<PAGE> 1
<TABLE>
<S> <C>
Table of Contents
OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 3
PORTFOLIO AT A GLANCE
CREDIT QUALITY 4
SIX-MONTH DIVIDEND HISTORY 4
TOP FIVE INDUSTRIES 5
NET ASSET VALUE AND MARKET PRICE 5
Q&A WITH YOUR PORTFOLIO MANAGERS 6
GLOSSARY OF TERMS 10
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS 11
FINANCIAL STATEMENTS 17
NOTES TO FINANCIAL STATEMENTS 22
TRUST OFFICERS AND IMPORTANT ADDRESSES 25
</TABLE>
It is times like these when money-management experience may make a difference.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 2
OVERVIEW
LETTER TO SHAREHOLDERS
May 19, 2000
Dear Shareholder,
Whether you have held your Trust for years or just joined the Van Kampen family
of shareholders in the last few months, you are likely to have questions and
even some concerns about how recent market volatility has affected your
investment. I encourage you to review the following Q&A in which your portfolio
manager provides an update on how your Trust is being managed in this
environment.
It is times like these when money-management experience may make a difference.
Toward that end, you should know that Van Kampen is one of the nation's oldest
investment-management firms, with a history of money management dating back to
1926. Our portfolio managers have invested in all types of market
conditions--during bull and bear markets, periods of inflation and rising
interest rates, and now a technology revolution. We have managed money long
enough to understand short-term market volatility and the value of investing for
the long term.
As we head into the second half of 2000, count on us to
continue to draw on the wisdom of our 76 years of experience.
Along those lines, Van Kampen's "Generations of Experience" is
the theme of a national advertising campaign that kicked off
this spring. The message emphasizes our depth of
investment-management history, as well as our firm belief that with the right
investments, anyone can realize life's true wealth.
Sincerely,
[SIG]
Richard F. Powers, III
President and CEO
Van Kampen Investments
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
ECONOMIC GROWTH REMAINED STRONG, PRIMARILY DUE TO ACTIVE CONSUMER AND BUSINESS
SPENDING. GROSS DOMESTIC PRODUCT, THE PRIMARY MEASURE OF ECONOMIC GROWTH,
INCREASED AT AN ANNUALIZED RATE OF 5.4 PERCENT IN THE FIRST QUARTER OF 2000.
WHILE THIS FIGURE INDICATES A MODEST SLOWDOWN FROM THE PREVIOUS TWO QUARTERS, IT
NEVERTHELESS REPRESENTS A HIGH RATE OF ECONOMIC GROWTH.
CONSUMER SPENDING AND EMPLOYMENT
INFLATION FEARS CONTINUED TO MOUNT BECAUSE OF STRONG CONSUMER SPENDING AND THE
TIGHT LABOR MARKET. FOR MOST OF THE REPORTING PERIOD, RISING INTEREST RATES DID
LITTLE TO REIN IN ROBUST CONSUMER SPENDING. ALTHOUGH RETAIL SALES GROWTH
MODERATED IN APRIL, THE FACTORS UNDERPINNING CONSUMER ACTIVITY REMAINED LARGELY
UNCHANGED--RISING WAGES, LOW UNEMPLOYMENT, AND A GENERALLY FAVORABLE (THOUGH
VOLATILE) STOCK MARKET.
IN ADDITION, THE JOBLESS RATE HOVERED NEAR ITS LOWEST LEVEL IN THREE DECADES.
THE EMPLOYMENT COST INDEX ACCELERATED SHARPLY IN THE FIRST QUARTER OF 2000,
REFLECTING RISING WAGES AS EMPLOYERS VIE TO ATTRACT AND RETAIN SKILLED WORKERS.
THESE WAGE PRESSURES, IN TURN, BEGAN TO AFFECT PRICES, AS COMPANIES STARTED TO
RAISE THE COST OF GOODS AND SERVICES TO COMPENSATE FOR HIGHER LABOR COSTS.
INTEREST RATES AND INFLATION
STRONG GDP DATA, CONSUMER SPENDING, AND EMPLOYMENT PROMPTED THE FEDERAL RESERVE
BOARD TO SEEK TO SLOW THE PACE OF ECONOMIC GROWTH AND WARD OFF INFLATION. THE
FED INCREASED THE FEDERAL FUNDS RATE BY 0.25 PERCENT FIVE TIMES BETWEEN JUNE
1999 AND APRIL 2000. [EDITOR'S NOTE: THE FED RAISED RATES BY 0.50 PERCENT ON MAY
16.] DESPITE THE FED'S CONCERNS, THE CONSUMER PRICE INDEX, A MEASURE OF
INFLATION, ROSE A MODERATE 3.0 PERCENT DURING THE 12 MONTHS ENDED APRIL 30,
2000.
INTEREST RATES AND INFLATION
(April 30, 1998 - April 30, 2000)
[LINE GRAPH]
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Apr 98 5.50 1.40
5.50 1.70
5.50 1.70
Jul 98 5.50 1.70
5.50 1.60
5.25 1.50
Oct 98 5.00 1.50
4.75 1.50
4.75 1.60
Jan 99 4.75 1.70
4.75 1.60
4.75 1.70
Apr 99 4.75 2.30
4.75 2.10
5.00 2.00
Jul 99 5.00 2.10
5.25 2.30
5.25 2.60
Oct 99 5.25 2.60
5.50 2.60
5.50 2.70
Jan 00 5.50 2.70
5.75 3.20
6.00 3.70
Apr 00 6.00 3.00
</TABLE>
Interest rates are represented by the closing midline federal funds target rate
on the last day of each month. Inflation is indicated by the annual percent
change of the Consumer Price Index for all urban consumers at the end of each
month.
2
<PAGE> 4
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS
(as of April 30, 2000)
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------------
NYSE Ticker Symbol VCV
-----------------------------------------------------------------------
Six-month total return based on market price(1) 4.48%
-----------------------------------------------------------------------
Six-month total return based on NAV(2) 3.68%
-----------------------------------------------------------------------
Distribution rate as a % of closing common stock
price(3) 6.05%
-----------------------------------------------------------------------
Taxable-equivalent distribution rate as a % of closing
common stock price(4) 10.43%
-----------------------------------------------------------------------
Net asset value $15.04
-----------------------------------------------------------------------
Closing common stock price $13.875
-----------------------------------------------------------------------
Six-month high common stock price (11/05/99) $14.125
-----------------------------------------------------------------------
Six-month low common stock price (12/17/99) $12.750
-----------------------------------------------------------------------
Preferred share rate(5) 4.20%
-----------------------------------------------------------------------
</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 42%
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 is no guarantee of 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
<PAGE> 5
PORTFOLIO AT A GLANCE
CREDIT QUALITY
(as a percentage of long-term investments)
<TABLE>
<CAPTION>
As of April 30, 2000
<S> <C> <C>
- AAA/Aaa............ 70.6%
- AA/Aa.............. 6.3%
- A/A................ 6.5%
- BBB/Baa............ 16.6%
[PIE CHART]
<CAPTION>
As of October 31, 1999
<S> <C> <C>
- AAA/Aaa............ 73.3%
- AA/Aa.............. 3.2%
- A/A................ 9.3%
- BBB/Baa............ 14.2%
[PIE CHART]
</TABLE>
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
SIX-MONTH DIVIDEND HISTORY
(for the six months ending April 30, 2000, for common shares)
[BAR GRAPH]
<TABLE>
<CAPTION>
DIVIDENDS
---------
<S> <C>
11/99 0.07
12/99 0.07
1/00 0.07
2/00 0.07
3/00 0.07
4/00 0.07
</TABLE>
The dividend history represents past performance of the Trust and is no
guarantee of the Trust's future dividends.
4
<PAGE> 6
TOP FIVE INDUSTRIES
(as a percentage of long-term investments)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
APRIL 30, 2000 OCTOBER 31, 1999
-------------- ----------------
<S> <C> <C>
General Purpose 14.50 9.40
Public Building 12.50 13.20
Transportation 12.20 11.60
Water & Sewer 11.50 13.10
Tax District 9.20 9.30
</TABLE>
NET ASSET VALUE AND MARKET PRICE
(based upon quarter-end values--April 1993 through April 2000)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NET ASSET VALUE MARKET PRICE
--------------- ------------
<S> <C> <C>
4/93 14.9300 15.0000
15.2700 14.1250
15.9700 14.8750
12/93 15.7300 14.0000
13.5300 12.6250
13.4700 12.1250
13.2300 12.0000
12/94 12.4700 10.5000
13.9600 12.0000
14.1200 12.1250
14.5500 12.0000
12/95 15.4000 12.2500
14.6500 12.2500
14.5200 11.8750
14.8900 12.2500
12/96 15.2100 12.6250
14.8000 12.8750
15.4100 13.8125
15.9000 14.3125
12/97 16.3000 14.9375
16.2800 15.5000
16.3100 15.6250
16.9200 16.0625
12/98 16.6700 16.4375
16.5900 16.0000
15.8600 14.6875
15.4000 14.5625
12/99 14.7300 13.6875
15.3400 13.8125
4/00 15.0400 13.8750
</TABLE>
The solid line above represents the Trust's net asset value (NAV), which
indicates overall changes in value among the Trust's underlying securities. The
Trust's market price is represented by the dashed line, which indicates the
price the market is willing to pay for shares of the Trust at a given time.
Market price is influenced by a range of factors, including supply and demand
and market conditions.
5
<PAGE> 7
Q&A WITH YOUR PORTFOLIO MANAGERS
WE RECENTLY SPOKE WITH REPRESENTATIVES OF THE ADVISER OF THE VAN KAMPEN
CALIFORNIA VALUE MUNICIPAL INCOME TRUST ABOUT THE KEY EVENTS AND ECONOMIC FORCES
THAT SHAPED THE MARKETS DURING THE PAST SIX MONTHS. THE REPRESENTATIVES INCLUDE
JOSEPH A. PIRARO, PORTFOLIO MANAGER, WHO HAS MANAGED THE TRUST SINCE 1993 AND
WORKED IN THE INVESTMENT INDUSTRY SINCE 1971. THE FOLLOWING COMMENTS REFLECT THE
REPRESENTATIVES' VIEWS ON THE TRUST'S PERFORMANCE DURING THE SIX MONTHS ENDED
APRIL 30, 2000.
Q WHAT WERE THE MOST IMPORTANT
DEVELOPMENTS IN THE FIXED-INCOME MARKETS DURING THE REPORTING PERIOD?
A Generally higher interest rates,
sparked by inflation worries, set the tone for the fixed-income markets during
the past six months. As the economy continued its strong advance, the markets
reacted warily to signs of potential inflationary pressures--such as rising
employment costs, healthy job growth, strong consumer spending, and spikes in
commodities prices, especially oil. These concerns fueled a steady sell-off
through the fourth quarter of 1999 and into January 2000.
To slow the economy and keep prices from rising, the Federal Reserve Board
gradually pushed short-term interest rates higher, raising the fed funds rate (a
key short-term lending rate) three times between November 1999 and April 2000.
(Editor's note: On May 16, 2000, after the reporting period ended, the Fed
raised rates a fourth time.)
In times of rising interest rates, bond prices trend downward. Add to that
the lingering effects of the Year 2000 (Y2K) computer scare early in the first
quarter of 2000, and you can see why this was a challenging period for many
fixed-income investors.
Q HOW DID THE MUNICIPAL
BOND MARKET REACT TO THESE CONDITIONS?
A Not surprisingly, higher interest
rates hurt municipal bond prices, but we believe there's always opportunity in
the market. In the past few months, we've actually seen some fairly significant
price swings--both up and down--as investors tried to anticipate the Fed's next
move and the direction of interest rates. The market was weak in late 1999 and
early 2000, but we had a nice rally in February and March, which tapered off in
April.
The strong economy has bolstered the financial condition of many
municipalities across the country, so the pace of new municipal bond issuance
dropped sharply (about 40 percent) from a year ago. With their coffers full,
municipalities haven't needed to turn to the bond market for financing. Also,
6
<PAGE> 8
higher interest rates made it more difficult for issuers to refund outstanding
bond issues, which has been a source of new investment opportunities in the
past.
Q HOW WOULD YOU DESCRIBE
CALIFORNIA'S ECONOMIC AND MUNICIPAL MARKET ENVIRONMENT DURING THE PERIOD?
A A broad-based economic expansion
continued to bolster fiscal positions and led to increases in reserves.
California outpaced the rest of the country in terms of employment and income
growth.
Despite rising interest rates, there is still strong demand for housing,
driven by limited supply in the state. Lack of affordable housing remains a
long-term concern, as the average purchase price of a single-family home in
California is now 153 percent of the U.S. average, while per-capita income
levels are only 104 percent of the national average. Our analysts will continue
to monitor the housing market for signs of overbuilding or a "speculative
bubble" similar to those in the early 1990s.
In the first quarter of 2000, issuance of new California municipal bonds was
down 30 percent to $4.4 billion compared to the first quarter of 1999. However,
an additional $4.5 billion in state general-obligation bonds was approved by
voters in the March 2000 elections, and California continues to lead the nation
in the issuance of municipal bonds.
Q WHAT STRATEGIES DID YOU FOLLOW
IN MANAGING THE TRUST?
A Strategically, we've been moving in
a new direction since early this year. We made the decision to manage the Trust
relative to a new benchmark, rather than the Lipper peer group, which meant that
we needed to make some adjustments to the Trust's structure. The Trust's
benchmark is now the Lehman Brothers California Municipal Bond Index with
maturities greater than five years. Specifically, we increased the duration of
the portfolio (a measure of its sensitivity to changes in interest rates) to
more closely track the performance of the new benchmark index. The benchmark
provides the shareholder with general municipal market returns, and the
leveraged structure provides the opportunity for enhanced dividends.
Fortunately, the municipal bond market played into our hands and gave us
some excellent opportunities to implement this new strategy. Beginning in late
January, we began purchasing deeply discounted bonds for the Trust. These were
securities that were issued a year or so ago with coupons of 4.75, 5.00, or 5.25
percent. As interest rates went up over time, these bonds began selling at a
deep discount, with some priced as low as 80 cents on the dollar.
At the same time, the Trust held a number of older, prerefunded issues with
higher coupons in the 5.75 to 6.00 percent range. Such prerefunded issues tend
to decrease the duration of a portfolio because they have shorter
7
<PAGE> 9
lives than their stated maturities. But because of their attractive coupons,
these bonds were trading at a premium, presenting us with an opportunity to
capture some solid gains. Because these bonds were scheduled to be called or
refunded within the next year or two, we chose to sell them while their
demand--and therefore their market price--was high.
This combination of buying deep-discount bonds and selling prerefunded
issues enabled us to lengthen the duration of the portfolio without drastically
altering the income stream that the Trust will be earning over time. While we've
seen a slight decline in portfolio income in the short run, the deeply
discounted bonds enabled us to purchase more par value per dollar invested.
Q WHAT AREAS OF THE MUNICIPAL
MARKET WERE MOST ATTRACTIVE TO YOU?
A Our philosophy is to seek bonds
that we feel represent the best values compared with similar offerings in the
marketplace. During the past six months, we did not specifically target one area
of the market over another, although we did maintain significant concentrations
in the transportation and utility sectors, each of which represented more than
11 percent of the portfolio's long-term investments.
Many of our portfolio management decisions were based on pricing issues,
such as the availability of deep discounts, or structural issues, such as
extending duration or maintaining adequate call protection and diversification
for the portfolio. As always, we invested the Trust's assets selectively,
looking for solid names, sector opportunities, or attractive price to coupon
situations. For additional portfolio highlights, please refer to page 4.
Q HOW DID THE TRUST PERFORM
DURING THE PERIOD?
A For the six-month period ended
April 30, 2000, the Trust returned 4.48 percent based on market price. This
reflects an increase in market price from $13.6875 per share on October 31,
1999, to $13.8750 per share on April 30, 2000. By comparison, the total return
of the Trust's peer group (as represented by the Lehman Brothers California
Municipal Bond Index) was 2.69 percent for the same period.
The Trust's dividend remained unchanged at $0.0700 per share throughout the
reporting period. This monthly tax-exempt dividend translates to a distribution
rate of 6.05 percent based on the Trust's closing common stock price on April
30, 2000.
Because the Trust is exempt from federal and California income taxes, this
distribution rate is equivalent to a yield of 10.43 percent for an investor in
the 42 percent combined federal and state income-tax bracket. Please refer to
the chart and footnotes on page 3 for additional performance results. Past
performance is no guarantee of future results.
8
<PAGE> 10
Q WHAT DO YOU SEE AHEAD
FOR THE ECONOMY AND THE MUNICIPAL MARKET?
A All eyes will be on the key
economic statistics, such as GDP growth, employment costs, and the unemployment
rate. These figures measure the economy's strength and rate of growth and may
influence whether the Fed will continue to raise short-term interest rates. We
expect that the inflation rate may increase, but it's likely to remain in a
moderate range for the near term. It's anticipated that the Fed will continue to
increase short-term rates by the end of the summer, perhaps by more than 0.50
percent. Higher interest rates will, in turn, put pressure on the municipal
market in the short run.
Increased stock-price volatility in April has increased investor skepticism,
but investors continue to see price pullbacks as opportunities to buy
aggressive-growth stocks. It may take a much deeper, more sustained decline in
these stocks to convince investors to rethink their asset allocation decisions.
If the stock market does fall sharply, we could see a flight to quality, as
investors pursue investments that typically carry less risk. Such conditions
might benefit investment-grade municipal bonds.
Low municipal-bond supply could continue throughout 2000, especially if
interest rates trend higher, as expected, throughout the first half of the year.
Overall, the lower supply of bonds should help to shore up prices, as demand
remains strong. Investors can tolerate periodic price swings if they keep
long-term perspectives and continue to value the steady stream of tax-exempt
income that municipal bonds provide. As always, we will rely on our strong
research efforts to evaluate opportunities in the marketplace and identify
securities that may offer superior investment potential and value over time.
9
<PAGE> 11
GLOSSARY OF TERMS
A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.
CREDIT RATING: An evaluation of an issuer's credit history and capability of
repaying obligations. Standard & Poor's and Moody's Investors Service are two
companies that assign bond ratings. Standard & Poor's ratings range from a high
of AAA to a low of D, while Moody's ratings range from a high of Aaa to a low of
C.
DISCOUNT BOND: A bond whose market price is lower than its face value (or "par
value"). Because bonds usually mature at face value, a discount bond has more
potential to appreciate in price than a par bond does.
DURATION: A measure of the sensitivity of a bond's price to changes in interest
rates, expressed in years. Each year of duration represents an expected 1
percent change in the price of a bond for every 1 percent change in interest
rates. The longer a bond's duration, the greater the effect of interest-rate
movements on its price. Typically, funds with shorter durations perform better
in rising rate environments, while funds with longer durations perform better
when rates decline.
INFLATION: A persistent and measurable rise in the general level of prices.
Inflation is widely measured by the Consumer Price Index, an economic indicator
that measures the change in the cost of purchased goods and services.
MATURITY DATE: The date a bond expires, usually at face value.
MATURITY LENGTH: The time it takes for a bond to mature. A bond issued in 1999
and maturing in 2009 is a 10-year bond.
PREREFUNDING: The process of issuing new bonds to refinance an outstanding
municipal bond issue prior to its maturity or call date. The proceeds from the
new bonds are generally invested in U.S. government securities. Prerefunding
typically occurs when interest rates decline and an issuer replaces its
higher-yielding bonds with current lower-yielding issues.
YIELD SPREAD: The additional yield investors can earn by either investing in
bonds with longer maturities or by investing in bonds with lower ratings. The
spread is the difference in yield between bonds with short versus long
maturities or the difference in yield between high-quality bonds and lower-
quality bonds.
10
<PAGE> 12
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
THE FOLLOWING PAGES DETAIL THE SPECIFIC HOLDINGS OF YOUR TRUST AT THE END OF THE
REPORTING PERIOD.
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 98.8%
CALIFORNIA 87.7%
$2,000 A B C CA Uni Sch Dist Cap Apprec Ser B
(FGIC Insd)............................... * 08/01/21 $ 566,240
1,610 A B C CA Uni Sch Dist Cap Apprec Ser B
(FGIC Insd)............................... * 08/01/22 426,763
1,000 Abag Fin Auth for Nonprft Corps CA Ctfs
Partn Childrens Hosp Med Cent............. 5.875% 12/01/19 1,015,910
1,000 Abag Fin Auth for Nonprft Corps CA Insd
Rev Ctfs Lincoln Glen Manor Sr Citizens... 6.100 02/15/25 1,008,640
1,000 Abag Fin Auth for Nonprft Corps CA Multi-
Family Rev Hsg Utd Dominion Ser A Rfdg.... 6.400 08/15/30 1,020,950
1,000 Abag Fin Auth for Nonprft Corps CA Multi-
Family Rev Hsg Utd Dominion Ser B Rfdg.... 6.250 08/15/30 1,020,890
2,000 California Edl Fac Auth Rev Cap Apprec
Loyola Marymount Univ (MBIA Insd)......... * 10/01/30 289,720
1,000 California Edl Fac Auth Rev Pooled College
& Univ Proj Ser B......................... 5.250 04/01/24 837,090
1,000 California Edl Fac Auth Rev Student Ln CA
Ln Pgm Ser A (MBIA Insd).................. 6.000 03/01/16 1,020,170
2,000 California Edl Fac Auth Rev Univ of
La Verne.................................. 6.375 04/01/13 2,046,820
1,000 California Hsg Fin Agy Rev Cap Apprec Home
Mtg Ser K (MBIA Insd)..................... * 08/01/24 215,400
1,000 California Hsg Fin Agy Rev Home Mtg Ser A
(MBIA Insd)............................... * 02/01/16 404,930
3,000 California Hsg Fin Agy Rev Home Mtg Ser B
(MBIA Insd)............................... 6.100 02/01/28 3,011,760
1,000 California Hsg Fin Agy Rev Multi-Family
Hsg III Ser A (MBIA Insd)................. 5.850 08/01/17 992,390
1,000 California Hsg Fin Agy Rev Multi-Family
Hsg III Ser A (MBIA Insd)................. 5.950 08/01/28 983,770
1,750 California Pollutn Ctl Fin Auth Pollutn
Ctl Rev IBM Proj Rfdg..................... 6.800 11/01/11 1,820,000
2,000 California Pollutn Ctl Fin Auth Pollutn
Ctl Rev Pacific Gas & Elec................ 6.350 06/01/09 2,086,580
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$2,000 California Pollutn Ctl Fin Auth Pollutn
Ctl Rev Southn CA Edison Co Ser B
(MBIA Insd)............................... 5.450% 09/01/29 $ 1,894,960
1,000 California Rural Home Mtg Fin Auth Single
Family Mtg Rev Mtg Bkd Secs Pgm Ser B
(GNMA Collateralized)..................... 6.150 06/01/20 1,006,200
560 California Rural Home Mtg Fin Auth Single
Family Mtg Rev Mtg Bkd Secs Pgm Ser C
(GNMA Collateralized)..................... 7.500 08/01/27 613,217
495 California Rural Home Mtg Fin Auth Single
Family Mtg Rev Ser A2
(GNMA Collateralized)..................... 7.950 12/01/24 524,641
2,670 California St Dept Wtr Res Cent Vly Proj
Rev Wtr Sys Ser L Rfdg (MBIA Insd)........ 5.625 12/01/12 2,712,960
3,000 California St Pub Wks Brd Energy
Efficiency Rev Ser A (FSA Insd)........... 5.250 05/01/08 3,044,130
3,000 California St Pub Wks Brd Lease Rev Dept
of Corrections CA St Prison D Susanville
(MBIA Insd)............................... 5.375 06/01/18 2,902,170
2,000 California St Pub Wks Brd Lease Rev Dept
of Corrections Monterey Ser A (Prerefunded
@ 11/01/04) (MBIA Insd)................... 6.400 11/01/10 2,166,480
2,400 California St Var Rate Cpn (AMBAC Insd)... 6.400 09/01/08 2,639,232
4,000 California St Veterans Ser BH (FSA
Insd)..................................... 5.400 12/01/15 3,927,480
2,000 California St Veterans Ser BH (FSA
Insd)..................................... 5.400 12/01/16 1,951,760
1,000 California Statewide Cmntys Dev Auth Spl
Fac United Airls.......................... 5.625 10/01/34 862,020
1,000 California Statewide Cmntys Dev Huntington
Mem Hosp (Connie Lee Insd)................ 5.750 07/01/16 1,012,580
2,485 Central Vly Fin Auth CA Cogeneration Proj
Rev (MBIA Insd)........................... 5.000 07/01/17 2,284,361
1,440 Chino Basin, CA Regl Fin Auth Rev Muni Wtr
Dist Swr Sys Proj Rfdg (AMBAC Insd)....... 7.000 08/01/08 1,635,365
2,000 Chino Hills, CA Ctfs Partn Wtr Sys Refin
Proj (FGIC Insd).......................... 5.600 06/01/18 1,996,500
1,965 Contra Costa Cnty, CA Ctfs Partn Merrithew
Mem Hosp Proj Rfdg (MBIA Insd)............ 5.500 11/01/22 1,883,079
2,500 East Bay, CA Muni Util Dist Wtr Sys Rev
Sub Rfdg.................................. 6.000 06/01/12 2,576,900
1,000 El Monte, CA Wtr Auth Rev Wtr Sys Proj
(AMBAC Insd).............................. 5.600 09/01/29 971,190
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$1,000 El Monte, CA Wtr Auth Rev Wtr Sys Proj
(AMBAC Insd).............................. 5.600% 09/01/34 $ 965,940
1,455 Fairfield Suisun, CA Uni Sch Dist Spl Tax
Cmnty Facs Dist No 5 New Sch (FSA Insd)... 5.375 08/15/29 1,359,508
5,000 Foothill/Eastern Corridor Agy CA
Toll Rd Rev Cap Apprec Rfdg............... * 01/15/30 725,100
5,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Rfdg....................... * 01/15/31 679,450
3,100 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Sr Lien Ser A.............. * 01/01/27 633,051
7,005 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Sr Lien Ser A.............. * 01/01/28 1,344,189
3,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Conv Cap Apprec Rfdg (a).............. 0/5.875 01/15/27 1,538,160
1,000 Foothill/Eastern Corridor Agy CA
Toll Rd Rev Rfdg.......................... 5.750 01/15/40 923,280
1,000 Galt Schs Jt Pwrs Auth CA Rev High Sch &
Elementary Sch Ser A Rfdg (MBIA Insd)..... 5.750 11/01/16 1,020,170
1,500 Glendale, CA Uni Sch Dist Ser C
(FSA Insd)................................ 5.500 09/01/19 1,474,470
2,340 Inglewood, CA Redev Agy Tax Alloc Century
Redev Proj Ser A Rfdg..................... 6.000 07/01/08 2,380,810
1,000 Inland Empire Solid Waste Fin Auth CA Rev
Landfill Impt Fin Proj Ser B (FSA Insd)... 6.000 08/01/16 1,073,640
1,600 La Quinta, CA Redev Agy Tax Alloc Redev
Proj Area No 1 Rfdg (MBIA Insd)........... 7.300 09/01/08 1,850,592
1,285 Lake Tahoe, CA Uni Sch Dist Cap Apprec Ser
A (FGIC Insd)............................. * 08/01/18 449,609
1,000 Long Beach, CA Bond Fin Auth Lease Rev
Rainbow Harbor Refing Proj A
(AMBAC Insd).............................. 5.250 05/01/24 920,100
1,000 Los Angeles, CA Ctfs Partn Sr Sonnenblick
Del Rio W L. A. (AMBAC Insd).............. 6.000 11/01/19 1,015,360
1,000 Los Angeles, CA Dept Wtr & Pwr Elec
Plt Rev................................... 6.000 02/15/28 1,002,020
1,000 Los Angeles, CA Dept Wtr & Pwr Elec
Plt Rev................................... 6.000 02/15/30 1,001,590
1,000 Los Angeles Cnty, CA Met Tran Auth Sales
Tax Rev (FSA Insd)........................ 4.750 07/01/24 840,920
1,000 Los Angeles Cnty, CA Pub Wks Fin Auth Rev
Cap Constr Rfdg (AMBAC Insd).............. 5.000 03/01/11 987,180
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$2,000 Los Angeles, CA Convention & Exhibition
Cent Auth Lease Rev Ser A Rfdg
(MBIA Insd)............................... 5.150% 08/15/08 $ 2,021,540
1,000 Los Angeles, CA Ctfs Partn Dept Pub Social
Svcs Ser A (AMBAC Insd)................... 5.500 08/01/31 952,550
1,200 Mammoth, CA Uni Sch Dist Cap Apprec (AMBAC
Insd)..................................... * 08/01/24 285,924
1,230 Merced, CA Irrig Dist Ctfs Partn Wtr
Fac Proj.................................. 6.400 11/01/10 1,282,582
2,000 Metropolitan Wtr Dist Southern CA Wtrwks
Rev Ser A Rfdg............................ 4.750 07/01/22 1,687,920
3,240 Midpeninsula Regl Open Space Dist CA Fin
Auth Rev (AMBAC Insd)..................... * 08/01/26 612,587
2,000 Monrovia, CA Redev Agy Tax Alloc Cent
Redev Proj Area 1 Ser B Rfdg
(AMBAC Insd).............................. 6.700 05/01/21 2,095,900
6,185 New Haven, CA Uni Sch Dist Cap Apprec Ser
D (FGIC Insd)............................. * 08/01/20 1,843,625
2,455 Paradise, CA Irrig Dist Rev Ctfs Partn Wtr
Sys Proj.................................. 6.400 01/01/14 2,503,363
1,790 Paramount, CA Redev Agy Tax Alloc Redev
Proj Area No 1 Rfdg (MBIA Insd)........... 6.100 08/01/08 1,889,936
1,765 Paramount, CA Redev Agy Tax Alloc Redev
Proj Area No 1 Rfdg (MBIA Insd)........... 6.250 08/01/23 1,816,044
3,350 Port Oakland, CA Port Rev Ser G
(MBIA Insd)............................... 5.375 11/01/25 3,076,204
2,000 Port Oakland, CA Spl Fac Rev Mitsui O.S.K.
Line Ltd Ser A............................ 6.750 01/01/12 2,080,280
1,000 Rancho Cucamonga, CA Redev Agy Tax Alloc
(FSA Insd)................................ 5.250 09/01/20 935,290
1,000 Rancho Mirage, CA Jt Pwrs Fin Eisenhower
Med Cent Ser A (MBIA Insd)................ 5.375 07/01/22 938,370
2,150 Riverside, CA Elec Rev Rfdg (MBIA Insd)... 5.000 10/01/13 2,073,503
1,000 Sacramento, CA City Fin Auth Lease Rev CA
EPA Bldg Ser A (AMBAC Insd)............... 4.750 05/01/23 843,470
700 Sacramento, CA Cogeneration Auth
Cogeneration Proj Rev Proctor &
Gamble Proj............................... 6.375 07/01/10 731,416
1,000 Sacramento Cnty, CA Ctfs Partn Pub Fac
Proj Rfdg (AMBAC Insd).................... 4.750 10/01/27 830,230
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$2,000 Sacramento, CA Muni Util Dist Elec Rev Ser
E (MBIA Insd)............................. 5.750% 05/15/22 $ 1,988,800
2,000 San Bernardino, CA Jt Pwrs Fin Auth Ctfs
Partn (MBIA Insd)......................... 5.500 09/01/20 1,950,860
1,000 San Diego, CA Uni Sch Dist Cap Apprec Ser
A (FGIC Insd)............................. * 07/01/17 372,390
2,000 San Francisco, CA City & Cnty Arpt Comm
Intl Arpt Rev Second Ser Issue 12-A (FGIC
Insd)..................................... 5.800 05/01/21 1,972,520
3,000 San Francisco, CA City & Cnty Redev Agy
Multi-Family Rev Hsg South Beach Proj Rfdg
(GNMA Collateralized)..................... 5.500 03/01/14 2,909,340
1,000 San Francisco, CA Uni Sch Dist Ctfs Partn
(AMBAC Insd).............................. 4.750 08/01/24 838,430
1,530 San Joaquin Hills, CA Tran Corridor Agy
Toll Rd Rev Jr Lien....................... * 01/01/09 981,373
1,600 San Leandro, CA Ctfs Partn Library & Fire
Stations Fin (AMBAC Insd)................. 5.700 11/01/20 1,597,488
1,320 San Marcos, CA Pub Fac Auth Rev Pub Impt
Civic Cent Ser A Rfdg..................... 5.900 08/01/03 1,335,154
1,200 San Marcos, CA Pub Fac Auth Rev Pub Impt
Civic Cent Ser A Rfdg..................... 6.150 08/01/13 1,205,496
1,000 San Mateo Cnty, CA Jt Pwrs Fin Auth Lease
Rev Cap Proj Ser A Rfdg (FSA Insd)........ 4.750 07/15/23 842,740
2,340 Santa-Monica-Malibu Uni Sch Dist CA Cap
Apprec (FGIC Insd)........................ * 08/01/23 583,034
1,680 South Orange Cnty, CA Pub Fin Auth Spl Tax
Rev Sr Lien Ser A Rfdg (MBIA Insd)........ 7.000 09/01/07 1,891,344
995 Stanton, CA Multi-Family Rev Hsg
Continental Garden Apts (FNMA
Collateralized)........................... 5.625 08/01/29 998,104
2,000 Sunnyvale, CA Fin Auth Utils Rev Wastewtr
Reuse & Sludge Ser A (MBIA Insd).......... 6.300 10/01/17 2,057,480
2,400 Tulare Cnty, CA Ctfs Partn Cap Impt Pgm
Ser A (MBIA Insd)......................... 6.000 02/15/16 2,579,880
2,000 University of CA Rev Multi Purp Projs Ser
C Rfdg (AMBAC Insd)....................... 5.125 09/01/13 1,954,540
------------
132,118,094
------------
GUAM 1.0%
1,500 Guam Arpt Auth Rev Ser B.................. 6.700 10/01/23 1,518,675
------------
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
YOUR TRUST'S INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
PUERTO RICO 8.1%
$3,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy
Rev Ser V Rfdg............................ 6.625% 07/01/12 $ 3,137,220
2,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy
Rev Ser W Rfdg............................ 5.500 07/01/17 1,955,300
5,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy
Rev Ser Y (FSA Insd)...................... 6.250 07/01/21 5,383,450
1,700 Puerto Rico Comwlth Ser A Rfdg............ 6.250 07/01/10 1,763,189
------------
12,239,159
------------
U.S. VIRGIN ISLANDS 2.0%
1,000 Virgin Islands Pub Fin Auth Rev Gross
Rcpts Taxes Ln Nt Ser A................... 6.375 10/01/19 1,002,350
1,000 Virgin Islands Pub Fin Auth Rev Gross
Rcpts Tax Ln Nt Ser A..................... 6.500 10/01/24 1,007,550
1,000 Virgin Islands Pub Fin Auth Rev Gross
Rcpts Taxes Ln Ser A (ACA Insd)........... 6.125 10/01/29 991,860
------------
3,001,760
------------
TOTAL INVESTMENTS 98.8%
(Cost $145,432,339)................................................... 148,877,688
OTHER ASSETS IN EXCESS OF LIABILITIES 1.2%............................. 1,791,186
------------
NET ASSETS 100.0%...................................................... $150,668,874
============
</TABLE>
* Zero coupon bond
(a) Security is currently a zero coupon bond which will convert to a coupon
paying bond at a predetermined date.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corporation
Connie Lee--Connie Lee Insurance Company
FGIC--Financial Guaranty Insurance Company
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
See Notes to Financial Statements
16
<PAGE> 18
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $145,432,339)....................... $148,877,688
Interest Receivable......................................... 2,418,544
Other....................................................... 8,147
------------
Total Assets............................................ 151,304,379
------------
LIABILITIES:
Payables:
Custodian Bank............................................ 302,951
Investment Advisory Fee................................... 83,186
Income Distributions -- Common and Preferred Shares....... 27,768
Administrative Fee........................................ 25,596
Affiliates................................................ 9,619
Trustees' Deferred Compensation and Retirement Plans........ 103,975
Accrued Expenses............................................ 82,410
------------
Total Liabilities....................................... 635,505
------------
NET ASSETS.................................................. $150,668,874
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 2,400 issued with liquidation preference of
$25,000 per share)........................................ $ 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................................. 3,445,349
Accumulated Undistributed Net Investment Income............. 936,472
Accumulated Net Realized Loss............................... (2,363,162)
------------
Net Assets Applicable to Common Shares.................. 90,668,874
------------
NET ASSETS.................................................. $150,668,874
============
NET ASSET VALUE PER COMMON SHARE ($90,668,874 divided by
6,029,844 shares outstanding)............................. $ 15.04
============
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
Statement of Operations
For the Six Months Ended April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $4,210,671
----------
EXPENSES:
Investment Advisory Fee..................................... 485,025
Administrative Fee.......................................... 149,239
Preferred Share Maintenance................................. 87,190
Legal....................................................... 5,394
Trustees' Fees and Related Expenses......................... 5,168
Custody..................................................... 2,868
Other....................................................... 59,941
----------
Total Expenses.......................................... 794,825
----------
NET INVESTMENT INCOME....................................... $3,415,846
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 702,781
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 3,250,415
End of the Period......................................... 3,445,349
----------
Net Unrealized Appreciation During the Period............... 194,934
----------
NET REALIZED AND UNREALIZED GAIN............................ $ 897,715
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $4,313,561
==========
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
Statement of Changes in Net Assets
For the Six Months Ended April 30, 2000
and the Year Ended October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 3,415,846 $ 6,830,167
Net Realized Gain.................................. 702,781 912,326
Net Unrealized Appreciation/Depreciation During the
Period........................................... 194,934 (12,200,199)
------------ ------------
Change in Net Assets from Operations............... 4,313,561 (4,457,706)
------------ ------------
Distributions from Net Investment Income:
Common Shares.................................... (2,532,534) (4,914,154)
Preferred Shares................................. (1,082,812) (1,712,592)
------------ ------------
Total Distributions................................ (3,615,346) (6,626,746)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... 698,215 (11,084,452)
NET ASSETS:
Beginning of the Period............................ 149,970,659 161,055,111
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $936,472
and $1,135,972, respectively).................... $150,668,874 $149,970,659
============ ============
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED -------------------
APRIL 30, 2000 1999 1998
---------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD
(A)........................................ $ 14.921 $ 16.759 $15.941
-------- -------- -------
Net Investment Income...................... .566 1.133 1.132
Net Realized and Unrealized Gain/Loss...... .150 (1.872) .824
-------- -------- -------
Total from Investment Operations............. .716 (.739) 1.956
-------- -------- -------
Less:
Distributions from Net Investment Income:
Paid to Common Shareholders.............. .420 .815 .808
Common Share Equivalent of Distributions
Paid to Preferred Shareholders......... .180 .284 .330
Distributions from Net Realized Gain:
Paid to Common Shareholders.............. -0- -0- -0-
Common Share Equivalent of Distributions
Paid to Preferred Shareholders......... -0- -0- -0-
-------- -------- -------
Total Distributions.......................... .600 1.099 1.138
-------- -------- -------
NET ASSET VALUE, END OF THE PERIOD........... $ 15.037 $ 14.921 $16.759
======== ======== =======
Market Price Per Share at End of the
Period..................................... $13.8750 $13.6875 $15.875
Total Investment Return at Market Price
(b)........................................ 4.48%* -9.11% 17.39%
Total Return at Net Asset Value (c).......... 3.68%* -6.37% 10.45%
Net Assets at End of the Period (In
millions).................................. $ 150.7 $ 150.0 $ 161.1
Ratio of Expenses to Average Net Assets
Applicable to Common Shares**.............. 1.78% 1.74% 1.75%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (d)..... 5.21% 5.24% 4.90%
Portfolio Turnover........................... 15%* 19% 17%
* Non-Annualized
** Ratio of Expenses to Average Net Assets
Including Preferred Shares................ 1.07% 1.07% 1.09%
</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 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.
(c) 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.
(d) Net investment income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
20
<PAGE> 22
<TABLE>
<CAPTION>
APRIL 30, 1993
(COMMENCEMENT
YEAR ENDED OCTOBER 31 OF INVESTMENT
------------------------------------------ OPERATIONS) TO
1997 1996 1995 1994 OCTOBER 31, 1993
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$15.091 $14.803 $12.644 $15.812 $14.714
------- ------- ------- ------- -------
1.133 1.135 1.124 1.124 .424
.822 .214 2.211 (3.133) 1.018
------- ------- ------- ------- -------
1.955 1.349 3.335 (2.009) 1.442
------- ------- ------- ------- -------
.775 .720 .774 .828 .276
.330 .341 .402 .265 .068
-0- -0- -0- .055 -0-
-0- -0- -0- .011 -0-
------- ------- ------- ------- -------
1.105 1.061 1.176 1.159 .344
------- ------- ------- ------- -------
$15.941 $15.091 $14.803 $12.644 $15.812
======= ======= ======= ======= =======
$14.250 $12.375 $12.000 $11.125 $14.750
21.89% 9.28% 15.04% -19.23% .18%*
11.07% 7.00% 23.85% -14.93% 7.28%*
$ 156.1 $ 151.0 $ 149.3 $ 136.2 $ 155.3
1.81% 1.86% 1.96% 1.89% 1.56%
5.23% 5.36% 5.25% 6.02% 4.68%
23% 33% 41% 93% 36%*
1.10% 1.11% 1.14% 1.11% 1.14%
</TABLE>
See Notes to Financial Statements
21
<PAGE> 23
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen 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 Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services are valued at fair value
using 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, which approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when-issued or delayed delivery
purchase commitments until payment is made. At April 30, 2000, there were no
when-issued or delayed delivery purchase commitments.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and original issue discount is accreted over the expected
life of each applicable security.
22
<PAGE> 24
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
D. 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, 1999, the Trust had an accumulated capital loss
carryforward for tax purposes of $3,065,943, which will expire between October
31, 2002 and October 31, 2003.
At April 30, 2000, for federal income tax purposes cost of long-term
investments is $145,432,339; the aggregate gross unrealized appreciation is
$5,009,473 and the aggregate gross unrealized depreciation is $1,564,124,
resulting in net unrealized appreciation on long-term investments of $3,445,349.
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly
dividends from net investment income to common shareholders. 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, Van Kampen
Investment Advisory Corp. (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 Van Kampen Funds Inc. or its affiliates (collectively "Van
Kampen"), 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.
For the six months ended April 30, 2000, the Trust recognized expenses of
approximately $2,000 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
For the six months ended April 30, 2000, the Trust recognized expenses of
approximately $8,500 representing Van Kampen's cost of providing accounting and
legal services to the Trust.
23
<PAGE> 25
NOTES TO
FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. 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 per trustee under the plan is $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $23,104,791 and $21,858,675,
respectively.
4. PREFERRED SHARES
The Trust has outstanding 2,400 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, 2000 was 4.200% and for the six
months then ended rates ranged from 2.650% to 5.880%.
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 $25,000 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.
24
<PAGE> 26
TRUST OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN CALIFORNIA VALUE
MUNICIPAL INCOME TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
THEODORE A. MYERS
RICHARD F. POWERS, III* - Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
RICHARD F. POWERS, III*
President
STEPHEN L. BOYD*
Executive Vice President and
Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer
RICHARD A. CICCARONE*
JOHN R. REYNOLDSON*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
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(1)
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
(1) Independent accountants for the Trust perform an annual audit of the Trust's
financial statements. The Board of Trustees has engaged Deloitte & Touche LLP to
be the Trust's independent accountants.
KPMG LLP, located at 303 West Wacker Drive, Chicago, IL 60601 ("KPMG"), ceased
being the Trust's independent accountants effective April 14, 2000. The
cessation of the client- auditor relationship between the Trust and KPMG was
based solely on a possible future business relationship by KPMG with an
affiliate of the Trust's investment adviser.
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
(C) Van Kampen Funds Inc., 2000. All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
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