<TABLE>
Table of Contents
<CAPTION>
<S> <C>
Letter to Shareholders................. 1
Performance Results.................... 3
Portfolio of Investments............... 4
Statement of Assets and Liabilities.... 7
Statement of Operations................ 8
Statement of Changes in Net Assets..... 9
Financial Highlights................... 10
Notes to Financial Statements.......... 11
Independent Auditors' Report........... 14
Dividend Reinvestment Plan............. 15
VNV AR 12/95
</TABLE>
Letter to Shareholders
November 22, 1995
Dear Shareholder:
The first ten months of 1995 have been very positive for most investors. Both
the fixed-income and equity markets have made considerable gains during the
period ended October 31, 1995.
This year serves as a reminder of just how quickly markets can move and how
difficult it can be to predict the timing of those movements. Moreover, this
year reinforces the importance of maintaining a long-term perspective and
reaffirms the principle that it is time---not timing---that leads to investment
success.
[PHOTO]
Dennis J. McDonnell and Don G. Powell
Economic Overview
Although the third quarter posted a stronger-than-expected annual gross
domestic product growth rate of 4.2 percent, the economy has slowed
significantly this year. This slowdown is due in large part to the Federal
Reserve Board's efforts to tighten monetary supply in 1994--a measure that
proved successful, as economic growth during the first half of 1995 was
substantially lower than its fourth quarter 1994 rate of 5.1 percent. And,
while other key economic data have shown mixed signs during recent months,
the general economic trends for the year continue to support a "soft landing"
scenario.
Comfortable with the economy's rate of growth and level of inflation, the Fed
reversed its trend of raising interest rates and lowered short-term rates by a
quarter percent on July 6. With slowing growth, interest rates declined and the
value of many fixed-income investments rose (bond yields and prices move in
opposite directions).
Performance Summary
The Trust produced a tax-exempt distribution of 5.80 percent<F3>, based on the
closing stock price of $11.375 per common share on October 31, 1995. Because
income from the Trust is exempt from federal and New York state income taxes, it
is important to compare the Trust's distribution rate to an equivalent taxable
rate. For example, for New York residents in the combined marginal tax bracket
of 41 percent, the Trust's distribution rate represents a yield equivalent to a
taxable investment earning 9.83 percent<F4>. In fact, many closed-end municipal
bond funds, such as your investment, are currently offering higher yields (after
taxes) over many income alternatives.
As the graph on the following page shows, the Trust's net asset value and
market price have made significant gains over the one-year period. The Trust's
closing stock price, for example, gained 11 percent from October 1994 to October
1995. Moreover, we are pleased to report the Trust generated a one-year total
return at market price of 18.15 percent<F1>, which includes reinvestment of
dividends for the period ended October 31, 1995.
(Continued on page two)
1
Economic Outlook
We believe the Fed will move cautiously before it continues to lower
short-term rates, waiting for key indicators to show that the economy has truly
settled into a slow growth pattern. Although current economic data continues to
send mixed signals, we anticipate the economy will grow at an annual rate of 3
percent in the fourth quarter and inflation will run under 3 percent.
Based upon a generally modest growth and low inflation outlook, we believe the
outlook for fixed-income markets is positive. As interest rates fall in response
to a slowing economy, we believe yields on short-term municipal bonds will
continue to move significantly lower than long-term municipal bonds. Lower
short-term rates typically translate into lower leveraging costs for the Trust,
which provides increased opportunities for higher earnings over time.
Additionally, a steepening of the municipal yield curve would likely increase
investor demand for long-term municipal bonds and help to boost market prices.
Long-term municipal bond prices will also benefit from the combination of low
supply of new municipal bond issues and increased demand driven by scheduled
bond maturities.
[GRAPH]
Trust Participants in Market Gains of '95
Market
Date NAV Price
31-Oct-94 12.23 10.250
30-Nov-94 11.53 10.500
31-Dec-94 12.07 10.375
31-Jan-95 12.56 11.1875
28-Feb-95 13.30 11.750
31-Mar-95 13.40 11.625
3O-Apr-95 13.33 11.375
31-May-95 14.10 11.250
3O-Jun-95 13.62 11.250
31-Jul-95 13.67 11.250
31-Aug-95 13.82 11.250
3O-Sep-95 13.86 11.375
31-Oct-95 14.17 11.375
Based on month-end prices
While there has been varied speculation about the impact of tax reform, no one
is certain about what will finally happen. Consequently, in the near term, the
municipal market may continue to experience periodic market fluctuations as
various proposals come to the forefront. However, in the long term, we believe
the municipal market will remain an attractive investment choice for investors
seeking high current income. We will continue to keep a close watch over any new
developments and evaluate the potential impact they may have on your investment
in the Trust.
Once again, thank you for your continued confidence in your investment with
Van Kampen American Capital and for the privilege of working with you in seeking
to reach your financial goals.
Sincerely,
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Investment Advisory Corp. Investment Advisory Corp.
2
Performance Results for the Period Ended October 31, 1995
<TABLE>
<CAPTION>
Van Kampen Merritt New York Value Municipal Income Trust
(NYSE Ticker Symbol VNV)
<S> <C>
Total Returns
One-year total return based on market price<F1>........................................ 18.15%
One-year total return based on NAV<F2>................................................. 22.35%
Distribution Rates
Distribution rate as a % of initial offer common stock price<F3>....................... 4.40%
Taxable-equivalent distribution rate as a % of initial offer common stock price<F4>.... 7.46%
Distribution rate as a % of closing common stock price<F3>............................. 5.80%
Taxable-equivalent distribution rate as a % of closing common stock price<F4>.......... 9.83%
Share Valuations
Net asset value........................................................................ $ 14.17
Closing common stock price............................................................. $ 11.375
One-year high common stock price (04/06/95)............................................ $ 11.875
One-year low common stock price (11/07/94)............................................. $ 9.625
Preferred share rate<F5>............................................................... 3.72%
<FN>
<F1>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 stock price at the end of the period indicated.
<F2>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.
<F3>Distribution rate represents the monthly annualized distributions of the Trust
at the end of the period and not the earnings of the Trust.
<F4>The taxable-equivalent distribution rate is calculated assuming a 41% combined
federal and state tax bracket which takes into consideration the deductibility
of individual state taxes paid.
<F5>See "Notes to Financial Statements" footnote #4, for more information
concerning Preferred Share reset periods.
</TABLE>
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.
3
<TABLE>
Portfolio of Investments
October 31, 1995
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bonds
New York 93.7%
$ 3,235 34th St Partnership Inc, NY Cap Impt
34th St Business Imp ................................ 5.500% 01/01/14 $ 3,100,359
1,000 Broome Cnty, NY Ctfs Partn Pub Safety Fac (MBIA
Insd) ............................................... 5.250 04/01/15 947,510
590 Erie Cnty, NY Indl Dev Agy Civic Fac Rev Mercy Hosp
Buffalo Proj Ser A .................................. 5.900 06/01/03 598,602
1,300 Erie Cnty, NY Indl Dev Agy Civic Fac Rev Mercy Hosp
Buffalo Proj Ser A .................................. 6.250 06/01/10 1,305,577
1,000 Groton, NY Cmnty Hlthcare Cent Inc Hlthcare Fac Rev
Groton Cmnty Ser A (FHA Gtd) ........................ 7.450 07/15/21 1,103,150
2,425 Metropolitan Tran Auth NY Svc Contract Commuter Fac
Ser P ............................................... 5.750 07/01/15 2,340,416
1,100 Montgomery, Otsego and Schoharie Cntys, NY Solid
Waste Mgmt Auth Solid Waste Sys Rev Ser B (MBIA
Insd) <F2> .......................................... 5.250 01/01/14 1,060,620
2,000 Nassau Cnty, NY Genl Impt Ser Q (FGIC Insd) ......... 5.200 08/01/14 1,917,760
1,000 New York City Hlth & Hosp Corp Rev Ser A Rfdg (AMBAC
Insd) ............................................... 5.750 02/15/22 987,220
700 New York City Indl Dev Agy Spl Fac Rev Terminal One
Group Assn Proj ..................................... 5.700 01/01/04 711,816
1,500 New York City Indl Dev Agy Spl Fac Rev Terminal One
Group Assn Proj ..................................... 6.000 01/01/19 1,469,535
3,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys Rev
Ser A ............................................... 6.000 06/15/25 3,008,730
3,000 New York City Ser A ................................. 7.750 08/15/06 3,351,420
4,000 New York City Ser A Rfdg ............................ 7.000 08/01/04 4,362,520
5,000 New York City Ser B (Embedded Cap) <F3> ............. 7.020 10/01/16 5,074,800
2,750 New York City Ser D <F4> ............................ 6.500 02/15/06 2,903,835
2,000 New York City Ser D Rfdg ............................ 5.750 08/15/14 1,897,540
1,500 New York City Ser E Rfdg (MBIA Insd) ................ 6.200 08/01/08 1,649,445
2,000 New York Res Recovery Agy (AMBAC Insd) .............. 7.250 07/01/11 2,349,080
2,500 New York St Dorm Auth Rev Cons City Univ Sys 2nd
Genl Res Ser A ...................................... 5.750 07/01/13 2,452,250
2,000 New York St Dorm Auth Rev Court Fac Lease Ser A ..... 5.250 05/15/21 1,794,380
1,250 New York St Dorm Auth Rev Highland Cmnty Dev
Ser B (Mandatory Tender @ 07/01/01) ................. 5.500 07/01/23 1,278,625
2,000 New York St Dorm Auth Rev Insd March of Dimes Birth
Rfdg (AMBAC Insd) ................................... 5.600 07/01/12 2,012,440
</TABLE>
4 See Notes to Financial Statements
<TABLE>
Portfolio of Investments (Continued)
October 31, 1995
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
New York (Continued)
$ 2,000 New York St Dorm Auth Rev Saint Luke's Home
Residential Hlth ...................................... 6.200% 08/01/15 $ 2,033,160
1,425 New York St Dorm Auth Rev Ser A ....................... 5.750 07/01/09 1,410,266
2,500 New York St Dorm Auth Rev St Univ Edl Fac Ser B ....... 5.000 05/15/18 2,180,650
3,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser C (MBIA Insd) .................. 5.600 06/01/25 2,909,250
1,500 New York St Energy Resh & Dev Cons Edison Co NY Ser A
Rfdg .................................................. 6.100 08/15/20 1,517,325
2,000 New York St Environmental Fac Corp Pollutn Ctl Rev NYC
Muni Wtr Fin Auth Ser E ............................... 6.600 06/15/09 2,187,580
3,000 New York St Hsg Fin Agy Svc Contract Oblig Rev Ser D
....................................................... 5.375 03/15/11 2,829,030
3,500 New York St Med Care Fac Fin Agy Rev Presbyterian Hosp
Mtg Ser A Rfdg (FHA Gtd) .............................. 5.250 08/15/14 3,300,255
3,000 New York St Med Care Fac Fin Agy Rev Saint Peter's
Hosp Proj Ser A (AMBAC Insd) <F2> ..................... 5.375 11/01/20 2,846,070
2,000 New York St Mtg Agy Rev Homeowner Mtg Ser 42 (FHA Gtd)
....................................................... 6.400 10/01/20 2,061,240
1,500 New York St Pwr Auth Rev & Genl Purp Ser Aa ........... 6.375 01/01/12 1,582,755
2,500 New York St Thruway Auth Hwy & Bridge Trust Fund Ser A
(MBIA Insd) ........................................... 5.500 04/01/15 2,471,950
3,700 New York St Urban Dev Corp Rev Correctional Fac Rfdg
....................................................... 5.625 01/01/07 3,664,961
3,500 Niagara Falls, NY Brdg Comm Toll Rev Ser B Rfdg (FGIC
Insd) ................................................. 5.250 10/01/21 3,312,785
1,060 Niagara Falls, NY Wtr Treatment Plant (MBIA Insd) ..... 7.250 11/01/10 1,240,656
650 Niagara Falls, NY Wtr Treatment Plant (MBIA Insd) ..... 7.000 11/01/14 712,829
2,000 Niagara, NY Frontier Tran Auth Arpt Greater Buffalo
Intl Arpt Rev Ser B (AMBAC Insd) ...................... 5.750 04/01/04 2,050,900
2,000 Port Auth NY & NJ Cons Ninety Seventh Ser (FGIC Insd)
....................................................... 6.650 01/15/23 2,136,700
2,495 Port Auth NY & NJ Cons Rev Bonds (MBIA Insd) .......... 5.750 09/15/12 2,530,204
2,000 Triborough Brdg & Tunl Auth NY Rev Genl Purp Ser Y
Rfdg .................................................. 6.000 01/01/12 2,118,140
1,720 Westchester Cnty, NY Indl Dev Agy Arpt Fac Rev
Westchester Arpt Assoc Ser A .......................... 5.950 08/01/24 1,710,437
------------
94,484,773
------------
</TABLE>
5 See Notes to Financial Statements
<TABLE>
Portfolio of Investments (Continued)
October 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Guam 4.2%
$ 2,500 Guam Arpt Auth Rev Ser B ............ 6.400% 10/01/05 $ 2,557,825
1,000 Guam Govt Ser A ..................... 6.000 09/01/06 1,018,240
650 Guam Pwr Auth Rev Ser A ............. 6.625 10/01/14 672,412
-------------
4,248,477
-------------
Puerto Rico 2.3%
2,500 Puerto Rico Indl Med & Environmental
Pollutn Ctl Fac Fin Auth Rev ........ 5.100 12/01/18 2,264,050
-------------
Total Long-Term Investments 100.2%
(Cost $97,616,956) <F1>......................................... 100,997,300
Short-Term Investments at Amortized Cost 1.3%.................... 1,300,000
Liabilities in Excess of Other Assets (1.5%)..................... (1,492,309)
-------------
Net Assets 100%.................................................. $ 100,804,991
==============
<FN>
<F1> At October 31, 1995, cost for federal income tax purposes is $97,616,956;
the aggregate gross unrealized appreciation is $3,766,036 and the
aggregate gross unrealized depreciation is $385,692, resulting in net
unrealized appreciation of $3,380,344.
<F2> Assets segregated as collateral for when issued or delayed delivery
purchase commitments.
<F3> 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.
<F4> Securities purchased on a when issued or delayed delivery basis.
</TABLE>
The following table summarizes the portfolio composition at October 31, 1995,
based upon quality ratings issued by Standard & Poor's. For securities not rated
by Standard & Poor's, the Moody's rating is used.
<TABLE>
<CAPTION>
Portfolio Composition by Credit Quality
<S> <C>
AAA..... 35.2%
AA...... 7.3
A....... 22.5
BBB..... 35.0
-------
100.0%
=======
</TABLE>
6 See Notes to Financial Statements
<TABLE>
Statement of Assets and Liabilities
October 31, 1995
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C>
Assets:
Investments, at Market Value (Cost $97,616,956) (Note 1).................................... $ 100,997,300
Short-Term Investments (Note 1)............................................................. 1,300,000
Cash........................................................................................ 64,857
Receivables:
Interest.................................................................................. 1,531,564
Investments Sold.......................................................................... 1,023,523
Unamortized Organizational Expenses (Note 1)................................................ 12,474
---------------
Total Assets............................................................................ 104,929,718
---------------
Liabilities:
Payables:
Investments Purchased..................................................................... 3,860,329
Income Distributions - Common and Preferred Shares........................................ 64,370
Investment Advisory Fee (Note 2).......................................................... 55,462
Administrative Fee (Note 2)............................................................... 17,065
Accrued Expenses............................................................................ 127,501
---------------
Total Liabilities....................................................................... 4,124,727
---------------
Net Assets.................................................................................. $ 100,804,991
===============
Net Assets Consist of:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 800 issued with
liquidation preference of $50,000 per share) (Note 4)..................................... $ 40,000,000
---------------
Common Shares ($.01 par value with an unlimited number of shares authorized,
4,291,172 shares issued and outstanding).................................................. 42,912
Paid in Surplus ............................................................................ 62,940,596
Net Unrealized Appreciation on Investments.................................................. 3,380,344
Accumulated Distributions in Excess of Net Investment Income................................ (30,518)
Accumulated Net Realized Loss on Investments................................................ (5,528,343)
---------------
Net Assets Applicable to Common Shares.................................................. 60,804,991
---------------
Net Assets.................................................................................. $ 100,804,991
===============
Net Asset Value Per Common Share ($60,804,991 divided by 4,291,172 shares outstanding)...... $ 14.17
===============
</TABLE>
7 See Notes to Financial Statements
<TABLE>
Statement of Operations
For the Year Ended October 31, 1995
- --------------------------------------------------------------------------------
<CAPTION>
<S> <C>
Investment Income:
Interest........................................................ $ 5,761,657
---------------
Expenses:
Investment Advisory Fee (Note 2)................................ 628,058
Administrative Fee (Note 2)..................................... 193,249
Preferred Share Maintenance (Note 4)............................ 122,381
Trustees Fees and Expenses (Note 2)............................. 30,037
Legal (Note 2).................................................. 9,125
Amortization of Organizational Expenses (Note 1)................ 4,997
Other........................................................... 176,826
---------------
Total Expenses.................................................. 1,164,673
---------------
Net Investment Income........................................... $ 4,596,984
===============
Realized and Unrealized Gain/Loss on Investments:
Realized Gain/Loss on Investments:
Proceeds from Sales............................................. $ 70,505,329
Cost of Securities Sold......................................... (72,817,642)
---------------
Net Realized Loss on Investments ............................... (2,312,313)
---------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period......................................... (7,278,793)
End of the Period............................................... 3,380,344
---------------
Net Unrealized Appreciation on Investments During the Period.... 10,659,137
---------------
Net Realized and Unrealized Gain on Investments................. $ 8,346,824
===============
Net Increase in Net Assets from Operations...................... $ 12,943,808
===============
</TABLE>
8 See Notes to Financial Statements
<TABLE>
Statement of Changes in Net Assets
For the Years Ended October 31, 1995 and 1994
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended Year Ended
October 31, 1995 October 31, 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income.............................................. $ 4,596,984 $ 4,468,697
Net Realized Loss on Investments................................... (2,312,313) (3,216,030)
Net Unrealized Appreciation/Depreciation on Investments During the
Period............................................................. 10,659,137 (10,439,728)
---------------- ----------------
Change in Net Assets from Operations .............................. 12,943,808 (9,187,061)
---------------- ----------------
Distributions from and in Excess of Net Investment Income:
Common Shares.................................................... (3,089,574) (3,598,115)
Preferred Shares................................................. (1,548,777) (976,982)
---------------- ----------------
(4,638,351) (4,575,097)
---------------- ----------------
Distributions from Net Realized Gain on Investments (Note 1):
Common Shares...................................................... -0- (609,776)
Preferred Shares................................................... -0- (120,851)
---------------- ----------------
-0- (730,627)
---------------- ----------------
Total Distributions................................................ (4,638,351) (5,305,724)
---------------- ----------------
Net Change in Net Assets from Investment Activities................ 8,305,457 (14,492,785)
Net Assets:
Beginning of the Period............................................ 92,499,534 106,992,319
---------------- ----------------
End of the Period (Including undistributed net investment income
of $(30,518) and $10,849, respectively).......................... $ 100,804,991 $ 92,499,534
=============== =================
</TABLE>
9 See Notes to Financial Statements
Financial Highlights
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
April 30, 1993
(Commencement
Year Ended Year Ended of Investment
October 31, October 31, Operations) to
1995 1994 October 31, 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period <F1>............ $ 12.234 $ 15.612 $ 14.697
----------- ------------ ----------------
Net Investment Income.................................. 1.071 1.041 .375
Net Realized and Unrealized Gain/Loss on Investments... 1.946 (3.182) .888
----------- ------------ ----------------
Total from Investment Operations......................... 3.017 (2.141) 1.263
----------- ------------ ----------------
Less:
Distributions from and in Excess of
Net Investment Income:
Paid to Common Shareholders.......................... .720 .839 .286
Common Share Equivalent of Distributions Paid to
Preferred Shareholders............................. .361 .228 .062
Distributions from Net Realized Gain on Investments
(Note 1):
Paid to Common Shareholders............................ -0- .142 -0-
Common Share Equivalent of Distributions Paid to
Preferred Shareholders............................... -0- .028 -0-
----------- ------------ ----------------
Total Distributions...................................... 1.081 1.237 .348
----------- ------------ ----------------
Net Asset Value, End of the Period....................... $ 14.170 $ 12.234 $ 15.612
=========== ============ ================
Market Price Per Share at End of the Period.............. $ 11.375 $ 10.250 $ 14.875
Total Investment Return at Market Price (Non-Annualized)
<F2>................................................... 18.15% (25.74%) 1.09%
Total Return at Net Asset Value
(Non-Annualized) <F3>.................................. 22.35% (15.99%) 6.01%
Net Assets at End of the Period (In millions)............ $ 100.8 $ 92.5 $ 107.0
Ratio of Expenses to Average Net Assets Applicable to
Common Shares (Annualized)............................. 2.06% 1.88% 1.56%
Ratio of Expenses to Average Net Assets (Annualized)..... 1.20% 1.13% 1.17%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (Annualized) <F4>.......... 5.38% 5.82% 4.13%
Portfolio Turnover....................................... 77.37% 91.35% 42.97%
<FN>
<F1> Net asset value at April 30, 1993, is adjusted for common and preferred
share offering costs of $.303 per common share.
<F2> 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.
<F3> Total return at net asset value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.
<F4> Net investment income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
</TABLE>
10 See Notes to Financial Statements
Notes to Financial Statements
October 31, 1995
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Van Kampen Merritt New York Value Municipal Income Trust (the "Trust") is
registered as a non-diversified closed-end management investment company under
the Investment Company Act of 1940, as amended. The Trust 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.
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 less than 60 days 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.
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.
D. Organizational Expenses-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 and initial registration 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 expenses in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.
11
Notes to Financial Statements (Continued)
October 31, 1995
- --------------------------------------------------------------------------------
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, 1995, the Trust had an accumulated capital loss
carry forward for tax purposes of $5,528,343, of which $3,216,030 and $2,312,313
will expire on October 31, 2002 and 2003, respectively.
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.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Trust, of which a trustee of the Trust is an affiliated person.
For the year ended October 31, 1995, the Trust recognized expenses of
approximately $12,600 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.
12
Notes to Financial Statements (Continued)
October 31, 1995
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The Trust has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC. The Trust's liability under the
deferred compensation and retirement plans at October 31, 1995, was $24,100.
At October 31, 1995, VKAC owned 6,700 common shares of the Trust.
3. Investment Transactions
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the year ended October 31, 1995 were $71,786,086 and
$72,817,642, respectively.
4. Preferred Shares
The Trust has outstanding 800 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is currently reset every seven days through an
auction process. The rate in effect on October 31, 1995 was 3.72%. During the
year ended October 31, 1995, the rates ranged from 2.900% to 5.998%.
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.
13
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Van Kampen Merritt New York Value Municipal Income Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen Merritt New York Value Municipal Income Trust (the "Trust"), including
the portfolio of investments, as of October 31, 1995, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Van
Kampen Merritt New York Value Municipal Income Trust as of October 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods presented, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
November 29, 1995
14
Dividend Reinvestment Plan
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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 divi-
dends 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:
One Parkview Plaza, Oakbrook Terrace, IL 60181
Attn: Closed-End Funds
15
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
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
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
Limited 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
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies 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 direct at 1-800-421-5666 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
16
Van Kampen Merritt New York Value Municipal Income Trust
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Officers and Trustees
Don G. Powell*
Chairman and Trustee
Dennis J. McDonnell*
President and Trustee
David C. Arch
Trustee
Rod Dammeyer
Trustee
Howard J Kerr
Trustee
Theodore A. Myers
Trustee
Hugo F. Sonnenschein
Trustee
Wayne W. Whalen*
Trustee
Peter W. Hegel*
Vice President
Ronald A. Nyberg*
Vice President and Secretary
Edward C. Wood, III*
Vice President and Treasurer
Scott E. Martin*
Assistant Secretary
Weston B. Wetherell*
Assistant Secretary
Nicholas Dalmaso*
Assistant Secretary
John L. Sullivan*
Controller
Steven M. Hill*
Assistant Treasurer
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
333 West Wacker Drive
Chicago, Illinois 60606
Independent Auditors
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., 1995 All rights reserved.
SM denotes a service mark of
Van Kampen American Capital Distributors, Inc.
17
