<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 4
Portfolio of Investments......................... 5
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
</TABLE>
VCV SAR 6/96
<PAGE> 2
LETTER TO SHAREHOLDERS
May 15, 1996
Dear Shareholder,
While interest rates drifted
downward during the fourth quarter of
last year, such was not the case in the
first quarter of 1996. Early in the [PHOTO]
quarter, municipal bond prices
demonstrated increased volatility in
conjunction with February's economic
announcements, which revealed a revival
in economic growth, impressive
employment levels, and moderate DENNIS J. MCDONNELL AND DON G. POWELL
inflation. This positive economic
environment, however, did not translate
into positive movement for the bond markets. Instead, the markets became wary,
because inflation often accompanies economic growth.
Other factors influencing the municipal bond market early in the year
included:
- Intense weather conditions, which hindered distribution and manufacturing,
were experienced by much of the United States and affected certain
municipal bond sectors.
- The expectation that a federal budget agreement was forthcoming helped
bolster municipal bonds, especially at the longer end of the spectrum.
- The proposal of tax reform--and the threat of municipal bonds having
diminished tax-exempt status--continued to dampen demand for municipals,
resulting in lower bond prices.
We believe the beginning of 1996 reflected the market's reaction to the
possibility of a return to long-term economic growth. This, coupled with
continued low inflationary conditions, has served to put the Federal Reserve
Board in a neutral policy mode, bringing relative calm to the market--although
currently at higher interest rate levels.
PERFORMANCE SUMMARY
The Van Kampen American Capital California Value Municipal Income Trust's
(ticker symbol VCV) common stock price remained relatively stable during the
six-month period, closing at $12.00, while the general municipal bond market was
down 4 percent for the same period, according to the Bond Buyer's 40 Municipal
Bond Index.
For the six months ended April 30, 1996, the Trust posted a total return of
2.91 percent(1), based on market price. Longer term, the Trust's one-year total
return was 2.77 percent(1), based on market price for the period ended April 30,
1996, including reinvestment of dividends.
Continued on page two
1
<PAGE> 3
Many closed-end municipal bond funds are currently offering higher after-tax
yields than taxable income alternatives, and your Trust is no exception. Based
on the closing common stock price on April 30, 1996, the California Value
Municipal Income Trust had a tax-exempt distribution rate of 6.00 percent (3).
In other words, California residents in the 43 percent combined marginal income
tax bracket would have to earn a yield of 10.53 percent(4) on a taxable
investment to equal your Trust's tax-exempt distribution rate.
MARKET OUTLOOK
The economy rebounded in the first quarter of 1996, despite poor weather in
the East and the remnants of a slow fourth quarter of 1995, which was hindered
by weak construction activity, two government shutdowns, and a strike at Boeing.
We believe the momentum of the first quarter can carry into the second, due in
part to renewed auto production in the aftermath of the General Motors strike
and an end to the budget stalemate between the White House and Congress. We
expect a modest slowdown in the summer months, as higher interest rates could
slow activity in interest-sensitive sectors of the economy, such as housing.
TOP 5 PORTFOLIO HOLDINGS BY INDUSTRY AS OF APRIL 30, 1996
Transportation..................................... 15.2%
Public Building.................................... 14.9%
Tax District....................................... 14.6%
Water & Sewer...................................... 12.5%
Higher Education................................... 11.9%
The Fed's protracted period of easing, and relatively neutral stance, favors
the growth we are currently experiencing. Given the strong employment situation
and commodity price increases, we think the Fed will await further economic
evidence before adjusting interest rates again--probably summertime at the
earliest. So far, guides such as the Consumer Price Index continue to indicate
modest levels of inflation. More importantly, we continue to see few signs of
emerging inflation in either unit labor costs, hourly earnings or the employment
cost index.
- --------------------------------------------------------------------------------
INVESTMENT TERM: REVENUE BONDS
Revenue bonds are one of the three most common types of municipal bonds--the
other two are general obligation bonds and municipal notes. Revenue bonds
are issued to finance income-generating projects such as turnpikes, toll
bridges and airports. The revenues these projects bring in are used to pay
interest and principal to bondholders.
- --------------------------------------------------------------------------------
Continued on page three
2
<PAGE> 4
Finally, as the November elections approach, the debate on tax reform
may grow. We believe the outcome in the long run will be positive, or at worst
neutral, for municipal bonds. That's good news for the market, which was
concerned that flat tax proposals could threaten the tax-exempt status of
municipal bonds. While the debate may not be over and legislation may be
forthcoming, the market should be more confident.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality
as of April 30, 1996
<TABLE>
<S> <C>
AAA................................. 67.5%
AA.................................. 1.8%
A................................... 14.9%
BBB................................. 15.8%
</TABLE>
Indeed, we expect investor demand for municipal securities to exceed supply,
which should add price stability to the general market. And with municipal bond
yields currently at attractive levels relative to Treasuries, investor demand
for tax-exempt securities should increase.
In summary, our view of the general municipal market is positive. From the
decreasing likelihood of tax reform in the near term to specific market
conditions, we believe the market is on solid ground. With our dedication to
comprehensive research and long-term investment perspective, we believe your
Trust is in a position to benefit in the coming months.
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.
3
<PAGE> 5
PERFORMANCE RESULTS FOR THE PERIOD ENDED APRIL 30, 1996
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA VALUE MUNICIPAL INCOME TRUST
(NYSE TICKER SYMBOL--VCV)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
Six-month total return based on market price(1)........... 2.91%
Six-month total return based on NAV(2).................... (.01%)
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................ 6.00%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)................................... 10.53%
SHARE VALUATIONS
Net asset value........................................... $ 14.45
Closing common stock price................................ $12.000
Six-month high common stock price (03/07/96).............. $12.875
Six-month low common stock price (04/12/96)............... $11.750
Preferred share rate(5)................................... 3.375%
</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 43%
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 #5, 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.
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
CALIFORNIA 88.0%
$1,000 California Edl Fac Auth Rev Harvey Mudd
College......................................... 6.050% 12/01/08 $ 997,760
575 California Edl Fac Auth Rev Univ of La Verne.... 5.000 04/01/97 576,616
2,000 California Edl Fac Auth Rev Univ of La Verne.... 6.375 04/01/13 1,983,540
1,750 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
IBM Proj Rfdg................................... 6.800 11/01/11 1,857,065
2,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Pacific Gas & Elec.............................. 6.350 06/01/09 2,029,300
680 California Rural Home Mtg Fin Auth Single Family
Mtg Rev Ser A2 (GNMA Collateralized)............ 7.950 12/01/24 762,606
2,670 California St Dept Wtr Res Cent Vly Proj Rev Wtr
Sys Ser L Rfdg (MBIA Insd)...................... 5.625 12/01/12 2,658,466
3,000 California St Pub Wks Brd Energy Efficiency Rev
Ser A (FSA Insd)................................ 5.250 05/01/08 2,972,370
3,000 California St Pub Wks Brd Lease Rev Dept of
Corrections CA St Prison D Susanville (MBIA
Insd)........................................... 5.375 06/01/18 2,756,550
4,000 California St Pub Wks Brd Lease Rev Dept of
Corrections Monterey Ser A (MBIA Insd).......... 6.400 11/01/10 4,269,520
2,500 California St Pub Wks Brd Lease Rev Var Univ CA
Proj Ser A...................................... 5.800 10/01/03 2,591,250
2,220 California St Pub Wks Brd Lease Rev Var Univ CA
Proj Ser A...................................... 5.800 11/01/04 2,295,191
3,000 California St Pub Wks Brd Lease Rev Var Univ CA
Proj Ser A (AMBAC Insd)......................... 6.200 12/01/06 3,210,840
2,400 California St Var Rate Cpn (AMBAC Insd)......... 6.400 09/01/08 2,663,088
1,000 California Statewide Cmntys Dev Corp Ctfs Partn
Insd United Westn Med Cent...................... 6.750 12/01/21 1,038,630
2,515 Chino Basin, CA Regl Fin Auth Rev Muni Wtr Dist
Swr Sys Proj Rfdg (AMBAC Insd).................. 7.000 08/01/07 2,900,198
1,440 Chino Basin, CA Regl Fin Auth Rev Muni Wtr Dist
Swr Sys Proj Rfdg (AMBAC Insd).................. 7.000 08/01/08 1,664,755
2,000 Chino Hills, CA Ctfs Partn Wtr Sys Refinancing
Proj (FGIC Insd) (b)............................ 5.600 06/01/18 1,899,160
2,500 East Bay, CA Muni Util Dist Wtr Sys Rev Sub
Rfdg............................................ 6.000 06/01/12 2,514,950
3,100 Foothill/Eastern Tran Agy Cap Apprec Sr Lien Ser
A............................................... * 01/01/27 389,391
3,000 Foothill/Eastern Tran Corridor Agy CA Toll Rd
Rev Ser A....................................... 6.500 01/01/32 2,968,830
6,605 Foothill/Eastern Tran Corridor Agy CA Toll Rd
Rev Sr Lien Ser A............................... * 01/01/28 775,361
1,770 Glendale, CA Hlth Fac Rev Mem Hosp & Hlth Cent
Ser A (Connie Lee Insd)......................... 5.625 11/15/15 1,689,270
2,000 Glendale, CA Hlth Fac Rev Mem Hosp & Hlth Cent
Ser A (Connie Lee Insd)......................... 5.600 11/15/25 1,870,240
2,500 Huntington Park, CA Redev Agy Single Family
Residential Mtg Rev Ser A Rfdg (FHA Gtd)........ 8.000 12/01/19 3,141,325
2,000 Imperial Irr Dist CA Ctfs Partn Elec Sys Proj
(MBIA Insd)..................................... 6.750 11/01/11 2,179,640
2,340 Inglewood, CA Redev Agy Tax Alloc Century Redev
Proj Ser A Rfdg................................. 6.000 07/01/08 2,330,780
</TABLE>
See Notes to Financial Statements
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$1,000 La Quinta, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Rfdg (MBIA Insd)...................... 7.300% 09/01/06 $ 1,179,360
1,740 La Quinta, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Rfdg (MBIA Insd)...................... 7.300 09/01/07 2,052,295
1,600 La Quinta, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Rfdg (MBIA Insd)...................... 7.300 09/01/08 1,894,128
2,000 Long Beach, CA Harbor Rev (MBIA Insd)........... 5.500 05/15/10 1,948,460
1,000 Los Angeles Cnty, CA Ctfs Partn (Embedded
Swap)........................................... 7.030 11/01/01 1,028,120
1,000 Los Angeles Cnty, CA Pub Wks Fin Auth Rev Cap
Constr Rfdg (AMBAC Insd)........................ 5.000 03/01/11 926,210
3,250 Los Angeles Cnty, CA Tran Comm Sales Tax Rev
Prop C 2nd Sr Ser A (MBIA Insd)................. 6.250 07/01/13 3,361,930
5,000 Los Angeles, CA Convention & Exhibition Cent
Auth Lease Rev Ser A Rfdg (MBIA Insd)........... 5.150 08/15/08 4,875,200
1,230 Merced, CA Irr Dist Ctfs Partn Wtr Fac Proj..... 6.400 11/01/10 1,244,379
2,000 Monrovia, CA Redev Agy Tax Alloc Cent Redev Proj
Area 1 Ser B Rfdg (AMBAC Insd).................. 6.700 05/01/21 2,142,220
1,000 Montebello, CA Unified Sch Dist Ctfs Partn Cap
Impts Proj...................................... 6.300 06/01/11 1,002,330
3,000 Mount Diablo, CA Hosp Dist Rev Ser A (Embedded
Cap) (AMBAC Insd) (c)........................... 5.125 12/01/23 2,597,760
6,185 New Haven, CA Unified Sch Dist Cap Apprec Ser D
(FGIC Insd)..................................... * 08/01/20 1,298,726
265 Paradise, CA Irrigation Dist Rev Ctfs Partn Wtr
Sys Proj........................................ 6.000 01/01/02 265,477
335 Paradise, CA Irrigation Dist Rev Ctfs Partn Wtr
Sys Proj........................................ 6.150 01/01/03 336,236
340 Paradise, CA Irrigation Dist Rev Ctfs Partn Wtr
Sys Proj........................................ 6.200 01/01/04 340,374
3,455 Paradise, CA Irrigation Dist Rev Ctfs Partn Wtr
Sys Proj........................................ 6.400 01/01/14 3,438,347
2,040 Paramount, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Rfdg (MBIA Insd)...................... 6.100 08/01/08 2,164,297
2,000 Paramount, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Rfdg (MBIA Insd)...................... 6.250 08/01/23 2,060,900
5,000 Paramount, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Ser B (MBIA Insd)..................... * 08/01/26 675,200
4,000 Port Oakland, CA Port Rev Ser A (BIGI Insd)..... 7.600 11/01/16 4,185,680
2,000 Port Oakland, CA Spl Fac Rev Mitsui O.S.K. Line
Ltd Ser A....................................... 6.750 01/01/12 2,076,980
2,150 Riverside, CA Elec Rev Rfdg..................... 5.000 10/01/13 1,937,795
1,500 Sacramento, CA Cogeneration Auth Cogeneration
Proj Rev Procter & Gamble Proj.................. 6.375 07/01/10 1,521,135
1,000 Sacramento, CA Cogeneration Auth Cogeneration
Proj Rev Procter & Gamble Proj.................. 6.500 07/01/14 1,012,790
2,000 Sacramento, CA Muni Util Dist Elec Rev Ser E
(MBIA Insd)..................................... 5.750 05/15/22 1,935,760
3,000 San Francisco, CA City & Cnty Redev Agy Multi
Family Rev Hsg South Beach Proj Rfdg (GNMA
Collateralized)................................. 5.500 03/01/14 2,849,430
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$1,320 San Marcos, CA Pub Fac Auth Rev Pub Impt Civic
Cent Ser A Rfdg................................. 5.900% 08/01/03 $ 1,273,589
2,500 San Marcos, CA Pub Fac Auth Rev Pub Impt Civic
Cent Ser A Rfdg................................. 6.150 08/01/13 2,416,000
1,250 San Mateo Cnty, CA Jt Pwrs Fin Auth Lease Rev
San Mateo Cnty Hlth Care Cent Ser A (FSA
Insd)........................................... 5.600 07/15/04 1,299,888
2,000 San Mateo Cnty, CA Jt Pwrs Fin Auth Lease Rev
San Mateo Cnty Hlth Care Cent Ser A (FSA
Insd)........................................... 5.700 07/15/05 2,087,140
2,000 San Mateo Cnty, CA Jt Pwrs Fin Auth Lease Rev
San Mateo Cnty Hlth Care Cent Ser A (FSA
Insd)........................................... 5.800 07/15/06 2,088,460
4,680 South Orange Cnty, CA Pub Fin Auth Spl Tax Rev
Sr Lien Ser A Rfdg (MBIA Insd).................. 7.000 09/01/07 5,400,767
2,000 Sunnyvale, CA Fin Auth Utils Rev Wastewtr Reuse
& Sludge Ser A (MBIA Insd)...................... 6.300 10/01/17 2,052,300
2,000 University of CA Rev Multi Purp Projs Ser C Rfdg
(AMBAC Insd).................................... 5.125 09/01/13 1,848,520
2,955 University of CA Rev Multi Purp Projs Ser D
(MBIA Insd)..................................... 10.000 09/01/02 3,786,537
------------
129,591,412
------------
PUERTO RICO 10.3%
3,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
V Rfdg.......................................... 6.625 07/01/12 3,151,950
2,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
W Rfdg.......................................... 5.500 07/01/17 1,845,960
5,000 Puerto Rico Comwlth Hwy & Tran Ser Y (Embedded
Cap) (FSA Insd)................................. 5.730 07/01/21 5,286,300
1,700 Puerto Rico Comwlth Ser A Rfdg.................. 6.250 07/01/10 1,742,942
3,000 Puerto Rico Pub Bldgs Auth Gtd Pub Ed & Hlth Fac
Rfdg Ser M (MBIA Insd).......................... 5.600 07/01/08 3,090,300
------------
15,117,452
------------
TOTAL LONG-TERM INVESTMENTS 98.3%
(Cost $141,019,683)(a)..................................................... 144,708,864
SHORT-TERM INVESTMENTS AT AMORTIZED COST 1.4%............................... 2,001,722
OTHER ASSETS IN EXCESS OF LIABILITIES 0.3%.................................. 447,554
------------
NET ASSETS 100%............................................................. $147,158,140
============
*Zero coupon bond
</TABLE>
(a) At April 30, 1996, cost for federal income tax purposes is $141,019,683; the
aggregate gross unrealized appreciation is $4,661,986 and the aggregate
gross unrealized depreciation is $972,805, resulting in net unrealized
appreciation of $3,689,181.
(b) Securities purchased on a when issued or delayed delivery basis.
(c) Assets segregated as collateral for when issued or delayed delivery purchase
commitments.
See Notes to Financial Statements
7
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $141,019,683) (Note 1).............. $144,708,864
Short-Term Investments (Note 1)........................................ 2,001,722
Interest Receivable.................................................... 2,660,043
Unamortized Organizational Expenses (Note 1)........................... 9,982
Other.................................................................. 4,126
------------
Total Assets..................................................... 149,384,737
------------
LIABILITIES:
Payables:
Investments Purchased................................................ 1,891,331
Investment Advisory Fee (Note 2)..................................... 78,471
Income Distributions--Common and Preferred Shares.................... 61,664
Administrative Fee (Note 2).......................................... 24,145
Custodian Bank....................................................... 17,754
Accrued Expenses....................................................... 114,752
Deferred Compensation and Retirement Plans (Note 2).................... 38,480
------------
Total Liabilities................................................ 2,226,597
------------
NET ASSETS............................................................. $147,158,140
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 1,200
issued with liquidation preference of $50,000 per share) (Note 5).... $ 60,000,000
------------
Common Shares ($.01 par value with an unlimited number of shares
authorized, 6,029,844 shares issued and outstanding)................. 60,298
Paid in Surplus........................................................ 88,589,917
Net Unrealized Appreciation on Investments............................. 3,689,181
Accumulated Undistributed Net Investment Income........................ 511,652
Accumulated Net Realized Loss on Investments........................... (5,692,908)
------------
Net Assets Applicable to Common Shares........................... 87,158,140
------------
NET ASSETS............................................................. $147,158,140
============
NET ASSET VALUE PER COMMON SHARE ($87,158,140 divided
by 6,029,844 shares outstanding)..................................... $ 14.45
============
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................................... $ 4,257,897
------------
EXPENSES:
Investment Advisory Fee (Note 2)....................................... 487,371
Administrative Fee (Note 2)............................................ 149,960
Preferred Share Maintenance (Note 5)................................... 87,438
Custody (Note 1)....................................................... 27,923
Trustees Fees and Expenses (Note 2).................................... 11,971
Legal (Note 2)......................................................... 10,839
Amortization of Organizational Expenses (Note 1)....................... 2,492
Other.................................................................. 70,701
------------
Total Expenses..................................................... 848,695
Earnings Credits on Cash Balances (Note 1)......................... (3,179)
------------
Net Expenses....................................................... 845,516
------------
NET INVESTMENT INCOME.................................................. $ 3,412,381
============
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Realized Gain/Loss on Investments:
Proceeds from Sales.................................................. $ 25,251,940
Cost of Securities Sold.............................................. (24,011,459)
------------
Net Realized Gain on Investments....................................... 1,240,481
------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period.............................................. 7,188,801
End of the Period.................................................... 3,689,181
------------
Net Unrealized Depreciation on Investments During the Period........... (3,499,620)
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS........................ $ (2,259,139)
============
NET INCREASE IN NET ASSETS FROM OPERATIONS............................. $ 1,153,242
============
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1996
and the Year Ended October 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1996 October 31, 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................... $ 3,412,381 $ 6,777,039
Net Realized Gain/Loss on Investments.................... 1,240,481 (1,038,644)
Net Unrealized Appreciation/Depreciation on Investments
During the Period...................................... (3,499,620) 14,371,277
----------- ------------
Change in Net Assets from Operations..................... 1,153,242 20,109,672
----------- ------------
Distributions from Net Investment Income:
Common Shares.......................................... (2,170,696) (4,667,035)
Preferred Shares....................................... (1,086,753) (2,424,795)
----------- ------------
Total Distributions...................................... (3,257,449) (7,091,830)
----------- ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES...... (2,104,207) 13,017,842
NET ASSETS:
Beginning of the Period.................................. 149,262,347 136,244,505
----------- ------------
End of the Period (Including undistributed net investment
income of $511,652 and $356,720, respectively)......... $147,158,140 $149,262,347
============ ============
</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 Year Ended of Investment
April 30, October 31, October 31, Operations) to
1996 1995 1994 October 31, 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period (a).... $14.803 $12.644 $15.812 $14.714
------- ------- ------- -------
Net Investment Income.......... .566 1.124 1.124 .424
Net Realized and Unrealized
Gain/Loss on Investments..... (.375) 2.211 (3.133) 1.018
------- ------- ------- -------
Total from Investment
Operations..................... .191 3.335 (2.009) 1.442
------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............... .360 .774 .828 .276
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders..... .180 .402 .265 .068
Distributions from Net Realized
Gain on Investments (Note 1):
Paid to Common
Shareholders............... -0- -0- .055 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders..... -0- -0- .011 -0-
------- ------- ------- -------
Total Distributions.............. .540 1.176 1.159 .344
------- ------- ------- -------
Net Asset Value, End of the
Period......................... $14.454 $14.803 $12.644 $15.812
======= ======= ======= =======
Market Price Per Share at End of
the Period..................... $12.000 $12.000 $11.125 $14.750
Total Investment Return at
Market Price (b)............... 2.91%* 15.04% (19.23%) .18%*
Total Return at Net Asset Value
(c)............................ (.01%)* 23.85% (14.93%) 7.28%*
Net Assets at End of the Period
(In millions).................. $ 147.2 $ 149.3 $ 136.2 $ 155.3
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares (d)..................... 1.87% 1.96% 1.89% 1.56%
Ratio of Expenses to Average Net
Assets (d)..................... 1.13% 1.14% 1.11% 1.14%
Ratio of Net Investment Income to
Average Net Assets Applicable
to Common Shares (e)........... 5.12% 5.25% 6.02% 4.68%
Portfolio Turnover............... 16.23%* 41.25% 92.54% 35.62%*
</TABLE>
(a) Net asset value at April 30, 1993, is adjusted for common and preferred
share offering costs of $.286 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) Beginning with the year ended October 31, 1995, the Ratios of Expenses are
based upon Total Expenses which does not reflect credits earned on overnight
cash balances. (Note 1)
(e) 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, 1996 (Unaudited)
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1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital California Value Municipal Income Trust (the
"Trust") is registered as a 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 and
California income taxes, consistent with preservation of capital. The Trust will
invest in a portfolio consisting substantially of California municipal
obligations 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 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
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
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 expenses in the same
proportion as the number of shares redeemed bears to the number of initial
shares held at the time of redemption.
E. EXPENSE REDUCTIONS--During the six months ended April 30, 1996, the Trust's
custody fee was reduced by $3,179 as a result of credits earned on overnight
cash balances.
F. 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
carryforward for tax purposes of $6,933,389, of which $5,894,745 and $1,038,644
will expire on October 31, 2002 and 2003, respectively.
G. 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.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
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 six months ended April 30, 1996, the Trust recognized expenses of
approximately $7,900 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 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.
At April 30, 1996, 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 six months ended April 30, 1996, were $25,702,665 and
$24,011,459, respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio and to manage the portfolio's effective yield, maturity and duration.
All of the Trust's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in the unrealized
appreciation/depreciation on investments. Upon disposition, a realized gain or
loss is recognized accordingly.
The following types of Indexed Securities are identified in the portfolio of
investments. The price of these securities may be more volatile than the price
of a comparable fixed rate security.
A. 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 Trust invests in these
instruments as a hedge against a rise in the short-term interest rates which is
pays on its preferred shares.
B. An Embedded Swap security includes a swap component such that the fixed
coupon component of the underlying bond is adjusted by the difference between
the
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
security's fixed swap rate and the floating swap index. 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.
5. PREFERRED SHARES
The Trust has outstanding 1,200 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, 1996, was 3.375%. During the
six months ended April 30, 1996, the rates ranged from 3.000% to 5.500%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $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.
15
<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
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
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
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 1-800-341-2911 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
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<PAGE> 18
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA VALUE MUNICIPAL INCOME TRUST
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., 1996
All rights reserved.
(SM) denotes a service mark of
Van Kampen American Capital Distributors, Inc.
17
