<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
</TABLE>
VFM SAR 4/97
<PAGE> 2
LETTER TO SHAREHOLDERS
March 21, 1997
Dear Shareholder,
As mentioned in your previous
report, VK/AC Holding, Inc., the parent
company of Van Kampen American Capital,
Inc., was acquired by Morgan Stanley
Group Inc., a world leader in asset [PHOTO]
management and investment banking. The
transaction was completed in October,
and we look forward to exploring the
opportunities it creates for investors.
As part of the acquisition, Van Kampen DENNIS J. MCDONNELL AND DON G. POWELL
American Capital became the distributor
of Morgan Stanley retail funds on January 2, 1997.
More recently, on February 5, 1997, it was announced that Morgan Stanley
Group Inc. and Dean Witter, Discover & Co. agreed to merge. The combined company
will be a preeminent global financial services firm, with leading market
positions in securities, asset management and credit services. As the financial
industry continues to witness unprecedented consolidations and new partnerships,
we believe those firms that want to offer investors the greatest opportunities
and services in the next century must be market leaders in all facets of their
business.
ECONOMIC REVIEW
Due to fears that strong economic growth would trigger higher inflation and
cause the Federal Reserve Board to raise interest rates, bond prices dropped
sharply in the first few months of 1996. The Fed ultimately decided to take no
action, however, and bond prices responded with a rally in May. The rally
continued through the latter part of 1996, with bonds regaining much of the loss
they had experienced earlier in the year. Election-year politics further
strengthened the municipal market; the flat federal income tax proposal lost
support, and the status quo of a split government (a Democratic president and a
Republican Congress) was maintained.
Fixed-income prices showed some volatility in the first two months of 1997,
but remained unchanged from year end. During the six-month reporting period,
municipal bond yields decreased an average of 25 basis points. In comparison,
taxable yields decreased 30 to 35 basis points over the same period. The Trust
performed well in this environment in which interest rates declined and the
price of bonds increased.
Continued on page two
1
<PAGE> 3
FUND STRATEGY
We employed the following strategies in managing the Trust:
- - We invested 75 percent of the Trust's long-term investments in AAA-rated
securities as of February 28, 1997. Typically, we attempt to balance the
rating distribution by exchanging a portion of these holdings for
lower-rated, higher-yielding assets. While the AAA-rated securities provide
safety of principal and total return opportunities, lower-rated and
non-rated bonds provide income potential and tend to exhibit lower price
volatility as interest rates change. The value of Trust shares will
fluctuate.
The majority of the Trust's AAA-rated holdings, however, are owned at yields
much higher than what is currently available in the tax-exempt market. As we
identify lower-rated bonds, they will be purchased to replace the
higher-quality, AAA-rated bonds that are subject to early redemption in the
near future.
[PIE CHARTS]
Portfolio Composition by Credit Quality as of February 28, 1997
<TABLE>
<S> <C>
AAA .......................... 75.4%
AA .......................... 11.0%
A .......................... 4.2%
BBB .......................... 7.4%
NR .......................... 2.0%
</TABLE>
- - Rather than focusing on market timing, we attempt to identify securities
that we believe will outperform within a sector and which can be acquired at
an attractive price. This "bottom-up" approach to security selection, aided
by our research team, provides significant added value to the portfolio.
- - We adjusted the Trust's duration to seek to manage volatility. Duration,
which is expressed in years, is a measurement of the portfolio's volatility
to interest rate movements. Portfolios with shorter durations tend to
perform better when interest rates are rising. At the end of the period, the
Trust's duration stood at 5.21 years, comparatively shorter than the Lehman
Brothers Municipal Bond Index benchmark of 7.59 years. While the shorter
duration boosted the Trust's performance in the first half of 1996, it
prevented the Trust from taking full advantage of the decline in interest
rates during the latter half.
Continued on page three
2
<PAGE> 4
Bar Graph
Six-month Dividend History
For the Period Ended February 28, 1997
<TABLE>
<S> <C>
Sep. 1996 .................... $.0875
Oct. 1996 .................... $.0875
Nov. 1996 .................... $.0875
Dec. 1996 .................... $.0875
Jan. 1997 .................... $.0875
Feb. 1997 .................... $.0875
</TABLE>
PERFORMANCE SUMMARY
We are pleased to report that the Van Kampen American Capital Florida
Quality Municipal Trust continued its positive performance over the first half
of its fiscal year. For the six-month period ended February 28, 1997, the Trust
generated a total return at market price of 3.94 percent(1), including
reinvestment of income dividends totaling $.525 per share. The Trust offered a
tax-exempt distribution rate of 6.22 percent(3), based on the closing common
stock price of $16.875 per share on February 28, 1997. Because income from the
Trust is exempt from federal income tax and the Florida Intangibles Tax, this
distribution rate represents a yield equivalent to taxable investment earning
9.72 percent(4) (for Florida investors in the 36 percent federal income tax
bracket).
<TABLE>
<S> <C>
TOP 5 PORTFOLIO INDUSTRY HOLDINGS BY SECTOR*
AS OF
FEBRUARY 28, 1997
Water and Sewer......................................... 20.7%
Health Care............................................. 19.4%
Retail Electric/Gas/Telephone........................... 16.1%
General Purpose......................................... 11.7%
Single Family Housing................................... 7.9%
</TABLE>
*As a Percentage of Long-Term Investments
MUNICIPAL MARKET OUTLOOK
Florida enjoyed above-average population growth along with strong employment
growth, which contributed to a solid state economy in 1996. As corporations
continue to relocate to the state, we expect Florida's economy to remain robust.
Rising population and growing infrastructure needs will result in increased
needs for external financing.
Continued on page four
3
<PAGE> 5
Nationwide, we continue to see signs of a strengthening economy. As a
result, we believe it is more likely that interest rates will rise rather than
decline, although we do not expect to see a drastic move in either direction. We
are, however, maintaining a slightly defensive posture with the Trust by
maintaining a relatively short duration in the event of an increase in interest
rates.
Relatively stable interest rates are favorable for the leveraged structure
of our closed-end funds, which involves borrowing short term funds to purchase
long term municipal securities. The leveraged capital structure of the Trust has
continued to provide 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 could also negatively impact the price.
We believe the Trust is positioned to perform well in the coming months, and
do not anticipate major changes in the portfolio's characteristics. We will
continue to balance the Trust's total return and dividend income. At the same
time, we seek to manage the volatility of the Trust by adjusting the duration
when necessary, and to continue to add value through security selection. Thank
you for your confidence in Van Kampen American Capital and in your Trust's
management team.
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 FEBRUARY 28, 1997
VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
(NYSE TICKER SYMBOL--VFM)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
Six-month total return based on market price(1)........... 3.94%
Six-month total return based on NAV(2).................... 5.37%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock price(3). 6.22%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 9.72%
SHARE VALUATIONS
Net asset value........................................... $ 16.79
Closing common stock price................................ $16.875
Six-month high common stock price (01/09/97).............. $17.125
Six-month low common stock price (10/31/96)............... $16.500
Preferred share rate(5)................................... 3.425%
</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 common 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 36% federal
tax bracket.
(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.
Market forecasts provided in this report may not necessarily come to pass.
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
FLORIDA 94.7%
$ 1,000 Bay Cnty, FL Sch Brd Ctfs Partn (AMBAC Insd).... 6.750% 07/01/12 $ 1,117,970
1,450 Cape Canaveral, FL Hosp Dist Rev Ctfs (AMBAC
Insd)........................................... 6.875 01/01/21 1,580,326
1,135 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/13 411,619
3,205 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/14 1,084,027
4,005 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/15 1,263,297
4,005 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/16 1,178,191
2,000 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/17 548,700
1,960 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/18 501,486
1,000 Charlotte Cnty, FL Util Rev (Prerefunded @
10/01/01) (FGIC Insd)........................... 6.875 10/01/21 1,120,210
1,000 Clay Cnty, FL Hsg Fin Auth Rev Single Family Mtg
(GNMA Collateralized)........................... 6.500 09/01/21 1,022,860
1,280 Dade Cnty, FL Hlth Fac Auth Hosp Rev North Shore
Med Cent Proj Rfdg (Prerefunded @ 08/15/02)
(AMBAC Insd).................................... 6.000 08/15/10 1,369,190
4,000 Dade Cnty, FL Hlth Fac Auth Hosp Rev South Miami
Hosp Proj Ser A (Prerefunded @ 10/01/01) (AMBAC
Insd)........................................... 6.750 10/01/20 4,453,160
130 Dade Cnty, FL Hsg Fin Auth Single Family Mtg Rev
Ser E Rfdg (GNMA Collateralized)................ 7.000 03/01/24 136,144
20,445 Dade Cnty, FL Spl Oblig Rfdg Cap Apprec Bond Ser
B (AMBAC Insd).................................. * 10/01/28 2,992,944
16,125 Dade Cnty, FL Spl Oblig Rfdg Cap Apprec Bond Ser
B (AMBAC Insd).................................. * 10/01/29 2,213,801
1,000 Dade Cnty, FL Wtr & Swr Sys Rev Rfdg (FGIC
Insd)........................................... 5.000 10/01/13 958,060
1,000 Daytona Beach, FL Wtr & Swr Rev Rfdg (AMBAC
Insd)........................................... 5.750 11/15/10 1,030,330
2,000 Dunedin, FL Hosp Rev Mease Hlthcare (Prerefunded
@ 11/15/01) (MBIA Insd)......................... 6.750 11/15/21 2,230,980
1,000 Escambia Cnty, FL Hlth Fac Auth Hlth Fac Rev
Baptist Hosp & Baptist Manor.................... 6.750 10/01/14 1,055,540
1,000 Escambia Cnty, FL Pollutn Ctl Rev Champion Intl
Corp Proj....................................... 6.900 08/01/22 1,068,990
5,975 Florida Hsg Fin Agy Home Ownership Mtg.......... 8.595 11/01/18 6,528,464
2,000 Florida Hsg Fin Agy Homeowner Mtg Ser 3......... 6.350 07/01/28 2,044,580
1,000 Florida Hsg Fin Agy Hsg Brittany Rosemont Ser G1
(AMBAC Insd).................................... 6.150 07/01/25 1,009,350
1,000 Florida Hsg Fin Agy Hsg Brittany Rosemont Ser G1
(AMBAC Insd).................................... 6.250 07/01/35 1,008,510
2,250 Florida St Brd Edl Cap Outlay Pub Edl Ser A
(Prerefunded @ 06/01/01)........................ 6.750 06/01/21 2,475,922
975 Florida St Brd Edl Cap Outlay Pub Edl Ser A
Rfdg............................................ 7.250 06/01/23 1,069,234
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$ 1,025 Florida St Brd Edl Cap Outlay Pub Edl Ser A Rfdg
(Prerefunded @ 06/01/00)........................ 7.250% 06/01/23 $ 1,136,254
1,650 Florida St Muni Pwr Agy Rev Pwr Supply Rfdg
(Prerefunded @ 10/01/01) (AMBAC Insd)........... 6.250 10/01/19 1,806,585
1,000 Florida St Tpk Auth Tpk Rev Ser A Rfdg (FGIC
Insd)........................................... 5.250 07/01/22 940,610
2,000 Halifax Hosp Med Cent FL Hosp Rev Ser A Rfdg
(Prerefunded @ 10/01/01) (MBIA Insd)............ 7.000 10/01/13 2,247,160
4,670 Hernando Cnty, FL Sch Brd Ctfs Partn (FSA
Insd)........................................... 6.500 07/01/12 5,087,078
1,000 Hillsborough Cnty, FL Cap Impt Pgm Rev
(Prerefunded @ 08/01/04) (FGIC Insd)............ 6.625 08/01/12 1,134,930
1,000 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Ser 92 Rfdg.............. 8.000 05/01/22 1,163,290
2,000 Hollywood, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (FGIC Insd)........................... 6.875 10/01/21 2,240,420
7,950 Jacksonville, FL Elec Auth Rev Bulk Pwr Supply
Scherer (Prerefunded @ 10/01/00)................ 6.750 10/01/16 8,717,493
4,000 Jacksonville, FL Elec Auth Rev Saint John's
River Issue 2 Ser 5 Rfdg........................ 6.500 10/01/14 4,233,280
3,350 Jacksonville, FL Excise Tax Rev Ser B (AMBAC
Insd)........................................... 6.500 10/01/16 3,549,258
1,665 Jacksonville, FL Gtd Entitlement Rev Ser A Rfdg
(AMBAC Insd).................................... 5.500 10/01/12 1,675,689
2,000 Jacksonville, FL Hosp Rev Univ Med Cent Inc Proj
(Connie Lee Insd)............................... 6.500 02/01/11 2,164,000
5,000 Kissimmee, FL Util Auth Elec Sys Rev Rfdg & Impt
(Prerefunded @ 10/01/01) (FGIC Insd)............ 6.500 10/01/17 5,526,000
1,105 Lake City, FL Util Rev Ser A (Prerefunded @
07/01/99) (MBIA Insd)........................... 6.875 07/01/16 1,197,477
1,500 Lee Cnty, FL Hsg Fin Auth Single Family Mtg Rev
Multi-Cnty Pgm Ser A (GNMA Collateralized)...... 7.450 09/01/27 1,664,310
1,000 Martin Cnty, FL Indl Dev Auth Indl Dev Rev
Indiantown Cogeneration Proj A Rfdg............. 7.875 12/15/25 1,147,270
4,000 Miami, FL Hlth Fac Auth Hlth Fac Rev Mercy Hosp
Proj (Prerefunded @ 08/01/01) (AMBAC Insd)...... 6.750 08/01/20 4,440,920
5,000 Miramar, FL Wastewater Impt Assmt Rev (FGIC
Insd)........................................... 6.750 10/01/25 5,572,800
5,000 Orange Cnty, FL Hlth Fac Auth Rev (Inverse Fltg)
(MBIA Insd) (b)................................. 8.999 10/29/21 6,062,500
2,000 Orange Cnty, FL Hlth Fac Auth Rev Hosp Adventist
Hlth/Sunbelt Ser A (AMBAC Insd)................. 6.875 11/15/15 2,202,780
1,000 Orange Cnty, FL Hsg Fin Auth Multi-Family Rev
Mtg Hands Inc Proj Ser A........................ 8.000 10/01/25 1,013,410
1,000 Orange Cnty, FL Hsg Fin Auth Single Family Mtg
Rev (GNMA Collateralized)....................... 6.550 10/01/21 1,037,280
7,500 Palm Beach Cnty, FL Arpt Sys Rev Rfdg (MBIA
Insd)........................................... 7.750 10/01/10 8,563,950
3,250 Polk Cnty, FL Indl Dev Auth Indl Dev Rev IMC
Fertilizer Inc Ser A............................ 7.525 01/01/15 3,470,025
3,500 Reedy Creek, FL Impt Dist FL Ser A.............. 6.000 06/01/16 3,581,025
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$ 5,000 Reedy Creek, FL Impt Dist FL Util Rev (AMBAC
Insd)........................................... 7.250% 10/01/08 $ 5,413,300
14,000 Reedy Creek, FL Impt Dist FL Util Rev Ser 1991-1
(Prerefunded @ 10/01/01) (MBIA Insd)............ 6.500 10/01/16 15,357,860
1,000 Saint Lucie Cnty, FL Sales Tax Rev (Prerefunded
@ 10/01/02) (FGIC Insd)......................... 6.500 10/01/22 1,116,870
1,000 Santa Rosa Bay Bridge Auth FL Rev............... 6.250 07/01/28 1,001,910
1,475 Sarasota Cnty, FL Hlth Fac Auth Rev Hlthcare
Kobernick/Meadow Park (Prerefunded @
07/01/02)....................................... 10.000 07/01/22 1,863,205
1,250 Tarpon Springs, FL Hlth Fac Auth Hosp Rev Helen
Ellis Mem Hosp Proj............................. 7.500 05/01/11 1,306,975
1,250 Tarpon Springs, FL Hlth Fac Auth Hosp Rev Helen
Ellis Mem Hosp Proj............................. 7.625 05/01/21 1,303,863
------------
150,413,662
------------
PUERTO RICO 4.0%
2,000 Centro De Recaudaciones De Ingresos Muni Ctfs
Partn PR........................................ 6.850 10/17/03 2,053,260
2,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
W............................................... 5.500 07/01/15 1,991,840
1,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
X Rfdg.......................................... 5.500 07/01/19 960,800
1,250 Puerto Rico Elec Pwr Auth Pwr Rev Ser T......... 6.375 07/01/24 1,321,937
------------
6,327,837
------------
TOTAL LONG-TERM INVESTMENTS 98.7%
(Cost $143,132,147)(a)..................................................... 156,741,499
OTHER ASSETS IN EXCESS OF LIABILITIES 1.3%.................................. 2,107,912
------------
NET ASSETS 100.0%........................................................... $158,849,411
============
*Zero coupon bond
(a) At February 28, 1997, cost for federal income tax purposes is $143,132,147;
the aggregate gross unrealized appreciation is $13,774,298 and the aggregate
gross unrealized depreciation is $164,946, resulting in net unrealized
appreciation of $13,609,352.
(b) An Inverse Floating security is one where the coupon is inversely indexed to
a short-term floating interest rate multiplied by a specified factor. As the
floating rate rises, the coupon is reduced. Conversely, as the floating rate
declines, the coupon is increased. The price of these securities may be more
volatile than the price of a comparable fixed rate security. These
instruments are typically used by the Trust to enhance the yield of the
portfolio.
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $143,132,147)
(Note 1).................................................. $156,741,499
Receivables:
Interest.................................................. 2,766,233
Investments Sold.......................................... 80,000
Other....................................................... 2,980
------------
Total Assets.......................................... 159,590,712
------------
LIABILITIES:
Payables:
Custodian Bank............................................ 368,847
Income Distributions--Common and Preferred Shares......... 107,911
Investment Advisory Fee (Note 2).......................... 85,354
Administrative Fee (Note 2)............................... 24,387
Affiliates (Note 2)....................................... 19,131
Accrued Expenses............................................ 78,139
Deferred Compensation and Retirement Plans (Note 2)......... 57,532
------------
Total Liabilities..................................... 741,301
------------
NET ASSETS.................................................. $158,849,411
------------
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 1,000 issued with liquidation preference of
$50,000 per share) (Note 5)............................... $ 50,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 6,482,074 shares issued and
outstanding) (Note 3)..................................... 64,821
Paid in Surplus (Note 3).................................... 95,922,919
Net Unrealized Appreciation on Investments.................. 13,609,352
Accumulated Undistributed Net Investment Income............. 577,959
Accumulated Net Realized Loss on Investments................ (1,325,640)
------------
Net Assets Applicable to Common Shares................ 108,849,411
------------
NET ASSETS.................................................. $158,849,411
------------
NET ASSET VALUE PER COMMON SHARE ($108,849,411 divided
by 6,482,074 shares outstanding).......................... $ 16.79
============
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1997 (Unaudited)
- ---------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 4,927,915
-----------
EXPENSES:
Investment Advisory Fee (Note 2)............................ 548,615
Administrative Fee (Note 2)................................. 156,747
Preferred Share Maintenance (Note 5)........................ 68,870
Custody..................................................... 23,959
Trustees Fees and Expenses (Note 2)......................... 13,176
Legal (Note 2).............................................. 9,061
Amortization of Organizational Expenses (Note 1)............ 428
Other....................................................... 64,152
-----------
Total Expenses.......................................... 885,008
-----------
NET INVESTMENT INCOME....................................... $ 4,042,907
===========
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Gain on Investments............................ $ 108,902
-----------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period................................... 11,272,413
End of the Period......................................... 13,609,352
-----------
Net Unrealized Appreciation on Investments During the
Period.................................................... 2,336,939
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............. $ 2,445,841
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 6,488,748
===========
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended February 28, 1997
and the Year Ended August 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, 1997 August 31, 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................. $ 4,042,907 $ 7,959,956
Net Realized Gain on Investments...................... 108,902 56,881
Net Unrealized Appreciation/Depreciation on
Investments During
the Period.......................................... 2,336,939 (584,044)
---------- ----------
Change in Net Assets from Operations.................. 6,488,748 7,432,793
---------- ----------
Distributions from Net Investment Income:
Common Shares....................................... (3,397,196) (6,776,256)
Preferred Shares.................................... (840,088) (1,796,477)
---------- ----------
Total Distributions................................... (4,237,284) (8,572,733)
---------- ----------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES... 2,251,464 (1,139,940)
FROM CAPITAL TRANSACTIONS (NOTE 3):
Value of Common Shares Issued Through Dividend
Reinvestment........................................ 287,783 226,109
----------- -----------
TOTAL INCREASE/DECREASE IN NET ASSETS................. 2,539,247 (913,831)
NET ASSETS:
Beginning of the Period............................... 156,310,164 157,223,995
----------- -----------
End of the Period (Including accumulated undistributed
net investment income of $577,959 and $772,336,
respectively)....................................... $158,849,411 $156,310,164
============ ============
</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. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 27, 1991
Six Months (Commencement
Ended Year Ended August 31 of Investment
February 28, ------------------------------------- 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)........................ $16.444 $16.621 $16.282 $17.392 $16.013 $14.786
--------- ------- ------- ------- ------- -------
Net Investment Income............. .625 1.232 1.266 1.275 1.346 1.049
Net Realized and Unrealized
Gain/Loss on Investments........ .378 (.081) .497 (1.100) 1.309 1.116
--------- ------- ------- ------- ------- -----
Total from Investment Operations... 1.003 1.151 1.763 .175 2.655 2.165
--------- ------- ------- ------- ------- -----
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders..... .525 1.050 1.050 1.050 1.007 .743
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders........ .130 .278 .293 .202 .185 .195
Distributions from and in Excess
of Net Realized Gain on
Investments (Note 1):
Paid to Common Shareholders..... -0- -0- .068 .029 .068 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders........ -0- -0- .013 .004 .016 -0-
--------- ------- ------- ------- ------- -------
Total Distributions................ .655 1.328 1.424 1.285 1.276 .938
--------- ------- ------- ------- ------- -------
Net Asset Value, End of the
Period............................ $16.792 $16.444 $16.621 $16.282 $17.392 $16.013
------- ------- ------- ------- ------- -------
Market Price Per Share at End of
the Period........................ $16.875 $16.750 $15.625 $15.625 $17.125 $15.625
Total Investment Return at
Market Price (b).................. 3.94%* 14.18% 7.58% (2.62%) 17.05% 9.33%*
Total Return at Net Asset Value
(c)............................... 5.37%* 5.30% 9.47% (.23%) 15.91% 11.96%*
Net Assets at End of the Period
(In millions)..................... $ 158.8 $ 156.3 $ 157.2 $ 155.0 $ 161.9 $ 152.9
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares............................ 1.64% 1.67% 1.72% 1.66% 1.63% 1.60%
Ratio of Expenses to Average Net
Assets............................ 1.12% 1.14% 1.16% 1.14% 1.11% 1.12%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (d)................. 5.93% 5.70% 6.06% 6.33% 7.04% 6.24%
Portfolio Turnover................. 6%* 8% 17% 19% 13% 37%*
</TABLE>
* Non-Annualized
(a) Net Asset Value at September 27, 1991, is adjusted for common and preferred
share offering costs of $.214 per common share.
(b) Total Investment Return at Market Price reflects the change in market value
of the common shares for the period indicated with reinvestment of dividends
in accordance with the Trust's dividend reinvestment plan.
(c) Total Return at Net Asset Value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.
(d) Net Investment Income is adjusted for common share equivalent of
distributions paid to preferred shareholders.
See Notes to Financial Statements
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Florida 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 income taxes
and Florida State intangible taxes, consistent with preservation of capital. The
Trust will invest in a portfolio consisting substantially of Florida 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 February 28, 1997, there were no
when issued or delayed delivery purchase commitments.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
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. ORGANIZATIONAL EXPENSES--The Trust has reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with the Trust's organization and initial registration in the amount
of $30,000. These costs 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.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At August 31, 1996, the Trust had an accumulated capital loss
carryforward for tax purposes of $1,434,542 which will expire between August 31,
2003 and August 31, 2004.
F. 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.
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.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom
(Illinois), counsel to the Trust, of which a trustee of the Trust is an
affiliated person.
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
For the six months ended February 28, 1997, the Trust recognized expenses of
approximately $9,800 representing VKAC's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of VKAC. The Trust does not compensate its officers or trustees who are officers
of VKAC.
The Trust has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC.
3. CAPITAL TRANSACTIONS
At February 28, 1997 and August 31, 1996, common share paid in surplus
aggregated $95,922,919 and $95,635,308, respectively.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1997 AUGUST 31, 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares......................... 6,464,916 6,451,214
Shares Issued Through Dividend
Reinvestment........................... 17,158 13,702
--------- ---------
Ending Shares............................ 6,482,074 6,464,916
--------- ---------
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $12,897,844 and $9,196,771, respectively.
5. PREFERRED SHARES
The Trust has outstanding 1,000 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 February 28, 1997 was 3.425%. During the
six months ended February 28, 1997, the rates ranged from 3.28% to 3.53%.
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.
15
<PAGE> 17
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
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
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
1-800-282-4404 for Morgan Stanley retail funds.
16
<PAGE> 18
VAN KAMPEN AMERICAN CAPITAL FLORIDA 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
A Special Meeting of Shareholders of the Trust was held on October 23, 1996,
where shareholders voted on a new investment advisory agreement and changes to
investment policies. With regard to the approval of a new investment advisory
agreement between Van Kampen American Capital Investment Advisory Corp. and the
Trust, 4,798,309 shares voted for the proposal, 103,191 shares voted against,
99,859 shares abstained and 387,517 shares represented broker non-votes. With
regard to the approval of certain changes to the Trust's fundamental investment
policies with respect to investments in other investment companies, 3,082,776
shares voted for the proposal, 135,620 shares voted against 177,383 shares
abstained and 2,072,689 shares represented broker non-votes.
17
