<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 6
Portfolio of Investments......................... 7
Statement of Assets and Liabilities.............. 12
Statement of Operations.......................... 13
Statement of Changes in Net Assets............... 14
Financial Highlights............................. 15
Notes to Financial Statements.................... 16
Dividend Reinvestment Plan....................... 20
</TABLE>
VQC SAR 4/98
<PAGE> 2
LETTER TO SHAREHOLDERS
March 23, 1998
Dear Shareholder,
The new year ushered in what
promises to be an exciting and
challenging time for investors. The
Taxpayer Relief Act of 1997, signed
into law by President Clinton in
August, creates many new opportunities [PHOTO]
for you and your family to take a more
active role in achieving your long-term
financial goals.
Most Americans will benefit from DENNIS J. MCDONNELL AND DON G. POWELL
the bill's $95 billion in tax cuts over
five years. The so-called Kiddie Credit
gives parents $400 in immediate tax relief for every child under age 17, and
families will find it easier to save for their children's college expenses with
the new Education IRA. The bill also cuts capital gains tax rates for the first
time in more than a decade and loosens restrictions on tax-deductible IRA
contributions. Perhaps the most exciting feature is the new Roth IRA, which
allows investment earnings to grow tax free, not just tax deferred.
This year, more than ever, it could be important for you to talk with your
financial adviser about how to make the tax code work to your advantage. At Van
Kampen American Capital, we have prepared a variety of publications to help you
understand your choices under the new tax legislation. And with the help of your
adviser, we'll help you locate the many benefits hidden among the changing tax
landscape.
ECONOMIC REVIEW
The U.S. economy sustained its forward momentum throughout 1997, growing at
a moderate rate of 3.8 percent, as measured in terms of gross domestic product.
Despite this continuing growth trend, inflation not only remained low but was on
a decline.
Nevertheless, market watchers remained alert for signs of surging prices.
One cause of concern was the extremely tight labor market. The percentage of
unemployed Americans fell to a 24-year low of 4.6 percent in February, as the
strong economy created more jobs than expected and wages continued to rise. To
date, increased productivity has allowed the U.S. economy to absorb this
increase in the workforce without overheating or driving prices higher.
California's economy continued to expand during the reporting period with
gains in employment, a rebound in construction, and growth in the
high-technology and entertainment sectors. While the financial position of the
state has improved in the past year, structural pressures remain. In particular,
the economic crisis in Asia will likely slow the state's exports, as more than
half of California's exports go to Asia. Additionally, the state continues to
suffer the brutal weather effects of El Nino.
Continued on page two
1
<PAGE> 3
MARKET REVIEW
The bond market rally continued during the past six months, with both
taxable and tax-exempt yields gradually drifting downward with minimal
volatility. Bond prices move in the opposite direction of bond yields, so as
bond yields fell during the period, bond prices were on the rise. Thirty-year
Treasury yields declined from 6.61 percent on August 29, 1997 to 5.91 percent on
February 27, 1998. In addition, the crisis in Asia helped spark the domestic
bond market, as U.S. Treasuries enjoyed an increase in demand from both foreign
and U.S. investors.
As is typical during bond market rallies, municipal bond yields also
declined, although municipals did not perform as strongly as taxable bonds.
Heavy supply and low yield levels contributed to the weaker performance of the
municipal market. Generic general obligation 30-year AAA-rated municipal yields
dropped from 5.30 percent to 4.96 percent at the end of the period.
Credit spreads--the difference in yield between high-quality issues and
low-quality issues--remained extremely tight during the past six months. Under
normal circumstances, low-quality issues provide higher yields in order to
compensate investors for additional credit risk. In 1997, close to 49 percent of
newly issued municipal bonds were insured--causing a scarcity of
higher-yielding, lower-rated securities. This shortage, combined with low yields
in the municipal market, resulted in very narrow credit spreads.
Municipal yields continued to be very attractive compared to taxable yields.
For example, the Bond Buyer Revenue Bond Index, composed of 25 revenue bonds
with an average rating of single-A and an average maturity of 30 years, is
representative of the bonds we typically purchase for the Trust. The Index was
yielding 5.36 percent at the end of the reporting period, while the 30-year
Treasury bond was yielding 5.91 percent. In other words, the difference between
municipal bonds yields and long-term Treasury yields is historically very
narrow.
California continues to be one of the largest issuers of new bonds. Demand
for this specialty state paper remains very strong, keeping prices at levels
slightly higher than general market securities.
TRUST STRATEGY
We employed the following strategies in managing the Trust during the period:
- - At the inception of the Trust in 1991, we were able to invest the Trust's
initial assets in bonds with attractive coupons and yields, and many of
these securities remain in the portfolio today. These securities, with
coupons much higher than current market levels, are approaching their
10-year call date and are at risk of being either pre-refunded or called. If
this happens, we will need to replace them with new bonds at current lower
coupons.
To help minimize this risk as the call dates approach, we gradually reduced
the Trust's holdings of pre-refunded securities and replaced them with
longer-term discount securities or securities priced near face value. If the
bond market continues to rally, discount securities are more likely to rise
in price than premium securities.
Continued on page three
2
<PAGE> 4
TOP 5 PORTFOLIO INDUSTRY HOLDINGS BY SECTOR*
<TABLE>
<CAPTION>
AS OF
FEBRUARY 28, 1998
<S> <C>
General Purpose............................................. 16.2%
Public Building............................................. 11.0%
Multi-Family Housing........................................ 11.0%
Tax District................................................ 10.6%
Retail Electric/Gas/Telephone............................... 10.6%
</TABLE>
*As a Percentage of Long-Term Investments
- - Duration was also a major focus. At the end of the reporting period, the
duration of the portfolio stood at 7.12 years. Duration is a measurement
used to express the sensitivity of a bond's price to changes in interest
rates. Each year of duration represents an expected one-percent change in
the price of a bond for every one-percent change in interest rates.
Typically, funds with short durations perform better when interest rates are
rising, while funds with long durations perform better when rates are
declining. Our interest rate outlook, described in more detail below, is
moderately optimistic. However, lengthening the duration of the Trust would
significantly impact the dividend, so we will maintain a somewhat short
duration in order to support the Trust's high dividend.
- - Due to the narrow credit spreads between AAA-rated and lower-rated
offerings, most acquisitions during the period were AAA-rated, as these
securities provided more relative value. However, due to our research
experience, we were able to identify and purchase several non-insured issues
at attractive yields. Examples include California State Community
Development (Baa3/BB+) and Los Angeles Certificates of Participation
(Baa3/Non-Rated).
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality
as of February 28, 1998*
<TABLE>
<S> <C>
AAA ..................... 49.1%
AA ...................... 1.7%
A ....................... 21.4%
BBB ..................... 12.4%
BB ...................... 0.6%
Non-Rated ............... 14.8%
</TABLE>
* As a Percentage of Long-Term Investments
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's.
PERFORMANCE SUMMARY
For the six months ended February 28, 1998, the Van Kampen American Capital
California Quality Municipal Trust generated a total return at market price of
8.29 percent(1),
Continued on page four
3
<PAGE> 5
including reinvestment of income dividends totaling $.495 per share and capital
gains dividends of $.0675 per share. The Trust offered a tax-exempt distribution
rate of 5.62 percent(3), based on the closing common stock price of $17.625 per
share on February 28, 1998. Because income from the Trust is exempt from federal
income tax, this distribution rate represents a yield equivalent to a taxable
investment earning 9.69 percent(4) (for investors in the 42 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 .09 percent discount to its net
asset value of $17.64.
[DIVIDEND HISTORY GRAPH]
Six-month Distribution History
For the Period Ended February 28, 1998
<TABLE>
<CAPTION>
Dividends Capital Gains
<S> <C> <C>
Sep 1997................... $.0825
Oct 1997................... $.0825
Nov 1997................... $.0825
Dec 1997................... $.0825 $.0675
Jan 1998................... $.0825
Feb 1998................... $.0825
</TABLE>
The distribution history represents past performance of the Trust and does
not predict the Trust's future distributions.
OUTLOOK
We expect the U.S. economy and the demand for products and services to
remain strong in the coming months. However, the impact of the Asian financial
crisis is a looming question. The fallout from Asian currency devaluations in
late 1997 occurred at a time when the U.S. dollar was extremely strong against
most major foreign currencies. If Asia's purchasing power is sharply reduced due
to weakened currencies, analysts fear that U.S. export sales will slump. At the
same time, as Asian goods become cheaper relative to American goods, domestic
companies could face a period of price competition versus imported goods. Taken
together, these developments could cut into the earnings of U.S. corporations.
There is no debate that the Federal Reserve Board believes low inflation is
the ideal environment for the economy. Because inflation is low, it is unlikely
that the Fed will change short-term rates in the near future. While the Fed
continues to give credence to signs of economic strength, we believe it will
wait to determine the impact of the Asian situation before taking any action.
Longer term, interest rates need to be high enough to control economic growth.
With a focus on inflation rather than growth, the Fed will
Continued on page five
4
<PAGE> 6
probably take any necessary actions to keep inflation from rising. We will
expect a rate increase by the Fed only if there are signs of an acceleration in
inflation.
Regarding the municipal bond market, we believe yields will remain near
current levels through at least mid-summer. This will depend not only on the
general economy and the taxable bond market, but also tax-exempt bond supply and
demand levels. Given what we have seen this year, the market appears to be in a
solid equilibrium position, with strong demand to accommodate record municipal
supply.
We believe the Trust is positioned to perform well in the coming months and
do not anticipate making major changes to the structure of the portfolio. We
continue to seek a balance between the Trust's total return and its dividend
income, as well as to 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. While we believe it is
unlikely that short-term interest rates will rise, this event would have an
unfavorable effect on the dividend-paying ability of the common shares and would
also negatively impact the price.
We appreciate your continued confidence in Van Kampen American Capital and
your Trust's portfolio manager.
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 six
5
<PAGE> 7
PERFORMANCE RESULTS FOR THE PERIOD ENDED FEBRUARY 28, 1998
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
(NYSE TICKER SYMBOL--VQC)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
Six-month total return based on market price(1)........... 8.29%
Six-month total return based on NAV(2).................... 6.65%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3).................................................. 5.62%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 9.69%
SHARE VALUATIONS
Net asset value........................................... $ 17.64
Closing common stock price................................ $ 17.625
Six-month high common stock price (01/26/98).............. $ 18.000
Six-month low common stock price (10/22/97)............... $16.4375
Preferred share rate(5)................................... 3.074%
</TABLE>
(1) Total return based on market price assumes an investment at the market price
at the beginning of the period indicated, reinvestment of all distributions for
the period in accordance with the Trust's dividend reinvestment plan, and sale
of all shares at the closing common stock price at the end of the period
indicated.
(2) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3) Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(4) The taxable-equivalent distribution rate is calculated assuming a 42%
combined federal and state tax bracket, which takes into consideration the
deductibility of individual state taxes paid.
(5) See "Notes to Financial Statements" footnote #6, 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.
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 99.5%
CALIFORNIA 94.9%
$ 2,100 Alameda, CA Pub Fin Auth Rev Marina Vlg Assmt
Dist Rfdg....................................... 6.375% 09/02/14 $ 2,161,362
1,000 Bakersfield, CA Ctfs Partn Convention Cent
Expansion Proj (MBIA Insd)...................... 5.875 04/01/22 1,069,460
1,610 Blythe, CA Redev Agy Redev Proj No 1 Tax Alloc
Ser A Rfdg...................................... 7.500 05/01/23 1,848,441
1,055 Borrego, CA Wtr Dist Ctfs Partn Wtr Sys
Acquisition..................................... 7.000 04/01/27 1,127,141
1,000 California Edl Fac Auth Rev Pooled Coll & Univ
Projs B......................................... 6.125 04/01/13 1,073,690
2,000 California Edl Fac Auth Rev Student Ln CA Ln Pgm
Ser A (MBIA Insd)............................... 6.000 03/01/16 2,085,120
2,000 California Edl Fac Auth Rev Univ of La Verne.... 6.375 04/01/13 2,126,340
1,800 California Hlth Fac Fin Auth Rev Kaiser
Permanente Ser A................................ 7.000 12/01/10 1,955,628
1,000 California Hsg Fin Agy Rev Home Mtg Ser B (MBIA
Insd)........................................... 6.100 02/01/28 1,057,170
1,000 California Hsg Fin Agy Rev Home Mtg Ser E (AMBAC
Insd)........................................... 6.100 08/01/29 1,059,070
1,825 California Hsg Fin Agy Rev Home Mtg Ser E (FHA
Gtd)............................................ 8.350 08/01/19 1,875,644
1,090 California Hsg Fin Agy Rev Home Mtg Ser F (FHA
Gtd)............................................ 6.750 08/01/11 1,163,488
1,000 California Hsg Fin Agy Rev Home Mtg Ser M (MBIA
Insd)........................................... 5.550 08/01/17 1,028,980
2,120 California Hsg Fin Agy Rev Insd Hsg Ser E (MBIA
Insd)........................................... 7.000 08/01/26 2,241,964
3,000 California Hsg Fin Agy Rev Multi-Unit Rental Hsg
Ser C II........................................ 6.850 08/01/15 3,181,170
8,190 California Hsg Fin Agy Rev Multi-Unit Rental Hsg
Ser C II........................................ 6.875 08/01/24 8,675,913
10,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southn CA Edison Co (AMBAC Insd)................ 6.000 07/01/27 10,713,000
4,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southn CA Edison Co Ser B (AMBAC Insd).......... 6.400 12/01/24 4,388,640
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 8,714,394
880 California Rural Home Mtg Fin Auth Single Family
Mtg Rev Ser C (GNMA Collateralized)............. 7.800 02/01/28 1,003,050
1,000 California St (AMBAC Insd)...................... 6.200 02/01/16 1,021,940
2,000 California St Ser BH (FSA Insd)................. 5.200 12/01/11 2,022,840
1,000 California St Ser BH (FSA Insd)................. 5.400 12/01/15 1,017,960
1,000 California St Ser BH (FSA Insd)................. 5.400 12/01/16 1,017,080
3,655 California St Cpn Muni Rcpts.................... * 03/01/08 2,329,587
3,655 California St Cpn Muni Rcpts.................... * 09/01/09 2,153,197
9,600 California St Prin Muni Rcpts................... * 09/01/09 5,655,456
4,000 California Statewide Cmntys Dev Auth Spl Fac
United Airls.................................... 5.625 10/01/34 4,066,240
9,000 California Statewide Cmntys Dev Corp Ctfs Partn
Insd United Westn Med Cent (Prerefunded @
12/01/01)....................................... 6.750 12/01/21 10,025,730
1,000 Camarillo, CA Multi-Family Hsg Park Glenn Apts
(FNMA Insd)..................................... 5.400 03/01/28 1,000,760
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 1,580 Carson, CA Impt Bond Act 1915 Assmt Dist No
92-1............................................ 7.375% 09/02/22 $ 1,733,418
1,000 Central Contra Costa, CA Santn Dist Rev Wastewtr
Fac Impt Proj (MBIA Insd)....................... 6.250 09/01/11 1,113,390
2,055 Central San Joaquin Vly, CA Risk Mgmt Auth Rev
Pooled Workers Ser C............................ * 02/01/01 1,814,072
2,635 Chula Vista, CA Redev Agy Tax Alloc Sr Bayfront
Ser D Rfdg...................................... 8.625 09/01/24 3,266,820
2,000 Contra Costa Cnty, CA Ctfs Partn Merrithew Mem
Hosp Proj Rfdg (MBIA Insd)...................... 5.500 11/01/22 2,071,360
1,176 Contra Costa Cnty, CA Multi-Family Hsg Rev
Crescent Park Apts Proj Ser B (GNMA
Collateralized)................................. 7.800 12/20/14 1,327,563
1,000 Contra Costa Cnty, CA Pub Fin Auth Tax Alloc Rev
Ser A........................................... 7.100 08/01/22 1,098,930
1,000 Davis, CA Pub Fac Fin Auth Loc Agy Rev Mace
Ranch Area Ser A................................ 6.500 09/01/15 1,055,600
1,935 Delano, CA Ctfs Partn Ser A..................... 9.250 01/01/22 2,269,174
1,000 Delta Cntys, CA Home Mtg Fin Auth Single Family
Mtg Rev Ser A (MBIA Insd) (b)................... 5.500 06/01/24 1,092,600
1,000 Duarte, CA Redev Agcy Tax Alloc Davis Addition
Proj Area
Rfdg............................................ 6.700 09/01/14 1,064,430
915 Fairfield, CA Hsg Auth Mtg Rev Creekside Estates
Proj Rfdg....................................... 7.875 02/01/15 950,063
1,000 Folsom, CA Spl Tax Cmnty Fac Dist No 2 Rfdg
(Connie Lee Insd)............................... 5.250 12/01/19 1,000,790
6,000 Foothill/Eastern Tran Agy Cap Apprec Sr Lien Ser
A............................................... * 01/01/27 1,274,040
2,000 Foothill/Eastern Tran Agy Conv Cap Apprec Sr
Lien Ser A (a).................................. 0/7.050 01/01/10 1,542,500
1,500 Huntington Beach, CA Pub Fin Auth Rev Huntington
Beach Redev Proj................................ 7.000 08/01/24 1,567,980
1,000 Huntington Park, CA Pub Fin Auth Lease Rev
Wastewtr Sys Proj Ser A......................... 6.200 10/01/25 1,028,250
665 Inglewood, CA Redev Agy Tax Alloc Centy Redev
Proj Ser A...................................... 6.125 07/01/23 696,727
3,205 Lompoc, CA Wtr & Wastewtr Impts Fin Auth Rev Wtr
& Wastewtr Sys Fin Proj Ser A (MBIA Insd)....... 6.700 03/01/22 3,537,166
7,000 Los Angeles Cnty, CA Ctfs Partn (Prerefunded @
11/01/01)....................................... 6.600 11/01/11 7,740,460
12,000 Los Angeles Cnty, CA Pension Oblig Ctfs Ltd Muni
Oblig Ser A (MBIA Insd) (c)..................... 6.900 06/30/08 14,473,560
1,730 Los Angeles, CA Cmnty Redev Agy Ctfs Partn
Allright Garage (Prerefunded @ 05/01/03)........ 7.550 11/01/08 2,000,814
1,900 Los Angeles, CA Ctfs Partn...................... 5.700 02/01/18 1,893,179
2,500 Los Angeles, CA Multi-Family Rev Hsg Earthquake
Rehab Proj Ser A (FNMA Insd).................... 5.700 12/01/28 2,636,050
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 1,705 Los Angeles, CA Single Family Home Mtg Rev Pgm
Ser A (GNMA Collateralized)..................... 6.875% 06/01/25 $ 1,801,145
1,000 Metropolitan Wtr Dist Southn CA Wtrwks Rev Ser
C............................................... 5.000 07/01/37 969,830
1,000 Montebello, CA Unified Sch Dist Ctfs Partn Cap
Impts Proj...................................... 6.300 06/01/11 1,064,760
2,490 Mount Diablo, CA Hosp Dist Rev Ser A (Embedded
Cap) (AMBAC Insd)............................... 5.125 12/01/23 2,446,101
2,000 Needles, CA Pub Util Auth Util Sys
Acquisition..................................... 6.500 02/01/22 2,112,700
1,500 Newport Beach, CA Spl Tax Spl Impt Dist No 95-1
Ser A........................................... 6.750 09/01/20 1,632,120
1,000 Oakland, CA Unified Sch Dist Alameda Cnty Ctfs
Partn........................................... 7.000 05/15/11 1,128,620
2,000 Oakland, CA Unified Sch Dist Alameda Cnty Ctfs
Partn Energy Retrofit Proj...................... 6.750 11/15/14 2,138,000
2,000 Orange Cnty, CA Recovery Ser A Rfdg (MBIA
Insd)........................................... 5.750 06/01/15 2,135,920
1,500 Paramount, CA Multi-Family Rev Hsg Twin Twrs
Apts Ser A Rfdg (GNMA Insd)..................... 5.700 02/20/33 1,520,160
6,000 Paramount, CA Redev Agy Tax Alloc Redev Proj
Area No 1 Ser B (Prerefunded @ 08/01/03) (MBIA
Insd)........................................... * 08/01/26 958,680
1,500 Pasadena, CA Spl Tax Cmnty Fac Dist No 1 Civic
Cent West....................................... * 12/01/07 944,535
2,000 Pasadena, CA Spl Tax Cmnty Fac Dist No 1 Civic
Cent West (Prerefunded @ 12/01/07).............. * 12/01/17 603,440
1,000 Port of Oakland, CA Spl Fac Rev Mitsui O.S.K.
Line Ltd Ser A.................................. 6.800 01/01/19 1,074,180
1,230 Redding, CA Redev Agy Tax Alloc Market Street
Redev Proj Ser A................................ 6.700 09/01/23 1,351,278
1,000 Redondo Beach, CA Pub Fin Auth Rev South Bay
Cent Redev Proj................................. 7.000 07/01/16 1,114,060
2,000 Richmond, CA Rev YMCA East Bay Proj Rfdg........ 7.250 06/01/17 2,197,800
5,000 Sacramento, CA City Fin Auth Rev (Prerefunded @
11/01/01)....................................... 6.800 11/01/20 5,578,900
1,000 San Bernardino Cnty, CA Ctfs Partn Med Cent Fin
Proj (MBIA Insd)................................ 5.000 08/01/28 971,050
6,000 San Diego Cnty, CA Wtr Auth Wtr Rev Ctfs Partn
Ser 91 B (Inverse Fltg) (MBIA Insd)............. 8.630 04/08/21 7,867,500
2,650 San Diego, CA Indl Dev Rev San Diego Gas & Elec
Ser A (MBIA Insd)............................... 6.400 09/01/18 2,917,438
5,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec
Ser A (AMBAC Insd).............................. 6.100 09/01/19 5,443,350
1,000 San Francisco, CA City & Cnty Arpt Comm Intl
Arpt Rev Second Ser Issue 12-A (FGIC Insd)...... 5.800 05/01/21 1,055,970
2,305 San Francisco, CA City & Cnty Redev Agy Hotel
Tax Rev (FSA Insd).............................. 6.750 07/01/15 2,620,324
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 5,000 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone.............................. * 07/01/08 $ 3,092,150
3,520 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone.............................. * 07/01/09 2,055,187
4,250 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone.............................. * 07/01/12 2,063,757
2,130 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone.............................. * 07/01/14 920,416
800 San Francisco, CA City & Cnty Redev Agy Lease
Rev George Moscone (FSA Insd)................... 6.750% 07/01/15 909,440
3,330 San Joaquin Hills, CA Tran Corridor Agy Toll Rd
Rev Ser A Rfdg (MBIA Insd)...................... * 01/15/27 738,727
1,000 San Jose, CA Single Family Mtg Rev Cap Apprec
Ser A........................................... * 04/01/16 392,560
1,000 Santa Ana, CA Multi-Family Hsg Rev Villa Del Sol
Apts Ser B (FNMA Insd).......................... 5.650 11/01/21 1,058,940
1,000 Santa Clara Cnty, CA Fin Auth Lease Rev VMC Fac
Replacement Proj Ser A (Prerefunded @ 11/15/04)
(AMBAC Insd).................................... 6.875 11/15/14 1,175,020
2,000 Santa Clarita, CA Cmnty Fac Dist Spl Tax No 92-1
Ser A........................................... 7.450 11/15/10 2,182,100
1,195 Santa Fe Springs, CA Cmnty Dev Commn Tax Alloc
Cons Redev Proj Ser A Rfdg (MBIA Insd).......... 5.000 09/01/17 1,173,096
1,760 Southern CA Home Fin Auth Single Family Mtg Rev
Pgm B (GNMA Collateralized)..................... 6.900 10/01/24 1,858,754
5,000 Southern CA Pub Pwr Auth Pwr Proj Rev
Multi-Projs..................................... 6.750 07/01/12 5,990,600
1,000 Stanislaus Cnty, CA Ctfs Downtown Cent Ser A
(MBIA Insd) (b)................................. 5.000 09/01/18 992,390
1,000 Stockton, CA South Stockton Cmnty Facs Dist Spl
Tax No 90-1 Rfdg................................ 6.400 09/01/15 1,057,610
2,750 Tulare, CA Loc Hosp Dist Hlth Fac Rev Ser A..... 6.750 12/01/21 2,990,185
1,000 University of CA Rev Resh Facs Ser C Rfdg (FSA
Insd) (b)....................................... 5.000 09/01/24 977,020
1,000 Vista, CA Mobile Home Pk Rev Estrella De Oro
Mobile Home Ser A............................... 5.875 02/01/28 992,700
2,785 Yolo Cnty, CA Hsg Auth Mtg Rev Mtg Waggener
Ranch Proj (FHA Gtd)............................ 7.000 10/01/33 2,931,881
-------------
232,309,785
-------------
GUAM 0.4%
1,000 Guam Arpt Auth Rev Ser B........................ 6.700 10/01/23 1,098,210
-------------
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PUERTO RICO 1.1%
$ 884 Centro de Recaudaciones de Ingresos Muni Ctfs
Partn PR........................................ 6.850% 10/17/03 $ 920,439
1,580 Puerto Rico Hsg Fin Single Family Mtg Rev
Portfolio 1 C (GNMA Collateralized)............. 6.850 10/15/23 1,679,271
-------------
2,599,710
-------------
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 7,577,415
-------------
TOTAL INVESTMENTS 99.5%
(Cost $218,238,215)........................................................ 243,585,120
OTHER ASSETS IN EXCESS OF LIABILITIES 0.5%.................................. 1,251,284
-------------
NET ASSETS 100.0%........................................................... $ 244,836,404
=============
</TABLE>
*Zero coupon bond
(a) Security is currently a zero coupon bond which will convert to a coupon
paying bond 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, open option and open futures transactions.
See Notes to Financial Statements
11
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $218,238,215)....................... $243,585,120
Receivables:
Interest.................................................. 3,458,730
Investments Sold.......................................... 3,114,488
Other....................................................... 6,485
------------
Total Assets.......................................... 250,164,823
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 4,220,914
Custodian Bank............................................ 630,758
Investment Advisory Fee................................... 131,836
Income Distributions--Common and Preferred Shares......... 82,386
Administrative Fee........................................ 37,668
Affiliates................................................ 7,957
Accrued Expenses............................................ 134,146
Trustees' Deferred Compensation and Retirement Plans........ 82,754
------------
Total Liabilities..................................... 5,328,419
------------
NET ASSETS.................................................. $244,836,404
============
NET ASSETS CONSIST OF:
Preferred Shares ($.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, 9,626,507 shares issued and
outstanding).............................................. 96,265
Paid in Surplus............................................. 142,466,004
Net Unrealized Appreciation................................. 25,346,905
Accumulated Net Realized Gain............................... 1,119,158
Accumulated Undistributed Net Investment Income............. 808,072
------------
Net Assets Applicable to Common Shares................ 169,836,404
------------
NET ASSETS.................................................. $244,836,404
============
NET ASSET VALUE PER COMMON SHARE ($169,836,404 divided
by 9,626,507 shares outstanding).......................... $ 17.64
============
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 7,246,243
-----------
EXPENSES:
Investment Advisory Fee..................................... 842,551
Administrative Fee.......................................... 240,729
Preferred Share Maintenance................................. 101,677
Trustees' Fees and Expenses................................. 13,943
Custody..................................................... 8,126
Legal....................................................... 5,253
Other....................................................... 86,373
-----------
Total Expenses........................................ 1,298,652
-----------
NET INVESTMENT INCOME....................................... $ 5,947,591
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 1,119,394
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 20,310,340
End of the Period......................................... 25,346,905
-----------
Net Unrealized Appreciation During the Period............... 5,036,565
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 6,155,959
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $12,103,550
===========
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended February 28, 1998
and the Year Ended August 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, 1998 August 31, 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................. $ 5,947,591 $ 12,150,732
Net Realized Gain..................................... 1,119,394 810,425
Net Unrealized Appreciation During the Period......... 5,036,565 7,875,246
------------ ------------
Change in Net Assets from Operations.................. 12,103,550 20,836,403
------------ ------------
Distributions from Net Investment Income:
Common Shares....................................... (4,763,650) (9,815,485)
Preferred Shares.................................... (1,146,845) (2,424,442)
------------ ------------
(5,910,495) (12,239,927)
------------ ------------
Distributions from Net Realized Gain:
Common Shares....................................... (649,552) (690,815)
Preferred Shares.................................... (161,112) (203,049)
------------ ------------
(810,664) (893,864)
------------ ------------
Total Distributions................................... (6,721,159) (13,133,791)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES... 5,382,391 7,702,612
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment........................................ 56,952 -0-
------------ ------------
TOTAL INCREASE IN NET ASSETS.......................... 5,439,343 7,702,612
NET ASSETS:
Beginning of the Period............................... 239,397,061 231,694,449
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $808,072 and $770,976,
respectively)....................................... $244,836,404 $239,397,061
============ ============
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 27, 1991
Six Months (Commencement
Ended Year Ended August 31 of Investment
February 28, ------------------------------------------------- Operations) to
1998 1997 1996 1995 1994 1993 August 31, 1992
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period
(a)....................... $17.083 $16.283 $16.127 $15.699 $17.454 $15.816 $14.805
------- ------- ------- ------- ------- ------- -------
Net Investment Income....... .618 1.263 1.259 1.269 1.286 1.305 1.038
Net Realized and Unrealized
Gain/Loss................. .640 .902 .233 .523 (1.693) 1.658 .870
------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations.................. 1.258 2.165 1.492 1.792 (.407) 2.963 1.908
------- ------- ------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............ .495 1.02 1.050 1.050 1.050 .981 .698
Common Share Equivalent of
Distributions Paid to
Preferred
Shareholders............ .119 .252 .286 .311 .235 .206 .199
Distributions from and in
Excess of Net Realized
Gain:
Paid to Common
Shareholders............ .067 .072 -0- .002 .054 .110 -0-
Common Share Equivalent of
Distributions Paid to
Preferred
Shareholders............ .017 .021 -0- .001 .009 .028 -0-
------- ------- ------- ------- ------- ------- -------
Total Distributions.......... .698 1.365 1.336 1.364 1.348 1.325 .897
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of the
Period...................... $17.643 $17.083 $16.283 $16.127 $15.699 $17.454 $15.816
======= ======= ======= ======= ======= ======= =======
Market Price Per Share at End
of the Period............... $17.625 $16.8125 $16.125 $15.000 $15.500 $16.750 $15.125
Total Investment Return at
Market Price (b)............ 8.29%* 11.45% 14.89% 3.95% (.90%) 18.66% 5.69%*
Total Return at Net Asset
Value (c)................... 6.65%* 11.96% 7.60% 10.02% (3.81%) 17.89% 11.80%*
Net Assets at End of the
Period
(In millions)............... $244.8 $239.4 $231.7 $230.2 $226.1 $243.0 $227.2
Ratio of Expenses to Average
Net Assets Applicable to
Common Shares**............. 1.56% 1.61% 1.64% 1.66% 1.62% 1.58% 1.55%
Ratio of Net Investment
Income to Average Net Assets
Applicable to Common Shares
(d)......................... 5.77% 6.05% 5.95% 6.22% 6.34% 6.70% 6.09%
Portfolio Turnover........... 13%* 17% 10% 16% 7% 26% 93%*
* Non-Annualized
** Ratio of Expenses to
Average Net Assets
Including Preferred
Shares.................... 1.08% 1.10% 1.11% 1.10% 1.10% 1.07% 1.09%
</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.
See Notes to Financial Statements
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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.
16
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
D. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
At February 28, 1998, for federal income tax purposes cost of long-term
investments is $218,238,215; the aggregate gross unrealized appreciation is
$25,353,726 and the aggregate gross unrealized depreciation is $6,821, resulting
in net unrealized appreciation of $25,346,905.
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.
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 six months ended February 28, 1998, the Trust recognized expenses of
approximately $1,800 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
For the six months ended February 28, 1998, the Trust recognized expenses of
approximately $28,800 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
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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. CAPITAL TRANSACTIONS
At February 28, 1998 and August 31, 1997, paid in surplus related to common
shares aggregated $142,466,004 and $142,409,084, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, 1998 August 31, 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares............................ 9,623,295 9,623,295
Shares Issued Through Dividend
Reinvestment.............................. 3,212 -0-
------------ ------------
Ending Shares............................... 9,626,507 9,623,295
============ ============
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $32,054,237 and $32,420,044,
respectively.
5. 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.
18
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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.
6. 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 February 28, 1998, was 3.074% and for the six
months then ended rates ranged from 3.00% to 4.80%.
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.
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
STEVEN MULLER
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., 1998
All rights reserved.
(SM) denotes a service mark of
Van Kampen American Capital Distributors, Inc.
21
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> CAL QUALITY MUNICIPAL TRUST
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 218,238,215
<INVESTMENTS-AT-VALUE> 243,585,120
<RECEIVABLES> 6,573,218
<ASSETS-OTHER> 6,485
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 250,164,823
<PAYABLE-FOR-SECURITIES> 4,220,914
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,107,505
<TOTAL-LIABILITIES> 5,328,419
<SENIOR-EQUITY> 75,000,000
<PAID-IN-CAPITAL-COMMON> 142,562,269
<SHARES-COMMON-STOCK> 9,626,507
<SHARES-COMMON-PRIOR> 9,623,295
<ACCUMULATED-NII-CURRENT> 808,072
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,119,158
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25,346,905
<NET-ASSETS> 244,836,404
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,246,243
<OTHER-INCOME> 0
<EXPENSES-NET> (1,298,652)
<NET-INVESTMENT-INCOME> 5,947,591
<REALIZED-GAINS-CURRENT> 1,119,394
<APPREC-INCREASE-CURRENT> 5,036,565
<NET-CHANGE-FROM-OPS> 12,103,550
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,910,495)
<DISTRIBUTIONS-OF-GAINS> (810,664)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 3,212
<NET-CHANGE-IN-ASSETS> 5,439,343
<ACCUMULATED-NII-PRIOR> 770,976
<ACCUMULATED-GAINS-PRIOR> 810,428
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 842,551
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,298,652
<AVERAGE-NET-ASSETS> 242,790,140
<PER-SHARE-NAV-BEGIN> 17.083
<PER-SHARE-NII> 0.618
<PER-SHARE-GAIN-APPREC> 0.640
<PER-SHARE-DIVIDEND> (0.614)
<PER-SHARE-DISTRIBUTIONS> (0.084)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.643
<EXPENSE-RATIO> 1.56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
