Invesco Pennsylvania Value Municipal Income Trust

Regulatory Filings • May 4, 2012

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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 811-07398

Invesco Van Kampen Pennsylvania Value Municipal Income Trust

(Exact name of registrant as specified in charter)

1555 Peachtree Street, N.E., Atlanta, Georgia 30309 (Address of principal executive offices) (Zip code)

Colin Meadows 1555 Peachtree Street, N.E., Atlanta, Georgia 30309 (Name and address of agent for service)

Registrant’s telephone number, including area code: ( 713) 626-1919

Date of fiscal year end: 2/28

Date of reporting period: 2/29/12

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link2 "Item 1. Reports to Stockholders."

Item 1. Reports to Stockholders.

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Annual Report to Shareholders February 29, 2012

Invesco Van Kampen Pennsylvania Value Municipal Income Trust

NYSE: VPV

2	Performance Summary
2	Management Discussion
4	Additional Information
5	Dividend Reinvestment Plan
6	Schedule of Investments
13	Financial Statements
16	Notes to Financial Statements
22	Financial Highlights
24	Auditor’s Report
25	Tax Information
26	Supplemental Information
T-1	Trustees and Officers

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Management’s Discussion of Trust Performance

Performance summary

This is the annual report of Invesco Van Kampen Pennsylvania Value Municipal Income Trust for the fiscal year ended February 29, 2012. The Trust’s return can be calculated based on 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. Market price reflects the supply and demand for Trust shares. As a result, the two returns can differ, as they did during the reporting period. A main contributor to the Trust’s return on an NAV basis was its exposure to education bonds.

Performance

Total returns, 2/28/11 to 2/29/12

Trust at NAV	22.58
Trust at Market Value	26.09
Barclays Pennsylvania Municipal Index ▼	12.24
Market Price Discount to NAV as of 2/29/12	–1.47

Source: ▼ Barclays via FactSet Research Systems Inc.

The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Investment return, net asset value and common share market price will fluctuate so that you may have a gain or loss when you sell shares. Please visit invesco.com/us for the most recent month-end performance. Performance figures reflect Trust expenses, the reinvestment of distributions (if any) and changes in net asset value (NAV) for performance based on NAV and changes in market price for performance based on market price.

Since the Trust is a closed-end management investment company, shares of the Trust may trade at a discount or premium from the NAV. This characteristic is separate and distinct from the risk that NAV could decrease as a result of investment activities and may be a greater risk to investors expecting to sell their shares after a short time. The Trust cannot predict whether shares will trade at, above or below NAV. The Trust should not be viewed as a vehicle for trading purposes. It is designed primarily for risk-tolerant long-term investors.

 

How we invest

We seek to provide investors with a high level of current income exempt from federal and Pennsylvania income taxes and, where possible under local law, local income and personal property taxes, consistent with preservation of capital.

We seek to achieve the Trust’s investment objective by investing primarily in municipal securities rated investment grade at the time of purchase by at least one nationally recognized statistical rating organization and that are exempt from Pennsylvania income tax. Municipal

obligations include municipal bonds, municipal notes, municipal commercial paper and lease obligations. The Trust also may invest in non-investment grade and unrated securities that we determine to be of comparable or higher quality. From time to time, we may invest in Pennsylvania municipal securities that pay interest that is subject to the federal alternative minimum tax.

We employ a bottom-up, research-driven approach to identify securities that have attractive risk/reward characteristics for the sectors in which we invest. We also integrate macroeconomic analysis and forecasting into our evaluation and

ranking of various sectors and individual securities. Finally, we employ leverage in an effort to enhance the Trust’s income and total return.

Sell decisions are based on:

| n | A deterioration or likely deterioration of an individual issuer’s capacity to meet its debt
obligations on a timely basis. |
| --- | --- |
| n | A deterioration or likely deterioration of the broader fundamentals of a particular industry or
sector. |
| n | Opportunities in the secondary or primary market to exchange into a security with better relative
value. |

Market conditions and your Trust

For the fiscal year ended February 29, 2012, the municipal market performed strongly. The Barclays Municipal Bond Index returned 12.42%, outperforming other fixed income indexes such as the Barclays U.S. Aggregate Index, which returned 8.37%; the Barclays U.S. Corporate High Yield Index, which returned 6.94%; the Barclays U.S. Corporate Investment Grade Index, which returned 10.37%; and the Barclays U.S. Mortgage Backed Securities Index, which returned 6.44%. 1

During 2011, credit fundamentals remained strong, and default rates continued their downward trend. In line with the drop exhibited from 2009 to 2010, the number of defaults in 2011 was muted and lower than 2010. Despite a few high profile bankruptcies such as Harrisburg, Pennsylvania, Jefferson County, Alabama and Central Falls, Rhode Island, defaults came nowhere near the “hundreds of billions of dollars” predicted by well-known analyst Meredith Whitney at the end of 2010. 2

In terms of municipal fund flows, Whitney’s prediction raised concerns regarding the credit stability of municipalities and the heightened risk of unprecedented defaults in 2011. Retail

Portfolio Composition

By credit sector, based on total investments

Revenue Bonds	79.8
General Obligation Bonds	15.5
Pre-refunded Bonds	3.0
Other	1.7

 

Top Five Fixed Income Holdings

1.	Pennsylvania (State of)	5.0
2.	Owen J. Roberts School District	4.9
3.	Pennsylvania (State of)
Higher Educational Facilities Authority
(Trustees of the University
of Pennsylvania)	4.7
4.	Pennsylvania (State of)
Intergovernmental
Cooperation Authority (City of Philadelphia Funding Program)	4.1
5.	Pennsylvania (State of)
Turnpike Commission	3.9

 

Total Net Assets
Applicable to Common Shares	$356.8 million
Total Number of Holdings	199

 

The Trust’s holdings are subject to change, and there is no assurance that the Trust will continue to hold any particular security.

2 Invesco Van Kampen Pennsylvania Value Municipal Income Trust

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investors, who already had been making withdrawals from municipal bond mutual funds, heeded Whitney’s warning and began to sell shares at a record pace. 3 Money was withdrawn from municipal mutual funds for 29 straight weeks 3 , but by the end of the third quarter of 2011, the tide had changed. This increase in demand in the third quarter had a positive effect on municipal market performance during the reporting period.

The state of Pennsylvania has experienced a slower than expected recovery from the recent recession, but has had some pockets of job creation. The state has announced plans to issue more debt than it retires in the coming years to help stimulate additional growth. We will continue to monitor the financial metrics to ensure the state’s debt burden does not expand at a rapid pace; the state’s current debt profile is lower than many other states. Like most other states, Pennsylvania’s growing unfunded pension liabilities are a concern and funding costs are consuming a larger part of the budget. The state has responded with effective budget cuts and has grown its general fund balance over the last two years. State gross domestic product was stagnant during fiscal 2010, but grew in fiscal 2011.

The Trust’s exposure to the 20-year part of the yield curve and the long end (20+ years) of the yield curve added to Trust returns as municipal yields approached all-time lows 3 during the reporting period. Some of our yield curve and duration positioning was obtained through the use of inverse floating rate securities. Inverse floating rate securities are instruments which have an inverse relationship to a referenced interest rate. Inverse floating rate securities can be a more efficient means of managing duration, yield curve exposure and credit exposure. Also, they potentially can enhance yield.

Strong security selection among highly rated bonds also added to the Trust’s performance for the reporting period.

At the sector level, our exposure to education, special tax and hospital bonds contributed to returns for the reporting period. Our allocations to transportation and state government obligation bonds detracted from returns.

One important factor impacting the return of the Trust relative to its comparative index was the Trust’s use of structural leverage. The Trust uses leverage because we believe that, over time, leveraging provides opportunities for additional income and total return for

common shareholders. However, use of leverage also can expose common shareholders to additional volatility. For example, if the prices of securities held by a trust decline, the negative impact of these valuation changes on common share net asset value and common shareholder total return is magnified by the use of leverage. Conversely, leverage may enhance common share returns during periods when the prices of securities held by a trust generally are rising. Leverage made a positive contribution to the performance of the Trust during the reporting period.

During the reporting period, the Trust achieved a leveraged position through the use of tender option bonds and auction rate preferred shares. As of the close of the reporting period, leverage accounted for 36% of the Trust’s total assets. For more information about the Trust’s use of leverage, see the Notes to Financial Statements later in this report.

As stated earlier, the Trust trades at a market price and also has an NAV. For the majority of the one-year reporting period, the Trust traded at a discount to its NAV.

Thank you for investing in Invesco Van Kampen Pennsylvania Value Municipal Income Trust and for sharing our long-term investment horizon.

1	Source: Lipper Inc.
2	Source: CBS News
3	Source: The Bond Buyer

The views and opinions expressed in management’s discussion of Trust performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Trust. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Trust and, if applicable, index disclosures later in this report.

Thomas Byron Portfolio manager, is manager of Invesco Van Kampen Pennsylvania Value Municipal Income Trust. He joined Invesco in 2010. Mr. Byron was associated with the Trust’s previous investment adviser or its investment advisory affiliates in an investment capacity from 1981 to 2010 and began managing the Trust in 2011. He earned a B.S. in finance from Marquette University and an M.B.A. in finance from DePaul University.

Robert Stryker Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Pennsylvania Value Municipal Income Trust. He joined Invesco in 2010. Mr. Stryker was associated with the Trust’s previous investment adviser or its investment advisory affiliates in an investment capacity from 1994 to 2010 and began managing the Trust in 2011. He earned a B.S. in finance from the University of Illinois, Chicago.

Julius Williams Portfolio manager, is manager of Invesco Van Kampen Pennsylvania Value Municipal Income Trust. He joined Invesco in 2010. Mr. Williams was associated with the Trust’s previous investment adviser or its investment advisory affiliates in an investment capacity from 2000 to 2010 and began managing the Trust in 2009. He earned a B.A. in economics and sociology, and a Master of Education degree in educational psychology from the University of Virginia.

Robert Wimmel Portfolio manager, is manager of Invesco Van Kampen Pennsylvania Value Municipal Income Trust. He joined Invesco in 2010. Mr. Wimmel was associated with the Trust’s previous investment adviser or its investment advisory affiliates in an investment capacity from 1996 to 2010 and began managing the Trust in 2001. He earned a B.A. in anthropology from the University of Cincinnati and an M.A. in economics from the University of Illinois, Chicago.

Effective March 1, 2012, after the close of the reporting period, Stephen Turman left the management team.

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Additional Information

| n | Unless otherwise stated, information presented in this report is as of February 29, 2012, and
is based on total net assets applicable to common shares. |
| --- | --- |
| n | Unless otherwise noted, all data provided by Invesco. |
| n | To access your Trust’s reports, visit invesco.com/fundreports. |

About indexes used in this report

| n | The Barclays Pennsylvania Municipal Index tracks the performance of Pennsylvania-issued
investment grade municipal bonds with maturities greater than two years. |
| --- | --- |
| n | The Barclays Municipal Bond Index is an unmanaged index considered representative of the
tax-exempt bond market. |
| n | The Barclays U.S. Aggregate Index is an unmanaged index considered representative of the US
investment-grade, fixed-rate bond market. |
| n | The Barclays U.S. Corporate High Yield Index is an unmanaged index that covers the universe of
fixed-rate, noninvestment-grade debt. |
| n | The Barclays U.S. Corporate Investment Grade Index is an unmanaged index considered
representative of fixed-rate, investment-grade taxable bond debt. |
| n | The Barclays U.S. Mortgage Backed Securities Index is an unmanaged index comprising 15- and
30-year fixed-rate securities backed by mortgage pools of Ginnie Mae, Freddie Mac and Fannie Mae. |
| n | The Trust is not managed to track the performance of any particular index, including the
index(es) defined here, and consequently, the performance of the Trust may deviate significantly
from the performance of the index(es). |
| n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include
reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if
applicable, reflects trust expenses; performance of a market index does not. |

Other information

| n | The Chartered Financial Analyst ® (CFA ® ) designation is globally recognized
and attests to a charterholder’s success in a rigorous and comprehensive study program in the field
of investment management and research analysis. |
| --- | --- |
| n | The returns shown in management’s discussion of Trust performance are based on net asset values
calculated for shareholder transactions. Generally accepted accounting principles require
adjustments to be made to the net assets of the Trust at period end for financial reporting
purposes, and as such, the net asset values for shareholder transactions and the returns based on
those net asset values may differ from the net asset values and returns reported in the Financial
Highlights. |

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

NYSE Symbol VPV

4 Invesco Van Kampen Pennsylvania Value Municipal Income Trust

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Dividend Reinvestment Plan

The dividend reinvestment plan (the Plan) offers you a prompt and simple way to reinvest your dividends and capital gains distributions (Distributions) into additional shares of your Trust. Under the Plan, the money you earn from Distributions will be reinvested automatically in more shares of your Trust, allowing you to potentially increase your investment over time.

Plan benefits

n	Add to your account: You may increase the amount of shares in your Trust easily and automatically with the Plan.
n	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 (NAV). In addition, transaction costs are low
because when new shares are issued by a Trust, there is no fee, and when shares are bought in
blocks on the open market, the per share fee is shared among all Participants.
n	Convenience: You will receive a detailed account statement from Computershare Trust Company, N.A. (the Agent)
which administers the Plan. 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. You can also access your account via the Internet. To do this, please go to
invesco.com/us.
n	Safekeeping: The Agent will hold the shares it has acquired for you in safekeeping.

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.

How to enroll

To enroll in the Plan, please read the Terms and Conditions in the Plan Brochure. You can enroll in the Plan by visiting invesco.com/us, calling toll-free 800 341 2929 or notifying us in writing at Invesco Closed-End Funds, Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078. 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 Distribution payable after the Agent receives your authorization, as long as they receive it before the “record date,” which is generally 10 business days before such Distributions are paid. If your authorization arrives after such record date, your participation in the Plan will begin with the following Distributions.

How the Plan works

If you choose to participate in the Plan, your Distributions will be promptly reinvested for you, automatically increasing your reinvestment shares. If the Trust is trading at a share price that is equal to its NAV, you’ll pay that amount for your reinvested shares. However, if the Trust is trading above or below NAV, the price is determined by one of two ways:

| 1. | Premium: If the 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 the Trust
trades at a premium, you’ll pay less for your reinvested shares than an 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. |
| --- | --- |
| 2. | Discount: If the Trust is trading at a discount – a market price that is lower than NAV – you’ll
pay the market price for your reinvested shares. |

Costs of the Plan

There is no direct charge to you for reinvesting 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 fees. However, if your Trust is trading at a discount, the shares are purchased on the open market, and you will pay your portion of per share fees. These per share fees are typically less than the standard brokerage charges for individual transactions because shares are purchased for all Participants in blocks, resulting in lower fees for each individual Participant. Any service or per share fees are added to the purchase price. Per share fees include any applicable brokerage commissions the Agent is required to pay.

Tax implications

The automatic reinvestment of Distributions does not relieve you of any income tax that may be due on Distributions. You will receive tax information annually to help you prepare your federal income tax return.

Invesco does not offer tax advice. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used, by any taxpayer for avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Federal and state tax laws are complex and constantly changing. Shareholders should always consult a legal or tax adviser for information concerning their individual situation.

How to withdraw from the Plan

You may withdraw from the Plan at any time by calling 800 341 2929, visiting invesco.com/us or by writing to Invesco Closed-End Funds, Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078. Simply indicate that you would like to withdraw from the Plan, and be sure to include your Trust name and account number. Also, ensure that all shareholders listed on the account have signed these written instructions. If you withdraw, you have three options with regard to the shares held in the Plan:

| 1. | If you opt to continue to hold your non-certificated whole shares (Investment Plan Book Shares),
they will be held by the Agent electronically as Direct Registration Book-Shares (Book-Entry
Shares) and fractional shares will be sold at the then-current market price. Proceeds will be sent
via check to your address of record after deducting applicable fees. |
| --- | --- |
| 2. | If you opt to sell your shares through the Agent, we will sell all full and fractional shares
and send the proceeds via check to your address of record after deducting a $2.50 service fee and
applicable per share fees. Per share fees include any applicable brokerage commissions the Agent is
required to pay. |
| 3. | You may sell your shares through your financial adviser through the Direct Registration System
(DRS). DRS is a service within the securities industry that allows Trust shares to be held in your
name in electronic format. You retain full ownership of your shares, without having to hold a share
certificate. You should contact your financial adviser to learn more about any restrictions or fees
that may apply. |

To obtain a complete copy of the Dividend Reinvestment Plan, please call our Client Services department at 800 341 2929 or visit invesco.com/us.

5 Invesco Van Kampen Pennsylvania Value Municipal Income Trust

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Schedule of Investments

February 29, 2012

Interest	Maturity		Principal — Amount
Rate	Date		(000)	Value
Municipal Obligations–155.97%
Pennsylvania–142.16%
Allegheny (County of) Higher Education Building Authority
(Duquesne University);
Series 2008, University RB	5.00 %	03/01/21	$ 1,165	$ 1,312,629
Series 2011 A, University RB	5.50 %	03/01/29	1,600	1,835,376
Allegheny (County of) Higher Education Building Authority
(Robert Morris University); Series 2008 A, University
RB	6.00 %	10/15/38	1,000	1,036,930
Allegheny (County of) Hospital Development Authority (Ohio
Valley General Hospital);
Series 2005 A, RB	5.00 %	04/01/25	735	665,248
Series 2005 A, RB	5.13 %	04/01/35	3,145	2,544,903
Allegheny (County of) Hospital Development Authority (University
of Pittsburgh Medical Center); Series 2009, RB	5.63 %	08/15/39	2,750	3,032,975
Allegheny (County of) Industrial Development Authority (AFCO
Cargo PIT, LLC); Series 1999, Cargo Facilities
Lease RB (b)	6.63 %	09/01/24	1,880	1,671,903
Allegheny (County of) Industrial Development Authority (Propel
Charter School-McKeesport); Series 2010 B, Charter
School RB	6.38 %	08/15/35	1,215	1,222,837
Allegheny (County of) Industrial Development Authority
(Residential Resources, Inc.); Series 2006, Lease RB	5.13 %	09/01/31	1,040	1,013,106
Allegheny (County of) Redevelopment Authority (Robinson Mall);
Series 2000 A, Tax Increment Allocation RB	7.00 %	11/01/17	840	838,723
Beaver (County of); Series 2009, Unlimited Tax GO Notes
(INS–AGM) (a)	5.55 %	11/15/31	4,935	5,481,008
Berks (County of) Industrial Development Authority (One
Douglassville); Series 2007 A, Ref. First
Mortgage RB (b)	6.13 %	11/01/34	1,425	1,311,371
Berks (County of) Municipal Authority (Albright College);
Series 2004, RB	5.50 %	10/01/16	1,695	1,721,425
Series 2004, RB	5.50 %	10/01/17	1,800	1,820,214
Bethlehem Area School District; Series 2010, Unlimited Tax
GO Bonds
(INS–AGM) (a)	5.25 %	01/15/25	3,000	3,435,030
Bradford (County of) Industrial Development Authority
(International Paper); Series 2005 B, Ref. Solid Waste
Disposal RB (b)	5.20 %	12/01/19	1,000	1,056,040
Bucks (County of) Industrial Development Authority (Ann’s
Choice, Inc. Facility); Series 2005 A, Retirement
Community RB	6.25 %	01/01/35	2,300	2,303,496
Bucks (County of) Industrial Development Authority (Lutheran
Community Telford Center); Series 2007, RB	5.75 %	01/01/37	2,200	1,924,582
Central Bradford Progress Authority (Guthrie Healthcare System);
Series 2011, RB	5.38 %	12/01/41	3,000	3,301,020
Centre (County of) Hospital Authority (Mt. Nittany Medical
Center);
Series 2009, RB
(INS–AGC) (a)	6.13 %	11/15/39	2,185	2,300,499
Series 2011, RB	6.25 %	11/15/41	1,250	1,407,363
Chartiers Valley Industrial & Commercial Development
Authority (Asbury Health Center);
Series 1999, Ref. First Mortgage RB	6.38 %	12/01/19	1,000	1,001,060
Series 1999, Ref. First Mortgage RB	6.38 %	12/01/24	1,000	1,000,650
Coatesville School District; Series 2010, Limited Tax GO
Bonds
(INS–AGM) (a)	5.00 %	08/15/30	2,650	3,063,771
Commonwealth Financing Authority; Series 2010 B, RB	5.00 %	06/01/23	1,775	2,086,725
Connellsville Area School District; Series 2008 B,
Limited Tax GO Notes
(INS–AGM) (a)	5.00 %	11/15/37	1,000	1,019,890
Cumberland (County of) Municipal Authority (Asbury Pennsylvania
Obligated Group);
Series 2010, RB	6.00 %	01/01/30	1,600	1,630,864
Series 2010, RB	6.00 %	01/01/40	2,885	2,909,811
Cumberland (County of) Municipal Authority (Association of
Independent Colleges & Universities of Pennsylvania
Financing Program-Dickinson College); Series 2009, RB	5.00 %	11/01/39	1,850	2,020,255
Cumberland (County of) Municipal Authority (Diakon Lutheran
Ministries);
Series 2007, RB	5.00 %	01/01/27	2,000	2,049,920
Series 2007, RB	5.00 %	01/01/36	3,000	3,013,860
Cumberland (County of) Municipal Authority (Messiah Village);
Series 2008 A, RB	6.00 %	07/01/35	2,000	2,026,060

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See accompanying Notes to Financial Statements which are an integral part of the financial statements.

6 Invesco Van Kampen Pennsylvania Value Municipal Income Trust

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Interest	Maturity		Principal — Amount
Rate	Date		(000)	Value
Pennsylvania–(continued)
Daniel Boone Area School District; Series 2008, Limited Tax
GO Notes	5.00 %	08/15/32	$ 2,000	$ 2,170,300
Dauphin (County of) General Authority (Hapsco Western Hospital);
Series 1992 B,
Ref. RB (c)	6.25 %	07/01/16	3,410	3,830,555
Dauphin (County of) General Authority (Pinnacle Health System);
Series 2009 A, Health System RB	5.75 %	06/01/20	5,475	6,337,750
Deer Lakes School District; Series 2009, Limited Tax GO
Bonds
(INS–AGC) (a)	5.38 %	04/01/34	1,000	1,114,120
Delaware (County of) Authority (Cabrini College);
Series 1999, College RB
(INS–Radian) (a)	5.75 %	07/01/23	360	360,385
Delaware (County of) Authority (Elwyn);
Series 2010, RB	5.00 %	06/01/19	1,875	2,006,062
Series 2010, RB	5.00 %	06/01/24	1,755	1,788,959
Series 2010, RB	5.00 %	06/01/25	750	762,060
Series 2010, RB	5.00 %	06/01/23	975	999,356
Delaware (County of) Authority (Neumann College);
Series 2008, College RB	6.25 %	10/01/38	675	723,006
Delaware (County of) Industrial Development Authority (Aqua
Pennsylvania, Inc.);
Series 2005 A, Water Facilities RB
(INS–NATL) (a)(b)	5.00 %	11/01/37	2,750	2,836,735
Series 2005 B, Water Facilities RB
(INS–NATL) (a)(b)	5.00 %	11/01/36	4,000	4,130,320
Series 2005 C, Water Facilities RB
(INS–NATL) (a)(b)	5.00 %	02/01/35	3,000	3,080,610
Delaware (County of) Industrial Development Authority
(Philadelphia Suburban Water); Series 2001, Water
Facilities RB
(INS–AMBAC) (a)(b)	5.35 %	10/01/31	2,500	2,522,625
Delaware River Port Authority; Series 2010 D, RB	5.00 %	01/01/40	2,000	2,136,800
Delaware Valley Regional Financial Authority;
Series 2002, RB	5.75 %	07/01/17	8,000	9,322,080
Series 2002, RB	5.75 %	07/01/32	2,500	2,893,275
Erie (City of) Higher Education Building Authority (Mercyhurst
College); Series 2008, College RB	5.50 %	03/15/38	1,000	1,052,360
Exeter Township School District; Series 2003, Unlimited Tax
GO Bonds
(INS–NATL) (a)	5.00 %	05/15/25	2,000	2,134,120
Franklin (County of) Industrial Development Authority
(Chambersburg Hospital); Series 2010, RB	5.38 %	07/01/42	2,980	3,132,993
Fulton (County of) Industrial Development Authority (The Fulton
County Medical Center); Series 2006, Hospital RB	5.90 %	07/01/40	2,000	1,881,180
Geisinger Authority;
Series 2005 C, VRD Health
System RB (d)	0.09 %	08/01/28	1,500	1,500,000
Series 2011 A 1, Health System RB	5.13 %	06/01/41	1,500	1,636,050
Harrisburg (City of) Authority; Series 2004, Ref. RB
(INS–AGM) (a)	5.00 %	07/15/21	6,575	6,584,862
Lancaster (County of) Higher Education Authority
(Franklin & Marshall College); Series 2008, RB	5.00 %	04/15/37	3,430	3,684,986
Lancaster (County of) Hospital Authority (Brethren Village);
Series 2008 A, RB	6.50 %	07/01/40	2,990	3,083,258
Lehigh & Northampton (Counties of) Airport Authority
(Lehigh Valley Airport System);
Series 2005 A, Ref. RB
(INS–NATL) (a)(b)	5.00 %	01/01/20	1,240	1,277,101
Series 2005 A, Ref. RB
(INS–NATL) (a)(b)	5.00 %	01/01/22	1,360	1,390,396
Series 2005 A, Ref. RB
(INS–NATL) (a)(b)	5.00 %	01/01/23	675	687,731
Lehigh (County of) General Purpose Authority (Cedar Crest
College); Series 2006, College RB
(INS–Radian) (a)	5.00 %	04/01/26	1,510	1,535,595
Lehigh (County of) General Purpose Authority (Lehigh Valley
Health); Series 2005 B, Hospital RB
(INS–AGM) (a)	5.00 %	07/01/35	1,000	1,058,760
Lycoming (County of) Authority (Pennsylvania College of
Technology); Series 2011, RB	5.00 %	07/01/30	4,250	4,695,102
Lycoming (County of) Authority (Susquehanna Health System);
Series 2009 A, Heath System RB	5.75 %	07/01/39	3,750	3,961,987
Monroe (County of) Hospital Authority (Pocono Medical Center);
Series 2003, RB (c)(e)	6.00 %	01/01/14	3,000	3,312,450
Series 2007, RB	5.25 %	01/01/43	3,000	3,069,840
Montgomery (County of) Higher Education & Health
Authority (Abington Memorial Hospital); Series 2002 A,
Hospital RB	5.13 %	06/01/32	4,500	4,562,685
Montgomery (County of) Higher Education & Health
Authority (Dickinson College); Series 2006 FF1, RB
(INS–CIFG) (a)	5.00 %	05/01/31	550	579,013
Montgomery (County of) Industrial Development Authority (ACTS
Retirement-Life Community); Series 2006 A, RB	4.50 %	11/15/36	3,000	2,742,630

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Interest	Maturity		Principal — Amount
Rate	Date		(000)	Value
Pennsylvania–(continued)
Montgomery (County of) Industrial Development Authority
(Philadelphia Presbytery Homes, Inc.); Series 2010, RB	6.63 %	12/01/30	$ 3,905	$ 4,307,293
Montgomery (County of) Industrial Development Authority
(Whitemarsh Community); Series 2008, Mortgage RB	7.00 %	02/01/36	1,500	1,502,040
Montgomery (County of) Industrial Development Authority
(Whitemarsh Continuing Care); Series 2005, Mortgage RB	6.25 %	02/01/35	750	692,603
Mt. Lebanon Hospital Authority (St. Clair Memorial Hospital);
Series 2002 A, RB	5.63 %	07/01/32	1,500	1,506,780
Northampton (County of) General Purpose Authority (Lehigh
University);
Series 2009, Higher Education RB	5.50 %	11/15/33	4,000	4,553,520
Series 2009, Higher Education RB	5.00 %	11/15/39	2,000	2,166,420
Northampton (County of) General Purpose Authority (St.
Luke’s Hospital);
Series 2008 A, Hospital RB	5.50 %	08/15/35	2,000	2,086,520
Series 2010 C,
Hospital RB (e)(f)	4.50 %	08/15/16	2,000	2,186,240
Northeastern York School District;
Series 2007 B, Limited Tax GO Bonds
(INS–NATL) (a)	5.00 %	04/01/30	1,000	1,083,150
Series 2007 B, Limited Tax GO Bonds
(INS–NATL) (a)	5.00 %	04/01/31	2,000	2,159,480
Owen J. Roberts School District; Series 2006, Unlimited Tax
GO Notes
(INS–AGM) (a)(g)	5.00 %	05/15/35	16,695	17,629,920
Pennsylvania (State of);
First Series 2006, Unlimited Tax GO Bonds	5.00 %	10/01/23	3,000	3,490,110
First Series 2011, Unlimited Tax GO
Bonds (g)	5.00 %	11/15/30	15,000	17,851,500
Pennsylvania (State of) Economic Development Financing Agency
(Forum Place); Series 2012, Governmental Lease RB	5.00 %	03/01/34	1,750	1,886,395
Pennsylvania (State of) Economic Development Financing Authority
(Allegheny Energy Supply Co.); Series 2009, RB	7.00 %	07/15/39	4,220	4,864,394
Pennsylvania (State of) Economic Development Financing Authority
(Aqua Pennsylvania, Inc.); Series 2010 A, Ref. Water
Facility
RB (b)	5.00 %	12/01/34	2,000	2,153,280
Pennsylvania (State of) Economic Development Financing Authority
(Philadelphia Biosolids Facility);
Series 2009, Sewage Sludge Disposal RB	5.50 %	01/01/18	1,000	1,104,740
Series 2009, Sewage Sludge Disposal RB	6.25 %	01/01/32	2,000	2,203,920
Pennsylvania (State of) Economic Development Financing Authority
(Waste Management, Inc.); Series 2005 A, Solid Waste
Disposal
RB (b)	5.10 %	10/01/27	3,690	3,798,855
Pennsylvania (State of) Higher Educational Facilities Authority
(Clarion University Foundation Inc.);
Series 2003 A, RB
(INS–SGI) (a)	5.25 %	07/01/18	1,500	1,522,365
Series 2003 A, RB
(INS–SGI) (a)	5.00 %	07/01/28	1,000	978,090
Series 2003 A, RB
(INS–SGI) (a)	5.00 %	07/01/33	1,500	1,428,075
Pennsylvania (State of) Higher Educational Facilities Authority
(Edinboro University Foundation); Series 2010, RB	6.00 %	07/01/43	1,000	1,060,430
Pennsylvania (State of) Higher Educational Facilities Authority
(Geneva College); Series 2002, College &
University RB (c)(e)	6.13 %	04/01/12	1,000	1,005,320
Pennsylvania (State of) Higher Educational Facilities Authority
(La Salle University); Series 2003, RB	5.50 %	05/01/34	4,000	4,057,480
Pennsylvania (State of) Higher Educational Facilities Authority
(Messiah College); Series 2003 AA3, RB
(INS–Radian) (a)	5.50 %	11/01/22	3,000	3,089,580
Pennsylvania (State of) Higher Educational Facilities Authority
(Philadelphia University of Sciences); Series 2005 A,
RB
(INS–SGI) (a)	5.00 %	11/01/36	2,320	2,404,796
Pennsylvania (State of) Higher Educational Facilities Authority
(St. Joseph’s University); Series 2010 A, RB	5.00 %	11/01/40	5,000	5,365,000
Pennsylvania (State of) Higher Educational Facilities Authority
(State System Higher Education); Series 2010 AL, RB	5.00 %	06/15/21	1,450	1,768,275
Pennsylvania (State of) Higher Educational Facilities Authority
(Thomas Jefferson University);
Series 2002, RB	5.38 %	01/01/25	1,540	1,571,231
Series 2010, RB	5.00 %	03/01/40	1,000	1,085,400
Pennsylvania (State of) Higher Educational Facilities Authority
(Trustees of the University of Pennsylvania);
Series 2005 C, RB (g)	5.00 %	07/15/38	15,925	16,775,236
Pennsylvania (State of) Higher Educational Facilities Authority
(University Properties, Inc.); Series 2010, Student Housing
RB	5.00 %	07/01/42	2,320	2,239,125

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Interest	Maturity		Principal — Amount
Rate	Date		(000)	Value
Pennsylvania–(continued)
Pennsylvania (State of) Higher Educational Facilities Authority
(UPMC Health System); Series 1999 A, RB
(INS–AGM) (a)	5.00 %	08/01/29	$ 3,600	$ 3,604,248
Pennsylvania (State of) Housing Finance Agency; Series 2007
100A, Single Family
Mortgage RB (b)	5.10 %	10/01/22	360	375,278
Pennsylvania (State of) Intergovernmental Cooperation Authority
(City of Philadelphia Funding Program); Series 2009, Ref.
Special
Tax RB (g)	5.00 %	06/15/21	12,135	14,458,003
Pennsylvania (State of) Turnpike Commission;
Series 2004 A, RB
(INS–AMBAC) (a)	5.25 %	12/01/21	1,200	1,329,588
Series 2005 D, Ref. VRD Registration Fee RB
(INS–AGM) (a)(d)	0.17 %	07/15/41	875	875,000
Series 2008 A-1, RB
(INS–AGC) (a)(g)	5.00 %	06/01/38	12,995	13,769,892
Series 2009 C, Sub. Conv. CAB RB
(INS–AGM) (a)(h)	0.00 %	06/01/33	5,840	5,711,286
Series 2009 E, Sub. Conv.
CAB RB (h)	0.00 %	12/01/38	720	637,229
Series 2010 A 1, Motor License Fund Special RB	5.00 %	12/01/38	1,000	1,088,660
Series 2010 A-2, Motor
License Fund Special Conv.
CAB RB (h)	0.00 %	12/01/34	2,065	1,857,736
Series 2010 B 2, Conv.
CAB RB (h)	0.00 %	12/01/30	1,875	1,704,038
Series 2010 B 2, Conv.
CAB RB (h)	0.00 %	12/01/35	1,500	1,324,860
Series 2011 B, Sub. Motor License
Fund Special RB (g)	5.00 %	12/01/41	11,000	12,118,810
Pennsylvania State University;
Series 2005, RB	5.00 %	09/01/29	2,000	2,231,280
Series 2005, RB	5.00 %	09/01/35	4,000	4,459,680
Philadelphia (City of) Hospitals & Higher Education
Facilities Authority (Children’s Hospital of Philadelphia);
Series 2002 A,
VRD RB (d)	0.10 %	07/01/22	7,025	7,025,000
Series 2011, RB	5.00 %	07/01/41	1,930	2,076,738
Philadelphia (City of) Hospitals & Higher Education
Facilities Authority (Jefferson Health System);
Series 2010 B, RB	5.00 %	05/15/40	4,995	5,332,362
Philadelphia (City of) Industrial Development Authority
(Discovery Charter School);
Series 2012, RB	5.88 %	04/01/32	450	453,204
Series 2012, RB	6.25 %	04/01/37	500	508,945
Philadelphia (City of) Industrial Development Authority (First
Philadelphia Charter School); Series 2007 A, RB	5.85 %	08/15/37	2,500	2,385,525
Philadelphia (City of) Industrial Development Authority (Global
Leadership Academy Charter School); Series 2010, RB	6.38 %	11/15/40	1,000	1,013,200
Philadelphia (City of) Industrial Development Authority
(Independence Charter School); Series 2007 A, RB	5.50 %	09/15/37	2,815	2,527,476
Philadelphia (City of) Industrial Development Authority (MaST
Charter School); Series 2010, RB	6.00 %	08/01/35	1,660	1,828,606
Philadelphia (City of) Industrial Development Authority (Please
Touch Museum);
Series 2006, RB	5.25 %	09/01/21	2,610	2,398,694
Series 2006, RB	5.25 %	09/01/26	3,230	2,751,605
Philadelphia (City of) Industrial Development Authority;
Series 1990, Commercial
Development RB (b)	7.75 %	12/01/17	2,000	2,002,540
Philadelphia (City of) Parking Authority;
Series 1999 A, RB
(INS–AMBAC) (a)	5.25 %	02/15/29	1,645	1,647,188
Philadelphia (City of) Redevelopment Authority (Neighborhood
Transformation); Series 2002 A, RB
(INS–NATL) (a)	5.50 %	04/15/16	1,905	1,916,849
Philadelphia (City of);
Ninth Series 2010, Gas Works RB	5.00 %	08/01/30	1,500	1,592,535
Ninth Series 2010, Gas Works RB	5.25 %	08/01/40	3,610	3,758,118
Series 2008 A, Ref. Unlimited Tax GO Bonds
(INS–AGM) (a)	5.25 %	12/15/25	3,500	3,909,045
Series 2009 A, Ref. Unlimited Tax GO Bonds
(INS–AGC) (a)	5.50 %	08/01/24	1,500	1,724,790
Series 2009 A, Water & Wastewater RB	5.25 %	01/01/36	1,500	1,622,790
Series 2009 B, Limited Tax GO Bonds
(INS–AGC) (a)	7.13 %	07/15/38	1,040	1,194,690
Series 2010 A, Airport RB	5.00 %	06/15/40	2,500	2,616,400
Series 2010 C, Water & Wastewater RB
(INS–AGM) (a)	5.00 %	08/01/35	2,750	3,018,070
Series 2011, Unlimited Tax GO Bonds	6.00 %	08/01/36	2,000	2,309,060
Twelfth Series 1990 B, Gas
Works RB (c)	7.00 %	05/15/20	3,045	3,777,566

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Interest	Maturity		Principal — Amount
Rate	Date		(000)	Value
Pennsylvania–(continued)
Philadelphia School District; Series 2008 E, Limited
Tax GO Bonds
(INS–BHAC) (a)	5.13 %	09/01/23	$ 2,500	$ 2,849,075
Pittsburgh (City of) & Allegheny (County of)
Sports & Exhibition Authority (Regional Asset
District); Series 2010, Ref. Sales Tax RB
(INS–AGM) (a)	5.00 %	02/01/31	3,235	3,570,081
Pittsburgh (City of) & Allegheny (County of)
Sports & Exhibition Authority; Series 2010, Ref.
Hotel Room Excise Tax RB
(INS–AGM) (a)	5.00 %	02/01/35	2,000	2,105,920
Pittsburgh (City of) Public Parking Authority;
Series 2005 A, Ref. RB
(INS–NATL) (a)	5.00 %	12/01/25	2,215	2,315,539
Pittsburgh (City of) Urban Redevelopment Authority;
Series 1999 C, RB
(CEP–GNMA) (b)	5.70 %	04/01/30	460	460,437
Pittsburgh (City of) Water & Sewer Authority;
Series 2008 D1, First Lien RB
(INS–AGM) (a)	5.00 %	09/01/24	2,000	2,233,800
Series 2008 D1, First Lien RB
(INS–AGM) (a)	5.00 %	09/01/25	3,000	3,341,340
Radnor Township School District;
Series 2005 B, Unlimited Tax GO Bonds
(INS–AGM) (a)	5.00 %	02/15/28	1,500	1,614,030
Series 2005 B, Unlimited Tax GO Bonds
(INS–AGM) (a)	5.00 %	02/15/35	1,500	1,630,545
Southeastern Pennsylvania Transportation Authority;
Series 2011, Capital Grant Receipts RB	5.00 %	06/01/29	2,480	2,791,662
State Public School Building Authority (Harrisburg School
District); Series 2009 A, RB
(INS–AGC) (a)	5.00 %	11/15/33	2,500	2,689,975
State Public School Building Authority (Jefferson County Dubois
Technology School); Series 2004, RB
(INS–NATL) (a)	5.38 %	02/01/23	2,360	2,581,439
Susquehanna Area Regional Airport Authority;
Series 2003 A, Airport System RB
(INS–AMBAC) (a)(b)	5.50 %	01/01/18	2,545	2,563,680
Series 2003 A, Airport System RB
(INS–AMBAC) (a)(b)	5.38 %	01/01/21	2,140	2,144,794
Series 2003 A, Airport System RB
(INS–AMBAC) (a)(b)	5.38 %	01/01/23	5,205	5,207,759
Series 2003 D, Sub. Airport System RB	5.38 %	01/01/18	5,475	5,326,682
Trinity Area School District; Series 2003, Unlimited Tax GO
Bonds
(INS–NATL) (a)	5.25 %	11/01/20	2,850	3,042,831
Twin Valley School District; Series 2006, Unlimited Tax GO
Bonds (c)(e)	5.25 %	10/01/15	1,820	2,128,526
Union (County of) Higher Educational Facilities Financing
Authority (Bucknell University); Series 2002 A,
University RB	5.25 %	04/01/19	1,000	1,048,530
Union (County of) Hospital Authority (Evangelical Community
Hospital);
Series 2004, RB
(INS–Radian) (a)	5.25 %	08/01/24	2,300	2,337,858
Series 2011, Ref. & Improvement RB	7.00 %	08/01/41	3,000	3,387,330
Unity (Township of) Municipal Authority; Series 2004, RB
(INS–AGM) (a)	5.00 %	12/01/24	1,285	1,360,430
University of Pittsburgh–of the Commonwealth System of
Higher Education (University Capital);
Series 2000 B,
Ref. RB (g)	5.25 %	09/15/34	10,000	11,396,600
Series 2005 A, RB (g)(i)	5.25 %	09/15/30	10,000	11,689,000
Washington (County of) Industrial Development Authority
(Washington Jefferson College);
Series 2010, College RB	5.25 %	11/01/30	1,500	1,650,930
Series 2010, College RB	5.00 %	11/01/36	1,700	1,807,066
Washington (County of) Redevelopment Authority (Victory Centre
Tanger Outlet Development); Series 2006 A, Tax
Allocation RB (e)(f)	5.45 %	07/01/35	490	492,891
Washington (County of);
Series 2002 A, Unlimited Tax GO
Bonds (c)(e)	5.13 %	09/01/12	825	845,782
Series 2002 A, Unlimited Tax GO Bonds
(INS–AMBAC) (a)	5.13 %	09/01/27	5,025	5,070,878
West Mifflin Area School District;
Series 2009, Limited Tax GO Bonds
(INS–AGM) (a)	5.50 %	04/01/24	500	583,415
Series 2009, Limited Tax GO Bonds
(INS–AGM) (a)	5.13 %	04/01/31	1,500	1,636,380
Westmoreland (County of) Industrial Development Authority
(Redstone Presbyterian Senior Care Obligated Group);
Series 2005 A, Retirement Community RB	5.75 %	01/01/26	2,350	2,300,462
Wilkes-Barre (City of) Finance Authority (University of
Scranton); Series 2010, RB	5.00 %	11/01/40	2,650	2,859,562
				507,217,017

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Interest	Maturity		Principal — Amount
Rate	Date		(000)	Value
Puerto Rico–9.26%
Puerto Rico (Commonwealth of) Aqueduct & Sewer
Authority; Series 2012 A, Sr. Lien RB	5.13 %	07/01/37	$ 3,000	$ 3,003,600
Puerto Rico (Commonwealth of) Electric Power Authority;
Series 2008 WW, RB	5.50 %	07/01/21	1,000	1,131,580
Series 2008 WW, RB	5.00 %	07/01/28	2,000	2,131,080
Series 2008 WW, RB	5.25 %	07/01/33	1,500	1,588,050
Series 2010 XX, RB	5.75 %	07/01/36	2,000	2,194,680
Puerto Rico (Commonwealth of) Infrastructure Financing
Authority; Series 2005 C, Ref. Special Tax RB
(INS–AMBAC) (a)	5.50 %	07/01/27	1,930	2,181,055
Puerto Rico Sales Tax Financing Corp.;
First Subseries 2010, Conv.
CAB RB (h)	0.00 %	08/01/33	2,260	1,786,078
First Subseries 2010 A,
CAB RB (h)	0.00 %	08/01/34	5,000	1,505,350
First Subseries 2010 A,
CAB RB (h)	0.00 %	08/01/35	2,500	700,700
First Subseries 2010 A,
CAB RB (h)	0.00 %	08/01/36	7,800	2,036,502
First Subseries 2010 A, RB	5.38 %	08/01/39	1,500	1,623,465
First Subseries 2010 C, RB	5.25 %	08/01/41	2,000	2,154,220
Series 2011 C, RB (g)	5.00 %	08/01/40	3,750	4,067,925
Series 2011 C, RB (g)	5.25 %	08/01/40	6,250	6,954,063
				33,058,348
Guam–2.72%
Guam (Territory of) (Section 30);
Series 2009 A, Limited Obligation RB	5.63 %	12/01/29	1,250	1,337,313
Series 2009 A, Limited Obligation RB	5.75 %	12/01/34	500	532,580
Guam (Territory of) International Airport Authority;
Series 2003 B, General RB
(INS–NATL) (a)	5.25 %	10/01/21	1,585	1,627,002
Guam (Territory of) Power Authority; Series 2010 A, RB	5.50 %	10/01/40	1,285	1,304,249
Guam (Territory of) Waterworks Authority; Series 2010,
Water & Wastewater System RB	5.63 %	07/01/40	3,000	3,012,630
Guam (Territory of); Series 2011 A, Business Privilege
Tax RB	5.25 %	01/01/36	1,700	1,891,097
				9,704,871
Virgin Islands–1.83%
University of the Virgin Islands; Series 2004 A,
Improvement RB (c)(e)	5.38 %	12/01/14	1,500	1,697,475
Virgin Islands (Government of) Public Finance Authority (Gross
Receipts Taxes Loan Note); Series 1999 A, RB	6.38 %	10/01/19	915	917,479
Virgin Islands (Government of) Public Finance Authority
(Matching Fund Loan Note–Diageo);
Series 2009 A, Sub. RB	6.63 %	10/01/29	2,425	2,776,528
Virgin Islands (Government of) Water & Power
Authority; Series 2007 A, Electric System RB	5.00 %	07/01/25	1,090	1,122,842
				6,514,324
TOTAL
INVESTMENTS (j) –155.97%

(Cost $522,888,410) | | | | 556,494,560 | |
| FLOATING RATE NOTE OBLIGATIONS–(21.26%) | | | | | |
| Notes with interest rates ranging from 0.16% to 0.26% at 02/29/12 and
contractual maturities of collateral ranging from 06/15/21 to 12/01/41 (See
Note 1I) (k) | | | | (75,860,000 | ) |
| OTHER ASSETS LESS LIABILITIES–1.75% | | | | 6,253,611 | |
| PREFERRED SHARES–(36.46%) | | | | (130,100,000 | ) |
| NET ASSETS APPLICABLE TO COMMON SHARES–100.00% | | | | $ 356,788,171 | |

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Investment Abbreviations:

AGC	– Assured Guaranty Corp.
AGM	– Assured Guaranty Municipal Corp.
AMBAC	– American Municipal Bond Assurance Corp.
BHAC	– Berkshire Hathaway Assurance Corp.
CAB	– Capital Appreciation Bonds
CEP	– Credit Enhancement Provider
CIFG	– CIFG Assurance North America, Inc.
Conv.	– Convertible
GNMA	– Government National Mortgage Association
GO	– General Obligation
INS	– Insurer
NATL	– National Public Finance Guarantee Corp.
Radian	– Radian Asset Assurance, Inc.
RB	– Revenue Bonds
Ref.	– Refunding
SGI	– Syncora Guarantee, Inc.
Sr.	– Senior
Sub.	– Subordinated
VRD	– Variable Rate Demand

Notes to Schedule of Investments:

| (a) | Principal and/or interest payments are secured by the bond insurance company
listed. |
| --- | --- |
| (b) | Security subject to the alternative
minimum tax. |
| (c) | Advance refunded; secured by an
escrow fund of U.S. Government obligations or other highly
rated collateral. |
| (d) | Demand security payable upon demand
by the Trust at specified time intervals no greater than
thirteen months. Interest rate is redetermined periodically.
Rate shown is the rate in effect on February 29, 2012. |
| (e) | Security has an irrevocable call by
the issuer or mandatory put by the holder. Maturity date
reflects such call or put. |
| (f) | Interest or dividend rate is
redetermined periodically. Rate shown is the rate in effect on
February 29, 2012. |
| (g) | Underlying security related to
Dealer Trusts entered into by the Trust. See Note 1I. |
| (h) | Zero coupon bond issued at a
discount. |
| (i) | Security is subject to a shortfall
agreement which may require the Trust to pay amounts to a
counterparty in the event of a significant decline in the market
value of the security underlying the Dealer Trusts. In case of a
shortfall, the maximum potential amount of payments the Trust
could ultimately be required to make under the agreement is
$6,665,000. However, such shortfall payment would be reduced by
the proceeds from the sale of the security underlying the Dealer
Trusts. |
| (j) | This table provides a listing of
those entities that have either issued, guaranteed, backed or
otherwise enhanced the credit quality of more than 5% of the
securities held in the portfolio. In instances where the entity
has guaranteed, backed or otherwise enhanced the credit quality
of a security, it is not primarily responsible for the
issuer’s obligations but may be called upon to satisfy the
issuer’s obligations. |

Entity
Assured Guaranty Municipal Corp.	13.2 %
National Public Finance Guarantee Corp.	5.6

(k) Floating rate note obligations related to securities held. The interest rates shown reflect the rates in effect at February 29, 2012. At February 29, 2012, the Trust’s investments with a value of $126,710,949 are held by Dealer Trusts and serve as collateral for the $75,860,000 in the floating rate note obligations outstanding at that date.

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Statement of Assets and Liabilities

February 29, 2012

Assets: — Investments, at value (Cost $522,888,410)	$ 556,494,560
Receivable for:
Investments sold	5,785,000
Interest	6,603,207
Total assets	568,882,767
Liabilities:
Floating rate note obligations	75,860,000
Payable for:
Investments purchased	939,784
Amount due custodian	4,925,002
Income distributions — preferred and common shares	81,203
Accrued fees to affiliates	19,409
Accrued other operating expenses	169,198
Total liabilities	81,994,596
Preferred shares ($0.01 par value, authorized
100,000,000 shares, 5,204 issued with liquidation
preference of $25,000 per share)	130,100,000
Net assets attributable to common shares	$ 356,788,171
Net assets applicable to common shares consist of:
Shares of beneficial interest — common shares	$ 350,128,190
Undistributed net investment income	6,471,264
Undistributed net realized gain (loss)	(33,417,433	)
Unrealized appreciation	33,606,150
	$ 356,788,171
Shares outstanding, $0.01 par value per common share, with an
unlimited number of shares authorized:
Common shares	23,797,266
Net asset value per share	$ 14.99
Market value per share	$ 14.77

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Statement of Operations

For the year ended February 29, 2012

Investment income: — Interest	$ 26,133,610
Expenses:
Advisory fees	2,959,633
Administrative services fees	116,031
Custodian fees	12,186
Interest, facilities and maintenance fees	700,824
Transfer agent fees	66,639
Trustees’ and officers’ fees and benefits	50,936
Other	220,592
Total expenses	4,126,841
Less: Fees waived	(168,193	)
Net expenses	3,958,648
Net investment income	22,174,962
Realized and unrealized gain (loss):
Net realized gain (loss) from investment securities	(2,428,481	)
Change in net unrealized appreciation of investment securities	47,867,542
Net realized and unrealized gain	45,439,061
Net increase in net assets resulting from operations	67,614,023
Distributions to preferred shareholders from net investment
income	(377,404	)
Net increase in net assets from operations applicable to common
shares	$ 67,236,619

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Statement of Changes in Net Assets

For the year ended February 29, 2012, the period November 1, 2010 through February 28, 2011 and the year ended October 31, 2010

	Year ended	ended		Year ended
	February 29,	February 28,		October 31,
	2012	2011		2010
Operations:
Net investment income	$ 22,174,962	$	7,638,539	$	23,890,290
Net realized gain (loss)	(2,428,481	)	(789,413	)	3,171,373
Change in net unrealized appreciation (depreciation)	47,867,542		(28,611,883	)	13,497,029
Net increase (decrease) in net assets resulting from operations	67,614,023		(21,762,757	)	40,558,692
Distributions to preferred shareholders from net investment
income	(377,404	)	(210,955	)	(629,991	)
Net increase (decrease) in net assets from operations applicable
to common shares	67,236,619		(21,973,712	)	39,928,701
Distributions to shareholders from net investment income	(21,416,715	)	(7,137,549	)	(21,318,877	)
Share transactions–net:
Net increase in net assets resulting from share transactions
applicable to common shares	70,972		—		220,642
Net increase (decrease) in net assets applicable to common shares	45,890,876		(29,111,261	)	18,830,466
Net assets applicable to common shares:
Beginning of period	310,897,295		340,008,556		321,178,090
End of period (includes undistributed net investment income of
$6,471,264 and $6,100,135 and 6,114,292 respectively)	$ 356,788,171	$	310,897,295	$	340,008,556

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Statement of Cash Flows

For the year ended February 29, 2012

| Cash provided by operating activities: — Net increase in net assets resulting from operations applicable
to common shares | $ 67,236,619 | |
| --- | --- | --- |
| Adjustments to reconcile change in net assets applicable to
common shares from operations to net cash provided by operating
activities: | | |
| Net realized loss on investment securities | 2,428,481 | |
| Net change in unrealized appreciation on investments | (47,867,542 | ) |
| Amortization of premium | 1,066,052 | |
| Accretion of discount | (585,173 | ) |
| Purchases of investments | (97,041,205 | ) |
| Proceeds from sales of investments | 85,635,338 | |
| Decrease in interest receivables and other assets | 463,173 | |
| Decrease in accrued expenses and other payables | (22,272 | ) |
| Net cash provided by operating activities | 11,313,471 | |
| Cash provided by (used in) financing activities: | | |
| Proceeds from redemptions of preferred shares | (23,900,000 | ) |
| Dividends paid to common shareholders from net investment income | (21,364,507 | ) |
| Increase in payable for amount due custodian | 4,925,002 | |
| Proceeds from floating rate note obligations | 24,005,000 | |
| Net cash provided by (used in) financing activities | (16,334,505 | ) |
| Net increase (decrease) in cash | (5,021,034 | ) |
| Cash at beginning of period | 5,021,034 | |
| Cash at end of period | $ — | |
| Supplemental disclosure of cash flow information: | | |
| Cash paid during the period for interest, facilities and
maintenance fees | $ 742,760 | |

Notes to Financial Statements

February 29, 2012

NOTE 1—Significant Accounting Policies

Invesco Van Kampen Pennsylvania Value Municipal Income Trust (the “Trust”), a Pennsylvania business trust, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a non-diversified, closed-end management investment company, but operates as a diversified management investment company.

The Trust’s investment objective is to seek to provide a high level of current income which is exempt from federal and Pennsylvania income taxes and, where possible under local law, local income and personal property taxes, consistent with preservation of capital. The Trust will invest substantially all of its assets in Pennsylvania municipal securities rated investment grade at the time of investment, but may invest up to 20% of its assets in unrated securities which are believed to be of comparable quality to those rated investment grade.

The following is a summary of the significant accounting policies followed by the Trust in the preparation of its financial statements.

| A. |
| --- |
| Securities are fair valued using an
evaluated quote provided by an independent pricing service
approved by the Board of Trustees. Evaluated quotes provided by
the pricing service may be determined without exclusive reliance
on quoted prices and may reflect appropriate factors such as
institution-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, individual
trading characteristics and other market data. Securities with a
demand feature exercisable within one to seven days are valued
at par. Debt securities are subject to interest rate and credit
risks. In addition, all debt securities involve some risk of
default with respect to interest and principal payments. |
| Securities for which market quotations
either are not readily available or are unreliable are valued at
fair value as determined in good faith by or under the
supervision of the Trust’s officers following procedures
approved by the Board of Trustees. Some of the factors which may
be considered in determining fair value are fundamental
analytical data relating to the investment; the nature and
duration of any restrictions on transferability or disposition;
trading |

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| | in similar securities by the same issuer or comparable
companies; relevant political, economic or issuer specific news;
and other relevant factors under the circumstances. |
| --- | --- |
| | Valuations change in response to many
factors including the historical and prospective earnings of the
issuer, the value of the issuer’s assets, general economic
conditions, interest rates, investor perceptions and market
liquidity. Because of the inherent uncertainties of valuation,
the values reflected in the financial statements may materially
differ from the value received upon actual sale of those
investments. |
| B. | Securities
Transactions and Investment Income —
Securities transactions are accounted for on a trade date basis.
Realized gains or losses on sales are computed on the basis of
specific identification of the securities sold. Interest income
is recorded on the accrual basis from settlement date. Dividend
income (net of withholding tax, if any) is recorded on the
ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
| | The Trust may periodically participate
in litigation related to Trust investments. As such, the Trust
may receive proceeds from litigation settlements. Any proceeds
received are included in the Statement of Operations as realized
gain (loss) for investments no longer held and as unrealized
gain (loss) for investments still held. |
| | Brokerage commissions and mark ups are
considered transaction costs and are recorded as an increase to
the cost basis of securities purchased and/or a
reduction of proceeds on a sale of securities. Such transaction
costs are included in the determination of net realized and
unrealized gain (loss) from investment securities reported in
the Statement of Operations and the Statement of Changes in Net
Assets and the net realized and unrealized gains (losses) on
securities per share in the Financial Highlights. Transaction
costs are included in the calculation of the Trust’s net
asset value and, accordingly, they reduce the Trust’s total
returns. These transaction costs are not considered operating
expenses and are not reflected in net investment income reported
in the Statement of Operations and Statement of Changes in Net
Assets, or the net investment income per share and ratios of
expenses and net investment income reported in the Financial
Highlights, nor are they limited by any expense limitation
arrangements between the Trust and the investment adviser. |
| C. | Country
Determination — For the purposes of making
investment selection decisions and presentation in the Schedule
of Investments, the investment adviser may determine the country
in which an issuer is located and/or credit risk exposure based on various factors. These factors
include the laws of the country under which the issuer is
organized, where the issuer maintains a principal office, the
country in which the issuer derives 50% or more of its total
revenues and the country that has the primary market for the
issuer’s securities, as well as other criteria. Among the
other criteria that may be evaluated for making this
determination are the country in which the issuer maintains 50%
or more of its assets, the type of security, financial
guarantees and enhancements, the nature of the collateral and
the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States
of America, unless otherwise noted. |
| D. | Distributions —
The Trust declares and pays monthly dividends from net
investment income to common shareholders. Distributions from net
realized capital gain, if any, are generally paid annually and
are distributed on a pro rata basis to common and preferred
shareholders. The Trust may elect to treat a portion of the
proceeds from redemptions as distributions for federal income
tax purposes. |
| E. | Federal Income
Taxes — The Trust intends to comply with
the requirements of Subchapter M of the Internal Revenue
Code necessary to qualify as a regulated investment company and
to distribute substantially all of the Trust’s taxable
earnings to shareholders. As such, the Trust will not be subject
to federal income taxes on otherwise taxable income (including
net realized capital gain) that is distributed to shareholders.
Therefore, no provision for federal income taxes is recorded in
the financial statements. |
| | In addition, the Trust intends to invest
in such municipal securities to allow it to qualify to pay
shareholders “exempt dividends”, as defined in the
Internal Revenue Code. |
| | The Trust files tax returns in the
U.S. Federal jurisdiction and certain other jurisdictions.
Generally, the Trust is subject to examinations by such taxing
authorities for up to three years after the filing of the return
for the tax period. |
| F. | Accounting
Estimates — The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America (“GAAP”)
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of
revenues and expenses during the reporting period including
estimates and assumptions related to taxation. Actual results
could differ from those estimates by a significant amount. In
addition, the Trust monitors for material events or transactions
that may occur or become known after the period-end date and
before the date the financial statements are released to print. |
| G. | Indemnifications —
Under the Trust’s organizational documents, each Trustee,
officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of
their duties to the Trust. Additionally, in the normal course of
business, the Trust enters into contracts, including the
Trust’s servicing agreements that contain a variety of
indemnification clauses. The Trust’s maximum exposure under
these arrangements is unknown as this would involve future
claims that may be made against the Trust that have not yet
occurred. The risk of material loss as a result of such
indemnification claims is considered remote. |
| H. | Cash and Cash
Equivalents — For the purposes of the
Statement of Cash Flows the Trust defines Cash and Cash
Equivalents as cash (including foreign currency), money market
funds and other investments held in lieu of cash and excludes
investments made with cash collateral received. |
| I. | Floating Rate
Note Obligations — The Trust invests
in inverse floating rate securities, such as Residual Interest
Bonds (“RIBs”) or Tender Option Bonds
(“TOBs”) for investment purposes and to enhance the
yield of the Trust. Inverse floating rate investments tend to
underperform the market for fixed rate bonds in a rising
interest rate environment, but tend to outperform the market for
fixed rate bonds when interest rates decline or remain
relatively stable. Such transactions may be purchased in the
secondary market without first owning the underlying bond or by
the sale of fixed rate bonds by the Trust to special purpose
trusts established by a broker dealer (“Dealer
Trusts”) in exchange for cash and residual interests in the
Dealer Trusts’ assets and cash flows, which are in the form
of inverse floating rate securities. The Dealer Trusts finance
the purchases of the fixed rate bonds by issuing floating rate
notes to third parties and allowing the Trust to retain residual
interest in the bonds. The floating rate 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.
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 |

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| | 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. |
| --- | --- |
| | TOBs are presently classified as private
placement securities. Private placement securities are subject
to restrictions on resale because they have not been registered
under the Securities Act of 1933, as amended or are otherwise
not readily marketable. As a result of the absence of a public
trading market for these securities, they may be less liquid
than publicly traded securities. Although these securities may
be resold in privately negotiated transactions, the prices
realized from these sales could be less than those originally
paid by the Trust or less than what may be considered the fair
value of such securities. |
| | 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 obligations and any administrative
expenses of the Dealer Trusts as a component of Interest,
facilities and maintenance fees on the Statement of
Operations. |
| | The Trust generally invests in inverse
floating rate securities that include embedded leverage, thus
exposing the Trust to greater risks and increased costs. The
primary risks associated with inverse floating rate securities
are varying degrees of liquidity and the changes in the value of
such securities in response to changes in market rates of
interest to a greater extent than the value of an equal
principal amount of a fixed rate security having similar credit
quality, redemption provisions and maturity which may cause the
Trust’s net asset value to be more volatile than if it had
not invested in inverse floating rate securities. In certain
instances, the short-term floating rate interests created by the
special purpose trust may not be able to be sold to third
parties or, in the case of holders tendering (or putting) such
interests for repayment of principal, may not be able to be
remarketed to third parties. In such cases, the special purpose
trust holding the long-term fixed rate bonds may be collapsed.
In the case of RIBs or TOBs created by the contribution of
long-term fixed income bonds by the Trust, the Trust will then
be required to repay the principal amount of the tendered
securities. During times of market volatility, illiquidity or
uncertainty, the Trust could be required to sell other portfolio
holdings at a disadvantageous time to raise cash to meet that
obligation. |
| J. | Interest,
Facilities and Maintenance Fees — Interest,
Facilities and Maintenance Fees include interest and related
borrowing costs such as commitment fees and other expenses
associated with lines of credit and interest and administrative
expenses related to establishing and maintaining Auction Rate
Preferred Shares and floating rate note obligations, if any. |
| K. | Other
Risks — The value of, payment of interest
on, repayment of principal for and the ability to sell a
municipal security may be affected by constitutional amendments,
legislative enactments, executive orders, administrative
regulations, voter initiatives and the economics of the regions
in which the issuers are located. |
| | Since many municipal securities are
issued to finance similar projects, especially those relating to
education, health care, transportation and utilities, conditions
in those sectors can affect the overall municipal securities
market and a Trust’s investments in municipal securities. |
| | There is some risk that a portion or all
of the interest received from certain tax-free municipal
securities could become taxable as a result of determinations by
the Internal Revenue Service. |

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Trust pays an advisory fee to the Adviser based on the annual rate 0.55% of the Trust’s average daily managed assets including current preferred shares and leverage entered into to retire preferred shares of the Trust.

Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Trust, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Trust based on the percentage of assets allocated to such Sub-Adviser(s).

The Adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses to the extent necessary to limit the Trust’s expenses (excluding certain items discussed below) to 0.98%. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Trust’s expenses to exceed the limit reflected above: (1) interest, facilities and maintenance fees; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Trust has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2012.

For the year ended February 29, 2012, the Adviser waived advisory fees of $168,193.

The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Trust has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Trust. For the year ended February 29, 2012, expenses incurred under this agreement are shown in the Statement of Operations as administrative services fees.

Certain officers and trustees of the Trust are officers and directors of Invesco.

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs

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(Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

| Level 1 — | Prices are determined using quoted prices in an active market
for identical assets. |
| --- | --- |
| Level 2 — | Prices are determined using other significant observable inputs.
Observable inputs are inputs that other market participants may
use in pricing a security. These may include quoted prices for
similar securities, interest rates, prepayment speeds, credit
risk, yield curves, loss severities, default rates, discount
rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In
situations where quoted prices or observable inputs are
unavailable (for example, when there is little or no market
activity for an investment at the end of the period),
unobservable inputs may be used. Unobservable inputs reflect the
Trust’s own assumptions about the factors market
participants would use in determining fair value of the
securities or instruments and would be based on the best
available information. |

The following is a summary of the tiered valuation input levels, as of February 29, 2012. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

During the year ended February 29, 2012, there were no significant transfers between investment levels.

	Level 1	Level 2	Level 3	Total
Municipal Obligations	$ —	$ 556,494,560	$ —	$ 556,494,560

NOTE 4—Trustees’ and Officers’ Fees and Benefits

“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Trust to pay remuneration to certain Trustees and Officers of the Trust.

During the year ended February 29, 2012, the Trust paid legal fees of $58,300 for services rendered by Skadden, Arps, Slate, Meagher & Flom LLP as counsel to the Trust. A trustee of the Trust is of counsel with the firm.

NOTE 5—Cash Balances and Borrowings

The Trust is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption amount due custodian . To compensate the custodian bank for such overdrafts, the overdrawn Trust may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

Inverse floating rate obligations resulting from the transfer of bonds to Dealer Trusts are accounted for as secured borrowings. The average floating rate notes outstanding and average annual interest and fees related to inverse floating rate note obligations during the year ended February 29, 2012 were $54,778,077 and 0.85%, respectively.

NOTE 6—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Years Ended February 29, 2012, the Period November 1, 2010 to February 28, 2011 and the Year Ended October 31, 2010:

	Year ended	Four months — ended	Year ended
	February 29,	February 28,	October 31,
	2012	2011	2010
Ordinary income	$ —	$ —	$ 458,979
Tax-exempt	21,794,119	7,348,504	21,489,889
Total distributions	$ 21,794,119	$ 7,348,504	$ 21,948,868

Tax Components of Net Assets at Period-End:

Undistributed ordinary income	2012 — $ 6,218,443
Net unrealized appreciation — investments	33,648,128
Post-October deferrals	(1,733,232	)
Capital loss carryforward	(31,473,358	)
Shares of beneficial interest — common shares	350,128,190
Total net assets	$ 356,788,171

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Trust’s net unrealized appreciation difference is attributable primarily to book to tax amortization and accretion differences and TOBs.

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Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Trust to utilize. The Regulated Investment Company Modernization Act of 2010 (the “Act”) eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Trust has a capital loss carryforward as of February 29, 2012, which expires as follows:

| Capital
Loss Carryforward* — Expiration | Short-Term | Long-Term | Total |
| --- | --- | --- | --- |
| February 29, 2016 | $ 23,201,246 | $ — | $ 23,201,246 |
| February 28, 2017 | 7,115,625 | — | 7,115,625 |
| February 28, 2019 | 789,219 | — | 789,219 |
| Not subject to expiration | — | 367,268 | 367,268 |
| | $ 31,106,090 | $ 367,268 | $ 31,473,358 |

• Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code.

NOTE 7—Investment Securities

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Trust during the year ended February 29, 2012 was $77,306,711 and $82,525,174, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.

| Unrealized
Appreciation (Depreciation) of Investment Securities on a Tax
Basis — Aggregate unrealized appreciation of investment securities | $ 37,825,693 | |
| --- | --- | --- |
| Aggregate unrealized (depreciation) of investment securities | (4,177,565 | ) |
| Net unrealized appreciation of investment securities | $ 33,648,128 | |
| Cost of investments for tax purposes is $522,846,432. | | |

NOTE 8—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of inverse floater adjustments, on February 29, 2012, undistributed net investment income was decreased by $9,714, undistributed net realized gain (loss) was increased by $4,383 and shares of beneficial interest was increased by $5,331. This reclassification had no effect on the net assets of the Trust.

NOTE 9—Common Shares of Beneficial Interest

Transactions in common shares of beneficial interest were as follows:

Year ended	ended	Year ended
February 29,	February 28,	October 31,
2012	2011	2010
Beginning shares	23,791,782	23,791,782	23,776,128
Shares Issued Through Dividend Reinvestment	5,484	—	15,654
Ending shares	23,797,266	23,791,782	23,791,782

The Trustees have approved share repurchases whereby the Trust may, when appropriate, purchase shares in the open market or in privately negotiated transactions at a price not above market value or net asset value, whichever is lower at the time of purchase.

NOTE 10—Preferred Shares of Beneficial Interest

The Trust has issued Auction Rate Preferred Shares (“preferred shares”) which have a liquidation value of $25,000 per share plus the redemption premium, if any, plus accumulated but unpaid dividends, whether or not declared, thereon to the date of distribution. The Trust may redeem such shares, in whole or in part, at the original purchase price of $25,000 per share plus accumulated but unpaid dividends, whether or not declared, thereon to the date of redemption.

Historically, the Trust paid annual fees equivalent to 0.25% of the preferred share liquidation value for the remarketing efforts associated with the preferred auction. Effective March 31, 2009, the Trust decreased this amount to 0.15% due to auction failures. In the future, if auctions no longer fail, the Trust may return to an annual fee payment of 0.25% of the preferred share liquidation value. These fees are included as a component of “Interest, facilities and maintenance fees” on the Statement of Operations.

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Dividends, which are cumulative, are reset through auction procedures.

| Series | Shares† | Amount — (000’s
omitted)† | Rate† | Reset
Date | Range of — Dividend
Rates†† |
| --- | --- | --- | --- | --- | --- |
| A | 1,065 | $ 26,625 | 0.244 % | 03/01/2012 | 0.110-0.411 % |
| B | 945 | 23,625 | 0.274 | 03/16/2012 | 0.107-0.427 |
| C | 1,539 | 38,475 | 0.229 | 03/08/2012 | 0.107-0.411 |
| D | 1,655 | 41,375 | 0.229 | 03/27/2012 | 0.107-0.396 |

†	As of February 29, 2012.
††	For the year ended
February 29, 2012.

Subsequent to February 29, 2012 and up through April 5, 2012, the Trust paid dividends to preferred shareholders at rates ranging from 0.198% to 0.331% in the aggregate amount of $31,946.

The Trust is subject to certain restrictions relating to the preferred shares. Failure to comply with these restrictions could preclude the Trust from declaring any distributions to common shareholders or purchasing common shares and/or could trigger the mandatory redemption of preferred shares at liquidation value.

Beginning February 13, 2008 and continuing through February 29, 2012, all series of preferred shares of the Trust were not successfully remarketed. As a result, the dividend rates of these preferred shares were reset to the maximum applicable rate.

The preferred shares, which are entitled to one vote per share, generally vote with the common shares but vote separately as a class to elect two Trustees and on any matters affecting the rights of the preferred shares.

The preferred shares are not listed on an exchange. Investors in preferred shares may participate in auctions through authorized broker-dealers; however, such broker-dealers are not required to maintain a secondary market in preferred shares, and there can be no assurance that a secondary market will develop, or if it does develop, a secondary market may not provide you with liquidity. When a preferred share auction fails, investors may not be able to sell any or all of their preferred shares and because of the nature of the market for preferred shares, investors may receive less than the price paid for their preferred shares if sold outside of the auction.

The Trust entered into additional floating rate note and dealer trust obligations as an alternative form of leverage in order to redeem a portion of its preferred shares. Transactions in preferred shares were as follows:

Shares		Value		Shares		Value		Shares		Value		Shares		Value
Outstanding at February 28, 2011	1,260	$	31,500,000		1,120	$	28,000,000		1,820	$	45,500,000		1,960	$	49,000,000
Shares redeemed	(195	)	(4,875,000	)	(175	)	(4,375,000	)	(281	)	(7,025,000	)	(305	)	(7,625,000	)
Outstanding at February 29, 2012	1,065	$	26,625,000		945	$	23,625,000		1,539	$	38,475,000		1,655	$	41,375,000

NOTE 11—Dividends

The Trust declared the following dividends to common shareholders from net investment income subsequent to February 29, 2012:

| Declaration
Date — March 1, 2012 | Amount Per
Share — $ 0.0750 | March 14, 2012 | March 30, 2012 |
| --- | --- | --- | --- |
| April 2, 2012 | $ 0.0750 | April 13, 2012 | April 30, 2012 |

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NOTE 12—Financial Highlights

The following schedule presents financial highlights for one common share of the Trust outstanding throughout the periods indicated.

	Year ended	ended
	February 29,	February 28,		Year ended
October 31,
	2012	2011		2010		2009		2008		2007
Net asset value, beginning of the period	$ 13.07	$	14.29	$	13.51	$	11.29	$	15.05	$	15.99
Net investment
income (a)	0.93		0.32		1.00		1.02		1.09		1.08
Net gains on securities (both realized and unrealized)	1.91		(1.23	)	0.71		2.06		(3.77	)	(0.97	)
Distributions paid to preferred shareholders:
Net investment income	(0.02	)	(0.01	)	(0.03	)	(0.06	)	(0.33	)	(0.34	)
Net realized gain	—		—		—		—		—		0.00	(b)
Total income (loss) from investment operations	2.82		(0.92	)	1.68		3.02		(3.01	)	(0.23	)
Distributions paid to common shareholders:
Net investment income	(0.90	)	(0.30	)	(0.90	)	(0.80	)	(0.75	)	(0.71	)
Net realized gain	—		—		—		—		—		0.00	(b)
Net asset value, end of the period	$ 14.99	$	13.07	$	14.29	$	13.51	$	11.29	$	15.05
Market value, end of the period	$ 14.77	$	12.52	$	14.69	$	12.30	$	10.38	$	13.55
Total return at net asset
value (c)	22.58	%	(6.38	)%	12.94	%
Total return at market
value (d)	26.09	%	(12.76	)%	27.52	%	27.27	%	(18.75	)%	2.72	%
Net assets applicable to common shares at end of the period
(000’s omitted)	$ 356,788	$	310,897	$	340,009	$	321,178	$	268,437	$	365,258
Portfolio
turnover (e)	15	%	6	%	16	%	23	%	23	%	30	%
Ratios/supplemental data based on average net assets applicable
to common shares:
Ratio of expenses:
With fee waivers and/or expense
reimbursements (f)	1.20	% (g)	1.22	% (i)(k)	1.23	%	1.33	%	1.63	%	2.29	%
With fee waivers and/or expense reimbursements excluding interest, facilities and
maintenance
fees (f)(j)	0.99	% (g)	0.98	% (i)(k)	1.06	%	1.10	%	0.96	%	1.03	%
Without fee waivers and/or expense
reimbursements (f)	1.25	% (g)	1.28	% (i)(k)	1.33	%	1.50	%	1.80	%	2.44	%
Ratio of net investment income before preferred dividends	6.71	% (g)	7.41	% (k)	7.23	%	8.24	%	7.87	%	6.90	%
Preferred share dividends	0.11	% (g)	0.21	% (k)
Ratio of net investment income after preferred share dividends	6.60	% (g)	7.20	% (k)	7.04	%	7.71	%	5.51	%	4.73	%
Senior Securities:
Total amount of preferred shares outstanding (000’s omitted)	$ 130,100	$	154,000	$	154,000	$	165,000	$	176,000	$	220,000
Asset coverage per preferred
share (h)	$ 93,560	$	75,470	$	80,199	$	73,666	$	63,163	$	66,543
Liquidating preference per preferred share	$ 25,000	$	25,000	$	25,000	$	25,000	$	25,000	$	25,000

| (a) | Calculated using average shares
outstanding. |
| --- | --- |
| (b) | Amount is less than $0.01 per share. |
| (c) | Includes adjustments in accordance
with accounting principles generally accepted in the United
States of America and as such, the net asset value for financial
reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for
shareholder transactions. Not annualized for periods less than
one year, if applicable. |
| (d) | 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. Not annualized for periods less
than one year, if applicable. |
| (e) | Portfolio turnover is not
annualized for periods less than a year, if applicable. |
| (f) | Ratios do not reflect the effect of
dividend payments to preferred shareholders. |
| (g) | Ratios are based on average net
assets applicable to common shares (000’s omitted) of
$330,568. |
| (h) | Calculated by subtracting the
Trust’s total liabilities (not including the preferred
shares) from the Trust’s total assets and dividing this by
the number of preferred shares outstanding. |
| (i) | Ratio includes an adjustment for a
change in accounting estimate for professional services fees
during the period. Ratios excluding this adjustment would have
been higher by 0.05%. |
| (j) | For the years ended
October 31, 2010 and prior, ratio does not exclude
facilities and maintenance fees. |
| (k) | Annualized. |

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NOTE 13—Significant Event

The Board of Trustees of the Trust (the “Board”) approved the redomestication of the Trust, a Pennsylvania business trust, into a Delaware statutory trust pursuant to an Agreement and Plan of Redomestication. The redomestication is subject to shareholder approval.

In addition, the Board also approved a plan to redeem all of the outstanding auction rate preferred shares at their respective liquidation preferences. These redemptions are anticipated to be funded with proceeds received from the issuance of Variable Rate Munifund Term Preferred Shares (“VMTPS”) and Tender Option Bonds (“TOBs”). VMTPS are a variable rate form of preferred stock with a mandatory redemption date. These redemptions and this issuance of VMTPS are targeted to occur in the first half of 2012.

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Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of

Invesco Van Kampen Pennsylvania Value Municipal Income Trust:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Invesco Van Kampen Pennsylvania Value Municipal Income Trust (hereafter referred to as the “Trust”) at February 29, 2012, the results of its operations and cash flows for the year then ended, and the changes in its net assets and financial highlights for the year then ended, the period ended February 28, 2011 and the year ended October 31, 2010, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements 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 are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Trust for the periods ended October 31, 2009 and prior were audited by other independent auditors whose report dated December 21, 2009 expressed an unqualified opinion on those financial statements.

PRICEWATERHOUSECOOPERS LLP

April 23, 2012

Houston, Texas

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Tax Information

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Trust designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended February 29, 2012:

| Federal and State Income
Tax | |
| --- | --- |
| Qualified Dividend Income | 0% |
| Corporate Dividends Received Reduction | 0% |
| Tax-Exempt Interest Dividends* | 99.97% |

• The above percentage is based on ordinary income dividends paid to shareholders during the Trust’s fiscal year.

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Supplemental Information

The disclosure concerning the investment objective, principal investment strategies and principal risks of Invesco Van Kampen Pennsylvania Value Municipal Income Trust (the “Fund”) is being updated. The investment objective has not changed; however the Board of Trustees of the Fund approved a revised statement of the principal investment strategies for the Fund. The revised disclosure of the investment objective, principal investment strategies and associated principal risks for the Fund is set forth below.

Investment Objective

The investment objective of Invesco Van Kampen Pennsylvania Value Municipal Income Trust (the “Fund”) is to provide common shareholders with a high level of current income exempt from federal and Pennsylvania income taxes and, where possible under local law, local income and personal property taxes, consistent with preservation of capital.

The investment objective is fundamental and may not be changed without the approval of a majority of the Fund’s outstanding voting securities, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”).

Principal Investment Strategies of the Fund

Under normal market conditions, at least 80% of the Fund’s net assets will be invested in Pennsylvania municipal securities. The policy stated in the foregoing sentence is a fundamental policy of the Fund and may not be changed without approval of a majority of the Fund’s outstanding voting securities, as defined in the 1940 Act. Under normal market conditions, the Fund’s investment adviser, Invesco Advisers, Inc. (the “Adviser”), seeks to achieve the Fund’s investment objective by investing at least 80% of the Fund’s net assets in investment grade Pennsylvania municipal securities. Investment grade securities are: (i) securities rated BBB- or higher by Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. (“S&P”) or Baa3 or higher by Moody’s Investors Service, Inc. (“Moody’s”) or an equivalent rating by another nationally recognized statistical rating organization (“NRSRO”), (ii) comparably rated short term securities, or (iii) unrated municipal securities determined by the Adviser to be of comparable quality at the time of purchase. Under normal market conditions, the Fund may invest up to 20% of its net assets in municipal securities rated below investment grade or that are unrated but determined by the Adviser to be of comparable quality at the time of purchase. Lower-grade securities are commonly referred to as junk bonds and involve greater risks than investments in higher-grade securities. The Fund does not purchase securities that are in default or rated in categories lower than B- by S&P or B3 by Moody’s or unrated securities of comparable quality.

The foregoing percentage and rating limitations apply at the time of acquisition of a security based on the last previous determination of the Fund’s net asset value. Any subsequent change in any rating by a rating service or change in percentages resulting from market fluctuations or other changes in the Fund’s net assets will not require elimination of any security from the Fund’s portfolio.

The Fund may invest all or a substantial portion of its total assets in municipal securities that may subject certain investors to the federal alternative minimum tax and, therefore, a substantial portion of the income produced by the Fund may be taxable for such investors under the federal alternative minimum tax. Accordingly, the Fund may not be a suitable investment for investors who are already subject to the federal alternative minimum tax or could become subject to the federal alternative minimum tax as a result of an investment in the Fund.

The Adviser buys and sells securities for the Fund with a view towards seeking a high level of current income exempt from federal and Pennsylvania income taxes and, where possible under local law, local income and personal property taxes, subject to reasonable credit risk. As a result, the Fund will not necessarily invest in the highest yielding municipal securities permitted by its investment policies if the Adviser determines that market risks or credit risks associated with such investments would subject the Fund’s portfolio to undue risk. The potential realization of capital gains or losses resulting from possible changes in interest rates will not be a major consideration and frequency of portfolio turnover generally will not be a limiting factor if the Adviser considers it advantageous to purchase or sell securities.

The Adviser employs a bottom-up, research-driven approach to identify securities that have attractive risk/reward characteristics for the sectors in which the Fund invests. The Adviser also integrates macroeconomic analysis and forecasting into its evaluation and ranking of various sectors and individual securities. Finally, the Fund employs leverage in an effort to enhance the Fund’s income and total return. Sell decisions are based on: (i) a deterioration or likely deterioration of an individual issuer’s capacity to meet its debt obligations on a timely basis; (ii) a deterioration or likely deterioration of the broader fundamentals of a particular industry or sector; and (iii) opportunities in the secondary or primary market to purchase a security with better relative value.

Municipal Securities. Municipal securities are obligations issued by or on behalf of states, territories or possessions of the United States, the District of Columbia and their cities, counties, political subdivisions, agencies and instrumentalities, the interest on which, in the opinion of bond counsel or other counsel to the issuers of such securities, is, at the time of issuance, exempt from federal income tax. Pennsylvania municipal securities are municipal securities the interest on which, in the opinion of bond counsel or other counsel to the issuers of such securities is, at the time of issuance, exempt from Pennsylvania personal income taxes. The Adviser does not conduct its own analysis of the tax status of the interest paid by municipal securities held by the Fund, but will rely on the opinion of counsel to the issuer of each such instrument.

The issuers of municipal securities obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, highways, bridges, schools, hospitals, housing, mass transportation, streets and water and sewer works. Other public purposes for which municipal securities may be issued include refunding outstanding obligations, obtaining funds for general operating expenses and obtaining funds to lend to other public institutions and facilities. Certain types of municipal securities are issued to obtain funding for privately operated facilities.

The yields of municipal securities depend on, among other things, general money market conditions, general conditions of the municipal securities market, size of a particular offering, the maturity of the obligation and rating of the issue. There is no limitation as to the maturity of the municipal securities in which the Fund may invest. The ratings of S&P and Moody’s represent their opinions of the quality of the municipal securities they undertake to rate. These ratings are general and are not absolute standards of quality. Consequently, municipal securities with the same maturity, coupon and rating may have different yields while municipal securities of the same maturity and coupon with different ratings may have the same yield.

The two principal classifications of municipal securities are general obligation and revenue or special delegation securities. General obligation securities are secured by the issuer’s pledge of its faith, credit and taxing power for the payment of principal and interest. Revenue securities are usually payable only from the

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revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source. Industrial development bonds are usually revenue securities, the credit quality of which is normally directly related to the credit standing of the industrial user involved.

Within these principal classifications of municipal securities, there are a variety of types of municipal securities, including:

| • | Variable rate securities, which bear rates of interest that are
adjusted periodically according to formulae intended to reflect
market rates of interest. |
| --- | --- |
| • | Municipal notes, including tax, revenue and bond anticipation
notes of short maturity, generally less than three years, which
are issued to obtain temporary funds for various public purposes. |
| • | Variable rate demand notes, which are obligations that contain a
floating or variable interest rate adjustment formula and which
are subject to a right of demand for payment of the principal
balance plus accrued interest either at any time or at specified
intervals. The interest rate on a variable rate demand note may
be based on a known lending rate, such as a bank’s prime
rate, and may be adjusted when such rate changes, or the
interest rate may be a market rate that is adjusted at specified
intervals. The adjustment formula maintains the value of the
variable rate demand note at approximately the par value of such
note at the adjustment date. |
| • | Municipal leases, which are obligations issued by state and
local governments or authorities to finance the acquisition of
equipment and facilities. Certain municipal lease obligations
may include non-appropriation clauses which provide that the
municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated
for such purpose on a yearly basis. |
| • | Private activity bonds, which are issued by, or on behalf of,
public authorities to finance privately operated facilities. |
| • | Participation certificates, which are obligations issued by
state or local governments or authorities to finance the
acquisition of equipment and facilities. They may represent
participations in a lease, an installment purchase contract or a
conditional sales contract. |
| • | Municipal securities that may not be backed by the faith, credit
and taxing power of the issuer. |
| • | Municipal securities that are privately placed and that may have
restrictions on the Fund’s ability to resell, such as
timing restrictions or requirements that the securities only be
sold to qualified institutional investors. |
| • | Municipal securities that are insured by financial insurance
companies. |

Derivatives. The Fund may use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based on the value of another underlying asset, interest rate, index or financial instrument. Derivative instruments and techniques that the Fund may use include:

Futures. A futures contract is a standardized agreement between two parties to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Futures contracts are bilateral agreements, with both the purchaser and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date.

Swaps. A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Fund’s obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty.

Inverse Floating Rate Obligations. The Fund may invest in inverse floating rate obligations. Inverse floating rate obligations are variable rate debt instruments that pay interest at rates that move in the opposite direction of prevailing interest rates. Because the interest rate paid to holders of such obligations is generally determined by subtracting a variable or floating rate from a predetermined amount, the interest rate paid to holders of such obligations will decrease as such variable or floating rate increases and increase as such variable or floating rate decreases. The inverse floating rate obligations in which the Fund may invest include derivative instruments such as residual interest bonds (“RIBs”) or tender option bonds (“TOBs”). Such instruments are typically created by a special purpose trust that holds long-term fixed rate bonds and sells two classes of beneficial interests: short-term floating rate interests, which are sold to third party investors, and inverse floating residual interests, which are purchased by the Fund. The short-term floating rate interests have first priority on the cash flow from the bond held by the special purpose trust and the Fund (as holder of the inverse floating residual interests) is paid the residual cash flow from the bond held by the special purpose trust.

When-Issued and Delayed Delivery Transactions. The Fund may purchase and sell securities on a when-issued and delayed delivery basis, which means that the Fund buys or sells a security with payment and delivery taking place in the future. The payment obligation and the interest rate are fixed at the time the Fund enters into the commitment. No income accrues on such securities until the date the Fund actually takes delivery of the securities.

Preferred Shares. The Fund uses leverage in the form of Preferred Shares. Dividends on the Preferred Shares will typically be comparable to the yields on investment grade short-term municipal securities, although the assets attributable to the Preferred Shares will generally be invested in longer-term municipal securities, which typically have higher yields than short-term municipal securities. Assuming such a yield differential, this leveraged capital structure enables the Fund to pay a potentially higher yield on the Common Shares than similar investment companies that do not use leverage.

The Fund will generally maintain an asset coverage of the value of the Fund’s total assets, less all liabilities and indebtedness of the Fund not represented by the Preferred Shares, of 200% of the aggregate liquidation value of the Preferred Shares. The liquidation value of the Preferred Shares is their aggregate original purchase price, plus any accrued and unpaid dividends.

Portfolio Turnover. The Fund may sell securities without regard to the length of time they have been held to take advantage of new investment opportunities, yield differentials, or for other reasons. The Fund’s portfolio turnover rate may vary from year to year. A high portfolio turnover rate (100% or more) would increase the Fund’s transaction costs (including brokerage commissions and dealer costs), which would adversely impact the Fund’s performance. Higher portfolio turnover may result in the realization of more short-term capital gains than if the Fund had lower portfolio turnover. Additionally, in a declining market,

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portfolio turnover may create realized capital losses. The turnover rate will not be a limiting factor, however, if the Adviser considers portfolio changes appropriate.

Temporary Defensive Strategy. When market conditions dictate a more defensive investment strategy, the Fund may, on a temporary basis, hold cash or invest a portion or all of its assets in high-quality, short-term municipal securities. If such municipal securities are not available or, in the judgment of the Adviser, do not afford sufficient protection against adverse market conditions, the Fund may invest in taxable instruments. Such taxable securities may include securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, other investment grade quality fixed income securities, prime commercial paper, certificates of deposit, bankers’ acceptances and other obligations of domestic banks, repurchase agreements and money market funds (including money market funds affiliated with the Adviser). In taking a defensive position, the Fund would temporarily not be pursuing its principal investment strategies and may not achieve its investment objective.

Zero Coupon/PIK Bonds. The Fund may invest in securities not producing immediate cash income, including zero coupon securities or pay-in-kind (“PIK”) securities, when their effective yield over comparable instruments producing cash income makes these investments attractive. PIK securities are debt securities that pay interest through the issuance of additional securities. Zero coupon securities are debt securities that do not entitle the holder to any periodic payment of interest prior to maturity or a specified date when the securities begin paying current interest. They are issued and traded at a discount from their face amounts or par value, which discount varies depending on the time remaining until cash payments begin, prevailing interest rates, liquidity of the security and the perceived credit quality of the issuer. The securities do not entitle the holder to any periodic payments of interest prior to maturity, which prevents any reinvestment of interest payments at prevailing interest rates if prevailing interest rates rise. On the other hand, because there are no periodic interest payments to be reinvested prior to maturity, zero coupon securities eliminate the reinvestment risk and may lock in a favorable rate of return to maturity if interest rates drop. In addition, the Fund would be required to distribute the income on these instruments as it accrues, even though the Fund will not receive all of the income on a current basis or in cash. Thus, the Fund may have to sell other investments, including when it may not be advisable to do so, to make income distributions to the Common Shareholders.

Principal Risks of Investing in the Fund

As with any fund investment, loss of money is a risk of investing. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. As with any managed fund, the Adviser may not be successful in selecting the best-performing securities or investment techniques, and the Fund’s performance may lag behind that of similar funds. The risks associated with an investment in the Fund can increase during times of significant market volatility.

Municipal Securities Risk. Under normal market conditions, longer-term municipal securities generally provide a higher yield than shorter-term municipal securities. The Adviser may adjust the average maturity of the Fund’s portfolio from time to time depending on its assessment of the relative yields available on securities of different maturities and its expectations of future changes in interest rates. The yields of municipal securities may move differently and adversely compared to the yields of the overall debt securities markets. Certain kinds of municipal securities are subject to specific risks that could cause a decline in the value of those securities:

Lease Obligations. Certain lease obligations contain non-appropriation clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for that purpose by the appropriate legislative body on an annual or other periodic basis. Consequently, continued lease payments on those lease obligations containing non-appropriation clauses are dependent on future legislative actions. If these legislative actions do not occur, the holders of the lease obligation may experience difficulty in exercising their rights, including disposition of the property.

Private Activity Bonds. The issuers of private activity bonds in which the Fund may invest may be negatively impacted by conditions affecting either the general credit of the user of the private activity project or the project itself. Conditions such as regulatory and environmental restrictions and economic downturns may lower the need for these facilities and the ability of users of the project to pay for the facilities. Private activity bonds may also pay interest subject to the alternative minimum tax.

In 2011, S&P lowered its long-term sovereign credit rating on the U.S. to “AA+” from “AAA” with a negative outlook. Following S&P’s downgrade of the long-term sovereign credit rating on the U.S., the major rating agencies have also placed many municipalities on review for potential downgrades, which could impact the market price, liquidity and volatility of the municipal securities held by the Fund in its portfolio. If the universe of municipal securities meeting the Fund’s ratings and credit quality requirements shrinks, it may be more difficult for the Fund to meet its investment objectives and the Fund’s investments may become more concentrated in fewer issues. Future downgrades by other rating agencies could have significant adverse effects on the economy generally and could result in significant adverse impacts on municipal issuers and the Fund.

Many state and municipal governments that issue securities are under significant economic and financial stress and may not be able to satisfy their obligations. In response to the national economic downturn, governmental cost burdens have been and may continue to be reallocated among federal, state and local governments. The ability of municipal issuers to make timely payments of interest and principal may be diminished during general economic downturns and as governmental cost burdens are reallocated among federal, state and local governments. Also, as a result of the downturn and related unemployment, declining income and loss of property values, many state and local governments have experienced significant reductions in revenues and consequently difficulties meeting ongoing expenses. As a result, certain of these state and local governments may have difficulty paying or default in the payment of principal or interest on their outstanding debt, may experience ratings downgrades of their debt. The taxing power of any governmental entity may be limited by provisions of state constitutions or laws and an entity’s credit will depend on many factors, including the entity’s tax base, the extent to which the entity relies on federal or state aid, and other factors which are beyond the entity’s control. In addition, laws enacted in the future by Congress or state legislatures or referenda could extend the time for payment of principal and/or interest, or impose other constraints on enforcement of such obligations or on the ability of municipalities to levy taxes.

In addition, municipalities might seek protection under the bankruptcy laws, thereby affecting the repayment of their outstanding debt. Issuers of municipal securities might seek protection under the bankruptcy laws. In the event of bankruptcy of such an issuer, holders of municipal securities could experience delays in collecting principal and interest and such holders may not be able to collect all principal and interest to which they are entitled. Certain provisions of the U.S. Bankruptcy Code governing such bankruptcies are unclear. Further, the application of state law to municipal securities issuers could produce varying results

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among the states or among municipal securities issuers within a state. These uncertainties could have a significant impact on the prices of the municipal securities in which the Fund invests. The value of municipal securities generally may be affected by uncertainties in the municipal markets as a result of legislation or litigation, including legislation or litigation that changes the taxation of municipal securities or the rights of municipal securities holders in the event of a bankruptcy. To enforce its rights in the event of a default in the payment of interest or repayment of principal, or both, the Fund may take possession of and manage the assets securing the issuer’s obligations on such securities, which may increase the Fund’s operating expenses. Any income derived from the Fund’s ownership or operation of such assets may not be tax-exempt and could jeopardize the Fund’s status as a regulated investment company under the Internal Revenue Code.

The U.S. economy may be in the process of “deleveraging,” with individuals, companies and municipalities reducing expenditures and paying down borrowings. In such event, the number of municipal borrowers and the amount of outstanding municipal securities may contract, potentially without corresponding reductions in investor demand for municipal securities. As a result, the Fund may have fewer investment alternatives, may invest in securities that it previously would have declined and may concentrate its investments in a smaller number of issuers.

Insurance Risk. Financial insurance guarantees that interest payments on a bond will be made on time and that principal will be repaid when the bond matures. Insured municipal obligations would generally be assigned a lower rating if the rating were based primarily on the credit quality of the issuer without regard to the insurance feature. If the claims-paying ability of the insurer were downgraded, the ratings on the municipal obligations it insures may also be downgraded. Insurance does not protect the Fund against losses caused by declines in a bond’s value due to a change in market conditions.

Market Risk. Market risk is the possibility that the market values of securities owned by the Fund will decline. The net asset value of the Fund will change with changes in the value of its portfolio securities, and the value of the Fund’s investments can be expected to fluctuate over time. The financial markets in general are subject to volatility and may at times experience extreme volatility and uncertainty, which may affect all investment securities, including debt securities and derivative instruments. Volatility may be greater during periods of general economic uncertainty.

Interest Rate Risk. Because the Fund invests primarily in fixed income municipal securities, the net asset value of the Fund can be expected to change as general levels of interest rates fluctuate. When interest rates decline, the value of a portfolio invested in fixed income securities generally can be expected to rise. Conversely, when interest rates rise, the value of a portfolio invested in fixed income securities generally can be expected to decline. The prices of longer term municipal securities generally are more volatile with respect to changes in interest rates than the prices of shorter term municipal securities. These risks may be greater in the current market environment because certain interest rates are near historically low levels.

Credit Risk. Credit risk refers to an issuer’s ability to make timely payments of interest and principal when due. Municipal securities, like other debt obligations, are subject to the credit risk of nonpayment. The ability of issuers of municipal securities to make timely payments of interest and principal may be adversely affected by general economic downturns and as relative governmental cost burdens are allocated and reallocated among federal, state and local governmental units. Private activity bonds used to finance projects, such as industrial development and pollution control, may also be negatively impacted by the general credit of the user of the project. Nonpayment would result in a reduction of income to the Fund, and a potential decrease in the net asset value of the Fund. The Adviser continuously monitors the issuers of securities held in the Fund.

The Fund will rely on the Adviser’s judgment, analysis and experience in evaluating the creditworthiness of an issuer. In its analysis, the Adviser may consider the credit ratings of NRSROs in evaluating securities, although the Adviser does not rely primarily on these ratings. Credit ratings of NRSROs evaluate only the safety of principal and interest payments, not the market risk. In addition, ratings are general and not absolute standards of quality, and the creditworthiness of an issuer may decline significantly before an NRSRO lowers the issuer’s rating. A rating downgrade does not require the Fund to dispose of a security.

Medium-grade obligations (for example, bonds rated BBB by S&P) possess speculative characteristics so that changes in economic conditions or other circumstances are more likely to lead to a weakened capacity of the issuer to make principal and interest payments than in the case of higher-rated securities. Securities rated below investment grade are considered speculative by NRSROs with respect to the issuer’s continuing ability to pay interest and principal.

Income Risk. The income you receive from the Fund is based primarily on prevailing interest rates, which can vary widely over the short and long term. If interest rates decrease, your income from the Fund may decrease as well.

Call Risk. If interest rates fall, it is possible that issuers of securities with high interest rates will prepay or call their securities before their maturity dates. In this event, the proceeds from the called securities would likely be reinvested by the Fund in securities bearing the new, lower interest rates, resulting in a possible decline in the Fund’s income and distributions to shareholders.

Market Segment Risk. The Fund generally considers investments in municipal securities issued by governments or political subdivisions not to be subject to industry concentration policies (because such issuers are not in any industry). The Fund may, however, invest in municipal securities issued by entities having similar characteristics. For example, the issuers may be located in the same geographic area or may pay their interest obligations from revenue of similar projects, such as hospitals, airports, utility systems and housing finance agencies. This may make the Fund’s investments more susceptible to similar economic, political or regulatory occurrences, which could increase the volatility of the Fund’s net asset value. The Fund may invest more than 25% of its total assets in a segment of the municipal securities market with similar characteristics if the Adviser determines that the yields available from obligations in a particular segment justify the additional risks of a larger investment in that segment. The Fund may not, however, invest more than 25% of its total assets in municipal securities, such as many private activity bonds or industrial development revenue bonds, issued for non-governmental entities that are in the same industry.

Tax Risk. To qualify for the favorable U.S. federal income tax treatment generally accorded to regulated investment companies, among other things, the Fund must derive in each taxable year at least 90% of its gross income from certain prescribed sources. If for any taxable year the Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) would be subject to federal income tax at regular corporate rates without any deduction for distributions to shareholders, and all distributions from the Fund (including underlying distributions attributable to tax exempt interest income) would be taxable to shareholders as ordinary dividends to the extent of the Fund’s current and accumulated earnings and profits.

The value of the Fund’s investments and its net asset value may be adversely affected by changes in tax rates and policies. Because interest income from municipal securities is normally not subject to regular federal income taxation, the attractiveness of municipal securities in relation to other investment alternatives is affected by changes in federal income tax rates or changes in the tax-exempt status of interest income from municipal securities. Any proposed or actual changes in such rates or exempt status, therefore, can significantly affect the demand for and supply, liquidity and marketability of municipal securities.

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This could in turn affect the Fund’s net asset value and ability to acquire and dispose of municipal securities at desirable yield and price levels. Additionally, the Fund may not be a suitable investment for individual retirement accounts, for other tax-exempt or tax-deferred accounts or for investors who are not sensitive to the federal income tax consequences of their investments.

The Fund may invest all or a substantial portion of its total assets in municipal securities subject to the federal alternative minimum tax. Accordingly, an investment in the Fund could cause shareholders to be subject to (or result in an increased liability under) the federal alternative minimum tax. As a result, the Fund may not be a suitable investment for investors who are already subject to the federal alternative minimum tax or who could become subject to the federal alternative minimum tax as a result of an investment in the Fund.

Subsequent to the Fund’s acquisition of a municipal security, the security may be determined to pay, or to have paid, taxable income. As a result, the treatment of dividends previously paid or to be paid by the Fund as “exempt-interest dividends” could be adversely affected, subjecting the Fund’s shareholders to increased federal income tax liabilities.

For federal income tax purposes, distributions of ordinary taxable income (including any net short-term capital gain) will be taxable to shareholders as ordinary income (and not eligible for favorable taxation as “qualified dividend income”), and capital gain dividends will be taxed at long-term capital gain rates. In certain circumstances, the Fund will make payments to holders of Preferred Shares to offset the tax effects of a taxable distribution.

Generally, to the extent a Fund’s distributions are derived from interest on municipal securities of a particular state (and, in some cases qualifying obligations of U.S. territories and possessions), its distributions are exempt from the personal income tax of that state. In some cases, the Fund’s shares may (to the extent applicable) also be exempt from personal property taxes of such state. However, some states require that the Fund meet certain thresholds with respect to the portion of its portfolio consisting of municipal securities of such state in order for such exemption to apply.

Risks of Using Derivative Instruments. A derivative instrument often has risks similar to its underlying instrument and may have additional risks, including imperfect correlation between the value of the derivative and the underlying instrument or instrument being hedged, risks of default by the other party to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which they relate, and risks that the derivatives may not be liquid. The use of derivatives involves risks that are different from, and potentially greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. Certain derivative transactions may give rise to a form of leverage. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable SEC rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. The Fund could suffer losses related to its derivative positions as a result of unanticipated market movements, which losses may potentially be unlimited. Although the Adviser may seek to use derivatives to further the Fund’s investment objective, the Fund is not required to use derivatives and may choose not to do so and there is no assurance that the use of derivatives will achieve this result.

Counterparty Risk. The Fund will be subject to credit risk with respect to the counterparties to the derivative transactions entered into by the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in bankruptcy or other reorganization proceeding. The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances.

Futures Risk. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Fund’s initial investment in such contracts.

Swaps Risk. Swap agreements are not entered into or traded on exchanges and there is no central clearing or guaranty function for swaps. Therefore, swaps are subject to credit risk or the risk of default or non-performance by the counterparty. Swaps could result in losses if interest rate or credit quality changes are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected.

Tax Risk. The use of derivatives may generate taxable income. In addition, the Fund’s use of derivatives may be limited by the requirements for taxation as a regulated investment company or the Fund’s intention to pay dividends that are exempt from federal and Pennsylvania income taxes. The tax treatment of derivatives may be adversely affected by changes in legislation, regulations or other legal authority, subjecting the Fund’s shareholders to increased federal income tax liabilities.

Inverse Floating Rate Obligations Risk. Like most other fixed-income securities, the value of inverse floating rate obligations will decrease as interest rates increase. They are more volatile, however, than most other fixed-income securities because the coupon rate on an inverse floating rate obligation typically changes at a multiple of the change in the relevant index rate. Thus, any rise in the index rate (as a consequence of an increase in interest rates) causes a correspondingly greater drop in the coupon rate of an inverse floating rate obligation while a drop in the index rate causes a correspondingly greater increase in the coupon of an inverse floating rate obligation. Some inverse floating rate obligations may also increase or decrease substantially because of changes in the rate of prepayments. Inverse floating rate obligations tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. Inverse floating rate obligations have varying degrees of liquidity.

The Fund generally invests in inverse floating rate obligations that include embedded leverage, thus exposing the Fund to greater risks and increased costs. The market value of a “leveraged” inverse floating rate obligations generally will fluctuate in response to changes in market rates of interest to a greater extent than the value of an unleveraged investment. The extent of increases and decreases in the value of inverse floating rate obligations generally will be larger than changes in an equal principal amount of a fixed rate security having similar credit quality, redemption provisions and maturity, which may cause the Fund’s net asset value to be more volatile than if it had not invested in inverse floating rate obligations.

In certain instances, the short-term floating rate interests created by a special purpose trust may not be able to be sold to third parties or, in the case of holders tendering (or putting) such interests for repayment of principal, may not be able to be remarketed to third parties. In such cases, the special purpose trust holding the long-term fixed rate bonds may be collapsed. In the case of inverse floating rate obligations created by the Fund, the Fund would then be

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required to repay the principal amount of the tendered securities. During times of market volatility, illiquidity or uncertainty, the Fund could be required to sell other portfolio holdings at a disadvantageous time to raise cash to meet that obligation.

The use of short-term floating rate obligations may require the Fund to segregate or earmark cash or liquid assets to cover its obligations. Securities so segregated or earmarked will be unavailable for sale by the Fund (unless replaced by other securities qualifying for segregation requirements), which may limit the Fund’s flexibility and may require that the Fund sell other portfolio investments at a time when it may be disadvantageous to sell such assets.

Risks of Investing in Lower-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, market risk, volatility and liquidity risk. In addition, the amount of available information about the financial condition of certain lower-grade issuers may be less extensive than other issuers, making the Fund more dependent on the Adviser’s credit analysis than a fund investing only in higher-grade securities. To minimize the risks involved in investing in lower-grade securities, the Fund does not purchase securities that are in default or rated in categories lower than B- by S&P or B3 by Moody’s or unrated securities of comparable quality.

Secondary market prices of lower-grade securities generally are less sensitive than higher-grade securities to changes in interest rates and are more sensitive to general adverse economic changes or specific developments with respect to the particular issuers. A significant increase in interest rates or a general economic downturn may significantly affect the ability of municipal issuers of lower-grade securities to pay interest and to repay principal, or to obtain additional financing, any of which could severely disrupt the market for lower-grade municipal 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. 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 price of the lower-grade securities and the net asset value of the Fund. Adverse publicity and investor perceptions, whether or not based on rational analysis, may affect the value, volatility and liquidity of lower-grade securities.

In the event that an issuer of securities held by the Fund experiences difficulties in the timely payment of principal and interest and such issuer seeks to restructure the terms of its borrowings, the Fund may incur additional expenses and may determine to invest additional assets with respect to such issuer or the project or projects to which the Fund’s securities relate. Further, the Fund 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 Fund may be unable to obtain full recovery on such amounts.

Investments in debt obligations that are at risk of or in default present special tax issues for the Fund. Federal income tax rules are not entirely clear about issues such as when the Fund may cease to accrue interest, original issue discount or market discount, when and to what extent deductions may be taken for bad debts or worthless securities, how payments received on obligations in default should be allocated between principal and interest and whether certain exchanges of debt obligations in a workout context are taxable. These and other issues will be addressed by the Fund, in the event it invests in or holds such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a regulated investment company.

Liquidity Risk. Liquidity relates to the ability of a fund to sell a security in a timely manner at a price which reflects the value of that security. The amount of available information about the financial condition of municipal securities issuers is generally less extensive than that for corporate issuers with publicly traded securities, and the market for municipal securities is generally considered to be less liquid than the market for corporate debt obligations. Certain municipal securities in which the Fund may invest, such as special obligation bonds, lease obligations, participation certificates and variable rate instruments, may be particularly less liquid. To the extent the Fund owns or may acquire illiquid or restricted securities, these securities may involve special registration requirements, liabilities and costs, and liquidity and valuation difficulties.

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 Fund 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 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 Fund 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 Fund at their current valuation more difficult.

From time to time, the Fund’s investments may include securities as to which the Fund, by itself or together with other funds or accounts managed by the Adviser, holds a major portion or all of an issue of municipal securities. Because there may be relatively few potential purchasers for such investments and, in some cases, there may be contractual restrictions on resales, the Fund may find it more difficult to sell such securities at a time when the Adviser believes it is advisable to do so.

Preferred Shares Risk. The Fund’s use of leverage through Preferred Shares may result in higher volatility of the net asset value of the Common Shares, and fluctuations in the dividend rates on the Preferred Shares (which are expected to reflect yields on short-term municipal securities) may affect the yield to the Common Shareholders. So long as the Fund is able to realize a higher net return on its investment portfolio than the then current dividend rate of the Preferred Shares, the effect of the leverage provided by the Preferred Shares will be to cause the Common Shareholders to realize a higher current rate of return than if the Fund were not so leveraged. On the other hand, to the extent that the then current dividend rate on the Preferred Shares approaches the net return on the Fund’s investment portfolio, the benefit of leverage to the Common Shareholders will be reduced, and if the then current dividend rate on the Preferred Shares were to exceed the net return on the Fund’s portfolio, the Fund’s leveraged capital structure would result in a lower rate of return to the Common Shareholders than if the Fund were not so structured.

Similarly, because any decline in the net asset value of the Fund’s investments will be borne entirely by the Common Shareholders, the effect of leverage in a declining market would result in a greater decrease in net asset value to the Common Shareholders than if the Fund were not so leveraged. Any such decrease would likely be reflected in a decline in the market price for Common Shares. If the Fund’s current investment income were not sufficient to meet dividend

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requirements on the Preferred Shares, the Fund might have to liquidate certain of its investments in order to meet required dividend payments, thereby reducing the net asset value attributable to the Fund’s Common Shares.

The amount of Preferred Shares outstanding from time to time may vary, depending on the Adviser’s analysis of conditions in the municipal securities market and interest rate movements. Management of the amount of outstanding Preferred Shares places greater reliance on the ability of the Adviser to predict trends in interest rates than if the Fund did not use leverage. In the event the Adviser later determines that all or a portion of such Preferred Shares should be reissued so as to increase the amount of leverage, no assurance can be given that the Fund will subsequently be able to reissue Preferred Shares on terms and/or with dividend rates that are beneficial to the Common Shareholders. Further, redemption and reissuance of the Preferred Shares, and any related trading of the Fund’s portfolio securities, results in increased transaction costs to the Fund and its Common Shareholders. Because the Common Shareholders bear these expenses, changes to the Fund’s outstanding leverage and any losses resulting from related portfolio trading will have a proportionately larger impact on the Common Shares’ net asset value and market price.

In addition, the Fund is not permitted to declare any cash dividend or other distribution on its Common Shares unless, at the time of such declaration, the Fund has an asset coverage of at least 200% (determined after deducting the amount of such dividend or distribution). This prohibition on the payment of dividends or other distributions might impair the ability of the Fund to maintain its qualification as a regulated investment company for federal income tax purposes. The Fund intends, however, to the extent possible, to purchase or redeem Preferred Shares from time to time to maintain an asset coverage of the Preferred Shares of at least 200%.

If a determination were made by the IRS to treat the Preferred Shares as debt rather than equity for U.S. federal income tax purposes, the Common Shareholders might be subject to increased federal income tax liabilities.

Unrated Securities Risk. Many lower-grade securities are not listed for trading on any national securities exchange, and many issuers of lower-grade securities choose not to have a rating assigned to their obligations by any NRSRO. As a result, the Fund’s portfolio may consist of a higher portion of unlisted or unrated securities as compared with an investment company that invests solely in higher-grade, listed securities. Unrated securities are usually not as attractive to as many buyers as are rated securities, a factor which may make unrated securities less marketable. These factors may limit the ability of the Fund to sell such securities at their fair value. The Fund may be more reliant on the Adviser’s judgment and analysis in evaluating the creditworthiness of an issuer of unrated securities.

When-Issued and Delayed Delivery Risks. When-issued and delayed delivery transactions are subject to market risk as the value or yield of a security at delivery may be more or less than the purchase price or the yield generally available on securities when delivery occurs. In addition, the Fund is subject to counterparty risk because it relies on the buyer or seller, as the case may be, to consummate the transaction, and failure by the other party to complete the transaction may result in the Fund missing the opportunity of obtaining a price or yield considered to be advantageous.

Zero Coupon/PIK Bond Risk. Prices on non-cash-paying instruments may be more sensitive to changes in the issuer’s financial condition, fluctuations in interest rates and market demand/supply imbalances than cash-paying securities with similar credit ratings, and thus may be more speculative than are securities that pay interest periodically in cash. These securities may subject the Fund to greater market risk than a fund that does not own these types of securities. Special tax considerations are associated with investing in non-cash-paying instruments, such as zero coupon or PIK securities. The Adviser will weigh these concerns against the expected total returns from such instruments.

Special Risk Considerations Regarding Pennsylvania Municipal Securities. The Fund invests substantially all of its assets in a portfolio of Pennsylvania municipal securities. Because the Fund invests substantially all of its assets in a portfolio of Pennsylvania municipal securities, the Fund is more susceptible to political, economic, regulatory or other factors affecting issuers of Pennsylvania municipal securities than a fund which does not limit its investments to such issuers. These risks include possible legislative, state constitutional or regulatory amendments that may affect the ability of state and local governments or regional governmental authorities to raise money to pay principal and interest on their municipal securities. Economic, fiscal and budgetary conditions throughout the state may also influence the Fund’s performance.

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Trustees and Officers

The address of each trustee and officer is 1555 Peachtree, N.E., Atlanta, Georgia 30309. Generally, each trustee serves for a three year term or until his or her successor has been duly elected and qualified, and each officer serves for a one year term or until his or her successor has been duly elected and qualified. Column two below includes length of time served with predecessor entities, if any.

			Number of
			Funds in
			Fund Complex
Name, Year of
Birth and	Trustee and/	Principal
Occupation(s)	Overseen by	Other
Directorship(s)
Position(s) Held
with the Fund	or Officer
Since	During Past 5
Years	Trustee	Held by
Trustee
Interested
Persons
Colin Meadows — 1971 Trustee, President and Principal Executive Officer	2010	Chief Administrative Officer, Invesco Advisers, Inc., since
2006; Prior to 2006, Senior Vice President of business
development and mergers and acquisitions at GE Consumer Finance;
Prior to 2005, Senior Vice President of strategic planning and
technology at Wells Fargo Bank; From 1996 to 2003, associate
principal with McKinsey & Company, focusing on the
financial services and venture capital industries, with emphasis
in banking and asset management sectors.	18	None
Wayne W.
Whalen 1 —

1939 Trustee and Chair | 1993 | Of Counsel, and prior to 2010, partner in the law firm of
Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to
funds in the Fund Complex | 158 | Director of the Abraham Lincoln Presidential Library Foundation |
| Independent
Trustees | | | | |
| David C. Arch — 1945 Trustee | 1993 | Chairman and Chief Executive Officer of Blistex Inc., a consumer
health care products manufacturer. | 158 | Member of the Heartland Alliance Advisory Board, a nonprofit
organization serving human needs based in Chicago. Board member
of the Illinois Manufacturers’ Association. Member of the
Board of Visitors, Institute for the Humanities, University of
Michigan |
| Jerry D. Choate — 1938 Trustee | 2003 | From 1995 to 1999, Chairman and Chief Executive Officer of the
Allstate Corporation (“Allstate”) and Allstate
Insurance Company. From 1994 to 1995, President and Chief
Executive Officer of Allstate. Prior to 1994, various management
positions at Allstate. | 18 | Trustee/Director/Managing General Partner of funds in the Fund
Complex. Director since 1998 and member of the governance and
nominating committee, executive committee, compensation and
management development committee and equity award committee, of
Amgen Inc., a biotechnological company. Director since 1999 and
member of the nominating and governance committee and
compensation and executive committee, of Valero Energy
Corporation, a crude oil refining and marketing company.
Previously, from 2006 to 2007, Director and member of the
compensation committee and audit committee, of H&R Block, a
tax preparation services company. |
| Rodney F. Dammeyer — 1940 Trustee | 1993 | Chairman of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 158 | Director of Quidel Corporation and Stericycle, Inc. Prior to May
2008, Trustee of The Scripps Research Institute. Prior to
February 2008, Director of Ventana Medical Systems, Inc. Prior
to April 2007, Director of GATX Corporation. Prior to April
2004, Director of TheraSense, Inc. |
| Linda Hutton Heagy — 1948 Trustee | 2003 | Prior to June 2008, Managing Partner of Heidrick &
Struggles, the second largest global executive search firm, and
from 2001-2004, Regional Managing Director of
U.S. operations at Heidrick & Struggles. Prior to
1997, Managing Partner of Ray & Berndtson, Inc., an
executive recruiting firm. Prior to 1995, Executive Vice
President of ABN AMRO, N.A., a bank holding company, with
oversight for treasury management operations including all
non-credit product pricing. Prior to 1990, experience includes
Executive Vice President of The Exchange National Bank with
oversight of treasury management including capital markets
operations, Vice President of Northern Trust Company and an
Associate at Price Waterhouse. | 18 | Trustee/Director/Managing General Partner of funds in the Fund
Complex. Prior to 2010, Trustee on the University of Chicago
Medical Center 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. |
| R. Craig Kennedy — 1952 Trustee | 2003 | Director and President of the German Marshall Fund of the United
States, an 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. | 18 | Trustee/Director/Managing General Partner of funds in the Fund
Complex. Director of First Solar, Inc. |

1 Mr. Whalen is considered 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.

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Trustees and Officers —(continued)

The address of each trustee and officer is 1555 Peachtree, N.E., Atlanta, Georgia 30309. Generally, each trustee serves for a three year term or until his or her successor has been duly elected and qualified, and each officer serves for a one year term or until his or her successor has been duly elected and qualified. Column two below includes length of time served with predecessor entities, if any.

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			Number of
			Funds in
			Fund Complex
Name, Year of
Birth and	Trustee and/	Principal
Occupation(s)	Overseen by	Other
Directorship(s)
Position(s) Held
with the Fund	or Officer
Since	During Past 5
Years	Trustee	Held by
Trustee
Independent
Trustees
Howard J Kerr — 1935 Trustee	1993	Retired. Previous member of the City Council and Mayor of Lake
Forest, Illinois from 1988 through 2002. Previous business
experience from 1981 through 1996 includes President and Chief
Executive Officer of Pocklington Corporation, Inc., an
investment holding company, President and Chief Executive
Officer of Grabill Aerospace, and President of Custom
Technologies Corporation. United States Naval Officer from 1960
through 1981, with responsibilities including Commanding Officer
of United States Navy destroyers and Commander of United States
Navy Destroyer Squadron Thirty-Three, White House experience in
1973 through 1975 as military aide to Vice Presidents Agnew and
Ford and Naval Aid to President Ford, and Military Fellow on the
Council of Foreign Relations in 1978-through 1979.	18	Trustee/Director/Managing General Partner of funds in the Fund
Complex. Director of the Lake Forest Bank & Trust. Director
of the Marrow Foundation.
Jack E. Nelson — 1936 Trustee	2003	President of Nelson Investment Planning Services, Inc., a
financial planning company and registered investment adviser in
the State of Florida. President of Nelson Ivest Brokerage
Services Inc., a member of the Financial Industry Regulatory
Authority (“FINRA”), 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.	18	Trustee/Director/Managing General Partner of funds in the Fund
Complex.
Hugo F. Sonnenschein — 1940 Trustee	1994	Distinguished Service Professor and President Emeritus of the
University of Chicago and the Adam Smith Distinguished Service
Professor in the Department of Economics at the University of
Chicago. Prior to July 2000, President of the University of
Chicago.	158	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. — 1941 Trustee	2003	Chief Communications Officer of the National Academy of Sciences
and Engineering and Institute of Medicine/National Research
Council, an independent, federally chartered policy institution,
from 2001 to November 2003 and Chief Operating Officer from 1993
to 2001. Executive Director of the Commission on Behavioral and
Social Sciences and Education at the National Academy of
Sciences/National Research Council from 1989 to 1993. Prior to
1980, experience includes Partner of Coopers & Lybrand
(from 1980 to 1989), Associate Director of the US Office of
Management and Budget (from 1977 to 1980) and Program Director
of the Urban Institute (from 1975 to 1977).	18	Trustee/Director/Managing General Partner of funds in the Fund
Complex. Independent Director and audit committee chairperson of
Changing World Technologies, Inc., an energy manufacturing
company, since July 2008. Independent Director and member of
audit and governance committees of Fluor Corp., a global
engineering, construction and management company, since January
2004. Director of Intelligent Medical Devices, Inc., a private
company which develops symptom-based diagnostic tools for viral
respiratory infections. Advisory Board member of ExactCost LLC,
a private company providing activity-based costing for
hospitals, laboratories, clinics, and physicians, since 2008.
Chairperson of the Board of Trustees of the Institute for
Defense Analyses, a federally funded research and development
center, since 2000. Trustee from 1992 to 2000 and 2002 to
present, current chairperson of the finance committee, current
member of the audit committee, strategic growth committee and
executive committee, and former Chairperson of the Board of
Trustees (from 1997 to 1999), of the German Marshall Fund of the
United States, a public foundation. Lead Independent Trustee of
the Rocky Mountain Institute, a non-profit energy and
environmental institute; Trustee since 2004. Chairperson of the
Board of Trustees of the Colorado College; Trustee since 1995.
Trustee of California Institute of Technology. Previously,
Independent Director and member of audit committee and
governance committee of Neutrogena Corporation from 1998 to
2006; and Independent Director of Arbros Communications from
2000 to 2002

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T-2 Invesco Van Kampen Pennsylvania Value Municipal Income Trust

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Trustees and Officers —(continued)

The address of each trustee and officer is 1555 Peachtree, N.E., Atlanta, Georgia 30309. Generally, each trustee serves for a three year term or until his or her successor has been duly elected and qualified, and each officer serves for a one year term or until his or her successor has been duly elected and qualified. Column two below includes length of time served with predecessor entities, if any.

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			Number of
			Funds in
			Fund Complex
Name, Year of
Birth and	Trustee and/	Principal
Occupation(s)	Overseen by	Other
Directorship(s)
Position(s) Held
with the Fund	or Officer
Since	During Past 5
Years	Trustee	Held by
Trustee
Other
Officers
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary	2010	Director, Senior Vice President, Secretary and General Counsel,
Invesco Management Group, Inc. (formerly known as Invesco Aim
Management Group, Inc.) and Van Kampen Exchange Corp.; Senior
Vice President, Invesco Advisers, Inc. (formerly known as
Invesco Institutional (N.A.), Inc.) (registered investment
adviser); Senior Vice President and Secretary, Invesco
Distributors, Inc. (formerly known as Invesco Aim Distributors,
Inc.); Director, Vice President and Secretary, Invesco
Investment Services, Inc. (formerly known as Invesco Aim
Investment Services, Inc.) and IVZ Distributors, Inc. (formerly
known as INVESCO Distributors, Inc.); Director and Vice
President, INVESCO Funds Group, Inc.; Senior Vice President,
Chief Legal Officer and Secretary, The Invesco Funds; Manager,
Invesco PowerShares Capital Management LLC; Director, Secretary
and General Counsel, Invesco Investment Advisers LLC (formerly
known as Van Kampen Asset Management); Secretary and General
Counsel, Van Kampen Funds Inc. and Chief Legal Officer,
PowerShares Exchange-Traded Fund Trust, PowerShares
Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded
Fund Trust and PowerShares Actively Managed Exchange-Traded Fund
Trust	N/A	N/A
		Formerly: Director and Secretary, Van Kampen Advisors Inc.;
Director Vice President, Secretary and General Counsel Van
Kampen Investor Services Inc.; Director, Invesco Distributors,
Inc. (formerly known as Invesco Aim Distributors, Inc.);
Director, Senior Vice President, General Counsel and Secretary,
Invesco Advisers, Inc.; and Van Kampen Investments Inc.;
Director, Vice President and Secretary, Fund Management Company;
Director, Senior Vice President, Secretary, General Counsel and
Vice President, Invesco Aim Capital Management, Inc.; Chief
Operating Officer and General Counsel, Liberty Ridge Capital,
Inc. (an investment adviser); Vice President and Secretary, PBHG
Funds (an investment company) and PBHG Insurance Series Fund (an
investment company); Chief Operating Officer, General Counsel
and Secretary, Old Mutual Investment Partners (a broker-dealer);
General Counsel and Secretary, Old Mutual Fund Services (an
administrator) and Old Mutual Shareholder Services (a
shareholder servicing center); Executive Vice President, General
Counsel and Secretary, Old Mutual Capital, Inc. (an investment
adviser); and Vice President and Secretary, Old Mutual Advisors
Funds (an investment company)
Karen Dunn Kelley — 1960 Vice President	2010	Head of Invesco’s World Wide Fixed Income and Cash
Management Group; Senior Vice President, Invesco Management
Group, Inc. (formerly known as Invesco Aim Management Group,
Inc.) and Invesco Advisers, Inc. (formerly known as Invesco
Institutional (N.A.), Inc.) (registered investment adviser);
Executive Vice President, Invesco Distributors, Inc. (formerly
known as Invesco Aim Distributors, Inc.); Director, Invesco
Mortgage Capital Inc.; Vice President, The Invesco Funds (other
than AIM Treasurer’s Series Trust (Invesco Treasurer’s
Series Trust) and Short-Term Investments Trust); and President
and Principal Executive Officer, The Invesco Funds (AIM
Treasurer’s Series Trust (Invesco Treasurer’s Series
Trust) and Short-Term Investments Trust only).	N/A	N/A
		Formerly: Senior Vice President, Van Kampen Investments Inc.;
Vice President, Invesco Advisers, Inc. (formerly known as
Invesco Institutional (N.A.), Inc.); Director of Cash Management
and Senior Vice President, Invesco Advisers, Inc. and Invesco
Aim Capital Management, Inc.; President and Principal Executive
Officer, Tax-Free Investments Trust; Director and President,
Fund Management Company; Chief Cash Management Officer, Director
of Cash Management, Senior Vice President, and Managing
Director, Invesco Aim Capital Management, Inc.; Director of Cash
Management, Senior Vice President, and Vice President, Invesco
Advisers, Inc. and The Invesco Funds (AIM Treasurer’s
Series Trust (Invesco Treasurer’s Series Trust), Short-Term
Investments Trust and Tax-Free Investments Trust only)
Sheri Morris — 1964 Vice President, Principal Financial Officer and Treasurer	2010	Vice President, Treasurer and Principal Financial Officer, The
Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly
known as Invesco Institutional (N.A.), Inc.) (registered
investment adviser).	N/A	N/A
		Formerly: Treasurer, PowerShares Exchange-Traded Fund Trust,
PowerShares Exchange-Traded Fund Trust II, PowerShares India
Exchange-Traded Fund Trust and PowerShares Actively Managed
Exchange-Traded Fund Trust, Vice President, Invesco Advisers,
Inc., Invesco Aim Capital Management, Inc. and Invesco Aim
Private Asset Management, Inc.; Assistant Vice President and
Assistant Treasurer, The Invesco Funds and Assistant Vice
President, Invesco Advisers, Inc., Invesco Aim Capital
Management, Inc. and Invesco Aim Private Asset Management, Inc.

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T-3 Invesco Van Kampen Pennsylvania Value Municipal Income Trust

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Trustees and Officers —(continued)

The address of each trustee and officer is 1555 Peachtree, N.E., Atlanta, Georgia 30309. Generally, each trustee serves for a three year term or until his or her successor has been duly elected and qualified, and each officer serves for a one year term or until his or her successor has been duly elected and qualified. Column two below includes length of time served with predecessor entities, if any.

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			Number of
			Funds in
			Fund Complex
Name, Year of
Birth and	Trustee and/	Principal
Occupation(s)	Overseen by	Other
Directorship(s)
Position(s) Held
with the Fund	or Officer
Since	During Past 5
Years	Trustee	Held by
Trustee
Other
Officers
Yinka Akinsola — 1977 Anti-Money Laundering Compliance Officer	2012	Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc.
(formerly known as Invesco Institutional (N.A.), Inc.)
(registered investment adviser); Invesco Distributors, Inc.
(formerly known as Invesco Aim Distributors, Inc.), Invesco
Investment Services, Inc. (formerly known as Invesco Aim
Investment Services, Inc.), The Invesco Funds, Invesco Van
Kampen Closed-End Funds, Van Kampen Funds Inc., PowerShares
Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund
Trust II, PowerShares India Exchange-Traded Fund Trust, and
PowerShares Actively Managed Exchange-Traded Fund Trust	N/A	N/A
		Formerly: Regulatory Analyst III, Financial Industry Regulatory
Authority (FINRA).
Valinda Arnett-Patton — 1959 Chief Compliance Officer	2011	Chief Compliance Officer, Invesco Van Kampen Closed-End Funds.	N/A	N/A

| Office of the Fund 1555
Peachtree Street, N.E. Atlanta, GA 30309 | Investment Adviser Invesco
Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
| --- | --- |
| Counsel to the Fund Skadden,
Arps, Slate, Meagher & Flom LLP 155 North Wacker Drive Chicago, IL 60606 | Transfer Agent Computershare
Trust Company, N.A. P.O. Box 43078 Providence, RI 02940-3078 |

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T-4 Invesco Van Kampen Pennsylvania Value Municipal Income Trust

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Correspondence information

Send general correspondence to Computershare, P.O. Box 43078, Providence, RI 02940-3078.

Invesco privacy policy

You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.

Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.

Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.

Trust holdings and proxy voting information

The Trust provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Trust’s semiannual and annual reports to shareholders. For the first and third quarters, the Trust files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. Shareholders can also look up the Trust’s Forms N-Q on the SEC website at sec.gov. Copies of the Trust’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file number for the Trust is 811-07398.

A description of the policies and procedures that the Trust uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 341 2929 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.

Information regarding how the Trust voted proxies related to its portfolio securities during the 12 months ended June 30, 2011, is available at invesco.com/proxysearch. In addition, this information is available on the SEC website at sec.gov.

Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

VK-CE-PAVMI-AR-1 Invesco Distributors, Inc.

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ITEM 2. CODE OF ETHICS.

As of the end of the period covered by this report, the Registrant had adopted a code of ethics (the “Code”) that applies to the Registrant’s principal executive officer (“PEO”) and principal financial officer (“PFO”). There were no amendments to the Code during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The Board of Trustees has determined that the Registrant has at least one audit committee financial expert serving on its Audit Committee. The Audit Committee financial experts are Jerry D. Choate, Linda Hutton Heagy and R. Craig Kennedy. Jerry D. Choate, Linda Hutton Heagy and R. Craig Kennedy are “independent” within the meaning of that term as used in Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Fees Billed by PWC Related to the Registrant

PWC billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows:

		Percentage of Fees — Billed Applicable to		Percentage of Fees — Billed Applicable to
		Non-Audit Services		Non-Audit Services
	Fees Billed for	Provided for fiscal	Fees Billed for	Provided for fiscal
	Services Rendered to	year end 2/29/2012	Services Rendered to	year end 2/28/2011
	the Registrant for	Pursuant to Waiver of	the Registrant for	Pursuant to Waiver of
	fiscal year end	Pre-Approval	fiscal year end	Pre-Approval
	2/29/2012	Requirement (1)	2/28/2011	Requirement (1)
Audit Fees	$ 36,300	N/A	$ 19,250	N/A
Audit-Related Fees (2)	$ 5,000	0%	$ 4,000	0%
Tax Fees (3)	$ 5,700	0%	$ 2,300	0%
All Other Fees (4)	$ 0	0%	$ 1,667	0%
Total Fees	$ 47,000	0%	$ 27,217	0%

PWC billed the Registrant aggregate non-audit fees of $10,700 for the fiscal year ended February 29, 2012, and $7,967 for the fiscal year ended February 28, 2011, for non-audit services rendered to the Registrant.

| (1) | With respect to the provision of non-audit services, the pre-approval requirement is waived
pursuant to a de minimis exception if (i) such services were not recognized as non-audit
services by the Registrant at the time of engagement, (ii) the aggregate amount of all such
services provided is no more than 5% of the aggregate audit and non-audit fees paid by the
Registrant to PWC during a fiscal year; and (iii) such services are promptly brought to the
attention of the Registrant’s Audit Committee and approved by the Registrant’s Audit Committee
prior to the completion of the audit. |
| --- | --- |
| (2) | Audit-Related fees for the fiscal year end February 29, 2012 includes fees billed for agreed
upon procedures related to auction rate preferred securities. Audit-Related fees for the
fiscal year end February 28, 2011 includes fees billed for agreed upon procedures related to
auction rate preferred securities. |
| (3) | Tax fees for the fiscal year end February 29, 2012 includes fees billed for reviewing tax
returns. Tax fees for the fiscal year end February 28, 2011 includes fees billed for
reviewing tax returns. |
| (4) | All Other fees for the fiscal year end February 28, 2011 includes fees billed for completing
professional services related to benchmark analysis. |

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Fees Billed by PWC Related to Invesco and Invesco Affiliates

PWC billed Invesco Advisers, Inc. (“Invesco”), the Registrant’s adviser, and any entity controlling, controlled by or under common control with Invesco that provides ongoing services to the Registrant (“Invesco Affiliates”) aggregate fees for pre-approved non-audit services rendered to Invesco and Invesco Affiliates for the last two fiscal years as follows:

	Fees Billed for Non- — Audit Services		Fees Billed for Non- — Audit Services
	Rendered to Invesco	Percentage of Fees	Rendered to Invesco	Percentage of Fees
	and Invesco Affiliates	Billed Applicable to	and Invesco Affiliates	Billed Applicable to
	for fiscal year end	Non-Audit Services	for fiscal year end	Non-Audit Services
	2/29/2012 That Were	Provided for fiscal year	2/28/2011 That Were	Provided for fiscal year
	Required	end 2/29/2012	Required	end 2/28/2011
	to be Pre-Approved	Pursuant to Waiver of	to be Pre-Approved	Pursuant to Waiver of
	by the Registrant’s	Pre-Approval	by the Registrant’s	Pre-Approval
	Audit Committee	Requirement (1)	Audit Committee	Requirement (1)
Audit-Related Fees	$ 0	0%	$ 0	0%
Tax Fees	$ 0	0%	$ 0	0%
All Other Fees	$ 0	0%	$ 0	0%
Total Fees (2)	$ 0	0%	$ 0	0%

| (1) | With respect to the provision of non-audit services, the pre-approval requirement is waived
pursuant to a de minimis exception if (i) such services were not recognized as non-audit
services by the Registrant at the time of engagement, (ii) the aggregate amount of all such
services provided is no more than 5% of the aggregate audit and non-audit fees paid by the
Registrant, Invesco and Invesco Affiliates to PWC during a fiscal year; and (iii) such
services are promptly brought to the attention of the Registrant’s Audit Committee and
approved by the Registrant’s Audit Committee prior to the completion of the audit. |
| --- | --- |
| (2) | Including the fees for services not required to be pre-approved by the registrant’s audit
committee, PWC billed Invesco and Invesco Affiliates aggregate non-audit fees of $0 for the
fiscal year ended February 29, 2012, and $0 for the fiscal year ended February 28, 2011, for
non-audit services rendered to Invesco and Invesco Affiliates. |

The Audit Committee also has considered whether the provision of non-audit services that were rendered to Invesco and Invesco Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with maintaining PWC’s independence. To the extent that such services were provided, the Audit Committee determined that the provision of such services is compatible with PWC maintaining independence with respect to the Registrant.

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PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES POLICIES AND PROCEDURES As adopted by the Audit Committees of the Invesco Funds (the “Funds”)

Statement of Principles

Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and Exchange Commission (“SEC”) (“Rules”), the Audit Committees of the Funds’ (the “Audit Committees”) Board of Trustees (the “Board”) are responsible for the appointment, compensation and oversight of the work of independent accountants (an “Auditor”). As part of this responsibility and to assure that the Auditor’s independence is not impaired, the Audit Committees pre-approve the audit and non-audit services provided to the Funds by each Auditor, as well as all non-audit services provided by the Auditor to the Funds’ investment adviser and to affiliates of the adviser that provide ongoing services to the Funds (“Service Affiliates”) if the services directly impact the Funds’ operations or financial reporting. The SEC Rules also specify the types of services that an Auditor may not provide to its audit client. The following policies and procedures comply with the requirements for pre-approval and provide a mechanism by which management of the Funds may request and secure pre-approval of audit and non-audit services in an orderly manner with minimal disruption to normal business operations.

Proposed services either may be pre-approved without consideration of specific case-by-case services by the Audit Committees (“general pre-approval”) or require the specific pre-approval of the Audit Committees (“specific pre-approval”). As set forth in these policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committees. Additionally, any fees exceeding 110% of estimated pre-approved fee levels provided at the time the service was pre-approved will also require specific approval by the Audit Committees before payment is made. The Audit Committees will also consider the impact of additional fees on the Auditor’s independence when determining whether to approve any additional fees for previously pre-approved services.

The Audit Committees will annually review and generally pre-approve the services that may be provided by each Auditor without obtaining specific pre-approval from the Audit Committee generally on an annual basis. The term of any general pre-approval runs from the date of such pre-approval through September 30 th of the following year, unless the Audit Committees consider a different period and state otherwise. The Audit Committees will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.

The purpose of these policies and procedures is to set forth the guidelines to assist the Audit Committees in fulfilling their responsibilities.

Delegation

The Audit Committees may from time to time delegate pre-approval authority to one or more of its members who are Independent Trustees. All decisions to pre-approve a service by a delegated member shall be reported to the Audit Committees at the next quarterly meeting.

Audit Services

The annual audit services engagement terms will be subject to specific pre-approval of the Audit Committees. Audit services include the annual financial statement audit and other procedures such as tax provision work that is required to be performed by the independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committees will obtain, review and consider sufficient information concerning the proposed Auditor to make a reasonable evaluation of the Auditor’s qualifications and independence.

In addition to the annual Audit services engagement, the Audit Committees may grant either general or specific pre-approval of other audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services such as issuing consents for the

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inclusion of audited financial statements with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.

Non-Audit Services

The Audit Committees may provide either general or specific pre-approval of any non-audit services to the Funds and its Service Affiliates if the Audit Committees believe that the provision of the service will not impair the independence of the Auditor, is consistent with the SEC’s Rules on auditor independence, and otherwise conforms to the Audit Committees’ general principles and policies as set forth herein.

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 that are traditionally performed by the independent auditor. 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; and agreed-upon procedures related to mergers, compliance with ratings agency requirements and interfund lending activities.

Tax Services

“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committees will scrutinize carefully the retention of the Auditor in connection with a transaction initially recommended by the Auditor, the major business purpose of which may be tax avoidance or the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committees will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisors as necessary to ensure the consistency of Tax services rendered by the Auditor with the foregoing policy.

No Auditor shall represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.

Under rules adopted by the Public Company Accounting Oversight Board and approved by the SEC, in connection with seeking Audit Committees’ pre-approval of permissible Tax services, the Auditor shall:

1. Describe in writing to the Audit Committees, which writing may be in the form of the proposed engagement letter:

| a. | The scope of the service, the fee structure for the engagement, and
any side letter or amendment to the engagement letter, or any other agreement
between the Auditor and the Fund, relating to the service; and |
| --- | --- |
| b. | Any compensation arrangement or other agreement, such as a referral
agreement, a referral fee or fee-sharing arrangement, between the Auditor and any
person (other than the Fund) with respect to the promoting, marketing, or
recommending of a transaction covered by the service; |

| 2. | Discuss with the Audit Committees the potential effects of the services on the
independence of the Auditor; and |
| --- | --- |
| 3. | Document the substance of its discussion with the Audit Committees. |

All Other Auditor Services

The Audit Committees may pre-approve non-audit services classified as “All other services” that are not categorically prohibited by the SEC, as listed in Exhibit 1 to this policy.

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Pre-Approval Fee Levels or Established Amounts

Pre-approval of estimated fees or established amounts for services to be provided by the Auditor under general or specific pre-approval policies will be set periodically by the Audit Committees. Any proposed fees exceeding 110% of the maximum estimated pre-approved fees or established amounts for pre-approved audit and non-audit services will be reported to the Audit Committees at the quarterly Audit Committees meeting and will require specific approval by the Audit Committees before payment is made. The Audit Committees will always factor in the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services and in determining whether to approve any additional fees exceeding 110% of the maximum pre-approved fees or established amounts for previously pre-approved services.

Procedures

Generally on an annual basis, Invesco Advisers, Inc. (“Invesco”) will submit to the Audit Committees for general pre-approval, a list of non-audit services that the Funds or Service Affiliates of the Funds may request from the Auditor. The list will describe the non-audit services in reasonable detail and will include an estimated range of fees and such other information as the Audit Committee may request.

Each request for services to be provided by the Auditor under the general pre-approval of the Audit Committees will be submitted to the Funds’ Treasurer (or his or her designee) and must include a detailed description of the services to be rendered. The Treasurer or his or her designee will ensure that such services are included within the list of services that have received the general pre-approval of the Audit Committees. The Audit Committees will be informed at the next quarterly scheduled Audit Committees meeting of any such services for which the Auditor rendered an invoice and whether such services and fees had been pre-approved and if so, by what means.

Each request to provide services that require specific approval by the Audit Committees shall be submitted to the Audit Committees jointly by the Fund’s Treasurer or his or her designee and the Auditor, and must include a joint statement that, in their view, such request is consistent with the policies and procedures and the SEC Rules.

Each request to provide tax services under either the general or specific pre-approval of the Audit Committees will describe in writing: (i) the scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the audit client, relating to the service; and (ii) any compensation arrangement or other agreement between the Auditor and any person (other than the audit client) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will discuss with the Audit Committees the potential effects of the services on the Auditor’s independence and will document the substance of the discussion.

Non-audit services pursuant to the de minimis exception provided by the SEC Rules will be promptly brought to the attention of the Audit Committees for approval, including documentation that each of the conditions for this exception, as set forth in the SEC Rules, has been satisfied.

On at least an annual basis, the Auditor will prepare a summary of all the services provided to any entity in the investment company complex as defined in section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of the engagement and the fees associated with those services.

The Audit Committees have designated the Funds’ Treasurer to monitor the performance of all services provided by the Auditor and to ensure such services are in compliance with these policies and procedures. The Funds’ Treasurer will report to the Audit Committees on a periodic basis as to the results of such monitoring. Both the Funds’ Treasurer and management of Invesco will immediately report to the chairman of the Audit Committees any breach of these policies and procedures that comes to the attention of the Funds’ Treasurer or senior management of Invesco.

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Exhibit 1 to Pre-Approval of Audit and Non-Audit Services Policies and Procedures

Conditionally Prohibited Non-Audit Services (not prohibited if the Fund can reasonably conclude that the results of the service would not be subject to audit procedures in connection with the audit of the Fund’s financial statements)

| • | Bookkeeping or other services related to the accounting records or financial
statements of the audit client |
| --- | --- |
| • | Financial information systems design and implementation |
| • | Appraisal or valuation services, fairness opinions, or contribution-in-kind reports |
| • | Actuarial services |
| • | Internal audit outsourcing services |

Categorically Prohibited Non-Audit Services

•	Management functions
•	Human resources
•	Broker-dealer, investment adviser, or investment banking services
•	Legal services
•	Expert services unrelated to the audit
•	Any service or product provided for a contingent fee or a commission
•	Services related to marketing, planning, or opining in favor of the tax treatment
of confidential transactions or aggressive tax position transactions, a significant
purpose of which is tax avoidance
•	Tax services for persons in financial reporting oversight roles at the Fund
•	Any other service that the Public Company Oversight Board determines by regulation
is impermissible.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

| (a) | The registrant has a separately-designed standing audit
committee established in accordance with Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, as amended. Members of the audit committee are: Jerry
D. Choate, Linda Hutton Heagy and R. Craig Kennedy. |
| --- | --- |
| (a) | Not applicable. |

ITEM 6. SCHEDULE OF INVESTMENTS.

Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

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I.2. PROXY POLICIES AND PROCEDURES — RETAIL

Applicable to	Retail Accounts
Risk Addressed by Policy	breach of fiduciary duty to client under
Investment Advisers Act of 1940 by placing
Invesco personal interests ahead of client
best economic interests in voting proxies
Relevant Law and Other Sources	Investment Advisers Act of 1940
Last Tested Date
Policy/Procedure Owner	Advisory Compliance
Policy Approver	Fund Board
Approved/Adopted Date	January 1, 2010

The following policies and procedures apply to certain funds and other accounts managed by Invesco Advisers, Inc. (“Invesco”).

A. POLICY STATEMENT

Introduction

Our Belief

The Invesco Funds Boards of Trustees and Invesco’s investment professionals expect a high standard of corporate governance from the companies in our portfolios so that Invesco may fulfill its fiduciary obligation to our fund shareholders and other account holders. Well governed companies are characterized by a primary focus on the interests of shareholders, accountable boards of directors, ample transparency in financial disclosure, performance-driven cultures and appropriate consideration of all stakeholders. Invesco believes well governed companies create greater shareholder wealth over the long term than poorly governed companies, so we endeavor to vote in a manner that increases the value of our investments and fosters good governance within our portfolio companies.

In determining how to vote proxy issues, Invesco considers the probable business consequences of each issue and votes in a manner designed to protect and enhance fund shareholders’ and other account holders’ interests. Our voting decisions are intended to enhance each company’s total shareholder value over Invesco’s typical investment horizon.

Proxy voting is an integral part of Invesco’s investment process. We believe that the right to vote proxies should be managed with the same care as all other elements of the investment process. The objective of Invesco’s proxy-voting activity is to promote good governance and advance the economic interests of our clients. At no time will Invesco exercise its voting power to advance its own

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commercial interests, to pursue a social or political cause that is unrelated to our clients’ economic interests, or to favor a particular client or business relationship to the detriment of others.

B. OPERATING PROCEDURES AND RESPONSIBLE PARTIES

Proxy administration

The Invesco Retail Proxy Committee (the “Proxy Committee”) consists of members representing Invesco’s Investments, Legal and Compliance departments. Invesco’s Proxy Voting Guidelines (the “Guidelines”) are revised annually by the Proxy Committee, and are approved by the Invesco Funds Boards of Trustees. The Proxy Committee implements the Guidelines and oversees proxy voting.

The Proxy Committee has retained outside experts to assist with the analysis and voting of proxy issues. In addition to the advice offered by these experts, Invesco uses information gathered from our own research, company managements, Invesco’s portfolio managers and outside shareholder groups to reach our voting decisions.

Generally speaking, Invesco’s investment-research process leads us to invest in companies led by management teams we believe have the ability to conceive and execute strategies to outperform their competitors. We select companies for investment based in large part on our assessment of their management teams’ ability to create shareholder wealth. Therefore, in formulating our proxy-voting decisions, Invesco gives proper consideration to the recommendations of a company’s Board of Directors.

Important principles underlying the Invesco Proxy Voting Guidelines

I. Accountability

Management teams of companies are accountable to their boards of directors, and directors of publicly held companies are accountable to their shareholders. Invesco endeavors to vote the proxies of its portfolio companies in a manner that will reinforce the notion of a board’s accountability to its shareholders. Consequently, Invesco votes against any actions that would impair the rights of shareholders or would reduce shareholders’ influence over the board or over management.

The following are specific voting issues that illustrate how Invesco applies this principle of accountability.

• Elections of directors. In uncontested director elections for companies that do not have a controlling shareholder, Invesco votes in favor of slates if they are comprised of at least a majority of independent directors and if the boards’ key committees are fully independent. Key committees include the Audit, Compensation and Governance or Nominating Committees. Invesco’s standard of independence excludes directors who, in addition to the directorship, have any material business or family relationships with the companies they serve.

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Contested director elections are evaluated on a case-by-case basis and are decided within the context of Invesco’s investment thesis on a company.

| • | Director performance. Invesco withholds votes from directors who exhibit a lack of
accountability to shareholders, either through their level of attendance at meetings or by
enacting egregious corporate-governance or other policies. In cases of material financial
restatements, accounting fraud, habitually late filings, adopting shareholder rights plan
(“poison pills”) without shareholder approval, or other areas of poor performance, Invesco
may withhold votes from some or all of a company’s directors. In situations where
directors’ performance is a concern, Invesco may also support shareholder proposals to take
corrective actions such as so-called “clawback” provisions. |
| --- | --- |
| • | Auditors and Audit Committee members. Invesco believes a company’s Audit Committee has a
high degree of responsibility to shareholders in matters of financial disclosure, integrity
of the financial statements and effectiveness of a company’s internal controls.
Independence, experience and financial expertise are critical elements of a
well-functioning Audit Committee. When electing directors who are members of a company’s
Audit Committee, or when ratifying a company’s auditors, Invesco considers the past
performance of the Committee and holds its members accountable for the quality of the
company’s financial statements and reports. |
| • | Majority standard in director elections. The right to elect directors is the single most
important mechanism shareholders have to promote accountability. Invesco supports the
nascent effort to reform the U.S. convention of electing directors, and votes in favor of
proposals to elect directors by a majority vote. |
| • | Classified boards. Invesco supports proposals to elect directors annually instead of
electing them to staggered multi-year terms because annual elections increase a board’s
level of accountability to its shareholders. |
| • | Supermajority voting requirements. Unless proscribed by law in the state of
incorporation, Invesco votes against actions that would impose any supermajority voting
requirement, and supports actions to dismantle existing supermajority requirements. |
| • | Responsiveness. Invesco withholds votes from directors who do not adequately respond to
shareholder proposals that were approved by a majority of votes cast the prior year. |
| • | Cumulative voting. The practice of cumulative voting can enable minority shareholders to
have representation on a company’s board. Invesco supports proposals to institute the
practice of cumulative voting at companies whose overall corporate-governance standards
indicate a particular need to protect the interests of minority shareholders. |

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• Shareholder access. On business matters with potential financial consequences, Invesco votes in favor of proposals that would increase shareholders’ opportunities to express their views to boards of directors, proposals that would lower barriers to shareholder action and proposals to promote the adoption of generally accepted best practices in corporate governance.

II. Incentives

Invesco believes properly constructed compensation plans that include equity ownership are effective in creating incentives that induce managements and employees of our portfolio companies to create greater shareholder wealth. Invesco supports equity compensation plans that promote the proper alignment of incentives, and votes against plans that are overly dilutive to existing shareholders, plans that contain objectionable structural features, and plans that appear likely to reduce the value of an account’s investment.

Following are specific voting issues that illustrate how Invesco evaluates incentive plans.

| • | Executive compensation. Invesco evaluates compensation plans for executives within the
context of the company’s performance under the executives’ tenure. Invesco believes
independent compensation committees are best positioned to craft executive-compensation
plans that are suitable for their company-specific circumstances. We view the election of
those independent compensation committee members as the appropriate mechanism for
shareholders to express their approval or disapproval of a company’s compensation
practices. Therefore, Invesco generally does not support shareholder proposals to limit or
eliminate certain forms of executive compensation. In the interest of reinforcing the
notion of a compensation committee’s accountability to shareholders, Invesco supports
proposals requesting that companies subject each year’s compensation record to an advisory
shareholder vote, or so-called “say on pay” proposals. |
| --- | --- |
| • | Equity-based compensation plans. When voting to approve or reject equity-based
compensation plans, Invesco compares the total estimated cost of the plans, including stock
options and restricted stock, against a carefully selected peer group and uses multiple
performance metrics that help us determine whether the incentive structures in place are
creating genuine shareholder wealth. Regardless of a plan’s estimated cost relative to its
peer group, Invesco votes against plans that contain structural features that would impair
the alignment of incentives between shareholders and management. Such features include the
ability to reprice or reload options without shareholder approval, the ability to issue
options below the stock’s current market price, or the ability to automatically replenish
shares without shareholder approval. |

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| • | Employee stock-purchase plans. Invesco supports employee stock-purchase plans that are
reasonably designed to provide proper incentives to a broad base of employees, provided
that the price at which employees may acquire stock is at most a 15 percent discount from
the market price. |
| --- | --- |
| • | Severance agreements. Invesco generally votes in favor of proposals requiring advisory
shareholder ratification of executives’ severance agreements. However, we oppose proposals
requiring such agreements to be ratified by shareholders in advance of their adoption. |

III. Capitalization

Examples of management proposals related to a company’s capital structure include authorizing or issuing additional equity capital, repurchasing outstanding stock, or enacting a stock split or reverse stock split. On requests for additional capital stock, Invesco analyzes the company’s stated reasons for the request. Except where the request could adversely affect the fund’s ownership stake or voting rights, Invesco generally supports a board’s decisions on its needs for additional capital stock. Some capitalization proposals require a case-by-case analysis within the context of Invesco’s investment thesis on a company. Examples of such proposals include authorizing common or preferred stock with special voting rights, or issuing additional stock in connection with an acquisition.

IV. Mergers, Acquisitions and Other Corporate Actions

Issuers occasionally require shareholder approval to engage in certain corporate actions such as mergers, acquisitions, name changes, dissolutions, reorganizations, divestitures and reincorporations. Invesco analyzes these proposals within the context of our investment thesis on the company, and determines its vote on a case-by-case basis.

V. Anti-Takeover Measures

Practices designed to protect a company from unsolicited bids can adversely affect shareholder value and voting rights, and they create conflicts of interests among directors, management and shareholders. Except under special issuer-specific circumstances, Invesco votes to reduce or eliminate such measures. These measures include adopting or renewing “poison pills”, requiring supermajority voting on certain corporate actions, classifying the election of directors instead of electing each director to an annual term, or creating separate classes of common or preferred stock with special voting rights. Invesco generally votes against management proposals to impose these types of measures, and generally votes for shareholder proposals designed to reduce such measures. Invesco supports shareholder proposals directing companies to subject their anti-takeover provisions to a shareholder vote.

VI. Shareholder Proposals on Corporate Governance

Invesco generally votes for shareholder proposals that are designed to protect shareholder rights if a company’s corporate-governance standards indicate that such additional protections are warranted.

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VII. Shareholder Proposals on Social Responsibility

The potential costs and economic benefits of shareholder proposals seeking to amend a company’s practices for social reasons are difficult to assess. Analyzing the costs and economic benefits of these proposals is highly subjective and does not fit readily within our framework of voting to create greater shareholder wealth over Invesco’s typical investment horizon. Therefore, Invesco abstains from voting on shareholder proposals deemed to be of a purely social, political or moral nature.

VIII. Routine Business Matters

Routine business matters rarely have a potentially material effect on the economic prospects of fund holdings, so we generally support the board’s discretion on these items. However, Invesco votes against proposals where there is insufficient information to make a decision about the nature of the proposal. Similarly, Invesco votes against proposals to conduct other unidentified business at shareholder meetings.

Summary

These Guidelines provide an important framework for making proxy-voting decisions, and should give fund shareholders and other account holders insight into the factors driving Invesco’s decisions. The Guidelines cannot address all potential proxy issues, however. Decisions on specific issues must be made within the context of these Guidelines and within the context of the investment thesis of the funds and other accounts that own the company’s stock. Where a different investment thesis is held by portfolio managers who may hold stocks in common, Invesco may vote the shares held on a fund-by-fund or account-by-account basis.

Exceptions

In certain circumstances, Invesco may refrain from voting where the economic cost of voting a company’s proxy exceeds any anticipated benefits of that proxy proposal.

Share-lending programs

One reason that some portion of Invesco’s position in a particular security might not be voted is the securities lending program. When securities are out on loan and earning fees for the lending fund, they are transferred into the borrower’s name. Any proxies during the period of the loan are voted by the borrower. The lending fund would have to terminate the loan to vote the company’s proxy, an action that is not generally in the best economic interest of fund shareholders. However, whenever Invesco determines that the benefit to shareholders or other account holders of voting a particular proxy outweighs the revenue lost by terminating the loan, we recall the securities for the purpose of voting the fund’s full position.

“Share-blocking”

Another example of a situation where Invesco may be unable to vote is in countries where the exercise of voting rights requires the fund to submit to short-term trading restrictions, a practice known as “share-blocking.” Invesco generally

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refrains from voting proxies in share-blocking countries unless the portfolio manager determines that the benefit to fund shareholders and other account holders of voting a specific proxy outweighs the fund’s or other account’s temporary inability to sell the security.

International constraints

An additional concern that sometimes precludes our voting non-U.S. proxies is our inability to receive proxy materials with enough time and enough information to make a voting decision. In the great majority of instances, however, we are able to vote non-U.S. proxies successfully. It is important to note that Invesco makes voting decisions for non-U.S. issuers using these Guidelines as our framework, but also takes into account the corporate-governance standards, regulatory environment and generally accepted best practices of the local market.

Exceptions to these Guidelines

Invesco retains the flexibility to accommodate company-specific situations where strictly adhering to the Guidelines would lead to a vote that the Proxy Committee deems not to be in the best interest of the funds’ shareholders and other account holders. In these situations, the Proxy Committee will vote the proxy in the manner deemed to be in the best interest of the funds’ shareholders and other account holders, and will promptly inform the funds’ Boards of Trustees of such vote and the circumstances surrounding it.

Resolving potential conflicts of interest

A potential conflict of interest arises when Invesco votes a proxy for an issuer with which it also maintains a material business relationship. Examples could include issuers that are distributors of Invesco’s products, or issuers that employ Invesco to manage portions of their retirement plans or treasury accounts. Invesco reviews each proxy proposal to assess the extent, if any, to which there may be a material conflict between the interests of the fund shareholders or other account holders and Invesco.

Invesco takes reasonable measures to determine whether a potential conflict may exist. A potential conflict is deemed to exist only if one or more of the Proxy Committee members actually knew or should have known of the potential conflict.

If a material potential conflict is deemed to exist, Invesco may resolve the potential conflict in one of the following ways: (1) if the proposal that gives rise to the potential conflict is specifically addressed by the Guidelines, Invesco may vote the proxy in accordance with the predetermined Guidelines; (2) Invesco may engage an independent third party to determine how the proxy should be voted; or (3) Invesco may establish an ethical wall or other informational barrier between the persons involved in the potential conflict and the persons making the proxy-voting decision in order to insulate the potential conflict from the decision makers.

Because the Guidelines are pre-determined and crafted to be in the best economic interest of shareholders and other account holders, applying the Guidelines to vote client proxies should, in most instances, adequately resolve any potential conflict of

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interest. As an additional safeguard against potential conflicts, persons from Invesco’s marketing, distribution and other customer-facing functions are precluded from becoming members of the Proxy Committee.

On a quarterly basis, the Invesco Funds Boards of Trustees review a report from Invesco’s Internal Compliance Controls Committee. The report contains a list of all known material business relationships that Invesco maintains with publicly traded issuers. That list is cross-referenced with the list of proxies voted over the period. If there are any instances where Invesco’s voting pattern on the proxies of its material business partners is inconsistent with its voting pattern on all other issuers, they are brought before the Trustees and explained by the Chairman of the Proxy Committee.

Personal conflicts of interest. If any member of the Proxy Committee has a personal conflict of interest with respect to a company or an issue presented for voting, that Proxy Committee member will inform the Proxy Committee of such conflict and will abstain from voting on that company or issue.

Funds of funds . Some Invesco Funds offering diversified asset allocation within one investment vehicle own shares in other Invesco Funds. A potential conflict of interest could arise if an underlying Invesco Fund has a shareholder meeting with any proxy issues to be voted on, because Invesco’s asset-allocation funds or target-maturity funds may be large shareholders of the underlying fund. In order to avoid any potential for a conflict, the asset-allocation funds and target maturity funds vote their shares in the same proportion as the votes of the external shareholders of the underlying fund.

C. RECORDKEEPING

Records are maintained in accordance with Invesco’s Recordkeeping Policy.

Policies and Vote Disclosure

A copy of these Guidelines and the voting record of each Invesco Fund are available on our web site, www.invesco.com . In accordance with Securities and Exchange Commission regulations, all funds file a record of all proxy-voting activity for the prior 12 months ending June 30th. That filing is made on or before August 31st of each year.

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ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

The following individuals are jointly and primarily responsible for the day-to-day management of the Trust:

| • | Thomas Byron, Portfolio Manager, who has been responsible for the Trust since 2011 and
has been associated with Invesco and/or its affiliates since 2010. From 1981 to 2010, Mr.
Byron was associated with Morgan Stanley Investment Advisors Inc. in an investment
management capacity. |
| --- | --- |
| • | Robert Stryker, Portfolio Manager, who has been responsible for the Trust since 2011
and has been associated with Invesco and/or its affiliates since 2010. From 1994 to 2010,
Mr. Stryker was associated with Morgan Stanley Investment Advisors Inc. in an investment
management capacity. |
| • | Julius Williams, Portfolio Manager, who has been responsible for the Trust since 2009
and has been associated with Invesco and/or its affiliates since 2010. From 2000 to 2010,
Mr. Williams was associated with Morgan Stanley Investment Advisors Inc. or its investment
advisory affiliates in an investment management capacity. |
| • | Robert Wimmel, Portfolio Manager, who has been responsible for the Trust since 2001 and
has been associated with Invesco and/or its affiliates since 2010. From 1996 to 2010, Mr.
Wimmel was associated with Morgan Stanley Investment Advisors Inc. in an investment
management capacity. |

Portfolio Manager Fund Holdings and Information on Other Managed Accounts

Invesco’s portfolio managers develop investment models which are used in connection with the management of certain Invesco Funds as well as other mutual funds for which Invesco or an affiliate acts as sub-adviser, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals. The ‘Investments’ chart reflects the portfolio managers’ investments in the Funds that they manage. Accounts are grouped into three categories: (i) investments made directly in the Fund, (ii) investments made in an Invesco pooled investment vehicle with the same or similar objectives and strategies as the Fund, and (iii) any investments made in any Invesco Fund or Invesco pooled investment vehicle. The ‘Assets Managed’ chart reflects information regarding accounts other than the Funds for which each portfolio manager has day-to-day management responsibilities. Accounts are grouped into three categories: (i) other registered investment companies, (ii) other pooled investment vehicles and (iii) other accounts. To the extent that any of these accounts pay advisory fees that are based on account performance (performance-based fees), information on those accounts is specifically broken out. In addition, any assets denominated in foreign currencies have been converted into U.S. Dollars using the exchange rates as of the applicable date.

Investments

The following information is as of February 29, 2012:

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	Dollar Range of	Dollar Range of Investments	Dollar Range of all Investments
Portfolio	Investments in each	in Invesco pooled	in Funds and Invesco pooled
Manager	Fund 1	investment vehicles 2	investment vehicles
Invesco Van Kampen Pennsylvania Value Municipal Income Trust
Thomas Byron	None	N/A	$100,001-$500,000
Robert Stryker	None	N/A	$100,001-$500,000
Julius Williams	None	N/A	$50,001-$100,000
Robert Wimmel	None	N/A	$100,001-$500,000

Assets Managed

The following information is as of February 29, 2012:

Portfolio	Other Registered Investment — Companies Managed (assets		Other Pooled Investment — Vehicles Managed (assets		Other Accounts — Managed (assets in
Manager	in millions)		in millions)		millions)
	Number of Accounts	Assets	Number of Accounts	Assets	Number of Accounts	Assets
Invesco Van Kampen Pennsylvania Value Municipal Income Trust
Thomas Byron	30	$14,077.8	None	None	None	None
Robert Stryker	30	$14,077.8	None	None	None	None
Julius Williams	12	$2,560.1	None	None	None	None
Robert Wimmel	30	$14,077.8	None	None	None	None

Potential Conflicts of Interest

Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one Fund or other account. More specifically, portfolio managers who manage multiple Funds and/or other accounts may be presented with one or more of the following potential conflicts:

| Ø | The management of multiple Funds and/or other accounts may result
in a portfolio manager devoting unequal time and attention to the
management of each Fund and/or other account. The Adviser and
each Sub-Adviser seek to manage such competing interests for the
time and attention of portfolio managers by having portfolio
managers focus on a particular investment discipline. Most other
accounts managed by a portfolio manager are managed using the same
investment models that are used in connection with the management
of the Funds. |
| --- | --- |
| Ø | If a portfolio manager identifies a limited investment opportunity
which may be suitable for more than one Fund or other account, a
Fund may not be able to take full advantage of that opportunity
due to an allocation of filled purchase or sale orders across all
eligible Funds and |

| 1 | This column reflects investments in a Fund’s shares
beneficially owned by a portfolio manager (as determined in accordance with
Rule 16a-1(a) (2) under the Securities Exchange Act of 1934, as amended).
Beneficial ownership includes ownership by a portfolio manager’s immediate
family members sharing the same household. |
| --- | --- |
| 2 | This column reflects portfolio managers’ investments
made either directly or through a deferred compensation or a similar plan in
Invesco pooled investment vehicles with the same or similar objectives and
strategies as the Fund as of the most recent fiscal year end of the Fund. |

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| | other accounts. To deal with these situations,
the Adviser, each Sub-Adviser and the Funds have adopted
procedures for allocating portfolio transactions across multiple
accounts. |
| --- | --- |
| Ø | The Adviser and each Sub-Adviser determine which broker to use to
execute each order for securities transactions for the Funds,
consistent with its duty to seek best execution of the
transaction. However, for certain other accounts (such as mutual
funds for which Invesco or an affiliate acts as sub-adviser, other
pooled investment vehicles that are not registered mutual funds,
and other accounts managed for organizations and individuals), the
Adviser and each Sub-Adviser may be limited by the client with
respect to the selection of brokers or may be instructed to direct
trades through a particular broker. In these cases, trades for a
Fund in a particular security may be placed separately from,
rather than aggregated with, such other accounts. Having separate
transactions with respect to a security may temporarily affect the
market price of the security or the execution of the transaction,
or both, to the possible detriment of the Fund or other account(s)
involved. |
| Ø | Finally, the appearance of a conflict of interest may arise where
the Adviser or Sub-Adviser has an incentive, such as a
performance-based management fee, which relates to the management
of one Fund or account but not all Funds and accounts for which a
portfolio manager has day-to-day management responsibilities. |

The Adviser, each Sub-Adviser, and the Funds have adopted certain compliance procedures which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.

Description of Compensation Structure

For the Adviser and each affiliated Sub-Adviser

The Adviser and each Sub-Adviser seek to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. Portfolio managers receive a base salary, an incentive bonus opportunity and an equity compensation opportunity. Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote competitive Fund performance. The Adviser and each Sub-Adviser evaluate competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager’s compensation consists of the following three elements:

Base Salary. Each portfolio manager is paid a base salary. In setting the base salary, the Adviser and each Sub-Adviser’s intention is to be competitive in light of the particular portfolio manager’s experience and responsibilities.

Annual Bonus. The portfolio managers are eligible, along with other employees of the Adviser and each Sub-Adviser, to participate in a discretionary year-end bonus pool. The Compensation Committee of Invesco Ltd. reviews and approves the amount of the bonus pool available for the Adviser and each of the Sub-Adviser’s investment centers. The Compensation Committee considers investment performance and financial results in its review. In addition, while having no direct impact on individual bonuses, assets under management are considered when determining the starting bonus funding levels. Each portfolio manager is eligible to receive an annual cash bonus which is based on quantitative (i.e. investment performance) and non-quantitative factors (which may include, but are not limited to, individual performance, risk management and teamwork).

Each portfolio manager’s compensation is linked to the pre-tax investment performance of the Funds/accounts managed by the portfolio manager as described in Table 1 below.

Table 1

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Sub-Adviser	Performance time period 3
Invesco 4 Invesco Australia 4 Invesco Deutschland	One-, Three- and Five-year
performance against Fund peer
group.
Invesco Advisors- Invesco Real Estate 5 Invesco Senior Secured 4, 6	Not applicable
Invesco Canada 4	One-year performance against Fund
peer group. Three- and Five-year performance
against entire universe of
Canadian funds.
Invesco Hong Kong 4 Invesco Asset Management	One-, Three- and Five-year
performance against Fund peer
group.
Invesco Japan 7	One-, Three- and Five-year
performance against the
appropriate Micropol benchmark.

High investment performance (against applicable peer group and/or benchmarks) would deliver compensation generally associated with top pay in the industry (determined by reference to the third-party provided compensation survey information) and poor investment performance (versus applicable peer group) would result in low bonus compared to the applicable peer group or no bonus at all. These decisions are reviewed and approved collectively by senior leadership which has responsibility for executing the compensation approach across the organization.

Equity-Based Compensation. Portfolio managers may be granted an annual deferral award that allows them to select receipt of shares of certain Invesco Funds with a vesting period as well as common shares and/or restricted shares of Invesco Ltd. stock from pools determined from time to time by the Compensation Committee of Invesco Ltd.’s Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.

Portfolio managers also participate in benefit plans and programs available generally to all employees.

ITEM 9. PURCHASES 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.

None

ITEM 11. CONTROLS AND PROCEDURES.

| 3 | Rolling time periods based on calendar
year-end. |
| --- | --- |
| 4 | Portfolio Managers may be granted an
annual deferral award that vests on a pro-rata basis over a four year period
and final payments are based on the performance of eligible Funds selected by
the portfolio manager at the time the award is granted. |
| 5 | Portfolio Managers for Invesco Global
Real Estate Fund, Invesco Real Estate Fund, Invesco Global Real Estate Income
Fund and Invesco V.I. Global Real Estate Fund base their bonus on new operating
profits of the U.S. Real Estate Division of Invesco. |
| 6 | Invesco Senior Secured’s bonus is based
on annual measures of equity return and standard tests of collateralization
performance. |
| 7 | Portfolio Managers for Invesco Pacific
Growth Fund’s compensation is based on the one-, three- and five-year
performance against the appropriate Micropol benchmark. |

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| (a) | As of March 21, 2012, an evaluation was performed under the supervision and with the
participation of the officers of the Registrant, including the PEO and PFO, to assess the
effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined
in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on
that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of
March 21, 2012, the Registrant’s disclosure controls and procedures were reasonably designed
to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is
recorded, processed, summarized and reported within the time periods specified by the rules
and forms of the Securities and Exchange Commission; and (2) that material information
relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely
decisions regarding required disclosure. |
| --- | --- |
| (b) | There have been no changes in the Registrant’s internal control over financial reporting (as
defined in Rule 30a-3(d) under the Act) 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 Registrant’s internal control over financial reporting. |

ITEM 12. EXHIBITS.

12(a) (1)	Code of Ethics.
12(a) (2)	Certifications of principal executive officer and principal financial officer as
required by Rule 30a-2(a) under the Investment Company Act of 1940.
12(a) (3)	Not applicable.
12(b)	Certifications of principal executive officer and principal financial officer as required by
Rule 30a-2(b) under the Investment Company Act of 1940.

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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: Invesco Van Kampen Pennsylvania Value Municipal Income Trust

By:	/s/ Colin Meadows
	Colin Meadows
	Principal Executive Officer
Date:	May 4, 2012

Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/ Colin Meadows
	Colin Meadows
	Principal Executive Officer
Date:	May 4, 2012
By:	/s/ Sheri Morris
	Sheri Morris
	Principal Financial Officer
Date:	May 4, 2012

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link2 "EXHIBIT INDEX"

EXHIBIT INDEX

12(a)(1)	Code of Ethics.
12(a)(2)	Certifications of principal executive officer and principal
Financial officer as required by Rule 30a-2(a) under the
Investment Company Act of 1940.
12(a)(3)	Not applicable.
12(b)	Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2(b) under the
Investment Company Act of 1940.

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