procedures required to be performed by the Independent Auditors to be able to form an opinion on
the Funds financial statements. These other procedures include information systems and procedural
reviews and testing performed in order to understand and place reliance on the systems of internal
control, and consultations relating to the audit. The Audit Committee will monitor the Audit
services engagement as necessary, but no less than on a quarterly basis, and will also approve, if
necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund
structure or other items.
In addition to the annual Audit services engagement approved by the Audit Committee, the Audit
Committee may grant general pre-approval to other Audit services, which are those services that
only the Independent Auditors reasonably can provide. Other Audit services may include statutory
audits and services associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other documents issued in
connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1. All other Audit
services not listed in Appendix B.1 must be specifically pre-approved by the Audit Committee (or by
any member of the Audit Committee to which pre-approval has been delegated).
4. Audit-related Services
Audit-related services are assurance and related services that are reasonably related to the
performance of the audit or review of the Funds financial statements or, to the extent they are
Covered Services, the Covered Entities financial statements, or that are traditionally performed
by the Independent Auditors. Because the Audit Committee believes that the provision of
Audit-related services does not impair the independence of the auditor and is consistent with the
SECs rules on auditor independence, the Audit Committee may grant general pre-approval to
Audit-related services. Audit-related services include, among others, accounting consultations
related to accounting, financial reporting or disclosure matters not classified as Audit
services; assistance with understanding and implementing new accounting and financial reporting
guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to
accounting and/or billing records required to respond to or comply with financial, accounting or
regulatory reporting matters; and assistance with internal control reporting requirements under
Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix B.2. All other
Audit-related services not listed in Appendix B.2 must be specifically pre-approved by the Audit
Committee (or by any member of the Audit Committee to which pre-approval has been delegated).
5. Tax Services
The Audit Committee believes that the Independent Auditors can provide Tax services to the
Fund and, to the extent they are Covered Services, the Covered Entities, such as tax compliance,
tax planning and tax advice without impairing the auditors independence, and the SEC has stated
that the Independent Auditors may provide such services. Hence, the Audit Committee believes it may
grant general pre-approval to those Tax services that have historically been provided by the
Independent Auditors, that the Audit Committee has reviewed and believes would not impair the
independence of the Independent Auditors, and that are consistent with the SECs rules on auditor
independence. The Audit Committee will not permit the retention of the Independent Auditors in
connection with a transaction initially recommended by the Independent Auditors, the sole business
purpose of which may be tax avoidance and the tax treatment of which may not be supported in the
Internal Revenue Code and related regulations. The Audit Committee will consult with Director of
Tax or outside counsel to determine that the tax planning and reporting positions are consistent
with this policy.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved the Tax Services in
Appendix B.3. All Tax services involving large and complex transactions not listed in Appendix B.3
must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee
to which pre-approval has been delegated), including tax services proposed to be provided by the
Independent Auditors to any executive officer or trustee/director/managing general partner of the
Fund, in his or her individual capacity, where such services are paid for by the Fund (generally
applicable only to internally managed investment companies).
6. All Other Services
The Audit Committee believes, based on the SECs rules prohibiting the Independent Auditors
from providing specific non-audit services, that other types of non-audit services are permitted.
Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible
non-audit services classified as All Other services that it believes are routine and recurring
services, would not impair the independence of the auditor and are consistent with the SECs rules
on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix B.4. Permissible All
Other services not listed in Appendix B.4 must be specifically pre-approved by the Audit Committee
(or by any member of the Audit Committee to which pre-approval has been delegated).
A list of the SECs prohibited non-audit services is attached to this policy as Appendix B.5.
The SECs rules and relevant guidance should be consulted to determine the precise definitions of
these services and the applicability of exceptions to certain of the prohibitions.
7. Pre-Approval Fee Levels or Budgeted Amounts
Pre-approval fee levels or budgeted amounts for all services to be provided by the Independent
Auditors will be established annually by the Audit Committee. Any proposed services exceeding
these levels or amounts will require specific pre-approval by the Audit Committee. The Audit
Committee is mindful of the overall relationship of fees for audit and non-audit services in
determining whether to pre-approve any such services. For each fiscal year, the Audit Committee may
determine the appropriate ratio between the total amount of fees for Audit, Audit-related, and Tax
services for the Fund (including any Audit-related or Tax services fees for Covered Entities
subject to pre-approval), and the total amount of fees for certain permissible non-audit services
classified as All Other services for the Fund (including any such services for Covered Entities
subject to pre-approval).
8. Procedures
All requests or applications for services to be provided by the Independent Auditors that do
not require specific approval by the Audit Committee will be submitted to the Funds Chief
Financial Officer and must include a detailed description of the services to be rendered. The
Funds Chief Financial Officer will determine whether such services are included within the list of
services that have received the general pre-approval of the Audit Committee. The Audit Committee
will be informed on a timely basis of any such services rendered by the Independent Auditors.
Requests or applications to provide services that require specific approval by the Audit Committee
will be submitted to the Audit Committee by both the Independent Auditors and the Funds Chief
Financial Officer, and must include a joint statement as to whether, in their view, the request or
application is consistent with the SECs rules on auditor independence.
The Audit Committee has designated the Funds Chief Financial Officer to monitor the
performance of all services provided by the Independent Auditors and to determine whether such
services are in compliance with this Policy. The Funds Chief Financial Officer will report to the
Audit Committee on a periodic basis on the results of its monitoring. A sample report is included
as Appendix B.7. Both the Funds Chief Financial Officer and management will immediately report to
the chairman of the Audit Committee any breach of this Policy that comes to the attention of the
Funds Chief Financial Officer or any member of management.
9. Additional Requirements
The Audit Committee has determined to take additional measures on an annual basis to meet its
responsibility to oversee the work of the Independent Auditors and to assure the auditors
independence from the Fund, such as reviewing a formal written statement from the Independent
Auditors delineating all relationships between the Independent Auditors and the Fund, consistent
with Independence Standards Board No. 1, and discussing with the Independent Auditors its methods
and procedures for ensuring independence.
10. Covered Entities
Covered Entities include the Funds investment adviser(s) and any entity controlling,
controlled by or under common control with the Funds investment adviser(s) that provides ongoing
services to the Fund(s). Beginning with non-audit service contracts entered into on or after May 6,
2003, the Funds audit committee must pre-approve non-audit services provided not only to the Fund
but also to the Covered Entities if the engagements relate directly to the operations and financial
reporting of the Fund. This list of Covered Entities would include:
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Van Kampen Investments Inc. |
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Van Kampen Asset Management |
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Van Kampen Advisors Inc. |
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Van Kampen Funds Inc. |
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Van Kampen Investor Services Inc. |
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Morgan Stanley Investment Management Inc. |
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Morgan Stanley Trust Company |
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Morgan Stanley Investment Management Ltd. |
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Morgan Stanley Investment Management Company |
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Morgan Stanley Asset & Investment Trust Management Company Ltd. |
(e)(2) Beginning with non-audit service contracts entered into on or after May 6, 2003, the audit
committee also is required to pre-approve services to Covered Entities to the extent that the
services
are determined to have a direct impact on the operations or financial reporting of the Registrant.
100% of such services were pre-approved by the audit committee pursuant to the Audit Committees
pre-approval policies and procedures (included herein).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees has considered whether the provision of
services other than audit services performed by the auditors to the Registrant and Covered Entities
is compatible with maintaining the auditors independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
(a) The Fund has a separately-designated standing audit committee established in accordance with
Section 3(a)(58)(A) of the Exchange Act whose members are: R. Craig Kennedy, Jerry D. Choate, Rod
Dammeyer.
(b) Not applicable.
Item 6. Schedule of Investments.
(a) Please refer to Item #1.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment
Companies.
The Funds and its investment advisors Proxy Voting Policies and Procedures are as follows:
MORGAN STANLEY INVESTMENT MANAGEMENT
PROXY VOTING POLICY AND PROCEDURES
I. POLICY STATEMENT
Introduction Morgan Stanley Investment Managements (MSIM) policy and procedures for
voting proxies (Policy) with respect to securities held in the accounts of clients applies to
those MSIM entities that provide discretionary investment management services and for which an MSIM
entity has authority to vote proxies. This Policy is reviewed and updated as necessary to address
new and evolving proxy voting issues and standards.
The MSIM entities covered by this Policy currently include the following: Morgan Stanley Investment
Advisors Inc., Morgan Stanley AIP GP LP, Morgan Stanley Investment Management Inc., Morgan Stanley
Investment Management Limited, Morgan Stanley Investment Management Company, Morgan Stanley Asset &
Investment Trust Management Co., Limited, Morgan Stanley Investment Management Private Limited, Van
Kampen Asset Management, and Van Kampen Advisors Inc. (each an MSIM Affiliate and collectively
referred to as the MSIM Affiliates or as we below).
Each MSIM Affiliate will use its best efforts to vote proxies as part of its authority to manage,
acquire and dispose of account assets. With respect to the MSIM registered management investment
companies (Van Kampen, Institutional and Advisor Fundscollectively referred to herein as the
MSIM Funds), each MSIM Affiliate will vote proxies under this Policy pursuant to authority
granted under its applicable investment advisory agreement or, in the absence of such authority, as
authorized by the Board of Directors/Trustees of the MSIM Funds. An MSIM Affiliate will not vote
proxies if the named fiduciary for an ERISA account has reserved the authority for itself, or in
the case of an account not governed by ERISA, the investment management or investment advisory
agreement does not authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will vote proxies
in a prudent and diligent manner and in the best interests of clients, including beneficiaries of
and participants in a clients benefit plan(s) for which the MSIM Affiliates manage assets,
consistent with the objective of maximizing long-term investment returns (Client Proxy Standard).
In certain situations, a client or its fiduciary may provide an MSIM Affiliate with a proxy voting
policy. In these situations, the MSIM Affiliate will comply with the clients policy.
Proxy Research Services RiskMetrics Group ISS Governance Services (ISS) and Glass Lewis
(together with other proxy research providers as we may retain from time to time, the Research
Providers) are independent advisers that specialize in providing a variety of fiduciary-level
proxy-related services to institutional investment managers, plan sponsors, custodians,
consultants, and other institutional investors. The services provided include in-depth research,
global issuer analysis, and voting recommendations. While we may review and utilize the
recommendations of the Research Providers in making proxy voting decisions, we are in no way
obligated to follow such recommendations. In addition to research, ISS provides vote execution,
reporting, and recordkeeping.
Voting Proxies for Certain Non-U.S. Companies Voting proxies of companies located in some
jurisdictions, particularly emerging markets, may involve several problems that can restrict or
prevent the ability to vote such proxies or entail significant costs. These problems include, but
are not limited to: (i) proxy statements and ballots being written in a language other than
English; (ii) untimely and/or inadequate notice of shareholder meetings; (iii) restrictions on the
ability of holders outside the issuers jurisdiction of organization to exercise votes; (iv)
requirements to vote proxies in person; (v) the imposition of restrictions on the sale of the
securities for a period of time in proximity to the shareholder meeting; and (vi) requirements to
provide local agents with power of attorney to facilitate our voting instructions. As a result, we
vote clients non-U.S. proxies on a best efforts basis only, after weighing the costs and benefits
of voting such proxies, consistent with the Client Proxy Standard. ISS has been retained to
provide assistance in connection with voting non-U.S. proxies.
II. GENERAL PROXY VOTING GUIDELINES
To promote consistency in voting proxies on behalf of its clients, we follow this Policy (subject
to any exception set forth herein), including the guidelines set forth below. These guidelines
address a broad range of issues, and provide general voting parameters on proposals that arise most
frequently. However, details of specific proposals vary, and those details affect particular
voting decisions, as do factors specific to a given company. Pursuant to the procedures set forth
herein, we may vote in a manner that is not in accordance with the following general guidelines,
provided the vote is approved by the Proxy Review Committee (see Section III for description) and
is consistent with the Client Proxy Standard. Morgan Stanley AIP GP LP will follow the procedures
as described in Appendix A.
We endeavor to integrate governance and proxy voting policy with investment goals and to follow the
Client Proxy Standard for each client. At times, this may result in split votes, for example when
different clients have varying economic interests in the outcome of a particular voting matter
(such as a case in which varied ownership interests in two companies involved in a merger result in
different stakes in the outcome). We also may split votes at times based on differing views of
portfolio managers, but such a split vote must be approved by the Proxy Review Committee.
We may abstain on matters for which disclosure is inadequate.
A. Routine Matters. We generally support routine management proposals. The following are examples
of routine management proposals:
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Approval of financial statements and auditor reports. |
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General updating/corrective amendments to the charter, articles of association or
bylaws. |
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Most proposals related to the conduct of the annual meeting, with the following
exceptions. We generally oppose proposals that relate to the transaction of such other
business which may come before the meeting, and open-ended requests for adjournment.
However, where management specifically states the reason for requesting an adjournment and
the requested |
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adjournment would facilitate passage of a proposal that would otherwise be supported under
this Policy (i.e. an uncontested corporate transaction), the adjournment request will be
supported. |
We generally support shareholder proposals advocating confidential voting procedures and
independent tabulation of voting results.
B. Board of Directors
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1. |
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Election of directors: In the absence of a proxy contest, we generally support
the boards nominees for director except as follows: |
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a. |
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We consider withholding support from or voting against interested
directors if the companys board does not meet market standards for director
independence, or if otherwise we believe board independence is insufficient. We
refer to prevalent market standards as promulgated by a stock exchange or other
authority within a given market (e.g., New York Stock Exchange or Nasdaq rules for
most U.S. companies, and The Combined Code on Corporate Governance in the United
Kingdom). Thus, for an NYSE company with no controlling shareholder, we would
expect that at a minimum a majority of directors should be independent as defined
by NYSE. Where we view market standards as inadequate, we may withhold votes based
on stronger independence standards. Market standards notwithstanding, we generally
do not view long board tenure alone as a basis to classify a director as
non-independent, although lack of board turnover and fresh perspective can be a
negative factor in voting on directors. |
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i. |
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At a company with a shareholder or group that
controls the company by virtue of a majority economic interest in the
company, we have a reduced expectation for board independence, although
we believe the presence of independent directors can be helpful,
particularly in staffing the audit committee, and at times we may
withhold support from or vote against a nominee on the view the board or
its committees are not sufficiently independent. |
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ii. |
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We consider withholding support from or voting
against a nominee if he or she is affiliated with a major shareholder
that has representation on a board disproportionate to its economic
interest. |
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b. |
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Depending on market standards, we consider withholding support from or
voting against a nominee who is interested and who is standing for election as a
member of the companys compensation, nominating or audit committee. |
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c. |
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We consider withholding support from or voting against a nominee if we
believe a direct conflict exists between the interests of the nominee and the
public shareholders, including failure to meet fiduciary standards of care and/or
loyalty. We may oppose directors where we conclude that actions of directors are
unlawful, unethical or negligent. We consider opposing individual board members or
an entire slate if we believe the board is entrenched and/or dealing inadequately
with performance problems, and/or acting with insufficient independence between the
board and management. |
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d. |
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We consider withholding support from or voting against a nominee
standing for election if the board has not taken action to implement generally
accepted governance practices for which there is a bright line test. For
example, in the context of the U.S. market, failure to eliminate a dead hand or
slow hand poison pills would be seen as a basis for opposing one or more incumbent
nominees. |
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e. |
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In markets that encourage designated audit committee financial experts,
we consider voting against members of an audit committee if no members are
designated as such. |
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f. |
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We consider withholding support from or voting against a nominee who
has failed to attend at least 75% of board meetings within a given year without a
reasonable excuse. |
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g. |
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We consider withholding support from or voting against a nominee who
serves on the board of directors of more than six companies (excluding investment
companies). We also consider voting against a director who otherwise appears to
have too many commitments to serve adequately on the board of the company. |
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2. |
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Board independence: We generally support U.S. shareholder proposals requiring
that a certain percentage (up to 662/3%) of the companys board members be independent
directors, and promoting all-independent audit, compensation and nominating/governance
committees. |
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3. |
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Board diversity: We consider on a case-by-case basis shareholder proposals
urging diversity of board membership with respect to social, religious or ethnic group. |
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4. |
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Majority voting: We generally support proposals requesting or requiring
majority voting policies in election of directors, so long as there is a carve-out for
plurality voting in the case of contested elections. |
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5. |
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Proxy access: We consider on a case-by-case basis shareholder proposals to
provide procedures for inclusion of shareholder nominees in company proxy statements. |
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6. |
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Proposals to elect all directors annually: We generally support proposals to
elect all directors annually at public companies (to declassify the Board of Directors)
where such action is supported by the board, and otherwise consider the issue on a
case-by-case basis based in part on overall takeover defenses at a company. |
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7. |
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Cumulative voting: We generally support proposals to eliminate cumulative
voting in the U.S. market context. (Cumulative voting provides that shareholders may
concentrate their votes for one or a handful of candidates, a system that can enable a
minority bloc to place representation on a board). U.S. proposals to establish cumulative
voting in the election of directors generally will not be supported. |
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8. |
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Separation of Chairman and CEO positions: We vote on shareholder proposals to
separate the Chairman and CEO positions and/or to appoint a non-executive Chairman based in
part on prevailing practice in particular markets, since the context for such a practice
varies. In many non-U.S. markets, we view separation of the roles as a market standard
practice, and support division of the roles in that context. |
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9. |
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Director retirement age and term limits: Proposals recommending set director
retirement ages or director term limits are voted on a case-by-case basis. |
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10. |
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Proposals to limit directors liability and/or broaden indemnification of
directors. Generally, we will support such proposals provided that the officers and
directors are eligible for indemnification and liability protection if they have acted in
good faith on company business and were found innocent of any civil or criminal charges for
duties performed on behalf of the company. |
C. Corporate transactions and proxy fights. We examine proposals relating to mergers, acquisitions
and other special corporate transactions (i.e., takeovers, spin-offs, sales of assets,
reorganizations, restructurings and recapitalizations) on a case-by-case basis. However, proposals
for mergers or other significant transactions that are friendly and approved by the Research
Providers generally will be supported and in those instances will not need to be reviewed by the
Proxy Review
Committee, where there is no portfolio manager objection and where there is no material conflict of
interest. We also analyze proxy contests on a case-by-case basis.
D. Changes in capital structure.
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We generally support the following: |
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Management and shareholder proposals aimed at eliminating unequal voting rights,
assuming fair economic treatment of classes of shares we hold. |
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Management proposals to increase the authorization of existing classes of common
stock (or securities convertible into common stock) if: (i) a clear business
purpose is stated that we can support and the number of shares requested is
reasonable in relation to the purpose for which authorization is requested; and/or
(ii) the authorization does not exceed 100% of shares currently authorized and at
least 30% of the total new authorization will be outstanding. |
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Management proposals to create a new class of preferred stock or for issuances
of preferred stock up to 50% of issued capital, unless we have concerns about use
of the authority for anti-takeover purposes. |
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Management proposals to authorize share repurchase plans, except in some cases
in which we believe there are insufficient protections against use of an
authorization for anti-takeover purposes. |
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Management proposals to reduce the number of authorized shares of common or
preferred stock, or to eliminate classes of preferred stock. |
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Management proposals to effect stock splits. |
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Management proposals to effect reverse stock splits if management
proportionately reduces the authorized share amount set forth in the corporate
charter. Reverse stock splits that do not adjust proportionately to the authorized
share amount generally will be approved if the resulting increase in authorized
shares coincides with the proxy guidelines set forth above for common stock
increases. |
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Management proposals for higher dividend payouts. |
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2. |
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We generally oppose the following (notwithstanding management support): |
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Proposals to add classes of stock that would substantially dilute the voting
interests of existing shareholders. |
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Proposals to increase the authorized or issued number of shares of existing
classes of stock that are unreasonably dilutive, particularly if there are no
preemptive rights for existing shareholders. |
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Proposals that authorize share issuance at a discount to market rates, except
where authority for such issuance is de minimis, or if there is a special situation
that we believe justifies such authorization (as may be the case, for example, at a
company under severe stress and risk of bankruptcy). |
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Proposals relating to changes in capitalization by 100% or more. |
We consider on a case-by-case basis shareholder proposals to increase dividend payout ratios, in
light of market practice and perceived market weaknesses, as well as individual company payout
history and current circumstances. For example, currently we perceive low payouts to shareholders
as a
concern at some Japanese companies, but may deem a low payout ratio as appropriate for a growth
company making good use of its cash, notwithstanding the broader market concern.
E. Takeover Defenses and Shareholder Rights
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1. |
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Shareholder rights plans: We generally support proposals to require
shareholder approval or ratification of shareholder rights plans (poison pills). In voting
on rights plans or similar takeover defenses, we consider on a case-by-case basis whether
the company has demonstrated a need for the defense in the context of promoting long-term
share value; whether provisions of the defense are in line with generally accepted
governance principles; and the specific context if the proposal is made in the midst of a
takeover bid or contest for control. |
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2. |
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Supermajority voting requirements: We generally oppose requirements for
supermajority votes to amend the charter or bylaws, unless the provisions protect minority
shareholders where there is a large shareholder. In line with this view, in the absence of
a large shareholder we support reasonable shareholder proposals to limit such supermajority
voting requirements. |
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3. |
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Shareholder rights to call meetings: We consider proposals to enhance
shareholder rights to call meetings on a case-by-case basis. |
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4. |
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Reincorporation: We consider management and shareholder proposals to
reincorporate to a different jurisdiction on a case-by-case basis. We oppose such
proposals if we believe the main purpose is to take advantage of laws or judicial
precedents that reduce shareholder rights. |
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5. |
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Anti-greenmail provisions: Proposals relating to the adoption of anti-greenmail
provisions will be supported, provided that the proposal: (i) defines greenmail; (ii)
prohibits buyback offers to large block holders (holders of at least 1% of the outstanding shares and in certain cases, a greater amount, as determined by the Proxy Review Committee)
not made to all shareholders or not approved by disinterested shareholders; and (iii)
contains no anti-takeover measures or other provisions restricting the rights of
shareholders. |
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6. |
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Bundled proposals: We may consider opposing or abstaining on proposals if
disparate issues are bundled and presented for a single vote. |
F. Auditors. We generally support management proposals for selection or ratification of
independent auditors. However, we may consider opposing such proposals with reference to incumbent
audit firms if the company has suffered from serious accounting irregularities and we believe
rotation of the audit firm is appropriate, or if fees paid to the auditor for non-audit-related
services are excessive. Generally, to determine if non-audit fees are excessive, a 50% test will
be applied (i.e., non-audit-related fees should be less than 50% of the total fees paid to the
auditor). We generally vote against proposals to indemnify auditors.
G. Executive and Director Remuneration.
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We generally support the following proposals: |
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Proposals for employee equity compensation plans and other employee ownership
plans, provided that our research does not indicate that approval of the plan would
be against shareholder interest. Such approval may be against shareholder interest
if it authorizes excessive dilution and shareholder cost, particularly in the
context of high usage (run rate) of equity compensation in the recent past; or if
there are objectionable plan design and provisions. |
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Proposals relating to fees to outside directors, provided the amounts are not
excessive relative to other companies in the country or industry, and provided that
the structure is appropriate within the market context. While stock-based
compensation to outside directors is positive if moderate and appropriately
structured, we are wary of significant stock option awards or other
performance-based awards for outside directors, as well as provisions that could
result in significant forfeiture of value on a directors decision to resign from a
board (such forfeiture can undercut director independence). |
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Proposals for employee stock purchase plans that permit discounts up to 15%, but
only for grants that are part of a broad-based employee plan, including all
non-executive employees. |
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Proposals for the establishment of employee retirement and severance plans,
provided that our research does not indicate that approval of the plan would be
against shareholder interest. |
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Shareholder proposals requiring shareholder approval of all severance
agreements will not be supported, but proposals that require shareholder approval for
agreements in excess of three times the annual compensation (salary and bonus)
generally will be supported. We generally oppose shareholder proposals that would
establish arbitrary caps on pay. We consider on a case-by-case basis shareholder
proposals that seek to limit Supplemental Executive Retirement Plans (SERPs), but
support such proposals where we consider SERPs to be excessive. |
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Shareholder proposals advocating stronger and/or particular pay-for-performance
models will be evaluated on a case-by-case basis, with consideration of the merits of
the individual proposal within the context of the particular company and its labor
markets, and the companys current and past practices. While we generally support
emphasis on long-term components of senior executive pay and strong linkage of pay to
performance, we consider whether a proposal may be overly prescriptive, and the impact
of the proposal, if implemented as written, on recruitment and retention. |
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We consider shareholder proposals for U.K.-style advisory votes on pay on a
case-by-case basis. |
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We generally support proposals advocating reasonable senior executive and
director stock ownership guidelines and holding requirements for shares gained in
option exercises. |
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Management proposals effectively to re-price stock options are considered on a
case-by-case basis. Considerations include the companys reasons and justifications
for a re-pricing, the companys competitive position, whether senior executives and
outside directors are excluded, potential cost to shareholders, whether the re-pricing
or share exchange is on a value-for-value basis, and whether vesting requirements are
extended. |
H. Social, Political and Environmental Issues. We consider proposals relating to social, political
and environmental issues on a case-by-case basis to determine whether they will have a financial
impact on shareholder value. However, we generally vote against proposals requesting reports that
are duplicative, related to matters not material to the business, or that would impose unnecessary
or excessive costs. We may abstain from voting on proposals that do not have a readily
determinable financial impact on shareholder value. We generally oppose proposals requiring
adherence to workplace standards that are not required or customary in market(s) to which the
proposals relate.
I. Fund of Funds. Certain Funds advised by an MSIM Affiliate invest only in other MSIM Funds. If
an underlying fund has a shareholder meeting, in order to avoid any potential conflict of interest,
such proposals will be voted in the same proportion as the votes of the other shareholders of the
underlying fund, unless otherwise determined by the Proxy Review Committee.
III. ADMINISTRATION OF POLICY
The MSIM Proxy Review Committee (the Committee) has overall responsibility for creating and
implementing the Policy, working with an MSIM staff group (the Corporate Governance Team). The
Committee, which is appointed by MSIMs Chief Investment Officer of Global Equities (CIO),
consists of senior investment professionals who represent the different investment disciplines and
geographic locations of the firm. Because proxy voting is an investment responsibility and impacts
shareholder value, and because of their knowledge of companies and markets, portfolio managers and
other members of investment staff play a key role in proxy voting, although the Committee has final
authority over proxy votes.
The Committee Chairperson is the head of the Corporate Governance Team, and is responsible for
identifying issues that require Committee deliberation or ratification. The Corporate Governance
Team, working with advice of investment teams and the Committee, is responsible for voting on
routine items and on matters that can be addressed in line with these Policy guidelines. The
Corporate Governance Team has responsibility for voting case-by-case where guidelines and precedent
provide adequate guidance, and to refer other case-by-case decisions to the Proxy Review Committee.
The Committee will periodically review and have the authority to amend, as necessary, the Policy
and establish and direct voting positions consistent with the Client Proxy Standard.
A. Committee Procedures
The Committee will meet at least monthly to (among other matters) address any outstanding issues
relating to the Policy or its implementation. The Corporate Governance Team will timely communicate
to ISS MSIMs Policy (and any amendments and/or any additional guidelines or procedures the
Committee may adopt).
The Committee will meet on an ad hoc basis to (among other matters): (1) authorize split voting
(i.e., allowing certain shares of the same issuer that are the subject of the same proxy
solicitation and held by one or more MSIM portfolios to be voted differently than other shares)
and/or override voting (i.e., voting all MSIM portfolio shares in a manner contrary to the
Policy); (2) review and approve upcoming votes, as appropriate, for matters for which specific
direction has been provided in this Policy; and (3) determine how to vote matters for which
specific direction has not been provided in this Policy.
Members of the Committee may take into account Research Providers recommendations and research as
well as any other relevant information they may request or receive, including portfolio manager
and/or analyst research, as applicable. Generally, proxies related to securities held in accounts
that are managed pursuant to quantitative, index or index-like strategies (Index Strategies) will
be voted in the same manner as those held in actively managed accounts, unless economic interests
of the accounts differ. Because accounts managed using Index Strategies are passively managed
accounts, research from portfolio managers and/or analysts related to securities held in these
accounts may not be available. If the affected securities are held only in accounts that are
managed pursuant to Index Strategies, and the proxy relates to a matter that is not described in
this Policy, the Committee will consider all available information from the Research Providers, and
to the extent that the holdings are significant, from the portfolio managers and/or analysts.
B. Material Conflicts of Interest
In addition to the procedures discussed above, if the Committee determines that an issue raises a
material conflict of interest, the Committee will request a special committee to review, and
recommend a course of action with respect to, the conflict(s) in question (Special Committee).
The Special Committee shall be comprised of the Chairperson of the Proxy Review Committee, the
Chief Compliance Officer or his/her designee, a senior portfolio manager (if practicable, one who
is a member of the Proxy Review Committee) designated by the Proxy Review Committee, and MSIMs
relevant Chief Investment Officer or his/her designee, and any other persons deemed necessary by
the Chairperson. The Special Committee may request the assistance of MSIMs General Counsel or
his/her designee who will have sole discretion to cast a vote. In addition to the research
provided by Research Providers, the Special Committee may request analysis from MSIM Affiliate
investment professionals and outside sources to the extent it deems appropriate.
C. Identification of Material Conflicts of Interest
A potential material conflict of interest could exist in the following situations, among others:
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The issuer soliciting the vote is a client of MSIM or an affiliate of MSIM and the vote
is on a material matter affecting the issuer. |
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The proxy relates to Morgan Stanley common stock or any other security issued by Morgan
Stanley or its affiliates except if echo voting is used, as with MSIM Funds, as described
herein. |
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Morgan Stanley has a material pecuniary interest in the matter submitted for a vote
(e.g., acting as a financial advisor to a party to a merger or acquisition for which Morgan
Stanley will be paid a success fee if completed). |
If the Chairperson of the Committee determines that an issue raises a potential material conflict
of interest, depending on the facts and circumstances, the Chairperson will address the issue as
follows:
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If the matter relates to a topic that is discussed in this Policy, the proposal will be
voted as per the Policy. |
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If the matter is not discussed in this Policy or the Policy indicates that the issue is
to be decided case-by-case, the proposal will be voted in a manner consistent with the
Research Providers, provided that all the Research Providers have the same recommendation,
no portfolio manager objects to that vote, and the vote is consistent with MSIMs Client
Proxy Standard. |
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If the Research Providers recommendations differ, the Chairperson will refer the
matter to the Committee to vote on the proposal. If the Committee determines that an issue
raises a material conflict of interest, the Committee will request a Special Committee to
review and recommend a course of action, as described above. Notwithstanding the above,
the Chairperson of the Committee may request a Special Committee to review a matter at any
time as he/she deems necessary to resolve a conflict. |
D. Proxy Voting Reporting
The Committee and the Special Committee, or their designee(s), will document in writing all of
their decisions and actions, which documentation will be maintained by the Committee and the
Special Committee, or their designee(s), for a period of at least 6 years. To the extent these
decisions relate to a security held by an MSIM Fund, the Committee and Special Committee, or their
designee(s), will report their decisions to each applicable Board of Trustees/Directors of those
Funds at each Boards next regularly scheduled Board meeting. The report will contain information
concerning decisions made by the Committee and Special Committee during the most recently ended
calendar quarter immediately preceding the Board meeting.
The Corporate Governance Team will timely communicate to applicable portfolio managers and to ISS,
decisions of the Committee and Special Committee so that, among other things, ISS will vote proxies
consistent with their decisions.
MSIM will promptly provide a copy of this Policy to any client requesting it. MSIM will also, upon
client request, promptly provide a report indicating how each proxy was voted with respect to
securities held in that clients account.
MSIMs Legal Department is responsible for filing an annual Form N-PX on behalf of each MSIM Fund
for which such filing is required, indicating how all proxies were voted with respect to such
Funds holdings.
APPENDIX A
The following procedures apply to accounts managed by Morgan Stanley AIP GP LP (AIP).
Generally, AIP will follow the guidelines set forth in Section II of MSIMs Proxy Voting Policy and
Procedures. To the extent that such guidelines do not provide specific direction, or AIP
determines that consistent with the Client Proxy Standard, the guidelines should not be followed,
the Proxy Review Committee has delegated the voting authority to vote securities held by accounts
managed by AIP to the Liquid Markets investment team and the Private Markets investment team of
AIP. A summary of decisions made by the investment teams will be made available to the Proxy
Review Committee for its information at the next scheduled meeting of the Proxy Review Committee.
In certain cases, AIP may determine to abstain from determining (or recommending) how a proxy
should be voted (and therefore abstain from voting such proxy or recommending how such proxy should
be voted), such as where the expected cost of giving due consideration to the proxy does not
justify the potential benefits to the affected account(s) that might result from adopting or
rejecting (as the case may be) the measure in question.
Waiver of Voting Rights
For regulatory reasons, AIP may either 1) invest in a class of securities of an underlying fund
(the Fund) that does not provide for voting rights; or 2) waive 100% of its voting rights with
respect to the following:
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Any rights with respect to the removal or replacement of a director, general partner,
managing member or other person acting in a similar capacity for or on behalf of the Fund
(each individually a Designated Person, and collectively, the Designated Persons),
which may include, but are not limited to, voting on the election or removal of a
Designated Person in the event of such Designated Persons death, disability, insolvency,
bankruptcy, incapacity, or other event requiring a vote of interest holders of the Fund to
remove or replace a Designated Person; and |
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Any rights in connection with a determination to renew, dissolve, liquidate, or
otherwise terminate or continue the Fund, which may include, but are not limited to, voting
on the renewal, dissolution, liquidation, termination or continuance of the Fund upon the
occurrence of an event described in the Funds organizational documents; provided,
however, that, if the Funds organizational documents require the consent of the
Funds general partner or manager, as the case may be, for any such termination or
continuation of the Fund to be effective, then AIP may exercise its voting rights with
respect to such matter. |
APPENDIX B
The following procedures apply to the portion of the Van Kampen Dynamic Credit Opportunities Fund
(VK Fund) sub advised by Avenue Europe International Management, L.P. (Avenue). (The portion
of the VK Fund managed solely by Van Kampen Asset Management will continue to be subject to MSIMs
Policy.)
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Generally: With respect to Avenues portion of the VK Fund, the Board of
Trustees of the VK Fund will retain sole authority and responsibility for proxy voting.
The Advisers involvement in the voting process of Avenues portion of the VK Fund is a
purely administrative function, and serves to execute and deliver the proxy voting
decisions made by the VK Fund Board in connection with the Avenue portion of the VK Fund,
which may, from time to time, include related administrative tasks such as receiving
proxies, following up on missing proxies, and collecting data related to proxies. As such,
the Adviser shall not be deemed to have voting power or shared voting power with Avenue
with respect to Avenues portion of the Fund. |
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Voting Guidelines: All proxies, with respect to Avenues portion of the VK
Fund, will be considered by the VK Fund Board or such subcommittee as the VK Fund Board may
designate from time to time for determination and voting approval. The VK Board or its
subcommittee will timely communicate to MSIMs Corporate Governance Group its proxy voting
decisions, so that among other things the votes will be effected consistent with the VK
Boards authority. |
Administration: The VK Board or its subcommittee will meet on an adhoc
basis as may be required from time to time to review proxies that require its review
and determination. The VK Board or its subcommittee will document in writing all of
its decisions and actions which will be maintained by the VK Fund, or its
designee(s), for a period of at least 6 years. If a subcommittee is designated, a
summary of decisions made by such subcommittee will be made available to the full VK
Board for its information at its next scheduled respective meetings.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Van Kampen Dynamic Credit Opportunities Fund is managed by members of the Advisers Senior Loan
Group, which currently includes Gerard Fogarty and Jeffrey Scott, each a Vice President of the
Adviser, and Philip Yarrow, an Executive Director of the Adviser. All team members are responsible
for the day-to-day management of the Advisers portion of Funds portfolio.
Mr. Fogarty joined the Adviser in 2007 and began managing the Fund in July 2008. Mr. Fogarty has
approximately 11 years of investment experience. From 2003 to 2007 and prior to joining the
Adviser, Mr. Fogarty was employed by JPMorgan and held a number of positions including Director in
the financial institutions group, and, most recently as a Credit Executive in the commercial real
estate group. Prior to joining JPMorgan, Mr. Fogarty was employed as an Associate in the financial
institutions group at Bank of America. Mr. Fogarty received a B.S. from Indiana University and an
M.B.A. from the University of Chicago Graduate School of Business.
Mr. Scott joined the Adviser in 2005 and began managing the Fund in July 2008. Mr. Scott has
approximately 18 years of investment industry experience. Prior to joining the Adviser, Mr. Scott
was employed by State Farm Insurance Companies where he served as an Assistant Vice President in
the Mutual Fund Group responsible for product development and strategy as well as a Regional Vice
President for Sales for the Financial Services Division. Mr. Scott received a B.S. from Elmhurst
College and an M.B.A. from the University of Chicago Graduate School of Business. Mr. Scott also
holds the Chartered Financial Analyst designation.
Mr. Yarrow joined the Adviser in 2005 and began managing the Fund in June 2007. Mr. Yarrow has
over 13 years of investment experience. Prior to joining the Adviser, Mr. Yarrow was a credit
analyst and a portfolio manager at Bank One/JPMorgan. Mr. Yarrow received a bachelors degree in
mathematics and economics from the University of Nottingham and an M.B.A. in finance from
Northwestern University. Mr. Yarrow also holds the Chartered Financial Analyst designation.
The Fund is also managed by Avenue Europe International Management, L.P., the Funds investment
subadviser (the Subadviser). Richard Furst, Senior Portfolio Manager of the Subadviser, and Raul
Ramirez, a Portfolio Manager of the Subadviser, are responsible for the day-to-day management of
the Subadvisers portion of Funds portfolio.
Mr. Furst has been associated with the Subadviser in an investment management capacity since 2004.
Prior to joining the Subadviser, he was a portfolio manager with Moore Capital Group, managing
approximately $1 billion of U.S. and European distressed and high yield securities. Prior to that,
he was a Managing Director and Head of U.S. Special Situations Trading group for Bank of America.
Previously, Mr. Furst was a Vice President in the High Yield and Distressed Trading and Research
department of Salomon Brothers, Inc., after serving as an Analyst in their Mergers, Acquisitions,
and Restructuring group.
Mr. Ramirez has been associated with the Subadviser in an investment management capacity since
2006. Prior to joining the Subadviser, Mr. Ramirez was a portfolio manager based in London at
Goldentree Asset Management UK, focused on European investments. Previously, Mr. Ramirez was
Executive Director of the Special Situations Group at Morgan Stanley, focused on the European
energy sector. While at Morgan Stanley, Mr. Ramirez was also the Head of European Distressed
Research.
The composition of the team may change from time to time.
The Adviser
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
As of July 31, 2009, Phillip Yarrow managed four registered investment companies with a total of
approximately $2.9 billion in assets; no pooled investment vehicles other than registered
investment companies; and no other accounts.
As of July 31, 2008, Gerard Fogarty managed three registered investment companies with a total of
approximately $2.9 billion in assets; no pooled investment vehicles other than registered
investment companies; and no other accounts.
As of July 31, 2008, Jeffrey Scott managed three registered investment companies with a total of
approximately $2.9 billion in assets; no pooled investment vehicles other than registered
investment companies; and no other accounts.
Because the portfolio managers manages assets for other investment companies, pooled investment
vehicles, and/or other accounts (including institutional clients, pension plans and certain high
net worth individuals), there may be an incentive to favor one client over another resulting in
conflicts of interest. For instance, the Adviser may receive fees from certain accounts that are
higher than the fee it receives from the Fund, or it may receive a performance-based fee on certain
accounts. In those instances, the portfolio manager may have an incentive to favor the higher
and/or performance-based fee accounts over the Fund. In addition, a conflict of interest could
exist to the extent the Adviser has proprietary investments in certain accounts, where portfolio
managers have personal investments in certain accounts or when certain accounts are investment
options in the Advisers employee benefits and/or deferred compensation plans. The portfolio
manager may have an incentive to favor these accounts over others. If the Adviser manages accounts
that engage in short sales of securities of the type in which the Fund invests, the Adviser could
be seen as harming the performance of the Fund for the benefit of the accounts engaged in short
sales if the short sales cause the market value of the securities to fall. The Adviser has adopted
trade allocation and other policies and procedures that it believes are reasonably designed to
address these and other conflicts of interest.
PORTFOLIO MANAGERS COMPENSATION STRUCTURE
Portfolio managers receive a combination of base compensation and discretionary compensation,
comprised of a cash bonus and several deferred compensation programs described below. The
methodology used to determine portfolio manager compensation is applied across all accounts managed
by the portfolio manager.
BASE SALARY COMPENSATION. Generally, portfolio managers receive base salary compensation based on
the level of their position with the Adviser.
DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio managers may receive
discretionary compensation.
Discretionary compensation can include:
- Cash Bonus;
- Morgan Stanleys Long-Term Incentive Compensation Program awards a mandatory program that
defers a portion of discretionary year-end compensation into restricted stock units or other awards
based on Morgan Stanley common stock that are subject to vesting and other conditions;
- Investment Management Alignment Plan (IMAP) awards a mandatory program that defers a portion
of discretionary year-end compensation and notionally invests it in designated funds advised by the
Adviser or its affiliates. The award is subject to vesting and other conditions. Portfolio managers
must notionally invest a minimum of 25% to a maximum of 100% of the IMAP deferral into a
combination of the designated open-end funds they manage that are included in the IMAP Fund menu;
- Voluntary Deferred Compensation Plans voluntary programs that permit certain employees to
elect to defer a portion of their discretionary year-end compensation and directly or notionally
invest the deferred amount: (1) across a range of designated investment funds, including funds
advised by the Adviser or its affiliates; and/or (2) in Morgan Stanley stock units.
Several factors determine discretionary compensation, which can vary by portfolio management team
and circumstances. In order of relative importance, these factors include:
- Investment performance. A portfolio managers compensation is linked to the pre-tax investment
performance of the funds/accounts managed by the portfolio manager. Investment performance is
calculated for one-, three- and five-year periods measured against an appropriate securities market
index (or indices) for the funds/accounts managed by the portfolio manager. Other funds/accounts
managed by the same portfolio manager may be measured against this same index and same rankings or
ratings, if appropriate, or against other indices and other rankings or ratings that are deemed
more appropriate given the size and/or style of such funds/accounts as set forth in such
funds/accounts disclosure materials and guidelines. The assets managed by the portfolio manager
in funds, pooled investment vehicles and other accounts are described in Other Accounts Managed by
the Portfolio Manager above. Generally, the greatest weight is placed on the three- and five-year
periods.
- Revenues generated by the investment companies, pooled investment vehicles and other accounts
managed by the portfolio manager.
- Contribution to the business objectives of the Adviser.
- The dollar amount of assets managed by the portfolio manager.
- Market compensation survey research by independent third parties.
- Other qualitative factors, such as contributions to client objectives.
- Performance of Morgan Stanley and Morgan Stanley Investment Management Inc., and the overall
performance of the investment team(s) of which the portfolio manager is a member.
* * *
The Sub-Adviser
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
As of July 31, 2009, Richard Furst managed one registered investment company with a total of
approximately $814.4 million in assets; seven pooled investment vehicles other than registered
investment companies with a total of approximately $2.7 billion in assets; and no other accounts.
As of July 31, 2009, Raul Ramirez managed one registered investment company with a total of
approximately $814.4 million in assets; seven pooled investment vehicles other than registered
investment companies with a total of approximately $2.7 billion in assets; and no other accounts.
POTENTIAL CONFLICTS OF INTEREST OF THE SUBADVISER
The Subadviser manages that portion of the Funds assets that are allocated to the Subadviser by
the Adviser. The Subadviser also manages assets for other accounts. The Subadviser generally will
not be making investments in the same securities for the Fund that it will be making for its other
accounts. The expected risk and return profile for the Subadvisers portion of the Funds assets is
lower than for the Subadvisers other accounts.
To avoid conflicts of interest between assets managed for the Fund and other accounts, the
Subadviser has adopted allocation policies and procedures which allocate investments eligible for
the Fund and the other accounts managed by the Subadviser. The Subadviser will generally invest its
portion of the Funds assets only in obligations with total yields at the time of purchase that are
below an applicable benchmark plus a credit spread as set from time to time by the Subadviser (the
Avenue-Credit Thresholds). The credit spread portion of the Avenue-Credit Thresholds shall be
determined periodically by the Subadviser, in its sole discretion, as the markets change. A
committee of the Subadviser will meet periodically to review market conditions, and to determine
whether the allocation policy, including the credit spread portion of the Avenue-Credit Thresholds
requires modification. The committee will not make changes to the allocation policy, including the
Avenue-Credit Thresholds, with particular investments in mind. Any revisions to the credit spread
portion of the Avenue-Credit Thresholds are made independent of individual investment decisions.
The committee, which consists of members of the Subadviser may receive and consider input from the
Adviser. A change to the credit spread portion of the Avenue-Credit Thresholds shall require
majority approval of the committee members. Fund shareholders will be notified of any material
change to the allocation policies and procedures. As an example, as of this date, the
Avenue-Credit Thresholds (which is subject to change from time to time) are obligations which, at
the time of investment, have yields in excess of the following benchmarks:
- for floating rate investments, LIBOR plus 600 basis points, EUROLIBOR plus 600 basis points, and
Sterling LIBOR plus 600 basis points, as applicable; and
- for fixed rate investments, current US Treasury plus 600 basis points, Bundes Obligationen
(OBL) plus 600 basis points, Bundes Republic Deutschland (DBR) plus 600 basis points, Bundes
Schatzanweisungen (BKO) plus 600 basis points and UK Gilt rates plus 600 basis points, as
applicable, depending upon the currency and term of the investment.
The Subadviser will generally purchase obligations with total yields above the Avenue-Credit
Thresholds for its other clients, and will generally purchase obligations with total yields below
the applicable Avenue-Credit Thresholds for the Fund. The Subadviser may use credit default swaps,
and may do so to a significant extent, to take active long or short positions with respect to the
likelihood of a default by an issuer. The Subadviser, on behalf of its other clients, will be able
to sell short (including purchasing a credit default swap) obligations below the applicable
Avenue-Credit Thresholds for hedging or other purposes (and thus at times the Subadviser may
purchase the same obligations for both its other clients and the Fund). The Subadviser, on behalf
of the Fund, will only be able to sell short investments below the applicable Avenue-Credit
Thresholds.
The Subadviser receives advisory fees for assets it manages. The Subadviser receives from the
Adviser an annual fee, payable monthly, in an amount equal to 40% of the compensation received by
the Adviser, less $200,000 per annum. For other accounts it manages, the Subadviser receives fees
that are calculated differently than the fees paid by the Fund, and generally are higher and
include performance-based fees. Because it manages assets for the Fund and other accounts and
because it receives different fees for assets it manages, there could be an incentive to favor one
client over another resulting in a conflict of interest. Other conflicts of interest also could
arise, for example, the Subadviser or its affiliates may invest in certain accounts or otherwise
have the same or similar investments in securities as their clients. In order to address these
conflicts of interest, the Subadviser has adopted the policies and procedures described above and
other policies and procedures that the Subadviser believes are reasonably designed to address these
and other conflicts of interest.
THE SUBADVISERS PORTFOLIO MANAGER COMPENSATION STRUCTURE
The Subadviser believes it has implemented a highly competitive compensation plan, which seeks to
attract and retain exceptional investment professionals who have demonstrated that they can
consistently provide attractive returns to our clients. The Subadvisers investment professionals,
including the portfolio managers that provide investment advisory services to the Fund (the
Portfolio Managers) and to its other clients, are each paid a base salary that is determined
based on their job function and responsibilities. The base salary is deemed to be competitive with
the marketplace for the financial services industry, specifically investment advisory firms.
In addition to the base salary, each investment professional, including the Portfolio Managers, is
paid a discretionary bonus based on the performance of the Subadviser, each Portfolio Manger is
paid a share of the carried interest generated from managing the assets of clients (other than the
Fund), which is subject to various vesting schedules. The discretionary bonus and carried interest
portion of an investment professionals compensation package is designed to reward and retain
investment professionals, including portfolio managers and other investment professionals for their
contributions to a portfolios performance.
The basis for determining an investment professionals total compensation is determined through a
subjective process that evaluates an investment professionals performance against several
quantitative and qualitative factors including the performance of the Subadvisers clients relative
to their peers, the investment professionals ability to work well with other members of the
Subadviser, the investment professionals contributions to the Subadvisers overall success and
other factors. Each investment professionals salary and bonus is reviewed not less than annually
(at his or her annual review) and may be adjusted based upon the performance of the individual.
* * *
SECURITIES OWNERSHIP OF PORTFOLIO MANAGERS
As of July 31, 2009, the portfolio managers did not own any shares of the Fund.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated
Purchasers.
Not Applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 11. Controls and Procedures
(a) The Funds principal executive officer and principal financial officer have concluded that the
Funds disclosure controls and procedures are sufficient to ensure that information required to be
disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commissions 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 registrants 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 registrants internal control over
financial reporting.
Item 12. Exhibits.
(1) The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto.
(2)(a) A certification for the Principal Executive Officer of the registrant is attached hereto as
part of EX-99.CERT.
(2)(b) A certification for the Principal Financial Officer of the registrant is attached hereto as
part of EX-99.CERT.
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 Dynamic Credit Opportunities Fund
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By:
Name:
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/s/ Edward C. Wood III
Edward C. Wood III
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Title:
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Principal Executive Officer |
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Date: September 17, 2009 |
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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.
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By:
Name:
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/s/ Edward C. Wood III
Edward C. Wood III
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Title:
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Principal Executive Officer |
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Date: September 17, 2009 |
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By:
Name:
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/s/ Stuart N. Schuldt
Stuart N. Schuldt
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Title:
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Principal Financial Officer |
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Date: September 17, 2009 |
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