<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>
<CAPTION>
--------------------------------------------------------------------------
<S> <C> <C>
NYSE Ticker Symbol VKV
--------------------------------------------------------------------------
Six-month total return based on market price(1) -1.92%
--------------------------------------------------------------------------
Six-month total return based on NAV(2) 2.40%
--------------------------------------------------------------------------
Distribution rate as a % of closing common stock price(3) 7.08%
--------------------------------------------------------------------------
Taxable-equivalent distribution rate as a % of closing
common stock price(4) 11.06%
--------------------------------------------------------------------------
Net asset value $13.72
--------------------------------------------------------------------------
Closing common stock price $11.4375
--------------------------------------------------------------------------
Six-month high common stock price (11/02/99) $12.3750
--------------------------------------------------------------------------
Six-month low common stock price (03/13/00) $11.0000
--------------------------------------------------------------------------
Preferred share (Series A) rate(5) 4.240%
--------------------------------------------------------------------------
Preferred share (Series B) rate(5) 3.885%
--------------------------------------------------------------------------
Preferred share (Series C) rate(5) 3.895%
--------------------------------------------------------------------------
Preferred share (Series D) rate(5) 3.850%
--------------------------------------------------------------------------
Preferred share (Series E) rate(5) 4.200%
--------------------------------------------------------------------------
</TABLE>
(1) Total return based on market price assumes an investment at the market price
at the beginning of the period indicated, reinvestment of all distributions
for the period in accordance with the Trust's dividend reinvestment plan,
and sale of all shares at the closing common stock price at the end of the
period indicated.
(2) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3) Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(4) The taxable-equivalent distribution rate is calculated assuming a 36%
federal income tax bracket.
(5) See "Notes to Financial Statements" footnote #5, for more information
concerning Preferred Share reset periods.
A portion of the interest income may be taxable for those investors subject
to the federal alternative minimum tax (AMT).
Past performance 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............ 66.7%
- AA/Aa.............. 6.2%
- A/A................ 11.3%
- BBB/Baa............ 14.6%
- Non-Rated.......... 1.2%
[PIE CHART]
<CAPTION>
As of October 31, 1999
<S> <C> <C>
- AAA/Aaa............ 64.4%
- AA/Aa.............. 7.0%
- A/A................ 10.0%
- BBB/Baa............ 17.6%
- Non-Rated.......... 1.0%
[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 0.0675
12/99 0.0675
1/00 0.0675
2/00 0.0675
3/00 0.0675
4/00 0.0675
</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 15.5 14.4
Industrial Revenue 14.0 13.2
Public Building 12.1 11.2
Retail Electric/Gas/Telephone 9.4 9.4
General Purpose 8.4 8.1
</TABLE>
NET ASSET VALUE AND MARKET PRICE
(based upon quarter-end values--March 1993 through April 2000)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NET ASSET VALUE MARKET PRICE
--------------- ------------
<S> <C> <C>
3/93 14.9500 14.9500
15.7000 14.7500
16.5800 15.2500
16.2500 14.5000
3/94 13.9500 12.8750
13.8400 12.8750
13.5300 11.5000
12.8200 11.0000
3/95 14.0700 12.3750
13.7500 12.3750
14.0800 12.1250
14.9600 12.5000
3/96 14.2000 12.2500
14.0300 11.8750
14.3500 12.5000
14.6300 12.1250
3/97 14.2300 12.3750
14.6700 13.0625
15.1000 13.7500
15.4300 13.9375
3/98 15.3600 14.1250
15.3600 13.9375
15.8200 14.6250
15.6000 14.7500
3/99 15.4300 14.3750
14.6800 13.7500
14.1700 12.3750
13.6200 12.0000
14.0000 11.8125
4/00 13.7200 11.4375
</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 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) 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 6.00 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
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. We did, however, maintain significant concentrations
in certain sectors, including health-care, industrial revenue, and public
building bonds, each of which represented more than 12 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 -1.92 percent based on market price. This
reflects a decrease in market price from $12.0625 per share on October 31, 1999,
to $11.4375 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.
The Trust's dividend remained unchanged during the past six months. The
monthly tax-exempt dividend of $0.0675 per share translates to a distribution
rate of 7.08 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 11.06 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 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
8
<PAGE> 10
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 97.5%
ALABAMA 1.9%
$5,000 Birmingham Baptist Med Cent AL Spl Care
Fac Fin Auth Rev (MBIA Insd).............. 5.750% 11/15/10 $ 5,106,400
2,650 Huntsville, AL Healthcare Auth Healthcare
Fac Rev Ser A (MBIA Insd)................. 6.375 06/01/22 2,687,656
3,000 Jefferson Cnty, AL Swr Rev Cap Impt
Warrents Ser A (FGIC Insd)................ 5.125 02/01/39 2,561,070
288 Mobile, AL Indl Dev Brd Solid Waste Disp
Rev Mobile Energy Svcs Co Proj Rfdg (a)... 6.950 01/01/20 93,547
------------
10,448,673
------------
ALASKA 0.2%
1,000 North Slope Borough, AK Ser B (FSA
Insd)..................................... 7.500 06/30/01 1,031,050
------------
ARIZONA 0.8%
3,975 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
Oblig Irvington Proj Tucson Ser A Rfdg
(FSA Insd)................................ 7.250 07/15/10 4,213,699
------------
ARKANSAS 0.2%
3,050 Arkansas St Cap Apprec College Savings
Ser A..................................... * 06/01/16 1,205,970
------------
CALIFORNIA 7.2%
830 California Rural Home Mtg Fin Auth Single
Family Mtg Rev Ser B (GNMA
Collateralized)........................... 7.750 09/01/26 878,348
6,000 California St Pub Wks Brd Lease Rev Dept
of Corrections St Prisons Ser A Rfdg
(AMBAC Insd).............................. 5.250 12/01/13 6,025,740
</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)
$2,000 California St Pub Wks Brd Lease Rev Dept
of Corrections St Prisons Ser A Rfdg
(AMBAC Insd).............................. 5.000% 12/01/19 $ 1,837,060
30,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Sr Lien Ser A......................... * 01/15/22 7,394,100
1,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Ser A (Prerefunded @ 01/01/07)........ 6.500 01/01/32 1,093,340
1,175 Kings Cnty, CA Waste Mgmt Auth
Solid Waste Rev........................... 7.200 10/01/14 1,249,601
1,750 Los Angeles, CA Dept Wtr & Pwr Elec Plant
Rev (MBIA Insd)........................... 4.250 11/15/14 1,494,342
9,500 Los Angeles, CA Dept Wtr & Pwr Elec Plant
Rev Crossover Rfdg (FGIC Insd)............ 5.375 09/01/23 8,934,370
9,000 Riverside Cnty, CA Asset Leasing Corp
Leasehold Rev Riverside Cnty Hosp Proj
(MBIA Insd)............................... * 06/01/21 2,500,650
5,700 Sacramento, CA City Fin Auth Rev Comb Proj
B (MBIA Insd)............................. * 11/01/15 2,371,599
7,550 San Joaquin Hills, CA Transn Corridor Agy
Toll Rd Rev Cap Apprec Ser A Rfdg (MBIA
Insd)..................................... * 01/15/36 867,797
3,250 San Marcos, CA Pub Fac Auth Rev Pub Impt
Civic Cent Ser A Rfdg..................... 6.200 08/01/22 3,179,442
10,225 Santa Ana, CA Unified Sch Dist Ctfs Partn
Cap Apprec Fin Proj (FSA Insd)............ * 04/01/32 1,484,466
------------
39,310,855
------------
COLORADO 4.6%
4,540 Adams & Arapahoe Cntys, CO Jt Sch Dist Ser
C (MBIA Insd)............................. 5.750 12/01/08 4,731,769
1,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy
Rev E-470 Proj Ser B
(Prerefunded @ 08/31/05).................. 6.950 08/31/20 1,113,590
3,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy
Rev E-470 Proj Ser B
(Prerefunded @ 08/31/05).................. 7.000 08/31/26 3,347,730
</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>
COLORADO (CONTINUED)
$9,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy
Rev E-470 Proj Ser C
(Prerefunded @ 08/31/05).................. * 08/31/26 $ 1,420,110
2,825 Denver, CO City & Cnty Arpt Rev........... 8.500% 11/15/23 2,926,869
920 Denver, CO City & Cnty Arpt Rev Ser A..... 8.875 11/15/12 983,876
330 Denver, CO City & Cnty Arpt Rev Ser A
(Prerefunded @11/15/01)................... 8.875 11/15/12 356,189
6,000 Denver, CO City & Cnty Arpt Rev Ser C..... 6.600 11/15/04 6,246,480
7,500 E-470 Pub Hwy Auth CO Rev Sr Ser B Rfdg
(MBIA Insd)............................... * 09/01/19 2,350,350
2,000 Meridian Metropolitan Dist CO Peninsular &
Oriental Steam Navig Co Rfdg (LOC:
Meridian Assoc East)...................... 7.500 12/01/11 2,079,440
------------
25,556,403
------------
CONNECTICUT 0.5%
2,500 Connecticut St Hlth & Edl Fac Auth Rev
Nursing Home Pgm AHF/Hartford (Prerefunded
@ 11/01/04)............................... 7.125 11/01/14 2,747,275
------------
FLORIDA 6.1%
1,985 Bay Cnty, FL Sch Brd Ctfs Partn
(Prerefunded @ 07/01/04) (AMBAC Insd)..... 6.750 07/01/12 2,149,299
3,500 Citrus Cnty, FL Hosp Brd Rev Citrus Mem
Hosp Ser A Rfdg (FSA Insd)................ 6.500 08/15/12 3,663,485
5,000 Dade Cnty, FL Wtr & Swr Rev Ser A
(FGIC Insd)............................... 5.000 10/01/29 4,328,150
2,500 Dade Cnty, FL Wtr & Swr Sys Rev (FGIC
Insd)..................................... 5.250 10/01/21 2,310,850
1,370 Florida Hsg Fin Agy Single Family Mtg Ser
A Rfdg (GNMA Collateralized).............. 6.650 01/01/24 1,419,758
3,000 Hillsborough Cnty, FL Cap Impt Pgm Rev
Criminal Justice Fac Rfdg (FGIC Insd)..... 5.250 08/01/16 2,859,390
3,000 Hillsborough Cnty, FL Indl Dev Auth
Pollutn Ctl Rev Tampa Elec Co Proj Ser 92
Rfdg...................................... 8.000 05/01/22 3,260,790
</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>
FLORIDA (CONTINUED)
$5,000 Jacksonville, FL Cap Impt Rev Stadium Proj
Rfdg (AMBAC Insd)......................... 4.750% 10/01/25 $ 4,181,300
3,985 Pinellas Cnty, FL Hsg Fin Auth Single
Family Mtg Rev Multi Cnty Pgm Ser A (GNMA
Collateralized)........................... 6.700 02/01/28 4,130,931
6,000 South Miami, FL Hlth Fac Auth Hosp Rev
Baptist Hlth Sys Oblig Grp (MBIA Insd).... 5.000 11/15/28 5,167,260
------------
33,471,213
------------
GEORGIA 1.8%
3,000 Cobb Cnty, GA Hosp Auth Rev Antic Ctfs Ser
A (AMBAC Insd)............................ 4.750 04/01/26 2,420,970
5,000 Georgia Muni Elec Auth Pwr Rev Ser B Rfdg
(FGIC Insd)............................... 5.700 01/01/19 5,028,750
2,700 Marietta, GA Dev Auth Rev First Mtg Life
College Ser B (FSA Insd).................. 5.375 09/01/09 2,720,952
------------
10,170,672
------------
ILLINOIS 6.1%
7,500 Chicago, IL Brd Ed Cap Apprec Sch Reform
B-1 (FGIC Insd)........................... * 12/01/29 1,203,375
3,500 Chicago, IL Cap Apprec (Prerefunded @
07/01/05) (AMBAC Insd).................... * 01/01/17 1,283,660
10,000 Chicago, IL Cap Apprec City Colleges (FGIC
Insd)..................................... * 01/01/29 1,736,300
6,000 Chicago, IL Lakefront Millennium Pkg Fac
(MBIA Insd) (b)........................... 0/5.750 01/01/29 3,920,760
5,000 Chicago, IL Lakefront Millennium Pkg Fac
(MBIA Insd)............................... 5.125 01/01/28 4,343,500
3,180 Illinois Hlth Fac Auth Rev Children's Mem
Hosp (MBIA Insd).......................... 6.250 08/15/13 3,401,010
2,250 Illinois Hlth Fac Auth Rev Evangelical
Hosps Ser A Rfdg (FSA Insd)............... 6.750 04/15/17 2,376,112
1,250 Illinois Hlth Fac Auth Rev Evangelical
Hosps Ser C (FSA Insd).................... 6.750 04/15/17 1,320,063
1,000 Illinois Hlth Fac Auth Rev Highland Park
Hosp Proj Ser A (MBIA Insd)............... 5.750 10/01/17 983,220
</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>
ILLINOIS (CONTINUED)
$5,000 Metropolitan Pier & Expo Auth IL Dedicated
St Tax Rev McCormick Plan Expn Proj Ser A
Rfdg (FGIC Insd).......................... 5.250% 12/15/28 $ 4,461,550
2,070 Northern IL Univ Ctfs Partn Hoffman
Estates Cent Proj (FSA Insd).............. 5.400 09/01/16 2,017,029
5,000 Regional Tran Auth IL Ser A (AMBAC
Insd)..................................... 8.000 06/01/17 6,248,250
------------
33,294,829
------------
KENTUCKY 2.6%
9,900 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac
Delta Airls Proj Ser A.................... 7.500 02/01/12 10,184,229
3,500 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac
Delta Airls Proj Ser A.................... 7.500 02/01/20 3,599,330
500 Mt Sterling, KY Lease Rev KY League Cities
Fdg Ser B................................. 6.100 03/01/18 518,470
------------
14,302,029
------------
LOUISIANA 2.0%
2,000 Louisiana Stadium & Expo Dist Hotel
Occupancy Tax & Stadium Rev Ser B Rfdg
(FGIC Insd)............................... 4.750 07/01/21 1,678,080
3,875 New Orleans, LA Rfdg (FGIC Insd).......... 4.750 12/01/26 3,171,029
6,000 Saint Charles Parish, LA Solid Waste Disp
Rev LA Pwr & Lt Co Proj (FSA Insd)........ 7.050 04/01/22 6,220,980
------------
11,070,089
------------
MAINE 0.8%
3,000 Maine Edl Ln Mktg Corp Student Ln
Rev Ser A4................................ 5.950 11/01/03 3,075,630
1,125 Maine St Hsg Auth Mtg Purp Ser C2......... 6.875 11/15/23 1,162,316
------------
4,237,946
------------
MASSACHUSETTS 2.5%
1,000 Massachusetts St Indl Fin Agy Wtr
Treatment American Hingham................ 6.750 12/01/20 1,015,130
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
10,000 Massachusetts St Wtr Res Auth Ser A
(Prerefunded @ 12/01/01).................. 6.500 12/01/19 10,473,000
------------
13,538,700
------------
</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>
MICHIGAN 4.3%
$1,250 Battle Creek, MI Downtown Dev Auth Tax
Increment Rev (Prerefunded @ 05/01/04).... 7.600% 05/01/16 $ 1,381,037
5,000 Detroit, MI Downtown Dev Auth Tax
Increment Rev Dev Area No 1 Proj Ser C1
(Prerefunded @ 07/01/06).................. 6.250 07/01/25 5,361,750
2,750 Detroit, MI Ser B Rfdg.................... 7.000 04/01/04 2,904,110
4,000 Michigan St Bldg Auth Rev Ser I Rfdg (MBIA
Insd)..................................... 6.250 10/01/20 4,061,760
3,000 Michigan St Hosp Fin Auth Rev Detroit Med
Cent Oblig Ser A.......................... 5.250 08/15/23 2,202,870
4,300 Michigan St Hosp Fin Auth Rev Detroit Med
Cent Oblig Ser A.......................... 5.250 08/15/28 3,064,309
5,000 Michigan St Strategic Fd Ltd Oblig Rev
Detroit Edison Co Ser A Rfdg (MBIA
Insd)..................................... 5.550 09/01/29 4,622,850
------------
23,598,686
------------
MINNESOTA 1.6%
5,000 Minneapolis & St Paul, MN Metarpts Comm
Arpt Rev Ser A (FGIC Insd)................ 5.125 01/01/31 4,405,800
4,700 Minnesota St Hsg Fin Agy Single Fam
Mrtg H-1.................................. 5.650 07/01/31 4,329,640
------------
8,735,440
------------
MISSISSIPPI 0.3%
2,000 Mississippi Business Fin Corp MS Pollutn
Ctl Rev Sys Energy Res Inc Proj........... 5.875 04/01/22 1,735,520
------------
MISSOURI 0.4%
2,395 Kansas City, MO Port Auth Fac Riverfront
Park Proj Ser A........................... 5.750 10/01/03 2,431,620
------------
NEVADA 2.7%
5,750 Clark Cnty, NV Indl Dev Rev NV Pwr Co Proj
Ser C Rfdg (AMBAC Insd)................... 7.200 10/01/22 6,114,838
7,800 Clark Cnty, NV Passenger Fac Charge Rev
Las Vegas McCarran Intl Rfdg (MBIA
Insd)..................................... 4.750 07/01/22 6,491,316
2,110 Nevada Hsg Div Single Family Pgm Mezz B... 6.550 10/01/12 2,127,344
------------
14,733,498
------------
</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 JERSEY 3.4%
$1,000 New Jersey Econ Dev Auth Econ Dev Rev
Manahawkin Convalescent Ser A Rfdg
(FHA Gtd)................................. 6.650% 02/01/23 $ 1,043,800
2,500 New Jersey Econ Dev Auth Mkt Transition
Fac Rev Sr Lien Ser A (MBIA Insd)......... 5.800 07/01/09 2,577,500
1,695 New Jersey Hlthcare Fac Fin Auth Rev Genl
Hosp Cent at Passaic (FSA Insd)........... 6.000 07/01/06 1,780,750
2,500 New Jersey Hlthcare Fac Fin Auth Rev Genl
Hosp Cent at Passaic (FSA Insd)........... 6.750 07/01/19 2,790,700
4,000 New Jersey St Transn Trust Fund Auth
Transn Sys Ser A.......................... 5.750 06/15/16 4,120,880
6,750 Salem Cnty, NJ Indl Pollutn Ctl Fin Auth
Rev Pollutn Ctl Pub Svc Elec & Gas Ser A
(MBIA Insd)............................... 5.450 02/01/32 6,228,833
------------
18,542,463
------------
NEW YORK 15.6%
5,000 Long Island Pwr Auth NY Elec Sys Rev Gen
Ser A (MBIA Insd)......................... 5.250 12/01/26 4,501,400
4,000 Nassau Cnty, NY Indl Dev Agy Civic Fac Rev
Hofstra Univ Proj Rfdg (MBIA Insd)........ 4.750 07/01/28 3,286,520
6,000 New York City Muni Wtr Fin Auth Wtr & Swr
Sys Rev Ser A (FGIC Insd)................. 4.750 06/15/31 4,883,340
10,000 New York City Muni Wtr Fin Auth Wtr & Swr
Sys Rev Ser B (FGIC Insd)................. 5.250 06/15/29 8,941,200
7,270 New York City Ser A....................... 7.000 08/01/04 7,767,632
5,700 New York City Ser E Rfdg.................. 6.600 08/01/03 5,953,308
5,000 New York City Ser G....................... 5.750 02/01/14 5,022,750
3,000 New York City Transitional Fin Auth Rev
Future Tax Secured Ser C Future Tax
Secured Ser C............................. 5.000 05/01/29 2,566,290
1,250 New York St Dorm Auth Lease Rev St Univ
Dorm Fac Ser C (MBIA Insd)................ 5.500 07/01/29 1,179,850
4,500 New York St Dorm Auth Rev St Univ Edl Fac
Ser A (MBIA Insd)......................... 4.750 05/15/25 3,727,575
2,000 New York St Dorm Auth Rev City Univ Third
Genl Res Ser 2 (Prerefunded @ 07/01/04)
(MBIA Insd)............................... 6.250 07/01/19 2,096,440
</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)
$7,575 New York St Dorm Auth Rev Cons City Univ
Sys Ser A................................. 5.625% 07/01/16 $ 7,554,396
4,000 New York St Dorm Auth Rev Court Fac Lease
Ser A..................................... 5.250 05/15/21 3,550,080
2,500 New York St Dorm Auth Rev Dept of Hlth.... 5.500 07/01/25 2,279,675
4,000 New York St Dorm Auth Rev St Univ Edl Fac
Ser A Rfdg (AMBAC Insd)................... 5.500 05/15/09 4,078,400
5,885 New York St Energy Resh & Dev Auth Fac
Rev....................................... 7.125 12/01/29 6,340,323
2,310 New York St Med Care Fac Fin Agy Rev Saint
Peter's Hosp Proj Ser A (AMBAC Insd)...... 5.375 11/01/13 2,268,697
3,130 New York St Urban Dev Corp Rev
Correctional Fac Ser A Rfdg............... 5.500 01/01/16 2,998,164
5,000 New York St Urban Dev Corp Rev St Fac
Rfdg...................................... 5.700 04/01/20 4,942,300
1,500 Niagara, NY Frontier Arpt Rev Buffalo
Niagara Intl Arpt Ser A (MBIA Insd)....... 5.625 04/01/29 1,426,080
------------
85,364,420
------------
OHIO 3.6%
2,000 Cuyahoga Cnty, OH Multi-Family Rev Hsg
Dale Bridge Apt (GNMA Collateralized)..... 6.600 10/20/30 2,040,080
3,540 Franklin Cnty, OH Hosp Rev & Impt Doctor's
Hosp Proj Rfdg............................ 5.875 12/01/23 3,543,115
4,800 Lucas Cnty, OH Hosp Rev Promedica Hlthcare
Oblig (MBIA Insd)......................... 6.000 11/15/06 5,025,552
1,905 Miami Cnty, OH Hosp Fac Rev Upper Vly Med
Cent Ser C Rfdg & Impt.................... 5.600 05/15/02 1,904,105
5,130 Muskingum Cnty, OH Hosp Fac Rev Bethesda
Care Sys Rfdg & Impt (Connie Lee Insd).... 6.250 12/01/10 5,464,373
2,000 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev
OH Edison Co Proj Rfdg.................... 5.950 05/15/29 1,795,020
------------
19,772,245
------------
OKLAHOMA 2.2%
1,750 Oklahoma Dev Fin Auth Rev St John Hlth
Sys Rfdg.................................. 5.750 02/15/25 1,712,515
10,000 Tulsa, OK Muni Arpt Tran Rev American
Airls Inc................................. 7.375 12/01/20 10,166,700
------------
11,879,215
------------
</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>
OREGON 0.7%
$3,795 Oregon St Dept Admin Serv Ctfs Partn Ser A
(MBIA Insd)............................... 5.250% 11/01/10 $ 3,800,161
------------
PENNSYLVANIA 3.7%
9,450 Philadelphia, PA Gas Wks Rev Ser 14 Rfdg
(FSA Insd)................................ 6.250 07/01/08 9,876,856
2,525 Philadelphia, PA Gas Wks Rev Ser 14 Rfdg
(FSA Insd)................................ 6.375 07/01/26 2,583,757
1,370 Philadelphia, PA Hosps & Higher Ed Fac
Auth Rev Cmnty College Ser B Rfdg (MBIA
Insd)..................................... 6.500 05/01/08 1,480,326
3,310 Pittsburgh, PA Ser A (AMBAC Insd)......... 5.500 09/01/14 3,304,870
2,235 Ridley Park, PA Hosp Auth Rev Taylor Hosp
Ser A..................................... 6.000 12/01/05 2,274,917
1,000 Southeastn PA Tran Auth PA Spl Rev Ser A
(FGIC Insd)............................... 4.750 03/01/24 831,980
------------
20,352,706
------------
RHODE ISLAND 0.2%
1,050 Rhode Island St Hlth & Edl Bldg Corp Rev
Higher Edl Fac Roger Williams (Prerefunded
@ 11/15/04) (Connie Lee Insd)............. 7.200 11/15/14 1,160,344
------------
TENNESSEE 1.1%
2,500 Johnson City, TN Hlth & Edl Facs Brd Hosp
Rev 1st Mtg Ser A Rfdg.................... 7.500 07/01/25 2,414,775
14,175 Johnson City, TN Hlth & Edl Facs Brd Hosp
Rev Cap Apprec 1st Mtg Ser A Rfdg (MBIA
Insd)..................................... * 07/01/26 2,752,927
820 Tennessee Hsg Dev Agy Mtg Fin Ser A....... 7.125 07/01/26 840,172
------------
6,007,874
------------
TEXAS 7.2%
9,065 Alliance Arpt Auth Inc TX Spl Fac Rev
American Airls Inc Proj................... 7.500 12/01/29 9,242,674
3,000 Brazos River Auth TX Rev Houston Inds Inc
Proj Ser D Rfdg (MBIA Insd)............... 4.900 10/01/15 2,681,670
7,170 Dallas, TX Rev Spl Tax Ser A (AMBAC
Insd)..................................... 4.750 08/15/27 5,889,510
2,500 Dallas Cnty, TX Util & Reclamation Dist
Ser B Rfdg (AMBAC Insd)................... 5.875 02/15/29 2,458,825
2,250 Harris Cnty, TX Hlth Fac Dev Corp Hosp Rev
Hermann Hosp Proj (Prerefunded @ 10/01/04)
(MBIA Insd)............................... 6.375 10/01/24 2,386,665
</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>
TEXAS (CONTINUED)
$1,275 Matagorda Cnty, TX Navig Dist No 1 Rev
Houston Lt & Pwr Ser A Rfdg (AMBAC
Insd)..................................... 6.700% 03/01/27 $ 1,330,462
5,000 Matagorda Cnty, TX Navig Dist No 1 Rev
Houston Lt Rfdg (AMBAC Insd).............. 5.125 11/01/28 4,354,600
6,285 Round Rock, TX Indpt Sch Dist (PSF Gtd)... 4.500 08/01/20 5,184,371
4,500 Tarrant Cnty, TX Hlth Fac Dev TX Hlth Res
Sys Ser A (MBIA Insd)..................... 5.000 02/15/26 3,801,240
2,250 Tomball, TX Hosp Auth Rev Rfdg............ 6.125 07/01/23 1,932,907
------------
39,262,924
------------
UTAH 0.3%
4,950 Intermountain Pwr Agy UT Pwr Supply Rev
Ser A Rfdg (FGIC Insd).................... * 07/01/17 1,808,284
------------
VIRGINIA 1.9%
1,125 Fredericksburg, VA Indl Dev Auth Hosp Facs
Rev (Inverse fltg) (FGIC Insd)............ 8.657 08/15/23 1,223,437
3,000 Isle Wight Cnty, VA Indl Dev Auth Solid
Waste Disp Fac Rev Union Camp Corp Proj... 6.550 04/01/24 3,002,700
2,000 Loudoun Cnty, VA Ctfs Partn (FSA Insd).... 6.900 03/01/19 2,134,160
3,000 Upper Occoquan Sewage Auth VA Regl Sewage
Rev Ser A (MBIA Insd)..................... 4.750 07/01/29 2,459,610
1,500 Virginia St Hsg Dev Auth Multi-Family
Ser E Rfdg................................ 5.900 11/01/17 1,499,985
------------
10,319,892
------------
WASHINGTON 4.1%
5,000 King Cnty, WA Ser B....................... 5.900 12/01/14 5,124,400
2,500 King Cnty, WA Ser B....................... 6.625 12/01/15 2,724,325
4,000 Washington St Pub Pwr Supply Ser A Rfdg
(FGIC Insd)............................... 7.000 07/01/08 4,413,920
10,000 Washington St Pub Pwr Supply Sys Nuclear
Proj No 1 Rev (AMBAC Insd)................ 5.700 07/01/09 10,205,200
------------
22,467,845
------------
</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>
WEST VIRGINIA 2.5%
$5,920 Harrison Cnty, WV Cnty Cmnty Solid Waste
Disp Rev West PA Pwr Co Ser C (AMBAC
Insd)..................................... 6.750% 08/01/24 $ 6,294,322
4,000 Marshall Cnty, WV Pollutn Ctl Rev OH Pwr
Co Proj Ser C Rfdg (MBIA Insd)............ 6.850 06/01/22 4,199,600
3,000 West Virginia St Wtr Dev Auth Wtr Dev Rev
Ln Pgm II Ser A (Prerefunded @ 11/01/04)
(FSA Insd)................................ 6.750 11/01/33 3,259,500
------------
13,753,422
------------
WISCONSIN 1.1%
2,000 Wisconsin St Hlth & Edl Fac Auth Rev (FGIC
Insd)..................................... 5.000 08/15/10 1,907,640
2,675 Wisconsin St Hlth & Edl Fac Auth Rev FH
Hlthcare Dev Inc Proj..................... 6.250 11/15/28 2,296,006
2,090 Wisconsin St Hlth & Edl Facs Auth Rev
Kenosha Hosp & Med Cent Proj.............. 5.625 05/15/29 1,772,445
------------
5,976,091
------------
PUERTO RICO 3.3%
7,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy
Rev Ser Y (FSA Insd)...................... 6.250 07/01/21 7,536,830
10,000 Puerto Rico Pub Bldgs Auth Gtd Pub Edl &
Hlth Fac Rfdg Ser M (MBIA Insd)........... 5.600 07/01/08 10,394,400
------------
17,931,230
------------
TOTAL INVESTMENTS 97.5%
(Cost $526,103,355)................................................... 534,233,283
OTHER ASSETS IN EXCESS OF LIABILITIES 2.5%............................. 13,836,412
------------
NET ASSETS 100.0%...................................................... $548,069,695
============
</TABLE>
See Notes to Financial Statements
21
<PAGE> 23
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
* Zero coupon bond
(a) Issuer has filed for protection in federal bankruptcy court.
(b) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined rate.
AMBAC--AMBAC Indemnity Corporation
Connie Lee--Connie Lee Insurance Company
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Administration
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
LOC--Letter of Credit
PSF--Public School Funding
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 $526,103,355)....................... $534,233,283
Receivables:
Interest.................................................. 9,735,427
Investments Sold.......................................... 6,199,365
Other....................................................... 21,232
------------
Total Assets............................................ 550,189,307
------------
LIABILITIES:
Payables:
Custodian Bank............................................ 1,212,175
Investment Advisory Fee................................... 294,859
Income Distributions -- Common and Preferred Shares....... 215,650
Administrative Fee........................................ 90,696
Affiliates................................................ 18,941
Accrued Expenses............................................ 166,274
Trustees' Deferred Compensation and Retirement Plans........ 121,017
------------
Total Liabilities....................................... 2,119,612
------------
NET ASSETS.................................................. $548,069,695
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 9,000 issued with liquidation preference of
$25,000 per share)........................................ $225,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 23,555,115 shares issued and
outstanding).............................................. 235,551
Paid in Surplus............................................. 348,118,080
Net Unrealized Appreciation................................. 8,129,928
Accumulated Undistributed Net Investment Income............. 1,832,179
Accumulated Net Realized Loss............................... (35,246,043)
------------
Net Assets Applicable to Common Shares.................. 323,069,695
------------
NET ASSETS.................................................. $548,069,695
============
NET ASSET VALUE PER COMMON SHARE ($323,069,695 divided
by 23,555,115 shares outstanding)......................... $ 13.72
============
</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.................................................... $16,279,286
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,772,827
Administrative Fee.......................................... 545,486
Preferred Share Maintenance................................. 313,522
Custody..................................................... 15,305
Legal....................................................... 11,980
Trustees' Fees and Related Expenses......................... 9,545
Other....................................................... 161,585
-----------
Total Expenses.......................................... 2,830,250
-----------
NET INVESTMENT INCOME....................................... $13,449,036
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... (186,328)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 9,607,307
End of the Period:
Investments............................................. 8,129,928
-----------
Net Unrealized Depreciation During the Period............... (1,477,379)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(1,663,707)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $11,785,329
===========
</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.............................. $ 13,449,036 $ 26,790,518
Net Realized Loss.................................. (186,328) (2,201,262)
Net Unrealized Depreciation During the Period...... (1,477,379) (41,605,009)
------------ ------------
Change in Net Assets from Operations............... 11,785,329 (17,015,753)
------------ ------------
Distributions from Net Investment Income:
Common Shares.................................... (9,539,822) (19,079,222)
Preferred Shares................................. (4,282,977) (7,302,425)
------------ ------------
Total Distributions................................ (13,822,799) (26,381,647)
------------ ------------
NET CHANGE IN NET ASSETS FROM
INVESTMENT ACTIVITIES............................ (2,037,470) (43,397,400)
------------ ------------
NET ASSETS:
Beginning of the Period............................ 550,107,165 593,504,565
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $1,832,179
and $2,205,942, respectively).................... $548,069,695 $550,107,165
============ ============
</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 ------------------------------
APR. 30, 2000 1999 1998 1997
----------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD (A)............................. $ 13.802 $ 15.644 $ 15.139 $ 14.496
-------- -------- -------- --------
Net Investment Income.................. .571 1.137 1.142 1.163
Net Realized and Unrealized
Gain/Loss............................ (.071) (1.859) .512 .631
-------- -------- -------- --------
Total from Investment Operations......... .500 (.722) 1.654 1.794
-------- -------- -------- --------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders.......... .405 .810 .810 .810
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders....................... .182 .310 .339 .341
Distributions from Net Realized Gain on
Investments:
Paid to Common Shareholders.......... -0- -0- -0- -0-
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders....................... -0- -0- -0- -0-
-------- -------- -------- --------
Total Distributions...................... .587 1.120 1.149 1.151
-------- -------- -------- --------
NET ASSET VALUE, END OF THE PERIOD....... $ 13.715 $ 13.802 $ 15.644 $ 15.139
======== ======== ======== ========
Market Price Per Share at End of the
Period................................. $11.4375 $12.0625 $14.7500 $13.5625
Total Investment Return at Market Price
(b).................................... -1.92%* -13.29% 15.10% 16.61%
Total Return at Net Asset Value (c)...... 2.40%* -6.88% 8.86% 10.30%
Net Assets at End of the Period (In
millions).............................. $ 548.1 $ 550.1 $ 593.5 $ 581.6
Ratio of Expenses to Average Net Assets
Applicable to Common Shares**.......... 1.76% 1.67% 1.67% 1.70%
Ratio of Net Investment Income to Average
Net Assets Applicable to Common Shares
(d).................................... 5.69% 5.50% 5.21% 5.61%
Portfolio Turnover....................... 18%* 35% 24% 32%
* Non-Annualized
** Ratio of Expenses to Average Net
Assets Including Preferred Shares..... 1.04% 1.02% 1.03% 1.03%
</TABLE>
(a) Net Asset Value at March 26, 1993, is adjusted for common and preferred
share offering costs of $.211 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.
26
<PAGE> 28
<TABLE>
<CAPTION>
MARCH 26, 1993
(COMMENCEMENT
Year Ended October 31 OF INVESTMENT
-------------------------------- OPERATIONS) TO
1996 1995 1994 OCTOBER 31, 1993
---------------------------------------------------
<S> <C> <C> <C> <C>
$14.366 $12.901 $16.427 $14.789
------- ------- ------- -------
1.168 1.183 1.177 .639
.131 1.571 (3.340) 1.487
------- ------- ------- -------
1.299 2.754 (2.163) 2.126
------- ------- ------- -------
.829 .912 .912 .380
.340 .377 .238 .108
-0- -0- .177 -0-
-0- -0- .036 -0-
------- ------- ------- -------
1.169 1.289 1.363 .488
------- ------- ------- -------
$14.496 $14.366 $12.901 $16.427
======= ======= ======= =======
$12.375 $12.750 $10.750 $15.250
3.70% 27.67% -23.52% 4.25%*
6.87% 19.04% -15.48% 12.14%*
$ 566.5 $ 563.4 $ 528.9 $ 611.9
1.77% 1.80% 1.70% 1.46%
5.78% 5.90% 6.39% 5.59%
42% 50% 79% 66%*
1.06% 1.06% 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 Value 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. The Trust will invest in a portfolio consisting
substantially of municipal obligations rated investment grade at the time of
investment. The Trust commenced investment operations on March 26, 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.
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 carry
forward for tax purposes of $35,059,715 which will expire between October 31,
2002 and October 31, 2007.
At April 30, 2000, for federal income tax purposes, cost of long-term
investments is $526,103,355; the aggregate gross unrealized appreciation is
$15,818,366 and the aggregate gross unrealized depreciation is $7,688,438,
resulting in net unrealized appreciation on long-term investments of $8,129,928.
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
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 $6,000 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 $18,900 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 $95,112,800 and $102,134,872,
respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio and to manage the portfolio's effective yield, maturity and duration.
All of the Trust's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in the unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly, except for exercised option contracts where the
recognition of gain or loss is postponed until the disposal of the security
underlying the option contract.
Summarized below are the specific types of derivative financial instruments
used by the Trust.
A. OPTION CONTRACTS An option contract gives the buyer the right, but not the
obligation to buy (call) or sell (put) an underlying item at a fixed exercise
price during a specified period. These contracts are generally used by the Trust
to manage the portfolio's effective maturity and duration.
There were no transactions in option contracts during the six months ended
April 30, 2000.
B. FUTURES CONTRACTS A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in futures on U.S. Treasury Bonds and the Municipal Bond
Index
30
<PAGE> 32
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
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).
There were no transactions in futures contracts during the six months ended
April 30, 2000.
C. EMBEDDED CAPS These securities, which would be identified in the portfolio of
investments, include 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 price of these securities may be more
volatile than the price of a comparable fixed rate security. 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 9,000 Auction Preferred Shares ("APS") in five series.
Series A, B, C and D each contain 2,000 shares and Series E contains 1,000
shares. Dividends are cumulative and the dividend rate is periodically reset
through an auction process. The dividend period for Series A is generally seven
days. However, effective with the auction on August 5, 1999, the dividend period
for Series A was extended through April 13, 2000. Following this extended
dividend period, Series A will revert back to its normal seven day reset period.
The dividend period for Series B, C and D is 28 days and for Series E is 7 days.
The average rate in effect on April 30, 2000 was 3.993%. During the six months
ended April 30, 2000, the rates ranged from 3.300% to 6.000%.
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 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.
33
