<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 15
NOTES TO FINANCIAL STATEMENTS 20
VAN KAMPEN FUNDS
THE VAN KAMPEN FAMILY OF FUNDS 23
TRUST OFFICERS AND IMPORTANT ADDRESSES 24
</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>
-----------------------------------------------------------------------
AMEX Ticker Symbol VMV
-----------------------------------------------------------------------
Six-month total return based on market price(1) 1.61%
-----------------------------------------------------------------------
Six-month total return based on NAV(2) 1.86%
-----------------------------------------------------------------------
Distribution rate as a % of closing common stock
price(3) 6.34%
-----------------------------------------------------------------------
Taxable-equivalent distribution rate as a % of closing
common stock price(4) 11.26%
-----------------------------------------------------------------------
Net asset value $14.25
-----------------------------------------------------------------------
Closing common stock price $13.0625
-----------------------------------------------------------------------
Six-month high common stock price (12/16/99) $14.1250
-----------------------------------------------------------------------
Six-month low common stock price (02/10/00) $12.3125
-----------------------------------------------------------------------
Preferred share rate(5) 4.6000%
-----------------------------------------------------------------------
</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 43.7%
combined federal and state income tax bracket, which takes into
consideration the deductibility of individual state taxes paid.
(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............ 64.0%
- AA/Aa.............. 10.2%
- A/A................ 12.0%
- BBB/Baa............ 9.2%
- BB/Ba.............. 1.3%
- Non-Rated.......... 3.3%
[PIE CHART]
<CAPTION>
As of October 31, 1999
<S> <C> <C>
- AAA/Aaa............ 67.4%
- AA/Aa.............. 10.0%
- A/A................ 11.9%
- BBB/Baa............ 5.9%
- BB/Ba.............. 1.4%
- Non-Rated.......... 3.4%
[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 0.069
12/99 0.069
1/00 0.069
2/00 0.069
3/00 0.069
4/00 0.069
</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>
Health Care 22.10 25.30
Transportation 18.40 18.00
Student Loan 11.40 11.40
General Purpose 9.80 9.90
Multi-Family Housing 9.30 9.50
</TABLE>
NET ASSET VALUE AND MARKET PRICE
(based upon quarter-end values--April 1993 through April 2000)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NET ASSET VALUE MARKET PRICE
--------------- ------------
<S> <C> <C>
4/93 14.8800 15.0000
15.1100 14.7500
15.5100 14.7500
12/93 15.3000 14.7500
13.0800 13.5000
13.0300 12.7500
12.7800 11.6250
12/94 12.1300 11.1250
13.4100 12.8750
13.6500 12.3750
13.9800 12.2500
12/95 14.8000 12.1250
14.1500 12.3750
14.0300 12.1250
14.3500 12.3750
12/96 14.6400 12.5000
14.3300 13.1250
14.7800 13.7500
15.2100 14.4370
12/97 15.5200 14.6250
15.5300 14.4375
15.5200 14.8125
15.9100 15.8125
12/98 15.7700 15.8750
15.6100 15.5000
15.0100 14.3125
14.6700 14.3125
12/99 14.2600 14.0625
14.4600 13.4375
4/00 14.2500 13.0625
</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
MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST ABOUT THE KEY EVENTS AND ECONOMIC
FORCES THAT SHAPED THE MARKETS DURING THE PAST SIX MONTHS. THE REPRESENTATIVES
INCLUDE TIMOTHY D. HANEY, PORTFOLIO MANAGER, WHO HAS MANAGED THE TRUST SINCE
1995 AND WORKED IN THE INVESTMENT INDUSTRY SINCE 1988. 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)
6
<PAGE> 8
from a year ago. With their coffers full, municipalities haven't needed to turn
to the bond market for financing. Also, higher interest rates made it more
difficult for issuers to refund outstanding bond issues, which has been a source
of new investment opportunities in the past.
Q HOW WOULD YOU DESCRIBE THE
ECONOMIC AND MUNICIPAL MARKET ENVIRONMENT IN MASSACHUSETTS DURING THE
PERIOD?
A The Massachusetts economy
continued to diversify and perform well, with a record-low unemployment rate of
just 2.4 percent in March 2000, compared to the 4.1 percent rate nationally. Tax
revenues exceeded expectations, though a pending cut in the commonwealth's
personal income-tax rate could reduce revenues. Another closely watched issue is
how the commonwealth will fund the cost overruns incurred by the "Big Dig"
project, an underground highway and tunnel under construction in Boston. Our
analysts continue to pay close attention to these issues in order to uncover
opportunities and seek to avoid trouble spots.
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 Massachusetts 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 6.00 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
7
<PAGE> 9
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
may see a slight decline in portfolio income in the months ahead, 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, although we did maintain a significant concentration
in the health-care sector, which represented more than 22 percent of the
portfolio's long-term investments. This is a sector that we monitored very
closely, relying on our in-depth research efforts to identify securities with
excellent investment potential.
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 1.61 percent based on market price. At the
same time, the Trust's market price decreased from $13.250 per share on October
31, 1999, to $13.0625 per share on April 30, 2000. By comparison, the total
return of the Trust's peer group (as represented by the Lehman Brothers
Massachusetts Municipal Bond Index) was 2.73 percent for the same period.
The Trust's dividend remained unchanged at $0.0690 per share throughout the
reporting period. This monthly tax-exempt dividend translates to a distribution
rate of 6.34 percent based on the Trust's closing common stock price on April
30, 2000.
Because the Trust is exempt from federal and Massachusetts income taxes,
this distribution rate is equivalent to a yield of 11.26 percent for an investor
in the 43.7 percent combined federal and state 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
8
<PAGE> 10
that the inflation rate may increase, but it's likely to remain in a moderate
range for the near term. It's anticipated that the Fed will continue to increase
short-term rates by the end of the summer, perhaps by more than 0.50 percent.
Higher interest rates will, in turn, put pressure on the municipal market in the
short run.
Increased stock-price volatility in April has increased investor skepticism,
but investors continue to see price pullbacks as opportunities to buy
aggressive-growth stocks. It may take a much deeper, more sustained decline in
these stocks to convince investors to rethink their asset allocation decisions.
If the stock market does fall sharply, we could see a flight to quality, as
investors pursue investments that typically carry less risk. Such conditions
might benefit investment-grade municipal bonds.
Low municipal-bond supply could continue throughout 2000, especially if
interest rates trend higher, as expected, throughout the first half of the year.
Overall, the lower supply of bonds should help to shore up prices, as demand
remains strong. Investors can tolerate periodic price swings if they keep
long-term perspectives and continue to value the steady stream of tax-exempt
income that municipal bonds provide. As always, we will rely on our strong
research efforts to evaluate opportunities in the marketplace and identify
securities that may offer superior investment potential and value over time.
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 97.1%
MASSACHUSETTS 90.5%
$1,705 Boston, MA Metro Dist Rfdg................... 6.500% 12/01/13 $ 1,810,915
2,000 Chelsea, MA Sch Proj Ln Act 1948 (AMBAC
Insd)........................................ 5.700 06/15/06 2,065,440
1,000 Chelsea, MA Sch Proj Ln Act 1948 (Prerefunded
@ 06/15/04) (AMBAC Insd)..................... 6.500 06/15/12 1,072,950
1,325 Holyoke, MA Ser B Rfdg (FSA Insd)............ 6.000 06/15/05 1,382,094
2,400 Lowell, MA (Prerefunded @ 04/01/05) (FSA
Insd)........................................ 6.625 04/01/15 2,606,472
1,500 Massachusetts Bay Tran Auth MA Genl Tran Sys
Ser B (Prerefunded @ 03/01/04)............... 5.900 03/01/12 1,571,085
725 Massachusetts Edl Ln Auth Edl Ln Rev Issue E
Ser B (AMBAC Insd)........................... 6.250 07/01/11 746,011
900 Massachusetts Edl Ln Auth Edl Ln Rev Issue E
Ser B (AMBAC Insd)........................... 6.300 07/01/12 926,136
1,000 Massachusetts Muni Wholesale Elec Co Pwr
Supply Sys Rev Ser C (MBIA Insd)............. 6.625 07/01/10 1,051,180
1,000 Massachusetts St Dev Fin Agy Rev MA College
of Pharmacy Ser B............................ 6.750 07/01/30 1,003,080
500 Massachusetts St Hlth & Edl Fac Auth Rev (FHA
Gtd)......................................... 5.950 02/15/17 486,050
1,500 Massachusetts St Hlth & Edl Fac Auth Rev
Baystate Med Cent Ser D Rfdg (FGIC Insd)..... 5.000 07/01/12 1,405,470
</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>
MASSACHUSETTS (CONTINUED)
$2,000 Massachusetts St Hlth & Edl Fac Auth Rev Cape
Cod Hlth Ser A3 (Connie Lee Insd)............ 5.000% 11/15/11 $ 1,893,200
2,500 Massachusetts St Hlth & Edl Fac Auth Rev
Faulkner Hosp Ser C (Prerefunded @
07/01/03).................................... 6.000 07/01/13 2,604,225
250 Massachusetts St Hlth & Edl Fac Auth Rev
Harvard Pilgrim Hlth Ser A (FSA Insd)........ 5.000 07/01/28 203,118
1,000 Massachusetts St Hlth & Edl Fac Auth Rev
Mount Auburn Hosp Issue Ser B-1 (MBIA
Insd)........................................ 6.300 08/15/24 1,012,970
2,000 Massachusetts St Hlth & Edl Fac Auth Rev New
England Med Cent Hosp Ser F (FGIC Insd)...... 6.500 07/01/12 2,086,520
1,000 Massachusetts St Hlth & Edl Fac Auth Rev
Newton Wellesley Hosp Issue Ser E (MBIA
Insd)........................................ 5.875 07/01/15 1,003,960
2,000 Massachusetts St Hlth & Edl Fac Auth Rev
North Shore Med Cent Ser A (MBIA Insd)....... 5.625 07/01/14 1,990,180
1,000 Massachusetts St Hlth & Edl Fac Auth Rev
Saint Mem Med Cent Ser A..................... 6.000 10/01/23 789,730
1,000 Massachusetts St Hlth & Edl Fac Auth Rev Vly
Regl Hlth Sys Ser C Rfdg (Connie Lee Insd)... 7.000 07/01/10 1,116,830
2,000 Massachusetts St Hsg Fin Agy (FNMA
Collateralized).............................. 6.800 11/15/12 2,094,260
2,185 Massachusetts St Hsg Fin Agy Hsg Rev Insd
Rental Ser A Rfdg (AMBAC Insd)............... 6.600 07/01/14 2,257,258
750 Massachusetts St Hsg Fin Agy Rental Mtg Ser D
(AMBAC Insd)................................. 6.200 07/01/15 762,495
500 Massachusetts St Indl Fin Agy Rev First Mtg
Loomis House & Vlg Proj...................... 7.500 07/01/17 562,000
2,000 Massachusetts St Indl Fin Agy Rev Suffolk
Univ (AMBAC Insd)............................ 5.250 07/01/27 1,804,900
2,075 Massachusetts St Indl Fin Agy Rev Tufts Univ
Ser H (MBIA Insd)............................ 4.750 02/15/28 1,705,359
1,500 Massachusetts St Indl Fin Agy Rev Whitehead
Inst Biomedical Research..................... 5.125 07/01/26 1,319,790
1,000 Massachusetts St Indl Fin Agy Wtr Treatment
American Hingham............................. 6.900 12/01/29 1,021,490
1,000 Massachusetts St Indl Fin Agy Wtr Treatment
American Hingham............................. 6.950 12/01/35 1,029,080
</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>
MASSACHUSETTS (CONTINUED)
$1,000 Massachusetts St Spl Oblig Rev Ser A......... 5.700% 06/01/10 $ 1,022,890
2,000 Massachusetts St Tpk Auth Metro Highway Sys
Rev Ser B (MBIA Insd)........................ 5.250 01/01/29 1,796,960
3,000 Massachusetts St Tpk Auth Rev Ser A Rfdg..... 5.000 01/01/13 2,902,680
1,500 Massachusetts St Wtr Res Auth Ser A
(Prerefunded @ 12/01/01)..................... 6.500 12/01/19 1,570,950
1,185 Massachusetts St Wtr Res Auth Ser C Rfdg..... 5.100 12/01/04 1,190,380
2,550 New England Edl Ln Mktg Corp MA Student Ln
Rev Sub Issue G.............................. 6.000 03/01/02 2,584,654
2,500 New England Edl Ln Mktg Corp MA Student Ln
Rev Sub Issue H.............................. 6.900 11/01/09 2,678,250
1,000 South Essex, MA Swr Dist Ser A Rfdg (MBIA
Insd)........................................ 5.250 06/15/24 905,530
825 Taunton, MA Elec............................. 8.000 02/01/04 900,050
-----------
56,936,592
-----------
GUAM 1.6%
1,000 Guam Govt Ser A.............................. 5.750 09/01/04 998,020
-----------
PUERTO RICO 3.4%
2,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev
Ser Y Rfdg (FSA Insd)........................ 6.250 07/01/21 2,153,380
-----------
U. S. VIRGIN ISLANDS 1.6%
1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpts
Taxes Ln Nt Ser A............................ 6.375 10/01/19 1,002,350
-----------
TOTAL LONG-TERM INVESTMENTS 97.1%
(Cost $59,258,300)..................................................... 61,090,342
SHORT-TERM INVESTMENTS 1.3%
(Cost $800,000)........................................................ 800,000
-----------
TOTAL INVESTMENTS 98.4%
(Cost $60,058,300)..................................................... 61,890,342
OTHER ASSETS IN EXCESS OF LIABILITIES 1.6%.............................. 1,022,541
-----------
NET ASSETS 100.0%....................................................... $62,912,883
===========
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
AMBAC--AMBAC Indemnity Corporation
Connie Lee--Connie Lee Insurance Company
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Administration
FSA--Financial Security Assurance Inc.
FNMA--Federal National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
See Notes to Financial Statements
14
<PAGE> 16
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $60,058,300)........................ $61,890,342
Cash........................................................ 66,021
Interest Receivable......................................... 1,186,764
Other....................................................... 5,307
-----------
Total Assets............................................ 63,148,434
-----------
LIABILITIES:
Payables:
Investment Advisory Fee................................... 34,209
Income Distributions -- Common and Preferred Shares....... 22,187
Administrative Fee........................................ 10,389
Affiliates................................................ 7,844
Trustees' Deferred Compensation and Retirement Plans........ 100,278
Accrued Expenses............................................ 60,644
-----------
Total Liabilities....................................... 235,551
-----------
NET ASSETS.................................................. $62,912,883
===========
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 1,000 issued with liquidation preference of
$25,000 per share)........................................ $25,000,000
-----------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 2,660,684 shares issued and
outstanding).............................................. 26,607
Paid in Surplus............................................. 38,904,404
Net Unrealized Appreciation................................. 1,832,042
Accumulated Undistributed Net Investment Income............. 336,638
Accumulated Net Realized Loss............................... (3,186,808)
-----------
Net Assets Applicable to Common Shares.................. 37,912,883
-----------
NET ASSETS.................................................. $62,912,883
===========
NET ASSET VALUE PER COMMON SHARE ($37,912,883 divided by
2,660,684 shares outstanding)............................. $ 14.25
===========
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
Statement of Operations
For the Six Months Ended April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $1,814,737
----------
EXPENSES:
Investment Advisory Fee..................................... 203,915
Administrative Fee.......................................... 62,743
Preferred Share Maintenance................................. 39,159
Legal....................................................... 3,919
Trustees' Fees and Related Expenses......................... 1,814
Custody..................................................... 719
Other....................................................... 56,955
----------
Total Expenses.......................................... 369,224
----------
NET INVESTMENT INCOME....................................... $1,445,513
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... $ (122,097)
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 2,023,569
End of the Period......................................... 1,832,042
----------
Net Unrealized Depreciation During the Period............... (191,527)
----------
NET REALIZED AND UNREALIZED LOSS............................ $ (313,624)
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $1,131,889
==========
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
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.............................. $ 1,445,513 $ 2,843,830
Net Realized Loss.................................. (122,097) (7,195)
Net Unrealized Depreciation During the Period...... (191,527) (3,764,211)
----------- -----------
Change in Net Assets from Operations............... 1,131,889 (927,576)
----------- -----------
Distributions from Net Investment Income:
Common Shares.................................... (1,101,523) (2,074,916)
Preferred Shares................................. (420,594) (647,800)
----------- -----------
Total Distributions................................ (1,522,117) (2,722,716)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... (390,228) (3,650,292)
----------- -----------
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment..................................... -0- 28,267
----------- -----------
TOTAL DECREASE IN NET ASSETS....................... (390,228) (3,622,025)
NET ASSETS:
Beginning of the Period............................ 63,303,111 66,925,136
----------- -----------
End of the Period (Including accumulated
undistributed net investment income of $336,638
and $413,242, respectively)...................... $62,912,883 $63,303,111
=========== ===========
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
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
----------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD (A)...... $ 14.396 $ 15.768 $ 15.241
-------- -------- --------
Net Investment Income........................... .543 1.068 1.070
Net Realized and Unrealized Gain/Loss........... (.118) (1.417) .555
-------- -------- --------
Total from Investment Operations.................. .425 (.349) 1.625
-------- -------- --------
Less:
Distributions from Net Investment Income:
Paid to Common Shareholders................... .414 .780 .780
Common Share Equivalent of Distributions Paid
to Preferred Shareholders................... .158 .243 .318
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............................... .572 1.023 1.098
-------- -------- --------
NET ASSET VALUE, END OF THE PERIOD................ $ 14.249 $ 14.396 $ 15.768
======== ======== ========
Market Price Per Share at End of the Period....... $13.0625 $13.2500 $15.8750
Total Investment Return at Market Price (b)....... 1.61%* -12.07% 15.22%
Total Return at Net Asset Value (c)............... 1.86%* -3.92% 8.78%
Net Assets at End of the Period (In millions)..... $ 62.9 $ 63.3 $ 66.9
Ratio of Expenses to Average Net Assets Applicable
to Common Shares**.............................. 1.95% 1.88% 1.88%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (d).......... 5.40% 5.38% 4.84%
Portfolio Turnover................................ 9%* 5% 3%
* Non-Annualized
** Ratio of Expenses to Average Net Assets
Including Preferred Shares..................... 1.17% 1.17% 1.17%
</TABLE>
(a) Net Asset Value at April 30, 1993, is adjusted for common and preferred
share offering costs of $.342 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 the common share equivalent of
distributions paid to preferred shareholders.
18
<PAGE> 20
<TABLE>
<CAPTION>
APRIL 30, 1993
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF INVESTMENT
----------------------------------------- OPERATIONS) TO
1997 1996 1995 1994 OCTOBER 31, 1993
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$14.534 $14.257 $12.269 $15.470 $14.658
------- ------- ------- ------- -------
1.076 1.077 1.078 1.090 .392
.701 .212 2.013 (3.162) .754
------- ------- ------- ------- -------
1.777 1.289 3.091 (2.072) 1.146
------- ------- ------- ------- -------
.775 .720 .774 .828 .276
.295 .292 .329 .227 .058
-0- -0- -0- .063 -0-
-0- -0- -0- .011 -0-
------- ------- ------- ------- -------
1.070 1.012 1.103 1.129 .334
------- ------- ------- ------- -------
$15.241 $14.534 $14.257 $12.269 $15.470
======= ======= ======= ======= =======
$14.500 $12.375 $12.000 $11.375 $15.375
23.97% 9.26% 12.26% -20.95% 4.38%*
10.51% 7.13% 23.19% -15.40% 5.01%*
$ 65.5 $ 63.6 $ 62.9 $ 57.6 $ 66.1
1.95% 2.06% 2.17% 2.12% 1.91%
5.29% 5.49% 5.65% 6.22% 4.45%
8% 12% 65% 108% 35%*
1.19% 1.24% 1.27% 1.26% 1.40%
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Massachusetts Value Municipal Income Trust (the "Trust") is
registered as a non-diversified closed-end management investment company under
the Investment Company Act of 1940, as amended. The Trust's investment objective
is to seek to provide Common Shareholders with a high level of current income
exempt from federal income taxes and Massachusetts personal income tax,
consistent with preservation of capital. The Trust will invest substantially all
of its assets in Massachusetts municipal securities rated investment grade at
the time of investment. The Trust commenced investment operations on April 30,
1993.
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. At April 30, 2000, there were no
when-issued or delayed delivery purchase commitments.
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.
20
<PAGE> 22
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 $3,064,711 which will expire between October
31, 2002 and October 31, 2007.
At April 30, 2000, for federal income tax purposes, cost of long- and short-
term investments is $60,058,300; the aggregate gross unrealized appreciation is
$2,241,295 and the aggregate gross unrealized depreciation is $409,253 resulting
in net unrealized appreciation on long- and short-term investments of
$1,832,042.
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays dividends from
net investment income to common shareholders monthly. Net realized gains, if
any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
2. INVESTMENT ADVISORY AGREEMENT AND
OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, 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
daily 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 $500 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 $8,000 representing Van Kampen's cost of providing accounting and
legal services to the Trust.
21
<PAGE> 23
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 provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Trust. The maximum
annual benefit per trustee under the plan is $2,500.
3. CAPITAL TRANSACTIONS
At April 30, 2000 and October 31, 1999, paid in surplus related to common shares
aggregated $38,904,404 and $38,904,404, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
------------------------------------
<S> <C> <C>
Beginning Shares.................................. 2,660,684 2,658,893
Shares Issued Through Dividend Reinvestment....... -0- 1,791
--------- ---------
Ending Shares..................................... 2,660,684 2,660,684
========= =========
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $5,464,279 and $6,279,858, respectively.
5. PREFERRED SHARES
The Trust has outstanding 1,000 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is currently reset every seven days through an
auction process. The rate in effect on April 30, 2000, was 4.600%. During the
six months ended April 30, 2000, the rates ranged from 2.000% to 5.150%.
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.
22
<PAGE> 24
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
23
<PAGE> 25
TRUST OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN MASSACHUSETTS VALUE
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, Illinois 60601
(1) Independent accountants for the Trust perform an annual audit of the Trust's
financial statements. The Board of Trustees has engaged Deloitte & Touche
LLP to be the Trust's independent accountants.
KPMG LLP, located at 303 West Wacker Drive, Chicago, IL 60601 ("KPMG"),
ceased being the Trust's independent accountants effective April 14, 2000.
The cessation of the client- auditor relationship between the Trust and KPMG
was based solely on a possible future business relationship by KPMG with an
affiliate of the Trust's investment adviser.
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
(C) Van Kampen Funds Inc., 2000. All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
24
