UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-6567
Van Kampen Municipal Opportunity Trust
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas New York, New York 10020
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas New York, New York 10020
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 10/31
Date of reporting period: 10/31/06
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
Municipal Opportunity Trust performed during the annual period. The
portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the trust's financial statements and a list of trust investments
as of October 31, 2006.
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
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NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
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Performance Summary as of 10/31/2006
MUNICIPAL OPPORTUNITY TRUST
SYMBOL: VMO
------------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (4/24/92) 7.96% 7.03%
10-year 7.68 8.08
5-year 7.25 7.14
1-year 8.71 10.76
------------------------------------------------------------
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 and preferred shares, by
the total number of common shares outstanding. The common share market price is
the price the market is willing to pay for shares of the trust at a given time.
Common share market price is influenced by a range of factors, including supply
and demand and market conditions. Total return assumes an investment at the
beginning of the period, reinvestment of all distributions for the period in
accordance with the trust's dividend reinvestment plan, and sale of all shares
at the end of the period.
The Lehman Brothers Municipal Bond Index is a broad-based statistical composite
of municipal bonds. The index does not include any expenses, fees or sales
charges, which would lower performance. The index is unmanaged and should not be
considered an investment. It is not possible to invest directly in an index.
1
Trust Report
FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2006
MARKET CONDITIONS
Against the backdrop of strong economic growth, good employment data and
inflationary pressures stemming from rising oil prices, the Federal Open Market
Committee (the "Fed") continued its tightening campaign during the first eight
months of the reporting period, raising the federal funds target rate six times
to 5.25 percent at the end of June. As the months progressed however, economic
growth moderated as consumer spending and housing weakened while inflation
concerns eased, prompting investors to speculate that the Fed would take a break
from rate increases. In August the Fed did pause, ending a two-year run of 17
consecutive rate increases--the longest stretch of increases in 25 years. At its
subsequent meetings, the Fed again kept its target rate unchanged, and indicated
that any future rate increases would be driven by the weight of economic data.
As a result of the improved outlook for the fixed-income market, yields on
longer-maturity municipal bonds fell dramatically in latter months of the
reporting year, ultimately ending at the lowest level in decades and causing
this segment of the market to earn the best returns. Shorter-maturity municipal
bonds, however, posted the lowest returns as Fed rate hikes moved yields in this
portion of the curve higher. Accordingly, the slope of the municipal yield curve
flattened as the spread between short-term and long-term interest rates
narrowed.
Demand for municipal bonds continued to be strong during the period. In fact,
inflows into municipal bond funds were 55 percent higher year-to-date through
October than for the same period last year, much of which went into high-yield
funds. Because prevailing interest rates were still at relatively low levels,
investors increasingly sought out lower-quality, higher-yielding bonds. The
increased demand for high-yield bonds led this segment of the market to
considerably outperform high-grade issues.
Although municipal bond issuance remained brisk in the last quarter of 2005,
volume declined throughout the remaining months of the period. As of the end of
October, national municipal bond issuance was down 13 percent for 2006. The
reduced supply, coupled with growing demand, further fueled municipal bond
performance.
2
PERFORMANCE ANALYSIS
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities and preferred shares, 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 both an NAV basis and a market price basis, the trust outperformed
its benchmark index, the Lehman Brothers Municipal Bond Index.
TOTAL RETURNS FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2006
---------------------------------------------------------------
BASED ON BASED ON LEHMAN BROTHERS MUNICIPAL
NAV MARKET PRICE BOND INDEX
8.71% 10.76% 5.75%
---------------------------------------------------------------
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.
Throughout the reporting period, we sought opportunities to enhance the
portfolio's yield, while still adhering to our quality-driven investment
discipline. We did so primarily by implementing two general strategies. First,
we increased the portfolio's exposure to lower-rated, higher-yielding
securities. Specifically, we added to holdings in BBB rated credits while
reducing holdings in AAA rated credits. This strategy proved beneficial to
performance as credit spreads in the high-yield segment of the market tightened,
leading high-yield bonds to considerably outperform higher-quality bonds.
Second, we emphasized the long end of the yield curve, favoring bonds with
maturities of 25 to 30 years or more. Given the flattening of the yield curve
during the period, attractive yields were primarily found on the very long end
of the curve and our focus here was additive to performance.
Reflecting our view that interest rates in the Treasury market would continue to
rise, we kept the trust's duration (a measure of interest-rate sensitivity)
shorter than that of the Lehman Brothers Municipal Bond Index for much of the
period. In the latter months, when it appeared that the Fed was done raising
rates, we increased the trust's duration to a more neutral stance. While this
positioning overall was beneficial, the trust could have benefited even more had
we increased the duration earlier in the reporting period. In addition, rising
interest rates made the trust's borrowing activity more expensive, thereby
tempering the benefits of leverage for much of the period. 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
3
proceeds are reinvested in longer-term securities, taking advantage of the
difference between short- and longer-term rates.
In keeping with our focus on high-yielding credits, we increased the trust's
holdings of tobacco settlement revenue bonds, which are BBB rated. The
litigation environment for tobacco companies has become quite favorable, demand
for the bonds remains strong, and the industry continues to prosper. We also
added to holdings in health care bonds, which have benefited from spread
tightening in the sector, and increased exposure to higher education bonds. Our
decision to increase the trust's exposure to these sectors during the period was
additive to performance as they performed strongly.
The trust remained well diversified among the major sectors of the municipal
market. The largest sectors at the end of the period were hospital, airport and
wholesale electric.
The Trustees have approved a procedure whereby the trust may, when appropriate,
repurchase its shares in the open market or in privately negotiated transactions
at a price not above market value or NAV, whichever is lower at the time of
purchase. This may help support the market value of the trust's shares.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the trust in
the future.
CHANGES IN INVESTMENT POLICIES
The Board of Trustees of the trust recently approved the following non-
fundamental investment policy for the trust: The trust may invest up to 20% of
its assets in securities that are rated, at the time of investment, BB/Ba or B
by Standard & Poor's Ratings Service ("S&P"), Moody's Investors Services, Inc.
("Moody's") or Fitch Ratings Ltd. ("Fitch") or that are unrated, but deemed to
be of comparable quality by the Adviser. These securities are regarded as below
investment grade and are commonly referred to as junk bonds, and involve greater
risks than investments in higher-grade securities.
Securities that are in the lower-grade categories generally offer higher yields
than are offered by higher-grade securities of similar maturities, but they also
generally involve greater risks, such as greater credit risk, greater market
risk and volatility, greater liquidity concerns and potentially greater manager
risk. Rated lower-grade debt securities are regarded by S&P, Moody's and Fitch
as predominately speculative with respect to the capacity to pay interest or
repay principal or interest in accordance with their terms. Investors should
carefully consider the risks of owning shares of a trust which invests in
lower-grade securities before investing in the trust.
Lower-grade securities are more susceptible to nonpayment of interest and
principal or default than higher-grade securities. Increases in interest rates
or changes in the economy may significantly affect the ability of lower-grade
4
income securities to pay interest and to repay principal, to meet projected
financial goals or to obtain additional financing. In the event that an issuer
of securities held by the trust experiences difficulties in the timely payment
of principal and interest and such issuer seeks to restructure the terms of its
borrowings, the trust may incur additional expenses and may determine to invest
additional assets with respect to such issuer or the project or projects to
which the trust's securities relate. Further, the trust may incur additional
expenses to the extent that it is required to seek recovery upon a default in
the payment of interest or the repayment of principal on its portfolio holdings,
and the trust may be unable to obtain full recovery on such amounts.
The secondary market prices of lower-grade securities generally are less
sensitive to changes in interest rates and are more sensitive to real or
perceived general adverse economic changes or specific developments with respect
to the particular issuers than are the secondary market prices of higher-grade
securities. A significant increase in interest rates or a general economic
downturn could severely disrupt the market for lower-grade securities and
adversely affect the market value of such securities. Such events also could
lead to a higher incidence of default by issuers of lower-grade securities as
compared with higher-grade securities. In addition, changes in credit risks,
interest rates, the credit markets or periods of general economic uncertainty
can be expected to result in increased volatility in the market price of
lower-grade securities in the trust and thus in the net asset value of the
trust. Adverse publicity and investor perceptions, whether or not based on
rational analysis, may affect the value, volatility and liquidity of lower-grade
securities.
The markets for lower-grade securities may be less liquid than the markets for
higher-grade securities. To the extent that there is no established retail
market for some of the lower-grade securities in which the trust may invest,
trading in such securities may be relatively inactive. Prices of lower-grade
securities may decline rapidly in the event a significant number of holders
decide to sell. Changes in expectations regarding an individual issuer of
lower-grade securities generally could reduce market liquidity for such
securities and make their sale by the trust more difficult, at least in the
absence of price concessions. The effects of adverse publicity and investor
perceptions may be more pronounced for securities for which no established
retail market exists as compared with the effects on securities for which such a
market does exist. An economic downturn or an increase in interest rates could
severely disrupt the market for such securities and adversely affect the value
of outstanding securities or the ability of the issuers to repay principal and
interest. Further, the trust may have more difficulty selling such securities in
a timely manner and at their stated value than would be the case for securities
for which an established retail market does exist.
The market for lower grade securities may have less available information,
further complicating evaluations and valuations of such securities and placing
more emphasis on the Adviser's experience, judgment and analysis than other
securities.
5
RATINGS ALLOCATION AS OF 10/31/2006
AAA/Aaa 61.7%
AA/Aa 9.8
A/A 8.3
BBB/Baa 15.5
BB/Ba 0.1
B/B 0.3
Non-Rated 4.3
TOP 5 SECTORS AS OF 10/31/2006
Hospital 20.4%
Airport 11.5
Wholesale Electric 8.8
General Purpose 8.2
Master Tobacco Settlement 6.5
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 10/31/2006
California 11.6%
New York 10.1
Texas 8.8
Illinois 7.4
New Jersey 7.3
Washington 4.5
Alabama 3.5
North Carolina 3.4
South Carolina 2.8
Florida 2.7
Arizona 2.6
Kentucky 2.6
Nevada 2.5
Pennsylvania 2.2
Massachusetts 2.1
Georgia 2.0
Missouri 2.0
Oklahoma 1.9
Louisiana 1.9
Indiana 1.9
Colorado 1.7
Puerto Rico 1.3
District of Columbia 1.2
Ohio 1.2
Maryland 1.2
Minnesota 1.1
Oregon 1.1
Connecticut 0.9
West Virginia 0.8
Iowa 0.7
Michigan 0.7
Tennessee 0.7
Alaska 0.6
Nebraska 0.5
Wisconsin 0.5
(continued on next page)
6
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 10/31/2006
(continued from previous page)
South Dakota 0.4
Virginia 0.4
New Mexico 0.3
New Hampshire 0.3
Utah 0.3
North Dakota 0.1
Wyoming 0.1
Mississippi 0.1
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Total Investments 100.0%
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Ratings and summary of investments by
state classification are as a percentage of total investments. Sectors are as a
percentage of total 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.
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. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. 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
(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 (800) 847-2424.
8
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the trust's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 847-2424 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the trust voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge 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.
9
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
On May 22, 2006, the Board of Trustees, and the independent trustees voting
separately, determined that the terms of the investment advisory agreement are
fair and reasonable and approved the continuance of the investment advisory
contract as being in the best interests of the Fund and its shareholders. In
making its determination, the Board of Trustees considered materials that were
specifically prepared by the investment adviser at the request of the Board and
Fund counsel, and by an independent provider of investment company data
contracted to assist the Board, relating to the contract review process. The
Board also considered information received periodically about the portfolio,
performance, the investment strategy, portfolio management team and fees and
expenses of the Fund. Finally, the Board considered materials it had received in
approving a reorganization of the Fund. The Board of Trustees considered the
contract over a period of several months and the non-management trustees held
sessions both with the investment adviser and separate from the investment
adviser in reviewing and considering the contract.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
breakpoints in the Fund's investment advisory fee schedule. The Board of
Trustees considered comparative advisory fees of the Fund and other investment
companies and/or other products at different asset levels, and considered the
trends in the industry. The Board of Trustees evaluated other benefits the
investment adviser and its affiliates derive from their relationship with the
Fund. The Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees, evaluated
all of the foregoing and does not believe any single factor or group of factors
control or dominate the review process, and, after considering all factors
10
together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund. The trustees also
discuss certain other services which are provided on a cost-reimbursement basis
by the investment adviser or its affiliates to the Van Kampen funds including
certain accounting, administrative and legal services. The Board has determined
that the nature, extent and quality of the services provided by the investment
adviser support its decision to approve the investment advisory contract.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report. The
trustees discuss with the investment adviser the level of advisory fees for this
Fund relative to comparable funds and other products advised by the adviser and
others in the marketplace. The trustees review not only the advisory fees but
other fees and expenses (whether paid to the adviser, its affiliates or others)
and the Fund's overall expense ratio. The Board has determined that the
performance, fees and expenses of the Fund support its decision to approve the
investment advisory contract.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser. These profitability reports are
put together by the investment adviser with the oversight of the Board. The
trustees discuss with the investment adviser its revenues and expenses,
including among other things, revenues for advisory services, portfolio
management-related expenses, revenue sharing arrangement costs and allocated
expenses both on an aggregate basis and per fund. The Board has determined that
the analysis of the
11
investment adviser's expenses and profitability support its decision to approve
the investment advisory contract.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
of the Fund and how that relates to the Fund's expense ratio and particularly
the Fund's advisory fee rate. In conjunction with its review of the investment
adviser's profitability, the trustees discuss with the investment adviser how
more (or less) assets can affect the efficiency or effectiveness of managing the
Fund's portfolio and whether the advisory fee level is appropriate relative to
current asset levels and/or whether the advisory fee structure reflects
economies of scale as asset levels change. The Board has determined that its
review of the actual and potential economies of scale of the Fund support its
decision to approve the investment advisory contract.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory contract.
12
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
MUNICIPAL BONDS 172.3%
ALABAMA 6.1%
$ 1,000 Alabama Bldg Renovation Fin Auth Rev Rfdg (AMBAC
Insd)........................................... 5.625% 09/01/24 $ 1,069,860
1,550 Birmingham, AL Arpt Auth Arpt Rev Rfdg (AMBAC
Insd) (AMT) (a)................................. 5.500 07/01/14 1,621,703
4,000 Birmingham Baptist Med Ctr AL Spl Care Fac Fin
Auth Rev Baptist Hlth Sys Inc Ser A............. 5.000 11/15/30 4,103,760
1,000 Jefferson Cnty, AL Ltd Oblig Sch Wt Ser A....... 5.000 01/01/24 1,048,700
4,250 Jefferson Cnty, AL Ltd Oblig Sch Wt Ser A....... 5.250 01/01/23 4,549,243
2,335 Marshall Cnty, AL Hlthcare Ser C................ 6.000 01/01/32 2,523,341
5 Mobile, AL Indl Dev Brd Solid Waste Disp Rev
Mobile Energy Svc Co Proj Rfdg.................. 6.950 01/01/20 469
2,000 Montgomery, AL Wt (AMBAC Insd).................. 5.250 05/01/20 2,170,900
2,000 Montgomery Cnty, AL Pub Bldg Auth Rev Wts Fac
Proj (MBIA Insd)................................ 5.000 03/01/31 2,120,000
14,850 University of AL at Birmingham Hosp Rev Ser A
(i)............................................. 5.000 09/01/41 15,407,568
------------
34,615,544
------------
ALASKA 1.1%
1,000 Alaska St Hsg Fin Corp Gen Hsg Ser A (FGIC
Insd)........................................... 5.250 12/01/41 1,065,310
5,000 Northern Tob Sec Corp AK Tob Settlement Rev
Asset Bkd Ser A................................. 5.000 06/01/46 5,067,500
------------
6,132,810
------------
ARIZONA 4.4%
1,425 Arizona Cap Fac Fin Corp Student Hsg Rev AZ St
Univ Proj....................................... 6.250 09/01/32 1,516,043
2,900 Arizona Tourism & Sports Auth Multi Purp Stad
Fac Ser A (MBIA Insd)........................... 5.375 07/01/22 3,159,492
1,500 Maricopa Cnty, AZ Stad Dist Rfdg (AMBAC Insd)... 5.375 06/01/19 1,624,470
2,875 Phoenix, AZ Civic Impt Corp Arpt Rev Jr Lien
(FGIC Insd) (AMT)............................... 5.375 07/01/29 2,903,146
610 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease Oblig
Irvington Proj Tucson Rfdg Ser A (FSA Insd)..... 7.250 07/15/10 612,288
14,840 University of AZ Med Ctr Corp................... 5.000 07/01/35 15,246,616
------------
25,062,055
------------
See Notes to Financial Statements 13
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
CALIFORNIA 20.1%
$ 2,630 Anaheim, CA Pub Fin Auth Lease Rev Cap Apprec
Sub Pub Impt Proj Ser C (FSA Insd).............. * 09/01/20 $ 1,465,962
2,400 Bay Area Govt Assn CA Rev Tax Alloc CA Redev
Pool Ser A (XLCA Insd).......................... 5.250% 09/01/29 2,582,352
1,050 California Cnty, CA Tob Sec Agy Asset Bkd Merced
Cnty Rfdg Ser A................................. 5.125 06/01/38 1,079,316
2,000 California Cnty, CA Tob Sec Agy Asset Bkd Sonoma
Cnty Corp Rfdg.................................. 5.125 06/01/38 2,055,840
1,750 California Cnty, CA Tob Sec Agy Asset Bkd Sonoma
Cnty Corp Rfdg.................................. 5.250 06/01/45 1,814,137
15,000 California Hlth Fac Fin Auth Rev Cedars Sinai
Med Ctr Rfdg (i)................................ 5.000 11/15/34 15,633,250
1,800 California Hlth Fac Fin Auth Rev Kaiser
Permanente Ser A................................ 5.000 04/01/37 1,878,228
2,000 California Pollutn Ctl Fin Auth Solid Waste Disp
Rev Waste Mgmt Inc Proj Ser B (AMT)............. 5.000 07/01/27 2,063,320
20 California Rural Home Mtg Fin Auth Single Family
Mtg Rev Ser C (GNMA Collateralized) (AMT)....... 7.800 02/01/28 20,404
5,770 California St................................... 5.000 02/01/33 6,039,055
2,000 California St Dept Wtr Res Pwr Ser A
(Prerefunded @ 5/01/12)......................... 5.750 05/01/17 2,242,560
3,500 California St Pub Wk Brd Lease Rev Dept
Corrections Ser C............................... 5.250 06/01/28 3,728,550
2,000 California St Pub Wk Brd Lease Rev Dept Mental
Hlth Coalinga Ser A............................. 5.000 06/01/25 2,106,240
4,405 California St Tcrs Bny (AMBAC Insd)............. 5.125 10/01/27 4,500,721
7,000 California Statewide Cmnty Dev Auth Rev
Daughters of Charity Hlth Ser A................. 5.000 07/01/39 7,192,780
7,750 California Statewide Cmnty Dev Auth Rev
Daughters of Charity Hlth Ser A................. 5.250 07/01/30 8,191,362
5,000 California Statewide Cmnty Dev Auth Rev Hlth Fac
Adventist Hlth Ser A............................ 5.000 03/01/30 5,194,750
3,000 California Statewide Cmnty Dev Auth Rev Hlth Fac
Adventist Hlth Ser A............................ 5.000 03/01/35 3,111,120
3,600 California Statewide Cmnty Dev Auth Rev Kaiser
Permanente Ser B................................ 5.000 03/01/41 3,745,476
5,200 California Statewide Cmnty Dev Auth Rev Kaiser
Permanente Ser B................................ 5.250 03/01/45 5,531,344
5,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap
Apprec Rfdg..................................... * 01/15/25 1,795,550
4,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev
Conv Cap Apprec Sr Lien Ser A (d)............... 7.050 01/01/10 4,427,600
14 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 3,000 Los Angeles Cnty, CA Uni Sch Dist Ser A (FSA
Insd) (Prerefunded @ 7/01/13)................... 5.250% 07/01/19 $ 3,308,670
2,400 Tobacco Sec Auth Northn CA Tob Settlement Rev
Asset Bkd Ser A1................................ 5.375 06/01/38 2,517,552
1,600 Tobacco Sec Auth Northn CA Tob Settlement Rev
Asset Bkd Ser A1................................ 5.500 06/01/45 1,692,384
6,000 Tobacco Sec Auth Southn CA Tob Settlement Ser
A-1............................................. 5.000 06/01/37 6,123,060
12,000 Tobacco Sec Auth Southn CA Tob Settlement Ser
A-1............................................. 5.125 06/01/46 12,302,520
1,600 Turlock, CA Hlth Fac Rev Ctf Partn Emanuel Med
Ctr Inc. ....................................... 5.375 10/15/34 1,686,480
------------
114,030,583
------------
COLORADO 3.0%
3,000 Colorado Hlth Fac Auth Rev Catholic Hlth
Initiatives Ser A (d)........................... 5.500 03/01/32 3,259,020
2,500 Colorado Hlth Fac Auth Rev Covenant Retirement
Cmnty Inc. ..................................... 5.000 12/01/35 2,552,225
3,700 Colorado Hlth Fac Auth Rev Evangelical
Lutheran........................................ 5.000 06/01/35 3,810,334
1,000 Colorado Hlth Fac Auth Rev Hosp Portercare
Adventist Hlth (Prerefunded @ 11/15/11)......... 6.500 11/15/31 1,138,660
1,000 Colorado Hsg Fin Auth Multi-Family Hsg Ins Mtg
Ser B2 (FHA Gtd) (AMT).......................... 5.800 10/01/28 1,018,870
61 Colorado Hsg Fin Auth Single Family Pgm Sr Ser
A2 (AMT)........................................ 7.250 05/01/27 61,893
30 Colorado Hsg Fin Auth Single Family Pgm Sr Ser
C1 (AMT)........................................ 7.550 11/01/27 30,467
1,005 Greeley, CO Multi-Family Rev Hsg Mtg Creek Stone
(FHA Gtd) (AMT)................................. 5.950 07/01/28 1,031,552
530 Highlands Ranch Metro Dist No 2 CO (FSA Insd)
(d)............................................. 6.500 06/15/11 595,725
470 Highlands Ranch Metro Dist No 2 CO (FSA Insd)... 6.500 06/15/11 527,646
1,500 Park Creek Metro Dist CO Rev Sr Ltd Tax Ppty
Rfdg............................................ 5.500 12/01/37 1,582,965
1,500 University of CO Hosp Auth Rev Ser A............ 5.250 11/15/39 1,576,110
------------
17,185,467
------------
See Notes to Financial Statements 15
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
CONNECTICUT 1.6%
$ 6,500 Connecticut St Spl Oblig Pkg Rev Bradley Intl
Arpt Ser A (ACA Insd) (AMT)..................... 6.600% 07/01/24 $ 7,116,330
1,000 Hartford, CT Pkg Sys Rev Ser A (Prerefunded @
7/01/10)........................................ 6.400 07/01/20 1,093,840
1,000 Mashantucket West Pequot Tribe CT Spl Rev Ser A
(e)............................................. 5.500 09/01/36 1,044,720
------------
9,254,890
------------
DISTRICT OF COLUMBIA 2.1%
2,500 District Columbia Rev Gonzaga College (FSA
Insd)........................................... 5.250 07/01/32 2,682,150
8,850 Metropolitan WA Auth Sys Ser A (FGIC Insd)
(AMT)........................................... 5.250 10/01/32 9,303,651
------------
11,985,801
------------
FLORIDA 4.7%
460 Escambia Cnty, FL Hlth Fac Auth Rev FL Hlthcare
Fac Ln VHA Pgm (AMBAC Insd)..................... 5.950 07/01/20 480,700
1,000 Highlands Cnty, FL Hlth Fac Auth Rev Hosp
Adventist Hlth Sys Ser D........................ 5.000 11/15/35 1,038,810
2,500 Highlands Cnty, FL Hlth Fac Auth Rev Hosp
Adventist Hlth Sys Ser C........................ 5.250 11/15/36 2,669,850
1,000 Lakeland, FL Hosp Sys Rev Lakeland Regl Hlth Sys
(Prerefunded @ 11/15/12)........................ 5.500 11/15/32 1,106,620
2,100 Miami-Dade Cnty, FL Aviation Miami Intl Arpt Ser
A (FGIC Insd) (AMT)............................. 5.375 10/01/27 2,227,890
2,500 Miami-Dade Cnty, FL Aviation Miami Intl Arpt
(FGIC Insd) (AMT)............................... 5.375 10/01/32 2,644,600
2,160 North Broward, FL Hosp Dist Rev Impt
(Prerefunded @ 1/15/11)......................... 6.000 01/15/31 2,378,657
215 North Broward, FL Hosp Dist Rev Impt............ 6.000 01/15/31 230,792
13,150 South FL Wtr Mgmt Dist Ctfs Partn (AMBAC Insd)
(f)............................................. 5.000 10/01/36 13,979,239
------------
26,757,158
------------
GEORGIA 3.4%
1,000 Atlanta, GA Arpt Rev Ser B (FGIC Insd) (AMT).... 5.625 01/01/30 1,055,270
1,383 Fulton Cnty, GA Lease Rev (Acquired 12/23/1994,
Cost $1,382,772) (b)............................ 7.250 06/15/10 1,415,876
7,000 Georgia Muni Elec Auth Pwr Rev Ser A (MBIA
Insd)........................................... 6.500 01/01/20 8,789,620
3,770 Monroe Cnty, GA Dev Auth Pollutn Ctl Rev
Oglethorpe Pwr Corp Scherer Ser A............... 6.800 01/01/12 4,277,442
16 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
GEORGIA (CONTINUED)
$ 2,500 Municipal Elec Auth GA Combustion Turbine Proj
Ser A (MBIA Insd)............................... 5.250% 11/01/21 $ 2,691,475
1,000 Oconee Cnty, GA Indl Dev Auth Rev Oiit Proj
(XLCA Insd)..................................... 5.250 07/01/25 1,064,930
------------
19,294,613
------------
ILLINOIS 12.8%
3,750 Bolingbrook, IL Cap Apprec Ser B (MBIA Insd).... * 01/01/30 1,097,550
3,150 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Rfdg Ser A (MBIA Insd) (AMT)............... 5.375 01/01/32 3,347,915
10,900 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser A (MBIA Insd) (i)...................... 5.250 01/01/24 12,135,480
10,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser A (MBIA Insd) (i)...................... 5.250 01/01/25 11,133,468
1,885 Chicago, IL Pk Dist Ser C (FGIC Insd)
(Prerefunded @ 7/01/11)......................... 5.500 01/01/19 2,042,115
615 Chicago, IL Pk Dist Ser C (FGIC Insd)........... 5.500 01/01/19 661,057
15 Chicago, IL Single Family Mtg Rev Ser A (GNMA
Collateralized) (AMT)........................... 7.000 09/01/27 15,399
4,500 Cook Cnty, IL Cap Impt Ser A (FGIC Insd)........ 5.000 11/15/23 4,676,580
6,000 Illinois Fin Auth Rev Northwestern Mem Hosp Ser
A............................................... 5.500 08/15/43 6,588,420
3,630 Kendall, Kane & Will Cntys, IL Cmnty Unit Sch
Dist No 308 Ser B (FGIC Insd) (a)............... 5.250 10/01/20 3,913,430
1,925 Kendall, Kane & Will Cntys, IL Cmnty Unit Sch
Dist No 308 Ser B (FGIC Insd)................... 5.250 10/01/21 2,075,304
6,000 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev McCormick Pl Expn Proj Ser A (MBIA
Insd)........................................... 5.250 06/15/42 6,438,660
1,250 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev McCormick Pl Expn Proj Ser A (FGIC
Insd)........................................... 5.375 12/15/18 1,320,963
2,000 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev McCormick Pl Expn Proj Ser A (FGIC
Insd)........................................... 5.500 12/15/24 2,121,160
3,000 Pekin, IL Mtg Rev United Auto Workers Inc Proj
Ser A (GNMA Collateralized)..................... 5.250 05/20/34 3,075,810
5,000 Regional Tran Auth IL Ser B (AMBAC Insd)........ 8.000 06/01/17 6,725,650
5,000 University IL Univ Rev Aux Sys Fac Rfdg Ser A
(AMBAC Insd).................................... 5.000 04/01/30 5,168,700
------------
72,537,661
------------
INDIANA 3.2%
1,000 Allen Cnty, IN Juvenile Just Ctr First Mtg
(AMBAC Insd).................................... 5.500 01/01/18 1,086,510
3,270 Allen Cnty, IN War Mem Coliseum Ser A (AMBAC
Insd) (a)....................................... 5.500 11/01/16 3,565,216
8,240 Indiana Hlth Fac Fin Auth Hosp Rev Cmnty Proj
Ser A (AMBAC Insd).............................. 5.000 05/01/35 8,656,037
See Notes to Financial Statements 17
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
INDIANA (CONTINUED)
$ 2,000 Indiana Hlth Fac Fin Auth Hosp Rev Columbus Regl
Hosp Rfdg (FSA Insd)............................ 7.000% 08/15/15 $ 2,332,600
2,500 Indiana St Dev Fin Auth Rev Exempt Fac Conv Rfdg
(AMT)........................................... 5.950 08/01/30 2,566,725
------------
18,207,088
------------
IOWA 1.3%
1,890 Des Moines, IA Pub Pkg Sys Rev Ser A (FGIC Insd)
(a)............................................. 5.750 06/01/17 2,023,755
2,500 Tobacco Settlement Auth IA Rev Asset Bkd Ser
C............................................... 5.500 06/01/42 2,635,300
2,500 Tobacco Settlement Auth IA Rev Asset Bkd Ser
C............................................... 5.625 06/01/46 2,657,150
------------
7,316,205
------------
KENTUCKY 4.1%
1,475 Kenton Cnty, KY Arpt Brd Rev Cincinnati/Northn
KY Intl Arpt Rfdg Ser A (MBIA Insd) (AMT)....... 6.200 03/01/08 1,522,583
1,995 Kentucky Hsg Corp Hsg Rev Ser F (FNMA
Collateralized) (AMT)........................... 5.450 01/01/32 2,058,840
14,295 Louisville & Jefferson Cnty, KY Metro Govt Hlth
Sys Rev Norton Hlthcare Inc (i)................. 5.250 10/01/36 14,998,219
4,500 Louisville & Jefferson Cnty, KY Metro Govt Indl
Bldg Rev Sisters of Mercy Cincinnati............ 5.000 10/01/35 4,645,125
------------
23,224,767
------------
LOUISIANA 3.2%
5,000 Lafayette, LA Util Rev (MBIA Insd).............. 5.250 11/01/23 5,456,500
65 Louisiana Hsg Fin Agy Mtg Rev Single Family
Access Pgm Ser B (GNMA Collateralized) (AMT).... 8.000 03/01/25 66,316
1,960 Louisiana Hsg Fin Agy Rev Azalea Estates Rfdg
Ser A (GNMA Collateralized) (AMT)............... 5.375 10/20/39 2,060,685
3,000 Louisiana St Energy & Pwr Auth Pwr Proj Rev Rfdg
(FSA Insd)...................................... 5.750 01/01/12 3,284,430
7,000 Louisiana St Gas & Fuels Tax Rev Ser A (i)...... 5.000 05/01/41 7,409,675
------------
18,277,606
------------
MARYLAND 2.0%
500 Baltimore, MD Convention Ctr Hotel Rev Drivers
Ser 1251 (XLCA Insd) (Acquired 2/06/2006, Cost
$588,545) (b) (c)............................... 9.367 03/01/14 696,290
2,050 Maryland St Econ Dev Corp Student Hsg Rev Univ
MD College Pk Proj Rfdg (Prerefunded @
6/01/13)........................................ 5.625 06/01/35 2,275,849
2,000 Maryland St Hlth & Higher Ed Fac Auth Rev
Medstar Hlth Rfdg............................... 5.375 08/15/24 2,135,440
18 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
MARYLAND (CONTINUED)
$ 1,200 Maryland St Hlth & Higher Ed Fac Auth Rev Union
Hosp Cecil Cnty Issue........................... 5.000% 07/01/40 $ 1,244,952
4,710 Northeast, MD Waste Disp Auth Rfdg (AMBAC Insd)
(AMT)........................................... 5.500 04/01/16 5,097,350
------------
11,449,881
------------
MASSACHUSETTS 3.7%
3,955 Massachusetts Bay Trans Auth Gen Trans Sys Rfdg
Ser A........................................... 5.500 03/01/12 4,218,007
4,800 Massachusetts St Dev Fin Agy Rev College
Pharmacy & Allied Hlth Ser D (AGL Insd)......... 5.000 07/01/35 5,021,232
3,000 Massachusetts St Dev Fin Agy Semass Sys Ser A
(MBIA Insd)..................................... 5.625 01/01/16 3,282,120
1,000 Massachusetts St Hlth & Ed Fac Auth Rev Partn
Hlthcare Sys Ser C.............................. 5.750 07/01/32 1,088,090
1,000 Massachusetts St Hlth & Ed Fac Auth Rev Saint
Mem Med Ctr Ser A............................... 6.000 10/01/23 1,001,120
6,050 Massachusetts St Hlth & Ed Fac Auth Rev Univ MA
Mem Issue Ser D................................. 5.000 07/01/33 6,179,773
------------
20,790,342
------------
MICHIGAN 1.3%
3,505 Detroit, MI Wtr Supply Sys Ser B (MBIA Insd)
(Prerefunded @ 7/01/13) (a)..................... 5.250 07/01/18 3,841,620
3,000 Kent Hosp Fin Auth MI Rev Metro Hosp Proj Ser
A............................................... 6.250 07/01/40 3,365,100
------------
7,206,720
------------
MINNESOTA 2.0%
990 Chaska, MN Elec Rev Ser A (Prerefunded @
10/01/10)....................................... 6.100 10/01/30 1,081,327
10 Chaska, MN Elec Rev Ser A....................... 6.100 10/01/30 10,834
1,150 Maple Grove, MN Hlthcare Fac Rev North Mem
Hlthcare........................................ 5.000 09/01/35 1,194,436
2,200 Saint Paul, MN Hsg & Redev Auth Hosp Rev Hlth
East Proj....................................... 6.000 11/15/30 2,457,532
2,000 Saint Paul, MN Hsg & Redev Auth Hosp Rev Hlth
East Proj....................................... 6.000 11/15/35 2,223,400
3,875 Saint Paul, MN Port Auth Lease Rev Office Bldg
at Cedar Str (a)................................ 5.250 12/01/19 4,237,313
------------
11,204,842
------------
MISSISSIPPI 0.2%
260 Mississippi Home Corp Single Family Rev Mtg Ser
F (GNMA Collateralized) (AMT)................... 7.550 12/01/27 268,713
610 Mississippi Home Corp Single Family Rev Mtg Ser
C (GNMA Collateralized) (AMT)................... 7.600 06/01/29 616,984
------------
885,697
------------
See Notes to Financial Statements 19
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
MISSOURI 3.2%
$ 2,150 Cape Girardeau Cnty, MO Indl Southeast MO Hosp
Assoc........................................... 5.500% 06/01/22 $ 2,250,169
1,345 Kansas City, MO Metro Cmnty Leasehold Jr College
Impt & Rfdg (FGIC Insd)......................... 5.500 07/01/17 1,451,712
1,375 Missouri St Hlth & Ed Fac Auth Rev Sr Living Fac
Lutheran Ser A.................................. 5.375 02/01/35 1,444,383
1,210 Saint Louis, MO Arpt Rev Cap Impt Pgm Ser A
(MBIA Insd)..................................... 5.375 07/01/18 1,306,594
3,000 Sikeston, MO Elec Rev Rfdg (MBIA Insd).......... 6.200 06/01/10 3,181,980
8,500 Springfield, MO Pub Util Rev (FGIC Insd)........ 4.500 08/01/36 8,502,805
------------
18,137,643
------------
NEBRASKA 0.9%
5,000 Omaha, NE Pub Pwr Dist Elec Rev Sys Ser A....... 5.000 02/01/39 5,220,450
------------
NEVADA 4.4%
15,000 Clark Cnty, NV Arpt Rev Sub Lien Ser A-2 (FGIC
Insd)........................................... 5.000 07/01/36 15,683,700
2,800 Clark Cnty, NV Indl Dev Rev Southwest Gas Corp
Proj Ser A (FGIC Insd) (AMT).................... 4.750 09/01/36 2,837,856
6,000 Clark Cnty, NV Indl Dev Rev Southwest Gas Corp
Proj Ser A (AMBAC Insd) (AMT)................... 5.250 07/01/34 6,346,500
------------
24,868,056
------------
NEW HAMPSHIRE 0.6%
1,155 New Hampshire Hlth & Ed Fac Auth Rev Derryfield
Sch............................................. 7.000 07/01/30 1,259,839
845 New Hampshire Hlth & Ed Fac Univ Sys of NH
(AMBAC Insd).................................... 5.500 07/01/15 917,856
1,000 New Hampshire St Bus Fin Auth Wtr Fac Rev
Pennichuck Wtrwks Inc (AMBAC Insd) (AMT)........ 6.300 05/01/22 1,032,410
------------
3,210,105
------------
NEW JERSEY 12.7%
3,110 Newark, NJ Hsg Auth Port Auth Newark Marine
Terminal (MBIA Insd)............................ 5.250 01/01/20 3,365,082
5,000 New Jersey Econ Dev Auth Mtr Veh Rev Ser A (MBIA
Insd)........................................... 5.000 07/01/22 5,374,900
2,700 New Jersey Econ Dev Auth Rev Cig Tax............ 5.750 06/15/29 2,940,300
2,000 New Jersey Econ Dev Auth Rev Cig Tax............ 5.750 06/15/34 2,164,520
3,000 New Jersey Econ Dev Auth Rev Mtr Veh Sur Rev Ser
A (MBIA Insd)................................... 5.000 07/01/23 3,180,990
30,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (MBIA Insd)............................ 5.900 03/15/21 36,165,000
20 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
NEW JERSEY (CONTINUED)
$ 8,000 New Jersey Econ Dev Auth Wtr Fac Rev NJ Amer Wtr
Co Inc Proj Ser A (FGIC Insd) (AMT)............. 6.875% 11/01/34 $ 8,021,200
10,000 New Jersey St Ed Fac Auth Higher Ed Cap Impt Ser
A (AMBAC Insd) (Prerefunded @ 9/01/12).......... 5.250 09/01/21 10,879,900
------------
72,091,892
------------
NEW MEXICO 0.6%
2,020 University NM Univ Rev Sub Lien Rfdg Ser A
(a)............................................. 5.250 06/01/20 2,171,823
1,125 University NM Univ Rev Sub Lien Rfdg Ser A...... 5.250 06/01/21 1,209,555
------------
3,381,378
------------
NEW YORK 17.5%
5,000 Long Island, NY Pwr Auth Elec Sys Rev Gen Ser
B............................................... 5.000 12/01/35 5,274,350
5,000 Nassau Cnty, NY Tob Settlement Corp Asset Bkd
Ser A-3......................................... 5.000 06/01/35 5,124,150
1,000 Nassau Cnty, NY Tob Settlement Corp Asset Bkd
Ser A-3......................................... 5.125 06/01/46 1,032,840
3,720 New York City Ser A............................. 7.000 08/01/07 3,785,472
11,000 New York City Hsg Dev Corp Multi-Family Rent Hsg
Rev Progress of Peoples Dev Ser B (FNMA
Collateralized) (AMT)........................... 4.950 05/15/36 11,233,750
1,255 New York City Indl Dev Civic YMCA Gtr NY Proj... 5.800 08/01/16 1,284,129
5,000 New York City Trans Fin Auth Rev Future Tax Secd
Rfdg Ser A (g).................................. 5.500/14.000 11/01/26 5,406,000
2,525 New York St Dorm Auth Lease Rev Muni Hlth Fac
Impt Pgm Ser A (FSA Insd)....................... 5.500 05/15/25 2,601,381
1,625 New York St Dorm Auth Lease Rev St Univ Dorm Fac
Ser A (Prerefunded @ 7/01/10)................... 6.000 07/01/14 1,778,172
650 New York St Dorm Auth Rev Ser B (Prerefunded @
5/15/10)........................................ 7.500 05/15/11 721,805
885 New York St Dorm Auth Rev Ser B................. 7.500 05/15/11 982,881
3,100 New York St Dorm Auth Rev City Univ Sys Cons Ser
A............................................... 5.625 07/01/16 3,498,288
2,600 New York St Dorm Auth Rev Cons City Univ Sys
Second Gen Ser A................................ 5.750 07/01/13 2,851,524
2,535 New York St Dorm Auth Rev Mental Hlth Ser B..... 5.750 08/15/11 2,598,933
500 New York St Dorm Auth Rev Mental Hlth Ser A..... 5.750 08/15/12 512,850
5 New York St Dorm Auth Rev Mental Hlth Svcs Fac
Ser A (Prerefunded @ 2/15/07)................... 5.750 08/15/12 5,131
2,040 New York St Dorm Auth Rev Secd Hosp Gen Hosp
Rfdg............................................ 5.750 02/15/18 2,258,729
5,000 New York St Dorm Auth Rev St Univ Ed Fac Ser A.. 5.500 05/15/08 5,141,300
1,500 New York St Dorm Auth Rev Upstate Cmnty Colleges
Ser B........................................... 5.250 07/01/20 1,627,305
See Notes to Financial Statements 21
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$ 1,000 New York St Dorm Auth Rev Upstate Cmnty Colleges
Ser B........................................... 5.250% 07/01/21 $ 1,083,490
3,780 New York St Mtg Agy Rev Ser 101 (AMT)........... 5.400 04/01/32 3,908,369
1,055 New York St Mtg Agy Rev Homeowner Mtg Ser 82
(AMT)........................................... 5.650 04/01/30 1,063,640
15,000 Port Auth NY & NJ Cons Ser 144 (i).............. 5.000 10/01/35 15,958,350
4,000 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (MBIA Insd) (AMT).......... 5.750 12/01/22 4,164,560
12,960 TSASC Inc NY Ser 1.............................. 5.000 06/01/34 13,281,797
2,150 Westchester, NY Tob Asset Sec Corp. ............ 5.125 06/01/38 2,217,682
------------
99,396,878
------------
NORTH CAROLINA 5.9%
1,500 North Carolina Eastn Muni Pwr Agy Pwr Sys Rev
Ser D........................................... 6.700 01/01/19 1,632,705
7,000 North Carolina Muni Pwr Agy Ser A (MBIA Insd)... 5.250 01/01/19 7,546,980
22,000 North Carolina Muni Pwr Agy No 1 Catawba Elec
Rev Rfdg (MBIA Insd)............................ 6.000 01/01/12 24,429,460
------------
33,609,145
------------
NORTH DAKOTA 0.2%
380 North Dakota St Hsg Fin Agy Ser C (AMT)......... 5.550 07/01/29 382,797
775 North Dakota St Hsg Fin Agy Rev Hsg Fin Pgm Home
Mtg Fin Ser B (MBIA Insd) (AMT)................. 5.500 07/01/29 785,602
------------
1,168,399
------------
OHIO 2.0%
1,000 Cleveland-Cuyahoga Cnty, OH Port Auth Rev
Student Hsg Euclid Ave Fenn Proj (AMBAC Insd)... 5.000 08/01/28 1,056,140
1,000 Cleveland, OH Muni Sch Dist (FSA Insd).......... 5.250 12/01/24 1,090,600
1,500 Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc Proj.. 7.500 01/01/30 1,667,730
2,000 Lorain Cnty, OH Hosp Rev Catholic Hlthcare...... 5.375 10/01/30 2,119,220
2,450 Lorain Cnty, OH Hosp Rev Catholic Hlthcare Impt
& Rfdg Ser A.................................... 5.250 10/01/33 2,574,730
3,000 Lucas Cnty, OH Hosp Rev Promedica Hlthcare Oblig
Rfdg (MBIA Insd)................................ 6.000 11/15/07 3,065,700
------------
11,574,120
------------
OKLAHOMA 3.2%
3,410 Jenks, OK Aquarium Auth Rev Rfdg (MBIA Insd)
(a)............................................. 5.250 07/01/24 3,705,783
1,475 Jenks, OK Aquarium Auth Rev Rfdg (MBIA Insd).... 5.250 07/01/33 1,600,906
3,970 McAlester, OK Pub Wk Auth Util Cap Apprec (FSA
Insd)........................................... * 02/01/34 1,199,734
2,250 Oklahoma City, OK Pub Ppty Auth Hotel Tax Rev
(FGIC Insd)..................................... 5.250 10/01/29 2,445,930
1,065 Oklahoma Dev Fin Auth Lease Rev OK Council Law
Enforcement (MBIA Insd) (a)..................... 5.500 06/01/17 1,162,266
22 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
OKLAHOMA (CONTINUED)
$ 1,120 Oklahoma Dev Fin Auth Lease Rev OK Council Law
Enforcement (MBIA Insd) (a)..................... 5.500% 06/01/18 $ 1,221,114
1,185 Oklahoma Dev Fin Auth Lease Rev OK Council Law
Enforcement (MBIA Insd) (a)..................... 5.500 06/01/19 1,291,982
2,250 Tulsa Cnty, OK Pub Fac Auth Cap Impt Rev (AMBAC
Insd) (Prerefunded @ 11/01/09) (h).............. 6.250 11/01/22 2,462,940
3,140 Tulsa, OK Indl Auth Hosp Rev Hillcrest Med Cent
Proj Rfdg (Connie Lee Insd) (a) (d)............. 6.250 06/01/08 3,267,076
------------
18,357,731
------------
OREGON 1.9%
5,000 Oregon Hlth Sciences Univ Insd Ser A (MBIA
Insd)........................................... 5.250 07/01/22 5,386,400
5,000 Oregon St Dept Admin Rfdg Ser C (MBIA Insd)..... 5.250 11/01/18 5,360,650
------------
10,747,050
------------
PENNSYLVANIA 3.8%
2,210 Chartiers Vly, PA Sch Dist Ser A (FSA Insd)
(a)............................................. 5.250 10/15/19 2,425,011
2,750 Hempfield, PA Area Sch Dist Westmoreland Cnty
Ser A (FGIC Insd)............................... 5.250 03/15/19 3,015,072
6,515 Hempfield, PA Area Sch Dist Westmoreland Cnty
Ser A (FGIC Insd) (a)........................... 5.250 03/15/20 7,129,039
3,000 Susquehanna Area Regl Arpt Auth PA Ser A (AMBAC
Insd) (AMT)..................................... 5.375 01/01/21 3,194,430
5,415 Susquehanna Area Regl Arpt Auth PA Ser A (AMBAC
Insd) (AMT) (a)................................. 5.375 01/01/22 5,762,914
------------
21,526,466
------------
SOUTH CAROLINA 4.8%
2,500 Charleston Ed Excellence Fin Corp SC Rev
Charleston Cnty Sch Dist (i).................... 5.250 12/01/25 2,687,162
7,500 Charleston Ed Excellence Fin Corp SC Rev
Charleston Cnty Sch Dist (i).................... 5.250 12/01/26 8,061,488
5,000 Easley, SC Util Rev Impt & Comb Rfdg (FSA
Insd)........................................... 5.000 12/01/34 5,285,750
2,000 Laurens Cnty, SC Sch Dist No 55 Installment Pur
Rev............................................. 5.250 12/01/30 2,117,640
5,000 South Carolina Jobs Econ Dev Auth Indl Rev Elec
& Gas Co Proj Ser A (AMBAC Insd)................ 5.200 11/01/27 5,330,450
3,750 South Carolina Jobs Econ Dev Auth Indl Rev Elec
& Gas Co Proj Ser B (AMBAC Insd) (AMT).......... 5.450 11/01/32 3,990,825
------------
27,473,315
------------
See Notes to Financial Statements 23
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
SOUTH DAKOTA 0.7%
$ 1,375 Deadwood, SD Ctf Partn (ACA Insd)............... 6.375% 11/01/20 $ 1,475,911
2,500 South Dakota St Hlth & Ed Fac Auth Rev Sioux Vly
Hosp & Hlth Sys Ser A........................... 5.250 11/01/34 2,627,900
------------
4,103,811
------------
TENNESSEE 1.3%
1,750 Chattanooga, TN Hlth Ed & Hsg Fac Brd Rev CDFI
Phase I LLC Proj Rfdg Ser A..................... 5.125 10/01/35 1,778,088
2,000 Elizabethton, TN Hlth & Ed Fac Brd Rev Impt Hosp
First Mtg Rfdg Ser B............................ 8.000 07/01/33 2,372,580
1,500 Elizabethton, TN Hlth & Ed Fac Brd Rev Impt Hosp
Rfdg Ser B (MBIA Insd).......................... 7.750 07/01/29 1,824,525
1,000 Johnson City, TN Hlth & Ed Fac Brd Hosp Rev
First Mtg Mtn St Hlth Rfdg Ser A (MBIA Insd).... 7.500 07/01/25 1,214,070
------------
7,189,263
------------
TEXAS 14.6%
2,000 Alliance Arpt Auth Inc TX Spl Fac Rev FedEx Corp
Proj Rfdg (AMT)................................. 4.850 04/01/21 2,032,900
2,350 Austin, TX Ctf Oblig (MBIA Insd) (a)............ 5.375 09/01/20 2,550,220
2,545 Dallas Cnty, TX Cmnty College Fin Sys (AMBAC
Insd) (a)....................................... 5.375 02/15/17 2,676,933
8,000 Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
(FSA Insd) (AMT)................................ 5.500 11/01/21 8,734,000
4,000 Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
(FGIC Insd) (AMT)............................... 5.750 11/01/30 4,213,040
5,500 Dallas-Fort Worth, TX Intl Arpt Rev Jt Impt &
Rfdg Ser A (FGIC Insd) (AMT).................... 5.500 11/01/31 5,874,385
2,000 Harris Cnty, TX Hlth Fac Dev Corp Hosp Rev Mem
Hermann Hlthcare Ser A (Prerefunded @
6/01/11)........................................ 6.375 06/01/29 2,246,780
10,000 Houston, TX Arpt Sys Rev Sub Lien Ser A (FSA
Insd) (AMT)..................................... 5.125 07/01/32 10,336,200
2,000 Houston, TX Arpt Sys Rev Sub Lien (FSA Insd).... 5.500 07/01/20 2,176,540
3,000 Houston, TX Arpt Sys Rev Sub Lien Ser A (FSA
Insd) (AMT)..................................... 5.625 07/01/30 3,168,210
12,000 Houston, TX Util Sys Rev First Lien Rfdg Ser A
(FSA Insd)...................................... 5.250 05/15/21 13,041,000
2,185 Lower CO Riv Auth TX Transmission Contract Rev
LCRA Svc Corp Proj Rfdg (FGIC Insd)............. 5.000 05/15/24 2,282,211
2,185 Lower CO Riv Auth TX Transmission Contract Rev
LCRA Svc Corp Proj Rfdg (FGIC Insd)............. 5.000 05/15/25 2,287,760
4,000 Lower CO Riv Auth TX Transmission Contract Rev
LCRA Svc Corp Proj Rfdg (FGIC Insd)............. 5.000 05/15/33 4,126,760
1,000 Matagorda Cnty, TX Navig Dist No 1 Rev Coll
Centerpoint Energy Proj Rfdg.................... 5.600 03/01/27 1,059,060
24 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
$ 3,000 Metropolitan Hlth Fac Dev Corp TX Wilson N Jones
Mem Hosp Proj................................... 7.250% 01/01/31 $ 3,106,860
10,000 North Cent, TX Hlth Fac Dev Hosp Childrens Med
Ctr Dallas (AMBAC Insd)......................... 5.250 08/15/32 10,606,800
2,360 University of TX Univ Rev Fin Sys Ser B......... 5.250 08/15/20 2,563,668
------------
83,083,327
------------
UTAH 0.5%
2,380 Mountain Regl Wtr Spl Svc Dist Rfdg (MBIA
Insd)........................................... 5.000 12/15/33 2,498,286
------------
VIRGINIA 0.7%
2,000 Tobacco Settlement Fin Corp VA Asset Bkd........ 5.500 06/01/26 2,128,720
1,670 Tobacco Settlement Fin Corp VA Asset Bkd........ 5.625 06/01/37 1,783,477
------------
3,912,197
------------
WASHINGTON 7.8%
9,850 Bellevue, WA Convention Ctr Auth Spl Oblig Rev
Comp Int Rfdg (MBIA Insd)....................... * 02/01/25 4,451,215
7,500 Chelan Cnty, WA Pub Util Dist No 001 Cons Rev
Chelan Hydro Ser A (MBIA Insd) (AMT)............ 5.600 01/01/36 8,073,075
5,000 Energy Northwest WA Elec Rev Columbia Generating
Rfdg Ser A (FSA Insd)........................... 5.500 07/01/16 5,435,600
2,500 Energy Northwest WA Elec Rev Proj No 3 Rfdg Ser
A (FSA Insd).................................... 5.500 07/01/18 2,713,875
5,000 Energy Northwest WA Elec Rev Proj No 3 Rfdg Ser
B (FSA Insd).................................... 6.000 07/01/16 5,599,000
2,000 Port Seattle, WA Rev Ser B (MBIA Insd) (AMT).... 5.625 02/01/24 2,114,500
2,120 Seattle, WA Muni Lt & Pwr Rev................... 5.625 12/01/17 2,270,372
3,000 Spokane, WA Pub Fac Dist Hotel Motel & Sales Use
Tax (MBIA Insd)................................. 5.250 09/01/33 3,203,460
1,500 Tacoma, WA Elec Sys Rev Rfdg Ser B (FSA Insd)... 5.500 01/01/12 1,630,620
4,750 Tacoma, WA Elec Sys Rev Rfdg Ser A (FSA Insd)... 5.750 01/01/14 5,174,840
5,125 Washington St Pub Pwr Supply Sys Nuclear Proj No
3 Rev Rfdg Ser C (MBIA Insd) (a)................ * 07/01/14 3,799,982
------------
44,466,539
------------
WEST VIRGINIA 1.4%
8,000 Harrison Cnty, WV Cmnty Solid Waste Disp Rev
West Penn Pwr Co Proj Ser A (MBIA Insd) (AMT)... 6.875 04/15/22 8,020,960
------------
WISCONSIN 0.9%
1,500 Southeast WI Professional Baseball Pk Dist Sales
Tax Rev Rfdg Ser A (MBIA Insd).................. 5.500 12/15/20 1,748,865
3,000 Wisconsin St Hlth & Ed Fac Wheaton Franciscan
Svc Rfdg........................................ 5.750 08/15/30 3,241,620
------------
4,990,485
------------
See Notes to Financial Statements 25
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
---------------------------------------------------------------------------------------------
WYOMING 0.2%
$ 1,000 University WY Univ Rev Fac Impt (FSA Insd)...... 5.500% 06/01/18 $ 1,076,300
------------
PUERTO RICO 2.2%
10,000 Puerto Rico Comwlth Hwy & Trans Auth Hwy Rev
Rfdg Ser Y (FSA Insd) (h)....................... 6.250 07/01/21 12,560,500
------------
TOTAL LONG-TERM INVESTMENTS 172.3%
(Cost $918,079,971)......................................................... 978,084,026
TOTAL SHORT-TERM INVESTMENTS 1.1%
(Cost $6,200,000)........................................................... 6,200,000
------------
TOTAL INVESTMENTS 173.4%
(Cost $924,279,971)......................................................... 984,284,026
LIABILITY FOR FLOATING RATE NOTE OBLIGATIONS RELATED TO
SECURITIES HELD (11.9%)
(Cost ($67,605,000))
(67,605) Notes with interest rates ranging from 3.42% to 3.62% at October
31, 2006 and contractual maturities of collateral ranging from
2024 to 2041 (see Note 1) (j)..................................... (67,605,000)
------------
TOTAL NET INVESTMENTS 161.5%
(Cost $856,674,971)......................................................... 916,679,026
LIABILITIES IN EXCESS OF OTHER ASSETS (1.5%)................................. (8,726,302)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (60.0%)................... (340,414,214)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................ $567,538,510
============
Percentages are calculated as a percentage of net assets applicable to common
shares.
* Zero coupon bond
(a) The Trust owns 100% of the outstanding bond issuance.
(b) This security is restricted and may be resold only in transactions exempt
from registration which are normally those transactions with qualified
institutional buyers. Restricted securities comprise 0.1% of net assets
applicable to common shares.
(c) Inverse Floating Rate
(d) Escrowed to Maturity
26 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
(e) 144A-Private Placement security which is exempt from registration under Rule
144A of the Securities Act of 1933, as amended. This security may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(f) Security purchased on a when-issued or delayed delivery basis.
(g) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(h) All or a portion of this security has been physically segregated in
connection with open futures or swap contracts.
(i) Underlying security related to Inverse Floaters entered into by the Trust.
See Note 1.
(j) Floating rate notes. The interest rate shown reflects the rates in effect at
October 31, 2006.
ACA--American Capital Access
AGL--Assured Guarantee Ltd.
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FHA--Federal Housing Administration
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
XLCA--XL Capital Assurance Inc.
See Notes to Financial Statements 27
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2006 continued
SWAP AGREEMENTS OUTSTANDING AS OF OCTOBER 31, 2006:
INTEREST RATE SWAPS
PAY/
RECEIVE NOTIONAL UNREALIZED
FLOATING FIXED EXPIRATION AMOUNT APPRECIATION/
COUNTERPARTY FLOATING RATE INDEX RATE RATE DATE (000) DEPRECIATION
JP Morgan
Chase USD-BMA
Bank, Municipal Swap
N.A. Index Receive 4.096% 12/15/26 $37,000 $(1,087,416)
===========
FUTURES CONTRACTS OUTSTANDING AS OF OCTOBER 31, 2006:
UNREALIZED
APPRECIATION/
SHORT CONTRACTS: CONTRACTS DEPRECIATION
U.S. Treasury Notes 10-Year Futures, December 2006
(Current Notional Value of $108,219 per contract)......... 691 $(681,214)
U.S. Treasury Bonds Futures, December 2006
(Current Notional Value of $112,656 per contract)......... 135 (300,078)
--- ---------
826 $(981,292)
=== =========
28 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
October 31, 2006
ASSETS:
Total Investments (Cost $924,279,971)....................... $ 984,284,026
Cash........................................................ 58,095
Receivables:
Investments Sold.......................................... 23,123,196
Interest.................................................. 14,365,626
Other....................................................... 82,355
--------------
Total Assets............................................ 1,021,913,298
--------------
LIABILITIES:
Payables:
Floating Rate Note Obligations............................ 67,605,000
Investments Purchased..................................... 43,313,603
Variation Margin on Futures............................... 425,156
Investment Advisory Fee................................... 421,196
Income Distributions--Common Shares....................... 94,372
Other Affiliates.......................................... 34,097
Swap Contracts.............................................. 1,087,416
Trustees' Deferred Compensation and Retirement Plans........ 795,645
Accrued Expenses............................................ 184,089
--------------
Total Liabilities....................................... 113,960,574
Preferred Shares (including accrued distributions).......... 340,414,214
--------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 567,538,510
==============
NET ASSET VALUE PER COMMON SHARE ($567,538,510 divided by
34,172,537 shares outstanding)............................ $ 16.61
==============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 34,172,537 shares issued and
outstanding).............................................. $ 341,725
Paid in Surplus............................................. 508,277,556
Net Unrealized Appreciation................................. 57,935,347
Accumulated Undistributed Net Investment Income............. 1,095,344
Accumulated Net Realized Loss............................... (111,462)
--------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 567,538,510
==============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 13,600 issued with liquidation preference of
$25,000 per share)........................................ $ 340,000,000
==============
NET ASSETS INCLUDING PREFERRED SHARES....................... $ 907,538,510
==============
See Notes to Financial Statements 29
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended October 31, 2006
INVESTMENT INCOME:
Interest.................................................... $ 39,330,424
------------
EXPENSES:
Investment Advisory Fee..................................... 4,270,606
Preferred Share Maintenance................................. 800,310
Accounting and Administrative Expenses...................... 129,556
Trustees' Fees and Related Expenses......................... 127,811
Professional Fees........................................... 123,333
Custody..................................................... 80,795
Reports to Shareholders..................................... 68,075
Transfer Agent Fees......................................... 53,563
Registration Fees........................................... 15,991
Interest and Residual Trust Expenses........................ 529,210
Other....................................................... 317,163
------------
Total Expenses.......................................... 6,516,413
------------
NET INVESTMENT INCOME....................................... $ 32,814,011
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 305,602
Futures................................................... 3,224,230
Swap Contracts............................................ (972,182)
------------
Net Realized Gain........................................... 2,557,650
------------
Net Unrealized Appreciation/Depreciation During the Period:
Investments............................................. 15,212,460
Futures................................................. (2,987,577)
Swap Contracts.......................................... (1,087,416)
------------
Net Unrealized Appreciation During the Period............... 11,137,467
------------
NET REALIZED AND UNREALIZED GAIN............................ $ 13,695,117
============
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $(10,576,543)
============
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $ 35,932,585
============
30 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005
------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 32,814,011 $ 17,237,401
Net Realized Gain....................................... 2,557,650 5,155,361
Net Unrealized Appreciation/Depreciation During the
Period................................................ 11,137,467 (10,334,831)
Distributions to Preferred Shareholders:
Net Investment Income................................. (9,290,320) (3,356,327)
Net Realized Gain..................................... (1,286,223) 0
------------ ------------
Change in Net Assets Applicable to Common Shares from
Operations............................................ 35,932,585 8,701,604
Distributions to Common Shareholders:
Net Investment Income................................. (23,610,637) (14,450,796)
Net Realized Gain..................................... (5,326,749) 0
------------ ------------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES
FROM INVESTMENT ACTIVITIES............................ 6,995,199 (5,749,192)
FROM CAPITAL TRANSACTIONS:
Proceeds from Common Shares Acquired Through Merger..... 306,870,227 0
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS APPLICABLE TO
COMMON SHARES......................................... 313,865,426 (5,749,192)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................. 253,673,084 259,422,276
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $1,095,344 and $620,228,
respectively)......................................... $567,538,510 $253,673,084
============ ============
See Notes to Financial Statements 31
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
YEAR ENDED OCTOBER 31,
------------------------------------------------
2006 2005 2004 2003 2002
------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD... $ 16.52 $ 16.89 $ 17.02 $ 17.48 $ 17.59
------- ------- ------- ------- -------
Net Investment Income.................... 1.11(a) 1.12 1.13 1.19 1.23
Net Realized and Unrealized Gain/Loss.... .49 (.33) .23 .09 .15
Common Share Equivalent of Distributions
Paid to Preferred Shareholders:
Net Investment Income.................. (.31) (.22) (.10) (.08) (.09)
Net Realized Gain...................... (.04) -0- (.02) (.04) (.08)
------- ------- ------- ------- -------
Total From Investment Operations........... 1.25 .57 1.24 1.16 1.21
Distributions Paid to Common Shareholders:
Net Investment Income.................. (.81) (.94) (1.08) (1.16) (1.08)
Net Realized Gain...................... (.35) -0- (.29) (.46) (.24)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD......... $ 16.61 $ 16.52 $ 16.89 $ 17.02 $ 17.48
======= ======= ======= ======= =======
Common Share Market Price at End of the
Period................................... $ 14.70 $ 14.35 $ 15.20 $ 16.65 $ 16.04
Total Return (b)........................... 10.76% .55% (.60%) 14.53% 11.36%
Net Assets Applicable to Common Shares at
End of the Period (In millions).......... $ 567.5 $ 253.7 $ 259.4 $ 261.3 $ 268.3
Ratio of Expenses to Average Net Assets
Applicable to Common Shares (c).......... 1.36% 1.18% 1.30% 1.28% 1.42%
Ratio of Net Investment Income to Average
Net Assets Applicable to Common Shares
(c)...................................... 6.86% 6.67% 6.74% 6.90% 7.17%
Portfolio Turnover......................... 20% 32% 28% 36% 43%
SUPPLEMENTAL RATIOS:
Ratio of Expenses (Excluding Interest and
Residual Trust Expenses) to Average Net
Assets Applicable to Common Shares (c)... 1.25% 1.18% 1.30% 1.28% 1.42%
Ratio of Expenses (Excluding Interest and
Residual Trust Expenses) to Average Net
Assets Including Preferred Shares (c).... .78% .75% .82% .81% .91%
Ratio of Expenses to Average Net Assets
Including Preferred Shares (c)........... .84% .75% .82% .81% .91%
Ratio of Net Investment Income to Average
Net Assets Applicable to Common Shares
(d)...................................... 4.92% 5.37% 6.15% 6.43% 6.61%
SENIOR SECURITIES:
Total Preferred Shares Outstanding......... 13,600 6,000 6,000 6,000 6,000
Asset Coverage Per Preferred Share (e)..... $66,761 $67,307 $68,253 $68,560 $69,736
Involuntary Liquidating Preference Per
Preferred Share.......................... $25,000 $25,000 $25,000 $25,000 $25,000
Average Market Value Per Preferred Share... $25,000 $25,000 $25,000 $25,000 $25,000
(a) Based on average shares outstanding.
(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.
32 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2006
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Municipal Opportunity Trust (the "Trust") is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940 (the "1940 Act"), as amended. The Trust's investment
objective is to provide a high level of current income exempt from federal
income tax, consistent with preservation of capital. The Trust commenced
investment operations on April 24, 1992.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Interest rate swaps are valued using market
quotations from brokers. 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, 2006, the Trust had $43,313,603 of when-issued
or delayed delivery purchase commitments.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security.
D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required. The
Trust intends to utilize provisions of the federal income tax laws which allow
it to carry a realized capital loss forward for eight years following the year
of the loss and offset these losses against any future realized capital gains.
33
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2006 continued
At October 31, 2006, the Trust had an accumulated capital loss carryforward for
tax purposes of $1,757,902 which will expire according to the following
schedule.
AMOUNT EXPIRATION
$577,984.................................................... October 31, 2013
1,179,918................................................... October 31, 2014
Part of the capital loss carryforward above was acquired due to a merger
with another regulated investment company. Please see footnote 3 for details.
At October 31, 2006, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $855,086,021
============
Gross tax unrealized appreciation........................... $ 61,988,191
Gross tax unrealized depreciation........................... (395,186)
------------
Net tax unrealized appreciation on investments.............. $ 61,593,005
============
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains and a portion of futures gains, which are
included as ordinary income for tax purposes.
The tax character of distributions paid during the years ended October 31,
2006 and 2005 was as follows:
2006 2005
Distributions paid from:
Ordinary income........................................... $ 478,073 $ 371
Tax-exempt income......................................... 32,610,353 17,741,794
Long-term capital gain.................................... 6,136,619 -0-
----------- -----------
$39,225,045 $17,742,165
=========== ===========
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. Permanent book to tax
differences relating to merger costs and excise taxes which are not deductible
for tax purposes totaling $222,000 and $46,133, respectively, were reclassified
from accumulated undistributed net investment income to paid in surplus.
Additionally, a permanent difference relating to book to tax accretion
differences totaling $394 was reclassified from accumulated undistributed net
investment income to accumulated net realized loss.
34
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2006 continued
As of October 31, 2006, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $ 217
Undistributed tax-exempt income............................. 1,471,303
Undistributed long-term capital gain........................ 0
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of gains or losses recognized on securities for
tax purposes but not for book, the deferral of losses relating to wash sale
transactions and gains or losses recognized for tax purposes on open futures
transactions on October 31, 2006.
F. FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES HELD The Trust enters
into transactions in which it transfers to dealer trusts fixed rate bonds in
exchange for cash and residual interests in the dealer trusts' assets and cash
flows, which are in the form of inverse floating rate investments. The dealer
trusts fund the purchases of the fixed rate bonds by issuing floating rate notes
to third parties and allowing the Trust to retain residual interests in the
bonds. The Trust enters into shortfall agreements with the dealer trusts, which
commit the Trust to pay the dealer trusts, in certain circumstances, the
difference between the liquidation value of the fixed rate bonds held by the
dealer trusts and the liquidation value of the floating rate notes held by third
parties, as well as any shortfalls in interest cash flows. The residual
interests held by the Trust (inverse floating rate investments) include the
right of the Trust (1) to cause the holders of the floating rate notes to tender
their notes at par at the next interest rate reset date, and (2) to transfer the
municipal bond from the dealer trusts to the Trust, thereby collapsing the
dealer trusts. The Trust accounts for the transfer of bonds to the dealer trusts
as secured borrowings, with the securities transferred remaining in the Trust's
investment assets, and the related floating rate notes reflected as Trust
liabilities under the caption "Floating Rate Note Obligations" on the Statement
of Assets and Liabilities. The Trust records the interest income from the fixed
rate bonds under the caption "Interest" and records the expenses related to
floating rate note obligations and any administrative expenses of the dealer
trusts under the caption "Interest and Residual Trust Expenses" in the Trust's
Statement of Operations. The notes issued by the dealer trusts have interest
rates that reset weekly and the floating rate note holders have the option to
tender their notes to the dealer trusts for redemption at par at each reset
date. At October 31, 2006, Trust investments with a value of $103,424,660 are
held by the dealer trusts and serve as collateral for the $67,605,000 in
floating rate notes outstanding at that date. Contractual maturities of the
floating rate notes and interest rates in effect at October 31, 2006 are
presented on the Portfolio of Investments.
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
including preferred shares of the Trust. Effective December 1, 2006, the Adviser
has agreed to waive investment advisory fees equal to .10% of the average daily
net assets including preferred shares of the Trust. This waiver is voluntary and
can be discontinued at any time.
35
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2006 continued
For the year ended October 31, 2006, the Trust recognized expenses of
approximately $43,700 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 Legal Services, Accounting Services and Chief Compliance
Officer (CCO) Employment agreements, the Adviser provides accounting and legal
services and the CCO provides compliance services to the Trust. The costs of
these services are allocated to each trust. For the year ended October 31, 2006,
the Trust recognized expenses of approximately $88,700 representing Van Kampen
Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting and legal services to the Trust, as well as, the salary,
benefits and related costs of the CCO and related support staff paid by Van
Kampen. Services provided pursuant to the Legal Services agreement are reported
as part of "Professional Fees" on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Accounting and Administrative Expenses" on the Statement of Operations.
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
also officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Trust.
The maximum annual benefit per trustee under the plan is $2,500.
3. CAPITAL TRANSACTIONS
For the years ended October 31, 2006 and 2005, transactions in common shares
were as follows:
YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005
Beginning Shares........................................ 15,357,684 15,357,684
Shares Issued Through Merger............................ 18,814,853 0
---------- ----------
Ending Shares........................................... 34,172,537 15,357,684
========== ==========
On January 27, 2006, the Trust acquired all of the assets and liabilities of
the Van Kampen Advantage Municipal Income Trust (ticker symbol VKA) through a
tax free reorganization approved by VKA's shareholders on January 11, 2006. The
Trust issued 18,814,853 common shares with a net asset value of $306,870,227 and
7,600 Auction Preferred Shares (APS) with a liquidation value of $190,000,000 in
exchange for VKA's net assets. The shares of VKA were converted into Trust
shares at a ratio of 0.984721 to 1 and 1 to 1, for common shares and APS,
respectively. Net unrealized appreciation of VKA as of January 27, 2006 was
$26,207,937. The Trust assumed VKA's book to tax accretion difference, which
resulted in a $652,090 increase to accumulated undistributed net investment
income and a corresponding decrease to net unrealized appreciation. Combined net
assets applicable to common shares on the day of the reorganization were
$557,410,249 and combined net assets including preferred shares were
$897,410,249. Included in these net assets was a capital
36
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2006 continued
loss carryforward of $577,984, gains or losses of $287,664 recognized for tax
purposes on open futures transactions at January 27, 2006, and deferred losses
relating to wash sales transactions of $84,376 which are included with
accumulated net realized loss of which all can be utilized by the acquiring
Trust. Additionally, included in these net assets was a deferred compensation
and retirement plan balance of $357,767 which is included with accumulated
undistributed net investment income.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $229,449,871 and $155,379,991,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
In order to seek to manage the interest rate exposure of the Trust's
portfolio in a changing interest rate environment, the Trust may purchase or
sell financial futures contracts or engage in transactions involving interest
rate swaps, caps, floors or collars. The Trust expects to enter into these
transactions primarily as a hedge against anticipated interest rate or fixed
income market changes, for duration management or for risk management purposes,
but may also enter into these transactions to generate additional income. All of
the Trust's portfolio holdings, including derivative instruments, are marked to
market each day with the change in value reflected in the unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly, except when taking delivery of a security underlying a
futures contract. In this instance, the recognition of gain or loss is postponed
until the disposal of the security underlying the futures contract.
Summarized below are the specific types of derivative financial instruments
used by the Trust.
A. FUTURES CONTRACTS A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in exchange traded futures contracts on U.S. Treasury
securities and typically closes the contract prior to the delivery date. These
contracts are generally used to manage the Trust's effective maturity and
duration. Upon entering into futures contracts, the Trust maintains an amount of
cash or liquid securities with a value equal to a percentage of the contract
amount with either a futures commission merchant pursuant to the rules and
regulations promulgated under the 1940 Act, as amended, or with its custodian in
an account in the broker's name. This amount is known as initial margin. During
the period the futures contract is open, payments are received from or made to
the broker based upon changes in the value of the contract (the variation
margin). The risk of loss associated with a futures contract is in excess of the
variation margin reflected on the Statement of Assets and Liabilities.
37
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2006 continued
Transactions in futures contracts for the year ended October 31, 2006 were
as follows:
CONTRACTS
Outstanding at October 31, 2005............................. 1,227
Futures Opened.............................................. 7,303
Futures Closed.............................................. (7,704)
------
Outstanding at October 31, 2006............................. 826
======
B. INVERSE FLOATING RATE INVESTMENTS The Trust may invest a portion of its
assets in inverse floating rate instruments, either through outright purchases
of inverse floating rate securities or through the transfer of bonds to a dealer
trust in exchange for cash and residual interests in the dealer trust. These
investments are typically used by the Trust in seeking to enhance the yield of
the portfolio. These instruments typically involve greater risks than a fixed
rate municipal bond. In particular, these instruments are acquired through
leverage or may have leverage embedded in them and therefore involve many of the
risks associated with leverage. Leverage is a speculative technique that may
expose the Trust to greater risk and increased costs. Leverage may cause the
Trust's net asset value to be more volatile than if it had not been leveraged
because leverage tends to magnify the effect of any increases or decreases in
the value of the Trust's portfolio securities. The use of leverage may also
cause the Trust to liquidate portfolio positions when it may not be advantageous
to do so in order to satisfy its obligations with respect to inverse floating
rate instruments.
C. INTEREST RATE SWAPS The Trust may enter into forward interest rate swap
transactions intended to help the Trust manage its overall interest rate
sensitivity, either shorter or longer, generally to more closely align the
Trust's interest rate sensitivity with that of the broader municipal market.
Forward interest rate swap transactions involve the Trust's agreement with a
counterparty to pay, in the future, a fixed or variable rate payment in exchange
for the counterparty paying the Trust a variable or fixed rate payment, the
accruals for which would begin at a specified date in the future (the "effective
date"). The amount of the payment obligation is based on the notional amount of
the forward swap contract and the termination date of the swap (which is akin to
a bond's maturity). The value of the Trust's swap commitment would increase or
decrease based primarily on the extent to which long-term interest rates for
bonds having a maturity of the swap's termination date increases or decreases.
The Trust may terminate a swap contract prior to the effective date, at which
point a realized gain or loss is recognized. When a forward swap is terminated,
it ordinarily does not involve the delivery of securities or other underlying
assets or principal, but rather is settled in cash on a net basis. The Trust
intends, but is not obligated, to terminate its forward swaps before the
effective date. Accordingly, the risk of loss with respect to the swap
counterparty on such transactions is limited to the credit risk associated with
a counterparty failing to honor its commitment to pay any realized gain to the
Trust upon termination. To reduce such credit risk, all counterparties are
required to pledge collateral daily (based on the daily valuation of each swap)
on behalf of the Trust with a value approximately equal to the amount of any
unrealized gain. Reciprocally, when the Trust has an unrealized loss on a swap
contract, the Trust has instructed the custodian to pledge cash or liquid
securities as collateral with a value approximately equal to the amount of the
unrealized loss. Collateral pledges are
38
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2006 continued
monitored and subsequently adjusted if and when the swap valuations fluctuate.
Restricted cash, if any, for segregating purposes is shown on the Statement of
Assets and Liabilities.
6. PREFERRED SHARES
The Trust has outstanding 13,600 APS. Series A and B contain 3,000 shares,
Series C, D and E contain 2,000 shares, and Series F contains 1,600 shares.
Dividends are cumulative and the dividend rate on each series is currently reset
every 28 days through an auction process. The average rate in effect on October
31, 2006 was 3.535%. During the year ended October 31, 2006, the rates ranged
from 2.650% to 5.125%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of "Preferred Share
Maintenance" expense on the Statement of Operations.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $25,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the APS are subject to
mandatory redemption if the tests are not met.
7. INDEMNIFICATIONS
The Trust enters into contracts that contain a variety of indemnifications. The
Trust's maximum exposure under these arrangements is unknown. However, the Trust
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
8. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
for income taxes by prescribing the minimum recognition threshold a tax position
must meet before being recognized in the financial statements. FIN 48 is
effective for the fiscal years beginning after December 15, 2006. The impact to
the Trust's financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Trust's financial statement disclosures.
39
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Van Kampen Municipal Opportunity Trust
We have audited the accompanying statement of assets and liabilities of Van
Kampen Municipal Opportunity Trust (the "Trust"), including the portfolio of
investments, as of October 31, 2006, 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.
We conducted our audits in accordance with the 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.
The Trust is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Trust's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2006, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Municipal Opportunity Trust as of October 31, 2006, the results of its
operations for the year then ended, the changes in its 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, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
January 11, 2007
40
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
DIVIDEND REINVESTMENT PLAN
The dividend reinvestment plan offers you a prompt and simple way to
reinvest your dividends and capital gains distributions into additional shares
of your trust. Under the plan, the money you earn from dividends and capital
gains distributions will be reinvested automatically in more shares of your
trust, allowing you to potentially increase your investment over time.
PLAN BENEFITS
- ADD TO YOUR ACCOUNT
You may increase your shares in your trust easily and automatically with
the dividend reinvestment plan.
- LOW TRANSACTION COSTS
Shareholders who participate in the plan are able to buy shares at below-
market prices when the trust is trading at a premium to its net asset
value. In addition, transaction costs are low because when new shares are
issued by the trust, there is no brokerage fee, and when shares are bought
in blocks on the open market, the brokerage commission is shared among all
participants.
- CONVENIENCE
You will receive a detailed account statement from Computershare Trust
Company, N.A., which administers the plan, whenever shares are reinvested
for you. The statement shows your total distributions, date of investment,
shares acquired, and price per share, as well as the total number of
shares in your reinvestment account.
- SAFEKEEPING
Computershare Trust Company, N.A. will hold the shares it has acquired for
you in safekeeping, which provides added protection against loss, theft,
or inadvertent destruction of certificates. However, you may request that
a certificate representing your reinvested shares be issued to you.
HOW DOES THE PLAN WORK?
If you choose to participate in the plan, your dividends and capital gains
distributions will be promptly reinvested for you, automatically increasing your
shares. If your trust is trading at a share price that is equal to its net asset
value (NAV), you'll pay that amount for your reinvested shares. However, if your
trust is trading above or below its NAV, the price is determined by one of two
ways:
1. PREMIUM If your trust is trading at a premium -- a market price that
is higher than its NAV -- you'll pay either the NAV or 95 percent of the
market price, whichever is greater. When your trust trades at a premium,
you'll pay less for your reinvested shares than an ordinary investor
purchasing shares on the stock exchange. Keep in mind, a portion of your
price reduction may be taxable because you are receiving shares at less
than market price.
41
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
DIVIDEND REINVESTMENT PLAN continued
2. DISCOUNT If your trust is trading at a discount -- a market price that
is lower than its NAV -- you'll pay the market price for your reinvested
shares.
HOW TO PARTICIPATE IN THE PLAN
If you own shares in your own name, you can participate directly in the
plan. If your shares are held in "street name" -- in the name of your brokerage
firm, bank, or other financial institution -- you must instruct that entity to
participate on your behalf. If they are unable to participate on your behalf,
you may request that they reregister your shares in your own name so that you
may enroll in the plan.
If you choose to participate in the plan, whenever your trust declares a
dividend or capital gains distribution, it will be invested in additional shares
of your trust that are purchased on the open market.
HOW TO ENROLL
To enroll in the Dividend Reinvestment Plan please visit vankampen.com or
call (800) 341-2929 or notify us in writing at the address below.
Van Kampen Closed-End Funds
Computershare Trust Company, N.A.
P.O. Box 43011
Providence, RI 02940-3011
Please include your trust name and account number and ensure that all
shareholders listed on the account sign these written instructions. Your
participation in the plan will begin with the next dividend or capital gains
distribution payable after Computershare Trust Company, N.A. receives your
authorization, as long as they receive it before the "record date," which is
generally ten business days before the dividend is paid. If your authorization
arrives after such record date, your participation in the plan will begin with
the following dividend or distribution.
COSTS OF THE PLAN
There is no direct charge to you for reinvesting dividends and capital gains
distributions because the plan's fees are paid by your trust. If your trust is
trading at or above its NAV, your new shares are issued directly by the trust
and there are no brokerage charges or commissions. However, if your trust is
trading at a discount, the shares are purchased on the open market, and you will
pay your portion of any brokerage commissions. These brokerage commissions are
typically less than the standard brokerage charges for individual transactions
because shares are purchased for all participants in
42
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
DIVIDEND REINVESTMENT PLAN continued
blocks, resulting in lower commissions for each individual participant. Any
brokerage commissions or service fees are averaged into the purchase price.
TAX IMPLICATIONS
The automatic reinvestment of dividends and capital gains distributions does
not relieve you of any income tax that may be due on dividends or distributions.
You will receive tax information annually to help you prepare your federal and
state income tax returns.
HOW TO WITHDRAW FROM THE PLAN
To withdraw from the Dividend Reinvestment Plan please visit vankampen.com
or call (800) 341-2929 or notify us in writing at the address below.
Van Kampen Closed-End Funds
Computershare Trust Company, N.A.
P.O. Box 43011
Providence, RI 02940-3011
All shareholders listed on the account must sign any written withdrawal
instructions. If you withdraw, you have two choices for receiving your shares:
- CERTIFICATE
We will issue a certificate for the full shares and send you a check for any
fractional shares without a charge.
- CHECK
We will sell all full and fractional shares and send the proceeds to your
address of record after deducting brokerage commissions and a $2.50 service fee.
The Trust and Computershare Trust Company, N.A. may amend or terminate the
plan. Participants will receive written notice at least 30 days before the
effective date of any amendment. In the case of termination, participants will
receive written notice at least 30 days before the record date for the payment
of any dividend or capital gains distribution by your trust.
TO OBTAIN A COMPLETE COPY OF THE DIVIDEND REINVESTMENT PLAN, PLEASE CALL OUR
CLIENT RELATIONS DEPARTMENT AT 800-341-2929 OR VISIT VANKAMPEN.COM.
43
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
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
One Lincoln Street
Boston, Massachusetts 02111
TRANSFER AGENT
COMPUTERSHARE TRUST COMPANY, N.A.
c/o Computershare Investor Services
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
111 South Wacker Drive
Chicago, Illinois 60606-4301
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, 2006. The Trust designated 99.99% of the income distributions as a
tax-exempt income distribution. The Trust designated and paid $6,136,619 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.
44
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
RESULTS OF SHAREHOLDER VOTES
With regard to the approval of the issuance of additional Common shares of the
Trust, a meeting was held on January 11, 2006, and the results of the votes from
the Common shareholders are as follows:
# OF SHARES
--------------------------------
IN FAVOR AGAINST WITHHELD
--------------------------------------------------------------------------------------------
Common.................................................... 7,071,640 494,051 286,823
The Annual Meeting of the Shareholders of the Trust was held on June 23, 2006,
where shareholders voted on the election of trustees.
With regard to the election of the following trustees by common shareholders of
the Trust:
# OF SHARES
----------------------
IN FAVOR WITHHELD
------------------------------------------------------------------------------------
Linda Hutton Heagy.......................................... 30,207,765 598,759
Wayne W. Whalen............................................. 30,205,554 600,970
With regard to the election of the following trustee by preferred shareholders
of the Trust:
# OF SHARES
--------------------
IN FAVOR WITHHELD
----------------------------------------------------------------------------------
Rod Dammeyer................................................ 9,597 32
The other trustees of the Trust whose terms did not expire in 2006 are David C.
Arch, Jerry D. Choate, R. Craig Kennedy, Howard J Kerr, Jack E. Nelson, Hugo F.
Sonnenschein, and Suzanne H. Woolsey.
45
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION
The business and affairs of the Trust are managed under the direction of the
Trust's Board of Trustees and the Trust's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Trust
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments,
the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange
Corp. and Investor Services. The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Annual
Report. Trustees of the Trust 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 TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (61) Trustee Trustee Chairman and Chief 71 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.
Jerry D. Choate (68) Trustee Trustee Prior to January 1999, 71 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.
46
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (66) Trustee Trustee President of CAC, L.L.C., 71 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 Quidel
San Diego, CA 92122-6223 advisory services. Prior Corporation, Stericycle,
to February 2001, Vice Inc., Ventana Medical
Chairman and Director of Systems, Inc., and GATX
Anixter International, Corporation, and Trustee
Inc., a global of The Scripps Research
distributor of wire, Institute. Prior to
cable and communications January 2005, Trustee of
connectivity products. the University of Chicago
Prior to July 2000, Hospitals and Health
Managing Partner of Systems. Prior to April
Equity Group Corporate 2004, Director of
Investment (EGI), a TheraSense, Inc. Prior to
company that makes January 2004, Director of
private investments in TeleTech Holdings Inc.
other companies. 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).
47
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Linda Hutton Heagy (58) Trustee Trustee Managing Partner of 71 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
1990, Executive Vice
President of The Exchange
National Bank.
R. Craig Kennedy (54) Trustee Trustee Director and President of 71 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 (71) Trustee Trustee Prior to 1998, President 71 Trustee/Director/Managing
14 Huron Trace since 1992 and Chief Executive General Partner of funds
Galena, IL 61036 Officer of Pocklington in the Fund Complex.
Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the
Marrow Foundation.
48
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jack E. Nelson (70) Trustee Trustee President of Nelson 71 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 (66) Trustee Trustee President Emeritus and 71 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. (65) Trustee Trustee Chief Communications 71 Trustee/Director/Managing
815 Cumberstone Road since 2003 Officer of the National General Partner of funds
Harwood, MD 20776 Academy of in the Fund Complex.
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.
49
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
INTERESTED TRUSTEE:*
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
Wayne W. Whalen* (67) Trustee Trustee Partner in the law firm 71 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 Director of the Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) 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.
50
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
OFFICERS:
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS
Ronald E. Robison (67) President and Officer President of funds in the Fund Complex since September 2005
1221 Avenue of the Americas Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex
New York, NY 10020 Officer since May 2003. Managing Director of Van Kampen Advisors
Inc. since June 2003. Director of Investor Services since
September 2002. Director of the Adviser, Van Kampen
Investments and Van Kampen Exchange Corp. since January
2005. Managing Director of Morgan Stanley and Morgan Stanley
& Co. Incorporated. Managing Director and Director of Morgan
Stanley Investment Management Inc. Chief Administrative
Officer, Managing Director and Director of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley Services Company
Inc. Managing Director and Director of Morgan Stanley
Distributors Inc. and Morgan Stanley Distribution 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 of Morgan Stanley Investment Management Inc. and
Executive Vice President of funds in the Fund Complex from
May 2003 to September 2005.
Dennis Shea (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
1221 Avenue of the Americas since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
New York, NY 10020 and Van Kampen Advisors Inc. Chief Investment Officer -
Global Equity of the same entities since February 2006.
Vice President of Morgan Stanley Institutional and Retail
Funds since February 2006. Vice President of funds in the
Fund Complex since March 2006. Previously, Managing Director
and Director of Global Equity Research at Morgan Stanley
from April 2000 to February 2006.
J. David Germany (52) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
25 Cabot Square since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
Canary Wharf and Van Kampen Advisors Inc. Chief Investment Officer -
London, GBR E14 4QA Global Fixed Income of the same entities since December
2005. Managing Director and Director of Morgan Stanley
Investment Management Ltd. Director of Morgan Stanley
Investment Management (ACD) Limited since December 2003.
Vice President of Morgan Stanley Institutional and Retail
Funds since February 2006. Vice President of funds in the
Fund Complex since March 2006.
51
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
TRUSTEE AND OFFICER INFORMATION continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS
Amy R. Doberman (44) 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 Advisors 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 since 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 (40) Vice President Officer Executive Director of Morgan Stanley Investment Management
1221 Avenue of the Americas and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10020 Complex.
John L. Sullivan (51) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza Officer since 1998 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 Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
James W. Garrett (38) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas and Treasurer since 2006 Chief Financial Officer and Treasurer of Morgan Stanley
New York, NY 10020 Institutional Funds since 2002 and of Funds in the Fund
Complex from January 2005 to August 2005 and since September
2006.
In accordance with Section 303A.12(a) of the New York Stock Exchange Listed
Company Manual, the Trust's Chief Executive Officer has certified to the New
York Stock Exchange that, as of June 29, 2006, he was not aware of any violation
by the Trust of NYSE corporate governance listing standards.
The certifications by the Trust's principal executive officer and principal
financial officer required by Rule 30a-2 under the 1940 Act were filed with the
Trust's report to the SEC on Form N-CSR and are available on the Securities and
Exchange Commission's web site at http://www.sec.gov.
52
Van Kampen Municipal Opportunity Trust
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.
(continued on next page)
Van Kampen Municipal Opportunity Trust
An Important Notice Concerning Our U.S. Privacy Policy continued
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 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
(continued on back)
Van Kampen Municipal Opportunity Trust
An Important Notice Concerning Our U.S. Privacy Policy continued
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)2006 Van Kampen Funds Inc.
All rights reserved. Member NASD/SIPC.
VMOANR 12/06
(VAN KAMPEN INVESTMENTS LOGO) RN06-03476P-Y10/06
Item 2. Code of Ethics.
(a) The Trust has adopted a code of ethics (the "Code of Ethics") that applies
to its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Trust or a third
party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f)
(1) The Trust's Code of Ethics is attached hereto as Exhibit 12A.
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Trust's Board of Trustees has determined that it has three "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees: Rod Dammeyer, Jerry Choate and R. Craig Kennedy. Under
applicable securities laws, a person who is determined to be an audit committee
financial expert will not be deemed an "expert" for any purpose, including
without limitation for the purposes of Section 11 of the Securities Act of 1933,
as a result of being designated or identified as an audit committee financial
expert. The designation or identification of a person as an audit committee
financial expert does not impose on such person any duties, obligations, or
liabilities that are greater than the duties, obligations, and liabilities
imposed on such person as a member of the audit committee and Board of Trustees
in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2006
COVERED
REGISTRANT ENTITIES(1)
---------- -----------
AUDIT FEES ........................................ $33,300 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES ............................. $ 400 $244,200(2)
TAX FEES ....................................... $ 1,600(3) $ 0
ALL OTHER FEES ................................. $ 0 $ 0
TOTAL NON-AUDIT FEES .............................. $ 2,000 $244,200
------- --------
TOTAL ............................................. $35,300 $244,200
======= ========
2005
COVERED
REGISTRANT ENTITIES(1)
---------- -----------
AUDIT FEES ........................................ $32,350 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES ............................. $ 400 $321,000(2)
TAX FEES ....................................... $ 1,600(3) $ 0
ALL OTHER FEES ................................. $ 0 $ 0
TOTAL NON-AUDIT FEES .............................. $ 2,000 $321,000
------- --------
TOTAL ............................................. $34,350 $321,000
======= ========
N/A- Not applicable, as not required by Item 4.
(1) Covered Entities include the Adviser (excluding sub-advisors) and any
entity controlling, controlled by or under common control with the Adviser
that provides ongoing services to the Registrant.
(2) Audit-Related Fees represent assurance and related services provided that
are reasonably related to the performance of the audit of the financial
statements of the Covered Entities' and funds advised by the Adviser or its
affiliates, specifically attestation services provided in connection with a
SAS 70 Report.
(3) Tax Fees represent tax advice and compliance services provided in
connection with the review of the Registrant's tax.
(e)(1) The audit committee's pre-approval policies and procedures are as
follows:
JOINT AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
VAN KAMPEN FUNDS
AS ADOPTED JULY 23, 2003 AND AMENDED MAY 26, 2004(1)
1. STATEMENT OF PRINCIPLES
The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.(2)
The SEC has issued rules specifying the types of services that an
independent auditor may not provide to its audit client, as well as the audit
committee's administration of the engagement of the independent auditor. The
SEC's rules establish two different approaches to pre-approving services, which
the SEC considers to be equally valid. Proposed services either: may be
pre-approved without consideration of specific case-by-case services by the
Audit Committee ("general pre-approval"); or require the specific pre-approval
of the Audit Committee ("specific pre-approval"). The Audit Committee believes
that the combination of these two approaches in this Policy will result in an
effective and efficient procedure to pre-approve services performed by the
Independent Auditors. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.
For both types of pre-approval, the Audit Committee will consider whether
such services are consistent with the SEC's rules on auditor independence. The
Audit Committee will also consider whether the Independent Auditors are best
positioned to provide the most effective and efficient services, for reasons
such as its familiarity with the Fund's business, people, culture, accounting
systems, risk profile and other factors, and whether the service might enhance
the Fund's ability to manage or control risk or improve audit quality. All such
factors will be considered as a whole, and no one factor should necessarily be
determinative.
The Audit Committee is also mindful of the relationship between fees for
audit and non-audit services in deciding whether to pre-approve any such
services and may determine for each fiscal year, the appropriate ratio between
the total amount of fees for Audit, Audit-related and Tax services for the Fund
(including any Audit-related or Tax service fees for Covered Entities that were
subject to pre-approval), and the total amount of fees for certain permissible
non-audit services classified as All Other services for the Fund (including any
such services for Covered Entities subject to pre-approval).
The appendices to this Policy describe the Audit, Audit-related, Tax and
All Other services that have the general pre-approval of the Audit Committee.
The term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will annually review and pre-approve the services
that may be provided by the Independent Auditors without obtaining specific
pre-approval
----------
(1) This Joint Audit Committee Audit and Non-Audit Services Pre-Approval Policy
and Procedures (the "Policy"), amended as of the date above, supercedes and
replaces all prior versions that may have been amended from time to time.
(2) Terms used in this Policy and not otherwise defined herein shall have the
meanings as defined in the Joint Audit Committee Charter.
from the Audit Committee. The Audit Committee will add to or subtract from the
list of general pre-approved services from time to time, based on subsequent
determinations.
The purpose of this Policy is to set forth the policy and procedures by
which the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.
The Fund's Independent Auditors have reviewed this Policy and believes that
implementation of the Policy will not adversely affect the Independent Auditors'
independence.
2. DELEGATION
As provided in the Act and the SEC's rules, the Audit Committee may
delegate either type of pre-approval authority to one or more of its members.
The member to whom such authority is delegated must report, for informational
purposes only, any pre-approval decisions to the Audit Committee at its next
scheduled meeting.
3. AUDIT SERVICES
The annual Audit services engagement terms and fees are subject to the
specific pre-approval of the Audit Committee. Audit services include the annual
financial statement audit and other procedures required to be performed by the
Independent Auditors to be able to form an opinion on the Fund's financial
statements. These other procedures include information systems and procedural
reviews and testing performed in order to understand and place reliance on the
systems of internal control, and consultations relating to the audit. The Audit
Committee will monitor the Audit services engagement as necessary, but no less
than on a quarterly basis, and will also approve, if necessary, any changes in
terms, conditions and fees resulting from changes in audit scope, Fund structure
or other items.
In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the Independent Auditors reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1.
All other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
4. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the Fund's
financial statements or, to the extent they are Covered Services, the Covered
Entities' financial statements, or that are traditionally performed by the
Independent Auditors. Because the Audit Committee believes that the provision of
Audit-related services does not impair the independence of the auditor and is
consistent with the SEC's rules on auditor independence, the Audit Committee may
grant general pre-approval to Audit-related services. Audit-related services
include, among others, accounting consultations related to accounting, financial
reporting or disclosure matters not classified as "Audit services"; assistance
with understanding and implementing new accounting and financial reporting
guidance from rulemaking authorities; agreed-upon or expanded audit procedures
related to accounting and/or billing records required to respond to or comply
with financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix
B.2. All other Audit-related services not listed in Appendix B.2 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
5. TAX SERVICES
The Audit Committee believes that the Independent Auditors can provide Tax
services to the Fund and, to the extent they are Covered Services, the Covered
Entities, such as tax compliance, tax planning and tax advice without impairing
the auditor's independence, and the SEC has stated that the Independent Auditors
may provide such services. Hence, the Audit Committee believes it may grant
general pre-approval to those Tax services that have historically been provided
by the Independent Auditors, that the Audit Committee has reviewed and believes
would not impair the independence of the Independent Auditors, and that are
consistent with the SEC's rules on auditor independence. The Audit Committee
will not permit the retention of the Independent Auditors in connection with a
transaction initially recommended by the Independent Auditors, the sole business
purpose of which may be tax avoidance and the tax treatment of which may not be
supported in the Internal Revenue Code and related regulations. The Audit
Committee will consult with Director of Tax or outside counsel to determine that
the tax planning and reporting positions are consistent with this policy.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved
the Tax Services in Appendix B.3. All Tax services involving large and complex
transactions not listed in Appendix B.3 must be specifically pre-approved by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
has been delegated), including tax services proposed to be provided by the
Independent Auditors to any executive officer or trustee/director/managing
general partner of the Fund, in his or her individual capacity, where such
services are paid for by the Fund (generally applicable only to internally
managed investment companies).
6. ALL OTHER SERVICES
The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix
B.4. Permissible All Other services not listed in Appendix B.4 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
A list of the SEC's prohibited non-audit services is attached to this
policy as Appendix B.5. The SEC's rules and relevant guidance should be
consulted to determine the precise definitions of these services and the
applicability of exceptions to certain of the prohibitions.
7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS
Pre-approval fee levels or budgeted amounts for all services to be provided
by the Independent Auditors will be established annually by the Audit Committee.
Any proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services. For each fiscal year, the Audit
Committee may determine the appropriate ratio between the total amount of fees
for Audit, Audit-related, and Tax services for the Fund (including any
Audit-related or Tax services fees for Covered Entities subject to
pre-approval), and the total amount of fees for certain permissible non-audit
services classified as All Other services for the Fund (including any such
services for Covered Entities subject to pre-approval).
8. PROCEDURES
All requests or applications for services to be provided by the Independent
Auditors that do not require specific approval by the Audit Committee will be
submitted to the Fund's Chief Financial Officer and must include a detailed
description of the services to be rendered. The Fund's Chief Financial Officer
will determine whether such services are included within the list of services
that have received the general pre-approval of the Audit Committee. The Audit
Committee will be informed on a timely basis of any such services rendered by
the Independent Auditors. Requests or applications to provide services that
require specific approval by the Audit Committee will be submitted to the Audit
Committee by both the Independent Auditors and the Fund's Chief Financial
Officer, and must include a joint statement as to whether, in their view, the
request or application is consistent with the SEC's rules on auditor
independence.
The Audit Committee has designated the Fund's Chief Financial Officer to
monitor the performance of all services provided by the Independent Auditors and
to determine whether such services are in compliance with this Policy. The
Fund's Chief Financial Officer will report to the Audit Committee on a periodic
basis on the results of its monitoring. A sample report is included as Appendix
B.7. Both the Fund's Chief Financial Officer and management will immediately
report to the chairman of the Audit Committee any breach of this Policy that
comes to the attention of the Fund's Chief Financial Officer or any member of
management.
9. ADDITIONAL REQUIREMENTS
The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the Independent Auditors
and to assure the auditor's independence from the Fund, such as reviewing a
formal written statement from the Independent Auditors delineating all
relationships between the Independent Auditors and the Fund, consistent with
Independence Standards Board No. 1, and discussing with the Independent Auditors
its methods and procedures for ensuring independence.
10. COVERED ENTITIES
Covered Entities include the Fund's investment adviser(s) and any entity
controlling, controlled by or under common control with the Fund's investment
adviser(s) that provides ongoing services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Fund's
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund. This list of Covered Entities
would include:
- Van Kampen Investments Inc.
- Van Kampen Asset Management
- Van Kampen Advisors Inc.
- Van Kampen Funds Inc.
- Van Kampen Investor Services Inc.
- Morgan Stanley Investment Management Inc.
- Morgan Stanley Trust Company
- Morgan Stanley Investment Management Ltd.
- Morgan Stanley Investment Management Company
- Morgan Stanley Asset & Investment Trust Management Company Ltd.
(e)(2) Beginning with non-audit service contracts entered into on or after May
6, 2003, the audit committee also is required to pre-approve services to Covered
Entities to the extent that the services
are determined to have a direct impact on the operations or financial reporting
of the Registrant. 100% of such services were pre-approved by the audit
committee pursuant to the Audit Committee's pre-approval policies and procedures
(included herein).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors to the
Registrant and Covered Entities is compatible with maintaining the auditors'
independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
(a) The Trust has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: R.
Craig Kennedy, Jerry Choate and Rod Dammeyer.
(b) Not applicable.
Item 6. Schedule of Investments.
Please refer to Item #1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Trust invests in exclusively non-voting securities and therefore this item
is not applicable to the Trust.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST (VMO) (THE "FUND")
FUND MANAGEMENT
PORTFOLIO MANAGEMENT. As of the date of this report, the Fund is managed by
members of the Municipal Fixed Income team. The team consists of portfolio
managers and analysts. Current members of the team jointly and primarily
responsible for the day-to-day management of the Fund's portfolio and the
overall execution of the strategy of the Fund are Dennis P. Pietrzak, an
Executive Director of the Adviser, Robert W. Wimmel, a Vice President of the
Adviser and John Reynoldson, an Executive Director of the Adviser.
Mr. Pietrzak has been associated with the Adviser in an investment management
capacity since August 1995 and began managing the Fund in August 1995. Mr.
Wimmel has been associated with the Adviser in an investment management capacity
since August 1996 and began managing the Fund in November 2001. Mr. Reynoldson
has been associated with the Adviser in an investment management capacity since
April 1987 and began managing the Fund in November 2001.
The composition of the team may change from time to time.
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
As of October 31, 2006:
Mr. Pietrzak managed eight registered investment companies with a total of
approximately $2.7 billion in assets; no pooled investment vehicles other than
registered investment companies; and no other accounts.
Mr. Wimmel managed 25 registered investment companies with a total of
approximately $12.6 billion in assets; no pooled investment vehicles other than
registered investment companies; and no other accounts.
Mr. Reynoldson managed 19 registered investment companies with a total of
approximately $7.7 billion in assets; no pooled investment vehicles other than
registered investment companies; and no 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 Fund, or it may receive a performance-based
fee on certain accounts. In those instances, the portfolio manager may have an
incentive to favor the higher and/or performance-based fee accounts over the
Fund. The portfolio managers of the Fund do not currently manage assets of 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.
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 Alignment Plan (IMAP) 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 100% of the IMAP deferral into a
combination of the designated open-end mutual funds they manage that are
included in the IMAP Fund menu, which may or may not include the Fund.
- Voluntary Deferred Compensation Plans -- voluntary programs that permit
certain employees to elect to defer a portion of their discretionary year-end
compensation and directly or notionally invest the deferred amount: (1) across a
range of designated investment Funds, including Funds advised by the Adviser or
its affiliates; and/or (2) 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 funds/accounts managed by the portfolio
manager. Investment performance is calculated for one-, three- and five-year
periods measured against a fund's/account's primary benchmark, indices and/or
peer groups where applicable. Generally, the greatest weight is placed on the
three- and five-year periods.
- Revenues generated by the investment companies, pooled investment vehicles and
other accounts managed by the portfolio manager.
- Contribution to the business objectives of the Adviser.
- The dollar amount of assets managed by the portfolio manager.
- 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 investment team(s) of which the portfolio manager
is a member.
SECURITIES OWNERSHIP OF PORTFOLIO MANAGERS
As of October 31, 2006, the portfolio managers did not own any shares of the
Fund.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not Applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 11. Controls and Procedures
a) The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
provide reasonable assurance that information required to be disclosed by the
Trust in this Form N-CSR was recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's ("SEC")
rules and forms or by the SEC staff, based upon such officers' evaluation of
these controls and procedures as of January 12, which is a date within 90 days
of the filing date of the report. The Trust's principal executive officer and
principal financial officer have also concluded that the Trust's disclosure
controls and procedures designed to ensure that information required to be
disclosed by the Trust in this Form N-CSR is accumulated and communicated to the
Trust's management, including its principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure were effective.
Management of the Trust has determined that as of and prior to October 31, 2006,
the Trust's fiscal year end, the Trust had a deficiency in its internal control
over financial reporting related to the review, analysis and determination of
whether certain transfers of municipal securities qualified for sale accounting
under the provisions of Statement of Financial Accounting Standards No. 140
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities." As a result, the Trust's independent registered public
accountants advised the Trust that this control deficiency represented a
material weakness in internal control over financial reporting as of October 31,
2006. Since October 31, 2006, and prior to the issuance of the Trust's annual
report, management has revised its disclosure controls and procedures and its
internal control over financial reporting in order to improve the controls'
effectiveness to ensure that transactions in transfers of municipal securities
are accounted for properly.
Management notes that other investment companies investing in similar
investments over the same time periods had been accounting for such investments
in a similar manner as the Trust. Accordingly, other investment companies are
also concluding that there was a material weakness in their internal control
over financial reporting of such investments. The changes in the Trust's
financial statements did not impact the net asset value of the Trust's shares or
the Trust's total return for any period.
(b) There were no changes in the Trust's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably likely to
materially affect, the Trust's internal control over financial reporting.
However, as discussed above, subsequent to October 31, 2006, the Trust's
internal control over financial reporting was revised.
Item 12. Exhibits.
(1) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.
(2)(a) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(2)(b) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Municipal
Opportunity Trust
By: /s/ Ronald E. Robison
---------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: January 12, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
---------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: January 12, 2007
By: /s/ James W. Garrett
---------------------------------
Name: James W. Garrett
Title: Principal Financial Officer
Date: January 12, 2007