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Invesco California Value Municipal Income Trust – ‘N-CSRS’ for 4/30/05

On:  Tuesday, 6/28/05, at 1:31pm ET   ·   Effective:  6/28/05   ·   For:  4/30/05   ·   Accession #:  950137-5-8017   ·   File #:  811-07404

Previous ‘N-CSRS’:  ‘N-CSRS’ on 6/29/04 for 4/30/04   ·   Next:  ‘N-CSRS’ on 6/29/06 for 4/30/06   ·   Latest:  ‘N-CSRS’ on 11/6/23 for 8/31/23

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/28/05  Invesco Cal Value Muni Income Tr  N-CSRS      4/30/05    3:81K                                    Bowne Boc/FA

Certified Semi-Annual Shareholder Report of a Management Investment Company   —   Form N-CSR
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-CSRS      Semiannual Report                                     31    126K 
 3: EX-99.906CERT  906 Certification                                   2      8K 
 2: EX-99.CERT  Miscellaneous Exhibit                                  2     15K 


N-CSRS   —   Semiannual Report
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
27Van Kampen
29Item 2. Code of Ethics
"Item 3. Audit Committee Financial Expert
"Item 4. Principal Accountant Fees and Services
"Item 5. Audit Committee of Listed Registrants
"Item 6. Schedule of Investments
"Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
"Item 8. Portfolio Managers of Closed-End Management Investment Companies
"Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
"Item 10. Submission of Matters to a Vote of Security Holders
"Item 11. Controls and Procedures
30Item 12. Exhibits
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSRS CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-7404 Van Kampen California Value Municipal Income Trust -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Ronald Robison 1221 Avenue of the Americas, New York, New York 10020 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: 10/31 Date of reporting period: 4/30/05
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Item 1. Report to Shareholders The Trust's semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: Welcome, Shareholder In this report, you'll learn about how your investment in Van Kampen California Value Municipal Income Trust performed during the semiannual period. The portfolio management team will provide an overview of the market conditions and discuss some of the factors that affected investment performance during the reporting period. In addition, this report includes the trust's financial statements and a list of trust investments as of April 30, 2005. MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT OBJECTIVE. TRUSTS ARE SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE TRUST WILL DECLINE AND THAT THE VALUE OF TRUST SHARES MAY THEREFORE BE LESS THAN WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS TRUST. INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT). [Enlarge/Download Table] --------------------------------------------------------------------------------------- NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE --------------------------------------------------------------------------------------- NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT ---------------------------------------------------------------------------------------
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Performance Summary as of 4/30/05 [Download Table] CALIFORNIA VALUE MUNICIPAL INCOME TRUST SYMBOL: VCV ------------------------------------------------------------ AVERAGE ANNUAL BASED ON BASED ON TOTAL RETURNS NAV MARKET PRICE Since Inception (4/30/93) 7.49% 6.39% 10-year 8.54 8.47 5-year 9.59 8.75 1-year 12.06 9.17 6-month 3.24 0.24 ------------------------------------------------------------ PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, NET ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. NAV per share is determined by dividing the value of the trust's portfolio securities, cash and other assets, less all liabilities, by the total number of common shares outstanding. The common share market price is the price the market is willing to pay for shares of the trust at a given time. Common share market price is influenced by a range of factors, including supply and demand and market conditions. Total return assumes an investment at the beginning of the period, reinvestment of all distributions for the period in accordance with the trust's dividend reinvestment plan, and sale of all shares at the end of the period. The Lehman Brothers California Municipal Bond Index is a broad-based statistical composite of California municipal bonds. The index does not include any expenses, fees or sales charges, which would lower performance. The index is unmanaged and should not be considered an investment. It is not possible to invest directly in an index. 1
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Trust Report FOR THE 6-MONTH PERIOD ENDED APRIL 30, 2005 Van Kampen California Value Municipal Income Trust is managed by the Adviser's Municipal Fixed Income team.(1) Current members include Joseph Piraro and Robert Wimmel, Vice Presidents of the Adviser; and John Reynoldson, Executive Director of the Adviser. MARKET CONDITIONS The six-month period ended April 30, 2005, was characterized by continued short-term interest rate increases. As crude oil prices reached record highs, the prospect of rising inflation also cast a shadow. The Federal Open Market Committee (the "Fed") raised the federal funds target rate 100 basis points during the period through a series of four "measured" 0.25 percent tightenings to 2.75 percent by the end of April. Although rates in the short and intermediate areas of the yield curve shifted upward as the Fed tightened, long- term interest rates fell as buyers did not seem deterred by the prospect of rising inflation. As a result, the yield curve (the difference between short and longer-term yields) flattened and the long end of the municipal market handily outperformed the shorter end. The municipal market in total posted positive returns during the period, though it was not uniformly strong. In contrast to the strong showing by longer-term bonds, shorter-term municipals were hampered by the Fed's tightening and turned in a flat to slightly negative showing. Within the investment-grade segment of the market, yield differentials between BBB-rated and AAA-rated municipal securities were slightly wider, though BBB-rated securities still outperformed high grades due to their higher coupons, while securities rated below investment grade strongly outperformed as investors sought out their higher yields. The Fed's interest rate hikes did not appear to dampen investors' appetites for municipal bonds, as net inflows into municipal bond funds topped $290 million during the period. The supply of new issues was modest during the closing months of 2004 (the first two months of the period) before soaring in the opening months of 2005 as long-term issuers rushed to bring securities to market in anticipation of additional interest rate increases in the near term. From a credit perspective, the state of California has made some positive strides. The California government's measures to stem current and projected budget deficits have been met with broad approval by investors. This in turn has resulted in improved demand for California bonds and a general rise in bond prices. However, the state faces notable challenges to achieving fiscal balance. For example, the governor's declining popularity could hinder his plans for resolving the state's deficit. (1)Team members may change without notice at any time. 2
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During the period, the state maintained its position as the leading issuer of new municipal debt. More than half of the new issuance which came to market was protected by credit insurance, which was helpful for us as we attempted to put cash to work. PERFORMANCE ANALYSIS The trust's return can be calculated based upon either the market price or the net asset value (NAV) of its shares. NAV per share is determined by dividing the value of the trust's portfolio securities, cash and other assets, less all liabilities, by the total number of common shares outstanding, while market price reflects the supply and demand for the shares. As a result, the two returns can differ, as they did during the reporting period. On an NAV basis, the trust outperformed its benchmark index, the Lehman Brothers California Municipal Bond Index. On a market price basis, the trust underperformed its benchmark. (See table below.) TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2005 [Download Table] ---------------------------------------------------------- LEHMAN BROTHERS BASED ON BASED ON CALIFORNIA MUNICIPAL NAV MARKET PRICE BOND INDEX 3.24% 0.24% 2.35% ---------------------------------------------------------- PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN, NET ASSET VALUE AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. SEE PERFORMANCE SUMMARY FOR ADDITIONAL PERFORMANCE INFORMATION AND INDEX DEFINITION. The trust uses leverage to enhance its dividend to common shareholders. The trust borrows money at short-term rates through the issuance of preferred shares. The proceeds are reinvested in longer-term securities, taking advantage of the difference between short- and longer-term rates. The Fed's policy of raising interest rates throughout the period made the trust's borrowing activity more expensive. These expenses, however, were more than offset by the positive performance of the bonds held by the trust. During the reporting period, we remained focused on keeping the portfolio's credit quality high. 80 percent of the bonds in the portfolio were rated AAA at the close of the period. However, as high-yield spreads have continued to tighten, lower quality bonds tended to perform better. Additionally, due to our concerns about the long-term merits of tobacco bonds, we do not include them in the portfolio. This decision prevented the trust from participating in the short-term rebound experienced by tobacco and other lower-rated bonds during the period. One of our primary strategies in managing the trust was to take advantage of compelling opportunities in the 25- to 30-year segment of the market. We 3
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focused here on purchasing securities with premium (that is, above-market) coupons and moderate interest rate sensitivity. Our purchases of these securities were funded by the proceeds of sales of several shorter-maturity positions, many of which had been refunded during the period. This was part of our ongoing strategy of positioning the trust for an environment of rising short-term interest rates by limiting the trust's exposure to that segment of the market. As part of this strategy, we also kept the trust's duration (a measure of interest rate sensitivity) below that of the market. The portfolio remained well diversified across the major sectors of the California municipal market. We continued to favor the essential services segments of the market, while avoiding the housing sector out of concerns about those bonds' structural characteristics and remained especially selective regarding the health care sector. We also avoided zero coupon bonds. Public education, public building and tax districts represented the portfolio's top exposures. There is no guarantee the security sectors mentioned will continue to perform well or be held by the trust in the future. [Download Table] TOP FIVE SECTORS AS OF 4/30/05 RATINGS ALLOCATION AS OF 4/30/05 Public Education 15.8% AAA/Aaa 80.0% Public Building 14.7 AA/Aa 7.1 Tax District 14.0 A/A 3.0 Transportation 13.0 BBB/Baa 9.9 Water & Sewer 11.7 Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned or securities in the sectors shown above. Ratings are as a percentage of total investments. Sectors are as a percentage of total long-term investments. Securities are classified by sectors that represent broad groupings of related industries. Van Kampen is a wholly owned subsidiary of a global securities firm which is engaged in a wide range of financial services including, for example, securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. Rating allocations based upon ratings as issued by Standard and Poor's and Moody's, respectively. 4
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FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS Each Van Kampen trust provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the trust's second and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semiannual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. Van Kampen also delivers the semiannual and annual reports to trust shareholders, and makes these reports available on its public Web site, www.vankampen.com. In addition to the semiannual and annual reports that Van Kampen delivers to shareholders and makes available through the Van Kampen public Web site, each trust files a complete schedule of portfolio holdings with the SEC for the trust's first and third fiscal quarters on Form N-Q. Van Kampen does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Van Kampen public Web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's Web site, http://www.sec.gov. You may also review and copy them at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102. You may obtain copies of a trust's fiscal quarter filings by contacting Van Kampen Client Relations at 1-800-847-2424. 5
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PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD The trust's policies and procedures with respect to the voting of proxies relating to the trust's portfolio securities and information on how the trust voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge, upon request, by visiting our Web site at www.vankampen.com. This information is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov. 6
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) [Enlarge/Download Table] PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ------------------------------------------------------------------------------------------- MUNICIPAL BONDS 158.3% CALIFORNIA 146.6% $2,000 A B C CA Uni Sch Dist Cap Apprec Ser B (FGIC Insd)........................................... * 08/01/21 $ 936,880 1,610 A B C CA Uni Sch Dist Cap Apprec Ser B (FGIC Insd)........................................... * 08/01/22 713,777 1,000 Abag Fin Auth For Nonprofit Corp CA Ctf Part Childrens Hosp Med Ctr (AMBAC Insd)............. 5.875% 12/01/19 1,118,209 1,000 Abag Fin Auth For Nonprofit Corp CA Insd Rev Ctf Lincoln Glen Manor Sr Citizens (CA MTG Insd).... 6.100 02/15/25 1,068,510 1,000 Abag Fin Auth For Nonprofit Corp CA Multi-Family Rev Hsg Utd Dominion Ser A Rfdg (AMT) (Variable Rate Coupon) (Asset Gty Insd)................... 6.400 08/15/30 1,071,180 1,000 Abag Fin Auth For Nonprofit Corp CA Multi-Family Rev Hsg Utd Dominion Ser B Rfdg (Variable Rate Coupon) (Asset Gty Insd)........................ 6.250 08/15/30 1,075,770 1,485 Anaheim, CA City Sch Dist Election 2002 (FGIC Insd)........................................... 5.375 08/01/20 1,624,902 2,000 Bay Area Toll Auth CA Toll Brdg Rev San Francisco Bay Area Ser D........................ 5.000 04/01/17 2,149,740 1,500 Beverly Hills, CA Pub Fin Auth Lease Rev Ser A (MBIA Insd)..................................... 5.250 06/01/12 1,676,760 1,390 Brea & Olinda, CA Uni Sch Dist Ctf Part Ser A Rfdg (FSA Insd) (a)............................. 5.500 08/01/19 1,551,754 1,510 Brea & Olinda, CA Uni Sch Dist Ctf Part Ser A Rfdg (FSA Insd) (a)............................. 5.500 08/01/20 1,663,038 2,000 Burbank, CA Pub Fin Auth Rev Golden State Redev Proj Ser A (AMBAC Insd)......................... 5.250 12/01/19 2,185,460 1,500 Burbank, CA Pub Fin Auth Rev Golden State Redev Proj Ser A (AMBAC Insd)......................... 5.250 12/01/23 1,623,210 1,000 California Edl Fac Auth Rev CA College Arts (b)............................................. 5.000 06/01/35 1,000,000 1,000 California Edl Fac Auth Rev Golden Gate Univ (b)............................................. 5.000 10/01/36 1,000,850 1,000 California Edl Fac Auth Rev Pitzer College Ser A............................................... 5.000 04/01/35 1,020,830 1,000 California Edl Fac Auth Rev Pooled College & Univ Proj Ser B................................. 6.750 06/01/30 1,092,320 1,000 California Edl Fac Auth Rev Pooled College & Univ Proj Ser B................................. 5.250 04/01/24 1,021,630 240 California Edl Fac Auth Rev Student Ln CA Ln Pgm Ser A (AMT) (MBIA Insd)......................... 6.000 03/01/16 252,569 1,000 California Hsg Fin Agy Rev Multi-Family Hsg III Ser A (AMT) (MBIA Insd)......................... 5.850 08/01/17 1,035,850 2,000 California Infrastructure & Econ Dev Bk Rev Bay Area Toll Brdgs First Lien Ser A (FGIC Insd).... 5.000 07/01/29 2,099,020 1,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev Gas & Elec Ser A Rfdg (MBIA Insd)............... 5.900 06/01/14 1,171,580 See Notes to Financial Statements 7
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued [Enlarge/Download Table] PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $ 140 California Rural Home Mtg Fin Auth Single Family Mtg Rev Mtg Bkd Secs Pgm Ser B (AMT) (GNMA Collateralized)................................. 6.150% 06/01/20 $ 140,476 20 California Rural Home Mtg Fin Auth Single Family Mtg Rev Mtg Bkd Secs Pgm Ser C (AMT) (GNMA Collateralized)................................. 7.500 08/01/27 20,592 55 California Rural Home Mtg Fin Auth Single Family Mtg Rev Mtg Bkd Secs Ser A2 (AMT) (GNMA Collateralized)................................. 7.950 12/01/24 55,501 2,400 California St (AMBAC Insd)...................... 6.400 09/01/08 2,663,904 1,000 California St (FGIC Insd)....................... 5.000 10/01/23 1,059,060 1,000 California St (MBIA Insd) (a)................... 5.000 02/01/26 1,050,630 1,585 California St Pub Wks Brd Dept Corrections Ser C............................................... 5.000 06/01/09 1,695,871 1,000 California St Pub Wks Brd Dept Corrections Ser C............................................... 5.500 06/01/23 1,094,770 2,000 California St Pub Wks Brd Univ CA Institute Proj C............................................... 5.000 04/01/26 2,119,500 1,255 California St Rfdg (XLCA Insd).................. 5.500 03/01/11 1,403,667 2,000 California St Univ Rev Syswise Ser A (AMBAC Insd)........................................... 5.000 11/01/28 2,118,700 1,000 California St Vet Bd Ser BH (AMT) (FSA Insd).... 5.400 12/01/15 1,047,180 2,000 California St Vet Bd Ser BH (AMT) (FSA Insd).... 5.400 12/01/16 2,081,540 1,000 California Statewide Cmntys Dev Huntington Mem Hosp (Connie Lee Insd).......................... 5.750 07/01/16 1,053,160 1,085 Cathedral City, CA Pub Fin Auth Rev Cap Apprec Ser A (MBIA Insd) (a)........................... * 08/01/32 276,599 1,085 Cathedral City, CA Pub Fin Auth Rev Cap Apprec Ser A (MBIA Insd) (a)........................... * 08/01/33 262,353 2,000 Central Vly Fin Auth CA Cogeneration Proj Rev Carson Ice-Gen Proj Rev (MBIA Insd)............. 5.000 07/01/17 2,127,340 1,500 Chaffey, CA Uni High Sch Dist Ser C (FSA Insd)........................................... 5.000 05/01/27 1,576,185 1,440 Chino Basin, CA Regl Fin Auth Rev Muni Wtr Dist Swr Sys Proj (AMBAC Insd)....................... 7.000 08/01/08 1,621,498 1,230 Compton, CA Uni Sch Dist Election of 2002 Ser B (MBIA Insd)..................................... 5.500 06/01/25 1,370,872 1,110 Compton, CA Uni Sch Dist Election of 2002 Ser B (MBIA Insd)..................................... 5.000 06/01/29 1,170,040 1,965 Contra Costa Cnty, CA Ctf Part Merrithew Mem Hosp Proj Rfdg (MBIA Insd)...................... 5.500 11/01/22 2,104,829 1,250 Corona Norco, CA Uni Sch Dist Cap Apprec Ser B (FSA Insd)...................................... * 09/01/16 769,062 1,595 Corona Norco, CA Uni Sch Dist Cap Apprec Ser B (FSA Insd)...................................... * 09/01/17 928,880 1,735 Corona Norco, CA Uni Sch Dist Cap Apprec Ser B (FSA Insd) (a).................................. * 09/01/18 956,054 8 See Notes to Financial Statements
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued [Enlarge/Download Table] PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $2,000 East Bay, CA Muni Util Dist Wtr Sys Rev Sub..... 5.250% 06/01/19 $ 2,138,840 1,000 El Monte, CA Wtr Auth Rev Wtr Sys Proj (AMBAC Insd)........................................... 5.600 09/01/29 1,108,710 1,000 El Monte, CA Wtr Auth Rev Wtr Sys Proj (AMBAC Insd)........................................... 5.600 09/01/34 1,108,710 1,000 Fairfield Suisun, CA Uni Sch Dist Spl Tax Cmnty Fac Dist No 5 New Sch (FSA Insd)................ 5.375 08/15/29 1,075,970 3,000 Florin, CA Res Consv Dist Cap Impt Elk Grove Wtr Svc Ser A (MBIA Insd)........................... 5.000 09/01/33 3,145,980 1,010 Folsom Cordova, CA Uni Sch Dist Fac Impt Dist No 1 Cap Apprec Ser A (AMBAC Insd) (a)............. * 10/01/19 524,160 1,060 Folsom Cordova, CA Uni Sch Dist Fac Impt Dist No 1 Cap Apprec Ser A (AMBAC Insd) (a)............. * 10/01/21 492,699 6,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap Apprec Rfdg..................................... * 01/15/30 1,409,220 5,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap Apprec Rfdg..................................... * 01/15/31 1,105,750 2,950 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap Apprec Sr Lien Ser A (Escrowed to Maturity)..... * 01/01/27 1,068,785 3,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Conv Cap Apprec Rfdg (c)........................ 5.875 01/15/27 2,509,110 1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Rfdg............................................ 5.750 01/15/40 1,022,500 1,000 Galt Schs Jt Pwrs Auth CA Rev High Sch & Elem Sch Ser A Rfdg (MBIA Insd)...................... 5.750 11/01/16 1,088,410 1,115 Garden Grove, CA Pub Fin Auth Rev Ctf Part Wtr Svcs Cap Impt Pgm (FSA Insd).................... 5.000 12/15/23 1,189,995 1,500 Glendale, CA Uni Sch Dist Ser C (FSA Insd)...... 5.500 09/01/19 1,650,315 2,000 Golden St Tob Sec Enhanced Asset Bkd B (AMBAC Insd)........................................... 5.000 06/01/43 2,043,280 2,000 Industry, CA Urban Dev Agy Tax Alloc Civic Rec Indl No 1 Rfdg (MBIA Insd)...................... 5.500 05/01/14 2,115,600 1,000 Irvine, CA Pub Fac & Infrastructure Auth Assmt Rev Ser B (AMBAC Insd).......................... 5.000 09/02/22 1,036,310 1,000 La Quinta, CA Fin Auth Loc Ser A (AMBAC Insd)... 5.250 09/01/24 1,089,640 1,420 La Quinta, CA Redev Agy Tax Alloc Redev Proj Area No 1 (AMBAC Insd).......................... 5.000 09/01/22 1,517,682 1,600 La Quinta, CA Redev Agy Tax Alloc Redev Proj Area No 1 Rfdg (MBIA Insd)...................... 7.300 09/01/08 1,821,104 1,145 Larkspur, CA Sch Dist Cap Apprec Ser A (FGIC Insd) (a)....................................... * 08/01/21 536,364 1,020 Larkspur, CA Sch Dist Cap Apprec Ser A (FGIC Insd)........................................... * 08/01/24 403,849 1,255 Larkspur, CA Sch Dist Cap Apprec Ser A (FGIC Insd) (a)....................................... * 08/01/25 468,893 See Notes to Financial Statements 9
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued [Enlarge/Download Table] PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $1,000 Long Beach, CA Bd Fin Auth Lease Rev Rainbow Harbor Refin Proj Ser A (AMBAC Insd)............ 5.250% 05/01/24 $ 1,072,030 1,685 Long Beach, CA Bd Fin Auth North Long Beach Redev Proj Ser A (AMBAC Insd)................... 5.375 08/01/21 1,835,083 1,000 Long Beach, CA Harbor Rev Ser A (AMT) (MBIA Insd)........................................... 5.000 05/15/25 1,047,860 1,000 Los Angeles, CA Ctf Part Dept Pub Social Svcs Ser A (AMBAC Insd).............................. 5.500 08/01/31 1,080,410 1,000 Los Angeles, CA Ctf Part Sr Sonnenblick Del Rio W L. A. (AMBAC Insd)............................ 6.000 11/01/19 1,142,290 1,000 Los Gatos, CA Jt Uni High Sch Election of 1998 Ser C (Pre-Refunded @ 6/01/12) (FSA Insd)....... 5.000 06/01/27 1,117,600 3,650 Manhattan Beach, CA Uni Sch Dist Cap Apprec Ser B (FGIC Insd)................................... * 09/01/22 1,611,840 2,400 Metropolitan Wtr Dist Southn CA Auth Ser B2 (FGIC Insd)..................................... 5.000 10/01/26 2,532,336 3,240 Midpeninsula Regl Open Space Dist CA Fin Auth Rev Cap Apprec Second Issue (AMBAC Insd)........ * 08/01/26 959,429 3,180 Mount Diablo, CA Uni Sch Dist (FSA Insd)........ 5.000 08/01/26 3,334,453 1,000 Novato, CA Uni Sch Dist (FSA Insd).............. 5.000 08/01/27 1,057,230 1,000 Orange Cnty, CA Wtr Dist Rev Ser B (MBIA Insd)........................................... 5.000 08/15/24 1,061,570 1,000 Oxnard, CA Harbor Dist Rev Ser B................ 6.000 08/01/24 1,060,280 1,230 Palm Desert, CA Fin Auth Tax Alloc Rev Proj Area No 2 Ser A Rfdg (MBIA Insd) (a)................. 5.000 08/01/21 1,317,896 1,100 Pasadena, CA Area Cmnty College Dist Election of 2002 Ser A (FGIC Insd).......................... 5.000 06/01/21 1,184,953 1,000 Pomona, CA Ctf Part Mission Promenade Proj Ser AE (AMBAC Insd)................................. 5.375 10/01/32 1,075,800 3,350 Port Oakland, CA Port Rev Ser G (AMT) (MBIA Insd)........................................... 5.375 11/01/25 3,541,318 1,000 Rancho Cucamonga, CA Redev Agy Tax Alloc Rancho Redev Proj (FSA Insd)........................... 5.250 09/01/20 1,072,250 1,960 Riverside Cnty CA Ctf Part Cap Impt Family Law Ser A Rfdg (FGIC Insd) (a)...................... 5.000 11/01/23 2,091,222 2,000 Sacramento Cnty, CA Santn Dist Fin Auth Rev Ser A Rfdg (AMBAC Insd)............................. 5.500 12/01/16 2,299,020 1,360 Sacramento Cnty, CA Wtr Fin Auth Rev Agy Zones 40 41 Wtr Sys Proj (AMBAC Insd) (a)............. 5.000 06/01/17 1,477,722 2,000 Sacramento, CA City Fin Auth Rev Cap Impt (AMBAC Insd)........................................... 5.000 12/01/33 2,087,160 700 Sacramento, CA Cogeneration Auth Cogeneration Proj Rev Proctor & Gamble Proj.................. 6.375 07/01/10 717,178 2,000 San Bernardino, CA Jt Pwrs Fin Auth Ctf Part (MBIA Insd)..................................... 5.500 09/01/20 2,194,040 1,000 San Diego, CA Pub Fac Fin Auth Swr Rev (FGIC Insd)........................................... 5.000 05/15/20 1,011,570 10 See Notes to Financial Statements
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued [Enlarge/Download Table] PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $1,500 San Francisco, CA City & Cnty Arpt Commn Intl Arpt Rev Second Ser 30 Rfdg (XLCA Insd)......... 5.250% 05/01/16 $ 1,652,595 2,000 San Francisco, CA City & Cnty Arpt Commn Intl Arpt Rev Second Ser Issue 12-A (AMT) (FGIC Insd)........................................... 5.800 05/01/21 2,069,100 1,000 San Jose, CA Fin Auth Lease Rev Convention Ctr Proj Ser F Rfdg (MBIA Insd)..................... 5.000 09/01/17 1,077,380 1,600 San Leandro, CA Ctf Part Lib & Fire Stations Fin (AMBAC Insd).................................... 5.700 11/01/20 1,778,592 1,220 Simi Vly, CA Cmnty Dev Agy Tax Alloc Tapo Canyon & West End Proj Rfdg (FGIC Insd) (a)............ 5.250 09/01/20 1,326,713 1,285 Simi Vly, CA Cmnty Dev Agy Tax Alloc Tapo Canyon & West End Proj Rfdg (FGIC Insd) (a)............ 5.250 09/01/21 1,395,497 1,350 Simi Vly, CA Cmnty Dev Agy Tax Alloc Tapo Canyon & West End Proj Rfdg (FGIC Insd) (a)............ 5.250 09/01/22 1,462,118 2,250 South Tahoe CA Jt Pwr Fin Redev Proj Area No 1 Ser A Rfdg (AMBAC Insd) (b)..................... 5.000 10/01/28 2,349,675 935 Stanton, CA Multi-Family Rev Hsg Contl Garden Apts (AMT) (Variable Rate Coupon) (FNMA Collateralized)................................. 5.625 08/01/29 983,377 1,260 Sweetwater, CA Auth Wtr Rev (FSA Insd).......... 5.500 04/01/17 1,393,560 2,000 University of CA Ctf Part San Diego Campus Proj Ser A........................................... 5.250 01/01/32 2,091,160 1,000 University of CA Rev Resh Fac Ser E (AMBAC Insd)........................................... 5.000 09/01/19 1,073,810 1,000 Woodland, CA Fin Auth Lease Rev Cap Proj Rfdg (XLCA Insd)..................................... 5.000 03/01/25 1,050,290 ------------ 149,280,385 ------------ PUERTO RICO 9.5% 5,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser Y Rfdg (FSA Insd)............................... 6.250 07/01/21 6,347,150 1,000 Puerto Rico Comwlth Hwy & Tran Rev Tran Rev Sub (FGIC Insd)..................................... 5.250 07/01/16 1,109,890 2,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser II (XLCA Insd)........................................... 5.375 07/01/17 2,237,360 ------------ 9,694,400 ------------ See Notes to Financial Statements 11
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) continued [Enlarge/Download Table] PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE ------------------------------------------------------------------------------------------- U. S. VIRGIN ISLANDS 2.2% $1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes Ln Nt Ser A..................................... 6.375% 10/01/19 $ 1,140,350 1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes Ln Nt Ser A..................................... 6.500 10/01/24 1,138,770 ------------ 2,279,120 ------------ TOTAL LONG-TERM INVESTMENTS 158.3% (Cost $149,511,907)....................................................... 161,253,905 SHORT-TERM INVESTMENTS 3.1% (Cost $3,133,000)......................................................... 3,133,000 ------------ TOTAL INVESTMENTS 161.4% (Cost $152,644,907)....................................................... 164,386,905 LIABILITIES IN EXCESS OF OTHER ASSETS (2.5%)............................... (2,525,292) PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (58.9%)................. (60,009,864) ------------ NET ASSETS APPLICABLE TO COMMON SHARES 100.0%.............................. $101,851,749 ============ Percentages are calculated as a percentage of net assets applicable to common shares. * Zero coupon bond (a) The Trust owns 100% of the bond issuance. (b) Security purchased on a when-issued or delayed delivery basis. (c) Security is a "step-up" bond where the coupon increases or steps up at a predetermined date. AMBAC--AMBAC Indemnity Corp. AMT--Alternative Minimum Tax Asset Gty--Asset Guaranty Insurance Co. CA MTG--California Mortgage Insurance Connie Lee--Connie Lee Insurance Co. FGIC--Financial Guaranty Insurance Co. FNMA--Federal National Mortgage Association FSA--Financial Security Assurance Inc. GNMA--Government National Mortgage Association MBIA--Municipal Bond Investors Assurance Corp. XLCA--XL Capital Assurance Inc. 12 See Notes to Financial Statements
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST FINANCIAL STATEMENTS Statement of Assets and Liabilities April 30, 2005 (Unaudited) [Download Table] ASSETS: Total Investments (Cost $152,644,907)....................... $164,386,905 Cash........................................................ 17,795 Receivables: Interest.................................................. 2,089,746 Investments Sold.......................................... 1,619,500 Other....................................................... 1,297 ------------ Total Assets............................................ 168,115,243 ------------ LIABILITIES: Payables: Investments Purchased..................................... 5,875,208 Investment Advisory Fee................................... 72,520 Income Distributions--Common Shares....................... 16,907 Other Affiliates.......................................... 6,991 Trustees' Deferred Compensation and Retirement Plans........ 230,520 Accrued Expenses............................................ 51,484 ------------ Total Liabilities....................................... 6,253,630 Preferred Shares (including accrued distributions).......... 60,009,864 ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $101,851,749 ============ NET ASSET VALUE PER COMMON SHARE ($101,851,749 divided by 6,043,220 shares outstanding)............................. $ 16.85 ============ NET ASSETS CONSIST OF: Common Shares ($.01 par value with an unlimited number of shares authorized, 6,043,220 shares issued and outstanding).............................................. $ 60,432 Paid in Surplus............................................. 88,812,473 Net Unrealized Appreciation................................. 11,741,998 Accumulated Net Realized Gain............................... 848,088 Accumulated Undistributed Net Investment Income............. 388,758 ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $101,851,749 ============ PREFERRED SHARES ($.01 par value, authorized 100,000,000 shares, 2,400 issued with liquidation preference of $25,000 per share)........................................ $ 60,000,000 ============ NET ASSETS INCLUDING PREFERRED SHARES....................... $161,851,749 ============ See Notes to Financial Statements 13
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST FINANCIAL STATEMENTS continued Statement of Operations For the Six Months Ended April 30, 2005 (Unaudited) [Download Table] INVESTMENT INCOME: Interest.................................................... $ 3,799,476 ----------- EXPENSES: Investment Advisory Fee..................................... 439,624 Preferred Share Maintenance................................. 84,145 Trustees' Fees and Related Expenses......................... 19,281 Legal....................................................... 14,737 Custody..................................................... 6,025 Other....................................................... 69,781 ----------- Total Expenses.......................................... 633,593 ----------- NET INVESTMENT INCOME....................................... $ 3,165,883 =========== REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Gain........................................... $ 848,381 ----------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... 12,404,860 End of the Period......................................... 11,741,998 ----------- Net Unrealized Depreciation During the Period............... (662,862) ----------- NET REALIZED AND UNREALIZED GAIN............................ $ 185,519 =========== DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (491,520) =========== NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS................................................ $ 2,859,882 =========== 14 See Notes to Financial Statements
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST FINANCIAL STATEMENTS continued Statements of Changes in Net Assets (Unaudited) [Enlarge/Download Table] FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED APRIL 30, 2005 OCTOBER 31, 2004 ----------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income..................................... $ 3,165,883 $ 6,429,904 Net Realized Gain......................................... 848,381 563,195 Net Unrealized Appreciation/Depreciation During the Period.................................................. (662,862) 2,692,779 Distributions to Preferred Shareholders: Net Investment Income................................... (452,872) (461,595) Net Realized Gain....................................... (38,648) (183,995) ------------ ------------ Change in Net Assets Applicable to Common Shares from Operations.............................................. 2,859,882 9,040,288 Distributions to Common Shareholders: Net Investment Income................................... (2,918,714) (6,221,108) Net Realized Gain....................................... (524,522) (2,174,844) ------------ ------------ NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM INVESTMENT ACTIVITIES................................... (583,354) 644,336 FROM CAPITAL TRANSACTIONS: Value of Common Shares Issued Through Dividend Reinvestment............................................ -0- 225,716 ------------ ------------ TOTAL INCREASE/DECREASE IN NET ASSETS APPLICABLE TO COMMON SHARES.................................................. (583,354) 870,052 NET ASSETS APPLICABLE TO COMMON SHARES: Beginning of the Period................................... 102,435,103 101,565,051 ------------ ------------ End of the Period (Including accumulated undistributed net investment income of $388,758 and $594,461, respectively)........................................... $101,851,749 $102,435,103 ============ ============ See Notes to Financial Statements 15
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST FINANCIAL HIGHLIGHTS (UNAUDITED) THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED. [Enlarge/Download Table] SIX MONTHS ENDED APRIL 30, ------------------ 2005 2004 2003 ------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $ 16.95 $ 16.84 $ 17.02 ------- ------- ------- Net Investment Income..................................... .52 1.07 1.12 Net Realized and Unrealized Gain/Loss..................... .03 .54 .03 Common Share Equivalent of Distributions Paid to Preferred Shareholders: Net Investment Income................................... (.07) (.08) (.09) Net Realized Gain....................................... (.01) (.03) -0-(f) ------- ------- ------- Total from Investment Operations............................ .47 1.50 1.00 Distributions Paid to Common Shareholders: Net Investment Income................................... (.48) (1.03) (1.11) Net Realized Gain....................................... (.09) (.36) (.07) ------- ------- ------- NET ASSET VALUE, END OF THE PERIOD.......................... $ 16.85 $ 16.95 $ 16.84 ======= ======= ======= Common Share Market Price at End of the Period.............. $ 14.96 $ 15.50 $ 16.67 Total Return (a)............................................ 0.24%* 1.32% 10.83% Net Assets Applicable to Common Shares at End of the Period (In millions)............................................. $ 101.9 $ 102.4 $ 101.6 Ratio of Expenses to Average Net Assets Applicable to Common Shares (b)................................................ 1.26% 1.42% 1.43% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (b)........................... 6.31% 6.40% 6.56% Portfolio Turnover.......................................... 10%* 11% 25% SUPPLEMENTAL RATIOS: Ratio of Expenses to Average Net Assets Including Preferred Shares (b)................................................ .79% .89% .90% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (c)........................... 5.41% 5.94% 6.04% SENIOR SECURITIES: Total Preferred Shares Outstanding.......................... 2,400 2,400 2,400 Asset Coverage Per Preferred Share (d)...................... $67,442 $67,686 $67,320 Involuntary Liquidating Preference Per Preferred Share...... $25,000 $25,000 $25,000 Average Market Value Per Preferred Share.................... $25,000 $25,000 $25,000 * Non-Annualized (a)Total return assumes an investment at the common share 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 share market price at the end of the period indicated. (b)Ratios do not reflect the effect of the dividend payments to preferred shareholders. (c)Ratios reflect the effect of the dividend payments to preferred shareholders. (d)Calculated by subtracting the Trust's total liabilities (not including the preferred shares) from the Trust's total assets and dividing this by the number of preferred shares outstanding. (e)As required, effective November 1, 2001, the Trust has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on fixed income securities. The effect of this change for the year ended October 31, 2002 was to increase net investment income per share by $.01, decrease net realized and unrealized gains and losses per share by $.01 and increase the ratio of net investment income to average net assets applicable to common shares by .05%. Per share, ratios and supplemental data for periods prior to October 31, 2002 have not been restated to reflect this change in presentation. (f)Amount is less than $.01. 16
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[Enlarge/Download Table] YEAR ENDED OCTOBER 31, ----------------------------------------------------------------------------------------- 2002 (e) 2001 2000 1999 1998 1997 1996 1995 ----------------------------------------------------------------------------------------- $ 17.02 $ 15.92 $ 14.92 $ 16.76 $ 15.94 $ 15.09 $ 14.80 $ 12.64 ------- ------- -------- -------- -------- -------- -------- -------- 1.17 1.16 1.16 1.13 1.13 1.13 1.14 1.12 (.05) 1.15 1.03 (1.87) .83 .82 .21 2.21 (.13) (.31) (.35) (.28) (.33) (.33) (.34) (.40) -0- -0- -0- -0- -0- -0- -0- -0- ------- ------- -------- -------- -------- -------- -------- -------- .99 2.00 1.84 (1.02) 1.63 1.62 1.01 2.93 (.99) (.90) (.84) (.82) (.81) (.77) (.72) (.77) -0- -0- -0- -0- -0- -0- -0- -0- ------- ------- -------- -------- -------- -------- -------- -------- $ 17.02 $ 17.02 $ 15.92 $ 14.92 $ 16.76 $ 15.94 $ 15.09 $ 14.80 ======= ======= ======== ======== ======== ======== ======== ======== $ 16.16 $ 15.92 $13.8125 $13.6875 $ 15.875 $ 14.25 $ 12.375 $ 12.00 7.95% 22.12% 7.10% -9.11% 17.39% 21.89% 9.28% 15.04% $ 102.6 $ 102.6 $ 96.0 $ 90.0 $ 101.1 $ 96.1 $ 91.0 $ 89.3 1.49% 1.71% 1.77% 1.74% 1.75% 1.81% 1.86% 1.96% 7.00% 7.08% 7.64% 6.99% 6.93% 7.38% 7.66% 8.17% 21% 10% 22% 19% 17% 23% 33% 41% .93% 1.06% 1.07% 1.07% 1.09% 1.10% 1.11% 1.14% 6.23% 5.19% 5.34% 5.24% 4.90% 5.23% 5.36% 5.25% 2,400 2,400 2,400 2,400 1,200 1,200 1,200 1,200 $67,759 $67,765 $ 64,994 $ 62,488 $134,213 $130,102 $125,832 $124,385 $25,000 $25,000 $ 25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $25,000 $25,000 $ 25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 See Notes to Financial Statements 17
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (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, but may invest up to 20% of its assets in unrated securities which are believed to be of comparable quality to those rated investment grade. 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 accounting principles generally accepted in the United States of America 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 or dealers 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 segregate assets with the custodian 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, 2005, the Trust had $4,269,975 of when-issued or delayed delivery purchase commitments. C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond premium is amortized and discount is accreted over the expected life of each applicable security. D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements of Subchapter M 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. 18
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued At April 30, 2005, the cost and related gross unrealized appreciation and depreciation were as follows: [Download Table] Cost of investments for tax purposes........................ $152,539,165 ============ Gross tax unrealized appreciation........................... $ 11,866,637 Gross tax unrealized depreciation........................... (18,897) ------------ Net tax unrealized appreciation on investments.............. $ 11,847,740 ============ 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. The tax character of distributions paid during the year ended October 31, 2004 was as follows: [Download Table] Distributions paid from: Ordinary income........................................... $ 226,155 Long-term capital gain.................................... 2,358,839 ---------- $2,584,994 ========== As of October 31, 2004, the components of distributable earnings on a tax basis were as follows: [Download Table] Undistributed ordinary income............................... $ 71,697 Undistributed long-term capital gain........................ 562,877 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Asset Management (the "Adviser") provides investment advice and facilities to the Trust for an annual fee payable monthly of .55% of the average daily net assets of the Trust. Effective November 1, 2004, the investment advisory fee was reduced from .60% to .55%. For the six months ended April 30, 2005, the Trust recognized expenses of approximately $2,900 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, of which a trustee of the Trust is a partner of such firm and he and his law firm provide legal services as legal counsel to the Trust. Under separate Accounting Services and Legal Services agreements, the Adviser provides accounting and legal services to the Trust. The Adviser allocates the cost of such services to each trust. For the six months ended April 30, 2005, the Trust recognized expenses of approximately $19,200 representing Van Kampen Investment Inc.'s or its affiliates (collectively "Van Kampen") cost of providing accounting and legal services to the Trust, which are reported as part of "Other" and "Legal" expenses, respectively, on the Statement of Operations. 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 also 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 19
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued defer all or a portion of their compensation to a later date. Benefits under the retirement plan are payable upon retirement 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. CAPITAL TRANSACTIONS At April 30, 2005 and October 31, 2004, paid in surplus related to common shares aggregated $88,812,473 for both periods. Transactions in common shares were as follows: [Enlarge/Download Table] SIX MONTHS ENDED YEAR ENDED APRIL 30, 2005 OCTOBER 31, 2004 Beginning Shares........................................ 6,043,220 6,029,844 Shares Issued Through Dividend Reinvestment............. -0- 13,376 --------- --------- Ending Shares........................................... 6,043,220 6,043,220 ========= ========= 4. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $16,679,883 and $17,774,540, respectively. 5. 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, 2005 was 2.000%. During the six months ended April 30, 2005, the rates ranged from 1.100% to 2.450%. 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 in the Statement of Operations. 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. 6. INDEMNIFICATIONS The Trust enters into contracts that contain a variety of indemnifications. The Trust's maximum exposure under these arrangements is unknown. However, the Trust has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. 7. TRUST MERGER On March 18, 2005, the Trustees of California Municipal Trust, California Quality Municipal Trust and Trust for Investment Grade California Municipals ("Target Trust") announced its intention to merge the Target Trust into California Value Municipal Income Trust ("Acquiring Trust"). The Trustees of each of the trusts have approved in principal an agreement and plan of reorganization between the trusts providing for a transfer of assets and liabilities of the Target Trust to the Acquiring Trust in exchange for shares of beneficial interest of the Acquiring Trust (the "Reorganization"). The Reorganization is subject to the 20
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) continued approval by the shareholders of the Target Trust. The issuance of additional common shares of the Acquiring Trust is subject to the approval of the shareholders of the Acquiring Trust. 8. DERIVATIVE FINANCIAL INSTRUMENTS A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate or index. The Trust may invest up to 15% of its net assets in "inverse floating rate obligations." The inverse floating rate obligations in which the Trust may invest are typically created through a division of a fixed-rate municipal obligation into two separate instruments, a short-term obligation and a long-term obligation. The interest rate on the short-term obligation is set at periodic auctions. The interest rate on the long-term obligation which the Trust may purchase is the rate the issuer would have paid on the fixed-income obligation, (i) plus the difference between such fixed rate and the rate on the short-term obligation, if the short-term rate is lower than the fixed rate; or (ii) minus such difference if the interest rate on the short-term obligation is higher than the fixed rate. These securities have varying degrees of liquidity and the market value of such securities generally will fluctuate in response to changes in market rates of interest to a greater extent than the value of an equal principal amount of a fixed rate security having similar credit quality, redemption provisions and maturity. These securities tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. Although volatile, inverse floating rate obligations typically offer the potential for yields exceeding the yields available on fixed rate bonds with comparable credit quality, coupon, call provisions and maturity. These securities usually permit the investor to convert the floating rate security counterpart to a fixed rate (normally adjusted downward), and this optional conversion feature may provide a partial hedge against rising rates if exercised at an opportune time. 21
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST DIVIDEND REINVESTMENT PLAN The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which Common Shareholders may elect to have dividends and capital gains distributions reinvested in Common Shares of the Trust. The Trust declares dividends out of net investment income, and will distribute annually net realized capital gains, if any. Common Shareholders may join or withdraw from the Plan at any time. If you decide to participate in the Plan, State Street Bank and Trust Company, as your Plan Agent, will automatically invest your dividends and capital gains distributions in Common Shares of the Trust for your account. HOW TO PARTICIPATE If you wish to participate and your shares are held in your own name, call 1-800-341-2929 for more information and a Plan brochure. If your shares are held in the name of a brokerage firm, bank, or other nominee, you should contact your nominee to see if it would participate in the Plan on your behalf. If you wish to participate in the Plan, but your brokerage firm, bank or nominee is unable to participate on your behalf, you should request that your shares be re-registered in your own name which will enable your participation in the Plan. HOW THE PLAN WORKS Participants in the Plan will receive the equivalent in Common Shares valued on the valuation date, generally at the lower of market price or net asset value, except as specified below. The valuation date will be the dividend or distribution payment date or, if that date is not a trading day on the national securities exchange or market system on which the Common Shares are listed for trading, the next preceding trading day. If the market price per Common Share on the valuation date equals or exceeds net asset value per Common Share on that date, the Trust will issue new Common Shares to participants valued at the higher of net asset value or 95% of the market price on the valuation date. In the foregoing situation, the Trust will not issue Common Shares under the Plan below net asset value. If net asset value per Common Share on the valuation date exceeds the market price per Common Share on that date, or if the Board of Trustees should declare a dividend or capital gains distribution payable to the Common Shareholders only in cash, participants in the Plan will be deemed to have elected to receive Common Shares from the Trust valued at the market price on that date. Accordingly, in this circumstance, the Plan Agent will, as agent for the participants, buy the Trust's Common Shares in the open market for the participants' accounts on or shortly after the payment date. If, before the Plan Agent has completed its purchases, the market price exceeds the net asset value per share of the Common Shares, the average per share purchase price paid by the Plan Agent may exceed the net asset value 22
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST DIVIDEND REINVESTMENT PLAN continued of the Trust's Common Shares, resulting in the acquisition of fewer Common Shares than if the dividend or distribution had been paid in Common Shares issued by the Trust. All reinvestments are in full and fractional Common Shares and are carried to three decimal places. Experience under the Plan may indicate that changes are desirable. Accordingly, the Trust reserves the right to amend or terminate the Plan as applied to any dividend or distribution paid subsequent to written notice of the changes sent to all Common Shareholders of the Trust at least 90 days before the record date for the dividend or distribution. The Plan also may be amended or terminated by the Plan Agent by at least 90 days written notice to all Common Shareholders of the Trust. COSTS OF THE PLAN The Plan Agent's fees for the handling of the reinvestment of dividends and distributions will be paid by the Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of dividends and distributions. No other charges will be made to participants for reinvesting dividends or capital gains distributions, except for certain brokerage commissions, as described above. TAX IMPLICATIONS You will receive tax information annually for your personal records and to help you prepare your federal income tax return. The automatic reinvestment of dividends and capital gains distributions does not relieve you of any income tax which may be payable on dividends or distributions. RIGHT TO WITHDRAW Plan participants may withdraw at any time by calling 1-800-341-2929 or by writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-8200. If you withdraw, you will receive, without charge, a share certificate issued in your name for all full Common Shares credited to your account under the Plan and a cash payment will be made for any fractional Common Share credited to your account under the Plan. You may again elect to participate in the Plan at any time by calling 1-800-341-2929 or writing to the Trust at: Van Kampen Funds Inc. Attn: Closed-End Funds 2800 Post Oak Blvd. Houston, TX 77056 23
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VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES BOARD OF TRUSTEES DAVID C. ARCH JERRY D. CHOATE ROD DAMMEYER LINDA HUTTON HEAGY R. CRAIG KENNEDY HOWARD J KERR MITCHELL M. MERIN* JACK E. NELSON RICHARD F. POWERS, III* HUGO F. SONNENSCHEIN WAYNE W. WHALEN* - Chairman SUZANNE H. WOOLSEY OFFICERS MITCHELL M. MERIN President and Chief Executive Officer RONALD E. ROBISON Executive Vice President and Principal Executive Officer JOSEPH J. MCALINDEN Executive Vice President and Chief Investment Officer AMY R. DOBERMAN Vice President STEFANIE V. CHANG Vice President and Secretary JOHN L. SULLIVAN Chief Compliance Officer JAMES W. GARRETT Chief Financial Officer and Treasurer INVESTMENT ADVISER VAN KAMPEN ASSET MANAGEMENT 1221 Avenue of the Americas New York, New York 10020 CUSTODIAN STATE STREET BANK AND TRUST COMPANY 225 Franklin Street P.O. Box 1713 Boston, Massachusetts 02110 TRANSFER AGENT EQUISERVE TRUST COMPANY, N.A. P.O. Box 43011 Providence, Rhode Island 02940-3011 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DELOITTE & TOUCHE LLP 180 North Stetson Avenue Chicago, Illinois 60601 * "Interested persons" of the Trust, as defined in the Investment Company Act of 1940, as amended. 24
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VAN KAMPEN AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY We are required by federal law to provide you with a copy of our Privacy Policy annually. The following Policy applies to current and former individual clients of Van Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange Corp., as well as current and former individual investors in Van Kampen mutual funds, unit investment trusts, and related companies. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, 529 Educational Savings Accounts, accounts subject to the Uniform Gifts to Minors Act, or similar accounts. Please note that we may amend this Policy at any time, and will inform you of any changes to this Policy as required by law. WE RESPECT YOUR PRIVACY We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Policy describes what non-public personal information we collect about you, why we collect it, and when we may share it with others. We hope this Policy will help you understand how we collect and share non-public personal information that we gather about you. Throughout this Policy, we refer to the non-public information that personally identifies you or your accounts as "personal information." 1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU? To serve you better and manage our business, it is important that we collect and maintain accurate information about you. We may obtain this information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources. For example: -- We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us. -- We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources. -- We may obtain information about your creditworthiness and credit history from consumer reporting agencies. -- We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements. -- If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, (continued on back)
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VAN KAMPEN AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued your use of our Web sites and your product and service preferences, through the use of "cookies." "Cookies" recognize your computer each time you return to one of our sites, and help to improve our sites' content and personalize your experience on our sites by, for example, suggesting offerings that may interest you. Please consult the Terms of Use of these sites for more details on our use of cookies. 2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU? To provide you with the products and services you request, to serve you better and to manage our business, we may disclose personal information we collect about you to our affiliated companies and to non-affiliated third parties as required or permitted by law. A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose personal information that we collect about you to our affiliated companies except to enable them to provide services on our behalf or as otherwise required or permitted by law. B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal information that we collect about you to non-affiliated third parties except to enable them to provide services on our behalf, to perform joint marketing agreements with other financial institutions, or as otherwise required or permitted by law. For example, some instances where we may disclose information about you to non-affiliated third parties include: for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with these companies, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information with others except to fulfill that limited purpose. 3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU? We maintain physical, electronic and procedural security measures to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information. Van Kampen Funds Inc. 1 Parkview Plaza, P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com Copyright (C)2005 Van Kampen Funds Inc. All rights reserved. Member NASD/SIPC. VCV SAR 6/05 RN05-01300-N04/05 (VAN KAMPEN INVESTMENTS LOGO)
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Item 2. Code of Ethics. Not applicable for semi-annual reports. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semi-annual reports. Item 6. Schedule of Investments. Please refer to Item #1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. Not applicable. Item 11. Controls and Procedures (a) The Trust's principal executive officer and principal financial officer have concluded that the Trust's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case
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of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a) Code of Ethics -- Not applicable for semi-annual reports. (b)(1) A certification for the Principal Executive Officer of the registrant is attached hereto as part of EX-99.CERT. (b)(2) A certification for the Principal Financial Officer of the registrant is attached hereto as part of EX-99.CERT.
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Van Kampen California Value Municipal Income Trust By: /s/ Ronald E. Robison ---------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 16, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Ronald E. Robison --------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 16, 2005 By: /s/ James W. Garrett -------------------- Name: James W. Garrett Title: Principal Financial Officer Date: June 16, 2005

Dates Referenced Herein   and   Documents Incorporated by Reference

Referenced-On Page
This ‘N-CSRS’ Filing    Date First  Last      Other Filings
Filed on / Effective on:6/28/05
6/16/0531
For Period End:4/30/05223NSAR-A
3/18/0522425,  N-14 8C
11/1/0421
10/31/041722N-CSR,  NSAR-B
10/31/0218N-30D,  NSAR-B
11/1/01183
4/30/9320
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