<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 5
Portfolio of Investments......................... 6
Statement of Assets and Liabilities.............. 8
Statement of Operations.......................... 9
Statement of Changes in Net Assets............... 10
Financial Highlights............................. 11
Notes to Financial Statements.................... 12
Dividend Reinvestment Plan....................... 15
</TABLE>
VJV SAR 6/97
<PAGE> 2
LETTER TO SHAREHOLDERS
June 5, 1997
Dear Shareholder,
As mentioned in your previous
report, VK/AC Holding, Inc., the parent
company of Van Kampen American Capital,
Inc., was acquired by Morgan Stanley
Group Inc., a world leader in asset
management. More recently, on February
5, 1997, Morgan Stanley Group Inc. and [photo]
Dean Witter, Discover & Co. announced
their agreement to merge, and you
received a proxy in April. The merger DENNIS J. MCDONNELL AND DON G. POWELL
was completed on May 31, 1997, creating
the combined company of Morgan Stanley, Dean Witter, Discover & Co. This
preeminent global financial services firm boasts a market capitalization of $21
billion and leading market positions in securities, asset management, and credit
services. As the financial industry continues to witness unprecedented
consolidations and new partnerships, we believe that those firms that are
leaders in all facets of their business will be able to offer investors the
greatest opportunities and services as we move into the next century. We are
confident that this merger will provide investors with those benefits.
ECONOMIC REVIEW
Bond prices were volatile during the six months ended April 30, 1997. Prices
initially rose as the economy slowed, erasing fears of an interest rate hike by
the Federal Reserve Board. The November election of a Democratic president and
Republican Congress was positive for bonds because the split government was
viewed as a restraint on spending increases that could potentially swell the
budget deficit. In addition, support diminished for radical tax reform that
could threaten the tax-free status of municipal bonds.
By the beginning of 1997, the situation changed. Bond prices began to fall
as the economy picked up speed, culminating in a 5.60 percent annualized growth
rate in the first quarter. This strength, coupled with warnings by Fed Chairman
Alan Greenspan that tighter monetary policy might be appropriate, reignited
fears of a rate hike. On March 25, the Fed raised short-term rates by a modest
0.25 percent, which sent the 30-year Treasury bond yield above 7.00 percent for
the first time in six months. By the end of April, the 30-year Treasury bond
yield slipped back below 7.00 percent as the market turned its attention to
positive news about inflation, and bonds recovered some of their earlier losses.
Throughout most of the six months ended April 30, municipal bonds generally
outperformed Treasuries. Between October 31 and April 30, yields on long-term
municipal revenue bonds rose 21 basis points, while yields on 30-year Treasury
bonds jumped 31 basis points. Because bond yields move in the opposite direction
of prices, the smaller
Continued on page two
1
<PAGE> 3
increase in municipal yields meant that municipal bond prices did not fall as
sharply as Treasury bond prices did. A relatively stable supply of new issues,
combined with an increase in retail demand, contributed to the improved
performance of municipal bonds.
The supply of New Jersey municipal securities was especially tight, which
helped to underpin the local bond market. The New Jersey economy grew at a
moderate rate that was slightly below the national average, but the state budget
continued to show a surplus, albeit the smallest one in six years. Looking
ahead, New Jersey faces the challenges of a severely underfunded state pension
system, inequality in school funding, and lack of a long-term solution to pay
for indigent care in its health-care system.
FUND STRATEGY
In managing the Trust, we maintained a heavy weighting in high-quality
bonds, which dominate the New Jersey municipal security market. As of April 30,
approximately 57 percent of the Trust's long-term investments were AAA-rated,
the highest credit rating assigned to bonds by the Standard & Poor's Ratings
Group. In addition, 27 percent of long-term investments were rated AA or A, and
approximately 16 percent were rated BBB, the lowest rating Standard & Poor's
assigns to bonds in the investment-grade category. AAA-rated bonds are extremely
liquid because most are insured securities. They provide the potential for
safety of principal but have tended to perform better when interest rates are
falling, which was not the case for most of the period. BBB-rated securities
have tended to perform better when rates are rising, and they have the potential
to provide additional income.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality as a Percentage of Long-Term
Investments as of April 30, 1997
<TABLE>
<S> <C>
AAA.................... 56.5%
AA..................... 13.1%
A...................... 13.9%
BBB.................... 16.5%
</TABLE>
Based upon credit quality ratings issued by Standard & Poor's. For securities
not rated not rated by Standard & Poor's, the Moody's rating is used.
Portfolio turnover was minimal during the period as the supply of New Jersey
bonds was tight and market conditions offered few opportunities to add value
over existing holdings. The average yield of bonds in the portfolio was higher
than yields currently available in the market. In addition, there were tight
spreads between the yields of AAA-rated bonds and lower-rated bonds, which
remained narrow due to the increasing number of insured bonds in the municipal
market. As a result, there was often not enough yield reward to justify the
additional credit risk of purchasing lower-rated securities.
Acquisitions that were made during the period focused on high-quality,
credit-enhanced bonds with moderately high yields. Bonds that benefited from
strong retail demand were sold in order to finance the purchases. When buying
new securities for the
Continued on page three
2
<PAGE> 4
portfolio, we attempt to identify those bonds that we believe will outperform
within a particular sector and that can be purchased at an attractive price. We
believe this "bottom-up" approach, supported by our research, provides
significant added value to the portfolio.
We continued to emphasize holdings in the health-care sector, which
accounted for 27 percent of assets at the end of the period, or more than twice
the weighting of any other sector. The health-care sector has improved
financially as facilities focus on keeping expenses under control, serving the
requirements of managed care organizations, and competing with one another in
order to expand their market share. Looking ahead, however, New Jersey faces
challenges in funding indigent care. Facilities that serve many indigent people
have experienced large cuts in their reimbursement rates from the state and
could be further stressed. Many of the portfolio's health-care bonds are
insured, which should benefit the Trust.
We shortened the duration slightly during this period of rising interest
rates in order to potentially reduce the Trust's volatility to rate increases.
Duration, which is expressed in years, is a measure of a portfolio's sensitivity
to interest rate movements. Portfolios with shorter durations have tended to
perform better when rates are rising, and portfolios with longer durations have
tended to outperform when rates are falling. At the end of the period, the
Trust's portfolio duration stood at 7.48 years compared to 7.80 years for the
Lehman Brothers New Jersey Municipal Bond Index benchmark.
[SIX-MONTH DIVIDEND HISTORY FOR THE PERIOD ENDED APRIL 30, 1997 GRAPH]
<TABLE>
DISTRIBUTION
PER
SHARE
-------------
<S> <C>
November 1996................................. $.0580
December 1996................................. $.0625
Jan 1997...................................... $.0625
Feb 1997...................................... $.0625
Mar 1997...................................... $.0625
Apr 1997...................................... $.0625
</TABLE>
The dividend history represents past performance of the Trust and does not
predict the Trust's future distributions.
PERFORMANCE SUMMARY
We are pleased to report that the Van Kampen American Capital New Jersey
Value Municipal Income Trust continued its positive performance over the first
half of its fiscal year. For the six-month period ended April 30, 1997, the
Trust generated a total return at market price of 12.94 percent(1). The Trust
offered a tax-exempt distribution rate of 5.88 percent(3), based on the closing
common stock price of $12.75 per share on
Continued on page four
3
<PAGE> 5
April 30, 1997. Because income from the Trust is exempt from federal and New
Jersey state income taxes, this distribution rate represents a yield equivalent
to a taxable investment earning 9.82 percent(4) (for investors in the combined
federal and state income tax bracket of 40.1 percent). At the end of the
reporting period, the closing share price of the Trust traded at a 10.6 percent
discount to its net asset value of $14.26.
As a result of the Trust's improved earnings, the Board of Trustees approved
an increase in its monthly dividend from $0.0580 to $0.0625 per common share,
payable December 31, 1996.
TOP FIVE PORTFOLIO INDUSTRY HOLDINGS BY SECTOR AS OF APRIL 30, 1997*
Health Care....................... 27.1%
Transportation.................... 13.3%
General Purpose................... 12.5%
Retail Electric/Gas/Telephone..... 8.8%
Waste Disposal.................... 7.5%
* As a Percentage of Long-Term Investments
MUNICIPAL MARKET OUTLOOK
We continue to see signs of a strong economy, although we do not expect the
unusually brisk growth rate of the first quarter to be sustained throughout the
year. As a result, we believe the Fed will monitor the economy closely and take
aggressive action to control growth if inflation picks up or the high growth
rate is sustained. However, if growth slows, we believe the Fed will leave rates
unchanged. Given this outlook, we expect that yields on the 30-year Treasury
bond will range between 6.75 and 7.40 percent for the remainder of the year,
with higher levels occurring early and lower yields dominating the second half
of 1997. Although short-term interest rates have risen, this has not had a
significant impact on the leveraged structure of the Trust.
We believe the Trust is positioned to perform well in the coming months, and
we do not anticipate major structural changes in the portfolio. In light of our
expectations for interest rates, we will continue to maintain a slightly
defensive posture by keeping a relatively short duration for the portfolio and
adjusting the duration when prudent. We will also continue to seek a balance
between the Trust's total return and its dividend income, as well as to add
value through security selection. Thank you for your continued confidence in Van
Kampen American Capital and your Trust's team of managers.
Sincerely,
[SIG]
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
[SIG]
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
Please see footnotes on page five
4
<PAGE> 6
PERFORMANCE RESULTS FOR THE PERIOD ENDED APRIL 30, 1997
VAN KAMPEN AMERICAN CAPITAL NEW JERSEY
VALUE MUNICIPAL INCOME TRUST
(AMEX TICKER SYMBOL--VJV)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
Six-month total return based on market price(1)........... 12.94%
Six-month total return based on NAV(2).................... 2.17%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3).................................................. 5.88%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 9.82%
SHARE VALUATIONS
Net asset value........................................... $ 14.26
Closing common stock price................................ $12.750
Six-month high common stock price (04/16/97).............. $12.875
Six-month low common stock price (11/22/96)............... $11.625
Preferred share rate(5)................................... 4.145%
</TABLE>
(1)Total return based on market price assumes an investment at the 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 stock price at the end of the period
indicated.
(2)Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3)Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(4)The taxable-equivalent distribution rate is calculated assuming a 40.1%
combined federal and state income tax bracket, which takes into consideration
the deductibility of individual state taxes paid.
(5)See "Notes to Financial Statements" footnote #4, for more information
concerning Preferred Share reset periods.
A portion of the interest income may be taxable for those investors subject to
the federal alternative minimum tax (AMT).
Past performance does not guarantee future results. Investment return, stock
price and net asset value will fluctuate with market conditions. Trust shares,
when sold, may be worth more or less than their original cost.
Market forecasts provided in this report may not necessarily come to pass.
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
NEW JERSEY 92.9%
$ 500 Bordentown, NJ Swr Auth Rev Ser C (MBIA Insd)... 6.800% 12/01/25 $ 539,705
1,000 Essex Cnty, NJ Impt Auth Lease-Newark........... 6.600 04/01/14 1,032,210
1,000 Essex Cnty, NJ Ser A1 Rfdg (AMBAC Insd)......... 5.375 09/01/10 998,980
1,000 Essex Cnty, NJ Util Auth Solid Waste Rev Ser A
(FSA Insd)...................................... 5.500 04/01/11 1,001,980
750 Hudson Cnty, NJ Ctfs Partn Correctional Fac Rfdg
(MBIA Insd)..................................... 6.500 12/01/11 803,970
1,000 Hudson Cnty, NJ Ctfs Partn Correctional Fac Rfdg
(MBIA Insd)..................................... 6.600 12/01/21 1,072,660
1,250 Hudson Cnty, NJ Impt Auth Solid Waste Sys Rev
Ser A........................................... 6.100 07/01/20 1,255,525
1,250 Mercer Cnty, NJ Impt Auth Rev Cap Apprec........ * 04/01/11 584,200
525 Middlesex Cnty, NJ Ctfs Partn (MBIA Insd)....... 5.900 08/15/09 547,838
1,500 New Jersey Econ Dev Auth Dist Heating & Cooling
Rev Trigen Trenton Ser A........................ 6.200 12/01/10 1,523,325
2,215 New Jersey Econ Dev Auth Econ Dev Rev Manahawkin
Convalescent Ser A Rfdg (FHA Gtd)............... 6.650 02/01/23 2,323,048
2,000 New Jersey Econ Dev Auth Mkt Transition Fac Rev
Sr Lien Ser A (MBIA Insd)....................... 5.800 07/01/08 2,081,300
1,000 New Jersey Econ Dev Auth Mkt Transition Fac Rev
Sr Lien Ser A (MBIA Insd)....................... 5.800 07/01/09 1,027,960
2,400 New Jersey Econ Dev Auth Nat Gas Fac Rev
Elizabethtown Gas Co Proj A (MBIA Insd)......... 6.750 10/01/21 2,452,344
1,000 New Jersey Econ Dev Auth Rev Morris Hall Saint
Lawrence
Proj............................................ 5.500 04/01/27 950,100
2,000 New Jersey Econ Dev Auth Rev Morris Hall Saint
Lawrence Proj A................................. 6.250 04/01/25 2,058,680
1,000 New Jersey Hlthcare Fac Fin Auth Rev Atlantic
City Med Cent Ser C Rfdg........................ 6.800 07/01/11 1,072,580
1,500 New Jersey Hlthcare Fac Fin Auth Rev Berkeley
Heights Convalescent (AMBAC Insd)............... 5.000 07/01/26 1,350,450
300 New Jersey Hlthcare Fac Fin Auth Rev Christ Hosp
Group Issue (Connie Lee Insd)................... 7.000 07/01/04 333,081
750 New Jersey Hlthcare Fac Fin Auth Rev Elizabeth
Genl Med Cent Ser C............................. 7.375 07/01/15 793,140
1,745 New Jersey Hlthcare Fac Fin Auth Rev Genl Hosp
Cent at Passaic (FSA Insd)...................... 6.500 07/01/11 1,877,637
2,250 New Jersey Hlthcare Fac Fin Auth Rev Genl Hosp
Cent at Passaic (FSA Insd)...................... 6.750 07/01/19 2,442,960
2,500 New Jersey Hlthcare Fac Fin Auth Rev Jersey
Shore Med Cent Rfdg (AMBAC Insd)................ 6.125 07/01/11 2,623,050
690 New Jersey Hlthcare Fac Fin Auth Rev Robert Wood
Johnson Univ Hosp Ser B (MBIA Insd)............. 6.625 07/01/16 737,375
1,000 New Jersey Hlthcare Fac Fin Auth Rev Saint Mary
Hosp............................................ 5.875 07/01/12 988,840
1,500 New Jersey Hlthcare Fac Fin Auth Rev Southern
Ocean Cnty Hosp Ser A........................... 6.125 07/01/13 1,509,795
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW JERSEY (CONTINUED)
$2,500 New Jersey Hlthcare Fac Fin Auth Rev Southern
Ocean Cnty Hosp Ser A........................... 6.250% 07/01/23 $ 2,533,675
1,900 New Jersey St Edl Fac Auth Rev Univ of Med &
Dentstry Ser B (AMBAC Insd)..................... 5.250 12/01/14 1,837,452
1,500 New Jersey St Hsg & Mtg Fin Agy Rev............. 6.600 11/01/14 1,574,025
2,400 New Jersey St Tpk Auth Tpk Rev Ser C Rfdg (MBIA
Insd)........................................... 6.500 01/01/16 2,658,288
2,450 Newark NJ Brd Edl (MBIA Insd)................... 5.875 12/15/09 2,554,958
1,000 Perth Amboy, NJ Brd Edl Ctfs Partn (FSA Insd)... 6.125 12/15/17 1,028,710
1,100 Port Auth NY & NJ Cons 104th Ser (AMBAC Insd)... 5.200 07/15/16 1,046,166
1,130 Port Auth NY & NJ Cons 106th Ser................ 5.625 07/01/08 1,155,787
1,000 Port Auth NY & NJ Cons 109th Ser................ 5.375 07/15/22 952,230
1,000 Rutgers St Univ NJ St Univ of NJ Ser A Rfdg..... 6.400 05/01/13 1,097,770
1,000 Salem Cnty, NJ Indl Pollutn Ctl Fin Auth Rev Pub
Svc Elec & Gas Ser D Rfdg (MBIA Insd)........... 6.550 10/01/29 1,074,430
750 Secaucus, NJ Muni Util Auth Swr Rev Ser A
Rfdg............................................ 6.000 12/01/08 795,097
2,250 Union Cnty, NJ Indl Pollutn Ctl Fin Auth Pollutn
Ctl Rev American Cyanamid Co Rfdg............... 5.800 09/01/09 2,399,107
1,680 Washington Twp NJ Muni Util Auth Mercer Cnty
(MBIA Insd)..................................... 5.800 09/01/13 1,685,494
-----------
56,375,922
-----------
GUAM 1.7%
1,000 Guam Govt Ser A................................. 5.625 09/01/02 1,004,490
-----------
PUERTO RICO 4.4%
2,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
Y (Embedded Cap) (FSA Insd) (b)................. 5.730 07/01/21 2,152,520
500 Puerto Rico Elec Pwr Auth Pwr Rev Ser T......... 6.125 07/01/09 519,305
-----------
2,671,825
-----------
TOTAL LONG-TERM INVESTMENTS 99.0%
(Cost $58,182,090) (a)..................................................... 60,052,237
OTHER ASSETS IN EXCESS OF LIABILITIES 1.0%.................................. 597,226
-----------
NET ASSETS 100.0%........................................................... $60,649,463
===========
</TABLE>
*Zero coupon bond
(a) At April 30, 1997, cost for federal income tax purposes is $58,182,090; the
aggregate gross unrealized appreciation is $1,953,065 and the aggregate
gross unrealized depreciation is $82,918, resulting in net unrealized
appreciation of $1,870,147.
(b) An Embedded Cap security includes a cap strike level such that the coupon
payment may be supplemented by cap payments if the floating rate index upon
which the cap is based rises above the strike level. The price of these
securities may be more volatile than the price of a comparable fixed rate
security. The Trust invests in these instruments as a hedge against a rise
in the short-term interest rates which it pays on its preferred shares.
These derivative instruments are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation on
investments. Upon disposition, a realized gain or loss is recognized
accordingly.
See Notes to Financial Statements
7
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $58,182,090)
(Note 1).................................................. $60,052,237
Receivables:
Interest.................................................. 1,025,620
Investments Sold.......................................... 970,378
Unamortized Organizational Costs (Note 1)................... 4,985
Other....................................................... 751
-----------
Total Assets.......................................... 62,053,971
===========
LIABILITIES:
Payables:
Investments Purchased..................................... 959,608
Custodian Bank............................................ 194,708
Investment Advisory Fee (Note 2).......................... 32,226
Income Distributions--Common and Preferred Shares......... 23,688
Administrative Fee (Note 2)............................... 9,916
Affiliates (Note 2)....................................... 4,752
Accrued Expenses............................................ 119,834
Deferred Compensation and Retirement Plans (Note 2)......... 59,776
-----------
Total Liabilities..................................... 1,404,508
-----------
NET ASSETS.................................................. $60,649,463
===========
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 500 issued with liquidation preference of $50,000
per share) (Note 4)....................................... $25,000,000
-----------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 2,499,940 shares issued and
outstanding).............................................. 24,999
Paid in Surplus............................................. 36,520,666
Net Unrealized Appreciation on Investments.................. 1,870,147
Accumulated Undistributed Net Investment Income............. 342,693
Accumulated Net Realized Loss on Investments................ (3,109,042)
-----------
Net Assets Applicable to Common Shares................ 35,649,463
-----------
NET ASSETS.................................................. $60,649,463
===========
NET ASSET VALUE PER COMMON SHARE ($35,649,463 divided
by 2,499,940 shares outstanding).......................... $ 14.26
===========
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $1,737,396
----------
EXPENSES:
Investment Advisory Fee (Note 2)............................ 196,485
Administrative Fee (Note 2)................................. 60,457
Preferred Share Maintenance (Note 4)........................ 44,589
Trustees Fees and Expenses (Note 2)......................... 12,833
Legal (Note 2).............................................. 4,525
Custody..................................................... 2,644
Amortization of Organizational Costs (Note 1)............... 2,478
Other....................................................... 57,269
----------
Total Expenses.......................................... 381,280
----------
NET INVESTMENT INCOME....................................... $1,356,116
==========
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Loss on Investments............................ $ (1,121)
----------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period................................... 2,074,186
End of the Period......................................... 1,870,147
----------
Net Unrealized Depreciation on Investments During the
Period.................................................... (204,039)
----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS............. $ (205,160)
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $1,150,956
==========
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1997 and
the Year Ended October 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1997 October 31, 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................... $ 1,356,116 $ 2,743,988
Net Realized Loss on Investments.................... (1,121) (82,707)
Net Unrealized Appreciation/Depreciation on
Investments During the Period..................... (204,039) 228,995
----------- -----------
Change in Net Assets from Operations................ 1,150,956 2,890,276
----------- -----------
Distributions from Net Investment Income:
Common Shares..................................... (926,162) (1,739,846)
Preferred Shares.................................. (386,473) (834,595)
----------- -----------
Total Distributions................................. (1,312,635) (2,574,441)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES........................................ (161,679) 315,835
NET ASSETS:
Beginning of the Period............................. 60,811,142 60,495,307
----------- -----------
End of the Period (Including accumulated
undistributed net investment income of $342,693
and $299,212, respectively)....................... $60,649,463 $60,811,142
=========== ===========
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 30, 1993
Six Months (Commencement
Ended Year Ended October 31, of Investment
April 30, --------------------------- Operations) to
1997 1996 1995 1994 October 31, 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period (a)...................... $14.324 $14.198 $12.137 $15.600 $14.638
-------- ------- ------- ------- --------
Net Investment Income........... .543 1.098 1.086 1.044 .374
Net Realized and Unrealized
Gain/Loss on Investments...... (.082) .058 2.071 (3.468) .913
-------- ------- ------- ------- --------
Total from Investment
Operations...................... .461 1.156 3.157 (2.424) 1.287
-------- ------- ------- ------- --------
Less:
Distributions from Net
Investment Income:
Paid to Common Shareholders... .370 .696 .736 .780 .260
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders...... .155 .334 .360 .250 .065
Distributions from Net Realized
Gain on Investments (Note 1):
Paid to Common Shareholders... -0- -0- -0- .007 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders...... -0- -0- -0- .002 -0-
-------- ------- ------- ------- --------
Total Distributions............... .525 1.030 1.096 1.039 .325
-------- ------- ------- ------- --------
Net Asset Value, End of the
Period.......................... $14.260 $14.324 $14.198 $12.137 $15.600
======== ======= ======= ======= ========
Market Price Per Share at End of
the Period...................... $12.750 $11.625 $11.625 $10.875 $14.625
Total Investment Return at Market
Price (b)....................... 12.94%* 5.98% 13.78% (20.92%) (.78%)*
Total Return at Net Asset Value
(c)............................. 2.17%* 5.91% 23.66% (17.60%) 5.78%*
Net Assets at End of the Period
(In millions)................... $60.6 $60.8 $60.5 $55.3 $64.0
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares.......................... 2.14% 2.15% 2.30% 2.24% 2.01%
Ratio of Expenses to Average Net
Assets.......................... 1.26% 1.26% 1.31% 1.31% 1.47%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (d)............... 5.44% 5.40% 5.51% 5.69% 4.07%
Portfolio Turnover................ 3%* 25% 34% 53% 7%*
</TABLE>
(a) Net Asset Value at April 30, 1993, is adjusted for common and preferred
share offering costs of $.362 per common share.
(b) Total Investment Return at Market Price reflects the change in market value
of the common shares for the period indicated with reinvestment of dividends
in accordance with the Trust's dividend reinvestment plan.
(c) Total Return at Net Asset Value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.
(d) Net Investment Income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
* Non-Annualized
See Notes to Financial Statements
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
April 30, 1997 (Unaudited)
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1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital New Jersey Value Municipal Income Trust (the
"Trust") is registered as a non-diversified closed-end management investment
company under the Investment Company Act of 1940, as amended. The Trust's
investment objective is to provide a high level of current income exempt from
federal income taxes and New Jersey gross income tax, consistent with
preservation of capital. The Trust will invest substantially all of its assets
in New Jersey municipal securities rated investment grade at the time of
investment. The Trust commenced investment operations on April 30, 1993.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Investments are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made. At April 30, 1997, there were no
when issued or delayed delivery purchase commitments.
C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of each
applicable security.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1997 (Unaudited)
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D. ORGANIZATIONAL COSTS--The Trust has reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with the Trust's organization in the amount of $25,000. These costs
are being amortized on a straight line basis over the 60 month period ending
April 29, 1998. Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") has agreed that in the event any of the initial shares of the Trust
originally purchased by VKAC are redeemed during the amortization period, the
Trust will be reimbursed for any unamortized organizational costs in the same
proportion as the number of shares redeemed bears to the number of initial
shares held at the time of redemption.
E. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At October 31, 1996, the Trust had an accumulated capital loss
carryforward for tax purposes of $3,107,921 which will expire between October
31, 2002 and October 31, 2004.
F. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays dividends from
net investment income to common shareholders monthly. Net realized gains, if
any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Trust for an annual fee payable
monthly of .65% of the average net assets of the Trust. In addition, the Trust
will pay a monthly administrative fee to VKAC, the Trust's Administrator, at an
annual rate of .20% of the average net assets of the Trust. The administrative
services provided by the Administrator include record keeping and reporting
responsibilities with respect to the Trust's portfolio and preferred shares and
providing certain services to shareholders.
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<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1997 (Unaudited)
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Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom
(Illinois), counsel to the Trust, of which a trustee of the Trust is an
affiliated person.
For the six months ended April 30, 1997, the Trust recognized expenses of
approximately $16,000 representing VKAC's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of VKAC. The Trust does not compensate its officers or trustees who are officers
of VKAC.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Trust. The maximum annual
benefit under the plan is equal to the trustees' annual retainer fee, which is
currently $2,500.
At April 30, 1997, VKAC owned 6,700 common shares of the Trust.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $2,850,000 and $1,573,420, respectively.
4. PREFERRED SHARES
The Trust has outstanding 500 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is currently reset every seven days through an
auction process. The rate in effect on April 30, 1997, was 4.145%. During the
six months ended April 30, 1997, the rates ranged from 2.00% to 5.00%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $50,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the APS are subject to
mandatory redemption if the tests are not met.
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<PAGE> 16
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be re-
registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common Shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
Van Kampen American Capital
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
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<PAGE> 17
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Growth Fund
Pace Fund
Growth & Income
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
MORGAN STANLEY
FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
U.S. Real Estate Fund
Worldwide High Income Fund
Ask your investment representative for a prospectus containing more
complete information, including sales charges and expenses. Please read it
carefully before you invest or send money. Or call us weekdays from 7:00
a.m. to 7:00 p.m. Central time at 1-800-341-2911 for Van Kampen American
Capital funds, or 1-800-282-4404 for Morgan Stanley retail funds.
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<PAGE> 18
VAN KAMPEN AMERICAN CAPITAL NEW JERSEY VALUE MUNICIPAL INCOME TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*--Chairman
THEODORE A. MYERS
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
Vice President
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
CUSTODIAN AND
TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in the Investment Company Act of
1940.
(C) Van Kampen American Capital Distributors, Inc., 1997 All rights reserved.
SM denotes a service mark of Van Kampen American Capital Distributors, Inc.
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