--  SEPTEMBER 2005  --
--------------------------------------------------------------------------------
                                IMPORTANT NOTICE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                         TO SHAREHOLDERS OF VAN KAMPEN
                        ADVANTAGE MUNICIPAL INCOME TRUST
                                      AND
                              VAN KAMPEN MUNICIPAL
                               OPPORTUNITY TRUST
--------------------------------------------------------------------------------
 
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 Advantage Municipal Income Trust: You are being asked to vote on a
reorganization (the "Reorganization") of Van Kampen Advantage Municipal Income
Trust (the "Target Fund") into Van Kampen Municipal Opportunity Trust (the
"Acquiring Fund"), a closed-end investment company that pursues the same
investment objective and has similar investment policies as the Target Fund.
 
Shareholders of Van Kampen Municipal Opportunity Trust: You are being asked to
vote on the issuance of common shares of beneficial interest by the Acquiring
Fund in connection with the Reorganization.
Q      WHY IS THE
       REORGANIZATION BEING RECOMMENDED?
A      The Board of Trustees of
each Fund has determined that the Reorganization will benefit common
shareholders of the Target Fund and the Acquiring Fund. The Target Fund and the
Acquiring Fund are similar. Each Fund seeks to provide common shareholders with
a high level of current income exempt from federal income tax, consistent with
preservation of capital. Each Fund invests primarily in municipal securities
rated investment grade at the time of investment. Each Fund is managed by the
same investment advisory personnel. After the Reorganization, it is anticipated
that common shareholders of each Fund will experience a reduced annual operating
expense ratio, as certain fixed

 
administrative costs will be spread across the combined fund's larger asset
base. It is not anticipated that the Reorganization will directly benefit
holders of preferred shares of the Funds; however, it is anticipated that
preferred shareholders will not be adversely effected by the Reorganization, and
none of the expenses of the Reorganization will be borne by preferred
shareholders.
Q      HOW WILL THE
REORGANIZATION AFFECT ME?
A      Assuming shareholders of
the Target Fund approve the Reorganization and shareholders of the Acquiring
Fund approve the issuance of common shares of beneficial interest by that Fund,
the assets and liabilities of the Target Fund will be combined with those of the
Acquiring Fund and the Target Fund will dissolve.
 
Shareholders of the Target Fund: You will become a shareholder of the Acquiring
Fund. If you are a holder of common shares of the Target Fund, you will receive
newly-issued common shares of the Acquiring Fund, and if you are a holder of
preferred shares of the Target Fund, you will receive newly-issued preferred
shares of the Acquiring Fund. The aggregate net asset value of the common shares
you receive in the Reorganization will equal the aggregate net asset value of
the common shares you own immediately prior to the Reorganization less the costs
of the Reorganization (though you may receive cash for fractional shares). Of
course, the common shares of the Acquiring Fund received by holders of common
shares of the Target Fund may trade on the New York Stock Exchange and Chicago
Stock Exchange at a discount from net asset value, which might be greater or
less than the trading discount of common shares of the Target Fund at the time
of the closing of the Reorganization. The aggregate liquidation preference of
the preferred shares you receive in the Reorganization will equal the aggregate
liquidation preference of the preferred shares you own immediately prior to the
Reorganization. No certificates for shares of the Acquiring Fund will be issued
in connection with the Reorganization, although such certificates will be
available upon request.
 
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
       REORGANIZATION?
A      You will pay no sales loads
or commissions in connection with the Reorganization. However, if the
Reorganization is completed, the costs associated with the Reorganization,
including the costs associated with the shareholder meeting, will be borne by
the common shareholders of the

 
Target Fund and the Acquiring Fund in proportion to their projected annual
expense savings as a result of the Reorganization.
Q      WILL I HAVE TO PAY ANY
       FEDERAL TAXES AS A RESULT OF THE REORGANIZATION?
A      The Reorganization 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
Reorganization so qualifies, in general, a shareholder of the Target Fund will
recognize no gain or loss upon the receipt of shares of the Acquiring Fund in
connection with the Reorganization. Additionally, the Target Fund will not
recognize any gain or loss as a result of the transfer of all of its assets and
liabilities in exchange for the shares of the Acquiring Fund or as a result of
its dissolution. Neither the Acquiring Fund nor its shareholders will recognize
any gain or loss in connection with the Reorganization.
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 Reorganization,
the rules of the New York Stock Exchange and the Chicago Stock Exchange, on
which the Acquiring Fund's common shares are listed, require the common
shareholders of the Acquiring Fund to approve the issuance of additional common
shares of beneficial interest by the Acquiring Fund in connection with the
Reorganization. If the issuance of additional common shares of the Acquiring
Fund is not approved, the Reorganization will not occur.
Q      HOW DOES THE BOARD OF
       TRUSTEES OF MY FUND SUGGEST I VOTE?
A      After careful consideration,
the Board of Trustees of each Fund recommends that you vote "FOR" each of the
items proposed.
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 via 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 web site at www.vankampen.com where
you can send us an e-mail message by selecting "Contact Us."

 
                              ABOUT THE PROXY CARD
--------------------------------------------------------------------------------
 
Please vote on each issue using blue or black ink to mark an X in one of the
boxes provided on the proxy card.
 
SHAREHOLDERS OF VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST:
 
APPROVAL OF REORGANIZATION - mark "For," "Against" or "Abstain."
 
COMMON SHAREHOLDERS OF VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST:
 
APPROVAL OF ISSUANCE OF 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 approve the issuance of
     approve the                                              Common Shares.
     Reorganization.

 

                                             
                                                               FOR    AGAINST    ABSTAIN
 
                                                               [ ]   [ ]     [ ]
     ----------------------------------
Please be sure to sign and date this Proxy, Date          3.   To transact such other business as may
                                                               properly come before the meeting or any
                                                               adjournment thereof.

 
Shareholder sign here       Co-owner sign here
 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
 
                   SAMPLE

 
                         VAN KAMPEN ADVANTAGE MUNICIPAL
                                  INCOME TRUST
                                      AND
                     VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
                          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 Advantage Municipal Income Trust (the "Target
Fund") and Van Kampen Municipal Opportunity Trust (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 10:00 a.m. for the
following purposes:
 
For shareholders of the Target Fund:
 
    1. To approve an Agreement and Plan of Reorganization (the "Reorganization
       Agreement") between the Target Fund and Acquiring Fund, the termination
       of the Target Fund's registration under the Investment Company Act of
       1940, as amended, and the dissolution of the Target Fund under applicable
       state law;
 
For common shareholders of the Acquiring Fund:
 
    2. To approve the issuance of additional common shares of the Acquiring Fund
       in connection with the Reorganization Agreement; and
 
For shareholders of both funds:
 
    3. 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 EACH 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 THE TARGET FUND RECOMMENDS THAT YOU CAST YOUR VOTE:
 
    - FOR THE REORGANIZATION AGREEMENT 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 THE REORGANIZATION AGREEMENT 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 PROMPTLY OR RECORD YOUR VOTING INSTRUCTIONS BY
TELEPHONE OR VIA THE INTERNET.
 
                                 For the Board of Trustees,
 
                                 Lou Anne McInnis
                                 Assistant Secretary
                                 Van Kampen Advantage Municipal
                                   Income Trust
                                 Van Kampen Municipal Opportunity Trust
September 2, 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.

 
                        JOINT PROXY STATEMENT/PROSPECTUS
 
                  VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
                                      AND
                     VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
                          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 Advantage Municipal Income Trust (the "Target Fund") and/or Van
Kampen Municipal Opportunity Trust (the "Acquiring Fund"). A joint special
meeting of shareholders of the funds (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 10:00 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 each 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 September 6, 2005.
 
  The purposes of the Special Meeting are:
 
  For shareholders of the Target Fund:
 
    1. To approve an Agreement and Plan of Reorganization (the "Reorganization
       Agreement") between the Target Fund and the Acquiring Fund, the
       termination of the Target Fund's registration under the Investment
       Company Act of 1940, as amended (the "1940 Act"), and the dissolution of
       the Target Fund under applicable state law;
 
  For common shareholders of the Acquiring Fund:
 
    2. To approve the issuance of additional common shares of the Acquiring Fund
       in connection with the Reorganization Agreement; and
 
  For shareholders of both funds:
 
    3. To transact such other business as may properly be presented at the
       Special Meeting or any adjournment thereof.

 
  The Reorganization Agreement that you are being asked to consider involves a
transaction that will be referred to in this Joint Proxy Statement/Prospectus as
the "Reorganization." The Reorganization seeks to combine two similar funds to
achieve certain economies of scale and other operational efficiencies. Each fund
pursues the same investment objective 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 invests primarily in municipal
securities rated investment grade at the time of investment. The Target Fund and
the Acquiring Fund are sometimes referred to herein each as a "Fund" and
collectively as the "Funds."
 
  In the 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 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 holders of common shares of the Target Fund ("Target Fund
Common Shares") (Target Fund Common Shares and Acquiring Fund Common Shares are
sometimes referred to herein collectively as "Common Shares") and Acquiring Fund
APS to holders of auction preferred shares of the Target Fund ("Target Fund
APS") (Target Fund APS and Acquiring Fund APS are sometimes referred to herein
collectively as "Preferred Shares" or "APS"), 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 Target Fund Common
Shares held immediately prior to the Reorganization less the costs of the
Reorganization (though common shareholders may receive cash for their fractional
shares). The aggregate liquidation preference of the Acquiring Fund APS received
in the Reorganization will equal the aggregate liquidation preference of the
Target Fund APS held immediately prior to the Reorganization. The Acquiring Fund
will continue to operate after the Reorganization as a registered closed-end
investment company with the investment objective and policies described in this
Joint Proxy Statement/Prospectus.
 
  In connection with the Reorganization, 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 both
proposals in one Joint Proxy Statement/Prospectus will reduce costs and is in
the best interests of each Fund's shareholders.
 
                                        2

 
  In the event that Target Fund shareholders do not approve the Reorganization
or Acquiring Fund common shareholders do not approve the issuance of Acquiring
Fund Common Shares, the Target Fund will continue to exist and the Board of
Trustees of the Target Fund (the "Target Fund Board") will consider what
additional action, if any, to take.
 
  This Joint Proxy Statement/Prospectus sets forth concisely the information
shareholders of the Funds should know before voting on the proposals 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 September 2, 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.
 
  The Funds are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") 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 100 F Street, N.E., 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)
551-8090. 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 New York Stock Exchange
(the "NYSE") and the Chicago Stock Exchange (the "CHX") under the ticker symbol
"VMO" and will continue to be so listed subsequent to the Reorganization. The
Target Fund Common Shares are listed on the NYSE and the CHX under the ticker
symbol "VKA." Reports, proxy statements and other
 
                                        3

 
information concerning the Funds 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 the Acquiring Fund Common Shares and the
Acquiring Fund APS in the 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.
 
  Based on the anticipated timing of these Reorganizations, the pro forma
financial information presented herein and in the Reorganization Statement of
Additional Information was prepared based on each Fund's first fiscal quarter
ended January 31, 2005. Each Fund has subsequently prepared and filed financial
statements for the semi-annual period ended April 30, 2005. Management has
considered the later financial statements and does not believe there were
material changes in the relative financial positions of the Funds such that it
was necessary to update the pro forma financial information.
                             ---------------------
 
  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 September 2, 2005.
 
                                        4

 
                               TABLE OF CONTENTS
 


                                                              PAGE
                                                              ----
                                                           
SUMMARY.....................................................    7
PROPOSAL 1: REORGANIZATION OF THE TARGET FUND...............   14
RISK FACTORS AND SPECIAL CONSIDERATIONS.....................   14
  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..............................................   17
  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...................   25
  Investment Restrictions...................................   28
  Management of the Funds...................................   31
  Other Service Providers...................................   34
  Capitalization............................................   34
  Additional Information about Common Shares of the Funds...   36
  Additional Information about Preferred Shares of the
    Funds...................................................   39
  Governing Law.............................................   43
  Certain Provisions of the Declarations of Trust...........   44
  Conversion to Open-End Fund...............................   45
  Voting Rights.............................................   46
  Financial Highlights......................................   47
INFORMATION ABOUT THE REORGANIZATION........................   49
  General...................................................   49
  Terms of the Reorganization Agreement.....................   51
  Material U.S. Federal Income Tax Consequences of the
    Reorganization..........................................   52
  Shareholder Approval......................................   54

 
                                        5

 


                                                              PAGE
                                                              ----
                                                           
PROPOSAL 2: ISSUANCE OF ADDITIONAL ACQUIRING FUND COMMON
  SHARES....................................................   55
  Shareholder Approval......................................   55
OTHER INFORMATION...........................................   56
  Voting Information and Requirements.......................   56
  Shareholder Information...................................   58
  Section 16(a) Beneficial Ownership Reporting Compliance...   59
  Shareholder Proposals.....................................   59
  Solicitation of Proxies...................................   59
  Legal Matters.............................................   60
  Other Matters to Come Before the Meeting..................   60
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: REORGANIZATION OF THE TARGET FUND
 
  THE PROPOSED REORGANIZATION. The Board of Trustees of each Fund, including the
trustees who are not "interested persons," as defined in the 1940 Act, of each
Fund, has unanimously approved the Reorganization Agreement. If the shareholders
of the Target Fund approve the Reorganization Agreement and the common
shareholders of the Acquiring Fund approve the issuance of additional 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 holders of Target Fund Common Shares and Target Fund APS,
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 holders of Target
Fund Common Shares may receive cash for their fractional shares). The aggregate
liquidation preference of Acquiring Fund APS received in the Reorganization will
equal the aggregate liquidation preference of Target Fund APS held immediately
prior to the Reorganization.
 
  BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION. The Reorganization
seeks to combine two 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. Each Fund invests
primarily in municipal securities rated investment grade at the time of
investment. 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 intends to achieve its
objective primarily by investing in a diversified portfolio of municipal
securities which such Fund's investment adviser believes does not involve undue
risk to income or principal. 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.
 
                                        7

 
  The proposed Reorganization will combine the assets of these similar funds by
reorganizing the Target Fund into the Acquiring Fund. The Target Fund Board,
based upon its evaluation of all relevant information, anticipates that the
Reorganization will benefit holders of Target Fund Common Shares. The Board of
Trustees of the Acquiring Fund (the "Acquiring Fund Board"), based upon its
evaluation of all relevant information, anticipates that the Reorganization will
benefit holders of Acquiring Fund Common Shares. The Board of Trustees of each
Fund believes, based on data presented by Van Kampen Asset Management,
investment adviser to each of the Funds (the "Adviser"), that holders of Common
Shares of each Fund will experience a reduced annual operating expense ratio as
a result of the Reorganization. The combined fund resulting from the
Reorganization will have a larger asset base than either 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.
 
  The table below illustrates the anticipated reduction in operating expenses
expected as a result of the Reorganization. The table sets forth (i) the fees,
expenses and distributions to preferred shareholders paid by the Target Fund 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 the Reorganization had been
completed at the beginning of such period. As shown below, the Reorganization is
expected to result
 
                                        8

 
in decreased total annual expenses for shareholders of each Fund (although such
savings will not be immediately realized (see footnote (c) to the table).
 
FEE, EXPENSE AND DISTRIBUTIONS ON PREFERRED SHARES TABLE FOR COMMON SHAREHOLDERS
                      OF THE FUNDS AS OF JANUARY 31, 2005
 


                                                  ACTUAL             PRO FORMA
                                         ------------------------   -----------
                                         VAN KAMPEN
                                         ADVANTAGE    VAN KAMPEN    VAN KAMPEN
                                         MUNICIPAL     MUNICIPAL     MUNICIPAL
                                           INCOME     OPPORTUNITY   OPPORTUNITY
                                           TRUST         TRUST         TRUST
                                         ----------   -----------   -----------
                                                           
Common Shareholder Transaction
  Expenses(a):
  Maximum Sales Load (as a percentage
    of offering price)(b)(c)...........     None         None          None
  Dividend Reinvestment Plan Fees......     None         None          None
Annual Expenses (as a percentage of net
  assets attributable to common
  shares):
  Investment Advisory Fees(d)..........     0.88%        0.87%         0.88%
  Interest Payments on Borrowed
    Funds..............................     0.00%        0.00%         0.00%
  Other Expenses.......................     0.30%        0.30%         0.25%
                                            ----         ----          ----
  Total Annual Expenses(d).............     1.18%        1.17%         1.13%
                                            ----         ----          ----
Distributions:
  Distributions on Preferred
    Shares(e)..........................     0.75%        0.76%         0.76%
                                            ----         ----          ----
  Total Annual Expenses and
    Distributions on Preferred
    Shares.............................     1.93%        1.93%         1.89%
                                            ----         ----          ----

 
---------------
 
(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 either Fund 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 Reorganization. Common Shares are not
   available for purchase from the Funds but may be purchased through a broker-
   dealer subject to individually negotiated commission rates.
(c)In connection with the Reorganization, 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 of Trustees; all
   expenses incurred in connection with the preparation of the Reorganization
   Agreement and registration
 
                                        9

 
   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 Reorganization. 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 Reorganization. After considering various alternatives
   for allocating these costs, the Board of Trustees of each Fund agreed that,
   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 projected annual expense savings as a result of the
   Reorganization. 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 Reorganization, allocation of Reorganization expenses
   between 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. The projected annual expense savings are generally
   not expected to be immediately realized. If a shareholder sells his or her
   Common Shares prior to the estimated pay-back period, then that shareholder
   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 Reorganization
   to reflect the allocation of Reorganization expenses to each Fund. In the
   event the Reorganization is not completed, the Adviser will bear the costs
   associated with the Reorganization. The numbers presented in the table are
   estimates; actual results may differ.
 


                                      PROJECTED     REORGANIZATION     ESTIMATED    REDUCTION TO NET
                        NET ASSETS     ANNUAL          EXPENSE          PAYBACK       ASSET VALUE
                         (COMMON       EXPENSE      ALLOCATION IN      PERIOD (IN      PER COMMON
FUND                   SHARES ONLY)    SAVINGS    DOLLARS/PERCENTAGE     YEARS)          SHARE
----                   ------------   ---------   ------------------   ----------   ----------------
                                                                     
Target Fund            $325,753,719   $130,301      $ 222,000/50%         1.70           $0.01
Acquiring Fund         $262,463,268   $131,232      $ 222,000/50%         1.69           $0.01
Total Expenses                                      $444,000/100%

 
---------------
 
(d)Expense information has been restated to reflect permanent reductions
   made to administrative fees of each Fund effective as of June 1, 2004 and
   permanent reductions made to advisory fees of each Fund effective as of
   November 1, 2004. As noted in the table, advisory fees are stated as a
   percentage of net assets attributable to Common Shares only. If assets
   attributable to Preferred Shares were included, the advisory fees would be
   0.55% for each Fund and the Acquiring Fund on a pro forma basis. Thus, while
   each Fund has the same advisory fee rate, the differences in advisory fees in
   the table reflect the relative leverage ratios for each Fund and the
   Acquiring Fund on a pro forma basis. The proposed Reorganization is intended
   to combine the Funds with their existing
 
                                        10

 
   capital structures, which will result in a weighted combined leverage ratio
   that each Fund's Board and management believe is within an appropriate range
   under current market conditions; the combined fund may consider changes in
   its leverage ratio based on varying market conditions in the future. See also
   the section entitled "Proposal 1: Reorganization of the Target
   Fund -- Comparison of the Funds -- Capitalization."
(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 (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.
 
  EXAMPLE. The following example is intended to help you compare the costs of
investing in the Acquiring Fund pro forma after the Reorganization, with the
costs of investing in the Target Fund and the Acquiring Fund without the
Reorganization. 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 Advantage Municipal Income
  Trust................................   $12       $37       $65       $143
Van Kampen Municipal Opportunity
  Trust................................   $12       $37       $64       $142
Pro Forma--Van Kampen Municipal
  Opportunity Trust....................   $12       $36       $62       $137

 
  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 REORGANIZATION. The Target Fund Board has
determined that the Reorganization is in the best interests of holders of Target
Fund Common Shares and that the interests of such shareholders will not be
diluted as a result of the Reorganization. Similarly, the Board of Trustees of
the Acquiring Fund has determined that the Reorganization is in the best
interests of holders of Acquiring Fund Common Shares and that the interests of
such share-
 
                                        11

 
holders will not be diluted as a result of the Reorganization. It is not
anticipated that the Reorganization will directly benefit the holders of
Preferred Shares of either Fund; however, the Reorganization will not adversely
affect the holders of Preferred Shares of either Fund and the expenses of the
Reorganization will not be borne by the holders of Preferred Shares of either
Fund. As a result of the Reorganization, however, a shareholder of either Fund
will hold a reduced percentage of ownership in the larger combined fund than he
or she did in either of the separate Funds.
 
  The Reorganization 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" or "Code"). If the Reorganization so qualifies, in
general, a shareholder of the Target Fund will recognize no gain or loss upon
the receipt of shares of the Acquiring Fund in connection with the
Reorganization. Additionally, the Target Fund will not recognize any gain or
loss as a result of the transfer of all of its assets and liabilities in
exchange for the shares of the Acquiring Fund or as a result of its dissolution.
Neither the Acquiring Fund nor its shareholders will recognize any gain or loss
in connection with the Reorganization.
 
  The Target Fund Board requests that shareholders of the Target Fund approve
the proposed Reorganization at the Special Meeting to be held on September 23,
2005. Shareholder approval of the Reorganization requires the affirmative vote
of shareholders of the Target Fund representing more than 50% of the outstanding
Target Fund Common Shares and Target Fund Preferred Shares entitled to vote,
each voting separately as a class. Subject to the requisite approval of the
shareholders of each Fund with regard to the Reorganization, it is 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" the proposed
Reorganization.
 
PROPOSAL 2: ISSUANCE OF ACQUIRING FUND COMMON SHARES
 
  In connection with the proposed Reorganization described under "Proposal 1:
Reorganization of the Target Fund," the Acquiring Fund will issue additional
Acquiring Fund Common Shares and list such shares on the NYSE and CHX. The
Acquiring Fund will acquire substantially all of the assets and assume
substantially all of the liabilities of the Target Fund in exchange for the
newly-issued Acquiring Fund Common Shares and newly-issued Acquiring Fund APS.
The Reorganization will result in no reduction of net asset value of the
Acquiring Fund Common Shares, other than the costs of the Reorganization. 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 the Reorganization will
benefit holders of
                                        12

 
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 annual operating expense ratio as a result of the Reorganization.
 
  The Acquiring Fund Board requests that 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 on the proposal, provided that the total votes cast
on the proposal represents more than 50% in interest of all securities entitled
to vote on the proposal. Subject to the requisite approval of the shareholders
of each Fund with regard to the Reorganization, 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 Reorganization.
 
                                        13

 
 ------------------------------------------------------------------------------
                 PROPOSAL 1: REORGANIZATION OF THE TARGET FUND
 ------------------------------------------------------------------------------
 
  The Reorganization seeks to combine two 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.
Each Fund pursues the same investment objective 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 invests primarily in
municipal securities rated investment grade at the time of investment. The Funds
are managed by the same investment advisory personnel.
 
  In the 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 holders of Target Fund Common Shares and Acquiring Fund APS to holders of
Target Fund APS, 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 holders of Target
Fund Common Shares may receive cash for their fractional shares). The aggregate
liquidation preference of Acquiring Fund APS received in the Reorganization will
equal the aggregate liquidation preference of Target Fund APS 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 the Target Fund will benefit from
the Reorganization. In particular, the Target Fund Board believes, based on data
presented by the Adviser, that common shareholders of the Target Fund will
experience a reduced annual operating expense ratio as a result of the
Reorganization. The combined fund resulting from the Reorganization will have a
larger asset base than either Fund 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.
 
                    RISK FACTORS AND SPECIAL CONSIDERATIONS
 
  Because each Fund, under normal market conditions, invests substantially all
of its assets in municipal securities rated investment grade at the time of
investment,
                                        14

 
any risks inherent in such investments are equally applicable to both Funds and
will apply to the combined fund after the Reorganization. The Reorganization
itself is not expected to adversely affect the rights of holders of Common
Shares or Preferred Shares of either Fund 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 refers to an issuer's ability to make timely payments of interest
and principal. The degree of credit risk depends on both the financial condition
of the issuer and the terms of the obligation. Under normal market conditions,
each Fund invests substantially all of its assets in municipal securities rated
investment grade at the time of investment. However, to the extent that a Fund
may hold securities rated below investment grade, it may be subject to a higher
level of credit risk than a fund that holds solely investment grade securities.
Securities rated BBB by Standard & Poor's ("S&P") or Baa by Moody's Investors
Service, Inc. ("Moody's") are in the lowest of the four investment grades and
are considered by the rating agencies to be medium-grade obligations which
possess speculative characteristics so that changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity of the issuer
to make principal and interest payments than in the case of higher-rated
securities. The credit quality of non-investment grade securities is considered
speculative by recognized rating
 
                                        15

 
agencies with respect to the issuer's continuing ability to pay interest and
principal. Lower-grade securities may have less liquidity and a higher incidence
of default than higher-grade securities. A Fund may incur higher expenditures to
protect its interests in such securities. The credit risks and market prices of
lower-grade securities generally are more sensitive to negative issuer
developments, such as reduced revenues or increased expenditures, or adverse
economic conditions, such as a recession, than are higher-grade securities.
 
INCOME RISK
 
  The income shareholders receive from a Fund is based primarily on interest
rates, which can vary widely over the short- and long-term. If interest rates
drop, your income from such Fund 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 in municipal securities that pay interest that
is subject to the federal alternative minimum tax. The Acquiring 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
                                        16

 
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.
 
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 each 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
                                        17

 
amount of taxable income allocable to, the Preferred Shares of a Fund will
affect the yield to holders of Common Shares of a Fund. In certain
circumstances, when a Fund is required to allocate taxable income to holders of
its Preferred Shares, a 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 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 of a Fund were to exceed the net
return on such 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
 
                                        18

 
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.
 
  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 Common 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 normally
is set through an auction process. In the auction, holders of Preferred Shares
may indicate the dividend rate at which they would be willing to hold or sell
their shares or purchase additional shares. An auction fails if there are more
Preferred Shares offered for sale than there are buyers, in which case holders
of Preferred Shares may not be able to sell their shares. Also, if holders of
Preferred Shares 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 holders of Preferred Shares buy 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 shares than the market rate. Finally, the dividend
period for the Preferred Shares may be changed by a Fund, subject to certain
conditions, including notice to preferred shareholders, which could also affect
the liquidity of an investment in Preferred 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 holders of Preferred Shares with a
liquid
                                        19

 
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. Preferred Shares may only be transferred outside
of auctions to or through broker-dealers or other persons as a Fund permits.
 
  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 fails 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's investment objective 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 intends to achieve its
objective primarily by investing in a diversified portfolio of municipal
securities which the Adviser believes does not involve undue risk to income or
principal.
 
  Under normal market conditions, the Target Fund invests substantially all of
its net assets in municipal securities rated investment grade at the time of
investment and the Acquiring Fund invests substantially all of its total assets
in municipal securities rated investment grade at the time of investment. Under
normal market conditions, each Fund invests at least 80% of its net assets in
municipal securities. Investment grade securities are rated BBB or higher by S&P
or Baa or higher by Moody's 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; whereas such securities normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely, in the opinion of S&P, to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated categories.
Securities rated Baa by Moody's are considered by Moody's as medium grade
obligations; they are neither highly protected nor poorly secured; interest
payments and principal security appear to Moody's to be adequate for the present
but certain protective elements may be lacking or may be characteristically
                                        20

 
unreliable over any great length of time; in the opinion of Moody's, they 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 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 net 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, in the opinion of bond counsel or
other counsel to the issuer of such securities is, at the time of issuance, not
includable in gross income for regular federal income tax purposes. Under normal
market conditions, each Fund will invest at least 80% of its net assets in
municipal securities. The policy stated in the foregoing sentence is a
fundamental policy of each Fund and cannot be changed without shareholder
approval.
 
  Municipal securities include long-term obligations, often called municipal
bonds, as well as short-term municipal notes, participation certificates,
municipal leases, and tax-exempt commercial paper. During ordinary market
conditions, longer-term municipal securities generally provide a higher yield
than short-term municipal securities of similar credit quality and therefore
each Fund generally expects primarily to invest and hold until maturity
longer-term municipal securities. The
 
                                        21

 
Funds may, however, invest in short-term municipal securities in certain
circumstances.
 
  The two principal classifications of municipal bonds are "general obligation"
bonds and "revenue" or "special obligation" bonds, which include "industrial
revenue bonds." General obligation bonds are secured by the issuer's pledge of
its faith, credit and taxing power for the payment of principal and interest,
and accordingly the capacity of the issuer of a general obligation bond as to
the timely payment of interest and the repayment of principal when due is
affected by the issuer's maintenance of its tax base. Revenue or special
obligation bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special tax or other specific revenue source such as from the user of the
facility being financed; accordingly the timely payment of interest and the
repayment of principal in accordance with the terms of the revenue or special
obligation bond is a function of the economic viability of such facility or such
revenue source. Although the ratings of Moody's or S&P of the municipal
securities in the Fund's portfolio are relative and subjective, and are not
absolute standards of quality, such ratings reflect the assessment of Moody's or
S&P, as the case may be, of the issuer's ability, or the economic viability of
the special revenue source, with respect to the timely payment of interest and
the repayment of principal in accordance with the terms of the obligation.
 
  Also included within the general category of municipal securities are
participations in lease obligations or installment purchase contract obligations
(hereinafter collectively called "lease obligations") of municipal authorities
or entities. Although lease obligations do not constitute general obligations of
the municipality for which the municipality's taxing power is pledged, a lease
obligation may be backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" 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. Typically in "non-appropriation" lease obligations, the lease
terminates as of the end of the last fiscal year for which an appropriation is
made. Although "non-appropriation" lease obligations are often secured by an
assignment of the lessor's interest in the underlying property, disposition of
the property in the event of foreclosure might prove difficult. There is no
limitation on the percentage of each Fund's assets that may be invested in "non-
appropriation" lease obligations. In evaluating such lease obligations, the
Adviser will consider such factors as it deems appropriate, including (a)
whether the lease can be cancelled, (b) the ability of the lease obligee to
direct the sale of the underlying assets, (c) the general creditworthiness of
the lease obligor, (d) the likelihood that the municipality will discontinue
appropriating funding for the leased property in the event such property is no
longer considered essential by the municipality, (e) the legal recourse of the
lease obligee in the event of such a
                                        22

 
failure to appropriate funding and (f) any limitations which are imposed on the
lease obligor's ability to utilize substitute property or services than those
covered by the lease obligation. Each Fund will invest in lease obligations
which contain non-appropriation clauses only if such obligations are rated
investment grade at the time of investment.
 
  Participation certificates are participations in lease obligations of state
and 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. Some municipal leases and
participation certificates may not be readily marketable.
 
  The "issuer" of municipal securities generally is deemed to be the
governmental agency, authority, instrumentality or other political subdivision,
or the non-governmental user of a revenue bond-financed facility, the assets and
revenues of which will be used to meet the payment obligations, or the guarantee
of such payment obligations, of the municipal securities.
 
  Municipal securities may have fixed or variable interest rates. Each Fund may
purchase floating and variable rate demand notes, which are municipal securities
normally having a stated maturity in excess of one year, but which permit the
holder to tender the notes for purchase at the principal amount thereof. The
interest rate on a floating rate demand note is based on a known lending rate,
such as a bank's prime rate, and is adjusted each time such rate is adjusted.
The interest rate on a variable rate demand note is adjusted at specified
intervals. There generally is no secondary market for these notes, although they
may be tendered for redemption at face value. Each such note purchased by a Fund
will meet the criteria established for the purchase of municipal securities.
 
  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
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 than 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.
 
  There is no limitation as to the maturity of municipal securities in which a
Fund may invest. The Adviser may adjust the average maturity of a Fund's
portfolio from time to time, depending on its assessment of the relative yields
available on
 
                                        23

 
securities of different maturities and its expectations of future changes in
interest rates.
 
  As a matter of operating policy, (which means it can be changed by the Fund's
Board of Trustees without Shareholder vote), 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. Governmental issuers of municipal securities are not
considered part of any "industry." However, municipal securities backed only by
the assets and revenues of nongovernmental users may for this purpose be deemed
to be issued by such nongovernmental users, and the 25% limitation would apply
to such obligations. It is nonetheless possible that a Fund may invest 25% or
more of its total assets in a broader segment of the municipal securities
market, such as revenue obligations of hospitals and other health care
facilities, housing agency revenue obligations, or airport revenue obligations
if the Adviser determines that the yields available from obligations in a
particular segment of the market justified the additional risks associated with
a large investment in such segment. Although such obligations could be supported
by the credit of governmental users, or by the credit of nongovernmental users
engaged in a number of industries, economic, business, political and other
developments generally affecting the revenues of such users (for example,
proposed legislation or pending court decisions affecting the financing of such
projects and market factors affecting the demand for their services or products)
may have a general adverse effect on all municipal securities in such a market
segment. Each Fund may invest more than 25% of its assets in industrial
development bonds or in issuers located in the same state. If a Fund were to
invest more than 25% of its assets in issuers located in the same state, it
would be more susceptible to adverse economic, business or regulatory conditions
in that state.
 
  DEFENSIVE STRATEGIES. At times the Adviser may judge that conditions in the
market 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 a Fund's assets. In implementing these "defensive"
strategies, each Fund may invest to a substantial degree in 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 taxable securities.
Such taxable securities may include: obligations of the U.S. Government, its
agencies or instrumentalities: other debt securities rated within the four
highest grades by either S&P or Moody's; commercial paper rated in the highest
grade by either rating service; certificates of deposit and bankers'
acceptances; repurchase agreements with respect to any of the foregoing
investments; or any other fixed-income securities that the Adviser considers
consistent with such strategy. Further, the Acquiring Fund may generally invest
up to 20% of its total assets in taxable obligations if such investment is
determined by the Adviser
                                        24

 
to be in the best interest of the Fund, provided, however, that the Fund will
not invest in taxable obligations rated below Baa by Moody's or below BBB by
S&P. To the extent that the use of certain of these strategies produces taxable
income, this taxable income will be distributed on a pro rata basis among the
Preferred Shares and the Common Shares. It is impossible to predict whether, or
for how long, a Fund will use any such defensive strategies. Further, the yields
on such securities may approach or be less than the then current dividend rate
payable to preferred shareholders. In such event, the benefit of leverage to the
common shareholders will diminish and a Fund's leveraged capital structure may
work to the disadvantage of the common shareholders.
 
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 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, including the
maintenance of cash and/or liquid securities in segregated accounts when
mandated by SEC rules.
 
  Each Fund has certain limits on its use of Strategic Transactions. Strategic
Transactions, other than Strategic Transactions involving financial futures and
options thereon, may be used by the Target Fund to enhance potential gain
although no more than 5% of the Fund's assets will be committed to such
Strategic Transactions for non-hedging purposes. The Target Fund will engage in
over-the-counter options ("OTC options") transactions only with United States
government securities dealers recognized by the Federal Reserve Bank in New York
as "primary
 
                                        25

 
dealers," broker dealers, domestic or foreign banks or other financial
institutions which have received a short-term credit rating of A-1 from S&P or
P-1 from Moody's or an equivalent rating from any other nationally recognized
statistical rating organization ("NRSRO"). All calls sold by the Target Fund
must be "covered" or must meet applicable asset segregation requirements as long
as the call is outstanding (i.e. the Target Fund must own the securities or
futures contract subject to the call). The Target Fund will not sell put options
if, as a result, more than 50% of the Fund's assets would be required to be
segregated to cover its potential obligations under its Strategic Transactions
other than with respect to futures and options thereon. The Target Fund's use of
financial futures and options thereon will in all cases be consistent with
applicable regulatory requirements and in particular the rules and regulations
of the Commodity Futures Trading Commission and will be entered into only for
bona fide hedging, risk management (including duration management) or other
portfolio management purposes. The Target Fund will not sell interest rate caps
or floors where it does not own securities or other instruments providing the
income stream the Fund may be obligated to pay. The Target Fund will not enter
into any swap, cap, floor or collar transaction unless, at the time of entering
into such transaction, the unsecured long-term debt of the counterparty,
combined with any credit enhancements, is rated at least A by S&P or Moody's or
has an equivalent rating from an NRSRO or is determined to be of equivalent
credit quality by the Adviser.
 
  The Acquiring Fund will not engage in interest rate and other hedging
transactions, including interest rate futures contracts and put and call options
on such futures contracts or financial instruments, for speculative purposes,
but only as a means to hedge risks associated with management of the Acquiring
Fund's portfolio. The Acquiring Fund will not sell interest rate caps or floors
that it does not own. The Acquiring Fund will not enter into swaps, caps or
floors if, on a net basis, the aggregate notional principal amount with respect
to such agreements exceeds the net assets of the Acquiring Fund. The Acquiring
Fund may write covered call options so long as it owns securities which are
acceptable for escrow purposes and may write secured put options, which means
that so long as the Acquiring Fund is obligated as a writer of a put option, it
will invest an amount, not less than the exercise price of the put option, in
eligible securities. The Acquiring Fund will only engage in OTC options
transactions with respect to U.S. Government securities with primary dealers
that have been specifically approved by the Board of Trustees of the Acquiring
Fund. The Acquiring Fund will engage in OTC options transactions with respect to
municipal securities only with dealers that have been specifically approved by
the Board of Trustees of the Acquiring Fund. The Acquiring Fund will not engage
in OTC options transactions if the amount invested by the Acquiring Fund in OTC
options and the amounts invested by the Acquiring Fund in illiquid securities or
required to be treated as illiquid would exceed 15% of the Acquiring Fund's
total assets. The Acquiring Fund will not engage in transac-
 
                                        26

 
tions in financial futures contracts or options thereon for speculation, but
only to attempt to hedge against changes in market conditions affecting the
values of securities which the Acquiring Fund holds or intends to purchase. When
futures contracts or options thereon are purchased to protect against a price
increase on securities intended to be purchased later, it is anticipated that at
least 75% of such intended purchases will be completed. When other futures
contracts or options thereon are purchased, the underlying value of such
contracts will at all times not exceed the sum of: (1) accrued profit on such
contracts held by the broker, (2) cash or high-quality money market instruments
set aside in an identifiable manner, and (3) cash proceeds from investments due
in 30 days.
 
  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.
 
  RATING AGENCY LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. For as long as
APS are rated by Moody's, a Fund will engage in transactions in options on
securities, futures contracts based on the Municipal Index or Treasury Bonds and
 
                                        27

 
options on such futures contracts only when consistent with the provisions set
forth in the Certificate of Vote of Trustees Establishing Preferred Shares of
each Fund (each a "Certificate of Vote"), unless it receives written
confirmation from Moody's that engaging in such transactions would not impair
the ratings then assigned to the APS by Moody's. For as long as APS are rated by
S&P, a Fund will not buy or sell futures contracts or options thereon or write
put options or call options on portfolio securities unless it receives written
confirmation from S&P that engaging in such transactions will not impair the
ratings then assigned to the APS by S&P, except that a Fund may buy and sell
futures contracts based on the Municipal Index or Treasury Bonds, may purchase
put and call options on such contracts and may write covered call options and
secured put options on portfolio securities (subject to certain limitations
described in such Fund's Certificate of Vote).
 
  "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 yields on the municipal securities obtained pursuant
to such transactions. Because the 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 the 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 that 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 Funds' investment objective, each Fund's policy with respect to investing
at least 80% of its net 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 Funds' outstanding voting
securities (defined in the
                                        28

 
1940 Act as the lesser of (i) more than 50% of the Funds' outstanding Common
Shares and of the APS, including any outstanding APS, voting by class, or (ii)
67% of the Funds' outstanding Common Shares and of the APS, including any
outstanding APS, 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 investment restrictions of the Acquiring Fund are set forth below. Except as
noted herein, the investment restrictions of the Target Fund are similar. The
Acquiring Fund may not:
 
   1. With respect to 75% of its 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 the Fund's total assets would be invested in
      securities of a single issuer or if as a result the Fund would hold more
      than 10% of the outstanding voting securities of any single issuer.
 
   2. Invest more than 25% of its total assets in a single industry; however, as
      described above the Fund may from time to time invest more than 25% of its
      total assets in a particular segment 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 hedging and risk management transactions or the writing of
      options.
 
   4. Borrow money, except for temporary or emergency purposes from banks or for
      repurchase of the Fund's Shares, and then only in an amount not exceeding
      one-third of the Fund's total assets, including the amount borrowed. The
      Fund will not mortgage, pledge or hypothecate any assets except in
      connection with a borrowing. The Fund will not purchase portfolio
      securities during any period that such borrowings exceed 5% of the total
      asset value of the Fund. Notwithstanding this investment restriction, the
      Fund may enter into "when issued" and "delayed delivery" transactions as
      described above.
 
   5. Make loans of money or property to any person, except to the extent the
      securities in which the Fund may invest are considered to be loans and
      except that the Fund may lend money or property in connection with
      maintenance
 
                                        29

 
      of the value of or the Fund's interest with respect to the securities
      owned by the Fund.
 
   6. Buy any securities "on margin." Neither the deposit of initial or
      variation margin in connection with hedging and risk management
      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 financial futures or options,
      except in connection with hedging or risk management transactions.
 
   8. Act as an underwriter of securities, except to the extent the Fund may be
      deemed to be an underwriter in connection with the sale of securities held
      in its portfolio.
 
   9. Make investments for the purpose of exercising control or participation in
      management, except to the extent that exercise by the Fund of its rights
      under agreements related to municipal securities would be deemed to
      constitute such control or participation and except that the Fund may
      purchase securities of other investment companies to the extent permitted
      by (i) 1940 Act, as amended from time to time, (ii) the rules and
      regulations promulgated by the Securities and Exchange Commission 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 issued by 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 Securities and Exchange
      Commission 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 Fund of its
      rights under agreements relating to municipal securities.
 
  12. Purchase or sell real estate, commodities or commodity contracts, except
      to the extent the municipal securities the Fund may invest in are
      considered to be interests in real estate, commodities or commodity
      contracts or to the extent the Fund exercises its rights under agreements
      relating to municipal securities (in which case the Fund may liquidate
      real estate acquired as a result of a default on a mortgage), and except
      to the extent that financial futures and related options the Fund may
      invest in are considered to be commodities or commodities contracts.
 
                                        30

 
  As a matter of operating policy (which means it can be changed by the Fund's
Board of Trustees without Shareholder vote), 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. See also the discussion under the heading "Proposal
1--Comparison of the Funds--Investment Objective and Policies--Municipal
Securities."
 
MANAGEMENT OF THE FUNDS
 
  THE BOARDS. The Board of Trustees 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 $103 billion under management or supervision as of July 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.
 
  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 managed assets, including assets attributable to
Preferred Shares. Effective November 1, 2004, the investment advisory fee paid
by each Fund was reduced from 0.60% to 0.55%. Subsequent to the Reorganization,
the Adviser will continue to receive compensation at the rate of 0.55% of the
average daily managed assets, including assets attributable to Preferred Shares,
of the combined fund. Because the fees paid to the Adviser are calculated on
managed 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 affiliates) provides accounting and legal services to each Fund. The
Adviser (or its affiliates) allocates the cost of such services to each Fund.
 
                                        31

 
  PORTFOLIO MANAGEMENT. Each Fund's portfolio is managed by members of the
Adviser's Municipal Fixed Income team. Current members of the team jointly and
primarily responsible for the day-to-day management of each Fund's portfolio are
Dennis Pietrzak, Executive Director of the Adviser, Robert W. Wimmel, Vice
President of the Adviser, and John R. Reynoldson, Executive Director of the
Adviser.
 
  Mr. Pietrzak has worked for the Adviser since 1995 and began managing the
Funds in 1995. Mr. Wimmel has worked for the Adviser since 1996 and began
managing the Funds in 2002. Mr. Reynoldson has worked for the Adviser since 1987
and began managing the Funds in 2002. Prior to October 2002, Messrs. Wimmel and
Reynoldson worked in an investment management capacity for the Adviser.
 
  Mr. Pietrzak is the lead portfolio manager of each Fund. Messrs. Wimmel and
Reynoldson are co-portfolio managers of each Fund. All team members are
responsible for 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
each 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 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
 
                                        32

 
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 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 one of the investment companies advised by the Adviser were
named as defendants in a class action complaint generally alleging that the
 
                                        33

 
defendants breached their duties of care to long-term shareholders of the
investment company by valuing portfolio securities at the closing prices of the
foreign exchanges on which they trade without accounting for significant market
information that became available after the close of the foreign exchanges but
before calculation of net asset value. As a result, the complaint alleged,
short-term traders were able to exploit stale pricing information to capture
arbitrage profits that diluted the value of shares held by long-term investors.
The complaint sought unspecified compensatory damages, punitive damages, fees
and costs. The case was recently dismissed with prejudice but remains subject to
appeals.
 
  The Adviser, an affiliate of 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. The court recently granted the Adviser and its affiliate's motion
to dismiss the complaint, subject to plaintiffs' right to amend. The trustees'
motion to dismiss is pending.
 
  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 court has
preliminarily approved a settlement agreement, 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 Fund. EquiServe Trust Company,
N.A., 250 Royall Street, Canton, Massachusetts, 02021, is the transfer agent,
dividend paying agent and registrar 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 APS of each
Fund.
 
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
                                        34

 
trustees. The table below sets forth the capitalization of the Target Fund and
the Acquiring Fund as of January 31, 2005, and the pro forma capitalization of
the combined fund as if the Reorganization had occurred on that date.
 
               CAPITALIZATION AS OF JANUARY 31, 2005 (UNAUDITED)
 


                                                  ACTUAL             PRO FORMA
                                         ------------------------   -----------
                                         VAN KAMPEN
                                         ADVANTAGE    VAN KAMPEN    VAN KAMPEN
                                         MUNICIPAL     MUNICIPAL     MUNICIPAL
                                           INCOME     OPPORTUNITY   OPPORTUNITY
                                           TRUST         TRUST         TRUST
                                         ----------   -----------   -----------
                                                           
NET ASSETS CONSIST OF (AMOUNTS IN
  THOUSANDS):
  Common Shares ($.01 par value)*.....    $    191     $    153      $    344
  Paid in surplus.....................     282,026      226,764       508,346
  Net unrealized appreciation.........      39,932       33,535        73,467
  Accumulated undistributed net
    investment income.................       2,842        1,062         3,904
  Accumulated net realized gain
    (loss)............................         763          949         1,712
  NET ASSETS APPLICABLE TO
    COMMON SHARES.....................     325,754      262,463       587,773**
  PREFERRED SHARES ($.01 par value,
    with liquidation preference of
    $25,000)*.........................     190,000      150,000       340,000
  NET ASSETS INCLUDING PREFERRED
    SHARES............................     515,754      412,463       927,773
NET ASSET VALUE PER COMMON SHARE......       17.05        17.09         17.08**

 
---------------
 
 * Based on the number of outstanding shares listed in "Outstanding Securities
   of the Funds" table below.
 
** Reflects a non-recurring cost associated with the Reorganization of
   approximately $444,000, with $220,000 to be borne by the Acquiring Fund and
   $220,000 to be borne by the Target Fund, assuming the Reorganization is
   approved and completed. See "Information about the Reorganization--Expenses
   of the Reorganization" for additional information.
 
                                        35

 
           OUTSTANDING SECURITIES OF THE FUNDS AS OF JANUARY 31, 2005
 


                                                                  AMOUNT OUTSTANDING
                                                 AMOUNT HELD      EXCLUSIVE OF AMOUNT
                                  AMOUNT       BY FUND FOR ITS         SHOWN IN
       TITLE OF CLASS           AUTHORIZED       OWN ACCOUNT        PREVIOUS COLUMN
       --------------           ----------     ---------------    -------------------
                                                         
Van Kampen Advantage
  Municipal Income Trust
  Common Shares.............      Unlimited           0               19,106,785
  Preferred Shares..........    100,000,000           0                    7,600
Van Kampen Municipal
  Opportunity Trust
  Common Shares.............      Unlimited           0               15,357,684
  Preferred Shares..........    100,000,000           0                    6,000

 
ADDITIONAL INFORMATION ABOUT COMMON SHARES OF THE FUNDS
 
  GENERAL. Common shareholders of a Fund are entitled to share equally in
dividends declared by such Fund's Board of Trustees payable to holders of the
Common Shares and in the net assets of such 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 accrued 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 the Funds through a registered broker-dealer on the NYSE or CHX, 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 for each full quarterly period
within each Fund's two most recent fiscal years and for the first fiscal quarter
of the current fiscal year of each Fund, along with the net asset value and
discount or premium to net asset value for each quotation.
 
                                        36

 


                                       VAN KAMPEN ADVANTAGE
                                      MUNICIPAL INCOME TRUST
                                      -----------------------
                                      NET ASSET     PREMIUM                 NET ASSET    PREMIUM
QUARTERLY PERIOD ENDING  HIGH PRICE     VALUE      (DISCOUNT)   LOW PRICE     VALUE     (DISCOUNT)
-----------------------  ----------   ---------    ----------   ---------   ---------   ----------
                                                                      
July 31, 2005.........     $15.23      $16.88         (9.77)%    $14.62      $16.83       (13.13)%
April 30, 2005........     $15.30      $17.21        (10.25)%    $14.13      $16.49       (14.31)%
January 31, 2005......     $15.21      $16.84         (9.68)%    $14.43      $16.51       (12.60)%
October 31, 2004......     $15.32      $16.91         (9.40)%    $14.82      $16.55       (10.45)%
July 31, 2004.........     $14.54      $16.24        (10.47)%    $13.86      $15.99       (13.32)%
April 30, 2004........     $17.15      $17.21         (0.35)%    $14.51      $16.27       (10.82)%
January 31, 2004......     $16.95      $17.21         (1.51)%    $16.06      $16.79        (4.35)%
October 31, 2003......     $16.35      $16.72         (2.21)%    $15.30      $16.20        (5.56)%
July 31, 2003.........     $17.31      $17.74         (2.42)%    $15.27      $16.19        (5.68)%
April 30, 2003........     $16.30      $17.06         (4.45)%    $15.51      $16.81        (7.73)%
January 31, 2003......     $15.84      $17.00         (6.82)%    $15.01      $16.63        (9.74)%

 


                                       VAN KAMPEN MUNICIPAL
                                         OPPORTUNITY TRUST
                                      -----------------------
                                      NET ASSET     PREMIUM                 NET ASSET    PREMIUM
QUARTERLY PERIOD ENDING  HIGH PRICE     VALUE      (DISCOUNT)   LOW PRICE     VALUE     (DISCOUNT)
-----------------------  ----------   ---------    ----------   ---------   ---------   ----------
                                                                      
July 31, 2005.........     $15.15      $16.99        (10.83)%    $14.64      $16.79       (12.81)%
April 30, 2005........     $15.50      $17.27        (10.25)%    $14.22      $16.50       (13.82)%
January 31, 2005......     $15.19      $16.87         (9.96)%    $14.51      $16.71       (13.17)%
October 31, 2004......     $15.31      $16.77         (8.71)%    $14.74      $16.43       (10.47)%
July 31, 2004.........     $14.74      $16.27         (9.40)%    $14.06      $16.04       (12.34)%
April 30, 2004........     $17.60      $17.50          0.57%     $14.70      $16.30        (9.82)%
January 31, 2004......     $17.14      $17.20         (0.35)%    $16.53      $17.07        (3.16)%
October 31, 2003......     $16.66      $17.01         (2.06)%    $15.79      $16.49        (4.24)%
July 31, 2003.........     $17.86      $18.03         (0.94)%    $15.98      $16.48        (3.03)%
April 30, 2003........     $16.94      $17.31         (2.14)%    $15.85      $16.98        (6.65)%
January 31, 2003......     $16.33      $17.72         (7.84)%    $15.55      $16.88        (7.88)%

 
  As of August 24, 2005, (i) the net asset value per share for Target Fund
Common Shares was $16.87 and the market price per share was $15.09, representing
a discount to net asset value of 9.69%, and (ii) the net asset value per share
for Acquiring Fund Common Shares was $16.93 and the market price per share was
$14.97, representing a discount to net asset value of 11.58%.
 
  The net asset value per share and the market price per share of common shares
of each Fund may fluctuate prior to the Closing Date. Depending on market
conditions immediately prior to the closing of the Reorganization, Acquiring
Fund Common Shares may trade at a larger or smaller discount to net asset value
than Target Fund Common Shares. This could result in the Acquiring Fund Common
Shares having a market value that is greater or less than the market value of
the Target Fund Common Shares at the time of the closing of the Reorganization.
 
  Common Shares of each Fund have traded at a discount to net asset value for
extended periods since each Fund's inception. In order to reduce or eliminate a
market value discount from net asset value, the Board of Trustees of each Fund
 
                                        37

 
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 either
Fund will, in fact, authorize a 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.
 
  DIVIDENDS AND DISTRIBUTIONS. The Funds' current policies with respect to
dividends and distributions relating to their respective 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 such 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 is required to allocate net capital gains and
other taxable income, if any, received by the Fund between its Fund's Common
Shares and the APS on a pro rata basis in the year for which such capital gains
and other income is realized.
 
  On July 31, 2005, common shareholders of the Target Fund received a monthly
dividend of $0.0760 per common share representing a distribution rate of 6.00%;
and common shareholders of the Acquiring Fund received a monthly dividend of
$0.0735 per common share representing a distribution rate of 5.83%. The level of
dividends paid by the Acquiring Fund after the Reorganization will depend on
market conditions and the ability of the Adviser to respond to such conditions,
among other factors.
 
  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 its Common Shares, unless at the time
of such declaration, (1) all accumulated Preferred Shares dividends have been
paid and (2) the value of the 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
accumulated and unpaid
 
                                        38

 
dividends thereon, whether or not earned or declared 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 a
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. The Plans
for the Target Fund and the Acquiring Fund are similar. Unless common
shareholders elect to participate in a Plan, common shareholders will receive
distributions of dividends and capital gains in cash. 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 Reorganization, a holder of shares of a Fund who currently receives
dividends in cash will continue to receive dividends in cash; all holders who
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. Target Fund APS and Acquiring Fund 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 such Fund out of funds legally
available therefor, at a rate per annum that may vary for successive dividend
periods. The APS of each Fund have a liquidation preference of $25,000 per
share. The net asset value per share of each Fund's Preferred Shares equals its
liquidation preference plus accumulated but unpaid dividends per share. Neither
Target Fund APS nor
                                        39

 
Acquiring Fund APS are traded on a stock exchange or over-the-counter. Holders
of each Fund's APS do not have preemptive rights to purchase any shares of APS,
or any other preferred shares that might be issued.
 
  SERIES. Under the 1940 Act, each Fund is permitted to have outstanding more
than one series of preferred shares so long as no single series has priority
over another to the distribution of assets of the Fund or the payment of
dividends. The Target Fund currently has four series of APS outstanding and the
Acquiring Fund currently has two series of APS outstanding. If the
Reorganization is approved and completed, the combined fund will have six series
of APS. The Acquiring Fund will issue Series C, Series D, Series E and Series F
APS in exchange for Target Fund APS. The aggregate liquidation preference of
each series will equal the aggregate liquidation preference of the existing
shares that the respective series replaces. The number of days in the regular
dividend period for each series, the number of shares in each series and the
liquidation preference per share will be similar to the existing preferred
shares.
 
  PURCHASE AND SALE. APS of the Acquiring Fund and APS of the Target Fund are
purchased or sold using similar procedures. The APS of the Funds generally are
purchased and sold through auctions conducted on a regular basis by Deutsche
Bank, as the auction agent for each Fund's APS (the "Auction Agent") unless the
applicable Fund elects, subject to certain limitations, to declare a special
dividend period. Unless otherwise permitted by the Funds, existing and potential
holders of each Fund's 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 for the APS of either Fund.
 
  Auctions are generally held every 28 days for each series of Target Fund APS
and every 28 days for each series of Acquiring Fund APS. As a result of the
Reorganization, the last dividend period for the Target Fund APS prior to the
Closing Date and the initial dividend period for the Acquiring Fund APS issued
in connection with the Reorganization after the Closing Date may be shorter than
the ordinary dividend period for such shares.
 
  DIVIDENDS AND DISTRIBUTIONS. The holders of the APS are entitled to receive,
when, as and if declared by the Board of Trustees of the Fund, out of funds
legally available therefore, cumulative cash dividends on their shares.
Dividends on a
 
                                        40

 
Fund's APS 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.
 
  The Acquiring Fund generally pays dividends on Acquiring Fund APS monthly at
the rate specified in the preceding auction. The Target Fund generally pays
dividends on Target Fund APS once every 28 days at the rate specified in the
preceding auction.
 
  Each Fund is required to allocate net capital gains and other taxable income,
if any, proportionately between its Common Shares and APS. The amount of taxable
income allocated to the APS depends upon the amount of such income realized by
each Fund.
 
  In normal circumstances, whenever a Fund intends to include any net capital
gains or other taxable income in any dividend on APS, such 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 each Fund's
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 such Fund will pay an additional dividend to offset
substantially the tax effect thereof.
 
  While the Funds normally utilize the auction procedures described above, each
Fund may utilize special dividend periods in certain circumstances to set the
dividend rate.
 
  DIVIDEND RATES. The following table provides information about the dividend
rates for each Fund's APS as of a recent auction date.
 


    AUCTION
 DIVIDEND DATE                     FUND                    RATE
 -------------                     ----                    ----
                                                    
  August 4, 2005        Target Fund APS--Series A         2.230%
 August 18, 2005        Target Fund APS--Series B         2.420%
  August 1, 2005        Target Fund APS--Series C         2.298%
  August 4, 2005        Target Fund APS--Series D         2.300%
 August 23, 2005       Acquiring Fund APS--Series A       2.479%
 August 18, 2005       Acquiring Fund APS--Series B       2.500%

 
  The dividend rates in effect at the closing of the Reorganization will be the
rates determined in the auction most recently preceding such closing.
 
  RATINGS. The Target Fund APS and Acquiring Fund APS have each been assigned a
rating of "AAA" from S&P and "Aaa" from Moody's. Each Fund intends that, so long
as its APS are outstanding, the composition of its portfolio will reflect
guidelines established by S&P and Moody's in connection with each Fund's
 
                                        41

 
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 APS, 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 APS, at any time, may change or withdraw any
such rating. As set forth in the Certificate of Vote of each Fund, 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 APS. For so long as any shares
of a Fund's APS 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 APS of each Fund are
similar. APS of each Fund are generally redeemable at the option of the Fund at
$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. APS 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 the Fund to
maintain asset coverage requirements for the APS specified by Moody's and S&P in
connection with their issuance of ratings on the APS. The liquidation preference
per share of each Fund's APS is $25,000.
 
                                        42

 
  LIQUIDATION RIGHTS. Upon any liquidation, dissolution or winding up of a Fund,
whether voluntary or involuntary, the holders of such Fund's APS will be
entitled to receive, out of the assets of the Fund in question available for
distribution to shareholders, before any distribution or payment is made upon
any of such Fund's Common Shares or any other capital shares of the Fund ranking
junior in right of payment upon liquidation to APS of $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
holders of APS will be entitled to no other payments except for any additional
dividends (as described above). If such assets of the Fund are insufficient to
make the full liquidation payment on the APS and liquidation payments on any
other outstanding class or series of preferred shares of the Fund ranking on a
parity with the APS as to payment upon liquidation, then such assets will be
distributed among the holders of APS 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 APS will not be
entitled to any further participation in any distribution of assets by such Fund
except for any additional dividends (which are more fully described below). 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 a Fund
shall not be deemed or construed to be a liquidation, dissolution or winding up
of such Fund for this purpose.
 
  ADDITIONAL INFORMATION. For additional information regarding APS of the
Acquiring Fund, Target Fund shareholders should consult the Certificate of Vote
of the Acquiring Fund attached as Appendix B to the Reorganization Statement of
Additional Information. Acquiring Fund APS issued in connection with the
Reorganization will be governed by the Certificate of Vote of the Acquiring
Fund, which, upon completion of the Reorganization, will be amended to reflect
the creation of new series and the issuance of additional Acquiring Fund APS.
 
GOVERNING LAW
 
  Each Fund is organized as a business trust under the laws of The Commonwealth
of Massachusetts. The Target Fund was organized on July 8, 1992 and commenced
operations on September 25, 1992; the Acquiring Fund was organized on February
21, 1992 and commenced operations on April 24, 1992.
 
  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
 
                                        43

 
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 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 such 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, the Funds' Declarations of Trust require the favorable vote of
the holders of at least 75%, in the case of the Target Fund, or 66 2/3%, in the
case of the Acquiring Fund, of the outstanding shares of each class of the Fund
in question 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 such Fund. The
transactions subject to these special approval requirements are: (i) the merger
or consolidation of a Fund or any subsidiary of a Fund with or into any
Principal Shareholder; (ii) the issuance of any securities of a Fund to any
Principal Shareholder for cash (except pursuant to the Plan); (iii) the sale,
lease or exchange of all or any substantial part of the assets of a Fund to any
Principal Shareholder (except assets having an aggregate fair market value of
less than
 
                                        44

 
$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 a Fund or any subsidiary
thereof, in exchange for securities of a 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 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 a Fund is liable to such Fund or to any
shareholder, nor is any trustee, officer, employee or agent liable to any third
persons in connection with the affairs of such 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 Fund property for satisfaction of claims arising in
connection with the affairs of a Fund. With the exceptions stated, the
Declaration of Trust provides that a trustee or officer is entitled to be
indemnified against all liability in connection with the affairs of a 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
such Fund, and (b) the lesser of (i) more than 50% of such 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 a 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 such 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
 
                                        45

 
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.
Holders of each Fund's Common Shares are entitled to one vote for each share
held. Except as set forth herein, 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, holders of Preferred Shares have no voting
rights. When holders of a Fund's Preferred Shares 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 Certificate of Vote of each Fund provides that such Fund shall not take
certain actions relating to the preferences, rights or powers of holders of such
Fund's Preferred Shares without the affirmative vote of the holders of a
majority of the outstanding Preferred Shares. Additionally, if a Fund has more
than one series of Preferred Shares outstanding, an affirmative vote of a
majority of the outstanding shares of each series of Preferred Shares, each
voting separately as a class, is required with respect to any matter that
materially affects the series in a manner different from that of other series of
such Fund's Preferred Shares. The specific provisions of each Fund's Certificate
of Vote with respect to the voting rights of holders of Preferred Shares may
differ and Target Fund shareholders should consult the Certificate of Vote
governing the Acquiring Fund APS, included as Appendix B to the Reorganization
Statement of Additional Information.
 
                                        46

 
FINANCIAL HIGHLIGHTS
 
  TARGET FUND. The following schedule presents financial highlights for one
Target Fund Common Share outstanding throughout the periods indicated.


                                                   YEAR ENDED OCTOBER 31,
                                     --------------------------------------------------
                                      2004      2003      2002(A)     2001       2000
                                      ----      ----      -------     ----       ----
                                                                
NET ASSET VALUE, BEGINNING OF THE
 PERIOD............................  $ 16.72   $ 16.77    $ 16.80    $ 15.52   $  14.87
                                     -------   -------    -------    -------   --------
 Net Investment Income.............     1.13      1.17       1.21       1.23       1.24
 Net Realized and Unrealized
   Gain/Loss.......................      .26      (.01)      (.05)      1.18        .68
 Common Share Equivalent of
   Distributions Paid to Preferred
   Shareholders:
   Net Investment Income...........     (.11)     (.10)      (.14)      (.34)      (.40)
   Net Realized Gain...............     (.01)      -0-        -0-        -0-        -0-
                                     -------   -------    -------    -------   --------
Total from Investment Operations...     1.27      1.06       1.02       2.07       1.52
Distributions Paid to Common
 Shareholders:
   Net Investment Income...........    (1.05)    (1.11)     (1.05)      (.79)      (.87)
   Net Realized Gain...............     (.07)      -0-        -0-        -0-        -0-
                                     -------   -------    -------    -------   --------
NET ASSET VALUE, END OF THE
 PERIOD............................  $ 16.87   $ 16.72    $ 16.77    $ 16.80   $  15.52
                                     =======   =======    =======    =======   ========
Common Share Market Price at End of
 the Period........................  $ 15.20   $ 16.20    $ 15.46    $ 14.35   $12.9375
Total Return(b)....................     0.81%    12.30%     15.28%     17.27%      6.86%
Net Assets Applicable to Common
 Shares at End of the Period (In
 millions).........................  $ 322.3   $ 319.5    $ 320.4    $ 320.9   $  296.5
Ratio of Expenses to Average Net
 Assets Applicable to Common
 Shares(c).........................     1.31%     1.32%      1.46%      1.61%      1.75%
Ratio of Net Investment Income to
 Average Net Assets Applicable to
 Common Shares(c)..................     6.75%     6.99%      7.26%      7.56%      8.34%
Portfolio Turnover.................       28%       27%        40%        32%        26%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
 Assets Including Preferred
 Shares(c).........................      .82%      .83%       .91%      1.00%      1.05%
Ratio of Net Investment Income to
 Average Net Assets Applicable to
 Common Shares(d)..................     6.11%     6.37%      6.40%      5.44%      5.61%
SENIOR SECURITIES:
Total Preferred Shares
 Outstanding.......................    7,600     7,600      7,600      7,600      7,600
Asset Coverage Per Preferred
 Share(e)..........................  $67,420   $67,049    $67,170    $67,225   $ 64,014
Involuntary Liquidating Preference
 Per Preferred Share...............  $25,000   $25,000    $25,000    $25,000   $ 25,000
Average Market Value Per Preferred
 Share.............................  $25,000   $25,000    $25,000    $25,000   $ 25,000
 

                                                    YEAR ENDED OCTOBER 31,
                                     ----------------------------------------------------
                                       1999       1998       1997       1996       1995
                                       ----       ----       ----       ----       ----
                                                                  
NET ASSET VALUE, BEGINNING OF THE
 PERIOD............................  $  16.93   $  16.35   $  15.68   $  15.61   $  13.99
                                     --------   --------   --------   --------   --------
 Net Investment Income.............      1.22       1.25       1.26       1.29       1.33
 Net Realized and Unrealized
   Gain/Loss.......................     (2.06)       .59        .72        .16       1.70
 Common Share Equivalent of
   Distributions Paid to Preferred
   Shareholders:
   Net Investment Income...........      (.32)      (.35)      (.35)      (.36)      (.39)
   Net Realized Gain...............       -0-        -0-        -0-        -0-        -0-
                                     --------   --------   --------   --------   --------
Total from Investment Operations...     (1.16)      1.49       1.63       1.09       2.64
Distributions Paid to Common
 Shareholders:
   Net Investment Income...........      (.90)      (.91)      (.96)     (1.02)     (1.02)
   Net Realized Gain...............       -0-        -0-        -0-        -0-        -0-
                                     --------   --------   --------   --------   --------
NET ASSET VALUE, END OF THE
 PERIOD............................  $  14.87   $  16.93   $  16.35   $  15.68   $  15.61
                                     ========   ========   ========   ========   ========
Common Share Market Price at End of
 the Period........................  $12.9375   $15.8125   $15.0625   $  14.75   $ 14.375
Total Return(b)....................    -13.16%     11.33%      8.96%      9.88%     21.06%
Net Assets Applicable to Common
 Shares at End of the Period (In
 millions).........................  $  284.1   $  323.4   $  312.5   $  299.7   $  298.3
Ratio of Expenses to Average Net
 Assets Applicable to Common
 Shares(c).........................      1.66%      1.64%      1.66%      1.72%      1.72%
Ratio of Net Investment Income to
 Average Net Assets Applicable to
 Common Shares(c)..................      7.55%      7.48%      7.99%      8.31%      8.94%
Portfolio Turnover.................        33%        30%        49%        37%        79%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
 Assets Including Preferred
 Shares(c).........................      1.03%      1.03%      1.02%      1.05%      1.03%
Ratio of Net Investment Income to
 Average Net Assets Applicable to
 Common Shares(d)..................      5.56%      5.35%      5.76%      5.99%      6.31%
SENIOR SECURITIES:
Total Preferred Shares
 Outstanding.......................     7,600      3,800      3,800      3,800      3,800
Asset Coverage Per Preferred
 Share(e)..........................  $ 62,388   $135,105   $132,234   $128,865   $128,498
Involuntary Liquidating Preference
 Per Preferred Share...............  $ 25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000
Average Market Value Per Preferred
 Share.............................  $ 25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000

 
---------------
(a) As required, effective November 1, 2001, the Trust has adopted the
    provisions of the AICPA Audit and Accounting Guide for Investment Companies
    and began accreting market discount on fixed income securities. The effect
    of this change for the year ended October 31, 2002 was to increase net
    investment income per share by $.02, decrease net realized and unrealized
    gains and losses by $.02 and increase the ratio of net investment income to
    average net assets applicable to common shares by .11%. Per share, ratios,
    and supplemental data for periods prior to October 31, 2002 have not been
    restated to reflect this change in presentation.
 
(b) Total return assumes an investment at the common share market price at the
    beginning of the period indicated, reinvestment of all distributions for the
    period in accordance with the Trust's dividend reinvestment plan, and sale
    of all shares at the closing common share market price at the end of the
    period indicated.
 
(c) Ratios do not reflect the effect of dividend payments to preferred
    shareholders.
 
(d) Ratios reflect the effect of dividend payments to preferred shareholders.
 
(e) Calculated by subtracting the Trust's total liabilities (not including the
    preferred shares) from the Trust's total assets and dividing this by the
    number of preferred shares outstanding.
 
                                        47

 
  ACQUIRING FUND. The following schedule presents financial highlights for one
Acquiring Fund Common Share outstanding throughout the periods indicated.


                                                   YEAR ENDED OCTOBER 31,
                                     --------------------------------------------------
                                      2004      2003      2002(A)     2001       2000
                                      ----      ----      -------     ----       ----
                                                                
NET ASSET VALUE, BEGINNING OF THE
 PERIOD............................  $ 17.02   $ 17.48    $ 17.59    $ 16.29   $  15.67
                                     -------   -------    -------    -------   --------
 Net Investment Income.............     1.13      1.19       1.23       1.26       1.27
 Net Realized and Unrealized
   Gain/Loss.......................      .23       .09        .15       1.29        .65
 Common Share Equivalent of
   Distributions Paid to
 Preferred Shareholders:
   Net Investment Income...........     (.10)     (.08)      (.09)      (.32)      (.40)
   Net Realized Gain...............     (.02)     (.04)      (.08)      (.01)       -0-
                                     -------   -------    -------    -------   --------
Total from Investment Operations...     1.24      1.16       1.21       2.22       1.52
Distributions Paid to Common
 Shareholders:
   Net Investment Income...........    (1.08)    (1.16)     (1.08)      (.92)      (.90)
   Net Realized Gain...............     (.29)     (.46)      (.24)       -0-        -0-
                                     -------   -------    -------    -------   --------
NET ASSET VALUE, END OF THE
 PERIOD............................  $ 16.89   $ 17.02    $ 17.48    $ 17.59   $  16.29
                                     =======   =======    =======    =======   ========
Common Share Market Price at End of
 the Period........................  $ 15.20   $ 16.65    $ 16.04    $ 15.65   $13.6875
Total Return(b)....................    -0.60%    14.53%     11.36%     21.42%      8.28%
Net Assets Applicable to Common
 Shares at End of the Period (In
 millions).........................  $ 259.4   $ 261.3    $ 268.3    $ 270.0   $  250.1
Ratio of Expenses to Average Net
 Assets Applicable to Common
 Shares(c).........................     1.30%     1.28%      1.42%      1.58%      1.68%
Ratio of Net Investment Income to
 Average Net Assets Applicable to
 Common Shares(c)..................     6.74%     6.90%      7.17%      7.40%      8.04%
Portfolio Turnover.................       28%       36%        43%        34%        29%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
 Assets Including Preferred
 Shares(c).........................      .82%      .81%       .91%      1.00%      1.03%
Ratio of Net Investment Income to
 Average Net Assets Applicable to
 Common Shares(d)..................     6.15%     6.43%      6.61%      5.54%      5.49%
SENIOR SECURITIES:
Total Preferred Shares
 Outstanding.......................    6,000     6,000      6,000      6,000      6,000
Asset Coverage Per Preferred
 Share(e)..........................  $68,253   $68,560    $69,736    $70,006   $ 66,683
Involuntary Liquidating Preference
 Per Preferred Share...............  $25,000   $25,000    $25,000    $25,000   $ 25,000
Average Market Value Per Preferred
 Share.............................  $25,000   $25,000    $25,000    $25,000   $ 25,000
 

                                                   YEAR ENDED OCTOBER 31,
                                     ---------------------------------------------------
                                      1999       1998       1997       1996       1995
                                      ----       ----       ----       ----       ----
                                                                 
NET ASSET VALUE, BEGINNING OF THE
 PERIOD............................  $ 17.61   $  16.96   $  16.12   $  15.85   $  14.39
                                     -------   --------   --------   --------   --------
 Net Investment Income.............     1.25       1.26       1.26       1.27       1.28
 Net Realized and Unrealized
   Gain/Loss.......................    (1.97)       .64        .83        .27       1.58
 Common Share Equivalent of
   Distributions Paid to
 Preferred Shareholders:
   Net Investment Income...........     (.32)      (.35)      (.35)      (.36)      (.39)
   Net Realized Gain...............      -0-        -0-        -0-        -0-        -0-
                                     -------   --------   --------   --------   --------
Total from Investment Operations...    (1.04)      1.55       1.74       1.18       2.47
Distributions Paid to Common
 Shareholders:
   Net Investment Income...........     (.90)      (.90)      (.90)      (.91)     (1.01)
   Net Realized Gain...............      -0-        -0-        -0-        -0-        -0-
                                     -------   --------   --------   --------   --------
NET ASSET VALUE, END OF THE
 PERIOD............................  $ 15.67   $  17.61   $  16.96   $  16.12   $  15.85
                                     =======   ========   ========   ========   ========
Common Share Market Price at End of
 the Period........................  $ 13.50   $  16.50   $15.0625   $  13.75   $ 13.625
Total Return(b)....................   -13.29%     15.91%     16.54%      7.72%     12.70%
Net Assets Applicable to Common
 Shares at End of the Period (In
 millions).........................  $ 240.5   $  270.3   $  260.3   $  247.5   $  243.3
Ratio of Expenses to Average Net
 Assets Applicable to Common
 Shares(c).........................     1.62%      1.61%      1.64%      1.66%      1.75%
Ratio of Net Investment Income to
 Average Net Assets Applicable to
 Common Shares(c)..................     7.35%      7.25%      7.64%      7.96%      8.45%
Portfolio Turnover.................       30%        29%        49%        85%        70%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
 Assets Including Preferred
 Shares(c).........................     1.03%      1.03%      1.03%      1.03%      1.06%
Ratio of Net Investment Income to
 Average Net Assets Applicable to
 Common Shares(d)..................     5.48%      5.24%      5.51%      5.73%      5.87%
SENIOR SECURITIES:
Total Preferred Shares
 Outstanding.......................    6,000      3,000      3,000      3,000      3,000
Asset Coverage Per Preferred
 Share(e)..........................  $65,086   $140,098   $136,771   $132,502   $131,094
Involuntary Liquidating Preference
 Per Preferred Share...............  $25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000
Average Market Value Per Preferred
 Share.............................  $25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000

 
---------------
(a) As required, effective November 1, 2001, the Trust has adopted the
    provisions of the AICPA Audit and Accounting Guide for Investment Companies
    and began accreting market discount on fixed income securities. The effect
    of this change for the year ended October 31, 2002 was to increase net
    investment income by $.01, decrease net realized and unrealized gains and
    losses per share by $.01 and increase the ratio of net investment income to
    average net assets applicable to common shares by .03%. Per share, ratios
    and supplemental data for periods prior to October 31, 2002 have not been
    restated to reflect this change in presentation.
 
(b) Total return assumes an investment at the common share market price at the
    beginning of the period indicated, reinvestment of all distributions for the
    period in accordance with the Trust's dividend reinvestment plan, and sale
    of all shares at the closing common share market price at the end of the
    period indicated.
 
(c) Ratios do not reflect the effect of dividend payments to preferred
    shareholders.
 
(d) Ratios reflect the effect of dividend payments to preferred shareholders.
 
(e) Calculated by subtracting the Trust's total liabilities (not including the
    preferred shares) from the Trust's total assets and dividing this by the
    number of preferred shares outstanding.
 
                                        48

 
                      INFORMATION ABOUT THE REORGANIZATION
 
GENERAL
 
  Under the Reorganization Agreement (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 Fund, in exchange for Acquiring Fund Common
Shares and Acquiring Fund APS to be issued by the Acquiring Fund. The Acquiring
Fund will issue and cause to be listed on the NYSE and the CHX additional
Acquiring Fund Common Shares. The Acquiring Fund Common Shares issued to the
Target Fund will have an aggregate net asset value equal to the aggregate net
asset value of the Target Fund Common Shares less the costs of the
Reorganization. The Acquiring Fund APS issued to the Target Fund will have an
aggregate liquidation preference equal to the aggregate liquidation preference
of the Target Fund APS. Upon receipt by the Target Fund of such shares, the
Target Fund will (i) distribute the Acquiring Fund Common Shares to the holders
of Target Fund Common Shares and (ii) distribute the Acquiring Fund APS to the
holders of Target Fund APS. As soon as practicable after the Closing Date for
the Reorganization, the Target Fund will deregister as an investment company
under the 1940 Act and dissolve under applicable state law.
 
  The Target Fund will distribute the Acquiring Fund Common Shares and the
Acquiring Fund APS received by it pro rata to its holders of record of Target
Fund Common Shares and Target Fund APS, as applicable, in exchange for such
shareholders' shares in the Target Fund. 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 Fund 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 Fund. Each
newly-opened account on the books of the Acquiring Fund for the former common
shareholders of the Target Fund will represent the respective pro rata number of
Acquiring Fund Common Shares (rounded down, in the case of fractional shares
held in an account other than a 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 Dividend Reinvestment Plan account).
In the event of fractional shares held in an account other than a Dividend
Reinvestment Plan account, the Acquiring Fund's transfer agent will aggregate
all fractional Acquiring Fund Common Shares and sell the resulting whole shares
on the NYSE for the account of all holders of 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 APS would represent the respective pro
rata number of Acquiring Fund APS
                                        49

 
due such shareholder. See "Terms of the Reorganization Agreement--Surrender and
Exchange of Share Certificates" below for a description of the procedures to be
followed by Target Fund 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 Reorganization, every holder of Target Fund Common Shares
would 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
less the costs of the Reorganization. Since the Acquiring Fund Common Shares
will be issued at net asset value in exchange for the net assets of the 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 Reorganization except for its
share of the reorganization costs. Similarly, the aggregate liquidation
preference of the Acquiring Fund APS to be issued to the Target Fund will equal
the aggregate liquidation preference of the Target Fund APS. Each holder of
Target Fund APS would receive Acquiring Fund APS that would have an aggregate
liquidation preference immediately after the Closing Date equal to the aggregate
liquidation preference of that shareholder's Target Fund APS immediately prior
to the Closing Date. The liquidation preference per share of the Acquiring Fund
APS will remain unchanged by the Reorganization. Thus, the Reorganization will
result in no dilution of net asset value of the Target Fund Common Shares or
Acquiring Fund Common Shares, other than to reflect the costs of the
Reorganization, and will result in no dilution of the value per share of
Acquiring Fund APS or Target Fund APS. However, as a result of the
Reorganization, a shareholder of either Fund will hold a reduced percentage of
ownership in the larger combined entity than he or she did in either of the
separate Funds.
 
  No sales charge or fee of any kind will be charged to shareholders of the
Target Fund in connection with their receipt of Acquiring Fund Common Shares or
Acquiring Fund APS in the Reorganization. Holders of Target Fund APS will find
that the auction dates and dividend payment dates for the Acquiring Fund APS
received in the Reorganization are ordinarily (i.e., except in the case of a
special dividend period) on a 28 day schedule, similar to the schedule of
dividend payment dates for Target Fund APS. The auction procedures for the
Acquiring Fund APS and the Target Fund APS are similar. As a result of the
Reorganization, the last dividend period for the Target Fund APS prior to the
Closing Date and the initial dividend period for the Acquiring Fund APS issued
in connection with the Reorganization after the Closing Date may be shorter than
the ordinary dividend period for such shares.
 
                                        50

 
TERMS OF THE REORGANIZATION AGREEMENT
 
  The following is a summary of the significant terms of the Reorganization
Agreement. 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 respective 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 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 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
                                        51

 
Fund Common Shares, together with cash in lieu of any fractional Acquiring Fund
Common Shares held in an account other than a 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 in an account other than 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 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,
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 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 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, and cash in lieu of fractional shares, if applicable,
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.
 
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
 
  The following is a general summary of the material anticipated U.S. federal
income tax consequences of the Reorganization. The discussion is based upon the
                                        52

 
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 the 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 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 Reorganization. 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 Reorganization, as well as the
effects of state, local and non-U.S. tax laws.
 
  It is a condition to closing the Reorganization that each of the Target Fund
and the Acquiring Fund receives an opinion from Skadden, Arps, Slate, Meagher &
Flom LLP ("Skadden Arps"), dated as of the Closing Date, regarding the
characterization of the 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 the Reorganization can be summarized as
follows:
 
    - No gain or loss will be recognized by the 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 the 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 the Reorganization
      (except with respect to cash received in lieu of a fractional share of the
      Acquiring Fund, as discussed below) or all of his, her or its Target Fund
      APS for Acquiring Fund APS pursuant to the 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 the Target Fund
      pursuant to the 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).
 
                                        53

 
    - The holding period of the Acquiring Fund Common Shares or Acquiring Fund
      APS, as the case may be, received by a shareholder of the Target Fund
      pursuant to the Reorganization will include the holding period of the
      shares of the Target Fund surrendered in exchange therefor.
 
    - A shareholder of the 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 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 the Target Fund's assets received by the
      Acquiring Fund pursuant to the Reorganization will equal the tax basis of
      such assets in the hands of the Target Fund immediately prior to the
      Reorganization, and the Acquiring Fund's holding period of such assets
      will include the period during which the assets were held by the 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 the Target Fund
and its 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 Fund and assume, among other things, that the Reorganization will be
consummated in accordance with the Reorganization Agreement 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 the Target Fund (as amended to date and
including the Certificate of Vote of the Target Fund), relevant Massachusetts
law and the applicable rules of the NYSE and CHX, shareholder approval of the
Reorganization Agreement requires the affirmative vote of shareholders of the
Target Fund representing more than 50% of the outstanding Target Fund Common
Shares and Target Fund APS present in person or represented by proxy and
entitled to vote, each voting separately as a class.
 
                                        54

 
 ------------------------------------------------------------------------------
        PROPOSAL 2: ISSUANCE OF ADDITIONAL ACQUIRING FUND COMMON SHARES
 ------------------------------------------------------------------------------
 
  Pursuant to the Reorganization Agreement, which is described more fully under
"Proposal 1: Reorganization of the Target Fund" herein, the Acquiring Fund will
acquire substantially all of the assets and assume substantially all of the
liabilities of the Target Fund in exchange for Acquiring Fund Common Shares and
Acquiring Fund APS. The Target Fund will distribute Acquiring Fund Common Shares
to holders of Target Fund Common Shares and Acquiring Fund APS to holders of
Target Fund APS, 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 the Reorganization will
benefit holders of Acquiring Fund Common Shares.
 
  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 holders of Target Fund Common Shares may receive cash
for their fractional shares). The aggregate liquidation preference of Acquiring
Fund APS received in the Reorganization will equal the aggregate liquidation
preference of Target Fund APS held immediately prior to the Reorganization. The
Reorganization will result in no dilution of net asset value of the Acquiring
Fund Common Shares, other than to reflect the costs of the Reorganization. No
gain or loss will be recognized by the Acquiring Fund or its shareholders in
connection with 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.
 
  In connection with the Reorganization and as contemplated by the
Reorganization Agreement, the Acquiring Fund will issue additional Acquiring
Fund Common Shares and list such shares on the NYSE and the CHX. While
applicable state and federal law does not require the shareholders of the
Acquiring Fund to approve the Reorganization, applicable NYSE and CHX 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
Reorganization.
 
SHAREHOLDER APPROVAL
 
  Shareholder approval of the issuance of additional Acquiring Fund Common
Shares requires the affirmative vote of a majority of the votes cast on the
proposal, provided that the total votes cast on the proposal represents more
than 50% in interest of all securities entitled to vote on the proposal. For
more information regarding voting requirements, see the section entitled "Other
Information--Voting Information and Requirements" below.
 
                                        55

 
------------------------------------------------------------------------------
                               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 Board of Trustees of each Fund has 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, the Target Fund had outstanding 19,106,785
Target Fund Common Shares and 7,600 Target Fund APS and the Acquiring Fund had
outstanding 15,357,684 Acquiring Fund Common Shares and 6,000 Acquiring Fund
APS.
 
  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 applicable Fund 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
 
                                        56

 
"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 the total Target Fund Common Shares
outstanding and a majority of the total Target Fund APS outstanding. 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 of each
class 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 TARGET FUND APS. Pursuant to the rules of
the NYSE, Target Fund APS 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 the Target Fund's Preferred Shares outstanding have voted on the
Reorganization and (ii) less than 10% of the Target Fund's Preferred Shares
outstanding have voted against the Reorganization. In such instance, the
broker-dealer firm will vote such uninstructed Target Fund APS on the
Reorganization in the same proportion as the votes cast by all holders of Target
Fund APS who voted on the Reorganization. The 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 the Target Fund exists.
 
                                        57

 
SHAREHOLDER INFORMATION
 
  ACQUIRING FUND.  As of July 29, 2005, to the knowledge of the Acquiring Fund,
no shareholder owned beneficially more than 5% of a class of the Acquiring
Fund's outstanding shares.
 
  Except as set forth below, as of July 29, 2005, no trustees or executive
officers owned, directly or beneficially, Acquiring Fund Common Shares or
Acquiring Fund APS.
 


                                                        NUMBER OF COMMON
TRUSTEE                                                   SHARES OWNED
-------                                                 ----------------
                                                     
David C. Arch.........................................           350
Rod Dammeyer..........................................       113,394
Linda Hutton Heagy....................................           100
Craig Kennedy.........................................           100
Hugo Sonnenschein.....................................           300
Wayne W. Whalen.......................................           902
Suzanne Woolsey.......................................           350

 
  As of July 29, 2005, the trustees and executive officers of the Acquiring Fund
individually and as a group owned less than 1% of the outstanding shares of the
Acquiring Fund.
 
  TARGET FUND.  As of July 29, 2005, to the knowledge of the Target Fund, no
shareholder owned beneficially more than 5% of a class of the Target Fund's
outstanding shares.
 
  Except as set forth below, as of July 29, 2005, no trustees or executive
officers owned, directly or beneficially, Target Fund Common Shares or Target
Fund APS.
 


                                                        NUMBER OF COMMON
TRUSTEE                                                   SHARES OWNED
-------                                                 ----------------
                                                     
David C. Arch.........................................           300
Rod Dammeyer..........................................       187,794
Linda Hutton Heagy....................................           100
Craig Kennedy.........................................           100
Hugo Sonnenschein.....................................           350
Wayne W. Whalen.......................................           856

 
  As of July 29, 2005, the trustees and executive officers of the Target Fund
individually and as a group owned less than 1% of the outstanding shares of the
Target Fund.
 
                                        58

 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
  Section 30(f) of the 1940 Act and Section 16(a) of the Exchange Act 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 such Fund and reports of ownership and changes in ownership of
Fund shares. These persons and entities are required by SEC regulation to
furnish the 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,
except that Form 4 filings relating to transactions in common shares of the
Target Fund and the Acquiring Fund on behalf of Wayne W. Whalen, a trustee of
the Funds, inadvertently were not filed in a timely manner.
 
SHAREHOLDER PROPOSALS
 
  To be considered for presentation at a shareholders' 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 a 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 respective 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. Shareholder proposals intended to be
presented at the 2005 Annual Meeting of the Funds pursuant to Rule 14a-8 under
the Exchange Act must be received by the respective Fund at such Fund's
principal executive offices by August 16, 2005. In order for proposals made
outside of Rule 14a-8 under the Exchange Act to be considered "timely" within
the meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be
received by the respective Fund at such Fund's principal executive offices by
August 16, 2005. If the Reorganization of the Target Fund is approved and
completed prior to its 2005 Annual Meeting, the Target Fund will cease to exist
and will not hold its 2005 Annual Meeting.
 
SOLICITATION OF PROXIES
 
  Solicitation of proxies on behalf of the Funds is being made primarily by the
mailing of this Notice and Joint Proxy Statement/Prospectus with its enclosures
on
                                        59

 
or about September 6, 2005. Shareholders 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. The Funds have retained
Computershare Fund Services ("Computershare") to make telephone calls to
shareholders to remind them to vote. Computershare 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 Computershare
would cost approximately $32,026 for the Target Fund and $26,997 for the
Acquiring Fund. Proxy solicitation expenses are an expense of the Reorganization
which will be borne by the Target Fund and the Acquiring Fund in proportion to
their projected annual expense savings as a result of the Reorganization.
 
LEGAL MATTERS
 
  Certain legal matters concerning the federal income tax consequences of the
Reorganization 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 Fund and the Acquiring Fund. Wayne W. Whalen, a partner of Skadden Arps,
is a trustee of both the Target Fund 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 voted at
the session of the Special Meeting to be adjourned.
 
                                        60

 
  If you cannot be present in person at the Special Meeting, please fill in,
sign and return the enclosed proxy card promptly or please record your voting
instructions by telephone or via the internet. No postage is necessary if the
enclosed proxy card is mailed in the United States.
 
                                       Lou Anne McInnis
                                       Assistant Secretary
                                       Van Kampen Advantage
                                         Municipal Income Trust
                                       Van Kampen Municipal
                                         Opportunity Trust
September 2, 2005
 
                                        61

 
                                   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]

 
                      STATEMENT OF ADDITIONAL INFORMATION
 
          RELATING TO THE ACQUISITION OF THE ASSETS AND LIABILITIES OF
 
                  VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
                        BY AND IN EXCHANGE FOR SHARES OF
 
                     VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
                            DATED SEPTEMBER 2, 2005
 
     This Statement of Additional Information is available to the shareholders
of Van Kampen Advantage Municipal Income Trust (the "Target Fund") in connection
with a proposed transaction (the "Reorganization") whereby Van Kampen Municipal
Opportunity Trust (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 net asset 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 Fund will distribute Acquiring Fund Common Shares to holders of common
shares of the Target Fund ("Target Fund Common Shares") and Acquiring Fund APS
to holders of auction preferred shares of the Target Fund ("Target Fund APS"),
and will then terminate its registration 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 the 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 Proxy
Statement/Prospectus.
 
     This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Proxy Statement/Prospectus dated September 2, 2005
relating to the proposed Reorganization of the Target Fund into the Acquiring
Fund. A copy of the 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.

 
                               TABLE OF CONTENTS
 


                                                              Page
                                                              ----
                                                           
Trustees and Officers.......................................  S-1
Investment Advisory Agreement...............................  S-12
Other Agreements............................................  S-13
Fund Management.............................................  S-15
Code of Ethics..............................................  S-17
Portfolio Transactions and Brokerage Allocation.............  S-17
Other Information...........................................  S-20
Financial Statements........................................  S-20
Pro Forma Financial Statements..............................  S-20
Appendix A--Form of Agreement and Plan of Reorganization....  A-1
Appendix B--Certificate of Vote of Trustees.................  B-1
Appendix C--Annual Report of the Acquiring Fund.............  C-1
Appendix D--Annual Report of the Target Fund................  D-1
Appendix E--Semiannual Report of the Acquiring Fund.........  E-1
Appendix F--Semiannual Report of the Target Fund............  F-1
Appendix G--Proxy Voting Procedures.........................  G-1
Appendix H--Pro Forma Financial Statements..................  H-1


 
                             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 Fund share the same Board of
Trustees and executive officers. The tables below list the trustees and
executive officers of each Fund 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., 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              FUNDS         SERVED      DURING PAST 5 YEARS         BY TRUSTEE   HELD BY TRUSTEE
                                                                                        
David C. Arch (60)               Trustee      Trustee of the  Chairman and Chief              78       Trustee/Director/
Blistex Inc.                                  Funds since     Executive Officer of                     Managing General
1800 Swift Drive                              1992            Blistex Inc., a consumer                 Partner of funds in
Oak Brook, IL 60523                                           health care products                     the Fund Complex.
                                                              manufacturer. Director of
                                                              the 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 of the  Prior to January 1999,          76       Trustee/Director/
33971 Selva Road                              Funds since     Chairman and Chief                       Managing General
Suite 130                                     2003            Executive Officer of the                 Partner of funds in
Dana Point, CA 92629                                          Allstate Corporation                     the Fund Complex.
                                                              ("Allstate") and Allstate                Director of Amgen
                                                              Insurance Company. Prior                 Inc., a
                                                              to January 1995, President               biotechnological
                                                              and Chief Executive                      company, and Director
                                                              Officer of Allstate. Prior               of Valero Energy
                                                              to August 1994, various                  Corporation, an
                                                              management positions at                  independent refining
                                                              Allstate.                                company.

 
                                       S-1

 


                                                                                          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              FUNDS         SERVED      DURING PAST 5 YEARS         BY TRUSTEE   HELD BY TRUSTEE
                                                                                        
Rod Dammeyer+ (64)               Trustee      Trustee of the  President of CAC, L.L.C.,       78       Trustee/Director/
CAC, L.L.C.                                   Funds since     a private company offering               Managing General
4350 LaJolla Village Drive                    1992            capital investment and                   Partner of funds in
Suite 980                                                     management advisory                      the Fund Complex.
San Diego, CA 92122-6223                                      services. Prior to                       Director of
                                                              February 2001, Vice                      Stericycle, Inc.,
                                                              Chairman and Director of                 Ventana Medical
                                                              Anixter International,                   Systems, Inc., and
                                                              Inc., a global distributor               GATX Corporation, and
                                                              of wire, cable and                       Trustee of The
                                                              communications                           Scripps Research
                                                              connectivity products.                   Institute and the
                                                              Prior to July 2000,                      University of Chicago
                                                              Managing Partner of Equity               Hospitals and Health
                                                              Group Corporate Investment               Systems. Prior to
                                                              (EGI), a company that                    April 2004, Director
                                                              makes private investments                of TheraSense, Inc.
                                                              in other companies.                      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 (57)          Trustee      Trustee of the  Managing Partner of             76       Trustee/Director/
Heidrick & Struggles                          Funds since     Heidrick & Struggles, an                 Managing General
233 South Wacker Drive                        2003            executive search firm.                   Partner of funds in
Suite 7000                                                    Trustee on the University                the Fund Complex.
Chicago, IL 60606                                             of Chicago Hospitals
                                                              Board, Vice Chair of the
                                                              Board of the YMCA of
                                                              Metropolitan Chicago and a
                                                              member of the Women's
                                                              Board of the University of
                                                              Chicago. Prior to 1997,
                                                              Partner of Ray &
                                                              Berndtson, Inc., an
                                                              executive recruiting firm.
                                                              Prior to 1996, Trustee of
                                                              The International House
                                                              Board, a fellowship and
                                                              housing organization for
                                                              international graduate
                                                              students. Prior to 1995,
                                                              Executive Vice President
                                                              of ABN AMRO, N.A., a bank
                                                              holding company. Prior to
                                                              1990, Executive Vice
                                                              President of The Exchange
                                                              National Bank.

 
                                       S-2

 


                                                                                          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              FUNDS         SERVED      DURING PAST 5 YEARS         BY TRUSTEE   HELD BY TRUSTEE
                                                                                        

R. Craig Kennedy (53)            Trustee      Trustee of the  Director and President of       76       Trustee/Director/
1744 R Street, NW                             Funds since     the German Marshall Fund                 Managing General
Washington, DC 20009                          2003            of the United States, an                 Partner of funds in
                                                              independent U.S.                         the Fund Complex.
                                                              foundation created to
                                                              deepen understanding,
                                                              promote collaboration and
                                                              stimulate exchanges of
                                                              practical experience
                                                              between Americans and
                                                              Europeans. Formerly,
                                                              advisor to the Dennis
                                                              Trading Group Inc., a
                                                              managed futures and option
                                                              company that invests money
                                                              for individuals and
                                                              institutions. Prior to
                                                              1992, President and Chief
                                                              Executive Officer,
                                                              Director and member of the
                                                              Investment Committee of
                                                              the Joyce Foundation, a
                                                              private foundation.

Howard J Kerr (69)               Trustee      Trustee of the  Prior to 1998, President        78       Trustee/Director/
736 North Western Avenue                      Funds since     and Chief Executive                      Managing General
P.O. Box 317                                  1992            Officer of Pocklington                   Partner of funds in
Lake Forest, IL 60045                                         Corporation, Inc., an                    the Fund Complex.
                                                              investment holding                       Director of the Lake
                                                              company. Director of the                 Forest Bank & Trust.
                                                              Marrow Foundation.

Jack E. Nelson (69)              Trustee      Trustee of the  President of Nelson             76       Trustee/Director/
423 Country Club Drive                        Funds since     Investment Planning                      Managing General
Winter Park, FL 32789                         2003            Services, Inc., a                        Partner of funds in
                                                              financial planning company               the Fund Complex.
                                                              and registered investment
                                                              adviser in the State of
                                                              Florida. President of
                                                              Nelson Ivest Brokerage
                                                              Services Inc., a member of
                                                              the NASD, Securities
                                                              Investors Protection Corp.
                                                              and the Municipal
                                                              Securities Rulemaking
                                                              Board. President of Nelson
                                                              Sales and Services
                                                              Corporation, a marketing
                                                              and services company to
                                                              support affiliated
                                                              companies.


 
                                       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              FUNDS         SERVED      DURING PAST 5 YEARS         BY TRUSTEE   HELD BY TRUSTEE
                                                                                        
Hugo F. Sonnenschein+ (64)       Trustee      Trustee of the  President Emeritus and          78       Trustee/Director/
1126 E. 59th Street                           Funds since     Honorary Trustee of the                  Managing General
Chicago, IL 60637                             1994            University of Chicago and                Partner of funds in
                                                              the Adam Smith                           the Fund Complex.
                                                              Distinguished Service                    Director of Winston
                                                              Professor in the                         Laboratories, Inc.
                                                              Department of Economics at
                                                              the University of Chicago.
                                                              Prior to July 2000,
                                                              President of the
                                                              University of Chicago.
                                                              Trustee of the University
                                                              of Rochester and a member
                                                              of its investment
                                                              committee. Member of the
                                                              National Academy of
                                                              Sciences, the American
                                                              Philosophical Society and
                                                              a fellow of the American
                                                              Academy of Arts and
                                                              Sciences.

Suzanne H. Woolsey, Ph.D. (63)   Trustee      Trustee of the  Chief Communications            76       Trustee/Director/
815 Cumberstone Road                          Funds since     Officer of the National                  Managing General
Harwood, MD 20776                             2003            Academy of Sciences/                     Partner of funds in
                                                              National Research Council,               the Fund Complex.
                                                              an independent, federally                Director of Fluor
                                                              chartered policy                         Corp., an
                                                              institution, from 2001 to                engineering,
                                                              November 2003 and Chief                  procurement and
                                                              Operating Officer from                   construction
                                                              1993 to 2001. Director of                organization, since
                                                              the Institute for Defense                January 2004 and
                                                              Analyses, a federally                    Director of Neurogen
                                                              funded research and                      Corporation, a
                                                              development center,                      pharmaceutical
                                                              Director of the German                   company, since
                                                              Marshall Fund of the                     January 1998.
                                                              United States, Director of
                                                              the Rocky Mountain
                                                              Institute and Trustee of
                                                              Colorado College. Prior to
                                                              1993, Executive Director
                                                              of the Commission on
                                                              Behavioral and Social
                                                              Sciences and Education at
                                                              the National Academy of
                                                              Sciences/National Research
                                                              Council. From 1980 through
                                                              1989, Partner of Coopers &
                                                              Lybrand.

 
                                       S-4

 
                              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            FUNDS       SERVED    DURING PAST 5 YEARS                BY TRUSTEE   HELD BY TRUSTEE
                                                                                        
Mitchell M. Merin* (52)       Trustee and  Trustee of  President of funds in the Fund         76       Trustee/Director/
1221 Avenue of the Americas   President    the Funds   Complex. Chairman, President,                   Managing General
New York, NY 10020                         since       Chief Executive Officer and                     Partner of funds in
                                           2003;       Director of the Adviser and Van                 the Fund Complex.
                                           President   Kampen Advisors Inc. since
                                           of the      December 2002. Chairman,
                                           Funds       President and Chief Executive
                                           since 2002  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 of  Advisory Director of Morgan            78       Trustee/Director/
1221 Avenue of the Americas                the Funds   Stanley. Prior to December 2002,                Managing General
New York, NY 10020                         since 1999  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-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 INTERESTED TRUSTEE            FUNDS       SERVED    DURING PAST 5 YEARS                BY TRUSTEE   HELD BY TRUSTEE
                                                                                        
Wayne W. Whalen* (66)         Trustee      Trustee of  Partner in the law firm of             78       Trustee/Director/
333 West Wacker Drive                      the Funds   Skadden, Arps, Slate, Meagher &                 Managing General
Chicago, IL 60606                          since 1992  Flom LLP, legal counsel to funds                Partner of funds in
                                                       in the Fund Complex.                            the Fund Complex.
                                                                                                       Director of the
                                                                                                       Abraham Lincoln
                                                                                                       Presidential Library
                                                                                                       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-6

 
                                    OFFICERS
 


                                                     TERM OF
                                                    OFFICE AND
                                   POSITION(S)      LENGTH OF
NAME, AGE AND                       HELD WITH          TIME     PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER                    FUNDS           SERVED    DURING PAST 5 YEARS
                                                       

Ronald E. Robison (66)          Executive Vice      Officer of  Executive Vice President and Principal Executive Officer of
1221 Avenue of the Americas     President and       the Funds   Funds in the Fund Complex since May 2003. Chief Executive
New York, NY 10020              Principal           since 2003  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 of  Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas     President and       the Funds   Stanley Investment Advisors Inc., Morgan Stanley Investment
New York, NY 10020              Chief Investment    since 2002  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 of  Managing Director and General Counsel, U.S. Investment
1221 Avenue of the Americas                         the Funds   Management; Managing Director of Morgan Stanley Investment
New York, NY 10020                                  since 2004  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 of  Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas     and Secretary       the Funds   Vice President and Secretary of funds in the Fund Complex.
New York, NY 10020                                  since 2003

John L. Sullivan (50)           Chief Compliance    Officer of  Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza                Officer             the Funds   August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181                          since 1992  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.

Phillip G. Goff (41)            Chief Financial     Officer of  Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza                Officer and         the Funds   since June 2005. Chief Financial Officer and Treasurer of
Oakbrook Terrace, IL 60181      Treasurer           since 2005  funds in the Fund Complex since August 2005. Prior to June
                                                                2005, Vice President and Chief Financial Officer of
                                                                Enterprise Capital Management, Inc., an investment holding
                                                                company.

 
---------------
 
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 Van Kampen Funds Inc. (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 defer receipt of their
compensation until retirement and earn a return on such deferred
 
                                       S-7

 
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 is
set forth below for the periods described in the notes accompanying the table.
 
                               COMPENSATION TABLE
 


                                                                                Fund Complex
                                                       --------------------------------------------------------------
                                         Aggregate     Aggregate Pension   Aggregate Estimated
                         Aggregate      Compensation     or Retirement       Maximum Annual
                       Compensation       from the     Benefits Accrued     Benefits from the     Total Compensation
                      from the Target    Acquiring        as Part of          Fund Complex       before Deferral from
       Name(1)            Fund(2)         Fund(3)         Expenses(4)      Upon Retirement(5)      Fund Complex(6)
       -------        ---------------   ------------   -----------------   -------------------   --------------------
                                                                                  
INDEPENDENT TRUSTEES
David C. Arch             $4,359           $3,736          $ 35,277             $147,500               $192,530
Jerry D. Choate            6,007            5,092            82,527              126,000                200,002
Rod Dammeyer               4,365            3,742            63,782              147,500                208,000
Linda Hutton Heagy         5,806            4,891            24,465              142,500                184,784
R. Craig Kennedy           6,007            5,092            16,911              142,500                200,002
Howard J Kerr              4,565            3,942           140,743              146,250                208,000
Jack E. Nelson             6,007            5,092            97,294              109,500                200,002
Hugo F. Sonnenschein       4,565            3,942            64,476              147,500                208,000
Suzanne H. Woolsey         6,007            5,092            58,450              142,500                200,002

INTERESTED TRUSTEE
Wayne W. Whalen(1)         3,942            4,565            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 the Funds and certain other funds in the Fund
    Complex. Theodore A. Myers retired from the Board of Trustees of the Funds
    and other funds in the Fund Complex as of December 31, 2003. J. Miles
    Branagan retired as a member of the Board of Trustees of the Funds 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 the Target Fund's fiscal year ended October 31,
    2004. The
 
                                       S-8

 
    following Trustees deferred compensation from the Target Fund during the
    fiscal year ended October 31, 2004: Mr. Choate, $6,007; Mr. Dammeyer,
    $4,365; Ms. Heagy, $5,806; Mr. Nelson, $6,007; Mr. Sonnenschein, $4,565; and
    Mr. Whalen, $4,565. The cumulative deferred compensation (including
    interest) accrued with respect to each trustee from the Target Fund as of
    October 31, 2004 is as follows: Mr. Choate, $7,880; Mr. Dammeyer, $61,304;
    Ms. Heagy, $7,780; Mr. Kerr, $29,593; Mr. Nelson, $7,811; Mr. Sonnenschein,
    $53,372; and Mr. Whalen, $54,157. 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 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, $5,092; Mr.
    Dammeyer, $3,742; Ms. Heagy, $4,891; Mr. Nelson, $5,092; Mr. Sonnenschein,
    $3,942; and Mr. Whalen, $3,942. The cumulative deferred compensation
    (included interest) accrued with respect to each trustee from the Acquiring
    Fund as of October 31, 2004 is as follows: Mr. Choate, $6,697; Mr. Dammeyer,
    $56,270; Ms. Heagy, $6,583; Mr. Kerr, $29,169; Mr. Nelson, $6,638; Mr.
    Sonnenschein, $49,045; and Mr. Whalen, $49,442. The deferred compensation
    plan is described above the Compensation Table.
 
(4) 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.
 
(5) 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.
 
(6) 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 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.
 
     The 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. The audit committee
makes recommendations to the Board of Trustees concerning the selection of the
Funds' independent registered public accounting firm, reviews
 
                                       S-9

 
with such independent registered public accounting firm the scope and results of
the Funds' annual audit and considers any comments which the independent
registered public accounting firm may have regarding the Funds' financial
statements, books of account or internal controls. The Board of Trustees has
adopted a formal written charter for the audit committee which sets forth the
audit committee's responsibilities. The audit committee has reviewed and
discussed the financial statements of the Funds with management as well as with
the independent registered public accounting firm of the Funds, and discussed
with the independent registered public accounting firm the matters required to
be discussed under the Statement of Auditing Standards No. 61. The 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, the audit
committee recommended to the Board of Trustees of the Funds that the Funds'
audited financial statements be included in the Funds' annual reports to
shareholders for the most recent fiscal year for filing with the SEC.
 
     The Board's brokerage and services committee consists of Linda Hutton
Heagy, Hugo F. Sonnenschein and Suzanne H. Woolsey. The brokerage and services
committee reviews the Fund's allocation of brokerage transactions and
soft-dollar practices.
 
     The 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. The governance
committee identifies individuals qualified to serve as Independent Trustees on
the Board and on committees of the Board, advises the Board with respect to
Board composition, procedures and committees, develops and recommends to the
Board a set of corporate governance principles applicable to the Funds, monitors
corporate governance matters and makes recommendations to the 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 the Funds select and nominate any other nominee Independent Trustees for the
Funds. While the Independent Trustees of the Funds expect to be able to continue
to identify from their own resources an ample number of qualified candidates for
the Board of Trustees as they deem appropriate, they will consider nominations
from shareholders to the Board. Nominations from shareholders should be in
writing and sent to the respective Fund's 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 the Funds' last fiscal year, the Board of Trustees held 16 meetings.
During the Funds' last fiscal year, the audit committee of the Board held 5
meetings, the brokerage and services committee of the Board held 4 meetings and
the governance committee of the Board held 5 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 the Funds beneficially
 
                                       S-10

 
owned equity securities of the Funds 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 the Target Fund................    $1-      none      over      $1-       $1-      none     none        $1-         none
                                     $10,000            $100,000  $10,000   $10,000                       $10,000
Dollar range of equity securities
 in the Acquiring Fund.............    $1-      none    $50,001-    $1-       $1-      none     none        $1-         $1-
                                     $10,000            $100,000  $10,000   $10,000                       $10,000     $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 the Target Fund........    none      none    $10,001-
                                                                                  $50,000
Dollar range of equity securities in the Acquiring Fund.....    none      none    $10,001-
                                                                                  $50,000
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-11

 
     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 Funds had in
the aggregate, combining beneficially owned equity securities and deferred
compensation of the Funds 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 the Target
 Fund...........................    $1-       none      over      $1-       $1-       none      none        $1-         none
                                  $10,000             $100,000  $10,000   $10,000                         $10,000
Dollar range of equity
 securities and deferred
 compensation in the Acquiring
 Fund...........................    $1-       none      over      $1-       $1-       none      none        $1-         $1-
                                  $10,000             $100,000  $10,000   $10,000                         $10,000     $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    $50,001-    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 the Target
 Fund...........................    none       none     $10,001-
                                                        $50,000
Dollar range of equity
 securities and deferred
 compensation in the Acquiring
 Fund...........................    none       none     $10,001-
                                                        $50,000
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 an Advisory Agreement, each 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 the 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.
Each 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 Preferred Shares, custodian fees, legal and independent 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
 
                                       S-12

 
persons of Van Kampen Investments, the Adviser or Van Kampen Funds Inc.) and all
other ordinary business expenses not specifically assumed by the Adviser. The
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 the
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, 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 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 considered the extent to which
any economies of scale experienced by the Adviser are shared with a Fund's
shareholders, and the propriety of alternative breakpoints in a Fund's advisory
fee schedule. The Board of Trustees considered comparative advisory fees of a
Fund and other investment companies at different asset levels. The Board of
Trustees 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 discussed the financial strength of the Adviser and its affiliated
companies and the capability of the personnel of the Adviser. The Board of
Trustees reviewed the statutory and regulatory requirements for approval of
advisory agreements. The Board of Trustees, 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
 
     The Adviser received the approximate advisory fees from each Fund as
follows:
 


                                                FISCAL YEAR ENDED OCTOBER 31,
                                             ------------------------------------
                                                2004         2003         2002
                                             ----------   ----------   ----------
                                                              
Acquiring Fund.............................  $2,443,896   $2,481,620   $2,478,266
Target Fund................................  $3,053,266   $3,072,652   $3,039,099

 
                                OTHER AGREEMENTS
 
THE ADMINISTRATIVE SERVICES AGREEMENT
 
     Each Fund was a party to an administrative services agreement. The
administrative services provided by Van Kampen Funds Inc. (the "Administrator")
included record
 
                                       S-13

 
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 daily net assets of each Fund.
Effective June 1, 2004, the administrative 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
 
     The Administrator received the approximate administrative services fees
from each Fund as follows:
 


                                                 FISCAL YEAR ENDED OCTOBER 31,
                                                --------------------------------
                                                  2004        2003        2002
                                                --------    --------    --------
                                                               
Acquiring Fund...............................   $119,262    $206,802    $534,761
Target Fund..................................   $148,842    $256,053    $655,615

 
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 the Funds
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
 
     The Adviser received the approximate accounting services fees from each
Fund as follows:
 


                                                          FISCAL YEAR ENDED
                                                             OCTOBER 31,
                                                     ---------------------------
                                                      2004      2003      2002
                                                     -------   -------   -------
                                                                
Acquiring Fund.....................................  $23,898   $26,731   $28,000
Target Fund........................................  $27,439   $31,230   $32,576

 
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
 
                                       S-14

 
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
 
     Van Kampen Investments received the approximate legal services fees from
each Fund as follows:
 


                                                  FISCAL YEAR ENDED OCTOBER 31,
                                                 -------------------------------
                                                  2004        2003        2002
                                                 -------     -------     -------
                                                                
Acquiring Fund.................................  $16,879     $17,464     $14,617
Target Fund....................................  $20,165     $18,870     $14,318

 
                                FUND MANAGEMENT
 
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
 
     As of October 31, 2004, Dennis Piectrzak managed 16 registered investment
companies with a total of approximately $4.4 billion in assets; 0 pooled
investment vehicles other than registered investment companies; and 0 other
accounts.
 
     As of October 31, 2004, Robert W. 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-15

 
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 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 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 a 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.
 
     - Contribution to the business objectives of the Adviser.
 
     - The dollar amount of assets managed by the portfolio manager.
 
                                       S-16

 
     - 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 the end of each Fund's most recently completed fiscal year, none of
the portfolio managers owned securities of either fund.
 
                                 CODE OF ETHICS
 
     The Funds and the Adviser 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 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
 
                                       S-17

 
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 to the Fund 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 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
 
                                       S-18

 
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, a Fund paid no commissions to affiliated
brokers during the last three fiscal years. Each Fund paid the following
commissions to brokers during the fiscal years shown:
 


                                                           AFFILIATED BROKERS
                                           ALL BROKERS   MORGAN STANLEY DW INC.
                                           -----------   ----------------------
                                                   
COMMISSIONS PAID:
  Fiscal year ended October 31, 2004:
     Target Fund.........................   $ 16,642              -0-
     Acquiring Fund......................   $ 21,086              -0-
  Fiscal year ended October 31, 2003:
     Target Fund.........................   $ 19,848              -0-
     Acquiring Fund......................   $ 13,997              -0-
  Fiscal year ended October 31, 2002:
     Target Fund.........................   $  2,155              -0-
     Acquiring Fund......................   $  1,237              -0-
FISCAL YEAR 2004 PERCENTAGES
  Commissions with affiliate to total
     commissions:
     Target Fund......................................            -0-
     Acquiring Fund...................................            -0-
  Value of brokerage transactions with
     affiliate to total transactions:
     Target Fund......................................            -0-
     Acquiring Fund...................................            -0-

 
                                       S-19

 
     During the fiscal year ended October 31, 2004, neither Fund 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 E to
this Statement of Additional Information. A copy of each Fund's proxy voting
record filed with the SEC is available (i) without charge on our web site at
www.vankampen.com and (ii) 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 Deloitte & Touche LLP, located at 111 South Wacker Drive, Chicago,
Illinois 60606, to be each Fund's independent registered public accounting firm.
 
                              FINANCIAL STATEMENTS
 
     Incorporated herein by reference and included 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 C hereto, (ii)
the audited financial statements of the Target Fund for fiscal year ended
October 31, 2004, as included in Appendix D hereto, (iii) the unaudited
semi-annual financial statements of the Acquiring Fund for the period ended
April 30, 2005, as included in Appendix E hereto, and (iv) the unaudited
semi-annual financial statements of the Target Fund for the period ended April
30, 2005, as included in Appendix F hereto.
 
                         PRO FORMA FINANCIAL STATEMENTS
 
     Set forth in Appendix H 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-20

                                   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
                  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 Deloitte & Touche LLP, 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 5(d) 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 6 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) 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


                                      A-2


                  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.

                                      A-3




         (b)      The Target Fund is duly registered under the 1940 Act as a
                  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 Deloitte & Touche LLP, 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

   

                                       A-4



                  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 annual
                  expense savings, 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
                                                          Federal Identification

                                                                  No. 36-3810337

                        THE COMMONWEALTH OF MASSACHUSETTS

                 Office of the Massachusetts Secretary of State
                         Michael J. Connolly, Secretary
                    One Ashburton Place, Boston, Mass. 02108

                  CERTIFICATE OF VOTE OF TRUSTEES ESTABLISHING
                         TWO SERIES OF PREFERRED SHARES


     I, Ronald A. Nyberg, Secretary, of Van Kampen Merritt Municipal Opportunity

Trust (the "Fund") located at One Parkview Plaza, Oakbrook Terrace, IL 60181, do

hereby certify that at a meeting of the trustees of the Fund held on May 14,

1992, the following vote establishing and designating two series of preferred

shares of beneficial interest and determining the relative rights and

preferences thereof was duly adopted:

     First: Pursuant to authority expressly vested in the Board of Trustees of
the Fund by Article VI of its Declaration of Trust (which, as amended or
restated from time to time, is, together with this Certificate of Vote, herein
called the "Declaration of Trust"), the Board of Trustees hereby authorizes the
issuance of two series of 3,000 shares of its authorized preferred shares of
beneficial interest, par value $.01 per share ("Preferred Shares"), liquidation
preference of $50,000 per share, designated, respectively, Auction Preferred
Shares, Series A ("APS Series A") and Auction Preferred Shares, Series B ("APS
Series B") (collectively the APS Series A and APS Series B are referred to
herein as "APS").

     Second: The preferences, voting powers, qualifications, and special or
relative rights or privileges of each such series of preferred shares of
beneficial interest are as follows:

                                   DESIGNATION

     APS SERIES A: A series of 1,500 preferred shares of beneficial interest,
$.01 par value, liquidation preference $50,000 per share, is hereby designated
"Auction Preferred Shares, Series A" (hereinafter, "APS Series A"). Each share
of APS Series A shall be issued on June 10, 1992; have an Applicable Rate for
its Initial Dividend Period 



(which period shall continue to and including Tuesday, January 12, 1993) equal
to 3.50% per annum; have an initial Dividend Payment Date of Wednesday, July 1,
1992; and have such other preferences, limitations and relative voting rights,
in addition to those required by applicable law or set forth in the Declaration
of Trust applicable to preferred shares of beneficial interest of the Fund, as
are set forth in Part I and Part II of this Certificate of Vote. The APS Series
A shall constitute a separate series of Preferred Shares of beneficial interest
of the Fund, and each share of APS Series A shall be identical except as
provided in Section 3 of Part I of this Certificate of Vote.

     APS SERIES B: A series of 1,500 preferred shares of beneficial interest,
par value $.01 per share, liquidation preference $50,000 per share, is hereby
designated "Auction Preferred Shares, Series B" (hereinafter, "APS Series B").
Each share of APS Series B shall be issued on June 10, 1992; have an Applicable
Rate for its Initial Dividend Period (which period shall continue to and
including Thursday, January 21, 1993) equal to 3.50% per annum; have an initial
Dividend Payment Date of Wednesday, July 1, 1992; and have such other
preferences, limitations and relative voting rights, in addition to those
required by applicable law or set forth in the Declaration of Trust applicable
to preferred shares of beneficial interest of the Fund, as are set forth in Part
I and Part II of this Certificate of Vote. The APS Series B shall constitute a
separate series of Preferred Shares of the Fund, and each share of APS Series B
shall be identical except as provided in Section 3 of Part I of this Certificate
of Vote.

     No holder of any series of APS shall have, solely by reason of being such a
holder of any series of APS, any right to acquire, purchase or subscribe for any
APS, common shares of beneficial interest, par value $.01 per share, of the Fund
or other securities of the Fund which it may hereafter issue or sell (whether
out of the number of shares authorized by the Declaration of Trust, or out of
any shares acquired by the Fund after the issuance thereof, or otherwise).

                                     PART I.

     1. Number of Shares; Ranking. (a) No fractional APS shall be issued.

       (b) APS which at any time have been redeemed or purchased by the Fund
shall, after such redemption or purchase, have the status of authorized but
unissued Preferred Shares, without designation as to series.

       (c) The shares of each series of APS shall rank on a parity with shares 
of any other series of Preferred Shares (including any other series of APS) as 
to the payment of dividends and the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Fund.

     2. Dividends. (a) The Holder of shares of any series of APS shall be
entitled to receive, when, as and if declared by the Board of Trustees, out of
funds legally available therefor, cumulative cash dividends at the Applicable
Rate per annum thereof, determined as set forth in paragraph (c) of this Section
2, and no more (except to the 


                                       2


extent set forth in Section 12 of this Part I), payable on the respective dates
(each a "Dividend Payment Date") determined as set forth in paragraph (b) of
this Section 2. Dividends on shares of any series of APS shall accumulate at the
Applicable Rate per annum from the Date of Original Issue thereof.

       (b) (i) Dividends shall be payable subject to subparagraph (b)(ii) of 
this Section 2, on shares of:

               (A) APS Series A, on Wednesday, July 1, 1992 and the first
         Business Day of each calendar month thereafter, provided that in any
         calendar month in which an Auction Date for such series is scheduled to
         occur, dividends shall be payable on the first Business Day next
         succeeding such Auction Date, and

               (B) APS Series B, on Wednesday, July 1, 1992 and the first
         Business Day of each claendar month thereafter, provided that in any
         calendar month in which an Auction Date for such series is scheduled to
         occur, dividends shall be payable on the first Business Day next
         succeeding such Auction Date,

provided that if the Fund, subject to the conditions set forth in Section 4 of
this Part I, designates any Subsequent Dividend Period as a Special Dividend
Period, dividends will be payable: (1) with respect to a Special Dividend Period
of less than 35 days, the day after the last day thereof and (2) with respect to
a Special Dividend Period of 35 days or more, the first Business Day of each
calendar month thereafter provided that, in any calendar month in which an
Auction Date is scheduled to occur, dividends shall be payable on the first
Business Day next succeeding such Auction Date.

After any Special Dividend Period, dividends on shares of such series of APS
shall be payable, subject to subparagraph (b)(ii) of this Section 2, on the
first Business Day of each calendar month thereafter, provided that in any
calendar month in which an Auction Date for such series is scheduled to occur,
dividends shall be payable on the first Business Day next succeeding such
Auction Date if such series is APS Series A, and on the first Business Day of
each calendar month thereafter, provided that in any calendar month in which an
Auction Date for such series is scheduled to occur, dividends shall be payable
on the first Business day next succeeding such Auction Date if such series is
APS Series B, subject in each case to the options of the Fund to further
designate from time to time any Subsequent Dividend Period hereof as a Special
Dividend Period.

           (ii) In the case of dividends that would otherwise be payable on a 
Sunday, Tuesday, Wednesday, Thursday, Friday or Saturday as determined by 
subparagraph (b)(i) of this Section 2, including clause (1), (2) or (3) of the 
proviso thereto, if (i) the Sunday, Monday or Tuesday that would otherwise be 
the Dividend Payment Date is not a Business Day, then dividends shall be payable
on the first Business Day that falls after such Sunday, Monday or Tuesday, or 
(ii) the Wednesday, Thursday, Friday or Saturday that would otherwise be the 
Dividend Payment Date is not a Business 


                                       3


Day, then dividends shall be payable on the first Business Day that falls prior
to such Wednesday, Thursday, Friday or Saturday.

         (iii) The Fund shall pay to the Auction Agent not later than 12:00 
Noon, New York City time, on the Business Day next preceding each Dividend 
Payment Date for shares of such series, an aggregate amount of funds available 
on the next Business Day in The City of New York, New York, equal to the 
dividends to be paid to all Holders of shares of such series on such Dividend 
Payment Date.

          (iv) All moneys paid to the Auction Agent for the payment of dividends
(or for the payment of any late charges pursuant to subparagraph (c)(i) of this
Section 2) shall be held in trust for the payment of such dividends (and any
such late charge) by the Auction Agent for the benefit of the Holders specified
in subparagraph (b)(v) of this Section 2. Any moneys paid to the Auction Agent
in accordance with the foregoing but not applied by the Auction Agent to the
payment of dividends (and any late charge) will, to the extent permitted by law,
be repaid to the Fund at the end of 90 days from the date on which such moneys
were so to have been applied.

           (v) Each dividend on the APS shall be paid on the Dividend Payment 
Date therefor to the Holders as their names appear on the share books of the 
Fund on the Business Day next preceding such Dividend Payment Date. Dividends 
in arrears for any past Dividend Period may be declared and paid at any time, 
without reference to any regular Dividend Payment Date, to the Holders as their 
names appear on the share books of the Fund on such date, not exceeding 15 days
preceding the payment date thereof, as may be fixed by the Board of Trustees.

       (c) (i) The dividend rate on shares of any series of APS during the 
period from and after the Date of Original Issue thereof to and including the 
last day of the Initial Dividend Period therefor shall be equal to the rate per
annum set forth with respect to such series under "Designation," above. For each
Subsequent Dividend Period of any series of APS outstanding thereafter, the
dividend rate on shares of such series shall be equal to the rate per annum that
results from an Auction for such series on the Auction Date next preceding such
Subsequent Dividend Period; provided, however, that if an Auction for any
Subsequent Dividend Period of any series of APS is not held for any reason or if
a Failure to Deposit occurs and such failure has not been cured as set forth
below prior to any succeeding Subsequent Dividend Period thereof, then, subject
to the next succeeding provision, the dividend rate on the shares of such series
for any such Subsequent Dividend Period shall be the Maximum Rate (as defined
herein) for such series on the Auction Date for such Subsequent Dividend Period;
provided, further, however, that if any Failure to Deposit shall have occurred
with respect to shares of any series of APS during any Rate Period thereof, and
prior to 12:00 noon, New York City time, on the third Business Day next
succeeding the date on which such Failure to Deposit occurred, such Failure to
Deposit shall not have been cured in accordance with the next succeeding
sentence or the Fund shall not have paid to the Auction Agent a late charge
equal to the sum of (1) if such Failure to Deposit consisted of the failure
timely to pay to the Auction Agent the full amount of dividends with respect to
any Dividend Period on the shares of such series, an amount computed by
multiplying (x) 200% of the 


                                       4


"AA" Composite Commercial Paper Rate (or Treasury Rate, if applicable) for the
Rate Period during which such Failure to Deposit occurs on the Dividend Payment
Date for such Dividend Period by (y) a fraction, the numerator of which shall be
the number of days for which such Failure to Deposit has not been cured in
accordance with the next succeeding sentence (including the day such Failure to
Deposit occurs and excluding the day such Failure to Deposit is cured) and the
denominator of which shall be 365, and applying the rate obtained against the
aggregate liquidation preference of the outstanding shares of such series of APS
and (2) if such Failure to Deposit consisted of the failure timely to pay to the
Auction Agent the Redemption Price of the shares of such series of APS, if any,
for which Notice of Redemption has been given by the Fund pursuant to paragraph
(b) of Section 3 of this Part I, an amount computed by multiplying (x) 200% of
the "AA" Composite Commercial Paper Rate (or Treasury Rate, if applicable) for
the Rate Period during which such Failure to Deposit occurs on the redemption
date by (y) a fraction, the numerator of which shall, then the dividend rate for
shares of such series of APS for each Subsequent Dividend Period thereof
commencing after such failure to and including the Subsequent Dividend Period,
if any, during which such Failure to Deposit is so cured shall be a rate per
annum equal to the Maximum Rate on the Auction Date for such Subsequent Dividend
Period (but with the prevailing rating for such shares, for purposes of
determining such Maximum Rate, being deemed to be "Below "ba3"/BB-") (the rate
per annum at which dividends are payable on the APS for any Rate Period for such
shares being herein referred to as the "Applicable Rate" for such shares). A
Failure to Deposit with respect to shares of any series of APS shall have been
cured (if such Failure to Deposit is not solely due to the willful failure of
the Fund to make the required payment to the Auction Agent) with respect to any
Rate Period if, not later than 12:00 Noon, New York City time, on the fourth
Business Day preceding the Auction Date for the Rate Period subsequent to such
Rate Period the Fund shall have paid to the Auction Agent (A) all accumulated
and unpaid dividends on the shares of such series of APS and (B) without
duplication, the Redemption Price for the APS, if any, for which Notice of
Redemption has been given by the Fund pursuant to paragraph (b) of Section 3 of
this Part I.

          (ii) The amount of dividends per share payable on shares of any series
of APS on any date on which dividends shall be payable on shares of such series
shall be computed by multiplying the respective Applicable Rate for such series
in effect for such Dividend Period or Dividend Periods or part thereof for which
dividends have not been paid by a fraction, the numerator of which shall be the
number of days in such Dividend Period or Dividend Periods or part thereof and
the denominator of which shall be 365 if such Dividend Period is a Rate Period,
or is contained in a Rate Period, of less than one year and 360 for all other
Dividend Periods, and applying the rate obtained against $50,000.

       (d) Any dividend payment made on the APS shall first be credited against
the earliest accumulated but unpaid dividends due with respect to such APS.

       (e) Except as set forth in the next sentence, no dividends shall be
declared or paid or set apart for payment on the shares of any class or series
of shares 


                                       5


ranking, as to the payment of dividends, on a parity with the APS for any period
unless full cumulative dividends have been or contemporaneously are declared and
paid on the shares of each series of APS through the most recent Dividend
Payment Date for each such series. When dividends are not paid in full upon the
APS through their most recent respective Dividend Payment Dates or upon the
shares of any other class or series of shares ranking on a parity as to the
payment of dividends with the APS through their most recent respective dividend
payment dates, all dividends declared upon the APS and any other such class or
series of shares ranking on a parity as to the payment of dividends with the APS
shall be declared pro rata so that the amount of dividends declared per share on
the APS and such other class or series of shares shall in all cases bear to each
other the same ratio that accumulated dividends per share on the APS and such
other class or series of shares bear to each other (for purposes of this
sentence, the amount of dividends declared per share shall be based on the
Applicable Rate for such shares for the Dividend Periods during which dividends
were not paid in full). Holders of the APS shall not be entitled to any
dividend, whether payable in cash, property or shares, in excess of full
cumulative dividends, as herein provided, on the APS. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on the APS which may be in arrears, and, except to the extent set
forth in subsection (c)(i) of this Section 2, no additional sum of money shall
be payable in respect of any such arrearage.

       (f) Dividends on the APS shall be designated as exempt-interest dividends
up to the amount of tax-exempt income of the Fund, to the extent permitted by,
and for purposes of, Section 852 of the Internal Revenue Code of 1986, as
amended from time to time.

       (g) The Board of Trustees shall not declare any dividend (except a 
dividend payable in Common Shares), or declare any other distribution, upon the 
Common Shares, or purchase Common Shares, unless in every such case the APS 
have, at the time of any such declaration or purchase, an asset coverage (as 
defined in and determined pursuant to the 1940 Act) of at least 200% (or such 
other asset coverage as may in the future be specified in or under the 1940 Act
as the minimum asset coverage for senior securities which are stock of a 
closed-end investment company as a condition of declaring dividends on its 
common stock) after deducting the amount of such dividend, distribution or 
purchase price, as the case may be.

     3. Redemption. (a) (i) Upon giving a Notice of Redemption, as provided
below, the Fund at its option may redeem shares of any series of APS, in whole
or in part, on the Second Business Day next preceding any Dividend Payment Date
applicable to those shares of APS called for redemption, out of funds legally
available therefor, at the Optional Redemption Price; provided that during a
Special Dividend Period of 365 days or more no share of APS will be subject to
optional redemption during any Non-Call Period; provided, that shares of any
series of APS may not be redeemed in part if after such partial redemption fewer
than 250 shares of such series remain outstanding.


                                       6


          (ii) If fewer than all of the outstanding shares of any series of APS
are to be redeemed pursuant to subparagraph (a)(i) of this Section 3, the number
of shares of such series to be redeemed shall be determined by the Board of
Trustees, and such shares shall be redeemed pro rata from the Holders of such
series in proportion to the number of such shares held by such Holders.

         (iii) No APS shall be redeemed pursuant to subparagraphs (a)(i) or 
(a)(ii) of this Section 3 unless, on the date on which the Fund intends to give
notice of such redemption pursuant to paragraph (b) of this Section 3, (a) the
Fund has available Deposit Securities with maturity or tender dates not later
than the day preceding the applicable redemption date and having a value not
less than the amount (including the applicable premium, if any) due to Holders 
of the APS by reason of the redemption of such shares on such redemption date 
and (b) Moody's Eligible Assets (if Moody's is then rating the APS) and S&P 
Eligible Assets (if S&P is then rating the APS) each at least equal the APS 
Basic Maintenance Amount, and would at least equal the APS Basic Maintenance 
Amount immediately subsequent to such redemption, if such redemption were to 
occur on such date, and on the date of redemption.

          (iv) Subject to Section 3(g), the Fund shall redeem at the Mandatory
Redemption Price certain of the APS if the Fund fails to maintain the APS Basic
Maintenance Amount or 1940 Act APS Asset Coverage in accordance with the
requirements of the rating agency or agencies then rating the APS and such
failure is not cured on or before the APS Basic Maintenance Cure Date or the
1940 Act Cure Date, as the case may be. The number of APS to be redeemed shall
be equal to the lesser of (i) the minimum number of APS the redemption of which,
if deemed to have occurred immediately prior to the opening of business on the
Cure Date, together with all other Preferred Shares subject to redemption or
retirement, would result in the satisfaction of the APS Basic Maintenance Amount
or the 1940 Act APS Asset Coverage, as the case may be, on such Cure Date
(provided that, if there is no such minimum number of APS and other Preferred
Shares the redemption of which would have such result, all the APS and Preferred
Shares then outstanding shall be redeemed), and (ii) the maximum number of APS,
together with all other Preferred Shares subject to redemption or retirement,
that can be redeemed out of funds expected to be legally available therefor. In
determining the APS required to be redeemed in accordance with the foregoing,
the Fund shall allocate the number required to be redeemed to satisfy the APS
Basic Maintenance Amount or the 1940 Act APS Asset Coverage, as the case may be,
pro rata among each series of APS and other Preferred Shares subject to
redemption provisions similar to those contained in this subparagraph (a)(iv) of
this Section 3. The Fund shall effect such redemption not earlier than 20 days
and not later than 40 days after such Cure Date, except that if the Fund does
not have funds legally available for the redemption of all of the required
number of APS and other Preferred Shares which are subject to redemption
provisions similar to those contained in this subparagraph (a)(iv) of this
Section 3 or the Fund otherwise is unable to effect such redemption on or prior
to 40 days after such Cure Date, the Fund shall redeem those APS and other
Preferred Shares which it was unable to redeem on the earliest practicable date
on which it is able to effect such redemption. If fewer than all of the
outstanding shares of any series of APS are to be redeemed pursuant to this
Section 3(a)(iv), the number of shares of such series to be redeemed shall be


                                       7


redeemed pro rata from the Holders of such shares in proportion to the number of
shares held by such Holders.

       (b) The Fund is required to give 30 days Notice of Redemption. In the 
event the Fund obtains appropriate exemptive or no-action relief from the 
Securities and Exchange Commission, the number of days' notice required for a 
mandatory redemption may be reduced by the Board of Trustees of the Fund to as 
few as two Business Days if Moody's and S&P each has agreed in writing that the 
revised notice provision would not adversely affect its then-current ratings of 
the APS. The Auction Agent will use its reasonable efforts to provide telephonic
notice to each holder of APS called for redemption not later than the close of 
business on the Business Day on which the Auction Agent determines the shares to
be redeemed (as described above) (or, during the occurrence of a Failure to 
Deposit with respect to such shares, not later than the close of business on the
Business Day immediately following the day on which the Auction Agent receives
Notice of Redemption from the Fund). Such telephonic notice will be confirmed
promptly in writing not later than the close of business on the third Business
Day preceding the redemption date by notice sent by the Auction Agent to each
holder of record of APS called for redemption, the Broker-Dealers and the
Securities Depository. Every Notice of Redemption and other redemption notice
with respect to APS will state: (1) the redemption date, (2) the number of APS
to be redeemed, (3) the redemption price, (4) that dividends on the APS to be
redeemed will cease to accumulate as of such redemption date and (5) the
provision of the APS Provisions pursuant to which such shares are being
redeemed. No defect in the Notice of Redemption or other redemption notice or in
the transmittal or the mailing thereof will affect the validity of the
redemption proceedings, except as required by applicable law. If fewer than all
shares of any series held by any Holder are to be redeemed, the Notice of
Redemption mailed to such Holder shall also specify the number of shares of such
series to be redeemed from such Holder.

       (c) Notwithstanding the provisions of paragraph (a) of this Section 3, if
any dividends on shares of any series of APS are in arrears, no shares of such
series of APS shall be redeemed unless all outstanding shares of such series of
APS are simultaneously redeemed, and the Fund shall not purchase or otherwise
acquire any shares of such series of APS; provided, however, that the foregoing
shall not prevent the purchase or acquisition of all outstanding shares of such
series of APS pursuant to the successful completion of an otherwise lawful
purchase or exchange offer made on the same terms to, and accepted by, Holders
of all outstanding shares of such series of APS.

       (d) Upon the deposit of funds sufficient to redeem the APS with the 
Auction Agent and the giving of Notice of Redemption under Paragraph (b) of this
Section 3, dividends on such shares shall cease to accumulate and such shares 
shall no longer be deemed to be outstanding for any purpose, and all rights of 
the Holders of the shares so called for redemption shall cease and terminate, 
except the right of such Holders to receive the Optional Redemption Price or 
Mandatory Redemption Price, as the case may be, but without any interest or 
other additional amount, except as provided in Section 2(c)(i) and in Section 
12. Upon surrender in accordance with the Notice of Redemption of the 
certificates for any shares so redeemed (properly endorsed or assigned for 
transfer, if the Board of Trustees shall so require and the Notice of Redemption
shall

                                       8


so state), the Optional Redemption Price or Mandatory Redemption Price, as the
case may be, shall be paid by the Auction Agent to the Holders of the APS
subject to redemption. In the case that fewer than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued,
representing the unredeemed shares, without cost to the Holder thereof. The Fund
shall be entitled to receive from the Auction Agent, promptly after the date
fixed for redemption, any cash deposited with the Auction Agent in excess of (i)
the aggregate Optional Redemption Price of the APS called for redemption on such
date and (ii) all other amounts to which Holders of the APS called for
redemption may be entitled. Any funds so deposited that are unclaimed at the end
of 90 days from such redemption date shall, to the extent permitted by law, be
repaid to the Fund, after which time the Holders of the APS so called for
redemption may look only to the Fund for payment of the Optional Redemption
Price or Mandatory Redemption Price, as the case may be, and all other amounts
to which they may be entitled. The Fund shall be entitled to receive, from time
to time after the date fixed for redemption, any interest on the funds so
deposited.

       (e) To the extent that any redemption for which Notice of Redemption has
been given is not made by reason of the absence of legally available funds
therefor, such redemption shall be made as soon as practicable to the extent
such funds become available. Failure to redeem the APS shall be deemed to exist
at any time after the date specified for redemption in a Notice of Redemption
when the Fund shall have failed, for any reason whatsoever, to deposit in trust
with the Auction Agent the Redemption Price with respect to any shares for which
such Notice of Redemption has been given. Notwithstanding the fact that the Fund
may not have redeemed the APS for which a Notice of Redemption has been given,
dividends may be declared and paid on the APS and shall include those APS for
which a Notice of Redemption has been given.

       (f) All moneys paid to the Auction Agent for payment of the Optional
Redemption Price or Mandatory Redemption Price, as the case may be, of the APS
called for redemption shall be held in trust by the Auction Agent for the
benefit of Holders of shares so to be redeemed.

       (g) In effecting any redemption pursuant to this Section 3, the Fund 
shall use its best efforts to comply with all applicable procedural conditions
precedent to effecting such redemption under the 1940 Act and Massachusetts law,
but shall effect no redemption except to the extent permitted by the 1940 Act
and Massachusetts law.

       (h) In the case of any redemption pursuant to this Section 3, only whole
APS shall be redeemed, and in the event that any provision of the Declaration of
Trust would require redemption of a fractional share, the Auction Agent shall be
authorized to round up so that only whole shares are redeemed.

     4. Designation of Special Dividend Periods. (a) The Fund, at its option,
may designate any succeeding Subsequent Dividend Period of any series of APS as
a Special Dividend Period; provided, however, that such designation shall be
effective only if (A) notice thereof shall have been given in accordance with
paragraph (b) and 


                                       9


clause (i) of paragraph (c) of this Section 4, (B) any Failure to Deposit that
shall have occurred with respect to shares of such series during any Dividend
Period shall have been cured in accordance with the provisions of the third
sentence of paragraph (c)(i) of Section 2 of this Part I, (C) Sufficient
Clearing Bids (as defined in Section 1 of Part II hereof) for such series shall
have existed in an Auction held on the Auction Date immediately preceding the
first day of such proposed Special Dividend Period, (D) if any Notice of
Redemption shall have been mailed by the Fund pursuant to paragraph (b) of
Section 3 of this Part I with respect to any shares of such series of APS, the
Redemption Price with respect to such shares shall have been deposited with the
Auction Agent and (E) in the event the Fund wishes to designate any succeeding
Subsequent Dividend Period for such series as a Special Dividend Period
consisting of more than 28 Rate Period Days, the Fund has received written
confirmation from S&P (if S&P is then rating the APS) and Moody's (if Moody's is
then rating the APS) that such designation would not affect the rating then
assigned by S&P and Moody's to such series.

       (b) If the Fund proposes to designate any succeeding Subsequent Dividend
Period of any series of APS as a Special Dividend Period of more than 28 Rate
Period Days pursuant to paragraph (a) of this Section 4, not less than 20 nor
more than 30 days prior to the date the Fund proposes to designate as the first
day of such Special Dividend Period (which shall be such day that would
otherwise be the first day of a Minimum Dividend Period), notice shall be (i)
published or caused to be published by the Fund in a newspaper of general
circulation to the financial community in The City of New York, New York, which
carries financial news, and (ii) communicated by the Fund by telephonic or other
means to the Auction Agent and confirmed in writing promptly thereafter. Each
such notice shall state (A) that the Fund may exercise its option to designate a
succeeding Subsequent Dividend Period of such series of APS as a Special
Dividend Period, specifying the first day thereof and (B) that the Fund will by
11:00 A.M., New York City time, on the second Business Day next preceding such
date notify the Auction Agent of either (x) its determination, subject to
certain conditions, to exercise such option, in which case the Fund shall
specify the Special Dividend Period designated and the terms of the Specific
Redemption Provisions, if any, or (y) its determination not to exercise such
option.

       (c) No later than 11:00 A.M., New York City time, on the second Business
Day next preceding the first day of any proposed Special Dividend Period the
Fund shall delivery to the Auction Agent either:

           (i) a notice stating (A) that the Fund has determined to designate 
the next succeeding Dividend Period of such series as a Special Dividend Period,
specifying the same and the first day thereof, (B) the Auction Date immediately
prior to the first day of such Special Dividend Period, (C) the terms of the
Specific Redemption Provisions, if any, for such series, (D) that such Special
Dividend Period shall not commence if (1) on such Auction Date Sufficient
Clearing Bids for such series shall not exist (in which case the succeeding Rate
Period shall be a Minimum Dividend Period) or (2) a Failure to Deposit shall
have occurred prior to the first day of such Special Dividend Period with
respect to shares of such series and (E) the scheduled Dividend Payment Dates
for such series of APS during such Special Dividend Period; 


                                       10


provided that, if such Special Dividend Period consists of more than 28 Rate
Period Days, such notice will be accompanied by an APS Basic Maintenance Report
showing that, as of the third Business Day next preceding such proposed Special
Dividend Period, (1) Moody's Eligible Assets, assuming for the purposes of
calculating Moody's Eligible Assets, in connection with an APS Basic Maintenance
Report required to be prepared pursuant to this Section 4(c)(i), a Moody's
Exposure Period of "eight weeks or less but greater than seven weeks" (if
Moody's is then rating such series) and (2) S&P Eligible Assets (if S&P is then
rating such series) each at least equal to the APS Basic Maintenance Amount as
of such Business Day (assuming for purposes of the foregoing calculation that
the Maximum Rate is the Maximum Rate on such Business Day as if such Business
Day were the Auction Date for the proposed Special Dividend Period); or

          (ii) a notice stating that the Fund has determined not to exercise its
option to designate a Special Dividend Period for such series of APS and that
the next succeeding Dividend Period of such series shall be a Minimum Dividend
Period.

If the Fund fails to deliver either such notice with respect to any designation
of any proposed Special Dividend Period to the Auction Agent by 11:00 A.M., New
York City time, on the second Business Day next preceding the first day of such
proposed Special Dividend Period, the Fund shall be deemed to have delivered a
notice to the Auction Agent with respect to such Special Dividend Period to the
effect set forth in clause (ii) of the preceding sentence.

     5. Voting Rights. (a) Except as otherwise provided in the Declaration of
Trust or as otherwise required by law, (i) each holder of APS shall be entitled
to one vote for each of the APS held on each matter submitted to a vote of
shareholders of the Fund, and (ii) the holders of outstanding Preferred Shares,
including APS, and of Common Shares shall vote together as a single class;
provided that, at a meeting of the shareholders of the Fund held for the
election of the trustees, the holders of outstanding Preferred Shares, including
APS, represented in person or by proxy at said meeting, shall elect two trustees
of the Fund, each Preferred Share, including each of the APS, entitling the
holder thereof to one vote. Subject to paragraph (b) of this Section 5, the
holders of outstanding Common Shares shall elect the balance of the trustees.

       (b) During any period in which any one or more of the conditions 
described below shall exist (such period being referred to herein as a "Voting 
Period"), the number of trustees constituting the Board of Trustees shall be 
automatically increased by the smallest number that, when added to the two 
trustees elected exclusively by the holders of Preferred Shares, including APS,
would constitute a majority of the Board of Trustees as so increased by such 
smallest number, and the holders of Preferred Shares, including APS, shall be 
entitled, voting as a class on a one-vote-per-share basis (to the exclusion of 
the holders of all other securities and class of capital shares of the Fund), to
elect such smallest number of additional trustees, together with the two 
trustees that such holders are in any event entitled to elect. A Voting Period 
shall commence:

           (i) if at the close of business on any Dividend Payment Date 
accumulated dividends (whether or not earned or declared) on any outstanding 
APS,


                                       11


equal to at least two full years' dividends shall be due and unpaid and
sufficient cash or specified securities shall not have been deposited with the
Auction Agent for the payment of such accumulated dividends; or

          (ii) if at any time holders of any other Preferred Shares are entitled
under the 1940 Act to elect a majority of the trustees of the Fund.

Upon the termination of a Voting Period, the voting rights described in this
paragraph (b) of Section 5 shall cease, subject always, however, to the
revesting of such voting rights in the Holders upon the further occurrence of
any of the events described in this paragraph (b) of Section 5.

       (c) (i) As soon as practicable after the accrual of any right of the
holders of Preferred Shares to elect additional trustees as described in
paragraph (b) of this Section 5, the Fund shall notify the Auction Agent and the
Auction Agent shall call a special meeting of such holders, by mailing a notice
of such special meeting to such holders, such meeting to be held not less than
10 nor more than 20 days after the date of mailing of such notice. If the Fund
fails to send such notice to the Auction Agent or if the Auction Agent does not
call such a special meeting, it may be called by any such holder on like notice.
The record date for determining the holders entitled to notice of and to vote at
such special meeting shall be the close of business on the fifth Business Day
preceding the day on which such notice is mailed. At any such special meeting
and at each meeting of holders of Preferred Shares held during a Voting Period
at which trustees are to be elected, such holders, voting together as a class
(to the exclusion of the holders of all other securities and classes of capital
shares of the Fund), shall be entitled to elect the number of trustees
prescribed in paragraph (b) of this Section 5 on a one-vote-per-share basis.

          (ii) For purposes of determining any rights of the Holders to vote on 
any matter, whether such right is created by this Certificate of Vote, by the 
other provisions of the Declaration of Trust, by statute or otherwise, no Holder
shall be entitled to vote and no APS shall be deemed to be "outstanding" for the
purpose of voting or determining the number of shares required to constitute a
quorum if, prior to or concurrently with the time of determination of shares
entitled to vote or shares deemed outstanding for quorum purposes, as the case
may be, the Redemption Price for the redemption of such shares has been
deposited in trust with the Auction Agent for that purpose and the requisite
Notice of Redemption with respect to such shares shall have been given as
provided in Section 3 of this Part I. None of the APS held by the Fund or any
affiliate of the Fund shall have any voting rights or be deemed to be
outstanding for voting or other purposes.

         (iii) The terms of office of all persons who are Trustees of the Fund 
at the time of a special meeting of Holders and holders of other Preferred 
Shares to elect trustees shall continue, notwithstanding the election at such 
meeting by the Holders and such other holders of the number of trustees that 
they are entitled to elect, and the persons so elected by the Holders and such 
other holders, together with the two incumbent trustees elected by the Holders 
and such other holders of Preferred Shares 


                                       12


and the remaining incumbent trustees elected by the holders of the Common
Shares, shall constitute the duly elected trustees of the Fund.

          (iv) Simultaneously with the termination of a Voting Period, the terms
of office of the additional trustees elected by the Holders and holders of other
Preferred Shares pursuant to paragraph (b) of this Section 5 shall terminate,
the remaining trustees shall constitute the trustees of the Fund and the voting
rights of the Holders and such other holders to elect additional trustees
pursuant to paragraph (b) of this Section 5 shall cease, subject to the
provisions of the last sentence of paragraph (b) of this Section 5.

       (d) (i) So long as any of the APS are outstanding, the Fund shall not,
without the affirmative vote of the Holders of the Outstanding APS determined
with reference to a "majority of outstanding voting securities" as that term is
defined in Section 2(a)(42) of the 1940 Act (voting separately as one class):
(a) authorize, create or issue any class or series of shares of beneficial
interest ranking prior to or on a parity with the APS with respect to the
payment of dividends or the distribution of assets upon dissolution, liquidation
or winding up of the affairs of the Fund, or increase the authorized amount of
any series of APS (except that, notwithstanding the foregoing, but subject to
the provisions of Section 13, the Board of Trustees, without the vote or consent
of the Holders of APS, may from time to time authorize and create, and the Fund
may from time to time issue, classes or series of Preferred Shares, including
APS, ranking on a parity with the APS with respect to the payment of dividends
and the distribution of assets upon dissolution, liquidation or winding up of
the affairs of the Fund, subject to continuing compliance by the Fund with 1940
Act APS Asset Coverage and APS Basic Maintenance Amount requirements, provided
that the Fund obtains written confirmation from Moody's (if Moody's is then
rating APS) and S&P (if S&P is then rating APS) that the issuance of such class
or series would not impair the rating then assigned by such rating agency to the
APS), (b) amend, alter or repeal the provisions of the Declaration of Trust,
including this Certificate of Vote, whether by merger, consolidation or
otherwise, so as to affect any preferences, right or power of such APS or the
Holders thereof; provided that (i) none of the actions permitted by the
exception to (a) above will be deemed to affect such preferences, rights or
powers and (ii) the authorization, creation and issuance of classes or series of
shares ranking junior to the APS with respect to the payment of dividends and
the distribution of assets upon dissolution, liquidation or winding up of the
affairs of the Fund, will be deemed to affect such preferences, rights or powers
only if Moody's or S&P is then rating the APS and such issuance would, at the
time thereof, cause the Fund not to satisfy the 1940 Act APS Asset Coverage or
the APS Basic Maintenance Amount, or (c) file a voluntary application for relief
under Federal bankruptcy law or any similar application under state law for so
long as the Fund is solvent and does not foresee becoming insolvent.

          (ii) The Board of Trustees, without the vote or consent of the Holders
of APS, may from time to time amend, alter or repeal any or all of the 
definitions of the terms listed below, and any such amendment, alteration or 
repeal will not be deemed to affect the preferences, rights or powers of the 
APS or the Holders thereof, provided the Board of Trustees receives written 
confirmation from Moody's 


                                       13


(such confirmation being required to be obtained only in the event Moody's is
rating the APS and in no event being required to be obtained in the case of the
definitions of Deposit Securities, Discounted Value and Receivables for
Municipal Securities Sold as such terms apply to S&P Eligible Assets, Dividend
Coverage Amount, Dividend Coverage Assets, Minimum Liquidity Level, S&P Discount
Factor, S&P Eligible Assets, S&P Exposure Period and Valuation Date as such term
applies to the definitions of Dividend Coverage Amount, Dividend Coverage Assets
and Minimuum Liquidity Level) and S&P (such confirmation being required to be
obtained only in the event S&P is rating the APS and in no event being required
to be obtained in the case of the definitions of Discounted Value and
Receivables for Municipal Securities Sold as such terms apply to Moody's
Eligible Assets, Moody's Discount Factor, Moody's Eligible Asset and Moody's
Exposure Period) that any such amendment, alteration or repeal would not impair
the ratings then assigned by Moody's or S&P, as the case may be, to the APS
(provided that, with respect to the Maximum Rate, such amendment or alteration
shall not, in any event, cause the Maximum Rate to fall below the Maximum Rate
that would have resulted absent such amendment or alteration):

                    APS Basic
                      Maintenance Amount
                    APS Basic
                      Maintenance Cure Date
                    APS Basic
                      Maintenance Report
                    Deposit Securities
                    Discounted Value
                    Dividend Coverage Amount
                    Dividend Coverage Assets
                    Market Value
                    Maximum Potential
                      Gross-up
                      Payment Liability
                    Maximum Rate
                    Minimum Liquidity Level
                    Moody's Discount Factor
                    Moody's Eligible Asset
                    Moody's Exposure Period
                    1940 Act Cure Date
                    1940 Act APS
                      Asset Coverage
                    Quarterly Valuation Date
                    Receivables for Municipal
                      Securities Sold
                    S&P Discount Factor

                                       14


                    S&P Eligible Asset
                    S&P Exposure Period
                    Valuation Date

       (e) Unless otherwise required by law, the Holders of the APS shall not 
have any relative rights or preferences or other special rights other than those
specifically set forth herein. The Holders of the APS shall have no preemptive
rights or rights to cumulative voting. In the event that the Fund fails to pay
any dividends on the APS, the exclusive remedy of the Holders shall be the right
to vote for trustees pursuant to the provisions of this Section 5.

       (f) Unless a higher percentage is provided for in the Declaration of 
Trust, the affirmative vote of the Holders of a majority of the outstanding APS,
voting as a separate class, shall be required to approve any plan of 
reorganization (as such term is used in the 1940 Act) adversely affecting such 
shares or any action requiring a vote of security holders of the Fund under 
Section 13(a) of the 1940 Act. In the event a vote of Holders of APS is required
pursuant to the provisions of Section 13(a) of the 1940 Act, the Fund shall, not
later than ten Business Days prior to the date on which such vote is to be 
taken, notify Moody's (if Moody's is then rating the APS) and S&P (if S&P is 
then rating the APS) that such vote is to be taken and the nature of the action 
with respect to which such vote is to be taken. In addition, the Fund shall 
notify Moody's (if Moody's is then rating the APS) and S&P (if S&P is then 
rating the APS) of the results of any vote described in the proceeding sentence.

       (g) Right to Vote with Respect to Certain Other Matters. The affirmative
vote of the holders of a majority (unless a higher percentage vote is required
under the Declaration of Trust or under this Certificate of Vote) of the
outstanding shares of each series of APS, each voting as a separate class, is
required with respect to any matter that materially affects the series in a
manner different from that of other series of classes of the Fund's shares,
including without limitation any proposal to do the following: (1) increase or
decrease the aggregate number of authorized shares of the series; (2) effect an
exchange, reclassification, or cancellation of all or part of the shares of the
series; (3) effect an exchange, or create a right of exchange, of all or any
part of the shares of the series; (4) change the rights or preferences of the
shares of the series; (5) change the shares of the series, whether with or
without par value, into the same or a different number of shares, either with or
without par value, of the same or another class or series; (6) create a new
class or series of shares having rights and preferences prior and superior to
the shares of the series, or increase the rights and preferences or the number
of authorized shares of a series having rights and preferences prior or superior
to the shares of the series; or (7) cancel or otherwise affect distributions on
the shares of the series that have accrued but have not been declared. To the
extent that the interests of a series of APS affected by a matter are
substantially identical to the interests of another series of APS affected by
such matter (e.g., a vote of shareholders required under Section 13(a) of the
1940 Act), each such series shall vote together collectively as one class. The
vote of holders of APS described above will in each case be in addition to a
separate vote of the requisite percentage of Common Shares and APS necessary to
authorize the action in question.


                                       15


     6. Liquidation Rights. (a) Upon the dissolution, liquidation or winding up
of the affairs of the Fund, whether voluntary or involuntary, the Holders of the
APS then outstanding shall be entitled to receive and to be paid out of the
assets of the Fund available for distribution to its shareholders, before any
payment or distribution shall be made on the Common Shares or on any other class
of shares of the Fund ranking junior to the APS upon dissolution, liquidation or
winding up, an amount equal to the liquidation preference with respect to such
shares. The liquidation preference for the APS shall be $50,000 per share, plus
an amount equal to all dividends thereon (whether or not earned or declared)
accumulated but unpaid to the date of final distribution in same-day funds,
together with any payments required to be made pursuant to Section 12 in
connection with the liquidation of the Fund.

       (b) Neither the sale of all or substantially all the property or business
of the Fund, nor the merger or consolidation of the Fund into or with any other
corporation nor the merger or consolidation of any other corporation into or
with the Fund shall be a dissolution, liquidation or winding up, whether
voluntary or involuntary, for the purposes of this Section 6.

       (c) After the payment to the Holders of the APS of the full preferential
amounts provided for in this Section 6, the Holders of the APS as such shall
have no right or claim to any of the remaining assets of the Fund.

       (d) In the event the assets of the Fund available for distribution to the
Holders of the APS upon any dissolution, liquidation or winding up of the
affairs of the Fund, whether voluntary or involuntary, shall be insufficient to
pay in full all amounts to which such Holders are entitled pursuant to paragraph
(a) of this Section 6, no such distribution shall be made on account of any
shares of any other class or series of Preferred Shares ranking on a parity with
the APS with respect to the distribution of assets upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the APS, ratably, in proportion to the full distributable
amounts for which holders of all such parity shares are respectively entitled
upon such dissolution, liquidation or winding up.

       (e) Subject to the rights of the holders of shares of any series or class
or classes of shares ranking on a parity with the APS with respect to the
distribution of assets upon dissolution, liquidation or winding up of the
affairs of the Fund, after payment shall have been made in full to the Holders
of the APS as provided in paragraph (a) of this Section 6, but not prior
thereto, any other series or class or classes of shares ranking junior to the
APS with respect to the distribution of assets upon dissolution, liquidation or
winding up of the affairs of the Fund shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the Holders of the APS shall not be
entitled to share therein.

     7. Auction Agent. For so long as any of the APS is outstanding, the Auction
Agent, duly appointed by the Fund to so act, shall be in each case a commercial
bank, trust company or other financial institution independent of the Fund and
its 


                                       16


affiliates (which, however, may engage or have engaged in business transactions
with the Fund or its affiliates) and at no time shall the Fund or any of its
affiliates act as the Auction Agent in connection with the Auction Procedures.
If the Auction Agent resigns or for any reason its appointment is terminated
during any period that any of the APS is outstanding, the Board of Trustees
shall use its best efforts promptly thereafter to appoint another qualified
commercial bank, trust company or financial institution to act as the Auction
Agent.

     8. 1940 Act APS Asset Coverage. The Fund shall maintain, as of the last
Business Day of each month in which any of the APS is outstanding, the 1940 Act
APS Asset Coverage.

     9. APS Basic Maintenance Amount. (a) So long as APS are Outstanding, the
Fund shall maintain, on each Valuation Date, and shall verify to its
satisfaction that it is maintaining on such Valuation Date, (i) S&P Eligible
Assets having an aggregate Discounted Value equal to or greater than the APS
Basic Maintenance Amount (if S&P is then rating the APS) and (ii) Moody's
Eligible Assets having an aggregate Discounted Value equal to or greater than
the APS Basic Maintenance Amount (if Moody's is then rating the APS). In
managing the Fund's portfolio, the Adviser will not alter the composition of the
Fund's portfolio if, in the reasonable belief of the Adviser, the effect of any
such alteration would be to cause the Fund to have Eligible Assets with an
aggregate Discounted Value, as of the immediately preceding Valuation Date, less
than the APS Basic Maintenance Amount as of such Valuation Date; provided,
however, that in the event that, as of the immediately preceding Valuation Date,
the aggregate Discounted Value of the Fund's Eligible Assets exceeded the APS
Basic Maintenance Amount by five percent or less, the Adviser will not alter the
composition of the Fund's portfolio in a manner reasonably expected to reduce
the aggregate Discounted Value of the Fund's Eligible Assets unless the
Corporation shall have confirmed that, after giving effect to such alteration,
the aggregate Discounted Value of the Fund's Eligible Assets would exceed the
APS Basic Maintenance Amount.

       (b) On or before 5:00 P.M., New York City time, on the third Business Day
after a Valuation Date on which the Fund fails to satisfy the APS Basic
Maintenance Amount, and on the third Business Day after the APS Basic
Maintenance Cure Date with respect to such Valuation Date, the Fund shall
complete and deliver to S&P (if S&P is then rating the APS), Moody's (if Moody's
is then rating the APS) and the Auction Agent (if either S&P or Moody's is then
rating the APS) an APS Basic Maintenance Report as of the date of such failure
or such APS Basic Maintenance Cure Date, as the case may be, which will be
deemed to have been delivered to the Auction Agent if the Auction Agent receives
a copy or telecopy, telex or other electronic transcription thereof and on the
same day the Fund mails to the Auction Agent for delivery on the next Business
Day the full APS Basic Maintenance Report. The Fund shall also deliver an APS
Basic Maintenance Report to S&P (if S&P is then rating the APS), and the Auction
Agent (if S&P is then rating the APS) as of (i) the fifteenth day of each month
(or, if such day is not a Business Day, the next succeeding Business Day) and
(ii) the last Business Day of each month, in each case on or before the third
Business Day after such day. The Fund will also deliver an APS Basic Maintenance
Report to Moody's 


                                       17


on any Valuation Date that (i) the Discounted Value of Moody's Eligible Assets,
is greater than the APS Basic Maintenance Amount by 5% or less or (ii) on any
date which the Fund redeems Common Shares. A failure by the Fund to deliver an
APS Basic Maintenance Report under subparagraph (b) of this Section 9 shall be
deemed to be delivery of an APS Basic Maintenance Report indicating the
Discounted Value for all assets of the Fund is less than the APS Basic
Maintenance Amount, as of the relevant Valuation Date.

       (c) Within ten Business Days after the date of delivery of an APS Basic
Maintenance Report in accordance with paragraph (b) of this Section 9 relating
to a Quarterly Valuation Date, the Fund shall cause the Independent Accountant
to confirm in writing to S&P (if S&P is then rating the APS), Moody's (if
Moody's is then rating the APS) and the Auction Agent (if either S&P or Moody's
is then rating the APS) (i) the mathematical accuracy of the calculations
reflected in such Report (and in any other APS Basic Maintenance Report,
randomly selected by the Independent Accountant, that was delivered by the Fund
during the quarter ending on such Quarterly Valuation Date) and (ii) that, in
such Report (and in such randomly selected Report), the Fund determined in
accordance with this Certificate of Vote whether the Fund had, at such Quarterly
Valuation Date (and at the Valuation Date addressed in such randomly-selected
Report), S&P Eligible Assets (if S&P is then rating the APS) of an aggregate
Discounted Value at least equal to the APS Basic Maintenance Amount and Moody's
Eligible Assets (if Moody's is then rating the APS) of an aggregate Discounted
Value at least equal to the APS Basic Maintenance Amount (such confirmation
being herein called the "Accountant's Confirmation").

       (d) Within ten Business Days after the date of delivery of an APS Basic
Maintenance Report in accordance with paragraph (b) of this Section 9 relating
to any Valuation Date on which the Fund failed to satisfy the APS Basic
Maintenance Amount, and relating to the APS Basic Maintenance Cure Date with
respect to such failure to exceed or equal the APS Basic Maintenance Amount, the
Fund shall cause the Independent Accountant to provide to S&P (if S&P is then
rating the APS), Moody's (if Moody's is then rating the APS) and the Auction
Agent (if either S&P or Moody's is then rating the APS) an Accountant's
Confirmation as to such APS Basic Maintenance Report.

       (e) If any Accountant's Confirmation delivered pursuant to subparagraph 
(c) or (d) of this Section 9 shows that an error was made in the APS Basic
Maintenance Report for a particular Valuation Date for which such Accountant's
Confirmation was required to be delivered, or shows that a lower aggregate
Discounted Value for the aggregate of all S&P Eligible Assets (if S&P is then
rating the APS) or Moody's Eligible Assets (if Moody's is then rating the APS),
as the case may be, of the Fund was determined by the Independent Accountant,
the calculation or determination made by such Independent Accountant shall be
final and conclusive and shall be binding on the Fund, and the Fund shall
accordingly amend and deliver the APS Basic Maintenance Report to S&P (if S&P is
then rating the APS), Moody's (if Moody's is then rating the APS) and the
Auction Agent (if either S&P or Moody's is then rating the APS) promptly
following receipt by the Fund of such Accountant's Confirmation.


                                       18


       (f) On or before 5:00 p.m., New York City time, on the first Business Day
after the Date of Original Issue of the APS, the Fund shall complete and deliver
to S&P (if S&P is then rating the APS) and to Moody's (if Moody's is then rating
the APS), an APS Basic Maintenance Report as of the close of business on such
Date of Original Issue. Within five Business Days of such Date of Original
Issue, the Fund shall cause the Independent Accountant to confirm in writing to
S&P (if S&P is then rating the APS) and to Moody's (if Moody's is then rating
the APS) (i) the mathematical accuracy of the calculations reflected in such
Report and (ii) that the amount of S&P Eligible Assets or Moody's Eligible
Assets, as the case may be, reflected thereon equals or exceeds the APS Basic
Maintenance Amount reflected thereon.

     10. Minimum Liquidity Level. So long as S&P is rating the APS, the Fund
shall have, as of each Valuation Date, Dividend Coverage Assets, with respect to
each then Outstanding share of each series of APS, having a value not less than
the Dividend Coverage Amount with respect to such share (the "Minimum Liquidity
Level"). If, as of each Valuation Date, the Fund does not have the required
Dividend Coverage Assets, the Fund shall, as soon as practicable, adjust its
portfolio in order to meet the Minimum Liquidity Level, but only so long as S&P
is rating the APS. So long as S&P is rating the APS, the Fund shall notify S&P
on any Valuation Date which the Fund does not have the required Dividend
Coverage Assets and does not adjust its portfolio as described in the
immediately preceding sentence.

     11. Restrictions on Certain Distributions. For so long as any of the APS is
Outstanding, and except as set forth in Sections 2(e) and 6(d) of this Part I,
(A) the Fund shall not declare, pay or set apart for payment any dividend or
other distribution (other than a dividend or distribution paid in shares of, or
options, warrants or rights to subscribe for or purchase, Common Shares or other
shares, if any, ranking junior to the APS as to the payment of dividends and the
distribution of assets upon dissolution, liquidation or winding up) in respect
of the Common Shares or any other shares of the Fund ranking junior to or on a
parity with the APS as to the payment of dividends or the distribution of assets
upon dissolution, liquidation or winding up, or call for redemption, redeem,
purchase or otherwise acquire for consideration any Common Shares or any other
such junior shares (except by conversion into or exchange for shares of the Fund
ranking junior to the APS as to the payment of dividends and the distribution of
assets upon dissolution, liquidation or winding up), or any such parity shares
(except by conversion into or exchange for shares of the Fund ranking junior to
or on a parity with APS as to the payment of dividends and the distribution of
assets upon dissolution, liquidation or winding up), unless (i) full cumulative
dividends on shares of each series of APS through its most recently ended
Dividend Period shall have been paid or shall have been declared and sufficient
funds for the payment thereof deposited with the Auction Agent and (ii) the Fund
has redeemed the full number of shares of each series of APS required to be
redeemed by any provision for mandatory redemption pertaining thereto, and (B)
if either Moody's or S&P is rating the APS, the Fund shall not declare, pay or
set apart for payment any dividend or other distribution (other than a dividend
or distribution paid in shares of, or options, warrants or rights to subscribe
for or purchase, Common Shares or other shares, if any, ranking junior to the
APS as to the payment of dividends and the distribution of assets upon
dissolution, liquidation or winding up) in respect of 


                                       19


Common Shares or any other shares of the Fund ranking junior to the APS as to
the payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up, or call for redemption, redeem, purchase or otherwise
acquire for consideration any shares of Common Shares or any other such junior
shares (except by conversion into or exchange for shares of the Fund ranking
junior to the APS as to the payment of dividends and the distribution of assets
upon dissolution, liquidation or winding up), unless immediately after such
transaction the Discounted Value of Moody's Eligible Assets and S&P Eligible
Assets would each at least equal the APS Basic Maintenance Amount.

     12. Additional Dividends. If the Fund retroactively allocates any net
capital gains or other income taxable for federal income tax purposes to the APS
without having given advance notice thereof to the Autcion Agent as provided in
Section 6 of Part II by reason of the fact that such allocation is made as a
result of (i) the realization of net capital gains or other income taxable for
federal income tax purposes, (ii) the redemption of all or a portion of the
outstanding APS or (iii) the liquidation of the Fund (such allocation being
referred to herein as a "Retroactive Taxable Allocation"), the Fund will
simultaneously, if practicable, with such allocation but in no event later than
270 days after the end of the Fund's taxable year in which a Retroactive Taxable
Allocation is made, provide notice thereof to the Auction Agent and to each
Holder of such shares during such taxable year at such Holder's address as the
same appears or last appeared on the share books of the Fund. Such Holders of
such shares shall be entitled to receive, when, as and if declared by the Board
of Trustees, out of funds legally available therefor, dividends in an amount
equal to the aggregate Additional Dividends with respect to all Retroactive
Taxable Allocations made to such shares during the taxable year in question,
such dividends to be payable by the Fund to the Auction Agent, for distribution
to such Holders, within 30 days after the notice described above is given to the
Auction Agent.

     13. Certain Other Restrictions. (a) For so long as any of the APS is
outstanding and Moody's is then rating such shares, the Fund will not, unless it
has received written confirmation from Moody's that any such action would not
impair the ratings then assigned by Moody's to the APS, engage in any one or
more of the following transactions:

           (i) transactions in options on securities, futures contracts or 
options on futures contracts except that in connection with Moody's Hedging 
Transactions: (A) the Fund may buy call or put option contracts on securities; 
(B) the Fund may write covered call options on securities; (C) the Fund may 
write put options on securities; (D) the Fund may enter into positions in 
futures contracts based on the Municipal Index provided that the Fund shall not
engage in any such transaction which would cause the Fund at the time of such
transaction to own or have sold (1) outstanding futures contracts based on the 
Municipal Index exceeding in number 10% of the rolling average number of daily 
traded futures contracts based on the Municipal Index in the 30 calendar days 
prior to the time of effecting such transaction as reported by The Wall Street 
Journal or (2) outstanding futures contracts based on the Municipal Index and 
options on such futures contracts having an aggregate fair market value (taking
into account the fair market value of futures contracts based on Treasury Bonds)
exceeding 


                                       20


the fair market value of Moody's Eligible Assets owned by the Fund; (E) the Fund
may enter into futures contracts on Treasury Bonds provided that the Fund shall
not engage in any such transaction which would cause the Fund at the time of
such transaction to own or have sold (1) outstanding futures contracts based on
Treasury Bonds and options on such futures contracts having an aggregate fair
market value (taking into account the fair market value of futures contracts
based on the Municipal Index) exceeding 40% of the aggregate fair market value
of Moody's Eligible Assets owned by the Fund and rated Aa by Moody's (or, if not
rated by Moody's but rated by S&P, rated AAA by S&P) or (2) outstanding futures
contracts based on Treasury Bonds and options on such futures contracts having
an aggregate fair market value (taking into account the fair market value of
futures contracts based on the Municipal Index) exceeding 80% of the aggregate
fair market value of Moody's Eligible Assets owned by the Fund and rated Baa or
A by Moody's (or, if not rated by Moody's but rated by S&P, rated A or AA by
S&P); for purposes of the foregoing clauses (D) and (E), the Fund shall be
deemed to own the number of futures contracts that underlie any outstanding
option written by the Fund; and (F) the Fund may buy call or put options on
futures contracts on the Municipal Index or Treasury Bonds, may write put
options on such futures contracts (provided, that if the contract would require
delivery of a security, that security must be held by the Fund) and may write
call options on such futures if it owns the futures contract subject to the
option. For so long as the APS are rated by Moody's, the Fund will engage in
Closing Transactions to close out any outstanding futures contract based on the
Municipal Index if the open interest with respect to such futures contracts
based on the Municipal Index as reported by The Wall Street Journal is less than
5,000. For so long as the APS are rated by Moody's, the Fund will engage in a
Closing Transaction to close out any outstanding futures contract by no later
than the fifth Business Day of the month in which such contract expires and will
engage in a Closing Transaction to close out any outstanding option on a futures
contract by no later than the first Business Day of the month in which such
option expires. For so long as the APS are rated by Moody's, the Fund will
engage in transactions with respect to futures contracts or options thereon
having only the next settlement date or the settlement date immediately
thereafter. For purposes of valuation of Moody's Eligible Assets: (A) if the
Fund writes a call option, the underlying asset will be valued as follows: (1)
if the option is exchange-traded and may be offset readily or if the option
expires before the earliest possible redemption of the APS, at the lower of the
Discounted Value of the underlying security of the option and the exercise price
of the option or (2) otherwise, it has no value; (B) if the Fund writes a put
option, the underlying asset will be valued as follows: the lesser of (1)
exercise price and (2) the Discounted Value of the underlying security; (C) if
the Fund is a seller under a futures contract, the underlying security will be
valued at the lower of (1) settlement price and (2) the Discounted Value of the
underlying security; if a contract matures within the Moody's Exposure Period,
the security may be valued at the settlement price; (D) if the Fund is the buyer
under a futures contract, the underlying security will be valued at the lower of
(1) the settlement price and (2) the Discounted Value of the underlying
security; if the contract matures within the Moody's Exposure Period, the
security may be valued at its Discounted Value and (E) call or put option
contracts which the Fund buys have no value. For so long as APS are rated by
Moody's: (A) the Fund will not engage in options and futures transactions for
leveraging or speculative purposes; (B) the Fund will not 


                                       21


write or sell any anticipatory contracts pursuant to which the Fund hedges the
anticipated purchase of an asset prior to completion of such purchase; (C) the
Fund will not enter into an option or futures transaction unless, after giving
effect thereto, the Fund would continue to have Moody's Eligible Assets with an
aggregate Discounted Value equal to or greater than the APS Basic Maintenance
Amount; (D) the Fund will not enter into an option or futures transaction unless
after giving effect to such transaction the fund would continue to be in
compliance with the provisions relating to the APS Basic Maintenance Amount; (E)
for purposes of the APS Basic Maintenance Amount (1) assets in margin accounts
are not Moody's Eligible Assets, (2) 10% of the settlement price of assets sold
under a futures contract, the settlement price of assets purchased under a
futures contract, the settlement price of an underlying futures contract if the
Fund writes put options on futures contracts will constitute liabilities of the
Fund and (3) if the Fund writes call options on futures contracts and does not
own the underlying futures contract, 105% of the Market Value of the underlying
futures contract will constitute a liability of the Fund; (F) the Fund shall
enter into only exchange-traded futures and shall write only exchange-traded
options on exchanges approved by Moody's; (G) where delivery may be made to the
Fund with any of a class of securities, the Fund shall assume for purposes of
the APS Basic Maintenance Amount that it takes delivery of that security which
yields it the least value; (H) the Fund will not engage in forward contracts;
(I) the Fund will enter into futures contracts as seller only if it owns the
underlying security; and (J) there shall be a quarterly audit made of the Fund's
futures and options transactions by the Fund's independent accountants to
confirm that the Fund is in compliance with these standards; or

          (ii) incur any indebtedness, without prior written approval of Moody's
that such indebtedness would not adversely affect the then current rating by 
Moody's of the APS except that the Fund may, without obtaining the written 
confirmation described above, incur indebtedness for the purpose of clearing 
securities transactions if the APS Basic Maintenance Amount would continue to be
satisfied after giving effect to such indebtedness; provided, however, that any
such indebtedness shall be repaid within 60 days and will not be extended or 
renewed; or

         (iii) issue any class or series of shares ranking prior to or on a 
parity with the APS with respect to the payment of dividends or the distribution
of assets upon dissolution, liquidation or winding up of the Fund, or reissue
any APS previously purchased or redeemed by the Fund; or

       (b) For so long as any of the APS is Outstanding and S&P is rating such
shares, the Fund will not, unless the Fund has received written confirmation
from S&P that any such action would not impair the rating then assigned by such
rating agency to the APS, engage in any one or more of the following
transactions:

           (i) transactions in any reverse repurchase agreements; or

          (ii) lend portfolio securities; or


                                       22


         (iii) borrow money, except that the Fund may, without obtaining the 
written confirmation described above, borrow money for the purposes of clearing
securities transactions if the APS Basic Maintenance Amount would continue to be
satisfied after giving effect to such borrowing; or

         (iv) issue any class or series of shares ranking prior to or on a 
parity with the APS with respect to the payment of dividends or the distribution
of assets upon dissolution, liquidation or winding up of the Fund, or reissue 
any APS previously purchased or redeemed by the Fund, or merge or consolidate 
with any corporation; or

         (v) engage in repurchase agreement transactions in which the term of
such repurchase obligation is longer than 90 days, in which the underlying 
security is a security other than United States treasury securities (not 
inclusive of zero-coupon securities), demand deposits, certificates of deposits 
or bankers acceptance in which the counter-party or its affiliates have 
securities rated A-1+ by S&P with respect to such underlying security; or

         (vi) engage in short sale transactions; or

         (vii) purchase or sell futures contracts or options thereon or write
uncovered put or uncovered call options on portfolio securities except that (A)
the Fund may engage in any S&P Hedging Transactions based on the Municipal
Index, provided that the Fund shall not engage in any S&P Hedging Transaction
based on the Municipal Index (other than Closing Transactions) which would cause
the Fund at the time of such transaction to own or have sold the least of (1)
more than 1,000 outstanding futures contracts based on the Municipal Index, (2)
outstanding futures contracts based on the Municipal Index and on the Treasury
Bonds exceeding in number 25% of the quotient of the fair market value of the
Fund's total assets divided by 100,000 or (3) outstanding futures contracts
based on the Municipal Index exceeding in number 10% of the average number of
daily traded futures contracts based on the Municipal Index in the month prior
to the time of effecting such transaction as reported by The Wall Street Journal
and (B) the Fund may engage in S&P Hedging Transactions based on Treasury Bonds,
provided that the Fund shall not engage in any S&P Hedging Transaction based on
Treasury Bonds (other than Closing Transactions) which would cause the Fund at
the time of such transaction to own or have sold the lesser of (1) outstanding
futures contracts based on Treasury Bonds and on the Municipal Index exceeding
in number 25% of the quotient of the fair market value of the Fund's total
assets divided by 100,000 or (2) outstanding futures contracts based on Treasury
Bonds exceeding in number 10% of the average number of daily traded futures
contracts based on Treasury Bonds in the month prior to the time of effecting
such transaction as reported by The Wall Street Journal. For so 


                                       23


long as the APS are rated by S&P, the Fund will engage in Closing Transactions
to close out any outstanding futures contracts which the Fund owns or has sold
or any outstanding option thereon owned by the Fund in the event (A) the Fund
does not have S&P Eligible Assets with an aggregate Discounted Value equal to or
greater than the APS Basic Maintenance Amount on two consecutive Valuation Dates
and (B) the Fund is required to pay Variation Margin on the second such
Valuation Date. For so long as the APS are rated by S&P, the Fund will engage in
a Closing Transaction to close out any outstanding futures contract or option
thereon in the month prior to the delivery month under the terms of such futures
contract or option thereon unless the Fund holds securities deliverable under
such terms. For purposes of determining S&P Eligible Assets to determine
compliance with the APS Basic Maintenance Amount, no amounts on deposit with the
Fund's custodian or broker representing Initial Margin or Variation Margin shall
constitute S&P Eligible Assets. For so long as the APS are rated by S&P, when
the Fund writes a futures contract or option thereon, it will maintain an amount
of cash, cash equivalents or short-term, money market securities in a segregated
account with the Fund's custodian, so that the amount so segregated plus the
amount of Initial Margin and Variation Margin held in the account of the Fund's
broker equals the fair market value of the futures contract, except that in the
event the Fund writes a futures contract or option thereon which requires
delivery of an underlying security, the Fund shall hold such underlying
security.

     14. Notice. All notices or communications, unless otherwise specified in
the By-Laws of the Fund or this Certificate of Vote, shall be sufficiently given
if in writing and delivered in person or mailed by first-class mail, postage
prepaid. Notice shall be deemed given on the earlier of the date received or the
date seven days after which such notice is mailed.

     15. Definitions. As used in Parts I and II hereof, the following terms
shall have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:

     "'AA' Composite Commercial Paper Rate," on any date for any Rate Period,
shall mean (i) (A) in the case of any Minimum Dividend Period or any Rate Period
between 7 and 28 Rate Period Days, the interest equivalent of the 30-day rate;
provided, however, in the case of any Minimum Dividend Period of 7 days or any
Rate Period with 7 Rate Period Days and the "AA" Composite Commercial Paper Rate
is being used to determine the Applicable Rate when all of the Outstanding APS
are subject to Submitted Hold Orders, then the interest equivalent of the 7-day
rate, and (B) in the case of any Rate Period with more than 28 Rate Period Days,
the interest equivalent of the 180-day rate, on commercial paper placed on
behalf of issuers whose corporate bonds are rated "AA" by S&P or the equivalent
of such rating by S&P or another rating agency, as made available on a discount
basis or otherwise by the Federal Reserve Bank of New York for the Business Day
immediately preceding such date; or (ii) in the event that the Federal Reserve
Bank of New York does not make available any such rate, then the arithmetic
average of such rates, as quoted on a discount basis or otherwise, by the
Commercial Paper Dealers to the Auction Agent for the close of business on the
Business Day next preceding such date. If any Commercial Paper Dealer does not
quote a rate required to determine the "AA" Composite Commercial Paper Rate, the
"AA" Composite Commercial Paper Rate shall be determined on the basis of the
quotation or quotations furnished by the remaining Commercial Paper Dealer or
Commercial Paper Dealers and any Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers selected by the Fund to provide such rate or
rates not being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers, as the case may be, or, if the Fund does not 


                                       24


select any such Substitute Commercial Paper Dealer or Substitute Commercial
Paper Dealers, by the remaining Commercial Paper Dealer or Commercial Paper
Dealers. For purposes of this definition, the "interest equivalent" of a rate
stated on a discount basis (a "discount rate") for commercial paper of a given
days' maturity shall be equal to the quotient (rounded upwards to the next
higher one-thousandth (.001) of 1%) of (A) the discount rate divided by (B) the
difference between (x) 1.00 and (y) a fraction the numerator of which shall be
the product of the discount rate times the number of days in which such
commercial paper matures and the denominator of which shall be 360.

     "Accountant's Confirmation" shall have the meaning set forth in paragraph
(c) of Section 9 of this Part I.

     "Additional Dividends" means payment to a Holder of APS of an amount which,
when taken together with the aggregate amount of Retroactive Taxable Allocations
made to such Holder with respect to the taxable year in question, would cause
such Holder's dividends in dollars (after federal income tax consequences) from
the aggregate of both the Retroactive Taxable Allocations and the Additional
Dividends to be equal to the dollar amount of the dividends which would have
been received by such Holder if the amount of the aggregate Retroactive Taxable
Allocations would have been excludable from the gross income of such Holder.
Such Additional Dividends shall be calculated (i) without consideration being
given to the time value of money; (ii) assuming that no Holder of APS is subject
to the federal alternative minimum tax with respect to dividends received from
the Fund; and (iii) assuming that each Retroactive Taxable Allocation would be
taxable in the hands of each Holder of APS at the maximum marginal regular
federal individual income tax rate applicable to ordinary income or net capital
gains, as applicable, or the maximum marginal regular federal corporate income
tax rate, whichever is greater, in effect during the taxable year in question.

     "Anticipation Notes" means the following municipal securities: tax
anticipation notes, revenue anticipation notes and tax and revenue anticipation
notes.

     "Applicable Rate" shall have the meaning specified in subparagraph (c)(i)
of Section 2 of this Part I.

     "APS Basic Maintenance Amount," as of any Valuation Date, shall mean the
dollar amount equal to the sum of (i) (A) the product of the number of APS
outstanding on such date multiplied by $50,000; (B) the aggregate amount of
dividends that will have accumulated at the Applicable Rate (whether or not
earned or declared) to (but not including) the first respective Dividend Payment
Dates for each of the APS Outstanding that follow such Valuation Date; (C) the
amount equal to the Projected Dividend Amount (based on the number of APS
Outstanding on such date); (D) the amount of anticipated expenses of the Fund
for the 90 days subsequent to such Valuation Date; (E) the amount of the Fund's
Maximum Potential Additional Dividend Liability as of such Valuation Date; (F)
the amount of any premium payable pursuant to a Premium Call Period; and (G) any
current liabilities as of such Valuation Date to the extent not reflected in any
of (i)(A) through (i)(F) (including, without limitation, any amounts described
in Section 13 of Part I as required to be treated as liabilities in connection
with 


                                       25


the Fund's transactions in futures and options and including any payables for
municipal securities purchased as of such Valuation Date) less (ii) either (A)
the face value of any of the Fund's assets irrevocably deposited by the Fund for
the payment of any of (i)(A) through (i)(G) if such assets mature prior to or on
the date of payment of the liability for which such assets are deposited and are
either securities issued or guaranteed by the United States Government or have a
rating assigned by Moody's of P-1, VMIG-1 or MIG-1 (or, with respect to S&P,
SP-1+ or A-1+) or (B) the Discounted Value of such assets. For purposes of the
APS Basic Maintenance Amount in connection with S&P's ratings of the APS, with
respect to any transactions by the Fund in futures contracts, the Fund shall
include as liabilities (i) 30% of the aggregate settlement value, as marked to
market, of any outstanding futures contracts based on the Municipal Index which
are owned by the Fund plus (ii) 25% of the aggregate settlement value, as marked
to market, of any outstanding futures contracts based on Treasury Bonds which
contracts are owned by the Fund. For purposes of the APS Basic Maintenance
Amount in connection with Moody's rating of the APS, with respect to any
transactions by the Fund in securities options, the Fund shall include as
liabilities (i) 10% of the exercise price of a call option written by the Fund
and (ii) the exercise price of any written put option.

     "APS Basic Maintenance Cure Date," with respect to the failure by the Fund
to satisfy the APS Basic Maintenance Amount (as required by paragraph (a) of
Section 9 of this Part I) as of a given Valuation Date, shall mean the third
Business Day following such Valuation Date.

     "APS Basic Maintenance Report" shall mean a report signed by the President,
Treasurer or any Senior Vice President or Vice President of the Fund which sets
forth, as of the related Valuation Date, the assets of the Fund, the Market
Value and the Discounted Value thereof (seriatim and in aggregate), and the APS
Basic Maintenance Amount.

     "Auction" shall mean each periodic implementation of the Auction
Procedures.

     "Auction Agency Agreement" shall mean the agreement between the Fund and
the Auction Agent which provides, among other things, that the Auction Agent
will follow the Auction Procedures for purposes of determining the Applicable
Rate for each series of APS so long as the Applicable Rate for such series is to
be based on the results of an Auction.

     "Auction Agent" shall mean the entity appointed as such by a resolution of
the Board of Trustees in accordance with Section 7 of this Part I.

     "Auction Date," with respect to any Rate Period, shall mean the Business
Day next preceding the first day of such Rate Period; initially Tuesday, January
12, 1993 for APS Series A and Thursday, January 21, 1993 for APS Series B; and
thereafter each January 12 and July 12 for APS Series A and January 21 and July
21 for APS Series B, subject to change as set forth herein.


                                       26


     "Auction Procedures" shall mean the procedures for conducting Auctions set
forth in Part II hereof.

     "Board of Trustees" shall mean the Board of Trustees of the Fund or any
duly authorized committee thereof.

     "Business Day" shall mean a day on which the New York Stock Exchange is
open for trading and which is neither a Saturday, Sunday nor any other day on
which banks in the City of New York, New York, are authorized by law to close.

     "Closing Transactions" means the termination of a futures contract or
option position by taking an equal position opposite thereto in the same
delivery month as such initial position being terminated.

     "Commercial Paper Dealers" shall mean Goldman, Sachs Money Markets, L.P.,
Lehman Commercial Paper Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Smith Barney, Harris Upham & Co. or, in lieu of any thereof,
their respective affiliates or successors, if such entity is a commercial paper
dealer.

     "Common Shares" shall mean the common shares of beneficial interest, par
value $.01 per share, of the Fund.

     "Cure Date" shall mean the APS Basic Maintenance Cure Date or the 1940 Act
Cure Date, as the case may be.

     "Date of Original Issue," with respect to any series of APS, shall mean the
date on which the Fund initially issued shares of such series of APS.

     "Deposit Securities" shall mean cash and municipal securities rated at
least A-1+ or SP-1+ by S&P, except that, for purposes of Section 3(a)(iii) of
this Part I, such municipal securities shall be considered "Deposit Securities"
only if they are also rated P-1, MIG-1 or VMIG-1 by Moody's.

     "Discounted Value" shall mean (i) with respect to an S&P Eligible Asset,
the quotient of the Market Value thereof divided by the applicable S&P Discount
Factor and (ii) with respect to a Moody's Eligible Asset, the quotient of the
Market Value thereof divided by the applicable Moody's Discount Factor, provided
that with respect to a Moody's Eligible Asset, Discounted Value shall not exceed
the par value of such Asset at any time.

     "Dividend Coverage Amount," as of any Valuation Date, shall mean, with
respect to each of the APS, (i) the aggregate amount of dividends that will
accumulate on such APS to (but not including) the first Dividend Payment Date
for such share that follows such Valuation Date plus any liabilities that will
become payable prior to or on such payment date, less (ii) the combined value of
Deposit Securities irrevocably deposited for the payment of dividends on such
APS and Receivables for Municipal Securities Sold which become due prior to the
Dividend Payment Date and interest with 


                                       27


respect to municipal securities which is payable to the Fund prior to the
Dividend Payment Date.

     "Dividend Coverage Assets," as of any Valuation Date, shall mean, with
respect to each of the APS, Deposit Securities with maturity or tender dates not
later than the day preceding the first Dividend Payment Date for such share that
follows such Valuation Date and having a value not less than the Dividend
Coverage Amount with respect to such share.

     "Dividend Payment Date," with respect to any series of APS, shall mean any
date on which dividends on shares of such series of APS are payable pursuant to
the provisions of paragraph (b) of Section 2 of this Part I.

     "Dividend Period," with respect to any series of APS, shall mean the period
from and including the Date of Original Issue of such series to but excluding
the initial Dividend Payment Date for such series and any period thereafter from
and including one Dividend Payment Date for such series to but excluding the
next succeeding Dividend Payment Date for such series.

     "Fund" shall mean Van Kampen Merritt Municipal Opportunity Trust, a
Massachusetts business trust, which is the issuer of the APS.

     "Failure to Deposit," with respect to any series of APS, shall mean a
failure by the Fund to pay to the Auction Agent, not later than 12:00 noon, New
York City time, (A) on the Business Day next preceding any Dividend Payment Date
for such series, in funds available on such Dividend Payment Date in The City of
New York, New York, the full amount of any dividend (whether or not earned or
declared) to be paid on such Dividend Payment Date on any share of such series
or (B) on the Business Day next preceding any redemption date in funds available
on such redemption date for such series in The City of New York, New York, the
Redemption Price to be paid on such redemption date for any share of such series
after notice of redemption is given pursuant to paragraph (b) of Section 3 of
this Part I.

     "Fund" shall mean Van Kampen Merritt Advantage Municipal Income Trust II, a
Massachusetts business trust, which is the issuer of the APS.

     "Holder," with respect to any series of APS, shall mean the registered
holder of shares of such series of APS as the same appears on the share books of
the Fund.

     "Independent Accountant" shall mean a nationally recognized accountant, or
firm of accountants, that is with respect to the Fund an independent public
accountant or firm of independent public accountants under the Securities Act of
1933, as amended from time to time.

     "Interest Equivalent" means a yield on a 360-day basis of a discount basis
security which is equal to the yield on an equivalent interest-bearing security.


                                       28


     "Initial Dividend Period," with respect to any series of APS, shall mean
the period from and including the Date of Original Issue thereof to but
excluding the initial Dividend Payment Date which occurs in a month which
contains the first scheduled Auction Date for such series of APS.

     "Initial Margin" means the amount of cash or securities deposited with a
custodian for the benefit of a futures commission merchant as a good-faith
deposit at the time of the initiation of a purchase or sale position with
respect to a futures contract or a sale position with respect to an option
position thereon.

     "Mandatory Redemption Price" means $50,000 per share of APS plus an amount
equal to accumulated but unpaid dividends thereon to the date fixed for
redemption (whether or not earned or declared).

     "Marginal Tax Rate" means the marginal regular federal income tax rate
applicable to ordinary income or the maximum marginal regular federal corporate
income tax rate, whichever is greater.

     "Market Value" of any asset of the Fund shall mean the market value thereof
determined by the Pricing Service designated from time to time by the Board of
Trustees. Market Value of any asset shall include any interest accrued thereon.
The Pricing Service values portfolio securities at the mean between the quoted
bid and asked price or the yield equivalent when quotations are readily
available. Securities for which quotations are not readily available are valued
at fair value as determined by the pricing service using methods which include
consideration of yields or prices of municipal bonds of comparable quality, type
of issue, coupon, maturity and rating; indications as to value from dealers; and
general market conditions. The pricing service may employ electronic data
processing techniques and/or a matrix system to determine valuations.

     "Mandatory Redemption Price" means $50,000 per share of APS plus an amount
equal to accumulated but unpaid dividends thereon to the date fixed for
redemption (whether or not earned or declared).

     "Master Purchaser's Letter" has the meaning specified in Section 1 of Part
II hereof.

     "Maximum Potential Additional Dividends Liability," as of any Valuation
Date, shall mean the aggregate amount of Additional Dividends that would be due
if the Fund were to make Retroactive Taxable Allocations, with respect to any
fiscal year, estimated based upon dividends paid and the amount of undistributed
realized net capital gains and other taxable income earned by the Fund, as of
the end of the calendar month immediately preceding such Valuation Date, and
assuming such Additional Dividends are fully taxable.

     "Minimum Dividend Period" shall mean with respect to APS Series A and APS
Series B, any Rate Period consisting of 28 Rate Period Days.


                                       29


     "Minimum Liquidity Level" shall have meaning set forth in Section 10 of
this Part I.

     "Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation, and its successors.

     "Moody's Discount Factor" shall mean, for purposes of determining the
Discounted Value of any Moody's Eligible Asset, the percentage determined by
reference to the rating on such asset and the shortest Exposure Period set forth
opposite such rating that is the same length as or is longer than the Moody's
Exposure Period, in accordance with the table set forth below:



                                                                  RATING CATEGORY
                                   ------------------------------------------------------------------------------
                                                                                 
  EXPOSURE PERIOD                  Aaa1         AA1       A1      BAA1       OTHER2   (V)MIG-11,3,4    SP-1+3,4
  ---------------                  ----         ---       --      ----       ------   -------------    --------

   7 weeks                         151%         159%      168%    202%       229%     136%             148%
   8 weeks or less but greater     154          164       173     205        235      137              149
     than seven weeks
   9 weeks or less but greater     158          169       179     209        242      138              150
     than eight weeks
  -----------------
  1  Moody's rating.
  2  New York municipal securities not rated by Moody's but rated BBB or BBB+ by S&P.
  3  New York municipal securities rated MIG-1 or VMIG-1 or, if not rated by Moody's, rated SP-1+ by S&P which
  do not mature or have a demand feature at par exercisable within the Moody's Exposure Period and which do not
  have a long-term rating.
  4  For the purposes of the definition of Moody's Eligible Assets, these securities will have an assumed
  rating of "A" by Moody's.


     Notwithstanding the foregoing, (i) No Moody's Discount Factor will be
applied to short-term municipal securities so long as such municipal securities
are rated at least MIG-1, VMIG-1 or P-1 by Moody's and mature or have a demand
feature at par exercisable within the Moody's Exposure Period and the Moody's
Discount Factor for such municipal securities will be 125% as long as such
municipal securities are rated at least A-1-/AA or SP-1+/AA by S&P and mature or
have a demand feature at par exercisable within the Moody's Exposure Period and
(ii) no Moody's Discount Factor will be applied to cash or to Receivables for
Municipal Securities Sold.

     "Moody's Eligible Asset" shall mean cash, Receivables for Municipal
Securities Sold or a municipal security that (i) pays interest in cash, (ii) is
publicly rated Baa or higher by Moody's or, if not rated by Moody's but rated by
S&P, is rated at least BBB by S&P (provided that, for purposes of determining
the Moody's Discount Factor applicable to any such S&P-rated municipal security,
such municipal security (excluding any short-term municipal security) shall be
deemed to have a Moody's rating which is one full rating category lower than its
S&P rating), (iii) does not have its Moody's rating suspended by Moody's; and
(iv) is part of an issue of municipal securities of at least $10,000,000.
Municipal securities issued by any one issuer and rated BBB by S&P may 


                                       30


comprise no more than 4% of total Moody's Eligible Assets; such BBB-rated
municipal securities, if any, together with any municipal securities issued by
the same issuer and rated Baa by Moody's or A by S&P, may comprise no more than
6% of total Moody's Eligible Assets; such BBB, Baa and A-rated municipal
securities, if any, together with any municipal securities issued by the same
issuer and rated A by Moody's or AA by S&P, may comprise no more than 10% of
total Moody's Eligible Assets; and such BBB, Baa, A and AA-rated municipal
securities, if any, together with any municipal securities issued by the same
issuer and rated Aa by Moody's or AAA by S&P, may comprise no more than 20% of
total Moody's Eligible Assets. For purposes of the foregoing sentence, any
municipal security backed by the guaranty, letter of credit or insurance issued
by a third party shall be deemed to be issued by such third party if the
issuance of such third party credit is the sole determinant of the rating on
such municipal security. Municipal securities issued by issuers located within a
single state or territory and rated BBB by S&P may comprise no more than 12% of
total Moody's Eligible Assets; such BBB-rated municipal securities, if any,
together with any municipal securities issued by issuers located within the same
state or territory and rated Baa by Moody's or A by S&P may comprise no more
than 20% of total Moody's Eligible Assets; such BBB, Baa and A-rated municipal
securities, if any, together with any municipal securities issued by issuers
located within the same state or territory and rated A by Moody's or AA by S&P,
may comprise no more than 40% of total Moody's Eligible Assets; and such BBB,
Baa, A and AA-rated municipal securities, if any, together with any municipal
securities issued by issuers located within the same state or territory and
rated Aa by Moody's or AAA by S&P, may comprise no more than 60% of total
Moody's Eligible Assets. For purposes of applying the foregoing requirements, a
municipal security shall be deemed to be rated BBB by S&P if rated BBB, BBB- or
BBB+ by S&P. For purposes of Minimum Issue Size, Maximum Underlying Obligor and
Maximum State or Territory Concentration, Moody's Eligible Assets shall be
calculated without including cash and municipal securities rated MIG-1 or VMIG-1
or, if not rated by Moody's, rated SP-1+ by S&P, which either mature or have a
demand feature at par exercisable within the Moody's Exposure Period. Where the
Fund sells an asset and agrees to repurchase such asset in the future, the
Discounted Value of such asset will constitute a Moody's Eligible Asset and the
amount the Fund is required to pay upon repurchase of such asset will count as a
liability for the purposes of the APS Basic Maintenance Amount. Where the Fund
purchases an asset and agrees to sell it to a third party in the future, cash
receivable by the Fund thereby will constitute a Moody's Eligible Asset if the
long-term debt of such other party is rated at least A2 by Moody's and such
agreement has a term of 30 days or less; otherwise the Discounted Value of such
asset will constitute a Moody's Eligible Asset. For the purposes of calculation
of Moody's Eligible Assets, municipal securities which have been called for
redemption by the issuer thereof shall be valued at the lower of Market Value or
the call price of such municipal securities.

     Notwithstanding the foregoing, an asset will not be considered a Moody's
Eligible Asset to the extent that it has been irrevocably deposited for the
payment of (i)(A) through (i)(G) under the definition of APS Basic Maintenance
Amount or it is subject to any material lien, mortgage, pledge, security
interest or security agreement of any kind (collectively, "Liens"), except for
(a) Liens which are being contested in good faith by appropriate proceedings and
which Moody's has indicated to the Fund will not 


                                       31


affect the status of such asset as a Moody's Eligible Asset, (b) Liens for taxes
that are not then due and payable or that can be paid thereafter without
penalty, (c) Liens to secure payment for services rendered or cash advanced to
the Fund by Van Kampen Merritt Investment Advisory Corp., the Administrator,
State Street Bank and Trust Company or the Auction Agent and (d) Liens by virtue
of any repurchase agreement.

     "Moody's Exposure Period" shall mean the period commencing on a given
Valuation Date and ending 46 days thereafter.

     "Moody's Hedging Transactions" shall mean transactions in options on
securities, futures contracts based on the Municipal Index or Treasury Bonds and
options on such futures contracts.

     "Municipal Index" shall mean The Bond Buyer Municipal Bond Index.

     "1940 Act" shall mean the Investment Company Act of 1940, as amended from
time to time.

     "1940 Act APS Asset Coverage" shall mean asset coverage, as defined in
Section 18(h) of the 1940 Act, of at least 200% with respect to all outstanding
senior securities of the Fund which are stock, including all outstanding APS (or
such other asset coverage as may in the future be specified in or under the 1940
Act as the minimum asset coverage for senior securities which are stock of a
closed-end investment company as a condition of declaring dividends on its
common stock).

     "1940 Act Cure Date," with respect to the failure by the Fund to maintain
the 1940 Act APS Asset Coverage (as required by Section 8 of this Part I) as of
the last Business Day of each month, shall mean the last Business Day of the
following month.

     "Non-Call Period" shall have the meaning set forth below under "Specific
Redemption Provisions."

     "Notice of Redemption" shall mean any notice with respect to the redemption
of the APS pursuant to Section 3 of this Part I.

     "Optional Redemption Price" shall mean (i) $50,000 per share of APS in the
case of a six-month Dividend Period or a Special Dividend Period of less than
365 days or (ii) with respect to a Special Dividend Period of 365 days or more
the Optional Redemption Price set forth in the Specific Redemption Provisions in
connection therewith; in each case plus an amount equal to accumulated but
unpaid dividends thereon to the date of redemption (whether or not earned or
declared).

     "Preferred Shares" shall mean the authorized preferred shares of beneficial
interest, par value $.01 per share, of the Fund, and includes the APS.

     "Premium Call Period" shall have the meaning set forth below under
"Specific Redemption Provisions."


                                       32


     "Pricing Service" means Van Kampen Merritt Investment Advisory Corp. acting
pursuant to a Fund Pricing Agreement between the Fund and Van Kampen Merritt
Investment Advisory Corp. and any successor pricing service approved in writing
by Moody's (if Moody's is then rating the APS) and S&P (if S&P is then rating
the APS).

     "Projected Dividend Amount" means, with respect to the shares of any series
of APS, on any Valuation Date, in the event the then current Dividend Period
will end within 47 calendar days of such date, from and after the last day of
such Dividend Period until 47 calendar days less the number of days remaining in
the current Dividend Period at an Applicable Rate equal to the Maximum Rate for
such Dividend Period multiplied by the larger of the factors (currently 304%)
that the Fund has been informed by Moody's and S&P is applicable to the
Projected Dividend Amount and desgined to take into account increases in
dividend rates over such period.

     "Quarterly Valuation Date" shall mean the last Business Day of each fiscal
quarter of the Fund in each fiscal year of the Fund, commencing July 31, 1992.

     "Rate Period," with respect to any series of APS, shall mean the Initial
Dividend Period thereof and any Subsequent Dividend Period, including any
Special Dividend Period, for such series.

     "Rate Period Days," for any Rate Period, if such Rate Period is less than
one year, shall mean the number of days (without giving effect to subparagraph
(b)(ii) of Section 2 of this Part I) in such Rate Period.

     "Receivables for Municipal Securities Sold" shall mean (A) for purposes of
calculation of Moody's Eligible Assets as of any Valuation Date, no more than
the aggregate of the following: (i) the book value of receivables for municipal
securities sold as of or prior to such Valuation Date if such receivables are
due within five business days of such Valuation Date, and if the trades which
generated such receivables are (x) settled through clearing house firms with
respect to which the Fund has received prior written authorization from Moody's
or (y) with counterparties having a Moody's long-term debt rating of at least
Baa3; and (ii) the Moody's Discounted Value of municipal securities sold as of
or prior to such Valuation Date which generated receivables, if such receivables
are due within the Moody's Exposure Period but do not comply with either of the
conditions specified in (i) above, and (B) for purposes of calculation of S&P
Eligible Assets as of any Valuation Date, the book value of receivables for
municipal securities sold as of or prior to such Valuation Date if such
receivables are due within five business days of such Valuation Date.

     "Redemption Price" shall mean the Optional Redemption Price or the
Mandatory Redemption Price, as applicable.

     "Retroactive Taxable Allocation" shall have th meaning set forth in Section
12 hereof.

     "Retroactive Taxable Allocation" shall have the meaning set forth in
Section 12 hereof.


                                       33


     "S&P" shall mean Standard & Poor's Fund, a New York corporation, and its
successors.

     "S&P Discount Factor" shall mean, for purposes of determining the
Discounted Value of any S&P Eligible Asset, the percentage determined by
reference to the rating on such asset and the shortest Exposure Period set forth
opposite such rating that is the same length as or is longer than the S&P
Exposure Period, in accordance with the table set forth below:



                                                                        RATING CATEGORY
                                               -------------- --------------- ------------ -------------
                                                                                   
EXPOSURE PERIOD                                     AAA*           AA*             A*           BBB*
---------------                                     ----           ---             --           ----
40      Business Days.............................. 190%           195%            210%         250%
22      Business Days.............................. 170            175             190          230
10      Business Days.............................. 155            160             175          215
7       Business Days.............................. 150            155             170          210
3       Business Days.............................. 130            135             150          190


--------------------
*     S&P rating.

     Notwithstanding the foregoing, (i) the S&P Discount Factor for short-term
municipal securities will be 115%, so long as such municipal securities are
rated A-1+ or SP-1+ by S&P and mature or have a demand feature exercisable
within 30 days or less, or 125% if such municipal securities are not rated by
S&P but are rated VMIG-1, P-1 or MIG-1 by Moody's; provided, however, that any
such Moody's rated short-term municipal securities which have demand features
exercisable within 30 days or less must be backed by a letter of credit,
liquidity facility or guarantee from a bank or other financial institution with
a short-term rating of at least A-1+ from S&P; and further provided that such
Moody's-rated short-term municipal securities may comprise no more than 50% of
short-term municipal securities that qualify as S&P Eligible Assets and (ii) no
S&P Discount Factor will be applied to cash or to Receivables for Municipal
Securities Sold. For purposes of the foregoing, Anticipation Notes rated SP-1+
or, if not rated by S&P, rated MIG-1 or VMIG-1 by Moody's, which do not mature
or have a demand feature at par exercisable in 30 days and which do not have a
long-term rating, shall be considered to be short-term municipal securities.

     "S&P Eligible Asset" shall mean cash (excluding any cash irrevocably
deposited by the Fund for the payment of any liabilities within the meaning of
APS Basic Maintenance Amount), Receivables for Municipal Securities Sold or a
municipal security owned by the Fund that (i) is interest bearing and pays
interest at least semi-annually; (ii) is payable with respect to principal and
interest in U.S. Dollars; (iii) is publicly rated BBB or higher by S&P or, if
not rated by S&P but rated by Moody's, is rated at least A by Moody's (provided
that such Moody's-rated municipal securities will be included in S&P Eligible
Assets only to the extent the Market Value of such municipal securities does not
exceed 50% of the aggregate Market Value of S&P Eligible Assets; and further
provided that, for purposes of determining the S&P Discount Factor applicable to
any 


                                       34


such Moody's-rated municipal security, such municipal security will be deemed to
have an S&P rating which is one full rating category lower than its Moody's
rating); (iv) is not part of a private placement of municipal securities; and
(v) is part of an issue of municipal securities with an original issue size of
at least $20 million or, if an issue with an original issue size below $20
million (but in no event below $10 million), is issued by an issuer with a total
of at least $50 million of securities outstanding. Solely for purposes of this
definition, the term "municipal securities" means any obligation the interest on
which is exempt from regular Federal income taxation and which is issued by any
of the fifty United States, the District of Columbia or any of the territories
of the United States, their subdivisions, counties, cities, towns, villages,
school districts and agencies (including authorities and special districts
created by the states), and federally sponsored agencies such as local housing
authorities. Notwithstanding the foregoing limitations:

     1. Municipal securities of any one issuer or guarantor (excluding bond
insurers) shall be considered S&P Eligible Assets only to the extent the Market
Value of such municipal securities does not exceed 10% of the aggregate Market
Value of S&P Eligible Assets provided that 2% is added to the applicable S&P
Discount Factor for every 1% by which the Market Value of such municipal
securities exceeds 5% of the aggregate Market Value of S&P Eligible Assets;

     2. Municipal securities guaranteed or insured by any one bond insurer shall
be considered S&P Eligible Assets only to the extent the Market Value of such
municipal securities does not exceed 25% of the aggregate Market Value of S&P
Eligible Assets; and

     3. Long-term municipal securities issued by issuers in any one state or
territory shall be considered S&P Eligible Assets only to the extent the Market
Value of such municipal securities does not exceed 20% of the aggregate Market
Value of S&P Eligible Assets.

     "S&P Exposure Period" shall mean the maximum period of time following a
Valuation Date that the Fund has under this Certificate of Vote to cure any
failure to maintain, as of such Valuation Date, the Discounted Value for its
portfolio at least equal to the APS Basic Maintenance Amount (as described in
paragraph (a) of Section 9 of this Part I).

     "S&P Hedging Transactions" means futures contracts based on the Municipal
Index or Treasury Bonds, put and call options on such contracts purchased by the
Fund and covered call options and secured put options on portfolio securities
written by the Fund.

     "Special Dividend Period," with respect to any series of APS, shall mean
any Subsequent Dividend Period commencing on the date designated by the Fund in
accordance with Section 4 of this Part I and ending on the last day of the last
Dividend Period thereof, with such number of consecutive days or whole years as
the Board of Trustees shall specify, including the terms of any Specific
Redemption Provisions, if any.


                                       35


     "Specific Redemption Provisions" means, with respect to any Special
Dividend Period of 365 or more days, either, or any combination of, (i) period
(a "Non-Call Period") determined by the Board of Trustees, after consultation
with the Broker-Dealers, during which the shares subject to such Special
Dividend Period are not subject to redemption at the option of the Fund and (ii)
a period (a "Premium Call Period"), consisting of a number of whole years and
determined by the Board of Trustees, after consultation with the Broker-Dealers,
during each year of which the shares subject to such Special Dividend Period
shall be redeemable at the Fund's option at a price per share equal to $50,000
plus accumulated but unpaid dividends plus a premium expressed as a percentage
of $50,000 as determined by the Board of Trustees after consultation with the
Broker-Dealers; provided that during any Special Dividend Period of 365 or more
days if on the date of determination of the Applicable Rate for such series,
such Applicable Rate equaled or exceeded the Treasury Rate, the Fund may redeem
APS without regard to any Non-Call Period or Premium Call Period at the
Mandatory Redemption Price.

     "Subsequent Dividend Period," with respect to any series of APS, shall mean
the period from and including the first day following the Initial Dividend
Period thereof to but excluding the next Dividend Payment Date which follows a
scheduled Auction for such series and any period thereafter from and including
one Dividend Payment Date which follows a scheduled Auction for such series to
but excluding the next succeeding Dividend Payment Date which follows a
scheduled Auction for such series; provided, however, that if any Subsequent
Dividend Period is also a Special Dividend Period, such term shall mean the
period commencing on the first day of such Special Dividend Period and ending on
the last day of the last Dividend Period thereof.

     "Substitute Commercial Paper Dealer" shall mean The First Boston Company or
Morgan Stanley & Co. Incorporated or their respective affiliates or successors,
if such entity is a Commercial Paper Dealer; provided that none of such entities
shall be a Commercial Paper Dealer.

     "Substitute U.S. Government Securities Dealer" shall mean The First Boston
Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated or their
respective affiliates or successors, if such entity is a U.S. Government
securities dealer; provided that none of such entities shall be a U.S.
Government Securities Dealer.

     "Treasury Bonds" shall mean United States Treasury Bonds backed by the full
faith and credit of the United States government with remaining maturities of 10
years or more.

     "Treasury Rate," on any date for any Rate Period, shall mean (i) the yield
on the most recently auctioned non-callable direct obligations of the U.S.
Government (excluding "flower" bonds) with a remaining maturity within three
months of the duration of such Rate Period, as quoted in The Wall Street Journal
on such date for the Business Day next preceding such date; or (ii) in the event
that any such rate is not published by The Wall Street Journal, then the
arithmetic average of the yields (expressed as an interest equivalent in the
case of a Rate Period which is one year or less and expressed as a bond
equivalent in the case of any longer Rate Period) on the most recently auctioned


                                       36


non-callable direct obligations of the U.S. Government (excluding "flower"
bonds) with a remaining maturity within three months of the duration of such
Rate Period as quoted on a discount basis or otherwise by the U.S. Government
Securities Dealers to the Auction Agent for the close of business on the
Business Day immediately preceding such date. If any U.S. Government Securities
Dealer does not quote a rate required to determine the Treasury Rate, the
Treasury Rate shall be determined on the basis of the quotation or quotations
furnished by the remaining U.S. Government Securities Dealer or U.S. Government
Securities Dealers and any Substitute U.S. Government Securities Dealers
selected by the Fund to provide such rate or rates not being supplied by any
U.S. Government Securities Dealer or U.S. Government Securities Dealers, as the
case may be, or, if the Fund does not select any such Substitute U.S. Government
Securities Dealer or Substitute U.S. Government Securities Dealers, by the
remaining U.S. Government Securities Dealer or U.S. Government Securities
Dealers.

     "U.S. Government Securities Dealer" shall mean Goldman, Sachs & Co., Lehman
Government Securities Incorporated, Smith Barney, Harris Upham & Co. and Morgan
Guaranty Trust Company of New York or their respective affiliates or successors,
if such entity is a U.S. Government securities dealer.

     "Valuation Date" shall mean, for purposes of determining whether the Fund
is maintaining the APS Basic Maintenance Amount and the Minimum Liquidity Level,
each Business Day.

     "Variation Margin" shall mean, in connection with outstanding purchase or
sale positions in futures contracts and outstanding sales positions with respect
to options thereon, the amount of cash and securities paid to and received from
a futures commission merchant (subsequent to the Initial Margin payment) from
time to time as the value of such position fluctuates.

     "Voting Period" shall have the meaning set forth in paragraph (b) of
Section 5 of this Part I.

                                    PART II.

     1. Certain Definitions. Capitalized terms not defined in Section 1 of this
Part II shall have the respective meaning specified in Part I hereof. As used in
this Part II, the following terms shall have the following meanings, unless the
context otherwise requires:

     "Affiliate" shall mean any Person known to the Auction Agent to be
controlled by, in control of or under common control with the Fund; provided
that no Broker-Dealer controlled by, in control of or under common control with
the Fund shall be deemed to be an Affiliate nor shall any fund or any Person
controlled by, in control of or under common control with such fund, one of the
trustees or executive officers of which is also a trustee of the Fund be deemed
to be an Affiliate solely because such trustee or executive officer is also a
trustee of the Fund.


                                       37


     "Agent Member" shall mean a member of or participant in the Securities
Depository that will act on behalf of a Bidder and is identified as such in such
Bidder's Master Purchaser's Letter.

     "Applicable Percentage" for any series of APS on any Auction Date shall
mean the percentage, determined as set forth below, based on the prevailing
rating of such series in effect at the close of business on the Business Day
next preceding such Auction Date.

              Prevailing Rating              Percentage
              -----------------              ----------
              "aa3"/AA- or higher               110%
              "a3"/A-                           125%
              "baa3"/BBB-                       150%
              "ba3"/BB-                         200%
              Below "ba3"/BB-                   250%

provided, however, that in the event the Fund has notified the Auction Agent of
its intent to allocate income taxable for federal income tax purposes to the APS
prior to the Auction establishing the Applicable Rate for such shares the
applicable percentage in the foregoing table shall be divided by the quantity 1
minus the maximum marginal regular federal individual income tax rate applicable
to ordinary income or the maximum marginal regular federal corporate income tax
rate, whichever is greater, provided further, however, that the Applicable
Percentage shall be divided in the foregoing manner only to the extent of the
portion of the dividend on the APS for such Rate Period that represents the
allocation of taxable income to the APS.

     For purposes of this definition, the "prevailing rating" of shares of a
series of APS shall be (i) "aa3"/AA- or higher if shares of such series of APS
have a rating of "aa3" or better by Moody's and AA- or better by S&P or the
equivalent of such ratings by such agencies or a substitute rating agency or
substitute rating agencies selected as provided below, (ii) if not "aa3"/AA- or
higher, then "a3"/A- if the shares of such series of APS have a rating of "a3"
or better by Moody's and A- or better by S&P or the equivalent of such ratings
by such agencies or a substitute rating agency or substitute rating agencies
selected as provided below, (iii) if not "aa3"/AA- or higher or "a3"/A-, then
"baa3"/BBB- if the shares of such series of APS have a rating of "baa3" or
better by Moody's and BBB- or better by S&P or the equivalent of such ratings by
such agencies or a substitute rating agency or substitute rating agencies
selected as provided below, (iv) if not "aa3"/AA- or higher, "a3"/A- or
"baa3"/BBB-, then "ba3"/BB- if the shares of such series of APS have a rating of
"ba3" or better by Moody's and BB- or better by S&P or the equivalent of such
ratings by such agencies or substitute rating agency or substitute rating
agencies selected as provided below, and (v) if not "aa3"/AA- or higher,
"a3"/A-, "baa3"/BBB- or "ba3"/BB-, then Below "ba3"/BB-, provided, however, that
if the APS are rated by only one rating agency, the prevailing rating will be
determined without reference to the rating of any other rating agency. The Fund
shall take all reasonable action necessary to enable either S&P or Moody's to
provide a rating for each series of APS. If neither S&P nor Moody's shall make
such a rating available, Goldman, Sachs & 


                                       38


Co. or Smith Barney, Harris Upham & Co. Incorporated or their successors as
Broker-Dealers shall select a nationally recognized statistical rating
organization (as that term is used in the rules and regulations of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended from time to time) to act as a substitute rating agency in respect of
the APS and the Fund shall take all reasonable action to enable such rating
agency or agencies to provide a rating for shares of such series.

     "Available APS" shall have the meaning specified in paragraph (a) of
Section 4 of this Part II.

     "Bid" and "Bids" shall have the respective meanings specified in paragraph
(a) of Section 2 of this Part II.

     "Bidder" and "Bidders" shall have the respective meanings specified in
paragraph (a) of Section 2 of this Part II.

     "Broker-Dealer" shall mean any broker-dealer, commercial bank or other
entity permitted by law to perform the functions required of a Broker-Dealer in
this Part II, that is a member of, or a participant in, the Securities
Depository or is an affiliate of such member or participant, has been selected
by the Fund and has entered into a Broker-Dealer Agreement that remains
effective.

     "Broker-Dealer Agreement" shall mean an agreement between the Auction Agent
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in this Part II.

     "Existing Holder," when used with respect to shares of any series of APS,
shall mean a Person who has signed a Master Purchaser's Letter and is listed as
a beneficial owner of such APS in the records of the Auction Agent.

     "Hold Order" and "Hold Orders" shall have the respective meanings specified
in paragraph (a) of Section 2 of this Part II.

     "Master Purchaser's Letter" shall mean a letter, addressed to the Fund, the
Auction Agent, a Broker-Dealer and an Agent Member in which a Person agrees,
among other things, to offer to purchase, to purchase, to offer to sell and/or
to sell APS as set forth in this Part II.

     "Maximum Rate," for any series of APS on any Auction Date, shall mean:

           (i) in the case of any Auction Date which is not the Auction Date
immediately prior to the first day of any proposed Special Dividend Period
designated by the Fund pursuant to Section 4 of Part I of the Certificate of
Vote, the product of (A) the "AA" Composite Commercial Paper Rate on such
Auction Date for the next Rate Period of such series and (B) the Applicable
Percentage on such Auction Date, unless such series has or had a Special
Dividend Period (other than a Special Dividend Period of 28 Rate Period Days or
less) and an Auction at which Sufficient Clearing Bids 


                                       39


existed has not yet occurred for a Minimum Dividend Period of such series after
such Special Dividend Period, in which case the higher of:

               (A) the dividend rate on shares of such series for the
         then-ending Rate Period, and

               (B) the product of (1) the higher of (x) the "AA" Composite
         Commercial Paper Rate on such Auction Date for the then-ending Rate
         Period of such series, if such Rate Period is less than one year, or
         the Treasury Rate on such Auction Date for such Rate Period, if such
         Rate Period is one year or greater, and (y) the "AA" Composite
         Commercial Paper Rate on such Auction Date for such Special Dividend
         Period of such series, if such Special Dividend Period is less than one
         year, or the Treasury Rate on such Auction Date for such Special
         Dividend Period, if such Special Dividend Period is one year or greater
         and (2) the Applicable Percentage on such Auction Date; or

          (ii) in the case of any Auction Date which is the Auction Date 
immediately prior to the first day of any proposed Special Dividend Period of 
more than 28 Rate Period Days designated by the Fund pursuant to Section 4 of 
Part I of the Certificate of Vote, the product of (A) the highest of (1) the 
"AA" Composite Commercial Paper Rate on such Auction Date for the then-ending 
Rate Period of such series, if such Rate Period is less than one year, or the 
Treasury Rate on such Auction Date for such Rate Period, if such Rate Period is 
one year or greater, (2) the "AA" Composite Commercial Paper Rate on such 
Auction Date for the Special Dividend Period for which the Auction is being held
if such Special Dividend Period is less than one year or the Treasury Rate on 
such Auction Date for the Special Dividend Period for which the Auction is being
held if such Special Dividend Period is one year or greater, and (3) the "AA" 
Composite Commercial Paper Rate on such Auction Date for Minimum Dividend 
Periods and (B) the Applicable Percentage on such Auction Date.

     "Order" and "Orders" shall have the respective meanings specified in
paragraph (a) of Section 2 of this Part II.

     "Outstanding" shall mean, as of any Auction Date with respect to shares of
any series of APS, the number of shares of such series theretofore issued by the
Fund except, without duplication, (i) any shares of such series of APS
theretofore cancelled or delivered to the Auction Agent for cancellation or
redeemed by the Fund or as to which a notice of redemption shall have been given
by the Fund, (ii) any shares of such series of APS as to which the Fund or any
Affiliate thereof shall be an Existing Holder and (iii) any shares of such
series of APS represented by any certificate in lieu of which a new certificate
has been executed and delivered by the Fund.

     "Person" shall mean and include an individual, a partnership, a fund, a
trust, an unincorporated association, a joint venture or other entity or a
government or any agency or political subdivision thereof.


                                       40


     "Potential Holder," when used with respect to shares of any series of APS,
shall mean any Person, including any Existing Holder of shares of such series of
APS, (i) who shall have executed a Master Purchaser's Letter and (ii) who may be
interested in acquiring shares of such series of APS (or, in the case of an
Existing Holder of shares of such series of APS, additional shares of such
series of APS).

     "Securities Depository" shall mean The Depository Trust Company and its
successors and assigns or any other securities depository selected by the Fund
which agrees to follow the procedures required to be followed by such securities
depository in connection with the APS.

     "Sell Order" and "Sell Orders" shall have the respective meanings specified
in paragraph (a) of Section 2 of this Part II.

     "Submission Deadline" shall mean 1:30 p.m., New York City time, on any
Auction Date or such other time on any Auction Date by which Brokers-Dealers are
required to submit Orders to the Auction Agent as specified by the Auction Agent
from time to time.

     "Submitted Bid" and "Submitted Bids" shall have the respective meanings
specified in paragraph (a) of Section 4 of this Part II.

     "Submitted Hold Order" and "Submitted Hold Orders" shall have the
respective meanings specified in paragraph (a) of Section 4 of this Part II.

     "Submitted Order" and "Submitted Orders" shall have the respective meanings
specified in paragraph (a) of Section 4 of this Part II.

     "Submitted Sell Order" and "Submitted Sell Orders" shall have the
respective meanings specified in paragraph (a) of Section 4 of this Part II.

     "Sufficient Clearing Bids" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.

     "Winning Bid Rate" shall have the meaning specified in paragraph (a) of
Section 4 of this Part II.

     2. Orders by Existing Holders and Potential Holders. (a) Prior to the
Submission Deadline on each Auction Date:

           (i) each Existing Holder of shares of any series of APS subject to an
Auction on such Auction Date may submit to a Broker-Dealer by telephone or
otherwise information as to:

               (A) the number of Outstanding shares, if any, of such series
         of APS held by such Existing Holder which such Existing Holder desires
         to continue to hold without regard to the Applicable Rate for such
         series for the next succeeding Rate Period of such series;


                                       41


               (B) the number of Outstanding shares, if any, of such series
         of APS which such Existing Holder offers to sell if the Applicable Rate
         for such series for the next succeeding Rate Period of such series
         shall be less than the rate per annum specified by such Existing
         Holder; and/or

               (C) the number of Outstanding shares, if any, of such series
         of APS held by such Existing Holder which such Existing Holder offers
         to sell without regard to the Applicable Rate for such series for the
         next succeeding Rate Period of such series;

and

          (ii) one or more Broker-Dealers, using lists of Potential Holders, 
shall in good faith for the purpose of conducting a competitive Auction in a 
commercially reasonable manner, contact Potential Holders (by telephone or 
otherwise), including Persons that are not Existing Holders, on such lists to 
determine the number of shares, if any, of such series of APS which each such 
Potential Holder offers to purchase if the Applicable Rate for such series for 
the next succeeding Rate Period of such series shall not be less than the rate 
per annum specified by such Potential Holder.

For the purposes hereof, the communication to a Broker-Dealer of information
referred to in clause (i)(A), (i)(B), (i)(C) or (ii) of this paragraph (a) is
hereinafter referred to as an "Order" and collectively as "Orders" and each
Existing Holder and each Potential Holder placing an Order is hereinafter
referred to as a "Bidder" and collectively as "Bidders"; an Order containing the
information referred to in clause (i)(A) of this paragraph (a) is hereinafter
referred to as a "Hold Order" and collectively as "Hold Orders"; an Order
containing the information referred to in clause (i)(B) or (ii) of this
paragraph (a) is hereinafter referred to as a "Bid" and collectively as "Bids";
and an Order containing the information referred to in clause (i)(C) of this
paragraph (a) is hereinafter referred to as a "Sell Order" and collectively as
"Sell Orders."

       (b) (i) A bid by an Existing Holder of shares of any series of APS 
subject to an Auction on any Auction Date shall constitute an irrevocable offer
to sell:

               (A) the number of Outstanding shares of such series
         of APS specified in such Bid if the Applicable Rate for such
         series determined on such Auction Date shall be less than the
         rate specified therein:

               (B) such number or a lesser number of Outstanding
         shares of such series of APS to be determined as set forth in
         clause (iv) of paragraph (a) of Section 5 of this Part II if
         the Applicable Rate for such series determined on such Auction
         Date shall be equal to the rate specified therein; or

               (C) the number of Outstanding shares of such series
         of APS specified in such Bid if the rate specified therein
         shall be higher than the Maximum Rate for such series, or such
         number or a lesser number of 


                                       42


         Outstanding shares of such series of APS to be determined as 
         set forth in clause (iii) of paragraph (b) of Section 5 of this
         Part II if the rate specified therein shall be higher than the
         Maximum Rate for such series and Sufficient Clearing Bids for
         such series do not exist.

          (ii) A Sell Order by an Existing Holder of shares of any series of APS
subject to an Auction on any Auction Date shall constitute an irrevocable offer
to sell:

               (A) the number of Outstanding shares of such series
         of APS specified in such Sell Order; or

               (B) such number or a lesser number of Outstanding
         shares of such series of APS as set forth in clause (iii) of
         paragraph (b) of Section 5 of this Part II if Sufficient
         Clearing Bids for such series do not exist.

         (iii) A Bid by a Potential Holder of shares of any series of APS 
subject to an Auction on any Auction Date shall constitute an irrevocable offer 
to purchase:

               (A) the number of Outstanding shares of such series
         of APS specified in such Bid if the Applicable Rate for such
         series determined on such Auction Date shall be higher than
         the rate specified therein; or

               (B) such number or a lesser number of Outstanding
         shares of such series of APS as set forth in clause (v) of
         paragraph (a) of Section 5 of this Part II if the Applicable
         Rate for such series determined on such Auction Date shall be
         equal to the rate specified therein.

       (c) No Order for any number of shares of any series of APS other than 
whole shares shall be valid.

     3. Submission of Orders by Broker-Dealers to Auction Agent. (a) Each
Broker-Dealer shall submit in writing to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders for shares of any series of
APS subject to an Auction on such Auction Date obtained by such Broker-Dealer
and shall specify with respect to each Order for such shares:

           (i) the name of the Bidder placing such Order;

          (ii) the aggregate number of shares of such series of APS that are the
subject of such Order;

         (iii) to the extent that such Bidder is an Existing Holder of shares of
such series of APS:


                                       43


               (A) the number of shares, if any, of such series of
         APS subject to any Hold Order placed by such Existing Holder;

               (B) the number of shares, if any, of such series of
         APS subject to any Bid placed by such Existing Holder and the
         rate specified in such Bid; and

               (C) the number of shares, if any, of such series of
         APS subject to any Sell Order placed by such Existing Holder;
         and

          (iv) to the extent such Bidder is a Potential Holder of shares of such
series of APS, the rate and number of shares of such series of APS specified in
such Potential Holder's Bid.

       (b) If any rate specified in any Bid contains more than three figures to
the right of the decimal point, the Auction Agent shall round such rate up to
the next highest one thousandth (.001) of 1%.

       (c) If an Order or Orders covering all of the Outstanding shares of any
series of APS held by any Existing Holder is not submitted to the Auction Agent
prior to the Submission Deadline, the Auction Agent shall deem a Hold Order to
have been submitted on behalf of such Existing Holder covering the number of
Outstanding shares of such series of APS held by such Existing Holder and not
subject to Orders submitted to the Auction Agent.

       (d) If any Existing Holder submits through a Broker-Dealer to the Auction
Agent one or more Orders covering in the aggregate more than the number of
Outstanding shares of any series of APS subject to an Auction held by such
Existing Holder, such Orders shall be considered valid in the following order of
priority:

           (i) all Hold Orders for shares of such series of APS shall be 
considered valid, but only up to and including in the aggregate the number of 
Outstanding shares of such series of APS held by such Existing Holder, and if 
the number of shares of such series of APS subject to such Hold Orders exceeds 
the number of Outstanding shares of such series of APS held by such Existing 
Holder, the number of shares subject to each such Hold Order shall be reduced 
pro rata to cover the number of Outstanding shares of such series of APS held 
by such Existing Holder;

          (ii) (A) any Bid for shares of such series of APS shall be considered
valid up to and including the excess of the number of Outstanding shares of such
series of APS held by such Existing Holder over the number of shares of such
series of APS subject to any Hold Orders referred to in clause (i) above;

               (B) subject to subclause (A), if more than one Bid
         for shares of such series of APS with the same rate is
         submitted on behalf of such Existing Holder and the number of
         Outstanding shares of such series of APS subject to such Bids
         is greater than such excess, such Bids shall be considered
         valid up to and including the amount of such excess, and the
         number of shares of 


                                       44


         such series of APS subject to each Bid with the same rate shall
         be reduced pro rata to cover the number of shares of such series
         of APS equal to such excess;

               (C) subject to subclauses (A) and (B), if more than
         one Bid for shares of such series of APS with different rates
         is submitted on behalf of such Existing Holder, such Bids
         shall be considered valid in the ascending order of their
         respective rates up to and including the amount of such
         excess; and

               (D) in any such event, the number, if any, of such
         Outstanding shares of such series of APS subject to any
         portion of Bids considered not valid in whole or in part under
         the clause (ii) shall be treated as the subject of a Bid for
         shares of such series of APS by a Potential Holder at the rate
         therein specified; and

         (iii) all Sell Orders for shares of such series of APS shall be 
considered valid up to and including the excess of the number of Outstanding 
shares of such series of APS held by such Existing Holder over the sum of the 
APS subject to valid Hold Orders referred to in clause (i) above and valid Bids
by such Existing Holder referred to in clause (ii) above.

       (e) If more than one Bid for one or more shares of any series of APS is
submitted on behalf of any Potential Holder, each such Bid submitted shall be a
separate Bid with the rate and number of shares therein specified.

       (f) An Order submitted by a Broker-Dealer to the Auction Agent prior to 
the Submission Deadline on any Auction Date shall be irrevocable.

     4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate. (a) Not earlier than the Submission Deadline on each Auction
Date, the Auction Agent shall assemble all valid Orders submitted or deemed
submitted to it by the Broker-Dealers (each such Order as submitted or deemed
submitted by a Broker-Dealer being hereinafter referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as the
case may be, or as a "Submitted Order" and collectively as "Submitted Hold
Orders," "Submitted Bids" or "Submitted Sell Orders," as the case may be, or as
"Submitted Orders" and shall for each series of APS for which an Auction is
being held determine:

           (i) the excess of the number of Outstanding shares of such series of
APS over the number of Outstanding shares of such series of APS subject to 
Submitted Hold Orders (such excess being hereinafter referred to as the 
"Available APS" of such series);

          (ii) from the Submitted Orders for such series whether:


                                       45


               (A) the number of Outstanding shares of such series
         of APS subject to Submitted Bids by Potential Holders
         specifying one or more rates equal to or lower than the
         Maximum Rate for such series

exceeds or is equal to the sum of

               (B) the number of Outstanding shares of such series
         of APS subject to Submitted Bids by Existing Holders
         specifying one or more rates higher than the Maximum Rate for
         such series; and

               (C) the number of Outstanding shares of such series
         of APS subject to Submitted Sell Orders

(in the event such excess or such equality exists (other than because the number
of shares of such series of APS in subclauses (B) and (C) above is zero because
all of the Outstanding shares of such series of APS are subject to Submitted
Hold Orders), such Submitted Bids in subclause (A) above being hereinafter
referred to collectively as "Sufficient Clearing Bids" for such series); and

         (iii) if Sufficient Clearing Bids for such series exist, the lowest 
rate specified in such Submitted Bids (the "Winning Bid Rate" for such series)
which if:

               (A) (I) each such Submitted Bid from Existing Holders
         specifying such lowest rate and (II) all other such Submitted
         Bids from Existing Holders specifying lower rates were
         rejected, thus entitling such Existing Holders to continue to
         hold the shares of such series of APS that are subject to such
         Submitted Bids; and

               (B) (I) each such Submitted Bid from Potential
         Holders specifying such lowest rate and (II) all other such
         Submitted Bids from Potential Holders specifying lower rates
         were accepted;

would result in such Existing Holders described in subclause (A) above
continuing to hold an aggregate number of Outstanding shares of such series of
APS which, when added to the number of Outstanding shares of such series of APS
to be purchased by such Potential Holders described in subclause (B) above,
would equal not less than the Available APS of such series.

       (b) Promptly after the Auction Agent has made the determinations pursuant
to paragraph (a) of this Section 4, the Auction Agent shall advise the Fund of
the Maximum Rate for each series of APS for which an Auction is being held on
the Auction Date and, based on such determination, the Applicable Rate for each
such series for the next succeeding Rate Period thereof as follows:

           (i) if Sufficient Clearing Bids for such series exist, that the 
Applicable Rate for such series for the next succeeding Rate Period thereof 
shall be equal to the Winning Bid Rate for such series to determined;


                                       46


          (ii) if Sufficient Clearing Bids for such series do not exist (other 
than because all of the Outstanding shares of such series of APS are subject to
Submitted Hold Orders), that the Applicable Rate for such series for the next
succeeding Rate Period, which shall be a Minimum Dividend Period, thereof shall
be equal to the Maximum Rate for such series; or

         (iii) if all of the Outstanding shares of such series of APS are 
subject to Submitted Hold Orders, that the Applicable Rate for such series for 
the next succeeding Rate Period thereof shall be equal to the product of (A) (I)
the "AA" Composite Commercial Paper Rate on such Auction Date for such Rate 
Period, if such Rate Period is less than one year or (II) the Treasury Rate on 
such Auction Date for such Rate Period, if such Rate Period is one year or 
greater and (B) 1 minus the maximum marginal regular federal individual income 
tax rate applicable to ordinary income or the maximum marginal regular federal 
corporate income tax rate, whichever is greater; provided, however, that if the
Fund has notified the Auction Agent of its intent to allocate to the APS in such
Rate Period any net capital gains or other income taxable for Federal income tax
purposes, the Applicable Rate in respect of that portion of the dividend on the
APS for such Rate Period that represents the allocation of net capital gains or
other income taxable for Federal income tax purposes shall be the rate described
in the preceding clause (A)(I) or (II), as applicable, without being multiplied
by the factor set forth in the preceding clause (B).

     5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and
Allocation of Shares. Existing Holders shall continue to hold the APS that are
subject to Submitted Hold Orders, and, based on the determinations made pursuant
to paragraph (a) of Section 4 of this Part II, the Submitted Bids and Submitted
Sell Orders shall be accepted or rejected and the Auction Agent shall take such
other action as set forth below:

       (a) If Sufficient Clearing Bids for any series of APS have been made, all
Submitted Sell Orders shall be accepted and, subject to the provisions of
paragraphs (d) and (e) of this Section 5, Submitted Bids shall be accepted or
rejected as follows in the following order of priority and all other Submitted
Bids for such series shall be rejected:

           (i) Existing Holders' Submitted Bids for shares of such series of APS
specifying any rate that is higher than the Winning Bid Rate for such series
shall be accepted, thus requiring each such Existing Holder to sell the APS
subject to such Submitted Bids;

          (ii) Existing Holders' Submitted Bids for shares of such series of APS
specifying any rate that is lower than the Winning Bid Rate for such series
shall be rejected, thus entitling each such Existing Holder to continue to hold
the APS subject to such Submitted Bids;


                                       47


         (iii) Potential Holders' Submitted Bids for shares of such series of 
APS specifying any rate that is lower than the Winning Bid Rate shall be
accepted;

          (iv) each Existing Holder's Submitted Bid for shares of such series of
APS specifying a rate that is equal to the Winning Bid Rate for such series 
shall be rejected, thus entitling such Existing Holder to continue to hold the 
APS subject to such Submitted Bid, unless the number of Outstanding shares of 
such series of APS subject to all such Submitted Bids shall be greater than the
number of shares of such series of APS ("remaining shares") in the excess of the
Available APS of such series over the number of the APS subject to Submitted
Bids described in clauses (ii) and (iii) of this paragraph (a), in which event
such Submitted Bid of such Existing Holder shall be rejected in part, and such
Existing Holder shall be entitled to continue to hold the APS subject to such
Submitted Bid, but only in an amount equal to the number of shares of such
series of APS obtained by multiplying the number of remaining shares by a
fraction, the numerator of which shall be the number of Outstanding shares of
such series of APS held by such Existing Holder subject to such Submitted Bid
and the denominator of which shall be the aggregate number of Outstanding shares
of such series of APS subject to such Submitted Bids made by all such Existing
Holders that specified a rate equal to the Winning Bid Rate for such series; and

           (v) each Potential Holder's Submitted Bid for shares of such series 
of APS specifying a rate that is equal to the Winning Bid Rate for such series 
shall be accepted but only in an amount equal to the number of shares of such 
series of APS obtained by multiplying the number of shares in the excess of the
Available APS of such series over the number of the APS subject to Submitted 
Bids described in clauses (ii) through (iv) of this paragraph (a) by a fraction,
the numerator of which shall be the number of Outstanding shares of such series 
of APS subject to such Submitted Bid and the denominator of which shall be the
aggregate number of Outstanding shares of such series of APS subject to such
Submitted Bids made by all such Potential Holders that specified a rate equal to
the Winning Bid Rate for such series; and

       (b) If Sufficient Clearing Bids for any series of APS have not been made
(other than because all of the Outstanding shares of such series of APS are
subject to Submitted Hold Orders), subject to the provisions of paragraph (d) of
this Section 5, Submitted Orders for such series shall be accepted or rejected
as follows in the following order of priority and all other Submitted Bids for
such series shall be rejected:

           (i) Existing Holders' Submitted Bids for shares of such series of APS
specifying any rate that is equal to or lower than the Maximum Rate for such
series shall be rejected, thus entitling such Existing Holders to continue to
hold the APS subject to such Submitted Bids;

          (ii) Potential Holders' Submitted Bids for shares of such series of 
APS specifying any rate that is equal to or lower than the Maximum Rate for such
series shall be accepted; and


                                       48


         (iii) Each Existing Holder's Submitted Bid for shares of such series of
APS specifying any rate that is higher than the Maximum Rate of such series and
the Submitted Sell Orders for shares of such series of APS of each Existing 
Holder shall be accepted, thus entitling each Existing Holder that submitted any
such Submitted Bid or Submitted Sell Order to sell the shares of such series of
APS subject to such Submitted Bid or Submitted Sell Order, but in both cases
only in an amount equal to the number of shares of such series of APS obtained
by multiplying the number of shares of such series of APS subject to Submitted 
Bids described in clause (ii) of this paragraph (b) by a fraction, the numerator
of which shall be the number of Outstanding shares of such series of APS held by
such Existing Holder subject to such Submitted Bid or Submitted Sell Order and
the denominator of which shall be the aggregate number of Outstanding shares of
such series of APS subject to all such Submitted Bids and Submitted Sell Orders.

       (c) If all of the Outstanding shares of any series of APS are subject to
Submitted Hold Orders, all Submitted Bids for such series shall be rejected.

       (d) If, as a result of the procedures described in clause (iv) or (v) of
paragraph (a) or clause (iii) of paragraph (b) of this Section 5, any Existing
Holder would be entitled or required to sell, or any Potential Holder would be
entitled or required to purchase, a fraction of a share of APS of any series on
any Auction Date, the Auction Agent shall, in such manner as it shall determine
in its sole discretion, round up or down the number of shares of such series of
APS to be purchased or sold by any Existing Holder or Potential Holder on such
Auction Date as a result of such procedures so that the number of shares of such
series so purchased or sold by each Existing Holder or Potential Holder on such
Auction Date shall be whole shares of APS.

       (e) If, as a result of the procedures described in clause (v) of 
paragraph (a) of this Section 5, any Potential Holder would be entitled or 
required to purchase less than a whole share of any series of APS on any Auction
Date, the Auction Agent shall, in such manner as it shall determine in its sole
discretion, allocate shares of such series of APS for purchase among Potential
Holders so that only whole shares of such series of APS are purchased on such
Auction Date as a result of such procedures by any Potential Holder, even if
such allocation results in one or more Potential Holders not purchasing the APS
on such Auction Date.

       (f) Based on the results of each Auction for a series of APS, the Auction
Agent shall determine the aggregate number of shares of such series of APS to be
purchased and the aggregate number of shares of such series of APS to be sold by
Potential Holders and Existing Holders on whose behalf each Broker-Dealer
submitted Bids or Sell Orders and, with respect to each Broker-Dealer, to the
extent that such aggregate number of shares to be purchased and such aggregate
number of shares to be sold differ, determine to which other Broker-Dealer or
Broker-Dealers acting for one or more purchasers of shares of such series of APS
such Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers of shares of such series of APS
such Broker-Dealer shall receive, as the case may be, shares of such series of
APS.


                                       49


     6. Notification of Allocations. In normal circumstances, whenever the Fund
intends to include any net capital gains or other income taxable for Federal
income tax purposes in any dividend on the APS, the Fund will notify the Auction
Agent of the amount to be so included 15 days prior to the Auction Date on which
the Applicable Rate for such dividend is to be established. Whenever the Auction
Agent receives such notice from the Fund, it will in turn notify each
Broker-Dealer, who, on or prior to such Auction Date, in accordance with its
Broker-Dealer Agreement, will notify its Existing Holders and Potential Holders
believed by it to be interested in submitting an Order in the Auction to be held
on such Auction Date.

     7. Miscellaneous. (a) To the extent permitted by applicable law, the Board
of Trustees may interpret or adjust the provisions of this Certificate of Vote
to resolve any inconsistency or ambiguity or to remedy any formal defect, and
may amend this Certificate of Vote with respect to any series of APS prior to
the issuance of such series.

       (a) An Existing Holder may sell, transfer or otherwise dispose of the APS
only in whole shares and only pursuant to a Bid or Sell Order in accordance with
the procedures described in this Part II or to or through a Broker-Dealer or to
a Person that has delivered a signed copy of a Master Purchaser's Letter to the
Auction Agent; provided that, in the case of all transfers other than pursuant
to Auctions, such Existing Holder, its Broker-Dealer or its Agent Member advises
the Auction Agent of such transfer.

       (b) All of the shares of each series of APS outstanding from time to time
shall be represented by one global certificate registered in the name of the
Securities Depository or its nominee.

       (c) Neither the Fund nor any affiliate thereof may submit an Order in any
Auction, except that any Broker-Dealer that is an affiliate of the Fund may
submit Orders in an Auction, but only if such Orders are not for its own
account.


                                       50


     IN WITNESS WHEREOF, the undersigned has caused this Certificate of Vote to
be executed as of ____________, 1992.


                                                     ------------------------
                                                     Ronald A. Nyberg
                                                     Secretary


State of                   )
                           )   ss
County of                  )


     Then personally appeared before me Ronald A. Nyberg, who acknowledged the
foregoing instrument to be his free act and deed and the free act and deed in
his capacity as Secretary of Van Kampen Merritt Municipal Opportunity Trust II.


                                                     Before me,


                                                     ------------------------
                                                     Notary public


My commission Expires:                               
                        -----------------------------


                                       51



                          ARTICLES OF AMENDMENT TO THE
                         CERTIFICATE OF VOTE OF TRUSTEES
                 ESTABLISHING TWO SERIES OF PREFERRED SHARES OF
                     VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST

                  Van Kampen Municipal Opportunity Trust, a Massachusetts
business trust (the "Fund"), certifies to the Secretary of State of the
Commonwealth of Massachusetts as follows:

                  FIRST: On October 8, 1998, the Board of Trustees, pursuant to
the provisions of Article VI of the Amended and Restated Declaration of Trust
(the "Declaration of Trust") of the Fund and Section 5 of Part I and Section 7
of Part II of the Certificate of Vote of Trustees Establishing Two Series of
Preferred Shares (the "Certificate of Vote") of the Fund, authorized and
declared a 2-for-1 split of the preferred shares of beneficial interest of the
Fund, par value $.01 per share, liquidation preference $50,000 per share,
designated, respectively, Auction Preferred Shares Series A ("APS Series A") and
Auction Preferred Shares Series B ("APS Series B")(collectively the APS Series A
and APS Series B are referred to herein as "APS"). The stock split is to be
effected by means of a division of each outstanding share of APS into two
preferred shares of beneficial interest, par value $.01 per share, liquidation
preference $25,000 per share.

                  SECOND: Pursuant to the provisions of Article VI of the
Declaration of Trust and Section 5 of Part I and Section 7 of Part II of the
Certificate of Vote, the following amendments to the Certificate of Vote have
been duly adopted and approved by a majority of the Trustees of the Fund.

                  a. The first paragraph of the vote establishing two series of
preferred shares of beneficial interest is hereby amended by replacing such
paragraph with the following:

                  First: Pursuant to authority expressly vested in the Board of
Trustees of the Fund by Article VI of its Declaration of Trust (which, as
amended or restated from time to time is, together with this Certificate of
Vote, herein called the "Declaration of Trust"), the Board of Trustees hereby
authorizes the issuance of two series of 6,000 shares of its authorized
preferred shares of beneficial interest, par value $.01 per share ("Preferred
Shares"), liquidation preference of $25,000 per share, designated, respectively,
Auction Preferred Shares Series A ("APS Series A") and Auction Preferred Shares
Series B ("APS Series B")(collectively the APS Series A and APS Series B are
referred to herein as "APS").

                  b. The first two paragraphs under the heading "DESIGNATION" of
the Certificate of Vote is hereby amended by replacing such paragraph with the
following paragraph.

                  APS SERIES A: A series of 3,000 preferred shares of beneficial
interest, $.01 par value, liquidation preference $25,000 per share, is hereby
designated "Auction



                                       52





Preferred Shares, Series A" (hereinafter, "APS Series A"). Each share of APS
Series A shall be issued on June 10, 1992; have an Applicable Rate for its
Initial Dividend Period (which period shall continue to and include Tuesday,
January 12, 1993) equal to 3.50% per annum; have an Initial Dividend Payment
Date of Wednesday, July 1, 1992; and have such other preferences, limitations
and relative voting rights, in addition to those required by applicable law or
set forth in the Declaration of Trust applicable to preferred shares of
beneficial interest of the Fund, as are set forth in Part I and Part II of this
Certificate of Vote. The APS Series A shall constitute a separate series of
Preferred Shares of beneficial interest of the Fund, and each share of APS
Series A shall be identical except as provided in Section 3 of Part I of this
Certificate of Vote.


                  APS SERIES B: A series of 3,000 preferred shares of beneficial
interest, $.01 par value, liquidation preference $25,000 per share, is hereby
designated "Auction Preferred Shares, Series B" (hereinafter, "APS Series B").
Each share of APS Series B shall be issued on June 10, 1992; have an Applicable
Rate for its Initial Dividend Period (which period shall continue to and include
Thursday, January 12, 1993) equal to 3.50% per annum; have an Initial Dividend
Payment Date of Wednesday, July 1, 1992; and have such other preferences,
limitations and relative voting rights, in addition to those required by
applicable law or set forth in the Declaration of Trust applicable to preferred
shares of beneficial interest of the Fund, as are set forth in Part I and Part
II of this Certificate of Vote. The APS Series B shall constitute a separate
series of Preferred Shares of beneficial interest of the Fund, and each share of
APS Series B shall be identical except as provided in Section 3 of Part I of
this Certificate of Vote.


                  c. Section 2(c)(ii) of Part I of the Certificate of Vote is
hereby amended to replace such section with the following:

                  The amount of dividends per share payable on shares of any
series of APS on any date on which dividends shall be payable on shares of such
series shall be computed by multiplying the respective Applicable Rate for such
series in effect for such Dividend Period or Dividend Periods or part thereof
for which dividends have not been paid by a fraction, the numerator of which
shall be the number of days in such Dividend Period or Dividend Periods or part
thereof and the denominator of which shall be 365 if such Dividend Period is a
Rate Period, or is contained in a Rate Period, of less that one year and 360 for
all other Dividend Periods, and applying the rate obtained against $25,000.

                  d. Section 3(a)(i) of Part I of the Certificate of Vote is
hereby amended to replace such section with the following:

                  After the Initial Dividend Period with respect to any series
of APS and upon giving a Notice of Redemption, as provided below, the Fund at
its option may redeem shares of any series of APS, in whole or in part, on the
second Business Day next preceding any Dividend Payment Date applicable to those
shares of APS called for redemption, out of funds legally available therefor, at
the Optional Redemption Price; provided that during a Special Dividend Period of
365 days or more no share of APS will be subject to optional redemption during
any Non-Call Period; provided, that shares of



                                       53






any series of APS may not be redeemed in part of any such partial redemption
fewer than 500 shares of such series remain outstanding.

                  e. Section 5(g) of Part I of the Certificate of Vote is hereby
amended to replace such section with the following:

                  Right to Vote with Respect to Certain Other Matters. If the
Fund has more than one series of APS outstanding, the affirmative vote of the
holders of a majority (unless a higher percentage vote is required under the
Declaration of Trust or under this Certificate of Vote) of the outstanding
shares of each series of APS, each voting as a separate class, is required with
respect to any matter that materially affects the series in a manner different
from that of other series of classes of the Fund's shares, including without
limitation any proposal to do the following: (1) increase or decrease the
aggregate number of authorized shares of the series; (2) effect any exchange,
reclassification, or cancellation of all or part of the shares of the series;
(3) effect an exchange, or create a right of exchange, of all or any part of the
shares of the series; (4) change the rights or preferences of the shares of the
series; (5) change the shares of the series, whether with or without par value,
of the same or another class or series; (6) create a new class or series of
shares having rights and preferences prior and superior to the shares of the
series, or increase the rights and preferences or the number of authorized
shares of a series having rights and preferences prior or superior to the shares
of the series; or (7) cancel or otherwise affect distributions on the shares of
the series that have accrued but have not been declared. To the extent that the
interest of a series of APS affected by a matter are substantially identical to
the interests of another series of APS affected by such matter (e.g., a vote of
shareholders required under Section 13(a) of the 1940 Act), each such series
shall vote together collectively as one class. The vote of holders of each
series of APS described above will in each case be in addition to a separate
vote of the requisite percentage of Common Shares and APS necessary to authorize
the action in question.

                  f. Section 6(a) of Part I of the Certificate of Vote is hereby
amended to replace such section with the following:

                  Upon the dissolution, liquidation or winding up of the affairs
of the Fund, whether voluntary or involuntary, the Holders of the APS then
outstanding shall be entitled to receive and to be paid out of the assets of the
Fund available for distribution to its shareholders, before any payment or
distribution shall be made on the Common Shares or on any other class of shares
of the Fund ranking junior to the APS upon dissolution, liquidation or winding
up, an amount equal to the liquidation preference with respect to such shares.
The liquidation preference for the APS shall be $25,000 per share, plus an
amount equal to all dividends thereon (whether or not earned or declared)
accumulated but unpaid to the date of final distribution in same-day funds,
together with any payments required to be made pursuant to Section 12 in
connection with the liquidation of the Fund.

                  g. Section 15(f) of Part I of the Certificate of Vote is
hereby amended to replace such section with the following:


                                       54





                  "APS Basic Maintenance Amount," as of any Valuation Date,
shall mean the dollar amount equal to the sum of (i)(A) the product of the
number of APS Outstanding on such date multiplied by $25,000; (B) the aggregate
amount of dividends that will have accumulated at the Applicable Rate (whether
or not earned or declared) to (but not including) the first respective Dividend
Payment Dates for each of the APS Outstanding that follow such Valuation Date;
(C) the amount equal to the Projected Dividend Amount (based on the number of
APS Outstanding on such date); (D) the amount of anticipated expenses of the
Fund for the 90 days subsequent to such Valuation Date; (E) the amount of the
Fund's Maximum Potential Additional Dividend Liability as of such Valuation
Date; (F) the amount of any premium payable pursuant to a Premium Call Period;
and (G) any current liabilities as of such Valuation Date to the extent not
reflected in any of (i)(A) through (i)(F) (including, without limitation, any
amounts described in Section 13 of Part I as required to be treated as
liabilities in connection with the Fund's transactions in futures and options
and including any payables for municipal securities purchased as of such
Valuation Date) less (ii) either (A) the face value of any of the Fund's assets
irrevocably deposited by the Fund for the payment of any of (i)(A) through
(i)(G) if such assets mature to or on the date of payment of the liability
for which such assets are deposited and are either securities issued or
guaranteed by the United States Government or have a rating assigned by Moody's
of P-1, VMIG-1 or MIG-1 (or, with respect to S&P, SP-1+ or A-1+) or (B) the
Discounted Value of such assets. For purposes of the APS Basic Maintenance
Amount in connection with S&P's ratings of the APS, with respect to any
transactions by the Fund in futures contracts, the Fund shall include as
liabilities (i) 30% of the aggregate settlement value, as marked to market, of
any outstanding futures contracts based on the Municipal Index which are owned
by the Fund plus (ii) 25% of the aggregate settlement value, as marked to
market, of any outstanding futures contracts based on Treasury Bonds which
contracts are owned by the Fund. For purposes of the APS Basic Maintenance
Amount in connection with Moody's rating of the APS, with respect to any
transactions by the Fund in securities options, the Fund shall include as
liabilities (i) 10% of the exercise price of a call option written by the Fund
and (ii) the exercise price of any written put option.

                  h. Section 15(ii) of Part I of the Certificate of Vote is
hereby amended to replace such section with the following:

                  "Mandatory Redemption Price" means $25,000 per share of APS
plus an amount equal to accumulated but unpaid dividends thereon to the date
fixed for redemption (whether or not earned or declared).

                  f. Section 15(yy) of Part I of the Certificate of Vote is
hereby amended to replace such section with the following:

                  "Optional Redemption Price" shall mean (i) $25,000 per share
of APS in the case of a six month Dividend Period or a Special Dividend Period
of less than 365 days or (ii) with respect to a Special Dividend Period of 365
days or more the Optional Redemption Price set forth in the Specific Redemption
Provisions in connection therewith; in each case plus an amount equal to
accumulated but unpaid dividends thereon to the date of redemption (whether or
not earned or declared).



                                       55




                  j. Section 15(ppp) of Part I of the Certificate of Vote is
hereby amended to replace such section with the following:

                           "Specific Redemption Provisions" means, with respect
                           to any Special Dividend Period of 365 or more days,
                           either, or any combination of, (i) a period (a
                           "Non-Call Period") determined by the Board of
                           Trustees, after consultation with the Broker-Dealers,
                           during which the shares subject to redemption at the
                           option of the Fund, and (ii) a period (a "Premium
                           Call Period"), consisting of a number of whole years
                           and determined by the Board of Trustees, after
                           consultation with the Broker-Dealers, during each
                           year of which the shares subject to such Special
                           Dividend Period shall be redeemable at the Fund's
                           option at a price per share equal to $25,000 plus
                           accumulated but unpaid dividends plus a premium
                           expressed as a percentage of $25,000 as determined by
                           the Board of Trustees after consultation with the
                           Broker-Dealers; provided, that during any Special
                           Dividend Period of 365 or more days if, on the date
                           of determination of the Applicable Rate for such
                           shares, such Applicable Rate equaled or exceeded the
                           Treasury Rate, the Fund may redeem APS without regard
                           to any Non-Call Period or Premium Call Period at the
                           Mandatory Redemption Price.


                                       56





                            ARTICLES OF AMENDMENT TO
                       THE CERTIFICATE OF VOTE OF TRUSTEES
                CHANGING THE TIMING OF CERTAIN REPORTS TO RATING
                                    AGENCIES

                  Van Kampen Municipal Opportunity Trust, a Massachusetts
business trust (the "Fund"), certifies to the Secretary of State of the
Commonwealth of Massachusetts as follows:

         FIRST: On September 25, 2003, the Board of Trustees of the Fund,
pursuant to the provisions of Article VI of the Amended and Restated Declaration
of Trust (the "Declaration of Trust") of the Fund and Section 5 of Part I of the
Certificate of Vote of Trustees Establishing a Class of Preferred Shares (the
"Certificate of Vote") of the Fund, authorized an amendment to the Certificate
of Vote to change the timing of filing certain reports with rating agencies from
quarterly to annually and to make conforming changes to the Certificate of Vote.

         SECOND: Pursuant to the provisions of Article VI of the Declaration of
Trust and Section 5 of Part I of the Certificate of Vote of the Fund, the
following amendments to the Certificate of Vote have been duly adopted and
approved by a majority of the Trustees of the Fund.

         A.       Section 5 (d) (ii) of Part I of the Certificate of Vote is
                  hereby amended to replace the term "Quarterly Valuation Date"
                  with the term "Annual Valuation Date."

         B.       The second and third sentences of Section 9(b) of Part I of
                  the Certificate of Vote are hereby amended to replace such
                  sentences with the following:

                  The Fund shall also deliver to S&P (if S&P is then rating the
                  APS), Moody's (if Moody's is then rating the APS) and the
                  Auction Agent (if either S&P or Moody's is then rating the
                  APS) an APS Basic Maintenance Report as of the last Valuation
                  Date of each month on or before the third Business Day after
                  such day. The Fund shall also deliver to S&P (if S&P is then
                  rating the APS) and Moody's (if Moody's is then rating the
                  APS) an APS Basic Maintenance Report whenever (i) the Fund
                  shall have redeemed APS or Common Shares, (ii) the Fund shall
                  fail to have S&P Eligible Assets or Moody's Eligible Assets
                  with an aggregate Discounted Value at least equal to 105% of
                  the APS Basic Maintenance Amount, or (iii) whenever requested
                  by Moody's or S&P, in each case on or before the third
                  Business Day after such day.

         C.       Section 9 (c) of Part I of the Certificate of Vote is hereby
                  amended to replace such section with the following:



                                       57



                  Within ten Business Days after the date of delivery of an APS
                  Basic Maintenance Report in accordance with paragraph (b) of
                  this Section 9 relating to an Annual Valuation Date, the Fund
                  shall cause the Independent Accountant to confirm in writing
                  to S&P (if S&P is then rating the APS), Moody's (if Moody's is
                  then rating the APS) and the Auction Agent (if either S&P or
                  Moody's is then rating the APS) (i) the mathematical accuracy
                  of the calculations reflected in such Report and (ii) that, in
                  such Report, the Fund determined in accordance with this
                  Certificate of Vote whether the Fund had, at such Annual
                  Valuation Date, S&P Eligible Assets (if S&P is then rating the
                  APS) of an aggregate Discounted Value at least equal to the
                  APS Basic Maintenance Amount and Moody's Eligible Assets (if
                  Moody's is then rating the APS) of an aggregate Discounted
                  Value at least equal to the APS Basic Maintenance Amount (such
                  confirmation being herein called the "Accountant's
                  Confirmation").

         D.       The final clause of Section 13 (a) (i) of Part I of the
                  Certificate of Vote, which read "there shall be a quarterly
                  audit made of the Fund's futures and options transactions by
                  the Fund's independent accountants to confirm that the Fund is
                  in compliance with these standards; or" is hereby amended to
                  replace such clause with the following:

                  there shall be an annual audit made of the Fund's futures and
                  options transactions by the Fund's independent accountants to
                  confirm that the Fund is in compliance with these standards;
                  or

         E.       Section 15 (h) of Part I of the Certificate of Vote is hereby
                  amended to replace such section with the following:

                  "APS Basic Maintenance Report" shall mean a report signed by
                  any of the President, Treasurer, any Senior Vice President or
                  any Vice President of the Fund which sets forth, as of the
                  related Valuation Date, the assets of the Fund, the Market
                  Value and the Discounted Value thereof (seriatim and in
                  aggregate), the APS Basic Maintenance Amount, the net asset
                  value and market trading price per Common Share, and the total
                  return percentage for the relevant valuation period.

         F.       Section 15 (ddd) of Part I of the Certificate of Vote is
                  hereby amended to replace such section with the following:

                  "Annual Valuation Date" shall mean the last Business Day of
                  each fiscal year of the Fund.



                                       58




                  IN WITNESS WHEREOF, the undersigned has caused this
Certificate of Vote to be executed as of March 8, 2004.


                                                   /s/ A. Thomas Smith III
                                                --------------------------
                                                A. Thomas Smith III
                                                Vice President and Secretary

State of New York          )
                           )    ss
County of New York         )


                           Then personally appeared before me A. Thomas Smith
III, who acknowledged the foregoing instrument to be his free act and deed and
the free act and deed in his capacity as Vice President and Secretary of Van
Kampen Pennsylvania Value Municipal Income Trust.


                                                Before me,


                                                   /s/ Rosemarie Costagliola
                                                ----------------------------
                                                Notary Public


My commission expires: Nov. 9, 2006
                       ------------


                                       59


                                   APPENDIX C

                      ANNUAL REPORT OF THE ACQUIRING FUND






















                                      C-1


 
Item 1.  Reports to Shareholders.

The Trust's annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
 
       Welcome, Shareholder
 
       In this report, you'll learn about how your investment in Van Kampen
       Municipal Opportunity Trust performed during the annual period. The
       portfolio management team will provide an overview of the market
       conditions and discuss some of the factors that affected investment
       performance during the reporting period. In addition, this report
       includes the trust's financial statements and a list of trust investments
       as of October 31, 2004.
 
       MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
       PASS. THERE IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
       OBJECTIVE. TRUSTS ARE SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
       THAT THE MARKET VALUES OF SECURITIES OWNED BY THE TRUST WILL DECLINE AND
       THAT THE VALUE OF TRUST SHARES MAY THEREFORE BE LESS THAN WHAT YOU PAID
       FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS TRUST.
 
       INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
       TAX (AMT).
 


                                                                    
         ---------------------------------------------------------------------------------------
            NOT FDIC INSURED             OFFER NO BANK GUARANTEE              MAY LOSE VALUE
         ---------------------------------------------------------------------------------------
                   NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY               NOT A DEPOSIT
         ---------------------------------------------------------------------------------------



                                      C-2



 
Performance Summary as of 10/31/04
 


MUNICIPAL OPPORTUNITY TRUST
SYMBOL: VMO
---------------------------------------------------------
AVERAGE ANNUAL                   BASED ON      BASED ON
TOTAL RETURNS                      NAV       MARKET PRICE
                                       
 
Since Inception (4/24/92)         8.21%          7.27%
 
10-year                           9.05           9.01
 
5-year                            9.80          10.76
 
1-year                            8.05          -0.60
---------------------------------------------------------

 
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, NET
ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
 
NAV per share is determined by dividing the value of the trust's portfolio
securities, cash and other assets, less all liabilities, by the total number of
common shares outstanding. The common share market price is the price the market
is willing to pay for shares of the trust at a given time. Common share market
price is influenced by a range of factors, including supply and demand and
market conditions. Total return assumes an investment at the beginning of the
period, reinvestment of all distributions for the period in accordance with the
trust's dividend reinvestment plan, and sale of all shares at the end of the
period.
 
The Lehman Brothers Municipal Bond Index is a broad-based statistical composite
of municipal bonds. The index does not include any expenses, fees or sales
charges, which would lower performance. The index is unmanaged and should not be
considered an investment. It is not possible to invest directly in an index.
 
                                      C-3


 
Trust Report
 
FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2004
 
Van Kampen Municipal Opportunity Trust is managed by the Adviser's Municipal
Fixed Income team.(1) Current members include Dennis Pietrzak, Executive
Director; Robert Wimmel, Vice President; and John Reynoldson, Executive
Director.
 
MARKET CONDITIONS
 
The interest-rate environment of the 12 months ended October 31, 2004 was marked
by two periods of steadily declining yields, with a significant sell-off in the
middle. Yields fell steadily through the first half of the period, approaching
the historical lows of 2003. This trend persisted until March, at which point
yields reversed direction and began an upward march as prices fell. These losses
were steepest in April, as a surprisingly strong employment report and signals
from members of the Federal Open Market Committee (the "Fed") caused investors
to expect a near-term rate increase. Rates went on to decline from May through
the end of the period as the market digested the Fed's newly hawkish rate
stance. Investors were further comforted when, after the Fed raised rates at its
June 30, 2004 meeting, its members indicated that the path of future rate
increases would be measured.
 
Unusually, longer-maturity securities largely outperformed in this period of Fed
tightening. Historically, the typical pattern in periods of tightening policy
has seen yields rise across all maturities. During the review period, however,
yields of shorter maturity bonds rose while those of bonds with longer
maturities declined slightly.
 
Lower-quality municipal bonds also performed strongly in this environment, as
the difference in yields (known as the "yield spread") between AAA and BBB rated
bonds decreased by roughly 20 basis points for 20-year bonds. As a result,
sectors with heavy exposure to lower-rated debt, such as hospitals and
industrial revenue bonds, posted higher total returns than sectors dominated by
higher-rated debt.
 
Issuance for the first 10 months of 2004 (the final 10 months of the review
period) was roughly 6 percent lower than in the same period in 2003. That said,
2003 was a record year, and at the current pace of issuance, 2004 could well be
one of the largest years in recent memory. The strong supply met with faltering
demand from mutual funds, as fund investors withdrew over $15 billion in net
cash during the period. This faltering demand was largely offset by increased
participation in the market by insurance companies and individual investors.
 
(1)Team members may change without notice at any time.

                                      C-4


 
PERFORMANCE ANALYSIS
 
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ significantly, as they did during the reporting period. On an
NAV basis, the trust outperformed its benchmark, the Lehman Brothers Municipal
Bond Index. (See table below.)
 
The trust uses leverage to enhance its dividend to common shareholders. The
trust borrows money at short-term rates through the issuance of preferred
shares. The proceeds are reinvested in longer-term securities, taking advantage
of the difference between short- and longer-term rates. The Fed's policy of
raising interest rates in the final months of the period made the trust's
borrowing activity more expensive. These expenses, however, were more than
offset by the strong performance of the bonds we invested in, leading to the
trust's outperformance versus its benchmark, which is unleveraged.
 
Interest rates spent much of the period at or near historic lows. Given these
levels, our analysis indicated that there was little room for rates to fall
further, and that as a result rates were more likely to go up than down over the
intermediate term. This analysis led us to reduce the trust's interest-rate
sensitivity to a level that was less than that of its benchmark. While this
approach served the trust well when rates rose in the late spring and early
summer, it was an overall drag on performance for the one-year period.
 
With interest rates at such low levels, several of the trust's holdings were
called away by issuers seeking to refinance their bonds at lower yields. Several
of the trust's shorter maturity bonds were also prerefunded, and we sold many of
these securities to take advantage of more compelling opportunities elsewhere.
We reinvested the proceeds into securities that we believed had attractive
total-return prospects, emphasizing bonds in the 13- to 18-year portion of the
yield curve, especially those with the relatively lower interest-rate
sensitivity. These bonds offer the dual benefit of a strong income stream and
moderate vulnerability to shifting interest rates.
 
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2004
 


-----------------------------------------------------------
      BASED ON     BASED ON        LEHMAN BROTHERS
        NAV      MARKET PRICE   MUNICIPAL BOND INDEX
                                          
 
       8.05%        -0.60%              6.03%
-----------------------------------------------------------

 
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. INVESTMENT RETURN, NET ASSET VALUE AND COMMON SHARE MARKET PRICE WILL
FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. SEE PERFORMANCE SUMMARY FOR ADDITIONAL PERFORMANCE INFORMATION
AND INDEX DEFINITION.

                                      C-5


 
We continued to pursue relative value opportunities at the long end of the
market, buying securities when we believed they offered attractive value and
selling them once they met our performance targets in order to reinvest the
proceeds elsewhere.
 
We remained focused on keeping the trust's risk profile within a reasonable
range through attention to credit quality and diversification. By the end of the
12-month period, more than 84 percent of the trust's total investments was
invested in bonds rated AAA and AA; these represent the two highest tiers of
credit ratings. The portfolio was also well diversified across the major sectors
of the municipal bond market. Its three largest sector exposures were general
purpose, airport, and wholesale electric.
 
While it is impossible to predict the exact turning point when interest rates
will move decisively higher, we believe the trust remains well positioned for
the near future. We will continue to comb the municipal bond markets for
interesting opportunities.
 
There is no guarantee that any securities mentioned will continue to perform
well or be held by the trust in the future.
 
                                      C-6


 


RATINGS ALLOCATION AS OF 10/31/04
                                                                 
AAA/Aaa                                                              79.9%
AA/Aa                                                                 4.8
A/A                                                                  11.2
BBB/Baa                                                               2.4
B/B                                                                   0.4
Non-Rated                                                             1.3

TOP 5 SECTORS AS OF 10/31/04
                                                                 
General Purpose                                                      14.8%
Airport                                                              14.4
Wholesale Electric                                                   12.7
Health Care                                                          10.7
Public Building                                                       9.1

SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 10/31/04
                                                                 
New Jersey                                                           12.0%
Texas                                                                12.0
New York                                                              9.6
California                                                            7.6
Illinois                                                              4.9
Washington                                                            4.6
Pennsylvania                                                          4.6
Georgia                                                               4.4
North Carolina                                                        4.4
Nevada                                                                3.0
Oklahoma                                                              2.6
Colorado                                                              2.4
Ohio                                                                  2.1
Oregon                                                                2.0
West Virginia                                                         2.0
Florida                                                               1.9
Michigan                                                              1.8
Kentucky                                                              1.6
Missouri                                                              1.4
Massachusetts                                                         1.4
Connecticut                                                           1.4
Indiana                                                               1.3
District of Columbia                                                  1.3
Louisiana                                                             1.2
Maryland                                                              1.2
Arizona                                                               1.1
South Carolina                                                        1.0
Arkansas                                                              0.8
New Hampshire                                                         0.7
Alabama                                                               0.6
Tennessee                                                             0.6
Iowa                                                                  0.5
Wisconsin                                                             0.4
Mississippi                                                           0.4
South Dakota                                                          0.4
New Mexico                                                            0.3

 

                                                                 
                                                 (continued on next page)

 
                                      C-7


 


SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 10/31/04
                                           (continued from previous page)
                                                                 
Minnesota                                                             0.3%
North Dakota                                                          0.2
                                                                    -----
Total Investments                                                   100.0%

 
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Ratings and summary of investments by
state classification are as a percentage of total investments. Sectors are as a
percentage of long-term investments. Securities are classified by sectors that
represent broad groupings of related industries. Van Kampen is a wholly owned
subsidiary of a global securities firm which is engaged in a wide range of
financial services including, for example, securities trading and brokerage
activities, investment banking, research and analysis, financing and financial
advisory services. Rating allocations based upon ratings as issued by Standard
and Poor's and Moody's, respectively.
 
                                      C-8


 
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
 
       Each Van Kampen trust provides a complete schedule of portfolio holdings
       in its semiannual and annual reports within 60 days of the end of the
       trust's second and fourth fiscal quarters by filing the schedule
       electronically with the Securities and Exchange Commission (SEC). The
       semiannual reports are filed on Form N-CSRS and the annual reports are
       filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
       reports to trust shareholders, and makes these reports available on its
       public web site, www.vankampen.com. In addition to the semiannual and
       annual reports that Van Kampen delivers to shareholders and makes
       available through the Van Kampen public web site, each trust files a
       complete schedule of portfolio holdings with the SEC for the trust's
       first and third fiscal quarters on Form N-Q. Van Kampen does not deliver
       the reports for the first and third fiscal quarters to shareholders, nor
       are the reports posted to the Van Kampen public web site. You may,
       however, obtain the Form N-Q filings (as well as the Form N-CSR and
       N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You
       may also review and copy them at the SEC's Public Reference Room in
       Washington, DC. Information on the operation of the SEC's Public
       Reference Room may be obtained by calling the SEC at 1-202-942-8090. You
       can also request copies of these materials, upon payment of a duplicating
       fee, by electronic request at the SEC's e-mail address
       (publicinfo@sec.gov) or by writing the Public Reference section of the
       SEC, Washington, DC 20549-0102.
 
       In addition to filing a complete schedule of portfolio holdings with the
       SEC each fiscal quarter, each Van Kampen trust makes portfolio holdings
       information available by periodically providing the information on its
       public web site, www.vankampen.com. Each Van Kampen trust provides a
       complete schedule of portfolio holdings on the public web site on a
       calendar-quarter basis approximately 30 days after the close of the
       calendar quarter. Van Kampen closed-end funds do not presently provide
       partial lists of their portfolio holdings on a monthly basis, but may do
       so in the future.
 
       You may obtain copies of a trust's fiscal quarter filings, or its monthly
       or calendar-quarter web site postings, by contacting Van Kampen Client
       Relations at 1-800-847-2424.
 
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
 
       The trust's policies and procedures with respect to the voting of proxies
       relating to the trust's portfolio securities and information on how the
       trust voted proxies relating to portfolio securities during the most
       recent twelve-month period ended June 30 is available without charge,
       upon request, by calling 1-800-847-2424 or by visiting our web site at
       www.vankampen.com. This information is also available on the Securities
       and Exchange Commission's web site at http://www.sec.gov.
 
                                      C-9


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON    MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          MUNICIPAL BONDS  156.2%
          ALABAMA  1.0%
$2,405    Marshall Cnty, AL Hlthcare Ser C..............   6.000%   01/01/32   $   2,543,865
     5    Mobile, AL Indl Dev Brd Solid Waste Disp Rev
          Mobile Energy Svc Co Proj Rfdg................   6.950    01/01/20              29
                                                                               -------------
                                                                                   2,543,894
                                                                               -------------
          ARIZONA  1.7%
 2,500    Arizona Sch Fac Brd Ctf Part Ser A (MBIA
          Insd).........................................   5.250    09/01/17       2,761,575
 1,500    Maricopa Cnty, AZ Stadium Dist Rfdg (AMBAC
          Insd).........................................   5.375    06/01/19       1,678,875
                                                                               -------------
                                                                                   4,440,450
                                                                               -------------
          ARKANSAS  1.3%
 3,035    Fort Smith, AR Wtr & Swr Rev Ser A Rfdg (FSA
          Insd).........................................   5.250    10/01/16       3,370,732
                                                                               -------------
 
          CALIFORNIA  11.9%
    75    California Rural Home Mtg Fin Auth Single
          Family Mtg Rev Ser C (AMT) (GNMA
          Collateralized)...............................   7.800    02/01/28          77,588
 4,500    California St (AMBAC Insd)....................   5.125    10/01/27       4,691,565
 5,500    California St Dept Wtr Res Pwr Ser A (AMBAC
          Insd).........................................   5.500    05/01/16       6,282,540
 2,000    California St Dept Wtr Res Pwr Ser A..........   5.750    05/01/17       2,271,180
 3,500    California St Pub Wks Brd Lease Rev Dept
          Corrections Ser C.............................   5.250    06/01/28       3,654,070
 2,500    California St Pub Wks Brd Lease Rev Dept
          Corrections Ser E Rfdg (XLCA Insd)............   5.000    06/01/18       2,723,375
 2,000    California St Pub Wks Brd Lease Rev Dept
          Mental Hlth Coalinga A........................   5.000    06/01/25       2,060,600
 5,000    Contra Costa, CA Home Mtg Fin Auth Home Mtg
          Rev (Escrowed to Maturity) (MBIA Insd)........    *       09/01/17       2,735,750
 4,000    Foothill/Eastern Corridor Agy CA Toll Rd Rev
          Conv Cap Apprec Sr Lien Ser A (Escrowed to
          Maturity) (b).................................  0/7.050   01/01/10       4,745,520
 1,500    Los Angeles Cnty, CA Met Tran Auth Sales Tax
          Rev Prop C Second Tier Sr Ser A Rfdg (AMBAC
          Insd).........................................   5.000    07/01/23       1,547,130
                                                                               -------------
                                                                                  30,789,318
                                                                               -------------
          COLORADO  3.7%
 2,000    Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev E-470
          Proj (Prerefunded @ 08/31/05).................   7.000    08/31/26       2,145,460
 1,505    Arapahoe Cnty, CO Ctfs Partn Rfdg (FSA Insd)
          (f)...........................................   5.250    12/01/15       1,701,252
 1,000    Colorado Hlth Fac Auth Rev Hosp Portercare
          Adventist Hlth................................   6.500    11/15/31       1,099,240
 1,000    Colorado Hsg Fin Auth Multi-Family Hsg Ins Mtg
          Ser B2 (AMT) (FHA Gtd)........................   5.800    10/01/28       1,032,250

 
                                               See Notes to Financial Statements

                                      C-10

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON    MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          COLORADO (CONTINUED)
$  171    Colorado Hsg Fin Auth Single Family Pgm Sr Ser
          A2 (AMT)......................................   7.250%   05/01/27   $     174,562
   135    Colorado Hsg Fin Auth Single Family Pgm Sr Ser
          C1 (AMT)......................................   7.550    11/01/27         135,209
 1,000    Denver, CO City & Cnty Arpt Rev Ser B (AMT)
          (MBIA Insd)...................................   6.250    11/15/07       1,091,170
 1,005    Greeley, CO Multi-Family Rev Hsg Mtg Creek
          Stone (AMT) (FHA Gtd).........................   5.950    07/01/28       1,039,572
 1,000    Highlands Ranch Metro Dist No 2 CO Rfdg (FSA
          Insd).........................................   6.500    06/15/11       1,201,710
                                                                               -------------
                                                                                   9,620,425
                                                                               -------------
          CONNECTICUT  2.1%
 3,250    Connecticut St Spl Oblig Pkg Rev Bradley Intl
          Arpt Ser A (AMT) (ACA Insd)...................   6.600    07/01/24       3,522,317
 1,000    Mashantucket Western Pequot Tribe CT Spl Rev
          Ser A, 144A--Private Placement (c)............   6.400    09/01/11       1,069,640
   840    Mashantucket Western Pequot Tribe CT Spl Rev
          Ser A, 144A--Private Placement (Escrowed to
          Maturity) (c).................................   6.500    09/01/06         909,552
                                                                               -------------
                                                                                   5,501,509
                                                                               -------------
          DISTRICT OF COLUMBIA  2.0%
 5,000    Metropolitan Washington DC Arpt Auth Sys Ser A
          (AMT) (FGIC Insd).............................   5.250    10/01/32       5,165,950
                                                                               -------------
 
          FLORIDA  3.0%
 2,000    Escambia Cnty, FL Hlth Fac Auth Rev FL
          Hlthcare Fac Ln VHA Pgm (AMBAC Insd)..........   5.950    07/01/20       2,054,520
 1,000    Lakeland, FL Hosp Sys Rev Lakeland Regl Hlth
          Sys...........................................   5.500    11/15/32       1,043,090
 2,100    Miami-Dade Cnty, FL Aviation Miami Intl Arpt
          (AMT) (FGIC Insd).............................   5.375    10/01/27       2,198,154
 2,375    North Broward, FL Hosp Dist Rev Impt..........   6.000    01/15/31       2,508,998
                                                                               -------------
                                                                                   7,804,762
                                                                               -------------
          GEORGIA  6.9%
 1,937    Fulton Cnty, GA Lease Rev (Acquired
          12/23/1994, Cost $1,936,856) (d)..............   7.250    06/15/10       2,007,416
 7,000    Georgia Muni Elec Auth Pwr Rev Ser A (MBIA
          Insd).........................................   6.500    01/01/20       8,952,440
 6,245    Municipal Elec Auth GA Combustion Turbine Proj
          Ser A (MBIA Insd).............................   5.250    11/01/16       7,012,011
                                                                               -------------
                                                                                  17,971,867
                                                                               -------------

 
See Notes to Financial Statements                                              

                                      C-11



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON    MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          ILLINOIS  7.6%
$5,000    Chicago, IL O'Hare Intl Arpt Rev Gen Arpt
          Second Lien Ser A Rfdg (MBIA Insd) (e)........   6.375%   01/01/12   $   5,135,400
    65    Chicago, IL Single Family Mtg Rev Ser A (AMT)
          (GNMA Collateralized).........................   7.000    09/01/27          65,271
    50    Chicago, IL Single Family Mtg Rev Ser B (AMT)
          (GNMA Collateralized).........................   7.625    09/01/27          50,238
 2,000    Cook Cnty, IL Cmnty Cap Apprec (FSA Insd).....    *       12/01/10       1,626,600
 2,500    Du Page Cnty, IL Trans Rev (FSA Insd).........   5.750    01/01/17       2,846,350
 3,000    Illinois Fin Auth Rev Northwestern Mem Hosp
          Ser A.........................................   5.500    08/15/43       3,120,240
 3,630    Kendall, Kane & Will Cntys, IL Cmnty Sch Dist
          308 Ser B (FGIC Insd) (f).....................   5.250    10/01/20       3,934,085
 1,000    Metropolitan Pier & Expo Auth IL Dedicated St
          Tax Rev McCormick Pl Expn Proj Rfdg (FGIC
          Insd).........................................   5.500    12/15/24       1,107,070
 1,865    Sangamon Cnty, IL Cmnty Unit Sch Dist No 5
          (FGIC Insd) (f)...............................   6.500    12/01/05       1,956,870
                                                                               -------------
                                                                                  19,842,124
                                                                               -------------
          INDIANA  2.1%
 3,270    Allen Cnty, IN War Mem Coliseum Ser A (AMBAC
          Insd) (f).....................................   5.500    11/01/16       3,687,971
 1,000    Indiana St Dev Fin Auth Rev Exempt Fac Conv
          Rfdg (AMT)....................................   5.950    08/01/30       1,024,560
 1,210    North Adams, IN Cmnty Sch Cap Apprec First Mtg
          (FSA Insd) (f)................................    *       01/15/16         747,707
                                                                               -------------
                                                                                   5,460,238
                                                                               -------------
          IOWA  0.8%
 1,890    Des Moines, IA Pub Pkg Sys Rev Ser A (FGIC
          Insd) (f).....................................   5.750    06/01/17       2,141,521
                                                                               -------------
 
          KENTUCKY  2.5%
 1,475    Kenton Cnty, KY Arpt Brd Rev Cincinnati/Northn
          KY Intl Arpt Ser A Rfdg (AMT) (MBIA Insd).....   6.200    03/01/08       1,636,011
 1,995    Kentucky Hsg Corp Hsg Rev Ser F (AMT) (FNMA
          Collateralized)...............................   5.450    01/01/32       2,055,628
 2,345    Kentucky St Tpk Auth Econ Dev Revitalization
          Proj Rfdg (Prerefunded @ 01/01/11) (FSA
          Insd).........................................   5.625    07/01/14       2,687,253
                                                                               -------------
                                                                                   6,378,892
                                                                               -------------
          LOUISIANA  1.8%
 2,500    Lafayette, LA Utils Rev (MBIA Insd)...........   5.250    11/01/23       2,722,250
 2,000    Louisiana Hsg Fin Agy Rev Azalea Estates Ser A
          Rfdg (AMT) (GNMA Collateralized)..............   5.375    10/20/39       2,031,760
                                                                               -------------
                                                                                   4,754,010
                                                                               -------------

 
                                               See Notes to Financial Statements

                                      C-12


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON    MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          MARYLAND  1.8%
$1,050    Maryland St Econ Dev Corp Univ MD College Pk
          Proj..........................................   5.625%   06/01/35   $   1,084,881
 1,000    Maryland St Hlth & Higher Ed Fac Auth Rev
          Medstar Hlth Rfdg.............................   5.375    08/15/24       1,023,930
 2,350    Northeast, MD Waste Disp Auth Rfdg (AMT)
          (AMBAC Insd)..................................   5.500    04/01/16       2,586,622
                                                                               -------------
                                                                                   4,695,433
                                                                               -------------
          MASSACHUSETTS  2.2%
 3,000    Massachusetts St Dev Fin Agy Semass Sys Ser A
          (MBIA Insd)...................................   5.625    01/01/16       3,356,610
 1,000    Massachusetts St Fed Hwy Gnt Antic Nt Ser A...   5.750    06/15/15       1,133,220
 1,000    Massachusetts St Hlth & Ed Fac Auth Rev Part
          Hlthcare Sys Ser C............................   5.750    07/01/32       1,093,230
                                                                               -------------
                                                                                   5,583,060
                                                                               -------------
          MICHIGAN  2.8%
 3,505    Detroit, MI Wtr Supply Sys Ser B (MBIA Insd)
          (f)...........................................   5.250    07/01/18       3,854,203
 2,000    Michigan St Ctf Part (AMBAC Insd).............   5.500    06/01/27       2,173,460
 1,215    Zeeland, MI Pub Schs Sch Bldg & Site (MBIA
          Insd) (f).....................................   5.250    05/01/19       1,345,758
                                                                               -------------
                                                                                   7,373,421
                                                                               -------------
          MINNESOTA  0.4%
 1,000    Chaska, MN Elec Rev Ser A.....................   6.100    10/01/30       1,074,320
                                                                               -------------
 
          MISSISSIPPI  0.7%
 1,145    Mississippi Home Corp Single Family Rev Mtg
          Ser C (AMT) (GNMA Collateralized).............   7.600    06/01/29       1,204,597
   480    Mississippi Home Corp Single Family Rev Mtg
          Ser F (AMT) (GNMA Collateralized).............   7.550    12/01/27         483,893
                                                                               -------------
                                                                                   1,688,490
                                                                               -------------
          MISSOURI  2.2%
 2,150    Cape Girardeau Cnty, MO Indl Southeast MO Hosp
          Assoc.........................................   5.500    06/01/22       2,208,222
    70    Saint Louis Cnty, MO Single Family Mtg Rev
          (MBIA Insd)...................................   6.900    04/01/16          71,341
 3,000    Sikeston, MO Elec Rev Rfdg (MBIA Insd) (e)....   6.200    06/01/10       3,455,310
                                                                               -------------
                                                                                   5,734,873
                                                                               -------------
          NEVADA  4.7%
 7,500    Clark Cnty, NV Arpt Rev Sub Lien Ser A-2 (FGIC
          Insd).........................................   5.000    07/01/36       7,641,225
 3,000    Clark Cnty, NV Indl Dev Rev Southwest Gas Corp
          Proj Ser A (AMT) (AMBAC Insd).................   5.250    07/01/34       3,096,000
 1,500    Reno, NV Sr Lien Retrac Reno Trans Proj (AMBAC
          Insd).........................................   5.125    06/01/32       1,549,320
                                                                               -------------
                                                                                  12,286,545
                                                                               -------------

 
See Notes to Financial Statements                                            

                                      C-13


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON    MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          NEW HAMPSHIRE  1.1%
$2,500    New Hampshire Hlth & Ed Fac Univ Sys of NH
          (AMBAC Insd)..................................   5.500%   07/01/15   $   2,830,875
                                                                               -------------
 
          NEW JERSEY  18.8%
 2,000    Garden St Preservation Tr NJ Ser A (FSA
          Insd).........................................   5.250    11/01/18       2,228,300
 2,000    New Jersey Econ Dev Auth Cigarette Tax........   5.750    06/15/34       2,055,200
 5,000    New Jersey Econ Dev Auth Mtr Veh Sur Rev Ser A
          (MBIA Insd)...................................   5.000    07/01/22       5,337,550
 5,000    New Jersey Econ Dev Auth Sch Fac Constr Ser F
          (FGIC Insd)...................................   5.250    06/15/20       5,496,050
 3,705    New Jersey Econ Dev Auth Sch Fac Constr Ser I
          (FGIC Insd)...................................   5.000    09/01/20       4,014,701
20,000    New Jersey Econ Dev Auth St Contract Econ
          Recovery (MBIA Insd)..........................   5.900    03/15/21      24,270,600
 5,000    New Jersey St Ed Fac Auth Higher Ed Cap Impt
          Ser A (AMBAC Insd)............................   5.250    09/01/21       5,470,950
                                                                               -------------
                                                                                  48,873,351
                                                                               -------------
          NEW MEXICO  0.5%
 1,180    New Mexico Mtg Fin Auth Single Family Mtg Pgm
          Ser G (AMT) (GNMA Collateralized).............   7.250    07/01/26       1,205,925
                                                                               -------------
 
          NEW YORK  14.9%
 9,600    New York City Ser A...........................   7.000    08/01/07      10,496,832
   400    New York City Ser A (Prerefunded @
          08/01/06).....................................   7.000    08/01/07         441,548
 3,000    New York City Ser A Rfdg......................   7.000    08/01/05       3,111,600
 2,500    New York St Dorm Auth Lease Mun Hlth Facs Impt
          Ser 1 (FSA Insd)..............................   5.500    01/15/12       2,817,800
 1,495    New York St Dorm Auth Rev Mental Hlth Svcs Fac
          Ser A.........................................   5.750    08/15/12       1,625,065
     5    New York St Dorm Auth Rev Mental Hlth Svcs Fac
          Ser A (Prerefunded @ 02/15/07)................   5.750    08/15/12           5,519
 1,445    New York St Dorm Auth Rev Secd Hosp North Gen
          Hosp Rfdg (MBIA Insd).........................   5.750    02/15/17       1,642,112
 2,040    New York St Dorm Auth Rev Secd Hosp North Gen
          Hosp Rfdg.....................................   5.750    02/15/18       2,292,062
 1,500    New York St Dorm Auth Revs Upstate Cmnty
          Colleges Ser B................................   5.250    07/01/20       1,623,420
 1,000    New York St Dorm Auth Revs Upstate Cmnty
          Colleges Ser B................................   5.250    07/01/21       1,075,700
 3,780    New York St Mtg Agy Rev Ser 101 (AMT).........   5.400    04/01/32       3,897,936
 3,500    Port Auth NY & NJ Cons 97th Ser (AMT) (FGIC
          Insd).........................................   6.650    01/15/23       3,568,075

 
                                               See Notes to Financial Statements

                                      C-14


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON    MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          NEW YORK (CONTINUED)
$4,000    Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
          Intl Arpt Terminal 6 (AMT) (MBIA Insd)........   5.750%   12/01/22   $   4,359,600
 1,500    Sales Tax Asset Receivable Corp Ser A (MBIA
          Insd) (a).....................................   5.000    10/15/21       1,621,575
                                                                               -------------
                                                                                  38,578,844
                                                                               -------------
          NORTH CAROLINA  6.9%
 1,500    North Carolina Eastn Muni Pwr Agy Pwr Sys Rev
          Ser D.........................................   6.700    01/01/19       1,694,475
11,000    North Carolina Muni Pwr Agy No 1 Catawba Elec
          Rev Rfdg (MBIA Insd)..........................   6.000    01/01/12      12,916,970
 3,000    North Carolina Muni Pwr Agy Ser A (MBIA
          Insd).........................................   5.250    01/01/19       3,275,430
                                                                               -------------
                                                                                  17,886,875
                                                                               -------------
          NORTH DAKOTA  0.2%
   595    North Dakota St Hsg Fin Agy Ser C (AMT).......   5.550    07/01/29         601,575
                                                                               -------------
 
          OHIO  3.3%
   700    Akron, OH Ctf Part Akron Muni Baseball Stad
          Proj..........................................   6.500    12/01/07         741,489
 1,190    Bowling Green St Univ OH (FGIC Insd)..........   5.750    06/01/14       1,361,324
   500    Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc
          Proj..........................................   7.500    01/01/30         554,230
 3,000    Lucas Cnty, OH Hosp Rev Promedica Hlthcare
          Oblig Rfdg (MBIA Insd)........................   6.000    11/15/07       3,275,760
 1,500    Mahoning Cnty, OH Hosp Fac Forum Hlth Oblig
          Group Ser A...................................   6.000    11/15/32       1,588,545
 1,000    Ohio St Air Quality Dev Auth Rev JMG Fdg Ltd
          Part Proj Rfdg (AMT) (AMBAC Insd).............   6.375    04/01/29       1,023,300
                                                                               -------------
                                                                                   8,544,648
                                                                               -------------
          OKLAHOMA  4.0%
   470    Central OK Transn & Pkg Auth Pkg Sys (AMBAC
          Insd).........................................   5.000    07/01/19         504,663
   525    Central OK Transn & Pkg Auth Pkg Sys (AMBAC
          Insd).........................................   5.000    07/01/20         560,942
 4,770    McAlester, OK Pub Wks Auth Util Cap Apprec
          (FSA Insd)....................................    *       02/01/34       1,048,541
 1,300    Sapulpa, OK Muni Auth Cap Impt Rev Rfdg
          (Prerefunded @ 07/01/10) (FSA Insd)...........   5.750    07/01/30       1,506,804
 1,000    Tulsa Cnty, OK Pub Fac Auth Cap Impt Rev
          (AMBAC Insd)..................................   6.250    11/01/22       1,168,420

 
See Notes to Financial Statements                                            

                                      C-15



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON    MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          OKLAHOMA (CONTINUED)
$2,000    Tulsa, OK Indl Auth Hosp Rev Hillcrest Med
          Cent Proj Rfdg (Escrowed to Maturity) (Connie
          Lee Insd).....................................   6.125%   06/01/05   $   2,050,580
 3,140    Tulsa, OK Indl Auth Hosp Rev Hillcrest Med
          Cent Proj Rfdg (Escrowed to Maturity) (Connie
          Lee Insd) (f).................................   6.250    06/01/08       3,554,982
                                                                               -------------
                                                                                  10,394,932
                                                                               -------------
          OREGON  3.2%
 2,500    Oregon Hlth Sciences Univ Insd Ser A (MBIA
          Insd).........................................   5.250    07/01/22       2,702,300
 5,000    Oregon St Dept Admin Ser C Rfdg (MBIA Insd)...   5.250    11/01/18       5,547,400
                                                                               -------------
                                                                                   8,249,700
                                                                               -------------
          PENNSYLVANIA  7.2%
 2,000    Harrisburg, PA Auth Res Gtd Sub Ser D-2 (FSA
          Insd).........................................   5.000    12/01/33       2,194,220
 1,000    Harrisburg, PA Cap Apprec Nts Ser F Rfdg
          (AMBAC Insd)..................................    *       03/15/15         649,630
 1,865    Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
          Insd) (f).....................................    *       09/15/15       1,186,644
 1,865    Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
          Insd).........................................    *       03/15/16       1,149,362
 4,000    Hempfield, PA Area Sch Dist Ser A Westmoreland
          Cnty (FGIC Insd)..............................   5.250    03/15/20       4,423,440
 3,000    Susquehanna Area Regl Arpt Auth PA Ser A (AMT)
          (AMBAC Insd)..................................   5.375    01/01/21       3,205,980
 5,415    Susquehanna Area Regl Arpt Auth PA Ser A (AMT)
          (AMBAC Insd) (f)..............................   5.375    01/01/22       5,760,044
                                                                               -------------
                                                                                  18,569,320
                                                                               -------------
          SOUTH CAROLINA  1.6%
 1,250    Easley, SC Util Rev Comb (FSA Insd) (f).......   5.250    12/01/18       1,393,125
 2,500    South Carolina Jobs Econ Dev Auth Indl Rev
          Elec & Gas Co Proj Ser A (AMBAC Insd).........   5.200    11/01/27       2,631,125
                                                                               -------------
                                                                                   4,024,250
                                                                               -------------
          SOUTH DAKOTA  0.6%
 1,375    Deadwood, SD Ctfs Partn (ACA Insd)............   6.375    11/01/20       1,484,285
                                                                               -------------
 
          TENNESSEE  0.9%
 1,000    Elizabethton, TN Hlth & Ed Fac Brd Rev Hosp
          First Mtg Ser B Impt & Rfdg...................   8.000    07/01/33       1,189,420
 1,000    Johnson City, TN Hlth & Ed Fac Brd Hosp Rev
          First Mtg Mtn St Hlth Ser A Rfdg (MBIA
          Insd).........................................   7.500    07/01/25       1,261,640
                                                                               -------------
                                                                                   2,451,060
                                                                               -------------

 
                                               See Notes to Financial Statements

                                      C-16


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON    MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          TEXAS  18.8%
$  980    Austin, TX Utility Sys Rev Comb (AMBAC
          Insd).........................................   6.500%   11/15/05   $   1,026,805
    20    Austin, TX Utility Sys Rev Comb Rfdg (Escrowed
          to Maturity) (AMBAC Insd).....................   6.500    11/15/05          20,966
 2,545    Dallas Cnty, TX Cmnty College Fin Sys (AMBAC
          Insd) (f).....................................   5.375    02/15/17       2,796,242
 3,000    Dallas Cnty, TX Util & Reclamation Dist Ser B
          Rfdg (AMBAC Insd).............................   5.875    02/15/29       3,032,340
 2,500    Dallas, TX Wtrwks & Swr Sys Rev & Impt Rfdg
          (FSA Insd)....................................   5.375    10/01/18       2,772,900
 5,500    Dallas-Fort Worth, TX Intl Arpt Rev Impt Jt
          Ser A Rfdg (AMT) (FGIC Insd)..................   5.500    11/01/31       5,755,035
 4,000    Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
          (AMT) (FSA Insd)..............................   5.500    11/01/21       4,341,280
 1,500    Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
          (AMT) (FGIC Insd).............................   5.750    11/01/30       1,600,845
 2,000    Houston, TX Arpt Sys Rev Sub Lien (FSA
          Insd).........................................   5.500    07/01/20       2,240,280
 3,000    Houston, TX Arpt Sys Rev Sub Lien Ser A (AMT)
          (FSA Insd)....................................   5.625    07/01/30       3,187,620
 5,000    Houston, TX Arpt Sys Rev Sub Lien Ser A (AMT)
          (FSA Insd)....................................   5.125    07/01/32       5,089,750
 6,000    Houston, TX Util Sys Rev First Lien Ser A Rfdg
          (FSA Insd)....................................   5.250    05/15/21       6,562,680
 1,500    Metropolitan Hlth Fac Dev Corp TX Wilson N
          Jones Mem Hosp Proj...........................   7.250    01/01/31       1,450,065
 5,000    North Cent TX Hlth Fac Dev Hosp Childrens Med
          Ctr Dallas (AMBAC Insd).......................   5.250    08/15/32       5,221,500
 1,122    Texas Gen Svcs Comm Partn Int Lease Purch Ctfs
          (Acquired 03/16/1995, Cost $1,122,054) (d)....   7.250    08/01/11       1,140,703
 2,360    University TX Rev Fin Sys Ser B...............   5.250    08/15/20       2,581,344
                                                                               -------------
                                                                                  48,820,355
                                                                               -------------
          WASHINGTON  7.2%
 9,850    Bellevue, WA Convention Cent Comp Int Rfdg
          (MBIA Insd)...................................    *       02/01/25       3,551,615
 3,750    Chelan Cnty, WA Pub Util Dist No. 001 Cons Rev
          Chelan Hydro Ser A (AMT) (MBIA Insd)..........   5.600    01/01/36       3,977,925
 5,000    Energy Northwest WA Elec Rev Columbia
          Generating Ser A Rfdg (FSA Insd)..............   5.500    07/01/16       5,620,350
 2,000    Port Seattle, WA Rev Ser B (AMT) (MBIA
          Insd).........................................   5.625    02/01/24       2,171,480
 5,125    Washington St Pub Pwr Supply Sys Nuclear Proj
          No 3 Rev Ser C Rfdg (MBIA Insd)...............    *       07/01/14       3,443,385
                                                                               -------------
                                                                                  18,764,755
                                                                               -------------
          WEST VIRGINIA  3.1%
 8,000    Harrison Cnty, WV Cmnty Solid Waste Disp Rev
          West Penn Pwr Co Proj Ser A (AMT) (MBIA
          Insd).........................................   6.875    04/15/22       8,031,280
                                                                               -------------

 
See Notes to Financial Statements                                            

                                      C-17


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON    MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          WISCONSIN  0.7%
$1,500    Southeast WI Professional Baseball Pk Dist
          Sales Tax Rev Ser A Rfdg (MBIA Insd)..........   5.500%   12/15/20   $   1,764,465
                                                                               -------------
 
TOTAL LONG-TERM INVESTMENTS  156.2%
  (Cost $373,287,748).......................................................     405,298,329
SHORT-TERM INVESTMENT  0.2%
  (Cost $500,000)...........................................................         500,000
                                                                               -------------
 
TOTAL INVESTMENTS  156.4%
  (Cost $373,787,748).......................................................     405,798,329
OTHER ASSETS IN EXCESS OF LIABILITIES  1.5%.................................       3,718,053
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS)  (57.9%).................    (150,094,106)
                                                                               -------------
 
NET ASSETS APPLICABLE TO COMMON SHARES  100.0%..............................   $ 259,422,276
                                                                               =============

 
Percentages are calculated as a percentage of net assets applicable to common
shares.
 
*   Zero coupon bond
 
(a) Securities purchased on a when-issued or delayed delivery basis.
 
(b) Security is a "step-up" bond where the coupon increases or steps up at a
    predetermined date.
 
(c) 144A securities are those which are exempt from registration under Rule 144A
    of the Securities Act of 1933, as amended. These securities may only be
    resold in transactions exempt from registration which are normally those
    transactions with qualified institutional buyers.
 
(d) These securities are restricted and may be resold only in transactions
    exempt from registration which are normally those transactions with
    qualified institutional buyers. Restricted securities comprise 1.2% of net
    assets applicable to common shares.
 
(e) All or a portion of these securities have been physically segregated in
    connection with open futures contracts.
 
(f) The Trust owns 100% of the bond issuance.
 
ACA--American Capital Access
 
AMBAC--AMBAC Indemnity Corp.
 
AMT--Alternative Minimum Tax
 
Connie Lee--Connie Lee Insurance Co.
 
FGIC--Financial Guaranty Insurance Co.
 
FHA--Federal Housing Administration
 
FNMA--Federal National Mortgage Association
 
FSA--Financial Security Assurance Inc.
 
GNMA--Government National Mortgage Association
 
MBIA--Municipal Bond Investors Assurance Corp.
 
XLCA--XL Capital Assurance Inc.
 
                                               See Notes to Financial Statements

                                      C-18


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
October 31, 2004
 

                                                           
ASSETS:
Total Investments (Cost $373,787,748).......................  $405,798,329
Cash........................................................        35,628
Receivables:
  Interest..................................................     5,937,527
  Investments Sold..........................................       172,746
Other.......................................................         7,177
                                                              ------------
    Total Assets............................................   411,951,407
                                                              ------------
LIABILITIES:
Payables:
  Investments Purchased.....................................     1,618,230
  Investment Advisory Fee...................................       207,472
  Variation Margin on Futures...............................       148,344
  Income Distributions--Common Shares.......................        60,638
  Other Affiliates..........................................        15,267
Trustees' Deferred Compensation and Retirement Plans........       271,468
Accrued Expenses............................................       113,606
                                                              ------------
    Total Liabilities.......................................     2,435,025
Preferred Shares (including accrued distributions)..........   150,094,106
                                                              ------------
NET ASSETS APPLICABLE TO COMMON SHARES......................  $259,422,276
                                                              ============
NET ASSET VALUE PER COMMON SHARE ($259,422,276 divided by
  15,357,684 shares outstanding)............................  $      16.89
                                                              ============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
  shares authorized, 15,357,684 shares issued and
  outstanding)..............................................  $    153,577
Paid in Surplus.............................................   226,763,756
Net Unrealized Appreciation.................................    31,576,864
Accumulated Undistributed Net Investment Income.............     1,189,973
Accumulated Net Realized Loss...............................      (261,894)
                                                              ------------
NET ASSETS APPLICABLE TO COMMON SHARES......................  $259,422,276
                                                              ============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
  shares, 6,000 issued with liquidation preference of
  $25,000 per share)........................................  $150,000,000
                                                              ============
NET ASSETS INCLUDING PREFERRED SHARES.......................  $409,422,276
                                                              ============

 
See Notes to Financial Statements                                             

                                      C-19


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
FINANCIAL STATEMENTS continued
 
Statement of Operations
For the Year Ended October 31, 2004
 

                                                           
INVESTMENT INCOME:
Interest....................................................  $20,697,831
                                                              -----------
EXPENSES:
Investment Advisory Fee.....................................    2,443,896
Preferred Share Maintenance.................................      399,746
Administrative Fee..........................................      119,262
Trustees' Fees and Related Expenses.........................       96,166
Legal.......................................................       43,215
Custody.....................................................       24,806
Other.......................................................      219,200
                                                              -----------
    Total Expenses..........................................    3,346,291
                                                              -----------
NET INVESTMENT INCOME.......................................  $17,351,540
                                                              ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
  Investments...............................................  $ 2,712,342
  Futures...................................................   (4,808,812)
                                                              -----------
Net Realized Loss...........................................   (2,096,470)
                                                              -----------
Unrealized Appreciation/Depreciation:
  Beginning of the Period...................................   25,976,471
                                                              -----------
  End of the Period:
    Investments.............................................   32,010,581
    Futures.................................................     (433,717)
                                                              -----------
                                                               31,576,864
                                                              -----------
Net Unrealized Appreciation During the Period...............    5,600,393
                                                              -----------
NET REALIZED AND UNREALIZED GAIN............................  $ 3,503,923
                                                              ===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS.....................  $(1,849,091)
                                                              ===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
  OPERATIONS................................................  $19,006,372
                                                              ===========

 
                                               See Notes to Financial Statements


                                      C-20


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
FINANCIAL STATEMENTS continued
 
Statements of Changes in Net Assets
 


                                                                FOR THE            FOR THE
                                                               YEAR ENDED         YEAR ENDED
                                                            OCTOBER 31, 2004   OCTOBER 31, 2003
                                                            -----------------------------------
                                                                         
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.....................................    $ 17,351,540       $ 18,197,414
Net Realized Gain/Loss....................................      (2,096,470)         6,086,249
Net Unrealized Appreciation/Depreciation During the
  Period..................................................       5,600,393         (4,641,387)
Distributions to Preferred Shareholders:
  Net Investment Income...................................      (1,527,703)        (1,239,349)
  Net Realized Gain.......................................        (321,388)          (537,720)
                                                              ------------       ------------
Change in Net Assets Applicable to Common Shares from
  Operations..............................................      19,006,372         17,865,207
 
Distributions to Common Shareholders:
  Net Investment Income...................................     (16,600,321)       (17,777,125)
  Net Realized Gain.......................................      (4,376,481)        (7,109,923)
                                                              ------------       ------------
 
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
  INVESTMENT ACTIVITIES...................................      (1,970,430)        (7,021,841)
 
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
  Reinvestment............................................          81,435                -0-
                                                              ------------       ------------
TOTAL DECREASE IN NET ASSETS APPLICABLE TO COMMON
  SHARES..................................................      (1,888,995)        (7,021,841)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period...................................     261,311,271        268,333,112
                                                              ------------       ------------
End of the Period (Including accumulated undistributed net
  investment income of $1,189,973 and $2,379,855,
  respectively)...........................................    $259,422,276       $261,311,271
                                                              ============       ============

 
See Notes to Financial Statements                                            

                                      C-21



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
FINANCIAL HIGHLIGHTS
 
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
 


                                                              ------------------------------
                                                               2004       2003      2002 (A)
                                                              ------------------------------
                                                                           
NET ASSET VALUE, BEGINNING OF THE PERIOD..................    $ 17.02    $ 17.48    $ 17.59
                                                              -------    -------    -------
  Net Investment Income...................................       1.13       1.19       1.23
  Net Realized and Unrealized Gain/Loss...................        .23        .09        .15
  Common Share Equivalent of Distributions Paid to
  Preferred Shareholders:
    Net Investment Income.................................       (.10)      (.08)      (.09)
    Net Realized Gain.....................................       (.02)      (.04)      (.08)
                                                              -------    -------    -------
Total from Investment Operations..........................       1.24       1.16       1.21
Distributions Paid to Common Shareholders:
    Net Investment Income.................................      (1.08)     (1.16)     (1.08)
    Net Realized Gain.....................................       (.29)      (.46)      (.24)
                                                              -------    -------    -------
NET ASSET VALUE, END OF THE PERIOD........................    $ 16.89    $ 17.02    $ 17.48
                                                              =======    =======    =======
 
Common Share Market Price at End of the Period............    $ 15.20    $ 16.65    $ 16.04
Total Return (b)..........................................     -0.60%     14.53%     11.36%
Net Assets Applicable to Common Shares at End of the
  Period (In millions)....................................    $ 259.4    $ 261.3    $ 268.3
Ratio of Expenses to Average Net Assets Applicable to
  Common Shares (c).......................................      1.30%      1.28%      1.42%
Ratio of Net Investment Income to Average Net Assets
  Applicable to Common Shares (c).........................      6.74%      6.90%      7.17%
Portfolio Turnover........................................        28%        36%        43%
 
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including
  Preferred Shares (c)....................................       .82%       .81%       .91%
Ratio of Net Investment Income to Average Net Assets
  Applicable to Common Shares (d).........................      6.15%      6.43%      6.61%
 
SENIOR SECURITIES:
Total Preferred Shares Outstanding........................      6,000      6,000      6,000
Asset Coverage Per Preferred Share (e)....................    $68,253    $68,560    $69,736
Involuntary Liquidating Preference Per Preferred Share....    $25,000    $25,000    $25,000
Average Market Value Per Preferred Share..................    $25,000    $25,000    $25,000

 
(a)As required, effective November 1, 2001, the Trust has adopted the provisions
   of the AICPA Audit and Accounting Guide for Investment Companies and began
   accreting market discount on fixed income securities. The effect of this
   change for the year ended October 31, 2002 was to increase net investment
   income by $.01, decrease net realized and unrealized gains and losses per
   share by $.01 and increase the ratio of net investment income to average net
   assets applicable to common shares by .03%. Per share, ratios and
   supplemental data for periods prior to October 31, 2002 have not been
   restated to reflect this change in presentation.
 
(b)Total return assumes an investment at the common share market price at the
   beginning of the period indicated, reinvestment of all distributions for the
   period in accordance with the Trust's dividend reinvestment plan, and sale of
   all shares at the closing common share market price at the end of the period
   indicated.
 
(c)Ratios do not reflect the effect of dividend payments to preferred
   shareholders.
 
(d)Ratios reflect the effect of dividend payments to preferred shareholders.
 
(e)Calculated by subtracting the Trust's total liabilities (not including the
   preferred shares) from the Trust's total assets and dividing this by the
   number of preferred shares outstanding.
 
                                      C-22



 


YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------
      2001       2000      1999       1998       1997       1996       1995
-----------------------------------------------------------------------------
                                                
     $ 16.29   $  15.67   $ 17.61   $  16.96   $  16.12   $  15.85   $  14.39
     -------   --------   -------   --------   --------   --------   --------
        1.26       1.27      1.25       1.26       1.26       1.27       1.28
        1.29        .65     (1.97)       .64        .83        .27       1.58
        (.32)      (.40)     (.32)      (.35)      (.35)      (.36)      (.39)
        (.01)       -0-       -0-        -0-        -0-        -0-        -0-
     -------   --------   -------   --------   --------   --------   --------
        2.22       1.52     (1.04)      1.55       1.74       1.18       2.47
        (.92)      (.90)     (.90)      (.90)      (.90)      (.91)     (1.01)
         -0-        -0-       -0-        -0-        -0-        -0-        -0-
     -------   --------   -------   --------   --------   --------   --------
     $ 17.59   $  16.29   $ 15.67   $  17.61   $  16.96   $  16.12   $  15.85
     =======   ========   =======   ========   ========   ========   ========
 
     $ 15.65   $13.6875   $ 13.50   $  16.50   $15.0625   $  13.75   $ 13.625
      21.42%      8.28%   -13.29%     15.91%     16.54%      7.72%     12.70%
     $ 270.0   $  250.1   $ 240.5   $  270.3   $  260.3   $  247.5   $  243.3
       1.58%      1.68%     1.62%      1.61%      1.64%      1.66%      1.75%
       7.40%      8.04%     7.35%      7.25%      7.64%      7.96%      8.45%
         34%        29%       30%        29%        49%        85%        70%
 
       1.00%      1.03%     1.03%      1.03%      1.03%      1.03%      1.06%
       5.54%      5.49%     5.48%      5.24%      5.51%      5.73%      5.87%
 
       6,000      6,000     6,000      3,000      3,000      3,000      3,000
     $70,006   $ 66,683   $65,086   $140,098   $136,771   $132,502   $131,094
     $25,000   $ 25,000   $25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000
     $25,000   $ 25,000   $25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000

 
See Notes to Financial Statements                                            

                                      C-23



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004
 
1. SIGNIFICANT ACCOUNTING POLICIES
 
Van Kampen Municipal Opportunity Trust (the "Trust") is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The Trust's investment objective is to provide
a high level of current income exempt from federal income tax, consistent with
preservation of capital. The Trust commenced investment operations on April 24,
1992. Effective November 30, 2003, the Trust's investment adviser, Van Kampen
Investment Advisory Corp. merged into its affiliate, Van Kampen Asset
Management.
 
    The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
 
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
 
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
segregate assets with 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. At October 31, 2004, the Trust had $1,618,230 of when-issued or
delayed delivery purchase commitments.
 
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security.
 
D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
 
    The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized loss forward for eight years following the year of
the loss and offset such losses against any future realized capital gains. At
October 31, 2004, the Trust had an accumulated capital loss carryforward for tax
purposes of $694,750, which will expire on October 31, 2012.
 
                                      C-24



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
 
    At October 31, 2004, the cost and related gross unrealized appreciation and
depreciation are as follows:
 

                                                           
Cost of investments for tax purposes........................  $373,634,612
                                                              ============
Gross tax unrealized appreciation...........................    32,631,554
Gross tax unrealized depreciation...........................      (467,837)
                                                              ------------
Net tax unrealized appreciation on investments..............  $ 32,163,717
                                                              ============

 
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
 
    The tax character of distributions paid during the years ended October 31,
2004 and 2003 was as follows:
 


                                                                 2004          2003
                                                                      
Distributions paid from:
  Ordinary income...........................................  $1,281,469    $1,944,011
  Long-term capital gain....................................   3,842,711     5,824,969
                                                              ----------    ----------
                                                              $5,124,180    $7,768,980
                                                              ==========    ==========

 
    Due to inherent differences in the recognition of income, expenses, and
realized gains/losses under accounting principles generally accepted in the
United States of America and federal income tax purposes, permanent differences
between financial and tax basis reporting for the 2004 fiscal year have been
identified and appropriately reclassified. A permanent difference relating to
excise taxes paid which are not deductible for tax purposes totaling $9,836 was
reclassified from accumulated undistributed net investment income to paid in
surplus. Also, a permanent difference of $423,234 relating to book to tax
accretion differences was reclassified from accumulated undistributed net
investment income to accumulated net realized loss.
 
    Net realized gains and losses may differ for financial and tax purposes as a
result of gains or losses recognized for tax purposes on open future
transactions on October 31, 2004 and the deferral of losses related to wash sale
transactions.
 
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
 
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") will provide investment advice and facilities to the
Trust for an annual fee payable monthly of .60% of the average daily net assets
of the Trust. Effective November 1, 2004, the investment advisory fee was
reduced from .60% to .55%. In addition, the Trust paid a monthly administrative
fee to Van Kampen Investments Inc. or its affiliates (collectively "Van
Kampen"), the Trust's Administrator, at an annual rate of .05% of the average
daily net assets of the Trust. Effective June 1, 2004, the administrative fee
was reduced from .05% to .00%.
 
                                      C-25



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
 
    For the year ended October 31, 2004, the Trust recognized expenses of
approximately $26,300 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Trust, of which a trustee of the Trust
is a partner who provides legal services to the Trust, and is therefore an
affiliated person.
 
    Under separate Accounting Services and Legal Services agreements, the
Adviser provides accounting and legal services to the Trust. The Adviser
allocates the cost of such services to each trust. For the year ended October
31, 2004, the Trust recognized expenses of approximately $40,800 representing
Van Kampen's cost of providing accounting and legal services to the Trust, which
are reported as part of "Other" and "Legal" expenses, respectively, in the
Statement of Operations.
 
    Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
also officers of Van Kampen.
 
    The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Trust.
The maximum annual benefit per trustee under the plan is $2,500.
 
3. CAPITAL TRANSACTIONS
 
At October 31, 2004 and 2003, paid in surplus related to common shares
aggregated $226,763,756 and $226,692,205, respectively.
 
    Transactions in common shares were as follows:
 


                                                             YEAR ENDED          YEAR ENDED
                                                          OCTOBER 31, 2004    OCTOBER 31, 2003
                                                          ----------------    ----------------
                                                                        
Beginning Shares........................................     15,352,891          15,352,891
Shares Issued Through Dividend Reinvestment.............          4,793                 -0-
                                                             ----------          ----------
Ending Shares...........................................     15,357,684          15,352,891
                                                             ==========          ==========

 
4. INVESTMENT TRANSACTIONS
 
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $112,949,512 and $122,149,605,
respectively.
 
5. DERIVATIVE FINANCIAL INSTRUMENTS
 
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
 
    In order to seek to manage the interest rate exposure of the Trust's
portfolio in a changing interest rate environment, the Trust may purchase or
sell financial futures contracts or engage in transactions involving interest
rate swaps, caps, floors or collars. The Trust expects to enter into these
transactions primarily as a hedge against anticipated interest rate or
fixed-income market changes, for duration management or for risk management
purposes, but may also enter into these transactions to generate additional
income. All of the Trust's portfolio holdings, including derivative instruments,
are marked to market each day with the change in value reflected in unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly, except when taking delivery of a security underlying a
 
                                      C-26



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
 
futures contract. In this instance, the recognition of gain or loss is postponed
until the disposal of the security underlying the futures contract. Risks may
arise as a result of the potential inability of the counterparties to meet the
terms of their contracts or agreements.
 
    During the period, the Trust invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Trust
generally invests in futures on U.S. Treasury Notes and typically closes the
contract prior to the delivery date. These contracts are generally used to
manage the portfolio's effective maturity and duration.
 
    Upon entering into futures contracts, the Trust maintains, in a segregated
account with its custodian, an amount of cash or liquid securities with a value
equal to a percentage of the contract amount with either a futures commission
merchant pursuant to rules and regulations promulgated under the 1940 Act, or
with its custodian in an account in the broker's name. This amount is known as
initial margin. During the period the futures contract is open, payments are
received from or made to the broker based upon changes in the value of the
contract (the variation margin). The risk of loss associated with a futures
contract is in excess of the variation margin reflected on the Statement of
Assets and Liabilities.
 
    Transactions in futures contracts, each with a par value of $100,000, for
the year ended October 31, 2004, were as follows:
 


                                                              CONTRACTS
                                                           
Outstanding at October 31, 2003.............................      584
Futures Opened..............................................    2,531
Futures Closed..............................................   (2,514)
                                                               ------
Outstanding at October 31, 2004.............................      601
                                                               ======

 
    The futures contracts outstanding as of October 31, 2004, and the
description and unrealized appreciation/depreciation were as follows:
 


                                                                            UNREALIZED
                                                                           APPRECIATION/
                                                              CONTRACTS    DEPRECIATION
                                                                     
SHORT CONTRACTS:
U.S. Treasury Notes 5-Year Futures December 2004 (Current
  Notional Value of $111,375 per contract)..................     493         $(310,097)
U.S. Treasury Notes 10-Year Futures December 2004 (Current
  Notional Value of $113,562 per contract)..................     108          (123,620)
                                                                 ---         ---------
                                                                 601         $(433,717)
                                                                 ===         =========

 
6. PREFERRED SHARES
 
The Trust has outstanding 6,000 Auction Preferred Shares ("APS") in two series
of 3,000 shares each. Dividends are cumulative and the dividend rate on each
series is currently reset every 28 days through an auction process. The average
rate in effect on October 31, 2004 was 1.575%. During the year ended October 31,
2004, the rates ranged from .880% to 1.850%.
 
    The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of "Preferred Share
Maintenance" expense in the Statement of Operations.
 
                                      C-27



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
 
    The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $25,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the APS are subject to
mandatory redemption if the tests are not met.
 
7. INDEMNIFICATIONS
 
The Trust enters into contracts that contain a variety of indemnifications. The
Trust's maximum exposure under these arrangements is unknown. However, the Trust
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
 
                                      C-28



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Trustees and Shareholders of Van Kampen Municipal Opportunity
Trust:
 
We have audited the accompanying statement of assets and liabilities of Van
Kampen Municipal Opportunity Trust (the "Trust"), including the portfolio of
investments, as of October 31, 2004, the related statement of operations for the
year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The Trust's financial highlights for the periods ended
prior to October 31, 2000 were audited by other auditors whose report, dated
December 6, 1999, expressed an unqualified opinion on those financial
highlights.
 
    We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2004, by correspondence with the Trust's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
 
    In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Municipal Opportunity Trust as of October 31, 2004, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the respective stated periods, in conformity with
accounting principles generally accepted in the United States of America.
 
DELOITTE & TOUCHE LLP
Chicago, Illinois
December 10, 2004
 
                                      C-29


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
DIVIDEND REINVESTMENT PLAN
 
    The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
 
    If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
 
HOW TO PARTICIPATE
 
    If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be
re-registered in your own name which will enable your participation in the Plan.
 
HOW THE PLAN WORKS
 
    Participants in the Plan will receive the equivalent in Common Shares valued
on the valuation date, generally at the lower of market price or net asset
value, except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value
 
                                      C-30




VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
DIVIDEND REINVESTMENT PLAN continued
 
of the Trust's Common Shares, resulting in the acquisition of fewer Common
Shares than if the dividend or distribution had been paid in Common Shares
issued by the Trust. All reinvestments are in full and fractional Common Shares
and are carried to three decimal places.
 
    Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
 
COSTS OF THE PLAN
 
    The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
 
TAX IMPLICATIONS
 
    You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
 
RIGHT TO WITHDRAW
 
    Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
 
                              Van Kampen Funds Inc.
                              Attn: Closed-End Funds
                                2800 Post Oak Blvd.
                                 Houston, TX 77056
 

                                      C-31



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
 
BOARD OF TRUSTEES
 
DAVID C. ARCH
J. MILES BRANAGAN
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
 
INVESTMENT ADVISER
 
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
 
CUSTODIAN AND TRANSFER AGENT
 
STATE STREET BANK
AND TRUST COMPANY
c/o EquiServe
P.O. Box 43011
Providence, Rhode Island 02940-3011
 
LEGAL COUNSEL
 
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
 
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
 
 For federal income tax purposes, the following information is furnished with
 respect to the distributions paid by the Trust during its taxable year ended
 October 31, 2004. The Trust designated 97.6% of the income distributions as a
 tax-exempt income distribution. The Trust designated and paid $3,842,711 as a
 long-term capital gain distribution. In January, the Trust provides tax
 information to shareholders for the preceding calendar year.
 
*   "Interested persons" of the Trust, as defined in the Investment Company Act
    of 1940, as amended.


                                      C-32



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
RESULTS OF SHAREHOLDER VOTES
 
The Annual Meeting of Shareholders of the Trust was held on June 23, 2004, where
shareholders voted on the election of trustees.
 
With regard to the election of the following trustees by common shareholders of
the Trust:
 


                                                                     # OF SHARES
                                                            ------------------------------
                                                             IN FAVOR             WITHHELD
------------------------------------------------------------------------------------------
                                                                            
R. Craig Kennedy..........................................  12,787,725            152,845
Jack E. Nelson............................................  12,785,261            155,309
Richard F. Powers, III....................................  12,772,638            167,932

 
With regards to the election of the following trustee by preferred shareholders
of the Trust:
 


                                                                      # OF SHARES
                                                              ----------------------------
                                                              IN FAVOR            WITHHELD
------------------------------------------------------------------------------------------
                                                                            
Hugo Sonnenschein...........................................   3,740                 20

 
The other trustees of the Trust whose terms did not expire in 2004 are David C.
Arch, J. Miles Branagan, Jerry D. Choate, Rod Dammeyer, Linda Hutton Heagy,
Howard J Kerr, Mitchell M. Merin, Wayne W. Whalen, and Suzanne H. Woolsey.
 
                                      C-33


 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
TRUSTEE AND OFFICER INFORMATION
 
The business and affairs of the Trust are managed under the direction of the
Trust's Board of Trustees and the Trust's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Trust
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments
Inc. ("Van Kampen Investments"), Van Kampen Asset Management (the "Adviser"),
Van Kampen Funds Inc. (the "Distributor"), 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 or its affiliates as of the date of this Statement of Additional
Information. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
 
INDEPENDENT TRUSTEES:
 


                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                
David C. Arch (59)            Trustee      Trustee     Chairman and Chief             85       Trustee/Director/Managing
Blistex Inc.                               since 1992  Executive Officer of                    General Partner of funds
1800 Swift Drive                                       Blistex Inc., a consumer                in the Fund Complex.
Oak Brook, IL 60523                                    health care products
                                                       manufacturer. Director of
                                                       the 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.

J. Miles Branagan (72)        Trustee      Trustee     Private investor.              83       Trustee/Director/Managing
1632 Morning Mountain Road                 since 2003  Co-founder, and prior to                General Partner of funds
Raleigh, NC 27614                                      August 1996, Chairman,                  in the Fund Complex.
                                                       Chief Executive Officer
                                                       and President, MDT
                                                       Corporation (now known as
                                                       Getinge/Castle, Inc., a
                                                       subsidiary of Getinge
                                                       Industrier AB), a company
                                                       which develops,
                                                       manufactures, markets and
                                                       services medical and
                                                       scientific equipment.

 
                                      C-34



 


VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Jerry D. Choate (66)          Trustee      Trustee     Prior to January 1999,         83       Trustee/Director/Managing
33971 Selva Road                           since 2003  Chairman and Chief                      General Partner of funds
Suite 130                                              Executive Officer of the                in the Fund Complex.
Dana Point, CA 92629                                   Allstate Corporation                    Director of Amgen Inc., a
                                                       ("Allstate") and Allstate               biotechnological company,
                                                       Insurance Company. Prior                and Director of Valero
                                                       to January 1995,                        Energy Corporation, an
                                                       President and Chief                     independent refining
                                                       Executive Officer of                    company.
                                                       Allstate. Prior to August
                                                       1994, various management
                                                       positions at Allstate.

 

                                      C-35



 


VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Rod Dammeyer (64)             Trustee      Trustee     President of CAC, L.L.C.,      85       Trustee/Director/Managing
CAC, L.L.C.                                since 1992  a private company                       General Partner of funds
4350 LaJolla Village Drive                             offering capital                        in the Fund Complex.
Suite 980                                              investment and management               Director of Stericycle,
San Diego, CA 92122-6223                               advisory services. Prior                Inc., Ventana Medical
                                                       to February 2001, Vice                  Systems, Inc., and GATX
                                                       Chairman and Director of                Corporation, and Trustee
                                                       Anixter International,                  of The Scripps Research
                                                       Inc., a global                          Institute and the
                                                       distributor of wire,                    University of Chicago
                                                       cable and communications                Hospitals and Health
                                                       connectivity products.                  Systems. Prior to January
                                                       Prior to July 2000,                     2004, Director of
                                                       Managing Partner of                     TeleTech Holdings Inc.
                                                       Equity Group Corporate                  and Arris Group, Inc.
                                                       Investment (EGI), a                     Prior to May 2002,
                                                       company that makes                      Director of Peregrine
                                                       private investments in                  Systems Inc. Prior to
                                                       other companies.                        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).

 
                                      C-36



 


VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Linda Hutton Heagy (56)       Trustee      Trustee     Managing Partner of            83       Trustee/Director/Managing
Heidrick & Struggles                       since 2003  Heidrick & Struggles, an                General Partner of funds
233 South Wacker Drive                                 executive search firm.                  in the Fund Complex.
Suite 7000                                             Trustee on the University
Chicago, IL 60606                                      of Chicago Hospitals
                                                       Board, Vice Chair of the
                                                       Board of the YMCA of
                                                       Metropolitan Chicago and
                                                       a member of the Women's
                                                       Board of the University
                                                       of Chicago. Prior to
                                                       1997, Partner of Ray &
                                                       Berndtson, Inc., an
                                                       executive recruiting
                                                       firm. Prior to 1996,
                                                       Trustee of The
                                                       International House
                                                       Board, a fellowship and
                                                       housing organization for
                                                       international graduate
                                                       students. Prior to 1995,
                                                       Executive Vice President
                                                       of ABN AMRO, N.A., a bank
                                                       holding company. Prior to
                                                       1992, Executive Vice
                                                       President of La Salle
                                                       National Bank.

R. Craig Kennedy (52)         Trustee      Trustee     Director and President of      83       Trustee/Director/Managing
1744 R Street, NW                          since 2003  the German Marshall Fund                General Partner of funds
Washington, DC 20009                                   of the United States, an                in the Fund Complex.
                                                       independent U.S.
                                                       foundation created to
                                                       deepen understanding,
                                                       promote collaboration and
                                                       stimulate exchanges of
                                                       practical experience
                                                       between Americans and
                                                       Europeans. Formerly,
                                                       advisor to the Dennis
                                                       Trading Group Inc., a
                                                       managed futures and
                                                       option company that
                                                       invests money for
                                                       individuals and
                                                       institutions. Prior to
                                                       1992, President and Chief
                                                       Executive Officer,
                                                       Director and member of
                                                       the Investment Committee
                                                       of the Joyce Foundation,
                                                       a private foundation.

Howard J Kerr (69)            Trustee      Trustee     Prior to 1998, President       85       Trustee/Director/Managing
736 North Western Avenue                   since 1992  and Chief Executive                     General Partner of funds
P.O. Box 317                                           Officer of Pocklington                  in the Fund Complex.
Lake Forest, IL 60045                                  Corporation, Inc., an                   Director of the Lake
                                                       investment holding                      Forest Bank & Trust.
                                                       company. Director of the
                                                       Marrow Foundation.

 

                                      C-37



 


VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Jack E. Nelson (68)           Trustee      Trustee     President of Nelson            83       Trustee/Director/Managing
423 Country Club Drive                     since 2003  Investment Planning                     General Partner of funds
Winter Park, FL 32789                                  Services, Inc., a                       in the Fund Complex.
                                                       financial planning
                                                       company and registered
                                                       investment adviser in the
                                                       State of Florida.
                                                       President of Nelson Ivest
                                                       Brokerage Services Inc.,
                                                       a member of the NASD,
                                                       Securities Investors
                                                       Protection Corp. and the
                                                       Municipal Securities
                                                       Rulemaking Board.
                                                       President of Nelson Sales
                                                       and Services Corporation,
                                                       a marketing and services
                                                       company to support
                                                       affiliated companies.

Hugo F. Sonnenschein (64)     Trustee      Trustee     President Emeritus and         85       Trustee/Director/Managing
1126 E. 59th Street                        since 1994  Honorary Trustee of the                 General Partner of funds
Chicago, IL 60637                                      University of Chicago and               in the Fund Complex.
                                                       the Adam Smith                          Director of Winston
                                                       Distinguished Service                   Laboratories, Inc.
                                                       Professor in the
                                                       Department of Economics
                                                       at the University of
                                                       Chicago. Prior to July
                                                       2000, President of the
                                                       University of Chicago.
                                                       Trustee of the University
                                                       of Rochester and a member
                                                       of its investment
                                                       committee. Member of the
                                                       National Academy of
                                                       Sciences, the American
                                                       Philosophical Society and
                                                       a fellow of the American
                                                       Academy of Arts and
                                                       Sciences.

Suzanne H. Woolsey, Ph.D.     Trustee      Trustee     Chief Communications           83       Trustee/Director/Managing
(62)                                       since 2003  Officer of the National                 General Partner of funds
815 Cumberstone Road                                   Academy of                              in the Fund Complex.
Harwood, MD 20776                                      Sciences/National                       Director of Fluor Corp.,
                                                       Research Council, an                    an engineering,
                                                       independent, federally                  procurement and
                                                       chartered policy                        construction
                                                       institution, from 2001 to               organization, since
                                                       November 2003 and Chief                 January 2004 and Director
                                                       Operating Officer from                  of Neurogen Corporation,
                                                       1993 to 2001. Director of               a pharmaceutical company,
                                                       the Institute for Defense               since January 1998.
                                                       Analyses, a federally
                                                       funded research and
                                                       development center,
                                                       Director of the German
                                                       Marshall Fund of the
                                                       United States, Director
                                                       of the Rocky Mountain
                                                       Institute and Trustee of
                                                       Colorado College. Prior
                                                       to 1993, Executive
                                                       Director of the
                                                       Commission on Behavioral
                                                       and Social Sciences and
                                                       Education at the National
                                                       Academy of
                                                       Sciences/National
                                                       Research Council. From
                                                       1980 through 1989,
                                                       Partner of Coopers &
                                                       Lybrand.

 
                                      C-38



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
TRUSTEE AND OFFICER INFORMATION continued
 
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            TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Mitchell M. Merin* (51)       Trustee,     Trustee     President and Chief            83       Trustee/Director/Managing
1221 Avenue of the Americas   President    since       Executive Officer of                    General Partner of funds
New York, NY 10020            and Chief    2003;       funds in the Fund                       in the Fund Complex.
                              Executive    President   Complex. Chairman,
                              Officer      and Chief   President, Chief
                                           Executive   Executive Officer and
                                           Officer     Director of the Adviser
                                           since 2002  and Van 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.

 
                                      C-39



 


                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE            TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Richard F. Powers, III* (58)  Trustee      Trustee     Advisory Director of           85       Trustee/Director/Managing
1 Parkview Plaza                           since 1999  Morgan Stanley. Prior to                General Partner of funds
P.O. Box 5555                                          December 2002, Chairman,                in the Fund Complex.
Oakbrook Terrace, IL 60181                             Director, President,
                                                       Chief Executive Officer
                                                       and Managing Director of
                                                       Van Kampen Investments
                                                       and its investment
                                                       advisory, distribution
                                                       and other subsidiaries.
                                                       Prior to December 2002,
                                                       President and Chief
                                                       Executive Officer of
                                                       funds in the Fund
                                                       Complex. Prior to May
                                                       1998, Executive Vice
                                                       President and Director of
                                                       Marketing at Morgan
                                                       Stanley and Director of
                                                       Dean Witter, Discover &
                                                       Co. and Dean Witter
                                                       Realty. Prior to 1996,
                                                       Director of Dean Witter
                                                       Reynolds Inc.

Wayne W. Whalen* (65)         Trustee      Trustee     Partner in the law firm        85       Trustee/Director/Managing
333 West Wacker Drive                      since 1992  of Skadden, Arps, Slate,                General Partner of funds
Chicago, IL 60606                                      Meagher & Flom LLP, legal               in the Fund Complex.
                                                       counsel to funds in the
                                                       Fund Complex.

 
*   Such Trustee is an "interested person" (within the meaning of Section
    2(a)(19) of the 1940 Act). Mr. Whalen is an interested person of certain
    funds in the Fund Complex by reason of his firm currently acting as legal
    counsel to such funds in the Fund Complex. Messrs. Merin and Powers are
    interested persons of funds in the Fund Complex and the Adviser by reason of
    their current or former positions with Morgan Stanley or its affiliates.
 
                                      C-40



 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
TRUSTEE AND OFFICER INFORMATION continued
 
OFFICERS:
 


                                                     TERM OF
                                                    OFFICE AND
                                   POSITION(S)      LENGTH OF
NAME, AGE AND                       HELD WITH          TIME     PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER                    TRUST           SERVED    DURING PAST 5 YEARS
                                                       
Stefanie V. Chang (38)          Vice President      Officer     Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas     and Secretary       since 2003  Vice President of funds in the Fund Complex.
New York, NY 10020

Amy R. Doberman (42)            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 Aeitus Investment Management,
                                                                Inc. from January 1997 to July 2000.

James M. Dykas (38)             Chief Financial     Officer     Executive Director of Van Kampen Asset Management and Morgan
1 Parkview Plaza                Officer and         since 1999  Stanley Investment Management. Chief Financial Officer and
Oakbrook Terrace, IL 60181      Treasurer                       Treasurer of funds in the Fund Complex. Prior to August
                                                                2004, Assistant Treasurer of funds in the Fund Complex.

Joseph J. McAlinden (61)        Executive Vice      Officer     Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas     President and       since 2002  Stanley Investment Advisors Inc., and Morgan Stanley
New York, NY 10020              Chief Investment                Investment Management Inc. and Director of Morgan Stanley
                                Officer                         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.

Ronald E. Robison (65)          Executive Vice      Officer     Principal Executive Officer of the Funds since May 2003.
1221 Avenue of the Americas     President and       since 2003  Chief Executive Officer and Chairman of Investor Services.
New York, NY 10020              Principal                       Executive Vice President and Principal Executive Officer of
                                Executive                       funds in the Fund Complex. Managing Director of Morgan
                                Officer                         Stanley. Chief Administrative Officer, Managing 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.

 
                                      C-41



 


VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                     TERM OF
                                                    OFFICE AND
                                   POSITION(S)      LENGTH OF
NAME, AGE AND                       HELD WITH          TIME     PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER                    TRUST           SERVED    DURING PAST 5 YEARS
                                                       

John L. Sullivan (49)           Chief Compliance    Officer     Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza                Officer             since 1998  August 2004. Director and Managing Director of Van Kampen
Oakbrook Terrace, IL 60181                                      Investments, the Adviser, Van Kampen Advisors Inc. and
                                                                certain other subsidiaries of Van Kampen Investments. Prior
                                                                August 2004, 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.

 
                                      C-42



 
VAN KAMPEN
 
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY
 
    We are required by federal law to provide you with a copy of our Privacy
Policy annually.
 
    The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc.,
Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange
Corp., as well as current and former individual investors in Van Kampen mutual
funds, unit investment trusts, and related companies.
 
    This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised by
us. This Policy is, however, applicable to individuals who select us to be a
custodian of securities or assets in individual retirement accounts, 401(k)
accounts, 529 Educational Savings Accounts, accounts subject to the Uniform
Gifts to Minors Act, or similar accounts.
 
    Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
 
WE RESPECT YOUR PRIVACY
 
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we help
you achieve your financial objectives. This Policy describes what non-public
personal information we collect about you, why we collect it, and when we may
share it with others.
 
    We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies you or
your accounts as "personal information."
 
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
 
To serve you better and manage our business, it is important that we collect and
maintain accurate information about you. We may obtain this information from
applications and other forms you submit to us, from your dealings with us, from
consumer reporting agencies, from our Web sites and from third parties and other
sources.
 
    For example:
 
     --  We may collect information such as your name, address, e-mail address,
         telephone/fax numbers, assets, income and investment objectives through
         applications and other forms you submit to us.
 
     --  We may obtain information about account balances, your use of
         account(s) and the types of products and services you prefer to receive
         from us through your dealings and transactions with us and other
         sources.
 
     --  We may obtain information about your creditworthiness and credit
         history from consumer reporting agencies.
 
     --  We may collect background information from and through third-party
         vendors to verify representations you have made and to comply with
         various regulatory requirements.
 
     --  If you interact with us through our public and private Web sites, we
         may collect information that you provide directly through online
         communications (such as an e-mail address). We may also collect
         information about your Internet service provider, your domain name,
         your computer's operating system and Web browser,
 
                                                             (continued on back)

                                      C-43


VAN KAMPEN
 
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
 
         your use of our Web sites and your product and service preferences,
         through the use of "cookies." "Cookies" recognize your computer each
         time you return to one of our sites, and help to improve our sites'
         content and personalize your experience on our sites by, for example,
         suggesting offerings that may interest you. Please consult the Terms of
         Use of these sites for more details on our use of cookies.
 
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
 
To provide you with the products and services you request, to serve you better
and to manage our business, we may disclose personal information we collect
about you to our affiliated companies and to non-affiliated third parties as
required or permitted by law.
 
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise required
or permitted by law.
 
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except to
enable them to provide services on our behalf, to perform joint marketing
agreements with other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
 
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
 
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
 
                                                 Van Kampen Funds Inc.
                                                 1 Parkview Plaza, P.O. Box 5555
                                                 Oakbrook Terrace, IL 60181-5555
                                                 www.vankampen.com
 
                                      (VAN KAMPEN INVESTMENTS LOGO)
 
                                                 Copyright (C)2004 Van Kampen
                                                 Funds Inc. All rights reserved.
                                                 Member NASD/SIPC.
                                                 VMO ANR
                                                 12/04 RN04-02835P-Y10/04

                                      C-44


                                   APPENDIX D

                        ANNUAL REPORT OF THE TARGET FUND




















   
                                      D-1

Item 1. Report to Shareholders.

The Trust's annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
 
       Welcome, Shareholder
 
       In this report, you'll learn about how your investment in Van Kampen
       Advantage Municipal Income Trust performed during the annual period. The
       portfolio management team will provide an overview of the market
       conditions and discuss some of the factors that affected investment
       performance during the reporting period. In addition, this report
       includes the trust's financial statements and a list of trust investments
       as of October 31, 2004.
 
       MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
       PASS. THERE IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
       OBJECTIVE. TRUSTS ARE SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
       THAT THE MARKET VALUES OF SECURITIES OWNED BY THE TRUST WILL DECLINE AND
       THAT THE VALUE OF TRUST SHARES MAY THEREFORE BE LESS THAN WHAT YOU PAID
       FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS TRUST.
 
       INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
       TAX (AMT).
 


                                                                    
         ---------------------------------------------------------------------------------------
            NOT FDIC INSURED             OFFER NO BANK GUARANTEE              MAY LOSE VALUE
         ---------------------------------------------------------------------------------------
                   NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY               NOT A DEPOSIT
         ---------------------------------------------------------------------------------------




                                      D-2

 
Performance Summary as of 10/31/04
 


ADVANTAGE MUNICIPAL INCOME TRUST
SYMBOL: VKA
---------------------------------------------------------
AVERAGE ANNUAL                   BASED ON      BASED ON
TOTAL RETURNS                      NAV       MARKET PRICE
                                       
 
Since Inception (9/25/92)         7.74%          6.82%
 
10-year                           8.77           8.65
 
5-year                            9.57          10.34
 
1-year                            8.41           0.81
---------------------------------------------------------

 
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, NET
ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
 
NAV per share is determined by dividing the value of the trust's portfolio
securities, cash and other assets, less all liabilities, by the total number of
common shares outstanding. The common share market price is the price the market
is willing to pay for shares of the trust at a given time. Common share market
price is influenced by a range of factors, including supply and demand and
market conditions. Total return assumes an investment at the beginning of the
period, reinvestment of all distributions for the period in accordance with the
trust's dividend reinvestment plan, and sale of all shares at the end of the
period.
 
The Lehman Brothers Municipal Bond Index is a broad-based statistical composite
of municipal bonds. The index does not include any expenses, fees or sales
charges, which would lower performance. The index is unmanaged and should not be
considered an investment. It is not possible to invest directly in an index.
 

                                      D-3

 
Trust Report
 
FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2004
 
Van Kampen Advantage Municipal Income Trust is managed by the Adviser's
Municipal Fixed Income team.(1) Current members include Dennis Pietrzak,
Executive Director; Robert Wimmel, Vice President; and John Reynoldson,
Executive Director.
 
MARKET CONDITIONS
 
The interest-rate environment of the 12 months ended October 31, 2004 was marked
by two periods of steadily declining yields, with a significant sell-off in the
middle. Yields fell steadily through the first half of the period, approaching
the historical lows of 2003. This trend persisted until March, at which point
yields reversed direction and began an upward march as prices fell. These losses
were steepest in April, as a surprisingly strong employment report and signals
from members of the Federal Open Market Committee (the "Fed") caused investors
to expect a near-term rate increase. Rates went on to decline from May through
the end of the period as the market digested the Fed's newly hawkish rate
stance. Investors were further comforted when, after the Fed raised rates at its
June 30, 2004 meeting, its members indicated that the path of future rate
increases would be measured.
 
Unusually, longer-maturity securities largely outperformed in this period of Fed
tightening. Historically, the typical pattern in periods of tightening policy
has seen yields rise across all maturities. During the review period, however,
yields of shorter maturity bonds rose while those of bonds with longer
maturities declined slightly.
 
Lower-quality municipal bonds also performed strongly in this environment, as
the difference in yields (known as the "yield spread") between AAA and BBB rated
bonds decreased by roughly 20 basis points for 20-year bonds. As a result,
sectors with heavy exposure to lower-rated debt, such as hospitals and
industrial revenue bonds, posted higher total returns than sectors dominated by
higher-rated debt.
 
Issuance for the first 10 months of 2004 (the final 10 months of the review
period) was roughly six percent lower than in the same period in 2003. That
said, 2003 was a record year, and at the current pace of issuance, 2004 could
well be one of the largest years in recent memory. The strong supply met with
faltering demand from mutual funds, as fund investors withdrew over $15 billion
in net cash during the period. This faltering demand was largely offset by
increased participation in the market by insurance companies and individual
investors.
 
(1)Team members may change without notice at any time.


                                      D-4

 
PERFORMANCE ANALYSIS
 
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ significantly, as they did during the reporting period. On an
NAV basis, the trust outperformed its benchmark, the Lehman Brothers Municipal
Bond Index. (See table below.)
 
The trust uses leverage to enhance its dividend to common shareholders. The
trust borrows money at short-term rates through the issuance of preferred
shares. The proceeds are reinvested in longer-term securities, taking advantage
of the difference between short- and longer-term rates. The Fed's policy of
raising interest rates in the final months of the period made the trust's
borrowing activity more expensive. These expenses, however, were more than
offset by the strong performance of the bonds the trust invested in, leading to
the trust's outperformance versus its benchmark, which is unleveraged.
 
Interest rates spent much of the period at or near historic lows. Given these
levels, our analysis indicated that there was little room for rates to fall
further, and that as a result, rates were more likely to go up than down over
the intermediate term. This analysis led us to reduce the trust's interest-rate
sensitivity to a level that was less than that of its benchmark. While this
approach served the trust well when rates rose in the late spring and early
summer, it was overall a drag on performance for the one-year period.
 
With interest rates at such low levels, several of the trust's holdings were
called away by issuers seeking to refinance their bonds at lower yields. Several
of the trust's shorter maturity bonds were also prerefunded, and the trust sold
many of these securities to take advantage of more compelling opportunities
elsewhere. We reinvested the proceeds into securities that we believed had
attractive total-return prospects, emphasizing bonds in the 13- to 18-year
portion of the yield curve, especially those with the relatively lower
interest-rate
 
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2004
 


---------------------------------------------------------------
        BASED ON       BASED ON        LEHMAN BROTHERS
          NAV        MARKET PRICE   MUNICIPAL BOND INDEX
                                              
 
         8.41%          0.81%               6.03%
---------------------------------------------------------------

 
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. INVESTMENT RETURN, NET ASSET VALUE AND COMMON SHARE MARKET PRICE WILL
FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. SEE PERFORMANCE SUMMARY FOR ADDITIONAL PERFORMANCE INFORMATION
AND INDEX DEFINITION.
 

                                      D-5

 
sensitivity. These bonds offer the dual benefit of a strong income stream and
moderate vulnerability to shifting interest rates.
 
We continued to pursue relative value opportunities at the long end of the
market, buying securities when we believed they offered attractive value and
selling them once they met our performance targets in order to reinvest the
proceeds elsewhere. As part of our conservative approach to interest-rate
positioning, we also trimmed the trust's holdings of highly rate-sensitive zero
coupon bonds.
 
We remained focused on keeping the trust's risk profile within a reasonable
range through attention to credit quality and diversification. By the end of the
12-month period, more than 89 percent of the trust's total investments were
invested in bonds rated AAA and AA; these represent the two highest tiers of
credit ratings. The portfolio was also well diversified across the major sectors
of the municipal bond market. Its three largest sector exposures were public
education, general purpose, and health care.
 
While it is impossible to predict the exact turning point when interest rates
will move decisively higher, we believe the trust remains well positioned for
the near future. We will continue to comb the municipal bond markets for
interesting opportunities.
 
There is no guarantee that any securities mentioned will continue to perform
well or be held by the trust in the future.
 

                                      D-6

 


RATINGS ALLOCATION AS OF 10/31/04
                                                                 
AAA/Aaa                                                              74.3%
AA/Aa                                                                15.0
A/A                                                                   6.2
BBB/Baa                                                               4.0
BB/Ba                                                                 0.2
B/B                                                                   0.3

TOP 5 SECTORS AS OF 10/31/04
                                                                 
Public Education                                                     12.3%
General Purpose                                                      11.0
Health Care                                                          10.4
Wholesale Electric                                                    9.7
Higher Education                                                      9.3

SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 10/31/04
                                                                 
New York                                                             12.6%
Texas                                                                10.8
Illinois                                                             10.0
New Jersey                                                            8.8
Washington                                                            5.5
California                                                            5.1
Pennsylvania                                                          5.0
Georgia                                                               3.6
North Carolina                                                        3.4
Oklahoma                                                              2.8
Oregon                                                                2.5
Puerto Rico                                                           2.5
Massachusetts                                                         2.5
Arizona                                                               2.2
Nevada                                                                2.1
Ohio                                                                  2.1
Louisiana                                                             1.9
South Carolina                                                        1.6
Colorado                                                              1.4
Connecticut                                                           1.3
Indiana                                                               1.3
District of Columbia                                                  1.3
Florida                                                               1.2
Alabama                                                               1.0
Maryland                                                              0.9
Mississippi                                                           0.9
Minnesota                                                             0.8
New Mexico                                                            0.7
Tennessee                                                             0.6
Wisconsin                                                             0.6
Missouri                                                              0.6
South Dakota                                                          0.5
Utah                                                                  0.5
New Hampshire                                                         0.4
West Virginia                                                         0.4
North Dakota                                                          0.3
                                                 (continued on next page)

 

                                      D-7

 


SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 10/31/04
                                           (continued from previous page)
                                                                 
Wyoming                                                               0.2
Kansas                                                                0.1
                                                                    -----
Total Investments                                                   100.0%

 
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Ratings and summary of investments by
state classification are as a percentage of total investments. Sectors are as a
percentage of long-term investments. Securities are classified by sectors that
represent broad groupings of related industries. Van Kampen is a wholly owned
subsidiary of a global securities firm which is engaged in a wide range of
financial services including, for example, securities trading and brokerage
activities, investment banking, research and analysis, financing and financial
advisory services. Rating allocations based upon ratings as issued by Standard
and Poor's and Moody's, respectively.
 

                                      D-8

 
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
 
       Each Van Kampen trust provides a complete schedule of portfolio holdings
       in its semiannual and annual reports within 60 days of the end of the
       trust's second and fourth fiscal quarters by filing the schedule
       electronically with the Securities and Exchange Commission (SEC). The
       semiannual reports are filed on Form N-CSRS and the annual reports are
       filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
       reports to trust shareholders, and makes these reports available on its
       public web site, www.vankampen.com. In addition to the semiannual and
       annual reports that Van Kampen delivers to shareholders and makes
       available through the Van Kampen public web site, each trust files a
       complete schedule of portfolio holdings with the SEC for the trust's
       first and third fiscal quarters on Form N-Q. Van Kampen does not deliver
       the reports for the first and third fiscal quarters to shareholders, nor
       are the reports posted to the Van Kampen public web site. You may,
       however, obtain the Form N-Q filings (as well as the Form N-CSR and
       N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You
       may also review and copy them at the SEC's Public Reference Room in
       Washington, DC. Information on the operation of the SEC's Public
       Reference Room may be obtained by calling the SEC at 1-202-942-8090. You
       can also request copies of these materials, upon payment of a duplicating
       fee, by electronic request at the SEC's e-mail address
       (publicinfo@sec.gov) or by writing the Public Reference section of the
       SEC, Washington, DC 20549-0102.
 
       In addition to filing a complete schedule of portfolio holdings with the
       SEC each fiscal quarter, each Van Kampen trust makes portfolio holdings
       information available by periodically providing the information on its
       public web site, www.vankampen.com. Each Van Kampen trust provides a
       complete schedule of portfolio holdings on the public web site on a
       calendar-quarter basis approximately 30 days after the close of the
       calendar quarter. Van Kampen closed-end funds do not presently provide
       partial lists of their portfolio holdings on a monthly basis, but may do
       so in the future.
 
       You may obtain copies of a trust's fiscal quarter filings, or its monthly
       or calendar-quarter web site postings, by contacting Van Kampen Client
       Relations at 1-800-847-2424.
 
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
 
       The trust's policies and procedures with respect to the voting of proxies
       relating to the trust's portfolio securities and information on how the
       trust voted proxies relating to portfolio securities during the most
       recent twelve-month period ended June 30 is available without charge,
       upon request, by calling 1-800-847-2424 or by visiting our web site at
       www.vankampen.com. This information is also available on the Securities
       and Exchange Commission's web site at http://www.sec.gov.
 

                                      D-9

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           MUNICIPAL BONDS  156.8%
           ALABAMA  1.5%
$ 1,000    Alabama Bldg Renovation Fin Auth Rev Rfdg
           (AMBAC Insd)..............................         5.625%  09/01/24   $   1,122,130
  1,550    Birmingham, AL Arpt Auth Arpt Rev Rfdg
           (AMT) (AMBAC Insd) (d)....................         5.500   07/01/14       1,665,444
  2,000    Montgomery, AL Wt (AMBAC Insd)............         5.250   05/01/20       2,181,680
                                                                                 -------------
                                                                                     4,969,254
                                                                                 -------------
           ARIZONA  3.5%
  1,425    Arizona Cap Fac Fin Corp Student Hsg Rev
           AZ St Univ Proj...........................         6.250   09/01/32       1,516,912
  2,500    Arizona Sch Fac Brd Rev St Sch Impt.......         5.500   07/01/17       2,815,700
  2,900    Arizona Tourism & Sports Auth Multi Purp
           Stad Fac Ser A (MBIA Insd)................         5.375   07/01/22       3,177,356
  2,875    Phoenix, AZ Civic Impt Corp Arpt Rev Jr
           Lien (AMT) (FGIC Insd)....................         5.375   07/01/29       2,924,076
    855    Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
           Oblig Irvington Proj Tucson Ser A Rfdg
           (FSA Insd)................................         7.250   07/15/10         903,136
                                                                                 -------------
                                                                                    11,337,180
                                                                                 -------------
           CALIFORNIA  8.0%
  2,630    Anaheim, CA Pub Fin Auth Lease Rev Cap
           Apprec Sub Pub Impts Proj C (FSA Insd)....          *      09/01/20       1,247,462
  4,500    California St (AMBAC Insd)................         5.125   10/01/27       4,691,565
  5,500    California St Dept Wtr Res Pwr Ser A
           (AMBAC Insd)..............................         5.500   05/01/16       6,282,540
  2,000    California St Dept Wtr Res Pwr Ser A......         5.750   05/01/17       2,271,180
  5,000    Foothill/Eastern Corridor Agy CA Toll Rd
           Rev Cap Apprec Rfdg.......................          *      01/15/25       1,523,200
  3,185    Imperial Irr Dist CA Rev Elec Sys Proj
           (FSA Insd) (d)............................         5.250   11/01/18       3,528,024
  3,000    Los Angeles, CA Uni Sch Dist Ser A (FSA
           Insd).....................................         5.250   07/01/19       3,310,500
  2,745    San Mateo, CA Un High Sch Dist Rfdg (FSA
           Insd).....................................         5.000   09/01/21       2,967,482
                                                                                 -------------
                                                                                    25,821,953
                                                                                 -------------
           COLORADO  2.2%
  8,500    Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev
           E-470 Proj Ser C (Prerefunded @
           08/31/05).................................          *      08/31/26       1,747,090
  3,000    Colorado Hlth Fac Auth Rev Catholic Hlth
           Initiatives Ser A (Escrowed to
           Maturity).................................         5.500   03/01/32       3,152,070
     45    Colorado Hsg Fin Auth Single Family Pgm Sr
           Ser B1 (AMT)..............................         7.900   12/01/25          45,251
  2,000    La Plata Cnty, CO Sch Dist 9 (MBIA Insd)
           (d).......................................         5.250   11/01/19       2,216,160
                                                                                 -------------
                                                                                     7,160,571
                                                                                 -------------

 
                                               See Notes to Financial Statements

                                      D-10

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           CONNECTICUT  2.1%
$ 2,040    Bridgeport, CT Ser A (MBIA Insd) (d)......         5.250%  08/15/21   $   2,235,310
  3,250    Connecticut St Spl Oblig Pkg Rev Bradley
           Intl Arpt Ser A (AMT) (ACA Insd)..........         6.600   07/01/24       3,522,317
  1,000    Hartford, CT Pkg Sys Rev Ser A............         6.400   07/01/20       1,047,160
                                                                                 -------------
                                                                                     6,804,787
                                                                                 -------------
           DISTRICT OF COLUMBIA  2.1%
  2,500    District Columbia Rev Gonzaga College (FSA
           Insd).....................................         5.250   07/01/32       2,614,925
  3,850    Metropolitan Washington DC Arpt Auth Sys
           Ser A (AMT) (FGIC Insd)...................         5.250   10/01/32       3,977,782
                                                                                 -------------
                                                                                     6,592,707
                                                                                 -------------
           FLORIDA  1.4%
  2,000    Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
           Insd).....................................         5.950   07/01/20       2,054,520
  2,500    Miami-Dade Cnty, FL Aviation Rev Miami
           Intl Arpt (AMT) (FGIC Insd)...............         5.375   10/01/32       2,600,050
                                                                                 -------------
                                                                                     4,654,570
                                                                                 -------------
           GEORGIA  5.6%
  1,000    Atlanta, GA Arpt Rev Ser B (AMT) (FGIC
           Insd).....................................         5.625   01/01/30       1,053,690
  5,160    Atlanta, GA Wtr & Wastewtr Rev (FSA
           Insd).....................................         5.000   11/01/20       5,593,130
  3,770    Monroe Cnty, GA Dev Auth Pollutn Ctl Rev
           Oglethorpe Pwr Corp Scherer Ser A.........         6.800   01/01/12       4,527,695
  3,000    Municipal Elec Auth GA Combustion Turbine
           Proj Ser A (MBIA Insd)....................         5.250   11/01/19       3,243,330
  2,500    Municipal Elec Auth GA Combustion Turbine
           Proj Ser A (MBIA Insd)....................         5.250   11/01/21       2,709,600
  1,000    Oconee Cnty, GA Indl Dev Auth Rev Oiit
           Proj (XLCA Insd)..........................         5.250   07/01/25       1,061,040
                                                                                 -------------
                                                                                    18,188,485
                                                                                 -------------
           ILLINOIS  15.8%
  3,750    Bolingbrook, IL Cap Apprec Ser B (MBIA
           Insd).....................................          *      01/01/30         946,050
  2,000    Chicago, IL Brd of Ed (Prerefunded @
           12/01/10) (FGIC Insd).....................         5.500   12/01/31       2,284,800
  5,000    Chicago, IL Brd of Ed Cap Apprec Sch
           Reform Ser A (FGIC Insd)..................          *      12/01/28       1,409,500
  3,150    Chicago, IL O'Hare Intl Arpt Rev Gen Arpt
           Third Lien Ser A Rfdg (AMT) (MBIA Insd)...         5.375   01/01/32       3,259,557
  1,895    Chicago, IL Pk Dist Hbr Fac Rev
           (Prerefunded @ 01/01/11)..................         5.875   01/01/16       2,198,067
  2,500    Chicago, IL Pk Dist Ser C (FGIC Insd).....         5.500   01/01/19       2,803,000

 
See Notes to Financial Statements                                              


                                      D-11

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           ILLINOIS (CONTINUED)
$ 1,000    Chicago, IL Wastewtr Transmission Rev
           Second Lien (Prerefunded @ 01/01/10) (MBIA
           Insd).....................................         5.750%  01/01/25   $   1,150,010
  4,500    Cook Cnty, IL Cap Impt Ser A (FGIC
           Insd).....................................         5.000   11/15/23       4,731,525
  1,620    Cook Cnty, IL Cmnty High Sch Dist No. 219
           Niles Twp (FSA Insd)......................          *      12/01/11       1,252,292
  2,260    Cook Cnty, IL Cmnty High Sch Dist No. 219
           Niles Twp (FSA Insd)......................          *      12/01/12       1,660,942
  2,235    Cook Cnty, IL Cmnty High Sch Dist No. 219
           Niles Twp (FSA Insd)......................          *      12/01/13       1,557,974
  3,110    Du Page Cnty, IL Trans Rev (FSA Insd).....         5.750   01/01/17       3,540,859
  3,000    Illinois Fin Auth Rev Northwestern Mem
           Hosp Ser A................................         5.500   08/15/43       3,120,240
  1,925    Kendall, Kane & Will Cntys, IL Cmnty Unit
           Sch Dist No. 308 Ser B (FGIC Insd)........         5.250   10/01/21       2,076,767
  2,135    Mc Henry Cnty, IL Cmnty High Sch Dist No.
           154 Cap Apprec (FGIC Insd) (d)............          *      01/01/14       1,463,478
  1,440    Mc Henry Cnty, IL Cmnty High Sch Dist No.
           154 Cap Apprec (FGIC Insd)................          *      01/01/17         840,744
  1,250    Metropolitan Pier & Expo Auth IL Dedicated
           St Tax Rev McCormick Pl Expn Proj (FGIC
           Insd).....................................         5.375   12/15/18       1,393,550
  1,000    Metropolitan Pier & Expo Auth IL Dedicated
           St Tax Rev McCormick Pl Expn Proj Rfdg
           (FGIC Insd)...............................         5.500   12/15/24       1,107,070
  6,000    Metropolitan Pier & Expo Auth IL Dedicated
           St Tax Rev McCormick Pl Expn Ser A (MBIA
           Insd).....................................         5.250   06/15/42       6,268,320
  5,000    Regional Tran Auth IL Ser B (AMBAC
           Insd).....................................         8.000   06/01/17       7,033,000
  1,150    Will Cnty, IL Cmnty Sch Dist 365U Vly View
           Ser B (FSA Insd)..........................          *      11/01/15         721,579
                                                                                 -------------
                                                                                    50,819,324
                                                                                 -------------
           INDIANA  2.1%
  1,000    Allen Cnty, IN Juvenile Justice Ctr First
           Mtg (AMBAC Insd)..........................         5.500   01/01/18       1,122,060
  2,000    Indiana Hlth Fac Fin Auth Hosp Rev
           Columbus Regl Hosp Rfdg (FSA Insd)........         7.000   08/15/15       2,486,780
  1,500    Indiana St Dev Fin Auth Rev Exempt Fac
           Conv Rfdg (AMT)...........................         5.950   08/01/30       1,536,840
  1,220    North Adams, IN Cmnty Sch Cap Apprec First
           Mtg (FSA Insd) (d)........................          *      07/15/16         737,880
  1,230    North Adams, IN Cmnty Sch Cap Apprec First
           Mtg (FSA Insd) (d)........................          *      01/15/17         719,476
                                                                                 -------------
                                                                                     6,603,036
                                                                                 -------------

 
                                               See Notes to Financial Statements


                                      D-12

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           KANSAS  0.1%
$   145    Sedgwick & Shawnee Cntys, KS Single Family
           Rev Coll Mtg Ser A-II Rfdg (AMT) (GNMA
           Collateralized)...........................         8.050%  05/01/24   $     152,295
    125    Sedgwick Cnty, KS Single Family Rev Coll
           Mtg Ser A-III Rfdg (AMT) (GNMA
           Collateralized)...........................         8.125   05/01/24         131,289
                                                                                 -------------
                                                                                       283,584
                                                                                 -------------
           LOUISIANA  3.0%
  2,500    Lafayette, LA Utils Rev (MBIA Insd).......         5.250   11/01/23       2,722,250
    355    Louisiana Hsg Fin Agy Mtg Rev Single
           Family Access Pgm Ser B (AMT) (GNMA
           Collateralized)...........................         8.000   03/01/25         357,322
  3,000    Louisiana St Energy & Pwr Auth Pwr Proj
           Rev Rfdg (FSA Insd).......................         5.750   01/01/12       3,485,610
  3,000    Saint Charles Parish, LA Environmental
           Impt Rev LA Pwr & Lt Co Ser A (AMT) (AMBAC
           Insd).....................................         6.875   07/01/24       3,100,860
                                                                                 -------------
                                                                                     9,666,042
                                                                                 -------------
           MARYLAND  1.4%
  1,000    Maryland St Econ Dev Corp Univ MD College
           Pk Proj...................................         5.625   06/01/35       1,033,220
  1,000    Maryland St Hlth & Higher Ed Fac Auth Rev
           Medstar Hlth Rfdg.........................         5.375   08/15/24       1,023,930
  2,360    Northeast, MD Waste Disp Auth Rfdg (AMT)
           (AMBAC Insd)..............................         5.500   04/01/16       2,597,628
                                                                                 -------------
                                                                                     4,654,778
                                                                                 -------------
           MASSACHUSETTS  3.9%
  3,955    Massachusetts Bay Trans Auth Gen Trans Sys
           Ser A Rfdg................................         5.500   03/01/12       4,468,319
  4,815    Massachusetts Muni Whsl Elec Co Proj 6-A
           (MBIA Insd)...............................         5.000   07/01/11       5,339,450
  1,500    Massachusetts St Fed Hwy Gnt Antic Nt Ser
           A.........................................         5.750   06/15/15       1,699,830
  1,000    Massachusetts St Hlth & Ed Fac Auth Rev
           Saint Mem Med Ctr Ser A...................         6.000   10/01/23         953,990
                                                                                 -------------
                                                                                    12,461,589
                                                                                 -------------
           MINNESOTA  1.3%
  3,875    Saint Paul, MN Port Auth Lease Rev Office
           Bldg at Cedar Str (d).....................         5.250   12/01/19       4,276,644
                                                                                 -------------
 
           MISSISSIPPI  1.3%
  2,000    Mississippi Bus Fin Corp MS Pollutn Ctl
           Rev Sys Energy Res Inc Proj...............         5.875   04/01/22       2,007,000
  1,000    Mississippi Bus Fin Corp MS Pollutn Ctl
           Rev Sys Energy Res Inc Proj Rfdg..........         5.900   05/01/22       1,010,800

 
See Notes to Financial Statements                                             

                                      D-13

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           MISSISSIPPI (CONTINUED)
$   925    Mississippi Home Corp Single Family Rev
           Mtg Access Pgm Ser B (AMT) (GNMA
           Collateralized)...........................         7.900%  03/01/25   $     926,351
    350    Mississippi Home Corp Single Family Rev
           Mtg Access Pgm Ser E (AMT) (GNMA
           Collateralized)...........................         8.100   12/01/25         367,714
                                                                                 -------------
                                                                                     4,311,865
                                                                                 -------------
           MISSOURI  0.9%
  1,345    Kansas City, MO Met Cmnty Colleges Bldg
           Corp Rev Leasehold Jr College Impt & Rfdg
           (FGIC Insd)...............................         5.500   07/01/17       1,509,722
  1,210    Saint Louis, MO Arpt Rev Cap Impt Pgm Ser
           A (MBIA Insd).............................         5.375   07/01/18       1,347,746
                                                                                 -------------
                                                                                     2,857,468
                                                                                 -------------
           NEVADA  3.3%
  7,500    Clark Cnty, NV Arpt Rev Sub Lien Ser A-2
           (FGIC Insd)...............................         5.000   07/01/36       7,641,225
  3,000    Clark Cnty, NV Indl Dev Rev Southwest Gas
           Corp Proj Ser A (AMT) (AMBAC Insd)........         5.250   07/01/34       3,096,000
                                                                                 -------------
                                                                                    10,737,225
                                                                                 -------------
           NEW HAMPSHIRE  0.7%
  1,155    New Hampshire Hlth & Ed Fac Auth Rev
           Derryfield Sch............................         7.000   07/01/30       1,156,536
  1,000    New Hampshire St Bus Fin Auth Wtr Fac Rev
           Pennichuck Wtrwks Inc (AMT) (AMBAC Insd)..         6.300   05/01/22       1,103,160
                                                                                 -------------
                                                                                     2,259,696
                                                                                 -------------
           NEW JERSEY  13.9%
  2,700    New Jersey Econ Dev Auth Rev Cigarette
           Tax.......................................         5.750   06/15/29       2,771,874
  3,000    New Jersey Econ Dev Auth Rev Motor Vehicle
           Sur Rev Ser A (MBIA Insd).................         5.000   07/01/23       3,182,850
  5,000    New Jersey Econ Dev Auth Rev Sch Fac
           Constr Ser F (FGIC Insd)..................         5.250   06/15/20       5,496,050
  4,000    New Jersey Econ Dev Auth Rev Sch Fac
           Constr Ser I..............................         5.000   09/01/22       4,209,360
 10,000    New Jersey Econ Dev Auth St Contract Econ
           Recovery (MBIA Insd)......................         5.900   03/15/21      12,135,300
  8,000    New Jersey Econ Dev Auth Wtr Fac Rev NJ
           American Wtr Co Inc Proj Ser A (AMT) (FGIC
           Insd).....................................         6.875   11/01/34       8,191,200

 
                                               See Notes to Financial Statements

                                      D-14

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           NEW JERSEY (CONTINUED)
$ 5,000    New Jersey St Ed Fac Auth Higher Ed Cap
           Impt Ser A (AMBAC Insd)...................         5.250%  09/01/21   $   5,470,950
  3,110    Newark, NJ Hsg Auth Port Auth Newark
           Marine Terminal (MBIA Insd)...............         5.250   01/01/20       3,414,625
                                                                                 -------------
                                                                                    44,872,209
                                                                                 -------------
           NEW MEXICO  1.1%
  2,020    University NM Univ Rev Sub Lien Ser A Rfdg
           (d).......................................         5.250   06/01/20       2,183,115
  1,125    University NM Univ Rev Sub Lien Ser A
           Rfdg......................................         5.250   06/01/21       1,210,500
                                                                                 -------------
                                                                                     3,393,615
                                                                                 -------------
           NEW YORK  19.9%
    170    Broome Cnty, NY Ctf Partn (MBIA Insd).....         5.250   04/01/15         173,854
  1,300    New York City Indl Dev Civic YMCA Gtr NY
           Proj......................................         5.800   08/01/16       1,395,017
  2,225    New York City Ser F.......................         6.000   08/01/11       2,391,875
  2,500    New York City Ser H.......................         5.750   03/15/12       2,843,425
  5,000    New York City Transitional Fin Auth Rev
           Future Tax Secd Ser A Rfdg (a)............  5.500/14.000   11/01/26       5,660,100
  2,525    New York St Dorm Auth Lease Rev Muni Hlth
           Fac Impt Pgm Ser A (FSA Insd).............         5.500   05/15/25       2,723,566
  1,625    New York St Dorm Auth Lease Rev St Univ
           Dorm Fac Ser A............................         6.000   07/01/14       1,870,521
  1,450    New York St Dorm Auth Lease Rev St Univ
           Dorm Fac Ser C (Prerefunded @ 07/01/09)
           (MBIA Insd)...............................         5.500   07/01/29       1,653,203
  1,135    New York St Dorm Auth Rev City Univ Secd
           Ser B (Escrowed to Maturity)..............         5.375   07/01/07       1,234,937
  3,915    New York St Dorm Auth Rev City Univ Secd
           Ser B.....................................         5.375   07/01/07       4,227,809
  3,100    New York St Dorm Auth Rev City Univ Sys
           Cons Ser A................................         5.625   07/01/16       3,618,010
  2,600    New York St Dorm Auth Rev Cons City Univ
           Sys Second Gen Ser A......................         5.750   07/01/13       2,997,176
  2,535    New York St Dorm Auth Rev Mental Hlth Ser
           B.........................................         5.750   08/15/11       2,755,545
     15    New York St Dorm Auth Rev Mental Hlth Ser
           B (Prerefunded @ 02/15/07)................         5.750   08/15/11          16,558
  2,545    New York St Dorm Auth Rev Mental Hlth Svc
           Fac Impt Ser D (FSA Insd) (d).............         5.875   02/15/14       2,845,794
  1,350    New York St Dorm Auth Rev Ser B...........         7.500   05/15/11       1,583,280
    650    New York St Dorm Auth Rev Ser B
           (Prerefunded @ 05/15/09)..................         7.500   05/15/11         789,607
  5,000    New York St Dorm Auth Rev St Univ Ed Fac
           Ser A.....................................         5.500   05/15/08       5,513,050

 
See Notes to Financial Statements                                               

                                      D-15

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           NEW YORK (CONTINUED)
$ 5,000    New York St Med Care Fac Fin Agy Rev NY
           Downtown Hosp Ser A (Prerefunded @
           02/15/05).................................         6.800%  02/15/20   $   5,173,950
  7,000    New York St Med Care Fac Fin Agy Rev NY
           Hosp Mtg Ser A (Prerefunded @ 02/15/05)
           (AMBAC Insd)..............................         6.400   08/15/07       7,234,920
  1,495    New York St Mtg Agy Rev Homeowner Mtg Ser
           82 (AMT)..................................         5.650   04/01/30       1,574,474
  2,160    New York St Twy Auth Svc Contract Rev Loc
           Hwy & Brdg................................         5.500   04/01/16       2,438,662
  1,550    New York St Urban Dev Corp Rev
           Correctional Cap Fac Ser 7 (Prerefunded @
           01/01/07).................................         5.700   01/01/27       1,704,287
  1,500    Sales Tax Asset Receivable Corp NY Ser A
           (MBIA Insd) (b)...........................         5.000   10/15/21       1,621,575
                                                                                 -------------
                                                                                    64,041,195
                                                                                 -------------
           NORTH CAROLINA  5.4%
 11,000    North Carolina Muni Pwr Agy No 1 Catawba
           Elec Rev Rfdg (MBIA Insd).................         6.000   01/01/12      12,916,970
  4,000    North Carolina Muni Pwr Agy Ser A (MBIA
           Insd).....................................         5.250   01/01/19       4,367,240
                                                                                 -------------
                                                                                    17,284,210
                                                                                 -------------
           NORTH DAKOTA  0.4%
  1,235    North Dakota St Hsg Fin Agy Rev Hsg Fin
           Pgm Home Mtg Fin Ser B (AMT) (MBIA Insd)..         5.500   07/01/29       1,269,061
                                                                                 -------------
 
           OHIO  3.2%
  2,335    Cleveland, OH Muni Sch Dist (FSA Insd)....         5.250   12/01/18       2,597,921
  1,000    Cleveland, OH Muni Sch Dist (FSA Insd)....         5.250   12/01/24       1,080,910
  1,000    Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc
           Proj......................................         7.500   01/01/30       1,108,460
  2,000    Lorain Cnty, OH Hosp Rev Catholic
           Hlthcare..................................         5.375   10/01/30       2,064,980
  2,450    Lorain Cnty, OH Hosp Rev Catholic Hlthcare
           Ser A Impt & Rfdg.........................         5.250   10/01/33       2,499,735
  1,000    Marion Cnty, OH Hosp Rev Cmnty Hosp Impt &
           Rfdg......................................         6.375   05/15/11       1,051,240
                                                                                 -------------
                                                                                    10,403,246
                                                                                 -------------
           OKLAHOMA  4.3%
  3,410    Jenks, OK Aquarium Auth Rev Rfdg (MBIA
           Insd) (d).................................         5.250   07/01/24       3,696,406
  1,475    Jenks, OK Aquarium Auth Rev Rfdg (MBIA
           Insd).....................................         5.250   07/01/33       1,574,666

 
                                               See Notes to Financial Statements

                                      D-16

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           OKLAHOMA (CONTINUED)
$ 1,100    Oklahoma City, OK Indl & Cultural Fac Tr
           Rev Dist Heating & Cooling Trigen (AMT)
           (LOC: Societe Generale)...................         6.750%  09/15/17   $   1,104,147
  1,065    Oklahoma Dev Fin Auth Lease Rev OK Council
           Law Enforcement (MBIA Insd) (d)...........         5.500   06/01/17       1,208,125
  1,120    Oklahoma Dev Fin Auth Lease Rev OK Council
           Law Enforcement (MBIA Insd) (d)...........         5.500   06/01/18       1,270,517
  1,185    Oklahoma Dev Fin Auth Lease Rev OK Council
           Law Enforcement (MBIA Insd) (d)...........         5.500   06/01/19       1,342,309
  2,000    Sapulpa, OK Muni Auth Cap Rev Impt & Rfdg
           (Prerefunded @ 07/01/10) (FSA Insd).......         5.750   07/01/30       2,318,160
  1,250    Tulsa Cnty, OK Pub Fac Auth Cap Impt Rev
           (AMBAC Insd)..............................         6.250   11/01/22       1,460,525
                                                                                 -------------
                                                                                    13,974,855
                                                                                 -------------
           OREGON  4.0%
  2,500    Oregon Hlth Sciences Univ Insd Ser A (MBIA
           Insd).....................................         5.250   07/01/22       2,702,300
  5,000    Oregon St Dept Admin Ser C Rfdg (MBIA
           Insd).....................................         5.250   11/01/18       5,547,400
  4,000    Portland, OR Swr Sys Rev Ser A (FGIC
           Insd).....................................         5.750   08/01/18       4,546,720
                                                                                 -------------
                                                                                    12,796,420
                                                                                 -------------
           PENNSYLVANIA  7.9%
  2,650    Central Dauphin, PA Sch Dist (FSA Insd)...         5.000   12/01/19       2,880,153
  2,210    Chartiers Valley, PA Sch Dist Ser A (FSA
           Insd) (d).................................         5.250   10/15/19       2,459,111
    700    Harrisburg, PA Cap Apprec Ser D Rfdg
           (AMBAC Insd)..............................           *     03/15/14         479,738
  1,830    Harrisburg, PA Cap Apprec Ser D Rfdg
           (AMBAC Insd) (d)..........................           *     09/15/14       1,229,156
  2,750    Hempfield, PA Area Sch Dist Westmoreland
           Cnty Ser A (FGIC Insd)....................         5.250   03/15/19       3,057,753
  2,515    Hempfield, PA Area Sch Dist Westmoreland
           Cnty Ser A (FGIC Insd)....................         5.250   03/15/20       2,781,238
  4,000    Pennsylvania Intergovt Coop Auth Spl Tax
           Rev Philadelphia Fdg Pgm (Prerefunded @
           06/15/05) (FGIC Insd).....................         6.750   06/15/21       4,125,240
  3,090    Philadelphia, PA Gas Wks Rev 1975 Gen
           Ordinance 17th Ser (FSA Insd).............         5.375   07/01/19       3,404,531
  2,440    Philadelphia, PA Sch Dist Ser A (FSA
           Insd).....................................         5.750   02/01/11       2,814,125
  2,000    Radnor Twp, PA Sch Dist (Prerefunded @
           03/15/07).................................         5.750   03/15/26       2,172,920
                                                                                 -------------
                                                                                    25,403,965
                                                                                 -------------

 
See Notes to Financial Statements                                               

                                      D-17

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           SOUTH CAROLINA  2.5%
$ 1,385    Easley, SC Util Rev (FSA Insd) (d)........         5.250%  12/01/20   $   1,509,082
  2,500    South Carolina Jobs Econ Dev Auth Indl Rev
           Elec & Gas Co Proj Ser A (AMBAC Insd).....         5.200   11/01/27       2,631,125
  3,750    South Carolina Jobs Econ Dev Auth Indl Rev
           Elec & Gas Co Proj Ser B (AMT) (AMBAC
           Insd).....................................         5.450   11/01/32       3,942,975
                                                                                 -------------
                                                                                     8,083,182
                                                                                 -------------
           SOUTH DAKOTA  0.8%
  2,500    South Dakota St Hlth & Ed Fac Auth Rev
           Sioux VY Hosp & Hlth Sys Ser A............         5.250   11/01/34       2,537,325
                                                                                 -------------
 
           TENNESSEE  1.0%
  1,000    Elizabethton, TN Hlth & Ed Fac Brd Rev
           Hosp First Mtg Ser B Impt & Rfdg..........         8.000   07/01/33       1,189,420
  1,500    Elizabethton, TN Hlth & Ed Fac Brd Rev
           Hosp Ser B Impt & Rfdg (MBIA Insd)........         7.750   07/01/29       1,945,830
    100    Franklin, TN Spl Sch Dist Cap Apprec (FSA
           Insd).....................................          *      06/01/16          62,125
                                                                                 -------------
                                                                                     3,197,375
                                                                                 -------------
           TEXAS  16.9%
  2,350    Austin, TX Ctf Oblig (MBIA Insd) (d)......         5.375   09/01/20       2,567,939
    825    Brazos, TX Higher Ed Auth Inc Student Ln
           Rev Sub Ser A2 Rfdg (AMT).................         6.800   12/01/04         828,069
  3,000    Dallas Cnty, TX Util & Reclamation Dist
           Ser B Rfdg (AMBAC Insd)...................         5.875   02/15/29       3,032,340
  4,000    Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser
           A (AMT) (FSA Insd)........................         5.500   11/01/21       4,341,280
  2,500    Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser
           A (AMT) (FGIC Insd).......................         5.750   11/01/30       2,668,075
  2,000    Harris Cnty, TX Hlth Fac Dev Mem Hermann
           Hlthcare Ser A............................         6.375   06/01/29       2,197,800
  5,000    Houston, TX Arpt Sys Rev Sub Lien Ser A
           (AMT) (FSA Insd)..........................         5.125   07/01/32       5,089,750
  6,000    Houston, TX Util Sys Rev First Lien Ser A
           Rfdg (FSA Insd)...........................         5.250   05/15/21       6,562,680
  2,910    Houston, TX Wtr & Swr Sys Rev Jr Lien Ser
           C (Prerefunded @ 12/01/07) (FGIC Insd)....         5.375   12/01/27       3,211,680
    515    Little Elm, TX Indpt Sch Dist (PSFG
           Insd).....................................         6.750   08/15/29         534,091
  4,625    Little Elm, TX Indpt Sch Dist (Prerefunded
           @ 08/15/05) (PSFG Insd)...................         6.750   08/15/29       4,805,930
  1,000    Matagorda Cnty, TX Navig Dist No 1 Rev
           Coll Centerpoint Energy Proj Rfdg
           (Variable Rate Coupon)....................         5.600   03/01/27       1,031,360
  1,500    Metropolitan Hlth Fac Dev Corp TX Wilson N
           Jones Mem Hosp Proj.......................         7.250   01/01/31       1,450,065

 
                                               See Notes to Financial Statements

                                      D-18

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           TEXAS (CONTINUED)
$ 5,000    North Cent TX Hlth Fac Dev Hosp Childrens
           Med Ctr Dallas (AMBAC Insd)...............         5.250%  08/15/32   $   5,221,500
  5,000    San Antonio, TX Elec & Gas Sys Rfdg.......         5.375   02/01/19       5,557,950
  2,000    San Antonio, TX Elec & Gas Sys Rfdg.......         5.375   02/01/20       2,212,820
  2,000    Tarrant Cnty, TX Jr College Dist
           (Prerefunded @ 02/15/07)..................         5.050   02/15/10       2,134,440
  1,000    Trinity River Auth TX Rev Tarrant Cnty Wtr
           Proj Impt & Rfdg (MBIA Insd)..............         5.500   02/01/21       1,118,310
                                                                                 -------------
                                                                                    54,566,079
                                                                                 -------------
           UTAH  0.8%
  2,380    Mountain Regl Wtr Spl Svc Dist Rfdg (MBIA
           Insd).....................................         5.000   12/15/33       2,445,712
                                                                                 -------------
 
           WASHINGTON  8.6%
  3,750    Chelan Cnty, WA Pub Util Dist No. 001 Cons
           Rev Chelan Hydro Ser A (AMT) (MBIA
           Insd).....................................         5.600   01/01/36       3,977,925
  2,500    Energy Northwest WA Elec Rev Proj No 3 Ser
           A Rfdg (FSA Insd).........................         5.500   07/01/18       2,810,175
  5,000    Energy Northwest WA Elec Rev Proj No 3 Ser
           B Rfdg (FSA Insd).........................         6.000   07/01/16       5,841,750
  1,400    King Cnty, WA Hsg Auth Hsg Rev Pooled Sr
           Ser A Rfdg................................         6.700   03/01/15       1,438,948
  2,120    Seattle, WA Muni Lt & Pwr Rev.............         5.625   12/01/17       2,309,846
  3,000    Spokane, WA Pub Fac Dist Hotel Motel &
           Sales Use Tax (MBIA Insd).................         5.250   09/01/33       3,160,470
  4,750    Tacoma, WA Elec Sys Rev Ser A Rfdg (FSA
           Insd).....................................         5.750   01/01/14       5,458,035
  1,500    Tacoma, WA Elec Sys Rev Ser B Rfdg (FSA
           Insd).....................................         5.500   01/01/12       1,712,760
  1,000    Thurston & Pierce Cntys, WA (FSA Insd)....         5.000   12/01/20       1,067,930
                                                                                 -------------
                                                                                    27,777,839
                                                                                 -------------
           WEST VIRGINIA  0.6%
  2,000    West Virginia St Hsg Dev Fd Ser A.........         5.550   05/01/17       2,042,200
                                                                                 -------------
 
           WISCONSIN  1.0%
  3,000    Wisconsin St Hlth & Ed Fac Wheaton
           Franciscan Svc Rfdg.......................         5.750   08/15/30       3,143,730
                                                                                 -------------
 
           WYOMING  0.4%
  1,000    University WY Univ Rev Fac Impt (FSA
           Insd).....................................         5.500   06/01/18       1,121,120
                                                                                 -------------

 
See Notes to Financial Statements                                               


                                      D-19

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                    COUPON      MATURITY       VALUE
----------------------------------------------------------------------------------------------
                                                                     
           PUERTO RICO  3.9%
$10,000    Puerto Rico Comwlth Hwy & Tran Auth Hwy
           Rev Ser Y Rfdg (FSA Insd) (c).............         6.250%  07/01/21   $  12,682,600
                                                                                 -------------
 
TOTAL LONG-TERM INVESTMENTS  156.8%
  (Cost $467,397,594).........................................................     505,496,696
SHORT-TERM INVESTMENT  0.5%
  (Cost $1,500,000)...........................................................       1,500,000
                                                                                 -------------
 
TOTAL INVESTMENTS  157.3%
  (Cost $468,897,594).........................................................     506,996,696
OTHER ASSETS IN EXCESS OF LIABILITIES  1.7%...................................       5,392,251
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS)  (59.0%)...................    (190,059,192)
                                                                                 -------------
 
NET ASSETS APPLICABLE TO COMMON SHARES  100.0%................................   $ 322,329,755
                                                                                 =============

 
    Percentages are calculated as a percentage of net assets applicable to
    common shares.
 
*   Zero coupon bond
 
(a) Security is a "step-up" bond where the coupon increases or steps up at a
    predetermined date.
 
(b) Security purchased on a when-issued or delayed delivery basis.
 
(c) All or a portion of this security has been physically segregated in
    connection with open futures contracts.
 
(d) The Trust owns 100% of the bond issuance.
 
ACA--American Capital Access
 
AMBAC--AMBAC Indemnity Corp.
 
AMT--Alternative Minimum Tax
 
FGIC--Financial Guaranty Insurance Co.
 
FSA--Financial Security Assurance Inc.
 
GNMA--Government National Mortgage Association
 
LOC--Letter of Credit
 
MBIA--Municipal Bond Investors Assurance Corp.
 
PSFG--Permanent School Fund Guaranty
 
XLCA--XL Capital Assurance Inc.
 
                                               See Notes to Financial Statements

                                      D-20

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
October 31, 2004
 

                                                           
ASSETS:
Total Investments (Cost $468,897,594).......................  $506,996,696
Cash........................................................        45,678
Interest Receivable.........................................     7,852,450
Other.......................................................         9,035
                                                              ------------
    Total Assets............................................   514,903,859
                                                              ------------
LIABILITIES:
Payables:
  Investments Purchased.....................................     1,618,230
  Investment Advisory Fee...................................       259,553
  Variation Margin on Futures...............................       110,500
  Income Distributions--Common Shares.......................        72,006
  Other Affiliates..........................................        19,964
Trustees' Deferred Compensation and Retirement Plans........       290,890
Accrued Expenses............................................       143,769
                                                              ------------
    Total Liabilities.......................................     2,514,912
Preferred Shares (including accrued distributions)..........   190,059,192
                                                              ------------
NET ASSETS APPLICABLE TO COMMON SHARES......................  $322,329,755
                                                              ============
NET ASSET VALUE PER COMMON SHARE ($322,329,755 divided by
  19,106,785 shares outstanding)............................  $      16.87
                                                              ============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
  shares authorized, 19,106,785 shares issued and
  outstanding)..............................................  $    191,068
Paid in Surplus.............................................   282,026,345
Net Unrealized Appreciation.................................    37,776,060
Accumulated Undistributed Net Investment Income.............     2,839,553
Accumulated Net Realized Loss...............................      (503,271)
                                                              ------------
NET ASSETS APPLICABLE TO COMMON SHARES......................  $322,329,755
                                                              ============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
  shares, 7,600 issued with liquidation preference of
  $25,000 per share)........................................  $190,000,000
                                                              ============
NET ASSET INCLUDING PREFERRED SHARES........................  $512,329,755
                                                              ============

 
See Notes to Financial Statements                                               

                                      D-21

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
FINANCIAL STATEMENTS continued
 
Statement of Operations
For the Year Ended October 31, 2004
 

                                                           
INVESTMENT INCOME:
Interest....................................................  $25,682,193
                                                              -----------
EXPENSES:
Investment Advisory Fee.....................................    3,053,266
Preferred Share Maintenance.................................      526,658
Administrative Fee..........................................      148,842
Trustees' Fees and Related Expenses.........................      107,423
Legal.......................................................       55,310
Custody.....................................................       31,069
Other.......................................................      247,356
                                                              -----------
    Total Expenses..........................................    4,169,924
                                                              -----------
NET INVESTMENT INCOME.......................................  $21,512,269
                                                              ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
  Investments...............................................  $ 1,901,551
  Futures...................................................   (3,602,902)
                                                              -----------
Net Realized Loss...........................................   (1,701,351)
                                                              -----------
Unrealized Appreciation/Depreciation:
  Beginning of the Period...................................   31,126,048
                                                              -----------
  End of the Period:
    Investments.............................................   38,099,102
    Futures.................................................     (323,042)
                                                              -----------
                                                               37,776,060
                                                              -----------
Net Unrealized Appreciation During the Period...............    6,650,012
                                                              -----------
NET REALIZED AND UNREALIZED GAIN............................  $ 4,948,661
                                                              ===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS.....................  $(2,172,561)
                                                              ===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
  OPERATIONS................................................  $24,288,369
                                                              ===========

 
                                               See Notes to Financial Statements

                                      D-22

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
FINANCIAL STATEMENTS continued
 
Statements of Changes in Net Assets
 


                                                              FOR THE             FOR THE
                                                             YEAR ENDED          YEAR ENDED
                                                          OCTOBER 31, 2004    OCTOBER 31, 2003
                                                          ------------------------------------
                                                                        
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income...................................    $ 21,512,269        $ 22,523,101
Net Realized Gain/Loss..................................      (1,701,351)          3,337,396
Net Unrealized Appreciation/Depreciation During the
  Period................................................       6,650,012          (3,467,592)
Distributions to Preferred Shareholders:
  Net Investment Income.................................      (2,037,718)         (2,002,125)
  Net Realized Gain.....................................        (134,843)                -0-
                                                            ------------        ------------
Change in Net Assets Applicable to Common Shares from
  Operations............................................      24,288,369          20,390,780
Distributions to Common Shareholders:
  Net Investment Income.................................     (20,099,497)        (21,207,192)
  Net Realized Gain.....................................      (1,407,980)                -0-
                                                            ------------        ------------
 
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES
  FROM INVESTMENT ACTIVITIES............................       2,780,892            (816,412)
 
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period.................................     319,548,863         320,365,275
                                                            ------------        ------------
End of the Period (Including accumulated undistributed
  net investment income of $2,839,553 and $3,468,169,
  respectively).........................................    $322,329,755        $319,548,863
                                                            ============        ============

 
See Notes to Financial Statements                                               

                                      D-23

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
FINANCIAL HIGHLIGHTS
 
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
 


                                                              ------------------------------
                                                               2004       2003      2002 (a)
                                                              ------------------------------
                                                                           
NET ASSET VALUE, BEGINNING OF THE PERIOD....................  $ 16.72    $ 16.77    $ 16.80
                                                              -------    -------    -------
  Net Investment Income.....................................     1.13       1.17       1.21
  Net Realized and Unrealized Gain/Loss.....................      .26       (.01)      (.05)
  Common Share Equivalent of Distributions Paid to Preferred
  Shareholders:
    Net Investment Income...................................     (.11)      (.10)      (.14)
    Net Realized Gain.......................................     (.01)       -0-        -0-
                                                              -------    -------    -------
Total from Investment Operations............................     1.27       1.06       1.02
Distributions Paid to Common Shareholders:
    Net Investment Income...................................    (1.05)     (1.11)     (1.05)
    Net Realized Gain.......................................     (.07)       -0-        -0-
                                                              -------    -------    -------
NET ASSET VALUE, END OF THE PERIOD..........................  $ 16.87    $ 16.72    $ 16.77
                                                              =======    =======    =======
 
Common Share Market Price at End of the Period..............  $ 15.20    $ 16.20    $ 15.46
Total Return (b)............................................    0.81%     12.30%     15.28%
Net Assets Applicable to Common Shares at End of the Period
  (In millions).............................................  $ 322.3    $ 319.5    $ 320.4
Ratio of Expenses to Average Net Assets Applicable to Common
  Shares (c)................................................    1.31%      1.32%      1.46%
Ratio of Net Investment Income to Average Net Assets
  Applicable to Common Shares (c)...........................    6.75%      6.99%      7.26%
Portfolio Turnover..........................................      28%        27%        40%
 
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
  Shares (c)................................................     .82%       .83%       .91%
Ratio of Net Investment Income to Average Net Assets
  Applicable to Common Shares (d)...........................    6.11%      6.37%      6.40%
 
SENIOR SECURITIES:
Total Preferred Shares Outstanding..........................    7,600      7,600      7,600
Asset Coverage Per Preferred Share (e)......................  $67,420    $67,049    $67,170
Involuntary Liquidating Preference Per Preferred Share......  $25,000    $25,000    $25,000
Average Market Value Per Preferred Share....................  $25,000    $25,000    $25,000

 
(a)As required, effective November 1, 2001, the Trust has adopted the provisions
   of the AICPA Audit and Accounting Guide for Investment Companies and began
   accreting market discount on fixed income securities. The effect of this
   change for the year ended October 31, 2002 was to increase net investment
   income per share by $.02, decrease net realized and unrealized gains and
   losses by $.02 and increase the ratio of net investment income to average net
   assets applicable to common shares by .11%. Per share, ratios, and
   supplemental data for periods prior to October 31, 2002 have not been
   restated to reflect this change in presentation.
 
(b)Total return assumes an investment at the common share market price at the
   beginning of the period indicated, reinvestment of all distributions for the
   period in accordance with the Trust's dividend reinvestment plan, and sale of
   all shares at the closing common share market price at the end of the period
   indicated.
 
(c)Ratios do not reflect the effect of dividend payments to preferred
   shareholders.
 
(d)Ratios reflect the effect of dividend payments to preferred shareholders.
 
(e)Calculated by subtracting the Trust's total liabilities (not including the
   preferred shares) from the Trust's total assets and dividing this by the
   number of preferred shares outstanding.
 

                                      D-24

 


YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
      2001       2000       1999       1998       1997       1996       1995
------------------------------------------------------------------------------
                                                 
     $ 15.52   $  14.87   $  16.93   $  16.35   $  15.68   $  15.61   $  13.99
     -------   --------   --------   --------   --------   --------   --------
        1.23       1.24       1.22       1.25       1.26       1.29       1.33
        1.18        .68      (2.06)       .59        .72        .16       1.70
        (.34)      (.40)      (.32)      (.35)      (.35)      (.36)      (.39)
         -0-        -0-        -0-        -0-        -0-        -0-        -0-
     -------   --------   --------   --------   --------   --------   --------
        2.07       1.52      (1.16)      1.49       1.63       1.09       2.64
        (.79)      (.87)      (.90)      (.91)      (.96)     (1.02)     (1.02)
         -0-        -0-        -0-        -0-        -0-        -0-        -0-
     -------   --------   --------   --------   --------   --------   --------
     $ 16.80   $  15.52   $  14.87   $  16.93   $  16.35   $  15.68   $  15.61
     =======   ========   ========   ========   ========   ========   ========
 
     $ 14.35   $12.9375   $12.9375   $15.8125   $15.0625   $  14.75   $ 14.375
      17.27%      6.86%    -13.16%     11.33%      8.96%      9.88%     21.06%
     $ 320.9   $  296.5   $  284.1   $  323.4   $  312.5   $  299.7   $  298.3
       1.61%      1.75%      1.66%      1.64%      1.66%      1.72%      1.72%
       7.56%      8.34%      7.55%      7.48%      7.99%      8.31%      8.94%
         32%        26%        33%        30%        49%        37%        79%
 
       1.00%      1.05%      1.03%      1.03%      1.02%      1.05%      1.03%
       5.44%      5.61%      5.56%      5.35%      5.76%      5.99%      6.31%
 
       7,600      7,600      7,600      3,800      3,800      3,800      3,800
     $67,225   $ 64,014   $ 62,388   $135,105   $132,234   $128,865   $128,498
     $25,000   $ 25,000   $ 25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000
     $25,000   $ 25,000   $ 25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000

 
See Notes to Financial Statements                                               

                                      D-25

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004
 
1. SIGNIFICANT ACCOUNTING POLICIES
 
Van Kampen Advantage Municipal Income Trust (the "Trust") is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The Trust's investment objective is to seek to
provide a high level of current income exempt from federal income tax,
consistent with preservation of capital. In normal market conditions, the Trust
will invest substantially all of its net assets in municipal securities rated
investment grade at the time of investment. The Trust commenced investment
operations on September 25, 1992. Effective November 30, 2003, the Trust's
investment adviser, Van Kampen Investment Advisory Corp. merged into its
affiliate, Van Kampen Asset Management (the "Adviser").
 
    The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
 
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
 
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
segregate assets with 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. At October 31, 2004, there were $1,618,230 of when-issued or
delayed delivery purchase commitments.
 
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security.
 
D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
 
    The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At October 31, 2004, the Trust had an
 

                                      D-26

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
 
accumulated capital loss carryforward for tax purposes of $741,936, which will
expire on October 31, 2012.
 
    At October 31, 2004, the cost and related gross unrealized appreciation and
depreciation are as follows:
 

                                                           
Cost of investments for tax purposes........................  $467,936,989
                                                              ============
Gross tax unrealized appreciation...........................  $ 39,261,865
Gross tax unrealized depreciation...........................      (202,158)
                                                              ------------
Net tax unrealized appreciation on investments..............  $ 39,059,707
                                                              ============

 
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
 
    The tax character of distributions paid during the years ended October 31,
2004 and 2003 was as follows:
 


                                                                 2004         2003
                                                                      
Distributions paid from:
  Ordinary income...........................................  $  427,997    $522,411
  Long-term capital gain....................................   1,542,823         -0-
                                                              ----------    --------
                                                              $1,970,820    $522,411
                                                              ==========    ========

 
    Due to inherent differences in the recognition of income, expenses and
realized gains/losses under accounting principles generally accepted in the
United States of America and federal income tax purposes, permanent differences
between book and tax basis reporting have been identified and appropriately
reclassified on the Statement of Assets and Liabilities. A permanent book to tax
basis difference relating to excise taxes paid which are not deductible for tax
purposes totaling $233 was reclassified from accumulated undistributed net
investment income to paid in surplus. Additionally, a permanent difference
relating to book to tax accretion differences totaling $3,903 was reclassified
from accumulated undistributed net investment income to accumulated net realized
loss.
 
    As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
 

                                                           
Undistributed ordinary income...............................  $325,308

 
    Net realized gains or losses differ for financial reporting and tax purposes
primarily as a result of the deferral of losses relating to wash sale
transactions and gains or losses recognized for tax purposes on open futures
transactions on October 31, 2004.
 

                                      D-27

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
 
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
 
Under the terms of the Trust's Investment Advisory Agreement, the Adviser
provides investment advice and facilities to the Trust for an annual fee payable
monthly of .60% of the average daily net assets of the Trust. Effective November
1, 2004, the investment advisory fee was reduced from .60% to .55%. In addition,
the Trust paid a monthly administrative fee to Van Kampen Investments Inc. or
its affiliates (collectively "Van Kampen"), the Trust's Administrator, at an
annual rate of .05% of the average daily net assets of the Trust. Effective June
1, 2004, the administrative fee was reduced from .05% to .00%.
 
    For the year ended October 31, 2004, the Trust recognized expenses of
approximately $35,000 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Trust, of which a trustee of the Trust
is a partner who provides legal services to the Trust, and is therefore an
affiliated person.
 
    Under separate Accounting Services and Legal Services agreements, the
Adviser provides accounting and legal services to the Trust. The Adviser
allocates the cost of such services to each trust. For the year ended October
31, 2004, the Trust recognized expenses of approximately $47,600 representing
Van Kampen's cost of providing accounting and legal services to the Trust, which
are reported as part of "Other" and "Legal" expenses, respectively, on the
Statement of Operations.
 
    Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
also officers of Van Kampen.
 
    The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Trust.
The maximum annual benefit per trustee under the plan is $2,500.
 
3. INVESTMENT TRANSACTIONS
 
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $138,957,875 and $143,179,331,
respectively.
 
4. DERIVATIVE FINANCIAL INSTRUMENTS
 
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
 
    In order to seek to manage the interest rate exposure of the Trust's
portfolio in a changing interest rate environment, the Trust may purchase or
sell financial futures contracts or engage in transactions involving interest
rate swaps, caps, floors or collars. The Trust expects to enter into these
transactions primarily as a hedge against anticipated interest rate or
fixed-income market changes, for duration management or for risk management
purposes, but may also enter into these transactions to generate additional
income. All of the Trust's portfolio holdings, including derivative instruments,
are marked to market each day with the change in value reflected in the
unrealized appreciation/depreciation. Upon disposition, a realized gain or loss
is recognized accordingly, except when taking delivery of a security underlying
a futures contract. In this instance, the recognition of gain or loss is
postponed until the disposal of the security underlying the futures contract.
Risks may arise as a result of the potential inability of the counterparties to
meet the terms of their contracts.
 

                                      D-28

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
 
    During the period, the Trust invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Trust
generally invests in exchange traded futures contracts on U.S. Treasury Bonds
and Notes and typically closes the contract prior to the delivery date. Upon
entering into futures contracts, the Trust maintains, in a segregated account
with its custodian, an amount of cash or liquid securities with a value equal to
a percentage of the contract amount with either a future commission merchant
pursuant to rules and regulations promulgated under the 1940 Act, as amended, or
with its custodian in an account in the broker's name. This amount is known as
initial margin. During the period the futures contract is open, payments are
received from or made to the broker based upon changes in the value of the
contract (the variation margin). The risk of loss associated with a futures
contract is in excess of the variation margin reflected on the Statement of
Assets and Liabilities.
 
    Transactions in futures contracts for the year ended October 31, 2004, were
as follows:
 


                                                              CONTRACTS
                                                           
Outstanding at October 31, 2003.............................      529
Futures Opened..............................................    1,950
Futures Closed..............................................   (2,031)
                                                               ------
Outstanding at October 31, 2004.............................      448
                                                               ======

 
    The futures contracts outstanding as of October 31, 2004, and the
descriptions and unrealized appreciation/depreciation are as follows:
 


                                                                            UNREALIZED
                                                                           APPRECIATION/
                                                              CONTRACTS    DEPRECIATION
                                                                     
SHORT CONTRACTS:
U.S. Treasury Notes 10-Year Futures December 2004 (Current
  Notional Value of $113,563 per contract)..................      80         $ (91,570)
U.S. Treasury Notes 5-Year Futures December 2004 (Current
  Notional Value of $111,375 per contract)..................     368          (231,472)
                                                                 ---         ---------
                                                                 448         $(323,042)
                                                                 ===         =========

 
5. PREFERRED SHARES
 
The Trust has outstanding 7,600 Auction Preferred Shares ("APS") in four series.
Series A, B and C each contain 2,000 shares while Series D contains 1,600
shares. Dividends are cumulative and the dividend rate is reset every 28 days
through an auction process. The average rate in effect on October 31, 2004 was
1.561%. During the year ended October 31, 2004, the rates ranged from 0.800% to
1.700%.
 
    The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of "Preferred Share
Maintenance" expense on the Statement of Operations.
 
    The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $25,000 per share plus accumulated and unpaid dividends.
The Trust is subject to
 

                                      D-29

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
 
certain asset coverage tests and the APS are subject to mandatory redemption if
the tests are not met.
 
6. INDEMNIFICATIONS
 
The Trust enters into contracts that contain a variety of indemnifications. The
Trust's maximum exposure under these arrangements is unknown. However, the Trust
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.


                                      D-30

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Trustees and Shareholders of Van Kampen Advantage Municipal
Income Trust:
 
We have audited the accompanying statement of assets and liabilities of Van
Kampen Advantage Municipal Income Trust (the "Trust"), including the portfolio
of investments, as of October 31, 2004, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The Trust's financial highlights for the periods ended
prior to October 31, 2000 were audited by other auditors whose report, dated
December 6, 1999, expressed an unqualified opinion on those financial
highlights.
 
    We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2004, by correspondence with the Trust's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
 
    In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Advantage Municipal Income Trust as of October 31, 2004, the results of
its operations for the year then ended, the changes in its net assets and the
financial highlights for the respective stated periods, in conformity with
accounting principles generally accepted in the United States of America.
 
DELOITTE & TOUCHE LLP
Chicago, Illinois
December 10, 2004
 

                                      D-31

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
DIVIDEND REINVESTMENT PLAN
 
    The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
 
    If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
 
HOW TO PARTICIPATE
 
    If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be
re-registered in your own name which will enable your participation in the Plan.
 
HOW THE PLAN WORKS
 
    Participants in the Plan will receive the equivalent in Common Shares valued
on the valuation date, generally at the lower of market price or net asset
value, except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value
 


                                      D-32


VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
DIVIDEND REINVESTMENT PLAN continued
 
of the Trust's Common Shares, resulting in the acquisition of fewer Common
Shares than if the dividend or distribution had been paid in Common Shares
issued by the Trust. All reinvestments are in full and fractional Common Shares
and are carried to three decimal places.
 
    Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
 
COSTS OF THE PLAN
 
    The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
 
TAX IMPLICATIONS
 
    You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
 
RIGHT TO WITHDRAW
 
    Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
 
                              Van Kampen Funds Inc.
                              Attn: Closed-End Funds
                                2800 Post Oak Blvd.
                                 Houston, TX 77056
 

                                      D-33

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
 
BOARD OF TRUSTEES
 
DAVID C. ARCH
J. MILES BRANAGAN
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
 
INVESTMENT ADVISER
 
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
 
CUSTODIAN AND TRANSFER AGENT
 
STATE STREET BANK
AND TRUST COMPANY
c/o EquiServe
P.O. Box 43011
Providence, Rhode Island 02940-3011
 
LEGAL COUNSEL
 
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
 
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
 
 For federal income tax purposes, the following information is furnished with
 respect to the distributions paid by the Trust during its taxable year ended
 October 31, 2004. The Trust designated 98.1% of the income distributions as a
 tax-exempt income distribution. The Trust designated and paid $1,542,823 as a
 long-term capital gain distribution. In January, the Trust provides tax
 information to shareholders for the preceding calendar year.
 
*   "Interested persons" of the Trust, as defined in the Investment Company Act
    of 1940, as amended.

                                      D-34

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
RESULTS OF SHAREHOLDER VOTES
 
The Annual Meeting of the Shareholders of the Trust was held on June 23, 2004,
where shareholders voted on the election of trustees.
 
With regard to the election of the following trustees by the common shareholders
of the Trust:
 


                                                                     # OF SHARES
                                                            ------------------------------
                                                             IN FAVOR             WITHHELD
------------------------------------------------------------------------------------------
                                                                            
R. Craig Kennedy..........................................  17,191,194            163,092
Jack E. Nelson............................................  17,182,477            171,809
Richard F. Powers, III....................................  17,191,269            163,017

 
With regard to the election of the following trustee by the preferred
shareholders of the Trust:
 


                                                                      # OF SHARES
                                                              ----------------------------
                                                              IN FAVOR            WITHHELD
------------------------------------------------------------------------------------------
                                                                            
Hugo F. Sonnenschein........................................   6,087                 6

 
The other trustees of the Trust whose terms did not expire in 2004 are David C.
Arch, J. Miles Branagan, Jerry D. Choate, Rod Dammeyer, Linda Hutton Heagy,
Howard J Kerr, Mitchell M. Merin, Wayne W. Whalen and Suzanne H. Woolsey.
 

                                      D-35

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
TRUSTEE AND OFFICER INFORMATION
 
The business and affairs of the Trust are managed under the direction of the
Trust's Board of Trustees and the Trust's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Trust
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments
Inc. ("Van Kampen Investments"), Van Kampen Asset Management (the "Adviser"),
Van Kampen Funds Inc. (the "Distributor"), 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 or its affiliates as of the date of this Statement of Additional
Information. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
 
INDEPENDENT TRUSTEES:
 


                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                
David C. Arch (59)            Trustee      Trustee     Chairman and Chief             85       Trustee/Director/Managing
Blistex Inc.                               since 1992  Executive Officer of                    General Partner of funds
1800 Swift Drive                                       Blistex Inc., a consumer                in the Fund Complex.
Oak Brook, IL 60523                                    health care products
                                                       manufacturer. Director of
                                                       the 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.

J. Miles Branagan (72)        Trustee      Trustee     Private investor.              83       Trustee/Director/Managing
1632 Morning Mountain Road                 since 2003  Co-founder, and prior to                General Partner of funds
Raleigh, NC 27614                                      August 1996, Chairman,                  in the Fund Complex.
                                                       Chief Executive Officer
                                                       and President, MDT
                                                       Corporation (now known as
                                                       Getinge/Castle, Inc., a
                                                       subsidiary of Getinge
                                                       Industrier AB), a company
                                                       which develops,
                                                       manufactures, markets and
                                                       services medical and
                                                       scientific equipment.

 

                                      D-36

 


VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Jerry D. Choate (66)          Trustee      Trustee     Prior to January 1999,         83       Trustee/Director/Managing
33971 Selva Road                           since 2003  Chairman and Chief                      General Partner of funds
Suite 130                                              Executive Officer of the                in the Fund Complex.
Dana Point, CA 92629                                   Allstate Corporation                    Director of Amgen Inc., a
                                                       ("Allstate") and Allstate               biotechnological company,
                                                       Insurance Company. Prior                and Director of Valero
                                                       to January 1995,                        Energy Corporation, an
                                                       President and Chief                     independent refining
                                                       Executive Officer of                    company.
                                                       Allstate. Prior to August
                                                       1994, various management
                                                       positions at Allstate.

 

                                      D-37

 


VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Rod Dammeyer (64)             Trustee      Trustee     President of CAC, L.L.C.,      85       Trustee/Director/Managing
CAC, L.L.C.                                since 1992  a private company                       General Partner of funds
4350 LaJolla Village Drive                             offering capital                        in the Fund Complex.
Suite 980                                              investment and management               Director of Stericycle,
San Diego, CA 92122-6223                               advisory services. Prior                Inc., Ventana Medical
                                                       to February 2001, Vice                  Systems, Inc., and GATX
                                                       Chairman and Director of                Corporation, and Trustee
                                                       Anixter International,                  of The Scripps Research
                                                       Inc., a global                          Institute and the
                                                       distributor of wire,                    University of Chicago
                                                       cable and communications                Hospitals and Health
                                                       connectivity products.                  Systems. Prior to January
                                                       Prior to July 2000,                     2004, Director of
                                                       Managing Partner of                     TeleTech Holdings Inc.
                                                       Equity Group Corporate                  and Arris Group, Inc.
                                                       Investment (EGI), a                     Prior to May 2002,
                                                       company that makes                      Director of Peregrine
                                                       private investments in                  Systems Inc. Prior to
                                                       other companies.                        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).



                                      D-38

 


VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Linda Hutton Heagy (56)       Trustee      Trustee     Managing Partner of            83       Trustee/Director/Managing
Heidrick & Struggles                       since 2003  Heidrick & Struggles, an                General Partner of funds
233 South Wacker Drive                                 executive search firm.                  in the Fund Complex.
Suite 7000                                             Trustee on the University
Chicago, IL 60606                                      of Chicago Hospitals
                                                       Board, Vice Chair of the
                                                       Board of the YMCA of
                                                       Metropolitan Chicago and
                                                       a member of the Women's
                                                       Board of the University
                                                       of Chicago. Prior to
                                                       1997, Partner of Ray &
                                                       Berndtson, Inc., an
                                                       executive recruiting
                                                       firm. Prior to 1996,
                                                       Trustee of The
                                                       International House
                                                       Board, a fellowship and
                                                       housing organization for
                                                       international graduate
                                                       students. Prior to 1995,
                                                       Executive Vice President
                                                       of ABN AMRO, N.A., a bank
                                                       holding company. Prior to
                                                       1992, Executive Vice
                                                       President of La Salle
                                                       National Bank.

R. Craig Kennedy (52)         Trustee      Trustee     Director and President of      83       Trustee/Director/Managing
1744 R Street, NW                          since 2003  the German Marshall Fund                General Partner of funds
Washington, DC 20009                                   of the United States, an                in the Fund Complex.
                                                       independent U.S.
                                                       foundation created to
                                                       deepen understanding,
                                                       promote collaboration and
                                                       stimulate exchanges of
                                                       practical experience
                                                       between Americans and
                                                       Europeans. Formerly,
                                                       advisor to the Dennis
                                                       Trading Group Inc., a
                                                       managed futures and
                                                       option company that
                                                       invests money for
                                                       individuals and
                                                       institutions. Prior to
                                                       1992, President and Chief
                                                       Executive Officer,
                                                       Director and member of
                                                       the Investment Committee
                                                       of the Joyce Foundation,
                                                       a private foundation.

Howard J Kerr (69)            Trustee      Trustee     Prior to 1998, President       85       Trustee/Director/Managing
736 North Western Avenue                   since 1992  and Chief Executive                     General Partner of funds
P.O. Box 317                                           Officer of Pocklington                  in the Fund Complex.
Lake Forest, IL 60045                                  Corporation, Inc., an                   Director of the Lake
                                                       investment holding                      Forest Bank & Trust.
                                                       company. Director of the
                                                       Marrow Foundation.



                                      D-39

 


VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE           TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Jack E. Nelson (68)           Trustee      Trustee     President of Nelson            83       Trustee/Director/Managing
423 Country Club Drive                     since 2003  Investment Planning                     General Partner of funds
Winter Park, FL 32789                                  Services, Inc., a                       in the Fund Complex.
                                                       financial planning
                                                       company and registered
                                                       investment adviser in the
                                                       State of Florida.
                                                       President of Nelson Ivest
                                                       Brokerage Services Inc.,
                                                       a member of the NASD,
                                                       Securities Investors
                                                       Protection Corp. and the
                                                       Municipal Securities
                                                       Rulemaking Board.
                                                       President of Nelson Sales
                                                       and Services Corporation,
                                                       a marketing and services
                                                       company to support
                                                       affiliated companies.

Hugo F. Sonnenschein (64)     Trustee      Trustee     President Emeritus and         85       Trustee/Director/Managing
1126 E. 59th Street                        since 1994  Honorary Trustee of the                 General Partner of funds
Chicago, IL 60637                                      University of Chicago and               in the Fund Complex.
                                                       the Adam Smith                          Director of Winston
                                                       Distinguished Service                   Laboratories, Inc.
                                                       Professor in the
                                                       Department of Economics
                                                       at the University of
                                                       Chicago. Prior to July
                                                       2000, President of the
                                                       University of Chicago.
                                                       Trustee of the University
                                                       of Rochester and a member
                                                       of its investment
                                                       committee. Member of the
                                                       National Academy of
                                                       Sciences, the American
                                                       Philosophical Society and
                                                       a fellow of the American
                                                       Academy of Arts and
                                                       Sciences.

Suzanne H. Woolsey, Ph.D.     Trustee      Trustee     Chief Communications           83       Trustee/Director/Managing
(62)                                       since 2003  Officer of the National                 General Partner of funds
815 Cumberstone Road                                   Academy of                              in the Fund Complex.
Harwood, MD 20776                                      Sciences/National                       Director of Fluor Corp.,
                                                       Research Council, an                    an engineering,
                                                       independent, federally                  procurement and
                                                       chartered policy                        construction
                                                       institution, from 2001 to               organization, since
                                                       November 2003 and Chief                 January 2004 and Director
                                                       Operating Officer from                  of Neurogen Corporation,
                                                       1993 to 2001. Director of               a pharmaceutical company,
                                                       the Institute for Defense               since January 1998.
                                                       Analyses, a federally
                                                       funded research and
                                                       development center,
                                                       Director of the German
                                                       Marshall Fund of the
                                                       United States, Director
                                                       of the Rocky Mountain
                                                       Institute and Trustee of
                                                       Colorado College. Prior
                                                       to 1993, Executive
                                                       Director of the
                                                       Commission on Behavioral
                                                       and Social Sciences and
                                                       Education at the National
                                                       Academy of
                                                       Sciences/National
                                                       Research Council. From
                                                       1980 through 1989,
                                                       Partner of Coopers &
                                                       Lybrand.

 

                                      D-40

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
TRUSTEE AND OFFICER INFORMATION continued
 
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            TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Mitchell M. Merin* (51)       Trustee,     Trustee     President and Chief            83       Trustee/Director/Managing
1221 Avenue of the Americas   President    since       Executive Officer of                    General Partner of funds
New York, NY 10020            and Chief    2003;       funds in the Fund                       in the Fund Complex.
                              Executive    President   Complex. Chairman,
                              Officer      and Chief   President, Chief
                                           Executive   Executive Officer and
                                           Officer     Director of the Adviser
                                           since 2002  and Van 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.

 

                                      D-41

 


VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                                                  NUMBER OF
                                            TERM OF                                FUNDS IN
                                           OFFICE AND                                FUND
                              POSITION(S)  LENGTH OF                               COMPLEX
NAME, AGE AND ADDRESS          HELD WITH      TIME     PRINCIPAL OCCUPATION(S)     OVERSEEN    OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE            TRUST       SERVED    DURING PAST 5 YEARS        BY TRUSTEE   HELD BY TRUSTEE
                                                                                

Richard F. Powers, III* (58)  Trustee      Trustee     Advisory Director of           85       Trustee/Director/Managing
1 Parkview Plaza                           since 1999  Morgan Stanley. Prior to                General Partner of funds
P.O. Box 5555                                          December 2002, Chairman,                in the Fund Complex.
Oakbrook Terrace, IL 60181                             Director, President,
                                                       Chief Executive Officer
                                                       and Managing Director of
                                                       Van Kampen Investments
                                                       and its investment
                                                       advisory, distribution
                                                       and other subsidiaries.
                                                       Prior to December 2002,
                                                       President and Chief
                                                       Executive Officer of
                                                       funds in the Fund
                                                       Complex. Prior to May
                                                       1998, Executive Vice
                                                       President and Director of
                                                       Marketing at Morgan
                                                       Stanley and Director of
                                                       Dean Witter, Discover &
                                                       Co. and Dean Witter
                                                       Realty. Prior to 1996,
                                                       Director of Dean Witter
                                                       Reynolds Inc.

Wayne W. Whalen* (65)         Trustee      Trustee     Partner in the law firm        85       Trustee/Director/Managing
333 West Wacker Drive                      since 1992  of Skadden, Arps, Slate,                General Partner of funds
Chicago, IL 60606                                      Meagher & Flom LLP, legal               in the Fund Complex.
                                                       counsel to funds in the
                                                       Fund Complex.

 
*   Such Trustee is an "interested person" (within the meaning of Section
    2(a)(19) of the 1940 Act). Mr. Whalen is an interested person of certain
    funds in the Fund Complex by reason of his firm currently acting as legal
    counsel to such funds in the Fund Complex. Messrs. Merin and Powers are
    interested persons of funds in the Fund Complex and the Adviser by reason of
    their current or former positions with Morgan Stanley or its affiliates.
 

                                      D-42

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
TRUSTEE AND OFFICER INFORMATION continued
 
OFFICERS:
 


                                                     TERM OF
                                                    OFFICE AND
                                   POSITION(S)      LENGTH OF
NAME, AGE AND                       HELD WITH          TIME     PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER                    TRUST           SERVED    DURING PAST 5 YEARS
                                                       
Stefanie V. Chang (38)          Vice President      Officer     Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas     and Secretary       since 2003  Vice President of funds in the Fund Complex.
New York, NY 10020

Amy R. Doberman (42)            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 Aeitus Investment Management,
                                                                Inc. from January 1997 to July 2000.

James M. Dykas (38)             Chief Financial     Officer     Executive Director of Van Kampen Asset Management and Morgan
1 Parkview Plaza                Officer and         since 1999  Stanley Investment Management. Chief Financial Officer and
Oakbrook Terrace, IL 60181      Treasurer                       Treasurer of funds in the Fund Complex. Prior to August
                                                                2004, Assistant Treasurer of funds in the Fund Complex.

Joseph J. McAlinden (61)        Executive Vice      Officer     Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas     President and       since 2002  Stanley Investment Advisors Inc., and Morgan Stanley
New York, NY 10020              Chief Investment                Investment Management Inc. and Director of Morgan Stanley
                                Officer                         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.

Ronald E. Robison (65)          Executive Vice      Officer     Principal Executive Officer of the Funds since May 2003.
1221 Avenue of the Americas     President and       since 2003  Chief Executive Officer and Chairman of Investor Services.
New York, NY 10020              Principal                       Executive Vice President and Principal Executive Officer of
                                Executive                       funds in the Fund Complex. Managing Director of Morgan
                                Officer                         Stanley. Chief Administrative Officer, Managing 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.

 

                                      D-43

 


VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
TRUSTEE AND OFFICER INFORMATION continued
                                                     TERM OF
                                                    OFFICE AND
                                   POSITION(S)      LENGTH OF
NAME, AGE AND                       HELD WITH          TIME     PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER                    TRUST           SERVED    DURING PAST 5 YEARS
                                                       

John L. Sullivan (49)           Chief Compliance    Officer     Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza                Officer             since 1998  August 2004. Director and Managing Director of Van Kampen
Oakbrook Terrace, IL 60181                                      Investments, the Adviser, Van Kampen Advisors Inc. and
                                                                certain other subsidiaries of Van Kampen Investments. Prior
                                                                August 2004, 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.

 

                                      D-44

 
VAN KAMPEN
 
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY
 
    We are required by federal law to provide you with a copy of our Privacy
Policy annually.
 
    The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc.,
Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange
Corp., as well as current and former individual investors in Van Kampen mutual
funds, unit investment trusts, and related companies.
 
    This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised by
us. This Policy is, however, applicable to individuals who select us to be a
custodian of securities or assets in individual retirement accounts, 401(k)
accounts, 529 Educational Savings Accounts, accounts subject to the Uniform
Gifts to Minors Act, or similar accounts.
 
    Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
 
WE RESPECT YOUR PRIVACY
 
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we help
you achieve your financial objectives. This Policy describes what non-public
personal information we collect about you, why we collect it, and when we may
share it with others.
 
    We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies you or
your accounts as "personal information."
 
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
 
To serve you better and manage our business, it is important that we collect and
maintain accurate information about you. We may obtain this information from
applications and other forms you submit to us, from your dealings with us, from
consumer reporting agencies, from our Web sites and from third parties and other
sources.
 
    For example:
 
     --  We may collect information such as your name, address, e-mail address,
         telephone/fax numbers, assets, income and investment objectives through
         applications and other forms you submit to us.
 
     --  We may obtain information about account balances, your use of
         account(s) and the types of products and services you prefer to receive
         from us through your dealings and transactions with us and other
         sources.
 
     --  We may obtain information about your creditworthiness and credit
         history from consumer reporting agencies.
 
     --  We may collect background information from and through third-party
         vendors to verify representations you have made and to comply with
         various regulatory requirements.
 
     --  If you interact with us through our public and private Web sites, we
         may collect information that you provide directly through online
         communications (such as an e-mail address). We may also collect
         information about your Internet service provider, your domain name,
         your computer's operating system and Web browser, your use of our Web
         sites and your product and service preferences, through the use of
         "cookies." "Cookies" recognize your computer each time you return to
         one of our
 
                                                             (continued on back)


                                      D-45


VAN KAMPEN
 
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
 
         sites, and help to improve our sites' content and personalize your
         experience on our sites by, for example, suggesting offerings that may
         interest you. Please consult the Terms of Use of these sites for more
         details on our use of cookies.
 
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
 
To provide you with the products and services you request, to serve you better
and to manage our business, we may disclose personal information we collect
about you to our affiliated companies and to non-affiliated third parties as
required or permitted by law.
 
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise required
or permitted by law.
 
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except to
enable them to provide services on our behalf, to perform joint marketing
agreements with other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
 
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
 
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
 
                                                 Van Kampen Funds Inc.
                                                 1 Parkview Plaza, P.O. Box 5555
                                                 Oakbrook Terrace, IL 60181-5555
                                                 www.vankampen.com
 
                                      (VAN KAMPEN INVESTMENTS LOGO)
 
                                                 Copyright (C)2004 Van Kampen
                                                 Funds Inc. All rights reserved.
                                                 Member NASD/SIPC.
                                                 VKA ANR
                                                 12/04 RN04-02839P-Y10/04


                                      D-46

                                   APPENDIX E

                    SEMIANNUAL REPORT OF THE ACQUIRING FUND




















   
                                      E-1

 
 
       Welcome, Shareholder
 
       In this report, you'll learn about how your investment in Van Kampen
       Municipal Opportunity Trust performed during the semiannual period. The
       portfolio management team will provide an overview of the market
       conditions and discuss some of the factors that affected investment
       performance during the reporting period. In addition, this report
       includes the trust's financial statements and a list of trust investments
       as of April 30, 2005.
 
       MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
       PASS. THERE IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
       OBJECTIVE. TRUSTS ARE SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
       THAT THE MARKET VALUES OF SECURITIES OWNED BY THE TRUST WILL DECLINE AND
       THAT THE VALUE OF TRUST SHARES MAY THEREFORE BE LESS THAN WHAT YOU PAID
       FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS TRUST.
 
       INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
       TAX (AMT).
 


                                                                    
         ---------------------------------------------------------------------------------------
            NOT FDIC INSURED             OFFER NO BANK GUARANTEE              MAY LOSE VALUE
         ---------------------------------------------------------------------------------------
                   NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY               NOT A DEPOSIT
         ---------------------------------------------------------------------------------------



                                      E-2

 
Performance Summary as of 4/30/05
 


MUNICIPAL OPPORTUNITY TRUST
SYMBOL: VMO
------------------------------------------------------------
AVERAGE ANNUAL                      BASED ON      BASED ON
TOTAL RETURNS                         NAV       MARKET PRICE
                                          
 
Since Inception (4/24/92)             8.14%         6.94%
 
10-year                               8.31          8.25
 
5-year                                9.80         10.22
 
1-year                               10.58          6.24
 
6-month                               3.15         -0.48
------------------------------------------------------------

 
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, NET
ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
 
NAV per share is determined by dividing the value of the trust's portfolio
securities, cash and other assets, less all liabilities, by the total number of
common shares outstanding. The common share market price is the price the market
is willing to pay for shares of the trust at a given time. Common share market
price is influenced by a range of factors, including supply and demand and
market conditions. Total return assumes an investment at the beginning of the
period, reinvestment of all distributions for the period in accordance with the
trust's dividend reinvestment plan, and sale of all shares at the end of the
period.
 
The Lehman Brothers Municipal Bond Index is a broad-based statistical composite
of municipal bonds. The index does not include any expenses, fees or sales
charges, which would lower performance. The index is unmanaged and should not be
considered an investment. It is not possible to invest directly in an index.
 

                                      E-3

 
Trust Report
 
FOR THE 6-MONTH PERIOD ENDED APRIL 30, 2005
 
Van Kampen Municipal Opportunity Trust is managed by the Adviser's Municipal
Fixed Income team.(1) Current members include Dennis Pietrzak and John
Reynoldson, Executive Directors of the Adviser; and Robert Wimmel, Vice
President of the Adviser.
 
MARKET CONDITIONS
 
The six-month period ended April 30, 2005, was characterized by continued
short-term interest rate increases. As crude oil prices reached record highs,
the prospect of rising inflation also cast a shadow. The Federal Open Market
Committee (the "Fed") raised the federal funds target rate 100 basis points
during the period through a series of four, "measured" 0.25 percent tightenings
to 2.75 percent by the end of April. Although rates in the short and
intermediate areas of the yield curve shifted upward as the Fed tightened, long-
term interest rates fell as buyers did not seem deterred by the prospect of
rising inflation. As a result, the yield curve (the difference between short and
longer-term yields) flattened and the long end of the municipal market handily
outperformed the shorter end.
 
The municipal market in total posted positive returns during the period, though
it was not uniformly strong. In contrast to the strong showing by longer-term
bonds, shorter-term municipals were hampered by the Fed's tightening and turned
in a flat to slightly negative showing. Within the investment-grade segment of
the market, yield differentials between BBB-rated and AAA-rated municipal
securities were slightly wider, though BBB-rated securities still outperformed
high grades due to their higher coupons, while securities rated below investment
grade strongly outperformed as investors sought out their higher yields.
 
The Fed's interest rate hikes did not appear to dampen investors' appetites for
municipal bonds, as net inflows into municipal bond funds topped $290 million
during the period. The supply of new issues was modest during the closing months
of 2004 (the first two months of the period) before soaring in the opening
months of 2005 as long-term issuers rushed to bring securities to market in
anticipation of additional interest rate increases in the near term.
 
(1)Team members may change without notice at any time.

                                      E-4

 
PERFORMANCE ANALYSIS
 
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ, as they did during the reporting period. On an NAV basis,
the trust outperformed its benchmark index, the Lehman Brothers Municipal Bond
Index. On a market price basis, the trust underperformed its benchmark.
 
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2005
 


----------------------------------------------------------
      BASED ON     BASED ON       LEHMAN BROTHERS
        NAV      MARKET PRICE   MUNICIPAL BOND INDEX
                                         
 
       3.15%        -0.48%             1.93%
----------------------------------------------------------

 
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. INVESTMENT RETURN, NET ASSET VALUE AND COMMON SHARE MARKET PRICE WILL
FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. SEE PERFORMANCE SUMMARY FOR ADDITIONAL PERFORMANCE INFORMATION
AND INDEX DEFINITION.
 
The trust uses leverage to enhance its dividend to common shareholders. The
trust borrows money at short-term rates through the issuance of preferred
shares. The proceeds are reinvested in longer-term securities, taking advantage
of the difference between short- and longer-term rates. The Fed's policy of
raising interest rates throughout the period made the trust's borrowing activity
more expensive. These expenses, however, were more than offset by the positive
performance of the bonds held by the trust.
 
One of our key strategies in managing the trust was to position it for rising
interest rates. This approach was largely the result of our analysis of interest
rates, which remained relatively low by historical standards even after rising
from their multi-decade lows earlier. First, we kept the trust's duration (a
measure of interest-rate sensitivity) below that of its benchmark. Second, to
limit the trust's exposure to areas of the market that would be most likely
susceptible to rising rates, we trimmed the trust's shorter-maturity bonds. We
reinvested the proceeds from those sales into bonds with premium coupons and
maturities between 25 and 30 years. In addition to offering relatively
attractive income streams, these securities positioned the trust to benefit from
any future flattening of the yield curve.
 
Throughout the reporting period, we remained focused on keeping the portfolio's
credit quality high. At the close of the period, 86 percent of the bonds in the
portfolio were rated AA or higher. However, as high-yield spreads continued to
tighten, lower quality bonds tended to perform better.


                                      E-5

 
Additionally, due to our concerns about the long-term merits of tobacco bonds,
we did not include them in the portfolio. This decision prevented the trust from
participating in the short-term rebound experienced by tobacco and other
lower-rated bonds during the period.
 
Much of our relative-value trading activity was focused on selling issues that
had been pre-refunded. We kept the trust well diversified across the major
sectors of the municipal bond market. The top three sector exposures at the end
of the period were wholesale electric, general purpose and airports.
 
There is no guarantee the security sectors mentioned will continue to perform
well or be held by the trust in the future.
 

                                      E-6

 


RATINGS ALLOCATION AS OF 4/30/05
                                                             
AAA/Aaa                                                          80.5%
AA/Aa                                                             5.8
A/A                                                               8.5
BBB/Baa                                                           3.5
B/B                                                               0.4
NR                                                                1.3


TOP 5 SECTORS AS OF 4/30/05
                                                             
Wholesale Electric                                               14.2%
General Purpose                                                  13.7
Airport                                                          13.1
Health Care                                                      11.9
Public Building                                                   9.9


SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 4/30/05
                                                             
Texas                                                            12.3%
California                                                       10.6
New Jersey                                                        9.6
New York                                                          7.9
Pennsylvania                                                      5.2
Georgia                                                           4.9
North Carolina                                                    4.7
Washington                                                        4.6
Nevada                                                            3.1
Illinois                                                          2.7
Colorado                                                          2.6
Massachusetts                                                     2.5
Indiana                                                           2.4
Michigan                                                          2.2
Oregon                                                            2.0
West Virginia                                                     2.0
Florida                                                           1.9
Ohio                                                              1.7
Oklahoma                                                          1.7
South Carolina                                                    1.6
Missouri                                                          1.4
Connecticut                                                       1.3
District of Columbia                                              1.3
Louisiana                                                         1.2
Alabama                                                           1.2
Maryland                                                          1.1
Kentucky                                                          0.9
Arkansas                                                          0.8
New Hampshire                                                     0.7
Nebraska                                                          0.6
Tennessee                                                         0.6
Iowa                                                              0.5
Wisconsin                                                         0.4
Arizona                                                           0.4
South Dakota                                                      0.4
Mississippi                                                       0.3

 

                                                             
                                             (continued on next page)

 

                                      E-7

 


SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 4/30/05
                                       (continued from previous page)
                                                             
Minnesota                                                         0.3
New Mexico                                                        0.2
North Dakota                                                      0.2
                                                                -----
Total Investments                                               100.0%

 
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Ratings and summary of investments by
state classification are as a percentage of total investments. Sectors are as a
percentage of long-term investments. Securities are classified by sectors that
represent broad groupings of related industries. Van Kampen is a wholly owned
subsidiary of a global securities firm which is engaged in a wide range of
financial services including, for example, securities trading and brokerage
activities, investment banking, research and analysis, financing and financial
advisory services. Rating allocations based upon ratings as issued by Standard
and Poor's and Moody's, respectively.
 

                                      E-8

 
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
 
       Each Van Kampen trust provides a complete schedule of portfolio holdings
       in its semiannual and annual reports within 60 days of the end of the
       trust's second and fourth fiscal quarters by filing the schedule
       electronically with the Securities and Exchange Commission (SEC). The
       semiannual reports are filed on Form N-CSRS and the annual reports are
       filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
       reports to trust shareholders, and makes these reports available on its
       public Web site, www.vankampen.com. In addition to the semiannual and
       annual reports that Van Kampen delivers to shareholders and makes
       available through the Van Kampen public Web site, each trust files a
       complete schedule of portfolio holdings with the SEC for the trust's
       first and third fiscal quarters on Form N-Q. Van Kampen does not deliver
       the reports for the first and third fiscal quarters to shareholders, nor
       are the reports posted to the Van Kampen public Web site. You may,
       however, obtain the Form N-Q filings (as well as the Form N-CSR and
       N-CSRS filings) by accessing the SEC's Web site, http://www.sec.gov. You
       may also review and copy them at the SEC's Public Reference Room in
       Washington, DC. Information on the operation of the SEC's Public
       Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. You
       can also request copies of these materials, upon payment of a duplicating
       fee, by electronic request at the SEC's e-mail address
       (publicinfo@sec.gov) or by writing the Public Reference section of the
       SEC, Washington, DC 20549-0102.
 
       You may obtain copies of a trust's fiscal quarter filings by contacting
       Van Kampen Client Relations at 1-800-847-2424.
 
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
 
       The trust's policies and procedures with respect to the voting of proxies
       relating to the trust's portfolio securities and information on how the
       trust voted proxies relating to portfolio securities during the most
       recent twelve-month period ended June 30 is available without charge,
       upon request, by visiting our Web site at www.vankampen.com. This
       information is also available on the Securities and Exchange Commission's
       web site at http://www.sec.gov.
 

                                      E-9

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
 


PAR
AMOUNT
(000)     DESCRIPTION                                      COUPON   MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          MUNICIPAL BONDS  157.8%
          ALABAMA  1.8%
$2,000    Jefferson Cnty, AL Ltd Oblig Sch Wt Ser A....... 5.250%   01/01/23   $   2,137,700
 2,375    Marshall Cnty, AL Hlthcare Ser C................ 6.000    01/01/32       2,538,471
     5    Mobile, AL Indl Dev Brd Solid Waste Disp Rev
          Mobile Energy Svc Co Proj Rfdg.................. 6.950    01/01/20              94
                                                                               -------------
                                                                                   4,676,265
                                                                               -------------
          ARIZONA  0.6%
 1,500    Maricopa Cnty, AZ Stad Dist Rfdg (AMBAC Insd)... 5.375    06/01/19       1,652,895
                                                                               -------------
 
          ARKANSAS  1.3%
 3,035    Fort Smith, AR Wtr & Swr Rev Ser A Rfdg (FSA
          Insd)........................................... 5.250    10/01/16       3,329,790
                                                                               -------------
 
          CALIFORNIA  16.7%
 2,000    California Edl Fac Auth Rev Occidental College
          Ser A (MBIA Insd)............................... 5.000    10/01/30       2,119,120
 2,500    California Edl Fac Auth Rev Pomona College Ser
          A............................................... 5.000    07/01/45       2,616,575
    30    California Rural Home Mtg Fin Auth Single Family
          Mtg Rev Ser C (AMT) (GNMA Collateralized)....... 7.800    02/01/28          30,366
 4,500    California St (AMBAC Insd)...................... 5.125    10/01/27       4,712,130
 5,500    California St Dept Wtr Res Pwr Ser A (AMBAC
          Insd)........................................... 5.500    05/01/16       6,193,935
 2,000    California St Dept Wtr Res Pwr Ser A............ 5.750    05/01/17       2,244,740
 3,500    California St Pub Wks Brd Lease Rev Dept
          Corrections Ser C............................... 5.250    06/01/28       3,712,030
 2,000    California St Pub Wks Brd Lease Rev Dept Mental
          Hlth Coalinga Ser A............................. 5.000    06/01/25       2,115,900
 1,250    California Statewide Cmntys Dev Auth Rev
          Daughters of Charity Hlth Ser A................. 5.250    07/01/30       1,302,950
 5,000    Contra Costa, CA Home Mtg Fin Auth Home Mtg Rev
          (Escrowed to Maturity) (MBIA Insd)..............   *      09/01/17       2,391,900
 4,000    Foothill/Eastern Corridor Agy CA Toll Rd Rev
          Conv Cap Apprec Sr Lien Ser A (Escrowed to
          Maturity)....................................... 7.050    01/01/10       4,700,160
 1,600    Long Beach, CA Bd Fin Auth Rev Redev Hsg & Gas
          Util Ser A1 (AMBAC Insd)........................ 5.000    08/01/40       1,665,568
 1,500    Los Angeles Cnty, CA Met Tran Auth Sales Tax Rev
          Prop C Second Tier Sr Ser A Rfdg (AMBAC Insd)... 5.000    07/01/23       1,579,860
 7,500    San Jose, CA Fin Auth Lease Rev Civic Ctr Proj
          Ser B (AMBAC Insd).............................. 5.000    06/01/32       7,780,950
                                                                               -------------
                                                                                  43,166,184
                                                                               -------------
          COLORADO  4.1%
 1,505    Arapahoe Cnty, CO Ctfs Partn Rfdg (FSA Insd)
          (a)............................................. 5.250    12/01/15       1,683,884
 1,000    Colorado Hlth Fac Auth Rev Hosp Portercare
          Adventist Hlth.................................. 6.500    11/15/31       1,103,950

 
                                               See Notes to Financial Statements

                                      E-10

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                      COUPON   MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          COLORADO (CONTINUED)
$1,000    Colorado Hsg Fin Auth Multi-Family Hsg Ins Mtg
          Ser B2 (AMT) (FHA Gtd).......................... 5.800%   10/01/28   $   1,030,330
   126    Colorado Hsg Fin Auth Single Family Pgm Sr Ser
          A2 (AMT)........................................ 7.250    05/01/27         128,347
   100    Colorado Hsg Fin Auth Single Family Pgm Sr Ser
          C1 (AMT)........................................ 7.550    11/01/27         101,963
 1,000    Denver, CO City & Cnty Arpt Rev Ser B (AMT)
          (MBIA Insd)..................................... 6.250    11/15/07       1,065,260
 1,005    Greeley, CO Multi-Family Rev Hsg Mtg Creek Stone
          (AMT) (FHA Gtd)................................. 5.950    07/01/28       1,041,582
 1,000    Highlands Ranch Metro Dist No 2 CO Rfdg (FSA
          Insd)........................................... 6.500    06/15/11       1,172,780
 3,000    Mesa Cnty, CO Vly Sch Dist No 51 Ser A (MBIA
          Insd)........................................... 5.000    12/01/21       3,235,650
                                                                               -------------
                                                                                  10,563,746
                                                                               -------------
          CONNECTICUT  2.1%
 3,250    Connecticut St Spl Oblig Pkg Rev Bradley Intl
          Arpt Ser A (AMT) (ACA Insd)..................... 6.600    07/01/24       3,528,492
 1,000    Mashantucket Western Pequot Tribe CT Spl Rev Ser
          A, 144A--Private Placement (b).................. 6.400    09/01/11       1,054,680
   840    Mashantucket Western Pequot Tribe CT Spl Rev Ser
          A, 144A--Private Placement (Escrowed to
          Maturity) (b)................................... 6.500    09/01/06         881,714
                                                                               -------------
                                                                                   5,464,886
                                                                               -------------
          DISTRICT OF COLUMBIA  2.0%
 5,000    Metropolitan Washington DC Arpt Auth Sys Ser A
          (AMT) (FGIC Insd)............................... 5.250    10/01/32       5,217,550
                                                                               -------------
 
          FLORIDA  3.0%
 2,000    Escambia Cnty, FL Hlth Fac Auth Rev FL Hlthcare
          Fac Ln VHA Pgm (AMBAC Insd)..................... 5.950    07/01/20       2,031,020
 1,000    Lakeland, FL Hosp Sys Rev Lakeland Regl Hlth
          Sys............................................. 5.500    11/15/32       1,046,780
 2,100    Miami-Dade Cnty, FL Aviation Miami Intl Arpt
          (AMT) (FGIC Insd)............................... 5.375    10/01/27       2,224,824
 2,375    North Broward, FL Hosp Dist Rev Impt............ 6.000    01/15/31       2,534,410
                                                                               -------------
                                                                                   7,837,034
                                                                               -------------
          GEORGIA  7.7%
 2,000    Clayton Cnty & Clayton Cnty, GA Wtr Auth Wtr &
          Swr Rev......................................... 5.000    05/01/21       2,159,300
 1,937    Fulton Cnty, GA Lease Rev (Acquired 12/23/94,
          Cost $1,936,856) (c)............................ 7.250    06/15/10       1,995,543
 7,000    Georgia Muni Elec Auth Pwr Rev Ser A (MBIA
          Insd)........................................... 6.500    01/01/20       8,896,160

 
See Notes to Financial Statements                                               

                                      E-11

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                      COUPON   MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          GEORGIA (CONTINUED)
$6,245    Municipal Elec Auth GA Combustion Turbine Proj
          Ser A (MBIA Insd)............................... 5.250%   11/01/16   $   6,880,741
                                                                               -------------
                                                                                  19,931,744
                                                                               -------------
          ILLINOIS  4.3%
    50    Chicago, IL Single Family Mtg Rev Ser A (AMT)
          (GNMA Collateralized)........................... 7.000    09/01/27          50,203
    40    Chicago, IL Single Family Mtg Rev Ser B (AMT)
          (GNMA Collateralized)........................... 7.625    09/01/27          40,551
 2,500    Du Page Cnty, IL Trans Rev (Prerefunded @
          07/01/11) (FSA Insd)............................ 5.750    01/01/17       2,843,125
 3,000    Illinois Fin Auth Rev Northwestern Mem Hosp Ser
          A............................................... 5.500    08/15/43       3,216,900
 3,630    Kendall, Kane & Will Cntys, IL Cmnty Sch Dist
          308 Ser B (FGIC Insd) (a)....................... 5.250    10/01/20       3,950,384
 1,000    Metropolitan Pier & Expo Auth IL Dedicated St
          Tax Rev McCormick Pl Expn Proj Rfdg (FGIC
          Insd)........................................... 5.500    12/15/24       1,093,690
                                                                               -------------
                                                                                  11,194,853
                                                                               -------------
          INDIANA  3.8%
 3,270    Allen Cnty, IN War Mem Coliseum Ser A (AMBAC
          Insd) (a)....................................... 5.500    11/01/16       3,644,153
 4,120    Indiana Hlth Fac Fin Auth Hosp Rev Cmnty Proj
          Ser A (AMBAC Insd) (d).......................... 5.000    05/01/35       4,271,039
 1,000    Indiana St Dev Fin Auth Rev Exempt Fac Conv Rfdg
          (AMT)........................................... 5.950    08/01/30       1,029,440
 1,210    North Adams, IN Cmnty Sch Cap Apprec First Mtg
          (FSA Insd) (a)..................................   *      01/15/16         754,387
                                                                               -------------
                                                                                   9,699,019
                                                                               -------------
          IOWA  0.8%
 1,890    Des Moines, IA Pub Pkg Sys Rev Ser A (FGIC Insd)
          (a)............................................. 5.750    06/01/17       2,099,431
                                                                               -------------
 
          KENTUCKY  1.4%
 1,475    Kenton Cnty, KY Arpt Brd Rev Cincinnati/Northn
          KY Intl Arpt Ser A Rfdg (AMT) (MBIA Insd)....... 6.200    03/01/08       1,593,103
 1,995    Kentucky Hsg Corp Hsg Rev Ser F (AMT) (FNMA
          Collateralized)................................. 5.450    01/01/32       2,058,162
                                                                               -------------
                                                                                   3,651,265
                                                                               -------------
          LOUISIANA  1.9%
 2,500    Lafayette, LA Utils Rev (MBIA Insd)............. 5.250    11/01/23       2,730,200
 1,990    Louisiana Hsg Fin Agy Rev Azalea Estates Ser A
          Rfdg (AMT) (GNMA Collateralized)................ 5.375    10/20/39       2,073,640
                                                                               -------------
                                                                                   4,803,840
                                                                               -------------

 
                                               See Notes to Financial Statements

                                      E-12

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                      COUPON   MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          MARYLAND  1.8%
$1,050    Maryland St Econ Dev Corp Univ MD College Pk
          Proj............................................ 5.625%   06/01/35   $   1,088,860
 1,000    Maryland St Hlth & Higher Ed Fac Auth Rev
          Medstar Hlth Rfdg............................... 5.375    08/15/24       1,034,290
 2,350    Northeast, MD Waste Disp Auth Rfdg (AMT) (AMBAC
          Insd)........................................... 5.500    04/01/16       2,564,743
                                                                               -------------
                                                                                   4,687,893
                                                                               -------------
          MASSACHUSETTS  3.9%
 2,400    Massachusetts St Dev Fin Agy Rev College
          Pharmacy & Allied Hlth Ser D.................... 5.000    07/01/35       2,494,944
 3,000    Massachusetts St Dev Fin Agy Semass Sys Ser A
          (MBIA Insd)..................................... 5.625    01/01/16       3,293,850
 1,000    Massachusetts St Hlth & Ed Fac Auth Rev Part
          Hlthcare Sys Ser C.............................. 5.750    07/01/32       1,094,600
 3,000    Massachusetts St Wtr Res Auth Gen Ser J (FSA
          Insd)........................................... 5.000    08/01/32       3,123,990
                                                                               -------------
                                                                                  10,007,384
                                                                               -------------
          MICHIGAN  3.5%
 3,505    Detroit, MI Wtr Supply Sys Ser B (MBIA Insd)
          (a)............................................. 5.250    07/01/18       3,858,970
 1,500    Kent Hosp Fin Auth MI Rev Met Hosp Proj Ser A... 6.250    07/01/40       1,641,810
 2,000    Michigan St Ctf Part (AMBAC Insd)............... 5.500    06/01/27       2,159,740
 1,215    Zeeland, MI Pub Schs Sch Bldg & Site (MBIA Insd)
          (a)............................................. 5.250    05/01/19       1,332,855
                                                                               -------------
                                                                                   8,993,375
                                                                               -------------
          MINNESOTA  0.4%
 1,000    Chaska, MN Elec Rev Ser A....................... 6.100    10/01/30       1,117,160
                                                                               -------------
 
          MISSISSIPPI  0.5%
   900    Mississippi Home Corp Single Family Rev Mtg Ser
          C (AMT) (GNMA Collateralized)................... 7.600    06/01/29         925,776
   380    Mississippi Home Corp Single Family Rev Mtg Ser
          F (AMT) (GNMA Collateralized)................... 7.550    12/01/27         392,483
                                                                               -------------
                                                                                   1,318,259
                                                                               -------------
          MISSOURI  2.2%
 2,150    Cape Girardeau Cnty, MO Indl Southeast MO Hosp
          Assoc........................................... 5.500    06/01/22       2,220,520
    35    Saint Louis Cnty, MO Single Family Mtg Rev (MBIA
          Insd)........................................... 6.900    04/01/16          35,623
 3,000    Sikeston, MO Elec Rev Rfdg (MBIA Insd) (e)...... 6.200    06/01/10       3,356,070
                                                                               -------------
                                                                                   5,612,213
                                                                               -------------
          NEBRASKA  1.0%
 2,500    Nebraska Pub Pwr Dist Gen Ser A (AMBAC Insd).... 5.000    01/01/35       2,616,725
                                                                               -------------

 
See Notes to Financial Statements                                               

                                      E-13

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                      COUPON   MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          NEVADA  4.8%
$7,500    Clark Cnty, NV Arpt Rev Sub Lien Ser A-2 (FGIC
          Insd)........................................... 5.000%   07/01/36   $   7,793,100
 3,000    Clark Cnty, NV Indl Dev Rev Southwest Gas Corp
          Proj Ser A (AMT) (AMBAC Insd)................... 5.250    07/01/34       3,147,360
 1,500    Reno, NV Sr Lien Retrac Reno Trans Proj (AMBAC
          Insd)........................................... 5.125    06/01/32       1,566,765
                                                                               -------------
                                                                                  12,507,225
                                                                               -------------
          NEW HAMPSHIRE  1.1%
 2,500    New Hampshire Hlth & Ed Fac Univ Sys of NH
          (AMBAC Insd).................................... 5.500    07/01/15       2,791,450
                                                                               -------------
 
          NEW JERSEY  15.2%
 2,000    Garden St Preservation Tr NJ Ser A (FSA Insd)... 5.250    11/01/18       2,209,080
 2,000    New Jersey Econ Dev Auth Cigarette Tax.......... 5.750    06/15/34       2,138,200
 5,000    New Jersey Econ Dev Auth Mtr Veh Rev Ser A (MBIA
          Insd)........................................... 5.000    07/01/22       5,350,750
20,000    New Jersey Econ Dev Auth St Contract Econ
          Recovery (MBIA Insd)............................ 5.900    03/15/21      24,209,200
 5,000    New Jersey St Ed Fac Auth Higher Ed Cap Impt Ser
          A (AMBAC Insd).................................. 5.250    09/01/21       5,436,900
                                                                               -------------
                                                                                  39,344,130
                                                                               -------------
 
          NEW MEXICO  0.3%
   860    New Mexico Mtg Fin Auth Single Family Mtg Pgm
          Ser G (AMT) (GNMA Collateralized)............... 7.250    07/01/26         878,946
                                                                               -------------
 
          NEW YORK  12.5%
 6,000    New York City Muni Wtr Fin Auth Wtr & Swr Sys
          Rev Ser D....................................... 5.000    06/15/39       6,255,960
 9,600    New York City Ser A............................. 7.000    08/01/07      10,210,848
   400    New York City Ser A (Prerefunded @ 08/01/06).... 7.000    08/01/07         427,052
   500    New York St Dorm Auth Rev Mental Hlth Ser A..... 5.750    08/15/12         530,985
     5    New York St Dorm Auth Rev Mental Hlth Svcs Fac
          Ser A (Prerefunded @ 02/15/07).................. 5.750    08/15/12           5,346
 1,445    New York St Dorm Auth Rev Secd Hosp North Gen
          Hosp Rfdg (MBIA Insd)........................... 5.750    02/15/17       1,623,616
 2,040    New York St Dorm Auth Rev Secd Hosp North Gen
          Hosp Rfdg....................................... 5.750    02/15/18       2,268,970
 1,500    New York St Dorm Auth Revs Upstate Cmnty
          Colleges Ser B.................................. 5.250    07/01/20       1,622,940
 1,000    New York St Dorm Auth Revs Upstate Cmnty
          Colleges Ser B.................................. 5.250    07/01/21       1,078,790

 
                                               See Notes to Financial Statements

                                      E-14

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                      COUPON   MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          NEW YORK (CONTINUED)
$3,780    New York St Mtg Agy Rev Ser 101 (AMT)........... 5.400%   04/01/32   $   3,903,304
 4,000    Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
          Intl Arpt Terminal 6 (AMT) (MBIA Insd).......... 5.750    12/01/22       4,311,000
                                                                               -------------
                                                                                  32,238,811
                                                                               -------------
          NORTH CAROLINA  7.5%
 1,500    North Carolina Eastn Muni Pwr Agy Pwr Sys Rev
          Ser D........................................... 6.700    01/01/19       1,679,385
11,000    North Carolina Muni Pwr Agy No 1 Catawba Elec
          Rev Rfdg (MBIA Insd)............................ 6.000    01/01/12      12,654,950
 3,000    North Carolina Muni Pwr Agy Ser A (MBIA Insd)... 5.250    01/01/19       3,270,300
 1,700    Raleigh Durham, NC Arpt Auth Rev Ser A (AMBAC
          Insd)........................................... 5.000    05/01/30       1,786,326
                                                                               -------------
                                                                                  19,390,961
                                                                               -------------
          NORTH DAKOTA  0.2%
   505    North Dakota St Hsg Fin Agy Ser C (AMT)......... 5.550    07/01/29         514,075
                                                                               -------------
 
          OHIO  2.8%
   385    Akron, OH Ctf Part Akron Muni Baseball Stad
          Proj............................................ 6.500    12/01/07         409,686
 1,190    Bowling Green St Univ OH (FGIC Insd)............ 5.750    06/01/14       1,333,324
   500    Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc
          Proj............................................ 7.500    01/01/30         562,360
 3,000    Lucas Cnty, OH Hosp Rev Promedica Hlthcare Oblig
          Rfdg (MBIA Insd)................................ 6.000    11/15/07       3,197,040
 1,500    Mahoning Cnty, OH Hosp Fac Forum Hlth Oblig
          Group Ser A..................................... 6.000    11/15/32       1,611,915
                                                                               -------------
                                                                                   7,114,325
                                                                               -------------
          OKLAHOMA  2.7%
   135    Central OK Transn & Pkg Auth Pkg Sys (AMBAC
          Insd)........................................... 5.000    07/01/20         143,454
 4,770    McAlester, OK Pub Wks Auth Util Cap Apprec (FSA
          Insd)...........................................   *      02/01/34       1,163,260
 1,000    Oklahoma City, OK Pub Ppty Auth Hotel Tax Rev
          (FGIC Insd)..................................... 5.250    10/01/29       1,085,040
 1,000    Tulsa Cnty, OK Pub Fac Auth Cap Impt Rev (AMBAC
          Insd)........................................... 6.250    11/01/22       1,140,730
 3,140    Tulsa, OK Indl Auth Hosp Rev Hillcrest Med Cent
          Proj Rfdg (Escrowed to Maturity) (Connie Lee
          Insd) (a)....................................... 6.250    06/01/08       3,436,102
                                                                               -------------
                                                                                   6,968,586
                                                                               -------------
          OREGON  3.2%
 2,500    Oregon Hlth Sciences Univ Insd Ser A (MBIA
          Insd)........................................... 5.250    07/01/22       2,735,675
 5,000    Oregon St Dept Admin Ser C Rfdg (MBIA Insd)..... 5.250    11/01/18       5,453,500
                                                                               -------------
                                                                                   8,189,175
                                                                               -------------

 
See Notes to Financial Statements                                               

                                      E-15

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                      COUPON   MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          PENNSYLVANIA  8.1%
$2,295    Allegheny Vly, PA Sch Dist Ser A (MBIA Insd).... 5.000%   11/01/24   $   2,444,519
 2,000    Harrisburg, PA Auth Res Gtd Sub Ser D-2 (FSA
          Insd)........................................... 5.000    12/01/33       2,177,780
 1,000    Harrisburg, PA Cap Apprec Nts Ser F Rfdg (AMBAC
          Insd)...........................................   *      03/15/15         656,250
 1,865    Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
          Insd) (a).......................................   *      09/15/15       1,198,095
 1,865    Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
          Insd)...........................................   *      03/15/16       1,160,403
 4,000    Hempfield, PA Area Sch Dist Westmoreland Cnty
          Ser A (FGIC Insd)............................... 5.250    03/15/20       4,392,520
 3,000    Susquehanna Area Regl Arpt Auth PA Ser A (AMT)
          (AMBAC Insd).................................... 5.375    01/01/21       3,213,330
 5,415    Susquehanna Area Regl Arpt Auth PA Ser A (AMT)
          (AMBAC Insd) (a)................................ 5.375    01/01/22       5,789,122
                                                                               -------------
                                                                                  21,032,019
                                                                               -------------
          SOUTH CAROLINA  2.6%
 1,250    Easley, SC Util Rev Comb (Prerefunded @
          12/01/12) (FSA Insd) (a)........................ 5.250    12/01/18       1,404,563
 2,500    Easley, SC Util Rev Impt Comb Rfdg (FSA Insd)... 5.000    12/01/34       2,637,700
 2,500    South Carolina Jobs Econ Dev Auth Indl Rev Elec
          & Gas Co Proj Ser A (AMBAC Insd)................ 5.200    11/01/27       2,680,125
                                                                               -------------
                                                                                   6,722,388
                                                                               -------------
          SOUTH DAKOTA  0.6%
 1,375    Deadwood, SD Ctfs Partn (ACA Insd).............. 6.375    11/01/20       1,477,919
                                                                               -------------
 
          TENNESSEE  0.9%
 1,000    Elizabethton, TN Hlth & Ed Fac Brd Rev Hosp
          First Mtg Ser B Impt & Rfdg..................... 8.000    07/01/33       1,192,170
 1,000    Johnson City, TN Hlth & Ed Fac Brd Hosp Rev
          First Mtg Mtn St Hlth Ser A Rfdg (MBIA Insd).... 7.500    07/01/25       1,258,270
                                                                               -------------
                                                                                   2,450,440
                                                                               -------------
          TEXAS  19.4%
   980    Austin, TX Utility Sys Rev Comb (AMBAC Insd).... 6.500    11/15/05         999,786
    20    Austin, TX Utility Sys Rev Comb Rfdg (Escrowed
          to Maturity) (AMBAC Insd)....................... 6.500    11/15/05          20,424
 2,545    Dallas Cnty, TX Cmnty College Fin Sys (AMBAC
          Insd) (a)....................................... 5.375    02/15/17       2,759,645
 2,500    Dallas, TX Wtrwks & Swr Sys Rev & Impt Rfdg (FSA
          Insd)........................................... 5.375    10/01/18       2,758,125
 4,000    Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
          (AMT) (FSA Insd)................................ 5.500    11/01/21       4,343,360
 1,500    Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
          (AMT) (FGIC Insd)............................... 5.750    11/01/30       1,615,575

 
                                               See Notes to Financial Statements

                                      E-16

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                      COUPON   MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          TEXAS (CONTINUED)
$5,500    Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
          Impt & Rfdg (AMT) (FGIC Insd) (e)............... 5.500%   11/01/31   $   5,818,340
 2,000    Houston, TX Arpt Sys Rev Sub Lien (FSA Insd).... 5.500    07/01/20       2,197,100
 3,000    Houston, TX Arpt Sys Rev Sub Lien Ser A (AMT)
          (FSA Insd)...................................... 5.625    07/01/30       3,234,270
 5,000    Houston, TX Arpt Sys Rev Sub Lien Ser A (AMT)
          (FSA Insd)...................................... 5.125    07/01/32       5,142,200
 6,000    Houston, TX Util Sys Rev First Lien Ser A Rfdg
          (FSA Insd)...................................... 5.250    05/15/21       6,504,180
 2,185    Lower Colorado Riv Auth TX LCRA Svcs Corp Proj
          Rfdg (FGIC Insd)................................ 5.000    05/15/24       2,280,375
 2,000    Lower Colorado Riv Auth TX LCRA Svcs Corp Proj
          Rfdg (FGIC Insd)................................ 5.000    05/15/33       2,056,520
 1,500    Metropolitan Hlth Fac Dev Corp TX Wilson N Jones
          Mem Hosp Proj................................... 7.250    01/01/31       1,529,580
 5,000    North Cent TX Hlth Fac Dev Hosp Childrens Med
          Ctr Dallas (AMBAC Insd)......................... 5.250    08/15/32       5,305,900
 1,057    Texas Gen Svcs Comm Partn Int Lease Purch Ctfs
          (Acquired 03/16/95, Cost $1,057,405) (c)........ 7.250    08/01/11       1,069,618
 2,360    University TX Rev Fin Sys Ser B................. 5.250    08/15/20       2,589,038
                                                                               -------------
                                                                                  50,224,036
                                                                               -------------
          WASHINGTON  7.3%
 9,850    Bellevue, WA Convention Cent Comp Int Rfdg (MBIA
          Insd)...........................................   *      02/01/25       3,763,390
 3,750    Chelan Cnty, WA Pub Util Dist No. 001 Cons Rev
          Chelan Hydro Ser A (AMT) (MBIA Insd)............ 5.600    01/01/36       4,021,013
 5,000    Energy Northwest WA Elec Rev Columbia Generating
          Ser A Rfdg (FSA Insd)........................... 5.500    07/01/16       5,543,000
 2,000    Port Seattle, WA Rev Ser B (AMT) (MBIA Insd).... 5.625    02/01/24       2,155,000
 5,125    Washington St Pub Pwr Supply Sys Nuclear Proj No
          3 Rev Ser C Rfdg (MBIA Insd)....................   *      07/01/14       3,490,996
                                                                               -------------
                                                                                  18,973,399
                                                                               -------------
          WEST VIRGINIA  3.1%
 8,000    Harrison Cnty, WV Cmnty Solid Waste Disp Rev
          West Penn Pwr Co Proj Ser A (AMT) (MBIA Insd)... 6.875    04/15/22       8,025,920
                                                                               -------------

 
See Notes to Financial Statements           

                                      E-17

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)     DESCRIPTION                                      COUPON   MATURITY       VALUE
--------------------------------------------------------------------------------------------
                                                                   
          WISCONSIN  0.7%
$1,500    Southeast WI Professional Baseball Pk Dist Sales
          Tax Rev Ser A Rfdg (MBIA Insd).................. 5.500%   12/15/20   $   1,754,730
                                                                               -------------
TOTAL INVESTMENTS  157.8%
  (Cost $379,167,696).......................................................     408,240,046
OTHER ASSETS IN EXCESS OF LIABILITIES  0.2%.................................         627,813
 
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS)  (58.0%).................    (150,128,944)
                                                                               -------------
 
NET ASSETS APPLICABLE TO COMMON SHARES  100.0%..............................   $ 258,738,915
                                                                               =============

 
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) 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.
 
(c) These securities are restricted and may be resold only in transactions
    exempt from registration which are normally those transactions with
    qualified institutional buyers. Restricted securities comprise 1.2% of net
    assets applicable to common shares.
 
(d) Securities purchased on a when-issued or delayed delivery basis.
 
(e) All or a portion of these securities have been physically segregated in
    connection with open futures contracts.
 
ACA--American Capital Access
 
AMBAC--AMBAC Indemnity Corp.
 
AMT--Alternative Minimum Tax
 
Connie Lee--Connie Lee Insurance Co.
 
FGIC--Financial Guaranty Insurance Co.
 
FHA--Federal Housing Administration
 
FNMA--Federal National Mortgage Association
 
FSA--Financial Security Assurance Inc.
 
GNMA--Government National Mortgage Association
 
MBIA--Municipal Bond Investors Assurance Corp.
 
                                               See Notes to Financial Statements

                                      E-18

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
April 30, 2005 (Unaudited)
 

                                                           
ASSETS:
Total Investments (Cost $379,167,696).......................  $408,240,046
Receivables:
  Interest..................................................     6,037,813
  Variation Margin on Futures...............................       224,750
  Investments Sold..........................................       167,494
Other.......................................................         1,164
                                                              ------------
    Total Assets............................................   414,671,267
                                                              ------------
LIABILITIES:
Payables:
  Investments Purchased.....................................     4,191,317
  Custodian Bank............................................       981,560
  Investment Advisory Fee...................................       183,477
  Income Distributions--Common Shares.......................        56,311
  Other Affiliates..........................................        13,235
Trustees' Deferred Compensation and Retirement Plans........       288,845
Accrued Expenses............................................        88,663
                                                              ------------
    Total Liabilities.......................................     5,803,408
Preferred Shares (including accrued distributions)..........   150,128,944
                                                              ------------
NET ASSETS APPLICABLE TO COMMON SHARES......................  $258,738,915
                                                              ============
NET ASSET VALUE PER COMMON SHARE ($258,738,915 divided by
  15,357,684 shares outstanding)............................  $      16.85
                                                              ============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
  shares authorized, 15,357,684 shares issued and
  outstanding)..............................................  $    153,577
Paid in Surplus.............................................   226,763,756
Net Unrealized Appreciation.................................    28,224,036
Accumulated Net Realized Gain...............................     2,748,391
Accumulated Undistributed Net Investment Income.............       849,155
                                                              ------------
NET ASSETS APPLICABLE TO COMMON SHARES......................  $258,738,915
                                                              ============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
  shares, 6,000 issued with liquidation preference of
  $25,000 per share)........................................  $150,000,000
                                                              ============
NET ASSETS INCLUDING PREFERRED SHARES.......................  $408,738,915
                                                              ============

 
See Notes to Financial Statements        

                                      E-19

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
FINANCIAL STATEMENTS continued
 
Statement of Operations
For the Six Months Ended April 30, 2005 (Unaudited)
 

                                                           
INVESTMENT INCOME:
Interest....................................................  $10,168,638
                                                              -----------
EXPENSES:
Investment Advisory Fee.....................................    1,112,952
Preferred Share Maintenance.................................      197,989
Trustees' Fees and Related Expenses.........................       29,015
Legal.......................................................       22,284
Custody.....................................................       19,825
Other.......................................................      105,921
                                                              -----------
    Total Expenses..........................................    1,487,986
                                                              -----------
NET INVESTMENT INCOME.......................................  $ 8,680,652
                                                              ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
  Investments...............................................  $ 2,334,464
  Futures...................................................      675,821
                                                              -----------
Net Realized Gain...........................................    3,010,285
                                                              -----------
Unrealized Appreciation/Depreciation:
  Beginning of the Period...................................   31,576,864
                                                              -----------
  End of the Period:
    Investments.............................................   29,072,350
    Futures.................................................     (848,314)
                                                              -----------
                                                               28,224,036
                                                              -----------
Net Unrealized Depreciation During the Period...............   (3,352,828)
                                                              -----------
NET REALIZED AND UNREALIZED LOSS............................  $  (342,543)
                                                              ===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS.....................  $(1,381,508)
                                                              ===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
  OPERATIONS................................................  $ 6,956,601
                                                              ===========

 
                                               See Notes to Financial Statements

                                      E-20

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
FINANCIAL STATEMENTS continued
 
Statements of Changes in Net Assets (Unaudited)
 


                                                               FOR THE            FOR THE
                                                           SIX MONTHS ENDED      YEAR ENDED
                                                            APRIL 30, 2005    OCTOBER 31, 2004
                                                           -----------------------------------
                                                                        
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income....................................    $  8,680,652       $ 17,351,540
Net Realized Gain/Loss...................................       3,010,285         (2,096,470)
Net Unrealized Appreciation/Depreciation During the
  Period.................................................      (3,352,828)         5,600,393
Distributions to Preferred Shareholders:
  Net Investment Income..................................      (1,381,508)        (1,527,703)
  Net Realized Gain......................................             -0-           (321,388)
                                                             ------------       ------------
Change in Net Assets Applicable to Common Shares from
  Operations.............................................       6,956,601         19,006,372
 
Distributions to Common Shareholders:
  Net Investment Income..................................      (7,639,962)       (16,600,321)
  Net Realized Gain......................................             -0-         (4,376,481)
                                                             ------------       ------------
 
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
  INVESTMENT ACTIVITIES..................................        (683,361)        (1,970,430)
 
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
  Reinvestment...........................................             -0-             81,435
                                                             ------------       ------------
TOTAL DECREASE IN NET ASSETS APPLICABLE TO COMMON
  SHARES.................................................        (683,361)        (1,888,995)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period..................................     259,422,276        261,311,271
                                                             ------------       ------------
End of the Period (Including accumulated undistributed
  net investment income of $849,155 and $1,189,973,
  respectively)..........................................    $258,738,915       $259,422,276
                                                             ============       ============

 
See Notes to Financial Statements                                               

                                      E-21

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
FINANCIAL HIGHLIGHTS (UNAUDITED)
 
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
 


                                                            SIX MONTHS
                                                              ENDED
                                                            APRIL 30,     ------------------
                                                               2005        2004       2003
                                                            --------------------------------
                                                                            
NET ASSET VALUE, BEGINNING OF THE PERIOD...................  $ 16.89      $ 17.02    $ 17.48
                                                             -------      -------    -------
  Net Investment Income....................................      .57         1.13       1.19
  Net Realized and Unrealized Gain/Loss....................     (.02)         .23        .09
  Common Share Equivalent of Distributions Paid to
  Preferred Shareholders:
    Net Investment Income..................................     (.09)        (.10)      (.08)
    Net Realized Gain......................................      -0-         (.02)      (.04)
                                                             -------      -------    -------
Total from Investment Operations...........................      .46         1.24       1.16
Distributions Paid to Common Shareholders:
    Net Investment Income..................................     (.50)       (1.08)     (1.16)
    Net Realized Gain......................................      -0-         (.29)      (.46)
                                                             -------      -------    -------
NET ASSET VALUE, END OF THE PERIOD.........................  $ 16.85      $ 16.89    $ 17.02
                                                             =======      =======    =======
 
Common Share Market Price at End of the Period.............  $ 14.63      $ 15.20    $ 16.65
Total Return (b)...........................................   -0.48%*      -0.60%     14.53%
Net Assets Applicable to Common Shares at End of the Period
  (In millions)............................................  $ 258.7      $ 259.4    $ 261.3
Ratio of Expenses to Average Net Assets Applicable to
  Common Shares (c)........................................    1.16%        1.30%      1.28%
Ratio of Net Investment Income to Average Net Assets
  Applicable to Common Shares (c)..........................    6.78%        6.74%      6.90%
Portfolio Turnover.........................................      14%*         28%        36%
 
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
  Shares (c)...............................................     .74%         .82%       .81%
Ratio of Net Investment Income to Average Net Assets
  Applicable to Common Shares (d)..........................    5.70%        6.15%      6.43%
SENIOR SECURITIES:
Total Preferred Shares Outstanding.........................    6,000        6,000      6,000
Asset Coverage Per Preferred Share (e).....................  $68,145      $68,253    $68,560
Involuntary Liquidating Preference Per Preferred Share.....  $25,000      $25,000    $25,000
Average Market Value Per Preferred Share...................  $25,000      $25,000    $25,000

 
*  Non-Annualized
 
(a) As required, effective November 1, 2001, the Trust has adopted the
    provisions of the AICPA Audit and Accounting Guide for Investment Companies
    and began accreting market discount on fixed income securities. The effect
    of this change for the year ended October 31, 2002 was to increase net    
    investment income by $.01, decrease net realized and unrealized gains and
    losses per share by $.01 and increase the ratio of net investment income to
    average net assets applicable to common shares by .03%. Per share, ratios
    and supplemental data for periods prior to October 31, 2002 have not been
    restated to reflect this change in presentation.
 
(b) Total return assumes an investment at the common share market price at the
    beginning of the period indicated, reinvestment of all distributions for the
    period in accordance with the Trust's dividend reinvestment plan, and sale
    of all shares at the closing common share market price at the end of the
    period indicated.
 
(c) Ratios do not reflect the effect of dividend payments to preferred
    shareholders.
 
(d) Ratios reflect the effect of dividend payments to preferred shareholders.
 
(e) Calculated by subtracting the Trust's total liabilities (not including the
    preferred shares) from the Trust's total assets and dividing this by the
    number of preferred shares outstanding.
 

                                      E-22

 


 
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------------
     2002 (a)    2001       2000      1999       1998       1997       1996       1995
----------------------------------------------------------------------------------------
                                                        
     $ 17.59    $ 16.29   $  15.67   $ 17.61   $  16.96   $  16.12   $  15.85   $  14.39
     -------    -------   --------   -------   --------   --------   --------   --------
        1.23       1.26       1.27      1.25       1.26       1.26       1.27       1.28
         .15       1.29        .65     (1.97)       .64        .83        .27       1.58
        (.09)      (.32)      (.40)     (.32)      (.35)      (.35)      (.36)      (.39)
        (.08)      (.01)       -0-       -0-        -0-        -0-        -0-        -0-
     -------    -------   --------   -------   --------   --------   --------   --------
        1.21       2.22       1.52     (1.04)      1.55       1.74       1.18       2.47
       (1.08)      (.92)      (.90)     (.90)      (.90)      (.90)      (.91)     (1.01)
        (.24)       -0-        -0-       -0-        -0-        -0-        -0-        -0-
     -------    -------   --------   -------   --------   --------   --------   --------
     $ 17.48    $ 17.59   $  16.29   $ 15.67   $  17.61   $  16.96   $  16.12   $  15.85
     =======    =======   ========   =======   ========   ========   ========   ========
 
     $ 16.04    $ 15.65   $13.6875   $ 13.50   $  16.50   $15.0625   $  13.75   $ 13.625
      11.36%     21.42%      8.28%   -13.29%     15.91%     16.54%      7.72%     12.70%
     $ 268.3    $ 270.0   $  250.1   $ 240.5   $  270.3   $  260.3   $  247.5   $  243.3
       1.42%      1.58%      1.68%     1.62%      1.61%      1.64%      1.66%      1.75%
       7.17%      7.40%      8.04%     7.35%      7.25%      7.64%      7.96%      8.45%
         43%        34%        29%       30%        29%        49%        85%        70%
        .91%      1.00%      1.03%     1.03%      1.03%      1.03%      1.03%      1.06%
       6.61%      5.54%      5.49%     5.48%      5.24%      5.51%      5.73%      5.87%
       6,000      6,000      6,000     6,000      3,000      3,000      3,000      3,000
     $69,736    $70,006   $ 66,683   $65,086   $140,098   $136,771   $132,502   $131,094
     $25,000    $25,000   $ 25,000   $25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000
     $25,000    $25,000   $ 25,000   $25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000

 
See Notes to Financial Statements                                               

                                      E-23

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
 
1. SIGNIFICANT ACCOUNTING POLICIES
 
Van Kampen Municipal Opportunity Trust (the "Trust") is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The Trust's investment objective is to provide
a high level of current income exempt from federal income tax, consistent with
preservation of capital. The Trust commenced investment operations on April 24,
1992.
 
    The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
 
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
 
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
segregate assets with 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. At April 30, 2005, the Trust had $4,191,317 of when-issued or
delayed delivery purchase commitments.
 
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security.
 
D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements
of 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.
 
    The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At October 31, 2004, the Trust had an
 

                                      E-24

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 
accumulated capital loss carryforward for tax purposes of $694,750, which will
expire according to the following schedule.
 


AMOUNT                                                           EXPIRATION
                                                           
$694,750....................................................  October 31, 2012

 
    At April 30, 2005, the cost and related gross unrealized appreciation and
depreciation are as follows:
 

                                                           
Cost of investments for tax purposes........................  $379,002,875
                                                              ============
Gross tax unrealized appreciation...........................    29,717,367
Gross tax unrealized depreciation...........................      (480,196)
                                                              ------------
Net tax unrealized appreciation on investments..............  $ 29,237,171
                                                              ============

 
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
 
    The tax character of distributions paid during the year ended October 31,
2004 was as follows:
 

                                                           
Distributions paid from:
Ordinary income.............................................  $1,281,469
Long-term capital gain......................................   3,842,711
                                                              ----------
                                                              $5,124,180
                                                              ==========

 
    Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses relating to wash sale
transactions.
 
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
 
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") will provide investment advice and facilities to the
Trust for an annual fee payable monthly of .55% of the average daily net assets
of the Trust. Effective November 1, 2004, the investment advisory fee was
reduced from .60% to .55%.
 
    For the six months ended April 30, 2005, the Trust recognized expenses of
approximately $9,800 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Trust, of which a trustee of the Trust
is a partner of such firm and he and his law firm provide legal services as
legal counsel to the Trust.
 
    Under separate Accounting Services and Legal Services agreements, the
Adviser provides accounting and legal services to the Trust. The Adviser
allocates the cost of such services to each trust. For the six months ended
April 30, 2005, the Trust recognized expenses of approximately $23,800
representing Van Kampen Investments Inc's or its affiliates' (collectively "Van
Kampen") cost of providing accounting and legal services to the Trust, which are
 

                                      E-25

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 
reported as part of "Other" and "Legal" expenses, respectively, in the Statement
of Operations.
 
    Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
also officers of Van Kampen.
 
    The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Trust.
The maximum annual benefit per trustee under the plan is $2,500.
 
3. CAPITAL TRANSACTIONS
 
At April 30, 2005 and October 31, 2004, paid in surplus related to common shares
aggregated $226,763,756.
 
    Transactions in common shares were as follows:
 


                                                          SIX MONTHS ENDED       YEAR ENDED
                                                           APRIL 30, 2005     OCTOBER 31, 2004
                                                                        
Beginning Shares........................................     15,357,684          15,352,891
Shares Issued Through Dividend Reinvestment.............            -0-               4,793
                                                             ----------          ----------
Ending Shares...........................................     15,357,684          15,357,684
                                                             ==========          ==========

 
4. INVESTMENT TRANSACTIONS
 
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $59,077,310 and $55,612,550,
respectively.
 
5. DERIVATIVE FINANCIAL INSTRUMENTS
 
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
 
    The Trust may invest up to 15% of its net assets in "inverse floating rate
obligations." The inverse floating rate obligations in which the Trust may
invest are typically created through a division of a fixed-rate municipal
obligation into two separate instruments, a short-term obligation and a
long-term obligation. The interest rate on the short-term obligation is set at
periodic auctions. The interest rate on the long-term obligation which the Trust
may purchase is the rate the issuer would have paid on the fixed-income
obligation, (i) plus the difference between such fixed rate and the rate on the
short-term obligation, if the short-term rate is lower than the fixed rate; or
(ii) minus such difference if the interest rate on the short-term obligation is
higher than the fixed rate. 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 than 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. Although volatile, inverse floating rate obligations
typically offer the potential for yields exceeding the yields available on fixed
rate bonds with comparable credit quality, coupon, call provisions and maturity.
These securities
 

                                      E-26

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 
usually permit the investor to convert the floating rate security counterpart to
a fixed rate (normally adjusted downward), and this optional conversion feature
may provide a partial hedge against rising rates if exercised at an opportune
time.
 
    In order to seek to manage the interest rate exposure of the Trust's
portfolio in a changing interest rate environment, the Trust may purchase or
sell financial futures contracts or engage in transactions involving interest
rate swaps, caps, floors or collars. The Trust expects to enter into these
transactions primarily as a hedge against anticipated interest rate or
fixed-income market changes, for duration management or for risk management
purposes, but may also enter into these transactions to generate additional
income. All of the Trust's portfolio holdings, including derivative instruments,
are marked to market each day with the change in value reflected in unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly, except when taking delivery of a security underlying a
futures contract. In this instance, the recognition of gain or loss is postponed
until the disposal of the security underlying the futures contract. Risks may
arise as a result of the potential inability of the counterparties to meet the
terms of their contracts or agreements.
 
    During the period, the Trust invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Trust
generally invests in futures on U.S. Treasury Notes and typically closes the
contract prior to the delivery date. These contracts are generally used to
manage the portfolio's effective maturity and duration. Upon entering into
futures contracts, the Trust maintains, in a segregated account with its
custodian, an amount of cash or liquid securities with a value equal to a
percentage of the contract amount with either a futures commission merchant
pursuant to rules and regulations promulgated under the 1940 Act, or with its
custodian in an account in the broker's name. This amount is known as initial
margin. During the period the futures contract is open, payments are received
from or made to the broker based upon changes in the value of the contract (the
variation margin). The risk of loss associated with a futures contract is in
excess of the variation margin reflected on the Statement of Assets and
Liabilities.
 
    Transactions in futures contracts for the six months ended April 30, 2005,
were as follows:
 


                                                              CONTRACTS
                                                           
Outstanding at October 31, 2004.............................      601
Futures Opened..............................................    1,617
Futures Closed..............................................   (1,319)
                                                               ------
Outstanding at April 30, 2005...............................      899
                                                               ======

 

                                      E-27

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 
    The futures contracts outstanding as of April 30, 2005, and the description
and unrealized appreciation/depreciation were as follows:
 


                                                                            UNREALIZED
                                                                           APPRECIATION/
                                                              CONTRACTS    DEPRECIATION
                                                                     
SHORT CONTRACTS:
U.S. Treasury Notes 5-Year Futures June 2005
  (Current Notional Value of $108,453 per contract).........     899         $(848,314)
                                                                 ===         =========

 
6. PREFERRED SHARES
 
The Trust has outstanding 6,000 Auction Preferred Shares ("APS") in two series
of 3,000 shares each. Dividends are cumulative and the dividend rate on each
series is currently reset every 28 days through an auction process. The average
rate in effect on April 30, 2005 was 2.520%. During the six months ended April
30, 2005, the rates ranged from 1.550% to 2.750%.
 
    The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of "Preferred Share
Maintenance" expense in the Statement of Operations.
 
    The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $25,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the APS are subject to
mandatory redemption if the tests are not met.
 
7. INDEMNIFICATIONS
 
The Trust enters into contracts that contain a variety of indemnifications. The
Trust's maximum exposure under these arrangements is unknown. However, the Trust
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
 

                                      E-28

 
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
 
BOARD OF TRUSTEES, OFFICERS, AND IMPORTANT ADDRESSES
 
BOARD OF TRUSTEES
 
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
 
OFFICERS
 
MITCHELL M. MERIN
President and Chief Executive Officer
 
RONALD E. ROBISON
Executive Vice President and
Principal Executive Officer
 
JOSEPH J. MCALINDEN
Executive Vice President and
Chief Investment Officer
 
AMY R. DOBERMAN
Vice President
 
STEFANIE V. CHANG
Vice President and Secretary
 
JOHN L. SULLIVAN
Chief Compliance Officer
 
JAMES W. GARRETT
Chief Financial Officer and Treasurer
 
INVESTMENT ADVISER
 
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
 
CUSTODIAN
 
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02110
 
TRANSFER AGENT
 
EQUISERVE TRUST COMPANY, N.A.
P.O. Box 43011
Providence, Rhode Island 02940-3011
 
LEGAL COUNSEL
 
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
 
INDEPENDENT REGISTERED
 
PUBLIC ACCOUNTING FIRM
 
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
 
*   "Interested persons" of the Trust, as defined in the Investment Company Act
    of 1940, as amended.

                                      E-29

 
VAN KAMPEN
 
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY
 
    We are required by federal law to provide you with a copy of our Privacy
Policy annually.
 
    The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc.,
Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange
Corp., as well as current and former individual investors in Van Kampen mutual
funds, unit investment trusts, and related companies.
 
    This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised by
us. This Policy is, however, applicable to individuals who select us to be a
custodian of securities or assets in individual retirement accounts, 401(k)
accounts, 529 Educational Savings Accounts, accounts subject to the Uniform
Gifts to Minors Act, or similar accounts.
 
    Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
 
WE RESPECT YOUR PRIVACY
 
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we help
you achieve your financial objectives. This Policy describes what non-public
personal information we collect about you, why we collect it, and when we may
share it with others.
 
    We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies you or
your accounts as "personal information."
 
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
 
To serve you better and manage our business, it is important that we collect and
maintain accurate information about you. We may obtain this information from
applications and other forms you submit to us, from your dealings with us, from
consumer reporting agencies, from our Web sites and from third parties and other
sources.
 
    For example:
 
     --  We may collect information such as your name, address, e-mail address,
         telephone/fax numbers, assets, income and investment objectives through
         applications and other forms you submit to us.
 
     --  We may obtain information about account balances, your use of
         account(s) and the types of products and services you prefer to receive
         from us through your dealings and transactions with us and other
         sources.
 
     --  We may obtain information about your creditworthiness and credit
         history from consumer reporting agencies.
 
     --  We may collect background information from and through third-party
         vendors to verify representations you have made and to comply with
         various regulatory requirements.
 
     --  If you interact with us through our public and private Web sites, we
         may collect information that you provide directly through online
         communications (such as an e-mail address). We may also collect
         information about your Internet service provider, your domain name,
         your computer's operating system and Web browser,
 
                                                             (continued on back)


                                      E-30


VAN KAMPEN
 
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
 
         your use of our Web sites and your product and service preferences,
         through the use of "cookies." "Cookies" recognize your computer each
         time you return to one of our sites, and help to improve our sites'
         content and personalize your experience on our sites by, for example,
         suggesting offerings that may interest you. Please consult the Terms of
         Use of these sites for more details on our use of cookies.
 
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
 
To provide you with the products and services you request, to serve you better
and to manage our business, we may disclose personal information we collect
about you to our affiliated companies and to non-affiliated third parties as
required or permitted by law.
 
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise required
or permitted by law.
 
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except to
enable them to provide services on our behalf, to perform joint marketing
agreements with other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
 
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
 
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
 
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
 
Copyright (C)2005 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
VMO SAR 6/05 RN05-01292P-Y04/05
                                                   (VAN KAMPEN INVESTMENTS LOGO)


                                      E-31

                                   APPENDIX F

                      SEMIANNUAL REPORT OF THE TARGET FUND




















   
                                      F-1

 
Item 1. Report to Shareholders
 
       Welcome, Shareholder
 
       In this report, you'll learn about how your investment in Van Kampen
       Advantage Municipal Income Trust performed during the semiannual period.
       The portfolio management team will provide an overview of the market
       conditions and discuss some of the factors that affected investment
       performance during the reporting period. In addition, this report
       includes the trust's financial statements and a list of trust investments
       as of April 30, 2005.
 
       MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
       PASS. THERE IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
       OBJECTIVE. TRUSTS ARE SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
       THAT THE MARKET VALUES OF SECURITIES OWNED BY THE TRUST WILL DECLINE AND
       THAT THE VALUE OF TRUST SHARES MAY THEREFORE BE LESS THAN WHAT YOU PAID
       FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS TRUST.
 
       INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
       TAX (AMT).
 


                                                                    
         ---------------------------------------------------------------------------------------
            NOT FDIC INSURED             OFFER NO BANK GUARANTEE              MAY LOSE VALUE
         ---------------------------------------------------------------------------------------
                   NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY               NOT A DEPOSIT
         ---------------------------------------------------------------------------------------



                                      F-2

 
Performance Summary as of 4/30/05
 


ADVANTAGE MUNICIPAL INCOME TRUST
SYMBOL: VKA
------------------------------------------------------------
AVERAGE ANNUAL                      BASED ON      BASED ON
TOTAL RETURNS                         NAV       MARKET PRICE
                                          
 
Since Inception (9/25/92)             7.69%         6.45%
 
10-year                               7.88          6.95
 
5-year                                9.56         10.22
 
1-year                               10.54          7.22
 
6-month                               3.09         -1.03
------------------------------------------------------------

 
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, NET
ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
 
NAV per share is determined by dividing the value of the trust's portfolio
securities, cash and other assets, less all liabilities, by the total number of
common shares outstanding. The common share market price is the price the market
is willing to pay for shares of the trust at a given time. Common share market
price is influenced by a range of factors, including supply and demand and
market conditions. Total return assumes an investment at the beginning of the
period, reinvestment of all distributions for the period in accordance with the
trust's dividend reinvestment plan, and sale of all shares at the end of the
period.
 
The Lehman Brothers Municipal Bond Index is a broad-based statistical composite
of municipal bonds. The index does not include any expenses, fees or sales
charges, which would lower performance. The index is unmanaged and should not be
considered an investment. It is not possible to invest directly in an index.
 

                                      F-3

 
Trust Report
 
FOR THE 6-MONTH PERIOD ENDED APRIL 30, 2005
 
Van Kampen Advantage Municipal Income Trust is managed by the Adviser's
Municipal Fixed Income team.(1) Current members include Dennis Pietrzak and John
Reynoldson, Executive Directors of the Adviser; and Robert Wimmel, Vice
President of the Adviser.
 
MARKET CONDITIONS
 
The six-month period ended April 30, 2005, was characterized by continued
short-term interest rate increases. As crude oil prices reached record highs,
the prospect of rising inflation also cast a shadow. The Federal Open Market
Committee (the "Fed") raised the federal funds target rate 100 basis points
during the period through a series of four "measured" 0.25 percent tightenings
to 2.75 percent by the end of April. Although rates in the short and
intermediate areas of the yield curve shifted upward as the Fed tightened, long-
term interest rates fell as buyers did not seem deterred by the prospect of
rising inflation. As a result, the yield curve (the difference between short and
longer-term yields) flattened and the long end of the municipal market handily
outperformed the shorter end.
 
The municipal market in total posted positive returns during the period, though
it was not uniformly strong. In contrast to the strong showing by longer-term
bonds, shorter-term municipals were hampered by the Fed's tightening and turned
in a flat to slightly negative showing. Within the investment-grade segment of
the market, yield differentials between BBB-rated and AAA-rated municipal
securities were slightly wider, though BBB-rated securities still outperformed
high grades due to their higher coupons, while securities rated below investment
grade strongly outperformed as investors sought out their higher yields.
 
The Fed's interest rate hikes did not appear to dampen investors' appetites for
municipal bonds, as net inflows into municipal bond funds topped $290 million
during the period. The supply of new issues was modest during the closing months
of 2004 (the first two months of the period) before soaring in the opening
months of 2005 as long-term issuers rushed to bring securities to market in
anticipation of additional interest rate increases in the near term.
 
(1)Team members may change without notice at any time.

                                      F-4

 
PERFORMANCE ANALYSIS
 
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ, as they did during the reporting period. On an NAV basis,
the trust outperformed its benchmark index, the Lehman Brothers Municipal Bond
Index. On a market price basis, the trust underperformed its benchmark. (See
table below.)
 
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2005
 


----------------------------------------------------------
      BASED ON     BASED ON       LEHMAN BROTHERS
        NAV      MARKET PRICE   MUNICIPAL BOND INDEX
                                         
 
       3.09%        -1.03%             1.93%
----------------------------------------------------------

 
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. INVESTMENT RETURN, NET ASSET VALUE AND COMMON SHARE MARKET PRICE WILL
FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. SEE PERFORMANCE SUMMARY FOR ADDITIONAL PERFORMANCE INFORMATION
AND INDEX DEFINITION.
 
The trust uses leverage to enhance its dividend to common shareholders. The
trust borrows money at short-term rates through the issuance of preferred
shares. The proceeds are reinvested in longer-term securities, taking advantage
of the difference between short- and longer-term rates. The Fed's policy of
raising interest rates throughout the period made the trust's borrowing activity
more expensive. These expenses, however, were more than offset by the positive
performance of the bonds held by the trust.
 
One of our key strategies in managing the trust during the period was to
position it for rising interest rates. This approach was largely the result of
our analysis of interest rates, which remained relatively low by historical
standards even after rising from their multi-decade lows earlier. First, we kept
the trust's duration (a measure of interest-rate sensitivity) below that of its
benchmark. Second, to limit the trust's exposure to areas of the market that
would be most likely susceptible to rising rates, we trimmed the trust's
shorter-maturity bonds. We reinvested the proceeds from those sales into bonds
with premium coupons and maturities between 25 and 30 years. In addition to
offering relatively attractive income streams, these securities positioned the
trust to benefit from any future flattening of the yield curve.
 
Throughout the reporting period, we remained focused on keeping the portfolio's
credit quality high. At the close of the period, 86 percent of the bonds in the
portfolio were rated AA or higher. However, as high-yield spreads have continued
to tighten, lower quality bonds tended to perform better. Additionally, due to
our concerns about the long-term merits of tobacco bonds,
 

                                      F-5

 
we did not include them in the portfolio. This decision prevented the trust from
participating in the short-term rebound experienced by tobacco and other
lower-rated bonds during the period.
 
Much of our relative-value trading activity was focused on selling issues that
had been pre-refunded. We kept the trust well diversified across the major
sectors of the municipal bond market. The top three sector exposures at the end
of the period were general purpose, health care and public building.
 
There is no guarantee the security sectors mentioned will continue to perform
well or be held by the trust in the future.
 

                                      F-6

 


RATINGS ALLOCATION AS OF 4/30/05
                                                             
AAA/Aaa                                                          73.0%
AA/Aa                                                            12.8
A/A                                                               8.0
BBB/Baa                                                           5.7
BB/Ba                                                             0.2
B/B                                                               0.3


TOP 5 SECTORS AS OF 4/30/05
                                                             
General Purpose                                                  11.9%
Health Care                                                      11.7
Public Building                                                  10.3
Public Education                                                 10.3
Higher Education                                                 10.2


SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 4/30/05
                                                             
New York                                                         11.1%
Illinois                                                         10.5
California                                                        9.9
New Jersey                                                        7.8
Texas                                                             7.3
Washington                                                        5.4
Pennsylvania                                                      4.1
Georgia                                                           4.0
North Carolina                                                    3.3
Oklahoma                                                          2.5
Puerto Rico                                                       2.5
Oregon                                                            2.5
Ohio                                                              2.3
Arizona                                                           2.2
Nevada                                                            2.2
South Carolina                                                    2.1
Indiana                                                           2.1
Louisiana                                                         1.9
Alabama                                                           1.7
Massachusetts                                                     1.6
Colorado                                                          1.5
Connecticut                                                       1.4
District of Columbia                                              1.3
Florida                                                           0.9
Maryland                                                          0.9
Minnesota                                                         0.8
Mississippi                                                       0.7
New Mexico                                                        0.7
Wisconsin                                                         0.6
Tennessee                                                         0.6
Missouri                                                          0.6
Nebraska                                                          0.5
South Dakota                                                      0.5
Utah                                                              0.5
New Hampshire                                                     0.4
Michigan                                                          0.3
Wyoming                                                           0.2
North Dakota                                                      0.2
Alaska                                                            0.2
West Virginia                                                     0.2
                                                                -----
Total Investments                                               100.0%

 
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Ratings and summary of investments by
state classification are as a percentage of total investment. Sectors are as a
percentage of long-term investment. Securities are classified by sectors that
represent broad groupings of related industries. Van Kampen is a wholly owned
subsidiary of a global securities firm which is engaged in a wide range of
financial services including, for example, securities trading and brokerage
activities, investment banking, research and analysis, financing and financial
advisory services. Rating allocations based upon ratings as issued by Standard
and Poor's and Moody's, respectively.
 

                                      F-7

 
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
 
       Each Van Kampen trust provides a complete schedule of portfolio holdings
       in its semiannual and annual reports within 60 days of the end of the
       trust's second and fourth fiscal quarters by filing the schedule
       electronically with the Securities and Exchange Commission (SEC). The
       semiannual reports are filed on Form N-CSRS and the annual reports are
       filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
       reports to trust shareholders, and makes these reports available on its
       public Web site, www.vankampen.com. In addition to the semiannual and
       annual reports that Van Kampen delivers to shareholders and makes
       available through the Van Kampen public Web site, each trust files a
       complete schedule of portfolio holdings with the SEC for the trust's
       first and third fiscal quarters on Form N-Q. Van Kampen does not deliver
       the reports for the first and third fiscal quarters to shareholders, nor
       are the reports posted to the Van Kampen public Web site. You may,
       however, obtain the Form N-Q filings (as well as the Form N-CSR and
       N-CSRS filings) by accessing the SEC's Web site, http://www.sec.gov. You
       may also review and copy them at the SEC's Public Reference Room in
       Washington, DC. Information on the operation of the SEC's Public
       Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. You
       can also request copies of these materials, upon payment of a duplicating
       fee, by electronic request at the SEC's e-mail address
       (publicinfo@sec.gov) or by writing the Public Reference section of the
       SEC, Washington, DC 20549-0102.
 
       You may obtain copies of a trust's fiscal quarter filings by contacting
       Van Kampen Client Relations at 1-800-847-2424.
 
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
 
       The trust's policies and procedures with respect to the voting of proxies
       relating to the trust's portfolio securities and information on how the
       trust voted proxies relating to portfolio securities during the most
       recent twelve-month period ended June 30 is available without charge,
       upon request, by visiting our Web site at www.vankampen.com. This
       information is also available on the Securities and Exchange Commission's
       Web site at http://www.sec.gov.
 

                                      F-8

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
 


PAR
AMOUNT
(000)     DESCRIPTION                                     COUPON      MATURITY      VALUE
---------------------------------------------------------------------------------------------
                                                                     
           MUNICIPAL BONDS  158.4%
           ALABAMA  2.6%
$ 1,000    Alabama Bldg Renovation Fin Auth Rev Rfdg
           (AMBAC Insd)................................    5.625%      09/01/24  $   1,104,570
  1,550    Birmingham, AL Arpt Auth Arpt Rev Rfdg (AMT)
           (AMBAC Insd) (a)............................    5.500       07/01/14      1,651,881
  2,250    Jefferson Cnty, AL Ltd Oblig Sch Wt
           Ser A.......................................    5.250       01/01/23      2,404,912
  1,000    Jefferson Cnty, AL Ltd Oblig Sch Wt
           Ser A.......................................    5.000       01/01/24      1,043,540
  2,000    Montgomery, AL Wt (AMBAC Insd)..............    5.250       05/01/20      2,183,880
                                                                                 -------------
                                                                                     8,388,783
                                                                                 -------------
           ALASKA  0.3%
  1,000    Alaska St Hsg Fin Corp Gen Hsg Ser A (FGIC
           Insd).......................................    5.250       12/01/41      1,057,050
                                                                                 -------------

           ARIZONA  3.5%
  1,425    Arizona Cap Fac Fin Corp Student Hsg Rev AZ
           St Univ Proj................................    6.250       09/01/32      1,522,114
  2,500    Arizona Sch Fac Brd Rev St Sch Impt.........    5.500       07/01/17      2,786,275
  2,900    Arizona Tourism & Sports Auth Multi Purp
           Stad Fac Ser A (MBIA Insd)..................    5.375       07/01/22      3,213,838
  2,875    Phoenix, AZ Civic Impt Corp Arpt Rev Jr Lien
           (AMT) (FGIC Insd)...........................    5.375       07/01/29      2,927,756
    720    Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
           Oblig Irvington Proj Tucson Ser A Rfdg (FSA
           Insd).......................................    7.250       07/15/10        753,696
                                                                                 -------------
                                                                                    11,203,679
                                                                                 -------------
           CALIFORNIA  15.6%
  2,630    Anaheim, CA Pub Fin Auth Lease Rev Cap
           Apprec Sub Pub Impt Proj C (FSA Insd).......      *         09/01/20      1,297,826
  2,400    Bay Area Govt Assn CA Rev Tax Alloc CA Redev
           Pool Ser A (XLCA Insd)......................    5.250       09/01/29      2,561,328
  2,500    California Ed Fac Auth Rev Pomona College
           Ser A.......................................    5.000       07/01/45      2,616,575
  4,500    California St (AMBAC Insd)..................    5.125       10/01/27      4,712,130
  5,770    California St...............................    5.000       02/01/33      5,961,737
  5,500    California St Dept Wtr Res Pwr Ser A (AMBAC
           Insd).......................................    5.500       05/01/16      6,193,935
  2,000    California St Dept Wtr Res Pwr Ser A........    5.750       05/01/17      2,244,740
  5,000    California Statewide Cmntys Dev Auth Rev
           Daughters of Charity Hlth Ser A.............    5.250       07/01/30      5,211,800
  5,000    Foothill/Eastern Corridor Agy CA Toll Rd Rev
           Cap Apprec Rfdg.............................      *         01/15/25      1,591,350
  3,185    Imperial Irr Dist CA Rev Elec Sys Proj (FSA
           Insd) (a)...................................    5.250       11/01/18      3,490,091
  1,600    Long Beach, CA Bd Fin Auth Rev Redev Hsg &
           Gas Util Fin Ser A1 (AMBAC Insd)............    5.000       08/01/40      1,665,568
  3,000    Los Angeles, CA Uni Sch Dist Ser A
           (FSA Insd)..................................    5.250       07/01/19      3,320,730


See Notes to Financial Statements                                              

                                      F-9

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                     COUPON      MATURITY      VALUE
---------------------------------------------------------------------------------------------
                                                                     
           CALIFORNIA (CONTINUED)
$ 7,500    San Jose, CA Fin Auth Lease Rev Civic Ctr
           Proj Ser B (AMBAC Insd).....................    5.000%      06/01/32  $   7,780,950
  1,600    Turlock, CA Hlth Fac Rev Ctf Partn Emanuel
           Med Ctr Inc.................................    5.375       10/15/34      1,640,624
                                                                                 -------------
                                                                                    50,289,384
                                                                                 -------------
           COLORADO  2.3%
  3,000    Colorado Hlth Fac Auth Rev Catholic Hlth
           Initiatives Ser A (Escrowed to Maturity)....    5.500       03/01/32      3,349,980
  2,000    La Plata Cnty, CO Sch Dist 9
           (MBIA Insd) (a).............................    5.250       11/01/19      2,198,100
  1,740    Weld & Adams Cntys, CO Sch Dist No. 003
           (FSA Insd) (a)..............................    5.000       12/15/23      1,867,037
                                                                                 -------------
                                                                                     7,415,117
                                                                                 -------------
           CONNECTICUT  2.1%
  2,040    Bridgeport, CT Ser A (MBIA Insd) (a)........    5.250       08/15/21      2,223,947
  3,250    Connecticut St Spl Oblig Pkg Rev Bradley
           Intl Arpt Ser A (AMT) (ACA Insd)............    6.600       07/01/24      3,528,492
  1,000    Hartford, CT Pkg Sys Rev Ser A
           (Prerefunded @ 07/01/10)....................    6.400       07/01/20      1,148,540
                                                                                 -------------
                                                                                     6,900,979
                                                                                 -------------
           DISTRICT OF COLUMBIA  2.1%
  2,500    District Columbia Rev Gonzaga College (FSA
           Insd).......................................    5.250       07/01/32      2,650,800
  3,850    Metropolitan Washington DC Arpt Auth Sys Ser
           A (AMT) (FGIC Insd).........................    5.250       10/01/32      4,017,513
                                                                                 -------------
                                                                                     6,668,313
                                                                                 -------------
           FLORIDA  1.5%
  2,000    Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
           Insd).......................................    5.950       07/01/20      2,031,020
  2,500    Miami-Dade Cnty, FL Aviation Rev Miami Intl
           Arpt (AMT) (FGIC Insd)......................    5.375       10/01/32      2,634,550
                                                                                 -------------
                                                                                     4,665,570
                                                                                 -------------
           GEORGIA  6.3%
  1,000    Atlanta, GA Arpt Rev Ser B (AMT) (FGIC
           Insd).......................................    5.625       01/01/30      1,059,450
  5,160    Atlanta, GA Wtr & Wastewtr Rev (FSA Insd)...    5.000       11/01/20      5,542,304
  2,000    Clayton Cnty & Clayton Cnty GA Wtr Auth Wtr
           & Swr Rev...................................    5.000       05/01/21      2,159,300
  3,770    Monroe Cnty, GA Dev Auth Pollutn Ctl Rev
           Oglethorpe Pwr Corp Scherer Ser A...........    6.800       01/01/12      4,456,366
  2,895    Municipal Elec Auth GA Combustion Turbine
           Proj Ser A (MBIA Insd)......................    5.250       11/01/19      3,041,429
  2,500    Municipal Elec Auth GA Combustion Turbine
           Proj Ser A (MBIA Insd)......................    5.250       11/01/21      2,722,875
    105    Municipal Elec Auth GA Combustion Turbine
           Proj Ser A (Prerefunded @ 11/01/07) (MBIA
           Insd).......................................    5.250       11/01/19        110,927
  1,000    Oconee Cnty, GA Indl Dev Auth Rev Oiit Proj
           (XLCA Insd).................................    5.250       07/01/25      1,065,530
                                                                                 -------------
                                                                                    20,158,181
                                                                                 -------------

 
                                               See Notes to Financial Statements

                                      F-10

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                     COUPON      MATURITY      VALUE
---------------------------------------------------------------------------------------------
                                                                     
           ILLINOIS  16.7%
$ 3,750    Bolingbrook, IL Cap Apprec Ser B (MBIA
           Insd).......................................      *         01/01/30  $     984,262
  2,000    Chicago, IL Brd of Ed
           (Prerefunded @ 12/01/10) (FGIC Insd)........    5.500%      12/01/31      2,235,280
  3,150    Chicago, IL O'Hare Intl Arpt Rev Gen Arpt
           Third Lien Ser A Rfdg (AMT) (MBIA Insd).....    5.375       01/01/32      3,298,649
  1,895    Chicago, IL Pk Dist Hbr Fac Rev
           (Prerefunded @ 01/01/11)....................    5.875       01/01/16      2,155,430
  2,500    Chicago, IL Pk Dist Ser C (FGIC Insd).......    5.500       01/01/19      2,759,925
  4,500    Cook Cnty, IL Cap Impt Ser A (FGIC Insd)....    5.000       11/15/23      4,778,910
  1,620    Cook Cnty, IL Cmnty High Sch Dist No. 219
           Niles Twp (FSA Insd)........................      *         12/01/11      1,262,272
  2,260    Cook Cnty, IL Cmnty High Sch Dist No. 219
           Niles Twp (FSA Insd)........................      *         12/01/12      1,672,942
  2,235    Cook Cnty, IL Cmnty High Sch Dist No. 219
           Niles Twp (FSA Insd)........................      *         12/01/13      1,571,920
  3,110    Du Page Cnty, IL Trans Rev (Prerefunded @
           07/01/11) (FSA Insd)........................    5.750       01/01/17      3,536,848
  3,000    Illinois Fin Auth Rev Northwestern Mem Hosp
           Ser A.......................................    5.500       08/15/43      3,216,900
  1,925    Kendall, Kane & Will Cntys, IL Cmnty Unit
           Sch Dist No. 308 Ser B (FGIC Insd)..........    5.250       10/01/21      2,094,901
  2,135    Mc Henry Cnty, IL Cmnty High Sch Dist No.
           154 Cap Apprec (FGIC Insd) (a)..............      *         01/01/14      1,488,842
  1,440    Mc Henry Cnty, IL Cmnty High Sch Dist No.
           154 Cap Apprec (FGIC Insd)..................      *         01/01/17        852,696
  1,250    Metropolitan Pier & Expo Auth IL Dedicated
           St Tax Rev McCormick Pl Expn Proj (FGIC
           Insd).......................................    5.375       12/15/18      1,360,875
  1,000    Metropolitan Pier & Expo Auth IL Dedicated
           St Tax Rev McCormick Pl Expn Proj Rfdg (FGIC
           Insd).......................................    5.500       12/15/24      1,093,690
  6,000    Metropolitan Pier & Expo Auth IL Dedicated
           St Tax Rev McCormick Pl Expn Ser A (MBIA
           Insd).......................................    5.250       06/15/42      6,444,660
  5,000    Regional Tran Auth IL Ser B
           (AMBAC Insd)................................    8.000       06/01/17      6,893,250
  5,000    University IL Univ Rev Auxiliary Fas Ser A
           Rfdg (AMBAC Insd)...........................    5.000       04/01/30      5,152,100
  1,150    Will Cnty, IL Cmnty Sch Dist 365U Vly View
           Ser B (FSA Insd)............................      *         11/01/15        732,493
                                                                                 -------------
                                                                                    53,586,845
                                                                                 -------------
           INDIANA  3.4%
  1,000    Allen Cnty, IN Juvenile Justice Ctr First
           Mtg (AMBAC Insd)............................    5.500       01/01/18      1,108,640
  4,120    Indiana Hlth Fac Fin Auth Hosp Rev Cmnty
           Hosp Proj Ser A (AMBAC Insd) (b)............    5.000       05/01/35      4,271,039
  2,000    Indiana Hlth Fac Fin Auth Hosp Rev Columbus
           Regl Hosp Rfdg (FSA Insd)...................    7.000       08/15/15      2,441,280
  1,500    Indiana St Dev Fin Auth Rev Exempt Fac Conv
           Rfdg (AMT)..................................    5.950       08/01/30      1,544,160


See Notes to Financial Statements                                              


                                      F-11

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                     COUPON      MATURITY      VALUE
---------------------------------------------------------------------------------------------
                                                                     
           INDIANA (CONTINUED)
$ 1,220    North Adams, IN Cmnty Sch Cap Apprec First
           Mtg (FSA Insd) (a)..........................      *         07/15/16  $     744,029
  1,230    North Adams, IN Cmnty Sch Cap Apprec First
           Mtg (FSA Insd) (a)..........................      *         01/15/17        725,749
                                                                                 -------------
                                                                                    10,834,897
                                                                                 -------------
           LOUISIANA  3.0%
  2,500    Lafayette, LA Utils Rev (MBIA Insd).........    5.250%      11/01/23      2,730,200
    300    Louisiana Hsg Fin Agy Mtg Rev Single Family
           Access Pgm Ser B (AMT)
           (GNMA Collateralized).......................    8.000       03/01/25        304,833
  3,000    Louisiana St Energy & Pwr Auth Pwr Proj Rev
           Rfdg (FSA Insd).............................    5.750       01/01/12      3,416,580
  3,000    Saint Charles Parish, LA Environmental Impt
           Rev LA Pwr & Lt Co
           Ser A (AMT) (AMBAC Insd)....................    6.875       07/01/24      3,029,610
                                                                                 -------------
                                                                                     9,481,223
                                                                                 -------------
           MARYLAND  1.4%
  1,000    Maryland St Econ Dev Corp Univ MD College Pk
           Proj........................................    5.625       06/01/35      1,037,010
  1,000    Maryland St Hlth & Higher Ed Fac Auth Rev
           Medstar Hlth Rfdg...........................    5.375       08/15/24      1,034,290
  2,360    Northeast, MD Waste Disp Auth Rfdg (AMT)
           (AMBAC Insd)................................    5.500       04/01/16      2,575,657
                                                                                 -------------
                                                                                     4,646,957
                                                                                 -------------
           MASSACHUSETTS  2.5%
  3,955    Massachusetts Bay Trans Auth Gen Trans Sys
           Ser A Rfdg..................................    5.500       03/01/12      4,383,247
  2,400    Massachusetts St Dev Fin Agy Rev Clg
           Pharmacy & Allied Hlth Ser D................    5.000       07/01/35      2,494,944
  1,000    Massachusetts St Hlth & Ed Fac Auth Rev
           Saint Mem Med Ctr Ser A.....................    6.000       10/01/23      1,004,060
                                                                                 -------------
                                                                                     7,882,251
                                                                                 -------------
           MICHIGAN  0.5%
  1,500    Kent Hosp Fin Auth MI Rev
           Met Hosp Proj Ser A.........................    6.250       07/01/40      1,641,810
                                                                                 -------------

           MINNESOTA  1.3%
  3,875    Saint Paul, MN Port Auth Lease Rev Office
           Bldg at Cedar Str (a).......................    5.250       12/01/19      4,289,315
                                                                                 -------------

           MISSISSIPPI  1.2%
  2,000    Mississippi Bus Fin Corp MS Pollutn Ctl Rev
           Sys Energy Res Inc Proj.....................    5.875       04/01/22      2,025,100
  1,000    Mississippi Bus Fin Corp MS Pollutn Ctl Rev
           Sys Energy Res Inc Proj Rfdg................    5.900       05/01/22      1,013,840
   680     Mississippi Home Corp Single Family Rev Mtg
           Access Pgm Ser B (AMT)
           (GNMA Collateralized).......................    7.900       03/01/25        689,180
                                                                                 -------------
                                                                                     3,728,120
                                                                                 -------------

 
                                               See Notes to Financial Statements

                                      F-12

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                     COUPON      MATURITY      VALUE
----------------------------------------------------------------------------------------------
                                                                     
           MISSOURI  0.9%
$ 1,345    Kansas City, MO Met Cmnty Colleges Bldg Corp
           Rev Leasehold Jr College Impt & Rfdg (FGIC
           Insd).......................................    5.500%      07/01/17  $   1,491,121
  1,210    Saint Louis, MO Arpt Rev Cap Impt Pgm Ser A
           (MBIA Insd).................................    5.375       07/01/18      1,326,608
                                                                                 -------------
                                                                                     2,817,729
                                                                                 -------------
           NEBRASKA  0.8%
  2,500    Nebraska Pub Pwr Dist Rev Gen Ser A (AMBAC
           Insd).......................................    5.000       01/01/35      2,616,725
                                                                                 -------------

           NEVADA  3.4%
  7,500    Clark Cnty, NV Arpt Rev Sub Lien Ser A-2
           (FGIC Insd).................................    5.000       07/01/36      7,793,100
  3,000    Clark Cnty, NV Indl Dev Rev Southwest Gas
           Corp Proj Ser A (AMT) (AMBAC Insd)..........    5.250       07/01/34      3,147,360
                                                                                 -------------
                                                                                    10,940,460
                                                                                 -------------
           NEW HAMPSHIRE  0.7%
  1,155    New Hampshire Hlth & Ed Fac Auth Rev
           Derryfield Sch..............................    7.000       07/01/30      1,224,496
  1,000    New Hampshire St Bus Fin Auth Wtr Fac Rev
           Pennichuck Wtrwks Inc (AMT) (AMBAC Insd)....    6.300       05/01/22      1,078,830
                                                                                 -------------
                                                                                     2,303,326
                                                                                 -------------
           NEW JERSEY  12.3%
  2,700    New Jersey Econ Dev Auth Rev Cigarette
           Tax.........................................    5.750       06/15/29      2,896,884
  3,000    New Jersey Econ Dev Auth Rev Motor Vehicle
           Sur Rev Ser A (MBIA Insd)...................    5.000       07/01/23      3,200,970
  4,000    New Jersey Econ Dev Auth Rev Sch Fac Constr
           Ser I.......................................    5.000       09/01/22      4,225,880
 10,000    New Jersey Econ Dev Auth St Contract Econ
           Recovery (MBIA Insd)........................    5.900       03/15/21     12,104,600
  8,000    New Jersey Econ Dev Auth Wtr Fac Rev NJ Amer
           Wtr Co Inc Proj Ser A (AMT) (FGIC Insd).....    6.875       11/01/34      8,185,760
  5,000    New Jersey St Ed Fac Auth Higher Ed Cap Impt
           Ser A (AMBAC Insd)..........................    5.250       09/01/21      5,436,900
  3,110    Newark, NJ Hsg Auth Port Auth Newark Marine
           Terminal (MBIA Insd)........................    5.250       01/01/20      3,391,144
                                                                                 -------------
                                                                                    39,442,138
                                                                                 -------------
           NEW MEXICO  1.1%
  2,020    University NM Univ Rev Sub Lien
           Ser A Rfdg (a)..............................    5.250       06/01/20      2,191,316
  1,125    University NM Univ Rev Sub Lien
           Ser A Rfdg..................................    5.250       06/01/21      1,220,411
                                                                                 -------------
                                                                                     3,411,727
                                                                                 -------------
           NEW YORK  17.6%
    170    Broome Cnty, NY Ctf Partn (MBIA Insd).......    5.250       04/01/15        172,032
  1,300    New York City Indl Dev Civic YMCA Gtr NY
           Proj........................................    5.800       08/01/16      1,375,790
  6,000    New York City Muni Wtr Fin Auth Wtr & Swr
           Sys Rev Ser D...............................    5.000       06/15/39      6,255,960
  3,500    New York City Ser E.........................    5.000       11/01/20      3,761,590
  2,225    New York City Ser F.........................    6.000       08/01/11      2,336,272

 
See Notes to Financial Statements                                             

                                      F-13

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                     COUPON      MATURITY      VALUE
----------------------------------------------------------------------------------------------
                                                                     
           NEW YORK (CONTINUED)
$ 2,500    New York City Ser H.........................    5.750%      03/15/12  $   2,795,425
  5,000    New York City Transitional Fin Auth Rev
           Future Tax Secd Ser A Rfdg (c).............. 5.500/14.000   11/01/26      5,562,750
  2,525    New York St Dorm Auth Lease Rev Muni Hlth
           Fac Impt Pgm Ser A (FSA Insd)...............    5.500       05/15/25      2,680,212
  1,625    New York St Dorm Auth Lease Rev St Univ Dorm
           Fac Ser A (Prerefunded @ 07/01/10)..........    6.000       07/01/14      1,866,166
  1,135    New York St Dorm Auth Rev City Univ Secd Ser
           B (Escrowed to Maturity)....................    5.375       07/01/07      1,196,006
  3,915    New York St Dorm Auth Rev City Univ Secd Ser
           B (a).......................................    5.375       07/01/07      4,106,013
  3,100    New York St Dorm Auth Rev City Univ Sys Cons
           Ser A.......................................    5.625       07/01/16      3,545,904
  2,600    New York St Dorm Auth Rev Cons City Univ Sys
           Second Gen Ser A............................    5.750       07/01/13      2,939,118
  3,650    New York St Dorm Auth Rev FHA Montefiore
           Hosp (FGIC Insd)............................    5.000       08/01/33      3,817,535
  2,535    New York St Dorm Auth Rev Mental Hlth
           Ser B.......................................    5.750       08/15/11      2,687,506
     15    New York St Dorm Auth Rev Mental Hlth Ser B
           (Prerefunded @ 02/15/07)....................    5.750       08/15/11         16,039
    110    New York St Dorm Auth Rev Mental Hlth Ser D
           (FSA Insd) (a)..............................    5.875       02/15/14        123,168
  1,350    New York St Dorm Auth Rev Ser B.............    7.500       05/15/11      1,531,670
    650    New York St Dorm Auth Rev Ser B
           (Prerefunded @ 05/15/09)....................    7.500       05/15/11        766,974
  5,000    New York St Dorm Auth Rev St Univ Ed Fac Ser
           A...........................................    5.500       05/15/08      5,355,900
  1,320    New York St Mtg Agy Rev Homeowner Mtg Ser 82
           (AMT).......................................    5.650       04/01/30      1,358,135
  2,160    New York St Twy Auth Svc Contract Rev Loc
           Hwy & Brdg..................................    5.500       04/01/16      2,408,724
                                                                                 -------------
                                                                                    56,658,889
                                                                                 -------------
           NORTH CAROLINA  5.3%
 11,000    North Carolina Muni Pwr Agy No 1 Catawba
           Elec Rev Rfdg (MBIA Insd)...................    6.000       01/01/12     12,654,950
  4,000    North Carolina Muni Pwr Agy
           Ser A (MBIA Insd)...........................    5.250       01/01/19      4,360,400
                                                                                 -------------
                                                                                    17,015,350
                                                                                 -------------
           NORTH DAKOTA  0.3%
  1,050    North Dakota St Hsg Fin Agy Rev Hsg Fin Pgm
           Home Mtg Fin Ser B (AMT) (MBIA Insd)........    5.500       07/01/29      1,080,576
                                                                                 -------------

           OHIO  3.6%
  2,335    Cleveland, OH Muni Sch Dist (FSA Insd)......    5.250       12/01/18      2,574,384
  1,000    Cleveland, OH Muni Sch Dist (FSA Insd)......    5.250       12/01/24      1,085,780
  1,000    Cleveland-Cuyahoga Cnty, OH Port Auth Rev
           Student Hsg Euclid Ave Fenn Proj (AMBAC
           Insd).......................................    5.000       08/01/28      1,055,200
  1,000    Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc
           Proj........................................    7.500       01/01/30      1,124,720

 
                                               See Notes to Financial Statements

                                      F-14

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                     COUPON      MATURITY      VALUE
----------------------------------------------------------------------------------------------
                                                                     
           OHIO (CONTINUED)
$ 2,000    Lorain Cnty, OH Hosp Rev
           Catholic Hlthcare...........................    5.375%      10/01/30  $   2,093,260
  2,450    Lorain Cnty, OH Hosp Rev
           Catholic Hlthcare Ser A Impt & Rfdg.........    5.250       10/01/33      2,534,991
  1,000    Marion Cnty, OH Hosp Rev Cmnty Hosp Impt &
           Rfdg........................................    6.375       05/15/11      1,045,030
                                                                                 -------------
                                                                                    11,513,365
                                                                                 -------------
           OKLAHOMA  4.0%
  3,410    Jenks, OK Aquarium Auth Rev Rfdg
           (MBIA Insd) (a).............................    5.250       07/01/24      3,714,206
  1,475    Jenks, OK Aquarium Auth Rev Rfdg
           (MBIA Insd).................................    5.250       07/01/33      1,599,520
  1,100    Oklahoma City, OK Indl & Cultural Fac Tr Rev
           Dist Heating & Cooling Trigen (AMT) (LOC:
           Societe Generale)...........................    6.750       09/15/17      1,103,410
  1,250    Oklahoma City, OK Pub Ppty Auth Hotel Tax
           Rev (FGIC Insd).............................    5.250       10/01/29      1,356,300
  1,065    Oklahoma Dev Fin Auth Lease Rev OK Council
           Law Enforcement (MBIA Insd) (a).............    5.500       06/01/17      1,186,698
  1,120    Oklahoma Dev Fin Auth Lease Rev OK Council
           Law Enforcement (MBIA Insd) (a).............    5.500       06/01/18      1,246,504
  1,185    Oklahoma Dev Fin Auth Lease Rev OK Council
           Law Enforcement (MBIA Insd) (a).............    5.500       06/01/19      1,318,846
  1,250    Tulsa Cnty, OK Pub Fac Auth Cap Impt Rev
           (AMBAC Insd)................................    6.250       11/01/22      1,425,913
                                                                                 -------------
                                                                                    12,951,397
                                                                                 -------------
           OREGON  3.9%
  2,500    Oregon Hlth Sciences Univ Insd Ser A (MBIA
           Insd).......................................    5.250       07/01/22      2,735,675
  5,000    Oregon St Dept Admin Ser C Rfdg (MBIA
           Insd).......................................    5.250       11/01/18      5,453,500
  4,000    Portland, OR Swr Sys Rev Ser A
           (FGIC Insd).................................    5.750       08/01/18      4,461,320
                                                                                 -------------
                                                                                    12,650,495
                                                                                 -------------
           PENNSYLVANIA  6.5%
  2,650    Central Dauphin, PA Sch Dist (FSA Insd).....    5.000       12/01/19      2,858,767
  2,210    Chartiers Valley, PA Sch Dist Ser A
           (FSA Insd) (a)..............................    5.250       10/15/19      2,437,497
    700    Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
           Insd).......................................      *         03/15/14        484,582
  1,830    Harrisburg, PA Cap Apprec Ser D Rfdg (AMBAC
           Insd) (a)...................................      *         09/15/14      1,236,202
  2,750    Hempfield, PA Area Sch Dist Westmoreland
           Cnty Ser A (FGIC Insd)......................    5.250       03/15/19      3,024,395
  2,515    Hempfield, PA Area Sch Dist Westmoreland
           Cnty Ser A (FGIC Insd)......................    5.250       03/15/20      2,761,797
  3,090    Philadelphia, PA Gas Wks Rev 1975 Gen
           Ordinance 17th Ser (FSA Insd)...............    5.375       07/01/19      3,381,263

 
See Notes to Financial Statements                                               

                                      F-15

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                     COUPON      MATURITY      VALUE
----------------------------------------------------------------------------------------------
                                                                     
           PENNSYLVANIA (CONTINUED)
$ 2,440    Philadelphia, PA Sch Dist Ser A
           (FSA Insd)..................................    5.750%      02/01/11  $   2,746,537
  2,000    Radnor Twp, PA Sch Dist
           (Prerefunded @ 03/15/07)....................    5.750       03/15/26      2,105,580
                                                                                 -------------
                                                                                    21,036,620
                                                                                 -------------
           SOUTH CAROLINA  3.4%
  1,385    Easley, SC Util Rev (Prerefunded @ 12/01/12)
           (FSA Insd) (a)..............................    5.250       12/01/20      1,556,255
  2,500    Easley, SC Util Rev Impt & Rfdg
           (FSA Insd)..................................    5.000       12/01/34      2,637,700
  2,500    South Carolina Jobs Econ Dev Auth Indl Rev
           Elec & Gas Co Proj Ser A (AMBAC Insd).......    5.200       11/01/27      2,680,125
  3,750    South Carolina Jobs Econ Dev Auth Indl Rev
           Elec & Gas Co Proj Ser B (AMT) (AMBAC
           Insd).......................................    5.450       11/01/32      3,989,025
                                                                                 -------------
                                                                                    10,863,105
                                                                                 -------------
           SOUTH DAKOTA  0.8%
  2,500    South Dakota St Hlth & Ed Fac Auth Rev Sioux
           Vly Hosp & Hlth Sys Ser A...................    5.250       11/01/34      2,592,600
                                                                                 -------------

           TENNESSEE  1.0%
  1,000    Elizabethton, TN Hlth & Ed Fac Brd Rev Hosp
           First Mtg Ser B Impt & Rfdg.................    8.000       07/01/33      1,192,170
  1,500    Elizabethton, TN Hlth & Ed Fac Brd Rev Hosp
           Ser B Impt & Rfdg (MBIA Insd)...............    7.750       07/01/29      1,894,440
                                                                                 -------------
                                                                                     3,086,610
                                                                                 -------------
           TEXAS  11.6%
  2,350    Austin, TX Ctf Oblig (MBIA Insd) (a)........    5.375       09/01/20      2,566,106
  4,000    Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
           (AMT) (FSA Insd)............................    5.500       11/01/21      4,343,360
  2,500    Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
           (AMT) (FGIC Insd)...........................    5.750       11/01/30      2,692,625
  2,000    Harris Cnty, TX Hlth Fac Dev Mem Hermann
           Hlthcare Ser A..............................    6.375       06/01/29      2,208,440
  5,000    Houston, TX Arpt Sys Rev Sub Lien Ser A
           (AMT) (FSA Insd)............................    5.125       07/01/32      5,142,200
  6,000    Houston, TX Util Sys Rev First Lien Ser A
           Rfdg (FSA Insd).............................    5.250       05/15/21      6,504,180
    515    Little Elm, TX Indpt Sch Dist
           (PSF Gtd) (a)...............................    6.750       08/15/29        520,572
  2,185    Lower CO Riv Auth TX Transmission Contract
           Rev Svc Corp Proj Rfdg (FGIC Insd)..........    5.000       05/15/25      2,274,694
  2,000    Lower CO Riv Auth TX Transmission Contract
           Rev Svc Corp Proj Rfdg (FGIC Insd)..........    5.000       05/15/33      2,056,520
  1,000    Matagorda Cnty, TX Navig Dist No 1 Rev Coll
           Centerpoint Energy Proj Rfdg................    5.600       03/01/27      1,043,500
  1,500    Metropolitan Hlth Fac Dev Corp TX Wilson N
           Jones Mem Hosp Proj.........................    7.250       01/01/31      1,529,580

 
                                               See Notes to Financial Statements

                                      F-16

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 


PAR
AMOUNT
(000)      DESCRIPTION                                     COUPON      MATURITY      VALUE
 ---------------------------------------------------------------------------------------------
                                                                     
           TEXAS (CONTINUED)
$ 5,000    North Cent TX Hlth Fac Dev Hosp Childrens
           Med Ctr Dallas (AMBAC Insd).................    5.250%      08/15/32  $   5,305,900
  1,000    Trinity Riv Auth TX Rev Tarrant Cnty Wtr
           Proj Impt & Rfdg (MBIA Insd)................    5.500       02/01/21      1,111,790
                                                                                 -------------
                                                                                    37,299,467
                                                                                 -------------
           UTAH  0.8%
  2,380    Mountain Regl Wtr Spl Svc Dist Rfdg (MBIA
           Insd).......................................    5.000       12/15/33      2,487,576
                                                                                 -------------

           WASHINGTON  8.6%
  3,750    Chelan Cnty, WA Pub Util Dist No. 001 Cons
           Rev Chelan Hydro Ser A (AMT) (MBIA Insd)....    5.600       01/01/36      4,021,013
  2,500    Energy Northwest WA Elec Rev Proj No 3 Ser A
           Rfdg (FSA Insd).............................    5.500       07/01/18      2,764,775
  5,000    Energy Northwest WA Elec Rev Proj No 3 Ser B
           Rfdg (FSA Insd).............................    6.000       07/01/16      5,730,200
  1,400    King Cnty, WA Hsg Auth Hsg Rev Pooled Sr Ser
           A Rfdg......................................    6.700       03/01/15      1,430,058
  2,120    Seattle, WA Muni Lt & Pwr Rev...............    5.625       12/01/17      2,293,692
  3,000    Spokane, WA Pub Fac Dist Hotel Motel & Sales
           Use Tax (MBIA Insd).........................    5.250       09/01/33      3,196,530
  4,750    Tacoma, WA Elec Sys Rev Ser A Rfdg (FSA
           Insd).......................................    5.750       01/01/14      5,366,978
  1,500    Tacoma, WA Elec Sys Rev Ser B Rfdg (FSA
           Insd).......................................    5.500       01/01/12      1,681,320
  1,000    Thurston & Pierce Cntys, WA (FSA Insd)......    5.000       12/01/20      1,076,650
                                                                                 -------------
                                                                                    27,561,216
                                                                                 -------------
           WEST VIRGINIA  0.3%
    920    West Virginia St Hsg Dev Fd Ser A...........    5.550       05/01/17        930,074
                                                                                 -------------

           WISCONSIN  1.0%
  3,000    Wisconsin St Hlth & Ed Fac Wheaton
           Franciscan Svc Rfdg.........................    5.750       08/15/30      3,193,080
                                                                                 -------------

           WYOMING  0.3%
  1,000    University WY Univ Rev Fac Impt
           (FSA Insd)..................................    5.500       06/01/18      1,106,360
                                                                                 -------------

           PUERTO RICO  3.9%
 10,000    Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev
           Ser Y Rfdg (FSA Insd) (d)...................    6.250       07/01/21    12,694,300
                                                                                -------------
TOTAL INVESTMENTS  158.4%
  (Cost $475,034,518).........................................................    509,091,659
OTHER ASSETS IN EXCESS OF LIABILITIES  0.8%...................................      2,480,993
 
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS)  (59.2%)...................   (190,166,546)
                                                                                -------------
 
NET ASSETS APPLICABLE TO COMMON SHARES  100.0%................................  $ 321,406,106
                                                                                =============

 
See Notes to Financial Statements        

                                      F-17

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 
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 purchased on a when-issued or delayed delivery basis.
 
(c) Security is a "step-up" bond where the coupon increases or steps up at a
    predetermined date.
 
(d) All or a portion of this security has been physically segregated in
    connection with open futures contracts.
 
ACA--American Capital Access
 
AMBAC--AMBAC Indemnity Corp.
 
AMT--Alternative Minimum Tax
 
FGIC--Financial Guaranty Insurance Co.
 
FSA--Financial Security Assurance Inc.
 
LOC--Letter of Credit
 
MBIA--Municipal Bond Investors Assurance Corp.
 
PSF--Public School Fund
 
XLCA--XL Capital Assurance Inc.
 
                                               See Notes to Financial Statements

                                      F-18

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
April 30, 2005 (Unaudited)
 

                                                           
ASSETS:
Total Investments (Cost $475,034,518).......................  $509,091,659
Receivables:
  Interest..................................................     7,938,035
  Variation Margin on Futures...............................       281,750
  Investments Sold..........................................        40,329
Other.......................................................         1,450
                                                              ------------
    Total Assets............................................   517,353,223
                                                              ------------
LIABILITIES:
Payables:
  Investments Purchased.....................................     4,191,317
  Custodian Bank............................................       856,954
  Investment Advisory Fee...................................       229,628
  Income Distributions--Common Shares.......................        70,531
  Other Affiliates..........................................        19,695
Trustees' Deferred Compensation and Retirement Plans........       310,682
Accrued Expenses............................................       101,764
                                                              ------------
    Total Liabilities.......................................     5,780,571
Preferred Shares (including accrued distributions)..........   190,166,546
                                                              ------------
NET ASSETS APPLICABLE TO COMMON SHARES......................  $321,406,106
                                                              ============
NET ASSET VALUE PER COMMON SHARE ($321,406,106 divided by
  19,106,785 shares outstanding)............................  $      16.82
                                                              ============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
  shares authorized, 19,106,785 shares issued and
  outstanding)..............................................  $    191,068
Paid in Surplus.............................................   282,026,345
Net Unrealized Appreciation.................................    33,098,337
Accumulated Net Realized Gain...............................     3,873,153
Accumulated Undistributed Net Investment Income.............     2,217,203
                                                              ------------
NET ASSETS APPLICABLE TO COMMON SHARES......................  $321,406,106
                                                              ============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
  shares, 7,600 issued with liquidation preference of
  $25,000 per share)........................................  $190,000,000
                                                              ============
NET ASSETS INCLUDING PREFERRED SHARES.......................  $511,406,106
                                                              ============

 
See Notes to Financial Statements                                               

                                      F-19

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
FINANCIAL STATEMENTS continued
 
Statement of Operations
For the Six Months Ended April 30, 2005 (Unaudited)
 

                                                           
INVESTMENT INCOME:
Interest....................................................  $12,462,045
                                                              -----------
EXPENSES:
Investment Advisory Fee.....................................    1,392,468
Preferred Share Maintenance.................................      260,318
Trustees' Fees and Related Expenses.........................       33,379
Legal.......................................................       27,660
Custody.....................................................       21,192
Other.......................................................      119,314
                                                              -----------
    Total Expenses..........................................    1,854,331
                                                              -----------
NET INVESTMENT INCOME.......................................  $10,607,714
                                                              ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
  Investments...............................................  $ 3,670,170
  Futures...................................................      706,254
                                                              -----------
Net Realized Gain...........................................    4,376,424
                                                              -----------
Unrealized Appreciation/Depreciation:
  Beginning of the Period...................................   37,776,060
                                                              -----------
  End of the Period:
    Investments.............................................   34,057,141
    Futures.................................................     (958,804)
                                                              -----------
                                                               33,098,337
                                                              -----------
Net Unrealized Depreciation During the Period...............   (4,677,723)
                                                              -----------
NET REALIZED AND UNREALIZED LOSS............................  $  (301,299)
                                                              ===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS.....................  $(1,772,694)
                                                              ===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
  OPERATIONS................................................  $ 8,533,721
                                                              ===========

 
                                               See Notes to Financial Statements

                                      F-20

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
FINANCIAL STATEMENTS continued
 
Statements of Changes in Net Assets (Unaudited)
 


                                                                FOR THE            FOR THE
                                                            SIX MONTHS ENDED      YEAR ENDED
                                                             APRIL 30, 2005    OCTOBER 31, 2004
                                                            -----------------------------------
                                                                         
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income......................................   $ 10,607,714       $ 21,512,269
Net Realized Gain/Loss.....................................      4,376,424         (1,701,351)
Net Unrealized Appreciation/Depreciation During the
  Period...................................................     (4,677,723)         6,650,012
Distributions to Preferred Shareholders:
  Net Investment Income....................................     (1,772,694)        (2,037,718)
  Net Realized Gain........................................            -0-           (134,843)
                                                              ------------       ------------
Change in Net Assets Applicable to Common Shares from
  Operations...............................................      8,533,721         24,288,369
Distributions to Common Shareholders:
  Net Investment Income....................................     (9,457,370)       (20,099,497)
  Net Realized Gain........................................            -0-         (1,407,980)
                                                              ------------       ------------
 
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
  INVESTMENT ACTIVITIES....................................       (923,649)         2,780,892
 
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period....................................    322,329,755        319,548,863
                                                              ------------       ------------
End of the Period (Including accumulated undistributed net
  investment income of $2,217,203 and $2,839,553,
  respectively)............................................   $321,406,106       $322,329,755
                                                              ============       ============

 
See Notes to Financial Statements                                             

                                      F-21

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
FINANCIAL HIGHLIGHTS (UNAUDITED)
 
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
 


                                                             SIX MONTHS
                                                               ENDED
                                                             APRIL 30,    ------------------
                                                                2005       2004       2003
                                                             -------------------------------
                                                                            
NET ASSET VALUE, BEGINNING OF THE PERIOD....................  $ 16.87     $ 16.72    $ 16.77
                                                              -------     -------    -------
  Net Investment Income.....................................      .56        1.13       1.17
  Net Realized and Unrealized Gain/Loss.....................     (.02)        .26       (.01)
  Common Share Equivalent of Distributions Paid to
  Preferred Shareholders:
    Net Investment Income...................................     (.09)       (.11)      (.10)
    Net Realized Gain.......................................      -0-        (.01)       -0-
                                                              -------     -------    -------
Total from Investment Operations............................      .45        1.27       1.06
Distributions Paid to Common Shareholders:
    Net Investment Income...................................     (.50)      (1.05)     (1.11)
    Net Realized Gain.......................................      -0-        (.07)       -0-
                                                              -------     -------    -------
NET ASSET VALUE, END OF THE PERIOD..........................  $ 16.82     $ 16.87    $ 16.72
                                                              =======     =======    =======
 
Common Share Market Price at End of the Period..............  $ 14.55     $ 15.20    $ 16.20
Total Return (b)............................................   -1.03%*      0.81%     12.30%
Net Assets Applicable to Common Shares at End of the Period
  (In millions).............................................  $ 321.4     $ 322.3    $ 319.5
Ratio of Expenses to Average Net Assets Applicable to Common
  Shares (c)................................................    1.17%       1.31%      1.32%
Ratio of Net Investment Income to Average Net Assets
  Applicable to Common Shares (c)...........................    6.67%       6.75%      6.99%
Portfolio Turnover..........................................      16%*        28%        27%
 
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
  Shares (c)................................................     .73%        .82%       .83%
Ratio of Net Investment Income to Average Net Assets
  Applicable to Common Shares (d)...........................    5.56%       6.11%      6.37%
 
SENIOR SECURITIES:
Total Preferred Shares Outstanding..........................    7,600       7,600      7,600
Asset Coverage Per Preferred Share (e)......................  $67,312     $67,420    $67,049
Involuntary Liquidating Preference Per Preferred Share......  $25,000     $25,000    $25,000
Average Market Value Per Preferred Share....................  $25,000     $25,000    $25,000

 
*  Non-Annualized
 
(a)As required, effective November 1, 2001, the Trust has adopted the provisions
   of the AICPA Audit and Accounting Guide for Investment Companies and began
   accreting market discount on fixed income securities. The effect of this
   change for the year ended October 31, 2002 was to increase net investment
   income per share by $.02, decrease net realized and unrealized gains and
   losses by $.02 and increase the ratio of net investment income to average net
   assets applicable to common shares by .11%. Per share, ratios, and
   supplemental data for periods prior to October 31, 2002 have not been
   restated to reflect this change in presentation.
 
(b)Total return assumes an investment at the common share market price at the
   beginning of the period indicated, reinvestment of all distributions for the
   period in accordance with the Trust's dividend reinvestment plan, and sale of
   all shares at the closing common share market price at the end of the period
   indicated.
 
(c)Ratios do not reflect the effect of dividend payments to preferred
   shareholders.
 
(d)Ratios reflect the effect of dividend payments to preferred shareholders.
 
(e)Calculated by subtracting the Trust's total liabilities (not including the
   preferred shares) from the Trust's total assets and dividing this by the
   number of preferred shares outstanding.
 
                                               See Notes to Financial Statements

                                      F-22

 


 
Year Ended October 31,
-----------------------------------------------------------------------------------------
     2002 (a)    2001       2000       1999       1998       1997       1996       1995
-----------------------------------------------------------------------------------------
                                                         
     $ 16.80    $ 15.52   $  14.87   $  16.93   $  16.35   $  15.68   $  15.61   $  13.99
     -------    -------   --------   --------   --------   --------   --------   --------
        1.21       1.23       1.24       1.22       1.25       1.26       1.29       1.33
        (.05)      1.18        .68      (2.06)       .59        .72        .16       1.70
        (.14)      (.34)      (.40)      (.32)      (.35)      (.35)      (.36)      (.39)
         -0-        -0-        -0-        -0-        -0-        -0-        -0-        -0-
     -------    -------   --------   --------   --------   --------   --------   --------
        1.02       2.07       1.52      (1.16)      1.49       1.63       1.09       2.64
       (1.05)      (.79)      (.87)      (.90)      (.91)      (.96)     (1.02)     (1.02)
         -0-        -0-        -0-        -0-        -0-        -0-        -0-        -0-
     -------    -------   --------   --------   --------   --------   --------   --------
     $ 16.77    $ 16.80   $  15.52   $  14.87   $  16.93   $  16.35   $  15.68   $  15.61
     =======    =======   ========   ========   ========   ========   ========   ========
 
     $ 15.46    $ 14.35   $12.9375   $12.9375   $15.8125   $15.0625   $  14.75   $ 14.375
      15.28%     17.27%      6.86%    -13.16%     11.33%      8.96%      9.88%     21.06%
     $ 320.4    $ 320.9   $  296.5   $  284.1   $  323.4   $  312.5   $  299.7   $  298.3
       1.46%      1.61%      1.75%      1.66%      1.64%      1.66%      1.72%      1.72%
       7.26%      7.56%      8.34%      7.55%      7.48%      7.99%      8.31%      8.94%
         40%        32%        26%        33%        30%        49%        37%        79%
 
        .91%      1.00%      1.05%      1.03%      1.03%      1.02%      1.05%      1.03%
       6.40%      5.44%      5.61%      5.56%      5.35%      5.76%      5.99%      6.31%
 
       7,600      7,600      7,600      7,600      3,800      3,800      3,800      3,800
     $67,170    $67,225   $ 64,014   $ 62,388   $135,105   $132,234   $128,865   $128,498
     $25,000    $25,000   $ 25,000   $ 25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000
     $25,000    $25,000   $ 25,000   $ 25,000   $ 50,000   $ 50,000   $ 50,000   $ 50,000

 
See Notes to Financial Statements                                              


                                      F-23

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
 
1. SIGNIFICANT ACCOUNTING POLICIES
 
Van Kampen Advantage Municipal Income Trust (the "Trust") is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The Trust's investment objective is to seek to
provide a high level of current income exempt from federal income tax,
consistent with preservation of capital. In normal market conditions, the Trust
will invest substantially all of its net assets in municipal securities rated
investment grade at the time of investment. The Trust commenced investment
operations on September 25, 1992.
 
    The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
 
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
 
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
segregate assets with 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. At April 30, 2005, there were $4,191,317 of when-issued or
delayed delivery purchase commitments.
 
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security.
 
D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements
of 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.
 
    The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At October 31, 2004, the Trust had an accumulated capital loss
carryforward for tax purposes of $741,936 which will expire on October 31, 2012.
 

                                      F-24

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 
    At April 30, 2005, the cost and related gross unrealized appreciation and
depreciation are as follows:
 

                                                           
Cost of investments for tax purposes........................  $474,267,072
                                                              ============
Gross tax unrealized appreciation...........................  $ 34,966,963
Gross tax unrealized depreciation...........................      (124,376)
                                                              ------------
Net tax unrealized appreciation on investments..............  $ 34,824,587
                                                              ============

 
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
 
    The tax character of distributions paid during the year ended October 31,
2004 was as follows:
 

                                                           
Distributions paid from:
  Ordinary income...........................................  $  427,997
  Long-term capital gain....................................   1,542,823
                                                              ----------
                                                              $1,970,820
                                                              ==========

 
    As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
 

                                                           
Undistributed ordinary income...............................  $325,308

 
    Net realized gains or losses differ for financial reporting and tax purposes
primarily as a result of the deferral of losses relating to wash sale
transactions.
 
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
 
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") provides investment advice and facilities to the
Trust for an annual fee payable monthly of .55% of the average daily net assets
of the Trust. Effective November 1, 2004, the investment advisory fee was
reduced from .60% to .55%.
 
    For the six months ended April 30, 2005, the Trust recognized expenses of
approximately $10,700 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a trustee of the Trust is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Trust.
 
    Under separate Accounting Services and Legal Services agreements, the
Adviser provides accounting and legal services to the Trust. The Adviser
allocates the cost of such services to each trust. For the six months ended
April 30, 2005, the Trust recognized expenses of approximately $28,000
representing Van Kampen Investments Inc.'s or its affiliates' (collectively "Van
Kampen") cost of providing accounting and legal services to the Trust, which are
reported as part of "Other" and "Legal" expenses, respectively, on the Statement
of Operations.
 

                                      F-25

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 
    Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
also officers of Van Kampen.
 
    The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Trust.
The maximum annual benefit per trustee under the plan is $2,500.
 
3. INVESTMENT TRANSACTIONS
 
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $86,995,444 and $82,932,475,
respectively.
 
4. DERIVATIVE FINANCIAL INSTRUMENTS
 
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
 
    The Trust may invest up to 15% of its net assets in "inverse floating rate
obligations." The inverse floating rate obligations in which the Trust may
invest are typically created through a division of a fixed-rate municipal
obligation into two separate instruments, a short-term obligation and a
long-term obligation. The interest rate on the short-term obligation is set at
periodic auctions. The interest rate on the long-term obligation which the Trust
may purchase is the rate the issuer would have paid on the fixed-income
obligation, (i) plus the difference between such fixed rate and the rate on the
short-term obligation, if the short-term rate is lower than the fixed rate; or
(ii) minus such difference if the interest rate on the short-term obligation is
higher than the fixed rate. 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 than 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. Although volatile, inverse floating rate obligations
typically offer the potential for yields exceeding the yields available on fixed
rate bonds with comparable credit quality, coupon, call provisions and maturity.
These securities usually permit the investor to convert the floating rate
security counterpart to a fixed rate (normally adjusted downward), and this
optional conversion feature may provide a partial hedge against rising rates if
exercised at an opportune time.
 
    In order to seek to manage the interest rate exposure of the Trust's
portfolio in a changing interest rate environment, the Trust may purchase or
sell financial futures contracts or engage in transactions involving interest
rate swaps, caps, floors or collars. The Trust expects to enter into these
transactions primarily as a hedge against anticipated interest rate or
fixed-income market changes, for duration management or for risk management
purposes, but may also enter into these transactions to generate additional
income. All of the Trust's portfolio holdings, including derivative instruments,
are marked to market each day with the change in value reflected in the
unrealized appreciation/depreciation. Upon disposition, a realized gain or loss
is recognized accordingly, except when taking delivery of a security underlying
a futures contract. In this instance, the recognition of gain or loss is
postponed
 

                                      F-26

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 
until the disposal of the security underlying the futures contract. Risks may
arise as a result of the potential inability of the counterparties to meet the
terms of their contracts.
 
    During the period, the Trust invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Trust
generally invests in exchange traded futures contracts on U.S. Treasury Bonds
and Notes and typically closes the contract prior to the delivery date. Upon
entering into futures contracts, the Trust maintains, in a segregated account
with its custodian, an amount of cash or liquid securities with a value equal to
a percentage of the contract amount with either a future commission merchant
pursuant to rules and regulations promulgated under the 1940 Act, as amended, or
with its custodian in an account in the broker's name. This amount is known as
initial margin. During the period the futures contract is open, payments are
received from or made to the broker based upon changes in the value of the
contract (the variation margin). The risk of loss associated with a futures
contract is in excess of the variation margin reflected on the Statement of
Assets and Liabilities.
 
    Transactions in futures contracts for the six months ended April 30, 2005,
were as follows:
 


                                                              CONTRACTS
                                                           
Outstanding at October 31, 2004.............................      448
Futures Opened..............................................    2,258
Futures Closed..............................................   (1,579)
                                                               ------
Outstanding at April 30, 2005...............................    1,127
                                                               ======

 
    The futures contracts outstanding as of April 30, 2005, and the descriptions
and unrealized appreciation/depreciation are as follows:
 


                                                                            UNREALIZED
                                                                           APPRECIATION/
                                                              CONTRACTS    DEPRECIATION
                                                                     
SHORT CONTRACTS:
U.S. Treasury Notes 5-Year Futures June 2005 (Current
  Notional Value of $108,453 per contract)..................    1,127        $(958,804)
                                                                =====        =========

 
5. PREFERRED SHARES
 
The Trust has outstanding 7,600 Auction Preferred Shares ("APS") in four series.
Series A, B and C each contain 2,000 shares while Series D contains 1,600
shares. Dividends are cumulative and the dividend rate is reset every 28 days
through an auction process. The average rate in effect on April 30, 2005 was
2.558%. During the six months ended April 30, 2005, the rates ranged from 1.450%
to 2.950%.
 
    The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of "Preferred Share
Maintenance" expense on the Statement of Operations.
 
    The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $25,000 per share plus accumulated and unpaid dividends.
The Trust is subject to
 

                                      F-27

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
 
certain asset coverage tests and the APS are subject to mandatory redemption if
the tests are not met.
 
6. INDEMNIFICATIONS
 
The Trust enters into contracts that contain a variety of indemnifications. The
Trust's maximum exposure under these arrangements is unknown. However, the Trust
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
 

                                      F-28

 
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
 
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
 
BOARD OF TRUSTEES
 
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
 
OFFICERS
 
MITCHELL M. MERIN
President and Chief Executive Officer
 
RONALD E. ROBISON
Executive Vice President and
Principal Executive Officer
 
JOSEPH J. MCALINDEN
Executive Vice President and
Chief Investment Officer
 
AMY R. DOBERMAN
Vice President
 
STEFANIE V. CHANG
Vice President and Secretary
 
JOHN L. SULLIVAN
Chief Compliance Officer
 
JAMES W. GARRETT
Chief Financial Officer and Treasurer
 
INVESTMENT ADVISER
 
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
 
CUSTODIAN
 
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02110
 
TRANSFER AGENT
 
EQUISERVE TRUST COMPANY, N. A.
P.O. Box 43011
Providence, Rhode Island 02940-3011
 
LEGAL COUNSEL
 
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
 
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
 
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
 
*   "Interested persons" of the Trust, as defined in the Investment Company Act
    of 1940, as amended.

                                      F-29

 
VAN KAMPEN
 
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY
 
    We are required by federal law to provide you with a copy of our Privacy
Policy annually.
 
    The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc.,
Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange
Corp., as well as current and former individual investors in Van Kampen mutual
funds, unit investment trusts, and related companies.
 
    This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised by
us. This Policy is, however, applicable to individuals who select us to be a
custodian of securities or assets in individual retirement accounts, 401(k)
accounts, 529 Educational Savings Accounts, accounts subject to the Uniform
Gifts to Minors Act, or similar accounts.
 
    Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
 
WE RESPECT YOUR PRIVACY
 
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we help
you achieve your financial objectives. This Policy describes what non-public
personal information we collect about you, why we collect it, and when we may
share it with others.
 
    We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies you or
your accounts as "personal information."
 
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
 
To serve you better and manage our business, it is important that we collect and
maintain accurate information about you. We may obtain this information from
applications and other forms you submit to us, from your dealings with us, from
consumer reporting agencies, from our Web sites and from third parties and other
sources.
 
    For example:
 
     --  We may collect information such as your name, address, e-mail address,
         telephone/fax numbers, assets, income and investment objectives through
         applications and other forms you submit to us.
 
     --  We may obtain information about account balances, your use of
         account(s) and the types of products and services you prefer to receive
         from us through your dealings and transactions with us and other
         sources.
 
     --  We may obtain information about your creditworthiness and credit
         history from consumer reporting agencies.
 
     --  We may collect background information from and through third-party
         vendors to verify representations you have made and to comply with
         various regulatory requirements.
 
     --  If you interact with us through our public and private Web sites, we
         may collect information that you provide directly through online
         communications (such as an e-mail address). We may also collect
         information about your Internet service provider, your domain name,
         your computer's operating system and Web browser, your use of our Web
         sites and your product and service preferences, through the use
 
                                                             (continued on back)


                                      F-30


VAN KAMPEN
 
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
 
         of "cookies." "Cookies" recognize your computer each time you return to
         one of our sites, and help to improve our sites' content and
         personalize your experience on our sites by, for example, suggesting
         offerings that may interest you. Please consult the Terms of Use of
         these sites for more details on our use of cookies.
 
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
 
To provide you with the products and services you request, to serve you better
and to manage our business, we may disclose personal information we collect
about you to our affiliated companies and to non-affiliated third parties as
required or permitted by law.
 
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise required
or permitted by law.
 
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except to
enable them to provide services on our behalf, to perform joint marketing
agreements with other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
 
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
 
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
 
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
 
Copyright (C)2005 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
VKA SAR 6/05 RN05-01312P-Y04/05
                                                   (VAN KAMPEN INVESTMENTS LOGO)


                                      F-31




                                   APPENDIX G
                      MORGAN STANLEY INVESTMENT MANAGEMENT
                       PROXY VOTING POLICY AND PROCEDURES

IV.      POLICY STATEMENT

         Introduction -- Morgan Stanley Investment Management's ("MSIM") policy
and procedures for voting proxies ("Proxy Voting Policy and Procedures") with
respect to securities held in the accounts of clients apply to those MSIM
entities that provide discretionary investment management services and for which
a MSIM entity has authority to vote proxies. The policies and procedures and
general guidelines in this section will be reviewed and updated, as necessary,
to address new or revised proxy voting issues. The MSIM entities covered by
these policies and procedures currently include the following: Morgan Stanley
Investment Advisors Inc., Morgan Stanley AIP GP LP, Morgan Stanley Investment
Management Inc., Morgan Stanley Investment Management Limited, Morgan Stanley
Investment Management Company, Morgan Stanley Asset & Investment Trust
Management Co., Limited, Morgan Stanley Investment Management Private Limited,
Morgan Stanley Hedge Fund Partners GP LP, Morgan Stanley Hedge Fund Partners LP,
Van Kampen Asset Management, and Van Kampen Advisors Inc. (each a "MSIM
Affiliate" and collectively referred to as the "MSIM Affiliates").

         Each MSIM Affiliate will use its best efforts to vote proxies as part
of its authority to manage, acquire and dispose of account assets. With respect
to the MSIM registered management investment companies (Van Kampen,
Institutional and Advisor Funds) (collectively referred to as the "MSIM Funds"),
each MSIM Affiliate will vote proxies pursuant to authority granted under its
applicable investment advisory agreement or, in the absence of such authority,
as authorized by the Boards of Directors or Trustees of the MSIM Funds. A MSIM
Affiliate will not vote proxies if the "named fiduciary" for an ERISA account
has reserved the authority for itself, or in the case of an account not governed
by ERISA, the Investment Management or Investment Advisory Agreement does not
authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will, in a prudent
and diligent manner, vote proxies in the best interests of clients, including
beneficiaries of and participants in a client's benefit plan(s) for which the
MSIM Affiliates manage assets, consistent with the objective of maximizing
long-term investment returns ("Client Proxy Standard"). In certain situations, a
client or its fiduciary may provide a MSIM Affiliate with a proxy voting policy.
In these situations, the MSIM Affiliate will comply with the client's policy
unless to do so would be inconsistent with applicable laws or regulations or the
MSIM Affiliate's fiduciary responsibility.

         Proxy Research Services -- To assist the MSIM Affiliates in their
responsibility for voting proxies and the overall global proxy voting process,
Institutional Shareholder Services ("ISS") and the Investor Responsibility
Research Center ("IRRC") have been retained as experts in the proxy voting and
corporate governance area. ISS and IRRC are independent advisers that specialize
in providing a variety of fiduciary-level proxy-related services to
institutional investment managers, plan sponsors, custodians, consultants, and
other institutional investors. The services provided to MSIM Affiliates include
in-depth research, global issuer analysis, and voting recommendations. While the
MSIM Affiliates may review and utilize the ISS and IRRC recommendations in
making proxy voting decisions, they are in no way obligated to follow the ISS
and IRRC recommendations. In addition to research, ISS provides vote execution,
reporting, and recordkeeping. MSIM's Proxy Review Committee (see Section IV.A.
below) will carefully monitor and supervise the services provided by the proxy
research services.



                                      G-1




         Voting Proxies for Certain Non-US Companies -- While the proxy voting
process is well established in the United States and other developed markets
with a number of tools and services available to assist an investment manager,
voting proxies of non-US companies located in certain jurisdictions,
particularly emerging markets, may involve a number of problems that may
restrict or prevent a MSIM Affiliate's ability to vote such proxies. These
problems include, but are not limited to: (i) proxy statements and ballots being
written in a language other than English; (ii) untimely and/or inadequate notice
of shareholder meetings; (iii) restrictions on the ability of holders outside
the issuer's jurisdiction of organization to exercise votes; (iv) requirements
to vote proxies in person, (v) the imposition of restrictions on the sale of the
securities for a period of time in proximity to the shareholder meeting; and
(vi) requirements to provide local agents with power of attorney to facilitate
the MSIM Affiliate's voting instructions. As a result, clients' non-U.S. proxies
will be voted on a best efforts basis only, after weighing the costs and
benefits of voting such proxies, consistent with the Client Proxy Standard. ISS
has been retained to provide assistance to the MSIM Affiliates in connection
with voting their clients' non-US proxies.

III.     GENERAL PROXY VOTING GUIDELINES

         To ensure consistency in voting proxies on behalf of its clients, MSIM
Affiliates will follow (subject to any exception set forth herein) these Proxy
Voting Policies and Procedures, including the guidelines set forth below. These
guidelines address a broad range of issues, including board size and
composition, executive compensation, anti-takeover proposals, capital structure
proposals and social responsibility issues and are meant to be general voting
parameters on issues that arise most frequently. The MSIM Affiliates, however,
may, pursuant to the procedures set forth in Section IV. below, vote in a manner
that is not in accordance with the following general guidelines, provided the
vote is approved by the Proxy Review Committee and is consistent with the Client
Proxy Standard.

VI.      GUIDELINES

         A.   MANAGEMENT PROPOSALS

              1.  When voting on routine ballot items, unless otherwise
                  determined by the Proxy Review Committee, the following
                  proposals will be voted in support of management.

                  o     Selection or ratification of auditors.

                  o     Approval of financial statements, director and auditor
                        reports.

                  o     General updating/corrective amendments to the chatter.

                  o     Approval of the payment of a dividend.

                  o     Proposals to limit Directors' liability and/or broaden
                        indemnification of Directors.

                  o     Proposals requiring that a certain percentage (up to
                        66%) of the company's Board members be independent
                        Directors.

                  o     Proposals requiring that members of the company's
                        compensation, nominating and audit committees be
                        comprised of independent or unaffiliated Directors.


                                       G-2



                  o     Proposals recommending set retirement ages or requiring
                        specific levels of stock ownership by Directors.

                  o     Proposals to eliminate cumulative voting.

                  o     Proposals to eliminate preemptive rights.

                  o     Proposals for confidential voting and independent
                        tabulation of voting results.

                  o     Proposals related to the conduct of the annual meeting
                        except those proposals that relate to the "transaction
                        of such other business which may come before the
                        meeting."

              2.  Election of Directors. In situations where no conflict exists,
                  and where no specific governance deficiency has been noted,
                  unless otherwise determined by the Proxy Review Committee,
                  will be voted in support of nominees of management.

                        Unless otherwise determined by the Proxy Review
                  Committee, a withhold vote will be made where:

                        (i)     A nominee has, or any time during the previous
                                three years had, a relationship with the issuer
                                (e.g., investment banker, counsel or other
                                professional service provider, or familial
                                relationship with a senior officer of the
                                issuer) that may impair his or her independence;

                        (ii)    A direct conflict exists between the interests
                                of the nominee and the public shareholders; or

                        (iii)   Where the nominees standing for election have
                                not taken action to implement generally accepted
                                governance practices for which there is a
                                "bright line" test. These would include
                                elimination of dead hand or slow hand poison
                                pills, requiring Audit, Compensation or
                                Nominating Committees to be composed of
                                independent directors and requiring a majority
                                independent board.

              3.  The following non-routine proposals, which potentially may
                  have a substantive financial or best interest impact on a
                  shareholder, unless otherwise determined by the Proxy Review
                  Committee, will be voted in support of management.

                  CAPITALIZATION CHANGES

                  o     Proposals relating to capitalization changes that
                        eliminate other classes of stock and voting rights.

                  o     Proposals to increase the authorization of existing
                        classes of common stock (or securities convertible into
                        common stock) if. (i) a clear and legitimate business
                        purpose is stated; (ii) the number of shares requested




                                       G-3



                        is reasonable in relation to the purpose for which
                        authorization is requested; and (iii) the authorization
                        does not exceed 100% of shares currently authorized and
                        at least 30% of the new authorization will be
                        outstanding.

                  o     Proposals to create a new class of preferred stock or
                        for issuances of preferred stock up to 50% of issued
                        capital.

                  o     Proposals for share repurchase plans.

                  o     Proposals to reduce the number of authorized shares of
                        common or preferred stock, or to eliminate classes of
                        preferred stock.

                  o     Proposals to effect stock splits.

                  o     Proposals to effect reverse stock splits if management
                        proportionately reduces the authorized share amount set
                        forth in the corporate charter. Reverse stock splits
                        that do not adjust proportionately to the authorized
                        share amount will generally be approved if the resulting
                        increase in authorized shares coincides with the proxy
                        guidelines set forth above for common stock increases.

                  COMPENSATION

                  o     Proposals relating to Director fees, provided the
                        amounts are not excessive relative to outer companies in
                        the country or industry.

                  o     Proposals for employee stock purchase plans that permit
                        discounts up to 15%, but only for grants that are part
                        of a broad based employee plan, including all
                        non-executive employees.

                  o     Proposals for the establishment of Employee Stock Option
                        Plans and other employee ownership plans.

                  ANTI-TAKEOVER MATTERS

                  o     Proposals to modify or rescind existing supermajority
                        vote requirements to amend the charters or bylaws.

                  o     Proposals relating to the adoption of anti-greenmail
                        provisions provided that the proposal: (i) defines
                        greenmail; (ii) prohibits buyback offers to large block
                        holders not made to all shareholders or not approved by
                        disinterested shareholders; and (iii) contains no
                        anti-takeover measures or other provisions restricting
                        the rights of shareholders.

              4.  The following non-routine proposals, which potentially may
                  have a substantive financial or best interest impact on the
                  shareholder, unless otherwise determined by the Proxy Review
                  Committee, will be voted against (notwithstanding management
                  support).



                                       G-4


                  o     Proposals to establish cumulative voting rights in the
                        election of directors.

                  o     Proposals relating to capitalization changes that add
                        classes of stock which substantially dilute the voting
                        interests of existing shareholders.

                  o     Proposals to increase the authorized number of shares of
                        existing classes of stock that carry preemptive rights
                        or super-voting rights.

                  o     Proposals to create "blank check" preferred stock.

                  o     Proposals relating to changes in capitalization by 100%
                        or more.

                  o     Compensation proposals that allow for discounted stock
                        options that have not been offered to employees in
                        general.

                  o     Proposals to amend bylaws to require a supermajority
                        shareholder vote to pass or repeal certain provisions.

                  o     Proposals to indemnify auditors.

              5.  The following types of non-routine proposals, which
                  potentially may have a substantive financial or best interest
                  impact on an issuer, will be voted as determined by the Proxy
                  Review Committee.

                  CORPORATE TRANSACTIONS

                  o     Proposals relating to mergers, acquisitions and other
                        special corporate transactions (i.e., takeovers,
                        spin-offs, sales of assets, reorganizations,
                        restructurings and recapitalizations) will be examined
                        on a case-by-case basis. In all cases, ISS and IRRC
                        research and analysis will be used along with MSIM
                        Affiliates' research and analysis, including, among
                        other things, MSM internal company-specific knowledge.

                  o     Proposals relating to change-in-control provisions in
                        non-salary compensation plans, employment contracts, and
                        severance agreements that benefit management and would
                        be costly to shareholders if triggered.

                  o     Proposals relating to shareholders rights plans that
                        allow appropriate offers to shareholders to be blocked
                        by the board or trigger provisions that prevent
                        legitimate offers from proceeding. 

                  o     Proposals relating to Executive/ Director stock option
                        plans. Generally, stock option plans should meet the
                        following criteria:

                        (i)     Whether the stock option plan is incentive
                                based;

                        (ii)    For mature companies, should be no more than 5%
                                of the issued capital at the time of approval;




                                       G-5



                        (iii)   For growth companies, should be no more than 10%
                                of the issued capital at the time of approval.

                  ANTI-TAKEOVER PROVISIONS

                  o     Proposals requiring shareholder ratification of poison
                        pills.

                  o     Proposals relating to anti-takeover and related
                        provisions that serve to prevent the majority of
                        shareholders from exercising their rights or effectively
                        deter the appropriate tender offers and other offers.

         B.   SHAREHOLDER PROPOSALS

              1.  The following shareholder proposals will be supported, unless
                  otherwise determined by the Proxy Review Committee:

                  o     Proposals requiring auditors to attend the annual
                        meeting of shareholders.

                  o     Proposals requiring non-U.S. companies to have a
                        separate Chairman and CEO.

                  o     Proposals requiring that members of the company's
                        compensation, nominating and audit committees be
                        comprised of independent or unaffiliated Directors.

                  o     Proposals requiring that a certain percentage of the
                        company's members be comprised of independent and
                        unaffiliated Directors.

                  o     Proposals requiring confidential voting.

                  o     Proposals to reduce or eliminate of supermajority voting
                        requirements.

                  o     Proposals requiring shareholder approval for shareholder
                        rights plan or poison pill.

                  o     Proposals to require the company to expense stock
                        options.

              2.  The following shareholder proposals will be voted as
                  determined by the Proxy Review Committee.

                  o     Proposals that limit tenure of directors.

                  o     Proposals to limit golden parachutes.

                  o     Proposals requiring directors to own large amounts of
                        stock to be eligible for election.

                  o     Proposals that request or require disclosure of
                        executive compensation in addition to the disclosure
                        required by the Securities and Exchange Commission
                        ("SEC") regulations.



                                       G-6



                  o     Proposals that limit retirement benefits or executive
                        compensation.

                  o     Proposals requiring shareholder approval for bylaw or
                        charter amendments.

                  o     Proposals requiring shareholder approval of executive
                        compensation.

                  o     Proposals requiring shareholder approval of golden
                        parachutes.

                  o     Proposals to eliminate certain anti-takeover related
                        provisions.

                  o     Proposals to prohibit payment of greenmail.

              3.  The following shareholder proposals will not be supported,
                  unless otherwise determined by the Proxy Review Committee.

                  o     Proposals to declassify the Board of Directors (if
                        management supports a classified board).

                  o     Proposals requiring a U.S. company to have a separate
                        Chairman and CEO.

                  o     Proposals requiring that the company prepare reports
                        that are costly to provide or that would require
                        duplicative efforts or expenditures that are of a
                        non-business nature or would provide no pertinent
                        information from the perspective of institutional
                        shareholders.

                  o     Proposals to add restrictions related to social,
                        political or special interest issues that impact the
                        ability of the company to do business or be competitive
                        and that have a significant financial or best interest
                        impact to the shareholders.

                  o     Proposals that require inappropriate endorsements or
                        corporate actions.

VII.     ADMINISTRATION OF PROXY POLICIES AND PROCEDURES

         A.   PROXY REVIEW COMMITTEE

              1.  The MSIM Proxy Review Committee ("Committee") is responsible
                  for creating and implementing MSIM's Proxy Voting Policy and
                  Procedures and, in this regard, has expressly adopted them.

                  (a)   The Committee, which is appointed by MSIM's Chief
                        Investment Officer ("CIO"), consists of senior
                        investment professionals who represent the different
                        investment disciplines and geographic locations of the
                        firm. The Committee is responsible for establishing
                        MSIM's proxy voting policy and guidelines and
                        determining how MSIM will vote proxies on an ongoing
                        basis.




                                       G-7






                  (b)   The Committee will periodically review and have the
                        authority to amend, as necessary, these Proxy Voting
                        Policy and Procedures and establish and direct voting
                        positions consistent with the Client Proxy Standard.

                  (c)   The Committee will meet at least monthly to (among other
                        matters): (1) address any outstanding issues relating to
                        MSIM's Proxy Voting Policy and Procedures; and (2)
                        review proposals at upcoming shareholder meetings of
                        MSIM portfolio companies in accordance with this Policy
                        including, as appropriate, the voting results of prior
                        shareholder meetings of the same issuer where a similar
                        proposal was presented to shareholders. The Committee,
                        or its designee, will timely communicate to ISS MSIM's
                        Proxy Voting Policy and Procedures (and any amendments
                        to them and/or any additional guidelines or procedures
                        it may adopt).

                  (d)   The Committee will meet on an ad hoc basis to (among
                        other matters): (1) authorize "split voting" (i.e.,
                        allowing certain shares of the same issuer that are the
                        subject of the same proxy solicitation and held by one
                        or more MSIM portfolios to be voted differently than
                        other shares) and/or "override voting" (i.e., voting all
                        MSIM portfolio shares in a manner contrary to the Proxy
                        Voting Policy and Procedures); (2) review and approve
                        upcoming votes, as appropriate, for matters for which
                        specific direction has been provided in these Policy and
                        Procedures; and (3) determine how to vote matters for
                        which specific direction has not been provided in these
                        Policy and Procedures. Split votes will generally not be
                        approved within a single Global Investor Group team. The
                        Committee may take into account ISS and IRRC
                        recommendations and the research as well as any other
                        relevant information they may request or receive.

                  (e)   In addition to the procedures discussed above, if the
                        Committee determines that an issue raises a potential
                        material conflict of interest, or gives rise to the
                        appearance of a potential material conflict of interest,
                        the Committee will request a special committee to
                        review, and recommend a course of action with respect
                        to, the conflict(s) in question ("Special Committee").
                        The Special Committee shall be comprised of the Chairman
                        of the Proxy Review Committee, the Compliance Director
                        for the area of the firm involved or his/her designee, a
                        senior portfolio manager (if practicable, one who is a
                        member of the Proxy Review Committee) designated by the
                        Proxy Review Committee and MSIM's Chief Investment
                        Officer or his/her designee. The Special Committee may
                        request the assistance of MSIM's General Counsel or
                        his/her designee and will have sole discretion to cast a
                        vote. In addition to the research provided by ISS and
                        IRRC, the Special Committee may request analysis from
                        MSIM Affiliate investment professionals and outside
                        sources to the extent it deems appropriate.

                  (f)   The Committee and the Special Committee, or their
                        designee(s), will document in writing all of their
                        decisions and actions, which documentation will be
                        maintained by the Committee and the Special Committee,
                        or their designee(s), for a period of at least 6 years.
                        To the


                                       G-8



                        extent these decisions relate to a security held by a
                        MSIM U.S. registered investment company, the Committee
                        and Special Committee, or their designee(s), will report
                        their decisions to each applicable Board of Trustees/
                        Directors of those investment companies at each Board's
                        next regularly scheduled Board meeting. The report will
                        contain information concerning decisions made by the
                        Committee and Special Committee during the most recently
                        ended calendar quarter immediately preceding the Board
                        meeting.

                  (g)   The Committee and Special Committee, or their
                        designee(s), will timely communicate to applicable
                        portfolio managers, the Compliance Departments and, as
                        necessary, ISS, decisions of the Committee and Special
                        Committee so that, among other things, ISS will vote
                        proxies consistent with their decisions.

         B.   IDENTIFICATION OF MATERIAL CONFLICTS OF INTEREST

              1.  If there is a possibility that a vote may involve a material
                  conflict of interest, the vote must be decided by the Special
                  Committee in consultation with MSIM's General Counsel or
                  his/her designee.

              2.  A material conflict of interest could exist in the following
                  situations, among others:

                  (a)   The issuer soliciting the vote is a client of MSIM or an
                        affiliate of MSIM and the vote is on a material matter
                        affecting the issuer;

                  (b)   The proxy relates to Morgan Stanley common stock or any
                        other security issued by Morgan Stanley or its
                        affiliates; or

                  (c)   Morgan Stanley has a material pecuniary interest in the
                        matter submitted for a vote (e.g., acting as a financial
                        advisor to a merger or acquisition for which Morgan
                        Stanley will be paid a success fee if completed).

         C.  PROXY VOTING REPORTS

              1.  MSIM will promptly provide a copy of these Policy and
                  Procedures to any client requesting it. MSIM will also, upon
                  client request, promptly provide a report indicating how each
                  proxy was voted with respect to securities held in that
                  client's account.

              2.  MSIM's legal department is responsible for filing an annual
                  Form N-PX on behalf of each registered management investment
                  company for which such filing is required, indicating how all
                  proxies were voted with respect to such investment company's
                  holdings.





                                       G-9



                                   APPENDIX H

                         PRO FORMA FINANCIAL STATEMENTS






















                                      H-1

                         PRO FORMA FINANCIAL STATEMENTS

The following presents the pro forma financial statements for the combination of
the Van Kampen Advantage Municipal Income Trust and the Municipal Opportunity
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 Municipal Opportunity Trust
shares for the assets and liabilities of the Van Kampen Advantage Municipal
Income Trust, with Van Kampen Municipal Opportunity Trust 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.



                                      H-2

                  VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST (VMO)
                VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST (VKA)
                        PROFORMA PORTFOLIO OF INVESTMENTS
                                JANUARY 31, 2005
                                   (UNAUDITED)



                          VMO                                                                             
   VKA         VMO      PROFORMA                                                                                            VMO
PAR AMOUNT  PAR AMOUNT PAR AMOUNT                                                          VKA MARKET    VMO MARKET  PROFORMA MARKET
  (000)       (000)      (000)    DESCRIPTION                       COUPON    MATURITY        VALUE         VALUE          VALUE
------------------------------------------------------------------------------------------------------------------------------------
                                                                                             

                                  MUNICIPAL BONDS 156.1%
                                  ALABAMA 2.2%
$ 1,000                 $ 1,000   Alabama Bldg Renovation
                                  Fin Auth Rev Rfdg (AMBAC
                                  Insd)                             5.625%    09/01/24     $ 1,125,050                   $ 1,125,050
  1,550                   1,550   Birmingham, AL Arpt Auth
                                  Arpt Rev Rfdg (AMT) (AMBAC
                                  Insd) (a)                         5.500     07/01/14       1,663,072                     1,663,072
  2,250       2,000       4,250   Jefferson Cnty, AL Ltd
                                  Oblig Sch Wt Ser A                5.250     01/01/23       2,418,930     2,150,160       4,569,090
  1,000                   1,000   Jefferson Cnty, AL Ltd
                                  Oblig Sch Wt Ser A                5.000     01/01/24       1,046,830                     1,046,830
              2,375       2,375   Marshall Cnty, AL Hlthcare
                                  Ser C                             6.000     01/01/32                     2,544,290       2,544,290
                  5           5   Mobile, AL Indl Dev Brd
                                  Solid Waste Disp Rev
                                  Mobile Energy Svc Co Proj
                                  Rfdg                              6.950     01/01/20                            29              29
  2,000                   2,000   Montgomery, AL Wt  (AMBAC
                                  Insd)                             5.250     05/01/20       2,213,460                     2,213,460
                                                                                           -------------------------  --------------
                                                                                             8,467,342     4,694,479      13,161,821
                                                                                           -------------------------  --------------

                                  ALASKA     2.2%
  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
                                                                                           -------------------------  --------------
                                                                                             1,065,960             -       1,065,960
                                                                                           -------------------------  --------------

                                  ARIZONA     2.2%
  1,425                   1,425   Arizona Cap Fac Fin Corp
                                  Student Hsg Rev AZ St Univ
                                  Proj                              6.250     09/01/32       1,524,037                     1,524,037
  2,500                   2,500   Arizona Sch Fac Brd Rev St
                                  Sch Impt                          5.500     07/01/17       2,823,350                     2,823,350
  2,900                   2,900   Arizona Tourism & Sports
                                  Auth Multi Purp Stad Fac
                                  Ser A (MBIA Insd)                 5.375     07/01/22       3,253,365                     3,253,365
              1,500       1,500   Maricopa Cnty, AZ Stadium
                                  Dist Rfdg (AMBAC Insd)            5.375     06/01/19                     1,678,395       1,678,395
  2,875                   2,875   Phoenix, AZ Civic Impt
                                  Corp Arpt Rev Jr Lien
                                  (AMT) (FGIC Insd)                 5.375     07/01/29       2,932,155                     2,932,155
    720                     720   Pima Cnty, AZ Indl Dev
                                  Auth Indl Rev Lease Oblig
                                  Irvington Proj Tucson Ser
                                  A Rfdg (FSA Insd)                 7.250     07/15/10         752,688                       752,688
                                                                                           -------------------------  --------------
                                                                                            11,285,595     1,678,395      12,963,990
                                                                                           -------------------------  --------------

                                  ARKANSAS     0.6%
              3,035       3,035   Fort Smith, AR Wtr & Swr
                                  Rev Ser A Rfdg (FSA Insd)         5.250     10/01/16                     3,373,008       3,373,008
                                                                                           -------------------------  --------------
                                                                                                     -     3,373,008       3,373,008
                                                                                           -------------------------  --------------

                                  CALIFORNIA     10.4%
  2,630                   2,630   Anaheim, CA Pub Fin Auth
                                  Lease Rev Cap Apprec Sub
                                  Pub Impt Proj C (FSA Insd)          *       09/01/20       1,287,806                     1,287,806
  2,400                   2,400   Bay Area Govt Assn CA Rev
                                  Tax Alloc CA Redev Pool
                                  Ser A (XLCA Insd)                 5.250     09/01/29       2,572,584                     2,572,584
                 30          30   California Rural Home Mtg
                                  Fin Auth Single Family Mtg
                                  Rev Ser C (AMT) (GNMA
                                  Collateralized)                   7.800     02/01/28                        30,667          30,667
  5,500       5,500      11,000   California St Dept Wtr Res
                                  Pwr Ser A (AMBAC Insd)            5.500     05/01/16       6,241,455     6,241,455      12,482,910
  2,000       2,000       4,000   California St Dept Wtr Res
                                  Pwr Ser A                         5.750     05/01/17       2,264,980     2,264,980       4,529,960
  4,500       4,500       9,000   California St (AMBAC Insd)        5.125     10/01/27       4,758,525     4,758,525       9,517,050
              3,500       3,500   California St Pub Wks Brd
                                  Lease Rev Dept Corrections
                                  Ser C                             5.250     06/01/28                     3,695,895       3,695,895
              2,500       2,500   California St Pub Wks Brd
                                  Lease Rev Dept Corrections
                                  Ser E Rfdg (XLCA Insd)            5.000     06/01/18                     2,714,300       2,714,300
              2,000       2,000   California St Pub Wks Brd
                                  Lease Rev Dept Mental Hlth
                                  Coalinga A                        5.000     06/01/25                     2,082,380       2,082,380
              5,000       5,000   Contra Costa, CA Home Mtg
                                  Fin Auth Home Mtg Rev
                                  (Escrowed to Maturity)
                                  (MBIA Insd)                         *       09/01/17                     2,712,000       2,712,000
  5,000                   5,000   Foothill/Eastern Corridor
                                  Agy CA Toll Rd Rev Cap
                                  Apprec Rfdg                         *       01/15/25       1,577,600                     1,577,600
              4,000       4,000   Foothill/Eastern Corridor
                                  Agy CA Toll Rd Rev Conv
                                  Cap Apprec Sr Lien Ser A
                                  (Escrowed to Maturity)            7.050     01/01/10                     4,784,800       4,784,800
  3,185                   3,185   Imperial Irr Dist CA Rev
                                  Elec Sys Proj (FSA Insd)
                                  (a)                               5.250     11/01/18       3,542,166                     3,542,166
              1,500       1,500   Los Angeles Cnty, CA Met
                                  Tran Auth Sales Tax Rev
                                  Prop C Second Tier Sr Ser
                                  A Rfdg (AMBAC Insd)               5.000     07/01/23                     1,554,285       1,554,285
  3,000                   3,000   Los Angeles, CA Uni Sch
                                  Dist Ser A (FSA Insd)             5.250     07/01/19       3,335,640                     3,335,640
  2,745                   2,745   San Mateo, CA Uni High Sch
                                  Dist Rfdg (FSA Insd)              5.000     09/01/21       2,978,709                     2,978,709
  1,600                   1,600   Turlock, CA Hlth Fac Rev
                                  Ctf Partn Emanuel Med Ctr
                                  Inc.                              5.375     10/15/34       1,612,016                     1,612,016
                                                                                           -------------------------  --------------
                                                                                            30,171,481    30,839,287      61,010,768
                                                                                           -------------------------  --------------

                                  COLORADO     3.4%
  8,500                   8,500   Arapahoe Cnty, CO Cap Impt
                                  Tr Fd Hwy Rev E-470 Proj
                                  Ser C (Prerefunded @
                                  08/31/05)                           *       08/31/26       1,752,360                     1,752,360
              1,505       1,505   Arapahoe Cnty, CO Ctfs
                                  Partn Rfdg (FSA Insd) (a)         5.250     12/01/15                     1,702,381       1,702,381
  3,000                   3,000   Colorado Hlth Fac Auth Rev
                                  Catholic Hlth Initiatives
                                  Ser A (Escrowed to
                                  Maturity)                         5.500     03/01/32       3,391,860                     3,391,860
              1,000       1,000   Colorado Hlth Fac Auth Rev
                                  Hosp Portercare Adventist
                                  Hlth                              6.500     11/15/31                     1,111,170       1,111,170
              1,000       1,000   Colorado Hsg Fin Auth
                                  Multi-Family Hsg Ins Mtg
                                  Ser B2 (AMT) (FHA Gtd)            5.800     10/01/28                     1,031,320       1,031,320
                171         171   Colorado Hsg Fin Auth
                                  Single Family Pgm Sr Ser
                                  A2 (AMT)                          7.250     05/01/27                       172,746         172,746
     20                      20   Colorado Hsg Fin Auth
                                  Single Family Pgm Sr Ser
                                  B1 (AMT)                          7.900     12/01/25          20,102                        20,102
                135         135   Colorado Hsg Fin Auth
                                  Single Family Pgm Sr Ser
                                  C1 (AMT)                          7.550     11/01/27                       136,430         136,430
              1,000       1,000   Denver, CO City & Cnty
                                  Arpt Rev Ser B (AMT) (MBIA
                                  Insd)                             6.250     11/15/07                     1,077,760       1,077,760
              1,005       1,005   Greeley, CO Multi-Family
                                  Rev Hsg Mtg Creek Stone
                                  (AMT) (FHA Gtd)                   5.950     07/01/28                     1,039,512       1,039,512
              1,000       1,000   Highlands Ranch Metro Dist
                                  No 2 CO Rfdg (FSA Insd)           6.500     06/15/11                     1,190,790       1,190,790
  2,000                   2,000   La Plata Cnty, CO Sch Dist
                                  9 (MBIA Insd) (a)                 5.250     11/01/19       2,222,620                     2,222,620
              3,000       3,000   Mesa Cnty, CO Vly Sch Dist
                                  No 51 Ser A (MBIA Insd)           5.000     12/01/21                     3,271,080       3,271,080
  1,740                   1,740   Weld & Adams Cntys, CO Sch
                                  Dist No. 003 (FSA Insd) (a)       5.000     12/15/23       1,881,427                     1,881,427
                                                                                           -------------------------  --------------
                                                                                             9,268,369    10,733,189      20,001,558
                                                                                           -------------------------  --------------

                                  CONNECTICUT     2.1%
  2,040                   2,040   Bridgeport, CT Ser A (MBIA
                                  Insd) (a)                         5.250     08/15/21       2,268,766                     2,268,766
  3,250       3,250       6,500   Connecticut St Spl Oblig
                                  Pkg Rev Bradley Intl Arpt
                                  Ser A (AMT) (ACA Insd)            6.600     07/01/24       3,538,795     3,538,795       7,077,590
  1,000                   1,000   Hartford, CT Pkg Sys Rev
                                  Ser A                             6.400     07/01/20       1,049,910                     1,049,910
              1,000       1,000   Mashantucket Western Pequot
                                  Tribe CT Spl Rev Ser A,
                                  144A - Private Placement (b)      6.400     09/01/11                     1,062,300       1,062,300
                840         840   Mashantucket Western
                                  Pequot Tribe CT Spl Rev
                                  Ser A, 144A - Private
                                  Placement (Escrowed to
                                  Maturity) (b)                     6.500     09/01/06                       894,054         894,054
                                                                                           -------------------------  --------------
                                                                                             6,857,471     5,495,149      12,352,620
                                                                                           -------------------------  --------------

                                  DISTRICT OF COLUMBIA     2.0%
  2,500                   2,500   District Columbia Rev
                                  Gonzaga College (FSA Insd)        5.250     07/01/32       2,655,325                     2,655,325
  3,850       5,000       8,850   Metropolitan Washington DC
                                  Arpt Auth Sys Ser A (AMT)
                                  (FGIC Insd)                       5.250     10/01/32       4,019,515     5,220,150       9,239,665
                                                                                           -------------------------  --------------
                                                                                             6,674,840     5,220,150      11,894,990
                                                                                           -------------------------  --------------

                                  FLORIDA     2.1%
  2,000                   2,000   Escambia Cnty, FL Hlth Fac
                                  Auth Rev (AMBAC Insd)             5.950     07/01/20       2,035,080                     2,035,080




                                      H-3





                                                                                             
              2,000       2,000   Escambia Cnty, FL Hlth Fac
                                  Auth Rev FL Hlthcare Fac
                                  Ln VHA Pgm (AMBAC Insd)           5.950     07/01/20                     2,035,080       2,035,080
              1,000       1,000   Lakeland, FL Hosp Sys Rev
                                  Lakeland Regl Hlth Sys            5.500     11/15/32                     1,048,610       1,048,610
              2,100       2,100   Miami-Dade Cnty, FL
                                  Aviation Miami Intl Arpt
                                  (AMT) (FGIC Insd)                 5.375     10/01/27                     2,222,640       2,222,640
  2,500                   2,500   Miami-Dade Cnty, FL
                                  Aviation Rev Miami Intl
                                  Arpt (AMT) (FGIC Insd)            5.375     10/01/32       2,636,550                     2,636,550
              2,375       2,375   North Broward, FL Hosp
                                  Dist Rev Impt                     6.000     01/15/31                     2,542,129       2,542,129
                                                                                           -------------------------  --------------
                                                                                             4,671,630     7,848,459      12,520,089
                                                                                           -------------------------  --------------

                                  GEORGIA     6.1%
  1,000                   1,000   Atlanta, GA Arpt Rev Ser B
                                  (AMT) (FGIC Insd)                 5.625     01/01/30       1,061,350                     1,061,350
  5,160                   5,160   Atlanta, GA Wtr & Wastewtr
                                  Rev (FSA Insd)                    5.000     11/01/20       5,627,341                     5,627,341
              1,937       1,937   Fulton Cnty, GA Lease Rev
                                  (Acquired 12/23/94, Cost
                                  $1,936,856) (c)                   7.250     06/15/10                     2,019,211       2,019,211
              7,000       7,000   Georgia Muni Elec Auth Pwr
                                  Rev Ser A (MBIA Insd)             6.500     01/01/20                     8,983,450       8,983,450
  3,770                   3,770   Monroe Cnty, GA Dev Auth
                                  Pollutn Ctl Rev Oglethorpe
                                  Pwr Corp Scherer Ser A            6.800     01/01/12       4,491,239                     4,491,239
              6,245       6,245   Municipal Elec Auth GA
                                  Combustion Turbine Proj
                                  Ser A (MBIA Insd)                 5.250     11/01/16                     6,962,925       6,962,925
  2,895                   2,895   Municipal Elec Auth GA
                                  Combustion Turbine Proj
                                  Ser A (MBIA Insd)                 5.250     11/01/19       3,067,137                     3,067,137
    105                     105   Municipal Elec Auth GA
                                  Combustion Turbine Proj
                                  Ser A (MBIA Insd)
                                  (Prerefunded @11/01/07)           5.250     11/01/19         112,647                       112,647
  2,500                   2,500   Municipal Elec Auth GA
                                  Combustion Turbine Proj
                                  Ser A (MBIA Insd)                 5.250     11/01/21       2,765,975                     2,765,975
  1,000                   1,000   Oconee Cnty, GA Indl Dev
                                  Auth Rev Oiit Proj (XLCA
                                  Insd)                             5.250     07/01/25       1,077,800                     1,077,800
                                                                                           -------------------------  --------------
                                                                                            18,203,489    17,965,586      36,169,075
                                                                                           -------------------------  --------------

                                  ILLINOIS     12.2%
  3,750                   3,750   Bolingbrook, IL Cap Apprec
                                  Ser B (MBIA Insd)                   *       01/01/30         970,912                       970,912
  2,000                   2,000   Chicago, IL Brd of Ed
                                  (Prerefunded @ 12/01/10)
                                  (FGIC Insd)                       5.500     12/01/31       2,262,460                     2,262,460
  5,000                   5,000   Chicago, IL Brd of Ed Cap
                                  Apprec Sch Reform Ser A
                                  (FGIC Insd)                         *       12/01/28       1,544,550                     1,544,550
  3,150                   3,150   Chicago, IL O'Hare Intl
                                  Arpt Rev Gen Arpt Third
                                  Lien Ser A Rfdg (AMT)
                                  (MBIA Insd)                       5.375     01/01/32       3,301,452                     3,301,452
  1,895                   1,895   Chicago, IL Pk Dist Hbr
                                  Fac Rev (Prerefunded @
                                  01/01/11)                         5.875     01/01/16       2,178,871                     2,178,871
  2,500                   2,500   Chicago, IL Pk Dist Ser C
                                  (FGIC Insd)                       5.500     01/01/19       2,811,025                     2,811,025
                 60          60   Chicago, IL Single Family
                                  Mtg Rev Ser A (AMT) (GNMA
                                  Collateralized)                   7.000     09/01/27                        60,274          60,274
                 45          45   Chicago, IL Single Family
                                  Mtg Rev Ser B (AMT) (GNMA
                                  Collateralized)                   7.625     09/01/27                        45,192          45,192
  1,000                   1,000   Chicago, IL Wastewtr
                                  Transmission Rev Second
                                  Lien (Prerefunded @
                                  01/01/10) (MBIA Insd)             5.750     01/01/25       1,137,630                     1,137,630
  4,500                   4,500   Cook Cnty, IL Cap Impt Ser
                                  A (FGIC Insd)                     5.000     11/15/23       4,840,560                     4,840,560
              2,000       2,000   Cook Cnty, IL Cmnty Cap
                                  Apprec (FSA Insd)                   *       12/01/10                     1,637,280       1,637,280
  1,620                   1,620   Cook Cnty, IL Cmnty High
                                  Sch Dist No. 219 Niles Twp
                                  (FSA Insd)                          *       12/01/11       1,267,699                     1,267,699
  2,260                   2,260   Cook Cnty, IL Cmnty High
                                  Sch Dist No. 219 Niles Twp
                                  (FSA Insd)                          *       12/01/12       1,680,649                     1,680,649
  2,235                   2,235   Cook Cnty, IL Cmnty High
                                  Sch Dist No. 219 Niles Twp
                                  (FSA Insd)                          *       12/01/13       1,580,681                     1,580,681
  3,110       2,500       5,610   Du Page Cnty, IL Trans Rev
                                  (FSA Insd)                        5.750     01/01/17       3,553,082     2,856,175       6,409,257
  3,000       3,000       6,000   Illinois Fin Auth Rev
                                  Northwestern Mem Hosp Ser A       5.500     08/15/43       3,212,970     3,212,970       6,425,940
              3,630       3,630   Kendall, Kane & Will Cntys,
                                  IL Cmnty Sch Dist No. 308
                                  Ser B (FGIC Insd) (a)             5.250     10/01/20                     4,016,196       4,016,196
  1,925                   1,925   Kendall, Kane & Will Cntys,
                                  IL Cmnty Sch Dist No. 308
                                  Ser B (FGIC Insd)                 5.250     10/01/21       2,124,257                     2,124,257
  2,135                   2,135   Mc Henry Cnty, IL Cmnty
                                  High Sch Dist No. 154 Cap
                                  Apprec (FGIC Insd) (a)              *       01/01/14       1,488,031                     1,488,031
  1,440                   1,440   Mc Henry Cnty, IL Cmnty
                                  High Sch Dist No. 154 Cap
                                  Apprec (FGIC Insd)                  *       01/01/17         854,280                       854,280

  1,250                   1,250   Metropolitan Pier & Expo
                                  Auth IL Dedicated St Tax
                                  Rev McCormick Pl Expn Proj
                                  (FGIC Insd)                       5.375     12/15/18       1,390,312                     1,390,312
  1,000       1,000       2,000   Metropolitan Pier & Expo
                                  Auth IL Dedicated St Tax
                                  Rev McCormick Pl Expn Proj
                                  Rfdg (FGIC Insd)                  5.500     12/15/24       1,114,020     1,114,020       2,228,040
  6,000                   6,000   Metropolitan Pier & Expo
                                  Auth IL Dedicated St Tax
                                  Rev McCormick Pl Expn Ser
                                  A (MBIA Insd)                     5.250     06/15/42       6,399,060                     6,399,060
  5,000                   5,000   Regional Tran Auth IL Ser
                                  B (AMBAC Insd)                    8.000     06/01/17       6,994,600                     6,994,600
              1,865       1,865   Sangamon Cnty, IL Cmnty
                                  Unit Sch Dist No 5 (FGIC
                                  Insd) (a)                         6.500     12/01/05                     1,930,331       1,930,331
  5,000                   5,000   University IL Univ Rev
                                  Auxiliary Fas Ser A Rfdg
                                  (AMBAC Insd)                      5.000     04/01/30       5,156,100                     5,156,100
  1,150                   1,150   Will Cnty, IL Cmnty Sch
                                  Dist 365U Vly View Ser B
                                  (FSA Insd)                          *       11/01/15         733,435                       733,435
                                                                                           -------------------------  --------------
                                                                                            56,596,636    14,872,438      71,469,074
                                                                                           -------------------------  --------------

                                  INDIANA     2.0%
  1,000                   1,000   Allen Cnty, IN Juvenile
                                  Justice Ctr First Mtg
                                  (AMBAC Insd)                      5.500     01/01/18       1,121,240                     1,121,240
              3,270       3,270   Allen Cnty, IN War Mem
                                  Coliseum Ser A (AMBAC
                                  Insd) (a)                         5.500     11/01/16                     3,679,110       3,679,110
  2,000                   2,000   Indiana Hlth Fac Fin Auth
                                  Hosp Rev Columbus Regl
                                  Hosp Rfdg (FSA Insd)              7.000     08/15/15       2,458,100                     2,458,100
  1,500       1,000       2,500   Indiana St Dev Fin Auth
                                  Rev Exempt Fac Conv Rfdg
                                  (AMT)                             5.950     08/01/30       1,542,270     1,028,180       2,570,450
              1,210       1,210   North Adams, IN Cmnty Sch
                                  Cap Apprec First Mtg (FSA
                                  Insd) (a)                           *       01/15/16                       755,149         755,149
  1,220                   1,220   North Adams, IN Cmnty Sch
                                  Cap Apprec First Mtg (FSA
                                  Insd) (a)                           *       07/15/16         744,761                       744,761
  1,230                   1,230   North Adams, IN Cmnty Sch
                                  Cap Apprec First Mtg (FSA
                                  Insd) (a)                           *       01/15/17         727,939                       727,939
                                                                                           -------------------------  --------------
                                                                                             6,594,310     5,462,439      12,056,749
                                                                                           -------------------------  --------------

                                  IOWA     0.4%
              1,890       1,890   Des Moines, IA Pub Pkg Sys
                                  Rev Ser A (FGIC Insd) (a)         5.750     06/01/17                     2,124,984       2,124,984
                                                                                           -------------------------  --------------
                                                                                                     -     2,124,984       2,124,984
                                                                                           -------------------------  --------------

                                  KENTUCKY     1.1%
              1,475       1,475   Kenton Cnty, KY Arpt Brd
                                  Rev Cincinnati/Northn KY
                                  Intl Arpt Ser A Rfdg (AMT)
                                  (MBIA Insd)                       6.200     03/01/08                     1,614,299       1,614,299
              1,995       1,995   Kentucky Hsg Corp Hsg Rev
                                  Ser F (AMT) (FNMA
                                  Collateralized)                   5.450     01/01/32                     2,058,142       2,058,142
              2,345       2,345   Kentucky St Tpk Auth Econ
                                  Dev Revitalization Proj
                                  Rfdg (Prerefunded @
                                  01/01/11) (FSA Insd)              5.625     07/01/14                     2,666,171       2,666,171
                                                                                           -------------------------  --------------
                                                                                                     -     6,338,612       6,338,612
                                                                                           -------------------------  --------------

                                  LOUISIANA     2.5%
  2,500       2,500       5,000   Lafayette, LA Utils Rev
                                  (MBIA Insd)                       5.250     11/01/23       2,776,750     2,776,750       5,553,500
    300                     300   Louisiana Hsg Fin Agy Mtg
                                  Rev Single Family Access
                                  Pgm Ser B (AMT) (GNMA
                                  Collateralized)                   8.000     03/01/25         301,791                       301,791
              2,000       2,000   Louisiana Hsg Fin Agy Rev
                                  Azalea Estates Ser A Rfdg
                                  (AMT) (GNMA Collateralized)       5.375     10/20/39                     2,038,640       2,038,640
  3,000                   3,000   Louisiana St Energy & Pwr
                                  Auth Pwr Proj Rev Rfdg
                                  (FSA Insd)                        5.750     01/01/12       3,458,130                     3,458,130
  3,000                   3,000   Saint Charles Parish, LA
                                  Environmental Impt Rev LA
                                  Pwr & Lt Co Ser A (AMT)
                                  (AMBAC Insd)                      6.875     07/01/24       3,063,060                     3,063,060
                                                                                           -------------------------  --------------
                                                                                             9,599,731     4,815,390      14,415,121
                                                                                           -------------------------  --------------

                                  MARYLAND     1.6%
  1,000       1,050       2,050   Maryland St Econ Dev Corp
                                  Univ MD College Pk Proj           5.625     06/01/35       1,038,570     1,090,498       2,129,068
  1,000       1,000       2,000   Maryland St Hlth & Higher
                                  Ed Fac Auth Rev Medstar
                                  Hlth Rfdg                         5.375     08/15/24       1,038,450     1,038,450       2,076,900
  2,360       2,350       4,710   Northeast, MD Waste Disp
                                  Auth Rfdg (AMT) (AMBAC
                                  Insd)                             5.500     04/01/16       2,603,552     2,592,520       5,196,072
                                                                                           -------------------------  --------------
                                                                                             4,680,572     4,721,468       9,402,040
                                                                                           -------------------------  --------------

                                  MASSACHUSETTS     4.4%
  3,955                   3,955   Massachusetts Bay Trans
                                  Auth Gen Trans Sys Ser A
                                  Rfdg                              5.500     03/01/12       4,422,323                     4,422,323
  4,815                   4,815   Massachusetts Muni Whsl
                                  Elec Co Proj 6-A (MBIA
                                  Insd)                             5.000     07/01/11       5,303,771                     5,303,771
  2,400       2,400       4,800   Massachusetts St Dev Fin
                                  Agy Rev Clg Pharmacy &
                                  Allied Hlth Ser D (d)             5.000     07/01/35       2,486,688     2,486,688       4,973,376
              3,000       3,000   Massachusetts St Dev Fin
                                  Agy Semass Sys Ser A
                                  (MBIA Insd)                       5.625     01/01/16                     3,354,270       3,354,270
  1,500       1,000       2,500   Massachusetts St Fed Hwy
                                  Gnt Antic Nt Ser A                5.750     06/15/15       1,690,830     1,127,220       2,818,050
              1,000       1,000   Massachusetts St Hlth & Ed
                                  Fac Auth Rev Partn Hlthcare
                                  Sys Ser C                         5.750     07/01/32                     1,099,050       1,099,050
  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
              3,000       3,000   Massachusetts St Wtr Res
                                  Auth Gen Ser J (FSA Insd)         5.000     08/01/32                     3,120,720       3,120,720
                                                                                           -------------------------  --------------
                                                                                            14,910,452    11,187,948      26,098,400
                                                                                           -------------------------  --------------


                                      H-4





                                                                                            

                                  MICHIGAN     1.3%
              3,505       3,505   Detroit, MI Wtr Supply Sys
                                  Ser B (MBIA Insd) (a)             5.250     07/01/18                     3,903,834       3,903,834
              2,000       2,000   Michigan St Ctf Part
                                  (AMBAC Insd)                      5.500     06/01/27                     2,186,860       2,186,860
              1,215       1,215   Zeeland, MI Pub Schs Sch
                                  Bldg & Site (MBIA Insd) (a)       5.250     05/01/19                     1,357,787       1,357,787
                                                                                           -------------------------  --------------
                                                                                                     -     7,448,481       7,448,481
                                                                                           -------------------------  --------------

                                  MINNESOTA     0.9%
              1,000       1,000   Chaska, MN Elec Rev Ser A         6.100     10/01/30                     1,123,740       1,123,740
  3,875                   3,875   Saint Paul, MN Port Auth
                                  Lease Rev Office Bldg at
                                  Cedar Str (a)                     5.250     12/01/19       4,326,631                     4,326,631
                                                                                           -------------------------  --------------
                                                                                             4,326,631     1,123,740       5,450,371
                                                                                           -------------------------  --------------

                                  MISSISSIPPI     0.9%
  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
  1,000                   1,000   Mississippi Bus Fin Corp
                                  MS Pollutn Ctl Rev Sys
                                  Energy Res Inc Proj Rfdg          5.900     05/01/22       1,010,080                     1,010,080
    730                     730   Mississippi Home Corp
                                  Single Family Rev Mtg
                                  Access Pgm Ser B (AMT)
                                  (GNMA Collateralized)             7.900     03/01/25         733,197                       733,197
              1,040       1,040   Mississippi Home Corp
                                  Single Family Rev Mtg Ser
                                  C (AMT) (GNMA
                                  Collateralized)                   7.600     06/01/29                     1,080,154       1,080,154
                430         430   Mississippi Home Corp
                                  Single Family Rev Mtg Ser
                                  F (AMT) (GNMA
                                  Collateralized)                   7.550     12/01/27                       438,321         438,321
                                                                                           -------------------------  --------------
                                                                                             3,749,497     1,518,475       5,267,972
                                                                                           -------------------------  --------------

                                  MISSOURI     1.5%
              2,150       2,150   Cape Girardeau Cnty, MO
                                  Indl Southeast MO Hosp
                                  Assoc                             5.500     06/01/22                     2,231,872       2,231,872
  1,345                   1,345   Kansas City, MO Met Cmnty
                                  Colleges Bldg Corp Rev
                                  Leasehold Jr College Impt
                                  & Rfdg (FGIC Insd)                5.500     07/01/17       1,513,986                     1,513,986
                 70          70   Saint Louis Cnty, MO
                                  Single Family Mtg Rev
                                  (MBIA Insd)                       6.900     04/01/16                        71,261          71,261
  1,210                   1,210   Saint Louis, MO Arpt Rev
                                  Cap Impt Pgm Ser A (MBIA
                                  Insd)                             5.375     07/01/18       1,347,008                     1,347,008
              3,000       3,000   Sikeston, MO Elec Rev Rfdg
                                  (MBIA Insd) (e)                   6.200     06/01/10                     3,400,620       3,400,620
                                                                                           -------------------------  --------------
                                                                                             2,860,994     5,703,753       8,564,747
                                                                                           -------------------------  --------------

                                  NEVADA     4.0%
  7,500       7,500      15,000   Clark Cnty, NV Arpt Rev
                                  Sub Lien Ser A-2 (FGIC
                                  Insd)                             5.000     07/01/36       7,776,225     7,776,225      15,552,450
  3,000       3,000       6,000   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       6,295,080
              1,500       1,500   Reno, NV Sr Lien Retrac
                                  Reno Trans Proj (AMBAC
                                  Insd)                             5.125     06/01/32                     1,564,485       1,564,485
                                                                                           -------------------------  --------------
                                                                                            10,923,765    12,488,250      23,412,015
                                                                                           -------------------------  --------------


                                  NEW HAMPSHIRE     0.9%
  1,155                   1,155   New Hampshire Hlth & Ed
                                  Fac Auth Rev Derryfield Sch       7.000     07/01/30       1,201,546                     1,201,546
              2,500       2,500   New Hampshire Hlth & Ed
                                  Fac Univ Sys of NH (AMBAC
                                  Insd)                             5.500     07/01/15                     2,821,975       2,821,975
  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
                                                                                           -------------------------  --------------
                                                                                             2,295,046     2,821,975       5,117,021
                                                                                           -------------------------  --------------

                                  NEW JERSEY     16.1%
              2,000       2,000   Garden St Preservation Tr
                                  NJ Ser A (FSA Insd)               5.250     11/01/18                     2,227,280       2,227,280
  2,700                   2,700   New Jersey Econ Dev Auth
                                  Rev Cigarette Tax                 5.750     06/15/29       2,869,614                     2,869,614
              2,000       2,000   New Jersey Econ Dev Auth
                                  Rev Cigarette Tax                 5.750     06/15/34                     2,111,780       2,111,780
              5,000       5,000   New Jersey Econ Dev Auth
                                  Rev Mtr Veh Sur Rev Ser A
                                  (MBIA Insd)                       5.000     07/01/22                     5,395,050       5,395,050
  3,000                   3,000   New Jersey Econ Dev Auth
                                  Rev Mtr Veh Sur Rev Ser A
                                  (MBIA Insd)                       5.000     07/01/23       3,227,280                     3,227,280
  5,000       5,000      10,000   New Jersey Econ Dev Auth
                                  Rev Sch Fac Constr Ser F
                                  (Prerefunded @ 06/15/13)
                                  (FGIC Insd)                       5.250     06/15/20       5,668,450     5,668,450      11,336,900
  4,000                   4,000   New Jersey Econ Dev Auth
                                  Rev Sch Fac Constr Ser I          5.000     09/01/22       4,266,440                     4,266,440
              3,705       3,705   New Jersey Econ Dev Auth
                                  Sch Fac Constr Ser I
                                  (Prerefunded @ 09/01/14)
                                  (FGIC Insd)                       5.000     09/01/20                     4,157,899       4,157,899
 10,000      20,000      30,000   New Jersey Econ Dev Auth
                                  St Contract Econ Recovery
                                  (MBIA Insd)                       5.900     03/15/21      12,221,000    24,442,000      36,663,000
  8,000                   8,000   New Jersey Econ Dev Auth
                                  Wtr Fac Rev NJ American
                                  Wtr Co Inc Proj Ser A (AMT)
                                  (FGIC Insd)                       6.875     11/01/34       8,186,160                     8,186,160
  5,000       5,000      10,000   New Jersey St Ed Fac Auth
                                  Higher Ed Cap Impt Ser A
                                  (AMBAC Insd)                      5.250     09/01/21       5,528,400     5,528,400      11,056,800
  3,110                   3,110   Newark, NJ Hsg Auth Port
                                  Auth Newark Marine Terminal
                                  (MBIA Insd)                       5.250     01/01/20       3,439,598                     3,439,598
                                                                                           -------------------------  --------------
                                                                                            45,406,942    49,530,859      94,937,801
                                                                                           -------------------------  --------------

                                  NEW MEXICO     0.7%
                860         860   New Mexico Mtg Fin Auth
                                  Single Family Mtg Pgm Ser
                                  G (AMT) (GNMA
                                  Collateralized)                   7.250     07/01/26                       878,705         878,705
  2,020                   2,020   University NM Univ Rev Sub
                                  Lien Ser A Rfdg (a)               5.250     06/01/20       2,236,463                     2,236,463
  1,125                   1,125   University NM Univ Rev Sub
                                  Lien Ser A Rfdg                   5.250     06/01/21       1,242,585                     1,242,585
                                                                                           -------------------------  --------------
                                                                                             3,479,048       878,705       4,357,753
                                                                                           -------------------------  --------------


                                  NEW YORK     14.4%
    170                     170   Broome Cnty, NY Ctf Partn
                                  (MBIA Insd)                       5.250     04/01/15         173,748                       173,748
  1,300                   1,300   New York City Indl Dev
                                  Civic YMCA Gtr NY Proj            5.800     08/01/16       1,387,659                     1,387,659
              9,600       9,600   New York City Ser A               7.000     08/01/07                    10,331,808      10,331,808
                400         400   New York City Ser A
                                  (Prerefunded @ 08/01/06)          7.000     08/01/07                       433,392         433,392
  3,500                   3,500   New York City Ser E               5.000     11/01/20       3,819,970                     3,819,970
  2,225                   2,225   New York City Ser F               6.000     08/01/11       2,362,327                     2,362,327
  2,500                   2,500   New York City Ser H               5.750     03/15/12       2,823,100                     2,823,100
  5,000                   5,000   New York City Transitional
                                  Fin Auth Rev Future Tax
                                  Secd Ser A Rfdg (f)        5.500/14.000     11/01/26       5,613,300                     5,613,300
              2,500       2,500   New York St Dorm Auth
                                  Lease Muni Hlth Facs Impt
                                  Ser 1 (FSA Insd)                  5.500     01/15/12                     2,799,050       2,799,050
  2,525                   2,525   New York St Dorm Auth
                                  Lease Rev Muni Hlth Fac
                                  Impt Pgm Ser A (FSA Insd)         5.500     05/15/25       2,713,011                     2,713,011
  1,625                   1,625   New York St Dorm Auth
                                  Lease Rev St Univ Dorm Fac
                                  Ser A                             6.000     07/01/14       1,858,480                     1,858,480
  1,450                   1,450   New York St Dorm Auth
                                  Lease Rev St Univ Dorm Fac
                                  Ser C (Prerefunded @
                                  07/01/09) (MBIA Insd)             5.500     07/01/29       1,627,262                     1,627,262
  3,915                   3,915   New York St Dorm Auth Rev
                                  City Univ Secd Ser B              5.375     07/01/07       4,158,787                     4,158,787
  1,135                   1,135   New York St Dorm Auth Rev
                                  City Univ Secd Ser B
                                  (Escrowed to Maturity)            5.375     07/01/07       1,213,939                     1,213,939
  3,100                   3,100   New York St Dorm Auth Rev
                                  City Univ Sys Cons Ser A          5.625     07/01/16       3,602,789                     3,602,789
  2,600                   2,600   New York St Dorm Auth Rev
                                  Cons City Univ Sys Second
                                  Gen Ser A                         5.750     07/01/13       2,955,394                     2,955,394
  2,535                   2,535   New York St Dorm Auth Rev
                                  Mental Hlth Ser B                 5.750     08/15/11       2,723,503                     2,723,503
     15                      15   New York St Dorm Auth Rev
                                  Mental Hlth Ser B
                                  (Prerefunded @ 02/15/07)          5.750     08/15/11          16,284                        16,284
  2,545                   2,545   New York St Dorm Auth Rev
                                  Mental Hlth Svc Fac Impt
                                  Ser D (FSA Insd) (a)              5.875     02/15/14       2,838,769                     2,838,769
              1,495       1,495   New York St Dorm Auth Rev
                                  Mental Hlth Svcs Fac Ser A        5.750     08/15/12                     1,606,168       1,606,168
                  5           5   New York St Dorm Auth Rev
                                  Mental Hlth Svcs Fac Ser A
                                  (Prerefunded @ 02/15/07)          5.750     08/15/12                         5,428           5,428
              1,445       1,445   New York St Dorm Auth Rev
                                  Secd Hosp North Gen Hosp
                                  Rfdg (MBIA Insd)                  5.750     02/15/17                     1,646,635       1,646,635
              2,040       2,040   New York St Dorm Auth Rev
                                  Secd Hosp North Gen Hosp
                                  Rfdg                              5.750     02/15/18                     2,300,508       2,300,508
  1,350                   1,350   New York St Dorm Auth Rev
                                  Ser B                             7.500     05/15/11       1,554,957                     1,554,957
    650                     650   New York St Dorm Auth Rev
                                  Ser B (Prerefunded @
                                  05/15/09)                         7.500     05/15/11         781,183                       781,183
  5,000                   5,000   New York St Dorm Auth Rev
                                  St Univ Ed Fac Ser A              5.500     05/15/08       5,427,050                     5,427,050
              1,500       1,500   New York St Dorm Auth Revs
                                  Upstate Cmnty Colleges
                                  Ser B                             5.250     07/01/20                     1,634,190       1,634,190
              1,000       1,000   New York St Dorm Auth Revs
                                  Upstate Cmnty Colleges
                                  Ser B                             5.250     07/01/21                     1,085,390       1,085,390
  1,380                   1,380   New York St Mtg Agy Rev
                                  Homeowner Mtg Ser 82 (AMT)        5.650     04/01/30       1,445,191                     1,445,191
              3,780       3,780   New York St Mtg Agy Rev
                                  Ser 101 (AMT)                     5.400     04/01/32                     3,902,812       3,902,812
  2,160                   2,160   New York St Twy Auth Svc
                                  Contract Rev Loc Hwy & Brdg       5.500     04/01/16       2,424,341                     2,424,341
              4,000       4,000   Port Auth NY & NJ Spl
                                  Oblig Rev Spl Proj JFK
                                  Intl Arpt Terminal 6 (AMT)
                                  (MBIA Insd)                       5.750     12/01/22                     4,348,840       4,348,840
  1,500       1,500       3,000   Sales Tax Asset Receivable
                                  Corp NY Ser A (MBIA Insd)         5.000     10/15/21       1,637,880     1,637,880       3,275,760
                                                                                           -------------------------  --------------
                                                                                            53,158,924    31,732,101      84,891,025
                                                                                           -------------------------  --------------



                                      H-5






                                                                                            


                                  NORTH CAROLINA     6.0%
              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
 11,000      11,000      22,000   North Carolina Muni Pwr
                                  Agy No 1 Catawba Elec Rev
                                  Rfdg (MBIA Insd)                  6.000     01/01/12      12,826,660    12,826,660      25,653,320
  4,000       3,000       7,000   North Carolina Muni Pwr
                                  Agy Ser A (MBIA Insd)             5.250     01/01/19       4,440,560     3,330,420       7,770,980
                                                                                           -------------------------  --------------
                                                                                            17,267,220    17,848,585      35,115,805
                                                                                           -------------------------  --------------

                                  NORTH DAKOTA     0.3%
  1,130                   1,130   North Dakota St Hsg Fin
                                  Agy Rev Hsg Fin Pgm Home
                                  Mtg Fin Ser B (AMT) (MBIA
                                  Insd)                             5.500     07/01/29       1,162,137                     1,162,137
                535         535   North Dakota St Hsg Fin
                                  Agy Ser C (AMT)                   5.550     07/01/29                       537,402         537,402
                                                                                           -------------------------  --------------
                                                                                             1,162,137       537,402       1,699,539
                                                                                           -------------------------  --------------

                                  OHIO     3.2%
                385         385   Akron, OH Ctf Part Akron
                                  Muni Baseball Stad Proj           6.500     12/01/07                       415,080         415,080
              1,190       1,190   Bowling Green St Univ OH
                                  (FGIC Insd)                       5.750     06/01/14                     1,352,209       1,352,209
  2,335                   2,335   Cleveland, OH Muni Sch
                                  Dist (FSA Insd)                   5.250     12/01/18       2,613,449                     2,613,449
  1,000                   1,000   Cleveland, OH Muni Sch
                                  Dist (FSA Insd)                   5.250     12/01/24       1,102,660                     1,102,660
  1,000         500       1,500   Cuyahoga Cnty, OH Hosp Fac
                                  Rev Canton Inc Proj               7.500     01/01/30       1,132,570       566,285       1,698,855
  2,000                   2,000   Lorain Cnty, OH Hosp Rev
                                  Catholic Hlthcare                 5.375     10/01/30       2,086,580                     2,086,580
  2,450                   2,450   Lorain Cnty, OH Hosp Rev
                                  Catholic Hlthcare Ser A
                                  Impt & Rfdg                       5.250     10/01/33       2,524,627                     2,524,627
              3,000       3,000   Lucas Cnty, OH Hosp Rev
                                  Promedica Hlthcare Oblig
                                  Rfdg (MBIA Insd)                  6.000     11/15/07                     3,231,000       3,231,000
              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
  1,000                   1,000   Marion Cnty, OH Hosp Rev
                                  Cmnty Hosp Impt & Rfdg            6.375     05/15/11       1,046,530                     1,046,530
              1,000       1,000   Ohio St Air Quality Dev
                                  Auth Rev JMG Fdg Ltd Part
                                  Proj Rfdg (AMT) (AMBAC Insd)      6.375     04/01/29                     1,022,210       1,022,210
                                                                                           -------------------------  --------------
                                                                                            10,506,416     8,198,279      18,704,695
                                                                                           -------------------------  --------------

                                  OKLAHOMA     4.1%
                470         470   Central OK Transn & Pkg
                                  Auth Pkg Sys (AMBAC Insd)         5.000     07/01/19                       507,299         507,299
                525         525   Central OK Transn & Pkg
                                  Auth Pkg Sys (AMBAC Insd)         5.000     07/01/20                       564,716         564,716
  3,410                   3,410   Jenks, OK Aquarium Auth
                                  Rev Rfdg (MBIA Insd) (a)          5.250     07/01/24       3,777,837                     3,777,837
  1,475                   1,475   Jenks, OK Aquarium Auth
                                  Rev Rfdg (MBIA Insd)              5.250     07/01/33       1,600,154                     1,600,154
              4,770       4,770   McAlester, OK Pub Wks Auth
                                  Util Cap Apprec (FSA Insd)          *       02/01/34                     1,136,453       1,136,453
  1,100                   1,100   Oklahoma City, OK Indl &
                                  Cultural Fac Tr Rev Dist
                                  Heating & Cooling Trigen
                                  (AMT) (LOC: Societe
                                  Generale)                         6.750     09/15/17       1,103,476                     1,103,476
  1,065                   1,065   Oklahoma Dev Fin Auth
                                  Lease Rev OK Council Law
                                  Enforcement (MBIA Insd) (a)       5.500     06/01/17       1,200,191                     1,200,191
  1,120                   1,120   Oklahoma Dev Fin Auth
                                  Lease Rev OK Council Law
                                  Enforcement (MBIA Insd) (a)       5.500     06/01/18       1,262,173                     1,262,173
  1,185                   1,185   Oklahoma Dev Fin Auth
                                  Lease Rev OK Council Law
                                  Enforcement (MBIA Insd) (a)       5.500     06/01/19       1,335,424                     1,335,424
  2,000       1,300       3,300   Sapulpa, OK Muni Auth Cap
                                  Rev Impt & Rfdg
                                  (Prerefunded @ 07/01/10)
                                  (FSA Insd)                        5.750     07/01/30       2,289,520     1,488,188       3,777,708
  1,250       1,000       2,250   Tulsa Cnty, OK Pub Fac
                                  Auth Cap Impt Rev (AMBAC
                                  Insd)                             6.250     11/01/22       1,453,688     1,162,950       2,616,638
              2,000       2,000   Tulsa, OK Indl Auth Hosp
                                  Rev Hillcrest Med Cent
                                  Proj Rfdg (Escrowed to
                                  Maturity) (Connie Lee Insd)       6.125     06/01/05                     2,026,880       2,026,880
              3,140       3,140   Tulsa, OK Indl Auth Hosp
                                  Rev Hillcrest Med Cent
                                  Proj Rfdg (Escrowed to
                                  Maturity) (Connie Lee Insd)
                                  (a)                               6.250     06/01/08                     3,490,267       3,490,267
                                                                                           -------------------------  --------------
                                                                                            14,022,463    10,376,753      24,399,216
                                                                                           -------------------------  --------------

                                  OREGON     3.6%
  2,500       2,500       5,000   Oregon Hlth Sciences Univ
                                  Insd Ser A (MBIA Insd)            5.250     07/01/22       2,766,650     2,766,650       5,533,300
  5,000       5,000      10,000   Oregon St Dept Admin Ser C
                                  Rfdg (MBIA Insd)                  5.250     11/01/18       5,522,050     5,522,050      11,044,100
  4,000                   4,000   Portland, OR Swr Sys Rev
                                  Ser A (FGIC Insd)                 5.750     08/01/18       4,511,760                     4,511,760
                                                                                           -------------------------  --------------
                                                                                            12,800,460     8,288,700      21,089,160
                                                                                           -------------------------  --------------

                                  PENNSYLVANIA     7.2%
              2,295       2,295   Allegheny Vly, PA Sch Dist
                                  Ser A (MBIA Insd)                 5.000     11/01/24                     2,469,994       2,469,994
  2,650                   2,650   Central Dauphin, PA Sch
                                  Dist (FSA Insd)                   5.000     12/01/19       2,894,516                     2,894,516
  2,210                   2,210   Chartiers Vly, PA Sch Dist
                                  Ser A (FSA Insd) (a)              5.250     10/15/19       2,482,272                     2,482,272
              2,000       2,000   Harrisburg, PA Auth Res
                                  Gtd Sub Ser D-2 (FSA Insd)        5.000     12/01/33                     2,191,460       2,191,460
              1,000       1,000   Harrisburg, PA Cap Apprec
                                  Nts Ser F Rfdg (AMBAC Insd)         *       03/15/15                       656,830         656,830
    700                     700   Harrisburg, PA Cap Apprec
                                  Ser D Rfdg (AMBAC Insd)             *       03/15/14         484,960                       484,960
  1,830                   1,830   Harrisburg, PA Cap Apprec
                                  Ser D Rfdg (AMBAC Insd) (a)         *       09/15/14       1,241,179                     1,241,179
              1,865       1,865   Harrisburg, PA Cap Apprec
                                  Ser D Rfdg (AMBAC Insd)             *       03/15/16                     1,163,685       1,163,685
              1,865       1,865   Harrisburg, PA Cap Apprec
                                  Ser D Rfdg (AMBAC Insd) (a)         *       09/15/15                     1,199,195       1,199,195
  2,750                   2,750   Hempfield, PA Area Sch Dist
                                  Westmoreland Cnty Ser A
                                  (FGIC Insd)                       5.250     03/15/19       3,086,408                     3,086,408
  2,515       4,000       6,515   Hempfield, PA Area Sch Dist
                                  Westmoreland Cnty Ser A
                                  (FGIC Insd)                       5.250     03/15/20       2,816,171     4,479,000       7,295,171
  3,090                   3,090   Philadelphia, PA Gas Wks
                                  Rev 1975 Gen Ordinance
                                  17th Ser (FSA Insd)               5.375     07/01/19       3,441,209                     3,441,209
  2,440                   2,440   Philadelphia, PA Sch Dist
                                  Ser A (FSA Insd)                  5.750     02/01/11       2,787,676                     2,787,676
  2,000                   2,000   Radnor Twp, PA Sch Dist
                                  (Prerefunded @ 03/15/07)          5.750     03/15/26       2,136,860                     2,136,860
              3,000       3,000   Susquehanna Area Regl Arpt
                                  Auth PA Ser A (AMT) (AMBAC
                                  Insd)                             5.375     01/01/21                     3,240,030       3,240,030
              5,415       5,415   Susquehanna Area Regl Arpt
                                  Auth PA Ser A (AMT) (AMBAC
                                  Insd) (a)                         5.375     01/01/22                     5,833,146       5,833,146
                                                                                           -------------------------  --------------
                                                                                            21,371,251    21,233,340      42,604,591
                                                                                           -------------------------  --------------

                                  SOUTH CAROLINA     2.1%
              1,250       1,250   Easley, SC Util Rev Comb
                                  (FSA Insd) (a)                    5.250     12/01/18                     1,392,525       1,392,525
  1,385                   1,385   Easley, SC Util Rev (FSA
                                  Insd) (a)                         5.250     12/01/20       1,536,921                     1,536,921
  2,500       2,500       5,000   South Carolina Jobs Econ
                                  Dev Auth Indl Rev Elec &
                                  Gas Co Proj Ser A (AMBAC
                                  Insd)                             5.200     11/01/27       2,681,200     2,681,200       5,362,400
  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
                                                                                           -------------------------  --------------
                                                                                             8,210,896     4,073,725      12,284,621
                                                                                           -------------------------  --------------

                                  SOUTH DAKOTA     0.7%
              1,375       1,375   Deadwood, SD Ctfs Partn
                                  (ACA Insd)                        6.375     11/01/20                     1,484,038       1,484,038
  2,500                   2,500   South Dakota St Hlth & Ed
                                  Fac Auth Rev Sioux Vly
                                  Hosp & Hlth Sys Ser A             5.250     11/01/34       2,565,425                     2,565,425
                                                                                           -------------------------  --------------
                                                                                             2,565,425     1,484,038       4,049,463
                                                                                           -------------------------  --------------

                                  TENNESSEE     1.0%
  1,000       1,000       2,000   Elizabethton, TN Hlth & Ed
                                  Fac Brd Rev Hosp First Mtg
                                  Ser B Impt & Rfdg                 8.000     07/01/33       1,200,920     1,200,920       2,401,840
  1,500                   1,500   Elizabethton, TN Hlth & Ed
                                  Fac Brd Rev Hosp Ser B Impt
                                  & Rfdg (MBIA Insd)                7.750     07/01/29       1,931,940                     1,931,940
    100                     100   Franklin, TN Spl Sch Dist
                                  Cap Apprec (FSA Insd)               *       06/01/16          62,614                        62,614
              1,000       1,000   Johnson City, TN Hlth & Ed
                                  Fac Brd Hosp Rev First Mtg
                                  Mtn St Hlth Ser A Rfdg
                                  (MBIA Insd)                       7.500     07/01/25                     1,271,460       1,271,460
                                                                                           -------------------------  --------------
                                                                                             3,195,474     2,472,380       5,667,854
                                                                                           -------------------------  --------------

                                  TEXAS     18.7%
  2,350                   2,350   Austin, TX Ctf Oblig (MBIA
                                  Insd) (a)                         5.375     09/01/20       2,626,572                     2,626,572
                980         980   Austin, TX Utility Sys Rev
                                  Comb (AMBAC Insd)                 6.500     11/15/05                     1,012,693       1,012,693
                 20          20   Austin, TX Utility Sys Rev
                                  Comb Rfdg (Escrowed to
                                  Maturity) (AMBAC Insd)            6.500     11/15/05                        20,684          20,684
              2,545       2,545   Dallas Cnty, TX Cmnty
                                  College Fin Sys (AMBAC
                                  Insd) (a)                         5.375     02/15/17                     2,785,172       2,785,172
  3,000       3,000       6,000   Dallas Cnty, TX Util &
                                  Reclamation Dist Ser B
                                  Rfdg (AMBAC Insd)                 5.875     02/15/29       3,056,550     3,056,550       6,113,100
              2,500       2,500   Dallas, TX Wtrwks & Swr
                                  Sys Rev & Impt Rfdg (FSA
                                  Insd)                             5.375     10/01/18                     2,815,025       2,815,025
              5,500       5,500   Dallas-Fort Worth, TX Intl
                                  Arpt Rev Impt Jt Ser A
                                  Rfdg (AMT) (FGIC Insd) (e)        5.500     11/01/31                     5,815,040       5,815,040
  4,000       4,000       8,000   Dallas-Fort Worth, TX Intl
                                  Arpt Rev Jt Ser A (AMT)
                                  (FSA Insd)                        5.500     11/01/21       4,394,120     4,394,120       8,788,240
  2,500       1,500       4,000   Dallas-Fort Worth, TX Intl
                                  Arpt Rev Jt Ser A (AMT)
                                  (FGIC Insd)                       5.750     11/01/30       2,719,850     1,631,910       4,351,760
  2,000                   2,000   Harris Cnty, TX Hlth Fac
                                  Dev Mem Hermann Hlthcare
                                  Ser A                             6.375     06/01/29       2,201,020                     2,201,020
              2,000       2,000   Houston, TX Arpt Sys Rev
                                  Sub Lien (FSA Insd)               5.500     07/01/20                     2,248,120       2,248,120





                                      H-6




                                                                                               
         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   10,000 Houston, TX Arpt Sys Rev
                        Sub Lien Ser A (AMT)
                        (FSA Insd)                                 5.125    07/01/32      5,143,550     5,143,550      10,287,100
 6,000   6,000   12,000 Houston, TX Util Sys Rev
                        First Lien Ser A Rfdg
                        (FSA Insd)                                 5.250    05/15/21      6,643,020     6,643,020      13,286,040
 2,910            2,910 Houston, TX Wtr & Swr Sys
                        Rev Jr Lien Ser C
                        (Prerefunded @ 12/01/07)
                        (FGIC Insd)                                5.375    12/01/27      3,164,654                     3,164,654
 4,625            4,625 Little Elm, TX Indpt Sch
                        Dist (Prerefunded @
                        08/15/05) (PSF Gtd)                        6.750    08/15/29      4,740,718                     4,740,718
   515              515 Little Elm, TX Indpt Sch
                        Dist (PSF Gtd)                             6.750    08/15/29        527,000                       527,000
         2,185    2,185 Lower CO Riv Auth TX
                        LCRA Svcs Corp Proj Rfdg
                        (FGIC Insd)                                5.000    05/15/24                    2,324,294       2,324,294
 2,185            2,185 Lower CO Riv Auth TX
                        Transmission Contract Rev
                        Svc Corp Proj Rfdg
                        (FGIC Insd)                                5.000    05/15/25      2,316,646                     2,316,646
 2,000   2,000    4,000 Lower CO Riv Auth TX
                        Transmission Contract Rev
                        Svc Corp Proj Rfdg
                        (FGIC Insd)                                5.000    05/15/33      2,057,980     2,057,980       4,115,960
 1,000            1,000 Matagorda Cnty, TX Navig
                        Dist No 1 Rev Coll
                        Centerpoint Energy
                        Proj Rfdg                                  5.600    03/01/27      1,038,350                     1,038,350
 1,500   1,500    3,000 Metropolitan Hlth Fac Dev
                        Corp TX Wilson N Jones Mem
                        Hosp Proj                                  7.250    01/01/31      1,504,005     1,504,005       3,008,010
 5,000   5,000   10,000 North Cent TX Hlth Fac Dev
                        Hosp Childrens Med Ctr Dallas
                        (AMBAC Insd)                               5.250    08/15/32      5,304,850     5,304,850      10,609,700
 5,000            5,000 San Antonio, TX Elec & Gas
                        Sys Rfdg                                   5.375    02/01/19      5,557,900                     5,557,900
 2,000            2,000 San Antonio, TX Elec & Gas
                        Sys Rfdg                                   5.375    02/01/20      2,223,160                     2,223,160
         1,090    1,090 Texas Gen Svcs Comm Partn
                        Int Lease Purch Ctfs
                        (Acquired 03/16/95, Cost
                        $1,090,022) (c)                            7.250    08/01/11                    1,098,622       1,098,622
 1,000            1,000 Trinity Riv Auth TX Rev
                        Tarrant Cnty Wtr Proj Impt
                        & Rfdg (MBIA Insd)                         5.500    02/01/21      1,129,350                     1,129,350
         2,360    2,360 University TX Rev Fin Sys
                        Ser B                                      5.250    08/15/20                    2,610,042       2,610,042
                                                                                      ---------------------------   ---------------
                                                                                         56,349,295    53,732,857     110,082,152
                                                                                      ---------------------------   ---------------

                        UTAH     0.4%
 2,380            2,380 Mountain Regl Wtr Spl Svc
                        Dist Rfdg (MBIA Insd)                      5.000    12/15/33      2,479,389                     2,479,389
                                                                                      ---------------------------   ---------------
                                                                                          2,479,389             -       2,479,389
                                                                                      ---------------------------   ---------------

                        WASHINGTON     8.0%
         9,850    9,850 Bellevue, WA Convention Cent
                        Comp Int Rfdg (MBIA Insd)                    *      02/01/25                    3,777,475       3,777,475
 3,750   3,750    7,500 Chelan Cnty, WA Pub Util
                        Dist No. 001 Cons Rev Chelan
                        Hydro Ser A (AMT) (MBIA Insd)              5.600    01/01/36      4,020,900     4,020,900       8,041,800
         5,000    5,000 Energy Northwest WA Elec Rev
                        Columbia Generating Ser A
                        Rfdg (FSA Insd)                            5.500    07/01/16                    5,602,150       5,602,150
 2,500            2,500 Energy Northwest WA Elec Rev
                        Proj No 3 Ser A Rfdg (FSA Insd)            5.500    07/01/18      2,801,075                     2,801,075
 5,000            5,000 Energy Northwest WA Elec Rev
                        Proj No 3 Ser B Rfdg (FSA Insd)            6.000    07/01/16      5,820,800                     5,820,800
 1,400            1,400 King Cnty, WA Hsg Auth Hsg Rev
                        Pooled Sr Ser A Rfdg                       6.700    03/01/15      1,430,548                     1,430,548
         2,000    2,000 Port Seattle, WA Rev Ser B (AMT)
                        (MBIA Insd)                                5.625    02/01/24                    2,186,380       2,186,380
 2,120            2,120 Seattle, WA Muni Lt & Pwr Rev              5.625    12/01/17      2,328,163                     2,328,163
 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
 1,500            1,500 Tacoma, WA Elec Sys Rev
                        Ser B Rfdg (FSA Insd)                      5.500    01/01/12      1,701,060                     1,701,060
 4,750            4,750 Tacoma, WA Elec Sys Rev
                        Ser A Rfdg (FSA Insd)                      5.750    01/01/14      5,424,975                     5,424,975
 1,000            1,000 Thurston & Pierce Cntys, WA
                        (FSA Insd)                                 5.000    12/01/20      1,084,830                     1,084,830
         5,125    5,125 Washington St Pub Pwr Supply
                        Sys Nuclear Proj No 3 Rev
                        Ser C Rfdg (MBIA Insd)                       *      07/01/14                    3,487,511       3,487,511
                                                                                       --------------------------   ---------------
                                                                                         27,809,571    19,074,416      46,883,987
                                                                                       --------------------------   ---------------

                        WEST VIRGINIA     1.6%
         8,000    8,000 Harrison Cnty, WV Cmnty Solid
                        Waste Disp Rev West Penn Pwr
                        Co Proj Ser A (AMT) (MBIA Insd)            6.875    04/15/22                    8,026,320       8,026,320
 1,135            1,135 West Virginia St Hsg Dev Fd Ser A          5.550    05/01/17      1,155,782                     1,155,782
                                                                                      ---------------------------   ---------------
                                                                                          1,155,782     8,026,320       9,182,102
                                                                                      ---------------------------   ---------------

                        WISCONSIN     0.8%
         1,500    1,500 Southeast WI Professional Baseball
                        Pk Dist Sales Tax Rev Ser A Rfdg
                        (MBIA Insd)                                5.500    12/15/20                    1,773,135       1,773,135
 3,000            3,000 Wisconsin St Hlth & Ed Fac Wheaton
                        Franciscan Svc Rfdg                        5.750    08/15/30      3,187,950                     3,187,950
                                                                                      ---------------------------   ---------------
                                                                                          3,187,950     1,773,135       4,961,085
                                                                                      ---------------------------   ---------------

                        WYOMING     0.2%
 1,000            1,000 University WY Univ Rev Fac Impt
                        (FSA Insd)                                 5.500    06/01/18      1,124,160                     1,124,160
                                                                                      ---------------------------   ---------------
                                                                                          1,124,160             -       1,124,160
                                                                                      ---------------------------   ---------------
                        PUERTO RICO     2.2%
10,000           10,000 Puerto Rico Comwlth Hwy & Tran
                        Auth Hwy Rev Ser Y Rfdg
                        (FSA Insd) (e)                             6.250    07/01/21     12,779,700                    12,779,700
                                                                                      ---------------------------   ---------------
                                                                                         12,779,700             -      12,779,700
                                                                                      ---------------------------   ---------------

                        TOTAL LONG-TERM INVESTMENTS  156.1 %
                           (Cost $844,787,873)                                          511,236,314   407,737,250     918,973,564

                        SHORT-TERM INVESTMENTS  1.0%
                           (Cost $5,500,000)                                              1,900,000     3,600,000      5,500,000
                                                                                      ---------------------------   ---------------

                        TOTAL INVESTMENTS  157.1%
                           (Cost $850,287,873)                                          513,136,314   411,337,250     924,473,564

                        OTHER ASSETS IN EXCESS OF
                        LIABILITIES  0.7%                                                 2,754,736     1,277,534      4,032,270

                        PREFERRED SHARES (INCLUDING
                        ACCRUED DISTRIBUTIONS)  (57.8%)                                (190,137,331) (150,151,516    (340,288,847)
                                                                                      ---------------------------   ---------------

                        NET ASSETS APPLICABLE TO COMMON
                        SHARES     100.0%                                             $ 325,753,719  $262,463,268   $ 588,216,987
                                                                                      ===========================   ===============


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) 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. 
(c) These securities are 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. 
(d) Securities purchased on a when-issued or delayed delivery basis.
(e) All or a portion of these securities have been physically segregated in
connection with open futures contracts. 
(f) Security is a "step-up" bond where the coupon increases or steps up at a 
predetermined date.

ACA - American Capital Access 
AMBAC - AMBAC Indemnity Corp. 
AMT - Alternative Minimum Tax 
Connie Lee - Connie Lee Insurance Co. 
FGIC - Financial Guaranty Insurance Co. 
FHA - Federal Housing Administration 
FNMA - Federal National Mortgage Association 
FSA - Financial Security Assurance Inc. 
GNMA - Government National Mortgage Association 
LOC - Letter of Credit 
PSF - Permanent School Fund
MBIA - Municipal Bond Investors Assurance Corp. 
XLCA - XL Capital Assurance Inc.

See Notes to Financial Statements





                                      H-7

                   VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
                     VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
             PROFORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
                                JANUARY 31, 2005
                                   (UNAUDITED)
                              AMOUNTS IN THOUSANDS



                                                                                                                      PROFORMA-  
                                                                  VAN KAMPEN        VAN KAMPEN                       VAN KAMPEN  
                                                                  ADVANTAGE          MUNICIPAL                        MUNICIPAL
                                                               MUNICIPAL INCOME     OPPORTUNITY                      OPPORTUNITY
                                                                    TRUST              TRUST       ADJUSTMENTS          TRUST  
                                                         ---------------------- ----------------- -------------     --------------
                                                                                                        
ASSETS:
Total Investments (Cost of $472,811,  $377,477
    and $850,288, respectively)                          $             513,136  $        411,337                    $     924,473
Cash                                                                         8               105                              113
Receivables:
   Interest                                                              5,589             4,483                           10,072
   Investment Sold                                                         311             5,447                            5,758
   Variation Margin on Futures                                              55                44                               99
Other                                                                        5                 4                                9
                                                         ---------------------  ----------------  ------------      ------------- 
        Total Assets                                                   519,104           421,420                          940,524
                                                         ---------------------  ----------------  ------------      ------------- 
LIABILITIES:
Payable:
    Investment Purchased                                                 2,473             8,154                           10,627
    Investment Advisory Fee                                                239               191                              430
    Income Distributions-Common Shares                                      72                58                              130
    Other Affiliates                                                        17                13                               30
Trustee's Deferred Compensation and
      Retirement Plans                                                     306               285                              591
Accrued Expenses                                                           106               104           444  (2)           654
                                                         ---------------------  ----------------  ------------      ------------- 
        Total Liabilities                                                3,213             8,805           444             12,462
Preferred Shares (Including
     accrued distributions)                                            190,137           150,152                          340,289
                                                         ---------------------  ----------------  ------------      -------------  
NET ASSETS APPLICABLE TO COMMON SHARES                   $             325,754  $        262,463  $       (444)     $     587,773
                                                         =====================  ================  ============      ============= 

Net Assets Applicable to Common Shares                                 325,754           262,463          (444) (2)       587,773
Share outstanding                                                       19,107            15,358           (48) (1)        34,417
                                                         ---------------------  ----------------                    ------------- 
Net Asset Value Per Common Share                         $               17.05  $          17.09                    $       17.08
                                                         =====================  ================                    ============= 

NET ASSETS CONSIST OF:
Common Shares                                            $                 191  $            153                    $         344
Paid in Surplus                                                        282,026           226,764          (444) (2)       508,346
Net Unrealized Appreciation                                             39,932            33,535                           73,467
Accumulated Undistributed Net Investment Income                          2,842             1,062                            3,904
Accumulated Net Realized Gain (Loss)                                       763               949                            1,712
                                                         ---------------------  ----------------                    ------------- 
NET ASSETS APPLICABLE TO COMMON SHARES                   $             325,754  $        262,463  $       (444)     $     587,773 
                                                         =====================  ================  ============      ============= 

PREFERRED SHARES                                         $             190,000  $        150,000                    $     340,000
                                                         =====================  ================  ============      ============= 
NET ASSETS INCLUDING PREFERRED SHARES                    $             515,754  $        412,463  $       (444)     $     927,773
                                                         =====================  ================  ============      =============  


(1) The proforma statements presume the issuance by the Van Kampen Municipal
Opportunity Trust of approximately 19,059,234 common shares in exchange for the
assets and liabilities of the Van Kampen Advantage Municipal Income Trust.

(2) A non-recurring cost associated with this transaction of approximately
$444,000 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 Advantage Municipal Income Trust.............     $        222,000              $ 0.014
Van Kampen Municipal Opportunity Trust..................              222,000                0.012
                                                             ----------------
                                                             $        444,000
                                                             ================




--------------------------------------------------------------------------------



                                                       Net Assets                         Net               NAV
New Share issuance Calculation:                        @ 01/31/05     Merger Cost      Assets After      of Survivor     New Shares
                                                   --------------     -----------    --------------     ------------     ----------
                                                                                                          
Van Kampen Advantage Municipal Income Trust.....   $  325,753,719     $ (222,000)    $  325,531,719     $    17.08        19,059,234
Van Kampen Municipal Opportunity Trust..........      262,463,268       (222,000)       262,241,268     $    17.08        15,357,684
                                                                      -----------                                        -----------
                                                                      $ (444,000)                                         34,416,918


--------------------------------------------------------------------------------



                                      H-8




                   VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
                     VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
                   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           MUNICIPAL                           MUNICIPAL
                                                      MUNICIPAL INCOME      OPPORTUNITY                         OPPORTUNITY
                                                           TRUST               TRUST          ADJUSTMENTS          TRUST  
                                                      ----------------      -----------     ---------------     -----------
                                                                                                      
INVESTMENT INCOME:
Interest                                                 $ 25,645           $ 20,564                              $ 46,209
                                                         --------           --------           --------           --------

EXPENSES:
Investment Advisory Fee                                     2,987              2,387                                 5,374
Preferred Share Maintenance                                   527                400                (24)(1)            903
Trustee's Fees and Related Expenses                            90                 81                (76)(2)             95
Administration Fee                                             84                 67                                   151 
Legal                                                          56                 43                (33)(1)             66
Custody                                                        30                 25                 (2)(1)             53
Other                                                         245                214               (118)(1)            341
                                                         --------           --------           --------           --------
      Total Expenses                                        4,019              3,217               (253)             6,983
                                                         --------           --------           --------           --------
NET INVESTMENT INCOME                                    $ 21,626           $ 17,347           $    253           $ 39,226
                                                         ========           ========           ========           ========

REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain                                        $    965           $    966                              $  1,931
                                                         --------           --------           --------           --------
Unrealized Appreciation/Depreciation:
      Beginning of the Period                              38,255             32,155                                70,410
      End of the Period                                    39,932             33,535                                73,467
                                                         --------           --------           --------           --------
Net Unrealized Appreciation During the Period               1,677              1,380                              $  3,057
                                                         --------           --------           --------           --------
NET REALIZED AND UNREALIZED GAIN                         $  2,642           $  2,346                              $  4,988
                                                         --------           --------           --------           --------
DISTRIBUTION TO PREFERRED SHAREHOLDERS                   $ (2,455)          $ (1,994)                             $ (4,449)
                                                         ========           ========           ========           ========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON
          SHARES FROM OPERATIONS                         $ 21,813           $ 17,699           $    253           $ 39,765
                                                         ========           ========           ========           ========




(1) Reflects the reduction in other 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 duplicative
expenses.

                                      H-9



VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST - VAN KAMPEN MUNICIPAL OPPORTUNITY 
TRUST
NOTES TO PRO FORMA FINANCIAL STATEMENTS
JANUARY 31, 2005 (UNAUDITED)

1.  SIGNIFICANT ACCOUNTING POLICIES
The Acquiring Fund, Van Kampen Municipal Opportunity Trust (the "Acquiring
Fund") is registered as a diversified, closed-end management investment company
under the Investment Company Act of 1940, as amended. The Acquiring Fund's
investment objective is to provide a high level of current income exempt from
federal income tax, consistent with preservation of capital. The Acquiring Fund
commenced investment operations on April 24, 1992.

         The following is a summary of significant accounting policies
consistently followed by the Acquiring Fund 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 Fund 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 Fund 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 Fund'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 Fund declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.




                                      H-10