UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-7400 Van Kampen Value Municipal Income Trust - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 1221 Avenue of the Americas NY NY 10020 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Ronald Robison 1221 Avenue of the Americas New York, NY 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: 10/31/03 Item 1. Report to Shareholders Welcome, Shareholder In this report, you'll learn about how your investment in Van Kampen Value Municipal Income Trust performed during the annual 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 October 31, 2003. Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the trust will achieve its investment objective. The trust is subject to market risk, which is the possibility that the market values of securities owned by the trust will decline and, therefore, the value of the trust shares may be less than what you paid for them. Accordingly, you can lose money investing in this trust. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Performance Summary <Table> <Caption> VALUE MUNICIPAL INCOME TRUST SYMBOL: VKV - ---------------------------------------------------- AVERAGE ANNUAL BASED ON BASED ON TOTAL RETURNS NAV MARKET PRICE Since Inception (3/26/93) 7.09% 6.47% 10-year 6.25 6.43 5-year 6.51 6.52 1-year 6.81 9.61 - ---------------------------------------------------- </Table> Past performance is no guarantee of future results. Investment return, 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. As a result of recent market activity, current performance may vary from the figures shown. For more up-to-date information, please visit vankampen.com or speak with your financial advisor. The 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 Municipal Bond Index is a broad-based statistical composite of municipal bonds. The index is unmanaged and does not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. 1 Trust Report FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2003 Van Kampen Value Municipal Income Trust is managed by the adviser's Municipal Fixed Income team.(1) Current members include Timothy D. Haney, Vice President; Robert Wimmel, Vice President; and John Reynoldson, Executive Director. MARKET CONDITIONS The economic backdrop for the 12 months ended October 31 was largely characterized by the persistent weakness of the U.S. economy. One of the most closely watched economic indicators, employment strength, was in negative territory for much of the period. Repeated comments from government and private-sector economists suggesting that the U.S. economy might be entering a deflationary period also seemed to weigh heavily on the minds of investors over the course of the year. At the same time, ongoing budgetary and fiscal difficulties at the state and local level contributed to ratings downgrades for many municipal bonds. The Federal Reserve Board (the Fed) attempted to allay these fears and keep the economy moving in the right direction by cutting the Fed Funds target rate twice during the period to a level of 1.00 percent. Although the stock markets appeared to look past the sluggish economic data, bonds, in general, were hampered. While yields on intermediate- and long-term bonds ended the period roughly where they began, the road between those two points was decidedly bumpy. The 12-month period can be divided into two distinct market environments. The first of these, which lasted from October 2002 to mid-June 2003, saw municipal yields fall by roughly 80 basis points to levels not seen since the late 1960s. These plummeting yields led to a surge in issuance as municipalities moved to lock in low financing and, in the case of older bonds, low refinancing costs. These record levels of supply met with substantial demand as investors in search of relative stability poured cash into municipal bond funds. Demand for municipal bonds was also strong from so-called "cross-over" buyers--investors who traditionally favor taxable investments, but were drawn to the relatively attractive yields of municipal bonds. The municipal market reversed abruptly in mid-June, when yields began to climb from their lows. Investors during this phase shifted their attention to the advancing equity market, which reduced demand for municipal bonds. Interest from cross-over investors also evaporated as the relative attractiveness of the taxable market returned. Issuance remained strong throughout this leg of the period, though it abated somewhat in the last three months of the reporting year. These forces combined to drive municipal bond yields off of their historic lows, ending the period where they began. (1)Team members may change without notice at any time. 2 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 significantly. On both a market price and an NAV basis, the trust outperformed its benchmark, the Lehman Brothers Municipal Bond Index. (See table below.) The trust's significant position in health-care bonds generated attractive income, as well as price appreciation driven by yield-seeking investors drawn to the bonds' relatively robust yields. Certain issues in this sector met their investment objectives during the period, and we subsequently sold them in favor of bonds with superior total-return potential. Our strategy of avoiding housing bonds also helped the trust; the sector performed poorly amidst record levels of mortgage refinancing activity. 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. With short-term rates at historic lows during the period, the difference between short- and longer-term rates was relatively high. This made using leverage a particularly profitable approach during the period, and added to the trust's strong performance. While the trust outperformed its benchmark, not all of its positions performed strongly over the entire period in question. With interest rates falling to such low levels, our analysis showed an increasing possibility of a damaging upward shift in interest rates. We positioned the trust defensively by maintaining a duration (a measure of interest-rate sensitivity) that was slightly shorter than that of the benchmark during the period. This position helped the trust when rates climbed, but kept it from fully participating in the bond-market rally earlier in the period. We were equally defensive in managing the portfolio's maturity structure. Given the steepness of the yield curve for much of the period (steepness is a measure of the difference in yields between long- and short-maturity securities), we focused on a strategy designed to outperform in a curve-flattening environment. TOTAL RETURN FOR THE 12-MONTH PERIOD ENDED OCTOBER 31, 2003 <Table> <Caption> - ---------------------------------------------------------- BASED ON BASED ON LEHMAN BROTHERS NAV MARKET PRICE MUNICIPAL BOND INDEX 6.81% 9.61% 5.11% - ---------------------------------------------------------- </Table> Past performance is no guarantee of future results. 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. 3 We purchased premium bonds in the 15- to 22-year range that were priced to 10-year call dates. These bonds offer attractive yields compared to bonds with similar interest rate risk. We sold bonds in the 5- to 10-year range, an area of the curve that we feel will underperform when short rates rise. This curve flattening did not occur as early as we anticipated, however, and the strategy hampered performance when short rates fell in the first part of the period. However, when long-bond yields rose in the latter part of the period, our emphasis on defensive bonds in the 15- to 22-year range helped to preserve principal. In addition to this core strategy, we also traded high-grade bonds in the 30-year range based on relative-value fluctuations. We sought out issues that were cheap relative to comparable bonds, and then sold them after they achieved their performance targets in order to reinvest the proceeds into securities with greater total-return prospects. As part of this strategy, we added to the portfolio's exposure in the A-rated hospital sector, which offered attractive total-return potential compared to similar bonds in other sectors. During the period, many municipalities faced budget shortfalls and potential credit downgrades. In this challenging environment, we sought to preserve principal by emphasizing the highest credit-quality tiers of the municipal bond market. As of October 31, 2003, approximately 72 percent of the trust's long- term investments were invested in bonds rated AAA, the highest credit quality available. We will continue with our disciplined investment approach, monitoring the market closely for compelling opportunities. PROXY VOTING POLICIES AND PROCEDURES A description of the trust's policies and procedures with respect to the voting of proxies relating to the trust's portfolio securities is available without charge, upon request, by calling 1-800-847-2424. This information is also available on the Securities and Exchange Commission's website at http://www.sec.gov. <Table> TOP 5 SECTORS AS OF 10/31/03 RATINGS ALLOCATION AS OF 10/31/03 Transportation 14.7% AAA/Aaa 71.5% Health Care 13.9 AA/Aa 12.4 General Purpose 12.2 A/A 9.0 Industrial Revenue 11.8 BBB/Baa 4.7 Public Building 11.2 Not Rated 2.4 </Table> Subject to change daily. All percentages are as a percentage of long-term investments. Provided for informational purposes only and should not be deemed as a recommendation to buy securities in the sectors shown above. Securities are classified by sectors that represent broad groupings of related industries. Rating allocations based upon ratings as issued by Standard and Poor's and Moody's, respectively. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. 4 BY THE NUMBERS YOUR TRUST'S INVESTMENTS October 31, 2003 THE FOLLOWING PAGES DETAIL YOUR TRUST'S PORTFOLIO OF INVESTMENTS AT THE END OF THE REPORTING PERIOD. <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE MUNICIPAL BONDS 152.4% ALABAMA 1.8% $ 1,000 Birmingham Baptist Med Ctr AL Baptist Hlth Sys Ser A.................................. 5.875% 11/15/24 $ 1,045,820 5,000 Birmingham Baptist Med Ctr AL Spl Care Fac Fin Auth Rev (MBIA Insd)................... 5.750 11/15/10 5,610,950 286 Mobile, AL Indl Dev Brd Solid Waste Disp Rev Mobile Energy Svc Co Proj Rfdg (a) (b)........................................ 6.950 01/01/20 1,999 ------------- 6,658,769 ------------- ARIZONA 3.1% 1,860 Arizona Hlth Fac Auth Hosp John C Lincoln Hlth Network............................... 5.750 12/01/32 1,772,971 6,000 Arizona St Trans Brd Hwy Rev Sub Ser A Rfdg....................................... 4.750 07/01/11 6,257,040 3,025 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease Oblig Irvington Proj Tucson Ser A Rfdg (FSA Insd)...................................... 7.250 07/15/10 3,187,291 ------------- 11,217,302 ------------- ARKANSAS 0.3% 1,930 Arkansas St Cap Apprec College Savings..... * 06/01/16 1,106,546 ------------- CALIFORNIA 20.1% 6,215 ABC, CA Uni Sch Dist Cap Apprec (FGIC Insd)...................................... * 08/01/34 1,138,961 10,000 California Infrastructure & Econ Dev Bk Rev Bay Area Toll Brdgs First Lien A (AMBAC Insd)...................................... 5.000 07/01/33 10,064,100 68 California Rural Home Mtg Fin Auth Single Family Mtg Rev Ser B (GNMA Collateralized)............................ 7.750 09/01/26 67,994 10,000 California St (MBIA Insd).................. 5.500 03/01/17 10,824,500 3,000 California St Dept Wtr Res Ser A........... 5.875 05/01/16 3,318,210 5,000 California St Pub Wks Brd Dept Gen Svc Cap East End A (AMBAC Insd).................... 5.125 12/01/21 5,202,350 6,000 California St Pub Wks Brd Lease Rev Dept of Corrections St Prisons Ser A Rfdg (AMBAC Insd)...................................... 5.250 12/01/13 6,720,240 </Table> See Notes to Financial Statements 5 YOUR TRUST'S INVESTMENTS October 31, 2003 <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE CALIFORNIA (CONTINUED) $ 2,000 California St Pub Wks Brd Lease Rev Dept of Corrections St Prisons Ser A Rfdg (AMBAC Insd)...................................... 5.000% 12/01/19 $ 2,126,500 5,000 California St Rfdg......................... 5.000 02/01/19 5,051,800 2,000 Florin, CA Res Consv Dist Ctf Part Cap Impt Elk Grove Wtr Svc A (MBIA Insd)............ 5.000 09/01/33 2,011,040 30,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Ser A Rfdg............................. * 01/15/22 10,477,500 1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Sr Lien Ser A (Prerefunded @ 01/01/07).................................. 6.500 01/01/32 1,146,510 1,175 Kings Cnty, CA Waste Mgmt Auth Solid Waste Rev........................................ 7.200 10/01/14 1,225,584 5,500 Port Oakland, CA Ser L (FGIC Insd)......... 5.000 11/01/32 5,472,445 9,000 Riverside Cnty, CA Asset Leasing Corp Leasehold Rev Riverside Cnty Hosp Proj (MBIA Insd)................................ * 06/01/21 3,609,000 5,700 Sacramento, CA City Fin Auth Rev Comb Proj B (MBIA Insd).............................. * 11/01/15 3,304,575 10,225 Santa Ana, CA Unified Sch Dist Ctf Part Cap Apprec Fin Proj (FSA Insd)................. * 04/01/32 2,137,229 ------------- 73,898,538 ------------- COLORADO 7.1% 4,340 Adams & Arapahoe Cntys, CO Jt Sch Dist Ser A (FSA Insd)............................... 5.250 12/01/18 4,709,464 4,290 Adams & Arapahoe Cntys, CO Jt Sch Dist Ser C (MBIA Insd).............................. 5.750 12/01/08 4,864,045 1,000 Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev E-470 Proj Ser B (Prerefunded @ 08/31/05).................................. 6.950 08/31/20 1,132,790 3,000 Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev E-470 Proj Ser B (Prerefunded @ 08/31/05).................................. 7.000 08/31/26 3,401,070 9,000 Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev E-470 Proj Ser C (Prerefunded @ 08/31/05).................................. * 08/31/26 1,830,060 2,000 Colorado Hlth Fac Auth Rev Catholic Hlth Initiatives Ser A.......................... 5.500 03/01/32 2,039,320 6,495 Colorado Springs, CO Utils Rev (Escrowed to Maturity).................................. 6.600 11/15/18 8,146,614 ------------- 26,123,363 ------------- </Table> 6 See Notes to Financial Statements YOUR TRUST'S INVESTMENTS October 31, 2003 <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE CONNECTICUT 0.7% $ 2,500 Connecticut St Hlth & Ed Fac Auth Rev Nursing Home Pgm AHF/Hartford (Prerefunded @ 11/01/04)................................ 7.125% 11/01/14 $ 2,700,425 ------------- DISTRICT OF COLUMBIA 1.4% 5,000 Metropolitan Washington DC Arpt Auth Sys Ser A (FGIC Insd).......................... 5.250 10/01/32 5,073,750 ------------- FLORIDA 8.8% 1,985 Bay Cnty, FL Sch Brd Ctf Part (Prerefunded @ 07/01/04) (AMBAC Insd)................... 6.750 07/01/12 2,100,249 2,500 Dade Cnty, FL Wtr & Swr Sys Rev (FGIC Insd)...................................... 5.250 10/01/21 2,632,825 5,000 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC Insd)...................................... 5.950 07/01/20 5,295,300 750 Florida Hsg Fin Agy Single Family Mtg Ser A Rfdg (GNMA Collateralized)................. 6.650 01/01/24 775,627 3,980 Jacksonville, FL Port Auth (MBIA Insd)..... 5.700 11/01/30 4,169,169 2,780 Jacksonville, FL Port Auth (Prerefunded @ 11/01/10) (MBIA Insd)...................... 5.700 11/01/30 3,202,060 11,500 Miami-Dade Cnty, FL Aviation Rev Miami Intl Arpt (FGIC Insd)........................... 5.375 10/01/32 11,821,655 2,195 Pinellas Cnty, FL Hsg Fin Auth Single Family Mtg Rev Multi Cnty Pgm Ser A (GNMA Collateralized)............................ 6.700 02/01/28 2,256,153 ------------- 32,253,038 ------------- GEORGIA 4.4% 5,000 Georgia Muni Elec Auth Pwr Rev Ser B (Escrowed to Maturity) (FGIC Insd)......... 5.700 01/01/19 5,749,500 2,700 Marietta, GA Dev Auth Rev First Mtg Life College Ser B (FSA Insd)................... 5.375 09/01/09 2,926,827 2,205 Municipal Elec Auth GA Comb Cycle Proj Ser A (MBIA Insd).............................. 5.000 11/01/20 2,286,695 5,000 Municipal Elec Auth GA Combustion Turbine Proj Ser A (MBIA Insd)..................... 5.250 11/01/20 5,318,800 ------------- 16,281,822 ------------- HAWAII 3.0% 10,430 Hawaii St Dept Budget & Fin Spl Purp Rev Hawaiian Elec Co Inc Ser A (MBIA Insd)..... 5.650 10/01/27 11,013,767 ------------- </Table> See Notes to Financial Statements 7 YOUR TRUST'S INVESTMENTS October 31, 2003 <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE ILLINOIS 9.2% $ 7,500 Chicago, IL Brd Ed Cap Apprec Sch Reform B-1 (FGIC Insd)............................ * 12/01/29 $ 1,763,775 3,500 Chicago, IL Cap Apprec (Prerefunded @ 07/01/05) (AMBAC Insd)..................... * 01/01/17 1,646,015 10,000 Chicago, IL Cap Apprec City Colleges (FGIC Insd)...................................... * 01/01/29 2,519,700 6,000 Chicago, IL Lakefront Millenium Pkg Fac (MBIA Insd) (c)............................ 0/5.750% 01/01/29 5,410,140 3,180 Illinois Hlth Fac Auth Rev Children's Mem Hosp (MBIA Insd)........................... 6.250 08/15/13 3,758,855 1,485 Illinois Hlth Fac Auth Rev Evangelical Hosp Ser A Rfdg (Escrowed to Maturity) (FSA Insd)...................................... 6.750 04/15/17 1,818,279 825 Illinois Hlth Fac Auth Rev Evangelical Hosp Ser C (FSA Insd)........................... 6.750 04/15/17 1,010,155 1,000 Illinois Hlth Fac Auth Rev Highland Pk Hosp Proj Ser A (Prerefunded @ 10/01/07) (MBIA Insd)...................................... 5.750 10/01/17 1,158,040 5,000 Illinois St First Ser (FSA Insd)........... 5.250 12/01/20 5,305,600 2,070 Northern IL Univ Ctf Part Hoffman Estates Ctr Proj (FSA Insd)........................ 5.400 09/01/16 2,326,411 5,000 Regional Trans Auth IL Ser A (AMBAC Insd)...................................... 8.000 06/01/17 6,859,850 ------------- 33,576,820 ------------- INDIANA 0.5% 2,000 Petersburg, IN Pollutn Ctl Rev IN Pwr & Lt......................................... 6.375 11/01/29 1,942,000 ------------- KANSAS 2.0% 3,430 Kansas St Dev Fin Auth Rev KS Proj Ser N (AMBAC Insd)............................... 5.250 10/01/20 3,631,307 3,615 Kansas St Dev Fin Auth Rev KS Proj Ser N (AMBAC Insd)............................... 5.250 10/01/21 3,808,113 ------------- 7,439,420 ------------- KENTUCKY 0.2% 500 Mount Sterling, KY Lease Rev KY League Cities Fdg Ser B........................... 6.100 03/01/18 580,970 ------------- LOUISIANA 3.9% 8,065 Louisiana St Office Fac Corp LA St Cap Complex Prog (MBIA Insd) (d)............... 5.000 11/01/20 8,363,808 6,000 Saint Charles Parish, LA Solid Waste Disp Rev LA Pwr & Lt Co Proj (FSA Insd) (e)..... 7.050 04/01/22 6,029,280 ------------- 14,393,088 ------------- </Table> 8 See Notes to Financial Statements YOUR TRUST'S INVESTMENTS October 31, 2003 <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE MAINE 0.8% $ 500 Maine Ed Ln Mktg Corp Student Ln Rev Ser A4 (Std Lns Gtd).............................. 5.950% 11/01/03 $ 3,000,000 ------------- MARYLAND 2.5% 5,000 Maryland St Econ Dev Corp MD Aviation Admin Fac (FSA Insd)............................. 5.375 06/01/20 5,227,550 4,000 Maryland St Trans Auth Arpt Baltimore/WA Intl Arpt B (AMBAC Insd)................... 5.125 03/01/24 4,067,160 ------------- 9,294,710 ------------- MASSACHUSETTS 1.1% 1,750 Massachusetts St Hlth & Ed Fac Auth Rev Hlthcare Sys Covenant Hlth................. 6.000 07/01/31 1,822,135 1,000 Massachusetts St Indl Fin Agy Wtr Treatment Amern Hingham.............................. 6.900 12/01/29 1,049,850 1,000 Massachusetts St Indl Fin Agy Wtr Treatment Amern Hingham.............................. 6.950 12/01/35 1,050,830 ------------- 3,922,815 ------------- MICHIGAN 6.2% 5,000 Detroit, MI Downtown Dev Auth Tax Increment Rev Dev Area No. 1 Proj Ser C1 (Prerefunded @ 07/01/06)................................ 6.250 07/01/25 5,705,250 2,750 Detroit, MI Ser B Rfdg..................... 7.000 04/01/04 2,811,957 3,185 Detroit, MI Wtr Supply Sys Rev Sr Lien Ser A (MBIA Insd).............................. 5.250 07/01/20 3,397,408 2,500 Macomb Cnty, MI Hosp Fin Auth Hosp Rev Mt Clemens Gen Hosp Ser B..................... 5.875 11/15/34 2,378,675 5,000 Michigan St Strategic Fd Detroit Edison Pollutn Ctl Ser B Rfdg..................... 5.650 09/01/29 5,067,400 3,090 Troy, MI Downtown Dev Auth Dev Rfdg (MBIA Insd)...................................... 5.500 11/01/15 3,453,971 ------------- 22,814,661 ------------- MISSISSIPPI 0.5% 2,000 Mississippi Bus Fin Corp MS Pollutn Ctl Rev Sys Energy Res Inc Proj.................... 5.875 04/01/22 1,994,320 ------------- MISSOURI 0.6% 2,195 Missouri St Hlth & Ed Fac Rev Univ MO Columbia Arena Proj........................ 5.000 11/01/16 2,343,097 ------------- </Table> See Notes to Financial Statements 9 YOUR TRUST'S INVESTMENTS October 31, 2003 <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE NEVADA 1.9% $ 6,000 Clark Cnty, NV Arpt Rev Sub Lien Ser B (FGIC Insd)................................ 5.250% 07/01/34 $ 6,136,680 650 Nevada Hsg Div Single Family Pgm Mezz B (FHA/VA Gtd)............................... 6.550 10/01/12 660,692 ------------- 6,797,372 ------------- NEW JERSEY 6.4% 1,000 New Jersey Econ Dev Auth Econ Dev Rev Manahawkin Convalescent Ser A Rfdg (FHA Gtd)....................................... 6.650 02/01/23 1,037,240 1,695 New Jersey Hlthcare Fac Fin Auth Rev Gen Hosp Ctr Passaic (Escrowed to Maturity) (FSA Insd)................................. 6.000 07/01/06 1,853,940 2,500 New Jersey Hlthcare Fac Fin Auth Rev Gen Hosp Ctr Passaic (Escrowed to Maturity) (FSA Insd)................................. 6.750 07/01/19 3,151,975 10,000 New Jersey St Ed Fac Auth Higher Ed Cap Impt Ser A (AMBAC Insd).................... 5.250 09/01/20 10,657,400 6,750 Salem Cnty, NJ Indl Pollutn Ctl Fin Auth Rev Pollutn Ctl Pub Svc Elec & Gas Ser A (MBIA Insd)................................ 5.450 02/01/32 6,843,690 ------------- 23,544,245 ------------- NEW YORK 20.1% 7,000 Metropolitan Trans Auth NY Ser A Rfdg (FGIC Insd)...................................... 5.250 11/15/31 7,252,070 7,270 New York City Ser A........................ 7.000 08/01/04 7,577,303 5,000 New York City Ser C........................ 5.500 08/01/13 5,459,550 5,000 New York City Ser G........................ 5.750 02/01/14 5,385,700 6,000 New York City Transitional Fin Auth Rev Future Tax Secd Ser A (c).................. 5.500/14.000 11/01/26 6,727,560 8,240 New York City Transitional Future Tax Secd Ser C Rfdg (AMBAC Insd).................... 5.250 08/01/18 8,889,477 7,575 New York St Dorm Auth Rev City Univ Sys Cons Ser A................................. 5.625 07/01/16 8,574,673 2,000 New York St Dorm Auth Rev City Univ Third Gen Res Ser 2 (Prerefunded @ 07/01/04) (MBIA Insd)................................ 6.250 07/01/19 2,069,760 3,845 New York St Dorm Auth Rev Secd Hosp General Hosp Rfdg.................................. 5.750 02/15/20 4,204,777 5,885 New York St Energy Resh & Dev Auth Fac Rev........................................ 7.125 12/01/29 6,358,448 2,310 New York St Med Care Fac Fin Agy Rev Saint Peter's Hosp Proj Ser A (AMBAC Insd)....... 5.375 11/01/13 2,362,945 </Table> 10 See Notes to Financial Statements YOUR TRUST'S INVESTMENTS October 31, 2003 <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE NEW YORK (CONTINUED) $ 3,130 New York St Urban Dev Corp Rev Correctional Fac Ser A Rfdg (Prerefunded @ 01/01/04).... 5.500% 01/01/16 $ 3,216,075 5,000 New York St Urban Dev Corp Rev St Fac Rfdg....................................... 5.700 04/01/20 5,646,650 ------------- 73,724,988 ------------- OHIO 4.9% 1,150 Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc Proj....................................... 7.500 01/01/30 1,268,899 2,000 Cuyahoga Cnty, OH Multi-Family Rev Hsg Dale Bridge Apt (GNMA Collateralized)........... 6.600 10/20/30 2,081,300 3,540 Franklin Cnty, OH Hosp Rev & Impt Doctor's Hosp Proj Rfdg (Escrowed to Maturity)...... 5.875 12/01/23 3,613,809 1,500 Mahoning Cnty, OH Hosp Fac Forum Hlth Oblig Group Ser A................................ 6.000 11/15/32 1,550,790 5,130 Muskingum Cnty, OH Hosp Fac Rev Bethesda Care Sys Rfdg & Impt (Connie Lee Insd)..... 6.250 12/01/10 5,887,906 2,000 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev OH Edison Co Proj Rfdg........................ 5.950 05/15/29 1,992,140 1,440 Toledo Lucas Cnty, OH Port Auth Dev Rev Northwest OH Bd Fd Ser C................... 6.600 11/15/15 1,458,994 ------------- 17,853,838 ------------- OKLAHOMA 0.5% 1,500 Jenks, OK Aquarium Auth Rev First Mtg (MBIA Insd)...................................... 6.100 07/01/30 1,702,920 ------------- OREGON 3.7% 5,000 Oregon Hlth Sciences Univ Insd Ser A (MBIA Insd)...................................... 5.250 07/01/22 5,265,400 2,745 Oregon St Dept Admin Ser A (Prerefunded @ 11/01/05) (MBIA Insd)...................... 5.250 11/01/10 2,987,713 5,000 Oregon St Dept Admin Ser C Rfdg (MBIA Insd)...................................... 5.250 11/01/18 5,351,750 ------------- 13,604,863 ------------- PENNSYLVANIA 0.7% 1,370 Philadelphia, PA Hosp & Higher Ed Fac Auth Rev Cmnty College Ser B Rfdg (MBIA Insd)... 6.500 05/01/08 1,599,900 905 Ridley Park, PA Hosp Auth Rev Taylor Hosp Ser A (Escrowed to Maturity)............... 6.000 12/01/05 949,101 ------------- 2,549,001 ------------- </Table> See Notes to Financial Statements 11 YOUR TRUST'S INVESTMENTS October 31, 2003 <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE RHODE ISLAND 1.2% $ 3,000 Rhode Island St Cons Cap Dev Ln Ser A...... 5.000% 08/01/12 $ 3,069,060 1,050 Rhode Island St Hlth & Ed Bldg Corp Rev Higher Ed Fac Roger Williams (Prerefunded @ 11/15/04) (Connie Lee Insd)................ 7.200 11/15/14 1,137,717 ------------- 4,206,777 ------------- SOUTH CAROLINA 2.1% 1,015 Rock Hill, SC Util Sys Rev Comb Ser C Rfdg (FSA Insd)................................. 5.000 01/01/11 1,116,135 6,500 South Carolina Jobs Econ Dev Auth Indl Rev Elec & Gas Co Proj Ser A (AMBAC Insd)...... 5.200 11/01/27 6,700,200 ------------- 7,816,335 ------------- TENNESSEE 1.9% 12,750 Johnson City, TN Hlth & Ed Fac Brd Hosp Rev Cap Apprec First Mtg Ser A Rfdg (MBIA Insd)...................................... * 07/01/26 3,654,150 2,500 Johnson City, TN Hlth & Ed Fac Brd Hosp Rev First Mtg Mtn St Hlth Ser A Rfdg (MBIA Insd)...................................... 7.500 07/01/25 3,134,750 ------------- 6,788,900 ------------- TEXAS 13.4% 2,000 Brazos River Auth TX Pollutn Ctl Rev Adj TXU Elec Co Proj Ser C Rfdg (Variable Rate Coupon).................................... 5.750 05/01/36 2,093,880 5,000 Dallas-Fort Worth, TX Intl Arpt Rev Impt Jt Ser A Rfdg (FGIC Insd)..................... 5.500 11/01/31 5,154,900 2,345 Denton Cnty, TX Perm Impt.................. 5.500 07/15/19 2,559,896 2,250 Harris Cnty, TX Hlth Fac Dev Corp Hosp Rev Hermann Hosp Proj (Prerefunded @ 10/01/04) (MBIA Insd)................................ 6.375 10/01/24 2,382,030 1,000 Harris Cnty, TX Hlth Fac Dev Mem Hermann Hlthcare Ser A............................. 6.375 06/01/29 1,070,110 5,000 Harris Cnty, TX Sr Lien Toll Rd Rfdg (FSA Insd)...................................... 5.125 08/15/32 5,079,900 4,655 Houston, TX Arpt Sys Rev Sub Lien (FSA Insd)...................................... 5.500 07/01/15 5,149,314 3,000 Houston, TX Arpt Sys Rev Sub Lien Ser A (FSA Insd)................................. 5.625 07/01/30 3,112,380 1,275 Matagorda Cnty, TX Navig Dist No 1 Rev Houston Lt & Pwr Ser A Rfdg (AMBAC Insd)... 6.700 03/01/27 1,293,131 5,000 Matagorda Cnty, TX Navig Dist No 1 Rev Houston Lt Rfdg (AMBAC Insd)............... 5.125 11/01/28 5,050,050 2,000 Metropolitan Hlth Fac Dev Corp TX Wilson N Jones Mem Hosp Proj........................ 7.250 01/01/31 1,852,460 </Table> 12 See Notes to Financial Statements YOUR TRUST'S INVESTMENTS October 31, 2003 <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE TEXAS (CONTINUED) $ 4,475 North Cent TX Hlth Fac Dev Hosp Baylor Hlthcare Sys Proj Ser A.................... 5.125% 05/15/29 $ 4,462,246 5,000 San Antonio, TX Elec & Gas Sys Rfdg........ 5.375 02/01/16 5,451,200 3,960 Stafford, TX Econ Dev Corp (FGIC Insd)..... 5.500 09/01/30 4,250,347 ------------- 48,961,844 ------------- UTAH 0.7% 4,950 Intermountain Pwr Agy UT Pwr Supply Rev Ser A Rfdg (Escrowed to Maturity) (FGIC Insd).. * 07/01/17 2,575,535 ------------- WASHINGTON 8.1% 5,000 Clark Cnty, WA Sch Dist 114 (FSA Insd)..... 5.250 06/01/19 5,343,350 3,630 King City, WA Ser B (Prerefunded @ 12/01/07).................................. 5.900 12/01/14 4,250,113 1,370 King Cnty, WA Ser B (Prerefunded @ 12/01/07).................................. 5.900 12/01/14 1,604,037 2,245 King Cnty, WA Ser B (Prerefunded @ 12/01/07).................................. 6.625 12/01/15 2,692,024 4,000 Washington St Pub Pwr Supply Ser A Rfdg (FGIC Insd)................................ 7.000 07/01/08 4,775,360 10,000 Washington St Pub Pwr Supply Ser A Rfdg (AMBAC Insd)............................... 5.700 07/01/09 11,181,800 ------------- 29,846,684 ------------- WEST VIRGINIA 3.7% 5,920 Harrison Cnty, WV Cnty Cmnty Solid Waste Disp Rev West PA Pwr Co Ser C (AMBAC Insd)...................................... 6.750 08/01/24 6,277,094 4,000 Marshall Cnty, WV Pollutn Ctl Rev OH Pwr Co Proj Ser C (MBIA Insd)..................... 6.850 06/01/22 4,152,200 3,000 West Virginia St Wtr Dev Auth Wtr Dev Rev Ln Pgm II Ser A (Prerefunded @ 11/01/04) (FSA Insd)................................. 6.750 11/01/33 3,230,460 ------------- 13,659,754 ------------- WISCONSIN 1.3% 2,000 Wisconsin St Hlth & Ed Fac Children's Hosp (FGIC Insd)................................ 5.000 08/15/10 2,045,660 2,675 Wisconsin St Hlth & Ed Fac FH Hlthcare Dev Inc Proj................................... 6.250 11/15/28 2,774,483 ------------- 4,820,143 ------------- </Table> See Notes to Financial Statements 13 YOUR TRUST'S INVESTMENTS October 31, 2003 <Table> <Caption> PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE PUERTO RICO 3.6% $ 7,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser Y Rfdg (FSA Insd) (e).................. 6.250% 07/01/21 $ 8,534,610 4,000 Puerto Rico Pub Bldgs Auth Gtd Pub Ed & Hlth Fac Ser M Rfdg (MBIA Insd)............ 5.600 07/01/08 4,565,000 ------------- 13,099,610 ------------- TOTAL LONG-TERM INVESTMENTS 152.4% (Cost $524,012,303)......................................................... 559,182,030 SHORT-TERM INVESTMENTS 2.2% (Cost $7,900,000)........................................................... 7,900,000 ------------- TOTAL INVESTMENTS 154.6% (Cost $531,912,303)......................................................... 567,082,030 OTHER ASSETS IN EXCESS OF LIABILITIES 6.7%................................... 24,843,088 PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (61.3%)................... (225,046,009) ------------- NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................ $ 366,879,109 ============= </Table> * Zero coupon bond (a) Non-income producing security. (b) Issuer has filed for protection in federal bankruptcy court. (c) Security is a "step-up" bond where the coupon increases or steps up at a predetermined date. (d) Securities purchased on a when-issued or delayed delivery basis. (e) All or a portion of these securities have been physically segregated in connection with open futures contracts. AMBAC--AMBAC Indemnity Corp. Connie Lee--Connie Lee Insurance Co. FGIC--Financial Guaranty Insurance Co. FHA--Federal Housing Administration FHA/VA--Federal Housing Administration/Department of Veterans Affairs FSA--Financial Security Assurance Inc. GNMA--Government National Mortgage Association MBIA--Municipal Bond Investors Assurance Corp. Std Lns--Student Loans 14 See Notes to Financial Statements FINANCIAL STATEMENTS Statement of Assets and Liabilities October 31, 2003 <Table> ASSETS: Total Investments (Cost $531,912,303)....................... $567,082,030 Cash........................................................ 92,130 Receivables: Investments Sold.......................................... 25,252,939 Interest.................................................. 8,741,067 Other....................................................... 10,981 ------------ Total Assets............................................ 601,179,147 ------------ LIABILITIES: Payables: Investments Purchased..................................... 8,314,343 Investment Advisory Fee................................... 300,766 Variation Margin on Futures............................... 206,422 Income Distributions--Common Shares....................... 79,430 Administrative Fee........................................ 25,064 Affiliates................................................ 16,478 Trustees' Deferred Compensation and Retirement Plans........ 223,848 Accrued Expenses............................................ 87,678 ------------ Total Liabilities....................................... 9,254,029 Preferred Shares (including accrued distributions).......... 225,046,009 ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $366,879,109 ============ NET ASSET VALUE PER COMMON SHARE ($366,879,109 divided by 23,555,115 shares outstanding)............................ $ 15.58 ============ NET ASSETS CONSIST OF: Common Shares ($.01 par value with an unlimited number of shares authorized, 23,555,115 shares issued and outstanding).............................................. $ 235,551 Paid in Surplus............................................. 331,229,454 Net Unrealized Appreciation................................. 32,736,810 Accumulated Undistributed Net Investment Income............. 2,903,198 Accumulated Net Realized Loss............................... (225,904) ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $366,879,109 ============ PREFERRED SHARES ($.01 par value, authorized 100,000,000 shares, 9,000 issued with liquidation preference of $25,000 per share)........................................ $225,000,000 ============ NET ASSETS INCLUDING PREFERRED SHARES....................... $591,879,109 ============ </Table> See Notes to Financial Statements 15 Statement of Operations For the Year Ended October 31, 2003 <Table> INVESTMENT INCOME: Interest.................................................... $30,757,118 ----------- EXPENSES: Investment Advisory Fee..................................... 3,566,745 Preferred Share Maintenance................................. 629,448 Administrative Fee.......................................... 297,229 Trustees' Fees and Related Expenses......................... 78,599 Legal....................................................... 59,689 Custody..................................................... 35,440 Other....................................................... 259,951 ----------- Total Expenses........................................ 4,927,101 ----------- NET INVESTMENT INCOME....................................... $25,830,017 =========== REALIZED AND UNREALIZED GAIN/LOSS: Realized Gain/Loss: Investments............................................... $ 6,047,813 Futures................................................... (1,175,745) ----------- Net Realized Gain........................................... 4,872,068 ----------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... 38,494,140 ----------- End of the Period: Investments............................................. 35,169,727 Futures................................................. (2,432,917) ----------- 32,736,810 ----------- Net Unrealized Depreciation During the Period............... (5,757,330) ----------- NET REALIZED AND UNREALIZED LOSS............................ $ (885,262) =========== DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $(2,292,954) =========== NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS................................................ $22,651,801 =========== </Table> 16 See Notes to Financial Statements Statements of Changes in Net Assets <Table> <Caption> YEAR ENDED YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 ------------------------------------ FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income................................... $ 25,830,017 $ 26,183,876 Net Realized Gain....................................... 4,872,068 6,132,890 Net Unrealized Depreciation During the Period........... (5,757,330) (7,426,483) Distributions to Preferred Shareholders: Net Investment Income................................. (2,292,954) (3,147,858) ------------ ------------ Change in Net Assets Applicable to Common Shares from Operations............................................ 22,651,801 21,742,425 Distributions to Common Shareholders: Net Investment Income................................. (23,883,918) (22,882,903) ------------ ------------ NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM INVESTMENT ACTIVITIES............................ (1,232,117) (1,140,478) NET ASSETS APPLICABLE TO COMMON SHARES: Beginning of the Period................................. 368,111,226 369,251,704 ------------ ------------ End of the Period (Including accumulated undistributed net investment income of $2,903,198 and $3,424,552, respectively)......................................... $366,879,109 $368,111,226 ============ ============ </Table> See Notes to Financial Statements 17 Financial Highlights THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED. <Table> <Caption> ------------------------------ 2003 2002 (a) 2001 ------------------------------ NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $ 15.63 $ 15.68 $ 14.38 ------- ------- ------- Net Investment Income..................................... 1.10 1.11 1.13 Net Realized and Unrealized Gain/Loss..................... (.04) (.06) 1.25 Common Share Equivalent of Distributions Paid to Preferred Shareholders: Net Investment Income................................... (.10) (.13) (.31) Net Realized Gain....................................... -0- -0- -0- ------- ------- ------- Total from Investment Operations............................ .96 .92 2.07 Distributions Paid to Common Shareholders: Net Investment Income................................... (1.01) (.97) (.77) Net Realized Gain....................................... -0- -0- -0- ------- ------- ------- NET ASSET VALUE, END OF THE PERIOD.......................... $ 15.58 $ 15.63 $ 15.68 ======= ======= ======= Common Share Market Price at End of the Period.............. $ 14.70 $ 14.37 $ 13.78 Total Return (b)............................................ 9.61% 11.50% 19.22% Net Assets Applicable to Common Shares at End of the Period (In millions)............................................. $ 366.9 $ 368.1 $ 369.3 Ratio of Expenses to Average Net Assets Applicable to Common Shares.................................................... 1.33% 1.46% 1.63% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares............................... 6.99% 7.22% 7.49% Portfolio Turnover.......................................... 30% 38% 30% SUPPLEMENTAL RATIOS: Ratio of Expenses to Average Net Assets Including Preferred Shares (c)................................................ .83% .90% 1.00% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (d)........................... 6.37% 6.36% 5.44% SENIOR SECURITIES: Total Preferred Shares Outstanding.......................... 9,000 9,000 9,000 Asset Coverage Per Preferred Share (e)...................... $65,769 $65,910 $66,028 Involuntary Liquidating Preference Per Preferred Share...... $25,000 $25,000 $25,000 Average Market Value Per Preferred Share.................... $25,000 $25,000 $25,000 </Table> (a)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 less than $.01, decrease net realized and unrealized gains and losses per share by less than $.01 and increase the ratio of net investment income to average net assets applicable to common shares by .02%. Per share, ratios and supplemental data for the periods prior to October 31, 2002 have not been restated to reflect this change. (b)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. (c)Ratios do not reflect the effect of dividend payments to preferred shareholders. (d)Ratios reflect the effect of dividend payments to preferred shareholders. (e)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. 18 <Table> <Caption> YEAR ENDED OCTOBER 31, - ------------------------------------------------------------------------------ 2000 1999 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------ $ 13.80 $ 15.64 $ 15.14 $ 14.50 $ 14.37 $ 12.90 $ 16.43 ------- -------- -------- -------- -------- -------- -------- 1.15 1.14 1.14 1.16 1.17 1.18 1.18 .63 (1.86) .51 .63 .13 1.57 (3.34) (.39) (.31) (.34) (.34) (.34) (.38) (.24) -0- -0- -0- -0- -0- -0- (.04) ------- -------- -------- -------- -------- -------- -------- 1.39 (1.03) 1.31 1.45 .96 2.37 (2.44) (.81) (.81) (.81) (.81) (.83) (.90) (.91) -0- -0- -0- -0- -0- -0- (.18) ------- -------- -------- -------- -------- -------- -------- $ 14.38 $ 13.80 $ 15.64 $ 15.14 $ 14.50 $ 14.37 $ 12.90 ======= ======== ======== ======== ======== ======== ======== $ 12.25 $12.0625 $ 14.75 $13.5625 $ 12.375 $ 12.75 $ 10.75 8.56% -13.29% 15.10% 16.61% 3.70% 27.67% -23.52% $ 338.7 $ 325.1 $ 368.5 $ 356.6 $ 341.5 $ 338.4 $ 303.9 1.77% 1.67% 1.67% 1.70% 1.77% 1.80% 1.70% 8.36% 7.56% 7.41% 7.93% 8.15% 8.67% 8.01% 25% 35% 24% 32% 42% 50% 79% 1.05% 1.02% 1.03% 1.03% 1.06% 1.06% 1.03% 5.55% 5.50% 5.21% 5.61% 5.78% 5.90% 6.39% 9,000 9,000 4,500 4,500 4,500 4,500 4,500 $62,631 $ 61,123 $131,890 $129,243 $125,881 $125,198 $117,532 $25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 </Table> See Notes to Financial Statements 19 NOTES TO FINANCIAL STATEMENTS October 31, 2003 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen 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 income tax, consistent with preservation of capital. The Trust will invest in a portfolio consisting substantially of municipal obligations rated investment grade at the time of investment. The Trust commenced investment operations on March 26, 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. Future contracts are valued at the settlement price established each day on the exchange on which they are traded. 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 October 31, 2003, the Trust had $8,314,343 of when-issued and 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 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, 2003, the Trust had an 20 NOTES TO FINANCIAL STATEMENTS October 31, 2003 accumulated capital loss carryforward for tax purposes of $2,658,821, which will expire between October 31, 2004 and October 31, 2007. Of this amount, $412,304 will expire on October 31, 2004. At October 31, 2003, the cost and related gross unrealized appreciation and depreciation were as follows: <Table> Cost of investments for tax purposes........................ $531,162,012 ============ Gross tax unrealized appreciation........................... $ 36,569,791 Gross tax unrealized depreciation........................... (649,773) ------------ Net tax unrealized appreciation on investments.............. $ 35,920,018 ============ </Table> 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 and a portion of futures gains, which are included as ordinary income for tax purposes. The tax character of distributions paid during the years ended October 31, 2003 and 2002 was as follows: <Table> <Caption> 2003 2002 Distributions paid from: Ordinary income........................................... $128,418 $103,315 Long-term capital gain.................................... -0- -0- -------- -------- $128,418 $103,315 ======== ======== </Table> Due to inherent differences in the recognition of income, expenses and realized gain/losses under accounting principles generally accepted in the United States of America and for federal income tax purposes, permanent differences between book and tax basis reporting have been identified and appropriately reclassified on the Statement of Assets and Liabilities. A permanent book and tax difference relating to a portion of the capital loss carryforward expiring in the current year totaling $16,888,626 was reclassified from accumulated net realized loss to paid in surplus. Also, a permanent difference relating to book to tax accretion differences totaling $174,499 was reclassified from accumulated undistributed net investment income to accumulated net realized loss. As of October 31, 2003, the components of distributable earnings on a tax basis were as follows: <Table> Undistributed ordinary income............................... $185,504 </Table> Net realized gains or losses may differ for financial and tax reporting purposes primarily as a result of gains or losses recognized for tax purposes on open futures contracts on October 31, 2003. 21 NOTES TO FINANCIAL STATEMENTS October 31, 2003 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 .60% of the average daily net assets of the Trust. In addition, the Trust will pay a monthly administrative fee to Van Kampen Investments Inc. or its affiliates (collectively "Van Kampen"), the Trust's Administrator, at an annual rate of ..05% of the average daily 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 year ended October 31, 2003, the Trust recognized expenses of approximately $39,400 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. 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 year ended October 31, 2003, the Trust recognized expenses of approximately $55,700 representing Van Kampen's cost of providing accounting and legal services to the Trust, which are reported as part of "Other" and "Legal" expenses, respectively, in 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 officers of Van Kampen. The Trust has implemented 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 $174,762,749 and $183,616,978, respectively. 4. DERIVATIVE FINANCIAL INSTRUMENTS A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate, or index. In order to seek to manage the interest rate exposure of the Trust's portfolio in a changing interest rate environment, the Trust may purchase or sell financial futures contracts or engage in transactions involving interest rate swaps, caps, floors, or collars. The Trust expects to enter into these transactions primarily as a hedge against anticipated interest rate or fixed income market changes, for duration management or for risk management purposes, but may also enter into these transactions to generate additional income. All of the Trust's portfolio holdings, including derivative instruments, are marked to market each day with the change in value reflected in unrealized appreciation/depreciation. Upon disposition, a realized gain or loss is recognized accordingly, except when taking delivery of a security underlying a 22 NOTES TO FINANCIAL STATEMENTS October 31, 2003 futures contract. In this instance, the recognition of gain or loss is postponed until the disposal of the security underlying the futures contract. During the period, the Trust invested in futures contracts, a type of derivative. A futures contract is an arrangement involving the delivery of a particular asset on a specified future date at an agreed upon price. The Trust generally invests in exchange traded futures on U.S. Treasury Bonds and Notes and typically closes the contract prior to the delivery date. Upon entering into futures contracts, the Trust maintains an amount of cash or liquid securities with a value equal to a percentage of the contract amount with either a futures commission merchant pursuant to the rules and regulations promulgated under the 1940 Act, as amended, or with its custodian in an account in the broker's name. This amount is known an initial margin. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). The risk of loss associated with a futures contract is in excess of the variation margin reflected on the Statement of Assets and Liabilities. Transactions in futures contracts for the year ended October 31, 2003, were as follows: <Table> <Caption> CONTRACTS Outstanding at October 31, 2002............................. 682 Futures Opened.............................................. 4,161 Futures Closed.............................................. (3,837) ------ Outstanding at October 31, 2003............................. 1,006 ====== </Table> The futures contracts outstanding as of October 31, 2003, and the description and unrealized appreciation/depreciation are as follows: <Table> <Caption> UNREALIZED APPRECIATION/ CONTRACTS DEPRECIATION SHORT CONTRACTS: 10-Year U.S. Treasury Notes Futures December 2003 (Current Notional Value of $112,297 per contract)................ 195 $ (649,811) 5-Year U.S. Treasury Notes Futures December 2003 (Current Notional Value of $111,813 per contract)................ 811 (1,783,106) ----- ----------- 1,006 $(2,432,917) ===== =========== </Table> 5. PREFERRED SHARES The Trust has outstanding 9,000 Auction Preferred Shares ("APS") in five series. Series A, B, C and D each contain 2,000 shares and Series E contains 1,000 shares. Dividends are cumulative and the dividend rate is periodically reset through an auction process. The dividend period for Series A and E is seven days. The dividend period for Series B, C and D is 28 days. The average rate in effect on October 31, 2003 was 0.882%. During the year ended October 31, 2003, the rates ranged from 0.517% to 1.800%. 23 NOTES TO FINANCIAL STATEMENTS October 31, 2003 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. 24 REPORT OF INDEPENDENT AUDITORS To the Board of Trustees and Shareholders of Van Kampen Value Municipal Income Trust: We have audited the accompanying statement of assets and liabilities of Van Kampen Value Municipal Income Trust (the "Trust"), including the portfolio of investments, as of October 31, 2003, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The Trust's financial highlights for the periods ended prior to October 31, 2000, were audited by other auditors whose report, dated December 6, 1999, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2003, by correspondence with the Trust's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Van Kampen Value Municipal Income Trust as of October 31, 2003, the results of its operations, the changes in its net assets and the financial highlights for the respective stated periods, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Chicago, Illinois December 8, 2003 25 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 of the Trust's Common Shares, resulting in the acquisition of fewer Common 26 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 27 BOARD OF TRUSTEES AND IMPORTANT ADDRESSES VAN KAMPEN VALUE MUNICIPAL INCOME TRUST BOARD OF TRUSTEES DAVID C. ARCH J. MILES BRANAGAN JERRY D. CHOATE ROD DAMMEYER LINDA HUTTON HEAGY R. CRAIG KENNEDY HOWARD J KERR MITCHELL M. MERIN* THEODORE A. MYERS JACK NELSON RICHARD F. POWERS, III* HUGO F. SONNENSCHEIN WAYNE W. WHALEN* - Chairman SUZANNE H WOOLSEY 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 c/o EquiServe P.O. Box 43011 Providence, Rhode Island 02940-3011 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT AUDITORS DELOITTE & TOUCHE LLP 180 North Stetson Avenue Chicago, Illinois 60601 For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Trust during its taxable year ended October 31, 2003. The Trust designated 99.5% of the income distributions as a tax-exempt income distribution. In January, the Trust provides tax information to shareholders for the preceding calendar year. * "Interested persons" of the Trust, as defined in the Investment Company Act of 1940, as amended. 28 RESULTS OF SHAREHOLDER VOTES The Annual Meeting of Shareholders of the Trust was held on June 24, 2003, where shareholders voted on the election of trustees. 1) With regards to the election of the following trustees by common shareholders of the Trust: <Table> <Caption> # OF SHARES ------------------------------ IN FAVOR WITHHELD - ------------------------------------------------------------------------------------------ David C. Arch............................................. 21,352,607 220,941 Jerry D. Choate........................................... 21,347,267 226,281 Linda Hutton Heagy........................................ 21,342,762 230,786 R. Craig Kennedy.......................................... 21,344,506 229,042 Howard J Kerr............................................. 21,338,998 234,550 Suzanne H. Woolsey........................................ 21,339,402 234,146 </Table> The other trustees of the Trust whose terms did not expire in 2003 are Rod Dammeyer, Theodore A. Myers, Richard F. Powers, Hugo F Sonnenschein, and Wayne W. Whalen. 2) With regards to the authority to vote for the amendment to the Declaration of Trust: <Table> <Caption> # OF SHARES - ------------------------------------------------ IN FAVOR AGAINST ABSTAIN - ------------------------------------------------ 20,719,052 615,517 238,979 </Table> 29 TRUSTEES AND OFFICERS The business and affairs of the Trust are managed under the direction of the Trust's Board of Trustees and the Trust's officers appointed by the Board of Trustees. The tables below list the trustees and executive officers of the Trust and their principal occupations during the last five years, other directorships held by trustees and their affiliations, if any, with Van Kampen Investments Inc. ("Van Kampen Investments"), Van Kampen Investment Advisory Corp. ("Advisory Corp."), Van Kampen Asset Management Inc. ("Asset Management"), Van Kampen Funds Inc. (the "Distributor"), Van Kampen Advisors Inc., Van Kampen Exchange Corp. and Van Kampen Investor Services Inc. ("Investor Services"). Advisory Corp. and Asset Management sometimes are referred to herein collectively as the "Advisers." The term "Fund Complex" includes each of the investment companies advised by the Advisers or their affiliates as of the date of this Statement of Additional Information. Trustees serve until reaching their retirement age or until their successors are duly elected and qualified. Officers are annually elected by the trustees. INDEPENDENT TRUSTEES <Table> <Caption> NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE David C. Arch (58) Trustee Trustee Chairman and Chief 90 Trustee/Director/Managing Blistex Inc. since 1993 Executive Officer of General Partner of funds 1800 Swift Drive Blistex Inc., a consumer in the Fund Complex. Oak Brook, IL 60523 health care products manufacturer. Former Director of the World Presidents Organization-Chicago Chapter. Director of the Heartland Alliance, a nonprofit organization serving human needs based in Chicago. J. Miles Branagan (71) Trustee Trustee Private investor. 88 Trustee/Director/Managing 1632 Morning Mountain Road since 2003 Co-founder, and prior to General Partner of funds Raleigh, NC 27614 August 1996, Chairman, in the Fund Complex. Chief Executive Officer and President, MDT Corporation (now known as Getinge/Castle, Inc., a subsidiary of Getinge Industrier AB), a company which develops, manufactures, markets and services medical and scientific equipment. </Table> 30 <Table> <Caption> NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Jerry D. Choate (65) Trustee Trustee Prior to January 1999, 88 Trustee/Director/Managing 33971 Selva Road since 2003 Chairman and Chief General Partner of funds Suite 130 Executive Officer of the in the Fund Complex. Dana Point, CA 92629 Allstate Corporation Director of Amgen Inc., a ("Allstate") and Allstate biotechnological company, Insurance Company. Prior and Director of Valero to January 1995, Energy Corporation, an President and Chief independent refining Executive Officer of company. Allstate. Prior to August 1994, various management positions at Allstate. Rod Dammeyer (63) Trustee Trustee President of CAC, llc., a 90 Trustee/Director/Managing CAC, llc. since 1993 private company offering General Partner of funds 4350 LaJolla Village Drive capital investment and in the Fund Complex. Suite 980 management advisory Director of TeleTech San Diego, CA 92122-6223 services. Prior to July Holdings Inc., 2000, Managing Partner of Stericycle, Inc., Equity Group Corporate TheraSense, Inc., GATX Investment (EGI), a Corporation, Arris Group, company that makes Inc. and Trustee of the private investments in University of Chicago other companies. Hospitals and Health Systems. Prior to May 2002, Director of Peregrine Systems Inc. Prior to February 2001, Vice Chairman and Director of Anixter International, Inc. and IMC Global Inc. Prior to July 2000, Director of Allied Riser Communications Corp., Matria Healthcare Inc., Transmedia Networks, Inc., CNA Surety, Corp. and Grupo Azcarero Mexico (GAM). Prior to April 1999, Director of Metal Management, Inc. </Table> 31 <Table> <Caption> NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Linda Hutton Heagy (55) Trustee Trustee Managing Partner of 88 Trustee/Director/Managing Heidrick & Struggles since 2003 Heidrick & Struggles, an General Partner of funds 233 South Wacker Drive executive search firm. in the Fund Complex. Suite 7000 Trustee on the University Chicago, IL 60606 of Chicago Hospitals Board, Vice Chair of the Board of the YMCA of Metropolitan Chicago and a member of the Women's Board of the University of Chicago. Prior to 1997, Partner of Ray & Berndtson, Inc., an executive recruiting firm. Prior to 1996, Trustee of The International House Board, a fellowship and housing organization for international graduate students. Prior to 1995, Executive Vice President of ABN AMRO, N.A., a bank holding company. Prior to 1992, Executive Vice President of La Salle National Bank. R. Craig Kennedy (51) Trustee Trustee Director and President of 88 Trustee/Director/Managing 11 DuPont Circle, N.W. since 2003 the German Marshall Fund General Partner of funds Washington, D.C. 20016 of the United States, an in the Fund Complex. independent U.S. foundation created to deepen understanding, promote collaboration and stimulate exchanges of practical experience between Americans and Europeans. Formerly, advisor to the Dennis Trading Group Inc., a managed futures and option company that invests money for individuals and institutions. Prior to 1992, President and Chief Executive Officer, Director and member of the Investment Committee of the Joyce Foundation, a private foundation. Howard J Kerr (68) Trustee Trustee Prior to 1998, President 90 Trustee/Director/Managing 736 North Western Avenue since 1993 and Chief Executive General Partner of funds P.O. Box 317 Officer of Pocklington in the Fund Complex. Lake Forest, IL 60045 Corporation, Inc., an Director of the Lake investment holding Forest Bank & Trust. company. Director of the Marrow Foundation. </Table> 32 <Table> <Caption> NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Theodore A. Myers (73) Trustee Trustee Financial consultant, 36 Director of Met Life 550 Washington Avenue since 1993 Trustee or Managing Investors (formerly knows Glencoe, IL 60022 General Partner of other as COVA Financial Life funds in the Closed-End Insurance). Prior to Fund Complex. Prior to 1997, Director of McLouth 1998, Senior Financial Steel. Advisor (and, prior to 1997, an Executive Vice President, Chief Financial Officer and Director) of Qualitech Steel Corporation, a producer of high quality engineered steels for automotive, transportation and capital goods industries. Prior to 1997, member of the Arthur Andersen Chief Financial Officers' Advisory Committee. Jack E. Nelson (67) Trustee Trustee President of Nelson 88 Trustee/Director/Managing 423 Country Club Drive since 2003 Investment Planning General Partner of funds Winter Park, FL 32789 Services, Inc., a in the Fund Complex. financial planning company and registered investment adviser in the State of Florida. President of Nelson Ivest Brokerage Services Inc., a member of the NASD, Securities Investors Protection Corp. and the Municipal Securities Rulemaking Board. President of Nelson Sales and Services Corporation, a marketing and services company to support affiliated companies. Hugo F. Sonnenschein (63) Trustee Trustee President Emeritus and 90 Trustee/Director/Managing 1126 E. 59th Street since 1994 Honorary Trustee of the General Partner of funds Chicago, IL 60637 University of Chicago and in the Fund Complex. the Adam Smith Director of Winston Distinguished Service Laboratories, Inc. Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences. </Table> 33 <Table> <Caption> NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Suzanne H. Woolsey (61) Trustee Trustee Currently with Paladin 88 Trustee/Director/Managing 2101 Constitution Ave., N.W. since 2003 Capital Group/Paladin General Partner of funds Room 285 Homeland Security Fund. in the Fund Complex. Washington, D.C. 20418 Previously Chief Director of Neurogen Communications Officer of Corporation, a the National Academy of pharmaceutical company, Sciences/National since January 1998. Research Council, an independent, federally chartered policy institution, since 2001 and Chief Operating Officer from 1993 to 2001. Director of the Institute for Defense Analyses, a federally funded research and development center, Director of the German Marshall Fund of the United States, and Trustee of Colorado College. Prior to 1993, Executive Director of the Commission on Behavioral and Social Sciences and Education at the National Academy of Sciences/National Research Council. From 1980 through 1989, Partner of Coopers & Lybrand. </Table> 34 INTERESTED TRUSTEES* <Table> <Caption> NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INTERESTED TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Mitchell M. Merin* (50) Trustee, Trustee President and Chief 88 Trustee/Director/Managing 1221 Avenue of the Americas President since 2002 Executive Officer of General Partner of funds New York, NY 10020 and Chief funds in the Fund in the Fund Complex. Executive Complex. Chairman, Officer President, Chief Executive Officer and Director of the Advisers and VK Advisors Inc. since December 2002. Chairman, President and Chief Executive Officer of Van Kampen Investments since December 2002. Director of Van Kampen Investments since December 1999. Chairman and Director of Van Kampen Funds Inc. since December 2002. President, Director and Chief Operating Officer of Morgan Stanley Investment Management since December 1998. President and Director since April 1997 and Chief Executive Officer since June 1998 of Morgan Stanley Investment Advisors Inc. and Morgan Stanley Services Company Inc. Chairman, Chief Executive Officer and Director of Morgan Stanley Distributors Inc. since June 1998. Chairman since June 1998, and Director since January 1998 of Morgan Stanley Trust. Director of various Morgan Stanley subsidiaries. President of the Morgan Stanley Funds since May 1999. Previously Chief Executive Officer of Van Kampen Funds Inc. from December 2002 to July 2003, Chief Strategic Officer of Morgan Stanley Investment Advisors Inc. and Morgan Stanley Services Company Inc. and Executive Vice President of Morgan Stanley Distributors Inc. from April 1997 to June 1998. Chief Executive Officer from September 2002 to April 2003 and Vice President from May 1997 to April 1999 of the Morgan Stanley Funds. </Table> 35 <Table> <Caption> NUMBER OF TERM OF FUNDS IN OFFICE AND FUND POSITION(S) LENGTH OF COMPLEX NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS OF INTERESTED TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE Richard F. Powers, III* (57) Trustee Trustee Advisory Director of 90 Trustee/Director/Managing 1 Parkview Plaza since 1999 Morgan Stanley. Prior to General Partner of funds P.O. Box 5555 December 2002, Chairman, in the Fund Complex. Oakbrook Terrace, IL 60181 Director, President, Chief Executive Officer and Managing Director of Van Kampen Investments and its investment advisory, distribution and other subsidiaries. Prior to December 2002, President and Chief Executive Officer of funds in the Fund Complex. Prior to May 1998, Executive Vice President and Director of Marketing at Morgan Stanley and Director of Dean Witter, Discover & Co. and Dean Witter Realty. Prior to 1996, Director of Dean Witter Reynolds Inc. Wayne W. Whalen* (64) Trustee Trustee Partner in the law firm 90 Trustee/Director/Managing 333 West Wacker Drive since 1993 of Skadden, Arps, Slate, General Partner of funds Chicago, IL 60606 Meagher & Flom in the Fund Complex. (Illinois), legal counsel to funds in the Fund Complex. </Table> * Such trustee is an "interested person" (within the meaning of Section 2(a)(19) of the 1940 Act). Mr. Whalen is an interested person of certain funds in the Fund Complex by reason of his firm currently acting as legal counsel to such funds in the Fund Complex. Messrs. Merin and Powers are interested persons of funds in the Fund Complex and the Advisers by reason of their current or former positions with Morgan Stanley or its affiliates. 36 OFFICERS <Table> <Caption> TERM OF OFFICE AND POSITION(S) LENGTH OF NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S) ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS Stephen L. Boyd (63) Vice President Officer Managing Director of Global Research Investment Management. 2800 Post Oak Blvd. since 1998 Vice President of funds in the Fund Complex. Prior to 45th Floor December 2002, Chief Investment Officer of Van Kampen Houston, TX 77056 Investments and President and Chief Operations Officer of the Advisers and Van Kampen Advisors Inc. Prior to May 2002, Executive Vice President and Chief Investment Officer of funds in the Fund Complex. Prior to May 2001, Managing Director and Chief Investment Officer of Van Kampen Investments, and Managing Director and President of the Advisers and Van Kampen Advisors Inc. Prior to December 2000, Executive Vice President and Chief Investment Officer of Van Kampen Investments, and President and Chief Operating Officer of the Advisers. Prior to April 2000, Executive Vice President and Chief Investment Officer for Equity Investments of the Advisers. Prior to October 1998, Vice President and Senior Portfolio Manager with AIM Capital Management, Inc. Prior to February 1998, Senior Vice President and Portfolio Manager of Van Kampen American Capital Asset Management, Inc., Van Kampen American Capital Investment Advisory Corp. and Van Kampen American Capital Management, Inc. Stefanie V. Chang (37) Vice President Officer Executive Director of Morgan Stanley Investment Management. 1221 Avenue of the Americas since 2003 Vice President of funds in the Fund Complex. New York, NY 10020 Joseph J. McAlinden (60) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan 1221 Avenue of the Americas President and Chief since 2002 Stanley Investment Advisors Inc., Morgan Stanley Investment New York, NY 10020 Investment Officer Management Inc. and Morgan Stanley Investments LP and Director of Morgan Stanley Trust for over 5 years. Executive Vice President and Chief Investment Officer of funds in the Fund Complex. Managing Director and Chief Investment Officer of Van Kampen Investments, the Advisers and Van Kampen Advisors Inc. since December 2002. </Table> 37 <Table> <Caption> TERM OF OFFICE AND POSITION(S) LENGTH OF NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S) ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS John R. Reynoldson (50) Vice President Officer Executive Director and Portfolio Specialist of the Advisers 1 Parkview Plaza since 2000 and Van Kampen Advisors Inc. Vice President of funds in the P.O. Box 5555 Fund Complex. Prior to July 2001, Principal and Co-head of Oakbrook Terrace, IL 60181 the Fixed Income Department of the Advisers and Van Kampen Advisors Inc. Prior to December 2000, Senior Vice President of the Advisers and Van Kampen Advisors Inc. Prior to May 2000, Senior Vice President of the investment grade taxable group for the Advisers. Prior to June 1999, Senior Vice President of the government securities bond group for Asset Management. Ronald E. Robison (64) Executive Vice Officer Chief Executive Officer and Chairman of Investor Services. 1221 Avenue of the Americas President and Principal since 2003 Executive Vice President and Principal Executive Officer of New York, NY 10020 Executive Officer funds in the Fund Complex. Chief Global Operations Officer and Managing Director of Morgan Stanley Investment Management Inc. Managing Director of Morgan Stanley. Managing Director and Director of Morgan Stanley Investment Advisors Inc. and Morgan Stanley Services Company Inc. Chief Executive Officer and Director of Morgan Stanley Trust. Vice President of the Morgan Stanley Funds. A. Thomas Smith III (46) Vice President and Officer Managing Director of Morgan Stanley, Managing Director and 1221 Avenue of the Americas Secretary since 1999 Director of Van Kampen Investments, Director of the New York, NY 10020 Advisers, Van Kampen Advisors Inc., the Distributor, Investor Services and certain other subsidiaries of Van Kampen Investments. Managing Director and General Counsel-Mutual Funds of Morgan Stanley Investment Advisors, Inc. Vice President and Secretary of funds in the Fund Complex. Prior to July 2001, Managing Director, General Counsel, Secretary and Director of Van Kampen Investments, the Advisers, the Distributor, Investor Services, and certain other subsidiaries of Van Kampen Investments. Prior to December 2000, Executive Vice President, General Counsel, Secretary and Director of Van Kampen Investments, the Advisers, Van Kampen Advisors Inc., the Distributor, Investor Services and certain other subsidiaries of Van Kampen Investments. Prior to January 1999, Vice President and Associate General Counsel to New York Life Insurance Company ("New York Life"), and prior to March 1997, Associate General Counsel of New York Life. Prior to December 1993, Assistant General Counsel of The Dreyfus Corporation. Prior to August 1991, Senior Associate, Willkie Farr & Gallagher. Prior to January 1989, Staff Attorney at the Securities and Exchange Commission, Division of Investment Management, Office of Chief Counsel. </Table> 38 <Table> <Caption> TERM OF OFFICE AND POSITION(S) LENGTH OF NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S) ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS John L. Sullivan (48) Vice President, Chief Officer Director and Managing Director of Van Kampen Investments, 1 Parkview Plaza Financial Officer and since 1996 the Advisers, Van Kampen Advisors Inc. and certain other P.O. Box 5555 Treasurer subsidiaries of Van Kampen Investments. Vice President, Oakbrook Terrace, IL 60181 Chief Financial Officer and Treasurer of funds in the Fund Complex. Head of Fund Accounting for Morgan Stanley Investment Management. Prior to December 2002, Executive Director of Van Kampen Investments, the Advisers and Van Kampen Advisors Inc. </Table> 39 Van Kampen Privacy Notice The Van Kampen companies and investment products* respect your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain nonpublic personal information about you. This is information we collect from you on applications or other forms, and from the transactions you conduct with us, our affiliates, or third parties. We may also collect information you provide when using our Web site, and text files (also known as "cookies") may be placed on your computer to help us to recognize you and to facilitate transactions you initiate. We do not disclose any nonpublic personal information about you or any of our former customers to anyone, except as permitted by law. For instance, so that we may continue to offer you Van Kampen investment products and services that meet your investing needs, and to effect transactions that you request or authorize, we may disclose the information we collect to companies that perform services on our behalf, such as printers and mailers that assist us in the distribution of investor materials. These companies will use this information only for the services for which we hired them, and are not permitted to use or share this information for any other purpose. To protect your nonpublic personal information internally, we permit access to it only by authorized employees, and maintain physical, electronic and procedural safeguards to guard your nonpublic personal information. * Includes Van Kampen Investments Inc., Van Kampen Investment Advisory Corp., Van Kampen Asset Management Inc., Van Kampen Advisors Inc., Van Kampen Management Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc., Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the many Van Kampen mutual funds and Van Kampen unit investment trusts. Van Kampen Funds Inc. 1 Parkview Plaza, P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com (VAN KAMPEN INVESTMENTS LOGO) Copyright (C)2003 Van Kampen Funds Inc. All rights reserved. VKV ANR 12/03 Member NASD/SIPC. 12573L03-AS-12/03 Item 2. Code of Ethics. (a) The Trust has adopted a code of ethics (the "Code of Ethics") that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Trust or a third party. (b) No information need be disclosed pursuant to this paragraph. (c) Not applicable (d) Not applicable (e) Not applicable. (f) (1) The Trust's Code of Ethics is attached hereto as Exhibit 10A. (2) Not applicable. (3) Not applicable. Item 3. Audit Committee Financial Expert. The Trust's Board of Trustees has determined that it has four "audit committee financial experts" serving on its audit committee, each of whom are "independent" Trustees : J. Miles Branagan, Jerry Choate, R. Craig Kennedy and Theodore A. Myers. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification. Item 4. Principal Accountant Fees and Services. Applicable only for reports covering fiscal years ending on or after December 15, 2003. Item 5. Audit Committee of Listed Registrants. Applicable only for reports covering periods ending on or after the earlier of (i) the first annual shareholder meeting after January 15, 2004 or (ii) October 31, 2004. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. The Trust invests in exclusively non-voting securities and therefore this item is not applicable to the Trust. Item 8. [Reserved.] Item 9. 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. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Trust's internal controls or in other factors that could significantly affect the Trust's internal controls subsequent to the date of their evaluation. (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 of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a) The Code of Ethics for Principal Executive and Senior Financial Officers is attached herto. (b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT. 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 Value Municipal Income Trust By: /s/ Ronald E. Robison --------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: December 18, 2003 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: December 18, 2003 By: /s/ John L. Sullivan -------------------- Name: John L. Sullivan Title: Principal Financial Officer Date: December 18, 2003