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 811-6736
Van Kampen Advantage Municipal Income 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
Date of reporting period: 10/31/03
Item 1. Report to Shareholders
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Advantage Municipal Income Trust performed during the annual period. The
portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the trust's financial statements and a list of trust investments
as of October 31, 2003.
Market forecasts provided in this report may not necessarily come to
pass. There is no assurance that the trust will achieve its investment
objective. The trust is subject to market risk, which is the possibility
that the market values of securities owned by the trust will decline and,
therefore, the value of the trust shares may be less than what you paid
for them. Accordingly, you can lose money investing in this trust.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
Performance Summary
<Table>
<Caption>
ADVANTAGE MUNICIPAL INCOME TRUST
SYMBOL: VKA
- -------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (9/25/92) 7.68% 7.38%
10-year 6.49 6.91
5-year 6.31 7.10
1-year 6.85 12.30
- -------------------------------------------------------
</Table>
Past performance is no guarantee of future results. Investment return, net asset
value (NAV) and common share market price 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 NAV per share is determined by dividing
the value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding. The common share
market price is 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. Total return assumes an
investment at the beginning of the period, reinvestment of all distributions for
the period in accordance with the trust's dividend reinvestment plan, and sale
of all shares at the end of the period.
The Lehman Brothers Municipal Bond Index is a broad-based statistical composite
of municipal bonds. The index is unmanaged and does not include any sales
charges or fees. Such costs would lower performance. It is not possible to
invest directly in an index.
1
Trust Report
FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2003
Van Kampen Advantage Municipal Income Trust is managed by the adviser's
Municipal Fixed Income team.(1) Current members include Dennis Pietrzak,
Executive Director; Robert Wimmel, Vice President; and John Reynoldson,
Executive Director.
MARKET CONDITIONS
The economic backdrop for the 12 months ended October 31 was largely
characterized by the persistent weakness of the U.S. economy. One of the most
closely watched economic indicators, employment strength, was in negative
territory for much of the period. Repeated comments from government and
private-sector economists suggesting that the U.S. economy might be entering a
deflationary period also seemed to weigh heavily on the minds of investors over
the course of the year. At the same time, ongoing budgetary and fiscal
difficulties at the state and local level contributed to ratings downgrades for
many municipal bonds. The Federal Reserve Board (the Fed) attempted to allay
these fears and keep the economy moving in the right direction by cutting the
Fed Funds target rate twice during the period to a level of 1.00 percent.
Although the stock markets appeared to look past the sluggish economic data,
bonds, in general, were hampered.
While yields on intermediate- and long-term bonds ended the period roughly where
they began, the road between those two points was decidedly bumpy. The 12-month
period can be divided into two distinct market environments. The first of these,
which lasted from October 2002 to mid-June 2003, saw municipal yields fall by
roughly 80 basis points to levels not seen since the late 1960s. These
plummeting yields led to a surge in issuance as municipalities moved to lock in
low financing and, in the case of older bonds, low refinancing costs. These
record levels of supply met with substantial demand as investors in search of
relative stability poured cash into municipal bond funds. Demand for municipal
bonds was also strong from so-called "cross-over" buyers--investors who
traditionally favor taxable investments, but were drawn to the relatively
attractive yields of municipal bonds.
The municipal market reversed abruptly in mid-June, when yields began to climb
from their lows. Investors during this phase shifted their attention to the
advancing equity market, which reduced demand for municipal bonds. Interest from
cross-over investors also evaporated as the relative attractiveness of the
taxable market returned. Issuance remained strong throughout this leg of the
period, though it abated somewhat in the last three months of the reporting
year. These forces combined to drive municipal bond yields off of their historic
lows, ending the period where they began.
(1)Team members may change without notice at any time.
2
PERFORMANCE ANALYSIS
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ significantly. On both a market price and an NAV basis, the
trust outperformed its benchmark, the Lehman Brothers Municipal Bond Index. (See
table below.)
The trust's holdings of airport bonds benefited from strong price appreciation
in the sector, which experienced its first solid gains since September 11, 2001.
As issues in this sector met their investment objectives during the period, we
subsequently sold them in favor of bonds with superior total-return potential.
Our strategy of avoiding housing bonds also helped the trust; the sector
performed poorly amidst record levels of mortgage refinancing activity.
The trust uses leverage to enhance its dividend to common shareholders. The
trust borrows money at short-term rates through the issuance of preferred
shares. The proceeds are reinvested in longer-term securities, taking advantage
of the difference between short- and longer-term rates. With short-term rates at
historic lows during the period, the difference between short- and longer-term
rates was relatively high. This made using leverage a particularly profitable
approach during the period, and added to the trust's strong performance.
With interest rates falling to historic lows, our analysis showed an increasing
possibility of a damaging upward shift in interest rates. We positioned the
trust defensively by maintaining a duration (a measure of interest-rate
sensitivity) that was approximately one-half year shorter than that of the
benchmark during the period. This positioning helped the trust when rates
climbed, but kept it from fully participating in the bond market rally earlier
in the period.
We were equally defensive in managing the portfolio's maturity structure. Given
the steepness of the yield curve for much of the period (steepness is a measure
of the difference in yields between long and short-maturity securities), we
focused on a strategy designed to outperform in a curve-flattening environment.
We purchased premium bonds in the 15- to 22-year range that were priced to
10-year call dates. These bonds offer attractive yields compared to bonds with
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2003
<Table>
<Caption>
- ----------------------------------------------------------
BASED ON BASED ON LEHMAN BROTHERS
NAV MARKET PRICE MUNICIPAL BOND INDEX
6.85% 12.30% 5.11%
- ----------------------------------------------------------
</Table>
Past performance is no guarantee of future results. Investment return, net asset
value and common share market price will fluctuate and trust shares, when sold,
may be worth more or less than their original cost. See Performance Summary for
additional performance information.
3
similar interest-rate risk. We sold bonds in the 5- to 10-year range, an area of
the curve that we feel will underperform when short rates rise. This curve
flattening did not occur as early as we anticipated, however, and the strategy
hampered performance when short rates fell in the first part of the period.
However, when long-bond yields rose in the latter part of the period, our
emphasis on defensive bonds in the 15- to 22-year range helped to preserve
principal.
In addition to this core strategy, we also traded high-grade bonds in the
30-year range based on relative value fluctuations. We sought out issues that
were cheap relative to comparable bonds, and then sold them after they achieved
their performance targets in order to reinvest the proceeds into securities with
greater total-return prospects. As part of this strategy, we added to the
portfolio's exposure in the A-rated hospital sector, which offered attractive
total-return potential compared to similar bonds in other sectors.
During the period, many municipalities faced budget shortfalls and potential
credit downgrades. In this challenging environment, we emphasized the highest
credit-quality tiers of the municipal bond market. As of October 31, 2003,
approximately 69 percent of the trust's long-term investments were invested in
bonds rated AAA, the highest credit quality available. We will continue with our
disciplined investment approach, monitoring the market closely for compelling
opportunities.
<Table>
TOP 5 SECTORS AS OF 10/31/03 RATINGS ALLOCATION AS OF 10/31/03
Health Care 13.5% AAA/Aaa 69.3%
Public Education 10.6 AA/Aa 17.5
Transportation 9.8 A/A 8.6
General Purpose 9.7 BBB/Baa 4.1
Higher Education 9.4 BB/Ba 0.2
B/B 0.3
</Table>
Subject to change daily. All percentages are as a percentage of long-term
investments. Provided for informational purposes only and should not be deemed
as a recommendation to buy securities in the sectors shown above. Securities are
classified by sectors that represent broad groupings of related industries.
Rating allocations based upon ratings as issued by Standard and Poor's and
Moody's, respectively. Morgan Stanley is a full-service securities firm engaged
in securities trading and brokerage activities, investment banking, research and
analysis, financing and financial advisory services.
4
PROXY VOTING POLICIES AND PROCEDURES
A description of the trust's policies and procedures with respect to the
voting of proxies relating to the trust's portfolio securities is
available without charge, upon request, by calling 1-800-847-2424. This
information is also available on the Securities and Exchange Commission's
website at http://www.sec.gov.
5
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS
October 31, 2003
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 157.1%
ALABAMA 1.5%
$ 1,000 Alabama Bldg Renovation Fin Auth Rev Rfdg (AMBAC
Insd)........................................... 5.625% 09/01/24 $ 1,074,550
1,550 Birmingham, AL Arpt Auth Arpt Rev Rfdg (AMBAC
Insd)........................................... 5.500 07/01/14 1,649,510
2,000 Montgomery, AL Wt (AMBAC Insd).................. 5.250 05/01/20 2,131,640
-------------
4,855,700
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ARIZONA 3.8%
1,425 Arizona Cap Fac Fin Corp Student Hsg Rev AZ St
Univ Proj....................................... 6.250 09/01/32 1,489,652
2,500 Arizona Sch Fac Brd Rev St Sch Impt............. 5.500 07/01/17 2,772,700
2,900 Arizona Tourism & Sports Auth Multi Purp Stad
Fac Ser A (MBIA Insd)........................... 5.375 07/01/22 3,093,430
2,875 Phoenix, AZ Civic Impt Corp Arpt Rev Jr Lien
(FGIC Insd)..................................... 5.375 07/01/29 2,911,944
955 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease Oblig
Irvington Proj Tucson Ser A Rfdg (FSA Insd)..... 7.250 07/15/10 1,006,236
1,000 Scottsdale, AZ Indl Dev Auth Hosp Rev Scottsdale
Hlthcare........................................ 5.800 12/01/31 1,016,100
-------------
12,290,062
-------------
CALIFORNIA 5.7%
2,630 Anaheim, CA Pub Fin Auth Lease Rev Cap Apprec
Sub Pub Impts Proj C (FSA Insd)................. * 09/01/20 1,120,196
4,000 California Infrastructure & Econ Dev Bk Rev Bay
Area Toll Brdgs First Lien A (AMBAC Insd)....... 5.000 07/01/33 4,025,640
5,500 California St Dept Wtr Res Pwr Ser A (AMBAC
Insd)........................................... 5.500 05/01/16 6,088,995
2,000 California St Dept Wtr Res Pwr Ser A (AMBAC
Insd)........................................... 5.750 05/01/17 2,184,960
5,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap
Apprec Rfdg..................................... * 01/15/25 1,435,700
3,000 Los Angeles, CA Uni Sch Dist Ser A (FSA Insd)... 5.250 07/01/19 3,229,440
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18,084,931
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</Table>
6 See Notes to Financial Statements
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
COLORADO 2.3%
$ 8,500 Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev E-470
Proj Ser C (Prerefunded @ 08/31/05)............. * 08/31/26 $ 1,728,390
3,000 Colorado Hlth Fac Auth Rev Catholic Hlth
Initiatives Ser A............................... 5.500% 03/01/32 3,058,980
225 Colorado Hsg Fin Auth Single Family Pgm Sr Ser
B1.............................................. 7.900 12/01/25 233,912
65 Colorado Hsg Fin Auth Single Family Pgm Sr Ser
D-1 Rfdg (a).................................... 8.000 12/01/24 65,088
32 Colorado Hsg Fin Auth Single Family Pgm Sr Ser
E............................................... 8.125 12/01/24 32,173
2,000 La Plata Cnty, CO Sch Dist 9 (MBIA Insd)........ 5.250 11/01/19 2,138,260
-------------
7,256,803
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CONNECTICUT 1.4%
3,250 Connecticut St Spl Oblig Pkg Rev Bradley Intl
Arpt Ser A (ACA Insd)........................... 6.600 07/01/24 3,464,922
1,000 Hartford, CT Pkg Sys Rev Ser A.................. 6.400 07/01/20 1,042,160
-------------
4,507,082
-------------
DISTRICT OF COLUMBIA 2.0%
2,500 District Columbia Rev Gonzaga College (FSA
Insd)........................................... 5.250 07/01/32 2,561,400
3,850 Metropolitan Washington DC Arpt Auth Sys Ser A
(FGIC Insd)..................................... 5.250 10/01/32 3,906,787
-------------
6,468,187
-------------
FLORIDA 2.9%
2,000 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
Insd)........................................... 5.950 07/01/20 2,118,120
2,500 Miami-Dade Cnty, FL Aviation Rev Miami Intl Arpt
(FGIC Insd)..................................... 5.375 10/01/32 2,569,925
2,250 Miami-Dade Cnty, FL Aviation Ser A (FSA Insd)... 5.000 10/01/33 2,234,362
2,355 Plantation, FL Proj Impt & Rfdg (FSA Insd)...... 5.000 08/15/19 2,465,285
-------------
9,387,692
-------------
GEORGIA 3.9%
1,000 Athens, GA Hsg Auth Student Hsg Univ of GA East
Campus (AMBAC Insd)............................. 5.250 12/01/22 1,050,430
1,000 Atlanta, GA Arpt Rev Ser B (FGIC Insd).......... 5.625 01/01/30 1,041,360
3,770 Monroe Cnty, GA Dev Auth Pollutn Ctl Rev
Oglethorpe Pwr Corp Scherer Ser A............... 6.800 01/01/12 4,474,424
3,000 Municipal Elec Auth GA Combustion Turbine Proj
Ser A (MBIA Insd)............................... 5.250 11/01/19 3,203,850
2,500 Municipal Elec Auth GA Combustion Turbine Proj
Ser A (MBIA Insd)............................... 5.250 11/01/21 2,646,050
-------------
12,416,114
-------------
</Table>
See Notes to Financial Statements 7
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
ILLINOIS 17.8%
$ 45 Aurora, IL Single Family Mtg Rev Ser B Rfdg
(GNMA Collateralized)........................... 8.050% 09/01/25 $ 45,334
3,750 Bolingbrook, IL Cap Apprec Ser B (MBIA Insd).... * 01/01/30 863,850
2,000 Chicago, IL Brd of Ed (FGIC Insd)............... 5.500 12/01/31 2,111,880
5,000 Chicago, IL Brd of Ed Cap Apprec Sch Reform Ser
A (FGIC Insd)................................... * 12/01/28 1,246,600
3,150 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser A Rfdg (MBIA Insd)..................... 5.375 01/01/32 3,218,638
1,895 Chicago, IL Pk Dist Hbr Fac Rev (Prerefunded @
01/01/11)....................................... 5.875 01/01/16 2,202,104
2,500 Chicago, IL Pk Dist Ser C (FGIC Insd)........... 5.500 01/01/19 2,726,900
5,000 Chicago, IL Sch Fin Auth Ser A (MBIA Insd)...... 5.000 06/01/09 5,208,750
1,000 Chicago, IL Wastewtr Transmission Rev Second
Lien (MBIA Insd)................................ 5.750 01/01/25 1,081,880
3,000 Cicero, IL Alt Rev Source (Prerefunded @
12/01/04) (MBIA Insd)........................... 6.500 12/01/14 3,236,310
4,500 Cook Cnty, IL Cap Impt Ser A (FGIC Insd)........ 5.000 11/15/23 4,565,205
1,620 Cook Cnty, IL Cmnty High Sch Dist No. 219 Niles
Twp (FSA Insd).................................. * 12/01/11 1,184,803
2,260 Cook Cnty, IL Cmnty High Sch Dist No. 219 Niles
Twp (FSA Insd).................................. * 12/01/12 1,555,129
2,235 Cook Cnty, IL Cmnty High Sch Dist No. 219 Niles
Twp (FSA Insd).................................. * 12/01/13 1,452,772
3,110 Du Page Cnty, IL Trans Rev (FSA Insd)........... 5.750 01/01/17 3,500,429
2,740 Illinois Dev Fin Auth Rev Loc Govt Pgm Aurora
East Sch (MBIA Insd)............................ * 12/01/16 1,492,067
920 Illinois Hsg Dev Auth Rev Homeowner Mtg G2...... 6.050 08/01/29 960,977
1,925 Kendall, Kane & Will Cntys, IL Cmnty Unit Sch
Dist No. 308 Ser B (FGIC Insd).................. 5.250 10/01/21 2,032,184
2,135 Mc Henry Cnty, IL Cmnty High Sch Dist No. 154
Cap Apprec (FGIC Insd).......................... * 01/01/14 1,362,087
1,440 Mc Henry Cnty, IL Cmnty High Sch Dist No. 154
Cap Apprec (FGIC Insd).......................... * 01/01/17 768,168
1,250 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev McCormick Pl Expn Proj (FGIC Insd)...... 5.375 12/15/18 1,354,675
1,000 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev McCormick Pl Expn Proj Rfdg (FGIC
Insd)........................................... 5.500 12/15/24 1,057,750
6,000 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev McCormick Pl Expn Ser A (MBIA Insd)..... 5.250 06/15/42 6,148,140
5,000 Regional Tran Auth IL Ser B (AMBAC Insd)........ 8.000 06/01/17 6,859,850
1,150 Will Cnty, IL Cmnty Sch Dist 365U Vly View Ser B
(FSA Insd)...................................... * 11/01/15 669,449
-------------
56,905,931
-------------
</Table>
8 See Notes to Financial Statements
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
INDIANA 4.0%
$ 1,000 Allen Cnty, IN Juvenile Justice Ctr First Mtg
(AMBAC Insd).................................... 5.500% 01/01/18 $ 1,090,710
1,960 Bloomington, IN Swr Wks Rev Rfdg (MBIA Insd).... 5.000 01/01/20 2,025,915
1,060 Bloomington, IN Swr Wks Rev Rfdg (MBIA Insd).... 5.000 01/01/21 1,088,970
3,155 Indiana Hlth Fac Fin Auth Hosp Rev Cmnty Hosp
Proj (MBIA Insd)................................ 6.850 07/01/22 3,201,694
2,000 Indiana Hlth Fac Fin Auth Hosp Rev Columbus Regl
Hosp Rfdg (FSA Insd)............................ 7.000 08/15/15 2,499,560
1,500 Indiana St Dev Fin Auth Rev Exempt Fac Conv Rfdg
(a)............................................. 5.950 08/01/30 1,385,145
1,220 North Adams, IN Cmnty Sch Cap Apprec First Mtg
(FSA Insd)...................................... * 07/15/16 677,795
1,230 North Adams, IN Cmnty Sch Cap Apprec First Mtg
(FSA Insd)...................................... * 01/15/17 658,308
-------------
12,628,097
-------------
KANSAS 0.2%
240 Sedgwick & Shawnee Cntys, KS Single Family Rev
Coll Mtg Ser A-II Rfdg (GNMA Collateralized).... 8.050 05/01/24 251,270
430 Sedgwick Cnty, KS Single Family Rev Coll Mtg Ser
A-III Rfdg (GNMA Collateralized)................ 8.125 05/01/24 454,665
-------------
705,935
-------------
LOUISIANA 2.9%
1,895 Louisiana Hsg Fin Agy Mtg Rev Multi-Family
Emerald Pointe Apts (FHA Gtd)................... 7.100 11/01/33 1,944,327
525 Louisiana Hsg Fin Agy Mtg Rev Single Family
Access Pgm Ser B (GNMA Collateralized).......... 8.000 03/01/25 551,602
3,000 Louisiana St Energy & Pwr Auth Pwr Proj Rev Rfdg
(FSA Insd)...................................... 5.750 01/01/12 3,437,850
3,000 Saint Charles Parish, LA Environmental Impt Rev
LA Pwr & Lt Co Ser A (AMBAC Insd)............... 6.875 07/01/24 3,170,070
-------------
9,103,849
-------------
MARYLAND 1.5%
1,370 Maryland St Econ Dev Corp Student Hsg Rev
Salisbury Univ Proj............................. 5.000 06/01/34 1,255,112
1,000 Maryland St Econ Dev Corp Student Hsg Rev Univ
MD College Pk Proj.............................. 5.625 06/01/35 991,040
2,360 Northeast, MD Waste Disp Auth Rfdg (AMBAC
Insd)........................................... 5.500 04/01/16 2,542,239
-------------
4,788,391
-------------
</Table>
See Notes to Financial Statements 9
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
MASSACHUSETTS 3.9%
$ 3,955 Massachusetts Bay Trans Auth Gen Trans Sys Ser A
Rfdg............................................ 5.500% 03/01/12 $ 4,500,197
4,815 Massachusetts Muni Whsl Elec Co Proj 6-A (MBIA
Insd)........................................... 5.000 07/01/11 5,289,952
1,500 Massachusetts St Fed Hwy Gnt Antic Nt Ser A..... 5.750 06/15/15 1,738,515
1,000 Massachusetts St Hlth & Ed Fac Auth Rev Saint
Mem Med Ctr Ser A............................... 6.000 10/01/23 899,690
-------------
12,428,354
-------------
MICHIGAN 1.5%
2,000 Macomb Cnty, MI Hosp Fin Auth Hosp Rev Mt
Clemens Gen Hosp Ser B.......................... 5.875 11/15/34 1,902,940
1,680 Michigan Higher Ed Fac Auth Rev Ltd Oblig Hope
College Proj Rfdg (Connie Lee Insd)............. 7.000 10/01/14 1,783,555
1,000 Michigan St Strategic Fd Detroit Edison Pollutn
Ctl Ser B Rfdg.................................. 5.650 09/01/29 1,013,480
-------------
4,699,975
-------------
MINNESOTA 1.3%
3,875 Saint Paul, MN Port Auth Lease Rev Office Bldg
at Cedar Str.................................... 5.250 12/01/19 4,148,924
-------------
MISSISSIPPI 1.8%
2,000 Mississippi Bus Fin Corp MS Pollutn Ctl Rev Sys
Energy Res Inc Proj............................. 5.875 04/01/22 1,994,320
1,000 Mississippi Bus Fin Corp MS Pollutn Ctl Rev Sys
Energy Res Inc Proj Rfdg........................ 5.900 05/01/22 1,000,000
1,590 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser B (GNMA Collateralized).......... 7.900 03/01/25 1,618,318
480 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser C (GNMA Collateralized).......... 8.125 12/01/24 506,750
650 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser E (GNMA Collateralized).......... 8.100 12/01/25 689,487
-------------
5,808,875
-------------
MISSOURI 1.6%
2,100 Kansas City, MO Arpt Rev Gen Impt Ser A (FSA
Insd)........................................... 6.900 09/01/10 2,213,883
1,345 Kansas City, MO Met Cmnty Colleges Bldg Corp Rev
Leasehold Jr College Impt & Rfdg (FGIC Insd).... 5.500 07/01/17 1,490,206
1,210 Saint Louis, MO Arpt Rev Cap Impt Pgm Ser A
(MBIA Insd)..................................... 5.375 07/01/18 1,305,481
-------------
5,009,570
-------------
</Table>
10 See Notes to Financial Statements
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
NEW HAMPSHIRE 0.7%
$ 1,155 New Hampshire Hlth & Ed Fac Auth Rev Derryfield
Sch............................................. 7.000% 07/01/30 $ 1,169,414
1,000 New Hampshire St Bus Fin Auth Wtr Fac Rev
Pennichuck Wtrwks Inc (AMBAC Insd).............. 6.300 05/01/22 1,132,980
-------------
2,302,394
-------------
NEW JERSEY 11.2%
5,000 New Jersey Econ Dev Auth Sch Fac Constr Ser F
(FGIC Insd)..................................... 5.250 06/15/20 5,360,650
10,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (MBIA Insd)............................ 5.900 03/15/21 11,601,900
8,000 New Jersey Econ Dev Auth Wtr Fac Rev NJ American
Wtr Co Inc Proj Ser A (FGIC Insd)............... 6.875 11/01/34 8,602,960
5,000 New Jersey St Ed Fac Auth Higher Ed Cap Impt Ser
A (AMBAC Insd).................................. 5.250 09/01/21 5,298,600
4,650 Salem Cnty, NJ Indl Pollutn Ctl Fin Auth Rev Pub
Svc Elec & Gas Ser D Rfdg (MBIA Insd)........... 6.550 10/01/29 4,951,971
-------------
35,816,081
-------------
NEW MEXICO 1.0%
2,020 University NM Univ Rev Sub Lien Ser A Rfdg...... 5.250 06/01/20 2,134,898
1,125 University NM Univ Rev Sub Lien Ser A Rfdg...... 5.250 06/01/21 1,183,252
-------------
3,318,150
-------------
NEW YORK 27.7%
170 Broome Cnty, NY Ctf Part (MBIA Insd)............ 5.250 04/01/15 175,806
4,250 New York City Indl Dev Agy Civic Fac Rev USTA
Natl Tennis Ctr Proj (FSA Insd)................. 6.375 11/15/14 4,546,650
1,300 New York City Indl Dev Civic YMCA Gtr NY Proj... 5.800 08/01/16 1,420,744
1,325 New York City Ser B1 (Prerefunded @ 08/15/04)... 7.000 08/15/16 1,400,631
2,225 New York City Ser F Rfdg........................ 6.000 08/01/11 2,445,186
2,500 New York City Ser H............................. 5.750 03/15/12 2,778,725
3,350 New York City Transitional Fin Auth Future Tax
Secd Ser B...................................... 5.000 08/01/21 3,450,098
5,000 New York City Transitional Fin Auth Rev Future
Tax Secd Ser A.................................. 5.500 11/01/26 5,606,300
2,525 New York St Dorm Auth Lease Rev Muni Hlth Fac
Impt Pgm Ser A (FSA Insd)....................... 5.500 05/15/25 2,705,436
1,625 New York St Dorm Auth Lease Rev St Univ Dorm Fac
Ser A........................................... 6.000 07/01/14 1,857,895
1,450 New York St Dorm Auth Lease Rev St Univ Dorm Fac
Ser C (MBIA Insd)............................... 5.500 07/01/29 1,548,658
1,135 New York St Dorm Auth Rev City Univ Sec Ser B
(Escrowed to Maturity).......................... 5.375 07/01/07 1,275,956
3,915 New York St Dorm Auth Rev City Univ Sec Ser B... 5.375 07/01/07 4,336,606
</Table>
See Notes to Financial Statements 11
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
NEW YORK (CONTINUED)
$ 3,100 New York St Dorm Auth Rev City Univ Sys Cons Ser
A............................................... 5.625% 07/01/16 $ 3,509,107
2,600 New York St Dorm Auth Rev Cons City Univ Sys
Second Gen Ser A................................ 5.750 07/01/13 2,994,082
2,535 New York St Dorm Auth Rev Mental Hlth Ser B..... 5.750 08/15/11 2,788,373
15 New York St Dorm Auth Rev Mental Hlth Ser B
(Prerefunded @ 2/15/07)......................... 5.750 08/15/11 17,156
2,545 New York St Dorm Auth Rev Mental Hlth Svc Fac
Impt Ser D (FSA Insd)........................... 5.875 02/15/14 2,831,669
1,350 New York St Dorm Auth Rev Ser B................. 7.500 05/15/11 1,647,891
650 New York St Dorm Auth Rev Ser B (Prerefunded @
05/15/09)....................................... 7.500 05/15/11 821,607
5,000 New York St Dorm Auth Rev St Univ Ed Fac Ser A.. 5.500 05/15/08 5,638,900
2,000 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Ser B................... 5.000 06/15/20 2,083,040
5,000 New York St Med Care Fac Fin Agy Rev NY Downtown
Hosp Ser A (Prerefunded @ 02/15/05)............. 6.800 02/15/20 5,459,500
6,750 New York St Med Care Fac Fin Agy Rev NY Hosp Mtg
Ser A (Prerefunded @ 02/15/05) (AMBAC Insd)..... 6.300 08/15/06 7,325,438
7,000 New York St Med Care Fac Fin Agy Rev NY Hosp Mtg
Ser A (Prerefunded @ 02/15/05) (AMBAC Insd)..... 6.400 08/15/07 7,605,640
2,505 New York St Mtg Agy Rev Homeowner Mtg Ser 82.... 5.650 04/01/30 2,659,609
7,025 New York St Twy Auth Svc Contract Rev Loc Hwy &
Brdg............................................ 5.500 04/01/16 7,742,463
1,550 New York St Urban Dev Corp Rev Correctional Cap
Fac Ser 7 (Prerefunded @ 01/01/07).............. 5.700 01/01/27 1,764,768
-------------
88,437,934
-------------
NORTH CAROLINA 5.3%
11,000 North Carolina Muni Pwr Agy No. 1 Catawba Elec
Rev Rfdg (MBIA Insd)............................ 6.000 01/01/12 12,798,060
4,000 North Carolina Muni Pwr Agy Ser A (MBIA Insd)... 5.250 01/01/19 4,261,720
-------------
17,059,780
-------------
NORTH DAKOTA 0.5%
1,630 North Dakota St Hsg Fin Agy Rev Hsg Fin Pgm Home
Mtg Fin Ser B (MBIA Insd)....................... 5.500 07/01/29 1,658,965
-------------
</Table>
12 See Notes to Financial Statements
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
OHIO 2.4%
$ 1,000 Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc Proj.. 7.500% 01/01/30 $ 1,103,390
2,000 Lorain Cnty, OH Hosp Rev Catholic Hlthcare...... 5.375 10/01/30 2,006,920
3,450 Lorain Cnty, OH Hosp Rev Catholic Hlthcare Ser A
Impt & Rfdg..................................... 5.250 10/01/33 3,401,183
1,000 Marion Cnty, OH Hosp Impt Rev Cmnty Hosp Rfdg... 6.375 05/15/11 1,059,570
-------------
7,571,063
-------------
OKLAHOMA 2.7%
1,100 Oklahoma City, OK Indl & Cultural Fac Tr Rev
Dist Heating & Cooling Trigen (LOC: Societe
Generale)....................................... 6.750 09/15/17 1,105,060
1,065 Oklahoma Dev Fin Auth Lease Rev OK Council Law
Enforcement (MBIA Insd)......................... 5.500 06/01/17 1,172,331
1,120 Oklahoma Dev Fin Auth Lease Rev OK Council Law
Enforcement (MBIA Insd)......................... 5.500 06/01/18 1,225,246
1,185 Oklahoma Dev Fin Auth Lease Rev OK Council Law
Enforcement (MBIA Insd)......................... 5.500 06/01/19 1,290,110
2,000 Sapulpa, OK Muni Auth Cap Impt & Rfdg
(Prerefunded @ 07/01/10) (FSA Insd)............. 5.750 07/01/30 2,347,720
1,250 Tulsa Cnty, OK Pub Fac Auth Cap Impt Rev (AMBAC
Insd)........................................... 6.250 11/01/22 1,441,713
-------------
8,582,180
-------------
OREGON 3.9%
2,500 Oregon Hlth Sciences Univ Insd Ser A (MBIA
Insd)........................................... 5.250 07/01/22 2,632,700
5,000 Oregon St Dept Admin Ser C Rfdg (MBIA Insd)..... 5.250 11/01/18 5,351,750
4,000 Portland, OR Swr Sys Rev Ser A (FGIC Insd)...... 5.750 08/01/18 4,516,160
-------------
12,500,610
-------------
PENNSYLVANIA 5.0%
700 Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
Insd)........................................... * 03/15/14 448,336
1,830 Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
Insd)........................................... * 09/15/14 1,147,172
4,000 Pennsylvania Intergovt Coop Auth Spl Tax Rev
Philadelphia Fdg Pgm (Prerefunded @ 06/15/05)
(FGIC Insd)..................................... 6.750 06/15/21 4,355,520
1,000 Pennsylvania St Higher Ed UPMC Hlth Sys Ser A... 6.000 01/15/31 1,040,940
2,440 Philadelphia, PA Sch Dist Ser A (FSA Insd)...... 5.750 02/01/11 2,813,857
</Table>
See Notes to Financial Statements 13
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
PENNSYLVANIA (CONTINUED)
$ 2,000 Radnor Twp, PA Sch Dist......................... 5.750% 03/15/26 $ 2,157,060
4,000 State Pub Sch Bldg Auth PA Sch Rev Lease
Philadelphia Sch Dist Proj (FSA Insd)........... 5.000 06/01/33 4,028,600
-------------
15,991,485
-------------
SOUTH CAROLINA 3.8%
1,385 Easley, SC Util Rev (FSA Insd).................. 5.250 12/01/20 1,472,851
2,500 South Carolina Jobs Econ Dev Auth Indl Rev Elec
& Gas Co Proj Ser A (AMBAC Insd)................ 5.200 11/01/27 2,577,000
3,750 South Carolina Jobs Econ Dev Auth Indl Rev Elec
& Gas Co Proj Ser B (AMBAC Insd)................ 5.450 11/01/32 3,862,613
4,250 South Carolina Jobs Econ Dev Rev Bon Secours
Hlth Sys Inc Ser A.............................. 5.625 11/15/30 4,291,863
-------------
12,204,327
-------------
TENNESSEE 1.0%
1,500 Elizabethton, TN Hlth & Ed Fac Brd Rev Hosp Ser
B Impt & Rfdg (MBIA Insd)....................... 7.750 07/01/29 1,936,500
1,000 Elizabethton, TN Hlth & Ed Fac Brd Rev Hosp Ser
B Impt & Rfdg................................... 8.000 07/01/33 1,121,350
200 Franklin, TN Spl Sch Dist Cap Apprec (FSA
Insd)........................................... * 06/01/16 114,526
-------------
3,172,376
-------------
TEXAS 14.5%
2,350 Austin, TX Ctf Oblig (MBIA Insd)................ 5.375 09/01/20 2,513,396
825 Brazos, TX Higher Ed Auth Inc Student Ln Rev
SubSer A2 Rfdg.................................. 6.800 12/01/04 861,028
3,000 Dallas Cnty, TX Util & Reclamation Dist Ser B
Rfdg (AMBAC Insd)............................... 5.875 02/15/29 3,133,350
4,000 Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
(FSA Insd)...................................... 5.500 11/01/21 4,183,120
2,500 Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
(FGIC Insd)..................................... 5.750 11/01/30 2,640,950
2,000 Harris Cnty, TX Hlth Fac Dev Mem Hermann
Hlthcare Ser A.................................. 6.375 06/01/29 2,140,220
5,000 Houston, TX Arpt Sys Rev Sub Lien Ser A (FSA
Insd)........................................... 5.125 07/01/32 5,008,300
2,910 Houston, TX Wtr & Swr Sys Rev Jr Lien Ser C
(FGIC Insd)..................................... 5.375 12/01/27 3,026,516
515 Little Elm, TX Indpt Sch Dist (PSFG Insd)....... 6.750 08/15/29 559,182
4,625 Little Elm, TX Indpt Sch Dist (Prerefunded @
08/15/05) (PSFG Insd)........................... 6.750 08/15/29 5,075,753
1,500 Metropolitan Hlth Fac Dev Corp TX Wilson N Jones
Mem Hosp Proj................................... 7.250 01/01/31 1,389,345
5,000 North Cent TX Hlth Fac Dev Hosp Childrens Med
Ctr Dallas (AMBAC Insd)......................... 5.250 08/15/32 5,141,850
</Table>
14 See Notes to Financial Statements
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
TEXAS (CONTINUED)
$ 5,000 San Antonio, TX Elec & Gas Sys Rfdg............. 5.375% 02/01/19 $ 5,353,500
2,000 San Antonio, TX Elec & Gas Sys Rfdg............. 5.375 02/01/20 2,131,420
2,000 Tarrant Cnty, TX Jr College Dist................ 5.050 02/15/10 2,181,820
1,000 Trinity Rvr Auth TX Rev Tarrant Cnty Wtr Proj
Impt & Rfdg (MBIA Insd)......................... 5.500 02/01/21 1,082,380
-------------
46,422,130
-------------
WASHINGTON 8.9%
3,750 Chelan Cnty, WA Pub Util Dist No. 001 Cons Rev
Chelan Hydro Ser A (MBIA Insd).................. 5.600 01/01/36 3,899,700
2,500 Energy Northwest WA Elec Rev Proj No 3 Ser A
Rfdg (FSA Insd)................................. 5.500 07/01/18 2,716,325
5,000 Energy Northwest WA Elec Rev Proj No 3 Ser B
Rfdg (FSA Insd)................................. 6.000 07/01/16 5,712,250
1,400 King Cnty, WA Hsg Auth Hsg Rev Pooled Sr Ser A
Rfdg............................................ 6.700 03/01/15 1,460,774
2,120 Seattle, WA Muni Lt & Pwr Rev................... 5.625 12/01/17 2,293,246
3,000 Spokane, WA Pub Fac Dist Hotel Motel & Sales Use
Tax (MBIA Insd)................................. 5.250 09/01/33 3,103,140
4,750 Tacoma, WA Elec Sys Rev Ser A Rfdg (FSA Insd)... 5.750 01/01/14 5,355,008
1,500 Tacoma, WA Elec Sys Rev Ser B Rfdg (FSA Insd)... 5.500 01/01/12 1,694,925
1,000 Thurston & Pierce Cntys, WA (FSA Insd).......... 5.000 12/01/20 1,036,570
1,000 Thurston & Pierce Cntys, WA (FSA Insd).......... 5.000 12/01/21 1,030,290
-------------
28,302,228
-------------
WEST VIRGINIA 3.1%
2,400 Berkeley Cnty, WV Bldg Comm Hosp Rev City Hosp
Proj............................................ 6.500 11/01/22 2,271,576
5,000 Marshall Cnty, WV Pollutn Ctl Rev OH Pwr Co Proj
Ser C (MBIA Insd)............................... 6.850 06/01/22 5,190,250
280 West Virginia St Hsg Dev Fd Hsg Fin Ser A....... 5.450 11/01/21 283,203
2,000 West Virginia St Hsg Dev Fd Ser A............... 5.550 05/01/17 2,045,200
-------------
9,790,229
-------------
WISCONSIN 1.3%
985 Wisconsin Hsg & Econ Dev Auth Homeownership Rev
Ser A........................................... 6.450 03/01/17 995,904
3,000 Wisconsin St Hlth & Ed Fac Wheaton Franciscan
Svc Rfdg........................................ 5.750 08/15/30 3,046,080
-------------
4,041,984
-------------
WYOMING 0.3%
1,000 University WY Univ Rev Fac Impt (FSA Insd)...... 5.500 06/01/18 1,102,890
-------------
</Table>
See Notes to Financial Statements 15
YOUR TRUST'S INVESTMENTS
October 31, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
PUERTO RICO 3.8%
$10,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
Y Rfdg (FSA Insd) (b)........................... 6.250% 07/01/21 $ 12,192,300
-------------
TOTAL INVESTMENTS 157.1%
(Cost $469,556,976)........................................................ 501,961,578
OTHER ASSETS IN EXCESS OF LIABILITIES 2.4%.................................. 7,612,620
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (59.5%).................. (190,025,335)
-------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%............................... $ 319,548,863
=============
</Table>
* Zero coupon bond
(a) Security converts to a fixed coupon rate at a predetermined date.
(b) All or a portion of these securities have been physically segregated in
connection with open futures contracts.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FHA--Federal Housing Administration
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance Corp.
PSFG--Permanent School Fund Guaranty
16 See Notes to Financial Statements
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
October 31, 2003
<Table>
ASSETS:
Total Investments (Cost $469,556,976)....................... $501,961,578
Receivables:
Interest.................................................. 8,153,368
Investments Sold.......................................... 3,834,948
Other....................................................... 9,497
------------
Total Assets............................................ 513,959,391
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 3,443,432
Investment Advisory Fee................................... 258,927
Custodian Bank............................................ 117,075
Variation Margin on Futures............................... 108,453
Income Distributions--Common Shares....................... 85,434
Administrative Fee........................................ 21,577
Affiliates................................................ 14,624
Trustees' Deferred Compensation and Retirement Plans........ 215,067
Accrued Expenses............................................ 120,604
------------
Total Liabilities....................................... 4,385,193
Preferred Shares (including accrued distributions).......... 190,025,335
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $319,548,863
============
NET ASSET VALUE PER COMMON SHARE ($319,548,863 divided by
19,106,785 shares outstanding)............................ $ 16.72
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 19,106,785 shares issued and
outstanding).............................................. $ 191,068
Paid in Surplus............................................. 282,026,578
Net Unrealized Appreciation................................. 31,126,048
Accumulated Undistributed Net Investment Income............. 3,468,169
Accumulated Net Realized Gain............................... 2,737,000
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $319,548,863
============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 7,600 issued with liquidation preference of
$25,000 per share)........................................ $190,000,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $509,548,863
============
</Table>
See Notes to Financial Statements 17
Statement of Operations
For the Year Ended October 31, 2003
<Table>
INVESTMENT INCOME:
Interest.................................................... $26,789,713
-----------
EXPENSES:
Investment Advisory Fee..................................... 3,072,652
Preferred Share Maintenance................................. 524,575
Administrative Fee.......................................... 256,053
Trustees' Fees and Related Expenses......................... 72,866
Legal....................................................... 52,743
Custody..................................................... 32,202
Other....................................................... 255,521
-----------
Total Expenses........................................ 4,266,612
-----------
NET INVESTMENT INCOME....................................... $22,523,101
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 5,287,119
Futures................................................... (1,949,723)
-----------
Net Realized Gain........................................... 3,337,396
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 34,593,640
-----------
End of the Period:
Investments............................................. 32,404,602
Futures................................................. (1,278,554)
-----------
31,126,048
-----------
Net Unrealized Depreciation During the Period............... (3,467,592)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $ (130,196)
===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $(2,002,125)
===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $20,390,780
===========
</Table>
18 See Notes to Financial Statements
Statements of Changes in Net Assets
<Table>
<Caption>
YEAR ENDED YEAR ENDED
OCTOBER 31, 2003 OCTOBER 31, 2002
------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 22,523,101 $ 22,990,585
Net Realized Gain....................................... 3,337,396 4,525,369
Net Unrealized Depreciation During the Period........... (3,467,592) (5,371,148)
Distributions to Preferred Shareholders:
Net Investment Income................................. (2,002,125) (2,722,651)
------------ ------------
Change in Net Assets Applicable to Common Shares from
Operations............................................ 20,390,780 19,422,155
Distributions to Common Shareholders:
Net Investment Income................................. (21,207,192) (19,965,484)
------------ ------------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES
FROM INVESTMENT ACTIVITIES............................ (816,412) (543,329)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................. 320,365,275 320,908,604
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $3,468,169 and $4,457,677,
respectively)......................................... $319,548,863 $320,365,275
============ ============
</Table>
See Notes to Financial Statements 19
Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
------------------------------
2003 2002 (a) 2001
------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $ 16.77 $ 16.80 $ 15.52
------- ------- -------
Net Investment Income..................................... 1.17 1.21 1.23
Net Realized and Unrealized Gain/Loss..................... (.01) (.05) 1.18
Common Share Equivalent of Distributions Paid to Preferred
Shareholders:
Net Investment Income................................... (.10) (.14) (.34)
Net Realized Gain....................................... -0- -0- -0-
------- ------- -------
Total from Investment Operations............................ 1.06 1.02 2.07
Distributions Paid to Common Shareholders:
Net Investment Income................................... (1.11) (1.05) (.79)
Net Realized Gain....................................... -0- -0- -0-
------- ------- -------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 16.72 $ 16.77 $ 16.80
======= ======= =======
Common Share Market Price at End of the Period.............. $ 16.20 $ 15.46 $ 14.35
Total Return (b)............................................ 12.30% 15.28% 17.27%
Net Assets Applicable to Common Shares at End of the Period
(In millions)............................................. $ 319.5 $ 320.4 $ 320.9
Ratio of Expenses to Average Net Assets Applicable to Common
Shares (c)................................................ 1.32% 1.46% 1.61%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c)........................... 6.99% 7.26% 7.56%
Portfolio Turnover.......................................... 27% 40% 32%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
Shares (c)................................................ .83% .91% 1.00%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (d)........................... 6.37% 6.40% 5.44%
SENIOR SECURITIES:
Total Preferred Shares Outstanding.......................... 7,600 7,600 7,600
Asset Coverage Per Preferred Share (e)...................... $67,049 $67,170 $67,225
Involuntary Liquidating Preference Per Preferred Share...... $25,000 $25,000 $25,000
Average Market Value Per Preferred Share.................... $25,000 $25,000 $25,000
</Table>
(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 $.02, decrease net realized and unrealized gains and
losses by $.02 and increase the ratio of net investment income to average net
assets applicable to common shares by .11%. 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.
20
<Table>
<Caption>
YEAR ENDED OCTOBER 31,
- -------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------
$ 14.87 $ 16.93 $ 16.35 $ 15.68 $ 15.61 $ 13.99 $ 17.18
-------- -------- -------- -------- -------- -------- --------
1.24 1.22 1.25 1.26 1.29 1.33 1.35
.68 (2.06) .59 .72 .16 1.70 (3.15)
(.40) (.32) (.35) (.35) (.36) (.39) (.28)
-0- -0- -0- -0- -0- -0- (.02)
-------- -------- -------- -------- -------- -------- --------
1.52 (1.16) 1.49 1.63 1.09 2.64 (2.10)
(.87) (.90) (.91) (.96) (1.02) (1.02) (1.02)
-0- -0- -0- -0- -0- -0- (.07)
-------- -------- -------- -------- -------- -------- --------
$ 15.52 $ 14.87 $ 16.93 $ 16.35 $ 15.68 $ 15.61 $ 13.99
======== ======== ======== ======== ======== ======== ========
$12.9375 $12.9375 $15.8125 $15.0625 $ 14.75 $ 14.375 $ 12.75
6.86% -13.16% 11.33% 8.96% 9.88% 21.06% -14.17%
$ 296.5 $ 284.1 $ 323.4 $ 312.5 $ 299.7 $ 298.3 $ 267.3
1.75% 1.66% 1.64% 1.66% 1.72% 1.72% 1.64%
8.34% 7.55% 7.48% 7.99% 8.31% 8.94% 8.63%
26% 33% 30% 49% 37% 79% 133%
1.05% 1.03% 1.03% 1.02% 1.05% 1.03% 1.00%
5.61% 5.56% 5.35% 5.76% 5.99% 6.31% 6.81%
7,600 7,600 3,800 3,800 3,800 3,800 3,800
$ 64,014 $ 62,388 $135,105 $132,234 $128,865 $128,498 $120,355
$ 25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
$ 25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
</Table>
See Notes to Financial Statements 21
NOTES TO
FINANCIAL STATEMENTS
October 31, 2003
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Advantage Municipal Income Trust (the "Trust") is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The Trust's investment objective is to seek to
provide a high level of current income exempt from federal income tax,
consistent with preservation of capital. In normal market conditions, the Trust
will invest substantially all of its net assets in municipal securities rated
investment grade at the time of investment. The Trust commenced investment
operations on September 25, 1992.
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.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
segregate assets with its custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
payment is made. At October 31, 2003, there were no when-issued or delayed
delivery purchase commitments.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and 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.
22
NOTES TO
FINANCIAL STATEMENTS
October 31, 2003
At October 31, 2003, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $468,366,607
============
Gross tax unrealized appreciation........................... $ 34,259,334
Gross tax unrealized depreciation........................... (664,363)
------------
Net tax unrealized appreciation on investments.............. $ 33,594,971
============
</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 and a portion of futures gains, which are
included as ordinary income for tax purposes.
The tax character of distributions paid during the years ended October 31,
2003 and 2002 was as follows:
<Table>
<Caption>
2003 2002
Distributions paid from:
Ordinary income........................................... $522,411 $451,859
Long-term capital gain.................................... -0- -0-
-------- --------
$522,411 $451,859
======== ========
</Table>
Due to inherent differences in the recognition of income, expenses and
realized gains/ losses under accounting principles generally accepted in the
United States of America and federal income tax purposes, permanent differences
between book and tax basis reporting have been identified and appropriately
reclassified on the Statement of Assets and Liabilities. A permanent book to tax
basis difference relating to expenses which are not deductible for tax purposes
totaling $251 was reclassified from accumulated undistributed net investment
income to paid in surplus. Additionally, a permanent difference relating to book
to tax accretion differences totaling $303,543 was reclassified from accumulated
undistributed net investment income to accumulated net realized gain.
As of October 31, 2003, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 410,372
Undistributed long-term capital gain........................ 1,542,823
</Table>
Net realized gains or losses differ for financial reporting and tax purposes
primarily as a result of the deferral of losses relating to wash sale
transactions and gains or losses recognized for tax purposes on open futures
transactions on October 31, 2003.
23
NOTES TO
FINANCIAL STATEMENTS
October 31, 2003
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 year ended October 31, 2003, the Trust recognized expenses of
approximately $33,900 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 year ended October
31, 2003, the Trust recognized expenses of approximately $50,100 representing
Van Kampen's cost of providing accounting and legal services to the Trust, which
are reported as part of "Other" and "Legal" expenses, respectively, on 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 $138,009,752 and $144,019,556,
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.
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
24
NOTES TO
FINANCIAL STATEMENTS
October 31, 2003
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. Upon
entering into futures contracts, the Trust maintains, in a segregated account
with its custodian, 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 year ended October 31, 2003, were
as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at October 31, 2002............................. 507
Futures Opened.............................................. 2,560
Futures Closed.............................................. (2,538)
------
Outstanding at October 31, 2003............................. 529
======
</Table>
The futures contracts outstanding as of October 31, 2003, and the
descriptions and unrealized appreciation/depreciation are as follows:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Notes 5-Year Futures December 2003
(Current Notional Value of $111,813 per contract)......... 427 $ (938,653)
U.S. Treasury Notes 10-Year Futures December 2003
(Current Notional Value of $112,297 per contract)......... 102 (339,901)
--- -----------
529 $(1,278,554)
=== ===========
</Table>
5. PREFERRED SHARES
The Trust has outstanding 7,600 Auction Preferred Shares ("APS") in four series.
Series A, B and C each contain 2,000 shares while Series D contains 1,600
shares. Dividends are cumulative and the dividend rate is reset every 28 days
through an auction process. The
25
NOTES TO
FINANCIAL STATEMENTS
October 31, 2003
average rate in effect on October 31, 2003 was 0.905%. During the year ended
October 31, 2003, the rates ranged from 0.600% to 1.800%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of "Preferred Share
Maintenance" expense on 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.
26
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of Van Kampen Advantage Municipal
Income Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen Advantage Municipal Income Trust (the "Trust"), including the portfolio
of investments, as of October 31, 2003, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
four years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The Trust's financial highlights for the periods ended
prior to October 31, 2000, were audited by other auditors whose report, dated
December 6, 1999, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2003, by correspondence with the Trust's
custodian; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Advantage Municipal Income Trust as of October 31, 2003, the results of
its operations, the changes in its net assets and the financial highlights for
the respective stated periods, in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
December 8, 2003
27
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be
re-registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued
on the valuation date, generally at the lower of market price or net asset
value, except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common
28
Shares than if the dividend or distribution had been paid in Common Shares
issued by the Trust. All reinvestments are in full and fractional Common Shares
and are carried to three decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
29
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
J. MILES BRANAGAN
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
THEODORE A. MYERS
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK AND TRUST COMPANY
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
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Trust during its taxable year ended
October 31, 2003. The Trust designated 97.8% of the income distributions as a
tax-exempt income distribution. In January, the Trust provides tax information
to shareholders for the preceding calendar year.
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
30
RESULTS OF
SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Trust was held on June 24, 2003, where
shareholders voted on the election of trustees.
With regard to the election of the following trustees by common shareholders of
the Trust:
<Table>
<Caption>
# OF SHARES
------------------------------
IN FAVOR WITHHELD
- ------------------------------------------------------------------------------------------
Jerry D. Choate........................................... 16,762,597 166,985
Linda Hutton Heagy........................................ 16,758,255 171,327
R. Craig Kennedy.......................................... 16,756,755 172,827
Wayne W. Whalen........................................... 16,755,645 173,937
Suzanne H. Woolsey........................................ 16,754,358 175,224
</Table>
The other trustees of the Trust whose terms did not expire in 2003 are David C.
Arch, Rod Dammeyer, Howard J Kerr, Theodore A. Myers, Richard F. Powers, III and
Hugo F. Sonnenschein
With regard to the vote for the amendment to the Declaration of Trust by the
common shareholders of the Trust, 16,325,177 shares voted in favor of the
proposal, 396,824 shares voted against and 207,581 shares abstained.
31
TRUSTEES AND OFFICERS
The business and affairs of the Trust are managed under the direction of the
Trust's Board of Trustees and the Trust's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Trust
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments
Inc. ("Van Kampen Investments"), Van Kampen Investment Advisory Corp. ("Advisory
Corp."), Van Kampen Asset Management Inc. ("Asset Management"), Van Kampen Funds
Inc. (the "Distributor"), Van Kampen Advisors Inc., Van Kampen Exchange Corp.
and Van Kampen Investor Services Inc. ("Investor Services"). Advisory Corp. and
Asset Management sometimes are referred to herein collectively as the
"Advisers." The term "Fund Complex" includes each of the investment companies
advised by the Advisers or their affiliates as of the date of this Statement of
Additional Information. Trustees serve until reaching their retirement age or
until their successors are duly elected and qualified. Officers are annually
elected by the trustees.
INDEPENDENT TRUSTEES
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (58) Trustee Trustee Chairman and Chief 90 Trustee/Director/Managing
Blistex Inc. since 1992 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products
manufacturer. Former
Director of the World
Presidents
Organization-Chicago
Chapter. Director of the
Heartland Alliance, a
nonprofit organization
serving human needs based
in Chicago.
J. Miles Branagan (71) Trustee Trustee Private investor. 88 Trustee/Director/Managing
1632 Morning Mountain Road since 2003 Co-founder, and prior to General Partner of funds
Raleigh, NC 27614 August 1996, Chairman, in the Fund Complex.
Chief Executive Officer
and President, MDT
Corporation (now known as
Getinge/Castle, Inc., a
subsidiary of Getinge
Industrier AB), a company
which develops,
manufactures, markets and
services medical and
scientific equipment.
</Table>
32
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jerry D. Choate (65) Trustee Trustee Prior to January 1999, 88 Trustee/Director/Managing
33971 Selva Road since 2003 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of Amgen Inc., a
("Allstate") and Allstate biotechnological company,
Insurance Company. Prior and Director of Valero
to January 1995, Energy Corporation, an
President and Chief independent refining
Executive Officer of company.
Allstate. Prior to August
1994, various management
positions at Allstate.
Rod Dammeyer (63) Trustee Trustee President of CAC, llc., a 90 Trustee/Director/Managing
CAC, llc. since 1992 private company offering General Partner of funds
4350 LaJolla Village Drive capital investment and in the Fund Complex.
Suite 980 management advisory Director of TeleTech
San Diego, CA 92122-6223 services. Prior to July Holdings Inc.,
2000, Managing Partner of Stericycle, Inc.,
Equity Group Corporate TheraSense, Inc., GATX
Investment (EGI), a Corporation, Arris Group,
company that makes Inc. and Trustee of the
private investments in University of Chicago
other companies. Hospitals and Health
Systems. Prior to May
2002, Director of
Peregrine Systems Inc.
Prior to February 2001,
Vice Chairman and
Director of Anixter
International, Inc. and
IMC Global Inc. Prior to
July 2000, Director of
Allied Riser
Communications Corp.,
Matria Healthcare Inc.,
Transmedia Networks,
Inc., CNA Surety, Corp.
and Grupo Azcarero Mexico
(GAM). Prior to April
1999, Director of Metal
Management, Inc.
</Table>
33
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Linda Hutton Heagy (55) Trustee Trustee Managing Partner of 88 Trustee/Director/Managing
Heidrick & Struggles since 2003 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive executive search firm. in the Fund Complex.
Suite 7000 Trustee on the University
Chicago, IL 60606 of Chicago Hospitals
Board, Vice Chair of the
Board of the YMCA of
Metropolitan Chicago and
a member of the Women's
Board of the University
of Chicago. Prior to
1997, Partner of Ray &
Berndtson, Inc., an
executive recruiting
firm. Prior to 1996,
Trustee of The
International House
Board, a fellowship and
housing organization for
international graduate
students. Prior to 1995,
Executive Vice President
of ABN AMRO, N.A., a bank
holding company. Prior to
1992, Executive Vice
President of La Salle
National Bank.
R. Craig Kennedy (51) Trustee Trustee Director and President of 88 Trustee/Director/Managing
11 DuPont Circle, N.W. since 2003 the German Marshall Fund General Partner of funds
Washington, D.C. 20016 of the United States, an in the Fund Complex.
independent U.S.
foundation created to
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (68) Trustee Trustee Prior to 1998, President 90 Trustee/Director/Managing
736 North Western Avenue since 1992 and Chief Executive General Partner of funds
P.O. Box 317 Officer of Pocklington in the Fund Complex.
Lake Forest, IL 60045 Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the
Marrow Foundation.
</Table>
34
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Theodore A. Myers (73) Trustee Trustee Financial consultant, 36 Director of Met Life
550 Washington Avenue since 1992 Trustee or Managing Investors (formerly knows
Glencoe, IL 60022 General Partner of other as COVA Financial Life
funds in the Closed-End Insurance). Prior to
Fund Complex. Prior to 1997, Director of McLouth
1998, Senior Financial Steel.
Advisor (and, prior to
1997, an Executive Vice
President, Chief
Financial Officer and
Director) of Qualitech
Steel Corporation, a
producer of high quality
engineered steels for
automotive,
transportation and
capital goods industries.
Prior to 1997, member of
the Arthur Andersen Chief
Financial Officers'
Advisory Committee.
Jack E. Nelson (67) Trustee Trustee President of Nelson 88 Trustee/Director/Managing
423 Country Club Drive since 2003 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of the NASD,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
Hugo F. Sonnenschein (63) Trustee Trustee President Emeritus and 90 Trustee/Director/Managing
1126 E. 59th Street since 1994 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Director of Winston
Distinguished Service Laboratories, Inc.
Professor in the
Department of Economics
at the University of
Chicago. Prior to July
2000, President of the
University of Chicago.
Trustee of the University
of Rochester and a member
of its investment
committee. Member of the
National Academy of
Sciences, the American
Philosophical Society and
a fellow of the American
Academy of Arts and
Sciences.
</Table>
35
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey (61) Trustee Trustee Currently with Paladin 88 Trustee/Director/Managing
2101 Constitution Ave., N.W. since 2003 Capital Group/Paladin General Partner of funds
Room 285 Homeland Security Fund. in the Fund Complex.
Washington, D.C. 20418 Previously Chief Director of Neurogen
Communications Officer of Corporation, a
the National Academy of pharmaceutical company,
Sciences/National since January 1998.
Research Council, an
independent, federally
chartered policy
institution, since 2001
and Chief Operating
Officer from 1993 to
2001. Director of the
Institute for Defense
Analyses, a federally
funded research and
development center,
Director of the German
Marshall Fund of the
United States, and
Trustee of Colorado
College. Prior to 1993,
Executive Director of the
Commission on Behavioral
and Social Sciences and
Education at the National
Academy of
Sciences/National
Research Council. From
1980 through 1989,
Partner of Coopers &
Lybrand.
</Table>
36
INTERESTED TRUSTEES*
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Mitchell M. Merin* (50) Trustee, Trustee President and Chief 88 Trustee/Director/Managing
1221 Avenue of the Americas President since 2002 Executive Officer of General Partner of funds
New York, NY 10020 and Chief funds in the Fund in the Fund Complex.
Executive Complex. Chairman,
Officer President, Chief
Executive Officer and
Director of the Advisers
and VK Advisors Inc.
since December 2002.
Chairman, President and
Chief Executive Officer
of Van Kampen Investments
since December 2002.
Director of Van Kampen
Investments since
December 1999. Chairman
and Director of Van
Kampen Funds Inc. since
December 2002. President,
Director and Chief
Operating Officer of
Morgan Stanley Investment
Management since December
1998. President and
Director since April 1997
and Chief Executive
Officer since June 1998
of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc.
Chairman, Chief Executive
Officer and Director of
Morgan Stanley
Distributors Inc. since
June 1998. Chairman since
June 1998, and Director
since January 1998 of
Morgan Stanley Trust.
Director of various
Morgan Stanley
subsidiaries. President
of the Morgan Stanley
Funds since May 1999.
Previously Chief
Executive Officer of Van
Kampen Funds Inc. from
December 2002 to July
2003, Chief Strategic
Officer of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc. and
Executive Vice President
of Morgan Stanley
Distributors Inc. from
April 1997 to June 1998.
Chief Executive Officer
from September 2002 to
April 2003 and Vice
President from May 1997
to April 1999 of the
Morgan Stanley Funds.
</Table>
37
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Richard F. Powers, III* (57) Trustee Trustee Advisory Director of 90 Trustee/Director/Managing
1 Parkview Plaza since 1999 Morgan Stanley. Prior to General Partner of funds
P.O. Box 5555 December 2002, Chairman, in the Fund Complex.
Oakbrook Terrace, IL 60181 Director, President,
Chief Executive Officer
and Managing Director of
Van Kampen Investments
and its investment
advisory, distribution
and other subsidiaries.
Prior to December 2002,
President and Chief
Executive Officer of
funds in the Fund
Complex. Prior to May
1998, Executive Vice
President and Director of
Marketing at Morgan
Stanley and Director of
Dean Witter, Discover &
Co. and Dean Witter
Realty. Prior to 1996,
Director of Dean Witter
Reynolds Inc.
Wayne W. Whalen* (64) Trustee Trustee Partner in the law firm 90 Trustee/Director/Managing
333 West Wacker Drive since 1992 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom in the Fund Complex.
(Illinois), legal counsel
to funds in the Fund
Complex.
</Table>
* Such trustee is an "interested person" (within the meaning of Section
2(a)(19) of the 1940 Act). Mr. Whalen is an interested person of certain
funds in the Fund Complex by reason of his firm currently acting as legal
counsel to such funds in the Fund Complex. Messrs. Merin and Powers are
interested persons of funds in the Fund Complex and the Advisers by reason
of their current or former positions with Morgan Stanley or its affiliates.
38
OFFICERS
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS
Stephen L. Boyd (63) Vice President Officer Managing Director of Global Research Investment Management.
2800 Post Oak Blvd. since 1998 Vice President of funds in the Fund Complex. Prior to
45th Floor December 2002, Chief Investment Officer of Van Kampen
Houston, TX 77056 Investments and President and Chief Operations Officer of
the Advisers and Van Kampen Advisors Inc. Prior to May 2002,
Executive Vice President and Chief Investment Officer of
funds in the Fund Complex. Prior to May 2001, Managing
Director and Chief Investment Officer of Van Kampen
Investments, and Managing Director and President of the
Advisers and Van Kampen Advisors Inc. Prior to December
2000, Executive Vice President and Chief Investment Officer
of Van Kampen Investments, and President and Chief Operating
Officer of the Advisers. Prior to April 2000, Executive Vice
President and Chief Investment Officer for Equity
Investments of the Advisers. Prior to October 1998, Vice
President and Senior Portfolio Manager with AIM Capital
Management, Inc. Prior to February 1998, Senior Vice
President and Portfolio Manager of Van Kampen American
Capital Asset Management, Inc., Van Kampen American Capital
Investment Advisory Corp. and Van Kampen American Capital
Management, Inc.
Stefanie V. Chang (37) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas since 2003 Vice President of funds in the Fund Complex.
New York, NY 10020
Joseph J. McAlinden (60) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas President and Chief since 2002 Stanley Investment Advisors Inc., Morgan Stanley Investment
New York, NY 10020 Investment Officer Management Inc. and Morgan Stanley Investments LP and
Director of Morgan Stanley Trust for over 5 years. Executive
Vice President and Chief Investment Officer of funds in the
Fund Complex. Managing Director and Chief Investment Officer
of Van Kampen Investments, the Advisers and Van Kampen
Advisors Inc. since December 2002.
</Table>
39
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS
John R. Reynoldson (50) Vice President Officer Executive Director and Portfolio Specialist of the Advisers
1 Parkview Plaza since 2000 and Van Kampen Advisors Inc. Vice President of funds in the
P.O. Box 5555 Fund Complex. Prior to July 2001, Principal and Co-head of
Oakbrook Terrace, IL 60181 the Fixed Income Department of the Advisers and Van Kampen
Advisors Inc. Prior to December 2000, Senior Vice President
of the Advisers and Van Kampen Advisors Inc. Prior to May
2000, Senior Vice President of the investment grade taxable
group for the Advisers. Prior to June 1999, Senior Vice
President of the government securities bond group for Asset
Management.
Ronald E. Robison (64) Executive Vice Officer Chief Executive Officer and Chairman of Investor Services.
1221 Avenue of the Americas President and Principal since 2003 Executive Vice President and Principal Executive Officer of
New York, NY 10020 Executive Officer funds in the Fund Complex. Chief Global Operations Officer
and Managing Director of Morgan Stanley Investment
Management Inc. Managing Director of Morgan Stanley.
Managing Director and Director of Morgan Stanley Investment
Advisors Inc. and Morgan Stanley Services Company Inc. Chief
Executive Officer and Director of Morgan Stanley Trust. Vice
President of the Morgan Stanley Funds.
A. Thomas Smith III (46) Vice President and Officer Managing Director of Morgan Stanley, Managing Director and
1221 Avenue of the Americas Secretary since 1999 Director of Van Kampen Investments, Director of the
New York, NY 10020 Advisers, Van Kampen Advisors Inc., the Distributor,
Investor Services and certain other subsidiaries of Van
Kampen Investments. Managing Director and General
Counsel-Mutual Funds of Morgan Stanley Investment Advisors,
Inc. Vice President and Secretary of funds in the Fund
Complex. Prior to July 2001, Managing Director, General
Counsel, Secretary and Director of Van Kampen Investments,
the Advisers, the Distributor, Investor Services, and
certain other subsidiaries of Van Kampen Investments. Prior
to December 2000, Executive Vice President, General Counsel,
Secretary and Director of Van Kampen Investments, the
Advisers, Van Kampen Advisors Inc., the Distributor,
Investor Services and certain other subsidiaries of Van
Kampen Investments. Prior to January 1999, Vice President
and Associate General Counsel to New York Life Insurance
Company ("New York Life"), and prior to March 1997,
Associate General Counsel of New York Life. Prior to
December 1993, Assistant General Counsel of The Dreyfus
Corporation. Prior to August 1991, Senior Associate, Willkie
Farr & Gallagher. Prior to January 1989, Staff Attorney at
the Securities and Exchange Commission, Division of
Investment Management, Office of Chief Counsel.
</Table>
40
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS
John L. Sullivan (48) Vice President, Chief Officer Director and Managing Director of Van Kampen Investments,
1 Parkview Plaza Financial Officer and since 1996 the Advisers, Van Kampen Advisors Inc. and certain other
P.O. Box 5555 Treasurer subsidiaries of Van Kampen Investments. Vice President,
Oakbrook Terrace, IL 60181 Chief Financial Officer and Treasurer of funds in the Fund
Complex. Head of Fund Accounting for Morgan Stanley
Investment Management. Prior to December 2002, Executive
Director of Van Kampen Investments, the Advisers and Van
Kampen Advisors Inc.
</Table>
41
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 conduct with
us, our affiliates, or third parties. We may also collect information you
provide when using our Web site, and text files (also known as "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 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.
VKA ANR 12/03 Member NASD/SIPC.
12521L03-AS-12/03
Item 2. Code of Ethics.
(a) The Trust has adopted a code of ethics (the "Code of Ethics") that
applies to its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the Trust or
a third party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Not applicable
(d) Not applicable
(e) Not applicable.
(f)
(1) The Trust's Code of Ethics is attached hereto as Exhibit 10A.
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Trust's Board of Trustees has determined that it has four "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees : J. Miles Branagan, Jerry Choate, R. Craig Kennedy and
Theodore A. Myers. Under applicable securities laws, a person who is determined
to be an audit committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11 of the
Securities Act of 1933, as a result of being designated or identified as an
audit committee financial expert. The designation or identification of a person
as an audit committee financial expert does not impose on such person any
duties, obligations, or liabilities that are greater than the duties,
obligations, and liabilities imposed on such person as a member of the audit
committee and Board of Trustees in the absence of such designation or
identification.
Item 4. Principal Accountant Fees and Services.
Applicable only for reports covering fiscal years ending on or after December
15, 2003.
Item 5. Audit Committee of Listed Registrants.
Applicable only for reports covering periods ending on or after the earlier of
(i) the first annual shareholder meeting after January 15, 2004 or (ii) October
31, 2004.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Trust invests in exclusively non-voting securities and therefore this item
is not applicable to the Trust.
Item 8. [Reserved.]
Item 9. Controls and Procedures
(a) 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.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a) The Code of Ethics for Principal Executive and Senior Financial
Officers is attached herto.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant are 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 Advantage Municipal Income Trust
By: /s/ Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: December 18, 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: December 18, 2003
By: /s/ John L. Sullivan
--------------------
Name: John L. Sullivan
Title: Principal Financial Officer
Date: December 18, 2003