<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
A Farewell from the Chairman..................... 1
Portfolio of Investments......................... 2
Statement of Assets and Liabilities.............. 5
Statement of Operations.......................... 6
Statement of Changes in Net Assets............... 7
Financial Highlights............................. 8
Notes to Financial Statements.................... 10
Report of Independent Accountants................ 14
Dividend Reinvestment Plan....................... 15
</TABLE>
VNM ANR 12/98
<PAGE> 2
A FAREWELL FROM THE CHAIRMAN
------------------------ - ------------------------
Dear Shareholder,
Since I became president and chief executive officer in 1987, much has
changed in our business. However, one thing has remained constant through these
years--my commitment to you, the trust shareholder. Through the many events at
Van Kampen that have marked the passage of time--including several mergers,
company name changes, and leadership changes--we have always focused on
providing superior investments and the highest level of customer service to help
you meet your investment objectives. I'm proud to say that during my tenure, Van
Kampen won eight consecutive awards for high-quality customer service--more
consecutive service awards than any other firm in the financial services
industry.(1) My successor, Dick Powers, shares this commitment to meeting your
needs and providing innovative and efficient ways to help you work with your
investment adviser to reach your financial goals.
Although my official retirement begins on January 1, 1999, I will remain
active in the industry and the community. I plan to continue my service as a
member of the board of directors of the Investment Company Institute, the
leading mutual fund industry association, and I will remain a trustee of your
Trust.
In closing, I want to say farewell to all of you. Thank you for your support
of Van Kampen over the years and for giving me the opportunity to serve you.
Best wishes,
Don G. Powell
Don G. Powell
------------------------ - ------------------------
(1)American Capital, which merged with Van Kampen in 1995, received the DALBAR
Service Award annually from 1990 to 1994. The award was called the Quality
Tested Service Seal until 1997.
1
<PAGE> 3
PORTFOLIO OF INVESTMENTS
October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 98.6%
NEW YORK 93.4%
$2,000 Erie Cnty, NY Ser B (FGIC Insd)................. 5.625% 06/15/20 $ 2,124,440
3,000 Grand Cent Dist Mgmt Assn Inc NY Business Impt
Dist Cap Impt (Prerefunded @ 01/01/02).......... 6.500 01/01/22 3,305,610
4,000 Long Island Pwr Auth NY Elec Sys Rev Genl Ser
A............................................... 5.500 12/01/29 4,133,520
4,000 Monroe Cnty, NY Arpt Auth Rev Greater Rochester
Intl (MBIA Insd)................................ 7.250 01/01/09 4,233,120
1,400 Monroe Cnty, NY Indl Dev Agy Rev Pub Impt Canal
Ponds Park Ser A................................ 7.000 06/15/13 1,545,796
2,000 Nassau Cnty, NY Genl Impt Ser Q (FGIC Insd)..... 5.200 08/01/13 2,104,220
1,000 New York City Indl Dev Agy Spl Fac Rev 1990
AMR/American Airls Inc.......................... 7.750 07/01/19 1,026,020
1,000 New York City Indl Dev Agy Spl Fac Rev Terminal
One Group Assn Proj............................. 6.000 01/01/15 1,065,430
5,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser F (AMBAC Insd).......................... 5.500 06/15/12 5,383,050
70 New York City Ser A............................. 7.750 08/15/06 78,030
2,770 New York City Ser A (Prerefunded @ 08/15/01).... 7.750 08/15/06 3,110,904
6,695 New York City Ser B............................. 6.600 10/01/16 7,359,010
3,305 New York City Ser B (Prerefunded @ 10/01/02).... 6.600 10/01/16 3,689,371
120 New York City Ser C Subser C1................... 7.500 08/01/20 135,660
4,880 New York City Ser C Subser C1 (Prerefunded @
08/01/02)....................................... 7.500 08/01/20 5,588,137
960 New York City Ser D............................. 6.500 02/15/06 1,084,022
1,790 New York City Ser D (Prerefunded @ 02/15/05).... 6.500 02/15/06 2,054,329
3,000 New York City Ser F (Prerefunded @ 11/15/01).... 8.250 11/15/16 3,438,810
2,500 New York St Dorm Auth Rev City Univ Sys Third
Genl Res Ser 2.................................. 6.000 07/01/20 2,696,600
1,625 New York St Dorm Auth Rev City Univ Sys Cons Ser
A............................................... 5.625 07/01/16 1,756,073
2,000 New York St Dorm Auth Rev City Univ Sys Cons Ser
A (Prerefunded @ 07/01/00)...................... 7.625 07/01/20 2,173,520
1,725 New York St Dorm Auth Rev Dept Hlth Vets Home... 5.500 07/01/11 1,856,893
2,075 New York St Dorm Auth Rev Genessee Vly Ser B
(FHA Gtd)....................................... 6.900 02/01/32 2,257,538
1,000 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................... * 07/01/06 731,970
905 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................... * 07/01/07 633,328
1,000 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................... * 07/01/08 665,250
1,000 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................... * 07/01/09 631,160
1,000 New York St Dorm Auth Rev NY Pub Lib (MBIA
Insd)........................................... * 07/01/10 597,660
1,500 New York St Dorm Auth Rev St Univ Edl Fac....... 5.750 05/15/10 1,645,770
2,000 New York St Dorm Auth Rev Upstate Cmnty Colleges
Ser B (Prerefunded @ 07/01/01).................. 7.375 07/01/11 2,222,140
</TABLE>
See Notes to Financial Statements
2
<PAGE> 4
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
<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 $ 2,213,420
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 3,764,530
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 1,164,534
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 1,862,245
3,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser C (MBIA Insd)............ 5.600 06/01/25 3,126,450
4,000 New York St Energy Resh & Dev Auth Pollutn Ctl
Rev Niagara Mohawk Pwr Rfdg (FGIC Insd)......... 6.625 10/01/13 4,361,760
1,290 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Rev.................................. 6.600 06/15/09 1,472,161
1,925 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Rev (Prerefunded @ 06/15/04)......... 6.600 06/15/09 2,207,840
2,000 New York St Environmental Fac Corp Solid Waste
Disp Rev Occidental Petroleum Corp Proj......... 6.100 11/01/30 2,111,480
2,055 New York St Hsg Fin Agy Rev Newburgh Interfaith
Hsg Ser A....................................... 7.050 11/01/12 2,173,471
1,500 New York St Loc Govt Assistance Corp Ser B Rfdg
(MBIA Insd)..................................... 5.000 04/01/21 1,486,965
1,500 New York St Loc Govt Assistance Corp Ser D
(Prerefunded @ 04/01/02)........................ 7.000 04/01/18 1,684,800
65 New York St Med Care Fac Fin Agy Rev Mental Hlth
Svcs Fac Ser C.................................. 7.300 02/15/21 71,544
685 New York St Med Care Fac Fin Agy Rev Mental Hlth
Svcs Fac Ser C (Prerefunded @ 08/15/01)......... 7.300 02/15/21 763,898
750 New York St Med Care Fac Fin Agy Rev Mental Hlth
Svcs Fac Ser D.................................. 7.400 02/15/18 835,223
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 1,920,422
2,000 New York St Med Care Fac Fin Agy Rev
Presbyterian Hosp Ser A Rfdg (FHA Gtd).......... 5.375 02/15/25 2,044,580
1,000 New York St Muni Bond Bk Agy Spl Pgm Rev Buffalo
Ser A........................................... 6.875 03/15/06 1,091,420
3,000 New York St Muni Bond Bk Agy Spl Pgm Rev
Rochester Ser A................................. 6.750 03/15/11 3,312,240
4,000 New York St Thruway Auth Svc Contract Rev (MBIA
Insd)........................................... 5.000 04/01/18 4,001,560
2,000 New York St Urban Dev Corp Rev Correctional Cap
Fac Rfdg........................................ 5.625 01/01/07 2,131,560
5,000 New York St Urban Dev Corp Rev Correctional Cap
Fac Ser 3 (Prerefunded @ 01/01/02).............. 7.000 01/01/21 5,581,850
1,500 New York St Urban Dev Corp Rev Correctional Cap
Fac Ser 4....................................... 5.375 01/01/23 1,518,555
1,115 New York St Urban Dev Corp Rev Proj Pine
Barrens......................................... 5.375 04/01/17 1,138,404
2,500 Port Auth NY & NJ Cons Ser 77................... 6.250 01/15/27 2,660,450
</TABLE>
See Notes to Financial Statements
3
<PAGE> 5
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$1,000 Port Auth NY & NJ Delta Airls Inc Proj Ser 1R... 6.950% 06/01/08 $ 1,080,330
2,500 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (MBIA Insd)................ 6.000 12/01/07 2,833,875
2,000 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (MBIA Insd)................ 5.750 12/01/25 2,121,100
1,285 Syracuse, NY Ser B.............................. 5.250 10/01/08 1,385,384
1,930 Yonkers, NY Ser A (Prerefunded @ 02/15/02) (FGIC
Insd)........................................... 6.500 02/15/07 2,121,552
400 Yonkers, NY Ser A (Prerefunded @ 02/15/02) (FGIC
Insd)........................................... 6.500 02/15/12 441,868
------------
134,012,852
------------
GUAM 3.0%
2,000 Guam Arpt Auth Rev Ser B........................ 6.400 10/01/05 2,176,300
1,000 Guam Arpt Auth Rev Ser B........................ 6.700 10/01/23 1,095,160
1,000 Guam Pwr Auth Rev Ser A......................... 6.625 10/01/14 1,109,500
------------
4,380,960
------------
PUERTO RICO 0.6%
761 Centro de Recaudaciones de Ingresos Muni Ctfs
Partn PR........................................ 6.850 10/17/03 795,470
------------
U. S. VIRGIN ISLANDS 1.6%
2,000 Virgin Islands Pub Fin Auth Rev Matching Fd Ln
Nts Ser A Rfdg (Prerefunded @ 10/01/02)......... 7.250 10/01/18 2,293,780
------------
TOTAL LONG-TERM INVESTMENTS 98.6%
(Cost $127,296,743)........................................................ 141,483,062
SHORT-TERM INVESTMENTS 0.1%
(Cost $100,000)............................................................ 100,000
------------
TOTAL INVESTMENTS 98.7%
(Cost $127,396,743)........................................................ 141,583,062
OTHER ASSETS IN EXCESS OF LIABILITIES 1.3%.................................. 1,924,081
------------
NET ASSETS 100.0%.......................................................... $143,507,143
============
</TABLE>
*Zero coupon bond
PORTFOLIO COMPOSITION BY CREDIT QUALITY*
The following table summarizes the portfolio composition at October 31,
1998, based upon the highest credit quality ratings as determined by Standard &
Poor's or Moody's.
<TABLE>
<S> <C>
AAA....................... 54.3%
AA........................ 6.1
A......................... 19.6
BBB....................... 17.8
NR........................ 2.2
-----
100.0%
=====
</TABLE>
* As a percentage of Long-Term Investments.
See Notes to Financial Statements
4
<PAGE> 6
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $127,396,743)....................... $141,583,062
Cash........................................................ 62,062
Receivables:
Interest.................................................. 2,231,300
Investments Sold.......................................... 45,000
Other....................................................... 2,313
------------
Total Assets............................................ 143,923,737
------------
LIABILITIES:
Payables:
Income Distributions - Common and Preferred Shares........ 124,330
Investment Advisory Fee................................... 85,562
Administrative Fee........................................ 24,446
Affiliates................................................ 7,500
Trustees' Deferred Compensation and Retirement Plans........ 89,940
Accrued Expenses............................................ 84,816
------------
Total Liabilities....................................... 416,594
------------
NET ASSETS.................................................. $143,507,143
============
NET ASSETS CONSIST OF:
Preferred Shares ($.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............................................. 83,577,849
Net Unrealized Appreciation................................. 14,186,319
Accumulated Net Realized Gain............................... 359,392
Accumulated Undistributed Net Investment Income............. 327,027
------------
Net Assets Applicable to Common Shares.................. 98,507,143
------------
NET ASSETS.................................................. $143,507,143
============
NET ASSET VALUE PER COMMON SHARE
($98,507,143 divided by 5,655,638 shares outstanding)..... $ 17.42
============
</TABLE>
See Notes to Financial Statements
5
<PAGE> 7
STATEMENT OF OPERATIONS
For the Two Months Ended October 31, 1998
and the Year Ended August 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Two Months Ended Year Ended
October 31, 1998 August 31, 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................... $1,392,511 $ 8,441,492
---------- -----------
EXPENSES:
Investment Advisory Fee................................ 167,979 993,126
Administrative Fee..................................... 47,994 283,750
Preferred Share Maintenance............................ 20,938 117,796
Legal.................................................. 3,081 4,769
Trustees' Fees and Expenses............................ 2,046 25,391
Custody................................................ 1,741 11,224
Other.................................................. 31,449 153,679
---------- -----------
Total Expenses..................................... 275,228 1,589,735
---------- -----------
NET INVESTMENT INCOME.................................. $1,117,283 $ 6,851,757
========== ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain...................................... $ 10,021 $ 391,977
---------- -----------
Unrealized Appreciation/Depreciation:
Beginning of the Period.............................. 14,034,354 11,274,021
End of the Period.................................... 14,186,319 14,034,354
---------- -----------
Net Unrealized Appreciation During the Period.......... 151,965 2,760,333
---------- -----------
NET REALIZED AND UNREALIZED GAIN....................... $ 161,986 $ 3,152,310
========== ===========
NET INCREASE IN NET ASSETS FROM OPERATIONS............. $1,279,269 $10,004,067
========== ===========
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
STATEMENT OF CHANGES IN NET ASSETS
For the Two Months Ended October 31, 1998 and the
Years Ended August 31, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Two Months Ended Year Ended Year Ended
October 31, 1998 August 31, 1998 August 31, 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income...................... $ 1,117,283 $ 6,851,757 $ 6,940,561
Net Realized Gain.......................... 10,021 391,977 55,284
Net Unrealized Appreciation During the
Period................................... 151,965 2,760,333 4,058,210
------------ ------------ ------------
Change in Net Assets from Operations....... 1,279,269 10,004,067 11,054,055
------------ ------------ ------------
Distributions from Net Investment Income:
Common Shares............................ (848,283) (5,259,384) (5,597,679)
Preferred Shares......................... (255,910) (1,603,442) (1,597,711)
------------ ------------ ------------
(1,104,193) (6,862,826) (7,195,390)
------------ ------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES............................... 175,076 3,141,241 3,858,665
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through
Dividend Reinvestment.................... -0- -0- 132,181
------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS............... 175,076 3,141,241 3,990,846
NET ASSETS:
Beginning of the Period.................... 143,332,067 140,190,826 136,199,980
------------ ------------ ------------
End of the Period (Including accumulated
undistributed net investment income of
$327,027, $313,937 and $322,848,
respectively)............................ $143,507,143 $143,332,067 $140,190,826
============ ============ ============
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Two Months Ended ------------------------------
October 31, 1998 1998 1997 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period (a).................................. $17.387 $ 16.831 $16.148 $16.469
------- -------- ------- -------
Net Investment Income....................... .198 1.212 1.227 1.245
Net Realized and Unrealized Gain/Loss....... .028 .558 .728 (.226)
------- -------- ------- -------
Total from Investment Operations............. .226 1.770 1.955 1.019
------- -------- ------- -------
Less:
Distributions from Net Investment Income:
Paid to Common Shareholders............... .150 .930 .990 1.050
Common Share Equivalent of Distributions
Paid to Preferred Shareholders.......... .045 .284 .282 .290
Distributions from and in Excess of Net
Realized Gain:
Paid to Common Shareholders............... -0- -0- -0- -0-
Common Share Equivalent of Distributions
Paid to Preferred Shareholders.......... -0- -0- -0- -0-
------- -------- ------- -------
Total Distributions.......................... .195 1.214 1.272 1.340
------- -------- ------- -------
Net Asset Value, End of the Period........... $17.418 $17.387 $16.831 $16.148
======= ======== ======= =======
Market Price Per Share at End of the
Period...................................... $16.875 $16.75 $16.125 $16.500
Total Investment Return at Market
Price (b)................................... 1.64%* 9.94% 3.94% 13.62%
Total Return at Net Asset Value (c).......... 1.04%* 9.07% 10.62% 4.45%
Net Assets at End of the Period (In
millions)................................... $143.5 $143.3 $140.2 $136.2
Ratio of Expenses to Average Net Assets
Applicable to Common Shares**............... 1.67% 1.64% 1.68% 1.74%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (d)...... 5.23% 5.42% 5.73% 5.77%
Portfolio Turnover........................... 1%* 26% 17% 23%
* Non-Annualized
** Ratio of Expenses to Average Net Assets
Including Preferred Shares............... 1.15% 1.12% 1.13% 1.18%
</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.
8
<PAGE> 10
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 27, 1991
(Commencement
August 31, of Investment
---------------------------------------- Operations) to
1995 1994 1993 August 31, 1992
-----------------------------------------------------------
<S> <C> <C> <C> <C>
$16.633 $17.958 $16.303 $14.777
------- ------- ------- -------
1.243 1.302 1.307 1.068
.168 (1.163) 1.640 1.400
------- ------- ------- -------
1.411 .139 2.947 2.468
------- ------- ------- -------
1.050 1.050 1.007 .743
.267 .211 .195 .199
.216 .177 .071 -0-
.042 .026 .019 -0-
------- ------- ------- -------
1.575 1.464 1.292 .942
------- ------- ------- -------
$16.469 $16.633 $17.958 $16.303
======= ======= ======= =======
$15.500 $15.375 $17.250 $15.625
9.73% (4.08%) 17.94% 9.39%*
7.29% (.67%) 17.42% 14.00%*
$ 137.9 $ 138.9 $ 146.3 $ 137.0
1.76% 1.66% 1.66% 1.67%
6.08% 6.31% 6.58% 6.27%
50% 21% 25% 65%*
1.17% 1.14% 1.13% 1.17%
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen 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. In July, 1998, the Fund's Board of
Trustees approved a change in the Fund's fiscal year end from August 31 to
October 31. As a result, this financial report reflects the two month period
commencing on September 1, 1998 and ending on October 31, 1998.
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 October 31, 1998 there were no
when issued or delayed delivery purchase commitments.
10
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
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.
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 October 31, 1998, for federal income tax purposes, cost of long- and
short-term investments is $127,396,743 the aggregate gross unrealized
appreciation is $14,193,337 and the aggregate gross unrealized depreciation is
$7,018, resulting in net unrealized appreciation on long- and short-term
investments of $14,186,319.
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.
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between financial and tax basis
reporting for the year ended August 31, 1998 have been identified and
appropriately reclassified. Permanent book and tax basis differences relating to
expenses which are not deductible for tax purposes totaling $2,158 were
reclassified from accumulated undistributed net investment income to capital.
For the two months ended October 31, 1998, 100% of the income distributions
made by the Trust were exempt from federal income taxes. In January, 1999, the
Trust will provide tax information to shareholders for the 1998 calendar year.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
Investment Advisory Corp. (the "Adviser") will provide investment advice and
facilities to the Trust for an annual fee payable monthly of .70% of the average
net assets of the Trust. In addition, the Trust will pay a monthly
administrative fee to Van Kampen Funds Inc. or its affiliates (collectively "Van
Kampen"), 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
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
include record keeping and reporting responsibilities with respect to the
Trust's portfolio and preferred shares and providing certain services to
shareholders.
For the two months ended October 31, 1998 and the year ended August 31,
1998, the Trust recognized expenses of approximately $1,100 and $2,500,
respectively, 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 two months ended October 31, 1998 and the year ended August 31,
1998, the Trust recognized expenses of approximately $10,100 and $59,400,
respectively, representing Van Kampen's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Trust. The maximum
annual benefit per trustee under the plan is $2,500.
3. CAPITAL TRANSACTIONS
At October 31, 1998, August 31, 1998, and August 31, 1997, common share paid in
surplus aggregated $83,577,849, $83,577,849, and $83,580,007, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
TWO MONTHS
ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 AUGUST 31, 1998 AUGUST 31, 1997
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning Shares............. 5,655,638 5,655,638 5,647,596
Shares Issued Through
Dividend Reinvestment...... -0- -0- 8,042
------------ ------------- -------------
Ending Shares................ 5,655,638 5,655,638 5,655,638
============ ============= =============
</TABLE>
4. INVESTMENT TRANSACTIONS
For the two months ended October 31, 1998, the cost of purchases and proceeds
from sales of investments, excluding short-term investments, were $1,493,970 and
$1,088,085, respectively. For the year ended August 31, 1998, the cost of
purchases and proceeds
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
from sales of investments, excluding short-term investments, were $35,914,404
and $36,397,292, 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 effect on October 31, 1998, was 3.350%. During the two months
ended October 31, 1998, the rates ranged from 3.350% to 3.440%.
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.
6. CAPITAL GAIN DISTRIBUTION
On December 3, 1998, the Trust declared a capital gain of $0.0483 per common
share, of which $0.0276 is long-term and $0.0207 is short-term, to common
shareholders of record on December 15, 1998. The gain will be payable on
December 31, 1998.
7. YEAR 2000 COMPLIANCE (UNAUDITED)
Van Kampen utilizes a number of computer programs across its entire operation
relying on both internal software systems as well as external software systems
provided by third parties. In 1996 Van Kampen initiated a CountDown 2000 Project
to review both the internal systems and external vendor connections. The goal of
this project is to position its business to continue unaffected as a result of
the century change. At this time, there can be no assurance that the steps taken
will be sufficient to avoid any adverse impact to the Trust, but Van Kampen does
not anticipate that the move to Year 2000 will have a material impact on its
ability to continue to provide the Trust with service at current levels. In
addition, it is possible that the securities markets in which the Trust invests
may be detrimentally affected by computer failures throughout the financial
services industry beginning January 1, 2000. Improperly functioning trading
systems may result in settlement problems and liquidity issues.
13
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders of
Van Kampen New York Quality Municipal Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen New York Quality Municipal Trust (the "Trust"), including the portfolio
of investments, as of October 31, 1998, and the related statement of operations
for the two-month period ended October 31, 1998 and the year ended August 31,
1998, the statement of changes in net assets for the two-month period ended
October 31, 1998 and for each of the two years in the period ended August 31,
1998, 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
October 31, 1998, 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 New York Quality Municipal Trust as of October 31, 1998, the results of
its operations for the two-month period ended October 31, 1998 and the year
ended August 31, 1998, the changes in its net assets for the two-month period
ended October 31, 1998 and for each of the two years in the period ended August
31, 1998, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 15, 1998
14
<PAGE> 16
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be re-
registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-
8200. If you withdraw, you will receive, without charge, a share certificate
issued in your name for all full Common Shares credited to your account under
the Plan and a cash payment will be made for any fractional Common Share
credited to your account under the Plan. You may again elect to participate in
the Plan at any time by calling 1-800-341-2929 or writing to the Trust at:
Van Kampen Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
15
<PAGE> 17
VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL* - Chairman
STEVEN MULLER
THEODORE A. MYERS
DON G. POWELL*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and
Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN INVESTMENT
ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
CUSTODIAN AND
TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG 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 Funds Inc., 1998 All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
16
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> NY QUALITY
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> SEP-01-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 127,396,743
<INVESTMENTS-AT-VALUE> 141,583,062
<RECEIVABLES> 2,276,300
<ASSETS-OTHER> 2,313
<OTHER-ITEMS-ASSETS> 62,062
<TOTAL-ASSETS> 143,923,737
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 416,594
<TOTAL-LIABILITIES> 416,594
<SENIOR-EQUITY> 45,000,000
<PAID-IN-CAPITAL-COMMON> 83,634,405
<SHARES-COMMON-STOCK> 5,655,638
<SHARES-COMMON-PRIOR> 5,655,638
<ACCUMULATED-NII-CURRENT> 327,027
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 359,392
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,186,319
<NET-ASSETS> 143,507,143
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,392,511
<OTHER-INCOME> 0
<EXPENSES-NET> (275,228)
<NET-INVESTMENT-INCOME> 1,117,283
<REALIZED-GAINS-CURRENT> 10,021
<APPREC-INCREASE-CURRENT> 151,965
<NET-CHANGE-FROM-OPS> 1,279,269
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,104,193)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 175,076
<ACCUMULATED-NII-PRIOR> 313,937
<ACCUMULATED-GAINS-PRIOR> 349,371
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 167,979
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 275,228
<AVERAGE-NET-ASSETS> 143,569,522
<PER-SHARE-NAV-BEGIN> 17.387
<PER-SHARE-NII> 0.198
<PER-SHARE-GAIN-APPREC> 0.028
<PER-SHARE-DIVIDEND> (0.195)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.418
<EXPENSE-RATIO> 1.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
