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, New York, New York 10020
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 10/31
Date of reporting period: 4/30/04
Item 1. Report to Shareholders.
The Trust's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Value Municipal Income Trust performed during the semiannual period. The
portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the trust's financial statements and a list of trust investments
as of April 30, 2004.
Market forecasts provided in this report may not necessarily come to
pass. There is no assurance that the trust will achieve its investment
objective. Trusts are subject to market risk, which is the possibility
that the market values of securities owned by the trust will decline and
that the value of trust shares may therefore be less than what you paid
for them. Accordingly, you can lose money investing in this trust.
Income may subject certain individuals to the federal Alternative Minimum
Tax (AMT).
<Table>
<Caption>
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NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
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</Table>
Performance Summary as of 4/30/04
<Table>
<Caption>
VALUE MUNICIPAL INCOME TRUST
SYMBOL: VKV
- ------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (03/26/93) 6.84% 5.50%
10-year 7.64 7.22
5-year 6.42 5.56
1-year 2.49 -4.52
6-month 0.83 -6.78
- ------------------------------------------------------
</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. 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 SIX-MONTH PERIOD ENDED APRIL 30, 2004
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 state of the U.S. economy remained mixed over the six-month period under
review. On the positive side, economic growth continued to be robust, with Gross
Domestic Product growth topping 4 percent in both the last quarter of 2003 and,
preliminarily, the first quarter of this year. While this strength in output has
historically triggered fears of rising interest rates, yields remained
stubbornly low across the municipal curve. These low yields were partly the
result of the continued low levels of observed inflation in the U.S. economy.
Unfortunately, they also reflected continuing weakness in the job market, which
remained soft throughout most of the period. The soft job numbers, coupled with
persistently low inflation, led the Federal Open Market Committee (the Fed) to
maintain its accommodative stance throughout the period.
The surprisingly rapid job growth data released in April, coupled with rapidly
rising commodity and high oil prices, led many investors to fear that the Fed
would be forced to raise interest rates earlier than the market initially
expected. As a result, bond yields across all major sectors spiked in April.
Supply of new municipal bonds in calendar 2003 hit record levels as
municipalities moved to take advantage of historically low interest rates. Many
cities and states sought to reduce expenditures by refinancing existing debt and
replacing it with lower-yielding bonds. In other cases, municipalities attempted
to meet current and future funding needs by issuing new debt. This activity
slowed in the first months of 2004.
The low interest rates that prevailed over much of the period also had an impact
on the demand for municipal bonds. Retail and institutional investor activity
slowed as holders of municipal bonds saw little reason to sell bonds purchased
at higher yield levels and reinvest at lower yields. However, the period was
marked by rising activity among non-traditional investors, such as hedge funds
and insurance companies seeking to take advantage of the attractiveness of
municipal bonds relative to some taxable securities. Additionally, investors'
search for yield led to significant outperformance by lower-rated bonds with
greater credit risk. Sectors such as health care, with a preponderance of
lower-rated issues, performed particularly well.
(1)Team members may change without notice at any time.
2
PERFORMANCE ANALYSIS
Closed-end fund returns 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 an NAV basis and a market-price basis,
the trust underperformed its benchmark, the Lehman Brothers Municipal Bond
Index. (See table below.)
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 typically reinvested in longer-term securities, taking
advantage of the difference between short- and longer-term rates. As yields rose
during the period, the prices of bonds declined. The trust's use of leverage
magnified this negative movement, leading to a lower total return at NAV than
that of its benchmark, which is not leveraged.
Our analysis of the macroeconomic environment, coupled with the levels of
interest rates near multi-decade lows, led us to believe that interest rates
were more likely to rise than to fall further. As a result, we kept the trust's
duration (a measure of interest-rate sensitivity) below that of its benchmark in
order to limit the potentially damaging impact of any increase in interest
rates. This approach hampered the trust's returns as interest rates fell for
much of the period. That said, the strategy provided a cushion to returns when
interest rates soared in the final weeks of the period.
The trust's performance was also modestly hampered by its relatively
high-quality bias. During the period, municipal-bond investors responded to the
protracted low rate environment by favoring high-yield bonds, which caused the
yield spreads between higher- and lower-rated bonds to narrow. (Yield spreads
reflect the premium demanded by investors to buy lower-rated bonds.) As a
result, lower-quality bonds outperformed. The portfolio had 87 percent exposure
to bonds rated AA/Aa or higher at the end of the period.
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2004
<Table>
<Caption>
- ----------------------------------------------------------
BASED ON BASED ON LEHMAN BROTHERS
NAV MARKET PRICE MUNICIPAL BOND INDEX
0.83% -6.78% 1.19%
- ----------------------------------------------------------
</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 and index definition.
3
We also adjusted the portfolio's term structure in anticipation of rising
interest rates. Our research showed that the intermediate portion of the curve
offered the most promising total-return potential. As a result, we focused our
purchases on the 15- to 20-year segment of the curve. These securities had the
added appeal of premium coupons and 10-year call dates, which offered attractive
income coupled with limited interest-rate exposure. Our term-structure strategy
also included an attempt to capitalize on a temporary pricing anomaly, which
boosted the short-term returns of securities in the ten-year range as they
"rolled down" the yield curve at the end of the calendar year.
Our trading activity during the period was below traditional norms because we
wanted to avoid having to reinvest into securities with low yields. That said,
we were able to make selective relative-value trades among securities and
sectors as they moved into and out of fair value. Some of these acquisitions
were funded by the proceeds of bonds that were called away by their issuers
during the period. In other cases, we sold bonds that met their performance
objectives. We reinvested this cash into securities with more promising
total-return characteristics, including a BBB-rated hospital bond and premium
high-grade securities in both the 20- and 30-year ranges.
The trust's portfolio remained well diversified during the period, with its
holdings spread across many major municipal-bond sectors. We believe this
long-standing strategy helps to minimize the risk of over-concentration in any
single sector, while also giving the portfolio exposure to as many potential
sources of return as possible. The three largest sector exposures at the end of
the period were general purpose, transportation and health care.
<Table>
TOP 5 SECTORS AS OF 4/30/04 RATINGS ALLOCATION AS OF 4/30/04
General Purpose 16.1% AAA/Aaa 72.7%
Transportation 15.2 AA/Aa 14.0
Health Care 13.4 A/A 6.9
Public Building 10.0 BBB/Baa 4.8
Industrial Revenue 9.7 BB/Ba 0.3
Non-Rated 1.3
</Table>
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. All percentages are as a percentage of
long-term investments. Securities are classified by sectors that represent broad
groupings of related industries. Ratings allocations based upon ratings as
issued by Standard and Poor's and Moody's. Van Kampen is a wholly owned
subsidiary of a global securities firm which is engaged in a wide range of
financial services including, for example, securities trading and brokerage
activities, investment banking, research and analysis, financing and financial
advisory services.
4
As mentioned above, the portfolio's below-market duration served it well in the
final weeks of the period, when interest rates rose sharply. While it is
impossible to predict how long this trend will hold, we believe that the trust
is well positioned to weather further increases in rates. We look forward to
becoming more active in seeking attractive structures and relative-value trading
opportunities now that rates have moved into a more normal range.
5
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.
6
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
MUNICIPAL BONDS 159.4%
ALABAMA 1.8%
$1,000 Birmingham Baptist Med Ctr AL Baptist Hlth
Sys Ser A................................. 5.875% 11/15/24 $ 1,047,810
5,000 Birmingham Baptist Med Ctr AL Spl Care Fac
Fin Auth Rev (MBIA Insd).................. 5.750 11/15/10 5,477,900
4 Mobile, AL Indl Dev Brd Solid Waste Disp
Rev Mobile Energy Svc Co Proj Rfdg (a)
(b)....................................... 6.950 01/01/20 26
-------------
6,525,736
-------------
ARIZONA 4.6%
1,860 Arizona Hlth Fac Auth Hosp John C Lincoln
Hlth Network.............................. 5.750 12/01/32 1,800,629
6,000 Arizona St Trans Brd Hwy Rev Sub Ser A
Rfdg (Prerefunded @ 07/01/04)............. 4.750 07/01/11 6,156,060
5,250 Arizona Tourism & Sports Auth Tax Rev
Multipurpose Stad Fac Ser A (MBIA Insd)... 5.375 07/01/23 5,545,207
2,710 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
Oblig Irvington Proj Tucson Ser A Rfdg
(FSA Insd)................................ 7.250 07/15/10 2,849,836
-------------
16,351,732
-------------
ARKANSAS 0.3%
1,930 Arkansas St Cap Apprec College Svg........ * 06/01/16 1,103,420
-------------
CALIFORNIA 21.5%
6,215 ABC, CA Uni Sch Dist Cap Apprec (FGIC
Insd)..................................... * 08/01/34 1,141,385
10,000 California Infrastructure & Econ Dev Bk
Rev Bay Area Toll Brdgs First Lien A
(AMBAC Insd).............................. 5.000 07/01/33 9,976,400
43 California Rural Home Mtg Fin Auth Single
Family Mtg Rev Ser B (AMT) (GNMA
Collateralized)........................... 7.750 09/01/26 43,483
10,000 California St (MBIA Insd)................. 5.500 03/01/17 10,754,800
3,000 California St Dept Wtr Res Ser A.......... 5.875 05/01/16 3,293,550
5,000 California St Pub Wks Brd Dept Gen Svc Cap
East End Ser A (AMBAC Insd)............... 5.125 12/01/21 5,153,850
6,000 California St Pub Wks Brd Lease Rev Dept
of Corrections St Prisons Ser A Rfdg
(AMBAC Insd).............................. 5.250 12/01/13 6,564,600
2,000 California St Pub Wks Brd Lease Rev Dept
of Corrections St Prisons Ser A Rfdg
(AMBAC Insd) (d).......................... 5.000 12/01/19 2,094,140
5,000 California St Rfdg........................ 5.000 02/01/19 5,007,600
2,000 Florin, CA Res Consv Dist Cap Impt Elk
Grove Wtr Svc A (MBIA Insd)............... 5.000 09/01/33 1,983,140
30,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Ser A Rfdg............................ * 01/15/22 10,645,800
</Table>
See Notes to Financial Statements 7
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$1,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Sr Lien Ser A (Prerefunded @
01/01/07)................................. 6.500% 01/01/32 $ 1,112,920
3,350 Imperial Irr Dist CA Ctf Part Elec Sys
Proj (FSA Insd)........................... 5.250 11/01/19 3,533,245
1,175 Kings Cnty, CA Waste Mgmt Auth Solid Waste
Rev (AMT)................................. 7.200 10/01/14 1,217,746
5,500 Port Oakland, CA Ser L (AMT) (FGIC
Insd)..................................... 5.000 11/01/32 5,367,780
9,000 Riverside Cnty, CA Asset Leasing Corp
Leasehold Rev Riverside Cnty Hosp Proj
(MBIA Insd)............................... * 06/01/21 3,678,930
5,700 Sacramento, CA City Fin Auth Rev Comb Proj
B (MBIA Insd)............................. * 11/01/15 3,297,507
10,225 Santa Ana, CA Unified Sch Dist Ctf Part
Cap Apprec Fin Proj (FSA Insd)............ * 04/01/32 2,130,788
-------------
76,997,664
-------------
COLORADO 7.2%
4,340 Adams & Arapahoe Cntys, CO Jt Sch Dist Ser
A (FSA Insd).............................. 5.250 12/01/18 4,662,722
4,290 Adams & Arapahoe Cntys, CO Jt Sch Dist Ser
C (MBIA Insd)............................. 5.750 12/01/08 4,742,938
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 1,101,510
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 3,306,510
9,000 Arapahoe Cnty, CO Cap Impt Tr Fd Hwy Rev
E-470 Proj Ser C (Prerefunded @
08/31/05)................................. * 08/31/26 1,839,510
2,000 Colorado Hlth Fac Auth Rev Catholic Hlth
Initiatives Ser A......................... 5.500 03/01/32 2,051,640
6,495 Colorado Springs, CO Utils Rev (Escrowed
to Maturity).............................. 6.600 11/15/18 7,964,039
-------------
25,668,869
-------------
CONNECTICUT 2.2%
2,500 Connecticut St Hlth & Ed Fac Auth Rev
Nursing Home Pgm AHF/Hartford (Prerefunded
@ 11/01/04)............................... 7.125 11/01/14 2,623,775
5,000 Connecticut St Ser C (FGIC Insd).......... 5.000 04/01/22 5,155,650
-------------
7,779,425
-------------
DISTRICT OF COLUMBIA 1.4%
5,000 Metropolitan WA DC Arpt Auth Sys Ser A
(AMT) (FGIC Insd)......................... 5.250 10/01/32 5,013,250
-------------
</Table>
8 See Notes to Financial Statements
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
FLORIDA 8.7%
$1,985 Bay Cnty, FL Sch Brd Ctf Part (Prerefunded
@ 07/01/04) (AMBAC Insd).................. 6.750% 07/01/12 $ 2,043,319
2,500 Dade Cnty, FL Wtr & Swr Sys Rev (FGIC
Insd)..................................... 5.250 10/01/21 2,630,275
5,000 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
Insd)..................................... 5.950 07/01/20 5,223,200
530 Florida Hsg Fin Agy Single Family Mtg Ser
A Rfdg (AMT) (GNMA Collateralized)........ 6.650 01/01/24 545,084
3,980 Jacksonville, FL Port Auth (AMT) (MBIA
Insd)..................................... 5.700 11/01/30 4,102,783
2,780 Jacksonville, FL Port Auth (Prerefunded @
11/01/10) (AMT) (MBIA Insd)............... 5.700 11/01/30 3,115,463
11,500 Miami-Dade Cnty, FL Aviation Rev Miami
Intl Arpt (AMT) (FGIC Insd)............... 5.375 10/01/32 11,728,735
1,560 Pinellas Cnty, FL Hsg Fin Auth Single
Family Mtg Rev Multi Cnty Pgm Ser A (AMT)
(GNMA Collateralized)..................... 6.700 02/01/28 1,596,098
-------------
30,984,957
-------------
GEORGIA 4.5%
5,000 Georgia Muni Elec Auth Pwr Rev Ser B
(Escrowed to Maturity) (FGIC Insd)........ 5.700 01/01/19 5,657,300
2,700 Marietta, GA Dev Auth Rev First Mtg Life
College Ser B (FSA Insd).................. 5.375 09/01/09 2,870,910
2,205 Municipal Elec Auth GA Comb Cycle Proj Ser
A (MBIA Insd)............................. 5.000 11/01/20 2,266,299
5,000 Municipal Elec Auth GA Combustion Turbine
Proj Ser A (MBIA Insd).................... 5.250 11/01/20 5,260,700
-------------
16,055,209
-------------
HAWAII 3.1%
10,430 Hawaii St Dept Budget & Fin Spl Purp Rev
Hawaiian Elec Co Inc Ser A (AMT) (MBIA
Insd)..................................... 5.650 10/01/27 10,971,526
-------------
ILLINOIS 7.9%
7,500 Chicago, IL Brd Ed Cap Apprec Sch Reform
B-1 (FGIC Insd)........................... * 12/01/29 1,773,825
3,500 Chicago, IL Cap Apprec (Prerefunded @
07/01/05) (AMBAC Insd).................... * 01/01/17 1,655,465
10,000 Chicago, IL Cap Apprec City Colleges (FGIC
Insd)..................................... * 01/01/29 2,522,400
6,000 Chicago, IL Lakefront Millenium Pkg Fac
(MBIA Insd) (c)........................... 0/5.750 01/01/29 5,626,860
3,180 Illinois Hlth Fac Auth Rev Children's Mem
Hosp (MBIA Insd).......................... 6.250 08/15/13 3,680,977
</Table>
See Notes to Financial Statements 9
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$1,485 Illinois Hlth Fac Auth Rev Evangelical
Hosp Ser A Rfdg (Escrowed to Maturity)
(FSA Insd)................................ 6.750% 04/15/17 $ 1,780,797
825 Illinois Hlth Fac Auth Rev Evangelical
Hosp Ser C (FSA Insd)..................... 6.750 04/15/17 989,332
1,000 Illinois Hlth Fac Auth Rev Highland Park
Hosp Proj Ser A (Prerefunded @ 10/01/07)
(MBIA Insd)............................... 5.750 10/01/17 1,128,640
2,070 Northern IL Univ Ctf Part Hoffman Estates
Ctr Proj (FSA Insd)....................... 5.400 09/01/16 2,260,150
5,000 Regional Trans Auth IL Ser A (AMBAC
Insd)..................................... 8.000 06/01/17 6,707,400
-------------
28,125,846
-------------
KANSAS 2.1%
3,430 Kansas St Dev Fin Auth Rev KS Proj Ser N
(AMBAC Insd).............................. 5.250 10/01/20 3,595,017
3,615 Kansas St Dev Fin Auth Rev KS Proj Ser N
(AMBAC Insd).............................. 5.250 10/01/21 3,773,518
-------------
7,368,535
-------------
KENTUCKY 0.2%
500 Mount Sterling, KY Lease Rev KY League
Cities Fdg Ser B.......................... 6.100 03/01/18 573,390
-------------
LOUISIANA 4.0%
8,065 Louisiana St Office Fac Corp LA St Cap
Complex Pgm (MBIA Insd)................... 5.000 11/01/20 8,276,706
6,000 Saint Charles Parish, LA Solid Waste Disp
Rev LA Pwr & Lt Co Proj (AMT) (FSA Insd)
(d)....................................... 7.050 04/01/22 6,024,600
-------------
14,301,306
-------------
MARYLAND 3.0%
5,000 Maryland St Econ Dev Corp MD Aviation
Admin Fac (AMT) (FSA Insd)................ 5.375 06/01/20 5,218,450
1,500 Maryland St Medstar Hlth & Higher Hlth
Rfdg...................................... 5.500 08/15/33 1,452,195
4,000 Maryland St Trans Auth Arpt Baltimore/WA
Intl Arpt B (AMT) (AMBAC Insd)............ 5.125 03/01/24 4,042,840
-------------
10,713,485
-------------
MASSACHUSETTS 1.1%
1,750 Massachusetts St Hlth & Ed Fac Auth Rev
Hlthcare Sys Covenant Hlth................ 6.000 07/01/31 1,831,182
1,000 Massachusetts St Indl Fin Agy Wtr
Treatment American Hingham (AMT).......... 6.900 12/01/29 1,059,210
1,000 Massachusetts St Indl Fin Agy Wtr
Treatment American Hingham (AMT).......... 6.950 12/01/35 1,058,380
-------------
3,948,772
-------------
</Table>
10 See Notes to Financial Statements
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
MICHIGAN 4.1%
$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 $ 5,559,950
3,185 Detroit, MI Wtr Supply Sys Rev Sr Lien Ser
A (MBIA Insd)............................. 5.250 07/01/20 3,356,544
2,535 Michigan St Strategic Fd Detroit Edison
Pollutn Ctl Ser B Rfdg (AMT).............. 5.650 09/01/29 2,562,505
3,090 Troy, MI Downtown Dev Auth Dev Rfdg (MBIA
Insd)..................................... 5.500 11/01/15 3,378,019
-------------
14,857,018
-------------
MISSISSIPPI 0.6%
2,000 Mississippi Bus Fin Corp MS Pollutn Ctl
Rev Sys Energy Res Inc Proj............... 5.875 04/01/22 2,009,980
-------------
MISSOURI 1.9%
2,195 Missouri St Hlth & Ed Fac Rev Univ MO
Columbia Arena Proj....................... 5.000 11/01/16 2,296,936
5,000 Platte Cnty, MO Indl Dev Auth Trans Rev... 4.500 12/01/24 4,677,650
-------------
6,974,586
-------------
NEVADA 1.8%
6,000 Clark Cnty, NV Arpt Rev Sub Lien Ser B
(FGIC Insd)............................... 5.250 07/01/34 6,074,580
520 Nevada Hsg Div Single Family Pgm Mezz B
(FHA/VA Gtd) (AMT)........................ 6.550 10/01/12 528,190
-------------
6,602,770
-------------
NEW JERSEY 7.7%
1,000 New Jersey Econ Dev Auth Econ Dev Rev
Manahawkin Convalescent Ser A Rfdg (FHA
Gtd)...................................... 6.650 02/01/23 1,025,520
4,350 New Jersey Econ Dev Auth Wtr Fac Rev NJ
Amern Wtr Co Inc Ser A (AMT) (FGIC
Insd)..................................... 5.250 07/01/38 4,389,585
1,695 New Jersey Hlthcare Fac Fin Auth Rev Gen
Hosp Ctr Passaic (Escrowed to Maturity)
(FSA Insd)................................ 6.000 07/01/06 1,809,463
2,500 New Jersey Hlthcare Fac Fin Auth Rev Gen
Hosp Ctr Passaic (Escrowed to Maturity)
(FSA Insd)................................ 6.750 07/01/19 3,091,150
10,000 New Jersey St Ed Fac Auth Higher Ed Cap
Impt Ser A (AMBAC Insd)................... 5.250 09/01/20 10,555,000
6,750 Salem Cnty, NJ Indl Pollutn Ctl Fin Auth
Rev Pollutn Ctl Pub Svc Elec & Gas Ser A
(AMT) (MBIA Insd)......................... 5.450 02/01/32 6,811,762
-------------
27,682,480
-------------
</Table>
See Notes to Financial Statements 11
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
NEW YORK 20.8%
$7,000 Metropolitan Trans Auth NY Ser A Rfdg
(FGIC Insd)............................... 5.250% 11/15/31 $ 7,171,640
7,270 New York City Ser A....................... 7.000 08/01/04 7,373,089
5,000 New York City Ser C....................... 5.500 08/01/13 5,419,050
2,415 New York City Ser G....................... 5.750 02/01/14 2,577,868
2,585 New York City Ser G (Prerefunded @
02/01/06)................................. 5.750 02/01/14 2,797,332
6,000 New York City Transitional Fin Auth Rev
Future Tax Secd Ser A Rfdg (c)............ 5.500/14.000 11/01/26 6,631,440
8,240 New York City Transitional Future Tax Secd
Ser C Rfdg (AMBAC Insd)................... 5.250 08/01/18 8,775,518
5,000 New York St Dorm Auth Lease Rev Ser B
(XLCA Insd)............................... 4.000 07/01/30 4,926,200
7,575 New York St Dorm Auth Rev City Univ Sys
Con Ser A................................. 5.625 07/01/16 8,445,443
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 2,017,160
3,845 New York St Dorm Auth Rev Secd Hosp Gen
Hosp Rfdg................................. 5.750 02/15/20 4,171,633
5,885 New York St Energy Resh & Dev Auth Fac Rev
(AMT)..................................... 7.125 12/01/29 6,164,832
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 2,362,922
5,000 New York St Urban Dev Corp Rev St Fac
Rfdg...................................... 5.700 04/01/20 5,594,700
-------------
74,428,827
-------------
OHIO 4.9%
1,150 Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc
Proj...................................... 7.500 01/01/30 1,266,610
2,000 Cuyahoga Cnty, OH Multi-Family Rev Hsg
Dale Bridge Apt (AMT) (GNMA
Collateralized)........................... 6.600 10/20/30 2,070,120
3,540 Franklin Cnty, OH Hosp Rev & Impt Doctor's
Hosp Proj Rfdg (Escrowed to Maturity)..... 5.875 12/01/23 3,598,622
1,500 Mahoning Cnty, OH Hosp Fac Forum Hlth
Oblig Group Ser A......................... 6.000 11/15/32 1,562,520
5,130 Muskingum Cnty, OH Hosp Fac Rev Bethesda
Care Sys Impt Rfdg (Connie Lee Insd)...... 6.250 12/01/10 5,702,611
2,000 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev
OH Edison Co Proj Rfdg.................... 5.950 05/15/29 1,970,760
1,390 Toledo-Lucas Cnty, OH Port Auth Dev Rev
Northwest OH Bd Fd Ser C (AMT)............ 6.600 11/15/15 1,397,145
-------------
17,568,388
-------------
</Table>
12 See Notes to Financial Statements
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
OKLAHOMA 0.5%
$1,500 Jenks, OK Aquarium Auth Rev First Mtg
(Prerefunded 07/01/10) (MBIA Insd)........ 6.100% 07/01/30 $ 1,746,255
-------------
OREGON 3.7%
5,000 Oregon Hlth Sciences Univ Insd Ser A (MBIA
Insd)..................................... 5.250 07/01/22 5,217,150
2,745 Oregon St Dept Admin Ser A (Prerefunded @
11/01/05) (MBIA Insd)..................... 5.250 11/01/10 2,920,707
5,000 Oregon St Dept Admin Ser C Rfdg (MBIA
Insd)..................................... 5.250 11/01/18 5,288,250
-------------
13,426,107
-------------
PENNSYLVANIA 2.2%
5,000 Harrisburg, PA Auth Res Gtd Sub Ser D-2
(FSA Insd)................................ 5.000 12/01/33 5,311,200
1,370 Philadelphia, PA Hosp & Higher Ed Fac Auth
Rev Cmnty College Ser B Rfdg (MBIA
Insd)..................................... 6.500 05/01/08 1,560,567
905 Ridley Park, PA Hosp Auth Rev Taylor Hosp
Ser A (Escrowed to Maturity).............. 6.000 12/01/05 944,757
-------------
7,816,524
-------------
RHODE ISLAND 1.2%
3,000 Rhode Island St Cons Cap Dev Ln Ser A
(Prerefunded @ 08/01/04).................. 5.000 08/01/12 3,058,830
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 1,104,768
-------------
4,163,598
-------------
SOUTH CAROLINA 2.2%
1,015 Rock Hill, SC Util Sys Rev Comb Ser C Rfdg
(FSA Insd)................................ 5.000 01/01/11 1,100,696
6,500 South Carolina Jobs Econ Dev Auth Indl Rev
Elec & Gas Co Proj Ser A (AMBAC Insd)..... 5.200 11/01/27 6,641,960
-------------
7,742,656
-------------
TENNESSEE 1.9%
12,650 Johnson City, TN Hlth & Ed Fac Brd Hosp
Rev Cap Apprec First Mtg Ser A Rfdg (MBIA
Insd)..................................... * 07/01/26 3,615,370
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 3,083,275
-------------
6,698,645
-------------
TEXAS 16.0%
2,000 Brazos River Auth TX Pollutn Ctl Rev Adj
TXU Elec Co Proj Ser C Rfdg (AMT)......... 5.750 05/01/36 2,114,660
5,000 Dallas-Fort Worth, TX Intl Arpt Rev Impt
Jt Ser A Rfdg (AMT) (FGIC Insd)........... 5.500 11/01/31 5,121,800
</Table>
See Notes to Financial Statements 13
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
$2,345 Denton Cnty, TX Perm Impt................. 5.500% 07/15/19 $ 2,531,193
10,000 Harris Cnty, TX Flood Ctl Dist Contract B
Rfdg...................................... 5.000 10/01/21 10,237,300
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 2,319,795
1,000 Harris Cnty, TX Hlth Fac Dev Mem Hermann
Hlthcare Ser A............................ 6.375 06/01/29 1,123,820
5,000 Harris Cnty, TX Sr Lien Toll Rd Rfdg (FSA
Insd)..................................... 5.125 08/15/32 5,038,900
4,655 Houston, TX Arpt Sys Rev Sub Lien (FSA
Insd)..................................... 5.500 07/01/15 5,070,878
3,000 Houston, TX Arpt Sys Rev Sub Lien Ser A
(AMT) (FSA Insd).......................... 5.625 07/01/30 3,067,260
5,000 Matagorda Cnty, TX Navig Dist No 1 Rev
Houston Lt Rfdg (AMT) (AMBAC Insd)........ 5.125 11/01/28 4,980,650
2,000 Metropolitan Hlth Fac Dev Corp TX Wilson N
Jones Mem Hosp Proj....................... 7.250 01/01/31 1,887,220
4,475 North Cent TX Hlth Fac Dev Hosp Baylor
Hlthcare Sys Proj Ser A................... 5.125 05/15/29 4,394,405
5,000 San Antonio, TX Elec & Gas Sys Rfdg....... 5.375 02/01/16 5,378,850
3,960 Stafford, TX Econ Dev Corp (FGIC Insd).... 5.500 09/01/30 4,201,679
-------------
57,468,410
-------------
UTAH 0.7%
4,950 Intermountain Pwr Agy UT Pwr Supply Rev
Ser A Rfdg (Escrowed to Maturity) (FGIC
Insd)..................................... * 07/01/17 2,585,830
-------------
WASHINGTON 8.1%
5,000 Clark Cnty, WA Sch Dist 114 (FSA Insd).... 5.250 06/01/19 5,290,350
3,630 King City, WA Ser B (Prerefunded @
12/01/07)................................. 5.900 12/01/14 4,132,646
1,370 King Cnty, WA Ser B (Prerefunded @
12/01/07)................................. 5.900 12/01/14 1,559,704
2,245 King Cnty, WA Ser B (Prerefunded @
12/01/07)................................. 6.625 12/01/15 2,611,496
4,000 Washington St Pub Pwr Supply Ser A Rfdg
(FGIC Insd)............................... 7.000 07/01/08 4,648,880
10,000 Washington St Pub Pwr Supply Ser A Rfdg
(AMBAC Insd).............................. 5.700 07/01/09 10,925,600
-------------
29,168,676
-------------
</Table>
14 See Notes to Financial Statements
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
WEST VIRGINIA 2.6%
$5,920 Harrison Cnty, WV Cnty Cmnty Solid Waste
Disp Rev West PA Pwr Co Ser C (AMT) (AMBAC
Insd)..................................... 6.750% 08/01/24 $ 6,106,954
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 3,143,010
-------------
9,249,964
-------------
WISCONSIN 1.3%
2,000 Wisconsin St Hlth & Ed Fac Children's Hosp
(Prerefunded @ 08/15/04) (FGIC Insd)...... 5.000 08/15/10 2,045,000
2,675 Wisconsin St Hlth & Ed Fac FH Hlthcare Dev
Inc Proj.................................. 6.250 11/15/28 2,774,537
-------------
4,819,537
-------------
PUERTO RICO 3.6%
7,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy
Rev Ser Y Rfdg (FSA Insd) (d)............. 6.250 07/01/21 8,439,620
4,000 Puerto Rico Pub Bldgs Auth Gtd Pub Ed &
Hlth Fac Ser M Rfdg (MBIA Insd)........... 5.600 07/01/08 4,466,920
-------------
12,906,540
-------------
TOTAL LONG-TERM INVESTMENTS 159.4%
(Cost $543,383,114)........................................................ 570,399,913
SHORT-TERM INVESTMENTS 1.6%
(Cost $5,800,000).......................................................... 5,800,000
-------------
TOTAL INVESTMENTS 161.0%
(Cost $549,183,114)........................................................ 576,199,913
OTHER ASSETS IN EXCESS OF LIABILITIES 1.9%.................................. 6,781,863
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (62.9%).................. (225,071,403)
-------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%............................... $ 357,910,373
=============
</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) All or a portion of these securities have been physically segregated in
connection with open futures contracts.
See Notes to Financial Statements 15
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
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.
XLCA--XL Capital Assurance Inc.
16 See Notes to Financial Statements
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2004 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $549,183,114)....................... $576,199,913
Cash........................................................ 378,687
Receivables:
Interest.................................................. 8,889,474
Investments Sold.......................................... 3,718,199
Other....................................................... 2,881
------------
Total Assets............................................ 589,189,154
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 5,145,450
Investment Advisory Fee................................... 289,462
Variation Margin on Futures............................... 248,578
Income Distributions--Common Shares....................... 73,335
Administrative Fee........................................ 24,122
Other Affiliates.......................................... 23,773
Trustees' Deferred Compensation and Retirement Plans........ 277,351
Accrued Expenses............................................ 125,307
------------
Total Liabilities....................................... 6,207,378
Preferred Shares (including accrued distributions).......... 225,071,403
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $357,910,373
============
NET ASSET VALUE PER COMMON SHARE ($357,910,373 divided by
23,555,115 shares outstanding)............................ $ 15.19
============
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................................. 29,196,395
Accumulated Undistributed Net Investment Income............. 2,367,541
Accumulated Net Realized Loss............................... (5,118,568)
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $357,910,373
============
PREFERRED SHARES ($.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....................... $582,910,373
============
</Table>
See Notes to Financial Statements 17
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended April 30, 2004 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $14,898,646
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,780,478
Preferred Share Maintenance................................. 313,641
Administrative Fee.......................................... 148,374
Trustees' Fees and Related Expenses......................... 70,113
Legal....................................................... 29,180
Custody..................................................... 18,416
Other....................................................... 135,255
-----------
Total Expenses.......................................... 2,495,457
-----------
NET INVESTMENT INCOME....................................... $12,403,189
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 610,369
Futures................................................... (5,503,033)
-----------
Net Realized Loss........................................... (4,892,664)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 32,736,810
-----------
End of the Period:
Investments............................................. 27,016,799
Futures................................................. 2,179,596
-----------
29,196,395
-----------
Net Unrealized Depreciation During the Period............... (3,540,415)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(8,433,079)
===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $(1,079,254)
===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $ 2,890,856
===========
</Table>
18 See Notes to Financial Statements
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2004 OCTOBER 31, 2003
------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 12,403,189 $ 25,830,017
Net Realized Gain/Loss.................................. (4,892,664) 4,872,068
Net Unrealized Depreciation During the Period........... (3,540,415) (5,757,330)
Distributions to Preferred Shareholders:
Net Investment Income................................. (1,079,254) (2,292,954)
------------ ------------
Change in Net Assets Applicable to Common Shares from
Operations............................................ 2,890,856 22,651,801
Distributions to Common Shareholders:
Net Investment Income................................. (11,859,592) (23,883,918)
------------ ------------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES
FROM INVESTMENT ACTIVITIES............................ (8,968,736) (1,232,117)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................. 366,879,109 368,111,226
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $2,367,541 and $2,903,198,
respectively)......................................... $357,910,373 $366,879,109
============ ============
</Table>
See Notes to Financial Statements 19
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED
APRIL 30, -------------------
2004 2003 2002 (a)
---------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD................... $ 15.58 $ 15.63 $ 15.68
------- ------- -------
Net Investment Income.................................... .53 1.10 1.11
Net Realized and Unrealized Gain/Loss.................... (.37) (.04) (.06)
Common Share Equivalent of Distributions Paid to
Preferred Shareholders:
Net Investment Income.................................. (.05) (.10) (.13)
Net Realized Gain...................................... -0- -0- -0-
------- ------- -------
Total from Investment Operations........................... .11 .96 .92
Distributions Paid to Common Shareholders:
Net Investment Income.................................. (.50) (1.01) (.97)
Net Realized Gain...................................... -0- -0- -0-
------- ------- -------
NET ASSET VALUE, END OF THE PERIOD......................... $ 15.19 $ 15.58 $ 15.63
======= ======= =======
Common Share Market Price at End of the Period............. $ 13.25 $ 14.70 $ 14.37
Total Return (b)........................................... -6.78%* 9.61% 11.50%
Net Assets Applicable to Common Shares at End of the Period
(In millions)............................................ $ 357.9 $ 366.9 $ 368.1
Ratio of Expenses to Average Net Assets Applicable to
Common Shares (c)........................................ 1.35% 1.33% 1.46%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c).......................... 6.71% 6.99% 7.22%
Portfolio Turnover......................................... 7%* 30% 38%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including Preferred
Shares (c)............................................... .84% .83% .90%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (d).......................... 6.13% 6.37% 6.36%
SENIOR SECURITIES:
Total Preferred Shares Outstanding......................... 9,000 9,000 9,000
Asset Coverage Per Preferred Share (e)..................... $64,796 $65,769 $65,910
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>
* Non-Annualized
(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.
20
<Table>
<Caption>
YEAR ENDED OCTOBER 31,
- ----------------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------
$ 14.38 $ 13.80 $ 15.64 $ 15.14 $ 14.50 $ 14.37 $ 12.90 $ 16.43
------- ------- -------- -------- -------- -------- -------- --------
1.13 1.15 1.14 1.14 1.16 1.17 1.18 1.18
1.25 .63 (1.86) .51 .63 .13 1.57 (3.34)
(.31) (.39) (.31) (.34) (.34) (.34) (.38) (.24)
-0- -0- -0- -0- -0- -0- -0- (.04)
------- ------- -------- -------- -------- -------- -------- --------
2.07 1.39 (1.03) 1.31 1.45 .96 2.37 (2.44)
(.77) (.81) (.81) (.81) (.81) (.83) (.90) (.91)
-0- -0- -0- -0- -0- -0- -0- (.18)
------- ------- -------- -------- -------- -------- -------- --------
$ 15.68 $ 14.38 $ 13.80 $ 15.64 $ 15.14 $ 14.50 $ 14.37 $ 12.90
======= ======= ======== ======== ======== ======== ======== ========
$ 13.78 $ 12.25 $12.0625 $ 14.75 $13.5625 $ 12.375 $ 12.75 $ 10.75
19.22% 8.56% -13.29% 15.10% 16.61% 3.70% 27.67% -23.52%
$ 369.3 $ 338.7 $ 325.1 $ 368.5 $ 356.6 $ 341.5 $ 338.4 $ 303.9
1.63% 1.77% 1.67% 1.67% 1.70% 1.77% 1.80% 1.70%
7.49% 8.36% 7.56% 7.41% 7.93% 8.15% 8.67% 8.01%
30% 25% 35% 24% 32% 42% 50% 79%
1.00% 1.05% 1.02% 1.03% 1.03% 1.06% 1.06% 1.03%
5.44% 5.55% 5.50% 5.21% 5.61% 5.78% 5.90% 6.39%
9,000 9,000 9,000 4,500 4,500 4,500 4,500 4,500
$66,028 $62,631 $ 61,123 $131,890 $129,243 $125,881 $125,198 $117,532
$25,000 $25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
$25,000 $25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
</Table>
See Notes to Financial Statements 21
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED)
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.
Effective November 30, 2003, the Trust's investment adviser, Van Kampen
Investment Advisory Corp., merged into its affiliate, Van Kampen Asset
Management.
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 April 30, 2004, there were no 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 accumulated capital loss
carryforward for tax purposes of $2,658,821, which will expire
22
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED) continued
between October 31, 2004 and October 31, 2007. Of this amount, $412,304 will
expire on October 31, 2004.
At April 30, 2004, the cost and related gross unrealized appreciation and
depreciation were as follows:
<Table>
Cost of investments for tax purposes........................ $548,499,629
============
Gross tax unrealized appreciation........................... $ 29,082,325
Gross tax unrealized depreciation........................... (1,382,041)
------------
Net tax unrealized appreciation on investments.............. $ 27,700,284
============
</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 year ended October 31,
2003 was as follows:
<Table>
<Caption>
2003
Distributions paid from:
Ordinary income........................................... $128,418
Long-term capital gain.................................... -0-
--------
$128,418
========
</Table>
As of October 31, 2003, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $185,504
</Table>
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") provides investment advice and facilities to the
Trust for an annual fee payable monthly of .60% of the average daily net assets
of the Trust. In addition, the Trust pays 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. Effective June 1, 2004, the administrative fee was reduced from
..05% to .00%.
For the six months ended April 30, 2004, the Trust recognized expenses of
approximately $18,800 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, 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 six months ended
April 30, 2004, the Trust recognized expenses of approximately $26,800
representing Van Kampen's cost of providing accounting and legal
23
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED) continued
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 $57,534,701 and $39,496,100,
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
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.
24
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED) continued
Transactions in futures contracts for the six months ended April 30, 2004,
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at October 31, 2003............................. 1,006
Futures Opened.............................................. 2,244
Futures Closed.............................................. (2,145)
------
Outstanding at April 30, 2004............................... 1,105
======
</Table>
The futures contracts outstanding as of April 30, 2004, and the description
and unrealized appreciation/depreciation are as follows:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Notes 10-Year Futures June 2004 (Current
Notional Value of $110,500 per contract).................. 193 $ 487,713
U.S. Treasury Notes 5-Year Futures June 2004 (Current
Notional Value of $109,938 per contract).................. 912 1,691,883
----- ----------
1,105 $2,179,596
===== ==========
</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 April 30, 2004 was 1.015%. During the six months ended April 30, 2004,
the rates ranged from 0.450% to 1.600%.
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.
25
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be
re-registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued
on the valuation date, generally at the lower of market price or net asset
value, except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value
26
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
DIVIDEND REINVESTMENT PLAN continued
of the Trust's Common Shares, resulting in the acquisition of fewer Common
Shares than if the dividend or distribution had been paid in Common Shares
issued by the Trust. All reinvestments are in full and fractional Common Shares
and are carried to three decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
27
VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
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*
JACK NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
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 LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
28
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 Asset Management, Van
Kampen Advisors 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)2004 Van Kampen
Funds Inc. All rights reserved.
Member NASD/SIPC.
VKV SAR 6/04 RN04-00759P-Y04/04
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
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.
(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) Code of Ethics - Not applicable for semi-annual reports.
(b)(1) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(b)(2) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
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: June 22, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: June 22, 2004
By: /s/ John L. Sullivan
---------------------
Name: John L. Sullivan
Title: Principal Financial Officer
Date: June 22, 2004