-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HY4IcVAA3b7NtAYOiizdGMdOS7JYEOUCoFgy9IQYaShKAmlm/ynN0ttb1uaql0aE Fdxrciga/s1ebGhp/Y269A== 0000950137-04-005304.txt : 20040629 0000950137-04-005304.hdr.sgml : 20040629 20040629130912 ACCESSION NUMBER: 0000950137-04-005304 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040430 FILED AS OF DATE: 20040629 EFFECTIVENESS DATE: 20040629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST CENTRAL INDEX KEY: 0000877461 IRS NUMBER: 363779780 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06361 FILM NUMBER: 04887816 BUSINESS ADDRESS: STREET 1: ONE PARKVIEW PLZ STREET 2: VAN KAMPEN INVESTMETNS INC CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 BUSINESS PHONE: 6306846774 MAIL ADDRESS: STREET 1: VAN KAMPEN INVESTMETNS INC STREET 2: ONE PARKVIEW PLZ CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNI TRUST DATE OF NAME CHANGE: 19960102 FORMER COMPANY: FORMER CONFORMED NAME: VAN KAMPEN MERRITT CALIFORNIA QUALITY MUNICIPAL TRUST DATE OF NAME CHANGE: 19920929 N-CSRS 1 c85436nvcsrs.txt SEMIANNUAL REPORT DATED APRIL 30, 2004 ------------------------- OMB APPROVAL ------------------------- OMB Number: 3235-0570 Expires: October 31, 2006 Estimated average burden hours per response: 19.3 ------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6361 Van Kampen California Quality Municipal Trust - --------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Ronald Robison 1221 Avenue of the Americas, New York, New York 10020 - --------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: 10/31 Date of reporting period: 4/30/04 Item 1. Report to Shareholders. The Trust's semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: Welcome, Shareholder In this report, you'll learn about how your investment in Van Kampen California Quality Municipal Trust performed during the semiannual period. The portfolio management team will provide an overview of the market conditions and discuss some of the factors that affected investment performance during the reporting period. In addition, this report includes the trust's financial statements and a list of trust investments as of April 30, 2004. Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the trust will achieve its investment objective. Trusts are subject to market risk, which is the possibility that the market values of securities owned by the trust will decline and that the value of trust shares may therefore be less than what you paid for them. Accordingly, you can lose money investing in this trust. Income may subject certain individuals to the federal Alternative Minimum Tax (AMT).
--------------------------------------------------------------------------------------- NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE --------------------------------------------------------------------------------------- NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT ---------------------------------------------------------------------------------------
Performance Summary as of 4/30/04
CALIFORNIA QUALITY MUNICIPAL TRUST SYMBOL: VQC - ------------------------------------------------------ AVERAGE ANNUAL BASED ON BASED ON TOTAL RETURNS NAV MARKET PRICE Since Inception (09/27/91) 7.87% 6.96% 10-year 7.75 7.18 5-year 6.01 3.83 1-year 1.99 -5.38 6-month 0.75 -5.36 - ------------------------------------------------------
Past performance is no guarantee of future results. Investment return, net asset value (NAV) and common share market price will fluctuate and trust shares, when sold, may be worth more or less than their original cost. As a result of recent market activity, current performance may vary from the figures shown. For more up-to-date information, please visit vankampen.com or speak with your financial advisor. NAV per share is determined by dividing the value of the trust's portfolio securities, cash and other assets, less all liabilities, by the total number of common shares outstanding. The common share market price is the price the market is willing to pay for shares of the trust at a given time. Common share market price is influenced by a range of factors, including supply and demand and market conditions. Total return assumes an investment at the beginning of the period, reinvestment of all distributions for the period in accordance with the trust's dividend reinvestment plan, and sale of all shares at the end of the period. The Lehman Brothers California Municipal Bond Index is a broad-based statistical composite of California municipal bonds. The index is unmanaged and does not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. 1 Trust Report FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2004 Van Kampen California Quality Municipal Trust is managed by the adviser's Municipal Fixed Income team.(1) Current members include Joseph Piraro, Vice President; Robert Wimmel, Vice President; and John Reynoldson, Executive Director. MARKET CONDITIONS The state of the U.S. economy remained mixed over the six-month period under review. On the positive side, economic growth continued to be robust, with Gross Domestic Product growth topping 4 percent in both the last quarter of 2003 and, preliminarily, the first quarter of this year. While this strength in output has historically triggered fears of rising interest rates, yields remained stubbornly low across the municipal curve. These low yields were partly the result of the continued low levels of observed inflation in the U.S. economy. Unfortunately, they also reflected continuing weakness in the job market, which remained soft throughout most of the period. The soft job numbers, coupled with persistently low inflation, led the Federal Open Market Committee (the Fed) to maintain its accommodative stance throughout the period. The surprisingly rapid job growth data released in April, coupled with rapidly rising commodity and high oil prices, led many investors to fear that the Fed would be forced to raise interest rates earlier than the market initially expected. As a result, bond yields across all major sectors spiked in April. Supply of new municipal bonds in calendar 2003 hit record levels as municipalities moved to take advantage of historically low interest rates. Many cities and states sought to reduce expenditures by refinancing existing debt and replacing it with lower-yielding bonds. In other cases, municipalities attempted to meet current and future funding needs by issuing new debt. This activity slowed in the first months of 2004. The low interest rates that prevailed over much of the period also had an impact on the demand for municipal bonds. Retail and institutional investor activity slowed as holders of municipal bonds saw little reason to sell bonds purchased at higher yield levels and reinvest at lower yields. However, the period was marked by rising activity among non-traditional investors, such as hedge funds and insurance companies seeking to take advantage of the attractiveness of municipal bonds relative to some taxable securities. Additionally, investors' search for yield led to significant outperformance by lower-rated bonds with greater credit risk. Sectors such as health care, with a preponderance of lower-rated issues, performed particularly well. (1)Team members may change without notice at any time. 2 California remained in the municipal spotlight during the period, with many investors anxiously awaiting the result of the March 2 referendum on Propositions 57 and 58. These two measures, which voters ultimately approved, gave the green light to approximately $15 billion of economic-improvement bonds that will begin to come to the market in early June. The passage of these measures led the major ratings agencies to increase their outlooks (though not their ratings) for the beleaguered state's bonds, with S&P shifting from stable to positive and Moody's shifting from negative to stable. This surge in issuance will at least partially offset the surprising decline in new debt in the first quarter of 2004, which was one third lower than the first quarter of last year. The majority of debt issued by the state for the entire six-month period offered credit enhancements, with fully two thirds of debt coming to market with credit insurance. PERFORMANCE ANALYSIS Closed-end fund returns can be calculated based upon either the market price or the net asset value (NAV) of its shares. NAV per share is determined by dividing the value of the trust's portfolio securities, cash and other assets, less all liabilities, by the total number of common shares outstanding, while market price reflects the supply and demand for the shares. As a result, the two returns can differ significantly. On both an NAV basis and a market-price basis, the trust underperformed its benchmark, the Lehman Brothers California Municipal Bond Index. (See table below.) The trust uses leverage to enhance its dividend to common shareholders. The trust borrows money at short-term rates through the issuance of preferred shares. The proceeds are typically reinvested in longer-term securities, taking advantage of the difference between short- and longer-term rates. As yields rose during the period, the prices of bonds declined. The trust's use of leverage magnified this negative movement, leading to a slightly lower total return at NAV than that of its benchmark, which is not leveraged. Our analysis of the macroeconomic environment, coupled with the levels of interest rates near multi-decade lows, led us to believe that interest rates were more likely to rise than to fall further. As a result, we kept the trust's duration (a measure of interest-rate sensitivity) below that of its benchmark in order to limit the potentially damaging impact of any increase in interest rates. This TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2004
- ---------------------------------------------------------------- BASED ON BASED ON LEHMAN BROTHERS CALIFORNIA NAV MARKET PRICE MUNICIPAL BOND INDEX 0.75% -5.36% 1.53% - ----------------------------------------------------------------
Past performance is no guarantee of future results. Investment return, net asset value and common share market price will fluctuate and trust shares, when sold, may be worth more or less than their original cost. See Performance Summary for additional performance information and index definition. 3 approach hampered the trust's returns for much of the period as interest rates fell; however, it helped buoy returns when interest rates soared in the final weeks of the period. The trust's performance was also modestly hampered by its bias, relative to the benchmark, toward high-quality securities. Municipal bond investors during the period responded to the improving economy by reducing the yield spreads between higher- and lower-rated bonds (yield spreads reflect the premium demanded by investors to buy lower-rated bonds). As a result, lower-quality bonds outperformed. The portfolio had 70 percent exposure to bonds rated AA/Aa or higher at the end of the period. We adjusted the portfolio's term structure in anticipation of rising interest rates. Our research showed that the intermediate portion of the curve offered the most promising total-return potential. As a result, we focused our purchases on the 18- to 22-year segment of the curve. Many of the securities we identified had the added appeal of premium coupons and 10-year call dates, which served to add income to the portfolio while limiting its interest-rate exposure. Our trading activity during the period was below traditional norms because we wanted to avoid having to reinvest into securities with low yields. That said, we were able to make selective relative-value trades among securities and sectors as they moved into and out of fair value. Some of these acquisitions were funded by the proceeds of the sale of prerefunded bonds. In other cases we sold bonds that met their performance objectives. We reinvested this cash into securities that we believed had more promising total-return characteristics. The trust's portfolio remained well diversified during the period, with its holdings spread across most major municipal bond sectors. We believe this long- standing strategy helps to minimize the risk of over-concentration in any single sector, while also giving the portfolio exposure to as many potential sources of return as possible. Our strategy during the period emphasized bonds tied to essential services, and de-emphasized housing and health-care bonds. The three TOP 5 SECTORS AS OF 4/30/04 RATINGS ALLOCATION AS OF 4/30/04 Tax District 19.6% AAA/Aaa 67.6% General Purpose 13.5 AA/Aa 2.7 Public Building 12.0 A/A 4.7 Water & Sewer 11.6 BBB/Baa 12.6 Public Education 7.9 Non-Rated 12.4
Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned or securities in the sectors shown above. All percentages are as a percentage of long-term investments. Securities are classified by sectors that represent broad groupings of related industries. Ratings allocations based upon ratings as issued by Standard and Poor's and Moody's. Van Kampen is a wholly owned subsidiary of a global securities firm which is engaged in a wide range of financial services including, for example, securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. 4 largest sector exposures at the end of the period were tax districts, general purpose and public building. As mentioned above, the portfolio's below-market duration served it well in the final weeks of the period, when interest rates rose sharply. While it is impossible to predict how long this trend will hold, we believe that the trust is well positioned to weather further increases in rates. We look forward to becoming more active in seeking attractive structures and relative-value trading opportunities now that rates have moved into a more normal range. PROXY VOTING POLICIES AND PROCEDURES A description of the trust's policies and procedures with respect to the voting of proxies relating to the trust's portfolio securities is available without charge, upon request, by calling 1-800-847-2424. This information is also available on the Securities and Exchange Commission's website at http://www.sec.gov. 5 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- MUNICIPAL BONDS 148.2% CALIFORNIA 144.8% $1,390 Abag Fin Auth For Nonprofit Corp CA Ctf Part Childrens Hosp Med Ctr (AMBAC Insd)............. 5.875% 12/01/19 $ 1,549,238 500 Abag Fin Auth For Nonprofit Corp CA Ctf Part Childrens Hosp Med Ctr (AMBAC Insd)............. 6.000 12/01/29 549,205 1,000 Abag Fin Auth For Nonprofit Corp CA Multi-Family Rev Hsg Utd Dominion Ser A Rfdg (AMT) (Asset Gty Insd)........................................... 6.400 08/15/30 1,112,040 1,000 Bakersfield, CA Ctf Part Convention Ctr Expansion Proj (MBIA Insd)...................... 5.875 04/01/22 1,081,560 1,790 Banning, CA Cmnty Redev Agy Tax Alloc Merged Downtown Proj (Radian Insd)..................... 5.000 08/01/23 1,737,106 1,000 Benicia, CA Uni Sch Dist Ser B (MBIA Insd)...... * 08/01/18 479,100 1,610 Blythe, CA Redev Agy Redev Proj No 1 Tax Alloc Ser A Rfdg...................................... 7.500 05/01/23 1,696,038 1,055 Borrego, CA Wtr Dist Ctf Part Wtr Sys Acquisition..................................... 7.000 04/01/27 1,104,743 1,000 California Edl Fac Auth Rev Pooled College & Univ Ser B...................................... 6.625 06/01/20 1,085,420 1,670 California Edl Fac Auth Rev Student Ln CA Ln Pgm Ser A (AMT) (MBIA Insd)......................... 6.000 03/01/16 1,763,487 2,500 California Hlth Fac Fin Auth Rev Cedars Sinai Med Ctr Ser A................................... 6.125 12/01/19 2,689,225 2,000 California Infrastructure & Econ Dev Bk Rev Bay Area Toll Brdgs First Lien Ser A (FGIC Insd).... 5.000 07/01/29 2,002,040 6,200 California Pollutn Ctl Fin Auth Pollutn Ctl Rev Southn CA Edison Co (AMT) (AMBAC Insd).......... 6.000 07/01/27 6,234,906 420 California Rural Home Mtg Fin Auth Single Family Mtg Rev Pgm Ser B (AMT) (GNMA Collateralized)... 6.250 12/01/31 436,040 90 California Rural Home Mtg Fin Auth Single Family Mtg Rev Ser C (AMT) (GNMA Collateralized)....... 7.800 02/01/28 95,416 1,060 California Spl Dist Assn Fin Corp Ctf Part Spl Dist Fin Pgm Ser KK (FSA Insd).................. 5.800 11/01/29 1,138,779 2,500 California St (AMBAC Insd)...................... 5.000 02/01/18 2,590,625 1,850 California St (AMBAC Insd)...................... 5.000 02/01/19 1,906,758 1,000 California St (CIFG Insd)....................... 5.000 10/01/22 1,013,330 2,655 California St Cpn Muni Rcpts.................... * 03/01/08 2,332,205 2,655 California St Cpn Muni Rcpts.................... * 09/01/09 2,156,895 2,000 California St Dept Wtr Res Pwr Ser A (AMBAC Insd)........................................... 5.500 05/01/16 2,182,960 9,600 California St Prin Muni Rcpts (XLCA Insd)....... * 09/01/09 8,014,368 4,000 California St Pub Wks Brd Lease Rev Dept Corrections Ser E Rfdg (XLCA Insd).............. 5.000 06/01/18 4,149,080 1,000 California St Pub Wks Brd Lease Rev Dept Hlth Svcs Ser A (MBIA Insd).......................... 5.750 11/01/24 1,067,250 2,340 California St Rfdg (FGIC Insd).................. 5.000 02/01/23 2,352,098
6 See Notes to Financial Statements VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $1,500 California St Univ Fresno Assn Sr Aux Organization Event Ctr.......................... 6.000% 07/01/26 $ 1,523,235 2,000 California St Vet Bd Ser BH (AMT) (FSA Insd).... 5.400 12/01/16 2,082,040 960 California St Vet Ser BJ (AMT).................. 5.700 12/01/32 968,506 2,000 California Statewide Cmntys Dev Auth Ctf Part (Acquired 11/23/99, Cost $2,000,000) (a)........ 7.250 11/01/29 2,050,440 1,325 California Statewide Cmntys Dev Auth Wtr & Wastewtr Rev Pooled Fin Pgm Ser B (FSA Insd).... 5.250 10/01/23 1,379,391 1,280 California Statewide Cmntys Dev Auth Wtr Rev Pooled Fin Pgm Ser C (FSA Insd)................. 5.250 10/01/28 1,310,029 2,000 Campbell, CA Redev Agy Tax Alloc Ctr Campbell Redev Proj Ser A................................ 6.550 10/01/32 2,136,200 1,595 Cardiff, CA Sch Dist Cap Apprec (FGIC Insd)..... * 08/01/24 535,218 1,675 Cardiff, CA Sch Dist Cap Apprec (FGIC Insd)..... * 08/01/25 523,823 240 Carson, CA Impt Bond Act 1915 Assmt Dist No 92-1............................................ 7.375 09/02/22 243,912 2,000 Carson, CA Redev Agy Tax Alloc Ser A Rfdg (MBIA Insd)........................................... 5.000 10/01/23 2,038,160 1,085 Cathedral City, CA Pub Fin Auth Rev Cap Apprec Ser A (MBIA Insd)............................... * 08/01/27 296,672 1,085 Cathedral City, CA Pub Fin Auth Rev Cap Apprec Ser A (MBIA Insd)............................... * 08/01/28 279,268 2,430 Chula Vista, CA Redev Agy Tax Alloc Sr Bayfront Ser D Rfdg...................................... 8.625 09/01/24 2,783,541 1,000 Coachella, CA Redev Agy Tax Alloc Proj Area No 3 Rfdg............................................ 5.875 12/01/28 1,003,180 1,000 Colton, CA Redev Agy Tax Alloc Mt Vernon Corridor Redev Proj............................. 6.300 09/01/36 1,046,750 620 Davis, CA Pub Fac Fin Auth Loc Agy Rev Mace Ranch Area Ser A................................ 6.500 09/01/15 656,648 1,000 Duarte, CA Redev Agy Tax Alloc Davis Addition Proj Area Rfdg.................................. 6.700 09/01/14 1,072,190 1,000 East Bay, CA Muni Util Dist Wtr Sys Rev (MBIA Insd)........................................... 5.000 06/01/21 1,023,000 2,445 East Bay, CA Muni Util Dist Wtr Sys Rev Sub..... 5.250 06/01/19 2,563,925 1,220 Emeryville, CA Pub Fin Auth Rev Assmt Dist Refin........................................... 5.900 09/02/21 1,239,520 1,000 Fairfield Suisun, CA Uni Sch Dist Spl Tax Cmnty Fac Dist No 5 New Sch (FSA Insd)................ 5.375 08/15/29 1,026,900 2,155 Florin, CA Res Consv Dist Cap Impt Elk Grove Wtr Svc A (MBIA Insd)............................... 5.000 09/01/33 2,136,833 1,000 Folsom, CA Spl Tax Cmnty Fac Dist No 2 Rfdg (Connie Lee Insd)............................... 5.250 12/01/19 1,056,410 15,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap Apprec Rfdg..................................... * 01/15/26 4,082,850 4,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap Apprec Rfdg..................................... * 01/15/30 843,920
See Notes to Financial Statements 7 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $2,500 Foothill/Eastern Corridor Agy CA Toll Rd Rev Conv Cap Apprec Rfdg (b)........................ 0/5.875% 01/15/27 $ 1,855,850 2,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Conv Cap Apprec Sr Lien Ser A (Escrowed to Maturity) (b)................................... 0/7.050 01/01/10 2,296,860 1,000 Glendale, CA Uni Sch Dist Ser C (FSA Insd)...... 5.500 09/01/19 1,083,080 2,000 Hawaii Desert, CA Mem Hlthcare Dist Rev Rfdg.... 5.500 10/01/19 1,776,260 1,000 Huntington Park, CA Pub Fin Auth Lease Rev Wastewtr Sys Proj Ser A......................... 6.200 10/01/25 1,025,550 1,000 Imperial Irr Dist CA Ctf Part Elec Sys Proj (FSA Insd)........................................... 5.250 11/01/23 1,033,630 1,435 Irvine, CA Pub Fac & Infrastructure Auth Assmt Rev Ser B (AMBAC Insd).......................... 5.000 09/02/22 1,464,331 1,500 La Quinta, CA Redev Agy Tax Redev Proj Area No 1 (AMBAC Insd).................................... 5.125 09/01/32 1,509,105 3,555 Long Beach, CA Hbr Rev Ser A (AMT) (FGIC Insd)........................................... 5.250 05/15/18 3,668,973 2,000 Los Angeles Cnty, CA Met Tran Auth Sales Tax Rev Prop A First Tier Sr Ser C Rfdg (AMBAC Insd).... 5.000 07/01/23 2,017,280 5,350 Los Angeles Cnty, CA Pension Oblig Ctf Ltd Muni Oblig Ser A (MBIA Insd)......................... 6.900 06/30/08 6,234,890 1,200 Los Angeles Cnty, CA Sch Regionalized Business Svc Ctf Part Cap Apprec Pooled Fin Ser A (AMBAC Insd)........................................... * 08/01/26 346,932 2,000 Los Angeles, CA Cmnty Redev Agy Cmnty Redev Fin Auth Rev Bunker Hill Proj Ser A (FSA Insd) (c)............................................. 5.000 12/01/27 1,998,540 1,900 Los Angeles, CA Ctf Part........................ 5.700 02/01/18 1,952,155 1,000 Los Angeles, CA Ctf Part Sr Sonnenblick Del Rio W L. A. (AMBAC Insd)............................ 6.000 11/01/19 1,134,960 1,468 Los Angeles, CA Multi-Family Rev Hsg Earthquake Rehab Proj Ser A (AMT) (FNMA Collateralized).... 5.700 12/01/27 1,559,483 755 Los Angeles, CA Single Family Home Mtg Rev Pgm Ser A (AMT) (GNMA Collateralized)............... 6.875 06/01/25 755,257 1,000 Los Angeles, CA Wtr & Pwr Rev Sys Ser A (MBIA Insd)........................................... 5.375 07/01/18 1,067,250 1,000 Los Gatos, CA Jt Uni High Sch Election of 1998 Ser C (FSA Insd)................................ 5.000 06/01/27 1,003,220 1,190 Lynwood, CA Util Auth Enterp Rev (FSA Insd)..... 5.000 06/01/25 1,195,557 1,000 Mendocino Cnty, CA Ctf Part Cnty Pub Fac Corp (MBIA Insd)..................................... 5.250 06/01/30 1,019,490 3,720 Midpeninsula Regl Open Space Dist CA Fin Auth Rev (AMBAC Insd)................................ * 08/01/27 941,234 1,710 Modesto, CA Irr Dist Ctf Part Cap Impts Ser A (FSA Insd)...................................... 5.250 07/01/17 1,815,883 2,000 Montclair, CA Redev Agy Mobile Home Pk Rev Hacienda Mobile Home Pk Proj.................... 6.000 11/15/22 1,893,060 1,000 Moorpark, CA Uni Sch Dist Ser A (FSA Insd)...... 5.000 08/01/23 1,015,810
8 See Notes to Financial Statements VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $1,110 Mountain View Los Altos, CA Uni High Sch Dist Cap Apprec Ser D (FSA Insd)..................... * 08/01/24 $ 372,472 2,000 Needles, CA Pub Util Auth Util Sys Acquisition Proj Ser A...................................... 6.500% 02/01/22 2,023,720 2,000 Oakland, CA Uni Sch Dist Alameda Cnty Ctf Part Energy Retrofit Proj (Prerefunded @ 11/15/06) (Acquired 5/24/96, Cost $1,908,220) (a)......... 6.750 11/15/14 2,273,640 1,000 Oakland, CA Uni Sch Dist Alameda Cnty Ctf Part Om-Energy Retrofit Proj (Prerefunded @ 11/15/05) (Acquired 1/22/02, Cost $1,075,953) (a)......... 7.000 11/15/11 1,101,350 1,180 Pasadena, CA Spl Tax Cmnty Fac Dist No 1 Civic Ctr West (Escrowed to Maturity)................. * 12/01/07 1,010,682 1,040 Perris, CA Pub Fin Auth Rev Tax Alloc Ser A (MBIA Insd)..................................... 5.000 10/01/24 1,048,788 1,000 Perris, CA Pub Fin Auth Rev Tax Alloc Ser A (MBIA Insd)..................................... 5.000 10/01/31 994,780 1,375 Pittsburg, CA Redev Agy Tax Alloc Los Medanos Cmnty Dev Proj (AMBAC Insd)..................... * 08/01/26 400,648 1,000 Port Oakland, CA Rev Ser N Rfdg (AMT) (MBIA Insd)........................................... 5.000 11/01/22 1,005,160 640 Port of Oakland, CA Spl Fac Rev Mitsui O.S.K. Line Ltd Ser A (AMT) (LOC: Industrial Bank of Japan).......................................... 6.800 01/01/19 642,848 1,500 Poway, CA Redev Agy Tax Alloc Paguay Redev Proj Ser A (MBIA Insd)............................... 5.000 06/15/33 1,487,400 2,000 Rancho Cordova Cmnty Fac Dist CA Spl Tax No 2003-1 Sunridge Anatolia........................ 6.000 09/01/24 1,964,120 2,540 Rancho Mirage, CA Redev Agy Tax Alloc Redev Plan 1984 Proj Ser A-E (MBIA Insd)................... 5.250 04/01/33 2,585,161 1,800 Redlands, CA Redev Agy Tax Alloc Redev Proj Ser A Rfdg (MBIA Insd).............................. 4.750 08/01/21 1,788,354 1,000 Redondo Beach, CA Pub Fin Auth Rev South Bay Ctr Redev Proj...................................... 7.000 07/01/16 1,060,110 4,000 Redwood City, CA Sch Dist (FGIC Insd)........... 5.000 07/15/23 4,062,960 3,000 Redwood City, CA Sch Dist (FGIC Insd)........... 5.000 07/15/27 3,008,790 1,900 Richmond, CA Rev YMCA East Bay Proj Rfdg........ 7.250 06/01/17 1,933,953 1,900 Sacramento Cnty, CA Santn Dist Fin Auth Rev Ser A............................................... 5.875 12/01/27 2,017,363 2,000 Sacramento, CA City Fin Auth City Hall & Redev Proj Ser A (FSA Insd)........................... 5.000 12/01/28 1,992,900 2,000 Sacramento, CA City Fin Auth Rev Cap Impt (AMBAC Insd)........................................... 5.000 12/01/33 1,986,160 2,000 Salinas Vly, CA Solid Waste Auth Rev (AMT) (AMBAC Insd).................................... 5.250 08/01/31 2,017,820 2,500 San Bernardino, CA Redev Agy Tax Alloc San Sevaine Redev Proj Ser A........................ 7.000 09/01/24 2,618,450
See Notes to Financial Statements 9 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $6,000 San Diego Cnty, CA Wtr Auth Wtr Rev Ctf Part Ser B (Inverse Fltg) (Prerefunded @ 04/27/06) (MBIA Insd) (d)....................................... 11.290% 04/08/21 $ 7,260,300 2,650 San Diego, CA Indl Dev Rev San Diego Gas & Elec Ser A (MBIA Insd)............................... 6.400 09/01/18 2,686,756 5,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec Ser A (AMBAC Insd).............................. 6.100 09/01/19 5,068,050 1,000 San Diego, CA Redev Agy Centre City Redev Proj Ser A........................................... 6.400 09/01/25 1,046,870 1,000 San Francisco, CA City & Cnty Arpt Commn Intl Arpt Rev Second Ser Issue 12-A (AMT) (FGIC Insd)........................................... 5.800 05/01/21 1,060,400 1,000 San Francisco, CA City & Cnty Arpt Commn Intl Arpt Second Ser 27A Rfdg (AMT) (MBIA Insd)...... 5.250 05/01/26 1,007,280 4,000 San Francisco, CA City & Cnty Arpt Commn Intl Arpt Second Ser 27A Rfdg (AMT) (MBIA Insd)...... 5.250 05/01/31 4,017,440 3,520 San Francisco, CA City & Cnty Redev Agy Lease Rev George Moscone (XLCA Insd).................. * 07/01/09 2,954,758 4,250 San Francisco, CA City & Cnty Redev Agy Lease Rev George Moscone (XLCA Insd).................. * 07/01/12 3,001,053 2,130 San Francisco, CA City & Cnty Redev Agy Lease Rev George Moscone (XLCA Insd).................. * 07/01/14 1,336,618 5,000 San Jose, CA Fin Auth Lease Rev Convention Ctr Proj Ser F Rfdg (MBIA Insd)..................... 5.000 09/01/17 5,189,250 1,000 San Jose, CA Single Family Mtg Rev Cap Accumulator (Escrowed to Maturity) (GEMIC Insd)........................................... * 04/01/16 572,460 2,000 San Leandro, CA Ctf Part Lib & Fire Stations Fin (AMBAC Insd).................................... 5.750 11/01/29 2,135,780 1,000 San Marcos, CA Pub Fac Auth Sub Tax Incrmnt Proj Area 3 Ser A.................................... 6.750 10/01/30 1,070,420 1,000 Santa Ana, CA Multi-Family Hsg Rev Villa Del Sol Apts Ser B (AMT) (FNMA Collateralized).......... 5.650 11/01/21 1,012,470 2,820 Santa Ana, CA Uni Sch Dist (MBIA Insd).......... 5.375 08/01/27 2,932,123 5,020 Santa Margarita/Dana Point Auth CA Rev Impt Dists 3-3A 4-4A Ser A (AMBAC Insd) (c).......... 5.000 08/01/17 5,259,755 1,505 Santa Margarita/Dana Point Auth CA Rev Impt Dists 3-3A 4-4A Ser A (AMBAC Insd) (c).......... 5.000 08/01/15 1,599,860 1,100 Simi Vly, CA Cmnty Dev Agy Coml Sycamore Plaza II Rfdg (Acquired 7/28/98, Cost $1,100,000) (a)............................................. 6.000 09/01/12 1,155,352 5,000 Southern CA Pub Pwr Auth Pwr Proj Rev Multi-Projs..................................... 6.750 07/01/12 5,898,300 1,000 Stockton, CA Cmnty Fac Dist Spl Tax No 1-A Mello Roos-Weston Ranch Ser A......................... 5.800 09/01/14 1,045,360 1,000 Stockton, CA South Stockton Cmnty Fac Dist Spl Tax No 90-1 Rfdg................................ 6.400 09/01/15 1,033,820 1,000 Ventura Cnty, CA Cmnty College Ser A (MBIA Insd)........................................... 5.500 08/01/23 1,059,010
10 See Notes to Financial Statements VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued
PAR AMOUNT (000) DESCRIPTION COUPON MATURITY VALUE - --------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) $2,000 Ventura Cnty, CA Ctf Part Pub Fin Auth I (FSA Insd)........................................... 5.250% 08/15/15 $ 2,137,120 1,000 Vista, CA Mobile Home Pk Rev Estrella De Oro Mobile Home Ser A (Prerefunded @ 02/01/25)...... 5.875 02/01/28 1,104,820 ------------ 232,130,167 ------------ PUERTO RICO 1.4% 2,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser II (XLCA Insd)........................................... 5.375 07/01/17 2,189,020 ------------ U. S. VIRGIN ISLANDS 2.0% 1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes Ln Nt Ser A..................................... 6.375 10/01/19 1,113,670 1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes Ln Nt Ser A..................................... 6.500 10/01/24 1,119,980 1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes Ln Nt Ser A (ACA Insd).......................... 6.125 10/01/29 1,070,410 ------------ 3,304,060 ------------ TOTAL LONG-TERM INVESTMENTS 148.2% (Cost $221,689,774)......................................................... 237,623,247 SHORT-TERM INVESTMENTS 2.8% (Cost $4,400,000)........................................................... 4,400,000 ------------ TOTAL INVESTMENTS 151.0% (Cost $226,089,774)......................................................... 242,023,247 LIABILITIES IN EXCESS OF OTHER ASSETS (4.2%)................................. (6,670,228) PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (46.8%)................... (75,034,926) ------------ NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................ $160,318,093 ============
See Notes to Financial Statements 11 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED) continued * Zero coupon bond (a) These securities are restricted and may be resold only in transactions exempt from registration which are normally those transactions with qualified institutional buyers. Restricted securities comprise 4.10% of net assets applicable to common shares. (b) Security is a "step-up" bond where the coupon increases or steps up at a predetermined date. (c) Securities purchased on a when-issued or delayed delivery basis. (d) An Inverse Floating Rate security is one where the coupon is inversely indexed to a short-term floating interest rate multiplied by a specific factor. As the floating rate rises, the coupon is reduced. Conversely, as the floating rate declines, the coupon is increased. The price of these securities may be more volatile than the price of a comparable fixed rate security. These instruments are typically used by the Trust to enhance the yield of the portfolio. All of the Trust's portfolio holdings, including derivative instruments, are marked to market each day with the change in value reflected in the unrealized appreciation/depreciation. Upon disposition, a realized gain or loss is recognized accordingly. ACA--American Capital Access AMBAC--AMBAC Indemnity Corp. AMT--Alternative Minimum Tax Asset Gty--Asset Guaranty Insurance Co. CIFG--CDC IXIS Financial Guaranty Connie Lee--Connie Lee Insurance Co. FGIC--Financial Guaranty Insurance Co. FNMA--Federal National Mortgage Association FSA--Financial Security Assurance Inc. GEMIC--General Electric Mortgage Insurance Corp. GNMA--Government National Mortgage Association LOC--Letter of Credit MBIA--Municipal Bond Investors Assurance Corp. Radian--Radian Asset Assurance XLCA--XL Capital Assurance Inc. 12 See Notes to Financial Statements VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST FINANCIAL STATEMENTS Statement of Assets and Liabilities April 30, 2004 (Unaudited) ASSETS: Total Investments (Cost $226,089,774)....................... $242,023,247 Cash........................................................ 89,995 Interest Receivable......................................... 3,039,230 Other....................................................... 921 ------------ Total Assets............................................ 245,153,393 ------------ LIABILITIES: Payables: Investments Purchased..................................... 9,331,290 Investment Advisory Fee................................... 117,100 Income Distributions--Common Shares....................... 53,677 Other Affiliates.......................................... 10,488 Administrative Fee........................................ 9,758 Trustees' Deferred Compensation and Retirement Plans........ 217,796 Accrued Expenses............................................ 60,265 ------------ Total Liabilities....................................... 9,800,374 Preferred Shares (including accrued distributions).......... 75,034,926 ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $160,318,093 ============ NET ASSET VALUE PER COMMON SHARE ($160,318,093 divided by 9,686,261 shares outstanding)............................. $ 16.55 ============ NET ASSETS CONSIST OF: Common Shares ($.01 par value with an unlimited number of shares authorized, 9,686,261 shares issued and outstanding).............................................. $ 96,863 Paid in Surplus............................................. 143,486,280 Net Unrealized Appreciation................................. 15,933,473 Accumulated Undistributed Net Investment Income............. 1,313,345 Accumulated Net Realized Loss............................... (511,868) ------------ NET ASSETS APPLICABLE TO COMMON SHARES...................... $160,318,093 ============ PREFERRED SHARES ($.01 par value, authorized 100,000,000 shares, 3,000 issued with liquidation preference of $25,000 per share)........................................ $ 75,000,000 ============ NET ASSETS INCLUDING PREFERRED SHARES....................... $235,318,093 ============
See Notes to Financial Statements 13 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST FINANCIAL STATEMENTS continued Statement of Operations For the Six Months Ended April 30, 2004 (Unaudited) INVESTMENT INCOME: Interest.................................................... $ 6,730,839 ----------- EXPENSES: Investment Advisory Fee..................................... 720,979 Preferred Share Maintenance................................. 94,460 Administrative Fee.......................................... 60,082 Trustees' Fees and Related Expenses......................... 46,466 Legal....................................................... 15,009 Custody..................................................... 7,824 Other....................................................... 87,458 ----------- Total Expenses.......................................... 1,032,278 ----------- NET INVESTMENT INCOME....................................... $ 5,698,561 =========== REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Gain........................................... $ 1,896,137 ----------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... 21,978,363 End of the Period......................................... 15,933,473 ----------- Net Unrealized Depreciation During the Period............... (6,044,890) ----------- NET REALIZED AND UNREALIZED LOSS............................ $(4,148,753) =========== DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (355,551) =========== NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS................................................ $ 1,194,257 ===========
14 See Notes to Financial Statements VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST FINANCIAL STATEMENTS continued Statements of Changes in Net Assets (Unaudited)
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED APRIL 30, 2004 OCTOBER 31, 2003 ----------------------------------- FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income.................................... $ 5,698,561 $ 11,276,591 Net Realized Gain/Loss................................... 1,896,137 (2,430,047) Net Unrealized Appreciation/Depreciation During the Period................................................. (6,044,890) 2,146,996 Distributions to Preferred Shareholders: Net Investment Income.................................. (355,551) (688,320) Net Realized Gain...................................... -0- (155,754) ------------ ------------ Change in Net Assets Applicable to Common Shares from Operations............................................. 1,194,257 10,149,466 Distributions to Common Shareholders: Net Investment Income.................................. (5,258,838) (10,980,028) Net Realized Gain...................................... -0- (2,305,393) ------------ ------------ NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM INVESTMENT ACTIVITIES.................................. (4,064,581) (3,135,955) FROM CAPITAL TRANSACTIONS: Value of Common Shares Issued Through Dividend Reinvestment........................................... 56,158 -0- ------------ ------------ TOTAL DECREASE IN NET ASSETS APPLICABLE TO COMMON SHARES................................................. (4,008,423) (3,135,955) NET ASSETS APPLICABLE TO COMMON SHARES: Beginning of the Period.................................. 164,326,516 167,462,471 ------------ ------------ End of the Period (Including accumulated undistributed net investment income of $1,313,345 and $1,229,173 respectively).......................................... $160,318,093 $164,326,516 ============ ============
See Notes to Financial Statements 15 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST FINANCIAL HIGHLIGHTS (UNAUDITED) THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS ENDED APRIL 30, ------------------------------ 2004 2003 2002 (a) 2001 -------------------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD......... $ 16.97 $ 17.29 $ 17.57 $ 16.58 ------- ------- ------- ------- Net Investment Income.......................... .59 1.16 1.19 1.19 Net Realized and Unrealized Gain/Loss.......... (.43) (.02) (.10) 1.08 Common Share Equivalent of Distributions Paid to Preferred Shareholders: Net Investment Income........................ (.04) (.07) (.08) (.23) Net Realized Gain............................ -0- (.02) (.05) (.03) ------- ------- ------- ------- Total from Investment Operations................. .12 1.05 .96 2.01 Distributions Paid to Common Shareholders: Net Investment Income........................ (.54) (1.13) (1.05) (.91) Net Realized Gain............................ -0- (.24) (.19) (.11) ------- ------- ------- ------- NET ASSET VALUE, END OF THE PERIOD............... $ 16.55 $ 16.97 $ 17.29 $ 17.57 ======= ======= ======= ======= Common Share Market Price at End of the Period... $ 15.07 $ 16.45 $ 16.56 $ 16.40 Total Return (b)................................. -5.36%* 7.69% 8.74% 16.59% Net Assets Applicable to Common Shares at End of the Period (In millions)....................... $ 160.3 $ 164.3 $ 167.5 $ 170.1 Ratio of Expenses to Average Net Assets Applicable to Common Shares (c)................ 1.25% 1.23% 1.32% 1.52% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (c)......... 6.88% 6.79% 6.97% 7.01% Portfolio Turnover............................... 17%* 15% 18% 15% SUPPLEMENTAL RATIOS: Ratio of Expenses to Average Net Assets Including Preferred Shares (c)........................... .86% .85% .91% 1.04% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (d)......... 6.45% 6.37% 6.51% 5.65% SENIOR SECURITIES: Total Preferred Shares Outstanding............... 3,000 3,000 3,000 3,000 Asset Coverage Per Preferred Share (e)........... $78,451 $79,777 $80,823 $81,704 Involuntary Liquidating Preference Per Preferred Share.......................................... $25,000 $25,000 $25,000 $25,000 Average Market Value Per Preferred Share......... $25,000 $25,000 $25,000 $25,000
* Non-Annualized (a)As required, effective November 1, 2001, the Trust has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on fixed income securities. The effect of this change for the year ended October 31, 2002 was to increase net investment income per share by less than $.01, decrease net realized and unrealized gains and losses per share by less than $.01 and increase the ratio of net investment income to average net assets by .01%. Per share, ratios and supplemental data for the periods prior to October 31, 2002 have not been restated to reflect this change in presentation. (b)Total return assumes an investment at the common share market price at the beginning of the period indicated, reinvestment of all distributions for the period in accordance with the Trust's dividend reinvestment plan, and sale of all shares at the closing common share market price at the end of the period indicated. (c)Ratios do not reflect the effect of dividend payments to preferred shareholders. (d)Ratios reflect the effect of dividend payments to preferred shareholders. (e)Calculated by subtracting the Trust's total liabilities (not including the preferred shares) from the Trust's total assets and dividing this by the number of preferred shares outstanding. 16
TWO MONTHS YEAR ENDED OCTOBER 31, ENDED YEAR ENDED AUGUST 31, - ---------------------- OCTOBER 31, ---------------------------------------------------- 2000 1999 1998 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------- $ 15.78 $ 17.93 $ 17.85 $ 17.08 $ 16.28 $ 16.13 $ 15.70 $ 17.45 ------- ------- -------- -------- -------- -------- -------- -------- 1.20 1.20 .20 1.23 1.26 1.26 1.27 1.28 .82 (1.90) .09 .85 .90 .23 .52 (1.69) (.28) (.21) (.04) (.24) (.25) (.29) (.31) (.23) -0- (.05) -0- (.02) (.02) -0- -0- (.01) ------- ------- -------- -------- -------- -------- -------- -------- 1.74 (.96) .25 1.82 1.89 1.20 1.48 (.65) (.94) (.99) (.17) (.99) (1.02) (1.05) (1.05) (1.05) -0- (.20) -0- (.06) (.07) -0- -0- (.05) ------- ------- -------- -------- -------- -------- -------- -------- $ 16.58 $ 15.78 $ 17.93 $ 17.85 $ 17.08 $ 16.28 $ 16.13 $ 15.70 ======= ======= ======== ======== ======== ======== ======== ======== $ 15.00 $ 15.25 $18.4375 $ 17.875 $16.8125 $ 16.125 $ 15.00 $ 15.50 4.70% -11.34% 4.09%* 12.96% 11.45% 14.89% 3.95% -0.90% $ 160.5 $ 152.8 $ 172.9 $ 172.0 $ 164.4 $ 156.7 $ 155.2 $ 151.1 1.62% 1.56% 1.58% 1.59% 1.61% 1.64% 1.66% 1.62% 7.66% 7.02% 6.75% 7.02% 7.56% 7.70% 8.24% 7.76% 20% 24% 2%* 21% 17% 10% 16% 7% 1.09% 1.07% 1.10% 1.10% 1.10% 1.11% 1.10% 1.10% 5.85% 5.78% 5.40% 5.63% 6.05% 5.95% 6.22% 6.34% 3,000 3,000 1,500 1,500 1,500 1,500 1,500 1,500 $78,510 $75,918 $165,283 $164,687 $159,598 $154,463 $153,465 $150,717 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
See Notes to Financial Statements 17 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen California Quality Municipal Trust (the "Trust") is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. The Trust's investment objective is to provide a high level of current income exempt from federal and California income taxes consistent with preservation of capital. The Trust will invest in a portfolio consisting substantially of California municipal obligations rated investment grade at the time of investment, but may invest up to 20% of its assets in unrated securities which are believed to be of comparable quality to those rated investment grade. The Trust commenced investment operations on September 27, 1991. Effective November 30, 2003, the Fund's investment adviser, Van Kampen Investment Advisory Corp. merged into its affiliate, Van Kampen Asset Management. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION Municipal bonds are valued by independent pricing services or dealers using the mean of the bid and asked prices or, in the absence of market quotations, at fair value based upon yield data relating to municipal bonds with similar characteristics and general market conditions. Securities which are not valued by independent pricing services or dealers are valued at fair value using procedures established in good faith by the Board of Trustees. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market value. B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date basis. Realized gains and losses are determined on an identified cost basis. The Trust may purchase and sell securities on a "when-issued" or "delayed delivery" basis, with settlement to occur at a later date. The value of the security so purchased is subject to market fluctuations during this period. The Trust will segregate assets with the custodian having an aggregate value at least equal to the amount of the when-issued or delayed delivery purchase commitments until payment is made. At April 30, 2004, the Trust had $9,331,290 of when-issued and delayed delivery purchase commitments. C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond premium is amortized and discount is accreted over the expected life of each applicable security. D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. 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 these losses against any future realized capital gains. At October 31, 2003, the Trust had an 18 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED) continued accumulated capital loss carryforward for tax purposes of $2,408,008, which expires on October 31, 2011. At April 30, 2004, the cost and related gross unrealized appreciation and depreciation are as follows: Cost of investments for tax purposes........................ $225,707,012 ============ Gross tax unrealized appreciation........................... $ 17,649,249 Gross tax unrealized depreciation........................... (1,333,014) ------------ Net tax unrealized appreciation on investments.............. $ 16,316,235 ============
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly dividends from net investment income to common shareholders. Net realized gains, if any, are distributed annually on a pro rata basis to common and preferred shareholders. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income for tax purposes. The tax character of distributions paid during the year ended October 31, 2003 was as follows:
2003 Distributions paid from: Ordinary income............................................. $ 136,249 Long-term capital gain...................................... 2,370,406 ---------- $2,506,655 ==========
As of October 31, 2003, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income............................... $403
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Asset Management (the "Adviser") provides investment advice and facilities to the Trust for an annual fee payable monthly of .60% of the average daily net assets of the Trust. In addition, the Trust pays a monthly administrative fee to Van Kampen Investments Inc. or its affiliates (collectively "Van Kampen"), the Trust's Administrator, at an annual rate of .05% of the average daily net assets of the Trust. Effective June 1, 2004, the administrative fee was reduced from ..05% to .00% For the six months ended April 30, 2004, the Trust recognized expenses of approximately $7,600 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Trust, of which a trustee of the Trust is an affiliated person. Under separate Accounting Services and Legal Services agreements, the Adviser provides accounting and legal services to the Trust. The Adviser allocates the cost of such services to each trust. For the six months ended April 30, 2004, the Trust recognized expenses of approximately $16,500 representing Van Kampen's cost of providing accounting and legal services to the Trust, which are reported as part of "Other" and "Legal" expenses, respectively, in the Statement of Operations. 19 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED) continued Certain officers and trustees of the Trust are also officers and directors of Van Kampen. The Trust does not compensate its officers or trustees who are officers of Van Kampen. The Trust provides deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation to a later date. Benefits under the retirement plan are payable upon retirement for a ten-year period and are based upon each trustee's years of service to the Trust. The maximum annual benefit per trustee under the plan is $2,500. 3. CAPITAL TRANSACTIONS At April 30, 2004 and October 31, 2003, paid in surplus related to common shares aggregated $143,486,280 and $143,430,155, respectively. Transactions in common shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 2004 OCTOBER 31, 2003 Beginning Shares........................................ 9,682,997 9,682,997 Shares Issued Through Dividend Reinvestment............. 3,264 -0- --------- --------- Ending Shares........................................... 9,686,621 9,682,997 ========= =========
4. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $45,984,129 and $40,770,791, respectively. 5. PREFERRED SHARES The Trust has outstanding 3,000 shares of 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 April 30, 2004 was 1.000% and for the six months then ended rates ranged from 0.820% to 1.100%. The Trust pays annual fees equivalent to .25% of the preferred share liquidation value for the remarketing efforts associated with the preferred auctions. These fees are included as a component of "Preferred Share Maintenance" expense in the Statement of Operations. The APS are redeemable at the option of the Trust in whole or in part at the liquidation value of $25,000 per share plus accumulated and unpaid dividends. The Trust is subject to certain asset coverage tests, and the APS are subject to mandatory redemptions if the tests are not met. 20 VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST BOARD OF TRUSTEES AND IMPORTANT ADDRESSES BOARD OF TRUSTEES DAVID C. ARCH J. MILES BRANAGAN JERRY D. CHOATE ROD DAMMEYER LINDA HUTTON HEAGY R. CRAIG KENNEDY HOWARD J KERR MITCHELL M. MERIN* JACK E. NELSON RICHARD F. POWERS, III* HUGO F. SONNENSCHEIN WAYNE W. WHALEN* - Chairman SUZANNE H. WOOLSEY INVESTMENT ADVISER VAN KAMPEN ASSET MANAGEMENT 1221 Avenue of the Americas New York, New York 10020 CUSTODIAN AND TRANSFER AGENT STATE STREET BANK AND TRUST COMPANY c/o EquiServe P.O. Box 43011 Providence, Rhode Island 02940-3011 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT AUDITORS DELOITTE & TOUCHE LLP 180 North Stetson Avenue Chicago, Illinois 60601 * "Interested persons" of the Trust, as defined in the Investment Company of Act 1940, as amended. 21 Van Kampen Privacy Notice The Van Kampen companies and investment products* respect your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain nonpublic personal information about you. This is information we collect from you on applications or other forms, and from the transactions you conduct with us, our affiliates, or third parties. We may also collect information you provide when using our Web site, and text files (also known as "cookies") may be placed on your computer to help us to recognize you and to facilitate transactions you initiate. We do not disclose any nonpublic personal information about you or any of our former customers to anyone, except as permitted by law. For instance, so that we may continue to offer you Van Kampen investment products and services that meet your investing needs, and to effect transactions that you request or authorize, we may disclose the information we collect to companies that perform services on our behalf, such as printers and mailers that assist us in the distribution of investor materials. These companies will use this information only for the services for which we hired them, and are not permitted to use or share this information for any other purpose. To protect your nonpublic personal information internally, we permit access to it only by authorized employees, and maintain physical, electronic and procedural safeguards to guard your nonpublic personal information. * Includes Van Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc., Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the many Van Kampen mutual funds and Van Kampen unit investment trusts. Van Kampen Funds Inc. 1 Parkview Plaza, P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com (VAN KAMPEN INVESTMENTS LOGO) Copyright (C)2004 Van Kampen Funds Inc. All rights reserved. Member NASD/SIPC. VQC SAR 6/04 RN04-00760P-Y04/04 Item 2. Code of Ethics. Not applicable for semi-annual reports. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semi-annual reports. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. [Reserved.] Item 9. Controls and Procedures (a) The Trust's principal executive officer and principal financial officer have concluded that the Trust's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a) Code of Ethics -- Not applicable for semi-annual reports. (b)(1) A certification for the Principal Executive Officer of the registrant is attached hereto as part of EX-99.CERT. (b)(2) A certification for the Principal Financial Officer of the registrant is attached hereto as part of EX-99.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Van Kampen California Quality Municipal Trust By: /s/ Ronald E. Robison ---------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 22, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Ronald E. Robison ---------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 22, 2004 By: /s/ John L. Sullivan ---------------------- Name: John L. Sullivan Title: Principal Financial Officer Date: June 22, 2004 EX-99.CERT 2 c85436exv99wcert.txt CERTIFICATION I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen California Quality Municipal Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: June 22, 2004 /s/ Ronald E. Robison --------------------------- Principal Executive Officer I, John L. Sullivan, certify that: 1. I have reviewed this report on Form N-CSR of Van Kampen California Quality Municipal Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: June 22, 2004 /s/ John L. Sullivan --------------------------- Principal Financial Officer EX-99.906CERT 3 c85436exv99w906cert.txt 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Issuer: Van Kampen California Quality Municipal Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended April 30, 2004 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: June 22, 2004 /s/ Ronald E. Robison ----------------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement required by Section 906 has been provided to Van Kampen California Quality Municipal Trust and will be retained by Van Kampen California Quality Municipal Trust and furnished to the Securities and Exchange Commission or its staff upon request. This written statement required by Section 906 is being furnished with this report, but not being filed as part of this Report. Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Issuer: Van Kampen California Quality Municipal Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended April 30, 2004 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: June 22, 2004 /s/ John L. Sullivan ------------------------------ John L. Sullivan Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Van Kampen California Quality Municipal Trust and will be retained by Van Kampen California Quality Municipal Trust and furnished to the Securities and Exchange Commission or its staff upon request. This written statement required by Section 906 is being furnished with this report, but not being filed as part of this Report. -----END PRIVACY-ENHANCED MESSAGE-----