-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rj56KP/WRR1wQcX0Z8F+y5nuwJU8lLDB6Zhd/R0hQNV0Rph08AU9zYQbUmctj5KV QHim2zJm8TtfcKkjMyS1WQ== 0000950137-03-003627.txt : 20030630 0000950137-03-003627.hdr.sgml : 20030630 20030630161234 ACCESSION NUMBER: 0000950137-03-003627 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030430 FILED AS OF DATE: 20030630 EFFECTIVENESS DATE: 20030630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN VALUE MUNICIPAL INCOME TRUST CENTRAL INDEX KEY: 0000895529 IRS NUMBER: 367017424 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07400 FILM NUMBER: 03764577 BUSINESS ADDRESS: STREET 1: ONE PARKVIEW PLAZA STREET 2: VAN KAMPEN INVESTMENTS INC CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 BUSINESS PHONE: 6306846774 MAIL ADDRESS: STREET 1: VAN KAMPEN INVESTMENTS INC STREET 2: ONE PARKVIEW PLAZA CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL VALUE MUNICIPAL INCOME TRUST DATE OF NAME CHANGE: 19960102 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN MERRITT VALUE MUNICIPAL INCOME TRUST DATE OF NAME CHANGE: 19930328 N-CSR 1 c77309nvcsr.txt SEMIANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-7400 Van Kampen Value Municipal Income Trust - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 1221 Avenue of the Americas NY NY 10020 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Ronald Robison 1221 Avenue of the Americas New York, NY 10020 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 ----------------------------- Date of fiscal year end: 10/31/03 ----------- Date of reporting period: 04/30/03 ----------- Item 1. Report to Shareholders PERFORMANCE SUMMARY RETURN HIGHLIGHTS (as of April 30, 2003) - ------------------------------ NYSE Ticker Symbol - VKV - ------------------------------ - ----------------------------------------------------------------------- Six-month total return(1) 7.01% - ----------------------------------------------------------------------- One-year total return(1) 13.52% - ----------------------------------------------------------------------- Five-year average annual total return(1) 8.32% - ----------------------------------------------------------------------- Ten-year average annual total return(1) 6.98% - ----------------------------------------------------------------------- Life-of-Trust average annual total return(1) 6.55% - ----------------------------------------------------------------------- Commencement date 03/26/93 - ----------------------------------------------------------------------- Distribution rate as a % of closing common share market price(2) 6.83% - ----------------------------------------------------------------------- Taxable-equivalent distribution rate as a % of closing common share market price(3) 11.12% - ----------------------------------------------------------------------- Preferred share (Series A) rate(4) 1.150% - ----------------------------------------------------------------------- Preferred share (Series B) rate(4) 0.965% - ----------------------------------------------------------------------- Preferred share (Series C) rate(4) 1.000% - ----------------------------------------------------------------------- Preferred share (Series D) rate(4) 1.049% - ----------------------------------------------------------------------- Preferred share (Series E) rate(4) 1.000% - ----------------------------------------------------------------------- Net asset value $15.86 - ----------------------------------------------------------------------- Closing common share market price $14.85 - ----------------------------------------------------------------------- Six-month high common share market price (04/30/03) $14.85 - ----------------------------------------------------------------------- Six-month low common share market price (11/27/02) $13.90 - -----------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE 1 (1) 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. (2) Distribution rate represents the monthly annualized distributions of the Trust at the end of the period and not the earnings of the Trust. (3) The taxable-equivalent distribution rate is calculated assuming the maximum 38.6% federal income tax rate effective for calendar year 2003. (4) See "Notes to Financial Statements" footnote #5, for more information concerning Preferred Share reset periods. A portion of the interest income may be taxable for those investors subject to the federal alternative minimum tax (AMT). Past performance is no guarantee of future results. Investment return, common share market price and net asset value will fluctuate and Trust shares, when sold, may be worth more or less than their original cost. An investment in the Trust is subject to investment risks, and you could lose money on your investment in the Trust. As a result of recent market activity, current performance may vary from the figures shown. For more up-to-date information, please visit vankampen.com or speak with your financial advisor. 2 PORTFOLIO AT A GLANCE CREDIT QUALITY (as a percentage of long-term investments)
As of April 30, 2003 AAA/Aaa........................... 71.2% AA/Aa............................. 13.0% A/A............................... 8.6% BBB/Baa........................... 4.5% Non-Rated......................... 2.7%
TOP FIVE SECTORS (as a percentage of long-term investments)
As of April 30, 2003 Transportation.................... 13.7% Public Building................... 13.1% Health Care....................... 12.9% Industrial Revenue................ 11.8% General Purpose................... 9.3%
Based upon the credit quality ratings as issued by Standard & Poor's Credit Market Services/Moody's Investor Services, respectively. Subject to change daily. NET ASSET VALUE AND COMMON SHARE MARKET PRICE (based upon quarter-end values--April 1993 through April 2003) [LINE GRAPH]
NET ASSET VALUE COMMON SHARE MARKET PRICE --------------- ------------------------- 4/93 $15.2000 $14.5000 6/93 $15.7000 $14.7500 $16.5800 $15.2500 $16.2500 $14.5000 $13.9500 $12.8750 6/94 $13.8400 $12.8750 $13.5300 $11.5000 $12.8200 $11.0000 $14.0700 $12.3750 6/95 $13.7500 $12.3750 $14.0800 $12.1250 $14.9600 $12.5000 $14.2000 $12.2500 6/96 $14.0300 $11.8750 $14.3500 $12.5000 $14.6300 $12.1250 $14.2300 $12.3750 6/97 $14.6700 $13.0625 $15.1000 $13.7500 $15.4300 $13.9375 $15.3600 $14.1250 6/98 $15.3600 $13.9375 $15.8200 $14.6250 $15.6000 $14.7500 $15.4300 $14.3750 6/99 $14.6800 $13.7500 $14.1700 $12.3750 $13.6200 $12.0000 $14.0000 $11.8125 6/00 $13.9900 $11.7500 $14.2200 $12.5625 $15.0900 $12.6250 $15.2400 $13.0100 6/01 $15.0600 $13.0300 $15.4400 $13.4000 $14.9700 $13.5800 $14.8100 $13.7000 6/02 $15.3800 $14.6600 $16.2900 $15.4500 $15.8100 $14.4500 $15.7500 $14.5800 4/03 $15.8600 $14.8500
The solid line above represents the trust's net asset value (NAV), which indicates overall changes in value among the trust's underlying securities. The trust's common share market price is represented by the dashed line, which indicates the price the market is willing to pay for shares of the trust at a given time. Common share market price is influenced by a range of factors, including supply and demand and market conditions. 3 Q&A WITH YOUR PORTFOLIO MANAGERS WE RECENTLY SPOKE WITH THE MANAGEMENT TEAM OF VAN KAMPEN VALUE MUNICIPAL INCOME TRUST ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS AND INFLUENCED THE TRUST'S RETURN DURING THE SIX MONTHS ENDED APRIL 30, 2003. TIMOTHY D. HANEY, PORTFOLIO MANAGER, HAS MANAGED THE TRUST SINCE 1996 AND HAS WORKED IN THE INVESTMENT INDUSTRY SINCE 1988. THE FOLLOWING DISCUSSION REFLECTS HIS VIEWS ON THE TRUST'S PERFORMANCE. Q WHAT WAS THE MARKET ENVIRONMENT OF THE PAST SIX MONTHS, AND HOW DID THE TRUST PERFORM IN THAT ENVIRONMENT? A The environment over the past six months has been defined by two major themes. The first of these was the level of interest rates. The period began with interest rates at levels not seen in over three decades and, surprisingly for many, ended with rates slightly lower. The Federal Reserve Board (the Fed) helped keep rates low with a widely anticipated rate cut in November, driven by economic uncertainty and geopolitical risk. The low level of rates led to a boom in issuance by municipalities seeking to lock in low financing costs. As a result, issuance reached a record level of $354 billion in 2002 and continued to be exceptional in the first quarter of 2003. The other theme in the market during the period was the relative attractiveness of municipal bonds, which produced enough demand to absorb the record issuance. Investors, wary of volatility in the equity market and in the geopolitical arena, flocked to perceived safe haven investments. Their risk aversion counteracted growing expectations for economic recovery and rising interest rates and was a key factor in keeping interest rates at historically low levels. In their ongoing preference for low-risk assets, investors bid Treasury prices up to such high levels that municipal bonds became as attractively valued as they have ever been relative to Treasuries. Insurance companies also moved heavily into municipal bonds as their mainstay corporate bond holdings became less attractive. At the same time, issuers recognized investor concerns over economic weakness by insuring roughly 50 percent of all issuance. This credit enhancement made municipal bonds even more attractive to risk-averse investors. While lower financing costs were a boon to municipal issuers, the continuing weakness in the economy had a negative impact on municipal credit quality, particularly in the first quarter of 2003. Moody's upgrades barely exceeded the number of downgrades in the first quarter, with 4 credit quality facing continued pressure from rising social service costs and weak national and regional economic conditions. As a result, municipalities face enormous deficits in 2003, when their combined shortfall is expected to reach $90 billion. Performance along the yield curve was varied. The Fed's November rate cut fueled a rally in short-term bonds that helped pull yields lower at the front end of the curve. Despite that rally, the best performing segment of the curve was the long-intermediate portion where performance was largely driven by buying activity among institutional investors drawn to the bonds' attractive total return potential. The trust's monthly dividend of $0.0845 per share translated to a distribution rate of 6.83 percent based on the trust's closing common share market price on April 30, 2003. Based on these figures, investors would have to earn a distribution rate of 11.12 percent on a taxable investment (for an investor in the 38.60 percent federal income tax bracket) to match the tax-exempt yield provided by the trust. For the six months through April 30, 2003, the trust produced a total return of 7.01 percent based on common share market price. By comparison, the Lehman Brothers Municipal Bond Index posted a total return of 3.59 percent for the same period. Of course, past performance is no guarantee of future results. Investment return, common share market price and net asset value will fluctuate and trust shares, when sold, may be worth more or less than their original cost. As a result of recent market activity, current performance may vary from the figures shown. For more up-to-date information, please visit vankampen.com or speak with your financial advisor. The Lehman Brothers Municipal Bond Index is an unmanaged, broad-based statistical composite of municipal bonds. Index returns do not include any sales charges or fees that would be paid by an investor purchasing the securities the index represents. Such costs would lower performance. It is not possible to invest directly in an index. For additional information, please refer to the performance summary section. Q WHAT STRATEGIES DID YOU PURSUE IN MANAGING THE TRUST? A With interest rates hovering near record lows, we focused on protecting the trust from the potential adverse effects of rising interest rates while maintaining the trust's yield. One of our primary methods for doing this was to purchase premium bonds with maturities between 15 and 20 years, priced to a ten-year call date. Our quantitative analysis showed that this segment of the yield curve offered a favorable combination of total return potential and downside protection. The yield of these bonds is competitive, corresponding to their 15 to 20 year maturity dates, yet their interest rate volatility is more closely related to the 10-year call feature. We funded our purchases in this maturity range chiefly through sales of bonds in the 10- and 30-year segments of the yield curve. We believe this alteration of the trust's yield curve exposure should benefit 5 shareholders if rates rise on the short end of the yield curve. Several years ago, we purchased some securities that were at the time deeply discounted, with coupons well below the market rate. They were so out of favor that we were able to purchase them at extremely attractive prices. As interest rates have fallen over the intervening years, however, the bonds have come closer and closer to being current coupons. Their falling yields have given the portfolio a substantial boost in terms of price performance, and once the bonds met their performance objectives we sold them into strong retail demand. We reinvested the proceeds into premium intermediate and other securities with better total return prospects. The generally poor economies of the states and municipalities also led us to upgrade the portfolio's overall credit profile. The ongoing economic difficulties across the country have made uninsured and lower-quality paper increasingly unattractive in our analysis, and as a result we focused our purchases on higher-quality paper. During the period, the trust's exposure to AAA rated bonds climbed by 2 percent. One of the sectors we avoided during the period was tobacco bonds. These bonds were issued by states seeking to securitize their future income streams resulting from settlements from class action suits against the major tobacco companies. Recent litigation in Illinois resulted in a judge awarding billions more in a suit alleging that the companies misled smokers about the amount of nicotine in "light" cigarettes. In order to appeal, the law required the companies to put up such substantial amounts of money that some began talking about potential bankruptcy, and the tobacco bonds' credit ratings and price performance suffered accordingly. Our decision not to invest in these securities was a benefit to shareholders during the period. 6 BY THE NUMBERS YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited) THE FOLLOWING PAGES DETAIL YOUR TRUST'S PORTFOLIO OF INVESTMENTS AT THE END OF THE REPORTING PERIOD.
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE MUNICIPAL BONDS 156.8% ALABAMA 2.3% $ 1,000 Birmingham Baptist Med Ctr AL Baptist Hlth Sys Ser A........................ 5.875% 11/15/24 $ 1,055,630 5,000 Birmingham Baptist Med Ctr AL Spl Care Fac Fin Auth Rev (MBIA Insd) (a)...... 5.750 11/15/10 5,448,450 2,000 Jefferson Cnty, AL Swr Rev Cap Impt Wts Ser A (FGIC Insd)................. 5.000 02/01/41 2,021,760 286 Mobile, AL Indl Dev Brd Solid Waste Disp Rev Mobile Energy Svc Co Proj Rfdg (b) (c).......................... 6.950 01/01/20 2,142 ------------- 8,527,982 ------------- ARIZONA 3.0% 1,860 Arizona Hlth Fac Auth Hosp John C Lincoln Hlth Network.................. 5.750 12/01/32 1,804,628 6,000 Arizona St Trans Brd Hwy Rev Sub Ser A Rfdg.................................. 4.750 07/01/11 6,322,020 3,025 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease Oblig Irvington Proj Tucson Ser A Rfdg (FSA Insd)..................... 7.250 07/15/10 3,196,669 ------------- 11,323,317 ------------- ARKANSAS 0.3% 1,930 Arkansas St Cap Apprec College Savings............................... * 06/01/16 1,116,003 ------------- CALIFORNIA 16.5% 6,215 ABC, CA Uni Sch Dist Cap Apprec (FGIC Insd)................................. * 08/01/34 1,192,783 195 California Rural Home Mtg Fin Auth Single Family Mtg Rev Ser B (GNMA Collateralized)....................... 7.750 09/01/26 196,884 3,000 California St Dept Wtr Res Ser A...... 5.875 05/01/16 3,397,740 5,000 California St Pub Wks Brd Dept Gen Svc Cap East End A (AMBAC Insd)........... 5.125 12/01/21 5,306,950 6,000 California St Pub Wks Brd Lease Rev Dept of Corrections St Prisons Ser A Rfdg (AMBAC Insd)..................... 5.250 12/01/13 6,839,340
See Notes to Financial Statements 7 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE CALIFORNIA (CONTINUED) $ 2,000 California St Pub Wks Brd Lease Rev Dept of Corrections St Prisons Ser A Rfdg (AMBAC Insd)..................... 5.000% 12/01/19 $ 2,180,920 5,000 California St Rfdg.................... 5.000 02/01/19 5,129,750 30,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Ser A Rfdg..................... * 01/15/22 10,359,900 1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Sr Lien Ser A (Prerefunded @ 01/01/07)............................. 6.500 01/01/32 1,163,620 1,175 Kings Cnty, CA Waste Mgmt Auth Solid Waste Rev............................. 7.200 10/01/14 1,241,035 9,500 Los Angeles, CA Dept Wtr & Pwr Elec Plant Rev Crossover Rfdg (FGIC Insd)................................. 5.375 09/01/23 9,812,075 5,500 Port Oakland, CA Ser L (FGIC Insd).... 5.000 11/01/32 5,535,145 9,000 Riverside Cnty, CA Asset Leasing Corp Leasehold Rev Riverside Cnty Hosp Proj (MBIA Insd)........................... * 06/01/21 3,629,340 5,700 Sacramento, CA City Fin Auth Rev Comb Proj B (MBIA Insd).................... * 11/01/15 3,273,681 10,225 Santa Ana, CA Unified Sch Dist Ctf Part Cap Apprec Fin Proj (FSA Insd)... * 04/01/32 2,221,074 ------------- 61,480,237 ------------- COLORADO 7.1% 4,340 Adams & Arapahoe Cntys, CO Jt Sch Dist Ser A (FSA Insd)...................... 5.250 12/01/18 4,778,731 4,290 Adams & Arapahoe Cntys, CO Jt Sch Dist Ser C (MBIA Insd)..................... 5.750 12/01/08 4,938,905 3,000 Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev E-470 Proj (Prerefunded @ 08/31/05)............................. 7.000 08/31/26 3,470,010 1,000 Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev E-470 Proj Ser B (Prerefunded @ 08/31/05)............................. 6.950 08/31/20 1,155,530 9,000 Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev E-470 Proj Ser C (Prerefunded @ 08/31/05)............................. * 08/31/26 1,812,240 2,000 Colorado Hlth Fac Auth Rev Catholic Hlth Initiatives Ser A................ 5.500 03/01/32 2,059,780 6,495 Colorado Springs, CO Utils Rev (Escrowed to Maturity)................ 6.600 11/15/18 8,326,655 ------------- 26,541,851 -------------
See Notes to Financial Statements 8 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE CONNECTICUT 0.7% $ 2,500 Connecticut St Hlth & Ed Fac Auth Rev Nursing Home Pgm AHF/Hartford (Prerefunded @ 11/01/04).............. 7.125% 11/01/14 $ 2,769,050 ------------- DISTRICT OF COLUMBIA 1.4% 5,000 Metropolitan Washington DC Arpt Auth Sys Ser A (FGIC Insd)................. 5.250 10/01/32 5,109,750 ------------- FLORIDA 9.8% 1,985 Bay Cnty, FL Sch Brd Ctf Part (Prerefunded @ 07/01/04) (AMBAC Insd)................................. 6.750 07/01/12 2,153,983 2,500 Dade Cnty, FL Wtr & Swr Sys Rev (FGIC Insd)................................. 5.250 10/01/21 2,673,400 5,000 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC Insd).......................... 5.950 07/01/20 5,480,700 1,045 Florida Hsg Fin Agy Single Family Mtg Ser A Rfdg (GNMA Collateralized)...... 6.650 01/01/24 1,091,920 3,000 Hillsborough Cnty, FL Cap Impt Pgm Rev Criminal Justice Fac Rfdg (FGIC Insd)................................. 5.250 08/01/16 3,057,300 3,980 Jacksonville, FL Port Auth (MBIA Insd)................................. 5.700 11/01/30 4,210,880 2,780 Jacksonville, FL Port Auth (Prerefunded @ 11/01/10) (MBIA Insd)................................. 5.700 11/01/30 3,243,343 11,500 Miami-Dade Cnty, FL Aviation Rev Miami Intl Arpt (FGIC Insd)................. 5.375 10/01/32 11,861,330 2,830 Pinellas Cnty, FL Hsg Fin Auth Single Family Mtg Rev Multi Cnty Pgm Ser A (GNMA Collateralized)................. 6.700 02/01/28 2,941,219 ------------- 36,714,075 ------------- GEORGIA 3.8% 5,000 Georgia Muni Elec Auth Pwr Rev Ser B (Escrowed to Maturity) (FGIC Insd).... 5.700 01/01/19 5,871,450 2,700 Marietta, GA Dev Auth Rev First Mtg Life College Ser B (FSA Insd)......... 5.375 09/01/09 2,968,083 5,000 Municipal Elec Auth GA Combustion Turbine Proj Ser A (MBIA Insd)........ 5.250 11/01/20 5,373,400 ------------- 14,212,933 ------------- HAWAII 3.0% 10,430 Hawaii St Dept Budget & Fin Spl Purp Rev Hawaiian Elec Co Inc Ser A (MBIA Insd)................................. 5.650 10/01/27 11,137,467 -------------
See Notes to Financial Statements 9 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE ILLINOIS 9.0% $ 7,500 Chicago, IL Brd Ed Cap Apprec Sch Reform B-1 (FGIC Insd)................ * 12/01/29 $ 1,801,650 3,500 Chicago, IL Cap Apprec (Prerefunded @ 07/01/05) (AMBAC Insd)................ * 01/01/17 1,630,020 10,000 Chicago, IL Cap Apprec City Colleges (FGIC Insd)........................... * 01/01/29 2,565,900 6,000 Chicago, IL Lakefront Millenium Pkg Fac (MBIA Insd) (d)................... 0/5.750% 01/01/29 5,393,580 3,180 Illinois Hlth Fac Auth Rev Children's Mem Hosp (MBIA Insd).................. 6.250 08/15/13 3,812,756 1,485 Illinois Hlth Fac Auth Rev Evangelical Hosp Ser A Rfdg (FSA Insd)............ 6.750 04/15/17 1,517,893 825 Illinois Hlth Fac Auth Rev Evangelical Hosp Ser C (FSA Insd)................. 6.750 04/15/17 843,274 1,000 Illinois Hlth Fac Auth Rev Highland Park Hosp Proj Ser A (Prerefunded @ 10/01/07) (MBIA Insd)................. 5.750 10/01/17 1,167,560 5,000 Illinois St First Ser (FSA Insd)...... 5.250 12/01/20 5,388,100 2,070 Northern IL Univ Ctf Part Hoffman Estates Ctr Proj (FSA Insd)........... 5.400 09/01/16 2,391,554 5,000 Regional Trans Auth IL Ser A (AMBAC Insd)................................. 8.000 06/01/17 7,080,650 ------------- 33,592,937 ------------- INDIANA 0.5% 2,000 Petersburg, IN Pollutn Ctl Rev IN Pwr & Lt........................... 6.375 11/01/29 1,771,740 ------------- KANSAS 2.0% 3,430 Kansas St Dev Fin Auth Rev KS Proj Ser N (AMBAC Insd)........................ 5.250 10/01/20 3,678,709 3,615 Kansas St Dev Fin Auth Rev KS Proj Ser N (AMBAC Insd)........................ 5.250 10/01/21 3,856,916 ------------- 7,535,625 ------------- KENTUCKY 0.2% 500 Mount Sterling, KY Lease Rev KY League Cities Fdg Ser B...................... 6.100 03/01/18 597,010 ------------- LOUISIANA 1.6% 6,000 Saint Charles Parish, LA Solid Waste Disp Rev LA Pwr & Lt Co Proj (FSA Insd)................................. 7.050 04/01/22 6,024,420 -------------
See Notes to Financial Statements 10 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE MAINE 0.8% $ 3,000 Maine Ed Ln Mktg Corp Student Ln Rev Ser A4 (Std Lns Gtd).................. 5.950% 11/01/03 $ 3,066,960 ------------- MARYLAND 2.5% 5,000 Maryland St Econ Dev Corp MD Aviation Admin Fac (FSA Insd).................. 5.375 06/01/20 5,328,400 4,000 Maryland St Trans Auth Arpt Baltimore/ WA Intl Arpt B (AMBAC Insd)........... 5.125 03/01/24 4,100,080 ------------- 9,428,480 ------------- MASSACHUSETTS 1.1% 1,750 Massachusetts St Hlth & Ed Fac Auth Rev Hlthcare Sys Covenant Hlth........ 6.000 07/01/31 1,832,180 1,000 Massachusetts St Indl Fin Agy Wtr Treatment Amern Hingham............... 6.900 12/01/29 1,035,550 1,000 Massachusetts St Indl Fin Agy Wtr Treatment Amern Hingham............... 6.950 12/01/35 1,030,670 ------------- 3,898,400 ------------- MICHIGAN 7.4% 1,250 Battle Creek, MI Downtown Dev Auth Tax Increment Rev (Prerefunded @ 05/01/04)............................. 7.600 05/01/16 1,354,450 5,450 Detroit, MI Convention Fac Rev Cobo Hall Expansion Rfdg (FSA Insd)........ 5.250 09/30/12 5,641,622 5,000 Detroit, MI Downtown Dev Auth Tax Increment Rev Dev Area No 1 Proj Ser C1 (Prerefunded @ 07/01/06)........... 6.250 07/01/25 5,797,950 2,750 Detroit, MI Ser B Rfdg................ 7.000 04/01/04 2,882,495 3,185 Detroit, MI Wtr Supply Sys Rev Sr Lien Ser A (MBIA Insd)..................... 5.250 07/01/20 3,444,227 5,000 Michigan St Strategic Fd Detroit Edison Pollutn Ctl Ser B Rfdg......... 5.650 09/01/29 5,107,150 3,090 Troy, MI Downtown Dev Auth Dev Rfdg (MBIA Insd)........................... 5.500 11/01/15 3,484,191 ------------- 27,712,085 ------------- MISSISSIPPI 0.5% 2,000 Mississippi Bus Fin Corp MS Pollutn Ctl Rev Sys Energy Res Inc Proj....... 5.875 04/01/22 1,975,160 -------------
See Notes to Financial Statements 11 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE MISSOURI 1.3% $ 2,395 Kansas City, MO Port Auth Fac Rvrfront Park Proj Ser A....................... 5.750% 10/01/03 $ 2,409,562 2,195 Missouri St Hlth & Ed Fac Rev Univ MO Columbia Arena Proj................... 5.000 11/01/16 2,370,776 ------------- 4,780,338 ------------- NEVADA 2.3% 6,000 Clark Cnty, NV Arpt Rev Sub Lien Ser B (FGIC Insd)........................... 5.250 07/01/34 6,220,500 1,440 Clark Cnty, NV Passenger Fac Charge Rev Las Vegas McCarran Intl Rfdg (MBIA Insd)................................. 4.750 07/01/22 1,456,920 940 Nevada Hsg Div Single Family Pgm Mezz B (FHA/VA Gtd)........................ 6.550 10/01/12 973,088 ------------- 8,650,508 ------------- NEW JERSEY 9.1% 1,000 New Jersey Econ Dev Auth Econ Dev Rev Manahawkin Convalescent Ser A Rfdg (FHA Gtd)............................. 6.650 02/01/23 1,052,730 2,500 New Jersey Econ Dev Auth Mkt Trans Fac Rev Sr Lien Ser A (Prerefunded @ 07/01/04) (MBIA Insd)................. 5.800 07/01/09 2,685,025 2,350 New Jersey Econ Dev Auth Trans Proj Sublease Ser B (FSA Insd)............. 5.750 05/01/09 2,723,861 1,695 New Jersey Hlthcare Fac Fin Auth Rev Gen Hosp Ctr Passaic (Escrowed to Maturity) (FSA Insd).................. 6.000 07/01/06 1,885,687 2,500 New Jersey Hlthcare Fac Fin Auth Rev Gen Hosp Ctr Passaic (Escrowed to Maturity) (FSA Insd).................. 6.750 07/01/19 3,226,050 10,000 New Jersey St Ed Fac Auth Higher Ed Cap Impt Ser A (AMBAC Insd)........... 5.250 09/01/20 10,831,600 4,000 New Jersey St Trans Tr Fd Auth Trans Sys Ser A............................. 5.750 06/15/16 4,756,600 6,750 Salem Cnty, NJ Indl Pollutn Ctl Fin Auth Rev Pollutn Ctl Pub Svc Elec & Gas Ser A (MBIA Insd)................. 5.450 02/01/32 6,900,997 ------------- 34,062,550 ------------- NEW YORK 20.0% 7,000 Metropolitan Trans Auth NY Ser A Rfdg (FGIC Insd)........................... 5.250 11/15/31 7,367,430 7,270 New York City Ser A................... 7.000 08/01/04 7,745,458 5,000 New York City Ser C................... 5.500 08/01/13 5,410,950 5,000 New York City Ser G................... 5.750 02/01/14 5,437,200
See Notes to Financial Statements 12 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE NEW YORK (CONTINUED) $ 6,000 New York City Transitional Fin Auth Rev Future Tax Secd Ser A (d)......... 5.500/14.000% 11/01/26 $ 6,701,040 8,240 New York City Transitional Future Tax Secd C Rfdg (AMBAC Insd).............. 5.250 08/01/18 9,006,155 7,575 New York St Dorm Auth Rev City Univ Sys Cons Ser A........................ 5.625 07/01/16 8,778,819 2,000 New York St Dorm Auth Rev City Univ Third Gen Res Ser 2 (Prerefunded @ 07/01/04) (MBIA Insd)................. 6.250 07/01/19 2,119,920 3,845 New York St Dorm Auth Rev Secd Hosp General Hosp Rfdg..................... 5.750 02/15/20 4,226,770 5,885 New York St Energy Resh & Dev Auth Fac Rev................................... 7.125 12/01/29 6,427,420 2,310 New York St Med Care Fac Fin Agy Rev Saint Peter's Hosp Proj Ser A (AMBAC Insd)................................. 5.375 11/01/13 2,373,617 3,130 New York St Urban Dev Corp Rev Correctional Fac Ser A Rfdg........... 5.500 01/01/16 3,265,779 5,000 New York St Urban Dev Corp Rev St Fac Rfdg.................................. 5.700 04/01/20 5,772,950 ------------- 74,633,508 ------------- OHIO 4.8% 1,150 Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc Proj.............................. 7.500 01/01/30 1,275,845 2,000 Cuyahoga Cnty, OH Multi-Family Rev Hsg Dale Bridge Apt (GNMA Collateralized)....................... 6.600 10/20/30 2,105,660 3,540 Franklin Cnty, OH Hosp Rev & Impt Doctor's Hosp Proj Rfdg (Escrowed to Maturity)............................. 5.875 12/01/23 3,637,385 1,500 Mahoning Cnty, OH Hosp Fac Forum Hlth Oblig Group Ser A..................... 6.000 11/15/32 1,557,525 5,130 Muskingum Cnty, OH Hosp Fac Rev Bethesda Care Sys Rfdg & Impt (Connie Lee Insd)............................. 6.250 12/01/10 5,984,709 2,000 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev OH Edison Co Proj Rfdg............ 5.950 05/15/29 2,001,100 1,490 Toledo Lucas Cnty, OH Port Auth Dev Rev Northwest OH Bd Fd Ser C.......... 6.600 11/15/15 1,516,299 ------------- 18,078,523 -------------
See Notes to Financial Statements 13 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE OKLAHOMA 0.5% $ 1,500 Jenks, OK Aquarium Auth Rev First Mtg (MBIA Insd)........................... 6.100% 07/01/30 $ 1,760,655 ------------- OREGON 3.7% 5,000 Oregon Hlth Sciences Univ Insd Ser A (MBIA Insd)........................... 5.250 07/01/22 5,345,700 2,745 Oregon St Dept Admin Ser A (Prerefunded @ 11/01/05) (MBIA Insd)................................. 5.250 11/01/10 3,026,088 5,000 Oregon St Dept Admin Ser C Rfdg (MBIA Insd)................................. 5.250 11/01/18 5,443,000 ------------- 13,814,788 ------------- PENNSYLVANIA 4.7% 5,000 Philadelphia, PA Auth Indl Ser B (FSA Insd)................................. 5.125 10/01/26 5,209,100 6,400 Philadelphia, PA Gas Wks Rev Ser 14 (Prerefunded @ 07/01/03) (FSA Insd)... 6.250 07/01/08 6,583,552 2,525 Philadelphia, PA Gas Wks Rev Ser 14 Rfdg (FSA Insd)....................... 6.375 07/01/26 2,597,947 1,370 Philadelphia, PA Hosp & Higher Ed Fac Auth Rev Cmnty College Ser B Rfdg (MBIA Insd)........................... 6.500 05/01/08 1,620,683 1,320 Ridley Park, PA Hosp Auth Rev Taylor Hosp Ser A (Escrowed to Maturity)..... 6.000 12/01/05 1,408,453 ------------- 17,419,735 ------------- RHODE ISLAND 1.1% 3,000 Rhode Island St Cons Cap Dev Ln Ser A..................................... 5.000 08/01/12 3,068,400 1,050 Rhode Island St Hlth & Ed Bldg Corp Rev Higher Ed Fac Roger Williams (Prerefunded @ 11/15/04) (Connie Lee Insd)................................. 7.200 11/15/14 1,166,676 ------------- 4,235,076 ------------- SOUTH CAROLINA 2.1% 1,015 Rock Hill, SC Util Sys Rev Comb Ser C Rfdg (FSA Insd)....................... 5.000 01/01/11 1,121,484 6,500 South Carolina Jobs Econ Elec & Gas Co Proj Ser A (AMBAC Insd)............... 5.200 11/01/27 6,810,245 ------------- 7,931,729 -------------
See Notes to Financial Statements 14 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE TENNESSEE 1.9% $13,250 Johnson City, TN Hlth & Ed Fac Brd Hosp Rev Cap Apprec First Mtg Ser A Rfdg (MBIA Insd)...................... * 07/01/26 $ 3,837,863 2,500 Johnson City, TN Hlth & Ed Fac Brd Hosp Rev First Mtg Mtn St Hlth Ser A Rfdg (MBIA Insd)...................... 7.500% 07/01/25 3,174,625 95 Tennessee Hsg Dev Agy Mtg Fin Ser A... 7.125 07/01/26 98,400 ------------- 7,110,888 ------------- TEXAS 13.4% 1,815 Alliance Arpt Auth Inc TX Spl Amern Airl Inc Proj......................... 7.500 12/01/29 635,323 2,000 Brazos River Auth TX Pollutn Adj TXU Elec Co Proj Ser C Rfdg (Variable Rate Coupon)............................... 5.750 05/01/36 1,968,900 5,000 Dallas-Fort Worth, TX Intl Arpt Rev Impt Jt Ser A Rfdg (FGIC Insd)........ 5.500 11/01/31 5,215,400 2,345 Denton Cnty, TX Perm Impt............. 5.500 07/15/19 2,581,587 2,250 Harris Cnty, TX Hlth Fac Dev Corp Hosp Rev Hermann Hosp Proj (Prerefunded @ 10/01/04) (MBIA Insd)................. 6.375 10/01/24 2,436,660 1,000 Harris Cnty, TX Hlth Fac Dev Mem Hermann Hlthcare Ser A................ 6.375 06/01/29 1,080,900 5,000 Harris Cnty, TX Sr Lien Toll Rd Rfdg (FSA Insd)............................ 5.125 08/15/32 5,160,800 4,655 Houston, TX Arpt Sys Rev Sub Lien (FSA Insd)................................. 5.500 07/01/15 5,245,347 3,000 Houston, TX Arpt Sys Rev Sub Lien Ser A (FSA Insd).......................... 5.625 07/01/30 3,125,340 1,275 Matagorda Cnty, TX Navig Dist No 1 Rev Houston Lt & Pwr Ser A Rfdg (AMBAC Insd)................................. 6.700 03/01/27 1,293,080 5,000 Matagorda Cnty, TX Navig Dist No 1 Rev Houston Ltg Rfdg (AMBAC Insd)......... 5.125 11/01/28 5,153,150 2,000 Metropolitan Hlth Fac Dev Corp TX Wilson N Jones Mem Hosp Proj.......... 7.250 01/01/31 1,808,480 4,475 North Cent TX Hlth Fac Dev Hosp Baylor Hlthcare Sys Proj Ser A............... 5.125 05/15/29 4,504,177 5,000 San Antonio, TX Elec & Gas Sys Rfdg... 5.375 02/01/16 5,540,150 3,960 Stafford, TX Econ Dev Corp (FGIC Insd)................................. 5.500 09/01/30 4,306,025 ------------- 50,055,319 -------------
See Notes to Financial Statements 15 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE UTAH 0.7% $ 4,950 Intermountain Pwr Agy UT Pwr Supply Rev Ser A Rfdg (Escrowed to Maturity) (FGIC Insd)........................... * 07/01/17 $ 2,623,946 ------------- VIRGINIA 1.0% 2,000 Loudoun Cnty, VA Ctf Part (FSA Insd)................................. 6.900% 03/01/19 2,128,320 1,500 Virginia St Hsg Dev Auth Multi-Family Ser E Rfdg............................ 5.900 11/01/17 1,540,170 ------------- 3,668,490 ------------- WASHINGTON 8.1% 5,000 Clark Cnty, WA Sch Dist 114 (FSA Insd)................................. 5.250 06/01/19 5,434,300 2,245 King Cnty, WA Ser B (Prerefunded @ 12/01/07)............................. 6.625 12/01/15 2,716,787 5,000 King Cnty, WA Ser B Rfdg.............. 5.900 12/01/14 5,893,400 4,000 Washington St Pub Pwr Supply Ser A Rfdg (FGIC Insd)...................... 7.000 07/01/08 4,842,760 10,000 Washington St Pub Pwr Supply Ser A Rfdg (AMBAC Insd)..................... 5.700 07/01/09 11,354,900 ------------- 30,242,147 ------------- WEST VIRGINIA 3.7% 5,920 Harrison Cnty, WV Cnty Cmnty Solid Waste Disp Rev West PA Pwr Co Ser C (AMBAC Insd).......................... 6.750 08/01/24 6,366,723 4,000 Marshall Cnty, WV Pollutn Ctl Rev OH Pwr Co Proj Ser C (MBIA Insd)......... 6.850 06/01/22 4,136,400 3,000 West Virginia St Wtr Dev Auth Wtr Dev Rev Ln Pgm II Ser A (Prerefunded @ 11/01/04) (FSA Insd).................. 6.750 11/01/33 3,307,350 ------------- 13,810,473 ------------- WISCONSIN 1.3% 2,000 Wisconsin St Hlth & Ed Fac Children's Hosp (FGIC Insd)...................... 5.000 08/15/10 2,047,700 2,675 Wisconsin St Hlth & Ed Fac FH Hlthcare Dev Inc Proj.......................... 6.250 11/15/28 2,801,902 ------------- 4,849,602 ------------- PUERTO RICO 3.6% 7,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser Y Rfdg (FSA Insd)......... 6.250 07/01/21 8,754,270 4,000 Puerto Rico Pub Bldgs Auth Gtd Pub Ed & Hlth Fac Ser M Rfdg (MBIA Insd)..... 5.600 07/01/08 4,611,280 ------------- 13,365,550 -------------
See Notes to Financial Statements 16 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
MARKET DESCRIPTION VALUE TOTAL LONG-TERM INVESTMENTS 156.8% (Cost $541,051,731).................................................... $ 585,629,307 SHORT-TERM INVESTMENT 0.3% (Cost $1,300,000)...................................................... 1,300,000 ------------- TOTAL INVESTMENTS 157.1% (Cost $542,351,731).................................................... 586,929,307 OTHER ASSETS IN EXCESS OF LIABILITIES 3.2%.............................. 11,662,479 PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (60.3%).............. (225,075,054) ------------- NET ASSETS APPLICABLE TO COMMON SHARES 100.0%........................... $ 373,516,732 =============
* Zero coupon bond (a) Assets segregated as collateral for open futures transactions. (b) Non-income producing security. (c) Issuer has filed for protection in federal bankruptcy court. (d) Security is a "step-up" bond where the coupon increases or steps up at a predetermined date. AMBAC--AMBAC Indemnity Corp. Connie Lee--Connie Lee Insurance Co. FGIC--Financial Guaranty Insurance Co. FHA--Federal Housing Administration FHA/VA--Federal Housing Administration/Department of Veterans Affairs FSA--Financial Security Assurance Inc. GNMA--Government National Mortgage Association MBIA--Municipal Bond Investors Assurance Corp. Std Lns--Student Loans See Notes to Financial Statements 17 FINANCIAL STATEMENTS Statement of Assets and Liabilities April 30, 2003 (Unaudited) ASSETS: Total Investments (Cost $542,351,731)....................... $586,929,307 Cash........................................................ 279,508 Receivables: Interest.................................................. 9,254,692 Investments Sold.......................................... 8,303,144 Other....................................................... 1,134 ------------ Total Assets............................................ 604,767,785 ------------ LIABILITIES: Payables: Investments Purchased..................................... 5,020,200 Variation Margin on Futures............................... 507,094 Investment Advisory Fee................................... 293,589 Administrative Fee........................................ 24,466 Affiliates................................................ 12,529 Trustees' Deferred Compensation and Retirement Plans........ 196,101 Accrued Expenses............................................ 122,020 ------------ Total Liabilities....................................... 6,175,999 Preferred Shares (including accrued distributions).......... 225,075,054 ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $373,516,732 ============ NET ASSET VALUE PER COMMON SHARE ($373,516,732 divided by 23,555,115 shares outstanding)............................ $ 15.86 ============ NET ASSETS CONSIST OF: Common Shares ($.01 par value with an unlimited number of shares authorized, 23,555,115 shares issued and outstanding).............................................. $ 235,551 Paid in Surplus............................................. 348,118,080 Net Unrealized Appreciation................................. 44,154,760 Accumulated Undistributed Net Investment Income............. 3,230,727 Accumulated Net Realized Loss............................... (22,222,386) ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $373,516,732 ============ PREFERRED SHARES ($.01 par value, authorized 100,000,000 shares, 9,000 issued with liquidation preference of $25,000 per share)........................................ $225,000,000 ============ NET ASSETS INCLUDING PREFERRED SHARES....................... $598,516,732 ============
See Notes to Financial Statements 18 Statement of Operations For the Six Months Ended April 30, 2003 (Unaudited) INVESTMENT INCOME: Interest.................................................... $15,489,526 ----------- EXPENSES: Investment Advisory Fee..................................... 1,767,032 Preferred Share Maintenance................................. 319,587 Administrative Fee.......................................... 147,253 Trustees' Fees and Related Expenses......................... 38,017 Legal....................................................... 24,788 Custody..................................................... 17,462 Other....................................................... 132,804 ----------- Total Expenses.......................................... 2,446,943 ----------- NET INVESTMENT INCOME....................................... $13,042,583 =========== REALIZED AND UNREALIZED GAIN/LOSS: Realized Gain/Loss: Investments............................................... $ 2,940,451 Futures................................................... (3,001,740) ----------- Net Realized Loss........................................... (61,289) ----------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... 38,494,140 ----------- End of the Period: Investments............................................. 44,577,576 Futures................................................. (422,816) ----------- 44,154,760 ----------- Net Unrealized Appreciation During the Period............... 5,660,620 ----------- NET REALIZED AND UNREALIZED GAIN............................ $ 5,599,331 =========== DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $(1,294,439) =========== NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS................................................ $17,347,475 ===========
See Notes to Financial Statements 19 Statements of Changes in Net Assets (Unaudited)
SIX MONTHS ENDED YEAR ENDED APRIL 30, 2003 OCTOBER 31, 2002 ------------------------------------ FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income.............................. $ 13,042,583 $ 26,183,876 Net Realized Gain/Loss............................. (61,289) 6,132,890 Net Unrealized Appreciation/Depreciation During the Period........................................... 5,660,620 (7,426,483) Distributions to Preferred Shareholders: Net Investment Income............................ (1,294,439) (3,147,858) ------------ ------------ Change in Net Assets Applicable to Common Shares from Operations.................................. 17,347,475 21,742,425 Distributions to Common Shareholders: Net Investment Income............................ (11,941,969) (22,882,903) ------------ ------------ NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM INVESTMENT ACTIVITIES................ 5,405,506 (1,140,478) NET ASSETS APPLICABLE TO COMMON SHARES: Beginning of the Period............................ 368,111,226 369,251,704 ------------ ------------ End of the Period (Including accumulated undistributed net investment income of $3,230,727 and $3,424,552, respectively).................... $373,516,732 $368,111,226 ============ ============
See Notes to Financial Statements 20 Financial Highlights (Unaudited) THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS ENDED APRIL 30, ------------------- 2003 2002 (a) 2001 -------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD (b)............ $ 15.63 $ 15.68 $ 14.38 ------- ------- ------- Net Investment Income................................. .55 1.11 1.13 Net Realized and Unrealized Gain/Loss................. .24 (.06) 1.25 Common Share Equivalent of Distributions Paid to Preferred Shareholders: Net Investment Income............................... (.05) (.13) (.31) Net Realized Gain................................... -0- -0- -0- ------- ------- ------- Total from Investment Operations........................ .74 .92 2.07 Distributions Paid to Common Shareholders: Net Investment Income............................... (.51) (.97) (.77) Net Realized Gain................................... -0- -0- -0- ------- ------- ------- NET ASSET VALUE, END OF THE PERIOD...................... $ 15.86 $ 15.63 $ 15.68 ======= ======= ======= Common Share Market Price at End of the Period.......... $ 14.85 $ 14.37 $ 13.78 Total Return (c)........................................ 7.01%* 11.50% 19.22% Net Assets Applicable to Common Shares at End of the Period (In millions).................................. $ 373.5 $ 368.1 $ 369.3 Ratio of Expenses to Average Net Assets Applicable to Common Shares (d)..................................... 1.34% 1.46% 1.63% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (d)....................... 7.13% 7.22% 7.49% Portfolio Turnover...................................... 18%* 38% 30% SUPPLEMENTAL RATIOS: Ratio of Expenses to Average Net Assets Including Preferred Shares (d).................................. .83% .90% 1.00% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (e)....................... 6.42% 6.36% 5.44% SENIOR SECURITIES: Total Preferred Shares Outstanding...................... 9,000 9,000 9,000 Asset Coverage Per Preferred Share (f).................. $66,510 $65,910 $66,028 Involuntary Liquidating Preference Per Preferred Share................................................. $25,000 $25,000 $25,000 Average Market Value Per Preferred Share................ $25,000 $25,000 $25,000
* Non-Annualized (a) As required, effective November 1, 2001, the Trust has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on fixed income securities. The effect of this change for the year ended October 31, 2002 was to increase net investment income per share by less than $.01, decrease net realized and unrealized gains and losses per share by less than $.01 and increase the ratio of net investment income to average net assets applicable to common shares by .02%. Per share, ratios, and supplemental data for the periods prior to October 31, 2002 have not been restated to reflect this change. (b) Net Asset Value at March 26, 1993, is adjusted for common and preferred share offering costs of $.211 per common share. (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. (d) Ratios do not reflect the effect of dividend payments to preferred shareholders. (e) Ratios reflect the effect of dividend payments to preferred shareholders. (f) Calculated by subtracting the Trust's total liabilities (not including the preferred shares) from the Trust's total assets and dividing this by the number of preferred shares outstanding. 21
MARCH 26, 1993 (COMMENCEMENT YEAR ENDED OCTOBER 31, OF INVESTMENT - ----------------------------------------------------------------------------- OPERATIONS) TO 2000 1999 1998 1997 1996 1995 1994 OCTOBER 31, 1993 - ------------------------------------------------------------------------------------------------ $ 13.80 $ 15.64 $ 15.14 $ 14.50 $ 14.37 $ 12.90 $ 16.43 $ 14.79 ------- -------- -------- -------- -------- -------- -------- -------- 1.15 1.14 1.14 1.16 1.17 1.18 1.18 .64 .63 (1.86) .51 .63 .13 1.57 (3.34) 1.49 (.39) (.31) (.34) (.34) (.34) (.38) (.24) (.11) -0- -0- -0- -0- -0- -0- (.04) -0- ------- -------- -------- -------- -------- -------- -------- -------- 1.39 (1.03) 1.31 1.45 .96 2.37 (2.44) 2.02 (.81) (.81) (.81) (.81) (.83) (.90) (.91) (.38) -0- -0- -0- -0- -0- -0- (.18) -0- ------- -------- -------- -------- -------- -------- -------- -------- $ 14.38 $ 13.80 $ 15.64 $ 15.14 $ 14.50 $ 14.37 $ 12.90 $ 16.43 ======= ======== ======== ======== ======== ======== ======== ======== $ 12.25 $12.0625 $ 14.75 $13.5625 $ 12.375 $ 12.75 $ 10.75 $ 15.25 8.56% -13.29% 15.10% 16.61% 3.70% 27.67% -23.52% 4.25%* $ 338.7 $ 325.1 $ 368.5 $ 356.6 $ 341.5 $ 338.4 $ 303.9 $ 386.9 1.77% 1.67% 1.67% 1.70% 1.77% 1.80% 1.70% 1.46% 8.36% 7.56% 7.41% 7.93% 8.15% 8.67% 8.01% 6.72% 25% 35% 24% 32% 42% 50% 79% 66%* 1.05% 1.02% 1.03% 1.03% 1.06% 1.06% 1.03% 1.00% 5.55% 5.50% 5.21% 5.61% 5.78% 5.90% 6.39% 5.59% 9,000 9,000 4,500 4,500 4,500 4,500 4,500 4,500 $62,631 $ 61,123 $131,890 $129,243 $125,881 $125,198 $117,532 $135,985 $25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
See Notes to Financial Statements 22 NOTES TO FINANCIAL STATEMENTS April 30, 2003 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen Value Municipal Income Trust (the "Trust") is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. The Trust's investment objective is to provide a high level of current income exempt from federal income tax, consistent with preservation of capital. The Trust will invest in a portfolio consisting substantially of municipal obligations rated investment grade at the time of investment. The Trust commenced investment operations on March 26, 1993. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION Municipal bonds are valued by independent pricing services or dealers using the mean of the bid and asked prices or, in the absence of market quotations, at fair value based upon yield data relating to municipal bonds with similar characteristics and general market conditions. Securities which are not valued by independent pricing services or dealers are valued at fair value using procedures established in good faith by the Board of Trustees. Future contracts are valued at the settlement price established each day on the exchange on which they are traded. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market value. B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date basis. Realized gains and losses are determined on an identified cost basis. The Trust may purchase and sell securities on a "when-issued" or "delayed delivery" basis with settlement to occur at a later date. The value of the security so purchased is subject to market fluctuations during this period. The Trust will maintain, in a segregated account with its custodian, assets having an aggregate value at least equal to the amount of the when-issued or delayed delivery purchase commitments until payment is made. At April 30, 2003, there were no when-issued and delayed delivery purchase commitments. C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond premium is amortized and discount is accreted over the expected life of each applicable security. 23 NOTES TO FINANCIAL STATEMENTS April 30, 2003 (Unaudited) D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. The Trust intends to utilize provisions of the federal income tax laws which allow it to carry a realized capital loss forward for eight years following the year of the loss and offset such losses against any future realized capital gains. At October 31, 2002, the Trust had an accumulated capital loss carryforward for tax purposes of $22,151,605, which will expire between October 31, 2003 and October 31, 2007. Of this amount, $19,492,784 will expire on October 31, 2003. At April 30, 2003, the cost and related gross unrealized appreciation and depreciation were as follows: Cost of investments for tax purposes........................ $541,499,745 ============ Gross tax unrealized appreciation........................... $ 47,386,578 Gross tax unrealized depreciation........................... (1,957,016) ------------ Net tax unrealized appreciation on investments.............. $ 45,429,562 ============
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly dividends from net investment income to common shareholders. Net realized gains, if any, are distributed annually on a pro rata basis to common and preferred shareholders. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income for tax purposes. The tax character of distributions paid during the year ended October 31, 2002 were as follows: Distributions paid from: Ordinary income........................................... $103,315 Long-term capital gain.................................... -0- -------- $103,315 ========
As of October 31, 2002, the component of distributable earnings on a tax basis were as follows: Undistributed ordinary income............................... $106,754
24 NOTES TO FINANCIAL STATEMENTS April 30, 2003 (Unaudited) 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Investment Advisory Corp. (the "Adviser") will provide investment advice and facilities to the Trust for an annual fee payable monthly of .60% of the average daily net assets of the Trust. In addition, the Trust will pay a monthly administrative fee to Van Kampen Investments Inc. or its affiliates (collectively "Van Kampen"), the Trust's Administrator, at an annual rate of ..05% of the average daily net assets of the Trust. The administrative services provided by the Administrator include record keeping and reporting responsibilities with respect to the Trust's portfolio and preferred shares and providing certain services to shareholders. For the six months ended April 30, 2003, the Trust recognized expenses of approximately $14,500 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of the Trust is an affiliated person. Under separate Accounting Services and Legal Services agreements, the Adviser provides accounting and legal services to the Trust. The Adviser allocates the cost of such services to each trust. For the six months ended April 30, 2003, the Trust recognized expenses of approximately $29,100 representing Van Kampen's cost of providing accounting and legal services to the Trust, which are reported as part of "Other" and "Legal" expenses, respectively, in the Statement of Operations. Certain officers and trustees of the Trust are also officers and directors of Van Kampen. The Trust does not compensate its officers or trustees who are officers of Van Kampen. The Trust has implemented deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation to a later date. Benefits under the retirement plan are payable for a ten-year period and are based upon each trustee's years of service to the Trust. The maximum annual benefit per trustee under the plan is $2,500. 3. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $144,108,626 and $102,037,476, respectively. 25 NOTES TO FINANCIAL STATEMENTS April 30, 2003 (Unaudited) 4. DERIVATIVE FINANCIAL INSTRUMENTS A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate, or index. In order to seek to manage the interest rate exposure of the Trust's portfolio in a changing interest rate environment, the Trust may purchase or sell financial futures contracts or engage in transactions involving interest rate swaps, caps, floors, or collars. The Trust expects to enter into these transactions primarily as a hedge against anticipated interest rate or fixed income market changes, for duration management or for risk management purposes, but may also enter into these transactions to generate additional income. All of the Trust's portfolio holdings, including derivative instruments, are marked to market each day with the change in value reflected in unrealized appreciation/depreciation. Upon disposition, a realized gain or loss is recognized accordingly, except when taking delivery of a security underlying a futures contract. In this instance, the recognition of gain or loss is postponed until the disposal of the security underlying the futures contract. During the period, the Trust invested in futures contracts, a type of derivative. A futures contract is an arrangement involving the delivery of a particular asset on a specified future date at an agreed upon price. The Trust generally invests in exchange traded futures on U.S. Treasury Bonds and Notes and typically closes the contract prior to the delivery date. Upon entering into futures contracts, the Trust maintains an amount of cash or liquid securities with a value equal to a percentage of the contract amount with either a futures commission merchant pursuant to the rules and regulations promulgated under the 1940 Act, as amended, or with its custodian in an account in the broker's name. This amount is known an initial margin. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). The risk of loss associated with a futures contract is in excess of the variation margin reflected on the Statement of Assets and Liabilities. Transactions in futures contracts for the six months ended April 30, 2003, were as follows:
CONTRACTS Outstanding at October 31, 2002............................. 682 Futures Opened.............................................. 2,110 Futures Closed.............................................. (1,763) ------ Outstanding at April 30, 2003............................... 1,029 ======
26 NOTES TO FINANCIAL STATEMENTS April 30, 2003 (Unaudited) The futures contracts outstanding as of April 30, 2003, and the description and unrealized appreciation/depreciation are as follows:
UNREALIZED APPRECIATION/ CONTRACTS DEPRECIATION SHORT CONTRACTS: 10-Year U.S. Treasury Notes Futures June 2003 (Current Notional Value of $115,125 per contract)................ 198 $ (58,074) 5-Year U.S. Treasury Notes Futures June 2003 (Current Notional Value of $113,750 per contract)................ 831 (364,742) ----- --------- 1,029 $(422,816) ===== =========
5. PREFERRED SHARES The Trust has outstanding 9,000 Auction Preferred Shares ("APS") in five series. Series A, B, C and D each contain 2,000 shares and Series E contains 1,000 shares. Dividends are cumulative and the dividend rate is periodically reset through an auction process. The dividend period for Series A and E is seven days. The dividend period for Series B, C and D is 28 days. The average rate in effect on April 30, 2003 was 1.036%. During the six months ended April 30, 2003, the rates ranged from 0.679% to 1.800%. The Trust pays annual fees equivalent to .25% of the preferred share liquidation value for the remarketing efforts associated with the preferred auctions. These fees are included as a component of "Preferred Share Maintenance" expense in the Statement of Operations. The APS are redeemable at the option of the Trust in whole or in part at the liquidation value of $25,000 per share plus accumulated and unpaid dividends. The Trust is subject to certain asset coverage tests and the APS are subject to mandatory redemption if the tests are not met. 27 DIVIDEND REINVESTMENT PLAN The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which Common Shareholders may elect to have dividends and capital gains distributions reinvested in Common Shares of the Trust. The Trust declares dividends out of net investment income, and will distribute annually net realized capital gains, if any. Common Shareholders may join or withdraw from the Plan at any time. If you decide to participate in the Plan, State Street Bank and Trust Company, as your Plan Agent, will automatically invest your dividends and capital gains distributions in Common Shares of the Trust for your account. HOW TO PARTICIPATE If you wish to participate and your shares are held in your own name, call 1-800-341-2929 for more information and a Plan brochure. If your shares are held in the name of a brokerage firm, bank, or other nominee, you should contact your nominee to see if it would participate in the Plan on your behalf. If you wish to participate in the Plan, but your brokerage firm, bank or nominee is unable to participate on your behalf, you should request that your shares be re-registered in your own name which will enable your participation in the Plan. HOW THE PLAN WORKS Participants in the Plan will receive the equivalent in Common Shares valued on the valuation date, generally at the lower of market price or net asset value, except as specified below. The valuation date will be the dividend or distribution payment date or, if that date is not a trading day on the national securities exchange or market system on which the Common Shares are listed for trading, the next preceding trading day. If the market price per Common Share on the valuation date equals or exceeds net asset value per Common Share on that date, the Trust will issue new Common Shares to participants valued at the higher of net asset value or 95% of the market price on the valuation date. In the foregoing situation, the Trust will not issue Common Shares under the Plan below net asset value. If net asset value per Common Share on the valuation date exceeds the market price per Common Share on that date, or if the Board of Trustees should declare a dividend or capital gains distribution payable to the Common Shareholders only in cash, participants in the Plan will be deemed to have elected to receive Common Shares from the Trust valued at the market price on that date. Accordingly, in this circumstance, the Plan Agent will, as agent for the participants, buy the Trust's Common Shares in the open market for the participants' accounts on or shortly after the payment date. If, before the Plan Agent has completed its purchases, the market price exceeds the net asset value per share of the Common Shares, the average per share purchase price paid by the Plan Agent may exceed the net asset value of the Trust's Common Shares, resulting in 28 the acquisition of fewer Common Shares than if the dividend or distribution had been paid in Common Shares issued by the Trust. All reinvestments are in full and fractional Common Shares and are carried to three decimal places. Experience under the Plan may indicate that changes are desirable. Accordingly, the Trust reserves the right to amend or terminate the Plan as applied to any dividend or distribution paid subsequent to written notice of the changes sent to all Common Shareholders of the Trust at least 90 days before the record date for the dividend or distribution. The Plan also may be amended or terminated by the Plan Agent by at least 90 days written notice to all Common Shareholders of the Trust. COSTS OF THE PLAN The Plan Agent's fees for the handling of the reinvestment of dividends and distributions will be paid by the Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of dividends and distributions. No other charges will be made to participants for reinvesting dividends or capital gains distributions, except for certain brokerage commissions, as described above. TAX IMPLICATIONS You will receive tax information annually for your personal records and to help you prepare your federal income tax return. The automatic reinvestment of dividends and capital gains distributions does not relieve you of any income tax which may be payable on dividends or distributions. RIGHT TO WITHDRAW Plan participants may withdraw at any time by calling 1-800-341-2929 or by writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-8200. If you withdraw, you will receive, without charge, a share certificate issued in your name for all full Common Shares credited to your account under the Plan and a cash payment will be made for any fractional Common Share credited to your account under the Plan. You may again elect to participate in the Plan at any time by calling 1-800-341-2929 or writing to the Trust at: Van Kampen Funds Inc. Attn: Closed-End Funds 2800 Post Oak Blvd. Houston, TX 77056 29 BOARD OF TRUSTEES AND IMPORTANT ADDRESSES VAN KAMPEN VALUE MUNICIPAL INCOME TRUST BOARD OF TRUSTEES DAVID C. ARCH ROD DAMMEYER HOWARD J KERR THEODORE A. MYERS RICHARD F. POWERS, III* - Chairman HUGO F. SONNENSCHEIN WAYNE W. WHALEN* INVESTMENT ADVISER VAN KAMPEN INVESTMENT ADVISORY CORP. 1 Parkview Plaza P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 CUSTODIAN AND TRANSFER AGENT STATE STREET BANK AND TRUST COMPANY c/o EquiServe P.O. Box 43011 Providence, Rhode Island 02940-3011 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT AUDITORS DELOITTE & TOUCHE LLP 180 North Stetson Avenue Chicago, Illinois 60601 * "Interested persons" of the Trust, as defined in the Investment Company Act of 1940, as amended. 30 Van Kampen Privacy Notice The Van Kampen companies and investment products* respect your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain nonpublic personal information about you. This is information we collect from you on applications or other forms, and from the transactions you make with us, our affiliates, or third parties. We may also collect information you provide when using our web site, and text files (a.k.a. "cookies") may be placed on your computer to help us to recognize you and to facilitate transactions you initiate. We do not disclose any nonpublic personal information about you or any of our former customers to anyone, except as permitted by law. For instance, so that we may continue to offer you Van Kampen investment products and services that meet your investing needs, and to effect transactions that you request or authorize, we may disclose the information we collect to companies that perform services on our behalf, such as printers and mailers that assist us in the distribution of investor materials. These companies will use this information only for the services for which we hired them, and are not permitted to use or share this information for any other purpose. To protect your nonpublic personal information internally, we permit access to it only by authorized employees, and maintain physical, electronic and procedural safeguards to guard your nonpublic personal information. * Includes Van Kampen Investments Inc., Van Kampen Investment Advisory Corp., Van Kampen Asset Management Inc., Van Kampen Advisors Inc., Van Kampen Management Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc., Van Kampen Trust Company, Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the many Van Kampen mutual funds and Van Kampen unit investment trusts. Van Kampen Funds Inc. 1 Parkview Plaza, P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com [VAN KAMPEN INVESTMENTS LOGO] Copyright (C)2003 Van Kampen Funds Inc. All rights reserved. VKV SAR 6/03 Member NASD/SIPC. 11169F03-AS-6/03 Item 2. Code of Ethics. Not applicable for semi-annual reports. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semi-annual reports. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semi-annual reports. Item 8. [Reserved.] Item 9. The Trust's principal executive officer and principal financial officer have concluded that the Trust's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Trust's internal controls or in other factors that could significantly affect the Trust's internal controls subsequent to the date of their evaluation. Item 10. Exhibits. (a) Code of Ethics - Not applicable for semi-annual reports. (b) Certifications of Principal Executive Officer and Principal Financial Officer attached hereto as part of EX-99.CERT. 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) Van Kampen Value Municipal Income Trust ------------------------------------------------------------------- By: /s/ Ronald E. Robison ---------------------------------------------------------------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 23, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Ronald E. Robison ---------------------------------------------------------------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 23, 2003 By: /s/ John L. Sullivan ---------------------------------------------------------------------------- Name: John Sullivan Title: Principal Financial Officer Date: June 23, 2003 EX-99.CERT 3 c77309exv99wcert.txt CERTIFICATION I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen Value Municipal Income Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 23, 2003 /s/ Ronald E. Robison --------------------------- Principal Executive Officer 1 I, John Sullivan, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen Value Municipal Income Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 23, 2003 /s/ John L. Sullivan --------------------------- Principal Financial Officer 2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Issuer: Van Kampen Value Municipal Income Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended April 30, 2003 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: June 23, 2003 /s/ Ronald E. Robison ---------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement requires by Section 906 has been provided to Van Kampen Value Municipal Income Trust and will be retained by Van Kampen Value Municipal Income Trust and furnished to the Securities and Exchange Commission or its staff upon request. 3 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Issuer: Van Kampen Value Municipal Income Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended April 30, 2003 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: June 23, 2003 /s/ John L. Sullivan --------------------- John Sullivan Principal Financial Officer A signed original of this written statement requires by Section 906 has been provided to Van Kampen Value Municipal Income Trust and will be retained by Van Kampen Value Municipal Income Trust and furnished to the Securities and Exchange Commission or its staff upon request. 4 -----END PRIVACY-ENHANCED MESSAGE-----