<PAGE> 1
<TABLE>
<S> <C>
Table of Contents
OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 3
PORTFOLIO AT A GLANCE
CREDIT QUALITY 4
SIX-MONTH DIVIDEND HISTORY 4
TOP FIVE INDUSTRIES 5
NET ASSET VALUE AND MARKET PRICE 5
Q&A WITH YOUR PORTFOLIO MANAGERS 6
GLOSSARY OF TERMS 9
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS 10
FINANCIAL STATEMENTS 27
NOTES TO FINANCIAL STATEMENTS 32
TRUST OFFICERS AND IMPORTANT ADDRESSES 37
</TABLE>
It is times like these when money-management experience may make a difference.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 2
OVERVIEW
LETTER TO SHAREHOLDERS
May 19, 2000
Dear Shareholder,
Whether you have held your Trust for years or just joined the Van Kampen family
of shareholders in the last few months, you are likely to have questions and
even some concerns about how recent market volatility has affected your
investment. I encourage you to review the following Q&A in which your portfolio
manager provides an update on how your Trust is being managed in this
environment.
It is times like these when money-management experience may make a difference.
Toward that end, you should know that Van Kampen is one of the nation's oldest
investment-management firms, with a history of money management dating back to
1926. Our portfolio managers have invested in all types of market
conditions--during bull and bear markets, periods of inflation and rising
interest rates, and now a technology revolution. We have managed money long
enough to understand short-term market volatility and the value of investing for
the long term.
As we head into the second half of 2000, count on us to
continue to draw on the wisdom of our 76 years of experience.
Along those lines, Van Kampen's "Generations of Experience" is
the theme of a national advertising campaign that kicked off
this spring. The message emphasizes our depth of
investment-management history, as well as our firm belief that with the right
investments, anyone can realize life's true wealth.
Sincerely,
[SIG]
Richard F. Powers, III
President and CEO
Van Kampen Investments
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
ECONOMIC GROWTH REMAINED STRONG, PRIMARILY DUE TO ACTIVE CONSUMER AND BUSINESS
SPENDING. GROSS DOMESTIC PRODUCT, THE PRIMARY MEASURE OF ECONOMIC GROWTH,
INCREASED AT AN ANNUALIZED RATE OF 5.4 PERCENT IN THE FIRST QUARTER OF 2000.
WHILE THIS FIGURE INDICATES A MODEST SLOWDOWN FROM THE PREVIOUS TWO QUARTERS, IT
NEVERTHELESS REPRESENTS A HIGH RATE OF ECONOMIC GROWTH.
CONSUMER SPENDING AND EMPLOYMENT
INFLATION FEARS CONTINUED TO MOUNT BECAUSE OF STRONG CONSUMER SPENDING AND THE
TIGHT LABOR MARKET. FOR MOST OF THE REPORTING PERIOD, RISING INTEREST RATES DID
LITTLE TO REIN IN ROBUST CONSUMER SPENDING. ALTHOUGH RETAIL SALES GROWTH
MODERATED IN APRIL, THE FACTORS UNDERPINNING CONSUMER ACTIVITY REMAINED LARGELY
UNCHANGED--RISING WAGES, LOW UNEMPLOYMENT, AND A GENERALLY FAVORABLE (THOUGH
VOLATILE) STOCK MARKET.
IN ADDITION, THE JOBLESS RATE HOVERED NEAR ITS LOWEST LEVEL IN THREE DECADES.
THE EMPLOYMENT COST INDEX ACCELERATED SHARPLY IN THE FIRST QUARTER OF 2000,
REFLECTING RISING WAGES AS EMPLOYERS VIE TO ATTRACT AND RETAIN SKILLED WORKERS.
THESE WAGE PRESSURES, IN TURN, BEGAN TO AFFECT PRICES, AS COMPANIES STARTED TO
RAISE THE COST OF GOODS AND SERVICES TO COMPENSATE FOR HIGHER LABOR COSTS.
INTEREST RATES AND INFLATION
STRONG GDP DATA, CONSUMER SPENDING, AND EMPLOYMENT PROMPTED THE FEDERAL RESERVE
BOARD TO SEEK TO SLOW THE PACE OF ECONOMIC GROWTH AND WARD OFF INFLATION. THE
FED INCREASED THE FEDERAL FUNDS RATE BY 0.25 PERCENT FIVE TIMES BETWEEN JUNE
1999 AND APRIL 2000. [EDITOR'S NOTE: THE FED RAISED RATES BY 0.50 PERCENT ON MAY
16.] DESPITE THE FED'S CONCERNS, THE CONSUMER PRICE INDEX, A MEASURE OF
INFLATION, ROSE A MODERATE 3.0 PERCENT DURING THE 12 MONTHS ENDED APRIL 30,
2000.
INTEREST RATES AND INFLATION
(April 30, 1998 - April 30, 2000)
[LINE GRAPH]
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Apr 98 5.50 1.40
5.50 1.70
5.50 1.70
Jul 98 5.50 1.70
5.50 1.60
5.25 1.50
Oct 98 5.00 1.50
4.75 1.50
4.75 1.60
Jan 99 4.75 1.70
4.75 1.60
4.75 1.70
Apr 99 4.75 2.30
4.75 2.10
5.00 2.00
Jul 99 5.00 2.10
5.25 2.30
5.25 2.60
Oct 99 5.25 2.60
5.50 2.60
5.50 2.70
Jan 00 5.50 2.70
5.75 3.20
6.00 3.70
Apr 00 6.00 3.00
</TABLE>
Interest rates are represented by the closing midline federal funds target rate
on the last day of each month. Inflation is indicated by the annual percent
change of the Consumer Price Index for all urban consumers at the end of each
month.
2
<PAGE> 4
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS
(as of April 30, 2000)
<TABLE>
<S> <C> <C>
------------------------------------------------------------------------
NYSE Ticker Symbol VKQ
------------------------------------------------------------------------
Six-month total return based on market price(1) 1.64%
------------------------------------------------------------------------
Six-month total return based on NAV(2) 1.55%
------------------------------------------------------------------------
Distribution rate as a % of closing common stock
price(3) 7.38%
------------------------------------------------------------------------
Taxable-equivalent distribution rate as a % of closing
common stock price(4) 11.53%
------------------------------------------------------------------------
Net asset value $14.42
------------------------------------------------------------------------
Closing common stock price $13.0000
------------------------------------------------------------------------
Six-month high common stock price (11/03/99) $13.8125
------------------------------------------------------------------------
Six-month low common stock price (12/22/99) $12.1250
------------------------------------------------------------------------
Preferred share (Series A) rate(5) 4.450%
------------------------------------------------------------------------
Preferred share (Series B) rate(5) 4.000%
------------------------------------------------------------------------
Preferred share (Series C) rate(5) 4.290%
------------------------------------------------------------------------
Preferred share (Series D) rate(5) 4.100%
------------------------------------------------------------------------
</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 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 income 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 is no guarantee of 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 AT A GLANCE
CREDIT QUALITY
(as a percentage of long-term investments)
<TABLE>
<CAPTION>
As of April 30, 2000
<S> <C> <C>
- AAA/Aaa............ 49.0%
- AA/Aa.............. 7.3%
- A/A................ 12.6%
- BBB/Baa............ 18.8%
- BB/Ba.............. 0.6%
- Non-Rated.......... 11.7%
[PIE CHART]
<CAPTION>
As of October 31, 1999
<S> <C> <C>
- AAA/Aaa............ 45.8%
- AA/Aa.............. 7.8%
- A/A................ 13.9%
- BBB/Baa............ 20.0%
- BB/Ba.............. 0.6%
- Non-Rated.......... 11.9%
[PIE CHART]
</TABLE>
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
SIX-MONTH DIVIDEND HISTORY
(for the six months ending April 30, 2000, for common shares)
[BAR GRAPH]
<TABLE>
<CAPTION>
DIVIDENDS
---------
<S> <C>
11/99 0.08
12/99 0.08
1/00 0.08
2/00 0.08
3/00 0.08
4/00 0.08
</TABLE>
The dividend history represents past performance of the Trust and is no
guarantee of the Trust's future dividends.
4
<PAGE> 6
TOP FIVE INDUSTRIES
(as a percentage of long-term investments)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
APRIL 30, 2000 OCTOBER 31, 1999
-------------- ----------------
<S> <C> <C>
General Purpose 16.20 16.40
Health Care 14.90 14.90
Industrial Revenue 9.80 10.20
Higher Education 7.00 6.00
Transportation 6.80 9.60
</TABLE>
NET ASSET VALUE AND MARKET PRICE
(based upon quarter-end values--September 1991 through April 2000)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NET ASSET VALUE MARKET PRICE
--------------- ------------
<S> <C> <C>
9/91 15.0000 14.8100
15.2400 15.1250
15.1800 14.7500
15.9800 15.6250
9/92 16.2400 15.7500
16.0000 15.6250
16.5700 16.5000
16.8600 16.2500
9/93 17.2600 16.6250
17.2700 16.5000
15.5300 14.8750
15.3900 15.1250
9/94 15.1300 14.3750
14.4800 13.0000
15.7200 14.8750
15.5000 14.3750
9/95 15.7600 14.0000
16.5600 14.1250
15.9900 14.1250
15.8000 14.0000
9/96 16.0200 14.5000
16.2700 13.8750
15.9600 14.1250
16.3900 15.0625
9/97 16.7700 15.6875
17.0900 16.1875
17.0900 15.8120
17.0400 16.1250
9/98 17.5100 17.0000
16.8200 16.9375
16.5500 16.3125
15.7100 15.1875
9/99 15.0300 13.9375
14.3900 12.7500
14.6400 12.8750
4/00 14.4200 13.0000
</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.
5
<PAGE> 7
Q&A WITH YOUR PORTFOLIO MANAGERS
WE RECENTLY SPOKE WITH REPRESENTATIVES OF THE ADVISER OF THE VAN KAMPEN
MUNICIPAL TRUST ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS
DURING THE PAST SIX MONTHS. THE REPRESENTATIVES INCLUDE DAVID C. JOHNSON,
PORTFOLIO MANAGER, WHO HAS MANAGED THE TRUST SINCE 1991 AND WORKED IN THE
INVESTMENT INDUSTRY SINCE 1981. THE FOLLOWING COMMENTS REFLECT THE
REPRESENTATIVES' VIEWS ON THE TRUST'S PERFORMANCE DURING THE SIX MONTHS ENDED
APRIL 30, 2000.
Q WHAT WERE THE MOST IMPORTANT
DEVELOPMENTS IN THE FIXED-INCOME MARKETS DURING THE REPORTING PERIOD?
A Generally higher interest rates,
sparked by inflation worries, set the tone for the fixed-income markets during
the past six months. As the economy continued its strong advance, the markets
reacted warily to signs of potential inflationary pressures--such as rising
employment costs, healthy job growth, strong consumer spending, and spikes in
commodities prices, especially oil. These concerns fueled a steady sell-off
through the fourth quarter of 1999 and into January 2000.
To slow the economy and keep prices from rising, the Federal Reserve Board
gradually pushed short-term interest rates higher, raising the fed funds rate (a
key short-term lending rate) three times between November 1999 and April 2000.
(Editor's note: On May 16, 2000, after the reporting period ended, the Fed
raised rates a fourth time.)
In times of rising interest rates, bond prices trend downward. Add to that
the lingering effects of the Year 2000 (Y2K) computer scare early in the first
quarter of 2000, and you can see why this was a challenging period for many
fixed-income investors.
Q HOW DID THE MUNICIPAL
BOND MARKET REACT TO THESE CONDITIONS?
A Not surprisingly, higher interest
rates hurt municipal bond prices, but we believe there's always opportunity in
the market. In the past few months, we've actually seen some fairly significant
price swings--both up and down--as investors tried to anticipate the Fed's next
move and the direction of interest rates. The market was weak in late 1999 and
early 2000, but we had a nice rally in February and March, which tapered off in
April.
The strong economy has bolstered the financial condition of many
municipalities across the country, so the pace of new municipal bond issuance
dropped sharply (about 40 percent) from a year ago. With their coffers full,
municipalities haven't needed to turn to the bond market for financing. Also,
higher interest rates made it more difficult for issuers to refund
6
<PAGE> 8
outstanding bond issues, which has been a source of new investment opportunities
in the past.
Q WHAT STRATEGIES DID YOU FOLLOW
IN MANAGING THE TRUST?
A The Trust is one of our more
seasoned closed-end funds, having been established in 1991. Because of the
market conditions at the time of its inception, it held a significant percentage
of higher-yielding, longer-maturity bonds. This created a situation in which a
number of these securities would likely be called because the issuer could issue
new bonds at much lower rates.
Because of their attractive coupons, these bonds were trading at a premium
to par, presenting us with an opportunity to capture some solid capital gains.
Because these bonds were scheduled to be called or refunded within the next year
or two, we chose to sell them while the demand for them--and therefore their
market price--was high. While the Trust still may lose some yield due to
higher-yielding securities being called out of the portfolio, we have actively
managed the portfolio in an attempt to decrease the impact of expected calls in
2000.
We've seen only a slight decline in portfolio income in recent months. To
help preserve the Trust's earning power, we added more longer-term securities
with stronger call protection provisions to the portfolio. We also maintained a
somewhat more aggressive stance--compared to our other closed-end funds--with
regard to lower-rated and nonrated securities, such as those that are rated BBB
or are not rated but are considered by our bond analysts to have credit quality
equivalent to this rating. As of April 30, 2000, more than 30 percent of the
portfolio was in BBB rated or nonrated bonds (18.8 percent in BBB and 11.7
percent in nonrated).
Other strategies included purchasing deeply discounted bonds, some of which
had been issued a year or so ago with coupons of 4.75, 5.00, or 5.25 percent. As
interest rates went up over time, these bonds began selling at a steep discount,
with some priced as low as 80 cents on the dollar. Buying these deeply
discounted bonds enabled us to purchase more par value per dollar invested.
Q WHAT AREAS OF THE MUNICIPAL
MARKET WERE MOST ATTRACTIVE TO YOU?
A Our philosophy is to seek bonds
that we feel represent the best values compared with similar offerings in the
marketplace. During the past six months, we did not specifically target one area
of the market over another. We did, however, maintain significant concentrations
in certain sectors, including general purpose and health-care bonds, each of
which represented more than 14 percent of the portfolio's long-term investments.
Many of our portfolio management decisions were based on pricing issues,
such as the availability of deep discounts, or structural issues, such as
maintaining adequate call protection and diversification for the portfolio. The
portfolio is well diversified, with no sector representing more than 17 percent
of long-term investments and no single security representing more than 2 percent
of the portfolio. For
7
<PAGE> 9
additional portfolio highlights, please refer to page 4.
Q HOW DID THE TRUST PERFORM
DURING THE PERIOD?
A For the six-month period ended
April 30, 2000, the Trust returned 1.64 percent based on market price. At the
same time, the Trust's market price decreased from $13.1875 per share on October
31, 1999, to $13.0000 per share on April 30, 2000. By comparison, the total
return of the Trust's peer group (as represented by the Lehman Brothers
Municipal Bond Index) was 2.63 percent for the same period.
The Trust continued to provide an attractive level of income, as its
dividend remained unchanged at $0.08 per share throughout the reporting period.
This monthly tax-exempt dividend translates to a distribution rate of 7.38
percent based on the Trust's closing common stock price on April 30, 2000.
Also, because the Trust is exempt from federal income taxes, this
distribution rate is equivalent to a yield of 11.53 percent 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 is no
guarantee of future results.
Q WHAT DO YOU SEE AHEAD FOR
THE ECONOMY AND THE MUNICIPAL MARKET?
A All eyes will be on the key
economic statistics, such as GDP
growth, employment costs, and the unemployment rate. These figures measure the
economy's strength and rate of growth and may influence whether the Fed will
continue to raise short-term interest rates. We expect that the inflation rate
may increase, but it's likely to remain in a moderate range for the near term.
It's anticipated that the Fed will continue to increase short-term rates by the
end of the summer, perhaps by more than 0.50 percent. Higher interest rates
will, in turn, put pressure on the municipal market in the short run.
Increased stock-price volatility in April has increased investor skepticism,
but investors continue to see price pullbacks as opportunities to buy
aggressive-growth stocks. It may take a much deeper, more sustained decline in
these stocks to convince investors to rethink their asset allocation decisions.
If the stock market does fall sharply, we could see a flight to quality, as
investors pursue investments that typically carry less risk. Such conditions
might benefit investment-grade municipal bonds.
Low municipal-bond supply could continue throughout 2000, especially if
interest rates trend higher, as expected, throughout the first half of the year.
Overall, the lower supply of bonds should help to shore up prices, as demand
remains strong. Investors can tolerate periodic price swings if they keep
long-term perspectives and continue to value the steady stream of tax-exempt
income that municipal bonds provide. As always, we will rely on our strong
research efforts to evaluate opportunities in the marketplace and identify
securities that may offer superior investment potential and value over time.
8
<PAGE> 10
GLOSSARY OF TERMS
A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.
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.
DISCOUNT BOND: A bond whose market price is lower than its face value (or "par
value"). Because bonds usually mature at face value, a discount bond has more
potential to appreciate in price than a par bond does.
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. 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.
INFLATION: A persistent and measurable rise in the general level of prices.
Inflation is widely measured by the Consumer Price Index, an economic indicator
that measures the change in the cost of purchased goods and services.
MATURITY DATE: The date a bond expires, usually at face value.
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.
YIELD SPREAD: The additional yield investors can earn by either investing in
bonds with longer maturities or by investing in bonds with lower ratings. The
spread is the difference in yield between bonds with short versus long
maturities or the difference in yield between high-quality bonds and lower-
quality bonds.
9
<PAGE> 11
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
THE FOLLOWING PAGES DETAIL THE SPECIFIC HOLDINGS OF YOUR TRUST AT THE END OF THE
REPORTING PERIOD.
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 99.5%
ARIZONA 0.3%
$ 2,500 Maricopa Cnty, AZ Indl Dev Auth Edl Rev AZ
Charter Schs Proj 1 Ser A................. 6.750% 07/01/29 $ 2,419,375
------------
ARKANSAS 0.4%
1,000 Arkansas St Dev Fin Auth Hosp Rev
Washington Regl Med Cent.................. 7.250 02/01/20 999,730
2,500 Arkansas St Dev Fin Auth Hosp Rev
Washington Regl Med Cent.................. 7.375 02/01/29 2,462,925
------------
3,462,655
------------
CALIFORNIA 7.6%
4,000 Anaheim, CA Pub Fing Auth Lease Rev Cap
Apprec Sub Pub Impts Proj C (FSA Insd).... * 09/01/20 1,195,800
6,010 California Edl Facs Auth Rev Cap Apprec
Loyola Marymount Univ (MBIA Insd)......... * 10/01/21 1,575,582
6,235 California Edl Facs Auth Rev Cap Apprec
Loyola Marymount Univ (MBIA Insd)......... * 10/01/22 1,526,016
6,435 California Edl Facs Auth Rev Cap Apprec
Loyola Marymount Univ (MBIA Insd)......... * 10/01/25 1,290,475
8,435 California Edl Facs Auth Rev Cap Apprec
Loyola Marymount Univ (MBIA Insd)......... * 10/01/26 1,584,599
1,950 California Hlth Facs Fin Auth Rev Casa De
Las Ser A (MBIA Insd)..................... 5.250 08/01/17 1,840,937
2,650 California Statewide Cmntys Dev Auth Ctfs
Partn..................................... 7.250 11/01/29 2,596,947
5,000 Contra Costa, CA Home Mtg Fin Auth Home
Mtg Rev (MBIA Insd)....................... * 09/01/17 1,862,900
1,030 Davis, CA Pub Fac Fin Auth Loc Agy Rev.... 6.600 09/01/25 1,035,511
2,000 Del Mar, CA Race Track Auth Rev Rfdg...... 6.000 08/15/06 2,036,460
7,110 Delano, CA Ctfs Partn Ser A (Prerefunded @
01/01/03)................................. 9.250 01/01/22 8,021,857
18,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Rfdg....................... * 01/15/25 3,629,880
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 3,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Rfdg....................... * 01/15/27 $ 1,538,160
47,810 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Rfdg....................... * 01/15/33 5,669,310
15,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Rfdg....................... * 01/15/37 1,359,300
11,150 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Sr Lien Ser A.............. * 01/01/18 4,020,578
2,240 Huntington Park, CA Redev Agy Rev Tax
Alloc Santa Fe Redev Rfdg................. 6.200% 10/01/27 2,150,781
16,540 Lodi, CA Elec Sys Rev Ctfs Partn Cap
Apprec Ser B (MBIA Insd).................. * 01/15/29 2,879,779
2,650 Los Angeles, CA Uni Sch Dist Ctfs Partn
Multiple Pptys Proj Ser A (FSA Insd)...... 5.500 10/01/16 2,642,792
3,860 Midpeninsula Reg Open Space Dist CA Fin
Auth Rev Cap Apprec (AMBAC Insd).......... * 09/01/27 696,498
3,670 Midpeninsula Reg Open Space Dist CA Fin
Auth Rev Cap Apprec (AMBAC Insd).......... * 09/01/30 546,683
1,900 Port Oakland, CA Ser K (FGIC Insd)........ 5.750 11/01/29 1,856,471
5,695 Sacramento, CA City Fin Auth Rev Comb Proj
B (MBIA Insd)............................. * 11/01/14 2,539,400
1,375 San Bernadino, CA Jt Pwrs Fin Auth Alloc
Rev Central City Merged Proj A Rfdg (AMBAC
Insd)..................................... 5.750 07/01/20 1,398,788
7,000 San Joaquin Hills, CA Tran Corridor Agy
Toll Rd Rev Cap Apprec Ser A Rfdg (MBIA
Insd)..................................... * 01/15/30 1,169,000
11,950 San Joaquin Hills, CA Tran Corridor Agy
Toll Rd Rev Cap Apprec Ser A Rfdg (MBIA
Insd)..................................... * 01/15/31 1,878,899
5,500 San Joaquin Hills, CA Tran Corridor Agy
Toll Rd Rev Cap Apprec Ser A Rfdg (MBIA
Insd)..................................... * 01/15/32 811,745
16,000 San Joaquin Hills, CA Tran Corridor Agy
Toll Rd Rev Cap Apprec Ser A Rfdg (MBIA
Insd)..................................... * 01/15/34 2,086,240
1,000 Stockton, CA Cmnty Fac Dist Spl Tax No.
1-A (b)................................... 5.800 09/01/14 966,780
------------
62,408,168
------------
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
COLORADO 9.0%
$ 5,000 Boulder Cnty, CO Rev Natl Cent Atmosphere
Impt & Rfdg............................... 6.900% 12/01/07 $ 5,189,900
8,500 Boulder Cnty, CO Rev Natl Cent Atmosphere
Impt & Rfdg............................... 7.000 12/01/13 8,836,005
990 Colorado Hsg Fin Auth Single Family Pgm Sr
Gtd Mtg Ln D3 (FHA Gtd)................... 7.200 08/01/23 1,022,452
2,000 Colorado Springs, CO Utils Rev Sub Lien
Sys Impt Ser A............................ 4.750 11/15/26 1,655,080
4,635 Denver, CO City & Cnty Arpt Rev Ser A
(b)....................................... 8.250 11/15/12 4,795,973
6,695 Denver, CO City & Cnty Arpt Rev Ser A
(b)....................................... 8.500 11/15/23 6,936,422
7,795 Denver, CO City & Cnty Arpt Rev Ser A
(b)....................................... 8.000 11/15/25 8,055,353
865 Denver, CO City & Cnty Arpt Rev Ser A
(Prerefunded @11/15/00)................... 8.250 11/15/12 899,704
8,790 Denver, CO City & Cnty Arpt Rev Ser D
(b)....................................... 7.000 11/15/25 8,834,126
2,310 Denver, CO City & Cnty Arpt Rev Ser D
(Prerefunded @ 11/15/01).................. 7.000 11/15/25 2,388,170
3,000 E-470 Pub Hwy Auth CO Rev Cap Apprec Sr
Ser B (MBIA Insd)......................... * 09/01/20 880,170
10,000 E-470 Pub Hwy Auth CO Rev Cap Apprec Sr
Ser B (MBIA Insd) (a)..................... * 09/01/28 1,570,300
22,000 Meridian Metro Dist CO Peninsular &
Oriental Steam Navig Co Rfdg (LOC:
Meridian Assoc East) (b).................. 7.500 12/01/11 22,873,840
------------
73,937,495
------------
CONNECTICUT 4.1%
7,140 Connecticut St Hlth & Edl Fac Auth Rev
Nursing Home Proj AHF/Hartford
(Prerefunded @ 11/01/04).................. 7.125 11/01/24 7,846,217
3,000 Connecticut St Spl Oblig Pkg Rev Bradley
Intl Arpt Ser A........................... 6.600 07/01/24 2,988,870
3,540 Mashantucket Western Pequot Tribe CT Spl
Rev Ser A, 144A -- Private Placement
(c)....................................... 6.400 09/01/11 3,645,563
3,460 Mashantucket Western Pequot Tribe CT Spl
Rev Ser A, 144A -- Private Placement
(Prerefunded @ 09/01/07) (c).............. 6.400 09/01/11 3,763,961
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
CONNECTICUT (CONTINUED)
$ 6,500 Mashantucket Western Pequot Tribe CT Spl
Rev Ser B, 144A -- Private Placement
(c)....................................... 5.750% 09/01/18 $ 5,955,365
7,000 Mashantucket Western Pequot Tribe CT Spl
Rev Ser B, 144A -- Private Placement
(c)....................................... 5.750 09/01/27 6,269,130
4,000 Stamford, CT Hsg Auth Multi-Family Rev
Fairfield Apts Proj Rfdg.................. 4.750 12/01/28 3,625,360
------------
34,094,466
------------
DELAWARE 0.4%
900 Delaware St Econ Dev Auth Rev Exempt Fac
Delmarva Pwr & Lt Co...................... 7.500 10/01/17 914,823
2,455 Delaware St Hsg Auth Rev Sr Home Mtg Ser B
Subser B2................................. 7.200 12/01/21 2,514,239
------------
3,429,062
------------
DISTRICT OF COLUMBIA 0.1%
1,000 District of Columbia Hosp Rev Medlantic
Hlthcare Group A Rfdg (MBIA Insd) (b)..... 5.875 08/15/19 1,003,150
------------
FLORIDA 2.9%
6,345 Florida St Dept Environmental Protection
Preservation Rev Ser A.................... 5.500 07/01/07 6,512,635
6,500 Gulf Breeze, FL Rev Cap Fdg Ser B (MBIA
Insd)..................................... 4.500 10/01/27 5,159,960
3,000 Hillsborough Cnty, FL Indl Dev Auth Indl
Dev Rev Hlth Facs Proj Univ Cmnty Hosp Ser
A......................................... 5.500 08/15/14 2,638,620
1,000 Hillsborough Cnty, FL Indl Dev Auth Indl
Dev Rev Univ Cmnty Hosp (MBIA Insd)....... 5.750 08/15/14 1,009,090
1,775 Miami-Dade Cnty, FL Spl Oblig Sub Ser A
Rfdg (MBIA Insd).......................... * 10/01/22 445,046
7,530 Sarasota Cnty, FL Hlth Fac Auth Rev
Hlthcare Kobernick/Meadow Pk (Prerefunded
@ 07/01/02)............................... 10.000 07/01/22 8,407,772
------------
24,173,123
------------
GEORGIA 4.8%
45,000 Georgia Loc Govt Ctfs Partn Grantor Trust
Ser A (MBIA Insd) (b)..................... 4.750 06/01/28 37,446,300
2,000 Royston, GA Hosp Auth Hosp Ctfs Rev Ty
Cobb Hlthcare Sys Inc Rfdg................ 6.500 07/01/27 1,789,180
------------
39,235,480
------------
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
HAWAII 0.6%
$ 420 Honolulu, HI City & Cnty Ser D (FGIC
Insd)..................................... 4.650% 02/01/07 $ 397,522
2,565 Honolulu, HI City & Cnty Ser D (FGIC
Insd)..................................... 4.700 02/01/08 2,414,819
4,000 Honolulu, HI City & Cnty Wastewtr Sys Rev
Cap Apprec (FGIC Insd).................... * 07/01/12 1,989,400
------------
4,801,741
------------
ILLINOIS 11.4%
4,490 Bedford Park, IL Tax Increment Rev Sr Lien
Bedford City Sq Proj...................... 9.250 02/01/12 4,821,991
3,650 Carol Stream, IL First Mtg Rev Windsor Pk
Mnr Proj.................................. 7.000 12/01/13 3,568,532
1,500 Champaign Cnty, IL Cmnty Unit Sch Dist No
116 Urbana Ser C (FGIC Insd).............. * 01/01/16 581,295
1,300 Champaign Cnty, IL Cmnty Unit Sch Dist No
116 Urbana Ser C (FGIC Insd).............. * 01/01/18 440,310
22,000 Chicago, IL Brd Edl Sch Reform Cap Apprec
B-1 (FGIC Insd)........................... * 12/01/20 6,307,400
14,400 Chicago, IL Brd Edl Sch Reform Cap Apprec
B-1 (FGIC Insd)........................... * 12/01/22 3,609,072
7,200 Chicago, IL Brd Edl Sch Reform Cap Apprec
B-1 (FGIC Insd)........................... * 12/01/23 1,689,552
6,345 Chicago, IL Lakefront Millennium Pkg Facs
(MBIA Insd)............................... 5.125 01/01/28 5,511,901
5,000 Chicago, IL Neighborhoods Alive 21 Pgm Ser
A (FGIC Insd)............................. 5.750 01/01/40 4,756,900
2,500 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
American Airls Inc Proj Rfdg.............. 8.200 12/01/24 2,727,375
6,210 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
United Airls Inc.......................... 8.400 05/01/04 6,346,558
4,215 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
United Airls Inc Ser B.................... 8.950 05/01/18 4,390,976
2,750 Chicago, IL Wastewtr Transmission Rev
Second Lien (MBIA Insd)................... 6.000 01/01/30 2,750,798
7,275 Chicago, IL Wastewtr Transmission Rev Cap
Apprec Ser A Rfdg (MBIA Insd)............. * 01/01/20 2,205,053
2,000 Chicago, IL Wastewtr Transmission Rev
Second Lien Ser B (MBIA Insd)............. 5.000 01/01/30 1,689,000
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
ILLINOIS (CONTINUED)
$ 900 Hodgkins, IL Tax Increment................ 9.500% 12/01/09 $ 981,486
4,000 Hodgkins, IL Tax Increment Ser A Rfdg..... 7.625 12/01/13 4,204,160
2,860 Illinois Dev Fin Auth Rev Adventist Hlth
Ser A (MBIA Insd) (a)..................... 5.500 11/15/05 2,897,380
2,705 Illinois Dev Fin Auth Rev Loc Govt Pgm
Aurora East Sch (MBIA Insd)............... * 12/01/15 1,090,872
2,000 Illinois Dev Fin Auth Solid Waste Disp Rev
Waste Mgmt Inc Proj....................... 5.050 01/01/10 1,674,220
1,740 Illinois Edl Fac Auth Rev Riverside Hlth
Sys Ser A Rfdg............................ 5.900 10/01/14 1,655,610
2,500 Illinois Hlth Fac Auth Rev Evangelical
Hosp Ser C Rfdg (FSA Insd)................ 6.750 04/15/12 2,639,650
7,750 Illinois Hlth Fac Auth Rev Fairview Oblig
Group Proj Ser A (Prerefunded @
10/01/02)................................. 9.500 10/01/22 8,747,735
4,335 Illinois Hlth Fac Auth Rev Hinsdale Hosp
Ser B Rfdg................................ 9.000 11/15/15 4,531,679
1,500 Illinois Hlth Fac Auth Rev Sarah Bush
Lincoln Hlth Cent (Prerefunded @
5/15/02).................................. 7.250 05/15/12 1,596,960
4,075 Illinois Hlth Facs Auth Rev West Suburban
Hosp Ser A Rfdg........................... 5.750 07/01/20 3,388,281
1,510 Roselle, IL Multi-Family Hsg Rev Waterbury
Apts Ser A Rfdg (GNMA Collateralized)..... 7.000 01/01/25 1,583,930
3,230 St Clair Cnty, IL Cap Impt Rev McKendree
Clg Proj Rfdg............................. 6.000 02/01/24 2,856,450
3,060 Will Cnty, IL Cmnty Sch Dist No 161 Summit
Hill Cap Apprec (FGIC Insd)............... * 01/01/12 1,580,459
3,505 Will Cnty, IL Cmnty Sch Dist No 161 Summit
Hill Cap Apprec (FGIC Insd)............... * 01/01/14 1,595,231
2,010 Will Cnty, IL Cmnty Sch Dist No 161 Summit
Hill Cap Apprec (FGIC Insd)............... * 01/01/16 798,131
2,415 Will Cnty, IL Cmnty Sch Dist No 161 Summit
Hill Cap Apprec (FGIC Insd)............... * 01/01/19 793,424
------------
94,012,371
------------
INDIANA 0.6%
2,500 Indiana Bond Bank Spl Pgm Ser F........... 7.150 08/01/15 2,582,250
2,592 Indiana St Dev Fin Auth Indl Dev Rev
Unr-Rohn Inc Proj......................... 7.500 03/01/11 2,670,512
------------
5,252,762
------------
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
KENTUCKY 1.0%
$ 2,000 Ashland, KY Solid Waste Rev Ashland Oil
Inc Proj.................................. 7.200% 10/01/20 $ 2,068,540
4,000 Elsmere, KY Indl Dev Rev Rfdg............. 6.750 04/01/10 4,321,920
2,000 Georgetown, KY College Rev Georgetown
College Proj Ser A (ACA Insd)............. 6.125 11/15/29 1,910,780
------------
8,301,240
------------
LOUISIANA 1.6%
690 East Baton Rouge, LA Mtg Fin Auth Single
Family Mtg Pur Ser A Rfdg (GNMA
Collateralized) (b)....................... 7.100 10/01/24 706,001
3,350 East Baton Rouge, LA Mtg Fin Auth Single
Family Mtg Pur Ser C Rfdg (GNMA
Collateralized)........................... 7.000 04/01/32 3,415,091
9,451 Louisiana St Univ & Agricultural &
Mechanical College Univ Rev............... 5.750 10/30/18 8,683,373
------------
12,804,465
------------
MAINE 0.1%
1,000 Maine Vets Homes ME Rev................... 7.750 10/01/20 1,041,600
------------
MARYLAND 2.0%
2,300 Baltimore, MD Cap Apprec Cons Pub Impt &
Rfdg (FGIC Insd).......................... * 10/15/06 1,618,418
1,845 Baltimore, MD Cap Apprec Ser A (FGIC
Insd)..................................... * 10/15/07 1,229,010
2,075 Baltimore, MD Cap Apprec Ser A
(Prerefunded @ 10/15/05) (FGIC Insd)...... * 10/15/07 1,388,859
103,890 Maryland St Cmnty Dev Admin Dept Hsg &
Cmnty Dev Single Family Rev Pgm Ser 6..... * 04/01/30 11,512,051
1,000 Maryland St Econ Dev Corp Student Hsg Rev
Collegiate Hsg Towson Ser A............... 5.750 06/01/29 879,560
------------
16,627,898
------------
MASSACHUSETTS 1.2%
940 Massachusetts St Dev Fin Agy Rev Boston
Architectural Cent........................ 6.100 09/01/18 869,387
1,000 Massachusetts St Dev Fin Agy Rev Boston
Architectural Cent........................ 6.250 09/01/28 909,690
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
MASSACHUSETTS (CONTINUED)
$ 2,600 Massachusetts St Hlth & Edl Fac Auth Rev
Med Cent of Central MA Ser A (Prerefunded
@ 07/01/01)............................... 7.100% 07/01/21 $ 2,725,814
5,000 Massachusetts St Hlth & Edl Fac Auth Rev
New England Med Cent Hosp Ser G (MBIA
Insd)..................................... 5.000 07/01/13 4,628,100
975 Massachusetts St Hlth & Edl Fac Auth Rev
Winchester Hosp Ser D Rfdg (Connie Lee
Insd)..................................... 5.750 07/01/14 978,676
------------
10,111,667
------------
MICHIGAN 2.3%
3,965 Detroit, MI Loc Dev Fin Auth Tax Increment
Sr Ser B.................................. 6.700 05/01/21 3,793,157
1,000 Detroit, MI Loc Dev Fin Auth Ser C........ 6.850 05/01/21 962,380
1,180 Hillsdale, MI Hosp Fin Auth Hosp Rev
Hillsdale Cmnty Hlth Cent................. 5.750 05/15/18 966,963
5,000 Michigan St Hosp Fin Auth Rev Detroit Med
Cent Oblig Ser A.......................... 5.250 08/15/28 3,563,150
1,000 Michigan St Hosp Fin Auth Rev Hosp Genesys
Regl Med Ser A Rfdg....................... 5.375 10/01/13 979,380
1,635 Michigan St Hosp Fin Auth Rev Saratoga
Cmnty Hosp Rfdg (Prerefunded @
06/01/02)................................. 8.750 06/01/10 1,761,614
5,700 Michigan St Strategic Fd Ltd Oblig Rev Utd
Waste Sys Proj............................ 5.200 04/01/10 4,868,427
1,750 Michigan St Strategic Fd Ltd Oblig Rev WMX
Technologies Inc Proj..................... 6.000 12/01/13 1,582,367
------------
18,477,438
------------
MISSISSIPPI 0.5%
2,500 Mississippi Bus Fin Corp MS Pollutn Ctl
Rev Sys Energy Res Inc Proj............... 5.875 04/01/22 2,169,400
1,985 Mississippi Home Corp Single Family Rev
Mtg Ser F (GNMA Collateralized)........... 7.550 12/01/27 2,149,676
------------
4,319,076
------------
MISSOURI 0.9%
1,400 Ellisville, MO Indl Dev Auth Rev Gambrill
Gardens Proj Rfdg & Impt.................. 6.100 06/01/20 1,198,078
1,000 Ellisville, MO Indl Dev Auth Rev Gambrill
Gardens Proj Rfdg & Impt.................. 6.200 06/01/29 846,420
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
MISSOURI (CONTINUED)
$ 1,740 Good Shepherd Nursing Home Dist MO Nursing
Home Fac Rev (Prerefunded @ 08/15/05)..... 7.625% 08/15/15 $ 1,972,516
1,220 Hannibal, MO Indl Dev Auth Hlth Fac Rev
Hannibal Regl Hlthcare Sys Inc
(Prerefunded @ 09/01/01).................. 9.500 03/01/22 1,346,404
2,810 Perry Cnty, MO Nursing Home Rev Rfdg...... 5.900 03/01/28 2,285,992
------------
7,649,410
------------
MONTANA 0.5%
3,900 Montana St Coal Severance Tax Broadwater
Pwr Proj Ser A Rfdg....................... 6.875 12/01/17 4,004,832
------------
NEBRASKA 0.1%
1,250 American Pub Energy Agy NE Gas Sup Rev NE
Pub Gas Agy Proj Ser A (AMBAC Insd)....... 4.375 06/01/10 1,080,262
------------
NEVADA 1.0%
3,720 Clark Cnty, NV Transn Ser A (FGIC Insd)... 4.500 12/01/16 3,119,555
2,545 Clark Cnty, NV Transn Ser B (FGIC Insd)... 4.500 12/01/16 2,134,211
3,000 Clark Cnty, NV Indl Dev Rev NV Pwr Co Proj
Ser C Rfdg................................ 5.500 10/01/30 2,488,050
------------
7,741,816
------------
NEW HAMPSHIRE 1.1%
4,800 New Hampshire High Edl & Hlth Fac Auth Rev
Daniel Webster College Issue.............. 6.300 07/01/29 4,331,904
3,955 New Hampshire High Edl & Hlth Fac Auth Rev
Cheshire Med Ctr.......................... 4.875 07/01/28 3,000,382
2,000 New Hampshire High Edl & Hlth Fac Auth Rev
Riverwoods at Exeter Ser A................ 6.500 03/01/23 1,776,720
------------
9,109,006
------------
NEW JERSEY 6.1%
4,000 Camden Cnty, NJ Impt Auth Lease Rev Ser
A......................................... 8.000 06/01/27 3,932,640
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)............................... * 03/01/02 914,670
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)............................... * 03/01/03 869,190
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
NEW JERSEY (CONTINUED)
$ 1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)............................... * 03/01/04 $ 823,630
1,460 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)............................... * 03/01/05 1,140,581
1,465 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)............................... * 03/01/06 1,083,880
1,615 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)............................... * 03/01/07 1,131,017
1,555 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)............................... * 03/01/08 1,029,021
25,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (MBIA Insd) (b).................. 5.900% 03/15/21 25,743,250
5,000 New Jersey Econ Dev Auth Wtr Fac Rev (FGIC
Insd) (b)................................. 6.500 04/01/22 5,107,850
4,825 New Jersey St Transn Tr Fd Auth Transn Sys
Ser A..................................... 5.750 06/15/18 4,942,393
3,500 New Jersey St Turnpike Auth Turnpike Rev
Ser C (FSA Insd).......................... 6.500 01/01/16 3,854,060
------------
50,572,182
------------
NEW MEXICO 0.0%
281 Santa Fe, NM Single Family Mtg Rev Rfdg... 8.450 12/01/11 291,241
------------
NEW YORK 9.4%
10,000 Long Island Pwr Auth NY Elec Sys Rev Cap
Apprec (FSA Insd) (a)..................... * 06/01/18 3,458,900
7,000 Long Island Pwr Auth NY Elec Sys Rev Cap
Apprec (FSA Insd) (a)..................... * 06/01/22 1,882,090
5,550 Metro Tran Auth NY Svcs Contract Commuter
Fac Ser N Rfdg (b)........................ 6.000 07/01/11 5,639,743
1,900 Metro Tran Auth NY Svcs Contract Tran Fac
Ser N Rfdg................................ 6.000 07/01/11 1,930,723
2,250 Metro Transn Auth NY Tran Facs Rev Ser A
Rfdg...................................... 4.750 07/01/24 1,874,565
7,000 New York City Ser A (b)................... 6.250 08/01/08 7,396,480
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$ 25 New York City Ser A (Prerefunded @
08/15/01)................................. 7.750% 08/15/12 $ 26,345
265 New York City Ser C....................... 7.100 08/15/10 272,258
400 New York City Ser C (Prerefunded @
8/15/01).................................. 7.100 08/15/10 412,728
420 New York City Ser F....................... 8.250 11/15/02 445,696
3,000 New York St Dorm Auth Rev City Univ Cons
Third (FGIC Insd)......................... 5.250 07/01/25 2,714,790
1,250 New York St Dorm Auth Rev FHA-Sarah Neuman
Nursing Home (AMBAC Insd)................. 5.500 08/01/37 1,161,937
6,800 New York St Dorm Auth Rev City Univ Sys
Cons Ser A (b)............................ 5.625 07/01/16 6,781,504
3,835 New York St Dorm Auth Rev Mental Hlth Svcs
Facs Ser C Rfdg (MBIA Insd)............... 4.750 08/15/19 3,269,568
2,750 New York St Dorm Auth Rev Mental Hlth Svcs
Facs Ser C Rfdg (MBIA Insd)............... 4.750 08/15/22 2,302,025
3,250 New York St Energy Resh & Dev Auth Fac Rev
Cons Edison Co Proj Ser B Rfdg (MBIA
Insd)..................................... 5.250 08/15/20 2,989,025
4,425 New York St Environmental Fac Corp Pollutn
Ctl Rev Ser E (Prerefunded @ 6/15/04)..... 6.700 06/15/10 4,753,822
2,920 New York St Med Care Fac Fin Agy Rev
Mental Hlth Svcs Fac Ser D................ 7.400 02/15/18 3,075,870
5,320 New York St Med Care Fac Fin Agy Rev
Mental Hlth Svcs Ser F Rfdg (MBIA Insd)... 5.375 02/15/14 5,198,066
2,000 New York St Med Care Facs Fin Agy Rev Hosp
Ser A Rfdg (MBIA Insd).................... 5.375 02/15/25 1,833,560
3,930 New York St Urban Dev Corp Sub Lien Corp
Purp Rfdg................................. 5.500 07/01/22 3,642,796
5,000 New York, NY City Adj Subser A-1.......... 6.260 08/01/12 5,003,950
3,650 New York, NY City Muni Wtr Fin Auth Wtr &
Sew Sys Rev Cap Apprec Ser B (FSA Insd)... * 06/15/13 1,746,123
3,000 Onondaga Cnty, NY Indl Dev Agy Swr Fac Rev
Bristol -- Meyers Squibb Co Proj.......... 5.750 03/01/24 2,967,120
6,092 Plainedge, NY Union Free Sch Dist #2063... 6.000 06/01/12 6,246,726
------------
77,026,410
------------
</TABLE>
See Notes to Financial Statements
20
<PAGE> 22
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
NORTH CAROLINA 2.3%
$ 8,265 North Carolina Eastern Muni Pwr Agy Pwr
Sys Rev Ser A Rfdg (MBIA Insd)............ 5.500% 01/01/05 $ 8,374,594
2,500 North Carolina Eastern Muni Pwr Agy Pwr
Sys Rev Ser C (ACA Insd).................. 5.000 01/01/21 2,044,700
8,300 North Carolina Muni Pwr Agy #1 Catawba
Elec Rev (MBIA Insd) (b).................. 6.000 01/01/12 8,722,719
------------
19,142,013
------------
OHIO 2.8%
3,140 Cleveland Cuyahoga Cnty, OH Dev Port Auth
Rev Cleveland Bond Fd Ser B............... 5.375 05/15/18 2,665,703
5,000 Franklin Cnty, OH Hosp Rev Holy Cross Hlth
Sys Ser B Rfdg (MBIA Insd) (b)............ 5.250 06/01/10 4,978,450
1,905 Jefferson Cnty, OH Impt & Rfdg (FSA
Insd)..................................... 5.700 12/01/13 1,978,247
2,070 Montgomery Cnty, OH Hosp Rev Grandview
Hosp & Med Cent Rfdg...................... 5.250 12/01/02 2,084,573
2,400 Montgomery Cnty, OH Hosp Rev Grandview
Hosp & Med Cent Rfdg...................... 5.375 12/01/05 2,422,920
2,270 Montgomery Cnty, OH Hosp Rev Kettering Med
Cent Impt & Rfdg (MBIA Insd).............. 6.250 04/01/20 2,402,069
1,000 Ohio St Air Qual Dev Auth Rev JMG Funding
Ltd Partn Proj Rfdg (AMBAC Insd).......... 6.375 04/01/29 1,019,430
7,000 Parma, OH Hosp Impr Rev Parma Cmnty Gen
Hosp Assoc Rfdg........................... 5.375 11/01/29 5,721,800
------------
23,273,192
------------
OKLAHOMA 1.5%
2,000 Cleveland Cnty, OK Home Ln Auth Single
Family Mtg Rev Rfdg....................... 8.000 08/01/12 2,064,680
1,240 Kay Cnty, OK Home Fin Auth Rev Single
Family Mtg Ser A Rfdg (AMBAC Insd)........ 7.000 11/01/11 1,408,975
1,500 Oklahoma Dev Fin Auth Rev St John Hlth Sys
Rfdg...................................... 5.750 02/15/25 1,467,870
5,710 Oklahoma Hsg Fin Agy Single Family Rev Mtg
Class B (GNMA Collateralized)............. 7.997 08/01/18 6,031,244
1,500 Tulsa, OK Muni Arpt Tran Rev American
Airls Inc................................. 7.600 12/01/30 1,538,685
------------
12,511,454
------------
</TABLE>
See Notes to Financial Statements
21
<PAGE> 23
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
PENNSYLVANIA 2.2%
$ 2,500 Allegheny Cnty, PA Hosp Dev Auth Rev Hosp
OH Vly Genl Hosp Rfdg..................... 5.875% 04/01/11 $ 2,315,400
2,000 Berks Cnty, PA Muni Auth Rev Phoebe Devitt
Homes Proj A1 Rfdg........................ 5.700 05/15/18 1,639,340
1,000 Berks Cnty, PA Muni Auth Rev Phoebe Devitt
Homes Proj A1 Rfdg........................ 5.750 05/15/22 816,330
135 Lehigh Cnty, PA Gen Purp Auth Rev First
Mtg Bible Fellowship Proj A Rfdg.......... 4.800 12/15/03 128,095
210 Lehigh Cnty, PA Gen Purp Auth Rev First
Mtg Bible Fellowship Proj A Rfgd.......... 5.000 12/15/05 193,855
275 Lehigh Cnty, PA Gen Purp Auth Rev First
Mtg Bible Fellowship Proj A Rfgd.......... 5.100 12/15/06 252,365
295 Lehigh Cnty, PA Gen Purp Auth Rev First
Mtg Bible Fellowship Proj A Rfgd.......... 5.250 12/15/07 269,777
210 Lehigh Cnty, PA Gen Purp Auth Rev First
Mtg Bible Fellowship Proj A Rfgd.......... 5.300 12/15/08 190,334
320 Lehigh Cnty, PA Gen Purp Auth Rev First
Mtg Bible Fellowship Proj A Rfgd.......... 5.300 12/15/09 285,248
240 Lehigh Cnty, PA Gen Purp Auth Rev First
Mtg Bible Fellowship Proj A Rfgd.......... 5.400 12/15/10 212,227
2,000 Montgomery Cnty, PA Indl Dev Auth
Retirement Cmnty Rev Adult Cmntys Total
Svcs Ser B................................ 5.625 11/15/12 1,868,420
2,700 Pennsylvania Econ Dev Fin Auth Res
Recovery Rev Colver Proj Ser D............ 7.125 12/01/15 2,780,352
9,000 Philadelphia, PA Sch Dist Ser A (MBIA
Insd)..................................... 4.500 04/01/23 7,229,610
------------
18,181,353
------------
RHODE ISLAND 1.2%
2,390 Providence, RI Redev Agy Ctfs Partn Ser
A......................................... 8.000 09/01/24 2,492,890
4,750 Rhode Island Hsg & Mtg Fin Corp (Inverse
Fltg) (d)................................. 9.657 04/01/24 5,076,562
2,000 Rhode Island St Hlth & Edl Bldg Corp Rev
Higher Edl Fac Roger Williams (Prerefunded
@11/15/04) (Connie Lee Insd).............. 7.250 11/15/24 2,214,200
------------
9,783,652
------------
</TABLE>
See Notes to Financial Statements
22
<PAGE> 24
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
TENNESSEE 1.4%
$ 4,000 Johnson City, TN Hlth & Edl Facs Brd Hosp
Rev First Mtg Mtn States Hlth Ser A
Rfdg...................................... 7.500% 07/01/25 $ 3,863,640
4,000 Municipal Energy Acquisition Corp TN Gas
Rev (FSA Insd)............................ 4.000 03/01/05 3,620,120
4,500 Municipal Energy Acquisition Corp TN Gas
Rev (FSA Insd)............................ 4.125 03/01/07 3,961,305
------------
11,445,065
------------
TEXAS 7.8%
6,500 Alliance Arpt Auth Inc TX Spl Fac Rev
American Airls Inc Proj (b)............... 7.500 12/01/29 6,627,400
6,000 Brazos River Auth TX Pollutn Ctl Rev Coll
TX Util Elec Co Proj A (AMBAC Insd) (b)... 6.750 04/01/22 6,272,700
420 Brazos, TX Higher Edl Auth Inc Student Ln
Rev Subser C2 Rfdg........................ 7.100 11/01/04 444,331
2,500 Coastal Bend Hlth Fac Dev TX Ser C
(Inverse Fltg) (AMBAC Insd) (d)........... 7.428 11/15/13 2,575,000
15,000 Dallas-Fort Worth, TX Intl Arpt Fac Impt
Corp Rev American Airls Inc (b)........... 7.500 11/01/25 15,300,300
2,000 Dallas-Fort Worth, TX Intl Arpt Fac Impt
Corp Rev American Airls Inc............... 6.375 05/01/35 1,907,460
3,600 Dallas-Fort Worth, TX Intl Arpt Fac Impt
Corp Rev Delta Airls Inc.................. 7.625 11/01/21 3,689,064
3,000 Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser
A (FGIC Insd)............................. 5.750 11/01/30 2,853,390
4,750 Harlingen, TX Cons Indpt Schl Dist (PSF
Gtd)...................................... 5.500 08/15/26 4,494,260
4,000 Harris County, TX Hlth Fac Dev Corp Rev
Christus Hlth Ser A....................... 5.375 07/01/24 3,628,440
3,885 Houston, TX Indpt Sch Dist Pub Cap Apprec
Cesar E Chavez Ser A (AMBAC Insd)......... * 09/15/18 1,285,158
3,885 Houston, TX Indpt Sch Dist Pub Cap Apprec
Cesar E Chavez Ser A (AMBAC Insd)......... * 09/15/20 1,125,989
8,000 Houston, TX Wtr & Swr Sys Rev Cap Apprec
Jr Lien Ser A Rfdg (FSA Insd)............. * 12/01/22 2,018,240
10,000 Houston, TX Wtr & Swr Sys Rev Cap Apprec
Jr Lien Ser A Rfdg (FSA Insd)............. * 12/01/23 2,368,200
4,575 Keller, TX Indpt Sch Dist Cap Apprec Rfdg
(PSF Gtd)................................. * 08/15/12 2,270,298
4,716 Region One Edl Svc Cent Sub-Tech Fac
Proj...................................... 6.590 12/15/17 4,822,741
</TABLE>
See Notes to Financial Statements
23
<PAGE> 25
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
TEXAS (CONTINUED)
$ 2,200 Rockwall, TX Indpt Sch Dist Cap Apprec
Rfdg (PSF Gtd)............................ * 08/15/17 $ 761,310
1,610 Texas Gen Svcs Comm Partn Int Lease Purch
Ctfs...................................... 7.250% 08/15/11 1,642,102
------------
64,086,383
------------
UTAH 0.6%
3,780 Bountiful, UT Hosp Rev South Davis Cmnty
Hosp Proj (Prerefunded @ 06/15/04)........ 9.500 12/15/18 4,487,276
550 Utah St Hsg Fin Agy Single Family Mtg Insd
Ser E2 (FHA Gtd).......................... 7.150 07/01/24 560,197
------------
5,047,473
------------
VIRGINIA 2.3%
1,500 Henrico Cnty, VA Indl Dev Auth Pub Fac
Lease Rev Henrico Cnty Regl Jail Proj..... 6.500 08/01/10 1,623,360
1,500 Henrico Cnty, VA Indl Dev Auth Pub Fac
Lease Rev Henrico Cnty Regl Jail Proj..... 7.125 08/01/21 1,666,200
1,630 Richmond, VA (FSA Insd) (a)............... 5.125 01/15/08 1,608,093
1,340 Richmond, VA (FSA Insd) (a)............... 5.500 01/15/10 1,346,338
4,165 Richmond, VA (FSA Insd) (a)............... 5.500 01/15/12 4,159,169
3,755 Richmond, VA (FSA Insd) (a)............... 5.500 01/15/18 3,579,454
5,000 Roanoke, VA Indl Dev Auth Hosp Rev Roanoke
Mem Hosp Ser B Rfdg (MBIA Insd)........... 6.250 07/01/20 5,049,650
------------
19,032,264
------------
WASHINGTON 2.6%
4,000 Bellevue, WA Convention Cent Auth Spl
Oblig Rev Rfdg (MBIA Insd)................ * 02/01/24 942,000
5,000 King Cnty, WA Ser B Rfdg (MBIA Insd)...... 5.250 01/01/34 4,437,000
4,275 Washington St Higher Edl Facs Auth Rev
Gonzaga Univ Proj Rfdg (MBIA Insd)........ 4.750 04/01/22 3,570,779
1,750 Washington St Pub Pwr Supply Sys Nuclear
Proj No 1 Rev (MBIA Insd)................. 5.750 07/01/12 1,772,015
10,495 Washington St Pub Pwr Supply Sys Nuclear
Proj No 1 Rev Ser B Rfdg (MBIA Insd)
(b)....................................... 5.600 07/01/15 10,351,743
------------
21,073,537
------------
</TABLE>
See Notes to Financial Statements
24
<PAGE> 26
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
WEST VIRGINIA 0.8%
$ 6,550 Harrison Cnty, WV Cnty Cmnty Solid Waste
Disp Rev Potomac Edison Co Ser A (b)...... 6.875% 04/15/22 $ 6,859,946
------------
WISCONSIN 2.0%
1,000 Madison, WI Indl Dev Rev Madison Gas &
Elec Co Proj A............................ 6.750 04/01/27 1,030,570
5,250 Wisconsin Hsg & Econ Dev Auth Hsg Rev Ser
B (b)..................................... 7.050 11/01/22 5,510,715
2,130 Wisconsin St Hlth & Edl Fac Auth Rev
Kenosha Hosp & Med Ctr Proj............... 5.700 05/15/20 1,898,341
7,280 Wisconsin St Hlth & Edl Fac Auth Rev
Children's Hosp (FGIC Insd)............... 5.000 08/15/10 6,943,810
1,500 Wisconsin St Hlth & Edl Facs Auth Rev
Kenosha Hosp & Med Ctr Proj............... 5.625 05/15/29 1,272,090
------------
16,655,526
------------
WYOMING 0.7%
1,145 Wyoming Cmnty Dev Auth Single Family Ser G
(FHA Gtd)................................. 7.250 06/01/21 1,179,819
4,000 Wyoming Cmnty Dev Auth Single Family Ser H
(FHA Gtd)................................. 7.100 06/01/12 4,170,520
------------
5,350,339
------------
GUAM 0.6%
5,000 Guam Pwr Auth Rev Ser A (AMBAC Insd)...... 5.250 10/01/34 4,495,700
------------
PUERTO RICO 0.7%
2,000 Puerto Rico Indl Tourist Edl Med &
Environmental Ctl Fac Fin Auth Higher Edl
Rev....................................... 5.375 02/01/29 1,721,320
4,000 Puerto Rico Pub Bldgs Auth Gtd Pub Edl &
Hlth Fac Ser M............................ 5.700 07/01/16 4,011,160
------------
5,732,480
------------
</TABLE>
See Notes to Financial Statements
25
<PAGE> 27
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
MARKET
VALUE
<C> <S> <C> <C> <C>
TOTAL LONG-TERM INVESTMENTS 99.5%
(Cost $826,458,480)................................................... $820,058,769
SHORT-TERM INVESTMENTS 1.0%
(Cost $8,375,000)..................................................... 8,375,000
------------
TOTAL INVESTMENTS 100.5%
(Cost $834,833,480)................................................... 828,433,769
LIABILITIES IN EXCESS OF OTHER ASSETS (0.5%)........................... (4,021,532)
------------
NET ASSETS 100.0%...................................................... $824,412,237
============
</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.
(c) 144A securities are those which are exempt from registration under rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally
transactions with qualified institutional buyers.
(d) 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. These 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.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FHA--Federal Housing Administration
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Assoc.
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance Corp.
PSF--Public School Fund
See Notes to Financial Statements
26
<PAGE> 28
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $834,833,480)....................... $828,433,769
Cash........................................................ 228,345
Receivables:
Interest.................................................. 14,261,278
Investments Sold.......................................... 3,595,057
Other....................................................... 23,608
------------
Total Assets............................................ 846,542,057
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 20,873,697
Investment Advisory Fee................................... 476,787
Income Distributions -- Common and Preferred Shares....... 224,955
Administrative Fee........................................ 136,225
Variation Margin on Futures............................... 34,375
Affiliates................................................ 20,159
Accrued Expenses............................................ 224,041
Trustees' Deferred Compensation and Retirement Plans........ 139,581
------------
Total Liabilities....................................... 22,129,820
------------
NET ASSETS.................................................. $824,412,237
============
NET ASSETS CONSIST OF:
Preferred Shares (Par value of $.01 per share with
100,000,000 shares authorized, 12,000 shares issued with
liquidation preference of $25,000 per share).............. $300,000,000
------------
Common Shares (Par value of $.01 per share with an unlimited
number of shares authorized, 36,365,393 shares issued and
outstanding).............................................. 363,654
Paid in Surplus............................................. 538,413,671
Net Unrealized Depreciation................................. (6,349,592)
Accumulated Undistributed Net Investment Income............. 2,544,749
Accumulated Net Realized Loss............................... (10,560,245)
------------
Net Assets Applicable to Common Shares.................. 524,412,237
------------
NET ASSETS.................................................. $824,412,237
============
NET ASSET VALUE PER COMMON SHARE ($524,412,237 divided by
36,365,393 shares outstanding)............................ $ 14.42
============
</TABLE>
See Notes to Financial Statements
27
<PAGE> 29
Statement of Operations
For the Six Months Ended April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $25,803,657
-----------
EXPENSES:
Investment Advisory Fee..................................... 2,867,520
Administrative Fee.......................................... 819,286
Preferred Share Maintenance................................. 391,187
Trustees' Fees and Related Expenses......................... 16,953
Legal....................................................... 14,242
Custody..................................................... 9,660
Other....................................................... 257,715
-----------
Total Expenses.......................................... 4,376,563
Less Credits Earned on Cash Balances.................... 4,885
-----------
Net Expenses............................................ 4,371,678
-----------
NET INVESTMENT INCOME....................................... $21,431,979
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $(7,036,626)
Options................................................... (202,586)
Futures................................................... 891,907
-----------
Net Realized Loss........................................... (6,347,305)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... (8,294,834)
End of the Period:
Investments............................................. (6,399,711)
Futures................................................. 50,119
-----------
(6,349,592)
-----------
Net Unrealized Appreciation During the Period............... 1,945,242
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(4,402,063)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $17,029,916
===========
</TABLE>
See Notes to Financial Statements
28
<PAGE> 30
Statement of Changes in Net Assets
For the Six Months Ended April 30, 2000 and the Year Ended October 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
-----------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 21,431,979 $ 43,660,779
Net Realized Loss.................................. (6,347,305) (2,776,922)
Net Unrealized Appreciation/Depreciation During the
Period........................................... 1,945,242 (80,950,957)
------------ -------------
Change in Net Assets from Operations............... 17,029,916 (40,067,100)
------------ -------------
Distributions from Net Investment Income:
Common Shares.................................... (17,455,389) (34,894,640)
Preferred Shares................................. (6,050,369) (8,719,281)
------------ -------------
(23,505,758) (43,613,921)
------------ -------------
Distributions from Net Realized Gains:
Common Shares.................................... -0- (15,464,760)
Preferred Shares................................. -0- (2,188,669)
------------ -------------
-0- (17,653,429)
------------ -------------
Total Distributions................................ (23,505,758) (61,267,350)
------------ -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... (6,475,842) (101,334,450)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued through Dividend
Reinvestment..................................... -0- 1,596,622
------------ -------------
TOTAL DECREASE IN NET ASSETS....................... (6,475,842) (99,737,828)
NET ASSETS:
Beginning of the Period............................ 830,888,079 930,625,907
------------ -------------
End of the Period (Including accumulated
undistributed net investment income of $2,544,749
and $4,618,528, respectively).................... $824,412,237 $ 830,888,079
============ =============
</TABLE>
See Notes to Financial Statements
29
<PAGE> 31
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 TWO MONTHS
ENDED YEAR ENDED ENDED --------
APRIL 30, 2000 OCT. 31, 1999 OCT. 31, 1998 1998
---------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD (A)........................... $ 14.599 $ 17.387 $ 17.319 $ 16.596
-------- -------- -------- --------
Net Investment Income................ .589 1.201 .210 1.260
Net Realized and Unrealized
Gain/Loss.......................... (.121) (2.304) .080 .722
-------- -------- -------- --------
Total from Investment Operations...... .468 (1.103) .290 1.982
-------- -------- -------- --------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders........ .480 .960 .160 .960
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders..................... .166 .240 .021 .299
Distributions from Net Realized Gain:
Paid to Common Shareholders........ -0- .425 -0- -0-
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders..................... -0- .060 .041 -0-
-------- -------- -------- --------
Total Distributions................... .646 1.685 .222 1.259
-------- -------- -------- --------
NET ASSET VALUE, END OF THE PERIOD.... $ 14.421 $ 14.599 $ 17.387 $ 17.319
======== ======== ======== ========
Market Price Per Share at End of the
Period............................... $13.0000 $13.1875 $16.8125 $16.1875
Total Investment Return at Market
Price (b)............................ 1.64%* -14.47% 4.84%* 9.06%
Total Return at Net Asset Value (c)... 1.55%* -8.64% 1.33%* 10.38%
Net Assets at End of the Period (In
millions)............................ $ 824.4 $ 830.9 $ 930.6 $ 928.2
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares**............................. 1.67% 1.60% 1.57% 1.57%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (d).................... 5.89% 5.95% 6.48% 5.66%
Portfolio Turnover.................... 18%* 80% 6%* 94%
* Non-Annualized
** Ratio of Expenses to Average Net
Assets Including Preferred
Shares............................. 1.07% 1.06% 1.07% 1.06%
</TABLE>
(a) Net Asset Value at September 27, 1991, is adjusted for common and preferred
share offering costs of $.192 per common share.
(b) 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 stock price at the end of the period
indicated.
(c) 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.
(d) Net Investment Income is adjusted for common share equivalent of
distributions paid to preferred shareholders.
30
<PAGE> 32
<TABLE>
<CAPTION>
SEPTEMBER 27, 1991
(COMMENCEMENT OF
YEAR ENDED AUGUST 31, INVESTMENT
---------------------------------------------------- OPERATIONS) TO
1997 1996 1995 1994 1993 AUGUST 31, 1992
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$15.842 $15.734 $15.562 $17.035 $16.328 $14.808
------- ------- ------- ------- ------- -------
1.275 1.295 1.311 1.347 1.410 1.166
.734 .105 .266 (1.424) .780 1.370
------- ------- ------- ------- ------- -------
2.009 1.400 1.577 (.077) 2.190 2.536
------- ------- ------- ------- ------- -------
.960 .990 1.084 1.116 1.100 .811
.295 .302 .321 .280 .246 .205
-0- -0- -0- -0- .111 -0-
-0- -0- -0- -0- .026 -0-
------- ------- ------- ------- ------- -------
1.255 1.292 1.405 1.396 1.483 1.016
------- ------- ------- ------- ------- -------
$16.596 $15.842 $15.734 $15.562 $17.035 $16.328
======= ======= ======= ======= ======= =======
$15.750 $14.500 $14.250 $15.000 $16.750 $16.125
15.87% 8.98% 2.39% -3.94% 11.90% 13.24%*
11.14% 7.09% 8.55% -2.22% 12.31% 14.64%*
$ 901.9 $ 874.6 $ 870.7 $ 864.4 $ 917.9 $ 891.7
1.61% 1.61% 1.65% 1.64% 1.59% 1.49%
6.04% 6.20% 6.48% 6.52% 7.08% 6.85%
54% 36% 49% 47% 48% 100%*
1.07% 1.06% 1.07% 1.09% 1.06% 1.03%
</TABLE>
See Notes to Financial Statements
31
<PAGE> 33
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Municipal 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 tax, consistent with preservation of
capital. The Trust will invest in a portfolio consisting substantially of
municipal obligations rated investment grade at the time of investment, but may
invest up to 20% of its assets in unrated securities which are believed to be of
comparable quality to those rated investment grade. The Trust commenced
investment operations on September 27, 1991.
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 those 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, which approximates market value.
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.
32
<PAGE> 34
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and original issue discount is accreted over the expected
life of each applicable security.
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 October 31, 1999, the Trust had an accumulated capital loss
carryforward for tax purposes of $2,772,714 which will expire on October 31,
2007. Net realized gains or losses may differ for financial reporting and tax
purposes as a result of gains or losses recognized for tax purposes on open
option and futures positions at October 31, 1999.
At April 30, 2000, for federal income tax purposes, cost of long and
short-term investments is $834,833,480; the aggregate gross unrealized
appreciation is $21,102,101 and the aggregate gross unrealized depreciation is
$27,501,812, resulting in net unrealized depreciation on long and short-term
investments of $6,399,711.
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays dividends
monthly from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
F. EXPENSE REDUCTION During the period ended April 30, 2000, the Trust's custody
fee was reduced by $4,885 as a result of credits earned on overnight cash
balances.
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 .70% of the average
net assets of the Trust. In addition, the Trust will pay a monthly
administrative fee to Van Kampen Funds Inc. or its affiliates (collectively "Van
Kampen"), the Trust's Administrator, at an annual rate of .20% of the average
net assets of the Trust. The administrative services provided by the
Administrator include record keeping and
33
<PAGE> 35
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
reporting responsibilities with respect to the Trust's portfolio and preferred
shares and providing certain services to shareholders.
For the six months ended April 30, 2000, the Trust recognized expenses of
approximately $7,100 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 April 30, 2000, the Trust recognized expenses of
approximately $23,500 representing Van Kampen's cost of providing accounting and
legal services to the Trust.
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 April 30, 2000 and October 31, 1999, common share paid in surplus aggregated
$538,413,671:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
<S> <C> <C>
Beginning Shares................................... 36,365,393 36,270,469
Shares Issued Through Dividend Reinvestment........ -0- 94,924
---------- ----------
Ending Shares...................................... 36,365,393 36,365,393
========== ==========
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $147,229,550 and $187,863,874.
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
34
<PAGE> 36
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
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.
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 for the six months ended April 30, 2000 were as
follows:
<TABLE>
<CAPTION>
CONTRACTS PREMIUM
<S> <C> <C>
Outstanding at October 31, 1999............................. 300 $(145,472)
Options Written and Purchased (Net)......................... 200 (71,931)
Options Expired (Net)....................................... (500) 217,403
---- ---------
Outstanding at April 30, 2000............................... -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, 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.
35
<PAGE> 37
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
Transactions in futures contracts for the six months ended April 30, 2000
were as follows:
<TABLE>
<CAPTION>
CONTRACTS
<S> <C>
Outstanding at October 31, 1999............................. 433
Futures Opened.............................................. 1,525
Futures Closed.............................................. (1,683)
------
Outstanding at April 30, 2000............................... 275
======
</TABLE>
The futures contracts outstanding as of April 30, 2000 and the descriptions
and unrealized appreciation/depreciation are as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
<S> <C> <C>
Short Contracts:
June 2000 Municipal Bond Index Future
(current notional value of $93,219 per contract)....... 175 $113,428
June 2000 Municipal Bond Index Future
(current notional value of $93,219 per contract)....... 100 (63,309)
--- --------
275 $ 50,119
=== ========
</TABLE>
6. PREFERRED SHARES
The Trust has outstanding 12,000 Auction Preferred Shares ("APS") in four series
of 3,000 shares each. Dividends are cumulative and the dividend rate is
periodically reset through an auction process. The dividend period for Series A
is generally seven days. However, effective with the auction on August 9, 1999,
the dividend period for Series A was extended through April 10, 2000. Following
this extended dividend period, Series A reverted to its normal seven day reset
period. The dividend period for Series C is 7 days and the dividend periods for
Series B and D are 28 days. The average rate in effect on April 30, 2000, was
4.21%. During the six months ended April 30, 2000, the rates ranged from 3.45%
to 6.05%.
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 APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $25,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests, and the APS are subject to
mandatory redemption if the tests are not met.
36
<PAGE> 38
TRUST OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
THEODORE A. MYERS
RICHARD F. POWERS, III* - Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
RICHARD F. POWERS, III*
President
STEPHEN L. BOYD*
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
RICHARD A. CICCARONE*
JOHN R. REYNOLDSON*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, 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(1)
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
(1) Independent accountants for the Trust perform an annual audit of the Trust's
financial statements. The Board of Trustees has engaged Deloitte & Touche LLP to
be the Trust's independent accountants.
KPMG LLP, located at 303 West Wacker Drive, Chicago, IL 60601 ("KPMG"), ceased
being the Trust's independent accountants effective April 14, 2000. The
cessation of the client- auditor relationship between the Trust and KPMG was
based solely on a possible future business relationship by KPMG with an
affiliate of the Trust's investment adviser.
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
(C) Van Kampen Funds Inc., 2000. All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
37
