<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Portfolio Management Review...................... 4
Glossary of Terms................................ 7
Portfolio Highlights............................. 8
Portfolio of Investments......................... 10
Statement of Assets and Liabilities.............. 15
Statement of Operations.......................... 16
Statement of Changes in Net Assets............... 17
Financial Highlights............................. 18
Notes to Financial Statements.................... 20
Dividend Reinvestment Plan....................... 23
</TABLE>
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2
LETTER TO SHAREHOLDERS
January 20, 2000
Dear Shareholder:
As we enter a new century--and millennium--it seems appropriate to take a
look back at the progress that's been made over the last 100 years and how the
world of investing has changed over the generations. Although rapid advances in
technology and science have dramatically altered the world that we live in
today, one of the greatest shifts we've seen is the increasing importance of
investing for many Americans.
Once considered primarily for the wealthy, investing in the stock market is
now available to most people. In fact, almost 79 million individuals--who
represent almost half of all U.S. households--own stocks either directly or
through mutual funds. This is even more impressive when considering that just 16
years earlier, only 19 percent of households owned stocks. Another important
shift has been the need for retirement planning beyond a pension plan or Social
Security. The Investment Company Institute, the leading mutual fund industry
association, reports that 77 percent of all mutual fund shareholders earmarked
retirement as their primary financial goal in 1998.
Through all the changes in the investment environment over the past century,
the general principles that have made generations of investors successful remain
the same. Some that have stood the test of time include:
- INVESTING FOR THE LONG-TERM
- BASING INVESTMENT DECISIONS ON SOUND RESEARCH
- BUILDING A DIVERSIFIED PORTFOLIO
- BELIEVING IN THE VALUE OF PROFESSIONAL INVESTMENT ADVICE
While no one can predict the future, at Van Kampen we believe that these
ideas will remain important tenets for investors well into this century. As we
continue to focus on these principles, we hope that our decades of investment
experience can help bring you closer to your financial goals as we welcome the
new millennium.
Sincerely,
[SIG.]
Richard F. Powers, III
Chairman
Van Kampen Investment Advisory Corp.
[SIG.]
Dennis J. McDonnell
President
Van Kampen Investment Advisory Corp.
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
The nation's brisk rate of economic growth continued throughout 1999,
bringing the United States to the verge of its longest economic expansion on
record. High levels of consumer spending, a host of new jobs, and increasing
productivity kept the economy strong. Gross domestic product, the primary
measure of economic growth, increased 4.2 percent for the year, including an
impressive annualized rate of 5.7 percent for the third quarter and 5.8 percent
in the fourth quarter.
EMPLOYMENT
The job market remained vibrant throughout the year, with more than 2.7
million U.S. jobs created in 1999. In addition, unemployment dropped to 4.1
percent in October--its lowest rate in three decades. With jobs plentiful and
wages on the rise, most Americans were optimistic about the future. At the end
of the year the consumer confidence index hit its highest level since 1968.
Although wage pressures caused some concerns about the potential erosion of
corporate profits, productivity gains helped keep those concerns muted through
the end of the year.
INFLATION AND INTEREST RATES
Although the Consumer Price Index continued to reflect historically low
inflation--rising only 2.7 percent during 1999--concerns about future increases
in inflation were prevalent throughout the reporting period. The Federal Reserve
Board remained active in guarding against inflation and trying to temper
economic growth. The Fed reversed its three interest-rate cuts from the fall of
1998 by raising rates in June, August, and November 1999.
U.S. GROSS DOMESTIC PRODUCT
Seasonally Adjusted Annualized Rates
Third Quarter 1997 through Fourth Quarter 1999
[GRAPH]
<TABLE>
<CAPTION>
<S> <C>
97Q3 4
97Q4 3.10
98Q1 6.70
98Q2 2.10
98Q3 3.80
98Q4 5.90
99Q1 3.70
99Q2 1.90
99Q3 5.70
99Q4 5.80
</TABLE>
Source: Bureau of Economic Analysis
2
<PAGE> 4
PERFORMANCE RESULTS FOR THE PERIOD ENDED DECEMBER 31, 1999
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
(AMEX TICKER SYMBOL--VKC)
<TABLE>
<S> <C>
COMMON SHARE TOTAL RETURNS
Six-month total return based on market price(1)........... (19.59%)
Six-month total return based on NAV(2).................... (6.37%)
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3).................................................. 6.74%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 11.62%
SHARE VALUATIONS
Net asset value........................................... $8.89
Closing common stock price................................ $7.5625
Six-month high common stock price (07/09/99).............. $10.1250
Six-month low common stock price (12/14/99)............... $7.2500
Preferred share rate(5)................................... 3.500%
</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 does not guarantee 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.
3
<PAGE> 5
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
We recently spoke with representatives of the adviser of the Van Kampen
California Municipal Trust about the key events and economic forces that shaped
the markets during the past six months. Joseph A. Piraro, portfolio manager, has
managed the Trust since 1992 and worked in the investment industry since 1971.
He is joined by Peter W. Hegel, chief investment officer for fixed-income
investments. The following discussion reflects their views on the Trust's
performance during the six months ended December 31, 1999.
Q WHAT HAPPENED IN THE MUNICIPAL MARKET DURING THE REPORTING PERIOD?
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. In addition to the negative effects of the Fed's interest-rate
increases, the nation's strong economic growth continued to fuel concerns about
inflation and future rate hikes. Together with low institutional demand for
municipal bonds during the period, these conditions hurt municipals more than
most taxable bonds (although municipals modestly outperformed long-term U.S.
Treasury bonds). The bonds in the Trust's portfolio suffered price declines
along with the rest of the municipal market.
Conditions were particularly difficult for closed-end funds toward the end
of the year, as many investors sold shares at a loss for tax purposes. In fact,
the average closed-end municipal fund fell 20 percent in price during the year.
Q COULD YOU DESCRIBE CALIFORNIA'S ECONOMIC AND MUNICIPAL MARKET CONDITIONS?
A Municipal bond supply in California declined less than the nationwide
average, making it by far the largest-issuing state for the year.
California bonds were very attractive to investors across the country
because of the state's strong economic conditions and the solid fiscal
management of many municipalities. The growth of the technology industry in the
state played an important role in supporting this fiscal health.
Despite the good economy, the state's infrastructure needs remain high,
ensuring ample supply of bonds throughout the state. However, these conditions
were balanced by strong demand, as we continued to witness a rising number of
high-income Californians turning to municipals for tax-advantaged investments.
Q WHAT TECHNIQUES DID YOU USE TO MANAGE THE TRUST IN THESE CONDITIONS?
A Some of the Trust's more seasoned holdings had been prerefunded and would
soon be called from the portfolio. Rather than taking the chance that
they'd be called at a lower price, we sold them at a premium and
reinvested the proceeds in areas of the market that we felt provided the best
values. These new purchases with longer
4
<PAGE> 6
maturity dates allowed us to extend the Trust's protection from future bond
calls while providing attractive rates.
We also focused on purchasing higher-quality bonds because we felt that they
represented an excellent value, particularly as bond prices fell. High-quality
bonds declined in value more than lower-quality bonds during the market
downturn, so we took advantage of market conditions to buy AAA-rated securities
at what we felt were attractive prices. AAA bonds represented 78.9 percent of
the portfolio at the end of the reporting period, an increase of 15 percent
during the six-month period. Although we believe that these securities will
eventually add value to the Trust, they hurt total return performance in the
short-term because they suffered as bond prices fell toward the end of the
period.
Q WHAT AREAS OF THE MUNICIPAL MARKET WERE MOST ATTRACTIVE TO YOU?
A We looked for areas of the municipal market where abundant supply had
temporarily depressed bond prices. We believed that these
supply-and-demand imbalances offered the opportunity to purchase bonds
with the potential to increase in price once the supply is absorbed. In this
effort, we found value in the essential service industries--those areas that are
deemed to be vital to communities. We added to our positions in the water and
sewer, general purpose, and education industries. Education issuance has been
particularly abundant during the past year, which allowed us a range of quality
issues from which to choose. At the end of the year, education represented one
of the Trust's largest industries, at 14.1 percent of the portfolio. For
additional portfolio highlights, please refer to page 8.
Q HOW DID THE TRUST PERFORM DURING THE PERIOD?
A Total return performance was disappointing because of the general downturn
in bond prices and the heavy weighting in AAA-rated bonds. In addition,
the Trust's leverage component hurt its performance during the period.
Although leverage helps the Trust provide higher income levels to common
shareholders, it made the portfolio more sensitive to the interest-rate
increases during the reporting period. However, the Trust's total return was
supported somewhat by its duration, which was shorter than its benchmark. For
the six-month period ended December 31, 1999, the Trust returned -19.59
percent(1) based on market price. This reflects a decrease in market price from
$9.8750 per share on June 30, 1999, to $7.5625 per share on December 31, 1999.
The Trust continued to provide shareholders with an attractive dividend,
although the dividend rate was decreased in September and November. The
adjustments resulted from the calls of older, higher-yielding bonds that had
been purchased when interest rates were much higher than they are now. Although
interest rates have increased in recent months, they have not increased enough
to compensate for the loss of these bonds, many of which provided yields of
seven percent or higher. The current monthly dividend of $0.0425 per share
translates to a distribution rate of 6.74 percent(3) based on the Trust's
closing market price on December 31, 1999. Because the Trust is exempt from
federal and California income taxes, this distribution rate is equivalent to a
yield of 11.62 percent(4)
5
<PAGE> 7
for an investor in the 42 percent combined federal and state income tax bracket.
Please refer to the chart and footnotes on page 3 for additional performance
results. Past performance does not guarantee future performance.
Q WHAT DO YOU SEE AHEAD FOR THE ECONOMY AND THE MUNICIPAL MARKET?
A We believe that the economy should eventually slow from this
record-breaking pace, although the Federal Reserve may have to take
significant action in the next several months to slow the rate of economic
growth. However, we think that the municipal market is poised for a recovery
later in 2000 if interest rates reverse their course, and that
municipals--especially closed-end municipal funds--currently represent an
excellent value in the marketplace.
With year 2000 computer concerns and the wave of tax-loss selling behind us,
market activity should pick up early in the new year. In the meantime, we will
continue to focus on finding attractive-yielding bonds and protecting the Trust
from bond calls as much as possible. We will also use our extensive research
capabilities to look for opportunities throughout the coming months.
6
<PAGE> 8
GLOSSARY OF TERMS
CALL FEATURE: Allows the issuer to buy back a bond on specific dates at set
prices before maturity. These dates and prices are set when the bond is
issued. To compensate the bondholder for the potential loss of income and
ownership, a bond's call price is usually higher than the face value of the
bond. Bonds are usually called when interest rates drop so significantly
that the issuer can save money by issuing new bonds at lower rates.
CREDIT RATING: An evaluation of an issuer's credit history and capability of
repaying obligations. Standard & Poor's and Moody's Investors Service are
two companies that assign bond ratings. Standard & Poor's ratings range from
a high of AAA to a low of D, while Moody's ratings range from a high of Aaa
to a low of C.
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 1
percent change in the price of a bond for every 1 percent change in interest
rates (i.e., a 5-year duration means the bond will fall about 5 percent in
value if interest rates rise by 1 percent). The longer a bond's duration,
the greater the effect of interest rate movements on its price. Typically,
funds with shorter durations perform better in rising rate environments,
while funds with longer durations perform better when rates decline.
INVESTMENT-GRADE BONDS: Securities rated BBB and above by Standard & Poor's or
Baa and above by Moody's Investors Service. Bonds rated below BBB or Baa are
noninvestment grade.
LEVERAGE: A process employed by the Trust that involves borrowing money at
short-term interest rates by issuing preferred shares. The proceeds are then
invested in longer-term bonds, which typically pay higher rates. The
difference between the long-term rates earned by the Trust and the
short-term rates paid on the preferred shares is passed along to
shareholders in the Trust's dividend. Common shareholders typically benefit
from leverage when short-term interest rates decline. However, a rise in
short-term rates would have a negative effect by raising the Trust's
borrowing costs and possibly affecting the dividend and price of common
shares.
MATURITY LENGTH: The time it takes for a bond to mature. A bond issued in 1999
and maturing in 2009 is a 10-year bond.
PREREFUNDING: The process of issuing new bonds to refinance an outstanding
municipal bond issue prior to its maturity or call date. The proceeds from
the new bonds are generally invested in U.S. government securities.
Prerefunding typically occurs when interest rates decline and an issuer
replaces its high-yielding bonds with current lower-yielding issues.
7
<PAGE> 9
PORTFOLIO HIGHLIGHTS
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
TOP FIVE PORTFOLIO INDUSTRIES*
[GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31, 1999 JUNE 30, 1999
----------------- -------------
<S> <C> <C>
Tax District 17.80 20.40
Water & Sewer 14.20 9.00
Public Education 14.10 6.50
Single-Family Housing 12.20 15.70
General Purpose 10.70 2.60
</TABLE>
* As a percentage of long-term investments
NET ASSET VALUE AND MARKET PRICE
(BASED UPON MONTH-END VALUES)
DECEMBER 1989 THROUGH DECEMBER 1999
[GRAPH]
<TABLE>
<CAPTION>
MARKET PRICE NET ASSET VALUE
------------ ---------------
<S> <C> <C>
Dec 1989 9.2500 9.3500
9.7500 9.2300
9.3750 9.3200
9.2500 9.2600
9.2500 8.8600
9.2500 9.0500
9.1250 9.1000
9.6250 9.2800
9.1250 8.8900
8.8750 8.8300
9.0000 8.9900
9.1250 9.3300
Dec 1990 9.5000 9.4400
9.5000 9.4100
9.6250 9.5000
9.5000 9.4300
9.5000 9.5500
9.8750 9.6100
9.7500 9.4100
9.6250 9.5700
9.7500 9.7500
9.8750 9.8800
10.0000 9.9100
9.7500 9.8700
Dec 1991 9.7500 9.9700
10.1250 9.9200
10.1250 9.8200
9.8750 9.8200
9.7500 9.8900
10.1250 9.9300
9.8750 10.1500
10.6250 10.6700
10.3750 10.4300
10.2500 10.3300
10.0000 10.0800
10.2500 10.3600
Dec 1992 10.2500 10.3000
10.3750 10.3700
10.6250 10.8900
10.5000 10.7100
10.8750 10.8000
10.8750 10.7600
10.8750 10.9600
10.7500 11.0200
11.2500 11.2800
11.1250 11.5300
11.5000 11.4600
11.2500 11.2000
Dec 1993 11.6250 11.4100
11.6250 11.5000
10.7500 11.0900
10.7500 10.4300
10.2500 10.3500
10.2500 10.4100
10.6250 10.3000
10.3750 10.4600
10.5000 10.4600
10.5000 10.2100
9.6250 9.9500
9.6250 9.5800
Dec 1994 9.6250 9.7000
9.7500 9.9700
10.5000 10.2900
10.2500 10.3400
10.5000 10.2900
10.7500 10.5700
10.7500 10.4000
10.6250 10.3900
11.2500 10.4300
11.1250 10.4200
10.7500 10.5500
11.1250 10.7700
Dec 1995 11.3750 10.8700
11.3750 10.8500
11.5000 10.8300
11.3750 10.3800
11.1250 10.2300
11.0000 10.2000
10.8750 10.2800
11.2500 10.4300
11.8750 10.2700
11.6250 10.4600
11.8750 10.5500
12.1250 10.7600
Dec 1996 11.8750 10.4600
11.8750 10.3800
11.7500 10.4200
11.6250 10.1900
11.7500 10.2300
11.9375 10.3500
12.1875 10.4500
12.5625 10.7800
12.5000 10.5400
12.8750 10.6700
11.8750 10.6800
12.5000 10.6900
Dec 1997 12.3125 10.6900
12.6250 10.7800
12.4375 10.7300
11.8750 10.6800
11.6250 10.5000
12.0000 10.6800
12.1250 10.6700
12.2500 10.6400
12.0000 10.8400
11.6875 10.9900
11.6875 10.8800
11.6875 10.9000
Dec 1998 11.5000 10.5000
10.8750 10.5700
11.0000 10.4500
10.8750 10.4200
10.8750 10.3700
10.6875 10.2200
9.8750 9.9300
9.7500 9.8900
9.6250 9.5800
9.0625 9.4800
8.4370 9.1300
8.1250 9.2300
Dec 1999 7.5625 8.8900
</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.
8
<PAGE> 10
PORTFOLIO HIGHLIGHTS (CONTINUED)
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
CREDIT QUALITY AS A PERCENTAGE OF LONG-TERM INVESTMENTS
AS OF DECEMBER 31, 1999
[PIE CHART]
<TABLE>
<CAPTION>
AAA/AAA AA/AA A/A BBB/BAA NOT RATED
------- ----- --- ------- ---------
<S> <C> <C> <C> <C> <C>
As of December 31, 1999 78.90 10.60 7.10 1.70 1.70
</TABLE>
AS OF JUNE 30, 1999
[PIE CHART]
<TABLE>
<CAPTION>
AAA/AAA AA/AA A/A BBB/BAA
------- ----- --- -------
<S> <C> <C> <C> <C>
As of June 30, 1999 63.90 10.40 15.00 10.70
</TABLE>
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
DISTRIBUTION HISTORY
FOR THE PERIOD ENDED DECEMBER 31, 1999
[BAR GRAPH]
<TABLE>
<CAPTION>
DIVIDENDS CAPITAL GAINS
--------- -------------
<S> <C> <C>
'Jul 1999' 0.0480
'Aug 1999' 0.0480
'Sep 1999' 0.0455
'Oct 1999' 0.0455
'Nov 1999' 0.0425
'Dec 1999' 0.0425 0.1429
</TABLE>
The distribution history represents past performance of the Trust and does not
predict the Trust's future distributions.
*As a Percentage of Long-Term Investments.
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 102.3%
CALIFORNIA 100.3%
$1,000 Abag Fin Auth Nonprft Corp CA Ctfs
Partn Childrens Hosp Med Cent......... 5.875% 12/01/19 $ 991,830
1,205 Alameda Cnty, CA Wtr Dist Rev Rfdg
(MBIA Insd)........................... 4.750 06/01/20 1,014,598
1,400 Alhambra, CA City Elem Sch Dist Ser A
(FSA Insd)............................ 5.600 09/01/24 1,333,612
790 Bay Area Govt Assn CA Rev Tax Alloc CA
Redev Agy Pool Rev Ser A (FSA Insd)... 6.000 12/15/15 801,392
500 Brea & Olinda, CA Uni Sch Dist Ctfs
Partn Sr High Sch Pgm Ser A Rfdg (FSA
Insd)................................. 6.000 08/01/09 525,850
3,000 California Edl Fac Auth Rev Cap Apprec
Loyola Marymount Univ (MBIA Insd)
(b)................................... * 10/01/29 441,600
1,000 California Edl Fac Auth Rev Student Ln
Pgm Ser A (MBIA Insd)................. 6.000 03/01/16 1,003,050
1,500 California Hlth Fac Fin Auth Rev Saint
Joseph Hlth Sys Ser A (Prerefunded @
07/01/01)............................. 6.750 07/01/21 1,579,965
1,000 California Hlth Fac Fin Auth Rev
Cedars Sinai Med Cent Ser A........... 6.125 12/01/19 986,370
505 California Hsg Fin Agy Rev Cap Apprec
Home Mtg Ser D........................ * 08/01/20 102,591
1,880 California Hsg Fin Agy Rev Cap Apprec
Ser D (AMBAC Insd).................... * 08/01/20 382,467
1,000 California Hsg Fin Agy Rev Home Mtg
Ser E (AMBAC Insd).................... 6.100 08/01/29 990,470
1,850 California Hsg Fin Agy Rev Home Mtg
Ser N................................. 6.375 02/01/27 1,879,785
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$1,000 California Hsg Fin Agy Rev
Multi-Family Hsg III Ser A (MBIA
Insd)................................. 5.850% 08/01/17 $ 985,910
2,000 California Pollutn Ctl Fin Auth
Pollutn Ctl Rev Southn CA Edison Co
(AMBAC Insd) (c)...................... 6.000 07/01/27 1,956,020
730 California Rural Home Mtg Fin Auth
Single Family Mtg Rev Ser C (GNMA
Collateralized)....................... 7.800 02/01/28 795,452
45 California St (MBIA Insd)............. 6.000 10/01/14 46,161
2,000 California St......................... 5.000 10/01/23 1,724,600
1,000 California St Veterans Ser BH (FSA
Insd)................................. 5.400 12/01/15 956,240
1,000 California St Veterans Ser BH (FSA
Insd)................................. 5.400 12/01/16 943,320
1,000 California Statewide Cmntys Dev Auth
Spl Fac United Airls.................. 5.625 10/01/34 845,160
1,000 Castaic Lake Wtr Agy CA Rev Ctfs Partn
Wtr Sys Impt Proj (AMBAC Insd)........ 5.125 08/01/30 864,940
785 Central Contra Costa, CA Santn Dist
Rev Wastewtr Fac Impt Proj
(Prerefunded @ 09/01/04) (MBIA
Insd)................................. 6.250 09/01/11 853,036
1,000 Contra Costa, CA Tran Auth Sales Tax
Rev Ser A............................. 6.875 03/01/07 1,048,110
1,280 El Cerrito, CA Redev Agy Tax Alloc
(MBIA Insd)........................... 5.250 07/01/15 1,201,805
1,000 Emeryville, CA Pub Fin Auth Shellmound
Pk Redev & Hsg Proj B (MBIA Insd)..... 5.000 09/01/19 883,780
1,000 Folsom, CA Spl Tax Cmnty Fac Dist No 2
Rfdg (Connie Lee Insd)................ 5.250 12/01/19 918,350
1,000 Fontana, CA Redev Agy Tax Southeast
Indl Pk Proj Rfdg (MBIA Insd)......... 5.000 09/01/22 870,760
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$2,435 Foothill/Eastern Corridor Agy CA Toll
Rd Rev Cap Apprec Sr Lien Ser A....... * 01/01/19 $ 785,385
1,000 Foothill/Eastern Corridor Agy CA Toll
Rd Rev Conv Cap Apprec Sr Lien Ser A
(a)................................... 0/7.050% 01/01/10 832,770
1,074 Los Angeles Cnty, CA Tran Comm Lease
Rev Dia RR Lease Ltd (FSA Insd)....... 7.375 12/15/06 1,127,088
1,800 Mountain View Los Altos CA Union High
Sch Dist Ctfs Partn (MBIA Insd)....... 5.625 08/01/16 1,769,454
2,000 Pico Rivera, CA Wtr Auth Rev Wtr Sys
Proj Ser A (MBIA Insd)................ 5.500 05/01/19 1,913,840
1,000 Pomona, CA Pub Fin Auth Rev Wtr Fac
Proj Ser AC (FGIC Insd)............... 5.500 05/01/29 929,340
1,000 Redlands, CA Redev Agy Tax Alloc Redev
Proj Ser A Rfdg (MBIA Insd)........... 4.750 08/01/21 836,510
1,000 San Bernardino Cnty, CA Ctfs Partn Med
Cent Fin Proj (MBIA Insd)............. 5.000 08/01/28 848,070
1,000 San Diego, CA Hsg Auth Multi-Family
Hsg Rev (GNMA Collateralized)......... 5.000 07/20/18 877,770
1,000 San Dimas, CA Redev Agy Tax Alloc
Creative Growth Ser A (FSA Insd)...... 5.000 09/01/16 910,690
1,210 San Jose, CA Redev Tax Alloc Hsg Set
Aside Mergd Area Ser E (MBIA Insd).... 5.750 08/01/17 1,179,266
1,000 Sanger, CA Uni Sch Dist Rfdg (MBIA
Insd)................................. 5.600 08/01/23 958,200
840 Santa Barbara, CA Ctfs Partn.......... 7.650 05/01/15 865,099
1,450 Santa Barbara, CA Ctfs Partn Wtr Sys
Impt Proj & Rfdg (AMBAC Insd)......... 6.700 04/01/27 1,517,671
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$1,300 Santa Clara Cnty, CA Fin Auth Lease
Rev Multiple Facs Proj Ser B (AMBAC
Insd) (b)............................. 5.500% 05/15/10 $ 1,309,152
1,305 South Orange Cnty, CA Pub Fin Auth
Reassmt Rev (FSA Insd)................ 5.800 09/02/18 1,296,791
50 Southern CA Home Fin Auth Single
Family Mtg Rev Ser B (GNMA
Collateralized)....................... 7.750 03/01/24 51,329
600 Southern CA Pub Pwr Auth Pwr Proj Rev
Multi-Projs........................... 5.500 07/01/20 562,530
1,520 Tahoe Truckee, CA Uni Sch Dist Impt
Dist No 1 Ser A (FGIC Insd)........... 5.750 08/01/20 1,493,826
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 2,127,080
-----------
49,119,085
-----------
U. S. VIRGIN ISLANDS 2.0%
1,000 Virgin Islands Pub Fin Auth Rev Gross
Rcpts Taxes Ln Note Ser A (ACA
Insd)................................. 6.125 10/01/29 968,020
-----------
TOTAL LONG-TERM INVESTMENTS 102.3%
(Cost $50,257,620).................................................. 50,087,105
SHORT-TERM INVESTMENTS 0.2%
(Cost $100,000)..................................................... 100,000
-----------
TOTAL INVESTMENTS 102.5%
(Cost $50,357,620).................................................. 50,187,105
LIABILITIES IN EXCESS OF OTHER ASSETS (2.5%)......................... (1,217,041)
-----------
NET ASSETS 100.0%.................................................... $48,970,064
===========
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
* Zero coupon bond
(a) Security is a "step up" bond where the coupon increases or steps up at a
predetermined date.
(b) Security purchased on a when-issued or delayed delivery purchase commitment.
(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--GNMA Collateralized
MBIA--Municipal Bond Investors Assurance Corp.
See Notes to Financial Statements
14
<PAGE> 16
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $50,357,620)........................ $50,187,105
Cash........................................................ 22,674
Interest Receivable......................................... 872,481
Other....................................................... 7,013
-----------
Total Assets.......................................... 51,089,273
-----------
LIABILITIES:
Payables:
Investments Purchased..................................... 1,813,257
Income Distributions--Common and Preferred Shares......... 32,656
Investment Advisory Fee................................... 25,834
Affiliates................................................ 10,559
Accrued Expenses............................................ 130,365
Trustees' Deferred Compensation and Retirement Plans........ 106,538
-----------
Total Liabilities..................................... 2,119,209
-----------
NET ASSETS.................................................. $48,970,064
===========
NET ASSETS CONSIST OF:
Preferred Shares ($.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
Accumulated Distributions in Excess of Net Investment
Income.................................................... (28,603)
Net Unrealized Depreciation................................. (170,515)
Accumulated Net Realized Loss............................... (427,812)
-----------
Net Assets Applicable to Common Shares................ 28,970,064
-----------
NET ASSETS.................................................. $48,970,064
===========
NET ASSET VALUE PER COMMON SHARE ($28,970,064 divided by
3,257,560 shares outstanding)............................. $ 8.89
===========
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 1,480,506
-----------
EXPENSES:
Investment Advisory Fee..................................... 153,382
Preferred Share Maintenance................................. 51,977
Accounting Services......................................... 19,908
Trustees' Fees and Related Expenses......................... 5,455
Legal....................................................... 5,090
Custody..................................................... 2,976
Other....................................................... 37,677
-----------
Total Expenses.......................................... 276,465
-----------
NET INVESTMENT INCOME....................................... $ 1,204,041
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... $ (427,704)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 2,287,328
End of the Period......................................... (170,515)
-----------
Net Unrealized Depreciation During the Period............... (2,457,843)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(2,885,547)
===========
NET DECREASE IN NET ASSETS FROM OPERATIONS.................. $(1,681,506)
===========
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1999 and
the Year Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
December 31, 1999 June 30, 1999
- ----------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income......................... $ 1,204,041 $ 2,530,877
Net Realized Gain/Loss........................ (427,704) 752,160
Net Unrealized Depreciation During the
Period...................................... (2,457,843) (1,964,318)
----------- -----------
Change in Net Assets from Operations.......... (1,681,506) 1,318,719
----------- -----------
Distributions from Net Investment Income:
Common Shares............................... (865,355) (2,018,718)
Preferred Shares............................ (338,485) (647,848)
----------- -----------
(1,203,840) (2,666,566)
----------- -----------
Distributions in Excess of Net Investment
Income:
Common Shares............................... (20,561) (152)
Preferred Shares............................ (8,042) (49)
----------- -----------
(28,603) (201)
----------- -----------
Distributions from and in Excess of Net
Investment Income........................... (1,232,443) (2,666,767)
Distributions from Net Realized Gain--Common
Shares...................................... (465,505) (1,054,081)
----------- -----------
Total Distributions........................... (1,697,948) (3,720,848)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES.................................. (3,379,454) (2,402,129)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment................................ 12,488 215,574
----------- -----------
TOTAL DECREASE IN NET ASSETS.................. (3,366,966) (2,186,555)
NET ASSETS:
Beginning of the Period....................... 52,337,030 54,523,585
----------- -----------
End of the Period (Including accumulated
distributions in excess of net investment
income of $28,603 and $201, respectively)... $48,970,064 $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. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended ----------------------------
December 31, 1999 1999 1998 1997
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period........................... $ 9.931 $10.667 $10.450 $10.283
------- ------- ------- --------
Net Investment Income.............. .370 .779 .851 .888
Net Realized and Unrealized
Gain/Loss........................ (.887) (.369) .524 .393
------- ------- ------- --------
Total from Investment Operations... (.517) .410 1.375 1.281
------- ------- ------- --------
Less:
Distributions from and in Excess
of Net Investment Income:
Paid to Common Shareholders.... .272 .622 .715 .750
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders....... .106 .199 .222 .211
Distributions from Net Realized
Gain Paid to Common
Shareholders................... .143 .325 .221 .153
------- ------- ------- --------
Total Distributions................ .521 1.146 1.158 1.114
------- ------- ------- --------
Net Asset Value, End of the
Period........................... $ 8.893 $ 9.931 $10.667 $10.450
======= ======= ======= ========
Market Price Per Share at End of
the Period....................... $7.5625 $9.875 $12.125 $12.1875
Total Investment Return at Market
Price (a)........................ (19.59%)* (11.17%) 7.77% 21.40%
Total Return at Net Asset
Value (b)........................ (6.37%)* 1.74% 11.40% 10.76%
Net Assets at End of the Period (In
millions)........................ $49.0 $52.3 $54.5 $53.6
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares**......................... 1.78% 1.67% 1.57% 1.58%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (c)................ 5.53% 5.49% 5.91% 6.51%
Portfolio Turnover................. 37%* 33% 53% 30%
* Non-Annualized
** Ratio of Expenses to Average
Net Assets Including Preferred
Shares........................ 1.08% 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 Investment Return at Market Price reflects the change in market value
of the common shares for the period indicated with reinvestment of dividends
in accordance with the Trust's dividend reinvestment plan.
(b) Total Return at Net Asset Value (NAV) reflects the change in the value of
the Trust's assets with reinvestment of dividends based upon 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>
$10,395 $10.301 $10.963 $10.147 $ 9.408 $9.095
------- ------- ------- ------- ------- ------
.919 .956 .968 .946 .975
(.001) .111 (.740) .788 .719 .313
------- ------- ------- ------- ------- ------
.918 1.062 .216 1.756 1.665 1.288
------- ------- ------- ------- ------- ------
.750 .725 .712 .663 .654 .648
.230 .237 .156 .167 .245 .327
.050 .006 .010 .110 .027 -0-
------- ------- ------- ------- ------- ------
1.030 .968 .878 .940 .926 .975
------- ------- ------- ------- ------- ------
$10.283 $10.395 $10.301 $10.963 $10.147 $9.408
======= ======= ======= ======= ======= ======
$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
December 31, 1999 (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
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.
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 and original issue discount are amortized over the expected life of each
applicable security.
20
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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 December 31, 1999, cost of long- and short-term investments for federal
income tax purposes is $50,357,620; the aggregate gross unrealized appreciation
is $1,088,934 and the aggregate gross unrealized depreciation is $1,259,449,
resulting in net unrealized depreciation on long- and short-term investments of
$170,515.
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of post October 31 losses which are not
recognized for tax purposes until the first day of the following year.
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.
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 six months ended December 31, 1999, the Trust recognized expenses of
approximately $600 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 six months ended December 31, 1999, the Trust recognized expenses of
approximately $24,400 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.
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
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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 December 31, 1999 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>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 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 $19,661,674 and $18,991,681,
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 December 31, 1999, was 3.500%, and for the six
months then ended rates ranged from 2.99% to 3.70%.
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
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be re-
registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common 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
23
<PAGE> 25
VAN KAMPEN FUNDS
GROWTH
Aggressive Growth*
American Value*
Emerging Growth
Enterprise
Equity Growth
Focus Equity
Growth
Mid Cap Growth
Pace
Small Cap Value
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
Global Fixed Income*
Global Franchise
Global Government Securities*
Global Managed Assets*
International Magnum
Latin American
Strategic Income
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
- - 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.
- - e-mail us by visiting WWW.VANKAMPEN.COM and selecting Contact Us
* Closed to new investors
** Open to new investors for a limited time
24
<PAGE> 26
VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*
THEODORE A. MYERS
RICHARD F. POWERS, III*--Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
RICHARD F. POWERS, III*
President
DENNIS J. MCDONNELL*
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
PETER W. HEGEL*
MICHAEL H. SANTO*
EDWARD C. WOOD, 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 ACCOUNTANTS
KPMG LLP
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in the Investment Company Act of
1940.
(SM) denotes a service mark of Van Kampen Funds Inc.
(C) Van Kampen Funds Inc., 2000 All rights reserved.
25
<PAGE> 27
RESULTS OF SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Trust was held on June 16, 1999, where
shareholders voted on the election of trustees and the ratification of KPMG LLP
as the independent public accountants and the approval of the Preferred Shares
split and simultaneous reduction of the liquidation preference per Preferred
Share of the Trust.
1) With regard to the election of the following trustees by common
shareholders of the Trust:
<TABLE>
<CAPTION>
# OF SHARES
---------------------
IN FAVOR WITHHELD
- -------------------------------------------------------------------------
<S> <C> <C>
David C. Arch................................... 2,999,755 37,972
Howard J Kerr................................... 2,999,755 37,972
Dennis J. McDonnell............................. 2,999,755 37,972
</TABLE>
The other trustees of the Trust whose terms did not expire in 1999 are Rod
Dammeyer, Don G. Powell*, Theodore A. Myers, Hugo F. Sonnenschein and Wayne W.
Whalen.
2) With regard to the ratification of KPMG LLP as independent public
accountants for the Trust, 2,975,306 shares voted in favor of the proposal,
10,200 shares voted against and 52,601 shares abstained.
3) With regards to the proposal to approve the Preferred Share split and
simultaneous reduction of the liquidation preference per Preferred Share, the
Meeting was adjourned until July 7, 1999, July 28, 1999 and August 18, 1999 at
which time it was determined that it was in the best interest of the Fund to
discontinue efforts to obtain the vote and adjourn with respect to the Preferred
Shares of this proposal.
*On August 9, 1999, Don G. Powell resigned and the Board of Trustees appointed
Richard F. Powers, III.
26
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YEAR 2000 UPDATE
As we enter the new century, it's "business as usual" for Van Kampen.
Thank you for the confidence you showed in us during the changeover on
January 1, 2000, and for entrusting us with your investment portfolio. We
look forward to continuing to serve your investment needs.
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VAN KAMPEN FUNDS
YOUR NOTES:
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