<PAGE> 1
<TABLE>
<S> <C>
Table of Contents
OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 3
PORTFOLIO AT A GLANCE
CREDIT QUALITY 4
SIX-MONTH DIVIDEND HISTORY 4
TOP FIVE INDUSTRIES 5
NET ASSET VALUE AND MARKET PRICE 5
Q&A WITH YOUR PORTFOLIO MANAGERS 6
GLOSSARY OF TERMS 10
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS 11
FINANCIAL STATEMENTS 23
NOTES TO FINANCIAL STATEMENTS 28
VAN KAMPEN FUNDS
THE VAN KAMPEN FAMILY OF FUNDS 32
TRUST OFFICERS AND IMPORTANT ADDRESSES 33
</TABLE>
It is times like these when money-management experience may make a difference.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 2
OVERVIEW
LETTER TO SHAREHOLDERS
May 19, 2000
Dear Shareholder,
Whether you have held your Trust for years or just joined the Van Kampen family
of shareholders in the last few months, you are likely to have questions and
even some concerns about how recent market volatility has affected your
investment. I encourage you to review the following Q&A in which your portfolio
manager provides an update on how your Trust is being managed in this
environment.
It is times like these when money-management experience may make a difference.
Toward that end, you should know that Van Kampen is one of the nation's oldest
investment-management firms, with a history of money management dating back to
1926. Our portfolio managers have invested in all types of market
conditions--during bull and bear markets, periods of inflation and rising
interest rates, and now a technology revolution. We have managed money long
enough to understand short-term market volatility and the value of investing for
the long term.
As we head into the second half of 2000, count on us to
continue to draw on the wisdom of our 76 years of experience.
Along those lines, Van Kampen's "Generations of Experience" is
the theme of a national advertising campaign that kicked off
this spring. The message emphasizes our depth of
investment-management history, as well as our firm belief that with the right
investments, anyone can realize life's true wealth.
Sincerely,
[SIG]
Richard F. Powers, III
President and CEO
Van Kampen Investments
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
ECONOMIC GROWTH REMAINED STRONG, PRIMARILY DUE TO ACTIVE CONSUMER AND BUSINESS
SPENDING. GROSS DOMESTIC PRODUCT, THE PRIMARY MEASURE OF ECONOMIC GROWTH,
INCREASED AT AN ANNUALIZED RATE OF 5.4 PERCENT IN THE FIRST QUARTER OF 2000.
WHILE THIS FIGURE INDICATES A MODEST SLOWDOWN FROM THE PREVIOUS TWO QUARTERS, IT
NEVERTHELESS REPRESENTS A HIGH RATE OF ECONOMIC GROWTH.
CONSUMER SPENDING AND EMPLOYMENT
INFLATION FEARS CONTINUED TO MOUNT BECAUSE OF STRONG CONSUMER SPENDING AND THE
TIGHT LABOR MARKET. FOR MOST OF THE REPORTING PERIOD, RISING INTEREST RATES DID
LITTLE TO REIN IN ROBUST CONSUMER SPENDING. ALTHOUGH RETAIL SALES GROWTH
MODERATED IN APRIL, THE FACTORS UNDERPINNING CONSUMER ACTIVITY REMAINED LARGELY
UNCHANGED--RISING WAGES, LOW UNEMPLOYMENT, AND A GENERALLY FAVORABLE (THOUGH
VOLATILE) STOCK MARKET.
IN ADDITION, THE JOBLESS RATE HOVERED NEAR ITS LOWEST LEVEL IN THREE DECADES.
THE EMPLOYMENT COST INDEX ACCELERATED SHARPLY IN THE FIRST QUARTER OF 2000,
REFLECTING RISING WAGES AS EMPLOYERS VIE TO ATTRACT AND RETAIN SKILLED WORKERS.
THESE WAGE PRESSURES, IN TURN, BEGAN TO AFFECT PRICES, AS COMPANIES STARTED TO
RAISE THE COST OF GOODS AND SERVICES TO COMPENSATE FOR HIGHER LABOR COSTS.
INTEREST RATES AND INFLATION
STRONG GDP DATA, CONSUMER SPENDING, AND EMPLOYMENT PROMPTED THE FEDERAL RESERVE
BOARD TO SEEK TO SLOW THE PACE OF ECONOMIC GROWTH AND WARD OFF INFLATION. THE
FED INCREASED THE FEDERAL FUNDS RATE BY 0.25 PERCENT FIVE TIMES BETWEEN JUNE
1999 AND APRIL 2000. [EDITOR'S NOTE: THE FED RAISED RATES BY 0.50 PERCENT ON MAY
16.] DESPITE THE FED'S CONCERNS, THE CONSUMER PRICE INDEX, A MEASURE OF
INFLATION, ROSE A MODERATE 3.0 PERCENT DURING THE 12 MONTHS ENDED APRIL 30,
2000.
INTEREST RATES AND INFLATION
(April 30, 1998 - April 30, 2000)
[LINE GRAPH]
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Apr 98 5.50 1.40
5.50 1.70
5.50 1.70
Jul 98 5.50 1.70
5.50 1.60
5.25 1.50
Oct 98 5.00 1.50
4.75 1.50
4.75 1.60
Jan 99 4.75 1.70
4.75 1.60
4.75 1.70
Apr 99 4.75 2.30
4.75 2.10
5.00 2.00
Jul 99 5.00 2.10
5.25 2.30
5.25 2.60
Oct 99 5.25 2.60
5.50 2.60
5.50 2.70
Jan 00 5.50 2.70
5.75 3.20
6.00 3.70
Apr 00 6.00 3.00
</TABLE>
Interest rates are represented by the closing midline federal funds target rate
on the last
day of each month. Inflation is indicated by the annual percent change of the
Consumer Price Index for all urban consumers at the end of each month.
2
<PAGE> 4
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS
(as of April 30, 2000)
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------------
NYSE Ticker Symbol VKA
-----------------------------------------------------------------------
Six-month total return based on market price(1) -.50%
-----------------------------------------------------------------------
Six-month total return based on NAV(2) 2.70%
-----------------------------------------------------------------------
Distribution rate as a % of closing common stock
price(3) 6.95%
-----------------------------------------------------------------------
Taxable-equivalent distribution rate as a % of closing
common stock price(4) 10.86%
-----------------------------------------------------------------------
Net asset value $14.82
-----------------------------------------------------------------------
Closing common stock price $12.4375
-----------------------------------------------------------------------
Six-month high common stock price (11/04/99) $13.5000
-----------------------------------------------------------------------
Six-month low common stock price (03/13/00) $11.8125
-----------------------------------------------------------------------
Preferred share (Series A) rate(5) 4.060%
-----------------------------------------------------------------------
Preferred share (Series B) rate(5) 3.890%
-----------------------------------------------------------------------
Preferred share (Series C) rate(5) 3.885%
-----------------------------------------------------------------------
Preferred share (Series D) rate(5) 4.060%
-----------------------------------------------------------------------
</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 rate.
(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 is no guarantee of future results. Investment return, stock
price and net asset value will fluctuate with market conditions. Trust
shares, when sold, may be worth more or less than their original cost.
3
<PAGE> 5
PORTFOLIO AT A GLANCE
CREDIT QUALITY
(as a percentage of long-term investments)
<TABLE>
<CAPTION>
As of April 30, 2000
<S> <C> <C>
- AAA/Aaa............ 59.2%
- AA/Aa.............. 12.6%
- A/A................ 17.4%
- BBB/Baa............ 10.6%
- BB/Ba.............. 0.2%
[PIE CHART]
<CAPTION>
As of October 31, 1999
<S> <C> <C>
- AAA/Aaa............ 61.1%
- AA/Aa.............. 12.0%
- A/A................ 9.4%
- BBB/Baa............ 17.3%
- BB/Ba.............. 0.2%
[PIE CHART]
</TABLE>
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
SIX-MONTH DIVIDEND HISTORY
(for the six months ending April 30, 2000, for common shares)
[BAR GRAPH]
<TABLE>
<CAPTION>
DIVIDENDS
---------
<S> <C>
11/99 0.0750
12/99 0.0750
1/00 0.0750
2/00 0.0750
3/00 0.0720
4/00 0.0720
</TABLE>
The dividend history represents past performance of the Trust and is no
guarantee of the Trust's future dividends.
4
<PAGE> 6
TOP FIVE INDUSTRIES
(as a percentage of long-term investments)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
APRIL 30, 2000 OCTOBER 31, 1999
-------------- ----------------
<S> <C> <C>
Transportation 15.50 17.40
Industrial Revenue 15.20 15.10
Health Care 10.50 11.40
Single-Family Housing 10.10 9.50
General Purpose 8.70 9.20
</TABLE>
NET ASSET VALUE AND MARKET PRICE
(based upon quarter-end values--September 1992 through April 2000)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NET ASSET VALUE MARKET PRICE
--------------- ------------
<S> <C> <C>
9/92 14.9600 14.9600
15.4000 14.2500
16.2100 15.2500
16.6300 15.2500
9/93 17.2500 16.1250
17.0800 15.7500
15.1600 14.0000
14.9400 14.2500
9/94 14.6500 13.0625
13.8800 12.7500
15.2400 14.5000
15.1800 14.5000
9/95 15.3500 13.8750
16.2000 14.6250
15.4300 14.8750
15.2300 14.6250
9/96 15.5600 14.7500
15.7600 13.8750
15.4100 14.0000
15.8900 14.8750
9/97 16.3300 15.0625
16.6600 15.3120
16.6400 15.2500
16.6500 15.3125
9/98 17.1100 16.1250
16.8700 16.5000
16.6800 15.5625
15.8500 14.7500
9/99 15.2800 13.5000
14.6900 12.7500
15.0900 12.6875
4/00 14.8200 12.4375
</TABLE>
The solid line above represents the Trust's net asset value (NAV), which
indicates overall changes in value among the Trust's underlying securities. The
Trust's market price is represented by the dashed line, which indicates the
price the market is willing to pay for shares of the Trust at a given time.
Market price is influenced by a range of factors, including supply and demand
and market conditions.
5
<PAGE> 7
Q&A WITH YOUR PORTFOLIO MANAGERS
WE RECENTLY SPOKE WITH REPRESENTATIVES OF THE ADVISER OF THE VAN KAMPEN
ADVANTAGE MUNICIPAL INCOME TRUST ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT
SHAPED THE MARKETS DURING THE PAST SIX MONTHS. THE REPRESENTATIVES INCLUDE
DENNIS S. PIETRZAK, PORTFOLIO MANAGER, WHO HAS MANAGED THE TRUST SINCE 1995 AND
WORKED IN THE INVESTMENT INDUSTRY SINCE 1968. THE FOLLOWING COMMENTS REFLECT THE
REPRESENTATIVES' VIEWS ON THE TRUST'S PERFORMANCE DURING THE SIX MONTHS ENDED
APRIL 30, 2000.
Q WHAT WERE THE MOST IMPORTANT
DEVELOPMENTS IN THE FIXED-INCOME MARKETS DURING THE REPORTING PERIOD?
A Generally higher interest rates,
sparked by inflation worries, set the tone for the fixed-income markets during
the past six months. As the economy continued its strong advance, the markets
reacted warily to signs of potential inflationary pressures--such as rising
employment costs, healthy job growth, strong consumer spending, and spikes in
commodities prices, especially oil. These concerns fueled a steady sell-off
through the fourth quarter of 1999 and into January 2000.
To slow the economy and keep prices from rising, the Federal Reserve Board
gradually pushed short-term interest rates higher, raising the fed funds rate (a
key short-term lending rate) three times between November 1999 and April 2000.
(Editor's note: On May 16, 2000, after the reporting period ended, the Fed
raised rates a fourth time.)
In times of rising interest rates, bond prices trend downward. Add to that
the lingering effects of the Year 2000 (Y2K) computer scare early in the first
quarter of 2000, and you can see why this was a challenging period for many
fixed-income investors.
Q HOW DID THE MUNICIPAL
BOND MARKET REACT TO THESE CONDITIONS?
A Not surprisingly, higher interest
rates hurt municipal bond prices, but we believe there's always opportunity in
the market. In the past few months, we've actually seen some fairly significant
price swings--both up and down--as investors tried to anticipate the Fed's next
move and the direction of interest rates. The market was weak in late 1999 and
early 2000, but we had a nice rally in February and March, which tapered off in
April.
The strong economy has bolstered the financial condition of many
municipalities across the country, so the pace of new municipal bond issuance
dropped sharply (about 40 percent) from a year ago. With their coffers full,
municipalities haven't needed to turn to the bond market for financing. Also,
higher interest rates made it more
6
<PAGE> 8
difficult for issuers to refund outstanding bond issues, which has been a source
of new investment opportunities in the past.
Q WHAT STRATEGIES DID YOU FOLLOW
IN MANAGING THE TRUST?
A Strategically, we've been moving in
a new direction since early this year. We made the decision to manage the Trust
relative to a new benchmark, rather than the Lipper peer group, which meant that
we needed to make some adjustments to the Trust's structure. The Trust's
benchmark is now the Lehman Brothers Municipal Bond Index with maturities
greater than five years. Specifically, we increased the duration of the
portfolio (a measure of its sensitivity to changes in interest rates) to more
closely track the performance of the new benchmark index. The benchmark provides
the shareholder with general municipal market returns, and the leveraged
structure provides the opportunity for enhanced dividends.
Fortunately, the municipal bond market played into our hands and gave us
some excellent opportunities to implement this new strategy. Beginning in late
January, we began purchasing deeply discounted bonds. These were securities that
had been issued a year or so ago with coupons of 4.75, 5.00, or 5.25 percent. As
interest rates went up over time, these bonds began selling at a deep discount,
with some as low as 80 cents on the dollar.
At the same time, the Trust held a number of older, prerefunded issues with
higher coupons in the 6.50 to 7.50 percent range. Such prerefunded issues tend
to decrease the duration of a portfolio because they have shorter lives than
their stated maturities. But because of their attractive coupons, these bonds
were trading at a premium to par, presenting us with an opportunity to capture
some solid capital gains. Because these bonds were scheduled to be called or
refunded within the next year or two, we chose to sell them while the demand for
them--and therefore their market price--was high.
This combination of buying deep-discount bonds and selling prerefunded
issues enabled us to lengthen the duration of the portfolio without drastically
altering the income stream that the Trust will be earning over time. While we've
seen a slight decline in portfolio income in the short run, buying the deeply
discounted bonds enabled us to purchase more par value per dollar invested. In
some cases, for example, we were able to pick up $1 million worth of bond par
value for just $800,000.
Q WHAT AREAS OF THE MUNICIPAL
MARKET WERE MOST ATTRACTIVE TO YOU?
A Our philosophy is to seek bonds
that we feel represent the best values compared with similar offerings in the
marketplace. During the past six months, we did not specifically target one area
of the market over another. We did, however, maintain significant concentrations
in certain sectors, including transportation, industrial revenue, and
health-care bonds, each of which represented more than 10 percent of the
portfolio's long-term investments.
7
<PAGE> 9
Many of our portfolio-management decisions were based on pricing issues,
such as the availability of deep discounts, or structural issues, such as
extending duration or maintaining adequate call protection and diversification
for the portfolio. For additional portfolio highlights, please refer to page 4.
Q HOW DID THE TRUST PERFORM
DURING THE PERIOD?
A For the six-month period ended
April 30, 2000, the Trust returned -0.50 percent based on market price. This
reflects a decrease in market price from $12.9375 per share on October 31, 1999,
to $12.4375 per share on April 30, 2000. By comparison, the total return of the
Trust's peer group (as represented by the Lehman Brothers Municipal Bond Index)
was 2.63 percent for the same period.
Effective in March 2000, the Trust's dividend was reduced to $0.072 per
share, down from $0.075 per share, reflecting a slight decrease in the Trust's
income stream. This monthly tax-exempt dividend translates to a distribution
rate of 6.95 percent based on the Trust's closing common stock price on April
30, 2000.
Because the Trust is exempt from federal income taxes, this distribution
rate is equivalent to a yield of 10.86 percent for an investor in the 36 percent
federal income-tax bracket. Please refer to the chart and footnotes on page 3
for additional performance results. Past performance is no guarantee of future
results.
Q WHAT DO YOU SEE AHEAD FOR
THE ECONOMY AND THE MUNICIPAL MARKET?
A All eyes will be on the key
economic statistics, such as GDP growth, employment costs, and the unemployment
rate. These figures measure the economy's strength and rate of growth and may
influence whether the Fed will continue to raise short-term interest rates. We
expect that the inflation rate may increase, but it's likely to remain in a
moderate range for the near term. It's anticipated that the Fed will continue to
increase short-term rates by the end of the summer, perhaps by more than 0.50
percent. Higher interest rates will, in turn, put pressure on the municipal
market in the short run.
Increased stock-price volatility in April has increased investor skepticism,
but investors continue to see price pullbacks as opportunities to buy
aggressive-growth stocks. It may take a much deeper, more sustained decline in
these stocks to convince investors to rethink their asset allocation decisions.
If the stock market does fall sharply, we could see a flight to quality, as
investors pursue investments that typically carry less risk. Such conditions
might benefit investment-grade municipal bonds.
Low municipal-bond supply could continue throughout 2000, especially if
interest rates trend higher, as expected, throughout the first half of the year.
Overall, the lower supply of bonds
8
<PAGE> 10
should help to shore up prices, as demand remains strong. Investors can tolerate
periodic price swings if they keep long-term perspectives and continue to value
the steady stream of tax-exempt income that municipal bonds provide. As always,
we will rely on our strong research efforts to evaluate opportunities in the
marketplace and identify securities that may offer superior investment potential
and value over time.
9
<PAGE> 11
GLOSSARY OF TERMS
A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.
CREDIT RATING: An evaluation of an issuer's credit history and capability of
repaying obligations. Standard & Poor's and Moody's Investors Service are two
companies that assign bond ratings. Standard & Poor's ratings range from a high
of AAA to a low of D, while Moody's ratings range from a high of Aaa to a low of
C.
DISCOUNT BOND: A bond whose market price is lower than its face value (or "par
value"). Because bonds usually mature at face value, a discount bond has more
potential to appreciate in price than a par bond does.
DURATION: A measure of the sensitivity of a bond's price to changes in interest
rates, expressed in years. Each year of duration represents an expected 1
percent change in the price of a bond for every 1 percent change in interest
rates. The longer a bond's duration, the greater the effect of interest-rate
movements on its price. Typically, funds with shorter durations perform better
in rising rate environments, while funds with longer durations perform better
when rates decline.
INFLATION: A persistent and measurable rise in the general level of prices.
Inflation is widely measured by the Consumer Price Index, an economic indicator
that measures the change in the cost of purchased goods and services.
MATURITY DATE: The date a bond expires, usually at face value.
MATURITY LENGTH: The time it takes for a bond to mature. A bond issued in 1999
and maturing in 2009 is a 10-year bond.
PREREFUNDING: The process of issuing new bonds to refinance an outstanding
municipal bond issue prior to its maturity or call date. The proceeds from the
new bonds are generally invested in U.S. government securities. Prerefunding
typically occurs when interest rates decline and an issuer replaces its
higher-yielding bonds with current lower-yielding issues.
YIELD SPREAD: The additional yield investors can earn by either investing in
bonds with longer maturities or by investing in bonds with lower ratings. The
spread is the difference in yield between bonds with short versus long
maturities or the difference in yield between high-quality bonds and lower-
quality bonds.
10
<PAGE> 12
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
THE FOLLOWING PAGES DETAIL THE SPECIFIC HOLDINGS OF YOUR TRUST AT THE END OF THE
REPORTING PERIOD.
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 99.8%
ALABAMA 1.7%
$1,000 Alabama Bldg Renovation Fin Auth Rev Rfdg
(AMBAC Insd)............................... 5.625% 09/01/24 $ 969,010
6,050 Alabama Wtr Pollutn Ctl Auth Revolving Fund
Ln Ser A (AMBAC Insd)...................... 5.000 08/15/15 5,588,990
1,550 Birmingham, AL Arpt Auth Arpt Rev Rfdg
(AMBAC Insd)............................... 5.500 07/01/14 1,517,791
------------
8,075,791
------------
ALASKA 1.9%
10,000 Alaska St Hsg Fin Corp Ser A Rfdg.......... 5.000 12/01/18 8,960,300
------------
ARIZONA 0.8%
3,635 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
Oblig Irvington Proj Tucson Ser A Rfdg (FSA
Insd)...................................... 7.250 07/15/10 3,853,282
------------
ARKANSAS 0.3%
1,500 Arkansas St Dev Fin Auth Hosp Rev
Washington Regl Med Cent................... 7.375 02/01/29 1,477,755
------------
CALIFORNIA 3.1%
2,630 Anaheim, CA Pub Fing Auth Lease Rev Cap
Apprec Sub Pub Impts Proj C (FSA Insd)..... * 09/01/20 786,238
4,215 California Hlth Fac Fin Auth Rev Kaiser
Permanente Med Cent........................ 5.450 10/01/13 4,050,025
5,000 California St Pub Wks Brd Lease Rev Var CA
St Univ Projs Ser A........................ 5.250 12/01/13 4,906,950
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$5,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Rfdg........................ * 01/15/25 $ 1,008,300
2,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Conv Cap Apprec Rfdg................... * 01/15/20 1,057,920
10,000 Foothill/Eastern Trans Corridor Agy CA Toll
Rd Rev Rfdg................................ * 01/15/21 2,644,800
------------
14,454,233
------------
COLORADO 2.3%
8,500 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy
Rev E-470 Proj Ser C (Prerefunded @
08/31/05).................................. * 08/31/26 1,341,215
1,105 Colorado Hsg Fin Auth Single Family Pgm Sr
Ser B1..................................... 7.900% 12/01/25 1,156,869
510 Colorado Hsg Fin Auth Single Family Pgm Sr
Ser D1 Rfdg................................ 8.000 12/01/24 545,659
1,461 Colorado Hsg Fin Auth Single Family Pgm Sr
Ser E...................................... 8.125 12/01/24 1,541,945
3,215 Denver, CO City & Cnty Arpt Rev Ser C...... 6.350 11/15/01 3,272,034
2,500 Denver, CO City & Cnty Sch Dist No 1 Rfdg
(FGIC Insd)................................ 5.000 12/01/23 2,182,225
1,000 Meridian Metro Dist, CO Peninsular &
Oriental Steam Navig Co Rfdg (LOC: Meridian
Assoc East)................................ 7.500 12/01/11 1,039,720
------------
11,079,667
------------
CONNECTICUT 0.7%
3,250 Connecticut St Spl Oblig Pkg Rev Bradley
Intl Arpt Ser A............................ 6.600 07/01/24 3,237,943
------------
FLORIDA 0.5%
3,000 Tampa Bay Wtr FL Util Sys Rev Ser A (FGIC
Insd)...................................... 4.750 10/01/27 2,495,250
------------
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
GEORGIA 1.4%
$1,000 Atlanta, GA Arpt Rev Ser B (FNMA Insd)..... 5.625% 01/01/30 $ 942,290
1,500 George L Smith ll GA Wrld Congress Cent
Auth Rev Domed Stadium Proj Rfdg (MBIA
Insd)...................................... 5.500 07/01/20 1,416,975
3,770 Monroe Cnty, GA Dev Auth Pollutn Ctl Rev
Oglethorpe Pwr Corp Scherer Ser A.......... 6.800 01/01/12 4,140,289
------------
6,499,554
------------
ILLINOIS 8.0%
610 Aurora, IL Single Family Mtg Rev Ser B Rfdg
(GNMA Collateralized)...................... 8.050 09/01/25 636,193
3,750 Bolingbrook, IL Cap Apprec Ser B (MBIA
Insd)...................................... * 01/01/30 579,938
5,000 Chicago, IL Brd of Edl Cap Apprec Sch
Reform Ser A (FGIC Insd)................... * 12/01/28 853,650
3,000 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
American Airls Inc Proj Ser B.............. 7.875 11/01/25 3,076,530
5,000 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
Intl Terminal (MBIA Insd).................. 6.750 01/01/18 5,199,000
5,000 Chicago, IL Sch Fin Auth Ser A (MBIA
Insd)...................................... 5.000 06/01/09 4,862,800
1,000 Chicago, IL Wastewtr Transmission Rev 2nd
Lien (MBIA Insd)........................... 5.750 01/01/25 972,310
3,000 Cicero, IL Alt Rev Source (Prerefunded @
12/01/05) (MBIA Insd)...................... 6.500 12/01/14 3,224,490
2,360 Cook Cnty, IL Cmnty High Sch Dist No 219
Niles Twp (FSA Insd)....................... * 12/01/11 1,234,374
2,360 Cook Cnty, IL Cmnty High Sch Dist No 219
Niles Twp (FSA Insd)....................... * 12/01/12 1,157,297
2,235 Cook Cnty, IL Cmnty High Sch Dist No 219
Niles Twp (FSA Insd)....................... * 12/01/13 1,028,860
3,930 Illinois Dev Fin Auth Rev Local Govt Pgm
Aurora East Sch (MBIA Insd)................ * 12/01/16 1,478,466
3,000 Illinois Dev Fin Auth Solid Waste Disposal
Rev........................................ 5.950 12/01/24 2,731,050
1,250 Metropolitan Pier & Expo Auth IL Dedicated
St Tax Rev McCormick Pl Expn Proj (FGIC
Insd)...................................... 5.375 12/15/18 1,190,562
1,000 Metropolitan Pier & Expo Auth IL Dedicated
St Tax Rev McCormick Pl Expn Proj (FGIC
Insd)...................................... 5.500 12/15/24 946,460
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
ILLINOIS (CONTINUED)
$2,000 Metropolitan Pier & Expo Auth IL Dedicated
St Tax Rev McCormick Pl Expn Proj (FGIC
Insd)...................................... 5.250% 12/15/28 $ 1,784,620
5,000 Regional Tran Auth IL Ser B (AMBAC Insd)... 8.000 06/01/17 6,248,250
1,150 Will Cnty, IL Cmnty Sch Dist 365U Vly View
Ser B (FSA Insd)........................... * 11/01/15 468,855
------------
37,673,705
------------
INDIANA 1.4%
4,000 Indiana Hlth Fac Fin Auth Hosp Rev Cmnty
Hosp Proj (MBIA Insd)...................... 6.850 07/01/22 4,203,960
2,000 Indiana Hlth Fac Fin Auth Hosp Rev Columbus
Regl Hosp Rfdg (FSA Insd).................. 7.000 08/15/15 2,272,760
------------
6,476,720
------------
KANSAS 1.8%
5,500 Burlington, KS Pollutn Ctl Rev KS Gas &
Elec Co Proj Rfdg (MBIA Insd).............. 7.000 06/01/31 5,721,375
965 Sedgwick & Shawnee Cntys, KS Single Family
Rev Coll Mtg Ser A Rfdg (GNMA
Collateralized)............................ 8.050 05/01/24 1,037,259
1,680 Sedgwick Cnty, KS Single Family Mtg Rev Ser
A Rfdg (GNMA Collateralized)............... 8.125 05/01/24 1,788,024
------------
8,546,658
------------
KENTUCKY 3.0%
2,000 Georgetown, KY College Rev Georgetown
College Proj Ser A (ACA Insd).............. 6.125 11/15/29 1,910,780
7,750 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac
Delta Airls Proj Ser A..................... 7.125 02/01/21 7,859,275
4,450 Louisville & Jefferson Cnty, KY Met Swr
Dist Drainage Rev Rfdg (MBIA Insd)......... 5.300 05/15/19 4,170,496
------------
13,940,551
------------
LOUISIANA 1.8%
1,925 Louisiana Hsg Fin Agy Mtg Rev Multi-Family
Emerald Pointe Apts (FHA Gtd).............. 7.100 11/01/33 2,020,191
1,520 Louisiana Hsg Fin Agy Mtg Rev Single Family
Access Pgm Ser B (GNMA Collateralized)..... 8.000 03/01/25 1,649,094
2,000 New Orleans, LA Rfdg (FGIC Insd)........... 4.750 12/01/26 1,636,660
3,000 Saint Charles Parish, LA Environmental Impt
Rev LA Pwr & Lt Co Ser A (AMBAC Insd)...... 6.875 07/01/24 3,197,820
------------
8,503,765
------------
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
MARYLAND 0.2%
$1,000 Maryland St Econ Dev Corp Student Hsg Rev
Collegiate Hsg Towson Ser A................ 5.750% 06/01/29 $ 879,560
------------
MASSACHUSETTS 2.8%
2,500 Chelsea, MA Sch Proj Ln Act 1948
(Prerefunded @ 06/15/04) (AMBAC Insd)...... 6.500 06/15/12 2,682,375
3,955 Massachusetts Bay Tran Auth MA Genl Tran
Sys Ser A Rfdg............................. 5.500 03/01/12 4,007,957
2,175 Massachusetts Bay Tran Auth MA Genl Tran
Sys Ser B Rfdg (MBIA Insd)................. 6.000 03/01/10 2,247,515
75 Massachusetts Bay Tran Auth MA Genl Tran
Sys Ser B Rfdg (Prerefunded @ 03/01/03)
(MBIA Insd)................................ 6.000 03/01/10 78,455
3,500 Massachusetts Muni Whsl Elec Co Pwr Supply
Sys Rev Ser A Rfdg (AMBAC Insd)............ 5.000 07/01/10 3,411,275
1,000 Massachusetts St Hlth & Edl Fac Auth Rev
Saint Mem Med Cent Ser A................... 6.000 10/01/23 789,730
------------
13,217,307
------------
MICHIGAN 4.0%
1,680 Michigan Higher Edl Fac Auth Rev Ltd Oblig
Hope College Proj Rfdg (Connie Lee Insd)... 7.000 10/01/14 1,801,497
3,350 Michigan St Hosp Fin Auth Rev Hosp Mid-MI
Oblig Group (Prerefunded @ 12/01/02)....... 6.800 12/01/14 3,567,549
8,810 Michigan St Strategic Fd Ltd Oblig Rev
Detroit Edison Co Ser A Rfdg (MBIA Insd)... 5.550 09/01/29 8,145,462
3,000 Michigan St Strategic Fd Ltd Oblig Rev Ser
CC Rfdg (FGIC Insd)........................ 6.950 09/01/21 3,128,700
2,500 Wayne St Univ MI Univ Rev Genl (FGIC
Insd)...................................... 5.125 11/15/29 2,200,775
------------
18,843,983
------------
MINNESOTA 0.9%
5,000 Minneapolis & St Paul, MN Met Arpt Commn
Arpt Rev Ser A (FGIC Insd)................. 5.125 01/01/31 4,405,800
------------
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
MISSISSIPPI 2.5%
$1,000 Mississippi Business Fin Corp Miss Pollutn
Ctl Rev Sys Energy Res Inc Proj Rfdg....... 5.900% 05/01/22 $ 870,370
2,000 Mississippi Business Fin Corp Sys Energy
Res Inc.................................... 5.875 04/01/22 1,735,520
5,135 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser B (GNMA Collateralized)..... 7.900 03/01/25 5,481,304
1,355 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser C (GNMA Collateralized)..... 8.125 12/01/24 1,454,051
2,049 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser E (GNMA Collateralized)..... 8.100 12/01/25 2,196,938
------------
11,738,183
------------
MISSOURI 1.1%
2,100 Kansas City, MO Arpt Rev Genl Impt Ser A
(FSA Insd)................................. 6.900 09/01/10 2,238,600
3,750 Missouri St Hlth & Edl Fac Rev BJC Hlth
Sys........................................ 5.000 05/15/28 3,119,625
------------
5,358,225
------------
NEBRASKA 0.4%
2,250 American Pub Energy Agy NE Gas Sup Rev NE
Pub Gas Agy Proj Ser A (AMBAC Insd)........ 4.375 06/01/10 1,944,473
------------
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 1,019,520
------------
NEW JERSEY 5.6%
10,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (MBIA Insd)....................... 5.900 03/15/21 10,297,300
8,000 New Jersey Econ Dev Auth Wtr Facs Rev NJ
American Wtr Co Inc Proj Ser A (FGIC
Insd)...................................... 6.875 11/01/34 8,554,240
1,000 New Jersey Hlthcare Fac Fin Auth Rev St
Barnabas Hlth Ser C Rfdg (MBIA Insd) (a)... 5.000 07/01/11 965,490
1,750 New Jersey St Hwy Auth Garden St Pkwy Genl
Rev Sr Pkwy................................ 6.250 01/01/14 1,807,943
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 4,852,042
------------
26,477,015
------------
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
NEW YORK 25.1%
$1,500 Broome Cnty, NY Ctfs Partn Pub Safety Fac
(MBIA Insd)................................ 5.250% 04/01/15 $ 1,437,780
2,000 Long Island Pwr Auth NY Elec Sys Rev Cap
Apprec (FSA Insd) (a)...................... * 06/01/18 691,780
2,500 Long Island Pwr Auth NY Elec Sys Rev Genl
Ser A (FSA Insd)........................... 5.000 12/01/18 2,246,575
1,500 Metropolitan Transn Auth NY Commuter Facs
Rev Ser A (MBIA Insd)...................... 5.625 07/01/27 1,440,420
1,500 Metropolitan Transn Auth NY Tran Facs Rev
Ser K Rfdg (Prerefunded @ 07/01/02)........ 6.250 07/01/11 1,561,890
3,000 Metropolitan Transn Auth NY Tran Facs Rev
Svc Contract Ser R......................... 5.500 07/01/17 2,860,380
3,605 Metropolitan Transn Auth NY Transit Facs
Rev (FGIC Insd)............................ 4.750 07/01/26 2,986,670
2,500 New York City Ser H........................ 5.000 03/15/29 2,103,325
1,000 New York City Adj Subser A1 (Embedded
Swap)...................................... 3.830 08/01/12 1,000,790
4,250 New York City Indl Dev Agy Civic Fac Rev
USTA Natl Tennis Cent Proj (FSA Insd)...... 6.375 11/15/14 4,460,333
2,360 New York City Indl Dev Agy Spl Fac United
Airls Inc Proj............................. 5.650 10/01/32 2,039,182
1,300 New York City Indl Dev Civic YMCA Greater
NY Proj.................................... 5.800 08/01/16 1,269,801
10 New York City Ser A (Prerefunded @
08/15/01).................................. 8.000 08/15/19 10,559
1,325 New York City Ser B1 (Prerefunded @
08/15/04).................................. 7.000 08/15/16 1,438,791
2,225 New York City Ser F Rfdg................... 6.000 08/01/11 2,297,068
4,015 New York City Transitional Fin Auth Rev
Future Tax Secd Ser C...................... 5.000 05/01/29 3,434,551
2,250 New York City Transitional Fin Auth Rev Ser
B (FGIC Insd).............................. 4.750 11/01/23 1,881,900
2,525 New York St Dorm Auth Lease Rev Muni Hlth
Fac Impt Pgm Ser A (FSA Insd).............. 5.500 05/15/25 2,388,903
1,450 New York St Dorm Auth Lease Rev St Univ
Dorm Facs Ser C (MBIA Insd)................ 5.500 07/01/29 1,368,626
1,000 New York St Dorm Auth Revs Univ Rochester
Ser A...................................... 5.000 07/01/23 871,650
3,970 New York St Dorm Auth Revs City Univ Ser
F.......................................... 5.000 07/01/14 3,620,759
3,100 New York St Dorm Auth Revs City Univ Sys
Cons Ser A................................. 5.625 07/01/16 3,091,568
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$2,600 New York St Dorm Auth Revs Cons City Univ
Sys Second Genl Res Ser A.................. 5.750% 07/01/13 $ 2,632,136
5,050 New York St Dorm Auth Revs Cons City Univ
Sys Second Genl Res Ser B.................. 5.375 07/01/07 5,034,749
4,050 New York St Dorm Auth Revs Court Facs Lease
Ser A...................................... 5.300 05/15/07 4,020,557
2,550 New York St Dorm Auth Revs Mental Hlth Svcs
Facs Ser B Rfdg............................ 5.750 08/15/11 2,566,371
5,000 New York St Dorm Auth Revs St Univ Edl Facs
Ser A Rfdg................................. 5.500 05/15/08 5,053,250
2,000 New York St Dorm Auth Revs St Univ Edl Facs
Ser B Rfdg................................. 7.500 05/15/11 2,273,720
1,560 New York St Med Care Facs Fin Agy Rev
Mental Hlth Svcs Fac Ser A................. 7.500 02/15/21 1,619,670
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 5,439,050
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 7,200,697
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 7,496,860
3,500 New York St Thruway Auth Genl Rev Ser E
Rfdg....................................... 5.000 01/01/25 3,025,820
5,695 New York St Thruway Auth Svc Contract Rev
Loc Hwy & Brdg............................. 5.750 04/01/08 5,816,360
7,500 New York St Thruway Auth Svc Contract Rev
Loc Hwy & Brdg............................. 5.250 04/01/13 7,144,500
3,550 New York St Urban Dev Corp Rev Correctional
Cap Fac Ser 7.............................. 5.700 01/01/27 3,370,441
10,000 Port Auth NY & NJ Spl Oblig Rev Spl Proj
JFK Intl Arpt Terminal 6 (MBIA Insd)....... 5.750 12/01/25 9,693,500
2,000 Triborough Brdg & Tunl Auth NY Rev Genl
Purp Ser X................................. 6.500 01/01/19 2,073,920
------------
118,964,902
------------
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
NORTH CAROLINA 2.4%
$11,000 North Carolina Muni Pwr Agy No 1 Catawba
Elec Rev Indexed Caps Rfdg (MBIA Insd)..... 6.000% 01/01/12 $ 11,560,230
------------
NORTH DAKOTA 0.5%
2,500 North Dakota St Hsg Fin Agy Rev Hsg Fin Pgm
Home Mtg Fin Ser B (MBIA Insd)............. 5.500 07/01/29 2,265,025
------------
OHIO 0.2%
1,000 Marion Cnty, OH Hosp Impt Rev Cmnty Hosp
Rfdg....................................... 6.375 05/15/11 949,110
------------
OKLAHOMA 0.7%
1,100 Oklahoma City, OK Indl & Cultural Fac Trust
Rev Dist Heating & Cooling Trigen.......... 6.750 09/15/17 1,100,352
1,000 Oklahoma Dev Fin Auth Rev St John Hlth Sys
Rfdg....................................... 5.750 02/15/25 978,580
1,250 Tulsa Cnty, OK Pub Facs Auth Cap Impt
Rev........................................ 6.250 11/01/22 1,219,075
------------
3,298,007
------------
PENNSYLVANIA 6.4%
1,000 Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
Insd)...................................... * 03/15/14 449,770
1,830 Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
Insd)...................................... * 09/15/14 799,728
5,330 McGuffey Sch Dist PA Ser B (AMBAC Insd).... 4.750 08/01/28 4,371,399
4,000 Pennsylvania Intergovt Coop Auth Spl Tax
Rev Philadelphia Funding Pgm (Prerefunded @
06/15/05) (FGIC Insd)...................... 6.750 06/15/21 4,310,200
1,250 Pennsylvania St Tpk Comm Oil Franchise Tax
Rev Subser B (AMBAC Insd).................. 4.750 12/01/27 1,028,300
3,000 Philadelphia, PA (FSA Insd)................ 5.000 03/15/28 2,568,300
3,000 Philadelphia, PA Gas Wks Rev First Ser A... 5.000 07/01/26 2,583,210
1,350 Philadelphia, PA Ind For Auth Dev Arpt Rev
Philadelphia Arpt Sys Proj Ser A (FGIC
Insd)...................................... 5.000 07/01/23 1,146,933
7,500 Pittsburgh & Allegheny Cnty, PA Pub Aud
Regl Asset Dist Sales Tax (AMBAC Insd)..... 5.000 02/01/29 6,436,650
3,000 Radnor Twp, PA Sch Dist.................... 5.750 03/15/26 2,942,400
4,075 Southeastern PA Transn Auth PA Spl Rev Ser
A (FGIC Insd).............................. 4.750 03/01/24 3,390,319
------------
30,027,209
------------
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
RHODE ISLAND 1.7%
$7,800 Rhode Island Hsg & Mtg Fin Corp
Homeownership Oppty Ser 5.................. 6.400% 04/01/24 $ 7,858,266
------------
TENNESSEE 0.8%
1,500 Elizabethton, TN Hlth & Edl Facs Brd Rev &
Impt Hosp First Mtg Ser B Rfdg............. 7.750 07/01/29 1,472,730
1,500 Franklin, TN Spl Sch Dist Cap Apprec (FSA
Insd)...................................... * 06/01/16 586,650
1,930 Tennessee Hsg Dev Agy Homeowner Pgm........ 5.300 01/01/24 1,727,543
------------
3,786,923
------------
TEXAS 7.1%
2,355 Brazos River Auth TX Pollutn Ctl Rev Adj
Coll Util Elec Co Rfdg..................... 5.550 06/01/30 2,003,587
2,000 Brazos River Auth TX Rev Houston Inds Inc
Proj Ser D Rfdg (MBIA Insd)................ 4.900 10/01/15 1,787,780
1,000 Brazos River Auth TX Rev Houston Lighting &
Pwr Co Proj Rfdg (AMBAC Insd).............. 5.050 11/01/18 877,920
825 Brazos, TX Higher Edl Auth Inc Student Ln
Rev Subser A2 Rfdg......................... 6.800 12/01/04 864,509
1,084 Brazos, TX Higher Edl Auth Inc Student Ln
Rev Subser C2 Rfdg......................... 7.100 11/01/04 1,146,796
3,000 Dallas Cnty, TX Util & Reclamation Dist Ser
B Rfdg (AMBAC Insd)........................ 5.875 02/15/29 2,950,590
5,000 Dallas-Fort Worth, TX Intl Arpt Fac Impt
Corp Rev American Airls Inc................ 7.250 11/01/30 5,103,500
5,340 Dallas-Fort Worth, TX Intl Arpt Fac Impt
Corp Rev Delta Airls Inc................... 7.625 11/01/21 5,472,112
1,500 Dallas-Fort Worth, TX Intl Arpt Fac Impt
Corp Rev Delta Airls Inc................... 7.125 11/01/26 1,508,565
2,500 Dallas-Fort Worth, TX Intl Arpt Rev JT Ser
A (FGIC Insd).............................. 5.750 11/01/30 2,377,825
5,140 Little Elm, TX Indpt Sch Dist Rfdg (PSFG
Insd)...................................... 6.750 08/15/29 5,495,688
2,000 Tarrant Cnty, TX Jr College Dist........... 5.050 02/15/10 1,954,100
2,000 Texas St Dept Hsg & Cmnty Affairs Single
Family Rev Mtg Jr Lien Ser A Rfdg.......... 8.100 09/01/15 2,178,020
------------
33,720,992
------------
</TABLE>
See Notes to Financial Statements
20
<PAGE> 22
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
UTAH 0.3%
$1,525 Salt Lake City, UT Arpt Rev Delta Airls Inc
Proj....................................... 7.900% 06/01/17 $ 1,553,365
------------
VIRGINIA 1.0%
5,000 Richmond, VA (FSA Insd) (a)................ 5.500 01/15/15 4,879,350
------------
WASHINGTON 0.3%
1,400 King Cnty, WA Hsg Auth Hsg Rev Pooled Sr
Ser A Rfdg................................. 6.700 03/01/15 1,432,144
------------
WEST VIRGINIA 2.3%
2,500 Berkeley Cnty, WV Bldg Comm Hosp Rev City
Hosp Proj.................................. 6.500 11/01/22 2,312,900
5,000 Marshall Cnty, WV Pollutn Ctl Rev OH Pwr Co
Proj Ser C Rfdg (MBIA Insd)................ 6.850 06/01/22 5,249,500
2,000 West Virginia St Hsg Dev Fund Hsg Fin Ser
A.......................................... 5.550 05/01/17 1,892,640
1,720 West Virginia St Hsg Dev Fund Hsg Fin Ser
A.......................................... 5.450 11/01/21 1,588,970
------------
11,044,010
------------
WISCONSIN 1.9%
5,000 Madison, WI Indl Dev Rev Madison Gas & Elec
Co Proj Ser A.............................. 6.750 04/01/27 5,152,850
1,000 Nekoosa, WI Pollutn Ctl Rev Nekoosa Papers
Inc Proj B................................. 5.500 07/01/15 904,330
3,000 Wisconsin Hsg & Econ Dev Auth Homeownership
Rev Ser A.................................. 6.450 03/01/17 3,040,350
------------
9,097,530
------------
WYOMING 0.2%
815 Wyoming Cmnty Dev Auth Insd Single Family
Mtg Ser B.................................. 6.700 06/01/17 823,191
------------
PUERTO RICO 2.5%
1,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev
Ser V Rfdg................................. 5.750 07/01/18 1,000,210
10,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev
Ser Y (FSA Insd)........................... 6.250 07/01/21 10,766,900
------------
11,767,110
------------
</TABLE>
See Notes to Financial Statements
21
<PAGE> 23
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
MARKET
VALUE
<C> <S> <C> <C> <C>
TOTAL INVESTMENTS 99.8%
(Cost $458,981,105).................................................. $472,186,604
OTHER ASSETS IN EXCESS OF LIABILITIES 0.2%............................ 986,125
------------
NET ASSETS 100.0%..................................................... $473,172,729
============
</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
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--Guaranteed National Mortgage Association
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance Corp.
PSFG--Permanent School Fund Guaranty
See Notes to Financial Statements
22
<PAGE> 24
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $458,981,105)....................... $472,186,604
Cash........................................................ 3,307
Receivables:
Interest.................................................. 8,323,637
Investments Sold.......................................... 197,866
Other....................................................... 20,438
------------
Total Assets............................................ 480,731,852
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 6,687,470
Income Distributions -- Common and Preferred Shares....... 297,706
Investment Advisory Fee................................... 257,910
Administrative Fee........................................ 79,357
Affiliates................................................ 9,209
Trustees' Deferred Compensation and Retirement Plans........ 120,883
Accrued Expenses............................................ 106,588
------------
Total Liabilities....................................... 7,559,123
------------
NET ASSETS.................................................. $473,172,729
============
NET ASSETS CONSIST OF:
Preferred Shares ($.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................................. 13,205,499
Accumulated Undistributed Net Investment Income............. 604,880
Accumulated Net Realized Loss............................... (12,860,424)
------------
Net Assets Applicable to Common Shares.................. 283,172,729
------------
NET ASSETS.................................................. $473,172,729
============
NET ASSET VALUE PER COMMON SHARE ($283,172,729 divided by
19,106,785 shares outstanding)............................ $ 14.82
============
</TABLE>
See Notes to Financial Statements
23
<PAGE> 25
Statement of Operations
For the Six Months Ended April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $14,181,309
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,529,619
Administrative Fee.......................................... 470,653
Preferred Share Maintenance................................. 276,049
Custody..................................................... 12,788
Trustees' Fees and Related Expenses......................... 10,829
Legal....................................................... 9,989
Other....................................................... 115,848
-----------
Total Expenses.......................................... 2,425,775
-----------
NET INVESTMENT INCOME....................................... $11,755,534
===========
NET REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 226,619
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 14,026,765
End of the Period......................................... 13,205,499
-----------
Net Unrealized Depreciation During the Period............... (821,266)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $ (594,647)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $11,160,887
===========
</TABLE>
See Notes to Financial Statements
24
<PAGE> 26
Statement of Changes in Net Assets
For the Six Months Ended April 30, 2000,
and the Year Ended October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 11,755,534 $ 23,440,046
Net Realized Gain/Loss............................. 226,619 (3,368,920)
Net Unrealized Depreciation During the Period...... (821,266) (35,946,548)
------------ ------------
Change in Net Assets from Operations............... 11,160,887 (15,875,422)
------------ ------------
Distributions from Net Investment Income:
Common Shares.................................... (8,483,413) (17,195,559)
Preferred Shares................................. (3,654,086) (6,177,707)
------------ ------------
Total Distributions................................ (12,137,499) (23,373,266)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... (976,612) (39,248,688)
NET ASSETS:
Beginning of the Period............................ 474,149,341 513,398,029
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $604,880
and $986,845, respectively)...................... $473,172,729 $474,149,341
============ ============
</TABLE>
See Notes to Financial Statements
25
<PAGE> 27
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, ------------------------------
2000 1999 1998 1997
-------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD
(A)..................................... $ 14.872 $ 16.926 $ 16.354 $ 15.684
-------- -------- -------- --------
Net Investment Income................... .615 1.227 1.248 1.266
Net Realized and Unrealized Gain/Loss... (.031) (2.058) .592 .717
-------- -------- -------- --------
Total from Investment Operations.......... .584 (.831) 1.840 1.983
-------- -------- -------- --------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders........... .444 .900 .913 .960
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders........................ .191 .323 .355 .353
Distributions from Net Realized Gain:
Paid to Common Shareholders........... -0- -0- -0- -0-
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders........................ -0- -0- -0- -0-
-------- -------- -------- --------
Total Distributions....................... .635 1.223 1.268 1.313
-------- -------- -------- --------
NET ASSET VALUE, END OF THE PERIOD........ $ 14.821 $ 14.872 $ 16.926 $ 16.354
======== ======== ======== ========
Market Price Per Share at End of the
Period.................................. $12.4375 $12.9375 $15.8125 $15.0625
Total Investment Return at Market Price
(b)..................................... -.50%* -13.16% 11.33% 8.96%
Total Return at Net Asset Value (c)....... 2.70%* -7.16% 9.35% 10.74%
Net Assets at End of the Period (In
millions)............................... $ 473.2 $ 474.1 $ 513.4 $ 502.5
Ratio of Expenses to Average Net Assets
Applicable to Common Shares**........... 1.73% 1.66% 1.64% 1.66%
Ratio of Net Investment Income to Average
Net Assets Applicable to Common Shares
(d)..................................... 5.76% 5.56% 5.35% 5.76%
Portfolio Turnover........................ 13%* 33% 30% 49%
* Non-Annualized
** Ratio of Expenses to Average Net Assets
Including Preferred Shares............. 1.03% 1.03% 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 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.
(c) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(d) Net Investment Income is adjusted for common share equivalent of
distributions paid to preferred shareholders.
26
<PAGE> 28
<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
27
<PAGE> 29
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (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, which approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when-issued or delayed delivery
purchase commitments until payment is made.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and original issue discount is accreted over the expected
life of each applicable security.
28
<PAGE> 30
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (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, 1999, the Trust had an accumulated capital loss
carryforward for tax purposes of $13,003,743, which will expire between October
31, 2002 and October 31, 2007. 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, 2000, for federal income tax purposes the cost of long-term
investments is $459,064,405, the aggregate gross unrealized appreciation is
$18,588,641 and the aggregate gross unrealized depreciation is $5,466,442,
resulting in net unrealized appreciation on long-term investments of
$13,122,199.
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, 2000, the Trust recognized expenses of
approximately $4,700 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
For the six months ended April 30, 2000, the Trust recognized expenses of
approximately $14,800 representing Van Kampen's cost of providing accounting and
legal services to the Trust.
29
<PAGE> 31
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
officers of Van Kampen.
The Trust 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 $62,741,144 and $75,215,152,
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 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).
30
<PAGE> 32
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
There were no transactions in futures contracts during the six months ended
April 30, 2000.
B. INDEXED SECURITIES These instruments, when applicable, 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
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, 2000 was
3.969%. During the six months ended April 30, 2000, the rates ranged from 3.405%
to 4.750%.
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.
31
<PAGE> 33
VAN KAMPEN FUNDS
THE VAN KAMPEN
FAMILY OF FUNDS
Growth
Aggressive Growth
American Value*
Emerging Growth
Enterprise
Equity Growth
Focus Equity
Growth*
Mid Cap Growth
Pace
Small Cap Value
Tax Managed Equity Growth
Technology
Growth and Income
Comstock
Equity Income
Growth and Income
Harbor
Real Estate Securities
Utility
Value
Global/International
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
International Magnum
Latin American
Strategic Income
Tax Managed Global Franchise
Worldwide High Income
Income
Corporate Bond
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
U.S. Government
U.S. Government Trust for Income
Capital Preservation
Reserve
Tax Free Money
Senior Loan
Prime Rate Income Trust
Senior Floating Rate
Tax Free
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal**
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
To find out more about any of these funds, ask your financial advisor for a
prospectus, which contains more complete information, including sales charges,
risks, and ongoing expenses. Please read it carefully before you invest or send
money.
To view a current Van Kampen fund prospectus or to receive additional fund
information, choose from one of the following:
- visit our Web site at
WWW.VANKAMPEN.COM--
to view a prospectus, select
Download Prospectus [COMPUTER ICON]
- 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.
[PHONE ICON]
- e-mail us by visiting
WWW.VANKAMPEN.COM and
selecting Contact Us
[MAIL ICON]
* Closed to new investors
** Open to new investors for a limited time
32
<PAGE> 34
TRUST OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN ADVANTAGE MUNICIPAL
INCOME TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
THEODORE A. MYERS
RICHARD F. POWERS, III* - Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
RICHARD F. POWERS, III*
President
STEPHEN L. BOYD*
Executive Vice President and
Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer
RICHARD A. CICCARONE*
JOHN R. REYNOLDSON*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS(1)
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, IL 60601
(1) Independent accountants for the Trust perform an annual audit of the Trust's
financial statements. The Board of Trustees has engaged Deloitte & Touche
LLP to be the Trust's independent accountants.
KPMG LLP, located at 303 West Wacker Drive, Chicago, IL 60601 ("KPMG"),
ceased being the Trust's independent accountants effective April 14, 2000.
The cessation of the client- auditor relationship between the Trust and KPMG
was based solely on a possible future business relationship by KPMG with an
affiliate of the Trust's investment adviser.
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
(C) Van Kampen Funds Inc., 2000. All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
33
