<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 5
Portfolio of Investments......................... 6
Statement of Assets and Liabilities.............. 9
Statement of Operations.......................... 10
Statement of Changes in Net Assets............... 11
Financial Highlights............................. 12
Notes to Financial Statements.................... 13
Report of Independent Accountants................ 17
Dividend Reinvestment Plan....................... 18
</TABLE>
VOQ ANR 10/97
<PAGE> 2
LETTER TO SHAREHOLDERS
September 25, 1997
Dear Shareholder,
As you know, Van Kampen American
Capital was acquired by Morgan Stanley
Group Inc., paving the way for the
development of a prominent global
financial services company. More
recently, Morgan Stanley Group Inc. and
Dean Witter, Discover & Co. agreed to [PHOTO]
merge. The merger was completed on May
31, 1997, creating the combined company
of Morgan Stanley, Dean Witter, DENNIS J. MCDONNELL AND DON G. POWELL
Discover & Co. This preeminent global
financial services firm boasts a market
capitalization of approximately $34 billion and leading market positions in
securities, asset management, and credit services. Additionally, I am very
pleased to announce that Philip N. Duff, formerly the chief financial officer of
Morgan Stanley Group Inc., has joined Van Kampen American Capital as president
and chief executive officer. I will continue as chairman of the firm. We are
confident that the partnership of Van Kampen American Capital and Morgan
Stanley, Dean Witter, Discover & Co. will continue to work to the benefit of our
fund shareholders as we move into the next century.
ECONOMIC REVIEW
Stability and growth continued to characterize the U.S. economic environment
during the past 12 months. In the first quarter of 1997, the economy accelerated
at its fastest pace since 1987. Consumer confidence remained high, and
unemployment fell to 4.9 percent at the end of August, one of the lowest levels
since 1973.
Despite this vigorous pace of economic growth, there were few signs of
inflation. Wholesale prices fell during each of the first seven months of 1997,
while at the consumer level, prices rose by a mere 2.2 percent during the 12
months through August. The strength of the U.S. dollar also helped curb
inflation by making imported goods less costly.
Meanwhile, on the state level, Ohio is economically stable. While the
state's employment growth has slowed below the national average, the state
continued to experience robust growth in retail trade and services. During
Ohio's prolonged economic recovery, the state has replenished budget reserves to
very healthy levels.
MARKET REVIEW
The bond market responded positively during most of the reporting period.
The rally that began in May of 1996 continued through year end. This situation,
however, reversed in early 1997. With the economy picking up speed and
cautionary remarks by Federal Reserve Chairman Alan Greenspan about tighter
monetary policy, inflationary fears were ignited and interest rates began to
rise. When the Fed raised short-term interest rates by a modest 0.25 percent in
March, interest rates peaked and then began to decline in April as inflationary
fears abated.
Continued on page two
1
<PAGE> 3
During the reporting period, tax-exempt interest rates declined overall. On
August 31, 1997, 30-year AAA-rated municipal securities offered a tax-exempt
yield of 5.30 percent, compared to 5.71 percent one year ago. In comparison, the
30-year Treasury bond yielded 6.61 percent as of August 31, 1997, versus 7.11
percent as of August 31, 1996. The ratio of municipal yields to Treasury yields
remained at an attractive level during the period despite a slight drop from
80.3 percent on August 31, 1996, to 80.2 percent on August 31, 1997.
The most significant trend in the municipal market has been the increasing
number of insured AAA-rated bonds that are coming to market. Credit spreads have
narrowed dramatically due to an 18.1 percent increase in new insured bond
issuance during the first eight months of 1997. Year to date issuance in Ohio
totaled $3.9 billion, almost 6.9 percent over the same period last year.
TRUST STRATEGY
We employed the following strategies to manage the portfolio during the 12 month
period:
- - We increased our holdings of AAA-rated securities from 54.9 percent of total
long-term investments to 59.4 percent. The high percentage of insured
issuance coming to market has compressed yield spreads, making AAA-rated
yields more attractive. Approximately 12 percent of the Trust's long-term
investments are non-rated (with an internal investment grade rating, as
rated by our analysts, at the time of purchase). Allocating assets at both
ends of the investment grade spectrum should help to reduce the volatility
associated with interest rate movements. Securities rated AAA provide safety
of principal and total return opportunities, and lower-rated securities
provide the potential for a higher degree of income and generally exhibit
less price movement when interest rates change.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality
as of August 31, 1997*
<TABLE>
<S> <C>
AAA.................... 59.4%
AA..................... 2.5%
A...................... 18.5%
BBB.................... 7.4%
Non-Rated.............. 12.2%
</TABLE>
*As a Percentage of Long-Term Investments
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's.
- - We continued to seek non-rated offerings that enhance the Trust's
dividend-paying ability. While credits that meet our rigid research criteria
are often difficult to find, we were able to identify several opportunities
that we believe have strong upside potential. We acquired non-rated
positions in Cuyahoga County Health Care (Judson Retirement Village), Lorain
County Hospital bonds (Elyria United Methodist), and Lucas
Continued on page three
2
<PAGE> 4
County Health Facilities (Ohio Presbyterian). The acquisition yield on these
bonds ranged from 7.35 percent to 6.82 percent.
- - We adjusted the portfolio's duration to 5.45 years on August 31, 1997, based
on our interest rate outlook. Duration, expressed in years, is a measurement
of the Trust's volatility to interest rate movements. Portfolios with
shorter durations have tended to perform better when interest rates rise,
while funds with longer durations have tended to outperform when interest
rates decline. In anticipation that the Fed would raise rates in March, we
shortened the duration. When rates declined after the March up-tick, we
lengthened the duration. Our interest rate outlook at the end of the
reporting period moved to a more neutral stance.
- - We focused on extending the call protection of the portfolio. By purchasing
securities with longer calls and selling existing positions with shorter
call features, we continued to minimize reinvestment risk. Given the current
embedded gains in many existing positions and the relatively low yields
available in the current market, this will be an ongoing process as we try
to avoid capital gains and protect the Trust's dividend-paying ability.
The Trust also benefited from the pre-refunding of our $7.25 million
holdings in Cincinnati and Hamilton County Port Authority Industrial Development
bonds backed by Allright Parking. The substantial increase in price as a result
of this pre-refunding helped boost the Trust's performance.
[DISTRIBUTION HISTORY GRAPH]
Twelve-month Distribution History
For the Period Ended August 31, 1997
Distribution per Common Share
<TABLE>
<CAPTION>
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
1996 1996 1996 1996 1997 1997 1997 1997 1997 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Gains $.1235
Dividends $.0840 $.0840 $.0840 $.0840 $.0840 $.0840 $.0840 $.0840 $.0840 $.0840 $.0840
</TABLE>
The dividend and capital gains history represents past performance of the Trust
and does not predict the Trust's future distributions.
PERFORMANCE SUMMARY
The Van Kampen American Capital Ohio Quality Municipal Trust continued its
positive performance during the fiscal year. For the year ended August 31, 1997,
the Trust generated a total return at market price of 9.55 percent(1), including
reinvestment of income dividends totaling $1.008 per common share and capital
gain dividends totaling $0.0395 per common share. 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 August 31, 1997.
Continued on page four
3
<PAGE> 5
Because income from the Trust is exempt from federal and Ohio state income tax,
this distribution rate represents a yield equivalent to a taxable investment
earning 9.97 percent(4) (for investors in the 40.5 percent combined federal and
state income tax bracket). At the end of the reporting period, the closing share
price of the Trust traded at a 1.33 percent discount to its net asset value of
$17.23.
TOP 5 PORTFOLIO INDUSTRY HOLDINGS BY SECTOR*
<TABLE>
<CAPTION>
AS OF
AUGUST 31, 1997
<S> <C>
Health Care............................................. 26.9%
General Purpose......................................... 13.8%
Industrial Revenue...................................... 12.0%
Single-Family Housing................................... 9.7%
Retail Electric/Gas/Telephone........................... 9.2%
</TABLE>
*As a Percentage of Long-Term Investments
OUTLOOK
We expect the pace of economic activity for the remainder of 1997 to
accelerate modestly from the relatively pedestrian rate that prevailed during
the second quarter. While we do not believe that economic growth will be rapid
enough to reignite inflation, some warning signs are present, including a tight
labor market and high consumer confidence. However, our long-term interest rate
outlook remains bullish.
We believe the Trust is positioned to perform well and do not anticipate
making major changes to the structure of the portfolio. Our portfolio management
team continues to seek a balance between the Trust's total return and its
dividend income, as well as add value through security selection. The Trust
continues to benefit from its leveraged capital structure, which provides common
shareholders with above-market levels of dividend income. It should be noted,
however, that a significant rise in short-term interest rates would have an
unfavorable effect on the dividend-paying ability of the common shares, and
would also negatively impact the price.
We encourage investors to take this opportunity to consider how their
investments are currently dividend among the three major asset classes of
stocks, bonds, and cash. Uneven moves in the various markets can distort a
carefully planned investment program. We encourage you to review your portfolio
with an eye toward correcting imbalances in the way assets have grown to be
allocated.
Once again, we value your continued confidence in your Van Kampen American
Capital investments and the team who manages your Trust.
Sincerely,
[Sig]
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
[Sig]
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
Please see footnotes on page five
4
<PAGE> 6
PERFORMANCE RESULTS FOR THE PERIOD ENDED AUGUST 31, 1997
VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
(NYSE TICKER SYMBOL - VOQ)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
One-year total return based on market price(1)............. 9.55%
One-year total return based on NAV(2)...................... 10.70%
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)...................................... 9.97%
SHARE VALUATIONS
Net asset value............................................ $ 17.23
Closing common stock price................................. $ 17.00
One-year high common stock price (07/14/97)................ $18.375
One-year low common stock price (09/24/96)................. $16.375
Preferred share rate(5).................................... 3.490%
</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 40.5%
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.
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
OHIO 84.1%
$ 2,750 Akron, OH Wtrwrks Rev Mtg (Prerefunded @
03/01/01) (AMBAC Insd)........................ 6.550% 03/01/12 $ 2,999,947
2,100 Alliance, OH Swr Sys Rev Rfdg (AMBAC Insd).... 6.000 10/15/10 2,244,312
500 Athens Cnty, OH Cmnty Mental Hlth Rev West
Cent Proj Ser 1............................... 6.900 06/01/10 535,080
650 Brecksville Broadview Heights, OH City Sch
Dist (FGIC Insd).............................. 5.250 12/01/21 631,709
2,500 Carroll Cnty, OH Hosp Impt Rev Timken Mercy
Med Cent (Prerefunded @ 12/01/01)............. 7.125 12/01/18 2,810,875
3,250 Cincinnati & Hamilton Cnty, OH Port Auth Indl
Dev Rev Convention Garage Rfdg (Prerefunded @
12/01/02)..................................... 7.450 06/01/10 3,761,160
4,000 Cincinnati & Hamilton Cnty, OH Port Auth Indl
Dev Rev Sixth Street Garage Rfdg (Prerefunded
@ 12/01/02)................................... 7.450 06/01/10 4,629,120
2,500 Cleveland, OH Arpt Sys Rev Ser A (MBIA
Insd)......................................... 7.375 01/01/10 2,693,550
500 Cleveland, OH Ctfs Partn Cleveland Stad Proj
(AMBAC Insd).................................. 5.250 11/15/22 483,015
500 Cleveland, OH Pub Pwr Sys Rev Impt 1st Mtg Ser
A (MBIA Insd)................................. 7.000 11/15/17 554,085
1,000 Cleveland, OH Pub Pwr Sys Rev Impt 1st Mtg Ser
B Rfdg (MBIA Insd)............................ 7.000 11/15/17 1,108,170
1,000 Cuyahoga Cnty, OH Hlthcare Fac Rev Judson
Retirement Cmnty Ser A Rfdg................... 7.250 11/15/18 1,038,740
500 Cuyahoga Cnty, OH Hosp Rev Hlth Cleveland
Fairview Genl Hosp & Lutheran Med Cent........ 6.300 08/15/15 532,055
1,000 Cuyahoga Cnty, OH Hosp Rev Meridia Hlth Sys... 7.000 08/15/09 1,083,730
3,000 Cuyahoga Cnty, OH Hosp Rev Meridia Hlth Sys... 7.000 08/15/23 3,229,860
3,000 Erie Cnty, OH Hosp Impt Rev Firelands Cmnty
Hosp Proj Rfdg................................ 6.750 01/01/08 3,254,340
4,000 Erie Cnty, OH Hosp Impt Rev Firelands Cmnty
Hosp Proj Rfdg................................ 6.750 01/01/15 4,321,200
500 Fairfield, OH City Sch Dist (FGIC Insd)....... 7.100 12/01/08 586,210
500 Finneytown, OH Local Sch Dist (FGIC Insd)..... 6.200 12/01/17 558,085
2,500 Franklin Cnty, OH Convention Fac Auth Tax &
Lease Rev Antic Bonds Rfdg (MBIA Insd)........ 5.800 12/01/13 2,587,950
7,500 Gateway Econ Dev Corp Gtr Cleveland, OH Excise
Tax Rev Sr Lien Ser A (FSA Insd).............. 6.875 09/01/05 8,190,750
1,000 Gateway Econ Dev Corp Gtr Cleveland, OH
Stadium Rev................................... 6.500 09/15/14 1,031,180
3,000 Hamilton Cnty, OH Hlth Sys Rev Providence Hosp
Franciscan Rfdg............................... 6.875 07/01/15 3,190,680
1,000 Lorain Cnty, OH Hosp Rev Mtg Elyria United
Methodist Rfdg................................ 6.875 06/01/22 1,057,110
2,000 Lorain, OH Hosp Impt Rev Lakeland Cmnty Hosp
Inc........................................... 6.500 11/15/12 2,208,920
1,500 Lucas Cnty, OH Hlth Fac Rev Ohio Presbyterian
Ser A Rfdg.................................... 6.750 07/01/20 1,568,055
1,400 Mahoning Cnty, OH Hosp Fac Rev YHA Inc Proj
Ser A Rfdg (MBIA Insd)........................ 7.000 10/15/08 1,525,314
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OHIO (CONTINUED)
$ 1,000 Middleburg Heights, OH Southwest Genl Hlth
Cent
(FSA Insd).................................... 5.625% 08/15/15 $ 1,027,330
3,465 Ohio Hsg Fin Agy Mtg Rev Residential Ser A2
(GNMA Collateralized)......................... 6.625 03/01/26 3,653,496
5,550 Ohio Hsg Fin Agy Single Family Mtg Rev........ * 01/15/15 2,170,938
5,850 Ohio Hsg Fin Agy Single Family Mtg Rev
(Prerefunded @ 07/15/14)...................... * 01/15/15 2,254,765
1,380 Ohio Hsg Fin Agy Single Family Mtg Rev Ser A
(GNMA Collateralized)......................... 7.650 03/01/29 1,450,946
730 Ohio Hsg Fin Agy Single Family Mtg Rev Ser B
(GNMA Collateralized)......................... 8.100 12/15/08 768,062
2,350 Ohio St Air Quality Dev Auth Rev Ashland Oil
Inc Proj Rfdg................................. 6.850 04/01/10 2,479,015
2,000 Ohio St Bldg Auth St Fac James Rhodes Ser A
Rfdg.......................................... 6.250 06/01/11 2,112,740
1,230 Ohio St Dept of Tran Ctfs Partn Panhandle Rail
Line Proj (FSA Insd).......................... 6.500 04/15/12 1,340,885
645 Ohio St Econ Dev Rev OH Enterprise Brd Fd Ser
9............................................. 7.625 12/01/11 708,732
3,000 Ohio St Univ Rev Genl Rcpts (Prerefunded @
12/01/98)..................................... 7.150 12/01/09 3,172,140
1,500 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev Wtr
Ctl Ln Fd St Match (MBIA Insd)................ 6.000 12/01/11 1,571,385
1,000 Pike Cnty, OH Hlthcare Fac Rev Rfdg........... 6.750 06/01/17 1,021,980
1,650 Toledo-Lucas Cnty, OH Port Auth Port Rev Fac
Cargill Inc Proj Rfdg......................... 7.250 03/01/22 1,843,892
3,000 University of Cincinnati, OH Genl Rcpts Ser II
(Prerefunded @ 06/01/99)...................... 7.100 06/01/10 3,210,000
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 3,354,000
------------
90,555,508
------------
GUAM 1.0%
1,000 Guam Arpt Auth Rev Ser B...................... 6.700 10/01/23 1,069,250
------------
PUERTO RICO 11.5%
5,000 Puerto Rico Comwlth Pub Impt Rfdg............. 3.000 07/01/06 4,305,350
1,815 Puerto Rico Elec Pwr Auth Pwr Rev Ser P
(Prerefunded @ 07/01/01)...................... 7.000 07/01/11 2,025,976
4,500 Puerto Rico Elec Pwr Auth Pwr Rev Ser P
(Prerefunded @ 07/01/01)...................... 7.000 07/01/21 5,023,080
1,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser T....... 6.375 07/01/24 1,089,350
------------
12,443,756
------------
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. VIRGIN ISLANDS 2.1%
$ 2,000 Virgin Islands Pub Fin Auth Rev Matching Fd Ln
Nts Ser A Rfdg................................ 7.250% 10/01/18 $ 2,226,200
------------
TOTAL INVESTMENTS 98.7%
(Cost $96,816,586).............................................................. 106,294,714
OTHER ASSETS IN EXCESS OF LIABILITIES 1.3%....................................... 1,416,942
------------
NET ASSETS 100.0%................................................................ $107,711,656
============
</TABLE>
* Zero coupon bond
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $96,816,586)........................ $106,294,714
Receivables:
Interest.................................................. 1,830,196
Investments Sold.......................................... 10,203
Other....................................................... 785
------------
Total Assets.......................................... 108,135,898
------------
LIABILITIES:
Payables:
Custodian Bank............................................ 126,364
Investment Advisory Fee................................... 64,191
Income Distributions - Common and Preferred Shares........ 51,954
Administrative Fee........................................ 18,340
Affiliates................................................ 5,435
Accrued Expenses............................................ 87,150
Deferred Compensation and Retirement Plans.................. 70,808
------------
Total Liabilities..................................... 424,242
------------
NET ASSETS.................................................. $107,711,656
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 700 issued with liquidation preference of $50,000
per share)................................................ $ 35,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 4,220,349 shares issued and
outstanding).............................................. 42,203
Paid in Surplus............................................. 62,304,602
Net Unrealized Appreciation................................. 9,478,128
Accumulated Undistributed Net Investment Income............. 763,488
Accumulated Net Realized Gain............................... 123,235
------------
Net Assets Applicable to Common Shares................ $ 72,711,656
------------
NET ASSETS.................................................. $107,711,656
============
NET ASSET VALUE PER COMMON SHARE ($72,711,656 divided by
4,220,349 shares outstanding)............................. $ 17.23
============
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 6,656,932
-----------
EXPENSES:
Investment Advisory Fee..................................... 745,422
Administrative Fee.......................................... 212,963
Preferred Share Maintenance................................. 102,109
Trustees Fees and Expenses.................................. 29,405
Legal....................................................... 13,600
Custody..................................................... 7,465
Amortization of Organizational Costs........................ 427
Other....................................................... 160,333
-----------
Total Expenses.......................................... 1,271,724
-----------
NET INVESTMENT INCOME....................................... $ 5,385,208
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 123,232
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 6,507,369
End of the Period......................................... 9,478,128
-----------
Net Unrealized Appreciation During the Period............... 2,970,759
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 3,093,991
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 8,479,199
===========
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended August 31, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, 1997 August 31, 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................. $ 5,385,208 $ 5,321,227
Net Realized Gain...................................... 123,232 245,266
Net Unrealized Appreciation/Depreciation During the
Period............................................... 2,970,759 (250,268)
------------ ------------
Change in Net Assets from Operations................... 8,479,199 5,316,225
------------ ------------
Distributions from Net Investment Income:
Common Shares........................................ (4,245,209) (4,230,058)
Preferred Shares..................................... (1,174,847) (1,269,921)
------------ ------------
(5,420,056) (5,499,979)
------------ ------------
Distributions from Net Realized Gain:
Common Shares........................................ (166,218) -0-
Preferred Shares..................................... (51,734) -0-
------------ ------------
(217,952) -0-
------------ ------------
Total Distributions.................................... (5,638,008) (5,499,979)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES.... 2,841,191 (183,754)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment......................................... 213,622 245,726
------------ ------------
TOTAL INCREASE IN NET ASSETS........................... 3,054,813 61,972
NET ASSETS:
Beginning of the Period................................ 104,656,843 104,594,871
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $763,488 and 797,667,
respectively)........................................ $107,711,656 $104,656,843
============ ============
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 27, 1991
(Commencement
Year Ended August 31 of Investment
---------------------------------------------------- Operations) to
1997 1996 1995 1994 1993 August 31, 1992
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period (a)............... $16.554 $16.598 $16.239 $17.445 $15.988 $14.748
------- ------- ------- ------- ------- -------
Net Investment Income........ 1.278 1.267 1.275 1.290 1.291 1.006
Net Realized and Unrealized
Gain/Loss.................. .735 -0- .397 (1.195) 1.442 1.175
------- ------- ------- ------- ------- -------
Total from Investment
Operations................... 2.013 1.267 1.672 .095 2.733 2.181
------- ------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............. 1.008 1.008 .984 .984 .983 .731
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders... .278 .303 .329 .208 .201 .210
Distributions from Net
Realized Gain
Paid to Common
Shareholders............. .040 -0- -0- .091 .072 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders... .012 -0- -0- .018 .020 -0-
------- ------- ------- ------- ------- -------
Total Distributions........... 1.338 1.311 1.313 1.301 1.276 .941
------- ------- ------- ------- ------- -------
Net Asset Value, End of the
Period....................... $17.229 $16.554 $16.598 $16.239 $17.445 $15.988
======= ======= ======= ======= ======= =======
Market Price Per Share at End
of the Period................ $17.000 $16.500 $15.875 $15.750 $17.250 $16.250
Total Investment Return at
Market Price (b)............. 9.55% 10.47% 7.34% (2.54%) 13.17% 13.59%*
Total Return at Net Asset
Value (c).................... 10.70% 5.85% 8.74% (0.79%) 16.26% 11.78%*
Net Assets at End of the
Period (In millions)......... $ 107.7 $ 104.7 $ 104.6 $ 103.0 $ 108.1 $ 101.8
Ratio of Expenses to Average
Net Assets Applicable to
Common Shares................ 1.78% 1.80% 1.81% 1.82% 1.72% 1.79%
Ratio of Expenses to Average
Net Assets................... 1.19% 1.20% 1.19% 1.22% 1.14% 1.22%
Ratio of Net Investment Income
to Average Net Assets
Applicable to Common Shares
(d).......................... 5.89% 5.75% 6.00% 6.39% 6.61% 5.83%
Portfolio Turnover............ 7% 6% 24% 0% 18% 43%*
</TABLE>
(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.
* Non-Annualized
See Notes to Financial Statements
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital 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 60 days or less are valued at amortized
cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made. At August 31, 1997, there were no
when issued or delayed delivery purchase commitments.
C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of each
applicable security.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
D. ORGANIZATIONAL COSTS--The Fund reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with the Fund's organization in the amount of $30,000. These costs
were amortized on a straight line basis over the 60 month period ended September
26, 1996.
E. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
At August 31, 1997, for federal income tax purposes, cost of long-term
investments is $96,816,586; the aggregate gross unrealized appreciation is
$9,478,128 and the aggregate gross unrealized depreciation is $0, resulting in
net unrealized appreciation on investments of $9,478,128.
F. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays dividends from
net investment income to common shareholders monthly. Net realized gains, if
any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes. Permanent book and tax basis differences relating to the recognition
of certain expenses which are not deductible for tax purposes totaling $669 have
been reclassified from accumulated undistributed net investment income to paid
in surplus.
For the year ended August 31, 1997, 100% of the income distributions made by
the Trust were exempt from federal income taxes. Additionally, during the
period, the Trust paid long-term capital gains of $67,489. In January, 1998, the
Trust will provide tax information to the shareholders for the 1997 calendar
year.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
American Capital Investment Advisory Corp. (the "Adviser") will provide
investment advice and facilities to the Trust for an annual fee payable monthly
of .70% of the average net assets of the Trust. In addition, the Trust will pay
a monthly administrative fee to VKAC, the Trust's Administrator, at an annual
rate of .20% of the average net assets of the Trust. The administrative services
provided by the Administrator include record keeping and reporting
responsibilities with respect to the Trust's portfolio and preferred shares and
providing certain services to shareholders.
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
For the year ended August 31, 1997, the Trust recognized expenses of
approximately $5,700 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
For the year ended August 31, 1997, the Trust recognized expenses of
approximately $49,500 representing VKAC's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of VKAC. The Trust does not compensate its officers or trustees who are officers
of VKAC.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Trust. The maximum annual
benefit under the plan is equal to the trustee's annual retainer fee, which is
currently $2,500.
3. CAPITAL TRANSACTIONS
At August 31, 1997 and August 31, 1996, paid in surplus related to common shares
aggregated $62,304,602 and $62,091,774, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares....................... 4,207,788 4,192,971
Shares Issued Through Dividend
Reinvestment......................... 12,561 14,817
--------- ---------
Ending Shares.......................... 4,220,349 4,207,788
========= =========
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $7,411,340 and $7,721,526, 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 rate in effect on August 31, 1997 was 3.490%. During the
year ended August 31, 1997, the rates ranged from 3.250% to 3.775%.
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $50,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests, and the APS are subject to
mandatory redemption if the tests are not met.
16
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders of
Van Kampen American Capital Ohio Quality Municipal Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen American Capital Ohio Quality Municipal Trust (the "Trust"), including
the portfolio of investments, as of August 31, 1997, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Van
Kampen American Capital Ohio Quality Municipal Trust as of August 31, 1997, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods presented, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
October 8, 1997
17
<PAGE> 19
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be
re-registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common Shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
Van Kampen American Capital
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
18
<PAGE> 20
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Growth Fund
Pace Fund
Growth & Income
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
MORGAN STANLEY
FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
U.S. Real Estate Fund
Value Fund
Worldwide High Income Fund
Ask your investment representative for a
prospectus containing more complete
information, including sales charges and
expenses. Please read it carefully before you
invest or send money. Or call us weekdays
from 7:00 a.m. to 7:00 p.m. Central time at
1-800-341-2911 for Van Kampen American
Capital funds or Morgan Stanley retail funds.
19
<PAGE> 21
VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*--Chairman
THEODORE A. MYERS
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
Vice President
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in
the Investment Company Act of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1997
All rights reserved.
SM denotes a service mark of
Van Kampen American Capital Distributors, Inc.
RESULTS OF SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Trust was held on May 28, 1997, where
shareholders voted on a new investment advisory agreement, the election of
Trustees and the selection of independent public accountants. With regard to the
approval of a new investment advisory agreement between Van Kampen American
Capital Investment Advisory Corp. and the Trust, 4,971,399 shares voted for the
proposal, 66,440 shares voted against, 86,260 shares abstained and 0 shares
represented broker non-votes. With regard to the election of Rod Dammeyer as
elected trustee by the preferred shareholders of the Trust, 595 shares voted in
his favor and 0 shares withheld. With regard to the election of Wayne W. Whalen
as elected trustee by the common share-holders of the Trust, 5,054,837 shares
voted in his favor and 68,668 shares withheld. The other trustees of the Trust
whose terms did not expire in 1997 are Dennis J. McDonnell, Theodore A. Myers,
Hugo Sonnenschein, David C. Arch and Howard J Kerr. With regard to the
ratification of KPMG Peat Marwick LLP as independent public accountants for the
Trust, 5,057,104 shares voted in favor of the proposal, 28,369 shares voted
against, 38,626 shares abstained and 0 shares represented broker non-votes.
20
