N-CSRS 1 c85417nvcsrs.txt SEMIANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6535 Van Kampen Trust For Investment Grade California Municipals -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Ronald Robison 1221 Avenue of the Americas, New York, New York 10020 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: 10/31 Date of reporting period: 4/30/04 Item 1. Report to Shareholders. The Trust's semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: Welcome, Shareholder In this report, you'll learn about how your investment in Van Kampen Trust for Investment Grade California Municipals performed during the semiannual period. The portfolio management team will provide an overview of the market conditions and discuss some of the factors that affected investment performance during the reporting period. In addition, this report includes the trust's financial statements and a list of trust investments as of April 30, 2004. Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the trust will achieve its investment objective. Trusts are subject to market risk, which is the possibility that the market values of securities owned by the trust will decline and that the value of the trust shares may therefore be less than what you paid for them. Accordingly, you can lose money investing in this trust. Income may subject certain individuals to the federal Alternative Minimum Tax (AMT).
--------------------------------------------------------------------------------------- NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE --------------------------------------------------------------------------------------- NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT ---------------------------------------------------------------------------------------
Performance Summary as of 4/30/04
TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS SYMBOL: VIC ------------------------------------------------------ AVERAGE ANNUAL BASED ON BASED ON TOTAL RETURNS NAV MARKET PRICE Since Inception (03/27/92) 7.70% 6.69% 10-year 7.55 7.80 5-year 5.79 2.95 1-year 2.04 -6.12 6-month 1.22 -7.06 ------------------------------------------------------
Past performance is no guarantee of future results. Investment return, net asset value (NAV) and common share market price will fluctuate and trust shares, when sold, may be worth more or less than their original cost. As a result of recent market activity, current performance may vary from the figures shown. For more up-to-date information, please visit vankampen.com or speak with your financial advisor. NAV per share is determined by dividing the value of the trust's portfolio securities, cash and other assets, less all liabilities, by the total number of common shares outstanding. The common share market price is the price the market is willing to pay for shares of the trust at a given time. Common share market price is influenced by a range of factors, including supply and demand and market conditions. Total return assumes an investment at the beginning of the period, reinvestment of all distributions for the period in accordance with the trust's dividend reinvestment plan, and sale of all shares at the end of the period. The Lehman Brothers California Municipal Bond Index is a broad-based statistical composite of California municipal bonds. The index is unmanaged and does not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. 1 Trust Report FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2004 Van Kampen Trust for Investment Grade California Municipals is managed by the adviser's Municipal Fixed Income team.(1) Current members include Joseph Piraro, Vice President; Robert Wimmel, Vice President; and John Reynoldson, Executive Director. MARKET CONDITIONS The state of the U.S. economy remained mixed over the six-month period under review. On the positive side, economic growth continued to be robust, with Gross Domestic Product growth topping 4 percent in both the last quarter of 2003 and, preliminarily, the first quarter of this year. While this strength in output has historically triggered fears of rising interest rates, yields remained stubbornly low across the municipal curve. These low yields were partly the result of the continued low levels of observed inflation in the U.S. economy. Unfortunately, they also reflected continuing weakness in the job market, which remained soft throughout most of the period. The soft job numbers, coupled with persistently low inflation, led the Federal Open Market Committee (the Fed) to maintain its accommodative stance throughout the period. The surprisingly rapid job growth data released in April, coupled with rapidly rising commodity and high oil prices, led many investors to fear that the Fed would be forced to raise interest rates earlier than the market initially expected. As a result, bond yields across all major sectors spiked in April. Supply of new municipal bonds in calendar 2003 hit record levels as municipalities moved to take advantage of historically low interest rates. Many cities and states sought to reduce expenditures by refinancing existing debt and replacing it with lower-yielding bonds. In other cases, municipalities attempted to meet current and future funding needs by issuing new debt. This activity slowed in the first months of 2004. The low interest rates that prevailed over much of the period also had an impact on the demand for municipal bonds. Retail and institutional investor activity slowed as holders of municipal bonds saw little reason to sell bonds purchased at higher yield levels and reinvest at lower yields. However, the period was marked by rising activity among non-traditional investors, such as hedge funds and insurance companies seeking to take advantage of the attractiveness of municipal bonds relative to some taxable securities. Additionally, investors' search for yield led to significant outperformance by lower-rated bonds with greater credit risk. Sectors such as health care, with a preponderance of lower-rated issues, performed particularly well. (1)Team members may change without notice at any time. 2 California remained in the municipal spotlight during the period, with many investors anxiously awaiting the result of the March 2 referendum on Propositions 57 and 58. These two measures, which voters ultimately approved, gave the green light to a roughly $15 billion economic-improvement bond that will begin to enter the market in early June. The passage of these measures led the major ratings agencies to increase their outlooks (though not their ratings) for the beleaguered state's bonds, with S&P shifting from stable to positive and Moody's shifting from negative to stable. This surge in issuance will at least partially offset the surprising decline in new debt in the first quarter of 2004, which was one-third lower than the first quarter of last year. The majority of debt issued by the state for the entire six-month period offered credit enhancements, with fully two thirds of debt coming to market with credit insurance. PERFORMANCE ANALYSIS Closed-end fund returns can be calculated based upon either the market price or the net asset value (NAV) of its shares. NAV per share is determined by dividing the value of the trust's portfolio securities, cash and other assets, less all liabilities, by the total number of common shares outstanding, while market price reflects the supply and demand for the shares. As a result, the two returns can differ significantly. On both an NAV basis and a market-price basis, the trust underperformed its benchmark, the Lehman Brothers California Municipal Bond Index. (See table below.) The trust uses leverage to enhance its dividend to common shareholders. The trust borrows money at short-term rates through the issuance of preferred shares. The proceeds are typically reinvested in longer-term securities, taking advantage of the difference between short- and longer-term rates. As yields rose during the period, the prices of bonds declined. The trust's use of leverage magnified this negative movement, leading to a somewhat lower total return at NAV than that of its benchmark, which is not leveraged. Our analysis of the macroeconomic environment, coupled with the levels of interest rates near multi-decade lows, led us to believe that interest rates were more likely to rise than to fall further. As a result, we kept the trust's duration (a measure of interest-rate sensitivity) below that of its benchmark in order to limit the potentially damaging impact of any increase in interest rates. This approach hampered the trust's returns for much of the period as interest rates TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2004
------------------------------------------------------------------------ BASED ON BASED ON LEHMAN BROTHERS CALIFORNIA NAV MARKET PRICE MUNICIPAL BOND INDEX 1.22% -7.06% 1.53% ------------------------------------------------------------------------
Past performance is no guarantee of future results. Investment return, net asset value and common share market price will fluctuate and trust shares, when sold, may be worth more or less than their original cost. See Performance Summary for additional performance information and index definition. 3 fell; however, it helped buoy returns when interest rates rose in the final weeks of the period. The trust's performance was also modestly hampered by its bias, relative to the benchmark, toward high-quality securities. Municipal-bond investors during the period responded to the improving economy by reducing the yield spreads between higher- and lower-rated bonds (yield spreads reflect the premium demanded by investors to buy lower-rated bonds). As a result, lower-quality bonds outperformed. The portfolio had an 87 percent exposure to bonds rated AA/Aa or higher at the end of the period. We adjusted the portfolio's term structure in anticipation of rising interest rates. Our research showed that the intermediate portion of the curve offered the most promising total-return potential. As a result, we focused our purchases on the 18- to 22-year segment of the curve. Many of the securities we identified had the added appeal of premium coupons and 10-year call dates, which served to add income to the portfolio while limiting its interest-rate exposure. Our trading activity during the period was well below traditional norms because we wanted to avoid having to reinvest into securities with low yields. That said, we were able to make selective relative-value trades among securities and sectors as they moved into and out of fair value. Some of these acquisitions were funded by the proceeds of the sale of pre-refunded bonds. In other cases we sold bonds that met their performance objectives during the period. We reinvested this cash into securities with more promising total-return characteristics. The trust's portfolio remained well diversified during the period, with its holdings spread across many major municipal bond sectors. We believe this long-standing strategy helps to minimize the risk of over-concentration in any single sector, while also giving the portfolio exposure to as many sources of return as possible. Our strategy during the period emphasized bonds tied to essential services, and de-emphasized housing and health-care bonds. The three largest sector exposures at the end of the period were public education, tax districts and industrial revenue. TOP 5 SECTORS AS OF 4/30/04 RATINGS ALLOCATIONS AS OF 4/30/04 Public Education 18.3% AAA/Aaa 81.4% Tax District 12.5 AA/Aa 6.1 Industrial Revenue 11.5 BBB/Baa 12.5 Transportation 11.4 Public Building 7.8
Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned or securities in the sectors shown above. All percentages are as a percentage of long-term investments. Securities are classified by sectors that represent broad groupings of related industries. Ratings allocations based upon ratings as issued by Standard and Poor's and Moody's. Van Kampen is a wholly owned subsidiary of a global securities firm which is engaged in a wide range of financial services including, for example, securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. 4 As mentioned above, the portfolio's below-market duration served it well in the final weeks of the period, when interest rates rose sharply. While it is impossible to predict how long this trend will hold, we believe that the trust is well positioned to weather further increases in rates. We look forward to becoming more active in seeking attractive structures and relative-value trading opportunities now that rates have moved into a more normal range. PROXY VOTING POLICIES AND PROCEDURES A description of the trust's policies and procedures with respect to the voting of proxies relating to the trust's portfolio securities is available without charge, upon request, by calling 1-800-847-2424. This information is also available on the Securities and Exchange Commission's website at http://www.sec.gov. 5 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE -------------------------------------------------------------------------------------------- MUNICIPAL BONDS 159.8% CALIFORNIA 158.3% $1,020 A B C CA Uni Sch Dist Cap Apprec Ser B (FGIC Insd)........................................... * 08/01/17 $ 535,265 1,000 Abag Fin Auth For Nonprofit Corp CA Multi-Family Rev Hsg Utd Dominion Ser A Rfdg (Asset Gty Insd) (AMT)........................................... 6.400% 08/15/30 1,112,040 3,540 Anaheim, CA Pub Fin Auth Lease Rev Cap Apprec Pub Impt Proj Ser C (FSA Insd).................. * 09/01/32 721,027 1,000 Banning, CA Cmnty Redev Agy Tax Alloc Merged Downtown (Radian Insd).......................... 5.000 08/01/23 970,450 2,000 Bay Area Toll Auth CA Toll Brdg Rev San Francisco Bay Area Ser D........................ 5.000 04/01/17 2,077,620 3,535 Brea, CA Redev Agy Tax Alloc Ser A Rfdg (AMBAC Insd)........................................... 5.500 08/01/20 3,799,736 1,000 California Ed Fac Auth Rev Pooled College & Univ Proj Ser B...................................... 6.750 06/01/30 1,071,840 1,000 California Ed Fac Auth Rev Pooled College & Univ Proj Ser B (Partially prerefunded @ 04/01/09)... 5.250 04/01/24 963,480 835 California Ed Fac Auth Rev Student Ln CA Ln Pgm Ser A (MBIA Insd) (AMT)......................... 6.000 03/01/16 881,743 565 California Hlth Fac Fin Auth Rev Hlth Fac Small Fac Ln Ser A (CA MTG Insd)...................... 6.700 03/01/11 566,141 850 California Hlth Fac Fin Auth Rev Hlth Fac Small Fac Ln Ser A (CA MTG Insd)...................... 6.750 03/01/20 852,958 2,500 California Hlth Fac Fin Auth Rev Insd Hlth Fac Vlycare Ser A (CA MTG Insd)..................... 6.125 05/01/12 2,503,325 1,000 California Hsg Fin Agy Rev Home Mtg Ser M (MBIA Insd) (AMT)..................................... 5.550 08/01/17 1,043,350 1,000 California Hsg Fin Agy Rev Multi-Family Hsg III Ser A (MBIA Insd) (AMT)......................... 5.850 08/01/17 1,042,860 2,000 California Infrastructure & Econ Dev Bk Rev Bay Area Toll Brdgs First Lien Ser A (FGIC Insd).... 5.000 07/01/29 2,002,040 4,500 California Pollutn Ctl Fin Auth Pollutn Ctl Rev Southn CA Edison Co (AMBAC Insd) (AMT).......... 6.000 07/01/27 4,525,335 2,110 California Spl Dists Fin Prog Ser 00 (MBIA Insd)........................................... 5.250 12/01/26 2,148,782 1,000 California St (CIFG Insd)....................... 5.000 10/01/22 1,013,330 2,000 California St Dept Wtr Res Pwr Ser A (AMBAC Insd)........................................... 5.500 05/01/16 2,182,960 1,000 California St Dept Wtr Res Wtr Ser W............ 5.500 12/01/17 1,090,450 1,475 California St Pub Wks Brd Dept Corr Ser B Rfdg (CIFG Insd)..................................... 5.250 01/01/13 1,599,313 1,000 California St Univ Fresno Assn Sr Aux Organization Event Ctr.......................... 6.000 07/01/26 1,015,490 1,000 California St Vet Bd Ser BH (FSA Insd) (AMT).... 5.400 12/01/15 1,041,020 2,000 California St Vet Bd Ser BH (FSA Insd) (AMT).... 5.400 12/01/16 2,082,040 1,085 Cathedral City, CA Pub Fin Auth Rev Cap Apprec Ser A (MBIA Insd)............................... * 08/01/30 249,691
6 See Notes to Financial Statements VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE -------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $1,085 Cathedral City, CA Pub Fin Auth Rev Cap Apprec Ser A (MBIA Insd)............................... * 08/01/31 $ 235,608 1,000 Chaffey, CA Uni High Sch Dist Ser C (FSA Insd)........................................... 5.000% 05/01/27 1,003,230 1,700 Chino Vly Uni Sch Dist CA Ctf Part Ser A Rfdg (FSA Insd)...................................... 5.375 09/01/20 1,824,202 1,700 Chula Vista, CA Indl Dev Rev San Diego Gas & Elec Co Ser A (AMBAC Insd) (AMT)................ 6.400 12/01/27 1,751,850 2,900 Colton, CA Jt Uni Sch Dist Ser A (FGIC Insd).... 5.500 08/01/22 3,094,851 1,000 Colton, CA Redev Agy Tax Alloc Mt Vernon Corridor Redev Proj............................. 6.300 09/01/36 1,046,750 1,000 Corona CA Ctf Part Clearwater Cogeneration Proj (MBIA Insd)..................................... 5.000 09/01/17 1,038,870 1,360 Csuci Fin Auth Rev CA East Campus Cmnty Ser A (MBIA Insd) (LOC--Citibank)..................... 5.125 09/01/21 1,403,520 1,245 Duarte, CA Multi-Family Rev Hsg Heritage Park Apt Ser A (FNMA Collateralized) (AMT)........... 5.850 05/01/30 1,283,981 1,000 Fairfield Suisun, CA Uni Sch Dist Spl Tax Cmnty Fac Dist No 5 New Sch (FSA Insd)................ 5.375 08/15/29 1,026,900 1,000 Folsom, CA Spl Tax Cmnty Fac Dist No 2 Rfdg (Connie Lee Insd)............................... 5.250 12/01/19 1,056,410 1,950 Fontana, CA Redev Agy Tax Alloc Southwest Indl Park Proj (MBIA Insd)........................... 5.200 09/01/30 1,973,673 10,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap Apprec Rfdg..................................... * 01/15/25 2,907,500 3,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Conv Cap Apprec Sr Lien Ser A (Escrowed to Maturity) (a)................................... 0/7.050 01/01/10 3,445,290 1,680 Glendale, CA Uni Sch Dist Ser D (MBIA Insd)..... 5.250 09/01/17 1,788,326 1,000 Imperial Irr Dist CA Ctf Part Elec Sys Proj (FSA Insd)........................................... 5.250 11/01/23 1,033,630 1,000 Industry, CA Urban Dev Agy Tax Alloc Civic Rec Ind-1 Rfdg (MBIA Insd).......................... 5.500 05/01/14 1,091,440 1,000 Kern, CA Cmnty College Sch Fac Impt Dist Mammoth Campus/Kern Cmnty (AMBAC Insd).................. * 08/01/22 381,820 1,000 Laguna Hills, CA Ctf Part Cmnty Ctr Proj (MBIA Insd)........................................... 5.000 12/01/18 1,037,000 1,105 Larkspur, CA Sch Dist Cap Apprec Ser A (FGIC Insd)........................................... * 08/01/20 478,609 1,000 Loma Linda, CA Redev Agy Tax Loma Linda Redev Proj Rfdg (MBIA Insd)........................... 5.125 07/01/30 1,011,810 1,000 Los Angeles, CA Cmnty College Dist Ser A (MBIA Insd)........................................... 5.000 06/01/26 1,002,940 1,000 Los Angeles, CA Ctf Part Sr Sonnenblick Del Rio W L. A. (AMBAC Insd)............................ 6.000 11/01/19 1,134,960 1,473 Los Angeles, CA Multi-Family Rev Hsg Earthquake Rehab Proj Ser A (FNMA Collateralized) (AMT).... 5.700 12/01/27 1,564,796 1,000 Los Angeles, CA Wtr & Pwr Rev Ser A............. 5.250 07/01/18 1,043,100
See Notes to Financial Statements 7 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE -------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $1,000 Los Gatos, CA Jt Uni High Sch Election of 1998 Ser C (FSA Insd)................................ 5.000% 06/01/27 $ 1,003,220 1,000 Mendocino Cnty, CA Ctf Part Cnty Pub Fac Corp (MBIA Insd)..................................... 5.250 06/01/30 1,019,490 1,000 Metropolitan Wtr Dist Southn CA Auth Ser B2 (FGIC Insd)..................................... 5.000 10/01/26 1,005,560 1,000 Oakland, CA Uni Sch Dist Alameda Cnty (FSA Insd)........................................... 5.000 08/01/17 1,027,090 1,000 Oxnard, CA Uni High Sch Dist Ser A Rfdg (MBIA Insd)........................................... 6.200 08/01/30 1,127,120 1,500 Placentia-Yorba Linda CA Un Ser A (FGIC Insd)... 5.000 08/01/26 1,507,440 3,000 Port Oakland, CA Ser N Rfdg (MBIA Insd) (AMT)... 5.000 11/01/22 3,015,480 1,220 Rancho Mirage, CA Redev Agy Tax Redev Plan 1984 Proj Ser A 1 (MBIA Insd)........................ 5.000 04/01/26 1,221,928 1,000 Redlands, CA Redev Agy Tax Alloc Redev Proj Ser A Rfdg (MBIA Insd).............................. 4.750 08/01/21 993,530 1,650 Roseville, CA Jt Uni High Sch Dist Ser B (FGIC Insd)........................................... * 06/01/20 721,842 1,000 Salinas Vly CA Solid Waste Auth Rev (AMBAC Insd) (AMT)........................................... 5.250 08/01/27 1,011,670 1,000 San Bernardino Cnty, CA Ctf Part Med Cent Fin Proj (MBIA Insd)................................ 5.000 08/01/28 990,900 4,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec Ser A (AMBAC Insd).............................. 6.100 09/01/19 4,054,440 1,500 San Diego, CA Redev Agy Centre City Redev Proj Ser A........................................... 6.400 09/01/25 1,570,305 1,185 San Francisco, CA City & Cnty Arpt Commn Intl Arpt Rev Second Ser Issue 15B (MBIA Insd)....... 4.800 05/01/17 1,204,505 1,685 San Francisco, CA City & Cnty Arpt Commn Intl Arpt Rev Spl Fac Lease Ser A (FSA Insd) (AMT)... 6.125 01/01/27 1,819,278 1,000 San Francisco, CA City & Cnty Arpt Commn Intl Arpt Second Ser 27A Rfdg (MBIA Insd) (AMT)...... 5.250 05/01/26 1,007,280 1,000 San Francisco, CA City & Cnty Arpt Commn Intl Arpt Second Ser 30 Rfdg (XLCA Insd)............. 5.250 05/01/16 1,074,470 1,000 Sanger, CA Uni Sch Dist Rfdg (MBIA Insd)........ 5.600 08/01/23 1,109,750 1,500 Santa Ana, CA Multi-Family Hsg Rev Villa Del Sol Apts Ser B (FNMA Collateralized) (AMT).......... 5.650 11/01/21 1,518,705 2,000 Santa Ana, CA Uni Sch Dist (MBIA Insd).......... 5.375 08/01/27 2,079,520 1,000 Santa Ana, CA Uni Sch Dist Ctf Part Cap Apprec Fin Proj (FSA Insd)............................. * 04/01/36 165,010 2,000 Santa Margarita/Dana Point Impt Dist 3-3A-4-4A Ser A (AMBAC Insd) (b).......................... 5.000 08/01/15 2,126,060 2,000 South Orange Cnty, CA Pub Fin Auth Reassmt Rev (FSA Insd)...................................... 5.800 09/02/18 2,237,100 55 Southern CA Home Fin Auth Single Family Mtg Rev Ser A (GNMA Collateralized) (AMT)............... 6.750 09/01/22 55,015
8 See Notes to Financial Statements VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE -------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $1,000 Stockton, CA Hlth Fac Rev Saint Joseph Med Cent Ser A (MBIA Insd)............................... 5.625% 06/01/13 $ 1,023,840 1,300 Taft, CA City Elem Sch Dist Ser A (MBIA Insd)... * 08/01/22 496,366 2,000 University of CA Ctf Part San Diego Campus Proj Ser A........................................... 5.250 01/01/32 2,026,940 1,000 University of CA Rev Gen Ser A (AMBAC Insd)..... 5.000 05/15/26 1,005,400 1,200 Ventura Cnty, CA Cmnty College Dist Ser A (MBIA Insd)........................................... 5.500 08/01/23 1,270,812 1,000 Vista, CA Uni Sch Dist Ser A (FSA Insd)......... 5.000 08/01/23 1,015,810 2,000 William S Hart CA Jt Sch Fin Auth Spl Tax Rev Cmnty Fac Rfdg (FSA Insd)....................... 6.500 09/01/14 2,163,340 1,000 Woodland, CA Fin Auth Lease Rev Cap Proj Rfdg (XLCA Insd)..................................... 5.000 03/01/25 1,002,840 ------------ 116,425,408 ------------ U. S. VIRGIN ISLANDS 1.5% 1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes Ln Nt Ser A..................................... 6.375 10/01/19 1,113,670 ------------ TOTAL LONG-TERM INVESTMENTS 159.8% (Cost $113,281,248)........................................................ 117,539,078 SHORT-TERM INVESTMENTS 2.6% (Cost $1,900,000).......................................................... 1,900,000 ------------ TOTAL INVESTMENTS 162.4% (Cost $115,181,248)........................................................ 119,439,078 LIABILITIES IN EXCESS OF OTHER ASSETS (1.2%)................................ (867,472) PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (61.2%).................. (45,029,202) ------------ NET ASSETS APPLICABLE TO COMMON SHARES 100.0%............................... $ 73,542,404 ============
* 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. See Notes to Financial Statements 9 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued AMBAC--AMBAC Indemnity Corp. AMT--Alternative Minimum Tax Asset Gty--Asset Guaranty Insurance Co. CA MTG--California Mortgage Insurance CIFG--CDC IXIS Financial Guaranty Connie Lee--Connie Lee Insurance Co. FGIC--Financial Guaranty Insurance Co. FNMA--Federal National Mortgage Association FSA--Financial Security Assurance Inc. GNMA--Government National Mortgage Association LOC--Letter of Credit MBIA--Municipal Bond Investors Assurance Corp. Radian--Radian Asset Assurance XLCA--XL Capital Assurance Inc. 10 See Notes to Financial Statements VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS FINANCIAL STATEMENTS Statement of Assets and Liabilities April 30, 2004 (Unaudited) ASSETS: Total Investments (Cost $115,181,248)....................... $119,439,078 Cash........................................................ 73,975 Interest Receivable......................................... 1,681,578 Other....................................................... 531 ------------ Total Assets............................................ 121,195,162 ------------ LIABILITIES: Payables: Investments Purchased..................................... 2,274,560 Investment Advisory Fee................................... 58,967 Income Distributions--Common Shares....................... 23,781 Other Affiliates.......................................... 8,876 Administrative Fee........................................ 4,914 Trustees' Deferred Compensation and Retirement Plans........ 195,958 Accrued Expenses............................................ 56,500 ------------ Total Liabilities....................................... 2,623,556 Preferred Shares (including accrued distributions).......... 45,029,202 ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 73,542,404 ============ NET ASSET VALUE PER COMMON SHARE ($73,542,404 divided by 4,676,173 shares outstanding)............................. $ 15.73 ============ NET ASSETS CONSIST OF: Common Shares ($.01 par value with an unlimited number of shares authorized, 4,676,173 shares issued and outstanding).............................................. $ 46,762 Paid in Surplus............................................. 68,747,251 Net Unrealized Appreciation................................. 4,257,830 Accumulated Undistributed Net Investment Income............. 374,592 Accumulated Net Realized Gain............................... 115,969 ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 73,542,404 ============ PREFERRED SHARES ($.01 par value, authorized 100,000,000 shares, 1,800 issued with liquidation preference of $25,000 per share)........................................ $ 45,000,000 ============ NET ASSETS INCLUDING PREFERRED SHARES....................... $118,542,404 ============
See Notes to Financial Statements 11 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS FINANCIAL STATEMENTS continued Statement of Operations For the Six Months Ended April 30, 2004 (Unaudited) INVESTMENT INCOME: Interest.................................................... $ 3,024,080 ----------- EXPENSES: Investment Advisory Fee..................................... 362,662 Preferred Share Maintenance................................. 63,205 Trustees' Fees and Related Expenses......................... 38,231 Administrative Fee.......................................... 30,223 Legal....................................................... 10,750 Custody..................................................... 3,870 Other....................................................... 66,120 ----------- Total Expenses.......................................... 575,061 ----------- NET INVESTMENT INCOME....................................... $ 2,449,019 =========== REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Gain........................................... $ 116,601 ----------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... 5,685,487 End of the Period......................................... 4,257,830 ----------- Net Unrealized Depreciation During the Period............... (1,427,657) ----------- NET REALIZED AND UNREALIZED LOSS............................ $(1,311,056) =========== DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (234,226) =========== NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS................................................ $ 903,737 ===========
12 See Notes to Financial Statements VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS FINANCIAL STATEMENTS continued Statements of Changes in Net Assets (Unaudited)
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED APRIL 30, 2004 OCTOBER 31, 2003 ------------------------------------ FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income................................... $ 2,449,019 $ 5,075,627 Net Realized Gain....................................... 116,601 678,004 Net Unrealized Depreciation During the Period........... (1,427,657) (521,646) Distributions to Preferred Shareholders: Net Investment Income................................. (183,813) (367,148) Net Realized Gain..................................... (50,413) (62,699) ----------- ----------- Change in Net Assets Applicable to Common Shares from Operations............................................ 903,737 4,802,138 Distributions to Common Shareholders: Net Investment Income................................. (2,394,175) (5,053,725) Net Realized Gain..................................... (651,121) (1,181,979) ----------- ----------- NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM INVESTMENT ACTIVITIES............................ (2,141,559) (1,433,566) FROM CAPITAL TRANSACTIONS: Value of Common Shares Issued Through Dividend Reinvestment.......................................... 136,145 26,165 ----------- ----------- TOTAL DECREASE IN NET ASSETS APPLICABLE TO COMMON SHARES................................................ (2,005,414) (1,407,401) NET ASSETS APPLICABLE TO COMMON SHARES: Beginning of the Period................................. 75,547,818 76,955,219 ----------- ----------- End of the Period (Including accumulated undistributed net investment income of $374,592 and $503,561, respectively)......................................... $73,542,404 $75,547,818 =========== ===========
See Notes to Financial Statements 13 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS FINANCIAL HIGHLIGHTS (UNAUDITED) THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS ENDED APRIL 30, -------------------- 2004 2003 2002 (a) ---------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD................. $ 16.18 $ 16.49 $ 16.81 ------- -------- -------- Net Investment Income.................................. .52 1.08 1.16 Net Realized and Unrealized Gain/Loss.................. (.27) .03 (.10) Common Share Equivalent of Distributions Paid to Preferred Shareholders: Net Investment Income................................ (.04) (.08) (.07) Net Realized Gain.................................... (.01) (.01) (.08) ------- -------- -------- Total from Investment Operations......................... .20 1.02 .91 Distributions Paid to Common Shareholders: Net Investment Income.................................. (.51) (1.08) (.98) Net Realized Gain...................................... (.14) (.25) (.25) ------- -------- -------- NET ASSET VALUE, END OF THE PERIOD....................... $ 15.73 $ 16.18 $ 16.49 ======= ======== ======== Common Share Market Price at End of the Period........... $ 14.14 $ 15.84 $ 16.37 Total Return (b)......................................... -7.06%* 5.09% 13.41% Net Assets Applicable to Common Shares at End of the Period (In millions)................................... $ 73.5 $ 75.5 $ 77.0 Ratio of Expenses to Average Net Assets Applicable to Common Shares (c)...................................... 1.51% 1.47% 1.56% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (c)........................ 6.43% 6.65% 7.13% Portfolio Turnover....................................... 3%* 17% 21% SUPPLEMENTAL RATIOS: Ratio of Expenses to Average Net Assets Including Preferred Shares (c)................................... .95% .93% .98% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (d)........................ 5.95% 6.17% 6.68% SENIOR SECURITIES: Total Preferred Shares Outstanding....................... 1,800 1,800 1,800 Asset Coverage Per Preferred Share (e)................... $65,873 $ 66,977 $ 67,762 Involuntary Liquidating Preference Per Preferred Share... $25,000 $ 25,000 $ 25,000 Average Market Value Per Preferred Share................. $25,000 $ 25,000 $ 25,000
* Non-Annualized (a)As required, effective November 1, 2001, the Trust has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on fixed income securities. The effect of this change for the year ended October 31, 2002 was to increase net investment income per share by $.01, decrease net realized and unrealized gains and losses per share by $.01 and increase the ratio of net investment income to average net assets applicable to common shares from 7.11% to 7.13%. Per share, ratios, and supplemental data for periods prior to October 31, 2002 have not been restated to reflect this change in presentation. (b)Total return assumes an investment at the common share market price at the beginning of the period indicated, reinvestment of all distributions for the period in accordance with the Trust's dividend reinvestment plan, and sale of all shares at the closing common share market price at the end of the period indicated. (c)Ratios do not reflect the effect of dividend payments to preferred shareholders. (d)Ratios reflect the effect of dividend payments to preferred shareholders. (e)Calculated by subtracting the Trust's total liabilities (not including the preferred shares) from the Trust's total assets and dividing this by the number of preferred shares outstanding. 14
YEAR ENDED OCTOBER 31, --------------------------------------------------------------------------------------- 2001 2000 1999 1998 1997 1996 1995 1994 --------------------------------------------------------------------------------------- $ 15.84 $ 15.10 $ 17.51 $ 17.16 $ 16.58 $ 16.29 $ 14.67 $ 17.64 ------- ------- ------- -------- -------- -------- -------- -------- 1.16 1.22 1.19 1.24 1.26 1.30 1.30 1.28 1.03 .84 (1.95) .70 .84 .40 1.64 (3.00) (.29) (.33) (.22) (.28) (.27) (.32) (.40) (.26) (.01) -0- (.10) (.07) (.06) (.04) -0- (.01) ------- ------- ------- -------- -------- -------- -------- -------- 1.89 1.73 (1.08) 1.59 1.77 1.34 2.54 (1.99) (.92) (.99) (.99) (.99) (.99) (.96) (.92) (.92) -0- -0- (.34) (.25) (.20) (.09) -0- (.06) ------- ------- ------- -------- -------- -------- -------- -------- $ 16.81 $ 15.84 $ 15.10 $ 17.51 $ 17.16 $ 16.58 $ 16.29 $ 14.67 ======= ======= ======= ======== ======== ======== ======== ======== $ 15.59 $16.125 $14.375 $ 18.00 $ 16.75 $ 15.75 $ 14.75 $ 12.75 2.45% 19.77% -13.54% 15.46% 12.96% 14.14% 23.60% -16.67% $ 78.5 $ 73.8 $ 70.2 $ 81.0 $ 79.3 $ 76.6 $ 75.3 $ 67.8 1.74% 1.80% 1.74% 1.71% 1.77% 1.80% 1.83% 1.79% 7.17% 7.98% 7.15% 7.16% 7.57% 7.97% 8.39% 7.91% 27% 28% 25% 27% 23% 16% 13% 14% 1.09% 1.10% 1.10% 1.10% 1.12% 1.13% 1.12% 1.12% 5.37% 5.81% 5.84% 5.54% 5.93% 5.97% 5.83% 6.31% 1,800 1,800 1,800 900 900 900 900 900 $68,588 $66,008 $64,025 $140,049 $138,057 $135,121 $133,628 $125,291 $25,000 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $25,000 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
See Notes to Financial Statements 15 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen Trust for Investment Grade California Municipals (the "Trust") is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. The Trust's investment objective is to provide a high level of current income exempt from federal and California income taxes, consistent with preservation of capital. The Trust will invest in a portfolio consisting substantially of California municipal obligations rated investment grade at the time of investment. The Trust commenced investment operations on March 27, 1992. Effective November 30, 2003, the Trust's investment adviser, Van Kampen Investment Advisory Corp. merged into its affiliate, Van Kampen Asset Management (the "Adviser"). The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION Municipal bonds are valued by independent pricing services or dealers using the mean of the bid and asked prices or, in the absence of market quotations, at fair value based upon yield data relating to municipal bonds with similar characteristics and general market conditions. Securities which are not valued by independent pricing services or dealers are valued at fair value using procedures established in good faith by the Board of Trustees. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market value. B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date basis. Realized gains and losses are determined on an identified cost basis. The Trust may purchase and sell securities on a "when-issued" or "delayed delivery" basis with settlement to occur at a later date. The value of the security so purchased is subject to market fluctuations during this period. The Trust will segregate assets with the custodian having an aggregate value at least equal to the amount of the when-issued or delayed delivery purchase commitments until payment is made. At April 30, 2004, the Trust had $2,274,560 of when-issued and delayed delivery purchase commitments. C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond premium is amortized and discount is accreted over the expected life of each applicable security. D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. 16 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED) continued At April 30, 2004 the cost and related gross unrealized appreciation and depreciation are as follows: Cost of investments for tax purposes........................ $115,100,697 ============ Gross tax unrealized appreciation........................... $ 4,773,778 Gross tax unrealized depreciation........................... (435,397) ------------ Net tax unrealized appreciation on investments.............. $ 4,338,381 ============
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 on a pro rata basis to common and preferred shareholders. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income for tax purposes. The tax character of distributions paid during the year ended October 31, 2003 was as follows:
2003 Distribution paid from: Ordinary Income........................................... $ 61,045 Long-term capital gain.................................... 1,230,078 ---------- $1,291,123 ==========
As of October 31, 2003, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income............................... $176,196 Undistributed long-term capital gain........................ 529,938
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Trust's Investment Advisory Agreement, the Adviser provides investment advice and facilities to the Trust for an annual fee payable monthly of .60% of the average daily net assets of the Trust. In addition, the Trust pays a monthly administrative fee to Van Kampen Funds Inc. or its affiliates (collectively "Van Kampen"), the Trust's Administrator, at an annual rate of .05% of the average daily net assets of the Trust. Effective June 1, 2004, the administrative fee was reduced from .05% to .00%. For the six months ended April 30, 2004, the Trust recognized expenses of approximately $4,000 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Trust, of which a trustee of the Trust is an affiliated person. Under separate Accounting Services and Legal Services agreements, the Adviser provides accounting and legal services to the Trust. The Adviser allocates the cost of such services to each trust. For the six months ended April 30, 2004, the Trust recognized expenses of approximately $13,800 representing Van Kampen's cost of providing accounting and legal services to the Trust, which are reported as part of "Other" and "Legal" expenses, respectively, in the Statement of Operations. 17 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED) continued Certain officers and trustees of the Trust are also officers and directors of Van Kampen. The Trust does not compensate its officers or trustees who are officers of Van Kampen. The Trust provides deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation to a later date. Benefits under the retirement plan are payable upon retirement for a ten-year period and are based upon each trustee's years of service to the Trust. The maximum annual benefit per trustee under the plan is $2,500. 3. CAPITAL TRANSACTIONS At April 30, 2004 and October 31, 2003, paid in surplus related to common shares aggregated $68,747,251 and $68,611,189, respectively. Transactions in common shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 2004 OCTOBER 31, 2003 Beginning Shares........................................ 4,667,882 4,666,320 --------- --------- Shares Issued Through Dividend Reinvestment............. 8,291 1,562 --------- --------- Ending Shares........................................... 4,676,173 4,667,882 ========= =========
4. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $5,419,590 and $3,447,145, respectively. 5. PREFERRED SHARES As of April 30, 2004, the Trust has outstanding 1,800 Auction Preferred Shares ("APS"). Dividends are cumulative and the dividend rate is currently reset every 28 days through an auction process. The rate in effect on April 30, 2004 was 1.030%. During the six months ended April 30, 2004, rates ranged from 0.899% to 1.300%. The Trust pays annual fees equivalent to .25% of the preferred share liquidation value for the remarketing efforts associated with the preferred auctions. These fees are included as a component of "Preferred Share Maintenance" expense in the Statement of Operations. The APS are redeemable at the option of the Trust in whole or in part at the liquidation value of $25,000 per share plus accumulated and unpaid dividends. The Trust is subject to certain asset coverage tests and the APS are subject to mandatory redemption if the tests are not met. 18 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS 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 19 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS DIVIDEND REINVESTMENT PLAN continued 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 20 VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS BOARD OF TRUSTEES AND IMPORTANT ADDRESSES BOARD OF TRUSTEES DAVID C. ARCH J. MILES BRANAGAN JERRY D. CHOATE ROD DAMMEYER LINDA HUTTON HEAGY R. CRAIG KENNEDY HOWARD J KERR MITCHELL M. MERIN* JACK E. NELSON RICHARD F. POWERS, III* HUGO F. SONNENSCHEIN WAYNE W. WHALEN* - Chairman SUZANNE H. WOOLSEY INVESTMENT ADVISER VAN KAMPEN ASSET MANAGEMENT 1221 Avenue of the Americas New York, New York 10020 CUSTODIAN AND TRANSFER AGENT STATE STREET BANK AND TRUST COMPANY c/o EquiServe P.O. Box 43011 Providence, Rhode Island 02940-3011 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT AUDITORS DELOITTE & TOUCHE LLP 180 North Stetson Avenue Chicago, Illinois 60601 * "Interested persons" of the Trust, as defined in the Investment Company Act of 1940, as amended. 21 Van Kampen Privacy Notice The Van Kampen companies and investment products* respect your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain nonpublic personal information about you. This is information we collect from you on applications or other forms, and from the transactions you conduct with us, our affiliates, or third parties. We may also collect information you provide when using our Web site, and text files (also known as "cookies") may be placed on your computer to help us to recognize you and to facilitate transactions you initiate. We do not disclose any nonpublic personal information about you or any of our former customers to anyone, except as permitted by law. For instance, so that we may continue to offer you Van Kampen investment products and services that meet your investing needs, and to effect transactions that you request or authorize, we may disclose the information we collect to companies that perform services on our behalf, such as printers and mailers that assist us in the distribution of investor materials. These companies will use this information only for the services for which we hired them, and are not permitted to use or share this information for any other purpose. To protect your nonpublic personal information internally, we permit access to it only by authorized employees, and maintain physical, electronic and procedural safeguards to guard your nonpublic personal information. * Includes Van Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc., Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the many Van Kampen mutual funds and Van Kampen unit investment trusts. Van Kampen Funds Inc. 1 Parkview Plaza, P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com (VAN KAMPEN INVESTMENTS LOGO) Copyright (C)2004 Van Kampen Funds Inc. All rights reserved. Member NASD/SIPC. VIC SAR 6/04 RN04-00742P-Y04/04 Item 2. Code of Ethics. Not applicable for semi-annual reports. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semi-annual reports. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. [Reserved.] Item 9. Controls and Procedures (a) The Trust's principal executive officer and principal financial officer have concluded that the Trust's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a) Code of Ethics - Not applicable for semi-annual reports. (b)(1) A certification for the Principal Executive Officer of the registrant is attached hereto as part of EX-99.CERT. (b)(2) A certification for the Principal Financial Officer of the registrant is attached hereto as part of EX-99.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Van Kampen Trust For Investment Grade California Municipals By: /s/ Ronald E. Robison ----------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 22, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Ronald E. Robison ----------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 22, 2004 By: /s/ John L. Sullivan ----------------------- Name: John L. Sullivan Title: Principal Financial Officer Date: June 22, 2004