<PAGE> 1
<TABLE>
<S> <C>
Table of Contents
OVERVIEW
LETTER TO SHAREHOLDERS 1
ECONOMIC SNAPSHOT 2
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS 4
PORTFOLIO AT A GLANCE
CREDIT QUALITY 5
TWELVE-MONTH DIVIDEND HISTORY 5
TOP FIVE SECTORS 6
NET ASSET VALUE AND MARKET PRICE 6
Q&A WITH YOUR PORTFOLIO MANAGERS 7
GLOSSARY OF TERMS 10
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS 11
FINANCIAL STATEMENTS 15
NOTES TO FINANCIAL STATEMENTS 20
REPORT OF INDEPENDENT AUDITORS 23
DIVIDEND REINVESTMENT PLAN 24
VAN KAMPEN FUNDS
THE VAN KAMPEN FAMILY OF FUNDS 26
TRUST OFFICERS AND IMPORTANT ADDRESSES 27
RESULTS OF SHAREHOLDER VOTES 28
</TABLE>
It is times like these when money- management experience may make a difference.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 2
OVERVIEW
LETTER TO SHAREHOLDERS
July 20, 2000
Dear Shareholder,
Whether you have held your trust for years or just joined the Van Kampen family
of shareholders in the last few months, you are likely to have questions and
even some concerns about how recent market volatility has affected your
investment. I encourage you to review the following Q&A in which your portfolio
manager provides an update on how your trust is being managed in this
environment.
It is times like these when money-management experience may make a difference.
Toward that end, you should know that Van Kampen is one of the nation's oldest
investment-management firms, with a history of money management dating back to
1926. Our portfolio managers have invested in all types of market
conditions--during bull and bear markets, periods of inflation and rising
interest rates, and now a technology revolution. We have managed money long
enough to understand short-term
market volatility and the value of investing for the long
term.
As we move through the second half of 2000, count on us to
continue to draw on the wisdom of our 74 years of experience.
Along those lines, Van Kampen's "Generations of Experience" is the theme of a
national advertising campaign that we recently kicked off. The message
emphasizes our depth of investment-management history, as well as our firm
belief that with the right investments, anyone can realize life's true wealth.
Sincerely,
[SIG]
Richard F. Powers, III
President and CEO
Van Kampen Investments
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
BEGINNING IN THE SECOND QUARTER OF 2000, EVIDENCE OF SLOWER ECONOMIC GROWTH IN
THE UNITED STATES EMERGED. HOWEVER, ANALYSTS BELIEVE IT MAY HAVE BEEN PREMATURE
TO ASSUME THAT THE U.S. ECONOMY HAS SLOWED TO A SUSTAINABLE, NONINFLATIONARY
PACE, WITH THE GROSS DOMESTIC PRODUCT (GDP), A MEASURE OF ECONOMIC GROWTH, UP
5.2 PERCENT ANNUALIZED IN THE SECOND QUARTER OF 2000.
CONSUMER SPENDING AND EMPLOYMENT
CONSUMER SPENDING REMAINED THE MAIN ENGINE OF GROWTH BEHIND THE U.S. ECONOMY.
LIVING STANDARDS AND SPENDING HABITS WERE BOOSTED BY STRONG GAINS IN REAL
INCOME, AND INDIVIDUAL WEALTH INCREASED SUBSTANTIALLY, PRIMARILY DUE TO A
BUOYANT STOCK MARKET. NONETHELESS, DATA RELEASED IN THE SECOND QUARTER OF 2000
REFLECTED A MINOR DECREASE IN THE SPENDING OF INDIVIDUALS. IN JUNE, THE CONSUMER
PRICE INDEX (CPI), THE LEADING INFLATION INDICATOR, ROSE HIGHER THAN
EXPECTED--0.6 PERCENT MORE THAN THE PREVIOUS MONTH. THAT HEIGHTENED CONCERNS
ABOUT INFLATION, AND THE PROSPECT OF ADDITIONAL FEDERAL RESERVE BOARD
INTEREST-RATE INCREASES.
THE U.S. LABOR MARKET WAS STILL ROBUST DURING THIS TIME, AND JOB INSECURITY
CONTINUED TO DECLINE. SOLID EMPLOYMENT GROWTH WAS ACCOMPANIED BY UNUSUALLY LARGE
GAINS IN PRODUCTIVITY, WHICH LIMITED THE RISE IN UNIT LABOR COSTS ACROSS THE
WHOLE ECONOMY. GIVEN THE HIGH EMPLOYMENT NUMBERS AND STRONG LEVELS OF
PRODUCTIVITY, ANALYSTS BELIEVE AN INCREASE IN INTEREST RATES TO WARD OFF
INFLATION AND FURTHER SLOW THE ECONOMY IS POSSIBLE.
INTEREST RATES AND INFLATION
DURING THE PAST FEW MONTHS, PERSISTENT STRENGTH IN CONSUMER SPENDING ACCOMPANIED
BY A VERY TIGHT LABOR MARKET, RESULTED IN SOME INFLATION. THE CPI REACHED A
LEVEL OF 2.7 PERCENT IN JANUARY 2000 AND 3.7 PERCENT IN JUNE 2000, CLEARLY
DEMONSTRATING SIGNS OF INFLATION.
SINCE JUNE 1999, THE FEDERAL RESERVE HAS INCREASED THE FEDERAL FUNDS RATE SIX
TIMES BY A TOTAL OF 175 BASIS POINTS TO LOWER ECONOMIC GROWTH AND DECREASE ANY
FUTURE FEARS OF INFLATION. THESE INCREASES IN INTEREST RATES HELPED SLOW THE
INTEREST-SENSITIVE AUTO AND HOUSING MARKETS.
MANY OBSERVERS BELIEVE INTEREST RATES COULD BE LIFTED FURTHER IN COMING MONTHS.
WHILE MARKETS HAVE EXPERIENCED MUCH SHORT-TERM VOLATILITY, THE MARKET'S OUTLOOK
COULD IMPROVE ONCE INTEREST-RATE HIKES CEASE.
2
<PAGE> 4
U.S. GROSS DOMESTIC PRODUCT
SEASONALLY ADJUSTED ANNUALIZED RATES
(June 30, 1998 - June 30, 2000)
[BAR GRAPH]
<TABLE>
<CAPTION>
U.S. GROSS DOMESTIC PRODUCT
---------------------------
<S> <C>
Jun 98 2.10
Sep 98 3.80
Dec 98 5.90
Mar 99 3.50
Jun 99 2.50
Sep 99 5.70
Dec 99 8.30
Mar 00 4.80
Jun 00 5.20
</TABLE>
Source: Bureau of Economic Analysis
INTEREST RATES AND INFLATION
(June 30, 1998 - June 30, 2000)
[BAR GRAPH]
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Jun 98 5.50 1.70
5.50 1.70
5.50 1.60
Sep 98 5.25 1.50
5.00 1.50
4.75 1.50
Dec 98 4.75 1.60
4.75 1.70
4.75 1.60
Mar 99 4.75 1.70
4.75 2.30
4.75 2.10
Jun 99 5.00 2.00
5.00 2.10
5.25 2.30
Sep 99 5.25 2.60
5.25 2.60
5.50 2.60
Dec 99 5.50 2.70
5.50 2.70
5.75 3.20
Mar 00 6.00 3.70
6.00 3.00
6.50 3.10
Jun 00 6.50 3.70
</TABLE>
Interest rates are represented by the closing midline federal funds target rate
on the last day of each month. Inflation is indicated by the annual percent
change of the Consumer Price Index for all urban consumers at the end of each
month.
3
<PAGE> 5
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS
(as of June 30, 2000)
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------------
AMEX Ticker Symbol VKC
-----------------------------------------------------------------------
One-year total return based on market price(1) -8.14%
-----------------------------------------------------------------------
One-year total return based on NAV(2) 1.37%
-----------------------------------------------------------------------
Distribution rate as a % of closing common stock
price(3) 5.87%
-----------------------------------------------------------------------
Taxable-equivalent distribution rate as a % of closing
common stock price(4) 10.12%
-----------------------------------------------------------------------
Net asset value $9.36
-----------------------------------------------------------------------
Closing common stock price $8.3750
-----------------------------------------------------------------------
One-year high common stock price (07/09/99) $10.1250
-----------------------------------------------------------------------
One-year low common stock price (01/18/00) $7.1875
-----------------------------------------------------------------------
Preferred share rate(5) 4.500%
-----------------------------------------------------------------------
</TABLE>
(1) Total return based on market price assumes an investment at the 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 stock price at the end of the
period indicated.
(2) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3) Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(4) The taxable-equivalent distribution rate is calculated assuming a 42%
combined federal and state tax bracket, which takes into consideration the
deductibility of individual state taxes paid.
(5) See "Notes to Financial Statements" footnote #5, for more information
concerning Preferred Share reset periods.
A portion of the interest income may be taxable for those investors subject
to the federal alternative minimum tax (AMT).
Past performance is no guarantee of future results. Investment return, stock
price and net asset value will fluctuate with market conditions. Trust
shares, when sold, may be worth more or less than their original cost.
4
<PAGE> 6
PORTFOLIO AT A GLANCE
CREDIT QUALITY
(as a percentage of long-term investments)
<TABLE>
<CAPTION>
As of June 30, 2000
<S> <C> <C>
- AAA/Aaa............ 74.4%
- AA/Aa.............. 16.6%
- A/A................ 5.3%
- BBB/Baa............ 3.7%
[PIE CHART]
<CAPTION>
As of June 30, 1999
<S> <C> <C>
- AAA/Aaa............ 63.3%
- AA/Aa.............. 10.8%
- A/A................ 12.3%
- BBB/Baa............ 13.6%
[PIE CHART]
</TABLE>
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
TWELVE-MONTH DIVIDEND HISTORY
(for the period ended June 30, 2000, for common shares)
[BAR GRAPH]
<TABLE>
<CAPTION>
DIVIDENDS CAPITAL GAINS
--------- -------------
<S> <C> <C>
7/99 0.0480 0.0000
8/99 0.0480 0.0000
9/99 0.0455 0.0000
10/99 0.0455 0.0000
11/99 0.0425 0.0000
12/99 0.0425 0.1429
1/00 0.0425 0.0000
2/00 0.0425 0.0000
3/00 0.0425 0.0000
4/00 0.0425 0.0000
5/00 0.0425 0.0000
6/00 0.0410 0.0000
</TABLE>
The dividend history represents past performance of the trust and is no
guarantee of the trust's future dividends.
5
<PAGE> 7
TOP FIVE SECTORS
(as a percentage of long-term investments)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
JUNE 30, 2000 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Water & Sewer 16.50 9.00
Tax District 16.20 20.40
Public Education 13.00 6.50
Single-Family Housing 11.60 15.70
General Purpose 10.50 2.60
</TABLE>
NET ASSET VALUE AND MARKET PRICE
(based upon quarter-end values--June 1990 through June 2000)
[INVESTMENT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NET ASSET VALUE MARKET PRICE
--------------- ------------
<S> <C> <C>
6/90 9.1000 9.1250
8.8300 8.8750
9.4400 9.5000
9.4300 9.5000
6/91 9.4100 9.7500
9.8800 9.8750
9.9700 9.7500
9.8200 9.8750
6/92 10.1500 9.8750
10.3300 10.2500
10.3000 10.2500
10.7100 10.5000
6/93 10.9600 10.6750
11.5300 11.1250
11.4100 11.6250
10.4300 10.7500
6/94 10.3000 10.6250
10.2100 10.5000
9.7000 9.6250
10.3400 10.2500
6/95 10.4000 10.7500
10.4200 11.1250
10.8700 11.3750
10.3600 11.3750
6/96 10.2800 10.8750
10.4600 11.6250
10.4600 11.8750
10.1900 11.6250
6/97 10.4500 12.1875
10.6700 12.8750
10.6900 12.3125
10.6800 11.8750
6/98 10.5700 12.1250
10.9900 11.6875
10.5000 11.5000
10.4200 10.8750
6/99 9.9300 9.8750
9.4600 9.0625
8.8900 7.5825
9.3200 8.1250
6/00 9.3600 8.3750
</TABLE>
The solid line above represents the trust's net asset value (NAV), which
indicates overall changes in value among the trust's underlying securities. The
trust's market price is represented by the dashed line, which indicates the
price the market is willing to pay for shares of the trust at a given time.
Market price is influenced by a range of factors, including supply and demand
and market conditions.
6
<PAGE> 8
Q&A WITH YOUR PORTFOLIO MANAGERS
WE RECENTLY SPOKE WITH THE MANAGEMENT TEAM OF THE VAN KAMPEN CALIFORNIA
MUNICIPAL TRUST ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS
AND INFLUENCED THE TRUST'S RETURN DURING THE 12 MONTHS ENDED JUNE 30, 2000. THE
TEAM IS LED BY JOSEPH A. PIRARO, SENIOR PORTFOLIO MANAGER, WHO HAS MANAGED THE
TRUST SINCE MAY 1992 AND HAS WORKED IN THE INVESTMENT INDUSTRY SINCE 1971. THE
FOLLOWING DISCUSSION REFLECTS HIS VIEWS ON THE TRUST'S PERFORMANCE.
Q HOW WOULD YOU DESCRIBE THE
MARKET ENVIRONMENT IN WHICH THE TRUST OPERATED, AND HOW DID THE TRUST
PERFORM IN THAT ENVIRONMENT?
A The second half of 1999 proved to
be very difficult for bonds, with prices declining dramatically as interest
rates rose and inflation fears resurfaced. Conditions were particularly
difficult for closed-end funds toward the end of the year. As the new year
began, investors appeared to be taking a cautious approach to the bond market.
Even though the year 2000 date change came and went without wreaking havoc on
the world's computer systems, many investors remained on the sidelines.
Bond issuers seemed to take the same approach, as the volume of new bond
issuance dropped off and never really picked up, remaining slow throughout the
reporting period. California was still the largest issuer of municipal bonds in
the country, but year-to-date volume was down roughly 23 percent from 1999.
California's strong economy helped build surpluses for many municipalities,
giving them less incentive to bring new bond issues to market. They saw no
reason to incur debt when they had money on hand to finance new projects. Rising
interest rates also helped keep municipal bond supply down, as municipalities
were reluctant to refund outstanding bond issues and issue new bonds at the
higher rates.
In its efforts to slow economic growth and keep inflation in check, the
Federal Reserve Board raised short-term interest rates six times since June of
1999. The market kept a watchful eye on economic indicators during the past
year, looking for clues that the Fed's efforts were paying off. Toward the end
of the reporting period, the economy finally appeared to have eased off,
restoring some positive momentum to the market in June.
For the 12 months through June 30, 2000, the trust had a total return of
-8.14 percent based on market price. This reflects a decrease in market price
from $9.875 per share on June 30, 1999, to $8.375 per share on June 30, 2000. Of
course, past performance is no guarantee of future results. As a result of
recent market activity,
7
<PAGE> 9
current performance may vary from the figures shown.
The trust also continued to provide shareholders with an attractive
dividend, even though the dividend rate declined during the period. Its monthly
dividend of $0.041 per share translates to a distribution rate of 5.87 percent
based on the trust's closing market price on June 30, 2000. Because the trust is
exempt from federal and state income taxes, this distribution rate is equivalent
to a yield of 10.12 percent for an investor in the 42 percent combined federal
and state income-tax bracket. Please refer to the chart and footnotes on page 4
for additional performance results.
Q WHAT WERE SOME OF THE
CHALLENGES YOU FACED IN MANAGING THE TRUST DURING THIS PERIOD?
A The California Municipal Trust was
created in 1988 and is one of our oldest closed-end funds. As a result, the
portfolio contained a number of securities issued in 1988, 1989, and 1990 that
were approaching, or had already reached, their 10-year call dates. Many of
these bonds were called by their issuers, because they had been issued during
times of relatively higher interest rates and it made sense to replace this debt
at current rates. As these higher-coupon bonds were called out of the portfolio,
the trust's income stream came under pressure, eventually leading to dividend
reductions in September and November 1999.
We have taken steps to stagger the call dates of securities in the
portfolio, which should increase the call protection and blunt the impact of
bond calls on the trust's earning power in the future. Still, shares of the
trust have been trading at a discount to net asset value during much of the
reporting period.
The declining supply of both insured and uninsured California bonds reduced
the scope of investment choices available to the trust, but we were satisfied
with the opportunities that our research efforts uncovered. We believe the
portfolio is now in outstanding shape in terms of credit quality.
Q WHAT SPECIFIC STRATEGIES DID
YOU EMPLOY IN POSITIONING THE PORTFOLIO?
A The portfolio is made up almost
exclusively of investment-grade securities, including 74.4 percent of long-term
investments invested in AAA rated securities. Higher-quality securities have
performed well during the past year, as lower-rated sectors struggled due to
investor concerns regarding credit quality and the increased default rate among
lower-quality securities in 1999.
We chose not to make any big bets on the direction of interest rates and
instead kept the risk profile of the portfolio close to its benchmark, the
Lehman Brothers BBB Corporate Bond Index. Ironically, two of the factors that
hurt performance in the last half of 1999 helped boost the trust's performance
in the first half of 2000. Namely, the portfolio's slightly longer duration (a
measure of its sensitivity to changes in interest rates) and its use of leverage
were both key factors in the
8
<PAGE> 10
trust's solid performance during the past two quarters.
Much of our trading activity in the past year was simply value-related, as
we sought to take advantage of opportunities to own quality bonds at attractive
prices. There were no significant changes in our sector allocations or
credit-quality profile, though we did reduce the trust's holdings in callable
zero-coupon bonds, which we felt were a drag on performance, replacing them with
current-coupon bonds. We also sold some securities for tax-loss purposes when
market conditions made that feasible.
Q WHAT IS YOUR OUTLOOK FOR THE
MARKET AND THE TRUST IN THE MONTHS AHEAD?
A We anticipate that the growth rate
of the economy will slow, though interest rates may edge higher. Though
unlikely, it is possible that the Federal Reserve Board might raise short-term
rates once more in the near term, possibly at the August meeting of the Federal
Open Market Committee, as they strive to accomplish their goal of slowing the
economy and keeping inflation under control.
We expect that the volume of new municipal bond issuance will remain low, as
budget surpluses persist for many municipalities. As the demand for short-term
municipals picks up and the Fed completes its tightening cycle, short-term
yields should moderate.
The economy of California continues to show great promise. Tourism is
strong, the service sector is thriving, Silicon Valley is a hotbed of new and
established business ventures, and shipping traffic between the United States
and its Asian trade partners has kept Californian ports humming with activity.
The supply of labor is just barely keeping up with demand. The state's
population is once again growing, and real estate markets have strengthened
accordingly.
Looking ahead, we feel the state's finely balanced economy will make
municipal investments more attractive to investors. In fact, we believe an
upgrade in the state's credit rating is a distinct possibility, given its strong
performance in recent months. Last August, the state was upgraded from an A1
rating to its current AA3 rating; we expect it could soon be upgraded to AA.
We are comfortable with the portfolio's heavy emphasis on investment-grade
municipal securities, which should continue to provide shareholders with an
attractive level of current income, especially on an after-tax basis.
9
<PAGE> 11
GLOSSARY OF TERMS
A HELPFUL GUIDE TO SOME OF THE COMMON TERMS YOU'RE LIKELY TO SEE IN THIS REPORT
AND OTHER FINANCIAL PUBLICATIONS.
COUPON RATE: The stated rate of interest the bond pays on an annual basis,
expressed as a percentage of the face value.
DIVIDEND: A distribution of earnings. Dividends may be in the form of cash,
stock, or property. The board of directors must declare all dividends.
DURATION: A measure of the sensitivity of a bond's price to changes in interest
rates, expressed in years. Each year of duration represents an expected one
percent change in the price of a bond for every one percent change in interest
rates. The longer a bond's duration, the greater the effect of interest-rate
movements on its price. Typically, trusts which hold bonds with shorter
durations perform better in rising-rate environments, while trusts with bonds of
longer durations perform better when rates decline.
FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve
System, which is the central bank of the United States. Its policy-making
committee, called the Federal Open Market Committee, meets eight times a year to
establish monetary policy and monitor the economic pulse of the United States.
INFLATION: A persistent and measurable rise in the general level of prices.
Inflation is widely measured by the Consumer Price Index, an economic indicator
that measures the change in the cost of purchased goods and services.
MUNICIPAL BOND: A debt security issued by a state, municipality, or other state
or local government entity to finance capital expenditures of public projects,
such as the construction of highways, public works, or school buildings.
Interest on public-purpose municipal bonds is exempt from federal income taxes
and, in some states, from state and local income taxes.
YIELD: The annual rate of return on an investment, expressed as a percentage.
10
<PAGE> 12
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS
June 30, 2000
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
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 97.9%
CALIFORNIA 95.9%
$1,000 Abag Fin Auth Nonprft Corp CA Ctfs Partn
Childrens Hosp Med Cent..................... 5.875% 12/01/19 $ 1,031,010
1,000 Abag Fin Auth Nonprft Corp CA Lincoln Glen
Manor Sr Citizens........................... 6.100 02/15/25 1,025,190
1,000 Abag Fin Auth Nonprft Corp CA Multi-Family
Rev Hg United Dominion Ser A Rfdg........... 6.400 08/15/30 1,021,920
1,205 Alameda Cnty, CA Wtr Dist Rev Rfdg (MBIA
Insd)....................................... 4.750 06/01/20 1,069,016
1,400 Alhambra, CA City Elem Sch Dist Ser A (FSA
Insd)....................................... 5.600 09/01/24 1,391,628
790 Bay Area Govt Assn CA Rev Tax Alloc CA Redev
Agy Pool Rev Ser A (FSA Insd)............... 6.000 12/15/15 820,541
3,000 California Edl Fac Auth Rev Cap Apprec
Loyola Marymount Univ (MBIA Insd)........... * 10/01/29 477,420
1,000 California Edl Fac Auth Rev Student Ln Pgm
Ser A (MBIA Insd)........................... 6.000 03/01/16 1,033,670
1,000 California Hlth Fac Fin Auth Rev Cedars
Sinai Med Cent Ser A........................ 6.125 12/01/19 1,009,910
505 California Hsg Fin Agy Rev Cap Apprec Home
Mtg Ser D................................... * 08/01/20 105,707
1,000 California Hsg Fin Agy Rev Home Mtg Ser E
(AMBAC Insd)................................ 6.100 08/01/29 1,009,650
1,775 California Hsg Fin Agy Rev Home Mtg Ser N... 6.375 02/01/27 1,817,032
1,000 California Hsg Fin Agy Rev Multi-Family Hsg
III Ser A (MBIA Insd)....................... 5.850 08/01/17 996,730
2,000 California Pollutn Ctl Fin Auth Pollutn Ctl
Rev Southn CA Edison Co (AMBAC Insd) (c).... 6.000 07/01/27 2,014,460
850 California Pollutn Ctl Fing Auth Pollutn Ctl
Rev Southn CA Edison Co Ser B (MBIA Insd)... 5.450 09/01/29 822,817
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
YOUR TRUST'S INVESTMENTS
June 30, 2000
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 685 California Rural Home Mtg Fin Auth Single
Family Mtg Rev Ser C (GNMA
Collateralized)............................. 7.800% 02/01/28 $ 745,609
2,000 California St............................... 5.000 10/01/23 1,821,880
940 California St............................... 4.750 12/01/28 803,879
1,000 California St Veterans Ser BH (FSA Insd).... 5.400 12/01/15 1,001,050
1,000 California St Veterans Ser BH (FSA Insd).... 5.400 12/01/16 991,900
1,000 California Statewide Cmntys Dev Auth Spl Fac
United Airls................................ 5.625 10/01/34 826,480
1,000 Castaic Lake Wtr Agy CA Rev Ctfs Partn Wtr
Sys Impt Proj (AMBAC Insd).................. 5.125 08/01/30 915,660
1,280 El Cerrito, CA Redev Agy Tax Alloc (MBIA
Insd)....................................... 5.250 07/01/15 1,261,069
1,000 Emeryville, CA Pub Fin Auth Shellmound Pk
Redev & Hsg Proj B (MBIA Insd).............. 5.000 09/01/19 928,280
1,000 Folsom, CA Spl Tax Cmnty Fac Dist No 2 Rfdg
(Connie Lee Insd)........................... 5.250 12/01/19 965,140
1,000 Fontana, CA Redev Agy Tax Southeast Indl Pk
Proj Rfdg (MBIA Insd)....................... 5.000 09/01/22 916,560
1,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev
Conv Cap Apprec Sr Lien Ser A (a)........... 0/7.050 01/01/10 860,500
997 Los Angeles Cnty, CA Tran Comm Lease Rev Dia
RR Lease Ltd (FSA Insd)..................... 7.375 12/15/06 1,030,459
3,000 Metropolitan Wtr Dist Southn CA Wtrwks Rev
Ser A Rfdg.................................. 4.750 07/01/22 2,623,050
1,800 Mountain View Los Altos, CA Un High Sch Dist
Ctfs Partn (MBIA Insd)...................... 5.625 08/01/16 1,803,060
2,000 Pico Rivera, CA Wtr Auth Rev Wtr Sys Proj
Ser A (MBIA Insd)........................... 5.500 05/01/19 2,008,000
2,000 Redding, CA Jnt Pwrs Fing Auth Elec Sys Rev
Ser A (MBIA Insd)........................... 5.500 06/01/11 2,085,220
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
YOUR TRUST'S INVESTMENTS
June 30, 2000
<TABLE>
<CAPTION>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$1,000 Redlands, CA Redev Agy Tax Alloc Redev Proj
Ser A Rfdg (MBIA Insd)...................... 4.750% 08/01/21 $ 881,450
1,000 San Bernardino Cnty, CA Ctfs Partn Med Cent
Fin Proj (MBIA Insd)........................ 5.000 08/01/28 887,810
1,000 San Diego, CA Hsg Auth Multi-Family Hsg Rev
(GNMA Collateralized)....................... 5.000 07/20/18 879,580
1,000 San Dimas, CA Redev Agy Tax Alloc Creative
Growth Ser A (FSA Insd)..................... 5.000 09/01/16 957,670
1,000 San Jose Evergreen, CA Cmnty College Dist
Cap Apprec Ser C (AMBAC Insd) (b)........... * 09/01/10 598,920
1,000 Sanger, CA Uni Sch Dist Rfdg (MBIA Insd).... 5.600 08/01/23 996,730
1,450 Santa Barbara, CA Ctfs Partn Wtr Sys Impt
Proj & Rfdg (AMBAC Insd).................... 6.700 04/01/27 1,516,700
1,305 South Orange Cnty, CA Pub Fin Auth Reassmt
Rev (FSA Insd).............................. 5.800 09/02/18 1,334,571
45 Southern CA Home Fin Auth Single Family Mtg
Rev Ser B (GNMA Collateralized)............. 7.750 03/01/24 45,964
600 Southern CA Pub Pwr Auth Pwr Proj Rev
Multi-Projs................................. 5.500 07/01/20 587,538
1,000 Ukiah, CA Uni Sch Dist (FGIC Insd).......... * 08/01/17 381,830
2,000 Westminster, CA Redev Agy Tax Alloc Rev Coml
Redev Proj No 1 Ser A Rfdg (Prerefunded @
08/01/01)................................... 7.300 08/01/21 2,104,940
-----------
48,408,200
-----------
U. S. VIRGIN ISLANDS 2.0%
1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpts
Taxes Ln Ser A (ACA Insd)................... 6.125 10/01/29 1,007,160
-----------
TOTAL LONG-TERM INVESTMENTS 97.9%
(Cost $48,572,262)...................................................... 49,415,360
SHORT-TERM INVESTMENTS 1.9%
(Cost $950,000)......................................................... 950,000
-----------
TOTAL INVESTMENTS 99.8%
(Cost $49,522,262)...................................................... 50,365,360
OTHER ASSETS IN EXCESS OF LIABILITIES 0.2%................................ 121,128
-----------
NET ASSETS 100.0%........................................................ $50,486,488
===========
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
YOUR TRUST'S INVESTMENTS
June 30, 2000
* Zero coupon bond
(a) Security is a "step up" bond where the coupon increases or steps up at a
predetermined date.
(b) Securities purchased on a when-issued or delayed delivery basis.
(c) Assets segregated as collateral for when-issued or delayed delivery purchase
commitments.
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corporation
Connie Lee--Connie Lee Insurance Company
FGIC--Financial Guaranty Insurance Company
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance corp.
See Notes to Financial Statements
14
<PAGE> 16
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2000
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $49,522,262)........................ $50,365,360
Cash........................................................ 74,202
Receivables:
Investments Sold.......................................... 1,368,627
Interest.................................................. 842,087
Other....................................................... 6,631
-----------
Total Assets............................................ 52,656,907
-----------
LIABILITIES:
Payables:
Investments Purchased..................................... 1,965,637
Investment Advisory Fee................................... 24,901
Affiliates................................................ 8,272
Income Distributions--Common and Preferred Shares......... 7,494
Trustees' Deferred Compensation and Retirement Plans........ 106,499
Accrued Expenses............................................ 57,616
-----------
Total Liabilities....................................... 2,170,419
-----------
NET ASSETS.................................................. $50,486,488
===========
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 1,000,000
shares, 400 shares are issued and outstanding with a
liquidation preference of $50,000 per share).............. $20,000,000
-----------
Common Shares ($.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................................. 843,098
Accumulated Undistributed Net Investment Income............. 38,715
Accumulated Net Realized Gain............................... 7,681
-----------
Net Assets Applicable to Common Shares.................. 30,486,488
-----------
NET ASSETS.................................................. $50,486,488
===========
NET ASSET VALUE PER COMMON SHARE ($30,486,488 divided by
3,257,560 shares outstanding)............................. $ 9.36
===========
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
Statement of Operations
For the Year Ended June 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 2,922,002
-----------
EXPENSES:
Investment Advisory Fee..................................... 300,731
Preferred Share Maintenance................................. 70,111
Accounting Services......................................... 37,127
Trustees' Fees and Related Expenses......................... 11,954
Legal....................................................... 7,678
Custody..................................................... 3,725
Other....................................................... 10,484
-----------
Total Expenses.......................................... 441,810
Less Credits Earned on Cash Balances.................... 277
-----------
Net Expenses............................................ 441,533
-----------
NET INVESTMENT INCOME....................................... $ 2,480,469
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 7,680
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 2,287,328
End of the Period......................................... 843,098
-----------
Net Unrealized Depreciation During the Period............... (1,444,230)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(1,436,550)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 1,043,919
===========
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
Statement of Changes in Net Assets
For the Years Ended June 30, 2000, and 1999
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 2000 JUNE 30, 1999
------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income..................................... $ 2,480,469 $ 2,530,877
Net Realized Gain......................................... 7,680 752,160
Net Unrealized Depreciation During the Period............. (1,444,230) (1,964,318)
----------- -----------
Change in Net Assets from Operations...................... 1,043,919 1,318,719
----------- -----------
Distributions from Net Investment Income:
Common Shares........................................... (1,711,816) (2,018,718)
Preferred Shares........................................ (729,737) (647,848)
----------- -----------
(2,441,553) (2,666,566)
----------- -----------
Distributions in Excess of Net Investment Income:
Common Shares........................................... -0- (152)
Preferred Shares........................................ -0- (49)
----------- -----------
-0- (201)
----------- -----------
Distributions from and in Excess of Net Investment
Income.................................................. (2,441,553) (2,666,767)
Distributions from Net Realized Gain--Common Shares....... (465,396) (1,054,081)
----------- -----------
Total Distributions....................................... (2,906,949) (3,720,848)
----------- -----------
NET CHANGE IN NET ASSETS FROM
INVESTMENT ACTIVITIES................................... (1,863,030) (2,402,129)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment............................................ 12,488 215,574
----------- -----------
TOTAL DECREASE IN NET ASSETS.............................. (1,850,542) (2,186,555)
NET ASSETS:
Beginning of the Period................................... 52,337,030 54,523,585
----------- -----------
End of the Period (Including accumulated undistributed net
investment income of $38,715 and ($201),
respectively)........................................... $50,486,488 $52,337,030
=========== ===========
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<TABLE>
<CAPTION>
------------------------------------
2000 1999 1998 1997
------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD........... $ 9.93 $10.67 $ 10.45 $ 10.28
------ ------ ------- --------
Net Investment Income............................ .76 .78 .85 .89
Net Realized and Unrealized Gain/Loss............ (.44) (.37) .53 .39
------ ------ ------- --------
Total from Investment Operations................... .32 .41 1.38 1.28
------ ------ ------- --------
Less:
Distributions from and in Excess of Net
Investment Income:
Paid to Common Shareholders.................... .53 .62 .72 .75
Common Share Equivalent of Distributions Paid
to Preferred Shareholders.................... .22 .20 .22 .21
Distributions from Net Realized Gain Paid to
Common Shareholders............................ .14 .33 .22 .15
------ ------ ------- --------
Total Distributions................................ .89 1.15 1.16 1.11
------ ------ ------- --------
NET ASSET VALUE, END OF THE PERIOD................. $ 9.36 $ 9.93 $ 10.67 $ 10.45
====== ====== ======= ========
Market Price Per Share at End of the Period........ $8.375 $9.875 $12.125 $12.1875
Total Investment Return at Market Price (a)........ -8.14% -11.17% 7.77% 21.40%
Total Return at Net Asset Value (b)................ 1.37% 1.74% 11.40% 10.76%
Net Assets at End of the Period (In millions)...... $50.5 $52.3 $54.5 $53.6
Ratio of Expenses to Average Net Assets Applicable
to Common Shares**............................... 1.47% 1.67% 1.57% 1.58%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (c)........... 5.82% 5.49% 5.91% 6.51%
Portfolio Turnover................................. 60% 33% 53% 30%
* Ratio of Expenses to Average Net Assets
Including Preferred Shares...................... .88% 1.05% .99% .99%
</TABLE>
** If certain expenses had not been assumed by Van Kampen, the annualized Ratio
of Expenses to Average Net Assets Applicable to Common Shares, Ratio of
Expenses to Average Net Assets Including Preferred Shares and the Ratio of
Net Investment Income to Average Net Assets Applicable to Common Shares would
have been 2.06%, 1.22% and 6.80% for the year ended June 30, 1991.
(a) Total return based on market price assumes an investment at the 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 stock price at the end of the
period indicated.
(b) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(c) Net investment income is adjusted for common share equivalent of
distributions paid to preferred shareholders.
18
<PAGE> 20
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------------------------------------
1996 1995 1994 1993 1992 1991
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10.40 $ 10.30 $ 10.96 $ 10.15 $ 9.41 $ 9.10
------- ------- ------- ------- ------- ------
.91 .95 .96 .97 .95 .98
.00 .11 (.74) .78 .72 .31
------- ------- ------- ------- ------- ------
.91 1.06 .22 1.75 1.67 1.29
------- ------- ------- ------- ------- ------
.75 .72 .71 .66 .65 .65
.23 .24 .16 .17 .25 .33
.05 .01 .01 .11 .03 .00
------- ------- ------- ------- ------- ------
1.03 .97 .88 .94 .93 .98
------- ------- ------- ------- ------- ------
$ 10.28 $ 10.40 $ 10.30 $ 10.96 $ 10.15 $ 9.41
======= ======= ======= ======= ======= ======
$10.875 $10.750 $10.625 $10.875 $9.875 $9.750
9.02% 8.67% 4.32% 18.49% 8.44% 14.51%
6.62% 8.47% .35% 16.19% 15.54% 10.85%
$52.9 $53.0 $52.6 $54.5 $51.9 $49.5
1.65% 1.65% 1.53% 1.57% 2.07% 1.88%**
6.57% 7.02% 7.28% 7.62% 7.74% 6.98%**
19% 16% 11% 18% 41% 99%
1.03% 1.02% .97% .98% 1.26% 1.11%**
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000
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
with safety of principal. 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 generally accepted
accounting principles 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 are valued at fair value
using procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost, which approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when-issued or delayed delivery
purchase commitments until payment is made.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and original issue discount is accreted over the expected
life of each applicable security.
20
<PAGE> 22
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000
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.
At June 30, 2000, cost of long- and short-term investments for federal
income tax purposes is $49,522,262; the aggregate gross unrealized appreciation
is $1,325,169 and the aggregate gross unrealized depreciation is $482,071,
resulting in net unrealized appreciation on long- and short-term investments of
$843,098.
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.
Due to inherent differences in the recognition of certain expenses under
generally accepted accounting principles and federal income tax purposes, the
amount of distributed net investment income may differ for a particular period.
These differences are temporary in nature, but may result in book basis
distribution in excess of net investment income for certain periods.
F. EXPENSE REDUCTIONS During the period ended June 30, 2000, the Trust's custody
fee was reduced by $277 as a result of credits earned on overnight cash
balances.
2. INVESTMENT ADVISORY AGREEMENT AND
OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
Investment Advisory Corp. (the "Adviser") will provide investment advice and
facilities to the Trust for an annual fee payable monthly of .60% of the average
net assets of the Trust.
For the year ended June 30, 2000, the Trust recognized expenses of
approximately $1,000 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.
For the year ended June 30, 2000, the Trust recognized expenses of
approximately $21,500 representing Van Kampen Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting, legal and certain
shareholder services to the Trust.
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.
21
<PAGE> 23
NOTES TO
FINANCIAL STATEMENTS
June 30, 2000
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 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. CAPITAL TRANSACTIONS
At June 30, 2000 and June 30, 1999, paid in surplus related to common shares
aggregated $29,564,418 and $29,551,943, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 2000 JUNE 30, 1999
<S> <C> <C>
Beginning Shares........................................ 3,256,257 3,236,436
Shares Issued Through Dividend Reinvestment............. 1,303 19,821
--------- ---------
Ending Shares........................................... 3,257,560 3,256,257
========= =========
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $29,900,755 and $31,397,793,
respectively.
5. REMARKETED PREFERRED SHARES
The Trust has outstanding 400 shares of Remarketed Preferred Shares ("RP").
Dividends are cumulative and the rate is reset through an auction process every
28 days. The rate in effect on June 30, 2000, was 4.500%, and for the year then
ended rates ranged from 2.99% to 6.299%.
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.
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 redemptions if the tests are not met.
22
<PAGE> 24
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of Van Kampen California Municipal
Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen California Municipal Trust (the "Trust"), including the portfolio of
investments, as of June 30, 2000, and the related statements of operations,
changes in net assets and the financial highlights for the year than ended.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The Trust's
financial statements and financial highlights for the periods ended prior to
June 30, 2000, were audited by other auditors whose report, dated August 5,
1999, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2000, by correspondence with the Trust's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen California Municipal Trust as of June 30, 2000, the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
Deloitte & Touche LLP
Chicago, Illinois
August 7, 2000
23
<PAGE> 25
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be
re-registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued
on the valuation date, generally at the lower of market price or net asset
value, except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in
24
<PAGE> 26
the acquisition of fewer Common Shares than if the dividend or distribution had
been paid in Common Shares issued by the Trust. All reinvestments are in full
and fractional Common shares and are carried to three decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
25
<PAGE> 27
VAN KAMPEN FUNDS
THE VAN KAMPEN
FAMILY OF FUNDS
Growth
Aggressive Growth
American Value*
Emerging Growth
Enterprise
Equity Growth
Focus Equity
Growth
Mid Cap Growth
Pace
Select Growth
Small Cap Value
Tax Managed Equity Growth
Technology
Growth and Income
Comstock
Equity Income
Growth and Income
Harbor
Real Estate Securities
Utility
Value
Global/International
Asian Growth
Emerging Markets
European Equity
Global Equity
Global Equity Allocation
International Magnum
Latin American
Strategic Income
Tax Managed Global Franchise
Worldwide High Income
Income
Corporate Bond
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return*
Limited Maturity Government
U.S. Government
U.S. Government Trust for Income
Capital Preservation
Reserve
Tax Free Money
Senior Loan
Prime Rate Income Trust
Senior Floating Rate
Tax Free
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal**
Insured Tax Free Income
Intermediate Term Municipal
Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
To find out more about any of these funds, ask your financial advisor for a
prospectus, which contains more complete information, including sales charges,
risks, and ongoing expenses. Please read it carefully before you invest or send
money.
To view a current Van Kampen fund prospectus or to receive additional fund
information, choose from one of the following:
- visit our Web site at
WWW.VANKAMPEN.COM--
to view a prospectus, select
Download Prospectus [COMPUTER ICON]
- call us at 1-800-341-2911
weekdays from 7:00 a.m. to 7:00 p.m.
Central time. Telecommunications
Device for the Deaf users, call
1-800-421-2833.
[PHONE ICON]
- e-mail us by visiting
WWW.VANKAMPEN.COM and
selecting Contact Us
[MAIL ICON]
* Closed to new investors
** Open to new investors for a limited time
26
<PAGE> 28
TRUST OFFICERS AND IMPORTANT ADDRESSES
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
THEODORE A. MYERS
RICHARD F. POWERS, III* - Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
RICHARD F. POWERS, III*
President
STEPHEN L. BOYD*
Executive Vice President and
Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer
RICHARD A. CICCARONE*
JOHN R. REYNOLDSON*
MICHAEL H. SANTO*
JOHN H. ZIMMERMANN, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS(1)
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
For Federal income-tax purposes, the following information is furnished with
respect to the distributions paid by the Trust during its taxable year ended
June 30, 2000. The Trust designated 99.9% of the income distributions as a
tax-exempt income distribution. Additionally, during the period, the Trust paid
$465,396 as a 20% rate gain distribution. In January 2001, the Trust will
provide tax information to shareholders for the 2000 calendar year.
(1) Independent auditors for the Trust perform an annual audit of the Trust's
financial statements. The Board of Trustees has engaged Deloitte & Touche
LLP to be the Trust's independent auditors.
KPMG LLP, located at 303 West Wacker Drive, Chicago, IL 60601 ("KPMG"),
ceased being the Trust's independent auditors effective April 14, 2000. The
cessation of the client-auditor relationship between the Trust and KPMG was
based solely on a possible future business relationship by KPMG with an
affiliate of the Trust's investment adviser.
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
(C) Van Kampen Funds Inc., 2000. All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
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RESULTS OF
SHAREHOLDER VOTES
A Joint Special Meeting of the Shareholders of the Trust was held on June 21,
2000, where shareholders voted on the election of trustees and the selection of
independent public auditors.
1) With regard to the election of the following trustee by the common
shareholders:
<TABLE>
<CAPTION>
# OF SHARES
------------------------------
IN FAVOR WITHHELD
<S> <C> <C>
Wayne W. Whalen....................................... 2,968,240 59,555
</TABLE>
With regard to the election of the following trustee by the preferred
shareholders:
<TABLE>
<CAPTION>
# OF SHARES
------------------------------
IN FAVOR WITHHELD
<S> <C> <C>
Rod Dammeyer.......................................... 381 --
</TABLE>
The other trustees whose terms did not expire in 2000 are: David C. Arch, Howard
J Kerr, Richard F. Powers, III, Hugo F. Sonnenschein, and Theodore A. Myers.
2) With regard to the ratification of Deloitte & Touche LLP to act as
independent public auditors for the trust, 2,975,294 shares voted in favor of
the proposal, 16,550 shares voted against, and 36,332 shares abstained.
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