<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....................... 31
</TABLE>
VKA 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
[LINE GRAPH]
<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 ADVANTAGE MUNICIPAL INCOME TRUST
(NYSE TICKER SYMBOL--VKA)
<TABLE>
<S> <C>
COMMON SHARE TOTAL RETURNS
Six-month total return based on market price(1)........... (0.41%)
Six-month total return based on NAV(2).................... 1.01%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3).................................................. 5.88%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 9.19%
SHARE VALUATIONS
Net asset value........................................... $ 16.65
Closing common stock price................................ $15.3125
Six-month high common stock price (12/02/98).............. $16.6875
Six-month low common stock price (04/16/99)............... $15.2500
Preferred share (Series A) rate(5)........................ 3.204%
Preferred share (Series B) rate(5)........................ 3.150%
Preferred share (Series C) rate(5)........................ 3.150%
Preferred share (Series D) rate(5)........................ 3.199%
</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 ADVANTAGE MUNICIPAL INCOME TRUST
We recently spoke with the management team of the Van Kampen Advantage Municipal
Income 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 -0.41
percent(1) based on market price. This reflects a decrease in market price
from $15.8125 per share on October 31, 1998, to $15.3125 on April 30,
1999. In addition, the Trust provided a distribution rate of 5.88 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 9.19 percent(4) on a taxable investment for shareholders in
6
<PAGE> 8
the 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 ADVANTAGE MUNICIPAL INCOME TRUST
TOP FIVE PORTFOLIO SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
<TABLE>
<CAPTION>
AS OF APRIL 30, 1999
<S> <C>
Transportation.............. 15.4%
Industrial Revenue.......... 14.9%
Health Care................. 12.8%
Single-Family Housing....... 10.0%
General Purpose............. 9.0%
</TABLE>
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1998
<S> <C>
Transportation.............. 15.3%
Industrial Revenue.......... 13.9%
Single-Family Housing....... 12.6%
Health Care................. 12.5%
Higher Education............ 7.9%
</TABLE>
PORTFOLIO COMPOSITION BY CREDIT QUALITY AS A PERCENTAGE OF LONG-TERM INVESTMENTS
<TABLE>
<CAPTION>
AS OF APRIL 30, 1999
AAA/Aaa AA/Aa A/A BBB/Baa B/B NON-RATED
------- ----- --- ------- --- ---------
<S> <C> <C> <C> <C> <C> <C>
58.2 12.7 11.7 16.8 .2 .4
</TABLE>
[PIE CHART]
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1998
AAA/Aaa AA/Aa A/A BBB/Baa B/B
------- ----- --- ------- ---
<S> <C> <C> <C> <C> <C>
58.9 14.2 11.3 15.4 .2
</TABLE>
[PIE CHART]
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 0.0750
Dec 1998 0.0750
Jan 1999 0.0750
Feb 1999 0.0750
Mar 1999 0.0750
Apr 1999 0.0750
</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 101.5%
ALABAMA 2.1%
$ 6,050 Alabama Wtr Pollutn Ctl Auth
Revolving Fund Ln Ser A (AMBAC
Insd)................................ 5.000% 08/15/15 $ 6,046,188
1,555 Birmingham, AL Arpt Auth Arpt Rev
Rfdg (AMBAC Insd) (a)................ 5.500 07/01/14 1,600,422
3,500 Birmingham, AL Wtr & Swr Rev Wts Ser
A.................................... 4.750 01/01/29 3,250,450
------------
10,897,060
------------
ALASKA 2.0%
10,000 Alaska St Hsg Fin Corp Ser A Rfdg.... 5.000 12/01/18 9,925,500
------------
ARIZONA 0.9%
3,930 Pima Cnty, AZ Indl Dev Auth Indl Rev
Lease Oblig Irvington Proj Tucson Ser
A Rfdg (FSA Insd).................... 7.250 07/15/10 4,345,480
------------
CALIFORNIA 4.3%
4,215 California Hlth Fac Fin Auth Rev
Kaiser Permanente Med Cent........... 5.450 10/01/13 4,305,833
5,000 California St Pub Wks Brd Lease Rev
Var CA St Univ Projs Ser A........... 5.250 12/01/13 5,149,750
2,500 Los Angeles Cnty, CA Pub Wks Fin Auth
Rev Cap Constr Rfdg (AMBAC Insd)..... 5.000 03/01/11 2,555,025
7,500 Los Angeles Cnty, CA Trans Com Sales
Tax Rev Prop C Ser A (Prerefunded @
07/01/02)............................ 6.500 07/01/20 8,299,800
1,500 Orange Cnty, CA Recovery Ctfs Ser A
(MBIA Insd).......................... 6.000 07/01/07 1,686,645
------------
21,997,053
------------
COLORADO 2.5%
8,500 Arapahoe Cnty, CO Cap Impt Trust Fund
Hwy Rev E-470 Proj Ser C (Prerefunded
@ 08/31/05).......................... * 08/31/26 1,364,590
1,495 Colorado Hsg Fin Auth Single Family
Pgm Sr Ser B1........................ 7.900 12/01/25 1,634,738
710 Colorado Hsg Fin Auth Single Family
Pgm Sr Ser D1 Rfdg................... 8.000 12/01/24 771,429
</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)
$ 2,381 Colorado Hsg Fin Auth Single Family
Pgm Sr Ser E......................... 8.125% 12/01/24 $ 2,595,860
3,215 Denver, CO City & Cnty Arpt Rev Ser
C.................................... 6.350 11/15/01 3,379,608
1,000 Meridian Metro Dist, CO Peninsular &
Oriental Steam Navig Co Rfdg......... 7.500 12/01/11 1,084,900
2,000 University CO Hosp Auth Rev Grandview
Hosp & Med Cent Ser A (AMBAC
Insd) (a)............................ 5.000 11/15/29 1,937,580
------------
12,768,705
------------
CONNECTICUT 0.2%
1,000 Connecticut St Dev Auth Wtr Fac Rev
Brdgeport Hydraulic.................. 6.150 04/01/35 1,086,890
------------
GEORGIA 1.4%
1,000 Atlanta, GA Spl Purp Fac Rev Delta
Airls Ser B.......................... 7.900 12/01/18 1,040,070
1,500 George L Smith II GA Wrld Congress
Cent Auth Rev Domed Stadium Proj Rfdg
(MBIA Insd) (a)...................... 5.500 07/01/20 1,502,235
3,770 Monroe Cnty, GA Dev Auth Pollutn Ctl
Rev Oglethorpe Pwr Corp Scherer Ser
A.................................... 6.800 01/01/12 4,475,669
------------
7,017,974
------------
HAWAII 1.2%
5,045 Hawaii St Arpt Sys Rev 2nd Ser (FGIC
Insd)................................ 7.500 07/01/20 5,356,478
1,000 Honolulu, HI City & Cnty Wastewtr Sys
Rev (FGIC Insd)...................... 4.500 07/01/28 900,270
------------
6,256,748
------------
ILLINOIS 7.8%
935 Aurora, IL Single Family Mtg Rev Ser
B Rfdg (GNMA Collateralized)......... 8.050 09/01/25 1,058,121
3,750 Bolingbrook, IL Cap Apprec Ser B
(MBIA Insd) (a)...................... * 01/01/33 582,487
4,385 Bolingbrook, IL Cap Apprec Ser C Rfdg
(MBIA Insd) (a)...................... * 01/01/24 1,200,744
3,000 Chicago, IL O'Hare Intl Arpt Spl Facs
Rev American Airls Inc Proj Ser B.... 7.875 11/01/25 3,210,060
</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>
ILLINOIS (CONTINUED)
$ 5,000 Chicago, IL O'Hare Intl Arpt Spl Facs
Rev Intl Terminal (MBIA Insd)........ 6.750% 01/01/18 $ 5,412,550
5,000 Chicago, IL Sch Fin Auth Ser A (MBIA
Insd)................................ 5.000 06/01/09 5,167,600
3,000 Cicero, IL (Prerefunded @ 12/01/05)
(MBIA Insd).......................... 6.500 12/01/14 3,435,540
2,360 Cook Cnty, IL Cmnty High Sch Dist 219
Niles Twp (FSA Insd)................. * 12/01/11 1,291,132
2,360 Cook Cnty, IL Cmnty High Sch Dist 219
Niles Twp (FSA Insd)................. * 12/01/12 1,220,970
2,235 Cook Cnty, IL Cmnty High Sch Dist 219
Niles Twp (FSA Insd)................. * 12/01/13 1,089,071
3,930 Illinois Dev Fin Auth Rev Local Govt
Pgm Aurora East Sch (MBIA Insd)...... * 12/01/16 1,609,846
3,000 Illinois Dev Fin Auth Solid Waste
Disposal Rev......................... 5.950 12/01/24 3,318,450
3,545 Illinois Edl Fac Auth Rev Lake Forest
College (Prerefunded @ 10/01/01) (FSA
Insd)................................ 6.750 10/01/21 3,869,474
5,000 Regional Tran Auth IL Ser B (AMBAC
Insd)................................ 8.000 06/01/17 6,841,300
1,150 Will Cnty, IL Cmnty Sch Dist 365U Vly
View Ser B (FSA Insd)................ * 11/01/15 501,722
------------
39,809,067
------------
INDIANA 1.4%
4,000 Indiana Hlth Fac Fin Auth Hosp Rev
Cmnty Hosp Proj (MBIA Insd).......... 6.850 07/01/22 4,392,000
2,000 Indiana Hlth Fac Fin Auth Hosp Rev
Columbus Regl Hosp Rfdg (FSA Insd)... 7.000 08/15/15 2,447,540
------------
6,839,540
------------
KANSAS 1.9%
5,500 Burlington, KS Pollutn Ctl Rev KS Gas
& Elec Co Proj Rfdg (MBIA Insd)...... 7.000 06/01/31 5,932,025
1,230 Sedgwick & Shawnee Cntys, KS Single
Family Rev Coll Mtg Ser A Rfdg (GNMA
Collateralized)...................... 8.050 05/01/24 1,375,595
</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>
KANSAS (CONTINUED)
$ 1,965 Sedgwick Cnty, KS Single Family Mtg
Rev Coll Ser A Rfdg (GNMA
Collateralized)...................... 8.125% 05/01/24 $ 2,182,781
------------
9,490,401
------------
KENTUCKY 2.5%
7,750 Kenton Cnty, KY Arpt Brd Arpt Rev Spl
Fac Delta Airls Proj Ser A........... 7.125 02/01/21 8,344,735
4,450 Louisville & Jefferson Cnty, KY Metro
Swr Dist Drainage Rev Rfdg (MBIA
Insd)................................ 5.300 05/15/19 4,510,653
------------
12,855,388
------------
LOUISIANA 1.5%
1,950 Louisiana Hsg Fin Agy Mtg Rev
Multi-Family Emerald Pointe Apts (FHA
Gtd)................................. 7.100 11/01/33 2,105,669
2,020 Louisiana Hsg Fin Agy Mtg Rev Single
Family Access Pgm Ser B (GNMA
Collateralized)...................... 8.000 03/01/25 2,309,304
3,000 Saint Charles Parish, LA
Environmental Impt Rev LA Pwr & Lt Co
Ser A (AMBAC Insd)................... 6.875 07/01/24 3,380,940
------------
7,795,913
------------
MARYLAND 0.3%
1,270 Baltimore, MD Ctfs Partn Brd of Edl
Admin Proj Ser A Rfdg (MBIA
Insd) (a)............................ 5.000 04/01/15 1,257,694
------------
MASSACHUSETTS 3.4%
3,000 Boston, MA Wtr & Swr Com Rev Genl Sr
Ser D (FGIC Insd).................... 5.000 11/01/28 2,907,780
2,500 Chelsea, MA Sch Proj Ln Act 1948
(Prerefunded @ 06/15/04) (AMBAC
Insd)................................ 6.500 06/15/12 2,842,075
3,955 Massachusetts Bay Trans Auth MA Genl
Trans Sys Ser A Rfdg................. 5.500 03/01/12 4,290,898
2,175 Massachusetts Bay Trans Auth MA Genl
Trans Sys Ser B Rfdg (MBIA Insd)..... 6.000 03/01/10 2,370,642
75 Massachusetts Bay Trans Auth MA Genl
Trans Sys Ser B Rfdg (Prerefunded @
03/01/03) (MBIA Insd)................ 6.000 03/01/10 82,316
</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>
MASSACHUSETTS (CONTINUED)
$ 3,500 Massachusetts Muni Whsl Elec Co Pwr
Supply Sys Rev Ser A Rfdg (AMBAC
Insd)................................ 5.000% 07/01/10 $ 3,563,875
1,000 Massachusetts St Hlth & Edl Fac Auth
Rev Saint Mem Med Cent Ser A......... 6.000 10/01/23 994,870
------------
17,052,456
------------
MICHIGAN 3.5%
1,680 Michigan Higher Edl Facs Auth Rev Ltd
Oblig Hope College Proj Rfdg (Connie
Lee Insd)............................ 7.000 10/01/14 1,915,284
1,000 Michigan St Hosp Fin Auth Rev Hosp
Genesys Regl Med Rfdg (ACA Insd)..... 5.500 10/01/18 1,005,860
2,000 Michigan St Hosp Fin Auth Rev Hosp
Genesys Regl Med Rfdg (ACA Insd)..... 5.500 10/01/27 2,005,400
3,350 Michigan St Hosp Fin Auth Rev Hosp
Mid-MI Oblig Group (Prerefunded @
12/01/02)............................ 6.800 12/01/14 3,756,188
5,860 Michigan St Strat Fd Ltd Oblig Rev
Detroit Edison Co Ser A Rfdg (MBIA
Insd) (a)............................ 5.550 09/01/29 5,946,845
3,000 Michigan St Strat Fd Ltd Oblig Rev
Ser CC Rfdg (FGIC Insd).............. 6.950 09/01/21 3,247,050
------------
17,876,627
------------
MISSISSIPPI 2.5%
2,000 Mississippi Business Fin Corp Sys
Energy Res Inc....................... 5.875 04/01/22 2,009,960
5,500 Mississippi Home Corp Single Family
Rev Mtg Access Pgm Ser B (GNMA
Collateralized)...................... 7.900 03/01/25 6,156,205
1,625 Mississippi Home Corp Single Family
Rev Mtg Access Pgm Ser C (GNMA
Collateralized)...................... 8.125 12/01/24 1,810,575
2,584 Mississippi Home Corp Single Family
Rev Mtg Access Pgm Ser E (GNMA
Collateralized)...................... 8.100 12/01/25 2,890,023
------------
12,866,763
------------
</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>
MISSOURI 2.2%
$ 2,100 Kansas City, MO Arpt Rev Genl Impt
Ser A (FSA Insd)..................... 6.900% 09/01/10 $ 2,371,236
9,000 Missouri St Hlth & Edl Fac Rev BJC
Hlth Sys............................. 5.000 05/15/28 8,621,100
------------
10,992,336
------------
NEBRASKA 0.4%
2,250 American Pub Energy Agy NE Gas Supply
Rev NE Pub Gas Agy Proj Ser A (AMBAC
Insd)................................ 4.375 06/01/10 2,203,470
------------
NEW HAMPSHIRE 0.2%
1,000 New Hampshire St Business Fin Auth
Wtr Fac Rev Pennichuck Wtrwks Inc
(AMBAC Insd)......................... 6.300 05/01/22 1,098,700
------------
NEW JERSEY 5.7%
10,000 New Jersey Econ Dev Auth St Contract
Econ Recovery (MBIA Insd)............ 5.900 03/15/21 11,267,200
8,000 New Jersey Econ Dev Auth Wtr Facs Rev
NJ American Wtr Co Inc Proj Ser A
(FGIC Insd) (b)...................... 6.875 11/01/34 9,065,360
1,000 New Jersey Hlthcare Facs Fin Auth Rev
Saint Barnabas Hlth Ser C Rfdg (MBIA
Insd) (a)............................ 5.000 07/01/11 1,003,990
2,000 New Jersey St Hwy Auth Garden St Pkwy
Genl Rev Sr Pkwy..................... 6.250 01/01/14 2,149,500
4,650 Salem Cnty, NJ Indl Pollutn Ctl Fin
Auth Rev Pub Svc Elec & Gas Ser D
Rfdg (MBIA Insd)..................... 6.550 10/01/29 5,201,862
------------
28,687,912
------------
NEW YORK 28.7%
1,500 Broome Cnty, NY Ctfs Partn Pub Safety
Fac (MBIA Insd)...................... 5.250 04/01/15 1,529,985
5,000 Long Island Power Auth NY Elec Sys
Rev Genl Ser A....................... 5.500 12/01/29 5,136,650
1,500 Metropolitan Trans Auth NY Commuter
Facs Rev Ser A (MBIA Insd)........... 5.625 07/01/27 1,591,725
1,500 Metropolitan Trans Auth NY Trans Fac
Rev Ser K Rfdg (Prerefunded @
07/01/02)............................ 6.250 07/01/11 1,630,755
</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 YORK (CONTINUED)
$ 3,000 Metropolitan Trans Auth NY Trans Fac
Rev Svcs Contract Ser R Rfdg......... 5.500% 07/01/17 $ 3,104,880
4,250 New York City Indl Dev Agy Civic Fac
Rev USTA Natl Tennis Cent Proj (FSA
Insd)................................ 6.375 11/15/14 4,748,907
2,360 New York City Indl Dev Agy Spl Facs
United Airls Inc Proj................ 5.650 10/01/32 2,410,197
1,300 New York City Indl Dev Civic YMCA
Greater NY Proj...................... 5.800 08/01/16 1,366,963
5,500 New York City Muni Wtr Fin Auth Wtr &
Swr Sys Rev Ser B.................... 5.750 06/15/26 5,921,740
10 New York City Ser A (Prerefunded @
08/15/01)............................ 8.000 08/15/19 11,086
1,325 New York City Ser B1 (Prerefunded @
08/15/04)............................ 7.000 08/15/16 1,532,098
125 New York City Ser C.................. 7.125 08/15/12 133,925
1,525 New York City Ser C (Prerefunded @
08/15/01)............................ 7.125 08/15/12 1,644,042
2,875 New York City Ser C (Prerefunded @
08/15/01)............................ 7.250 08/15/24 3,106,610
2,225 New York City Ser F Rfdg............. 6.000 08/01/11 2,447,767
4,500 New York City Ser I (MBIA Insd)...... 5.000 04/15/24 4,384,080
2,000 New York City Ser I (MBIA Insd)...... 5.000 04/15/29 1,941,040
1,000 New York City Subser A1 (Embedded
Swap)................................ 5.435 08/01/12 1,068,090
2,525 New York St Dorm Auth Lease Rev Muni
Hlth Facs Impt Pgm Ser A (FSA
Insd)................................ 5.500 05/15/25 2,636,832
3,970 New York St Dorm Auth Rev City Univ
Ser F................................ 5.000 07/01/14 3,967,618
2,600 New York St Dorm Auth Rev Cons City
Univ Sys 2nd Genl Res Ser A.......... 5.750 07/01/13 2,830,620
5,050 New York St Dorm Auth Rev Cons City
Univ Sys 2nd Genl Res Ser B.......... 5.375 07/01/07 5,364,918
3,100 New York St Dorm Auth Rev Cons City
Univ Sys Ser A....................... 5.625 07/01/16 3,330,578
</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)
$ 4,050 New York St Dorm Auth Rev Court Facs
Lease Ser A.......................... 5.300% 05/15/07 $ 4,205,561
2,550 New York St Dorm Auth Rev Mental Hlth
Svcs Facs Ser B Rfdg................. 5.750 08/15/11 2,760,936
5,000 New York St Dorm Auth Rev St Univ Edl
Facs Ser A Rfdg...................... 5.500 05/15/08 5,385,300
2,250 New York St Dorm Auth Rev St Univ Edl
Facs Ser B........................... 4.750 05/15/28 2,091,128
2,000 New York St Dorm Auth Rev St Univ Edl
Facs Ser B Rfdg...................... 7.500 05/15/11 2,434,360
3,000 New York St Energy Resh & Dev Auth
Elec Facs Rev Cons Edison Co of NY
Inc Proj Ser A....................... 6.750 01/15/27 3,158,700
1,560 New York St Med Care Facs Fin Agy Rev
Mental Hlth Svcs Facs Ser A.......... 7.500 02/15/21 1,681,555
2,615 New York St Med Care Facs Fin Agy Rev
Mental Hlth Svcs Facs Ser A
(Prerefunded @ 02/15/01)............. 7.500 02/15/21 2,840,230
5,000 New York St Med Care Facs Fin Agy Rev
NY Downtown Hosp Ser A (Prerefunded @
02/15/05)............................ 6.800 02/15/20 5,795,100
2,000 New York St Med Care Facs Fin Agy Rev
NY Hosp Mtg Ser A (Prerefunded @
02/15/01) (AMBAC Insd)............... 6.600 02/15/11 2,100,940
6,750 New York St Med Care Facs Fin Agy Rev
NY Hosp Mtg Ser A (Prerefunded @
02/15/05) (AMBAC Insd) (b)........... 6.300 08/15/06 7,631,752
7,000 New York St Med Care Facs Fin Agy Rev
NY Hosp Mtg Ser A (Prerefunded @
02/15/05) (AMBAC Insd)............... 6.400 08/15/07 7,950,180
3,000 New York St Pwr Auth Rev & Genl Purp
Ser Y (Prerefunded @ 01/01/01)....... 6.750 01/01/18 3,212,430
5,695 New York St Thruway Auth Svc Contract
Rev Loc Hwy & Brdg................... 5.750 04/01/08 6,185,283
</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>
NEW YORK (CONTINUED)
$ 7,500 New York St Thruway Auth Svc Contract
Rev Loc Hwy & Brdg................... 5.250% 04/01/13 $ 7,631,250
3,550 New York St Urban Dev Corp Rev
Correctional Cap Facs Ser 7.......... 5.700 01/01/27 3,731,476
12,500 Port Auth NY & NJ Spl Oblig Rev Spl
Proj JFK Intl Arpt Terminal 6 (MBIA
Insd)................................ 5.750 12/01/25 13,250,250
2,000 Triborough Brdg & Tunl Auth NY Rev
Genl Purp Ser X...................... 6.500 01/01/19 2,159,400
------------
146,046,937
------------
NORTH CAROLINA 2.5%
11,000 North Carolina Muni Pwr Agy No 1
Catawba Elec Rev (MBIA Insd)......... 6.000 01/01/12 12,425,820
------------
OHIO 1.1%
1,000 Marion Cnty, OH Hosp Impt Rev Cmnty
Hosp Rfdg............................ 6.375 05/15/11 1,083,680
1,250 Montgomery Cnty, OH Hosp Rev
Grandview Hosp & Med Cent Rfdg....... 5.250 12/01/04 1,224,512
3,000 Ohio St Tpk Comm Tpk Rev Ser A Rfdg
(FGIC Insd).......................... 5.500 02/15/26 3,217,560
------------
5,525,752
------------
OKLAHOMA 0.2%
1,100 Oklahoma City, OK Indl & Cultural Fac
Trust Rev Dist Heating & Cooling
Trigen............................... 6.750 09/15/17 1,111,495
------------
PENNSYLVANIA 3.8%
2,665 Harrisburg, PA Cap Apprec Ser D Rfdg
(AMBAC Insd)......................... * 03/15/14 1,272,830
1,830 Harrisburg, PA Cap Apprec Ser D Rfdg
(AMBAC Insd)......................... * 09/15/14 852,579
2,900 Indiana Cnty, PA Indl Dev Auth
Pollutn Ctl Rev Metro Edison Co Proj
A (AMBAC Insd)....................... 5.950 05/01/27 3,106,538
</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)
$ 4,000 Pennsylvania Intergovt Coop Auth Spl
Tax Rev Philadelphia Funding Pgm
(Prerefunded @ 06/15/05) (FGIC
Insd)................................ 6.750% 06/15/21 $ 4,588,600
3,000 Philadelphia, PA Sch Dist Ser A (MBIA
Insd)................................ 4.500 04/01/23 2,735,370
5,200 Radnor Twp, PA Sch Dist.............. 5.750 03/15/26 5,515,224
3,500 Westmoreland Cnty, PA Ser A Rfdg
(MBIA Insd) (a)...................... * 12/01/18 1,280,580
------------
19,351,721
------------
RHODE ISLAND 1.6%
7,800 Rhode Island Hsg & Mtg Fin Corp
Homeownership Oppty Ser 5............ 6.400 04/01/24 8,194,290
------------
TEXAS 6.0%
2,355 Brazos River Auth TX Pollutn Ctl Rev
Coll Util Elec Co Rfdg............... 5.550 06/01/30 2,330,437
2,000 Brazos River Auth TX Rev Houston Inds
Inc Proj Ser D Rfdg (MBIA Insd)...... 4.900 10/01/15 2,023,600
825 Brazos, TX Higher Edl Auth Inc
Student Ln Rev Subser A2 Rfdg........ 6.800 12/01/04 912,194
1,084 Brazos, TX Higher Edl Auth Inc
Student Ln Rev Subser C2 Rfdg........ 7.100 11/01/04 1,210,199
5,000 Dallas-Fort Worth, TX Intl Arpt Fac
Impt Corp Rev American Airls Inc..... 7.250 11/01/30 5,472,800
5,340 Dallas-Fort Worth, TX Intl Arpt Fac
Impt Corp Rev Delta Airls Inc........ 7.625 11/01/21 5,804,473
1,500 Dallas-Fort Worth, TX Intl Arpt Fac
Impt Corp Rev Delta Airls Inc........ 7.125 11/01/26 1,584,405
5,140 Little Elm, TX Indpt Sch Dist Rfdg
(PSFG Insd).......................... 6.750 08/15/29 5,847,059
1,000 Matagorda Cnty, TX Navigation Dist 1
Houston Lighting Pwr Co (AMBAC
Insd)................................ 5.125 11/01/28 988,000
2,000 Tarrant Cnty, TX Jr College Dist..... 5.050 02/15/10 2,065,240
</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>
TEXAS (CONTINUED)
$ 2,000 Texas St Dept Hsg & Cmnty Affairs
Single Family Rev Mtg Jr Lien Ser A
Rfdg................................. 8.100% 09/01/15 $ 2,264,040
------------
30,502,447
------------
UTAH 0.6%
1,500 Intermountain Pwr Agy UT Pwr Supply
Rev Ser B Rfdg (MBIA Insd)........... 5.750 07/01/19 1,604,145
1,525 Salt Lake City, UT Arpt Rev Delta
Airls Inc Proj....................... 7.900 06/01/17 1,559,618
------------
3,163,763
------------
VIRGINIA 0.5%
2,500 Chesapeake Bay Brdg & Tunl VA Dist
Rev Genl Resolution Rfdg (MBIA
Insd)................................ 5.500 07/01/25 2,679,250
------------
WASHINGTON 1.0%
1,400 King Cnty, WA Hsg Auth Hsg Rev Pooled
Sr Ser A Rfdg........................ 6.700 03/01/15 1,498,084
3,450 Washington St Pub Pwr Supply Sys
Nuclear Proj No 2 Rev Ser B Rfdg
(Prerefunded @ 07/01/00) (FSA
Insd)................................ 7.000 07/01/12 3,654,654
------------
5,152,738
------------
WEST VIRGINIA 2.4%
2,500 Berkeley Cnty, WV Bldg Com Hosp Rev
City Hosp Proj....................... 6.500 11/01/22 2,656,200
5,000 Marshall Cnty, WV Pollutn Ctl Rev OH
Pwr Co Proj Ser C Rfdg (MBIA Insd)... 6.850 06/01/22 5,480,500
2,000 West Virginia St Hsg Dev Fund Hsg Fin
Ser A................................ 5.550 05/01/17 2,053,620
1,905 West Virginia St Hsg Dev Fund Hsg Fin
Ser A................................ 5.450 11/01/21 1,939,404
------------
12,129,724
------------
WISCONSIN 2.4%
5,000 Madison, WI Indl Dev Rev Madison Gas
& Elec Co Proj Ser A................. 6.750 04/01/27 5,382,850
1,000 Nekoosa, WI Pollutn Ctl Rev Nekoosa
Papers Inc Proj B.................... 5.500 07/01/15 1,012,250
</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 (CONTINUED)
$ 2,500 Southeast WI Professional Baseball
Park Dist Sales Tax Rev Ser A Rfdg
(MBIA Insd).......................... 5.500% 12/15/18 $ 2,679,375
3,000 Wisconsin Hsg & Econ Dev Auth
Homeownership Rev Ser A.............. 6.450 03/01/17 3,186,510
------------
12,260,985
------------
WYOMING 0.3%
1,285 Wyoming Cmnty Dev Auth Insd Single
Family Mtg Ser B..................... 6.700 06/01/17 1,326,056
------------
PUERTO RICO 2.5%
1,000 Puerto Rico Comwlth Hwy & Tran Auth
Hwy Rev Ser V Rfdg................... 5.750 07/01/18 1,040,210
10,000 Puerto Rico Comwlth Hwy & Tran Auth
Hwy Rev Ser Y Rfdg (Embedded Cap)
(FSA Insd)........................... 5.730 07/01/21 11,716,800
------------
12,757,010
------------
TOTAL LONG-TERM INVESTMENTS 101.5%
(Cost $471,048,888)................................................ 515,749,665
SHORT-TERM INVESTMENTS 0.0%
(Cost $300,000).................................................... 300,000
------------
TOTAL INVESTMENTS 101.5%
(Cost $471,348,888)................................................ 516,049,665
LIABILITIES IN EXCESS OF OTHER ASSETS (1.5%)........................ (7,847,071)
------------
NET ASSETS 100.0%................................................... $508,202,594
============
</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.
ACA--American Capital Access Insurance Company
AMBAC--AMBAC Indemnity Corporation
ASSET GTY--Asset Guaranty Insurance Company
Connie Lee--Connie Lee Insurance Company
FGIC--Financial Guaranty Insurance Company
FSA--Financial Security Assurance, Inc.
MBIA--Municipal Bond Investors Assurance Corp.
PSFG--Permanent School Fund Guaranty
See Notes to Financial Statements
20
<PAGE> 22
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $471,348,888)....................... $516,049,665
Cash........................................................ 26,555
Receivables:
Interest.................................................. 8,687,202
Investments Sold.......................................... 487,025
Other....................................................... 1,654
------------
Total Assets.......................................... 525,252,101
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 16,138,877
Income Distributions--Common and Preferred Shares......... 296,253
Investment Advisory Fee................................... 272,020
Administrative Fee........................................ 83,699
Affiliates................................................ 50,450
Trustees' Deferred Compensation and Retirement Plans........ 107,148
Accrued Expenses............................................ 101,060
------------
Total Liabilities..................................... 17,049,507
------------
NET ASSETS.................................................. $508,202,594
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 7,600 issued with liquidation preference of
$25,000 per share)........................................ $190,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized,19,106,785 shares issued and
outstanding).............................................. 191,068
Paid in Surplus............................................. 282,031,706
Net Unrealized Appreciation................................. 44,700,777
Accumulated Undistributed Net Investment Income............. 933,097
Accumulated Net Realized Loss............................... (9,654,054)
------------
Net Assets Applicable to Common Shares.................... 318,202,594
------------
NET ASSETS.................................................. $508,202,594
============
NET ASSET VALUE PER COMMON SHARE ($318,202,594 divided
by 19,106,785 shares outstanding)......................... $ 16.65
============
</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.................................................... $14,252,116
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,648,059
Administrative Fee.......................................... 507,095
Preferred Share Maintenance................................. 277,102
Custody..................................................... 18,930
Trustees' Fees and Related Expenses......................... 18,386
Legal....................................................... 11,971
Other....................................................... 149,039
-----------
Total Expenses.............................................. 2,630,582
-----------
NET INVESTMENT INCOME....................................... $11,621,534
===========
NET REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 64,069
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 49,973,313
End of the Period......................................... 44,700,777
-----------
Net Unrealized Depreciation During the Period............... (5,272,536)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(5,208,467)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 6,413,067
===========
</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.......................... $ 11,621,534 $ 23,844,464
Net Realized Gain.............................. 64,069 1,431,062
Net Unrealized Appreciation/Depreciation During
the Period................................... (5,272,536) 9,854,569
------------ ------------
Change in Net Assets from Operations........... 6,413,067 35,130,095
------------ ------------
Distributions from Net Investment Income:
Common Shares................................ (8,597,731) (17,434,204)
Preferred Shares............................. (3,010,771) (6,788,173)
------------ ------------
Total Distributions............................ (11,608,502) (24,222,377)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES................................... (5,195,435) 10,907,718
NET ASSETS:
Beginning of the Period........................ 513,398,029 502,490,311
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of
$933,097 and $920,065,
respectively)................................ $508,202,594 $513,398,029
============ ============
</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)......................... $ 16.926 $ 16.354 $ 15.684
-------- -------- --------
Net Investment Income.............. .608 1.248 1.266
Net Realized and Unrealized
Gain/Loss........................ (.272) .592 .717
-------- -------- --------
Total from Investment Operations..... .336 1.840 1.983
-------- -------- --------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders.... .450 .913 .960
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders...... .158 .355 .353
Distributions from Net Realized
Gain:
Paid to Common Shareholders...... -0- -0- -0-
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders................... -0- -0- -0-
-------- -------- --------
Total Distributions.................. .608 1.268 1.313
-------- -------- --------
Net Asset Value, End of the Period... $ 16.654 $ 16.926 $ 16.354
======== ======== ========
Market Price Per Share at End of the
Period............................. $15.3125 $15.8125 $15.0625
Total Investment Return at Market
Price (b).......................... (0.41%)* 11.33% 8.96%
Total Return at Net Asset Value
(c)................................ 1.01%* 9.35% 10.74%
Net Assets at End of the Period (In
millions).......................... $ 508.2 $ 513.4 $ 502.5
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares**........................... 1.65% 1.64% 1.66%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (d).................. 5.40% 5.35% 5.76%
Portfolio Turnover................... 17%* 30% 49%
* Non-Annualized
** Ratio of Expenses to Average Net
Assets Including Preferred
Shares............................ 1.04% 1.03% 1.02%
</TABLE>
(a) Net Asset Value at September 25, 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 on NAV.
(d) Net Investment Income is adjusted for common share equivalent of
distributions paid to preferred shareholders.
24
<PAGE> 26
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 25, 1992
(Commencement
Year Ended October 31 of Investment
- ------------------------------------------- Operations) to
1996 1995 1994 1993 October 31, 1992
- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$15.612 $13.992 $17.177 $14.587 $14.771
------- ------- ------- ------- -------
1.293 1.330 1.354 1.369 .056
.159 1.701 (3.148) 2.408 (.237)
------- ------- ------- ------- -------
1.452 3.031 (1.794) 3.777 (.181)
------- ------- ------- ------- -------
1.020 1.020 1.020 .884 -0-
.360 .391 .285 .303 .003
-0- -0- .067 -0- -0-
-0- -0- .019 -0- -0-
------- ------- ------- ------- -------
1.380 1.411 1.391 1.187 .003
------- ------- ------- ------- -------
$15.684 $15.612 $13.992 $17.177 $14.587
======= ======= ======= ======= =======
$14.750 $14.375 $12.750 $16.000 $13.875
9.88% 21.06% (14.17%) 22.08% (7.50%)*
7.22% 19.46% (12.71%) 24.24% (2.73%)*
$ 489.7 $ 488.3 $ 457.3 $ 518.2 $ 468.7
1.72% 1.72% 1.64% 1.66% 1.12%
5.99% 6.31% 6.81% 6.57% 3.52%
37% 79% 133% 112% 15%*
1.05% 1.03% 1.00% 1.03% 1.00%
</TABLE>
See Notes to Financial Statements
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Advantage Municipal Income Trust (the "Trust") is registered as a
diversified closed-end management investment company under the Investment
Company Act of 1940, as amended. The Trust's investment objective is to provide
a high level of current income exempt from federal income tax, consistent with
preservation of capital. In normal market conditions, the Trust will invest
substantially all of its net assets in municipal securities rated investment
grade at the time of investment. The Trust commenced investment operations on
September 25, 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 $9,634,822, which will expire between October
31, 2002 and October 31, 2003. Net realized gains or losses differ for financial
reporting and tax purposes as a result of the deferral of losses relating to
wash sale transactions.
At April 30, 1999, for federal income tax purposes the cost of long- and
short-term investments is $471,432,188, the aggregate gross unrealized
appreciation is $45,133,778 and the aggregate gross unrealized depreciation is
$516,301, resulting in net unrealized appreciation on long- and short-term
investments of $44,617,477.
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 $6,400 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 $68,100 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 has implemented 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 $86,922,985 and $89,536,120,
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 exercising an option contract or taking
delivery of a security underlying a futures contract. In these instances the
recognition of gain or loss is postponed until the disposal of the security
underlying the option or futures contract.
Summarized below are the specific types of derivative financial instruments
used by the Trust.
A. 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
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
closes the contract prior to the delivery date. These contracts are generally
used to manage the portfolio's effective maturity and duration.
Upon entering into futures contracts, the Trust maintains, in a segregated
account with its custodian, cash or liquid securities with a value equal to its
obligation under the futures contracts. During the period the futures contract
is open, payments are received from or made to the broker based upon changes in
the value of the contract (the variation margin).
There were no transactions in futures contracts during the six months ended
April 30, 1999.
B. INDEXED SECURITIES--These instruments are identified in the portfolio of
investments. The price of these securities may be more volatile than the price
of a comparable fixed rate security.
An 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.
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 security's 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 7,600 Auction Preferred
Shares ("APS") in four series. Series A, B and C each contain 2,000 shares while
Series D contains 1,600 shares. Dividends are cumulative and the dividend rate
is reset every 28 days through an auction process. The average rate in effect on
April 30, 1999 was 3.175%. During the six months ended April 30, 1999, the rates
ranged from 2.900% to 3.620%.
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.
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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.
30
<PAGE> 32
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be re-
registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-
8200. If you withdraw, you will receive, without charge, a share certificate
issued in your name for all full Common Shares credited to your account under
the Plan and a cash payment will be made for any fractional Common Share
credited to your account under the Plan. You may again elect to participate in
the Plan at any time by calling 1-800-341-2929 or writing to the Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
31
<PAGE> 33
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME 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> ADV MUNI
<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> 471,348,888
<INVESTMENTS-AT-VALUE> 516,049,665
<RECEIVABLES> 9,174,227
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 28,209
<TOTAL-ASSETS> 525,252,101
<PAYABLE-FOR-SECURITIES> 16,138,877
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 910,630
<TOTAL-LIABILITIES> 17,049,507
<SENIOR-EQUITY> 190,000,000
<PAID-IN-CAPITAL-COMMON> 282,222,774
<SHARES-COMMON-STOCK> 19,106,785
<SHARES-COMMON-PRIOR> 19,106,785
<ACCUMULATED-NII-CURRENT> 933,097
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (9,654,054)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 44,700,777
<NET-ASSETS> 508,202,594
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,252,116
<OTHER-INCOME> 0
<EXPENSES-NET> (2,630,582)
<NET-INVESTMENT-INCOME> 11,621,534
<REALIZED-GAINS-CURRENT> 64,069
<APPREC-INCREASE-CURRENT> (5,272,536)
<NET-CHANGE-FROM-OPS> 6,413,067
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11,608,502)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (5,195,435)
<ACCUMULATED-NII-PRIOR> 920,065
<ACCUMULATED-GAINS-PRIOR> (9,718,123)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,648,059
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,630,582
<AVERAGE-NET-ASSETS> 511,276,354
<PER-SHARE-NAV-BEGIN> 16.926
<PER-SHARE-NII> 0.608
<PER-SHARE-GAIN-APPREC> (0.272)
<PER-SHARE-DIVIDEND> (0.608)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.654
<EXPENSE-RATIO> 1.65
</TABLE>
