As filed with the Securities and Exchange Commission on June 30, 2005
Securities Act File No.
Investment Company Act File No. 811-7868
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[ ] PRE-EFFECTIVE AMENDMENT NO. __
[ ] POST-EFFECTIVE AMENDMENT NO. __
(CHECK APPROPRIATE BOX OR BOXES)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
(EXACT NAME OF REGISTRANT AS SPECIFIED IN DECLARATION OF TRUST)
(800) 847-2424
(AREA CODE AND TELEPHONE NUMBER)
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
AMY R. DOBERMAN, ESQ.
MANAGING DIRECTOR
VAN KAMPEN INVESTMENTS INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
WAYNE W. WHALEN, ESQ.
CHARLES B. TAYLOR, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
================================================================================
Approximate Date of Proposed Offering: As soon as practicable after this
Registration Statement is declared effective.
===============================================================================================================================
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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TITLE OF SECURITIES PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BEING REGISTERED AMOUNT BEING OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED PER UNIT PRICE FEE
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Common Shares ($0.01 par value) 1,000 $ 13.765 (1) $ 13,765 $ 117.70
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Auction Preferred Shares ($0.01 par value) 40 $ 25,000 $ 1,000,000 $ 117.70
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(1) Average of high and low reported price for common shares on June 24, 2005.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
EXPLANATORY NOTE
This Registration Statement is organized as follows:
- Questions and Answers to Shareholders of Van Kampen Municipal
Opportunity Trust II, Van Kampen Value Municipal Income Trust and Van
Kampen Advantage Municipal Income Trust II
- Notice of Joint Special Meeting of Shareholders of Van Kampen Municipal
Opportunity Trust II, Van Kampen Value Municipal Income Trust and Van
Kampen Advantage Municipal Income Trust II
- Joint Proxy Statement/Prospectus for Van Kampen Municipal Opportunity
Trust II, Van Kampen Value Municipal Income Trust and Van Kampen
Advantage Municipal Income Trust II
- Statement of Additional Information regarding the proposed
Reorganizations of Van Kampen Municipal Opportunity Trust II and Van
Kampen Value Municipal Income Trust into Van Kampen Advantage Municipal
Income Trust II
- Part C Information
- Exhibits
-- AUGUST 2005 --
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IMPORTANT NOTICE
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TO SHAREHOLDERS OF VAN KAMPEN
MUNICIPAL OPPORTUNITY TRUST II
VAN KAMPEN
VALUE MUNICIPAL INCOME TRUST AND
VAN KAMPEN
ADVANTAGE MUNICIPAL INCOME TRUST II
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QUESTIONS & ANSWERS
---------------------------------------
Although we recommend that you read the complete Joint Proxy Statement/
Prospectus, we have provided for your convenience a brief overview of the issues
to be voted on.
---------------------------------------
Q WHY IS A SHAREHOLDER
MEETING BEING HELD?
A Shareholders of
Van Kampen Municipal Opportunity Trust II and Van Kampen Value Municipal Income
Trust: You are being asked to vote on a reorganization (each a "Reorganization"
and collectively the "Reorganizations") of your fund (each such fund being
referred to herein as a "Target Fund" and together as the "Target Funds") into
Van Kampen Advantage Municipal Income Trust II (the "Acquiring Fund"), a closed-
end fund that pursues the same investment objective and has similar investment
policies and which is managed by the same investment advisory personnel as the
Target Funds.
Shareholders of Van Kampen Advantage Municipal Income Trust II: You are being
asked to vote on the issuance of additional common shares of the Acquiring Fund
in connection with the Reorganizations.
Q WHY IS EACH
REORGANIZATION BEING RECOMMENDED?
A The Board of Trustees of
each Fund has determined that each Reorganization will benefit common
shareholders of the respective Target Fund and the Acquiring Fund. The Target
Funds 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, by investing substantially all of its
assets in municipal securities rated investment grade at the time of investment.
Each Fund is managed by the same investment advisory personnel. After the
Reorganizations, it is anticipated that common shareholders of each Fund will
experience a reduced overall operating expense ratio, as certain fixed
administrative costs will be spread across the combined fund's larger asset
base. It is not anticipated that the Reorganizations will directly benefit
preferred shareholders of the Funds; however, the Reorganizations will not
adversely affect preferred shareholders, and none of the expenses of the
Reorganizations will be borne by preferred shareholders.
Q HOW WILL THE
REORGANIZATIONS AFFECT ME?
A Assuming shareholders
approve the Reorganizations of the Target Funds and shareholders of the
Acquiring Fund approve the issuance of additional common shares of the Acquiring
Fund, the assets and liabilities of the Target Funds will be combined with those
of the Acquiring Fund and the Target Funds will dissolve.
Shareholders of the Target Funds: You will become a shareholder of the Acquiring
Fund. If you are a holder of common shares of a Target Fund, you will receive
newly-issued common shares of the Acquiring Fund, the aggregate net asset value
of which will equal the aggregate net asset value of the common shares you held
immediately prior to the Reorganization, less the costs of the Reorganization
(though you may receive cash for fractional shares). If you are a holder of
preferred shares of a Target Fund, you will receive newly-issued preferred
shares of the Acquiring Fund, the aggregate liquidation preference of which will
equal the aggregate liquidation preference of the preferred shares you held
immediately prior to the Reorganization.
Shareholders of the Acquiring Fund: You will remain a shareholder of the
Acquiring Fund.
Q WILL I HAVE TO PAY ANY
SALES LOAD, COMMISSION OR OTHER SIMILAR FEE IN CONNECTION WITH THE
REORGANIZATIONS?
A You will pay no sales loads
or commissions in connection with the Reorganizations. However, if the
Reorganizations are completed, the costs associated with the Reorganizations,
including the costs associated with the shareholder meeting, will be borne by
common shareholders of the Target Funds and the Acquiring Fund in proportion to
their projected annual expense savings as a result of the Reorganizations.
Q WILL I HAVE TO PAY ANY
FEDERAL TAXES AS A RESULT OF THE REORGANIZATIONS?
A Each of the
Reorganizations is intended to qualify as a "reorganization" within the meaning
of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended. If the
Reorganizations so qualify, in general, shareholders of the Target Funds will
recognize no gain or loss upon the receipt solely of shares of the Acquiring
Fund in connection with the Reorganizations. Additionally, the Target Funds will
recognize no gain or loss as a result of the transfer of all of their assets and
liabilities in exchange for the shares of the Acquiring Fund or as a result of
their dissolution. Neither the Acquiring Fund nor its shareholders will
recognize any gain or loss in connection with the Reorganizations.
Q WHAT HAPPENS IF
SHAREHOLDERS OF ONE TARGET FUND DO NOT APPROVE ITS REORGANIZATION BUT
SHAREHOLDERS OF THE OTHER TARGET FUND DO APPROVE ITS REORGANIZATION?
A An unfavorable vote on a
proposed Reorganization by the shareholders of one Target Fund will not affect
the implementation of a Reorganization by the other Target Fund, if such
Reorganization is approved by the shareholders of such Target Fund and the
issuance of additional common shares is approved by the shareholders of the
Acquiring Fund.
Q WHY IS THE VOTE OF
COMMON SHAREHOLDERS OF THE ACQUIRING FUND BEING SOLICITED?
A Although the Acquiring
Fund will continue its legal existence and operations after the Reorganizations,
the rules of the American Stock Exchange and the Chicago Stock Exchange (on
which the Acquiring Fund's common shares are listed) require the Acquiring
Fund's common shareholders to approve the issuance of additional common shares
in connection with the Reorganizations. If the issuance of additional common
shares of the Acquiring Fund is not approved, neither Reorganization will occur.
Q HOW DOES THE BOARD OF
TRUSTEES OF MY FUND SUGGEST THAT I VOTE?
A After careful consideration,
the Board of Trustees of your fund recommends that you vote "FOR" the item
proposed for your fund.
Q HOW DO I VOTE MY PROXY?
A You may cast your vote by
mail, phone or internet. To vote by mail, please mark your vote on the enclosed
proxy card and sign, date and return the card in the postage-paid envelope
provided. If you choose to vote by phone or internet, please refer to the
instructions found on the proxy card accompanying this Joint Proxy
Statement/Prospectus. To vote by phone or internet, you will need the "control
number" that appears on the proxy card.
Q WHOM DO I CONTACT FOR
FURTHER INFORMATION?
A You can contact your
financial adviser for further information. You may also call Van Kampen's Client
Relations Department at (800) 341-2929 (Telecommunication Device for the Deaf
users may call (800) 421-2833) or visit our website at www.vankampen.com where
you can send us an e-mail message by selecting "Contact Us."
ABOUT THE PROXY CARD
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Please vote on the proposal(s) applicable to your fund using blue or black ink
to mark an X in one of the boxes provided on the proxy card.
SHAREHOLDERS OF VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II AND VAN KAMPEN VALUE
MUNICIPAL INCOME TRUST:
APPROVAL OF REORGANIZATION -- mark "For," "Against" or "Abstain."
COMMON SHAREHOLDERS OF VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II:
APPROVAL OF ISSUANCE OF ADDITIONAL COMMON SHARES -- mark "For," "Against" or
"Abstain."
Sign, date and return the proxy card in the enclosed postage-paid envelope. All
registered owners of an account, as shown in the address, must sign the card.
When signing as attorney, trustee, executor, administrator, custodian, guardian
or corporate officer, please indicate your full title.
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
VAN KAMPEN XXXXX
JOINT SPECIAL MEETING OF SHAREHOLDERS
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
FOR AGAINST ABSTAIN
1. The proposal to [ ] [ ] [ ] 2. The proposal to issue additional
approve the common shares. FOR AGAINST ABSTAIN
Reorganization. [ ] [ ] [ ]
3. To transact such other business as may
properly come before the Meeting or any
adjournment thereof.
Please be sure to sign and date this Proxy, Date
Shareholder sign here Co-owner sign here
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
SAMPLE
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II,
VAN KAMPEN VALUE MUNICIPAL
INCOME TRUST
AND
VAN KAMPEN ADVANTAGE MUNICIPAL
INCOME TRUST II
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(800) 341-2929
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 23, 2005
Notice is hereby given that a joint special meeting of shareholders (the
"Special Meeting") of Van Kampen Municipal Opportunity Trust II ("Municipal
Opportunity Trust II"), Van Kampen Value Municipal Income Trust ("Value
Municipal Income Trust") and Van Kampen Advantage Municipal Income Trust II (the
"Acquiring Fund") will be held at the offices of Van Kampen Investments Inc., 1
Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555 on September 23, 2005 at
11:00 a.m. for the following purposes:
1. Approval of Reorganizations:
a. For shareholders of Municipal Opportunity Trust II:
To approve an Agreement and Plan of Reorganization between Municipal
Opportunity Trust II and the Acquiring Fund, the termination of
Municipal Opportunity Trust II's registration under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the dissolution
of Municipal Opportunity Trust II under applicable state law;
b. For shareholders of Value Municipal Income Trust:
To approve an Agreement and Plan of Reorganization between Value
Municipal Income Trust and the Acquiring Fund, the termination of Value
Municipal Income Trust's registration under the 1940 Act, and the
dissolution of Value Municipal Income Trust under applicable state law;
2. Issuance of Common Shares:
For common shareholders of the Acquiring Fund:
To approve the issuance of additional common shares of the Acquiring
Fund in connection with each Agreement and Plan of Reorganization; and
3. Other Business:
For shareholders of each fund:
To transact such other business as may properly be presented at the
Special Meeting or any adjournment thereof.
Shareholders of record as of the close of business on July 29, 2005 are
entitled to vote at the Special Meeting or any adjournment thereof.
THE BOARD OF TRUSTEES OF MUNICIPAL OPPORTUNITY TRUST II, VALUE MUNICIPAL
INCOME TRUST AND THE ACQUIRING FUND REQUESTS THAT YOU VOTE YOUR SHARES BY
INDICATING YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATING AND
SIGNING SUCH PROXY CARD AND RETURNING IT IN THE ENVELOPE PROVIDED, WHICH IS
ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES, OR BY RECORDING YOUR VOTING INSTRUCTIONS BY TELEPHONE OR VIA THE
INTERNET.
THE BOARD OF TRUSTEES OF MUNICIPAL OPPORTUNITY TRUST II AND VALUE MUNICIPAL
INCOME TRUST RECOMMENDS THAT YOU CAST YOUR VOTE:
- FOR THE REORGANIZATION OF YOUR FUND PURSUANT TO AN AGREEMENT AND PLAN OF
REORGANIZATION AS DESCRIBED IN THE JOINT PROXY STATEMENT/PROSPECTUS.
THE BOARD OF TRUSTEES OF THE ACQUIRING FUND RECOMMENDS THAT YOU CAST YOUR
VOTE:
- FOR THE ISSUANCE OF ADDITIONAL COMMON SHARES OF THE ACQUIRING FUND IN
CONNECTION WITH EACH AGREEMENT AND PLAN OF REORGANIZATION AS DESCRIBED IN
THE JOINT PROXY STATEMENT/PROSPECTUS.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT
YOU MAIL YOUR PROXY CARD OR RECORD YOUR VOTING INSTRUCTIONS BY TELEPHONE OR VIA
THE INTERNET PROMPTLY.
For the Board of Trustees,
Lou Anne McInnis
Assistant Secretary
Van Kampen Municipal
Opportunity Trust II
Van Kampen Value
Municipal Income Trust
Van Kampen Advantage Municipal
Income Trust II
August , 2005
------------------
YOUR VOTE IS IMPORTANT.
PLEASE VOTE PROMPTLY BY SIGNING AND RETURNING THE
ENCLOSED PROXY CARD OR BY RECORDING YOUR VOTING INSTRUCTIONS BY TELEPHONE
OR VIA THE INTERNET NO MATTER HOW MANY SHARES YOU OWN.
THE INFORMATION IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE
AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 30, 2005
JOINT PROXY STATEMENT/PROSPECTUS
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II,
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
AND
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
NEW YORK MUNICIPALS
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(800) 341-2929
JOINT SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 23, 2005
This Joint Proxy Statement/Prospectus is furnished to you as a shareholder of
Van Kampen Municipal Opportunity Trust II ("Municipal Opportunity Trust II"),
Van Kampen Value Municipal Income Trust ("Value Municipal Income Trust") and/or
Van Kampen Advantage Municipal Income Trust II (the "Acquiring Fund"). A joint
special meeting of shareholders of Municipal Opportunity Trust II, Value
Municipal Income Trust and the Acquiring Fund (the "Special Meeting") will be
held at the offices of Van Kampen Investments Inc., 1 Parkview Plaza, Oakbrook
Terrace, Illinois 60181-5555 on September 23, 2005 at 11:00 a.m. to consider the
items listed below and discussed in greater detail elsewhere in this Joint Proxy
Statement/Prospectus. If you are unable to attend the Special Meeting or any
adjournment thereof, the Board of Trustees of Municipal Opportunity Trust II,
Value Municipal Income Trust and the Acquiring Fund requests that you vote your
shares by completing and returning the enclosed proxy card or by recording your
voting instructions by telephone or via the internet. The approximate mailing
date of this Joint Proxy Statement/Prospectus and accompanying form of proxy is
August , 2005.
The purposes of the Special Meeting are:
1. Approval of Reorganizations:
a. For shareholders of Municipal Opportunity Trust II:
To approve an Agreement and Plan of Reorganization between Municipal
Opportunity Trust II and the Acquiring Fund, the termination of
Municipal Opportunity Trust II's registration under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the dissolution
of Municipal Opportunity Trust II under applicable state law;
b. For shareholders of Value Municipal Income Trust:
To approve an Agreement and Plan of Reorganization between Value
Municipal Income Trust and the Acquiring Fund, the termination of Value
Municipal Income Trust's registration under the 1940 Act, and the
dissolution of Value Municipal Income Trust under applicable state law;
2. Issuance of Common Shares:
For common shareholders of the Acquiring Fund:
To approve the issuance of additional common shares of the Acquiring
Fund in connection with each Agreement and Plan of Reorganization; and
3. Other Business:
For shareholders of each fund:
To transact such other business as may properly be presented at the
Special Meeting or any adjournment thereof.
Municipal Opportunity Trust II and Value Municipal Income Trust are sometimes
referred to herein individually as a "Target Fund" or collectively as the
"Target Funds." The Target Funds and the Acquiring Fund are sometimes referred
to herein each as a "Fund" and collectively as the "Funds." Each Agreement and
Plan of Reorganization is sometimes referred to herein individually as a
"Reorganization Agreement" or collectively as the "Reorganization Agreements."
Each Reorganization Agreement that Target Fund shareholders are being asked to
consider involves a transaction that will be referred to in this Joint Proxy
Statement/Prospectus individually as a "Reorganization" and collectively as the
"Reorganizations."
The Reorganizations seek to combine three similar Funds to achieve certain
economies of scale and other operational efficiencies. The investment objective
of each Fund is to seek to provide common shareholders with a high level of
current income exempt from federal income tax, consistent with preservation of
capital. Each Fund seeks to achieve its investment objective by investing
substantially all of its assets in municipal securities rated investment grade
at the time of investment. In each Reorganization, the Acquiring Fund will
acquire substantially all of the assets and assume substantially all of the
liabilities of the Target Fund in exchange solely for an equal aggregate value
of newly-issued common shares of beneficial interest of the Acquiring Fund, par
value $0.01 per share ("Acquiring Fund Common Shares"), and newly-issued auction
preferred shares of the Acquiring Fund with a par value of $0.01 per share and a
liquidation preference of $25,000 per share ("Acquiring Fund APS"). The Target
Fund will distribute Acquiring Fund Common Shares to common shareholders of the
Target Fund and Acquiring Fund APS to preferred shareholders of the Target Fund,
and will then terminate its registration under the 1940 Act and dissolve under
applicable state law. The aggregate net asset value of Acquiring Fund Common
Shares received in each Reorganization will equal the aggregate net asset value
of Target Fund common shares held
2
immediately prior to such Reorganization, less the costs of such Reorganization
(though common shareholders may receive cash for their fractional shares). The
aggregate liquidation preference of Acquiring Fund APS received in each
Reorganization will equal the aggregate liquidation preference of Target Fund
preferred shares held immediately prior to such Reorganization. The Acquiring
Fund will continue to operate after the Reorganizations as a registered
closed-end investment company with the investment objective and policies
described in this Joint Proxy Statement/Prospectus.
In connection with the Reorganizations, common shareholders of the Acquiring
Fund are being asked to approve the issuance of additional Acquiring Fund Common
Shares.
The Board of Trustees of each Fund has determined that including these
proposals in one Joint Proxy Statement/Prospectus will reduce costs and is in
the best interests of each Fund's shareholders.
In the event that shareholders of one or both of the Target Funds do not
approve the Reorganization(s), such Target Fund(s) will continue to exist and
the Board of Trustees of such Target Fund(s) will consider what additional
action, if any, to take. In the event Acquiring Fund common shareholders do not
approve the issuance of additional Acquiring Fund Common Shares, then all of the
Funds will continue to exist and the respective Board of Trustees of each Fund
will consider what additional action, if any, to take.
This Joint Proxy Statement/Prospectus sets forth concisely the information
shareholders of each Fund should know before voting on the proposals for their
Fund and constitutes an offering of Acquiring Fund Common Shares and Acquiring
Fund APS. Please read it carefully and retain it for future reference. A
Statement of Additional Information, dated August , 2005, relating to this
Joint Proxy Statement/Prospectus (the "Reorganization Statement of Additional
Information") has been filed with the Securities and Exchange Commission (the
"SEC") and is incorporated herein by reference. If you wish to request the
Reorganization Statement of Additional Information, please ask for the
"Reorganization Statement of Additional Information." Copies of each Fund's most
recent annual report and semi-annual report can be obtained on a web site
maintained by Van Kampen Investments Inc. at www.vankampen.com. In addition,
each Fund will furnish, without charge, a copy of the Reorganization Statement
of Additional Information, its most recent annual report and any more recent
semi-annual report to any shareholder upon request. Any such request should be
directed to the Van Kampen Client Relations Department by calling (800) 341-2929
(TDD users may call (800) 421-2833) or by writing to the respective Fund at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, Illinois 60181-5555. The
address of the principal executive offices of the Funds is 1221 Avenue of the
Americas, New York, New York 10020, and the telephone number is (800) 341-2929.
3
The Funds are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith file reports,
proxy statements, proxy material and other information with the SEC. Materials
filed with the SEC can be reviewed and copied at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549 or downloaded from the SEC's
web site at www.sec.gov. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at (202) 942-8090. You can
also request copies of these materials, upon payment at the prescribed rates of
a duplicating fee, by electronic request to the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, DC, 20549-0102.
The Acquiring Fund Common Shares are listed on the American Stock Exchange
(the "AMEX") and the Chicago Stock Exchange (the "CHX") under the ticker symbol
"VKI" and will continue to be so listed subsequent to the Reorganizations.
Reports, proxy statements and other information concerning the Acquiring Fund
may be inspected at the offices of the AMEX, 86 Trinity Place, New York, New
York 10006. The common shares of Municipal Opportunity Trust II are listed on
the New York Stock Exchange (the "NYSE") and the CHX under the ticker symbol
"VOT." The common shares of Value Municipal Income Trust are listed on the NYSE
and the CHX under the ticker symbol "VKV." Reports, proxy statements and other
information concerning Municipal Opportunity Trust II and Value Municipal Income
Trust may be inspected at the offices of the NYSE, 20 Broad Street, New York,
New York 10005.
This Joint Proxy Statement/Prospectus serves as a prospectus of the Acquiring
Fund in connection with the issuance of Acquiring Fund Common Shares and
Acquiring Fund APS in each Reorganization. No person has been authorized to give
any information or make any representation not contained in this Joint Proxy
Statement/Prospectus and, if so given or made, such information or
representation must not be relied upon as having been authorized. This Joint
Proxy Statement/Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities in any jurisdiction in which, or
to any person to whom, it is unlawful to make such offer or solicitation.
The Board of Trustees of each Fund knows of no business other than that
discussed above that will be presented for consideration at the Special Meeting.
If any other matter is properly presented, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment.
---------------------
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is August , 2005.
4
TABLE OF CONTENTS
PAGE
----
SUMMARY..................................................... 7
PROPOSAL 1: REORGANIZATIONS OF THE TARGET FUNDS............. 14
RISK FACTORS AND SPECIAL CONSIDERATIONS..................... 15
Market Risk............................................... 15
Interest Rate Risk........................................ 15
Credit Risk............................................... 15
Income Risk............................................... 16
Call Risk................................................. 16
Municipal Securities Risk................................. 16
Risks of Using Strategic Transactions..................... 16
Manager Risk.............................................. 16
Market Discount Risk...................................... 17
Leverage Risk............................................. 17
Anti-Takeover Provisions.................................. 19
Special Risks Related to Preferred Shares................. 19
COMPARISON OF THE FUNDS..................................... 20
Investment Objective and Policies......................... 20
Other Investment Practices and Policies................... 23
Investment Restrictions................................... 25
Management of the Funds................................... 27
Other Service Providers................................... 30
Capitalization............................................ 31
Additional Information about Common Shares of the Funds... 32
Additional Information about Preferred Shares of the
Funds................................................... 36
Governing Law............................................. 40
Certain Provisions of the Declarations of Trust........... 40
Conversion to Open-End Funds.............................. 42
Voting Rights............................................. 42
Financial Highlights...................................... 44
INFORMATION ABOUT THE REORGANIZATIONS....................... 47
General................................................... 47
Terms of the Reorganization Agreements.................... 48
Material U.S. Federal Income Tax Consequences of the
Reorganizations......................................... 50
Shareholder Approval...................................... 52
5
PAGE
----
PROPOSAL 2: ISSUANCE OF ADDITIONAL ACQUIRING FUND COMMON
SHARES.................................................... 53
Shareholder Approval...................................... 53
OTHER INFORMATION........................................... 54
Voting Information and Requirements....................... 54
Shareholder Information................................... 55
Section 16(a) Beneficial Ownership Reporting Compliance... 56
Shareholder Proposals..................................... 56
Solicitation of Proxies................................... 56
Legal Matters............................................. 57
Other Matters to Come Before the Meeting.................. 57
EXHIBIT I: DESCRIPTION OF SECURITIES RATINGS................ I-1
6
SUMMARY
The following is a summary of certain information contained elsewhere in this
Joint Proxy Statement/Prospectus and is qualified in its entirety by reference
to the more complete information contained in this Joint Proxy
Statement/Prospectus and in the Reorganization Statement of Additional
Information. Shareholders should read the entire Joint Proxy
Statement/Prospectus carefully.
PROPOSAL 1: REORGANIZATIONS OF THE TARGET FUNDS
THE PROPOSED REORGANIZATIONS. The Board of Trustees of each Target Fund,
including the trustees who are not "interested persons" of each Target Fund (as
defined in the 1940 Act), has unanimously approved each Reorganization
Agreement. If the shareholders of a Target Fund approve their Reorganization
Agreement and the common shareholders of the Acquiring Fund approve the issuance
of Acquiring Fund Common Shares (see Proposal 2: "Issuance of Additional
Acquiring Fund Common Shares"), Acquiring Fund Common Shares and Acquiring Fund
APS will be issued to the common shareholders and preferred shareholders of such
Target Fund, respectively, in exchange for substantially all of the assets of
the Target Fund and the assumption of substantially all of the liabilities of
the Target Fund. The Target Fund will then terminate its registration under the
1940 Act and dissolve under applicable state law. The aggregate net asset value
of Acquiring Fund Common Shares received in the Reorganization will equal the
aggregate net asset value of Target Fund common shares held immediately prior to
the Reorganization, less the costs of the Reorganization (though common
shareholders may receive cash for fractional shares). The aggregate liquidation
preference of Acquiring Fund APS received in the Reorganization will equal the
aggregate liquidation preference of Target Fund preferred shares held
immediately prior to the Reorganization.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATIONS. The Reorganizations
seek to combine three similar Funds to achieve certain economies of scale and
other operational efficiencies. Each Fund is registered as a diversified,
closed-end management investment company under the 1940 Act. The investment
objective of each Fund is to seek to provide common shareholders with a high
level of current income exempt from federal income tax, consistent with
preservation of capital. Each Fund seeks to achieve its investment objective,
under normal market conditions, by investing substantially all of its total
assets in municipal securities rated investment grade at the time of investment.
Each Fund may invest an unlimited portion of its assets in municipal securities
that pay interest that is subject to the alternative minimum tax provisions of
federal tax law. The Funds are managed by the same investment advisory
personnel.
The proposed Reorganizations will combine the assets of these similar Funds by
reorganizing the Target Funds into the Acquiring Fund. The Board of Trustees of
7
each Target Fund (the "Target Fund Board"), based upon its evaluation of all
relevant information, anticipates that the common shareholders of each Target
Fund will benefit from their Fund's respective Reorganization. The Board of
Trustees of the Acquiring Fund (the "Acquiring Fund Board"), based upon its
evaluation of all relevant information, anticipates that each Reorganization
will benefit holders of Acquiring Fund Common Shares. Each Board believes, based
on data presented by Van Kampen Asset Management, investment adviser to each of
the Funds (the "Adviser"), that common shareholders of each Fund will experience
a reduced overall operating expense ratio as a result of their Fund's respective
Reorganization. The combined fund resulting from the Reorganizations will have a
larger asset base than any of the Funds has currently; certain fixed
administrative costs, such as costs of printing shareholder reports and proxy
statements, legal expenses, audit fees, mailing costs and other expenses, will
be spread across this larger asset base, thereby lowering the expense ratio for
common shareholders of the combined fund.
8
The table below illustrates the anticipated reduction in operating expenses
expected as a result of the Reorganizations. The table sets forth (i) the fees,
expenses and distributions to preferred shareholders paid by the Target Funds
for the 12-month period ended January 31, 2005, (ii) the fees, expenses and
distributions to preferred shareholders paid by the Acquiring Fund for the
12-month period ended January 31, 2005 and (iii) the pro forma fees, expenses
and distributions to preferred shareholders for the Acquiring Fund for the
12-month period ended January 31, 2005, assuming each of the Reorganizations had
been completed at the beginning of such period. As shown below, the
Reorganizations are expected to result in decreased total annual expenses for
shareholders of each Fund.
FEE, EXPENSE AND DISTRIBUTIONS ON PREFERRED SHARES TABLE
FOR COMMON SHAREHOLDERS OF THE FUNDS
AS OF JANUARY 31, 2005
PRO
ACTUAL FORMA(F)
------------------------------------- ----------
VAN KAMPEN VAN KAMPEN VAN KAMPEN
VAN KAMPEN VALUE ADVANTAGE ADVANTAGE
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
OPPORTUNITY INCOME INCOME INCOME
TRUST II TRUST TRUST II TRUST II
(VOT) (VKV) (VKI) (VKI)
----------- ---------- ---------- ----------
Common Shareholder Transaction
Expenses(a):
Maximum Sales Load (as a percentage
of offering price)(b)(c).......... None None None None
Dividend Reinvestment Plan Fees..... None None None None
Annual Expenses (as a percentage of
net assets attributable to common
shares):
Investment Advisory Fees(d)......... 0.91% 0.89% 0.92% 0.90%
Interest Payments on Borrowed
Funds............................. 0.00% 0.00% 0.00% 0.00%
Other Expenses(c)................... 0.37% 0.30% 0.40% 0.26%
Total Annual Expenses(d).......... 1.28% 1.19% 1.32% 1.16%
Distributions
Distributions on Preferred
Shares(e)......................... 0.76% 0.75% 0.80% 0.76%
----- ----- ----- -----
Total Annual Expenses and
Distributions on Preferred
Shares.......................... 2.04% 1.94% 2.12% 1.92%
----- ----- ----- -----
---------------
(a)No expense information is presented with respect to preferred shares because
holders of preferred shares do not bear any transaction or operating expenses
of any of the Funds and will not bear any of the Reorganization expenses or
any transaction or operating expenses of the combined fund.
(b)Common shares purchased in the secondary market may be subject to brokerage
commissions or other charges. No sales load will be charged on the issuance
of common shares in the Reorganizations. Common shares are not available for
purchase from the Funds but may be purchased through a broker-dealer subject
to individually negotiated commission rates.
9
(c)In connection with the Reorganizations, there are certain other transaction
expenses which include, but are not limited to: all costs related to the
preparation, printing and distributing of this Joint Proxy
Statement/Prospectus to shareholders; costs related to preparation and
distribution of materials distributed to each Fund's Board; all expenses
incurred in connection with the preparation of the Reorganization Agreements
and the registration statement on Form N-14; SEC and state securities
commission filing fees; legal and audit fees; portfolio transfer taxes (if
any); and any similar expenses incurred in connection with the
Reorganizations. In accordance with applicable SEC rules, the Board of
Trustees of each Fund reviewed the fees and expenses that will be borne
directly or indirectly by the Funds in connection with the Reorganizations.
After considering various alternatives for allocating these costs, the Board
of Trustees of each Fund agreed that, in the event the Reorganizations are
approved and completed, the expenses of the Reorganizations will be shared by
the Target Funds and the Acquiring Fund in proportion to their projected
annual expense savings as a result of the Reorganizations. The table below
summarizes each Fund's net assets (common shares only) at January 31, 2005,
projected annual expense savings to each Fund as a result of the
Reorganizations, allocation of Reorganization expenses among the Funds in
dollars and percentages, an estimated pay-back period (in years) and the
resulting effect on each Fund's net asset value per common share at January
31, 2005. Some Funds will benefit more from projected annual expense savings
of the Reorganizations than other Funds. The projected annual expense savings
are generally not expected to be immediately realized. If shareholders sell
their common shares prior to the estimated pay-back period, then they may not
realize any of the projected expense savings resulting from the reduced
expense ratio of the combined fund. The net asset value per common share of
each Fund will be reduced at the closing date of the respective
Reorganization to reflect the allocation of Reorganization expenses to each
Fund. The reduction in net asset value per common share resulting from the
allocation of Reorganization expenses, when compared to the relative net
asset sizes of each Fund involved in the Reorganizations, will be greater in
some Funds than others. In the event a Reorganization is not completed, the
Adviser will bear the costs associated with such Reorganization. The numbers
presented in the table are estimates; actual results may differ.
REDUCTION TO
PROJECTED ESTIMATED NET ASSET
NET ASSETS ANNUAL REORGANIZATION PAYBACK VALUE PER
(COMMON EXPENSE EXPENSE ALLOCATION PERIOD COMMON
FUND SHARES ONLY) SAVINGS IN DOLLARS/PERCENTAGE (IN YEARS) SHARE
---- ------------ --------- --------------------- ----------- ------------
VOT.................. $179,748,442 $215,698 $205,829/41% 0.95 $0.018
VKV.................. 374,324,371 112,297 105,420/21% 0.94 0.004
VKI.................. 123,228,168 197,165 190,760/38% 0.97 0.023
-----------
Total Expenses....... 502,000/100%
(d)Expense information has been restated to reflect permanent reductions made to
administrative fees effective as of June 1, 2004 and permanent reductions
made to management fees effective as of November 1, 2004. If assets
attributable to preferred shares were included, the investment advisory fee
would be 0.55% for each Fund and for the Acquiring Fund on a pro forma basis.
(e)In seeking to enhance the income for its common shareholders, each of the
Funds uses preferred shares as financial leverage. Leverage created by
borrowing or other forms of indebtedness would create interest expenses which
would, if used by the Funds, be charged to common shareholders (shown above
as "Interest Payments on Borrowed Funds"). Leverage created by preferred
shares creates dividend payments and/or capital gains distributions to
preferred shareholders which are charged to common shareholders
10
(shown above as "Distributions on Preferred Shares"). The dividend rates are
based on periodic auctions as described herein and thus will differ based on
varying market conditions at the times of such auctions.
(f)As described above the table, the pro forma column shown above assumes all of
the Reorganizations are completed. As described herein, an unfavorable vote
by one of the Target Funds will not affect the implementation of the
Reorganization by the other Target Fund if approved by such other Target
Fund. As such, there could be other combinations of approved Reorganizations,
and the pro forma columns below present these various combinations.
Pro Forma
-------------------
ANNUAL EXPENSES VOT and VKV and
(as a percentage of net assets attributable to common shares): VKI Only VKI Only
-------------------------------------------------------------- -------- --------
Investment Advisory Fees(d).............................. 0.91% 0.90%
Interest Payments on Borrowed Funds...................... 0.00% 0.00%
Other Expenses........................................... 0.32% 0.27%
Total Annual Expenses(d)............................... 1.23% 1.17%
Distributions
Distributions on Preferred Shares(e)..................... 0.78% 0.76%
Total Annual Expenses and Distributions on Preferred
Shares............................................... 2.01% 1.93%
EXAMPLE. The following example is intended to help you compare the costs of
investing in the Acquiring Fund pro forma after the Reorganizations with the
costs of investing in the Target Funds and the Acquiring Fund without the
Reorganizations. An investor would pay the following expenses on a $1,000
investment, assuming (1) the operating expense ratio for each Fund (as a
percentage of net assets attributable to common shares) set forth in the table
above and (2) a 5% annual return throughout the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Van Kampen Municipal Opportunity Trust
II (VOT)............................ $13 $41 $70 $155
Van Kampen Value Municipal Income
Trust (VKV)......................... $12 $38 $65 $144
Van Kampen Advantage Municipal Income
Trust II (VKI)...................... $13 $42 $72 $159
Pro Forma -- Van Kampen Advantage
Municipal Income Trust II(a)
(VKI)............................... $12 $37 $64 $141
---------------
(a)Consistent with footnote (f) to the preceding table, the pro forma row shown
above assumes each of the Reorganizations is completed. As described herein,
an unfavorable vote by one of the Target Funds will not affect the
implementation of the Reorganization of the other Target Fund if approved by
such other Target Fund. This means that there could be other combinations of
approved
11
Reorganizations, and the pro forma rows below present these various
combinations:
PRO FORMA 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ------ ------- ------- --------
VOT and VKI only.................. $13 $39 $68 $149
VKV and VKI only.................. $12 $37 $64 $142
The example set forth above assumes the reinvestment of all dividends and
distributions. The example should not be considered a representation of past or
future expenses or annual rates of return. Actual expenses or annual rates of
return may be more or less than those assumed for purposes of the example.
FURTHER INFORMATION REGARDING THE REORGANIZATIONS. The Target Fund Board has
determined that each Reorganization is in the best interests of common
shareholders of the respective Target Fund and that the interests of such
shareholders will not be diluted as a result of their Fund's Reorganization.
Similarly, the Acquiring Fund Board has determined that each Reorganization is
in the best interests of common shareholders of the Acquiring Fund and that the
interests of such shareholders will not be diluted as a result of any
Reorganization. It is not anticipated that any of the Reorganizations will
directly benefit preferred shareholders of any of the Funds; however, the
Reorganizations will not materially adversely affect preferred shareholders of
any of the Funds, and the expenses of the Reorganizations will not be borne by
preferred shareholders of any of the Funds. As a result of the Reorganizations,
however, shareholders of each Fund will hold a reduced percentage of ownership
in the larger combined fund than they did in any of the separate Funds.
Each of the Reorganizations is intended to qualify as a "reorganization"
within the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"). If the Reorganizations so qualify, in
general, shareholders of the Target Funds will recognize no gain or loss upon
the receipt of shares of the Acquiring Fund in connection with the
Reorganizations. Additionally, the Target Funds will recognize no gain or loss
as a result of the transfer of all of their assets and liabilities in exchange
for shares of the Acquiring Fund or as a result of their dissolution. Neither
the Acquiring Fund nor its shareholders will recognize any gain or loss in
connection with the Reorganizations.
The Target Fund Board requests that shareholders of each Target Fund approve
their Fund's proposed Reorganization at the Special Meeting to be held on
September 23, 2005. Shareholder approval of each Reorganization requires the
affirmative vote of shareholders of the respective Target Fund representing more
than 50% of the outstanding common shares and preferred shares of such Target
Fund entitled to vote, each voting separately as a class. Subject to the
requisite approval of the shareholders of each Fund with regard to each
Reorganization, it is
12
expected that the closing date of the transaction (the "Closing Date") will be
after the close of business on or about October 7, 2005, but it may be at a
different time as described herein.
The Target Fund Board recommends that you vote "FOR" your Target Fund's
proposed Reorganization.
PROPOSAL 2: ISSUANCE OF ADDITIONAL ACQUIRING FUND COMMON SHARES
In connection with each proposed Reorganization described under "Proposal 1:
Reorganizations of the Target Funds," the Acquiring Fund will issue additional
Acquiring Fund Common Shares and list such shares on the AMEX and CHX. The
Acquiring Fund will acquire substantially all of the assets and assume
substantially all of the liabilities of each Target Fund in exchange for
newly-issued Acquiring Fund Common Shares and newly-issued Acquiring Fund APS.
The Reorganizations will result in no reduction of the net asset value of the
Acquiring Fund Common Shares, other than to reflect the costs of the
Reorganizations. No gain or loss will be recognized by the Acquiring Fund or its
shareholders in connection with the Reorganization. The Acquiring Fund Board,
based upon its evaluation of all relevant information, anticipates that each
Reorganization will benefit holders of Acquiring Fund Common Shares. In
particular, the Acquiring Fund Board believes, based on data presented by the
Adviser, that the Acquiring Fund will experience a reduced overall operating
expense ratio as a result of the Reorganizations.
The Acquiring Fund Board requests that common shareholders of the Acquiring
Fund approve the issuance of additional Acquiring Fund Common Shares at the
Special Meeting to be held on September 23, 2005. Shareholder approval of the
issuance of additional Acquiring Fund Common Shares requires the affirmative
vote of a majority of the votes cast, provided that total votes cast on the
proposal represent over 50% of all securities entitled to vote on the matter.
Subject to the requisite approval of the shareholders of each Fund with regard
to the Reorganizations, it is expected that the Closing Date will be after the
close of business on or about October 7, 2005, but it may be at a different time
as described herein.
The Acquiring Fund Board recommends that you vote "FOR" the issuance of
additional Acquiring Fund Common Shares in connection with the Reorganizations.
13
------------------------------------------------------------------------------
PROPOSAL 1: REORGANIZATIONS OF THE TARGET FUNDS
------------------------------------------------------------------------------
The Reorganizations seek to combine three similar Funds to achieve certain
economies of scale and other operational efficiencies. Each Fund is registered
as a diversified, closed-end management investment company under the 1940 Act.
The investment objective of each Fund is to seek to provide common shareholders
with a high level of current income exempt from federal income tax, consistent
with preservation of capital. Each Fund seeks to achieve its investment
objective, under normal market conditions, by investing substantially all of its
total assets in municipal securities rated investment grade at the time of
investment. The Funds are managed by the same investment advisory personnel.
In each Reorganization, the Acquiring Fund will acquire substantially all of
the assets and assume substantially all of the liabilities of the Target Fund in
exchange for an equal aggregate value of Acquiring Fund Common Shares and
Acquiring Fund APS. The Target Fund will distribute Acquiring Fund Common Shares
to common shareholders of the Target Fund and Acquiring Fund APS to preferred
shareholders of the Target Fund, and will then terminate its registration under
the 1940 Act and dissolve under applicable state law. The aggregate net asset
value of Acquiring Fund Common Shares received in the Reorganization will equal
the aggregate net asset value of the Target Fund common shares held immediately
prior to the Reorganization, less the costs of the Reorganization (though common
shareholders may receive cash for fractional shares). The aggregate liquidation
preference of Acquiring Fund APS received in the Reorganization will equal the
aggregate liquidation preference of Target Fund preferred shares held
immediately prior to the Reorganization. The Acquiring Fund will continue to
operate as a registered closed-end investment company with the investment
objective and policies described in this Joint Proxy Statement/Prospectus.
The Target Fund Board, based upon its evaluation of all relevant information,
anticipates that the common shareholders of each Target Fund will benefit from
their Fund's respective Reorganization. In particular, the Target Fund Board
believes, based on data presented by the Adviser, that common shareholders of
each Target Fund will experience a reduced overall operating expense ratio as a
result of their Fund's respective Reorganization. The combined fund resulting
from the Reorganizations will have a larger asset base than any of the Funds has
currently; certain fixed administrative costs, such as costs of printing
shareholder reports and proxy statements, legal expenses, audit fees, mailing
costs and other expenses, will be spread across this larger asset base, thereby
lowering the expense ratio for common shareholders of the combined fund.
14
RISK FACTORS AND SPECIAL CONSIDERATIONS
Because each Fund, under normal market conditions, invests substantially all
of its assets in investment grade New York municipal securities, any risks
inherent in such investments are equally applicable to each Fund and will apply
to the combined fund after the Reorganizations. The Reorganizations themselves
are not expected to adversely affect the rights of shareholders of any of the
Funds or to create additional risks.
MARKET RISK
Market risk is the possibility that the market values of securities owned by
each Fund will decline. The prices of debt securities tend to fall as interest
rates rise, and such declines tend to be greater among debt securities with
longer maturities. Market risk is often greater among certain types of debt
securities, such as zero coupon bonds which do not make regular interest
payments but are instead bought at a discount to their face values and paid in
full upon maturity. As interest rates change, these securities often fluctuate
more in price than securities that make regular interest payments and therefore
subject the Funds to greater market risk than a fund that does not own these
types of securities. When-issued and delayed delivery transactions are subject
to changes in market conditions from the time of the commitment until
settlement. This may adversely affect the prices or yields of the securities
being purchased. The greater the Funds' outstanding commitments for these
securities, the greater the Funds' exposure to market price fluctuations.
INTEREST RATE RISK
Interest rate risk is the risk that prices of municipal securities generally
increase when interest rates decline and decrease when interest rates increase.
Prices of longer-term securities generally change more in response to interest
rate changes than prices of shorter-term securities.
CREDIT RISK
Credit risk is the risk that the issuer will be unable to pay the interest or
principal when due. The degree of credit risk depends on both the financial
condition of the issuer and the terms of the obligation. Each Fund invests
substantially all of its assets in municipal securities that are rated
investment grade by Standard & Poor's ("S&P") or Moody's Investors Service Inc.
("Moody's") (or comparably rated by another nationally recognized statistical
rating organization). Securities rated in the lowest investment grade category
may have certain speculative characteristics.
15
INCOME RISK
The income shareholders receive from their Fund is based primarily on interest
rates, which can vary widely over the short- and long-term. If interest rates
drop, the income from the Funds may drop as well.
CALL RISK
If interest rates fall, it is possible that issuers of securities with high
interest rates will prepay or "call" their securities before their maturity
dates. In this event, the proceeds from the called securities would likely be
reinvested by the Funds in securities bearing the new, lower interest rates,
resulting in a possible decline in the Funds' income and distributions to
shareholders.
MUNICIPAL SECURITIES RISK
Under normal market conditions, the Funds invest primarily in municipal
securities. The yields of municipal securities may move differently and
adversely compared to the yields of overall debt securities markets. Although
the interest received from municipal securities generally is exempt from federal
income tax, each Fund may invest all or a substantial portion of its total
assets in municipal securities that pay interest that is subject to the federal
alternative minimum tax. In addition, there could be changes in applicable tax
laws or tax treatments that reduce or eliminate the current federal income tax
exemption on municipal securities or otherwise adversely affect the current
federal or state tax status of municipal securities.
RISKS OF USING STRATEGIC TRANSACTIONS
Each Fund may engage in certain transactions ("Strategic Transactions")
designed to, among other things, reduce its exposure to interest rate movements.
For example, each Fund may purchase and sell exchange-listed and over-the-
counter put and call options on securities, financial futures and other
financial instruments, purchase and sell financial futures contracts and enter
into various interest rate transactions such as swaps, caps, floors or collars.
If a Fund incorrectly forecasts market values, interest rates or other factors,
that Fund's performance could suffer as a result of its Strategic Transactions.
Each Fund also may suffer a loss if the other party to the Strategic Transaction
fails to meet its obligations. The Funds are not required to use Strategic
Transactions and may choose not to do so.
MANAGER RISK
As with any managed fund, the investment adviser to each Fund may not be
successful in selecting the best-performing securities or investment techniques,
and a Fund's performance may lag behind that of similar funds.
16
MARKET DISCOUNT RISK
Whether investors will realize gains or losses upon the sale of shares of a
Fund will depend upon the market price of the shares at the time of original
purchase and subsequent sale, which may be less or more than such Fund's net
asset value per share. Since the market price of the shares will be affected by
such factors as the relative demand for and supply of the shares in the market,
general market and economic conditions and other factors beyond the control of
the Funds, the Funds cannot predict whether shares of the Funds will trade at,
below or above net asset value. Shares of closed-end funds often trade at a
discount to their net asset values, and the Funds' shares may trade at such a
discount.
In order to reduce or eliminate a market value discount from net asset value,
the Board of Trustees of a Fund may, subject to the terms of its preferred
shares, authorize such Fund from time to time to repurchase its common shares in
the open market or to tender for its common shares at net asset value. The Board
of Trustees of a Fund, in consultation with the Adviser, reviews on a quarterly
basis the possibility of open-market repurchases and/or tender offers for such
Fund's common shares. Subject to its borrowing restrictions, a Fund may incur
debt to finance such repurchases, which entails risks. The ability of a Fund to
enter into tender offers and the common share repurchases may be limited by the
1940 Act asset coverage requirements and any additional asset coverage
requirements which may be imposed by a rating agency in connection with any
rating of the preferred shares. No assurance can be given that the Board of
Trustees of a Fund will, in fact, authorize such Fund to undertake such
repurchases and/or tender offers or that, if undertaken, such actions would
result in such Fund's common shares trading at a price which is equal or close
to net asset value.
LEVERAGE RISK
Use of leverage, through the issuance of preferred shares, involves certain
risks to holders of common shares of the Funds. For example, each Fund's
issuance of preferred shares may result in higher volatility of the net asset
value of its common shares and potentially more volatility in the market value
of its common shares. In addition, changes in the short-term and medium-term
dividend rates on, and the amount of taxable income allocable to, the preferred
shares of a Fund will affect the yield to holders of common shares of such Fund.
In certain circumstances, when a Fund is required to allocate taxable income to
holders of its preferred shares, such Fund may be required to make an additional
distribution to such holders in an amount approximately equal to the tax
liability resulting from the allocation (an "Additional Dividend"). Leverage
will allow holders of each Fund's common shares to realize a higher current rate
of return than if a Fund were not leveraged as long as such Fund, while
accounting for its costs and operating expenses, is able to realize a higher net
return on its investment portfolio than the then-current dividend
17
rate (and any Additional Dividend) paid on its preferred shares. Similarly,
since a pro rata portion of each Fund's net realized capital gains is generally
payable to holders of a Fund's common shares, the use of leverage will increase
the amount of such gains distributed to holders of a Fund's common shares.
However, short-term, medium-term and long-term interest rates change from time
to time as do their relationships to each other (i.e., the slope of the yield
curve) depending upon such factors as supply and demand forces, monetary and tax
policies and investor expectations. Changes in any or all of such factors could
cause the relationship between short-term, medium-term and long-term rates to
change (i.e., to flatten or to invert the slope of the yield curve) so that
short-term and medium-term rates may substantially increase relative to the
long-term obligations in which each Fund may be invested. To the extent that the
current dividend rate (and any Additional Dividend) on a Fund's preferred shares
approaches the net return on such Fund's investment portfolio, the benefit of
leverage to holders of common shares of such Fund will be decreased. If the
current dividend rate (and any Additional Dividend) on the preferred shares were
to exceed the net return on a Fund's portfolio, holders of common shares of such
Fund would receive a lower rate of return than if the Fund were not leveraged.
Similarly, since both the costs of issuing preferred shares and any decline in
the value of a Fund's investments (including investments purchased with the
proceeds from any preferred shares offering) will be borne entirely by holders
of such Fund's common shares, the effect of leverage in a declining market would
result in a greater decrease in net asset value to holders of common shares than
if a Fund were not leveraged. If a Fund is liquidated, holders of that Fund's
preferred shares will be entitled to receive liquidating distributions before
any distribution is made to holders of common shares of such Fund.
In an extreme case, a decline in net asset value could affect a Fund's ability
to pay dividends on its common shares. Failure to make such dividend payments
could adversely affect a Fund's qualification as a regulated investment company
under the federal tax laws. However, each Fund intends to take all measures
necessary to make required common share dividend payments. If a Fund's current
investment income is ever insufficient to meet dividend payments on either its
common shares or its preferred shares, such Fund may have to liquidate certain
of its investments. In addition, each Fund has the authority to redeem its
preferred shares for any reason and may be required to redeem all or part of its
preferred shares in the following circumstances:
- if the asset coverage for the preferred shares declines below 200%, either
as a result of a decline in the value of a Fund's portfolio investments or
as a result of the repurchase of common shares in tender offers or
otherwise, or
- in order to maintain the asset coverage guidelines established by Moody's
and S&P in rating the preferred shares.
18
Redemption of the preferred shares or insufficient investment income to make
dividend payments may reduce the net asset value of a Fund's common shares and
require a Fund to liquidate a portion of its investments at a time when it may
be disadvantageous to do so.
ANTI-TAKEOVER PROVISIONS
The Declaration of Trust of each Fund (in each case, the "Declaration of
Trust") includes provisions that could limit the ability of other entities or
persons to acquire control of that Fund or to change the composition of its
Board of Trustees. Such provisions could limit the ability of common
shareholders to sell their shares at a premium over prevailing market prices by
discouraging a third party from seeking to obtain control of either Fund.
SPECIAL RISKS RELATED TO PREFERRED SHARES
AUCTION RISK. The dividend rate for the preferred shares of each Fund,
including the Acquiring Fund, normally is set through an auction process. These
preferred shares are referred to as "auction preferred shares." In the auction,
preferred shareholders may indicate the dividend rate at which they would be
willing to hold or sell their auction preferred shares or purchase additional
shares. An auction fails if there are more auction preferred shares offered for
sale than there are buyers, in which case preferred shareholders may not be able
to sell their shares. Also, if preferred shareholders place bids to retain
shares at an auction only at a specified dividend rate and that rate exceeds the
rate set at the auction, they will not retain their shares. Additionally, if
preferred shareholders buy auction preferred shares or elect to retain shares
without specifying a dividend rate below which they would not wish to buy or
continue to hold those shares, they could receive a lower rate of return on
their auction preferred shares than the market rate. Finally, the dividend
period for the auction preferred shares may be changed by the Funds, subject to
certain conditions, including notice to preferred shareholders, which could also
affect the liquidity of an investment in those shares.
SECONDARY MARKET RISK. Broker-dealers may maintain a secondary trading market
in the preferred shares outside of auctions; however, they are not obligated to
do so and there can be no assurance that such a secondary market will develop
or, if it does develop, that it will provide preferred shareholders with a
liquid trading market. It may not be possible to sell preferred shares between
auctions, or it may only be possible to sell them for a price less than their
liquidation preference plus any accumulated dividends. An increase in the level
of interest rates likely will have an adverse effect on the secondary market
price of the preferred shares. Auction preferred shares may only be transferred
outside of auctions to or through broker-dealers or other persons as the Funds
permits.
19
RATINGS AND ASSET COVERAGE RISKS. Although the preferred shares of each Fund
have been rated "Aaa" by Moody's and "AAA" by S&P, such ratings do not eliminate
or necessarily mitigate the risks of investing in preferred shares. Moody's or
S&P could downgrade its rating of the preferred shares or withdraw its rating at
any time, which may make the preferred shares less liquid at an auction or in
the secondary market. If a Fund fail to satisfy its asset coverage ratios, it
will be required to redeem a sufficient number of preferred shares in order to
return to compliance with the asset coverage ratios. A Fund may voluntarily
redeem preferred shares under certain circumstances in order to meet asset
coverage tests.
COMPARISON OF THE FUNDS
INVESTMENT OBJECTIVE AND POLICIES
The Funds pursue the same investment objective and have similar investment
policies. Each Fund seeks to provide common shareholders with a high level of
current income exempt from federal income tax consistent with preservation of
capital. Under normal market conditions, each Fund invests at least 80% of its
assets in municipal securities.
Under normal market conditions, each Fund invests substantially all of its
assets in municipal securities rated investment grade at the time of investment.
Investment grade rated securities are rated BBB or higher by S&P or Baa or
higher by Moody's (or comparably rated by any other nationally recognized
statistical rating organization) in the case of long-term obligations, and have
equivalent ratings in the case of short-term obligations. Securities rated BBB
by S&P are regarded by S&P as having an adequate capacity to pay interest and
repay principal. Securities rated Baa by Moody's are considered by Moody's as
medium-grade obligations which lack outstanding investment characteristics and
in fact have speculative characteristics as well.
The foregoing policies with respect to credit quality of portfolio investments
apply only at the time of purchase of a security, and the Funds are not required
to dispose of a security in the event that S&P or Moody's (or any other
nationally recognized statistical rating organization) downgrades its assessment
of the credit characteristics of a particular issuer. In determining whether a
Fund will retain or sell such a security, the Adviser may consider such factors
as the Adviser's assessment of the credit quality of the issuer of such
security, the price at which such security could be sold and the rating, if any,
assigned to such security by other nationally recognized statistical rating
organizations.
Each Fund may invest an unlimited portion of its assets in municipal
securities that pay interest that is subject to the alternative minimum tax
provisions of federal tax law. A substantial portion of the income produced by
each Fund may be taxable
20
under the alternative minimum tax. The Funds may not be suitable investments for
investors who are already subject to the federal alternative minimum tax or who
would become subject to the federal alternative minimum tax as a result of an
investment in the Funds.
Each Fund may engage in certain hedging transactions and may purchase and sell
put and call options on municipal securities and municipal securities indices.
Such transactions are not treated as investments in municipal securities for the
purpose of each Fund's policy of investing 80% of its total assets in municipal
securities.
MUNICIPAL SECURITIES. Municipal securities are obligations issued by or on
behalf of states, certain territories and possessions of the United States and
the District of Columbia and their political subdivisions, agencies and
instrumentalities, the interest on which is, in the opinion of bond counsel or
other counsel to the issuer of such securities, at the time of issuance, not
includable in gross income for regular federal income tax purposes. Under normal
market conditions, at least 80% of each Fund's net assets are invested in
municipal securities.
The two principal classifications of municipal securities are "general
obligation" securities and "revenue" securities. "General obligation" securities
are secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. "Revenue" securities are usually payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source. Industrial development bonds are usually revenue securities, the
credit quality of which is normally directly related to the credit standing of
the industrial user involved.
Within these principal classifications of municipal securities, there are a
variety of categories of municipal securities, including fixed and variable rate
securities, municipal bonds, municipal notes, municipal leases, custodial
receipts, participation certificates and municipal securities the terms of which
include elements of, or are similar in effect to, certain Strategic Transactions
in which the Funds may engage. Variable rate securities bear rates of interest
that are adjusted periodically according to formulae intended to reflect market
rates of interest and include securities whose rates vary inversely with changes
in market rates of interest. Municipal notes include tax, revenue and bond
anticipation notes of short maturity, generally less than three years, which are
issued to obtain temporary funds for various public purposes. Municipal leases
are obligations issued by state and local governments or authorities to finance
the acquisition of equipment and facilities. Certain municipal lease obligations
may include "nonappropriation" clauses which provide that the municipality has
no obligation to make lease or installment purchase payments in future years
unless money is appropriated for such purpose on a yearly basis. Custodial
receipts are underwritten by securities dealers or banks and evidence ownership
of future interest payments, principal payments or both on certain municipal
securities. Participation certificates are obligations issued by state and
21
local governments or authorities to finance the acquisition of equipment and
facilities. They may represent participations in a lease, an installment
purchase contract, or a conditional sales contract. Municipal securities may not
be backed by the faith, credit and taxing power of the issuer.
The Funds do not generally invest 25% or more of their respective total assets
in any one industry. Governmental issuers of municipal securities are not
considered part of any "industry" and are accordingly not subject to this 25%
limitation. However, municipal securities backed only by the assets and revenues
of non-governmental users may for this purpose be deemed to be issued by such
non-governmental users, and the 25% limitation would apply to such obligations.
Each Fund may invest in municipal securities backed by original issue
insurance or secondary market insurance (collectively, "insurance"). The credit
rating assigned by Moody's or S&P (or any other nationally recognized
statistical rating organization) to municipal securities covered by insurance
ordinarily will be based, at least in part, on such insurance. Although the
Adviser periodically reviews the financial condition of insurers, there can be
no assurance that the insurers will be able to honor their obligations in all
circumstances. In the event of a default by an insurer on its obligations with
respect to any municipal securities in a Fund's portfolio, the Fund would look
to the issuer or guarantor of such municipal securities for payments of
principal and interest and such issuer or any guarantor may not be rated
investment grade. Alternatively, the Fund could elect to dispose of such
municipal securities; however, the market prices for such municipal securities
may be lower than the Fund's purchase price for them and the Fund could sustain
a capital loss as a result.
The amount of available information about the financial condition of municipal
securities issuers may be less extensive than that for corporate issuers with
publicly traded securities. Municipal securities in which the Funds may each
invest include special obligation bonds, lease obligations, participation
certificates, variable rate instruments and municipal securities the terms of
which include elements of, or are similar in effect to, certain Strategic
Transactions in which the Funds may engage. Certain of these instruments
represent relatively recent innovations in the municipal securities markets.
While the markets for such recent innovations progress through stages of
development, such markets may be less liquid than more fully developed markets
for municipal securities. Liquidity relates to the ability of a Fund to sell a
security in a timely manner at a price which reflects the value of that
security. Although it is generally the policy of the Funds to hold municipal
securities until their maturity, the relative illiquidity of some of a Fund's
portfolio securities may adversely affect the ability of the Fund to dispose of
such securities in a timely manner and at a fair price.
Each Fund may invest up to 15% of its net assets in "inverse floating rate
obligations." Floating rate obligations bear rates of interest that are adjusted
22
periodically to reflect changes in market rates of interest. Inverse floating
rate obligations have rates that vary inversely with changes in market rates of
interest. These securities have varying degrees of liquidity and the market
value of such securities generally will fluctuate in response to changes in
market rates of interest to a greater extent that the value of an equal
principal amount of a fixed rate security having similar credit quality,
redemption provisions and maturity. These securities tend to underperform the
market for fixed rate bonds in a rising interest rate environment, but tend to
outperform the market for fixed rate bonds when interest rates decline or remain
relatively stable.
TEMPORARY DEFENSIVE STRATEGIES. At times, the Adviser may judge that
conditions in the markets for municipal securities make pursuing a Fund's basic
investment strategy inconsistent with the best interests of its shareholders. At
such times, the Adviser may use alternative strategies, primarily designed to
reduce fluctuations in the value of such Fund's assets. In implementing these
"defensive" strategies, a Fund may invest to a substantial degree in other
investment grade municipal securities, including liquid, high-quality,
short-term municipal securities. If these other municipal securities are not
available or, in the Adviser's judgment, do not afford sufficient protection
against adverse market conditions, each Fund may invest in investment grade
taxable securities. To the extent that a Fund invests in taxable securities for
temporary defensive purposes, that Fund will not be invested in a manner
primarily designed to achieve its investment objective of seeking to provide
common shareholders with a high level of current income exempt from federal
income tax.
OTHER INVESTMENT PRACTICES AND POLICIES
In connection with the investment objective and policies described above, each
Fund may, but is not required to, utilize various other investment strategies as
described below to earn income, to facilitate portfolio management and to
mitigate risk. Such strategies are generally accepted by modern portfolio
managers and are regularly utilized by many investment companies and other
institutional investors. These investment practices entail risks. Although the
Adviser believes that these investment practices may further the Funds'
respective investment objectives, no assurance can be given that these
investment practices will achieve this result.
STRATEGIC TRANSACTIONS. Each Fund may engage in certain Strategic Transactions
to attempt to protect against possible changes in the market value of securities
held in or to be purchased for its portfolio resulting from securities markets
fluctuations, to protect unrealized gains in the value of its portfolio
securities, to facilitate the sale of such securities for investment purposes,
to manage the effective maturity or duration of its portfolio, or to establish a
position in the derivatives markets as a temporary substitute for purchasing or
selling particular securities. Any or all of these investment techniques may be
used at any time and there is no particular
23
strategy that dictates the use of one technique rather than another, as use of
any Strategic Transaction is a function of numerous variables, including market
conditions. The ability of a Fund to utilize these Strategic Transactions
successfully depends on the Adviser's ability to predict pertinent market
movements, which cannot be assured. Each Fund complies with applicable
regulatory requirements when implementing these strategies, techniques and
instruments.
Strategic Transactions have risks associated with them, including possible
default by the other party to the transaction, liquidity and, to the extent the
Adviser's view as to certain market movements is incorrect, the risk that the
use of such Strategic Transactions could result in losses greater than if they
had not been used. Use of put and call options may result in losses to a Fund,
force the sale of portfolio securities at inopportune times or for prices other
than at current market values, limit the amount of appreciation a Fund can
realize on its investments or cause a Fund to hold a security it might otherwise
sell. The use of options and futures transactions entails certain other risks.
In particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
Fund might not be able to close out a transaction without incurring substantial
losses, if at all. Although the contemplated use of these futures contracts and
options thereon should tend to minimize the risk of loss due to a decline in the
value of the hedged position, at the same time they tend to limit any potential
gain which might result from an increase in value of such position. Finally, the
daily variation margin requirements for futures contracts and the sale of
options thereon would create, a greater ongoing potential financial risk than
would purchases of options, where the exposure is limited to the cost of the
initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized. Income earned or gains realized or deemed to
be earned or realized, if any, by a Fund from engaging in Strategic Transactions
generally will be taxable income of the Fund. Such income is allocated among the
common shares and the preferred shares of a Fund on a pro rata basis.
"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS. Each Fund may also purchase
and sell municipal securities on a "when-issued" and "delayed delivery" basis.
No income accrues to a Fund on municipal securities in connection with such
transactions prior to the date such Fund actually takes delivery of such
securities. These transactions are subject to market fluctuation; the value of
the municipal securities at delivery may be more or less than their purchase
price, and yields generally available on municipal securities when delivery
occurs may be higher than
24
yields on the municipal securities obtained pursuant to such transactions.
Because a Fund engaging in such transactions relies on the buyer or seller, as
the case may be, to consummate the transaction, failure by the other party to
complete the transaction may result in such Fund missing the opportunity of
obtaining a price or yield considered to be advantageous. When a Fund is the
buyer in such a transaction, however, it will maintain, in a segregated account
with its custodian, cash or liquid portfolio securities having an aggregate
value equal to the amount of such purchase commitments until payment is made. A
Fund will make commitments to purchase municipal securities on such basis only
with the intention of actually acquiring these securities, but a Fund may sell
such securities prior to the settlement date if such sale is considered to be
advisable. To the extent a Fund engages in "when-issued" and "delayed delivery"
transactions, it will do so for the purpose of acquiring securities for a Fund's
portfolio consistent with a Fund's investment objective and policies and not for
the purpose of investment leverage. No specific limitation exists as to the
percentage of a Fund's assets which may be used to acquire securities on a
"when-issued" or "delayed delivery" basis.
INVESTMENT RESTRICTIONS
Each Fund's investment objective, each Fund's investment policy with respect
to investing at least 80% of its total assets in municipal securities and the
following investment restrictions are fundamental and cannot be changed without
the approval of the holders of a majority of the Fund's outstanding voting
securities (defined in the 1940 Act as the lesser of (i) more than 50% of the
Fund's outstanding common shares and of its outstanding preferred shares, voting
by class, or (ii) 67% of such outstanding common shares and preferred shares,
voting by class, present at a meeting at which the holders of more than 50% of
the outstanding shares of each such class are present in person or by proxy).
All other investment policies or practices are considered by the Funds not to be
fundamental and accordingly may be changed without shareholder approval. If a
percentage restriction on investment or use of assets set forth below is adhered
to at the time a transaction is effected, later changes in percentage resulting
from changing market values will not be considered a deviation from policy. With
respect to the limitations on borrowings, the percentage limitations apply at
the time of purchase and on an ongoing basis.
The Funds may not:
1. With respect to 75% of their total assets, purchase any securities (other
than obligations issued or guaranteed as to principal or interest by the
United States Government or by its agencies or instrumentalities), if as a
result more than 5% of a Fund's total assets would then be invested in
securities of a single issuer or if as a result a Fund would hold more
than 10% of the outstanding voting securities of any issuer, except that
the Funds may
25
purchase securities of other investment companies to the extent permitted
by (i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief from the provisions of
the 1940 Act.
2. Invest more than 25% of their assets in a single industry; however, the
Funds may from time to time invest more than 25% of their assets in one or
more particular segments or sectors of the municipal securities market.
3. Issue senior securities, as defined in the 1940 Act, other than preferred
shares of beneficial interest, except to the extent such issuance might be
involved with borrowings described under subparagraph (4) below or with
respect to Strategic Transactions.
4. Borrow money, except for temporary or emergency purposes from banks or for
repurchase of their shares, and then only in an amount not exceeding one-
third of a Fund's total assets, including the amount borrowed. The Funds
will not mortgage, pledge or hypothecate any assets except in connection
with a borrowing or a Strategic Transaction. The Funds will not purchase
portfolio securities during any period in which such borrowings exceed 5%
of the total asset value of a Fund. Notwithstanding this investment
restriction, the Funds may enter into "when-issued" and "delayed delivery"
transactions.
5. Make loans of money or property to any person, except to the extent the
securities in which the Funds may invest are considered to be loans and
except that the Funds may lend money or property in connection with
maintenance of the value of or a Fund's interest with respect to the
securities owned by such Fund.
6. Buy any securities "on margin." Neither the deposit of initial or
variation margin in connection with Strategic Transactions nor short-term
credits as may be necessary for the clearance of transactions is
considered the purchase of a security on margin.
7. Sell any securities "short," write, purchase or sell puts, calls or
combinations thereof, or purchase or sell futures or options, except in
connection with Strategic Transactions.
8. Act as an underwriter of securities, except to the extent the Funds may be
deemed to be underwriters in connection with the sale of securities held
in their portfolios.
9. Make investments for the purpose of exercising control or participation in
management, except to the extent that exercise by the Funds of their
rights under agreements related to municipal securities would be deemed to
constitute such control or participation and except to the extent
permitted by
26
(i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief from the provisions of
the 1940 Act.
10. Invest in securities of other investment companies except as part of a
merger, consolidation or other acquisition and except to the extent
permitted by (i) the 1940 Act, as amended from time to time, (ii) the
rules and regulations promulgated by the SEC under the 1940 Act, as
amended from time to time, or (iii) an exemption or other relief from the
provisions of the 1940 Act.
11. Invest in equity interests in oil, gas or other mineral exploration or
development programs except pursuant to the exercise by the Funds of their
rights under agreements relating to municipal securities.
12. Purchase or sell real estate, commodities or commodity contracts, except
to the extent the municipal securities in which the Funds may invest are
considered to be interests in real estate and except to the extent that
the Strategic Transactions in which the Funds may invest are considered to
be commodities or commodities contracts.
As a matter of operating policy, each Fund will not invest 25% or more of its
assets in a single industry; however, each Fund may from time to time invest 25%
or more of its assets in a particular segment of the municipal securities
market.
MANAGEMENT OF THE FUNDS
THE BOARDS. The Board of each Fund is responsible for the overall supervision
of the operations of its respective Fund and performs the various duties imposed
on trustees of investment companies by the 1940 Act and under applicable state
law.
THE ADVISER. The investment adviser for each Fund is Van Kampen Asset
Management. The Adviser is a wholly owned subsidiary of Van Kampen Investments
Inc. ("Van Kampen Investments"). Van Kampen Investments is a diversified asset
management company that administers more than three million retail investor
accounts, has extensive capabilities for managing institutional portfolios and
has more than $99 billion under management or supervision as of May 31, 2005.
Van Kampen Investments is an indirect wholly owned subsidiary of Morgan Stanley,
a preeminent global financial services firm that maintains leading market
positions in each of its three primary businesses: securities, asset management
and credit services. 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. The principal business
address of the Adviser and Van Kampen Investments is 1221 Avenue of the
Americas, New York, New York 10020.
27
Pursuant to separate investment advisory agreements between each Fund and the
Adviser, each Fund pays the Adviser a monthly fee at the annual rate of 0.55% of
such Fund's average daily net assets, including assets attributable to its
preferred shares. Effective November 1, 2004, the investment advisory fee paid
by each Fund was reduced from .60% to .55%. Subsequent to the Reorganizations,
the Adviser will continue to receive compensation at the rate of 0.55% of the
average daily net assets, including assets attributable to preferred shares, of
the combined fund. Because the fees paid to the Adviser are calculated on net
assets, including assets attributable to preferred shares, the fees earned by
the Adviser will be higher when preferred shares are outstanding.
Under a separate accounting services and legal services agreement, the Adviser
(or its affiliate) provides accounting and legal services to each Fund. The
Adviser (or its affiliate) allocates the cost of such services to each Fund.
PORTFOLIO MANAGEMENT. Each Fund's portfolio is managed by the Adviser's
Municipal Fixed Income team. The team is made up of established investment
professionals. Current members of the team include Timothy Haney, Vice President
of the Adviser; Robert Wimmel, Vice President of the Adviser; and John R.
Reynoldson, Executive Director of the Adviser.
Mr. Haney has worked for the Adviser since 1998 and began managing the Funds
in . Mr. Wimmel has worked for the Adviser since 1996 and began managing the
Funds in . Mr. Reynoldson has worked for the Adviser since 1987 and began
managing the Funds in . Prior to , Messrs. Wimmel and Reynoldson worked
in an investment management capacity for the Adviser.
Mr. Haney is the lead portfolio manager of each Fund. Mssrs. Wimmel and
Reynoldson are co-portfolio managers of each Fund. All team members are
responsible for the day-to-day management of each Fund and for the execution of
the overall strategy of each Fund.
The Reorganization Statement of Additional Information provides additional
information about the portfolio managers' compensation, other accounts managed
by the portfolio managers and the portfolio managers' ownership of securities in
the Acquiring Fund.
The composition of the team may change without notice from time to time.
PORTFOLIO TRANSACTIONS WITH AFFILIATES. The Adviser may place portfolio
transactions, to the extent permitted by law, with brokerage firms affiliated
with the Funds and the Adviser, if it reasonably believes that the quality of
execution and the commission are comparable to that available from other
qualified firms.
LEGAL PROCEEDINGS INVOLVING THE ADVISER. The Adviser, certain affiliates of
the Adviser, and certain investment companies advised by the Adviser or its
affiliates were named as defendants in a number of similar class action
complaints which
28
were consolidated. The amended complaint also names as defendants certain
individual trustees and directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
trustees of any Van Kampen funds. The complaint generally alleges that
defendants violated their statutory disclosure obligations and fiduciary duties
by failing properly to disclose (i) that the Adviser and certain affiliates of
the Adviser allegedly offered economic incentives to brokers and others to steer
investors to the funds advised by the Adviser or its affiliates rather than
funds managed by other companies, and (ii) that the funds advised by the Adviser
or its affiliates allegedly paid excessive commissions to brokers in return for
their alleged efforts to steer investors to these funds. The complaint seeks,
among other things, unspecified compensatory damages, rescissionary damages,
fees and costs. The defendants' motion to dismiss this action is pending. After
defendants moved to dismiss, the plaintiffs filed a motion for leave to amend
the complaint, which is also pending. The proposed amendment drops all claims
against the named investment companies, which are listed only as nominal
defendants. The proposed amendment raises similar claims against the Adviser and
its affiliates with respect to the investment companies advised by the Adviser
or its affiliates, and, in addition, alleges that affiliates of the Adviser
received undisclosed compensation for steering investors into thirteen
non-affiliated fund families. The defendants intend to continue to defend this
action vigorously. While the defendants believe that they have meritorious
defenses, the ultimate outcome of this matter is not presently determinable at
this early stage of litigation.
The Adviser and certain affiliates of the Adviser are also named as defendants
in a derivative suit which additionally names as defendants individual trustees
of certain Van Kampen funds; the named investment companies are listed as
nominal defendants. The complaint alleges that defendants caused the Van Kampen
funds to pay economic incentives to a proprietary sales force to promote the
sale of Van Kampen funds. The complaint also alleges that the Van Kampen funds
paid excessive commissions to Morgan Stanley and its affiliates in connection
with the sales of the funds. The complaint seeks, among other things, the
removal of the current trustees of the funds, rescission of the management
contracts for the funds, disgorgement of profits by Morgan Stanley and its
affiliates and monetary damages. This complaint has been coordinated with the
action described in the preceding paragraph. The defendants have moved to
dismiss this action and otherwise intend to defend it vigorously. This action is
currently stayed until the later of (i) a ruling on the motion to dismiss the
action described in the preceding paragraph or (ii) a ruling on a motion to
dismiss the action described in the next paragraph. While the defendants believe
that they have meritorious defenses, the ultimate outcome of this matter is not
presently determinable at this early stage of litigation.
The plaintiff in the action described in the preceding paragraph filed a
separate derivative action against the Adviser, certain affiliates of the
Adviser, the individual trustees of certain Van Kampen funds, and certain
unaffiliated entities. The named
29
investment companies are listed as nominal defendants. The complaint alleges
that certain unaffiliated entities engaged in or facilitated market timing and
late trading in the Van Kampen funds, and that the Adviser, certain affiliates
of the Adviser, and the trustees failed to prevent and/or detect such market
timing and late trading. The complaint seeks, among other things, the removal of
the current trustees of the funds, rescission of the management contracts and
distribution plans for the funds, disgorgement of fees and profits from the
Adviser and its affiliates, and monetary damages. The defendants' motion to
dismiss this action is pending. While the defendants believe that they have
meritorious defenses, the ultimate outcome of this matter is not presently
determinable at this early stage of litigation.
The Adviser and the individual trustees of certain Van Kampen funds are named
as defendants in a recently filed class action complaint that alleges the
defendants breached various fiduciary and statutory duties to investors by
failing to ensure that the funds participated in securities class action
settlements involving securities held in the funds' portfolios. The complaint
seeks, among other things, compensatory and punitive damages. None of the funds
are named as defendants, and no claims are asserted against them. Each of the
defendants has moved or will move to dismiss the complaint and believes that
they have meritorious defenses.
The Adviser, one of the investment companies advised by the Adviser, and
certain officers and directors of the investment company are defendants in a
class action filed in 2001 alleging that the defendants issued a series of
prospectuses and registration statements that were materially false and
misleading. Among other things, the complaint alleges that the prospectuses and
registration statements contained misleading descriptions of the method
defendants used to value senior loan interests in the fund's portfolio, and that
defendants materially overstated the net asset value of the fund. The parties
recently reached an agreement to settle the case. The court preliminarily
approved the settlement agreement in June 2005, subject to a later hearing on
the fairness of the settlement agreement.
OTHER SERVICE PROVIDERS
State Street Bank and Trust Company, 225 West Franklin Street, Boston,
Massachusetts 02110, is the custodian for each of the Funds. EquiServe Trust
Company, N.A., 250 Royall Street, Canton, Massachusetts 02021, is the transfer
agent and dividend disbursing agent for the common shares of each Fund. Deutsche
Bank Trust Company Americas ("Deutsche Bank"), 280 Park Avenue, New York, New
York 10017, is the auction agent and dividend paying agent for the preferred
shares of each Fund.
30
CAPITALIZATION
The Board of Trustees of each Fund may authorize separate classes of shares
together with such designation of preferences, rights, voting powers,
restrictions, limitations, qualifications or terms as may be determined from
time to time by the trustees. The following table sets forth the capitalization
of the Target Funds and the Acquiring Fund as of January 31, 2005, and the pro
forma capitalization of the combined fund as if the Reorganizations had occurred
on that date.
CAPITALIZATION AS OF JANUARY 31, 2005 (UNAUDITED)
ACTUAL PRO FORMA
------------------------------------- ----------------
VAN KAMPEN VAN KAMPEN VAN KAMPEN
VAN KAMPEN VALUE ADVANTAGE ADVANTAGE
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
OPPORTUNITY INCOME INCOME INCOME
TRUST II TRUST TRUST II TRUST II
----------- ---------- ---------- ----------
NET ASSETS CONSIST OF
(AMOUNTS IN THOUSANDS):
Common Shares
($.01 par value)*....... $ 117 $ 236 $ 82 $ 450
Paid in surplus........... 158,834 331,229 108,295 597,841
Net unrealized
appreciation............ 20,694 43,988 13,241 77,923
Accumulated undistributed
net investment income... 848 1,625 916 3,389
Accumulated net realized
gain (loss)............. (745) (2,754) 694 (2,805)
NET ASSETS APPLICABLE TO
COMMON SHARES........... 179,748 374,324 123,228 676,798**
PREFERRED SHARES ($.01 par
value, with liquidation
preference of $25,000,
$25,000, $25,000 and
$25,000,
respectively)*.......... 115,000 225,000 80,000 420,000
NET ASSETS INCLUDING
PREFERRED SHARES........ 294,748 599,324 203,228 1,096,798
Net Asset Value per Common
Share..................... 15.39 15.89 15.07 15.05
---------------
* Based on the number of outstanding shares listed in "Outstanding Securities
of the Funds" table below.
** Reflects a non-recurring cost associated with the Reorganizations of
approximately $502,000, with $205,820 to be borne by common shareholders of
Municipal Opportunity Trust II, $105,420 to be borne by common shareholders
31
of Value Municipal Income Trust and $190,760 to be borne by common
shareholders of the Acquiring Fund, assuming each of these Reorganizations is
approved and completed.
OUTSTANDING SECURITIES OF THE FUNDS
AS OF JANUARY 31, 2005
AMOUNT
OUTSTANDING
AMOUNT HELD EXCLUSIVE OF
BY FUND FOR AMOUNT SHOWN
AMOUNT ITS OWN IN PREVIOUS
TITLE OF CLASS AUTHORIZED ACCOUNT COLUMN
-------------- ---------- ----------- ------------
VAN KAMPEN MUNICIPAL OPPORTUNITY
TRUST II
Common Shares.................... Unlimited 0 11,681,272
Preferred Shares................. 100,000,000 0 4,600
VAN KAMPEN VALUE MUNICIPAL INCOME
TRUST
Common Shares.................... Unlimited 0 23,555,115
Preferred Shares................. 100,000,000 0 9,000
VAN KAMPEN ADVANTAGE MUNICIPAL
INCOME TRUST II
Common Shares.................... Unlimited 0 8,175,881
Preferred Shares................. 100,000,000 0 3,200
ADDITIONAL INFORMATION ABOUT COMMON SHARES OF THE FUNDS
GENERAL. Common shareholders of a Fund are entitled to share equally in
dividends declared by the Fund's Board of Trustees payable to holders of the
common shares and in the net assets of the Fund available for distribution to
holders of the common shares after payment of the preferential amounts payable
to preferred shareholders. Common shareholders do not have preemptive or
conversion rights and a Fund's common shares are not redeemable. The outstanding
common shares of each Fund are fully paid and nonassessable (except as described
under "Governing Law" below). So long as any preferred shares of a Fund are
outstanding, holders of the Fund's common shares will not be entitled to receive
any dividends or other distributions from the Fund unless all accumulated
dividends on the Fund's outstanding preferred shares have been paid, and unless
asset coverage (as defined in the 1940 Act) with respect to such preferred
shares would be at least 200% after giving effect to such distributions.
PURCHASE AND SALE. Purchase and sale procedures for the common shares of each
of the Funds are identical. Investors typically purchase and sell common shares
of
32
the Funds through a registered broker-dealer on the NYSE, AMEX or CHX, as the
case may be, thereby incurring a brokerage commission set by the broker-dealer.
Alternatively, investors may purchase or sell common shares of the Funds through
privately negotiated transactions with existing shareholders.
COMMON SHARE PRICE DATA. The following table sets forth the high and low sales
prices for common shares of each Fund on the NYSE or AMEX, as the case may be,
for each full quarterly period within each Fund's two most recent fiscal years
and for each full fiscal quarter of the current fiscal year, along with the net
asset value and discount or premium to net asset value for each quotation.
MUNICIPAL OPPORTUNITY TRUST II
HIGH NET ASSET PREMIUM LOW NET ASSET PREMIUM
QUARTERLY PERIOD ENDING PRICE VALUE (DISCOUNT) PRICE VALUE (DISCOUNT)
----------------------- ----- --------- ---------- ----- --------- ----------
April 30, 2005.......... $14.09 $15.41 -8.57% $12.79 $14.90 -14.16%
January 31, 2005........ $14.22 $15.15 -6.14% $13.52 $14.88 -9.14%
October 31, 2004........ $14.35 $15.23 -5.78% $13.64 $14.88 -8.33%
July 31, 2004........... $13.70 $14.74 -7.06% $12.43 $14.51 -14.33%
April 30, 2004.......... $15.16 $15.54 -2.45% $12.92 $14.79 -12.64%
January 31, 2004........ $14.73 $15.44 -4.60% $14.07 $14.97 -6.01%
October 31, 2003........ $14.35 $15.01 -4.40% $13.35 $14.51 -7.99%
July 31, 2003........... $15.30 $15.84 -3.41% $13.79 $14.57 -5.35%
April 30, 2003.......... $14.35 $15.41 -6.88% $13.90 $15.07 -7.76%
January 31, 2003........ $14.11 $15.03 -6.12% $13.70 $14.95 -8.36%
VALUE MUNICIPAL INCOME TRUST
HIGH NET ASSET PREMIUM LOW NET ASSET PREMIUM
QUARTERLY PERIOD ENDING PRICE VALUE (DISCOUNT) PRICE VALUE (DISCOUNT)
----------------------- ----- --------- ---------- ----- --------- ----------
April 30, 2005.......... $14.33 $15.91 -9.93% $13.03 $15.39 -15.33%
January 31, 2005........ $14.43 $15.61 -7.56% $12.68 $15.53 -18.35%
October 31, 2004........ $14.80 $15.57 -4.95% $14.02 $15.28 -8.25%
July 31, 2004........... $14.00 $15.25 -8.20% $12.87 $14.98 -14.09%
April 30, 2004.......... $15.55 $16.12 -3.54% $13.25 $15.19 -12.77%
January 31, 2004........ $15.53 $15.82 -1.83% $14.54 $15.70 -7.39%
October 31, 2003........ $14.71 $15.74 -6.54% $14.00 $15.13 -7.47%
July 31, 2003........... $15.59 $16.36 -4.71% $14.30 $15.30 -6.54%
April 30, 2003.......... $14.85 $15.86 -6.37% $14.14 $15.59 -9.30%
January 31, 2003........ $14.57 $15.82 -7.90% $13.91 $15.50 -10.26%
33
ACQUIRING FUND
HIGH NET ASSET PREMIUM LOW NET ASSET PREMIUM
QUARTERLY PERIOD ENDING PRICE VALUE (DISCOUNT) PRICE VALUE (DISCOUNT)
----------------------- ----- --------- ---------- ----- --------- ----------
April 30, 2005........ $14.46 $15.26 -5.24% $13.30 $14.79 -10.07%
January 31, 2005...... $14.65 $14.83 -1.21% $13.37 $14.78 -9.54%
October 31, 2004...... $14.79 $14.75 0.27% $13.95 $14.56 -4.19%
July 31, 2004......... $14.20 $14.46 -1.80% $12.51 $14.21 -11.96%
April 30, 2004........ $15.65 $15.39 1.69% $13.12 $14.53 -9.70%
January 31, 2004...... $15.75 $15.16 3.89% $13.98 $14.68 -4.77%
October 31, 2003...... $14.13 $14.54 -2.82% $13.44 $14.26 -5.75%
July 31, 2003......... $15.46 $15.53 -0.45% $13.47 $14.40 -6.46%
April 30, 2003........ $14.81 $15.17 -2.37% $14.40 $14.68 -1.91%
January 31, 2003...... $14.70 $14.79 -0.61% $14.05 $14.87 -5.51%
As of July 29, 2005, (i) the net asset value per share for common shares of
Municipal Opportunity Trust II was $[ ] and the market price per share
was $[ ], representing a [premium/discount] to net asset value of
[ ]%, (ii) the net asset value per share for common shares of Value Municipal
Income Trust was $[ ] and the market price per share was $[ ],
representing a [premium/discount] to net asset value of [ ]%, and (iii) the
net asset value per share for Acquiring Fund Common Shares was $[ ] and
the market price per share was $[ ], representing a [premium/discount]
to net asset value of [ ]%.
Common shares of the Target Funds have historically traded at a discount to
net asset value while common shares of the Acquiring Fund have historically
traded at both a premium and a discount to net asset value. In order to reduce
or eliminate a market value discount from net asset value, the Board of Trustees
of each Fund may, subject to the terms and conditions of its preferred shares,
authorize that Fund from time to time to repurchase the common shares in the
open market or to tender for the common shares at net asset value. The Board of
Trustees of each Fund, in consultation with the Adviser, will review on a
quarterly basis the possibility of open market repurchases and/or tender offers
for the common shares. Subject to its borrowing restrictions, each Fund may
incur debt to finance such repurchases, which entails risks. The ability of a
Fund to enter into tender offers and the common share repurchases may be limited
by the 1940 Act asset coverage requirements and any additional asset coverage
requirements which may be imposed by a rating agency in connection with any
rating of the preferred shares. No assurance can be given that the Board of
Trustees of any Fund will, in fact, authorize that Fund to undertake such
repurchases and/or tender offers or that, if undertaken, such actions would
result in the common shares trading at a price which is equal or close to net
asset value.
34
DIVIDENDS AND DISTRIBUTIONS. The Funds' current policies with respect to
dividends and distributions relating to their common shares are similar. It is
each Fund's present policy, which may be changed by its Board of Trustees, to
make monthly distributions to holders of its common shares of substantially all
of a Fund's net investment income remaining after the payment of dividends on
any outstanding preferred shares. Net income of each Fund consists of all
interest income accrued on portfolio assets less all expenses of such Fund. Each
Fund, including the Acquiring Fund, is required to allocate net capital gains
and other taxable income, if any, received by the Fund among its common shares
and preferred shares on a pro rata basis in the year for which such capital
gains and other income is realized.
Expenses of each Fund are accrued each day. Net realized capital gains, if
any, are expected to be distributed to shareholders at least once a year. While
there are any preferred shares of a Fund outstanding, such Fund may not declare
any cash dividend or other distribution on their common shares, unless at the
time of such declaration, (1) all accrued preferred share dividends have been
paid and (2) the value of such Fund's total assets (determined after deducting
the amount of such dividend or other distribution), less all liabilities and
indebtedness of such Fund, is at least 200% (as required by the 1940 Act) of the
liquidation value of the outstanding preferred shares (expected to equal the
aggregate original purchase price of the outstanding preferred shares plus any
accrued and unpaid dividends thereon, whether or not earned or declared an on a
cumulative basis). In addition to the requirements of the 1940 Act, each Fund
may be required to comply with other asset coverage requirements as a condition
of a Fund obtaining a rating of its preferred shares from a nationally
recognized rating service. These requirements may include an asset coverage test
more stringent than under the 1940 Act. This limitation on a Fund's ability to
make distributions on its common shares could in certain circumstances impair
the ability of a Fund to maintain its qualification for taxation as a regulated
investment company. Each Fund intends, however, to the extent possible, to
purchase or redeem preferred shares from time to time to maintain compliance
with such asset coverage requirements and may pay special dividends to the
holders of the preferred shares in certain circumstances in connection with any
such impairment of such Fund's status as a regulated investment company.
For information concerning the manner in which dividends and distributions to
holders of a Fund's common shares may be reinvested automatically in such Fund's
common shares, see "-- Dividend Reinvestment Plan" below.
DIVIDEND REINVESTMENT PLAN. Each Fund offers a Dividend Reinvestment Plan
(each a "Plan" and collectively the "Plans") pursuant to which holders of common
shares may elect to have all distributions of dividends and all capital gains
automatically reinvested in common shares pursuant to such Plan. Unless common
shareholders elect to participate in a Plan, all common shareholders receive
35
distributions of dividends and capital gains in cash. The Plans for the Target
Funds and the Acquiring Fund are similar. EquiServe Trust Company, N.A., as plan
agent (the "Plan Agent"), serves as agent for the holders of common shares of
each Fund in administering the Plans.
After the Reorganizations, a holder of shares of a Fund who currently elects
to receive dividends in cash will continue to receive dividends in cash; all
holders who currently elect to participate in the Plan of a Fund will have their
dividends automatically reinvested in shares of the combined fund. All
correspondence concerning the Plan should be directed to the Plan Agent at P.O.
Box 43011, Providence, Rhode Island 02940-3011. Telephone calls concerning the
Plan may be directed to the Plan Agent between the hours of 7:30 a.m. and 5:00
p.m. Central Standard Time at (800) 341-2929.
ADDITIONAL INFORMATION ABOUT PREFERRED SHARES OF THE FUNDS
GENERAL. The preferred shares of each Fund are labeled "auction preferred
shares" ("APS"). APS are preferred shares of beneficial interest which entitle
their holders to receive dividends when, as and if declared by the Board of
Trustees of a Fund, out of funds legally available therefore, at a rate per
annum that may vary for the successive dividend periods. The liquidation
preference of each Fund's APS is $25,000 per share. APS are not traded on a
stock exchange or over-the-counter. Holders of a Fund's preferred shares do not
have preemptive rights to purchase any shares of the same series or any other
preferred shares that might be issued. The net asset value per share of a Fund's
preferred shares equals its liquidation preference plus accumulated but unpaid
dividends per share.
SERIES. Under the 1940 Act, each Fund is permitted to have outstanding more
than one series of preferred shares as long as no single series has priority
over another series as to the distribution of assets of the Fund or the payment
of dividends. Municipal Opportunity Trust II currently has three series of
preferred shares outstanding, Value Municipal Income Trust currently has five
series of preferred shares outstanding and the Acquiring Fund currently has two
series of preferred shares outstanding. If the Reorganizations are approved and
completed, the combined fund will have 10 series of preferred shares. The
existing series of Acquiring Fund APS will remain Series A and Series B, and the
Acquiring Fund will issue Series C, Series D and Series E APS in exchange for
the three existing series of preferred shares of Municipal Opportunity Trust II,
and Series F, Series G, Series H, Series I and Series J APS in exchange for the
five existing series of preferred shares of Value Municipal Income Trust. The
aggregate liquidation preference of each new series will equal the aggregate
liquidation preference of the existing shares that the respective new series
replaces. For each series, the number of days in the regular dividend period,
the number of shares and the liquidation preference per share will be the same
as the existing series.
36
PURCHASE AND SALE. Each Fund's APS are purchased and sold at separate auctions
conducted on a regular basis (unless a Fund elects, subject to certain
limitations, to declare a special dividend period) by Deutsche Bank, as the
auction agent for each Fund's APS (the "Auction Agent"). Unless otherwise
permitted by the Funds, existing and potential holders of APS only may
participate in auctions through their broker-dealers. Broker-dealers submit the
orders of their respective customers who are existing and potential holders of
APS to the Auction Agent. On or prior to each auction date for the APS (the
business day next preceding the first day of each dividend period), each holder
may submit orders to buy, sell or hold APS to its broker-dealer. Outside of
these auctions, shares of APS may be purchased or sold through broker-dealers
for the APS in a secondary trading market maintained by the broker-dealers.
However, there can be no assurance that a secondary market will develop or, if
it does develop, that it will provide holders with a liquid trading market.
DIVIDENDS AND DISTRIBUTIONS. The holders of each Fund's preferred shares are
entitled to receive, when, as and if declared by the Board of Trustees of the
Fund, out of funds legally available therefor, cumulative cash dividends on
their shares. Dividends on each Fund's preferred shares so declared and payable
shall be paid in preference to and in priority over any dividends so declared
and payable on the Fund's common shares.
Prior to each dividend payment date, the Funds are required to deposit with
the Auction Agent sufficient funds for the payment of such declared dividends.
The Funds do not intend to establish any reserves for the payment of dividends,
and no interest will be payable in respect of any dividend payment or payment on
a Fund's preferred shares which may be in arrears.
Each Fund, including the Acquiring Fund, is required to allocate net capital
gains and other taxable income, if any, proportionately among its common shares
and preferred shares. The amount of taxable income allocated to the APS depends
upon the amount of such income realized by a Fund, but is generally not expected
to be significant.
In normal circumstances, whenever a Fund intends to include any net capital
gains or other taxable income in any dividend on APS, the Fund will notify the
Auction Agent of the amount to be so included prior to the auction establishing
the applicable rate for such dividend. The Auction Agent will in turn notify
each broker-dealer who will notify existing and potential holders of the APS. As
a result, auction participants may, in response to such information, place bids
which take account of the inclusion of net capital gains or other taxable income
in the dividend. If a Fund retroactively allocates any net capital gains or
other taxable income to the APS without having given notice to the Auction
Agent, the Fund will pay an Additional Dividend to offset substantially the tax
effect thereof.
37
DIVIDEND RATES. The following table provides information about the dividend
rates for each Fund's preferred shares as of a recent auction date:
AUCTION DATE FUND RATE
------------ ---- ----
, 2005 Municipal Opportunity Trust II............. %
, 2005 Value Municipal Income Trust............... %
, 2005 Acquiring Fund............................. %
The dividend rates in effect at the closing of the Reorganizations will be the
rates determined in the or auction most recently preceding such closing.
RATINGS. The Funds' preferred shares have all been assigned a rating of "AAA"
from S&P and "Aaa" from Moody's. Each Fund intends that, so long as its
preferred shares are outstanding, the composition of its portfolio will reflect
guidelines established by S&P and Moody's in connection with each Fund's receipt
of a rating for such shares of at least "AAA" from S&P and "Aaa" from Moody's.
S&P and Moody's, which are nationally recognized statistical rating
organizations, issue ratings for various securities reflecting the perceived
creditworthiness of such securities. The guidelines for rating such preferred
shares have been developed by S&P and Moody's in connection with issuances of
asset-backed and similar securities, including debt obligations and variable
rate preferred stock, generally on a case-by-case basis through discussions with
the issuers of these securities. The guidelines are designed to ensure that
assets underlying outstanding debt or preferred stock will be varied
sufficiently and will be of sufficient quality and amount to justify investment
grade ratings. The guidelines do not have the force of law but have been adopted
by each Fund in order to satisfy current requirements necessary for S&P and
Moody's to issue the above-described ratings for the preferred shares, which
ratings generally are relied upon by institutional investors in purchasing such
securities. The guidelines provide a set of tests for portfolio composition and
asset coverage that supplement (and in some cases are more restrictive than) the
applicable requirements under the 1940 Act.
Each Fund may, but is not required to, adopt any modifications to these
guidelines that hereafter may be established by S&P or Moody's. Failure to adopt
any such modifications, however, may result in a change in the ratings described
above or a withdrawal of the ratings altogether. In addition, any rating agency
providing a rating for a Fund's preferred shares, at any time, may change or
withdraw any such rating. As set forth in the Certificate of Vote of Trustees
Establishing Preferred Shares of each Fund (each a "Certificate of Vote"), the
Board of Trustees of each Fund, without shareholder approval, may modify certain
definitions or restrictions that have been adopted by the Fund pursuant to the
rating agency guidelines, provided the Board of Trustees has obtained written
confirmation from S&P and Moody's that any such change would not impair the
ratings then assigned by S&P and Moody's to the preferred shares. For so long as
any of its
38
preferred shares are rated by S&P or Moody's, as the case may be, a Fund's use
of options and financial futures contracts and options thereon will be subject
to certain limitations mandated by the rating agencies.
REDEMPTIONS. The redemption provisions pertaining to the preferred shares of
each Fund are similar. Preferred shares of each Fund are generally redeemable at
the option of the Fund at a price equal to their liquidation preference of
$25,000 per share plus accumulated but unpaid dividends (whether or not earned
or declared) to the date of redemption plus, in certain circumstances, a
redemption premium. Preferred shares of each Fund are also subject to mandatory
redemption at a price equal to their liquidation preference plus accumulated but
unpaid dividends (whether or not earned or declared) to the date of redemption
upon the occurrence of certain specified events, such as the failure of a Fund
to maintain asset coverage requirements for its preferred shares specified by
Moody's and S&P in connection with their issuance of ratings on the preferred
shares.
LIQUIDATION RIGHTS. Upon any liquidation, dissolution or winding up of any of
the Funds, whether voluntary or involuntary, the holders of such Fund's
preferred shares will be entitled to receive, out of the assets of the Fund
available for distribution to shareholders, before any distribution or payment
is made upon any of the Fund's common shares or any other capital shares of the
Fund ranking junior in right of payment upon liquidation to preferred shares,
$25,000 per share together with the amount of any dividends accumulated but
unpaid (whether or not earned or declared) thereon to the date of distribution,
and after such payment the preferred shareholders will be entitled to no other
payments except for any Additional Dividends. If such assets of the Fund are
insufficient to make the full liquidation payment on the preferred shares and
liquidation payments on any other outstanding class or series of preferred
shares of the Fund ranking on a parity with the preferred shares as to payment
upon liquidation, then such assets will be distributed among the preferred
shareholders and the holders of shares of such other class or series ratably in
proportion to the respective preferential amounts to which they are entitled.
After payment of the full amount of liquidation distribution to which they are
entitled, the holders of a Fund's preferred shares will not be entitled to any
further participation in any distribution of assets by the Fund except for any
Additional Dividends. A consolidation, merger or share exchange of a Fund with
or into any other entity or entities or a sale, whether for cash, shares of
stock, securities or properties, of all or substantially all or any part of the
assets of the Fund shall not be deemed or construed to be a liquidation,
dissolution or winding up of the Fund for this purpose.
39
ADDITIONAL INFORMATION. For additional information on Acquiring Fund APS,
Target Fund shareholders should consult the Reorganization Statement of
Additional Information, which contains a more complete summary of the terms of
the Acquiring Fund APS, and the Certificate of Vote governing the Acquiring Fund
APS, included as Appendix B to the Reorganization Statement of Additional
Information. APS issued in connection with the Reorganizations will be governed
by the Certificate of Vote of the Acquiring Fund, which, upon completion of the
Reorganizations, will be amended to reflect the creation of new series and the
issuance of additional APS. As a result of the Reorganizations, the last
dividend periods for the Target Funds' preferred shares prior to the Closing
Date and the initial dividend periods for the Acquiring Fund APS issued in
connection with the Reorganizations after the Closing Date may be shorter than
the regular dividend periods for such shares.
GOVERNING LAW
Each Fund is organized as a business trust under the laws of The Commonwealth
of Massachusetts. Municipal Opportunity Trust II was organized on April 8, 1993
and commenced investment operations on June 25, 1993; Value Municipal Income
Trust was organized on December 21, 1992 and commenced investment operations on
March 26, 1993; and the Acquiring Fund was organized on June 28, 1993 and
commenced investment operations on August 27, 1993.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Declaration of Trust of each Fund contains an express disclaimer of
shareholder liability in connection with Fund property or for acts, obligations
or affairs of the Fund and provides for indemnification and reimbursement of
expenses out of the Fund's property for any shareholder held personally liable
for the obligations of that Fund. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Fund itself would be unable to meet its obligations. Given the
nature of each Fund's assets and operations, the possibility of a Fund being
unable to meet its obligations is remote and, in the opinion of counsel to the
Funds, the risk to the Funds' respective shareholders is remote.
Each Fund is also subject to federal securities laws, including the 1940 Act
and the rules and regulations promulgated by the SEC thereunder, and applicable
state securities laws. Each Fund is registered as a diversified, closed-end
management investment company under the 1940 Act.
CERTAIN PROVISIONS OF THE DECLARATIONS OF TRUST
Each Fund's Declaration of Trust includes provisions that could have the
effect of limiting the ability of other entities or persons to acquire control
of the Fund or to
40
change the composition of its Board of Trustees, and could have the effect of
depriving common shareholders of an opportunity to sell their common shares at a
premium over prevailing market prices by discouraging a third party from seeking
to obtain control of the Fund. The Board of Trustees of each Fund is divided
into three classes, with the term of one class expiring at the annual meeting of
shareholders. At each annual meeting, each class whose term is expiring will be
elected to a three-year term. This provision could delay for up to two years the
replacement of a majority of the Board of Trustees. A trustee may be removed
from office only for cause by a written instrument signed by at least two-thirds
of the remaining trustees or by a vote of the holders of at least two-thirds of
the class of shares of the Fund that elected such trustee and entitled to vote
on the matter.
In addition, each Fund's Declaration of Trust requires the favorable vote of
the holders of at least 75% of the outstanding shares of each class of the Fund,
voting as a class, then entitled to vote to approve, adopt or authorize certain
transactions with 5%-or-greater holders of a class of shares and their
associates, unless the Board of Trustees shall by resolution have approved a
memorandum of understanding with such holders, in which case normal voting
requirements would be in effect. For purposes of these provisions, a
5%-or-greater holder of a class of shares (a "Principal Shareholder") refers to
any person who, whether directly or indirectly and whether alone or together
with its affiliates and associates, beneficially owns 5% or more of the
outstanding shares of any class of beneficial interest of the Fund. The
transactions subject to these special approval requirements are: (i) the merger
or consolidation of the Fund or any subsidiary of the Fund with or into any
Principal Shareholder; (ii) the issuance of any securities of the Fund to any
Principal Shareholder for cash (except pursuant to the Dividend Reinvestment
Plan); (iii) the sale, lease or exchange of all or any substantial part of the
assets of the Fund to any Principal Shareholder (except assets having an
aggregate fair market value of less than $1,000,000, aggregating for the purpose
of such computation all assets sold, leased or exchanged in any series of
similar transactions within a twelve-month period); or (iv) the sale, lease or
exchange to the Fund or any subsidiary thereof, in exchange for securities of
the Fund, of any assets of any Principal Shareholder (except assets having an
aggregate fair market value of less than $1,000,000, aggregating for purposes of
such computation all assets sold, leased or exchanged in any series of similar
transactions within a twelve-month period).
The Board of Trustees of each Fund has determined that the 75% voting
requirements described above, which are greater than the minimum requirements
under Massachusetts law or the 1940 Act, are in the best interest of
shareholders of each respective Fund generally. Reference should be made to the
Declaration of Trust of each Fund on file with the SEC for the full text of
these provisions.
The Declaration of Trust of each Fund further provides that no trustee,
officer, employee or agent of the Fund is liable to the Fund or to any
shareholder, nor is any
41
trustee, officer, employee or agent liable to any third persons in connection
with the affairs of the Fund, except as such liability may arise from his or her
own bad faith, willful misfeasance, gross negligence, or reckless disregard of
their duties. It also provides that all third persons shall look solely to the
Fund property for satisfaction of claims arising in connection with the affairs
of the Fund. With the exceptions stated, the Declaration of Trust provides that
a trustee, officer, employee or agent is entitled to be indemnified against all
liability in connection with the affairs of the Fund.
CONVERSION TO OPEN-END FUND
Each Fund may be converted to an open-end investment company at any time by an
amendment to its Declaration of Trust. Each Fund's Declaration of Trust provides
that such an amendment would require the approval of (a) a majority of the
trustees, including the approval by a majority of the disinterested trustees of
the Fund, and (b) the lesser of (i) more than 50% of the Fund's outstanding
common and preferred shares, each voting as a class or (ii) 67% of the common
and preferred shares, each voting as a class, present at a meeting at which
holders of more than 50% of the outstanding shares of each such class are
present in person or by proxy. If approved in the foregoing manner, conversion
of the Fund could not occur until 90 days after the shareholders' meeting at
which such conversion was approved and would also require at least 30 days prior
notice to all shareholders. Conversion of a Fund to an open-end investment
company would require the redemption of all outstanding preferred shares, which
would eliminate the leveraged capital structure of the Fund. In the event of
conversion, the common shares would cease to be listed on the NYSE, AMEX, CHX,
NASDAQ National Market System or other national securities exchange or national
market system. Shareholders of an open-end investment company may require the
company to redeem their shares at any time (except in certain circumstances as
authorized by or under the 1940 Act) at their net asset value, less such
redemption charge, if any, as might be in effect at the time of a redemption. If
a Fund were converted to an open-end fund, it is likely that new common shares
would be sold at net asset value plus a sales load. Following any such
conversion, it is also possible that certain of the Fund's investment policies
and strategies would have to be modified to assure sufficient portfolio
liquidity. In particular, the Fund would be required to maintain its portfolio
such that not more than 15% of its assets would be invested in illiquid
securities. Such requirement could cause the Fund to dispose of portfolio
securities or other assets at a time when it is not advantageous to do so, and
could adversely affect the ability of the Fund to meet its investment objective.
VOTING RIGHTS
Voting rights are identical for the holders of each Fund's common shares.
Common shareholders of each Fund are entitled to one vote for each share held.
42
Except as set forth above under "Certain Provisions of the Declarations of
Trust" or "Conversion to Open-End Fund," or except as expressly required by
applicable law or expressly set forth in the designation of rights and
preferences with respect to a Fund's preferred shares, preferred shareholders
have no voting rights. When preferred shareholders are entitled to vote, they
are also entitled to cast one vote per share held.
Preferred shareholders of a Fund, voting as a class, are entitled to elect two
of the Fund's trustees. Under the 1940 Act, if at any time dividends on a Fund's
preferred shares are unpaid in an amount equal to two full years dividends
thereon, the holders of all outstanding preferred shares, voting as a class, are
entitled to elect a majority of the Fund's trustees until all dividends have
been paid or declared and set apart for payment. The affirmative vote of a
majority of the preferred shareholders of a Fund, voting as a class, is required
to amend, alter or repeal any of the preferences, rights or powers of preferred
shareholders so as to materially and adversely affect such preferences, rights
or powers, or increase or decrease the number of preferred shares authorized to
be issued.
43
FINANCIAL HIGHLIGHTS
MUNICIPAL OPPORTUNITY TRUST II. The following schedule presents financial
highlights for one common share of the Fund outstanding throughout the periods
indicated.
YEAR ENDED OCTOBER 31,
2004 2003 2002(A) 2001 2000 1999 1998
---- ---- ------- ---- ---- ---- ----
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 15.02 $ 15.01 $ 14.91 $ 13.77 $ 13.28 $ 15.08 $ 14.51
------- ------- ------- ------- -------- -------- --------
Net Investment Income............. 1.03 1.08 1.09 1.10 1.13 1.12 1.12
Net Realized and Unrealized
Gain/Loss....................... .19 .02 .06 1.11 .54 (1.82) .57
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income........... (.10) (.10) (.13) (.31) (.40) (.32) (.34)
------- ------- ------- ------- -------- -------- --------
Total from Investment Operations... 1.12 1.00 1.02 1.90 1.27 (1.02) 1.35
Distributions Paid to Common
Shareholders:
Net Investment Income........... (.97) (.99) (.92) (.76) (.78) (.78) (.78)
------- ------- ------- ------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 15.17 $ 15.02 $ 15.01 $ 14.91 $ 13.77 $ 13.28 $ 15.08
======= ======= ======= ======= ======== ======== ========
Common Share Market Price at End of
the Period........................ $ 14.07 $ 14.20 $ 13.80 $ 13.36 $11.8125 $11.5625 $14.0625
Total Return(b).................... 6.12% 10.27% 10.36% 20.07% 9.19% -12.84% 17.23%
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 177.2 $ 175.4 $ 175.3 $ 174.2 $ 160.8 $ 155.1 $ 176.1
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.42% 1.44% 1.55% 1.76% 1.85% 1.79% 1.79%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 6.87% 7.11% 7.44% 7.66% 8.44% 7.68% 7.54%
Portfolio Turnover................. 21% 35% 44% 45% 22% 25% 13%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... .86% .87% .93% 1.04% 1.06% 1.06% 1.08%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 6.19% 6.46% 6.54% 5.48% 5.48% 5.50% 5.20%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 4,600 4,600 4,600 4,600 4,600 4,600 2,300
Asset Coverage Per Preferred
Share(e).......................... $63,528 $63,132 $63,114 $62,863 $ 59,963 $ 58,717 $126,569
Involuntary Liquidating Preference
Per Preferred Share............... $25,000 $25,000 $25,000 $25,000 $ 25,000 $ 25,000 $ 50,000
Average Market Value Per Preferred
Share............................. $25,000 $25,000 $25,000 $25,000 $ 25,000 $ 25,000 $ 50,000
YEAR ENDED OCTOBER 31,
1997 1996 1995
---- ---- ----
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 13.88 $ 13.72 $ 12.20
-------- -------- --------
Net Investment Income............. 1.13 1.14 1.15
Net Realized and Unrealized
Gain/Loss....................... .60 .12 1.55
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income........... (.35) (.35) (.38)
-------- -------- --------
Total from Investment Operations... 1.38 .91 2.32
Distributions Paid to Common
Shareholders:
Net Investment Income........... (.75) (.75) (.80)
-------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 14.51 $ 13.88 $ 13.72
======== ======== ========
Common Share Market Price at End of
the Period........................ $12.6875 $ 11.625 $ 11.375
Total Return(b).................... 16.02% 8.98% 16.07%
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 169.5 $ 162.1 $ 160.2
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.83% 1.90% 1.94%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 8.04% 8.31% 8.85%
Portfolio Turnover................. 23% 37% 58%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... 1.08% 1.10% 1.10%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 5.56% 5.77% 5.88%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 2,300 2,300 2,300
Asset Coverage Per Preferred
Share(e).......................... $123,694 $120,481 $119,666
Involuntary Liquidating Preference
Per Preferred Share............... $ 50,000 $ 50,000 $ 50,000
Average Market Value Per Preferred
Share............................. $ 50,000 $ 50,000 $ 50,000
(a) As required, effective November 1, 2001, the Fund 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 period ended October 31, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses per share by $.01 and increase the ratio of investment income to
average net assets applicable to common shares by .03%. Per share, ratios
and supplemental data for the periods prior to October 31, 2002 have not
been restated to reflect this change in presentation.
(b) Total return based 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 Fund'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 Fund's total liabilities (not including the
preferred shares) from the Fund's total assets and dividing this by the
number of preferred shares outstanding.
44
VALUE MUNICIPAL INCOME TRUST. The following schedule presents financial
highlights for one common share of the Fund outstanding throughout the periods
indicated.
YEAR ENDED OCTOBER 31,
2004 2003 2002(A) 2001 2000 1999 1998
---- ---- ------- ---- ---- ---- ----
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 15.58 $ 15.63 $ 15.68 $ 14.38 $ 13.80 $ 15.64 $ 15.14
------- ------- ------- ------- -------- -------- --------
Net Investment Income............. 1.05 1.10 1.11 1.13 1.15 1.14 1.14
Net Realized and Unrealized
Gain/Loss....................... .12 (.04) (.06) 1.25 .63 (1.86) .51
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income........... (.10) (.10) (.13) (.31) (.39) (.31) (.34)
------- ------- ------- ------- -------- -------- --------
Total from Investment Operations... 1.07 .96 .92 2.07 1.39 (1.03) 1.31
Distributions Paid to Common
Shareholders:
Net Investment Income........... (.99) (1.01) (.97) (.77) (.81) (.81) (.81)
------- ------- ------- ------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 15.66 $ 15.58 $ 15.63 $ 15.68 $ 14.38 $ 13.80 $ 15.64
======= ======= ======= ======= ======== ======== ========
Common Share Market Price at End of
the Period........................ $ 14.46 $ 14.70 $ 14.37 $ 13.78 $ 12.25 $12.0625 $ 14.75
Total Return(b).................... 5.25% 9.61% 11.50% 19.22% 8.56% -13.29% 15.10%
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 368.9 $ 366.9 $ 368.1 $ 369.3 $ 338.7 $ 325.1 $ 368.5
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.32% 1.33% 1.46% 1.63% 1.77% 1.67% 1.67%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 6.76% 6.99% 7.22% 7.49% 8.36% 7.56% 7.41%
Portfolio Turnover................. 24% 30% 38% 30% 25% 35% 24%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... .82% .83% .90% 1.00% 1.05% 1.02% 1.03%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 6.09% 6.37% 6.36% 5.44% 5.55% 5.50% 5.21%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 9,000 9,000 9,000 9,000 9,000 9,000 4,500
Asset Coverage Per Preferred
Share(e).......................... $65,999 $65,769 $65,910 $66,028 $ 62,631 $ 61,123 $131,890
Involuntary Liquidating Preference
Per Preferred Share............... $25,000 $25,000 $25,000 $25,000 $ 25,000 $ 25,000 $ 50,000
Average Market Value Per Preferred
Share............................. $25,000 $25,000 $25,000 $25,000 $ 25,000 $ 25,000 $ 50,000
YEAR ENDED OCTOBER 31,
1997 1996 1995
---- ---- ----
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 14.50 $ 14.37 $ 12.90
-------- -------- --------
Net Investment Income............. 1.16 1.17 1.18
Net Realized and Unrealized
Gain/Loss....................... .63 .13 1.57
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income........... (.34) (.34) (.38)
-------- -------- --------
Total from Investment Operations... 1.45 .96 2.37
Distributions Paid to Common
Shareholders:
Net Investment Income........... (.81) (.83) (.90)
-------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 15.14 $ 14.50 $ 14.37
======== ======== ========
Common Share Market Price at End of
the Period........................ $13.5625 $ 12.375 $ 12.75
Total Return(b).................... 16.61% 3.70% 27.67%
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 356.6 $ 341.5 $ 338.4
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.70% 1.77% 1.80%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 7.93% 8.15% 8.67%
Portfolio Turnover................. 32% 42% 50%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... 1.03% 1.06% 1.06%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 5.61% 5.78% 5.90%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 4,500 4,500 4,500
Asset Coverage Per Preferred
Share(e).......................... $129,243 $125,881 $125,198
Involuntary Liquidating Preference
Per Preferred Share............... $ 50,000 $ 50,000 $ 50,000
Average Market Value Per Preferred
Share............................. $ 50,000 $ 50,000 $ 50,000
(a) As required, effective November 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended October 31, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01 and increase the ratio of net
investment income to average net assets applicable to common shares by .02%.
Per share, ratios, and supplemental data for the periods prior to October
31, 2002 have not been restated to reflect this change.
(b) 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 Fund'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 Fund's total liabilities (not including the
preferred shares) from the Fund's total assets and dividing this by the
number of preferred shares outstanding.
45
ACQUIRING FUND. The following schedule presents financial highlights for one
common share of the Fund outstanding throughout the periods indicated.
YEAR ENDED OCTOBER 31,
2004 2003 2002(A) 2001 2000 1999 1998
---- ---- ------- ---- ---- ---- ----
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 14.69 $ 14.87 $ 14.77 $ 13.46 $ 12.92 $ 14.72 $ 14.17
------- ------- ------- ------- ------- -------- --------
Net Investment Income............. 1.05 1.08 1.10 1.12 1.08 1.10 1.10
Net Realized and Unrealized
Gain/Loss....................... .18 (.16) .10 1.23 .64 (1.84) .54
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income........... (.10) (.10) (.14) (.32) (.40) (.32) (.35)
------- ------- ------- ------- ------- -------- --------
Total from Investment Operations... 1.13 .82 1.06 2.03 1.32 (1.06) 1.29
Distributions Paid to Common
Shareholders:
Net Investment Income........... (.96) (1.00) (.96) (.72) (.78) (.74) (.74)
------- ------- ------- ------- ------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 14.86 $ 14.69 $ 14.87 $ 14.77 $ 13.46 $ 12.92 $ 14.72
======= ======= ======= ======= ======= ======== ========
Common Share Market Price at End of
the Period........................ $ 14.70 $ 13.90 $ 13.98 $ 12.95 $11.625 $11.1875 $13.6875
Total Return(b).................... 13.05% 6.57% 15.64% 18.05% 11.15% -13.37% 15.87%
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 121.5 $ 120.0 $ 121.4 $ 120.6 $ 109.9 $ 105.6 $ 120.2
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.46% 1.48% 1.58% 1.76% 1.88% 1.79% 1.83%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 7.14% 7.23% 7.55% 7.89% 8.35% 7.86% 7.67%
Portfolio Turnover................. 29% 26% 45% 38% 24% 36% 15%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... .88% .89% .95% 1.04% 1.07% 1.06% 1.09%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 6.44% 6.57% 6.59% 5.66% 5.27% 5.60% 5.24%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 3,200 3,200 3,200 3,200 3,200 3,200 1,600
Asset Coverage Per Preferred
Share(e).......................... $62,967 $62,499 $62,954 $62,695 $59,345 $ 57,986 $125,139
Involuntary Liquidating Preference
Per Preferred Share............... $25,000 $25,000 $25,000 $25,000 $25,000 $ 25,000 $ 50,000
Average Market Value Per Preferred
Share............................. $25,000 $25,000 $25,000 $25,000 $25,000 $ 25,000 $ 50,000
YEAR ENDED OCTOBER 31,
1997 1996 1995
---- ---- ----
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 13.51 $ 13.31 $ 11.93
-------- -------- --------
Net Investment Income............. 1.12 1.12 1.15
Net Realized and Unrealized
Gain/Loss....................... .63 .19 1.45
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income........... (.35) (.35) (.39)
-------- -------- --------
Total from Investment Operations... 1.40 .96 2.21
Distributions Paid to Common
Shareholders:
Net Investment Income........... (.74) (.76) (.83)
-------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 14.17 $ 13.51 $ 13.31
======== ======== ========
Common Share Market Price at End of
the Period........................ $ 12.50 $ 11.50 $ 11.50
Total Return(b).................... 15.58% 6.82% 25.22%
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 115.7 $ 110.3 $ 108.7
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.88% 1.94% 1.98%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 8.16% 8.42% 9.06%
Portfolio Turnover................. 16% 37% 79%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... 1.09% 1.12% 1.12%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 5.61% 5.77% 6.01%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 1,600 1,600 1,600
Asset Coverage Per Preferred
Share(e).......................... $122,327 $118,953 $117,963
Involuntary Liquidating Preference
Per Preferred Share............... $ 50,000 $ 50,000 $ 50,000
Average Market Value Per Preferred
Share............................. $ 50,000 $ 50,000 $ 50,000
(a) As required, effective November 1, 2001, the Fund 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 per share by $.02 and increase the ratio of net investment income to
average net assets applicable to common shares by .17%. 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 Fund'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 Fund's total liabilities (not including the
preferred shares) from the Fund's total assets and dividing this by the
number of preferred shares outstanding.
46
INFORMATION ABOUT THE REORGANIZATIONS
GENERAL
Under the Reorganization Agreements (a form of which is attached as Appendix A
to the Reorganization Statement of Additional Information), the Acquiring Fund
will acquire substantially all of the assets, and will assume substantially all
of the liabilities, of the Target Funds, in exchange for Acquiring Fund Common
Shares and Acquiring Fund APS to be issued by the Acquiring Fund. The Acquiring
Fund Common Shares issued to the Target Funds will have an aggregate net asset
value equal to the aggregate net asset value of the Target Funds' common shares,
less the costs of the Reorganizations (though cash may be paid in lieu of any
fractional shares). The Acquiring Fund APS issued to the Target Funds will have
an aggregate liquidation preference equal to the aggregate liquidation
preference of the Target Funds' preferred shares. Upon receipt by the Target
Funds of such shares, the Target Funds will (i) distribute the Acquiring Fund
Common Shares to the Target Funds' common shareholders and (ii) distribute the
Acquiring Fund APS to the Target Funds' preferred shareholders. As soon as
practicable after the Closing Date for the Reorganizations, the Target Funds
will deregister as investment companies under the 1940 Act and dissolve under
applicable state law.
The Target Funds will distribute the Acquiring Fund Common Shares and the
Acquiring Fund APS received by them pro rata to the holders of record of their
common shares and preferred shares, as applicable, in exchange for such
shareholders' shares in the Target Funds. Such distribution will be accomplished
by opening new accounts on the books of the Acquiring Fund in the names of the
common and preferred shareholders of the Target Funds and transferring to those
shareholder accounts the Acquiring Fund Common Shares and the Acquiring Fund APS
previously credited on those books to the accounts of the Target Funds. Each
newly-opened account on the books of the Acquiring Fund for the former common
shareholders of the Target Funds will represent the respective pro rata number
of Acquiring Fund Common Shares (rounded down, in the case of fractional shares
held other than in a Dividend Reinvestment Plan account, to the next largest
number of whole shares) due such shareholder. No fractional Acquiring Fund
Common Shares will be issued (except for shares held in a Plan account). In the
event of fractional shares in an account other than a Plan account, the
Acquiring Fund's transfer agent will aggregate all such fractional Acquiring
Fund Common Shares and sell the resulting whole shares on the NYSE for the
account of all holders of such fractional interests, and each such holder will
be entitled to the pro rata share of the proceeds from such sale upon surrender
of the Target Fund common share certificates. Similarly, each newly-opened
account on the books of the Acquiring Fund for the former preferred shareholders
of Target Fund would represent the respective pro rata number of Acquiring Fund
APS due such shareholder. See "Terms of the Reorganization
Agreements -- Surrender and
47
Exchange of Share Certificates" below for a description of the procedures to be
followed by the Target Funds' shareholders to obtain their Acquiring Fund Common
Shares or Acquiring Fund APS (and cash in lieu of fractional shares, if any).
As a result of the Reorganizations, each common shareholder of a Target Fund
will own Acquiring Fund Common Shares that (except for cash payments received in
lieu of fractional shares) will have an aggregate net asset value immediately
after the Closing Date equal to the aggregate net asset value of that
shareholder's Target Fund common shares immediately prior to the Closing Date.
Since the Acquiring Fund Common Shares will be issued at net asset value in
exchange for the net assets of each Target Fund having a value equal to the
aggregate net asset value of those Acquiring Fund Common Shares, the net asset
value per share of Acquiring Fund Common Shares should remain virtually
unchanged by the Reorganizations except for its share of the costs of the
Reorganizations. Similarly, the aggregate liquidation preference of the
Acquiring Fund APS to be issued to each Target Fund will equal the aggregate
liquidation preference of each Target Fund's preferred shares. Each preferred
shareholder of a Target Fund will receive Acquiring Fund APS that will have an
aggregate liquidation preference immediately after the Closing Date equal to the
aggregate liquidation preference of that shareholder's Target Fund preferred
shares immediately prior to the Closing Date. The liquidation preference per
share of the Acquiring Fund APS will remain unchanged by the Reorganizations.
Thus, the Reorganization will result in no dilution of net asset value of the
Acquiring Fund Common Shares or the Target Funds' common shares, other than to
reflect the costs of the Reorganization, and will result in no dilution of the
value per share for preferred shareholders of the Acquiring Fund or the Target
Fund. However, as a result of the Reorganizations, a shareholder of any of the
Funds will hold a reduced percentage of ownership in the larger combined entity
than he or she did in any of the separate Funds. No sales charge or fee of any
kind will be charged to shareholders of the Target Funds in connection with
their receipt of Acquiring Fund Common Shares or Acquiring Fund APS in the
Reorganizations.
TERMS OF THE REORGANIZATION AGREEMENTS
The following is a summary of the significant terms of a Reorganization
Agreement. The terms of each Reorganization Agreement are similar. This summary
is qualified in its entirety by reference to the form of Reorganization
Agreement, attached as Appendix A to the Reorganization Statement of Additional
Information.
VALUATION OF ASSETS AND LIABILITIES. The assets of each Fund will be valued
after the close of business on the NYSE (generally, 4:00 p.m., Eastern time) on
the Closing Date. For the purpose of determining the net asset value of a common
share of each Fund, the value of the securities held by the Fund plus any cash
or other
48
assets (including interest accrued but not yet received) minus all liabilities
(including accrued expenses) and the aggregate liquidation value of the
outstanding preferred shares of the Fund is divided by the total number of
common shares of the Fund outstanding at such time. Daily expenses, including
the fees payable to the Adviser, will accrue on the Closing Date.
AMENDMENTS AND CONDITIONS. The Reorganization Agreement may be amended at any
time prior to the Closing Date with respect to any of the terms therein. The
obligations of each Fund pursuant to the Reorganization Agreement are subject to
various conditions, including a registration statement on Form N-14 being
declared effective by the SEC, approval by the shareholders of the Target Fund,
approval of the issuance of additional Acquiring Fund Common Shares by the
common shareholders of the Acquiring Fund, receipt of an opinion of counsel as
to tax matters, receipt of an opinion of counsel as to corporate and securities
matters and the continuing accuracy of various representations and warranties of
the Funds being confirmed by the respective parties.
POSTPONEMENT; TERMINATION. Under the Reorganization Agreement, the Board of
Trustees of either Fund may cause the Reorganization to be postponed or
abandoned in certain circumstances should such Board determine that it is in the
best interests of the shareholders of its respective Fund to do so.
The Reorganization Agreement may be terminated, and the Reorganization
abandoned at any time (whether before or after adoption thereof by the
shareholders of either of the Funds) prior to the Closing Date, or the Closing
Date may be postponed: (i) by mutual consent of the Boards of Trustees of the
Funds and (ii) by the Board of Trustees of either Fund if any condition to that
Fund's obligations set forth in the Reorganization Agreement has not been
fulfilled or waived by such Board.
SURRENDER AND EXCHANGE OF SHARE CERTIFICATES. After the Closing Date, each
holder of an outstanding certificate or certificates formerly representing
Target Fund common shares will be entitled to receive, upon surrender of his or
her certificate or certificates, a certificate or certificates representing the
number of Acquiring Fund Common Shares distributable with respect to such
holder's Target Fund common shares, together with cash in lieu of any fractional
Acquiring Fund Common Shares held other than in a Dividend Reinvestment Plan
account. Promptly after the Closing Date, the transfer agent for the Acquiring
Fund Common Shares will mail to each holder of certificates formerly
representing Target Fund common shares a letter of transmittal for use in
surrendering his or her certificates for certificates representing Acquiring
Fund Common Shares and cash in lieu of any fractional shares held other than in
a Plan account.
Please do not send in any share certificates at this time. Upon consummation
of the Reorganization, holders of Target Fund common shares will be furnished
with
49
instructions for exchanging their share certificates for Acquiring Fund share
certificates and, if applicable, cash in lieu of fractional shares.
From and after the Closing Date, certificates formerly representing Target
Fund common shares will be deemed for all purposes to evidence ownership of the
number of full Acquiring Fund Common Shares distributable with respect to the
Target Fund common shares held before the Reorganization as described above and
as shown in the table above, provided that, until such share certificates have
been so surrendered, no dividends payable to the holders of record of Target
Fund common shares as of any date subsequent to the Closing Date will be
reinvested pursuant to the Acquiring Fund's Dividend Reinvestment Plan, but will
instead be paid in cash. Once such Target Fund share certificates have been
surrendered, participants in the Target Fund's Dividend Reinvestment Plan will
automatically be enrolled in the Dividend Reinvestment Plan of the Acquiring
Fund.
From and after the Closing Date, there will be no transfers on the share
transfer books of the Target Fund. If, after the Closing Date, certificates
representing Target Fund Common Shares are presented to the Acquiring Fund, they
will be cancelled and exchanged for certificates representing Acquiring Fund
Common Shares, as applicable, and cash in lieu of fractional shares, if any,
distributable with respect to such Target Fund Common Shares in the
Reorganization.
Preferred shares are held in "street name" by the Depository Trust Company and
all transfers will be accomplished by book entry.
EXPENSES OF THE REORGANIZATION. In the event the Reorganization is approved
and completed, the expenses of the Reorganization will be shared by the Target
Fund and the Acquiring Fund in proportion to their respective projected annual
expense savings as a result of the Reorganization. The expenses of the
Reorganization will not be borne by the preferred shareholders of either Fund.
In the event the Reorganization is not completed, the Adviser will bear the
costs associated with the Reorganization. Neither the Funds nor the Adviser will
pay any expenses of shareholders arising out of or in connection with the
Reorganization.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS
The following is a general summary of the material anticipated U.S. federal
income tax consequences of the Reorganizations. The discussion is based upon the
Internal Revenue Code, Treasury regulations, court decisions, published
positions of the Internal Revenue Service ("IRS") and other applicable
authorities, all as in effect on the date hereof and all of which are subject to
change or differing interpretations (possibly with retroactive effect). The
discussion is limited to U.S. persons who hold shares of a Target Fund as
capital assets for U.S. federal income tax purposes (generally, assets held for
investment). This summary does not address all of the U.S. federal income tax
consequences that may be relevant to a
50
particular shareholder or to shareholders who may be subject to special
treatment under U.S. federal income tax laws. No ruling has been or will be
obtained from the IRS regarding any matter relating to the Reorganizations. No
assurance can be given that the IRS would not assert, or that a court would not
sustain, a position contrary to any of the tax aspects described below.
Prospective investors must consult their own tax advisers as to the U.S. federal
income tax consequences of the Reorganizations, as well as the effects of state,
local and non-U.S. tax laws.
It is a condition to closing each Reorganization that the respective Target
Fund and the Acquiring Fund receive an opinion from Skadden, Arps, Slate,
Meagher & Flom LLP ("Skadden Arps"), dated as of the Closing Date, regarding the
characterization of such Reorganization as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code. As such a reorganization, the
U.S. federal income tax consequences of each Reorganization can be summarized as
follows:
- No gain or loss will be recognized by a Target Fund or the Acquiring Fund
upon the transfer to the Acquiring Fund of substantially all of the assets
of the Target Fund in exchange for Acquiring Fund Common Shares and
Acquiring Fund APS and the assumption by the Acquiring Fund of substantially
all of the liabilities of the Target Fund and the subsequent liquidation of
the Target Fund.
- No gain or loss will be recognized by a shareholder of a Target Fund who
exchanges, as the case may be, all of his, her or its Target Fund common
shares for Acquiring Fund Common Shares pursuant to a Reorganization (except
with respect to cash received in lieu of a fractional share, as discussed
below) or all of his, her or its Target Fund preferred shares solely for
Acquiring Fund APS pursuant to a Reorganization.
- The aggregate tax basis of the Acquiring Fund Common Shares or Acquiring
Fund APS, as the case may be, received by a shareholder of a Target Fund
pursuant to a Reorganization will be the same as the aggregate tax basis of
the shares of the Target Fund surrendered in exchange therefor (reduced by
any amount of tax basis allocable to a fractional share for which cash is
received).
- The holding period of the Acquiring Fund Common Shares or Acquiring Fund
APS, as the case may be, received by a shareholder of a Target Fund pursuant
to a Reorganization will include the holding period of the shares of the
Target Fund surrendered in exchange therefor.
- A shareholder of a Target Fund that receives cash in lieu of a fractional
Acquiring Fund Common Share pursuant to the Reorganization will recognize
capital gain or loss with respect to the fractional share in an amount equal
to the difference between the amount of cash received for the fractional
share and the portion of such shareholder's tax basis in its Target Fund
common shares that is allocable to the fractional share. The capital gain or
loss will be
51
long-term if the holding period for such Target Fund common shares is more
than one year as of the date of the exchange.
- The Acquiring Fund's tax basis in a Target Fund's assets received by the
Acquiring Fund pursuant to a Reorganization will, in each instance, equal
the tax basis of such assets in the hands of such Target Fund immediately
prior to such Reorganization, and the Acquiring Fund's holding period of
such assets will, in each instance, include the period during which the
assets were held by such Target Fund.
The Acquiring Fund intends to continue to be taxed under the rules applicable
to regulated investment companies as defined in Section 851 of the Internal
Revenue Code, which are the same rules currently applicable to each of the
Target Funds and their shareholders.
The opinion of Skadden Arps will be based on U.S. federal income tax law in
effect on the Closing Date. In rendering its opinion, Skadden Arps will also
rely upon certain representations of the management of the Acquiring Fund and
the Target Funds and assume, among other things, that the Reorganizations will
be consummated in accordance with the Reorganization Agreements and as described
herein. An opinion of counsel is not binding on the IRS or any court.
SHAREHOLDER APPROVAL
Under the Declaration of Trust of each Target Fund (as amended to date and
including the Certificate of Vote of each Target Fund), relevant Massachusetts
law and the rules of the NYSE and CHX, shareholder approval of each
Reorganization Agreement requires the affirmative vote of shareholders of the
respective Target Fund representing more than 50% of the outstanding common
shares and preferred shares of such Target Fund entitled to vote, each voting
separately as a class.
52
------------------------------------------------------------------------------
PROPOSAL 2: ISSUANCE OF ACQUIRING FUND COMMON SHARES
------------------------------------------------------------------------------
Pursuant to the Reorganization Agreements, which are described more fully
under "Proposal 1: Reorganizations of the Target Funds" herein, the Acquiring
Fund will acquire substantially all of the assets and assume substantially all
of the liabilities of each Target Fund in exchange for Acquiring Fund Common
Shares and Acquiring Fund APS. Each Target Fund will distribute Acquiring Fund
Common Shares to its common shareholders and Acquiring Fund APS to its preferred
shareholders, and will then terminate its registration under the 1940 Act and
dissolve under applicable state law. The Acquiring Fund Board, based upon its
evaluation of all relevant information, anticipates that each Reorganization
will benefit holders of Acquiring Fund Common Shares.
The aggregate net asset value of Acquiring Fund Common Shares issued in each
Reorganization will equal the aggregate net asset value of the Target Fund's
common shares held immediately prior to the Reorganization, less the costs of
the Reorganization (though shareholders may receive cash for their fractional
shares). The aggregate liquidation preference of Acquiring Fund APS issued in
the Reorganization will equal the aggregate liquidation preference of the Target
Fund's preferred shares held immediately prior to the Reorganization. The
Reorganization will result in no reduction of the net asset value of the
Acquiring Fund Common Shares, other than to reflect the costs of each
Reorganization. No gain or loss will be recognized by the Acquiring Fund or its
shareholders in connection with each Reorganization. The Acquiring Fund will
continue to operate as a registered closed-end investment company with the
investment objective and policies described in this Joint Proxy
Statement/Prospectus.
In connection with Reorganizations and as contemplated by the Reorganization
Agreements, the Acquiring Fund will issue additional Acquiring Fund Common
Shares and list such shares on the AMEX and the CHX. While applicable state and
federal law does not require the shareholders of the Acquiring Fund to approve
the Reorganizations, applicable AMEX rules require the common shareholders of
the Acquiring Fund to approve the issuance of additional Acquiring Fund Common
Shares to be issued in connection with the Reorganizations.
SHAREHOLDER APPROVAL
Shareholder approval of the issuance of additional Acquiring Fund Common
Shares requires the affirmative vote of a majority of votes cast, provided that
total votes cast on the proposal represents over 50% of all securities entitled
to vote on the matter. For more information regarding voting requirements, see
the section entitled "Other Information -- Voting Information and Requirements"
below.
53
------------------------------------------------------------------------------
OTHER INFORMATION
------------------------------------------------------------------------------
VOTING INFORMATION AND REQUIREMENTS
GENERAL. A list of shareholders of each Fund entitled to be present and vote
at the Special Meeting will be available at the offices of the Funds, 1 Parkview
Plaza, Oakbrook Terrace, Illinois 60181-5555, for inspection by any shareholder
during regular business hours for ten days prior to the date of the Special
Meeting.
RECORD DATE. The Funds' Boards have fixed the close of business on July 29,
2005 as the record date (the "Record Date") for the determination of
shareholders entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof. Shareholders on the Record Date will be entitled to one
vote for each share held, with no shares having cumulative voting rights. At the
Record Date, Municipal Opportunity Trust II had outstanding common
shares and 4,600 preferred shares, Value Municipal Income Trust had outstanding
common shares and 9,000 preferred shares and the Acquiring Fund had
outstanding common shares and 3,200 preferred shares.
PROXIES. Shareholders may vote by appearing in person at the Special Meeting,
by returning the enclosed proxy card or by casting their vote via telephone or
the internet using the instructions provided on the enclosed proxy card and more
fully described below. Shareholders of each Fund have the opportunity to submit
their voting instructions via the internet by utilizing a program provided by a
third-party vendor hired by the Funds, or by "touch-tone" telephone voting. The
giving of such a proxy will not affect your right to vote in person should you
decide to attend the Special Meeting. To use the internet, please access the
internet address found on your proxy card. To record your voting instructions by
automated telephone, please call the toll-free number listed on your proxy card.
The internet and automated telephone voting instructions are designed to
authenticate shareholder identities, to allow shareholders to give their voting
instructions, and to confirm that shareholders' instructions have been recorded
properly. Shareholders submitting their voting instructions via the internet
should understand that there may be costs associated with internet access, such
as usage charges from internet access providers and telephone companies, that
must be borne by the shareholders. Any person giving a proxy may revoke it at
any time prior to its exercise by giving written notice of the revocation to the
Secretary of the Funds at the address indicated above, by delivering a duly
executed proxy bearing a later date, by recording later-dated voting
instructions via the internet or automated telephone or by attending the Special
Meeting and voting in person. The giving of a proxy will not affect your right
to vote in person if you attend the Special Meeting and wish to do so.
All properly executed proxies received prior to the Special Meeting will be
voted in accordance with the instructions marked thereon or otherwise as
provided therein. Unless instructions to the contrary are marked, proxies will
be voted
54
"FOR" the approval of each proposal. Abstentions and broker non-votes (i.e.,
where a nominee such as a broker holding shares for beneficial owners votes on
certain matters pursuant to discretionary authority or instructions from
beneficial owners, but with respect to one or more proposals does not receive
instructions from beneficial owners or does not exercise discretionary
authority) are not treated as votes "FOR" a proposal.
With respect to Proposal 1, abstentions and broker non-votes have the same
effect as votes "AGAINST" the proposals since their approvals are based on the
affirmative vote of a majority of each Target Fund's outstanding common shares
and preferred shares, each voting as a separate class. With respect to Proposal
2, abstentions will not be treated as votes "FOR" the proposal but will be
counted as votes cast on the proposal and will therefore have the same effect as
votes "AGAINST" the proposal. Broker non-votes will not be treated as votes
"FOR" the proposal and will not be counted as votes cast on the proposal and
will therefore have the effect of reducing the aggregate number of shares voting
on the proposal and reducing the number of votes "FOR" required to approve the
proposal.
With respect to each proposal, a majority of the outstanding shares entitled
to vote on the proposal must be present in person or by proxy to have a quorum
to conduct business at the Special Meeting. Abstentions and broker non-votes
will be deemed present for quorum purposes.
CERTAIN VOTING INFORMATION REGARDING PREFERRED SHARES OF THE TARGET FUNDS.
Pursuant to the rules of the NYSE, preferred shares of each Target Fund held in
"street name" may be voted under certain conditions by broker-dealer firms and
counted for purposes of establishing a quorum of that Fund if no instructions
are received one business day before the Special Meeting or, if adjourned, one
business day before the day to which the Special Meeting is adjourned. These
conditions include, among others, that (i) at least 30% of a Target Fund's
preferred shares outstanding have voted on such Fund's Reorganization and (ii)
less than 10% of a Target Fund's preferred shares outstanding have voted against
such Fund's Reorganization. In such instance, the broker-dealer firm will vote
such uninstructed Target Fund's preferred shares on such Reorganization in the
same proportion as the votes cast by all Target Fund preferred shareholders who
voted on such Reorganization. Each Target Fund will include shares held of
record by broker-dealers as to which such authority has been granted in its
tabulation of the total number of shares present for purposes of determining
whether the necessary quorum of shareholders of such Fund exists.
SHAREHOLDER INFORMATION
[As of July 29, 2005, to the knowledge of the Funds, no shareholder owned
beneficially more than 5% of the outstanding common shares of any Fund.] [Except
as set forth below, as of July 29, 2005, to the knowledge of the Funds, no
55
shareholder owned beneficially more than 5% of a class of a Fund's outstanding
shares:]
To the knowledge of the Funds, no trustee or executive officer owned, directly
or beneficially, common shares of the Funds as of July 29, 2005, and no trustees
or executive officers owned preferred shares of the Funds as of that date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(f) of the 1940 Act and Section 16(a) of the Securities Exchange Act
of 1934, as amended, require the Funds' trustees, officers, investment adviser,
affiliated persons of the investment adviser and persons who own more than 10%
of a registered class of a Fund's equity securities to file forms with the SEC
and the NYSE reporting their affiliation with a Fund and reports of ownership
and changes in ownership of Fund shares. These persons and entities are required
by SEC regulation to furnish a Fund with copies of all such forms they file.
Based on a review of these forms furnished to each Fund, each Fund believes that
during its last fiscal year, its trustees, officers, investment adviser and
affiliated persons of the investment adviser complied with the applicable filing
requirements.
SHAREHOLDER PROPOSALS
To be considered for presentation at a shareholder's meeting, rules
promulgated by the SEC generally require that, among other things, a
shareholder's proposal must be received at the offices of the relevant Fund a
reasonable time before solicitation is made. Timely submission of a proposal
does not necessarily mean that such proposal will be included. Any shareholder
who wishes to submit a proposal for consideration at a meeting of such
shareholder's Fund should send such proposal to the relevant Fund at the
principal executive offices of the Fund at 1221 Avenue of the Americas, New
York, New York 10020.
Information regarding the deadline for timely submission of proposals intended
to be presented at the year 2006 Annual Meeting of the Funds will be provided in
the proxy statement relating to the 2005 Annual Meeting of the Funds, which is
expected to take place later this year. If the Reorganizations of the Target
Funds are approved and completed prior to their 2005 Annual Meeting, such Funds
will cease to exist and will not hold their 2005 Annual Meeting.
SOLICITATION OF PROXIES
Solicitation of proxies is being made primarily by the mailing of this Notice
and Joint Proxy Statement/Prospectus with its enclosures on or about August ,
2005. Shareholders of the Target Funds whose shares are held by nominees such as
brokers can vote their proxies by contacting their respective nominee. In
addition to the solicitation of proxies by mail, employees of the Adviser and
its affiliates as well as dealers or their representatives may, without
additional compensation, solicit proxies in person or by mail, telephone,
telegraph, facsimile or oral communication.
56
The Target Funds have retained Computershare Fund Services ("CFS") to make
telephone calls to shareholders of the Funds to remind them to vote. CFS will be
paid a project management fee as well as fees charged on a per call basis and
certain other expenses. Management estimates that the telephone solicitation by
CFS will cost approximately $20,200 for Municipal Opportunity Trust II, $37,900
for Value Municipal Income Trust and $16,300 for the Acquiring Fund. Proxy
solicitation expenses are an expense of the Reorganizations which will be borne
by the Target Funds and the Acquiring Fund in proportion to their projected
annual expense savings as a result of the Reorganizations.
LEGAL MATTERS
Certain legal matters concerning the federal income tax consequences of the
Reorganizations and the issuance of Acquiring Fund Common Shares and Acquiring
Fund APS will be passed upon by Skadden Arps, which serves as counsel to the
Target Funds and the Acquiring Fund. Wayne W. Whalen, a partner of Skadden Arps,
is a trustee of both the Target Funds and the Acquiring Fund.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Trustees of each Fund knows of no business other than that
described in this Joint Proxy Statement/Prospectus which will be presented for
consideration at the Special Meeting. If any other matters are properly
presented, it is the intention of the persons named on the enclosed proxy card
to vote proxies in accordance with their best judgment.
In the event that a quorum is present at the Special Meeting but sufficient
votes to approve any of the proposals are not received, proxies (including
abstentions and broker non-votes) will be voted in favor of one or more
adjournments of the Special Meeting to permit further solicitation of proxies on
such proposals, provided that the Board of Trustees of each Fund determines that
such an adjournment and additional solicitation is reasonable and in the
interest of shareholders based on a consideration of all relevant factors,
including the percentage of votes then cast, the percentage of negative votes
cast, the nature of the proposed solicitation activities and the nature of the
reasons for such further solicitation. Any such adjournment will require the
affirmative vote of the holders of a majority of the outstanding shares of the
respective Fund voted at the session of the Special Meeting to be adjourned.
57
If you cannot be present in person at the Special Meeting, please fill in,
sign and return the enclosed proxy card or please record your voting
instructions by telephone or via the internet promptly. No postage is necessary
if the enclosed proxy card is mailed in the United States.
Lou Anne McInnis
Assistant Secretary
Van Kampen Municipal Opportunity
Trust II
Van Kampen Value Municipal
Income Trust
Van Kampen Advantage Municipal
Income Trust II
August , 2005
58
EXHIBIT I
DESCRIPTION OF SECURITIES RATINGS
STANDARD & POOR'S -- A brief description of the applicable Standard & Poor's
(S&P) rating symbols and their meanings (as published by S&P) follows:
A S&P issue credit rating is a current opinion of the creditworthiness of an
obligor with respect to a specific financial obligation, a specific class of
financial obligations, or a specific financial program (including ratings on
medium-term note programs and commercial paper programs). It takes into
consideration the creditworthiness of guarantors, insurers, or other forms of
credit enhancement on the obligation and takes into account the currency in
which the obligation is denominated. The issue credit rating is not a
recommendation to purchase, sell, or hold a financial obligation, inasmuch as it
does not comment as to market price or suitability for a particular investor.
Issue credit ratings are based on current information furnished by the obligors
or obtained by S&P from other sources it considers reliable. S&P does not
perform an audit in connection with any credit rating and may, on occasion, rely
on unaudited financial information. Credit ratings may be changed, suspended, or
withdrawn as a result of changes in, or unavailability of, such information, or
based on other circumstances. Issue credit ratings can be either long-term or
short-term. Short-term ratings are generally assigned to those obligations
considered short term in the relevant market. In the U.S., for example, that
means obligations with an original maturity of no more than 365 days, including
commercial paper. Short-term ratings are also used to indicate the
creditworthiness of an obligor with respect to put features on long-term
obligations. The result is a dual rating, in which the short-term ratings
address the put feature, in addition to the usual long-term rating. Medium-term
notes are assigned long-term ratings.
LONG-TERM ISSUE CREDIT RATINGS
Issue credit ratings are based, in varying degrees, on the following
considerations:
- Likelihood of payment -- capacity and willingness of the obligor to
meet its financial commitment on an obligation in accordance with the terms
of the obligation;
- Nature of and provisions of the obligation;
- Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
The issue rating definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower
I-1
than senior obligations, to reflect the lower priority in bankruptcy, as noted
above. (Such differentiation applies when an entity has both senior and
subordinated obligations, secured and unsecured obligations, or operating
company and holding company obligations.) Accordingly, in the case of junior
debt, the rating may not conform exactly with the category definition.
AAA: An obligation rated "AAA" has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA: An obligation rated "AA" differs from the highest-rated obligations only
in small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated "A" is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated "BBB" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
SPECULATIVE GRADE
BB, B, CCC, CC, C: Obligations rated "BB", "B", "CCC", "CC" and "C" are
regarded as having significant speculative characteristics. "BB" indicates the
least degree of speculation and "C" the highest. While such obligations will
likely have some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.
BB: An obligation rated "BB" is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B: An obligation rated "B" is more vulnerable to nonpayment than obligations
rated "BB", but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC: An obligation rated "CCC" is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse
I-2
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
CC: An obligation rated "CC" is currently highly vulnerable to nonpayment.
C: A subordinated debt or preferred stock obligation rated "C" is CURRENTLY
HIGHLY VULNERABLE to nonpayment. The "C" rating may be used to cover a situation
where a bankruptcy petition has been filed or similar action taken, but payments
on this obligation are being continued. A "C" also will be assigned to a
preferred stock issue in arrears on dividends or sinking fund payments, but that
is currently paying.
D: An obligation rated "D" is in payment default. The "D" rating category is
used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The "D" rating also will be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.
Plus (+) or minus (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
r: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating.
N.R.: This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular obligation as a matter of policy.
SHORT-TERM ISSUE CREDIT RATINGS
A-1: A short-term obligation rated "A-1" is rated in the highest category by
S&P. The obligor's capacity to meet its financial commitment on the obligation
is strong. Within this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
A-2: A short-term obligation rated "A-2" is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated "A-3" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more
I-3
likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
B: A short-term obligation rated "B" is regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
C: A short-term obligation rated "C" is currently vulnerable to nonpayment and
is dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The "D" rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
MOODY'S INVESTORS SERVICE INC. -- A brief description of the applicable
Moody's Investors Service, Inc. (Moody's) rating symbols and their meanings (as
published by Moody's) follows:
Aaa: Obligations rated Aaa are judged to be of the highest quality with
minimal credit risk.
Aa: Obligations rated Aa are judged to be of high quality and are subject to
very low credit risk.
A: Obligations rated A are considered upper-medium grade and are subject to
low credit risk.
Baa: Obligations rated Baa are subject to moderate credit risk. They are
considered medium-grade and as such may possess certain speculative
characteristics.
Ba: Obligations rated Ba are judged to have speculative elements and are
subject to substantial credit risk.
B: Obligations rated B are considered speculative and are subject to high
credit risk.
Caa: Obligations rated Caa are judged to be of poor standing and are subject
to very high credit risk.
Ca: Obligations rated Ca are highly speculative and are likely in, or very
near, default, with some prospect of recovery of principal and interest.
I-4
C: Obligations rated C are the lowest rated class of bonds, and are typically
in default, with little prospect for recovery of principal or interest.
Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
Moody's assigns long-term ratings to individual debt securities issued from
medium-term note (MTN) programs, in addition to indicating ratings to MTN
programs themselves. Notes issued under MTN programs with such indicated ratings
are rated at issuance at the rating applicable to all pari passu notes issued
under the same program, at the program's relevant indicated rating, provided
such notes do not exhibit any of the characteristics listed below:
-- Notes containing features that link interest or principal to the
credit performance of any third party or parties.
-- Notes allowing for negative coupons, or negative principal.
-- Notes containing any provision that could obligate the investor to
make any additional payments.
-- Notes containing provisions that subordinate the claim.
For notes with any of these characteristics, the rating of the individual note
may differ from the indicated rating of the program.
Market participants must determine whether any particular note is rated, and
if so, at what rating level. Moody's encourages market participants to contact
Moody's Ratings Desks directly or visit www.moodys.com directly if they have
questions regarding ratings for specific notes issued under a medium-term note
program. Unrated notes issued under an MTN program may be assigned an NR symbol.
I-5
SHORT-TERM RATINGS
Moody's short-term ratings are opinions of the ability of issuers to honor
short-term financial obligations. Ratings may be assigned to issuers, short-term
programs or to individual short-term debt instruments. Such obligations
generally have an original maturity not exceeding thirteen months, unless
explicitly noted. Moody's employs the following designations to indicate the
relative repayment ability of rated issuers:
P-1
Issuers (or supporting institutions) rated Prime-1 have a superior ability to
repay short-term debt obligations.
P-2
Issuers (or supporting institutions) rated Prime-2 have a strong ability to
repay short-term debt obligations.
P-3
Issuers (or supporting institutions) rated Prime-3 have an acceptable ability
to repay short-term obligations.
NP
Issuers (or supporting institutions) rated Not Prime do not fall within any of
the Prime rating categories.
NOTE: Canadian issuers rated P-1 or P-2 have their short-term ratings enhanced
by the senior-most long-term rating of the issuer, its guarantor or
support-provider.
I-6
[VAN KAMPEN INVESTMENTS LOGO]
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE
AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE
SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 30, 2005
STATEMENT OF ADDITIONAL INFORMATION
RELATING TO THE ACQUISITION OF THE ASSETS AND LIABILITIES OF
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II
AND
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
BY AND IN EXCHANGE FOR SHARES OF
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
DATED AUGUST , 2005
This Statement of Additional Information is available to the shareholders
of Van Kampen Municipal Opportunity Trust II ("Municipal Opportunity Trust II")
and Van Kampen Value Municipal Income Trust ("Value Municipal Income Trust")
(each a "Target Fund" and collectively the "Target Funds") in connection with
proposed reorganizations (each a "Reorganization" and collectively the
"Reorganizations") whereby Van Kampen Advantage Municipal Income Trust II (the
"Acquiring Fund") will acquire substantially all of the assets and assume
substantially all of the liabilities of the Target Funds in exchange for an
equal aggregate value of newly-issued common shares of beneficial interest, par
value $0.01 per share ("Acquiring Fund Common Shares"), and newly-issued auction
preferred shares with a par value of $0.01 per share and a liquidation
preference of $25,000 per share ("Acquiring Fund APS"). The Target Funds will
distribute Acquiring Fund Common Shares to common shareholders of the Target
Funds and Acquiring Fund APS to preferred shareholders of the Target Funds, and
will then terminate their registrations under the Investment Company Act of
1940, as amended (the "1940 Act"), and dissolve under applicable state law. A
copy of a form of the Agreement and Plan of Reorganization between each Target
Fund and the Acquiring Fund is attached hereto as Appendix A. Unless otherwise
defined herein, capitalized terms have the meanings given to them in the Joint
Proxy Statement/Prospectus.
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Joint Proxy Statement/Prospectus dated August ,
2005 relating to the proposed Reorganizations of the Target Funds into the
Acquiring Fund. A copy of the Joint Proxy Statement/Prospectus may be obtained,
without charge, by writing to the Van Kampen Client Relations Department at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, Illinois 60181-5555 or by
calling (800) 341-2929 (TDD users may call (800) 421-2833).
The Acquiring Fund will provide, without charge, upon the written or oral
request of any person to whom this Statement of Additional Information is
delivered, a copy of any and all documents that have been incorporated by
reference in the registration statement of which this Statement of Additional
Information is a part.
S-1
TABLE OF CONTENTS
Trustees and Officers....................................... S-3
Investment Advisory Agreement............................... S-14
Other Agreements............................................ S-16
Fund Management............................................. S-17
Code of Ethics.............................................. S-19
Portfolio Transactions and Brokerage Allocation............. S-20
Other Information........................................... S-22
Financial Statements........................................ S-22
Pro Forma Financial Statements.............................. S-23
Appendix A -- Form of Agreement and Plan of A-1
Reorganization............................................
Appendix B -- Certificate of Vote of Trustees Establishing B-1
Preferred Shares..........................................
Appendix C -- Proxy Voting Policy and Procedures............ C-1
Appendix D -- Annual Report of the Acquiring Fund........... D-1
Appendix E -- Semiannual Report of the Acquiring Fund....... E-1
Appendix F -- Annual Report of Municipal Opportunity Trust F-1
II........................................................
Appendix G -- Semiannual Report of Municipal Opportunity G-1
Trust II..................................................
Appendix H -- Annual Report of Value Municipal Income H-1
Trust.....................................................
Appendix I -- Semiannual Report of Value Municipal Income I-1
Trust.....................................................
Appendix J -- Pro Forma Financial Statements................ J-1
S-2
TRUSTEES AND OFFICERS
GENERAL
The business and affairs of each Fund are managed under the direction of
each Fund's Board of Trustees and each Fund's officers appointed by the Board of
Trustees. The Acquiring Fund and the Target Funds share the same Board of
Trustees and executive officers. The tables below list the trustees and
executive officers of the Funds 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 Asset
Management (the "Adviser"), Van Kampen Funds Inc. (the "Administrator"), Van
Kampen Advisors Inc., Van Kampen Exchange Corp. and Van Kampen Investor Services
Inc. ("Investor Services"). The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Statement of
Additional Information. Trustees of the Funds generally serve three-year terms
or until their successors are duly elected and qualified. Officers are annually
elected by the trustees.
INDEPENDENT TRUSTEES
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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (59) Trustee Trustee Chairman and Chief Executive 82 Trustee/Director/
Blistex Inc. since 1993 Officer of Blistex Inc., a Managing General
1800 Swift Drive consumer health care products Partner of funds in
Oak Brook, IL 60523 manufacturer. Director of the the Fund Complex.
Heartland Alliance, a
nonprofit organization serving
human needs based in Chicago.
Director of St. Vincent de
Paul Center, a Chicago based
day care facility serving the
children of low income
families. Board member of the
Illinois Manufacturers'
Association.
Jerry D. Choate (66) Trustee Trustee Prior to January 1999, 80 Trustee/Director/
33971 Selva Road since 2003 Chairman and Chief Executive Managing General
Suite 130 Officer of the Allstate Partner of funds in
Dana Point, CA 92629 Corporation ("Allstate") and the Fund Complex.
Allstate Insurance Company. Director of Amgen
Prior to January 1995, Inc., a
President and Chief Executive biotechnological
Officer of Allstate. Prior to company, and Director
August 1994, various of Valero Energy
management positions at Corporation, an
Allstate. independent refining
company.
S-3
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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer+ (64) Trustee Trustee President of CAC, L.L.C., a 82 Trustee/Director/
CAC, L.L.C. since 1993 private company offering Managing General
4350 LaJolla Village Drive capital investment and Partner of funds in
Suite 980 management advisory services. the Fund Complex.
San Diego, CA 92122-6223 Prior to February 2001, Vice Director of
Chairman and Director of Stericycle, Inc.,
Anixter International, Inc., a Ventana Medical
global distributor of wire, Systems, Inc., and
cable and communications GATX Corporation, and
connectivity products. Prior Trustee of The
to July 2000, Managing Partner Scripps Research
of Equity Group Corporate Institute. Prior to
Investment (EGI), a company January 2005, Trustee
that makes private investments of the University of
in other companies. Chicago Hospitals and
Health Systems. Prior
to April 2004,
Director of
TheraSense, Inc.
Prior to January
2004, Director of
TeleTech Holdings
Inc. and Arris Group,
Inc. Prior to May
2002, Director of
Peregrine Systems
Inc. Prior to
February 2001,
Director of 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).
Linda Hutton Heagy (56) Trustee Trustee Managing Partner of Heidrick & 80 Trustee/Director/
Heidrick & Struggles since 2003 Struggles, an executive search Managing General
233 South Wacker Drive firm. Trustee on the Partner of funds in
Suite 7000 University of Chicago the Fund Complex.
Chicago, IL 60606 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
1990, Executive Vice President
of The Exchange National Bank.
S-4
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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy (53) Trustee Trustee Director and President of the 80 Trustee/Director/
1744 R Street, NW since 2003 German Marshall Fund of the Managing General
Washington, DC 20009 United States, an independent Partner of funds in
U.S. foundation created to the Fund Complex.
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 (69) Trustee Trustee Prior to 1998, President and 82 Trustee/Director/
736 North Western Avenue since 1993 Chief Executive Officer of Managing General
P.O. Box 317 Pocklington Corporation, Inc., Partner of funds in
Lake Forest, IL 60045 an investment holding company. the Fund Complex.
Director of the Marrow Director of the Lake
Foundation. Forest Bank & Trust.
Jack E. Nelson (69) Trustee Trustee President of Nelson Investment 80 Trustee/Director/
423 Country Club Drive since 2003 Planning Services, Inc., a Managing General
Winter Park, FL 32789 financial planning company and Partner of funds in
registered investment adviser the Fund Complex.
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+ (64) Trustee Trustee President Emeritus and 82 Trustee/Director/
1126 E. 59th Street since 1994 Honorary Trustee of the Managing General
Chicago, IL 60637 University of Chicago and the Partner of funds in
Adam Smith Distinguished the Fund Complex.
Service Professor in the Director of Winston
Department of Economics at the Laboratories, Inc.
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.
S-5
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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. (63) Trustee Trustee Chief Communications Officer 80 Trustee/Director/
815 Cumberstone Road since 2003 of the National Academy of Managing General
Harwood, MD 20776 Sciences/National Research Partner of funds in
Council, an independent, the Fund Complex.
federally chartered policy Director of Fluor
institution, from 2001 to Corp., an
November 2003 and Chief engineering,
Operating Officer from 1993 to procurement and
2001. Director of the construction
Institute for Defense organization, since
Analyses, a federally funded January 2004 and
research and development Director of Neurogen
center, Director of the German Corporation, a
Marshall Fund of the United pharmaceutical
States, Director of the Rocky company, since
Mountain Institute and Trustee January 1998.
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.
S-6
INTERESTED TRUSTEES*
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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Mitchell M. Merin* (51) Trustee and Trustee President of funds in the Fund 80 Trustee/Director/
1221 Avenue of the Americas President since Complex. Chairman, President, Managing General
New York, NY 10020 2003; Chief Executive Officer and Partner of funds in
President Director of the Adviser and Van the Fund Complex.
since 2002 Kampen 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.
Richard F. Powers, III* (59) Trustee Trustee Advisory Director of Morgan 82 Trustee/Director/
1221 Avenue of the Americas since 1999 Stanley. Prior to December 2002, Managing General
New York, NY 10020 Chairman, Director, President, Partner of funds in
Chief Executive Officer and the Fund Complex.
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.
S-7
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 FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (65) Trustee Trustee Partner in the law firm of 82 Trustee/Director/
333 West Wacker Drive since 1993 Skadden, Arps, Slate, Meagher & Managing General
Chicago, IL 60606 Flom LLP, legal counsel to funds Partner of funds in
in the Fund Complex. the Fund Complex.
Director of the
Abraham Lincoln
Presidential
Foundation.
------------------------------------
* Such trustee is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act). Messrs. Merin and Powers are interested persons of funds in
the Fund Complex and the Adviser by reason of their current or former
positions with Morgan Stanley or its affiliates. Mr. Whalen is an interested
person of certain funds in the Fund Complex by reason of he and his firm
currently providing legal services as legal counsel to such funds in the Fund
Complex.
+ Designated as Preferred Shares Trustee.
S-8
OFFICERS
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (66) Executive Vice Officer Executive Vice President and Principal Executive Officer of
1221 Avenue of the Americas President and since 2003 Funds in the Fund Complex since May 2003. Chief Executive
New York, NY 10020 Principal Officer and Chairman of Investor Services. Managing Director
Executive of Morgan Stanley. Chief Administrative Officer, Managing
Officer Director and Director of Morgan Stanley Investment Advisors
Inc., Morgan Stanley Services Company Inc. and Managing
Director and Director of Morgan Stanley Distributors Inc.
Chief Executive Officer and Director of Morgan Stanley
Trust. Executive Vice President and Principal Executive
Officer of the Institutional and Retail Morgan Stanley
Funds; Director of Morgan Stanley SICAV; previously Chief
Global Operations Officer and Managing Director of Morgan
Stanley Investment Management Inc.
Joseph J. McAlinden (62) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas President and since 2002 Stanley Investment Advisors Inc., Morgan Stanley Investment
New York, NY 10020 Chief Investment Management Inc. and Morgan Stanley Investments LP and
Officer 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 Adviser and Van Kampen
Advisors Inc. since December 2002.
Amy R. Doberman (43) Vice President Officer Managing Director and General Counsel, U.S. Investment
1221 Avenue of the Americas since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10020 Management, Inc., Morgan Stanley Investment Advisers Inc.
and the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex as of August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc from January 1997 to July 2000.
Stefanie V. Chang Yu (38) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas and Secretary since 2003 Vice President and Secretary of funds in the Fund Complex.
New York, NY 10020
John L. Sullivan (49) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza Officer since 1996 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen
Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management. Prior
to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
James W. Garrett (36) Chief Financial Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas Officer and since 2005 Chief Financial Officer and Treasurer of Morgan Stanley
New York, NY 10020 Treasurer Institutional Funds since 2002 and of funds in the Fund
Complex since 2005.
COMPENSATION
Each trustee/director/managing general partner (hereinafter referred to in
this section as "trustee") who is not an affiliated person (as defined in the
1940 Act) of Van Kampen Investments, the Adviser or the Administrator (each a
"Non-Affiliated Trustee") is compensated by an annual retainer and meeting fees
for services to funds in the Fund Complex. Each fund in the Fund Complex (except
Van Kampen Exchange Fund) provides a deferred compensation plan to its
Non-Affiliated Trustees that allows trustees to
S-9
defer receipt of their compensation until retirement and earn a return on such
deferred amounts. Amounts deferred are retained by the Funds and earn a rate of
return determined by reference to the return on the common shares of the Funds
or other funds in the Fund Complex as selected by the respective Non-Affiliated
Trustee. To the extent permitted by the 1940 Act, the Funds may invest in
securities of those funds selected by the Non-Affiliated Trustees in order to
match the deferred compensation obligation. The deferred compensation plan is
not funded and obligations thereunder represent general unsecured claims against
the general assets of the Funds. Deferring compensation has the same economic
effect as if the Non-Affiliated Trustee reinvested his or her compensation into
the Funds. Each fund in the Fund Complex (except Van Kampen Exchange Fund)
provides a retirement plan to its Non-Affiliated Trustees that provides
Non-Affiliated Trustees with compensation after retirement, provided that
certain eligibility requirements are met. Under the retirement plan, a
Non-Affiliated Trustee who is receiving compensation from the Funds prior to
such Non-Affiliated Trustee's retirement, has at least 10 years of service
(including years of service prior to adoption of the retirement plan) and
retires at or after attaining the age of 60, is eligible to receive a retirement
benefit per year for each of the 10 years following such retirement from the
Funds. Non-Affiliated Trustees retiring prior to the age of 60 or with fewer
than 10 years but more than 5 years of service may receive reduced retirement
benefits from the Funds.
Additional information regarding compensation and benefits for trustees of
each Fund is set forth below for the periods described in the notes accompanying
the table.
COMPENSATION TABLE
Fund Complex
-----------------------------------------------
Aggregate Aggregate
Aggregate Compensation from: Pension or Estimated Total
----------------------------------- Retirement Maximum Annual Compensation
Value Benefits Benefits from the before
Municipal Municipal Accrued as Fund Complex Deferral from
Opportunity Income Acquiring Part of Upon Fund
Name(1) Trust II(2) Trust(3) Fund(4) Expenses(5) Retirement(6) Complex(7)
------- ----------- --------- --------- ----------- ----------------- -------------
INDEPENDENT TRUSTEES
David C. Arch $3,008 $4,864 $2,454 $ 35,277 $147,500 $192,530
Jerry D. Choate 4,030 6,739 3,222 82,527 126,000 200,002
Rod Dammeyer 3,014 4,870 2,460 63,782 147,500 208,000
Linda Hutton Heagy 3,829 6,538 3,021 24,465 142,500 184,784
R. Craig Kennedy 4,030 6,739 3,222 16,911 142,500 200,002
Howard J Kerr 3,214 5,070 2,660 140,743 146,250 208,000
Jack E. Nelson 4,030 6,739 3,222 97,294 109,500 200,002
Hugo F. Sonnenschein 3,214 5,070 2,660 64,476 147,500 208,000
Suzanne H. Woolsey 4,030 6,739 3,222 58,450 142,500 200,002
INTERESTED TRUSTEE
Wayne W. Whalen(1) 3,214 5,070 2,660 72,001 147,500 208,000
------------------------------------
(1) Trustees not eligible for compensation are not included in the Compensation
Table. Mr. Whalen is an "interested person" (within the meaning of Section
2(a)(19) of the 1940 Act) of each Fund and certain other funds in the Fund
Complex. Theodore A. Myers retired as a member of the Board of Trustees of
each Fund and other funds in the Fund Complex on December 31, 2003. J. Miles
Branagan retired as a member of
S-10
the Board of Trustees of each Fund and other funds in the Fund Complex on
December 31, 2004.
(2) The amounts shown in this column represent the aggregate compensation before
deferral with respect to Municipal Opportunity Trust II's fiscal year ended
October 31, 2004. The following trustees deferred compensation from
Municipal Opportunity Trust II during the fiscal year ended October 31,
2004: Mr. Choate, $4,030; Mr. Dammeyer, $3,014; Ms. Heagy, $3,829; Mr.
Nelson, $4,030; Mr. Sonnenschein, $3,214; and Mr. Whalen, $3,214. The
cumulative deferred compensation (including interest) accrued with respect
to each trustee from Municipal Opportunity Trust II as of October 31, 2004
is as follows: Mr. Choate, $5,306; Mr. Dammeyer, $49,488; Ms. Heagy, $5,175;
Mr. Nelson, $5,260; Mr. Sonnenschein, $43,230; and Mr. Whalen, $43,081. The
deferred compensation plan is described above the Compensation Table.
(3) The amounts shown in this column represent the aggregate compensation before
deferral with respect to Value Municipal Income Trust's fiscal year ended
October 31, 2004. The following trustees deferred compensation from Value
Municipal Income Trust during the fiscal year ended October 31, 2004: Mr.
Choate, $6,739; Mr. Dammeyer, $4,870; Ms. Heagy, $6,538; Mr. Nelson, $6,739;
Mr. Sonnenschein, $5,070; and Mr. Whalen, $5,070. The cumulative deferred
compensation (including interest) accrued with respect to each trustee from
Value Municipal Income Trust as of October 31, 2004 is as follows: Mr.
Choate, $8,835; Mr. Dammeyer, $65,657; Ms. Heagy, $8,748; Mr. Nelson,
$8,757; Mr. Sonnenschein, $57,110; and Mr. Whalen, $58,237. The deferred
compensation plan is described above the Compensation Table.
(4) The amounts shown in this column represent the aggregate compensation before
deferral with respect to the Acquiring Fund's fiscal year ended October 31,
2004. The following trustees deferred compensation from the Acquiring Fund
during the fiscal year ended October 31, 2004: Mr. Choate, $3,222; Mr.
Dammeyer, $2,460; Ms. Heagy, $3,021; Mr. Nelson, $3,222; Mr. Sonnenschein,
$2,660; and Mr. Whalen, $2,660. The cumulative deferred compensation
(including interest) accrued with respect to each trustee from the Acquiring
Fund as of October 31, 2004 is as follows: Mr. Choate, $4,255; Mr. Dammeyer,
$44,682; Ms. Heagy, $4,109; Mr. Nelson, $4,218; Mr. Sonnenschein, $39,105;
and Mr. Whalen, $38,576. The deferred compensation plan is described above
the Compensation Table.
(5) The amounts shown in this column represent the sum of the retirement
benefits accrued by the operating funds in the Fund Complex for each of the
trustees for the funds' respective fiscal years ended in 2004. The
retirement plan is described above the Compensation Table.
(6) For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex for each year of the 10-year period
commencing in the year of such person's anticipated retirement. The
retirement plan is described above the Compensation Table.
(7) The amounts shown in this column represent the aggregate compensation paid
by all of the funds in the Fund Complex as of December 31, 2004 before
deferral by the trustees under the deferred compensation plan. Because the
funds in the Fund
S-11
Complex have different fiscal year ends, the amounts shown in this column
are presented on a calendar year basis.
BOARD COMMITTEES
The Board of Trustees of each Fund has the same 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 Funds as defined by the 1940 Act and (2) are "independent" of the Funds
as defined by the New York Stock Exchange, American Stock Exchange and Chicago
Stock Exchange listing standards.
Each Board's audit committee consists of Jerry D. Choate, Rod Dammeyer and
R. Craig Kennedy. In addition to being Independent Trustees as defined above,
each of these trustees also meets the additional independence requirements for
audit committee members as defined by the New York Stock Exchange, American
Stock Exchange and Chicago Stock Exchange listing standards. Each audit
committee makes recommendations to its Board of Trustees concerning the
selection of its Fund's independent registered public accounting firm, reviews
with such independent registered public accounting firm the scope and results of
its Fund's annual audit and considers any comments which the independent
registered public accounting firm may have regarding its Fund's financial
statements, books of account or internal controls. Each Board of Trustees has
adopted a formal written charter for its audit committee which sets forth the
audit committee's responsibilities. Each audit committee has reviewed and
discussed the financial statements of its Fund with management as well as with
the independent registered public accounting firm of the Fund, and discussed
with the independent registered public accounting firm the matters required to
be discussed under the Statement of Auditing Standards No. 61. Each audit
committee has received the written disclosures and the letter from the
independent registered public accounting firm required under Independence
Standards Board Standard No. 1 and has discussed with the independent registered
public accounting firm its independence. Based on this review, each audit
committee recommended to its Board of Trustees that its Fund's audited financial
statements be included in the Fund's annual report to shareholders for the most
recent fiscal year for filing with the SEC.
Each Board's brokerage and services committee consists of Linda Hutton
Heagy, Hugo F. Sonnenschein and Suzanne H. Woolsey. Each brokerage and services
committee reviews its Fund's allocation of brokerage transactions and
soft-dollar practices.
Each Board's governance committee consists of David C. Arch, Howard J Kerr
and Jack E. Nelson. In addition to being Independent Trustees as defined above,
each of these trustees also meets the additional independence requirements for
nominating committee members as defined by the New York Stock Exchange, American
Stock Exchange and Chicago Stock Exchange listing standards. Each governance
committee identifies individuals qualified to serve as Independent Trustees on
its Board and on committees of the Board, advises its Board with respect to
Board composition, procedures and committees, develops and recommends to its
Board a set of corporate governance principles applicable to the Fund, monitors
corporate governance matters and makes recommendations to its Board, and acts as
the administrative committee with respect to Board policies and procedures,
committee policies and procedures and codes of ethics. The Independent Trustees
of each Fund select and nominate any other nominee Independent Trustees for
S-12
each Fund. While the Independent Trustees of each Fund expect to be able to
continue to identify from their own resources an ample number of qualified
candidates for each Board of Trustees as they deem appropriate, they will
consider nominations from shareholders to each Board. Nominations from
shareholders should be in writing and sent to the Independent Trustees of the
Funds at the Funds' offices at 1221 Avenue of the Americas, New York, New York
10020 or directly to the Independent Trustees at the address specified above for
each trustee.
During each Fund's last fiscal year, each Board of Trustees held 16
meetings. During each Fund's last fiscal year, the audit committee of each Board
held five meetings, the brokerage and services committee of each Board held four
meetings and the governance committee of each Board held five meetings.
SHARE OWNERSHIP
Excluding any deferred compensation balances as described in the
Compensation Table, as of December 31, 2004, the most recently completed
calendar year prior to the date of this Statement of Additional Information,
each trustee of Municipal Opportunity Trust II, Value Municipal Income Trust and
the Acquiring Fund beneficially owned equity securities of each such Fund and of
all of the funds in the Fund Complex overseen by the trustee in the dollar range
amounts specified below.
2004 TRUSTEE BENEFICIAL OWNERSHIP OF SECURITIES
INDEPENDENT TRUSTEES
TRUSTEE
-----------------------------------------------------------------------------------------
ARCH CHOATE DAMMEYER HEAGY KENNEDY KERR NELSON SONNENSCHEIN WOOLSEY
-------- ------- -------- -------- -------- ------- ------- ------------ --------
Dollar range of equity securities
in Municipal Opportunity Trust
II................................ none none over none none none none $1- none
$100,000 $10,000
Dollar range of equity securities
in Value Municipal Income Trust... none none none none none none none none none
Dollar range of equity securities
in the Acquiring Fund............. $1- none over none none none none $1- none
$10,000 $100,000 $10,000
Aggregate dollar range of equity
securities in all registered
investment companies overseen by
trustee in the Fund Complex....... $50,001- $1- over $50,001- over $1- $1- $10,001- $10,001-
$100,000 $10,000 $100,000 $100,000 $100,000 $10,000 $10,000 $50,000 $50,000
INTERESTED TRUSTEES
TRUSTEE
----------------------------
MERIN POWERS WHALEN
-------- -------- --------
Dollar range of equity securities in Municipal Opportunity
Trust II................................................... none none $1-
$10,000
Dollar range of equity securities in Value Municipal Income
Trust...................................................... none none none
Dollar range of equity securities in the Acquiring Fund..... none none $1-
$10,000
Aggregate dollar range of equity securities in all
registered investment companies overseen by trustee in the
Fund Complex............................................... over over over
$100,000 $100,000 $100,000
S-13
Including deferred compensation balances (which are amounts deferred and
thus retained by the Funds as described in the Compensation Table), as of
December 31, 2004, the most recently completed calendar year prior to the date
of this Statement of Additional Information, each trustee of the Fund had in the
aggregate, combining beneficially owned equity securities and deferred
compensation of the Fund and of all of the funds in the Fund Complex overseen by
the trustee, the dollar range of amounts specified below.
2004 TRUSTEE BENEFICIAL OWNERSHIP AND DEFERRED COMPENSATION
INDEPENDENT TRUSTEES
TRUSTEE
--------------------------------------------------------------------------------------------
ARCH CHOATE DAMMEYER HEAGY KENNEDY KERR NELSON SONNENSCHEIN WOOLSEY
-------- -------- -------- -------- -------- -------- -------- ------------ --------
Dollar range of equity
securities and deferred
compensation in Municipal
Opportunity Trust II........... none none over none none over none $1- none
$100,000 $100,000 $10,000
Dollar range of equity
securities and deferred
compensation in Value Municipal
Income Trust................... none none none none none none none none none
Dollar range of equity
securities and deferred
compensation in the Acquiring
Fund........................... $1- none over none none none none $1- none
$10,000 $100,000 $10,000
Aggregate dollar range of equity
securities and deferred
compensation in all registered
investment companies overseen
by trustee in Fund Complex..... $50,001- over over over over over over over $10,000-
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $50,001
INTERESTED TRUSTEES
TRUSTEE
------------------------------
MERIN POWERS WHALEN
----- ------ ------
Dollar range of equity
securities and deferred
compensation in Municipal
Opportunity Trust II........... none none $1-
$10,000
Dollar range of equity
securities and deferred
compensation in Value Municipal
Income Trust................... none none none
Dollar range of equity
securities and deferred
compensation in the Acquiring
Fund........................... none none $1-
$10,000
Aggregate dollar range of equity
securities and deferred
compensation in all registered
investment companies overseen
by trustee in the Fund
Complex........................ over over over
$100,000 $100,000 $100,000
INVESTMENT ADVISORY AGREEMENT
Each Fund and the Adviser are parties to an investment advisory agreement
(each an "Advisory Agreement"). Under each Advisory Agreement, a Fund retains
the Adviser to manage the investment of such Fund's assets, including the
placing of orders for the purchase and sale of portfolio securities. The Adviser
obtains and evaluates economic, statistical and financial information to
formulate strategy and implement such Fund's investment objective. The Adviser
also furnishes offices, necessary facilities and equipment, provides
administrative services to such Fund, renders periodic reports to such Fund's
Board of Trustees and permits its officers and employees to serve without
compensation as trustees or officers of such Fund if elected to such positions.
A Fund, however, bears the costs of its day-to-day operations, including auction
agent fees, fees for broker-dealers participating in auctions of such Fund's
APS, custodian fees, legal and independent
S-14
registered public accounting firm fees, the costs of reports and proxies to
shareholders, compensation of trustees of such Fund (other than those who are
affiliated persons of Van Kampen Investments, the Adviser or the Administrator)
and all other ordinary business expenses not specifically assumed by the
Adviser. Each Advisory Agreement also provides that the Adviser shall not be
liable to a Fund for any actions or omissions in the absence of willful
misfeasance, bad faith, negligence or reckless disregard of its obligations and
duties under such Advisory Agreement.
Each Advisory Agreement may be continued from year to year if specifically
approved at least annually (a)(i) by a Fund's Board of Trustees or (ii) by a
vote of a majority of a Fund's outstanding voting securities and (b) by a vote
of a majority of the trustees who are not parties to the agreement or interested
persons of any such party by votes cast in person at a meeting called for such
purpose. Each Advisory Agreement provides that it shall terminate automatically
if assigned and that it may be terminated without penalty by either party on 60
days' written notice.
In approving each Advisory Agreement, the Board of Trustees of each Fund,
including the non-interested trustees, considered the nature, quality and scope
of the services provided by the Adviser, the performance, fees and expenses of a
Fund compared to other similar investment companies, the Adviser's expenses in
providing the services and the profitability of the Adviser and its affiliated
companies. The Board of Trustees of each Fund also reviewed the benefit to the
Adviser of receiving research paid for by Fund assets and the propriety of such
an arrangement and evaluated other benefits the Adviser derives from its
relationship with a Fund. The Board of Trustees of each Fund considered the
extent to which any economies of scale experienced by the Adviser are shared
with a Fund's shareholders, and the propriety of existing and alternative
breakpoints in a Fund's advisory fee schedule. The Board of Trustees of each
Fund considered comparative advisory fees of a Fund and other investment
companies at different asset levels. The Board of Trustees of each Fund reviewed
reports from third parties about the foregoing factors and considered changes,
if any, in such items since its previous approval. The Board of Trustees of each
Fund discussed the financial strength of the Adviser and its affiliated
companies and the capability of the personnel of the Adviser. The Board of
Trustees of each Fund reviewed the statutory and regulatory requirements for
approval of advisory agreements. The Board of Trustees of each Fund, including
the non-interested trustees, evaluated all of the foregoing and determined, in
the exercise of its business judgment, that approval of each Advisory Agreement
was in the best interests of the respective Fund and its shareholders.
ADVISORY FEES
FISCAL YEAR ENDED OCTOBER 31,
------------------------------------
2004 2003 2002
---------- ---------- ----------
The Adviser received the approximate advisory
fees from each Fund as follows:
Municipal Opportunity Trust II................. $1,743,012 $1,748,973 $1,719,486
Value Municipal Income Trust................... $3,545,870 $3,566,745 $3,524,738
Acquiring Fund................................. $1,202,514 $1,208,379 $1,192,207
S-15
OTHER AGREEMENTS
ADMINISTRATIVE SERVICES AGREEMENT
Each Fund was a party to an administrative services agreement. The
administrative services provided by the Administrator to each Fund included
record keeping and reporting responsibilities with respect to each Fund's
portfolio and preferred shares and providing certain services to shareholders.
Prior to May 14, 2002, each Fund paid the Administrator a monthly administrative
services fee at the annual rate of 0.20% of the average net assets of each Fund.
Prior to June 1, 2004, each Fund paid the Administrator a monthly administrative
services fee at the annual rate of 0.05% of the average net assets of each Fund.
Effective June 1, 2004, the administrative services fee was reduced from 0.05%
to 0.00%. The administrative services agreement for each Fund was terminated
effective May 26, 2005.
ADMINISTRATIVE SERVICES FEES
FISCAL YEAR ENDED OCTOBER 31,
------------------------------
2004 2003 2002
-------- -------- --------
Van Kampen Funds Inc. received the approximate
administrative services fees from each Fund as
follows:
Municipal Opportunity Trust II...................... $ 84,934 $145,750 $370,936
Value Municipal Income Trust........................ 172,834 297,229 760,602
Acquiring Fund...................................... 58,584 100,699 257,217
ACCOUNTING SERVICES AGREEMENT
Each Fund has entered into an accounting services agreement pursuant to
which the Adviser provides accounting services to each Fund supplementary to
those provided by the custodian. Such services are expected to enable each Fund
to more closely monitor and maintain its accounts and records. Each Fund pays
all costs and expenses related to such services, including all salary and
related benefits of accounting personnel, as well as the overhead and expenses
of office space and the equipment necessary to render such services. Each Fund
shares together with the other Van Kampen funds in the cost of providing such
services with 25% of such costs shared proportionately based on the respective
number of classes of securities issued per fund and the remaining 75% of such
costs based proportionately on the respective net assets per fund.
ACCOUNTING SERVICES FEES
FISCAL YEAR ENDED OCTOBER 31,
------------------------------
2004 2003 2002
-------- -------- --------
The Adviser received the approximate accounting services
fees from each Fund as follows:
Municipal Opportunity Trust II......................... $19,698 $21,576 $23,168
Value Municipal Income Trust........................... 30,315 35,430 36,540
Acquiring Fund......................................... 16,541 17,741 19,257
S-16
LEGAL SERVICES AGREEMENT
Each Fund and certain other Van Kampen funds have entered into legal
services agreements pursuant to which Van Kampen Investments provides legal
services, including without limitation, accurate maintenance of each fund's
minute books and records, preparation and oversight of each fund's regulatory
reports and other information provided to shareholders, as well as responding to
day-to-day legal issues on behalf of the funds. Payment by the funds for such
services is made on a cost basis for the salary and salary-related benefits,
including but not limited to bonuses, group insurance and other regular wages
for the employment of personnel. Of the total costs for legal services provided
to the funds, one half of such costs are allocated equally to each fund and the
remaining one half of such costs are allocated to specific funds based on
monthly time records.
LEGAL SERVICES FEES
FISCAL YEAR ENDED OCTOBER 31,
------------------------------
2004 2003 2002
-------- -------- --------
Van Kampen Investments received the approximate legal
services fees from each Fund as follows:
Municipal Opportunity Trust II......................... $17,192 $16,054 $11,825
Value Municipal Income Trust........................... 21,488 20,301 14,788
Acquiring Fund......................................... 13,986 14,416 11,256
FUND MANAGEMENT
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
As of October 31, 2004, Timothy Haney managed 12 registered investment
companies with a total of approximately $2.9 billion in assets; 0 pooled
investment vehicles other than registered investment companies; and 0 other
accounts.
As of October 31, 2004, Robert Wimmel managed 36 registered investment
companies with a total of approximately $11.0 billion in assets; 0 pooled
investment vehicles other than registered investment companies; and 0 other
accounts.
As of October 31, 2004, John R. Reynoldson managed 33 registered investment
companies with a total of approximately $7.8 billion in assets; 0 pooled
investment vehicles other than registered investment companies; and 0 other
accounts.
Because the portfolio managers manage assets for other investment
companies, pooled investment vehicles, and/or other accounts (including
institutional clients, pension plans and certain high net worth individuals),
there may be an incentive to favor one client over another resulting in
conflicts of interest. For instance, the Adviser may receive fees from certain
accounts that are higher than the fee it receives from the Funds, or it may
receive a performance-based fee on certain accounts. In those instances, the
portfolio managers may have an incentive to favor the higher and/or
performance-based fee accounts over the Funds. The portfolio managers of the
Funds do not currently manage assets for other investment companies, pooled
investment vehicles or other accounts that charge a performance fee. The Adviser
has adopted trade allocation and other policies and procedures that it believes
are reasonably designed to address these and other conflicts of interest.
S-17
PORTFOLIO MANAGER COMPENSATION STRUCTURE
Portfolio managers receive a combination of base compensation and
discretionary compensation, comprised of a cash bonus and several deferred
compensation programs described below. The methodology used to determine
portfolio manager compensation is applied across all accounts managed by the
portfolio manager.
BASE SALARY COMPENSATION. Generally, portfolio managers receive base
salary compensation based on the level of their position with the Adviser.
DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio
managers may receive discretionary compensation.
Discretionary compensation can include:
- Cash Bonus;
- Morgan Stanley's Equity Incentive Compensation Program (EICP) awards -- a
mandatory program that defers a portion of discretionary year-end
compensation into restricted stock units or other awards based on Morgan
Stanley common stock that are subject to vesting and other conditions;
- Investment Management Deferred Compensation Plan (IMDCP) awards -- a
mandatory program that defers a portion of discretionary year-end
compensation and notionally invests it in designated funds advised by the
Adviser or its affiliates. The award is subject to vesting and other
conditions. Portfolio managers must notionally invest a minimum of 25% to
a maximum of 50% of the IMDCP deferral into a combination of the
designated funds they manage that are included in the IMDCP fund menu;
- Select Employees' Capital Accumulation Program (SECAP) awards -- a
voluntary program that permits employees to elect to defer a portion of
their discretionary year-end compensation and notionally invest the
deferred amount across a range of designated investment funds, including
funds advised by the Adviser or its affiliates, and
- Voluntary Equity Incentive Compensation Program (VEICP) awards -- a
voluntary program that permits employees to elect to defer a portion of
their discretionary year-end compensation to invest in Morgan Stanley
stock units.
Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:
- Investment performance. A portfolio manager's compensation is linked to
the pre-tax investment performance of the accounts managed by the
portfolio manager. Investment performance is calculated for one-, three-
and five-year periods measured against a fund's primary benchmark (as set
forth in the fund's prospectus), indices and/or peer groups. Generally,
the greatest weight is placed on the three- and five-year periods.
- Revenues generated by the investment companies, pooled investment
vehicles and other accounts managed by the portfolio manager.
S-18
- Contribution to the business objectives of the Adviser.
- The dollar amount of assets managed by the portfolio manager.
- Market compensation survey research by independent third parties.
- Other qualitative factors, such as contributions to client objectives.
- Performance of Morgan Stanley and Morgan Stanley Investment Management,
and the overall performance of the Global Investor Group, a department
within Morgan Stanley Investment Management that includes all investment
professionals.
Occasionally, to attract new hires or to retain key employees, the total
amount of compensation will be guaranteed in advance of the fiscal year end
based on current market levels. In limited circumstances, the guarantee may
continue for more than one year. The guaranteed compensation is based on the
same factors as those comprising overall compensation described above.
SECURITIES OWNERSHIP OF PORTFOLIO MANAGERS
[As of October 31, 2004, the dollar range of securities beneficially owned
by each portfolio manager in each Fund is shown below:
Timothy Haney--[ ];(1)
Robert Wimmel--[ ];(1)
John R. Reynoldson--[ ].(1)
------------
(1) Includes amounts held directly or notionally in each Fund through certain
defined contribution and/or deferred compensation programs.]
[As of each Fund's fiscal year end, none of the portfolio managers owned
equity securities in any of the Funds.]
CODE OF ETHICS
The Funds, the Adviser, and the Administrator have adopted a Code of Ethics
(the "Code of Ethics") that sets forth general and specific standards relating
to the securities trading activities of their employees. The Code of Ethics does
not prohibit employees from acquiring securities that may be purchased or held
by the Funds, but is intended to ensure that all employees conduct their
personal transactions in a manner that does not interfere with the portfolio
transactions of the Funds or other Van Kampen funds, or that such employees take
unfair advantage of their relationship with the Funds. Among other things, the
Code of Ethics prohibits certain types of transactions absent prior approval,
imposes various trading restrictions (such as time periods during which personal
transactions may or may not be made) and requires quarterly reporting of
securities transactions and other reporting matters. All reportable securities
transactions and other required reports are to be reviewed by appropriate
personnel for compliance with the Code of Ethics. Additional restrictions apply
to portfolio managers, traders, research analysts and others who may have access
to nonpublic information about the trading activities of the Funds or other
S-19
Van Kampen funds or who otherwise are involved in the investment advisory
process. Exceptions to these and other provisions of the Code of Ethics may be
granted in particular circumstances after review by appropriate personnel.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
The Adviser is responsible for decisions to buy and sell securities for the
Funds, the selection of brokers and dealers to effect the transactions and the
negotiation of prices and any brokerage commissions on such transactions. While
the Adviser will be primarily responsible for the placement of each Fund's
portfolio business, the policies and practices in this regard are subject to
review by each Fund's Board of Trustees.
As most transactions made by a Fund are principal transactions at net
prices, a Fund generally incurs little or no brokerage costs. The portfolio
securities in which a Fund invests are normally purchased directly from the
issuer or in the over-the-counter market from an underwriter or market maker for
the securities. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market makers include a spread or markup to the dealer
between the bid and asked price. Sales to dealers are effected at bid prices. A
Fund may also purchase certain money market instruments directly from an issuer,
in which case no commissions or discounts are paid, or may purchase and sell
listed securities on an exchange, which are effected through brokers who charge
a commission for their services.
The Adviser is responsible for placing portfolio transactions and does so
in a manner deemed fair and reasonable to each Fund and not according to any
formula. The primary consideration in all portfolio transactions is prompt
execution of orders in an effective manner at the most favorable price. In
selecting broker-dealers and in negotiating prices and any brokerage commissions
on such transactions, the Adviser considers the firm's reliability, integrity
and financial condition and the firm's execution capability, the size and
breadth of the market for the security, the size of and difficulty in executing
the order, and the best net price. There are many instances when, in the
judgment of the Adviser, more than one firm can offer comparable execution
services. In selecting among such firms, consideration may be given to those
firms which supply research and other services in addition to execution
services. The Adviser is authorized to pay higher commissions to brokerage firms
that provide it with investment and research information than to firms which do
not provide such services if the Adviser determines that such commissions are
reasonable in relation to the overall services provided. No specific value can
be assigned to such research services which are furnished without cost to the
Adviser. Since statistical and other research information is only supplementary
to the research efforts of the Adviser and still must be analyzed and reviewed
by its staff, the receipt of research information is not expected to reduce its
expenses materially. The investment advisory fee is not reduced as a result of
the Adviser's receipt of such research services. Services provided may include
(a) furnishing advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; (b) furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (c) effecting
securities transactions and performing functions incidental thereto (such as
clearance, settlement and custody). Research services furnished by firms through
which a
S-20
Fund effects its securities transactions may be used by the Adviser in servicing
all of its advisory accounts; not all of such services may be used by the
Adviser in connection with a Fund.
The Adviser also may place portfolio transactions, to the extent permitted
by law, with brokerage firms affiliated with a Fund and the Adviser if it
reasonably believes that the quality of execution and the commission are
comparable to that available from other qualified firms.
The Adviser may place portfolio transactions at or about the same time for
other advisory accounts, including other investment companies. The Adviser seeks
to allocate portfolio transactions equitably whenever concurrent decisions are
made to purchase or sell securities for a Fund and another advisory account. In
some cases, this procedure could have an adverse effect on the price or the
amount of securities available to a Fund. In making such allocations among a
Fund and other advisory accounts, the main factors considered by the Adviser are
the respective sizes of such Fund and other advisory accounts, the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and opinions of the persons responsible
for recommending the investment.
Certain broker-dealers, through which a Fund may effect securities
transactions, are affiliated persons (as defined in the 1940 Act) of a Fund or
affiliated persons of such affiliates, including Morgan Stanley or its
subsidiaries. Each Fund's Board of Trustees has adopted certain policies
incorporating the standards of Rule 17e-1 issued by the SEC under the 1940 Act
which require that the commissions paid to affiliates of the Fund must be
reasonable and fair compared to the commissions, fees or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time.
The rule and procedures also contain review requirements and require the Adviser
to furnish reports to the trustees and to maintain records in connection with
such reviews. After consideration of all factors deemed relevant, the trustees
will consider from time to time whether the advisory fee for each Fund will be
reduced by all or a portion of the brokerage commission paid to affiliated
brokers.
Unless otherwise disclosed below, the Funds paid no commissions to
affiliated brokers during the last three fiscal years. The Funds paid the
following commissions to brokers during the fiscal years shown:
AFFILIATED BROKERS
ALL BROKERS MORGAN STANLEY DW INC.
----------- ----------------------
MUNICIPAL OPPORTUNITY TRUST II
Commissions Paid:
Fiscal year ended October 31,
2004.............................. $17,882 -0-
Fiscal year ended October 31,
2003.............................. 14,970 -0-
Fiscal year ended October 31,
2002.............................. 1,330 -0-
S-21
AFFILIATED BROKERS
ALL BROKERS MORGAN STANLEY DW INC.
----------- ----------------------
VALUE MUNICIPAL INCOME TRUST
Commissions Paid:
Fiscal year ended October 31,
2004.............................. $38,198 -0-
Fiscal year ended October 31,
2003.............................. 29,326 -0-
Fiscal year ended October 31,
2002.............................. 2,899 -0-
ACQUIRING FUND
Commissions Paid:
Fiscal year ended October 31,
2004.............................. $10,143 -0-
Fiscal year ended October 31,
2003.............................. 12,823 -0-
Fiscal year ended October 31,
2002.............................. 1,084 -0-
During the fiscal year ended October 31, 2004, none of the Funds paid
brokerage commissions to brokers selected primarily on the basis of research
services provided to the Adviser.
OTHER INFORMATION
CUSTODY OF ASSETS
All securities owned by the Funds and all cash, including proceeds from the
sale of securities in each Fund's investment portfolio, are held by State Street
Bank and Trust Company, 225 West Franklin Street, Boston, Massachusetts 02110,
as custodian. The custodian also provides accounting services to the Funds.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
The Funds' Proxy Voting Policy and Procedures are included as Appendix C to
this Statement of Additional Information. Information on how each Fund voted
proxies relating to portfolio securities during the most recent twelve-month
period ended June 30 is available without charge, upon request, by calling (800)
341-2929 or by visiting our web site at www.vankampen.com. This information is
also available on the SEC's web site at http://www.sec.gov.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
An independent registered public accounting firm for the Funds performs an
annual audit of each Fund's financial statements. Each Fund's Board of Trustees
has engaged , located at , to be each Fund's independent
registered public accounting firm.
FINANCIAL STATEMENTS
Incorporated herein by reference in their respective entireties are (i) the
audited financial statements of the Acquiring Fund for the fiscal year ended
October 31, 2004, as included in Appendix D hereto, (ii) the unaudited financial
statements of the Acquiring
S-22
Fund for the six-month period ended April 30, 2005, as included in Appendix E
hereto, (iii) the audited financial statements of Municipal Opportunity Trust II
for the fiscal year ended October 31, 2004, as included in Appendix F hereto,
(iv) the unaudited financial statements of Municipal Opportunity Trust II for
the six-month period ended April 30, 2005, as included in Appendix G hereto, (v)
the audited financial statements of Value Municipal Income Trust for the fiscal
year ended October 31, 2004, as included in Appendix H hereto, and (vi) the
unaudited financial statements of Value Municipal Income Trust for the six-month
period ended April 30, 2005, as included in Appendix I hereto.
PRO FORMA FINANCIAL STATEMENTS
Set forth in Appendix J hereto are unaudited pro forma financial statements
of the Acquiring Fund giving effect to the Reorganization which include: (i) Pro
Forma Condensed Statements of Assets and Liabilities at January 31, 2005, (ii)
Pro Forma Condensed Statement of Operations for the one year period ended
January 31, 2005 and (iii) Pro Forma Portfolio of Investments at January 31,
2005.
S-23
APPENDIX A
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
In order to consummate the Reorganization and in consideration of the
promises and the covenants and agreements hereinafter set forth, and intending
to be legally bound, Van Kampen XXXXXX, a registered closed-end investment
company, File No. 811-XXXX (the "Target Fund") and Van Kampen XXXXXX (the
"Acquiring Fund"), a registered closed-end investment company, File No.
811-XXXX, each hereby agree as follows:
1. Representations and Warranties of the Acquiring Fund.
The Acquiring Fund represents and warrants to, and agrees with, the
Target Fund that:
(a) The Acquiring Fund is a trust, with transferable shares, duly
organized, validly existing and in good standing in conformity
with the laws of its jurisdiction of organization, and has the
power to own all of its assets and to carry out this
Agreement. The Acquiring Fund has all necessary federal, state
and local authorizations to carry on its business as it is now
being conducted and to carry out this Agreement.
(b) The Acquiring Fund is duly registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as a
[non-]diversified, closed-end management investment company
and such registration has not been revoked or rescinded and is
in full force and effect. The Acquiring Fund has elected and
qualified for the special tax treatment afforded regulated
investment companies ("RICs") under Section 851 of the
Internal Revenue Code (the "Code") at all times since its
inception and intends to continue to so qualify until
consummation of the reorganization contemplated hereby (the
"Reorganization") and thereafter.
(c) The Target Fund has been furnished with the Acquiring Fund's
Annual Report to Shareholders for the fiscal year ended XXXX,
2004, and the audited financial statements appearing therein,
having been audited by , independent registered
public accounting firm, fairly present the financial position
of the Acquiring Fund as of the respective dates indicated, in
conformity with accounting principles generally accepted in
the United States applied on a consistent basis.
(d) An unaudited statement of assets, liabilities and capital of
the Acquiring Fund and an unaudited schedule of investments of
the Acquiring Fund, each as of the Valuation Time (as defined
in Section 3(e) of this Agreement), will be furnished to the
Target Fund, at or prior to the Closing Date (as defined in
Section 7(a) herein), for the purpose of determining the
number of Acquiring Fund Common Shares and Acquiring Fund APS
to be issued pursuant to Section 3(a) of this Agreement; each
will fairly present the financial position of the Acquiring
Fund as of the Valuation Time in conformity with generally
accepted accounting principles applied on a consistent basis.
(e) The Acquiring Fund has full power and authority to enter into
and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement has been
duly authorized by all necessary action of its Board of
Trustees, and this Agreement constitutes a valid and binding
contract enforceable in accordance with its terms, subject to
the effects of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar
A-1
laws relating to or affecting creditors' rights generally and
court decisions with respect thereto.
(f) There are no material legal, administrative or other
proceedings pending or, to the knowledge of the Acquiring
Fund, threatened against it which assert liability on the part
of the Acquiring Fund or which materially affect its financial
condition or its ability to consummate the Reorganization. The
Acquiring Fund is not charged with or, to the best of its
knowledge, threatened with any violation or investigation of
any possible violation of any provisions of any federal, state
or local law or regulation or administrative ruling relating
to any aspect of its business.
(g) The Acquiring Fund is not obligated under any provision of its
Declaration of Trust, as amended, or its by-laws, as amended,
and is not a party to any contract or other commitment or
obligation, and is not subject to any order or decree which
would be violated by its execution of or performance under
this Agreement, except insofar as the Funds have mutually
agreed to amend such contract or other commitment or
obligation to cure any potential violation as a condition
precedent to the Reorganization.
(h) There are no material contracts outstanding to which the
Acquiring Fund is a party that have not been disclosed in the
N-14 Registration Statement (as defined in subsection (k)
below) or that will not otherwise be disclosed to the Target
Fund prior to the Valuation Time.
(i) The Acquiring Fund has no known liabilities of a material
amount, contingent or otherwise, other than those shown on its
statements of assets, liabilities and capital referred to in
subsection (c) above, those incurred in the ordinary course of
its business as an investment company, and those incurred in
connection with the Reorganization. As of the Valuation Time,
the Acquiring Fund will advise the Target Fund in writing of
all known liabilities, contingent or otherwise, whether or not
incurred in the ordinary course of business, existing or
accrued as of such time, except to the extent disclosed in the
financial statements referred to in subsection (c) above.
(j) No consent, approval, authorization or order of any court or
government authority is required for the consummation by the
Acquiring Fund of the Reorganization, except such as may be
required under the Securities Act of 1933, as amended (the
"1933 Act"), the Securities Exchange Act of 1934, as amended
(the "1934 Act") and the 1940 Act or state securities laws
(which term as used herein shall include the laws of the
District of Columbia and Puerto Rico).
(k) The registration statement filed by the Acquiring Fund on Form
N-14, which includes the proxy statement of the Target Fund
and the Acquiring Fund with respect to the transactions
contemplated herein (the "Joint Proxy Statement/Prospectus"),
and any supplement or amendment thereto or to the documents
therein (as amended or supplemented, the "N-14 Registration
Statement"), on its effective date, at the time of the
shareholders' meetings referred to in Section 8(a) and Section
9(a) of this Agreement and at the Closing Date, insofar as it
relates to the Acquiring Fund, (i) complied or will comply in
all material respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act and the rules and regulations
thereunder and (ii) did not or will not contain any
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untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading; and the Joint
Proxy Statement/Prospectus included therein did not or will
not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the
representations and warranties in this subsection only shall
apply to statements in or omissions from the N-14 Registration
Statement made in reliance upon and in conformity with
information furnished by the Acquiring Fund for use in the
N-14 Registration Statement.
(l) The Acquiring Fund is authorized to issue an unlimited number
of common shares of beneficial interest, par value $.01 per
share (the "Acquiring Fund Common Shares"), and XXXX preferred
shares of beneficial interest, par value $.01 per share. The
Board of Trustees of the Acquiring Fund has designated XXXX
preferred shares as Auction Preferred Shares ("Acquiring Fund
APS"). Each outstanding Acquiring Fund Common Share and each
Acquiring Fund APS of the Acquiring Fund is fully paid and,
except as provided in Section 5.1 of the Acquiring Fund's
Declaration of Trust, nonassessable, and has full voting
rights.
(m) The Acquiring Fund Common Shares and the Acquiring Fund APS to
be issued to the Target Fund pursuant to this Agreement will
have been duly authorized and, when issued and delivered
pursuant to this Agreement, will be legally and validly issued
and will be fully paid and, except as provided in Section 5.1
of the Acquiring Fund's Declaration of Trust, nonassessable
and will have full voting rights, and no shareholder of the
Acquiring Fund will have any preemptive right of subscription
or purchase in respect thereof.
(n) At or prior to the Closing Date, the Acquiring Fund Common
Shares to be transferred to the Target Fund for distribution
to the shareholders of the Target Fund on the Closing Date
will be duly qualified for offering to the public in all
states of the United States in which the sale of shares of the
Funds presently are qualified, and there will be a sufficient
number of such shares registered under the 1933 Act and, as
may be necessary, with each pertinent state securities
commission to permit the transfers contemplated by this
Agreement to be consummated.
(o) At or prior to the Closing Date, the Acquiring Fund APS to be
transferred to the Target Fund on the Closing Date will be
duly qualified for offering to the public in all states of the
United States in which the sale of APS of the Target Fund
presently are qualified, and there are a sufficient number of
Acquiring Fund APS registered under the 1933 Act and with each
pertinent state securities commission to permit the transfers
contemplated by this Agreement to be consummated.
(p) At or prior to the Closing Date, the Acquiring Fund will have
obtained any and all regulatory, trustee and shareholder
approvals necessary to issue the Acquiring Fund Common Shares
and the Acquiring Fund APS to the Target Fund.
(q) The Acquiring Fund has filed, or intends to file, or has
obtained extensions to file, all federal, state and local tax
returns which are required to be filed by it, and has paid or
has obtained extensions to pay, all federal, state and local
taxes shown on said returns to be due and owing and all
assessments received by it, up to and including the taxable
year in which the Closing Date occurs. All tax liabilities of
the Acquiring Fund have been adequately provided for on its
books, and no tax deficiency or liability of the Acquiring
Fund has been asserted and no question with respect thereto
has been raised by the Internal Revenue Service or by any
state or local tax authority for taxes in excess of those
already paid, up to and including the taxable year in which
the Closing Date occurs.
(r) The Acquiring Fund has elected to qualify and has qualified as
a RIC as of and since its inception; has been a RIC under the
Code at all times since the end of its first taxable year when
it so qualified; qualifies and will continue to qualify as a
RIC under the Code; and has satisfied the distribution
requirements imposed by the Code for each of its taxable
years.
2. Representations and Warranties of the Target Fund.
The Target Fund represents and warrants to, and agrees with, the
Acquiring Fund that:
(a) The Target Fund is a trust, with transferable shares, duly
organized, validly existing and in good standing in conformity
with the laws of the jurisdiction of its organization, and has
the power to own all of its assets and to carry out this
Agreement. The Target Fund has all necessary federal, state
and local authorizations to carry on its business as it is now
being conducted and to carry out this Agreement.
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(b) The Target Fund is duly registered under the 1940 Act as a
[non-]diversified, closed-end management investment company,
and such registration has not been revoked or rescinded and is
in full force and effect. The Target Fund has elected and
qualified for the special tax treatment afforded RICs under
Section 851 of the Code at all times since its inception, and
intends to continue to so qualify through its taxable year
ending upon liquidation.
(c) As used in this Agreement, the term "Target Fund Investments"
shall mean (i) the investments of the Target Fund shown on the
schedule of its investments as of the Valuation Time furnished
to the Acquiring Fund; and (ii) all other assets owned by the
Target Fund or liabilities incurred as of the Valuation Time.
(d) The Target Fund has full power and authority to enter into and
perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement has been duly
authorized by all necessary action of its Board of Trustees
and this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws relating to or affecting
creditors' rights generally and court decisions with respect
thereto.
(e) The Acquiring Fund has been furnished with the Target Fund's
Annual Report to Shareholders for the fiscal year ended XXXX,
2004, and the audited financial statements appearing therein,
having been audited by , independent registered
public accounting firm, fairly present the financial position
of the Target Fund as of the respective dates indicated, in
conformity with accounting principles generally accepted in
the United States applied on a consistent basis.
(f) An unaudited statement of assets, liabilities and capital of
the Target Fund and an unaudited schedule of investments of
the Target Fund, each as of the Valuation Time, will be
furnished to the Acquiring Fund at or prior to the Closing
Date for the purpose of determining the number of shares of
Acquiring Fund Common Shares and Acquiring Fund APS to be
issued to the Target Fund pursuant to Section 3 of this
Agreement; each will fairly present the financial position of
the Target Fund as of the Valuation Time in conformity with
generally accepted accounting principles applied on a
consistent basis.
(g) There are no material legal, administrative or other
proceedings pending or, to the knowledge of the Target Fund,
threatened against it which assert liability on the part of
the Target Fund or which materially affect its financial
condition or its ability to consummate the Reorganization. The
Target Fund is not charged with or, to the best of its
knowledge, threatened with any violation or investigation of
any possible violation of any provisions of any federal, state
or local law or regulation or administrative ruling relating
to any aspect of its business.
(h) There are no material contracts outstanding to which the
Target Fund is a party that have not been disclosed in the
N-14 Registration Statement or will not otherwise be disclosed
to the Acquiring Fund prior to the Valuation Time.
(i) The Target Fund is not obligated under any provision of its
Declaration of Trust, as amended, or its by-laws, as amended,
or a party to any contract or other commitment or obligation,
and is not subject to any order or decree which would be
violated by its execution of or performance under this
Agreement, except insofar as the Funds have
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mutually agreed to amend such contract or other commitment or
obligation to cure any potential violation as a condition
precedent to the Reorganization.
(j) The Target Fund has no known liabilities of a material amount,
contingent or otherwise, other than those shown on its
statements of assets, liabilities and capital referred to
above, those incurred in the ordinary course of its business
as an investment company and those incurred in connection with
the Reorganization. As of the Valuation Time, the Target Fund
will advise the Acquiring Fund in writing of all known
liabilities, contingent or otherwise, whether or not incurred
in the ordinary course of business, existing or accrued as of
such time.
(k) The Target Fund has filed, or intends to file, or has obtained
extensions to file, all federal, state and local tax returns
which are required to be filed by it, and has paid or has
obtained extensions to pay, all federal, state and local taxes
shown on said returns to be due and owing and all assessments
received by it, up to and including the taxable year in which
the Closing Date occurs. All tax liabilities of the Target
Fund have been adequately provided for on its books, and no
tax deficiency or liability of the Target Fund has been
asserted and no question with respect thereto has been raised
by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid, up to and
including the taxable year in which the Closing Date occurs.
(l) At both the Valuation Time and the Closing Date, the Target
Fund will have full right, power and authority to sell,
assign, transfer and deliver the Target Fund Investments. At
the Closing Date, subject only to the obligation to deliver
the Target Fund Investments as contemplated by this Agreement,
the Target Fund will have good and marketable title to all of
the Target Fund Investments, and the Acquiring Fund will
acquire all of the Target Fund Investments free and clear of
any encumbrances, liens or security interests and without any
restrictions upon the transfer thereof (except those imposed
by the federal or state securities laws and those
imperfections of title or encumbrances as do not materially
detract from the value or use of the Target Fund Investments
or materially affect title thereto).
(m) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Target Fund of the Reorganization, except such as may be
required under the 1933 Act, the 1934 Act, the 1940 Act or
state securities laws.
(n) The N-14 Registration Statement, on its effective date, at the
time of the shareholders' meetings called to vote on this
Agreement and on the Closing Date, insofar as it relates to
the Target Fund (i) complied or will comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and
the 1940 Act and the rules and regulations thereunder, and
(ii) did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading; and the Joint Proxy Statement/Prospectus
included therein did not or will not contain any untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this subsection shall apply only to statements in or omissions
from the N-14 Registration Statement made in reliance upon and
in conformity with information furnished by the Target Fund
for use in the N-14 Registration Statement.
A-5
(o) The Target Fund is authorized to issue an unlimited number of
common shares of beneficial interest, par value $.01 per share
(the "Target Fund Common Shares"), and XXXX preferred shares
of beneficial interest, par value $.01 per share. The Board of
Trustees of the Acquiring Fund has designated XXXX preferred
shares as Target Fund Preferred Shares (the "Target Fund
Preferred Shares"). Each outstanding Target Fund Common Share
and each of the outstanding Target Fund Preferred Shares is
fully paid and, except as provided in Section 5.1 of the
Target Fund's Declaration of Trust, nonassessable, and has
full voting rights.
(p) All of the issued and outstanding Target Fund Common Shares
and Target Fund Preferred Shares were offered for sale and
sold in conformity with all applicable federal and state
securities laws.
(q) The books and records of the Target Fund made available to the
Acquiring Fund and/or its counsel are substantially true and
correct and contain no material misstatements or omissions
with respect to the operations of the Target Fund.
(r) The Target Fund will not sell or otherwise dispose of any of
the Acquiring Fund Common Shares or Acquiring Fund APS to be
received in the Reorganization, except in distribution to the
shareholders of the Target Fund, as provided in Section 3 of
this Agreement.
(s) The Target Fund has elected to qualify and has qualified as a
"RIC" under the Code as of and since its inception; has been a
RIC under the Code at all times since the end of its first
taxable year when it so qualified; qualifies and will continue
to qualify as a RIC under the Code for its taxable year ending
upon its liquidation; and has satisfied the distribution
requirements imposed by the Code for each of its taxable
years.
3. The Reorganization.
(a) Subject to receiving the requisite approvals of the
shareholders of the Target Fund, and to the other terms and
conditions contained herein, (i) the Target Fund agrees to
convey, transfer and deliver to the Acquiring Fund and the
Acquiring Fund agrees to acquire from the Target Fund, on the
Closing Date, all of the Target Fund Investments (including
interest accrued as of the Valuation Time on debt
instruments), and assume substantially all of the liabilities
of the Target Fund, in exchange for that number of Target Fund
Common Shares and Target Fund Preferred Shares provided in
Section 4 of this Agreement. Pursuant to this Agreement, as
soon as practicable after the Closing Date, the Target Fund
will distribute all Acquiring Fund Common Shares and Acquiring
Fund APS received by it to its shareholders in exchange for
their Target Fund Common Shares and Target Fund Preferred
Shares. Such distributions shall be accomplished by the
opening of shareholder accounts on the share ledger records of
the Acquiring Fund in the amounts due the shareholders of the
Target Fund based on their respective holdings in the Target
Fund as of the Valuation Time.
(b) If it is determined that the portfolios of the Target Fund and
the Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon the
Acquiring Fund with respect to such investments, the Target
Fund, if requested by the Acquiring Fund, will dispose of a
sufficient amount of such investments as may be necessary to
avoid violating such limitations as of the Closing Date.
Notwithstanding the foregoing, (a) nothing herein will require
the Target Fund to dispose of any portfolios, securities or
other investments, if, in the reasonable judgment of the
Target Fund's trustees or investment adviser, such disposition
would adversely affect the tax-free nature of the
Reorganization for federal income tax purposes or would
otherwise not be in the best interests of the Target Fund, and
(b) nothing will permit the Target Fund to dispose of any
portfolio securities or other investments if, in the
reasonable judgment of the Acquiring Fund's trustees or
investment adviser, such disposition would adversely affect
the tax-free nature of the Reorganization for federal income
tax purposes or would otherwise not be in the best interests
of the Acquiring Fund.
(c) Prior to the Closing Date, the Target Fund shall declare a
dividend or dividends which, together with all such previous
dividends, shall have the effect of distributing to their
respective shareholders all of their respective net investment
company taxable income to and including the Closing Date, if
any (computed without regard to any deduction for dividends
paid), and all of its net capital gain, if any, realized to
and including the Closing Date. In this regard and in
connection with the Reorganization, the last dividend period
for the Target Fund Preferred Shares prior to the Closing Date
may be shorter than the dividend period for such Target Fund
Preferred Shares determined as set forth in the applicable
Certificate of Vote pertaining to such Target Fund Preferred
Shares.
(d) The Target Fund will pay or cause to be paid to the Acquiring
Fund any interest the Target Fund receives on or after the
Closing Date with respect to any of the Target Fund
Investments transferred to the Acquiring Fund hereunder.
A-6
(e) The Valuation Time shall be 4:00 p.m., Eastern time, on XXXX,
2005, or such earlier or later day and time as may be mutually
agreed upon in writing (the "Valuation Time").
(f) Recourse for liabilities assumed from the Target Fund by the
Acquiring Fund in the Reorganization will be limited to the
net assets acquired by the Acquiring Fund. The known
liabilities of the Target Fund, as of the Valuation Time,
shall be confirmed to the Acquiring Fund pursuant to Section
2(j) of this Agreement.
(g) The Target Fund will be terminated following the Closing Date
by terminating its registration under the 1940 Act and its
organization under Massachusetts law and will withdraw its
authority to do business in any state where it is required to
do so.
(h) The Acquiring Fund will file with the Secretary of State of
The Commonwealth of Massachusetts, as required, any amendment
to its Certificate of Vote establishing the powers, rights and
preferences of the Acquiring Fund APS prior to the closing of
the Reorganization.
4. Issuance and Valuation of Acquiring Fund Common Shares and Acquiring
Fund APS in the Reorganization.
Acquiring Fund Common Shares and Acquiring Fund APS of an aggregate net asset
value or aggregate liquidation preference, as the case may be, equal to the
value of the assets of the Target Fund acquired in the Reorganization determined
as hereinafter provided, reduced by the amount of liabilities of the Target Fund
assumed by the Acquiring Fund in the Reorganization, shall be issued by the
Acquiring Fund to the Target Fund in exchange for such assets of the Target
Fund. The Acquiring Fund will issue to the Target Fund (i) a number of Acquiring
Fund Common Shares, the aggregate net asset value of which will equal the
aggregate net asset value of the Target Fund Common Shares, determined as set
forth below, and (ii) a number of Acquiring Fund APS, the aggregate liquidation
preference and value of which will equal the aggregate liquidation preference
and value of the Target Fund Preferred Shares, determined as set forth below.
The net asset value of each of the Funds and the liquidation preference and
value of each of the Target Fund Preferred Shares and the Acquiring Fund APS
shall be determined as of the Valuation Time in accordance with the regular
procedures of the investment adviser, and no formula will be used to adjust the
net asset value so determined of any Fund to take into account differences in
realized and unrealized gains and losses. Values in all cases shall be
determined as of the Valuation Time. The value of the Target Fund Investments to
be transferred to the Acquiring Fund shall be determined pursuant to the regular
procedures of the investment adviser.
Such valuation and determination shall be made by the Acquiring Fund in
cooperation with the Target Fund and shall be confirmed in writing by the
Acquiring Fund to the Target Fund. The net asset value per share of the
Acquiring Fund Common Shares and the liquidation preference and value per share
of the Acquiring Fund APS shall be determined in accordance with such procedures
and the Acquiring Fund shall certify the computations involved. For purposes of
determining the net asset value of each of a Target Fund Common Share and an
Acquiring Fund Common Share, the value of the securities held by the applicable
Fund plus any cash or other assets (including interest accrued but not yet
received) minus all liabilities (including accrued expenses) and the aggregate
liquidation value of the outstanding shares of Target Fund Preferred Shares or
Acquiring Fund APS, as the case may be, is divided by the total number of Target
Fund Common Shares or Acquiring Fund Common Shares, as the case may be,
outstanding at such time.
A-7
The Acquiring Fund shall issue to the Target Fund separate certificates or
share deposit receipts for the Acquiring Fund Common Shares and the Acquiring
Fund APS, each registered in the name of the Target Fund. The Target Fund shall
then distribute the Acquiring Fund Common Shares and the Acquiring Fund APS to
the holders of Target Fund Common Shares and Target Fund Preferred Shares by
redelivering the certificates or share deposit receipts evidencing ownership of
(i) the Acquiring Fund Common Shares to EquiServe Trust Company, N.A., as the
transfer agent and registrar for the Acquiring Fund Common Shares, for
distribution to the holders of Target Fund Common Shares on the basis of such
holder's proportionate interest in the aggregate net asset value of the Target
Fund Common Shares and (ii) the Acquiring Fund APS to Deutsche Bank Trust
Company Americas, as the transfer agent and registrar for the Acquiring Fund
APS, for distribution to the holders of Target Fund Preferred Shares on the
basis of such holder's proportionate interest in the aggregate liquidation
preference and value of the Target Fund Preferred Shares. With respect to any
Target Fund shareholder holding certificates evidencing ownership of Target Fund
Common Shares as of the Closing Date, and subject to the Acquiring Fund being
informed thereof in writing by the Target Fund, the Acquiring Fund will not
permit such shareholder to receive new certificates evidencing ownership of the
Acquiring Fund Common Shares or Acquiring Fund APS, exchange Acquiring Fund
Common Shares or Acquiring Fund APS credited to such shareholder's account for
shares of other investment companies managed by the Adviser or any of its
affiliates, or pledge or redeem such Acquiring Fund Common Shares or Acquiring
Fund APS, in any case, until notified by the Target Fund or its agent that such
shareholder has surrendered his or her outstanding certificates evidencing
ownership of Target Fund Common Shares or Target Fund Preferred Shares or, in
the event of lost certificates, posted adequate bond. The Target Fund, at its
own expense, will request its shareholders to surrender their outstanding
certificates evidencing ownership of Target Fund Common Shares or Target Fund
Preferred Shares, as the case may be, or post adequate bond therefor.
No fractional shares of Acquiring Fund Common Shares will be issued to
holders of Target Fund Common Shares unless such shares are held in a Dividend
Reinvestment Plan account. In lieu thereof, the Acquiring Fund's transfer agent,
EquiServe Trust Company, N.A., will aggregate all fractional Acquiring Fund
Common Shares to be issued in connection with the Reorganization (other than
those issued to a Dividend Reinvestment Plan account) and sell the resulting
full shares on the New York Stock Exchange at the current market price for
Acquiring Fund Common Shares for the account of all holders of such fractional
interests, and each such holder will receive such holder's pro rata share of the
proceeds of such sale upon surrender of such holder's certificates representing
Acquiring Fund Common Shares.
5. Payment of Expenses.
(a) With respect to expenses incurred in connection with the
Reorganization, the Target Fund and the Acquiring Fund will
share, in proportion to their respective projected declines in
total operating expenses, all expenses incurred in connection
with the Reorganization, including, but not limited to, all
costs related to the preparation and distribution of materials
distributed to each Fund's Board of Trustees; expenses
incurred in connection with the preparation of the Agreement
and Plan of Reorganization and a registration statement on
Form N-14; SEC and state securities commission filing fees and
legal and audit fees in connection with the Reorganization;
costs of printing and distributing the Joint Proxy Statement/
Prospectus; legal fees incurred preparing each Fund's board
materials, attending each Fund's board meetings and preparing
the minutes; auditing fees associated with each Fund's
financial statements; stock exchange fees, rating agency fees,
portfolio transfer taxes (if any) and any similar expenses
incurred in connection with the Reorganization.
(b) If for any reason the Reorganization is not consummated, no
party shall be liable to any other party for any damages
resulting therefrom, including, without limitation,
consequential damages, and the investment adviser shall pay
all expenses incurred by each Fund in connection with the
Reorganization.
A-8
6. Covenants of the Funds.
(a) Each Fund covenants to operate its business as presently
conducted between the date hereof and the Closing Date.
(b) The Target Fund agrees that following the consummation of the
Reorganization, it will terminate in accordance with the laws
of The Commonwealth of Massachusetts and any other applicable
law, it will not make any distributions of any Acquiring Fund
Common Shares or Acquiring Fund APS other than to its
respective shareholders and without first paying or adequately
providing for the payment of all of its respective liabilities
not assumed by the Acquiring Fund, if any, and on and after
the Closing Date it shall not conduct any business except in
connection with its termination.
(c) The Target Fund undertakes that if the Reorganization is
consummated, it will file an application pursuant to Section
8(f) of the 1940 Act for an order declaring that the Target
Fund has ceased to be a registered investment company.
(d) The Acquiring Fund will file the N-14 Registration Statement
with the Securities and Exchange Commission (the "Commission")
and will use its best efforts to provide that the N-14
Registration Statement becomes effective as promptly as
practicable. Each Fund agrees to cooperate fully with the
other, and each will furnish to the other the information
relating to itself to be set forth in the N-14 Registration
Statement as required by the 1933 Act, the 1934 Act the 1940
Act, and the rules and regulations thereunder and the state
securities laws.
(e) The Acquiring Fund has no plan or intention to sell or
otherwise dispose of the Target Fund Investments, except for
dispositions made in the ordinary course of business.
(f) Each of the Funds agrees that by the Closing Date all of its
federal and other tax returns and reports required to be filed
on or before such date shall have been filed and all taxes
shown as due on said returns either have been paid or adequate
liability reserves have been provided for the payment of such
taxes.
The intention of the parties is that the transaction
contemplated by this Agreement will qualify as a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. Neither the Acquiring Fund nor the
Target Fund shall take any action or cause any action to be
taken (including, without limitation, the filing of any tax
return) that is inconsistent with such treatment or results in
the failure of the transaction to qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue
Code. At or prior to the Closing Date, the Acquiring Fund and
the Target Fund will take such action, or cause such action to
be taken, as is reasonably necessary to enable Skadden, Arps,
Slate, Meagher & Flom LLP ("Skadden"), special counsel to the
Funds, to render the tax opinion required herein (including,
without limitation, each party's execution of representations
reasonably requested by and addressed to Skadden.
In connection with this covenant, the Funds agree to
cooperate with each other in filing any tax return, amended
return or claim for refund, determining a liability for taxes
or a right to a refund of taxes or participating in or
conducting any audit or other proceeding in respect of taxes.
The Acquiring Fund agrees to retain for a period of ten (10)
years following the Closing Date all returns, schedules and
work papers and all material records or other documents
relating to tax matters of the Target Fund for each of such
Fund's taxable period first ending after the Closing Date and
for all prior taxable periods.
After the Closing Date, the Target Fund shall
prepare, or cause its agents to prepare, any federal, state or
local tax returns required to be filed by such fund with
respect to its final taxable year ending with its complete
liquidation and for any prior periods or taxable years and
further shall cause such tax returns to be duly filed with the
appropriate taxing authorities. Notwithstanding the
aforementioned provisions of this subsection, any expenses
incurred by the Target Fund (other than for payment of taxes)
in connection with the preparation and filing of said tax
returns after the Closing Date shall be borne by such Fund to
the extent such expenses have been accrued by such Fund in the
ordinary course without regard to the Reorganization; any
excess expenses shall be borne by the investment adviser or an
affiliate thereof.
A-9
(g) The Target Fund agrees to mail to its shareholders of record
entitled to vote at the special meeting of shareholders at
which action is to be considered regarding this Agreement, in
sufficient time to comply with requirements as to notice
thereof, a combined proxy statement and prospectus which
complies in all material respects with the applicable
provisions of Section 14(a) of the 1934 Act and Section 20(a)
of the 1940 Act, and the rules and regulations, respectively,
thereunder.
(h) Following the consummation of the Reorganization, the
Acquiring Fund will continue its business as a diversified,
closed-end management investment company registered under the
1940 Act.
7. Closing Date.
(a) Delivery of the assets of the Target Fund to be transferred,
together with any other Target Fund Investments, and the
Acquiring Fund Common Shares and Acquiring Fund APS to be
issued as provided in this Agreement, shall be made at such
place and time as the Funds shall mutually agree on the next
full business day following the Valuation Time, or at such
other time and date agreed to by the Funds, the date and time
upon which such delivery is to take place being referred to
herein as the "Closing Date." To the extent that any Target
Fund Investments, for any reason, are not transferable on the
Closing Date, the Target Fund shall cause such Target Fund
Investments to be transferred to the Acquiring Fund's account
with its custodian at the earliest practicable date
thereafter.
(b) The Target Fund will deliver to the Acquiring Fund on the
Closing Date confirmation or other adequate evidence as to the
tax basis of the Target Fund Investments delivered to the
Acquiring Fund hereunder.
(c) As soon as practicable after the close of business on the
Closing Date, the Target Fund shall deliver to the Acquiring
Fund a list of the names and addresses of all of the
shareholders of record of the Target Fund on the Closing Date
and the number of Target Fund Common Shares and Target Fund
Preferred Shares owned by each such shareholder, certified to
the best of its knowledge and belief by the transfer agent for
the Target Fund or by its President.
8. Conditions of the Target Fund.
The obligations of the Target Fund hereunder shall be subject to the
following conditions:
(a) That this Agreement shall have been adopted, and the
Reorganization shall have been approved, by the Board of
Trustees of the Target Fund and by the affirmative vote of the
holders of a majority of each of the outstanding Target Fund
Common Shares and Target Fund Preferred Shares, each voting
separately as a class; and that the Acquiring Fund shall have
delivered to the Target Fund a copy of the resolution
approving this Agreement adopted by the Board of Trustees of
the Acquiring Fund, and a certificate setting forth the vote
of holders of Acquiring Fund Common Shares approving the
issuance of additional Acquiring Fund Common Shares, each
certified by its Secretary.
(b) That the Target Fund shall have received from the Acquiring
Fund a statement of assets, liabilities and capital, with
values determined as provided in Section 4 of this Agreement,
together with a schedule of such Fund's investments, all as of
the Valuation Time, certified on the Target Fund's behalf by
its President (or any Vice President) or its Treasurer, and a
certificate signed by the Fund's President (or any Vice
President) and its Treasurer, dated as of the Closing Date,
certifying that as of the Valuation Time and as of the Closing
Date there has been no material adverse change in the
financial position of the Target Fund since the date of such
Fund's most recent Annual or Semi-Annual Report,
A-10
as applicable, other than changes in its portfolio securities
since that date or changes in the market value of its
portfolio securities.
(c) That the Acquiring Fund shall have furnished to the Target
Fund a certificate signed by the Acquiring Fund's President
(or any Vice President) or its Treasurer, dated as of the
Closing Date, certifying that, as of the Valuation Time and as
of the Closing Date, all representations and warranties of the
Acquiring Fund made in this Agreement are true and correct in
all material respects with the same effect as if made at and
as of such dates, and that the Acquiring Fund has complied
with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied at or prior to each
of such dates.
(d) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement.
(e) The Target Fund shall have received the opinion(s) of Skadden,
counsel for the Acquiring Fund, dated as of the Closing Date,
addressed to the Target Fund substantially in the form and to
the effect that:
(i) the Acquiring Fund is duly formed and validly
existing under the laws of its state of organization;
(ii) the Acquiring Fund is registered as a closed-end,
management investment company under the 1940 Act;
(iii) this Agreement and the Reorganization provided for
herein and the execution of this Agreement have been
duly authorized and approved by all requisite action
of the Acquiring Fund, and this Agreement has been
duly executed and delivered by the Acquiring Fund and
(assuming this Agreement is a valid and binding
obligation of the other party hereto) is a valid and
binding obligation of the Acquiring Fund;
(iv) neither the execution or delivery by the Acquiring
Fund of this Agreement nor the consummation by the
Acquiring Fund of the transactions contemplated
hereby violate any provision of any statute or any
published regulation or any judgment or order
disclosed to counsel by the Acquiring Fund as being
applicable to the Acquiring Fund;
(v) the Acquiring Fund Common Shares and Acquiring Fund
APS have each been duly authorized and, upon issuance
thereof in accordance with this Agreement, each will
be validly issued, fully paid and, except as provided
in Section 5.1 of the Acquiring Fund's Declaration of
Trust, nonassessable; and
(vi) to their knowledge and subject to the qualifications
set forth below, the execution and delivery by the
Acquiring Fund of this Agreement and the consummation
of the transactions herein contemplated do not
require, under the laws of its state of organization
or any state in which the Acquiring Fund is qualified
to do business or the federal laws of the United
States, the consent, approval, authorization,
registration, qualification or order of, or filing
with, any court or governmental agency or body
(except such as have been obtained). Counsel need
express no opinion, however, as to any such consent,
approval, authorization, registration, qualification,
order or filing which may be required as a result of
the involvement of other parties to this Agreement in
the transactions herein contemplated because of their
legal or regulatory status or because of any other
facts specifically pertaining to them;
A-11
(f) The Target Fund shall have obtained an opinion from Skadden,
Arps, dated as of the Closing Date, addressed to the Target
Fund, that the consummation of the transactions set forth in
this Agreement comply with the requirements of a
reorganization as described in Section 368(a) of the Internal
Revenue Code.
(g) That all proceedings taken by each of the Funds and its
counsel in connection with the Reorganization and all
documents incidental thereto shall be satisfactory in form and
substance to the others.
(h) That the N-14 Registration Statement shall have become
effective under the 1933 Act, and no stop order suspending
such effectiveness shall have been instituted or, to the
knowledge of the Acquiring Fund, be contemplated by the SEC.
9. Acquiring Fund Conditions.
The obligations of the Acquiring Fund hereunder shall be subject to the
following conditions:
(a) That this Agreement shall have been adopted, and the
Reorganization shall have been approved, by the Board of
Trustees of the Acquiring Fund and that the issuance of
additional Acquiring Fund Common Shares shall have been
approved by the affirmative vote of a majority of votes cast,
where total votes cast represented over 50% of all securities
entitled to vote; and the Target Fund shall have delivered to
the Acquiring Fund a copy of the resolution approving this
Agreement adopted by the Target Fund's Board of Trustees, and
a certificate setting forth the vote of the holders of Target
Fund Common Shares and Target Fund Preferred Shares obtained,
each certified by its Secretary.
(b) That the Target Fund shall have furnished to the Acquiring
Fund a statement of its assets, liabilities and capital, with
values determined as provided in Section 4 of this Agreement,
together with a schedule of investments with their respective
dates of acquisition and tax costs, all as of the Valuation
Time, certified on such Fund's behalf by its President (or any
Vice President) or its Treasurer, and a certificate signed by
such Fund's President
A-12
(or any Vice President) or its Treasurer, dated as of the
Closing Date, certifying that as of the Valuation Time and as
of the Closing Date there has been no material adverse change
in the financial position of the Target Fund since the date of
such Fund's most recent Annual Report or Semi-Annual Report,
as applicable, other than changes in the Target Fund
Investments since that date or changes in the market value of
the Target Fund Investments.
(c) That the Target Fund shall have furnished to the Acquiring
Fund a certificate signed by such Fund's President (or any
Vice President) or its Treasurer, dated the Closing Date,
certifying that as of the Valuation Time and as of the Closing
Date all representations and warranties of the Target Fund
made in this Agreement are true and correct in all material
respects with the same effect as if made at and as of such
dates and the Target Fund has complied with all of the
agreements and satisfied all of the conditions on its part to
be performed or satisfied at or prior to such dates.
(d) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement.
(e) That the Acquiring Fund shall have received the opinion of
Skadden, counsel for the Target Fund, dated as of the Closing
Date, addressed to the Acquiring Fund, substantially in the
form and to the effect that:
(i) the Target Fund is duly formed and validly existing
under the laws of its state of organization;
(ii) the Target Fund is registered as a closed-end,
management investment company under the 1940 Act;
(iii) this Agreement and the Reorganization provided for
herein and the execution of this Agreement have been
duly authorized by all requisite action of the
Target Fund, and this Agreement has been duly
executed and delivered by the Target Fund and
(assuming this Agreement is a valid and binding
obligation of the other party hereto) is a valid and
binding obligation of the Target Fund;
(iv) neither the execution or delivery by the Target Fund
of this Agreement nor the consummation by the Target
Fund of the transactions contemplated hereby violate
any provision of any statute, or any published
regulation or any judgment or order disclosed to
them by the Target Fund as being applicable to the
Target Fund; and
(v) to their knowledge and subject to the qualifications
set forth below, the execution and delivery by the
Target Fund of the Agreement and the consummation of
the transactions herein contemplated do not require,
under the laws of its state of organization or any
state in which the Target Fund is qualified to do
business, or the federal laws of the United States,
the consent, approval, authorization, registration,
qualification or order of, or filing with, any court
or governmental agency or body (except such as have
been obtained under the 1933 Act, 1934 Act, the 1940
Act or the rules and regulations thereunder).
Counsel need express no opinion, however, as to any
such consent, approval, authorization, registration,
qualification, order or filing
A-13
which may be required as a result of the involvement
of other parties to this Agreement in the
transactions herein contemplated because of their
legal or regulatory status or because of any other
facts specifically pertaining to them;
(f) That the Acquiring Fund shall have obtained an opinion from
Skadden, counsel for the Target Fund, dated as of the Closing
Date, addressed to the Acquiring Fund, that the consummation
of the transactions set forth in this Agreement comply with
the requirements of a reorganization as described in Section
368(a) of the Code.
(g) That the N-14 Registration Statement shall have become
effective under the 1933 Act and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge
of the Target Fund, be contemplated by the SEC.
(h) That all proceedings taken by the Target Fund and its counsel
in connection with the Reorganization and all documents
incidental thereto shall be satisfactory in form and substance
to the Acquiring Fund.
(i) That prior to the Closing Date the Target Fund shall have
declared a dividend or dividends which, together with all such
previous dividends, shall have the effect of distributing to
its shareholders all of its net investment company taxable
income for the period to and including the Closing Date, if
any (computed without regard to any deduction for dividends
paid), and all of its net capital gain, if any, realized to
and including the Closing Date. In this regard, the last
dividend period for the Target Fund Preferred Shares may be
shorter than the dividend period for such APS determined as
set forth in the applicable Certificate of Vote.
10. Termination, Postponement and Waivers.
(a) Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may be terminated and the
Reorganization abandoned at any time (whether before or after
adoption thereof by the shareholders of the Funds) prior to
the Closing Date, or the Closing Date may be postponed, (i) by
mutual consent of the Boards of Trustees of the
A-14
Funds, (ii) by the Board of Trustees of the Target Fund if any
condition of the Target Fund's obligations set forth in
Section 8 of this Agreement has not been fulfilled or waived
by such Board; or (iii) by the Board of Trustees of the
Acquiring Fund if any condition of the Acquiring Fund's
obligations set forth in Section 9 of this Agreement have not
been fulfilled or waived by such Board.
(b) If the transactions contemplated by this Agreement have not
been consummated by December 31, 2005, this Agreement
automatically shall terminate on that date, unless a later
date is mutually agreed to by the Boards of Trustees of the
Funds.
(c) In the event of termination of this Agreement pursuant to the
provisions hereof, the same shall become void and have no
further effect, and there shall not be any liability on the
part of any Fund or persons who are their directors, trustees,
officers, agents or shareholders in respect of this Agreement.
(d) At any time prior to the Closing Date, any of the terms or
conditions of this Agreement may be waived by the Board of
Trustees of any Fund (whichever is entitled to the benefit
thereof), if, in the judgment of such Board after consultation
with its counsel, such action or waiver will not have a
material adverse effect on the benefits intended under this
Agreement to the shareholders of their respective fund, on
behalf of which such action is taken.
(e) The respective representations and warranties contained in
Sections 1 and 2 of this Agreement shall expire with, and be
terminated by, the consummation of the Reorganization, and
neither Fund nor any of its officers, trustees, agents or
shareholders shall have any liability with respect to such
representations or warranties after the Closing Date. This
provision shall not protect any officer, trustee, agent or
shareholder of either Fund against any liability to the entity
for which that officer, trustee, agent or shareholder so acts
or to its shareholders, to which that officer, trustee, agent
or shareholder otherwise would be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties in the conduct of such office.
(f) If any order or orders of the Commission with respect to this
Agreement shall be issued prior to the Closing Date and shall
impose any terms or conditions which are determined by action
of the Boards of Trustees of the Funds to be acceptable, such
terms and conditions shall be binding as if a part of this
Agreement without further vote or approval of the shareholders
of the Funds unless such terms and conditions shall result in
a change in the method of computing the number of Acquiring
Fund Common Shares or Acquiring Fund APS to be issued to the
Acquired Funds, as applicable, in which event, unless such
terms and conditions shall have been included in the proxy
solicitation materials furnished to the shareholders of the
Funds prior to the meetings at which the Reorganization shall
have been approved, this Agreement shall not be consummated
and shall terminate unless the Funds promptly shall call a
special meeting of shareholders at which such conditions so
imposed shall be submitted for approval.
11. Indemnification.
(a) Each party (an "Indemnitor") shall indemnify and hold the
other and its officers, trustees, agents and persons
controlled by or controlling any of them (each an "Indemnified
A-15
Party") harmless from and against any and all losses, damages,
liabilities, claims, demands, judgments, settlements,
deficiencies, taxes, assessments, charges, costs and expenses
of any nature whatsoever (including reasonable attorneys'
fees) including amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees
reasonably incurred by such Indemnified Party in connection
with the defense or disposition of any claim, action, suit or
other proceeding, whether civil or criminal, before any court
or administrative or investigative body in which such
Indemnified Party may be or may have been involved as a party
or otherwise or with which such Indemnified Party may be or
may have been threatened (collectively, the "Losses") arising
out of or related to any claim of a breach of any
representation, warranty or covenant made herein by the
Indemnitor, provided, however, that no Indemnified Party shall
be indemnified hereunder against any Losses arising directly
from such Indemnified Party's (i) willful misfeasance, (ii)
bad faith, (iii) gross negligence or (iv) reckless disregard
of the duties involved in the conduct of such Indemnified
Party's position.
(b) The Indemnified Party shall use its best efforts to minimize
any liabilities, damages, deficiencies, claims, judgments,
assessments, costs and expenses in respect of which indemnity
may be sought hereunder. The Indemnified Party shall give
written notice to Indemnitor within the earlier of ten (10)
days of receipt of written notice to Indemnified Party or
thirty (30) days from discovery by Indemnified Party of any
matters which may give rise to a claim for indemnification or
reimbursement under this Agreement. The failure to give such
notice shall not affect the right of Indemnified Party to
indemnity hereunder unless such failure has materially and
adversely affected the rights of the Indemnitor; provided that
in any event such notice shall have been given prior to the
expiration of the Survival Period. At any time after ten (10)
days from the giving of such notice, Indemnified Party may, at
its option, resist, settle or otherwise compromise, or pay
such claim unless it shall have received notice from
Indemnitor that Indemnitor intends, at Indemnitor's sole cost
and expense, to assume the defense of any such matter, in
which case Indemnified Party shall have the right, at no cost
or expense to Indemnitor, to participate in such defense. If
Indemnitor does not assume the defense of such matter, and in
any event until Indemnitor states in writing that it will
assume the defense, Indemnitor shall pay all costs of
Indemnified Party arising out of the defense until the defense
is assumed; provided, however, that Indemnified Party shall
consult with Indemnitor and obtain indemnitor's prior written
consent to any payment or settlement of any such claim.
Indemnitor shall keep Indemnified Party fully apprised at all
times as to the status of the defense. If Indemnitor does not
assume the defense, Indemnified Party shall keep Indemnitor
apprised at all times as to the status of the defense.
Following indemnification as provided for hereunder,
Indemnitor shall be subrogated to all rights of Indemnified
Party with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been
made.
12. Other Matters.
A-16
(a) All covenants, agreements, representations and warranties made
under this Agreement and any certificates delivered pursuant
to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any
investigation made by them or on their behalf.
(b) All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally or
sent by registered mail or certified mail, postage prepaid.
Notice to the Target Fund shall be addressed to the Target
Fund c/o Van Kampen Asset Management, 1221 Avenue of the
Americas, New York, New York 10020, Attention: General
Counsel, or at such other address as the Target Fund may
designate by written notice to the Acquiring Fund. Notice to
the Acquiring Fund shall be addressed to the Acquiring Fund
c/o Van Kampen Asset Management, 1221 Avenue of the Americas,
New York, New York 10020, Attention: General Counsel, or at
such other address and to the attention of such other person
as the Acquiring Fund may designate by written notice to the
Target Fund. Any notice shall be deemed to have been served or
given as of the date such notice is delivered personally or
mailed.
(c) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the
Reorganization, constitutes the only understanding with
respect to the Reorganization, may not be changed except by a
letter of agreement signed by each party and shall be governed
by and construed in accordance with the laws of the State of
Illinois applicable to agreements made and to be performed in
said state.
(d) It is expressly agreed that the obligations of the Funds
hereunder shall not be binding upon any of their respective
trustees, shareholders, nominees, officers, agents, or
employees personally, but shall bind only the trust property
of the respective Fund as provided in such Fund's Declaration
of Trust. The execution and delivery of this Agreement has
been authorized by the trustees of each Fund and signed by
authorized officers of each Fund, acting as such, and neither
such authorization by such trustees, nor such execution and
delivery by such officers shall be deemed to have been made by
any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of
each Fund as provided in such Funds' Declaration of Trust.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original but all
such counterparts together shall constitute but one instrument.
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to
be executed and delivered by their duly authorized officers as of the day and
year first written above.
A-17
VAN KAMPEN XXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX
-----------------------------------------
[Name]
[Title]
Attest: [Name]
[Title]
VAN KAMPEN XXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX
-----------------------------------------
[Name]
[Title]
Attest: [Name]
[Title]
A-18
APPENDIX B
CERTIFICATE OF VOTE OF TRUSTEES
ESTABLISHING PREFERRED SHARES
[TO BE FILED BY AMENDMENT]
B-1
APPENDIX C
PROXY VOTING POLICY AND PROCEDURES
[TO BE FILED BY AMENDMENT]
C-1
APPENDIX D
ANNUAL REPORT OF THE ACQUIRING FUND, DATED OCTOBER 31, 2004
[TO BE FILED BY AMENDMENT]
D-1
APPENDIX E
SEMIANNUAL REPORT OF THE ACQUIRING FUND, DATED APRIL 30, 2005
[TO BE FILED BY AMENDMENT]
E-1
APPENDIX F
ANNUAL REPORT OF VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II,
DATED OCTOBER 31, 2004
[TO BE FILED BY AMENDMENT]
F-1
APPENDIX G
SEMIANNUAL REPORT OF MUNICIPAL OPPORTUNITY TRUST II,
DATED APRIL 30, 2005
[TO BE FILED BY AMENDMENT]
G-1
5
APPENDIX H
ANNUAL REPORT OF VAN KAMPEN VALUE MUNICIPAL INCOME TRUST,
DATED OCTOBER 31, 2004
[TO BE FILED BY AMENDMENT]
H-1
APPENDIX I
SEMIANNUAL REPORT OF VALUE MUNICIPAL INCOME TRUST,
DATED APRIL 30, 2005
[TO BE FILED BY AMENDMENT]
I-1
APPENDIX J
PRO FORMA FINANCIAL STATEMENTS
The following presents the pro forma financial statements for the combination of
the Van Kampen Advantage Municipal Income Trust II, Van Kampen Municipal
Opportunity Trust II and the Value Municipal Income Trust. The statements are
presented as of January 31, 2005, the most recent period for which financial
information is currently available.
The unaudited Pro Forma Portfolio of Investments and Pro Forma Statement of
Assets and Liabilities reflect the financial position as if the transaction
occurred on January 31, 2005. The Pro Forma Statement of Operations reflects the
expenses for the twelve months ended January 31, 2005. The pro forma statements
give effect to the proposed exchange of Van Kampen Advantage Municipal Income
Trust II shares for the assets and liabilities of the Van Kampen Municipal
Opportunity Trust II and Van Kampen Value Municipal Income Trust, with Van
Kampen Advantage Municipal Income Trust II being the surviving entity. The
proposed transaction will be accounted for as a tax-free reorganization in
accordance with accounting principles generally accepted in the United States of
America. The historical cost basis of the investments is carried over to the
surviving entity. 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.
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 159.6%
ALASKA 0.2%
$1,000 $ 1,000 Alaska St Hsg Fin Corp
Gen Hsg Ser A
(FGIC Insd) 5.250 12/01/41 $ $ $ 1,065,960 $ 1,065,960
-------------------------------------------------------
ALABAMA 2.1%
$1,000 $1,000 2,000 Birmingham Baptist
Med Ctr AL Baptist
Hlth Sys Ser A 5.875 11/15/24 1,066,150 1,066,150 2,132,300
5,000 5,000 Birmingham Baptist
Med Ctr AL Spl Care
Fac Fin Auth Rev
(MBIA Insd) 5.750 11/15/10 5,361,950 5,361,950
4,000 4,000 Jefferson Cnty, AL
Ltd Oblig Sch Wt Ser A 5.250 01/01/23 4,300,320 4,300,320
1,090 1,090 Lee Cnty, AL
Sch Wts Ltd Oblig
(MBIA Insd) (a) 5.000 02/01/17 1,184,917 1,184,917
4 4 Mobile, AL Indl Dev Brd
Solid Waste Disp Rev
Mobile Energy Svc Co
Proj Rfdg 6.950 01/01/20 22 22
1,000 1,000 Valley, AL Spl Care Fac
Fin Auth Rev Lanier Mem
Hosp Ser A 5.600 11/01/16 1,014,250 1,014,250
-------------------------------------------------------
3,265,317 10,728,442 13,993,759
-------------------------------------------------------
ARIZONA 4.8%
5,000 5,000 Arizona Sch Fac Brd
Ctfs Ser B (FGIC Insd) 5.250 09/01/18 5,541,300 5,541,300
5,000 5,000 Arizona Sch Fac Brd
Ctfs Ser B (FSA Insd) 5.250 09/01/19 5,592,550 5,592,550
3,000 3,000 Arizona St Transn Brd
Hwy Rev Ser B 5.250 07/01/19 3,328,260 3,328,260
2,235 2,235 Arizona Tourism &
Sports Auth Tax Rev
Multipurpose Stad Fac
Ser A (MBIA Insd) 5.375 07/01/21 2,510,777 2,510,777
5,250 5,250 Arizona Tourism &
Sports Auth Tax Rev
Multipurpose Stad Fac
Ser A (MBIA Insd) 5.375 07/01/23 5,885,302 5,885,302
2,000 2,000 Phoenix, AZ Civic Impt
Corp Arpt Rev Jr Lien
(AMT) (FGIC Insd) 5.375 07/01/29 2,039,760 2,039,760
2,280 765 3,045 Pima Cnty, AZ Indl Dev
Auth Indl Rev Lease
Oblig Irvington Proj
Tucson Ser A Rfdg
(FSA Insd) 7.250 07/15/10 2,383,512 799,731 3,183,243
2,685 2,685 South Campus Group LLC
AZ Std Hsg Rev AZ St
Univ South Campus Proj
(MBIA Insd) 5.625 09/01/35 3,028,358 3,028,358
1,300 1,300 Tempe, AZ Excise Tax
Rev Rfdg 5.250 07/01/18 1,447,927 1,447,927
-------------------------------------------------------
11,080,435 13,861,364 7,615,678 32,557,477
-------------------------------------------------------
ARKANSAS 0.5%
1,930 1,930 Arkansas St Cap Apprec
College Svg * 06/01/16 1,209,782 1,209,782
2,305 2,305 Arkansas St Dev Fin
Auth Rev St Agy Fac
Donaghey Plaza Proj
(FSA Insd) 5.000 06/01/34 2,408,886 2,408,886
-------------------------------------------------------
3,618,668 3,618,668
-------------------------------------------------------
CALIFORNIA 20.6%
6,215 6,215 ABC, CA Uni Sch Dist
Cap Apprec (FGIC Insd) * 08/01/34 1,404,776 1,404,776
6,000 6,000 Anaheim, CA Pub Fin
Auth Lease Rev Cap
Apprec Pub Impt Proj
Ser C (FSA Insd) * 09/01/19 3,097,680 3,097,680
7,195 7,195 Anaheim, CA Pub Fin
Auth Lease Rev Cap
Apprec Pub Impt Proj
Ser C (FSA Insd) * 09/01/21 3,332,724 3,332,724
5,000 5,000 Anaheim, CA Pub Fin
Auth Lease Rev Cap
Apprec Pub Impt Proj
Ser C (FSA Insd) * 09/01/32 1,234,800 1,234,800
1,300 1,300 Anaheim, CA Pub Fin
Auth Lease Rev Pub
Impt Proj Ser C (FSA
Insd) 6.000 09/01/16 1,568,515 1,568,515
2,095 2,095 Bay Area Govt Assn CA
Rev Tax Alloc CA Redev
Pool Ser A (XLCA Insd) 5.250 09/01/35 2,237,167 2,237,167
8 8 California Rural Home
Mtg Fin Auth Single
Family Mtg Rev Ser B
(AMT) (GNMA
Collateralized) 7.750 09/01/26 7,544 7,544
1,000 1,000 California St
(AMBAC Insd) 5.125 10/01/27 1,057,450 1,057,450
10,000 10,000 California St
(MBIA Insd) 5.500 03/01/17 11,111,200 11,111,200
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
3,000 3,000 California St Dept Wtr
Res Ser A 5.875 05/01/16 3,428,250 3,428,250
2,800 2,800 California St Dept Wtr
Res Pwr Ser A
(AMBAC Insd) 5.500 05/01/16 3,177,468 3,177,468
2,000 2,000 California St Dept Wtr
Res Pwr Ser A 6.000 05/01/15 2,328,960 2,328,960
2,345 2,345 California St Dept Wtr
Res Pwr Supply Rev
Ser A (XLCA Insd) 5.375 05/01/17 2,616,152 2,616,152
5,000 5,000 California St Pub Wks
Brd Dept Gen Svc Cap
East End A (AMBAC Insd) 5.125 12/01/21 5,390,500 5,390,500
2,000 2,000 4,000 California St Pub Wks
Brd Lease Rev Dept of
Corrections St Prisons
Ser A Rfdg (AMBAC Insd)
(c) 5.000 12/01/19 2,210,680 2,210,680 4,421,360
6,000 6,000 California St Pub Wks
Brd Lease Rev Dept of
Corrections St Prisons
Ser A Rfdg (AMBAC Insd) 5.250 12/01/13 6,844,500 6,844,500
2,500 2,500 5,000 California St Pub Wks
Brd Lease Rev Dept of
Mental Hlth Coalinga
Ser A 5.000 06/01/24 2,614,625 2,614,625 5,229,250
4,600 4,600 California St Pub Wks
Brd Lease Rev Var Univ
CA Proj Ser A Rfdg (c) 5.500 06/01/10 5,100,250 5,100,250
5,905 5,905 California St Pub Wks
Brd Lease Rev Var Univ
CA Proj Ser A Rfdg 5.500 06/01/14 6,657,120 6,657,120
5,000 5,000 California St Rfdg 5.000 02/01/19 5,323,050 5,323,050
2,000 2,000 Florin, CA Res Consv
Dist Cap Impt Elk Grove
Wtr Svc Ser A
(MBIA Insd) 5.000 09/01/33 2,091,000 2,091,000
5,000 5,000 Foothill/Eastern
Corridor Agy CA Toll Rd
Rev Cap Apprec Rfdg
(MBIA Insd) * 01/15/18 2,597,050 2,597,050
30,000 30,000 Foothill/Eastern
Corridor Agy CA Toll Rd
Rev Ser A Rfdg * 01/15/22 11,384,700 11,384,700
2,000 1,000 3,000 Foothill/Eastern
Corridor Agy CA Toll Rd
Rev Sr Lien Ser A
(Prerefunded @
01/01/07) 6.500 01/01/32 2,157,160 1,078,580 3,235,740
3,350 3,350 Imperial Irr Dist CA
Ctf Part Elec Sys Proj
(FSA Insd) (a) 5.250 11/01/19 3,709,823 3,709,823
3,950 3,950 Los Angeles, CA Dept
Wtr & Pwr Ser A
(FGIC Insd) 5.125 07/01/40 4,123,049 4,123,049
5,000 5,000 Los Angeles, CA Uni Sch
Dist Ser A (FSA Insd) 5.250 07/01/20 5,550,600 5,550,600
2,465 2,465 Los Angeles, CA Uni Sch
Dist Ser B (FGIC Insd) 5.000 07/01/23 2,638,684 2,638,684
5,500 5,500 Port Oakland, CA Ser L
(AMT) (FGIC Insd) 5.000 11/01/32 5,637,005 5,637,005
9,000 9,000 Riverside Cnty, CA
Asset Leasing Corp
Leasehold Rev Riverside
Cnty Hosp Proj
(MBIA Insd) * 06/01/21 4,237,740 4,237,740
5,700 5,700 Sacramento, CA City Fin
Auth Rev Comb Proj B
(MBIA Insd) * 11/01/15 3,626,112 3,626,112
13,880 13,880 San Joaquin Hills, CA
Transn Corridor Agy
Toll Rd Rev Cap Apprec
Ser A Rfdg (MBIA Insd) * 01/15/28 4,422,446 4,422,446
10,225 10,225 Santa Ana, CA Uni Sch
Dist Ctf Part Cap
Apprec Fin Proj
(FSA Insd) * 04/01/32 2,539,788 2,539,788
5,755 5,755 Southwestern Cmnty
College Cap Apprec
Election 2000 (FGIC
Insd) * 08/01/29 1,689,783 1,689,783
2,720 2,720 Washington, CA Uni Sch
Dist Yolo Cnty Election
2004 Ser A (FGIC Insd)
(a) 5.250 08/01/19 3,025,701 3,025,701
3,070 3,070 Washington, CA Uni Sch
Dist Yolo Cnty Ser A
(FGIC Insd) (a) 5.250 08/01/20 3,409,603 3,409,603
-------------------------------------------------------
40,571,443 71,715,031 27,201,066 139,487,540
-------------------------------------------------------
COLORADO 7.3%
4,340 4,340 Adams & Arapahoe Cntys,
CO Jt Sch Dist Ser A
(FSA Insd) 5.250 12/01/18 4,845,133 4,845,133
4,290 4,290 Adams & Arapahoe Cntys,
CO Jt Sch Dist Ser C
(Prerefunded @ 12/01/06)
(MBIA Insd) 5.750 12/01/08 4,630,497 4,630,497
1,000 3,000 1,000 5,000 Arapahoe Cnty, CO Cap
Impt Tr Fd Hwy Rev
E-470 Proj (Prerefunded
@ 08/31/05) (b) 7.000 08/31/26 1,058,100 3,174,300 1,058,100 5,290,500
1,000 1,000 Arapahoe Cnty, CO Cap
Impt Tr Fd Hwy Rev
E-470 Proj Ser B
(Prerefunded @
08/31/05) (b) 6.950 08/31/20 1,057,820 1,057,820
7,500 9,000 5,000 21,500 Arapahoe Cnty, CO Cap
Impt Tr Fd Hwy Rev
E-470 Proj Ser C
(Prerefunded @
08/31/05) * 08/31/26 1,546,200 1,855,440 1,030,800 4,432,440
1,475 1,475 Colorado Ed & Cultural
Fac Auth Rev Charter
Sch Proj Impt & Rfdg
(XLCA Insd) 5.250 08/15/19 1,631,704 1,631,704
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
1,945 1,945 Colorado Ed & Cultural
Impt Charter Sch
Pinnacle Rfdg
(XLCA Insd) 5.250 06/01/23 2,115,032 2,115,032
1,000 2,000 3,000 Colorado Hlth Fac Auth
Rev Catholic Hlth
Initiatives Ser A
(Escrowed to Maturity) 5.500 03/01/32 1,130,620 2,261,240 3,391,860
1,250 1,000 2,250 Colorado Hlth Fac Auth
Rev Hosp Portercare
Adventist Hlth 6.500 11/15/31 1,388,962 1,111,170 2,500,132
165 165 Colorado Hsg Fin Auth
Single Family Pgm Sr
Ser A2 (AMT) 7.250 05/01/27 166,685 166,685
109 109 Colorado Hsg Fin Auth
Single Family Pgm Sr
Ser B1 (AMT) 7.650 11/01/26 110,184 110,184
6,495 6,495 Colorado Springs, CO
Utils Rev (Escrowed to
Maturity) 6.600 11/15/18 8,231,308 8,231,308
1,500 1,500 Denver, CO City & Cnty
Arpt Rev Ser D (AMT) 7.750 11/15/13 1,814,460 1,814,460
3,515 3,515 E-470 Pub Hwy Auth CO
Rev Cap Apprec Sr Ser B
(MBIA Insd) * 09/01/13 2,507,706 2,507,706
6,160 6,160 E-470 Pub Hwy Auth CO
Rev Sr Ser A (MBIA Insd) 5.000 09/01/21 6,507,178 6,507,178
-------------------------------------------------------
18,068,258 26,055,738 5,108,643 49,232,639
-------------------------------------------------------
CONNECTICUT 1.1%
5,000 5,000 Connecticut St Ser C
(FGIC Insd) (c) 5.000 04/01/22 5,418,200 5,418,200
1,010 1,010 Mashantucket Western
Pequot Tribe CT Spl Rev
Ser A, 144-A Private
Placement (d) 6.400 09/01/11 1,072,923 1,072,923
990 990 Mashantucket Western
Pequot Tribe CT Spl Rev
Ser A, 144-A Private
Placement (Prerefunded
@ 09/01/07) (d) 6.400 09/01/11 1,085,050 1,085,050
-------------------------------------------------------
5,418,200 2,157,973 7,576,173
-------------------------------------------------------
DISTRICT OF COLUMBIA 0.8%
5,000 5,000 Metropolitan Washington
DC Arpt Auth Sys Ser A
(AMT) (FGIC Insd) 5.250 10/01/32 5,220,150 5,220,150
-------------------------------------------------------
FLORIDA 6.3%
2,500 2,500 Dade Cnty, FL Wtr & Swr
Sys Rev (FGIC Insd) 5.250 10/01/21 2,672,100 2,672,100
5,000 5,000 Escambia Cnty, FL Hlth
Fac Auth Rev
(AMBAC Insd) 5.950 07/01/20 5,087,700 5,087,700
3,980 3,980 Jacksonville, FL Port
Auth (AMT) (MBIA Insd) 5.700 11/01/30 4,373,741 4,373,741
2,780 2,780 Jacksonville, FL Port
Auth (Prerefunded @
11/01/10) (AMT)
(MBIA Insd) 5.700 11/01/30 3,135,673 3,135,673
3,000 3,000 Lake Cnty, FL Sch Brd
Ctf Part (AMBAC Insd) 5.375 07/01/17 3,352,080 3,352,080
11,500 11,500 Miami-Dade Cnty, FL
Aviation Rev Miami Intl
Arpt (AMT) (FGIC Insd) 5.375 10/01/32 12,128,130 12,128,130
5,000 5,000 Osceola Cnty, FL Trans
Rev Osceola Pkwy Proj &
Rfdg (MBIA Insd) 5.000 04/01/22 5,398,200 5,398,200
5,000 5,000 Ocoee, FL Wtr & Swr Sys
Rev Impt & Rfdg
(AMBAC Insd) 5.125 10/01/33 5,289,950 5,289,950
995 995 Pinellas Cnty, FL Hsg
Fin Auth Single Family
Mtg Rev Multi Cnty Pgm
Ser A (AMT)
(GNMA Collateralized) 6.700 02/01/28 1,015,636 1,015,636
-------------------------------------------------------
5,398,200 28,412,980 8,642,030 42,453,210
-------------------------------------------------------
GEORGIA 4.4%
2,000 2,000 Atlanta, GA Wtr &
Wastewtr Rev (FSA Insd) 5.000 11/01/21 2,174,360 2,174,360
5,000 5,000 Clayton Cnty & Clayton
Cnty GA Wtr Auth Wtr &
Swr Rev 5.000 05/01/20 5,476,700 5,476,700
5,000 5,000 Georgia Muni Elec Auth
Pwr Rev Ser B (Escrowed
to Maturity)
(FGIC Insd) 5.700 01/01/19 5,926,150 5,926,150
2,000 2,000 Georgia St Rd & Twy
Auth Rev 5.000 10/01/19 2,186,060 2,186,060
2,700 2,700 Marietta, GA Dev Auth
Rev First Mtg Life
College Ser B
(FSA Insd) (a) 5.375 09/01/09 2,797,524 2,797,524
2,205 2,205 Municipal Elec Auth GA
Comb Cycle Proj Ser A
(MBIA Insd) 5.000 11/01/20 2,394,123 2,394,123
4,995 1,745 6,740 Municipal Elec Auth GA
Comb Turbine Proj Ser A
(MBIA Insd) 5.250 11/01/20 5,540,654 1,935,624 7,476,278
5 5 Municipal Elec Auth GA
Comb Turbine Proj Ser A
(Prerefunded @
11/01/12) (MBIA Insd) 5.250 11/01/20 5,657 5,657
1,000 1,000 Richmond Cnty, GA Dev
Auth ASU Jaguar Student
Hsg LLC Ser A 5.250 02/01/35 1,028,230 1,028,230
-------------------------------------------------------
6,504,930 16,664,108 6,296,044 29,465,082
-------------------------------------------------------
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
HAWAII 1.7%
10,430 10,430 Hawaii St Dept Budget &
Fin Spl Purp Rev
Hawaiian Elec Co Inc
Ser A (AMT) (MBIA Insd) 5.650 10/01/27 11,405,205 11,405,205
-------------------------------------------------------
ILLINOIS 10.2%
3,750 3,750 Bolingbrook, IL Cap
Apprec Ser B
(MBIA Insd) * 01/01/32 876,300 876,300
1,710 1,710 Bolingbrook, IL Cap
Apprec Ser C Rfdg
(MBIA Insd) (a) * 01/01/29 522,405 522,405
5,400 5,400 Chicago, IL Brd of Ed
Cap Apprec Sch Reform
Ser B-1 (FGIC Insd) * 12/01/28 1,667,358 1,667,358
3,365 3,500 6,865 Chicago, IL Cap Apprec
(Prerefunded @ 07/01/05)
(AMBAC Insd) * 01/01/17 1,605,946 1,670,375 3,276,321
6,000 6,000 Chicago, IL Lakefront
Millenium Pkg Fac
(MBIA Insd) (e) 0/5.750 01/01/29 6,076,200 6,076,200
335 335 Chicago, IL Single
Family Mtg Rev Ser A
(AMT) (GNMA
Collateralized) 7.000 09/01/27 336,531 336,531
50 50 Chicago, IL Single
Family Mtg Rev Ser B
(AMT) (GNMA
Collateralized) 7.625 09/01/27 50,213 50,213
3,345 3,345 Cook Cnty, IL Sch Dist
No 100 Berwyn South
Ser D Rfdg (FSA Insd) 5.500 12/01/23 3,803,365 3,803,365
2,540 2,540 Cook Cnty, IL Sch Dist
No 122 Oak Lawn Cap
Apprec (FGIC Insd) (a) * 12/01/15 1,607,312 1,607,312
4,500 4,500 Cook Cnty, IL Ser A
(FGIC Insd) 5.500 11/15/31 4,991,535 4,991,535
1,000 1,000 Illinois Dev Fin Auth
Rev Cmnty Rehab
Providers Fac Ser A 7.375 07/01/25 1,089,980 1,089,980
2,500 2,500 Illinois Fin Auth Rev
Northwestern Mem Hosp
Ser A 5.500 08/15/43 2,677,475 2,677,475
1,325 1,325 Illinois Fin Auth
Student Hsg MJH Rev
Ed Assistance IV-Sr
Ser A 5.125 06/01/35 1,315,221 1,315,221
3,180 3,180 Illinois Hlth Fac Auth
Rev Children's Mem Hosp
(MBIA Insd) 6.250 08/15/13 3,729,599 3,729,599
1,485 1,485 Illinois Hlth Fac Auth
Rev Evangelical Hosp
Ser A Rfdg (FSA Insd) 6.750 04/15/17 1,832,698 1,832,698
825 825 Illinois Hlth Fac Auth
Rev Evangelical Hosp
Ser C (FSA Insd) 6.750 04/15/17 1,018,166 1,018,166
1,000 1,000 Illinois Hlth Fac Auth
Rev Highland Park Hosp
Proj Ser A (Prerefunded
@ 10/01/07) (MBIA Insd) 5.750 10/01/17 1,101,600 1,101,600
8,000 8,000 Illinois St First Ser
(FSA Insd) 5.250 12/01/19 8,875,200 8,875,200
3,400 3,400 Illinois St First Ser
(FSA Insd) 5.250 04/01/27 3,684,614 3,684,614
2,070 2,070 Northern IL Univ Ctf
Part Hoffman Estates
Ctr Proj (FSA Insd) 5.400 09/01/16 2,341,418 2,341,418
300 300 Peoria, Moline &
Freeport, IL Coll Mtg
Ser A (AMT) (GNMA
Collateralized) 7.600 04/01/27 301,332 301,332
5,000 5,000 Regional Trans Auth IL
Ser A (AMBAC Insd) 8.000 06/01/17 6,994,600 6,994,600
10,000 10,000 Will Cnty, IL Sch Dist
No 122 Ser B Rfdg
(FGIC Insd) 5.250 11/01/20 11,042,200 11,042,200
-------------------------------------------------------
31,215,024 35,806,856 2,189,763 69,211,643
-------------------------------------------------------
INDIANA 2.7%
2,805 2,805 Dekalb Eastn High Sch
Bldg Corp IN First Mtg
(FSA Insd) 6.000 01/15/18 3,243,926 3,243,926
4,000 4,000 East Chicago, IN
Elementary Sch Bldg
Corp First Mtg Ser A 6.250 07/05/08 4,385,880 4,385,880
3,000 3,000 Indiana Hlth Fac Fin
Auth Hosp Rev Columbus
Regl Hosp Rfdg
(FSA Insd) 7.000 08/15/15 3,687,150 3,687,150
1,500 1,500 Indiana St Dev Fin Auth
Rev Exempt Fac Conv
Rfdg (AMT) 5.950 08/01/30 1,542,270 1,542,270
2,000 2,000 Petersburg, IN Pollutn
Ctl Rev IN Pwr & Lt
(AMT) 5.950 12/01/29 2,048,620 2,048,620
2,850 2,850 Southwest Parke Cmnty
Sch Bldg First Mtg
(FGIC Insd) (a) 5.250 07/15/21 3,160,108 3,160,108
-------------------------------------------------------
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
16,525,684 1,542,270 18,067,954
-------------------------------------------------------
KANSAS 1.1%
3,430 3,430 Kansas St Dev Fin Auth
Rev KS Proj Ser N
(AMBAC Insd) (a) 5.250 10/01/20 3,770,359 3,770,359
3,615 3,615 Kansas St Dev Fin Auth
Rev KS Proj Ser N
(AMBAC Insd) (a) 5.250 10/01/21 3,957,594 3,957,594
-------------------------------------------------------
7,727,953 7,727,953
-------------------------------------------------------
KENTUCKY 0.1%
500 500 Mount Sterling, KY
Lease Rev KY League
Cities Fdg Ser B 6.100 03/01/18 601,420 601,420
-------------------------------------------------------
LOUISIANA 6.7%
5,000 5,000 Lafayette, LA Util Rev
(MBIA Insd) 5.250 11/01/21 5,583,650 5,583,650
5,970 5,970 Louisiana Loc Govt
Environment Southeastn
LA Student Hsg A
(MBIA Insd) (a) 5.250 08/01/24 6,572,373 6,572,373
2,500 2,500 Louisiana Loc Govt
Envir Fac Pkg Fac Corp
Garage Proj Ser A
(AMBAC Insd) 5.375 10/01/31 2,717,875 2,717,875
1,400 1,400 Louisiana Pub Fac Auth
Rev Hlth Fac Glen
Retirement Ser A 6.700 12/01/25 1,449,476 1,449,476
8,065 8,065 Louisiana St Office Fac
Corp LA St Cap Complex
Pgm (MBIA Insd) (a) 5.000 11/01/20 8,688,989 8,688,989
6,000 6,000 New Orleans, LA Rfdg
(MBIA Insd) 5.125 09/01/21 6,560,700 6,560,700
2,000 2,000 4,000 New Orleans, LA Rfdg
(FGIC Insd) 5.500 12/01/21 2,366,180 2,366,180 4,732,360
2,800 6,000 8,800 Saint Charles Parish,
LA Solid Waste Disp Rev
LA Pwr & Lt Co Proj
(AMT) (FSA Insd) (c) 7.050 04/01/22 2,809,576 6,020,520 8,830,096
-------------------------------------------------------
14,454,331 26,865,532 3,815,656 45,135,519
-------------------------------------------------------
MARYLAND 1.6%
5,000 5,000 Maryland St Econ Dev
Corp MD Aviation Admin
Fac (AMT) (FSA Insd) 5.375 06/01/20 5,465,450 5,465,450
1,000 1,000 Maryland St Econ Dev
Corp Univ MD College Pk
Proj 5.625 06/01/35 1,038,570 1,038,570
4,000 4,000 Maryland St Trans Auth
Arpt Baltimore/WA Intl
Arpt B (AMT)
(AMBAC Insd) 5.125 03/01/24 4,237,400 4,237,400
-------------------------------------------------------
9,702,850 1,038,570 10,741,420
-------------------------------------------------------
MASSACHUSETTS 4.1%
2,500 2,500 Massachusetts Bay Trans
Auth Ser A 5.000 07/01/32 2,597,975 2,597,975
1,200 1,200 Massachusetts Bay Tran
Auth MA Gen Tran Sys
Ser A Rfdg 6.250 03/01/12 1,419,024 1,419,024
2,000 2,000 Massachusetts Muni Whsl
Elec Co Proj No 6-A
(MBIA Insd) 5.250 07/01/16 2,209,300 2,209,300
1,000 1,000 2,000 Massachusetts St Hlth &
Ed Fac Auth Rev Saint
Mem Med Ctr Ser A 6.000 10/01/23 1,006,840 1,006,840 2,013,680
1,750 1,750 Massachusetts St Hlth &
Ed Fac Auth Rev
Hlthcare Sys Covenant
Hlth 6.000 07/01/31 1,869,963 1,869,963
925 925 Massachusetts St Indl
Fin Agy Wtr Treatment
American Hingham (AMT) 6.900 12/01/29 973,590 973,590
925 925 Massachusetts St Indl
Fin Agy Wtr Treatment
American Hingham (AMT) 6.950 12/01/35 974,016 974,016
2,995 5,000 7,995 Massachusetts St Wtr
Pollutn Abatement Tr
Pool Pgm Bds Ser 10 5.000 08/01/21 3,260,656 5,443,500 8,704,156
7,050 7,050 Massachusetts St Wtr
Res Auth Gen Ser J
(FSA Insd) 5.000 08/01/32 7,333,692 7,333,692
-------------------------------------------------------
6,476,796 11,859,044 9,759,556 28,095,396
-------------------------------------------------------
MICHIGAN 4.4%
3,000 3,000 Detroit, MI City Sch
Dist Sch Bldg & Site
Impt Ser A (FGIC Insd) 5.375 05/01/24 3,360,630 3,360,630
5,000 2,000 7,000 Detroit, MI Downtown
Dev Auth Tax Increment
Rev Dev Area No. 1 Proj
Ser C1 (Prerefunded @
07/01/06) 6.250 07/01/25 5,367,850 2,147,140 7,514,990
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
3,185 3,185 Detroit, MI Wtr Supply
Sys Rev Sr Lien Ser A
(MBIA Insd) (a) 5.250 07/01/20 3,535,732 3,535,732
2,790 2,790 Detroit, MI Wtr Supply
Sys Rev Sr Lien Ser C
Rfdg (MBIA Insd) (a) 5.250 07/01/19 3,102,145 3,102,145
2,000 2,000 Grand Rapids, MI Wtr
Supply (FGIC Insd) 5.750 01/01/15 2,271,700 2,271,700
1,495 1,495 Michigan St Hsg Dev
Auth Multi-Family Rev
Ltd Oblig Ser A Rfdg
(GNMA Collateralized) 6.600 04/01/30 1,528,398 1,528,398
2,075 2,075 South Lyon, MI Cmnty
Sch Bldg & Site
(FGIC Insd) 5.250 05/01/18 2,304,184 2,304,184
2,285 2,285 Taylor, MI Bldg Auth
(AMBAC Insd) (a) 6.000 03/01/13 2,703,863 2,703,863
3,090 3,090 Troy, MI Downtown Dev
Auth Dev Rfdg
(MBIA Insd) 5.500 11/01/15 3,498,189 3,498,189
-------------------------------------------------------
4,889,028 12,401,771 12,529,032 29,819,831
-------------------------------------------------------
MINNESOTA 0.2%
1,065 1,065 Duluth, MN Econ Dev
Auth Hlthcare Fac Rev
Benedictine Hlth Sys
Saint Marys 5.250 02/15/33 1,098,611 1,098,611
-------------------------------------------------------
MISSISSIPPI 2.2%
2,000 2,000 Mississippi Bus Fin
Corp MS Pollutn Ctl Rev
Sys Energy Res Inc Proj 5.875 04/01/22 2,006,220 2,006,220
2,000 3,000 5,000 Mississippi Bus Fin
Corp MS Pollutn Ctl Rev
Sys Energy Res Inc Proj
Rfdg 5.900 05/01/22 2,020,160 3,030,240 5,050,400
1,900 1,900 Mississippi Dev Bk Spl
Oblig Cap Proj & Equip
Acquisition Ser A2
(AMBAC Insd) 5.000 07/01/24 2,088,366 2,088,366
1,550 1,550 Mississippi Dev Bk Spl
Oblig Madison Cnty Hosp
Proj (Prerefunded @
07/01/09) 6.400 07/01/29 1,798,170 1,798,170
2,595 2,595 Mississippi Dev Bk Spl
Oblig MS Ltd Oblig Hosp
Impts (MBIA Insd) (a) 5.250 07/01/32 2,755,215 2,755,215
840 840 Mississippi Home Corp
Single Family Rev Mtg
Ser C (AMT) (GNMA
Collateralized) 7.600 06/01/29 872,432 872,432
-------------------------------------------------------
8,661,911 2,006,220 3,902,672 14,570,803
-------------------------------------------------------
MISSOURI 4.4%
2,000 2,000 Cape Girardeau Cnty, MO
Indl Dev Auth Hlthcare
Fac Rev Southeast MO
Hosp Assoc 5.625 06/01/27 2,066,260 2,066,260
1,250 1,250 Cole Cnty, MO Indl Dev
Auth Sr Living Fac Rev
Lutheran Sr Svcs
Heisinger Proj (a) 5.500 02/01/35 1,304,063 1,304,063
2,000 2,000 Curators Univ MO Sys
Fac Rev Ser B Rfdg (a) 5.000 11/01/20 2,171,540 2,171,540
2,195 2,195 Missouri St Hlth & Ed
Fac Rev Univ MO
Columbia Arena Proj (a) 5.000 11/01/16 2,398,191 2,398,191
4,000 4,000 Platte Cnty, MO Indl
Dev Auth Trans Rev 4.500 12/01/24 4,050,720 4,050,720
3,000 3,000 Platte Cnty, MO
Neighborhood Impt
Parkville Ser B
(MBIA Insd) (f) 5.000 02/01/25 3,184,260 3,184,260
1,500 1,500 Saint Louis Cnty, MO
Mtg Rev Ctf Rcpt Ser H
(AMT) (Escrowed to
Maturity) 5.400 07/01/18 1,702,140 1,702,140
5,855 4,000 9,855 Saint Louis, MO Arpt
Rev Arpt Dev Pgm Ser A
(MBIA Insd) 5.250 07/01/31 6,195,761 4,232,800 10,428,561
2,380 2,380 Saint Louis, MO Arpt
Rev Cap Impt Pgm Ser A
(MBIA Insd) (a) 5.375 07/01/19 2,645,061 2,645,061
-------------------------------------------------------
13,913,285 6,448,911 9,588,600 29,950,796
-------------------------------------------------------
NEBRASKA 0.7%
4,260 4,260 University NE Univ Rev
Lincoln Student Fees &
Fac Ser B 5.000 07/01/23 4,549,169 4,549,169
-------------------------------------------------------
NEVADA 3.0%
8,000 8,000 Clark Cnty, NV Arpt Rev
Sub Lien Ser A-2
(FGIC Insd) 5.000 07/01/36 8,294,640 8,294,640
4,000 3,000 7,000 Clark Cnty, NV Indl Dev
Rev Southwest Gas Corp
Proj Ser A (AMT)
(AMBAC Insd) 5.250 07/01/34 4,196,720 3,147,540 7,344,260
4,375 4,375 Las Vegas Valley, NV
Wtr Dist Ser B Rfdg
(MBIA Insd) 5.000 06/01/27 4,578,087 4,578,087
375 375 Nevada Hsg Div Single
Family Pgm Mezz B (AMT)
(FHA/VA Gtd) 6.550 10/01/12 376,890 376,890
-------------------------------------------------------
12,868,250 7,725,627 20,593,877
-------------------------------------------------------
NEW HAMPSHIRE 0.5%
1,000 1,000 New Hampshire Hlth & Ed
Fac Auth Rev Derryfield
Sch 7.000 07/01/30 1,040,300 1,040,300
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
1,400 1,400 New Hampshire Hlth & Ed
Fac Hlthcare Sys
Covenant Hlth 5.500 07/01/34 1,456,588 1,456,588
1,000 1,000 New Hampshire St Bus
Fin Auth Wtr Fac Rev
Pennichuck Wtrwks Inc
(AMT) (AMBAC Insd) 6.300 05/01/22 1,093,500 1,093,500
-------------------------------------------------------
3,590,388 3,590,388
-------------------------------------------------------
NEW JERSEY 8.3%
5,000 5,000 Essex Cnty, NJ Impt
Auth Rev Cnty Gtd Proj
Consldtn Rfdg
(MBIA Insd) 5.125 10/01/20 5,491,200 5,491,200
1,400 500 1,900 New Jersey Econ Dev
Auth Rev Cigarette Tax 5.750 06/15/29 1,487,948 531,410 2,019,358
1,000 1,000 New Jersey Econ Dev
Auth Rev Cigarette Tax 5.500 06/15/31 1,041,160 1,041,160
5,000 5,000 New Jersey Econ Dev
Auth Rev Sch Fac Constr
Ser I 5.000 09/01/23 5,316,800 5,316,800
2,210 2,210 New Jersey Econ Dev
Auth Wtr Fac Rev NJ
American Wtr Co Inc
Ser B (AMT) (FGIC Insd) 5.375 05/01/32 2,337,539 2,337,539
4,350 4,350 New Jersey Econ Dev Wtr
NJ Amern Wtr Co Inc
Ser A (AMT) (FGIC Insd) 5.250 07/01/38 4,491,419 4,491,419
1,000 1,000 New Jersey Hlthcare Fac
Fin Auth Rev Cap Hlth
Sys Oblig Grp Ser A 5.375 07/01/33 1,037,280 1,037,280
1,000 1,695 2,695 New Jersey Hlthcare Fac
Fin Auth Rev Gen Hosp
Ctr at Passaic
(Escrowed to Maturity)
(FSA Insd) 6.000 07/01/06 1,031,470 1,748,342 2,779,812
2,500 2,500 New Jersey Hlthcare Fac
Fin Auth Rev Gen Hosp
Ctr at Passaic
(Escrowed to Maturity)
(FSA Insd) 6.750 07/01/19 3,212,450 3,212,450
10,000 10,000 New Jersey St Ed Fac
Auth Higher Ed Cap Impt
Ser A (AMBAC Insd) 5.250 09/01/20 11,084,100 11,084,100
3,830 3,830 New Jersey St Trans Tr
Fd Auth Trans Sys Ser A
(Prerefunded @
06/15/41) (FGIC Insd) 5.250 06/15/19 4,369,034 4,369,034
2,000 2,000 New Jersey St Tpk Auth
Tpk Rev Ser C-1
(AMBAC Insd) 5.000 01/01/35 2,077,900 2,077,900
4,000 6,750 10,750 Salem Cnty, NJ Indl
Pollutn Ctl Fin Auth
Rev Pollutn Ctl Pub Svc
Elec & Gas Ser A (AMT)
(MBIA Insd) 5.450 02/01/32 4,042,480 6,821,685 10,864,165
-------------------------------------------------------
11,431,910 38,706,178 5,984,129 56,122,217
-------------------------------------------------------
NEW MEXICO 0.2%
1,500 1,500 Jicarilla, NM Apache
Nation Rev Adj Ser A
(Acquired 10/23/03,
Cost $1,514,910) (g) 5.000 09/01/18 1,576,290 1,576,290
-------------------------------------------------------
NEW YORK 13.8%
7,000 7,000 Metropolitan Trans Auth
NY Ser A Rfdg
(FGIC Insd) 5.250 11/15/31 7,525,420 7,525,420
3,250 3,250 New York City Hlth &
Hosp Corp Rev Hlth Sys
Ser A (AMBAC Insd) 5.000 02/15/11 3,572,270 3,572,270
3,000 3,000 New York City Muni Wtr
5,000 5,000 New York City Ser A1
(Prerefunded @
08/01/05) 6.375 08/01/10 5,156,550 5,156,550
Fin Auth Wtr & Swr Sys
Rev Ser A (AMBAC Insd) 5.000 06/15/35 3,127,980 3,127,980
3,500 3,500 New York City Ser C 5.500 08/01/13 3,943,135 3,943,135
7,500 7,500 New York City Ser E
(FSA Insd) 5.000 11/01/20 8,185,650 8,185,650
3,000 3,000 New York City Ser G
(Prerefunded @
02/01/06) (c) 6.000 02/01/11 3,156,420 3,156,420
5,000 5,000 New York City Ser H
(MBIA Insd) (a) 5.250 03/15/14 5,567,200 5,567,200
6,000 6,000 New York City
Transitional Fin Auth
Rev Future Tax Secd Ser
A Rfdg (e) 5.500/
14.000 11/01/26 6,735,960 6,735,960
8,240 8,240 New York City
Transitional Future Tax
Secd Ser C Rfdg
(AMBAC Insd) 5.250 08/01/18 9,161,067 9,161,067
7,575 7,575 New York St Dorm Auth
Rev City Univ Sys Con
Ser A 5.625 07/01/16 8,803,589 8,803,589
1,520 1,520 New York St Dorm Auth
Rev Insd John T Mather
Mem Hosp (Connie Lee
Insd) (a) 6.500 07/01/09 1,740,172 1,740,172
3,845 3,845 New York St Dorm Auth
Rev Secd Hosp Gen Hosp
Rfdg 5.750 02/15/20 4,336,007 4,336,007
500 500 New York St Energy Resh
& Dev Auth St Service
Contract Rev Ser B 5.500 04/01/05 502,780 502,780
2,175 2,175 New York St Med Care
Fac Fin Agy Rev NY
Downtown Hosp Ser A
(Prerefunded @
02/15/05) 6.800 02/15/20 2,222,545 2,222,545
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
3,000 3,000 New York St Med Care
Fac Fin Agy Rev NY Hosp
Mtg Ser A (Prerefunded
@ 02/15/05) (AMBAC
Insd) 6.200 08/15/05 3,064,830 3,064,830
3,000 3,000 New York St Med Care
Fac Fin Agy Rev NY Hosp
Mtg Ser A (Prerefunded
@ 02/15/05) (AMBAC
Insd) 6.800 08/15/24 3,065,520 3,065,520
2,310 2,310 New York St Med Care
Fac Fin Agy Rev Saint
Peter's Hosp Proj Ser A
(AMBAC Insd) 5.375 11/01/13 2,338,251 2,338,251
775 775 New York St Ser G 5.750 02/01/14 809,526 809,526
4,225 4,225 New York St Ser G
(Prerefunded @
02/01/06) 5.750 02/01/14 4,434,898 4,434,898
5,000 5,000 New York St Urban Dev
Corp Rev St Fac Rfdg 5.700 04/01/20 5,930,950 5,930,950
-------------------------------------------------------
14,099,752 62,204,453 17,076,515 93,380,720
-------------------------------------------------------
NORTH CAROLINA 0.2%
1,500 1,500 North Carolina Eastn
Muni Pwr Agy Pwr Sys
Rev Ser D 6.700 01/01/19 1,691,505 1,691,505
-------------------------------------------------------
OHIO 4.6%
3,000 3,000 Cincinnati, OH City Sch
Dist Sch Impt
(FSA Insd) 5.250 06/01/18 3,332,940 3,332,940
1,000 1,150 1,000 3,150 Cuyahoga Cnty, OH Hosp
Fac Rev Canton Inc Proj 7.500 01/01/30 1,132,570 1,302,456 1,132,570 3,567,596
2,000 2,000 Cuyahoga Cnty, OH
Multi-Family Rev Hsg
Dale Bridge Apt (AMT)
(GNMA Collateralized) 6.600 10/20/30 2,059,500 2,059,500
1,000 1,000 Dayton, OH Arpt Rev
James M Cox Dayton
Ser C Rfdg (AMT)
(Radian Insd) 5.250 12/01/27 1,036,760 1,036,760
3,540 3,540 Franklin Cnty, OH Hosp
Rev & Impt Doctor's
Hosp Proj Rfdg
(Escrowed to Maturity) 5.875 12/01/23 3,579,790 3,579,790
1,040 1,040 Lorain Cnty, OH Hosp
Rev EMH Regl Med Ctr
Rfdg (AMBAC Insd) 7.750 11/01/13 1,101,090 1,101,090
1,500 1,500 Mahoning Cnty, OH Hosp
Fac Forum Hlth Oblig
Group Ser A 6.000 11/15/32 1,611,495 1,611,495
1,165 1,165 Marion Cnty, OH Rev
Cmnty Hosp Impt & Rfdg 6.100 05/15/06 1,204,435 1,204,435
5,130 5,130 Muskingum Cnty, OH Hosp
Fac Rev Bethesda Care
Sys Impt & Rfdg (Connie
Lee Insd) (a) 6.250 12/01/10 5,553,482 5,553,482
2,000 2,000 Ohio St Wtr Dev Auth
Pollutn Ctl Fac Rev OH
Edison Co Proj Rfdg 5.950 05/15/29 2,014,800 2,014,800
3,170 3,170 Pickerington, OH Loc
Sch Dist Cap Apprec Sch
Fac Contract
(FGIC Insd) * 12/01/11 2,497,009 2,497,009
950 950 Strongsville, OH
(Prerefunded @
12/01/06) 6.700 12/01/11 1,041,495 1,041,495
1,340 1,340 Toledo Lucas Cnty, OH
Port Auth Dev Rev
Northwest OH Bd Fd
Ser C (AMT) (a) 6.600 11/15/15 1,419,435 1,419,435
850 850 Toledo Lucas Cnty, OH
Port Auth Northwest Bd
Fd Ser A (AMT) 6.000 05/15/11 918,374 918,374
-------------------------------------------------------
3,275,155 17,540,958 10,122,088 30,938,201
-------------------------------------------------------
OKLAHOMA 1.6%
1,500 1,500 Jenks, OK Aquarium Auth
Rev First Mtg
(Prerefunded @ 07/01/10)
(MBIA Insd) 6.100 07/01/30 1,743,195 1,743,195
1,000 1,755 2,755 Tulsa Cnty, OK Pub Fac
Auth Cap Impt Rev
(AMBAC Insd) 6.250 11/01/22 1,162,950 2,040,977 3,203,927
2,785 2,785 Tulsa, OK Indl Auth
Hosp Rev Hillcrest Med
Ctr Proj Rfdg (Escrowed
to Maturity) (Connie
Lee Insd) (a) 6.250 06/01/06 2,924,696 2,924,696
2,960 2,960 Tulsa, OK Indl Auth
Hosp Rev Hillcrest Med
Ctr Proj Rfdg (Escrowed
to Maturity) (Connie
Lee Insd) (a) 6.250 06/01/07 3,207,486 3,207,486
-------------------------------------------------------
4,370,436 1,743,195 4,965,673 11,079,304
-------------------------------------------------------
OREGON 3.1%
2,010 2,010 Emerald Peoples Util
Dist OR Rfdg
(FGIC Insd) (a) 7.350 11/01/09 2,398,292 2,398,292
5,000 5,000 Oregon Hlth Sciences
Univ Insd Ser A
(MBIA Insd) 5.250 07/01/22 5,533,300 5,533,300
2,745 2,745 Oregon St Dept Admin
Ser A (Prerefunded @
11/01/05) (MBIA Insd) 5.250 11/01/10 2,835,887 2,835,887
5,000 5,000 Oregon St Dept Admin
Ser C Rfdg (MBIA Insd) 5.250 11/01/18 5,522,050 5,522,050
820 820 Oregon St Vets Welfare
Ser 76A 6.050 10/01/28 824,313 824,313
3,580 3,580 Yamhill Cnty, OR Sch
Dist No 029J Newburg
(MBIA Insd) 5.250 06/15/21 3,954,719 3,954,719
-------------------------------------------------------
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
4,779,032 13,891,237 2,398,292 21,068,561
-------------------------------------------------------
PENNSYLVANIA 3.5%
4,680 4,680 Erie, PA Sch Dist Cap
Apprec Rfdg (FSA Insd) * 09/01/20 2,314,400 2,314,400
5,000 5,000 Harrisburg, PA Auth Res
Gtd Sub Ser D-2
(Variable Rate Coupon)
(FSA Insd) 5.000 12/01/33 5,478,650 5,478,650
1,500 1,500 Harrisburg, PA Res Gtd
Sub Ser D 2 (FSA Insd)
(b) 5.000 12/01/33 1,643,595 1,643,595
1,500 1,500 Pennsylvania Econ Dev
Fin Auth Res Recovery
Rev Colver Proj Ser D
(AMT) 7.050 12/01/10 1,534,635 1,534,635
2,000 2,000 Pennsylvania Econ Dev
Fin Auth Res Recovery
Rev Colver Proj Ser D
(AMT) 7.150 12/01/18 2,046,940 2,046,940
2,535 2,000 4,535 Pennsylvania St Higher
Ed Fac Auth Rev UPMC
Hlth Sys Ser A 6.250 01/15/17 2,901,662 2,289,280 5,190,942
1,000 905 1,905 Pennsylvania St Higher
Ed Fac Auth Rev UPMC
Hlth Sys Ser A 6.250 01/15/18 1,142,340 1,033,818 2,176,158
1,370 1,370 Philadelphia, PA Hosp &
Higher Ed Fac Auth Rev
Cmnty College Ser B
Rfdg (MBIA Insd) (a) 6.500 05/01/08 1,527,934 1,527,934
465 465 Ridley Park, PA Hosp
Auth Rev Taylor Hosp
Ser A (Escrowed to
Maturity) 6.000 12/01/05 477,137 477,137
1,315 1,315 State Pub Sch Bldg Auth
PA Sch Rev Burgettstown
Sch Dist Ser D
(Prerefunded @
02/01/05) (MBIA Insd)
(a) 6.450 02/01/10 1,315,000 1,315,000
-------------------------------------------------------
6,807,630 11,527,723 5,370,038 23,705,391
-------------------------------------------------------
RHODE ISLAND 0.6%
3,775 3,775 Rhode Island St Econ
Dev Corp Arpt Rev Ser A
Rfdg (AMT) (FSA Insd) 5.000 07/01/17 4,024,414 4,024,414
-------------------------------------------------------
SOUTH CAROLINA 2.3%
3,115 3,115 Greenville, SC Impt &
Rfdg (MBIA Insd) (a) 5.250 04/01/21 3,438,244 3,438,244
1,015 1,015 Rock Hill, SC Util Sys
Rev Comb Ser C Rfdg
(FSA Insd) (a) 5.000 01/01/11 1,112,724 1,112,724
6,500 6,500 South Carolina Jobs
Econ Dev Auth Indl Rev
Elec & Gas Co Proj
Ser A (AMBAC Insd) 5.200 11/01/27 6,971,120 6,971,120
3,750 3,750 South Carolina Jobs
Econ Dev Auth Indl Rev
Elec & Gas Co Proj Ser
B (AMT) (AMBAC Insd) 5.450 11/01/32 3,992,775 3,992,775
-------------------------------------------------------
7,431,019 8,083,844 15,514,863
-------------------------------------------------------
SOUTH DAKOTA 0.4%
1,375 1,375 Deadwood, SD Ctf Partn
(ACA Insd) 6.375 11/01/20 1,484,038 1,484,038
1,000 1,000 South Dakota St Hlth &
Ed Fac Auth Rev
Childrens Care Hosp
Rfdg 6.125 11/01/29 1,090,920 1,090,920
-------------------------------------------------------
1,484,038 1,090,920 2,574,958
-------------------------------------------------------
TENNESSEE 1.8%
1,270 1,270 Elizabethton, TN Hlth &
Ed Fac Brd Rev Hosp
First Mtg Ser B Impt &
Rfdg 8.000 07/01/33 1,525,168 1,525,168
12,525 12,525 Johnson City, TN Hlth &
Ed Fac Brd Hosp Rev Cap
Apprec First Mtg Ser A
Rfdg (MBIA Insd) * 07/01/26 4,422,828 4,422,828
1,300 2,500 1,000 4,800 Johnson City, TN Hlth &
Ed Fac Brd Hosp Rev
First Mtg Ser A Rfdg
(MBIA Insd) 7.500 07/01/25 1,652,898 3,178,650 1,271,460 6,103,008
-------------------------------------------------------
1,652,898 7,601,478 2,796,628 12,051,004
-------------------------------------------------------
TEXAS 13.5%
2,335 2,335 Beaumont, TX Wtrwks &
Swr Sys (FGIC Insd) 6.250 09/01/14 2,697,976 2,697,976
2,000 2,000 Brazos Cnty, TX Hlth
Fac Dev Oblig Grp 5.375 01/01/32 2,060,600 2,060,600
1,190 1,585 790 3,565 Brazos River Auth TX
Pollutn Ctl Rev Adj TXU
Elec Co Proj Ser C Rfdg
(AMT) (b) 5.750 05/01/36 1,287,402 1,714,732 854,661 3,856,795
930 930 Brownsville, TX Util
Sys Rev (Escrowed to
Maturity) 7.375 01/01/10 1,053,941 1,053,941
1,515 1,515 Cameron Cnty, TX Ctf
Oblig (AMBAC Insd) (a) 5.750 02/15/16 1,690,831 1,690,831
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
5,000 3,000 8,000 Dallas-Fort Worth, TX
Intl Arpt Rev Jt Ser A
Impt & Rfdg (AMT)
(FGIC Insd) 5.500 11/01/31 5,286,400 3,171,840 8,458,240
2,345 2,345 Denton Cnty, TX Perm
Impt (a) 5.500 07/15/19 2,603,700 2,603,700
1,000 1,000 Harris Cnty, TX Hlth
Fac Dev Mem Hermann
Hlthcare Ser A 6.375 06/01/29 1,100,510 1,100,510
5,000 5,000 Harris Cnty, TX Sr Lien
Toll Rd Rfdg (FSA Insd) 5.125 08/15/32 5,233,300 5,233,300
2,945 2,945 Houston, TX Arpt Sys
Rev (Escrowed to
Maturity) 9.500 07/01/10 3,545,486 3,545,486
4,655 4,655 Houston, TX Arpt Sys
Rev Sub Lien (FSA Insd) 5.500 07/01/15 5,242,182 5,242,182
3,000 3,000 Houston, TX Arpt Sys
Rev Sub Lien Ser A
(AMT) (FSA Insd) 5.625 07/01/30 3,267,180 3,267,180
5,000 5,000 Houston, TX Util Sys
Rev Comb First Lien
Ser A Rfdg (FSA Insd) 5.250 05/15/20 5,552,350 5,552,350
3,920 Lower, CO Riv Auth TX
Svc Corp Proj Rfdg
(FGIC Insd) 5.000 05/15/33 4,033,641 4,033,641
5,000 5,000 Matagorda Cnty, TX
Navig Dist No 1 Rev
Houston Lt Rfdg (AMT)
(AMBAC Insd) (b) 5.125 11/01/28 5,416,750 5,416,750
1,000 1,000 2,000 Mesquite, TX Hlth Fac
Dev Corp Retirement Fac
Christian Care Ctr
Ser A 7.625 02/15/28 1,053,440 1,053,440 2,106,880
1,500 2,000 3,500 Metropolitan Hlth Fac
Dev Corp TX Wilson N
Jones Mem Hosp Proj 7.250 01/01/31 1,504,005 2,005,340 3,509,345
3,325 3,325 North Cent TX Hlth Fac
Dev Hosp Baylor
Hlthcare Sys Proj Ser A 5.125 05/15/29 3,419,164 3,419,164
3,000 3,000 Prosper,TX Indpt Sch
Dist (PSF Gtd) 5.500 08/15/33 3,240,690 3,240,690
5,000 2,000 7,000 San Antonio, TX Elec &
Gas Sys Rfdg 5.375 02/01/16 5,557,900 2,223,160 7,781,060
3,960 3,960 Stafford, TX Econ Dev
Corp (FGIC Insd) 5.500 09/01/30 4,401,421 4,401,421
1,990 1,990 Stafford, TX Econ Dev
Corp (FGIC Insd) (a) 6.000 09/01/19 2,396,458 2,396,458
2,000 1,510 3,510 Texas St Wtr Fin
Assistance 5.500 08/01/35 2,178,240 1,644,571 3,822,811
5,000 5,000 Wylie, TX Indpt Sch
Dist Rfdg (PSF Gtd) 5.000 08/15/30 5,150,150 5,150,150
-------------------------------------------------------
16,334,013 54,432,370 20,875,078 91,641,461
-------------------------------------------------------
UTAH 0.4%
4,950 4,950 Intermountain Pwr Agy
UT Pwr Supply Rev Ser A
Rfdg (Escrowed to
Maturity) (FGIC Insd) * 07/01/17 2,825,510 2,825,510
50 50 Utah St Hsg Fin Agy
Single Family Mtg Sr
Issue Ser B-2 (AMT)
(FHA/VA Gtd) 6.500 07/01/15 50,133 50,133
-------------------------------------------------------
50,133 2,825,510 2,875,643
-------------------------------------------------------
VIRGINIA 1.3%
2,000 2,000 Fairfax Cnty, VA Ctf
Partn 5.300 04/15/23 2,183,680 2,183,680
1,500 1,500 Henrico Cnty, VA Indl
Dev Auth Pub Fac Lease
Rev Henrico Cnty Regl
Jail Proj (Prerefunded
@ 08/01/05) 6.500 08/01/10 1,562,820 1,562,820
1,380 1,380 Richmond, VA Indl Dev
Auth Govt Fac Rev Bds
(AMBAC Insd) (a) 5.000 07/15/14 1,537,513 1,537,513
1,595 1,595 Richmond, VA Indl Dev
Auth Govt Fac Rev Bds
(AMBAC Insd) (a) 5.000 07/15/16 1,784,789 1,784,789
1,715 1,715 Richmond, VA Indl Dev
Auth Govt Fac Rev Bds
(AMBAC Insd) (a) 5.000 07/15/17 1,916,770 1,916,770
-------------------------------------------------------
7,200,783 1,784,789 8,985,572
-------------------------------------------------------
WASHINGTON 5.0%
5,000 5,000 Clark Cnty, WA Sch Dist
114 (FSA Insd) 5.250 06/01/19 5,551,150 5,551,150
3,630 3,630 King City, WA Ser B
(Prerefunded @
12/01/07) 5.900 12/01/14 4,033,293 4,033,293
1,370 1,370 King Cnty, WA Ser B
(Prerefunded @
12/01/07) 5.900 12/01/14 1,522,207 1,522,207
2,245 2,245 King Cnty, WA Ser B
(Prerefunded @
12/01/07) 6.625 12/01/15 2,538,668 2,538,668
1,280 1,280 Pierce Cnty, WA Sch
Dist No. 343 Dieringer
Impt & Rfdg (FSA Insd) 5.000 12/01/20 1,383,475 1,383,475
700 700 Quinault Indian Nation,
WA Quinault Beach Ser A
Rfdg & Impt (ACA Insd) 5.800 12/01/15 749,497 749,497
3,000 3,000 Spokane, WA Pub Fac
Dist Hotel Motel &
Sales Use Tax
(MBIA Insd) 5.250 09/01/33 3,197,220 3,197,220
4,000 4,000 Washington St Pub Pwr
Supply Ser A Rfdg
(FGIC Insd) 7.000 07/01/08 4,542,960 4,542,960
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKV VKI PROFORMA
PAR PAR PAR PAR VKI-
AMOUNT AMOUNT AMOUNT AMOUNT VOT VKV VKI PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
10,000 10,000 Washington St Pub Pwr
Supply Ser A Rfdg
(AMBAC Insd) 5.700 07/01/09 10,645,800 10,645,800
-------------------------------------------------------
3,946,717 28,834,078 1,383,475 34,164,270
-------------------------------------------------------
WEST VIRGINIA 1.5%
500 5,920 6,420 Harrison Cnty, WV Cnty
Cmnty Solid Waste Disp
Rev West PA Pwr Co Ser
C (AMT) (AMBAC Insd) 6.750 08/01/24 511,600 6,057,344 6,568,944
3,750 3,750 West Virginia Univ Rev
Impt Univ Proj Ser C
(FGIC Insd) 5.000 10/01/34 3,923,888 3,923,888
-------------------------------------------------------
4,435,488 6,057,344 10,492,832
-------------------------------------------------------
WISCONSIN 1.2%
2,500 2,500 Milwaukee, WI Redev
Auth Rev Milwaukee Pub
Schs (AMBAC Insd) 5.125 08/01/21 2,706,225 2,706,225
2,490 2,490 Wisconsin St Hlth & Ed
Fac Auth Rev Bellin Mem
Hosp (AMBAC Insd) 6.625 02/15/08 2,679,663 2,679,663
2,675 2,675 Wisconsin St Hlth & Ed
Fac FH Hlthcare Dev Inc
Proj 6.250 11/15/28 2,858,853 2,858,853
-------------------------------------------------------
2,679,663 2,858,853 2,706,225 8,244,741
-------------------------------------------------------
PUERTO RICO 4.6%
8,000 7,000 6,000 21,000 Puerto Rico Comwlth Hwy
& Trans Auth Hwy Rev
Ser Y Rfdg (FSA Insd)
(b) (c) 6.250 07/01/21 10,223,760 8,945,790 7,667,820 26,837,370
4,000 4,000 Puerto Rico Pub Bldgs
Auth Gtd Pub Ed & Hlth
Fac Ser M Rfdg
(MBIA Insd) 5.600 07/01/08 4,390,480 4,390,480
-------------------------------------------------------
10,223,760 13,336,270 7,667,820 31,227,850
-------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS 159.6%
(Cost $1,002,168,124) 290,899,263 589,032,184 201,258,993 1,081,190,440
TOTAL SHORT-TERM INVESTMENTS 1.2%
(Cost $8,400,000) 800,000 3,800,000 3,800,000 8,400,000
-------------------------------------------------------
TOTAL INVESTMENTS 160.8%
(Cost $1,010,568,124) 291,699,263 592,832,184 205,058,993 1,089,590,440
OTHER ASSETS IN EXCESS OF LIABILITIES 1.2% 3,069,816 6,593,817 (1,806,682) 7,856,951
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (62.0%) (115,020,637) (225,101,630) (80,024,143) (420,146,410)
-------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0% $179,748,442 $374,324,371 $123,228,168 $ 677,300,981
=======================================================
Percentages are calculated as a percentage of net assets applicable to common shares.
* Zero coupon bond
(a) The Trust owns 100% of the bond issuance.
(b) Security converts to a fixed coupon rate at a predetermined date.
(c) All or a portion of these securities have been physically segregated in connection with open futures contracts.
(d) 144A securities are those which are exempt from registration under Rule 144A of the Securities Act of 1933, as
amended. These securities may only be resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(e) Security is a "step-up" bond where the coupon increases or steps up at a predetermined date.
(f) Securities purchased on a when-issued or delayed delivery basis.
(g) This security is restricted and may be resold only in transactions exempt from registration which are normally
those transactions with qualified institutional buyers. Restricted securities comprise 0.2% of net assets
applicable to common shares.
VAN KAMPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV)
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
ACA - American Capital Access Insurance Co.
AMBAC - AMBAC Indemnity Corp.
AMT - Alternative Minimum Tax
Connie Lee - Connie Lee Insurance Co.
FGIC - Financial Guaranty Insurance Co.
FHA/VA - Federal Housing Administration/Department of Veterans Affairs
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
MBIA - Municipal Bond Investors Assurance Corp.
PSF - Public School Fund
Radian - Radian Asset Assurance
XLCA - XL Capital Assurance Inc.
Future contracts outstanding as of January 31, 2005:
Unrealized Appreciation/
Short Contracts: Contracts Depreciation
---------------- --------- ------------
U.S. Treasury Notes 10-Year Futures March 05
(Current Notional Value $112,266 per contract) .......... 218 $ (297,216)
U.S. Treasury Notes 5-Year Futures March 05
(Current Notional Value $109,250 per contract) .......... 2,154 (801,669)
----- ------------
2,372 $ (1,098,885)
===== ============
VAN KAPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VOT VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
Municipal Bonds 162.4%
ALASKA 0.4%
$ 1,000 $ 1,000 Alaska St Hsg Fin Corp Gen Hsg Ser
A (FGIC Insd) 5.250 12/01/41 $ $ 1,065,960 $ 1,065,960
------------------------------------------
ALABAMA 1.1%
$ 1,000 1,000 Birmingham Baptist Med Ctr AL
Baptist Hlth Sys Ser A 5.875 11/15/24 1,066,150 1,066,150
1,090 1,090 Lee Cnty, AL Sch Wts Ltd Oblig
(MBIA Insd) (a) 5.000 02/01/17 1,184,917 1,184,917
1,000 1,000 Valley, AL Spl Care Fac Fin Auth
Rev Lanier Mem Hosp Ser A 5.600 11/01/16 1,014,250 1,014,250
------------------------------------------
3,265,317 3,265,317
------------------------------------------
ARIZONA 6.2%
5,000 5,000 Arizona Sch Fac Brd Ctfs Ser B
(FGIC Insd) 5.250 09/01/18 5,541,300 5,541,300
3,000 3,000 Arizona St Transn Brd Hwy Rev Ser B 5.250 07/01/19 3,328,260 3,328,260
2,235 2,235 Arizona Tourism & Sports Auth Tax
Rev Multipurpose Stad Fac Ser A
(MBIA Insd) 5.375 07/01/21 2,510,777 2,510,777
2,000 2,000 Phoenix, AZ Civic Impt Corp Arpt
Rev Jr Lien (AMT) (FGIC Insd) 5.375 07/01/29 2,039,760 2,039,760
765 765 Pima Cnty, AZ Indl Dev Auth Indl
Rev Lease Oblig Irvington Proj
Tucson Ser A Rfdg (FSA Insd) 7.250 07/15/10 799,731 799,731
2,685 2,685 South Campus Group LLC AZ Std Hsg
Rev AZ St Univ South Campus Proj
(MBIA Insd) 5.625 09/01/35 3,028,358 3,028,358
1,300 1,300 Tempe, AZ Excise Tax Rev Rfdg 5.250 07/01/18 1,447,927 1,447,927
------------------------------------------
11,080,435 7,615,678 18,696,113
------------------------------------------
CALIFORNIA 22.4%
6,000 6,000 Anaheim, CA Pub Fin Auth Lease Rev
Cap Apprec Pub Impt Proj Ser C
(FSA Insd) * 09/01/19 3,097,680 3,097,680
7,195 7,195 Anaheim, CA Pub Fin Auth Lease Rev
Cap Apprec Pub Impt Proj Ser C
(FSA Insd) * 09/01/21 3,332,724 3,332,724
5,000 5,000 Anaheim, CA Pub Fin Auth Lease Rev
Cap Apprec Pub Impt Proj Ser C
(FSA Insd) * 09/01/32 1,234,800 1,234,800
1,300 1,300 Anaheim, CA Pub Fin Auth Lease Rev
Pub Impt Proj Ser C (FSA Insd) 6.000 09/01/16 1,568,515 1,568,515
2,095 2,095 Bay Area Govt Assn CA Rev Tax Alloc
CA Redev Pool Ser A (XLCA Insd) 5.250 09/01/35 2,237,167 2,237,167
1,000 1,000 California St (AMBAC Insd) 5.125 10/01/27 1,057,450 1,057,450
2,800 2,800 California St Dept Wtr Res Pwr Ser
A (AMBAC Insd) 5.500 05/01/16 3,177,468 3,177,468
2,000 2,000 California St Dept Wtr Res Pwr
Ser A 6.000 05/01/15 2,328,960 2,328,960
2,345 2,345 California St Dept Wtr Res Pwr
Supply Rev Ser A (XLCA Insd) 5.375 05/01/17 2,616,152 2,616,152
2,000 2,000 California St Pub Wks Brd Lease Rev
Dept of Corrections St Prisons Ser
A Rfdg (AMBAC Insd) (c) 5.000 12/01/19 2,210,680 2,210,680
2,500 2,500 5,000 California St Pub Wks Brd Lease Rev
Dept of Mental Hlth Coalinga Ser A 5.000 06/01/24 2,614,625 2,614,625 5,229,250
4,600 4,600 California St Pub Wks Brd Lease Rev
Var Univ CA Proj Ser A Rfdg (c) 5.500 06/01/10 5,100,250 5,100,250
5,905 5,905 California St Pub Wks Brd Lease Rev
Var Univ CA Proj Ser A Rfdg 5.500 06/01/14 6,657,120 6,657,120
5,000 5,000 Foothill/Eastern Corridor Agy CA
Toll Rd Rev Cap Apprec Rfdg
(MBIA Insd) * 01/15/18 2,597,050 2,597,050
2,000 2,000 Foothill/Eastern Corridor Agy CA
Toll Rd Rev Sr Lien Ser A
(Prerefunded @ 01/01/07) 6.500 01/01/32 2,157,160 2,157,160
3,950 3,950 Los Angeles, CA Dept Wtr & Pwr Ser
A (FGIC Insd) 5.125 07/01/40 4,123,049 4,123,049
5,000 5,000 Los Angeles, CA Uni Sch Dist Ser A
(FSA Insd) 5.250 07/01/20 5,550,600 5,550,600
VAN KAPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VOT VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
2,465 2,465 Los Angeles, CA Uni Sch Dist Ser B
(FGIC Insd) 5.000 07/01/23 2,638,684 2,638,684
13,880 13,880 San Joaquin Hills, CA Transn
Corridor Agy Toll Rd Rev Cap Apprec
Ser A Rfdg (MBIA Insd) * 01/15/28 4,422,446 4,422,446
2,720 2,720 Washington, CA Uni Sch Dist Yolo
Cnty Election 2004 Ser A
(FGIC Insd) (a) 5.250 08/01/19 3,025,701 3,025,701
3,070 3,070 Washington, CA Uni Sch Dist Yolo
Cnty Ser A (FGIC Insd) (a) 5.250 08/01/20 3,409,603 3,409,603
------------------------------------------
40,571,443 27,201,066 67,772,509
------------------------------------------
COLORADO 7.6%
1,000 1,000 2,000 Arapahoe Cnty, CO Cap Impt Tr Fd
Hwy Rev E-470 Proj (Prerefunded @
08/31/05) (b) 7.000 08/31/26 1,058,100 1,058,100 2,116,200
7,500 5,000 12,500 Arapahoe Cnty, CO Cap Impt Tr Fd
Hwy Rev E-470 Proj Ser C
(Prerefunded @ 08/31/05) * 08/31/26 1,546,200 1,030,800 2,577,000
1,475 1,475 Colorado Ed & Cultural Fac Auth Rev
Charter Sch Proj Impt & Rfdg
(XLCA Insd) 5.250 08/15/19 1,631,704 1,631,704
1,945 1,945 Colorado Ed & Cultural Impt Charter
Sch Pinnacle Rfdg (XLCA Insd) 5.250 06/01/23 2,115,032 2,115,032
1,000 1,000 Colorado Hlth Fac Auth Rev Catholic
Hlth Initiatives Ser A (Escrowed to
Maturity) 5.500 03/01/32 1,130,620 1,130,620
1,250 1,000 2,250 Colorado Hlth Fac Auth Rev Hosp
Portercare Adventist Hlth 6.500 11/15/31 1,388,962 1,111,170 2,500,132
165 165 Colorado Hsg Fin Auth Single Family
Pgm Sr Ser A2 (AMT) 7.250 05/01/27 166,685 166,685
109 109 Colorado Hsg Fin Auth Single Family
Pgm Sr Ser B1 (AMT) 7.650 11/01/26 110,184 110,184
1,500 1,500 Denver, CO City & Cnty Arpt Rev Ser
D (AMT) 7.750 11/15/13 1,814,460 1,814,460
3,515 3,515 E-470 Pub Hwy Auth CO Rev Cap
Apprec Sr Ser B (MBIA Insd) * 09/01/13 2,507,706 2,507,706
6,160 6,160 E-470 Pub Hwy Auth CO Rev Sr Ser A
(MBIA Insd) 5.000 09/01/21 6,507,178 6,507,178
------------------------------------------
18,068,258 5,108,643 23,176,901
------------------------------------------
CONNECTICUT 0.7%
1,010 1,010 Mashantucket Western Pequot Tribe
CT Spl Rev Ser A, 144-A Private
Placement (d) 6.400 09/01/11 1,072,923 1,072,923
990 990 Mashantucket Western Pequot Tribe
CT Spl Rev Ser A, 144-A Private
Placement (Prerefunded @ 09/01/07)
(d) 6.400 09/01/11 1,085,050 1,085,050
------------------------------------------
2,157,973 2,157,973
------------------------------------------
FLORIDA 4.6%
3,000 3,000 Lake Cnty, FL Sch Brd Ctf Part
(AMBAC Insd) 5.375 07/01/17 3,352,080 3,352,080
5,000 5,000 Osceola Cnty, FL Trans Rev Osceola
Pkwy Proj & Rfdg (MBIA Insd) 5.000 04/01/22 5,398,200 5,398,200
5,000 5,000 Ocoee, FL Wtr & Swr Sys Rev Impt &
Rfdg (AMBAC Insd) 5.125 10/01/33 5,289,950 5,289,950
------------------------------------------
5,398,200 8,642,030 14,040,230
------------------------------------------
GEORGIA 4.2%
2,000 2,000 Atlanta, GA Wtr & Wastewtr Rev (FSA
Insd) 5.000 11/01/21 2,174,360 2,174,360
5,000 5,000 Clayton Cnty & Clayton Cnty GA Wtr
Auth Wtr & Swr Rev 5.000 05/01/20 5,476,700 5,476,700
2,000 2,000 Georgia St Rd & Twy Auth Rev 5.000 10/01/19 2,186,060 2,186,060
1,745 1,745 Municipal Elec Auth GA Comb Turbine
Proj Ser A (MBIA Insd) 5.250 11/01/20 1,935,624 1,935,624
1,000 1,000 Richmond Cnty, GA Dev Auth ASU
Jaguar Student Hsg LLC Ser A 5.250 02/01/35 1,028,230 1,028,230
------------------------------------------
6,504,930 6,296,044 12,800,974
------------------------------------------
ILLINOIS 11.0%
3,750 3,750 Bolingbrook, IL Cap Apprec Ser B
(MBIA Insd) * 01/01/32 876,300 876,300
1,710 1,710 Bolingbrook, IL Cap Apprec Ser C
Rfdg (MBIA Insd) (a) * 01/01/29 522,405 522,405
VAN KAPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VOT VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
5,400 5,400 Chicago, IL Brd of Ed Cap Apprec
Sch Reform Ser B-1 (FGIC Insd) * 12/01/28 1,667,358 1,667,358
3,365 3,365 Chicago, IL Cap Apprec (Prerefunded
@ 07/01/05) (AMBAC Insd) * 01/01/17 1,605,946 1,605,946
335 335 Chicago, IL Single Family Mtg Rev
Ser A (AMT) (GNMA Collateralized) 7.000 09/01/27 336,531 336,531
50 50 Chicago, IL Single Family Mtg Rev
Ser B (AMT) (GNMA Collateralized) 7.625 09/01/27 50,213 50,213
3,345 3,345 Cook Cnty, IL Sch Dist No 100
Berwyn South Ser D Rfdg (FSA Insd) 5.500 12/01/23 3,803,365 3,803,365
2,540 2,540 Cook Cnty, IL Sch Dist No 122 Oak
Lawn Cap Apprec (FGIC Insd) (a) * 12/01/15 1,607,312 1,607,312
4,500 4,500 Cook Cnty, IL Ser A (FGIC Insd) 5.500 11/15/31 4,991,535 4,991,535
1,000 1,000 Illinois Dev Fin Auth Rev Cmnty
Rehab Providers Fac Ser A 7.375 07/01/25 1,089,980 1,089,980
2,500 2,500 Illinois Fin Auth Rev Northwestern
Mem Hosp Ser A 5.500 08/15/43 2,677,475 2,677,475
1,325 1,325 Illinois Fin Auth Student Hsg MJH
Rev Ed Assistance IV-Sr Ser A 5.125 06/01/35 1,315,221 1,315,221
8,000 8,000 Illinois St First Ser (FSA Insd) 5.250 12/01/19 8,875,200 8,875,200
3,400 3,400 Illinois St First Ser (FSA Insd) 5.250 04/01/27 3,684,614 3,684,614
300 300 Peoria, Moline & Freeport, IL Coll
Mtg Ser A (AMT) (GNMA
Collateralized) 7.600 04/01/27 301,332 301,332
------------------------------------------
31,215,024 2,189,763 33,404,787
------------------------------------------
INDIANA 6.0%
2,805 2,805 Dekalb Eastn High Sch Bldg Corp IN
First Mtg (FSA Insd) 6.000 01/15/18 3,243,926 3,243,926
4,000 4,000 East Chicago, IN Elementary Sch
Bldg Corp First Mtg Ser A 6.250 07/05/08 4,385,880 4,385,880
3,000 3,000 Indiana Hlth Fac Fin Auth Hosp Rev
Columbus Regl Hosp Rfdg (FSA Insd) 7.000 08/15/15 3,687,150 3,687,150
1,500 1,500 Indiana St Dev Fin Auth Rev Exempt
Fac Conv Rfdg (AMT) 5.950 08/01/30 1,542,270 1,542,270
2,000 2,000 Petersburg, IN Pollutn Ctl Rev IN
Pwr & Lt (AMT) 5.950 12/01/29 2,048,620 2,048,620
2,850 2,850 Southwest Parke Cmnty Sch Bldg
First Mtg (FGIC Insd) (a) 5.250 07/15/21 3,160,108 3,160,108
------------------------------------------
16,525,684 1,542,270 18,067,954
------------------------------------------
LOUISIANA 6.0%
2,500 2,500 Louisiana Loc Govt Envir Fac Pkg
Fac Corp Garage Proj Ser A (AMBAC
Insd) 5.375 10/01/31 2,717,875 2,717,875
1,400 1,400 Louisiana Pub Fac Auth Rev Hlth Fac
Glen Retirement Ser A 6.700 12/01/25 1,449,476 1,449,476
6,000 6,000 New Orleans, LA Rfdg (MBIA Insd) 5.125 09/01/21 6,560,700 6,560,700
2,000 2,000 4,000 New Orleans, LA Rfdg (FGIC Insd) 5.500 12/01/21 2,366,180 2,366,180 4,732,360
2,800 2,800 Saint Charles Parish, LA Solid
Waste Disp Rev LA Pwr & Lt Co Proj
(AMT) (FSA Insd) (c) 7.050 04/01/22 2,809,576 2,809,576
------------------------------------------
14,454,331 3,815,656 18,269,987
------------------------------------------
MARYLAND 0.3%
1,000 1,000 Maryland St Econ Dev Corp Univ MD
College Pk Proj 5.625 06/01/35 1,038,570 1,038,570
------------------------------------------
MASSACHUSETTS 5.3%
1,200 1,200 Massachusetts Bay Tran Auth MA Gen
Tran Sys Ser A Rfdg 6.250 03/01/12 1,419,024 1,419,024
2,000 2,000 Massachusetts Muni Whsl Elec Co
Proj No 6-A (MBIA Insd) 5.250 07/01/16 2,209,300 2,209,300
VAN KAPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VOT VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
1,000 1,000 2,000 Massachusetts St Hlth & Ed Fac Auth
Rev Saint Mem Med Ctr Ser A 6.000 10/01/23 1,006,840 1,006,840 2,013,680
2,995 2,995 Massachusetts St Wtr Pollutn
Abatement Tr Pool Pgm Bds Ser 10 5.000 08/01/21 3,260,656 3,260,656
7,050 7,050 Massachusetts St Wtr Res Auth Gen
Ser J (FSA Insd) 5.000 08/01/32 7,333,692 7,333,692
------------------------------------------
6,476,796 9,759,556 16,236,352
------------------------------------------
MICHIGAN 5.7%
3,000 3,000 Detroit, MI City Sch Dist Sch Bldg
& Site Impt Ser A (FGIC Insd) 5.375 05/01/24 3,360,630 3,360,630
2,000 2,000 Detroit, MI Downtown Dev Auth Tax
Increment Rev Dev Area No. 1 Proj
Ser C1 (Prerefunded @ 07/01/06) 6.250 07/01/25 2,147,140 2,147,140
2,790 2,790 Detroit, MI Wtr Supply Sys Rev Sr
Lien Ser C (MBIA Insd) (a) 5.250 07/01/19 3,102,145 3,102,145
2,000 2,000 Grand Rapids, MI Wtr Supply
(FGIC Insd) 5.750 01/01/15 2,271,700 2,271,700
1,495 1,495 Michigan St Hsg Dev Auth Multi-
Family Rev Ltd Oblig Ser A Rfdg
(GNMA Collateralized) 6.600 04/01/30 1,528,398 1,528,398
2,075 2,075 South Lyon, MI Cmnty Sch Bldg &
Site (FGIC Insd) 5.250 05/01/18 2,304,184 2,304,184
2,285 2,285 Taylor, MI Bldg Auth (AMBAC Insd)
(a) 6.000 03/01/13 2,703,863 2,703,863
------------------------------------------
4,889,028 12,529,032 17,418,060
------------------------------------------
MINNESOTA 0.4%
1,065 1,065 Duluth, MN Econ Dev Auth Hlthcare
Fac Rev Benedictine Hlth Sys Saint
Marys 5.250 02/15/33 1,098,611 1,098,611
------------------------------------------
MISSISSIPPI 4.1%
2,000 3,000 5,000 Mississippi Bus Fin Corp MS Pollutn
Ctl Rev Sys Energy Res Inc Proj
Rfdg 5.900 05/01/22 2,020,160 3,030,240 5,050,400
1,900 1,900 Mississippi Dev Bk Spl Oblig Cap
Proj & Equip Acquisition Ser A2
(AMBAC Insd) 5.000 07/01/24 2,088,366 2,088,366
1,550 1,550 Mississippi Dev Bk Spl Oblig
Madison Cnty Hosp Proj (Prerefunded
@ 07/01/09) 6.400 07/01/29 1,798,170 1,798,170
2,595 2,595 Mississippi Dev Bk Spl Oblig MS Ltd
Oblig Hosp Impts (MBIA Insd) (a) 5.250 07/01/32 2,755,215 2,755,215
840 840 Mississippi Home Corp Single Family
Rev Mtg Ser C (AMT) (GNMA
Collateralized) 7.600 06/01/29 872,432 872,432
------------------------------------------
8,661,911 3,902,672 12,564,583
------------------------------------------
MISSOURI 7.8%
2,000 2,000 Cape Girardeau Cnty, MO Indl Dev
Auth Hlthcare Fac Rev Southeast MO
Hosp Assoc 5.625 06/01/27 2,066,260 2,066,260
1,250 1,250 Cole Cnty, MO Indl Dev Auth Sr
Living Fac Rev Lutheran Sr Svcs
Heisinger Proj (a) 5.500 02/01/35 1,304,063 1,304,063
2,000 2,000 Curators Univ MO Sys Fac Rev Ser B
Rfdg (a) 5.000 11/01/20 2,171,540 2,171,540
3,000 3,000 Platte Cnty, MO Neighborhood Impt
Parkville Ser B (MBIA Insd) (e) 5.000 02/01/25 3,184,260 3,184,260
1,500 1,500 Saint Louis Cnty, MO Mtg Rev Ctf
Rcpt Ser H (AMT) (Escrowed to
Maturity) 5.400 07/01/18 1,702,140 1,702,140
5,855 4,000 9,855 Saint Louis, MO Arpt Rev Arpt Dev
Pgm Ser A (MBIA Insd) 5.250 07/01/31 6,195,761 4,232,800 10,428,561
2,380 2,380 Saint Louis, MO Arpt Rev Cap Impt
Pgm Ser A (MBIA Insd) (a) 5.375 07/01/19 2,645,061 2,645,061
------------------------------------------
13,913,285 9,588,600 23,501,885
------------------------------------------
NEBRASKA 1.5%
4,260 4,260 University NE Univ Rev Lincoln
Student Fees & Fac Ser B 5.000 07/01/23 4,549,169 4,549,169
------------------------------------------
VAN KAPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VOT VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEVADA 2.5%
3,000 3,000 Clark Cnty, NV Indl Dev Rev
Southwest Gas Corp Proj Ser A (AMT)
(AMBAC Insd) 5.250 07/01/34 3,147,540 3,147,540
4,375 4,375 Las Vegas Valley, NV Wtr Dist Ser B
Rfdg (MBIA Insd) 5.000 06/01/27 4,578,087 4,578,087
------------------------------------------
7,725,627 7,725,627
------------------------------------------
NEW HAMPSHIRE 1.2%
1,000 1,000 New Hampshire Hlth & Ed Fac Auth
Rev Derryfield Sch 7.000 07/01/30 1,040,300 1,040,300
1,400 1,400 New Hampshire Hlth & Ed Fac
Hlthcare Sys Covenant Hlth 5.500 07/01/34 1,456,588 1,456,588
1,000 1,000 New Hampshire St Bus Fin Auth Wtr
Fac Rev Pennichuck Wtrwks Inc (AMT)
(AMBAC Insd) 6.300 05/01/22 1,093,500 1,093,500
------------------------------------------
3,590,388 3,590,388
------------------------------------------
NEW JERSEY 5.7%
500 500 New Jersey Econ Dev Auth Rev
Cigarette Tax 5.750 06/15/29 531,410 531,410
1,000 1,000 New Jersey Econ Dev Auth Rev
Cigarette Tax 5.500 06/15/31 1,041,160 1,041,160
5,000 5,000 New Jersey Econ Dev Auth Rev Sch
Fac Constr Ser I 5.000 09/01/23 5,316,800 5,316,800
2,210 2,210 New Jersey Econ Dev Auth Wtr Fac
Rev NJ American Wtr Co Inc Ser B
(AMT) (FGIC Insd) 5.375 05/01/32 2,337,539 2,337,539
1,000 1,000 New Jersey Hlthcare Fac Fin Auth
Rev Cap Hlth Sys Oblig Grp Ser A 5.375 07/01/33 1,037,280 1,037,280
1,000 1,000 New Jersey Hlthcare Fac Fin Auth
Rev Gen Hosp Ctr at Passaic
(Escrowed to Maturity) (FSA Insd) 6.000 07/01/06 1,031,470 1,031,470
2,000 2,000 New Jersey St Tpk Auth Tpk Rev Ser
C-1 (AMBAC Insd) 5.000 01/01/35 2,077,900 2,077,900
4,000 4,000 Salem Cnty, NJ Indl Pollutn Ctl Fin
Auth Rev Pollutn Ctl Pub Svc Elec &
Gas Ser A (AMT) (MBIA Insd) 5.450 02/01/32 4,042,480 4,042,480
------------------------------------------
11,431,910 5,984,129 17,416,039
------------------------------------------
NEW MEXICO 0.5%
1,500 1,500 Jicarilla, NM Apache Nation Rev Adj
Ser A (Acquired 10/23/03, Cost
$1,514,910) (f) 5.000 09/01/18 1,576,290 1,576,290
------------------------------------------
NEW YORK 10.3%
3,250 3,250 New York City Hlth & Hosp Corp Rev
Hlth Sys Ser A (AMBAC Insd) 5.000 02/15/11 3,572,270 3,572,270
3,000 3,000 New York City Muni Wtr Fin Auth Wtr
& Sew Sys Rev Ser A (AMBAC Insd) 5.000 06/15/35 3,127,980 3,127,980
5,000 5,000 New York City Ser A1 (Prerefunded @
08/01/05) 6.375 08/01/10 5,156,550 5,156,550
3,000 3,000 New York City Ser G (Prerefunded
@ 02/01/06) (c) 6.000 02/01/11 3,156,420 3,156,420
5,000 5,000 New York City Ser H (MBIA Insd) (a) 5.250 03/15/14 5,567,200 5,567,200
1,520 1,520 New York St Dorm Auth Rev Insd John
T Mather Mem Hosp (Connie Lee Insd)
(a) 6.500 07/01/09 1,740,172 1,740,172
500 500 New York St Energy Resh & Dev Auth
St Service Contract Rev Ser B 5.500 04/01/05 502,780 502,780
2,175 2,175 New York St Med Care Fac Fin Agy
Rev NY Downtown Hosp Ser A
(Prerefunded @ 02/15/05) 6.800 02/15/20 2,222,545 2,222,545
3,000 3,000 New York St Med Care Fac Fin Agy
Rev NY Hosp Mtg Ser A (Prerefunded
@ 02/15/05) (AMBAC Insd) 6.200 08/15/05 3,064,830 3,064,830
3,000 3,000 New York St Med Care Fac Fin Agy
Rev NY Hosp Mtg Ser A (Prerefunded
@ 02/15/05) (AMBAC Insd) 6.800 08/15/24 3,065,520 3,065,520
------------------------------------------
14,099,752 17,076,515 31,176,267
------------------------------------------
NORTH CAROLINA 0.6%
1,500 1,500 North Carolina Eastn Muni Pwr Agy
Pwr Sys Rev Ser D 6.700 01/01/19 1,691,505 1,691,505
------------------------------------------
OHIO 4.4%
3,000 3,000 Cincinnati, OH City Sch Dist Sch
Impt (FSA Insd) 5.250 06/01/18 3,332,940 3,332,940
1,000 1,000 2,000 Cuyahoga Cnty, OH Hosp Fac Rev
Canton Inc Proj 7.500 01/01/30 1,132,570 1,132,570 2,265,140
1,000 1,000 Dayton, OH Arpt Rev James M Cox
Dayton Ser C Rfdg (AMT)
(Radian Insd) 5.250 12/01/27 1,036,760 1,036,760
VAN KAPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VOT VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
1,040 1,040 Lorain Cnty, OH Hosp Rev EMH Regl
Med Ctr Rfdg (AMBAC Insd) 7.750 11/01/13 1,101,090 1,101,090
1,165 1,165 Marion Cnty, OH Rev Cmnty Hosp Impt
& Rfdg 6.100 05/15/06 1,204,435 1,204,435
3,170 3,170 Pickerington, OH Loc Sch Dist Cap
Apprec Sch Fac Contract (FGIC Insd) * 12/01/11 2,497,009 2,497,009
950 950 Strongsville, OH (Prerefunded @
12/01/06) 6.700 12/01/11 1,041,495 1,041,495
850 850 Toledo Lucas Cnty, OH Port Auth
Northwest Bd Fd Ser A (AMT) 6.000 05/15/11 918,374 918,374
------------------------------------------
3,275,155 10,122,088 13,397,243
------------------------------------------
OKLAHOMA 3.1%
1,000 1,755 2,755 Tulsa Cnty, OK Pub Fac Auth Cap
Impt Rev (AMBAC Insd) 6.250 11/01/22 1,162,950 2,040,977 3,203,927
2,785 2,785 Tulsa, OK Indl Auth Hosp Rev
Hillcrest Med Ctr Proj Rfdg
(Escrowed to Maturity) (Connie Lee
Insd) (a) 6.250 06/01/06 2,924,696 2,924,696
2,960 2,960 Tulsa, OK Indl Auth Hosp Rev
Hillcrest Med Ctr Proj Rfdg
(Escrowed to Maturity) (Connie Lee
Insd) (a) 6.250 06/01/07 3,207,486 3,207,486
------------------------------------------
4,370,436 4,965,673 9,336,109
------------------------------------------
OREGON 2.4%
2,010 2,010 Emerald Peoples Util Dist OR Rfdg
(FGIC Insd) (a) 7.350 11/01/09 2,398,292 2,398,292
820 820 Oregon St Vets Welfare Ser 76A 6.050 10/01/28 824,313 824,313
3,580 3,580 Yamhill Cnty, OR Sch Dist No 029J
Newburg (MBIA Insd) 5.250 06/15/21 3,954,719 3,954,719
------------------------------------------
4,779,032 2,398,292 7,177,324
------------------------------------------
PENNSYLVANIA 4.0%
4,680 4,680 Erie, PA Sch Dist Cap Apprec Rfdg
(FSA Insd) * 09/01/20 2,314,400 2,314,400
1,500 1,500 Harrisburg, PA Res Gtd Sub Ser D 2
(FSA Insd) (b) 5.000 12/01/33 1,643,595 1,643,595
1,500 1,500 Pennsylvania Econ Dev Fin Auth Res
Recovery Rev Colver Proj Ser D
(AMT) 7.050 12/01/10 1,534,635 1,534,635
2,000 2,000 Pennsylvania Econ Dev Fin Auth Res
Recovery Rev Colver Proj Ser D
(AMT) 7.150 12/01/18 2,046,940 2,046,940
2,000 2,000 Pennsylvania St Higher Ed Fac Auth
Rev UPMC Hlth Sys Ser A 6.250 01/15/17 2,289,280 2,289,280
905 905 Pennsylvania St Higher Ed Fac Auth
Rev UPMC Hlth Sys Ser A 6.250 01/15/18 1,033,818 1,033,818
1,315 1,315 State Pub Sch Bldg Auth PA Sch Rev
Burgettstown Sch Dist Ser D
(Prerefunded @ 02/01/05)
(MBIA Insd) (a) 6.450 02/01/10 1,315,000 1,315,000
------------------------------------------
6,807,630 5,370,038 12,177,668
----------------------------------------
RHODE ISLAND 1.3%
3,775 3,775 Rhode Island St Econ Dev Corp Arpt
Rev Ser A Rfdg (AMT) (FSA Insd) 5.000 07/01/17 4,024,414 4,024,414
------------------------------------------
SOUTH CAROLINA 2.5%
3,115 3,115 Greenville, SC Impt & Rfdg (MBIA
Insd) (a) 5.250 04/01/21 3,438,244 3,438,244
3,750 3,750 South Carolina Jobs Econ Dev Auth
Indl Rev Elec & Gas Co Proj Ser B
(AMT) (AMBAC Insd) 5.450 11/01/32 3,992,775 3,992,775
------------------------------------------
7,431,019 7,431,019
------------------------------------------
SOUTH DAKOTA 0.8%
1,375 1,375 Deadwood, SD Ctf Partn (ACA Insd) 6.375 11/01/20 1,484,038 1,484,038
1,000 1,000 South Dakota St Hlth & Ed Fac Auth
Rev Childrens Care Hosp Rfdg 6.125 11/01/29 1,090,920 1,090,920
------------------------------------------
1,484,038 1,090,920 2,574,958
------------------------------------------
TENNESSEE 1.5%
1,270 1,270 Elizabethton, TN Hlth & Ed Fac Brd
Rev Hosp First Mtg Ser B Impt &
Rfdg 8.000 07/01/33 1,525,168 1,525,168
VAN KAPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VOT VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
1,300 1,000 2,300 Johnson City, TN Hlth & Ed Fac Brd
Hosp Rev First Mtg Ser A Rfdg
(MBIA Insd) 7.500 07/01/25 1,652,898 1,271,460 2,924,358
------------------------------------------
1,652,898 2,796,628 4,449,526
------------------------------------------
TEXAS 12.3%
2,335 2,335 Beaumont, TX Wtrwks & Swr Sys
(FGIC Insd) 6.250 09/01/14 2,697,976 2,697,976
2,000 2,000 Brazos Cnty, TX Hlth Fac Dev
Oblig Grp 5.375 01/01/32 2,060,600 2,060,600
1,190 790 1,980 Brazos River Auth TX Pollutn Ctl
Rev Adj TXU Elec Co Proj Ser C Rfdg
(AMT) (b) 5.750 05/01/36 1,287,402 854,661 2,142,063
930 930 Brownsville, TX Util Sys Rev
(Escrowed to Maturity) 7.375 01/01/10 1,053,941 1,053,941
1,515 1,515 Cameron Cnty, TX Ctf Oblig
(AMBAC Insd) (a) 5.750 02/15/16 1,690,831 1,690,831
3,000 3,000 Dallas-Fort Worth, TX Intl Arpt Rev
Jt Ser A Impt & Rfdg (AMT)
(FGIC Insd) 5.500 11/01/31 3,171,840 3,171,840
2,945 2,945 Houston, TX Arpt Sys Rev (Escrowed
to Maturity) 9.500 07/01/10 3,545,486 3,545,486
5,000 5,000 Houston, TX Util Sys Rev Comb First
Lien Ser A Rfdg (FSA Insd) 5.250 05/15/20 5,552,350 5,552,350
1,000 1,000 2,000 Mesquite, TX Hlth Fac Dev Corp
Retirement Fac Christian Care Ctr
Ser A 7.625 02/15/28 1,053,440 1,053,440 2,106,880
1,500 1,500 Metropolitan Hlth Fac Dev Corp TX
Wilson N Jones Mem Hosp Proj 7.250 01/01/31 1,504,005 1,504,005
3,000 3,000 Prosper,TX Indpt Sch Dist (PSF Gtd) 5.500 08/15/33 3,240,690 3,240,690
2,000 2,000 San Antonio, TX Elec & Gas Sys Rfdg 5.375 02/01/16 2,223,160 2,223,160
1,990 1,990 Stafford, TX Econ Dev Corp (FGIC
Insd) (a) 6.000 09/01/19 2,396,458 2,396,458
2,000 1,510 3,510 Texas St Wtr Fin Assistance 5.500 08/01/35 2,178,240 1,644,571 3,822,811
------------------------------------------
16,334,013 20,875,078 37,209,091
------------------------------------------
UTAH 0.0%
50 50 Utah St Hsg Fin Agy Single Family
Mtg Sr Issue Ser B-2 (AMT)
(FHA/VA Gtd) 6.500 07/01/15 50,133 50,133
------------------------------------------
VIRGINIA 3.0%
2,000 2,000 Fairfax Cnty, VA Ctf Partn 5.300 04/15/23 2,183,680 2,183,680
1,500 1,500 Henrico Cnty, VA Indl Dev Auth Pub
Fac Lease Rev Henrico Cnty Regl
Jail Proj (Prerefunded @ 08/01/05) 6.500 08/01/10 1,562,820 1,562,820
1,380 1,380 Richmond, VA Indl Dev Auth Govt Fac
Rev Bds (AMBAC Insd) (a) 5.000 07/15/14 1,537,513 1,537,513
1,595 1,595 Richmond, VA Indl Dev Auth Govt Fac
Rev Bds (AMBAC Insd) (a) 5.000 07/15/16 1,784,789 1,784,789
1,715 1,715 Richmond, VA Indl Dev Auth Govt Fac
Rev Bds (AMBAC Insd) (a) 5.000 07/15/17 1,916,770 1,916,770
------------------------------------------
7,200,783 1,784,789 8,985,572
------------------------------------------
WASHINGTON 1.8%
1,280 1,280 Pierce Cnty, WA Sch Dist No. 343
Dieringer Impt & Rfdg (FSA Insd) 5.000 12/01/20 1,383,475 1,383,475
700 700 Quinault Indian Nation, WA Quinaul
Beach Ser A Rfdg & Impt (ACA Insd) 5.800 12/01/15 749,497 749,497
3,000 3,000 Spokane, WA Pub Fac Dist Hotel
Motel & Sales Use Tax (MBIA Insd) 5.250 09/01/33 3,197,220 3,197,220
------------------------------------------
3,946,717 1,383,475 5,330,192
------------------------------------------
WEST VIRGINIA 1.5%
500 500 Harrison Cnty, WV Cnty Cmnty Solid
Waste Disp Rev West PA Pwr Co Ser C
(AMT) (AMBAC Insd) 6.750 08/01/24 511,600 511,600
3,750 3,750 West Virginia Univ Rev Impt Univ
Proj Ser C (FGIC Insd) 5.000 10/01/34 3,923,888 3,923,888
------------------------------------------
4,435,488 4,435,488
------------------------------------------
WISCONSIN 1.8%
2,500 2,500 Milwaukee, WI Redev Auth Rev
Milwaukee Pub Schs (AMBAC Insd) 5.125 08/01/21 2,706,225 2,706,225
VAN KAPEN MUNICIPAL OPPORTUNITIES TRUST II (VOT) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VOT VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VOT VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------------------------------------
2,490 2,490 Wisconsin St Hlth & Ed Fac Auth Rev
Bellin Mem Hosp (AMBAC Insd) 6.625 02/15/08 2,679,663 2,679,663
------------------------------------------
2,679,663 2,706,225 5,385,888
------------------------------------------
PUERTO RICO 5.9%
8,000 6,000 14,000 Puerto Rico Comwlth Hwy & Trans
Auth Hwy Rev Ser Y Rfdg (FSA Insd)
(b) (c) 6.250 07/01/21 10,223,760 7,667,820 17,891,580
------------------------------------------
TOTAL LONG-TERM INVESTMENTS 162.4%
(Cost $457,665,853) 290,899,263 201,258,993 492,158,256
TOTAL SHORT-TERM INVESTMENTS 1.5%
(Cost $4,600,000) 800,000 3,800,000 4,600,000
------------------------------------------
TOTAL INVESTMENTS 163.9%
(Cost $462,265,853) 291,699,263 205,058,993 496,758,256
OTHER ASSETS IN EXCESS OF LIABILITIES 0.5% 3,069,816 (1,806,682) 1,263,134
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (64.4%) (115,020,637) (80,024,143) (195,044,780)
------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0% $179,748,442 $123,228,168 $302,976,610
==========================================
Percentages are calculated as a percentage of net assets applicable to common shares.
* Zero coupon bond
(a) The Trust owns 100% of the bond issuance.
(b) Security converts to a fixed coupon rate at a predetermined date.
(c) All or a portion of these securities have been physically segregated in connection with open futures contracts.
(d) 144A securities are those which are exempt from registration under Rule 144A of the Securities Act of 1933, as
amended. These securities may only be resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(e) Securities purchased on a when-issued or delayed delivery basis.
(f) This security is restricted and may be resold only in transactions exempt from registration which are normally
those transactions with qualified institutional buyers. Restricted securities comprise 0.5% of net assets
applicable to common shares.
ACA - American Capital Access Insurance Co.
AMBAC - AMBAC Indemnity Corp.
AMT - Alternative Minimum Tax
Connie Lee - Connie Lee Insurance Co.
FGIC - Financial Guaranty Insurance Co.
FHA/VA - Federal Housing Administration/Department of Veterans Affairs
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
MBIA - Municipal Bond Investors Assurance Corp.
PSF - Public School Fund
Radian - Radian Asset Assurance
XLCA - XL Capital Assurance Inc.
Future contracts outstanding as of January 31, 2005:
Unrealized
Appreciation/
Short Contracts: Contracts Depreciation
U.S. Treasury Notes 10-Year Futures March 05 (Current Notional Value $112,266 per contract) 178 $ (242,681)
U.S. Treasury Notes 5-Year Futures March 05 (Current Notional Value $109,250 per contract) 943 (314,317)
------ ----------
1,121 $ (556,998)
====== ==========
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VKV VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VKV VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
Municipal Bonds 158.8%
ALASKA 0.2%
$ 1,000 $ 1,000 Alaska St Hsg Fin Corp Gen Hsg
Ser A (FGIC Insd) 5.250 12/01/41 $ $ 1,065,960 $ 1,065,960
----------------------------------------
ALABAMA 2.2%
$ 1,000 1,000 Birmingham Baptist Med Ctr AL
Baptist Hlth Sys Ser A 5.875 11/15/24 1,066,150 1,066,150
5,000 5,000 Birmingham Baptist Med Ctr AL Spl
Care Fac Fin Auth Rev (MBIA Insd) 5.750 11/15/10 5,361,950 5,361,950
4,000 4,000 Jefferson Cnty, AL Ltd Oblig Sch Wt
Ser A 5.250 01/01/23 4,300,320 4,300,320
4 4 Mobile, AL Indl Dev Brd Solid Waste
Disp Rev Mobile Energy Svc Co Proj
Rfdg 6.950 01/01/20 22 22
----------------------------------------
10,728,442 10,728,442
----------------------------------------
ARIZONA 4.3%
5,000 5,000 Arizona Sch Fac Brd Ctfs Ser B (FSA
Insd) 5.250 09/01/19 5,592,550 5,592,550
3,000 3,000 Arizona St Transn Brd Hwy Rev Ser B 5.250 07/01/19 3,328,260 3,328,260
5,250 5,250 Arizona Tourism & Sports Auth Tax
Rev Multipurpose Stad Fac Ser A
(MBIA Insd) 5.375 07/01/23 5,885,302 5,885,302
2,000 2,000 Phoenix, AZ Civic Impt Corp Arpt
Rev Jr Lien (AMT) (FGIC Insd) 5.375 07/01/29 2,039,760 2,039,760
2,280 765 3,045 Pima Cnty, AZ Indl Dev Auth Indl
Rev Lease Oblig Irvington Proj
Tucson Ser A Rfdg (FSA Insd) 7.250 07/15/10 2,383,512 799,731 3,183,243
1,300 1,300 Tempe, AZ Excise Tax Rev Rfdg 5.250 07/01/18 1,447,927 1,447,927
----------------------------------------
13,861,364 7,615,678 21,477,042
----------------------------------------
ARKANSAS 0.7%
1,930 1,930 Arkansas St Cap Apprec College Svg * 06/01/16 1,209,782 1,209,782
2,305 2,305 Arkansas St Dev Fin Auth Rev St Agy
Fac Donaghey Plaza Proj (FSA Insd) 5.000 06/01/34 2,408,886 2,408,886
----------------------------------------
3,618,668 3,618,668
----------------------------------------
CALIFORNIA 19.9%
6,215 6,215 ABC, CA Uni Sch Dist Cap Apprec
(FGIC Insd) * 08/01/34 1,404,776 1,404,776
6,000 6,000 Anaheim, CA Pub Fin Auth Lease Rev
Cap Apprec Pub Impt Proj Ser C (FSA
Insd) * 09/01/19 3,097,680 3,097,680
5,000 5,000 Anaheim, CA Pub Fin Auth Lease Rev
Cap Apprec Pub Impt Proj Ser C (FSA
Insd) * 09/01/32 1,234,800 1,234,800
2,095 2,095 Bay Area Govt Assn CA Rev Tax Alloc
CA Redev Pool Ser A (XLCA Insd) 5.250 09/01/35 2,237,167 2,237,167
8 8 California Rural Home Mtg Fin Auth
Single Family Mtg Rev Ser B (AMT)
(GNMA Collateralized) 7.750 09/01/26 7,544 7,544
1,000 1,000 California St (AMBAC Insd) 5.125 10/01/27 1,057,450 1,057,450
10,000 10,000 California St (MBIA Insd) 5.500 03/01/17 11,111,200 11,111,200
3,000 3,000 California St Dept Wtr Res Ser A 5.875 05/01/16 3,428,250 3,428,250
2,800 2,800 California St Dept Wtr Res Pwr
Ser A (AMBAC Insd) 5.500 05/01/16 3,177,468 3,177,468
5,000 5,000 California St Pub Wks Brd Dept Gen
Svc Cap East End A (AMBAC Insd) 5.125 12/01/21 5,390,500 5,390,500
2,000 2,000 4,000 California St Pub Wks Brd Lease Rev
Dept of Corrections St Prisons
Ser A Rfdg (AMBAC Insd) (b) 5.000 12/01/19 2,210,680 2,210,680 4,421,360
6,000 6,000 California St Pub Wks Brd Lease Rev
Dept of Corrections St Prisons
Ser A Rfdg (AMBAC Insd) 5.250 12/01/13 6,844,500 6,844,500
2,500 2,500 California St Pub Wks Brd Lease Rev
Dept of Mental Hlth Coalinga Ser A 5.000 06/01/24 2,614,625 2,614,625
5,000 5,000 California St Rfdg 5.000 02/01/19 5,323,050 5,323,050
2,000 2,000 Florin, CA Res Consv Dist Cap Impt
Elk Grove Wtr Svc Ser A (MBIA Insd) 5.000 09/01/33 2,091,000 2,091,000
30,000 30,000 Foothill/Eastern Corridor Agy CA
Toll Rd Rev Ser A Rfdg * 01/15/22 11,384,700 11,384,700
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VKV VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VKV VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
1,000 1,000 Foothill/Eastern Corridor Agy CA
Toll Rd Rev Sr Lien Ser A
(Prerefunded @ 01/01/07) 6.500 01/01/32 1,078,580 1,078,580
3,350 3,350 Imperial Irr Dist CA Ctf Part Elec
Sys Proj (FSA Insd) (c) 5.250 11/01/19 3,709,823 3,709,823
3,950 3,950 Los Angeles, CA Dept Wtr & Pwr
Ser A (FGIC Insd) 5.125 07/01/40 4,123,049 4,123,049
5,500 5,500 Port Oakland, CA Ser L (AMT) (FGIC
Insd) 5.000 11/01/32 5,637,005 5,637,005
9,000 9,000 Riverside Cnty, CA Asset Leasing
Corp Leasehold Rev Riverside Cnty
Hosp Proj (MBIA Insd) * 06/01/21 4,237,740 4,237,740
5,700 5,700 Sacramento, CA City Fin Auth Rev
Comb Proj B (MBIA Insd) * 11/01/15 3,626,112 3,626,112
13,880 13,880 San Joaquin Hills, CA Transn
Corridor Agy Toll Rd Rev Cap Apprec
Ser A Rfdg (MBIA Insd) * 01/15/28 4,422,446 4,422,446
10,225 10,225 Santa Ana, CA Uni Sch Dist Ctf Part
Cap Apprec Fin Proj (FSA Insd) * 04/01/32 2,539,788 2,539,788
5,755 5,755 Southwestern Cmnty College Cap
Apprec Election 2000 (FGIC Insd) * 08/01/29 1,689,783 1,689,783
2,720 2,720 Washington, CA Uni Sch Dist Yolo
Cnty Election 2004 Ser A (FGIC
Insd)(c) 5.250 08/01/19 3,025,701 3,025,701
----------------------------------------
71,715,031 27,201,066 98,916,097
----------------------------------------
COLORADO 6.3%
4,340 4,340 Adams & Arapahoe Cntys, CO Jt Sch
Dist Ser A (FSA Insd) 5.250 12/01/18 4,845,133 4,845,133
4,290 4,290 Adams & Arapahoe Cntys, CO Jt Sch
Dist Ser C (Prerefunded @ 12/01/06)
(MBIA Insd) 5.750 12/01/08 4,630,497 4,630,497
3,000 1,000 4,000 Arapahoe Cnty, CO Cap Impt Tr Fd
Rev E-470 Proj (Prerefunded @
Hwy 08/31/05) (a) 7.000 08/31/26 3,174,300 1,058,100 4,232,400
1,000 1,000 Arapahoe Cnty, CO Cap Impt Tr Fd
Hwy Rev E-470 Proj Ser B
(Prerefunded @ 08/31/05) (a) 6.950 08/31/20 1,057,820 1,057,820
9,000 5,000 14,000 Arapahoe Cnty, CO Cap Impt Tr Fd
Hwy Rev E-470 Proj Ser C
(Prerefunded @ 08/31/05) * 08/31/26 1,855,440 1,030,800 2,886,240
1,475 1,475 Colorado Ed & Cultural Fac Auth Rev
Charter Sch Proj Impt & Rfdg (XLCA
Insd) 5.250 08/15/19 1,631,704 1,631,704
2,000 2,000 Colorado Hlth Fac Auth Rev Catholic
Hlth Initiatives Ser A (Escrowed to
Maturity) 5.500 03/01/32 2,261,240 2,261,240
1,000 1,000 Colorado Hlth Fac Auth Rev Hosp
Portercare Adventist Hlth 6.500 11/15/31 1,111,170 1,111,170
165 165 Colorado Hsg Fin Auth Single Family
Pgm Sr Ser A2 (AMT) 7.250 05/01/27 166,685 166,685
109 109 Colorado Hsg Fin Auth Single Family
Pgm Sr Ser B1 (AMT) 7.650 11/01/26 110,184 110,184
6,495 6,495 Colorado Springs, CO Utils Rev
(Escrowed to Maturity) 6.600 11/15/18 8,231,308 8,231,308
----------------------------------------
26,055,738 5,108,643 31,164,381
----------------------------------------
CONNECTICUT 1.5%
5,000 5,000 Connecticut St Ser C (FGIC Insd)(b) 5.000 04/01/22 5,418,200 5,418,200
1,010 1,010 Mashantucket Western Pequot Tribe
CT Spl Rev Ser A, 144-A Private
Placement (d) 6.400 09/01/11 1,072,923 1,072,923
990 990 Mashantucket Western Pequot Tribe
CT Spl Rev Ser A, 144-A Private
Placement (Prerefunded @ 09/01/07)
(d) 6.400 09/01/11 1,085,050 1,085,050
----------------------------------------
5,418,200 2,157,973 7,576,173
----------------------------------------
----------------------------------------
DISTRICT OF COLUMBIA 1.1%
5,000 5,000 Metropolitan Washington DC Arpt
Auth Sys Ser A (AMT) (FGIC Insd) 5.250 10/01/32 5,220,150 5,220,150
----------------------------------------
FLORIDA 7.5%
2,500 2,500 Dade Cnty, FL Wtr & Swr Sys Rev
(FGIC Insd) 5.250 10/01/21 2,672,100 2,672,100
5,000 5,000 Escambia Cnty, FL Hlth Fac Auth
Rev (AMBAC Insd) 5.950 07/01/20 5,087,700 5,087,700
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VKV VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VKV VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
3,980 3,980 Jacksonville, FL Port Auth (AMT)
(MBIA Insd) 5.700 11/01/30 4,373,741 4,373,741
2,780 2,780 Jacksonville, FL Port Auth
(Prerefunded @ 11/01/10) (AMT)
(MBIA Insd) 5.700 11/01/30 3,135,673 3,135,673
3,000 3,000 Lake Cnty, FL Sch Brd Ctf Part
(AMBAC Insd) 5.375 07/01/17 3,352,080 3,352,080
11,500 11,500 Miami-Dade Cnty, FL Aviation Rev
Miami Intl Arpt (AMT) (FGIC Insd) 5.375 10/01/32 12,128,130 12,128,130
5,000 5,000 Ocoee, FL Wtr & Swr Sys Rev Impt &
Rfdg (AMBAC Insd) 5.125 10/01/33 5,289,950 5,289,950
995 995 Pinellas Cnty, FL Hsg Fin Auth
Single Family Mtg Rev Multi Cnty
Pgm Ser A (AMT) (GNMA
Collateralized) 6.700 02/01/28 1,015,636 1,015,636
----------------------------------------
28,412,980 8,642,030 37,055,010
----------------------------------------
GEORGIA 4.6%
2,000 2,000 Atlanta, GA Wtr & Wastewtr Rev (FSA
Insd) 5.000 11/01/21 2,174,360 2,174,360
5,000 5,000 Georgia Muni Elec Auth Pwr Rev
Ser B (Escrowed to Maturity) (FGIC
Insd) 5.700 01/01/19 5,926,150 5,926,150
2,000 2,000 Georgia St Rd & Twy Auth Rev 5.000 10/01/19 2,186,060 2,186,060
2,700 2,700 Marietta, GA Dev Auth Rev First Mtg
Life College Ser B (FSA Insd) (c) 5.375 09/01/09 2,797,524 2,797,524
2,205 2,205 Municipal Elec Auth GA Comb Cycle
Proj Ser A (MBIA Insd) 5.000 11/01/20 2,394,123 2,394,123
4,995 1,745 6,740 Municipal Elec Auth GA Comb Turbine
Proj Ser A (MBIA Insd) 5.250 11/01/20 5,540,654 1,935,624 7,476,278
5 5 Municipal Elec Auth GA Comb Turbine
Proj Ser A (Prerefunded @ 11/01/12)
(MBIA Insd) 5.250 11/01/20 5,657 5,657
----------------------------------------
16,664,108 6,296,044 22,960,152
----------------------------------------
HAWAII 2.3%
10,430 10,430 Hawaii St Dept Budget & Fin Spl
Purp Rev Hawaiian Elec Co Inc Ser A
(AMT) (MBIA Insd) 5.650 10/01/27 11,405,205 11,405,205
----------------------------------------
ILLINOIS 7.6%
1,710 1,710 Bolingbrook, IL Cap Apprec Ser C
Rfdg (MBIA Insd) (c) * 01/01/29 522,405 522,405
5,400 5,400 Chicago, IL Brd of Ed Cap Apprec
Sch Reform Ser B-1 (FGIC Insd) * 12/01/28 1,667,358 1,667,358
3,500 3,500 Chicago, IL Cap Apprec (Prerefunded
@ 07/01/05) (AMBAC Insd) * 01/01/17 1,670,375 1,670,375
6,000 6,000 Chicago, IL Lakefront Millenium Pkg
Fac (MBIA Insd) (e) 0/5.750 01/01/29 6,076,200 6,076,200
3,180 3,180 Illinois Hlth Fac Auth Rev
Children's Mem Hosp (MBIA Insd) 6.250 08/15/13 3,729,599 3,729,599
1,485 1,485 Illinois Hlth Fac Auth Rev
Evangelical Hosp Ser A Rfdg (FSA
Insd) 6.750 04/15/17 1,832,698 1,832,698
825 825 Illinois Hlth Fac Auth Rev
Evangelical Hosp Ser C (FSA Insd) 6.750 04/15/17 1,018,166 1,018,166
1,000 1,000 Illinois Hlth Fac Auth Rev Highland
Park Hosp Proj Ser A (Prerefunded @
10/01/07) (MBIA Insd) 5.750 10/01/17 1,101,600 1,101,600
2,070 2,070 Northern IL Univ Ctf Part Hoffman
Estates Ctr Proj (FSA Insd) 5.400 09/01/16 2,341,418 2,341,418
5,000 5,000 Regional Trans Auth IL Ser A (AMBAC
Insd) 8.000 06/01/17 6,994,600 6,994,600
10,000 10,000 Will Cnty, IL Sch Dist No 122 Ser B
Rfdg (FGIC Insd) 5.250 11/01/20 11,042,200 11,042,200
----------------------------------------
35,806,856 2,189,763 37,996,619
----------------------------------------
INDIANA 0.3%
1,500 1,500 Indiana St Dev Fin Auth Rev Exempt
Fac Conv Rfdg (AMT) 5.950 08/01/30 1,542,270 1,542,270
----------------------------------------
KANSAS 1.6%
3,430 3,430 Kansas St Dev Fin Auth Rev KS Proj
Ser N (AMBAC Insd) (c) 5.250 10/01/20 3,770,359 3,770,359
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VKV VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VKV VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
3,615 3,615 Kansas St Dev Fin Auth Rev KS Proj
Ser N (AMBAC Insd) (c) 5.250 10/01/21 3,957,594 3,957,594
----------------------------------------
7,727,953 7,727,953
----------------------------------------
KENTUCKY 0.1%
500 500 Mount Sterling, KY Lease Rev KY
League Cities Fdg Ser B 6.100 03/01/18 601,420 601,420
----------------------------------------
LOUISIANA 6.2%
5,000 5,000 Lafayette, LA Util Rev (MBIA Insd) 5.250 11/01/21 5,583,650 5,583,650
5,970 5,970 Louisiana Loc Govt Environment
Southeastn LA Student Hsg A (MBIA
Insd) (c) 5.250 08/01/24 6,572,373 6,572,373
1,400 1,400 Louisiana Pub Fac Auth Rev Hlth Fac
Glen Retirement Ser A 6.700 12/01/25 1,449,476 1,449,476
8,065 8,065 Louisiana St Office Fac Corp LA St
Cap Complex Pgm (MBIA Insd) (c) 5.000 11/01/20 8,688,989 8,688,989
2,000 2,000 New Orleans, LA Rfdg (FGIC Insd) 5.500 12/01/21 2,366,180 2,366,180
6,000 6,000 Saint Charles Parish, LA Solid
Waste Disp Rev LA Pwr & Lt Co Proj
(AMT) (FSA Insd) (b) 7.050 04/01/22 6,020,520 6,020,520
----------------------------------------
26,865,532 3,815,656 30,681,188
----------------------------------------
MARYLAND 2.2%
5,000 5,000 Maryland St Econ Dev Corp MD
Aviation Admin Fac (AMT) (FSA Insd) 5.375 06/01/20 5,465,450 5,465,450
1,000 1,000 Maryland St Econ Dev Corp Univ MD
College Pk Proj 5.625 06/01/35 1,038,570 1,038,570
4,000 4,000 Maryland St Trans Auth Arpt
Baltimore/WA Intl Arpt B (AMT)
(AMBAC Insd) 5.125 03/01/24 4,237,400 4,237,400
----------------------------------------
9,702,850 1,038,570 10,741,420
----------------------------------------
MASSACHUSETTS 4.3%
2,500 2,500 Massachusetts Bay Trans Auth Ser A 5.000 07/01/32 2,597,975 2,597,975
1,200 1,200 Massachusetts Bay Tran Auth MA Gen
Tran Sys Ser A Rfdg 6.250 03/01/12 1,419,024 1,419,024
1,000 1,000 Massachusetts St Hlth & Ed Fac Auth
Rev Saint Mem Med Ctr Ser A 6.000 10/01/23 1,006,840 1,006,840
1,750 1,750 Massachusetts St Hlth & Ed Fac Auth
Rev Hlthcare Sys Covenant Hlth 6.000 07/01/31 1,869,963 1,869,963
925 925 Massachusetts St Indl Fin Agy Wtr
Treatment American Hingham (AMT) 6.900 12/01/29 973,590 973,590
925 925 Massachusetts St Indl Fin Agy Wtr
Treatment American Hingham (AMT) 6.950 12/01/35 974,016 974,016
5,000 5,000 Massachusetts St Wtr Pollutn
Abatement Tr Pool Pgm Bds Ser 10 5.000 08/01/21 5,443,500 5,443,500
7,050 7,050 Massachusetts St Wtr Res Auth Gen
Ser J (FSA Insd) 5.000 08/01/32 7,333,692 7,333,692
----------------------------------------
11,859,044 9,759,556 21,618,600
----------------------------------------
MICHIGAN 5.0%
5,000 2,000 7,000 Detroit, MI Downtown Dev Auth Tax
Increment Rev Dev Area No. 1 Proj
Ser C1 (Prerefunded @ 07/01/06) 6.250 07/01/25 5,367,850 2,147,140 7,514,990
3,185 3,185 Detroit, MI Wtr Supply Sys Rev Sr
Lien Ser A (MBIA Insd) (c) 5.250 07/01/20 3,535,732 3,535,732
2,790 2,790 Detroit, MI Wtr Supply Sys Rev Sr
Lien Ser C Rfdg (MBIA Insd) (c) 5.250 07/01/19 3,102,145 3,102,145
2,000 2,000 Grand Rapids, MI Wtr Supply (FGIC
Insd) 5.750 01/01/15 2,271,700 2,271,700
2,075 2,075 South Lyon, MI Cmnty Sch Bldg &
Site (FGIC Insd) 5.250 05/01/18 2,304,184 2,304,184
2,285 2,285 Taylor, MI Bldg Auth (AMBAC 6.000 03/01/13 2,703,863 2,703,863
Insd) (c)
3,090 3,090 Troy, MI Downtown Dev Auth Dev Rfdg
(MBIA Insd) 5.500 11/01/15 3,498,189 3,498,189
----------------------------------------
12,401,771 12,529,032 24,930,803
----------------------------------------
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VKV VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VKV VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI 1.2%
2,000 2,000 Mississippi Bus Fin Corp MS Pollutn
Ctl Rev Sys Energy Res Inc Proj 5.875 04/01/22 2,006,220 2,006,220
3,000 3,000 Mississippi Bus Fin Corp MS Pollutn
Ctl Rev Sys Energy Res Inc Proj
Rfdg 5.900 05/01/22 3,030,240 3,030,240
840 840 Mississippi Home Corp Single Family
Rev Mtg Ser C (AMT) (GNMA
Collateralized) 7.600 06/01/29 872,432 872,432
----------------------------------------
2,006,220 3,902,672 5,908,892
----------------------------------------
MISSOURI 3.2%
2,000 2,000 Curators Univ MO Sys Fac Rev Ser B
Rfdg (c) 5.000 11/01/20 2,171,540 2,171,540
2,195 2,195 Missouri St Hlth & Ed Fac Rev Univ
MO Columbia Arena Proj (c) 5.000 11/01/16 2,398,191 2,398,191
4,000 4,000 Platte Cnty, MO Indl Dev Auth Trans
Rev 4.500 12/01/24 4,050,720 4,050,720
3,000 3,000 Platte Cnty, MO Neighborhood Impt
Parkville Ser B (MBIA Insd) (f) 5.000 02/01/25 3,184,260 3,184,260
4,000 4,000 Saint Louis, MO Arpt Rev Arpt Dev
Pgm Ser A (MBIA Insd) 5.250 07/01/31 4,232,800 4,232,800
----------------------------------------
6,448,911 9,588,600 16,037,511
----------------------------------------
NEVADA 4.1%
8,000 8,000 Clark Cnty, NV Arpt Rev Sub Lien
Ser A-2 (FGIC Insd) 5.000 07/01/36 8,294,640 8,294,640
4,000 3,000 7,000 Clark Cnty, NV Indl Dev Rev
Southwest Gas Corp Proj Ser A (AMT)
(AMBAC Insd) 5.250 07/01/34 4,196,720 3,147,540 7,344,260
4,375 4,375 Las Vegas Valley, NV Wtr Dist Ser B
Rfdg (MBIA Insd) 5.000 06/01/27 4,578,087 4,578,087
375 375 Nevada Hsg Div Single Family Pgm
Mezz B (AMT) (FHA/VA Gtd) 6.550 10/01/12 376,890 376,890
----------------------------------------
12,868,250 7,725,627 20,593,877
----------------------------------------
NEW HAMPSHIRE 0.7%
1,000 1,000 New Hampshire Hlth & Ed Fac Auth
Rev Derryfield Sch 7.000 07/01/30 1,040,300 1,040,300
1,400 1,400 New Hampshire Hlth & Ed Fac
Hlthcare Sys Covenant Hlth 5.500 07/01/34 1,456,588 1,456,588
1,000 1,000 New Hampshire St Bus Fin Auth Wtr
Fac Rev Pennichuck Wtrwks Inc (AMT)
(AMBAC Insd) 6.300 05/01/22 1,093,500 1,093,500
----------------------------------------
3,590,388 3,590,388
----------------------------------------
NEW JERSEY 9.0%
5,000 5,000 Essex Cnty, NJ Impt Auth Rev Cnty
Gtd Proj Consldtn Rfdg (MBIA Insd) 5.125 10/01/20 5,491,200 5,491,200
1,400 500 1,900 New Jersey Econ Dev Auth Rev
Cigarette Tax 5.750 06/15/29 1,487,948 531,410 2,019,358
2,210 2,210 New Jersey Econ Dev Auth Wtr Fac
Rev NJ American Wtr Co Inc Ser B
(AMT) (FGIC Insd) 5.375 05/01/32 2,337,539 2,337,539
4,350 4,350 New Jersey Econ Dev Wtr NJ Amern
Wtr Co Inc Ser A (AMT) (FGIC Insd) 5.250 07/01/38 4,491,419 4,491,419
1,000 1,000 New Jersey Hlthcare Fac Fin Auth
Rev Cap Hlth Sys Oblig Grp Ser A 5.375 07/01/33 1,037,280 1,037,280
1,695 1,695 New Jersey Hlthcare Fac Fin Auth
Rev Gen Hosp Ctr at Passaic
(Escrowed to Maturity) (FSA Insd) 6.000 07/01/06 1,748,342 1,748,342
2,500 2,500 New Jersey Hlthcare Fac Fin Auth
Rev Gen Hosp Ctr at Passaic
(Escrowed to Maturity) (FSA Insd) 6.750 07/01/19 3,212,450 3,212,450
10,000 10,000 New Jersey St Ed Fac Auth Higher Ed
Cap Impt Ser A (AMBAC Insd) 5.250 09/01/20 11,084,100 11,084,100
3,830 3,830 New Jersey St Trans Tr Fd Auth
Trans Sys Ser A (FGIC Insd) 5.250 06/15/19 4,369,034 4,369,034
2,000 2,000 New Jersey St Tpk Auth Tpk Rev Ser
C-1 (AMBAC Insd) 5.000 01/01/35 2,077,900 2,077,900
6,750 6,750 Salem Cnty, NJ Indl Pollutn Ctl Fin
Auth Rev Pollutn Ctl Pub Svc Elec &
Gas Ser A (AMT) (MBIA Insd) 5.450 02/01/32 6,821,685 6,821,685
----------------------------------------
38,706,178 5,984,129 44,690,307
----------------------------------------
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VKV VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VKV VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO 0.3%
1,500 1,500 Jicarilla, NM Apache Nation Rev Adj
Ser A (Acquired 10/23/03, Cost
$1,514,910) (g) 5.000 09/01/18 1,576,290 1,576,290
----------------------------------------
NEW YORK 15.9%
7,000 7,000 Metropolitan Trans Auth NY Ser A 7,525,420 7,525,420
Rfdg (FGIC Insd) 5.250 11/15/31
3,500 3,500 New York City Ser C 5.500 08/01/13 3,943,135 3,943,135
7,500 7,500 New York City Ser E (FSA Insd) 5.000 11/01/20 8,185,650 8,185,650
3,000 3,000 New York City Ser G (Prerefunded @ 3,156,420 3,156,420
02/01/06) (b) 6.000 02/01/11
5,000 5,000 New York City Ser H (MBIA Insd) (c) 5.250 03/15/14 5,567,200 5,567,200
6,000 6,000 New York City Transitional Fin Auth
Rev Future Tax Secd Ser A Rfdg (e) 5.500/14.000 11/01/26 6,735,960 6,735,960
8,240 8,240 New York City Transitional Future
Tax Secd Ser C Rfdg (AMBAC Insd) 5.250 08/01/18 9,161,067 9,161,067
7,575 7,575 New York St Dorm Auth Rev City Univ
Sys Con Ser A 5.625 07/01/16 8,803,589 8,803,589
3,845 3,845 New York St Dorm Auth Rev Secd Hosp
Gen Hosp Rfdg 5.750 02/15/20 4,336,007 4,336,007
2,175 2,175 New York St Med Care Fac Fin Agy
Rev NY Downtown Hosp Ser A
(Prerefunded @ 02/15/05) 6.800 02/15/20 2,222,545 2,222,545
3,000 3,000 New York St Med Care Fac Fin Agy
Rev NY Hosp Mtg Ser A (Prerefunded
@ 02/15/05) (AMBAC Insd) 6.200 08/15/05 3,064,830 3,064,830
3,000 3,000 New York St Med Care Fac Fin Agy
Rev NY Hosp Mtg Ser A (Prerefunded
@ 02/15/05) (AMBAC Insd) 6.800 08/15/24 3,065,520 3,065,520
2,310 2,310 New York St Med Care Fac Fin Agy
Rev Saint Peter's Hosp Proj Ser A
(AMBAC Insd) 5.375 11/01/13 2,338,251 2,338,251
775 775 New York St Ser G 5.750 02/01/14 809,526 809,526
4,225 4,225 New York St Ser G (Prerefunded @
02/01/06) 5.750 02/01/14 4,434,898 4,434,898
5,000 5,000 New York St Urban Dev Corp Rev St
Fac Rfdg 5.700 04/01/20 5,930,950 5,930,950
----------------------------------------
62,204,453 17,076,515 79,280,968
----------------------------------------
NORTH CAROLINA 0.3%
1,500 1,500 North Carolina Eastn Muni Pwr Agy
Pwr Sys Rev Ser D 6.700 01/01/19 1,691,505 1,691,505
----------------------------------------
OHIO 5.6%
3,000 3,000 Cincinnati, OH City Sch Dist Sch
Impt (FSA Insd) 5.250 06/01/18 3,332,940 3,332,940
1,150 1,000 2,150 Cuyahoga Cnty, OH Hosp Fac Rev
Canton Inc Proj 7.500 01/01/30 1,302,456 1,132,570 2,435,026
2,000 2,000 Cuyahoga Cnty, OH Multi-Family Rev
Hsg Dale Bridge Apt (AMT) (GNMA
Collateralized) 6.600 10/20/30 2,059,500 2,059,500
1,000 1,000 Dayton, OH Arpt Rev James M Cox
Dayton Ser C Rfdg (AMT) (Radian
Insd) 5.250 12/01/27 1,036,760 1,036,760
3,540 3,540 Franklin Cnty, OH Hosp Rev & Impt
Doctor's Hosp Proj Rfdg (Escrowed
to Maturity) 5.875 12/01/23 3,579,790 3,579,790
1,500 1,500 Mahoning Cnty, OH Hosp Fac Forum
Hlth Oblig Group Ser A 6.000 11/15/32 1,611,495 1,611,495
1,165 1,165 Marion Cnty, OH Rev Cmnty Hosp Impt
& Rfdg 6.100 05/15/06 1,204,435 1,204,435
5,130 5,130 Muskingum Cnty, OH Hosp Fac Rev
Bethesda Care Sys Impt & Rfdg
(Connie Lee Insd) (c) 6.250 12/01/10 5,553,482 5,553,482
2,000 2,000 Ohio St Wtr Dev Auth Pollutn Ctl
Fac Rev OH Edison Co Proj Rfdg 5.950 05/15/29 2,014,800 2,014,800
3,170 3,170 Pickerington, OH Loc Sch Dist Cap
Apprec Sch Fac Contract (FGIC Insd) * 12/01/11 2,497,009 2,497,009
1,340 1,340 Toledo Lucas Cnty, OH Port Auth Dev
Rev Northwest OH Bd Fd Ser C (AMT)
(c) 6.600 11/15/15 1,419,435 1,419,435
850 850 Toledo Lucas Cnty, OH Port Auth
Northwest Bd Fd Ser A (AMT) 6.000 05/15/11 918,374 918,374
----------------------------------------
17,540,958 10,122,088 27,663,046
----------------------------------------
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VKV VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VKV VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA 1.3%
1,500 1,500 Jenks, OK Aquarium Auth Rev First
Mtg (Prerefunded @ 07/01/10) (MBIA
Insd) 6.100 07/01/30 1,743,195 1,743,195
1,755 1,755 Tulsa Cnty, OK Pub Fac Auth Cap
Impt Rev (AMBAC Insd) 6.250 11/01/22 2,040,977 2,040,977
2,785 2,785 Tulsa, OK Indl Auth Hosp Rev
Hillcrest Med Ctr Proj Rfdg
(Escrowed to Maturity) (Connie Lee
Insd) (c) 6.250 06/01/06 2,924,696 2,924,696
----------------------------------------
1,743,195 4,965,673 6,708,868
----------------------------------------
OREGON 3.3%
2,010 2,010 Emerald Peoples Util Dist OR Rfdg
(FGIC Insd) (c) 7.350 11/01/09 2,398,292 2,398,292
5,000 5,000 Oregon Hlth Sciences Univ Insd
Ser A (MBIA Insd) 5.250 07/01/22 5,533,300 5,533,300
2,745 2,745 Oregon St Dept Admin Ser A
(Prerefunded @ 11/01/05)(MBIA Insd) 5.250 11/01/10 2,835,887 2,835,887
5,000 5,000 Oregon St Dept Admin Ser C Rfdg
(MBIA Insd) 5.250 11/01/18 5,522,050 5,522,050
----------------------------------------
13,891,237 2,398,292 16,289,529
----------------------------------------
PENNSYLVANIA 3.4%
5,000 5,000 Harrisburg, PA Auth Res Gtd Sub Ser
D-2 (Variable Rate Coupon)
(FSA Insd) 5.000 12/01/33 5,478,650 5,478,650
2,000 2,000 Pennsylvania Econ Dev Fin Auth Res
Recovery Rev Colver Proj Ser D(AMT) 7.150 12/01/18 2,046,940 2,046,940
2,535 2,000 4,535 Pennsylvania St Higher Ed Fac Auth
Rev UPMC Hlth Sys Ser A 6.250 01/15/17 2,901,662 2,289,280 5,190,942
1,000 905 1,905 Pennsylvania St Higher Ed Fac Auth
Rev UPMC Hlth Sys Ser A 6.250 01/15/18 1,142,340 1,033,818 2,176,158
1,370 1,370 Philadelphia, PA Hosp & Higher Ed
Fac Auth Rev Cmnty College Ser B
Rfdg (MBIA Insd) (c) 6.500 05/01/08 1,527,934 1,527,934
465 465 Ridley Park, PA Hosp Auth Rev
Taylor Hosp Ser A (Escrowed to
Maturity) 6.000 12/01/05 477,137 477,137
----------------------------------------
11,527,723 5,370,038 16,897,761
----------------------------------------
SOUTH CAROLINA 1.6%
1,015 1,015 Rock Hill, SC Util Sys Rev Comb Ser
C Rfdg (FSA Insd) (c) 5.000 01/01/11 1,112,724 1,112,724
6,500 6,500 South Carolina Jobs Econ Dev Auth
Indl Rev Elec & Gas Co Proj Ser A
(AMBAC Insd) 5.200 11/01/27 6,971,120 6,971,120
----------------------------------------
8,083,844 8,083,844
----------------------------------------
SOUTH DAKOTA 0.2%
1,000 1,000 South Dakota St Hlth & Ed Fac Auth
Rev Childrens Care Hosp Rfdg 6.125 11/01/29 1,090,920 1,090,920
----------------------------------------
TENNESSEE 2.1%
1,270 1,270 Elizabethton, TN Hlth & Ed Fac Brd
Rev Hosp First Mtg Ser B Impt &
Rfdg 8.000 07/01/33 1,525,168 1,525,168
12,525 12,525 Johnson City, TN Hlth & Ed Fac Brd
Hosp Rev Cap Apprec First Mtg Ser A
Rfdg (MBIA Insd) * 7/01/26 4,422,828 4,422,828
2,500 1,000 3,500 Johnson City, TN Hlth & Ed Fac Brd
Hosp Rev First Mtg Ser A Rfdg (MBIA
Insd) 7.500 07/01/25 3,178,650 1,271,460 4,450,110
----------------------------------------
7,601,478 2,796,628 10,398,106
----------------------------------------
TEXAS 15.1%
1,585 790 2,375 Brazos River Auth TX Pollutn Ctl
Rev Adj TXU Elec Co Proj Ser C Rfdg
(AMT) (a) 5.750 05/01/36 1,714,732 854,661 2,569,393
930 930 Brownsville, TX Util Sys Rev
(Escrowed to Maturity) 7.375 01/01/10 1,053,941 1,053,941
1,515 1,515 Cameron Cnty, TX Ctf Oblig (AMBAC
Insd) (c) 5.750 02/15/16 1,690,831 1,690,831
5,000 3,000 8,000 Dallas-Fort Worth, TX Intl Arpt Rev
Jt Ser A Impt & Rfdg (AMT) (FGIC
Insd) 5.500 11/01/31 5,286,400 3,171,840 8,458,240
2,345 2,345 Denton Cnty, TX Perm Impt (c) 5.500 07/15/19 2,603,700 2,603,700
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VKV VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VKV VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
1,000 1,000 Harris Cnty, TX Hlth Fac Dev Mem
Hermann Hlthcare Ser A 6.375 06/01/29 1,100,510 1,100,510
5,000 5,000 Harris Cnty, TX Sr Lien Toll Rd
Rfdg (FSA Insd) 5.125 08/15/32 5,233,300 5,233,300
2,945 2,945 Houston, TX Arpt Sys Rev (Escrowed
to Maturity) 9.500 07/01/10 3,545,486 3,545,486
4,655 4,655 Houston, TX Arpt Sys Rev Sub Lien
(FSA Insd) 5.500 07/01/15 5,242,182 5,242,182
3,000 3,000 Houston, TX Arpt Sys Rev Sub Lien
Ser A (AMT) (FSA Insd) 5.625 07/01/30 3,267,180 3,267,180
3,920 3,920 Lower, CO Riv Auth TX Svc Corp Proj
Rfdg (FGIC Insd) 5.000 05/15/33 4,033,641 4,033,641
5,000 5,000 Matagorda Cnty, TX Navig Dist No 1
Rev Houston Lt Rfdg (AMT) (AMBAC
Insd) (a) 5.125 11/01/28 5,416,750 5,416,750
1,000 1,000 Mesquite, TX Hlth Fac Dev Corp
Retirement Fac Christian Care Ctr
Ser A 7.625 02/15/28 1,053,440 1,053,440
2,000 2,000 Metropolitan Hlth Fac Dev Corp TX
Wilson N Jones Mem Hosp Proj 7.250 01/01/31 2,005,340 2,005,340
3,325 3,325 North Cent TX Hlth Fac Dev Hosp
Baylor Hlthcare Sys Proj Ser A 5.125 05/15/29 3,419,164 3,419,164
3,000 3,000 Prosper,TX Indpt Sch Dist (PSF Gtd) 5.500 08/15/33 3,240,690 3,240,690
5,000 2,000 7,000 San Antonio, TX Elec & Gas Sys Rfdg 5.375 02/01/16 5,557,900 2,223,160 7,781,060
3,960 3,960 Stafford, TX Econ Dev Corp (FGIC
Insd) 5.500 09/01/30 4,401,421 4,401,421
1,990 1,990 Stafford, TX Econ Dev Corp (FGIC
Insd) (c) 6.000 09/01/19 2,396,458 2,396,458
1,510 1,510 Texas St Wtr Fin Assistance 5.500 08/01/35 1,644,571 1,644,571
5,000 5,000 Wylie, TX Indpt Sch Dist Rfdg (PSF
Gtd) 5.000 08/15/30 5,150,150 5,150,150
----------------------------------------
54,432,370 20,875,078 75,307,448
----------------------------------------
UTAH 0.6%
4,950 4,950 Intermountain Pwr Agy UT Pwr Supply
Rev Ser A Rfdg (Escrowed to
Maturity) (FGIC Insd) * 07/01/17 2,825,510 2,825,510
----------------------------------------
VIRGINIA 0.4%
1,595 1,595 Richmond, VA Indl Dev Auth Govt Fac
Rev Bds (AMBAC Insd) (c) 5.000 07/15/16 1,784,789 1,784,789
----------------------------------------
WASHINGTON 6.1%
5,000 5,000 Clark Cnty, WA Sch Dist 114 (FSA
Insd) 5.250 06/01/19 5,551,150 5,551,150
3,630 3,630 King City, WA Ser B (Prerefunded @
12/01/07) 5.900 12/01/14 4,033,293 4,033,293
1,370 1,370 King Cnty, WA Ser B (Prerefunded @
12/01/07) 5.900 12/01/14 1,522,207 1,522,207
2,245 2,245 King Cnty, WA Ser B (Prerefunded @
12/01/07) 6.625 12/01/15 2,538,668 2,538,668
1,280 1,280 Pierce Cnty, WA Sch Dist No. 343
Dieringer Impt & Rfdg (FSA Insd) 5.000 12/01/20 1,383,475 1,383,475
4,000 4,000 Washington St Pub Pwr Supply Ser A
Rfdg (FGIC Insd) 7.000 07/01/08 4,542,960 4,542,960
10,000 10,000 Washington St Pub Pwr Supply Ser A
Rfdg (AMBAC Insd) 5.700 07/01/09 10,645,800 10,645,800
----------------------------------------
28,834,078 1,383,475 30,217,553
----------------------------------------
WEST VIRGINIA 1.2%
5,920 5,920 Harrison Cnty, WV Cnty Cmnty Solid
Waste Disp Rev West PA Pwr Co Ser C
(AMT) (AMBAC Insd) 6.750 08/01/24 6,057,344 6,057,344
----------------------------------------
WISCONSIN 1.1%
2,500 2,500 Milwaukee, WI Redev Auth Rev
Milwaukee Pub Schs (AMBAC Insd) 5.125 08/01/21 2,706,225 2,706,225
2,675 2,675 Wisconsin St Hlth & Ed Fac FH
Hlthcare Dev Inc Proj 6.250 11/15/28 2,858,853 2,858,853
----------------------------------------
2,858,853 2,706,225 5,565,078
----------------------------------------
PUERTO RICO 4.2%
7,000 6,000 13,000 Puerto Rico Comwlth Hwy & Trans
Auth Hwy Rev Ser Y Rfdg (FSA
Insd) (a) (b) 6.250 07/01/21 8,945,790 7,667,820 16,613,610
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST (VKV) -
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II (VKI)
PROFORMA PORTFOLIO OF INVESTMENTS
JANUARY 31, 2005
(UNAUDITED)
VKI-
VKV VKI PROFORMA VKI-
PAR AMOUNT PAR AMOUNT PAR AMOUNT VKV VKI PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
4,000 4,000 Puerto Rico Pub Bldgs Auth Gtd Pub
Ed & Hlth Fac Ser M Rfdg
(MBIA Insd) 5.600 07/01/08 4,390,480 4,390,480
----------------------------------------
13,336,270 7,667,820 21,004,090
----------------------------------------
TOTAL LONG-TERM INVESTMENTS 158.8% 589,032,184 201,258,993 790,291,177
(Cost $732,334,946)
TOTAL SHORT-TERM INVESTMENTS 1.5% 3,800,000 3,800,000 7,600,000
(Cost $7,600,000) ---------------------------------------
TOTAL INVESTMENTS 160.3% 592,832,184 205,058,993 797,891,177
(Cost $739,934,946)
OTHER ASSETS IN EXCESS OF LIABILITIES 1.0% 6,593,817 (1,806,682) 4,787,135
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (61.3%) (225,101,630) (80,024,143) (305,125,773)
----------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0% $374,324,371 $123,228,168 $497,552,539
========================================
Percentages are calculated as a percentage of net assets applicable to common
shares.
* 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.
(c) The Trust owns 100% of the bond issuance.
(d) 144A securities are those which are exempt from registration under Rule
144A of the Securities Act of 1933, as amended. These securities may only
be resold in transactions exempt from registration which are normally
those transactions with qualified institutional buyers.
(e) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(f) Securities purchased on a when-issued or delayed delivery basis.
(g) This security is restricted and may be resold only in transactions exempt
from registration which are normally those transactions with qualified
institutional buyers. Restricted securities comprise 0.3% of net assets
applicable to common shares.
AMBAC - AMBAC Indemnity Corp.
AMT - Alternative Minimum Tax
Connie Lee - Connie Lee Insurance Co.
FGIC - Financial Guaranty Insurance Co.
FHA/VA - Federal Housing Administration/Department of Veterans Affairs
FSA - Financial Security Assurance Inc.
GNMA - Government National Mortgage Association
MBIA - Municipal Bond Investors Assurance Corp.
PSF - Public School Fund
Radian - Radian Asset Assurance
XLCA - XL Capital Assurance Inc.
Future contracts outstanding as of January 31, 2005:
Short Contracts:
Unrealized
Contracts Appreciation/Depreciation
--------- -------------------------
U.S. Treasury Notes 10-Year Futures March 05 (Current Notional Value $112,266 per contract) 104 $ (141,791)
U.S. Treasury Notes 5-Year Futures March 05 (Current Notional Value $109,250 per contract) 1,616 (585,159)
----- --------
1,720 $ (726,950)
===== ==========
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II - VAN KAMPEN
VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PROFORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 2005
(UNAUDITED)
AMOUNTS IN THOUSANDS
PROFORMA-
VAN KAMPEN VAN KAMPEN VAN KAMPEN
VAN KAMPEN VALUE ADVANTAGE ADVANTAGE
MUNICIPAL OPPORTUNITY MUNICIPAL INCOME MUNICIPAL INCOME MUNICIPAL INCOME
TRUST II TRUST TRUST II ADJUSTMENTS TRUST II
----------------- ------------------ ----------------- -------------- ---------------
ASSETS:
Total Investments (Cost of $270,633,$548,302,
$191,633 and $1,010,568, respectively) $ 291,699 $ 592,832 $ 205,059 $1,089,590
Cash 59 77 198 334
Receivables:
Interest 3,453 6,955 2,261 12,669
Investment Sold 2,591 275 6,469 9,335
Variation Margin on Futures 40 94 31 165
Other 4 6 3 13
----------------- ---------------- ----------------- --------------- ------------
Total Assets 297,846 600,239 214,021 1,112,106
----------------- ---------------- ----------------- --------------- ------------
LIABILITIES:
Payable:
Investment Purchased 2,576 - 10,356 12,932
Investment Advisory Fee 137 278 94 509
Income Distributions-Common Shares 27 62 18 107
Other Affiliates 11 22 6 39
Trustees' Deferred Compensation and
Retirement Plans 257 323 237 817
Merger Cost $ 502 (2) 502
Accrued Expenses 69 128 58 255
----------------- ---------------- ----------------- --------------- ------------
Total Liabilities 3,077 813 10,769 502 15,161
Preferred Shares (including
accrued distributions) 115,021 225,102 80,024 420,147
----------------- ---------------- ----------------- --------------- ------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 179,748 $ 374,324 $ 123,228 $ (502) $ 676,798
================= ================ ================= =============== ============
Net Assets Applicable to Common Shares $ 179,748 $ 374,324 $ 123,228 $ (502)(2) $ 676,798
Common Shares Outstanding 11,681 23,555 8,176 1,559 (1) 44,971
----------------- ---------------- ----------------- ------------
Net Asset Value Per Common Share $ 15.39 $ 15.89 $ 15.07 $ 15.05
================= ================ ================= ============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value) $ 117 $ 236 $ 82 $ 15 (1)(2) $ 450
Paid in Surplus 158,834 331,229 108,295 (517)(1)(2) 597,841
Net Unrealized Appreciation 20,694 43,988 13,241 77,923
Accumulated Undistributed Net Investment Income 848 1,625 916 3,389
Accumulated Net Realized Gain/ Loss (745) (2,754) 694 (2,805)
----------------- ---------------- ----------------- --------------- ------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 179,748 $ 374,324 $ 123,228 $ (502) $ 676,798
================= ================ ================= =============== ============
PREFERRED SHARES $ 115,000 $ 225,000 $ 80,000 $ 420,000
================= ================ ================= =============== ============
NET ASSETS INCLUDING PREFERRED SHARES $ 294,748 $ 599,324 $ 203,228 $ (502) $1,096,798
================= ================ ================= =============== ============
(1) The proforma statements presume the issuance by the Van Kampen Advantage
Municipal Income Trust II of approximately 11,929,742 and 24,865,047 common
shares in exchange for the assets and liabilities of the Van Kampen Municipal
Opportunity Trust II and Van Kampen Value Municipal Income Trust, respectively.
(2) A non-recurring cost associated with this transaction of approximately
$502,000 will be incurred. The approximate cost and per share cost that will be
borne by the common shareholders are as follows:
Approximate Cost Cost Per Share
------------------ --------------
Van Kampen Municipal Opportunity Trust II $ 205,820 $ 0.02
Van Kampen Value Municipal Income Trust 105,420 0.00
Van Kampen Advantage Municipal Income Trust II 190,760 0.02
------------------
$ 502,000
------------------
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PROFORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
January 31, 2005
(Unaudited)
AMOUNTS IN THOUSANDS
PROFORMA -
VAN KAMPEN VAN KAMPEN
VAN KAMPEN ADVANTAGE ADVANTAGE
MUNICIPAL OPPORTUNITY MUNICIPAL INCOME MUNICIPAL INCOME
TRUST II TRUST II ADJUSTMENTS TRUST II
--------------------- ------------------- -------------- ----------------
ASSETS:
Total Investments (Cost of $270,633,
$191,633 and $462,266, respectively) $ 291,699 $ 205,059 $ 496,758
Cash 59 198 257
Receivables:
Interest 3,453 2,261 5,714
Investment Sold 2,591 6,469 9,060
Variation Margin on Futures 40 31 71
Other 4 3 7
--------------------- ------------------- --------------- --------------
Total Assets 297,846 214,021 511,867
--------------------- ------------------- --------------- --------------
LIABILITIES:
Payable:
Investment Purchased 2,576 10,356 12,932
Investment Advisory Fee 137 94 231
Income Distributions-Common Shares 27 18 45
Other Affiliates 11 6 17
Trustees' Deferred Compensation and
Retirement Plans 257 237 494
Merger Cost $ 314 (2) 314
Accrued Expenses 69 58 127
--------------------- ------------------- --------------- --------------
Total Liabilities 3,077 10,769 314 14,160
Preferred Shares (including
accrued distributions) 115,021 80,024 195,045
--------------------- ------------------- --------------- --------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 179,748 $ 123,228 $ (314) $ 302,662
===================== =================== =============== ==============
Net Assets Applicable to Common Shares $ 179,748 $ 123,228 $ (314)(2) $ 302,662
Common Shares Outstanding 11,681 8,176 253 (1) 20,110
--------------------- ------------------- --------------
Net Asset Value Per Common Share $ 15.39 $ 15.07 $ 15.05
===================== =================== ==============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value) $ 117 $ 82 $ 2 (1)(2) $ 201
Paid in Surplus 158,834 108,295 (316)(1)(2) 266,813
Net Unrealized Appreciation 20,694 13,241 33,935
Accumulated Undistributed Net Investment Income 848 916 1,764
Accumulated Net Realized Gain/ Loss (745) 694 (51)
--------------------- ------------------- --------------- --------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 179,748 $ 123,228 $ (314) $ 302,662
===================== =================== =============== ==============
PREFERRED SHARES $ 115,000 $ 80,000 $ 195,000
===================== =================== =============== ==============
NET ASSETS INCLUDING PREFERRED SHARES $ 294,748 $ 203,228 $ (314) $ 497,662
===================== =================== =============== ==============
(1) The proforma statements presume the issuance by the Van Kampen Advantage
Municipal Income Trust II of approximately 11,934,029 common shares in exchange
for the assets and liabilities of the Van Kampen Municipal Opportunity Trust II.
(2) A non-recurring cost associated with this transaction of approximately
$314,000 will be incurred. The approximate cost and per share cost that will be
borne by the common shareholders are as follows:
Approximate Cost Cost Per Share
---------------- --------------
Van Kampen Municipal Opportunity Trust II $ 141,300 $ 0.01
Van Kampen Advantage Municipal Income Trust II 172,700 0.02
---------------
$ 314,000
===============
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PROFORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 2005
(Unaudited)
AMOUNTS IN THOUSANDS
PROFORMA-
VAN KAMPEN VAN KAMPEN VAN KAMPEN
VALUE ADVANTAGE ADVANTAGE
MUNICIPAL INCOME MUNICIPAL INCOME MUNICIPAL INCOME
TRUST TRUST II ADJUSTMENTS TRUST II
-------------------- ------------------- --------------- ----------------
ASSETS:
Total Investments (Cost of $548,302,
$191,633 and $739,935, respectively) $ 592,832 $ 205,059 $ 797,891
Cash 77 198 275
Receivables:
Interest 6,955 2,261 9,216
Investment Sold 275 6,469 6,744
Variation Margin on Futures 94 31 125
Other 6 3 9
-------------------- ------------------- --------------- -------------
Total Assets 600,239 214,021 814,260
-------------------- ------------------- --------------- -------------
LIABILITIES:
Payable:
Investment Purchased - 10,356 10,356
Investment Advisory Fee 278 94 372
Income Distributions-Common Shares 62 18 80
Other Affiliates 22 6 28
Trustees' Deferred Compensation and
Retirement Plans 323 237 560
Merger Cost $ 364 (2) 364
Accrued Expenses 128 58 186
-------------------- ------------------- --------------- -------------
Total Liabilities 813 10,769 364 11,946
Preferred Shares (including
accrued distributions) 225,102 80,024 305,126
-------------------- ------------------- --------------- -------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 374,324 $ 123,228 $ (364) $ 497,188
==================== =================== =============== =============
Net Assets Applicable to Common Shares $ 374,324 $ 123,228 $ (364) (2) $ 497,188
Common Shares Outstanding 23,555 8,176 1,326 (1) 33,057
-------------------- ------------------- -------------
Net Asset Value Per Common Share $ 15.89 $ 15.07 $ 15.04
==================== =================== =============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value) $ 236 $ 82 $ 13 (1)(2) $ 331
Paid in Surplus 331,229 108,295 (377)(1)(2) 439,147
Net Unrealized Appreciation 43,988 13,241 57,229
Accumulated Undistributed Net Investment Income 1,625 916 2,541
Accumulated Net Realized Gain/ Loss (2,754) 694 (2,060)
-------------------- ------------------- --------------- -------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 374,324 $ 123,228 $ (364) $ 497,188
==================== =================== =============== =============
PREFERRED SHARES $ 225,000 $ 80,000 $ 305,000
==================== =================== =============== =============
NET ASSETS INCLUDING PREFERRED SHARES $ 599,324 $ 203,228 $ (364) $ 802,188
==================== =================== =============== =============
(1) The proforma statements presume the issuance by the Van Kampen Advantage
Municipal Income Trust II of approximately 24,881,570 common shares in exchange
for the assets and liabilities of the Van Kampen Value Municipal Income Trust.
(2) A non-recurring cost associated with this transaction of approximately
$364,000 will be incurred. The approximate cost and per share cost that will be
borne by the common shareholders are as follows:
Approximate Cost Cost Per Share
---------------- --------------
Van Kampen Value Municipal Income Trust $ 105,560 $ 0.00
Van Kampen Advantage Municipal Income Trust II 258,440 0.03
----------------
$ 364,000
----------------
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II - VAN KAMPEN
VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PROFORMA CONDENSED STATEMENT OF OPERATIONS
For the Twelve Months Ended January 31, 2005
(Unaudited)
Amounts in thousands
Proforma-
Van Kampen
Van Kampen Van Kampen Van Kampen Advantage
Municipal Value Advantage Municipal
Opportunity Municipal Income Municipal Income Income
Trust II Trust Trust II Adjustments Trust II
------------------- ------------------ ---------------- -------------- ----------
INVESTMENT INCOME:
Interest $ 14,499 $ 29,473 $ 10,092 $ 54,064
------------------ ------------------ ------------------- ---------- ----------
EXPENSES:
Investment Advisory Fee 1,706 3,468 1,177 6,351
Preferred Share Maintenance 352 639 233 $ (121) (1) 1,103
Trustee's Fees and Related Expenses 68 99 59 (119) (2) 107
Administration Fee 48 98 33 - 179
Legal 38 63 27 (76) (1) 52
Custody 17 37 13 (6) (1) 61
Other 179 253 149 (220) (1) 361
------------------- ------------------ ------------------ ----------- ---------
Total Expenses 2,408 4,657 1,691 (542) 8,214
------------------- ------------------ ------------------ ----------- ---------
NET INVESTMENT INCOME $ 12,091 $ 24,816 $ 8,401 $ 542 $ 45,850
=================== ================== ================== =========== ==========
REALIZED AND UNREALIZED GAIN/ LOSS:
Realized Gain/ Loss:
Investments $ 841 $ 1,960 $ 2,863 $ 5,664
Futures (885) (1,896) (661) (3,442)
------------------ ------------------ ------------------- ---------- ----------
Net Realized Gain/Loss (44) 64 2,202 2,222
------------------ ------------------ ------------------- ---------- ----------
Unrealized Appreciation/Depreciation
Beginning of the Period 18,303 40,211 13,846 72,360
End of the Period 20,694 43,988 13,241 77,923
------------------ ------------------ ------------------- ---------- ----------
Net Unrealized Appreciation/Depreciation
During the Period 2,391 3,777 (605) 5,563
------------------ ------------------ ------------------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN $ 2,347 $ 3,841 $ 1,597 $ 7,785
------------------ ------------------ ------------------- ---------- ----------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS $ (1,362) $ (2,815) $ (990) $ (5,167)
=================== ================== ================== =========== ==========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON
SHARES FROM OPERATIONS $ 13,076 $ 25,842 $ 9,008 $ 542 $ 48,468
=================== ================== ================== =========== ==========
(1) Reflects the reduction in certain operating expenses as a result of the
elimination of certain duplicative expenses and the result of operating a
larger, more efficient fund.
(2) Reflects the exclusion of unrealized net appreciation related to the
trustees' deferred compensation plan and the elimination of certain duplicate
expenses.
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PROFORMA CONDENSED STATEMENT OF OPERATIONS
For the Twelve Months Ended January 31, 2005
(Unaudited)
Amounts in thousands
Proforma-
Van Kampen Van Kampen
Van Kampen Advantage Advantage
Municipal Opportunity Municipal Income Municipal Income
Trust II Trust II Adjustments Trust II
---------------------- -------------------- ------------- ----------------
INVESTMENT INCOME:
Interest $ 14,499 $ 10,092 $ 24,591
---------------------- -------------------- -------------- --------------
EXPENSES:
Investment Advisory Fee 1,706 1,177 2,883
Preferred Share Maintenance 352 233 $ (52)(1) 533
Trustee's Fees and Related Expenses 68 59 (22)(2) 105
Administration Fee 48 33 - 81
Legal 38 27 (28)(1) 37
Custody 17 13 (2)(1) 28
Other 179 149 (101)(1) 227
---------------------- -------------------- -------------- --------------
Total Expenses 2,408 1,691 (205) 3,894
---------------------- -------------------- -------------- --------------
NET INVESTMENT INCOME $ 12,091 $ 8,401 $ 205 $ 20,697
====================== ==================== ============== ==============
REALIZED AND UNREALIZED GAIN/ LOSS:
Realized Gain/ Loss:
Investments $ 841 $ 2,863 $ 3,704
Futures (885) (661) (1,546)
---------------------- -------------------- -------------- --------------
Net Realized Gain/Loss (44) 2,202 2,158
---------------------- -------------------- -------------- --------------
Unrealized Appreciation/Depreciation
Beginning of the Period 18,303 13,846 32,149
End of the Period 20,694 13,241 33,935
---------------------- -------------------- -------------- --------------
Net Unrealized Appreciation/Depreciation
During the Period 2,391 (605) 1,786
---------------------- -------------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN $ 2,347 $ 1,597 $ 3,944
---------------------- -------------------- -------------- --------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS $ (1,362) $ (990) $ (2,352)
====================== ==================== ============== ==============
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON
SHARES FROM OPERATIONS $ 13,076 $ 9,008 $ 205 $ 22,289
====================== ==================== ============== ==============
(1) Reflects the reduction in certain operating expenses as a result of the
elimination of certain duplicative expenses and the result of operating a
larger, more efficient fund.
(2) Reflects the exclusion of unrealized net appreciation related to the
trustees' deferred compensation plan and the elimination of certain duplicate
expenses.
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PROFORMA CONDENSED STATEMENT OF OPERATIONS
For the Twelve Months Ended January 31, 2005
(Unaudited)
Amounts in thousands
Proforma-
Van Kampen Van Kampen Van Kampen
Value Advantage Advantage
Municipal Income Municipal Income Municipal Income
Trust Trust II Adjustments Trust II
--------------------- -------------------- ------------- ------------
INVESTMENT INCOME:
Interest $ 29,473 $ 10,092 $ 39,565
--------------------- -------------------- ------------- ------------
EXPENSES:
Investment Advisory Fee 3,468 1,177 4,645
Preferred Share Maintenance 639 233 $ (70)(1) 802
Trustee's Fees and Related Expenses 99 59 (52)(2) 106
Administration Fee 98 33 - 131
Legal 63 27 (47)(1) 43
Custody 37 13 (3)(1) 47
Other 253 149 (109)(1) 293
--------------------- -------------------- ------------- ------------
Total Expenses 4,657 1,691 (281) 6,067
--------------------- -------------------- ------------- ------------
NET INVESTMENT INCOME $ 24,816 $ 8,401 $ 281 $ 33,498
===================== ==================== ============= ============
REALIZED AND UNREALIZED GAIN/ LOSS:
Realized Gain/ Loss:
Investments $ 1,960 $ 2,863 $ 4,823
Futures (1,896) (661) (2,557)
--------------------- -------------------- ------------- ------------
Net Realized Gain/Loss 64 2,202 2,266
--------------------- -------------------- ------------- ------------
Unrealized Appreciation/Depreciation
Beginning of the Period 40,211 13,846 54,057
End of the Period 43,988 13,241 57,229
--------------------- -------------------- ------------- ------------
Net Unrealized Appreciation/Depreciation During
the Period 3,777 (605) 3,172
--------------------- -------------------- ------------- ------------
NET REALIZED AND UNREALIZED GAIN $ 3,841 $ 1,597 $ 5,438
--------------------- -------------------- ------------- ------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS $ (2,815) $ (990) $ (3,805)
===================== ==================== ============= ============
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON
SHARES FROM OPERATIONS $ 25,842 $ 9,008 $ 281 $ 35,131
===================== ==================== ============= ============
(1) Reflects the reduction in certain operating expenses as a result of the
elimination of certain duplicative expenses and the result of operating a
larger, more efficient fund.
(2) Reflects the exclusion of unrealized net appreciation related to the
trustees' deferred compensation plan and the elimination of certain duplicate
expenses.
Van Kampen Advantage Municipal Income Trust II-Van Kampen Municipal
Opportunity Trust II - Van Kampen Value Municipal Income Trust
NOTES TO PRO FORMA FINANCIAL STATEMENTS
JANUARY 31, 2005 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Acquiring Trust, Van Kampen Advantage Municipal Income Trust II ("Acquiring
Trust") is registered as a diversified, closed-end management investment company
under the Investment Company Act of 1940 (the "1940 Act"), as amended. The
Acquiring Trust's investment objective is to seek to provide a high level of
current income exempt from federal income tax, consistent with preservation of
capital. The Acquiring Trust will invest substantially all of its assets in
municipal securities rated investment grade at the time of investment. The
Acquiring Trust commenced investment operations on August 27, 1993.
The following is a summary of significant accounting policies
consistently followed by the Acquiring 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
Acquiring 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
Acquiring Trust will segregate assets with the custodian having an aggregate
value at least equal to the amount of the when-issued or delayed delivery
purchase commitments until payment is made.
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 Acquiring Trust's policy to comply with the
requirements of Subchapter M 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.
E. DISTRIBUTION OF INCOME AND GAINS The Acquiring 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.
PART C: OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Section 5.3 of the Registrant's Declaration of Trust, a copy of which is
filed as an exhibit hereto, provides for indemnification, as set forth below:
"Section 5.3 Mandatory Indemnification.
(a) Subject to the exceptions and limitations contained in paragraph
(b) below:
(i) every person who is or has been a Trustee or officer of the
Trust shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the settlement thereof;
(ii) the words, "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and
the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or its Shareholders by
reason of a final adjudication by the court or other body before which
the proceeding was brought that he engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or
(b)(ii) resulting in a payment by a Trustee or officer, unless there
has been either a determination that such Trustee or officer did not
engage in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or a
reasonable determination, based upon a review of readily available
facts (as opposed to a full trial-type inquiry) that he did not engage
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in such conduct:
(A) by vote of a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided by be insured
against by policies maintained by the Trust, shall be severable, shall not
effect any other rights to which any Trustee or officer may now or
hereafter be entitled, shall continue as to a Person who has ceased to be
such Trustee or officer and shall inure to the benefit of the heirs,
executors, administrators, and assigns of such Person. Nothing contained
herein shall affect any rights to indemnification to which personnel of the
Trust other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a defense to any
claim, action, suit, or proceeding of the character described in paragraph
(a) of this Section 5.3 shall be advanced by the Trust prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is
not entitled to indemnification under this Section 5.3, provided that
either
(i) such undertaking is secured by a surety bond or
some other appropriate security or the Trust shall be
insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter) or an independent
legal counsel in a written opinion shall determine, based
upon a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe
that the recipient ultimately will be found entitled to
indemnification.
As used in this Section 5.3, a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending."
ITEM 16. EXHIBITS
1. (a) Declaration of Trust of the Registrant and amendments thereto++
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(b) Certificate of Vote Establishing Preferred Shares++
2. Bylaws of the Registrant and amendments thereto++
3. Not applicable
4. Form of Agreement and Plan of Reorganization+++
5. (a) Specimen share certificate for common shares of the
Registrant++
(b) Specimen share certificate for preferred shares of the
Registrant++
6. Investment Advisory Agreement and amendment thereto++
7. Not Applicable
8. (a) Form of Amended and Restated Deferred Compensation Plan++
(b) Form of Retirement Plan for Each Closed End Fund++
9. Custodian Contract and amendments thereto++
10. Not Applicable
11.(a) Consent of Skadden, Arps, Slate, Meagher & Flom LLP, counsel
for the Registrant+
(b) Opinion of Skadden, Arps, Slate, Meagher & Flom LLP++
12. Tax opinion of Skadden, Arps, Slate, Meagher & Flom LLP++++
13.(a) Transfer Agency and Service Agreement++
(b) Auction Agency Agreement++
(c) Form of Broker-Dealer Agreement++
(d)(i) Letter of Representation++
(ii) Form of Letter of Representation++
(e) Fund Accounting Agreement and amendment thereto++
(f) Amended and Restated Legal Services Agreement++
14. Consent of independent registered public accounting firm for the
Registrant and the Target Funds++
15. Not Applicable
16. Power of Attorney+
17.(a) Code of Ethics of the Investment Adviser++
(b) Code of Ethics of the Funds++
(c) Proxy cards for the Target Funds+
(d) Proxy card for the Acquiring Fund+
+ Filed herewith.
++ To be filed by further amendment.
+++ Filed as Appendix A to the Statement of Additional Information and
incorporated herein by reference to Registrant's Registration Statement on
Form N-14 as filed via EDGAR on June 30, 2005.
++++ To be filed by post-effective amendment.
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through use of a prospectus which is part of this
Registration Statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act of 1933, as amended, the
reoffering prospectus will contain information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by other items of the applicable form.
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(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, as
amended, each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of securities at
that time shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees that, if the Reorganizations
discussed in the registration statement close, it shall file by post-effective
amendment either a copy of the Internal Revenue Service private letter ruling
applied for or an opinion supporting the tax matter discussed in the
registration statement.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and the State of New York, on June 30, 2005.
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
By: /s/ Lou Anne McInnis
------------------------------------
Lou Anne McInnis
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
SIGNATURES TITLE
---------- -----
Principal Executive Officer:
/s/ Ronald E. Robison* Executive Vice President and
------------------------------------------- Principal Executive Officer
Ronald E. Robison
Principal Financial Officer:
/s/ James W. Garrett*
------------------------------------------- Chief Financial
James W. Garrett Officer and Treasurer
Trustees:
/s/ David C. Arch* Trustee
-------------------------------------------
David C. Arch
/s/ Jerry D. Choate* Trustee
-------------------------------------------
Jerry D. Choate
/s/ Rod Dammeyer* Trustee
-------------------------------------------
Rod Dammeyer
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/s/ Linda Hutton Heagy* Trustee
-------------------------------------------
Linda Hutton Heagy
/s/ R. Craig Kennedy* Trustee
-------------------------------------------
R. Craig Kennedy
/s/ Howard J Kerr* Trustee
-------------------------------------------
Howard J Kerr
/s/ Mitchell M. Merin* Trustee
-------------------------------------------
Mitchell M. Merin
/s/ Jack E. Nelson* Trustee
-------------------------------------------
Jack E. Nelson
/s/ Richard F. Powers, III* Trustee
-------------------------------------------
Richard F. Powers, III
/s/ Hugo F. Sonnenschein* Trustee
-------------------------------------------
Hugo F. Sonnenschein
/s/ Wayne W. Whalen* Trustee
-------------------------------------------
Wayne W. Whalen
/s/ Suzanne H. Woolsey* Trustee
-------------------------------------------
Suzanne H. Woolsey
* Signed by Lou Anne McInnis pursuant to a power of attorney filed herewith.
/s/ Lou Anne McInnis June 30, 2005
-------------------------------------------
Lou Anne McInnis
Attorney-in-Fact
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SCHEDULE OF EXHIBITS TO FORM N-14
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
Exhibit
-------
11(a) Consent of Skadden, Arps, Slate, Meagher & Flom LLP
16 Power of Attorney
17(c) Proxy card for the Target Fund
(d) Proxy card for the Acquiring Fund