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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANIES
Investment Company Act file number 811-07088
Invesco Van Kampen Massachusetts Value Municipal Income Trust
(Exact name of registrant as specified in charter)
1555 Peachtree Street, N.E., Atlanta, Georgia 30309
(Address of principal executive offices) (Zip code)
Colin Meadows 1555 Peachtree Street, N.E., Atlanta, Georgia 30309
(Name and address of agent for service)
Registrant’s telephone number, including area code: (713) 626-1919
Date of
fiscal year end: 2/28
Date of
reporting period: 8/31/12
Item 1. Reports to Stockholders.
Invesco Van Kampen Massachusetts Value
Municipal Income Trust
Municipal Income Trust
Semiannual
Report to Shareholders
n August 31, 2012
NYSE: VMV
NYSE: VMV
2 |
Trust Performance | |
2 |
Trust Updates | |
3 |
Dividend Reinvestment Plan | |
4 |
Schedule of Investments | |
7 |
Financial Statements | |
10 |
Notes to Financial Statements | |
16 |
Financial Highlights | |
18 |
Approval of Investment Advisory and Sub-Advisory Agreements | |
20 |
Results of Proxy | |
Unless otherwise noted, all data provided by Invesco.
| NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | ||
Trust Performance
Performance summary
Cumulative total returns, 2/29/12 to 8/31/12
Trust at NAV |
4.14 | % | ||
Trust at Market Value |
6.70 | |||
Barclays Massachusetts Municipal Index▼ |
2.40 | |||
Market Price
Premium to NAV as of 8/31/12 |
1.24 | |||
| Source(s): ▼Barclays via FactSet Research Systems Inc. | ||
The performance data quoted represent past performance and cannot guarantee comparable future
results; current performance may be lower or higher. Investment return, net asset value and common
share market price will fluctuate so that you may have a gain or loss when you sell shares. Please
visit invesco.com/us for the most recent month-end performance. Performance figures reflect Trust
expenses, the reinvestment of distributions (if any) and changes in net asset value (NAV) for
performance based on NAV and changes in market price for performance based on market price.
Since the Trust is a closed-end management investment company, shares of the Trust may trade at a discount or premium from the NAV. This characteristic is separate and distinct from the risk that
NAV could decrease as a result of investment activities and may be a greater risk to investors
expecting to sell their shares after a short time. The Trust cannot predict whether shares will
trade at, above or below NAV. The Trust should not be viewed as a vehicle for trading purposes. It
is designed primarily for risk-tolerant long-term investors.
The Barclays Massachusetts Municipal Index is an unmanaged index considered representative
of Massachusetts investment-grade municipal bonds.
The Trust is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Trust may deviate significantly from the performance of the index(es).
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges.
The Trust is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Trust may deviate significantly from the performance of the index(es).
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges.
Trust Updates
Preferred Shares
On May 17, 2012, the Trust successfully priced and placed a private offering of Variable Rate
Muni Term Preferred Shares (“VMTP”) in the amount of $14,900,000 pursuant to an offering exempt
from registration under the Securities Act of 1933. VMTP is a variable rate form of preferred stock
with a mandatory redemption date. The proceeds of the VMTP were used to redeem all of the Trust’s
outstanding auction rate preferred shares (“ARPS”) at their liquidation preference (sometimes
referred to as “at par”), together with accrued and unpaid dividends, if any, to the redemption
date. As of May 24, 2012, all of the Trust’s ARPS were redeemed in full.
Mergers and Redomestication
At a shareholder meeting held on September 25, 2012, shareholders approved the merger of each
of the Trust, Invesco Van Kampen Ohio Quality Municipal Trust and Invesco Van Kampen Trust for
Investment Grade New Jersey Municipals (the “Target Funds”) into Invesco Van Kampen Municipal Trust
(the “Acquiring Fund”). Shareholders also approved the redomestication of the Trust to a Delaware
statutory trust. The redomestication and mergers were completed on October 15, 2012, and common
shares of the Target Funds were converted into newly issued common shares of the Acquiring Fund.
VMTP shares of the Target Funds were converted into newly issued VMTP shares of the Acquiring Fund.
| NYSE Symbol | VMV | |
| 2 | Invesco Van Kampen Massachusetts Value Municipal Income Trust |
Dividend Reinvestment Plan
The dividend reinvestment plan (the Plan) offers you a prompt and simple way to reinvest your dividends and capital gains
distributions (Distributions) into additional shares of your Trust. Under the Plan, the money you earn from Distributions will be
reinvested automatically in more shares of your Trust, allowing you to potentially increase your investment over time.
Plan benefits
| n | Add to your account: You may increase the amount of shares in your Trust easily and automatically with the Plan. |
|
| n | Low transaction costs: Shareholders who participate in the Plan are able to buy shares at below-market prices when the Trust is trading at a premium to its net asset value (NAV). In addition, transaction costs are low because when new shares are issued by a Trust, there is no fee, and when shares are bought in blocks on the open market, the per share fee is shared among all Participants. |
| n | Convenience: You will receive a detailed account statement from Computershare Trust Company, N.A. (the Agent) which administers the Plan. The statement shows your total Distributions, date of investment, shares acquired, and price per share, as well as the total number of shares in your reinvestment account. You can also access your account via the Internet. To do this, please go to invesco.com/us. |
|
| n | Safekeeping: The Agent will hold the shares it has acquired for you in safekeeping. |
How to participate in the Plan
If you own shares in your own name, you can
participate directly in the Plan. If your shares
are held in “street name” – in the name of
your brokerage firm, bank, or other financial
institution – you must instruct that entity to
participate on your behalf. If they are unable
to participate on your behalf, you may request
that they reregister your shares in your own
name so that you may enroll in the Plan.
How to enroll
To enroll in the Plan, please read the Terms
and Conditions in the Plan Brochure. You can
enroll in the Plan by visiting invesco.com/us,
calling toll-free 800 341 2929 or notifying
us in writing at Invesco Closed-End Funds,
Computershare Trust Company, N.A.,
P.O. Box 43078, Providence, RI 02940-3078.
Please include your Trust name and account
number and ensure that all shareholders
listed on the account sign these written
instructions. Your participation in the Plan will
begin with the next Distribution payable after
the Agent receives your authorization, as long
as they receive it before the “record date,”
which is generally 10 business days before
such Distributions are paid. If your authorization
arrives after such record date, your
participation in the Plan will begin with the
following Distributions.
How the Plan works
If you choose to participate in the Plan, your
Distributions will be promptly reinvested for
you, automatically increasing your reinvestment
shares. If the Trust is trading at a share
price that is equal to its NAV, you’ll pay that
amount for your reinvested shares. However,
if the Trust is trading above or below NAV, the
price is determined by one of two ways:
| 1. | Premium: If the Trust is trading at a premium – a market price that is higher than its NAV – you’ll pay either the NAV or 95 percent of the market price, whichever is greater. When the Trust trades at a premium, you’ll pay less for your reinvested shares than an investor purchasing shares on the stock exchange. Keep in mind, a portion of your price reduction may be taxable because you are receiving shares at less than market price. | ||
| 2. | Discount: If the Trust is trading at a discount – a market price that is lower than NAV – you’ll pay the market price for your reinvested shares. |
Costs of the Plan
There is no direct charge to you for reinvesting
Distributions because the Plan’s fees are
paid by your Trust. If your Trust is trading at or
above its NAV, your new shares are issued
directly by the Trust and there are no
brokerage charges or fees. However, if your
Trust is trading at a discount, the shares are
purchased on the open market, and you will
pay your portion of per share fees. These per
share fees are typically less than the standard
brokerage charges for individual transactions
because shares are purchased for all Participants
in blocks, resulting in lower fees for
each individual Participant. Any service or
per share fees are added to the purchase
price. Per share fees include any applicable
brokerage commissions the Agent is required
to pay.
Tax implications
The automatic reinvestment of Distributions
does not relieve you of any income tax that
may be due on Distributions. You will receive
tax information annually to help you prepare
your federal income tax return.
Invesco does not offer tax advice. The tax
information contained herein is general and is
not exhaustive by nature. It was not intended or
written to be used, and it cannot be used, by any
taxpayer for avoiding penalties that may be
imposed on the taxpayer under U.S. federal tax
laws. Federal and state tax laws are complex and
constantly changing. Shareholders should
always consult a legal or tax adviser for
information concerning their individual situation.
How to withdraw from the Plan
You may withdraw from the Plan at any
time by calling 800 341 2929, visiting
invesco.com/us or by writing to Invesco
Closed-End Funds, Computershare Trust
Company, N.A., P.O. Box 43078, Providence,
RI 02940-3078. Simply indicate that you
would like to withdraw from the Plan, and be
sure to include your Trust name and account
number. Also, ensure that all shareholders
listed on the account have signed these
written instructions. If you withdraw, you have
three options with regard to the shares held in
the Plan:
| 1. | If you opt to continue to hold your non-certificated whole shares (Investment Plan Book Shares), they will be held by the Agent electronically as Direct Registration Book-Shares (Book-Entry Shares) and fractional shares will be sold at the then-current market price. Proceeds will be sent via check to your address of record after deducting applicable fees. | ||
| 2. | If you opt to sell your shares through the Agent, we will sell all full and fractional shares and send the proceeds via check to your address of record after deducting a $2.50 service fee and applicable per share fees. Per share fees include any applicable brokerage commissions the Agent is required to pay. | ||
| 3. | You may sell your shares through your financial adviser through the Direct Registration System (DRS). DRS is a service within the securities industry that allows Trust shares to be held in your name in electronic format. You retain full ownership of your shares, without having to hold a share certificate. You should contact your financial adviser to learn more about any restrictions or fees that may apply. |
To obtain a complete copy of the Dividend
Reinvestment Plan, please call our Client
Services department at 800 341 2929 or
visit invesco.com/us.
| 3 | Invesco Van Kampen Massachusetts Value Municipal Income Trust |
Schedule
of Investments
August 31,
2012
(Unaudited)
|
Principal |
||||||||||||||||
|
Interest |
Maturity |
Amount |
||||||||||||||
| Rate | Date | (000) | Value | |||||||||||||
|
Municipal Obligations–162.32% |
||||||||||||||||
|
Massachusetts–140.37% |
||||||||||||||||
|
Berkshire Wind Power Cooperative Corp.; Series 2010 1, RB
|
5.25 | % | 07/01/30 | $ | 350 | $ | 382,550 | |||||||||
|
Boston (City of) Water & Sewer Commission;
Series 2009 A, Ref. General RB
|
5.00 | % | 11/01/26 | 1,000 | 1,184,080 | |||||||||||
|
Holyoke (City of) Gas & Electric Department;
Series 2001 A, RB(a)(b)
|
5.00 | % | 12/01/12 | 1,000 | 1,011,850 | |||||||||||
|
Massachusetts (State of) Bay Transportation Authority;
|
||||||||||||||||
|
Series 2006 B, Sr. Sales Tax RB
|
5.25 | % | 07/01/21 | 1,000 | 1,287,170 | |||||||||||
|
Series 2007
A-2,
Sr. Sales Tax
CAB RB(c)
|
0.00 | % | 07/01/21 | 715 | 540,783 | |||||||||||
|
Massachusetts (State of) Department of Transportation (Contract
Assistance); Series 2010 B, Metropolitan Highway
Systems RB
|
5.00 | % | 01/01/35 | 2,010 | 2,269,250 | |||||||||||
|
Massachusetts (State of) Department of Transportation;
|
||||||||||||||||
|
Series 1993 A,
Turnpike RB(b)
|
5.00 | % | 01/01/13 | 350 | 355,649 | |||||||||||
|
Series 1997 C, Sr. Turnpike Metropolitan Highway
System CAB RB
(INS–NATL)(c)(d)
|
0.00 | % | 01/01/22 | 1,550 | 1,166,902 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (American
Hingham); Series 1995, Water
Treatment RB(e)
|
6.90 | % | 12/01/29 | 930 | 931,135 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Berklee
College of Music); Series 2007 A, RB
|
5.00 | % | 10/01/32 | 350 | 382,161 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Berkshire
Health System); Series 2012 G, RB
|
5.00 | % | 10/01/31 | 500 | 556,885 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Boston
College);
|
||||||||||||||||
|
Series 2008, RB
|
5.50 | % | 06/01/26 | 400 | 533,532 | |||||||||||
|
Series 2010 R-1, RB
|
5.00 | % | 07/01/31 | 350 | 408,768 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Broad
Institute); Series 2011 A, RB
|
5.25 | % | 04/01/37 | 500 | 565,760 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Cape Cod
Healthcare Obligation); Series 2004, RB
(INS–AGC)(d)
|
5.13 | % | 11/15/35 | 500 | 546,495 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Caregroup);
Series 1998 B-2, RB
(INS–NATL)(d)
|
5.38 | % | 02/01/28 | 500 | 560,615 | |||||||||||
|
Massachusetts (State of) Development Finance Agency
(Carleton-Willard Village); Series 2010, RB
|
5.63 | % | 12/01/30 | 700 | 765,632 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (CLG
Pharmacy & Allied Health); Series 2005 D, RB
(INS–AGC)(d)
|
5.00 | % | 07/01/35 | 500 | 522,170 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Emerson
College); Series 2010 A, RB
|
5.00 | % | 01/01/40 | 250 | 261,935 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Evergreen
Center Inc.);
|
||||||||||||||||
|
Series 2005, RB
|
5.00 | % | 01/01/24 | 250 | 251,403 | |||||||||||
|
Series 2005, RB
|
5.50 | % | 01/01/35 | 450 | 452,700 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Hampshire
College); Series 2004, RB
|
5.70 | % | 10/01/34 | 1,000 | 1,030,590 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Harvard
University);
Series 2008 B, RB(f)
|
5.00 | % | 10/01/38 | 3,500 | 4,093,075 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Hillcrest
Extended Care Services); Series 2001 A, VRD RB
(LOC–Bank of
America, N.A.)(g)(h)
|
0.22 | % | 10/01/26 | 465 | 465,000 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Lesley
University); Series 2011 B-1, RB
(INS–AGM)(d)
|
5.25 | % | 07/01/33 | 300 | 345,114 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Linden
Ponds, Inc. Facility);
|
||||||||||||||||
|
Series 2011
A-1, RB
|
6.25 | % | 11/15/46 | 213 | 158,941 | |||||||||||
|
Series 2011
A-2, RB
|
5.50 | % | 11/15/46 | 11 | 7,229 | |||||||||||
|
Series 2011 B, RB(c)
|
0.00 | % | 11/15/56 | 56 | 293 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Lowell
General Hospital); Series 2010 C, RB
|
5.13 | % | 07/01/35 | 500 | 518,900 | |||||||||||
|
Massachusetts (State of) Development Finance Agency
(Massachusetts Eye & Ear Infirmary);
Series 2010 C, RB
|
5.38 | % | 07/01/35 | 500 | 537,980 | |||||||||||
|
Massachusetts (State of) Development Finance Agency
(Massachusetts Institute of Technology);
|
||||||||||||||||
|
Series 2002 K, RB(f)
|
5.50 | % | 07/01/32 | 2,500 | 3,591,100 | |||||||||||
|
Series 2008 A, RB
|
5.00 | % | 07/01/38 | 750 | 871,545 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Merrimack
College); Series 2012 A, RB
|
5.25 | % | 07/01/42 | 500 | 540,235 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Mount
Holyoke College); Series 2011 B, RB
|
5.00 | % | 07/01/41 | 500 | 560,375 | |||||||||||
|
Massachusetts (State of) Development Finance Agency
(Northeastern University); Series 2009 Y-2, Ref. RB
|
5.50 | % | 10/01/24 | 750 | 898,177 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Partners
Healthcare System); Series 2007 G, RB
|
5.00 | % | 07/01/47 | 600 | 639,258 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Sabis
International Charter School); Series 2009 A, RB
|
8.00 | % | 04/15/39 | 250 | 309,677 | |||||||||||
See accompanying Notes to Financial Statements which are an
integral part of the financial statements.
4 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
|
Principal |
||||||||||||||||
|
Interest |
Maturity |
Amount |
||||||||||||||
| Rate | Date | (000) | Value | |||||||||||||
|
Massachusetts–(continued) |
||||||||||||||||
|
Massachusetts (State of) Development Finance Agency (Springfield
College); Series 2010, RB
|
5.63 | % | 10/15/40 | $ | 500 | $ | 541,045 | |||||||||
|
Massachusetts (State of) Development Finance Agency (SRBC);
Series 2002 A, RB
(INS–NATL)(d)
|
5.13 | % | 08/01/28 | 1,000 | 1,000,880 | |||||||||||
|
Massachusetts (State of) Development Finance Agency
(Sterling & Francine Clark Art); Series 2010, RB
|
5.00 | % | 07/01/40 | 500 | 564,675 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Suffolk
University); Series 2010, RB
|
5.13 | % | 07/01/40 | 500 | 541,850 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (The Groves
in Lincoln); Series 2009 B-1,
TEMPS-85SM
Senior Living Facility RB
|
7.25 | % | 06/01/16 | 250 | 157,542 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Tufts
Medical Center); Series 2011 I, RB
|
6.75 | % | 01/01/36 | 500 | 609,475 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (UMass
Memorial); Series 2011 H, RB
|
5.50 | % | 07/01/31 | 500 | 568,270 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Wellesley
College); Series 2012 J, RB
|
5.00 | % | 07/01/42 | 150 | 175,029 | |||||||||||
|
Massachusetts (State of) Development Finance Agency (Winchester
Hospital); Series 2010, RB
|
5.25 | % | 07/01/38 | 700 | 755,622 | |||||||||||
|
Massachusetts (State of) Educational Financing Authority;
Series 2011 J, RB(e)
|
5.63 | % | 07/01/28 | 350 | 379,610 | |||||||||||
|
Massachusetts (State of) Port Authority (Conrac);
Series 2011 A, RB
|
5.13 | % | 07/01/41 | 250 | 278,917 | |||||||||||
|
Massachusetts (State of) Port Authority;
Series 2010 A, RB
|
5.00 | % | 07/01/40 | 300 | 336,369 | |||||||||||
|
Massachusetts (State of) School Building Authority;
Series 2005 A, Dedicated Sales Tax RB
(INS–AGM)(d)(f)
|
5.00 | % | 08/15/30 | 3,500 | 3,868,375 | |||||||||||
|
Massachusetts (State of) Water Pollution Abatement Trust (MWRA
Program); Series 2002, RB
|
5.00 | % | 08/01/32 | 50 | 50,170 | |||||||||||
|
Massachusetts (State of) Water Resources Authority;
|
||||||||||||||||
|
Series 2007 B, Ref. General RB
(INS–AGM)(d)
|
5.25 | % | 08/01/31 | 500 | 662,775 | |||||||||||
|
Series 2011 B, General RB
|
5.00 | % | 08/01/28 | 200 | 241,246 | |||||||||||
|
Series 2011 C, Ref.
General RB(f)
|
5.00 | % | 08/01/30 | 3,500 | 4,200,070 | |||||||||||
|
Massachusetts (State of);
|
||||||||||||||||
|
Series 2004 A, Ref. Limited Tax GO Bonds
(INS–AMBAC)(d)
|
5.50 | % | 08/01/30 | 1,500 | 2,076,540 | |||||||||||
|
Series 2004 C, Ref. Unlimited Tax GO Bonds
(INS–NATL)(d)
|
5.50 | % | 12/01/17 | 455 | 564,382 | |||||||||||
|
Series 2005, Ref. Special Obligation Dedicated Tax RB
(INS–NATL)(d)
|
5.50 | % | 01/01/23 | 1,000 | 1,252,510 | |||||||||||
|
Series 2006 A, VRD Unlimited Tax GO
Bonds(g)
|
0.18 | % | 03/01/26 | 1,500 | 1,500,000 | |||||||||||
|
Westford (Town of); Series 2003, Limited Tax GO Bonds
(INS–AMBAC)(d)
|
5.25 | % | 06/01/19 | 1,975 | 2,043,671 | |||||||||||
| 51,873,937 | ||||||||||||||||
|
Puerto Rico–10.19% |
||||||||||||||||
|
Puerto Rico (Commonwealth of) Aqueduct & Sewer
Authority; Series 2008 A, Sr. Lien RB
|
6.00 | % | 07/01/38 | 400 | 426,336 | |||||||||||
|
Puerto Rico (Commonwealth of) Electric Power Authority;
|
||||||||||||||||
|
Series 2010 CCC, RB
|
5.25 | % | 07/01/27 | 200 | 218,134 | |||||||||||
|
Series 2010 XX, RB
|
5.75 | % | 07/01/36 | 300 | 328,965 | |||||||||||
|
Series 2010 XX, RB
|
5.25 | % | 07/01/40 | 500 | 520,305 | |||||||||||
|
Puerto Rico (Commonwealth of) Infrastructure Financing
Authority; Series 2005 C, Ref. Special Tax RB
(INS–AMBAC)(d)
|
5.50 | % | 07/01/27 | 200 | 225,286 | |||||||||||
|
Puerto Rico Sales Tax Financing Corp.;
|
||||||||||||||||
|
First Subseries 2009 A, RB
|
5.75 | % | 08/01/37 | 300 | 334,989 | |||||||||||
|
First Subseries 2010 A,
CAB RB(c)
|
0.00 | % | 08/01/34 | 2,000 | 603,140 | |||||||||||
|
Series 2011 C, RB(f)
|
5.00 | % | 08/01/40 | 375 | 406,538 | |||||||||||
|
Series 2011 C, RB(f)
|
5.25 | % | 08/01/40 | 630 | 701,801 | |||||||||||
| 3,765,494 | ||||||||||||||||
|
Virgin Islands–8.88% |
||||||||||||||||
|
University of the Virgin Islands; Series 2004 A,
Improvement RB(a)(b)
|
5.38 | % | 12/01/14 | 1,000 | 1,108,980 | |||||||||||
|
Virgin Islands (Government of) Public Finance Authority (Gross
Receipts Taxes Loan Note); Series 1999 A, RB
|
6.38 | % | 10/01/19 | 915 | 918,075 | |||||||||||
|
Virgin Islands (Government of) Public Finance Authority
(Matching Fund Loan Note–Diageo);
Series 2009 A, Sub. RB
|
6.75 | % | 10/01/19 | 300 | 353,580 | |||||||||||
|
Virgin Islands (Government of) Public Finance Authority
(Matching Fund Loan Note);
|
||||||||||||||||
|
Series 2009 A, Sub. RB
|
6.00 | % | 10/01/39 | 320 | 353,414 | |||||||||||
|
Series 2010 A, Sr. Lien RB
|
5.00 | % | 10/01/29 | 500 | 546,320 | |||||||||||
| 3,280,369 | ||||||||||||||||
See accompanying Notes to Financial Statements which are an
integral part of the financial statements.
5 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
|
Principal |
||||||||||||||||
|
Interest |
Maturity |
Amount |
||||||||||||||
| Rate | Date | (000) | Value | |||||||||||||
|
Guam–2.88% |
||||||||||||||||
|
Guam (Territory of) (Section 30); Series 2009 A,
Limited Obligation RB
|
5.38 | % | 12/01/24 | $ | 350 | $ | 388,724 | |||||||||
|
Guam (Territory of) Power Authority; Series 2010 A, RB
|
5.50 | % | 10/01/40 | 135 | 141,310 | |||||||||||
|
Guam (Territory of) Waterworks Authority; Series 2010,
Water & Wastewater System RB
|
5.63 | % | 07/01/40 | 300 | 308,229 | |||||||||||
|
Guam (Territory of); Series 2011 A, Business Privilege
Tax RB
|
5.25 | % | 01/01/36 | 200 | 225,868 | |||||||||||
| 1,064,131 | ||||||||||||||||
|
TOTAL
INVESTMENTS(i)–162.32%
(Cost $54,603,619)
|
59,983,931 | |||||||||||||||
|
FLOATING RATE NOTE OBLIGATIONS–(23.72)%
|
||||||||||||||||
|
Notes with interest rates ranging from 0.20% to 0.24% at
08/31/12 and
contractual maturities of collateral ranging from
08/01/30 to
08/01/40
(See
Note 1J)(j)
|
(8,765,000 | ) | ||||||||||||||
|
VARIABLE RATE MUNI TERM PREFERRED SHARES–(40.32)%
|
(14,900,000 | ) | ||||||||||||||
|
OTHER ASSETS LESS LIABILITIES–1.72%
|
635,688 | |||||||||||||||
|
NET ASSETS APPLICABLE TO COMMON SHARES–100.00%
|
$ | 36,954,619 | ||||||||||||||
Investment Abbreviations:
|
AGC
|
– Assured Guaranty Corp. | |
|
AGM
|
– Assured Guaranty Municipal Corp. | |
|
AMBAC
|
– American Municipal Bond Assurance Corp. | |
|
CAB
|
– Capital Appreciation Bonds | |
|
GO
|
– General Obligation | |
|
INS
|
– Insurer | |
|
LOC
|
– Letter of Credit | |
|
NATL
|
– National Public Finance Guarantee Corp. | |
|
RB
|
– Revenue Bonds | |
|
Ref.
|
– Refunding | |
|
Sr.
|
– Senior | |
|
Sub.
|
– Subordinated | |
|
TEMPS
|
– Tax-Exempt Mandatory Paydown Securities | |
|
VRD
|
– Variable Rate Demand |
Notes to Schedule of Investments:
| (a) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. | |
| (b) | Advance refunded; secured by an escrow fund of U.S. Government obligations or other highly rated collateral. | |
| (c) | Zero coupon bond issued at a discount. | |
| (d) | Principal and/or interest payments are secured by the bond insurance company listed. | |
| (e) | Security subject to the alternative minimum tax. | |
| (f) | Underlying security related to Dealer Trusts entered into by the Trust. See Note 1J. | |
| (g) | Demand security payable upon demand by the Trust at specified time intervals no greater than thirteen months. Interest rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2012. | |
| (h) | Principal and interest payments are fully enhanced by a letter of credit from the bank listed or a predecessor bank, branch or subsidiary. | |
| (i) | This table provides a listing of those entities that have either issued, guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the securities held in the portfolio. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the issuer’s obligations but may be called upon to satisfy the issuer’s obligations. |
| Entities | Percentage | |||
|
Assured Guaranty Municipal Corp.
|
8.1 | % | ||
|
National Public Finance Guarantee Corp.
|
7.6 | |||
|
American Municipal Bond Assurance Corp.
|
7.2 | |||
| (j) | Floating rate note obligations related to securities held. The interest rates shown reflect the rates in effect at August 31, 2012. At August 31, 2012, the Trust’s investments with a value of $16,860,959 are held by Dealer Trusts and serve as collateral for the $8,765,000 in the floating rate note obligations outstanding at that date. |
By
credit sector, based on total investments
as
of August 31, 2012
|
Revenue Bonds
|
78.3 | % | ||
|
Pre-Refunded Bonds
|
10.6 | |||
|
General Obligations Bonds
|
7.8 | |||
|
Other
|
3.3 | |||
See accompanying Notes to Financial Statements which are an
integral part of the financial statements.
6 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
Statement
of Assets and Liabilities
August 31,
2012
(Unaudited)
|
Assets: |
||||
|
Investments, at value (Cost $54,603,619)
|
$ | 59,983,931 | ||
|
Receivable for:
|
||||
|
Interest
|
534,500 | |||
|
Deferred offering costs
|
133,504 | |||
|
Other assets
|
15,753 | |||
|
Total assets
|
60,667,688 | |||
|
Liabilities: |
||||
|
Floating rate note obligations
|
8,765,000 | |||
|
Variable rate muni term preferred shares, at liquidation value
($0.01 par value, 149 issued with liquidation preference of
$100,000 per share)
|
14,900,000 | |||
|
Payable for:
|
||||
|
Amount due custodian
|
9,143 | |||
|
Accrued other operating expenses
|
22,674 | |||
|
Accrued interest expense
|
16,252 | |||
|
Total liabilities
|
23,713,069 | |||
|
Net assets applicable to common shares
|
$ | 36,954,619 | ||
|
Net assets applicable to common shares consist of: |
||||
|
Shares of beneficial interest — common shares
|
$ | 37,682,126 | ||
|
Undistributed net investment income
|
15,314 | |||
|
Undistributed net realized gain (loss)
|
(6,123,133 | ) | ||
|
Unrealized appreciation
|
5,380,312 | |||
| $ | 36,954,619 | |||
|
Shares outstanding, $0.01 par value per common share, with an unlimited number of shares authorized: |
||||
|
Common shares outstanding
|
2,707,228 | |||
|
Net asset value per common share
|
$ | 13.65 | ||
|
Market value per common share
|
$ | 13.83 | ||
See accompanying Notes to Financial Statements which are an
integral part of the financial statements.
7 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
Statement
of Operations
For
the six months ended August 31, 2012
(Unaudited)
|
Investment income: |
||||
|
Interest
|
$ | 1,303,410 | ||
|
Expenses: |
||||
|
Advisory fees
|
166,278 | |||
|
Administrative services fees
|
25,205 | |||
|
Custodian fees
|
1,622 | |||
|
Interest, facilities and maintenance fees
|
124,067 | |||
|
Transfer agent fees
|
9,398 | |||
|
Trustees’ and officers’ fees and benefits
|
7,697 | |||
|
Other
|
43,417 | |||
|
Total expenses
|
377,684 | |||
|
Less: Fees waived
|
(3,506 | ) | ||
|
Net expenses
|
374,178 | |||
|
Net investment income
|
929,232 | |||
|
Realized and unrealized gain from: |
||||
|
Net realized gain from investment securities
|
129,948 | |||
|
Change in net unrealized appreciation of investment securities
|
404,349 | |||
|
Net realized and unrealized gain
|
534,297 | |||
|
Net increase in net assets resulting from operations
|
1,463,529 | |||
|
Distributions to preferred shareholders from net investment
income
|
(9,828 | ) | ||
|
Net increase in net assets from operations applicable to common
shares
|
$ | 1,453,701 | ||
See accompanying Notes to Financial Statements which are an
integral part of the financial statements.
8 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
Statement
of Changes in Net Assets
For
the six months ended August 31, 2012 and the year ended
February 29, 2012
(Unaudited)
|
August 31, |
February 29, |
|||||||
| 2012 | 2012 | |||||||
|
Operations: |
||||||||
|
Net investment income
|
$ | 929,232 | $ | 2,097,700 | ||||
|
Net realized gain (loss)
|
129,948 | (56,883 | ) | |||||
|
Change in net unrealized appreciation
|
404,349 | 6,032,262 | ||||||
|
Net increase in net assets resulting from operations
|
1,463,529 | 8,073,079 | ||||||
|
Distributions to preferred shareholders from net investment
income
|
(9,828 | ) | (42,847 | ) | ||||
|
Net increase in net assets from operations applicable to common
shares
|
1,453,701 | 8,030,232 | ||||||
|
Distributions to common shareholders from net investment income
|
(1,015,123 | ) | (2,171,651 | ) | ||||
|
Net increase in net assets applicable to common shares
|
438,578 | 5,858,581 | ||||||
|
Share transactions–net: |
||||||||
|
Increase from transactions in common shares of beneficial
interest
|
7,699 | 15,385 | ||||||
|
Net increase in net assets
|
446,277 | 5,873,966 | ||||||
|
Net assets applicable to common shares: |
||||||||
|
Beginning of period
|
36,508,342 | 30,634,376 | ||||||
|
End of period (includes undistributed net investment income of
$15,314 and $111,033, respectively)
|
$ | 36,954,619 | $ | 36,508,342 | ||||
See accompanying Notes to Financial Statements which are an
integral part of the financial statements.
9 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
Statement
of Cash Flows
For
the six months ended August 31, 2012
(Unaudited)
|
Cash provided by operating activities: |
||||
|
Net increase in net assets resulting from operations applicable
to common shares
|
$ | 1,453,701 | ||
|
Adjustments to reconcile the change in net assets applicable to common shares from operations to net cash provided by operating activities: |
||||
|
Purchases of investments
|
(2,297,134 | ) | ||
|
Proceeds from sales of investments
|
2,868,864 | |||
|
Amortization of premium
|
87,732 | |||
|
Accretion of discount
|
(57,745 | ) | ||
|
Increase in receivables and other assets
|
(105,091 | ) | ||
|
Decrease in accrued expenses and other payables
|
(55,483 | ) | ||
|
Net realized gain from investment securities
|
(129,948 | ) | ||
|
Net change in unrealized appreciation on investment securities
|
(404,349 | ) | ||
|
Net cash provided by operating activities
|
1,360,547 | |||
|
Cash provided by (used in) financing activities: |
||||
|
Dividends paid to common shareholders from net investment income
|
(1,009,339 | ) | ||
|
Decrease in payable for amount due custodian
|
(301,208 | ) | ||
|
Increase in VMTP shares, at liquidation value
|
14,900,000 | |||
|
Net proceeds from the redemption of preferred shares
|
(14,950,000 | ) | ||
|
Net cash provided by (used in) financing activities
|
(1,360,547 | ) | ||
|
Net increase (decrease) in cash and cash equivalents
|
— | |||
|
Cash and cash equivalents at beginning of period
|
— | |||
|
Cash and cash equivalents at end of period
|
— | |||
|
Supplemental disclosure of cash flow information: |
||||
|
Cash paid during the period for interest, facilities and
maintenance fees
|
$ | 174,948 | ||
Notes
to Financial Statements
August 31,
2012
(Unaudited)
NOTE 1—Significant
Accounting Policies
Invesco Van Kampen Massachusetts Value Municipal Income Trust
(the “Trust”) is registered under the Investment
Company Act of 1940, as amended (the “1940 Act”), as a
diversified, closed-end management investment company.
The Trust’s investment objective is to seek to
provide 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 following is a summary of the significant
accounting policies followed by the Trust in the preparation of
its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. | |
| Securities are fair valued using an evaluated quote provided by an independent pricing service approved by the Board of Trustees. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices and may reflect appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, individual trading characteristics and other market data. Securities with a demand feature exercisable within one to seven days are valued at par. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and principal payments. | ||
| Securities for which market quotations either are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on transferability or disposition; trading in similar securities by the same issuer or comparable companies; relevant political, economic or issuer specific news; and other relevant factors under the circumstances. |
10 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
| Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. | |
| The Trust may periodically participate in litigation related to Trust investments. As such, the Trust may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
| Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Trust’s net asset value and, accordingly, they reduce the Trust’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Trust and the investment adviser. | ||
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. | |
| D. | Distributions — The Trust declares and pays monthly dividends from net investment income to common shareholders. Distributions from net realized capital gain, if any, are generally paid annually and are distributed on a pro rata basis to common and preferred shareholders. The Trust may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
| E. | Federal Income Taxes — The Trust intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Trust’s taxable earnings to shareholders. As such, the Trust will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
| In addition, the Trust intends to invest in such municipal securities to allow it to qualify to pay shareholders “exempt dividends”, as defined in the Internal Revenue Code. | ||
| The Trust files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Trust is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
| F. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Trust monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
| G. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts, including the Trust’s servicing agreements, that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. | |
| H. | Cash and Cash Equivalents — For the purposes of the Statement of Cash Flows the Trust defines Cash and Cash Equivalents as cash (including foreign currency), money market funds and other investments held in lieu of cash and excludes investments made with cash collateral received. | |
| I. | Interest, Facilities and Maintenance Fees — Interest, Facilities and Maintenance Fees include interest and related borrowing costs such as commitment fees, rating and bank agent fees and other expenses associated with lines of credit and Variable Rate Muni Term Preferred Shares (“VMTP Shares”), and interest and administrative expenses related to establishing and maintaining Auction Rate Preferred Shares and floating rate note obligations, if any. | |
| J. | Floating Rate Note Obligations — The Trust invests in inverse floating rate securities, such as Residual Interest Bonds (“RIBs”) or Tender Option Bonds (“TOBs”) for investment purposes and to enhance the yield of the Trust. Inverse floating rate investments tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. Such transactions may be purchased in the secondary market without first owning the underlying bond or by the sale of fixed rate bonds by the Trust to special purpose trusts established by a broker dealer (“Dealer Trusts”) in exchange for cash and residual interests in the Dealer Trusts’ assets and cash flows, which are in the form of inverse floating rate securities. The Dealer Trusts finance the purchases of the fixed rate bonds by issuing floating rate notes to third parties and allowing the Trust to retain residual interests in the bonds. The floating rate notes issued by the Dealer Trusts have interest rates that reset weekly and the floating rate note holders have the option to tender their notes to the Dealer Trusts for redemption at par at each |
11 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
| reset date. The residual interests held by the Trust (inverse floating rate investments) include the right of the Trust (1) to cause the holders of the floating rate notes to tender their notes at par at the next interest rate reset date, and (2) to transfer the municipal bond from the Dealer Trusts to the Trust, thereby collapsing the Dealer Trusts. | ||
| TOBs are presently classified as private placement securities. Private placement securities are subject to restrictions on resale because they have not been registered under the Securities Act of 1933, as amended or are otherwise not readily marketable. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Trust or less than what may be considered the fair value of such securities. | ||
| The Trust accounts for the transfer of bonds to the Dealer Trusts as secured borrowings, with the securities transferred remaining in the Trust’s investment assets, and the related floating rate notes reflected as Trust liabilities under the caption Floating rate note obligations on the Statement of Assets and Liabilities. The Trust records the interest income from the fixed rate bonds under the caption Interest and records the expenses related to floating rate obligations and any administrative expenses of the Dealer Trusts as a component of Interest, facilities and maintenance fees on the Statement of Operations. | ||
| The Trust generally invests in inverse floating rate securities that include embedded leverage, thus exposing the Trust to greater risks and increased costs. The primary risks associated with inverse floating rate securities are varying degrees of liquidity and the changes in the value of such securities in response to changes in market rates of interest to a greater extent than the value of an equal principal amount of a fixed rate security having similar credit quality, redemption provisions and maturity which may cause the Trust’s net asset value to be more volatile than if it had not invested in inverse floating rate securities. In certain instances, the short-term floating rate interests created by the special purpose trust may not be able to be sold to third parties or, in the case of holders tendering (or putting) such interests for repayment of principal, may not be able to be remarketed to third parties. In such cases, the special purpose trust holding the long-term fixed rate bonds may be collapsed. In the case of RIBs or TOBs created by the contribution of long-term fixed income bonds by the Trust, the Trust will then be required to repay the principal amount of the tendered securities. During times of market volatility, illiquidity or uncertainty, the Trust could be required to sell other portfolio holdings at a disadvantageous time to raise cash to meet that obligation. | ||
| K. | Other Risks — The value of, payment of interest on, repayment of principal for and the ability to sell a municipal security may be affected by constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives and the economics of the regions in which the issuers are located. | |
| Since many municipal securities are issued to finance similar projects, especially those relating to education, health care, transportation and utilities, conditions in those sectors can affect the overall municipal securities market and a Trust’s investments in municipal securities. | ||
| There is some risk that a portion or all of the interest received from certain tax-free municipal securities could become taxable as a result of determinations by the Internal Revenue Service. |
NOTE 2—Advisory
Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory
agreement with Invesco Advisers, Inc. (the “Adviser”
or “Invesco”). Under the terms of the investment
advisory agreement, the Trust pays an advisory fee to the
Adviser based on the annual rate 0.55% of the Trust’s
average daily net assets including current preferred shares and
leverage entered into to retire preferred shares of the Trust.
Under the terms of a master
sub-advisory
agreement between the Adviser and each of Invesco Asset
Management Deutschland GmbH, Invesco Asset Management Limited,
Invesco Asset Management (Japan) Limited, Invesco Australia
Limited, Invesco Hong Kong Limited, Invesco Senior Secured
Management, Inc. and Invesco Canada Ltd. (collectively, the
“Affiliated
Sub-Advisers”)
the Adviser, not the Trust, may pay 40% of the fees paid to the
Adviser to any such Affiliated
Sub-Adviser(s)
that provide(s) discretionary investment management services to
the Trust based on the percentage of assets allocated to such
Sub-Adviser(s).
The Adviser had contractually agreed, through
June 30, 2012, to waive advisory fees
and/or
reimburse expenses to the extent necessary to limit the
Trust’s expenses (excluding certain items discussed below)
to 1.18%. In determining the Adviser’s obligation to waive
advisory fees
and/or
reimburse expenses, the following expenses are not taken into
account, and could cause the Trust’s expenses to exceed the
limit reflected above: (1) interest, facilities and
maintenance fees; (2) taxes; (3) dividend expense on
short sales; (4) extraordinary or non-routine items,
including litigation expenses; and (5) expenses that the
Trust has incurred but did not actually pay because of an
expense offset arrangement. The fee waiver agreement terminated
on June 30, 2012.
For the six months ended August 31, 2012, the
Adviser waived advisory fees of $3,506.
The Trust has entered into a master administrative
services agreement with Invesco pursuant to which the Trust has
agreed to pay Invesco for certain administrative costs incurred
in providing accounting services to the Trust. For the six
months ended August 31, 2012, expenses incurred under this
agreement are shown in the Statement of Operations as
Administrative services fees.
Certain officers and trustees of the Trust are
officers and directors of Invesco.
12 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
NOTE 3—Additional
Valuation Information
GAAP defines fair value as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date,
under current market conditions. GAAP establishes a hierarchy
that prioritizes the inputs to valuation methods giving the
highest priority to readily available unadjusted quoted prices
in an active market for identical assets (Level 1) and
the lowest priority to significant unobservable inputs
(Level 3) generally when market prices are not readily
available or are unreliable. Based on the valuation inputs, the
securities or other investments are tiered into one of three
levels. Changes in valuation methods may result in transfers in
or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Trust’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation
input levels, as of August 31, 2012. The level assigned to
the securities valuations may not be an indication of the risk
or liquidity associated with investing in those securities.
Because of the inherent uncertainties of valuation, the values
reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
Municipal Obligations
|
$ | — | $ | 59,983,931 | $ | — | $ | 59,983,931 | ||||||||
NOTE 4—Trustees’
and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits”
include amounts accrued by the Trust to pay remuneration to
certain Trustees and Officers of the Trust.
During the six months ended August 31, 2012,
the Trust paid legal fees of $48,393 for services rendered by
Skadden, Arps, Slate, Meagher & Flom LLP as counsel to
the Trust. A trustee of the Trust is of counsel with the firm.
NOTE 5—Cash
Balances and Borrowings
The Trust is permitted to temporarily carry a negative or
overdrawn balance in its account with State Street Bank and
Trust Company, the custodian bank. Such balances, if any at
period end, are shown in the Statement of Assets and Liabilities
under the payable caption Amount due custodian. To
compensate the custodian bank for such overdrafts, the overdrawn
Trust may either (1) leave funds as a compensating balance
in the account so the custodian bank can be compensated by
earning the additional interest; or (2) compensate by
paying the custodian bank at a rate agreed upon by the custodian
bank and Invesco, not to exceed the contractually agreed upon
rate.
Inverse floating rate obligations resulting from the
transfer of bonds to Dealer Trusts are accounted for as secured
borrowings. The average floating rate notes outstanding and
average annual interest and fees related to inverse floating
rate note obligations during the six months ended
August 31, 2012 were $8,760,000 and 0.82%, respectively.
NOTE 6—Tax
Information
The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations, which
may differ from generally accepted accounting principles.
Reclassifications are made to the Trust’s capital accounts
to reflect income and gains available for distribution (or
available capital loss carryforward) under income tax
regulations. The tax character of distributions paid during the
year and the tax components of net assets will be reported at
the Trust’s fiscal year-end.
Capital loss carryforward is calculated and reported
as of a specific date. Results of transactions and other
activity after that date may affect the amount of capital loss
carryforward actually available for the Trust to utilize. The
Regulated Investment Company Modernization Act of 2010 (the
“Act”) eliminated the eight-year carryover period for
capital losses that arise in taxable years beginning after its
enactment date of December 22, 2010. Consequently, these
capital losses can be carried forward for an unlimited period.
However, capital losses with an expiration period may not be
used to offset capital gains until all net capital losses
without an expiration date have been utilized. Additionally,
post-enactment capital loss carryovers will retain their
character as either short-term or long-term capital losses
instead of as short-term capital losses as under prior law. The
ability to utilize capital loss carryforward in the future may
be limited under the Internal Revenue Code and related
regulations based on the results of future transactions.
13 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
The Trust had a capital loss carryforward as of
February 29, 2012 which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
|
February 29, 2016
|
$ | 2,649,743 | $ | — | $ | 2,649,743 | ||||||
|
February 28, 2017
|
3,477,195 | — | 3,477,195 | |||||||||
|
February 28, 2019
|
109,321 | — | 109,321 | |||||||||
|
Not subject to expiration
|
— | 26,554 | 26,554 | |||||||||
|
Total capital loss carryforward
|
$ | 6,236,259 | $ | 26,554 | $ | 6,262,813 | ||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 7—Investment
Securities
The aggregate amount of investment securities (other than
short-term securities, U.S. Treasury obligations and money
market funds, if any) purchased and sold by the Trust during the
six months ended August 31, 2012 was $1,296,946 and
$2,868,864, respectively. Cost of investments on a tax basis
includes the adjustments for financial reporting purposes as of
the most recently completed federal income tax reporting
period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
|
Aggregate unrealized appreciation of investment securities
|
$ | 5,757,567 | ||
|
Aggregate unrealized (depreciation) of investment securities
|
(318,239 | ) | ||
|
Net unrealized appreciation of investment securities
|
$ | 5,439,328 | ||
| Cost of investments for tax purposes is $54,544,603. | ||||
NOTE 8—Common
Shares of Beneficial Interest
Transactions in common shares of beneficial interest were as
follows:
|
Six months
ended |
Year ended |
|||||||
|
August 31, |
February 29, |
|||||||
| 2012 | 2012 | |||||||
|
Beginning shares
|
2,706,661 | 2,705,384 | ||||||
|
Shares issued through dividend reinvestment
|
567 | 1,277 | ||||||
|
Ending shares
|
2,707,228 | 2,706,661 | ||||||
The Board of Trustees have approved share
repurchases whereby the Trust may, when appropriate, purchase
shares in the open market or in privately negotiated
transactions at a price not above market value or net asset
value, whichever is lower at the time of purchase.
NOTE 9—Auction
Rate Preferred Shares
The Trust is authorized to issue Auction Rate Preferred Shares
(“ARPS”). On May 24, 2012, the Trust redeemed all
of its outstanding ARPS at their respective liquidation
preference, including accrued and unpaid dividends, if any,
through the redemption date. The redemptions were funded with
cash and proceeds received from the issuance of VMTP Shares.
Historically, the Trust paid annual fees equivalent
to 0.25% of the ARPS liquidation value for the remarketing
efforts associated with the auction. Effective March 16,
2009, the Trust decreased this amount to 0.15% due to auction
failures. These fees are included as a component of Interest,
facilities and maintenance fees expense on the Statement of
Operations.
Dividends, which are cumulative, are reset through
auction procedures.
For the period March 1, 2012 through
May 24, 2012, the range of dividend rates was 0.198%-0.396%.
The Trust was subject to certain restrictions
relating to the ARPS. Failure to comply with these restrictions
could have precluded the Trust from declaring any distributions
to common shareholders or purchasing common shares
and/or could
trigger the mandatory redemption of ARPS at liquidation value.
Beginning February 15, 2008 and continuing
through May 24, 2012, all series of ARPS of the Trust were
not successfully remarketed. As a result, the dividend rates of
these ARPS were reset to the maximum applicable rate.
14 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
Transactions in ARPS were as follows:
| Shares | Value | |||||||
|
Outstanding at February 29, 2012
|
598 | $ | 14,950,000 | |||||
|
Shares redeemed
|
(598 | ) | (14,950,000 | ) | ||||
|
Outstanding at August 31, 2012
|
— | $ | — | |||||
NOTE 10—Variable
Rate Muni Term Preferred Shares
On May 17, 2012, the Trust issued 149
Series 2015/6-VMV VMTP Shares, with liquidation preference
of $100,000 per share pursuant to an offering exempt from
registration under the Securities Act of 1933. Proceeds from the
issuance of VMTP Shares were used to redeem all of the
Trust’s outstanding ARPS. VMTP Shares are a floating-rate
form of preferred shares with a mandatory redemption date. The
Trust is required to redeem all outstanding VMTP Shares on
June 1, 2015, unless earlier redeemed, repurchased or
extended. VMTP Shares are subject to optional and mandatory
redemption in certain circumstances. The redemption price per
share is equal to the sum of the liquidation value per share
plus any accumulated but unpaid dividends and a redemption
premium, if any.
The Trust incurred costs in connection with the
issuance of VMTP Shares. These costs were recorded as a deferred
charge and will be amortized over the 3 year life of the
VMTP Shares. Amortization of these costs is included in
Interest, facilities and maintenance fees on the
Statement of Operations and the unamortized balance is included
in Deferred Offering Costs on the Statement of Assets and
Liabilities.
Dividends paid on the VMTP Shares (which are treated
as interest expense for financial reporting purposes) are
declared daily and paid monthly. The initial rate for dividends
is equal to the sum of 1.15% per annum plus the Securities
Industry and Financial Markets Association Municipal Swap Index.
Subsequent rates take into account a ratings spread which is
based on the long term preferred share ratings assigned to the
VMTP Shares by Moody’s and Fitch. The average liquidation
value outstanding and the average annualized dividend rate of
the VMTP Shares during the six months ended August 31, 2012
were $14,900,000 and 1.32%, respectively.
The Trust is subject to certain restrictions, such
as maintaining certain asset coverage and leverage ratio
requirements relating to the VMTP Shares. Failure to comply with
these restrictions could preclude the Trust from declaring any
distributions to common shareholders or purchasing common shares
and/or could trigger the mandatory redemption of VMTP Shares at
liquidation value.
For financial reporting purposes, the liquidation
value of VMTP Shares, which is considered debt of the issuer, is
recorded as a liability under the caption Variable rate muni
term preferred shares on the Statement of Assets and
Liabilities. Unpaid dividends on VMTP Shares are recognized as
Accrued interest expense on the Statement of Assets and
Liabilities. Dividends paid on VMTP Shares are recognized as a
component of Interest, facilities and maintenance fees on
the Statement of Operations.
NOTE 11—Dividends
The Trust declared the following dividends to common
shareholders from net investment income subsequent to
August 31, 2012:
| Declaration Date | Amount Per Share | Record Date | Payable Date | |||||||||
|
September 4, 2012
|
$ | 0.0625 | September 18, 2012 | September 28, 2012 | ||||||||
|
October 8, 2012
|
$ | 0.0044 | October 12, 2012 | October 31, 2012 | ||||||||
15 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
NOTE 12—Financial
Highlights
The following schedule presents financial highlights for a share
of the Trust outstanding throughout the periods indicated.
|
Six months |
Four months |
|||||||||||||||||||||||||||
|
ended |
Year ended |
ended |
||||||||||||||||||||||||||
|
August 31, |
February 29, |
February 28, |
Years ended October 31, | |||||||||||||||||||||||||
| 2012 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
|
Net asset value per common share, beginning of period
|
$ | 13.49 | $ | 11.32 | $ | 12.59 | $ | 11.91 | $ | 10.16 | $ | 14.81 | $ | 15.84 | ||||||||||||||
|
Net investment
income(a)
|
0.34 | 0.78 | 0.29 | 0.84 | 0.93 | 1.14 | 1.09 | |||||||||||||||||||||
|
Net gains (losses) on securities (both realized and unrealized)
|
0.19 | 2.20 | (1.27 | ) | 0.71 | 1.70 | (4.66 | ) | (1.00 | ) | ||||||||||||||||||
|
Distributions paid to preferred shareholders:
|
||||||||||||||||||||||||||||
|
Dividends from net investment income
|
(0.00 | ) | (0.01 | ) | (0.01 | ) | (0.03 | ) | (0.06 | ) | (0.34 | ) | (0.32 | ) | ||||||||||||||
|
Distributions from net realized gain
|
— | — | — | — | — | — | (0.01 | ) | ||||||||||||||||||||
|
Total from investment operations
|
0.53 | 2.97 | (0.99 | ) | 1.52 | 2.57 | (3.86 | ) | (0.24 | ) | ||||||||||||||||||
|
Less distributions paid to common shareholders:
|
||||||||||||||||||||||||||||
|
Dividends from net investment income
|
(0.37 | ) | (0.80 | ) | (0.28 | ) | (0.84 | ) | (0.82 | ) | (0.79 | ) | (0.76 | ) | ||||||||||||||
|
Distributions from net realized gains
|
— | — | — | — | — | — | (0.03 | ) | ||||||||||||||||||||
|
Total distributions to common shareholders
|
(0.37 | ) | (0.80 | ) | (0.28 | ) | (0.84 | ) | (0.82 | ) | (0.79 | ) | (0.79 | ) | ||||||||||||||
|
Net asset value per common share, end of period
|
$ | 13.65 | $ | 13.49 | $ | 11.32 | $ | 12.59 | $ | 11.91 | $ | 10.16 | $ | 14.81 | ||||||||||||||
|
Market value per common share, end of period
|
$ | 13.83 | $ | 13.33 | $ | 11.46 | $ | 13.04 | $ | 11.91 | $ | 9.55 | $ | 14.90 | ||||||||||||||
|
Total return at net asset
value(b)
|
4.06 | % | 27.23 | % | (7.89 | )% | 13.01 | % | ||||||||||||||||||||
|
Total return at market
value(c)
|
6.70 | % | 24.19 | % | (9.97 | )% | 17.05 | % | 34.30 | % | (32.01 | )% | 6.68 | % | ||||||||||||||
|
Net assets applicable to common shares, end of period
(000’s omitted)
|
$ | 36,955 | $ | 36,508 | $ | 30,634 | $ | 34,041 | $ | 32,179 | $ | 27,394 | $ | 39,889 | ||||||||||||||
|
Portfolio turnover
rate(d)
|
2 | % | 26 | % | 3 | % | 33 | % | 20 | % | 36 | % | 18 | % | ||||||||||||||
|
Ratios/supplemental data based on average net assets applicable to common shares: |
||||||||||||||||||||||||||||
|
Ratio of expenses:
|
||||||||||||||||||||||||||||
|
With fee waivers
and/or
expense
reimbursements(e)
|
2.04 | %(f) | 1.50 | % | 1.55 | %(g)(h) | 1.83 | % | 1.70 | % | 2.34 | % | 2.53 | % | ||||||||||||||
|
With fee waivers
and/or
expense reimbursements excluding interest, facilities and
maintenance
fees(e)(i)
|
1.36 | %(f) | 1.21 | % | 1.18 | %(g)(h) | 1.40 | % | 1.37 | % | 1.02 | % | 1.19 | % | ||||||||||||||
|
Without fee waivers
and/or
expense
reimbursements(e)
|
2.06 | %(f) | 1.86 | % | 1.80 | %(g)(h) | 2.14 | % | 2.16 | % | 2.75 | % | 2.90 | % | ||||||||||||||
|
Ratio of net investment income before preferred share dividends
|
5.08 | %(f) | 6.34 | % | 7.68 | %(h) | 6.85 | % | 8.50 | % | 8.32 | % | 7.06 | % | ||||||||||||||
|
Preferred share dividends
|
0.05 | %(f) | 0.13 | % | 0.24 | %(h) | ||||||||||||||||||||||
|
Ratio of net investment income after preferred share dividends
|
5.03 | %(f) | 6.21 | % | 7.44 | %(h) | 6.59 | % | 7.98 | % | 5.83 | % | 4.89 | % | ||||||||||||||
|
Senior securities: |
||||||||||||||||||||||||||||
|
Total amount of preferred shares outstanding (000’s
omitted)(j)
|
$ | 14,900 | $ | 14,950 | $ | 17,250 | $ | 17,250 | $ | 18,500 | $ | 19,750 | $ | 25,000 | ||||||||||||||
|
Asset coverage per preferred
share(j)(k)
|
$ | 348,018 | $ | 86,051 | $ | 69,398 | $ | 74,336 | $ | 68,487 | $ | 59,687 | $ | 64,897 | ||||||||||||||
|
Liquidating preference per preferred
share(j)
|
$ | 100,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | ||||||||||||||
| (a) | Calculated using average shares outstanding. | |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year, if applicable. | |
| (c) | Total Return assumes an investment at the common share 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 share market price at the end of the period indicated. Not annualized for periods less than one year, if applicable. | |
| (d) | Portfolio turnover is not annualized for periods less than one year, if applicable. | |
| (e) | Ratios do not reflect the effect of dividend payments to preferred shareholders. | |
| (f) | Ratios are annualized and based on average daily net assets (000’s omitted) of $36,309. | |
| (g) | Ratio includes an adjustment for a change in accounting estimate for professional services fees during the period. Ratios excluding this adjustment would have been higher by 0.25%. | |
| (h) | Annualized. | |
| (i) | For the years ended October 31, 2010 and prior, ratio does not exclude facilities and maintenance fees. | |
| (j) | For the years ended February 29, 2012 and prior, amounts are based on ARPS outstanding. | |
| (k) | Calculated by subtracting the Trust’s total liabilities (not including preferred shares) from the Trust’s total assets and dividing this by preferred shares outstanding. |
16 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
NOTE 13—Subsequent
Event
The Board of Trustees (the “Board”) and the
shareholders of the Trust have approved the redomestication of
the Trust, a Massachusetts business trust, into a Delaware
statutory trust pursuant to an Agreement and Plan of
Redomestication (the “Redomestication”). The Board and
the shareholders also approved an Agreement and Plan of Merger
pursuant to which the Trust merged with and into Invesco Van
Kampen Municipal Trust (the “Acquiring Trust”) in
accordance with the Delaware Statutory Trust Act (the
“Merger”). As a result of the Merger, all of the
assets and liabilities of the Trust became assets and
liabilities of the Acquiring Trust, the Trust’s
shareholders became shareholders of the Acquiring Trust and the
Trust ceased operations. The Redomestication and Merger were
consummated on October 15, 2012.
17 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
Approval
of Investment Advisory and
Sub-Advisory
Contracts
The Board of Trustees (the Board) of Invesco Van Kampen
Massachusetts Value Municipal Income Trust (the Fund) is
required under the Investment Company Act of 1940, as amended,
to approve annually the renewal of the investment advisory
agreement with Invesco Advisers, Inc. (Invesco Advisers) and the
Master Intergroup
Sub-Advisory
Contract (the
sub-advisory
contracts) with Invesco Asset Management Deutschland GmbH,
Invesco Asset Management Ltd., Invesco Asset Management (Japan)
Limited, Invesco Australia Limited, Invesco Hong Kong Limited,
Invesco Senior Secured Management, Inc. and Invesco Canada Ltd.
(collectively, the Affiliated
Sub-Advisers).
During contract renewal meetings held on May 15, 2012, the
Board as a whole, and the disinterested or
“independent” Trustees, who comprise more than 75% of
the Board, voting separately, approved the continuance of the
Fund’s investment advisory agreement and the
sub-advisory
contracts for another year. In doing so, the Board considered
the process that it follows in reviewing and approving the
Fund’s investment advisory agreement and
sub-advisory
contracts and the information that it is provided. The Board
determined that the Fund’s investment advisory agreement
and the
sub-advisory
contracts are in the best interests of the Fund and its
shareholders and the compensation to Invesco Advisers and the
Affiliated
Sub-Advisers
under the agreements is fair and reasonable.
The Board’s
Fund Evaluation Process
The Board, acting directly and through its committees, meets
throughout the year to review the performance of the Invesco Van
Kampen funds. Over the course of each year, the Board, acting
directly and through its committees, meets with portfolio
managers for the funds and other members of management to review
the performance, investment objective(s), policies, strategies
and limitations and investment risks of the funds. The Board
meets regularly and at designated contract renewal meetings each
year to conduct a review of the performance, fees, expenses and
other matters related to the funds. The Board also considered
materials it had received in approving the proposed
reorganization of the Fund into a closed-end fund overseen by
the Board and advised by Invesco Advisers.
During the contract renewal process, the Trustees
receive comparative performance and fee data regarding the funds
prepared by Invesco Advisers and an independent company, Lipper,
Inc. (Lipper). The independent Trustees are assisted in their
annual evaluation of the funds’ investment advisory
agreements by fund counsel.
In evaluating the fairness and reasonableness of the
Fund’s investment advisory agreement and
sub-advisory
contracts, the Board considered, among other things, the factors
discussed below. The Trustees recognized that the advisory fees
for the Invesco Van Kampen funds, including the Fund, reflect
the results of years of review and negotiation between the
Trustees and Invesco Advisers and previously Van Kampen Asset
Management, the funds’ predecessor investment adviser. The
Trustees’ deliberations and conclusions in a particular
year may be based in part on their deliberations and conclusions
regarding these same arrangements throughout the year and in
prior years. The Board noted the willingness of Invesco Advisers
personnel to engage in open and candid discussions with the
Board. One Trustee may have weighed a particular piece of
information differently than another Trustee.
The discussion below is a summary of the
Board’s evaluation with respect to the Fund’s
investment advisory agreement as well as a discussion of the
material factors and related conclusions that formed the basis
for the Board’s approval of the Fund’s investment
advisory agreement and
sub-advisory
contracts. Unless otherwise stated, this information is current
as of May 15, 2012, and may not reflect consideration of
factors that became known to the Board after that date,
including, for example, changes to the Fund’s performance,
advisory fees, expense limitations
and/or fee
waivers.
Factors and
Conclusions
| A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the advisory services provided to the Fund by
Invesco Advisers under the Fund’s investment advisory
agreement, the performance of Invesco Advisers in providing
these services, and the credentials and experience of the
officers and employees of Invesco Advisers who provide these
services. Based on their meetings throughout the year with the
Fund’s portfolio managers, the Board concluded that these
individuals are competent and able to continue to carry out
their responsibilities under the Fund’s investment advisory
agreement or
sub-advisory
contracts, as applicable. The Board’s review of the
qualifications of Invesco Advisers to provide advisory services
included the Board’s consideration of Invesco
Advisers’ performance and investment process oversight,
independent credit analysis and investment risk management.
In determining whether to continue the Fund’s
investment advisory agreement, the Board considered the prior
relationship between Invesco Advisers (and previously Van Kampen
Asset Management) and the Fund, as well as the Board’s
knowledge of Invesco Advisers’ operations, and concluded
that it is beneficial to maintain the current relationship, in
part, because of such knowledge. The Board also considered
services that Invesco Advisers and its affiliates provide to the
Invesco Van Kampen funds, including the Fund, such as various
back office support functions, equity and fixed income trading
operations, internal audit and legal and compliance. The Board
concluded that the nature, extent and quality of the services
provided to the Fund by Invesco Advisers are appropriate and
satisfactory and the advisory services are provided in
accordance with the terms of the Fund’s investment advisory
agreement.
The Board reviewed the services capable of being
provided by the Affiliated
Sub-Advisers
under the
sub-advisory
contracts and the credentials and experience of the officers and
employees of the Affiliated
Sub-Advisers
who would provide such services. The Board concluded that the
sub-advisory
contracts benefit the Fund and its shareholders by permitting
Invesco Advisers to use the resources and talents of the
Affiliated
Sub-Advisers,
from time to time as necessary and appropriate, in managing the
Fund. The Board concluded that the nature, extent and quality of
the services capable of being provided by the Affiliated
Sub-Advisers
are appropriate and satisfactory and in accordance with the
terms of the Fund’s
sub-advisory
contracts.
| B. | Fund Performance |
The Board considered Fund performance as a relevant factor in
considering whether to approve the investment advisory
agreement. The Board did not view Fund performance as a relevant
factor in considering whether to approve the
sub-advisory
contracts for the Fund, as no Affiliated
Sub-Adviser
currently manages assets of the Fund.
The Board compared the Fund’s performance
during the past one, two three, five and ten calendar years to
the performance of funds in the Fund’s Lipper performance
universe and against the applicable Lipper index. The Board
noted that the Fund’s performance was in the first quintile
of its performance universe for the one, two and three year
periods and the fifth quintile for the five and ten year periods
(the first quintile being the best performing funds and the
fifth quintile being the worst performing funds). The Board
noted that the performance universe included leveraged
closed-end municipal debt funds of various states. When
considering a fund’s performance, the Board places emphasis
on trends and longer term returns.
18 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
| C. | Advisory and Sub-Advisory Fees and Fee Waivers |
The Board compared the Fund’s contractual advisory fee rate
to the contractual advisory fee rates of funds in the
Fund’s Lipper expense group at a common asset level. The
Board noted that the Fund’s contractual advisory fee rate
was below the median contractual advisory fee rate of funds in
its expense group. The Board also reviewed the methodology used
by Lipper in providing expense group information, which includes
using audited financial data from the most recent annual report
of each fund in the expense group that was publicly available as
of the end of the past calendar year and including only one fund
per investment adviser. The Board noted that comparative data is
as of varying dates, which may affect the comparability of data
during times of market volatility.
The Board also considered the Fund’s effective
fee rate (the advisory fee after advisory fee waivers and before
expense limitations/waivers), including comparisons, as
applicable, to advisory fee rates of other funds advised by
Invesco Advisers and its affiliates with investment strategies
similar to those of the Fund. The Board reviewed not only the
advisory fees but other fees and expenses (whether paid to
Invesco Advisers, its affiliates or others) and the Fund’s
overall expense ratio.
The Board compared the strategy of the Fund to that
of other client accounts of Invesco Advisers and the Affiliated
Sub-Advisers
and considered, as applicable, the fees charged to other client
accounts with investment strategies similar to those of the
Fund. The Board noted that Invesco Advisers or the Affiliated
Sub-Advisers
may charge lower fees to large institutional clients solely for
investment management services than to registered fund clients,
such as the Fund. Invesco Advisers reviewed with the Board the
significantly greater scope of services it provides to
registered fund clients, including the Fund, relative to other
client accounts. These additional services include provision of
administrative services, officers and office space, oversight of
service providers, preparation of shareholder reports, efforts
to support secondary market trading of the Fund’s shares,
preparation of financial information and regulatory compliance
under the Investment Company Act of 1940, as amended, and stock
exchange listing standards, including preparation for,
coordinating the solicitation of proxies for, and conducting
annual shareholder meetings. The Board noted that
sub-advisory
fees charged by the Affiliated
Sub-Advisers
to manage registered fund clients and to manage other client
accounts were often more comparable. The Board concluded that
the aggregate services provided to the Fund were sufficiently
different from those provided to institutional clients, and the
Board did not place significant weight on these fee comparisons.
The Board noted that Invesco Advisers has
contractually agreed to waive fees
and/or limit
expenses of the Fund through June 30, 2012 in an amount
necessary to limit total annual operating expenses to a
specified percentage of average daily net assets for each class
of the Fund. The Board also considered the effect this fee
waiver, and the discontinuation of this fee waiver on
June 30, 2012, would have on the Fund’s total
estimated expenses.
The Board also considered the services capable of
being provided by the Affiliated
Sub-Advisers
pursuant to the
sub-advisory
contracts, as well as the allocation of fees between Invesco
Advisers and the Affiliated
Sub-Advisers
pursuant to the
sub-advisory
contracts. The Board noted that to the extent the Fund were to
utilize the Affiliated
Sub-Advisers,
Invesco Advisers would provide services related to oversight of
the Affiliated
Sub-Advisers
as well as the additional services described above other than
day-to-day
portfolio management. The Board also noted that the
sub-advisory
fees have no direct effect on the Fund or its shareholders, as
they are paid by Invesco Advisers to the Affiliated
Sub-Advisers.
Based upon the information and considerations
described above, the Board concluded that the Fund’s
advisory and
sub-advisory
fees are fair and reasonable.
| D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there are economies of
scale in the provision of advisory services to the Fund. The
Board noted that most closed-end funds do not have fund level
breakpoints because closed-end funds generally do not experience
substantial asset growth after the initial public offering. The
Board noted that although the Fund does not benefit from
economies of scale through contractual breakpoints, the Fund
does share directly in economies of scale through lower fees
charged by third party service providers based on the combined
size of the registered fund clients advised by Invesco Advisers.
| E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning
the costs of the advisory and other services that Invesco
Advisers and its affiliates provide to the Fund and the
profitability of Invesco Advisers and its affiliates in
providing these services. The Board reviewed with Invesco
Advisers the methodology used to prepare the profitability
information. The Board considered the profitability of Invesco
Advisers in connection with managing the Fund and the Invesco
Van Kampen funds. The Board noted that Invesco Advisers
continues to operate at a net profit from services Invesco
Advisers and its subsidiaries provide to the Fund and the
Invesco Van Kampen funds. The Board concluded that the level of
profits realized by Invesco Advisers and its affiliates from
providing services to the Fund is not excessive given the
nature, quality and extent of the services provided to the Fund.
The Board considered whether Invesco Advisers and each
Affiliated
Sub-Adviser
are financially sound and have the resources necessary to
perform their obligations under the investment advisory
agreement and
sub-advisory
contracts. The Board concluded that Invesco Advisers and each
Affiliated
Sub-Adviser
have the financial resources necessary to fulfill these
obligations.
| F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco
Advisers and its affiliates from the relationship with the Fund,
including the fees received for their provision of
administrative services to the Fund. The Board considered the
performance of Invesco Advisers and its affiliates in providing
these services and the organizational structure employed to
provide these services. The Board also considered that the
services are required for the operation of the Fund; that
Invesco Advisers and its affiliates can provide services, the
nature and quality of which are at least equal to those provided
by others offering the same or similar services; and that the
fees for such services are fair and reasonable in light of the
usual and customary charges by others for services of the same
nature and quality.
The Board considered that the Fund’s uninvested
cash and cash collateral from any securities lending
arrangements may be invested in money market funds advised by
Invesco Advisers pursuant to procedures approved by the Board.
The Board noted that Invesco Advisers receives advisory fees
from these affiliated money market funds attributable to such
investments, although Invesco Advisers has contractually agreed
to waive through varying periods the advisory fees payable by
the Fund. The waiver is in an amount equal to 100% of the net
advisory fee Invesco Advisers receives from the affiliated money
market funds with respect to the Fund’s investment in the
affiliated money market funds of uninvested cash, but not cash
collateral. The Board concluded that the Fund’s investment
of uninvested cash and cash collateral from any securities
lending arrangements in the affiliated money market funds is in
the best interests of the Fund and its shareholders.
19 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
Proxy
Results
An Annual Meeting (“Meeting”) of Shareholders of
Invesco Van Kampen Massachusetts Value Municipal Income Trust
(the “Fund”) was held on July 17, 2012. The
Meeting was held for the following purpose:
| (1) | Elect three Class I Trustees, by the holders of Common Shares and Preferred Shares voting together as a single class, each of whom will serve for a three-year term or until a successor shall have been duly elected and qualified. |
The results of the voting on the above matter were as follows:
|
Votes |
||||||||||||||||||
| Matter | Votes For | Against | ||||||||||||||||
|
(1)
|
David C. Arch | 2,386,657 | 152,063 | |||||||||||||||
| Jerry D. Choate | 2,393,557 | 145,163 | ||||||||||||||||
| Suzanne H. Woolsey | 2,393,557 | 145,163 | ||||||||||||||||
Other proposals, including the redomestication proposal, were
adjourned until September 25, 2012. Results from the
adjourned meeting will be reflected in the next report to
shareholders.
20 Invesco
Van Kampen Massachusetts Value Municipal Income Trust
Correspondence information
Send general correspondence to Computershare, P.O. Box 43078, Providence, RI 02940-3078.
Invesco privacy policy
You share personal and financial information with us that is
necessary for your transactions and your account records. We take very seriously the obligation to
keep that information confidential and private.
Invesco collects nonpublic personal
information about you from account applications or other forms you complete and from your transactions with
us or our affiliates. We do not disclose information about you or our former customers to service providers
or other third parties except to the extent necessary to service your account and in other limited circumstances
as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations,
financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in
the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest
level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet
or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications
with us on our website. More detail is available to you at invesco.com/privacy.
Trust holdings and proxy voting information
The Trust provides a complete list of its holdings four times in each
fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Trust’s semiannual
and annual reports to shareholders. For the first and third quarters, the Trust files the lists with the Securities
and Exchange Commission (SEC) on Form N-Q. Shareholders can also look up the Trust’s Forms N-Q on the SEC
website at sec.gov. Copies of the Trust’s Forms N-Q may be reviewed and copied at the SEC Public Reference
Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including
information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request
at the following email address: publicinfo@sec.gov. The SEC file number for the Trust is shown below.
A description of the policies and procedures that the Trust uses to determine how to
vote proxies relating to portfolio securities is available without charge, upon request, from
our Client Services department at 800 341 2929 or at invesco.com/proxyguidelines. The information is
also available on the SEC website, sec.gov.
Information regarding how the Trust voted proxies related to its
portfolio securities during the 12 months ended June 30, 2012, is available at invesco.com/proxysearch.
In addition, this information is available on the SEC website at sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides
investment advisory services to individual and institutional clients and does not sell securities.
Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded
funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
| SEC file number: 811-07088 | VK-CE-MVMI-SAR-1 | Invesco Distributors, Inc. |
ITEM 2. CODE OF ETHICS.
There were no amendments to the Code of Ethics (the “Code”) that applies to the
Registrant’s Principal Executive Officer (“PEO”) and Principal Financial Officer
(“PFO”) during the period covered by the report. The Registrant did not grant any
waivers, including implicit waivers, from any provisions of the Code to the PEO or
PFO during the period covered by this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Investments in securities of unaffiliated issuers is included as part of the
reports to stockholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 11. AND PROCEDURES.
| (a) | As of August 13, 2012, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of August 13, 2012, the Registrant’s disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is |
| recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure. | ||
| (b) | There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by the report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12. EXHIBITS.
12(a)(1)
|
Not applicable. | |
12(a)(2)
|
Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. | |
12(a)(3)
|
Not applicable | |
12(b)
|
Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Registrant: Invesco Van Kampen Massachusetts Value Municipal Income Trust
By:
|
/s/ Colin Meadows | |||
| Colin Meadows | ||||
| Principal Executive Officer | ||||
Date:
|
November 8, 2012 |
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company
Act of 1940, this report has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
By:
|
/s/ Colin Meadows | |||
| Colin Meadows | ||||
| Principal Executive Officer | ||||
Date:
|
November 8, 2012 | |||
By:
|
/s/ Sheri Morris | |||
| Sheri Morris | ||||
| Principal Financial Officer | ||||
Date:
|
November 8, 2012 |
EXHIBIT INDEX
12(a) (1)
|
Not applicable. | |
12(a) (2)
|
Certifications of principal executive officer and Principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. | |
12(a) (3)
|
Not applicable. | |
12(b)
|
Certifications of principal executive officer and Principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. |