<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 4
Portfolio of Investments......................... 5
Statement of Assets and Liabilities.............. 10
Statement of Operations.......................... 11
Statement of Changes in Net Assets............... 12
Financial Highlights............................. 13
Notes to Financial Statements.................... 14
</TABLE>
VMO SAR 6/96
<PAGE> 2
LETTER TO SHAREHOLDERS
May 15, 1996
Dear Shareholder,
While interest rates drifted
downward during the fourth quarter of
last year, such was not the case in the
first quarter of 1996. Early in the
quarter, municipal bond prices
demonstrated increased volatility in [PHOTO]
conjunction with February's economic
announcements, which revealed a revival
in economic growth, impressive DENNIS J. MCDONNELL AND DON G. POWELL
employment levels, and moderate
inflation. This positive economic
environment, however, did not translate
into positive movement for the bond markets. Instead, the markets became wary,
because inflation often accompanies economic growth.
Other factors influencing the municipal bond market early in the year
included:
- Intense weather conditions, which hindered distribution and manufacturing,
were experienced by much of the United States and affected certain
municipal bond sectors.
- The expectation that a federal budget agreement was forthcoming helped
bolster municipal bonds, especially at the longer end of the spectrum.
- The proposal of tax reform--and the threat of municipal bonds having
diminished tax-exempt status--continued to dampen demand for municipals,
resulting in lower bond prices.
We believe the beginning of 1996 reflected the market's reaction to the
possibility of a return to long-term economic growth. This, coupled with
continued low inflationary conditions, has served to put the Federal Reserve
Board in a neutral policy mode, bringing relative calm to the market--although
currently at higher interest rate levels.
PERFORMANCE SUMMARY
The Van Kampen American Capital Municipal Opportunity Trust's (ticker symbol
VMO) common stock price declined 1 percent during the six-month period, closing
at $13.50, while the general municipal bond market was down 4 percent for the
same period, according to the Bond Buyer's 40 Municipal Bond Index.
For the six-months ended April 30, 1996, the Trust posted a total return of
2.35 percent(1), based on market price. Longer term, the Trust achieved a
one-year total
Continued on page two
1
<PAGE> 3
return of 8.05 percent(1), based on market price for the period
ended April 30, 1996, including reinvestment of dividends.
The Trust sustained a reduction in its monthly dividend from $0.081 to
$0.075 per common share which was effective December 1, 1995 and first payable
December 31, 1995. Although short-term municipal rates have recently notched
lower, due to a series of Fed easings beginning in 1995, short-term rates in
general are significantly higher than two years ago. This short-term rate
pressure, combined with efforts to manage the Trust's callable bonds, has
impacted the Trust's earning potential and necessitated the dividend adjustment.
Despite the decline in income, many closed-end municipal bond funds are
currently offering higher after-tax yields than taxable income alternatives, and
your Trust is no exception. Based on the closing common stock price on April 30,
1996, the Municipal Opportunity Trust had a tax-exempt distribution rate of 6.67
percent(3). In other words, investors in the 36 percent federal income tax
bracket would have to earn a yield of 10.42 percent(4) on a taxable investment
to equal your Trust's tax-exempt distribution rate.
MARKET OUTLOOK
The economy rebounded in the first quarter of 1996, despite poor weather in
the East and the remnants of a slow fourth quarter of 1995, which was hindered
by weak construction activity, two government shutdowns, and a strike at Boeing.
We believe the momentum of the first quarter can carry into the second, due in
part to renewed auto production in the aftermath of the General Motors strike
and an end to the budget stalemate between the White House and Congress. We
expect a modest slowdown in the summer months, as higher interest rates could
slow activity in interest-sensitive sectors of the economy, such as housing.
Top 5 Portfolio Holdings by Industry as of April 30, 1996
General Purpose................... 15.8%
Wholesale Electric................ 15.8%
Health Care....................... 12.4%
Retail Electric/Gas/Telephone..... 8.5%
Airport............................ 7.5%
The Fed's protracted period of easing, and relatively neutral stance, favors
the growth we are currently experiencing. Given the strong employment situation
and commodity price increases, we think the Fed will await further economic
evidence before adjusting interest rates again--probably summertime at the
earliest. So far, guides such as the Consumer Price Index continue to indicate
modest levels of inflation. More importantly, we continue to see few signs of
emerging inflation in either unit labor costs, hourly earnings or the employment
cost index.
- --------------------------------------------------------------------------------
INVESTMENT TERM: REVENUE BONDS
Revenue bonds are one of the three most common types of municipal bonds--the
other two are general obligation bonds and municipal notes. Revenue bonds
are issued to finance income-generating projects such as turnpikes, toll
bridges and airports. The revenues these projects bring in are used to pay
interest and principal to bondholders.
- --------------------------------------------------------------------------------
Continued on page three
2
<PAGE> 4
Finally, as the November
elections approach, the PORTFOLIO COMPOSITION BY CREDIT
debate on tax reform may QUALITY AS OF APRIL 30, 1996
grow. We believe the outcome
in the long run will be [PIE CHART]
positive, or at worst
neutral, for municipal AAA......... 44.2%
bonds. That's good news for AA......... 10.4%
the market, which was A......... 19.2%
concerned that flat tax BBB......... 23.5%
proposals could threaten the BB......... 2.7%
tax-exempt status of BASED UPON CREDIT QUALITY RATINGS
municipal bonds. While the ISSUED BY STANDARD & POOR'S. FOR
debate may not be over and SECURITIES NOT RATED BY STANDARD
legislation may be & POOR'S, THE MOODY'S RATING IS
forthcoming, the market USED.
should be more confident.
Indeed, we expect investors demand for municipal securities to exceed
supply, which should add price stability to the general market. And with
municipal bond yields currently at attractive levels relative to Treasuries,
investor demand for tax-exempt securities should increase.
In summary, our view of the general municipal market is positive. From the
decreasing likelihood of tax reform in the near term to specific market
conditions, we believe the market is on solid ground. With our dedication to
comprehensive research and long-term investment perspective, we believe your
Trust is in a position to benefit in the coming months.
Sincerely,
[SIG]
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
[SIG]
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
3
<PAGE> 5
PERFORMANCE RESULTS FOR THE PERIOD ENDED APRIL 30, 1996
VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST
(NYSE TICKER SYMBOL--VMO)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
Six-month total return based on market price(1)........... 2.35%
Six-month total return based on NAV(2).................... 1.16%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................ 6.67%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)................................... 10.42%
SHARE VALUATIONS
Net asset value........................................... $15.59
Closing common stock price................................ $13.500
Six-month high common stock price (02/22/96).............. $14.500
Six-month low common stock price (04/08/96)............... $13.000
Preferred share (Series A) rate(5)........................ 3.629%
Preferred share (Series B) rate(5)........................ 3.750%
</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
income tax bracket.
(5)See "Notes to Financial Statements" footnote number 5, 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.
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
ALABAMA 1.1%
$ 2,000 Mobile, AL Indl Dev Brd Solid Waste Disp Rev
Mobile Energy Svcs Co Proj Rfdg................. 6.950% 01/01/20 $ 2,075,720
2,500 University of Southern AL Univ Rev Tuition Rfdg
(AMBAC Insd).................................... 5.000 11/15/15 2,261,150
------------
4,336,870
------------
ALASKA 2.0%
8,000 Alaska St Hsg Fin Corp Ser A (MBIA Insd)........ 5.875 12/01/24 7,736,400
------------
CALIFORNIA 9.9%
1,585 California Hsg Fin Agy Rev Home Mtg Ser B1...... 6.300 08/01/08 1,622,057
2,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southern CA Edison Co (Embedded Cap) (AMBAC
Insd)........................................... 6.000 07/01/27 1,980,040
3,000 California St Ser 94............................ 5.500 03/01/12 2,887,770
1,000 California Statewide Cmntys Dev Auth Rev Ctfs
Children's Hosp (MBIA Insd)..................... 6.000 06/01/12 1,030,730
1,000 California Statewide Cmntys Dev Auth Rev Ctfs
Children's Hosp (MBIA Insd)..................... 6.000 06/01/13 1,026,360
5,000 Contra Costa, CA Home Mtg Fin Auth Home Mtg Rev
(MBIA Insd)..................................... * 09/01/17 1,293,100
4,000 Foothill/Eastern Tran Agy Conv Cap Apprec Sr
Lien Ser A (d).................................. 0/7.050 01/01/10 2,396,520
8,000 Foothill/Eastern Tran Corridor Agy CA Toll Rd
Rev............................................. * 01/01/15 2,304,000
7,000 Metropolitan Wtr Dist Southern CA Wtrwks Rev.... 5.950 08/05/22 6,782,580
3,000 Orange Cnty, CA Recovery Ser A Rfdg (MBIA
Insd)........................................... 6.000 06/01/08 3,122,910
10,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec
Ser A (Embedded Cap) (MBIA Insd) (c)............ 6.100 09/01/18 9,938,600
4,000 Southern CA Rapid Tran Dist CA Rev Spl Benefit
Assmt Dist Ser A1 (AMBAC Insd).................. 5.500 09/01/09 3,997,800
------------
38,382,467
------------
COLORADO 5.4%
2,000 Arapahoe Cnty, CO Cap Impt Trust Fd Hwy Rev
E-470 Proj Ser B................................ 7.000 08/31/26 2,091,480
1,000 Colorado Hlth Fac Auth Rev Vail Vly Med Cent
Proj Ser A...................................... 6.500 01/15/13 1,009,080
1,525 Colorado Hsg Fin Auth Single Family Proj Sr Ser
A3.............................................. 7.000 11/01/24 1,570,079
3,500 Denver, CO City & Cnty Arpt Rev Ser A........... 8.500 11/15/07 3,990,490
7,000 Denver, CO City & Cnty Arpt Rev Ser A........... 8.875 11/15/12 8,272,250
1,750 Denver, CO City & Cnty Arpt Rev Ser B (MBIA
Insd)........................................... 6.250 11/15/06 1,842,435
1,000 Denver, CO City & Cnty Arpt Rev Ser B (MBIA
Insd)........................................... 6.250 11/15/07 1,046,880
1,000 Highlands Ranch Metro Dist No 2 CO Rfdg (FSA
Insd)........................................... 6.500 06/15/11 1,093,610
------------
20,916,304
------------
DISTRICT OF COLUMBIA 1.6%
2,000 District of Columbia Hosp Rev Medlantic Hlthcare
Group A Rfdg (MBIA Insd) (b).................... 5.750 08/15/16 1,929,100
2,000 District of Columbia Hosp Rev Medlantic Hlthcare
Group A Rfdg (MBIA Insd) (b).................... 5.875 08/15/19 1,944,240
</TABLE>
See Notes to Financial Statements
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
DISTRICT OF COLUMBIA (CONTINUED)
$ 2,000 Metropolitan WA, DC Arpt Auth Genl Arpt Rev Ser
A (FGIC Insd)................................... 7.250% 10/01/10 $ 2,165,780
------------
6,039,120
------------
FLORIDA 0.8%
3,000 Florida St Brd Edl Cap Outlay Pub Edl Ser A..... 5.875 06/01/16 2,981,280
------------
GEORGIA 2.9%
3,370 Fulton Cnty, GA Lease Rev (e)................... 7.250 06/15/10 3,738,105
7,000 Municipal Elec Auth GA Spl Oblig First Crossover
(MBIA Insd)..................................... 6.500 01/01/20 7,602,070
------------
11,340,175
------------
HAWAII 1.4%
5,000 Hawaii St Arpt Sys Rev Ser 2.................... 7.000 07/01/18 5,314,350
------------
IDAHO 1.6%
6,000 Idaho Hsg Agy Single Family Mtg Sr Ser A........ 6.700 07/01/27 6,132,300
------------
ILLINOIS 7.9%
10,000 Chicago, IL Brd Ed Chicago Sch Reform (MBIA
Insd)........................................... 6.000 12/01/26 9,841,100
5,000 Chicago, IL O'Hare Intl Arpt Rev Genl Arpt 2nd
Lien Ser A (MBIA Insd) (c)...................... 6.375 01/01/12 5,256,350
6,400 Chicago, IL Sch Fin Auth Ser A (MBIA Insd)...... 5.000 06/01/09 6,055,360
1,000 Chicago, IL Single Family Mtg Rev Coll Ser A
(GNMA Collateralized)........................... 7.000 09/01/27 1,086,520
3,285 Illinois Hlth Fac Auth Rev Midwest Physician
Group Ltd Proj.................................. 8.125 11/15/19 3,469,354
1,475 Regional Tran Auth IL Ser A (AMBAC Insd)........ 6.500 06/01/15 1,529,722
1,410 Sangamon Cnty, IL Cmnty Unit Sch Dist No 5 (FGIC
Insd)........................................... 6.400 12/01/03 1,539,692
1,865 Sangamon Cnty, IL Cmnty Unit Sch Dist No 5 (FGIC
Insd)........................................... 6.500 12/01/05 2,057,207
------------
30,835,305
------------
INDIANA 1.1%
1,500 Indianapolis, IN Loc Pub Impt Bond Bank Ser D... 6.500 02/01/22 1,514,970
2,500 Purdue Univ, IN Univ Rev Student Fee Ser B...... 6.750 07/01/09 2,814,550
------------
4,329,520
------------
IOWA 0.4%
1,500 Iowa Fin Auth Private College Rev Drake Univ
Proj Rfdg (MBIA Insd)........................... 5.400 12/01/21 1,408,095
------------
MAINE 1.0%
2,470 Maine Edl Ln Auth Edl Ln Rev Supplemental Edl Ln
Pgm Ser A1...................................... 7.000 12/01/16 2,599,477
1,355 Maine Edl Ln Auth Edl Ln Rev Supplemental Edl Ln
Pgm Ser A2...................................... 7.150 12/01/16 1,425,596
------------
4,025,073
------------
MASSACHUSETTS 1.3%
2,000 Massachusetts St Hlth & Edl Fac Auth Rev New
England Med Cent Hosp Ser G (Embedded Swap)
(MBIA Insd)..................................... 3.100 07/01/13 1,625,760
3,000 Plymouth Cnty, MA Ctfs Partn Ser A.............. 7.000 04/01/22 3,268,320
------------
4,894,080
------------
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MICHIGAN 1.8%
$ 2,500 Michigan St Hosp Fin Auth Rev Hosp Port Huron
Hosp Oblig Rfdg (FSA Insd)...................... 5.375% 07/01/12 $ 2,371,700
4,500 Monroe Cnty, MI Pollutn Ctl Rev Coll Detroit
Edison Monroe Ser 1 (MBIA Insd)................. 6.875 09/01/22 4,750,290
------------
7,121,990
------------
MISSISSIPPI 1.0%
3,750 Mississippi Home Corp Single Family Rev Mtg Ser
C............................................... 5.500 06/01/29 4,083,300
------------
MISSOURI 2.0%
980 Saint Louis Cnty, MO Single Family (MBIA
Insd)........................................... 6.900 04/01/16 995,896
3,000 Sikeston, MO Elec Rev Rfdg (MBIA Insd).......... 6.200 06/01/10 3,220,620
4,000 Sikeston, MO Elec Rev Rfdg (MBIA Insd).......... 5.000 06/01/11 3,743,960
------------
7,960,476
------------
NEVADA 1.1%
4,000 Clark Cnty, NV Indl Dev Rev NV Pwr Co Proj Ser A
(FGIC Insd) (c)................................. 6.700 06/01/22 4,144,680
------------
NEW JERSEY 5.5%
20,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (Embedded Cap) (c)..................... 5.900 03/15/21 19,816,200
1,395 New Jersey Hlthcare Fac Fin Auth Rev Christ Hosp
Group Issue (Connie Lee Insd)................... 7.000 07/01/04 1,563,223
------------
21,379,423
------------
NEW MEXICO 0.8%
1,095 Hobbs, NM Single Family Mtg Rev Rfdg............ 8.750 07/01/11 1,188,644
2,000 University of NM Technology Dev Corp Lease Rev
Univ Cent Resh Pk Proj Ser A (MBIA Insd)........ 6.450 08/15/18 2,093,940
------------
3,282,584
------------
NEW YORK 16.5%
5,000 Battery Park City Auth NY Rev (MBIA Insd)....... 5.250 11/01/17 4,558,800
3,000 Metropolitan Tran Auth NY Svcs Contract Tran Fac
Ser 5 Rfdg...................................... 7.000 07/01/12 3,175,080
1,440 New York City Indl Spl Fac Terminal One Group
Assn Proj....................................... 6.100 01/01/09 1,441,411
6,000 New York City Ser D............................. 6.000 02/15/11 5,794,200
8,000 New York City Ser D............................. 7.500 02/01/19 8,732,240
4,000 New York City Ser F............................. 5.750 02/01/15 3,691,320
5,000 New York City Ser I............................. 5.875 03/15/12 4,752,200
5,000 New York City Ser I............................. 5.875 03/15/14 4,727,500
6,060 New York St Dorm Auth Rev City Univ Ser F....... 5.500 07/01/12 5,624,347
1,365 New York St Dorm Auth Rev St Univ Edl Fac Ser B
Rfdg............................................ 5.250 05/15/09 1,277,954
4,325 New York St Energy Resh & Dev Auth St Svc
Contract Rev Western NY Nuclear Svc Cent Proj... 5.500 04/01/99 4,395,800
5,040 New York St Urban Dev Corp Rev Correctional Cap
Fac Ser 6....................................... 5.250 01/01/09 4,661,093
3,300 Onondaga Cnty, NY Res Recovery Agy Rev Proj Res
Recovery Fac.................................... 6.625 05/01/00 3,370,422
3,500 Port Auth NY & NJ Cons 97th Ser (FGIC Insd)..... 6.650 01/15/23 3,657,325
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$ 5,000 Triborough Brdg & Tunl Auth NY Rev Genl Purp Ser
A (MBIA Insd)................................... 5.000% 01/01/15 $ 4,450,350
------------
64,310,042
------------
NORTH CAROLINA 6.1%
13,000 North Carolina Eastn Muni Pwr Agy Pwr Sys Rev
Ser B Rfdg (Embedded Cap)....................... 6.000 01/01/14 12,760,930
11,000 North Carolina Muni Pwr Agy No 1 Catawba Elec
Rev (Embedded Cap).............................. 6.000 01/01/12 10,998,900
------------
23,759,830
------------
OHIO 1.1%
3,600 Cuyahoga Cnty, OH Hosp Rev Univ Hosp Hlth Ser A
Rfdg & Impt (MBIA Insd)......................... 5.625 01/15/21 3,429,072
1,000 Ohio St Air Quality Dev Auth Rev JMG Funding Ltd
Partnership Proj Rfdg (AMBAC Insd).............. 6.375 04/01/29 1,027,510
------------
4,456,582
------------
OKLAHOMA 0.8%
3,000 Tulsa, OK Muni Arpt Tran Rev American Airls
Inc............................................. 7.600 12/01/30 3,215,490
------------
OREGON 0.5%
2,000 Oregon St Econ Dev Rev GA Pacific Corp.......... 6.350 08/01/25 1,956,340
------------
PENNSYLVANIA 5.8%
6,655 Berks Cnty, PA Muni Auth Rev Highlands at
Wyomissing Proj B............................... 6.875 10/01/17 6,860,773
8,500 Geisinger Auth PA Hlth Sys Ser A................ 6.400 07/01/22 8,830,055
1,000 Pennsylvania Intergvtl Coop Auth Spl Tax Rev
City of Philadelphia (Prerefunded @ 06/15/02)... 6.800 06/15/22 1,107,830
5,000 Pennsylvania St Higher Edl Fac Auth Univ PA Ser
A Rfdg.......................................... 5.750 01/01/22 4,783,350
1,000 Philadelphia, PA Sch Dist Ser A (MBIA Insd)..... 5.750 07/01/07 1,032,660
------------
22,614,668
------------
RHODE ISLAND 0.6%
950 Rhode Island St Hlth & Edl Bldg Corp Rev Higher
Ed Fac Johnson & Wales (Connie Lee Insd)........ 6.000 04/01/17 929,470
1,400 Rhode Island St Hlth & Edl Bldg Corp Rev Higher
Ed Fac Johnson & Wales (Connie Lee Insd)........ 6.100 04/01/26 1,374,450
------------
2,303,920
------------
TEXAS 4.4%
4,500 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp
Rev Delta Airls Inc............................. 7.000 11/01/01 4,653,630
2,525 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp
Rev Delta Airls Inc............................. 7.625 11/01/21 2,705,689
5,000 Ector Cnty, TX Hosp Dist Hosp Rev Med Cent
Hosp............................................ 7.300 04/15/12 5,496,050
1,928 Texas Genl Svcs Comm Partn Int Lease Pur Ctfs... 7.250 08/01/11 1,919,400
2,500 Texas St Ser 1994............................... 6.400 12/01/24 2,538,550
------------
17,313,319
------------
UTAH 1.5%
3,000 Salt Lake City, UT Hosp Rev IHC Hosp Inc Rfdg
(Embedded Cap).................................. 5.500 02/15/17 2,747,370
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UTAH (CONTINUED)
$ 2,815 Utah St Hsg Fin Agy Single Family Mtg Sr Issue
B3.............................................. 7.100% 07/01/24 $ 2,907,811
------------
5,655,181
------------
VIRGINIA 2.3%
1,000 Loudoun Cnty, VA Indl Dev Auth Loudoun Hosp Cent
(FSA Insd)...................................... 5.800 06/01/26 974,270
8,200 Roanoke, VA Indl Dev Auth Hosp Rev Roanoke Mem
Hosp Carilion Hlth Sys Ser B Rfdg (MBIA Insd)
(d)............................................. 4.70/ 07/01/20 7,917,592
6.25
------------
8,891,862
------------
WASHINGTON 6.0%
9,850 Bellevue, WA Convention Cent Comp Int Rfdg (MBIA
Insd)........................................... * 02/01/25 1,659,922
10,975 Washington St Pub Pwr Supply Sys Nuclear Proj No
1 Rev Ser A Rfdg (MBIA Insd).................... 5.700 07/01/17 10,563,108
10,000 Washington St Pub Pwr Supply Sys Nuclear Proj No
1 Rev Ser B Rfdg (MBIA Insd).................... 5.600 07/01/15 9,530,700
5,125 Washington St Pub Pwr Supply Sys Nuclear Proj No
3 Rev Ser C Rfdg................................ * 07/01/14 1,611,505
------------
23,365,235
------------
WEST VIRGINIA 2.1%
8,000 Harrison Cnty, WV Cmnty Solid Waste Disp Rev
West Penn Pwr Co Proj A......................... 6.875 04/15/22 8,328,800
------------
WISCONSIN 0.9%
1,000 Madison, WI Indl Dev Rev Madison Gas & Elec Co
Proj Ser A...................................... 6.750 04/01/27 1,042,190
2,500 Wisconsin St Hlth & Edl Fac Waukesha Mem Hosp
Ser A (AMBAC Insd).............................. 5.000 08/15/09 2,331,600
------------
3,373,790
------------
TOTAL LONG-TERM INVESTMENTS 99.2%
(Cost $374,458,521) (a)..................................................... 386,188,851
SHORT-TERM INVESTMENTS AT AMORTIZED COST 0.1%................................ 600,000
OTHER ASSETS IN EXCESS OF LIABILITIES 0.7%................................... 2,547,779
------------
NET ASSETS 100%.............................................................. $389,336,630
============
*Zero coupon bond
</TABLE>
(a) At April 30, 1996, cost for federal income tax purposes is $374,458,521; the
aggregate gross unrealized appreciation is $14,483,181 and the aggregate
gross unrealized depreciation is $2,911,170, resulting in net unrealized
appreciation including open option transactions of $11,572,011.
(b) Securities purchased on a when issued or delayed delivery basis.
(c) Assets segregated as collateral for when issued or delayed delivery purchase
commitments and open option transactions.
(d) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(e) Private placement issue.
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $374,458,521) (Note 1).............. $386,188,851
Short-Term Investments (Note 1)........................................ 600,000
Receivables:
Interest............................................................. 6,654,922
Investments Sold..................................................... 4,811,787
Options at Market Value (Net premiums paid of $263,790) (Note 4)....... 105,471
Unamortized Organizational Expenses (Note 1)........................... 7,822
Other.................................................................. 11,299
------------
Total Assets..................................................... 398,380,152
------------
LIABILITIES:
Payables:
Custodian Bank....................................................... 4,169,033
Investments Purchased................................................ 3,901,114
Income Distributions--Common and Preferred Shares.................... 354,390
Investment Advisory Fee (Note 2)..................................... 207,842
Administrative Fee (Note 2).......................................... 63,951
Accrued Expenses....................................................... 308,382
Deferred Compensation and Retirement Plans (Note 2).................... 38,810
------------
Total Liabilities................................................ 9,043,522
------------
NET ASSETS............................................................. $389,336,630
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 3,000
issued with liquidation preference of $50,000 per share) (Note 5).... $150,000,000
------------
Common Shares ($.01 par value with an unlimited number of shares
authorized, 15,352,891 shares issued and outstanding)................ 153,529
Paid in Surplus........................................................ 226,719,758
Net Unrealized Appreciation on Investments............................. 11,572,011
Accumulated Undistributed Net Investment Income........................ 988,252
Accumulated Net Realized Loss on Investments........................... (96,920)
------------
Net Assets Applicable to Common Shares........................... 239,336,630
------------
NET ASSETS............................................................. $389,336,630
============
NET ASSET VALUE PER COMMON SHARE ($239,336,630 divided
by 15,352,891 shares outstanding).................................... $ 15.59
============
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................................... $ 11,780,162
-------------
EXPENSES:
Investment Advisory Fee (Note 2)....................................... 1,288,840
Administrative Fee (Note 2)............................................ 396,566
Preferred Share Maintenance (Note 5)................................... 197,975
Legal (Note 2)......................................................... 12,260
Trustees Fees and Expenses (Note 2).................................... 12,154
Amortization of Organizational Expenses (Note 1)....................... 3,989
Other.................................................................. 159,540
-------------
Total Expenses..................................................... 2,071,324
-------------
NET INVESTMENT INCOME.................................................. $ 9,708,838
=============
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Realized Gain/Loss on Investments:
Proceeds from Sales.................................................. $ 133,423,390
Cost of Securities Sold.............................................. (127,648,977)
-------------
Net Realized Gain on Investments (Including realized gain on futures
transactions of $327,036)............................................ 5,774,413
-------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period.............................................. 21,185,149
End of the Period (Including unrealized depreciation on open option
transactions of $158,319).......................................... 11,572,011
-------------
Net Unrealized Depreciation on Investments During the Period........... (9,613,138)
-------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS........................ $ (3,838,725)
=============
NET INCREASE IN NET ASSETS FROM OPERATIONS............................. $ 5,870,113
=============
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1996
and the Year Ended October 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1996 October 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 9,708,838 $ 19,582,543
Net Realized Gain/Loss on Investments................ 5,774,413 (5,569,226)
Net Unrealized Appreciation/Depreciation on
Investments During the Period...................... (9,613,138) 29,881,589
---------- ----------
Change in Net Assets from Operations................. 5,870,113 43,894,906
---------- ----------
Distributions from Net Investment Income:
Common Shares...................................... (7,000,745) (15,536,849)
Preferred Shares................................... (2,815,389) (5,986,277)
---------- ----------
Total Distributions.................................. (9,816,134) (21,523,126)
---------- ----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (3,946,021) 22,371,780
NET ASSETS:
Beginning of the Period.............................. 393,282,651 370,910,871
------------ ------------
End of the Period (Including undistributed net
investment income of $988,252 and $1,095,548,
respectively)...................................... $389,336,630 $393,282,651
============ ============
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 24, 1992
Six Months (Commencement
Ended Year Ended October 31 of Investment
April 30, -------------------------- Operations) to
1996 1995 1994 1993 October 31, 1992
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period (a)...... $15.846 $14.389 $17.297 $14.990 $14.771
------- ------ ------ ------ ------
Net Investment Income............ .632 1.275 1.303 1.354 .611
Net Realized and Unrealized
Gain/Loss on Investments....... (.250) 1.584 (2.918) 2.332 .083
------- ------ ------ ------ ------
Total from Investment Operations... .382 2.859 (1.615) 3.686 .694
------- ------ ------ ------ ------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders.... .456 1.012 1.020 1.020 .340
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders....... .183 .390 .273 .282 .135
Distributions from Net Realized
Gain on Investments:
Paid to Common Shareholders.... -0- -0- -0- .057 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders....... -0- -0- -0- .020 -0-
------- ------ ------ ------ ------
Total Distributions................ .639 1.402 1.293 1.379 .475
------- ------ ------ ------ ------
Net Asset Value, End of the
Period........................... $15.589 $15.846 $14.389 $17.297 $14.990
======= ======= ======= ======= =======
Market Price Per Share at End of
the Period....................... $13.500 $13.625 $13.000 $16.375 $14.500
Total Investment Return at Market
Price (b)........................ 2.35%* 12.70% (14.96%) 20.85% (1.16%)*
Total Return at Net Asset Value
(c).............................. 1.16%* 17.74% (11.30%) 23.17% 2.10%*
Net Assets at End of the Period (In
millions)........................ $389.3 $393.3 $370.9 $415.6 $380.1
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares........................... 1.67% 1.75% 1.69% 1.62% 1.54%
Ratio of Expenses to Average Net
Assets........................... 1.04% 1.06% 1.05% 1.02% 1.04%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (d)................ 5.54% 5.87% 6.43% 6.51% 5.82%
Portfolio Turnover................. 29.90%* 69.55% 75.64% 52.40% 53.37%*
</TABLE>
(a) Net asset value at April 24, 1992, is adjusted for common and preferred
share offering costs of $.229 per common share.
(b) 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.
(c) Total return at net asset value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.
(d) Net investment income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
* Non-Annualized
See Notes to Financial Statements
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Municipal Opportunity 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. The Trust commenced investment operations on April 24, 1992.
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--Investments are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of less than 60 days 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.
D. ORGANIZATIONAL EXPENSES--The Trust has reimbursed Van Kampen American Capital
Distributors Inc. or its affiliates (collectively "VKAC") for costs incurred in
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
connection with the Trust's organization in the amount of $40,000. These costs
are being amortized on a straight line basis over the 60 month period ending
April 23, 1997. Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") has agreed that in the event any of the initial shares of the Trust
originally purchased by VKAC are redeemed during the amortization period, the
Trust will be reimbursed for any unamortized organizational expenses in the same
proportion as the number of shares redeemed bears to the number of initial
shares held at the time of redemption.
E. 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, 1995, the Trust had an accumulated capital loss
carryforward for tax purposes of $5,871,333, of which $302,107 and $5,569,226
will expire on October 31, 2001 and 2003, respectively.
F. 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 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.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Trust for an annual fee payable
monthly of .65% of the average net assets of the Trust. In addition, the Trust
will pay a monthly administrative fee to VKAC, 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 reporting
responsibilities with respect to the Trust's portfolio and preferred shares and
providing certain services to shareholders.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Trust, of which a trustee of the Trust is an affiliated person.
For the six months ended April 30, 1996, the Trust recognized expenses of
approximately $12,500 representing VKAC's cost of providing accounting and legal
services to the Trust.
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Certain officers and trustees of the Trust are also officers and directors
of VKAC. The Trust does not compensate its officers or trustees who are officers
of VKAC.
The Trust has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC.
At April 30, 1996, VKAC owned 6,700 common shares of the Trust.
3. INVESTMENT TRANSACTIONS
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the six months ended April 30, 1996 were $118,272,781 and
$127,648,977, respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio 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 the unrealized
appreciation/depreciation on investments. Upon disposition, a realized gain or
loss is recognized accordingly, except for exercised option contracts where the
recognition of gain or loss is postponed until the disposal of the security
underlying the option 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.
16
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Transactions in options for the six months ended April 30, 1996, were as
follows:
<TABLE>
<CAPTION>
CONTRACTS PREMIUM
<S> <C> <C>
- -------------------------------------------------------------------------
Outstanding at October 31, 1995.................. -0- $ -0-
Options Written and Purchased (Net).............. 450 (263,790)
--- ---------
Outstanding at April 30, 1996.................... 450 $(263,790)
=== =========
</TABLE>
The related futures contracts of the outstanding option transactions as of
April 30, 1996, and the description and market value is as follows:
<TABLE>
<CAPTION>
EXP. MONTH/ MARKET VALUE
CONTRACTS EXERCISE PRICE OF OPTION
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
June 1996 U.S. Treasury Bond
Futures Purchased Puts.......... 450 June/106 $105,471
=== =========
</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, the Municipal Bond
Index and Eurodollar Notes and typically closes the contracts prior to the
delivery date. These contracts are generally used to manage the portfolio's
effective maturity and duration.
The fluctuation in market value of the contracts is settled daily through a
cash margin account. Realized gains and losses are recognized when the contracts
are closed or expire.
Transactions in futures contracts for the six months ended April 30, 1996,
were as follows:
<TABLE>
<CAPTION>
CONTRACTS
<S> <C>
- ----------------------------------------------------------------------
Outstanding at October 31, 1995............................ 600
Futures Opened............................................. 300
Futures Closed............................................. (900)
----
Outstanding at April 30, 1996.............................. -0-
====
</TABLE>
C. INDEXED SECURITIES--These instruments are identified in the portfolio of
investments. Their price may be more volatile than the price of a comparable
fixed rate security.
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.
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
An Embedded Swap security includes a swap component such that the fixed
coupon component of the underlying bond is adjusted by the difference between
the securities fixed swap rate and the floating swap index. 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.
5. PREFERRED SHARES
The Trust has outstanding 3,000 Auction Preferred Shares ("APS") in two series
of 1,500 shares each. Dividends are cumulative and the dividend rate on each
series is currently reset every 28 days through an auction process. The average
rate in effect on April 30, 1996 was 3.69%. During the six months ended April
30, 1996, the rates ranged from 3.34% to 4.50%.
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 $50,000 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.
18
<PAGE> 20
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free
Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal
Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-341-2911 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
19
<PAGE> 21
VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST
OFFICERS AND TRUSTEES
DON G. POWELL*
Chairman and Trustee
DENNIS J. MCDONNELL*
President and Trustee
DAVID C. ARCH
Trustee
ROD DAMMEYER
Trustee
HOWARD J KERR
Trustee
THEODORE A. MYERS
Trustee
HUGO F. SONNENSCHEIN
Trustee
WAYNE W. WHALEN*
Trustee
PETER W. HEGEL*
Vice President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Treasurer
SCOTT E. MARTIN*
Assistant Secretary
WESTON B. WETHERELL*
Assistant Secretary
NICHOLAS DALMASO*
Assistant Secretary
JOHN L. SULLIVAN*
Controller
STEVEN M. HILL*
Assistant Treasurer
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
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
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in
the Investment Company Act of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1996
All rights reserved.
(SM) denotes a service mark of Van Kampen American
Capital Distributors, Inc.
20
