<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
A Farewell from the Chairman..................... 1
Portfolio of Investments......................... 2
Statement of Assets and Liabilities.............. 5
Statement of Operations.......................... 6
Statement of Changes in Net Assets............... 7
Financial Highlights............................. 8
Notes to Financial Statements.................... 10
Report of Independent Accountants................ 15
Dividend Reinvestment Plan....................... 16
</TABLE>
VOQ ANR 12/98
<PAGE> 2
A FAREWELL FROM THE CHAIRMAN
------------------------ - ------------------------
Dear Shareholder,
Since I became president and chief executive officer in 1987, much has
changed in our business. However, one thing has remained constant through these
years--my commitment to you, the trust shareholder. Through the many events at
Van Kampen that have marked the passage of time--including several mergers,
company name changes, and leadership changes--we have always focused on
providing superior investments and the highest level of customer service to help
you meet your investment objectives. I'm proud to say that during my tenure, Van
Kampen won eight consecutive awards for high-quality customer service--more
consecutive service awards than any other firm in the financial services
industry.(1) My successor, Dick Powers, shares this commitment to meeting your
needs and providing innovative and efficient ways to help you work with your
investment adviser to reach your financial goals.
Although my official retirement begins on January 1, 1999, I will remain
active in the industry and the community. I plan to continue my service as a
member of the board of directors of the Investment Company Institute, the
leading mutual fund industry association, and I will remain a trustee of your
Trust.
In closing, I want to say farewell to all of you. Thank you for your support
of Van Kampen over the years and for giving me the opportunity to serve you.
Best wishes,
[SIG]
Don G. Powell
------------------------ - ------------------------
(1)American Capital, which merged with Van Kampen in 1995, received the DALBAR
Service Award annually from 1990 to 1994. The award was called the Quality
Tested Service Seal until 1997.
1
<PAGE> 3
PORTFOLIO OF INVESTMENTS
October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 98.7%
OHIO 84.0%
$2,750 Akron, OH Wtrwrks Mtg Rev (Prerefunded @
03/01/01) (AMBAC Insd)......................... 6.550% 03/01/12 $ 2,983,365
2,100 Alliance, OH Swr Sys Rev Rfdg (AMBAC Insd)..... 6.000 10/15/10 2,331,357
500 Athens Cnty, OH Cmnty Mental Hlth Rev West Cent
Proj Ser 1 (LOC - Bank One).................... 6.900 06/01/10 540,815
1,000 Batavia, OH Local Sch Dist Rfdg (MBIA Insd).... 5.625 12/01/22 1,096,560
2,500 Carroll Cnty, OH Hosp Impt Rev Timken Mercy Med
Cent (Prerefunded @ 12/01/01).................. 7.125 12/01/18 2,798,575
3,250 Cincinnati & Hamilton Cnty, OH Port Auth Indl
Dev Rev Convention Garage Rfdg (Prerefunded @
12/01/02)...................................... 7.450 06/01/10 3,766,360
4,000 Cincinnati & Hamilton Cnty, OH Port Auth Indl
Dev Rev Sixth Street Garage Rfdg (Prerefunded @
12/01/02)...................................... 7.450 06/01/10 4,635,520
2,500 Cleveland, OH Arpt Sys Rev Ser A (Prerefunded @
01/01/00) (MBIA Insd).......................... 7.375 01/01/10 2,661,475
500 Cleveland, OH Pub Pwr Sys Rev Impt First Mtg
Ser A (MBIA Insd).............................. 7.000 11/15/17 552,550
1,000 Cleveland, OH Pub Pwr Sys Rev Impt First Mtg
Ser B Rfdg (MBIA Insd)......................... 7.000 11/15/17 1,105,100
500 Cuyahoga Cnty, OH Hlthcare Fac Benjamin Rose
Institute Proj Rfdg............................ 5.500 12/01/28 495,615
1,000 Cuyahoga Cnty, OH Hlthcare Fac Rev Judson
Retirement Cmnty Ser A Rfdg.................... 7.250 11/15/18 1,100,660
500 Cuyahoga Cnty, OH Hosp Rev Hlth Cleveland
Fairview Genl Hosp & Lutheran Med Cent......... 6.300 08/15/15 543,295
1,000 Cuyahoga Cnty, OH Hosp Rev Meridia Hlth Sys
(Prerefunded @ 08/15/01)....................... 7.000 08/15/09 1,108,130
3,000 Cuyahoga Cnty, OH Hosp Rev Meridia Hlth Sys
(Prerefunded @ 08/15/01)....................... 7.000 08/15/23 3,324,390
3,000 Erie Cnty, OH Hosp Impt Rev Firelands Cmnty
Hosp Proj Rfdg................................. 6.750 01/01/08 3,287,520
4,000 Erie Cnty, OH Hosp Impt Rev Firelands Cmnty
Hosp Proj Rfdg................................. 6.750 01/01/15 4,355,200
500 Fairfield, OH City Sch Dist (FGIC Insd)........ 7.100 12/01/08 601,975
500 Finneytown, OH Local Sch Dist (FGIC Insd)...... 6.200 12/01/17 586,485
2,500 Franklin Cnty, OH Convention Fac Auth Tax &
Lease Rev Antic Bonds Rfdg (MBIA Insd)......... 5.800 12/01/13 2,712,000
7,500 Gateway Econ Dev Corp Gtr Cleveland, OH Excise
Tax Rev Sr Lien Ser A (FSA Insd)............... 6.875 09/01/05 8,189,250
1,000 Gateway Econ Dev Corp Gtr Cleveland, OH Stadium
Rev............................................ 6.500 09/15/14 1,052,730
</TABLE>
See Notes to Financial Statements
2
<PAGE> 4
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OHIO (CONTINUED)
$3,000 Hamilton Cnty, OH Hlth Sys Rev Providence Hosp
Franciscan Rfdg................................ 6.875% 07/01/15 $ 3,238,860
1,000 Lorain Cnty, OH Hosp Rev Mtg Elyria United
Methodist Rfdg................................. 6.875 06/01/22 1,107,740
2,000 Lorain, OH Hosp Impt Rev Lakeland Cmnty Hosp
Inc............................................ 6.500 11/15/12 2,304,640
1,500 Lucas Cnty, OH Hlth Fac Rev Ohio Presbyterian
Ser A Rfdg..................................... 6.750 07/01/20 1,667,985
1,400 Mahoning Cnty, OH Hosp Fac Rev YHA Inc Proj Ser
A Rfdg (Prerefunded @ 10/15/02) (MBIA Insd).... 7.000 10/15/08 1,520,862
1,000 Middleburg Heights, OH Southwest Genl Hlth Cent
(FSA Insd)..................................... 5.625 08/15/15 1,079,640
1,000 Montgomery Cnty, OH Hosp Rev Grandview Hosp &
Med Cent Rfdg.................................. 5.600 12/01/11 1,065,360
3,325 Ohio Hsg Fin Agy Mtg Rev Residential Ser A2
(GNMA Collateralized).......................... 6.625 03/01/26 3,590,102
5,550 Ohio Hsg Fin Agy Single Family Mtg Rev......... * 01/15/15 2,532,409
5,850 Ohio Hsg Fin Agy Single Family Mtg Rev
(Prerefunded @ 07/15/14)....................... * 01/15/15 2,621,385
1,215 Ohio Hsg Fin Agy Single Family Mtg Rev Ser A
(GNMA Collateralized).......................... 7.650 03/01/29 1,249,980
540 Ohio Hsg Fin Agy Single Family Mtg Rev Ser B
(GNMA Collateralized).......................... 8.100 12/15/08 558,241
2,350 Ohio St Air Quality Dev Auth Rev Ashland Oil
Inc Proj Rfdg.................................. 6.850 04/01/10 2,516,239
2,000 Ohio St Bldg Auth St Fac James Rhodes Ser A
Rfdg (Prerefunded @ 06/01/01).................. 6.250 06/01/11 2,166,940
1,230 Ohio St Dept of Tran Ctfs Partn Panhandle Rail
Line Proj (FSA Insd)........................... 6.500 04/15/12 1,344,169
645 Ohio St Econ Dev Rev OH Enterprise Brd Fd Ser
9.............................................. 7.625 12/01/11 707,894
2,000 Ohio St Univ Rev Genl Rcpts (Prerefunded @
12/01/98)...................................... 7.150 12/01/09 2,046,740
1,500 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev Wtr
Ctl Ln Fd St Match (MBIA Insd)................. 6.000 12/01/11 1,617,555
1,000 Pike Cnty, OH Hlthcare Fac Rev Rfdg............ 6.750 06/01/17 1,036,020
1,650 Toledo-Lucas Cnty, OH Port Auth Port Rev Fac
Cargill Inc Proj Rfdg.......................... 7.250 03/01/22 1,835,543
3,000 University of Cincinnati, OH Genl Rcpts Ser II
(Prerefunded @ 06/01/99)....................... 7.100 06/01/10 3,132,030
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 3,386,430
------------
92,155,691
------------
GUAM 1.0%
1,000 Guam Arpt Auth Rev Ser B....................... 6.700 10/01/23 1,095,160
------------
</TABLE>
See Notes to Financial Statements
3
<PAGE> 5
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PUERTO RICO 11.6%
$5,000 Puerto Rico Comwlth Pub Impt Rfdg.............. 3.000% 07/01/06 $ 4,614,550
1,815 Puerto Rico Elec Pwr Auth Pwr Rev Ser P
(Prerefunded @ 07/01/01)....................... 7.000 07/01/11 2,009,259
4,500 Puerto Rico Elec Pwr Auth Pwr Rev Ser P
(Prerefunded @ 07/01/01)....................... 7.000 07/01/21 4,981,635
1,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser T
(Prerefunded @ 07/01/04)....................... 6.375 07/01/24 1,144,380
------------
12,749,824
------------
U. S. VIRGIN ISLANDS 2.1%
2,000 Virgin Islands Pub Fin Auth Rev Matching Fd Ln
Nts Ser A Rfdg (Prerefunded @ 10/01/02)........ 7.250 10/01/18 2,293,780
------------
TOTAL INVESTMENTS 98.7%
(Cost $97,152,844)....................................................... 108,294,455
OTHER ASSETS IN EXCESS OF LIABILITIES 1.3%................................ 1,411,621
------------
NET ASSETS 100.0%......................................................... $109,706,076
============
</TABLE>
* Zero coupon bond
PORTFOLIO COMPOSITION BY CREDIT QUALITY*
The following table summarizes the portfolio composition at October 31,
1998, based upon the highest credit quality ratings as determined by Standard &
Poor's or Moody's.
<TABLE>
<S> <C>
AAA................................. 58.2%
AA.................................. 3.0
A................................... 18.7
BBB................................. 8.4
NR.................................. 11.7
------
100.0%
======
</TABLE>
* As a percentage of long-term investments.
See Notes to Financial Statements
4
<PAGE> 6
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $97,152,844)........................ $108,294,455
Receivables:
Interest.................................................. 1,828,158
Investments Sold.......................................... 10,338
Other....................................................... 2,201
------------
Total Assets.......................................... 110,135,152
------------
LIABILITIES:
Payables:
Custodian Bank............................................ 114,041
Investment Advisory Fee................................... 65,411
Income Distributions - Preferred Shares................... 28,220
Shareholder Reports....................................... 21,519
Administrative Fee........................................ 18,689
Affiliates................................................ 9,725
Trustees' Deferred Compensation and Retirement Plans........ 89,422
Accrued Expenses............................................ 82,049
------------
Total Liabilities..................................... 429,076
------------
NET ASSETS.................................................. $109,706,076
============
NET ASSETS CONSIST OF:
Preferred Shares ($.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, 4,252,556 shares issued and
outstanding).............................................. 42,526
Paid in Surplus............................................. 62,870,027
Net Unrealized Appreciation................................. 11,141,611
Accumulated Undistributed Net Investment Income............. 570,204
Accumulated Net Realized Gain............................... 81,708
------------
Net Assets Applicable to Common Shares................ 74,706,076
------------
NET ASSETS.................................................. $109,706,076
============
NET ASSET VALUE PER COMMON SHARE ($74,706,076 divided by
4,252,556 shares outstanding)............................. $ 17.57
============
</TABLE>
See Notes to Financial Statements
5
<PAGE> 7
STATEMENT OF OPERATIONS
For the Two Months Ended October 31, 1998
and the Year Ended August 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Two Months Ended Year Ended
October 31, 1998 August 31, 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest.............................................. $ 1,106,711 $ 6,638,195
----------- -----------
EXPENSES:
Investment Advisory Fee............................... 128,447 761,163
Administrative Fee.................................... 36,699 217,475
Preferred Share Maintenance........................... 17,065 101,709
Audit................................................. 15,000 23,700
Trustees' Fees and Expenses........................... 2,713 20,774
Legal................................................. 2,545 8,518
Custody............................................... 1,886 8,576
Other................................................. 19,632 146,363
----------- -----------
Total Expenses.................................... 223,987 1,288,278
----------- -----------
NET INVESTMENT INCOME................................. $ 882,724 $ 5,349,917
=========== ===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain/Loss................................ $ (615) $ 82,320
----------- -----------
Unrealized Appreciation/Depreciation:
Beginning of the Period............................. 11,106,020 9,478,128
End of the Period................................... 11,141,611 11,106,020
----------- -----------
Net Unrealized Appreciation During the Period......... 35,591 1,627,892
----------- -----------
NET REALIZED AND UNREALIZED GAIN...................... $ 34,976 $ 1,710,212
=========== ===========
NET INCREASE IN NET ASSETS FROM OPERATIONS............ $ 917,700 $ 7,060,129
=========== ===========
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
STATEMENT OF CHANGES IN NET ASSETS
For the Two Months Ended October 31, 1998
and the Years Ended August 31, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Two Months Ended Year Ended Year Ended
October 31, 1998 August 31, 1998 August 31, 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income...................... $ 882,724 $ 5,349,917 $ 5,385,208
Net Realized Gain/Loss..................... (615) 82,320 123,232
Net Unrealized Appreciation During the
Period................................... 35,591 1,627,892 2,970,759
------------ ------------ ------------
Change in Net Assets from Operations....... 917,700 7,060,129 8,479,199
------------ ------------ ------------
Distributions from Net Investment Income:
Common Shares............................ (713,824) (4,266,805) (4,245,209)
Preferred Shares......................... (202,745) (1,244,255) (1,174,847)
------------ ------------ ------------
(916,569) (5,511,060) (5,420,056)
------------ ------------ ------------
Distributions from Net Realized Gain:
Common Shares............................ -0- (96,478) (166,218)
Preferred Shares......................... -0- (26,754) (51,734)
------------ ------------ ------------
-0- (123,232) (217,952)
------------ ------------ ------------
Total Distributions........................ (916,569) (5,634,292) (5,638,008)
------------ ------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES............................... 1,131 1,425,837 2,841,191
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through
Dividend Reinvestment.................... 78,564 488,888 213,622
------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS............... 79,695 1,914,725 3,054,813
NET ASSETS:
Beginning of the Period.................... 109,626,381 107,711,656 104,656,843
------------ ------------ ------------
End of the Period (Including accumulated
undistributed net investment income of
$570,204, $604,049 and $763,488,
respectively)............................ $109,706,076 $109,626,381 $107,711,656
============ ============ ============
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Two Months Ended ------------------------
October 31, 1998 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period (a)...... $ 17.567 $17.229 $16.554
-------- ------- -------
Net Investment Income........................... .208 1.262 1.278
Net Realized and Unrealized Gain/Loss........... .008 .406 .735
-------- ------- -------
Total from Investment Operations.................. .216 1.668 2.013
-------- ------- -------
Less:
Distributions from Net Investment Income:
Paid to Common Shareholders................... .168 1.008 1.008
Common Share Equivalent of Distributions Paid
to Preferred Shareholders................... .048 .293 .278
Distributions from Net Realized Gains:
Paid to Common Shareholders................... -0- .023 .040
Common Share Equivalent of Distributions Paid
to Preferred Shareholders................... -0- .006 .012
-------- ------- -------
Total Distributions............................... .216 1.330 1.338
-------- ------- -------
Net Asset Value, End of the Period................ $ 17.567 $17.567 $17.229
======== ======= =======
Market Price Per Share at End of the Period....... $19.0625 $18.500 $17.000
Total Investment Return at Market Price (b)....... 4.00%* 15.39% 9.55%
Total Return at Net Asset Value (c)............... 0.96%* 8.16% 10.70%
Net Assets at End of the Period (In millions)..... $ 109.7 $ 109.6 $ 107.7
Ratio of Expenses to Average Net Assets Applicable
to Common Shares**.............................. 1.79% 1.75% 1.78%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (d).......... 5.44% 5.57% 5.89%
Portfolio Turnover................................ 0%* 5% 7%
*Non-Annualized
**Ratio of Expenses to Average Net Assets
Including Preferred Shares...................... 1.22% 1.18% 1.19%
</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.
8
<PAGE> 10
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 27, 1991
(Commencement
Year Ended August 31, of Investment
------------------------------------------- Operations) to
1996 1995 1994 1993 August 31, 1992
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$16.598 $16.239 $17.445 $15.988 $14.748
------- ------- ------- ------- -------
1.267 1.275 1.290 1.291 1.006
-0- .397 (1.195) 1.442 1.175
------- ------- ------- ------- -------
1.267 1.672 .095 2.733 2.181
------- ------- ------- ------- -------
1.008 .984 .984 .983 .731
.303 .329 .208 .201 .210
-0- -0- .091 .072 -0-
-0- -0- .018 .020 -0-
------- ------- ------- ------- -------
1.311 1.313 1.301 1.276 .941
------- ------- ------- ------- -------
$16.554 $16.598 $16.239 $17.445 $15.988
======= ======= ======= ======= =======
$16.500 $15.875 $15.750 $17.250 $16.250
10.47% 7.34% (2.54%) 13.17% 13.59%*
5.85% 8.74% (0.79%) 16.26% 11.78%*
$ 104.7 $ 104.6 $ 103.0 $ 108.1 $ 101.8
1.80% 1.81% 1.82% 1.72% 1.79%
5.75% 6.00% 6.39% 6.61% 5.83%
6% 24% 0% 18% 43%*
1.20% 1.19% 1.22% 1.14% 1.22%
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen 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. In August 1998, the Trust's Board of Trustees approved a change in the
Trust's fiscal year end from August 31 to October 31. As a result, this
financial report reflects the two-month period commencing on September 1, 1998,
and ending on October 31, 1998.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Investments are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made. At October 31, 1998, there were no
when issued or delayed delivery purchase commitments.
10
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of each
applicable security.
D. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
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, 1998, the Trust had an accumulated capital loss
carryforward for tax purposes of $615 which will expire on October 31, 2006.
At October 31, 1998, for federal income tax purposes the cost of long-term
investments is $97,152,844, the aggregate gross unrealized appreciation is
$11,141,611 and the aggregate gross unrealized depreciation is $0, resulting in
net unrealized appreciation on long-term investments of $11,141,611.
E. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under generally accepted accounting principles and federal
income tax purposes, permanent differences between financial and tax basis
reporting for the year ended August 31, 1998 have been identified and
appropriately reclassified. Permanent book and tax basis differences relating to
the recognition of certain expenses which were not deductible for tax purposes
totaling $1,704 were reclassified from accumulated undistributed net investment
income to capital.
For the two months ended October 31, 1998, 100% of the income distributions
made by the Trust were exempt from federal income taxes. In January 1999, the
Trust will provide tax information to shareholders for the 1998 calendar year.
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
Investment Advisory Corp. (the "Adviser") will provide investment advice and
facilities to the Trust for an annual fee payable monthly of .70% of the average
net assets of the Trust. In addition, the Trust will pay a monthly
administrative fee to Van Kampen Funds Inc. or its affiliates (collectively "Van
Kampen"), the Trust's Administrator, at an annual rate of .20% of the average
net assets of the Trust. The administrative services provided by the
Administrator include record keeping and reporting responsibilities with respect
to the Trust's portfolio and preferred shares and providing certain services to
shareholders.
For the two months ended October 31, 1998, and the year ended August 31,
1998, the Trust recognized expenses of approximately $600 and $1,500,
respectively, representing legal services provided by Skadden, Arps, Slate,
Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of the Trust
is an affiliated person.
For the two months ended October 31, 1998 and the year ended August 31,
1998, the Trust recognized expenses of approximately $10,300 and $60,600,
respectively, representing Van Kampen's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Trust. The maximum
annual benefit under the plan is $2,500.
3. CAPITAL TRANSACTIONS
At October 31, 1998, August 31, 1998, and August 31, 1997, paid in surplus
related to common shares aggregated $62,870,027, $62,791,507 and $62,304,602,
respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
TWO MONTHS ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 AUGUST 31, 1998 AUGUST 31, 1997
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning Shares............ 4,248,190 4,220,349 4,207,788
Shares Issued Through
Dividend Reinvestment..... 4,366 27,841 12,561
--------- --------- ---------
Ending Shares............... 4,252,556 4,248,190 4,220,349
========= ========= =========
</TABLE>
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
4. INVESTMENT TRANSACTIONS
For the two months ended October 31, 1998, the cost of purchases and proceeds
from sale of investments, excluding short-term investments, were $0 and $20,000,
respectively. For the year ended August 31, 1998, the cost of purchases and
proceeds from sales of investments, excluding short-term investments, were
$5,802,076 and $5,928,554, 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 October 31, 1998 was 3.270%. During the
two months ended October 31, 1998, the rates ranged from 3.270% to 3.500%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $50,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests, and the APS are subject to
mandatory redemption if the tests are not met.
6. CAPITAL GAIN DISTRIBUTION
On December 3, 1998, the Trust declared a capital gain of $.0149 per common
share, of which $.0077 is long-term and $.0072 is short-term, to common
shareholders of record on December 15, 1998. The gain will be payable on
December 31, 1998.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1998
- --------------------------------------------------------------------------------
7. YEAR 2000 COMPLIANCE (UNAUDITED)
Van Kampen utilizes a number of computer programs across its entire operation
relying on both internal software systems as well as external software systems
provided by third parties. In 1996, Van Kampen initiated a CountDown 2000
Project to review both the internal systems and external vendor connections. The
goal of this project is to position its business to continue unaffected as a
result of the century change. At this time, there can be no assurance that the
steps taken will be sufficient to avoid any adverse impact to the Trust, but Van
Kampen does not anticipate that the move to Year 2000 will have a material
impact on its ability to continue to provide the Trust with service at current
levels. In addition, it is possible that the securities markets in which the
Trust invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues.
14
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders of
Van Kampen Ohio Quality Municipal Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen Ohio Quality Municipal Trust (the "Trust"), including the portfolio of
investments, as of October 31, 1998, and the related statement of operations for
the two-month period ended October 31, 1998 and the year ended August 31, 1998,
the statement of changes in net assets for the two-month period ended October
31, 1998 and for each of the two years in the period ended August 31, 1998, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1998, by correspondence with the custodian and brokers. 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 Ohio Quality Municipal Trust as of October 31, 1998, the results of its
operations for the two-month period ended October 31, 1998 and the year ended
August 31, 1998, the changes in its net assets for the two-month period ended
October 31, 1998 and for each of the two years in the period ended August 31,
1998, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 15, 1998
15
<PAGE> 17
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 Funds Inc.
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
16
<PAGE> 18
VAN KAMPEN OHIO QUALITY MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*--Chairman
STEVEN MULLER
THEODORE A. MYERS
DON G. POWELL*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in
the Investment Company Act of 1940.
(C) Van Kampen Funds Inc., 1998
All rights reserved.
(SM) denotes a service mark of
Van Kampen Funds Inc.
17
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> OH QUALITY
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> SEP-01-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 97,152,844
<INVESTMENTS-AT-VALUE> 108,294,455
<RECEIVABLES> 1,838,496
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 2,201
<TOTAL-ASSETS> 110,135,152
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 429,076
<TOTAL-LIABILITIES> 429,076
<SENIOR-EQUITY> 35,000,000
<PAID-IN-CAPITAL-COMMON> 62,912,553
<SHARES-COMMON-STOCK> 4,252,556
<SHARES-COMMON-PRIOR> 4,248,190
<ACCUMULATED-NII-CURRENT> 570,204
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 81,708
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,141,611
<NET-ASSETS> 109,706,076
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,106,711
<OTHER-INCOME> 0
<EXPENSES-NET> (223,987)
<NET-INVESTMENT-INCOME> 882,724
<REALIZED-GAINS-CURRENT> (615)
<APPREC-INCREASE-CURRENT> 35,591
<NET-CHANGE-FROM-OPS> 917,700
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (916,569)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 4,366
<NET-CHANGE-IN-ASSETS> 79,695
<ACCUMULATED-NII-PRIOR> 604,049
<ACCUMULATED-GAINS-PRIOR> 82,323
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 128,447
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 223,987
<AVERAGE-NET-ASSETS> 109,786,612
<PER-SHARE-NAV-BEGIN> 17.567
<PER-SHARE-NII> 0.208
<PER-SHARE-GAIN-APPREC> 0.008
<PER-SHARE-DIVIDEND> (0.216)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.567
<EXPENSE-RATIO> 1.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
