<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 5
Portfolio of Investments......................... 6
Statement of Assets and Liabilities.............. 9
Statement of Operations.......................... 10
Statement of Changes in Net Assets............... 11
Financial Highlights............................. 12
Notes to Financial Statements.................... 13
Report of Independent Accountants................ 17
Dividend Reinvestment Plan....................... 18
</TABLE>
VNM ANR 10/97
<PAGE> 2
LETTER TO SHAREHOLDERS
September 26, 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
31, creating the combined company of
Morgan Stanley, Dean Witter, Discover &
Co. This preeminent global financial DENNIS J. MCDONNELL AND DON G. POWELL
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, New York continued to enjoy a modest economic
revival, reporting steady though limited employment growth, strong personal
income growth and declining unemployment levels. The state's improved economic
picture is largely tied to the continued bull market. On the fiscal side, the
current legislature and governor have successfully limited expenditure growth
with an increase of only 1.4 percent in 1997.
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 a modest 0.25 percent in
March, interest rates peaked and then began to decline in April as inflationary
fears abated.
Continued on page two
1
<PAGE> 3
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. Year to date, New York issuance
totaled $15.5 billion, an increase of 23.7 percent from the same period last
year.
TRUST STRATEGY
We employed the following strategies to manage the portfolio during the 12-month
period:
- - We used a "barbell" approach to the credit quality of the portfolio with
concentrations in AAA-rated and lower-rated holdings. At the end of the
reporting period, 46.8 percent of the Trust's long-term investments were
rated AAA, and 40.4 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
minimize 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.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality
as of August 31, 1997*
<TABLE>
<S> <C>
AAA................. 46.8%
AA.................. 7.3%
A................... 5.5%
BBB................. 34.0%
Non-Rated........... 6.4%
</TABLE>
*As a Percentage of Long-Term Investments
Based upon the highest credit quality ratings as issued
by Standard & Poor's or Moody's.
- - We adjusted the portfolio's duration to 5.95 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
Continued on page three
2
<PAGE> 4
up-tick, we lengthened the duration. Our interest rate outlook at the end of
the reporting period moved to a more neutral stance.
- - We actively managed our exposure to New York City issued bonds, which
currently represents 21 percent of the Trust's assets. New York City
obligations have historically provided above average yields, enhancing our
dividend-paying ability. In addition, the city is in a refunding mode,
further making this an attractive holding as prices increase significantly
when a bond is pre-refunded.
- - We also have increased our exposure to state-appropriated issuers such as
New York State Dormitory Authority, New York State Local Government
Assistance Corporation, and New York State Urban Development Corporation.
The credit spreads between these issuers, typically rated Baa1/BBB, and
non-rated paper have narrowed, which allowed us to acquire these names at
yields which are attractive when compared to non-rated paper.
We focused on extending the call protection of the portfolio. By purchasing
securities with longer calls and selling existing positions with shorter call
features, we continued to minimize reinvestment risk. Given the current embedded
gains in many existing positions and the relatively low yields available in the
current market, this will be an ongoing process as we try to avoid capital gains
and protect the Trust's dividend-paying ability.
Twelve-month Dividend History
For the Period Ended August 31, 1997
Distribution per Common Share
<TABLE>
<CAPTION>
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
1996 1996 1996 1996 1997 1997 1997 1997 1997 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends $.0875 $.0875 $.0875 $.0825 $.0825 $.0825 $.0825 $.0825 $.0825 $.0775 $.0775 $.0775
</TABLE>
The dividend history represents past performance of the
Trust and does not predict the Trust's future
distributions.
PERFORMANCE SUMMARY
The Van Kampen American Capital New York 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 3.94 percent(1),
including reinvestment of income dividends totaling $0.99 per common share. The
Trust offered a tax-exempt distribution rate of 5.77 percent(3), based on the
closing common stock price of $16.125 per share on August 31, 1997. Because
income from the Trust is exempt from federal income tax, this
Continued on page four
3
<PAGE> 5
distribution rate represents a yield equivalent to a tax investment earning 9.71
percent(4) (for investors in the 40.6 percent combined federal and New York
state income tax bracket). At the end of the reporting period, the closing share
price of the Trust traded at a 4.19 percent discount to its net asset value of
$16.83.
TOP FIVE PORTFOLIO INDUSTRY HOLDINGS BY SECTOR*
AS OF
AUGUST 31, 1997
General Purpose........................................ 27.2%
Higher Education....................................... 15.2%
Industrial Revenue..................................... 10.8%
Public Building........................................ 8.9%
Water & Sewer.......................................... 6.3%
*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 NEW YORK QUALITY MUNICIPAL TRUST
(NYSE TICKER SYMBOL-VNM)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
One-year total return based on market price(1)............. 3.94%
One-year total return based on NAV(2)...................... 10.62%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock price(3).. 5.77%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)...................................... 9.71%
SHARE VALUATIONS
Net asset value............................................ $ 16.83
Closing common stock price................................. $16.125
One-year high common stock price (11/07/96)................ $16.750
One-year low common stock price (04/18/97)................. $15.250
Preferred share rate(5).................................... 3.52%
</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 40.6%
combined federal and state income 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
NEW YORK 90.9%
$ 2,000 Erie Cnty, NY Ser B (FGIC Insd).............. 5.625% 06/15/20 $ 2,018,560
3,000 Grand Cent Dist Mgmt Assn Inc NY Business
Impt Dist Cap Impt (Prerefunded
@ 01/01/02).................................. 6.500 01/01/22 3,298,950
2,500 Herkimer Cnty, NY Indl Dev Agy Indl Dev Rev
Burrows Paper Corp Recycling................. 8.000 01/01/09 2,517,050
4,000 Monroe Cnty, NY Arpt Auth Rev Greater
Rochester Intl (MBIA Insd)................... 7.250 01/01/09 4,300,560
1,400 Monroe Cnty, NY Indl Dev Agy Rev Pub Impt
Canal Ponds Park Ser A....................... 7.000 06/15/13 1,522,668
128 Municipal Assist Corp Troy NY Cap Apprec Ser
C (MBIA Insd)................................ * 07/15/21 33,481
195 Municipal Assist Corp Troy NY Cap Apprec Ser
C (MBIA Insd)................................ * 01/15/22 49,291
2,000 Nassau Cnty, NY Genl Impt Ser Q (FGIC
Insd)........................................ 5.200 08/01/13 1,985,380
1,000 New York City Indl Dev Agy Spl Fac Rev 1990
AMR/American Airls Inc....................... 7.750 07/01/19 1,052,780
1,000 New York City Indl Dev Agy Spl Fac Rev
Terminal One Group Assn Proj................. 6.000 01/01/15 1,039,090
5,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser F (AMBAC Insd)....................... 5.500 06/15/12 5,076,150
170 New York City Ser A.......................... 7.750 08/15/06 189,157
2,670 New York City Ser A (Prerefunded @
08/15/01).................................... 7.750 08/15/06 3,038,620
10,000 New York City Ser B (Embedded Cap) (a)....... 6.600 10/01/16 10,641,900
425 New York City Ser C Subser C1................ 7.500 08/01/20 479,205
4,575 New York City Ser C Subser C1 (Prerefunded @
08/01/02).................................... 7.500 08/01/20 5,257,224
2,750 New York City Ser D.......................... 6.500 02/15/06 3,010,645
240 New York City Ser F.......................... 8.250 11/15/16 274,450
2,760 New York City Ser F (Prerefunded @
11/15/01).................................... 8.250 11/15/16 3,212,143
2,500 New York St Dorm Auth Rev City Univ Sys 3rd
Genl Res Ser 2............................... 6.000 07/01/20 2,594,625
1,625 New York St Dorm Auth Rev City Univ Sys Cons
Ser A........................................ 5.625 07/01/16 1,660,019
2,000 New York St Dorm Auth Rev City Univ Sys Cons
Ser A (Prerefunded @ 07/01/00)............... 7.625 07/01/20 2,218,320
2,075 New York St Dorm Auth Rev Genessee Valley Ser
B (FHA Gtd).................................. 6.900 02/01/32 2,248,304
1,000 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................ * 07/01/06 656,970
905 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................ * 07/01/07 564,240
1,000 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................ * 07/01/08 587,990
1,000 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................ * 07/01/09 550,260
1,000 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................ * 07/01/10 519,920
1,500 New York St Dorm Auth Rev St Univ Edl Fac.... 5.750 05/15/10 1,549,545
3,500 New York St Dorm Auth Rev St Univ Edl Fac.... 5.500 05/15/26 3,401,335
2,000 New York St Dorm Auth Rev Upstate Cmnty
Colleges Ser B (Prerefunded @ 07/01/01)...... 7.375 07/01/11 2,243,640
</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>
NEW YORK (CONTINUED)
$ 2,000 New York St Dorm Auth Rev Upstate Cmnty
Colleges Ser B (Prerefunded @ 07/01/01)...... 7.200% 07/01/21 $ 2,231,400
1,725 New York St Dorm Auth Revs Dept Hlth Vets
Home......................................... 5.500 07/01/11 1,735,298
3,500 New York St Energy Resh & Dev Auth Elec Fac
Rev Cons Edison Co NY Inc Proj (MBIA Insd)... 6.000 03/15/28 3,589,390
1,110 New York St Energy Resh & Dev Auth Elec Fac
Rev Cons Edison Co NY Inc Proj Ser A (MBIA
Insd)........................................ 7.500 01/01/26 1,189,520
1,750 New York St Energy Resh & Dev Auth Elec Fac
Rev Cons Edison Co NY Inc Proj Ser A (MBIA
Insd)........................................ 6.750 01/15/27 1,869,245
3,000 New York St Energy Resh & Dev Auth Gas Fac
Rev Brooklyn Union Gas Ser C (MBIA Insd)..... 5.600 06/01/25 2,962,260
4,000 New York St Energy Resh & Dev Auth Pollutn
Ctl Rev Niagara Mohawk Pwr Rfdg (FGIC
Insd)........................................ 6.625 10/01/13 4,369,720
2,000 New York St Environmental Fac Corp Solid
Waste Disp Rev Occidental Petroleum Corp
Proj......................................... 6.100 11/01/30 2,038,800
3,215 New York St Environmental Fac Corp St Wtr
Pollutn Ctl Rev Ser E........................ 6.600 06/15/09 3,617,679
2,180 New York St Hsg Fin Agy Rev Newburgh
Interfaith Hsg Ser A......................... 7.050 11/01/12 2,302,996
1,500 New York St Loc Govt Assistance Corp Ser D
(Prerefunded @ 04/01/02)..................... 7.000 04/01/18 1,686,630
65 New York St Med Care Fac Fin Agy Rev Mental
Hlth Svcs Fac Ser C.......................... 7.300 02/15/21 71,949
685 New York St Med Care Fac Fin Agy Rev Mental
Hlth Svcs Fac Ser C (Prerefunded @
08/15/01).................................... 7.300 02/15/21 770,810
750 New York St Med Care Fac Fin Agy Rev Mental
Hlth Svcs Fac Ser D.......................... 7.400 02/15/18 838,950
1,700 New York St Med Care Fac Fin Agy Rev Mental
Hlth Svcs Fac Ser D (Prerefunded @
02/15/02).................................... 7.400 02/15/18 1,926,950
2,000 New York St Med Care Fac Fin Agy Rev
Presbyterian Hosp Ser A Rfdg (FHA Gtd)....... 5.375 02/15/25 1,937,220
1,000 New York St Muni Bond Bk Agy Spl Pgm Rev
Buffalo Ser A................................ 6.875 03/15/06 1,080,800
3,000 New York St Muni Bond Bk Agy Spl Pgm Rev
Rochester Ser A.............................. 6.750 03/15/11 3,258,720
2,000 New York St Urban Dev Corp Rev Correctional
Cap Fac Rfdg................................. 5.625 01/01/07 2,067,160
5,000 New York St Urban Dev Corp Rev Correctional
Cap Fac Ser 3 (Prerefunded @ 01/01/02)....... 7.000 01/01/21 5,596,100
1,500 New York St Urban Dev Corp Rev Correctional
Cap Fac Ser 4................................ 5.375 01/01/23 1,434,945
1,115 New York St Urban Dev Corp Rev Proj Pine
Barrens...................................... 5.375 04/01/17 1,082,743
</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>
NEW YORK (CONTINUED)
$ 2,500 Port Auth NY & NJ Cons Ser 77................ 6.250% 01/15/27 $ 2,616,400
1,000 Port Auth NY & NJ Delta Airls Inc Proj Ser
1R........................................... 6.950 06/01/08 1,087,350
2,500 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (MBIA Insd)............. 6.000 12/01/07 2,718,350
2,000 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (MBIA Insd)............. 5.750 12/01/25 2,026,080
1,000 United Nations Dev Corp NY Rev Rfdg Sub Lien
Ser C........................................ 5.500 07/01/17 996,330
1,930 Yonkers, NY Ser A (FGIC Insd)................ 6.500 02/15/07 2,110,301
400 Yonkers, NY Ser A (FGIC Insd)................ 6.500 02/15/12 435,504
------------
127,442,072
------------
GUAM 3.0%
2,000 Guam Arpt Auth Rev Ser B..................... 6.400 10/01/05 2,129,560
1,000 Guam Arpt Auth Rev Ser B..................... 6.700 10/01/23 1,069,250
1,000 Guam Pwr Auth Rev Ser A...................... 6.625 10/01/14 1,078,860
------------
4,277,670
------------
PUERTO RICO 3.0%
943 Centro De Recaudaciones De Ingresos Muni Ctfs
Partn........................................ 6.850 10/17/03 978,347
3,154 Puerto Rico Comwlth Dept of Hlth Lease Purch
Ctfs......................................... 7.250 04/07/01 3,163,220
------------
4,141,567
------------
U.S. VIRGIN ISLANDS 1.6%
2,000 Virgin Islands Pub Fin Auth Rev Matching Fd
Ln Nts Ser A Rfdg............................ 7.250 10/01/18 2,226,200
------------
TOTAL LONG-TERM INVESTMENTS 98.5%
(Cost $126,813,488)...................................................... 138,087,509
TOTAL SHORT-TERM INVESTMENTS 0.2%
(Cost $300,000).......................................................... 300,000
------------
TOTAL INVESTMENTS
(Cost $127,113,488)...................................................... 138,387,509
OTHER ASSETS IN EXCESS OF LIABILITIES 1.3%................................ 1,803,317
------------
NET ASSETS 100.0%......................................................... $140,190,826
============
</TABLE>
* Zero coupon bond
(a) 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 price of these
securities may be more volatile than the price of a comparable fixed rate
security. 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.
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $127,113,488)....................... $138,387,509
Interest Receivable......................................... 2,049,351
Cash........................................................ 152,836
Other....................................................... 983
------------
Total Assets............................................ 140,590,679
------------
LIABILITIES:
Payables:
Income Distributions - Common and Preferred Shares........ 107,419
Investment Advisory Fee................................... 83,593
Administrative Fee........................................ 23,884
Affiliates................................................ 5,966
Accrued Expenses............................................ 108,146
Deferred Compensation and Retirement Plans.................. 70,845
------------
Total Liabilities....................................... 399,853
------------
NET ASSETS.................................................. $140,190,826
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 900 issued with liquidation preference of $50,000
per share)................................................ $ 45,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 5,655,638 shares issued and
outstanding).............................................. 56,556
Paid in Surplus............................................. 83,580,007
Net Unrealized Appreciation................................. 11,274,021
Accumulated Undistributed Net Investment Income............. 322,848
Accumulated Net Realized Loss............................... (42,606)
------------
Net Assets Applicable to Common Shares.................. 95,190,826
------------
NET ASSETS.................................................. $140,190,826
============
NET ASSET VALUE PER COMMON SHARE
($95,190,826 divided by 5,655,638 shares outstanding)..... $ 16.83
============
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 8,508,224
-----------
EXPENSES:
Investment Advisory Fee..................................... 967,857
Administrative Fee.......................................... 276,531
Preferred Share Maintenance................................. 122,109
Trustees Fees and Expenses.................................. 27,301
Custody..................................................... 8,835
Legal....................................................... 8,375
Amortization of Organizational Costs........................ 428
Other....................................................... 156,227
-----------
Total Expenses.......................................... 1,567,663
-----------
NET INVESTMENT INCOME....................................... $ 6,940,561
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 55,284
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 7,215,811
End of the Period......................................... 11,274,021
-----------
Net Unrealized Appreciation During the Period............... 4,058,210
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 4,113,494
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $11,054,055
===========
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
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.................................. $ 6,940,561 $ 7,026,896
Net Realized Gain...................................... 55,284 266,232
Net Unrealized Appreciation/Depreciation During the
Period............................................... 4,058,210 (1,542,531)
------------ ------------
Change in Net Assets from Operations................... 11,054,055 5,750,597
------------ ------------
Distributions from Net Investment Income:
Common Shares........................................ (5,597,679) (5,925,408)
Preferred Shares..................................... (1,597,711) (1,633,939)
------------ ------------
(7,195,390) (7,559,347)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES.... 3,858,665 (1,808,750)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment......................................... 132,181 66,182
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS.................. 3,990,846 (1,742,568)
NET ASSETS:
Beginning of the Period................................ 136,199,980 137,942,548
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $322,848 and $577,677,
respectively)........................................ $140,190,826 $136,199,980
============ ============
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
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
of Investment
Year Ended August 31 Operations) to
----------------------------------------------- August 31,
1997 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period (a)..... $16.148 $16.469 $16.633 $17.958 $16.303 $14.777
------- ------- ------- ------- ------- -------
Net Investment Income........... 1.227 1.245 1.243 1.302 1.307 1.068
Net Realized and Unrealized
Gain/Loss..................... .728 (.226) .168 (1.163) 1.640 1.400
------- ------- ------- ------- ------- -------
Total from Investment
Operations...................... 1.955 1.019 1.411 .139 2.947 2.468
------- ------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common Shareholders... .990 1.050 1.050 1.050 1.007 .743
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders...... .282 .290 .267 .211 .195 .199
Distributions from and in Excess
of Net Realized Gain:
Paid to Common Shareholders... -0- -0- .216 .177 .071 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders...... -0- -0- .042 .026 .019 -0-
------- ------- ------- ------- ------- -------
Total Distributions............... 1.272 1.340 1.575 1.464 1.292 .942
------- ------- ------- ------- ------- -------
Net Asset Value, End of the
Period.......................... $16.831 $16.148 $16.469 $16.633 $17.958 $16.303
======= ======= ======= ======= ======= =======
Market Price Per Share at End of
the Period...................... $16.125 $16.500 $15.500 $15.375 $17.250 $15.625
Total Investment Return at
Market Price (b)................ 3.94% 13.62% 9.73% (4.08%) 17.94% 9.39%*
Total Return at Net Asset Value
(c)............................. 10.62% 4.45% 7.29% (.67%) 17.42% 14.00%*
Net Assets at End of the Period
(In millions)................... $140.2 $136.2 $137.9 $138.9 $146.3 $137.0
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares.......................... 1.68% 1.74% 1.76% 1.66% 1.66% 1.67%
Ratio of Expenses to Average Net
Assets.......................... 1.13% 1.18% 1.17% 1.14% 1.13% 1.17%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (d)............... 5.73% 5.77% 6.08% 6.31% 6.58% 6.27%
Portfolio Turnover................ 17% 23% 50% 21% 25% 65%*
</TABLE>
(a) Net asset value at September 27, 1991, is adjusted for common and preferred
share offering costs of $.223 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 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
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital New York Quality Municipal Trust (the "Trust") is
registered as a non-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 as well as New
York State and New York City income taxes, consistent with preservation of
capital. The Trust will invest in a portfolio consisting substantially of New
York 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. At August 31, 1997, there were no
when issued or delayed delivery purchase commitments.
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.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
D. ORGANIZATIONAL COSTS--The Trust has 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 ending 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.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At August 31, 1997, the Trust had an accumulated capital loss
carryforward for tax purposes of $42,606. This amount will expire on August 31,
2004.
At August 31, 1997, for federal income tax purposes, cost of long- and
short-term investments is $127,113,488, the aggregate gross unrealized
appreciation is $11,274,040 and the aggregate gross unrealized depreciation is
$19, resulting in net unrealized appreciation on investments of $11,274,021.
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, 100.0% of the income distributions made
by the Trust were exempt from federal income taxes. 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
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
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 $7,400 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
For the year ended August 31, 1997, the Trust recognized expenses of
approximately $59,300 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. CAPITAL TRANSACTIONS
At August 31, 1997 and August 31, 1996, common share paid in surplus aggregated
$83,580,007 and $83,447,906, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares......................... 5,647,596 5,643,496
Shares Issued Through Dividend
Reinvestment........................... 8,042 4,100
--------- ---------
Ending Shares............................ 5,655,638 5,647,596
========= =========
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sale of investments,
excluding short-term investments, were $22,528,511 and $25,325,238,
respectively.
5. PREFERRED SHARES
The Trust has outstanding 900 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is reset through an auction process every 28
days. The rate in
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
effect on August 31, 1997, was 3.520%. During the year ended August 31, 1997,
the rates ranged from 3.350% to 3.900%.
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 redemption if the tests are not met.
16
<PAGE> 18
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Trustees and Shareholders of
Van Kampen American Capital New York Quality Municipal Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen American Capital New York 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. 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 New York 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 11, 1997
17
<PAGE> 19
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be re-
registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-
8200. If you withdraw, you will receive, without charge, a share certificate
issued in your name for all full Common Shares credited to your account under
the Plan and a cash payment will be made for any fractional Common Share
credited to your account under the Plan. You may again elect to participate in
the Plan at any time by calling 1-800-341-2929 or writing to the Trust at:
Van Kampen American Capital
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
18
<PAGE> 20
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Growth Fund
Pace Fund
Growth & Income
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
MORGAN STANLEY FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
U.S. Real Estate Fund
Value Fund
Worldwide High Income Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us weekdays from 7:00 a.m. to 7:00
p.m. Central time at 1-800-341-2911 for Van Kampen American Capital funds or
Morgan Stanley retail funds.
19
<PAGE> 21
VAN KAMPEN AMERICAN CAPITAL NEW YORK 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, 3,492,197 shares voted for the
proposal, 49,820 shares voted against, 73,594 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, 392 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, 3,564,067 shares
voted in his favor and 51,152 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, 3,557,676 shares voted in favor of the proposal, 12,058 shares voted
against, 45,877 shares abstained and 0 shares represented broker non-votes.
20
