<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 5
Portfolio of Investments......................... 6
Statement of Assets and Liabilities.............. 10
Statement of Operations.......................... 11
Statement of Changes in Net Assets............... 12
Financial Highlights............................. 13
Notes to Financial Statements.................... 14
</TABLE>
VCV 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 [PHOTO]
Group Inc., a world leader in asset
management. More recently, on February
5, 1997, Morgan Stanley Group Inc. and
Dean Witter, Discover & Co. announced
their agreement to merge, and you DENNIS J. MCDONNELL AND DON G. POWELL
received a proxy in April. The merger
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.
In California, the economy grew well ahead of the national rate, which
boosted the state's short-term financial prospects. A $525 million sale of
general obligation bonds in March was highly successful, and there is the
potential for a ratings upgrade later this year. For the long term, however,
California continues to be vulnerable to an economic downturn due to its small
budget surplus. In addition, the feud continues between state and county
governments over who should pay for state-mandated local services.
FUND STRATEGY
In managing the Trust, we maintained a high concentration in AAA-rated bonds
during the period. As of April 30, 1997, approximately 74 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, approximately 15
percent of long-term investments were AA- or A-rated, and approximately 11
percent were rated BBB, the lowest rating Standard & Poor's assigns to bonds in
the investment-grade category. AAA-rated securities typically have performed
better when interest rates are declining and the potential to provide safety of
principal. 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............ 73.9%
AA............. 1.8%
A.............. 12.9%
BBB............ 11.4%
</TABLE>
Based upon credit quality ratings issued by Standard & Poor's. For securities
not rated by Standard & Poor's, the Moody's rating is used.
Portfolio turnover during the period was minimal because market conditions
offered few opportunities to add value over existing holdings. The majority of
bonds in the portfolio had higher yields than current market levels. Activity
was also limited by the tight spreads between yields of AAA-rated bonds and
lower-rated bonds. These spreads 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 focused on long-term, higher-yielding housing securities, which
have tended to perform well during periods of rising interest rates, and
long-term discount bonds to enhance the call protection of the Trust. In other
words, we hope to lessen the
Continued on page three
2
<PAGE> 4
concentration of bonds that can be called at any one time. New purchases were
financed by sales of par bonds which had been acquired near current market
yields. (A bond that is priced at its face value is selling at par. If it is
priced below par, it is selling at a discount. Conversely, a bond priced above
par is selling at a premium.) When buying new securities for the 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.
At the end of the period, the Trust's duration stood at 8.24 years, compared
to 8.68 years for the Lehman Brothers Municipal Bond Index benchmark. Duration,
which is expressed in years, is a measure of a portfolio's sensitivity to
interest rate movements. Portfolios with long durations have tended to perform
better when rates are falling, and portfolios with short durations have tended
to perform better when rates are rising.
Six-month Dividend History
For the Period Ended April 30, 1997
<TABLE>
<CAPTION>
Distribution per Share
----------------------
<S> <C>
Nov 1996.................. $.0600
Dec 1996.................. $.0650
Jan 1997.................. $.0650
Feb 1997.................. $.0650
Mar 1997.................. $.0650
Apr 1997.................. $.0650
</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 California
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 8.17 percent(1). The Trust
offered a tax-exempt distribution rate of 6.00 percent(3), based on the closing
common stock price of $13.00 per share on April 30, 1997. Because income from
the Trust is exempt from federal and California state income taxes, this
distribution rate represents a yield equivalent to a taxable investment earning
10.53 percent(4) (for investors in the combined federal and state income tax
bracket of 43 percent).
As a result of the Trust's improved earnings, its Board of Trustees approved
a slight increase in its monthly dividend from $0.060 to $0.065 per common
share, payable
Continued on page four
3
<PAGE> 5
December 31, 1996. At the end of the reporting period, the closing share price
of the Trust traded at a 12.87 percent discount to its net asset value of
$14.92.
TOP FIVE PORTFOLIO INDUSTRY HOLDINGS BY SECTOR AS OF APRIL 30, 1997*
Public Building..................................... 12.6%
Transportation...................................... 11.9%
Water & Sewer....................................... 11.1%
General Purpose..................................... 10.8%
Higher Education.................................... 10.7%
*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 CALIFORNIA VALUE MUNICIPAL INCOME TRUST
(NYSE TICKER SYMBOL--VCV)
<TABLE>
COMMON SHARE TOTAL RETURNS
<S> <C>
Six-month total return based on market price(1)............ 8.17%
Six-month total return based on NAV(2)..................... 1.42%
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............................................ $14.92
Closing common stock price................................. $13.000
Six-month high common stock price (02/25/97)............... $13.375
Six-month low common stock price (12/17/96)................ $12.250
Preferred share rate(5).................................... 4.040%
</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 #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
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS
CALIFORNIA 89.7%
$1,000 California Edl Fac Auth Rev Student Ln CA Ln Pg
Ser A (MBIA Insd)............................... 6.000% 03/01/16 $ 1,002,840
2,000 California Edl Fac Auth Rev Univ of La Verne.... 6.375 04/01/13 2,033,380
3,000 California Hsg Fin Agy Rev Home Mtg Ser B (MBIA
Insd)........................................... 6.100 02/01/28 3,009,630
1,000 California Hsg Fin Agy Rev Multi-Family Hsg III
Ser A (MBIA Insd)............................... 5.850 08/01/17 991,700
1,000 California Hsg Fin Agy Rev Multi-Family Hsg III
Ser A (MBIA Insd)............................... 5.950 08/01/28 997,070
1,750 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
IBM Proj Rfdg................................... 6.800 11/01/11 1,886,955
2,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Pacific Gas & Elec.............................. 6.350 06/01/09 2,078,420
825 California Rural Home Mtg Fin Auth Single Family
Mtg Rev Mtg Bkd Secs Pgm Ser C (GNMA
Collateralized)................................. 7.500 08/01/27 911,114
680 California Rural Home Mtg Fin Auth Single Family
Mtg Rev Ser A2 (GNMA Collateralized)............ 7.950 12/01/24 769,325
2,670 California St Dept Wtr Res Cent Vly Proj Rev Wtr
Sys Ser L Rfdg (MBIA Insd)...................... 5.625 12/01/12 2,684,578
3,000 California St Pub Wks Brd Energy Efficiency Rev
Ser A (FSA Insd)................................ 5.250 05/01/08 3,012,630
3,000 California St Pub Wks Brd Lease Rev Dept of
Corrections CA St Prison D Susanville (MBIA
Insd) .......................................... 5.375 06/01/18 2,830,200
4,000 California St Pub Wks Brd Lease Rev Dept of
Corrections Monterey Ser A (MBIA Insd).......... 6.400 11/01/10 4,305,080
2,500 California St Pub Wks Brd Lease Rev Var Univ CA
Proj Ser A...................................... 5.800 10/01/03 2,602,975
2,220 California St Pub Wks Brd Lease Rev Var Univ CA
Proj Ser A...................................... 5.800 11/01/04 2,317,280
3,000 California St Pub Wks Brd Lease Rev Var Univ CA
Proj Ser A (AMBAC Insd)......................... 6.200 12/01/06 3,215,160
2,400 California St Var Rate Cpn (AMBAC Insd)......... 6.400 09/01/08 2,660,880
1,000 California Statewide Cmntys Dev Corp Ctfs Partn
Insd United Westn Med Cent (Prerefunded @
12/01/01)....................................... 6.750 12/01/21 1,100,020
1,000 California Statewide Cmntys Dev Huntington Mem
Hosp (Connie Lee Insd).......................... 5.750 07/01/16 993,600
2,515 Chino Basin, CA Regl Fin Auth Rev Muni Wtr Dist
Swr Sys Proj Rfdg (AMBAC Insd).................. 7.000 08/01/07 2,891,521
1,440 Chino Basin, CA Regl Fin Auth Rev Muni Wtr Dist
Swr Sys Proj Rfdg (AMBAC Insd).................. 7.000 08/01/08 1,669,910
2,000 Chino Hills, CA Ctfs Partn Wtr Sys Refinancing
Proj (FGIC Insd)................................ 5.600 06/01/18 1,940,940
2,000 Contra Costa Cnty, CA Ctfs Partn Merrithew Mem
Hosp Proj Rfdg (MBIA Insd)...................... 5.500 11/01/22 1,919,340
2,500 East Bay, CA Muni Util Dist Wtr Sys Rev Sub
Rfdg............................................ 6.000 06/01/12 2,570,175
3,100 Foothill/Eastern Tran Agy Cap Apprec Sr Lien Ser
A............................................... * 01/01/27 470,053
</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
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$6,605 Foothill/Eastern Tran Corridor Agy CA Toll Rd
Rev Sr Lien Ser A............................... * 01/01/28 $ 939,825
1,000 Galt Schs Jt Pwrs Auth CA Rev High Sch &
Elementary Sch Ser A Rfdg (MBIA Insd) (b)....... 5.750% 11/01/16 1,004,870
1,500 Galt Schs Jt Pwrs Auth CA Rev High Sch &
Elementary Sch Ser A Rfdg (MBIA Insd) (b)....... 5.875 11/01/24 1,503,945
2,000 Imperial Irrig Dist CA Ctfs Partn Elec Sys Proj
(MBIA Insd)..................................... 6.750 11/01/11 2,217,120
2,340 Inglewood, CA Redev Agy Tax Alloc Century Redev
Proj Ser A Rfdg................................. 6.000 07/01/08 2,348,003
1,000 Inland Empire Solid Waste Fin Auth CA Rev
Landfill Impt Fin Proj Ser B (FSA Insd)......... 6.000 08/01/16 1,003,540
1,600 La Quinta, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Rfdg (MBIA Insd)...................... 7.300 09/01/08 1,885,968
2,000 Long Beach, CA Harbor Rev Ser A (MBIA Insd)..... 7.250 05/15/19 2,094,640
1,000 Los Angeles Cnty, CA Ctfs Partn................. 6.100 11/01/01 1,046,730
1,000 Los Angeles Cnty, CA Pub Wks Fin Auth Rev Cap
Constr Rfdg (AMBAC Insd)........................ 5.000 03/01/11 946,370
3,250 Los Angeles Cnty, CA Tran Comm Sales Tax Rev
Prop C Second Sr Ser A (MBIA Insd).............. 6.250 07/01/13 3,411,135
3,000 Los Angeles, CA Convention & Exhibition Cent
Auth Lease Rev Ser A Rfdg (MBIA Insd)........... 5.150 08/15/08 2,988,840
1,230 Merced, CA Irrig Dist Ctfs Partn Wtr Fac Proj... 6.400 11/01/10 1,279,409
2,000 Monrovia, CA Redev Agy Tax Alloc Cent Redev Proj
Area 1 Ser B Rfdg (AMBAC Insd).................. 6.700 05/01/21 2,156,560
1,000 Montebello, CA Unified Sch Dist Ctfs Partn Cap
Impts Proj...................................... 6.300 06/01/11 1,028,920
3,000 Mount Diablo, CA Hosp Dist Rev Ser A (Embedded
Cap) (AMBAC Insd) (c)(d)........................ 5.125 12/01/23 2,681,010
6,185 New Haven, CA Unified Sch Dist Cap Apprec Ser D
(FGIC Insd)..................................... * 08/01/20 1,526,025
1,000 Orange Cnty, CA Arpt Rev Rfdg (MBIA Insd)....... 5.625 07/01/12 986,380
2,455 Paradise, CA Irrig Dist Rev Ctfs Partn Wtr Sys
Proj............................................ 6.400 01/01/14 2,504,591
1,790 Paramount, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Rfdg (MBIA Insd)...................... 6.100 08/01/08 1,908,283
1,765 Paramount, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Rfdg (MBIA Insd)...................... 6.250 08/01/23 1,844,390
5,000 Paramount, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Ser B (MBIA Insd)..................... * 08/01/26 733,100
3,350 Port Oakland, CA Port Rev Ser G (MBIA Insd)..... 5.375 11/01/25 3,128,364
2,000 Port Oakland, CA Spl Fac Rev Mitsui O.S.K. Line
Ltd Ser A....................................... 6.750 01/01/12 2,108,160
1,000 Rancho Mirage, CA Jt Pwrs Fin Eisenhower Med
Cent Ser A (MBIA Insd).......................... 5.375 07/01/22 949,720
2,150 Riverside, CA Elec Rev Rfdg (MBIA Insd)......... 5.000 10/01/13 2,007,090
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$1,500 Sacramento, CA Cogeneration Auth Cogeneration
Proj Rev Procter & Gamble Proj.................. 6.375% 07/01/10 $ 1,558,980
1,000 Sacramento, CA Cogeneration Auth Cogeneration
Proj Rev Procter & Gamble Proj.................. 6.500 07/01/14 1,037,160
2,000 Sacramento, CA Muni Util Dist Elec Rev Ser E
(MBIA Insd)..................................... 5.750 05/15/22 1,972,520
3,000 San Francisco, CA City & Cnty Intl Arpt Rev
Second Ser Issue 12A (FGIC Insd)................ 5.800 05/01/21 2,944,770
3,000 San Francisco, CA City & Cnty Redev Agy
Multi-Family Rev Hsg South Beach Proj Rfdg (GNMA
Collateralized)................................. 5.500 03/01/14 2,919,540
1,810 San Francisco, CA St Bldg Auth Lease Rev (AMBAC
Insd)........................................... 5.250 12/01/21 1,697,219
1,320 San Marcos, CA Pub Fac Auth Rev Pub Impt Civic
Cent Ser A Rfdg................................. 5.900 08/01/03 1,344,882
1,200 San Marcos, CA Pub Fac Auth Rev Pub Impt Civic
Cent Ser A Rfdg................................. 6.150 08/01/13 1,204,932
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 2,093,700
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 2,103,780
4,680 South Orange Cnty, CA Pub Fin Auth Spl Tax Rev
Sr Lien Ser A Rfdg (MBIA Insd).................. 7.000 09/01/07 5,385,042
2,000 Sunnyvale, CA Fin Auth Utils Rev Wastewtr Reuse
& Sludge Ser A (MBIA Insd)...................... 6.300 10/01/17 2,072,580
2,400 Tulare Cnty, CA Ctfs Partn Cap Impt Pgm Ser A
(MBIA Insd)..................................... 6.000 02/15/16 2,444,592
2,000 University of CA Rev Multi Purp Projs Ser C Rfdg
(AMBAC Insd).................................... 5.125 09/01/13 1,894,100
2,955 University of CA Rev Multi Purp Projs Ser D
(MBIA Insd)..................................... 10.000 09/01/02 3,669,667
3,225 Visalia, CA Ctfs Partn Motor Vehicle License Fee
Rfdg (MBIA Insd)................................ 5.375 12/01/19 3,071,006
------------
134,512,234
------------
PUERTO RICO 8.2%
3,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
V Rfdg.......................................... 6.625 07/01/12 3,205,440
2,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
W Rfdg.......................................... 5.500 07/01/17 1,909,600
5,000 Puerto Rico Comwlth Hwy & Tran Ser Y (Embedded
Cap) (FSA Insd)................................. 5.730 07/01/21 5,381,300
1,700 Puerto Rico Comwlth Ser A Rfdg.................. 6.250 07/01/10 1,762,832
------------
12,259,172
------------
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<S> <C>
TOTAL LONG-TERM INVESTMENTS 97.9%
(Cost $141,162,730) (a).................................................... $146,771,406
SHORT-TERM INVESTMENTS 2.0%
(Cost $3,100,000) (a)...................................................... 3,100,000
OTHER ASSETS IN EXCESS OF LIABILITIES 0.1%.................................. 87,998
------------
NET ASSETS 100.0%........................................................... $149,959,404
============
</TABLE>
*Zero coupon bond
(a) At April 30, 1997, cost of long- and short-term investments for federal
income tax purposes is $144,262,730; the aggregate gross unrealized
appreciation is $5,911,983 and the aggregate gross unrealized depreciation
is $303,307, resulting in net unrealized appreciation of $5,608,676.
(b) Securities purchased on a when issued or delayed delivery basis.
(c) Assets segregated as collateral for when issued or delayed delivery purchase
commitments.
(d) 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
9
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $141,162,730)
(Note 1).................................................. $146,771,406
Short-Term Investments (Cost $3,100,000) (Note 1)........... 3,100,000
Cash........................................................ 25,874
Receivables:
Interest.................................................. 2,680,077
Investments Sold.......................................... 195,344
Unamortized Organizational Costs (Note 1)................... 4,985
Other....................................................... 2,070
------------
Total Assets.......................................... 152,779,756
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 2,472,494
Investment Advisory Fee (Note 2).......................... 79,566
Income Distributions--Common and Preferred Shares......... 70,259
Administrative Fee (Note 2)............................... 24,482
Affiliates (Note 2)....................................... 3,370
Accrued Expenses............................................ 110,126
Deferred Compensation and Retirement Plans (Note 2)......... 60,055
------------
Total Liabilities..................................... 2,820,352
------------
NET ASSETS.................................................. $149,959,404
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 1,200 issued with liquidation preference of
$50,000 per share) (Note 4)............................... $ 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.................. 5,608,676
Accumulated Undistributed Net Investment Income............. 882,495
Accumulated Net Realized Loss on Investments................ (5,181,982)
------------
Net Assets Applicable to Common Shares................ 89,959,404
------------
NET ASSETS.................................................. $149,959,404
============
NET ASSET VALUE PER COMMON SHARE ($89,959,404 divided
by 6,029,844 shares outstanding).......................... $ 14.92
============
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 4,222,604
------------
EXPENSES:
Investment Advisory Fee (Note 2)............................ 486,752
Administrative Fee (Note 2)................................. 149,770
Preferred Share Maintenance (Note 4)........................ 86,921
Trustees Fees and Expenses (Note 2)......................... 12,833
Custody..................................................... 11,401
Legal (Note 2).............................................. 7,240
Amortization of Organizational Costs (Note 1)............... 2,478
Other....................................................... 69,831
------------
Total Expenses.......................................... 827,226
------------
NET INVESTMENT INCOME....................................... $ 3,395,378
============
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Gain on Investments............................ $ 298,437
------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period................................... 7,026,090
End of the Period......................................... 5,608,676
------------
Net Unrealized Depreciation on Investments During the
Period.................................................... (1,417,414)
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS............. $ (1,118,977)
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 2,276,401
============
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
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.................................... $ 3,395,378 $ 6,842,664
Net Realized Gain on Investments......................... 298,437 1,452,970
Net Unrealized Depreciation on Investments During the
Period................................................. (1,417,414) (162,711)
------------ ------------
Change in Net Assets from Operations..................... 2,276,401 8,132,923
------------ ------------
Distributions from Net Investment Income:
Common Shares.......................................... (2,321,410) (4,341,381)
Preferred Shares....................................... (994,341) (2,055,135)
------------ ------------
Total Distributions...................................... (3,315,751) (6,396,516)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES...... (1,039,350) 1,736,407
NET ASSETS:
Beginning of the Period.................................. 150,998,754 149,262,347
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $882,495 and $802,868,
respectively).......................................... $149,959,404 $150,998,754
============ ============
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
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
(Commencement
Six Months Year Ended October 31 of Investment
Ended --------------------------- Operations) to
April 30, 1997 1996 1995 1994 October 31, 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period
(a)..................................... $15.091 $14.803 $12.644 $15.812 $14.714
------- ------- ------- ------- -------
Net Investment Income................... .563 1.135 1.124 1.124 .424
Net Realized and Unrealized
Gain/Loss on
Investments........................... (.185) .214 2.211 (3.133) 1.018
------ ------ ------ ------ ------
Total from Investment
Operations.............................. .378 1.349 3.335 (2.009) 1.442
------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders........................ .385 .720 .774 .828 .276
Common Share Equivalent
of Distributions Paid
to Preferred
Shareholders........................ .165 .341 .402 .265 .068
Distributions from Net
Realized Gain on
Investments (Note 1):
Paid to Common
Shareholders.......................... -0- -0- -0- .055 -0-
Common Share Equivalent
of Distributions Paid
to Preferred
Shareholders........................ -0- -0- -0- .011 -0-
------- ------- ------- ------- -------
Total Distributions....................... .550 1.061 1.176 1.159 .344
------- ------- ------- ------- -------
Net Asset Value, End of the
Period.................................. $14.919 $15.091 $14.803 $12.644 $15.812
======= ======= ======= ======= =======
Market Price Per Share at End
of the Period........................... $13.000 $12.375 $12.000 $11.125 $14.750
Total Investment Return at
Market Price (b)........................ 8.17%* 9.28% 15.04% (19.23%) .18%*
Total Return at Net Asset
Value (c)............................... 1.42%* 7.00% 23.85% (14.93%) 7.28%*
Net Assets at End of the
Period (In millions).................... $ 150.0 $ 151.0 $ 149.3 $ 136.2 $ 155.3
Ratio of Expenses to Average
Net Assets Applicable to
Common Shares........................... 1.82% 1.86% 1.96% 1.89% 1.56%
Ratio of Expenses to Average Net Assets... 1.10% 1.11% 1.14% 1.11% 1.14%
Ratio of Net Investment Income
to Average Net Assets
Applicable to Common Shares
(d)..................................... 5.28% 5.36% 5.25% 6.02% 4.68%
Portfolio Turnover........................ 15%* 33% 41% 93% 36%*
</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) Net investment income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
* Non-Annualized
See Notes to Financial Statements
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
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 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.
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 COSTS--The Trust has reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
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 $5,480,419 which will expire between October
31, 2002 and October 31, 2003.
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
(Illinois), counsel to the Trust, of which a trustee of the Trust is an
affiliated person.
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
For the six months ended April 30, 1997, the Trust recognized expenses of
approximately $16,400 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 $22,159,134 and $21,703,103,
respectively.
4. 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, 1997, was 4.040%. During the
six months ended April 30, 1997, the rates ranged from 2.500% to 4.040%.
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.
16
<PAGE> 18
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA 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.
17
