<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Glossary of Terms................................ 4
Portfolio Management Review...................... 5
Portfolio Highlights............................. 8
Portfolio of Investments......................... 9
Statement of Assets and Liabilities.............. 21
Statement of Operations.......................... 22
Statement of Changes in Net Assets............... 23
Financial Highlights............................. 24
Notes to Financial Statements.................... 26
Dividend Reinvestment Plan....................... 30
</TABLE>
VMO SAR 6/99
<PAGE> 2
LETTER TO SHAREHOLDERS
May 20, 1999
Dear Shareholder,
With the volatility that we've experienced in many financial markets in
recent months, some investors have sold securities because of uncertainty about
where the markets were going, only to be left rethinking whether they made the
right decision. We've witnessed this kind of market activity numerous times over
the past several years, sparked by concerns such as the impact of the Asian
economic crisis, high stock valuations, or, most recently, the stability of many
high-flying technology companies. While these fears eventually subsided,
investors who may have sold during this period were unable to reap the benefits
of the latest rally. That's partly because most of the recent big gains happened
in relatively short periods of time. This kind of volatility--and the danger of
making short-term decisions--highlights the importance of investing for the long
term, in accordance with your individual financial objectives.
Although the worst of the Asian crisis appears to be behind us, new concerns
are always emerging. In the coming months, we'll likely hear more about how the
year 2000 computer problem may affect the markets or that we're overdue for a
correction. While the markets could undoubtedly suffer as a result of these or
any number of other events, we encourage you to focus on your long-term
investment goals. Although nothing is certain, history has shown us that over
time, the markets tend to recover--and most investors want to be positioned to
take advantage of any recovery.
If you have concerns about market volatility or questions about how your
portfolio is structured to respond to these events, we encourage you to contact
your financial advisor. Your advisor can talk with you about sustaining a
long-term investment plan through a variety of market conditions. We hope that
Van Kampen Funds will play an important role as you and your advisor build a
portfolio designed to help you weather whatever the markets have in store.
Sincerely,
[SIG]
Richard F. Powers III
Chairman
Van Kampen Investment Advisory Corp.
[SIG]
Dennis J. McDonnell
President
Van Kampen Investment Advisory Corp.
1
<PAGE> 3
ECONOMIC SNAPSHOT
A surge in consumer confidence led to strong economic growth over the past
six months, as fears about the impact of the Asian financial crisis subsided. In
the fourth quarter, the nation's gross domestic product (GDP) rose at an
astounding 6.0 percent annual rate and remained strong at 4.5 percent through
the first quarter of 1999. This powerful level of growth is attributed to a
continued increase in consumer spending, a strong housing market, and high
retail sales--all the result of a more confident consumer given the positive
employment environment. The economy began to show signs of slowing down early in
1999, however, as corporate profits and wage growth declined.
Despite continued improvements in Asia and Latin America and the record
economic growth in the United States, inflation remained at bay in late 1998 as
commodity prices tumbled. Although rising oil prices pushed inflation up 3.3
percent on an annualized basis in the first four months of 1999, price increases
remained moderate enough overall to keep inflation-adjusted interest rates
attractive.
Our outlook for the domestic economy remains positive, although we
anticipate slower growth in the second half of the year. We look for a gradual
but steady rise in inflation throughout 1999 to more normal but certainly not
alarming levels. Internationally, low interest rates and improving financial
conditions should continue to support the economic progress we've witnessed
overseas.
INTEREST RATES AND INFLATION
April 30, 1997, through April 30, 1999
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Apr 1997 6.0000 2.5000
5.6250 2.2000
6.5000 2.3000
Jul 1997 6.0000 2.2000
5.5000 2.2000
6.2500 2.2000
Oct 1997 5.7500 2.1000
5.6875 1.8000
6.5000 1.7000
Jan 1998 5.5625 1.6000
5.6250 1.4000
6.1250 1.4000
Apr 1998 5.6250 1.4000
5.6875 1.7000
6.0000 1.7000
Jul 1998 5.5625 1.7000
5.9375 1.6000
5.7500 1.5000
Oct 1998 5.2500 1.5000
4.8750 1.5000
4.0000 1.6000
Jan 1999 4.8125 1.7000
4.8750 1.6000
5.1250 1.7000
Apr 1999 4.9375 2.3000
</TABLE>
Interest rates are represented by the closing midline federal funds 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 RESULTS FOR THE PERIOD ENDED APRIL 30, 1999
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
(NYSE TICKER SYMBOL--VMO)
<TABLE>
<S> <C>
COMMON SHARE TOTAL RETURNS
Six-month total return based on market price(1)............ 0.43%
Six-month total return based on NAV(2)..................... 1.08%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................... 5.58%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)...................................... 8.72%
SHARE VALUATIONS
Net asset value............................................ $ 17.35
Closing common stock price................................. $16.125
Six-month high common stock price (12/01/98)............... $16.875
Six-month low common stock price (04/30/99)................ $16.000
Preferred share (Series A) rate(5)......................... 3.100%
Preferred share (Series B) rate(5)......................... 3.110%
</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 #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.
3
<PAGE> 5
GLOSSARY OF TERMS
CALL FEATURE: Allows the issuer to buy back a bond on specific dates at set
prices before maturity. These dates and prices are set when the bond is
issued. To compensate the bondholder for the potential loss of income and
ownership, a bond's call price is usually higher than the face value of the
bond. Bonds are usually called when interest rates drop so significantly
that the issuer can save money by issuing new bonds at lower rates.
CREDIT RATING: An evaluation of an issuer's credit history and capability of
repaying obligations. Standard & Poor's and Moody's Investors Service are
two companies that assign bond ratings. Standard & Poor's ratings range from
a high of AAA to a low of D, while Moody's ratings range from a high of Aaa
to a low of C.
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.
INSURED BOND: A bond that is insured against default by the bond insurer. If the
issuer defaults, the insurance company will step in and take over payments
of interest and principal when due. Once a bond is insured, it typically
carries the rating of the insurer. Most insurers are rated AAA.
INVESTMENT-GRADE BONDS: Securities rated BBB and above by Standard & Poor's or
Baa and above by Moody's Investors Service. Bonds rated below BBB or Baa are
noninvestment grade.
MATURITY LENGTH: The time it takes for a bond to mature. A bond issued in 1998
and maturing in 2008 is a 10-year bond.
MUNICIPAL BOND: A debt security issued by a state, municipality, or other
government entity to finance capital expenditures of public projects, such
as the construction of highways, public works, or school buildings. Interest
on public-purpose municipal bonds is exempt from federal income taxes and,
in some states, from state and local income taxes.
PREMIUM BOND: A bond whose market price is above its face value (or "par
value"). Because bonds usually mature at face value, a premium bond has less
potential to appreciate in price than a par bond does.
REFUNDING: Retiring an outstanding bond issue at maturity using money from the
sale of a new offering.
YIELD: The annual rate of return on an investment, expressed as a percentage.
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.
4
<PAGE> 6
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
We recently spoke with the management team of the Van Kampen Municipal
Opportunity Trust about the key events and economic forces that shaped the
markets during the reporting period. The team includes Dennis S. Pietrzak,
portfolio manager, and Peter W. Hegel, chief investment officer for fixed-income
investments. The following comments reflect their views on the Trust's
performance during the six months ended April 30, 1999.
Q HOW WOULD YOU DESCRIBE THE CONDITIONS IN THE MUNICIPAL MARKET DURING THE
PAST SIX MONTHS?
A Although most of the financial markets experienced volatility during the
period, the municipal market remained relatively stable. For the majority
of the six months, long-term municipal bond yields remained within a range
of about 5.1 to 5.3 percent, even as the Federal Reserve cut interest rates.
Much of the stability in the municipal market can be attributed to its isolation
from turbulence abroad. Concerns about the financial conditions in Asia and
Latin America hurt the stock and high-yield bond markets last fall, but had
little effect on municipals.
The positive economic and market conditions encouraged more municipalities
to take advantage of low interest rates and issue new bonds. Although the amount
of municipal debt increased, the credit quality of many issuers was not
compromised--in fact, it improved as the positive economic environment led to
stronger balance sheets. As a result, we saw more issuers using municipal bonds
to finance special growth and expansion projects, as opposed to financing their
regular operations.
The proportion of higher-yielding municipal bonds also increased during the
period as the number of insured bonds declined. Because bond insurers tightened
their underwriting criteria, more issuers came to market without insurance and
offered higher yields to compensate bondholders for the increased credit risk.
This benefited the Trust because it allowed our experienced research staff to
seek out those higher-yielding bonds that we felt had strong underlying quality.
Q WHY WERE MUNICIPAL BONDS SO ATTRACTIVE RELATIVE TO COMPARABLE TREASURY
BONDS?
A Toward the end of 1998, the yields on 30-year insured municipal bonds and
comparable U.S. Treasury bonds reached equivalent levels, which is a rare
occurrence. Typically, investment-grade municipal bonds have offered about
85 to 90 percent as much yield as comparable Treasury bonds because their
interest payments are exempt from federal income taxes. However, as Treasury
yields fell and municipal yields remained stable, the yield difference between
the two types of bonds shrank. Early in 1999, investors recognized the
tremendous opportunities available in the municipal market, and demand for
municipals began to increase. In conjunction with a recent slowdown in supply,
this boost in municipal demand pushed the municipal-to-Treasury yield ratio back
to more traditional but still attractive levels.
5
<PAGE> 7
Q WHAT STRATEGIES DID YOU USE TO MANAGE THE TRUST?
A Our focus was on supporting the Trust's income stream while monitoring its
risk level and price volatility. As a result, most of our purchases were
bonds with 15-to 20-year maturities, as the intermediate range of the
yield curve offered almost as much yield as comparable 30-year bonds but is
potentially less volatile. We would have received minimal incremental yield for
assuming the additional interest-rate risk associated with purchasing
longer-maturity bonds.
In addition, we sold bonds in the portfolio that had a high risk of being
called, or repaid early by the issuer. These higher-yielding bonds had increased
in value since we purchased them, so we took advantage of the opportunity to
sell them at a premium and contribute to the Trust's total return. To help
protect the Trust from future bond calls, we began to replace some of our
housing bonds. These bonds carry a risk that the mortgage holder will refinance
the mortgage or pay it off early, especially during a low interest-rate
environment like we are currently experiencing. Thus, housing bonds are more
likely than many other issues to be called from the portfolio.
Another strategy we used was to purchase bonds issued in states that have
strong demand for municipal securities as a result of heavy state and local
taxation. In particular, we purchased several securities issued in New York. The
large supply in that state provided a number of opportunities to find attractive
bonds with appreciation potential.
Q HOW DID YOU FIND VALUE IN THE MUNICIPAL MARKET?
A By working closely with our experienced research analysts, we continued to
look for bonds that may be temporarily out of favor but that we feel have
the potential to appreciate in price if market conditions change. For
example, we had previously purchased securities that were subject to the
alternative minimum tax (AMT) because they offered very attractive yields during
a time when AMT bonds were plentiful. Since that time, the supply of AMT bonds
has dropped significantly, so we sold several AMT holdings and replaced them
with insured bonds that offered approximately the same yield--effectively
increasing the quality of the portfolio without sacrificing yield. For
additional portfolio highlights, please refer to page 8.
Q HOW DID THE TRUST PERFORM DURING THE PERIOD?
A During the past six months, the Trust generated a total return of 0.43
percent(1) based on market price. This reflects a decrease in market price
from $16.50 per share on October 31, 1998, to $16.125 on April 30, 1999.
In addition, the Trust provided a distribution rate of 5.58 percent(3) based on
its closing common stock price on April 30, 1999. Because the Trust is exempt
from federal income taxes, this distribution rate is equivalent to a yield of
8.72 percent(4) on a taxable investment for shareholders in the
6
<PAGE> 8
36 percent federal income tax bracket. The Trust's monthly dividend of $.075 per
share was unchanged during the reporting period. Past performance does not
guarantee future results. Please refer to the footnotes and chart on page 3 for
additional Trust performance results.
Q WHAT DO YOU SEE AHEAD FOR THE MUNICIPAL MARKET?
A Strong economic performance should continue to bolster the credit
conditions of municipal issuers. In addition, we expect that this economic
strength will continue to make municipalities more likely to issue debt
for special projects rather than for general operating financing.
Although insured debt has been increasing in recent years, we have started
to see a reversal of this trend in the last few months, as municipal bond
insurers have become more cautious. If this caution continues, credit spreads
may widen as the proportion of higher-yielding uninsured bonds increases.
Finally, we see the potential for changes in traditional economic activity
toward the end of the year because of investor concerns about the year 2000
computer problem. These temporary concerns, however, may result in attractive
investment opportunities that our research staff can explore to uncover
potential value.
[SIG]
Dennis S. Pietrzak
Portfolio Manager
[SIG]
Peter W. Hegel
Chief Investment Officer
Fixed Income Investments
7
<PAGE> 9
PORTFOLIO HIGHLIGHTS
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TOP FIVE PORTFOLIO SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
<TABLE>
<CAPTION>
AS OF APRIL 30, 1999 AS OF OCTOBER 31, 1998
<S> <C> <C> <C>
General Purpose............. 17.9% General Purpose............. 16.7%
Wholesale Electric.......... 12.8% Wholesale Electric.......... 12.5%
Health Care................. 11.1% Single-Family Housing....... 12.2%
Single-Family Housing....... 9.7% Airport..................... 10.8%
Airport..................... 8.6% Health Care................. 10.6%
</TABLE>
PORTFOLIO COMPOSITION BY CREDIT QUALITY AS A PERCENTAGE OF LONG-TERM
INVESTMENTS
[PIE CHART]
<TABLE>
<CAPTION>
AAA/Aaa AA/Aa A/A BBB/Baa NON-RATED
------- ----- --- ------- ---------
<S> <C> <C> <C> <C> <C>
As of April 30, 1999 61.3 11.1 13.4 13.8 0.4
</TABLE>
[PIE CHART]
<TABLE>
<CAPTION>
AAA/Aaa AA/Aa A/A BBB/Baa NON-RATED
------- ----- --- ------- ---------
<S> <C> <C> <C> <C> <C>
As of October 31, 1998 58.1 14 13.4 14.1 0.4
</TABLE>
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
DIVIDEND HISTORY
FOR THE PERIOD ENDED APRIL 30, 1999
[BAR GRAPH]
<TABLE>
<CAPTION>
Distribution per
Common Share
----------------
<S> <C>
'Nov 1998' $.075
'Dec 1998' $.075
'Jan 1999' $.075
'Feb 1999' $.075
'Mar 1999' $.075
'Apr 1999' $.075
</TABLE>
The dividend history represents past performance of the Trust and does not
predict the Trust's future distributions.
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 101.9%
ALABAMA 0.8%
$ 3,500 Birmingham, AL Wtr & Swr Rev Wts Ser
A...................................... 4.750% 01/01/29 $ 3,250,450
400 Mobile, AL Indl Dev Brd Solid Waste
Disp Rev Mobile Energy Svcs Co Proj
Rfdg (e)............................... 6.950 01/01/20 139,500
------------
3,389,950
------------
CALIFORNIA 6.0%
1,390 California Hsg Fin Agy Rev Home Mtg Ser
B1..................................... 6.300 08/01/08 1,483,241
2,000 California Pollutn Ctl Fin Auth Pollutn
Ctl Rev Southn CA Edison Co (AMBAC
Insd).................................. 6.000 07/01/27 2,144,180
1,110 California Rural Home Mtg Fin Auth
Single Family Mtg Rev Ser C (GNMA
Collateralized)........................ 7.800 02/01/28 1,274,413
5,000 Contra Costa, CA Home Mtg Fin Auth Home
Mtg Rev (MBIA Insd).................... * 09/01/17 2,010,800
4,000 Foothill/Eastern Corridor Tran Agy CA
Toll Rd Rev Conv Cap Apprec Sr Lien Ser
A (c).................................. 0/7.050 01/01/10 3,328,920
5,000 Orange Cnty, CA Recovery Ctfs Ser A
(MBIA Insd)............................ 6.000 07/01/06 5,596,150
5,000 Orange Cnty, CA Recovery Ctfs Ser A
(MBIA Insd)............................ 6.000 07/01/08 5,652,300
3,000 Orange Cnty, CA Recovery Ser A Rfdg
(MBIA Insd)............................ 6.000 06/01/08 3,388,560
------------
24,878,564
------------
COLORADO 6.8%
2,000 Arapahoe Cnty, CO Cap Impt Trust Fund
Hwy Rev E-470 Proj Ser B (Prerefunded @
08/31/05).............................. 7.000 08/31/26 2,381,180
1,000 Castle Rock, CO Multi-Family Rev Hsg
Pines at Castle Rock Ser A (FSA
Insd).................................. 6.100 12/01/16 1,056,680
1,500 Colorado Hsg Fin Auth Multi-Family Hsg
Ins Mtg Ser B2......................... 5.800 10/01/28 1,577,730
1,500 Colorado Hsg Fin Auth Single Family Pgm
Sr Ser A2.............................. 7.250 05/01/27 1,675,305
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COLORADO (CONTINUED)
$ 1,025 Colorado Hsg Fin Auth Single Family Pgm
Sr Ser A3.............................. 7.000% 11/01/24 $ 1,108,076
1,500 Colorado Hsg Fin Auth Single Family Pgm
Sr Ser C1.............................. 7.550 11/01/27 1,700,940
3,200 Denver, CO City & Cnty Arpt Rev Ser
A...................................... 8.500 11/15/07 3,448,992
5,145 Denver, CO City & Cnty Arpt Rev Ser
A...................................... 8.875 11/15/12 5,760,393
300 Denver, CO City & Cnty Arpt Rev Ser A
(Prerefunded @ 11/15/00)............... 8.500 11/15/07 328,041
1,855 Denver, CO City & Cnty Arpt Rev Ser A
(Prerefunded @ 11/15/01)............... 8.875 11/15/12 2,121,341
1,750 Denver, CO City & Cnty Arpt Rev Ser B
(MBIA Insd)............................ 6.250 11/15/06 1,960,000
1,000 Denver, CO City & Cnty Arpt Rev Ser B
(MBIA Insd)............................ 6.250 11/15/07 1,125,590
1,005 Greeley, CO Multi-Family Rev AMT Hsg
Mtg Creek Stone (FHA Gtd).............. 5.950 07/01/28 1,049,974
1,000 Highlands Ranch Metro Dist No 2 CO Rfdg
(FSA Insd)............................. 6.500 06/15/11 1,177,560
2,000 University CO Hosp Auth Rev Ser A
(AMBAC Insd) (a)....................... 5.000 11/15/29 1,937,580
------------
28,409,382
------------
CONNECTICUT 0.8%
1,000 Mashantucket Western Pequot Tribe CT
Spl Rev Ser A, 144A Private Placement
(d).................................... 6.400 09/01/11 1,099,580
840 Mashantucket Western Pequot Tribe CT
Spl Rev Ser A, 144A Private Placement
(Escrowed to Maturity) (d)............. 6.500 09/01/06 968,570
1,000 Mashantucket Western Pequot Tribe CT
Spl Rev Ser A, 144A Private Placement
(Prerefunded @ 09/01/07) (d)........... 6.400 09/01/11 1,163,840
------------
3,231,990
------------
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
DISTRICT OF COLUMBIA 0.5%
$ 2,000 Metropolitan Washington, DC Arpt Auth
Genl Arpt Rev Ser A (FGIC Insd)........ 7.250% 10/01/10 $ 2,130,580
------------
FLORIDA 0.8%
3,000 Florida St Brd Edl Cap Outlay Pub Edl
Ser A (Prerefunded @ 06/01/04)......... 5.875 06/01/16 3,302,070
------------
GEORGIA 3.3%
2,935 Fulton Cnty, GA Lease Rev, 144A Private
Placement (d).......................... 7.250 06/15/10 3,393,611
2,000 George L Smith II GA World Congress
Cent Auth Rev (MBIA Insd) (a).......... 6.000 07/01/09 2,166,240
7,000 Georgia Muni Elec Auth Pwr Rev Ser A
(MBIA Insd)............................ 6.500 01/01/20 8,307,390
------------
13,867,241
------------
HAWAII 1.5%
5,000 Hawaii St Arpt Sys Rev Ser 2........... 7.000 07/01/18 5,371,350
1,000 Honolulu, HI City & Cnty Wastewtr Sys
Rev (FGIC Insd)........................ 4.500 07/01/28 900,270
------------
6,271,620
------------
IDAHO 0.3%
1,000 Idaho Hsg & Fin Assn Single Family Mtg
Mezz Ser E 2........................... 5.950 07/01/14 1,053,240
------------
ILLINOIS 6.5%
2,000 Bolingbrook, IL Cap Apprec Ser C Rfdg
(MBIA Insd) (a)........................ * 01/01/23 578,500
5,000 Chicago, IL O'Hare Intl Arpt Rev Genl
Arpt Second Lien Ser A Rfdg (MBIA Insd)
(b).................................... 6.375 01/01/12 5,545,850
6,400 Chicago, IL Sch Fin Auth Ser A (MBIA
Insd).................................. 5.000 06/01/09 6,614,528
970 Chicago, IL Single Family Mtg Rev Ser A
(GNMA Collateralized).................. 7.000 09/01/27 1,081,841
895 Chicago, IL Single Family Mtg Rev Ser B
(GNMA Collateralized).................. 7.625 09/01/27 1,022,054
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ILLINOIS (CONTINUED)
$ 2,555 Illinois Dev Fin Auth Rev Local Govt
Pgm Lincoln Way Cmnty (FGIC Insd)...... 5.700% 01/01/17 $ 2,793,024
3,285 Illinois Hlth Fac Auth Rev Midwest
Physician Group Ltd Proj (Prerefunded @
11/15/04).............................. 8.125 11/15/19 3,990,553
1,475 Regional Tran Auth IL Ser A (AMBAC
Insd).................................. 6.500 06/01/15 1,608,679
1,410 Sangamon Cnty, IL Cmnty Unit Sch Dist
No 5 (FGIC Insd)....................... 6.400 12/01/03 1,559,714
1,865 Sangamon Cnty, IL Cmnty Unit Sch Dist
No 5 (FGIC Insd)....................... 6.500 12/01/05 2,118,099
------------
26,912,842
------------
INDIANA 0.7%
2,500 Purdue Univ, IN Univ Rev Student Fee
Ser B (Prerefunded @ 01/01/05)......... 6.750 07/01/09 2,894,975
------------
KANSAS 0.2%
1,000 Kansas St Dev Fin Auth Rev (FSA
Insd).................................. 4.150 06/01/08 988,850
------------
KENTUCKY 0.7%
1,475 Kenton Cnty, KY Arpt Brd Rev
Cincinnati/Northn KY Intl Arpt Ser A
Rfdg (MBIA Insd)....................... 6.200 03/01/08 1,658,918
1,350 Kentucky Hsg Corp Hsg Rev Ser B........ 6.250 07/01/28 1,443,690
------------
3,102,608
------------
LOUISIANA 1.2%
2,000 Louisiana Stadium & Expo Dist Hotel
Occupancy Tax & Stadium Rev Ser B (FGIC
Insd).................................. 4.750 07/01/21 1,891,060
3,000 New Orleans, LA Rfdg (FGIC Insd)....... 5.500 12/01/21 3,203,640
------------
5,094,700
------------
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MAINE 0.8%
$ 1,950 Maine Edl Ln Auth Rev Supplemental Pgm
Ser A1................................. 7.000% 12/01/16 $ 2,064,562
1,070 Maine Edl Ln Auth Rev Supplemental Pgm
Ser A2................................. 7.150 12/01/16 1,136,212
------------
3,200,774
------------
MASSACHUSETTS 2.2%
2,000 Boston, MA Wtr & Swr Comm Rev Genl Sr
Ser D (FGIC Insd)...................... 4.750 11/01/22 1,885,180
2,000 Boston, MA Wtr & Swr Comm Rev Genl Sr
Ser D (FGIC Insd)...................... 5.000 11/01/28 1,938,520
2,000 Massachusetts St Hlth & Edl Fac Auth
Rev New England Med Cent Hosp Ser G
(Embedded Swap) (MBIA Insd) (c)........ 3.10/5.00 07/01/13 1,997,240
3,000 Plymouth Cnty, MA Ctfs Partn Ser A
(Prerefunded @ 10/01/02)............... 7.000 04/01/22 3,371,670
------------
9,192,610
------------
MICHIGAN 3.6%
1,000 Michigan St Hosp Fin Auth Rev Hosp
Genesys Regl Med Rfdg (ACA Insd)....... 5.500 10/01/18 1,005,860
3,500 Michigan St Hosp Fin Auth Rev Hosp
Genesys Regl Med Rfdg (ACA Insd)....... 5.500 10/01/27 3,509,450
5,500 Michigan St Strat Fd Ltd Oblig Rev
Detroit Edison Co Ser A Rfdg (MBIA
Insd) (a).............................. 5.550 09/01/29 5,581,510
4,500 Monroe Cnty, MI Pollutn Ctl Rev Coll
Detroit Edison Monroe Ser 1 (MBIA
Insd).................................. 6.875 09/01/22 4,954,275
------------
15,051,095
------------
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MISSISSIPPI 1.6%
$ 3,730 Mississippi Home Corp Single Family Rev
Mtg Ser C (GNMA Collateralized)......... 7.600% 06/01/29 $ 4,233,550
1,985 Mississippi Home Corp Single Family Rev
Mtg Ser F (GNMA Collateralized)......... 7.550 12/01/27 2,258,870
------------
6,492,420
------------
MISSOURI 1.3%
1,485 Saint Charles Cnty, MO Indl Dev Auth
Indl Rev Dev Westchester Vlg Apts Ser A
Rfdg (FNMA Collateralized).............. 6.150 02/01/27 1,579,832
535 Saint Louis Cnty, MO Single Family Mtg
Rev (MBIA Insd)......................... 6.900 04/01/16 581,995
3,000 Sikeston, MO Elec Rev Rfdg (MBIA Insd)
(b)..................................... 6.200 06/01/10 3,451,110
------------
5,612,937
------------
NEBRASKA 0.3%
1,000 American Pub Energy Agy NE Gas Supply
Rev (AMBAC Insd)........................ 5.250 06/01/11 1,053,540
------------
NEVADA 1.0%
4,000 Clark Cnty, NV Indl Dev Rev NV Pwr Co
Proj Ser A (FGIC Insd).................. 6.700 06/01/22 4,348,920
------------
NEW HAMPSHIRE 0.5%
2,000 New Hampshire St Hsg Fin Auth Single
Family Rev Mtg Acquisition Ser B
Rfdg.................................... 6.100 07/01/28 2,106,680
------------
NEW JERSEY 6.1%
20,000 New Jersey Econ Dev Auth St Contract
Econ Recovery (MBIA Insd)............... 5.900 03/15/21 22,534,400
1,400 New Jersey Hlthcare Fac Fin Auth Rev
Barnabas Hlth Ser C Rfdg (MBIA Insd).... 5.250 07/01/18 1,383,270
1,395 New Jersey Hlthcare Fac Fin Auth Rev
Christ Hosp Group Issue (Connie Lee
Insd) (a)............................... 7.000 07/01/04 1,581,288
------------
25,498,958
------------
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW MEXICO 2.3%
$ 605 Hobbs, NM Single Family Mtg Rev Rfdg... 8.750% 07/01/11 $ 665,917
4,900 New Mexico Mtg Fin Auth Single Family
Mtg Pgm Ser G (GNMA Collateralized).... 7.250 07/01/26 5,242,657
1,500 New Mexico St Hosp Equip Loan Council
Hosp Rev Mem Med Cent Inc Proj......... 5.500 06/01/28 1,465,875
2,000 University of NM Technology Dev Corp
Lease Rev Univ Cent Resh Pk Proj Ser A
(Prerefunded @ 08/15/04) (MBIA Insd)... 6.450 08/15/18 2,274,700
------------
9,649,149
------------
NEW YORK 19.2%
2,000 Metropolitan Tran Auth NY Commuter Facs
Rev Contract........................... 5.500 07/01/14 2,101,220
3,000 Metropolitan Tran Auth NY Svcs Contract
Tran Fac Ser 5 Rfdg.................... 7.000 07/01/12 3,243,360
1,440 New York City Indl Dev Agy Spl Fac Rev
Terminal One Group Assn Proj........... 6.100 01/01/09 1,558,714
3,000 New York City Indl Dev Agy Spl Fac Rev
Terminal One Group Assn Proj........... 6.000 01/01/15 3,187,110
5,000 New York City Muni Wtr Fin Auth Ser
B...................................... 5.750 06/15/29 5,372,200
10,000 New York City Ser A.................... 7.000 08/01/07 11,691,000
5,000 New York City Ser A Rfdg............... 7.000 08/01/05 5,758,000
40 New York City Ser D (b)................ 7.500 02/01/19 44,078
7,960 New York City Ser D (Prerefunded @
02/01/02) (b).......................... 7.500 02/01/19 8,862,027
2,000 New York City Ser I (MBIA Insd)........ 5.000 04/15/29 1,941,040
1,500 New York St Dorm Auth Rev Mental Hlth
Svcs Fac Ser A......................... 5.750 08/15/12 1,618,080
2,070 New York St Dorm Auth Rev Mental Hlth
Svcs Fac Ser B......................... 5.750 08/15/10 2,246,902
6,060 New York St Dorm Auth Rev City Univ Ser
F...................................... 5.500 07/01/12 6,285,432
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$ 1,500 New York St Dorm Auth Rev Dept Edl St
of NY Issue Ser A...................... 5.800% 07/01/22 $ 1,595,250
1,365 New York St Dorm Auth Rev St Univ Edl
Fac Ser B Rfdg......................... 5.250 05/15/09 1,442,996
1,880 New York St Mtg Agy Rev Homeowner Mtg
Ser 58................................. 6.400 04/01/27 2,045,440
6,400 New York St Thruway Auth Svc Contract
Rev Loc Hwy & Brdg..................... 5.750 04/01/09 6,919,168
1,100 New York St Urban Dev Corp Rev
Correctional Cap Fac Ser 4............. 5.375 01/01/23 1,110,956
3,000 New York St Urban Dev Corp Rev
Correctional Cap Fac Ser 7............. 5.700 01/01/27 3,153,360
3,500 Port Auth NY & NJ Cons 97th Ser (FGIC
Insd).................................. 6.650 01/15/23 3,904,775
5,400 Port Auth NY & NJ Spl Oblig Rev Spl
Proj JFK Intl Arpt Terminal 6 (MBIA
Insd).................................. 5.750 12/01/22 5,782,266
------------
79,863,374
------------
NORTH CAROLINA 3.0%
11,000 North Carolina Muni Pwr Agy No 1
Catawba Elec Rev (MBIA Insd) (b)....... 6.000 01/01/12 12,425,820
------------
OHIO 2.1%
1,000 Akron, OH Ctfs Partn Akron Muni
Baseball Stadium Proj (c).............. 0/6.500 12/01/07 983,490
1,325 Lorain Cnty, OH Hosp Rev Catholic
Hlthcare Partners Ser B Rfdg (MBIA
Insd).................................. 5.625 09/01/15 1,409,270
3,000 Lucas Cnty, OH Hosp Rev Promedica
Hlthcare Oblig (MBIA Insd)............. 6.000 11/15/07 3,351,090
1,000 Montgomery Cnty, OH Hosp Rev Grandview
Hosp & Med Cent Rfdg................... 5.250 12/01/04 979,610
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
OHIO (CONTINUED)
$ 995 Ohio Hsg Fin Agy Mtg Rev Residential
Ser A1 (GNMA Collateralized)........... 6.150% 03/01/29 $ 1,056,670
1,000 Ohio St Air Quality Dev Auth Rev JMG
Funding Ltd Partn Proj Rfdg (AMBAC
Insd).................................. 6.375 04/01/29 1,109,810
------------
8,889,940
------------
OKLAHOMA 2.2%
2,000 Tulsa, OK Indl Auth Hosp Rev Hillcrest
Med Cent Proj Rfdg (Connie Lee Insd)... 6.125 06/01/05 2,222,360
3,140 Tulsa, OK Indl Auth Hosp Rev Hillcrest
Med Cent Proj Rfdg (Connie Lee Insd)... 6.250 06/01/08 3,595,112
3,000 Tulsa, OK Muni Arpt Tran Rev American
Airls Inc.............................. 7.600 12/01/30 3,234,600
------------
9,052,072
------------
OREGON 0.5%
2,000 Oregon St Econ Dev Rev Georgia Pacific
Corp................................... 6.350 08/01/25 2,108,780
------------
PENNSYLVANIA 5.5%
2,000 Allegheny Cnty, PA Arpt Rev Pittsburgh
Intl Arpt A Rfdg (MBIA Insd)........... 5.750 01/01/10 2,177,100
6,655 Berks Cnty, PA Muni Auth Rev Highlands
at Wyomissing Proj Ser B............... 6.875 10/01/17 7,121,050
8,500 Geisinger Auth PA Hlth Sys Ser A
(Prerefunded @ 07/01/02)............... 6.400 07/01/22 9,319,485
1,440 Harrisburg, PA Cap Apprec Nts Ser F
Rfdg (AMBAC Insd)...................... * 03/15/15 649,382
1,865 Harrisburg, PA Cap Apprec Ser D Rfdg
(AMBAC Insd)........................... * 09/15/15 820,208
1,865 Harrisburg, PA Cap Apprec Ser D Rfdg
(AMBAC Insd)........................... * 03/15/16 793,334
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
$ 1,000 Indiana Cnty, PA Indl Dev Auth Pollutn
Ctl Rev Metro Edison Co Proj A (AMBAC
Insd).................................. 5.950% 05/01/27 $ 1,071,220
1,000 Pennsylvania Intergvtl Coop Auth Spl
Tax Rev City of Philadelphia
(Prerefunded @ 06/15/02)............... 6.800 06/15/22 1,092,340
------------
23,044,119
------------
SOUTH DAKOTA 0.3%
1,285 South Dakota St Hlth & Edl Fac Auth
Vocational Edl Pgm Ser A (AMBAC
Insd).................................. 5.400 08/01/13 1,355,611
------------
TEXAS 4.6%
1,000 Austin, TX Util Sys Rev Rfdg (AMBAC
Insd).................................. 6.500 11/15/05 1,137,390
2,000 Brazos River Auth TX Rev Houston Inds
Inc Proj Ser D Rfdg (MBIA Insd)........ 4.900 10/01/15 2,023,600
4,500 Dallas-Fort Worth, TX Intl Arpt Fac
Impt Corp Rev Delta Airls Inc (b)...... 7.000 11/01/01 4,743,900
2,525 Dallas-Fort Worth, TX Intl Arpt Fac
Impt Corp Rev Delta Airls Inc.......... 7.625 11/01/21 2,744,625
5,000 Ector Cnty, TX Hosp Dist Hosp Rev Med
Cent Hosp (Prerefunded @
04/15/02) (b).......................... 7.300 04/15/12 5,588,850
1,000 Matagorda Cnty, TX Navigation Dist 1
Houston Lighting Pwr Co (AMBAC Insd)... 5.125 11/01/28 988,000
1,698 Texas Genl Svcs Cmnty Partn Int Lease
Purch Ctfs, 144A Private Placement
(d).................................... 7.250 08/01/11 1,736,060
------------
18,962,425
------------
UTAH 1.7%
1,500 Intermountain Pwr Agy UT Pwr Supply Rev
Ser B Rfdg (MBIA Insd)................. 5.750 07/01/19 1,604,145
1,500 Intermountain Pwr Agy UT Rev Ser E Rfdg
(FSA Insd)............................. 6.000 07/01/06 1,663,110
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UTAH (CONTINUED)
$ 2,110 Utah St Hsg Fin Agy Single Family Ser
C2..................................... 6.000% 07/01/15 $ 2,210,689
1,475 Utah St Hsg Fin Agy Single Family Mtg
Sr Issue B3............................ 7.100 07/01/24 1,552,924
------------
7,030,868
------------
VIRGINIA 2.1%
8,200 Roanoke, VA Indl Dev Auth Hosp Rev
Roanoke Mem Hosp Carilion Hlth Sys Ser
B Rfdg (MBIA Insd) (c)................. 4.70/6.25 07/01/20 8,741,364
------------
WASHINGTON 7.2%
9,850 Bellevue, WA Convention Cent Comp Int
Rfdg (MBIA Insd)....................... * 02/01/25 2,547,407
545 Grant Cnty, WA Pub Util Dist Number 2
Priest Rapids Hydro Elec Rev (MBIA
Insd) (a).............................. 5.250 01/01/14 544,324
520 Grant Cnty, WA Pub Util Dist Number 2
Wanapum Hydro Elec Rev Ser B Rfdg (MBIA
Insd) (a).............................. 5.375 01/01/18 513,854
10,975 Washington St Pub Pwr Supply Sys
Nuclear Proj No 1 Rev Ser A Rfdg (MBIA
Insd).................................. 5.700 07/01/17 11,425,524
10,000 Washington St Pub Pwr Supply Sys
Nuclear Proj No 1 Rev Ser B Rfdg (MBIA
Insd).................................. 5.600 07/01/15 10,395,600
2,000 Washington St Pub Pwr Supply Sys
Nuclear Proj No 2 Rev Ser A Rfdg (AMBAC
Insd).................................. 6.000 07/01/08 2,238,380
5,125 Washington St Pub Pwr Supply Sys
Nuclear Proj No 3 Rev Ser C Rfdg (MBIA
Insd).................................. * 07/01/14 2,412,235
------------
30,077,324
------------
WEST VIRGINIA 2.1%
8,000 Harrison Cnty, WV Cmnty Solid Waste
Disp Rev West Penn Pwr Co Proj Ser
A (b).................................. 6.875 04/15/22 8,619,440
------------
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
WISCONSIN 1.2%
$ 1,000 Madison, WI Indl Dev Rev Madison Gas &
Elec Co Proj Ser A..................... 6.750% 04/01/27 $ 1,076,570
3,500 Wisconsin Hsg & Econ Dev Auth
Homeownership Rev Ser C................ 6.250 09/01/17 3,731,455
------------
4,808,025
------------
WYOMING 0.4%
1,430 Wyoming Cmnty Dev Auth Hsg Rev Ser 2... 6.350 06/01/29 1,529,913
------------
TOTAL INVESTMENTS 101.9%
(Cost $384,943,315).................................................. 424,244,770
LIABILITIES IN EXCESS OF OTHER ASSETS (1.9%).......................... (7,895,489)
------------
NET ASSETS 100.0%..................................................... $416,349,281
============
</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.
(c) Security is a "Step-up" bond where the coupon increases or steps up at a
predetermined date.
(d) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933. These securities may be resold in
transactions exempt from registration which are normally transactions with
qualified institutional buyers.
(e) Issuer has filed for protection in federal bankruptcy court.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corporation
Connie Lee--Connie Lee Insurance Company
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Administration
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance Inc.
GNMA--Governmnet National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
See Notes to Financial Statements
20
<PAGE> 22
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $384,943,315)....................... $424,244,770
Receivables:
Interest.................................................. 6,877,070
Investments Sold.......................................... 205,318
Other....................................................... 5,495
------------
Total Assets.......................................... 431,332,653
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 13,595,789
Custodian Bank............................................ 422,643
Income Distributions--Common and Preferred Shares......... 322,866
Investment Advisory Fee................................... 222,859
Administrative Fee........................................ 68,572
Affiliates................................................ 22,757
Accrued Expenses............................................ 223,023
Trustees' Deferred Compensation and Retirement Plans........ 104,863
------------
Total Liabilities..................................... 14,983,372
------------
NET ASSETS.................................................. $416,349,281
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 6,000 issued with liquidation preference of
$25,000 per share)........................................ $150,000,000
------------
Common Shares ($.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................................. 39,301,455
Accumulated Undistributed Net Investment Income............. 1,627,793
Accumulated Net Realized Loss............................... (1,453,254)
------------
Net Assets Applicable to Common Shares................ 266,349,281
------------
NET ASSETS.................................................. $416,349,281
============
NET ASSET VALUE PER COMMON SHARE ($266,349,281 divided
by 15,352,891 shares outstanding)......................... $ 17.35
============
</TABLE>
See Notes to Financial Statements
21
<PAGE> 23
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $11,633,518
-----------
EXPENSES:
Investment Advisory......................................... 1,349,610
Administrative Fee.......................................... 415,265
Preferred Share Maintenance................................. 185,978
Trustees' Fees and Related Expenses......................... 17,900
Custody..................................................... 14,192
Legal....................................................... 8,145
Other....................................................... 144,196
-----------
Total Expenses.......................................... 2,135,286
-----------
NET INVESTMENT INCOME....................................... $ 9,498,232
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 398,429
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 43,847,567
End of the Period......................................... 39,301,455
-----------
Net Unrealized Depreciation During the Period............... (4,546,112)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(4,147,683)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 5,350,549
===========
</TABLE>
See Notes to Financial Statements
22
<PAGE> 24
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1999 and the Year Ended
October 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................. $ 9,498,232 $ 19,272,332
Net Realized Gain................................. 398,429 90,175
Net Unrealized Appreciation/Depreciation During
the Period...................................... (4,546,112) 9,773,428
------------ ------------
Change in Net Assets from Operations.............. 5,350,549 29,135,935
------------ ------------
Distributions from Net Investment Income:
Common Shares................................... (6,908,495) (13,817,036)
Preferred Shares................................ (2,387,566) (5,336,712)
------------ ------------
Total Distributions............................... (9,296,061) (19,153,748)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES...................................... (3,945,512) 9,982,187
NET ASSETS:
Beginning of the Period........................... 420,294,793 410,312,606
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of
$1,627,793 and $1,425,622, respectively)........ $416,349,281 $420,294,793
============ ============
</TABLE>
See Notes to Financial Statements
23
<PAGE> 25
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended ---------------------
April 30, 1999 1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period
(a)................................... $17.605 $16.955 $ 16.121
------- ------- --------
Net Investment Income................. .619 1.255 1.253
Net Realized and Unrealized
Gain/Loss........................... (.270) .643 .830
------- ------- --------
Total from Investment Operations........ .349 1.898 2.083
------- ------- --------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders......... .450 .900 .900
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders...................... .156 .348 .349
Distributions from Net Realized Gains:
Paid to Common Shareholders......... -0- -0- -0-
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders...................... -0- -0- -0-
------- ------- --------
Total Distributions..................... .606 1.248 1.249
------- ------- --------
Net Asset Value, End of the Period...... $17.348 $17.605 $ 16.955
======= ======= ========
Market Price Per Share at End of the
Period................................ $16.125 $16.500 $15.0625
Total Investment Return at Market Price
(b)................................... 0.43%* 15.91% 16.54%
Total Return at Net Asset Value (c)..... 1.08%* 9.35% 11.11%
Net Assets at End of the Period (In
millions)............................. $ 416.3 $ 420.3 $ 410.3
Ratio of Expenses to Average Net Assets
Applicable to Common Shares**......... 1.61% 1.61% 1.64%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (d)..................... 5.38% 5.24% 5.51%
Portfolio Turnover...................... 16%* 29% 49%
* Non-Annualized
** Ratio of Expenses to Average Net
Assets Including Preferred Shares.... 1.03% 1.03% 1.03%
</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.
24
<PAGE> 26
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 24, 1992
(Commencement
Year Ended October 31, of Investment
- ------------------------------------------- Operations) to
1996 1995 1994 1993 October 31, 1992
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
$15.846 $14.389 $17.297 $14.990 $14.771
------- ------- ------- ------- -------
1.271 1.275 1.303 1.354 .611
.266 1.584 (2.918) 2.332 .083
------- ------- ------- ------- -------
1.537 2.859 (1.615) 3.686 .694
------- ------- ------- ------- -------
.906 1.012 1.020 1.020 .340
.356 .390 .273 .282 .135
-0- -0- -0- .057 -0-
-0- -0- -0- .020 -0-
------- ------- ------- ------- -------
1.262 1.402 1.293 1.379 .475
------- ------- ------- ------- -------
$16.121 $15.846 $14.389 $17.297 $14.990
======= ======= ======= ======= =======
$13.750 $13.625 $13.000 $16.375 $14.500
7.72% 12.70% (14.96%) 20.85% (1.16%)*
7.61% 17.74% (11.30%) 23.17% 2.10%*
$ 397.5 $ 393.3 $ 370.9 $ 415.6 $ 380.1
1.66% 1.75% 1.69% 1.62% 1.54%
5.73% 5.87% 6.43% 6.51% 5.82%
85% 70% 76% 52% 53%*
1.03% 1.06% 1.05% 1.02% 1.04%
</TABLE>
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen 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--Municipal bonds are valued by independent pricing
services or dealers using the mean of the bid and asked prices or, in the
absence of market quotations, at fair value based upon yield data relating to
municipal bonds with similar characteristics and general market conditions.
Securities which are not valued by independent pricing services are valued at
fair value using procedures established in good faith by the Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are valued at
amortized cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Trust may purchase and sell securities on a "when issued" or "delayed
delivery" basis, with settlement to occur at a later date. The value of the
security so purchased is subject to market fluctuations during this period. The
Trust will maintain, in a segregated account with its custodian, assets having
an aggregate value at least equal to the amount of the when issued or delayed
delivery purchase commitments until payment is made.
C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of each
applicable security.
26
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
D. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At October 31, 1998, the Trust had an accumulated capital loss
carryforward for tax purposes of $1,851,683 which will expire between October
31, 2003 and October 31, 2005.
At April 30, 1999, for federal income tax purposes, cost of long-term
investments is $384,943,315; the aggregate gross unrealized appreciation is
$39,811,676 and the aggregate gross unrealized depreciation is $510,221
resulting in net unrealized appreciation on long-term investments of
$39,301,455.
E. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays monthly
dividends 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.
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 .65% 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 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, 1999, the Trust recognized expenses of
approximately $3,700 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
For the six months ended April 30, 1999, the Trust recognized expenses of
approximately $53,600 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. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of
investments, excluding short-term investments, were $68,574,298 and $69,675,205,
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
unrealized appreciation/depreciation. Upon disposition, a realized gain or loss
is recognized accordingly, except when 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 futures contract.
Summarized below are the types of derivative financial instruments used by
the Trust.
A. 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 contracts prior to the delivery date. These
contracts are generally used to manage the portfolio's effective maturity and
duration.
Upon entering into futures contracts, the Trust maintains, in a segregated
account with its custodian, cash or liquid securities with a value equal to its
obligation under the
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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).
There were no transactions in futures contracts during six months ended
April 30, 1999.
B. 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 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
Effective with the close of business on April 23, 1999, the liquidation
preference on the Trust's preferred shares decreased from $50,000 to $25,000 per
share. This decrease was effected by means of a 2 for 1 stock split that doubled
the Trust's number of outstanding preferred shares. The total liquidation value
for the Trust was unchanged.
As of April 30, 1999, the Trust has outstanding 6,000 Auction Preferred
Shares ("APS") in two series of 3,000 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, 1999 was 3.105%. During
the six months ended April 30, 1999, the rates ranged from 3.000% to 3.625%.
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.
29
<PAGE> 31
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be re-
registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, of if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common Shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-
8200. If you withdraw, you will receive, without charge, a share certificate
issued in your name for all full Common Shares credited to your account under
the Plan and a cash payment will be made for any fractional Common Share
credited to your account under the Plan. You may again elect to participate in
the Plan at any time by calling 1-800-341-2929 or writing to the Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
30
<PAGE> 32
VAN KAMPEN FUNDS
EQUITY FUNDS
Domestic
Aggressive Equity
Aggressive Growth
American Value
Comstock
Emerging Growth
Enterprise
Equity Growth
Equity Income
Growth
Growth and Income
Harbor
Pace
Real Estate Securities
Utility
Value
Global/International
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
Global Franchise
Global Managed Assets
International Magnum
Latin American
FIXED-INCOME FUNDS
Income
Corporate Bond
Global Fixed Income
Global Government Securities
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
Short-Term Global Income
Strategic Income
U.S. Government
U.S. Government Trust for Income
Worldwide High Income
Tax Exempt Income
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
Capital Preservation
Reserve
Tax Free Money
SENIOR LOAN
Prime Rate Income Trust
Senior Floating Rate
To find out more about any of these funds, ask your financial advisor for a
prospectus, which contains more complete information, including sales charges,
risks, and expenses. Please read it carefully before you invest or send money.
To view a current Van Kampen fund prospectus or to receive additional fund
information, choose from one of the following:
- - visit our Web site at WWW.VANKAMPEN.COM--to view a prospectus, select Download
Prospectus
- - call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time.
Telecommunications Device for the Deaf users, call 1-800-421-2833.
- - e-mail us by visiting WWW.VANKAMPEN.COM and selecting Contact Us
31
<PAGE> 33
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL* - Chairman
STEVEN MULLER
THEODORE A. MYERS
DON G. POWELL*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
A. THOMAS SMITH, III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and Chief
Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN INVESTMENT
ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG LLP
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in the Investment Company Act of
1940.
(C) Van Kampen Funds Inc., 1999 All rights reserved.
(SM) denotes a service mark of
Van Kampen Funds Inc.
32
<PAGE> 34
YEAR 2000 READINESS DISCLOSURE
Like other mutual funds, financial and business organizations and individuals
around the world, the Trust could be adversely affected if the computer systems
used by the Trust's investment adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Trust's
investment adviser is taking steps that it believes are reasonably designed to
address the Year 2000 Problem with respect to computer systems that it uses and
to obtain reasonable assurances that comparable steps are being taken by the
Trust's other major service providers. At this time, there can be no assurances
that these steps will be sufficient to avoid any adverse impact to the Trust. In
addition, the Year 2000 Problem may adversely affect the markets and the issuers
of securities in which the Trust may invest that, in turn, may adversely affect
the net asset value of the Trust. Improperly functioning trading systems may
result in settlement problems and liquidity issues. In addition, corporate and
governmental data processing errors may result in production problems for
individual companies or issuers and overall economic uncertainty. Earnings of
individual issuers will be affected by remediation costs, which may be
substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Trust's investments may be adversely affected. The
statements above are subject to the Year 2000 Information and Readiness
Disclosure Act, which may limit the legal rights regarding the use of such
statements in the case of dispute.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> MUNICIPAL OPPORTUNITY TRUST
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 384,943,315
<INVESTMENTS-AT-VALUE> 424,244,770
<RECEIVABLES> 7,082,388
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 5,495
<TOTAL-ASSETS> 431,332,653
<PAYABLE-FOR-SECURITIES> 13,595,789
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,387,583
<TOTAL-LIABILITIES> 14,983,372
<SENIOR-EQUITY> 150,000,000
<PAID-IN-CAPITAL-COMMON> 226,873,287
<SHARES-COMMON-STOCK> 15,352,891
<SHARES-COMMON-PRIOR> 15,352,891
<ACCUMULATED-NII-CURRENT> 1,627,793
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,453,254)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,301,455
<NET-ASSETS> 416,349,281
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,633,518
<OTHER-INCOME> 0
<EXPENSES-NET> (2,135,286)
<NET-INVESTMENT-INCOME> 9,498,232
<REALIZED-GAINS-CURRENT> 398,429
<APPREC-INCREASE-CURRENT> (4,546,112)
<NET-CHANGE-FROM-OPS> 5,350,549
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9,296,061)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (3,945,512)
<ACCUMULATED-NII-PRIOR> 1,425,622
<ACCUMULATED-GAINS-PRIOR> (1,851,683)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,349,610
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,135,286
<AVERAGE-NET-ASSETS> 268,687,470
<PER-SHARE-NAV-BEGIN> 17.605
<PER-SHARE-NII> 0.619
<PER-SHARE-GAIN-APPREC> (0.270)
<PER-SHARE-DIVIDEND> (0.606)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.348
<EXPENSE-RATIO> 1.61
</TABLE>
