As filed with the Securities and Exchange Commission on June 29, 2005
Securities Act File No. 333-124823
Investment Company Act File No. 811-06537
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[x] PRE-EFFECTIVE AMENDMENT NO. 1
[ ] POST-EFFECTIVE AMENDMENT NO. __
(CHECK APPROPRIATE BOX OR BOXES)
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN DECLARATION OF TRUST)
(800) 847-2424
(AREA CODE AND TELEPHONE NUMBER)
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
AMY R. DOBERMAN, ESQ.
MANAGING DIRECTOR
VAN KAMPEN INVESTMENTS INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
WAYNE W. WHALEN, ESQ.
CHARLES B. TAYLOR, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
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Approximate Date of Proposed Offering: As soon as practicable after this
Registration Statement is declared effective.
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CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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TITLE OF SECURITIES PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BEING REGISTERED AMOUNT BEING OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED PER UNIT PRICE FEE
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Common Shares ($0.01 par value) 11,170,585 $ 15.43 (1) $ 172,306,271 $ 20,280 (2)
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Auction Preferred Shares ($0.01 par value) 3,400 $ 25,000 $ 85,000,000 $ 10,005 (2)
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(1) Average of high and low reported price for common shares on June 24, 2005.
(2) Includes registration fee of $117.70 previously paid in connection with the
initial filing of the Registration Statement.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
EXPLANATORY NOTE
This Registration Statement is organized as follows:
- Questions and Answers to Shareholders of Van Kampen New York Quality
Municipal Trust, Van Kampen New York Value Municipal Income Trust and
Van Kampen Trust for Investment Grade New York Municipals
- Notice of Joint Special Meeting of Shareholders of Van Kampen New York
Quality Municipal Trust, Van Kampen New York Value Municipal Income
Trust and Van Kampen Trust for Investment Grade New York Municipals
- Joint Proxy Statement/Prospectus for Van Kampen New York Quality
Municipal Trust, Van Kampen New York Value Municipal Income Trust and
Van Kampen Trust for Investment Grade New York Municipals
- Statement of Additional Information regarding the proposed
Reorganizations of Van Kampen New York Quality Municipal Trust and Van
Kampen New York Value Municipal Income Trust into Van Kampen Trust for
Investment Grade New York Municipals
- Part C Information
- Exhibits
-- JUNE 2005 --
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IMPORTANT NOTICE
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TO SHAREHOLDERS OF VAN KAMPEN
NEW YORK QUALITY MUNICIPAL TRUST,
VAN KAMPEN NEW YORK
VALUE MUNICIPAL INCOME TRUST AND
VAN KAMPEN TRUST FOR INVESTMENT GRADE
NEW YORK MUNICIPALS
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QUESTIONS & ANSWERS
---------------------------------------
Although we recommend that you read the complete Joint Proxy Statement/
Prospectus, we have provided for your convenience a brief overview of the issues
to be voted on.
---------------------------------------
Q WHY IS A SHAREHOLDER
MEETING BEING HELD?
A Shareholders of
Van Kampen New York Quality Municipal Trust and Van Kampen New York Value
Municipal Income Trust: You are being asked to vote on a reorganization (each a
"Reorganization" and collectively the "Reorganizations") of your fund (each such
fund being referred to herein as a "Target Fund" and together as the "Target
Funds") into Van Kampen Trust for Investment Grade New York Municipals (the
"Acquiring Fund"), a closed-end fund that pursues the same investment objective
and has similar investment policies and which is managed by the same investment
advisory personnel as the Target Funds.
Shareholders of Van Kampen Trust for Investment Grade New York Municipals: You
are being asked to vote on the issuance of additional common shares of the
Acquiring Fund in connection with the Reorganizations.
Q WHY IS EACH
REORGANIZATION BEING RECOMMENDED?
A The Board of Trustees of
each Fund has determined that each Reorganization will benefit common
shareholders of the respective Target Fund and the Acquiring Fund. The Target
Funds and the Acquiring Fund are similar. Each Fund seeks to provide a high
level of current income exempt from federal as well as New York State and New
York City income taxes, consistent with preservation of capital, by investing
substantially all of its assets in a portfolio of New York municipal securities
rated investment grade at the time of investment. Each Fund is managed by the
same investment advisory personnel. After the Reorganizations, it is anticipated
that common shareholders of each Fund will experience a reduced overall
operating expense ratio, as certain fixed administrative costs will be spread
across the combined fund's larger asset base. It is not anticipated that the
Reorganizations will directly benefit preferred shareholders of the Funds;
however, the Reorganizations will not adversely affect preferred shareholders,
and none of the expenses of the Reorganizations will be borne by preferred
shareholders.
Q HOW WILL THE
REORGANIZATIONS AFFECT ME?
A Assuming shareholders
approve the Reorganizations of the Target Funds and shareholders of the
Acquiring Fund approve the issuance of additional common shares of the Acquiring
Fund, the assets and liabilities of the Target Funds will be combined with those
of the Acquiring Fund and the Target Funds will dissolve.
Shareholders of the Target Funds: You will become a shareholder of the Acquiring
Fund. If you are a holder of common shares of a Target Fund, you will receive
newly-issued common shares of the Acquiring Fund, the aggregate net asset value
of which will equal the aggregate net asset value of the common shares you held
immediately prior to the Reorganization, less the costs of the Reorganization
(though you may receive cash for fractional shares). If you are a holder of
preferred shares of a Target Fund, you will receive newly-issued preferred
shares of the Acquiring Fund, the aggregate liquidation preference of which will
equal the aggregate liquidation preference of the preferred shares you held
immediately prior to the Reorganization.
Shareholders of the Acquiring Fund: You will remain a shareholder of the
Acquiring Fund.
Q WILL I HAVE TO PAY ANY
SALES LOAD, COMMISSION OR OTHER SIMILAR FEE IN CONNECTION WITH THE
REORGANIZATIONS?
A You will pay no sales loads
or commissions in connection with the Reorganizations. However, if the
Reorganizations are completed, the costs associated with the Reorganizations,
including the costs associated with the shareholder meeting, will be borne by
common shareholders of the Target Funds and the Acquiring Fund in proportion to
their projected annual expense savings as a result of the Reorganizations.
Q WILL I HAVE TO PAY ANY
FEDERAL TAXES AS A RESULT OF THE REORGANIZATIONS?
A Each of the
Reorganizations is intended to qualify as a "reorganization" within the meaning
of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended. If the
Reorganizations so qualify, in general, shareholders of the Target Funds will
recognize no gain or loss upon the receipt solely of shares of the Acquiring
Fund in connection with the Reorganizations. Additionally, the Target Funds will
recognize no gain or loss as a result of the transfer of all of their assets and
liabilities in exchange for the shares of the Acquiring Fund or as a result of
their dissolution. Neither the Acquiring Fund nor its shareholders will
recognize any gain or loss in connection with the Reorganizations.
Q WHAT HAPPENS IF
SHAREHOLDERS OF ONE TARGET FUND DO NOT APPROVE ITS REORGANIZATION BUT
SHAREHOLDERS OF THE OTHER TARGET FUND DO APPROVE ITS REORGANIZATION?
A An unfavorable vote on a
proposed Reorganization by the shareholders of one Target Fund will not affect
the implementation of a Reorganization by the other Target Fund, if such
Reorganization is approved by the shareholders of such Target Fund and the
issuance of additional common shares is approved by the shareholders of the
Acquiring Fund.
Q WHY IS THE VOTE OF
COMMON SHAREHOLDERS OF THE ACQUIRING FUND BEING SOLICITED?
A Although the Acquiring
Fund will continue its legal existence and operations after the Reorganizations,
the rules of the New York Stock Exchange and the Chicago Stock Exchange (on
which the Acquiring Fund's common shares are listed) require the Acquiring
Fund's common shareholders to approve the issuance of additional common shares
in connection with the Reorganizations. If the issuance of additional common
shares of the Acquiring Fund is not approved, neither Reorganization will occur.
Q HOW DOES THE BOARD OF
TRUSTEES OF MY FUND SUGGEST THAT I VOTE?
A After careful consideration,
the Board of Trustees of your fund recommends that you vote "FOR" the item
proposed for your fund.
Q HOW DO I VOTE MY PROXY?
A You may cast your vote by
mail, phone or internet. To vote by mail, please mark your vote on the enclosed
proxy card and sign, date and return the card in the postage-paid envelope
provided. If you choose to vote by phone or internet, please refer to the
instructions found on the proxy card accompanying this Joint Proxy
Statement/Prospectus. To vote by phone or internet, you will need the "control
number" that appears on the proxy card.
Q WHOM DO I CONTACT FOR
FURTHER INFORMATION?
A You can contact your
financial adviser for further information. You may also call Van Kampen's Client
Relations Department at (800) 341-2929 (Telecommunication Device for the Deaf
users may call (800) 421-2833) or visit our website at www.vankampen.com where
you can send us an e-mail message by selecting "Contact Us."
ABOUT THE PROXY CARD
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Please vote on the proposal(s) applicable to your fund using blue or black ink
to mark an X in one of the boxes provided on the proxy card.
SHAREHOLDERS OF VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST AND VAN KAMPEN NEW
YORK VALUE MUNICIPAL INCOME TRUST:
APPROVAL OF REORGANIZATION -- mark "For," "Against" or "Abstain."
COMMON SHAREHOLDERS OF VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK
MUNICIPALS:
APPROVAL OF ISSUANCE OF ADDITIONAL COMMON SHARES -- mark "For," "Against" or
"Abstain."
Sign, date and return the proxy card in the enclosed postage-paid envelope. All
registered owners of an account, as shown in the address, must sign the card.
When signing as attorney, trustee, executor, administrator, custodian, guardian
or corporate officer, please indicate your full title.
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
VAN KAMPEN XXXXX
JOINT SPECIAL MEETING OF SHAREHOLDERS
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
FOR AGAINST ABSTAIN
1. The proposal to [ ] [ ] [ ] 2. The proposal to issue additional
approve the common shares. FOR AGAINST ABSTAIN
Reorganization. [ ] [ ] [ ]
3. To transact such other business as may
properly come before the Meeting or any
adjournment thereof.
Please be sure to sign and date this Proxy, Date
Shareholder sign here Co-owner sign here
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
SAMPLE
VAN KAMPEN NEW YORK QUALITY
MUNICIPAL TRUST,
VAN KAMPEN NEW YORK VALUE MUNICIPAL
INCOME TRUST
AND
VAN KAMPEN TRUST FOR INVESTMENT GRADE
NEW YORK MUNICIPALS
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(800) 341-2929
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 12, 2005
Notice is hereby given that a joint special meeting of shareholders (the
"Special Meeting") of Van Kampen New York Quality Municipal Trust ("New York
Quality Municipal Trust"), Van Kampen New York Value Municipal Income Trust
("New York Value Municipal Income Trust"), and Van Kampen Trust for Investment
Grade New York Municipals (the "Acquiring Fund") will be held at the offices of
Van Kampen Investments Inc., 1 Parkview Plaza, Oakbrook Terrace, Illinois
60181-5555 on August 12, 2005 at 11:30 a.m. for the following purposes:
1. Approval of Reorganizations:
a. For shareholders of New York Quality Municipal Trust:
To approve an Agreement and Plan of Reorganization between New York
Quality Municipal Trust and the Acquiring Fund, the termination of New
York Quality Municipal Trust's registration under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the dissolution
of New York Quality Municipal Trust under applicable state law;
b. For shareholders of New York Value Municipal Income Trust:
To approve an Agreement and Plan of Reorganization between New York
Value Municipal Income Trust and the Acquiring Fund, the termination of
New York Value Municipal Income Trust's registration under the 1940
Act, and the dissolution of New York Value Municipal Income Trust under
applicable state law;
2. Issuance of Common Shares:
For common shareholders of the Acquiring Fund:
To approve the issuance of additional common shares of the Acquiring
Fund in connection with each Agreement and Plan of Reorganization; and
3. Other Business:
For shareholders of each fund:
To transact such other business as may properly be presented at the
Special Meeting or any adjournment thereof.
Shareholders of record as of the close of business on June 13, 2005 are
entitled to vote at the Special Meeting or any adjournment thereof.
THE BOARD OF TRUSTEES OF NEW YORK QUALITY MUNICIPAL TRUST, NEW YORK VALUE
MUNICIPAL INCOME TRUST AND THE ACQUIRING FUND REQUESTS THAT YOU VOTE YOUR SHARES
BY INDICATING YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATING AND
SIGNING SUCH PROXY CARD AND RETURNING IT IN THE ENVELOPE PROVIDED, WHICH IS
ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES, OR BY RECORDING YOUR VOTING INSTRUCTIONS BY TELEPHONE OR VIA THE
INTERNET.
THE BOARD OF TRUSTEES OF NEW YORK QUALITY MUNICIPAL TRUST AND NEW YORK VALUE
MUNICIPAL INCOME TRUST RECOMMENDS THAT YOU CAST YOUR VOTE:
- FOR THE REORGANIZATION OF YOUR FUND PURSUANT TO AN AGREEMENT AND PLAN OF
REORGANIZATION AS DESCRIBED IN THE JOINT PROXY STATEMENT/PROSPECTUS.
THE BOARD OF TRUSTEES OF THE ACQUIRING FUND RECOMMENDS THAT YOU CAST YOUR
VOTE:
- FOR THE ISSUANCE OF ADDITIONAL COMMON SHARES OF THE ACQUIRING FUND IN
CONNECTION WITH EACH AGREEMENT AND PLAN OF REORGANIZATION AS DESCRIBED IN
THE JOINT PROXY STATEMENT/PROSPECTUS.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT
YOU MAIL YOUR PROXY CARD OR RECORD YOUR VOTING INSTRUCTIONS BY TELEPHONE OR VIA
THE INTERNET PROMPTLY.
For the Board of Trustees,
Lou Anne McInnis
Assistant Secretary
Van Kampen New York Quality
Municipal Trust
Van Kampen New York Value
Municipal Income Trust
Van Kampen Trust for Investment
Grade New York Municipals
June 30, 2005
------------------
YOUR VOTE IS IMPORTANT.
PLEASE VOTE PROMPTLY BY SIGNING AND RETURNING THE
ENCLOSED PROXY CARD OR BY RECORDING YOUR VOTING INSTRUCTIONS BY TELEPHONE
OR VIA THE INTERNET NO MATTER HOW MANY SHARES YOU OWN.
THE INFORMATION IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE
AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 29, 2005
JOINT PROXY STATEMENT/PROSPECTUS
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST,
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
AND
VAN KAMPEN TRUST FOR INVESTMENT GRADE
NEW YORK MUNICIPALS
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(800) 341-2929
JOINT SPECIAL MEETING OF SHAREHOLDERS
AUGUST 12, 2005
This Joint Proxy Statement/Prospectus is furnished to you as a shareholder of
Van Kampen New York Quality Municipal Trust ("New York Quality Municipal
Trust"), Van Kampen New York Value Municipal Income Trust ("New York Value
Municipal Income Trust") and/or Van Kampen Trust for Investment Grade New York
Municipals (the "Acquiring Fund"). A joint special meeting of shareholders of
New York Quality Municipal Trust, New York Value Municipal Income Trust and the
Acquiring Fund (the "Special Meeting") will be held at the offices of Van Kampen
Investments Inc., 1 Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555 on
August 12, 2005 at 11:30 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 New York Quality Municipal Trust, New York Value Municipal Income
Trust and the Acquiring Fund requests that you vote your shares by completing
and returning the enclosed proxy card or by recording your voting instructions
by telephone or via the internet. The approximate mailing date of this Joint
Proxy Statement/Prospectus and accompanying form of proxy is July 6, 2005.
The purposes of the Special Meeting are:
1. Approval of Reorganizations:
a. For shareholders of New York Quality Municipal Trust:
To approve an Agreement and Plan of Reorganization between New York
Quality Municipal Trust and the Acquiring Fund, the termination of New
York Quality Municipal Trust's registration under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the dissolution
of New York Quality Municipal Trust under applicable state law;
b. For shareholders of New York Value Municipal Income Trust:
To approve an Agreement and Plan of Reorganization between New York
Value Municipal Income Trust and the Acquiring Fund, the termination of
New York Value Municipal Income Trust's registration under the 1940
Act, and the dissolution of New York Value Municipal Income Trust under
applicable state law;
2. Issuance of Common Shares:
For common shareholders of the Acquiring Fund:
To approve the issuance of additional common shares of the Acquiring
Fund in connection with each Agreement and Plan of Reorganization; and
3. Other Business:
For shareholders of each fund:
To transact such other business as may properly be presented at the
Special Meeting or any adjournment thereof.
New York Quality Municipal Trust and New York Value Municipal Income Trust are
sometimes referred to herein individually as a "Target Fund" or collectively as
the "Target Funds." The Target Funds and the Acquiring Fund are sometimes
referred to herein each as a "Fund" and collectively as the "Funds." Each
Agreement and Plan of Reorganization is sometimes referred to herein
individually as a "Reorganization Agreement" or collectively as the
"Reorganization Agreements." Each Reorganization Agreement that Target Fund
shareholders are being asked to consider involves a transaction that will be
referred to in this Joint Proxy Statement/Prospectus individually as a
"Reorganization" and collectively as the "Reorganizations."
The Reorganizations seek to combine three similar Funds to achieve certain
economies of scale and other operational efficiencies. The investment objective
of each Fund is to seek to provide a high level of current income exempt from
federal as well as New York State and New York City income taxes, consistent
with preservation of capital. Each Fund seeks to achieve its investment
objective by investing substantially all of its assets in a portfolio of New
York municipal securities rated investment grade at the time of investment. In
each Reorganization, the Acquiring Fund will acquire substantially all of the
assets and assume substantially all of the liabilities of the Target Fund in
exchange 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"). Each of the Target Funds will distribute
Acquiring Fund Common Shares to common shareholders of such Target Fund and
Acquiring Fund APS to preferred shareholders of such Target Fund, and will then
2
terminate its registration under the 1940 Act and dissolve under applicable
state law. The aggregate net asset value of Acquiring Fund Common Shares
received in each Reorganization will equal the aggregate net asset value of
Target Fund common shares held immediately prior to such Reorganization, less
the costs of such Reorganization (though common shareholders may receive cash
for their fractional shares). The aggregate liquidation preference of Acquiring
Fund APS received in each Reorganization will equal the aggregate liquidation
preference of Target Fund preferred shares held immediately prior to such
Reorganization. The Acquiring Fund will continue to operate after the
Reorganizations as a registered closed-end investment company with the
investment objective and policies described in this Joint Proxy
Statement/Prospectus.
In connection with the Reorganizations, common shareholders of the Acquiring
Fund are being asked to approve the issuance of additional Acquiring Fund Common
Shares.
The Board of Trustees of each Fund has determined that including these
proposals in one Joint Proxy Statement/Prospectus will reduce costs and is in
the best interests of each Fund's shareholders.
In the event that shareholders of one or both of the Target Funds do not
approve the Reorganization(s), such Target Fund(s) will continue to exist and
the Board of Trustees of such Target Fund(s) will consider what additional
action, if any, to take. In the event Acquiring Fund common shareholders do not
approve the issuance of additional Acquiring Fund Common Shares, then all of the
Funds will continue to exist and the respective Board of Trustees of each Fund
will consider what additional action, if any, to take.
This Joint Proxy Statement/Prospectus sets forth concisely the information
shareholders of each Fund should know before voting on the proposals for their
Fund and constitutes an offering of Acquiring Fund Common Shares and Acquiring
Fund APS. Please read it carefully and retain it for future reference. A
Statement of Additional Information, dated June 30, 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
3
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, and in accordance therewith file reports,
proxy statements, proxy material and other information with the SEC. Materials
filed with the SEC can be reviewed and copied at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549 or downloaded from the SEC's
web site at www.sec.gov. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at (202) 942-8090. You can
also request copies of these materials, upon payment at the prescribed rates of
a duplicating fee, by electronic request to the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, DC, 20549-0102.
The Acquiring Fund Common Shares are listed on the New York Stock Exchange
(the "NYSE") and the Chicago Stock Exchange (the "CHX") under the ticker symbol
"VTN" and will continue to be so listed subsequent to the Reorganizations. The
common shares of New York Quality Municipal Trust are listed on the NYSE and the
CHX under the ticker symbol "VNM." The common shares of New York Value Municipal
Income Trust are listed on the NYSE and the CHX under the ticker symbol "VNV."
Reports, proxy statements and other information concerning the Acquiring Fund,
New York Quality Municipal Trust and New York Value Municipal Income Trust may
be inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
This Joint Proxy Statement/Prospectus serves as a prospectus of the Acquiring
Fund in connection with the issuance of Acquiring Fund Common Shares and
Acquiring Fund APS in each Reorganization. No person has been authorized to give
any information or make any representation not contained in this Joint Proxy
Statement/Prospectus and, if so given or made, such information or
representation must not be relied upon as having been authorized. This Joint
Proxy Statement/Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities in any jurisdiction in which, or
to any person to whom, it is unlawful to make such offer or solicitation.
The Board of Trustees of each Fund knows of no business other than that
discussed above that will be presented for consideration at the Special Meeting.
If any other matter is properly presented, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment.
---------------------
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is June 30, 2005.
4
TABLE OF CONTENTS
PAGE
----
SUMMARY..................................................... 7
PROPOSAL 1: REORGANIZATIONS OF THE TARGET FUNDS............. 14
RISK FACTORS AND SPECIAL CONSIDERATIONS..................... 15
Market Risk............................................... 15
Interest Rate Risk........................................ 15
Credit Risk............................................... 15
Income Risk............................................... 16
Call Risk................................................. 16
Non-Diversification Risk.................................. 16
New York Municipal Securities Risk........................ 16
Risks of Using Strategic Transactions..................... 17
Manager Risk.............................................. 17
Market Discount Risk...................................... 17
Leverage Risk............................................. 18
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................... 24
Investment Restrictions................................... 26
Management of the Funds................................... 28
Other Service Providers................................... 31
Capitalization............................................ 31
Additional Information about Common Shares of the Funds... 33
Additional Information about Preferred Shares of the
Funds................................................... 37
Governing Law............................................. 41
Certain Provisions of the Declarations of Trust........... 41
Conversion to Open-End Funds.............................. 43
Voting Rights............................................. 43
Financial Highlights...................................... 45
5
PAGE
----
INFORMATION ABOUT THE REORGANIZATIONS....................... 48
General................................................... 48
Terms of the Reorganization Agreements.................... 49
Material U.S. Federal Income Tax Consequences of the
Reorganizations......................................... 51
Shareholder Approval...................................... 53
PROPOSAL 2: ISSUANCE OF ADDITIONAL ACQUIRING FUND COMMON
SHARES.................................................... 54
Shareholder Approval...................................... 54
OTHER INFORMATION........................................... 55
Voting Information and Requirements....................... 55
Shareholder Information................................... 56
Section 16(a) Beneficial Ownership Reporting Compliance... 57
Shareholder Proposals..................................... 57
Solicitation of Proxies................................... 57
Legal Matters............................................. 58
Other Matters to Come Before the Meeting.................. 58
EXHIBIT I: DESCRIPTION OF SECURITIES RATINGS................ I-1
6
SUMMARY
The following is a summary of certain information contained elsewhere in this
Joint Proxy Statement/Prospectus and is qualified in its entirety by reference
to the more complete information contained in this Joint Proxy
Statement/Prospectus and in the Reorganization Statement of Additional
Information. Shareholders should read the entire Joint Proxy
Statement/Prospectus carefully.
PROPOSAL 1: REORGANIZATIONS OF THE TARGET FUNDS
THE PROPOSED REORGANIZATIONS. The Board of Trustees of each Target Fund,
including the trustees who are not "interested persons" of each Target Fund (as
defined in the 1940 Act), has unanimously approved each Reorganization
Agreement. If the shareholders of a Target Fund approve their Reorganization
Agreement and the common shareholders of the Acquiring Fund approve the issuance
of Acquiring Fund Common Shares (see Proposal 2: "Issuance of Additional
Acquiring Fund Common Shares"), Acquiring Fund Common Shares and Acquiring Fund
APS will be issued to the common shareholders and preferred shareholders of such
Target Fund, respectively, in exchange for substantially all of the assets of
the Target Fund and the assumption of substantially all of the liabilities of
the Target Fund. The Target Fund will then terminate its registration under the
1940 Act and dissolve under applicable state law. The aggregate net asset value
of Acquiring Fund Common Shares received in the Reorganization will equal the
aggregate net asset value of Target Fund common shares held immediately prior to
the Reorganization, less the costs of the Reorganization (though common
shareholders may receive cash for fractional shares). The aggregate liquidation
preference of Acquiring Fund APS received in the Reorganization will equal the
aggregate liquidation preference of Target Fund preferred shares held
immediately prior to the Reorganization.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATIONS. The Reorganizations
seek to combine three similar Funds to achieve certain economies of scale and
other operational efficiencies. Each Fund is registered as a non-diversified,
closed-end management investment company under the 1940 Act. The investment
objective of each Fund is to seek to provide a high level of current income
exempt from federal as well as New York State and New York City income taxes,
consistent with preservation of capital. Each Fund seeks to achieve its
investment objective, under normal market conditions, by investing substantially
all of its total assets in New York municipal securities rated investment grade
at the time of investment. New York Quality Municipal Trust and the Acquiring
Fund may invest up to 20% of their assets in unrated New York municipal
securities believed, at the time of investment, by the Adviser to have credit
characteristics equivalent to, and to be of comparable quality as, New York
municipal securities that are rated investment grade. Each Fund may invest all
or a substantial portion of its total assets in
7
New York municipal securities that pay interest that is subject to the federal
alternative minimum tax. The Funds are managed by the same investment advisory
personnel.
The proposed Reorganizations will combine the assets of these similar Funds by
reorganizing the Target Funds into the Acquiring Fund. The Board of Trustees of
each Target Fund (the "Target Fund Board"), based upon its evaluation of all
relevant information, anticipates that the common shareholders of each Target
Fund will benefit from their Fund's respective Reorganization. The Board of
Trustees of the Acquiring Fund (the "Acquiring Fund Board"), based upon its
evaluation of all relevant information, anticipates that each Reorganization
will benefit holders of Acquiring Fund Common Shares. Each Board believes, based
on data presented by Van Kampen Asset Management, investment adviser to each of
the Funds (the "Adviser"), that common shareholders of each Fund will experience
a reduced overall operating expense ratio as a result of their Fund's respective
Reorganization. The combined fund resulting from the Reorganizations will have a
larger asset base than any of the Funds has currently; certain fixed
administrative costs, such as costs of printing shareholder reports and proxy
statements, legal expenses, audit fees, mailing costs and other expenses, will
be spread across this larger asset base, thereby lowering the expense ratio for
common shareholders of the combined fund.
8
The table below illustrates the anticipated reduction in operating expenses
expected as a result of the Reorganizations. The table sets forth (i) the fees,
expenses and distributions to preferred shareholders paid by the Target Funds
for the 12-month period ended October 31, 2004, (ii) the fees, expenses and
distributions to preferred shareholders paid by the Acquiring Fund for the
12-month period ended October 31, 2004 and (iii) the pro forma fees, expenses
and distributions to preferred shareholders for the Acquiring Fund for the
12-month period ended October 31, 2004, assuming each of the Reorganizations had
been completed at the beginning of such period. As shown below, the
Reorganizations are expected to result in decreased total annual expenses for
shareholders of each Fund.
FEE, EXPENSE AND DISTRIBUTIONS ON PREFERRED SHARES TABLE
FOR COMMON SHAREHOLDERS OF THE FUNDS
AS OF OCTOBER 31, 2004
PRO
ACTUAL FORMA(F)
------------------------------------ ----------
VAN KAMPEN VAN KAMPEN VAN KAMPEN
VAN KAMPEN NEW YORK TRUST FOR TRUST FOR
NEW YORK VALUE INVESTMENT INVESTMENT
QUALITY MUNICIPAL GRADE GRADE
MUNICIPAL INCOME NEW YORK NEW YORK
TRUST TRUST MUNICIPALS MUNICIPALS
(VNM) (VNV) (VTN) (VTN)
---------- ---------- ---------- ----------
Common Shareholder Transaction
Expenses(a):
Maximum Sales Load (as a percentage
of offering price)(b)(c).......... None None None None
Dividend Reinvestment Plan Fees..... None None None None
Annual Expenses (as a percentage of
net assets attributable to common
shares):
Investment Advisory Fees(d)......... 0.81% 0.86% 0.86% 0.84%
Interest Payments on Borrowed
Funds............................. 0.00% 0.00% 0.00% 0.00%
Other Expenses(c)................... 0.37% 0.48% 0.38% 0.26%
Total Annual Expenses(d).......... 1.18% 1.34% 1.24% 1.10%
Distributions
Distributions on Preferred
Shares(e)......................... 0.55% 0.54% 0.65% 0.59%
----- ----- ----- -----
Total Annual Expenses and
Distributions on Preferred
Shares.......................... 1.73% 1.88% 1.89% 1.69%
----- ----- ----- -----
---------------
(a)No expense information is presented with respect to preferred shares because
holders of preferred shares do not bear any transaction or operating expenses
of any of the Funds and will not bear any of the Reorganization expenses or
any transaction or operating expenses of the combined fund.
(b)Common shares purchased in the secondary market may be subject to brokerage
commissions or other charges. No sales load will be charged on the issuance
of common shares in the Reorganizations. Common shares are not available for
purchase from the Funds but may be purchased through a broker-dealer subject
to individually negotiated commission rates.
9
(c) In connection with the Reorganizations, there are certain other transaction
expenses which include, but are not limited to: all costs related to the
preparation, printing and distributing of this Joint Proxy
Statement/Prospectus to shareholders; costs related to preparation and
distribution of materials distributed to each Fund's Board; all expenses
incurred in connection with the preparation of the Reorganization Agreements
and the registration statement on Form N-14; SEC and state securities
commission filing fees; legal and audit fees; portfolio transfer taxes (if
any); and any similar expenses incurred in connection with the
Reorganizations. In accordance with applicable SEC rules, the Board of
Trustees of each Fund reviewed the fees and expenses that will be borne
directly or indirectly by the Funds in connection with the Reorganizations.
After considering various alternatives for allocating these costs, the Board
of Trustees of each Fund agreed that, in the event the Reorganizations are
approved and completed, the expenses of the Reorganizations will be shared
by the Target Funds and the Acquiring Fund in proportion to their projected
annual expense savings as a result of the Reorganizations. The table below
summarizes each Fund's net assets (common shares only) at October 31, 2004,
projected annual expense savings to each Fund as a result of the
Reorganizations, allocation of Reorganization expenses among the Funds in
dollars and percentages, an estimated pay-back period (in years) and the
resulting effect on each Fund's net asset value per common share at October
31, 2004. Some Funds will benefit more from projected annual expense savings
of the Reorganizations than other Funds. The projected annual expense
savings are generally not expected to be immediately realized. If
shareholders sell their common shares prior to the estimated pay-back
period, then they may not realize any of the projected expense savings
resulting from the reduced expense ratio of the combined fund. The net asset
value per common share of each Fund will be reduced at the closing date of
the respective Reorganization to reflect the allocation of Reorganization
expenses to each Fund. The reduction in net asset value per common share
resulting from the allocation of Reorganization expenses, when compared to
the relative net asset sizes of each Fund involved in the Reorganizations,
will be greater in some Funds than others. In the event a Reorganization is
not completed, the Adviser will bear the costs associated with such
Reorganization. The numbers presented in the table are estimates; actual
results may differ.
REDUCTION TO
PROJECTED ESTIMATED NET ASSET
NET ASSETS ANNUAL REORGANIZATION PAYBACK VALUE PER
(COMMON EXPENSE EXPENSE ALLOCATION PERIOD COMMON
FUND SHARES ONLY) SAVINGS IN DOLLARS/PERCENTAGE (IN YEARS) SHARE
---- ------------ --------- --------------------- ----------- ------------
VNM.................. $ 72,369,780 $173,679 $ 174,150/43% 1.00 0.04
VNV.................. 96,572,318 77,258 76,950/19% 1.00 0.01
VTN.................. 107,028,857 149,840 153,900/38% 1.03 0.02
------------
Total Expenses....... 405,000/100%
(d) Expense information has been restated to reflect permanent reductions made
to administrative fees effective as of June 1, 2004 and permanent reductions
made to management fees effective as of November 1, 2004. If assets
attributable to preferred shares were included, the investment advisory fee
would be 0.55% for each Fund and for the Acquiring Fund on a pro forma
basis.
(e) In seeking to enhance the income for its common shareholders, each of the
Funds uses preferred shares as financial leverage. Leverage created by
borrowing or other forms of indebtedness would create interest expenses
which would, if used by the Funds, be charged to common shareholders (shown
above as "Interest Payments on Borrowed Funds"). Leverage created by
preferred shares creates dividend payments and/or capital gains
distributions to preferred
10
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.
(f)As described above the table, the pro forma column shown above assumes all of
the Reorganizations are completed. As described herein, an unfavorable vote
by one of the Target Funds will not affect the implementation of the
Reorganization by the other Target Fund if approved by such other Target
Fund. As such, there could be other combinations of approved Reorganizations,
and the pro forma columns below present these various combinations.
Pro Forma
-------------------
ANNUAL EXPENSES VNM and VNV and
(as a percentage of net assets attributable to common shares): VTN Only VTN Only
-------------------------------------------------------------- -------- --------
Investment Advisory Fees(d)............................. 0.84% 0.86%
Interest Payments on Borrowed Funds..................... 0.00% 0.00%
Other Expenses.......................................... 0.28% 0.31%
Total Annual Expenses(d).............................. 1.12% 1.17%
Distributions
Distributions on Preferred Shares(e).................... 0.60% 0.61%
Total Annual Expenses and Distributions on Preferred
Shares.............................................. 1.72% 1.78%
EXAMPLE. The following example is intended to help you compare the costs of
investing in the Acquiring Fund pro forma after the Reorganizations with the
costs of investing in the Target Funds and the Acquiring Fund without the
Reorganizations. An investor would pay the following expenses on a $1,000
investment, assuming (1) the operating expense ratio for each Fund (as a
percentage of net assets attributable to common shares) set forth in the table
above and (2) a 5% annual return throughout the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Van Kampen New York Quality Municipal
Trust (VNM)......................... $12 $37 $64 $143
Van Kampen New York Value Municipal
Income Trust (VNV).................. $14 $43 $74 $162
Van Kampen Trust for Investment Grade
New York Municipals (VTN)........... $13 $40 $69 $151
Pro Forma -- Van Kampen Trust for
Investment Grade New York
Municipals(a) (VTN)................. $11 $35 $61 $135
---------------
(a)Consistent with footnote (f) to the preceding table, the pro forma row shown
above assumes each of the Reorganizations is completed. As described herein,
an unfavorable vote by one of the Target Funds will not affect the
implementation of the Reorganization of the other Target Fund if approved by
such other
11
Target Fund. This means that there could be other combinations of approved
Reorganizations, and the pro forma rows below present these various
combinations:
PRO FORMA 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ------ ------- ------- --------
VNM and VTN only.................. $11 $35 $61 $135
VNV and VTN only.................. $12 $37 $64 $142
The example set forth above assumes the reinvestment of all dividends and
distributions. The example should not be considered a representation of past or
future expenses or annual rates of return. Actual expenses or annual rates of
return may be more or less than those assumed for purposes of the example.
FURTHER INFORMATION REGARDING THE REORGANIZATIONS. The Target Fund Board has
determined that each Reorganization is in the best interests of common
shareholders of the respective Target Fund and that the interests of such
shareholders will not be diluted as a result of their Fund's Reorganization.
Similarly, the Acquiring Fund Board has determined that each Reorganization is
in the best interests of common shareholders of the Acquiring Fund and that the
interests of such shareholders will not be diluted as a result of any
Reorganization. It is not anticipated that any of the Reorganizations will
directly benefit preferred shareholders of any of the Funds; however, the
Reorganizations will not materially adversely affect preferred shareholders of
any of the Funds, and the expenses of the Reorganizations will not be borne by
preferred shareholders of any of the Funds. As a result of the Reorganizations,
however, shareholders of each Fund will hold a reduced percentage of ownership
in the larger combined fund than they did in any of the separate Funds.
Each of the Reorganizations is intended to qualify as a "reorganization"
within the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"). If the Reorganizations so qualify, in
general, shareholders of the Target Funds will recognize no gain or loss upon
the receipt of shares of the Acquiring Fund in connection with the
Reorganizations. Additionally, the Target Funds will recognize no gain or loss
as a result of the transfer of all of their assets and liabilities in exchange
for shares of the Acquiring Fund or as a result of their dissolution. Neither
the Acquiring Fund nor its shareholders will recognize any gain or loss in
connection with the Reorganizations.
The Target Fund Board requests that shareholders of each Target Fund approve
their Fund's proposed Reorganization at the Special Meeting to be held on August
12, 2005. Shareholder approval of each Reorganization requires the affirmative
vote of shareholders of the respective Target Fund representing more than 50% of
the outstanding common shares and preferred shares of such Target Fund, entitled
to vote, each voting separately as a class. Subject to the requisite approval of
the shareholders of each Fund with regard to each Reorganization, it is expected
12
that the closing date of the transaction (the "Closing Date") will be after the
close of business on or about August 26, 2005, but it may be at a different time
as described herein.
The Target Fund Board recommends that you vote "FOR" your Target Fund's
proposed Reorganization.
PROPOSAL 2: ISSUANCE OF ADDITIONAL ACQUIRING FUND COMMON SHARES
In connection with each proposed Reorganization described under "Proposal 1:
Reorganizations of the Target Funds," the Acquiring Fund will issue additional
Acquiring Fund Common Shares and list such shares on the NYSE and CHX. The
Acquiring Fund will acquire substantially all of the assets and assume
substantially all of the liabilities of each Target Fund in exchange for
newly-issued Acquiring Fund Common Shares and newly-issued Acquiring Fund APS.
The Reorganizations will result in no reduction of the net asset value of the
Acquiring Fund Common Shares, other than to reflect the costs of the
Reorganizations. No gain or loss will be recognized by the Acquiring Fund or its
shareholders in connection with the Reorganization. The Acquiring Fund Board,
based upon its evaluation of all relevant information, anticipates that each
Reorganization will benefit holders of Acquiring Fund Common Shares. In
particular, the Acquiring Fund Board believes, based on data presented by the
Adviser, that the Acquiring Fund will experience a reduced overall operating
expense ratio as a result of the Reorganizations.
The Acquiring Fund Board requests that common shareholders of the Acquiring
Fund approve the issuance of additional Acquiring Fund Common Shares at the
Special Meeting to be held on August 12, 2005. Shareholder approval of the
issuance of additional Acquiring Fund Common Shares requires the affirmative
vote of a majority of the votes cast, provided that total votes cast on the
proposal represent over 50% of all securities entitled to vote on the matter.
Subject to the requisite approval of the shareholders of each Fund with regard
to the Reorganizations, it is expected that the Closing Date will be after the
close of business on or about August 26, 2005, but it may be at a different time
as described herein.
The Acquiring Fund Board recommends that you vote "FOR" the issuance of
additional Acquiring Fund Common Shares in connection with the Reorganizations.
13
------------------------------------------------------------------------------
PROPOSAL 1: REORGANIZATIONS OF THE TARGET FUNDS
------------------------------------------------------------------------------
The Reorganizations seek to combine three similar Funds to achieve certain
economies of scale and other operational efficiencies. Each Fund is registered
as a non-diversified, closed-end management investment company under the 1940
Act. The investment objective of each Fund is to seek to provide a high level of
current income exempt from federal as well as New York State and New York City
income taxes, consistent with preservation of capital. Each Fund seeks to
achieve its investment objective, under normal market conditions, by investing
substantially all of its total assets in New York municipal securities rated
investment grade at the time of investment. New York Quality Municipal Trust and
the Acquiring Fund may invest up to 20% of their assets in unrated New York
municipal securities believed, at the time of investment, by the Adviser to have
credit characteristics equivalent to, and to be of comparable quality as, New
York municipal securities that are rated investment grade. The Funds are managed
by the same investment advisory personnel.
In each Reorganization, the Acquiring Fund will acquire substantially all of
the assets and assume substantially all of the liabilities of the Target Fund in
exchange for an equal aggregate value of Acquiring Fund Common Shares and
Acquiring Fund APS. The Target Fund will distribute Acquiring Fund Common Shares
to common shareholders of the Target Fund and Acquiring Fund APS to preferred
shareholders of the Target Fund, and will then terminate its registration under
the 1940 Act and dissolve under applicable state law. The aggregate net asset
value of Acquiring Fund Common Shares received in the Reorganization will equal
the aggregate net asset value of the Target Fund common shares held immediately
prior to the Reorganization, less the costs of the Reorganization (though common
shareholders may receive cash for fractional shares). The aggregate liquidation
preference of Acquiring Fund APS received in the Reorganization will equal the
aggregate liquidation preference of Target Fund preferred shares held
immediately prior to the Reorganization. The Acquiring Fund will continue to
operate as a registered closed-end investment company with the investment
objective and policies described in this Joint Proxy Statement/Prospectus.
The Target Fund Board, based upon its evaluation of all relevant information,
anticipates that the common shareholders of each Target Fund will benefit from
their Fund's respective Reorganization. In particular, the Target Fund Board
believes, based on data presented by the Adviser, that common shareholders of
each Target Fund will experience a reduced overall operating expense ratio as a
result of their Fund's respective Reorganization. The combined fund resulting
from the Reorganizations will have a larger asset base than any of the Funds has
currently; certain fixed administrative costs, such as costs of printing
shareholder reports and proxy statements, legal expenses, audit fees, mailing
costs and other expenses, will
14
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 investment grade New York municipal securities, any risks
inherent in such investments are equally applicable to each Fund and will apply
to the combined fund after the Reorganizations. The Reorganizations themselves
are not expected to adversely affect the rights of shareholders of any of the
Funds or to create additional risks.
MARKET RISK
Market risk is the possibility that the market values of securities owned by
each Fund will decline. The prices of debt securities tend to fall as interest
rates rise, and such declines tend to be greater among debt securities with
longer maturities. Market risk is often greater among certain types of debt
securities, such as zero coupon bonds which do not make regular interest
payments but are instead bought at a discount to their face values and paid in
full upon maturity. As interest rates change, these securities often fluctuate
more in price than securities that make regular interest payments and therefore
subject the Funds to greater market risk than a fund that does not own these
types of securities. When-issued and delayed delivery transactions are subject
to changes in market conditions from the time of the commitment until
settlement. This may adversely affect the prices or yields of the securities
being purchased. The greater the Funds' outstanding commitments for these
securities, the greater the Funds' exposure to market price fluctuations.
INTEREST RATE RISK
Interest rate risk is the risk that prices of municipal securities generally
increase when interest rates decline and decrease when interest rates increase.
Prices of longer-term securities generally change more in response to interest
rate changes than prices of shorter-term securities.
CREDIT RISK
Credit risk is the risk that the issuer will be unable to pay the interest or
principal when due. The degree of credit risk depends on both the financial
condition of the issuer and the terms of the obligation. Each Fund invests
substantially all of its assets in municipal securities that are rated
investment grade by Standard & Poor's ("S&P") or Moody's Investors Service Inc.
("Moody's") (or comparably rated by another nationally recognized statistical
rating organization). Securities rated in the lowest investment grade category
may have certain speculative characteristics.
15
New York Quality Municipal Trust and the Acquiring Fund may invest up to 20% of
their assets in unrated New York municipal securities believed, at the time of
investment, by the Adviser to have credit characteristics equivalent to, and to
be of comparable quality as, New York municipal securities that are rated
investment grade. New York Quality Municipal Trust and the Acquiring Fund may
therefore be more dependent on the Adviser's investment analysis of unrated New
York municipal securities than is the case with respect to rated New York
municipal securities.
INCOME RISK
The income shareholders receive from their Fund is based primarily on interest
rates, which can vary widely over the short- and long-term. If interest rates
drop, the income from the Funds may drop as well.
CALL RISK
If interest rates fall, it is possible that issuers of securities with high
interest rates will prepay or "call" their securities before their maturity
dates. In this event, the proceeds from the called securities would likely be
reinvested by the Funds in securities bearing the new, lower interest rates,
resulting in a possible decline in the Funds' income and distributions to
shareholders.
NON-DIVERSIFICATION RISK
Each Fund is classified as a non-diversified fund, which means each Fund may
invest a greater portion of its assets in a more limited number of issuers than
a diversified fund. As a result, each Fund may be subject to greater risk than a
diversified fund because changes in the financial condition or market assessment
of a single issuer may cause greater fluctuations in the value of such Fund's
shares.
NEW YORK MUNICIPAL SECURITIES RISK
Since each Fund, under normal market conditions, invests substantially all of
its assets in investment grade New York municipal securities, each Fund is more
exposed to risks affecting issuers of New York municipal securities than is a
bond fund or a municipal bond fund that invests more widely. Many different
social, environmental and economic factors may affect the financial condition of
municipal bonds, and particularly those of New York and its political
subdivisions. The yields of New York municipal securities may move differently
and adversely compared to the yields of overall debt securities markets.
Although the interest received from New York municipal securities generally is
exempt from regular federal income tax as well as New York State and New York
City personal income taxes, each fund may invest in New York municipal
securities that pay interest that is subject to the federal alternative minimum
tax. Each Fund may invest all or a substantial portion of its total assets in
New York municipal securities that pay interest that is subject
16
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 generally applicable to interest received on
municipal securities or otherwise adversely affect the current federal or state
tax status of New York municipal securities.
RISKS OF USING STRATEGIC TRANSACTIONS
Each Fund may engage in certain transactions ("Strategic Transactions")
designed to, among other things, reduce its exposure to interest rate movements.
For example, each Fund may purchase and sell exchange-listed and over-the-
counter put and call options on securities, financial futures and other
financial instruments, purchase and sell financial futures contracts and enter
into various interest rate transactions such as swaps, caps, floors or collars.
If a Fund incorrectly forecasts market values, interest rates or other factors,
that Fund's performance could suffer as a result of its Strategic Transactions.
Each Fund also may suffer a loss if the other party to the Strategic Transaction
fails to meet its obligations. The Funds are not required to use Strategic
Transactions and may choose not to do so.
MANAGER RISK
As with any managed fund, the investment adviser to each Fund may not be
successful in selecting the best-performing securities or investment techniques,
and a Fund's performance may lag behind that of similar funds.
MARKET DISCOUNT RISK
Whether investors will realize gains or losses upon the sale of shares of a
Fund will depend upon the market price of the shares at the time of original
purchase and subsequent sale, which may be less or more than such Fund's net
asset value per share. Since the market price of the shares will be affected by
such factors as the relative demand for and supply of the shares in the market,
general market and economic conditions and other factors beyond the control of
the Funds, the Funds cannot predict whether shares of the Funds will trade at,
below or above net asset value. Shares of closed-end funds often trade at a
discount to their net asset values, and the Funds' shares may trade at such a
discount.
In order to reduce or eliminate a market value discount from net asset value,
the Board of Trustees of a Fund may, subject to the terms of its preferred
shares, authorize such Fund from time to time to repurchase its common shares in
the open market or to tender for its common shares at net asset value. The Board
of Trustees of a Fund, in consultation with the Adviser, reviews on a quarterly
basis the possibility of open-market repurchases and/or tender offers for such
Fund's common shares. Subject to its borrowing restrictions, a Fund may incur
debt to finance such repurchases, which entails risks. The ability of a Fund to
enter into tender
17
offers and the common share repurchases may be limited by the 1940 Act asset
coverage requirements and any additional asset coverage requirements which may
be imposed by a rating agency in connection with any rating of the preferred
shares. No assurance can be given that the Board of Trustees of a Fund will, in
fact, authorize such Fund to undertake such repurchases and/or tender offers or
that, if undertaken, such actions would result in such Fund's common shares
trading at a price which is equal or close to net asset value.
LEVERAGE RISK
Use of leverage, through the issuance of preferred shares, involves certain
risks to holders of common shares of the Funds. For example, each Fund's
issuance of preferred shares may result in higher volatility of the net asset
value of its common shares and potentially more volatility in the market value
of its common shares. In addition, changes in the short-term and medium-term
dividend rates on, and the amount of taxable income allocable to, the preferred
shares of a Fund will affect the yield to holders of common shares of such Fund.
In certain circumstances, when a Fund is required to allocate taxable income to
holders of its preferred shares, such Fund may be required to make an additional
distribution to such holders in an amount approximately equal to the tax
liability resulting from the allocation (an "Additional Dividend"). Leverage
will allow holders of each Fund's common shares to realize a higher current rate
of return than if a Fund were not leveraged as long as such Fund, while
accounting for its costs and operating expenses, is able to realize a higher net
return on its investment portfolio than the then-current dividend rate (and any
Additional Dividend) paid on its preferred shares. Similarly, since a pro rata
portion of each Fund's net realized capital gains is generally payable to
holders of a Fund's common shares, the use of leverage will increase the amount
of such gains distributed to holders of a Fund's common shares. However,
short-term, medium-term and long-term interest rates change from time to time as
do their relationships to each other (i.e., the slope of the yield curve)
depending upon such factors as supply and demand forces, monetary and tax
policies and investor expectations. Changes in any or all of such factors could
cause the relationship between short-term, medium-term and long-term rates to
change (i.e., to flatten or to invert the slope of the yield curve) so that
short-term and medium-term rates may substantially increase relative to the
long-term obligations in which each Fund may be invested. To the extent that the
current dividend rate (and any Additional Dividend) on a Fund's preferred shares
approaches the net return on such Fund's investment portfolio, the benefit of
leverage to holders of common shares of such Fund will be decreased. If the
current dividend rate (and any Additional Dividend) on the preferred shares were
to exceed the net return on a Fund's portfolio, holders of common shares of such
Fund would receive a lower rate of return than if the Fund were not leveraged.
Similarly, since both the costs of issuing preferred shares and any decline in
the value of a Fund's investments (including investments purchased with the
proceeds from any preferred shares offering) will be borne entirely by holders
of such Fund's common shares, the effect of
18
leverage in a declining market would result in a greater decrease in net asset
value to holders of common shares than if a Fund were not leveraged. If a Fund
is liquidated, holders of that Fund's preferred shares will be entitled to
receive liquidating distributions before any distribution is made to holders of
common shares of such Fund.
In an extreme case, a decline in net asset value could affect a Fund's ability
to pay dividends on its common shares. Failure to make such dividend payments
could adversely affect a Fund's qualification as a regulated investment company
under the federal tax laws. However, each Fund intends to take all measures
necessary to make required common share dividend payments. If a Fund's current
investment income is ever insufficient to meet dividend payments on either its
common shares or its preferred shares, such Fund may have to liquidate certain
of its investments. In addition, each Fund has the authority to redeem its
preferred shares for any reason and may be required to redeem all or part of its
preferred shares in the following circumstances:
- if the asset coverage for the preferred shares declines below 200%, either
as a result of a decline in the value of a Fund's portfolio investments or
as a result of the repurchase of common shares in tender offers or
otherwise, or
- in order to maintain the asset coverage guidelines established by Moody's
and S&P in rating the preferred shares.
Redemption of the preferred shares or insufficient investment income to make
dividend payments may reduce the net asset value of a Fund's common shares and
require a Fund to liquidate a portion of its investments at a time when it may
be disadvantageous to do so.
ANTI-TAKEOVER PROVISIONS
The Declaration of Trust of each Fund (in each case, the "Declaration of
Trust") includes provisions that could limit the ability of other entities or
persons to acquire control of that Fund or to change the composition of its
Board of Trustees. Such provisions could limit the ability of common
shareholders to sell their shares at a premium over prevailing market prices by
discouraging a third party from seeking to obtain control of either Fund.
SPECIAL RISKS RELATED TO PREFERRED SHARES
AUCTION RISK. The dividend rate for the preferred shares of each Fund,
including the Acquiring Fund, normally is set through an auction process. These
preferred shares are referred to as "auction preferred shares." In the auction,
preferred shareholders may indicate the dividend rate at which they would be
willing to hold or sell their auction preferred shares or purchase additional
shares. An auction fails if there are more auction preferred shares offered for
sale than there are buyers, in which case preferred shareholders may not be able
to sell their shares. Also, if preferred shareholders place bids to retain
shares at an auction only at a specified
19
dividend rate and that rate exceeds the rate set at the auction, they will not
retain their shares. Additionally, if preferred shareholders buy auction
preferred shares or elect to retain shares without specifying a dividend rate
below which they would not wish to buy or continue to hold those shares, they
could receive a lower rate of return on their auction preferred shares than the
market rate. Finally, the dividend period for the auction preferred shares may
be changed by the Funds, subject to certain conditions, including notice to
preferred shareholders, which could also affect the liquidity of an investment
in those shares.
SECONDARY MARKET RISK. Broker-dealers may maintain a secondary trading market
in the preferred shares outside of auctions; however, they are not obligated to
do so and there can be no assurance that such a secondary market will develop
or, if it does develop, that it will provide preferred shareholders with a
liquid trading market. It may not be possible to sell preferred shares between
auctions, or it may only be possible to sell them for a price less than their
liquidation preference plus any accumulated dividends. An increase in the level
of interest rates likely will have an adverse effect on the secondary market
price of the preferred shares. Auction preferred shares may only be transferred
outside of auctions to or through broker-dealers or other persons as the Funds
permits.
RATINGS AND ASSET COVERAGE RISKS. Although the preferred shares of each Fund
have been rated "Aaa" by Moody's and "AAA" by S&P, such ratings do not eliminate
or necessarily mitigate the risks of investing in preferred shares. Moody's or
S&P could downgrade its rating of the preferred shares or withdraw its rating at
any time, which may make the preferred shares less liquid at an auction or in
the secondary market. If a Fund fail to satisfy its asset coverage ratios, it
will be required to redeem a sufficient number of preferred shares in order to
return to compliance with the asset coverage ratios. A Fund may voluntarily
redeem preferred shares under certain circumstances in order to meet asset
coverage tests.
COMPARISON OF THE FUNDS
INVESTMENT OBJECTIVE AND POLICIES
The Funds pursue the same investment objective and have similar investment
policies. Each Fund seeks to provide common shareholders with a high level of
current income exempt from federal income tax as well as New York State and New
York City personal income taxes, consistent with preservation of capital. Under
normal market conditions, each Fund invests at least 80% of its assets in New
York municipal securities.
Under normal market conditions, each Fund invests substantially all of its
assets in New York municipal securities rated investment grade at the time of
investment. Investment grade rated securities are rated BBB or higher by S&P or
Baa or higher
20
by Moody's (or comparably rated by any other nationally recognized statistical
rating organization) in the case of long-term obligations, and have equivalent
ratings in the case of short-term obligations. Securities rated BBB by S&P are
regarded by S&P as having an adequate capacity to pay interest and repay
principal. Securities rated Baa by Moody's are considered by Moody's as
medium-grade obligations which lack outstanding investment characteristics and
in fact have speculative characteristics as well.
New York Quality Municipal Trust and the Acquiring Fund may invest up to 20%
of their assets in unrated New York municipal securities believed, at the time
of investment, by the Adviser to have credit characteristics equivalent to, and
to be of comparable quality as, New York municipal securities that are rated
investment grade.
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 or, in the case of unrated
securities in which New York Quality Municipal Trust and the Acquiring Fund may
invest, in the event the Adviser reassesses its view with respect to the credit
quality of the issuer thereof. 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 New York 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 total assets in New York
municipal securities.
NEW YORK MUNICIPAL SECURITIES. Municipal securities are obligations issued by
or on behalf of states, certain territories and possessions of the United States
and the District of Columbia and their political subdivisions, agencies and
instrumentalities, the interest on which is, in the opinion of bond counsel or
other counsel to the issuer
21
of such securities, at the time of issuance, not includable in gross income for
regular federal income tax purposes. New York municipal securities are municipal
securities, the interest on which is, in the opinion of bond counsel or other
counsel to the issuer of such securities, at the time of issuance, exempt from
New York State and New York City personal income taxes. Under normal market
conditions, at least 80% of each Fund's net assets are invested in New York
municipal securities.
The two principal classifications of municipal securities are "general
obligation" securities and "revenue" securities. "General obligation" securities
are secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. "Revenue" securities are usually payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source. Industrial development bonds are usually revenue securities, the
credit quality of which is normally directly related to the credit standing of
the industrial user involved.
Within these principal classifications of municipal securities, there are a
variety of categories of municipal securities, including fixed and variable rate
securities, municipal bonds, municipal notes, municipal leases, custodial
receipts, participation certificates and municipal securities the terms of which
include elements of, or are similar in effect to, certain Strategic Transactions
in which the Funds may engage. Variable rate securities bear rates of interest
that are adjusted periodically according to formulae intended to reflect market
rates of interest and include securities whose rates vary inversely with changes
in market rates of interest. Municipal notes include tax, revenue and bond
anticipation notes of short maturity, generally less than three years, which are
issued to obtain temporary funds for various public purposes. Municipal leases
are obligations issued by state and local governments or authorities to finance
the acquisition of equipment and facilities. Certain municipal lease obligations
may include "nonappropriation" clauses which provide that the municipality has
no obligation to make lease or installment purchase payments in future years
unless money is appropriated for such purpose on a yearly basis. Custodial
receipts are underwritten by securities dealers or banks and evidence ownership
of future interest payments, principal payments or both on certain municipal
securities. Participation certificates are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities. They may represent participations in a lease, an installment
purchase contract, or a conditional sales contract. Municipal securities may not
be backed by the faith, credit and taxing power of the issuer.
The Funds do not generally invest 25% or more of their respective total assets
in any one industry. Governmental issuers of New York municipal securities are
not considered part of any "industry" and are accordingly not subject to this
25% limitation. However, New York municipal securities backed only by the assets
and revenues of non-governmental users may for this purpose be deemed to be
issued by
22
such non-governmental users, and the 25% limitation would apply to such
obligations.
Each Fund may invest in New York municipal securities backed by original issue
insurance or secondary market insurance (collectively, "insurance"). The credit
rating assigned by Moody's or S&P (or any other nationally recognized
statistical rating organization) to New York municipal securities covered by
insurance ordinarily will be based, at least in part, on such insurance.
Although the Adviser periodically reviews the financial condition of insurers,
there can be no assurance that the insurers will be able to honor their
obligations in all circumstances. In the event of a default by an insurer on its
obligations with respect to any New York municipal securities in a Fund's
portfolio, the Fund would look to the issuer or guarantor of such New York
municipal securities for payments of principal and interest and such issuer or
any guarantor may not be rated investment grade. Alternatively, the Fund could
elect to dispose of such New York municipal securities; however, the market
prices for such New York municipal securities may be lower than the Fund's
purchase price for them and the Fund could sustain a capital loss as a result.
The amount of available information about the financial condition of New York
municipal securities issuers may be less extensive than that for corporate
issuers with publicly traded securities. New York municipal securities in which
the Funds may each invest include special obligation bonds, lease obligations,
participation certificates, variable rate instruments and New York municipal
securities the terms of which include elements of, or are similar in effect to,
certain Strategic Transactions in which the Funds may engage. Certain of these
instruments represent relatively recent innovations in the municipal securities
markets. While the markets for such recent innovations progress through stages
of development, such markets may be less liquid than more fully developed
markets for municipal securities. Liquidity relates to the ability of a Fund to
sell a security in a timely manner at a price which reflects the value of that
security. Although it is generally the policy of the Funds to hold New York
municipal securities until their maturity, the relative illiquidity of some of a
Fund's portfolio securities may adversely affect the ability of the Fund to
dispose of such securities in a timely manner and at a fair price.
Each Fund may invest up to 15% of its net assets in "inverse floating rate
obligations." Floating rate obligations bear rates of interest that are adjusted
periodically to reflect changes in market rates of interest. Inverse floating
rate obligations have rates that vary inversely with changes in market rates of
interest. These securities have varying degrees of liquidity and the market
value of such securities generally will fluctuate in response to changes in
market rates of interest to a greater extent that the value of an equal
principal amount of a fixed rate security having similar credit quality,
redemption provisions and maturity. These securities tend to underperform the
market for fixed rate bonds in a rising interest
23
rate environment, but tend to outperform the market for fixed rate bonds when
interest rates decline or remain relatively stable.
TEMPORARY DEFENSIVE STRATEGIES. At times, the Adviser may judge that
conditions in the markets for New York municipal securities make pursuing a
Fund's basic investment strategy inconsistent with the best interests of its
shareholders. At such times, the Adviser may use alternative strategies,
primarily designed to reduce fluctuations in the value of such Fund's assets. In
implementing these "defensive" strategies, a Fund may invest to a substantial
degree in other investment grade municipal securities, including liquid,
high-quality, short-term municipal securities. If these other municipal
securities are not available or, in the Adviser's judgment, do not afford
sufficient protection against adverse market conditions, each Fund may invest in
investment grade taxable securities. To the extent that a Fund invests in
taxable securities for temporary defensive purposes, that Fund will not be
invested in a manner primarily designed to achieve its investment objective of
seeking to provide common shareholders with a high level of current income
exempt from federal income tax as well as New York State and New York City
personal income taxes.
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.
24
Strategic Transactions have risks associated with them, including possible
default by the other party to the transaction, liquidity and, to the extent the
Adviser's view as to certain market movements is incorrect, the risk that the
use of such Strategic Transactions could result in losses greater than if they
had not been used. Use of put and call options may result in losses to a Fund,
force the sale of portfolio securities at inopportune times or for prices other
than at current market values, limit the amount of appreciation a Fund can
realize on its investments or cause a Fund to hold a security it might otherwise
sell. The use of options and futures transactions entails certain other risks.
In particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
Fund might not be able to close out a transaction without incurring substantial
losses, if at all. Although the contemplated use of these futures contracts and
options thereon should tend to minimize the risk of loss due to a decline in the
value of the hedged position, at the same time they tend to limit any potential
gain which might result from an increase in value of such position. Finally, the
daily variation margin requirements for futures contracts and the sale of
options thereon would create, a greater ongoing potential financial risk than
would purchases of options, where the exposure is limited to the cost of the
initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized. Income earned or gains realized or deemed to
be earned or realized, if any, by a Fund from engaging in Strategic Transactions
generally will be taxable income of the Fund. Such income is allocated among the
common shares and the preferred shares of a Fund on a pro rata basis.
"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS. Each Fund may also purchase
and sell municipal securities on a "when-issued" and "delayed delivery" basis.
No income accrues to a Fund on municipal securities in connection with such
transactions prior to the date such Fund actually takes delivery of such
securities. These transactions are subject to market fluctuation; the value of
the municipal securities at delivery may be more or less than their purchase
price, and yields generally available on municipal securities when delivery
occurs may be higher than yields on the municipal securities obtained pursuant
to such transactions. Because a Fund engaging in such transactions relies on the
buyer or seller, as the case may be, to consummate the transaction, failure by
the other party to complete the transaction may result in such Fund missing the
opportunity of obtaining a price or yield considered to be advantageous. When a
Fund is the buyer in such a transaction, however, it will maintain, in a
segregated account with its custodian, cash or liquid portfolio securities
having an aggregate value equal to the amount of such purchase
25
commitments until payment is made. A Fund will make commitments to purchase
municipal securities on such basis only with the intention of actually acquiring
these securities, but a Fund may sell such securities prior to the settlement
date if such sale is considered to be advisable. To the extent a Fund engages in
"when-issued" and "delayed delivery" transactions, it will do so for the purpose
of acquiring securities for a Fund's portfolio consistent with a Fund's
investment objective and policies and not for the purpose of investment
leverage. No specific limitation exists as to the percentage of a Fund's assets
which may be used to acquire securities on a "when-issued" or "delayed delivery"
basis.
INVESTMENT RESTRICTIONS
Each Fund's investment objective, each Fund's investment policy with respect
to investing at least 80% of its total assets in municipal securities (or, with
respect to New York Quality Municipal Trust, in New York municipal securities)
and the following investment restrictions are fundamental and cannot be changed
without the approval of the holders of a majority of the Fund's outstanding
voting securities (defined in the 1940 Act as the lesser of (i) more than 50% of
the Fund's outstanding common shares and of its outstanding preferred shares,
voting by class, or (ii) 67% of such outstanding common shares and preferred
shares, voting by class, present at a meeting at which the holders of more than
50% of the outstanding shares of each such class are present in person or by
proxy). All other investment policies or practices are considered by the Funds
not to be fundamental and accordingly may be changed without shareholder
approval. If a percentage restriction on investment or use of assets set forth
below is adhered to at the time a transaction is effected, later changes in
percentage resulting from changing market values will not be considered a
deviation from policy. With respect to the limitations on illiquid securities
and borrowings, the percentage limitations apply at the time of purchase and on
an ongoing basis.
The Funds may not:
1. Invest more than 25% of their assets in a single industry; however, the
Funds may from time to time invest more than 25% of their assets in a
particular segment of the municipal securities market.
2. 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 (3) below or with
respect to Strategic Transactions.
3. Borrow money, except for temporary or emergency purposes from banks or for
repurchase of its shares, and then only in an amount not exceeding one-
third of a Fund's total assets, including the amount borrowed. The Funds
will not mortgage, pledge or hypothecate any assets except in connection
with a borrowing or, with respect to New York Value Municipal Income Trust
only,
26
a Strategic Transaction. The Funds will not purchase portfolio securities
during any period in which such borrowings exceed 5% of the total asset
value of a Fund. Notwithstanding this investment restriction, the Funds
may enter into "when-issued" and "delayed delivery" transactions.
4. Make loans of money or property to any person, except to the extent the
securities in which the Funds may invest are considered to be loans and
except that the Funds may lend money or property in connection with
maintenance of the value of or a Fund's interest with respect to the
securities owned by such Fund.
5. Buy any securities "on margin." Neither the deposit of initial or
variation margin in connection with Strategic Transactions nor short-term
credits as may be necessary for the clearance of transactions is
considered the purchase of a security on margin.
6. Sell any securities "short," write, purchase or sell puts, calls or
combinations thereof, or purchase or sell futures or options, except in
connection with Strategic Transactions.
7. Act as an underwriter of securities, except to the extent the Funds may be
deemed to be underwriters in connection with the sale of securities held
in their portfolios.
8. Make investments for the purpose of exercising control or participation in
management, except to the extent that exercise by the Funds of their
rights under agreements related to municipal securities would be deemed to
constitute such control or participation and except to the extent
permitted by (i) the 1940 Act, as amended from time to time, (ii) the
rules and regulations promulgated by the SEC under the 1940 Act, as
amended from time to time, or (iii) an exemption or other relief from the
provisions of the 1940 Act.
9. Invest in securities of other investment companies except as part of a
merger, consolidation or other acquisition and except to the extent
permitted by (i) the 1940 Act, as amended from time to time, (ii) the
rules and regulations promulgated by the SEC under the 1940 Act, as
amended from time to time, or (iii) an exemption or other relief from the
provisions of the 1940 Act.
10. Invest in equity interests in oil, gas or other mineral exploration or
development programs except pursuant to the exercise by the Funds of their
rights under agreements relating to municipal securities.
11. Purchase or sell real estate, commodities or commodity contracts, except
to the extent the municipal securities in which the Funds may invest are
considered to be interests in real estate and except to the extent that
the Strategic Transactions in which the Funds may invest are considered to
be commodities or commodities contracts.
27
As a matter of operating policy, each Fund will not invest 25% or more of its
assets in a single industry; however, each Fund may from time to time invest 25%
or more of its assets in a particular segment of the municipal securities
market.
MANAGEMENT OF THE FUNDS
THE BOARDS. The Board of each Fund is responsible for the overall supervision
of the operations of its respective Fund and performs the various duties imposed
on trustees of investment companies by the 1940 Act and under applicable state
law.
THE ADVISER. The investment adviser for each Fund is Van Kampen Asset
Management. The Adviser is a wholly owned subsidiary of Van Kampen Investments
Inc. ("Van Kampen Investments"). Van Kampen Investments is a diversified asset
management company that administers more than three million retail investor
accounts, has extensive capabilities for managing institutional portfolios and
has more than $99 billion under management or supervision as of May 31, 2005.
Van Kampen Investments is an indirect wholly owned subsidiary of Morgan Stanley,
a preeminent global financial services firm that maintains leading market
positions in each of its three primary businesses: securities, asset management
and credit services. Morgan Stanley is a full service securities firm engaged in
securities trading and brokerage activities, investment banking, research and
analysis, financing and financial advisory services. The principal business
address of the Adviser and Van Kampen Investments is 1221 Avenue of the
Americas, New York, New York 10020.
Pursuant to separate investment advisory agreements between each Fund and the
Adviser, each Fund pays the Adviser a monthly fee at the annual rate of 0.55% of
such Fund's average daily net assets, including assets attributable to its
preferred shares. Effective November 1, 2004, the investment advisory fee paid
by each Fund was reduced from .60% to .55%. Subsequent to the Reorganizations,
the Adviser will continue to receive compensation at the rate of 0.55% of the
average daily net assets, including assets attributable to preferred shares, of
the combined fund. Because the fees paid to the Adviser are calculated on net
assets, including assets attributable to preferred shares, the fees earned by
the Adviser will be higher when preferred shares are outstanding.
Under a separate accounting services and legal services agreement, the Adviser
(or its affiliate) provides accounting and legal services to each Fund. The
Adviser (or its affiliate) allocates the cost of such services to each Fund.
PORTFOLIO MANAGEMENT. Each Fund's portfolio is managed by the Adviser's
Municipal Fixed Income team. The team is made up of established investment
professionals. Current members of the team include Dennis Pietrzak, Executive
Director of the Adviser; Robert Wimmel, Vice President of the Adviser; and John
R. Reynoldson, Executive Director of the Adviser.
28
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 2002, Messrs. Wimmel and
Reynoldson worked in an investment management capacity for the Adviser.
Mr. Pietrzak is the lead portfolio manager of each Fund. Mssrs. Wimmel and
Reynoldson are co-portfolio managers of each Fund. All team members are
responsible for the day-to-day management of each Fund and for the execution of
the overall strategy of each Fund.
The Reorganization Statement of Additional Information provides additional
information about the portfolio managers' compensation, other accounts managed
by the portfolio managers and the portfolio managers' ownership of securities in
the Acquiring Fund.
The composition of the team may change without notice from time to time.
PORTFOLIO TRANSACTIONS WITH AFFILIATES. The Adviser may place portfolio
transactions, to the extent permitted by law, with brokerage firms affiliated
with the Funds and the Adviser, if it reasonably believes that the quality of
execution and the commission are comparable to that available from other
qualified firms.
LEGAL PROCEEDINGS INVOLVING THE ADVISER. The Adviser, certain affiliates of
the Adviser, and certain investment companies advised by the Adviser or its
affiliates were named as defendants in a number of similar class action
complaints which were consolidated. The amended complaint also names as
defendants certain individual trustees and directors of certain investment
companies advised by affiliates of the Adviser; the complaint does not, however,
name the individual trustees of any Van Kampen funds. The complaint generally
alleges that defendants violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates rather than funds managed by other companies, and (ii) that the funds
advised by the Adviser or its affiliates allegedly paid excessive commissions to
brokers in return for their alleged efforts to steer investors to these funds.
The complaint seeks, among other things, unspecified compensatory damages,
rescissionary damages, fees and costs. The defendants' motion to dismiss this
action is pending. After defendants moved to dismiss, the plaintiffs filed a
motion for leave to amend the complaint, which is also pending. The proposed
amendment drops all claims against the named investment companies, which are
listed only as nominal defendants. The proposed amendment raises similar claims
against the Adviser and its affiliates with respect to the investment companies
advised by the Adviser or its affiliates, and, in addition, alleges that
affiliates of the Adviser received undisclosed compensation for steering
investors into thirteen non-affiliated
29
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 the individual trustees of certain Van Kampen funds are named
as defendants in a recently filed class action complaint that alleges the
defendants breached various fiduciary and statutory duties to investors by
failing to ensure that the funds participated in securities class action
settlements involving securities held in the funds' portfolios. The complaint
seeks, among other things, compensatory and punitive damages. None of the funds
are named as defendants, and no claims are asserted against them. Each of the
defendants has moved or will move to dismiss the complaint and believes that
they have meritorious defenses.
30
The Adviser, one of the investment companies advised by the Adviser, and
certain officers and directors of the investment company are defendants in a
class action filed in 2001 alleging that the defendants issued a series of
prospectuses and registration statements that were materially false and
misleading. Among other things, the complaint alleges that the prospectuses and
registration statements contained misleading descriptions of the method
defendants used to value senior loan interests in the fund's portfolio, and that
defendants materially overstated the net asset value of the fund. The parties
recently reached an agreement to settle the case. The court preliminarily
approved the settlement agreement in June 2005, subject to a later hearing on
the fairness of the settlement agreement.
OTHER SERVICE PROVIDERS
State Street Bank and Trust Company, 225 West Franklin Street, Boston,
Massachusetts 02110, is the custodian for each of the Funds. EquiServe Trust
Company, N.A., 250 Royall Street, Canton, Massachusetts 02021, is the transfer
agent and dividend disbursing agent for the common shares of each Fund. Deutsche
Bank Trust Company Americas ("Deutsche Bank"), 280 Park Avenue, New York, New
York 10017, is the auction agent and dividend paying agent for the preferred
shares of each Fund.
CAPITALIZATION
The Board of Trustees of each Fund may authorize separate classes of shares
together with such designation of preferences, rights, voting powers,
restrictions, limitations, qualifications or terms as may be determined from
time to time by the trustees. The following table sets forth the capitalization
of the Target Funds and the Acquiring Fund as of October 31, 2004, and the pro
forma capitalization of the combined fund as if the Reorganizations had occurred
on that date.
31
CAPITALIZATION AS OF OCTOBER 31, 2004 (UNAUDITED)
ACTUAL PRO FORMA
------------------------------------ ----------
VAN KAMPEN VAN KAMPEN VAN KAMPEN
VAN KAMPEN NEW YORK TRUST FOR TRUST FOR
NEW YORK VALUE INVESTMENT INVESTMENT
QUALITY MUNICIPAL GRADE GRADE
MUNICIPAL INCOME NEW YORK NEW YORK
TRUST TRUST MUNICIPALS MUNICIPALS
---------- ---------- ---------- ----------
NET ASSETS CONSIST OF (AMOUNTS
IN THOUSANDS):
Common Shares
($.01 par value)*.......... $ 57 $ 43 $ 62 $ 160
Paid in surplus.............. 83,570 62,404 91,398 236,969
Net unrealized
appreciation............... 10,403 8,918 14,373 33,694
Accumulated undistributed net
investment income.......... 747 464 891 2,102
Accumulated net realized gain
(loss)..................... 1,795 541 305 2,641
NET ASSETS APPLICABLE TO
COMMON SHARES.............. 96,572 72,370 107,029 275,566**
PREFERRED SHARES ($.01 par
value, with liquidation
preference of $25,000,
$25,000, $25,000 and
$25,000, respectively)*.... 45,000 40,000 60,000 145,000
NET ASSETS INCLUDING
PREFERRED SHARES........... 141,572 112,370 167,029 420,566
NET ASSET VALUE PER COMMON
SHARE........................ 17.07 16.86 17.23 17.21
---------------
* Based on the number of outstanding shares listed in "Outstanding Securities
of the Funds" table below.
** Reflects a non-recurring cost associated with the Reorganizations of
approximately $405,000, with $76,950 to be borne by common shareholders of
New York Quality Municipal Trust, $174,150 to be borne by common shareholders
of New York Value Municipal Income Trust and $153,900 to be borne by common
shareholders of the Acquiring Fund, assuming each of these Reorganizations is
approved and completed.
32
OUTSTANDING SECURITIES OF THE FUNDS
AS OF OCTOBER 31, 2004
AMOUNT
OUTSTANDING
AMOUNT HELD EXCLUSIVE OF
BY FUND FOR AMOUNT SHOWN
AMOUNT ITS OWN IN PREVIOUS
TITLE OF CLASS AUTHORIZED ACCOUNT COLUMN
-------------- ---------- ----------- ------------
VAN KAMPEN NEW YORK QUALITY
MUNICIPAL TRUST
Common Shares.................... Unlimited 0 5,655,638
Preferred Shares................. 100,000,000 0 1,800
VAN KAMPEN NEW YORK VALUE MUNICIPAL
INCOME TRUST
Common Shares.................... Unlimited 0 4,291,172
Preferred Shares................. 100,000,000 0 1,600
VAN KAMPEN TRUST FOR INVESTMENT
GRADE NEW YORK MUNICIPALS
Common Shares.................... Unlimited 0 6,211,330
Preferred Shares................. 100,000,000 0 2,400
ADDITIONAL INFORMATION ABOUT COMMON SHARES OF THE FUNDS
GENERAL. Common shareholders of a Fund are entitled to share equally in
dividends declared by the Fund's Board of Trustees payable to holders of the
common shares and in the net assets of the Fund available for distribution to
holders of the common shares after payment of the preferential amounts payable
to preferred shareholders. Common shareholders do not have preemptive or
conversion rights and a Fund's common shares are not redeemable. The outstanding
common shares of each Fund are fully paid and nonassessable (except as described
under "Governing Law" below). So long as any preferred shares of a Fund are
outstanding, holders of the Fund's common shares will not be entitled to receive
any dividends or other distributions from the Fund unless all accumulated
dividends on the Fund's outstanding preferred shares have been paid, and unless
asset coverage (as defined in the 1940 Act) with respect to such preferred
shares would be at least 200% after giving effect to such distributions.
PURCHASE AND SALE. Purchase and sale procedures for the common shares of each
of the Funds are identical. Investors typically purchase and sell common shares
of 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.
33
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 each full fiscal
quarter of the current fiscal year, along with the net asset value and discount
or premium to net asset value for each quotation.
NEW YORK QUALITY MUNICIPAL TRUST
HIGH NET ASSET PREMIUM LOW NET ASSET PREMIUM
QUARTERLY PERIOD ENDING PRICE VALUE (DISCOUNT) PRICE VALUE (DISCOUNT)
----------------------- ----- --------- ---------- ----- --------- ----------
April 30, 2005.......... $15.15 $16.77 -9.66% $13.97 $16.35 -14.56%
January 31, 2005........ $14.46 $17.05 -9.33% $14.50 $16.68 -13.07%
October 31, 2004........ $15.45 $17.07 -9.49% $14.68 $16.66 -11.88%
July 31, 2004........... $15.01 $16.54 -9.25% $13.48 $15.86 -15.01%
April 30, 2004.......... $16.28 $17.08 -4.68% $14.26 $16.41 -13.10%
January 31, 2004........ $15.71 $17.11 -8.18% $15.03 $16.93 -11.22%
October 31, 2003........ $15.35 $17.09 -10.18% $14.53 $16.36 -11.19%
July 31, 2003........... $16.73 $17.45 -4.13% $15.15 $16.49 -8.13%
April 30, 2003.......... $15.78 $16.92 -6.74% $15.20 $16.83 -9.69%
January 31, 2003........ $15.80 $17.37 -9.04% $15.05 $16.82 -10.52%
NEW YORK VALUE MUNICIPAL INCOME TRUST
HIGH NET ASSET PREMIUM LOW NET ASSET PREMIUM
QUARTERLY PERIOD ENDING PRICE VALUE (DISCOUNT) PRICE VALUE (DISCOUNT)
----------------------- ----- --------- ---------- ----- --------- ----------
April 30, 2005.......... $15.30 $16.64 -8.05% $14.26 $16.41 -13.10%
January 31, 2005........ $16.80 $16.65 0.90% $14.68 $16.52 -11.14%
October 31, 2004........ $15.34 $16.89 -9.18% $14.61 $16.39 -10.86%
July 31, 2004........... $14.65 $16.20 -9.57% $13.52 $15.77 -14.27%
April 30, 2004.......... $16.43 $17.38 -5.47% $14.30 $16.20 -11.73%
January 31, 2004........ $16.25 $17.09 -4.92% $15.19 $16.53 -8.11%
October 31, 2003........ $15.36 $16.46 -6.68% $14.91 $15.85 -5.93%
July 31, 2003........... $16.53 $17.50 -5.54% $15.11 $15.91 -5.03%
April 30, 2003.......... $15.75 $16.77 -6.08% $14.91 $16.37 -8.92%
January 31, 2003........ $15.42 $16.42 -6.09% $14.63 $16.12 -9.24%
34
ACQUIRING FUND
HIGH NET ASSET PREMIUM LOW NET ASSET PREMIUM
QUARTERLY PERIOD ENDING PRICE VALUE (DISCOUNT) PRICE VALUE (DISCOUNT)
----------------------- ----- --------- ---------- ----- --------- ----------
April 30, 2005.......... $15.80 $17.00 -7.06% $14.57 $16.72 -12.86%
January 31, 2005........ $15.76 $17.18 -8.27% $14.80 $16.97 -12.79%
October 31, 2004........ $15.87 $17.12 -7.30% $15.35 $16.72 -8.19%
July 31, 2004........... $15.40 $16.56 -7.00% $14.22 $16.01 -11.18%
April 30, 2004.......... $18.52 $17.56 5.47% $15.39 $16.71 -7.90%
January 31, 2004........ $17.95 $17.52 2.45% $16.60 $17.48 -5.03%
October 31, 2003........ $16.69 $17.11 -2.45% $16.35 $16.74 -2.33%
July 31, 2003........... $17.75 $17.72 0.17% $16.31 $16.72 -2.45%
April 30, 2003.......... $17.20 $17.77 -3.21% $16.39 $17.23 -4.88%
January 31, 2003........ $16.13 $17.13 -5.84% $17.30 $17.34 -0.23%
As of June 13, 2005, (i) the net asset value per share for common shares of
New York Quality Municipal Trust was $16.90 and the market price per share was
$14.75, representing a discount to net asset value of 12.72%, (ii) the net asset
value per share for common shares of New York Value Municipal Income Trust was
$16.74 and the market price per share was $14.74, representing a discount to net
asset value of 11.95%, and (iii) the net asset value per share for Acquiring
Fund Common Shares was $17.24 and the market price per share was $15.71,
representing a discount to net asset value of 8.87%.
Common shares of each of the Funds have historically traded primarily at a
discount to net asset value. In order to reduce or eliminate a market value
discount from net asset value, the Board of Trustees of each Fund may, subject
to the terms and conditions of its preferred shares, authorize that Fund from
time to time to repurchase the common shares in the open market or to tender for
the common shares at net asset value. The Board of Trustees of each Fund, in
consultation with the Adviser, will review on a quarterly basis the possibility
of open market repurchases and/or tender offers for the common shares. Subject
to its borrowing restrictions, each Fund may incur debt to finance such
repurchases, which entails risks. The ability of a Fund to enter into tender
offers and the common share repurchases may be limited by the 1940 Act asset
coverage requirements and any additional asset coverage requirements which may
be imposed by a rating agency in connection with any rating of the preferred
shares. No assurance can be given that the Board of Trustees of any Fund will,
in fact, authorize that Fund to undertake such repurchases and/or tender offers
or that, if undertaken, such actions would result in the common shares trading
at a price which is equal or close to net asset value.
35
DIVIDENDS AND DISTRIBUTIONS. The Funds' current policies with respect to
dividends and distributions relating to their common shares are similar. It is
each Fund's present policy, which may be changed by its Board of Trustees, to
make monthly distributions to holders of its common shares of substantially all
of a Fund's net investment income remaining after the payment of dividends on
any outstanding preferred shares. Net income of each Fund consists of all
interest income accrued on portfolio assets less all expenses of such Fund. Each
Fund, including the Acquiring Fund, is required to allocate net capital gains
and other taxable income, if any, received by the Fund among its common shares
and preferred shares on a pro rata basis in the year for which such capital
gains and other income is realized.
Expenses of each Fund are accrued each day. Net realized capital gains, if
any, are expected to be distributed to shareholders at least once a year. While
there are any preferred shares of a Fund outstanding, such Fund may not declare
any cash dividend or other distribution on their common shares, unless at the
time of such declaration, (1) all accrued preferred share dividends have been
paid and (2) the value of such Fund's total assets (determined after deducting
the amount of such dividend or other distribution), less all liabilities and
indebtedness of such Fund, is at least 200% (as required by the 1940 Act) of the
liquidation value of the outstanding preferred shares (expected to equal the
aggregate original purchase price of the outstanding preferred shares plus any
accrued and unpaid dividends thereon, whether or not earned or declared an on a
cumulative basis). In addition to the requirements of the 1940 Act, each Fund
may be required to comply with other asset coverage requirements as a condition
of a Fund obtaining a rating of its preferred shares from a nationally
recognized rating service. These requirements may include an asset coverage test
more stringent than under the 1940 Act. This limitation on a Fund's ability to
make distributions on its common shares could in certain circumstances impair
the ability of a Fund to maintain its qualification for taxation as a regulated
investment company. Each Fund intends, however, to the extent possible, to
purchase or redeem preferred shares from time to time to maintain compliance
with such asset coverage requirements and may pay special dividends to the
holders of the preferred shares in certain circumstances in connection with any
such impairment of such Fund's status as a regulated investment company.
For information concerning the manner in which dividends and distributions to
holders of a Fund's common shares may be reinvested automatically in such Fund's
common shares, see "-- Dividend Reinvestment Plan" below.
DIVIDEND REINVESTMENT PLAN. Each Fund offers a Dividend Reinvestment Plan
(each a "Plan" and collectively the "Plans") pursuant to which holders of common
shares may elect to have all distributions of dividends and all capital gains
automatically reinvested in common shares pursuant to such Plan. Unless common
shareholders elect to participate in a Plan, all common shareholders receive
36
distributions of dividends and capital gains in cash. The Plans for the Target
Funds and the Acquiring Fund are similar. EquiServe Trust Company, N.A., as plan
agent (the "Plan Agent"), serves as agent for the holders of common shares of
each Fund in administering the Plans.
After the Reorganizations, a holder of shares of a Fund who currently elects
to receive dividends in cash will continue to receive dividends in cash; all
holders who currently elect to participate in the Plan of a Fund will have their
dividends automatically reinvested in shares of the combined fund. All
correspondence concerning the Plan should be directed to the Plan Agent at P.O.
Box 43011, Providence, Rhode Island 02940-3011. Telephone calls concerning the
Plan may be directed to the Plan Agent between the hours of 7:30 a.m. and 5:00
p.m. Central Standard Time at (800) 341-2929.
ADDITIONAL INFORMATION ABOUT PREFERRED SHARES OF THE FUNDS
GENERAL. The preferred shares of each Fund are labeled "auction preferred
shares" ("APS"). APS are preferred shares of beneficial interest which entitle
their holders to receive dividends when, as and if declared by the Board of
Trustees of a Fund, out of funds legally available therefore, at a rate per
annum that may vary for the successive dividend periods. The liquidation
preference of each Fund's APS is $25,000 per share. APS are not traded on a
stock exchange or over-the-counter. Holders of a Fund's preferred shares do not
have preemptive rights to purchase any shares of the same series or any other
preferred shares that might be issued. The net asset value per share of a Fund's
preferred shares equals its liquidation preference plus accumulated but unpaid
dividends per share.
SERIES. Under the 1940 Act, each Fund is permitted to have outstanding more
than one series of preferred shares as long as no single series has priority
over another series as to the distribution of assets of the Fund or the payment
of dividends. Each Fund currently has only one series of preferred shares
outstanding. If the Reorganizations are approved and completed, the combined
fund will have three series of preferred shares. The existing Acquiring Fund APS
will comprise Series A, and the Acquiring Fund will issue Series B APS in
exchange for the preferred shares of New York Quality Municipal Trust and Series
C APS in exchange for the preferred shares of New York Value Municipal Income
Trust. The aggregate liquidation preference of each series will equal the
aggregate liquidation preference of the existing shares that the respective
series replaces. For each series, the number of days in the regular dividend
period, the number of shares and the liquidation preference per share will be
the same as the existing shares that the respective series replaces.
PURCHASE AND SALE. Each Fund's APS are purchased and sold at separate auctions
conducted on a regular basis (every 7 days for New York Value Municipal Income
Trust's APS and every 28 days for the APS of New York Quality
37
Municipal Trust and the Acquiring Fund, unless a Fund elects, subject to certain
limitations, to declare a special dividend period) by Deutsche Bank, as the
auction agent for each Fund's APS (the "Auction Agent"). Unless otherwise
permitted by the Funds, existing and potential holders of APS only may
participate in auctions through their broker-dealers. Broker-dealers submit the
orders of their respective customers who are existing and potential holders of
APS to the Auction Agent. On or prior to each auction date for the APS (the
business day next preceding the first day of each dividend period), each holder
may submit orders to buy, sell or hold APS to its broker-dealer. Outside of
these auctions, shares of APS may be purchased or sold through broker-dealers
for the APS in a secondary trading market maintained by the broker-dealers.
However, there can be no assurance that a secondary market will develop or, if
it does develop, that it will provide holders with a liquid trading market.
DIVIDENDS AND DISTRIBUTIONS. The holders of each Fund's preferred shares are
entitled to receive, when, as and if declared by the Board of Trustees of the
Fund, out of funds legally available therefor, cumulative cash dividends on
their shares. Dividends on each Fund's preferred shares so declared and payable
shall be paid in preference to and in priority over any dividends so declared
and payable on the Fund's common shares.
Prior to each dividend payment date, the Funds are required to deposit with
the Auction Agent sufficient funds for the payment of such declared dividends.
The Funds do not intend to establish any reserves for the payment of dividends,
and no interest will be payable in respect of any dividend payment or payment on
a Fund's preferred shares which may be in arrears.
Each Fund, including the Acquiring Fund, is required to allocate net capital
gains and other taxable income, if any, proportionately among its common shares
and preferred shares. The amount of taxable income allocated to the APS depends
upon the amount of such income realized by a Fund, but is generally not expected
to be significant.
In normal circumstances, whenever a Fund intends to include any net capital
gains or other taxable income in any dividend on APS, the Fund will notify the
Auction Agent of the amount to be so included prior to the auction establishing
the applicable rate for such dividend. The Auction Agent will in turn notify
each broker-dealer who will notify existing and potential holders of the APS. As
a result, auction participants may, in response to such information, place bids
which take account of the inclusion of net capital gains or other taxable income
in the dividend. If a Fund retroactively allocates any net capital gains or
other taxable income to the APS without having given notice to the Auction
Agent, the Fund will pay an Additional Dividend to offset substantially the tax
effect thereof.
38
DIVIDEND RATES. The following table provides information about the dividend
rates for each Fund's preferred shares as of a recent auction date:
AUCTION DATE FUND RATE
------------ ---- ----
June 13, 2005 New York Quality Municipal Trust................... 2.34%
June 8, 2005 New York Value Municipal Income Trust.............. 2.28%
June 8, 2005 Acquiring Fund..................................... 2.41%
The dividend rates in effect at the closing of the Reorganizations will be the
rates determined in the or auction most recently preceding such closing.
RATINGS. The Funds' preferred shares have all been assigned a rating of "AAA"
from S&P and "Aaa" from Moody's. Each Fund intends that, so long as its
preferred shares are outstanding, the composition of its portfolio will reflect
guidelines established by S&P and Moody's in connection with each Fund's receipt
of a rating for such shares of at least "AAA" from S&P and "Aaa" from Moody's.
S&P and Moody's, which are nationally recognized statistical rating
organizations, issue ratings for various securities reflecting the perceived
creditworthiness of such securities. The guidelines for rating such preferred
shares have been developed by S&P and Moody's in connection with issuances of
asset-backed and similar securities, including debt obligations and variable
rate preferred stock, generally on a case-by-case basis through discussions with
the issuers of these securities. The guidelines are designed to ensure that
assets underlying outstanding debt or preferred stock will be varied
sufficiently and will be of sufficient quality and amount to justify investment
grade ratings. The guidelines do not have the force of law but have been adopted
by each Fund in order to satisfy current requirements necessary for S&P and
Moody's to issue the above-described ratings for the preferred shares, which
ratings generally are relied upon by institutional investors in purchasing such
securities. The guidelines provide a set of tests for portfolio composition and
asset coverage that supplement (and in some cases are more restrictive than) the
applicable requirements under the 1940 Act.
Each Fund may, but is not required to, adopt any modifications to these
guidelines that hereafter may be established by S&P or Moody's. Failure to adopt
any such modifications, however, may result in a change in the ratings described
above or a withdrawal of the ratings altogether. In addition, any rating agency
providing a rating for a Fund's preferred shares, at any time, may change or
withdraw any such rating. As set forth in the Certificate of Vote of Trustees
Establishing Preferred Shares of each Fund (each a "Certificate of Vote"), the
Board of Trustees of each Fund, without shareholder approval, may modify certain
definitions or restrictions that have been adopted by the Fund pursuant to the
rating agency guidelines, provided the Board of Trustees has obtained written
confirmation from S&P and Moody's that any such change would not impair the
ratings then assigned by S&P and Moody's to the preferred shares. For so long as
any of its preferred shares are rated by S&P or Moody's, as the case may be, a
Fund's use of
39
options and financial futures contracts and options thereon will be subject to
certain limitations mandated by the rating agencies.
REDEMPTIONS. The redemption provisions pertaining to the preferred shares of
each Fund are similar. Preferred shares of each Fund are generally redeemable at
the option of the Fund at a price equal to their liquidation preference of
$25,000 per share plus accumulated but unpaid dividends (whether or not earned
or declared) to the date of redemption plus, in certain circumstances, a
redemption premium. Preferred shares of each Fund are also subject to mandatory
redemption at a price equal to their liquidation preference plus accumulated but
unpaid dividends (whether or not earned or declared) to the date of redemption
upon the occurrence of certain specified events, such as the failure of a Fund
to maintain asset coverage requirements for its preferred shares specified by
Moody's and S&P in connection with their issuance of ratings on the preferred
shares.
LIQUIDATION RIGHTS. Upon any liquidation, dissolution or winding up of any of
the Funds, whether voluntary or involuntary, the holders of such Fund's
preferred shares will be entitled to receive, out of the assets of the Fund
available for distribution to shareholders, before any distribution or payment
is made upon any of the Fund's common shares or any other capital shares of the
Fund ranking junior in right of payment upon liquidation to preferred shares,
$25,000 per share together with the amount of any dividends accumulated but
unpaid (whether or not earned or declared) thereon to the date of distribution,
and after such payment the preferred shareholders will be entitled to no other
payments except for any Additional Dividends. If such assets of the Fund are
insufficient to make the full liquidation payment on the preferred shares and
liquidation payments on any other outstanding class or series of preferred
shares of the Fund ranking on a parity with the preferred shares as to payment
upon liquidation, then such assets will be distributed among the preferred
shareholders and the holders of shares of such other class or series ratably in
proportion to the respective preferential amounts to which they are entitled.
After payment of the full amount of liquidation distribution to which they are
entitled, the holders of a Fund's preferred shares will not be entitled to any
further participation in any distribution of assets by the Fund except for any
Additional Dividends. A consolidation, merger or share exchange of a Fund with
or into any other entity or entities or a sale, whether for cash, shares of
stock, securities or properties, of all or substantially all or any part of the
assets of the Fund shall not be deemed or construed to be a liquidation,
dissolution or winding up of the Fund for this purpose.
ADDITIONAL INFORMATION. For additional information on Acquiring Fund APS,
Target Fund shareholders should consult the Reorganization Statement of
Additional Information, which contains a more complete summary of the terms of
the Acquiring Fund APS, and the Certificate of Vote governing the Acquiring Fund
APS, included as Appendix B to the Reorganization Statement of Additional
40
Information. APS issued in connection with the Reorganizations will be governed
by the Certificate of Vote of the Acquiring Fund, which, upon completion of the
Reorganizations, will be amended to reflect the creation of new series and the
issuance of additional APS. As a result of the Reorganizations, the last
dividend periods for the Target Funds' preferred shares prior to the Closing
Date and the initial dividend periods for the Acquiring Fund APS issued in
connection with the Reorganizations after the Closing Date may be shorter than
the regular dividend periods for such shares.
GOVERNING LAW
Each Fund is organized as a business trust under the laws of The Commonwealth
of Massachusetts. New York Quality Municipal Trust was organized on July 19,
1991 and commenced investment operations on September 27, 1991; New York Value
Municipal Income Trust was organized on December 21, 1992 and commenced
investment operations on April 30, 1993; and the Acquiring Fund was organized on
January 21, 1992 and commenced investment operations on March 27, 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 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 non-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 the Fund. The Board of Trustees of each
Fund is divided into three
41
classes, with the term of one class expiring at the annual meeting of
shareholders. At each annual meeting, each class whose term is expiring will be
elected to a three-year term. This provision could delay for up to two years the
replacement of a majority of the Board of Trustees. A trustee may be removed
from office only for cause by a written instrument signed by at least two-thirds
of the remaining trustees or by a vote of the holders of at least two-thirds of
the class of shares of the Fund that elected such trustee and entitled to vote
on the matter.
In addition, each Fund's Declaration of Trust requires the favorable vote of
the holders of at least 75% of the outstanding shares of each class of the Fund,
voting as a class, then entitled to vote to approve, adopt or authorize certain
transactions with 5%-or-greater holders of a class of shares and their
associates, unless the Board of Trustees shall by resolution have approved a
memorandum of understanding with such holders, in which case normal voting
requirements would be in effect. For purposes of these provisions, a
5%-or-greater holder of a class of shares (a "Principal Shareholder") refers to
any person who, whether directly or indirectly and whether alone or together
with its affiliates and associates, beneficially owns 5% or more of the
outstanding shares of any class of beneficial interest of the Fund. The
transactions subject to these special approval requirements are: (i) the merger
or consolidation of the Fund or any subsidiary of the Fund with or into any
Principal Shareholder; (ii) the issuance of any securities of the Fund to any
Principal Shareholder for cash (except pursuant to the Dividend Reinvestment
Plan); (iii) the sale, lease or exchange of all or any substantial part of the
assets of the Fund to any Principal Shareholder (except assets having an
aggregate fair market value of less than $1,000,000, aggregating for the purpose
of such computation all assets sold, leased or exchanged in any series of
similar transactions within a twelve-month period); or (iv) the sale, lease or
exchange to the Fund or any subsidiary thereof, in exchange for securities of
the Fund, of any assets of any Principal Shareholder (except assets having an
aggregate fair market value of less than $1,000,000, aggregating for purposes of
such computation all assets sold, leased or exchanged in any series of similar
transactions within a twelve-month period).
The Board of Trustees of each Fund has determined that the 75% voting
requirements described above, which are greater than the minimum requirements
under Massachusetts law or the 1940 Act, are in the best interest of
shareholders of each respective Fund generally. Reference should be made to the
Declaration of Trust of each Fund on file with the SEC for the full text of
these provisions.
The Declaration of Trust of each Fund further provides that no trustee,
officer, employee or agent of the Fund is liable to the Fund or to any
shareholder, nor is any trustee, officer, employee or agent liable to any third
persons in connection with the affairs of the Fund, except as such liability may
arise from his or her own bad faith, willful misfeasance, gross negligence, or
reckless disregard of their duties. It also provides that all third persons
shall look solely to the Fund property for satisfaction
42
of claims arising in connection with the affairs of the Fund. With the
exceptions stated, the Declaration of Trust provides that a trustee, officer,
employee or agent is entitled to be indemnified against all liability in
connection with the affairs of the Fund.
CONVERSION TO OPEN-END FUND
Each Fund may be converted to an open-end investment company at any time by an
amendment to its Declaration of Trust. Each Fund's Declaration of Trust provides
that such an amendment would require the approval of (a) a majority of the
trustees, including the approval by a majority of the disinterested trustees of
the Fund, and (b) the lesser of (i) more than 50% of the Fund's outstanding
common and preferred shares, each voting as a class or (ii) 67% of the common
and preferred shares, each voting as a class, present at a meeting at which
holders of more than 50% of the outstanding shares of each such class are
present in person or by proxy. If approved in the foregoing manner, conversion
of the Fund could not occur until 90 days after the shareholders' meeting at
which such conversion was approved and would also require at least 30 days prior
notice to all shareholders. Conversion of a Fund to an open-end investment
company would require the redemption of all outstanding preferred shares, which
would eliminate the leveraged capital structure of the Fund. In the event of
conversion, the common shares would cease to be listed on the NYSE, CHX, NASDAQ
National Market System or other national securities exchange or national market
system. Shareholders of an open-end investment company may require the company
to redeem their shares at any time (except in certain circumstances as
authorized by or under the 1940 Act) at their net asset value, less such
redemption charge, if any, as might be in effect at the time of a redemption. If
a Fund were converted to an open-end fund, it is likely that new common shares
would be sold at net asset value plus a sales load. Following any such
conversion, it is also possible that certain of the Fund's investment policies
and strategies would have to be modified to assure sufficient portfolio
liquidity. In particular, the Fund would be required to maintain its portfolio
such that not more than 15% of its assets would be invested in illiquid
securities. Such requirement could cause the Fund to dispose of portfolio
securities or other assets at a time when it is not advantageous to do so, and
could adversely affect the ability of the Fund to meet its investment objective.
VOTING RIGHTS
Voting rights are identical for the holders of each Fund's common shares.
Common shareholders of each Fund are entitled to one vote for each share held.
Except as set forth above under "Certain Provisions of the Declarations of
Trust" or "Conversion to Open-End Fund," or except as expressly required by
applicable law or expressly set forth in the designation of rights and
preferences with respect to a Fund's preferred shares, preferred shareholders
have no voting rights. When
43
preferred shareholders are entitled to vote, they are also entitled to cast one
vote per share held.
Preferred shareholders of a Fund, voting as a class, are entitled to elect two
of the Fund's trustees. Under the 1940 Act, if at any time dividends on a Fund's
preferred shares are unpaid in an amount equal to two full years dividends
thereon, the holders of all outstanding preferred shares, voting as a class, are
entitled to elect a majority of the Fund's trustees until all dividends have
been paid or declared and set apart for payment. The affirmative vote of a
majority of the preferred shareholders of a Fund, voting as a class, is required
to amend, alter or repeal any of the preferences, rights or powers of preferred
shareholders so as to materially and adversely affect such preferences, rights
or powers, or increase or decrease the number of preferred shares authorized to
be issued.
44
FINANCIAL HIGHLIGHTS
NEW YORK QUALITY MUNICIPAL TRUST. The following schedule presents financial
highlights for one common share of the Fund outstanding throughout the periods
indicated.
TWO MONTHS
YEAR ENDED OCTOBER 31, ENDED
--------------------------------------------------------- OCTOBER 31,
2004 2003 2002(A) 2001 2000 1999 1998
---- ---- ------- ---- ---- ---- -----------
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 16.97 $ 17.46 $ 17.39 $ 16.25 $ 15.73 $ 17.42 $ 17.39
------- ------- ------- ------- ------- ------- --------
Net Investment Income............. .97 1.01 1.07 1.13 1.16 1.18 .20
Net Realized and Unrealized
Gain/Loss........................ .48 .21 .24 1.07 .57 (1.65) .03
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income............ (.09) (.02) (.09) (.26) (.32) (.25) (.05)
Net Realized Gain................ (.01) (.06) (.04) -0- -0- (.02) -0-
------- ------- ------- ------- ------- ------- --------
Total from Investment Operations... 1.35 1.14 1.18 1.94 1.41 (.74) .18
Distributions Paid to Common
Shareholders:
Net Investment Income............ (.92) (.99) (.97) (.80) (.89) (.90) (.15)
Net Realized Gain................ (.32) (.64) (.14) -0- -0- (.05) -0-
------- ------- ------- ------- ------- ------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 17.08 $ 16.97 $ 17.46 $ 17.39 $ 16.25 $ 15.73 $ 17.42
======= ======= ======= ======= ======= ======= ========
Common Share Market Price at End of
the Period........................ $ 15.43 $ 15.17 $ 15.45 $ 15.30 $ 13.75 $13.375 $ 16.875
Total Return(b).................... 10.33% 8.82% 8.37% 17.45% 9.64% -15.88% 1.64%*
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 96.6 $ 96.0 $ 98.7 $ 98.4 $ 91.9 $ 89.0 $ 98.5
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.29% 1.31% 1.38% 1.61% 1.73% 1.66% 1.67%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 5.76% 5.97% 6.31% 6.62% 7.37% 7.03% 6.78%
Portfolio Turnover................. 27% 22% 43% 17% 39% 45% 1%*
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... .88% .90% .94% 1.09% 1.15% 1.13% 1.15%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 5.25% 5.84% 5.76% 5.11% 5.31% 5.53% 5.23%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 1,800 1,800 1,800 1,800 1,800 1,800 900
Asset Coverage Per Preferred
Share(e).......................... $78,677 $78,322 $79,871 $79,647 $76,055 $74,438 $159,452
Involuntary Liquidating Preference
Per Preferred Share............... $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $ 50,000
Average Market Value Per Preferred
Share............................. $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $ 50,000
YEAR ENDED AUGUST 31,
-----------------------------------------
1998 1997 1996 1995
---- ---- ---- ----
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 16.83 $ 16.15 $ 16.47 $ 16.63
-------- -------- -------- --------
Net Investment Income............. 1.21 1.22 1.25 1.24
Net Realized and Unrealized
Gain/Loss........................ .56 .73 (.23) .17
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income............ (.28) (.28) (.29) (.26)
Net Realized Gain................ -0- -0- -0- (.04)
-------- -------- -------- --------
Total from Investment Operations... 1.49 1.67 .73 1.11
Distributions Paid to Common
Shareholders:
Net Investment Income............ (.93) (.99) (1.05) (1.05)
Net Realized Gain................ -0- -0- -0- (.22)
-------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 17.39 $ 16.83 $ 16.15 $ 16.47
======== ======== ======== ========
Common Share Market Price at End of
the Period........................ $ 16.75 $ 16.125 $ 16.50 $ 15.50
Total Return(b).................... 9.94% 3.94% 13.62% 9.73%
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 98.3 $ 95.2 $ 91.2 $ 92.9
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.64% 1.68% 1.74% 1.76%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 7.08% 7.44% 7.52% 7.74%
Portfolio Turnover................. 26% 17% 23% 50%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... 1.12% 1.13% 1.18% 1.17%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 5.42% 5.73% 5.77% 6.08%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 900 900 900 900
Asset Coverage Per Preferred
Share(e).......................... $159,258 $155,768 $151,333 $153,270
Involuntary Liquidating Preference
Per Preferred Share............... $ 50,000 $ 50,000 $ 50,000 $ 50,000
Average Market Value Per Preferred
Share............................. $ 50,000 $ 50,000 $ 50,000 $ 50,000
* Non-Annualized
(a) As required, effective November 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the period ended October 31, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses per share by $.01 and increase the ratio of net investment income to
average net asset applicable to common shares by .01%. Per share, ratios and
supplemental data for the periods prior to October 31, 2002 have not been
restated to reflect this change in presentation.
(b) Total return assumes an investment at the common share market price at the
beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Fund's dividend reinvestment plan, and sale of
all shares at the closing common share market price at the end of the period
indicated.
(c) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(d) Ratios reflect the effect of dividend payments to preferred shareholders.
(e) Calculated by subtracting the Fund's total liabilities (not including the
preferred shares) from the Fund's total assets and dividing this by the
number of preferred shares outstanding.
45
NEW YORK VALUE MUNICIPAL INCOME TRUST. The following schedule presents
financial highlights for one common share of the Fund outstanding throughout the
periods indicated.
YEAR ENDED OCTOBER 31,
2004 2003 2002(A) 2001 2000 1999 1998
---- ---- ------- ---- ---- ---- ----
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 16.50 $ 16.40 $ 16.12 $ 14.98 $ 14.31 $ 16.14 $ 15.39
------- ------- ------- ------- -------- -------- --------
Net Investment Income............. 1.04 1.07 1.10 1.09 1.12 1.09 1.09
Net Realized and Unrealized
Gain/Loss....................... .39 .14 .24 1.17 .75 (1.85) .74
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income........... (.09) (.09) (.13) (.27) (.37) (.28) (.31)
------- ------- ------- ------- -------- -------- --------
Total from Investment Operations... 1.34 1.12 1.21 1.99 1.50 (1.04) 1.52
Distributions Paid to Common
Shareholders:
Net Investment Income........... (.98) (1.02) (.93) (.85) (.83) (.79) (.77)
------- ------- ------- ------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 16.86 $ 16.50 $ 16.40 $ 16.12 $ 14.98 $ 14.31 $ 16.14
======= ======= ======= ======= ======== ======== ========
Common Share Market Price at End of
the Period........................ $ 15.30 $ 15.21 $ 14.85 $ 14.86 $13.0625 $13.0625 $14.9375
Total Return(b).................... 7.24% 9.38% 6.25% 20.61% 6.44% -7.68% 18.32%
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 72.4 $ 70.8 $ 70.4 $ 69.2 $ 64.3 $ 61.4 $ 69.3
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.47% 1.46% 1.53% 1.75% 1.85% 1.80% 1.79%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 6.24% 6.48% 6.89% 6.92% 7.73% 7.01% 6.91%
Portfolio Turnover................. 18% 30% 33% 6% 29% 4% 11%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... .94% .94% .96% 1.10% 1.13% 1.12% 1.13%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 5.70% 5.93% 6.10% 5.20% 5.20% 5.19% 4.96%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 1,600 1,600 1,600 1,600 1,600 1,600 800
Asset Coverage Per Preferred
Share(e).......................... $70,235 $69,261 $68,985 $68,224 $ 65,189 $ 63,381 $136,581
Involuntary Liquidating Preference
Per Preferred Share............... $25,000 $25,000 $25,000 $25,000 $ 25,000 $ 25,000 $ 50,000
Average Market Value Per Preferred
Share............................. $25,000 $25,000 $25,000 $25,000 $ 25,000 $ 25,000 $ 50,000
YEAR ENDED OCTOBER 31,
1997 1996 1995
---- ---- ----
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $ 14.45 $ 14.17 $ 12.23
-------- -------- --------
Net Investment Income............. 1.10 1.09 1.07
Net Realized and Unrealized
Gain/Loss....................... .87 .17 1.95
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders:
Net Investment Income........... (.31) (.32) (.36)
-------- -------- --------
Total from Investment Operations... 1.66 .94 2.66
Distributions Paid to Common
Shareholders:
Net Investment Income........... (.72) (.66) (.72)
-------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD............................ $ 15.39 $ 14.45 $ 14.17
======== ======== ========
Common Share Market Price at End of
the Period........................ $13.3125 $ 11.625 $ 11.375
Total Return(b).................... 21.19% 8.09% 18.15%
Net Assets Applicable to Common
Shares at End of the Period (In
millions)......................... $ 66.0 $ 62.0 $ 60.8
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares(c)......................... 1.87% 1.95% 2.06%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(c).................. 7.42% 7.69% 8.11%
Portfolio Turnover................. 25% 51% 77%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net
Assets Including Preferred
Shares(c)......................... 1.15% 1.18% 1.20%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares(d).................. 5.32% 5.41% 5.38%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding....................... 800 800 800
Asset Coverage Per Preferred
Share(e).......................... $132,546 $127,515 $126,006
Involuntary Liquidating Preference
Per Preferred Share............... $ 50,000 $ 50,000 $ 50,000
Average Market Value Per Preferred
Share............................. $ 50,000 $ 50,000 $ 50,000
(a) As required, effective November 1, 2001 the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended October 31, 2002 was to increase net investment
income per share by $.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 .04%. Per share, ratios
and supplemental data for periods prior to October 31, 2002 have not been
restated to reflect this change in presentation.
(b) Total return assumes an investment at the common share market price at the
beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Fund's dividend reinvestment plan, and sale of
all shares at the closing common share market price at the end of the period
indicated.
(c) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(d) Ratios reflect the effect of dividend payments to preferred shareholders.
(e) Calculated by subtracting the Fund's total liabilities (not including the
preferred shares) from the Fund's total assets and dividing this by the
number of preferred shares outstanding.
46
ACQUIRING FUND. The following schedule presents financial highlights for one
common share of the Fund outstanding throughout the periods indicated.
YEAR ENDED OCTOBER 31,
2004 2003 2002(A) 2001 2000 1999 1998 1997 1996 1995
---- ---- ------- ---- ---- ---- ---- ---- ---- ----
NET ASSET VALUE, BEGINNING
OF THE PERIOD............ $ 17.37 $ 17.59 $ 17.50 $ 16.64 $ 16.32 $ 17.83 $ 17.33 $ 16.63 $ 16.49 $ 14.80
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Net Investment Income.... 1.12 1.17 1.22 1.25 1.30 1.30 1.29 1.28 1.30 1.30
Net Realized and
Unrealized Gain/Loss... .31 .20 .20 1.19 .43 (1.53) .52 .70 .10 1.79
Common Share Equivalent
of Distributions Paid
to Preferred
Shareholders:
Net Investment
Income................ (.09) (.06) (.12) (.25) (.39) (.31) (.33) (.34) (.36) (.39)
Net Realized Gain...... (.02) (.04) (.03) (.10) -0- -0- (.01) (.01) -0- -0-
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Total from Investment
Operations............... 1.32 1.27 1.27 2.09 1.34 (.54) 1.47 1.63 1.04 2.70
Distributions Paid to
Common Shareholders:
Net Investment
Income................ (1.06) (1.13) (1.06) (.98) (1.02) (.96) (.94) (.90) (.90) (1.00)
Net Realized Gain...... (.40) (.36) (.12) (.25) -0- (.01) (.03) (.03) -0- (.01)
------- ------- ------- ------- ------- ------- -------- -------- -------- --------
NET ASSET VALUE, END OF
THE PERIOD............... $ 17.23 $ 17.37 $ 17.59 $ 17.50 $ 16.64 $ 16.32 $ 17.83 $ 17.33 $ 16.63 $ 16.49
======= ======= ======= ======= ======= ======= ======== ======== ======== ========
Common Share Market Price
at End of the Period..... $ 15.70 $ 16.60 $ 16.31 $ 16.22 $15.375 $ 15.25 $17.6875 $15.5625 $ 14.625 $ 14.375
Total Return (b).......... 3.24% 11.07% 7.98% 13.68% 7.80% -8.73% 20.29% 13.08% 8.09% 17.49%
Net Assets Applicable to
Common Shares at End of
the Period (In
millions)................ $ 107.0 $ 107.8 $ 109.1 $ 108.5 $ 103.3 $ 101.3 $ 110.5 $ 107.5 $ 103.2 $ 102.2
Ratio of Expenses to
Average Net Assets
Applicable to Common
Shares (c)............... 1.37% 1.38% 1.45% 1.67% 1.69% 1.68% 1.66% 1.70% 1.73% 1.78%
Ratio of Net Investment
Income to Average Net
Assets Applicable to
Common Shares (c)........ 6.56% 6.73% 7.06% 7.22% 8.00% 7.51% 7.35% 7.63% 7.92% 8.36%
Portfolio Turnover........ 10% 22% 28% 15% 34% 4% 1% 8% 20% 54%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to
Average Net Assets
Including Preferred
Shares (c)............... .87% .89% .93% 1.07% 1.06% 1.07% 1.07% 1.08% 1.09% 1.10%
Ratio of Net Investment
Income to Average Net
Assets Applicable to
Common Shares (d)........ 6.04% 6.36% 6.35% 5.79% 5.62% 5.72% 5.45% 5.63% 5.78% 5.89%
SENIOR SECURITIES:
Total Preferred Shares
Outstanding.............. 2,400 2,400 2,400 2,400 2,400 2,400 1,200 1,200 1,200 1,200
Asset Coverage Per
Preferred Share (e)...... $69,600 $69,907 $70,457 $70,227 $68,025 $67,197 $142,118 $139,565 $135,961 $135,197
Involuntary Liquidating
Preference Per Preferred
Share.................... $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
Average Market Value Per
Preferred Share.......... $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
(a) As required, effective November 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the period ended October 31, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses per share by $.01 and increase the ratio of net investment income to
average net assets applicable to common shares by .05%. Per share, ratios
and supplemental data for periods prior to October 31, 2002 have not been
restated to reflect this change in presentation.
(b) Total return assumes an investment at the common share market price at the
beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Fund's dividend reinvestment plan, and sale of
all shares at the closing common share market price at the end of the period
indicated.
(c) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(d) Ratios reflect the effect of dividend payments to preferred shareholders.
(e) Calculated by subtracting the Fund's total liabilities (not including the
preferred shares) from the Fund's total assets and dividing this by the
number of preferred shares outstanding.
47
INFORMATION ABOUT THE REORGANIZATIONS
GENERAL
Under the Reorganization Agreements (a form of which is attached as Appendix A
to the Reorganization Statement of Additional Information), the Acquiring Fund
will acquire substantially all of the assets, and will assume substantially all
of the liabilities, of the Target Funds, in exchange for Acquiring Fund Common
Shares and Acquiring Fund APS to be issued by the Acquiring Fund. The Acquiring
Fund Common Shares issued to the Target Funds will have an aggregate net asset
value equal to the aggregate net asset value of the Target Funds' common shares,
less the costs of the Reorganizations (though cash may be paid in lieu of any
fractional shares). The Acquiring Fund APS issued to the Target Funds will have
an aggregate liquidation preference equal to the aggregate liquidation
preference of the Target Funds' preferred shares. Upon receipt by the Target
Funds of such shares, the Target Funds will (i) distribute the Acquiring Fund
Common Shares to the Target Funds' common shareholders and (ii) distribute the
Acquiring Fund APS to the Target Funds' preferred shareholders. As soon as
practicable after the Closing Date for the Reorganizations, the Target Funds
will deregister as investment companies under the 1940 Act and dissolve under
applicable state law.
The Target Funds will distribute the Acquiring Fund Common Shares and the
Acquiring Fund APS received by them pro rata to the holders of record of their
common shares and preferred shares, as applicable, in exchange for such
shareholders' shares in the Target Funds. Such distribution will be accomplished
by opening new accounts on the books of the Acquiring Fund in the names of the
common and preferred shareholders of the Target Funds and transferring to those
shareholder accounts the Acquiring Fund Common Shares and the Acquiring Fund APS
previously credited on those books to the accounts of the Target Funds. Each
newly-opened account on the books of the Acquiring Fund for the former common
shareholders of the Target Funds will represent the respective pro rata number
of Acquiring Fund Common Shares (rounded down, in the case of fractional shares
held other than in a Dividend Reinvestment Plan account, to the next largest
number of whole shares) due such shareholder. No fractional Acquiring Fund
Common Shares will be issued (except for shares held in a Plan account). In the
event of fractional shares in an account other than a Plan account, the
Acquiring Fund's transfer agent will aggregate all such fractional Acquiring
Fund Common Shares and sell the resulting whole shares on the NYSE for the
account of all holders of such fractional interests, and each such holder will
be entitled to the pro rata share of the proceeds from such sale upon surrender
of the Target Fund common share certificates. Similarly, each newly-opened
account on the books of the Acquiring Fund for the former preferred shareholders
of Target Fund would represent the respective pro rata number of Acquiring Fund
APS due such shareholder. See "Terms of the Reorganization
Agreements -- Surrender and
48
Exchange of Share Certificates" below for a description of the procedures to be
followed by the Target Funds' shareholders to obtain their Acquiring Fund Common
Shares or Acquiring Fund APS (and cash in lieu of fractional shares, if any).
As a result of the Reorganizations, each common shareholder of a Target Fund
will own Acquiring Fund Common Shares that (except for cash payments received in
lieu of fractional shares) will have an aggregate net asset value immediately
after the Closing Date equal to the aggregate net asset value of that
shareholder's Target Fund common shares immediately prior to the Closing Date.
Since the Acquiring Fund Common Shares will be issued at net asset value in
exchange for the net assets of each Target Fund having a value equal to the
aggregate net asset value of those Acquiring Fund Common Shares, the net asset
value per share of Acquiring Fund Common Shares should remain virtually
unchanged by the Reorganizations except for its share of the costs of the
Reorganizations. Similarly, the aggregate liquidation preference of the
Acquiring Fund APS to be issued to each Target Fund will equal the aggregate
liquidation preference of each Target Fund's preferred shares. Each preferred
shareholder of a Target Fund will receive Acquiring Fund APS that will have an
aggregate liquidation preference immediately after the Closing Date equal to the
aggregate liquidation preference of that shareholder's Target Fund preferred
shares immediately prior to the Closing Date. The liquidation preference per
share of the Acquiring Fund APS will remain unchanged by the Reorganizations.
Thus, the Reorganization will result in no dilution of net asset value of the
Acquiring Fund Common Shares or the Target Funds' common shares, other than to
reflect the costs of the Reorganization, and will result in no dilution of the
value per share for preferred shareholders of the Acquiring Fund or the Target
Fund. However, as a result of the Reorganizations, a shareholder of any of the
Funds will hold a reduced percentage of ownership in the larger combined entity
than he or she did in any of the separate Funds. No sales charge or fee of any
kind will be charged to shareholders of the Target Funds in connection with
their receipt of Acquiring Fund Common Shares or Acquiring Fund APS in the
Reorganizations.
TERMS OF THE REORGANIZATION AGREEMENTS
The following is a summary of the significant terms of a Reorganization
Agreement. The terms of each Reorganization Agreement are similar. This summary
is qualified in its entirety by reference to the form of Reorganization
Agreement, attached as Appendix A to the Reorganization Statement of Additional
Information.
VALUATION OF ASSETS AND LIABILITIES. The assets of each Fund will be valued
after the close of business on the NYSE (generally, 4:00 p.m., Eastern time) on
the Closing Date. For the purpose of determining the net asset value of a common
share of each Fund, the value of the securities held by the Fund plus any cash
or other
49
assets (including interest accrued but not yet received) minus all liabilities
(including accrued expenses) and the aggregate liquidation value of the
outstanding preferred shares of the Fund is divided by the total number of
common shares of the Fund outstanding at such time. Daily expenses, including
the fees payable to the Adviser, will accrue on the Closing Date.
AMENDMENTS AND CONDITIONS. The Reorganization Agreement may be amended at any
time prior to the Closing Date with respect to any of the terms therein. The
obligations of each Fund pursuant to the Reorganization Agreement are subject to
various conditions, including a registration statement on Form N-14 being
declared effective by the SEC, approval by the shareholders of the Target Fund,
approval of the issuance of additional Acquiring Fund Common Shares by the
common shareholders of the Acquiring Fund, receipt of an opinion of counsel as
to tax matters, receipt of an opinion of counsel as to corporate and securities
matters and the continuing accuracy of various representations and warranties of
the Funds being confirmed by the respective parties.
POSTPONEMENT; TERMINATION. Under the Reorganization Agreement, the Board of
Trustees of either Fund may cause the Reorganization to be postponed or
abandoned in certain circumstances should such Board determine that it is in the
best interests of the shareholders of its respective Fund to do so.
The Reorganization Agreement may be terminated, and the Reorganization
abandoned at any time (whether before or after adoption thereof by the
shareholders of either of the Funds) prior to the Closing Date, or the Closing
Date may be postponed: (i) by mutual consent of the Boards of Trustees of the
Funds and (ii) by the Board of Trustees of either Fund if any condition to that
Fund's obligations set forth in the Reorganization Agreement has not been
fulfilled or waived by such Board.
SURRENDER AND EXCHANGE OF SHARE CERTIFICATES. After the Closing Date, each
holder of an outstanding certificate or certificates formerly representing
Target Fund common shares will be entitled to receive, upon surrender of his or
her certificate or certificates, a certificate or certificates representing the
number of Acquiring Fund Common Shares distributable with respect to such
holder's Target Fund common shares, together with cash in lieu of any fractional
Acquiring Fund Common Shares held other than in a Dividend Reinvestment Plan
account. Promptly after the Closing Date, the transfer agent for the Acquiring
Fund Common Shares will mail to each holder of certificates formerly
representing Target Fund common shares a letter of transmittal for use in
surrendering his or her certificates for certificates representing Acquiring
Fund Common Shares and cash in lieu of any fractional shares held other than in
a Plan account.
Please do not send in any share certificates at this time. Upon consummation
of the Reorganization, holders of Target Fund common shares will be furnished
with
50
instructions for exchanging their share certificates for Acquiring Fund share
certificates and, if applicable, cash in lieu of fractional shares.
From and after the Closing Date, certificates formerly representing Target
Fund common shares will be deemed for all purposes to evidence ownership of the
number of full Acquiring Fund Common Shares distributable with respect to the
Target Fund common shares held before the Reorganization as described above and
as shown in the table above, provided that, until such share certificates have
been so surrendered, no dividends payable to the holders of record of Target
Fund common shares as of any date subsequent to the Closing Date will be
reinvested pursuant to the Acquiring Fund's Dividend Reinvestment Plan, but will
instead be paid in cash. Once such Target Fund share certificates have been
surrendered, participants in the Target Fund's Dividend Reinvestment Plan will
automatically be enrolled in the Dividend Reinvestment Plan of the Acquiring
Fund.
From and after the Closing Date, there will be no transfers on the share
transfer books of the Target Fund. If, after the Closing Date, certificates
representing Target Fund Common Shares are presented to the Acquiring Fund, they
will be cancelled and exchanged for certificates representing Acquiring Fund
Common Shares, as applicable, and cash in lieu of fractional shares, if any,
distributable with respect to such Target Fund Common Shares in the
Reorganization.
Preferred shares are held in "street name" by the Depository Trust Company and
all transfers will be accomplished by book entry.
EXPENSES OF THE REORGANIZATION. In the event the Reorganization is approved
and completed, the expenses of the Reorganization will be shared by the Target
Fund and the Acquiring Fund in proportion to their respective projected annual
expense savings as a result of the Reorganization. The expenses of the
Reorganization will not be borne by the preferred shareholders of either Fund.
In the event the Reorganization is not completed, the Adviser will bear the
costs associated with the Reorganization. Neither the Funds nor the Adviser will
pay any expenses of shareholders arising out of or in connection with the
Reorganization.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS
The following is a general summary of the material anticipated U.S. federal
income tax consequences of the Reorganizations. The discussion is based upon the
Internal Revenue Code, Treasury regulations, court decisions, published
positions of the Internal Revenue Service ("IRS") and other applicable
authorities, all as in effect on the date hereof and all of which are subject to
change or differing interpretations (possibly with retroactive effect). The
discussion is limited to U.S. persons who hold shares of a Target Fund as
capital assets for U.S. federal income tax purposes (generally, assets held for
investment). This summary does not address all of the U.S. federal income tax
consequences that may be relevant to a particular shareholder or to shareholders
who may be subject to special treatment
51
under U.S. federal income tax laws. No ruling has been or will be obtained from
the IRS regarding any matter relating to the Reorganizations. No assurance can
be given that the IRS would not assert, or that a court would not sustain, a
position contrary to any of the tax aspects described below. Prospective
investors must consult their own tax advisers as to the U.S. federal income tax
consequences of the Reorganizations, as well as the effects of state, local and
non-U.S. tax laws.
It is a condition to closing each Reorganization that the respective Target
Fund and the Acquiring Fund receive an opinion from Skadden, Arps, Slate,
Meagher & Flom LLP ("Skadden Arps"), dated as of the Closing Date, regarding the
characterization of such Reorganization as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code. As such a reorganization, the
U.S. federal income tax consequences of each Reorganization can be summarized as
follows:
- No gain or loss will be recognized by a Target Fund or the Acquiring Fund
upon the transfer to the Acquiring Fund of substantially all of the assets
of the Target Fund in exchange for Acquiring Fund Common Shares and
Acquiring Fund APS and the assumption by the Acquiring Fund of substantially
all of the liabilities of the Target Fund and the subsequent liquidation of
the Target Fund.
- No gain or loss will be recognized by a shareholder of a Target Fund who
exchanges, as the case may be, all of his, her or its Target Fund common
shares for Acquiring Fund Common Shares pursuant to a Reorganization (except
with respect to cash received in lieu of a fractional share, as discussed
below) or all of his, her or its Target Fund preferred shares solely for
Acquiring Fund APS pursuant to a Reorganization.
- The aggregate tax basis of the Acquiring Fund Common Shares or Acquiring
Fund APS, as the case may be, received by a shareholder of a Target Fund
pursuant to a Reorganization will be the same as the aggregate tax basis of
the shares of the Target Fund surrendered in exchange therefor (reduced by
any amount of tax basis allocable to a fractional share for which cash is
received).
- The holding period of the Acquiring Fund Common Shares or Acquiring Fund
APS, as the case may be, received by a shareholder of a Target Fund pursuant
to a Reorganization will include the holding period of the shares of the
Target Fund surrendered in exchange therefor.
- A shareholder of a Target Fund that receives cash in lieu of a fractional
Acquiring Fund Common Share pursuant to the Reorganization will recognize
capital gain or loss with respect to the fractional share in an amount equal
to the difference between the amount of cash received for the fractional
share and the portion of such shareholder's tax basis in its Target Fund
common shares that is allocable to the fractional share. The capital gain or
loss will be long-
52
term if the holding period for such Target Fund common shares is more than
one year as of the date of the exchange.
- The Acquiring Fund's tax basis in a Target Fund's assets received by the
Acquiring Fund pursuant to a Reorganization will, in each instance, equal
the tax basis of such assets in the hands of such Target Fund immediately
prior to such Reorganization, and the Acquiring Fund's holding period of
such assets will, in each instance, include the period during which the
assets were held by such Target Fund.
The Acquiring Fund intends to continue to be taxed under the rules applicable
to regulated investment companies as defined in Section 851 of the Internal
Revenue Code, which are the same rules currently applicable to each of the
Target Funds and their shareholders.
The opinion of Skadden Arps will be based on U.S. federal income tax law in
effect on the Closing Date. In rendering its opinion, Skadden Arps will also
rely upon certain representations of the management of the Acquiring Fund and
the Target Funds and assume, among other things, that the Reorganizations will
be consummated in accordance with the Reorganization Agreements and as described
herein. An opinion of counsel is not binding on the IRS or any court.
SHAREHOLDER APPROVAL
Under the Declaration of Trust of each Target Fund (as amended to date and
including the Certificate of Vote of each Target Fund), relevant Massachusetts
law and the rules of the NYSE and CHX, shareholder approval of each
Reorganization Agreement requires the affirmative vote of shareholders of the
respective Target Fund representing more than 50% of the outstanding common
shares and preferred shares of such Target Fund entitled to vote, each voting
separately as a class.
53
------------------------------------------------------------------------------
PROPOSAL 2: ISSUANCE OF ACQUIRING FUND COMMON SHARES
------------------------------------------------------------------------------
Pursuant to the Reorganization Agreements, which are described more fully
under "Proposal 1: Reorganizations of the Target Funds" herein, the Acquiring
Fund will acquire substantially all of the assets and assume substantially all
of the liabilities of each Target Fund in exchange for Acquiring Fund Common
Shares and Acquiring Fund APS. Each Target Fund will distribute Acquiring Fund
Common Shares to its common shareholders and Acquiring Fund APS to its preferred
shareholders, and will then terminate its registration under the 1940 Act and
dissolve under applicable state law. The Acquiring Fund Board, based upon its
evaluation of all relevant information, anticipates that each Reorganization
will benefit holders of Acquiring Fund Common Shares.
The aggregate net asset value of Acquiring Fund Common Shares issued in each
Reorganization will equal the aggregate net asset value of the Target Fund's
common shares held immediately prior to the Reorganization, less the costs of
the Reorganization (though shareholders may receive cash for their fractional
shares). The aggregate liquidation preference of Acquiring Fund APS issued in
the Reorganization will equal the aggregate liquidation preference of the Target
Fund's preferred shares held immediately prior to the Reorganization. The
Reorganization will result in no reduction of the net asset value of the
Acquiring Fund Common Shares, other than to reflect the costs of each
Reorganization. No gain or loss will be recognized by the Acquiring Fund or its
shareholders in connection with each Reorganization. The Acquiring Fund will
continue to operate as a registered closed-end investment company with the
investment objective and policies described in this Joint Proxy
Statement/Prospectus.
In connection with Reorganizations and as contemplated by the Reorganization
Agreements, the Acquiring Fund will issue additional Acquiring Fund Common
Shares and list such shares on the NYSE and the CHX. While applicable state and
federal law does not require the shareholders of the Acquiring Fund to approve
the Reorganizations, applicable NYSE rules require the common shareholders of
the Acquiring Fund to approve the issuance of additional Acquiring Fund Common
Shares to be issued in connection with the Reorganizations.
SHAREHOLDER APPROVAL
Shareholder approval of the issuance of additional Acquiring Fund Common
Shares requires the affirmative vote of a majority of votes cast, provided that
total votes cast on the proposal represents over 50% of all securities entitled
to vote on the matter. For more information regarding voting requirements, see
the section entitled "Other Information -- Voting Information and Requirements"
below.
54
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OTHER INFORMATION
------------------------------------------------------------------------------
VOTING INFORMATION AND REQUIREMENTS
GENERAL. A list of shareholders of each Fund entitled to be present and vote
at the Special Meeting will be available at the offices of the Funds, 1 Parkview
Plaza, Oakbrook Terrace, Illinois 60181-5555, for inspection by any shareholder
during regular business hours for ten days prior to the date of the Special
Meeting.
RECORD DATE. The Funds' Boards have fixed the close of business on June 13,
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, New York Quality Municipal Trust had outstanding 5,655,638 common
shares and 1,800 preferred shares, New York Value Municipal Income Trust had
outstanding 4,291,172 common shares and 1,600 preferred shares and the Acquiring
Fund had outstanding 6,211,330 common shares and 2,400 preferred shares.
PROXIES. Shareholders may vote by appearing in person at the Special Meeting,
by returning the enclosed proxy card or by casting their vote via telephone or
the internet using the instructions provided on the enclosed proxy card and more
fully described below. Shareholders of each Fund have the opportunity to submit
their voting instructions via the internet by utilizing a program provided by a
third-party vendor hired by the Funds, or by "touch-tone" telephone voting. The
giving of such a proxy will not affect your right to vote in person should you
decide to attend the Special Meeting. To use the internet, please access the
internet address found on your proxy card. To record your voting instructions by
automated telephone, please call the toll-free number listed on your proxy card.
The internet and automated telephone voting instructions are designed to
authenticate shareholder identities, to allow shareholders to give their voting
instructions, and to confirm that shareholders' instructions have been recorded
properly. Shareholders submitting their voting instructions via the internet
should understand that there may be costs associated with internet access, such
as usage charges from internet access providers and telephone companies, that
must be borne by the shareholders. Any person giving a proxy may revoke it at
any time prior to its exercise by giving written notice of the revocation to the
Secretary of the Funds at the address indicated above, by delivering a duly
executed proxy bearing a later date, by recording later-dated voting
instructions via the internet or automated telephone or by attending the Special
Meeting and voting in person. The giving of a proxy will not affect your right
to vote in person if you attend the Special Meeting and wish to do so.
All properly executed proxies received prior to the Special Meeting will be
voted in accordance with the instructions marked thereon or otherwise as
provided therein. Unless instructions to the contrary are marked, proxies will
be voted
55
"FOR" the approval of each proposal. Abstentions and broker non-votes (i.e.,
where a nominee such as a broker holding shares for beneficial owners votes on
certain matters pursuant to discretionary authority or instructions from
beneficial owners, but with respect to one or more proposals does not receive
instructions from beneficial owners or does not exercise discretionary
authority) are not treated as votes "FOR" a proposal.
With respect to Proposal 1, abstentions and broker non-votes have the same
effect as votes "AGAINST" the proposals since their approvals are based on the
affirmative vote of a majority of each Target Fund's outstanding common shares
and preferred shares, each voting as a separate class. With respect to Proposal
2, abstentions will not be treated as votes "FOR" the proposal but will be
counted as votes cast on the proposal and will therefore have the same effect as
votes "AGAINST" the proposal. Broker non-votes will not be treated as votes
"FOR" the proposal and will not be counted as votes cast on the proposal and
will therefore have the effect of reducing the aggregate number of shares voting
on the proposal and reducing the number of votes "FOR" required to approve the
proposal.
With respect to each proposal, a majority of the outstanding shares 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 PREFERRED SHARES OF THE TARGET FUNDS.
Pursuant to the rules of the NYSE, preferred shares of each Target Fund held in
"street name" may be voted under certain conditions by broker-dealer firms and
counted for purposes of establishing a quorum of that Fund if no instructions
are received one business day before the Special Meeting or, if adjourned, one
business day before the day to which the Special Meeting is adjourned. These
conditions include, among others, that (i) at least 30% of a Target Fund's
preferred shares outstanding have voted on such Fund's Reorganization and (ii)
less than 10% of a Target Fund's preferred shares outstanding have voted against
such Fund's Reorganization. In such instance, the broker-dealer firm will vote
such uninstructed Target Fund's preferred shares on such Reorganization in the
same proportion as the votes cast by all Target Fund preferred shareholders who
voted on such Reorganization. Each Target Fund will include shares held of
record by broker-dealers as to which such authority has been granted in its
tabulation of the total number of shares present for purposes of determining
whether the necessary quorum of shareholders of such Fund exists.
SHAREHOLDER INFORMATION
As of June 13, 2005, to the knowledge of the Funds, no shareholder owned
beneficially more than 5% of the outstanding common shares of any Fund.
56
To the knowledge of the Funds, no trustee or executive officer owned, directly
or beneficially, common shares of the Funds as of June 13, 2005, and no trustees
or executive officers owned preferred shares of the Funds as of that date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(f) of the 1940 Act and Section 16(a) of the Securities Exchange Act
of 1934, as amended, require the Funds' trustees, officers, investment adviser,
affiliated persons of the investment adviser and persons who own more than 10%
of a registered class of a Fund's equity securities to file forms with the SEC
and the NYSE reporting their affiliation with a Fund and reports of ownership
and changes in ownership of Fund shares. These persons and entities are required
by SEC regulation to furnish a Fund with copies of all such forms they file.
Based on a review of these forms furnished to each Fund, each Fund believes that
during its last fiscal year, its trustees, officers, investment adviser and
affiliated persons of the investment adviser complied with the applicable filing
requirements.
SHAREHOLDER PROPOSALS
To be considered for presentation at a shareholder's meeting, rules
promulgated by the SEC generally require that, among other things, a
shareholder's proposal must be received at the offices of the relevant Fund a
reasonable time before solicitation is made. Timely submission of a proposal
does not necessarily mean that such proposal will be included. Any shareholder
who wishes to submit a proposal for consideration at a meeting of such
shareholder's Fund should send such proposal to the relevant Fund at the
principal executive offices of the Fund at 1221 Avenue of the Americas, New
York, New York 10020.
Information regarding the deadline for timely submission of proposals intended
to be presented at the year 2006 Annual Meeting of the Funds will be provided in
the proxy statement relating to the 2005 Annual Meeting of the Funds, which is
expected to take place later this year. If the Reorganizations of the Target
Funds are approved and completed prior to their 2005 Annual Meeting, such Funds
will cease to exist and will not hold their 2005 Annual Meeting.
SOLICITATION OF PROXIES
Solicitation of proxies is being made primarily by the mailing of this Notice
and Joint Proxy Statement/Prospectus with its enclosures on or about June ,
2005. Shareholders of the Target Funds whose shares are held by nominees such as
brokers can vote their proxies by contacting their respective nominee. In
addition to the solicitation of proxies by mail, employees of the Adviser and
its affiliates as well as dealers or their representatives may, without
additional compensation, solicit proxies in person or by mail, telephone,
telegraph, facsimile or oral communication. The Target Funds have retained
Computershare Fund Services ("CFS") to make telephone calls to shareholders of
the Funds to remind them to vote. CFS will be
57
paid a project management fee as well as fees charged on a per call basis and
certain other expenses. Management estimates that the telephone solicitation by
CFS will cost approximately $10,500 for New York Quality Municipal Trust, $8,200
for New York Value Municipal Income Trust and $11,100 for the Acquiring Fund.
Proxy solicitation expenses are an expense of the Reorganizations which will be
borne by the Target Funds and the Acquiring Fund in proportion to their
projected annual expense savings as a result of the Reorganizations.
LEGAL MATTERS
Certain legal matters concerning the federal income tax consequences of the
Reorganizations and the issuance of Acquiring Fund Common Shares and Acquiring
Fund APS will be passed upon by Skadden Arps, which serves as counsel to the
Target Funds and the Acquiring Fund. Wayne W. Whalen, a partner of Skadden Arps,
is a trustee of both the Target Funds and the Acquiring Fund.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Trustees of each Fund knows of no business other than that
described in this Joint Proxy Statement/Prospectus which will be presented for
consideration at the Special Meeting. If any other matters are properly
presented, it is the intention of the persons named on the enclosed proxy card
to vote proxies in accordance with their best judgment.
In the event that a quorum is present at the Special Meeting but sufficient
votes to approve any of the proposals are not received, proxies (including
abstentions and broker non-votes) will be voted in favor of one or more
adjournments of the Special Meeting to permit further solicitation of proxies on
such proposals, provided that the Board of Trustees of each Fund determines that
such an adjournment and additional solicitation is reasonable and in the
interest of shareholders based on a consideration of all relevant factors,
including the percentage of votes then cast, the percentage of negative votes
cast, the nature of the proposed solicitation activities and the nature of the
reasons for such further solicitation. Any such adjournment will require the
affirmative vote of the holders of a majority of the outstanding shares of the
respective Fund voted at the session of the Special Meeting to be adjourned.
58
If you cannot be present in person at the Special Meeting, please fill in,
sign and return the enclosed proxy card or please record your voting
instructions by telephone or via the internet promptly. No postage is necessary
if the enclosed proxy card is mailed in the United States.
Lou Anne McInnis
Assistant Secretary
Van Kampen New York Quality
Municipal Trust
Van Kampen New York Value Municipal
Income Trust
Van Kampen Trust for Investment Grade
New York Municipals
June 30, 2005
59
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 than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated
I-1
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 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.
I-2
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 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
I-3
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.
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.
I-4
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.
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.
I-5
NP
Issuers (or supporting institutions) rated Not Prime do not fall within any of
the Prime rating categories.
NOTE: Canadian issuers rated P-1 or P-2 have their short-term ratings enhanced
by the senior-most long-term rating of the issuer, its guarantor or
support-provider.
I-6
[VAN KAMPEN INVESTMENTS LOGO]
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE
AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE
SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 29, 2005
STATEMENT OF ADDITIONAL INFORMATION
RELATING TO THE ACQUISITION OF THE ASSETS AND LIABILITIES OF
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
AND
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
BY AND IN EXCHANGE FOR SHARES OF
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
DATED JUNE 30, 2005
This Statement of Additional Information is available to the shareholders
of Van Kampen New York Quality Municipal Trust ("New York Quality Municipal
Trust") and Van Kampen New York Value Municipal Income Trust ("New York Value
Municipal Income Trust") (each a "Target Fund" and collectively the "Target
Funds") in connection with proposed reorganizations (each a "Reorganization" and
collectively the "Reorganizations") whereby Van Kampen Trust for Investment
Grade New York Municipals (the "Acquiring Fund") will acquire substantially all
of the assets and assume substantially all of the liabilities of the Target
Funds in exchange for an equal aggregate value of newly-issued common shares of
beneficial interest, par value $0.01 per share ("Acquiring Fund Common Shares"),
and newly-issued auction preferred shares with a par value of $0.01 per share
and a liquidation preference of $25,000 per share ("Acquiring Fund APS"). The
Target Funds will distribute Acquiring Fund Common Shares to common shareholders
of the Target Funds and Acquiring Fund APS to preferred shareholders of the
Target Funds, and will then terminate their registrations under the Investment
Company Act of 1940, as amended (the "1940 Act"), and dissolve under applicable
state law. A copy of a form of the Agreement and Plan of Reorganization between
each Target Fund and the Acquiring Fund is attached hereto as Appendix A. Unless
otherwise defined herein, capitalized terms have the meanings given to them in
the Joint Proxy Statement/Prospectus.
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Joint Proxy Statement/Prospectus dated June 30,
2005 relating to the proposed Reorganizations of the Target Funds into the
Acquiring Fund. A copy of the Joint Proxy Statement/Prospectus may be obtained,
without charge, by writing to the Van Kampen Client Relations Department at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, Illinois 60181-5555 or by
calling (800) 341-2929 (TDD users may call (800) 421-2833).
The Acquiring Fund will provide, without charge, upon the written or oral
request of any person to whom this Statement of Additional Information is
delivered, a copy of any and all documents that have been incorporated by
reference in the registration statement of which this Statement of Additional
Information is a part.
S-1
TABLE OF CONTENTS
Trustees and Officers....................................... S-3
Investment Advisory Agreement............................... S-14
Other Agreements............................................ S-16
Fund Management............................................. S-17
Code of Ethics.............................................. S-19
Portfolio Transactions and Brokerage Allocation............. S-19
Additional Information Relating to Auction Preferred Shares
of the Acquiring Fund..................................... S-22
Other Information........................................... S-31
Financial Statements........................................ S-32
Pro Forma Financial Statements.............................. S-32
Appendix A -- Form of Agreement and Plan of
Reorganization............................................ A-1
Appendix B -- Year of Initial Election or Appointment of
Each Trustee to the Board of Trustees of Each Fund........ B-1
Appendix C -- Certificate of Vote of Trustees Establishing
Preferred Shares.......................................... C-1
Appendix D -- Proxy Voting Policy and Procedures............ D-1
Appendix E -- Annual Report of the Acquiring Fund........... E-1
Appendix F -- Semiannual Report of the Acquiring Fund....... F-1
Appendix G -- Annual Report of New York Quality Municipal
Trust..................................................... G-1
Appendix H -- Semiannual Report of New York Quality
Municipal Trust........................................... H-1
Appendix I -- Annual Report of New York Value Municipal
Income Trust.............................................. I-1
Appendix J -- Semiannual Report of New York Value Municipal
Income Trust.............................................. J-1
Appendix K -- Pro Forma Financial Statements................ K-1
S-2
TRUSTEES AND OFFICERS
GENERAL
The business and affairs of each Fund are managed under the direction of
each Fund's Board of Trustees and each Fund's officers appointed by the Board of
Trustees. The Acquiring Fund and the Target Funds share the same Board of
Trustees and executive officers. The tables below list the trustees and
executive officers of the Funds and their principal occupations during the last
five years, other directorships held by trustees and their affiliations, if any,
with Van Kampen Investments Inc. ("Van Kampen Investments"), Van Kampen Asset
Management (the "Adviser"), Van Kampen Funds Inc. (the "Administrator"), Van
Kampen Advisors Inc., Van Kampen Exchange Corp. and Van Kampen Investor Services
Inc. ("Investor Services"). The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Statement of
Additional Information. Trustees of the Funds generally serve three-year terms
or until their successors are duly elected and qualified. Officers are annually
elected by the trustees.
INDEPENDENT TRUSTEES
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (59) Trustee + Chairman and Chief Executive 82 Trustee/Director/
Blistex Inc. Officer of Blistex Inc., a Managing General
1800 Swift Drive consumer health care products Partner of funds in
Oak Brook, IL 60523 manufacturer. Director of the the Fund Complex.
Heartland Alliance, a
nonprofit organization serving
human needs based in Chicago.
Director of St. Vincent de
Paul Center, a Chicago based
day care facility serving the
children of low income
families. Board member of the
Illinois Manufacturers'
Association.
Jerry D. Choate (66) Trustee + Prior to January 1999, 80 Trustee/Director/
33971 Selva Road Chairman and Chief Executive Managing General
Suite 130 Officer of the Allstate Partner of funds in
Dana Point, CA 92629 Corporation ("Allstate") and the Fund Complex.
Allstate Insurance Company. Director of Amgen
Prior to January 1995, Inc., a
President and Chief Executive biotechnological
Officer of Allstate. Prior to company, and Director
August 1994, various of Valero Energy
management positions at Corporation, an
Allstate. independent refining
company.
S-3
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer++ (64) Trustee + President of CAC, L.L.C., a 82 Trustee/Director/
CAC, L.L.C. private company offering Managing General
4350 LaJolla Village Drive capital investment and Partner of funds in
Suite 980 management advisory services. the Fund Complex.
San Diego, CA 92122-6223 Prior to February 2001, Vice Director of
Chairman and Director of Stericycle, Inc.,
Anixter International, Inc., a Ventana Medical
global distributor of wire, Systems, Inc., and
cable and communications GATX Corporation, and
connectivity products. Prior Trustee of The
to July 2000, Managing Partner Scripps Research
of Equity Group Corporate Institute. Prior to
Investment (EGI), a company January 2005, Trustee
that makes private investments of the University of
in other companies. Chicago Hospitals and
Health Systems. Prior
to April 2004,
Director of
TheraSense, Inc.
Prior to January
2004, Director of
TeleTech Holdings
Inc. and Arris Group,
Inc. Prior to May
2002, Director of
Peregrine Systems
Inc. Prior to
February 2001,
Director of IMC
Global Inc. Prior to
July 2000, Director
of Allied Riser
Communications Corp.,
Matria Healthcare
Inc., Transmedia
Networks, Inc., CNA
Surety, Corp. and
Grupo Azcarero Mexico
(GAM).
Linda Hutton Heagy (56) Trustee + Managing Partner of Heidrick & 80 Trustee/Director/
Heidrick & Struggles Struggles, an executive search Managing General
233 South Wacker Drive firm. Trustee on the Partner of funds in
Suite 7000 University of Chicago the Fund Complex.
Chicago, IL 60606 Hospitals Board, Vice Chair of
the Board of the YMCA of
Metropolitan Chicago and a
member of the Women's Board of
the University of Chicago.
Prior to 1997, Partner of Ray
& Berndtson, Inc., an
executive recruiting firm.
Prior to 1996, Trustee of The
International House Board, a
fellowship and housing
organization for international
graduate students. Prior to
1995, Executive Vice President
of ABN AMRO, N.A., a bank
holding company. Prior to
1990, Executive Vice President
of The Exchange National Bank.
S-4
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy (53) Trustee + Director and President of the 80 Trustee/Director/
1744 R Street, NW German Marshall Fund of the Managing General
Washington, DC 20009 United States, an independent Partner of funds in
U.S. foundation created to the Fund Complex.
deepen understanding, promote
collaboration and stimulate
exchanges of practical
experience between Americans
and Europeans. Formerly,
advisor to the Dennis Trading
Group Inc., a managed futures
and option company that
invests money for individuals
and institutions. Prior to
1992, President and Chief
Executive Officer, Director
and member of the Investment
Committee of the Joyce
Foundation, a private
foundation.
Howard J Kerr (69) Trustee + Prior to 1998, President and 82 Trustee/Director/
736 North Western Avenue Chief Executive Officer of Managing General
P.O. Box 317 Pocklington Corporation, Inc., Partner of funds in
Lake Forest, IL 60045 an investment holding company. the Fund Complex.
Director of the Marrow Director of the Lake
Foundation. Forest Bank & Trust.
Jack E. Nelson (69) Trustee + President of Nelson Investment 80 Trustee/Director/
423 Country Club Drive Planning Services, Inc., a Managing General
Winter Park, FL 32789 financial planning company and Partner of funds in
registered investment adviser the Fund Complex.
in the State of Florida.
President of Nelson Ivest
Brokerage Services Inc., a
member of the NASD, Securities
Investors Protection Corp. and
the Municipal Securities
Rulemaking Board. President of
Nelson Sales and Services
Corporation, a marketing and
services company to support
affiliated companies.
Hugo F. Sonnenschein++ (64) Trustee + President Emeritus and 82 Trustee/Director/
1126 E. 59th Street Honorary Trustee of the Managing General
Chicago, IL 60637 University of Chicago and the Partner of funds in
Adam Smith Distinguished the Fund Complex.
Service Professor in the Director of Winston
Department of Economics at the Laboratories, Inc.
University of Chicago. Prior
to July 2000, President of the
University of Chicago. Trustee
of the University of Rochester
and a member of its investment
committee. Member of the
National Academy of Sciences,
the American Philosophical
Society and a fellow of the
American Academy of Arts and
Sciences.
S-5
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. (63) Trustee + Chief Communications Officer 80 Trustee/Director/
815 Cumberstone Road of the National Academy of Managing General
Harwood, MD 20776 Sciences/National Research Partner of funds in
Council, an independent, the Fund Complex.
federally chartered policy Director of Fluor
institution, from 2001 to Corp., an
November 2003 and Chief engineering,
Operating Officer from 1993 to procurement and
2001. Director of the construction
Institute for Defense organization, since
Analyses, a federally funded January 2004 and
research and development Director of Neurogen
center, Director of the German Corporation, a
Marshall Fund of the United pharmaceutical
States, Director of the Rocky company, since
Mountain Institute and Trustee January 1998.
of Colorado College. Prior to
1993, Executive Director of
the Commission on Behavioral
and Social Sciences and
Education at the National
Academy of Sciences/National
Research Council. From 1980
through 1989, Partner of
Coopers & Lybrand.
S-6
INTERESTED TRUSTEES*
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Mitchell M. Merin* (51) Trustee and +; President of funds in the Fund 80 Trustee/Director/
1221 Avenue of the Americas President President Complex. Chairman, President, Managing General
New York, NY 10020 since 2002 Chief Executive Officer and Partner of funds in
Director of the Adviser and Van the Fund Complex.
Kampen Advisors Inc. since
December 2002. Chairman,
President and Chief Executive
Officer of Van Kampen Investments
since December 2002. Director of
Van Kampen Investments since
December 1999. Chairman and
Director of Van Kampen Funds Inc.
since December 2002. President,
Director and Chief Operating
Officer of Morgan Stanley
Investment Management since
December 1998. President and
Director since April 1997 and
Chief Executive Officer since
June 1998 of Morgan Stanley
Investment Advisors Inc. and
Morgan Stanley Services Company
Inc. Chairman, Chief Executive
Officer and Director of Morgan
Stanley Distributors Inc. since
June 1998. Chairman since June
1998, and Director since January
1998 of Morgan Stanley Trust.
Director of various Morgan
Stanley subsidiaries. President
of the Morgan Stanley Funds since
May 1999. Previously Chief
Executive Officer of Van Kampen
Funds Inc. from December 2002 to
July 2003, Chief Strategic
Officer of Morgan Stanley
Investment Advisors Inc. and
Morgan Stanley Services Company
Inc. and Executive Vice President
of Morgan Stanley Distributors
Inc. from April 1997 to June
1998. Chief Executive Officer
from September 2002 to April 2003
and Vice President from May 1997
to April 1999 of the Morgan
Stanley Funds.
Richard F. Powers, III* (59) Trustee + Advisory Director of Morgan 82 Trustee/Director/
1221 Avenue of the Americas Stanley. Prior to December 2002, Managing General
New York, NY 10020 Chairman, Director, President, Partner of funds in
Chief Executive Officer and the Fund Complex.
Managing Director of Van Kampen
Investments and its investment
advisory, distribution and other
subsidiaries. Prior to December
2002, President and Chief
Executive Officer of funds in the
Fund Complex. Prior to May 1998,
Executive Vice President and
Director of Marketing at Morgan
Stanley and Director of Dean
Witter, Discover & Co. and Dean
Witter Realty. Prior to 1996,
Director of Dean Witter Reynolds
Inc.
S-7
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (65) Trustee + Partner in the law firm of 82 Trustee/Director/
333 West Wacker Drive Skadden, Arps, Slate, Meagher & Managing General
Chicago, IL 60606 Flom LLP, legal counsel to funds Partner of funds in
in the Fund Complex. the Fund Complex.
Director of the
Abraham Lincoln
Presidential
Foundation.
------------------------------------
* Such trustee is an "interested person" (within the meaning of Section
2(a)(19) of the 1940 Act). Messrs. Merin and Powers are interested persons of
funds in the Fund Complex and the Adviser by reason of their current or
former positions with Morgan Stanley or its affiliates. Mr. Whalen is an
interested person of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds in
the Fund Complex.
+ Each trustee has served as a trustee of each respective Fund since the year
shown in Appendix B.
++ Designated as Preferred Shares Trustee.
S-8
OFFICERS
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (66) Executive Vice Officer Executive Vice President and Principal Executive Officer of
1221 Avenue of the Americas President and since 2003 Funds in the Fund Complex since May 2003. Chief Executive
New York, NY 10020 Principal Officer and Chairman of Investor Services. Managing Director
Executive of Morgan Stanley. Chief Administrative Officer, Managing
Officer Director and Director of Morgan Stanley Investment Advisors
Inc., Morgan Stanley Services Company Inc. and Managing
Director and Director of Morgan Stanley Distributors Inc.
Chief Executive Officer and Director of Morgan Stanley
Trust. Executive Vice President and Principal Executive
Officer of the Institutional and Retail Morgan Stanley
Funds; Director of Morgan Stanley SICAV; previously Chief
Global Operations Officer and Managing Director of Morgan
Stanley Investment Management Inc.
Joseph J. McAlinden (62) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas President and since 2002 Stanley Investment Advisors Inc., Morgan Stanley Investment
New York, NY 10020 Chief Investment Management Inc. and Morgan Stanley Investments LP and
Officer Director of Morgan Stanley Trust for over 5 years. Executive
Vice President and Chief Investment Officer of funds in the
Fund Complex. Managing Director and Chief Investment Officer
of Van Kampen Investments, the Adviser and Van Kampen
Advisors Inc. since December 2002.
Amy R. Doberman (43) Vice President Officer Managing Director and General Counsel, U.S. Investment
1221 Avenue of the Americas since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10020 Management, Inc., Morgan Stanley Investment Advisers Inc.
and the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex as of August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc from January 1997 to July 2000.
Stefanie V. Chang Yu (38) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas and Secretary since 2003 Vice President and Secretary of funds in the Fund Complex.
New York, NY 10020
John L. Sullivan (49) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza Officer since 1996 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen
Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management. Prior
to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
James W. Garrett (36) Chief Financial Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas Officer and since 2005 Chief Financial Officer and Treasurer of Morgan Stanley
New York, NY 10020 Treasurer Institutional Funds since 2002 and of funds in the Fund
Complex since 2005.
COMPENSATION
Each trustee/director/managing general partner (hereinafter referred to in
this section as "trustee") who is not an affiliated person (as defined in the
1940 Act) of Van Kampen Investments, the Adviser or the Administrator (each a
"Non-Affiliated Trustee") is compensated by an annual retainer and meeting fees
for services to funds in the Fund Complex. Each fund in the Fund Complex (except
Van Kampen Exchange Fund) provides a deferred compensation plan to its
Non-Affiliated Trustees that allows trustees to
S-9
defer receipt of their compensation until retirement and earn a return on such
deferred amounts. Amounts deferred are retained by the Funds and earn a rate of
return determined by reference to the return on the common shares of the Funds
or other funds in the Fund Complex as selected by the respective Non-Affiliated
Trustee. To the extent permitted by the 1940 Act, the Funds may invest in
securities of those funds selected by the Non-Affiliated Trustees in order to
match the deferred compensation obligation. The deferred compensation plan is
not funded and obligations thereunder represent general unsecured claims against
the general assets of the Funds. Deferring compensation has the same economic
effect as if the Non-Affiliated Trustee reinvested his or her compensation into
the Funds. Each fund in the Fund Complex (except Van Kampen Exchange Fund)
provides a retirement plan to its Non-Affiliated Trustees that provides
Non-Affiliated Trustees with compensation after retirement, provided that
certain eligibility requirements are met. Under the retirement plan, a
Non-Affiliated Trustee who is receiving compensation from the Funds prior to
such Non-Affiliated Trustee's retirement, has at least 10 years of service
(including years of service prior to adoption of the retirement plan) and
retires at or after attaining the age of 60, is eligible to receive a retirement
benefit per year for each of the 10 years following such retirement from the
Funds. Non-Affiliated Trustees retiring prior to the age of 60 or with fewer
than 10 years but more than 5 years of service may receive reduced retirement
benefits from the Funds.
Additional information regarding compensation and benefits for trustees of
each Fund is set forth below for the periods described in the notes accompanying
the table.
COMPENSATION TABLE
Fund Complex
-----------------------------------------------
Aggregate Compensation from: Aggregate Aggregate
--------------------------------- Pension or Estimated Total
New York Retirement Maximum Annual Compensation
New York Value Benefits Benefits from the before
Quality Municipal Accrued as Fund Complex Deferral from
Municipal Income Acquiring Part of Upon Fund
Name(1) Trust(2) Trust(3) Fund(4) Expenses(5) Retirement(6) Complex(7)
------- --------- --------- --------- ----------- ----------------- -------------
INDEPENDENT TRUSTEES
David C. Arch $2,084 $1,903 $2,243 $ 35,277 $147,500 $192,530
Jerry D. Choate 2,676 2,414 2,908 82,527 126,000 200,002
Rod Dammeyer 2,090 1,909 2,249 63,782 147,500 208,000
Linda Hutton Heagy 2,475 2,213 2,707 24,465 142,500 184,784
R. Craig Kennedy 2,676 2,414 2,908 16,911 142,500 200,002
Howard J Kerr 2,290 2,109 2,449 140,743 146,250 208,000
Jack E. Nelson 2,676 2,414 2,908 97,294 109,500 200,002
Hugo F. Sonnenschein 2,290 2,109 2,449 64,476 147,500 208,000
Suzanne H. Woolsey 2,676 2,414 2,908 58,450 142,500 200,002
INTERESTED TRUSTEE
Wayne W. Whalen(1) 2,290 2,109 2,449 72,001 147,500 208,000
------------------------------------
(1) Trustees not eligible for compensation are not included in the Compensation
Table. Mr. Whalen is an "interested person" (within the meaning of Section
2(a)(19) of the 1940 Act) of each Fund and certain other funds in the Fund
Complex. Theodore A. Myers retired as a member of the Board of Trustees of
each Fund and other funds in the Fund Complex on December 31, 2003. J. Miles
Branagan retired as a member of
S-10
the Board of Trustees of each Fund and other funds in the Fund Complex on
December 31, 2004.
(2) The amounts shown in this column represent the aggregate compensation before
deferral with respect to New York Quality Municipal Trust's fiscal year
ended October 31, 2004. The following trustees deferred compensation from
New York Quality Municipal Trust during the fiscal year ended October 31,
2004: Mr. Choate, $2,676; Mr. Dammeyer, $2,090; Ms. Heagy, $2,475; Mr.
Nelson, $2,676; Mr. Sonnenschein, $2,290; and Mr. Whalen, $2,290. The
cumulative deferred compensation (including interest) accrued with respect
to each trustee from New York Quality Municipal Trust as of October 31, 2004
is as follows: Mr. Choate, $3,549; Mr. Dammeyer, $41,620; Ms. Heagy, $3,395;
Mr. Nelson, $3,518; Mr. Sonnenschein, $36,473; and Mr. Whalen, $35,707. 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 New York Value Municipal Income Trust's fiscal year
ended October 31, 2004. The following trustees deferred compensation from
New York Value Municipal Income Trust during the fiscal year ended October
31, 2004: Mr. Choate, $2,414; Mr. Dammeyer, $1,909; Ms. Heagy, $2,213; Mr.
Nelson, $2,414; Mr. Sonnenschein, $2,109; and Mr. Whalen, $2,109. The
cumulative deferred compensation (including interest) accrued with respect
to each trustee from New York Value Municipal Income Trust as of October 31,
2004 is as follows: Mr. Choate, $3,206; Mr. Dammeyer, $39,861; Ms. Heagy,
$3,048; Mr. Nelson, $3,179; Mr. Sonnenschein, $34,966; and Mr. Whalen,
$34,055. The deferred compensation plan is described above the Compensation
Table.
(4) The amounts shown in this column represent the aggregate compensation before
deferral with respect to the Acquiring Fund's fiscal year ended October 31,
2004. The following trustees deferred compensation from the Acquiring Fund
during the fiscal year ended October 31, 2004: Mr. Choate, $2,908; Mr.
Dammeyer, $2,249; Ms. Heagy, $2,707; Mr. Nelson, $2,908; Mr. Sonnenschein,
$2,449; and Mr. Whalen, $2,449. The cumulative deferred compensation
(including interest) accrued with respect to each trustee from the Acquiring
Fund as of October 31, 2004 is as follows: Mr. Choate, $3,855; Mr. Dammeyer,
$43,107; Ms. Heagy, $3,706; Mr. Nelson, $3,822; Mr. Sonnenschein, $37,741;
and Mr. Whalen, $37,095. The deferred compensation plan is described above
the Compensation Table.
(5) The amounts shown in this column represent the sum of the retirement
benefits accrued by the operating funds in the Fund Complex for each of the
trustees for the funds' respective fiscal years ended in 2004. The
retirement plan is described above the Compensation Table.
(6) For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex for each year of the 10-year period
commencing in the year of such person's anticipated retirement. The
retirement plan is described above the Compensation Table.
(7) The amounts shown in this column represent the aggregate compensation paid
by all of the funds in the Fund Complex as of December 31, 2004 before
deferral by the trustees under the deferred compensation plan. Because the
funds in the Fund
S-11
Complex have different fiscal year ends, the amounts shown in this column
are presented on a calendar year basis.
BOARD COMMITTEES
The Board of Trustees of each Fund has the same three standing committees
(an audit committee, a brokerage and services committee and a governance
committee). Each committee is comprised solely of "Independent Trustees," which
is defined for purposes herein as trustees who: (1) are not "interested persons"
of the Funds as defined by the 1940 Act and (2) are "independent" of the Funds
as defined by the New York Stock Exchange, American Stock Exchange and Chicago
Stock Exchange listing standards.
Each Board's audit committee consists of Jerry D. Choate, Rod Dammeyer and
R. Craig Kennedy. In addition to being Independent Trustees as defined above,
each of these trustees also meets the additional independence requirements for
audit committee members as defined by the New York Stock Exchange, American
Stock Exchange and Chicago Stock Exchange listing standards. Each audit
committee makes recommendations to its Board of Trustees concerning the
selection of its Fund's independent registered public accounting firm, reviews
with such independent registered public accounting firm the scope and results of
its Fund's annual audit and considers any comments which the independent
registered public accounting firm may have regarding its Fund's financial
statements, books of account or internal controls. Each Board of Trustees has
adopted a formal written charter for its audit committee which sets forth the
audit committee's responsibilities. Each audit committee has reviewed and
discussed the financial statements of its Fund with management as well as with
the independent registered public accounting firm of the Fund, and discussed
with the independent registered public accounting firm the matters required to
be discussed under the Statement of Auditing Standards No. 61. Each audit
committee has received the written disclosures and the letter from the
independent registered public accounting firm required under Independence
Standards Board Standard No. 1 and has discussed with the independent registered
public accounting firm its independence. Based on this review, each audit
committee recommended to its Board of Trustees that its Fund's audited financial
statements be included in the Fund's annual report to shareholders for the most
recent fiscal year for filing with the SEC.
Each Board's brokerage and services committee consists of Linda Hutton
Heagy, Hugo F. Sonnenschein and Suzanne H. Woolsey. Each brokerage and services
committee reviews its Fund's allocation of brokerage transactions and
soft-dollar practices and reviews the transfer agency and shareholder servicing
arrangements with Investor Services.
Each Board's governance committee consists of David C. Arch, Howard J Kerr
and Jack E. Nelson. In addition to being Independent Trustees as defined above,
each of these trustees also meets the additional independence requirements for
nominating committee members as defined by the New York Stock Exchange, American
Stock Exchange and Chicago Stock Exchange listing standards. Each governance
committee identifies individuals qualified to serve as Independent Trustees on
its Board and on committees of the Board, advises its Board with respect to
Board composition, procedures and committees, develops and recommends to its
Board a set of corporate governance principles applicable to the Fund, monitors
corporate governance matters and makes recommendations to its Board, and acts as
the administrative committee with respect to Board policies and procedures,
committee policies and procedures and codes of ethics. The Independent
S-12
Trustees of each Fund select and nominate any other nominee Independent Trustees
for each Fund. While the Independent Trustees of each Fund expect to be able to
continue to identify from their own resources an ample number of qualified
candidates for each Board of Trustees as they deem appropriate, they will
consider nominations from shareholders to each Board. Nominations from
shareholders should be in writing and sent to the Independent Trustees of the
Funds at the Funds' offices at 1221 Avenue of the Americas, New York, New York
10020 or directly to the Independent Trustees at the address specified above for
each trustee.
During each Fund's last fiscal year, each Board of Trustees held 16
meetings. During each Fund's last fiscal year, the audit committee of each Board
held five meetings, the brokerage and services committee of each Board held four
meetings and the governance committee of each Board held five meetings.
SHARE OWNERSHIP
Excluding any deferred compensation balances as described in the
Compensation Table, as of December 31, 2004, the most recently completed
calendar year prior to the date of this Statement of Additional Information,
each trustee of New York Quality Municipal Trust, New York Value Municipal
Income Trust and the Acquiring Fund beneficially owned equity securities of each
such Fund and of all of the funds in the Fund Complex overseen by the trustee in
the dollar range amounts specified below.
2004 TRUSTEE BENEFICIAL OWNERSHIP OF SECURITIES
INDEPENDENT TRUSTEES
TRUSTEE
-----------------------------------------------------------------------------------------
ARCH CHOATE DAMMEYER HEAGY KENNEDY KERR NELSON SONNENSCHEIN WOOLSEY
-------- ------- -------- -------- -------- ------- ------- ------------ --------
Dollar range of equity securities
in New York Quality Municipal
Trust............................. none none none none none none none none none
Dollar range of equity securities
in New York Value Municipal Income
Trust............................. none none none none none none none none none
Dollar range of equity securities
in the Acquiring Fund............. none none none none none none none none none
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 New York Quality
Municipal Trust............................................ none none none
Dollar range of equity securities in New York Value
Municipal Income Trust..................................... none none none
Dollar range of equity securities in the Acquiring Fund..... none none none
Aggregate dollar range of equity securities in all
registered investment companies overseen by trustee in the
Fund Complex............................................... over over over
$100,000 $100,000 $100,000
S-13
Including deferred compensation balances (which are amounts deferred and
thus retained by the Funds as described in the Compensation Table), as of
December 31, 2004, the most recently completed calendar year prior to the date
of this Statement of Additional Information, each trustee of the Fund had in the
aggregate, combining beneficially owned equity securities and deferred
compensation of the Fund and of all of the funds in the Fund Complex overseen by
the trustee, the dollar range of amounts specified below.
2004 TRUSTEE BENEFICIAL OWNERSHIP AND DEFERRED COMPENSATION
INDEPENDENT TRUSTEES
TRUSTEE
--------------------------------------------------------------------------------------------
ARCH CHOATE DAMMEYER HEAGY KENNEDY KERR NELSON SONNENSCHEIN WOOLSEY
-------- -------- -------- -------- -------- -------- -------- ------------ --------
Dollar range of equity
securities and deferred
compensation in New York
Quality Municipal Trust........ none none none none none none none none none
Dollar range of equity
securities and deferred
compensation in New York Value
Municipal Income Trust......... none none none none none none none none none
Dollar range of equity
securities and deferred
compensation in the Acquiring
Fund........................... none none none none none none none none none
Aggregate dollar range of equity
securities and deferred
compensation in all registered
investment companies overseen
by trustee in Fund Complex..... $50,001- over over over over over over over $10,000-
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $50,001
INTERESTED TRUSTEES
TRUSTEE
------------------------------
MERIN POWERS WHALEN
----- ------ ------
Dollar range of equity
securities and deferred
compensation in New York
Quality Municipal Trust........ none none none
Dollar range of equity
securities and deferred
compensation in New York Value
Municipal Income Trust......... none none none
Dollar range of equity
securities and deferred
compensation in the Acquiring
Fund........................... none none none
Aggregate dollar range of equity
securities and deferred
compensation in all registered
investment companies overseen
by trustee in the Fund
Complex........................ over over over
$100,000 $100,000 $100,000
INVESTMENT ADVISORY AGREEMENT
Each Fund and the Adviser are parties to an investment advisory agreement
(each an "Advisory Agreement"). Under each Advisory Agreement, a Fund retains
the Adviser to manage the investment of such Fund's assets, including the
placing of orders for the purchase and sale of portfolio securities. The Adviser
obtains and evaluates economic, statistical and financial information to
formulate strategy and implement such Fund's investment objective. The Adviser
also furnishes offices, necessary facilities and equipment, provides
administrative services to such Fund, renders periodic reports to such Fund's
Board of Trustees and permits its officers and employees to serve without
compensation as trustees or officers of such Fund if elected to such positions.
A Fund, however, bears the costs of its day-to-day operations, including auction
agent fees, fees for broker-dealers participating in auctions of such Fund's
APS, custodian fees, legal and independent registered public accounting firm
fees, the costs of reports and proxies to shareholders,
S-14
compensation of trustees of such Fund (other than those who are affiliated
persons of Van Kampen Investments, the Adviser or the Administrator) and all
other ordinary business expenses not specifically assumed by the Adviser. Each
Advisory Agreement also provides that the Adviser shall not be liable to a Fund
for any actions or omissions in the absence of willful misfeasance, bad faith,
negligence or reckless disregard of its obligations and duties under such
Advisory Agreement.
Each Advisory Agreement may be continued from year to year if specifically
approved at least annually (a)(i) by a Fund's Board of Trustees or (ii) by a
vote of a majority of a Fund's outstanding voting securities and (b) by a vote
of a majority of the trustees who are not parties to the agreement or interested
persons of any such party by votes cast in person at a meeting called for such
purpose. Each Advisory Agreement provides that it shall terminate automatically
if assigned and that it may be terminated without penalty by either party on 60
days' written notice.
In approving each Advisory Agreement, the Board of Trustees of each Fund,
including the non-interested trustees, considered the nature, quality and scope
of the services provided by the Adviser, the performance, fees and expenses of a
Fund compared to other similar investment companies, the Adviser's expenses in
providing the services and the profitability of the Adviser and its affiliated
companies. The Board of Trustees of each Fund also reviewed the benefit to the
Adviser of receiving research paid for by Fund assets and the propriety of such
an arrangement and evaluated other benefits the Adviser derives from its
relationship with a Fund. The Board of Trustees of each Fund considered the
extent to which any economies of scale experienced by the Adviser are shared
with a Fund's shareholders, and the propriety of existing and alternative
breakpoints in a Fund's advisory fee schedule. The Board of Trustees of each
Fund considered comparative advisory fees of a Fund and other investment
companies at different asset levels. The Board of Trustees of each Fund reviewed
reports from third parties about the foregoing factors and considered changes,
if any, in such items since its previous approval. The Board of Trustees of each
Fund discussed the financial strength of the Adviser and its affiliated
companies and the capability of the personnel of the Adviser. The Board of
Trustees of each Fund reviewed the statutory and regulatory requirements for
approval of advisory agreements. The Board of Trustees of each Fund, including
the non-interested trustees, evaluated all of the foregoing and determined, in
the exercise of its business judgment, that approval of each Advisory Agreement
was in the best interests of the respective Fund and its shareholders.
ADVISORY FEES
FISCAL YEAR ENDED OCTOBER 31,
----------------------------------
2004 2003 2002
-------- ---------- ----------
The Adviser received the approximate advisory fees
from each Fund as follows:
New York Quality Municipal Trust................. $841,887 $ 848,311 $ 849,964
New York Value Municipal Income Trust............ 667,539 665,907 650,649
Acquiring Fund................................... 994,729 1,008,570 1,000,155
S-15
OTHER AGREEMENTS
ADMINISTRATIVE SERVICES AGREEMENT
Each Fund was a party to an administrative services agreement. The
administrative services provided by the Administrator to each Fund included
record keeping and reporting responsibilities with respect to each Fund's
portfolio and preferred shares and providing certain services to shareholders.
Prior to May 14, 2002, each Fund paid the Administrator a monthly administrative
services fee at the annual rate of 0.20% of the average net assets of each Fund.
Prior to June 1, 2004, each Fund paid the Administrator a monthly administrative
services fee at the annual rate of 0.05% of the average net assets of each Fund.
Effective June 1, 2004, the administrative services fee was reduced from 0.05%
to 0.00%. The administrative services agreement for each Fund was terminated
effective May 26, 2005.
ADMINISTRATIVE SERVICES FEES
FISCAL YEAR ENDED OCTOBER 31,
-------------------------------
2004 2003 2002
-------- -------- ---------
Van Kampen Funds Inc. received the approximate
administrative services fees from each Fund as
follows:
New York Quality Municipal Trust...................... $41,028 $70,692 $183,502
New York Value Municipal Income Trust................. 32,501 55,490 140,357
Acquiring Fund........................................ 48,501 84,047 215,806
ACCOUNTING SERVICES AGREEMENT
Each Fund has entered into an accounting services agreement pursuant to
which the Adviser provides accounting services to each Fund supplementary to
those provided by the custodian. Such services are expected to enable each Fund
to more closely monitor and maintain its accounts and records. Each Fund pays
all costs and expenses related to such services, including all salary and
related benefits of accounting personnel, as well as the overhead and expenses
of office space and the equipment necessary to render such services. Each Fund
shares together with the other Van Kampen funds in the cost of providing such
services with 25% of such costs shared proportionately based on the respective
number of classes of securities issued per fund and the remaining 75% of such
costs based proportionately on the respective net assets per fund.
ACCOUNTING SERVICES FEES
FISCAL YEAR ENDED OCTOBER 31,
------------------------------
2004 2003 2002
-------- -------- --------
The Adviser received the approximate accounting services
fees from each Fund as follows:
New York Quality Municipal Trust....................... $14,216 $15,339 $15,794
New York Value Municipal Income Trust.................. 13,346 13,899 15,257
Acquiring Fund......................................... 15,373 16,397 8,201
S-16
LEGAL SERVICES AGREEMENT
Each Fund and certain other Van Kampen funds have entered into legal
services agreements pursuant to which Van Kampen Investments provides legal
services, including without limitation, accurate maintenance of each fund's
minute books and records, preparation and oversight of each fund's regulatory
reports and other information provided to shareholders, as well as responding to
day-to-day legal issues on behalf of the funds. Payment by the funds for such
services is made on a cost basis for the salary and salary-related benefits,
including but not limited to bonuses, group insurance and other regular wages
for the employment of personnel. Of the total costs for legal services provided
to the funds, one half of such costs are allocated equally to each fund and the
remaining one half of such costs are allocated to specific funds based on
monthly time records.
LEGAL SERVICES FEES
FISCAL YEAR ENDED OCTOBER 31,
------------------------------
2004 2003 2002
-------- -------- --------
Van Kampen Investments received the approximate legal
services fees from each Fund as follows:
New York Quality Municipal Trust....................... $13,095 $13,794 $10,565
New York Value Municipal Income Trust.................. 13,303 13,349 9,884
Acquiring Fund......................................... 13,838 13,633 10,630
FUND MANAGEMENT
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
As of October 31, 2004, Dennis Pietrzak 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 Wimmel managed 36 registered investment
companies with a total of approximately $11.0 billion in assets; 0 pooled
investment vehicles other than registered investment companies; and 0 other
accounts.
As of October 31, 2004, John R. Reynoldson managed 33 registered investment
companies with a total of approximately $7.8 billion in assets; 0 pooled
investment vehicles other than registered investment companies; and 0 other
accounts.
Because the portfolio managers manage assets for other investment
companies, pooled investment vehicles, and/or other accounts (including
institutional clients, pension plans and certain high net worth individuals),
there may be an incentive to favor one client over another resulting in
conflicts of interest. For instance, the Adviser may receive fees from certain
accounts that are higher than the fee it receives from the Funds, or it may
receive a performance-based fee on certain accounts. In those instances, the
portfolio managers may have an incentive to favor the higher and/or
performance-based fee accounts over the Funds. The portfolio managers of the
Funds do not currently manage assets for other investment companies, pooled
investment vehicles or other accounts that charge a performance fee. The Adviser
has adopted trade allocation and other policies and procedures that it believes
are reasonably designed to address these and other conflicts of interest.
S-17
PORTFOLIO MANAGER COMPENSATION STRUCTURE
Portfolio managers receive a combination of base compensation and
discretionary compensation, comprised of a cash bonus and several deferred
compensation programs described below. The methodology used to determine
portfolio manager compensation is applied across all accounts managed by the
portfolio manager.
BASE SALARY COMPENSATION. Generally, portfolio managers receive base
salary compensation based on the level of their position with the Adviser.
DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio
managers may receive discretionary compensation.
Discretionary compensation can include:
- Cash Bonus;
- Morgan Stanley's Equity Incentive Compensation Program (EICP) awards -- a
mandatory program that defers a portion of discretionary year-end
compensation into restricted stock units or other awards based on Morgan
Stanley common stock that are subject to vesting and other conditions;
- Investment Management Deferred Compensation Plan (IMDCP) awards -- a
mandatory program that defers a portion of discretionary year-end
compensation and notionally invests it in designated funds advised by the
Adviser or its affiliates. The award is subject to vesting and other
conditions. Portfolio managers must notionally invest a minimum of 25% to
a maximum of 50% of the IMDCP deferral into a combination of the
designated funds they manage that are included in the IMDCP fund menu;
- Select Employees' Capital Accumulation Program (SECAP) awards -- a
voluntary program that permits employees to elect to defer a portion of
their discretionary year-end compensation and notionally invest the
deferred amount across a range of designated investment funds, including
funds advised by the Adviser or its affiliates, and
- Voluntary Equity Incentive Compensation Program (VEICP) awards -- a
voluntary program that permits employees to elect to defer a portion of
their discretionary year-end compensation to invest in Morgan Stanley
stock units.
Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:
- Investment performance. A portfolio manager's compensation is linked to
the pre-tax investment performance of the accounts managed by the
portfolio manager. Investment performance is calculated for one-, three-
and five-year periods measured against a fund's primary benchmark (as set
forth in the fund's prospectus), indices and/or peer groups. Generally,
the greatest weight is placed on the three- and five-year periods.
- Revenues generated by the investment companies, pooled investment
vehicles and other accounts managed by the portfolio manager.
S-18
- Contribution to the business objectives of the Adviser.
- The dollar amount of assets managed by the portfolio manager.
- Market compensation survey research by independent third parties.
- Other qualitative factors, such as contributions to client objectives.
- Performance of Morgan Stanley and Morgan Stanley Investment Management,
and the overall performance of the Global Investor Group, a department
within Morgan Stanley Investment Management that includes all investment
professionals.
Occasionally, to attract new hires or to retain key employees, the total
amount of compensation will be guaranteed in advance of the fiscal year end
based on current market levels. In limited circumstances, the guarantee may
continue for more than one year. The guaranteed compensation is based on the
same factors as those comprising overall compensation described above.
SECURITIES OWNERSHIP OF PORTFOLIO MANAGERS
As of each Fund's fiscal year end, none of the portfolio managers owned
equity securities in any of the Funds.
CODE OF ETHICS
The Funds, the Adviser, and the Administrator have adopted a Code of Ethics
(the "Code of Ethics") that sets forth general and specific standards relating
to the securities trading activities of their employees. The Code of Ethics does
not prohibit employees from acquiring securities that may be purchased or held
by the Funds, but is intended to ensure that all employees conduct their
personal transactions in a manner that does not interfere with the portfolio
transactions of the Funds or other Van Kampen funds, or that such employees take
unfair advantage of their relationship with the Funds. Among other things, the
Code of Ethics prohibits certain types of transactions absent prior approval,
imposes various trading restrictions (such as time periods during which personal
transactions may or may not be made) and requires quarterly reporting of
securities transactions and other reporting matters. All reportable securities
transactions and other required reports are to be reviewed by appropriate
personnel for compliance with the Code of Ethics. Additional restrictions apply
to portfolio managers, traders, research analysts and others who may have access
to nonpublic information about the trading activities of the Funds or other 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
S-19
responsible for the placement of each Fund's portfolio business, the policies
and practices in this regard are subject to review by each Fund's Board of
Trustees.
As most transactions made by a Fund are principal transactions at net
prices, a Fund generally incurs little or no brokerage costs. The portfolio
securities in which a Fund invests are normally purchased directly from the
issuer or in the over-the-counter market from an underwriter or market maker for
the securities. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market makers include a spread or markup to the dealer
between the bid and asked price. Sales to dealers are effected at bid prices. A
Fund may also purchase certain money market instruments directly from an issuer,
in which case no commissions or discounts are paid, or may purchase and sell
listed securities on an exchange, which are effected through brokers who charge
a commission for their services.
The Adviser is responsible for placing portfolio transactions and does so
in a manner deemed fair and reasonable to each Fund and not according to any
formula. The primary consideration in all portfolio transactions is prompt
execution of orders in an effective manner at the most favorable price. In
selecting broker-dealers and in negotiating prices and any brokerage commissions
on such transactions, the Adviser considers the firm's reliability, integrity
and financial condition and the firm's execution capability, the size and
breadth of the market for the security, the size of and difficulty in executing
the order, and the best net price. There are many instances when, in the
judgment of the Adviser, more than one firm can offer comparable execution
services. In selecting among such firms, consideration may be given to those
firms which supply research and other services in addition to execution
services. The Adviser is authorized to pay higher commissions to brokerage firms
that provide it with investment and research information than to firms which do
not provide such services if the Adviser determines that such commissions are
reasonable in relation to the overall services provided. No specific value can
be assigned to such research services which are furnished without cost to the
Adviser. Since statistical and other research information is only supplementary
to the research efforts of the Adviser and still must be analyzed and reviewed
by its staff, the receipt of research information is not expected to reduce its
expenses materially. The investment advisory fee is not reduced as a result of
the Adviser's receipt of such research services. Services provided may include
(a) furnishing advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; (b) furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (c) effecting
securities transactions and performing functions incidental thereto (such as
clearance, settlement and custody). Research services furnished by firms through
which a 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.
S-20
The Adviser may place portfolio transactions at or about the same time for
other advisory accounts, including other investment companies. The Adviser seeks
to allocate portfolio transactions equitably whenever concurrent decisions are
made to purchase or sell securities for a Fund and another advisory account. In
some cases, this procedure could have an adverse effect on the price or the
amount of securities available to a Fund. In making such allocations among a
Fund and other advisory accounts, the main factors considered by the Adviser are
the respective sizes of such Fund and other advisory accounts, the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and opinions of the persons responsible
for recommending the investment.
Certain broker-dealers, through which a Fund may effect securities
transactions, are affiliated persons (as defined in the 1940 Act) of a Fund or
affiliated persons of such affiliates, including Morgan Stanley or its
subsidiaries. Each Fund's Board of Trustees has adopted certain policies
incorporating the standards of Rule 17e-1 issued by the SEC under the 1940 Act
which require that the commissions paid to affiliates of the Fund must be
reasonable and fair compared to the commissions, fees or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time.
The rule and procedures also contain review requirements and require the Adviser
to furnish reports to the trustees and to maintain records in connection with
such reviews. After consideration of all factors deemed relevant, the trustees
will consider from time to time whether the advisory fee for each Fund will be
reduced by all or a portion of the brokerage commission paid to affiliated
brokers.
Unless otherwise disclosed below, the Funds paid no commissions to
affiliated brokers during the last three fiscal years. The Funds paid the
following commissions to brokers during the fiscal years shown:
AFFILIATED BROKERS
ALL BROKERS MORGAN STANLEY DW INC.
----------- ----------------------
NEW YORK QUALITY MUNICIPAL TRUST
Commissions Paid:
Fiscal year ended October 31,
2004.............................. -0- -0-
Fiscal year ended October 31,
2003.............................. -0- -0-
Fiscal year ended October 31,
2002.............................. -0- -0-
NEW YORK VALUE MUNICIPAL INCOME TRUST
Commissions Paid:
Fiscal year ended October 31,
2004.............................. -0- -0-
Fiscal year ended October 31,
2003.............................. -0- -0-
Fiscal year ended October 31,
2002.............................. -0- -0-
ACQUIRING FUND
Commissions Paid:
Fiscal year ended October 31,
2004.............................. -0- -0-
Fiscal year ended October 31,
2003.............................. -0- -0-
Fiscal year ended October 31,
2002.............................. -0- -0-
S-21
During the fiscal year ended October 31, 2004, none of the Funds paid
brokerage commissions to brokers selected primarily on the basis of research
services provided to the Adviser.
ADDITIONAL INFORMATION
RELATING TO AUCTION PREFERRED SHARES OF THE ACQUIRING FUND
The following is a brief description of the terms of the Acquiring Fund APS
prior to the completion of the Reorganizations. The Acquiring Fund is referred
to throughout this section as the "Fund." This description does not purport to
be complete and is subject to and qualified in its entirety by reference to the
Fund's Declaration of Trust, including the Certificate of Vote establishing and
fixing the rights and preferences of the APS, attached hereto as Appendix C (the
"Certificate of Vote" and, together with the Fund's Declaration of Trust, the
"APS Provisions"). For purposes of this section, capitalized terms not otherwise
defined herein have the meanings ascribed to them in the Certificate of Vote.
APS issued in connection with the Reorganizations will be governed by the
Certificate of Vote of the Acquiring Fund, which, upon completion of the
Reorganizations, will be amended to reflect the creation of new series and the
issuance of additional APS.
GENERAL
The Declaration of Trust currently authorizes the issuance of an unlimited
number of common shares and 100,000,000 preferred shares of beneficial interest,
par value $.01 per share (which may be issued from time to time in such series
and with such designations, preferences and other rights, qualifications,
limitations and restrictions as are determined in a resolution of the Board of
Trustees of the Fund). Under the APS Provisions, the Fund is currently
authorized to issue up to 2,400 APS. All shares of each series of APS will have
a liquidation preference of $25,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared). The shares
of each series of APS will 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 liquidation. So long as either
Moody's or S&P is rating the shares of any series of APS, the Fund may, without
the vote of the holders of APS, issue additional series of Preferred Shares,
including APS, subject to applicable provisions of the 1940 Act and to
continuing compliance with the 1940 Act APS Asset Coverage and the APS Basic
Maintenance Amount, provided that (1) any such additional series ranks on a
parity with the then Outstanding APS as to the payment of dividends and the
distribution of assets upon liquidation and (2) the Fund obtains written
confirmation from Moody's or S&P, or both, as the case may be, that the issuance
of any such additional series would not impair the rating then assigned by such
rating agency to the APS.
DIVIDENDS AND DIVIDEND PERIODS
Dividends on shares of each series of APS will accumulate at the Applicable
Rate per annum will be payable, when, as and if declared by the Board of
Trustees of the Fund out of funds legally available therefor. Dividend Periods
shall be 7 days for each series of APS. The Fund, subject to certain conditions,
may designate any Dividend Period as a Special
S-22
Dividend Period, which shall be such number of consecutive days or whole years
as the Board of Trustees shall specify, subject to certain exceptions.
Dividends will be paid through the Securities Depository (The Depository
Trust Company or any successor) on each Dividend Payment Date in accordance with
its normal procedures, which now provide for it to distribute dividends in
next-day funds to Agent Members, who in turn are expected to distribute such
dividend payments to the persons for whom they are acting as agents. Each of the
initial Broker Dealers, however, has indicated to the Fund that such
Broker-Dealer or one of its affiliates will make such dividend payments
available in same-day funds on each Dividend Payment Date to customers that use
such Broker-Dealer or such affiliate as Agent Member.
For each Dividend Period, the dividend rate for shares of each series of
APS will be the Applicable Rate per annum that the Auction Agent (Bankers Trust
Company or any successor) advises the Fund results from an Auction, except as
provided below. The dividend rate that results from an Auction for a series of
APS will not be greater than the Maximum Rate, which is:
(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,
the product of (1) the "AA" Composite Commercial Paper Rate on such Auction
Date for the next Rate Period of such series and (2) the Applicable
Percentage on such Auction Date, unless such series of APS has or had a
Special Dividend Period (other than a Special Dividend Period of 28 days or
less) and an Auction at which Sufficient Clearing Bids existed has not yet
occurred for a Minimum Dividend Period for such series (28 days for each
series of APS) after such Special Dividend Period, in which case the higher
of:
(A) the dividend rate on shares of such series of APS for the
then-ending Rate Period, and
(B) the product of (x) the higher of (I) 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 longer, and (II) 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 longer and (y) 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 days, the product of (1) the highest 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 longer, (y) the "AA" Composite Commercial Paper Rate
on such Auction Date for the Special Dividend Period of such series 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
S-23
year or longer, and (z) the "AA" Composite Commercial Paper Rate on such
Auction Date for a Minimum Dividend Period and (2) the Applicable
Percentage on such Auction Date.
The applicable "AA" Composite Commercial Paper Rates and Treasury Rates
will be the rates announced on such Auction Date for the Business Day
immediately prior to such Auction Date.
The "Applicable Percentage" will be a percentage, determined as set forth
below, based on the prevailing rating of the APS in effect at the close of
business on the Business Day next preceding such Auction Date:
APPLICABLE
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 that is taxable for federal income tax purposes to
the APS prior to any Auction, for purposes of determining the Maximum Rate with
respect to such Auction 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,
however, that the Applicable Percentage shall be divided in the foregoing manner
only to the extent that the portion of the dividend on the APS for such Rate
Period that represents the allocation of taxable income to the APS. If the APS
are rated by only one rating agency, such rating will be the prevailing rating.
If the ratings for the APS are split between two of the foregoing categories,
the lower rating will determine the prevailing rating.
If an Auction for any Dividend Period of any series of APS is not held for
any reason or if the Fund fails to pay in a timely manner to the Auction Agent
the full amount of any dividend on, or Redemption Price of, shares of any series
of APS and such failure has not been cured as set forth below prior to any
succeeding Dividend Period thereof, then, subject to the next paragraph, the
dividend rate on the shares of such series for any such Dividend Period will be
the Maximum Rate for such series on the Auction Date for such Dividend Period.
If the Fund fails to pay in a timely manner to the Auction Agent the full
amount of any dividend on, or the Redemption Price of, any shares of any series
of APS during any Rate Period thereof (other than any Special Dividend Period
consisting of four or more Dividend Periods or any Rate Period succeeding any
Special Dividend Period consisting of four or more Dividend Periods during which
such a failure occurred that has not been cured), and, prior to 12:00 Noon on
the third Business Day next succeeding the date on which such failure occurred,
such failure shall not have been cured or the Fund shall not have paid a late
charge, then Auctions for such series will be suspended until such failure
S-24
is so cured and the dividend rate for such shares of APS for each Dividend
Period thereof commencing after such failure to and including the Dividend
Period, if any, during which such failure is so cured shall be a rate per annum
equal to the Maximum Rate on the Auction Date for each such Dividend Period (but
with the prevailing rating for such shares, for purposes of determining such
Maximum Rate, being deemed to be "Below "ba3"/BB-"). If the Fund fails to pay in
a timely manner to the Auction Agent the full amount of any dividend on, or the
Redemption Price of, any shares of any series of APS during a Special Dividend
Period thereof consisting of four or more Dividend Periods, or during any
Dividend Period thereof succeeding any Special Dividend Period consisting of
four or more Dividend Periods during which such a failure occurred that has not
been cured, and such failure shall not have been cured, then Auctions for such
series will be suspended until such failure is so cured and the dividend rate
for such shares of APS for each Dividend Period thereof commencing after such
failure to and including the Dividend Period, if any, during which such failure
is so cured shall be a rate per annum equal to the Maximum Rate on the Auction
Date for each such 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 Fund, at its option, may designate any succeeding Dividend Period of
any series of APS as a Special Dividend Period which shall consist of such
number of days or whole years as the Board of Trustees shall specify; provided,
however, that such designation shall be effective only if (i) notice thereof
shall have been given as provided in the APS Provisions, (ii) any failure to pay
in a timely manner to the Auction Agent the full amount of any dividend on, or
the Redemption Price of, shares of such series of APS shall have been cured
(iii) Sufficient Clearing Bids 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, (iv) if the Fund shall have mailed a notice of
redemption with respect to any shares of such series, the Redemption Price with
respect to such shares shall have been deposited with the Auction Agent, and (v)
in the event the Fund wishes to designate any succeeding Dividend Period for
such series as a Special Dividend Period consisting of more than 28 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 to such series.
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 Auction Agent 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 is
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 APS (initially Cede & Co. as nominee of DTC) during such taxable year
at such holder's address as the same appears or last appeared on the share books
of the Fund. The Fund will, within 30 days after such notice is given to the
Auction Agent, pay to the Auction Agent (who will then distribute to such
holders of shares of APS), out of funds legally available therefor, an amount
equal to the aggregate Additional Dividends (as defined
S-25
below) with respect to all Retroactive Taxable Allocations made to such holders
during the taxable year in question.
"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 as
described below) 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. State taxes imposed on the Additional Dividends, however, may
reduce the amount of after tax cash a holder would have had if there were no
Retroactive Taxable Allocation. 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.
THE AUCTIONS
On each Auction Date for each series of APS (the Business Day prior to the
beginning of each Rate Period for such series), each Existing Holder may submit
Orders through a Broker-Dealer to the Auction Agent as follows:
Hold Order: indicating its desire to hold without regard to the
Applicable Rate for the next Rate Period.
Bid: indicating its desire to sell if the Applicable Rate for
the next Rate Period is less than the rate specified in
such Bid.
Sell Order: indicating its desire to sell without regard to the
Applicable Rate for the next Rate Period.
An Existing Holder may submit different types of Orders in an Auction with
respect to shares of APS then held by such Existing Holder. An Existing Holder
that offers to purchase additional shares of APS is, for purposes of such offer,
treated as a Potential Holder as described below. Bids of Existing Holders with
rates higher than the Maximum Rate on the Auction Date will be treated as Sell
Orders. A Hold Order will be deemed to have been submitted on behalf of an
Existing Holder if an Order is not submitted on behalf of such Existing Holder
for any reason, including the failure of a Broker-Dealer to submit such Existing
Holder's Order to the Auction Agent.
Potential Holders of shares of any series of APS may submit Bids in which
they will offer to purchase shares of such series of APS if the Applicable Rate
for the next Rate Period is not less than the rate specified in such Bid. A Bid
by a Potential Holder specifying a rate higher than the Maximum Rate will not be
accepted.
In normal circumstances, whenever the Fund intends to include any net
capital gains or other income that is taxable for federal income tax purposes in
any dividend on shares
S-26
of any series of 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.
If Sufficient Clearing Bids exist (that is, the number of shares of a
particular series of APS subject to Bids by Potential Holders with rates equal
to or lower than the Maximum Rate is at least equal to the number of shares of
such series of APS subject to Sell Orders by Existing Holders), the Applicable
Rate for such series will be the lowest rate specified in the Submitted Bids
which, taking into account such rate and all lower rates bid by Existing Holders
and Potential Holders, would result in Existing Holders and Potential Holders
owning all the shares of such series of APS available for purchase in the
Auction. If Sufficient Clearing Bids do not exist, the Applicable Rate will be
the Maximum Rate on the Auction Date, and, in such event, Existing Holders that
have submitted Sell Orders may not be able to sell in such Auction all shares of
such series of APS subject to such Sell Orders. If all Existing Holders of
shares of such series of APS submit or are deemed to have submitted Hold Orders,
the Applicable Rate will be the product of (i) (I) the "AA" Composite Commercial
Paper Rate on such Auction Date for the Rate Period for which the Auction is
held, if such Rate Period is less than one year or (2) the Treasury Rate on such
Auction Date for such Rate Period, if such Rate Period is one year or longer and
(ii) 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 that is 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 will be the rate
described in the preceding clause (i) (1) or (2), as applicable, without being
multiplied by the factor set forth in the preceding clause (ii).
The Auction Procedures include a pro rata allocation of shares for purchase
and sale, which may result in an Existing Holder continuing to hold or selling,
or a Potential Holder purchasing, a number of shares of APS that is fewer than
the number of shares of APS specified in its Order.
A Bid placed by an Existing Holder specifying a rate greater than the
Applicable Rate determined in the Auction or a Sell Order shall constitute an
irrevocable offer to sell the shares of such series of APS subject thereto, in
each case at a price per share equal to $25,000. A Bid placed by a Potential
Holder shall constitute an irrevocable offer to purchase the shares of such
series of APS subject thereto at a price per share equal to $25,000 if the rate
specified in such Bid is less than or equal to the Applicable Rate determined in
the Auction. Settlement of purchases and sales will be made on the next Business
Day (also a Dividend Payment Date) after the Auction Date through the Securities
Depository. Purchasers will make payment through their Agent Members in same-day
funds to the Securities Depository against delivery to their respective Agent
Members. The Securities Depository will make payment to the sellers' Agent
Members in
S-27
accordance with the Securities Depository's normal procedures, which now provide
for payment against delivery by their Agent Members in same-day funds.
ASSET MAINTENANCE
Under the APS Provisions, the Fund must maintain (i) assets having in the
aggregate a Discounted Value at least equal to the APS Basic Maintenance Amount,
and (ii) 1940 Act APS Asset Coverage of at least 200%. The Discount Factors and
guidelines for calculating the Discounted Value of the Fund's portfolio for
purposes of determining whether the APS Basic Maintenance Amount has been
satisfied have been established by Moody's and S&P in connection with the Fund's
receipt of ratings on the shares of each series of APS on their Date of Original
Issue of "aaa" from Moody's and AAA from S&P. So long as any of the APS are
Outstanding and S&P is rating the APS, the Fund will be required under the APS
Provisions to maintain as of each Valuation Date certain Dividend Coverage
Assets with a value not less than the Dividend Coverage Amount (the "Minimum
Liquidity Level").
MANDATORY REDEMPTION
If the APS Basic Maintenance Amount or the 1940 Act APS Asset Coverage is
not maintained or restored as specified, the APS will be subject to mandatory
redemption on a date specified by the Board of Trustees, out of funds legally
available therefor, at the redemption price of $25,000 per share plus an amount
equal to accumulated but unpaid dividends thereon (whether or not earned or
declared) to the date fixed for redemption. Any such redemption will be limited
to the number of APS necessary to restore the APS Basic Maintenance Amount or
the 1940 Act APS Asset Coverage, as the case may be.
OPTIONAL REDEMPTION
Except as described in the APS Provisions, shares of each series of APS are
redeemable, in whole or in part, at the option of the Fund, on the next
succeeding scheduled Dividend Payment Date applicable to the shares of such
series of APS called for redemption, out of funds legally available therefor, at
the Optional Redemption Price of $25,000 per share plus (in the case of a
Special Dividend Period only) a premium, if any, resulting from the designation
of a Premium Call Period, plus an amount equal to dividends thereon (whether or
not earned or declared) accumulated but unpaid to the date fixed for redemption;
provided that during a Special Dividend Period of 365 days or more no share of
such series of APS will be subject to optional redemption during any Non-Call
Period to which such series of APS may be subject.
LIQUIDATION PREFERENCE
The liquidation preference of the shares of each series of APS is $25,000
per share plus accumulated but unpaid dividends, if any, thereon (whether or not
earned or declared).
S-28
VOTING RIGHTS
The 1940 Act requires that the holders of APS, voting as a separate class,
have the right to elect at least two Trustees at all times and to elect a
majority of the Trustees at any time that two years' dividends on the APS are
unpaid. The holders of APS will vote as a separate class or classes on certain
other matters as required under the APS Provisions, the 1940 Act and
Massachusetts law. In addition, each series of APS may vote as a separate series
under certain circumstances.
MASTER PURCHASER'S LETTER
Each prospective purchaser of shares of any series of APS or its
Broker-Dealer will be required to sign and deliver a Master Purchaser's Letter
to the Auction Agent in which such prospective purchaser or its Broker-Dealer
will agree, among other things, that (i) dispositions of shares of such series
of APS may be made only pursuant to a Bid or a Sell Order placed in an Auction,
or to or through a Broker-Dealer or to a person that has delivered a signed
Master Purchaser's Letter to the Auction Agent, provided that in the case of all
transfers other than those pursuant to Auctions, the Existing Holder of the
shares so transferred, its Agent Member or its Broker-Dealer advises the Auction
Agent of such transfer, and (ii) ownership of shares of such series of APS will
be maintained in book entry form by the Securities Depository for the account of
such prospective purchaser's Agent Member, which in turn will maintain records
of such prospective purchaser's beneficial ownership.
Each prospective purchaser should ask its Broker-Dealer whether such
prospective purchaser should sign a Master Purchaser's Letter. If the
Broker-Dealer submits Orders for such prospective purchaser listing the
Broker-Dealer as the Existing Holder or the Potential Holder, a Master
Purchaser's Letter signed by such prospective purchaser may not be required.
Execution by a prospective purchaser or its Broker-Dealer of a Master
Purchaser's Letter is not a commitment to purchase shares of APS in the offering
being made by this Prospectus or in any Auction, but is a condition precedent to
such purchaser's purchasing shares of APS. In addition, acceptance of a Master
Purchaser's Letter is not a guarantee that shares of APS will be available for
purchase.
The Broker-Dealers may maintain a secondary trading market in the APS
outside of Auctions. They have no obligation to do so, however, and there can be
no assurance that a secondary market for the APS will develop or, if it does
develop, that it will provide holders with liquidity of investment. The APS will
not be registered on any stock exchange or on the National Association of
Securities Dealers Automated Quotations system.
RATING AGENCY GUIDELINES
The Fund intends that, so long as shares of any series of APS are
Outstanding, the composition of its portfolio will reflect guidelines
established by Moody's and S&P in connection with the Fund's receipt on the Date
of Original Issue of the shares of each series of APS of ratings of "aaa" from
Moody's and AAA from S&P. Moody's and S&P, nationally recognized independent
rating agencies, issue ratings for various securities reflecting their perceived
creditworthiness of such securities. The Fund will pay certain fees
S-29
to Moody's and S&P for rating shares of the APS. The guidelines have been
developed by Moody's and S&P in connection with other issuances of asset-backed
and similar securities, including debt obligations and adjustable 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 sufficiently varied 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 the Fund in
order to satisfy current requirements necessary for Moody's and S&P to issue the
above-described ratings for shares of each series of APS, which ratings are
generally relied upon by institutional investors in purchasing such securities.
In the context of a closed-end investment company such as the Fund, therefore,
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. A rating agency's guidelines will
apply to shares of any series of APS only so long as such rating agency is
rating such shares.
The Fund intends to maintain a Discounted Value for its portfolio at least
equal to the APS Basic Maintenance Amount and, in addition, so long as S&P is
rating the shares of any series of APS, the Fund intends to maintain a Minimum
Liquidity Level. Moody's and S&P have each established separate guidelines for
determining Discounted Value. To the extent any particular portfolio holding
does not satisfy the applicable rating agency's guidelines, all or a portion of
such holding's value will not be included in the calculation of Discounted Value
(as defined by such rating agency). The Moody's and S&P guidelines do not impose
any limitations on the percentage of Fund assets that may be invested in
holdings not eligible for inclusion in the calculation of the Discounted Value
of the Fund's portfolio. The amount of such assets included in the portfolio at
any time may vary depending upon the rating, diversification and other
characteristics of the Eligible Assets included in the portfolio, although it is
not anticipated that in the normal course of business the value of such assets
would exceed 20% of the Fund's total assets.
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 Fund 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.
Upon any failure to maintain the required Discounted Value, the Fund will
seek to alter the composition of its portfolio to reattain the APS Basic
Maintenance Amount on or prior to the APS Basic Maintenance Cure Date, thereby
incurring additional transaction costs and possible losses and/or gains on
dispositions of portfolio securities. To the extent any such failure is not
cured in a timely manner, shares of each series of APS will be subject to
redemption if either Moody's or S&P is rating such shares.
S-30
The Fund may, but is not required to, adopt any modifications to these
guidelines that may hereafter be established by Moody's and S&P. Failure to
adopt any such modifications, however, may result in a change in the ratings
described above or a withdrawal of ratings altogether. In addition, any rating
agency providing a rating for the shares of any series of APS may, at any time,
change or withdraw any such rating. As set forth in the APS Provisions, the
Board of Trustees may, without Shareholder approval, modify certain definitions
or policies which have been adopted by the Fund pursuant to the rating agency
guidelines, provided the Board of Trustees has obtained written confirmation
from Moody's and S&P, as appropriate, that any such change would not impair the
ratings then assigned by Moody's and S&P to any series of APS. A rating agency's
guidelines will apply to shares of any series of APS only so long as such rating
agency is rating such shares.
The ratings on any series of the APS are not recommendations to purchase,
hold or sell shares of any series of APS, inasmuch as the ratings do not comment
as to market price or suitability for a particular investor nor do the rating
agency guidelines described above address the likelihood that a holder of shares
of any series of APS will be able to sell such shares in an Auction. The ratings
are based on current information furnished to Moody's and S&P by the Fund and
the Adviser, and information obtained from other sources. The ratings may be
changed, suspended or withdrawn as a result of changes in, or the unavailability
of, such information. The Fund's Common Shares have not been rated by a
nationally recognized statistical rating organization.
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 D to
this Statement of Additional Information. Information on how each Fund voted
proxies relating to portfolio securities during the most recent twelve-month
period ended June 30 is available without charge, upon request, by calling (800)
341-2929 or by visiting our web site at www.vankampen.com. This information is
also available on the SEC's web site at http://www.sec.gov.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
An independent registered public accounting firm for the Funds performs an
annual audit of each Fund's financial statements. Each Fund's Board of Trustees
has engaged Deloitte & Touche LLP, located at 180 North Stetson Avenue, Chicago,
Illinois 60601, to be each Fund's independent registered public accounting firm.
S-31
FINANCIAL STATEMENTS
Incorporated herein by reference in their respective entireties are (i) the
audited financial statements of the Acquiring Fund for the fiscal year ended
October 31, 2004, as included in Appendix E hereto, (ii) the unaudited financial
statements of the Acquiring Fund for the six-month period ended April 30, 2005,
as included in Appendix F hereto, (iii) the audited financial statements of New
York Quality Municipal Trust for the fiscal year ended October 31, 2004, as
included in Appendix G hereto, (iv) the unaudited financial statements of New
York Quality Municipal Trust for the six-month period ended April 30, 2005, as
included in Appendix H hereto, (v) the audited financial statements of New York
Value Municipal Income Trust for the fiscal year ended October 31, 2004, as
included in Appendix I hereto, and (vi) the unaudited financial statements of
New York Value Municipal Income Trust for the six-month period ended April 30,
2005, as included in Appendix J hereto.
PRO FORMA FINANCIAL STATEMENTS
Set forth in Appendix K 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 October 31, 2004, (ii)
Pro Forma Condensed Statement of Operations for the one year period ended
October 31, 2004 and (iii) Pro Forma Portfolio of Investments at October 31,
2004.
S-32
APPENDIX A
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
In order to consummate the Reorganization and in consideration of the
promises and the covenants and agreements hereinafter set forth, and intending
to be legally bound, Van Kampen XXXXXX, a registered closed-end investment
company, File No. 811-XXXX (the "Target Fund") and Van Kampen XXXXXX (the
"Acquiring Fund"), a registered closed-end investment company, File No.
811-XXXX, each hereby agree as follows:
1. Representations and Warranties of the Acquiring Fund.
The Acquiring Fund represents and warrants to, and agrees with, the
Target Fund that:
(a) The Acquiring Fund is a trust, with transferable shares, duly
organized, validly existing and in good standing in conformity
with the laws of its jurisdiction of organization, and has the
power to own all of its assets and to carry out this
Agreement. The Acquiring Fund has all necessary federal, state
and local authorizations to carry on its business as it is now
being conducted and to carry out this Agreement.
(b) The Acquiring Fund is duly registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as a
[non-]diversified, closed-end management investment company
and such registration has not been revoked or rescinded and is
in full force and effect. The Acquiring Fund has elected and
qualified for the special tax treatment afforded regulated
investment companies ("RICs") under Section 851 of the
Internal Revenue Code (the "Code") at all times since its
inception and intends to continue to so qualify until
consummation of the reorganization contemplated hereby (the
"Reorganization") and thereafter.
(c) The Target Fund has been furnished with the Acquiring Fund's
Annual Report to Shareholders for the fiscal year ended XXXX,
2004, and the audited financial statements appearing therein,
having been audited by 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 3(e) of this Agreement), will be furnished to the
Target Fund, at or prior to the Closing Date (as defined in
Section 7(a) herein), for the purpose of determining the
number of Acquiring Fund Common Shares and Acquiring Fund APS
to be issued pursuant to Section 3(a) of this Agreement; each
will fairly present the financial position of the Acquiring
Fund as of the Valuation Time in conformity with generally
accepted accounting principles applied on a consistent basis.
(e) The Acquiring Fund has full power and authority to enter into
and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement has been
duly authorized by all necessary action of its Board of
Trustees, and this Agreement constitutes a valid and binding
contract enforceable in accordance with its terms, subject to
the effects of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar
A-1
laws relating to or affecting creditors' rights generally and
court decisions with respect thereto.
(f) There are no material legal, administrative or other
proceedings pending or, to the knowledge of the Acquiring
Fund, threatened against it which assert liability on the part
of the Acquiring Fund or which materially affect its financial
condition or its ability to consummate the Reorganization. The
Acquiring Fund is not charged with or, to the best of its
knowledge, threatened with any violation or investigation of
any possible violation of any provisions of any federal, state
or local law or regulation or administrative ruling relating
to any aspect of its business.
(g) The Acquiring Fund is not obligated under any provision of its
Declaration of Trust, as amended, or its by-laws, as amended,
and is not a party to any contract or other commitment or
obligation, and is not subject to any order or decree which
would be violated by its execution of or performance under
this Agreement, except insofar as the Funds have mutually
agreed to amend such contract or other commitment or
obligation to cure any potential violation as a condition
precedent to the Reorganization.
(h) There are no material contracts outstanding to which the
Acquiring Fund is a party that have not been disclosed in the
N-14 Registration Statement (as defined in subsection (k)
below) or that will not otherwise be disclosed to the Target
Fund prior to the Valuation Time.
(i) The Acquiring Fund has no known liabilities of a material
amount, contingent or otherwise, other than those shown on its
statements of assets, liabilities and capital referred to in
subsection (c) above, those incurred in the ordinary course of
its business as an investment company, and those incurred in
connection with the Reorganization. As of the Valuation Time,
the Acquiring Fund will advise the Target Fund in writing of
all known liabilities, contingent or otherwise, whether or not
incurred in the ordinary course of business, existing or
accrued as of such time, except to the extent disclosed in the
financial statements referred to in subsection (c) above.
(j) No consent, approval, authorization or order of any court or
government authority is required for the consummation by the
Acquiring Fund of the Reorganization, except such as may be
required under the Securities Act of 1933, as amended (the
"1933 Act"), the Securities Exchange Act of 1934, as amended
(the "1934 Act") and the 1940 Act or state securities laws
(which term as used herein shall include the laws of the
District of Columbia and Puerto Rico).
(k) The registration statement filed by the Acquiring Fund on Form
N-14, which includes the proxy statement of the Target Fund
and the Acquiring Fund with respect to the transactions
contemplated herein (the "Joint Proxy Statement/Prospectus"),
and any supplement or amendment thereto or to the documents
therein (as amended or supplemented, the "N-14 Registration
Statement"), on its effective date, at the time of the
shareholders' meetings referred to in Section 8(a) and Section
9(a) of this Agreement and at the Closing Date, insofar as it
relates to the Acquiring Fund, (i) complied or will comply in
all material respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act and the rules and regulations
thereunder and (ii) did not or will not contain any
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untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading; and the Joint
Proxy Statement/Prospectus included therein did not or will
not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the
representations and warranties in this subsection only shall
apply to statements in or omissions from the N-14 Registration
Statement made in reliance upon and in conformity with
information furnished by the Acquiring Fund for use in the
N-14 Registration Statement.
(l) The Acquiring Fund is authorized to issue an unlimited number
of common shares of beneficial interest, par value $.01 per
share (the "Acquiring Fund Common Shares"), and XXXX preferred
shares of beneficial interest, par value $.01 per share. The
Board of Trustees of the Acquiring Fund has designated XXXX
preferred shares as Auction Preferred Shares ("Acquiring Fund
APS"). Each outstanding Acquiring Fund Common Share and each
Acquiring Fund APS of the Acquiring Fund is fully paid and,
except as provided in Section 5.1 of the Acquiring Fund's
Declaration of Trust, nonassessable, and has full voting
rights.
(m) The Acquiring Fund Common Shares and the Acquiring Fund APS to
be issued to the Target Fund pursuant to this Agreement will
have been duly authorized and, when issued and delivered
pursuant to this Agreement, will be legally and validly issued
and will be fully paid and, except as provided in Section 5.1
of the Acquiring Fund's Declaration of Trust, nonassessable
and will have full voting rights, and no shareholder of the
Acquiring Fund will have any preemptive right of subscription
or purchase in respect thereof.
(n) At or prior to the Closing Date, the Acquiring Fund Common
Shares to be transferred to the Target Fund for distribution
to the shareholders of the Target Fund on the Closing Date
will be duly qualified for offering to the public in all
states of the United States in which the sale of shares of the
Funds presently are qualified, and there will be a sufficient
number of such shares registered under the 1933 Act and, as
may be necessary, with each pertinent state securities
commission to permit the transfers contemplated by this
Agreement to be consummated.
(o) At or prior to the Closing Date, the Acquiring Fund APS to be
transferred to the Target Fund on the Closing Date will be
duly qualified for offering to the public in all states of the
United States in which the sale of APS of the Target Fund
presently are qualified, and there are a sufficient number of
Acquiring Fund APS registered under the 1933 Act and with each
pertinent state securities commission to permit the transfers
contemplated by this Agreement to be consummated.
(p) At or prior to the Closing Date, the Acquiring Fund will have
obtained any and all regulatory, trustee and shareholder
approvals necessary to issue the Acquiring Fund Common Shares
and the Acquiring Fund APS to the Target Fund.
(q) The Acquiring Fund has filed, or intends to file, or has
obtained extensions to file, all federal, state and local tax
returns which are required to be filed by it, and has paid or
has obtained extensions to pay, all federal, state and local
taxes shown on said returns to be due and owing and all
assessments received by it, up to and including the taxable
year in which the Closing Date occurs. All tax liabilities of
the Acquiring Fund have been adequately provided for on its
books, and no tax deficiency or liability of the Acquiring
Fund has been asserted and no question with respect thereto
has been raised by the Internal Revenue Service or by any
state or local tax authority for taxes in excess of those
already paid, up to and including the taxable year in which
the Closing Date occurs.
(r) The Acquiring Fund has elected to qualify and has qualified as
a RIC as of and since its inception; has been a RIC under the
Code at all times since the end of its first taxable year when
it so qualified; qualifies and will continue to qualify as a
RIC under the Code; and has satisfied the distribution
requirements imposed by the Code for each of its taxable
years.
2. Representations and Warranties of the Target Fund.
The Target Fund represents and warrants to, and agrees with, the
Acquiring Fund that:
(a) The Target Fund is a trust, with transferable shares, duly
organized, validly existing and in good standing in conformity
with the laws of the jurisdiction of its organization, and has
the power to own all of its assets and to carry out this
Agreement. The Target Fund has all necessary federal, state
and local authorizations to carry on its business as it is now
being conducted and to carry out this Agreement.
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(b) The Target Fund is duly registered under the 1940 Act as a
[non-]diversified, closed-end management investment company,
and such registration has not been revoked or rescinded and is
in full force and effect. The Target Fund has elected and
qualified for the special tax treatment afforded RICs under
Section 851 of the Code at all times since its inception, and
intends to continue to so qualify through its taxable year
ending upon liquidation.
(c) As used in this Agreement, the term "Target Fund Investments"
shall mean (i) the investments of the Target Fund shown on the
schedule of its investments as of the Valuation Time furnished
to the Acquiring Fund; and (ii) all other assets owned by the
Target Fund or liabilities incurred as of the Valuation Time.
(d) The Target Fund has full power and authority to enter into and
perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement has been duly
authorized by all necessary action of its Board of Trustees
and this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws relating to or affecting
creditors' rights generally and court decisions with respect
thereto.
(e) The Acquiring Fund has been furnished with the Target Fund's
Annual Report to Shareholders for the fiscal year ended XXXX,
2004, and the audited financial statements appearing therein,
having been audited by 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;
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(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
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(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
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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
YEAR OF INITIAL ELECTION OR APPOINTMENT OF EACH TRUSTEE TO THE
BOARD OF TRUSTEES OF EACH FUND
B-1
The table below sets forth the year in which each of the trustees initially
was elected or appointed to the Board of Trustees of each Fund.
Fund Arch Choate Dammeyer Heagy Kennedy Kerr Merin Nelson Powers Sonnenschein Whalen Woolsey
---- ---- ------ -------- ----- ------- ---- ----- ------ ------ ------------ ------ -------
Van Kampen New 1991 2003 1991 2003 2003 1992 2003 2003 1999 1994 1991 2003
York Quality Trust
Van Kampen New 1993 2003 1993 2003 2003 1993 2003 2003 1999 1994 1993 2003
York Value Municipal
Income Trust
Van Kampen Trust for 1992 2003 1992 2003 2003 1993 2003 2003 1999 1994 1992 2003
Investment Grade New
York Municipals
B-2
APPENDIX C
CERTIFICATE OF VOTE OF TRUSTEES
ESTABLISHING PREFERRED SHARES
C-1
Federal Identification
No. 36-6981632
THE COMMONWEALTH OF MASSACHUSETTS
Office of the Massachusetts Secretary of State
Michael Joseph Connolly, Secretary
One Ashburton Place, Boston, Mass. 02108
CERTIFICATE OF VOTE OF TRUSTEES ESTABLISHING
PREFERRED SHARES
I, Ronald A. Nyberg, Secretary, of Van Kampen Merritt Trust
For Investment Grade New York Municipals (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 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 1,200 shares of its authorized preferred shares of
beneficial interest, par value $.01 per share ("Preferred Shares"), liquidation
preference of $50,000 per share, designated Auction Preferred Shares (the
"APS").
Second: The preferences, voting powers, qualifications, and
special or relative rights or privileges of the preferred shares of beneficial
interest are as follows:
DESIGNATION
APS: The 1,200 preferred shares of beneficial interest, $.01
par value, liquidation preference $50,000 per share, are hereby designated
"Auction Preferred Shares." Each share of APS shall be issued on June 10, 1992;
have an Applicable Rate for its Initial Dividend Period (which period shall
continue to and including Wednesday, January 20, 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
C-2
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 shall
constitute a separate series of Preferred Shares of the Fund, and each share of
APS shall be identical except as provided in Section 3 of Part I of this
Certificate of Vote.
No holder of APS shall have, solely by reason of being such a
holder 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. (b) No fractional APS shall be
issued.
(c) Any 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.
(d) The 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. (b) The Holder of any of the 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 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 any of
the APS shall accumulate at the Applicable Rate per annum from the Date of
Original Issue thereof.
(c) (i) Dividends shall be payable subject to subparagraph
(b) (ii) of this Section 2, 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 is scheduled to occur, dividends shall be payable on the
first Business Day next succeeding such Auction Date, subject to certain
exceptions, 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.
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After any Special Dividend Period, dividends on such 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 APS is scheduled to occur, dividends shall be payable on
the first Business Day next succeeding such Auction Date, subject in each case
to the options of the Fund to further designate from time to time any Subsequent
Dividend Period thereof as a Special Dividend Period.
(ii) In the case of dividends that would otherwise be
payable on a Sunday, Monday, 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 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 the APS, 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 APS 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.
(d) (i) The dividend rate on the 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 APS under "Designation," above. For each Subsequent
Dividend Period of any of
C-4
the APS outstanding thereafter, the dividend rate on such APS shall be equal
to the rate per annum that results from an Auction for such APS on the Auction
Date next preceding such Subsequent Dividend Period; provided, however, that if
an Auction for any Subsequent Dividend Period of any of the 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 APS for
any such Subsequent Dividend Period shall be the Maximum Rate (as defined
herein) for such APS on the Auction Date for such Subsequent Dividend Period;
provided, further, however, that if any Failure to Deposit shall have occurred
with respect to any of the 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
APS, 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 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 APS and (2) if such Failure to Deposit consisted
of the failure timely to pay to the Auction Agent the Redemption Price of 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, 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 be the
number of days for which such Failure to Deposit is not 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 APS to be redeemed. A
Failure to Deposit with respect to the 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 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 the
APS on any date on which dividends shall be payable on the APS shall be
computed by multiplying the respective Applicable Rate for such APS in
effect for such Dividend Period or Dividend Periods or part thereof for
which dividends
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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.
(e) Any dividend payment made on the APS shall first be
credited against the earliest accumulated but unpaid dividends due with respect
to such APS.
(f) 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 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 APS through the most recent
Dividend Payment Date for such APS. 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.
(g) 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.
(h) 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.
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3. Redemption. (b) (i) Upon giving a Notice of Redemption, as
provided below, the Fund at its option may redeem any of the 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 any of the APS
may not be redeemed in part if after such partial redemption fewer than 250
shares of such APS remain outstanding.
(ii) If fewer than all of the outstanding APS are to be
redeemed pursuant to subparagraph (a)(i) of this Section 3, the number of
APS to be redeemed shall be determined by the Board of Trustees, and such
shares shall be redeemed pro rata from the Holders of such APS 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
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case may be, pro rata among the 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 APS are to be
redeemed pursuant to this Section 3(a)(iv), the number of APS to be
redeemed shall be redeemed pro rata from the Holders of such shares in
proportion to the number of shares held by such Holders.
(c) 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 of the APS held by any Holder are to be redeemed, the Notice of
Redemption mailed to such Holder shall also specify the number of APS to be
redeemed from such Holder.
(d) Notwithstanding the provisions of paragraph (a) of this
Section 3, if any dividends on APS are in arrears, none of the APS shall be
redeemed unless all outstanding APS are simultaneously redeemed, and the Fund
shall not purchase or otherwise acquire any shares of such APS; provided,
however, that the foregoing shall not prevent the purchase or acquisition of all
outstanding 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 APS.
C-8
(e) 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 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.
(f) 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.
(g) 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.
(h) 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.
C-9
(i) 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. (b) The Fund, at
its option, may designate any succeeding Subsequent Dividend Period of the 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 clause (i) of paragraph (c) of this Section 4, (B) any Failure
to Deposit that shall have occurred with respect to the APS 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 APS 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 of the 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 APS 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
APS.
(c) If the Fund proposes to designate any succeeding
Subsequent Dividend Period of any of the 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 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.
(d) 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 deliver to the Auction Agent either:
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(i) a notice stating (A) that the Fund has determined
to designate the next succeeding Dividend Period 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, (D) that such Special
Dividend Period shall not commence if (1) on such Auction Date Sufficient
Clearing Bids 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 and (E) the
scheduled Dividend Payment Dates for such APS during such Special Dividend
Period; 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 APS)
and (2) S&P Eligible Assets (if S&P is then rating such APS) each at least
equal 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 APS
and that the next succeeding Dividend Period 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. (b) 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.
(c) 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
C-11
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 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.
(d) (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
C-12
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 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.
(e) (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 preference, 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
C-13
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.
(i) 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 (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 New York 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 Minimum 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 New York 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
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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 New York
Municipal Securities Sold
S&P Discount Factor
S&P Eligible Asset
S&P Exposure Period
Valuation Date
(f) 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.
(g) 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.
(h) 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 APS, voting separately as a class, is required with
respect to any matter that materially affects the APS 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
C-15
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.
6. Liquidation Rights. (b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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
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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 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. (b) 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.
(c) 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
C-17
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 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.
(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 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").
(e) 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 satisfy 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.
(f) 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
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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.
(g) 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 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
C-19
APS as to the payment of dividends and the distribution of assets upon
dissolution, liquidation or winding up), unless (i) full cumulative dividends on
the 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 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 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 Auction 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. (b) 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
C-20
securities; (B) the Fund may write covered call options on securities; and
(C) the Fund may write put options on securities. 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, and
(iii) 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 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
C-21
(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
(c) 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
(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 A1+ 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 contract
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
C-22
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
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:
(a) "'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
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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 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.
(b) "Accountant's Confirmation" shall have the meaning set
forth in paragraph (c) of Section 9 of this Part I.
(c) "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, New
York State and New York City 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 combined federal, New York State and New
York City individual income tax rate applicable to ordinary income or net
capital gains, as applicable (taking into account the federal income tax
deductibility of state and local taxes paid or incurred), or the maximum
marginal regular federal
C-24
corporate income tax rate, whichever is greater, in effect during the taxable
year in question.
(d) "Anticipation Notes" means the following New York
municipal securities: tax anticipation notes, revenue anticipation notes and tax
and revenue anticipation notes.
(e) "Applicable Rate" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(f) "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 the Fund's transactions in futures and options
and including any payables for New York 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.
(g) "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.
C-25
(h) "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.
(i) "Auction" shall mean each periodic implementation of
the Auction Procedures.
(j) "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 the APS so long as the Applicable Rate for such APS is
to be based on the results of an Auction.
(k) "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.
(l) "Auction Date," with respect to any Rate Period, shall
mean the Business Day next preceding the first day of such Rate Period;
initially Wednesday, January 20, 1993 and thereafter each July 20 and January
20, subject to change as provided therein.
(m) "Auction Procedures" shall mean the procedures for
conducting Auctions set forth in Part II hereof.
(n) "Board of Trustees" shall mean the Board of Trustees of
the Fund or any duly authorized committee thereof.
(o) "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.
(p) "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.
(q) "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.
(r) "Common Shares" shall mean the common shares of
beneficial interest, par value $.01 per share, of the Fund.
(s) "Cure Date" shall mean the APS Basic Maintenance Cure
Date or the 1940 Act Cure Date, as the case may be.
C-26
(t) "Date of Original Issue," with respect to the APS,
shall mean the date on which the Fund initially issued such APS.
(u) "Deposit Securities" shall mean cash and New York
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 New York municipal securities
shall be considered "Deposit Securities" only if they are also rated P-1, MIG-1
or VMIG-1 by Moody's.
(v) "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.
(w) "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 New York Municipal Securities Sold
which become due prior to the Dividend Payment Date and interest with respect to
New York municipal securities which is payable to the Fund prior to the Dividend
Payment Date.
(x) "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.
(y) "Dividend Payment Date," with respect to the APS, shall
mean any date on which dividends on such APS are payable pursuant to the
provisions of paragraph (b) of Section 2 of this Part I.
(z) "Dividend Period," with respect to the APS, shall mean
the period from and including the Date of Original Issue of such APS to but
excluding the initial Dividend Payment Date for such APS and any period
thereafter from and including one Dividend Payment Date for such APS to but
excluding the next succeeding Dividend Payment Date for such APS.
(bb) "Fund" shall mean Van Kampen Merritt Trust For
Investment Grade New York Municipals, a Massachusetts business trust, which is
the issuer of the APS.
(cc) "Failure to Deposit," with respect to the 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
C-27
APS, 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 of the APS or (B) on the Business
Day next preceding any redemption date in funds available on such redemption
date for such APS in The City of New York, New York, the Redemption Price to be
paid on such redemption date for the APS after notice of redemption is given
pursuant to paragraph (b) of Section 3 of this Part I.
(dd) "Holder," with respect to the APS, shall mean the
registered holder of such APS as the same appears on the share books of the
Fund.
(ee) "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.
(ff) "Initial Dividend Period," with respect to the 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 the APS.
(gg) "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.
(hh) "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.
(ii) "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.
(jj) "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).
(kk) "Master Purchaser's Letter" has the meaning specified
in Section 1 of Part II hereof.
C-28
(ll) "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.
(mm) "Minimum Liquidity Level" shall have meaning set forth
in Section 10 of this Part I.
(nn) "Minimum Dividend Period" shall mean with respect to
the APS, any Rate Period consisting of 28 Rate Period Days.
(oo) "Moody's" shall mean Moody's Investors Service, Inc.,
a Delaware corporation, and its successors.
(pp) "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 Aaa(1) Aa(1) A(1) Baa(1) Other(2) (V) MIG-1(1),(3),(4) SP-1+(3),(4)
--------------- ------ ----- ---- ------ -------- ----------------------------------
7 weeks.................... 151% 159% 168% 202% 229% 136% 148%
8 weeks or less but greater
than seven weeks........... 154 164 173 205 235 137 149
9 weeks or less but greater
than eight weeks........... 158 169 179 209 242 138 150
----------------------
(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 New York municipal securities so long as such New
York 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 New York municipal securities
will be 125% as long as such New York 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 New York Municipal
Securities Sold.
C-29
(qq) "Moody's Eligible Asset" shall mean cash, Receivables
for New York Municipal Securities Sold or a New York 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 New York 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
New York municipal securities of at least $10,000,000. New York municipal
securities issued by any one issuer and rated BBB by S&P may comprise no more
than 4% of total Moody's Eligible Assets; such BBB-rated New York municipal
securities, if any, together with any New York 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 New York
municipal securities, if any, together with any New York 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 New York municipal securities, if any, together with any New York
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 New York 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 New York municipal
security. New York municipal securities classified within one issue type
concentration and rated BBB by S&P may comprise no more than 12% of Moody's
Eligible Assets; such BBB-rated New York municipal securities, if any, together
with any New York municipal securities in the same issue type and rated Baa by
Moody's or A by S&P may comprise no more than 20% of Moody's Eligible Assets;
such BBB, Baa and A-rated New York municipal securities, if any, together with
any New York municipal securities in the same issue type and rated A by Moody's
or AA by S&P may comprise no more than 40% of Moody's Eligible Assets and such
BBB, Baa, A and AA-rated New York municipal securities, if any, together with
any New York municipal securities in the same issue type and rated Aa by Moody's
or AAA by S&P, may comprise no more than 60% of Moody's Eligible Assets. For
purposes of the issue type concentration requirement described above, New York
municipal securities will be classified within one of the following categories:
health care issues (teaching and non-teaching hospitals, public and private),
housing issues (single- and multi-family), educational facilities issues (public
and private schools), student loan issues, resource recovery issues,
transportation issues (mass transit, airport and highway bonds), industrial
development bond issues, utility issues (water, sewer and electricity), general
obligation issues, lease obligations, escrowed bonds and other issues ("Other
Issues") (includes special obligations to crossover, excise and sales tax
revenue, recreation revenue, special assessment and telephone revenue bonds
only) not falling within one of the aforementioned categories. In no event shall
(a) more than 10% of Moody's Eligible Assets consist of student loan issues, (b)
more than 10% of Moody's Eligible Assets consist of resource recovery issues or
(c) more than 10% of Moody's Eligible Assets consist of Other Issues. New York
municipal securities issued by issuers
C-30
located within a single county and rated BBB by S&P may comprise no more than
12% of total Moody's Eligible Assets; such BBB-rated New York municipal
securities, if any, together with any New York municipal securities issued by
issuers located within the same county 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 New York municipal securities, if any, together with any New York
municipal securities issued by issuers located within the same county 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 New York municipal
securities, if any, together with any New York municipal securities issued by
issuers located within the same county and rated Aa by Moody's or AAA by S&P,
may comprise no more than 60% of total Moody's Eligible Assets. The single
county limitations set forth in the immediately preceding sentence apply to
general obligation bonds only. For purposes of applying the foregoing
requirements, a New York municipal security shall be deemed to be rated BBB by
S&P if rated BBB or BBB+ by S&P. For purposes of minimum issue size, maximum
underlying obligor, maximum issue type concentration and maximum county
concentration, Moody's Eligible Assets shall be calculated without including
cash and New York 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, New York 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 New York 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 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.
(rr) "Moody's Exposure Period" shall mean the period
commencing on a given Valuation Date and ending 47 days thereafter.
C-31
(ss) "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.
(tt) "Municipal Index" shall mean The Bond Buyer
Municipal Bond Index.
(uu) "1940 Act" shall mean the Investment Company Act
of 1940, as amended from time to time.
(vv) "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).
(ww) "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.
(xx) "Non-call Period" shall have the meaning set forth
below under "Specific Redemption Provisions."
(yy) "Notice of Redemption" shall mean any notice with
respect to the redemption of the APS pursuant to Section 3 of this Part I.
(zz) "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).
(aaa) "Preferred Shares" shall mean the authorized
preferred shares of beneficial interest, par value $.01 per share, of the Fund,
and includes the APS.
(bbb) "Premium Call Period" shall have the meaning set
forth below under "Specific Redemption Provisions."
(ccc) "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).
C-32
(ddd) "Projected Dividend Amount" means, with respect
to the the 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 designed to take into account
increases in dividend rates over such period.
(eee) "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.
(fff) "Rate Period," with respect to the APS, shall
mean the Initial Dividend Period thereof and any Subsequent Dividend Period,
including any Special Dividend Period, for such APS.
(ggg) "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.
(hhh) "Receivables for New York 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 New York 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 New York 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 New York municipal securities
sold as of or prior to such Valuation Date if such receivables are due within
five business days of such Valuation Date.
(iii) "Redemption Price" shall mean the Optional
Redemption Price or the Mandatory Redemption Price, as applicable.
(jjj) "Retroactive Taxable Allocation" shall have the
meaning set forth in Section 12 hereof.
(kkk) "S&P" shall mean Standard & Poor's Fund, a New
York corporation, and its successors.
(lll) "S&P Discount Factor" shall mean, for purposes of
determining the Discounted Value of any S&P Eligible Asset, the percentage
determined
C-33
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............... 210% 215% 230% 270%
22 Business Days............... 190 195 210 250
10 Business Days............... 175 180 195 235
7 Business Days............... 170 175 190 230
3 Business Days............... 150 155 170 210
--------------------------
* S&P rating.
Notwithstanding the foregoing, (i) the S&P Discount Factor for
short-term New York municipal securities will be 115%, so long as such New York
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 New York 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 New York 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 New York municipal
securities may comprise no more than 50% of short-term New York 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 New York 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 New York municipal securities.
(mmm) "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 New York
Municipal Securities Sold or a New York 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 New
York municipal securities will be included in S&P Eligible Assets only to the
extent the Market Value of such New York 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 such
Moody's-rated New York municipal security, such New York 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 New York
C-34
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 "New
York municipal securities" means any obligation the interest on which is exempt
from regular Federal income taxation and which 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. New York 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 New York 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 New York
municipal securities exceeds 5% of the aggregate Market Value of S&P
Eligible Assets;
2. New York 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 New York municipal securities does not
exceed 25% of the aggregate Market Value of S&P Eligible Assets; and
3. New York municipal securities of any one issue type
category will be considered S&P Eligible Assets only to the extent the
fair market value of such New York municipal securities does not exceed
20% of the aggregate fair market value of S&P Eligible Assets. For
purposes of this requirement, New York municipal securities will be
classified into one of the following categories: health care issues,
housing issues, educational issues, facilities issues, student loan
issues, transportation issues, industrial development bond issues,
public power utilities issues, water and sewer utilities issues,
special utilities issues, general obligation issues, lease obligations,
escrowed bonds and other issues not falling within one of the
aforementioned categories. Furthermore, special utilities issues that
are not rated by S&P will not be considered S&P Eligible Assets.
(nnn) "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).
(ooo) "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.
C-35
(ppp) "Special Dividend Period," with respect to the
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.
(qqq) "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 APS, 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.
(rrr) "Subsequent Dividend Period," with respect to the
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 APS and any period thereafter from
and including one Dividend Payment Date which follows a scheduled Auction for
such APS to but excluding the next succeeding Dividend Payment Date which
follows a scheduled Auction for such APS; 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.
(sss) "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.
(ttt) "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.
(uuu) "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.
C-36
(vvv) "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 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.
(www) "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.
(xxx) "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.
(yyy) "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.
(zzz) "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:
C-37
(a) "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.
(b) "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.
(c) "Applicable Percentage" for the APS on any Auction Date
shall mean the percentage, determined as set forth below, based on the
prevailing rating of such APS 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%
**C"ba3"/BB-.................................................. 200%
**CBelow "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 combined regular federal, New York State and New York
City individual income tax rate applicable to ordinary income (taking into
account the federal income tax deductibility of state and local taxes paid or
incurred) 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
the APS shall be (i) "aa3"/AA- or higher if such 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
such 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 such 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
C-38
not "aa3"/AA- or higher, "a3"/A- or "baa3"/BBB-, then "ba3"/BB- if the such 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 the APS. If neither S&P nor Moody's shall
make such a rating available, [Goldman, Sachs & 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 such APS.
(d) "Available APS" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(e) "Bid" and "Bids" shall have the respective meanings
specified in paragraph (a) of Section 2 of this Part II.
(f) "Bidder" and "Bidders" shall have the respective
meanings specified in paragraph (a) of Section 2 of this Part II.
(g) "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.
(h) "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.
(i) "Existing Holder," when used with respect to the APS,
shall mean a Person who has signed a Master Purchaser's Letter and is listed as
the beneficial owner of such APS in the records of the Auction Agent.
(j) "Hold Order" and "Hold Orders" shall have the
respective meanings specified in paragraph (a) of Section 2 of this Part II.
(k) "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.
C-39
(l) "Maximum Rate," for the 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 APS and
(B) the Applicable Percentage on such Auction Date, unless such APS have or
have 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 existed has not yet occurred for a Minimum Dividend Period after such
Special Dividend Period, in which case the higher of:
(A) the dividend rate on the APS 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 APS, 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 APS, 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 APS, 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.
(m) "Order" and "Orders" shall have the respective meanings
specified in paragraph (a) of Section 2 of this Part II.
C-40
(n) "Outstanding" shall mean, as of any Auction Date with
respect to the APS, the number of such APS theretofore issued by the Fund
except, without duplication, (i) any 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 APS as to which
the Fund or any Affiliate thereof shall be an Existing Holder and (iii) any APS
represented by any certificate in lieu of which a new certificate has been
executed and delivered by the Fund.
(o) "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.
(p) "Potential Holder," when used with respect to the APS,
shall mean any Person, including any Existing Holder of such APS, (i) who shall
have executed a Master Purchaser's Letter and (ii) who may be interested in
acquiring such APS (or, in the case of an Existing Holder of APS, additional
APS).
(q) "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.
(r) "Sell Order" and "Sell Orders" shall have the
respective meanings specified in paragraph (a) of Section 2 of this Part II.
(s) "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.
(t) "Submitted Bid" and "Submitted Bids" shall have the
respective meanings specified in paragraph (a) of Section 4 of this Part II.
(u) "Submitted Hold Order" and "Submitted Hold Orders"
shall have the respective meanings specified in paragraph (a) of Section 4 of
this Part II.
(v) "Submitted Order" and "Submitted Orders" shall have the
respective meanings specified in paragraph (a) of Section 4 of this Part II.
(w) "Submitted Sell Order" and "Submitted Sell Orders"
shall have the respective meanings specified in paragraph (a) of Section 4 of
this Part II.
(x) "Sufficient Clearing Bids" shall have the meaning
specified in paragraph (a) of Section 4 of this Part II.
(y) "Winning Bid Rate" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
C-41
2. Orders by Existing Holders and Potential Holders. Prior to
the Submission Deadline on each Auction Date:
(i) each Existing Holder 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 APS, if any,
held by such Existing Holder which such Existing Holder desires to
continue to hold without regard to the Applicable Rate for such APS
for the next succeeding Rate Period of such APS;
(B) the number of Outstanding APS, if any,
which such Existing Holder offers to sell if the Applicable Rate for
such APS for the next succeeding Rate Period of such APS shall be less
than the rate per annum specified by such Existing Holder; and/or
(C) the number of Outstanding APS, if any,
held by such Existing Holder which such Existing Holder offers to sell
without regard to the Applicable Rate for such APS for the next
succeeding Rate Period of such APS;
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 APS, if any,
which each such Potential Holder offers to purchase if the Applicable Rate
for such APS for the next succeeding Rate Period of such APS 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."
(c) (i) A bid by an Existing Holder of APS subject to an
Auction on any Auction Date shall constitute an irrevocable offer to sell:
C-42
(A) the number of Outstanding APS specified in
such Bid if the Applicable Rate for such APS determined on such
Auction Date shall be less than the rate specified therein:
(B) such number or a lesser number of
Outstanding 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 APS determined on such Auction Date shall be equal to the rate
specified therein; or
(C) the number of Outstanding APS specified in
such Bid if the rate specified therein shall be higher than the
Maximum Rate for such APS, or such number or a lesser number of
Outstanding 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 APS and
Sufficient Clearing Bids for such APS do not exist.
(ii) A Sell Order by an Existing Holder of APS subject
to an Auction on any Auction Date shall constitute an irrevocable offer to
sell:
(A) the number of Outstanding APS specified in
such Sell Order; or
(B) such number or a lesser number of
Outstanding APS as set forth in clause (iii) of paragraph (b) of
Section 5 of this Part II if Sufficient Clearing Bids for such APS do
not exist.
(iii) A Bid by a Potential Holder of APS subject to an
Auction on any Auction Date shall constitute an irrevocable offer to
purchase:
(A) the number of Outstanding APS specified in
such Bid if the Applicable Rate for such APS determined on such
Auction Date shall be higher than the rate specified therein; or
(B) such number or a lesser number of
Outstanding APS as set forth in clause (v) of paragraph (a) of Section
5 of this Part II if the Applicable Rate for such APS determined on
such Auction Date shall be equal to the rate specified therein.
(d) No Order for any number of APS other than whole shares
shall be valid.
C-43
3. Submission of Orders by Broker-Dealers to Auction Agent.
(b) Each Broker-Dealer shall submit in writing to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders for 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 APS that are the subject
of such Order;
(iii) to the extent that such Bidder is an Existing
Holder of APS:
(A) the number of APS, if any, subject to any
Hold Order placed by such Existing Holder;
(B) the number of APS, if any, subject to any
Bid placed by such Existing Holder and the rate specified in such Bid;
and
(C) the number of APS, if any, subject to any
Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder of
APS, the rate and number of such APS specified in such Potential Holder's
Bid.
(c) 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%.
(d) If an Order or Orders covering all of the Outstanding
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
APS held by such Existing Holder and not subject to Orders submitted to the
Auction Agent.
(e) 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 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 APS shall be considered valid,
but only up to and including in the aggregate the number of Outstanding APS
held by such Existing Holder, and if the number of APS subject to such Hold
Orders exceeds the number of Outstanding 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 APS held by such Existing Holder;
C-44
(ii) (A) any Bid for APS shall be considered valid up
to and including the excess of the number of Outstanding APS held by such
Existing Holder over the number of APS subject to any Hold Orders referred
to in clause (i) above;
(B) subject to subclause (A), if more than one
Bid for APS with the same rate is submitted on behalf of such Existing
Holder and the number of Outstanding 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 APS subject
to each Bid with the same rate shall be reduced pro rata to cover the
number of APS equal to such excess;
(C) subject to subclauses (A) and (B), if more
than one Bid for 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 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 APS by a Potential Holder at the rate therein
specified; and
(iii) all Sell Orders for APS shall be considered valid
up to and including the excess of the number of Outstanding 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.
(f) If more than one Bid for one or more of the 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.
(g) 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. 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,"
C-45
as the case may be, or as "Submitted Orders" and shall for the APS for which an
Auction is being held determine:
(i) the excess of the number of Outstanding APS over
the number of Outstanding APS subject to Submitted Hold Orders (such excess
being hereinafter referred to as the "Available APS.");
(ii) from the Submitted Orders for such APS whether:
(A) the number of Outstanding APS subject to
Submitted Bids by Potential Holders specifying one or more rates equal
to or lower than the Maximum Rate for such APS
exceeds or is equal to the sum of
(B) the number of Outstanding APS subject to
Submitted Bids by Existing Holders specifying one or more rates higher
than the Maximum Rate for such APS; and
(C) the number of Outstanding APS subject to
Submitted Sell Orders
(in the event such excess or such equality exists (other than because the number
of APS in subclauses (B) and (C) above is zero because all of the Outstanding
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 APS); and
(iii) if Sufficient Clearing Bids for such APS exists,
the lowest rate specified in such Submitted Bids (the "Winning Bid Rate"
for such APS) 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 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 APS which, when added to
the number of Outstanding APS to be purchased by such Potential Holders
described in subclause (B) above, would equal not less than the Available APS.
C-46
(c) 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 the APS for which an Auction is
being held on the Auction Date and, based on such determination, the Applicable
Rate for such APS for the next succeeding Rate Period thereof as follows:
(i) if Sufficient Clearing Bids for such APS exists,
that the Applicable Rate for such APS for the next succeeding Rate Period
thereof shall be equal to the Winning Bid Rate for such APS to be
determined;
(ii) if Sufficient Clearing Bids for such APS do not
exist (other than because all of the Outstanding APS are subject to
Submitted Hold Orders), that the Applicable Rate for such APS for the next
succeeding Rate Period, which shall be a Minimum Dividend Period, thereof
shall be equal to the Maximum Rate for such APS; or
(iii) if all of the Outstanding APS are subject to
Submitted Hold Orders, that the Applicable Rate for such APS 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 combined regular federal,
New York State and New York City individual income tax rate applicable to
ordinary income (taking into account the federal income tax deductibility
of state and local taxes paid or incurred) 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 of the 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 APS shall be rejected:
C-47
(i) Existing Holders' Submitted Bids for such APS
specifying any rate that is higher than the Winning Bid Rate for such APS
shall be accepted, thus requiring each such Existing Holder to sell the APS
subject to such Submitted Bids;
(ii) Existing Holders' Submitted Bids for the APS
specifying any rate that is lower than the Winning Bid Rate for such APS
shall be rejected, thus entitling each such Existing Holder to continue to
hold the APS subject to such Submitted Bids;
(iii) Potential Holders' Submitted Bids for the APS
specifying any rate that is lower than the Winning Bid Rate shall be
accepted;
(iv) each Existing Holder's Submitted Bid for the APS
specifying a rate that is equal to the Winning Bid Rate for such APS shall
be rejected, thus entitling such Existing Holder to continue to hold the
APS subject to such Submitted Bid, unless the number of Outstanding of APS
subject to all such Submitted Bids shall be greater than the number of APS
("remaining shares") in the excess of the Available APS 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 APS obtained by multiplying the
number of remaining shares by a fraction, the numerator of which shall be
the number of Outstanding APS held by such Existing Holder subject to such
Submitted Bid and the denominator of which shall be the aggregate number of
Outstanding APS subject to such Submitted Bids made by all such Existing
Holders that specified a rate equal to the Winning Bid Rate for such APS;
and
(v) each Potential Holder's Submitted Bid for the APS
specifying a rate that is equal to the Winning Bid Rate for such APS shall
be accepted but only in an amount equal to the number of APS obtained by
multiplying the number of shares in the excess of the Available APS 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 APS subject to such Submitted Bid and
the denominator of which shall be the aggregate number of Outstanding APS
subject to such Submitted Bids made by all such Potential Holders that
specified a rate equal to the Winning Bid Rate for such APS; and
(b) If Sufficient Clearing Bids for any of the APS have not
been made (other than because all of the Outstanding APS are subject to
Submitted Hold Orders), subject to the provisions of paragraph (d) of this
Section 5, Submitted Orders for such APS shall be accepted or rejected as
follows in the following order of priority and all other Submitted Bids for such
APS shall be rejected:
C-48
(i) Existing Holders' Submitted Bids for the APS
specifying any rate that is equal to or lower than the Maximum Rate for
such APS 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 the APS
specifying any rate that is equal to or lower than the Maximum Rate for
such APS shall be accepted; and
(iii) Each Existing Holder's Submitted Bid for the APS
specifying any rate that is higher than the Maximum Rate of such APS and
the Submitted Sell Orders for such 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 APS subject to such
Submitted Bid or Submitted Sell Order, but in both cases only in an amount
equal to the number of APS obtained by multiplying the number 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 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 APS subject to all such Submitted Bids and Submitted Sell
Orders.
(c) If all of the Outstanding APS are subject to Submitted
Hold Orders, all Submitted Bids for such APS 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
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 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 APS 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 APS on any Auction Date, the
Auction Agent shall, in such manner as it shall determine in its sole
discretion, allocate shares of such APS for purchase among Potential Holders so
that only whole shares 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 the APS, the
Auction Agent shall determine the aggregate number of APS to be purchased and
the aggregate number of APS to be sold by Potential Holders and Existing Holders
on whose
C-49
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
APS such Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers of APS such Broker-Dealer shall
receive, as the case may be, shares of such APS.
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. (b) 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 the APS
prior to the issuance of such APS.
(c) 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.
(d) All of the APS outstanding from time to time shall be
represented by one global certificate registered in the name of the Securities
Depository or its nominee.
(e) 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.
IN WITNESS WHEREOF, the undersigned has caused this
Certificate of Vote to be executed as of June 8, 1992.
/s/ Ronald A. Nyberg
----------------------------
Ronald A. Nyberg
Secretary
C-50
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 Trust For
Investment Grade New York Municipals.
Before me,
/s/ Terri Marrs
-------------------------------
Notary public
My commission Expires: 8/30/94
--------------------
C-51
ARTICLES OF AMENDMENT TO
THE CERTIFICATE OF VOTE OF TRUSTEES
ESTABLISHING A CLASS OF PREFERRED SHARES OF
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
Van Kampen Trust for Investment Grade New York Municipals, 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 a Class 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 Auction Preferred Shares (the "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 a class
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 a series of 2,400 shares of its authorized
preferred shares of beneficial interest, par value
$.01 per share ("Preferred Shares"), liquidation
preference of $25,000 per share, designated Auction
Preferred Shares ("APS").
b. The first paragraph under the heading "DESIGNATION"
of the Certificate of Vote is hereby amended by
replacing such paragraph with the following
paragraph.
APS: A series of 2,400 preferred shares of beneficial
interest, $.01 par value, liquidation preference
$25,000 per share, is hereby designated "Auction
Preferred Shares" (hereinafter, "APS"). Each APS
shall be issued on June 10, 1992; have an Applicable
Rate for
C-52
its Initial Dividend Period (which period shall
continue to and include Wednesday, January 20, 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 shall
constitute a separate series of Preferred Shares of
beneficial interest of the Fund, and each share of
APS 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 the APS
on any date on which dividends shall be payable on
the APS shall be computed by multiplying the
respective Applicable Rate 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 any series of APB 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
C-53
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 ou
tstanding 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.
C-54
g. Section 15 (f) of Part I of the Certificate of Vote
is hereby amended to replace such section with the
following:
"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) thorough (i)(G) if such
assets mature within the Moody's Exposure Period 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&Ps 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 connections
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:
C-55
"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).
i. 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).
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 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 within 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, 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.
C-56
ARTICLES OF AMENDMENT TO
THE CERTIFICATE OF VOTE OF TRUSTEES
CHANGING THE TIMING OF CERTAIN REPORTS TO RATING
AGENCIES
Van Kampen Trust for Investment Grade New York Municipals, 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-57
C. Section 9 (c) of Part I of the Certificate of Vote is hereby ]
amended to replace such section with the following:
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:
C-58
"Annual Valuation Date" shall mean the last Business Day of
each fiscal year of the Fund.
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 Trust
for Investment Grade New York Municipals.
Before me,
/s/ Rosemarie Costagliola
----------------------------------------
Notary Public
My commission expires: November 9, 2006
------------------------
C-59
APPENDIX D
MORGAN STANLEY INVESTMENT MANAGEMENT
PROXY VOTING POLICY AND PROCEDURES
I. 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 applies to those MSIM
entities that provide discretionary investment management services and for which
a MSIM entity has authority to vote proxies. The policy 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 an "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 Board 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 recommendations in making proxy
voting decisions, they are in no way obligated to follow the ISS
recommendations. In addition to research, ISS
D-1
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.
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 to MSIM's clients 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.
II. 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.
III. 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.
- Selection or ratification of auditors.
- Approval of financial statements, director and auditor reports.
- General updating/corrective amendments to the charter.
- Proposals to limit Directors' liability and/or broaden
indemnification of Directors.
D-2
- Proposals requiring that a certain percentage (up to 66 2/3%) of the
company's Board members be independent Directors.
- Proposals requiring that members of the company's compensation,
nominating and audit committees be comprised of independent or
unaffiliated Directors.
- Proposals recommending set retirement ages or requiring specific
levels of stock ownership by Directors.
- Proposals to eliminate cumulative voting.
- Proposals to eliminate preemptive rights.
- Proposals for confidential voting and independent tabulation of
voting results.
- 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, proxies 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 five 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
- Proposals relating to capitalization changes that eliminate other
classes of stock and voting rights.
- Proposals to increase the authorization of existing classes of
common stock (or securities convertible into common stock) if: (i) a
clear and legitimate
D-3
business purpose is stated; (ii) the number of shares requested 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.
- Proposals to create a new class of preferred stock or for issuances
of preferred stock up to 50% of issued capital.
- Proposals for share repurchase plans.
- Proposals to reduce the number of authorized shares of common or
preferred stock, or to eliminate classes of preferred stock.
- Proposals to effect stock splits.
- 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
- Proposals relating to Director fees, provided the amounts are not
excessive relative to other companies in the country or industry.
- 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.
- Proposals for the establishment of employee stock option Plans and
other employee ownership plans.
- Proposals for the establishment of employee retirement and severance
plans
ANTI-TAKEOVER MATTERS
- Proposals to modify or rescind existing supermajority vote
requirements to amend the charters or bylaws.
- 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 a shareholder, unless
otherwise determined by
D-4
the Proxy Review Committee, will be voted against (notwithstanding
management support).
- Proposals to establish cumulative voting rights in the election of
directors.
- Proposals relating to capitalization changes that add classes of
stock which substantially dilute the voting interests of existing
shareholders.
- Proposals to increase the authorized number of shares of existing
classes of stock that carry preemptive rights or supervoting rights.
- Proposals to create "blank check" preferred stock.
- Proposals relating to changes in capitalization by 100% or more.
- Compensation proposals that allow for discounted stock options that
have not been offered to employees in general.
- Proposals to amend bylaws to require a supermajority shareholder
vote to pass or repeal certain provisions.
- 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
- 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, MSIM internal
company-specific knowledge.
- 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.
- 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.
- Proposals relating to Executive/Director stock option plans.
Generally, stock option plans should meet the following criteria:
(i) The stock option plan should be incentive based;
(ii) For mature companies, should be no more than 5% of the issued
capital at the time of approval;
(iii) For growth companies, should be no more than 10% of the
issued capital at the time of approval.
D-5
ANTI-TAKEOVER PROVISIONS
- Proposals requiring shareholder ratification of poison pills.
- 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:
- Proposals requiring auditors to attend the annual meeting of
shareholders.
- Proposals requiring non-U.S. companies to have a separate Chairman
and CEO.
- Proposals requiring that members of the company's compensation,
nominating and audit committees be comprised of independent or
unaffiliated Directors.
- Proposals requiring that a certain percentage of the company's
members be comprised of independent and unaffiliated Directors.
- Proposals requiring diversity of Board membership relating to broad
based social, religious or ethnic groups.
- Proposals requiring confidential voting.
- Proposals to reduce or eliminate supermajority voting requirements.
- Proposals requiring shareholder approval for a shareholder rights
plan or poison pill.
- Proposals to require the company to expense stock options.
2. The following shareholder proposals will be voted as determined by the
Proxy Review Committee.
- Proposals that limit tenure of directors.
- Proposals to limit golden parachutes.
- Proposals requiring directors to own large amounts of stock to be
eligible for election.
- Proposals that request or require disclosure of executive
compensation in addition to the disclosure required by the
Securities and Exchange Commission ("SEC") regulations.
- Proposals that limit retirement benefits or executive compensation.
- Proposals requiring shareholder approval for bylaw or charter
amendments.
- Proposals requiring shareholder approval of executive compensation.
D-6
- Proposals requiring shareholder approval of golden parachutes.
- Proposals to eliminate certain anti-takeover related provisions.
- Proposals to prohibit payment of greenmail.
3. The following shareholder proposals generally will not be supported,
unless otherwise determined by the Proxy Review Committee.
- Proposals to declassify the Board of Directors (if management
supports a classified board).
- Proposals requiring a U.S. company to have a separate Chairman and
CEO.
- Proposal 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.
- 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.
- Proposals that require inappropriate endorsements or corporate
actions.
- Proposals requiring adherence to workplace standards that are not
required or customary in market(s) to which the proposals relate.
IV. ADMINISTRATION OF PROXY POLICY 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.
(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
D-7
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 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 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 to ISS, decisions of the Committee and
Special Committee so that, among other things, ISS will vote proxies
consistent with their decisions.
D-8
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 party
to a merger or acquisition for which Morgan Stanley will be paid a
success fee if completed).
C. PROXY VOTING REPORTS
(a)MSIM will promptly provide a copy of these Policy and Procedures to
any client requesting them. 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.
(b)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.
D-9
APPENDIX E
ANNUAL REPORT OF THE ACQUIRING FUND, DATED OCTOBER 31, 2004
E-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
Trust for Investment Grade New York Municipals 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
---------------------------------------------------------------------------------------
E-2
Performance Summary as of 10/31/04
TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
SYMBOL: VTN
---------------------------------------------------------
BASED ON BASED ON
NAV MARKET PRICE
Since Inception (3/27/92) 8.21% 7.37%
10-year 8.82 9.11
5-year 9.25 8.70
1-year 8.28 3.24
---------------------------------------------------------
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 New York Municipal Bond Index is a broad-based statistical
composite of New York 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 12-MONTH PERIOD ENDED OCTOBER 31, 2004
Van Kampen Trust for Investment Grade New York Municipals 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.
E-4
While New York was still among the largest issuers in the country during the
period, its overall issuance fell by 18 percent for the first nine months of
2004 relative to the same period in 2003. Many local municipalities moved to
take advantage of relatively low interest rates during the period by refinancing
their existing debt. The state's ongoing economic improvement led to an upgrade
by Moody's.
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 New York
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
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2004
--------------------------------------------------------------
BASED ON BASED ON LEHMAN BROTHERS NEW YORK
NAV MARKET PRICE MUNICIPAL BOND INDEX
8.28% 3.24% 5.79%
--------------------------------------------------------------
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.
E-5
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.
We continued to pursue relative-value opportunities at the long end of the
market, buying securities when 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 81 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
transportation, general purpose, and public building.
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.
E-6
RATINGS ALLOCATION AS OF 10/31/04
AAA/Aaa 46.0%
AA/Aa 35.5
A/A 15.9
BBB/Baa 2.6
TOP 5 SECTORS AS OF 10/31/04
Transportation 18.7%
General Purpose 16.8
Public Building 13.2
Higher Education 8.3
Water & Sewer 7.8
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 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-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 1-202-942-8090. 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.
E-8
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
MUNICIPAL BONDS 156.2%
NEW YORK 147.3%
$1,000 Amherst, NY Indl Dev Agy Civic Fac Rev UBF Fac
Student Hsg Ser B (AMBAC Insd).................. 5.750% 08/01/30 $ 1,121,470
1,250 Erie Cnty, NY Indl Dev Agy Sch Fac Rev City of
Buffalo Proj (FSA Insd)......................... 5.750 05/01/23 1,436,362
2,000 Erie Cnty, NY Pub Impt Ser A (FGIC Insd)........ 5.250 03/15/20 2,189,060
1,000 Erie Cnty, NY Pub Impt Ser C (AMBAC Insd)....... 5.500 07/01/29 1,090,880
1,610 Grand Central NY Dist Mgt Assn Cap Impt Business
Impt & Rfdg (b)................................. 5.000 01/01/16 1,757,701
1,110 Islip NY Res Recovery 1985 Fac Ser E (AMT) (FSA
Insd) (b)....................................... 5.750 07/01/18 1,244,954
3,020 Long Island Pwr Auth NY Elec Sys Rev Cap Apprec
(FSA Insd)...................................... * 06/01/19 1,633,971
1,500 Long Island Pwr Auth NY Elec Sys Rev Gen Ser
C............................................... 5.500 09/01/21 1,632,840
1,000 Metropolitan Trans Auth NY Rev Ser A Rfdg (AMBAC
Insd)........................................... 5.500 11/15/19 1,138,180
1,500 Metropolitan Trans Auth NY Svc Contract
Ser A Rfdg...................................... 5.125 01/01/29 1,544,955
1,000 Metropolitan Trans Auth NY Svc Contract Ser B
(MBIA Insd)..................................... 5.500 07/01/14 1,161,960
1,000 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A (AMBAC Insd).............................. 5.000 11/15/18 1,091,510
2,000 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A (Prerefunded @ 11/15/10).................. 5.750 11/15/15 2,319,920
730 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A1 (AMBAC Insd)............................. 5.375 11/15/15 818,658
1,770 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A1 (Prerefunded @ 11/15/11) (AMBAC Insd).... 5.375 11/15/15 2,032,102
1,585 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser B Rfdg (AMBAC Insd)......................... 5.000 11/15/17 1,738,935
935 New York City Hsg Dev Corp Multi-Family Hsg Rev
Ser A (AMT)..................................... 5.850 11/01/20 999,132
1,000 New York City Indl Dev Agy Civic Fac Rev NY Inst
of Technology Proj (MBIA Insd).................. 5.250 03/01/18 1,103,880
1,000 New York City Indl Dev Agy Pkg Royal Charter-NY
Presbyterian (FSA Insd)......................... 5.250 12/15/11 1,133,030
2,000 New York City Indl Dev Agy Spl Fac Rev Terminal
One Group Assn Proj (AMT)....................... 6.000 01/01/15 2,045,060
1,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev............................................. 5.500 06/15/33 1,079,880
3,900 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser B (FSA Insd)............................ 5.250 06/15/29 4,090,086
1,325 New York City Muni Wtr Fin Ser B................ 6.000 06/15/33 1,542,234
2,175 New York City Muni Wtr Fin Ser B (Prerefunded @
06/15/10)....................................... 6.000 06/15/33 2,556,060
1,250 New York City Ser K............................. 5.625 08/01/13 1,366,763
See Notes to Financial Statements
E-9
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$1,500 New York City Transitional Fin Auth Rev Future
Tax Secd Ser C (AMBAC Insd)..................... 5.250% 08/01/21 $ 1,627,515
3,500 New York City Transitional Fin Auth Rev Future
Tax Secd Ser D (MBIA Insd)...................... 5.250 02/01/19 3,850,000
1,330 New York St Dorm Auth Lease Rev Court
Fac Ser A....................................... 5.375 05/15/22 1,428,846
1,000 New York St Dorm Auth Lease Rev Master Boces Pgm
Ser A (FSA Insd)................................ 5.250 08/15/17 1,108,780
2,250 New York St Dorm Auth Lease Rev Muni Hlth Fac
Impt Pgm Ser 1 (FSA Insd)....................... 5.500 01/15/13 2,539,485
1,040 New York St Dorm Auth Lease Rev St Univ Dorm
Fac............................................. 5.375 07/01/16 1,146,974
2,500 New York St Dorm Auth Rev Grace Manor Hlthcare
Fac............................................. 6.150 07/01/18 2,695,825
1,000 New York St Dorm Auth Rev Hosp (MBIA Insd)...... 5.000 08/01/33 1,033,070
1,340 New York St Dorm Auth Rev Insd Brooklyn Law Sch
Ser B (XLCA Insd)............................... 5.375 07/01/23 1,464,071
1,000 New York St Dorm Auth Rev Mem Sloan-Kettering
Ctr Ser 1 (MBIA Insd)........................... 5.000 07/01/20 1,072,240
2,340 New York St Dorm Auth Rev Mental Hlth Svc Fac
Impt Ser D (FSA Insd) (b)....................... 5.750 08/15/12 2,639,731
1,210 New York St Dorm Auth Rev Mental Hlth Svc Ser B
(MBIA Insd)..................................... 5.250 08/15/31 1,260,021
1,000 New York St Dorm Auth Rev Sch Dist Fin Pgm Ser I
(MBIA Insd)..................................... 5.750 10/01/18 1,158,220
1,000 New York St Dorm Auth Rev Secd Hosp North Gen
Hosp Rfdg....................................... 5.750 02/15/18 1,123,560
1,000 New York St Dorm Auth Rev St Personal Income Tax
Ed Ser A........................................ 5.000 03/15/32 1,022,260
1,000 New York St Dorm Auth Rev St Univ Ed Fac 1989
Res (MBIA Insd)................................. 6.000 05/15/15 1,158,700
1,000 New York St Dorm Auth Rev St Univ Ed Fac Ser A
(MBIA Insd)..................................... 5.250 05/15/15 1,142,280
5,010 New York St Dorm Auth Rev St Univ Ed Fac Ser B
Rfdg............................................ 5.250 05/15/19 5,674,677
2,200 New York St Dorm Auth Rev Catholic Hlth L.I.
Oblig Grp (a)................................... 5.000 07/01/27 2,190,980
1,365 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser B (AMT) (MBIA Insd)...... 6.750 02/01/24 1,383,987
4,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser C (AMT) (MBIA Insd)...... 5.600 06/01/25 4,068,920
1,640 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Pooled Fin Pgm I........ 5.250 09/15/19 1,803,442
2,000 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Ser B................... 5.000 06/15/21 2,133,660
See Notes to Financial Statements
E-10
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$3,500 New York St Hsg Fin Agy Rev Multi-Family Hsg
Secd Mtg Pgm Ser A (AMT)........................ 7.050% 08/15/24 $ 3,505,530
3,000 New York St Loc Govt Assistance Corp Ser E
Rfdg............................................ 6.000 04/01/14 3,563,790
1,050 New York St Med Care Fac Fin Agy Rev Saint
Peter's Hosp Proj Ser A (AMBAC Insd)............ 5.375 11/01/20 1,062,800
4,000 New York St Mtg Agy Rev Homeowner Mtg Ser 71
(AMT)........................................... 5.400 04/01/29 4,107,400
4,460 New York St Mtg Agy Rev Homeowner Mtg Ser 79
(AMT)........................................... 5.300 04/01/29 4,572,749
1,990 New York St Mtg Agy Rev Ser 101 (AMT)........... 5.400 04/01/32 2,052,088
1,535 New York St Ser C Rfdg.......................... 5.000 04/15/17 1,670,095
2,000 New York St Twy Auth Hwy & Brdg Tr Fd Ser A (FSA
Insd)........................................... 5.250 04/01/19 2,182,580
3,000 New York St Twy Auth Svc Contract Rev Loc Hwy &
Brdg (Prerefunded @ 4/01/11).................... 5.250 04/01/15 3,394,380
2,500 New York St Urban Dev Corp Rev Correctional Fac
Ser A Rfdg...................................... 5.500 01/01/14 2,799,275
1,625 New York St Urban Dev Corp Rev Proj Ctr for Indl
Innovation Rfdg................................. 5.500 01/01/13 1,852,321
19,280 New York St Urban Dev Corp Rev St Office South
Mall Ser A...................................... * 01/01/11 13,971,830
3,570 Niagara, NY Frontier Auth Arpt Buffalo Niagara
Intl Arpt Ser A (AMT) (MBIA Insd)............... 5.625 04/01/29 3,771,848
4,500 Port Auth NY & NJ Cons 97th Ser (AMT)
(FGIC Insd)..................................... 6.650 01/15/23 4,587,525
1,600 Rensselaer, NY Hsg Auth Multi-Family Rev Mtg
Renwyck Pl Ser A................................ 7.650 01/01/11 1,635,584
1,480 Rensselaer, NY Hsg Auth Multi-Family Rev Mtg Van
Rensselaer Heights Ser A........................ 7.750 01/01/11 1,513,019
1,500 Sales Tax Asset Receivable Corp NY Ser A (MBIA
Insd) (a)....................................... 5.000 10/15/21 1,621,575
5,445 Triborough Brdg & Tunl Auth NY Rev Gen
Purp Ser A...................................... 5.250 01/01/18 5,930,966
5,000 Triborough Brdg & Tunl Auth NY Rev Gen
Purp Ser A...................................... 5.000 01/01/32 5,113,050
2,000 Yonkers, NY Indl Dev Agy Civic Cmnty Dev Ppty
Yonkers Inc Ser A............................... 6.625 02/01/26 2,157,520
1,700 Yonkers, NY Ser A (FGIC Insd) (b)............... 5.750 10/01/14 1,955,153
------------
157,617,905
------------
PUERTO RICO 7.9%
5,000 Puerto Rico Comwlth Hwy & Trans Auth Hwy Rev Ser
Y (FSA Insd).................................... 6.250 07/01/21 6,341,300
2,000 Puerto Rico Pub Bldg Auth Rev Govt Fac Ser I
(Comwth Gtd).................................... 5.250 07/01/33 2,095,660
------------
8,436,960
------------
See Notes to Financial Statements
E-11
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
U. S. VIRGIN ISLANDS 1.0%
$1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes
Ln Nt Ser A (ACA Insd).......................... 6.125% 10/01/29 $ 1,120,460
------------
TOTAL LONG-TERM INVESTMENTS 156.2%
(Cost $152,801,938)....................................................... 167,175,325
SHORT-TERM INVESTMENTS 1.7%
(Cost $1,800,000)......................................................... 1,800,000
------------
TOTAL INVESTMENTS 157.9%
(Cost $154,601,938)....................................................... 168,975,325
LIABILITIES IN EXCESS OF OTHER ASSETS (1.8%)............................... (1,935,289)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (56.1%)................. (60,011,179)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%.............................. $107,028,857
============
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) The Trust owns 100% of the bond issuance.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
Comwth Gtd--Commonwealth of Puerto Rico
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
MBIA--Municipal Bond Investors Assurance Corp.
XLCA--XL Capital Assurance Inc.
See Notes to Financial Statements
E-12
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
October 31, 2004
ASSETS:
Total Investments (Cost $154,601,938)....................... $168,975,325
Cash........................................................ 95,146
Receivables:
Interest.................................................. 2,150,830
Investments Sold.......................................... 20,000
Other....................................................... 2,878
------------
Total Assets............................................ 171,244,179
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 3,791,632
Investment Advisory Fee................................... 84,631
Income Distributions--Common Shares....................... 33,021
Other Affiliates.......................................... 9,141
Trustees' Deferred Compensation and Retirement Plans........ 221,578
Accrued Expenses............................................ 64,140
------------
Total Liabilities....................................... 4,204,143
Preferred Shares (including accrued distributions).......... 60,011,179
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $107,028,857
============
NET ASSET VALUE PER COMMON SHARE ($107,028,857 divided by
6,211,330 shares outstanding)............................. $ 17.23
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 6,211,330 shares issued and
outstanding).............................................. $ 62,113
Paid in Surplus............................................. 91,397,893
Net Unrealized Appreciation................................. 14,373,387
Accumulated Undistributed Net Investment Income............. 891,365
Accumulated Net Realized Gain............................... 304,099
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $107,028,857
============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 2,400 issued with liquidation preference of
$25,000 per share)........................................ $ 60,000,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $167,028,857
============
See Notes to Financial Statements
E-13
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended October 31, 2004
INVESTMENT INCOME:
Interest.................................................... $ 8,385,252
-----------
EXPENSES:
Investment Advisory Fee..................................... 994,729
Preferred Share Maintenance................................. 165,743
Trustees' Fees and Related Expenses......................... 67,760
Administrative Fee.......................................... 48,501
Legal....................................................... 25,465
Custody..................................................... 9,987
Other....................................................... 132,119
-----------
Total Expenses.......................................... 1,444,304
-----------
NET INVESTMENT INCOME....................................... $ 6,940,948
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 304,285
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 12,755,476
End of the Period......................................... 14,373,387
-----------
Net Unrealized Appreciation During the Period............... 1,617,911
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 1,922,196
===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (690,759)
===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $ 8,172,385
===========
See Notes to Financial Statements
E-14
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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..................................... $ 6,940,948 $ 7,276,609
Net Realized Gain......................................... 304,285 2,585,189
Net Unrealized Appreciation/Depreciation During the
Period.................................................. 1,617,911 (1,302,046)
Distributions to Preferred Shareholders:
Net Investment Income................................... (547,440) (398,197)
Net Realized Gain....................................... (143,319) (243,196)
------------ ------------
Change in Net Assets Applicable to Common Shares from
Operations.............................................. 8,172,385 7,918,359
Distributions to Common Shareholders:
Net Investment Income................................... (6,559,267) (6,997,564)
Net Realized Gain....................................... (2,491,336) (2,240,759)
------------ ------------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
INVESTMENT ACTIVITIES................................... (878,218) (1,319,964)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment............................................ 133,318 -0-
------------ ------------
TOTAL DECREASE IN NET ASSETS APPLICABLE TO COMMON
SHARES.................................................. (744,900) (1,319,964)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................... 107,773,757 109,093,721
------------ ------------
End of the Period (Including accumulated undistributed net
investment income of $891,365 and $1,055,975,
respectively)........................................... $107,028,857 $107,773,757
============ ============
See Notes to Financial Statements
E-15
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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.................... $ 17.37 $ 17.59 $ 17.50
------- ------- -------
Net Investment Income..................................... 1.12 1.17 1.22
Net Realized and Unrealized Gain/Loss..................... .31 .20 .20
Common Share Equivalent of Distributions Paid to Preferred
Shareholders:
Net Investment Income................................... (.09) (.06) (.12)
Net Realized Gain....................................... (.02) (.04) (.03)
------- ------- -------
Total from Investment Operations............................ 1.32 1.27 1.27
Distributions Paid to Common Shareholders:
Net Investment Income................................... (1.06) (1.13) (1.06)
Net Realized Gain....................................... (.40) (.36) (.12)
------- ------- -------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 17.23 $ 17.37 $ 17.59
======= ======= =======
Common Share Market Price at End of the Period.............. $ 15.70 $ 16.60 $ 16.31
Total Return (b)............................................ 3.24% 11.07% 7.98%
Net Assets Applicable to Common Shares at End of the Period
(In millions)............................................. $ 107.0 $ 107.8 $ 109.1
Ratio of Expenses to Average Net Assets Applicable to Common
Shares (c)................................................ 1.37% 1.38% 1.45%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c)........................... 6.56% 6.73% 7.06%
Portfolio Turnover.......................................... 10% 22% 28%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
Shares (c)................................................ .87% .89% .93%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (d)........................... 6.04% 6.36% 6.35%
SENIOR SECURITIES:
Total Preferred Shares Outstanding.......................... 2,400 2,400 2,400
Asset Coverage Per Preferred Share (e)...................... $69,600 $69,907 $70,457
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 period ended October 31, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses per share by $.01 and increase the ratio of net investment income to
average net assets applicable to common shares by .05%. 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-16
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995
----------------------------------------------------------------------------
$ 16.64 $ 16.32 $ 17.83 $ 17.33 $ 16.63 $ 16.49 $ 14.80
------- ------- ------- -------- -------- -------- --------
1.25 1.30 1.30 1.29 1.28 1.30 1.30
1.19 .43 (1.53) .52 .70 .10 1.79
(.25) (.39) (.31) (.33) (.34) (.36) (.39)
(.10) -0- -0- (.01) (.01) -0- -0-
------- ------- ------- -------- -------- -------- --------
2.09 1.34 (.54) 1.47 1.63 1.04 2.70
(.98) (1.02) (.96) (.94) (.90) (.90) (1.00)
(.25) -0- (.01) (.03) (.03) -0- (.01)
------- ------- ------- -------- -------- -------- --------
$ 17.50 $ 16.64 $ 16.32 $ 17.83 $ 17.33 $ 16.63 $ 16.49
======= ======= ======= ======== ======== ======== ========
$ 16.22 $15.375 $ 15.25 $17.6875 $15.5625 $ 14.625 $ 14.375
13.68% 7.80% -8.73% 20.29% 13.08% 8.09% 17.49%
$ 108.5 $ 103.3 $ 101.3 $ 110.5 $ 107.5 $ 103.2 $ 102.2
1.67% 1.69% 1.68% 1.66% 1.70% 1.73% 1.78%
7.22% 8.00% 7.51% 7.35% 7.63% 7.92% 8.36%
15% 34% 4% 1% 8% 20% 54%
1.07% 1.06% 1.07% 1.07% 1.08% 1.09% 1.10%
5.79% 5.62% 5.72% 5.45% 5.63% 5.78% 5.89%
2,400 2,400 2,400 1,200 1,200 1,200 1,200
$70,227 $68,025 $67,197 $142,118 $139,565 $135,961 $135,197
$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
E-17
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Trust for Investment Grade New York Municipals (the "Trust") is
registered as a non-diversified, closed-end management investment company under
the Investment Company Act of 1940 (the "1940 Act"), as amended. The Trust's
investment objective is to provide a high level of current income exempt from
federal as well as New York State and New York City income taxes, consistent
with preservation of capital. The Trust will invest substantially all of its
assets in New York municipal securities rated investment grade at the time of
investment. The Trust commenced investment operations on March 27, 1992.
Effective November 30, 2003, the Fund'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.
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 $3,791,632 of when-issued
and 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.
E-18
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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........................ $154,260,042
============
Gross tax unrealized appreciation........................... $ 14,736,167
Gross tax unrealized depreciation........................... (20,884)
------------
Net tax unrealized appreciation on investments.............. $ 14,715,283
============
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........................................... $ 217,923 $ 40,900
Long-Term capital gain.................................... 2,497,499 2,475,889
---------- ----------
$2,715,422 $2,516,789
========== ==========
Due to inherent differences in the recognition of income, expenses and
realized gain/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. Permanent book and tax
differences relating to excise taxes paid which are not deductible for tax
purposes totaling $1,149 were reclassified from accumulated undistributed net
investment income to paid in surplus.
As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $ 7,461
Undistributed long-term capital gain........................ $296,637
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, 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%.
For the year ended October 31, 2004, the Trust recognized expenses of
approximately $11,500 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.
E-19
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
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 $29,200 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 October 31, 2003, paid in surplus related to common
shares aggregated $91,397,893 and $91,265,800, respectively. Transactions in
common shares were as follows:
YEAR ENDED YEAR ENDED
OCTOBER 31, 2004 OCTOBER 31, 2003
Beginning Shares........................................ 6,203,651 6,203,651
Shares Issued Through Dividend Reinvestment............. 7,679 -0-
--------- ---------
Ending Shares........................................... 6,211,330 6,203,651
========= =========
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $15,812,626 and $17,123,939,
respectively.
5. PREFERRED SHARES
The Trust has outstanding 2,400 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is generally reset every 28 days through an
auction process. The rate in effect on October 31, 2004 was 1.700%. During the
year ended October 31, 2004, the rates ranged from .750% 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 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.
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.
E-20
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of Van Kampen Trust for Investment
Grade New York Municipals:
We have audited the accompanying statement of assets and liabilities of Van
Kampen Trust for Investment Grade New York Municipals (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 Trust for Investment Grade New York Municipals 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
E-21
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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
E-22
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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
prorata share of brokerage commissions incurred with respect to the Plan Agent's
open market purchases in connection with the reinvestment of dividends and
distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
E-23
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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 98.9% of the income distributions as a
tax-exempt income distribution. The Trust designated and paid $2,497,499 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.
E-24
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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 regards to the election of the following trustees by the common
shareholders of the Trust:
# OF SHARES
-----------------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------------
R. Craig Kennedy........................................... 4,937,771 62,432
Jack E. Nelson............................................. 4,937,781 62,422
Richard F. Powers, III..................................... 4,937,771 62,432
With regards to the election of the following trustee by the preferred
shareholders of the Trust:
# OF SHARES
----------------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------------
Hugo F. Sonnenschein........................................ 1,962 0
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.
E-25
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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.
E-26
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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.
E-27
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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).
E-28
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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.
E-29
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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.
E-30
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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.
E-31
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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.
E-32
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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.
E-33
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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.
E-34
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-35
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.
VTN ANR
12/04 RN04-02838P-Y10/04
E-36
APPENDIX F
SEMIANNUAL REPORT OF THE ACQUIRING FUND,
DATED APRIL 30, 2005
F-1
Item 1. Reports to Shareholders
The Trust's semi-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
Trust for Investment Grade New York Municipals 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
TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
SYMBOL: VTN
------------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception 03/27/92 8.12% 7.10%
10-year 8.13 7.85
5-year 9.37 8.74
1-year 10.56 5.22
6-month 2.90 0.27
------------------------------------------------------------
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 New York Municipal Bond Index is a broad-based statistical
composite of New York 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 Trust for Investment Grade New York Municipals 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.
New York continued to be one of the most active markets in the nation for new
issuance during the period, although economic conditions were not uniformly
strong. New York's economy continued to improve, and its credit rating was
upgraded due in large part to a guardedly optimistic outlook for New York City's
fiscal health. The city continued to issue Liberty bonds to fund reconstruction
efforts at the site of the World Trade Center. In contrast, the northern part of
the state continued to struggle economically.
(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 New York
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 NEW YORK
NAV MARKET PRICE MUNICIPAL BOND INDEX
2.90% 0.27% 1.74%
--------------------------------------------------------------
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. We effected
this positioning in two ways. 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 also 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.
We kept the trust's exposure well diversified across the major sectors of the
New York municipal market. Much of our relative-value trading activity was
focused on selling issues that had been pre-refunded and purchasing what we
believed to be more attractive securities in sectors such as health care and
public
F-5
education. The trust remained focused on investment-grade securities, with 100
percent of the portfolio rated BBB or higher at the end of the period.
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 51.9%
AA/Aa 33.3
A/a 12.2
BBB/Baa 2.6
TOP 5 SECTORS AS OF 4/30/05
General Purpose 18.2%
Transportation 15.5
Health Care 10.4
Public Building 9.1
Water & Sewer 7.8
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 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.
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 TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
MUNICIPAL BONDS 154.0%
NEW YORK 145.0%
$1,000 Amherst, NY Indl Dev Agy Civic Fac Rev UBF Fac
Student Hsg Ser B (AMBAC Insd).................. 5.750% 08/01/30 $ 1,120,680
1,250 Erie Cnty, NY Indl Dev Agy Sch Fac Rev City of
Buffalo Proj (FSA Insd)......................... 5.750 05/01/23 1,402,775
2,000 Erie Cnty, NY Pub Impt Ser A (FGIC Insd)........ 5.250 03/15/20 2,178,000
1,000 Erie Cnty, NY Pub Impt Ser C (AMBAC Insd)....... 5.500 07/01/29 1,094,220
1,610 Grand Central NY Dist Mgt Assn Cap Impt Business
Impt & Rfdg (b)................................. 5.000 01/01/16 1,736,095
1,110 Islip NY Res Recovery 1985 Fac Ser E (AMT) (FSA
Insd) (b)....................................... 5.750 07/01/18 1,246,907
1,500 Long Island Pwr Auth NY Elec Sys Rev Gen Ser
C............................................... 5.500 09/01/21 1,640,865
1,000 Metropolitan Trans Auth NY Rev Ser A Rfdg (AMBAC
Insd)........................................... 5.500 11/15/19 1,122,780
2,000 Metropolitan Trans Auth NY Rev Ser A Rfdg (FSA
Insd)........................................... 5.000 11/15/30 2,088,700
1,500 Metropolitan Trans Auth NY Svc Contract Ser A
Rfdg............................................ 5.125 01/01/29 1,565,715
1,000 Metropolitan Trans Auth NY Svc Contract Ser B
(MBIA Insd)..................................... 5.500 07/01/14 1,146,830
1,500 Montgomery Cnty, NY Indl Dev Agy Lease Rev HFM
Boces Ser A (XLCA Insd)......................... 5.000 07/01/24 1,582,875
1,500 Montgomery Cnty, NY Indl Dev Agy Lease Rev HFM
Boces Ser A (XLCA Insd)......................... 5.000 07/01/34 1,565,505
2,000 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A (Prerefunded @ 11/15/10).................. 5.750 11/15/15 2,266,960
730 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A1 (AMBAC Insd)............................. 5.375 11/15/15 809,431
920 New York City Hsg Dev Corp Multi-Family Hsg Rev
Ser A........................................... 5.850 11/01/20 970,646
2,000 New York City Hsg Dev Corp Rev Cap Fd Pgm NYC
Hsg Auth Pgm Ser A (FGIC Insd) (a).............. 5.000 07/01/25 2,114,260
1,000 New York City Indl Dev Agy Pkg Royal Charter-NY
Presbyterian (FSA Insd)......................... 5.250 12/15/11 1,113,870
2,000 New York City Indl Dev Agy Spl Fac Rev Terminal
One Group Assn Proj (AMT)....................... 6.000 01/01/15 2,028,480
1,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev............................................. 5.500 06/15/33 1,088,530
3,900 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser B (FSA Insd)............................ 5.250 06/15/29 4,081,974
2,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser D....................................... 5.000 06/15/39 2,085,320
1,325 New York City Muni Wtr Fin Ser B................ 6.000 06/15/33 1,509,029
2,000 New York City Ser E (FSA Insd).................. 5.000 11/01/20 2,149,480
3,000 New York City Ser G............................. 5.000 12/01/24 3,147,840
1,250 New York City Ser K............................. 5.625 08/01/13 1,363,588
1,000 New York City Ser K............................. 5.000 08/01/24 1,051,980
See Notes to Financial Statements
F-9
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$5,000 New York City Transitional Cultural Res Rev
Amern Museum Nat History Ser A Rfdg (MBIA
Insd)........................................... 5.000% 07/01/44 $ 5,198,050
1,500 New York City Transitional Fin Auth Rev Future
Tax Secd Ser C (AMBAC Insd)..................... 5.250 08/01/21 1,629,765
3,500 New York City Transitional Fin Auth Rev Future
Tax Secd Ser D (MBIA Insd)...................... 5.250 02/01/19 3,837,925
1,330 New York St Dorm Auth Lease Rev Court Fac Ser
A............................................... 5.375 05/15/22 1,435,243
1,000 New York St Dorm Auth Lease Rev Master Boces Pgm
Ser A (FSA Insd)................................ 5.250 08/15/17 1,096,270
2,200 New York St Dorm Auth Rev Catholic Hlth L.I.
Oblig Grp....................................... 5.000 07/01/27 2,235,464
6,500 New York St Dorm Auth Rev FHA Insd Mtg
Montefiore Hosp (FGIC Insd)..................... 5.000 08/01/33 6,798,350
2,500 New York St Dorm Auth Rev Grace Manor Hlthcare
Fac............................................. 6.150 07/01/18 2,641,650
1,000 New York St Dorm Auth Rev Hosp (MBIA Insd)...... 5.000 08/01/33 1,050,190
1,340 New York St Dorm Auth Rev Insd Brooklyn Law Sch
Ser B (XLCA Insd)............................... 5.375 07/01/23 1,486,006
1,000 New York St Dorm Auth Rev Mem Sloan-Kettering
Ctr Ser 1 (MBIA Insd)........................... 5.000 07/01/20 1,067,850
100 New York St Dorm Auth Rev Mental Hlth Ser D (FSA
Insd) (b)....................................... 5.750 08/15/12 111,319
2,240 New York St Dorm Auth Rev Mental Hlth Ser D
(Prerefunded @ 08/15/10) (FSA Insd) (b)......... 5.750 08/15/12 2,530,595
2,250 New York St Dorm Auth Rev Mental Hlth Svc Fac
Impt Ser B (AMBAC Insd)......................... 5.000 02/15/30 2,364,570
1,250 New York St Dorm Auth Rev Mental Hlth Svc Fac
Impt Ser B (AMBAC Insd)......................... 5.000 02/15/35 1,310,600
830 New York St Dorm Auth Rev Mental Hlth Svc Ser B
(MBIA Insd)..................................... 5.250 08/15/31 874,662
1,000 New York St Dorm Auth Rev Sch Dist Fin Pgm Ser I
(MBIA Insd)..................................... 5.750 10/01/18 1,137,170
1,000 New York St Dorm Auth Rev Secd Hosp North Gen
Hosp Rfdg....................................... 5.750 02/15/18 1,112,240
1,000 New York St Dorm Auth Rev St Univ Ed Fac 1989
Res (MBIA Insd)................................. 6.000 05/15/15 1,134,980
1,000 New York St Dorm Auth Rev St Univ Ed Fac Ser A
(MBIA Insd)..................................... 5.250 05/15/15 1,125,460
5,010 New York St Dorm Auth Rev St Univ Ed Fac Ser B
Rfdg............................................ 5.250 05/15/19 5,594,266
1,250 New York St Dorm Auth St Personal Income Tax Rev
Ed Ser A (AMBAC Insd)........................... 5.000 03/15/34 1,316,163
1,365 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser B (AMT) (MBIA Insd)...... 6.750 02/01/24 1,376,330
See Notes to Financial Statements
F-10
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$4,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser C (AMT) (MBIA Insd)...... 5.600% 06/01/25 $ 4,067,640
1,640 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Pooled Fin Pgm I........ 5.250 09/15/19 1,809,986
2,000 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Ser B................... 5.000 06/15/21 2,134,380
3,500 New York St Hsg Fin Agy Rev Multi-Family Hsg
Secd Mtg Pgm Ser A (AMT)........................ 7.050 08/15/24 3,505,460
2,000 New York St Hsg Fin Agy St Personal Income Tax
Rev Econ Dev & Hsg Ser A (FGIC Insd)............ 5.000 09/15/30 2,102,560
3,000 New York St Loc Govt Assistance Corp Ser E
Rfdg............................................ 6.000 04/01/14 3,516,450
1,050 New York St Med Care Fac Fin Agy Rev Saint
Peter's Hosp Proj Ser A (AMBAC Insd)............ 5.375 11/01/20 1,073,058
4,000 New York St Mtg Agy Rev Homeowner Mtg Ser 71
(AMT)........................................... 5.400 04/01/29 4,165,520
4,460 New York St Mtg Agy Rev Homeowner Mtg Ser 79
(AMT)........................................... 5.300 04/01/29 4,627,785
1,990 New York St Mtg Agy Rev Ser 101 (AMT)........... 5.400 04/01/32 2,054,914
1,535 New York St Ser C Rfdg.......................... 5.000 04/15/17 1,652,305
2,000 New York St Twy Auth Hwy & Brdg Tr Fd Ser A (FSA
Insd)........................................... 5.250 04/01/19 2,190,920
2,500 New York St Urban Dev Corp Rev Correctional Fac
Ser A Rfdg...................................... 5.500 01/01/14 2,758,500
1,625 New York St Urban Dev Corp Rev Proj Ctr for Indl
Innovation Rfdg................................. 5.500 01/01/13 1,829,718
1,000 Niagara Falls City Sch Dist Ctf Partn High Sch
Fac Rfdg (FSA Insd) (a)......................... 5.000 06/15/25 1,057,360
3,570 Niagara, NY Frontier Auth Arpt Buffalo Niagara
Intl Arpt Ser A (AMT) (MBIA Insd)............... 5.625 04/01/29 3,835,751
1,515 Rensselaer, NY Hsg Auth Multi-Family Rev Mtg
Renwyck Pl Ser A................................ 7.650 01/01/11 1,533,195
1,405 Rensselaer, NY Hsg Auth Multi-Family Rev Mtg Van
Rensselaer Heights Ser A........................ 7.750 01/01/11 1,421,986
5,445 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.250 01/01/18 5,948,064
5,000 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.000 01/01/32 5,164,250
2,000 Yonkers, NY Indl Dev Agy Civic Cmnty Dev Ppty
Yonkers Inc Ser A............................... 6.625 02/01/26 2,160,100
1,700 Yonkers, NY Ser A (FGIC Insd) (b)............... 5.750 10/01/14 1,914,455
------------
154,262,810
------------
See Notes to Financial Statements
F-11
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
PUERTO RICO 8.0%
$5,000 Puerto Rico Comwlth Hwy & Trans Auth Hwy Rev Ser
Y (FSA Insd).................................... 6.250% 07/01/21 $ 6,347,150
2,000 Puerto Rico Pub Bldg Auth Rev Govt Fac Ser I
(Comwth Gtd).................................... 5.250 07/01/33 2,128,600
------------
8,475,750
------------
U. S. VIRGIN ISLANDS 1.0%
1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes
Ln Nt Ser A (ACA Insd).......................... 6.125 10/01/29 1,119,510
------------
TOTAL LONG-TERM INVESTMENTS 154.0%
(Cost $152,674,960)....................................................... 163,858,070
SHORT-TERM INVESTMENTS 3.4%
(Cost $3,600,000)......................................................... 3,600,000
------------
TOTAL INVESTMENTS 157.4%
(Cost $156,274,960)....................................................... 167,458,070
LIABILITIES IN EXCESS OF OTHER ASSETS (1.0%)............................... (1,032,818)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (56.4%)................. (60,061,477)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%.............................. $106,363,775
============
Percentages are calculated as a percentage of net assets applicable to common
shares.
(a) Securities purchased on a when-issued or delayed delivery basis.
(b) The Trust owns 100% of the bond issuance.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
Comwth Gtd--Commonwealth of Puerto Rico
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
MBIA--Municipal Bond Investors Assurance Corp.
XLCA--XL Capital Assurance Inc.
See Notes to Financial Statements
F-12
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2005 (Unaudited)
ASSETS:
Total Investments (Cost $156,274,960)....................... $167,458,070
Cash........................................................ 36,972
Receivables:
Interest.................................................. 2,316,969
Investments Sold.......................................... 1,207,377
Other....................................................... 466
------------
Total Assets............................................ 171,019,854
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 4,191,463
Investment Advisory Fee................................... 74,644
Income Distributions--Common Shares....................... 35,911
Other Affiliates.......................................... 7,437
Trustees' Deferred Compensation and Retirement Plans........ 233,311
Accrued Expenses............................................ 51,836
------------
Total Liabilities....................................... 4,594,602
Preferred Shares (including accrued distributions).......... 60,061,477
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $106,363,775
============
NET ASSET VALUE PER COMMON SHARE ($106,363,775 divided by
6,211,330 shares outstanding)............................. $ 17.12
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 6,211,330 shares issued and
outstanding).............................................. $ 62,113
Paid in Surplus............................................. 91,397,893
Net Unrealized Appreciation................................. 11,183,110
Accumulated Net Realized Gain............................... 2,925,044
Accumulated Undistributed Net Investment Income............. 795,615
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $106,363,775
============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 2,400 issued with liquidation preference of
$25,000 per share)........................................ $ 60,000,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $166,363,775
============
See Notes to Financial Statements
F-13
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended April 30, 2005 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $ 4,145,346
-----------
EXPENSES:
Investment Advisory Fee..................................... 452,290
Preferred Share Maintenance................................. 82,240
Trustees' Fees and Related Expenses......................... 19,543
Legal....................................................... 14,133
Custody..................................................... 8,190
Other....................................................... 68,435
-----------
Total Expenses.......................................... 644,831
-----------
NET INVESTMENT INCOME....................................... $ 3,500,515
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 2,924,896
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 14,373,387
End of the Period......................................... 11,183,110
-----------
Net Unrealized Depreciation During the Period............... (3,190,277)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $ (265,381)
===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (582,810)
===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $ 2,652,324
===========
See Notes to Financial Statements
F-14
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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..................................... $ 3,500,515 $ 6,940,948
Net Realized Gain......................................... 2,924,896 304,285
Net Unrealized Appreciation/Depreciation During the
Period.................................................. (3,190,277) 1,617,911
Distributions to Preferred Shareholders:
Net Investment Income................................... (558,985) (547,440)
Net Realized Gain....................................... (23,825) (143,319)
------------ ------------
Change in Net Assets Applicable to Common Shares from
Operations.............................................. 2,652,324 8,172,385
Distributions to Common Shareholders:
Net Investment Income................................... (3,037,280) (6,559,267)
Net Realized Gain....................................... (280,126) (2,491,336)
------------ ------------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
INVESTMENT ACTIVITIES................................... (665,082) (878,218)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment............................................ -0- 133,318
------------ ------------
TOTAL DECREASE IN NET ASSETS APPLICABLE TO COMMON
SHARES.................................................. (665,082) (744,900)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................... 107,028,857 107,773,757
------------ ------------
End of the Period (Including accumulated undistributed net
investment income of $795,615 and $891,365,
respectively)........................................... $106,363,775 $107,028,857
============ ============
See Notes to Financial Statements
F-15
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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................... $ 17.23 $ 17.37 $ 17.59
------- ------- -------
Net Investment Income.................................... .56 1.12 1.17
Net Realized and Unrealized Gain/Loss.................... (.04) .31 .20
Common Share Equivalent of Distributions Paid to
Preferred Shareholders:
Net Investment Income.................................. (.09) (.09) (.06)
Net Realized Gain...................................... -0-* (.02) (.04)
------- ------- -------
Total from Investment Operations........................... .43 1.32 1.27
Distributions Paid to Common Shareholders:
Net Investment Income.................................. (.49) (1.06) (1.13)
Net Realized Gain...................................... (.05) (.40) (.36)
------- ------- -------
NET ASSET VALUE, END OF THE PERIOD......................... $ 17.12 $ 17.23 $ 17.37
======= ======= =======
Common Share Market Price at End of the Period............. $ 15.20 $ 15.70 $ 16.60
Total Return (b)........................................... 0.27%** 3.24% 11.07%
Net Assets Applicable to Common Shares at End of the Period
(In millions)............................................ $ 106.4 $ 107.0 $ 107.8
Ratio of Expenses to Average Net Assets Applicable to
Common Shares (c)........................................ 1.23% 1.37% 1.38%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c).......................... 6.67% 6.56% 6.73%
Portfolio Turnover......................................... 24%** 10% 22%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
Shares (c)............................................... .78% .87% .89%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (d).......................... 5.60% 6.04% 6.36%
SENIOR SECURITIES:
Total Preferred Shares Outstanding......................... 2,400 2,400 2,400
Asset Coverage Per Preferred Share (e)..................... $69,344 $69,600 $69,907
Involuntary Liquidating Preference Per Preferred Share..... $25,000 $25,000 $25,000
Average Market Value Per Preferred Share................... $25,000 $25,000 $25,000
* Amount is less than $.01.
** 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 period ended October 31, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses per share by $.01 and increase the ratio of net investment income to
average net assets applicable to common shares by .05%. 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.
F-16
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------------
2002 (a) 2001 2000 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------
$ 17.50 $ 16.64 $ 16.32 $ 17.83 $ 17.33 $ 16.63 $ 16.49 $ 14.80
------- ------- ------- ------- -------- -------- -------- --------
1.22 1.25 1.30 1.30 1.29 1.28 1.30 1.30
.20 1.19 .43 (1.53) .52 .70 .10 1.79
(.12) (.25) (.39) (.31) (.33) (.34) (.36) (.39)
(.03) (.10) -0- -0- (.01) (.01) -0- -0-
------- ------- ------- ------- -------- -------- -------- --------
1.27 2.09 1.34 (.54) 1.47 1.63 1.04 2.70
(1.06) (.98) (1.02) (.96) (.94) (.90) (.90) (1.00)
(.12) (.25) -0- (.01) (.03) (.03) -0- (.01)
------- ------- ------- ------- -------- -------- -------- --------
$ 17.59 $ 17.50 $ 16.64 $ 16.32 $ 17.83 $ 17.33 $ 16.63 $ 16.49
======= ======= ======= ======= ======== ======== ======== ========
$ 16.31 $ 16.22 $15.375 $ 15.25 $17.6875 $15.5625 $ 14.625 $ 14.375
7.98% 13.68% 7.80% -8.73% 20.29% 13.08% 8.09% 17.49%
$ 109.1 $ 108.5 $ 103.3 $ 101.3 $ 110.5 $ 107.5 $ 103.2 $ 102.2
1.45% 1.67% 1.69% 1.68% 1.66% 1.70% 1.73% 1.78%
7.06% 7.22% 8.00% 7.51% 7.35% 7.63% 7.92% 8.36%
28% 15% 34% 4% 1% 8% 20% 54%
.93% 1.07% 1.06% 1.07% 1.07% 1.08% 1.09% 1.10%
6.35% 5.79% 5.62% 5.72% 5.45% 5.63% 5.78% 5.89%
2,400 2,400 2,400 2,400 1,200 1,200 1,200 1,200
$70,457 $70,227 $68,025 $67,197 $142,118 $139,565 $135,961 $135,197
$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-17
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Trust for Investment Grade New York Municipals (the "Trust") is
registered as a non-diversified, closed-end management investment company under
the Investment Company Act of 1940 (the "1940 Act"), as amended. The Trust's
investment objective is to provide a high level of current income exempt from
federal as well as New York State and New York City income taxes, consistent
with preservation of capital. The Trust will invest substantially all of its
assets in New York municipal securities rated investment grade at the time of
investment, but may invest up to 20% of its assets in unrated securities which
are believed to be of comparable quality to those rated investment grade. The
Trust commenced investment operations on March 27, 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.
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 $3,134,990 of when-issued and
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.
F-18
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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........................ $155,903,410
============
Gross tax unrealized appreciation........................... $ 11,584,678
Gross tax unrealized depreciation........................... (30,018)
------------
Net tax unrealized appreciation on investments.............. $ 11,554,660
============
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........................................... $ 217,923
Long-Term capital gain.................................... 2,497,499
----------
$2,715,422
==========
As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $ 7,461
Undistributed long-term capital gain........................ $296,637
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 $4,700 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 $16,300
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, 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.
F-19
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
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 $91,397,893. Transactions in common shares were as follows:
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2005 OCTOBER 31, 2004
Beginning Shares........................................ 6,211,330 6,203,651
Shares Issued Through Dividend Reinvestment............. -0- 7,679
--------- ---------
Ending Shares........................................... 6,211,330 6,211,330
========= =========
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $39,024,110 and $42,328,822,
respectively.
5. PREFERRED SHARES
As of April 30, 2005, the Trust has outstanding 2,400 Auction Preferred Shares
("APS"). Dividends are cumulative and the dividend rate is generally reset every
28 days through an auction process. The rate in effect on April 30, 2005 was
2.400%. During the six months ended April 30, 2005, the rates ranged from 1.400%
to 2.400%.
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.
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.
7. TRUST MERGER
On May 11, 2005, the Trustees of New York Quality Municipal Trust and New York
Value Municipal Income Trust ("Target Trusts") announced its intention to merge
the Target Trusts into Trust for Investment Grade New York Municipals
("Acquiring Trust"). The Trustees of each of the trusts have approved in
principal an agreement and plan of reorganization between the trusts providing
for a transfer of assets and liabilities of the Target Trusts to the Acquiring
Trust in exchange for shares of beneficial interest of the Acquiring Trust (the
F-20
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
"Reorganization"). The Reorganization is subject to the approval by the
shareholders of the Target Trusts.
8. 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.
F-21
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
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
STEPHANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
JAMES W. GARRET
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-22
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)
F-23
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
Copyright (C)2005 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
VTN SAR 6/05 RN05-01316P-Y04/05
(VAN KAMPEN INVESTMENTS LOGO)
F-24
APPENDIX G
ANNUAL REPORT OF VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST,
DATED OCTOBER 31, 2004
G-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 New
York Quality Municipal 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
---------------------------------------------------------------------------------------
G-2
Performance Summary as of 10/31/04
NEW YORK QUALITY MUNICIPAL TRUST
SYMBOL: VNM
---------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (9/27/91) 8.27% 7.33%
10-year 8.24 8.18
5-year 9.54 10.87
1-year 9.17 10.33
---------------------------------------------------------
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 New York Municipal Bond Index is a broad-based statistical
composite of New York 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.
G-3
Trust Report
FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2004
Van Kampen New York Quality Municipal 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.
G-4
While New York was still among the largest issuers in the country during the
period, its overall issuance fell by 18 percent for the first nine months of
2004 relative to the same period in 2003. Many local municipalities moved to
take advantage of relatively low interest rates during the period by refinancing
their existing debt. The state's ongoing economic improvement led to an upgrade
by Moody's.
PERFORMANCE ANALYSIS
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ significantly. On both an NAV basis and a market price basis,
the trust outperformed its benchmark, the Lehman Brothers New York 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
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2004
-------------------------------------------------------------------
BASED ON BASED ON LEHMAN BROTHERS NEW YORK
NAV MARKET PRICE MUNICIPAL BOND INDEX
9.17% 10.33% 5.79%
-------------------------------------------------------------------
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.
G-5
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.
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 80 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 general
purpose, transportation, and higher education.
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.
G-6
RATINGS ALLOCATION AS OF 10/31/04
AAA/Aaa 45.5%
AA/Aa 35.3
A/A 13.9
BBB/Baa 4.5
Non-Rated 0.8
TOP 5 SECTORS AS OF 10/31/04
General Purpose 23.9%
Transportation 20.0
Higher Education 16.6
Water & Sewer 9.4
Industrial Revenue 7.9
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 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.
G-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 1-202-942-8090. 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.
G-8
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
MUNICIPAL BONDS 146.4%
NEW YORK 136.3%
$1,000 Amherst, NY Indl Dev Agy Rev Fac Student Hsg Ser
A (AMBAC Insd).................................. 5.750% 08/01/25 $ 1,133,530
1,250 Erie Cnty, NY Pub Impt Ser B (MBIA Insd)........ 5.250 04/01/18 1,396,062
1,250 Erie Cnty, NY Indl Dev Agy Sch Fac Rev City of
Buffalo Proj (FSA Insd)......................... 5.750 05/01/19 1,438,687
3,365 Long Island Pwr Auth NY Elec Sys Rev Cap Apprec
(FSA Insd)...................................... * 06/01/21 1,630,679
2,000 Long Island Pwr Auth NY Elec Sys Rev Gen Ser
C............................................... 5.500 09/01/19 2,194,080
2,000 Metropolitan Trans Auth NY Rev Ser A Rfdg (AMBAC
Insd)........................................... 5.500 11/15/19 2,276,360
1,500 Metropolitan Trans Auth NY Svc Contract Ser A
Rfdg............................................ 5.125 01/01/29 1,544,955
1,000 Metropolitan Trans Auth NY Svc Contract Ser B
(MBIA Insd)..................................... 5.500 07/01/14 1,161,960
1,215 Monroe Cnty, NY Indl Dev Agy Rev Pub Impt Canal
Ponds Park Ser A................................ 7.000 06/15/13 1,222,144
1,125 Nassau Cnty, NY Impt Ser E (FSA Insd)........... 6.000 03/01/20 1,293,592
2,000 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A (Prerefunded @ 11/15/10).................. 5.750 11/15/15 2,319,920
820 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A-1 (AMBAC Insd)............................ 5.375 11/15/16 919,589
1,000 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser B Rfdg (AMBAC Insd)......................... 5.000 11/15/17 1,097,120
500 Nassau Cnty, NY Swr & Storm Ser B (MBIA Insd)... 5.000 10/01/20 540,390
1,370 Nassau Cnty, NY Swr & Storm Ser B (MBIA Insd)... 5.000 10/01/22 1,463,311
2,000 New York City Fiscal 2003 Ser I................. 5.750 03/01/16 2,260,360
1,000 New York City Indl Dev Agy Fac Rev Royal
Charter-NY Presbyterian (FSA Insd).............. 5.250 12/15/11 1,133,030
2,000 New York City Indl Dev Agy Spl Fac Rev Terminal
One Group Assn Proj (AMT)....................... 6.000 01/01/15 2,045,060
1,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev............................................. 5.500 06/15/33 1,079,880
2,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser B (FSA Insd)............................ 5.000 06/15/29 2,062,260
1,325 New York City Muni Wtr Fin Ser B................ 6.000 06/15/33 1,542,234
2,175 New York City Muni Wtr Fin Ser B (Prerefunded @
06/15/10)....................................... 6.000 06/15/33 2,556,060
1,200 New York City Ser G............................. 5.250 08/01/16 1,295,388
2,000 New York City Ser H (FGIC Insd)................. 6.000 08/01/12 2,360,280
1,750 New York City Transitional Fin Auth Rev Future
Tax Secd Ser B (MBIA Insd)...................... 5.250 05/01/16 1,934,713
1,500 New York City Transitional Fin Auth Rev Future
Tax Secd Ser D (MBIA Insd)...................... 5.250 02/01/19 1,650,000
1,000 New York St Dorm Auth Lease Rev Court Fac Ser
A............................................... 5.500 05/15/20 1,095,890
2,000 New York St Dorm Auth Lease Rev St Univ Dorm
Fac............................................. 5.375 07/01/16 2,205,720
See Notes to Financial Statements
G-9
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$1,000 New York St Dorm Auth Lease Rev St Univ Dorm Fac
(Prerefunded @ 07/01/12)........................ 5.375% 07/01/20 $ 1,150,920
1,000 New York St Dorm Auth Lease Rev St Univ Dorm Fac
(Prerefunded @ 07/01/12)........................ 5.000 07/01/32 1,125,540
3,500 New York St Dorm Auth Rev City Univ Cons Third
Ser 1 (FGIC Insd)............................... 5.250 07/01/25 3,726,205
1,625 New York St Dorm Auth Rev City Univ Sys Cons Ser
A............................................... 5.625 07/01/16 1,896,538
2,500 New York St Dorm Auth Rev City Univ Sys Third
Gen Res Ser 2 (Prerefunded @ 07/01/06).......... 6.000 07/01/20 2,720,875
1,000 New York St Dorm Auth Rev Hosp (MBIA Insd)...... 5.000 08/01/33 1,033,070
1,000 New York St Dorm Auth Rev Insd Brooklyn Law Sch
Ser B (XLCA Insd)............................... 5.375 07/01/23 1,092,590
1,500 New York St Dorm Auth Rev Mem Sloan-Kettering
Ctr Ser 1 (MBIA Insd)........................... 5.000 07/01/20 1,608,360
5,875 New York St Dorm Auth Rev Mental Hlth Fac Impt
Ser B (b)....................................... 5.250 02/15/22 6,305,520
1,000 New York St Dorm Auth Rev Sch Dist Fin Pgm Ser C
(MBIA Insd)..................................... 5.375 10/01/15 1,122,470
1,000 New York St Dorm Auth Rev Secd Hosp North Gen
Hosp Rfdg....................................... 5.750 02/15/18 1,123,560
1,370 New York St Dorm Auth Rev St Personal Income Tax
Ed Ser A........................................ 5.375 03/15/20 1,505,466
1,500 New York St Dorm Auth Rev St Univ Ed Fac
(Prerefunded @ 05/15/06)........................ 5.750 05/15/10 1,619,640
2,000 New York St Dorm Auth Rev St Univ Ed Fac 1989
Res (MBIA Insd)................................. 6.000 05/15/16 2,317,400
2,600 New York St Dorm Auth Rev St Univ Ed Fac Ser A
(MBIA Insd)..................................... 5.250 05/15/15 2,969,928
2,750 New York St Dorm Auth Revs Catholic Hlth L.I.
Oblig Grp (a)................................... 5.100 07/01/34 2,736,058
3,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser C (AMT) (MBIA Insd)...... 5.600 06/01/25 3,051,690
300 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Revolving Fd Ser A (Escrowed to
Maturity)....................................... 5.750 06/15/12 353,112
1,290 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Revolving Fd Ser E................... 6.600 06/15/09 1,314,329
95 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Ser 02............................... 5.750 06/15/12 111,207
500 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Ser 02 (Escrowed to Maturity)........ 5.750 06/15/12 588,520
2,000 New York St Environmental Fac Corp Solid Waste
Disp Rev Occidental Petroleum Corp Proj (AMT)... 6.100 11/01/30 2,065,100
1,565 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Ser B................... 5.000 06/15/20 1,677,038
See Notes to Financial Statements
G-10
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$1,340 New York St Hsg Fin Agy Rev Newburgh Interfaith
Hsg Ser A....................................... 7.050% 11/01/12 $ 1,342,345
1,075 New York St Hsg Fin Agy St Personal Income Tax
Rev Econ Dev & Hsg Ser A........................ 5.250 09/15/19 1,169,955
2,300 New York St Hsg Fin Agy St Personal Income Tax
Rev Econ Dev & Hsg Ser A (b).................... 5.250 09/15/21 2,475,329
3,000 New York St Loc Govt Assist Corp Ser E Rfdg..... 6.000 04/01/14 3,563,790
2,820 New York St Mtg Agy Rev Homeowner Mtg Ser 79
(AMT)........................................... 5.300 04/01/29 2,891,290
2,000 New York St Twy Auth Hwy & Brdg Tr Fd Ser A (FSA
Insd)........................................... 5.250 04/01/19 2,182,580
2,750 New York St Twy Auth Hwy & Brdg Tr Fd Ser B
(FGIC Insd)..................................... 5.000 04/01/16 2,986,638
1,540 New York St Twy Auth Svc Contract Rev Loc Hwy &
Brdg............................................ 5.500 04/01/16 1,738,675
5,000 New York St Twy Auth Svc Contract Rev Loc Hwy &
Brdg (Prerefunded @ 04/01/11)................... 5.250 04/01/14 5,657,300
3,460 New York St Twy Auth Svc Contract Rev Loc Hwy &
Brdg (Prerefunded @ 04/01/12)................... 5.500 04/01/16 3,998,030
1,500 New York St Urban Dev Corp Rev Personal Income
Tax Ser C-1 (FGIC Insd)......................... 5.500 03/15/19 1,700,655
2,000 New York St Urban Dev Corp Rev Personal Income
Tax St Fac Ser A................................ 5.375 03/15/19 2,186,800
1,115 New York St Urban Dev Corp Rev Proj Pine
Barrens......................................... 5.375 04/01/17 1,149,821
1,000 Rockland Cnty, NY Solid Waste Mgmt Auth Ser B
(AMT) (AMBAC Insd).............................. 5.125 12/15/28 1,032,320
1,000 Sales Tax Asset Receivable Corp Ser A (MBIA
Insd) (a)....................................... 5.000 10/15/21 1,081,050
1,000 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.250 01/01/17 1,092,530
1,500 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.250 01/01/18 1,633,875
4,000 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.000 01/01/32 4,090,440
1,500 Yonkers, NY Indl Dev Agy Civic Fac Rev Cmnty Dev
Ppty Yonkers Inc Ser A.......................... 6.625 02/01/26 1,618,140
------------
131,659,953
------------
PUERTO RICO 7.8%
5,000 Puerto Rico Comwlth Pub Impt Ser A.............. 5.250 07/01/20 5,409,350
2,000 Puerto Rico Pub Bldgs Auth Rev Govt Facs Ser I
(Comwth Gtd).................................... 5.250 07/01/33 2,095,660
------------
7,505,010
------------
See Notes to Financial Statements
G-11
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
U. S. VIRGIN ISLANDS 2.3%
$2,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes
Ln Nt Ser A (ACA Insd).......................... 6.125% 10/01/29 $ 2,240,920
------------
TOTAL LONG-TERM INVESTMENTS 146.4%
(Cost $131,002,590)....................................................... 141,405,883
SHORT-TERM INVESTMENTS 2.5%
(Cost $2,400,000)......................................................... 2,400,000
------------
TOTAL INVESTMENTS 148.9%
(Cost $133,402,590)....................................................... 143,805,883
LIABILITIES IN EXCESS OF OTHER ASSETS (2.3%)............................... (2,186,961)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (46.6%)................. (45,046,604)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%.............................. $ 96,572,318
============
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) The Trust owns 100% of the bond issuance.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
Comwth Gtd--Commonwealth of Puerto Rico
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
MBIA--Municipal Bond Investors Assurance Corp.
XLCA--XL Capital Assurance Inc.
See Notes to Financial Statements
G-12
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
October 31, 2004
ASSETS:
Total Investments (Cost $133,402,590)....................... $143,805,883
Cash........................................................ 46,545
Receivables:
Interest.................................................. 1,822,729
Investments Sold.......................................... 130,000
Other....................................................... 2,445
------------
Total Assets............................................ 145,807,602
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 3,791,365
Investment Advisory Fee................................... 71,699
Income Distributions--Common Shares....................... 28,138
Other Affiliates.......................................... 7,837
Trustees' Deferred Compensation and Retirement Plans........ 216,679
Accrued Expenses............................................ 72,962
------------
Total Liabilities....................................... 4,188,680
Preferred Shares (including accrued distributions).......... 45,046,604
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 96,572,318
============
NET ASSET VALUE PER COMMON SHARE ($96,572,318 divided by
5,655,638 shares outstanding)............................. $ 17.08
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 5,655,638 shares issued and
outstanding).............................................. $ 56,556
Paid in Surplus............................................. 83,570,387
Net Unrealized Appreciation................................. 10,403,293
Accumulated Net Realized Gain............................... 1,794,925
Accumulated Undistributed Net Investment Income............. 747,157
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 96,572,318
============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 1,800 issued with liquidation preference of
$25,000 per share)........................................ $ 45,000,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $141,572,318
============
See Notes to Financial Statements
G-13
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended October 31, 2004
INVESTMENT INCOME:
Interest.................................................... $ 6,721,653
-----------
EXPENSES:
Investment Advisory Fee..................................... 841,887
Preferred Share Maintenance................................. 128,173
Trustees' Fees and Related Expenses......................... 65,000
Administrative Fee.......................................... 41,028
Legal....................................................... 22,744
Custody..................................................... 8,887
Other....................................................... 120,437
-----------
Total Expenses.......................................... 1,228,156
-----------
NET INVESTMENT INCOME....................................... $ 5,493,497
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 1,795,555
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 9,506,516
End of the Period......................................... 10,403,293
-----------
Net Unrealized Appreciation During the Period............... 896,777
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 2,692,332
===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (524,494)
===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $ 7,661,335
===========
See Notes to Financial Statements
G-14
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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..................................... $ 5,493,497 $ 5,754,920
Net Realized Gain......................................... 1,795,555 1,838,729
Net Unrealized Appreciation/Depreciation During the
Period.................................................. 896,777 (674,859)
Distributions to Preferred Shareholders:
Net Investment Income................................... (486,341) (124,202)
Net Realized Gain....................................... (38,153) (348,817)
----------- -----------
Change in Net Assets Applicable to Common Shares from
Operations.............................................. 7,661,335 6,445,771
Distributions to Common Shareholders:
Net Investment Income................................... (5,226,318) (5,617,964)
Net Realized Gain....................................... (1,814,196) (3,597,551)
----------- -----------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
INVESTMENT ACTIVITIES................................... 620,821 (2,769,744)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................... 95,951,497 98,721,241
----------- -----------
End of the Period (Including accumulated undistributed net
investment income of $747,157 and $966,409,
respectively)........................................... $96,572,318 $95,951,497
=========== ===========
See Notes to Financial Statements
G-15
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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.................... $ 16.97 $ 17.46 $ 17.39
------- ------- -------
Net Investment Income..................................... .97 1.01 1.07
Net Realized and Unrealized Gain/Loss..................... .48 .21 .24
Common Share Equivalent of Distributions Paid to Preferred
Shareholders:
Net Investment Income................................... (.09) (.02) (.09)
Net Realized Gain....................................... (.01) (.06) (.04)
------- ------- -------
Total from Investment Operations............................ 1.35 1.14 1.18
Distributions Paid to Common Shareholders:
Net Investment Income................................... (.92) (.99) (.97)
Net Realized Gain....................................... (.32) (.64) (.14)
------- ------- -------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 17.08 $ 16.97 $ 17.46
======= ======= =======
Common Share Market Price at End of the Period.............. $ 15.43 $ 15.17 $ 15.45
Total Return (b)............................................ 10.33% 8.82% 8.37%
Net Assets Applicable to Common Shares at End of the Period
(In millions)............................................. $ 96.6 $ 96.0 $ 98.7
Ratio of Expenses to Average Net Assets Applicable to Common
Shares (c)................................................ 1.29% 1.31% 1.38%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c)........................... 5.76% 5.97% 6.31%
Portfolio Turnover.......................................... 27% 22% 43%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
Shares (c)................................................ .88% .90% .94%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (d)........................... 5.25% 5.84% 5.76%
SENIOR SECURITIES:
Total Preferred Shares Outstanding.......................... 1,800 1,800 1,800
Asset Coverage Per Preferred Share (e)...................... $78,677 $78,322 $79,871
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 period ended October 31, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses per share by $.01 and increase the ratio of net investment income to
average net asset applicable to common shares by .01% Per share, ratios and
supplemental data for the periods prior to October 31, 2002 have not been
restated to reflect this change in presentation.
(b)Total return 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.
G-16
NEW YORK QUALITY MUNICIPAL TRUST
FINANCIAL HIGHLIGHTS continued
TWO MONTHS
YEAR ENDED OCTOBER 31, ENDED YEAR ENDED AUGUST 31,
-------------------------------- OCTOBER 31, -----------------------------------------
2001 2000 1999 1998 1998 1997 1996 1995
------------------------------------------------------------------------------------------
$ 16.25 $ 15.73 $ 17.42 $ 17.39 $ 16.83 $ 16.15 $ 16.47 $ 16.63
------- ------- ------- -------- -------- -------- -------- --------
1.13 1.16 1.18 .20 1.21 1.22 1.25 1.24
1.07 .57 (1.65) .03 .56 .73 (.23) .17
(.26) (.32) (.25) (.05) (.28) (.28) (.29) (.26)
-0- -0- (.02) -0- -0- -0- -0- (.04)
------- ------- ------- -------- -------- -------- -------- --------
1.94 1.41 (.74) .18 1.49 1.67 .73 1.11
(.80) (.89) (.90) (.15) (.93) (.99) (1.05) (1.05)
-0- -0- (.05) -0- -0- -0- -0- (.22)
------- ------- ------- -------- -------- -------- -------- --------
$ 17.39 $ 16.25 $ 15.73 $ 17.42 $ 17.39 $ 16.83 $ 16.15 $ 16.47
======= ======= ======= ======== ======== ======== ======== ========
$ 15.30 $ 13.75 $13.375 $ 16.875 $ 16.75 $ 16.125 $ 16.50 $ 15.50
17.45% 9.64% -15.88% 1.64%* 9.94% 3.94% 13.62% 9.73%
$ 98.4 $ 91.9 $ 89.0 $ 98.5 $ 98.3 $ 95.2 $ 91.2 $ 92.9
1.61% 1.73% 1.66% 1.67% 1.64% 1.68% 1.74% 1.76%
6.62% 7.37% 7.03% 6.78% 7.08% 7.44% 7.52% 7.74%
17% 39% 45% 1%* 26% 17% 23% 50%
1.09% 1.15% 1.13% 1.15% 1.12% 1.13% 1.18% 1.17%
5.11% 5.31% 5.53% 5.23% 5.42% 5.73% 5.77% 6.08%
1,800 1,800 1,800 900 900 900 900 900
$79,647 $76,055 $74,438 $159,452 $159,258 $155,768 $151,333 $153,270
$25,000 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
$25,000 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
See Notes to Financial Statements
G-17
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen New York Quality Municipal Trust (the "Trust") is registered as a
non-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 as well as New York State and
New York City income taxes, consistent with preservation of capital. The Trust
will invest in a portfolio consisting substantially of New York municipal
obligations rated investment grade at the time of investment, but may invest up
to 20% of its assets in unrated securities which are believed to be of
comparable quality to those rated investment grade. The Trust commenced
investment operations on September 27, 1991. 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.
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 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. At October 31, 2004, the Trust had $3,791,365 of when-issued
and 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.
G-18
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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........................ $133,181,314
============
Gross tax unrealized appreciation........................... $ 10,645,861
Gross tax unrealized depreciation........................... (21,292)
------------
Net tax unrealized appreciation on investments.............. $ 10,624,569
============
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........................................... $ 194,594 $ 121,134
Long-term capital gain.................................... 1,665,095 3,893,026
---------- ----------
$1,859,689 $4,014,160
========== ==========
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 differences
relating to book to tax accretion differences totaling $90 has been reclassified
from accumulated undistributed net investment income to accumulated net realized
gain.
As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $ 226,915
Undistributed long-term capital gain........................ 1,727,881
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 $9,500 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP,
G-19
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
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 $27,300 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 has implemented 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 $36,649,660 and $36,764,876,
respectively.
4. PREFERRED SHARES
The Trust has outstanding 1,800 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is reset through an auction process every 28
days. The rate in effect on October 31, 2004 was 1.400%. During the year ended
October 31, 2004, the rates ranged from .917% to 1.500%.
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.
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.
5. 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.
G-20
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of Van Kampen New York Quality
Municipal Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen New York Quality Municipal 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 New York Quality Municipal 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
G-21
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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
G-22
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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
prorata share of brokerage commissions incurred with respect to the Plan Agent's
open market purchases in connection with the reinvestment of dividends and
distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
G-23
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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 99.9% of the income distributions as a
tax-exempt income distribution. The Trust designated and paid $1,665,095 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.
G-24
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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 regards to the election of the following trustees by the common
shareholders of the Trust:
# OF SHARES
-----------------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------------
R. Craig Kennedy........................................... 4,650,734 289,863
Jack E. Nelson............................................. 4,654,734 285,863
Richard F. Powers, III..................................... 4,649,265 291,332
With regards to the election of the following trustee by the preferred
shareholders of the Trust:
# OF SHARES
----------------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------------
Hugo F. Sonnenschein........................................ 1,784 1
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.
G-25
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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 1991 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.
G-26
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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.
G-27
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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 1991 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).
G-28
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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.
G-29
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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.
G-30
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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.
G-31
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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 1991 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.
G-32
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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.
G-33
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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.
G-34
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)
G-35
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.
VNM ANR 12/04 RN04-02840P-Y10/04
G-36
APPENDIX H
SEMIANNUAL REPORT OF VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST,
DATED APRIL 30, 2005
H-1
Item 1. Report to Shareholders
The Trust's semi-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 New
York Quality Municipal 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
---------------------------------------------------------------------------------------
H-2
Performance Summary as of 4/30/05
NEW YORK QUALITY MUNICIPAL TRUST
SYMBOL: VNM
------------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (9/27/91) 8.21% 7.05%
10-year 7.68 7.16
5-year 9.66 10.23
1-year 10.84 9.99
6-month 3.25 -0.06
------------------------------------------------------------
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 New York Municipal Bond Index is a broad-based statistical
composite of New York 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.
H-3
Trust Report
FOR THE 6-MONTH PERIOD ENDED APRIL 30, 2005
Van Kampen New York Quality Municipal 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.
New York continued to be one of the most active markets in the nation for new
issuance during the period, although economic conditions were not uniformly
strong. New York's economy continued to improve, and its credit rating was
upgraded due in large part to a guardedly optimistic outlook for New York City's
fiscal health. The city continued to issue Liberty bonds to fund reconstruction
efforts at the site of the World Trade Center. By contrast, the northern part of
the state continued to struggle economically.
(1)Team members may change without notice at any time.
H-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 New York
Municipal Bond Index. On a market price basis, the trust underperformed its
benchmark.
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2005
------------------------------------------------------------
LEHMAN BROTHERS
BASED ON NEW YORK MUNICIPAL
BASED ON NAV MARKET PRICE BOND INDEX
3.25% -0.06% 1.74%
------------------------------------------------------------
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 in 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. We effected
this positioning in two ways. 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.
We kept the trust's exposure well diversified across the major sectors of the
New York municipal market. Much of our relative-value trading activity was
focused on selling issues that had been pre-refunded and purchasing what we
H-5
believed to be more attractive securities in sectors such as water and sewer and
health care. The trust remained focused on investment-grade securities, with 99
percent of the portfolio rated BBB or higher at the end of the period.
There is no guarantee the security sectors mentioned will continue to perform
well or be held by the trust in the future.
RATINGS ALLOCATION AS OF 4/30/05 TOP 5 SECTORS AS OF 4/30/05
AAA/Aaa 57.5% General Purpose 20.2%
AA/Aa 23.6 Transportation 17.8
A/A 13.4 Water & Sewer 13.7
BBB/Baa 4.6 Higher Education 11.5
NR 0.9 Health Care 11.5
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 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.
H-6
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.
H-7
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.
H-8
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
MUNICIPAL BONDS 143.2%
NEW YORK 138.6%
$1,000 Amherst, NY Indl Dev Agy Rev Fac Student Hsg Ser
A (AMBAC Insd).................................. 5.750% 08/01/25 $ 1,120,680
1,250 Erie Cnty Ny Pub Impt Ser B (MBIA Insd)......... 5.250 04/01/18 1,381,550
1,250 Erie Cnty, NY Indl Dev Agy Sch Fac Rev City of
Buffalo Proj (FSA Insd)......................... 5.750 05/01/19 1,413,038
2,000 Long Island Pwr Auth NY Elec Sys Rev Gen
Ser C........................................... 5.500 09/01/19 2,198,180
3,300 Metropolitan Trans Auth NY Rev Ser A
(AMBAC Insd).................................... 5.000 11/15/33 3,484,074
2,000 Metropolitan Trans Auth NY Rev Ser A Rfdg (AMBAC
Insd)........................................... 5.500 11/15/19 2,245,560
2,000 Metropolitan Trans Auth NY Rev Ser A Rfdg (FSA
Insd)........................................... 5.000 11/15/30 2,088,700
1,500 Metropolitan Trans Auth NY Svc Contract
Ser A Rfdg...................................... 5.125 01/01/29 1,565,715
1,000 Metropolitan Trans Auth NY Svc Contract Ser B
(MBIA Insd)..................................... 5.500 07/01/14 1,146,830
1,215 Monroe Cnty, NY Indl Dev Agy Rev Pub Impt Canal
Ponds Park Ser A................................ 7.000 06/15/13 1,220,783
1,125 Nassau Cnty, NY Impt Ser E (FSA Insd)........... 6.000 03/01/20 1,265,546
2,000 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A (Prerefunded @ 11/15/10).................. 5.750 11/15/15 2,266,960
820 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A-1 (AMBAC Insd)............................ 5.375 11/15/16 909,224
500 Nassau Cnty, NY Swr & Storm Ser B (MBIA Insd)... 5.000 10/01/20 538,305
1,370 Nassau Cnty, NY Swr & Storm Ser B (MBIA Insd)... 5.000 10/01/22 1,463,859
2,000 New York City Fiscal 2003 Ser I................. 5.750 03/01/16 2,241,540
2,100 New York City Hsg Dev Corp Rev Cap Fd Pgm NYC
Hsg Auth Pgm Ser A (FGIC Insd) (a).............. 5.000 07/01/25 2,219,973
1,000 New York City Indl Dev Agy Fac Rev Royal
Charter-NY Presbyterian (FSA Insd).............. 5.250 12/15/11 1,113,870
2,000 New York City Indl Dev Agy Spl Fac Rev Terminal
One Group Assn Proj (AMT)....................... 6.000 01/01/15 2,028,480
2,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser B (FSA Insd)............................ 5.000 06/15/29 2,076,020
4,835 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser C (MBIA Insd)........................... 5.000 06/15/28 5,120,459
4,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser D....................................... 5.000 06/15/39 4,170,640
1,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev............................................. 5.500 06/15/33 1,088,530
1,325 New York City Muni Wtr Fin Ser B................ 6.000 06/15/33 1,509,029
1,200 New York City Ser G............................. 5.250 08/01/16 1,285,920
2,115 New York City Ser G............................. 5.000 12/01/26 2,204,084
2,000 New York City Ser H (FGIC Insd)................. 6.000 08/01/12 2,318,780
See Notes to Financial Statements
H-9
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$2,000 New York City Ser K............................. 5.000% 08/01/24 $ 2,103,960
1,500 New York City Transitional Cultural Res Rev
Amern Museum Nat History Ser A Rfdg (MBIA
Insd)........................................... 5.000 07/01/44 1,559,415
1,750 New York City Transitional Fin Auth Rev Future
Tax Secd Ser B (MBIA Insd)...................... 5.250 05/01/16 1,929,480
1,500 New York City Transitional Fin Auth Rev Future
Tax Secd Ser D (MBIA Insd)...................... 5.250 02/01/19 1,644,825
1,000 New York St Dorm Auth Lease Rev Court
Fac Ser A....................................... 5.500 05/15/20 1,094,020
2,750 New York St Dorm Auth Rev Catholic Hlth L.I.
Oblig Grp....................................... 5.100 07/01/34 2,804,313
3,500 New York St Dorm Auth Rev City Univ Cons Third
Ser 1 (FGIC Insd)............................... 5.250 07/01/25 3,733,240
1,625 New York St Dorm Auth Rev City Univ Sys Cons Ser
A............................................... 5.625 07/01/16 1,858,740
2,500 New York St Dorm Auth Rev Dept Hlth Ser A Rfdg
(CIFG Insd)..................................... 5.000 07/01/25 2,643,875
3,500 New York St Dorm Auth Rev FHA Insd Mtg
Montefiore Hosp (FGIC Insd)..................... 5.000 08/01/29 3,686,165
1,000 New York St Dorm Auth Rev Hosp (MBIA Insd)...... 5.000 08/01/33 1,050,190
1,000 New York St Dorm Auth Rev Insd Brooklyn Law Sch
Ser B (XLCA Insd)............................... 5.375 07/01/23 1,108,960
1,500 New York St Dorm Auth Rev Mem Sloan-Kettering
Ctr Ser 1 (MBIA Insd)........................... 5.000 07/01/20 1,601,775
890 New York St Dorm Auth Rev Mental Hlth Fac
Ser B........................................... 5.250 02/15/22 956,376
1,250 New York St Dorm Auth Rev Mental Hlth Svc Fac
Impt B (AMBAC Insd)............................. 5.000 02/15/35 1,310,600
1,000 New York St Dorm Auth Rev Sch Dist Fin Pgm Ser C
(MBIA Insd)..................................... 5.375 10/01/15 1,112,270
1,000 New York St Dorm Auth Rev Secd Hosp North Gen
Hosp Rfdg....................................... 5.750 02/15/18 1,112,240
2,000 New York St Dorm Auth Rev St Univ Ed Fac 1989
Res (MBIA Insd)................................. 6.000 05/15/16 2,269,960
2,600 New York St Dorm Auth Rev St Univ Ed Fac Ser A
(MBIA Insd)..................................... 5.250 05/15/15 2,926,196
2,500 New York St Dorm Auth St Pers Income Tax Rev Ed
Ser A (AMBAC Insd).............................. 5.000 03/15/34 2,632,325
3,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser C (AMT) (MBIA Insd)...... 5.600 06/01/25 3,050,730
300 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Revolving Fd Ser A (Escrowed to
Maturity)....................................... 5.750 06/15/12 345,714
95 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Ser 02............................... 5.750 06/15/12 109,080
500 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Ser 02 (Escrowed to Maturity)........ 5.750 06/15/12 576,190
See Notes to Financial Statements
H-10
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$2,000 New York St Environmental Fac Corp Solid Waste
Disp Rev Occidental Petroleum Corp Proj (AMT)... 6.100% 11/01/30 $ 2,054,180
1,565 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Ser B................... 5.000 06/15/20 1,670,152
1,340 New York St Hsg Fin Agy Rev Newburgh Interfaith
Hsg Ser A (b)................................... 7.050 11/01/12 1,342,064
1,075 New York St Hsg Fin Agy St Personal Income Tax
Rev Econ Dev & Hsg Ser A........................ 5.250 09/15/19 1,170,761
2,300 New York St Hsg Fin Agy St Personal Income Tax
Rev Econ Dev & Hsg Ser A (b).................... 5.250 09/15/21 2,494,166
2,000 New York St Hsg Fin Agy St Personal Income Tax
Rev Econ Dev & Hsg Ser A (FGIC Insd)............ 5.000 09/15/30 2,102,560
3,000 New York St Loc Govt Assist Corp Ser E Rfdg..... 6.000 04/01/14 3,516,450
2,820 New York St Mtg Agy Rev Homeowner Mtg
Ser 79 (AMT).................................... 5.300 04/01/29 2,926,088
2,000 New York St Twy Auth Hwy & Brdg Tr Fd Ser A (FSA
Insd)........................................... 5.250 04/01/19 2,190,920
2,750 New York St Twy Auth Hwy & Brdg Tr Fd Ser B
(FGIC Insd)..................................... 5.000 04/01/16 2,943,215
1,540 New York St Twy Auth Svc Contract Rev Loc Hwy &
Brdg............................................ 5.500 04/01/16 1,717,331
1,000 Rockland Cnty, NY Solid Waste Mgmt Auth Ser B
(AMT) (AMBAC Insd).............................. 5.125 12/15/28 1,049,480
1,000 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.250 01/01/17 1,093,630
1,500 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.250 01/01/18 1,638,585
4,000 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.000 01/01/32 4,131,400
1,360 Warren & Wash Cnty NY Indl Dev Agy Civic Fac Rev
Glens Falls Hosp Proj Ser A (FSA Insd).......... 5.000 12/01/35 1,419,269
1,535 West Islip NY Un Free Sch Dist Rfdg (FSA
Insd)........................................... 5.000 10/01/18 1,683,250
1,500 Yonkers, NY Indl Dev Agy Civic Fac Rev Cmnty Dev
Ppty Yonkers Inc Ser A.......................... 6.625 02/01/26 1,620,075
------------
131,670,544
------------
PUERTO RICO 2.2%
2,000 Puerto Rico Pub Bldg Auth Rev Govt Fac Ser I
(Comwth Gtd).................................... 5.250 07/01/33 2,128,600
------------
See Notes to Financial Statements
H-11
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
U. S. VIRGIN ISLANDS 2.4%
$2,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes
Ln Nt Ser A (ACA Insd).......................... 6.125% 10/01/29 $ 2,239,020
------------
TOTAL LONG-TERM INVESTMENTS 143.2%
(Cost $128,066,190)....................................................... 136,038,164
SHORT-TERM INVESTMENTS 4.7%
(Cost $4,520,000)......................................................... 4,520,000
------------
TOTAL INVESTMENTS 147.9%
(Cost $132,586,190)....................................................... 140,558,164
LIABILITIES IN EXCESS OF OTHER ASSETS (0.5%)............................... (500,178)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (47.4%)................. (45,035,509)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%.............................. $ 95,022,477
============
Percentages are calculated as a percentage of net assets applicable to common
shares.
(a) Securities purchased on a when-issued or delayed delivery basis.
(b) The Trust owns 100% of the bond issuance.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
CIFG--CDC IXIS Financial Guaranty
Comwth Gtd--Commonwealth of Puerto Rico
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
MBIA--Municipal Bond Investors Assurance Corp.
XLCA--XL Capital Assurance Inc.
See Notes to Financial Statements
H-12
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2005 (Unaudited)
ASSETS:
Total Investments (Cost $132,586,190)....................... $140,558,164
Cash........................................................ 18,040
Receivables:
Investments Sold.......................................... 2,358,032
Interest.................................................. 1,795,732
Other....................................................... 397
------------
Total Assets............................................ 144,730,365
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 4,316,771
Investment Advisory Fee................................... 62,791
Income Distributions--Common Shares....................... 26,222
Other Affiliates.......................................... 5,523
Trustees' Deferred Compensation and Retirement Plans........ 227,994
Accrued Expenses............................................ 33,078
------------
Total Liabilities....................................... 4,672,379
Preferred Shares (including accrued distributions).......... 45,035,509
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 95,022,477
============
NET ASSET VALUE PER COMMON SHARE ($95,022,477 divided by
5,655,638 shares outstanding)............................. $ 16.80
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 5,655,638 shares issued and
outstanding).............................................. $ 56,556
Paid in Surplus............................................. 83,570,387
Net Unrealized Appreciation................................. 7,971,974
Accumulated Net Realized Gain............................... 2,690,202
Accumulated Undistributed Net Investment Income............. 733,358
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 95,022,477
============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 1,800 issued with liquidation preference of
$25,000 per share)........................................ $ 45,000,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $140,022,477
============
See Notes to Financial Statements
H-13
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended April 30, 2005 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $3,269,418
----------
EXPENSES:
Investment Advisory Fee..................................... 380,901
Preferred Share Maintenance................................. 63,230
Trustees' Fees and Related Expenses......................... 18,633
Legal....................................................... 12,837
Custody..................................................... 4,065
Other....................................................... 64,726
----------
Total Expenses.......................................... 544,392
----------
NET INVESTMENT INCOME....................................... $2,725,026
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $2,690,433
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 10,403,293
End of the Period......................................... 7,971,974
----------
Net Unrealized Depreciation During the Period............... (2,431,319)
----------
NET REALIZED AND UNREALIZED GAIN............................ $ 259,114
==========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (425,585)
==========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $2,558,555
==========
See Notes to Financial Statements
H-14
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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...................................... $ 2,725,026 $ 5,493,497
Net Realized Gain.......................................... 2,690,433 1,795,555
Net Unrealized Appreciation/Depreciation During the
Period................................................... (2,431,319) 896,777
Distributions to Preferred Shareholders:
Net Investment Income.................................... (267,568) (486,341)
Net Realized Gain........................................ (158,017) (38,153)
----------- -----------
Change in Net Assets Applicable to Common Shares from
Operations............................................... 2,558,555 7,661,335
Distributions to Common Shareholders:
Net Investment Income.................................... (2,471,257) (5,226,318)
Net Realized Gain........................................ (1,637,139) (1,814,196)
----------- -----------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
INVESTMENT ACTIVITIES.................................... (1,549,841) 620,821
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period.................................... 96,572,318 95,951,497
----------- -----------
End of the Period (Including accumulated undistributed net
investment income of $733,358 and $747,157,
respectively)............................................ $95,022,477 $96,572,318
=========== ===========
See Notes to Financial Statements
H-15
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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 2002 (a)
-------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD........... $ 17.08 $ 16.97 $ 17.46 $ 17.39
------- ------- ------- -------
Net Investment Income............................ .48 .97 1.01 1.07
Net Realized and Unrealized Gain/Loss............ .05 .48 .21 .24
Common Share Equivalent of Distributions Paid to
Preferred Shareholders:
Net Investment Income.......................... (.05) (.09) (.02) (.09)
Net Realized Gain.............................. (.03) (.01) (.06) (.04)
------- ------- ------- -------
Total from Investment Operations................... .45 1.35 1.14 1.18
Distributions Paid to Common Shareholders:
Net Investment Income.......................... (.44) (.92) (.99) (.97)
Net Realized Gain.............................. (.29) (.32) (.64) (.14)
------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD................. $ 16.80 $ 17.08 $ 16.97 $ 17.46
======= ======= ======= =======
Common Share Market Price at End of the Period..... $ 14.69 $ 15.43 $ 15.17 $ 15.45
Total Return (b)................................... -0.06%* 10.33% 8.82% 8.37%
Net Assets Applicable to Common Shares at End of
the Period (In millions)......................... $ 95.0 $ 96.6 $ 96.0 $ 98.7
Ratio of Expenses to Average Net Assets Applicable
to Common Shares (c)............................. 1.16% 1.29% 1.31% 1.38%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (c)........... 5.81% 5.76% 5.97% 6.31%
Portfolio Turnover................................. 32%* 27% 22% 43%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including
Preferred Shares (c)............................. .79% .88% .90% .94%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (d)........... 5.24% 5.25% 5.84% 5.76%
SENIOR SECURITIES:
Total Preferred Shares Outstanding................. 1,800 1,800 1,800 1,800
Asset Coverage Per Preferred Share (e)............. $77,810 $78,677 $78,322 $79,871
Involuntary Liquidating Preference Per Preferred
Share............................................ $25,000 $25,000 $25,000 $25,000
Average Market Value Per Preferred Share........... $25,000 $25,000 $25,000 $25,000
* 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 period ended October 31, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses per share by $.01 and increase the ratio of net investment income to
average net asset applicable to common shares by .01% Per share, ratios and
supplemental data for the periods prior to October 31, 2002 have not been
restated to reflect this change in presentation.
(b)Total return 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.
H-16
TWO MONTHS
YEAR ENDED OCTOBER 31, ENDED YEAR ENDED AUGUST 31,
------------------------------- OCTOBER 31, -----------------------------------------
2001 2000 1999 1998 1998 1997 1996 1995
-----------------------------------------------------------------------------------------
$ 16.25 $ 15.73 $ 17.42 $ 17.39 $ 16.83 $ 16.15 $ 16.47 $ 16.63
------- ------- ------- -------- -------- -------- -------- --------
1.13 1.16 1.18 .20 1.21 1.22 1.25 1.24
1.07 .57 (1.65) .03 .56 .73 (.23) .17
(.26) (.32) (.25) (.05) (.28) (.28) (.29) (.26)
-0- -0- (.02) -0- -0- -0- -0- (.04)
------- ------- ------- -------- -------- -------- -------- --------
1.94 1.41 (.74) .18 1.49 1.67 .73 1.11
(.80) (.89) (.90) (.15) (.93) (.99) (1.05) (1.05)
-0- -0- (.05) -0- -0- -0- -0- (.22)
------- ------- ------- -------- -------- -------- -------- --------
$ 17.39 $ 16.25 $ 15.73 $ 17.42 $ 17.39 $ 16.83 $ 16.15 $ 16.47
======= ======= ======= ======== ======== ======== ======== ========
$ 15.30 $ 13.75 $13.375 $ 16.875 $ 16.75 $ 16.125 $ 16.50 $ 15.50
17.45% 9.64% -15.88% 1.64%* 9.94% 3.94% 13.62% 9.73%
$ 98.4 $ 91.9 $ 89.0 $ 98.5 $ 98.3 $ 95.2 $ 91.2 $ 92.9
1.61% 1.73% 1.66% 1.67% 1.64% 1.68% 1.74% 1.76%
6.62% 7.37% 7.03% 6.78% 7.08% 7.44% 7.52% 7.74%
17% 39% 45% 1%* 26% 17% 23% 50%
1.09% 1.15% 1.13% 1.15% 1.12% 1.13% 1.18% 1.17%
5.11% 5.31% 5.53% 5.23% 5.42% 5.73% 5.77% 6.08%
1,800 1,800 1,800 900 900 900 900 900
$79,647 $76,055 $74,438 $159,452 $159,258 $155,768 $151,333 $153,270
$25,000 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
$25,000 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
See Notes to Financial Statements
H-17
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen New York Quality Municipal Trust (the "Trust") is registered as a
non-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 as well as New York State and
New York City income taxes, consistent with preservation of capital. The Trust
will invest in a portfolio consisting substantially of New York municipal
obligations rated investment grade at the time of investment, but may invest up
to 20% of its assets in unrated securities which are believed to be of
comparable quality to those rated investment grade. The Trust commenced
investment operations on September 27, 1991.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
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 $2,203,824 of when-issued and
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.
H-18
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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........................ $132,353,501
============
Gross tax unrealized appreciation........................... $ 8,247,150
Gross tax unrealized depreciation........................... (42,487)
------------
Net tax unrealized appreciation on investments.............. $ 8,204,663
============
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........................................... $ 194,594
Long-term capital gain.................................... 1,665,095
----------
$1,859,689
==========
As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $ 226,915
Undistributed long-term capital gain........................ 1,727,881
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 $3,800 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 $15,300
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, 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 has implemented deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may
H-19
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
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 $44,034,695 and $49,473,466,
respectively.
4. PREFERRED SHARES
The Trust has outstanding 1,800 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is reset through an auction process every 28
days. The rate in effect on April 30, 2005 was 2.400%. During the six months
ended April 30, 2005, the rates ranged from 1.700% to 2.400%.
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.
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.
5. 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.
6. TRUST MERGER
On May 11, 2005, the Trustees of New York Quality Municipal Trust ("Target
Trust") announced its intention to merge the Target Trust into Trust for
Investment Grade New York Municipals ("Acquiring Trust"). The Trustees of each
of the trusts have approved in principal an agreement and plan of reorganization
between the trusts providing for a transfer of assets and liabilities of the
Target Trust to the Acquiring Trust in exchange for shares of beneficial
interest of the Acquiring Trust (the "Reorganization"). The Reorganization is
subject to the approval by the shareholders of the Target Trust.
7. 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
H-20
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
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.
H-21
VAN KAMPEN NEW YORK QUALITY MUNICIPAL 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
STEPHANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
JAMES W. GARRET
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.
H-22
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)
H-23
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.
VNM SAR 6/05 RN05-01323P-Y04/05
(VAN KAMPEN INVESTMENTS LOGO)
H-24
APPENDIX I
ANNUAL REPORT OF VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST,
DATED OCTOBER 31, 2004
I-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 New
York Value 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
---------------------------------------------------------------------------------------
I-2
Performance Summary as of 10/31/04
NEW YORK VALUE MUNICIPAL INCOME TRUST
SYMBOL: VNV
---------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (4/30/93) 7.31% 6.35%
10-year 9.59 10.46
5-year 9.99 9.86
1-year 8.93 7.24
---------------------------------------------------------
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 New York Municipal Bond Index is a broad-based statistical
composite of New York 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.
I-3
Trust Report
FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2004
Van Kampen New York Value 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.
I-4
While New York was still among the largest issuers in the country during the
period, its overall issuance fell by 18 percent for the first nine months of
2004 relative to the same period in 2003. Many local municipalities moved to
take advantage of relatively low interest rates during the period by refinancing
their existing debt. The state's ongoing economic improvement led to an upgrade
by Moody's.
PERFORMANCE ANALYSIS
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ significantly. On both an NAV basis and a market price basis,
the trust outperformed its benchmark, the Lehman Brothers New York 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
TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2004
--------------------------------------------------------------
BASED ON BASED ON LEHMAN BROTHERS NEW YORK
NAV MARKET PRICE MUNICIPAL BOND INDEX
8.93% 7.24% 5.79%
--------------------------------------------------------------
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.
I-5
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.
We continued to pursue relative value opportunities at the long end of the
market, buying securities when 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 87 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
transportation, 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.
I-6
RATINGS ALLOCATION AS OF 10/31/04
AAA/Aaa 57.8%
AA/Aa 29.8
A/A 5.7
BBB/Baa 6.7
TOP 5 SECTORS AS OF 10/31/04
Transportation 18.6%
General Purpose 12.6
Health Care 12.3
Higher Education 12.1
Industrial Revenue 10.7
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 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.
I-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 1-202-942-8090. 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.
I-8
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
MUNICIPAL BONDS 154.6%
NEW YORK 145.5%
$1,500 Erie Cnty, NY Indl Dev Agy Sch Fac Rev City of
Buffalo Proj (FSA Insd)......................... 5.750% 05/01/20 $ 1,726,425
1,100 Islip, NY Res Recovery Agy Rev 1985 Fac Ser E
(AMT) (FSA Insd)................................ 5.750 07/01/20 1,220,802
2,000 Islip, NY Res Recovery Agy Rev 1985 Fac Ser B
(AMT) (AMBAC Insd).............................. 7.250 07/01/11 2,451,380
2,000 Long Island Pwr Auth NY Elec Sys Rev Gen
Ser C........................................... 5.500 09/01/19 2,194,080
1,000 Metropolitan Trans Auth NY Rev Ser A Rfdg (AMBAC
Insd)........................................... 5.500 11/15/19 1,138,180
1,000 Metropolitan Trans Auth NY Svc Contract
Ser A Rfdg...................................... 5.125 01/01/29 1,029,970
1,000 Metropolitan Trans Auth NY Svc Contract Ser B
(MBIA Insd)..................................... 5.500 07/01/14 1,161,960
1,115 Monroe Woodbury, NY Cent Sch Ser A Rfdg (FGIC
Insd)........................................... 5.000 05/15/19 1,219,855
1,500 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A (AMBAC Insd).............................. 5.000 11/15/18 1,637,265
295 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A-1 (AMBAC Insd)............................ 5.375 11/15/16 330,828
1,000 Nassau Cnty, NY Swr & Storm Wtr Fin Auth Sys Rev
Ser B (MBIA Insd)............................... 5.000 10/01/21 1,074,840
1,000 New York City Hsg Dev Corp Multi-Family Hsg Rev
Ser A (AMT)..................................... 5.950 11/01/32 1,049,480
1,900 New York City Indl Dev Agy Brooklyn Navy
Yard (AMT)...................................... 5.650 10/01/28 1,790,522
1,355 New York City Indl Dev Agy Civic Fac Rev
Nightingale Bamford Sch Rfdg (AMBAC Insd) (b)... 5.250 01/15/19 1,489,890
2,000 New York City Indl Dev Agy Spl Fac Rev Terminal
One Group Assn Proj (AMT)....................... 6.000 01/01/15 2,045,060
1,230 New York City Indl Dev Civic YMCA Gtr NY Proj... 5.850 08/01/08 1,333,763
1,500 New York City Indl Dev Civic YMCA Gtr NY Proj... 5.800 08/01/16 1,609,635
1,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev............................................. 5.500 06/15/33 1,079,880
3,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Ser B (FGIC Insd)............................... 5.250 06/15/29 3,146,220
1,500 New York City Ser E Rfdg (MBIA Insd)............ 6.200 08/01/08 1,702,605
1,000 New York City Ser H (FGIC Insd)................. 6.000 08/01/12 1,180,140
60 New York City Transitional Fin Auth Rev Unref
Future Tax Secd Ser A........................... 5.000 08/15/27 61,005
1,750 New York City Transitional Fin Auth Rev Future
Tax Secd Ser B (MBIA Insd)...................... 5.250 05/01/16 1,934,712
1,000 New York City Transitional Fin Auth Rev Future
Tax Secd Ser C (AMBAC Insd)..................... 5.250 08/01/21 1,085,010
See Notes to Financial Statements
I-9
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$1,000 New York City Transitional Fin Auth Rev Future
Tax Secd Ser D (MBIA Insd)...................... 5.250% 02/01/19 $ 1,100,000
1,000 New York St Dorm Auth Lease Rev Court Fac
Ser A........................................... 5.375 05/15/22 1,074,320
745 New York St Dorm Auth Lease Rev Master Boces Pgm
(FSA Insd)...................................... 5.250 08/15/21 812,564
500 New York St Dorm Auth Lease Rev Master Boces Pgm
(FSA Insd)...................................... 5.250 08/15/23 539,575
2,150 New York St Dorm Auth Lease Rev Master Boces Pgm
Ser A (FSA Insd) (b)............................ 5.250 08/15/16 2,383,877
1,000 New York St Dorm Auth Lease Rev St Univ Dorm
Fac............................................. 5.375 07/01/16 1,102,860
820 New York St Dorm Auth Lease Univ Dorm
Fac Ser B....................................... 5.125 07/01/28 846,060
2,055 New York St Dorm Auth Lease Univ Dorm Fac Ser B
(Prerefunded @ 7/01/09)......................... 5.125 07/01/28 2,309,224
1,500 New York St Dorm Auth Rev City Univ Sys Cons Ser
A............................................... 5.625 07/01/16 1,750,650
2,500 New York St Dorm Auth Rev Cons City Univ Sys
Second Gen Ser A................................ 5.750 07/01/13 2,881,900
1,670 New York St Dorm Auth Rev Dept Education (b).... 5.250 07/01/19 1,826,863
1,800 New York St Dorm Auth Rev Hosp (MBIA Insd)...... 5.000 08/01/33 1,859,526
1,425 New York St Dorm Auth Rev Insd John T Mather Mem
Hosp Rfdg (Connie Lee Insd) (b)................. 6.500 07/01/08 1,623,474
1,000 New York St Dorm Auth Rev Insd John T Mather Mem
Hosp Rfdg (Connie Lee Insd)..................... 6.500 07/01/10 1,179,260
1,720 New York St Dorm Auth Rev Insd John T Mather Mem
Hosp Rfdg (Connie Lee Insd) (b)................. 6.500 07/01/11 2,053,353
1,000 New York St Dorm Auth Rev Mem Sloan-Kettering
Ctr Ser 1 (MBIA Insd)........................... 5.000 07/01/20 1,072,240
1,000 New York St Dorm Auth Rev Mental Hlth Svc
Ser A........................................... 6.000 02/15/07 1,083,710
1,215 New York St Dorm Auth Rev Mental Hlth Svc Ser B
(MBIA Insd)..................................... 5.250 08/15/31 1,265,228
1,500 New York St Dorm Auth Rev Sch Dist Fin Pgm Ser D
(MBIA Insd)..................................... 5.500 10/01/17 1,711,530
2,515 New York St Dorm Auth Rev Second Hosp Interfaith
Med Cent Ser D (FSA Insd)....................... 5.750 02/15/08 2,776,032
1,000 New York St Dorm Auth Rev Second Hosp North Gen
Hosp Rfdg....................................... 5.750 02/15/18 1,123,560
1,250 New York St Dorm Auth Rev St Personal Income Tax
Ed Ser A........................................ 5.000 03/15/32 1,277,825
3,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser C (AMT) (MBIA Insd)...... 5.600 06/01/25 3,051,690
1,000 New York St Energy Resh & Dev Auth St Svc
Contract Rev.................................... 6.000 04/01/07 1,087,280
See Notes to Financial Statements
I-10
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$1,000 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Muni Wtr Proj Ser B..... 5.250% 06/15/20 $ 1,090,700
1,695 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Ser B................... 5.000 06/15/21 1,808,277
1,000 New York St Loc Govt Assist Corp Ser E Rfdg..... 6.000 04/01/14 1,187,930
2,000 New York St Med Care Fac Fin Agy Rev Saint
Peter's Hosp Proj Ser A (AMBAC Insd)............ 5.375 11/01/20 2,024,380
1,000 New York St Twy Auth Hwy & Brdg Tr Fd Ser A (FSA
Insd)........................................... 5.250 04/01/19 1,091,290
1,000 New York St Twy Auth Second Ser A (MBIA Insd)... 5.000 04/01/22 1,069,320
2,000 New York St Twy Auth Second Ser A (MBIA Insd)... 5.000 04/01/23 2,124,180
460 New York St Twy Auth Svc Contract Rev Loc Hwy &
Brdg............................................ 5.500 04/01/16 519,345
2,150 New York St Urban Dev Corp Rev Correctional Fac
Ser A Rfdg...................................... 5.500 01/01/14 2,407,376
1,000 New York St Urban Dev Corp Rev Proj
Pine Barrens.................................... 5.375 04/01/17 1,031,230
1,000 New York St Urban Dev Corp Rev St Fac Rfdg...... 5.500 04/01/07 1,079,010
1,060 Niagara Falls, NY Wtr Treatment Plant (AMT)
(MBIA Insd)..................................... 7.250 11/01/10 1,282,430
2,000 Port Auth NY & NJ Cons 97th Ser (AMT)
(FGIC Insd)..................................... 6.650 01/15/23 2,038,900
2,500 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (AMT) (MBIA Insd).......... 5.750 12/01/25 2,675,725
1,000 Sales Tax Asset Receivable Corp NY Ser A (MBIA
Insd) (a)....................................... 5.000 10/15/21 1,081,050
1,250 Sodus, NY Ctr Sch Dist Rfdg (FGIC Insd) (b)..... 5.125 06/15/17 1,365,213
1,000 Tobacco Settlement Fin Corp NY Ser C-1.......... 5.500 06/01/22 1,088,000
3,000 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.000 01/01/32 3,067,830
1,600 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
B Rfdg.......................................... 5.125 11/15/29 1,660,816
2,000 Triborough Brdg & Tunl Auth NY Ser E Rfdg (MBIA
Insd)........................................... 5.000 11/15/32 2,056,620
1,000 Yonkers, NY Indl Dev Agy Civic Fac Rev Cmnty Dev
Ppty Yonkers Inc Ser A.......................... 6.625 02/01/26 1,078,760
------------
105,314,490
------------
PUERTO RICO 6.7%
3,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
Y Rfdg (FSA Insd)............................... 6.250 07/01/21 3,804,780
1,000 Puerto Rico Pub Bldgs Auth Rev Gtd Govt Fac Ser
I (Comwlth Gtd)................................. 5.250 07/01/33 1,047,830
------------
4,852,610
------------
See Notes to Financial Statements
I-11
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2004 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
U. S. VIRGIN ISLANDS 2.4%
$1,500 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes
Ln Nt Ser A..................................... 6.375% 10/01/19 $ 1,737,270
------------
TOTAL INVESTMENTS 154.6%
(Cost $102,986,074)....................................................... 111,904,370
OTHER ASSETS IN EXCESS OF LIABILITIES 0.7%................................. 472,029
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (55.3%)................. (40,006,619)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%.............................. $ 72,369,780
============
Percentages are calculated as a percentage of net assets applicable to
common shares.
(a) Securities purchased on a when-issued or delayed delivery basis.
(b) The Trust owns 100% of the bond issuance.
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
Comwth Gtd--Commonwealth of Puerto Rico
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
MBIA--Municipal Bond Investors Assurance Corp.
See Notes to Financial Statements
I-12
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
October 31, 2004
ASSETS:
Total Investments (Cost $102,986,074)....................... $111,904,370
Cash........................................................ 87,390
Receivables:
Interest.................................................. 1,724,055
Investments Sold.......................................... 98,377
Other....................................................... 2,896
------------
Total Assets............................................ 113,817,088
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 1,078,820
Investment Advisory Fee................................... 56,931
Income Distributions--Common Shares....................... 20,750
Other Affiliates.......................................... 7,022
Trustees' Deferred Compensation and Retirement Plans........ 208,509
Accrued Expenses............................................ 68,657
------------
Total Liabilities....................................... 1,440,689
Preferred Shares (including accrued distributions).......... 40,006,619
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 72,369,780
============
NET ASSET VALUE PER COMMON SHARE ($72,369,780 divided by
4,291,172 shares outstanding)............................. $ 16.86
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 4,291,172 shares issued and
outstanding).............................................. $ 42,912
Paid in Surplus............................................. 62,404,365
Net Unrealized Appreciation................................. 8,918,296
Accumulated Net Realized Gain............................... 540,115
Accumulated Undistributed Net Investment Income............. 464,092
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 72,369,780
============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 1,600 issued with liquidation preference of
$25,000 per share)........................................ $ 40,000,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $112,369,780
============
See Notes to Financial Statements
I-13
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended October 31, 2004
INVESTMENT INCOME:
Interest.................................................... $5,493,932
----------
EXPENSES:
Investment Advisory Fee..................................... 667,539
Preferred Share Maintenance................................. 125,969
Trustees' Fees and Related Expenses......................... 61,240
Administrative Fee.......................................... 32,501
Legal....................................................... 21,268
Custody..................................................... 7,062
Other....................................................... 134,311
----------
Total Expenses.......................................... 1,049,890
----------
NET INVESTMENT INCOME....................................... $4,444,042
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 668,558
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 7,892,527
End of the Period......................................... 8,918,296
----------
Net Unrealized Appreciation During the Period............... 1,025,769
----------
NET REALIZED AND UNREALIZED GAIN............................ $1,694,327
==========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (384,197)
==========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $5,754,172
==========
See Notes to Financial Statements
I-14
VAN KAMPEN NEW YORK VALUE 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................................... $ 4,444,042 $ 4,596,637
Net Realized Gain....................................... 668,558 1,535,745
Net Unrealized Appreciation/Depreciation During the
Period................................................ 1,025,769 (941,564)
Distributions to Preferred Shareholders:
Net Investment Income................................. (384,197) (387,454)
----------- -----------
Change in Net Assets Applicable to Common Shares from
Operations............................................ 5,754,172 4,803,364
Distributions to Common Shareholders:
Net Investment Income................................. (4,200,708) (4,361,592)
----------- -----------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES
FROM INVESTMENT ACTIVITIES............................ 1,553,464 441,772
NET ASSETS APPLICABLE TO COMMON SHARES:.................
Beginning of the Period................................. 70,816,316 70,374,544
----------- -----------
End of the Period (Including accumulated undistributed
net investment income of $464,092 and $621,363,
respectively)......................................... $72,369,780 $70,816,316
=========== ===========
See Notes to Financial Statements
I-15
VAN KAMPEN NEW YORK VALUE 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................... $ 16.50 $ 16.40 $ 16.12
------- ------- -------
Net Investment Income.................................... 1.04 1.07 1.10
Net Realized and Unrealized Gain/Loss.................... .39 .14 .24
Common Share Equivalent of Distributions Paid to
Preferred Shareholders:
Net Investment Income.................................. (.09) (.09) (.13)
------- ------- -------
Total from Investment Operations........................... 1.34 1.12 1.21
Distributions Paid to Common Shareholders:
Net Investment Income.................................. (.98) (1.02) (.93)
------- ------- -------
NET ASSET VALUE, END OF THE PERIOD......................... $ 16.86 $ 16.50 $ 16.40
======= ======= =======
Common Share Market Price at End of the Period............. $ 15.30 $ 15.21 $ 14.85
Total Return (b)........................................... 7.24% 9.38% 6.25%
Net Assets Applicable to Common Shares at End of the Period
(In millions)............................................ $ 72.4 $ 70.8 $ 70.4
Ratio of Expenses to Average Net Assets Applicable to
Common Shares (c)........................................ 1.47% 1.46% 1.53%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c).......................... 6.24% 6.48% 6.89%
Portfolio Turnover......................................... 18% 30% 33%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
Shares (c)............................................... .94% .94% .96%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (d).......................... 5.70% 5.93% 6.10%
SENIOR SECURITIES:
Total Preferred Shares Outstanding......................... 1,600 1,600 1,600
Asset Coverage Per Preferred Share (e)..................... $70,235 $69,261 $68,985
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 $.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 .04%. 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.
I-16
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995
------------------------------------------------------------------------------
$ 14.98 $ 14.31 $ 16.14 $ 15.39 $ 14.45 $ 14.17 $ 12.23
------- -------- -------- -------- -------- -------- --------
1.09 1.12 1.09 1.09 1.10 1.09 1.07
1.17 .75 (1.85) .74 .87 .17 1.95
(.27) (.37) (.28) (.31) (.31) (.32) (.36)
------- -------- -------- -------- -------- -------- --------
1.99 1.50 (1.04) 1.52 1.66 .94 2.66
(.85) (.83) (.79) (.77) (.72) (.66) (.72)
------- -------- -------- -------- -------- -------- --------
$ 16.12 $ 14.98 $ 14.31 $ 16.14 $ 15.39 $ 14.45 $ 14.17
======= ======== ======== ======== ======== ======== ========
$ 14.86 $13.0625 $13.0625 $14.9375 $13.3125 $ 11.625 $ 11.375
20.61% 6.44% -7.68% 18.32% 21.19% 8.09% 18.15%
$ 69.2 $ 64.3 $ 61.4 $ 69.3 $ 66.0 $ 62.0 $ 60.8
1.75% 1.85% 1.80% 1.79% 1.87% 1.95% 2.06%
6.92% 7.73% 7.01% 6.91% 7.42% 7.69% 8.11%
6% 29% 4% 11% 25% 51% 77%
1.10% 1.13% 1.12% 1.13% 1.15% 1.18% 1.20%
5.20% 5.20% 5.19% 4.96% 5.32% 5.41% 5.38%
1,600 1,600 1,600 800 800 800 800
$68,224 $ 65,189 $ 63,381 $136,581 $132,546 $127,515 $126,006
$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
I-17
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen New York Value Municipal Income Trust (the "Trust") is registered as
a non-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 as well as from New York
State and New York City income taxes, consistent with preservation of capital.
The Trust will invest substantially all of its assets in New York municipal
securities rated investment grade at the time of investment. The Trust commenced
investment operations on April 30, 1993. 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.
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 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. At October 31, 2004, the Trust had $1,078,820 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.
I-18
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME 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........................ $102,862,868
============
Gross tax unrealized appreciation........................... $ 9,094,679
Gross tax unrealized depreciation........................... (53,177)
------------
Net tax unrealized appreciation on investments.............. $ 9,041,502
============
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........................................... $49,608 $39,175
Long-term capital gain.................................... -0- -0-
------- -------
$49,608 $39,175
======= =======
Due to inherent differences in the recognition of income, expenses and
realized gain/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 difference
relating to book to tax accretion differences totaling $16,408 was reclassified
from accumulated undistributed net investment income to accumulated net realized
gain.
As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $ 4,649
Undistributed long-term capital gain........................ 680,317
Net realized gains or losses may differ for financial and tax reporting
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 .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
I-19
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 continued
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 $8,000 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 $26,600 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, 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. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $20,186,458 and $21,230,071,
respectively.
4. PREFERRED SHARES
The Trust has outstanding 1,600 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is currently reset every seven days through an
auction process. The rate in effect on October 31, 2004 was 1.510%. During the
year ended October 31, 2004, the rates ranged from 0.450% to 1.510%.
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.
5. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
I-20
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of Van Kampen New York Value Municipal
Income Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen New York Value 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 New York Value 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
I-21
VAN KAMPEN NEW YORK VALUE 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
I-22
VAN KAMPEN NEW YORK VALUE 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
change 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
I-23
VAN KAMPEN NEW YORK VALUE 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, NY 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 98.9% of the income distributions as a
tax-exempt income distribution. In January, the Trust provides tax information
to shareholders for the preceding calendar year.
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
I-24
VAN KAMPEN NEW YORK VALUE 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
------------------------------------------------------------------------------------------
J. Miles Branagan.......................................... 3,678,571 33,776
Linda Hutton Heagy......................................... 3,679,871 32,476
Mitchell M. Merin.......................................... 3,677,658 34,689
Wayne W. Whalen............................................ 3,686,340 26,007
The other trustees of the Trust whose terms did not expire in 2004 are David C.
Arch, Jerry D. Choate, Rod Dammeyer, R. Craig Kennedy, Howard J Kerr, Jack E.
Nelson, Richard F. Powers III, Hugo F. Sonnenschein, and Suzanne H. Woolsey.
I-25
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME
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 1993 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.
I-26
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME
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.
I-27
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME
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 1993 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).
I-28
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME
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 1993 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.
I-29
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME
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.
I-30
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME
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.
I-31
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME
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 1993 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.
I-32
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME
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.
I-33
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME
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.
I-34
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)
I-35
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.
VNV ANR 12/04 RN04-02825P-Y10/04
I-36
APPENDIX J
SEMIANNUAL REPORT OF VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST,
DATED APRIL 30, 2005
J-1
Item 1. Report to Shareholders
The Trust's semi-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 New
York Value Municipal Income Trust performed during the semi-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 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
---------------------------------------------------------------------------------------
J-2
Performance Summary as of 4/30/05
NEW YORK VALUE MUNICIPAL INCOME TRUST
SYMBOL: VNV
-----------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (4/30/93) 7.26% 6.07%
10-year 8.59 8.93
5-year 10.05 8.84
1-year 10.64 7.75
6-month 2.96 -0.08
-----------------------------------------------------------
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 New York Municipal Bond Index is a broad-based statistical
composite of New York 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.
J-3
Trust Report
FOR THE 6-MONTH PERIOD ENDED APRIL 30, 2005
Van Kampen New York Value 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.
New York continued to be one of the most active markets in the nation for new
issuance during the period, although economic conditions were not uniformly
strong. New York's economy continued to improve, and its credit rating was
upgraded due in large part to a guardedly optimistic outlook for New York City's
fiscal health. The city continued to issue Liberty bonds to fund reconstruction
efforts at the site of the World Trade Center. In contrast, the northern part of
the state continued to struggle economically.
(1)Team members may change at any time without notice.
J-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 New York
Municipal Bond Index. On a market price basis, the trust underperformed its
benchmark.
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2005
-------------------------------------------------------------
LEHMAN BROTHERS
BASED ON BASED ON NEW YORK MUNICIPAL BOND
NAV MARKET PRICE INDEX
2.96% -0.08% 1.74%
-------------------------------------------------------------
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. We effected
this positioning in two ways. 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 also trimmed the fund'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.
We kept the trust's exposure well diversified across the major sectors of the
New York municipal market. Much of our relative-value trading activity was
focused on selling issues that had been pre-refunded and purchasing what we
believed
J-5
to be more attractive securities in sectors such as health care and public
building. The trust remained focused on investment-grade securities, with 100
percent of the portfolio rated BBB or higher at the end of the period.
There is no guarantee the security sectors mentioned will continue to perform
well or be held by the trust in the future.
J-6
RATINGS ALLOCATION AS OF 4/30/05
AAA/Aaa 62.5%
AA/Aa 22.8
A/A 8.6
BBB/Baa 6.1
TOP 5 SECTORS AS OF 4/30/05
General Purpose 15.2%
Transportation 15.0
Health Care 14.6
Industrial Revenue 10.2
Public Education 9.7
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 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.
J-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.
J-8
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
MUNICIPAL BONDS 154.7%
NEW YORK 145.5%
$1,500 Erie Cnty, NY Indl Dev Agy Sch Fac Rev City of
Buffalo Proj (FSA Insd)......................... 5.750% 05/01/20 $ 1,683,330
2,000 Islip, NY Res Recovery Agy Rev 1985 Fac Ser B
(AMT) (AMBAC)................................... 7.250 07/01/11 2,408,640
1,100 Islip, NY Res Recovery Agy Rev 1985 Fac Ser E
(AMT) (FSA)..................................... 5.750 07/01/20 1,232,990
2,000 Long Island Pwr Auth NY Elec Sys Rev Gen Ser
C............................................... 5.500 09/01/19 2,198,180
1,000 Metropolitan Trans Auth NY Rev Ser A Rfdg (AMBAC
Insd)........................................... 5.500 11/15/19 1,122,780
1,000 Metropolitan Trans Auth NY Rev Ser A Rfdg (FSA
Insd)........................................... 5.000 11/15/30 1,044,350
1,000 Metropolitan Trans Auth NY Svc Contract Ser A
Rfdg............................................ 5.125 01/01/29 1,043,810
1,000 Metropolitan Trans Auth NY Svc Contract Ser B
(MBIA Insd)..................................... 5.500 07/01/14 1,146,830
1,115 Monroe Woodbury, NY Cent Sch Ser A Rfdg (FGIC
Insd)........................................... 5.000 05/15/19 1,209,920
295 Nassau Cnty, NY Interim Fin Auth Sales Tax Secd
Ser A-1 (AMBAC Insd)............................ 5.375 11/15/16 327,099
1,000 Nassau Cnty, NY Swr & Storm Wtr Fin Auth Sys Rev
Ser B (MBIA Insd)............................... 5.000 10/01/21 1,072,550
1,000 New York City Hsg Dev Corp Multi-Family Hsg Rev
Ser A (AMT)..................................... 5.950 11/01/32 1,049,880
1,500 New York City Hsg Dev Corp NYC Hsg Auth Prog Ser
A (FGIC Insd) (a)............................... 5.000 07/01/25 1,585,695
1,110 New York City Indl Dev Agy Brooklyn Navy Yard
(AMT)........................................... 5.650 10/01/28 1,101,253
1,355 New York City Indl Dev Agy Civic Fac Rev
Nightingale Bamford Sch Rfdg (AMBAC Insd) (b)... 5.250 01/15/19 1,485,188
2,000 New York City Indl Dev Agy Spl Fac Rev Terminal
One Group Assn Proj (AMT)....................... 6.000 01/01/15 2,028,480
1,230 New York City Indl Dev Civic YMCA Gtr NY Proj... 5.850 08/01/08 1,306,703
1,500 New York City Indl Dev Civic YMCA Gtr NY Proj... 5.800 08/01/16 1,587,450
1,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev............................................. 5.500 06/15/33 1,088,530
1,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser D....................................... 5.000 06/15/39 1,042,660
3,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Ser B (FGIC Insd)............................... 5.250 06/15/29 3,139,980
2,000 New York City Ser E (FSA Insd).................. 5.000 11/01/20 2,149,480
1,500 New York City Ser E Rfdg (MBIA Insd)............ 6.200 08/01/08 1,648,920
2,000 New York City Ser G............................. 5.000 12/01/25 2,093,780
1,000 New York City Ser H (FGIC Insd)................. 6.000 08/01/12 1,159,390
1,000 New York City Ser K (a)......................... 5.000 08/01/24 1,051,980
See Notes to Financial Statements
J-9
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$2,250 New York City Tr Cultural Res Amern Museum Nat
History Ser A Rfdg (MBIA Insd).................. 5.000% 07/01/44 $ 2,339,122
60 New York City Transitional Fin Auth Rev Future
Tax Secd Ser A.................................. 5.000 08/15/27 61,482
1,750 New York City Transitional Fin Auth Rev Future
Tax Secd Ser B (MBIA Insd)...................... 5.250 05/01/16 1,929,480
1,000 New York City Transitional Fin Auth Rev Future
Tax Secd Ser C (AMBAC Insd)..................... 5.250 08/01/21 1,086,510
1,000 New York City Transitional Fin Auth Rev Future
Tax Secd Ser D (MBIA Insd)...................... 5.250 02/01/19 1,096,550
1,000 New York St Dorm Auth Lease Rev Court Fac Ser
A............................................... 5.375 05/15/22 1,079,130
745 New York St Dorm Auth Lease Rev Master Boces Pgm
(FSA Insd)...................................... 5.250 08/15/21 820,640
500 New York St Dorm Auth Lease Rev Master Boces Pgm
(FSA Insd)...................................... 5.250 08/15/23 550,765
2,150 New York St Dorm Auth Lease Rev Master Boces Pgm
Ser A (FSA Insd) (b)............................ 5.250 08/15/16 2,359,518
820 New York St Dorm Auth Lease Univ Dorm Fac Ser
B............................................... 5.125 07/01/28 851,611
1,500 New York St Dorm Auth Rev City Univ Sys Cons Ser
A............................................... 5.625 07/01/16 1,715,760
2,500 New York St Dorm Auth Rev Cons City Univ Sys
Second Gen Ser A................................ 5.750 07/01/13 2,826,075
1,670 New York St Dorm Auth Rev Dept Education (b).... 5.250 07/01/19 1,810,848
1,800 New York St Dorm Auth Rev Hosp (MBIA Insd)...... 5.000 08/01/33 1,890,342
1,425 New York St Dorm Auth Rev Insd John T Mather Mem
Hosp Rfdg (Connie Lee Insd) (b)................. 6.500 07/01/08 1,571,362
1,000 New York St Dorm Auth Rev Insd John T Mather Mem
Hosp Rfdg (Connie Lee Insd)..................... 6.500 07/01/10 1,150,190
1,720 New York St Dorm Auth Rev Insd John T Mather Mem
Hosp Rfdg (Connie Lee Insd) (b)................. 6.500 07/01/11 2,012,950
1,000 New York St Dorm Auth Rev Insd New York Univ Ser
2 (AMBAC Insd).................................. 5.000 07/01/41 1,029,070
1,000 New York St Dorm Auth Rev Mem Sloan-Kettering
Ctr Ser 1 (MBIA Insd)........................... 5.000 07/01/20 1,067,850
830 New York St Dorm Auth Rev Mental Hlth Svc Ser B
(MBIA Insd)..................................... 5.250 08/15/31 874,662
2,500 New York St Dorm Auth Rev Montefiore Hosp (FGIC
Insd)........................................... 5.000 08/01/33 2,614,750
1,500 New York St Dorm Auth Rev Sch Dist Fin Pgm Ser D
(MBIA Insd)..................................... 5.500 10/01/17 1,683,615
2,515 New York St Dorm Auth Rev Second Hosp Interfaith
Med Cent Ser D (FSA Insd)....................... 5.750 02/15/08 2,694,043
1,000 New York St Dorm Auth Rev Second Hosp North Gen
Hosp Rfdg....................................... 5.750 02/15/18 1,112,240
See Notes to Financial Statements
J-10
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$3,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser C (AMT) (MBIA Insd)...... 5.600% 06/01/25 $ 3,050,730
1,000 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Muni Wtr Proj Ser B..... 5.250 06/15/20 1,089,100
1,695 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Ser B................... 5.000 06/15/21 1,808,887
1,250 New York St Hsg Fin Agy St Econ Dev & Hsg Ser A
(FGIC Insd)..................................... 5.000 09/15/34 1,311,038
1,000 New York St Loc Govt Assist Corp Ser E Rfdg..... 6.000 04/01/14 1,172,150
2,000 New York St Med Care Fac Fin Agy Rev Saint
Peter's Hosp Proj Ser A (AMBAC Insd)............ 5.375 11/01/20 2,043,920
1,000 New York St Twy Auth Hwy & Brdg Tr Fd Ser A (FSA
Insd)........................................... 5.250 04/01/19 1,095,460
460 New York St Twy Auth Svc Contract Rev Loc Hwy &
Brdg............................................ 5.500 04/01/16 512,969
2,150 New York St Urban Dev Corp Rev Correctional Fac
Ser A Rfdg...................................... 5.500 01/01/14 2,372,310
1,000 Niagara Falls, NY City Sch Dist Ctfs Partn High
Sch Fac Rfdg (FSA Insd) (a)..................... 5.000 06/15/28 1,051,480
1,060 Niagara Falls, NY Wtr Treatment Plant (AMT)
(MBIA Insd)..................................... 7.250 11/01/10 1,255,443
2,500 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (AMT) (MBIA Insd).......... 5.750 12/01/25 2,648,475
1,250 Sodus, NY Ctr Sch Dist Rfdg (FGIC Insd) (b)..... 5.125 06/15/17 1,360,250
1,000 Tobacco Settlement Fin Corp NY Ser C-1.......... 5.500 06/01/22 1,092,280
3,000 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.000 01/01/32 3,098,550
1,600 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
B Rfdg.......................................... 5.125 11/15/29 1,677,424
2,000 Triborough Brdg & Tunl Auth NY Rev Rfdg (MBIA
Insd)........................................... 5.000 11/15/32 2,086,080
1,000 Yonkers, NY Indl Dev Agy Civic Fac Rev Cmnty Dev
Ppty Yonkers Inc Ser A.......................... 6.625 02/01/26 1,080,050
------------
104,045,009
------------
PUERTO RICO 6.8%
3,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
Y Rfdg (FSA Insd)............................... 6.250 07/01/21 3,808,290
1,000 Puerto Rico Pub Bldgs Auth Rev Gtd Govt Fac Ser
I (Comwlth Gtd)................................. 5.250 07/01/33 1,064,300
------------
4,872,590
------------
See Notes to Financial Statements
J-11
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
-------------------------------------------------------------------------------------------
U.S. VIRGIN ISLANDS 2.4%
$1,500 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes
Ln Nt Ser A..................................... 6.375% 10/01/19 $ 1,710,525
------------
TOTAL INVESTMENTS 154.7%
(Cost $102,875,156)....................................................... 110,628,124
OTHER ASSETS IN EXCESS OF LIABILITIES 1.2%................................. 903,192
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (55.9%)................. (40,008,907)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%.............................. $ 71,522,409
============
Percentages are calculated as a percentage of net assets applicable to common
shares.
(a) Securities purchased on a when-issued or delayed delivery basis.
(b) The Trust owns 100% of the bond issuance.
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
Comwth Gtd--Commonwealth of Puerto Rico
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
MBIA--Municipal Bond Investors Assurance Corp.
See Notes to Financial Statements
J-12
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2005 (Unaudited)
ASSETS:
Total Investments (Cost $102,875,156)....................... $110,628,124
Receivables:
Investments Sold.......................................... 4,357,203
Interest.................................................. 1,761,016
Other....................................................... 1,171
------------
Total Assets............................................ 116,747,514
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 3,661,013
Custodian Bank............................................ 1,215,206
Investment Advisory Fee................................... 50,042
Income Distributions--Common Shares....................... 20,686
Other Affiliates.......................................... 4,007
Trustees' Deferred Compensation and Retirement Plans........ 218,810
Accrued Expenses............................................ 46,434
------------
Total Liabilities....................................... 5,216,198
Preferred Shares (including accrued distributions).......... 40,008,907
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 71,522,409
============
NET ASSET VALUE PER COMMON SHARE ($71,522,409 divided by
4,291,172 shares outstanding)............................. $ 16.67
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 4,291,172 shares issued and
outstanding).............................................. $ 42,912
Paid in Surplus............................................. 62,404,365
Net Unrealized Appreciation................................. 7,752,968
Accumulated Net Realized Gain............................... 854,138
Accumulated Undistributed Net Investment Income............. 468,026
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 71,522,409
============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 1,600 issued with liquidation preference of
$25,000 per share)........................................ $ 40,000,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $111,522,409
============
See Notes to Financial Statements
J-13
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended April 30, 2005 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $2,720,516
----------
EXPENSES:
Investment Advisory Fee..................................... 303,489
Preferred Share Maintenance................................. 59,132
Trustees' Fees and Related Expenses......................... 17,312
Legal....................................................... 11,005
Custody..................................................... 9,009
Other....................................................... 62,839
----------
Total Expenses.......................................... 462,786
----------
NET INVESTMENT INCOME....................................... $2,257,730
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 999,111
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 8,918,296
End of the Period......................................... 7,752,968
----------
Net Unrealized Depreciation During the Period............... (1,165,328)
----------
NET REALIZED AND UNREALIZED LOSS............................ $ (166,217)
==========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (342,960)
==========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $1,748,553
==========
See Notes to Financial Statements
J-14
VAN KAMPEN NEW YORK VALUE 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...................................... $ 2,257,730 $ 4,444,042
Net Realized Gain.......................................... 999,111 668,558
Net Unrealized Appreciation/Depreciation During the
Period................................................... (1,165,328) 1,025,769
Distributions to Preferred Shareholders:
Net Investment Income.................................... (284,327) (384,197)
Net Realized Gain........................................ (58,633) -0-
----------- -----------
Change in Net Assets Applicable to Common Shares from
Operations............................................... 1,748,553 5,754,172
Distributions to Common Shareholders:
Net Investment Income.................................... (1,969,469) (4,200,708)
Net Realized Gain........................................ (626,455) -0-
----------- -----------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
INVESTMENT ACTIVITIES.................................... (847,371) 1,553,464
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period.................................... 72,369,780 70,816,316
----------- -----------
End of the Period (Including accumulated undistributed net
investment income of $468,026 and $464,092,
respectively)............................................ $71,522,409 $72,369,780
=========== ===========
See Notes to Financial Statements
J-15
VAN KAMPEN NEW YORK VALUE 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.................... $ 16.86 $ 16.50 $ 16.40
------- ------- -------
Net Investment Income..................................... .53 1.04 1.07
Net Realized and Unrealized Gain/Loss..................... (.03) .39 .14
Common Share Equivalent of Distributions Paid to Preferred
Shareholders:
Net Investment Income................................... (.07) (.09) (.09)
Net Realized Gain....................................... (.01) -0- -0-
------- ------- -------
Total from Investment Operations............................ .42 1.34 1.12
Distributions Paid to Common Shareholders:
Net Investment Income................................... (.46) (.98) (1.02)
Net Realized Gain....................................... (.15) -0- -0-
------- ------- -------
NET ASSET VALUE, END OF THE PERIOD.......................... $ 16.67 $ 16.86 $ 16.50
======= ======= =======
Common Share Market Price at End of the Period.............. $ 14.68 $ 15.30 $ 15.21
Total Return (b)............................................ -0.08%* 7.24% 9.38%
Net Assets Applicable to Common Shares at End of the Period
(In millions)............................................. $ 71.5 $ 72.4 $ 70.8
Ratio of Expenses to Average Net Assets Applicable to Common
Shares (c)................................................ 1.31% 1.47% 1.46%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c)........................... 6.39% 6.24% 6.48%
Portfolio Turnover.......................................... 17%* 18% 30%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
Shares (c)................................................ .84% .94% .94%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (d)........................... 5.58% 5.70% 5.93%
SENIOR SECURITIES:
Total Preferred Shares Outstanding.......................... 1,600 1,600 1,600
Asset Coverage Per Preferred Share (e)...................... $69,707 $70,235 $69,261
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 $.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 .04%. 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.
J-16
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------------
2002 (a) 2001 2000 1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------
$ 16.12 $ 14.98 $ 14.31 $ 16.14 $ 15.39 $ 14.45 $ 14.17 $ 12.23
------- ------- -------- -------- -------- -------- -------- --------
1.10 1.09 1.12 1.09 1.09 1.10 1.09 1.07
.24 1.17 .75 (1.85) .74 .87 .17 1.95
(.13) (.27) (.37) (.28) (.31) (.31) (.32) (.36)
-0- -0- -0- -0- -0- -0- -0- -0-
------- ------- -------- -------- -------- -------- -------- --------
1.21 1.99 1.50 (1.04) 1.52 1.66 .94 2.66
(.93) (.85) (.83) (.79) (.77) (.72) (.66) (.72)
-0- -0- -0- -0- -0- -0- -0- -0-
------- ------- -------- -------- -------- -------- -------- --------
$ 16.40 $ 16.12 $ 14.98 $ 14.31 $ 16.14 $ 15.39 $ 14.45 $ 14.17
======= ======= ======== ======== ======== ======== ======== ========
$ 14.85 $ 14.86 $13.0625 $13.0625 $14.9375 $13.3125 $ 11.625 $ 11.375
6.25% 20.61% 6.44% -7.68% 18.32% 21.19% 8.09% 18.15%
$ 70.4 $ 69.2 $ 64.3 $ 61.4 $ 69.3 $ 66.0 $ 62.0 $ 60.8
1.53% 1.75% 1.85% 1.80% 1.79% 1.87% 1.95% 2.06%
6.89% 6.92% 7.73% 7.01% 6.91% 7.42% 7.69% 8.11%
33% 6% 29% 4% 11% 25% 51% 77%
.96% 1.10% 1.13% 1.12% 1.13% 1.15% 1.18% 1.20%
6.10% 5.20% 5.20% 5.19% 4.96% 5.32% 5.41% 5.38%
1,600 1,600 1,600 1,600 800 800 800 800
$68,985 $68,224 $ 65,189 $ 63,381 $136,581 $132,546 $127,515 $126,006
$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
J-17
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen New York Value Municipal Income Trust (the "Trust") is registered as
a non-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 as well as from New York
State and New York City income taxes, consistent with preservation of capital.
The Trust will invest substantially all of its assets in New York municipal
securities rated investment grade at the time of investment. The Trust commenced
investment operations on April 30, 1993.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
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 $3,661,013 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.
J-18
VAN KAMPEN NEW YORK VALUE 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........................ $102,760,116
============
Gross tax unrealized appreciation........................... $ 7,868,087
Gross tax unrealized depreciation........................... (79)
------------
Net tax unrealized appreciation on investments.............. $ 7,868,008
============
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........................................... $49,608
Long-term capital gain.................................... -0-
-------
$49,608
=======
As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $ 4,649
Undistributed long-term capital gain........................ 680,317
Net realized gains or losses may differ for financial and tax reporting
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 $2,200 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 $15,400
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, in the Statement
of Operations.
J-19
VAN KAMPEN NEW YORK VALUE 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 $18,316,219 and $19,320,404,
respectively.
4. PREFERRED SHARES
The Trust has outstanding 1,600 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is currently reset every seven days through an
auction process. The rate in effect on April 30, 2005 was 2.710%. During the six
months ended April 30, 2005, the rates ranged from 1.000% to 2.710%.
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.
5. 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.
6. 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
J-20
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued
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.
7. TRUST MERGER
On May 11, 2005, the Trustees of New York Value Municipal Income Trust and New
York Quality Municipal Trust ("Target Trusts") announced its intention to merge
the Target Trusts into Trust for Investment Grade New York Municipals
("Acquiring Trust"). The Trustees of each of the trusts have approved in
principal an agreement and plan of reorganization between the trusts providing
for a transfer of assets and liabilities of the Target Trusts to the Acquiring
Trust in exchange for shares of beneficial interest of the Acquiring Trust (the
"Reorganization"). The Reorganization is subject to the approval by the
shareholders of the Target Trusts. The issuance of additional common shares of
the Acquiring Trust is subject to the approval of the shareholders of the
Acquiring Trust.
J-21
VAN KAMPEN NEW YORK VALUE 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.
J-22
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)
J-23
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.
VNV SAR 6/05 RN05-1307P-404/05
(VAN KAMPEN INVESTMENTS LOGO)
J-24
APPENDIX K
PRO FORMA FINANCIAL STATEMENTS
The following presents the pro forma financial statements for the combination of
the Van Kampen Trust for Investment Grade New York Municipals, Van Kampen New
York Quality Municipal Trust and the New York Value Municipal Income Trust. The
statements are presented as of October 31, 2004, 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 October 31, 2004. The Pro Forma Statement of Operations reflects the
expenses for the twelve months ended October 31, 2004. The pro forma statements
give effect to the proposed exchange of Van Kampen Trust for Investment Grade
New York Municipals shares for the assets and liabilities of the Van Kampen New
York Quality Municipal Trust and Van Kampen New York Value Municipal Income
Trust, with Van Kampen Trust for Investment Grade New York Municipals being the
surviving entity. The proposed transaction will be accounted for as a tax-free
reorganization in accordance with accounting principles generally accepted in
the United States of America. The historical cost basis of the investments is
carried over to the surviving entity. There is no guarantee that the portfolio
of investments of the surviving entity on the closing date of the transaction
will match the Pro Forma Portfolio of Investments presented herein. All or a
portion of the securities acquired in the transaction could be sold by the
surviving entity; however, there is no plan or intention to sell securities
acquired in the transaction other than in the ordinary course of business.
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST (VNM) - VAN KAMPEN NEW YORK VALUE
MUNICIPAL INCOME TRUST (VNV) - VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK
MUNICIPALS (VTN)
PROFORMA PORTFOLIO OF INVESTMENTS
OCTOBER 31, 2004 (UNAUDITED)
VTN
VNM VNV VTN PROFORMA
PAR AMOUNT PAR AMOUNT PAR AMOUNT PAR AMOUNT VNM VNV VTN VTN-PROFORMA
(000) (000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
Municipal Bonds 152.4%
New York 143.0%
$ 1,000 $ 1,000 Amherst, NY Indl
Dev Agy Civic
Fac Rev UBF Fac
Student Hsg Ser
B (AMBAC Insd) 5.750% 08/01/30 $ 1,121,470 $ 1,121,470
$ 1,000 1,000 Amherst, NY Indl
Dev Agy Rev Fac
Student Hsg Ser
A (AMBAC Insd) 5.750 08/01/25 $ 1,133,530 1,133,530
1,250 1,250 Erie Cnty, NY
Indl Dev Agy Sch
Fac Rev City of
Buffalo Proj
(FSA Insd) 5.750 05/01/19 1,438,687 1,438,687
$ 1,500 1,500 Erie Cnty, NY
Indl Dev Agy Sch
Fac Rev City of
Buffalo Proj
(FSA Insd) 5.750 05/01/20 $ 1,726,425 1,726,425
1,250 1,250 Erie Cnty, NY
Indl Dev Agy Sch
Fac Rev City of
Buffalo Proj
(FSA Insd) 5.750 05/01/23 1,436,362 1,436,362
2,000 2,000 Erie Cnty, NY
Pub Impt Ser A
(FGIC Insd) 5.250 03/15/20 2,189,060 2,189,060
1,250 1,250 Erie Cnty, NY
Pub Impt Ser B
(MBIA Insd) 5.250 04/01/18 1,396,062 1,396,062
1,000 1,000 Erie Cnty, NY
Pub Impt Ser C
(AMBAC Insd) 5.500 07/01/29 1,090,880 1,090,880
1,610 1,610 Grand Central NY
Dist Mgt Assn
Cap Impt Business
Impt & Rfdg (b) 5.000 01/01/16 1,757,701 1,757,701
1,110 1,110 Islip, NY Res
Recovery 1985 Fac
Ser E (AMT)
(FSA Insd) (b) 5.750 07/01/18 1,244,954 1,244,954
2,000 2,000 Islip, NY Res
Recovery Agy Rev
1985 Fac Ser B
(AMT) (AMBAC
Insd) 7.250 07/01/11 2,451,380 2,451,380
1,100 1,100 Islip, NY Res
Recovery Agy Rev
1985 Fac Ser E
(AMT) (FSA Insd) 5.750 07/01/20 1,220,802 1,220,802
3,020 3,020 Long Island Pwr
Auth NY Elec Sys
Rev Cap Apprec
(FSA Insd) * 06/01/19 1,633,971 1,633,971
3,365 3,365 Long Island Pwr
Auth NY Elec Sys
Rev Cap Apprec
(FSA Insd) * 06/01/21 1,630,679 1,630,679
2,000 2,000 4,000 Long Island Pwr
Auth NY Elec Sys
Rev Gen Ser C 5.500 09/01/19 2,194,080 2,194,080 4,388,160
1,500 1,500 Long Island Pwr
Auth NY Elec Sys
Rev Gen Ser C 5.500 09/01/21 1,632,840 1,632,840
2,000 1,000 1,000 4,000 Metropolitan
Trans Auth NY Rev
Ser A Rfdg
(AMBAC Insd) 5.500 11/15/19 2,276,360 1,138,180 1,138,180 4,552,720
1,500 1,000 1,500 4,000 Metropolitan
Trans Auth NY Svc
Contract Ser A
Rfdg 5.125 01/01/29 1,544,955 1,029,970 1,544,955 4,119,880
1,000 1,000 1,000 3,000 Metropolitan
Trans Auth NY
Svc Contract Ser
B (MBIA Insd) 5.500 07/01/14 1,161,960 1,161,960 1,161,960 3,485,880
1,215 1,215 Monroe Cnty, NY
Indl Dev Agy Rev
Pub Impt Canal
Ponds Park Ser A 7.000 06/15/13 1,222,144 1,222,144
1,115 1,115 Monroe Woodbury,
NY Cent Sch Ser A
Rfdg (FGIC Insd) 5.000 05/15/19 1,219,855 1,219,855
1,125 1,125 Nassau Cnty, NY
Impt Ser E (FSA
Insd) 6.000 03/01/20 1,293,592 1,293,592
1,500 1,000 2,500 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd
Ser A (AMBAC
Insd) 5.000 11/15/18 1,637,265 1,091,510 2,728,775
2,000 2,000 4,000 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd
Ser A (Prerefunded
@ 11/15/10) 5.750 11/15/15 2,319,920 2,319,920 4,639,840
730 730 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd
Ser A1 (AMBAC
Insd) 5.375 11/15/15 818,658 818,658
1,770 1,770 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd
Ser A1
(Prerefunded
@ 11/15/11)
(AMBAC Insd) 5.375 11/15/15 2,032,102 2,032,102
820 295 1,115 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd
Ser A-1 (AMBAC
Insd) 5.375 11/15/16 919,589 330,828 1,250,417
1,000 1,585 2,585 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd
Ser B Rfdg (AMBAC
Insd) 5.000 11/15/17 1,097,120 1,738,935 2,836,055
500 500 Nassau Cnty, NY
Swr & Storm Ser B
(MBIA Insd) 5.000 10/01/20 540,390 540,390
1,370 1,370 Nassau Cnty, NY
Swr & Storm Ser B
(MBIA Insd) 5.000 10/01/22 1,463,311 1,463,311
1,000 1,000 Nassau Cnty, NY
Swr & Storm Wtr
Fin Auth Sys Rev
Ser B (MBIA Insd) 5.000 10/01/21 1,074,840 1,074,840
2,000 2,000 New York City
Fiscal 2003 Ser I 5.750 03/01/16 2,260,360 2,260,360
935 935 New York City Hsg
Dev Corp Multi-
Family Hsg Rev
Ser A (AMT) 5.850 11/01/20 999,132 999,132
1,000 1,000 New York City Hsg
Dev Corp Multi-
Family Hsg Rev
Ser A (AMT) 5.950 11/01/32 1,049,480 1,049,480
1,900 1,900 New York City Indl
Dev Agy Brooklyn
Navy Yard (AMT) 5.650 10/01/28 1,790,522 1,790,522
1,355 1,355 New York City Indl
Dev Agy Civic Fac
Rev Nightingale
Bamford Sch Rfdg
(AMBAC Insd) (b) 5.250 01/15/19 1,489,890 1,489,890
1,000 1,000 New York City Indl
Dev Agy Civic Fac
Rev NY Inst of
Technology Proj
(MBIA Insd) 5.250 03/01/18 1,103,880 1,103,880
1,000 1,000 2,000 New York City Indl
Dev Agy Fac Rev
Royal Charter-NY
Presbyterian
(FSA Insd) 5.250 12/15/11 1,133,030 1,133,030 2,266,060
2,000 2,000 2,000 6,000 New York City Indl
Dev Agy Spl Fac
Rev Terminal One
Group Assn Proj
(AMT) 6.000 01/01/15 2,045,060 2,045,060 2,045,060 6,135,180
1,230 1,230 New York City Indl
Dev Civic YMCA Gtr
NY Proj 5.850 08/01/08 1,333,763 1,333,763
1,500 1,500 New York City Indl
Dev Civic YMCA Gtr
NY Proj 5.800 08/01/16 1,609,635 1,609,635
1,000 1,000 1,000 3,000 New York City Muni
Wtr Fin Auth Wtr &
Swr Sys Rev 5.500 06/15/33 1,079,880 1,079,880 1,079,880 3,239,640
2,000 2,000 New York City Muni
Wtr Fin Auth Wtr &
Swr Sys Rev Ser B
(FSA Insd) 5.000 06/15/29 2,062,260 2,062,260
3,900 3,900 New York City Muni
Wtr Fin Auth Wtr &
Swr Sys Rev Ser B
(FSA Insd) 5.250 06/15/29 4,090,086 4,090,086
3,000 3,000 New York City Muni
Wtr Fin Auth Wtr &
Swr Sys Ser B
(FGIC Insd) 5.250 06/15/29 3,146,220 3,146,220
1,325 1,325 2,650 New York City Muni
Wtr Fin Ser B 6.000 06/15/33 1,542,234 1,542,234 3,084,468
2,175 2,175 4,350 New York City Muni
Wtr Fin Ser B
(Prerefunded @
06/15/10) 6.000 06/15/33 2,556,060 2,556,060 5,112,120
1,500 1,500 New York City Ser E
Rfdg (MBIA Insd) 6.200 08/01/08 1,702,605 1,702,605
1,200 1,200 New York City Ser G 5.250 08/01/16 1,295,388 1,295,388
2,000 1,000 3,000 New York City Ser H
(FGIC Insd) 6.000 08/01/12 2,360,280 1,180,140 3,540,420
1,250 1,250 New York City Ser K 5.625 08/01/13 1,366,763 1,366,763
60 60 New York City
Transitional Fin
Auth Rev Future Tax
Secd Ser A 5.000 08/15/27 61,005 61,005
1,750 1,750 3,500 New York City
Transitional Fin
Auth Rev Future Tax
Secd Ser B (MBIA
Insd) 5.250 05/01/16 1,934,713 1,934,712 3,869,425
1,000 1,500 2,500 New York City
Transitional Fin
Auth Rev Future
Tax Secd Ser C
(AMBAC Insd) 5.250 08/01/21 1,085,010 1,627,515 2,712,525
1,500 1,000 3,500 6,000 New York City
Transitional Fin
Auth Rev Future
Tax Secd Ser D
(MBIA Insd) 5.250 02/01/19 1,650,000 1,100,000 3,850,000 6,600,000
1,000 1,000 New York St Dorm
Auth Lease Rev
Court Fac Ser A 5.500 05/15/20 1,095,890 1,095,890
1,000 1,330 2,330 New York St Dorm
Auth Lease Rev
Court Fac Ser A 5.375 05/15/22 1,074,320 1,428,846 2,503,166
745 745 New York St Dorm
Auth Lease Rev
Master Boces Pgm
(FSA Insd) 5.250 08/15/21 812,564 812,564
500 500 New York St Dorm
Auth Lease Rev
Master Boces Pgm
(FSA Insd) 5.250 08/15/23 539,575 539,575
2,150 2,150 New York St Dorm
Auth Lease Rev
Master Boces Pgm
Ser A (FSA Insd)
(b) 5.250 08/15/16 2,383,877 2,383,877
1,000 1,000 New York St Dorm
Auth Lease Rev
Master Boces
Prog Ser A
(FSA Insd) 5.250 08/15/17 1,108,780 1,108,780
2,250 2,250 New York St Dorm
Auth Lease Rev
Muni Hlth Fac
Impt Pgm Ser
1 (FSA Insd) 5.500 01/15/13 2,539,485 2,539,485
2,000 1,000 1,040 4,040 New York St Dorm
Auth Lease Rev
St Univ Dorm Fac 5.375 07/01/16 2,205,720 1,102,860 1,146,974 4,455,554
1,000 1,000 New York St Dorm
Auth Lease Rev
St Univ Dorm Fac
(Prerefunded @
07/01/12) 5.375 07/01/20 1,150,920 1,150,920
1,000 1,000 New York St Dorm
Auth Lease Rev
St Univ Dorm Fac
(Prerefunded @
07/01/12) 5.000 07/01/32 1,125,540 1,125,540
820 820 New York St Dorm
Auth Lease Univ
Dorm Fac Ser B 5.125 07/01/28 846,060 846,060
2,055 2,055 New York St Dorm
Auth Lease Univ
Dorm Fac Ser B
(Prerefunded @
7/01/09) 5.125 07/01/28 2,309,224 2,309,224
2,200 2,200 New York St Dorm
Auth Rev Catholic
Hlth L.I. Oblig
Grp (a) 5.000 07/01/27 2,190,980 2,190,980
2,750 2,750 New York St Dorm
Auth Rev Catholic
Hlth L.I. Oblig
Grp (a) 5.100 07/01/34 2,736,058 2,736,058
3,500 3,500 New York St Dorm
Auth Rev City Univ
Cons Third Ser 1
(FGIC Insd) 5.250 07/01/25 3,726,205 3,726,205
1,625 1,500 3,125 New York St Dorm
Auth Rev City
Univ Sys Cons
Ser A 5.625 07/01/16 1,896,538 1,750,650 3,647,188
2,500 2,500 New York St Dorm
Auth Rev City
Univ Sys Third
Gen Res Ser 2
(Prerefunded
@ 07/01/06) 6.000 07/01/20 2,720,875 2,720,875
2,500 2,500 New York St Dorm
Auth Rev Cons City
Univ Sys Second
Gen Ser A 5.750 07/01/13 2,881,900 2,881,900
1,670 1,670 New York St Dorm
Auth Rev Dept
Education (b) 5.250 07/01/19 1,826,863 1,826,863
2,500 2,500 New York St Dorm
Auth Rev Grace
Manor Hlthcare Fac 6.150 07/01/18 2,695,825 2,695,825
1,000 1,800 1,000 3,800 New York St Dorm
Auth Rev Hosp
(MBIA Insd) 5.000 08/01/33 1,033,070 1,859,526 1,033,070 3,925,666
1,000 1,340 2,340 New York St Dorm
Auth Rev Insd
Brooklyn Law Sch
Ser B (XLCA Insd) 5.375 07/01/23 1,092,590 1,464,071 2,556,661
1,425 1,425 New York St Dorm
Auth Rev Insd John
T Mather Mem Hosp
Rfdg (Connie
Lee Insd) (b) 6.500 07/01/08 1,623,474 1,623,474
1,000 1,000 New York St Dorm
Auth Rev Insd John
T Mather Mem Hosp
Rfdg (Connie
Lee Insd) 6.500 07/01/10 1,179,260 1,179,260
1,720 1,720 New York St Dorm
Auth Rev Insd John
T Mather Mem Hosp
Rfdg (Connie
Lee Insd) (b) 6.500 07/01/11 2,053,353 2,053,353
1,500 1,000 1,000 3,500 New York St Dorm
Auth Rev Mem
Sloan-Kettering
Ctr Ser 1
(MBIA Insd) 5.000 07/01/20 1,608,360 1,072,240 1,072,240 3,752,840
5,875 5,875 New York St
Dorm Auth Rev
Mental Hlth
Fac Impt Ser B (b) 5.250 02/15/22 6,305,520 6,305,520
2,340 2,340 New York St Dorm
Auth Rev Mental
Hlth Svc Fac Impt
Ser D (FSA Insd)
(b) 5.750 08/15/12 2,639,731 2,639,731
1,000 1,000 New York St Dorm
Auth Rev Mental
Hlth Svc Ser A 6.000 02/15/07 1,083,710 1,083,710
1,215 1,210 2,425 New York St Dorm
Auth Rev Mental
Hlth Svc Ser B
(MBIA Insd) 5.250 08/15/31 1,265,228 1,260,021 2,525,249
1,000 1,000 New York St Dorm
Auth Rev Sch Dist
Fin Pgm Ser C
(MBIA Insd) 5.375 10/01/15 1,122,470 1,122,470
1,500 1,500 New York St Dorm
Auth Rev Sch Dist
Fin Pgm Ser D
(MBIA Insd) 5.500 10/01/17 1,711,530 1,711,530
1,000 1,000 New York St Dorm
Auth Rev Sch Dist
Fin Pgm Ser I
(MBIA Insd) 5.750 10/01/18 1,158,220 1,158,220
2,515 2,515 New York St Dorm
Auth Rev Second
Hosp Interfaith
Med Cent Ser D
(FSA Insd) 5.750 02/15/08 2,776,032 2,776,032
1,000 1,000 1,000 3,000 New York St Dorm
Auth Rev Second
Hosp North Gen
Hosp Rfdg 5.750 02/15/18 1,123,560 1,123,560 1,123,560 3,370,680
1,370 1,370 New York St Dorm
Auth Rev St
Personal Income
Tax Ed Ser A 5.375 03/15/20 1,505,466 1,505,466
1,250 1,000 2,250 New York St Dorm
Auth Rev St
Personal Income
Tax Ed Ser A 5.000 03/15/32 1,277,825 1,022,260 2,300,085
1,500 1,500 New York St Dorm
Auth Rev St Univ
Ed Fac
(Prerefunded @
05/15/06) 5.750 05/15/10 1,619,640 1,619,640
1,000 1,000 New York St Dorm
Auth Rev St Univ
Ed Fac 1989 Res
(MBIA Insd) 6.000 05/15/15 1,158,700 1,158,700
2,000 2,000 New York St Dorm
Auth Rev St Univ
Ed Fac 1989 Res
(MBIA Insd) 6.000 05/15/16 2,317,400 2,317,400
2,600 1,000 3,600 New York St Dorm
Auth Rev St Univ
Ed Fac Ser A
(MBIA Insd) 5.250 05/15/15 2,969,928 1,142,280 4,112,208
5,010 5,010 New York St Dorm
Auth Rev St Univ
Ed Fac Ser B Rfdg 5.250 05/15/19 5,674,677 5,674,677
1,365 1,365 New York St Energy
Resh & Dev Auth
Gas Fac Rev
Brooklyn Union Gas
Ser B (AMT)
(MBIA Insd) 6.750 02/01/24 1,383,987 1,383,987
3,000 3,000 4,000 10,000 New York St Energy
Resh & Dev Auth
Gas Fac Rev
Brooklyn Union Gas
Ser C (AMT)
(MBIA Insd) 5.600 06/01/25 3,051,690 3,051,690 4,068,920 10,172,300
1,000 1,000 New York St Energy
Resh & Dev Auth
St Svc Contract Rev 6.000 04/01/07 1,087,280 1,087,280
300 300 New York St
Environmental Fac
Corp Pollutn Ctl
Rev St Wtr
Revolving
Fd Ser A (Escrowed
to Maturity) 5.750 06/15/12 353,112 353,112
1,290 1,290 New York St
Environmental Fac
Corp Pollutn Ctl
Rev St Wtr
Revolving
Fd Ser E 6.600 06/15/09 1,314,329 1,314,329
95 95 New York St
Environmental Fac
Corp Pollutn Ctl
Rev St Wtr Ser 02 5.750 06/15/12 111,207 111,207
500 500 New York St
Environmental Fac
Corp Pollutn Ctl
Rev St Wtr Ser 02
(Escrowed to
Maturity) 5.750 06/15/12 588,520 588,520
2,000 2,000 New York St
Environmental Fac
Corp Solid Waste
Disp Rev Occidental
Petroleum Corp
Proj (AMT) 6.100 11/01/30 2,065,100 2,065,100
1,000 1,000 New York St
Environmental Fac
Corp St Clean Wtr
& Drinking
Revolving Fd Muni
Wtr Proj Ser B 5.250 06/15/20 1,090,700 1,090,700
1,640 1,640 New York St
Environmental Fac
Corp St Clean Wtr
& Drinking
Revolving Fd
Pooled Fin Pgm I 5.250 09/15/19 1,803,442 1,803,442
1,565 1,565 New York St
Environmental Fac
Corp St Clean Wtr
& Drinking
Revolving Fd Ser B 5.000 06/15/20 1,677,038 1,677,038
1,695 2,000 3,695 New York St
Environmental Fac
Corp St Clean Wtr
& Drinking
Revolving Fd Ser B 5.000 06/15/21 1,808,277 2,133,660 3,941,937
3,500 3,500 New York St Hsg
Fin Agy Rev Multi-
Family Hsg Secd Mtg
Pgm Ser A (AMT) 7.050 08/15/24 3,505,530 3,505,530
1,340 1,340 New York St Hsg
Fin Agy Rev Newburgh
Interfaith Hsg Ser A 7.050 11/01/12 1,342,345 1,342,345
1,075 1,075 New York St Hsg Fin
Agy St Personal
Income Tax Rev Econ
Dev & Hsg Ser A 5.250 09/15/19 1,169,955 1,169,955
2,300 2,300 New York St Hsg Fin
Agy St Personal
Income Tax Rev Econ
Dev & Hsg Ser A (b) 5.250 09/15/21 2,475,329 2,475,329
3,000 1,000 3,000 7,000 New York St Loc Govt
Assist Corp Ser E
Rfdg 6.000 04/01/14 3,563,790 1,187,930 3,563,790 8,315,510
2,000 1,050 3,050 New York St Med Care
Fac Fin Agy Rev
Saint Peter's Hosp
Proj Ser A
(AMBAC Insd) 5.375 11/01/20 2,024,380 1,062,800 3,087,180
4,000 4,000 New York St Mtg Agy
Rev Homeowner Mtg
Ser 71 (AMT) 5.400 04/01/29 4,107,400 4,107,400
2,820 4,460 7,280 New York St Mtg Agy
Rev Homeowner Mtg
Ser 79 (AMT) 5.300 04/01/29 2,891,290 4,572,749 7,464,039
1,990 1,990 New York St Mtg Agy
Rev Ser 101(AMT) 5.400 04/01/32 2,052,088 2,052,088
1,535 1,535 New York St Ser C
Rfdg 5.000 04/15/17 1,670,095 1,670,095
2,000 1,000 2,000 5,000 New York St Twy
Auth Hwy & Brdg Tr
Fd Ser A (FSA Insd) 5.250 04/01/19 2,182,580 1,091,290 2,182,580 5,456,450
2,750 2,750 New York St Twy Auth
Hwy & Brdg Tr Fd Ser
B (FGIC Insd) 5.000 04/01/16 2,986,638 2,986,638
1,000 1,000 New York St Twy Auth
Second Ser A
(MBIA Insd) 5.000 04/01/22 1,069,320 1,069,320
2,000 2,000 New York St Twy Auth
Second Ser A
(MBIA Insd) 5.000 04/01/23 2,124,180 2,124,180
1,540 460 2,000 New York St Twy Auth
Svc Contract Rev Loc
Hwy & Brdg 5.500 04/01/16 1,738,675 519,345 2,258,020
5,000 5,000 New York St Twy Auth
Svc Contract Rev Loc
Hwy & Brdg
(Prerefunded @
04/01/11) 5.250 04/01/14 5,657,300 5,657,300
3,000 3,000 New York St Twy Auth
Svc Contract Rev Loc
Hwy & Brdg
(Prerefunded @
04/01/11) 5.250 04/01/15 3,394,380 3,394,380
3,460 3,460 New York St Twy Auth
Svc Contract Rev Loc
Hwy & Brdg
(Prerefunded @
04/01/12) 5.500 04/01/16 3,998,030 3,998,030
2,150 2,500 4,650 New York St Urban
Dev Corp Rev
Correctional Fac Ser
A Rfdg 5.500 01/01/14 2,407,376 2,799,275 5,206,651
1,500 1,500 New York St Urban
Dev Corp Rev Personal
Income Tax Ser C-1
(FGIC Insd) 5.500 03/15/19 1,700,655 1,700,655
2,000 2,000 New York St Urban Dev
Corp Rev Personal
Income Tax St Fac Ser
A 5.375 03/15/19 2,186,800 2,186,800
1,625 1,625 New York St Urban Dev
Corp Rev Proj Ctr for
Indl Innovation Rfdg 5.500 01/01/13 1,852,321 1,852,321
1,115 1,000 2,115 New York St Urban Dev
Corp Rev Proj Pine
Barrens 5.375 04/01/17 1,149,821 1,031,230 2,181,051
1,000 1,000 New York St Urban Dev
Corp Rev St Fac Rfdg 5.500 04/01/07 1,079,010 1,079,010
19,280 19,280 New York St Urban Dev
Corp Rev St Office
South Mall Ser A * 01/01/11 13,971,830 13,971,830
1,060 1,060 Niagara Falls, NY Wtr
Treatment Plant (AMT)
(MBIA Insd) 7.250 11/01/10 1,282,430 1,282,430
3,570 3,570 Niagara, NY Frontier
Auth Arpt Buffalo
Niagara Intl Arpt
Ser A (AMT)
(MBIA Insd) 5.625 04/01/29 3,771,848 3,771,848
2,000 4,500 6,500 Port Auth NY & NJ
Cons 97th Ser (AMT)
(FGIC Insd) 6.650 01/15/23 2,038,900 4,587,525 6,626,425
2,500 2,500 Port Auth NY & NJ
Spl Oblig Rev Spl
Proj JFK Intl Arpt
Terminal 6(AMT)
(MBIA Insd) 5.750 12/01/25 2,675,725 2,675,725
1,600 1,600 Rensselaer, NY Hsg
Auth Multi-Family
Rev Mtg Renwyck Pl
Ser A 7.650 01/01/11 1,635,584 1,635,584
1,480 1,480 Rensselaer, NY Hsg
Auth Multi-Family
Rev Mtg Van
Rensselaer Heights
Ser A 7.750 01/01/11 1,513,019 1,513,019
1,000 1,000 Rockland Cnty, NY
Solid Waste Mgmt
Auth Ser B (AMT)
(AMBAC Insd) 5.125 12/15/28 1,032,320 1,032,320
1,000 1,000 1,500 3,500 Sales Tax Asset
Receivable Corp NY
Ser A (MBIA Insd)
(a) 5.000 10/15/21 1,081,050 1,081,050 1,621,575 3,783,675
1,250 1,250 Sodus, NY Ctr Sch
Dist Rfdg
(FGIC Insd) (b) 5.125 06/15/17 1,365,213 1,365,213
1,000 1,000 Tobacco Settlement
Fin Corp NY Ser C-1 5.500 06/01/22 1,088,000 1,088,000
1,000 1,000 Triborough Brdg &
Tunl Auth NY Rev
Gen Purp Ser A 5.250 01/01/17 1,092,530 1,092,530
1,500 5,445 6,945 Triborough Brdg &
Tunl Auth NY Rev
Gen Purp Ser A 5.250 01/01/18 1,633,875 5,930,966 7,564,841
4,000 3,000 5,000 12,000 Triborough Brdg &
Tunl Auth NY Rev
Gen Purp Ser A 5.000 01/01/32 4,090,440 3,067,830 5,113,050 12,271,320
1,600 1,600 Triborough Brdg &
Tunl Auth NY Rev
Gen Purp Ser B Rfdg 5.125 11/15/29 1,660,816 1,660,816
2,000 2,000 Triborough Brdg &
Tunl Auth NY Ser E
Rfdg (MBIA Insd) 5.000 11/15/32 2,056,620 2,056,620
1,500 1,000 2,000 4,500 Yonkers, NY Indl Dev
Agy Civic Fac Rev
Cmnty Dev Ppty
Yonkers Inc Ser A 6.625 02/01/26 1,618,140 1,078,760 2,157,520 4,854,420
1,700 1,700 Yonkers, NY Ser A
(FGIC Insd) (b) 5.750 10/01/14 1,955,153 1,955,153
----------------------------------------------------------------
131,659,953 105,314,490 157,617,905 394,592,348
----------------------------------------------------------------
Puerto Rico 7.5%
3,000 5,000 8,000 Puerto Rico Comwlth
Hwy & Trans Auth Hwy
Rev Ser Y (FSA Insd) 6.250 07/01/21 3,804,780 6,341,300 10,146,080
5,000 5,000 Puerto Rico Comwlth
Pub Impt Ser A 5.250 07/01/20 5,409,350 5,409,350
2,000 1,000 2,000 5,000 Puerto Rico Pub Bldg
Auth Rev Govt Fac
Ser I (Comwth Gtd) 5.250 07/01/33 2,095,660 1,047,830 2,095,660 5,239,150
----------------------------------------------------
7,505,010 4,852,610 8,436,960 20,794,580
----------------------------------------------------
U. S. Virgin Islands 1.9%
1,500 1,500 Virgin Islands Pub
Fin Auth Rev Gross
Rcpt Taxes Ln Nt Ser A 6.375 10/01/19 1,737,270 1,737,270
2,000 1,000 3,000 Virgin Islands Pub
Fin Auth Rev Gross
Rcpt Taxes Ln Nt Ser A
(ACA Insd) 6.125 10/01/29 2,240,920 1,120,460 3,361,380
---------------------------------------------------
2,240,920 1,737,270 1,120,460 5,098,650
---------------------------------------------------
Total Long-Term Investments 152.4% 141,405,883 111,904,370 167,175,325 420,485,578
(Cost $386,790,602)...................................................
Total Short-Term Investments 1.5% 2,400,000 - 1,800,000 4,200,000
------------------------------------------------------
(Cost $4,200,000).....................................................
Total Investments 153.9% 143,805,883 111,904,370 168,975,325 424,685,578
(Cost $390,990,602)...................................................
Liabilities in Excess of Other Assets (1.3%) (2,186,961) 472,029 (1,935,289) (3,650,221)
Preferred Shares (including accrued distributions) (52.6%) (45,046,604) (40,006,619) (60,011,179) (145,064,402)
------------------------------------------------------
Net Assets Applicable to Common Shares 100.0% $ 96,572,318 $ 72,369,780 $107,028,857 $ 275,970,955
------------------------------------------------------
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) The Trust owns 100% of the bond issuance.
ACA -- American Capital Access Insurance Co.
AMBAC -- AMBAC Indemnity Corp.
AMT - Alternative Minimum Tax
Comwth Gtd - Commonwealth of Puerto Rico
Connie Lee -- Connie Lee Insurance Co.
FGIC -- Financial Guaranty Insurance Co.
FSA -- Financial Security Assurance Inc.
MBIA -- Municipal Bond Investors Assurance Corp.
XLCA - XL Capital Assurance Inc.
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST (VNM) -
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS (VTN)
PROFORMA PORTFOLIO OF INVESTMENTS
OCTOBER 31, 2004 (UNAUDITED)
VTN
VNM VTN PROFORMA
PAR AMOUNT PAR AMOUNT PAR AMOUNT VNM VTN VTN-PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 151.5%
NEW YORK 142.1%
$ 1,000 $ 1,000 Amherst, NY Indl Dev Agy
Civic Fac Rev UBF Fac
Student Hsg Ser B (AMBAC
Insd) 5.750% 08/01/30 $ 1,121,470 $ 1,121,470
$ 1,000 1,000 Amherst, NY Indl Dev Agy
Rev Fac Student Hsg Ser A
(AMBAC Insd) 5.750 08/01/25 $ 1,133,530 1,133,530
1,250 1,250 Erie Cnty, NY Indl Dev Agy
Sch Fac Rev City of Buffalo
Proj (FSA Insd) 5.750 05/01/19 1,438,687 1,438,687
1,250 1,250 Erie Cnty, NY Indl Dev Agy
Sch Fac Rev City of Buffalo
Proj (FSA Insd) 5.750 05/01/23 1,436,362 1,436,362
2,000 2,000 Erie Cnty, NY Pub Impt Ser
A (FGIC Insd) 5.250 03/15/20 2,189,060 2,189,060
1,250 1,250 Erie Cnty, NY Pub Impt Ser
B (MBIA Insd) 5.250 04/01/18 1,396,062 1,396,062
1,000 1,000 Erie Cnty, NY Pub Impt Ser
C (AMBAC Insd) 5.500 07/01/29 1,090,880 1,090,880
1,610 1,610 Grand Central NY Dist Mgt
Assn Cap Impt Business Impt
& Rfdg (b) 5.000 01/01/16 1,757,701 1,757,701
1,110 1,110 Islip, NY Res Recovery 1985
Fac Ser E (AMT) (FSA Insd)
(b) 5.750 07/01/18 1,244,954 1,244,954
3,020 3,020 Long Island Pwr Auth NY
Elec Sys Rev Cap Apprec
(FSA Insd) * 06/01/19 1,633,971 1,633,971
3,365 3,365 Long Island Pwr Auth NY
Elec Sys Rev Cap Apprec
(FSA Insd) * 06/01/21 1,630,679 1,630,679
2,000 2,000 Long Island Pwr Auth NY
Elec Sys Rev Gen Ser C 5.500 09/01/19 2,194,080 2,194,080
1,500 1,500 Long Island Pwr Auth NY
Elec Sys Rev Gen Ser C 5.500 09/01/21 1,632,840 1,632,840
2,000 1,000 3,000 Metropolitan Trans Auth NY
Rev Ser A Rfdg (AMBAC Insd) 5.500 11/15/19 2,276,360 1,138,180 3,414,540
1,500 1,500 3,000 Metropolitan Trans Auth NY
Svc Contract Ser A Rfdg 5.125 01/01/29 1,544,955 1,544,955 3,089,910
1,000 1,000 2,000 Metropolitan Trans Auth NY
Svc Contract Ser B (MBIA
Insd) 5.500 07/01/14 1,161,960 1,161,960 2,323,920
1,215 1,215 Monroe Cnty, NY Indl Dev
Agy Rev Pub Impt Canal
Ponds Park Ser A 7.000 06/15/13 1,222,144 1,222,144
1,125 1,125 Nassau Cnty, NY Impt Ser
E (FSA Insd) 6.000 03/01/20 1,293,592 1,293,592
1,000 1,000 Nassau Cnty, NY Interim Fin
Auth Sales Tax Secd Ser A
(AMBAC Insd) 5.000 11/15/18 1,091,510 1,091,510
2,000 2,000 4,000 Nassau Cnty, NY Interim Fin
Auth Sales Tax Secd Ser A
(Prerefunded @ 11/15/10) 5.750 11/15/15 2,319,920 2,319,920 4,639,840
730 730 Nassau Cnty, NY Interim Fin
Auth Sales Tax Secd Ser A1
(AMBAC Insd) 5.375 11/15/15 818,658 818,658
1,770 1,770 Nassau Cnty, NY Interim Fin
Auth Sales Tax Secd Ser A1
(Prerefunded @ 11/15/11)
(AMBAC Insd) 5.375 11/15/15 2,032,102 2,032,102
820 820 Nassau Cnty, NY Interim Fin
Auth Sales Tax Secd Ser A-1
(AMBAC Insd) 5.375 11/15/16 919,589 919,589
1,000 1,585 2,585 Nassau Cnty, NY Interim Fin
Auth Sales Tax Secd Ser B
Rfdg (AMBAC Insd) 5.000 11/15/17 1,097,120 1,738,935 2,836,055
500 500 Nassau Cnty, NY Swr & Storm
Ser B (MBIA Insd) 5.000 10/01/20 540,390 540,390
1,370 1,370 Nassau Cnty, NY Swr & Storm
Ser B (MBIA Insd) 5.000 10/01/22 1,463,311 1,463,311
2,000 2,000 New York City Fiscal 2003
Ser I 5.750 03/01/16 2,260,360 2,260,360
935 935 New York City Hsg Dev Corp
Multi-Family Hsg Rev Ser A
(AMT) 5.850 11/01/20 999,132 999,132
1,000 1,000 New York City Indl Dev Agy
Civic Fac Rev NY Inst of
Technology Proj (MBIA Insd) 5.250 03/01/18 1,103,880 1,103,880
1,000 1,000 2,000 New York City Indl Dev Agy
Fac Rev Royal Charter-NY
Presbyterian (FSA Insd) 5.250 12/15/11 1,133,030 1,133,030 2,266,060
2,000 2,000 4,000 New York City Indl Dev Agy
Spl Fac Rev Terminal One
Group Assn Proj (AMT) 6.000 01/01/15 2,045,060 2,045,060 4,090,120
1,000 1,000 2,000 New York City Muni Wtr Fin
Auth Wtr & Swr Sys Rev 5.500 06/15/33 1,079,880 1,079,880 2,159,760
2,000 2,000 New York City Muni Wtr Fin
Auth Wtr & Swr Sys Rev Ser
B (FSA Insd) 5.000 06/15/29 2,062,260 2,062,260
3,900 3,900 New York City Muni Wtr Fin
Auth Wtr & Swr Sys Rev Ser
B (FSA Insd) 5.250 06/15/29 4,090,086 4,090,086
1,325 1,325 2,650 New York City Muni Wtr Fin
Ser B 6.000 06/15/33 1,542,234 1,542,234 3,084,468
2,175 2,175 4,350 New York City Muni Wtr Fin
Ser B (Prerefunded @
06/15/10) 6.000 06/15/33 2,556,060 2,556,060 5,112,120
1,200 1,200 New York City Ser G 5.250 08/01/16 1,295,388 1,295,388
2,000 2,000 New York City Ser H (FGIC
Insd) 6.000 08/01/12 2,360,280 2,360,280
1,250 1,250 New York City Ser K 5.625 08/01/13 1,366,763 1,366,763
1,750 1,750 New York City Transitional
Fin Auth Rev Future Tax
Secd Ser B (MBIA Insd) 5.250 05/01/16 1,934,713 1,934,713
1,500 1,500 New York City Transitional
Fin Auth Rev Future Tax
Secd Ser C (AMBAC Insd) 5.250 08/01/21 1,627,515 1,627,515
1,500 3,500 5,000 New York City Transitional
Fin Auth Rev Future Tax
Secd Ser D (MBIA Insd) 5.250 02/01/19 1,650,000 3,850,000 5,500,000
1,000 1,000 New York St Dorm Auth Lease
Rev Court Fac Ser A 5.500 05/15/20 1,095,890 1,095,890
1,330 1,330 New York St Dorm Auth Lease
Rev Court Fac Ser A 5.375 05/15/22 1,428,846 1,428,846
1,000 1,000 New York St Dorm Auth Lease
Rev Master Boces Prog Ser A
(FSA Insd) 5.250 08/15/17 1,108,780 1,108,780
2,250 2,250 New York St Dorm Auth Lease
Rev Muni Hlth Fac Impt Pgm
Ser 1 (FSA Insd) 5.500 01/15/13 2,539,485 2,539,485
2,000 1,040 3,040 New York St Dorm Auth Lease
Rev St Univ Dorm Fac 5.375 07/01/16 2,205,720 1,146,974 3,352,694
1,000 1,000 New York St Dorm Auth Lease
Rev St Univ Dorm Fac
(Prerefunded @ 07/01/12) 5.375 07/01/20 1,150,920 1,150,920
1,000 1,000 New York St Dorm Auth Lease
Rev St Univ Dorm Fac
(Prerefunded @ 07/01/12) 5.000 07/01/32 1,125,540 1,125,540
2,200 2,200 New York St Dorm Auth Rev
Catholic Hlth L.I. Oblig
Grp (a) 5.000 07/01/27 2,190,980 2,190,980
2,750 2,750 New York St Dorm Auth Rev
Catholic Hlth L.I. Oblig
Grp (a) 5.100 07/01/34 2,736,058 2,736,058
3,500 3,500 New York St Dorm Auth Rev
City Univ Cons Third Ser 1
(FGIC Insd) 5.250 07/01/25 3,726,205 3,726,205
1,625 1,625 New York St Dorm Auth Rev
City Univ Sys Cons Ser A 5.625 07/01/16 1,896,538 1,896,538
2,500 2,500 New York St Dorm Auth Rev
City Univ Sys Third Gen Res
Ser 2 (Prerefunded @
07/01/06) 6.000 07/01/20 2,720,875 2,720,875
2,500 2,500 New York St Dorm Auth Rev
Grace Manor Hlthcare Fac 6.150 07/01/18 2,695,825 2,695,825
1,000 1,000 2,000 New York St Dorm Auth Rev
Hosp (MBIA Insd) 5.000 08/01/33 1,033,070 1,033,070 2,066,140
1,000 1,340 2,340 New York St Dorm Auth Rev
Insd Brooklyn Law Sch Ser B
(XLCA Insd) 5.375 07/01/23 1,092,590 1,464,071 2,556,661
1,500 1,000 2,500 New York St Dorm Auth Rev
Mem Sloan-Kettering Ctr Ser
1 (MBIA Insd) 5.000 07/01/20 1,608,360 1,072,240 2,680,600
5,875 5,875 New York St Dorm Auth Rev
Mental Hlth Fac Impt Ser B
(b) 5.250 02/15/22 6,305,520 6,305,520
2,340 2,340 New York St Dorm
Auth Rev Mental
Hlth Svc
Fac Impt Ser D
(FSA Insd) (b) 5.750 08/15/12 2,639,731 2,639,731
1,210 1,210 New York St Dorm
Auth Rev Mental
Hlth Svc
Ser B (MBIA Insd) 5.250 08/15/31 1,260,021 1,260,021
1,000 1,000 New York St Dorm
Auth Rev Sch Dist
Fin Pgm Ser C
(MBIA Insd) 5.375 10/01/15 1,122,470 1,122,470
1,000 1,000 New York St Dorm
Auth Rev Sch Dist
Fin Pgm Ser I
(MBIA Insd) 5.750 10/01/18 1,158,220 1,158,220
1,000 1,000 2,000 New York St Dorm
Auth Rev Second Hosp
North Gen Hosp Rfdg 5.750 02/15/18 1,123,560 1,123,560 2,247,120
1,370 1,370 New York St Dorm
Auth Rev St Personal
Income Tax Ed Ser A 5.375 03/15/20 1,505,466 1,505,466
1,000 1,000 New York St Dorm
Auth Rev St Personal
Income Tax Ed Ser A 5.000 03/15/32 1,022,260 1,022,260
1,500 1,500 New York St Dorm
Auth Rev St Univ
Ed Fac (Prerefunded
@ 05/15/06) 5.750 05/15/10 1,619,640 1,619,640
1,000 1,000 New York St Dorm
Auth Rev St Univ
Ed Fac 1989 Res
(MBIA Insd) 6.000 05/15/15 1,158,700 1,158,700
2,000 2,000 New York St Dorm
Auth Rev St Univ
Ed Fac 1989 Res
(MBIA Insd) 6.000 05/15/16 2,317,400 2,317,400
2,600 1,000 3,600 New York St Dorm
Auth Rev St Univ
Ed Fac Ser A
(MBIA Insd) 5.250 05/15/15 2,969,928 1,142,280 4,112,208
5,010 5,010 New York St Dorm
Auth Rev St Univ
Ed Fac Ser B Rfdg 5.250 05/15/19 5,674,677 5,674,677
1,365 1,365 New York St Energy
Resh & Dev Auth
Gas Fac
Rev Brooklyn Union
Gas Ser B (AMT)
(MBIA Insd) 6.750 02/01/24 1,383,987 1,383,987
3,000 4,000 7,000 New York St Energy
Resh & Dev Auth
Gas Fac
Rev Brooklyn Union
Gas Ser C (AMT)
(MBIA Insd) 5.600 06/01/25 3,051,690 4,068,920 7,120,610
300 300 New York St
Environmental Fac
Corp Pollutn
Ctl Rev St Wtr
Revolving Fd
Ser A (Escrowed
to Maturity) 5.750 06/15/12 353,112 353,112
1,290 1,290 New York St
Environmental Fac
Corp Pollutn
Ctl Rev St Wtr
Revolving Fd Ser E 6.600 06/15/09 1,314,329 1,314,329
95 95 New York St
Environmental Fac
Corp Pollutn
Ctl Rev St Wtr
Ser 02 5.750 06/15/12 111,207 111,207
500 500 New York St
Environmental Fac
Corp Pollutn
Ctl Rev St Wtr
Ser 02 (Escrowed
to Maturity) 5.750 06/15/12 588,520 588,520
2,000 2,000 New York St
Environmental Fac
Corp Solid
Waste Disp Rev
Occidental
Petroleum Corp
Proj (AMT) 6.100 11/01/30 2,065,100 2,065,100
1,640 1,640 New York St
Environmental Fac
Corp St
Clean Wtr &
Drinking Revolving
Fd Pooled
Fin Pgm I 5.250 09/15/19 1,803,442 1,803,442
1,565 1,565 New York St
Environmental Fac
Corp St
Clean Wtr &
Drinking Revolving
Fd Ser B 5.000 06/15/20 1,677,038 1,677,038
2,000 2,000 New York St
Environmental Fac
Corp St
Clean Wtr &
Drinking Revolving
Fd Ser B 5.000 06/15/21 2,133,660 2,133,660
3,500 3,500 New York St Hsg
Fin Agy Rev
Multi-Family
Hsg Secd Mtg Pgm
Ser A (AMT) 7.050 08/15/24 3,505,530 3,505,530
1,340 1,340 New York St Hsg
Fin Agy Rev
Newburgh
Interfaith Hsg
Ser A 7.050 11/01/12 1,342,345 1,342,345
1,075 1,075 New York St Hsg
Fin Agy St Personal
Income Tax Rev Econ
Dev & Hsg Ser A 5.250 09/15/19 1,169,955 1,169,955
2,300 2,300 New York St Hsg
Fin Agy St Personal
Income Tax Rev Econ
Dev & Hsg Ser A (b) 5.250 09/15/21 2,475,329 2,475,329
3,000 3,000 6,000 New York St Loc
Govt Assist Corp
Ser E Rfdg 6.000 04/01/14 3,563,790 3,563,790 7,127,580
1,050 1,050 New York St Med
Care Fac Fin Agy
Rev Saint Peter's
Hosp Proj Ser A
(AMBAC Insd) 5.375 11/01/20 1,062,800 1,062,800
4,000 4,000 New York St Mtg
Agy Rev Homeowner
Mtg Ser 71 (AMT) 5.400 04/01/29 4,107,400 4,107,400
2,820 4,460 7,280 New York St Mtg
Agy Rev Homeowner
Mtg Ser 79 (AMT) 5.300 04/01/29 2,891,290 4,572,749 7,464,039
1,990 1,990 New York St Mtg
Agy Rev Ser 101
(AMT) 5.400 04/01/32 2,052,088 2,052,088
1,535 1,535 New York St
Ser C Rfdg 5.000 04/15/17 1,670,095 1,670,095
2,000 2,000 4,000 New York St Twy
Auth Hwy & Brdg
Tr Fd Ser
A (FSA Insd) 5.250 04/01/19 2,182,580 2,182,580 4,365,160
2,750 2,750 New York St Twy
Auth Hwy & Brdg
Tr Fd Ser
B (FGIC Insd) 5.000 04/01/16 2,986,638 2,986,638
1,540 1,540 New York St Twy
Auth Svc Contract
Rev Loc
Hwy & Brdg 5.500 04/01/16 1,738,675 1,738,675
5,000 5,000 New York St Twy
Auth Svc Contract
Rev Loc Hwy & Brdg
(Prerefunded @
04/01/11) 5.250 04/01/14 5,657,300 5,657,300
3,000 3,000 New York St Twy
Auth Svc Contract
Rev Loc Hwy & Brdg
(Prerefunded @
04/01/11) 5.250 04/01/15 3,394,380 3,394,380
3,460 3,460 New York St Twy
Auth Svc Contract
Rev Loc Hwy & Brdg
(Prerefunded @
04/01/12) 5.500 04/01/16 3,998,030 3,998,030
2,500 2,500 New York St Urban
Dev Corp Rev
Correctional Fac
Ser A Rfdg 5.500 01/01/14 2,799,275 2,799,275
1,500 1,500 New York St Urban
Dev Corp Rev
Personal
Income Tax
Ser C-1 (FGIC
Insd) 5.500 03/15/19 1,700,655 1,700,655
2,000 2,000 New York St Urban
Dev Corp Rev
Personal Income
Tax St Fac Ser A 5.375 03/15/19 2,186,800 2,186,800
1,625 1,625 New York St Urban
Dev Corp Rev Proj
Ctr for Indl
Innovation Rfdg 5.500 01/01/13 1,852,321 1,852,321
1,115 1,115 New York St Urban
Dev Corp Rev Proj
Pine Barrens 5.375 04/01/17 1,149,821 1,149,821
19,280 19,280 New York St Urban
Dev Corp Rev St
Office South
Mall Ser A * 01/01/11 13,971,830 13,971,830
3,570 3,570 Niagara, NY
Frontier Auth
Arpt Buffalo
Niagara Intl
Arpt Ser A (AMT)
(MBIA Insd) 5.625 04/01/29 3,771,848 3,771,848
4,500 4,500 Port Auth NY & NJ
Cons 97th Ser
(AMT) (FGIC
Insd) 6.650 01/15/23 4,587,525 4,587,525
1,600 1,600 Rensselaer, NY
Hsg Auth Multi-
Family Rev
Mtg Renwyck Pl
Ser A 7.650 01/01/11 1,635,584 1,635,584
1,480 1,480 Rensselaer, NY
Hsg Auth Multi-
Family Rev Mtg
Van Rensselaer
Heights Ser A 7.750 01/01/11 1,513,019 1,513,019
1,000 1,000 Rockland Cnty,
NY Solid Waste
Mgmt Auth
Ser B (AMT)
(AMBAC Insd) 5.125 12/15/28 1,032,320 1,032,320
1,000 1,500 2,500 Sales Tax Asset
Receivable Corp
NY Ser A (MBIA
Insd) (a) 5.000 10/15/21 1,081,050 1,621,575 2,702,625
1,000 1,000 Triborough Brdg
& Tunl Auth NY
Rev Gen
Purp Ser A 5.250 01/01/17 1,092,530 1,092,530
1,500 5,445 6,945 Triborough Brdg
& Tunl Auth NY
Rev Gen
Purp Ser A 5.250 01/01/18 1,633,875 5,930,966 7,564,841
4,000 5,000 9,000 Triborough Brdg
& Tunl Auth NY
Rev Gen
Purp Ser A 5.000 01/01/32 4,090,440 5,113,050 9,203,490
1,500 2,000 3,500 Yonkers, NY
Indl Dev Agy
Civic Fac Rev
Cmnty Dev Ppty
Yonkers Inc Ser A 6.625 02/01/26 1,618,140 2,157,520 3,775,660
1,700 1,700 Yonkers, NY Ser A
(FGIC Insd) (b) 5.750 10/01/14 1,955,153 1,955,153
-------------------------------------------
131,659,953 157,617,905 289,277,858
-------------------------------------------
PUERTO RICO 7.8%
5,000 5,000 Puerto Rico Comwlth Hwy & Trans Auth Hwy
Rev Ser Y (FSA Insd) 6.250 07/01/21 6,341,300 6,341,300
5,000 5,000 Puerto Rico Comwlth Pub Impt Ser A 5.250 07/01/20 5,409,350 5,409,350
2,000 2,000 4,000 Puerto Rico Pub Bldg Auth Rev Govt Fac Ser
I (Comwth Gtd) 5.250 07/01/33 2,095,660 2,095,660 4,191,320
-----------------------------------
7,505,010 8,436,960 15,941,970
-----------------------------------
U. S. VIRGIN ISLANDS 1.6%
2,000 1,000 3,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt
Taxes Ln Nt Ser A (ACA Insd) 6.125 10/01/29 2,240,920 1,120,460 3,361,380
-----------------------------------
2,240,920 1,120,460 3,361,380
-----------------------------------
TOTAL LONG-TERM INVESTMENTS 151.5%
(Cost $283,804,528)....................................... 141,405,883 167,175,325 308,581,208
TOTAL SHORT-TERM INVESTMENTS 2.1%
(Cost $4,200,000)......................................... 2,400,000 1,800,000 4,200,000
-----------------------------------------------------
TOTAL INVESTMENTS 153.6%
(Cost $288,004,528)....................................... 143,805,883 168,975,325 312,781,208
LIABILITIES IN EXCESS OF OTHER ASSETS (2.0%) (2,186,961) (1,935,289) (4,122,250)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (51.6%) (45,046,604) (60,011,179) (105,057,783)
-----------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0% $ 96,572,318 $ 107,028,857 $ 203,601,175
-----------------------------------------------------
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) The Trust owns 100% of the bond issuance.
ACA -- American Capital Access Insurance Co.
AMBAC -- AMBAC Indemnity Corp.
AMT - Alternative Minimum Tax
Comwth Gtd - Commonwealth of Puerto Rico
FGIC -- Financial Guaranty Insurance Co.
FSA -- Financial Security Assurance Inc.
MBIA -- Municipal Bond Investors Assurance Corp.
XLCA - XL Capital Assurance Inc.
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST (VNV) -
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS (VTN)
PROFORMA PORTFOLIO OF INVESTMENTS
OCTOBER 31, 2004 (UNAUDITED)
VTN
VNV VTN PROFORMA
PAR AMOUNT PAR AMOUNT PAR AMOUNT VNV VTN VTN-PROFORMA
(000) (000) (000) DESCRIPTION COUPON MATURITY MARKET VALUE MARKET VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 155.6%
NEW YORK 146.6%
$ 1,000 $ 1,000 Amherst, NY Indl
Dev Agy Civic Fac
Rev UBF Fac
Student Hsg Ser B
(AMBAC Insd) 5.750% 08/01/30 $ 1,121,470 $ 1,121,470
$ 1,500 1,500 Erie Cnty, NY
Indl Dev Agy Sch
Fac Rev City of
Buffalo Proj (FSA
Insd) 5.750 05/01/20 $ 1,726,425 1,726,425
1,250 1,250 Erie Cnty, NY
Indl Dev Agy Sch
Fac Rev City of
Buffalo Proj (FSA
Insd) 5.750 05/01/23 1,436,362 1,436,362
2,000 2,000 Erie Cnty, NY Pub
Impt Ser A (FGIC
Insd) 5.250 03/15/20 2,189,060 2,189,060
1,000 1,000 Erie Cnty, NY Pub
Impt Ser C (AMBAC
Insd) 5.500 07/01/29 1,090,880 1,090,880
1,610 1,610 Grand Central NY
Dist Mgt Assn Cap
Impt Business Impt
& Rfdg (b) 5.000 01/01/16 1,757,701 1,757,701
1,110 1,110 Islip, NY Res
Recovery 1985 Fac
Ser E (AMT) (FSA
Insd) (b) 5.750 07/01/18 1,244,954 1,244,954
2,000 2,000 Islip, NY Res
Recovery Agy Rev
1985 Fac Ser B
(AMT) (AMBAC Insd) 7.250 07/01/11 2,451,380 2,451,380
1,100 1,100 Islip, NY Res
Recovery Agy Rev
1985 Fac Ser E
(AMT) (FSA Insd) 5.750 07/01/20 1,220,802 1,220,802
3,020 3,020 Long Island Pwr
Auth NY Elec Sys
Rev Cap Apprec
(FSA Insd) * 06/01/19 1,633,971 1,633,971
2,000 2,000 Long Island Pwr
Auth NY Elec Sys
Rev Gen Ser C 5.500 09/01/19 2,194,080 2,194,080
1,500 1,500 Long Island Pwr
Auth NY Elec Sys
Rev Gen Ser C 5.500 09/01/21 1,632,840 1,632,840
1,000 1,000 2,000 Metropolitan
Trans Auth NY Rev
Ser A Rfdg (AMBAC
Insd) 5.500 11/15/19 1,138,180 1,138,180 2,276,360
1,000 1,500 2,500 Metropolitan Trans
Auth NY Svc
Contract Ser A Rfdg 5.125 01/01/29 1,029,970 1,544,955 2,574,925
1,000 1,000 2,000 Metropolitan Trans
Auth NY Svc
Contract Ser B
(MBIA Insd) 5.500 07/01/14 1,161,960 1,161,960 2,323,920
1,115 1,115 Monroe Woodbury,
NY Cent Sch Ser
A Rfdg (FGIC Insd) 5.000 05/15/19 1,219,855 1,219,855
1,500 1,000 2,500 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd Ser
A (AMBAC Insd) 5.000 11/15/18 1,637,265 1,091,510 2,728,775
2,000 2,000 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd Ser
A (Prerefunded @
11/15/10) 5.750 11/15/15 2,319,920 2,319,920
730 730 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd Ser
A1 (AMBAC Insd) 5.375 11/15/15 818,658 818,658
1,770 1,770 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd Ser
A1 (Prerefunded @
11/15/11) (AMBAC
Insd) 5.375 11/15/15 2,032,102 2,032,102
295 295 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd
Ser A-1 (AMBAC
Insd) 5.375 11/15/16 330,828 330,828
1,585 1,585 Nassau Cnty, NY
Interim Fin Auth
Sales Tax Secd
Ser B Rfdg (AMBAC
Insd) 5.000 11/15/17 1,738,935 1,738,935
1,000 1,000 Nassau Cnty, NY
Swr & Storm Wtr
Fin Auth Sys Rev
Ser B (MBIA Insd) 5.000 10/01/21 1,074,840 1,074,840
935 935 New York City Hsg
Dev Corp Multi-
Family Hsg Rev Ser
A (AMT) 5.850 11/01/20 999,132 999,132
1,000 1,000 New York City Hsg
Dev Corp Multi-
Family Hsg Rev
Ser A (AMT) 5.950 11/01/32 1,049,480 1,049,480
1,900 1,900 New York City
Indl Dev Agy
Brooklyn Navy
Yard (AMT) 5.650 10/01/28 1,790,522 1,790,522
1,355 1,355 New York City
Indl Dev Agy
Civic Fac Rev
Nightingale
Bamford Sch
Rfdg (AMBAC
Insd) (b) 5.250 01/15/19 1,489,890 1,489,890
1,000 1,000 New York City
Indl Dev Agy
Civic Fac Rev
NY Inst of
Technology Proj
(MBIA Insd) 5.250 03/01/18 1,103,880 1,103,880
1,000 1,000 New York City
Indl Dev Agy
Fac Rev Royal
Charter-NY
Presbyterian (FSA
Insd) 5.250 12/15/11 1,133,030 1,133,030
2,000 2,000 4,000 New York City Indl
Dev Agy Spl Fac
Rev Terminal One
Group Assn Proj
(AMT) 6.000 01/01/15 2,045,060 2,045,060 4,090,120
1,230 1,230 New York City Indl
Dev Civic YMCA Gtr
NY Proj 5.850 08/01/08 1,333,763 1,333,763
1,500 1,500 New York City Indl
Dev Civic YMCA Gtr
NY Proj 5.800 08/01/16 1,609,635 1,609,635
1,000 1,000 2,000 New York City
Muni Wtr Fin
Auth Wtr & Swr
Sys Rev 5.500 06/15/33 1,079,880 1,079,880 2,159,760
3,900 3,900 New York City
Muni Wtr Fin
Auth Wtr & Swr
Sys Rev Ser B
(FSA Insd) 5.250 06/15/29 4,090,086 4,090,086
3,000 3,000 New York City
Muni Wtr Fin
Auth Wtr & Swr
Sys Ser B (FGIC
Insd) 5.250 06/15/29 3,146,220 3,146,220
1,325 1,325 New York City
Muni Wtr Fin
Ser B 6.000 06/15/33 1,542,234 1,542,234
2,175 2,175 New York City
Muni Wtr Fin
Ser B (Prerefunded
@ 06/15/10) 6.000 06/15/33 2,556,060 2,556,060
1,500 1,500 New York City Ser
E Rfdg (MBIA Insd) 6.200 08/01/08 1,702,605 1,702,605
1,000 1,000 New York City Ser
H (FGIC Insd) 6.000 08/01/12 1,180,140 1,180,140
1,250 1,250 New York City Ser
K 5.625 08/01/13 1,366,763 1,366,763
60 60 New York City
Transitional Fin
Auth Rev Future
Tax Secd Ser A 5.000 08/15/27 61,005 61,005
1,750 1,750 New York City
Transitional Fin
Auth Rev Future
Tax Secd Ser B
(MBIA Insd) 5.250 05/01/16 1,934,712 1,934,712
1,000 1,500 2,500 New York City
Transitional Fin
Auth Rev Future
Tax Secd Ser C
(AMBAC Insd) .250 08/01/21 1,085,010 1,627,515 2,712,525
1,000 3,500 4,500 New York City
Transitional Fin
Auth Rev Future
Tax Secd Ser D
(MBIA Insd) 5.250 02/01/19 1,100,000 3,850,000 4,950,000
1,000 1,330 2,330 New York St Dorm
Auth Lease Rev
Court Fac Ser A 5.375 05/15/22 1,074,320 1,428,846 2,503,166
745 745 New York St Dorm
Auth Lease Rev
Master Boces Pgm
(FSA Insd) 5.250 08/15/21 812,564 812,564
500 500 New York St Dorm
Auth Lease Rev
Master Boces Pgm
(FSA Insd) 5.250 08/15/23 539,575 539,575
2,150 2,150 New York St Dorm
Auth Lease Rev
Master Boces Pgm
Ser A (FSA Insd)
(b) 5.250 08/15/16 2,383,877 2,383,877
1,000 1,000 New York St Dorm
Auth Lease Rev
Master Boces Prog
Ser A (FSA Insd) 5.250 08/15/17 1,108,780 1,108,780
2,250 2,250 New York St Dorm
Auth Lease Rev
Muni Hlth Fac
Impt Pgm Ser 1
(FSA Insd) 5.500 01/15/13 2,539,485 2,539,485
1,000 1,040 2,040 New York St Dorm
Auth Lease Rev St
Univ Dorm Fac 5.375 07/01/16 1,102,860 1,146,974 2,249,834
820 820 New York St Dorm
Auth Lease Univ
Dorm Fac Ser B 5.125 07/01/28 846,060 846,060
2,055 2,055 New York St Dorm
Auth Lease Univ
Dorm Fac Ser B
(Prerefunded @
7/01/09) 5.125 07/01/28 2,309,224 2,309,224
2,200 2,200 New York St Dorm
Auth Rev Catholic Hlth
L.I. Oblig Grp (a) 5.000 07/01/27 2,190,980 2,190,980
1,500 1,500 New York St Dorm Auth
Rev City Univ Sys
Cons Ser A 5.625 07/01/16 1,750,650 1,750,650
2,500 2,500 New York St Dorm Auth
Rev Cons City Univ
Sys Second Gen Ser A 5.750 07/01/13 2,881,900 2,881,900
1,670 1,670 New York St Dorm Auth
Rev Dept Education (b) 5.250 07/01/19 1,826,863 1,826,863
2,500 2,500 New York St Dorm Auth
Rev Grace Manor
Hlthcare Fac 6.150 07/01/18 2,695,825 2,695,825
1,800 1,000 2,800 New York St Dorm Auth
Rev Hosp (MBIA Insd) 5.000 08/01/33 1,859,526 1,033,070 2,892,596
1,340 1,340 New York St Dorm Auth
Rev Insd Brooklyn
Law Sch Ser B
(XLCA Insd) 5.375 07/01/23 1,464,071 1,464,071
1,425 1,425 New York St Dorm Auth
Rev Insd John T Mather
Mem Hosp Rfdg (Connie
Lee Insd) (b) 6.500 07/01/08 1,623,474 1,623,474
1,000 1,000 New York St Dorm Auth
Rev Insd John T Mather
Mem Hosp Rfdg (Connie
Lee Insd) 6.500 07/01/10 1,179,260 1,179,260
1,720 1,720 New York St Dorm Auth
Rev Insd John T Mather
Mem Hosp Rfdg (Connie
Lee Insd) (b) 6.500 07/01/11 2,053,353 2,053,353
1,000 1,000 2,000 New York St Dorm Auth
Rev Mem Sloan-Kettering
Ctr Ser 1 (MBIA Insd) 5.000 07/01/20 1,072,240 1,072,240 2,144,480
2,340 2,340 New York St Dorm Auth
Rev Mental Hlth Svc
Fac Impt Ser D
(FSA Insd) (b) 5.750 08/15/12 2,639,731 2,639,731
1,000 1,000 New York St Dorm Auth
Rev Mental Hlth Svc
Ser A 6.000 02/15/07 1,083,710 1,083,710
1,215 1,210 2,425 New York St Dorm Auth
Rev Mental Hlth
Svc Ser B (MBIA Insd) 5.250 08/15/31 1,265,228 1,260,021 2,525,249
1,500 1,500 New York St Dorm Auth
Rev Sch Dist Fin
Pgm Ser D (MBIA Insd) 5.500 10/01/17 1,711,530 1,711,530
1,000 1,000 New York St Dorm Auth
Rev Sch Dist Fin
Pgm Ser I (MBIA Insd) 5.750 10/01/18 1,158,220 1,158,220
2,515 2,515 New York St Dorm Auth
Rev Second Hosp
Interfaith Med Cent
Ser D (FSA Insd) 5.750 02/15/08 2,776,032 2,776,032
1,000 1,000 2,000 New York St Dorm Auth
Rev Second Hosp
North Gen Hosp Rfdg 5.750 02/15/18 1,123,560 1,123,560 2,247,120
1,250 1,000 2,250 New York St Dorm Auth
Rev St Personal
Income Tax Ed Ser A 5.000 03/15/32 1,277,825 1,022,260 2,300,085
1,000 1,000 New York St Dorm Auth
Rev St Univ Ed Fac
1989 Res (MBIA Insd) 6.000 05/15/15 1,158,700 1,158,700
1,000 1,000 New York St Dorm Auth
Rev St Univ Ed Fac
Ser A (MBIA Insd) 5.250 05/15/15 1,142,280 1,142,280
5,010 5,010 New York St Dorm Auth
Rev St Univ Ed Fac
Ser B Rfdg 5.250 05/15/19 5,674,677 5,674,677
1,365 New York St Energy
Resh & Dev Auth Gas
1,365 Fac Rev Brooklyn Union
Gas Ser B (AMT)
(MBIA Insd) 6.750 02/01/24 1,383,987 1,383,987
3,000 7,000 New York St Energy
Resh & Dev Auth Gas
4,000 Fac Rev Brooklyn Union
Gas Ser C (AMT)
(MBIA Insd) 5.600 06/01/25 3,051,690 4,068,920 7,120,610
1,000 1,000 New York St Energy
Resh & Dev Auth St
Svc Contract Rev 6.000 04/01/07 1,087,280 1,087,280
1,000 1,000 New York St
Environmental
Fac Corp St Clean Wtr
& Drinking Revolving
Fd Muni Wtr Proj Ser B 5.250 06/15/20 1,090,700 1,090,700
1,640 New York St
Environmental
Fac Corp St
1,640 Clean Wtr & Drinking
Revolving Fd Pooled
Fin Pgm I 5.250 09/15/19 1,803,442 1,803,442
1,695 2,000 3,695 New York St
Environmental
Fac Corp St
Clean Wtr & Drinking
Revolving Fd Ser B 5.000 06/15/21 1,808,277 2,133,660 3,941,937
3,500 3,500 New York St Hsg Fin
Agy Rev Multi-Family
Hsg Secd Mtg Pgm Ser
A (AMT) 7.050 08/15/24 3,505,530 3,505,530
1,000 3,000 4,000 New York St Loc
Govt Assist Corp
Ser E Rfdg 6.000 04/01/14 1,187,930 3,563,790 4,751,720
3,050 New York St Med
Care Fac Fin Agy
Rev
2,000 1,050 Saint Peter's Hosp
Proj Ser A (AMBAC
Insd) 5.375 11/01/20 2,024,380 1,062,800 3,087,180
4,000 4,000 New York St Mtg Agy
Rev Homeowner Mtg
Ser 71 (AMT) 5.400 04/01/29 4,107,400 4,107,400
4,460 4,460 New York St Mtg Agy
Rev Homeowner Mtg
Ser 79 (AMT) 5.300 04/01/29 4,572,749 4,572,749
1,990 1,990 New York St Mtg
Agy Rev Ser 101
(AMT) 5.400 04/01/32 2,052,088 2,052,088
1,535 1,535 New York St Ser
C Rfdg 5.000 04/15/17 1,670,095 1,670,095
1,000 2,000 3,000 New York St Twy
Auth Hwy & Brdg
Tr Fd Ser A
(FSA Insd) 5.250 04/01/19 1,091,290 2,182,580 3,273,870
1,000 1,000 New York St Twy
Auth Second Ser A
(MBIA Insd) 5.000 04/01/22 1,069,320 1,069,320
2,000 2,000 New York St Twy
Auth Second Ser A
(MBIA Insd) 5.000 04/01/23 2,124,180 2,124,180
460 460 New York St Twy
Auth Svc Contract
Rev Loc Hwy & Brdg 5.500 04/01/16 519,345 519,345
3,000 3,000 New York St Twy
Auth Svc Contract
Rev Loc Hwy & Brdg
(Prerefunded @
04/01/11) 5.250 04/01/15 3,394,380 3,394,380
2,150 2,500 4,650 New York St Urban
Dev Corp Rev
Correctional Fac
Ser A Rfdg 5.500 01/01/14 2,407,376 2,799,275 5,206,651
1,625 1,625 New York St Urban
Dev Corp Rev Proj
Ctr for Indl
Innovation Rfdg 5.500 01/01/13 1,852,321 1,852,321
1,000 1,000 New York St Urban
Dev Corp Rev Proj
Pine Barrens 5.375 04/01/17 1,031,230 1,031,230
1,000 1,000 New York St Urban
Dev Corp Rev St
Fac Rfdg 5.500 04/01/07 1,079,010 1,079,010
19,280 19,280 New York St Urban
Dev Corp Rev St
Office South Mall
Ser A * 01/01/11 13,971,830 13,971,830
1,060 1,060 Niagara Falls, NY
Wtr Treatment Plant
(AMT) (MBIA Insd) 7.250 11/01/10 1,282,430 1,282,430
3,570 3,570 Niagara, NY Frontier
Auth Arpt Buffalo
Niagara Intl Arpt
Ser A (AMT)
(MBIA Insd) 5.625 04/01/29 3,771,848 3,771,848
2,000 4,500 6,500 Port Auth NY & NJ
Cons 97th Ser
(AMT) (FGIC Insd) 6.650 01/15/23 2,038,900 4,587,525 6,626,425
2,500 2,500 Port Auth NY & NJ
Spl Oblig Rev Spl
Proj JFK Intl Arpt
Terminal 6 (AMT)
(MBIA Insd) 5.750 12/01/25 2,675,725 2,675,725
1,600 1,600 Rensselaer, NY Hsg
Auth Multi-Family
Rev Mtg Renwyck Pl
Ser A 7.650 01/01/11 1,635,584 1,635,584
1,480 1,480 Rensselaer, NY Hsg
Auth Multi-Family Rev
Mtg Van Rensselaer
Heights Ser A 7.750 01/01/11 1,513,019 1,513,019
1,000 1,500 2,500 Sales Tax Asset
Receivable Corp
NY Ser A (MBIA
Insd) (a) 5.000 10/15/21 1,081,050 1,621,575 2,702,625
1,250 1,250 Sodus, NY Ctr Sch
Dist Rfdg (FGIC
Insd) (b) 5.125 06/15/17 1,365,213 1,365,213
1,000 1,000 Tobacco Settlement
Fin Corp NY Ser C-1 5.500 06/01/22 1,088,000 1,088,000
5,445 5,445 Triborough Brdg &
Tunl Auth NY Rev
Gen Purp Ser A 5.250 01/01/18 5,930,966 5,930,966
3,000 5,000 8,000 Triborough Brdg &
Tunl Auth NY Rev
Gen Purp Ser A 5.000 01/01/32 3,067,830 5,113,050 8,180,880
NEW YORK (continued)
1,600 1,600 Triborough Brdg & Tunl Auth NY Rev Gen
Purp Ser B Rfdg 5.125 11/15/29 1,660,816 1,660,816
2,000 2,000 Triborough Brdg & Tunl Auth NY Ser E
Rfdg (MBIA Insd) 5.000 11/15/32 2,056,620 2,056,620
1,000 2,000 3,000 Yonkers, NY Indl Dev Agy Civic Fac Rev
Cmnty Dev Ppty Yonkers Inc Ser A 6.625 02/01/26 1,078,760 2,157,520 3,236,280
1,700 1,700 Yonkers, NY Ser A (FGIC Insd) (b) 5.750 10/01/14 1,955,153 1,955,153
----------------------------------------
105,314,490 157,617,905 262,932,395
----------------------------------------
PUERTO RICO 7.4%
3,000 5,000 8,000 Puerto Rico Comwlth Hwy & Trans Auth Hwy 6.250 07/01/21 3,804,780 6,341,300 10,146,080
Rev Ser Y (FSA Insd)
1,000 2,000 3,000 Puerto Rico Pub Bldg Auth Rev Govt Fac 5.250 07/01/33 1,047,830 2,095,660 3,143,490
Ser I (Comwth Gtd) ---------------------------------------
4,852,610 8,436,960 13,289,570
---------------------------------------
6.375 10/01/19 1,737,270 1,737,270
U. S. VIRGIN ISLANDS 1.6% 6.125 10/01/29 1,120,460 1,120,460
1,500 1,500 Virgin Islands Pub Fin Auth Rev Gross ---------------------------------------
Rcpt Taxes Ln Nt Ser A
1,000 1,000 Virgin Islands Pub Fin Auth Rev Gross 1,737,270 1,120,460 2,857,730
Rcpt Taxes Ln Nt Ser A (ACA Insd) ---------------------------------------
TOTAL LONG-TERM INVESTMENTS 155.6%............................................... 111,904,370 167,175,325 279,079,695
(Cost $255,788,012)
TOTAL SHORT-TERM INVESTMENTS 1.0%................................................ - 1,800,000 1,800,000
(Cost $1,800,000) ----------------------------------------
TOTAL INVESTMENTS 156.6%......................................................... 111,904,370 168,975,325 280,879,695
(Cost $257,588,012)
LIABILITIES IN EXCESS OF OTHER ASSETS (0.8%)..................................... 472,029 (1,935,289) (1,463,260)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (55.8%)........................ (40,006,619) (60,011,179) (100,017,798)
-----------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%.................................... $ 72,369,780 $107,028,857 $179,398,637
-----------------------------------------
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) The Trust owns 100% of the bond issuance.
ACA -- American Capital Access Insurance Co.
AMBAC -- AMBAC Indemnity Corp.
AMT - Alternative Minimum Tax
Comwth Gtd - Commonwealth of Puerto Rico
Connie Lee -- Connie Lee Insurance Co.
FGIC -- Financial Guaranty Insurance Co.
FSA -- Financial Security Assurance Inc.
MBIA -- Municipal Bond Investors Assurance Corp.
XLCA - XL Capital Assurance Inc.
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST -
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST -
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PROFORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2004
(UNAUDITED)
AMOUNTS IN THOUSANDS
PROFORMA -
VAN KAMPEN
VAN KAMPEN VAN KAMPEN TRUST FOR
VAN KAMPEN NEW YORK VALUE TRUST FOR INVESTMENT INVESTMENT
NEW YORK QUALITY MUNICIPAL INCOME GRADE NEW YORK GRADE NEW YORK
MUNICIPAL TRUST TRUST MUNICIPALS ADJUSTMENTS MUNICIPALS
---------------- ---------------- -------------------- ------------ --------------
ASSETS:
Total Investments (Cost of $133,403, $102,986,
$154,602 and $390,991, respectively) $ 143,806 $ 111,904 $ 168,975 $ 424,685
Cash 47 88 95 230
Receivables:
Interest 1,823 1,724 2,151 5,698
Investment Sold 130 98 20 248
Other 2 3 3 8
---------------- ---------------- -------------------- ------------- ---------
Total Assets 145,808 113,817 171,244 430,869
---------------- ---------------- -------------------- ------------- ---------
LIABILITIES:
Payable:
Investment Purchased 3,791 1,079 3,792 8,662
Investment Advisory Fee 72 57 84 213
Income Distributions-Common Shares 28 21 33 82
Other Affiliates 8 7 9 24
Trustees' Deferred Compensation and
Retirement Plans 217 208 222 647
Merger Cost (2) 405 405
Accrued Expenses 73 68 64 205
---------------- ---------------- -------------------- ------------- ---------
Total Liabilities 4,189 1,440 4,204 405 10,238
Preferred Shares (including
accrued distributions) 45,047 40,007 60,011 145,065
---------------- ---------------- -------------------- ------------- ---------
NET ASSETS APPLICABLE TO COMMON SHARES $ 96,572 $ 72,370 $ 107,029 $ (405) $ 275,566
================ ================ ==================== ============= =========
NET ASSET VALUE PER COMMON SHARE
Net Assets Applicable to Common Shares $ 96,572 $ 72,370 $ 107,029 $ (405) $ 275,566
Common Share outstanding (1) 5,656 4,291 6,211 (145) 16,013
---------------- ---------------- -------------------- ---------
Net Asset Value Per Common Share $ 17.07 $ 16.86 $ 17.23 $ 17.21
================ ================ ==================== =========
NET ASSETS CONSIST OF:
Common Shares ($.01 par value) (1) $ 57 $ 43 $ 62 $ (2) $ 160
Paid in Surplus (1) 83,570 62,404 91,398 (403) 236,969
Net Unrealized Appreciation 10,403 8,918 14,373 33,694
Accumulated Undistributed Net Investment Income 747 464 891 2,102
Accumulated Net Realized Gain 1,795 541 305 2,641
---------------- ---------------- -------------------- ------------- ---------
NET ASSETS APPLICABLE TO COMMON SHARES $ 96,572 $ 72,370 $ 107,029 $ (405) $ 275,566
================ ================ ==================== ============= =========
PREFERRED SHARES $ 45,000 $ 40,000 $ 60,000 $ 145,000
================ ================ ==================== ============= =========
NET ASSETS INCLUDING PREFERRED SHARES $ 141,572 $ 112,370 $ 167,029 $ (405) $ 420,566
================ ================ ==================== ============= =========
(1) The proforma statements presume the issuance by the Van Kampen Trust for
Investment Grade New York Municipals of approximately 5,606,936, and 4,194,981
common shares in exchange for the assets and liabilities of the Van Kampen New
York Quality Municipal Trust and Van Kampen New York Value Municipal Income
Trust, respectively.
(2) A non-recurring cost associated with this transaction of approximately
$405,000 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 New York Quality Municipal Trust................. $ 76,950 $ 0.014
Van Kampen New York Value Municipal Income Trust............. 174,150 0.041
Van Kampen Trust for Investment Grade New York.............. 153,900 0.025
------------------
$ 405,000
==================
--------------------------------------------------------------------------------
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST -
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST -
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PROFORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2004
(UNAUDITED)
AMOUNTS IN THOUSANDS
PROFORMA -
VAN KAMPEN
VAN KAMPEN VAN KAMPEN TRUST FOR
VAN KAMPEN NEW YORK VALUE TRUST FOR INVESTMENT INVESTMENT
NEW YORK QUALITY MUNICIPAL INCOME GRADE NEW YORK GRADE NEW YORK
MUNICIPAL TRUST TRUST MUNICIPALS ADJUSTMENTS MUNICIPALS
---------------- ---------------- -------------------- ----------- --------------
INVESTMENT INCOME:
Interest $ 6,721 $ 5,494 $ 8,385 $ 20,600
---------------- ---------------- -------------------- ---------- --------
EXPENSES:
Investment Advisory Fee 842 668 995 2,505
Preferred Share Maintenance 128 126 166 (35)(1) 385
Trustee's Fees and Related Expenses 65 61 68 (136)(2) 58
Administration Fee 41 33 48 122
Legal 23 21 25 (33)(1) 36
Custody 9 7 10 (2)(1) 24
Other 120 134 132 (181)(1) 205
---------------- ---------------- -------------------- ---------- --------
Total Expenses 1,228 1,050 1,444 (387) 3,335
---------------- ---------------- -------------------- ---------- --------
NET INVESTMENT INCOME $ 5,493 $ 4,444 $ 6,941 $ 387 $ 17,265
---------------- ---------------- -------------------- ---------- --------
REALIZED AND UNREALIZED GAIN:
Net Realized Gain $ 1,795 $ 668 $ 304 $ 2,767
Net Unrealized Appreciation During the Period 897 1,026 1,618 $ 3,541
---------------- ---------------- -------------------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN $ 2,692 $ 1,694 $ 1,922 $ 6,308
---------------- ---------------- --------------------- ---------- ---------
DISTRIBUTION TO PREFERRED SHAREHOLDERS $ (524) $ (384) $ (691) $ (1,599)
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON
---------------- ---------------- -------------------- ---------- ---------
SHARES FROM OPERATIONS $ 7,661 $ 5,754 $ 8,172 $ 387 $ 21,974
---------------- ---------------- -------------------- ---------- ---------
(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 duplicate
expenses.
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST -
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PROFORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2004
(UNAUDITED)
AMOUNTS IN THOUSANDS
PROFORMA -
VAN KAMPEN
VAN KAMPEN TRUST FOR
VAN KAMPEN TRUST FOR INVESTMENT INVESTMENT
NEW YORK QUALITY GRADE NEW YORK GRADE NEW YORK
MUNICIPAL TRUST MUNICIPALS ADJUSTMENTS MUNICIPALS
---------------- -------------------- ----------- ---------------
ASSETS:
Total Investments (Cost of $133,403,
$154,602 and $288,005, respectively) $ 143,806 $ 168,975 $ 312,781
Cash 47 95 142
Receivables:
Interest 1,823 2,151 3,974
Investment Sold 130 20 150
Other 2 3 5
--------------- -------------------- ------------ ---------
Total Assets 145,808 171,244 317,052
--------------- -------------------- ------------ ---------
LIABILITIES:
Payable:
Investment Purchased 3,791 3,792 7,583
Investment Advisory Fee 72 84 156
Income Distributions-Common Shares 28 33 61
Other Affiliates 8 9 17
Trustees' Deferred Compensation and
Retirement Plans 217 222 439
Merger Cost (2) 290 290
Accrued Expenses 73 64 137
--------------- -------------------- ------------ ---------
Total Liabilities 4,189 4,204 290 8,683
Preferred Shares (including
accrued distributions) 45,047 60,011 105,058
--------------- -------------------- ------------ ---------
NET ASSETS APPLICABLE TO COMMON SHARES $ 96,572 $ 107,029 $ (290) $ 03,311
=============== ==================== ============ =========
NET ASSET VALUE PER COMMON SHARE
Net Assets Applicable to Common Shares $ 96,572 $ 107,029 $ (290) $ 203,311
Common Share outstanding (1) 5,656 6,211 (46) 11,821
--------------- --------------------- ---------
Net Asset Value Per Common Share $ 17.07 $ 17.23 $ 17.20
=============== ==================== =========
NET ASSETS CONSIST OF:
Common Shares ($.01 par value) (1) $ 57 $ 62 $ (1) $ 118
Paid in Surplus (1) 83,570 91,398 (289) 174,679
Net Unrealized Appreciation 10,403 14,373 24,776
Accumulated Undistributed Net Investment Income 747 891 1,638
Accumulated Net Realized Gain 1,795 305 2,100
--------------- --------------------- ---------
NET ASSETS APPLICABLE TO COMMON SHARES $ 96,572 $ 107,029 $ (290) $ 203,311
=============== ==================== ============ =========
PREFERRED SHARES $ 45,000 $ 60,000 $ 105,000
=============== ==================== ============ =========
NET ASSETS INCLUDING PREFERRED SHARES $ 141,572 $ 167,029 $ (290) $ 308,311
=============== ==================== ============ =========
(1) The proforma statements presume the issuance by the Van Kampen Trust for
Investment Grade New York Municipals of approximately 5,609,443 common shares in
exchange for the assets and liabilities of the Van Kampen New York Quality
Municipal Trust.
(2) A non-recurring cost associated with this transaction of approximately
$290,000 will be incurred. The approximate cost and per share cost that will be
borne by the common shareholders are as follows:
APPROXIMATE COST COST PER SHARE
---------------- --------------
Van Kampen New York Quality Municipal Trust.....................$ 89,900 $ 0.016
Van Kampen Trust for Investment Grade New York.................. 200,100 0.032
----------------
$ 290,000
================
--------------------------------------------------------------------------------
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST -
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PROFORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2004
(UNAUDITED)
AMOUNTS IN THOUSANDS
PROFORMA -
VAN KAMPEN
VAN KAMPEN TRUST FOR
VAN KAMPEN TRUST FOR INVESTMENT INVESTMENT
NEW YORK QUALITY GRADE NEW YORK GRADE NEW YORK
MUNICIPAL TRUST MUNICIPALS ADJUSTMENTS MUNICIPALS
---------------- -------------------- ----------- --------------
INVESTMENT INCOME:
Interest $ 6,721 $ 8,385 $ 15,106
---------------- -------------------- ----------- --------
EXPENSES:
Investment Advisory Fee 842 995 1,837
Preferred Share Maintenance 128 166 (15)(1) 279
Trustee's Fees and Related Expenses 65 68 (76)(2) 57
Administration Fee 41 48 89
Legal 23 25 (17)(1) 31
Custody 9 10 (1)(1) 18
Other 120 132 (89)(1) 163
---------------- -------------------- ----------- --------
Total Expenses 1,228 1,444 (198) 2,474
---------------- -------------------- ----------- --------
NET INVESTMENT INCOME $ 5,493 $ 6,941 $ 198 $ 12,632
================ ==================== =========== ========
REALIZED AND UNREALIZED GAIN:
Net Realized Gain $ 1,795 $ 304 $ 2,099
Net Unrealized Appreciation During the Period 897 1,618 $ 2,515
---------------- -------------------- ----------- --------
NET REALIZED AND UNREALIZED GAIN $ 2,692 $ 1,922 $ 4,614
---------------- -------------------- ----------- --------
DISTRIBUTION TO PREFERRED SHAREHOLDERS $ (524) $ (691) $ (1,215)
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON
================ ==================== =========== ========
SHARES FROM OPERATIONS $ 7,661 $ 8,172 $ 198 $ 16,031
================ ==================== =========== ========
(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 duplicate
expenses.
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST -
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PROFORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2004
(UNAUDITED)
AMOUNTS IN THOUSANDS
PROFORMA -
VAN KAMPEN
VAN KAMPEN TRUST FOR
VAN KAMPEN TRUST FOR INVESTMENT INVESTMENT
NEW YORK VALUE GRADE NEW YORK GRADE NEW YORK
MUNICIPAL INCOME TRUST MUNICIPALS ADJUSTMENTS MUNICIPALS
---------------------- -------------------- ----------- --------------
ASSETS:
Total Investments (Cost of $102,986,
$154,602 and $257,588, respectively) $ 111,904 $ 168,975 $ 280,879
Cash 88 95 183
Receivables:
Interest 1,724 2,151 3,875
Investment Sold 98 20 118
Other 3 3 6
---------------- -------------------- ----------- ---------
Total Assets 113,817 171,244 285,061
---------------- -------------------- ----------- ---------
LIABILITIES:
Payable:
Investment Purchased 1,079 3,792 4,871
Investment Advisory Fee 57 84 141
Income Distributions-Common Shares 21 33 54
Other Affiliates 7 9 16
Trustees' Deferred Compensation and
Retirement Plans 208 222 430
Merger Cost (2) 279
Accrued Expenses 68 64 132
---------------- -------------------- ----------- ---------
Total Liabilities 1,440 4,204 279 5,644
Preferred Shares (including
accrued distributions) 40,007 60,011 100,018
---------------- -------------------- ----------- ---------
NET ASSETS APPLICABLE TO COMMON SHARES $ 72,370 $ 107,029 $ (279) $ 179,399
================ ==================== =========== =========
NET ASSET VALUE PER COMMON SHARE
Net Assets Applicable to Common Shares $ 72,370 $ 107,029 $ (279) $ 179,399
Common Share outstanding (1) 4,291 6,211 (96) 10,406
---------------- -------------------- ---------
Net Asset Value Per Common Share $ 16.86 $ 17.23 $ 17.24
================ ==================== =========
NET ASSETS CONSIST OF:
Common Shares ($.01 par value) (1) $ 43 $ 62 $ (1) $ 104
Paid in Surplus (1) 62,404 91,398 (278) 153,524
Net Unrealized Appreciation 8,918 14,373 23,291
Accumulated Undistributed Net Investment Income 464 891 1,355
Accumulated Net Realized Gain 541 305 846
---------------- -------------------- ----------- ---------
NET ASSETS APPLICABLE TO COMMON SHARES $ 72,370 $ 107,029 $ (279) $ 179,120
================ ==================== =========== =========
PREFERRED SHARES $ 40,000 $ 60,000 $ 100,000
================ ==================== =========== =========
NET ASSETS INCLUDING PREFERRED SHARES $ 112,370 $ 167,029 $ (279) $ 279,120
================ ==================== =========== =========
(1) The proforma statements presume the issuance by the Van Kampen Trust for
Investment Grade New York Municipals of approximately 4,195,049 common shares in
exchange for the assets and liabilities of the Van Kampen New York Value
Municipal Income Trust.
(2) A non-recurring cost associated with this transaction of approximately
$279,000 will be incurred. The approximate cost and per share cost that will be
borne by the common shareholders are as follows:
APPROXIMATE COST COST PER SHARE
---------------- --------------
Van Kampen New York Value Municipal Income Trust.........$ 172,980 $ 0.040
Van Kampen Trust for Investment Grade New York........... 106,020 0.017
----------------
$ 279,000
================
--------------------------------------------------------------------------------
VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST -
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
PROFORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2004
(UNAUDITED)
AMOUNTS IN THOUSANDS
PROFORMA -
VAN KAMPEN
VAN KAMPEN TRUST FOR
VAN KAMPEN TRUST FOR INVESTMENT INVESTMENT
NEW YORK VALUE GRADE NEW YORK GRADE NEW YORK
MUNICIPAL INCOME TRUST MUNICIPALS ADJUSTMENTS MUNICIPALS
---------------------- -------------------- ----------- --------------
INVESTMENT INCOME:
Interest $ 5,494 $ 8,385 $ 13,879
---------------------- -------------------- ----------- --------
EXPENSES:
Investment Advisory Fee 668 995 1,663
Preferred Share Maintenance 126 166 (19)(1) 273
Trustee's Fees and Related Expenses 61 68 (72)(2) 57
Administration Fee 33 48 81
Legal 21 25 (16)(1) 30
Custody 7 10 -- 17
Other 134 132 (89)(1) 177
---------------------- -------------------- ----------- --------
Total Expenses 1,050 1,444 (196) 2,298
---------------------- -------------------- ----------- --------
NET INVESTMENT INCOME $ 4,444 $ 6,941 $ 196 $ 11,581
====================== ==================== =========== ========
REALIZED AND UNREALIZED GAIN:
Net Realized Gain $ 668 $ 304 $ 972
Net Unrealized Appreciation During the
Period 1,026 1,618 $ 2,644
---------------------- -------------------- ----------- --------
NET REALIZED AND UNREALIZED GAIN $ 1,694 $ 1,922 $ 3,616
---------------------- -------------------- ----------- --------
DISTRIBUTION TO PREFERRED SHAREHOLDERS $ (384) $ (691) $ (1,075)
NET INCREASE IN NET ASSETS APPLICABLE
TO COMMON
====================== ==================== =========== ========
SHARES FROM OPERATIONS $ 5,754 $ 8,172 $ 196 $ 14,122
====================== ==================== =========== ========
(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 duplicate
expenses.
Van Kampen New York Quality Municipal Trust-Van Kampen New York Value Municipal
Income Trust-Van Kampen Trust for Investment Grade New York Municipals
Notes to Pro Forma Financial Statements
October 31, 2004 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Trust for Investment Grade New York Municipals (the "Acquiring Fund")
is registered as a non-diversified, closed-end management investment company
under the Investment Company Act of 1940 (the "1940 Act"), as amended. The
Acquiring Fund's investment objective is to provide a high level of current
income exempt from federal as well as New York State and New York City income
taxes, consistent with preservation of capital. The Acquiring Fund invests
substantially all of its assets in New York municipal securities rated
investment grade at the time of investment. The Acquiring Fund commenced
investment operations on March 27, 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.
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. At October 31, 2004, the Acquiring
Fund had $3,791,632 of when-issued and 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 Acquiring Fund'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.
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.
PART C: OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Section 5.3 of the Registrant's Declaration of Trust, a copy of which is
filed as an exhibit hereto, provides for indemnification, as set forth below:
"Section 5.3 Mandatory Indemnification.
(a) Subject to the exceptions and limitations contained in paragraph
(b) below:
(i) every person who is or has been a Trustee or officer of the
Trust shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the settlement thereof;
(ii) the words, "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and
the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or its Shareholders by
reason of a final adjudication by the court or other body before which
the proceeding was brought that he engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or
(b)(ii) resulting in a payment by a Trustee or officer, unless there
has been either a determination that such Trustee or officer did not
engage in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or a
reasonable determination, based upon a review of readily available
facts (as opposed to a full trial-type inquiry) that he did not engage
C-1
in such conduct:
(A) by vote of a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided by be insured
against by policies maintained by the Trust, shall be severable, shall not
effect any other rights to which any Trustee or officer may now or
hereafter be entitled, shall continue as to a Person who has ceased to be
such Trustee or officer and shall inure to the benefit of the heirs,
executors, administrators, and assigns of such Person. Nothing contained
herein shall affect any rights to indemnification to which personnel of the
Trust other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a defense to any
claim, action, suit, or proceeding of the character described in paragraph
(a) of this Section 5.3 shall be advanced by the Trust prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is
not entitled to indemnification under this Section 5.3, provided that
either
(i) such undertaking is secured by a surety bond or
some other appropriate security or the Trust shall be
insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter) or an independent
legal counsel in a written opinion shall determine, based
upon a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe
that the recipient ultimately will be found entitled to
indemnification.
As used in this Section 5.3, a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending."
ITEM 16. EXHIBITS
1. (a) Declaration of Trust of the Registrant and amendments thereto+
C-2
(b) Certificate of Vote Establishing Preferred Shares and
amendments thereto++++
2. Bylaws of the Registrant and amendment thereto+
3. Not applicable
4. Form of Agreement and Plan of Reorganization+++
5. (a) Specimen share certificate for common shares of the
Registrant+
(b) Specimen share certificate for preferred shares of the
Registrant+
6. Investment Advisory Agreement and amendment thereto+
7. Not Applicable
8. (a) Form of Amended and Restated Deferred Compensation Plan+
(b) Form of Retirement Plan for Each Closed End Fund+
9. Custodian Contract and amendments thereto+
10. Not Applicable
11. Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the Registrant+
12. Tax opinion of Skadden, Arps, Slate, Meagher & Flom LLP++
13.(a) Transfer Agency and Service Agreement+
(b) Auction Agency Agreement+
(c) Form of Broker-Dealer Agreement+
(d)(i) Letter of Representation+
(ii) Form of Letter of Representation+
(e) Fund Accounting Agreement and amendment thereto+
(f) Amended and Restated Legal Services Agreement+
14. Consent of independent registered public accounting firm for the
Registrant and the Target Funds+
15. Not Applicable
16. Power of Attorney+++++
17.(a) Code of Ethics of the Investment Adviser+
(b) Code of Ethics of the Funds+
(c) Proxy cards for the Target Funds+
(d) Proxy card for the Acquiring Fund+
+ Filed herewith.
++ To be filed by further amendment.
+++ Filed as Appendix A to the Statement of Additional Information and
incorporated herein by reference to Registrant's Registration Statement on
Form N-14 as filed via EDGAR on May 11, 2005.
++++ Filed as Appendix B to the Statement of Additional Information and
incorporated herein by reference to Registrant's Registration Statement on
Form N-14 as filed via EDGAR on June 29, 2005.
+++++ Incorporated herein by reference to Registrant's Registration Statement on
Form N-14, File No. 333-124823, filed May 11, 2005.
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through use of a prospectus which is part of this
Registration Statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act of 1933, as amended, the
reoffering prospectus will contain information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by other items of the applicable form.
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(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, as
amended, each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of securities at
that time shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees that, if the Reorganizations
discussed in the registration statement close, it shall file by post-effective
amendment either a copy of the Internal Revenue Service private letter ruling
applied for or an opinion supporting the tax matter discussed in the
registration statement.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and the State of New York, on June 29, 2005.
VAN KAMPEN TRUST FOR INVESTMENT GRADE
NEW YORK MUNICIPALS
By: /s/ Lou Anne McInnis
------------------------------------
Lou Anne McInnis
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
SIGNATURES TITLE
---------- -----
Principal Executive Officer:
/s/ Ronald E. Robison* Executive Vice President and
------------------------------------------- Principal Executive Officer
Ronald E. Robison
Principal Financial Officer:
/s/ James W. Garrett*
------------------------------------------- Chief Financial
James W. Garrett Officer and Treasurer
Trustees:
/s/ David C. Arch* Trustee
-------------------------------------------
David C. Arch
/s/ Jerry D. Choate* Trustee
-------------------------------------------
Jerry D. Choate
/s/ Rod Dammeyer* Trustee
-------------------------------------------
Rod Dammeyer
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/s/ Linda Hutton Heagy* Trustee
-------------------------------------------
Linda Hutton Heagy
/s/ R. Craig Kennedy* Trustee
-------------------------------------------
R. Craig Kennedy
/s/ Howard J Kerr* Trustee
-------------------------------------------
Howard J Kerr
/s/ Mitchell M. Merin* Trustee
-------------------------------------------
Mitchell M. Merin
/s/ Jack E. Nelson* Trustee
-------------------------------------------
Jack E. Nelson
/s/ Richard F. Powers, III* Trustee
-------------------------------------------
Richard F. Powers, III
/s/ Hugo F. Sonnenschein* Trustee
-------------------------------------------
Hugo F. Sonnenschein
/s/ Wayne W. Whalen* Trustee
-------------------------------------------
Wayne W. Whalen
/s/ Suzanne H. Woolsey* Trustee
-------------------------------------------
Suzanne H. Woolsey
* Signed by Lou Anne McInnis pursuant to a power of attorney filed herewith.
/s/ Lou Anne McInnis June 29, 2005
-------------------------------------------
Lou Anne McInnis
Attorney-in-Fact
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SCHEDULE OF EXHIBITS TO FORM N-14
VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
Exhibit
-------
1(a) Declaration of Trust of the Registrant and amendments thereto
2 Bylaws of the Registrant and amendment thereto
5(a) Specimen share certificate for common shares of the Registrant
(b) Specimen share certificate for preferred shares of the Registrant
6 Investment Advisory Agreement and amendment thereto
8(a) Form of Amended and Restated Deferred Compensation Plan
(b) Form of Retirement Plan for Each Closed End Fund
9 Custodian Contract and amendments thereto
11 Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom LLP
13(a) Transfer Agency and Service Agreement
(b) Auction Agency Agreement
(c) Form of Broker-Dealer Agreement
(d)(i) Letter of Representation
(ii) Form of Letter of Representation
(e) Fund Accounting Agreement and amendment thereto
(f) Amended and Restated Legal Services Agreement
14 Consent of independent registered public accounting firm for the
Registrant and the Target Funds
17(a) Code of Ethics of the Investment Adviser
(b) Code of Ethics of the Funds
(c) Proxy cards for the Target Funds
(d) Proxy card for the Acquiring Fund