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, New York, New York 10020
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 6/30
Date of reporting period: 12/31/03
Item 1. Report to Shareholders.
The Trust's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
California Municipal Trust performed during the semiannual period. The
portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the trust's financial statements and a list of trust investments
as of December 31, 2003.
Market forecasts provided in this report may not necessarily come to
pass. There is no assurance that the trust will achieve its investment
objective. The trust is subject to market risk, which is the possibility
that the market values of securities owned by the trust will decline and,
therefore, the value of the trust shares may be less than what you paid
for them. Accordingly, you can lose money investing in this trust.
<Table>
<Caption>
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NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
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</Table>
Performance Summary
AVERAGE ANNUAL TOTAL RETURNS
<Table>
<Caption>
CALIFORNIA MUNICIPAL TRUST
SYMBOL: VKC
- -------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (11/01/88) 7.82% 7.45%
10-year 6.79 6.03
5-year 7.10 4.07
1-year 6.76 9.09
6-month 2.12 -0.34
- -------------------------------------------------------
</Table>
Past performance is no guarantee of future results. Investment return, net asset
value (NAV) and common share market price will fluctuate and trust shares, when
sold, may be worth more or less than their original cost.
As a result of recent market activity, current performance may vary from the
figures shown. For more up-to-date information, please visit vankampen.com or
speak with your financial advisor. The NAV per share is determined by dividing
the value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding. The common share
market price is the price the market is willing to pay for shares of the trust
at a given time. Common share market price is influenced by a range of factors,
including supply and demand and market conditions. Total return assumes an
investment at the beginning of the period, reinvestment of all distributions for
the period in accordance with the trust's dividend reinvestment plan, and sale
of all shares at the end of the period.
The Lehman Brothers 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 SIX-MONTH PERIOD ENDED DECEMBER 31, 2003
Van Kampen California Municipal Trust is managed by the adviser's Municipal
Fixed Income team.(1) Current members include Joseph Piraro, Vice President;
Robert Wimmel, Vice President; and John Reynoldson, Executive Director.
MARKET CONDITIONS
The economic backdrop for the six months ended December 31, 2003 was marked by
mixed signals regarding the strength of the U.S. economy. While employment
strength was generally weak, the economy as measured by gross domestic product
(GDP) grew by 8.2 percent in the third quarter of 2003. The beleaguered
industrial sector of the economy appeared to show signs of life, however, and
consumer spending remained fairly strong. While generally positive for the stock
market, none of these improvements made a significant dent in the ongoing
budgetary and fiscal difficulties at the state and local levels, however, and
many municipal-bond issuers experienced downgrades.
The Federal Reserve Board (the Fed) attempted to allay investor fears and keep
the economy moving in the right direction by cutting the federal funds target
rate on June 25 to a level of 1.00 percent. This movement, which was half of
what many investors had hoped for, seemed to signal that deflation was no longer
a primary concern for the Fed; as a result, yields began to climb from their
June lows. At the same time, investors shifted their attention to the advancing
equity market, which reduced demand for municipal bonds. Interest from
cross-over investors--those who traditionally favor taxable investments but were
drawn to the higher yields of municipal bonds--also evaporated as the relative
attractiveness of the taxable market returned. Issuance was heavy through the
first half of the period, though it abated somewhat in the last three months of
the reporting year. These forces combined to drive municipal-bond yields off of
their historic lows, and the municipal market ended the six-month period at
higher levels.
California's economic outlook grew increasingly negative over the course of
2003. The state's economy continued to be affected by the recession, with
unemployment well above the national average and very little growth in economic
activity. The state also faced the largest state budget deficit in the country,
and the legislative and executive branches of the California state government
appeared to offer no immediate solution to closing the gap. This difficult
situation led both Standard & Poor's and Moody's to downgrade the state's
general obligations during the summer of 2003, with additional downgrades by
Moody's and Fitch in December. Because of these fiscal and credit concerns,
valuations in the state's municipal-bond market declined to extremely low levels
during the period, drawing interest from
(1)Team members may change without notice at any time.
2
many national investors seeking to benefit from the relatively attractive yields
in the California market.
PERFORMANCE ANALYSIS
Closed-end fund returns can be calculated based upon either the market price or
the net asset value (NAV) of its shares. NAV per share is determined by dividing
the value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns can differ significantly. On an NAV basis, Van Kampen California
Municipal Trust outperformed its benchmark, the Lehman Brothers California
Municipal Bond Index. On a market-price basis, however, the trust underperformed
its benchmark. (See table below.)
The trust appeared to benefit from our conservative investment approach during
the reporting period. Given California's budgetary difficulties, we chose to
emphasize essential-services sectors such as water & sewer and transportation.
These bonds are tied to revenues from ongoing projects rather than more volatile
general tax revenues, which is particularly beneficial in economically
challenging times. We also maintained the portfolio's credit quality at a very
high level, with more than 85 percent of assets rated AAA by the end of the
period. Both of these strategies boosted performance.
The trust uses leverage to enhance its dividend to common shareholders. To
implement this approach, the trust borrows money at short-term rates through the
issuance of preferred shares. The proceeds are invested in longer-term
securities, taking advantage of the difference between short- and longer-term
rates. With short-term rates at historic lows during the period, the difference
between short- and longer-term rates was relatively high. This made using
leverage a particularly profitable approach during the period, and added to the
trust's performance.
Our interest-rate strategy was largely defensive, as we kept the portfolio's
duration (a measure of interest-rate sensitivity) below that of its benchmark.
We also moved to take advantage of compelling valuations in the 18- to 22-year
segment of the yield curve. Our purchases for the portfolio were focused on
bonds with 10-year call dates that allow them to offer the dual benefits of
strong income and the lower downside vulnerability inherent with
shorter-duration securities. This position also
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2003
<Table>
<Caption>
- ----------------------------------------------------------------
BASED ON BASED ON LEHMAN BROTHERS CALIFORNIA
NAV MARKET PRICE MUNICIPAL BOND INDEX
2.12% -0.34% 1.46%
- ----------------------------------------------------------------
</Table>
Past performance is no guarantee of future results. Investment return, net asset
value and common share market price will fluctuate and trust shares, when sold,
may be worth more or less than their original cost. See Performance Summary for
additional performance information and an index definition.
3
added to performance, as the 20-year segment of the curve outperformed its peers
during the period. Going forward, we will continue with our disciplined
investment approach, monitoring the market closely for compelling investment
opportunities.
<Table>
TOP 5 SECTORS AS OF 12/31/03 RATINGS ALLOCATIONS AS OF 12/31/03
Public Education 17.0% AAA/Aaa 86.7%
Tax District 15.8 AA/Aa 3.8
Water & Sewer 12.9 A/A 3.2
Public Building 9.9 BBB/Baa 6.3
General Purpose 6.6
</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.
Ratings allocation based upon ratings as issued by Standard and Poor's and
Moody's, respectively. Van Kampen is a wholly owned subsidiary of a global
securities firm which is engaged in a wide range of financial services
including, for example, securities trading and brokerage activities, investment
banking, research and analysis, financing and financial advisory services.
4
PROXY VOTING POLICIES AND PROCEDURES
A description of the trust's policies and procedures with respect to the
voting of proxies relating to the trust's portfolio securities is
available without charge, upon request, by calling 1-800-847-2424. This
information is also available on the Securities and Exchange Commission's
website at http://www.sec.gov.
5
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS
December 31, 2003 (Unaudited)
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 158.2%
$1,000 Abag Fin Auth For Nonprofit Corp CA Ctf Part
Childrens Hosp Med Ctr (AMBAC Insd).............. 5.875% 12/01/19 $ 1,146,340
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 1,076,520
1,000 Abag Fin Auth For Nonprofit Corp CA Multi-Family
Rev Hsg Utd Dominion Ser A Rfdg (GTY AGMT: Utd
Dominion Realty Tr).............................. 6.400 08/15/30 1,092,810
1,205 Alameda Cnty, CA Wtr Dist Rev Rfdg (MBIA Insd)... 4.750 06/01/20 1,231,787
1,400 Alhambra, CA City Elem Sch Dist Ser A (FSA
Insd)............................................ 5.600 09/01/24 1,541,778
1,000 Banning, CA Cmnty Redev Agy Tax Alloc Merged
Downtown Proj.................................... 5.000 08/01/28 1,004,440
790 Bay Area Govt Assn CA Rev Tax Alloc CA Redev Agy
Pool Rev Ser A (FSA Insd)........................ 6.000 12/15/15 838,790
1,000 Bay Area Toll Auth CA Toll Brdg Rev San Francisco
Bay Area Ser D................................... 5.000 04/01/17 1,071,370
835 California Edl Fac Auth Rev Student Ln CA Ln Pgm
Ser A (MBIA Insd)................................ 6.000 03/01/16 888,841
1,000 California Hlth Fac Fin Auth Rev Cedars Sinai Med
Ctr Ser A........................................ 6.125 12/01/19 1,097,510
15 California Hsg Fin Agy Rev Home Mtg Ser E (AMBAC
Insd)............................................ 6.100 08/01/29 15,063
1,000 California Hsg Fin Agy Rev Multi-Family Hsg III
Ser A (MBIA Insd)................................ 5.850 08/01/17 1,051,770
1,000 California Infrastructure & Econ Dev Bk Rev (MBIA
Insd)............................................ 5.500 06/01/15 1,132,690
1,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southn CA Edison Co (AMBAC Insd)................. 6.000 07/01/27 1,013,330
175 California Rural Home Mtg Fin Auth Single Family
Mtg Rev Ser C (GNMA Collateralized).............. 7.800 02/01/28 188,512
2,000 California St (FGIC Insd)........................ 5.000 10/01/23 2,050,540
1,000 California St Univ Fresno Assn Inc Rev Sr Aux
Organization Event Ctr........................... 6.000 07/01/22 1,043,010
1,000 California St Vet Bd Ser BH (FSA Insd)........... 5.400 12/01/15 1,059,780
1,000 California St Vet Bd Ser BH (FSA Insd)........... 5.400 12/01/16 1,054,760
1,000 East Bay, CA Muni Util Dist Wtr Sys Rev (MBIA
Insd)............................................ 5.000 06/01/21 1,048,220
1,280 El Cerrito, CA Redev Agy Tax Alloc Redev Proj
Area Ser B Rfdg (MBIA Insd)...................... 5.250 07/01/15 1,426,957
</Table>
6 See Notes to Financial Statements
YOUR TRUST'S INVESTMENTS
December 31, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$1,000 Emeryville, CA Pub Fin Auth Shellmound Pk Redev &
Hsg Proj B (MBIA Insd)........................... 5.000% 09/01/19 $ 1,060,090
1,000 Folsom, CA Spl Tax Cmnty Fac Dist No 2 Rfdg
(Connie Lee Insd)................................ 5.250 12/01/19 1,088,890
1,000 Fontana, CA Redev Agy Tax Southeast Indl Pk Proj
Rfdg (MBIA Insd)................................. 5.000 09/01/22 1,048,130
1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap
Apprec Rfdg...................................... * 01/15/30 216,590
1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Conv
Cap Apprec Sr Lien Ser A (Escrowed to Maturity)
(a).............................................. 0/7.050 01/01/10 1,152,540
1,000 Imperial Irr Dist CA Ctf Part Elec Sys Proj (FSA
Insd)............................................ 5.250 11/01/23 1,070,910
1,000 Irvine, CA Pub Fac & Infrastructure Auth Assmt
Rev Ser B (AMBAC Insd)........................... 5.000 09/02/22 1,034,910
800 Kern, CA Cmnty College Sch Fac Impt Dist Mammoth
Campus Ser A (AMBAC Insd)........................ 5.000 08/01/19 848,256
1,250 Los Angeles Cnty, CA Sch Regionalized Business
Svc Ctf LA Cnty Sch Polled Fin Proj Ser A (FSA
Insd)............................................ 5.000 09/01/28 1,285,150
591 Los Angeles Cnty, CA Tran Comm Lease Rev Dia RR
Lease Ltd (FSA Insd)............................. 7.375 12/15/06 607,388
1,000 Los Angeles, CA Uni Sch Dist 1997 Election Ser E
(MBIA Insd)...................................... 5.500 07/01/17 1,124,590
1,000 Los Angeles, CA Uni Sch Dist Ser A (FSA Insd).... 5.250 07/01/20 1,090,150
1,000 Metropolitan Wtr Dist Southn CA Wtrwks Rev Auth
Ser B2 (FGIC Insd)............................... 5.000 10/01/26 1,032,260
1,405 Moorpark, CA Uni Sch Dist Ser A (FSA Insd)....... 5.375 08/01/18 1,555,433
1,000 Pico Rivera, CA Wtr Auth Rev Wtr Sys Proj Ser A
(MBIA Insd)...................................... 5.500 05/01/19 1,143,130
2,000 Redding, CA Jt Pwrs Fin Auth Elec Sys Rev Ser A
(MBIA Insd)...................................... 5.500 06/01/11 2,203,240
1,000 Redlands, CA Redev Agy Tax Alloc Redev Proj Ser A
Rfdg (MBIA Insd)................................. 4.750 08/01/21 1,017,780
1,000 San Bernardino Cnty, CA Ctf Part Med Cent Fin
Proj (MBIA Insd)................................. 5.000 08/01/28 1,011,170
955 San Diego, CA Hsg Auth Multi-Family Hsg Rev (GNMA
Collateralized).................................. 5.000 07/20/18 990,574
1,000 San Dimas, CA Redev Agy Tax Alloc Creative Growth
Ser A (FSA Insd)................................. 5.000 09/01/16 1,078,820
2,000 San Jose, CA Fin Auth Lease Rev Convention Ctr
Proj Ser F Rfdg (MBIA Insd)...................... 5.000 09/01/17 2,146,120
1,000 Sanger, CA Uni Sch Dist Rfdg (MBIA Insd)......... 5.600 08/01/23 1,154,240
1,350 Santa Ana, CA Uni Sch Dist (MBIA Insd)........... 5.375 08/01/21 1,469,704
</Table>
See Notes to Financial Statements 7
YOUR TRUST'S INVESTMENTS
December 31, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$1,305 South Orange Cnty, CA Pub Fin Auth Reassmt Rev
(FSA Insd)....................................... 5.800% 09/02/18 $ 1,505,383
600 Southern CA Pub Pwr Auth Pwr Proj Rev
Multi-Projs...................................... 5.500 07/01/20 600,654
1,325 Sweetwater, CA Auth Wtr Rev (FSA Insd)........... 5.500 04/01/18 1,482,569
1,000 University of CA Rev Gen Ser A (AMBAC Insd)...... 5.000 05/15/26 1,031,280
1,000 University of CA Rev Multi Purp Proj Ser M (FGIC
Insd)............................................ 5.125 09/01/17 1,085,610
------------
TOTAL INVESTMENTS 158.2%
(Cost $49,709,940)........................................................... 54,210,379
OTHER ASSETS IN EXCESS OF LIABILITIES 0.2%.................................... 75,956
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (58.4%).................... (20,013,863)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................. $ 34,272,472
============
</Table>
* Zero coupon bond
(a) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
AMBAC--AMBAC Indemnity Corp.
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.
Radian--Radian Asset Assurance
8 See Notes to Financial Statements
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
December 31, 2003 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $49,709,940)........................ $54,210,379
Interest Receivable......................................... 775,582
Other....................................................... 729
-----------
Total Assets............................................ 54,986,690
-----------
LIABILITIES:
Payables:
Custodian Bank............................................ 412,224
Capital Gain Distributions--Common Shares................. 29,211
Investment Advisory Fee................................... 27,527
Income Distributions--Common Shares....................... 11,447
Other Affiliates.......................................... 4,951
Trustees' Deferred Compensation and Retirement Plans........ 171,114
Accrued Expenses............................................ 43,881
-----------
Total Liabilities....................................... 700,355
Preferred Shares (including accrued distributions).......... 20,013,863
-----------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $34,272,472
===========
NET ASSET VALUE PER COMMON SHARE ($34,272,472 divided by
3,257,560 shares outstanding)............................. $ 10.52
===========
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................................. 4,500,439
Accumulated Undistributed Net Investment Income............. 258,200
Accumulated Net Realized Loss............................... (83,161)
-----------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $34,272,472
===========
PREFERRED SHARES ($.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....................... $54,272,472
===========
</Table>
See Notes to Financial Statements 9
Statement of Operations
For the Six Months Ended December 31, 2003 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $1,332,613
----------
EXPENSES:
Investment Advisory Fee..................................... 162,166
Preferred Share Maintenance................................. 32,075
Trustees' Fees and Related Expenses......................... 21,166
Legal....................................................... 8,115
Custody..................................................... 2,241
Other....................................................... 49,902
----------
Total Expenses.......................................... 275,665
----------
NET INVESTMENT INCOME....................................... $1,056,948
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... $ (85,905)
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 4,722,170
End of the Period......................................... 4,500,439
----------
Net Unrealized Depreciation During the Period............... (221,731)
----------
NET REALIZED AND UNREALIZED LOSS............................ $ (307,636)
==========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (94,204)
==========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $ 655,108
==========
</Table>
10 See Notes to Financial Statements
Statements of Changes in Net Assets
(Unaudited)
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 2003 JUNE 30, 2003
----------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 1,056,948 $ 2,200,161
Net Realized Gain/Loss.................................. (85,905) 560,495
Net Unrealized Appreciation/Depreciation During the
Period................................................ (221,731) 1,527,573
Distributions to Preferred Shareholders:
Net Investment Income................................. (94,204) (238,566)
----------- -----------
Change in Net Assets Applicable to Common Shares from
Operations............................................ 655,108 4,049,663
Distributions to Common Shareholders:
Net Investment Income................................. (977,204) (2,061,858)
Net Realized Gain..................................... (415,665) (372,990)
----------- -----------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES
FROM INVESTMENT ACTIVITIES............................ (737,761) 1,614,815
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................. 35,010,233 33,395,418
----------- -----------
End of the Period (Including accumulated undistributed
net investment income of $258,200 and $272,660,
respectively)......................................... $34,272,472 $35,010,233
=========== ===========
</Table>
See Notes to Financial Statements 11
Financial Highlights
(Unaudited)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED
DECEMBER 31, --------------------
2003 2003 2002 (e)
------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD............... $ 10.75 $ 10.25 $ 9.99
-------- -------- --------
Net Investment Income................................ .32 .67 .71
Net Realized and Unrealized Gain/Loss................ (.09) .64 .28
Common Share Equivalent of Distributions Paid to
Preferred Shareholders:
Net Investment Income.............................. (.03) (.07) (.11)
-------- -------- --------
Total from Investment Operations....................... .20 1.24 .88
Distributions Paid to Common Shareholders:
Net Investment Income.............................. (.30) (.63) (.55)
Net Realized Gain.................................. (.13) (.11) (.07)
-------- -------- --------
NET ASSET VALUE, END OF THE PERIOD..................... $ 10.52 $ 10.75 $ 10.25
======== ======== ========
Common Share Market Price at End of the Period......... $ 9.98 $ 10.45 $ 10.14
Total Return (a)....................................... -0.34%** 10.97% 22.39%
Net Assets Applicable to Common Shares at End of the
Period (In millions)................................. $ 34.3 $ 35.0 $ 33.4
Ratio of Expenses to Average Net Assets Applicable to
Common Shares (b).................................... 1.62% 1.56% 1.59%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (b)...................... 6.23% 6.38% 6.90%
Portfolio Turnover..................................... 13%** 19% 24%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including
Preferred Shares (b)................................. 1.02% .99% .99%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c)...................... 5.67% 5.69% 5.86%
SENIOR SECURITIES:
Total Preferred Shares Outstanding..................... 400 400 400
Asset Coverage Per Preferred Share (d)................. $135,716 $137,533 $133,498
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
** Non-Annualized
(a)Total return assumes an investment at the common share market price at the
beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Trust's dividend reinvestment plan, and sale of
all shares at the closing common share market price at the end of the period
indicated.
(b)Ratios do not reflect the effect of 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,
- ------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------
$ 9.36 $ 9.93 $ 10.67 $ 10.45 $ 10.28 $ 10.40 $ 10.30 $ 10.96
-------- -------- -------- -------- -------- -------- -------- --------
.73 .76 .78 .85 .89 .91 .95 .96
.58 (.44) (.37) .53 .39 -0-* .11 (.74)
(.23) (.22) (.20) (.22) (.21) (.23) (.23) (.16)
-------- -------- -------- -------- -------- -------- -------- --------
1.08 .10 .21 1.16 1.07 .68 .83 .06
(.45) (.53) (.62) (.72) (.75) (.75) (.72) (.71)
-0-* (.14) (.33) (.22) (.15) (.05) (.01) (.01)
-------- -------- -------- -------- -------- -------- -------- --------
$ 9.99 $ 9.36 $ 9.93 $ 10.67 $ 10.45 $ 10.28 $ 10.40 $ 10.30
======== ======== ======== ======== ======== ======== ======== ========
$ 8.83 $ 8.375 $ 9.875 $ 12.125 $12.1875 $ 10.875 $ 10.75 $ 10.625
10.99% -8.14% -11.17% 7.77% 21.40% 9.02% 8.67% 4.32%
$ 32.5 $ 30.5 $ 32.3 $ 34.5 $ 33.6 $ 32.9 $ 33.0 $ 32.6
1.65% 1.47% 1.67% 1.57% 1.58% 1.65% 1.65% 1.53%
7.33% 8.25% 7.38% 8.00% 8.54% 8.76% 9.35% 8.70%
16% 60% 33% 53% 30% 19% 16% 11%
1.02% .88% 1.05% .99% .99% 1.03% 1.02% .97%
5.02% 5.82% 5.49% 5.91% 6.51% 6.57% 7.02% 7.28%
400 400 400 400 400 400 400 400
$131,365 $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 $ 50,000 $ 50,000
</Table>
See Notes to Financial Statements 13
NOTES TO
FINANCIAL STATEMENTS
December 31, 2003 (Unaudited)
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. Effective November 30, 2003, the Trust's investment adviser,
Van Kampen Investment Advisory Corp. merged into its affiliate, Van Kampen Asset
Management.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
segregate assets with the custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
payment is made. At December 31, 2003, the Trust had no 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
December 31, 2003 (Unaudited)
At December 31, 2003, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $49,652,994
===========
Gross tax unrealized appreciation........................... $ 4,560,402
Gross tax unrealized depreciation........................... (3,017)
-----------
Net tax unrealized appreciation on investments.............. $ 4,557,385
===========
</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 year ended June 30, 2003
was as follows:
<Table>
<Caption>
2003
Distributions paid from:
Ordinary income........................................... $ 37,415
Long-term capital gain.................................... 344,219
--------
$381,634
========
</Table>
As of June 30, 2003, the components of distributable earnings on a tax basis
were as follows:
<Table>
Undistributed ordinary income............................... $417,385
</Table>
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") 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.
For the six months ended December 31, 2003, the Trust recognized expenses of
approximately $1,800 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 six months ended
December 31, 2003, the Trust recognized expenses of approximately $12,100
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
15
NOTES TO
FINANCIAL STATEMENTS
December 31, 2003 (Unaudited)
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 $7,376,875 and $6,798,960, 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 December 31, 2003 was 1.150%. During the six
months ended December 31, 2003, rates ranged from 0.840% to 1.150%.
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.
16
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
J. MILES BRANAGAN
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, NY 10020
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
c/o EquiServe
P.O. Box 43011
Providence, Rhode Island 02940-3011
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
17
Van Kampen
Privacy Notice
The Van Kampen companies and investment products* respect your right to privacy.
We also know that you expect us to conduct and process your business in an
accurate and efficient manner. To do so, we must collect and maintain certain
nonpublic personal information about you. This is information we collect from
you on applications or other forms, and from the transactions you conduct with
us, our affiliates, or third parties. We may also collect information you
provide when using our Web site, and text files (also known as "cookies") may be
placed on your computer to help us to recognize you and to facilitate
transactions you initiate. We do not disclose any nonpublic personal information
about you or any of our former customers to anyone, except as permitted by law.
For instance, so that we may continue to offer you Van Kampen investment
products and services that meet your investing needs, and to effect transactions
that you request or authorize, we may disclose the information we collect to
companies that perform services on our behalf, such as printers and mailers that
assist us in the distribution of investor materials. These companies will use
this information only for the services for which we hired them, and are not
permitted to use or share this information for any other purpose. To protect
your nonpublic personal information internally, we permit access to it only by
authorized employees, and maintain physical, electronic and procedural
safeguards to guard your nonpublic personal information.
* Includes Van Kampen Investments Inc., Van Kampen Asset Management, Van
Kampen Advisors Inc., Van Kampen Funds Inc., Van Kampen Investor Services
Inc., Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the
many Van Kampen mutual funds and Van Kampen unit investment trusts.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
(VAN KAMPEN INVESTMENTS LOGO)
Copyright (C)2004 Van Kampen
Funds Inc. All rights reserved.
Member NASD/SIPC. 920, 910, 106
VKC SAR 2/04 13654B04-AS-2/04
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved.]
Item 9. Controls and Procedures
(a) The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a) Code of Ethics - Not applicable for semi-annual reports.
(b)(1) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(b)(2) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen California Municipal Trust
-------------------------------------------------
By: /s/Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: February 18, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/Ronald E. Robison
---------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: February 18, 2004
By: /s/ John L. Sullivan
--------------------
Name: John L. Sullivan
Title: Principal Financial Officer
Date: February 18, 2004