<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 5
Portfolio of Investments......................... 6
Statement of Assets and Liabilities.............. 11
Statement of Operations.......................... 12
Statement of Changes in Net Assets............... 13
Financial Highlights............................. 14
Notes to Financial Statements.................... 15
Report of Independent Accountants................ 19
Dividend Reinvestment Plan....................... 20
</TABLE>
VQC ANR 10/97
<PAGE> 2
LETTER TO SHAREHOLDERS
September 25, 1997
Dear Shareholder,
As you know, Van Kampen American
Capital was acquired by Morgan Stanley
Group Inc., paving the way for the
development of a prominent global
financial services company. More
recently, Morgan Stanley Group Inc. and [PHOTO]
Dean Witter, Discover & Co. agreed to
merge. The merger was completed on May DENNIS J. MCDONNELL AND DON G. POWELL
31, 1997, creating the combined company
of Morgan Stanley, Dean Witter,
Discover & Co. This preeminent global
financial services firm boasts a market capitalization of approximately $34
billion and leading market positions in securities, asset management, and credit
services. Additionally, I am very pleased to announce that Philip N. Duff,
formerly the chief financial officer of Morgan Stanley Group Inc., has joined
Van Kampen American Capital as president and chief executive officer. I will
continue as chairman of the firm. We are confident that the partnership of Van
Kampen American Capital and Morgan Stanley, Dean Witter, Discover & Co. will
continue to work to the benefit of our fund shareholders as we move into the
next century.
ECONOMIC REVIEW
Stability and growth continued to characterize the U.S. economic environment
during the past 12 months. In the first quarter of 1997, the economy accelerated
at its fastest pace since 1987. Consumer confidence remained high, and
unemployment fell to 4.9 percent at the end of August, one of the lowest levels
since 1973.
Despite this vigorous pace of economic growth, there were few signs of
inflation. Wholesale prices fell during each of the first seven months of 1997,
while at the consumer level, prices rose by a mere 2.2 percent during the 12
months through August. The strength of the U.S. dollar also helped curb
inflation by making imported goods less costly.
Meanwhile, on the state level, California's economy also continued to
experience solid growth. The seasonally adjusted unemployment rate fell to 6.4
percent of the labor force in May, the lowest for the state since September of
1990. While the state's new fiscal year began on July 1 without a budget in
place, the fiscal picture looks bright. The state is running a large surplus,
and is preparing to take on large-scale capital projects once again.
MARKET REVIEW
The bond market responded positively during most of the reporting period.
The rally that began in May of 1996 continued through year end. This situation,
however, reversed in early 1997. With the economy picking up speed and
cautionary remarks by Federal Reserve Chairman Alan Greenspan about tighter
monetary policy, inflationary fears were ignited and interest rates began to
rise. When the Fed raised short-term interest rates by
Continued on page two
1
<PAGE> 3
a modest 0.25 percent in March, interest rates peaked and then began to decline
in April as inflationary fears abated.
During the reporting period, tax-exempt interest rates declined overall. On
August 31, 1997, 30-year AAA-rated municipal securities offered a tax-exempt
yield of 5.30 percent, compared to 5.71 percent one year ago. In comparison, the
30-year Treasury bond yielded 6.61 percent as of August 31, 1997 versus 7.11
percent as of August 31, 1996. The ratio of municipal yields to Treasury yields
remained at an attractive level during the period despite a slight drop from
80.3 percent on August 31, 1996 to 80.2 percent on August 31, 1997.
The most significant trend in the municipal market has been the increasing
number of insured AAA-rated bonds that are coming to market. Credit spreads have
narrowed dramatically due to an 18.1 percent increase in new insured bond
issuance during the first eight months of 1997. Proposition 218 has also made a
significant impact on the California municipal market. As anticipated, this has
led to a lower new issue volume (down 23 percent from the same period a year
ago), and higher prices as demand for this specialty state paper remains high.
TRUST STRATEGY
We employed the following strategies to manage the portfolio during the 12-month
period:
- - We maintained a "barbell" approach in the credit quality of the portfolio
with concentrations in AAA-rated and lower-rated holdings. At the end of the
reporting period, 51.6 percent of the Trust's long-term investments were
AAA-rated, and 24.2 percent of long-term investments were BBB-rated or
non-rated (with an internal investment grade rating, as rated by our
analysts, at the time of purchase). We believe this strategy will help to
reduce the volatility associated with interest rate movements. Securities
rated AAA provide safety of principal and total return opportunities, while
lower-rated securities provide the potential for a higher degree of income
and generally exhibit less price movement when interest rates change.
[PIE CHARTS]
Portfolio Composition by Credit Quality
as of August 31, 1997*
<TABLE>
<S> <C>
AAA.................... 51.6%
AA..................... 2.5%
A...................... 20.5%
BBB.................... 9.8%
BB..................... 1.2%
Non-Rated.............. 14.4%
</TABLE>
Continued on page three
2
<PAGE> 4
- - We adjusted the portfolio's duration to 7.14 years on August 31, 1997, based
on our interest rate outlook. Duration, expressed in years, is a measurement
of the Trust's volatility to interest rate movements. Portfolios with
shorter durations have tended to perform better when interest rates rise,
while funds with longer durations have tended to outperform when interest
rates decline. In anticipation that the Fed would raise rates in March, we
shortened the duration. When rates declined after the March up-tick, we
lengthened the duration. Our interest rate outlook at the end of the
reporting period moved to a more neutral stance.
- - Our municipal research capabilities added significant value in the
identification of lower-rated securities that have strong upside potential
and could boost the dividend-paying ability of the fund. For example, during
the period we purchased several non-rated issues such as Needles Public
Utility Authority at a yield of 6.70 percent and Borrego Water District at a
yield of 7.00 percent.
We took advantage of the attractive yields on AAA-rated offerings to sell
several existing holdings with short calls and invested in comparable quality
securities with better call protection. Extending the call protection of the
portfolio may help reduce reinvestment risk.
[BAR GRAPH]
Twelve-month Distribution History
For the Period Ended August 31, 1997
<TABLE>
<CAPTION>
Distribution per Common Share
Capital Gains Dividends
<S> <C> <C>
Sep 1996........................... $.0875
Oct 1996........................... $.0875
Nov 1996........................... $.0875
Dec 1996........................... $.07179 $.0875
Jan 1997........................... $.0875
Feb 1997........................... $.0875
Mar 1997........................... $.0825
Apr 1997........................... $.0825
May 1997........................... $.0825
Jun 1997........................... $.0825
Jul 1997........................... $.0825
Aug 1997........................... $.0825
</TABLE>
The dividend capital gains history represents past performance of the Trust and
does not predict the Trust's future distributions.
PERFORMANCE SUMMARY
The Van Kampen American Capital California Quality Municipal Trust continued
its positive performance during the fiscal year. For the year ended August 31,
1997, the Trust generated a total return at market price of 11.45 percent(1),
including reinvestment of income dividends totaling $1.02 per common share and
long-term capital gain of $0.07179 per common share. The Trust offered a
tax-exempt distribution rate of 5.89 percent(3), based on the closing common
stock price of $16.8125 per share on August 31, 1997. Because income from the
Trust is exempt from federal and California
Continued on page four
3
<PAGE> 5
state income tax, this distribution rate represents a yield equivalent to a tax
investment earning 10.33 percent(4) (for investors in the 43 percent combined
federal and state income tax bracket). At the end of the reporting period, the
closing share price of the Trust traded at a 1.57 percent discount to its net
asset value of $17.08.
TOP 5 PORTFOLIO INDUSTRY HOLDINGS BY SECTOR*
<TABLE>
<CAPTION>
AS OF
AUGUST 31, 1997
<S> <C>
General Purpose............................................. 18.3%
Tax District................................................ 10.6%
Public Building............................................. 10.4%
Retail Electric/Gas/Telephone............................... 10.4%
Health Care................................................. 10.0%
</TABLE>
*As a Percentage of Long-Term Investments
OUTLOOK
We expect the pace of economic activity for the remainder of 1997 to
accelerate modestly from the relatively pedestrian rate that prevailed during
the second quarter. While we do not believe that economic growth will be rapid
enough to reignite inflation, some warning signs are present, including a tight
labor market and high consumer confidence. However, our long-term interest rate
outlook remains bullish.
We believe the Trust is positioned to perform well and do not anticipate
making major changes to the structure of the portfolio. Our portfolio management
team continues to seek a balance between the Trust's total return and its
dividend income, as well as add value through security selection. The Trust
continues to benefit from its leveraged capital structure, which provides common
shareholders with above-market levels of dividend income. It should be noted,
however, that a significant rise in short-term interest rates would have an
unfavorable effect on the dividend-paying ability of the common shares, and
would also negatively impact the price.
We encourage investors to take this opportunity to consider how their
investments are currently divided among the three major asset classes of stocks,
bonds, and cash. Uneven moves in the various markets can distort a carefully
planned investment program. We encourage you to review your portfolio with an
eye toward correcting imbalances in the way assets have grown to be allocated.
Once again, we appreciate your continued confidence in your Van Kampen
American Capital investments and the team who manages your Trust.
Sincerely,
[sig]
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
[sig]
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
Please see footnotes on page five
4
<PAGE> 6
PERFORMANCE RESULTS FOR THE PERIOD ENDED AUGUST 31, 1997
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
(NYSE TICKER SYMBOL--VQC)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
One-year total return based on market price(1)............ 11.45%
One-year total return based on NAV(2)..................... 11.96%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3).................................................. 5.89%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 10.33%
SHARE VALUATIONS
Net asset value........................................... $ 17.08
Closing common stock price................................ $16.8125
One-year high common stock price (08/19/97)............... $16.9375
One-year low common stock price (04/17/97)................ $15.2500
Preferred share rate(5)................................... 3.000%
</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 43%
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.
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
CALIFORNIA 94.4%
$ 2,100 Alameda, CA Pub Fin Auth Rev Marina Vlg Assmt
Dist Rfdg....................................... 6.375% 09/02/14 $ 2,146,536
1,000 Bakersfield, CA Ctfs Partn Convention Cent
Expansion Proj (MBIA Insd)...................... 5.875 04/01/22 1,029,740
1,610 Blythe, CA Redev Agy Redev Proj No 1 Tax Alloc
Ser A Rfdg...................................... 7.500 05/01/23 1,810,960
1,055 Borrego, CA Wtr Dist Ctfs Partn Wtr Sys
Acquisition..................................... 7.000 04/01/27 1,093,919
1,000 California Edl Fac Auth Rev Pooled Coll & Univ
Projs B......................................... 6.125 04/01/13 1,036,480
2,000 California Edl Fac Auth Rev Student Ln CA Ln Pgm
Ser A (MBIA Insd)............................... 6.000 03/01/16 2,045,040
2,000 California Edl Fac Auth Rev Univ of La Verne.... 6.375 04/01/13 2,082,100
1,800 California Hlth Fac Fin Auth Rev Kaiser
Permanente Ser A................................ 7.000 12/01/10 1,977,354
1,000 California Hsg Fin Agy Rev Home Mtg Ser B (MBIA
Insd)........................................... 6.100 02/01/28 1,028,960
1,000 California Hsg Fin Agy Rev Home Mtg Ser E (AMBAC
Insd)........................................... 6.100 08/01/29 1,029,850
1,925 California Hsg Fin Agy Rev Home Mtg Ser E (FHA
Gtd)............................................ 8.350 08/01/19 1,993,029
1,090 California Hsg Fin Agy Rev Home Mtg Ser F (FHA
Gtd)............................................ 6.750 08/01/11 1,143,432
2,120 California Hsg Fin Agy Rev Insd Hsg Ser E (MBIA
Insd)........................................... 7.000 08/01/26 2,233,780
3,000 California Hsg Fin Agy Rev Multi-Unit Rental Hsg
Ser C II........................................ 6.850 08/01/15 3,144,270
8,190 California Hsg Fin Agy Rev Multi-Unit Rental Hsg
Ser C II........................................ 6.875 08/01/24 8,581,154
10,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southern CA Edison Co (Embedded Cap) (AMBAC
Insd)........................................... 6.000 07/01/27 10,240,900
4,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southern CA Edison Co Ser B (AMBAC Insd)........ 6.400 12/01/24 4,269,400
7,800 California Pollutn Ctl Fin Auth Solid Waste Disp
Rev North Cnty Recycling Ser A (Prerefunded @
07/01/04)....................................... 6.750 07/01/17 8,916,414
1,000 California Rural Home Mtg Fin Mtg Backed Secs
Pgm Ser C (GNMA Collateralized) (a)............. 6.40/7.80 02/01/28 1,120,730
1,000 California St (AMBAC Insd)...................... 6.200 02/01/16 1,027,390
3,655 California St Cpn Muni Rcpts.................... * 03/01/08 2,186,713
3,655 California St Cpn Muni Rcpts.................... * 09/01/09 1,992,012
9,600 California St Prin Muni Rcpts................... * 09/01/09 5,232,096
1,125 California Statewide Cmntys Dev Auth Rev Ctfs
Partn Saint Joseph Hlth (AMBAC Insd)............ 6.100 07/01/07 1,228,342
9,000 California Statewide Cmntys Dev Corp Ctfs Partn
Insd United Westn Med Cent (Prerefunded @
12/01/01)....................................... 6.750 12/01/21 10,045,260
3,500 Capistrano, CA Unified Sch Dist Cmnty Fac Dist
Spl Tax No 87-1 (Prerefunded @ 10/01/00)........ 8.375 10/01/20 3,994,165
1,580 Carson, CA Impt Bond Act 1915 Assmt Dist No
92-1............................................ 7.375 09/02/22 1,713,052
1,000 Central Contra Costa, CA Santn Dist Rev Wastewtr
Fac Impt Proj (MBIA Insd)....................... 6.250 09/01/11 1,093,480
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 1,940 Central San Joaquin Vly, CA Risk Mgmt Auth Rev
Pooled Workers C................................ * 02/01/99 $ 1,823,678
2,000 Central San Joaquin Vly, CA Risk Mgmt Auth Rev
Pooled Workers C................................ * 08/01/99 1,839,660
1,895 Central San Joaquin Vly, CA Risk Mgmt Auth Rev
Pooled Workers C................................ * 02/01/00 1,701,558
2,055 Central San Joaquin Vly, CA Risk Mgmt Auth Rev
Pooled Workers C................................ * 02/01/01 1,759,101
2,635 Chula Vista, CA Redev Agy Tax Alloc Sr Bayfront
Ser D Rfdg...................................... 8.625% 09/01/24 3,205,899
2,000 Contra Costa Cnty, CA Ctfs Partn Merrithew Mem
Hosp Proj Rfdg (MBIA Insd)...................... 5.500 11/01/22 1,986,360
1,176 Contra Costa Cnty, CA Multi-Family Hsg Rev
Crescent Park Apts Proj Ser B (GNMA
Collateralized)................................. 7.800 12/20/14 1,323,517
1,000 Contra Costa Cnty, CA Pub Fin Auth Tax Alloc Rev
Ser A........................................... 7.100 08/01/22 1,088,410
1,000 Davis, CA Pub Fac Fin Auth Loc Agcy Rev Mace
Ranch Area Ser A (b)............................ 6.500 09/01/15 999,990
1,935 Delano, CA Ctfs Partn Ser A..................... 9.250 01/01/22 2,261,512
1,000 Duarte, CA Redev Agcy Tax Alloc Davis Addition
Proj Area Rfdg.................................. 6.700 09/01/14 1,029,940
925 Fairfield, CA Hsg Auth Mtg Rev Creekside Estates
Proj Rfdg....................................... 7.875 02/01/15 955,951
6,000 Foothill/Eastern Tran Agy Cap Apprec Sr Lien Ser
A............................................... * 01/01/27 1,051,500
2,000 Foothill/Eastern Tran Agy Conv Cap Apprec Sr
Lien Ser A (a).................................. 0/7.050 01/01/10 1,393,820
1,500 Huntington Beach, CA Pub Fin Auth Rev Huntington
Beach Redev Proj................................ 7.000 08/01/24 1,528,140
665 Inglewood, CA Redev Agy Tax Alloc Century Redev
Proj Ser A...................................... 6.125 07/01/23 679,238
3,205 Lompoc, CA Wtr & Wastewtr Impts Fin Auth Rev Wtr
& Wastewtr Sys Fin Proj Ser A (MBIA Insd)....... 6.700 03/01/22 3,517,295
5,000 Long Beach, CA Harbor Rev Ser A (MBIA Insd)..... 7.375 05/15/09 5,203,300
1,000 Long Beach, CA Harbor Rev Ser A (MBIA Insd)..... 7.250 05/15/19 1,039,800
7,000 Los Angeles Cnty, CA Ctfs Partn................. 6.600 11/01/11 7,421,540
12,000 Los Angeles Cnty, CA Pension Oblig Ctfs Ltd Muni
Oblig Ser A (MBIA Insd) (c)..................... 6.900 06/30/08 14,175,840
1,795 Los Angeles, CA Cmnty Redev Agy Ctfs Partn
Allright Garage (Prerefunded @ 05/01/03)........ 7.550 11/01/08 2,037,792
2,500 Los Angeles, CA Multi-Family Rev Hsg Earthquake
Rehab Proj Ser A (FNMA Insd).................... 5.700 12/01/27 2,601,075
1,780 Los Angeles, CA Single Family Home Mtg Rev Pgm
Ser A (GNMA Collateralized)..................... 6.875 06/01/25 1,870,424
495 Mendota & Parlier, CA Unified Sch Dist Ctfs
Partn Cap Outlay Fin Pgm........................ 7.400 01/01/06 504,440
120 Mendota & Parlier, CA Unified Sch Dist Ctfs
Partn Cap Outlay Fin Pgm........................ 7.500 01/01/11 122,095
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 610 Mendota & Parlier, CA Unified Sch Dist Ctfs
Partn Cap Outlay Fin Pgm........................ 7.550% 01/01/17 $ 619,040
1,000 Metropolitan Wtr Dist Southn CA Wtrwks Rev Ser
C............................................... 5.000 07/01/37 928,580
1,000 Montebello, CA Unified Sch Dist Ctfs Partn Cap
Impts Proj...................................... 6.300 06/01/11 1,045,360
2,490 Mount Diablo, CA Hosp Dist Rev Ser A (Embedded
Cap) (AMBAC Insd)............................... 5.125 12/01/23 2,368,812
2,000 Needles, CA Pub Util Auth Util Sys Acquisition
Proj Ser A...................................... 6.500 02/01/22 2,051,260
1,535 Newport Beach, CA Spl Tax Spl Impt Dist No 95-1
Ser A........................................... 6.750 09/01/20 1,627,775
2,000 Oakland, CA Unified Sch Dist Alameda Cnty Ctfs
Partn Energy Retrofit Proj...................... 6.750 11/15/14 2,075,460
1,000 Oakland, CA Unified Sch Dist Almeda Cnty Ctfs
Partn........................................... 7.000 05/15/11 1,105,830
2,000 Orange Cnty, CA Recovery Ser A Rfdg (MBIA
Insd)........................................... 5.750 06/01/15 2,049,300
6,000 Paramount, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Ser B (MBIA Insd)..................... * 08/01/26 910,080
1,500 Pasadena, CA Spl Tax Cmnty Fac Dist No 1 Civic
Cent West....................................... * 12/01/07 760,965
2,000 Pasadena, CA Spl Tax Cmnty Fac Dist No 1 Civic
Cent West....................................... * 12/01/17 463,160
1,000 Port of Oakland, CA Spl Fac Rev Mitsui O.S.K.
Line Ltd Ser A.................................. 6.800 01/01/19 1,077,830
1,230 Redding, CA Redev Agy Tax Alloc Market Street
Redev Proj Ser A................................ 6.700 09/01/23 1,327,195
1,000 Redondo Beach, CA Pub Fin Auth Rev South Bay Ctr
Redev Proj...................................... 7.000 07/01/16 1,087,500
2,000 Richmond, CA Rev YMCA East Bay Proj Rfdg........ 7.250 06/01/17 2,141,860
5,000 Sacramento, CA City Fin Auth Rev (Prerefunded @
11/01/01)....................................... 6.800 11/01/20 5,591,800
1,000 San Bernardino Cnty, CA Ctfs Partn Med Cent Fin
Proj (MBIA Insd)................................ 5.000 08/01/28 928,820
6,000 San Diego Cnty, CA Wtr Auth Wtr Rev Ctfs Partn
Ser 91 B (Inverse Fltg) (MBIA Insd)............. 8.620 04/08/21 6,885,000
2,650 San Diego, CA Indl Dev Rev San Diego Gas & Elec
Ser A (MBIA Insd)............................... 6.400 09/01/18 2,878,483
5,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec
Ser A (AMBAC Insd).............................. 6.100 09/01/19 5,264,450
1,000 San Francisco, CA City & Cnty Arpt Comm Intl
Arpt Rev Second Ser Issue 12-A (FGIC Insd)...... 5.800 05/01/21 1,012,460
2,305 San Francisco, CA City & Cnty Redev Agy Hotel
Tax Rev (FSA Insd).............................. 6.750 07/01/15 2,587,478
5,000 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone.............................. * 07/01/08 2,881,450
3,520 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone.............................. * 07/01/09 1,890,557
4,250 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone.............................. * 07/01/12 1,891,675
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 2,130 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone.............................. * 07/01/14 $ 836,259
800 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone (FSA Insd)................... 6.750% 07/01/15 898,040
1,000 San Jose, CA Arpt Rev (AMBAC Insd).............. 7.500 03/01/18 1,035,650
1,000 San Jose, CA Single Family Mtg Rev Cap Apprec
Ser A........................................... * 04/01/16 356,580
2,905 San Jose, CA Unified Sch Dist Santa Clara Cnty
Ser A (FGIC Insd)............................... * 08/01/20 808,200
1,000 Santa Ana, CA Multi-Family Hsg Rev Villa Del Sol
Apts Ser B (FNMA Insd).......................... 5.650 11/01/21 1,037,370
1,000 Santa Clara Cnty, CA Fin Auth Lease Rev VMC Fac
Replacement Proj Ser A (AMBAC Insd)............. 6.875 11/15/14 1,134,740
1,000 Santa Clara, CA Impt Bond Act 1915 Assmt Dist
187 Ser 1996-1.................................. 7.000 09/02/11 1,032,710
2,000 Santa Clarita, CA Cmnty Fac Dist Spl Tax No 92-1
Ser A........................................... 7.450 11/15/10 2,153,540
1,760 Southern CA Home Fin Auth Single Family Mtg Rev
Pgm B (GNMA Collateralized)..................... 6.900 10/01/24 1,854,318
5,000 Southern CA Pub Pwr Auth Pwr Proj Rev
Multi-Projs..................................... 6.750 07/01/12 5,816,800
1,000 Stockton, CA South Stockton Cmnty Facs Dist Spl
Tax No 90-1 Rfdg................................ 6.400 09/01/15 1,027,490
2,750 Tulare, CA Loc Hosp Dist Hlth Fac Rev Ser A..... 6.750 12/01/21 2,967,910
2,785 Yolo Cnty, CA Hsg Auth Mtg Rev Mtg Waggener
Ranch Proj (FHA Gtd)............................ 7.000 10/01/33 2,906,872
------------
225,877,092
------------
GUAM 0.5%
1,000 Guam Arpt Auth Rev Ser B........................ 6.700 10/01/23 1,069,250
------------
PUERTO RICO 1.1%
943 Centro De Recaudaciones De Ingresos Muni Ctfs
Partn........................................... 6.850% 10/17/03 978,347
1,580 Puerto Rico Hsg Fin Single Family Mtg Rev
Portfolio 1 C (GNMA Collateralized)............. 6.850 10/15/23 1,664,246
------------
2,642,593
------------
U.S. VIRGIN ISLANDS 3.1%
6,750 Virgin Islands Pub Fin Auth Rev Matching Fd Ln
Nts Ser A Rfdg.................................. 7.250 10/01/18 7,513,425
------------
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Market Value
- ----------------------------------------------------------------------------------------------
<S> <C>
TOTAL LONG-TERM INVESTMENTS 99.1%
(Cost $216,792,020)........................................................... $237,102,360
TOTAL SHORT-TERM INVESTMENTS 0.1%
(Cost $300,000)............................................................... 300,000
------------
TOTAL INVESTMENTS 99.2%
(Cost $217,092,020)........................................................... 237,402,360
OTHER ASSETS IN EXCESS OF LIABILITIES 0.8%..................................... 1,994,701
------------
NET ASSETS 100.0%.............................................................. $239,397,061
============
</TABLE>
*Zero coupon bond
(a) Security is a "step up" bond where the coupon increases step up at a
predetermined date.
(b) Securities purchased on a when issued or delayed delivery basis.
(c) Assets segregated as collateral for when issued or delayed delivery purchase
commitments.
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $217,092,020)....................... $237,402,360
Receivables:
Interest.................................................. 3,447,126
Investments Sold.......................................... 183,450
Other....................................................... 1,692
------------
Total Assets.......................................... 241,034,628
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 1,000,542
Income Distributions--Common and Preferred Shares......... 178,337
Investment Advisory Fee................................... 142,770
Custodian Bank............................................ 68,556
Administrative Fee........................................ 40,791
Affiliates................................................ 9,456
Accrued Expenses............................................ 126,270
Deferred Compensation and Retirement Plans.................. 70,845
------------
Total Liabilities..................................... 1,637,567
------------
NET ASSETS.................................................. $239,397,061
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 1,500 issued with liquidation preference of
$50,000 per share)........................................ $ 75,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 9,623,295 shares issued and
outstanding).............................................. 96,233
Paid in Surplus............................................. 142,409,084
Net Unrealized Appreciation................................. 20,310,340
Accumulated Net Realized Gain............................... 810,428
Accumulated Undistributed Net Investment Income............. 770,976
------------
Net Assets Applicable to Common Shares................ 164,397,061
------------
NET ASSETS.................................................. $239,397,061
============
NET ASSET VALUE PER COMMON SHARE ($164,397,061 divided
by 9,623,295 shares outstanding).......................... $ 17.08
============
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $14,737,239
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,650,287
Administrative Fee.......................................... 471,510
Preferred Share Maintenance................................. 205,039
Trustees Fees and Expenses.................................. 26,164
Custody..................................................... 18,853
Legal....................................................... 6,929
Amortization of Organizational Costs........................ 428
Other....................................................... 207,297
-----------
Total Expenses........................................ 2,586,507
-----------
NET INVESTMENT INCOME....................................... $12,150,732
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 810,425
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 12,435,094
End of the Period......................................... 20,310,340
-----------
Net Unrealized Appreciation During the Period............... 7,875,246
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 8,685,671
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $20,836,403
===========
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended August 31, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, 1997 August 31, 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................. $ 12,150,732 $ 12,115,305
Net Realized Gain..................................... 810,425 1,920,906
Net Unrealized Appreciation During the Period......... 7,875,246 317,965
------------ ------------
Change in Net Assets from Operations.................. 20,836,403 14,354,176
------------ ------------
Distributions from Net Investment Income:
Common Shares....................................... (9,815,485) (10,104,222)
Preferred Shares.................................... (2,424,442) (2,753,746)
------------ ------------
(12,239,927) (12,857,968)
------------ ------------
Distributions from Net Realized Gain:
Common Shares....................................... (690,815) -0-
Preferred Shares.................................... (203,049) -0-
------------ ------------
(893,864) -0-
------------ ------------
Total Distributions................................... (13,133,791) (12,857,968)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES... 7,702,612 1,496,208
NET ASSETS:
Beginning of the Period............................... 231,694,449 230,198,241
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $770,976 and $860,171,
respectively)....................................... $239,397,061 $231,694,449
============ ============
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 27, 1991
(Commencement
Year Ended August 31 of Investment
------------------------------------------------- Operations) to
1997 1996 1995 1994 1993 August 31, 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period (a)............ $16.283 $16.127 $15.699 $17.454 $15.816 $14.805
------- ------- ------- ------- ------- -------
Net Investment Income.................. 1.263 1.259 1.269 1.286 1.305 1.038
Net Realized and Unrealized
Gain/Loss............................ .902 .233 .523 (1.693) 1.658 .870
------- ------- ------- ------- ------- -------
Total from Investment Operations........ 2.165 1.492 1.792 (.407) 2.963 1.908
------- ------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common Shareholders.......... 1.02 1.050 1.050 1.050 .981 .698
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders....................... .252 .286 .311 .235 .206 .199
Distributions from and in Excess of Net
Realized Gain:
Paid to Common Shareholders.......... .072 -0- .002 .054 .110 -0-
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders....................... .021 -0- .001 .009 .028 -0-
------- ------- ------- ------- ------- -------
Total Distributions..................... 1.365 1.336 1.364 1.348 1.325 .897
------- ------- ------- ------- ------- -------
Net Asset Value, End of the Period...... $17.083 $16.283 $16.127 $15.699 $17.454 $15.816
======= ======= ======= ======= ======= =======
Market Price Per Share at End of the
Period................................. $16.8125 $16.125 $15.000 $15.500 $16.750 $15.125
Total Investment Return at Market Price
(b).................................... 11.45% 14.89% 3.95% (.90%) 18.66% 5.69%*
Total Return at Net Asset Value (c)..... 11.96% 7.60% 10.02% (3.81%) 17.89% 11.80%*
Net Assets at End of the Period
(In millions).......................... $239.4 $231.7 $230.2 $226.1 $243.0 $227.2
Ratio of Expenses to Average Net Assets
Applicable to Common Shares............ 1.61% 1.64% 1.66% 1.62% 1.58% 1.55%
Ratio of Expenses to Average
Net Assets............................. 1.10% 1.11% 1.10% 1.10% 1.07% 1.09%
Ratio of Net Investment Income to
Average Net Assets Applicable to Common
Shares (d)............................. 6.05% 5.95% 6.22% 6.34% 6.70% 6.09%
Portfolio Turnover...................... 17% 10% 16% 7% 26% 93%*
</TABLE>
(a) Net Asset Value at September 27, 1991, is adjusted for common and preferred
share offering costs of $.195 per common share.
(b) 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.
(c) 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.
(d) Net investment income is adjusted for common share equivalent of
distributions paid to preferred shareholders.
* Non-Annualized
See Notes to Financial Statements
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital California Quality Municipal Trust (the "Trust") is
registered as a diversified closed-end management investment company under the
Investment Company Act of 1940, as amended. The Trust's investment objective is
to provide a high level of current income exempt from federal and California
income taxes consistent with preservation of capital. The Trust will invest in a
portfolio consisting substantially of California municipal obligations rated
investment grade at the time of investment, but may invest up to 20% of its
assets in unrated securities which are believed to be of comparable quality to
those rated investment grade. The Trust commenced investment operations on
September 27, 1991.
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--Investments are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with 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.
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
D. ORGANIZATIONAL COSTS--The Trust reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with the Trust's organization and initial registration in the amount
of $30,000. These costs were amortized on a straight line basis over the
60-month period ended September 26, 1996.
E. 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 August 31, 1997, for federal income tax purposes cost of long- and
short-term investments is $217,092,020; the aggregate gross unrealized
appreciation is $20,312,361 and the aggregate gross unrealized depreciation is
$2,021, resulting in net unrealized appreciation of $20,310,340.
F. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays dividends from
net investment income to common shareholders monthly. 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.
For the year ended August 31, 1997, 99.9% of the income distributions made
by the Trust were exempt from federal income taxes. Additionally, during the
period, the Trust paid long-term capital gains of $893,864. In January, 1998,
the Trust will provide tax information to shareholders for the 1997 calendar
year.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
American Capital Investment Advisory Corp. (the "Adviser") will provide
investment advice and facilities to the Trust for an annual fee payable monthly
of .70% of the average net assets of the Trust. In addition, the Trust will pay
a monthly administrative fee to VKAC, the Trust's Administrator, at an annual
rate of .20% of the average net assets of the Trust. The administrative services
provided by the Administrator include record keeping and reporting
responsibilities with respect to the Trust's portfolio and preferred shares and
providing certain services to shareholders.
For the year ended August 31, 1997, the Trust recognized expenses of
approximately $9,500 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.
16
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
For the year ended August 31, 1997, the Trust recognized expenses of
approximately $78,800 representing VKAC's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of VKAC. The Trust does not compensate its officers or trustees who are officers
of VKAC.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Trust. The maximum annual
benefit under the plan is equal to the trustee's annual retainer fee, which is
currently $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $39,406,642 and $40,352,373,
respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio and to manage the portfolio's effective yield, maturity and duration.
All of the Trust's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in the unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly.
The following types of Indexed Securities are identified in the portfolio of
investments. The price of these securities may be more volatile than the price
of a comparable fixed rate security.
A. An Inverse Floating security is one where the coupon is inversely indexed
to a short-term floating interest rate multiplied by a specified factor. As the
floating rate rises, the coupon is reduced. Conversely, as the floating rate
declines, the coupon is increased. These instruments are typically used by the
Trust to enhance the yield of the portfolio.
B. An Embedded Cap security includes a cap strike level such that the coupon
payment may be supplemented by cap payments if the floating rate index upon
which the cap is based rises above the strike level. The Trust invests in these
instruments as a hedge against a rise in the short-term interest rates which it
pays on its preferred shares.
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
5. PREFERRED SHARES
The Trust has outstanding 1,500 shares of Auction Preferred Shares ("APS").
Dividends are cumulative and the rate is reset through an auction process every
28 days. The rate in effect on August 31, 1997, was 3.00% and for the year then
ended rates ranged from 3.00% to 4.75%.
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 APS 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 APS are subject to
mandatory redemptions if the tests are not met.
18
<PAGE> 20
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Trustees and Shareholders of
Van Kampen American Capital California Quality Municipal Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen American Capital California Quality Municipal Trust (the "Trust"),
including the portfolio of investments, as of August 31, 1997, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1997, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen American Capital California Quality Municipal Trust as of August 31,
1997, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
October 8, 1997
19
<PAGE> 21
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
changes 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
prorata 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 American Capital
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
20
<PAGE> 22
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*--Chairman
THEODORE A. MYERS
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
Vice President
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
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 PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in the Investment Company Act
of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1997
All rights reserved.
(SM) denotes a service mark of
Van Kampen American Capital Distributors, Inc.
RESULTS OF SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Trust was held on May 28, 1997,
where shareholders voted on a new investment advisory agreement, the election of
Trustees and the selection of independent public accountants. With regard to the
approval of a new investment advisory agreement between Van Kampen American
Capital Investment Advisory Corp. and the Trust, 7,927,159 shares voted for the
proposal, 119,533 shares voted against, 210,336 shares abstained and 0 shares
represented broker non-votes. With regard to the election of Rod Dammeyer as
elected trustee by the preferred shareholders of the Trust 1,374 shares voted in
his favor and 0 shares withheld. With regard to the election of Wayne W. Whalen
as elected trustee by the common shareholders of the Trust 8,116,084 shares
voted in his favor and 139,569 shares withheld. The other trustees of the Fund
whose terms did not expire in 1997 are Dennis J. McDonnell, Theodore A. Myers,
Hugo Sonnenschein, David C. Arch and Howard J. Kerr. With regard to the
ratification of KPMG Peat Marwick LLP as independent public accountants for the
Trust, 8,128,631 shares voted in favor of the proposal, 32,428 shares votes
against, 95,968 shares abstained and 0 shares represented broker non-votes.
21
