<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 4
Portfolio of Investments......................... 5
Statement of Assets and Liabilities.............. 8
Statement of Operations.......................... 9
Statement of Changes in Net Assets............... 10
Financial Highlights............................. 11
Notes to Financial Statements.................... 12
</TABLE>
VOQ SAR 4/96
<PAGE> 2
LETTER TO SHAREHOLDERS
April 15, 1996
Dear Shareholder,
We are pleased to report that the
Van Kampen American Capital Ohio
Quality Municipal Trust (formerly Van
Kampen Merritt Ohio Quality Municipal
Trust) continued its strong performance [PHOTO OF DENNIS J. MCDONNELL
over the first half of its fiscal year, AND DON G. POWELL]
having achieved a total return at
market price of 10.42 percent(1) for
the six months ended February 29, 1996.
Additionally, the Trust offered a
tax-exempt distribution rate of 5.93
percent( 3), based on the closing common stock price of $17.00 per share on
February 29, 1996. Because income from the Trust is exempt from federal and
state income taxes, this distribution rate represents a yield equivalent to a
taxable investment earning 10.02 percent( 4) (for Ohio residents in the 40.8
percent combined marginal income tax bracket).
CUMULATIVE TOTAL RETURN
While the six-month results are attractive for investors, the return for
each period will vary according to changing market conditions. It is important,
therefore, to look at the Trust's cumulative results to see the full benefit of
its long-term investment approach.
Since beginning operations on September 27, 1991, the Trust's cumulative
total return at net asset value was 48.89 percent. The Trust's performance
demonstrates the value of experienced portfolio management, as well as the
importance of reinvesting distributions. Together, these factors reinforce our
confidence in the long-term approach we utilize in managing the Trust.
EXTENSIVE EXPERIENCE IN MUNICIPAL BONDS
This year, we will celebrate 22 years of experience in investing in
municipal bonds. Thanks to our long-term investment record, Van Kampen American
Capital Investment Advisory Corp. today manages over $12 billion in municipal
bonds. We attribute much of our success to skillful, in-depth credit analysis of
the securities in which we invest, conducted by one of the largest municipal
research departments in the industry. Over the years, careful attention to the
Trust's overall credit composition (refer to the pie chart on page 2), average
bond maturity, duration and coupon structure also have benefited the Trust's
performance.
Continued on page two
1
<PAGE> 3
MUNICIPAL MARKET OVER THE PAST SIX MONTHS
The slowdown in the economy continued through the end of 1995, reflected by
weak consumer demand and disappointing retail sales during the holiday season.
Severe winter weather in many parts of the country further dampened retail
activity and hindered distribution and manufacturing.
These conditions helped to keep inflation in check, prompting the
Federal Reserve Board to continue easing short-term interest rates. In turn,
long-term interest rates declined, causing the price of bonds to increase.
Municipal bond yields declined in concert with other interest rates, with the
yield on the Bond Buyer's 40 Municipal Bond Index dropping by 40 basis points
to 5.71 percent. At the same time, the Index increased by 3.5 percent to
118.72.
The beginning of 1996 was marked by an increase in market volatility, which
effectively ended the decline in muni yields. This volatility was triggered in
part by three factors: fiscal uncertainty caused by two unprecedented shutdowns
of the federal government, presidential primary debates about impending tax
reform, and an unexpected reversal in a number of key economic indicators, which
consequently sent the market mixed signals on the direction of the economy.
Still, due to the government shutdowns and the unusually harsh weather, the
market remained skeptical of the predictive value of economic statistics issued
for January and February. Interest rates have fluctuated as the market attempts
to determine whether the economy will remain slow throughout 1996.
[Credit Quality Graph]
Portfolio Composition by Credit Quality as of
February 29, 1996
<TABLE>
<S> <C>
AAA . . . . . . . . . . . . . . 45.0%
AA. . . . . . . . . . . . . . . 5.4
A . . . . . . . . . . . . . . . 32.3
BBB . . . . . . . . . . . . . . 6.2
Non-Rated . . . . . . . . . . . 11.1
-----
100.0%
=====
</TABLE>
OUTLOOK FOR THE MUNICIPAL MARKET
In general, we anticipate a pickup in economic activity during the first
half of the year, with possibilities of an increase in inflation and an economic
slowdown toward the end of the year. We believe the Fed will be cautious in its
monetary policy toward short-term interest rates, as mixed economic news
continues to be reported.
The Fed is expected to maintain its focus on growing the economy at an
annual rate of 2 to 3 percent, while striving to keep inflation at bay. Interest
rates are likely to remain within the range experienced over the past several
years, with a continuation of historically low rates.
This type of market environment (of relatively low rates) typically lends
itself to the use of an investment technique called leveraging, which involves
borrowing short-term funds to purchase long-term municipal securities. The
yields available on these long-term securities (which are typically much higher
than those on short-term securities) have enabled our portfolio management team
to cover the cost of the Trust's short-term borrowing by a substantial margin.
The additional income earned by the Trust through leveraging has been reflected
in its ability to maintain a highly attractive distribution rate in
Continued on page three
2
<PAGE> 4
relation to similar--but non-leveraged--investment vehicles. (Conversely, a rise
in interest rates may tend to produce an unfavorable effect on the Trust's
common share performance and would likely cause the Trust to underperform a
non-leveraged portfolio.)
OHIO MUNICIPAL BONDS
Ohio has a strong, diversified economy with a good manufacturing base.
Driven by a fiscally conservative state government, Ohio has experienced steady
employment growth during the past decade.
The Trust's current duration of 6.09 years (a measure of the portfolio's
sensitivity to interest rate changes) is relatively conservative and is expected
to enhance the Trust's ability to perform well should interest rates rise during
the next stage of the interest rate cycle. The portfolio is of high credit
quality, with 82.7 percent of the Trust's portfolio rated single-A or higher.
TOP 5 INDUSTRY HOLDINGS BY SECTOR AS OF FEBRUARY 29, 1996
Health Care.............................................. 27.7%
General Purpose.......................................... 13.8%
Single Family Housing.................................... 9.9%
Retail Electric / Gas / Telephone........................ 9.5%
Water & Sewer............................................ 8.9%
RESEARCH AND LONG-TERM RETURNS
We believe that the cumulative return of the Trust--and the performance
achieved by many of our other municipal bond funds--demonstrates our commitment
to thorough research and a long-term, value-oriented investment approach.
Thank you for your confidence in Van Kampen American Capital and in your
Trust's management team.
Sincerely,
DON G. POWELL
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
DENNIS J. McDONNELL
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
3
<PAGE> 5
PERFORMANCE RESULTS FOR THE PERIOD ENDED FEBRUARY 29, 1996
VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
(NYSE TICKER SYMBOL - VOQ)
<TABLE>
<S> <C>
COMMON SHARE TOTAL RETURNS
Six-month total return based on market price(1)............ 10.42%
Six-month total return based on NAV(2)..................... 6.15%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................. 5.93%
Taxable-equivalent distribution rate as a % of closing
common stock price(4).................................... 10.02%
SHARE VALUATIONS
Net asset value............................................ $ 17.11
Closing common stock price................................. $17.000
Six-month high common stock price (02/12/96)............... $17.250
Six-month low common stock price (10/06/95)................ $15.500
Preferred share rate(5).................................... 3.33%
</TABLE>
(1)Total return based on market price assumes an investment at the market price
at the beginning of the period indicated, reinvestment of all distributions for
the period in accordance with the Trust's dividend reinvestment plan, and sale
of all shares at the closing stock price at the end of the period indicated.
(2)Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3)Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(4)The taxable-equivalent distribution rate is calculated assuming a 40.8%
combined federal and state tax bracket, which takes into consideration the
deductibility of individual state taxes paid.
(5)See "Notes to Financial Statements" footnote #5, for more information
concerning Preferred Share reset periods.
A portion of the interest income may be taxable for those investors subject to
the federal alternative minimum tax (AMT).
Past performance does not guarantee future results. Investment return, stock
price and net asset value will fluctuate with market conditions. Trust shares,
when sold, may be worth more or less than their original cost.
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS
February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
OHIO 83.2%
$2,750 Akron, OH Wtrwrks Rev Mtg (AMBAC Insd)..... 6.550% 03/01/12 $ 3,078,377
2,100 Alliance, OH Swr Sys Rev Rfdg (AMBAC
Insd)...................................... 6.000 10/15/10 2,241,897
500 Athens Cnty, OH Cmnty Mental Hlth Rev West
Cent Proj Ser 1............................ 6.900 06/01/10 530,770
2,500 Carroll Cnty, OH Hosp Impt Rev Timken Mercy
Med Cent (Prerefunded @ 12/01/01).......... 7.125 12/01/18 2,903,975
3,250 Cincinnati & Hamilton Cnty, OH Port Auth
Indl Dev Rev Convention Garage Rfdg........ 7.450 06/01/10 3,422,185
4,000 Cincinnati & Hamilton Cnty, OH Port Auth
Indl Dev Rev Sixth Street Garage Rfdg...... 7.450 06/01/10 4,198,400
2,500 Cleveland, OH Arpt Sys Rev Ser A (MBIA
Insd)...................................... 7.375 01/01/10 2,752,200
500 Cleveland, OH Pub Pwr Sys Rev Impt 1st Mtg
Ser A (MBIA Insd).......................... 7.000 11/15/17 567,200
1,000 Cleveland, OH Pub Pwr Sys Rev Impt 1st Mtg
Ser B Rfdg (MBIA Insd)..................... 7.000 11/15/17 1,134,400
500 Cuyahoga Cnty, OH Hosp Rev Hlth Cleveland
Fairview Genl Hosp & Lutheran Med Cent..... 6.300 08/15/15 511,830
1,000 Cuyahoga Cnty, OH Hosp Rev Meridia Hlth
Sys........................................ 7.000 08/15/09 1,086,010
3,000 Cuyahoga Cnty, OH Hosp Rev Meridia Hlth
Sys........................................ 7.000 08/15/23 3,258,030
500 Delaware, OH City Sch Dist (FGIC Insd)..... 5.750 12/01/20 507,360
3,000 Erie Cnty, OH Hosp Impt Rev Firelands Cmnty
Hosp Proj Rfdg............................. 6.750 01/01/08 3,195,630
4,000 Erie Cnty, OH Hosp Impt Rev Firelands Cmnty
Hosp Proj Rfdg............................. 6.750 01/01/15 4,255,640
500 Fairfield, OH City Sch Dist (FGIC Insd).... 7.100 12/01/08 591,000
2,500 Franklin Cnty, OH Convention Fac Auth Tax &
Lease Rev Antic Bonds Rfdg (MBIA Insd)..... 5.800 12/01/13 2,567,925
7,500 Gateway Econ Dev Corp Gtr Cleveland, OH
Excise Tax Rev Sr Lien Ser A (FSA Insd).... 6.875 09/01/05 8,293,350
3,000 Hamilton Cnty, OH Hlth Sys Rev Providence
Hosp Franciscan Rfdg....................... 6.875 07/01/15 3,083,820
2,500 Hamilton Cnty, OH Swr Sys Rev & Impt Ser A
Rfdg (FGIC Insd)........................... 5.500 12/01/17 2,485,650
2,000 Lorain, OH Hosp Impt Rev Lakeland Cmnty
Hosp Inc................................... 6.500 11/15/12 2,081,280
1,400 Mahoning Cnty, OH Hosp Fac Rev YHA Inc Proj
Ser A Rfdg (MBIA Insd)..................... 7.000 10/15/08 1,555,316
1,500 Middleburg Heights, OH Southwest Genl Hlth
Cent (FSA Insd)............................ 5.625 08/15/15 1,496,445
500 Muskingum Cnty, OH Hosp Fac Rev Franciscan
Sisters Rfdg (Connie Lee Insd)............. 5.375 02/15/12 492,100
3,650 Ohio Hsg Fin Agy Mtg Rev Residential Ser A2
(GNMA Collateralized)...................... 6.625 03/01/26 3,769,464
5,550 Ohio Hsg Fin Agy Single Family Mtg Rev..... * 01/15/15 1,913,918
5,850 Ohio Hsg Fin Agy Single Family Mtg Rev
(Prerefunded @ 07/15/14)................... * 01/15/15 1,991,633
</TABLE>
See Notes to Financial Statements
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 29, 1996 (Unaudited)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
OHIO (CONTINUED)
$1,710 Ohio Hsg Fin Agy Single Family Mtg Rev Ser A
(GNMA Collateralized)....................... 7.650% 03/01/29 $ 1,811,335
930 Ohio Hsg Fin Agy Single Family Mtg Rev Ser
B (GNMA Collateralized).................... 8.100 12/15/08 974,426
2,350 Ohio St Air Quality Dev Auth Rev Ashland
Oil Inc
Proj Rfdg.................................. 6.850 04/01/10 2,451,402
2,000 Ohio St Bldg Auth St Fac James Rhodes Ser A
Rfdg....................................... 6.250 06/01/11 2,128,220
1,230 Ohio St Dept Tran Ctfs Partn Panhandle Rail
Line Proj (Cap Guar Insd) (FSA Insd)....... 6.500 04/15/12 1,353,701
645 Ohio St Econ Dev Rev OH Enterprise Brd Fd
Ser 9...................................... 7.625 12/01/11 700,851
3,000 Ohio St Univ Rev Genl Rcpts (Prerefunded
@ 12/01/98)................................ 7.150 12/01/09 3,316,080
1,500 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev
Wtr Ctl Ln Fd St Match (MBIA Insd)......... 6.000 12/01/11 1,579,065
1,933 Pike Cnty, OH Hlthcare Fac Rev Rfdg........ 6.750 06/01/17 1,952,813
1,650 Toledo-Lucas Cnty, OH Port Auth Port Rev
Fac Cargill Inc Proj Rfdg.................. 7.250 03/01/22 1,841,367
3,000 University of Cincinnati, OH Genl Rcpts Ser
II (Prerefunded @ 06/01/99)................ 7.100 06/01/10 3,331,770
3,000 Westerville, OH Minerva Park & Blendon Jt
Twp Hosp Dist Rev Saint Anns Hosp Ser B
Rfdg (AMBAC Insd).......................... 6.800 09/15/06 3,360,810
------------
88,767,645
------------
GUAM 1.0%
1,000 Guam Arpt Auth Rev Ser B................... 6.700 10/01/23 1,025,140
------------
PUERTO RICO 12.6%
5,000 Puerto Rico Comwlth Pub Impt Rfdg.......... 3.000 07/01/06 4,137,450
1,815 Puerto Rico Elec Pwr Auth Pwr Rev Ser P
(Prerefunded @ 07/01/01)................... 7.000 07/01/11 2,082,858
4,500 Puerto Rico Elec Pwr Auth Pwr Rev Ser P
(Prerefunded @ 07/01/01)................... 7.000 07/01/21 5,178,105
1,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser T.... 6.375 07/01/24 1,075,970
1,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser Z
Rfdg....................................... 5.500 07/01/14 972,360
------------
13,446,743
------------
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 29, 1996 (Unaudited)
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U. S. VIRGIN ISLANDS 2.0%
$2,000 Virgin Islands Pub Fin Auth Rev Matching Fd
Ln Nts Ser A Rfdg.......................... 7.250% 10/01/18 $ 2,158,520
------------
TOTAL LONG-TERM INVESTMENTS 98.8%
(Cost $96,596,959) (a)................................................... 105,398,048
OTHER ASSETS IN EXCESS OF LIABILITIES 1.2%................................ 1,324,124
------------
NET ASSETS 100%........................................................... $106,722,172
============
</TABLE>
* Zero coupon bond
(a) At February 29, 1996, cost for federal income tax purposes is $96,596,959;
the aggregate gross unrealized appreciation is $8,801,089 and the aggregate
gross unrealized depreciation is $0, resulting in net unrealized
appreciation of $8,801,089.
See Notes to Financial Statements
7
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $96,596,959) (Note 1)............... $105,398,048
Receivables:
Interest............................................................. 1,841,857
Investments Sold..................................................... 35,202
Unamortized Organizational Expenses (Note 1)........................... 3,449
Other.................................................................. 1,926
------------
Total Assets..................................................... 107,280,482
------------
LIABILITIES:
Payables:
Custodian Bank....................................................... 274,639
Income Distributions - Common and Preferred Shares................... 94,044
Investment Advisory Fee (Note 2)..................................... 59,572
Administrative Fee (Note 2).......................................... 17,020
Accrued Expenses....................................................... 113,035
------------
Total Liabilities................................................ 558,310
------------
NET ASSETS............................................................. $106,722,172
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 700
issued with liquidation preference of $50,000 per share) (Note 5).... $ 35,000,000
------------
Common Shares ($.01 par value with an unlimited number of shares
authorized, 4,192,971 shares issued and outstanding)................. 41,930
Paid in Surplus........................................................ 61,851,572
Net Unrealized Appreciation on Investments............................. 8,801,089
Accumulated Undistributed Net Investment Income........................ 866,655
Accumulated Net Realized Gain on Investments........................... 160,926
------------
Net Assets Applicable to Common Shares........................... 71,722,172
------------
NET ASSETS............................................................. $106,722,172
============
NET ASSET VALUE PER COMMON SHARE ($71,722,172 divided by 4,192,971
shares outstanding).................................................. $ 17.11
============
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................................................ $ 3,292,187
-----------
EXPENSES:
Investment Advisory Fee (Note 2)........................................ 370,229
Administrative Fee (Note 2)............................................. 105,780
Preferred Share Maintenance (Note 5).................................... 47,825
Trustees Fees and Expenses (Note 2)..................................... 19,822
Legal (Note 2).......................................................... 6,672
Amortization of Organizational Expenses (Note 1)........................ 2,988
Other................................................................... 80,735
-----------
Total Expenses...................................................... 634,051
-----------
NET INVESTMENT INCOME................................................... $ 2,658,136
===========
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Realized Gain/Loss on Investments:
Proceeds from Sales................................................... $ 5,437,664
Cost of Securities Sold............................................... (5,249,427)
-----------
Net Realized Gain on Investments........................................ 188,237
-----------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period............................................... 6,757,637
End of the Period..................................................... 8,801,089
-----------
Net Unrealized Appreciation on Investments During the Period............ 2,043,452
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS......................... $ 2,231,689
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.............................. $ 4,889,825
===========
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended February 29, 1996
and the Year Ended August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 29, 1996 August 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................... $ 2,658,136 $ 5,376,542
Net Realized Gain on Investments.................... 188,237 19,461
Net Unrealized Appreciation on Investments During
the Period........................................ 2,043,452 1,653,844
------------ ------------
Change in Net Assets from Operations................ 4,889,825 7,049,847
------------ ------------
Distributions from Net Investment Income:
Common Shares..................................... (2,113,172) (4,158,197)
Preferred Shares.................................. (649,352) (1,379,213)
------------ ------------
Total Distributions............................... (2,762,524) (5,537,410)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES........................................ 2,127,301 1,512,437
FROM CAPITAL TRANSACTIONS (NOTE 3):
Value of Common Shares Issued Through Dividend
Reinvestment...................................... -0- 74,619
------------ ------------
TOTAL INCREASE IN NET ASSETS........................ 2,127,301 1,587,056
NET ASSETS:
Beginning of the Period............................. 104,594,871 103,007,815
------------ ------------
End of the Period (Including undistributed net
investment income of $866,655 and $971,043,
respectively)..................................... $106,722,172 $104,594,871
============ ============
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION> September 27, 1991
Six Months (Commencement
Ended Year Ended August 31 of Investment
February 29, ------------------------------ Operations) to
1996 1995 1994 1993 August 31, 1992
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period (a).............. $16.598 $16.239 $17.445 $15.988 $14.748
------- ------- ------- ------- -------
Net Investment Income....... .634 1.275 1.290 1.291 1.006
Net Realized and Unrealized
Gain/Loss on
Investments............... .532 .397 (1.195) 1.442 1.175
------- ------- ------- ------- -------
Total from Investment
Operations.................. 1.166 1.672 .095 2.733 2.181
------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............ .504 .984 .984 .983 .731
Common Share Equivalent of
Distributions Paid to
Preferred
Shareholders............ .155 .329 .208 .201 .210
Distributions from Net
Realized Gain on
Investments:
Paid to Common
Shareholders............ -0- -0- .091 .072 -0-
Common Share Equivalent of
Distributions Paid to
Preferred
Shareholders............ -0- -0- .018 .020 -0-
------- ------- ------- ------- -------
Total Distributions.......... .659 1.313 1.301 1.276 .941
------- ------- ------- ------- -------
Net Asset Value, End of the
Period...................... $17.105 $16.598 $16.239 $17.445 $15.988
======= ======= ======= ======= =======
Market Price Per Share at End
of the Period............... $17.000 $15.875 $15.750 $17.250 $16.250
Total Investment Return at
Market Price (b)............ 10.42%* 7.34% (2.54%) 13.17% 13.59%*
Total Return at Net Asset
Value (c)................... 6.15%* 8.74% (0.79%) 16.26% 11.78%*
Net Assets at End of the
Period (In millions)........ $ 106.7 $ 104.6 $ 103.0 $ 108.1 $ 101.8
Ratio of Expenses to Average
Net Assets Applicable to
Common Shares............... 1.79% 1.81% 1.82% 1.72% 1.79%
Ratio of Expenses to Average
Net Assets.................. 1.20% 1.19% 1.22% 1.14% 1.22%
Ratio of Net Investment
Income to Average Net Assets
Applicable to Common Shares
(d)......................... 5.67% 6.00% 6.39% 6.61% 5.83%
Portfolio Turnover........... 4.51% 24.17% 0.27% 18.41% 42.70%
</TABLE>
* Non-Annualized
(a) Net asset value at September 27, 1991, is adjusted for common and preferred
share offering costs of $.252 per share.
(b) Total investment return at market price reflects the change in market value
of the common shares for the period indicated with reinvestment of dividends
in accordance with the Trust's dividend reinvestment plan.
(c) Total return at net asset value (NAV) reflects the change in the value of
the Trust's assets with reinvestment of dividends based upon NAV.
(d) Net investment income is adjusted for common share equivalent of
distributions paid to preferred shareholders.
See Notes to Financial Statements
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Ohio 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 and Ohio income
taxes, consistent with preservation of capital. The Trust will invest in a
portfolio consisting substantially of Ohio municipal obligations rated
investment grade at the time of investment, but may invest up to 20% of its
assets in unrated securities which are believed to be of comparable quality to
those rated investment grade. The Trust commenced investment operations on
September 27, 1991.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Investments are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of less than 60 days 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 February 29, 1996, there were no
when issued or delayed delivery purchase commitments.
C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of each
applicable security.
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
D. ORGANIZATIONAL EXPENSES--The Trust has reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with the Trust's organization and initial registration in the amount
of $30,000. These costs are being amortized on a straight line basis over the 60
month period ending September 26, 1996. Van Kampen American Capital Investment
Advisory Corp. (the "Adviser") has agreed that in the event any of the initial
shares of the Trust originally purchased by VKAC are redeemed during the
amortization period, the Trust will be reimbursed for any unamortized
organizational expenses in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.
E. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At August 31, 1995, the Trust had an accumulated capital loss
carryforward for tax purposes of $27,311, which will expire on August 31, 2003.
Net realized gains or losses may differ for financial and tax reporting purposes
primarily as a result of post October 31 losses which may not be recognized for
tax purposes until the first day of the following fiscal year.
F. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays dividends from
net investment income to common shareholders monthly. Net realized gains, if
any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included in ordinary income for tax
purposes.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Trust for an annual fee payable
monthly of .70% of the average net assets of the Trust. In addition, the Trust
will pay a monthly administrative fee to VKAC, the Trust's Administrator, at an
annual rate of .20% of the average net assets of the Trust. The administrative
services provided by the Administrator include
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<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
record keeping and reporting responsibilities with respect to the Trust's
portfolio and preferred shares and providing certain services to shareholders.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Trust, of which a trustee of the Trust is an affiliated person.
For the six months ended February 29, 1996, the Trust recognized expenses of
approximately $8,900 representing VKAC's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of VKAC. The Trust does not compensate its officers or trustees who are officers
of VKAC.
The Trust has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC. The Trust's liability under the
deferred compensation and retirement plans at February 29, 1996, was
approximately $36,100.
At February 29, 1996, VKAC owned 6,700 common shares of the Trust.
3. CAPITAL TRANSACTIONS
At both February 29, 1996 and August 31, 1995, paid in surplus related to common
shares aggregated $61,851,572.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 29, YEAR ENDED
1996 AUGUST 31, 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares....................... 4,192,971 4,188,021
Shares Issued Through Dividend
Reinvestment......................... -0- 4,950
--------- ---------
Ending Shares.......................... 4,192,971 4,192,971
========= =========
</TABLE>
4. INVESTMENT TRANSACTIONS
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the six months ended February 29, 1996, were $4,747,782
and $5,249,427, respectively.
5. PREFERRED SHARES
The Trust has outstanding 700 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is currently reset every 28 days through an
auction process. The
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------
rate in effect on February 29, 1996 was 3.33%. During the six months ended
February 29, 1996, the rates ranged from 3.33% to 3.85%.
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.
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<PAGE> 17
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free
Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Limited Term Municipal
Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment adviser for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-421-5666 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
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<PAGE> 18
VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
OFFICERS AND TRUSTEES
DON G. POWELL*
Chairman and Trustee
DENNIS J. MCDONNELL*
President and Trustee
DAVID C. ARCH
Trustee
ROD DAMMEYER
Trustee
HOWARD J KERR
Trustee
THEODORE A. MYERS
Trustee
HUGO F. SONNENSCHEIN
Trustee
WAYNE W. WHALEN*
Trustee
PETER W. HEGEL*
Vice President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Treasurer
SCOTT E. MARTIN*
Assistant Secretary
WESTON B. WETHERELL*
Assistant Secretary
NICHOLAS DALMASO*
Assistant Secretary
JOHN L. SULLIVAN*
Controller
STEVEN M. HILL*
Assistant Treasurer
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in
the Investment Company Act of 1940.
(C) Van Kampen American Capital Distributors, Inc.,
1996 All rights reserved.
SM denotes a service mark of
Van Kampen American Capital Distributors, Inc.
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