Skadden, Arps, Slate, Meagher & Flom LLP
333 West Wacker Drive
Chicago, Illinois 60606
August 9, 2005
Mr. Larry Greene
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Van Kampen Municipal Opportunity Trust--
Registration Statement on Form N-14
(the "Registration Statement")
(File Nos. 333-126305 and 811-06567)
Dear Mr. Greene:
Thank you for your telephonic comments regarding the Registration
Statement on Form N-14 for Van Kampen Municipal Opportunity Trust (the
"Acquiring Fund" or the "Registrant") filed with the Securities and Exchange
Commission (the "Commission") on June 30, 2005 in connection with the proposed
reorganization (the "Reorganization") of Van Kampen Advantage Municipal Income
Trust (the "Target Fund") into the Acquiring Fund. On behalf of the Acquiring
Fund, we have summarized your comments to the best of our understanding, below
which we have provided our response to those comments. We have not included
comments which we resolved in the course of our conference call with you. Where
changes were necessary in response to your comments, they are reflected in
Pre-Effective Amendment No. 1 to the Acquiring Fund's Registration Statement on
Form N-14, which will be filed on or about August 9, 2005. The Target Fund and
the Acquiring Fund are referred to herein collectively as the "Funds."
COMMENTS TO THE JOINT PROXY STATEMENT/PROSPECTUS
COMMENT 1. UNDER "QUESTIONS & ANSWERS," IN THE RESPONSE TO THE SECOND
QUESTION, REVISE THE DISCLOSURE TO MORE FULLY EXPLAIN THE
REASONS FOR THE PROPOSED REORGANIZATION.
Response 1. The Funds respectfully submit that they have adequately
conveyed the reasons for the proposed Reorganization. The
Funds respond to that question as follows:
The Board of Trustees of each Fund has determined that the
Reorganization will benefit common shareholders of the Target
Fund and the Acquiring Fund. The Target Fund and the Acquiring
Fund are similar. Each Fund seeks to provide common
shareholders with a high level of current income exempt from
federal income tax, consistent with preservation of capital.
Each Fund invests primarily in municipal securities rated
investment grade at the time of investment. Each Fund is
managed by the same investment advisory personnel. After the
Reorganization, it is anticipated that common shareholders of
each Fund will experience a reduced annual operating expense
ratio, as certain fixed administrative costs will be spread
across the combined fund's larger asset base.
This disclosure notes that the Funds pursue substantially
similar investment objectives and strategies and are managed
by the same investment advisory personnel. These facts serve
as important background for the primary reason for the
Reorganization--the anticipated reduced annual operating
expense ratio for common shareholders of each Fund. Given that
the Funds pursue substantially similar investment objectives
and strategies and are managed by the same investment advisory
personnel, common shareholders of each Fund should find the
anticipated reduced annual operating expense ratio as a
compelling reason to support the Reorganization of the Funds.
COMMENT 2. UNDER THE "FEE, EXPENSE AND DISTRIBUTIONS ON PREFERRED
SHARES TABLE FOR COMMON SHAREHOLDERS OF THE FUNDS," THE FUNDS
MAY DELETE ALL REFERENCES TO ANY FEE DESCRIPTIONS FOR WHICH NO
CLASS OF SHARES PAYS SUCH FEES.
Response 2. The Funds acknowledge the comment and opt to continue to show
these captions.
COMMENT 3. UNDER "PROPOSAL 1--COMPARISON OF THE FUNDS--OTHER
INVESTMENT PRACTICES AND POLICIES--STRATEGIC TRANSACTIONS,"
PROVIDE ADDITIONAL DISCLOSURE REGARDING EACH FUND'S COMPLIANCE
WITH APPLICABLE REGULATORY REQUIREMENTS WHEN IMPLEMENTING
STRATEGIC TRANSACTIONS.
Response 3. Each Fund may engage in certain strategic transactions,
such as put and call options, financial futures contracts and
interest rate transactions such as swaps, caps, floors or
collars. The Funds disclose that they "compl[y] with
applicable regulatory requirements when implementing these
strategies, techniques and instruments." This general
disclosure provides the Funds with flexibility to adjust to
changes in applicable law, rules, regulations or exemptive
relief. The Funds acknowledge the Staff's comment but do not
believe that additional disclosure is necessary.
COMMENT 4. UNDER "PROPOSAL 1--COMPARISON OF THE FUNDS--OTHER
INVESTMENT PRACTICES AND POLICIES--INVESTMENT RESTRICTIONS,"
WITH RESPECT TO THE SECOND INVESTMENT RESTRICTION, NOTE THE
LOCATION OF THE DESCRIPTION OF EACH FUND'S ABILITY TO INVEST
MORE THAN 25% OF ITS TOTAL ASSETS IN A PARTICULAR SEGMENT OF
THE MUNICIPAL SECURITIES MARKET, AND EXPLAIN WHETHER SUCH
DESCRIPTION IS ALSO A FUNDAMENTAL POLICY.
Response 4. The Funds have made the requested changes.
COMMENT 5. UNDER "PROPOSAL 1--COMPARISON OF THE FUNDS--OTHER
INVESTMENT PRACTICES AND POLICIES--INVESTMENT RESTRICTIONS,"
REVISE THE THIRD INVESTMENT RESTRICTION SUCH THAT "BORROWINGS"
IS NOT DEFINED BY REFERENCE TO THE FOURTH INVESTMENT
RESTRICTION.
Response 5. The Funds acknowledge the comment, but respectfully submit
that investment restrictions may not be revised without a
shareholder vote.
COMMENT 6. UNDER "PROPOSAL 1--INFORMATION ABOUT THE
REORGANIZATION--MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
OF THE REORGANIZATION," PROVIDE DISCLOSURE REGARDING CAPITAL
LOSS CARRYFORWARDS, IF APPLICABLE.
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Response 6. The Funds respectfully submit that the rule applicable to
capital loss carryforwards is not material with respect to the
Reorganization and therefore no such disclosure is necessary.
COMMENT 7. UNDER "OTHER INFORMATION--SHAREHOLDER PROPOSALS," PROVIDE
THE DISCLOSURE REQUIRED BY RULE 14A-8(E) OF REGULATION 14A.
Response 7. The Funds have added the requested disclosure.
COMMENTS TO THE STATEMENT OF ADDITIONAL INFORMATION (SAI)
COMMENT 8. UNDER "TRUSTEES AND OFFICERS--BOARD COMMITTEES," INDICATE
WHETHER THE MEMBERS OF THE BOARD'S BROKERAGE AND SERVICES
COMMITTEE ARE INTERESTED TRUSTEES.
Response 8. The first paragraph of that section reads as follows:
"The Board of Trustees has three standing committees
(an audit committee, a brokerage and services
committee and a governance committee). Each committee
is comprised solely of 'Independent Trustees,' which
is defined for purposes herein as trustees who: (1)
are not 'interested persons' of the Fund as defined
by the 1940 Act and (2) are 'independent' of the Fund
as defined by the New York Stock Exchange, American
Stock Exchange and Chicago Stock Exchange listing
standards."
Thus, the Funds do not believe that additional disclosure is
necessary.
COMMENT 9. IN THE FIFTH PARAGRAPH UNDER "INVESTMENT ADVISORY
AGREEMENT," DISCUSS THE FACTORS INVOLVED IN DETERMINING THE
APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT.
Response 9. The Funds respectfully submit that they have satisfied the
existing disclosure requirements regarding approval of
advisory contracts required under Form N-14. Form N-14 (Items
12(b) and 13(b)) requires the Funds to furnish in the SAI the
information called for under Item 18.13 of Form N-2.
Investment Company Act Release No. 26486 (June 23, 2004) (the
"Release") removes Item 18.13 of Form N-2 effective January
31, 2006 and adds new disclosure regarding approval of
advisory contracts to shareholder reports.
The Funds respectfully submit that they are not yet obligated
to provide this new disclosure in their shareholder reports.
The Release adds subsection (e) to Item 24.6 of Form N-2,
which applies only "[i]f the Registrant's board of directors
approved any investment advisory contract during the
Registrant's most recent fiscal half-year." Each Fund's most
recent fiscal half-year ended April 30, 2005, which preceded
the May 25-26, 2005 Board meeting at which the investment
advisory contract for each Fund was renewed. Since the Board
had not approved the investment advisory contracts pursuant to
the revised disclosure rules prior to April 30, 2005, the
Funds were not required to provide the new disclosure in their
most recent shareholder reports. Although the Release states
that "[p]rior to January 31, 2006, a fund may omit disclosure
in its SAI with respect to any board
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approval of an investment advisory contract if it has
previously provided the required disclosure with respect to
that board approval in a shareholder report," since none of
the Funds has yet been obligated to provide the new disclosure
in its shareholder reports, the Funds have provided the
disclosure currently required by Item 18.13 of Form N-2.
The new disclosure requirements also apply to "all proxy
statements filed on or after October 31, 2004," and the N-14
serves as a proxy statement for the Acquiring Fund with
respect to the issuance of additional common shares in
connection with the Reorganizations. However, the Funds
respectfully submit that they are not obligated to provide
this new disclosure. The Release adds new disclosure to Item
22(c)(11) of Schedule 14A; Item 22(c), though, applies only
"[i]f action is to be taken with respect to an investment
advisory contract." Accordingly, since the Acquiring Fund is
not taking action with respect to an investment advisory
contract, the new disclosure is not required.
COMMENT 10. UNDER "FUND MANAGEMENT," PROVIDE THE DISCLOSURE REQUIRED
BY ITEM 21.2 OF FORM N-2 WITH RESPECT TO COMPENSATION.
Response 10. The Funds respectfully submit that they have satisfied the
existing disclosure requirements regarding portfolio manager
compensation. Item 21.2 requires disclosure of "the structure
of, and the method used to determine, the compensation of each
Portfolio Manager." The Funds' investment adviser has created
a structure and method for compensating portfolio managers
which is fully described in the SAI. To the extent that the
Funds disclosed any additional information regarding the
structure and method for compensating its portfolio managers,
they would risk the possibility that the value of compensation
would be disclosed, a result that is specifically disclaimed
by Item 21.2 ("[t]he value of compensation is not required to
be disclosed under this Item").
COMMENT 11. WITH RESPECT TO THE PRO FORMA FINANCIAL STATEMENTS IN
APPENDIX H TO THE SAI, DISCLOSE THE EXTENT TO WHICH SECURITIES
OF THE TARGET FUND MAY BE SOLD IN CONNECTION WITH THE PROPOSED
REORGANIZATION.
Response 11. In the second introductory paragraph to the pro forma
financial statements, the Funds have noted the following:
There is no guarantee that the portfolio of
investments of the surviving entity on the closing
date of the transaction will match the Pro Forma
Portfolio of Investments presented herein. All or a
portion of the securities acquired in the transaction
could be sold by the surviving entity; however, there
is no plan or intention to sell securities acquired
in the transaction other than in the ordinary course
of business.
ACCOUNTING COMMENTS
COMMENT 12. WITH RESPECT TO THE PROPOSED REORGANIZATION, ADDRESS ANY
ISSUES RAISED BY THE STAFF OF THE SECURITIES AND EXCHANGE
COMMISSION IN NORTH AMERICAN SECURITY TRUST (PUBL. AVAIL. AUG.
5, 1994) ("NORTH AMERICAN").
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Response 12. The Funds' analysis of North American has been prepared and
filed as a separate correspondence.
COMMENT 13. EXPLAIN SUPPLEMENTALLY THE BASIS FOR THE CHOICE OF JANUARY
31, 2005 AS THE DATE FOR THE PRO FORMA FINANCIAL STATEMENTS
ATTACHED AS APPENDIX H TO THE SAI.
Response 13. Rule 11-02(c) of Regulation S-X governs the periods to be
presented with respect to pro forma financial information.
Rule 11-02(c)(1) requires that a pro forma financial
information be prepared "as of the end of the most recent
period for which a consolidated balance sheet of the
registrant is required by Rule 3-01." Rule 3-01(g) refers
registered management investment companies to Rule 3-18 in
lieu of Rule 3-01. Rule 3-18(c) states:
If the most current balance sheet or statement of
assets and liabilities in a filing is as of a date
245 days or more prior to the date the filing is
expected to become effective, the financial
statements shall be updated with a balance sheet or
statement of assets and liabilities as of an interim
date within 245 days.
We expected this filing to become effective on August 9, 2005,
which is 282 days from October 31, 2004, the last fiscal year
end of each Fund. Accordingly, pursuant to Rule 3-18(c), we
updated the pro forma financial information "as of an interim
date within 245 days." The date chosen, January 31, 2005, is
an interim date within 245 days.
* * *
In connection with the effectiveness of the Registration
Statement, the Registrant acknowledges that the disclosure included in the
Registration Statement is the responsibility of the Registrant. The Registrant
further acknowledges that the action of the Commission or the staff acting
pursuant to delegated authority in reviewing the Registration Statement does not
relieve the Registrant from its full responsibility for the adequacy and
accuracy of the disclosures in the Registration Statement; and that the
Registrant will not assert this action as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.
Should you have any questions concerning our responses to your
comments, please direct them to Christopher Rohrbacher at (312) 407-0940 or the
undersigned at (312) 407-0863.
Sincerely,
/s/ Charles B. Taylor
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