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 811-5662
Van Kampen California Municipal Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas NY NY 10020
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas
New York, NY 10020
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
-----------------------------
Date of fiscal year end: 6/30/03
-----------
Date of reporting period: 6/30/03
-----------
Item 1. Report to Shareholders
Welcome, Shareholder
In this update, you'll learn about how your trust performed during the
reporting period. The portfolio management team will provide an overview
of the market climate, and discuss some of the factors that helped or
hindered performance during the reporting period. In addition, this
report includes the trust's financial statements and a list of trust
investments, as well as other information.
Market forecasts provided in this report may not necessarily come to
pass. There is no assurance that the trust will achieve its investment
objective. The trust is subject to market risk, which is the possibility
that the market values of securities owned by the trust will decline and,
therefore, the value of the trust shares may be less than what you paid
for them. Accordingly, you can lose money investing in this trust.
Income may subject certain individuals to the federal alternative minimum
tax (AMT).
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
Performance Summary
NET ASSET VALUE AND COMMON SHARE MARKET PRICE
(based upon quarter-end values--April 1993 through April 2003)
(LINE GRAPH)
<Table>
<Caption>
NET ASSET VALUE COMMON SHARE MARKET PRICE
--------------- -------------------------
6/93 10.96 10.88
11.53 11.13
11.41 11.63
10.43 10.75
6/94 10.30 10.63
10.21 10.50
9.70 9.63
10.34 10.25
6/95 10.40 10.75
10.42 11.13
10.87 11.38
10.38 11.38
6/96 10.28 10.88
10.46 11.63
10.46 11.88
10.19 11.63
6/97 10.45 12.19
10.67 12.88
10.69 12.31
10.68 11.88
6/98 10.67 12.13
10.99 11.69
10.50 11.50
10.42 10.88
6/99 9.93 9.88
9.48 9.06
8.89 7.56
9.32 8.13
6/00 9.33 8.38
9.65 8.69
10.20 8.44
10.19 8.66
6/01 9.99 8.83
10.45 9.53
10.06 9.34
9.88 9.45
6/02 10.25 10.14
11.02 10.50
10.61 9.85
10.57 9.69
6/03 10.75 10.45
</Table>
The solid line above represents the trust's net asset value (NAV), which
indicates overall changes in value among the trust's underlying securities. The
trust's common share market price is represented by the dashed line, which
indicates the price the market is willing to pay for shares of the trust at a
given time. Common share market price is influenced by a range of factors,
including supply and demand and market conditions.
<Table>
<Caption>
- --------------------------------------------
AVERAGE ANNUAL MARKET PRICE
TOTAL RETURNS since 11/01/1988
Since Inception 7.74%
10-year 7.12%
5-year 4.23%
1-year 10.97%
- --------------------------------------------
</Table>
Past performance is no guarantee of future results. Investment return, common
share market price and net asset value will fluctuate and trust shares, when
sold, may be worth more or less than their original costs.
As a result of recent market activity, current performance may vary from the
figures shown. For more up-to-date information, please visit vankampen.com or
speak with your financial advisor. Total return assumes an investment at the
common share market price at the beginning of the period, reinvestment of all
distributions for the period in accordance with the trust's dividend
reinvestment plan, and sale of all shares at the closing common share market
price at the end of the period. Distribution rate is a percent of closing common
share market price, and represents the monthly annualized distributions of the
trust at the end of the period and not the earnings of the trust.
The Lehman Brothers California Municipal Bond Index is a broad-based statistical
composite of California municipal bonds. The index does not include any
expenses, fees or sales charges, which would lower performance. The index is
unmanaged and should not be considered an investment.
1
Trust Report
FOR THE 12-MONTH PERIOD ENDED JUNE 30, 2003
Van Kampen California Municipal Trust is managed by the Adviser's
Municipal Fixed Income team. Members of the team include Joseph Piraro,
Vice President; Robert Wimmel, Vice President; and Jack Reynoldson,
Executive Director.(1) The following discussion reflects their views on
the trust's performance.
Q. BEFORE YOU DISCUSS HOW THE TRUST PERFORMED, PLEASE DESCRIBE THE
OVERALL MARKET ENVIRONMENT.
A. The municipal-bond market was dominated by the effects of steadily
falling interest rates over the course of the period. The Federal Reserve
Bank (the Fed) cut interest rates several times in an effort to stimulate
the economy, bringing benchmark Treasury rates to their lowest levels in
decades.
Geopolitical concerns around the war in Iraq and terrorism also
contributed to volatility, though the tension in the market was somewhat
eased as the initial combat phase of the war was concluded.
Budget problems and low financing costs led state and local
municipalities to bring record levels of issuance to the market in 2002,
with volume in the first half of 2003 even higher than the same period in
2002.
California's economy suffered during the period, with a $38 billion
budget gap and little hope for a funding compromise in the state's
deadlocked legislature. The budget crisis led the two major ratings
agencies to reduce credit ratings on the state's general obligations to
their lowest levels in the agencies' history. The state was the largest
issuer of debt in the market, and roughly 65 percent of those bonds
featured some kind of credit enhancement.
Q. HOW DID THE TRUST PERFORM DURING THE REPORTING PERIOD?
A. The trust outperformed its benchmark.
-- The trust returned 10.97 percent for the 12 months ended June 30,
2003, based on common share market price.
-- By comparison, the Lehman Brothers California Municipal Bond Index,
returned 7.93 percent for the same period.
-- The trust's monthly dividend of $0.05 translated to a distribution
rate of 5.74 percent, based on the trust's common share market price
as of June 30, 2003.
See Performance Summary for additional information and index definitions.
(1)Team members may change at any time without notice.
2
Q. WHAT HELPED PERFORMANCE DURING THE REPORTING PERIOD?
A. -- Given the weak economy, we kept the portfolio's credit quality
relatively high. As of the end of the reporting period, the
portfolio's average credit quality was AAA, versus an average credit
rating of AA2 for the benchmark index. This was an aid to
performance as investors bid up the price of more conservative,
higher-rated securities.
-- Our analysis indicated that the 20-year segment of the yield curve
offered the most attractive potential for total return, which led us
to emphasize that part of the curve. This was one of the
best-performing areas of the market during the period.
-- The portfolio was well-diversified and included significant exposure
to bonds tied to essential services. This helped limit the effect of
the state's budget and credit difficulties on the portfolio.
Q. WHAT FACTORS HINDERED PERFORMANCE?
A. -- The trust's holdings of zero-coupon bonds, purchased during a
previous period, lagged the market. While these bonds remained solid
from a credit perspective, investors tended to favor more
traditionally structured securities during the period.
-- The portfolio had a small number of bonds that were called by their
issuers seeking to refinance at lower rates. However, the impact of
these called bonds was limited by the relatively small size of the
positions.
Q. PLEASE WALK US THROUGH HOW YOU POSITIONED THE PORTFOLIO, HIGHLIGHTING
KEY THEMES.
A. -- Our concerns over the health of the California market led us to
upgrade the portfolio's overall credit quality, partially through
the purchase of insured bonds. The trust ended the period with 87
percent of holdings invested in bonds carrying a rating of AAA.
<Table>
TOP 5 SECTORS AS OF 6/30/03 RATINGS ALLOCATION AS OF 6/30/03
Public Education 18.8% AAA/Aaa 86.6%
Tax District 14.1 AA/Aa 2.0
Public Building 10.0 A/A 7.1
Water & Sewer 9.2 BBB/Baa 4.3
General Purpose 8.6
</Table>
Subject to change daily. All percentages are as a percentage of long-term
investments. Provided for informational purposes only and should not be deemed
as a recommendation to buy securities in the sectors shown above. Securities are
classified by sectors that represent broad groupings of related industries.
Rating allocations based upon ratings as issued by Standard and Poor's and
Moody's, respectively. Morgan Stanley is a full-service securities firm engaged
in securities trading and brokerage activities, investment banking, research and
analysis, financing and financial advisory services.
3
-- We added bonds in the essential-service sectors, and avoided bonds
from the health-care and housing sectors due to credit concerns and
what we believed to be overvalued pricing.
-- While issuance was strong, we were highly selective in our
purchases. Many of the bonds we added to the portfolio carried the
yield advantage of premium coupons and the moderate interest-rate
sensitivity of intermediate bonds.
Q. NOW THAT YOU'VE PROVIDED AN OVERVIEW OF THE PORTFOLIO, DO YOU HAVE ANY
CLOSING THOUGHTS FOR THE SHAREHOLDERS?
A. Treasury yields ended the period at multi-decade lows that appear to be
unsustainable, indicating to us that rising interest rates are more
likely than falling rates. In addition, both fiscal and monetary policy
remain geared to spurring near-term economic growth at the national
level, which would put further upward pressure on rates. On the state
level, the California market will probably continue to struggle in the
absence of a state budget; the gubernatorial recall effort is also likely
to continue to roil the market. We will continue with our disciplined
investment approach, watching the economy and the markets closely for
emerging opportunities.
PROXY VOTING POLICIES AND PROCEDURES
A description of the fund's policies and procedures with respect to the
voting of proxies relating to the fund's portfolio securities is
available without charge, upon request, by calling 1-800-847-2424. This
information is also available on the Securities and Exchange Commission's
website at http://www.sec.gov.
4
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS
June 30, 2003
THE FOLLOWING PAGES DETAIL YOUR TRUST'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CALIFORNIA MUNICIPAL BONDS 153.9%
$1,000 Abag Fin Auth For Nonprofit Corp CA Ctf Partn
Childrens Hosp Med Cent (AMBAC Insd)............. 5.875% 12/01/19 $ 1,152,060
1,000 Abag Fin Auth For Nonprofit Corp CA Insd Rev Ctf
Lincoln Glen Manor Sr Citizens (CA MTG Insd)..... 6.100 02/15/25 1,094,960
1,000 Abag Fin Auth For Nonprofit Corp CA Multi-Family
Rev Hsg Utd Dominion Ser A Rfdg (Asset Gty
Insd)............................................ 6.400 08/15/30 1,068,120
1,205 Alameda Cnty, CA Wtr Dist Rev Rfdg (MBIA Insd)... 4.750 06/01/20 1,239,692
1,400 Alhambra, CA City Elem Sch Dist Ser A (FSA
Insd)............................................ 5.600 09/01/24 1,547,966
790 Bay Area Govt Assn CA Rev Tax Alloc CA Redev Agy
Pool Rev Ser A (FSA Insd)........................ 6.000 12/15/15 853,532
1,000 Bay Area Toll Auth CA Toll Brdg Rev San Francisco
Bay Area Ser D................................... 5.000 04/01/17 1,075,000
835 California Edl Fac Auth Rev Student Ln CA Ln Pgm
Ser A (MBIA Insd)................................ 6.000 03/01/16 901,683
1,000 California Hlth Fac Fin Auth Rev Cedars Sinai Med
Ctr Ser A........................................ 6.125 12/01/19 1,089,910
260 California Hsg Fin Agy Rev Home Mtg Ser E (AMBAC
Insd)............................................ 6.100 08/01/29 272,225
1,000 California Hsg Fin Agy Rev Multi-Family Hsg III
Ser A (MBIA Insd)................................ 5.850 08/01/17 1,053,750
1,000 California Infrastructure & Econ Dev Bk Rev (MBIA
Insd)............................................ 5.500 06/01/15 1,140,390
1,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southn CA Edison Co (AMBAC Insd) (a)............. 6.000 07/01/27 1,013,040
305 California Rural Home Mtg Fin Auth Single Family
Mtg Rev Ser C (GNMA Collateralized).............. 7.800 02/01/28 353,025
1,000 California St (b)................................ 5.250 02/01/21 1,040,070
2,000 California St (FGIC Insd) (a).................... 5.000 10/01/23 2,065,400
1,000 California St Dept Wtr Res Pwr Ser A (AMBAC
Insd)............................................ 5.500 05/01/15 1,138,140
1,000 California St Univ Fresno Assn Inc Rev Sr Aux
Organization Event Ctr........................... 6.000 07/01/22 1,057,690
1,000 California St Vet Bd Ser BH (FSA Insd)........... 5.400 12/01/15 1,086,900
1,000 California St Vet Bd Ser BH (FSA Insd)........... 5.400 12/01/16 1,080,210
</Table>
See Notes to Financial Statements 5
YOUR TRUST'S INVESTMENTS
June 30, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CALIFORNIA (CONTINUED)
$1,000 East Bay, CA Muni Util Dist Wtr Sys Rev (MBIA
Insd)............................................ 5.000% 06/01/21 $ 1,050,640
1,280 El Cerrito, CA Redev Agy Tax Alloc Redev Proj
Area Ser B Rfdg (MBIA Insd)...................... 5.250 07/01/15 1,454,246
1,000 Emeryville, CA Pub Fin Auth Shellmound Pk Redev &
Hsg Proj B (MBIA Insd)........................... 5.000 09/01/19 1,059,090
1,000 Folsom, CA Spl Tax Cmnty Fac Dist No 2 Rfdg
(Connie Lee Insd)................................ 5.250 12/01/19 1,086,020
1,000 Fontana, CA Redev Agy Tax Southeast Indl Pk Proj
Rfdg (MBIA Insd)................................. 5.000 09/01/22 1,037,360
1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap
Apprec Rfdg...................................... * 01/15/30 213,660
1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Conv
Cap Apprec Sr Lien Ser A (Escrowed to Maturity)
(c).............................................. 0/7.050 01/01/10 1,147,690
1,000 Irvine, CA Pub Facs & Infrastructure Auth Assmt
Rev Ser B (AMBAC Insd)........................... 5.000 09/02/22 1,032,480
800 Kern, CA Cmnty College Sch Fac Impt Dist Mammoth
Campus Ser A (AMBAC Insd)........................ 5.000 08/01/19 850,800
670 Los Angeles Cnty, CA Tran Comm Lease Rev Dia RR
Lease Ltd (FSA Insd)............................. 7.375 12/15/06 688,907
1,000 Los Angeles, CA Uni Sch Dist 1997 Election Ser E
(MBIA Insd)...................................... 5.500 07/01/17 1,138,810
1,000 Los Angeles, CA Uni Sch Dist Ser A (FSA Insd).... 5.250 07/01/20 1,101,780
1,405 Moorpark, CA Uni Sch Dist Ser A (FSA Insd)....... 5.375 08/01/18 1,569,638
1,800 Mountain View Los Altos, CA Uni High Sch Dist
Ctfs Partn (MBIA Insd)........................... 5.625 08/01/16 1,805,922
1,000 Pico Rivera, CA Wtr Auth Rev Wtr Sys Proj Ser A
(MBIA Insd) (a).................................. 5.500 05/01/19 1,174,010
2,000 Redding, CA Jt Pwrs Fin Auth Elec Sys Rev Ser A
(MBIA Insd)...................................... 5.500 06/01/11 2,217,680
1,000 Redlands, CA Redev Agy Tax Alloc Redev Proj Ser A
Rfdg (MBIA Insd)................................. 4.750 08/01/21 1,025,670
1,000 San Bernardino Cnty, CA Ctfs Partn Med Cent Fin
Proj (MBIA Insd)................................. 5.000 08/01/28 1,023,150
985 San Diego, CA Hsg Auth Multi-Family Hsg Rev (GNMA
Collateralized).................................. 5.000 07/20/18 1,017,495
1,000 San Dimas, CA Redev Agy Tax Alloc Creative Growth
Ser A (FSA Insd)................................. 5.000 09/01/16 1,081,240
</Table>
6 See Notes to Financial Statements
YOUR TRUST'S INVESTMENTS
June 30, 2003
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CALIFORNIA (CONTINUED)
$2,000 San Jose, CA Fin Auth Lease Rev Convention Ctr
Proj Ser F Rfdg (MBIA Insd)...................... 5.000% 09/01/17 $ 2,156,900
1,000 San Mateo, CA Uni High Sch Dist Cap Apprec
Election of 2000 Ser B (FGIC Insd)............... * 09/01/26 310,300
1,000 Sanger, CA Uni Sch Dist Rfdg (MBIA Insd)......... 5.600 08/01/23 1,177,380
1,350 Santa Ana, CA Uni Sch Dist (MBIA Insd)........... 5.375 08/01/21 1,479,560
1,305 South Orange Cnty, CA Pub Fin Auth Reassmt Rev
(FSA Insd)....................................... 5.800 09/02/18 1,507,197
600 Southern CA Pub Pwr Auth Pwr Proj Rev
Multi-Projs...................................... 5.500 07/01/20 600,666
1,325 Sweetwater, CA Auth Wtr Rev (FSA Insd)........... 5.500 04/01/18 1,482,013
1,000 University of CA Rev Multi Purp Proj Ser M (FGIC
Insd)............................................ 5.125 09/01/17 1,087,960
-----------
TOTAL LONG-TERM INVESTMENTS 153.9%
(Cost $49,179,857)........................................................... 53,902,027
SHORT-TERM INVESTMENTS 4.6%
(Cost $1,600,000)............................................................ 1,600,000
-----------
TOTAL INVESTMENTS 158.5%
(Cost $50,779,857)........................................................... 55,502,027
LIABILITIES IN EXCESS OF OTHER ASSETS (1.4%).................................. (488,671)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (57.1%).................... (20,003,123)
-----------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................. $35,010,233
===========
</Table>
See Notes to Financial Statements 7
YOUR TRUST'S INVESTMENTS
June 30, 2003
* Zero coupon bond
(a) Assets segregated as collateral for when-issued or delayed delivery purchase
commitments.
(b) Securities purchased on a when-issued or delayed delivery basis.
(c) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
AMBAC--AMBAC Indemnity Corp.
Asset Gty--Asset Guaranty Insurance Co.
CA MTG--California Mortgage Insurance
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
8 See Notes to Financial Statements
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2003
<Table>
ASSETS:
Total Investments (Cost $50,779,857)........................ $55,502,027
Cash........................................................ 38,500
Interest Receivable......................................... 759,673
Other....................................................... 427
-----------
Total Assets............................................ 56,300,627
-----------
LIABILITIES:
Payables:
Investments Purchased..................................... 1,046,170
Investment Advisory Fee................................... 27,469
Affiliates................................................ 4,154
Trustees' Deferred Compensation and Retirement Plans........ 155,155
Accrued Expenses............................................ 54,323
-----------
Total Liabilities....................................... 1,287,271
Preferred Shares (including accrued distributions).......... 20,003,123
-----------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $35,010,233
===========
NET ASSET VALUE PER COMMON SHARE ($35,010,233 divided by
3,257,560 shares outstanding)............................. $ 10.75
===========
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 3,257,560 shares issued and
outstanding).............................................. $ 32,576
Paid in Surplus............................................. 29,564,418
Net Unrealized Appreciation................................. 4,722,170
Accumulated Net Realized Gain............................... 418,409
Accumulated Undistributed Net Investment Income............. 272,660
-----------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $35,010,233
===========
PREFERRED SHARES ($.01 par value, authorized 1,000,000
shares, 400 issued with liquidation preference of $50,000
per share)................................................ $20,000,000
===========
NET ASSETS INCLUDING PREFERRED SHARES....................... $55,010,233
===========
</Table>
See Notes to Financial Statements 9
Statement of Operations
For the Year Ended June 30, 2003
<Table>
INVESTMENT INCOME:
Interest.................................................... $2,738,534
----------
EXPENSES:
Investment Advisory Fee..................................... 326,899
Preferred Share Maintenance................................. 67,192
Trustees' Fees and Related Expenses......................... 17,827
Legal....................................................... 16,907
Custody..................................................... 3,681
Other....................................................... 105,867
----------
Total Expenses.......................................... 538,373
----------
NET INVESTMENT INCOME....................................... $2,200,161
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 560,495
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 3,194,597
End of the Period......................................... 4,722,170
----------
Net Unrealized Appreciation During the Period............. 1,527,573
----------
NET REALIZED AND UNREALIZED GAIN............................ $2,088,068
==========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (238,566)
==========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $4,049,663
==========
</Table>
10 See Notes to Financial Statements
Statements of Changes in Net Assets
<Table>
<Caption>
YEAR ENDED YEAR ENDED
JUNE 30, 2003 JUNE 30, 2002
------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income....................................... $ 2,200,161 $ 2,301,240
Net Realized Gain........................................... 560,495 241,341
Net Unrealized Appreciation During the Period............... 1,527,573 656,551
Distributions to Preferred Shareholders:
Net Investment Income..................................... (238,566) (347,185)
----------- -----------
Change in Net Assets Applicable to Common Shares from
Operations................................................ 4,049,663 2,851,947
Distributions to Common Shareholders:
Net Investment Income....................................... (2,061,858) (1,786,643)
Net Realized Gain........................................... (372,990) (215,976)
----------- -----------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
INVESTMENT ACTIVITIES..................................... 1,614,815 849,328
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period..................................... 33,395,418 32,546,090
----------- -----------
End of the Period (Including accumulated undistributed net
investment income of $272,660 and $408,079,
respectively)............................................. $35,010,233 $33,395,418
=========== ===========
</Table>
See Notes to Financial Statements 11
Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
--------------------------------
2003 2002 (e) 2001
--------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD................. $ 10.25 $ 9.99 $ 9.36
-------- -------- --------
Net Investment Income.................................... .67 .71 .73
Net Realized and Unrealized Gain/Loss.................... .64 .28 .58
Common Share Equivalent of Distributions Paid to
Preferred Shareholders:
Net Investment Income.................................. (.07) (.11) (.23)
-------- -------- --------
Total from Investment Operations......................... 1.24 .88 1.08
Distributions Paid to Common Shareholders:
Net Investment Income.................................. (.63) (.55) (.45)
Net Realized Gain...................................... (.11) (.07) -0-*
-------- -------- --------
NET ASSET VALUE, END OF THE PERIOD....................... $ 10.75 $ 10.25 $ 9.99
======== ======== ========
Common Share Market Price at End of the Period........... $ 10.45 $ 10.14 $ 8.83
Total Return (a)......................................... 10.97% 22.39% 10.99%
Net Assets Applicable to Common Shares at End of the
Period (In millions)................................... $ 35.0 $ 33.4 $ 32.5
Ratio of Expenses to Average Net Assets Applicable to
Common Shares (b)...................................... 1.56% 1.59% 1.65%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (b)........................ 6.38% 6.90% 7.33%
Portfolio Turnover....................................... 19% 24% 16%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including
Preferred Shares (b)................................... .99% .99% 1.02%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c)........................ 5.69% 5.86% 5.02%
SENIOR SECURITIES:
Total Preferred Shares Outstanding....................... 400 400 400
Asset Coverage Per Preferred Share (d)................... $137,533 $133,498 $131,365
Involuntary Liquidating Preference Per Preferred Share... $ 50,000 $ 50,000 $ 50,000
Average Market Value Per Preferred Share................. $ 50,000 $ 50,000 $ 50,000
</Table>
* Amount is less than $.01
(a) Total return assumes an investment at the common share market price at the
beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Trust's dividend reinvestment plan, and sale
of all shares at the closing common share market price at the end of the
period indicated.
(b) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(c) Ratios reflect the effect of dividend payments to preferred shareholders.
(d) Calculated by subtracting the Trust's total liabilities (not including the
preferred shares) from the Trust's total assets and dividing by the number
of preferred shares outstanding.
(e) As required, effective July 1, 2001, the Trust has adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended June 30, 2002 was to increase the ratio of net
investment income to average net assets applicable to common shares by .06%.
Net investment income per share and net realized and unrealized gains and
losses per share were unaffected by the adjustments. Per share, ratios and
supplemental data for periods prior to June 30, 2002 have not been restated
to reflect this change in presentation.
12
<Table>
<Caption>
YEAR ENDED JUNE 30,
- -------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------
$ 9.93 $ 10.67 $ 10.45 $ 10.28 $ 10.40 $ 10.30 $ 10.96
-------- -------- -------- -------- -------- -------- --------
.76 .78 .85 .89 .91 .95 .96
(.44) (.37) .53 .39 -0-* .11 (.74)
(.22) (.20) (.22) (.21) (.23) (.23) (.16)
-------- -------- -------- -------- -------- -------- --------
.10 .21 1.16 1.07 .68 .83 .06
(.53) (.62) (.72) (.75) (.75) (.72) (.71)
(.14) (.33) (.22) (.15) (.05) (.01) (.01)
-------- -------- -------- -------- -------- -------- --------
$ 9.36 $ 9.93 $ 10.67 $ 10.45 $ 10.28 $ 10.40 $ 10.30
======== ======== ======== ======== ======== ======== ========
$ 8.375 $ 9.875 $ 12.125 $12.1875 $ 10.875 $ 10.75 $ 10.625
-8.14% -11.17% 7.77% 21.40% 9.02% 8.67% 4.32%
$ 30.5 $ 32.3 $ 34.5 $ 33.6 $ 32.9 $ 33.0 $ 32.6
1.47% 1.67% 1.57% 1.58% 1.65% 1.65% 1.53%
8.25% 7.38% 8.00% 8.54% 8.76% 9.35% 8.70%
60% 33% 53% 30% 19% 16% 11%
.88% 1.05% .99% .99% 1.03% 1.02% .97%
5.82% 5.49% 5.91% 6.51% 6.57% 7.02% 7.28%
400 400 400 400 400 400 400
$126,216 $130,843 $136,309 $134,055 $132,192 $132,521 $131,433
$ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
$ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
</Table>
See Notes to Financial Statements 13
NOTES TO
FINANCIAL STATEMENTS
June 30, 2003
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen California Municipal Trust (the "Trust") is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The Trust's investment objective is to provide
a high level of current income exempt from federal and California income taxes,
consistent with preservation of capital. The Trust will invest in a portfolio
consisting substantially of California municipal obligations rated investment
grade at the time of investment. The Trust commenced investment operations on
November 1, 1988.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when-issued or delayed delivery
purchase commitments until payment is made. At June 30, 2003, the Trust had
$1,046,170 of when-issued or delayed delivery purchase commitments.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and discounts are accreted over the expected life of each
applicable security.
D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
14
NOTES TO
FINANCIAL STATEMENTS
June 30, 2003
At June 30, 2003, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $50,731,555
===========
Gross tax unrealized appreciation........................... $ 4,776,572
Gross tax unrealized depreciation........................... (6,100)
-----------
Net tax unrealized appreciation on investments.............. $ 4,770,472
===========
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually to common shareholders. Distributions from net
realized gains for book purposes may include short-term capital gains, which are
included as ordinary income for tax purposes.
The tax character of distributions paid during the years ended June 30, 2003
and 2002 was as follows:
<Table>
<Caption>
2003 2002
Distributions paid from:
Ordinary income........................................... $ 37,415 $ 68,140
Long-term capital gain.................................... 344,219 147,836
-------- --------
$381,634 $215,976
======== ========
</Table>
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under accounting principles generally accepted in the
United States of America and federal income tax purposes, permanent differences
between book and tax basis reporting have been identified and appropriately
reclassified on the Statement of Assets and Liabilities. A permanent book and
tax difference relating to book to tax amortization differences totaling $35,156
has been reclassified from accumulated undistributed net investment income to
accumulated net realized gain.
As of June 30, 2003, the components of distributable earnings on a tax basis
were as follows:
<Table>
Undistributed ordinary income............................... $417,385
</Table>
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of post October 31 losses which are not
recognized for tax purposes until the first day of the following fiscal year.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
Investment Advisory Corp. (the "Adviser") will provide investment advice and
facilities to the Trust for an annual fee payable monthly of .60% of the average
daily net assets of the Trust.
15
NOTES TO
FINANCIAL STATEMENTS
June 30, 2003
For the year ended June 30, 2003, the Trust recognized expenses of
approximately $4,300 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
Under separate Accounting Services and Legal Services agreements, the
Adviser provides accounting and legal services to the Trust. The Adviser
allocates the cost of such services to each Trust. For the year ended June 30,
2003, the Trust recognized expenses of approximately $25,100 representing Van
Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting and legal services to the Trust, which are reported as part
of "Other" and "Legal" expenses, respectively, in the Statement of Operations.
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Trust.
The maximum annual benefit per trustee under the plan is $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $9,936,573 and $10,022,264, respectively.
4. REMARKETED PREFERRED SHARES
The Trust has outstanding 400 shares of Remarketed Preferred Shares ("RP").
Dividends are cumulative and the rate is reset through an auction process every
28 days. The rate in effect on June 30, 2003 was 0.950%. During the year ended
June 30, 2003, interest rates ranged from 0.950% to 1.50%
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of "Preferred Share
Maintenance" expense in the Statement of Operations.
The RP are redeemable at the option of the Trust in whole or in part at the
liquidation value of $50,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests, and the RP are subject to
mandatory redemption if the tests are not met.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust may seek to manage the portfolio's interest rate exposure in a
changing interest rate environment by engaging in transactions involving
interest rate swaps, caps, floors, or collars. The Trust expects to enter into
these transactions primarily as a hedge against anticipated interest rate or
fixed-income market changes, for duration management
16
NOTES TO
FINANCIAL STATEMENTS
June 30, 2003
purposes or for risk management purposes but may also enter into these
transactions to generate additional income. Risks may arise as a result of the
potential inability of the counterparties to meet the terms of their contracts
or agreements. During the year ended June 30, 2003, the Trust did not enter into
any of these transactions
17
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of Van Kampen California Municipal
Trust
We have audited the accompanying statement of assets and liabilities of Van
Kampen California Municipal Trust (the "Trust"), including the portfolio of
investments, as of June 30, 2003, the related statement of operations for the
year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
four years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The Trust's financial highlights for the periods ended
prior to June 30, 2000, were audited by other auditors whose report, dated
August 5, 1999, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2003, by correspondence with the Trust's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen California Municipal Trust as of June 30, 2003, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the respective stated periods, in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
August 6, 2003
18
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be
re-registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued
on the valuation date, generally at the lower of market price or net asset
value, except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common
19
Shares than if the dividend or distribution had been paid in Common Shares
issued by the Trust. All reinvestments are in full and fractional Common shares
and are carried to three decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
20
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
J. MILES BRANAGAN(1)
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*(1)
THEODORE A. MYERS
JACK E. NELSON(1)
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
c/o EquiServe
P.O. Box 43011
Providence, Rhode Island 02940-3011
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Trust during its taxable year ended
June 30, 2003. The Trust designated 99.6% of the income distributions as a
tax-exempt income distribution. Additionally, during the period, the Trust
paid $344,219 as a long-term capital gain distribution. In January, the Trust
provides tax information to shareholders for the preceding calendar year.
1 Appointed to the Board of Trustees effective July 23, 2003.
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
21
RESULTS OF
SHAREHOLDER VOTES
The Annual Meeting of the Shareholders of the Trust was held on June 24, 2003,
where shareholders voted on the election of trustees.
1) With regards to the election of the following trustees by the common
shareholders of the Trust:
<Table>
<Caption>
# OF SHARES
-----------------------------
IN FAVOR WITHHELD
- ------------------------------------------------------------------------------------------
Jerry D. Choate............................................ 2,856,569 38,372
Linda Hutton Heagy......................................... 2,852,169 42,772
R. Craig Kennedy........................................... 2,856,569 38,372
Wayne W. Whalen............................................ 2,856,569 38,372
Suzanne H. Woolsey......................................... 2,851,064 43,877
</Table>
2) With regards to the authority to vote for the amendment to the Declaration of
Trust:
<Table>
<Caption>
# OF SHARES
-------------------------------
IN FAVOR AGAINST ABSTAIN
-------------------------------
2,770,733 81,951 42,257
</Table>
3) With regards to the election of the following trustee by the preferred
shareholders of the Trust:
<Table>
<Caption>
# OF SHARES
----------------------------
IN FAVOR WITHHELD
- ------------------------------------------------------------------------------------------
Rod Dammeyer................................................ 400 0
</Table>
A Special Meeting of the Shareholders of the Trust was held on July 10, 2003,
where shareholders voted on the amendment to the Declaration of Trust:
1) With regards to the authority to vote for the amendment to the Declaration of
Trust:
<Table>
<Caption>
# OF SHARES
------------------------------
IN FAVOR AGAINST ABSTAIN
------------------------------
206 194 0
</Table>
The other trustees of the Trust whose terms did not expire in 2003 are David C.
Arch, Howard J Kerr, Richard F. Powers III, and Hugo F. Sonnenschein.
22
TRUSTEES AND OFFICERS
The business and affairs of the Trust are managed under the direction of the
Trust's Board of Trustees and the Trust's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Trust
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments
Inc. ("Van Kampen Investments"), Van Kampen Investment Advisory Corp. ("Advisory
Corp."), Van Kampen Asset Management Inc. ("Asset Management"), Van Kampen Funds
Inc. (the "Distributor"), Van Kampen Advisors Inc., Van Kampen Exchange Corp.
and Van Kampen Investor Services Inc. ("Investor Services"). Advisory Corp. and
Asset Management sometimes are referred to herein collectively as the
"Advisers." The term "Fund Complex" includes each of the investment companies
advised by the Advisers or their affiliates as of the date of this Statement of
Additional Information. Trustees serve until reaching their retirement age or
until their successors are duly elected and qualified. Officers are annually
elected by the trustees.
INDEPENDENT TRUSTEES
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (58) Trustee Trustee Chairman and Chief 91 Trustee/Director/Managing
Blistex Inc. since 1998 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products
manufacturer. Former
Director of the World
Presidents
Organization-Chicago
Chapter. Director of the
Heartland Alliance, a
nonprofit organization
serving human needs based
in Chicago.
J. Miles Branagan (71) Trustee Trustee Private investor. 89 Trustee/Director/Managing
1632 Morning Mountain Road since 2003 Co-founder, and prior to General Partner of funds
Raleigh, NC 27614 August 1996, Chairman, in the Fund Complex.
Chief Executive Officer
and President, MDT
Corporation (now known as
Getinge/Castle, Inc., a
subsidiary of Getinge
Industrier AB), a company
which develops,
manufactures, markets and
services medical and
scientific equipment.
</Table>
23
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Jerry D. Choate (64) Trustee Trustee Prior to January 1999, 89 Trustee/Director/Managing
33971 Selva Road since 2003 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of Amgen Inc., a
("Allstate") and Allstate biotechnological company,
Insurance Company. Prior and Director of Valero
to January 1995, Energy Corporation, an
President and Chief independent refining
Executive Officer of company.
Allstate. Prior to August
1994, various management
positions at Allstate.
Rod Dammeyer (62) Trustee Trustee President of CAC, llc., a 91 Trustee/Director/Managing
CAC, llc. since 1988 private company offering General Partner of funds
4350 LaJolla Village Drive capital investment and in the Fund Complex.
Suite 980 management advisory Director of TeleTech
San Diego, CA 92122-6223 services. Prior to July Holdings Inc.,
2000, Managing Partner of Stericycle, Inc.,
Equity Group Corporate TheraSense, Inc., GATX
Investment (EGI), a Corporation, Arris Group,
company that makes Inc. and Trustee of the
private investments in University of Chicago
other companies. Hospitals and Health
Systems. Prior to May
2002, Director of
Peregrine Systems Inc.
Prior to February 2001,
Vice Chairman and
Director of Anixter
International, Inc. and
IMC Global Inc. Prior to
July 2000, Director of
Allied Riser
Communications Corp.,
Matria Healthcare Inc.,
Transmedia Networks,
Inc., CNA Surety, Corp.
and Grupo Azcarero Mexico
(GAM). Prior to April
1999, Director of Metal
Management, Inc.
</Table>
24
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Linda Hutton Heagy (55) Trustee Trustee Managing Partner of 89 Trustee/Director/Managing
Heidrick & Struggles since 2003 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive executive search firm. in the Fund Complex.
Suite 7000 Trustee on the University
Chicago, IL 60606 of Chicago Hospitals
Board, Vice Chair of the
Board of the YMCA of
Metropolitan Chicago and
a member of the Women's
Board of the University
of Chicago. Prior to
1997, Partner of Ray &
Berndtson, Inc., an
executive recruiting
firm. Prior to 1996,
Trustee of The
International House
Board, a fellowship and
housing organization for
international graduate
students. Prior to 1995,
Executive Vice President
of ABN AMRO, N.A., a bank
holding company. Prior to
1992, Executive Vice
President of La Salle
National Bank.
R. Craig Kennedy (51) Trustee Trustee Director and President of 89 Trustee/Director/Managing
11 DuPont Circle, N.W. since 2003 the German Marshall Fund General Partner of funds
Washington, D.C. 20016 of the United States, an in the Fund Complex.
independent U.S.
foundation created to
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (67) Trustee Trustee Prior to 1998, President 91 Trustee/Director/Managing
736 North Western Avenue since 1992 and Chief Executive General Partner of funds
P.O. Box 317 Officer of Pocklington in the Fund Complex.
Lake Forest, IL 60045 Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the
Marrow Foundation
</Table>
25
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Theodore A. Myers (72) Trustee Trustee Financial consultant, 36 Director of Met Life
550 Washington Avenue since 1988 Trustee or Managing Investors (formerly knows
Glencoe, IL 60022 General Partner of other as COVA Financial Life
funds in the Closed-End Insurance). Prior to
Fund Complex. Prior to 1997, Director of McLouth
1998, Senior Financial Steel.
Advisor (and, prior to
1997, an Executive Vice
President, Chief
Financial Officer and
Director) of Qualitech
Steel Corporation, a
producer of high quality
engineered steels for
automotive,
transportation and
capital goods industries.
Prior to 1997, member of
the Arthur Andersen Chief
Financial Officers'
Advisory Committee.
Jack E. Nelson (67) Trustee Trustee President of Nelson 89 Trustee/Director/Managing
423 Country Club Drive since 2003 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of the NASD,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
</Table>
26
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Hugo F. Sonnenschein (62) Trustee Trustee President Emeritus and 91 Trustee/Director/Managing
1126 E. 59th Street since 1994 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Director of Winston
Distinguished Service Laboratories, Inc.
Professor in the
Department of Economics
at the University of
Chicago. Prior to July
2000, President of the
University of Chicago.
Trustee of the University
of Rochester and a member
of its investment
committee. Member of the
National Academy of
Sciences, the American
Philosophical Society and
a fellow of the American
Academy of Arts and
Sciences.
Suzanne H. Woolsey (61) Trustee Trustee Chief Communications 89 Trustee/Director/Managing
2101 Constitution Ave., N.W. since 2003 Officer of the National General Partner of funds
Room 285 Academy of in the Fund Complex.
Washington, D.C. 20418 Sciences/National Director of Neurogen
Research Council, an Corporation, a
independent, federally pharmaceutical company,
chartered policy since January 1998.
institution, since 2001
and previously Chief
Operating Officer from
1993 to 2001. Director of
the Institute for Defense
Analyses, a federally
funded research and
development center,
Director of the German
Marshall Fund of the
United States, and
Trustee of Colorado
College. Prior to 1993,
Executive Director of the
Commission on Behavioral
and Social Sciences and
Education at the National
Academy of
Sciences/National
Research Council. From
1980 through 1989,
Partner of Coopers &
Lybrand.
</Table>
27
INTERESTED TRUSTEES*
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Mitchell M. Merin* (50) Trustee and Trustee President of funds in the 89 Trustee/Director/Managing
1221 Avenue of the Americas President since 2003 Fund Complex. Chairman, General Partner of funds
New York, NY 10020 President, Chief in the Fund Complex.
Executive Officer and
Director of the Advisers
and VK Advisors Inc.
since December 2002.
Chairman, President and
Chief Executive Officer
of Van Kampen Investments
since December 2002.
Director of Van Kampen
Investments since
December 1999. Chairman
and Director of Van
Kampen Funds Inc. since
December 2002. President,
Director and Chief
Operating Officer of
Morgan Stanley Investment
Management since December
1998. President and
Director since April 1997
and Chief Executive
Officer since June 1998
of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc.
Chairman, Chief Executive
Officer and Director of
Morgan Stanley
Distributors Inc. since
June 1998. Chairman since
June 1998, and Director
since January 1998 of
Morgan Stanley Trust.
Director of various
Morgan Stanley
subsidiaries. President
of the Morgan Stanley
Funds since May 1999.
Previously Chief
Executive Officer of Van
Kampen Funds Inc. from
December 2002 to July
2003, Chief Strategic
Officer of Morgan Stanley
Investment Advisors Inc.
and Morgan Stanley
Services Company Inc. and
Executive Vice President
of Morgan Stanley
Distributors Inc. from
April 1997 to June 1998.
Chief Executive Officer
from September 2002 to
April 2003 and Vice
President from May 1997
to April 1999 of the
Morgan Stanley Funds.
</Table>
28
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE TRUST SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Richard F. Powers, III* (57) Trustee Trustee Advisory Director of 91 Trustee/Director/Managing
1 Parkview Plaza since 1999 Morgan Stanley. Prior to General Partner of funds
P.O. Box 5555 December 2002, Chairman, in the Fund Complex.
Oakbrook Terrace, IL 60181 Director, President,
Chief Executive Officer
and Managing Director of
Van Kampen Investments
and its investment
advisory, distribution
and other subsidiaries.
Prior to December 2002,
President and Chief
Executive Officer of
funds in the Fund
Complex. Prior to May
1998, Executive Vice
President and Director of
Marketing at Morgan
Stanley and Director of
Dean Witter, Discover &
Co. and Dean Witter
Realty. Prior to 1996,
Director of Dean Witter
Reynolds Inc.
Wayne W. Whalen* (64) Trustee Trustee Partner in the law firm 91 Trustee/Director/Managing
333 West Wacker Drive since 1988 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom in the Fund Complex.
(Illinois), legal counsel
to funds in the Fund
Complex.
</Table>
- ---------------
* Such trustee is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. Whalen is an interested person of certain funds in the
Fund Complex by reason of his firm currently acting as legal counsel to such
funds in the Fund Complex. Messrs. Merin and Powers are interested persons of
funds in the Fund Complex and the Advisers by reason of their current or
former positions with Morgan Stanley or its affiliates.
29
OFFICERS
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS
Stephen L. Boyd (62) Vice President Officer Managing Director of Global Research Investment Management.
2800 Post Oak Blvd. since 1998 Vice President of funds in the Fund Complex. Prior to
45th Floor December 2002, Chief Investment Officer of Van Kampen
Houston, TX 77056 Investments and President and Chief Operations Officer of
the Advisers and Van Kampen Advisors Inc. Prior to May 2002,
Executive Vice President and Chief Investment Officer of
funds in the Fund Complex. Prior to May 2001, Managing
Director and Chief Investment Officer of Van Kampen
Investments, and Managing Director and President of the
Advisers and Van Kampen Advisors Inc. Prior to December
2000, Executive Vice President and Chief Investment Officer
of Van Kampen Investments, and President and Chief Operating
Officer of the Advisers. Prior to April 2000, Executive Vice
President and Chief Investment Officer for Equity
Investments of the Advisers. Prior to October 1998, Vice
President and Senior Portfolio Manager with AIM Capital
Management, Inc. Prior to February 1998, Senior Vice
President and Portfolio Manager of Van Kampen American
Capital Asset Management, Inc., Van Kampen American Capital
Investment Advisory Corp. and Van Kampen American Capital
Management, Inc.
Stefanie V. Chang (36) Vice President Officer Executive Director of Morgan Stanley Investment Management.
1221 Avenue of the Americas since 2003 Vice President of funds in the Fund Complex.
New York, NY 10020
Joseph J. McAlinden (60) Executive Vice Officer Managing Director and Chief Investment Officer of Morgan
1221 Avenue of the Americas President and Chief since 2002 Stanley Investment Advisors Inc., Morgan Stanley Investment
New York, NY 10020 Investment Officer Management Inc. and Morgan Stanley Investments LP and
Director of Morgan Stanley Trust for over 5 years. Executive
Vice President and Chief Investment Officer of funds in the
Fund Complex. Managing Director and Chief Investment Officer
of Van Kampen Investments, the Advisers and Van Kampen
Advisors Inc. since December 2002.
John R. Reynoldson (50) Vice President Officer Executive Director and Portfolio Specialist of the Advisers
1 Parkview Plaza since 2000 and Van Kampen Advisors Inc. Vice President of funds in the
P.O. Box 5555 Fund Complex. Prior to July 2001, Principal and Co-head of
Oakbrook Terrace, IL 60181 the Fixed Income Department of the Advisers and Van Kampen
Advisors Inc. Prior to December 2000, Senior Vice President
of the Advisers and Van Kampen Advisors Inc. Prior to May
2000, Senior Vice President of the investment grade taxable
group for the Advisers. Prior to June 1999, Senior Vice
President of the government securities bond group for Asset
Management.
</Table>
30
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER TRUST SERVED DURING PAST 5 YEARS
Ronald E. Robison (64) Executive Vice Officer Chief Executive Officer and Chairman of Investor Services.
1221 Avenue of the Americas President and since 2003 Executive Vice President and Principal Executive Officer of
New York, NY 10020 Principal Executive funds in the Fund Complex. Chief Global Operations Officer
Officer and Managing Director of Morgan Stanley Investment
Management Inc. Managing Director of Morgan Stanley.
Managing Director and Director of Morgan Stanley Investment
Advisors Inc. and Morgan Stanley Services Company Inc. Chief
Executive Officer and Director of Morgan Stanley Trust. Vice
President of the Morgan Stanley Funds.
A. Thomas Smith III (46) Vice President and Officer Managing Director of Morgan Stanley, Managing Director and
1221 Avenue of the Americas Secretary since 1999 Director of Van Kampen Investments, Director of the
New York, NY 10020 Advisers, Van Kampen Advisors Inc., the Distributor,
Investor Services and certain other subsidiaries of Van
Kampen Investments. Managing Director and General
Counsel-Mutual Funds of Morgan Stanley Investment Advisors,
Inc. Vice President and Secretary of funds in the Fund
Complex. Prior to July 2001, Managing Director, General
Counsel, Secretary and Director of Van Kampen Investments,
the Advisers, the Distributor, Investor Services, and
certain other subsidiaries of Van Kampen Investments. Prior
to December 2000, Executive Vice President, General Counsel,
Secretary and Director of Van Kampen Investments, the
Advisers, Van Kampen Advisors Inc., the Distributor,
Investor Services and certain other subsidiaries of Van
Kampen Investments. Prior to January 1999, Vice President
and Associate General Counsel to New York Life Insurance
Company ("New York Life"), and prior to March 1997,
Associate General Counsel of New York Life. Prior to
December 1993, Assistant General Counsel of The Dreyfus
Corporation. Prior to August 1991, Senior Associate, Willkie
Farr & Gallagher. Prior to January 1989, Staff Attorney at
the Securities and Exchange Commission, Division of
Investment Management, Office of Chief Counsel.
John L. Sullivan (48) Vice President, Chief Officer Director and Managing Director of Van Kampen Investments,
1 Parkview Plaza Financial Officer and since 1996 the Advisers, Van Kampen Advisors Inc. and certain other
P.O. Box 5555 Treasurer subsidiaries of Van Kampen Investments. Vice President,
Oakbrook Terrace, IL 60181 Chief Financial Officer and Treasurer of funds in the Fund
Complex. Head of Fund Accounting for Morgan Stanley
Investment Management. Prior to December 2002, Executive
Director of Van Kampen Investments, the Advisers and Van
Kampen Advisors Inc.
</Table>
31
Van Kampen
Privacy Notice
The Van Kampen companies and investment products* respect your right to privacy.
We also know that you expect us to conduct and process your business in an
accurate and efficient manner. To do so, we must collect and maintain certain
nonpublic personal information about you. This is information we collect from
you on applications or other forms, and from the transactions you conduct with
us, our affiliates, or third parties. We may also collect information you
provide when using our Web site, and text files (also known as "cookies") may be
placed on your computer to help us to recognize you and to facilitate
transactions you initiate. We do not disclose any nonpublic personal information
about you or any of our former customers to anyone, except as permitted by law.
For instance, so that we may continue to offer you Van Kampen investment
products and services that meet your investing needs, and to effect transactions
that you request or authorize, we may disclose the information we collect to
companies that perform services on our behalf, such as printers and mailers that
assist us in the distribution of investor materials. These companies will use
this information only for the services for which we hired them, and are not
permitted to use or share this information for any other purpose. To protect
your nonpublic personal information internally, we permit access to it only by
authorized employees, and maintain physical, electronic and procedural
safeguards to guard your nonpublic personal information.
* Includes Van Kampen Investments Inc., Van Kampen Investment Advisory Corp.,
Van Kampen Asset Management Inc., Van Kampen Advisors Inc., Van Kampen
Management Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc.,
Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the many
Van Kampen mutual funds and Van Kampen unit investment trusts.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
(VAN KAMPEN INVESTMENTS LOGO)
Copyright (C)2003 Van Kampen
Funds Inc. All rights reserved.
Member NASD/SIPC. 920, 910, 106
VKC ANR 8/03 11620H03-AS-8/03
Item 2. Code of Ethics.
Applicable only for reports covering fiscal years ending on or after July 15,
2003.
Item 3. Audit Committee Financial Expert.
Applicable only for reports covering fiscal years ending on or after July 15,
2003.
Item 4. Principal Accountant Fees and Services.
Applicable only for reports covering fiscal years ending on or after December
15, 2003.
Item 5. Audit Committee of Listed Registrants.
Applicable only for reports covering periods ending on or after the earlier of
(i) the first annual shareholder meeting after January 15, 2004 or (ii) October
31, 2004.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Trust invests in exclusively non-voting securities and therefore this item
is not applicable to the Trust.
Item 8. [Reserved.]
Item 9.
The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation.
Item 10. Exhibits.
(a) Code of Ethics - Applicable only for reports covering fiscal years
ending on or after July 15, 2003.
(b) Certifications of Principal Executive Officer and Principal Financial
Officer attached hereto as part of EX-99. CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen California Municipal Trust
----------------------------------------------
By: /s/ Ronald E. Robison
------------------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: August 19, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
------------------------------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: August 19, 2003
By: /s/ John L. Sullivan
------------------------------------------------------
Name: John L. Sullivan
Title: Principal Financial Officer
Date: August 19, 2003