<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Portfolio Management Review...................... 4
Glossary of Terms................................ 7
Portfolio Highlights............................. 8
Portfolio of Investments......................... 10
Statement of Assets and Liabilities.............. 21
Statement of Operations.......................... 22
Statement of Changes in Net Assets............... 23
Financial Highlights............................. 24
Notes to Financial Statements.................... 26
Dividend Reinvestment Plan....................... 32
</TABLE>
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2
LETTER TO SHAREHOLDERS
January 20, 2000
Dear Shareholder:
As we enter a new century--and millennium--it seems appropriate to take a
look back at the progress that's been made over the last 100 years and how the
world of investing has changed over the generations. Although rapid advances in
technology and science have dramatically altered the world that we live in
today, one of the greatest shifts we've seen is the increasing importance of
investing for many Americans.
Once considered primarily for the wealthy, investing in the stock market is
now available to most people. In fact, almost 79 million individuals--who
represent almost half of all U.S. households--own stocks either directly or
through mutual funds. This is even more impressive when considering that just 16
years earlier, only 19 percent of households owned stocks. Another important
shift has been the need for retirement planning beyond a pension plan or Social
Security. The Investment Company Institute, the leading mutual fund industry
association, reports that 77 percent of all mutual fund shareholders earmarked
retirement as their primary financial goal in 1998.
Through all the changes in the investment environment over the past century,
the general principles that have made generations of investors successful remain
the same. Some that have stood the test of time include:
- INVESTING FOR THE LONG-TERM
- BASING INVESTMENT DECISIONS ON SOUND RESEARCH
- BUILDING A DIVERSIFIED PORTFOLIO
- BELIEVING IN THE VALUE OF PROFESSIONAL INVESTMENT ADVICE
While no one can predict the future, at Van Kampen we believe that these
ideas will remain important tenets for investors well into this century. As we
continue to focus on these principles, we hope that our decades of investment
experience can help bring you closer to your financial goals as we welcome the
new millennium.
Sincerely,
<TABLE>
<S> <C>
/s/ Richard F. Powers, III /s/ Dennis J. McDonnell
Richard F. Powers, III Dennis J. McDonnell
Chairman President
Van Kampen Investment Advisory Van Kampen Investment Advisory
Corp. Corp.
</TABLE>
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
The nation's brisk rate of economic growth continued throughout 1999,
bringing the United States to the verge of its longest economic expansion on
record. High levels of consumer spending, a host of new jobs, and increasing
productivity kept the economy strong. Gross domestic product, the primary
measure of economic growth, increased 4.2 percent for the year, including an
impressive annualized rate of 5.7 percent for the third quarter and 5.8 percent
in the fourth quarter.
EMPLOYMENT
The job market remained vibrant throughout the year, with more than 2.7
million U.S. jobs created in 1999. In addition, unemployment dropped to 4.1
percent in October--its lowest rate in three decades. With jobs plentiful and
wages on the rise, most Americans were optimistic about the future. At the end
of the year the consumer confidence index hit its highest level since 1968.
Although wage pressures caused some concerns about the potential erosion of
corporate profits, productivity gains helped keep those concerns muted through
the end of the year.
INFLATION AND INTEREST RATES
Although the Consumer Price Index continued to reflect historically low
inflation--rising only 2.7 percent during 1999--concerns about future increases
in inflation were prevalent throughout the reporting period. The Federal Reserve
Board remained active in guarding against inflation and trying to temper
economic growth. The Fed reversed its three interest-rate cuts from the fall of
1998 by raising rates in June, August, and November 1999.
U.S. GROSS DOMESTIC PRODUCT
Seasonally Adjusted Annualized Rates
Third Quarter 1997 through Fourth Quarter 1999
[GRAPH]
<TABLE>
<S> <C>
97Q3 4
97Q4 3.10
98Q1 6.70
98Q2 2.10
98Q3 3.80
98Q4 5.90
99Q1 3.70
99Q2 1.90
99Q3 5.70
99Q4 5.80
</TABLE>
Source: Bureau of Economic Analysis
2
<PAGE> 4
PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31, 1999
VAN KAMPEN MUNICIPAL INCOME TRUST
(NYSE TICKER SYMBOL--VMT)
<TABLE>
<S> <C>
COMMON SHARE TOTAL RETURNS
Six-month total return based on market price(1)........... (17.92)%
Six-month total return based on NAV(2).................... (4.79)%
DISTRIBUTION RATES
Distribution rate as a % of closing stock price(3)........ 7.87%
Taxable-equivalent distribution rate as a % of closing
stock price(4)............................................ 12.30%
SHARE VALUATIONS
Net asset value........................................... $ 8.80
Closing common stock price................................ $ 7.625
Six-month high common stock price (07/02/99).............. $9.8125
Six-month low common stock price (12/14/99)............... $7.3750
Preferred share (Series A) rate(5)........................ 4.150%
Preferred share (Series B) rate(5)........................ 4.200%
Preferred share (Series C) rate(5)........................ 3.850%
</TABLE>
(1) Total return based on market price assumes an investment at the market price
at the beginning of the period indicated, reinvestment of all distributions for
the period in accordance with the Trust's dividend reinvestment plan, and sale
of all shares at the closing common stock price at the end of the period
indicated.
(2) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3) Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(4) The taxable-equivalent distribution rate is calculated assuming a 36%
federal tax bracket.
(5) See "Notes to Financial Statements" footnote #6, for more information
concerning Preferred Share reset periods.
A portion of the interest income may be taxable for those investors subject to
the federal alternative minimum
tax (AMT).
Past performance does not guarantee future results. Investment return, stock
price and net asset value will fluctuate with market conditions. Trust shares,
when sold, may be worth more or less than their original cost.
3
<PAGE> 5
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN MUNICIPAL INCOME TRUST
We recently spoke with representatives of the adviser of the Van Kampen
Municipal Income Trust about the key events and economic forces that shaped the
markets during the past six months. David C. Johnson, portfolio manager, has
managed the Trust since 1989 and worked in the investment industry since 1981.
He is joined by Peter W. Hegel, chief investment officer for fixed-income
investments. The following discussion reflects their views on the Trust's
performance during the six months ended December 31, 1999.
Q WHAT HAPPENED IN THE MUNICIPAL MARKET DURING THE
REPORTING PERIOD?
A The second half of 1999 proved to be very difficult for bonds, with prices
declining dramatically as interest rates rose and inflation fears
resurfaced. In addition to the negative effects of the Fed's interest-rate
increases, the nation's strong economic growth continued to fuel concerns about
inflation and future rate hikes. Together with low institutional demand for
municipal bonds during the period, these conditions hurt municipals more than
most taxable bonds (although municipals modestly outperformed long-term U.S.
Treasury bonds). The bonds in the Trust's portfolio suffered price declines
along with the rest of the municipal market.
Conditions were particularly difficult for closed-end funds toward the end
of the year, as many investors sold shares at a loss for tax purposes. In fact,
the average closed-end municipal fund fell 20 percent in price during the year.
Q HOW DID THIS ENVIRONMENT AFFECT MUNICIPAL BOND SUPPLY?
A The interest-rate increases essentially suppressed municipal bond supply,
bringing nationwide supply down more than 20 percent in 1999 compared with
1998. New issuance was down less than one percent for the year, but the
amount of bonds issued through refinancing fell more than 50 percent in 1999.
Many municipalities simply chose not to refinance outstanding bonds because of
the higher interest rates they would have to pay in the current marketplace.
Q WHAT TECHNIQUES DID YOU USE TO MANAGE THE TRUST IN
THESE CONDITIONS?
A Many of the Trust's more seasoned holdings were nearing their call dates,
so we took advantage of higher interest rates in the municipal market to
replace these bonds with new issues. These new bonds with longer maturity
dates allowed us to extend the Trust's protection from bond calls and provided
attractive coupon rates. Because bond prices had declined during the period, we
were also able to enhance the Trust's tax management by selling these and other
holdings at a capital loss. Using this strategy, we
4
<PAGE> 6
offset some of the gains we earned early in 1999 to avoid the need to distribute
taxable capital gains to shareholders this year.
By purchasing longer-maturity bonds, we also increased the portfolio's
duration, or sensitivity to interest-rate changes. We feel that the longer
duration will benefit the Trust in a declining interest-rate environment by
allowing it to participate more fully in a market rally. In the short term,
however, the longer duration negatively affected the Trust's total return as
interest rates climbed.
Q WHAT AREAS OF THE MUNICIPAL MARKET WERE MOST ATTRACTIVE TO YOU?
A We focused on increasing the Trust's income stream to help offset the loss
of income from higher-yielding bonds that were called or sold from the
portfolio. In our search for the most attractive-yielding issues that met
our criteria, we found value in the lower-rated investment-grade credit quality
range, as well as bonds in the long-term care and industrial revenue sectors.
For additional portfolio highlights, please refer to page 8.
Q HOW DID THE TRUST PERFORM DURING THE PERIOD?
A Total return performance was disappointing because of the general downturn
in bond prices and the negative effects of the Trust's longer duration. In
addition, the Trust's leverage component hurt its performance during the
period. Although leverage helps the Trust provide higher income levels to common
shareholders, it made the portfolio more sensitive to the interest-rate
increases we experienced during the reporting period. For the six-month period
ended December 31, 1999, the Trust returned -17.92 percent(1) based on market
price. This reflects a decrease in market price from $9.625 per share on June
30, 1999, to $7.625 per share on December 31, 1999.
The Trust continued to provide shareholders with an attractive dividend,
although the dividend rate was decreased in November. The adjustment resulted
from the call of older, higher-yielding bonds that had been purchased when
interest rates were much higher than they are now. Although interest rates have
increased in recent months, they have not increased enough for the income from
the new bonds to compensate for the loss of income from the older bonds. The
monthly dividend of $0.05 per share translates to a distribution rate of 7.87
percent(3) based on the Trust's closing market price on December 31, 1999.
Because the Trust is exempt from federal income taxes, this distribution rate is
equivalent to a yield of 12.3 percent(4) for an investor in the 36 percent
federal income tax bracket. Please refer to the chart and footnotes on page 3
for additional performance results. Past performance does not guarantee future
results.
5
<PAGE> 7
Q WHAT DO YOU SEE AHEAD FOR THE ECONOMY AND THE MUNICIPAL MARKET?
A We believe that the economy should eventually slow from this
record-breaking pace, although the Federal Reserve may have to take
significant action in the next several months to slow the rate of economic
growth. However, we think that the municipal market is poised for a recovery
later in 2000 if interest rates reverse their course, and that
municipals--especially closed-end municipal funds--currently represent an
excellent value in the marketplace.
With year 2000 computer concerns and the wave of tax-loss selling behind us,
market activity should pick up early in the new year. In the meantime, we will
continue to focus on finding attractive-yielding bonds and protecting the Trust
from bond calls as much as possible. We will also use our extensive research
capabilities to look for opportunities throughout the coming months.
6
<PAGE> 8
GLOSSARY OF TERMS
CALL FEATURE: Allows the issuer to buy back a bond on specific dates at set
prices before maturity. These dates and prices are set when the bond is
issued. To compensate the bondholder for the potential loss of income and
ownership, a bond's call price is usually higher than the face value of the
bond. Bonds are usually called when interest rates drop so significantly
that the issuer can save money by issuing new bonds at lower rates.
CREDIT RATING: An evaluation of an issuer's credit history and capability of
repaying obligations. Standard & Poor's and Moody's Investors Service are
two companies that assign bond ratings. Standard & Poor's ratings range from
a high of AAA to a low of D, while Moody's ratings range from a high of Aaa
to a low of C.
DURATION: A measure of the sensitivity of a bond's price to changes in interest
rates, expressed in years. Each year of duration represents an expected 1
percent change in the price of a bond for every 1 percent change in interest
rates (i.e. a 5-year duration means the bond will fall about 5 percent in
value if interest rates rise by 1 percent). The longer a bond's duration,
the greater the effect of interest rate movements on its price. Typically,
funds with shorter durations perform better in rising rate environments,
while funds with longer durations perform better when rates decline.
INVESTMENT-GRADE BONDS: Securities rated BBB and above by Standard & Poor's or
Baa and above by Moody's Investors Service. Bonds rated below BBB or Baa are
noninvestment grade.
LEVERAGE: A process employed by the Trust that involves borrowing money at
short-term interest rates by issuing preferred shares. The proceeds are then
invested in longer-term bonds, which typically pay higher rates. The
difference between the long-term rates earned by the Trust and the
short-term rates paid on the preferred shares is passed along to
shareholders in the Trust's dividend. Common shareholders typically benefit
from leverage when short-term interest rates decline. However, a rise in
short-term rates would have a negative effect by raising the Trust's
borrowing costs and possibly affecting the dividend and price of common
shares.
MATURITY LENGTH: The time it takes for a bond to mature. A bond issued in 1999
and maturing in 2009 is a 10-year bond.
PREREFUNDING: The process of issuing new bonds to refinance an outstanding
municipal bond issue prior to its maturity or call date. The proceeds from
the new bonds are generally invested in U.S. government securities.
Prerefunding typically occurs when interest rates decline and an issuer
replaces its higher-yielding bonds with current lower-yielding issues.
7
<PAGE> 9
PORTFOLIO HIGHLIGHTS
VAN KAMPEN MUNICIPAL INCOME TRUST
TOP FIVE PORTFOLIO INDUSTRIES*
[GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31, 1999 JUNE 30, 1999
----------------- -------------
<S> <C> <C>
General Purpose 18 20.2
Health Care 12.5 12.3
Transportation 7.9 7.5
Public Education 7.6 9
Airport 6.2 8.8
</TABLE>
* As a percentage of long-term investments
NET ASSET VALUE AND MARKET PRICE
(BASED UPON MONTH-END VALUES)
DECEMBER 1989 THROUGH DECEMBER 1999
[GRAPH]
<TABLE>
<CAPTION>
MARKET PRICE NET ASSET VALUE
------------ ---------------
<S> <C> <C>
Dec 1989 9.1250 9.7200
9.3750 9.5800
9.3750 9.6100
9.2500 9.5600
9.3750 9.3300
9.2500 9.4300
9.2500 9.5300
9.5000 9.6600
9.2500 9.4000
9.0000 9.3100
8.8750 9.3600
9.2500 9.5600
Dec 1990 9.6250 9.6200
9.6250 9.6100
10.0000 9.7000
10.0000 9.6400
10.0000 9.7400
10.1250 9.8300
10.1250 9.8100
10.3750 9.9200
10.3750 9.9700
10.6250 10.1100
10.5000 10.1300
10.5000 10.1300
Dec 1991 10.7500 10.2400
11.1250 10.2000
10.7500 10.2200
10.8750 10.1800
11.1250 10.2500
11.1250 10.4500
11.3750 10.6900
11.8750 11.3700
11.7500 10.9900
11.5000 10.9700
10.7500 10.6800
11.3750 10.7100
Dec 1992 12.0000 10.6500
12.0000 10.6900
12.3750 11.0900
11.6250 11.0900
11.7500 11.0900
11.8750 11.0900
12.0000 11.1300
12.2500 11.0900
12.6250 11.2100
12.3750 11.3700
12.2500 11.3100
11.7500 11.0400
Dec 1993 11.7500 11.1700
12.2500 11.2700
11.7500 10.8000
10.7500 9.9300
11.1250 9.9100
11.0000 9.9700
11.1250 9.9200
11.2500 10.0000
11.0000 10.0200
10.2500 9.8200
10.0000 9.5000
10.1250 9.1000
Dec 1994 9.7500 9.3400
10.6250 9.6100
11.2500 9.9000
11.0000 9.9000
11.0000 9.7700
11.0000 9.9400
11.1250 9.7600
11.2500 9.7600
11.1250 9.8500
10.7500 9.8600
10.5000 9.9800
10.5000 10.1600
Dec 1995 10.5000 10.2400
11.0000 10.2600
11.0000 10.1600
10.3750 9.8800
10.1250 9.7600
10.0000 9.7200
9.8750 9.7600
10.1250 9.8400
10.3750 9.7700
10.2500 9.9000
10.2500 9.9700
10.3750 10.1200
Dec 1996 10.3750 10.0000
10.3750 9.9600
10.3750 10.0400
10.1250 9.8100
10.6250 9.8900
10.6250 9.9900
10.8750 10.0100
11.0625 10.3800
11.0000 10.0900
11.0000 10.1800
10.9370 10.2300
11.8700 10.2000
Dec 1997 10.8120 10.3500
11.1250 10.4200
11.0620 10.3700
10.3120 10.3200
10.2500 10.1400
10.4370 10.2800
10.8750 10.2600
10.8125 10.2300
10.7500 10.4400
11.0000 10.5700
11.1250 10.4300
11.3750 10.4100
Dec 1998 10.8125 10.3800
10.6250 10.4300
10.8750 10.2000
10.6875 10.1300
10.5000 10.1100
10.3750 9.9200
9.6250 9.5600
9.5000 9.5200
9.0620 9.2400
8.8750 9.1500
8.2500 8.9000
7.9375 8.9800
Dec 1999 7.6250 8.8000
</TABLE>
The solid line above represents the Trust's net asset value (NAV), which
indicates overall changes in value among the Trust's underlying securities. The
Trust's market price is represented by the dashed line, which indicates the
price the market is willing to pay for shares of the Trust at a given time.
Market price is influenced by a range of factors, including supply and demand
and market conditions.
8
<PAGE> 10
PORTFOLIO HIGHLIGHTS (CONTINUED)
VAN KAMPEN MUNICIPAL INCOME TRUST
CREDIT QUALITY AS A PERCENTAGE OF LONG-TERM INVESTMENTS
AS OF DECEMBER 31, 1999
[PIE CHART]
<TABLE>
<CAPTION>
AAA/AAA AA/AA A/A BBB/BAA NON-RATED
------- ----- --- ------- ---------
<S> <C> <C> <C> <C> <C>
As of December 31, 1999 58.40 4.20 12.60 22.40 2.40
</TABLE>
AS OF JUNE 30, 1999
[PIE CHART]
<TABLE>
<CAPTION>
AAA/AAA AA/AA A/A BBB/BAA NON-RATED
------- ----- --- ------- ---------
<S> <C> <C> <C> <C> <C>
As of June 30, 1999 63.80 3.80 10.40 20.00 2.00
</TABLE>
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
DIVIDEND HISTORY
FOR THE PERIOD ENDED DECEMBER 31, 1999
[BAR GRAPH]
<TABLE>
<CAPTION>
MONTHLY DIVIDEND
----------------
<S> <C>
Jul 1999 0.052
Aug 1999 0.052
Sep 1999 0.052
Oct 1999 0.052
Nov 1999 0.050
Dec 1999 0.050
</TABLE>
The dividend history represents past performance of the Trust and does not
predict the Trust's future distributions.
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 102.3%
ALABAMA 0.4%
$ 500 Alabama St Indl Dev Auth Solid Waste
Disp Rev Pine City Fiber Co (b)...... 6.450% 12/01/23 $ 471,840
1,500 Lauderdale Cnty & Florence, AL
Hlthcare Auth Rev (MBIA Insd)........ 5.250 07/01/19 1,337,700
------------
1,809,540
------------
ARKANSAS 0.3%
1,000 Conway, AR Hosp Rev Conway Regl
Hosp Rfdg............................ 8.375 07/01/11 1,040,190
------------
CALIFORNIA 5.9%
1,755 California Hsg Fin Agy Rev Homeowner
Mtg
Ser D................................ * 08/01/20 356,528
5,000 Contra Costa, CA Home Mtg Fin Auth
Home Mtg Rev (MBIA Insd)............. * 09/01/17 1,754,950
2,000 Duarte, CA Ctfs Partn Ser A.......... 5.250 04/01/19 1,666,920
1,500 Duarte, CA Ctfs Partn Ser A.......... 5.250 04/01/24 1,210,365
30,535 Foothill/Eastern Corridor Agy CA Toll
Rd
Rev Rfdg............................. * 01/15/34 3,266,940
10,000 Foothill/Eastern Corridor Agy CA Toll
Rd
Rev Rfdg............................. * 01/15/38 819,800
15,000 Foothill/Eastern Corridor Agy CA Toll
Rd Rev Cap Apprec Rfdg............... * 01/15/30 2,105,250
3,000 Foothill/Eastern Corridor Agy CA Toll
Rd Rev Conv Cap Apprec Rfdg.......... * 01/15/27 1,514,940
6,075 Orange Cnty, CA Recovery Ctfs Ser A
Rfdg (MBIA Insd) (b)................. 6.000 06/01/09 6,494,054
11,120 San Diego, CA Unified Sch Dist Cap
Apprec Ser A (FGIC Insd)............. * 07/01/23 2,645,114
3,000 San Joaquin Hills, CA Tran Corridor
Agy Toll Rd Rev Cap Apprec Ser A
(MBIA Insd).......................... * 01/15/34 363,810
22,445 San Joaquin Hills, CA Tran Corridor
Agy Toll Rd Rev Cap Apprec Ser A
(MBIA Insd).......................... * 01/15/35 2,555,812
------------
24,754,483
------------
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COLORADO 7.6%
$ 1,000 Arapahoe Cnty, CO Cap Impt Trust Fund
Hwy Rev E-470 Proj Ser B (Prerefunded
@ 08/31/05).......................... 6.950% 08/31/20 $ 1,124,090
1,500 Arapahoe Cnty, CO Cap Impt Trust Fund
Hwy Rev E-470 Proj Ser B (Prerefunded
@ 08/31/05).......................... 7.000 08/31/26 1,689,495
1,015 Colorado Edl And Cultural Fac Auth
Rev Charter Sch Jefferson Academy.... 6.500 06/01/15 994,355
1,535 Colorado Edl And Cultural Fac Auth
Rev Charter Sch Jefferson Academy.... 6.700 06/01/25 1,495,996
1,825 Denver, CO City & Cnty Arpt Rev Ser
A.................................... 8.500 11/15/07 1,914,097
11,330 Denver, CO City & Cnty Arpt Rev Ser A
(b).................................. 8.250 11/15/12 11,831,806
4,410 Denver, CO City & Cnty Arpt Rev Ser A
(b).................................. 8.750 11/15/23 4,750,805
1,070 Denver, CO City & Cnty Arpt Rev Ser A
(Prerefunded @ 11/15/00) (b)......... 8.250 11/15/12 1,128,379
1,590 Denver, CO City & Cnty Arpt Rev Ser A
(Prerefunded @ 11/15/01)............. 8.750 11/15/23 1,736,678
3,000 Meridian Metro Dist CO Peninsular &
Oriental Steam Navig Co Rfdg......... 7.500 12/01/11 3,146,280
1,850 Montrose Cnty, CO Ctfs Partn......... 6.350 06/15/06 1,929,735
------------
31,741,714
------------
CONNECTICUT 0.7%
3,100 Stamford, CT Hsg Auth Multi-Family
Rev Fairfield Apts Proj Rfdg......... 4.750 12/01/28 2,867,562
------------
DISTRICT OF COLUMBIA 1.0%
550 Dist of Columbia Ctfs Partn.......... 6.875 01/01/03 559,691
2,775 Dist of Columbia Hosp Rev Medlantic
Hlthcare Ser A Rfdg (MBIA Insd)
(b).................................. 5.250 08/15/12 2,728,352
1,000 Dist of Columbia Rev Gonzaga College
High Sch (FSA Insd).................. 5.375 07/01/29 882,180
------------
4,170,223
------------
FLORIDA 2.9%
1,000 Bartow, FL Wtr & Swr Sys Rev (FGIC
Insd)................................ 5.125 10/01/29 869,890
4,660 Florida St Brd Edl Cap Outlay Pub Ed
Ser A Rfdg (Prerefunded @
06/01/00)............................ * 06/01/15 1,600,570
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$ 3,500 Gulf Breeze, FL Rev Cap Fdg Ser B
(MBIA Insd).......................... 4.500% 10/01/27 $ 2,710,610
4,000 Sarasota Cnty, FL Pub Hosp Brd Miles
Sarasota Mem Hosp Proj Ser A
(Embedded Cap)
(MBIA Insd).......................... * 10/01/21 3,744,360
3,500 Tampa, FL Hosp Rev Cap Impt H Lee
Moffitt
Ser A................................ 5.750 07/01/29 3,125,955
------------
12,051,385
------------
GEORGIA 9.0%
5,866 Fulton Cnty, GA Lease Rev (b)........ 7.250 06/15/10 6,476,078
25,000 Georgia Local Gov Ctfs Partn Grantor
Trust Ser A (MBIA Insd) (b).......... 4.750 06/01/28 20,262,750
2,635 Georgia Muni Elec Auth Pwr Rev Ser A
(MBIA Insd) (b)...................... 6.500 01/01/20 2,814,391
3,000 Georgia Muni Elec Auth Pwr Rev Ser B
(FGIC
Insd) (b)............................ 6.250 01/01/17 3,146,370
2,000 Georgia Muni Elec Auth Pwr Rev Ser Z
Rfdg (MBIA Insd) (b)................. 5.500 01/01/20 1,910,180
800 Royston, GA Hosp Auth Hosp Rev Ty
Cobb Hlthcare Sys, Inc............... 6.700 07/01/16 766,568
2,500 Royston, GA Hosp Auth Hosp Rev Ty
Cobb Hlthcare Sys, Inc............... 6.500 07/01/27 2,321,175
------------
37,697,512
------------
HAWAII 0.3%
2,480 Honolulu, HI City & Cnty Wastewtr Sys
Rev
(FGIC Insd).......................... * 07/01/13 1,119,398
------------
ILLINOIS 15.7%
49,000 Chicago, IL Brd Edl Cap Apprec Sch
Reform B-1 (FGIC Insd)............... * 12/01/27 8,285,410
9,000 Chicago, IL Brd Edl Chicago Sch
Reform Ser A (AMBAC Insd)............ 5.250 12/01/27 7,833,780
13,645 Chicago, IL O'Hare Intl Arpt Spl Fac
Rev United Airls Inc Proj Ser 84A
(b).................................. 8.850 05/01/18 14,396,021
2,585 Chicago, IL O'Hare Intl Arpt Spl Fac
Rev United Airls Inc Proj Ser 84B
(b).................................. 8.850 05/01/18 2,727,278
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ILLINOIS (CONTINUED)
$ 4,895 Chicago, IL Pub Bldg Comm Bldg Rev
Ser A (MBIA Insd).................... * 01/01/07 $ 3,387,193
1,000 Chicago, IL Ser B Rfdg (AMBAC Insd)
(b).................................. 5.125% 01/01/15 933,940
1,335 Illinois Dev Fin Auth Rev Bradley
Univ Proj (AMBAC Insd)............... 5.375 08/01/24 1,197,655
2,000 Illinois Edl Fac Auth Rev Lewis
Univ................................. 6.125 10/01/26 1,860,360
1,380 Illinois Hlth Fac Auth Rev Glenoaks
Med
Cent Ser D........................... 9.500 11/15/15 1,471,108
1,275 Illinois Hlth Fac Auth Rev Glenoaks
Med Cent Ser D (Prerefunded @
11/15/00)............................ 9.500 11/15/15 1,358,283
540 Illinois Hlth Fac Auth Rev Glenoaks
Med Cent
Ser E................................ 9.500 11/15/19 575,651
1,310 Illinois Hlth Fac Auth Rev Glenoaks
Med Cent Ser E (Prerefunded @
11/15/00)............................ 9.500 11/15/19 1,389,714
1,000 Illinois Hlth Fac Auth Rev Lutheran
Social Svcs Proj Ser A (Prerefunded @
08/01/00) (LOC: Bank of Japan) (b)... 7.650 08/01/20 1,039,870
3,205 Illinois Hlth Fac Auth Rev OSF
Hlthcare Sys
Rfdg (b)............................. 6.000 11/15/23 2,973,375
45,775 Illinois Hsg Dev Auth Multi-Family
Hsg Ser A............................ * 07/01/27 5,737,896
1,250 Sangamon Cnty, IL Ctfs Partn......... 10.000 12/01/06 1,591,988
3,750 Will Cnty, IL Cmnty Sch Dist No 161
Summit Hill (FGIC Insd).............. * 01/01/15 1,527,075
4,295 Will Cnty, IL Cmnty Sch Dist No 161
Summit Hill (FGIC Insd).............. * 01/01/17 1,523,651
6,500 Will Cnty, IL Cmnty Sch Dist No 365
(FSA Insd)........................... * 11/01/17 2,191,670
7,455 Will Cnty, IL Fst Presv Dist Ser B
(FGIC Insd).......................... * 12/01/12 3,571,169
------------
65,573,085
------------
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
INDIANA 3.1%
$ 1,370 Indiana Hlth Fac Fin Auth Hosp Rev
Bartholomew Cnty Hosp Proj
(Prerefunded @ 08/15/00) (FSA Insd)
(b).................................. 7.750% 08/15/20 $ 1,427,581
1,565 Indiana St Edl Fac Auth Rev Univ
Evansville Proj (Prerefunded @
11/01/00) (b)........................ 8.125 11/01/10 1,647,100
12,705 St Joseph Cnty, IN Hosp Auth Hlth Sys
Rev Ser A (MBIA Insd)................ 4.625 08/15/28 9,662,661
------------
12,737,342
------------
KENTUCKY 0.6%
2,190 Kenton Cnty, KY Arpt Brd Rev
Cincinnati/Northn KY Intl Arpt Ser A
Rfdg (MBIA Insd) (b)................. 6.250 03/01/09 2,331,627
------------
LOUISIANA 2.3%
851 Lafayette, LA Pub Fin Auth Single
Family Mtg Rev Ser A Rfdg............ 8.500 11/15/12 861,912
1,250 New Orleans, LA Hsg Dev Corp
Multi-Family Rev Hsg Southwood Patio
Ser A (FNMA Collateralized).......... 7.700 02/01/22 1,319,000
7,500 St Charles Parish, LA Pollutn Ctl Rev
Energy LA Inc Proj Ser C Rfdg........ 5.350 10/01/29 7,474,725
------------
9,655,637
------------
MARYLAND 1.4%
2,180 Baltimore, MD Cap Apprec Ser A (FGIC
Insd)................................ * 10/15/09 1,263,114
2,470 Baltimore, MD Cap Apprec Ser A
(Prerefunded @ 10/15/05) (FGIC
Insd)................................ * 10/15/09 1,452,311
2,500 Maryland St Econ Dev Corp Student Hsg
Rev.................................. 6.000 06/01/30 2,235,425
1,000 Maryland St Econ Dev Corp Student Hsg
Rev Collegiate Hsg Towson Ser A...... 5.750 06/01/29 879,700
------------
5,830,549
------------
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MASSACHUSETTS 2.0%
$ 2,440 Massachusetts St Hlth & Edl Fac Auth
Rev Farmingham Union Hosp Ser B
(Prerefunded @ 07/01/00)............. 8.500% 07/01/10 $ 2,528,840
1,000 Massachusetts St Indl Fin Agy Rev
Higher Edl Hampshire College Proj.... 5.625 10/01/12 943,840
5,000 Massachusetts St Wtr Pollutn
Abatement Trust Wtr Pollutn Abatement
Rev.................................. 5.750 08/01/29 4,771,150
------------
8,243,830
------------
MICHIGAN 2.2%
1,180 Hillsdale, MI Hosp Fin Auth Hosp Rev
Hillsdale Cmnty Hlth Ctr............. 5.750 05/15/18 1,013,467
4,150 Michigan St Hosp Fin Auth Rev Hosp
Battle Creek Hosp Ser G Rfdg......... 9.500 11/15/15 4,418,464
1,915 Michigan St Hosp Fin Auth Rev Hosp
Bay Med Cent Ser A Rfdg (Crossover
Rfdg @
07/01/00) (b)........................ 8.250 07/01/12 1,989,666
2,000 Michigan St Hosp Fin Auth Rev Hosp
Hackley Hosp Ser A Rfdg.............. 5.000 05/01/18 1,612,320
------------
9,033,916
------------
MINNESOTA 0.2%
1,000 Southern MN Muni Pwr Agy Pwr Supply
Sys Rev Ser A Rfdg (MBIA Insd)....... 4.750 01/01/16 853,720
------------
MISSISSIPPI 0.4%
1,500 Mississippi Hosp Equip & Fac MS
Baptist Med Cent Rfdg (MBIA Insd)
(b).................................. 6.000 05/01/13 1,525,185
------------
MISSOURI 0.7%
2,735 Missouri St Hsg Dev Cmnty Mtg Rev Ser
B Rfdg (FHA Gtd) (b)................. 7.000 09/01/10 2,793,803
------------
NEBRASKA 0.8%
3,235 Nebraska Invt Fin Single Family Mtg
Rev Pgm B (Inverse Fltg) (GNMA Insd)
(b).................................. 9.868 01/27/00 3,380,575
------------
NEW HAMPSHIRE 0.5%
2,340 New Hampshire St Bus Fin Auth Pollutn
Ctl Rev.............................. 5.875 10/01/33 2,064,465
------------
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW JERSEY 0.9%
$ 880 New Jersey Hlthcare Fac Fin Auth Rev
(a).................................. 6.500% 07/01/04 $ 879,930
940 New Jersey Hlthcare Fac Fin Auth Rev
(a).................................. 6.500 07/01/05 937,349
2,095 New Jersey St Tran Trust Fund Auth
Tran Sys
Ser A................................ 5.750 06/15/17 2,093,785
------------
3,911,064
------------
NEW YORK 9.2%
7,000 New York City Ser A (b).............. 7.000 08/01/04 7,546,840
4,500 New York City Ser B (AMBAC Insd)
(b).................................. 7.250 08/15/07 5,099,805
1,885 New York City Ser C (b).............. 7.000 08/15/08 1,948,845
1,915 New York City Ser C (Prerefunded
@ 08/15/01).......................... 7.000 08/15/08 1,989,723
6,930 New York City Tran Auth Tran Fac
Livingston Plaza Proj Rfdg (FSA Insd)
(b).................................. 5.400 01/01/18 6,554,048
1,250 New York St Dorm Auth Lease Rev St
Univ Dorm Facs Ser C (MBIA Insd)..... 5.500 07/01/29 1,143,963
5,190 New York St Dorm Auth Rev Insd NY
Univ Ser A (AMBAC Insd) (a).......... 5.500 07/01/11 5,141,889
415 New York St Med Care Fac Fin Agy Rev
Mental Hlth Svcs Fac Ser A........... 7.750 08/15/11 436,265
1,000 New York St Urban Dev Corp Sub Lien
Corp Purp............................ 5.500 07/01/22 902,800
2,500 New York St Urban Dev Corp Rev
Correctional Cap Fac Ser A........... 5.250 01/01/21 2,184,775
2,635 New York St Urban Dev Corp Rev Youth
Fac.................................. 5.875 04/01/08 2,699,004
2,680 Port Auth NY & NJ Consolidated 119Th
Ser.................................. 5.500 09/15/17 2,555,862
------------
38,203,818
------------
NORTH CAROLINA 4.5%
3,000 North Carolina Eastn Muni Pwr Agy Pwr
Sys Rev Ser D........................ 6.750 01/01/26 2,974,590
15,000 North Carolina Muni Pwr Agy No 1
Catawba Elec Rev (MBIA Insd) (b)..... 6.000 01/01/12 15,712,950
------------
18,687,540
------------
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
OHIO 2.9%
$ 5,000 Akron Bath Copley, OH St Twp Hosp
Dist Rev Summa Hosp Ser A............ 5.375% 11/15/18 $ 4,199,350
3,755 Mason, OH Hlthcare Fac MCV Hlthcare
Fac (FHA Gtd) (Prerefunded @
02/01/01)............................ 7.625 02/01/40 3,994,607
1,000 Ohio St Air Quality Dev Auth Rev JMG
Funding Ltd Partn Proj Rfdg (AMBAC
Insd) (b)............................ 6.375 04/01/29 1,006,950
3,000 Ohio St Tpk Comm Tpk Rev Ser A Rfdg
(FGIC Insd).......................... 5.500 02/15/24 2,833,530
------------
12,034,437
------------
OKLAHOMA 1.4%
3,300 McAlester, OK Public Wks Auth Utility
Sys Rev (FSA Insd)................... 5.750 02/01/20 3,183,741
3,000 Oklahoma Dev Fin Auth Rev St John
Hlth Sys Rfdg........................ 5.750 02/15/25 2,856,420
------------
6,040,161
------------
PENNSYLVANIA 6.4%
1,000 Allegheny Cnty, PA Ctfs Partn (AMBAC
Insd)................................ 5.000 12/01/28 829,650
2,500 Harrisburg, PA Auth Wtr Rev (Inverse
Fltg) (FGIC Insd) (b)................ 7.480 01/12/00 2,459,375
1,200 Harrisburg, PA Cap Apprec Notes Ser F
Rfdg (AMBAC Insd).................... * 09/15/14 506,664
5,000 Pennsylvania St Higher Edl Assist Agy
Student Ln Rev Ser B (Inverse Fltg)
(MBIA Insd) (b)...................... 10.331 01/08/00 5,793,750
1,770 Philadelphia, PA Auth Indl Dev Rev
Edl Comm Foreign Med Grads (MBIA
Insd)................................ 5.000 06/01/18 1,553,600
1,000 Philadelphia, PA Auth Indl Dev Rev
Edl Comm Foreign Med Grads (MBIA
Insd)................................ 5.000 06/01/21 855,050
7,385 Philadelphia, PA Sch Dist Ser A (MBIA
Insd)................................ 4.500 04/01/18 5,964,938
1,750 Philadelphia, PA Sch Dist Cap Apprec
Ser A Rfdg (AMBAC Insd).............. * 07/01/01 1,633,398
2,000 Ridley Park, PA Hosp Auth Rev Taylor
Hosp Ser A Rfdg (b).................. 6.000 12/01/13 2,087,940
4,745 Sayre, PA Hlthcare Fac Auth Rev VHA
Cap Asset Fin Pgm Ser C (AMBAC Insd)
(b).................................. 7.700 12/01/15 4,898,121
------------
26,582,486
------------
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
RHODE ISLAND 0.2%
$ 1,000 Providence, RI Pub Bldg Auth Genl Rev
Ser B (FSA Insd) (b)................. 7.250% 12/15/10 $ 1,046,340
------------
SOUTH CAROLINA 0.4%
1,610 South Carolina St Hsg Fin & Dev Auth
Homeowner Mtg Ser A (b).............. 7.400 07/01/23 1,647,159
------------
SOUTH DAKOTA 0.3%
1,375 Deadwood, SD Ctfs Partn (ACA Insd)
(a).................................. 6.375 11/01/20 1,347,706
------------
TENNESSEE 1.1%
4,605 Tennessee Hsg Dev Agy Mtg Fin Ser A
(b).................................. 7.125 07/01/26 4,728,414
------------
TEXAS 9.0%
7,000 Austin, TX Rev Sub Lien Ser A Rfdg
(MBIA Insd).......................... 4.250 05/15/28 5,081,090
7,065 Dallas Cnty, TX Util & Reclamation
Dist Cap Apprec (MBIA Insd).......... * 02/15/20 1,644,237
2,790 Dallas Fort Worth, TX Intl Arpt Fac
Imp Corp Rev......................... 6.000 11/01/14 2,651,839
1,800 Gulf Coast Wtr Auth TX Wtr Sys
Contract Rev (FGIC Insd)............. 5.000 08/15/17 1,603,026
4,820 Harris Cnty, TX Toll Rd (Prerefunded
@ 08/15/09) (AMBAC Insd)............. * 08/15/18 1,543,846
1,000 Harris Cnty, TX Toll Rd (Prerefunded
@ 08/15/09) (AMBAC Insd)............. * 08/15/21 260,560
10,000 Matagorda Cnty, TX Nav Dist No 1
Houton Ltg Rfdg (AMBAC Insd)......... 5.125 11/01/28 8,487,900
1,900 Port Arthur, TX Navig Dist Rfdg
(AMBAC Insd)......................... 4.875 03/01/19 1,598,166
4,000 Rockwall, TX Ind Sch Dist Cap Apprec
Rfdg (PSF Gtd)....................... * 08/15/20 1,084,520
4,395 Rockwall, TX Ind Sch Dist Cap Apprec
Rfdg (PSF Gtd)....................... * 08/15/21 1,113,869
3,525 Texas Muni Pwr Agy Rev Cap Apprec
Rfdg (AMBAC Insd).................... * 09/01/07 2,349,871
8,220 Texas St Pub Ppty Fin Corp Rev Mental
Hlth & Retardation Rfdg (FSA Insd)
(b).................................. 5.500 09/01/13 8,137,636
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEXAS (CONTINUED)
$ 1,475 Waxahachie, TX Cmnty Dev Corp Sales
Tax Rev (MBIA Insd).................. * 08/01/21 $ 374,753
1,270 Waxahachie, TX Cmnty Dev Corp Sales
Tax Rev (MBIA Insd).................. * 08/01/22 301,498
1,250 West Side Calhoun Cnty, TX Navig Dist
Solid Waste Disp Union Carbide Chem &
Plastics (b)......................... 8.200% 03/15/21 1,305,450
------------
37,538,261
------------
UTAH 1.7%
5,210 Salt Lake City, UT Arpt Rev Delta
Airls Inc Proj (b)................... 7.900 06/01/17 5,322,223
1,000 Salt Lake Cnty, UT College Rev
Westminster College Proj............. 5.750 10/01/27 901,100
870 Utah St Hsg Fin Agy Single Family Mtg
Ser B Class 2 (b).................... 6.250 07/01/14 888,592
------------
7,111,915
------------
VIRGINIA 3.7%
1,970 Richmond, VA (FSA Insd) (a).......... 5.250 01/15/09 1,942,873
4,000 Richmond, VA (FSA Insd) (a).......... 5.500 01/15/12 3,932,680
4,000 Richmond, VA (FSA Insd) (a).......... 5.500 01/15/13 3,895,320
3,000 Richmond, VA (FSA Insd) (a).......... 5.500 01/15/16 2,852,370
3,000 Richmond, VA (FSA Insd) (a).......... 5.500 01/15/17 2,832,840
------------
15,456,083
------------
WEST VIRGINIA 0.6%
2,480 South Charleston, WV Indl Dev Rev
Union Carbide Chem & Plastics Ser A
(b).................................. 8.000 08/01/20 2,558,046
------------
WISCONSIN 1.2%
2,835 Southeast WI Professional Baseball Pk
Dist Lease Ctfs Partn (MBIA Insd).... * 12/15/11 1,458,012
1,495 Southeast WI Professional Baseball Pk
Dist Lease Ctfs Partn (MBIA Insd).... * 12/15/12 719,977
1,565 Southeast WI Professional Baseball Pk
Dist Lease Ctfs Partn (MBIA Insd).... * 12/15/13 702,763
1,670 Southeast WI Professional Baseball Pk
Dist Lease Ctfs Partn (MBIA Insd).... * 12/15/14 697,893
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
WISCONSIN (CONTINUED)
$ 1,000 Southeast WI Professional Baseball Pk
Dist Lease Ctfs Partn (MBIA Insd).... * 12/15/16 $ 361,610
1,000 Southeast WI Professional Baseball Pk
Dist Sales Tax Rev Ser A Rfdg (MBIA
Insd)................................ 5.500% 12/15/26 938,000
------------
4,878,255
------------
PUERTO RICO 0.9%
1,000 Puerto Rico Indl Tourist Edl Med &
Environmental Control Fac Financing
Auth Higher Edl Rev.................. 5.375 02/01/19 889,430
3,000 Puerto Rico Pub Bldgs Auth Gtd Pub Ed
& Hlth Fac........................... 5.700 07/01/16 2,954,340
------------
3,843,770
------------
TOTAL LONG-TERM INVESTMENTS 102.3%
(Cost $435,653,868)................................................ 426,891,196
SHORT-TERM INVESTMENTS 0.4%
(Cost $1,500,000).................................................. 1,500,000
------------
TOTAL INVESTMENTS 102.7%
(Cost $437,153,868)................................................ 428,391,196
LIABILITIES IN EXCESS OF OTHER ASSETS (2.7%)........................ (11,049,271)
------------
NET ASSETS 100.0%................................................... $417,341,925
============
</TABLE>
* Zero coupon bond
(a) Securities purchased on a when issued or delayed delivery basis.
(b) Assets segregated as collateral for when issued or delayed delivery purchase
commitments and open futures transactions.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corporation
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Administration
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance Corp.
PSF--Permanent School Fund Guaranty
See Notes to Financial Statements
20
<PAGE> 22
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $437,153,868)....................... $428,391,196
Cash........................................................ 90,665
Receivables:
Investments Sold.......................................... 8,705,229
Interest.................................................. 5,563,427
Variation Margin on Futures............................... 5,469
Other....................................................... 21,112
------------
Total Assets.......................................... 442,777,098
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 24,576,495
Income Distributions -- Common and Preferred Shares....... 352,774
Investment Advisory Fee................................... 213,681
Affiliates................................................ 19,815
Accrued Expenses............................................ 155,376
Trustees' Deferred Compensation and Retirement Plans........ 117,032
------------
Total Liabilities..................................... 25,435,173
------------
NET ASSETS.................................................. $417,341,925
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 1,000,000
shares, 330 issued with liquidation preference of $500,000
per share)................................................ $165,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 28,684,985 shares issued and
outstanding).............................................. 286,850
Paid in Surplus............................................. 265,829,515
Accumulated Undistributed Net Investment Income............. 941,736
Accumulated Net Realized Loss............................... (6,123,183)
Net Unrealized Depreciation................................. (8,592,993)
------------
Net Assets Applicable to Common Shares................ 252,341,925
------------
NET ASSETS.................................................. $417,341,925
============
NET ASSET VALUE PER COMMON SHARE ($252,341,925 divided by
28,684,985 shares outstanding)............................ $ 8.80
============
</TABLE>
See Notes to Financial Statements
21
<PAGE> 23
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 13,411,077
------------
EXPENSES:
Investment Advisory Fee..................................... 1,291,398
Preferred Share Maintenance................................. 217,528
Custody..................................................... 16,330
Trustees' Fees and Related Expenses......................... 10,727
Legal....................................................... 9,200
Other....................................................... 153,745
------------
Total Expenses.......................................... 1,698,928
------------
NET INVESTMENT INCOME....................................... $ 11,712,149
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ (7,094,601)
Options................................................... 231,709
Futures................................................... 3,252,241
------------
Net Realized Loss........................................... (3,610,651)
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 9,463,175
------------
End of the Period:
Investments............................................. (8,762,672)
Futures................................................. 169,679
------------
(8,592,993)
------------
Net Unrealized Depreciation During the Period............... (18,056,168)
------------
NET REALIZED AND UNREALIZED LOSS............................ $(21,666,819)
============
NET DECREASE IN NET ASSETS FROM OPERATIONS.................. $ (9,954,670)
============
</TABLE>
See Notes to Financial Statements
22
<PAGE> 24
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1999 and the
Year Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
December 31, 1999 June 30, 1999
- -----------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................ $ 11,712,149 $ 24,072,047
Net Realized Gain/Loss........................... (3,610,651) 3,804,623
Net Unrealized Depreciation During the Period.... (18,056,168) (23,920,190)
------------ ------------
Change in Net Assets from Operations............. (9,954,670) 3,956,480
------------ ------------
Distributions from Net Investment Income:
Common Shares.................................. (8,834,911) (18,745,835)
Preferred Shares............................... (2,980,455) (5,498,326)
------------ ------------
Total Distributions.............................. (11,815,366) (24,244,161)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES..................................... (21,770,036) (20,287,681)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through
Dividend Reinvestment.......................... -0- 2,055,345
------------ ------------
TOTAL DECREASE IN NET ASSETS..................... (21,770,036) (18,232,336)
NET ASSETS:
Beginning of the Period.......................... 439,111,961 457,344,297
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $941,736
and
$1,044,953, respectively)...................... $417,341,925 $439,111,961
============ ============
</TABLE>
See Notes to Financial Statements
23
<PAGE> 25
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended ---------------------------------------------
December 31, 1999 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period (a)............. $ 9.556 $10.263 $10.014 $ 9.758 $9.760
----------------- ------- ------- ------- ------
Net Investment Income........ .409 .841 .890 .916 .940
Net Realized and Unrealized
Gain/Loss.................. (.756) (.700) .261 .264 .048
----------------- ------- ------- ------- ------
Total from Investment
Operations................. (.347) .141 1.151 1.180 .988
----------------- ------- ------- ------- ------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders........... .308 .656 .692 .720 .770
Common Share Equivalent
of Distributions Paid
to Preferred
Shareholders........... .104 .192 .210 .204 .220
Distributions from and in
Excess of Net Realized
Gain Paid to Common
Shareholders............. -0- -0- -0- -0- -0-
----------------- ------- ------- ------- ------
Total Distributions.......... .412 .848 .902 .924 .990
----------------- ------- ------- ------- ------
Net Asset Value, End of the
Period..................... $ 8.797 $ 9.556 $10.263 $10.014 $9.758
================= ======= ======= ======= ======
Market Price Per Share at End
of the Period.............. $ 7.625 $ 9.625 $10.875 $10.875 $9.875
Total Investment Return at
Market Price (a)........... (17.92%)** (5.68%) 6.85% 18.32% (4.27%)
Total Return at Net Asset
Value (b).................. (4.79%)** (.67%) 9.62% 10.24% 8.02%
Net Assets at End of the
Period (In millions)....... $ 417.3 $ 439.1 $ 457.3 $ 448.2 $438.7
Ratio of Expenses to Average
Net Assets Applicable to
Common Shares*............. 1.28% 1.24% 1.23% 1.28% 1.31%
Ratio of Net Investment
Income to Average Net
Assets Applicable to Common
Shares (c)................. 6.60% 6.35% 6.64% 7.18% 7.26%
Portfolio Turnover........... 34%** 98% 103% 53% 29%
* Ratio of Expenses to
Average Net Assets
Including Preferred
Shares.................... .79% .79% .79% .80% .82%
</TABLE>
(a) Total Investment Return at Market Price reflects the change in market value
of the common shares for the period indicated with reinvestment of dividends
in accordance with the Trust's dividend reinvestment plan.
(b) Total Return at Net Asset Value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.
(c) Net Investment Income is adjusted for common share equivalent of
distributions paid to preferred shareholders.
** Non-Annualized
24
<PAGE> 26
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended June 30,
- -------------------------------------------
1995 1994 1993 1992 1991
- -----------------------------------------------------
<S> <C> <C> <C> <C>
$ 9.924 $11.133 $10.688 $ 9.805 $ 9.534
------- ------- ------- ------- -------
.964 1.000 1.078 1.095 1.093
(.065) (1.214) .520 .848 .295
------- ------- ------- ------- -------
.899 (.214) 1.598 1.943 1.388
------- ------- ------- ------- -------
.840 .840 .829 .791 .725
.223 .155 .162 .238 .337
-0- -0- .162 .031 .055
------- ------- ------- ------- -------
1.063 .995 1.153 1.060 1.117
------- ------- ------- ------- -------
$ 9.760 $ 9.924 $11.133 $10.688 $ 9.805
======= ======= ======= ======= =======
$11.125 $11.125 $12.000 $11.375 $10.125
8.59% (0.05%) 15.20% 21.65% 18.71%
7.24% (3.63%) 13.97% 18.08% 11.61%
$ 436.1 $ 437.7 $ 467.9 $ 452.7 $ 426.7
1.33% 1.28% 1.25% 1.35% 1.46%
7.56% 7.86% 8.41% 8.41% 7.88%
38% 45% 45% 27% 69%
.83% .82% .80% .84% .89%
</TABLE>
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Municipal Income Trust (the "Trust") is registered as a diversified
closed-end management investment company under the Investment Company Act of
1940, as amended. The Trust's investment objective is to provide a high level of
current income exempt from federal income taxes with safety of principal through
investment in a diversified portfolio of investment grade tax-exempt municipal
securities. The Trust commenced investment operations on August 26, 1988.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles 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 these estimates.
A. SECURITY VALUATION--Municipal bonds are valued by independent pricing
services or dealers using the mean of the bid and asked prices or, in the
absence of market quotations, at fair value based upon yield data relating to
municipal bonds with similar characteristics and general market conditions.
Securities which are not valued by independent pricing services are valued at
fair value using procedures established in good faith by the Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are valued at
amortized cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when issued" 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 Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made.
C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of each
applicable security.
26
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
D. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At June 30, 1999, the Trust had an accumulated capital loss carryforward
for tax purposes of $2,492,182 which will expire on June 30, 2004.
At December 31, 1999, for federal income tax purposes, cost of long- and
short-term investments is $437,153,868; the aggregate gross unrealized
appreciation is $11,505,180 and the aggregate gross unrealized depreciation is
$20,267,852, resulting in net unrealized depreciation on long- and short-term
investments of $8,762,672.
E. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays dividends from
net investment income to common shareholders monthly. Net realized gains, if
any, are distributed annually to common shareholders. Distributions from net
realized gains for book purposes may include short-term capital gains, which are
included as ordinary income for tax purposes. Due to inherent differences in the
recognition of certain expenses under generally accepted accounting principles
and for federal income tax purposes, the amount of net investment income/loss
may differ between book and federal income tax purposes for a particular period.
These differences are temporary in nature, but may result in book basis net
investment losses.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
Investment Advisory Corp. (the "Adviser") will provide investment advice and
facilities to the Trust for an annual fee payable monthly of .60% of the average
net assets of the Trust.
For the six months ended December 31, 1999, the Trust recognized expenses of
approximately $4,700 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
For the six months ended December 31, 1999, the Trust recognized expenses of
approximately $52,500 representing Van Kampen Funds Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting and legal services to
the Trust.
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Trust. The maximum
annual benefit per trustee under the plan is $2,500.
3. CAPITAL TRANSACTIONS
At December 31, 1999 and June 30, 1999, respectively, common shares paid in
surplus aggregated $265,829,515 and $265,829,515, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
- ---------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares........................ 28,684,985 28,485,339
Shares Issued Through Dividend
Reinvestment.......................... -0- 199,646
---------- ----------
Ending Shares........................... 28,684,985 28,684,985
========== ==========
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $150,657,593 and $165,748,264,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio and to manage the portfolio's effective yield, maturity and duration.
All of the Trust's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly, except when exercising a call option contract or taking
delivery of a security underlying a futures contract. In this instance, the
recognition of gain or loss is postponed until the disposal of the security
underlying the option or futures contract.
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Summarized below are the specific types of derivative financial instruments
used by the Trust.
A. OPTION CONTRACTS--An option contract gives the buyer the right, but not the
obligation to buy (call) or sell (put) an underlying item at a fixed exercise
price during a specified period. These contracts are generally used by the Trust
to manage the portfolio's effective maturity and duration.
Transactions in options, each with a par value of $100,000, for the six
months ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
CONTRACTS PREMIUM
- -----------------------------------------------------------------------
<S> <C> <C>
Outstanding at June 30, 1999.................... -0- $ -0-
Options Written and Purchased (Net)............. 1,175 372,926
Options Terminated in Closing Transactions
(Net)......................................... (750) (330,712)
Options Expired (Net)........................... (425) (42,214)
----- ---------
Outstanding at December 31, 1999................ -0- $ -0-
===== =========
</TABLE>
B. FUTURES CONTRACTS--A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in futures on U.S. Treasury Bonds and the Municipal Bond
Index and typically closes the contract prior to the delivery date. These
contracts are generally used to manage the portfolio's effective maturity and
duration.
Upon entering into futures contracts, the Trust maintains, in a segregated
account with its custodian, cash or liquid securities with a value equal to its
obligation under the futures contracts. During the period the futures contract
is open, payments are received from or made to the broker based upon changes in
the value of the contract (the variation margin). The risk of loss associated
with a futures contract is in excess of the variation margin reflected on the
Statement of Assets and Liabilities.
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Transactions in futures contracts for the six months ended December 31,
1999, were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- ---------------------------------------------------------------------
<S> <C>
Outstanding at June 30, 1999.............................. 420
Futures Opened............................................ 1,296
Futures Closed............................................ (1,541)
------
Outstanding at December 31, 1999.......................... 175
======
</TABLE>
The futures contracts outstanding as of December 31, 1999, and the
descriptions and unrealized appreciation/depreciation are as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
- -------------------------------------------------------------------------
<S> <C> <C>
Short Contracts
Municipal Bond Future, Mar 2000--
(Current Notional Value of $93,438 per
contract)................................. 175 $ 169,679
=== =========
</TABLE>
C. INDEXED SECURITIES--These instruments are identified in the portfolio of
investments. The price of these securities may be more volatile than the price
of a comparable fixed rate security.
An Inverse Floating security is one where the coupon is inversely indexed to
a short-term floating interest rate multiplied by a specified factor. As the
floating rate rises, the coupon is reduced. Conversely, as the floating rate
declines, the coupon is increased. These instruments are typically used by the
Trust to enhance the yield of the portfolio.
An Embedded Cap security includes a cap strike level such that the coupon
payment may be supplemented by cap payments if the floating rate index upon
which the cap is based rises above the strike level. The Trust invests in these
instruments as a hedge against a rise in the short-term interest rates which it
pays on its preferred shares.
6. PREFERRED SHARES
The Trust has outstanding 330 shares of rate adjusted tax-exempt preferred
shares ("Rates") in three series of 110 shares each. Dividends are cumulative
and the rate on each series is currently reset every 28 days through an auction
process. The average rate in effect on December 31, 1999, was 4.067%. During the
six months ended December 31, 1999, the rates ranged from 3.247% to 4.200%.
30
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense.
The Rates are redeemable at the option of the Trust in whole or in part at a
price of $500,000 per share plus accumulated and unpaid dividends. The Trust is
subject to certain asset coverage tests, and the Rates are subject to mandatory
redemption if the tests are not met.
31
<PAGE> 33
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be re-
registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-
8200. If you withdraw, you will receive, without charge, a share certificate
issued in your name for all full Common Shares credited to your account under
the Plan and a cash payment will be made for any fractional Common Share
credited to your account under the Plan. You may again elect to participate in
the Plan at any time by calling 1-800-341-2929 or writing to the Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
32
<PAGE> 34
VAN KAMPEN FUNDS
GROWTH
Aggressive Growth*
American Value*
Emerging Growth
Enterprise
Equity Growth
Focus Equity
Growth
Mid Cap Growth
Pace
Small Cap Value
Technology
GROWTH AND INCOME
Comstock
Equity Income
Growth and Income
Harbor
Real Estate Securities
Utility
Value
GLOBAL/INTERNATIONAL
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
Global Fixed Income*
Global Franchise
Global Government Securities*
Global Managed Assets*
International Magnum
Latin American
Strategic Income
Worldwide High Income
INCOME
Corporate Bond
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
U.S. Government
U.S. Government Trust for Income
CAPITAL PRESERVATION
Reserve
Tax Free Money
SENIOR LOAN
Prime Rate Income Trust
Senior Floating Rate
TAX FREE
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal**
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
To find out more about any of these funds, ask your financial advisor for a
prospectus, which contains more complete information, including sales charges,
risks, and ongoing expenses. Please read it carefully before you invest or send
money.
To view a current Van Kampen fund prospectus or to receive additional fund
information, choose from one of the following:
- - visit our Web site at WWW.VANKAMPEN.COM--to view a prospectus, select Download
Prospectus
- - call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time.
Telecommunications Device for the Deaf users, call 1-800-421-2833.
- - e-mail us by visiting WWW.VANKAMPEN.COM and selecting Contact Us
* Closed to new investors
** Open to new investors for a limited time
33
<PAGE> 35
VAN KAMPEN MUNICIPAL INCOME TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*
THEODORE A. MYERS
RICHARD F. POWERS, III* - Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
RICHARD F. POWERS, III*
President
DENNIS J. MCDONNELL*
Executive Vice President and Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer, and Chief Financial Officer
PETER W. HEGEL*
MICHAEL H. SANTO*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG LLP
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined
in the Investment Company Act of 1940.
(C) Van Kampen Funds Inc., 2000 All rights reserved.
(SM) denotes a service mark of
Van Kampen Funds Inc.
34
<PAGE> 36
YEAR 2000 UPDATE
As we enter the new century, it's "business as usual" for Van Kampen.
Thank you for the confidence you showed in us during the changeover on
January 1, 2000, and for entrusting us with your investment portfolio. We
look forward to continuing to serve your investment needs.
35
<PAGE> 37
VAN KAMPEN FUNDS
YOUR NOTES:
36
