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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 811-07404
Invesco Van Kampen California Value Municipal Income Trust
(Exact name of registrant as specified in charter)
1555 Peachtree Street, N.E., Atlanta, Georgia 30309
(Address of principal executive offices)     (Zip code)
Colin Meadows 1555 Peachtree Street, N.E., Atlanta, Georgia 30309
(Name and address of agent for service)
Registrant’s telephone number, including area code: (713) 626-1919
Date of fiscal year end: 2/28
Date of reporting period: 2/28/11
 
 

 


 

Item 1. Reports to Stockholders.

 


 


(IMAGE)
 

 
 
Annual Report to Shareholders    February 28, 2011
 
Invesco Van Kampen California Value Municipal Income Trust

NYSE: VCV
 
 
2
  Performance Summary
2
  Management Discussion
4
  Supplemental Information
5
  Dividend Reinvestment Plan
6
  Schedule of Investments
12
  Financial Statements
16
  Financial Highlights
17
  Notes to Financial Statements
23
  Auditor’s Report
24
  Tax Information
T-1
  Trustees and Officers


 


 

 
Management’s Discussion of Trust Performance

 
Performance summary
Please note that the fiscal year-end for Invesco Van Kampen California Value Municipal Income Trust has changed to February 28. Therefore, the period covered by this report is from October 31, 2010, the date of the last annual report, through February 28, 2011, the Trust’s new fiscal year-end.
     The Trust’s return can be calculated based on 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 and preferred shares, by the total number of common shares outstanding. Market price reflects the supply and demand for Trust shares. As a result, the two returns can differ, as they did during the reporting period. Main contributors to return on an NAV basis included our exposure to state general obligation (GO) bonds and local GO bonds.
 
Performance
Cumulative total returns, 10/31/10 to 2/28/11
         
Trust at NAV
    -11.46 %
 
Trust at Market Value
    -11.54  
 
Barclays Capital California Municipal Bond Index
    -3.92  
 
 
 
Market Price Premium to NAV as of 2/28/11
    2.19  
 
  FactSet Research Systems, Inc.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Investment return, net asset value and common share market price will fluctuate so that you may have a gain or loss when you sell shares. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect Trust expenses, the reinvestment of distributions (if any) and changes in net asset value (NAV) for performance based on NAV and changes in market price for performance based on market price.
     Since the Trust is a closed-end management investment company, shares of the Trust may trade at a discount or premium from the NAV. This characteristic is separate and distinct from the risk that NAV could decrease as a result of investment activities and may be a greater risk to investors expecting to sell their shares after a short time. The Trust cannot predict whether shares will trade at, above or below NAV. The Trust should not be viewed as a vehicle for trading purposes. It is designed primarily for risk-tolerant long-term investors.

 
How we invest
We seek to provide investors with a high level of current income exempt from federal and California income taxes primarily through investment in a diversified portfolio of investment grade California municipal securities.
     We seek to achieve the Trust’s investment objective by investing primarily in California municipal securities that are rated BBB or higher by Standard & Poor’s (S&P) or Baa or higher by Moody’s at the time of purchase. Municipal securities
include long-term obligations (“municipal bonds”), short-term municipal notes, participation certificates, municipal leases and tax-exempt commercial paper. The Trust also may invest in securities rated BB/Ba or B by S&P, Moody’s or Fitch, as well as unrated securities that we determine to be of comparable or higher quality. From time to time, we may invest in California municipal securities that pay interest that is subject to the federal alternative minimum tax.


 
Portfolio Composition
By credit sector, based on total investments
         
Revenue Bonds
    88.6 %
 
General Obligation Bonds
    10.5  
 
Pre-refunded Bonds
    0.8  
 
Other
    0.1  
      
 
         
Total Net Assets
       
Applicable to Common Shares
  $242.3 million
 
Total Number of Holdings
    213
The Trust’s holdings are subject to change, and there is no assurance that the Trust will continue to hold any particular security.
 
Top Five Fixed Income Holdings
                 
  1.    
Sacramento, California Municipal Utilities District Electrical
    6.3 %
 
  2.    
California Educational Facilities Authority Revenue University Southern California
    4.3  
 
  3.    
Los Angeles, California Department Airport Revenue Los Angeles International Airport
    4.1  
 
  4.    
Santa Clara County, California Financial Authority Lease Revenue Refunding Lease
    4.0  
 
  5.    
Foothill/Eastern Corridor Agency California Toll Road Revenue Capital Appreciation Refunding
    3.8  


     We employ a bottom-up, research-driven approach to identify securities that have attractive risk/reward characteristics for the sectors in which we invest. We also integrate macroeconomic analysis and forecasting into our evaluation and ranking of various sectors and individual securities. Finally, we employ leverage in an effort to enhance the Trust’s income and total return.
     Sell decisions are based on:
n   A deterioration or likely deterioration of an individual issuer’s capacity to meet its debt obligations on a timely basis.
 
n   A deterioration or likely deterioration of the broader fundamentals of a particular industry or sector.
 
n   Opportunities in the secondary or primary market to purchase a security with better relative value.
 
Market conditions and your Trust
In the U.S. and most of the developed world, a gradual and somewhat lackluster recovery continued, with central banks keeping interest rates at low levels and with few of them withdrawing their quantitative easing measures. This helped private sector companies improve their balance sheets and earnings following the global financial crisis that began to dissipate in early 2009. However, investor skepticism of global governments’ abilities to retire huge amounts of debt without affecting economic growth rates caused sovereign debt distress (especially for eurozone countries) and became a focal point of investor concern.
     In the U.S., economic recovery was present, although the pace was modest as stubbornly high unemployment and export weakness continued to weigh on the economy. Real gross domestic product, the broadest measure of overall U.S. economic activity, increased at an annual rate of 3.1% in the fourth quarter of 2010, a marked improvement from the 2.6% decrease in 2009.1 The U.S. Federal Reserve (the Fed) maintained a very accommodative monetary policy throughout the period, with the federal funds target rate unchanged in a range of zero to 0.25%.2 The Fed recently described its view of the U.S. economy by stating: “The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued

2 Invesco Van Kampen California Value Municipal Income Trust


 

inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.”2
      While many states are currently facing budgetary challenges, California may have received more press than most. The state still benefits from its large and diverse economic base and above-average wealth levels. However, its large exposure to the housing crisis, falling tax revenues and recent budgetary shortfalls pose considerable challenges.
     During the four-month period covered by this report, municipal bond mutual funds experienced extensive net outflows. Market volatility was heightened across the municipal asset class as U.S. Treasury yields increased, and the market was flooded with new issuance during the last two months of 2010 in anticipation of the Build America Bond (BAB) program ending. These factors contributed to rising investor fears regarding the health of municipal finances leading to redemptions and lower municipal bond prices.
     In terms of yield curve positioning, the Trust’s exposure to the 12– to 20–year part of the curve and the long portion of the curve (20+ years) contributed to returns as yields increased during most of the reporting period. Some of our yield curve and duration positioning was obtained through the use of inverse floating rate securities. Inverse floating rate securities are instruments which have an inverse relationship to a referenced interest rate. Inverse floating rate securities can be a more efficient means by which to manage duration, yield curve exposure, credit exposure and potentially can enhance yield.
     Sector performance was driven by quality spread widening for most of the reporting period before tightening in February, largely a result of increased volatility and higher tax-exempt issuance. As a result, BBB-rated and lower credit quality sectors underperformed and detracted from Trust performance as we held some exposure to these market segments.
     At a sector level, our exposure to state and local GO bonds contributed to returns for the reporting period. Detractors for the reporting period included our exposure to the dedicated tax sector, as well as our allocation to higher education bonds.
     We employ leverage in an effort to enhance the Trust’s income and total return. Leverage simply magnifies the performance of the Trust, either up or down, and can be implemented several ways. The Trust achieves a leveraged position through both borrowings and the use of financial instruments, which include auction rate preferred shares. During the reporting period, the use of leverage detracted from returns.
     As stated earlier, the Trust trades at a market price and also has an NAV. During the reporting period, the Trust traded mostly at a premium but did trade at slight discounts periodically in the first two months of the reporting period.
     Thank you for investing in Invesco Van Kampen California Value Municipal Income Trust and for sharing our long-term investment horizon.
1 Bureau of Economic Analysis
2 U.S. Federal Reserve
The views and opinions expressed in management’s discussion of Trust performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Trust. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Trust and, if applicable, index disclosures later in this report.
(PHOTO OF THOMAS BYRON)
Thomas Byron
Portfolio manager, is manager of Invesco Van Kampen California Value Municipal Income Trust. Mr. Byron joined Invesco in 2010. He was associated with the Trust’s previous investment adviser or its investment advisory affiliates in an investment capacity from 1981 to 2010 and began managing the Trust in 2009. He earned a B.S. in finance from Marquette University and an M.B.A. in finance from DePaul University.
(PHOTO OF ROBERT STRYKER)
Robert Stryker
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen California Value Municipal Income Trust. Mr. Stryker joined Invesco in 2010. He was associated with the Trust’s previous investment adviser or its investment advisory affiliates in an investment capacity from 1994 to 2010 and began managing the Trust in 2009. He earned a B.S. in finance from the University of Illinois, Chicago.
(PHOTO OF ROBERT WIMMEL)
Robert Wimmel
Portfolio manager, is manager of Invesco Van Kampen California Value Municipal Income Trust. Mr. Wimmel joined Invesco in 2010. He was associated with the Trust’s previous investment adviser or its investment advisory affiliates in an investment capacity from 1996 to 2010 and began managing the Trust in 2001. He earned a B.A. in anthropology from the University of Cincinnati and an M.A. in economics from the University of Illinois, Chicago.


3 Invesco Van Kampen California Value Municipal Income Trust


 

 
Invesco Van Kampen California Value Municipal Income Trust’s investment objective is to seek to provide a high level of current income exempt from federal and California income taxes, consistent with preservation of capital.
n   Unless otherwise stated, information presented in this report is as of February 28, 2011, and is based on total net assets applicable to common shares.
n   Unless otherwise noted, all data provided by Invesco.
 
n   To access your Trust’s reports, visit invesco.com/fundreports.

 
Principal risks of investing in the Trust
n   The prices of securities held by the Trust may decline in response to market risks.
 
n   Other risks are described and defined later in this report.
 
About indexes used in this report
n   The Barclays Capital California Municipal Bond Index is an index of California investment grade municipal bonds.
 
n   The Trust is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Trust may deviate significantly from the performance of the index(es).
 
n   A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.
 
Other information
n   The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis.
 
n   The returns shown in management’s discussion of Trust performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Trust at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights.


 
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
 
NYSE Symbol   VCV


4 Invesco Van Kampen California Value Municipal Income Trust

 


 

 
Dividend Reinvestment Plan
The dividend reinvestment plan (the Plan) offers you a prompt and simple way to reinvest your dividends and capital gains distributions (Distributions) into additional shares of your Trust. Under the Plan, the money you earn from Distributions will be reinvested automatically in more shares of your Trust, allowing you to potentially increase your investment over time.

 
Plan benefits
n   Add to your account
 
    You may increase the amount of shares in your Trust easily and automatically with the Plan.
 
n   Low transaction costs
 
    Shareholders who participate in the Plan are able to buy shares at below-market prices when the Trust is trading at a premium to its net asset value (NAV). In addition, transaction costs are low because when new shares are issued by a Trust, there is no fee, and when shares are bought in blocks on the open market, the per share fee is shared among all Participants.
 
n   Convenience
 
    You will receive a detailed account statement from Computershare Trust Company, N.A. (the Agent) which administers the Plan. The statement shows your total Distributions, date of investment, shares acquired, and price per share, as well as the total number of shares in your reinvestment account. You can also access your account via the Internet. To do this, please go to invesco.com/us.
 
n   Safekeeping
 
    The Agent will hold the shares it has acquired for you in safekeeping.
 
How to participate in the Plan
If you own shares in your own name, you can participate directly in the Plan. If your shares are held in “street name” – in the name of your brokerage firm, bank, or other financial institution – you must instruct that entity to participate on your behalf. If they are unable to participate on your behalf, you may request that they reregister your shares in your own name so that you may enroll in the Plan.
 
How to enroll
To enroll in the Plan, please read the Terms and Conditions in the Plan Brochure. You can enroll in the Plan by visiting invesco.com/us, calling toll-free 800 341 2929 or notifying us in writing at Invesco Van Kampen Closed-End Funds, Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078. Please include your Trust name and account number and ensure that all shareholders listed on the account sign these written instructions. Your participation in the Plan will begin with the next Distribution payable after the Agent receives your authorization, as long as they receive it before the “record date,” which is generally 10 business days before such Distributions are paid. If your authorization arrives after such record date, your participation in the Plan will begin with the following Distributions.
 
How the Plan works
If you choose to participate in the Plan, your Distributions will be promptly reinvested for you, automatically increasing your shares. If the Trust is trading at a share price that is equal to its NAV, you’ll pay that amount for your reinvested shares. However, if the Trust is trading above or below NAV, the price is determined by one of two ways:
  1.   Premium: If the Trust is trading at a premium – a market price that is higher than its NAV – you’ll pay either the NAV or 95 percent of the market price, whichever is greater. When the Trust trades at a premium, you’ll pay less for your reinvested shares than an investor purchasing shares on the stock exchange. Keep in mind, a portion of your price reduction may be taxable because you are receiving shares at less than market price.
 
  2.   Discount: If the Trust is trading at a discount – a market price that is lower than NAV – you’ll pay the market price for your reinvested shares.
 
Costs of the Plan
There is no direct charge to you for reinvesting Distributions because the Plan’s fees are paid by your Trust. If your Trust is trading at or above its NAV, your new shares are issued directly by the Trust and there are no brokerage charges or fees. However, if your Trust is trading at a discount, the shares are purchased on the open market, and you will pay your portion of per share fees. These per share fees are typically less than the standard brokerage charges for individual transactions because shares are purchased for all Participants in blocks, resulting in lower fees for each individual Participant. Any service or per share fees are added to the purchase price. Per share fees include any applicable brokerage commissions the Agent is required to pay.
 
Tax implications
The automatic reinvestment of Distributions does not relieve you of any income tax that may be due on Distributions. You will receive tax information annually to help you prepare your federal income tax return.
     Invesco does not offer tax advice. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used, by any taxpayer for avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Federal and state tax laws are complex and constantly changing. Shareholders should always consult a legal or tax adviser for information concerning their individual situation.
 
How to withdraw from the Plan
You may withdraw from the Plan at any time by calling 800 341 2929, visiting invesco.com/us or by writing to Invesco Van Kampen Closed-End Funds, Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078. Simply indicate that you would like to withdraw from the Plan, and be sure to include your Trust name and account number. Also, ensure that all shareholders listed on the account have signed these written instructions. If you withdraw, you have three options with regard to the shares held in the Plan:
  1.   If you opt to continue to hold your non-certificated whole shares (Investment Plan Book Shares), they will be held by the Agent electronically as Direct Registration Book-Shares (Book-Entry Shares) and fractional shares will be sold at the then-current market price. Proceeds will be sent via check to your address of record after deducting applicable fees.
 
  2.   If you opt to sell your shares through the Agent, we will sell all full and fractional shares and send the proceeds via check to your address of record after deducting a $2.50 per share fee and applicable per share fee. Per share fees include any applicable brokerage commissions the Agent is required to pay.
 
  3.   You may sell your shares through your financial adviser through the Direct Registration System (DRS). DRS is a service within the securities industry that allows Trust shares to be held in your name in electronic format. You retain full ownership of your shares, without having to hold a stock certificate. You should contact your financial adviser to learn more about any restrictions or fees that may apply.
     To obtain a complete copy of the Dividend Reinvestment Plan, please call our Client Services department at 800 341 2929 or visit invesco.com/us.


5 Invesco Van Kampen California Value Municipal Income Trust

 


 

Schedule of Investments
 
February 28, 2011
 
 
                                 
            Par
   
            Amount
   
    Coupon   Maturity   (000)   Value
 
 
Municipal Bonds–178.1%
 
                       
 
California–171.6%
 
                       
Abag Fin Auth For Nonprofit Corp CA Insd Rev Ctf Lincoln Glen Manor Sr Ctzn (CA MTG Insd)
    6.100 %     02/15/25     $ 1,915     $ 1,915,747  
 
Adelanto, CA Pub Util Auth Rev Rfdg Util Sys Proj, Ser A
    6.750 %     07/01/39       2,000       1,921,860  
 
Alhambra, CA Rev Atherton Baptist Homes, Ser A
    7.500 %     01/01/30       1,725       1,745,821  
 
Anaheim, CA Redev Agy Tax Alloc Rfdg Merged Redev Proj Area, Ser A (AGM Insd)(a)
    5.000 %     02/01/31       4,250       4,078,938  
 
Apple Valley, CA Redev Agy Tax Alloc Proj Area No 2 (AMBAC Insd)
    5.000 %     06/01/37       4,120       3,211,128  
 
Banning, CA Cmnty Redev Agy Tax Alloc Merged Downtown (Radian Insd)
    5.000 %     08/01/23       2,790       2,348,176  
 
Bay Area Toll Auth CA Toll Brdg Rev San Francisco Bay Area, Ser F1(a)
    5.125 %     04/01/39       4,500       4,350,285  
 
Bay Area Toll Auth CA Toll Brdg Rev, Ser F(a)
    5.000 %     04/01/31       6,000       6,020,040  
 
Beverly Hills, CA Uni Sch Dist Cap Apprec 2008 Election
    *       08/01/28       3,000       1,061,880  
 
Brea & Olinda, CA Uni Sch Dist Ctf Partn Rfdg, Ser A (AGM Insd)
    5.500 %     08/01/20       1,510       1,551,132  
 
Brea, CA Redev Agy Tax Alloc Rfdg, Ser A (AMBAC Insd)
    5.500 %     08/01/20       3,535       3,431,212  
 
California Cnty, CA Tob Sec Agy Tob Asset Bkd Los Angeles Cnty Sec(b)
    5.450 %     06/01/28       3,000       2,382,750  
 
California Ed Fac Auth Rev CA College Arts
    5.000 %     06/01/35       2,000       1,537,940  
 
California Ed Fac Auth Rev Claremont McKenna College(a)
    5.000 %     01/01/38       7,480       7,206,681  
 
California Ed Fac Auth Rev Pitzer College
    5.375 %     04/01/34       2,000       1,841,240  
 
California Ed Fac Auth Rev Pooled College & Univ, Ser B
    5.250 %     04/01/24       1,445       1,303,823  
 
California Ed Fac Auth Rev Univ Southn CA, Ser A(a)
    5.250 %     10/01/39       10,200       10,323,624  
 
California Hlth Fac Fin Auth Rev Adventist Hlth Sys West, Ser A
    5.750 %     09/01/39       2,500       2,366,300  
 
California Hlth Fac Fin Auth Rev Catholic Hlthcare West, Ser A
    6.000 %     07/01/39       2,500       2,514,425  
 
California Hlth Fac Fin Auth Rev Cedars Sinai Med Ctr
    5.000 %     08/15/39       4,000       3,501,360  
 
California Hlth Fac Fin Auth Rev Childrens Hosp (AGM Insd)
    5.250 %     07/01/38       2,000       1,828,220  
 
California Hlth Fac Fin Auth Rev Providence Hlth & Svc, Ser C
    6.500 %     10/01/33       3,000       3,271,320  
 
California Hlth Fac Fin Auth Rev Scripps Hlth, Ser A
    5.000 %     11/15/36       3,500       3,060,435  
 
California Hlth Fac Fin Auth Rev Sutter Hlth, Ser B
    5.500 %     08/15/26       2,000       2,013,740  
 
California Hsg Fin Agy Rev Home Mtg, Ser G (AMT)
    4.950 %     08/01/23       8,480       7,819,323  
 
California Hsg Fin Agy Rev Multi-Family Hsg III, Ser A (NATL Insd) (AMT)
    5.850 %     08/01/17       2,005       2,006,664  
 
California Mun Fin Auth Rev Eisenhower Med Ctr, Ser A
    5.750 %     07/01/40       2,100       1,933,071  
 
California Muni Fin Auth Ctf Partn Cmnty Hosp Cent CA
    5.250 %     02/01/37       2,500       2,064,775  
 
California Muni Fin Auth Ed High Tech High Chula Vista, Ser B(e)
    6.000 %     07/01/28       1,000       900,350  
 
California Pollutn Ctl Fin Auth Pollutn Ctl Rev Gas & Elec Rfdg, Ser A (NATL Insd)
    5.900 %     06/01/14       1,000       1,105,410  
 
California Pollutn Ctl Fin Auth San Jose Water Co Proj
    5.100 %     06/01/40       2,450       2,276,148  
 
California Pollutn Ctl Fin Auth Solid Waste Disp Rev Waste Mgmt Inc Proj, Ser B (AMT)
    5.000 %     07/01/27       2,000       1,902,480  
 
California Pollutn Ctl Fin Auth Solid Waste Disp Rev Waste Mgmt Inc Proj, Ser C (AMT)(c)(f)
    5.125 %     11/01/15       2,000       1,997,080  
 
California Rural Home Mtg Fin Auth Single Family Mtg Rev Mtg Bkd Sec Pgm, Ser B (GNMA Collateralized) (AMT)
    6.150 %     06/01/20       15       15,183  
 
California Rural Home Mtg Fin Auth Single Family Mtg Rev Mtg Bkd Sec Pgm, Ser B (GNMA Collateralized) (AMT)
    6.250 %     12/01/31       35       35,383  
 
California St
    5.250 %     11/01/40       2,500       2,393,025  
 
California St Dept Vet Affairs Home Pur Rev, Ser A (AMT)(a)
    4.950 %     12/01/37       9,000       7,402,320  
 
California St Dept Wtr Res Pwr Supply Rev, Ser F-5
    5.000 %     05/01/22       2,000       2,161,380  
 
California St Econ Recovery Rfdg, Ser A
    5.250 %     07/01/21       3,000       3,342,360  
 
California St Univ Rev Syswide, Ser A
    5.250 %     11/01/38       3,000       2,824,830  
 
California St Univ Rev Syswide, Ser D (AGM Insd)
    4.500 %     11/01/37       8,625       7,224,386  
 
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
6        Invesco Van Kampen California Value Municipal Income Trust


 

                                 
            Par
   
            Amount
   
    Coupon   Maturity   (000)   Value
 
 
California–(continued)
 
                       
                                 
California St Var Purp
    5.750 %     04/01/31     $ 1,150     $ 1,188,594  
 
California St Var Purp
    6.000 %     11/01/35       2,000       2,081,360  
 
California St Var Purp
    6.000 %     04/01/38       1,565       1,618,038  
 
California Statewide Cmnty Dev Auth CHF Irvine LLC UCI East Campus
    5.750 %     05/15/32       2,500       2,376,450  
 
California Statewide Cmnty Dev Auth CHF Irvine LLC UCI East Rfdg
    5.000 %     05/15/38       2,230       1,854,713  
 
California Statewide Cmnty Dev Auth Rev Amern Baptist Homes West
    6.250 %     10/01/39       2,000       1,885,920  
 
California Statewide Cmnty Dev Auth Rev CA Baptist Univ, Ser A
    5.500 %     11/01/38       1,250       1,025,825  
 
California Statewide Cmnty Dev Auth Rev Cottage Hlth Oblig Grp
    5.250 %     11/01/30       2,150       2,031,406  
 
California Statewide Cmnty Dev Auth Rev FHA Insd Mtg Methodist Hosp Proj (FHA Gtd)
    6.750 %     02/01/38       2,000       2,175,080  
 
California Statewide Cmnty Dev Auth Rev Front Porch Cmnty & Svc, Ser A(e)
    5.125 %     04/01/37       1,500       1,185,810  
 
California Statewide Cmnty Dev Auth Rev Hlth Fac Adventist Hlth, Ser A
    5.000 %     03/01/19       1,825       1,858,124  
 
California Statewide Cmnty Dev Auth Rev Insd Enloe Med Ctr (CA MTG Insd)
    6.250 %     08/15/28       2,750       2,843,362  
 
California Statewide Cmnty Dev Auth Rev Kaiser Permanente, Ser A
    5.000 %     04/01/19       2,000       2,100,320  
 
California Statewide Cmnty Dev Auth Rev Sr Living Southn CA Presbyterian Homes
    7.250 %     11/15/41       2,000       2,094,260  
 
Carson, CA Redev Agy Tax Alloc Rfdg, Ser A (NATL Insd)
    5.000 %     10/01/23       2,000       1,974,180  
 
Cathedral City, CA Pub Fin Auth Rev Cap Apprec, Ser A (NATL Insd)
    *       08/01/27       1,085       332,596  
 
Cathedral City, CA Pub Fin Auth Rev Cap Apprec, Ser A (NATL Insd)
    *       08/01/28       1,085       304,842  
 
Cathedral City, CA Pub Fin Auth Rev Cap Apprec, Ser A (NATL Insd)
    *       08/01/30       1,085       259,109  
 
Cathedral City, CA Pub Fin Auth Rev Cap Apprec, Ser A (NATL Insd)
    *       08/01/31       1,085       238,331  
 
Cathedral City, CA Pub Fin Auth Rev Cap Apprec, Ser A (NATL Insd)
    *       08/01/32       1,085       219,919  
 
Cathedral City, CA Pub Fin Auth Rev Cap Apprec, Ser A (NATL Insd)
    *       08/01/33       1,085       203,698  
 
Cerritos, CA Cmnty College Dist Election 2004, Ser A (NATL Insd)
    5.000 %     08/01/27       220       221,676  
 
Chula Vista, CA Cmnty Fac Dist Spl Tax No 01-1 Impt Area San Miguel, Ser B
    5.350 %     09/01/26       2,000       1,657,340  
 
Chula Vista, CA Indl Dev Rev San Diego Gas, Ser A
    5.300 %     07/01/21       2,000       2,069,800  
 
Chula Vista, CA Redev Agy Tax Alloc Sub Bayfront Rfdg, Ser B
    5.250 %     10/01/27       1,540       1,253,083  
 
Coachella, CA Fin Auth Tax Alloc Rev Redev Proj 4 Rfdg, Ser B (Syncora Gtd)
    5.250 %     09/01/34       1,605       1,258,753  
 
Coachella, CA Redev Agy Tax Alloc Proj Area No 3 Rfdg
    5.875 %     12/01/28       940       796,180  
 
Colton, CA Redev Agy Tax Alloc Mt Vernon Corridor Redev Proj
    6.300 %     09/01/36       2,000       1,726,880  
 
Commerce, CA Jt Pwr Fin Auth Lease Rev Cmnty Ctr Proj (Syncora Gtd)
    5.000 %     10/01/34       2,000       1,511,280  
 
Compton, CA Wtr Rev
    6.000 %     08/01/39       1,750       1,644,650  
 
Daly City, CA Hsg Dev Fin Agy Mobile Home Pk Rev Third Tier Franciscan Rfdg, Ser C
    6.500 %     12/15/47       1,965       1,609,021  
 
Desert Hot Springs, CA Redev Agy Tax Alloc Merged Redev Proj, Ser A-2
    5.750 %     09/01/38       2,000       1,602,680  
 
Eden Township Hlthcare Dist
    6.000 %     06/01/30       1,500       1,422,825  
 
El Cerrito, CA Redev Agy Tax Alloc Redev Proj Area Rfdg, Ser B (NATL Insd) (AMT)
    5.250 %     07/01/15       960       996,902  
 
Emeryville, CA Pub Fin Auth Rev Shellmound Pk Redev & Hsg Proj, Ser B (NATL Insd)
    5.000 %     09/01/19       1,000       996,910  
 
Fairfield, CA Cmnty Fac Dist Spl Tax No 2007-1 Fairfield Commons
    6.875 %     09/01/38       1,000       886,650  
 
Florin, CA Res Consv Dist Cap Impt Elk Grove Wtr Svc, Ser A (NATL Insd)
    5.000 %     09/01/33       5,155       4,340,922  
 
Folsom, CA Pub Fin Auth Spl Tax Rev, Ser A (AMBAC Insd)
    5.000 %     09/01/28       3,000       2,630,340  
 
Fontana, CA Redev Agy Tax Alloc Southwest Indl Park Proj (NATL Insd)
    5.000 %     09/01/22       1,000       958,190  
 
Fontana, CA Redev Agy Tax Alloc Southwest Indl Park Proj (NATL Insd)
    5.200 %     09/01/30       1,950       1,712,022  
 
Foothill/Eastern Corridor Agy CA Toll Rd Rev(g)
    *       01/01/27       2,950       1,424,201  
 
Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap Apprec Rfdg
    *       01/15/25       10,000       3,409,100  
 
Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap Apprec Rfdg
    *       01/15/26       15,000       4,698,450  
 
Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap Apprec Rfdg
    *       01/15/31       5,000       1,020,550  
 
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
7        Invesco Van Kampen California Value Municipal Income Trust


 

                                 
            Par
   
            Amount
   
    Coupon   Maturity   (000)   Value
 
 
California–(continued)
 
                       
                                 
Foothill/Eastern Corridor Agy CA Toll Rd Rev Conv Cap Apprec Rfdg
    5.875 %     01/15/27     $ 3,000     $ 2,683,230  
 
Garden Grove, CA Agy Cmnty Dev Sub Nt (Acquired 5/27/08, Cost $1,646,285)
    6.000 %     10/01/27       1,890       1,523,718  
 
Golden St Tob Sec Corp CA Tob Settlement Rev Asset Bkd Sr, Ser A-1
    4.500 %     06/01/27       1,080       777,578  
 
Golden St Tob Sec Corp CA Tob Settlement Rev Asset Bkd Sr, Ser A-1
    5.750 %     06/01/47       1,435       958,236  
 
Hawthorne, CA Spl Tax Cmnty Fac Dist No, Ser 2006-1
    5.000 %     09/01/36       3,000       1,815,810  
 
Indio, CA Redev Agy Tax Alloc Sub Merged Redev Proj Area, Ser A
    5.625 %     08/15/35       1,000       892,950  
 
Irvine, CA Pub Fac & Infrastructure Auth Assmt Rev, Ser B (AMBAC Insd)
    5.000 %     09/02/22       3,340       3,201,691  
 
La Quinta, CA Fin Auth Loc Agy Rev, Ser A (AMBAC Insd)
    5.250 %     09/01/24       1,000       957,820  
 
La Quinta, CA Redev Agy Tax Alloc Redev Proj Area No 1 (AMBAC Insd)
    5.000 %     09/01/22       1,420       1,391,415  
 
La Quinta, CA Redev Agy Tax Alloc Redev Proj Area No 1 (AMBAC Insd)
    5.125 %     09/01/32       1,500       1,369,245  
 
Lancaster, CA Redev Agy Tax Comb Redev Proj Areas
    6.875 %     08/01/39       1,000       1,029,510  
 
Lathrop, CA Impt Bd Act 1915 Mossdale Vlg Assmt Dist 03-1
    5.000 %     09/02/25       1,000       818,760  
 
Loma Linda, CA Redev Agy Tax Loma Linda Redev Proj Rfdg (NATL Insd)
    5.125 %     07/01/30       1,000       882,320  
 
Long Beach, CA Arpt Snr Rev, Ser A
    5.000 %     06/01/40       1,000       864,640  
 
Long Beach, CA Spl Tax Long Beach Towne Ctr
    5.750 %     10/01/25       2,000       1,905,040  
 
Los Angeles, CA Cmnty College Dist 2003 Election, Ser F1(a)
    5.000 %     08/01/33       5,000       4,871,550  
 
Los Angeles, CA Cmnty Redev Agy Multi-Family Hsg Rev Grand Cent Square Rfdg, Ser B (AMBAC Insd) (AMT)
    4.750 %     12/01/26       2,215       1,757,957  
 
Los Angeles, CA Ctf Partn Sr Sonnenblick Del Rio W LA (AMBAC Insd)
    6.000 %     11/01/19       3,000       3,035,010  
 
Los Angeles, CA Dept Arpt Rev LA Intl Arpt, Ser A
    5.000 %     05/15/35       2,000       1,910,660  
 
Los Angeles, CA Dept Arpt Rev LA Intl Arpt, Ser C
    5.125 %     05/15/33       1,230       1,180,296  
 
Los Angeles, CA Dept Arpt Rev LA Intl Arpt, Ser D(a)
    5.250 %     05/15/33       10,000       10,028,200  
 
Los Angeles, CA Dept Wtr & Pwr Rev Pwr Sys, Ser A-1(a)
    5.250 %     07/01/38       4,000       3,973,840  
 
Los Angeles, CA Dept Wtr & Pwr Rev Pwr Sys, Ser A-1
    5.250 %     07/01/38       3,000       2,980,380  
 
Los Angeles, CA Dept Wtr & Pwr Wtrwks Rev Sys, Ser A
    5.375 %     07/01/38       2,000       2,010,000  
 
Los Angeles, CA Uni Sch Dist, Ser D
    5.000 %     01/01/34       2,000       1,914,540  
 
Los Angeles Cnty, CA Sch Regionalized Business Svc Ctf Partn Cap Apprec Pooled Fin, Ser A (AMBAC Insd)
    *       08/01/26       1,200       370,272  
 
Los Angeles Cnty, CA Sch Regionalized Business Svc Ctf Partn Cap Apprec Pooled Fin, Ser A (AGM Insd)
    5.000 %     09/01/28       1,250       1,234,925  
 
Mendocino Cnty, CA Ctf Partn Cnty Pub Fac Corp (NATL Insd)
    5.250 %     06/01/30       2,000       1,826,680  
 
Metropolitan Wtr Dist Southn CA Auth, Ser B-2 (NATL Insd)
    5.000 %     10/01/26       1,900       1,983,106  
 
Montclair, CA Redev Agy Mobile Home Pk Rev Hacienda Mobile Home Pk Proj
    6.000 %     11/15/22       2,000       1,991,480  
 
Morongo Band of Mission Indians CA Enterprise Rev Indians Enterprise Casino, Ser B(e)
    5.500 %     03/01/18       1,850       1,743,884  
 
Morongo Band of Mission Indians CA Enterprise Rev Indians Enterprise Casino, Ser B(e)
    6.500 %     03/01/28       2,175       2,036,104  
 
Mount Diablo, CA Uni Sch Dist (AGM Insd)(a)
    5.000 %     08/01/26       3,180       3,197,236  
 
National City, CA Cmnty Dev Commn Tax Alloc National City Redev Proj, Ser A (AMBAC Insd)
    5.500 %     08/01/32       1,730       1,529,891  
 
Needles, CA Pub Util Auth Util Sys Acquisition Proj, Ser A
    6.500 %     02/01/22       2,000       1,903,160  
 
Orange Cnty, CA Arpt Rev, Ser A
    5.000 %     07/01/31       1,000       993,620  
 
Oxnard, CA Uni High Sch Dist Rfdg, Ser A (NATL Insd)
    6.200 %     08/01/30       1,000       1,038,950  
 
Palm Desert, CA Fin Auth Tax Alloc Rev Proj Area No 2 Rfdg, Ser A (NATL Insd)
    5.000 %     08/01/21       1,230       1,153,765  
 
Palm Springs, CA Arpt Sub Palm Springs Intl Arpt Rfdg (AMT)
    5.450 %     07/01/20       250       223,175  
 
Palm Springs, CA Arpt Sub Palm Springs Intl Arpt Rfdg (AMT)
    5.550 %     07/01/28       475       400,881  
 
Palm Springs, CA Arpt Sub Palm Springs Intl Arpt Rfdg (AMT)
    6.000 %     07/01/18       250       235,357  
 
Palm Springs, CA Arpt Sub Palm Springs Intl Arpt Rfdg (AMT)
    6.400 %     07/01/23       250       227,053  
 
Palm Springs, CA Arpt Sub Palm Springs Intl Arpt Rfdg (AMT)
    6.500 %     07/01/27       530       475,664  
 
Palomar Pomerado Hlthcare Dist CA Ctf Partn
    6.750 %     11/01/39       2,000       1,984,700  
 
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
8        Invesco Van Kampen California Value Municipal Income Trust


 

                                 
            Par
   
            Amount
   
    Coupon   Maturity   (000)   Value
 
 
California–(continued)
 
                       
                                 
Perris, CA Pub Fin Auth Loc Agy Rev Perris Vly Vistas IA 3, Ser B
    6.625 %     09/01/38     $ 2,000     $ 1,827,600  
 
Perris, CA Pub Fin Auth Rev Tax Alloc
    5.350 %     10/01/36       4,350       3,343,671  
 
Perris, CA Pub Fin Auth Rev Tax Alloc, Ser A (NATL Insd)
    5.000 %     10/01/31       1,000       886,390  
 
Pico Rivera, CA Wtr Auth Rev Wtr Sys Proj, Ser A (NATL Insd)
    5.500 %     05/01/19       1,000       1,062,220  
 
Pittsburg, CA Redev Agy Tax Alloc Los Medanos Cmnty Dev Proj (AMBAC Insd)
    *       08/01/26       1,375       448,924  
 
Port Oakland, CA Rfdg, Ser N (NATL Insd) (AMT)
    5.000 %     11/01/22       2,325       2,217,934  
 
Port Oakland, CA Rfdg, Ser N (NATL Insd) (Prerefunded @ 11/01/12) (AMT)
    5.000 %     11/01/22       175       188,011  
 
Poway, CA Redev Agy Tax Alloc Paguay Redev Proj, Ser A (NATL Insd)
    5.000 %     06/15/33       1,000       813,970  
 
Rancho Cordova Cmnty Fac Dist CA Spl Tax No 2003-1 Sunridge Anatolia
    6.000 %     09/01/24       2,000       1,893,800  
 
Rancho Cucamonga, CA Redev Agy Tax Alloc Rancho Redev Proj (AGM Insd)
    5.250 %     09/01/20       1,000       1,000,460  
 
Rancho Mirage, CA Redev Agy Tax Alloc Redev Plan 1984 Proj, Ser A-1 (NATL Insd)
    5.000 %     04/01/26       1,220       1,106,113  
 
Rancho Mirage, CA Redev Agy Tax Alloc Redev Plan 1984 Proj, Ser A-E (NATL Insd)
    5.250 %     04/01/33       2,540       2,142,769  
 
Redlands, CA Redev Agy Tax Alloc Redev Proj Rfdg, Ser A (NATL Insd)
    4.750 %     08/01/21       3,800       3,628,240  
 
Redwood City, CA Sch Dist (NATL Insd)
    5.000 %     07/15/23       4,000       4,079,200  
 
Richmond, CA Jt Pwr Fin Auth Rev Lease Point Potrero, Ser A
    6.250 %     07/01/24       2,000       2,127,000  
 
Riverside, CA Cmnty College Dist Election 2004, Ser C (AGM Insd)(a)
    5.000 %     08/01/32       5,000       4,893,650  
 
Riverside Cnty, CA Transn Commn Sales Tax Rev Ltd Tax, Ser A
    5.000 %     06/01/32       1,500       1,451,250  
 
RNR Sch Fin Auth CA Spl Tax Cmnty Fac Dist No 92 1, Ser A (AMBAC Insd)
    5.000 %     09/01/36       2,000       1,619,200  
 
Roseville, CA Fin Auth Elec Sys Rev Rfdg
    5.000 %     02/01/37       500       468,935  
 
Roseville, CA Jt Uni High Sch Dist, Ser B (NATL Insd)
    *       06/01/20       1,650       995,742  
 
Sacramento, CA City Fin Auth Rev Tax Alloc, Ser A (NATL Insd)
    5.000 %     12/01/34       900       720,621  
 
Sacramento, CA Mun Util Dist Elec, Ser U (AGM Insd)(a)
    5.000 %     08/15/24       4,960       5,104,882  
 
Sacramento, CA Mun Util Dist Elec, Ser U (AGM Insd)(a)
    5.000 %     08/15/26       10,000       10,152,200  
 
Salinas Vly, CA Solid Waste Auth Rev (AMBAC Insd) (AMT)
    5.250 %     08/01/27       1,000       904,360  
 
Salinas Vly, CA Solid Waste Auth Rev (AMBAC Insd) (AMT)
    5.250 %     08/01/31       2,000       1,728,540  
 
San Bernardino, CA Jt Pwr Fin Auth Ctf Partn (NATL Insd)
    5.500 %     09/01/20       1,865       1,869,439  
 
San Diego, CA Cmnty College Dist Election 2002(a)
    5.250 %     08/01/33       5,000       5,052,350  
 
San Diego, CA Pub Fac Fin Auth Wtr Rev, Ser B
    5.375 %     08/01/34       5,000       5,087,850  
 
San Diego, CA Redev Agy Centre City Redev Proj, Ser A
    6.400 %     09/01/25       2,500       2,444,650  
 
San Diego Cnty, CA Regl Arpt Auth Arpt Rev Sub, Ser A
    5.000 %     07/01/34       3,000       2,739,600  
 
San Dimas, CA Redev Agy Tax Alloc Creative Growth, Ser A (AGM Insd)
    5.000 %     09/01/16       655       657,207  
 
San Francisco, CA Bay Area Rapid Tran Dist Sales Tax Rev
    5.000 %     07/01/28       1,000       1,042,770  
 
San Francisco, CA City & Cnty Arpt Commn Intl Arpt Rev Spl Fac Lease, Ser A (AGM Insd) (AMT)
    6.125 %     01/01/27       1,660       1,661,046  
 
San Francisco, CA City & Cnty Arpt Commn Intl Arpt Second Rfdg, Ser 27A (NATL Insd) (AMT)
    5.250 %     05/01/26       2,000       2,000,240  
 
San Francisco, CA City & Cnty Arpt Commn Intl Arpt Second Rfdg, Ser 27A (NATL Insd) (AMT)
    5.250 %     05/01/31       3,000       2,749,980  
 
Sanger, CA Uni Sch Dist Rfdg (NATL Insd)
    5.600 %     08/01/23       2,000       2,061,000  
 
Santa Ana, CA Uni Sch Dist Ctf Partn Cap Apprec Fin Proj (AGM Insd)
    *       04/01/36       1,000       171,580  
 
Santa Clara Cnty, CA Fin Auth Lease Rev Rfdg Lease, Ser L(a)
    5.250 %     05/15/36       10,000       9,660,300  
 
Sierra View Loc Hlthcare Dist CA Rev
    5.250 %     07/01/32       2,000       1,809,480  
 
South Orange Cnty, CA Pub Fin Auth Reassmt Rev (AGM Insd)
    5.800 %     09/02/18       3,305       3,375,231  
 
South Tahoe, CA Jt Pwr Fin Auth Rev Tahoe Redev Proj Area 1-A Rfdg (AGM Insd)
    5.000 %     10/01/29       1,640       1,570,038  
 
South Tahoe, CA Jt Pwr Fin Redev Proj Area No 1, Ser A (AMBAC Insd)
    5.000 %     10/01/28       2,250       1,878,458  
 
Southern CA Logistics Arpt Auth, Ser A
    6.000 %     12/01/38       1,285       987,278  
 
Southern CA Pub Pwr Auth Pwr Proj Rev Mead Adelanto, Ser A(d)
    0.190 %     03/18/11       200       200,000  
 
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
9        Invesco Van Kampen California Value Municipal Income Trust


 

                                 
            Par
   
            Amount
   
    Coupon   Maturity   (000)   Value
 
 
California–(continued)
 
                       
                                 
Southern CA Pub Pwr Auth Pwr Proj Rev Multi-Proj
    6.750 %     07/01/12     $ 5,000     $ 5,373,350  
 
Stockton, CA Uni Sch Dist Ctf Partn Cap Proj (AMBAC Insd)
    4.375 %     02/01/31       1,000       774,570  
 
Stockton, CA Uni Sch Dist Ctf Partn Cap Proj (AMBAC Insd)
    4.500 %     02/01/36       1,000       732,630  
 
Temecula, CA Redev Agy Tax Alloc Rev Sub Lien Redev Proj No 1
    5.500 %     12/15/38       1,000       764,830  
 
Tobacco Sec Auth Northn CA Tob Settlement Rev Asset Bkd Bd, Ser A-1
    5.375 %     06/01/38       4,500       3,089,925  
 
Tobacco Sec Auth Southn CA Tob Settlement Sr, Ser A-1
    5.000 %     06/01/37       3,000       1,956,960  
 
Tobacco Sec Auth Southn CA Tob Settlement Sr, Ser A-1
    5.125 %     06/01/46       4,650       2,846,777  
 
Torrance, CA Rev Torrance Mem Med Ctr, Ser A
    5.000 %     09/01/40       1,500       1,247,040  
 
Turlock, CA Hlth Fac Rev Ctf Partn Emanuel Med Ctr, Ser A
    5.125 %     10/15/31       1,000       816,540  
 
Turlock, CA Hlth Fac Rev Ctf Partn Emanuel Med Ctr, Ser B
    5.125 %     10/15/37       1,000       779,900  
 
Turlock, CA Irr Dist Rev, Ser A
    5.000 %     01/01/35       2,450       2,233,665  
 
Twin Rivers, CA Uni Sch Dist CA Bd Antic Nts
    *       04/01/14       1,500       1,362,465  
 
Twin Rivers, CA Uni Sch Dist Ctf Partn Sch Fac Brdg Pgm (AGM Insd)(c)(f)
    3.500 %     05/31/13       2,000       2,000,000  
 
University, CA Regt Med Ctr Rev, Ser E
    5.500 %     05/15/27       2,500       2,573,950  
 
University, CA Rev, Ser O(a)
    5.250 %     05/15/39       7,500       7,439,325  
 
Vernon, CA Elec Sys Rev, Ser A
    5.125 %     08/01/21       3,000       3,086,910  
 
Vista, CA Uni Sch Dist Election 2002, Ser C (AGM Insd)(a)
    5.000 %     08/01/28       2,185       2,171,103  
 
West Contra Costa, CA Uni Sch Dist Cabs (NATL Insd)
    *       08/01/25       5,000       1,860,550  
 
Woodland, CA Fin Auth Lease Rev Cap Proj Rfdg (Syncora Gtd)
    5.000 %     03/01/25       2,000       2,013,338  
 
                              416,124,893  
 
 
Guam–1.2%
 
                       
Guam Govt Ltd Oblig Rev Sect 30, Ser A
    5.375 %     12/01/24       2,900       2,844,523  
 
 
Puerto Rico–2.4%
 
                       
Puerto Rico Elec Pwr Auth Pwr Rev, Ser XX
    5.250 %     07/01/40       1,150       1,003,065  
 
Puerto Rico Sales Tax Fin Corp Sales Tax Rev First Sub, Ser A (Prerefunded @ 8/01/11)(c)(f)
    5.000 %     08/01/39       3,000       3,059,460  
 
Puerto Rico Sales Tax Fin Corp Sales Tax Rev First Sub, Ser C
    5.250 %     08/01/41       2,000       1,809,320  
 
                              5,871,845  
 
 
U.S. Virgin Islands–2.9%
 
                       
Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes Ln Nt, Ser A
    6.375 %     10/01/19       3,000       3,035,070  
 
Virgin Islands Pub Fin Auth Rev Matching Fd Ln Diago, Ser A
    6.625 %     10/01/29       2,000       2,056,340  
 
Virgin Islands Pub Fin Auth Rev Matching Fd Ln Nt Sr Lien, Ser A
    5.000 %     10/01/29       2,000       1,884,380  
 
                              6,975,790  
 
TOTAL INVESTMENTS(h)–178.1% (Cost $463,769,064)
                            431,817,051  
 
FLOATING RATE NOTE OBLIGATIONS–(27.2%)
                               
Notes with interest rates ranging from 0.26% to 0.36% at 02/28/11, and contractual maturities of collateral ranging from 08/15/24 to 10/01/39 (See Note 1I)(i)
                            (65,925,000 )
 
OTHER ASSETS IN EXCESS OF LIABILITIES–2.7%
                            6,443,602  
 
PREFERRED SHARES–(53.6%)
                            (130,000,000 )
 
NET ASSETS APPLICABLE TO COMMON SHARES–100.0%
                          $ 242,335,653  
 
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
10        Invesco Van Kampen California Value Municipal Income Trust


 

Investment Abbreviations:
 
     
AGM
  – Assured Guaranty Municipal Corp.
AMBAC
  – American Municipal Bond Assurance Corp.**
AMT
  – Alternative Minimum Tax
CA MTG
  – California Mortgage Insurance
FHA
  – Federal Housing Administration
GNMA
  – Government National Mortgage Association
NATL
  – National Public Finance Guarantee Corp.
Radian
  – Radian Asset Assurance
Syncora Gtd
  – Syncora Guaranteed Limited
 
Notes to Schedule of Investments:
 
* Zero Coupon Bond
** AMBAC filed for bankruptcy on November 8, 2010.
(a) Underlying security related to Dealer Trusts entered into by the Trust. See Note 1I.
(b) Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date.
(c) Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on February 28, 2011.
(d) Demand Security payable upon demand by the Trust at specified time intervals no greater than thirteen months. Interest rate is redetermined periodically. Rate shown is the rate in effect on February 28, 2011.
(e) Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended. The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at February 28, 2011 was $5,866,148, which represented 2.42% of the Trust’s net assets applicable to common shares.
(f) Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put.
(g) Escrowed to Maturity
(h) This table provides a listing of those entities that have either issued, guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the securities held in the portfolio. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the issuer’s obligations but may be called upon to satisfy the issuer’s obligations.
 
         
Entities   Percentage
 
Assured Guaranty Municipal Corp. 
    12.01 %
 
National Public Finance Guarantee Corp. 
    11.84 %
 
American Municipal Bond Assurance Corp.**
    7.17 %
 
 
(i) Floating rate note obligations related to securities held. The interest rates shown reflect the rates in effect at February 28, 2011. At February 28, 2011, the Trust’s investments with a value of $105,926,524 are held by the Dealer Trusts established by a Broker Dealer (“Dealer Trusts”) and serve as collateral for the $65,925,000 in floating rate note obligations outstanding at that date.
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
11        Invesco Van Kampen California Value Municipal Income Trust


 

Statement of Assets and Liabilities
 
February 28, 2011
 
 
         
 
Assets:
 
Investments, at value (Cost $463,769,064)
  $ 431,817,051  
 
Cash
    301,706  
 
Receivables:
       
Interest
    6,155,816  
 
Investments sold
    205,000  
 
Total assets
    438,479,573  
 
 
Liabilities:
 
Floating rate note obligations
    65,925,000  
 
Payables:
       
Accrued fees to affiliates
    22,464  
 
Income distributions-preferred shares
    22,217  
 
Accrued other operating expenses
    174,239  
 
Total liabilities
    66,143,920  
 
Preferred shares ($0.01 par value, authorized 100,000,000 shares, 5,200 issued with liquidation preference of $25,000 per share)
    130,000,000  
 
Net assets applicable to common shares
  $ 242,335,653  
 
 
Net assets applicable to common shares consist of:
 
Shares of beneficial interest-common shares
  $ 332,728,641  
 
Undistributed net investment income
    3,207,250  
 
Undistributed net realized gain (loss)
    (61,648,225 )
 
Unrealized appreciation (depreciation)
    (31,952,013 )
 
    $ 242,335,653  
 
 
Shares outstanding, $0.01 par value per common share with an unlimited number of shares authorized:
 
Common shares outstanding
    22,106,471  
 
Net asset value per common share
  $ 10.96  
 
Market value per common share
  $ 11.21  
 
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
12        Invesco Van Kampen California Value Municipal Income Trust


 

Statement of Operations
 
 
                 
    Four months ended
  Year ended
    February 28,
  October 31,
    2011   2010
 
 
Investment income:
 
       
Interest
  $ 8,219,780     $ 25,217,068  
 
                 
 
Expenses:
 
       
Advisory fees
    802,072       2,574,534  
 
Interest, facilities and maintenance fees
    285,317       907,824  
 
Trustees’ and officers’ fees and benefits
    26,333       123,251  
 
Administrative services fees
    31,949       100,998  
 
Transfer agent fees
    0       41,389  
 
Custodian fees
    1,417       8,917  
 
Other
    23,666       170,247  
 
Total expenses
    1,170,754       3,927,160  
 
Less: Fees waived and/or expenses reimbursed
    27,271       268,891  
 
Net expenses
    1,143,483       3,658,269  
 
Net investment income
    7,076,297       21,558,799  
 
 
Realized and unrealized gain (loss):
 
       
Net realized gain (loss)
    (3,577,213 )     (5,609,167 )
 
Unrealized appreciation (depreciation):
               
Beginning of the period
    3,415,700       (21,951,769 )
 
End of the period
    (31,952,013 )     3,415,700  
 
Net unrealized appreciation (depreciation) during the period
    (35,367,713 )     25,367,469  
 
Net realized and unrealized gain (loss)
    (38,944,926 )     19,758,302  
 
Distributions to preferred shareholders from net investment income
    (177,464 )     (543,369 )
 
Net increase (decrease) in net assets applicable to common shares from operations
  $ (32,046,093 )   $ 40,773,732  
 
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
13        Invesco Van Kampen California Value Municipal Income Trust


 

Statement of Changes in Net Assets
 
 
                         
    Four months ended
  Year ended
  Year ended
    February 28,
  October 31,
  October 31,
    2011   2010   2009
 
 
From investment activities:
 
               
 
Operations:
 
               
Net investment income
  $ 7,076,297     $ 21,558,799     $ 22,820,325  
 
Net realized gain (loss)
    (3,577,213 )     (5,609,167 )     (32,417,280 )
 
Net unrealized appreciation (depreciation) during the period
    (35,367,713 )     25,367,469       67,348,242  
 
Distributions to preferred shareholders from net investment income
    (177,464 )     (543,369 )     (1,368,454 )
 
Change in net assets applicable to common shares from operations
    (32,046,093 )     40,773,732       56,382,833  
 
Distributions to common shareholders from net investment income
    (6,717,790 )     (20,131,211 )     (19,483,458 )
 
Net change in net assets applicable to common shares from investment activities
    (38,763,883 )     20,642,521       36,899,375  
 
 
From capital transactions:
 
               
Value of common shares issued through dividend reinvestment
    149,578       567,912       541,096  
 
Total increase (decrease) in net assets applicable to common shares
    (38,614,305 )     21,210,433       37,440,471  
 
 
Net assets applicable to common shares:
 
               
Beginning of the period
    280,949,958       259,739,525       222,299,054  
 
End of the period (including accumulated undistributed net investment income of $3,207,250, $3,092,904 and $2,215,333, respectively)
  $ 242,335,653     $ 280,949,958     $ 259,739,525  
 
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
14        Invesco Van Kampen California Value Municipal Income Trust


 

Statement of Cash Flows
 
 
                 
    Four months ended
  Year ended
    February 28,
  October 31,
    2011   2010
 
Net increase (decrease) in net assets applicable to common shares from operations
  $ (32,046,093 )   $ 40,773,732  
 
 
Adjustments to reconcile the change in net assets applicable to common shares from operations to net cash provided by operating activities:
 
       
Purchases of investments
    (21,910,730 )     (59,056,684 )
 
Proceeds from sales of investments
    17,727,986       71,806,697  
 
Net sales of short-term investments
          7,800,000  
 
Amortization of premium
    136,119       356,208  
 
Accretion of discount
    (499,751 )     (1,628,958 )
 
Net realized loss on investments
    3,577,213       5,609,167  
 
Net change in unrealized appreciation (depreciation) on investments
    35,367,713       (25,367,469 )
 
Decrease in interest receivables and other assets
    124,678       461,452  
 
(Decrease)/Increase in accrued expenses and other payables
    (205,827 )     26,373  
 
Increase/(Decrease) in trustees’ deferred compensation and retirement plans
    7,583       (1,082,318 )
 
Net cash provided by operating activities
    2,278,891       39,698,200  
 
 
Cash flows provided by (used in) financing activities:
 
       
Dividends paid to common shareholders from net investment income
    (6,564,383 )     (19,563,477 )
 
Net proceeds from and repayments of floating rate note and dealer trust obligations
    825,000       (6,525,000 )
 
Retirement of preferred shares
          (10,000,000 )
 
Net cash provided by (used in) financing activities
    (5,739,383 )     (36,088,477 )
 
Net increase (decrease) in cash
    (3,460,492 )     3,609,723  
 
Cash at the beginning of the period
    3,762,198       152,475  
 
Cash at the end of the period
  $ 301,706     $ 3,762,198  
 
 
Supplemental disclosures of cash flow information
 
       
Cash paid during the period for interest, facilities and maintenance fees
  $ 285,317     $ 661,769
 
For the year ended October 31, 2010, facilities and maintenance fees were excluded.
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
15        Invesco Van Kampen California Value Municipal Income Trust


 

Financial Highlights
 
The following schedule presents financial highlights for one common share of the Trust outstanding throughout the periods indicated.
 
                                                 
    Four months
                   
    ended
                   
    February 28,
  Year ended October 31,
    2011   2010   2009   2008   2007   2006
 
Net asset value, beginning of the period
  $ 12.72     $ 11.78     $ 10.11     $ 15.38     $ 16.69     $ 16.47  
 
Net investment income(a)
    0.32       0.98       1.04       1.18       1.13       1.09  
 
Net realized and unrealized gain (loss)
    (1.77 )     0.89       1.58       (5.28 )     (1.25 )     0.44  
 
Distributions paid to preferred shareholders:
 
                                               
Net investment income
    (0.01 )     (0.02 )     (0.06 )     (0.32 )     (0.30 )     (0.26 )
 
Net realized gain
    -0-       -0-       -0-       -0-       (0.02 )     (0.03 )
 
Total income (loss) from investment operations
    (1.46 )     1.85       2.56       (4.42 )     (0.44 )     1.24  
 
Distributions paid to common shareholders:
 
                                               
Net investment income
    (0.30 )     (0.91 )     (0.89 )     (0.85 )     (0.81 )     (0.85 )
 
Net realized gain
    -0-       -0-       -0-       -0-       (0.06 )     (0.17 )
 
Net asset value, end of the period
  $ 10.96     $ 12.72     $ 11.78     $ 10.11     $ 15.38     $ 16.69  
 
Market value, end of the period
  $ 11.21     $ 13.02     $ 12.02     $ 10.34     $ 15.44     $ 15.86  
 
Total return at net asset value(b)
    (11.47 )%     16.33 %                                
 
Total return at market value(c)
    (11.54 )%     16.70 %     26.67 %     (28.65 )%     2.80 %     14.36 %
 
Net assets applicable to common shares at end of the period (000’s omitted)
  $ 242,336     $ 280,950     $ 259,740     $ 222,299     $ 337,272     $ 365,678  
 
Portfolio turnover rate(d)
    4 %     12 %     30 %     33 %     38 %     25 %
 
 
Ratios/supplemental data based on average net assets applicable to common shares:
 
                                       
Ratio of expenses:
 
                                               
With fee waivers and/or expense reimbursements(e)
    1.40 %(g)(h)     1.36 %     1.53 %     2.03 %     1.91 %     1.23 %
 
With fee waivers and/or expense reimbursements excluding interest, facilities and maintenance fees(e)(i)
    1.05 %(g)(h)     1.12 %     1.19 %     0.97 %     1.03 %     1.21 %
 
Without fee waivers and/or expense reimbursements(e)
    1.43 %(g)(h)     1.46 %     1.72 %     2.19 %     2.05 %     N/A  
 
Ratio of net investment income before preferred share dividends
    8.66 %(g)(h)     8.03 %     9.97 %     8.52 %     7.04 %     6.66 %
 
Preferred share dividends
    0.22 %(g)                                        
 
Ratio of net investment income after preferred share dividends
    8.44 %(g)(h)     7.83 %     9.37 %     6.23 %     5.18 %     5.09 %
 
 
Senior securities:
 
                                       
Total preferred shares outstanding
    5,200       5,200       5,600       6,400       8,000       8,000  
 
Total amount of preferred shares outstanding (000’s omitted)
  $ 130,000     $ 130,000     $ 140,000     $ 160,000     $ 200,000     $ 200,000  
 
Asset coverage per preferred share(f)
  $ 71,603     $ 79,032     $ 71,385     $ 59,769     $ 67,182     $ 70,730  
 
Liquidating preference per preferred share
  $ 25,000     $ 25,000     $ 25,000     $ 25,000     $ 25,000     $ 25,000  
 
(a) Based on average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the return based upon those net asset values differ from the net asset value and returns for shareholders transactions. Does not include sales charges and is not annualized for periods less than one year.
(c) Total return based on common share market price 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. Not annualized for period less than one year, if applicable.
(d) Portfolio turnover is not annualized for periods less than one year, if applicable.
(e) Ratios do not reflect the effect of dividend payments to preferred shareholders.
(f) 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.
(g) Ratios are annualized and based on average net assets applicable to common shares (000’s omitted) of $248,596.
(h) Ratio includes an adjustment for a change in accounting estimate for professional services fees during the period. Ratios excluding this adjustment would have been higher by 0.05%.
(i) For the years ended October 31, 2010 and prior, ratio does not exclude facilities and maintenance fees.
N/A=Not Applicable
 
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
 
16        Invesco Van Kampen California Value Municipal Income Trust


 

Notes to Financial Statements
 
February 28, 2011
 
 
NOTE 1—Significant Accounting Policies
 
Invesco Van Kampen California Value Municipal Income Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, closed-end management investment company. Effective June 1, 2010, the Trust’s name changed from Van Kampen California Value Municipal Income Trust to Invesco Van Kampen California Value Municipal Income Trust.
  On February 28, 2011, the Trust’s fiscal year-end changed from October 31 to February 28.
  The Trust’s investment objective is to seek to provide a high level of current income exempt from federal and California income taxes, consistent with preservation of capital. The Trust will invest substantially all of its assets in California municipal securities rated investment grade at the time of investment.
  The following is a summary of the significant accounting policies followed by the Trust in the preparation of its financial statements.
A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.
    Securities are fair valued using an evaluated quote provided by an independent pricing service approved by the Board of Trustees. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices and may reflect appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Securities with a demand feature exercisable within one to seven days are valued at par. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and principal payments.
    Securities for which market quotations either are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on transferability or disposition; trading in similar securities by the same issuer or comparable companies; relevant political, economic or issuer specific news; and other relevant factors under the circumstances.
    Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes.
    The Trust may periodically participate in litigation related to Trust investments. As such, the Trust may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
    Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Trust’s net asset value and, accordingly, they reduce the Trust’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Trust and the investment adviser.
C. Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.
D. Distributions — The Trust declares and pays monthly dividends from net investment income to common shareholders. Distributions from net realized capital gain, if any, are generally paid annually and are distributed on a pro rata basis to common and preferred shareholders. The Trust may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.
E. Federal Income Taxes — The Trust intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Trust’s taxable earnings to shareholders. As such, the Trust will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
    In addition, the Trust intends to invest in such municipal securities to allow it to qualify to pay shareholders “exempt-interest dividends”, as defined in the Internal Revenue Code.
    The Trust files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Trust is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
 
17        Invesco Van Kampen California Value Municipal Income Trust


 

F. Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Trust monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
G. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts, including the Trust’s servicing agreements that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
H. Securities Purchased on a When-Issued and Delayed Delivery Basis — The Trust may purchase and sell interests in portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Trust on such interests or securities in connection with such transactions prior to the date the Trust actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Trust will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date.
I. Floating Rate Note Obligations — The Trust invests in inverse floating rate securities, such as Residual Interest Bonds (“RIBs”) or Tender Option Bonds (“TOBs”) for investment purposes and to enhance the yield of the Trust. Inverse floating rate investments tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. Such transactions may be purchased in the secondary market without first owning the underlying bond or by the sale of fixed rate bonds by the Trust to special purpose trusts established by a broker dealer (“Dealer Trusts”) in exchange for cash and residual interests in the Dealer Trusts’ assets and cash flows, which are in the form of inverse floating rate securities. The Dealer Trusts finance the purchases of the fixed rate bonds by issuing floating rate notes to third parties and allowing the Trust to retain residual interest in the bonds. The floating rate notes issued by the Dealer Trusts have interest rates that reset weekly and the floating rate note holders have the option to tender their notes to the Dealer Trusts for redemption at par at each reset date. The residual interests held by the Trust (inverse floating rate investments) include the right of the Trust (1) to cause the holders of the floating rate notes to tender their notes at par at the next interest rate reset date, and (2) to transfer the municipal bond from the Dealer Trusts to the Trust, thereby collapsing the Dealer Trusts.
    TOBs are presently classified as private placement securities. Private placement securities are subject to restrictions on resale because they have not been registered under the Securities Act of 1933, as amended or are otherwise not readily marketable. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Trust or less than what may be considered the fair value of such securities.
    The Trust accounts for the transfer of bonds to the Dealer Trusts as secured borrowings, with the securities transferred remaining in the Trust’s investment assets, and the related floating rate notes reflected as Trust liabilities under the caption Floating rate note obligations on the Statement of Assets and Liabilities. The Trust records the interest income from the fixed rate bonds under the caption Interest and records the expenses related to floating rate obligations and any administrative expenses of the Dealer Trusts as a component of Interest, facilities and maintenance fees on the Statement of Operations.
    The Trust generally invests in inverse floating rate securities that include embedded leverage, thus exposing the Trust to greater risks and increased costs. The primary risks associated with inverse floating rate securities are varying degrees of liquidity and the changes in the value of such securities in response to changes in market rates of interest to a greater extent than the value of an equal principal amount of a fixed rate security having similar credit quality, redemption provisions and maturity which may cause the Trust’s net asset value to be more volatile than if it had not invested in inverse floating rate securities. In certain instances, the short-term floating rate interests created by the special purpose trust may not be able to be sold to third parties or, in the case of holders tendering (or putting) such interests for repayment of principal, may not be able to be remarketed to third parties. In such cases, the special purpose trust holding the long-term fixed rate bonds may be collapsed. In the case of RIBs or TOBs created by the contribution of long-term fixed income bonds by the Trust, the Trust will then be required to repay the principal amount of the tendered securities. During times of market volatility, illiquidity or uncertainty, the Trust could be required to sell other portfolio holdings at a disadvantageous time to raise cash to meet that obligation.
J. Cash and Cash Equivalents — For the purposes of the Statement of Cash Flows the Fund defines Cash and Cash Equivalents as cash (including foreign currency), money market funds and other investments held in lieu of cash and excludes investments made with cash collateral received.
K. Other Risks — The value of, payment of interest on, repayment of principal for and the ability to sell a municipal security may be affected by constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives and the economics of the regions in which the issuers are located.
    Since many municipal securities are issued to finance similar projects, especially those relating to education, health care, transportation and utilities, conditions in those sectors can affect the overall municipal securities market and a Trust’s investments in municipal securities.
    There is some risk that a portion or all of the interest received from certain tax-free municipal securities could become taxable as a result of determinations by the Internal Revenue Service.
L. Interest, Facilities and Maintenance Fees — Interest, Facilities and Maintenance Fees include interest and related borrowing costs such as commitment fees and other expenses associated with lines of credit and interest and administrative expenses related to establishing and maintaining Auction Rate Preferred Shares and floating rate note obligations, if any.
 
18        Invesco Van Kampen California Value Municipal Income Trust


 

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
 
Effective June 1, 2010, the Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Trust pays an advisory fee to the Adviser based on the annual rate of 0.55% of the Trust’s average daily net assets including current preferred shares and leverage that the Trust entered into to retire preferred shares of the Trust. Prior to June 1, 2010, Van Kampen Asset Management (“VKAM”) had voluntarily agreed to waive investment advisory fees equal to 0.10% of the average daily net assets including current preferred shares and leverage. For the period November 1, 2009 to May 31, 2010, the Trust paid an advisory fee of $1,479,068 to VKAM based on the annual rate and the Trust’s average daily net assets as discussed above.
  Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Trust, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Trust based on the percentage of assets allocated to such Sub-Adviser(s).
  The Adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses to the extent necessary to limit the Trust’s expenses (excluding certain items discussed below) to 1.05%. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Trust’s expenses to exceed the limit reflected above: (1) interest, facilities and maintenance fees; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; and (5) expenses that the Trust has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2012. The Adviser waived fees and/or reimbursed expenses of $27,271 during the period under this expense limitation.
  Prior to June 1, 2010, VKAM voluntarily waived $268,891 of advisory fees of the Trust.
  The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Trust has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Trust. Prior to June 1, 2010, under separate accounting services and chief compliance officer (“CCO”) employment agreements, Van Kampen Investments Inc. (“VKII”) provided accounting services and the CCO provided compliance services to the Trust. Pursuant to such agreements, the Trust paid $21,574 to VKII. For the period November 1, 2010 to February 28, 2011 and the year ended October 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as administrative services fees. Also, Invesco has entered into service agreements whereby State Street Bank and Trust Company (“SSB”) serves as the custodian and fund accountant and provides certain administrative services to the Trust.
  Prior to June 1, 2010, under a legal services agreement, VKII provided legal services to the Trust. Pursuant to such agreement, the Trust paid $12,071 to VKII.
  Certain officers and trustees of the Trust are officers and directors of Invesco.
 
NOTE 3—Additional Valuation Information
 
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
    Level 1 — Prices are determined using quoted prices in an active market for identical assets.
    Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
    Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Trust’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.
  The following is a summary of the tiered valuation input levels, as of February 28, 2011. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
  During the four month period ended February 28, 2011, there were no significant transfers between investment levels.
 
                                 
    Level 1   Level 2   Level 3   Total
 
Municipal Obligations
  $     $ 431,817,051     $     $ 431,817,051  
 
 
NOTE 4—Trustees’ and Officers’ Fees and Benefits
 
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Trust to pay remuneration to certain Trustees and Officers of the Trust.
  For the period November 1, 2010 to February 28, 2011 and the year ended October 31, 2010, the Trust paid legal fees of $16,062 and $25,717, respectively for services rendered by Skadden, Arps, Slate, Meagher & Flom LLP, as legal counsel to the Trust. A member of that firm is a Trustee of the Trust.
  Prior to June 1, 2010, the Trust provided retirement plans for its independent trustees. Such plans were terminated and the amounts owed to the trustees were distributed.
 
19        Invesco Van Kampen California Value Municipal Income Trust


 

NOTE 5—Cash Balances and Borrowings
 
The Trust is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Trust may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
  Inverse floating rate obligations resulting from the transfer of bonds to Dealer Trusts are accounted for as secured borrowings. The average floating rate notes outstanding and average annual interest and fees related to inverse floating rate note obligations during the period ended February 28, 2011 were $67,726,000 and 0.92%, respectively.
 
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
 
Tax Character of Distributions to Shareholders Paid During the period November 1, 2010 to February 28, 2011 and the years ended October 31, 2010 and 2009:
 
                         
    Four months ended
  Year ended
  Year ended
    February 28, 2011   October 31, 2010   October 31, 2009
 
Ordinary income
  $     $ 53,482     $ 74,893  
 
Tax exempt income
    6,895,254       20,621,098       20,982,772  
 
Total distributions
  $ 6,895,254     $ 20,674,580     $ 21,057,665  
 
 
Tax Components of Net Assets at Period-End:
 
         
    Four months ended
    February 28, 2011
 
Undistributed ordinary income
  $ 2,818,852  
 
Net unrealized appreciation (depreciation) — investments
    (31,120,371 )
 
Temporary book/tax differences
    (1,481 )
 
Capital loss carryforward
    (62,089,988 )
 
Shares of beneficial interest
    332,728,641  
 
Total net assets
  $ 242,335,653  
 
 
  The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Trust’s net unrealized appreciation (depreciation) difference is attributable primarily to bond accretion and amortization.
  The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses.
  Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Trust to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
  The Trust utilized $0 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Trust has a capital loss carryforward as of February 28, 2011 which expires as follows:
 
         
    Capital Loss
Expiration   Carryforward*
 
February 28, 2015
  $ 1,441,133  
 
February 29, 2016
    20,393,535  
 
February 28, 2017
    31,471,695  
 
February 28, 2018
    4,985,286  
 
February 28, 2019
    3,798,339  
 
Total capital loss carryforward
  $ 62,089,988  
 
Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code.
 
20        Invesco Van Kampen California Value Municipal Income Trust


 

NOTE 7—Investment Securities
 
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Trust during the period November 1, 2010 to February 28, 2011 was $21,910,730 and $17,732,986, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
 
         
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis
 
Aggregate unrealized appreciation of investment securities
  $ 5,195,842  
 
Aggregate unrealized (depreciation) of investment securities
    (36,316,213 )
 
Net unrealized appreciation (depreciation) of investment securities
  $ (31,120,371 )
 
Cost of investments for tax purposes is $462,937,422.
 
NOTE 8—Reclassification of Permanent Differences
 
Primarily as a result of differing book/tax treatment of bond premium, on February 28, 2011, undistributed net investment income (loss) was decreased by $66,697, undistributed net realized gain (loss) was increased by $32,510 and common shares of beneficial interest increased by $34,187. This reclassification had no effect on the net assets of the Trust.
 
NOTE 9—Common Shares of Beneficial Interest
 
Transactions in common shares of beneficial interest were as follows:
 
                         
    Four months ended
  Year ended
  Year ended
    February 28, 2011   October 31, 2010   October 31, 2009
 
Beginning shares
    22,093,084       22,046,524       21,996,525  
 
Shares Issued Through Dividend Reinvestment
    13,387       46,560       49,999  
 
Ending shares
    22,106,471       22,093,084       22,046,524  
 
 
  The Trustees have approved share repurchases whereby the Trust may, when appropriate, purchase shares in the open market or in privately negotiated transactions at a price not above market value or net asset value, whichever is lower at the time of purchase.
 
NOTE 10—Preferred Shares of Beneficial Interest
 
The Trust has issued Auction Rate Preferred Shares (“preferred shares”) which have a liquidation value of $25,000 per share plus the redemption premium, if any, plus accumulated but unpaid dividends, whether or not declared, thereon to the date of distribution. The Trust may redeem such shares, in whole or in part, at the original purchase price of $25,000 per share plus accumulated but unpaid dividends, whether or not declared, thereon to the date of redemption.
  Historically, the Trust paid annual fees equivalent to 0.25% of the preferred share liquidation value for the remarketing efforts associated with the preferred auction. Effective March 16, 2009, the Trust decreased this amount to 0.15% due to auction failures. In the future, if auctions no longer fail, the Trust may return to an annual fee payment of 0.25% of the preferred share liquidation value. These fees are included as a component of interest, facilities and maintenance fees on the Statement of Operations.
  Dividends, which are cumulative, are reset through auction procedures.
 
                                         
        Amount
          Range of
Series   Shares†   (000’s omitted)†   Rate†   Reset Date   Dividend Rates††
 
A
    1,560       39,000       0.396 %     03/03/2011       0.365%-0.503%  
 
B
    1,950       48,750       0.411 %     03/09/2011       0.365%-0.442%  
 
C
    1,170       29,250       0.396 %     03/03/2011       0.365%-0.427%  
 
D
    520       13,000       0.411 %     03/23/2011       0.381%-0.503%  
 
As of February 28, 2011.
†† For the four month period ended February 28, 2011.
  Subsequent to February 28, 2011 and up through April 7, 2011, the Trust paid dividends to preferred shareholders at rates ranging from 0.381% to 0.411% in the aggregate amount of $65,753.
  The Trust is subject to certain restrictions relating to the preferred shares. Failure to comply with these restrictions could preclude the Trust from declaring any distributions to common shareholders or purchasing common shares and/or could trigger the mandatory redemption of preferred shares at liquidation value.
  Beginning on February 13, 2008 and continuing through February 28, 2011 all series of preferred shares of the Trust were not successfully remarketed. As a result, the dividend rates of these preferred shares were reset to the maximum applicable rate.
  The preferred shares, which are entitled to one vote per share, generally vote with the common shares but vote separately as a class to elect two Trustees and on any matters affecting the rights of the preferred shares.
  The preferred shares are not listed on an exchange. Investors in preferred shares may participate in auctions through authorized broker-dealers; however, such broker-dealers are not required to maintain a secondary market in preferred shares, and there can be no assurance that a secondary market will develop, or if it does develop, a secondary market may not provide liquidity. When a preferred shares auction fails, investors may not be able to sell any or all of their preferred
 
21        Invesco Van Kampen California Value Municipal Income Trust


 

shares and because of the nature of the market for preferred shares, investors may receive less than the price paid for their preferred shares if sold outside of the auction.
  The Trust entered into additional floating rate note obligations as an alternative form of leverage in order to redeem and to retire a portion of its preferred shares. Transactions in preferred shares were as follows:
 
                                                                 
    Series A   Series B   Series C   Series D
    Shares   Value   Shares   Value   Shares   Value   Shares   Value
 
Outstanding at October 31, 2010
    1,560     $ 39,000,000       1,950     $ 48,750,000       1,170     $ 29,250,000       520     $ 13,000,000  
 
Shares retired
                                               
 
Outstanding at February 28, 2011
    1,560     $ 39,000,000       1,950     $ 48,750,000       1,170     $ 29,250,000       520     $ 13,000,000  
 
 
NOTE 11—Dividends
 
The Trust declared the following dividends from net investment income subsequent to February 28, 2011:
 
                         
Declaration Date   Amount per Share   Record Date   Payable Date
 
March 1, 2011
  $ 0.076       March 15, 2011       March 31, 2011  
 
April 1, 2011
  $ 0.076       April 15, 2011       April 29, 2011  
 
 
22        Invesco Van Kampen California Value Municipal Income Trust


 

Report of Independent Registered Public Accounting Firm
 
 
To the Board of Trustees and Shareholders of
Invesco Van Kampen California Value Municipal Income Trust:
 
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Invesco Van Kampen California Value Municipal Income Trust (hereafter referred to as the “Trust”) at February 28, 2011, and the results of its operations, the changes in its net assets, its cash flows, and the financial highlights for the period ended February 28, 2011 and the year ended October 31, 2010, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The statement of changes in net assets for the year ended October 31, 2009 and the financial highlights of the Trust for the periods ended October 31, 2009 and prior were audited by other independent auditors whose report dated December 21, 2009 expressed an unqualified opinion on those financial statements.
 
PRICEWATERHOUSECOOPERS LLP
 
April 21, 2011
Houston, Texas
 
23        Invesco Van Kampen California Value Municipal Income Trust


 

Tax Information
 
 
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
  The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
  The Trust designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended February 28, 2011:
 
         
Federal and State Income Tax
   
 
Tax-exempt interest dividends*
    99.85%  
 
  The above percentages are based on ordinary income dividends paid to shareholders during the Trust’s fiscal year.
 
24        Invesco Van Kampen California Value Municipal Income Trust


 

Trustees and Officers
The address of each trustee and officer is 1555 Peachtree, N.E., Atlanta, Georgia 30309. Generally, each trustee serves for a three year term or until his or her successor has been duly elected and qualified, and each officer serves for a one year term or until his or her successor has been duly elected and qualified. Column two below includes length of time served with predecessor entities, if any.
                     
              Number of      
              Funds in      
         Trustee       Fund      
  Name, Year of Birth and      and/or       Complex      
  Position(s) Held with the      Officer   Principal Occupation(s)   Overseen by   Other Directorship(s)  
  Trust      Since   During Past 5 Years   Trustee   Held by Trustee  
                     
 
Interested Persons
                 
                     
 
Colin Meadows — 1971
Trustee, President and Principal Executive Officer
     2010    Chief Administrative Officer, Invesco Advisers, Inc., since 2006; Prior to 2006, Senior Vice President of business development and mergers and acquisitions at GE Consumer Finance; Prior to 2005, Senior Vice President of strategic planning and technology at Wells Fargo Bank; From 1996 to 2003, associate principal with McKinsey & Company, focusing on the financial services and venture capital industries, with emphasis in banking and asset management sectors.   18    None  
                     
 
Independent Trustees
                 
                     
 
Wayne M. Whalen1 — 1939
Trustee and Chair
     1993    Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex   227    Director of the Abraham Lincoln Presidential Library Foundation  
                     
 
David C. Arch — 1945
Trustee
     1993    Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer.   227    Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan  
                     
 
Jerry D. Choate — 1938
Trustee
     2003    From 1995 to 1999, Chairman and Chief Executive Officer of the Allstate Corporation (‘‘Allstate’’) and Allstate Insurance Company. From 1994 to 1995, President and Chief Executive Officer of Allstate. Prior to 1994, various management positions at Allstate.   18    Trustee/Director/Managing General Partner of funds in the Fund Complex. Director since 1998 and member of the governance and nominating committee, executive committee, compensation and management development committee and equity award committee, of Amgen Inc., a biotechnological company. Director since 1999 and member of the nominating and governance committee and compensation and executive committee, of Valero Energy Corporation, a crude oil refining and marketing company. Previously, from 2006 to 2007, Director and member of the compensation committee and audit committee, of H&R Block, a tax preparation services company.  
                     
 
Rodney Dammeyer — 1940
Trustee
     1993    President of CAC, LLC, a private company offering capital investment and management advisory services.

Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.
  227    Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc.  
                     
 
1   Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex.
T-1

 


 

Trustees and Officers – (continued)
                             
        Trustee   Principal Occupation(s)   Number of   Other  
        and/or   During Past 5 Years   Funds in   Directorship(s)  
  Name, Year of Birth and     Officer       Fund   Held by Trustee  
  Position(s) Held with the     Since       Complex      
  Trust               Overseen by      
                  Trustee      
 
 
                         
             
 
Independent Trustees
                         
             
 
Linda Hutton Heagy – 1948
Trustee
    2003     Prior to June 2008, Managing Partner of Heidrick & Struggles, the second largest global executive search firm, and from 2001-2004, Regional Managing Director of U.S. operations at Heidrick & Struggles. Prior to 1997, Managing Partner of Ray & Berndtson, Inc., an executive recruiting firm. Prior to 1995, Executive Vice President of ABN AMRO, N.A., a bank holding company, with oversight for treasury management operations including all non-credit product pricing. Prior to 1990, experience includes Executive Vice President of The Exchange National Bank with oversight of treasury management including capital markets operations, Vice President of Northern Trust Company and an Associate at Price Waterhouse.     18     Trustee/Director/Managing General Partner of funds in the Fund Complex. Prior to 2010, Trustee on the University of Chicago Medical Center 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.  
             
 
R. Craig Kennedy – 1952
Trustee
    2003     Director and President of the German Marshall Fund of the United States, an 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.     18     Trustee/Director/Managing General Partner of funds in the Fund Complex. Director of First Solar, Inc.  
             
 
Howard J Kerr – 1935
Trustee
    1993     Retired. Previous member of the City Council and Mayor of Lake Forest, Illinois from 1988 through 2002. Previous business experience from 1981 through 1996 includes President and Chief Executive Officer of Pocklington Corporation, Inc., an investment holding company, President and Chief Executive Officer of Grabill Aerospace, and President of Custom Technologies Corporation. United States Naval Officer from 1960 through 1981, with responsibilities including Commanding Officer of United States Navy destroyers and Commander of United States Navy Destroyer Squadron Thirty-Three, White House experience in 1973 through 1975 as military aide to Vice Presidents Agnew and Ford and Naval Aid to President Ford, and Military Fellow on the Council of Foreign Relations in 1978-through 1979.     18     Trustee/Director/Managing General Partner of funds in the Fund Complex. Director of the Lake Forest Bank & Trust. Director of the Marrow Foundation.  
             
 
Jack E. Nelson – 1936
Trustee
    2003     President of Nelson Investment Planning Services, Inc., a financial planning company and registered investment adviser in the State of Florida. President of Nelson Ivest Brokerage Services Inc., a member of the Financial Industry Regulatory Authority (“FINRA”), 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.     18     Trustee/Director/Managing General Partner of funds in the Fund Complex.  
             
 
Hugo F. Sonnenschein – 1940
Trustee
    1994     President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago.     227     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  
             
 
Suzanne H. Woolsey, Ph.D. – 1941 Trustee
    2003     Chief Communications Officer of the National Academy of Sciences and Engineering and Institute of Medicine/National Research Council, an independent, federally chartered policy institution, from 2001 to November 2003 and Chief Operating Officer from 1993 to 2001. Executive Director of the Commission on Behavioral and Social Sciences and Education at the National Academy of Sciences/National Research Council from 1989 to 1993. Prior to 1980, experience includes Partner of Coopers & Lybrand (from 1980 to 1989), Associate Director of the US Office of Management and Budget (from 1977 to 1980) and Program Director of the Urban Institute (from 1975 to 1977).     18     Trustee/Director/Managing General Partner of funds in the Fund Complex. Independent Director and audit committee chairperson of Changing World Technologies, Inc., an energy manufacturing company, since July 2008. Independent Director and member of audit and governance committees of Fluor Corp., a global engineering, construction and management company, since January 2004. Director of Intelligent Medical Devices, Inc., a private company which develops symptom-based diagnostic tools for viral respiratory infections. Advisory Board member of ExactCost LLC, a private company providing activity-based costing for hospitals, laboratories, clinics, and physicians, since 2008.  
     

T-2


 

Trustees and Officers – (continued)
                             
        Trustee   Principal Occupation(s)   Number of   Other  
        and/or   During Past 5 Years   Funds in   Directorship(s)  
  Name, Year of Birth and     Officer       Fund   Held by Trustee  
  Position(s) Held with the     Since       Complex      
  Trust               Overseen by      
                  Trustee      
 
 
                         
             
 
Independent Trustees
                         
             
 
 
                      Chairperson of the Board of Trustees of the Institute for Defense Analyses, afederally funded research and development center, since 2000. Trustee from 1992 to 2000 and 2002 to present, current chairperson of the finance committee, current member of the audit committee, strategic growth committee and executive committee, and former Chairperson of the Board of Trustees (from 1997 to 1999), of the German Marshall Fund of the United States, a public foundation. Lead Independent Trustee of the Rocky Mountain Institute, a non-profit energy and environmental institute; Trustee since 2004. Chairperson of the Board of Trustees of the Colorado College; Trustee since 1995. Trustee of California Institute of Technology. Previously, Independent Director and member of audit committee and governance committee of Neurogen Corporation from 1998 to 2006; and Independent Director of Arbros Communications from 2000 to 2002  
             
 
Other Officers
                         
             
 
John M. Zerr – 1962
Senior Vice President, Chief Legal Officer and Secretary
    2010     Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust     N/A     N/A  
 
 
                         
 
 
          Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company)              
             
 
Lisa O. Brinkley – 1959 Vice President
    2010     Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds     N/A     N/A  
 
 
                         
 
 
          Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company              
     

T-3


 

Trustees and Officers – (continued)
                         
        Trustee   Principal Occupation(s)   Number of   Other  
  Name, Year of Birth and     and/or   During Past 5 Years   Funds in   Directorship(s)  
  Position(s) Held with the     Officer       Fund Complex   Held by  
  Trust     Since       Overseen by   Trustee  
                  Trustee      
 
 
                     
     
 
Other Officers
                     
     
 
Karen Dunn Kelley – 1960 Vice President
    2010     Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only).   N/A   N/A  
 
 
                     
 
 
          Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only)          
     
 
Sheri Morris – 1964
Vice President, Principal Financial Officer and Treasurer
    2010     Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser)   N/A   N/A  
 
 
                     
 
 
          Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.          
     
 
Lance A. Rejsek – 1967 Anti-Money Laundering Compliance Officer
    2010     Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc.   N/A   N/A  
 
 
                     
 
 
          Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.          
     
 
Todd L. Spillane – 1958 Chief Compliance Officer
    2010     Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.   N/A   N/A  
 
 
                     
 
 
          Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company          
     
             
Office of the Fund
  Investment Adviser   Auditors   Custodian
1555 Peachtree Street, N.E.
  Invesco Advisers, Inc.   PricewaterhouseCoopers LLP   State Street Bank and Trust Company
Atlanta, GA 30309 
  1555 Peachtree Street, N.E.   1201 Louisiana Street, Suite 2900    225 Franklin
 
  Atlanta, GA 30309    Houston, TX 77002-5678    Boston, MA 02110-2801 
 
Counsel to the Fund
  Transfer Agent        
Skadden, Arps, Slate, Meagher & Flom , LLP
  Computershare Trust Company, N.A.        
155 West Wacker Drive
  P.O. Box 43078         
Chicago, IL 60606 
  Providence, RI 02940-3078         

T-4


 

 
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
     Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
     Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
 
Trust holdings and proxy voting information
The Trust provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Trust’s semiannual and annual reports to shareholders. For the first and third quarters, the Trust files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. Shareholders can also look up the Trust’s Forms N-Q on the SEC website at sec.gov. Copies of the Trust’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file number for the Trust is 811-07404.
     A description of the policies and procedures that the Trust uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 341 2929 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
     Information regarding how the Trust voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at invesco.com/proxysearch. In addition, this information is available on the SEC website at sec.gov.
     Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities.
(INVESCO LOGO)
Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
         
 
  VK-CE-CAVMI-AR-1   Invesco Distributors, Inc.

 


 

ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the Registrant had adopted a code of ethics (the “Code”) that applies to the Registrant’s principal executive officer (“PEO”) and principal financial officer (“PFO”). There were no amendments to the Code during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees has determined that the Registrant has at least one audit committee financial expert serving on its Audit Committee. The Audit Committee financial experts are Jerry D. Choate, Linda Hutton Heagy and R. Craig Kennedy. Jerry D. Choate, Linda Hutton Heagy and R. Craig Kennedy are “independent” within the meaning of that term as used in Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Fees Billed by PWC Related to the Registrant
          PWC billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows:
                                 
            Percentage of Fees                
            Billed Applicable             Percentage of Fees  
            to Non-Audit             Billed Applicable to  
            Services Provided             Non-Audit Services  
    Fees Billed for     for fiscal year end     Fees Billed for     Provided for fiscal  
    Services Rendered     2/28/2011 Pursuant     Services Rendered     year end 10/31/2010  
    to the Registrant     to Waiver of Pre-     to the Registrant for     Pursuant to Waiver  
    for fiscal year end     Approval     fiscal year end     of Pre-Approval  
    2/28/2011     Requirement(1)     10/31/2010     Requirement(1)  
Audit Fees
  $ 19,250       N/A     $ 35,000       N/A  
Audit-Related Fees(2)
  $ 4,000       0 %   $ 0       0 %
Tax Fees(3)
  $ 2,300       0 %   $ 4,300       0 %
All Other Fees(4)
  $ 1,667       0 %   $ 0       0 %
 
                           
Total Fees
  $ 27,217       0 %   $ 39,300       0 %
PWC billed the Registrant aggregate non-audit fees of $7,967 for the fiscal year ended February 28, 2011, and $4,300 for the fiscal year ended October 31, 2010, for non-audit services rendered to the Registrant.
 
(1)   With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant to PWC during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrant’s Audit Committee and approved by the Registrant’s Audit Committee prior to the completion of the audit.
 
(2)   Audit-Related fees for the fiscal year end February 28, 2011 includes fees billed for agreed upon procedures related to auction rate preferred securities.
 
(3)   Tax fees for the fiscal year end February 28, 2011 includes fees billed for reviewing tax returns. Tax fees for the fiscal year end October 31, 2010 includes fees billed for reviewing tax returns.
 
(4)   All Other fees for the fiscal year end February 28, 2011 includes fees billed for completing professional services related to benchmark analysis.

 


 

Fees Billed by PWC Related to Invesco and Invesco Affiliates
          PWC billed Invesco Advisers, Inc. (“Invesco”), the Registrant’s adviser, and any entity controlling, controlled by or under common control with Invesco that provides ongoing services to the Registrant (“Invesco Affiliates”) aggregate fees for pre-approved non-audit services rendered to Invesco and Invesco Affiliates for the last two fiscal years as follows:
                                 
    Fees Billed for Non-             Fees Billed for Non-        
    Audit Services             Audit Services        
    Rendered to Invesco     Percentage of Fees     Rendered to Invesco     Percentage of Fees  
    and Invesco     Billed Applicable to     and Invesco     Billed Applicable to  
    Affiliates for fiscal     Non-Audit Services     Affiliates for fiscal     Non-Audit Services  
    year end 2/28/2011     Provided for fiscal     year end 10/31/2010     Provided for fiscal  
    That Were Required     year end 2/28/2011     That Were Required     year end 10/31/2010  
    to be Pre-Approved     Pursuant to Waiver     to be Pre-Approved     Pursuant to Waiver  
    by the Registrant's     of Pre-Approval     by the Registrant's     of Pre-Approval  
    Audit Committee     Requirement(1)     Audit Committee     Requirement(1)  
Audit-Related Fees
  $ 0       0 %   $ 0       0 %
Tax Fees
  $ 0       0 %   $ 0       0 %
All Other Fees
  $ 0       0 %   $ 0       0 %
 
                           
Total Fees(2)
  $ 0       0 %   $ 0       0 %
 
(1)   With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant, Invesco and Invesco Affiliates to PWC during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrant’s Audit Committee and approved by the Registrant’s Audit Committee prior to the completion of the audit.
 
(2)   Including the fees for services not required to be pre-approved by the registrant’s audit committee, PWC billed Invesco and Invesco Affiliates aggregate non-audit fees of $0 for the fiscal year ended February 28, 2011, and $0 for the fiscal year ended October 31, 2010, for non-audit services rendered to Invesco and Invesco Affiliates.
 
    The Audit Committee also has considered whether the provision of non-audit services that were rendered to Invesco and Invesco Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with maintaining PWC’s independence. To the extent that such services were provided, the Audit Committee determined that the provision of such services is compatible with PWC maintaining independence with respect to the Registrant.

 


 

PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees of
the Invesco Funds (the “Funds”)
Last Amended May 4, 2010
Statement of Principles
Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and Exchange Commission (“SEC”) (“Rules”), the Audit Committees of the Funds’ (the “Audit Committees”) Board of Trustees (the “Board”) are responsible for the appointment, compensation and oversight of the work of independent accountants (an “Auditor”). As part of this responsibility and to assure that the Auditor’s independence is not impaired, the Audit Committees pre-approve the audit and non-audit services provided to the Funds by each Auditor, as well as all non-audit services provided by the Auditor to the Funds’ investment adviser and to affiliates of the adviser that provide ongoing services to the Funds (“Service Affiliates”) if the services directly impact the Funds’ operations or financial reporting. The SEC Rules also specify the types of services that an Auditor may not provide to its audit client. The following policies and procedures comply with the requirements for pre-approval and provide a mechanism by which management of the Funds may request and secure pre-approval of audit and non-audit services in an orderly manner with minimal disruption to normal business operations.
Proposed services either may be pre-approved without consideration of specific case-by-case services by the Audit Committees (“general pre-approval”) or require the specific pre-approval of the Audit Committees (“specific pre-approval”). As set forth in these policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committees. Additionally, any fees exceeding 110% of estimated pre-approved fee levels provided at the time the service was pre-approved will also require specific approval by the Audit Committees before payment is made. The Audit Committees will also consider the impact of additional fees on the Auditor’s independence when determining whether to approve any additional fees for previously pre-approved services.
The Audit Committees will annually review and generally pre-approve the services that may be provided by each Auditor without obtaining specific pre-approval from the Audit Committee generally on an annual basis. The term of any general pre-approval runs from the date of such pre-approval through September 30th of the following year, unless the Audit Committees consider a different period and state otherwise. The Audit Committees will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.
The purpose of these policies and procedures is to set forth the guidelines to assist the Audit Committees in fulfilling their responsibilities.
Delegation
The Audit Committees may from time to time delegate pre-approval authority to one or more of its members who are Independent Trustees. All decisions to pre-approve a service by a delegated member shall be reported to the Audit Committees at the next quarterly meeting.
Audit Services
The annual audit services engagement terms will be subject to specific pre-approval of the Audit Committees. Audit services include the annual financial statement audit and other procedures such as tax provision work that is required to be performed by the independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committees will obtain, review and consider sufficient information concerning the proposed Auditor to make a reasonable evaluation of the Auditor’s qualifications and independence.
In addition to the annual Audit services engagement, the Audit Committees may grant either general or specific pre-approval of other audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services such as issuing consents for the

 


 

inclusion of audited financial statements with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.
Non-Audit Services
The Audit Committees may provide either general or specific pre-approval of any non-audit services to the Funds and its Service Affiliates if the Audit Committees believe that the provision of the service will not impair the independence of the Auditor, is consistent with the SEC’s Rules on auditor independence, and otherwise conforms to the Audit Committees’ general principles and policies as set forth herein.
Audit-Related Services
“Audit-related services” are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements or that are traditionally performed by the independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; and agreed-upon procedures related to mergers, compliance with ratings agency requirements and interfund lending activities.
Tax Services
“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committees will scrutinize carefully the retention of the Auditor in connection with a transaction initially recommended by the Auditor, the major business purpose of which may be tax avoidance or the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committees will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisors as necessary to ensure the consistency of Tax services rendered by the Auditor with the foregoing policy.
No Auditor shall represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.
Under rules adopted by the Public Company Accounting Oversight Board and approved by the SEC, in connection with seeking Audit Committees’ pre-approval of permissible Tax services, the Auditor shall:
  1.   Describe in writing to the Audit Committees, which writing may be in the form of the proposed engagement letter:
  a.   The scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the Fund, relating to the service; and
 
  b.   Any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor and any person (other than the Fund) with respect to the promoting, marketing, or recommending of a transaction covered by the service;
  2.   Discuss with the Audit Committees the potential effects of the services on the independence of the Auditor; and
 
  3.   Document the substance of its discussion with the Audit Committees.
All Other Auditor Services
The Audit Committees may pre-approve non-audit services classified as “All other services” that are not categorically prohibited by the SEC, as listed in Exhibit 1 to this policy.

 


 

Pre-Approval Fee Levels or Established Amounts
Pre-approval of estimated fees or established amounts for services to be provided by the Auditor under general or specific pre-approval policies will be set periodically by the Audit Committees. Any proposed fees exceeding 110% of the maximum estimated pre-approved fees or established amounts for pre-approved audit and non-audit services will be reported to the Audit Committees at the quarterly Audit Committees meeting and will require specific approval by the Audit Committees before payment is made. The Audit Committees will always factor in the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services and in determining whether to approve any additional fees exceeding 110% of the maximum pre-approved fees or established amounts for previously pre-approved services.
Procedures
Generally on an annual basis, Invesco Advisers, Inc. (“Invesco”) will submit to the Audit Committees for general pre-approval, a list of non-audit services that the Funds or Service Affiliates of the Funds may request from the Auditor. The list will describe the non-audit services in reasonable detail and will include an estimated range of fees and such other information as the Audit Committee may request.
Each request for services to be provided by the Auditor under the general pre-approval of the Audit Committees will be submitted to the Funds’ Treasurer (or his or her designee) and must include a detailed description of the services to be rendered. The Treasurer or his or her designee will ensure that such services are included within the list of services that have received the general pre-approval of the Audit Committees. The Audit Committees will be informed at the next quarterly scheduled Audit Committees meeting of any such services for which the Auditor rendered an invoice and whether such services and fees had been pre-approved and if so, by what means.
Each request to provide services that require specific approval by the Audit Committees shall be submitted to the Audit Committees jointly by the Fund’s Treasurer or his or her designee and the Auditor, and must include a joint statement that, in their view, such request is consistent with the policies and procedures and the SEC Rules.
Each request to provide tax services under either the general or specific pre-approval of the Audit Committees will describe in writing: (i) the scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the audit client, relating to the service; and (ii) any compensation arrangement or other agreement between the Auditor and any person (other than the audit client) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will discuss with the Audit Committees the potential effects of the services on the Auditor’s independence and will document the substance of the discussion.
Non-audit services pursuant to the de minimis exception provided by the SEC Rules will be promptly brought to the attention of the Audit Committees for approval, including documentation that each of the conditions for this exception, as set forth in the SEC Rules, has been satisfied.
On at least an annual basis, the Auditor will prepare a summary of all the services provided to any entity in the investment company complex as defined in section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of the engagement and the fees associated with those services.
The Audit Committees have designated the Funds’ Treasurer to monitor the performance of all services provided by the Auditor and to ensure such services are in compliance with these policies and procedures. The Funds’ Treasurer will report to the Audit Committees on a periodic basis as to the results of such monitoring. Both the Funds’ Treasurer and management of Invesco will immediately report to the chairman of the Audit Committees any breach of these policies and procedures that comes to the attention of the Funds’ Treasurer or senior management of Invesco.

 


 

Exhibit 1 to Pre-Approval of Audit and Non-Audit Services Policies and Procedures
Conditionally Prohibited Non-Audit Services (not prohibited if the Fund can reasonably conclude that the results of the service would not be subject to audit procedures in connection with the audit of the Fund’s financial statements)
    Bookkeeping or other services related to the accounting records or financial statements of the audit client
 
    Financial information systems design and implementation
 
    Appraisal or valuation services, fairness opinions, or contribution-in-kind reports
 
    Actuarial services
 
    Internal audit outsourcing services
Categorically Prohibited Non-Audit Services
    Management functions
 
    Human resources
 
    Broker-dealer, investment adviser, or investment banking services
 
    Legal services
 
    Expert services unrelated to the audit
 
    Any service or product provided for a contingent fee or a commission
 
    Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance
 
    Tax services for persons in financial reporting oversight roles at the Fund
 
    Any other service that the Public Company Oversight Board determines by regulation is impermissible.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
  (a)   The registrant has a separately-designed standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. Members of the audit committee are: Jerry D. Choate, Linda Hutton Heagy and R. Craig Kennedy.
 
  (b)   Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
      Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form.
ITEM 7.   DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

 


 

(INVESCO LOGO)
I.2. PROXY POLICIES AND PROCEDURES — RETAIL
     
Applicable to
  Retail Accounts
Risk Addressed by Policy
  breach of fiduciary duty to client under Investment Advisers Act of 1940 by placing Invesco personal interests ahead of client best economic interests in voting proxies
Relevant Law and Other Sources
  Investment Advisers Act of 1940
Last Tested Date
   
Policy/Procedure Owner
  Advisory Compliance
Policy Approver
  Fund Board
Approved/Adopted Date
  January 1, 2010
The following policies and procedures apply to certain funds and other accounts managed by Invesco Advisers, Inc. (“Invesco”).
A. POLICY STATEMENT
Introduction
Our Belief
The Invesco Funds Boards of Trustees and Invesco’s investment professionals expect a high standard of corporate governance from the companies in our portfolios so that Invesco may fulfill its fiduciary obligation to our fund shareholders and other account holders. Well governed companies are characterized by a primary focus on the interests of shareholders, accountable boards of directors, ample transparency in financial disclosure, performance-driven cultures and appropriate consideration of all stakeholders. Invesco believes well governed companies create greater shareholder wealth over the long term than poorly governed companies, so we endeavor to vote in a manner that increases the value of our investments and fosters good governance within our portfolio companies.
In determining how to vote proxy issues, Invesco considers the probable business consequences of each issue and votes in a manner designed to protect and enhance fund shareholders’ and other account holders’ interests. Our voting decisions are intended to enhance each company’s total shareholder value over Invesco’s typical investment horizon.
Proxy voting is an integral part of Invesco’s investment process. We believe that the right to vote proxies should be managed with the same care as all other elements of the investment process. The objective of Invesco’s proxy-voting activity is to promote good governance and advance the economic interests of our clients. At no time will Invesco exercise its voting power to advance its own
     
January 2010   I.2 — 1

 


 

commercial interests, to pursue a social or political cause that is unrelated to our clients’ economic interests, or to favor a particular client or business relationship to the detriment of others.
B. OPERATING PROCEDURES AND RESPONSIBLE PARTIES
Proxy administration
The Invesco Retail Proxy Committee (the “Proxy Committee”) consists of members representing Invesco’s Investments, Legal and Compliance departments. Invesco’s Proxy Voting Guidelines (the “Guidelines”) are revised annually by the Proxy Committee, and are approved by the Invesco Funds Boards of Trustees. The Proxy Committee implements the Guidelines and oversees proxy voting.
The Proxy Committee has retained outside experts to assist with the analysis and voting of proxy issues. In addition to the advice offered by these experts, Invesco uses information gathered from our own research, company managements, Invesco’s portfolio managers and outside shareholder groups to reach our voting decisions.
Generally speaking, Invesco’s investment-research process leads us to invest in companies led by management teams we believe have the ability to conceive and execute strategies to outperform their competitors. We select companies for investment based in large part on our assessment of their management teams’ ability to create shareholder wealth. Therefore, in formulating our proxy-voting decisions, Invesco gives proper consideration to the recommendations of a company’s Board of Directors.
Important principles underlying the Invesco Proxy Voting Guidelines
I. Accountability
Management teams of companies are accountable to their boards of directors, and directors of publicly held companies are accountable to their shareholders. Invesco endeavors to vote the proxies of its portfolio companies in a manner that will reinforce the notion of a board’s accountability to its shareholders. Consequently, Invesco votes against any actions that would impair the rights of shareholders or would reduce shareholders’ influence over the board or over management.
The following are specific voting issues that illustrate how Invesco applies this principle of accountability.
    Elections of directors. In uncontested director elections for companies that do not have a controlling shareholder, Invesco votes in favor of slates if they are comprised of at least a majority of independent directors and if the boards’ key committees are fully independent. Key committees include the Audit, Compensation and Governance or Nominating Committees. Invesco’s standard of independence excludes directors who, in addition to the directorship, have any material business or family relationships with the companies they serve.
     
January 2010   I.2 — 2

 


 

      Contested director elections are evaluated on a case-by-case basis and are decided within the context of Invesco’s investment thesis on a company.
    Director performance. Invesco withholds votes from directors who exhibit a lack of accountability to shareholders, either through their level of attendance at meetings or by enacting egregious corporate-governance or other policies. In cases of material financial restatements, accounting fraud, habitually late filings, adopting shareholder rights plan (“poison pills”) without shareholder approval, or other areas of poor performance, Invesco may withhold votes from some or all of a company’s directors. In situations where directors’ performance is a concern, Invesco may also support shareholder proposals to take corrective actions such as so-called “clawback” provisions.
 
    Auditors and Audit Committee members. Invesco believes a company’s Audit Committee has a high degree of responsibility to shareholders in matters of financial disclosure, integrity of the financial statements and effectiveness of a company’s internal controls. Independence, experience and financial expertise are critical elements of a well-functioning Audit Committee. When electing directors who are members of a company’s Audit Committee, or when ratifying a company’s auditors, Invesco considers the past performance of the Committee and holds its members accountable for the quality of the company’s financial statements and reports.
 
    Majority standard in director elections. The right to elect directors is the single most important mechanism shareholders have to promote accountability. Invesco supports the nascent effort to reform the U.S. convention of electing directors, and votes in favor of proposals to elect directors by a majority vote.
 
    Classified boards. Invesco supports proposals to elect directors annually instead of electing them to staggered multi-year terms because annual elections increase a board’s level of accountability to its shareholders.
 
    Supermajority voting requirements. Unless proscribed by law in the state of incorporation, Invesco votes against actions that would impose any supermajority voting requirement, and supports actions to dismantle existing supermajority requirements.
 
    Responsiveness. Invesco withholds votes from directors who do not adequately respond to shareholder proposals that were approved by a majority of votes cast the prior year.
 
    Cumulative voting. The practice of cumulative voting can enable minority shareholders to have representation on a company’s board. Invesco supports proposals to institute the practice of cumulative voting at companies whose overall corporate-governance standards indicate a particular need to protect the interests of minority shareholders.
     
January 2010   I.2 — 3

 


 

    Shareholder access. On business matters with potential financial consequences, Invesco votes in favor of proposals that would increase shareholders’ opportunities to express their views to boards of directors, proposals that would lower barriers to shareholder action and proposals to promote the adoption of generally accepted best practices in corporate governance.
II. Incentives
Invesco believes properly constructed compensation plans that include equity ownership are effective in creating incentives that induce managements and employees of our portfolio companies to create greater shareholder wealth. Invesco supports equity compensation plans that promote the proper alignment of incentives, and votes against plans that are overly dilutive to existing shareholders, plans that contain objectionable structural features, and plans that appear likely to reduce the value of an account’s investment.
Following are specific voting issues that illustrate how Invesco evaluates incentive plans.
    Executive compensation. Invesco evaluates compensation plans for executives within the context of the company’s performance under the executives’ tenure. Invesco believes independent compensation committees are best positioned to craft executive-compensation plans that are suitable for their company-specific circumstances. We view the election of those independent compensation committee members as the appropriate mechanism for shareholders to express their approval or disapproval of a company’s compensation practices. Therefore, Invesco generally does not support shareholder proposals to limit or eliminate certain forms of executive compensation. In the interest of reinforcing the notion of a compensation committee’s accountability to shareholders, Invesco supports proposals requesting that companies subject each year’s compensation record to an advisory shareholder vote, or so-called “say on pay” proposals.
 
    Equity-based compensation plans. When voting to approve or reject equity-based compensation plans, Invesco compares the total estimated cost of the plans, including stock options and restricted stock, against a carefully selected peer group and uses multiple performance metrics that help us determine whether the incentive structures in place are creating genuine shareholder wealth. Regardless of a plan’s estimated cost relative to its peer group, Invesco votes against plans that contain structural features that would impair the alignment of incentives between shareholders and management. Such features include the ability to reprice or reload options without shareholder approval, the ability to issue options below the stock’s current market price, or the ability to automatically replenish shares without shareholder approval.
 
January 2010   I.2 — 4

 


 

    Employee stock-purchase plans. Invesco supports employee stock-purchase plans that are reasonably designed to provide proper incentives to a broad base of employees, provided that the price at which employees may acquire stock is at most a 15 percent discount from the market price.
 
    Severance agreements. Invesco generally votes in favor of proposals requiring advisory shareholder ratification of executives’ severance agreements. However, we oppose proposals requiring such agreements to be ratified by shareholders in advance of their adoption.
III. Capitalization
Examples of management proposals related to a company’s capital structure include authorizing or issuing additional equity capital, repurchasing outstanding stock, or enacting a stock split or reverse stock split. On requests for additional capital stock, Invesco analyzes the company’s stated reasons for the request. Except where the request could adversely affect the fund’s ownership stake or voting rights, Invesco generally supports a board’s decisions on its needs for additional capital stock. Some capitalization proposals require a case-by-case analysis within the context of Invesco’s investment thesis on a company. Examples of such proposals include authorizing common or preferred stock with special voting rights, or issuing additional stock in connection with an acquisition.
IV. Mergers, Acquisitions and Other Corporate Actions
Issuers occasionally require shareholder approval to engage in certain corporate actions such as mergers, acquisitions, name changes, dissolutions, reorganizations, divestitures and reincorporations. Invesco analyzes these proposals within the context of our investment thesis on the company, and determines its vote on a case-by-case basis.
V. Anti-Takeover Measures
Practices designed to protect a company from unsolicited bids can adversely affect shareholder value and voting rights, and they create conflicts of interests among directors, management and shareholders. Except under special issuer-specific circumstances, Invesco votes to reduce or eliminate such measures. These measures include adopting or renewing “poison pills”, requiring supermajority voting on certain corporate actions, classifying the election of directors instead of electing each director to an annual term, or creating separate classes of common or preferred stock with special voting rights. Invesco generally votes against management proposals to impose these types of measures, and generally votes for shareholder proposals designed to reduce such measures. Invesco supports shareholder proposals directing companies to subject their anti-takeover provisions to a shareholder vote.
VI. Shareholder Proposals on Corporate Governance
Invesco generally votes for shareholder proposals that are designed to protect shareholder rights if a company’s corporate-governance standards indicate that such additional protections are warranted.
     
January 2010   I.2 — 5

 


 

VII. Shareholder Proposals on Social Responsibility
The potential costs and economic benefits of shareholder proposals seeking to amend a company’s practices for social reasons are difficult to assess. Analyzing the costs and economic benefits of these proposals is highly subjective and does not fit readily within our framework of voting to create greater shareholder wealth over Invesco’s typical investment horizon. Therefore, Invesco abstains from voting on shareholder proposals deemed to be of a purely social, political or moral nature.
VIII. Routine Business Matters
Routine business matters rarely have a potentially material effect on the economic prospects of fund holdings, so we generally support the board’s discretion on these items. However, Invesco votes against proposals where there is insufficient information to make a decision about the nature of the proposal. Similarly, Invesco votes against proposals to conduct other unidentified business at shareholder meetings.
Summary
These Guidelines provide an important framework for making proxy-voting decisions, and should give fund shareholders and other account holders insight into the factors driving Invesco’s decisions. The Guidelines cannot address all potential proxy issues, however. Decisions on specific issues must be made within the context of these Guidelines and within the context of the investment thesis of the funds and other accounts that own the company’s stock. Where a different investment thesis is held by portfolio managers who may hold stocks in common, Invesco may vote the shares held on a fund-by-fund or account-by-account basis.
Exceptions
In certain circumstances, Invesco may refrain from voting where the economic cost of voting a company’s proxy exceeds any anticipated benefits of that proxy proposal.
Share-lending programs
One reason that some portion of Invesco’s position in a particular security might not be voted is the securities lending program. When securities are out on loan and earning fees for the lending fund, they are transferred into the borrower’s name. Any proxies during the period of the loan are voted by the borrower. The lending fund would have to terminate the loan to vote the company’s proxy, an action that is not generally in the best economic interest of fund shareholders. However, whenever Invesco determines that the benefit to shareholders or other account holders of voting a particular proxy outweighs the revenue lost by terminating the loan, we recall the securities for the purpose of voting the fund’s full position.
“Share-blocking”
Another example of a situation where Invesco may be unable to vote is in countries where the exercise of voting rights requires the fund to submit to short-term trading restrictions, a practice known as “share-blocking.” Invesco generally
     
January 2010   I.2 — 6

 


 

refrains from voting proxies in share-blocking countries unless the portfolio manager determines that the benefit to fund shareholders and other account holders of voting a specific proxy outweighs the fund’s or other account’s temporary inability to sell the security.
International constraints
An additional concern that sometimes precludes our voting non-U.S. proxies is our inability to receive proxy materials with enough time and enough information to make a voting decision. In the great majority of instances, however, we are able to vote non-U.S. proxies successfully. It is important to note that Invesco makes voting decisions for non-U.S. issuers using these Guidelines as our framework, but also takes into account the corporate-governance standards, regulatory environment and generally accepted best practices of the local market.
Exceptions to these Guidelines
Invesco retains the flexibility to accommodate company-specific situations where strictly adhering to the Guidelines would lead to a vote that the Proxy Committee deems not to be in the best interest of the funds’ shareholders and other account holders. In these situations, the Proxy Committee will vote the proxy in the manner deemed to be in the best interest of the funds’ shareholders and other account holders, and will promptly inform the funds’ Boards of Trustees of such vote and the circumstances surrounding it.
Resolving potential conflicts of interest
A potential conflict of interest arises when Invesco votes a proxy for an issuer with which it also maintains a material business relationship. Examples could include issuers that are distributors of Invesco’s products, or issuers that employ Invesco to manage portions of their retirement plans or treasury accounts. Invesco reviews each proxy proposal to assess the extent, if any, to which there may be a material conflict between the interests of the fund shareholders or other account holders and Invesco.
Invesco takes reasonable measures to determine whether a potential conflict may exist. A potential conflict is deemed to exist only if one or more of the Proxy Committee members actually knew or should have known of the potential conflict.
If a material potential conflict is deemed to exist, Invesco may resolve the potential conflict in one of the following ways: (1) if the proposal that gives rise to the potential conflict is specifically addressed by the Guidelines, Invesco may vote the proxy in accordance with the predetermined Guidelines; (2) Invesco may engage an independent third party to determine how the proxy should be voted; or (3) Invesco may establish an ethical wall or other informational barrier between the persons involved in the potential conflict and the persons making the proxy-voting decision in order to insulate the potential conflict from the decision makers.
Because the Guidelines are pre-determined and crafted to be in the best economic interest of shareholders and other account holders, applying the Guidelines to vote client proxies should, in most instances, adequately resolve any potential conflict of
     
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interest. As an additional safeguard against potential conflicts, persons from Invesco’s marketing, distribution and other customer-facing functions are precluded from becoming members of the Proxy Committee.
On a quarterly basis, the Invesco Funds Boards of Trustees review a report from Invesco’s Internal Compliance Controls Committee. The report contains a list of all known material business relationships that Invesco maintains with publicly traded issuers. That list is cross-referenced with the list of proxies voted over the period. If there are any instances where Invesco’s voting pattern on the proxies of its material business partners is inconsistent with its voting pattern on all other issuers, they are brought before the Trustees and explained by the Chairman of the Proxy Committee.
Personal conflicts of interest. If any member of the Proxy Committee has a personal conflict of interest with respect to a company or an issue presented for voting, that Proxy Committee member will inform the Proxy Committee of such conflict and will abstain from voting on that company or issue.
Funds of funds. Some Invesco Funds offering diversified asset allocation within one investment vehicle own shares in other Invesco Funds. A potential conflict of interest could arise if an underlying Invesco Fund has a shareholder meeting with any proxy issues to be voted on, because Invesco’s asset-allocation funds or target-maturity funds may be large shareholders of the underlying fund. In order to avoid any potential for a conflict, the asset-allocation funds and target maturity funds vote their shares in the same proportion as the votes of the external shareholders of the underlying fund.
C. RECORDKEEPING
Records are maintained in accordance with Invesco’s Recordkeeping Policy.
Policies and Vote Disclosure
A copy of these Guidelines and the voting record of each Invesco Fund are available on our web site, www.invesco.com. In accordance with Securities and Exchange Commission regulations, all funds file a record of all proxy-voting activity for the prior 12 months ending June 30th. That filing is made on or before August 31st of each year.
     
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ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
The following individuals are jointly and primarily responsible for the day-to-day management of the Trust:
    Thomas Byron, Portfolio Manager, who has been responsible for the Trust since 2009 and has been associated with Invesco and/or its affiliates since 2010. From 1981 to 2010, Mr. Byron was associated with Morgan Stanley Investment Advisors Inc. in an investment management capacity.
 
    Robert Stryker, Portfolio Manager, who has been responsible for the Trust since 2009 and has been with Invesco and/or its affiliates since 2010. From 1994 to 2010, Mr. Stryker was associated with Morgan Stanley Investment Advisors Inc. in an investment management capacity.
 
    Robert Wimmel, Portfolio Manager, who has been responsible for the Trust since 2001 and has been associated with Invesco and/or its affiliates since 2010. From 1996 to 2010, Mr. Wimmel was associated with Morgan Stanley Investment Advisors Inc. in an investment management capacity.
Portfolio Manager Fund Holdings and Information on Other Managed Accounts
          Invesco’s portfolio managers develop investment models which are used in connection with the management of certain Invesco Funds as well as other mutual funds for which Invesco or an affiliate acts as sub-adviser, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals. The following chart reflects the portfolio managers’ investments in the Funds that they manage. The chart also reflects information regarding accounts other than the Funds for which each portfolio manager has day-to-day management responsibilities. Accounts are grouped into three categories: (i) other registered investment companies, (ii) other pooled investment vehicles and (iii) other accounts. To the extent that any of these accounts pay advisory fees that are based on account performance (performance-based fees), information on those accounts is specifically broken out. In addition, any assets denominated in foreign currencies have been converted into U.S. Dollars using the exchange rates as of the applicable date.
The following information is as of February 28, 2011:
                                                         
            Other Registered   Other Pooled    
            Investment Companies   Investment Vehicles   Other Accounts
    Dollar Range   Managed (assets in   Managed (assets in   Managed
    of   millions)   millions)   (assets in millions)
    Investments   Number           Number           Number    
Portfolio   in Each   of           of           of    
Manager   Fund1   Accounts   Assets   Accounts   Assets   Accounts   Assets
Invesco Van Kampen California Value Municipal Income Trust
Thomas Byron
  None     28     $ 10,372.3     None   None   None   None
Robert Stryker
  None     33     $ 11,080.0     None   None   None   None
Robert Wimmel
  None     29     $ 10,998.2     None   None   None   None
Potential Conflicts of Interest
 
1   This column reflects investments in a Fund’s shares owned directly by a portfolio manager or beneficially owned by a portfolio manager (as determined in accordance with Rule 16a-1(a) (2) under the Securities Exchange Act of 1934, as amended). A portfolio manager is presumed to be a beneficial owner of securities that are held by his or her immediate family members sharing the same household.

 


 

          Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one Fund or other account. More specifically, portfolio managers who manage multiple Funds and/or other accounts may be presented with one or more of the following potential conflicts:
Ø   The management of multiple Funds and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each Fund and/or other account. The Adviser and each Sub-Adviser seek to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the Funds.
 
Ø   If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one Fund or other account, a Fund may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible Funds and other accounts. To deal with these situations, the Adviser, each Sub-Adviser and the Funds have adopted procedures for allocating portfolio transactions across multiple accounts.
 
Ø   The Adviser and each Sub-Adviser determine which broker to use to execute each order for securities transactions for the Funds, consistent with its duty to seek best execution of the transaction. However, for certain other accounts (such as mutual funds for which Invesco or an affiliate acts as sub-adviser, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals), the Adviser and each Sub-Adviser may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, trades for a Fund in a particular security may be placed separately from, rather than aggregated with, such other accounts. Having separate transactions with respect to a security may temporarily affect the market price of the security or the execution of the transaction, or both, to the possible detriment of the Fund or other account(s) involved.
 
Ø   Finally, the appearance of a conflict of interest may arise where the Adviser or Sub-Adviser has an incentive, such as a performance-based management fee, which relates to the management of one Fund or account but not all Funds and accounts for which a portfolio manager has day-to-day management responsibilities.
          The Adviser, each Sub-Adviser, and the Funds have adopted certain compliance procedures which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
Description of Compensation Structure
For the Adviser and each affiliated Sub-Adviser
          The Adviser and each Sub-Adviser seek to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. Portfolio managers receive a base salary, an incentive bonus opportunity and an equity compensation opportunity. Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote competitive Fund performance. The Adviser and each Sub-Adviser evaluate competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager’s compensation consists of the following three elements:
          Base Salary. Each portfolio manager is paid a base salary. In setting the base salary, the Adviser and each Sub-Adviser’s intention is to be competitive in light of the particular portfolio manager’s experience and responsibilities.
          Annual Bonus. The portfolio managers are eligible, along with other employees of the Adviser and each Sub-Adviser, to participate in a discretionary year-end bonus pool. The Compensation Committee of Invesco Ltd. reviews and approves the amount of the bonus pool available for the Adviser and each of the

 


 

Sub-Adviser’s investment centers. The Compensation Committee considers investment performance and financial results in its review. In addition, while having no direct impact on individual bonuses, assets under management are considered when determining the starting bonus funding levels. Each portfolio manager is eligible to receive an annual cash bonus which is based on quantitative (i.e. investment performance) and non-quantitative factors (which may include, but are not limited to, individual performance, risk management and teamwork).
          Each portfolio manager’s compensation is linked to the pre-tax investment performance of the Funds/accounts managed by the portfolio manager as described in Table 1 below.
Table 1
     
Sub-Adviser   Performance time period2
Invesco 3,4,5
Invesco Australia
Invesco Deutschland
  One-, Three- and Five-year performance against Fund peer group.
 
   
Invesco Senior Secured
  N/A
 
   
Invesco Trimark3
  One-year performance against Fund peer group.

Three- and Five-year performance against entire universe of Canadian funds.
 
   
Invesco Hong Kong3
Invesco Asset Management
  One-, Three- and Five-year performance against Fund peer group.
 
   
Invesco Japan6
  One-, Three- and Five-year performance against the appropriate Micropol benchmark.
          Invesco Senior Secured’s bonus is based on annual measures of equity return and standard tests of collateralization performance.
          High investment performance (against applicable peer group and/or benchmarks) would deliver compensation generally associated with top pay in the industry (determined by reference to the third-party provided compensation survey information) and poor investment performance (versus applicable peer group) would result in low bonus compared to the applicable peer group or no bonus at all. These decisions are reviewed and approved collectively by senior leadership which has responsibility for executing the compensation approach across the organization.
 
2   Rolling time periods based on calendar year-end.
 
3   Portfolio Managers may be granted a short-term award that vests on a pro-rata basis over a four year period and final payments are based on the performance of eligible Funds selected by the portfolio manager at the time the award is granted.
 
4   Portfolio Managers for Invesco Global Real Estate Fund, Invesco Real Estate Fund, Invesco Select Real Estate Income Fund and Invesco V.I. Global Real Estate Fund base their bonus on new operating profits of the U.S. Real Estate Division of Invesco.
 
5   Portfolio Managers for Invesco Balanced Fund, Invesco Basic Balanced Fund, Invesco Basic Value Fund, Invesco Fundamental Value Fund, Invesco Large Cap Basic Value Fund, Invesco Large Cap Relative Value Fund, Invesco Mid Cap Basic Value Fund, Invesco Mid-Cap Value Fund, Invesco U.S. Mid Cap Value Fund, Invesco Value Fund, Invesco Value II Fund, Invesco V.I. Basic Balanced Fund, Invesco V.I. Basic Value Fund, Invesco V.I. Select Dimensions Balanced Fund, Invesco V.I. Income Builder Fund, Invesco Van Kampen American Value Fund, Invesco Van Kampen Comstock Fund, Invesco Van Kampen Equity and Income Fund, Invesco Van Kampen Growth and Income Fund, Invesco Van Kampen Value Opportunities Fund, Invesco Van Kampen V.I. Comstock Fund, Invesco Van Kampen V.I. Growth and Income Fund, Invesco Van Kampen V.I. Equity and Income Fund, Invesco Van Kampen V.I. Mid Cap Value Fund and Invesco Van Kampen V.I. Value Fund’s compensation is based on the one-, three- and five-year performance against the Fund’s peer group. Furthermore, for the portfolio manager(s) formerly managing the predecessor funds to the Funds in this footnote 5, they also have a ten-year performance measure.
 
6   Portfolio Managers for Invesco Pacific Growth Fund’s compensation is based on the one-, three- and five-year performance against the appropriate Micropol benchmark. Furthermore, for the portfolio manager(s) formerly managing the predecessor fund to Invesco Pacific Growth Fund, they also have a ten-year performance measure.

 


 

          Equity-Based Compensation. Portfolio managers may be granted an award that allows them to select receipt of shares of certain Invesco Funds with a vesting period as well as common shares and/or restricted shares of Invesco Ltd. stock from pools determined from time to time by the Compensation Committee of Invesco Ltd.’s Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
          Portfolio managers also participate in benefit plans and programs available generally to all employees.
ITEM 9.   PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 11. CONTROLS AND PROCEDURES.
(a)   As of March 21, 2011, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of March 21, 2011, the Registrant’s disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure.
 
(b)   There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
ITEM 12. EXHIBITS.
     
12(a) (1)
  Code of Ethics.
 
   
12(a) (2)
  Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.
 
   
12(a) (3)
  Not applicable.
 
   
12(b)
  Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940.

 


 

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: Invesco Van Kampen California Value Municipal Income Trust
         
By:
  /s/ Colin Meadows    
 
       
 
  Colin Meadows    
 
  Principal Executive Officer    
 
       
Date:
  May 9, 2011    
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
         
By:
  /s/ Colin Meadows    
 
       
 
  Colin Meadows    
 
  Principal Executive Officer    
 
       
Date:
  May 9, 2011    
 
       
By:
  /s/ Sheri Morris    
 
       
 
  Sheri Morris    
 
  Principal Financial Officer    
 
       
Date:
  May 9, 2011    

 


 

EXHIBIT INDEX
     
12(a)(1)
  Code of Ethics.
 
   
12(a)(2)
  Certifications of principal executive officer and principal Financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.
 
   
12(a)(3)
  Not applicable.
 
   
12(b)
  Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940.