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 811-6362
Van Kampen Municipal Trust
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(Exact name of registrant as specified in charter)
1221 Avenue of the Americas NY NY 10020
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(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas
New York, NY 10020
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(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
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Date of reporting period: 04/30/03
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Item 1. Report to Shareholders
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS
(as of April 30, 2003)
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NYSE Ticker Symbol - VKQ
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<Table>
<Caption>
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Six-month total return(1) 8.67%
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One-year total return(1) 16.04%
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Five-year average annual total return(1) 6.28%
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Ten-year average annual total return(1) 6.08%
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Life-of-Trust average annual total return(1) 7.05%
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Commencement date 09/27/91
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Distribution rate as a % of closing common share market
price(2) 6.22%
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Taxable-equivalent distribution rate as a % of closing
common share market price(3) 10.13%
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Preferred share (Series A) rate(4) 1.250%
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Preferred share (Series B) rate(4) 1.060%
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Preferred share (Series C) rate(4) 1.049%
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Preferred share (Series D) rate(4) 1.200%
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Net asset value $16.50
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Closing common share market price $15.05
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Six-month high common share market price (04/30/03) $15.05
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Six-month low common share market price (11/26/02) $13.84
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</Table>
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% combined federal and state tax bracket effective for calendar year
2003, which takes into consideration the deductibility of individual state
taxes paid.
(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)
<Table>
<Caption>
As of April 30, 2003
AAA/Aaa........................... 64.6%
AA/Aa............................. 13.2%
A/A............................... 8.2%
BBB/Baa........................... 6.1%
BB/Ba............................. 1.6%
B/B............................... 0.1%
Non-Rated......................... 6.2%
</Table>
TOP FIVE SECTORS
(as a percentage of long-term investments)
<Table>
<Caption>
As of April 30, 2003
General Purpose................... 16.7%
Public Education.................. 11.2%
Health Care....................... 10.5%
Transportation.................... 9.7%
Higher Education.................. 7.9%
</Table>
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]
<Table>
<Caption>
NET ASSET VALUE COMMON SHARE MARKET PRICE
--------------- -------------------------
4/93 $16.6800 $16.5000
6/93 $16.8600 $16.2500
$17.2600 $16.6250
$17.2700 $16.5000
$15.5300 $14.8750
6/94 $15.3900 $15.1250
$15.1300 $14.3750
$14.4800 $13.0000
$15.7200 $14.8750
6/95 $15.5000 $14.3750
$15.7600 $14.0000
$16.5600 $14.1250
$15.9900 $14.1250
6/96 $15.8000 $14.0000
$16.0200 $14.5000
$16.2700 $13.8750
$15.9600 $14.1250
6/97 $16.3900 $15.0625
$16.7700 $15.6875
$17.0900 $16.1875
$17.0900 $15.8120
6/98 $17.0400 $16.1250
$17.5100 $17.0000
$16.8200 $16.9375
$16.5500 $16.3125
6/99 $15.7100 $15.1875
$15.0300 $13.9375
$14.3900 $12.7500
$14.6400 $12.8750
6/00 $14.5800 $13.3750
$14.8200 $12.8750
$15.4700 $13.0625
$15.6000 $13.7800
6/01 $15.4600 $13.6100
$15.8500 $13.7500
$15.4000 $13.4200
$15.2600 $13.5900
6/02 $15.8500 $14.7300
$16.7600 $15.2900
$16.3700 $14.4500
$16.3500 $14.6600
4/03 $16.5000 $15.0500
</Table>
The solid line above represents the trust's net asset value (NAV), which
indicates overall changes in value among the trust's underlying securities. The
trust's 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 THE VAN KAMPEN MUNICIPAL 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. TOM BYRON,
PORTFOLIO MANAGER, HAS MANAGED THE TRUST SINCE 2000 AND HAS WORKED IN THE
INVESTMENT INDUSTRY SINCE 1981. 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 feature 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 credit quality facing continued
pressure from rising social service costs and weak national and regional
economic conditions. As a result, municipalities
4
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 $0.0780 per share translated to a
distribution rate of 6.22 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 10.13 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 ended April 30, 2003, the trust produced a total return
of 8.67 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 While interest rates fell somewhat
during the period, they remained largely confined to a relatively tight trading
range at historically low levels. As a result, there were fewer compelling
opportunities for reinvesting the proceeds of sales from the portfolio than
we've seen in some time. This kept the portfolio's turnover relatively low as we
attempted to protect the trust's dividend by limiting the likelihood of having
to reinvest in lower-yielding securities.
Overall, our focus over the period was on positioning the portfolio to
perform well in the event of rising interest rates, while also maintaining an
attractive yield. One of our primary methods for doing this was to purchase
premium bonds with maturities of between 15 and 20 years and a shorter call
date. The yield of these bonds is competitive, yet their interest rate
volatility is more closely related to the 10-year call feature. Our quantitative
analysis showed that this segment of the yield curve offered the optimal
combination of total return potential and downside protection.
5
Our approach also continued to emphasize active trading of highly liquid
bonds to capture shifts in relative value between various sectors and state
markets. For example, California was a major issuer of debt during the period,
and issued so much that prices for the state's debt temporarily dropped due to
the influx of supply. We took advantage of this issuance by purchasing several
well-structured deals for the portfolio. We anticipate that these bonds will
return to fair value, and when they do we may consider selling them.
The portfolio also enjoyed the fruits of a long-running strategy during the
period. 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 gave 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 troubled economy led us to trim some of the portfolio's holdings, and to
avoid some sectors altogether. In the course of their credit monitoring, our
analysts came to the conclusion that one particular health care holding was
likely to experience credit--and thus price--performance difficulties. We sold
the position in order to protect shareholders from any deterioration in the
issuer's financial health. We also eliminated the trust's exposure to the
troubled airline sector.
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.
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
MUNICIPAL BONDS 148.2%
ALABAMA 4.0%
$ 1,790 Alabama St Univ Rev Gen Tuition & Fee Ser B
(MBIA Insd)................................. 5.250% 03/01/28 $ 1,884,440
1,000 Birmingham Baptist Med Ctr AL Baptist Hlth
Sys Ser A................................... 5.875 11/15/24 1,055,630
7,950 Jefferson Cnty, AL Swr Rev Cap Impt Wt Ser A
(FGIC Insd) (a)............................. 5.000 02/01/41 8,036,496
8,000 Jefferson Cnty, AL Swr Rev Cap Impt Wt Ser B
(FGIC Insd) (a)............................. 5.125 02/01/42 8,184,000
2,000 Jefferson Cnty, AL Wts Ser A (AMBAC Insd)... 5.000 04/01/09 2,235,320
2,435 Marshall Cnty, AL Hlthcare Ser C............ 6.000 01/01/32 2,561,523
------------
23,957,409
------------
ALASKA 0.2%
1,000 Alaska St Intl Arpt Rev Ser B (AMBAC
Insd)....................................... 5.750 10/01/17 1,136,610
------------
ARIZONA 2.7%
1,425 Arizona Cap Fac Fin Corp Student Hsg Rev AZ
St Univ Proj................................ 6.250 09/01/32 1,505,313
1,000 Arizona Hlth Fac Auth Hosp John C Lincoln
Hlth Network................................ 6.375 12/01/37 1,036,540
1,750 Arizona Sch Fac Brd Ctf Part Ser A (MBIA
Insd)....................................... 5.250 09/01/17 1,931,597
4,250 Arizona St Trans Brd Hwy Rev Sub Ser A
Rfdg........................................ 4.750 07/01/11 4,478,097
2,500 Maricopa Cnty, AZ Indl Dev Auth Ed Rev AZ
Charter Sch Proj 1 Ser A.................... 6.750 07/01/29 2,479,975
4,375 Salt River Proj AZ Agric Impt Salt River
Proj Ser A Rfdg............................. 5.250 01/01/06 4,791,194
------------
16,222,716
------------
</Table>
See Notes to Financial Statements
7
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
ARKANSAS 0.3%
$ 1,565 Fort Smith, AR Wtr & Swr Rev Ser C (FSA
Insd)....................................... 5.000% 10/01/21 $ 1,650,918
------------
CALIFORNIA 9.3%
4,000 Anaheim, CA Pub Fin Auth Lease Rev Cap
Apprec Sub Pub Impts Proj C (FSA Insd)...... * 09/01/20 1,709,280
2,500 Anaheim, CA Un High Sch Dist Ser A (FSA
Insd)....................................... 5.000 08/01/25 2,586,875
5,010 California Ed Fac Auth Rev Cap Apprec Loyola
Marymount Univ (Prerefunded @ 10/01/09)
(MBIA Insd)................................. * 10/01/21 1,966,375
350 California Hlth Fac Fin Auth Rev Casa De Las
Ser A (MBIA Insd)........................... 5.250 08/01/17 379,260
1,250 California St Dept Wtr Res Pwr Ser A........ 6.000 05/01/15 1,442,612
4,000 California St Dept Wtr Res Pwr Ser A (AMBAC
Insd)....................................... 5.375 05/01/18 4,422,800
1,000 California St Pub Wks Brd UCLA Replacement
Hosp Ser A (FSA Insd)....................... 5.375 10/01/20 1,091,000
5,000 California St Univ Rev Systemwide Ser A
(AMBAC Insd)................................ 5.000 11/01/23 5,228,950
2,650 California Statewide Cmnty Dev Auth Ctf Part
(b)......................................... 7.250 11/01/29 2,760,717
5,000 Contra Costa, CA Home Mtg Fin Auth Home Mtg
Rev (Escrowed to Maturity) (MBIA Insd)...... * 09/01/17 2,517,600
1,000 Davis, CA Pub Fac Fin Auth Mace Ranch Area
Ser A....................................... 6.600 09/01/25 1,056,560
1,650 Del Mar, CA Race Track Auth Rev Rfdg........ 6.000 08/15/06 1,733,308
18,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev
Cap Apprec Rfdg (MBIA Insd)................. * 01/15/25 5,303,880
27,810 Foothill/Eastern Corridor Agy CA Toll Rd Rev
Cap Apprec Rfdg............................. * 01/15/33 4,829,206
6,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev
Cap Apprec Sr Lien Ser A (Escrowed to
Maturity)................................... * 01/01/18 3,121,260
2,240 Huntington Park, CA Redev Agy Rev Tax Alloc
Santa Fe Redev Rfdg......................... 6.200 10/01/27 2,343,533
2,000 Los Angeles, CA Uni Sch Dist Ser A (MBIA
Insd)....................................... 5.375 07/01/18 2,235,780
</Table>
See Notes to Financial Statements
8
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CALIFORNIA (CONTINUED)
$ 4,400 Los Angeles, CA Uni Sch Dist Ser A (MBIA
Insd)....................................... 5.250% 07/01/19 $ 4,822,840
5,585 Sacramento, CA City Fin Auth Rev Comb Proj B
(MBIA Insd)................................. * 11/01/14 3,394,842
1,375 San Bernadino, CA Jt Pwr Fin Auth Alloc Rev
Central City Merged Proj A Rfdg (AMBAC
Insd)....................................... 5.750 07/01/20 1,629,114
1,000 Stockton, CA Cmnty Fac Dist Spl Tax No 1-A
Mello Roos-Weston Ranch Ser A (a)........... 5.800 09/01/14 1,061,610
------------
55,637,402
------------
COLORADO 2.0%
1,000 Colorado Hlth Fac Auth Rev Catholic Hlth
Initiatives Ser A........................... 5.500 03/01/32 1,029,890
1,125 Colorado Hlth Fac Auth Rev Hosp Portercare
Adventist Hlth.............................. 6.500 11/15/31 1,226,779
2,200 La Plata Cnty, CO Sch Dist 9-R Durango (MBIA
Insd)....................................... 5.250 11/01/21 2,358,972
6,365 Platte Riv Pwr Auth CO Pwr Rev Ser EE....... 5.375 06/01/16 7,095,320
------------
11,710,961
------------
CONNECTICUT 5.5%
7,140 Connecticut St Hlth & Ed Fac Auth Rev
Nursing Home Proj AHF/Hartford (Prerefunded
@ 11/01/04)................................. 7.125 11/01/24 7,908,407
2,840 Connecticut St Spl Oblig Pkg Rev Bradley
Intl Arpt Ser A (ACA Insd).................. 6.600 07/01/24 3,074,442
3,450 Connecticut St Spl Tax Oblig Ser B
(Prerefunded @ 10/01/04) (FGIC Insd)........ 6.200 10/01/13 3,728,760
6,500 Mashantucket Western Pequot Tribe CT Spl Rev
Ser B, 144A-Private Placement (c)........... 5.750 09/01/18 6,750,770
3,500 Mashantucket Western Pequot Tribe CT Spl Rev
Ser B, 144A-Private Placement (c)........... 5.750 09/01/27 3,575,985
3,540 Mashantucket Western Pequot Tribe CT Spl Rev
Ser A, 144A-Private Placement (c)........... 6.400 09/01/11 3,823,837
3,460 Mashantucket Western Pequot Tribe CT Spl Rev
Ser A, 144A-Private Placement (Prerefunded @
09/01/07) (c)............................... 6.400 09/01/11 4,038,650
------------
32,900,851
------------
DELAWARE 0.3%
1,505 Delaware St Hsg Auth Rev Sr Home Mtg Ser B
SubSer B2................................... 7.200 12/01/21 1,522,458
------------
</Table>
See Notes to Financial Statements
9
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
DISTRICT OF COLUMBIA 1.0%
$ 1,000 District of Columbia Hosp Rev Medlantic
Hlthcare Group A Rfdg (Escrowed to Maturity)
(MBIA Insd) (a)............................. 5.875% 08/15/19 $ 1,124,150
5,000 Metropolitan Washington DC Arpt Auth Sys Ser
A (FGIC Insd)............................... 5.125 10/01/26 5,070,650
------------
6,194,800
------------
FLORIDA 9.6%
3,380 Brevard Cnty, FL Hlth Fac Hlth First Inc
Proj (MBIA Insd)............................ 5.125 04/01/31 3,497,252
2,550 Broward Cnty, FL Wtr & Swr Util Rfdg (MBIA
Insd)....................................... 5.000 10/01/20 2,715,087
3,750 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
Insd)....................................... 5.950 07/01/20 4,110,525
1,000 Florida St Brd Ed Lottery Rev Ser A (FGIC
Insd)....................................... 5.750 07/01/11 1,160,710
3,000 Florida St Dept Environmental Protection
Preservation Rev Ser A (FGIC Insd).......... 5.750 07/01/10 3,505,320
1,895 Gulf Breeze, FL Rev Loc Govt (Variable Rate
Coupon) (FGIC Insd)......................... 5.625 12/01/20 2,113,096
1,255 Gulf Breeze, FL Rev Venice Loc Govt (FGIC
Insd) (d)................................... 5.050 12/01/20 1,370,334
2,310 Hillsborough Cnty, FL Indl Dev Auth Andl Dev
Rev Hlth Fac Proj Univ Cmnty Hosp Ser A..... 5.500 08/15/14 2,357,725
1,000 Hillsborough Cnty, FL Indl Dev Auth Indl Dev
Rev Univ Cmnty Hosp (MBIA Insd)............. 5.750 08/15/14 1,044,730
1,000 Hillsborough Cnty, FL Util Jr Lien Rfdg
(AMBAC Insd)................................ 5.000 08/01/06 1,104,140
1,000 Jea, FL Elec Sys Rev Ser 3 Ser A............ 5.500 10/01/41 1,075,010
1,000 Lake Cnty, FL Sch Brd Ctf Part (AMBAC
Insd)....................................... 5.375 07/01/15 1,126,290
615 Lakeland, FL Hosp Sys Rev Lakeland Regl Hlth
Sys......................................... 5.500 11/15/32 625,566
1,515 Miami Beach, FL Stormwtr Rev (FGIC Insd).... 5.250 09/01/25 1,601,249
1,855 Miami Dade Cnty, FL Hlth Fac Miami Childrens
Hosp Ser A Rfdg (AMBAC Insd)................ 5.000 08/15/20 1,957,118
2,000 Miami-Dade Cnty, FL Aviation Rev Miami Intl
Arpt (FGIC Insd)............................ 5.375 10/01/25 2,079,180
2,700 Miami-Dade Cnty, FL Aviation Rev Miami Intl
Arpt (FGIC Insd)............................ 5.375 10/01/32 2,784,834
1,000 Miami-Dade Cnty, FL Aviation Ser A (FSA
Insd)....................................... 5.000 10/01/33 1,004,810
</Table>
See Notes to Financial Statements
10
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
FLORIDA (CONTINUED)
$ 5,000 Miami-Dade Cnty, FL Aviation Ser A (FSA
Insd)....................................... 5.125% 10/01/35 $ 5,050,800
3,750 Orange Cnty, FL Sch Brd Ctf Part Ser A
(AMBAC Insd)................................ 5.250 08/01/14 4,239,450
4,320 Orange Cnty, FL Tourist Dev Tax Rev (AMBAC
Insd)....................................... 5.625 10/01/14 4,942,339
4,300 Orange Cnty, FL Tourist Dev Tax Rev (AMBAC
Insd)....................................... 5.500 10/01/31 4,670,445
2,140 Reedy Creek, FL Impt Dist FL Ser A Rfdg
(AMBAC Insd)................................ 5.500 06/01/12 2,440,863
1,060 Tallahassee, FL Lease Rev FL St Univ Proj
Ser A (MBIA Insd)........................... 5.500 08/01/18 1,182,366
------------
57,759,239
------------
GEORGIA 3.4%
2,645 Georgia St Ser D............................ 6.000 10/01/05 2,933,755
3,500 Georgia St Ser D............................ 6.000 10/01/06 3,999,730
2,400 Municipal Elec Auth GA Combustion Turbine
Proj Ser A (MBIA Insd)...................... 5.250 11/01/14 2,685,144
8,030 Municipal Elec Auth GA Combustion Turbine
Proj Ser A (MBIA Insd)...................... 5.250 11/01/18 8,754,065
2,000 Royston, GA Hosp Auth Hosp Ctf Rev Ty Cobb
Hlthcare Sys Inc Rfdg....................... 6.500 07/01/27 1,948,940
------------
20,321,634
------------
HAWAII 0.4%
1,465 Honolulu, HI City & Cnty Ser D (FGIC
Insd)....................................... 4.700 02/01/08 1,583,123
1,375 Honolulu, HI City & Cnty Wastewtr Sys Rev
Cap Apprec (FGIC Insd)...................... * 07/01/12 949,850
------------
2,532,973
------------
ILLINOIS 14.3%
3,400 Carol Stream, IL First Mtg Rev Windsor Pk
Mnr Proj.................................... 7.000 12/01/13 3,543,140
1,500 Champaign Cnty, IL Cmnty Unit Sch Dist No
116 Urbana Ser C (Prerefunded @ 01/01/10)
(FGIC Insd)................................. * 01/01/16 844,515
1,300 Champaign Cnty, IL Cmnty Unit Sch Dist No
116 Urbana Ser C (Prerefunded @ 01/01/10)
(FGIC Insd)................................. * 01/01/18 647,764
1,285 Chicago, IL Brd Ed (FGIC Insd).............. 6.000 12/01/12 1,516,120
1,400 Chicago, IL Brd Ed Ser A (MBIA Insd)........ 5.500 12/01/28 1,498,434
</Table>
See Notes to Financial Statements
11
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
ILLINOIS (CONTINUED)
$ 4,000 Chicago, IL Neighborhoods Alive 21 Pgm Ser A
(FGIC Insd)................................. 5.750% 01/01/40 $ 4,455,840
5,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt
Third Lien Ser A Rfdg (MBIA Insd)........... 5.375 01/01/32 5,138,750
1,015 Chicago, IL O'Hare Intl Arpt Rev Second Lien
Passenger Fac Ser B (AMBAC Insd)............ 5.500 01/01/16 1,133,187
1,980 Chicago, IL Pk Dist Ser C (FGIC Insd)....... 5.500 01/01/19 2,168,516
2,565 Chicago, IL Proj Ser C Rfdg (FGIC Insd)..... 5.750 01/01/12 2,943,620
1,000 Cook Cnty, IL Cmnty Cons Sch Dist No 64 Park
Ridge (FSA Insd)............................ 5.500 12/01/14 1,162,690
1,000 Cook Cnty, IL Ser A (FGIC Insd)............. 5.500 11/15/31 1,064,400
7,765 Du Page Cnty, IL Forest Preserve Dist....... * 11/01/17 3,952,929
5,000 Du Page Cnty, IL Trans Rev (FSA Insd)....... 5.750 01/01/15 5,703,450
4,000 Hodgkins, IL Tax Increment Ser A Rfdg....... 7.625 12/01/13 4,274,040
2,860 Illinois Dev Fin Auth Rev Adventist Hlth Ser
A (MBIA Insd) (d)........................... 5.500 11/15/05 3,113,139
2,725 Illinois Dev Fin Auth Rev Cmnty Rehab
Providers Fac Ser A......................... 7.375 07/01/25 2,918,965
2,705 Illinois Dev Fin Auth Rev Loc Govt Pgm
Aurora East Sch (MBIA Insd)................. * 12/01/15 1,569,901
1,565 Illinois Edl Fac Auth Rev DePaul Univ (AMBAC
Insd)....................................... 5.625 10/01/15 1,782,911
1,740 Illinois Edl Fac Auth Rev Lewis Univ........ 5.900 10/01/14 1,765,613
1,645 Illinois Hlth Fac Auth Rev Evangelical Hosp
Ser C Rfdg (FSA Insd)....................... 6.750 04/15/12 1,681,437
2,500 Illinois St First Ser (MBIA Insd)........... 5.500 12/01/09 2,893,425
1,500 Illinois St First Ser (FGIC Insd)........... 5.375 11/01/14 1,679,310
3,000 Illinois St First Ser (FSA Insd)............ 5.250 12/01/21 3,215,760
3,440 Kendall Kane & Will Cntys, IL Cmnty Sch Dist
No 308 Ser B (FGIC Insd).................... 5.250 10/01/19 3,728,238
870 Metropolitan Pier & Expo Auth IL Dedicated
St Tax Rev Cap Apprec (Escrowed to Maturity)
(FGIC Insd)................................. * 06/15/14 546,699
3,460 Metropolitan Pier & Expo Auth IL Dedicated
St Tax Rev Cap Apprec (Unrefunded Balance)
(FGIC Insd)................................. * 06/15/14 2,143,678
2,675 Metropolitan Pier & Expo Auth IL Dedicated
St Tax Rev McCormick Pl Expansion Ser A
(MBIA Insd)................................. 5.250 06/15/42 2,797,140
1,510 Roselle, IL Multi-Family Hsg Rev Waterbury
Apts Ser A Rfdg (GNMA Collateralized)....... 7.000 01/01/25 1,583,356
</Table>
See Notes to Financial Statements
12
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
ILLINOIS (CONTINUED)
$ 3,230 Saint Clair Cnty, IL Cap Impt Rev McKendree
College Proj Rfdg........................... 6.000% 02/01/24 $ 3,238,753
3,060 Will Cnty, IL Cmnty Sch Dist No 161 Summit
Hill Cap Apprec (FGIC Insd)................. * 01/01/12 2,156,015
3,505 Will Cnty, IL Cmnty Sch Dist No 161 Summit
Hill Cap Apprec (FGIC Insd)................. * 01/01/14 2,212,216
2,010 Will Cnty, IL Cmnty Sch Dist No 161 Summit
Hill Cap Apprec (FGIC Insd)................. * 01/01/16 1,128,293
1,415 Will Cnty, IL Cmnty Sch Dist No 161 Summit
Hill Cap Apprec (FGIC Insd)................. * 01/01/19 659,673
9,660 Will Cnty, IL Fst Presv Dist Ser B (FGIC
Insd)....................................... * 12/01/16 5,200,654
------------
86,062,571
------------
INDIANA 1.3%
1,000 Allen Cnty, IN Juvenile Justice Ctr First
Mtg (AMBAC Insd)............................ 5.500 01/01/18 1,115,620
1,000 Clark Pleasant, IN Cmnty Sch First Mtg
(AMBAC Insd)................................ 5.500 07/15/13 1,134,020
1,580 Indiana Trans Fin Auth Toll Rd Lease Rev
Rfdg (AMBAC Insd)........................... 5.375 07/01/09 1,778,353
1,500 Petersburg, IN Pollutn Ctl Rev, IN Pwr & Lt
(d)......................................... 5.950 12/01/29 1,373,220
2,500 Vigo Cnty, IN Sch Bldg Corp First Mtg Impt &
Rfdg (FSA Insd)............................. 5.250 07/10/24 2,632,775
------------
8,033,988
------------
KANSAS 1.1%
3,000 Sedgwick Cnty, KS Uni Sch Dist No 259
Wichita (MBIA Insd)......................... 6.000 09/01/09 3,542,610
1,395 Wichita, KS Pub Bldg Comm Rev Wichita St
Univ Proj Ser L Rfdg (AMBAC Insd)........... 5.000 02/01/15 1,520,201
1,465 Wichita, KS Pub Bldg Comm Rev Wichita St
Univ Proj Ser L Rfdg (AMBAC Insd)........... 5.000 02/01/16 1,585,130
------------
6,647,941
------------
KENTUCKY 2.7%
2,000 Ashland, KY Solid Waste Rev Ashland Oil Inc
Proj........................................ 7.200 10/01/20 2,012,520
4,000 Elsmere, KY Indl Dev Rev Courtaulds Pkg Inc
Proj Rfdg (Prerefunded @ 04/01/05).......... 6.750 04/01/10 4,469,040
1,500 Kentucky St Ppty & Bldgs Comm Proj No 69 Ser
A Rfdg (FSA Insd)........................... 5.500 08/01/11 1,725,285
</Table>
See Notes to Financial Statements
13
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
KENTUCKY (CONTINUED)
$ 3,500 Kentucky St Tpk Auth Econ Dev Revitalization
Proj Rfdg (FSA Insd)........................ 5.500% 07/01/07 $ 3,965,850
1,000 Kentucky St Tpk Auth Econ Dev Revitalization
Proj Rfdg (FSA Insd)........................ 5.625 07/01/14 1,129,240
2,350 Louisville & Jefferson, KY Swr Ser A (MBIA
Insd)....................................... 5.500 05/15/15 2,669,882
------------
15,971,817
------------
LOUISIANA 2.2%
1,675 Louisiana Loc Govt Envir Facs Pkg Facs Corp
Garage Proj Ser A (AMBAC Insd).............. 5.200 10/01/19 1,789,386
3,000 Louisiana St Ser A (FGIC Insd).............. 5.500 11/15/07 3,429,120
8,380 Louisiana St Univ & Agriculture & Mechanical
College Univ Rev Master Lease (b)........... 5.750 10/30/18 8,166,538
------------
13,385,044
------------
MAINE 0.2%
1,000 Maine Vets Homes, ME Rev (Prerefunded @
10/01/05)................................... 7.750 10/01/20 1,158,730
------------
MARYLAND 1.6%
2,300 Baltimore, MD Cap Apprec Cons Pub Ser A Impt
& Rfdg (FGIC Insd).......................... * 10/15/06 2,064,204
1,675 Baltimore, MD Cap Apprec Ser A (Prerefunded
@ 10/15/05) (FGIC Insd)..................... * 10/15/07 1,434,838
1,845 Baltimore, MD Cap Apprec Ser A (Unrefunded
Balance) (FGIC Insd)........................ * 10/15/07 1,545,686
1,700 Maryland St Trans Auth Arpt Baltimore/
Washington Intl Arpt B (AMBAC Insd)......... 5.125 03/01/24 1,742,534
2,365 Northeast, MD Waste Disp Auth Rfdg (AMBAC
Insd)....................................... 5.500 04/01/16 2,601,145
------------
9,388,407
------------
MASSACHUSETTS 3.1%
1,775 Massachusetts Muni Whsl Elec Co Nuclear Proj
5 (MBIA Insd)............................... 5.250 07/01/13 1,976,995
1,745 Massachusetts St Cons Ln Ser B (Prerefunded
@ 05/01/09)................................. 5.250 05/01/13 1,998,548
5,000 Massachusetts St Cons Ln Ser E (FSA Insd)... 5.250 01/01/20 5,403,050
850 Massachusetts St Dev Fin Agy Rev Boston
Architectural Ctr (ACA Insd)................ 6.100 09/01/18 915,603
1,000 Massachusetts St Dev Fin Agy Rev Boston
Architectural Ctr (ACA Insd)................ 6.250 09/01/28 1,060,130
</Table>
See Notes to Financial Statements
14
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
MASSACHUSETTS (CONTINUED)
$ 1,500 Massachusetts St Fed Hwy Grant Antic Nt Ser
A........................................... 5.750% 06/15/15 $ 1,721,175
3,700 Massachusetts St Hlth & Ed Fac Auth Rev
(MBIA Insd)................................. 5.000 07/01/13 3,886,998
1,000 Massachusetts St Hlth & Ed Fac Auth Rev
Partn Hlthcare Sys Ser C.................... 5.750 07/01/32 1,057,180
825 Massachusetts St Hlth & Ed Fac Auth Rev
Winchester Hosp Ser D Rfdg (Connie Lee
Insd)....................................... 5.750 07/01/14 872,800
------------
18,892,479
------------
MICHIGAN 3.7%
3,675 Detroit, MI Loc Dev Fin Auth Tax Increment
Sr Ser B (b)................................ 6.700 05/01/21 3,760,591
920 Detroit, MI Loc Dev Fin Auth Tax Increment
SubSer C (b)................................ 6.850 05/01/21 943,488
2,930 Detroit, MI Wtr Supply Sys Rev Sr Lien Ser C
Rfdg (MBIA Insd)............................ 5.250 07/01/18 3,214,122
1,180 Hillsdale, MI Hosp Fin Auth Hosp Rev
Hillsdale Cmnty Hlth Ctr.................... 5.750 05/15/18 1,124,292
2,000 Michigan Muni Bd Auth Rev Clean Wtr Rev Fd.. 5.250 10/01/18 2,197,020
500 Michigan St Hosp Fin Auth Rev Hosp Genesys
Regl Med Ser A Rfdg (Escrowed to
Maturity)................................... 5.375 10/01/13 564,090
3,180 Michigan St Hsg Dev Rental Hsg Rev Ser A
(MBIA Insd)................................. 5.300 10/01/37 3,247,034
1,500 Michigan St Strategic Fd Detroit Edison Co
Proj C Rfdg (XLCA Insd)..................... 5.450 12/15/32 1,558,875
1,150 Michigan St Strategic Fd Detroit Edison
Pollutn Ctl Ser B Rfdg...................... 5.650 09/01/29 1,174,644
1,750 Michigan St Strategic Fd Ltd Oblig Rev WMX
Technologies Inc Proj....................... 6.000 12/01/13 1,778,297
2,500 Michigan St Trunk Line Ser A................ 5.500 11/01/15 2,818,925
------------
22,381,378
------------
MISSISSIPPI 0.6%
2,500 Mississippi Bus Fin Corp MS Pollutn Ctl Rev
Sys Energy Res Inc Proj..................... 5.875 04/01/22 2,468,950
975 Mississippi Home Corp Single Family Rev Mtg
Ser F (GNMA Collateralized)................. 7.550 12/01/27 1,025,056
------------
3,494,006
------------
</Table>
See Notes to Financial Statements
15
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
MISSOURI 2.9%
$ 1,400 Ellisville, MO Indl Dev Auth Rev Gambrill
Gardens Proj Rfdg & Impt.................... 6.100% 06/01/20 $ 1,261,302
1,000 Ellisville, MO Indl Dev Auth Rev Gambrill
Gardens Proj Rfdg & Impt.................... 6.200 06/01/29 869,330
1,250 Fulton 54 Trans Corp Hwt Rev MO (AMBAC
Insd)....................................... 4.600 09/01/04 1,306,112
1,740 Good Shepherd Nursing Home Dist MO Nursing
Home Fac Rev (Prerefunded @ 08/15/05)....... 7.625 08/15/15 1,997,990
1,000 Kearney, MO (AMBAC Insd).................... 5.500 03/01/16 1,116,020
1,415 Missouri St Hlth & Ed Fac Rev Univ MO
Columbia Arena Proj......................... 5.000 11/01/18 1,508,263
3,085 Missouri St Hwy & Trans Commn Rd Rev Ser A.. 5.250 02/01/07 3,436,289
1,000 Missouri St Hwy & Trans Ser A............... 5.125 02/01/17 1,085,950
2,810 Perry Cnty, MO Nursing Home Rev Rfdg........ 5.900 03/01/28 2,339,297
2,505 St Louis, MO Arpt Rev Cap Impt Prog Ser A
(MBIA Insd)................................. 5.375 07/01/20 2,719,979
------------
17,640,532
------------
NEVADA 1.1%
2,500 Clark Cnty, NV Sch Dist Bldg Ser C (MBIA
Insd)....................................... 5.000 06/15/12 2,781,575
2,500 Reno, NV Cap Impt Rev (FGIC Insd)........... 5.125 06/01/26 2,586,525
1,500 Reno, NV Sr Lien Retrac Reno Trans Proj
(AMBAC Insd)................................ 5.125 06/01/37 1,536,390
------------
6,904,490
------------
NEW HAMPSHIRE 1.3%
4,800 New Hampshire Higher Ed & Hlth Fac Auth Rev
Daniel Webster College Issue................ 6.300 07/01/29 4,599,840
2,000 New Hampshire Higher Ed & Hlth Fac Auth Rev
Riverwoods at Exeter Ser A.................. 6.500 03/01/23 2,002,660
1,000 New Hampshire Hlth & Ed Fac Auth Rev
Derryfield Sch.............................. 6.750 07/01/20 1,024,220
------------
7,626,720
------------
</Table>
See Notes to Financial Statements
16
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
NEW JERSEY 9.0%
$ 4,000 Camden Cnty, NJ Impt Auth Lease Rev Kaighn
PT Marine Term Ser A (Asset Gty Insd) (e)
(f)......................................... 8.000% 06/01/27 $ 876,000
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)................................. * 03/01/04 989,590
1,460 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)................................. * 03/01/05 1,419,938
1,465 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)................................. * 03/01/06 1,388,190
1,615 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)................................. * 03/01/07 1,475,157
1,555 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd)................................. * 03/01/08 1,358,370
2,500 New Jersey Econ Dev Auth Sch Facs Constr Ser
C (MBIA Insd)............................... 5.000 06/15/16 2,714,325
25,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (MBIA Insd) (a) (d)................ 5.900 03/15/21 29,796,250
2,825 New Jersey St Ed Fac Auth Higher Ed Cap Impt
Ser A (AMBAC Insd).......................... 5.250 09/01/19 3,078,176
3,500 New Jersey St Tpk Auth Tpk Rev Ser C (FSA
Insd)....................................... 6.500 01/01/16 4,323,795
3,500 New Jersey St Trans Corp Ctfs Fed Trans
Admin Grant Ser A (AMBAC Insd).............. 5.500 09/15/13 4,047,715
1,000 New Jersey St Transn Corp Capital Grant
Antic Nt Ser B (AMBAC Insd)................. 5.500 02/01/08 1,133,850
1,000 New Jersey St Transn Tr Fd Auth Trans Sys
Ser A....................................... 5.750 06/15/18 1,187,680
------------
53,789,036
------------
NEW YORK 13.3%
1,870 Long Island Pwr Auth, NY Elec Cap Apprec
(FSA Insd).................................. * 06/01/18 969,090
3,000 Metropolitan Trans Auth NY Ser A Rfdg (FGIC
Insd)....................................... 5.250 11/15/31 3,157,470
2,500 Nassau Cnty, NY Impt Ser F.................. 7.000 03/01/04 2,609,400
2,500 Nassau Cnty, NY Interim Fin Auth Sales Tax
Secured Ser A............................... 5.750 11/15/13 2,820,175
1,000 Nassau Cnty, NY Ser A Rfdg (FGIC Insd)...... 6.000 07/01/10 1,177,360
5,000 New York City Adj SubSer A-1................ 5.750 08/01/12 5,119,150
3,500 New York City Hlth & Hosp Hlth Sys Ser A
(AMBAC Insd)................................ 5.000 02/15/11 3,843,385
7,000 New York City Ser A (a)..................... 6.250 08/01/08 7,913,360
2,000 New York City Ser H (FGIC Insd)............. 6.000 08/01/12 2,354,600
</Table>
See Notes to Financial Statements
17
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
NEW YORK (CONTINUED)
$ 1,000 New York City Ser H......................... 5.750% 03/15/13 $ 1,092,790
760 New York City Trans Future Tax Secd Ser C... 4.750 05/01/23 765,176
2,000 New York City Transitional Future Tax Secd
Ser C Rfdg (AMBAC Insd)..................... 5.250 08/01/22 2,136,560
1,545 New York St Dorm Auth Lease Teachers College
(FSA Insd).................................. 5.250 08/15/15 1,701,230
6,800 New York St Dorm Auth Rev City Univ Sys Cons
Ser A (a)................................... 5.625 07/01/16 7,880,656
3,000 New York St Dorm Auth Rev Sch Dist Fin Pgm
Ser D (MBIA Insd)........................... 5.500 10/01/17 3,379,050
4,200 New York St Dorm Auth Rev Secd Hosp N
General Hosp Rfdg........................... 5.750 02/15/19 4,648,602
1,250 New York St Dorm Auth Revs Cons City Univ
Sys A (FSA Insd)............................ 5.750 07/01/13 1,467,200
2,070 New York St Med Care Fac Fin Agy Rev Mental
Hlth Svcs Ser F Rfdg (MBIA Insd)............ 5.375 02/15/14 2,170,354
4,000 New York St Twy Auth Svc Cntrct Loc Hwy
Brdg........................................ 5.250 04/01/16 4,363,320
3,000 Onondaga Cnty, NY Indl Dev Agy Swr Fac Rev
Bristol-Meyers Squibb Co Proj............... 5.750 03/01/24 3,413,250
5,189 Plainedge, NY Union Free Sch Dist (b)....... 6.000 06/01/12 5,546,955
6,000 Triborough Brdg & Tunl Auth NY Gen Ser B
Rfdg........................................ 5.000 11/15/21 6,280,320
2,000 Triborough Brdg & Tunl Auth NY Ser E Rfdg
(MBIA Insd)................................. 5.000 11/15/32 2,052,640
3,000 Triborough Brdg & Tunl Auth Gen Purp Ser A.. 5.000 01/01/27 3,062,220
------------
79,924,313
------------
NORTH CAROLINA 5.1%
2,000 Johnston Cnty, NC (FGIC Insd)............... 5.900 03/01/19 2,324,620
7,015 North Carolina Eastern Muni Pwr Agy Pwr Sys
Rev Ser A Rfdg (MBIA Insd) (a).............. 5.500 01/01/05 7,484,795
2,200 North Carolina Eastern Muni Pwr Agy Pwr Sys
Rev Ser C (ACA Insd)........................ 5.000 01/01/21 2,199,978
8,300 North Carolina Muni Pwr Agy No 1 Catawba
Elec Rev Rfdg (MBIA Insd) (a)............... 6.000 01/01/12 9,802,217
</Table>
See Notes to Financial Statements
18
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
NORTH CAROLINA (CONTINUED)
$ 6,605 North Carolina Muni Pwr Agy Ser A (MBIA
Insd)....................................... 5.250% 01/01/20 $ 7,099,450
1,315 University, NC Wilmington Rev (AMBAC Insd).. 5.250 01/01/19 1,432,995
------------
30,344,055
------------
OHIO 6.4%
3,950 Cincinnati, OH City Sch Dist Sch Impt (FSA
Insd)....................................... 5.250 06/01/18 4,341,445
2,800 Cleveland-Cuyahoga Cnty, OH Dev Port Auth
Rev Cleveland Bond Fd Ser B (g)............. 5.375 05/15/18 2,650,648
1,000 Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc
Proj........................................ 7.500 01/01/30 1,109,430
2,170 Franklin Cnty, OH Convention Fac Auth Tax &
Lease Rev Antic Bds Rfdg (AMBAC Insd)....... 5.250 12/01/13 2,446,219
2,350 Franklin Cnty, OH Convention Fac Auth Tax &
Lease Rev Antic Bds Rfdg (AMBAC Insd)....... 5.250 12/01/17 2,586,833
1,200 Franklin Cnty, OH Convention Fac Auth Tax &
Lease Rev Antic Bds Rfdg (AMBAC Insd)....... 5.250 12/01/18 1,312,920
4,800 Franklin Cnty, OH Hosp Rev Holy Cross Hlth
Sys Ser B Rfdg (MBIA Insd) (a).............. 5.250 06/01/10 5,090,976
2,000 Lebanon, OH City Sch Dist (FSA Insd)........ 5.500 12/01/16 2,252,500
1,000 Lorain Cnty, OH Hosp Rev Catholic
Hlthcare.................................... 5.375 10/01/30 1,018,450
2,000 Lorain, OH City Sch Dist Classroom Fac Impt
(MBIA Insd)................................. 5.250 12/01/20 2,178,500
1,000 Mahoning Cnty, OH Hosp Fac Forum Hlth Oblig
Group Ser A................................. 6.000 11/15/32 1,038,350
1,580 Montgomery Cnty, OH Hosp Rev Grandview Hosp
& Med Cent Rfdg (Escrowed to Maturity)...... 5.375 12/01/05 1,731,380
2,270 Montgomery Cnty, OH Hosp Rev Kettering Med
Cent Impt & Rfdg (MBIA Insd)................ 6.250 04/01/20 2,778,049
1,000 Ohio St Air Quality Dev Auth Rev JMG Funding
Ltd Part Proj Rfdg (AMBAC Insd)............. 6.375 04/01/29 1,078,720
2,500 Ohio St Bldg Auth St Fac Adult Correction
Ser A Rfdg (FSA Insd)....................... 5.500 10/01/12 2,848,125
1,000 Ohio St Higher Ed Cap Fac Ser II A.......... 5.250 12/01/05 1,094,710
2,950 Parma, OH Hosp Impt Rev Parma Cmnty Gen Hosp
Assoc Rfdg.................................. 5.375 11/01/29 2,965,370
------------
38,522,625
------------
</Table>
See Notes to Financial Statements
19
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
OKLAHOMA 1.3%
$ 995 Cleveland Cnty, OK Home Ln Auth Rfdg........ 8.000% 08/01/12 $ 999,279
1,240 Kay Cnty, OK Home Fin Auth Rev Single Family
Mtg Ser A Rfdg (Escrowed to Maturity) (AMBAC
Insd)....................................... 7.000 11/01/11 1,562,524
2,635 Oklahoma Hsg Fin Agy Single Family Rev Mtg
Class B (GNMA Collateralized)............... 7.997 08/01/18 2,905,114
2,305 Oklahoma St Cap Impt Auth St (MBIA Insd).... 5.000 06/01/06 2,535,062
------------
8,001,979
------------
OREGON 2.1%
4,000 Oregon Hlth Sciences Univ Insd Ser A (MBIA
Insd)....................................... 5.250 07/01/22 4,276,560
1,500 Oregon St Dept Admin Ser C Rfdg (MBIA
Insd)....................................... 5.250 11/01/17 1,642,365
1,250 Portland, OR Cmnty College Dist Ser B....... 5.250 06/01/12 1,405,388
1,500 Washington Multnomah & Yamhill Cntys, OR Sch
Dist No 11 (MBIA Insd)...................... 5.000 06/01/13 1,645,815
3,195 Yamhill Cnty, OR Sch Dist No 029J Newberg
(MBIA Insd)................................. 5.250 06/15/18 3,496,384
------------
12,466,512
------------
PENNSYLVANIA 5.7%
2,500 Allegheny Cnty, PA San Auth Swr (MBIA
Insd)....................................... 5.500 12/01/30 2,716,875
3,850 Greater Latrobe, PA Sch Auth (FGIC Insd).... 5.250 04/01/16 4,248,937
135 Lehigh Cnty, PA Gen Purp Auth Rev First Mtg
Bible Fellowship Proj A Rfdg................ 4.800 12/15/03 135,244
210 Lehigh Cnty, PA Gen Purp Auth Rev First Mtg
Bible Fellowship Proj A Rfdg................ 5.000 12/15/05 209,402
275 Lehigh Cnty, PA Gen Purp Auth Rev First Mtg
Bible Fellowship Proj A Rfdg................ 5.100 12/15/06 273,262
295 Lehigh Cnty, PA Gen Purp Auth Rev First Mtg
Bible Fellowship Proj A Rfdg................ 5.250 12/15/07 292,088
210 Lehigh Cnty, PA Gen Purp Auth Rev First Mtg
Bible Fellowship Proj A Rfdg................ 5.300 12/15/08 206,932
320 Lehigh Cnty, PA Gen Purp Auth Rev First Mtg
Bible Fellowship Proj A Rfdg................ 5.300 12/15/09 310,323
240 Lehigh Cnty, PA Gen Purp Auth Rev First Mtg
Bible Fellowship Proj A Rfdg................ 5.400 12/15/10 230,650
1,650 Montgomery Cnty, PA Indl Dev Auth Retirement
Cmnty Rev Adult Cmnty Total Svc Ser B....... 5.625 11/15/12 1,744,149
</Table>
See Notes to Financial Statements
20
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
PENNSYLVANIA (CONTINUED)
$ 2,700 Pennsylvania Econ Dev Fin Auth Res Recovery
Rev Colver Proj Ser D....................... 7.150% 12/01/18 $ 2,800,278
1,000 Pennsylvania St Tpk Commn Rev Ser T Rfdg
(FGIC Insd)................................. 5.500 12/01/11 1,155,770
1,000 Philadelphia, PA Auth Indl Dev Philadelphia
Arpt Sys Proj Ser A (FGIC Insd)............. 5.125 07/01/19 1,042,960
2,600 Philadelphia, PA Auth Indl Ser B (FSA
Insd)....................................... 5.500 10/01/16 2,921,776
3,200 Philadelphia, PA Gas Wks Rev 1998 Gen
Ordinance 4th Ser (FSA Insd)................ 5.250 08/01/19 3,489,920
4,305 Philadelphia, PA Redev Auth Rev Neighborhood
Transformation Ser A (FGIC Insd)............ 5.250 04/15/11 4,862,239
1,500 Philadelphia, PA Sch Dist Ser A (FSA
Insd)....................................... 5.750 02/01/12 1,728,765
5,205 Pittsburgh, PA Ser A (AMBAC Insd) (a)....... 5.500 09/01/17 5,836,627
------------
34,206,197
------------
RHODE ISLAND 1.3%
2,195 Providence, RI Redev Agy Ctf Part Ser A
(Prerefunded @ 09/01/04).................... 8.000 09/01/24 2,401,659
2,420 Rhode Island St Cons Cap Dev Ln Ser A....... 5.000 08/01/12 2,475,176
2,495 Rhode Island St Hlth & Ed Higher Ed Johnson
& Wales Rfdg (XLCA Insd).................... 5.375 04/01/18 2,759,545
------------
7,636,380
------------
SOUTH CAROLINA 0.7%
2,000 Rock Hill, SC Util Sys Rev Comb Ser A Impt &
Rfdg (FSA Insd)............................. 5.375 01/01/18 2,219,460
475 Rock Hill, SC Util Sys Rev Comb Ser C Rfdg
(FSA Insd).................................. 5.125 01/01/13 520,885
1,500 South Carolina Jobs Econ SC Elec & Gas Co
Proj A (AMBAC Insd)......................... 5.200 11/01/27 1,571,595
------------
4,311,940
------------
SOUTH DAKOTA 1.0%
5,890 South Dakota Hsg Dev Auth Homeownership Mtg
Ser F (a)................................... 5.800 05/01/28 6,097,210
------------
TENNESSEE 2.7%
4,000 Johnson City, TN Hlth & Ed Fac Brd Hosp Rev
First Mtg Mtn St Hlth Ser A Rfdg (MBIA
Insd)....................................... 7.500 07/01/25 5,079,400
2,500 Memphis, TN (Prerefunded @ 10/01/06)........ 5.250 10/01/14 2,814,050
2,905 Memphis, TN Gen Impt (g).................... 5.000 05/01/20 3,073,258
</Table>
See Notes to Financial Statements
21
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
TENNESSEE (CONTINUED)
$ 1,000 Metropolitan Nashville Arpt Auth TN Impt Ser
A Rfdg (FGIC Insd).......................... 6.600% 07/01/14 $ 1,218,610
2,100 Tennessee Hsg Dev Agy Home Ownership Pgm
2-A......................................... 5.700 07/01/31 2,199,351
1,720 Wilson Cnty, TN Sch Rfdg (FGIC Insd)........ 5.000 04/01/17 1,888,078
------------
16,272,747
------------
TEXAS 9.5%
1,000 Brazos Cnty, TX Hlth Fac Dev Oblig Grp...... 5.375 01/01/32 991,970
1,250 Brazos River Auth TX Pollutn Ctl Rev Adj TX
Elec Co Proj Ser C Rfdg..................... 5.750 05/01/36 1,230,563
1,350 Cameron Cnty, TX Ctfs Oblig (AMBAC Insd).... 5.750 02/15/14 1,543,523
2,500 Coastal Bend Hlth Fac Dev, TX Ser C (Inverse
Fltg) (Escrowed to Maturity) (AMBAC Insd)
(h)......................................... 8.138 11/15/13 3,472,700
2,420 Dallas Cnty, TX Cmnty College Dist Rev Fing
Sys (AMBAC Insd)............................ 5.375 02/15/16 2,674,342
1,600 Dallas-Fort Worth, TX Intl Arpt Fac Impt
Corp Rev Delta Airl Inc..................... 7.625 11/01/21 834,272
2,000 Fort Worth, TX Wtr & Swr Rev Impt Rfdg...... 5.500 02/15/05 2,145,100
1,745 Harris Cnty, TX Perm Impt & Rfdg............ 5.000 10/01/11 1,914,928
2,500 Houston, TX Arpt Sys Rev Sub Lien (FSA
Insd)....................................... 5.000 07/01/32 2,533,800
3,345 Houston, TX Hotel Occupancy Tax Convtn &
Entertnmnt Ser B (AMBAC Insd)............... 5.750 09/01/14 3,825,610
3,000 Houston, TX Indpt Sch Dist Maintenance Tax
Nt (FSA Insd)............................... 5.000 07/15/20 3,138,480
6,790 Houston, TX Indpt Sch Dist Pub Fac Corp
Lease Rev Cap Apprec West Side Ser B (AMBAC
Insd)....................................... * 09/15/14 4,166,412
1,500 Houston, TX Pub Impt Rfdg (FSA Insd)........ 5.750 03/01/15 1,715,580
2,500 Houston, TX Wtr & Swr Sys Rev Jr Lien Ser B
Rfdg (FGIC Insd)............................ 6.250 12/01/05 2,798,575
1,000 Mesquite, TX Hlth Fac Dev Christian Care
Retirement Fac Ser A........................ 7.625 02/15/28 1,046,100
1,400 Metropolitan Hlth Fac Dev Corp TX Wilson N
Jones Mem Hosp Proj......................... 7.250 01/01/31 1,265,936
1,000 North Central, TX Hlth Fac Dev Hosp Baylor
Hlth Care Sys Proj A........................ 5.125 05/15/29 1,006,520
4,000 North Central, TX Hlth Fac Dev Hosp
Childrens Med Ctr Dallas (AMBAC Insd)....... 5.250 08/15/32 4,126,480
4,258 Region One Ed Svc Cent Sub Tech Fac Proj.... 6.590 12/15/17 4,480,976
</Table>
See Notes to Financial Statements
22
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
TEXAS (CONTINUED)
$ 4,000 San Antonio, TX Elec & Gas Rev Sys Rfdg..... 5.375% 02/01/18 $ 4,376,280
1,303 Texas Gen Svc Comm Part Int................. 7.250 08/01/11 1,321,496
45 Texas Muni Pwr Agy Rev (Escrowed to
Maturity) (MBIA Insd)....................... * 09/01/15 26,464
3,955 Texas Muni Pwr Agy Rev (Unrefunded Balance)
(MBIA Insd)................................. * 09/01/15 2,289,708
4,000 Texas St Univ Sys Fin Rev Rfdg (FSA Insd)... 5.000 03/15/19 4,221,200
------------
57,147,015
------------
UTAH 0.9%
3,545 Bountiful, UT Hosp Rev South Davis Cmnty
Hosp Proj (Prerefunded @ 06/15/04) (b)...... 9.500 12/15/18 3,978,589
1,000 Utah St Ser B Rfdg (a)...................... 5.250 07/01/08 1,134,360
------------
5,112,949
------------
VIRGINIA 2.5%
1,320 Fairfax Cnty, VA Ctf Part................... 5.300 04/15/23 1,378,106
1,500 Henrico Cnty, VA Indl Dev Auth Pub Fac Lease
Rev Henrico Cnty Regl Jail Proj (Prerefunded
@ 08/01/05)................................. 6.500 08/01/10 1,697,655
1,500 Henrico Cnty, VA Indl Dev Auth Pub Fac Lease
Rev Henrico Cnty Regl Jail Proj (Prerefunded
@ 08/01/05)................................. 7.125 08/01/21 1,718,370
1,630 Richmond, VA (FSA Insd)..................... 5.125 01/15/08 1,826,578
1,340 Richmond, VA (FSA Insd)..................... 5.500 01/15/10 1,536,256
2,155 Virginia Comwlth Trans Brd North VA Trans
Dist Pg Ser A............................... 5.375 05/15/14 2,421,272
1,875 Virginia St Hsg Dev Auth Comwlth Mtg SubSer
A-3......................................... 5.650 07/01/07 2,035,331
1,960 Virginia St Hsg Dev Auth Comwlth Mtg SubSer
A-3......................................... 5.700 07/01/08 2,132,225
------------
14,745,793
------------
WASHINGTON 7.3%
5,000 Bellevue, WA Convention Cent Auth Spl Oblig
Rev Rfdg (MBIA Insd)........................ * 02/01/24 1,705,700
3,230 Clark Cnty, WA Pub Util Dist No. 001 Gen Sys
Rev Rfdg (FSA Insd)......................... 5.500 01/01/07 3,611,560
3,000 Clark Cnty, WA Pub Util Dist No. 001 Gen Sys
Rev Rfdg (FSA Insd)......................... 5.625 01/01/12 3,402,450
5,000 Cowlitz Cnty, WA Spl Swr Rev Csob Wastewtr
Treatment Rfdg (FGIC Insd).................. 5.500 11/01/19 5,758,500
</Table>
See Notes to Financial Statements
23
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
WASHINGTON (CONTINUED)
$ 5,000 Energy Northwest WA Elec Rev Proj No 3 Ser A
Rfdg (XLCA Insd)............................ 5.500% 07/01/17 $ 5,583,650
3,000 Energy Northwest WA Elec Rev Proj No 3 Ser A
Rfdg (FSA Insd)............................. 5.500 07/01/18 3,304,920
5,000 King Cnty, WA Ser B Rfdg (MBIA Insd)........ 5.250 01/01/34 5,223,100
1,000 Port Seattle, WA Rev Ser B (MBIA Insd)...... 5.625 02/01/24 1,053,390
1,345 Tacoma, WA Elec Sys Rev Ser A Rfdg (FSA
Insd)....................................... 5.750 01/01/15 1,529,521
30 Washington St Pub Pwr Supply Ser B
(Prerefunded @ 07/01/03) (MBIA Insd)........ 5.600 07/01/15 30,828
10,465 Washington St Pub Pwr Supply Ser B
(Unrefunded Balance) (MBIA Insd) (a)........ 5.600 07/01/15 10,753,625
1,750 Washington St Pub Pwr Supply Sys Nuclear
Proj No 1 Rev (MBIA Insd)................... 5.750 07/01/12 1,966,020
------------
43,923,264
------------
WEST VIRGINIA 1.1%
6,550 Harrison Cnty, WV Cnty Cmnty Solid Waste
Disp Rev Potomac Edison Co Ser A (MBIA Insd)
(a)......................................... 6.875 04/15/22 6,641,045
------------
WISCONSIN 2.2%
430 Wisconsin Hsg & Econ Dev Auth Home Ownership
Rev Ser F................................... 5.250 07/01/29 438,445
5,000 Wisconsin St Hlth & Ed Fac Auth Mercy Hlth
Sys Corp (AMBAC Insd) (a)................... 5.500 08/15/25 5,262,950
7,280 Wisconsin St Hlth & Ed Fac Auth Rev
Children's Hosp (FGIC Insd) (a) (d)......... 5.000 08/15/10 7,453,628
------------
13,155,023
------------
GUAM 0.9%
5,000 Guam Pwr Auth Rev Ser A (AMBAC Insd)........ 5.250 10/01/34 5,252,150
------------
PUERTO RICO 0.4%
2,000 Puerto Rico Muni Fin Agy Ser A (FSA Insd)... 5.250 08/01/20 2,173,080
------------
TOTAL LONG-TERM INVESTMENTS 148.2%
(Cost $830,793,293).................................................... 888,859,387
SHORT-TERM INVESTMENT 0.0%
(Cost $200,000)........................................................ 200,000
------------
</Table>
See Notes to Financial Statements
24
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
MARKET
DESCRIPTION VALUE
TOTAL INVESTMENTS $148.2%
(Cost $830,993,293).................................................... $889,059,387
OTHER ASSETS IN EXCESS OF LIABILITIES 1.8%............................... 11,007,886
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (50.0%).............. (300,072,175)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%........................... $599,995,098
============
</Table>
* Zero coupon bond
(a) Assets segregated as collateral for when-issued or delayed delivery purchase
commitments and open futures transactions.
(b) These securities are restricted and may be resold only in transactions
exempt from registration which are normally those transactions with
qualified institutional buyers.
(c) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(d) Security converts to a fixed coupon rate at a predetermined date.
(e) Non-income producing security.
(f) Issuer has filed for protection in federal bankruptcy court.
(g) Securities purchased on a when-issued or delayed delivery basis.
(h) An Inverse Floating Rate security is one where the coupon is inversely
indexed to a short-term floating interest rate multiplied by a specific
factor. As the floating rate rises, the coupon is reduced. Conversely, as
the floating rate declines, the coupon is increased. The price of these
securities may be more volatile than the price of a comparable fixed rate
security. These instruments are typically used by the Trust to enhance the
yield of the portfolio. All of the Trust's portfolio holdings, including
derivative instruments, are marked to market each day with the change in
value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
Asset Gty--Asset Guaranty Insurance Co.
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
XLCA--XL Capital Assurance Inc.
See Notes to Financial Statements
25
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2003 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $830,993,293)....................... $889,059,387
Cash........................................................ 118,485
Receivables:
Interest.................................................. 12,393,799
Investments Sold.......................................... 8,645,496
Other....................................................... 1,667
------------
Total Assets............................................ 910,218,834
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 9,027,539
Investment Advisory Fee................................... 440,604
Variation Margin on Futures............................... 243,906
Affiliates................................................ 44,868
Administrative Fee........................................ 36,717
Trustees' Deferred Compensation and Retirement Plans........ 229,851
Accrued Expenses............................................ 128,076
------------
Total Liabilities....................................... 10,151,561
Preferred Shares (including accrued distributions).......... 300,072,175
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $599,995,098
============
NET ASSET VALUE PER COMMON SHARE ($599,995,098 divided by
36,365,393 shares outstanding)............................ $ 16.50
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 36,365,393 shares issued and
outstanding).............................................. $ 363,654
Paid in Surplus............................................. 538,413,497
Net Unrealized Appreciation................................. 57,862,659
Accumulated Undistributed Net Investment Income............. 3,985,102
Accumulated Net Realized Loss............................... (629,814)
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $599,995,098
============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 12,000 issued with liquidation preference of
$25,000 per share)........................................ $300,000,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $899,995,098
============
</Table>
See Notes to Financial Statements
26
Statement of Operations
For the Six Months Ended April 30, 2003 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $22,291,019
-----------
EXPENSES:
Investment Advisory Fee..................................... 2,646,253
Preferred Share Maintenance................................. 396,384
Administrative Fee.......................................... 220,521
Legal....................................................... 68,389
Trustees' Fees and Related Expenses......................... 47,819
Custody..................................................... 27,204
Other....................................................... 186,138
-----------
Total Expenses.......................................... 3,592,708
Less Credits Earned on Cash Balances.................... 457
-----------
Net Expenses............................................ 3,592,251
-----------
NET INVESTMENT INCOME....................................... $18,698,768
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................. $ 2,049,904
Futures................................................. (834,388)
-----------
Net Realized Gain........................................... 1,215,516
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 45,190,571
End of the Period:
Investments............................................. 58,066,094
Futures................................................. (203,435)
-----------
57,862,659
-----------
Net Unrealized Appreciation During the Period............... 12,672,088
-----------
NET REALIZED AND UNREALIZED GAIN............................ $13,887,604
===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $(1,737,473)
===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $30,848,899
===========
</Table>
See Notes to Financial Statements
27
Statements of Changes in Net Assets
(Unaudited)
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 18,698,768 $ 38,628,846
Net Realized Gain.................................. 1,215,516 6,482,908
Net Unrealized Appreciation/Depreciation During the
Period........................................... 12,672,088 (5,984,542)
Distributions to Preferred Shareholders:
Net Investment Income............................ (1,737,473) (4,166,801)
------------ ------------
Change in Net Assets Applicable to Common Shares
from Operations.................................. 30,848,899 34,960,411
Distributions to Common Shareholders:
Net Investment Income............................ (17,018,069) (33,199,705)
------------ ------------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON
SHARES FROM INVESTMENT ACTIVITIES................ 13,830,830 1,760,706
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period............................ 586,164,268 584,403,562
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $3,985,102
and $4,041,876, respectively).................... $599,995,098 $586,164,268
============ ============
</Table>
See Notes to Financial Statements
28
Financial Highlights
(Unaudited)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ----------------------------
2003 2002 (a) 2001 2000
-----------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD........ $ 16.12 $ 16.07 $ 14.91 $ 14.60
------- ------- ------- -------
Net Investment Income......................... .52 1.06 1.13 1.17
Net Realized and Unrealized Gain/Loss......... .38 .01 1.12 .42
Common Share Equivalent of Distributions Paid to
Preferred Shareholders:
Net Investment Income....................... (.05) (.11) (.27) (.34)
Net Realized Gain........................... -0- -0- -0- -0-
------- ------- ------- -------
Total from Investment Operations................ .85 .96 1.98 1.25
Distributions Paid to Common Shareholders:
Net Investment Income....................... (.47) (.91) (.82) (.94)
Net Realized Gain........................... -0- -0- -0- -0-
------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD.............. $ 16.50 $ 16.12 $ 16.07 $ 14.91
======= ======= ======= =======
Common Share Market Price at End of the
Period........................................ $ 15.05 $ 14.30 $ 13.79 $12.625
Total Return (b)................................ 8.67%* 10.49% 15.97% 2.80%
Net Assets Applicable to Common Shares at End of
the Period (In millions)...................... $ 600.0 $ 586.2 $ 584.4 $ 542.1
Ratio of Expenses to Average Net Assets
Applicable to Common Shares (c)............... 1.23% 1.35% 1.55% 1.67%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (c)........ 6.40% 6.70% 7.26% 8.07%
Portfolio Turnover.............................. 13%* 38% 28% 39%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets
Including Preferred Shares (c)................ .81% .89% 1.01% 1.07%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (d)........ 5.80% 5.98% 5.51% 5.71%
SENIOR SECURITIES:
Total Preferred Shares Outstanding.............. 12,000 12,000 12,000 12,000
Asset Coverage Per Preferred Share (e).......... $75,006 $73,861 $73,700 $70,177
Involuntary Liquidating Preference Per Preferred
Share......................................... $25,000 $25,000 $25,000 $25,000
Average Market Value Per Preferred Share........ $25,000 $25,000 $25,000 $25,000
</Table>
* 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 $.01, decrease net realized and unrealized
gains and losses per share by $.01 and increase the ratio of net investment
income to average net assets applicable to common shares from 6.69% to
6.73%. Per share, ratios and supplemental data for periods prior to October
31, 2002 have not been restated to reflect this change in presentation.
(b) 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.
(c) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(d) Ratios reflect the effect of dividend payments to preferred shareholders.
(e) 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.
See Notes to Financial Statements
29
<Table>
<Caption>
TWO MONTHS
ENDED YEAR ENDED AUGUST 31,
- ------------ OCTOBER 31, ---------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------
$ 17.39 $ 17.32 $ 16.60 $ 15.84 $ 15.73 $ 15.56 $ 17.04 $ 16.33
-------- -------- -------- -------- -------- -------- -------- --------
1.20 .21 1.26 1.28 1.30 1.31 1.34 1.41
(2.30) .08 .72 .73 .10 .26 (1.42) .78
(.24) (.02) (.30) (.29) (.30) (.32) (.28) (.24)
(.06) (.04) -0- -0- -0- -0- -0- (.03)
-------- -------- -------- -------- -------- -------- -------- --------
(1.40) .23 1.68 1.72 1.10 1.25 (.36) 1.92
(.96) (.16) (.96) (.96) (.99) (1.08) (1.12) (1.10)
(.43) -0- -0- -0- -0- -0- -0- (.11)
-------- -------- -------- -------- -------- -------- -------- --------
$ 14.60 $ 17.39 $ 17.32 $ 16.60 $ 15.84 $ 15.73 $ 15.56 $ 17.04
======== ======== ======== ======== ======== ======== ======== ========
$13.1875 $16.8125 $16.1875 $ 15.75 $ 14.50 $ 14.25 $ 15.00 $ 16.75
-14.47% 4.84%* 9.06% 15.87% 8.98% 2.39% -3.94% 11.90%
$ 530.9 $ 630.6 $ 628.2 $ 601.9 $ 574.6 $ 570.7 $ 564.4 $ 617.9
1.60% 1.57% 1.57% 1.61% 1.61% 1.65% 1.64% 1.59%
7.43% 7.20% 7.42% 7.86% 8.08% 8.58% 8.23% 8.58%
80% 6%* 94% 54% 36% 49% 47% 48%
1.06% 1.07% 1.06% 1.07% 1.06% 1.07% 1.09% 1.06%
5.95% 6.48% 5.66% 6.04% 6.20% 6.48% 6.52% 7.08%
12,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
$ 69,241 $155,104 $154,696 $150,322 $145,764 $145,113 $144,074 $152,980
$ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
$ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
</Table>
See Notes to Financial Statements
30
NOTES TO
FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Municipal 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 seek 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, but may
invest up to 20% of its assets in unrated securities which are believed to be of
comparable quality to those rated investment grade. The Trust commenced
investment operations on September 27, 1991.
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.
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, the Trust had
$9,027,539 of when-issued and delayed delivery purchase commitments.
31
NOTES TO
FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
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.
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 $1,636,866, which will expire on October 31,
2008.
At April 30, 2003, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $830,233,443
============
Gross tax unrealized appreciation........................... $ 64,303,886
Gross tax unrealized depreciation........................... (5,477,942)
------------
Net tax unrealized appreciation on investments.............. $ 58,825,944
============
</Table>
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 for the year ended October 31, 2002,
was as follows:
<Table>
<Caption>
2002
Distributions paid from:
Ordinary income........................................... $75,802
</Table>
As of October 31, 2002, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $155,800
</Table>
F. EXPENSE REDUCTION During the six months ended April 30, 2003, the Trust's
custody fee was reduced by $457 as a result of credits earned on cash balances.
32
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 $25,100 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 $40,800
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 provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement 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 $130,277,501 and $115,889,483,
respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
33
NOTES TO
FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
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 the
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.
Risks may arise as a result of the potential inability of the counterparties to
meet the terms of their contracts.
During the period, the Trust invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Trust
generally invests in exchange traded futures contracts on U.S. Treasury Bonds
and Notes and typically closes the contract prior to the delivery date. Futures
contracts are valued at the settlement price established each day on the
exchange on which they are traded.
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 future commission merchant pursuant to 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 as 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:
<Table>
<Caption>
CONTRACTS
Outstanding at October 31, 2002............................. 1,063
Futures Opened.............................................. 1,056
Futures Closed.............................................. (1,624)
------
Outstanding at April 30, 2003............................... 495
======
</Table>
34
NOTES TO
FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
The futures contracts outstanding as of April 30, 2003, and the descriptions
and unrealized appreciation/depreciation are as follows:
<Table>
<Caption>
UNREALIZED
CONTRACTS DEPRECIATION
Short Contracts:
U.S. Treasury Notes 10-Year Futures June 2003 (Current
Notional Value of $115,125 per contract)................ 95 $ (27,863)
U.S. Treasury Notes 5-Year Futures June 2003 (Current
Notional Value of $113,750 per contract)................ 400 (175,572)
---- ---------
495 $(203,435)
==== =========
</Table>
5. PREFERRED SHARES
The Trust has outstanding 12,000 Auction Preferred Shares ("APS") in four series
of 3,000 shares each. Dividends are cumulative and the dividend rate is
periodically reset through an auction process. The dividend periods for Series A
and C are generally seven days. The dividend periods for Series B and D are 28
days. The average rate in effect on April 30, 2003 was 1.140%. During the six
months ended April 30, 2003, the rates ranged from 0.710% to 1.750%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of "Preferred Share
Maintenance" expense 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.
35
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
36
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
prorata 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
37
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
VAN KAMPEN MUNICIPAL 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.
38
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.
VKQ SAR 6/03 Member NASD/SIPC.
11179F03-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 Municipal 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