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: 12/31/04
Item 1. Reports to Shareholders.
The Trust's 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, 2004.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE TRUST IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE TRUST WILL DECLINE AND
THAT THE VALUE OF THE TRUST SHARES MAY THEREFORE BE LESS THAN WHAT YOU
PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS TRUST.
INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
TAX (AMT).
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
</Table>
Performance Summary as of 12/31/04
<Table>
<Caption>
CALIFORNIA MUNICIPAL TRUST
SYMBOL: VKC
- ------------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (11/1/88) 7.73% 7.19%
10-year 8.44 7.65
5-year 10.34 12.15
1-year 6.27 3.38
6-month 8.54 14.51
- ------------------------------------------------------------
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, 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.
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. It is not possible to
invest directly in an index.
1
Fund Report
FOR THE 6-MONTH PERIOD ENDED DECEMBER 31, 2004
Van Kampen California Municipal Trust is managed by the Adviser's Municipal
Fixed Income team.(1) Current members include Joseph Piraro and Robert Wimmel,
Vice Presidents of the Adviser; and John Reynoldson, Executive Director of the
Adviser.
MARKET CONDITIONS
The fixed income markets during the six months ended December 31, 2004 were
focused on the ongoing actions of the Federal Reserve Open Market Committee (the
"Fed"). In keeping with Chairman Alan Greenspan's comments in the spring of
2004, the Fed reversed its stance and began to tighten interest rates at its
June 30, 2004 meeting. The Fed went on to raise rates at its four subsequent
meetings through the end of the year. By the end of the review period, the
federal funds rate stood at 2.25%, its highest level since 2002, and the fixed
income market appeared to anticipate further increases in 2005.
These shifts helped boost yields on shorter-maturity securities in the municipal
market. In the past, this stage of the economic cycle has typically been marked
by rising yields for intermediate and longer-maturity bonds. That was not the
case during the six-month period, however. During this time, these yields
actually fell, which led to a general "flattening" of the yield curve.
Lower-quality bonds also outperformed their higher-quality peers during the
period.
The state of California continued on the path to recovery that started earlier
in the year. The state's budgetary situation, while not yet out of the woods, at
least appears to be on a more positive track. Both S&P and Moody's upgraded the
state's general obligation bonds during the period, and the state's strong
issuance of debt (which once again led the nation) met with broad demand in the
market.
(1) The team's composition may change at any time without prior notice.
2
PERFORMANCE ANALYSIS
The trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the trust's portfolio securities, cash and other assets, less all
liabilities, by the total number of common shares outstanding, while market
price reflects the supply and demand for the shares. As a result, the two
returns may differ significantly, as they did during the reporting period when
the fund showed a 8.54 percent gain on an NAV basis and a 14.51 percent gain on
a market-price basis. The fund's return at NAV outperformed its benchmark, the
Lehman Brothers California Municipal Bond Index. (See table below.)
The trust often uses leverage to enhance its dividend to common shareholders.
The trust borrows money at short-term rates through the issuance of preferred
shares. The proceeds are reinvested in longer-term securities, taking advantage
of the difference between short- and longer-term rates.
While the trust's strategy of using leverage was largely positive, its
performance was hampered by our general interest rate strategy. The trust
entered the period with its duration (a measure of interest rate sensitivity)
below that of the Lehman Brothers California Municipal Bond Index. This strategy
limited the trust's participation in the rally of the longer-maturity portion of
the yield curve. The trust's performance was also hindered by its emphasis on
maintaining a relatively high average credit quality. At the end of the period,
almost 89 percent of the portfolio's holdings were rated AAA.
During the period, the trust's portfolio remained well diversified across the
major sectors of the municipal market. We continued to focus on securities in
sectors tied to essential services such as water & sewer and transportation. We
avoided securities with, in our opinion, unattractive structural characteristics
in areas such as housing and zero-coupon bonds. Additions to the portfolio
tended to be in the 20 to 25-year segment of the market, where we favored what
we viewed as well-structured securities with reduced interest-rate sensitivity.
These
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2004
<Table>
<Caption>
- ----------------------------------------------------------------
BASED ON BASED ON LEHMAN BROTHERS CALIFORNIA
NAV MARKET PRICE MUNICIPAL BOND INDEX
8.54% 14.51% 5.75%
- ----------------------------------------------------------------
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURN, NET ASSET
VALUE AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES, WHEN SOLD,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. SEE PERFORMANCE SUMMARY FOR
ADDITIONAL PERFORMANCE INFORMATION AND INDEX DEFINITION.
3
securities gained strongly during the period, and were a contributor to the
trust's positive returns.
Should interest rates continue to rise, we anticipate finding more securities
with attractive yields than have been available for quite some time. The coming
six months promise to be an interesting time for the municipal bond market--and
for the Fed.
There is no guarantee that any securities will continue to perform well or be
held by the trust in the future.
4
<Table>
<Caption>
TOP 5 SECTORS AS OF 12/31/04
Public Education 18.2%
Water & Sewer 14.1
Tax District 13.6
Public Building 10.5
Retail Elec/Gas/Telephone 8.0
<Caption>
RATINGS ALLOCATION AS OF 12/31/04
AAA/Aaa 89.0%
AA/Aa 1.9
A/A 4.9
BBB/Baa 4.2
</Table>
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Ratings are as a percentage of total
investments and sectors are as percentage of long term investments. Securities
are classified by sectors that represent broad groupings of related industries.
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. Rating allocations based upon ratings
as issued by Standard and Poor's and Moody's, respectively.
5
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen trust provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
trust's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to trust shareholders, and makes these reports available on its
public web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public web site, each trust files a
complete schedule of portfolio holdings with the SEC for the trust's
first and third fiscal quarters on Form N-Q. Van Kampen does not deliver
the reports for the first and third fiscal quarters to shareholders, nor
are the reports posted to the Van Kampen public web site. You may,
however, obtain the Form N-Q filings (as well as the Form N-CSR and
N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You
may also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
In addition to filing a complete schedule of portfolio holdings with the
SEC each fiscal quarter, each Van Kampen trust makes portfolio holdings
information available by periodically providing the information on its
public web site, www.vankampen.com. Each Van Kampen trust provides a
complete schedule of portfolio holdings on the public web site on a
calendar-quarter basis approximately 30 days after the close of the
calendar quarter. Van Kampen closed-end funds do not presently provide
partial lists of their portfolio holdings on a monthly basis, but may do
so in the future.
You may obtain copies of the trust's fiscal quarter filings, or its
monthly or calendar-quarter web site postings, by contacting Van Kampen
Client Relations at 1-800-847-2424.
6
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
The trust's policies and procedures with respect to the voting of proxies
relating to the trust's portfolio securities and information on how the
trust voted proxies relating to portfolio securities during the most
recent twelve-month period ended June 30 is available without charge,
upon request, by calling 1-800-847-2424 or by visiting our web site at
www.vankampen.com. This information is also available on the Securities
and Exchange Commission's web site at http://www.sec.gov.
7
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 (UNAUDITED)
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
MUNICIPAL BONDS 166.5%
CALIFORNIA 156.4%
$1,000 Abag Fin Auth For Nonprofit Corp CA Ctf Part
Childrens Hosp Med Ctr (AMBAC Insd).............. 5.875% 12/01/19 $ 1,135,440
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 1,080,920
1,000 Abag Fin Auth For Nonprofit Corp CA Multi-Family
Rev Hsg Utd Dominion Ser A Rfdg (AMT)(GTY AGMT:
Utd Dominion Realty Tr).......................... 6.400 08/15/30 1,088,460
1,205 Alameda Cnty, CA Wtr Dist Rev Rfdg (MBIA Insd)... 4.750 06/01/20 1,234,113
1,400 Alhambra, CA City Elem Sch Dist Ser A (FSA
Insd)............................................ 5.600 09/01/24 1,555,302
1,000 Bay Area Toll Auth CA Toll Brdg Rev San Francisco
Bay Area Ser D................................... 5.000 04/01/17 1,076,290
505 California Edl Fac Auth Rev Student Ln CA Ln Pgm
Ser A (AMT) (MBIA Insd).......................... 6.000 03/01/16 534,351
1,000 California Hlth Fac Fin Auth Rev Cedars Sinai Med
Ctr Ser A........................................ 6.125 12/01/19 1,095,860
1,000 California Hsg Fin Agy Rev Multi-Family Hsg III
Ser A (AMT) (MBIA Insd).......................... 5.850 08/01/17 1,044,480
1,000 California Infrastructure & Econ Dev Bk Rev (MBIA
Insd)............................................ 5.500 06/01/15 1,120,090
1,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southn CA Edison Co (AMT) (AMBAC Insd)........... 6.000 07/01/27 1,013,600
60 California Rural Home Mtg Fin Auth Single Family
Mtg Rev Ser C (AMT) (GNMA Collateralized)........ 7.800 02/01/28 61,568
2,000 California St (FGIC Insd)........................ 5.000 10/01/23 2,066,820
1,000 California St Univ Fresno Assn Inc Rev Sr Aux
Organization Event Ctr........................... 6.000 07/01/22 1,058,840
1,000 California St Vet Bd Ser BH (AMT) (FSA Insd)..... 5.400 12/01/15 1,021,960
1,000 California St Vet Bd Ser BH (AMT) (FSA Insd)..... 5.400 12/01/16 1,020,120
1,600 Commerce, CA Jt Pwrs Fin Cmnty Ctr Proj (XLCA
Insd)............................................ 5.000 10/01/29 1,640,224
1,000 East Bay, CA Muni Util Dist Wtr Sys Rev (MBIA
Insd)............................................ 5.000 06/01/21 1,052,890
1,280 El Cerrito, CA Redev Agy Tax Alloc Redev Proj
Area Ser B Rfdg (AMT) (MBIA Insd) (a)............ 5.250 07/01/15 1,400,461
1,000 Emeryville, CA Pub Fin Auth Shellmound Pk Redev &
Hsg Proj B (MBIA Insd)........................... 5.000 09/01/19 1,071,890
1,000 Folsom, CA Spl Tax Cmnty Fac Dist No 2 Rfdg
(Connie Lee Insd)................................ 5.250 12/01/19 1,091,460
1,000 Fontana, CA Redev Agy Tax Southeast Indl Pk Proj
Rfdg (MBIA Insd)................................. 5.000 09/01/22 1,058,460
1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap
Apprec Rfdg...................................... * 01/15/30 225,990
1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Conv
Cap Apprec Sr Lien Ser A (Escrowed to Maturity)
(b).............................................. 0/7.050 01/01/10 1,188,790
1,000 Imperial Irr Dist CA Ctf Part Elec Sys Proj (FSA
Insd)............................................ 5.250 11/01/23 1,081,750
</Table>
8 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
$1,000 Irvine, CA Pub Fac & Infrastructure Auth Assmt
Rev Ser B (AMBAC Insd)........................... 5.000% 09/02/22 $ 1,032,800
800 Kern, CA Cmnty College Sch Fac Impt Dist Mammoth
Campus Ser A (AMBAC Insd) (a).................... 5.000 08/01/19 859,400
1,250 Los Angeles Cnty, CA Sch Regionalized Business
Svc Ctf LA Cnty Sch Pooled Fin Proj Ser A (FSA
Insd)............................................ 5.000 09/01/28 1,288,488
464 Los Angeles Cnty, CA Tran Comm Lease Rev Dia RR
Lease Ltd (FSA Insd)............................. 7.375 12/15/06 474,992
2,000 Los Angeles, CA Dept Wtr & Pwr Sys Ser C (MBIA
Insd)............................................ 5.000 07/01/26 2,094,740
1,000 Los Angeles, CA Uni Sch Dist 1997 Election Ser E
(Prerefunded @ 07/01/12) (MBIA Insd)............. 5.500 07/01/17 1,153,370
1,000 Los Angeles, CA Uni Sch Dist Ser A (FSA Insd).... 5.250 07/01/20 1,096,270
1,000 Lucia Mar Uni Sch Dist Election 2004 Ser A (FGIC
Insd)............................................ 5.000 08/01/25 1,053,590
1,405 Moorpark, CA Uni Sch Dist Ser A (FSA Insd) (a)... 5.375 08/01/18 1,564,144
1,000 Pico Rivera, CA Wtr Auth Rev Wtr Sys Proj Ser A
(MBIA Insd)...................................... 5.500 05/01/19 1,147,730
1,000 Redlands, CA Redev Agy Tax Alloc Redev Proj Ser A
Rfdg (MBIA Insd)................................. 4.750 08/01/21 1,023,840
955 San Diego, CA Hsg Auth Multi-Family Hsg Rev (AMT)
(GNMA Collateralized)............................ 5.000 07/20/18 994,661
1,000 San Dimas, CA Redev Agy Tax Alloc Creative Growth
Ser A (FSA Insd)................................. 5.000 09/01/16 1,080,550
2,000 San Jose, CA Fin Auth Lease Rev Convention Ctr
Proj Ser F Rfdg (MBIA Insd)...................... 5.000 09/01/17 2,149,460
1,000 Sanger, CA Uni Sch Dist Rfdg (MBIA Insd)......... 5.600 08/01/23 1,178,610
1,350 Santa Ana, CA Uni Sch Dist (MBIA Insd) (a)....... 5.375 08/01/21 1,491,953
1,000 Semitropic Impt Wtr Storage Dist CA Wtr Ser A
(XLCA Insd)...................................... 5.125 12/01/35 1,035,750
1,305 South Orange Cnty, CA Pub Fin Auth Reassmt Rev
(FSA Insd)....................................... 5.800 09/02/18 1,473,188
600 Southern CA Pub Pwr Auth Pwr Proj Rev
Multi-Projs...................................... 5.500 07/01/20 603,132
1,000 State Center, CA Cmnty Election 2002 Ser A (MBIA
Insd)............................................ 5.500 08/01/28 1,097,110
1,325 Sweetwater, CA Auth Wtr Rev (FSA Insd)........... 5.500 04/01/18 1,474,195
1,000 University of CA Rev Multi Purp Proj Ser M (FGIC
Insd)............................................ 5.125 09/01/17 1,090,780
------------
53,478,882
------------
</Table>
See Notes to Financial Statements 9
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2004 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ---------------------------------------------------------------------------------------------
PUERTO RICO 10.1%
$3,000 Puerto Rico Elec Pwr Auth Rev Ser QQ (XLCA Insd)
(c).............................................. 5.500% 07/01/18 $ 3,452,340
------------
TOTAL INVESTMENTS 166.5%
(Cost $52,490,480).......................................................... 56,931,222
LIABILITIES IN EXCESS OF OTHER ASSETS (8.0%)................................. (2,711,756)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (58.5%)................... (20,020,383)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................ $ 34,199,083
============
</Table>
Percentages are calculated as a percentage of net assets applicable to common
shares.
* Zero coupon bond
(a) The Trust owns 100% of the bond issuance.
(b) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(c) Securities purchased on a when-issued or delayed delivery basis.
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
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
GTY AGMT--Guaranty Agreement.
MBIA--Municipal Bond Investors Assurance Corp.
XLCA--XL Capital Assurance Inc.
10 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
December 31, 2004 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $52,490,480)........................ $56,931,222
Cash........................................................ 124,184
Interest Receivable......................................... 902,097
Other....................................................... 2,861
-----------
Total Assets............................................ 57,960,364
-----------
LIABILITIES:
Payables:
Investments Purchased..................................... 3,444,197
Investment Advisory Fee................................... 25,231
Income Distributions--Common Shares....................... 7,547
Other Affiliates.......................................... 4,771
Capital Gain Distributions................................ 2,135
Trustees' Deferred Compensation and Retirement Plans........ 210,070
Accrued Expenses............................................ 46,947
-----------
Total Liabilities....................................... 3,740,898
Preferred Shares (including accrued distributions).......... 20,020,383
-----------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $34,199,083
===========
NET ASSET VALUE PER COMMON SHARE ($34,199,083 divided by
3,257,560 shares outstanding)............................. $ 10.50
===========
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................................. 4,440,742
Accumulated Undistributed Net Investment Income............. 207,267
Accumulated Net Realized Loss............................... (45,920)
-----------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $34,199,083
===========
PREFERRED SHARES ($.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....................... $54,199,083
===========
</Table>
See Notes to Financial Statements 11
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended December 31, 2004 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $1,333,161
----------
EXPENSES:
Investment Advisory Fee..................................... 158,158
Preferred Share Maintenance................................. 32,693
Trustees' Fees and Related Expenses......................... 26,132
Legal....................................................... 8,738
Custody..................................................... 2,197
Other....................................................... 49,865
----------
Total Expenses.......................................... 277,783
----------
NET INVESTMENT INCOME....................................... $1,055,378
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... $ (52,487)
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 2,625,069
End of the Period......................................... 4,440,742
----------
Net Unrealized Appreciation During the Period............... 1,815,673
----------
NET REALIZED AND UNREALIZED GAIN............................ $1,763,186
==========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (142,865)
==========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $2,675,699
==========
</Table>
12 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 2004 JUNE 30, 2004
---------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................... $ 1,055,378 $ 2,103,419
Net Realized Gain/Loss................................... (52,487) 42,420
Net Unrealized Appreciation/Depreciation During the
Period................................................. 1,815,673 (2,097,101)
Distributions to Preferred Shareholders:
Net Investment Income.................................. (142,865) (192,274)
----------- -----------
Change in Net Assets Applicable to Common Shares from
Operations............................................. 2,675,699 (143,536)
Distributions to Common Shareholders:
Net Investment Income.................................. (930,285) (1,954,457)
Net Realized Gain...................................... (43,000) (415,571)
----------- -----------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
INVESTMENT ACTIVITIES.................................. 1,702,414 (2,513,564)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period.................................. 32,496,669 35,010,233
----------- -----------
End of the Period (Including accumulated undistributed
net investment income of $207,267 and $225,039,
respectively).......................................... $34,199,083 $32,496,669
=========== ===========
</Table>
See Notes to Financial Statements 13
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED
DECEMBER 31, --------------------
2004 2004 2003
------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD............... $ 9.98 $ 10.75 $ 10.25
-------- -------- --------
Net Investment Income................................ .32 .65 .67
Net Realized and Unrealized Gain/Loss................ .54 (.63) .64
Common Share Equivalent of Distributions Paid to
Preferred Shareholders:
Net Investment Income.............................. (.04) (.06) (.07)
-------- -------- --------
Total from Investment Operations....................... .82 (.04) 1.24
Distributions Paid to Common Shareholders:
Net Investment Income.............................. (.29) (.60) (.63)
Net Realized Gain.................................. (.01) (.13) (.11)
-------- -------- --------
NET ASSET VALUE, END OF THE PERIOD..................... $ 10.50 $ 9.98 $ 10.75
======== ======== ========
Common Share Market Price at End of the Period......... $ 9.69 $ 8.73 $ 10.45
Total Return (a)....................................... 14.51%** -10.03% 10.97%
Net Assets Applicable to Common Shares at End of the
Period (In millions)................................. $ 34.2 $ 32.5 $ 35.0
Ratio of Expenses to Average Net Assets Applicable to
Common Shares (b).................................... 1.63% 1.65% 1.56%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (b)...................... 6.20% 6.24% 6.38%
Portfolio Turnover..................................... 7%** 33% 19%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets Including
Preferred Shares (b)................................. 1.02% 1.03% .99%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (c)...................... 5.36% 5.67% 5.69%
SENIOR SECURITIES:
Total Preferred Shares Outstanding..................... 400 400 400
Asset Coverage Per Preferred Share (d)................. $135,549 $131,256 $137,533
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.
14
<Table>
<Caption>
YEAR ENDED JUNE 30,
- ------------------------------------------------------------------------------------------
2002 (E) 2001 2000 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------
$ 9.99 $ 9.36 $ 9.93 $ 10.67 $ 10.45 $ 10.28 $ 10.40 $ 10.30
-------- -------- -------- -------- -------- -------- -------- --------
.71 .73 .76 .78 .85 .89 .91 .95
.28 .58 (.44) (.37) .53 .39 -0-* .11
(.11) (.23) (.22) (.20) (.22) (.21) (.23) (.23)
-------- -------- -------- -------- -------- -------- -------- --------
.88 1.08 .10 .21 1.16 1.07 .68 .83
(.55) (.45) (.53) (.62) (.72) (.75) (.75) (.72)
(.07) -0-* (.14) (.33) (.22) (.15) (.05) (.01)
-------- -------- -------- -------- -------- -------- -------- --------
$ 10.25 $ 9.99 $ 9.36 $ 9.93 $ 10.67 $ 10.45 $ 10.28 $ 10.40
======== ======== ======== ======== ======== ======== ======== ========
$ 10.14 $ 8.83 $ 8.375 $ 9.875 $ 12.125 $12.1875 $ 10.875 $ 10.75
22.39% 10.99% -8.14% -11.17% 7.77% 21.40% 9.02% 8.67%
$ 33.4 $ 32.5 $ 30.5 $ 32.3 $ 34.5 $ 33.6 $ 32.9 $ 33.0
1.59% 1.65% 1.47% 1.67% 1.57% 1.58% 1.65% 1.65%
6.90% 7.33% 8.25% 7.38% 8.00% 8.54% 8.76% 9.35%
24% 16% 60% 33% 53% 30% 19% 16%
.99% 1.02% .88% 1.05% .99% .99% 1.03% 1.02%
5.86% 5.02% 5.82% 5.49% 5.91% 6.51% 6.57% 7.02%
400 400 400 400 400 400 400 400
$133,498 $131,365 $126,216 $130,843 $136,309 $134,055 $132,192 $132,521
$ 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 15
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2004 (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.
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, 2004, the Trust had $3,444,197 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 Subchapter M 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.
16
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2004 (UNAUDITED) continued
At December 31, 2004, the cost and related gross unrealized appreciation and
depreciation were as follows:
<Table>
Cost of investments for tax purposes........................ $52,420,543
===========
Gross tax unrealized appreciation........................... $ 4,514,682
Gross tax unrealized depreciation........................... (4,003)
-----------
Net tax unrealized appreciation on investments.............. $ 4,510,679
===========
</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, 2004
was as follows:
<Table>
<Caption>
2004
Distributions paid from:
Ordinary income........................................... $417,385
Long-term capital gain.................................... -0-
--------
$417,385
========
</Table>
As of June 30, 2004, the component of distributable earnings on a tax basis
was as follows:
<Table>
Undistributed long-term capital gain........................ $43,111
</Table>
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") provides investment advice and facilities to the
Trust for an annual fee payable monthly of .55% of the average daily net assets
of the Trust. Effective November 1, 2004, the investment advisory fee was
reduced from .60% to .55%.
For the six months ended December 31, 2004, the Trust recognized expenses of
approximately $1,400 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Trust, of which a trustee of the Trust
is a partner of such firm and he and his law firm provide legal services as
legal counsel to the Trust.
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, 2004, the Trust recognized expenses of approximately $13,000
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
also officers of Van Kampen.
17
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2004 (UNAUDITED) continued
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 $6,986,376 and $4,056,106, 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, 2004 was 1.550%. During the six
months ended December 31, 2004, rates ranged from 1.200% to 1.650%
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. INDEMNIFICATIONS
The Trust enters into contracts that contain a variety of indemnifications. The
Trust's maximum exposure under these arrangements is unknown. However, the Trust
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
18
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
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, New York 10020
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
c/o EquiServe
P.O. Box 43011
Providence, Rhode Island 02940-3011
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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.
19
VAN KAMPEN
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc.,
Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange
Corp., as well as current and former individual investors in Van Kampen mutual
funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised by
us. This Policy is, however, applicable to individuals who select us to be a
custodian of securities or assets in individual retirement accounts, 401(k)
accounts, 529 Educational Savings Accounts, accounts subject to the Uniform
Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we help
you achieve your financial objectives. This Policy describes what non-public
personal information we collect about you, why we collect it, and when we may
share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies you or
your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect and
maintain accurate information about you. We may obtain this information from
applications and other forms you submit to us, from your dealings with us, from
consumer reporting agencies, from our Web sites and from third parties and other
sources.
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser,
(continued on back)
VAN KAMPEN
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
your use of our Web sites and your product and service preferences,
through the use of "cookies." "Cookies" recognize your computer each
time you return to one of our sites, and help to improve our sites'
content and personalize your experience on our sites by, for example,
suggesting offerings that may interest you. Please consult the Terms of
Use of these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you better
and to manage our business, we may disclose personal information we collect
about you to our affiliated companies and to non-affiliated third parties as
required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise required
or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except to
enable them to provide services on our behalf, to perform joint marketing
agreements with other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2004 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC. 920, 910, 106
VKC SAR 3/05 RN05-00261P-Y12/04
(VAN KAMPEN INVESTMENTS LOGO)
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. Schedule of Investments.
Please refer to Item #1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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 11. 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 17, 2005
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 17, 2005
By: /s/ James W. Garrett
----------------------
Name: James W. Garrett
Title: Principal Financial Officer
Date: February 17, 2005