<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>
VFM 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 [PHOTO]
recently, Morgan Stanley Group Inc. and
Dean Witter, Discover & Co. agreed to
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, tourism and construction continued to drive
Florida's healthy economic growth. After a decline in employment growth in 1996,
employment gains rebounded in the first half of 1997, and helped maintain
unemployment at a level below 5 percent. Expectations of continued economic
health combined with conservative fiscal management resulted in the Standard &
Poor's upgrading Florida's general obligation debt rating from AA to AA+.
Additionally, Moody's also upgraded the state's rating from Aa to Aa2.
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
Continued on page two
1
<PAGE> 3
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.
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. In Florida, 5.7 percent of new
volume through August came to market insured. This has dramatically narrowed
credit spreads.
FUND STRATEGY
We employed the following strategies to manage the portfolio during the 12-month
period:
- - As of August 31, 1997, over 81 percent of the Trust's long-term investments
are rated AAA, relatively unchanged over the period. The high percentage of
insured issuance coming to market has compressed yield spreads, making
AAA-rated yields more attractive. While we actively seek lower-rated and
non-rated offerings that enhance the Trust's dividend-paying ability and
that should help reduce volatility, credits which meet our rigid research
criteria are often difficult to find. During the period, however, we were
able to purchase positions in Santa Rosa Bay Bridge Authority
(Non-Rated/BBB-) and Centro de Recaudaciones (Non-Rated/Non-Rated). Both
positions have done well since our acquisition.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality
as of August 31, 1997*
<TABLE>
<S> <C>
AAA............ 81.4%
AA............. 5.0%
A.............. 4.2%
BBB............ 7.5%
Non-Rated...... 1.9%
</TABLE>
*As a Percentage of Long-Term Investments
Based upon the highest credit quality ratings
as issued by Standard & Poor's or Moody's.
Continued on page three
2
<PAGE> 4
- - We adjusted the portfolio's duration to 5.66 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.
To reduce our exposure to pre-refunded securities that will mature on the
pre-refunded date, we purchased approximately $3 million in municipal "forwards"
for Pensacola Airport. These forwards, which do not settle until June 1998, were
acquired at yields of 6.10 to 6.23 percent. Locking in a yield above 6.00
percent for AAA-rated securities should help reduce the reinvestment risk for
the portfolio.
[BAR GRAPH]
Twelve-month Dividend History
For the Period Ended August 31, 1997
<TABLE>
<CAPTION>
Distribution per
Date Common Share
- ---- ----------------
<S> <C>
Sep 1996 $.0875
Oct 1996 $.0875
Nov 1996 $.0875
Dec 1996 $.0875
Jan 1997 $.0875
Feb 1997 $.0875
Mar 1997 $.0875
Apr 1997 $.0875
May 1997 $.0875
Jun 1997 $.0825
Jul 1997 $.0825
Aug 1997 $.0825
</TABLE>
The dividend history represents past performance of the Trust and does not
predict the Trust's future distributions.
PERFORMANCE SUMMARY
The Van Kampen American Capital Florida 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 10.33 percent(1),
including reinvestment of income dividends totaling $1.035 per common share. The
Trust offered a tax-exempt distribution rate of 5.70 percent(3), based on the
closing common stock price of $17.375 per share on August 31, 1997. Because
income from the Trust is exempt from federal income tax, this distribution rate
represents a yield equivalent to a taxable investment earning 8.91 percent(4)
(for investors in the 36 percent federal income tax bracket). At the end of the
reporting period, the closing share price of the Trust traded at a 3.00 percent
premium to its net asset value of $16.83.
Continued on page four
3
<PAGE> 5
TOP FIVE INDUSTRY HOLDINGS BY SECTOR*
<TABLE>
<CAPTION>
AS OF
AUGUST 31, 1997
<S> <C>
Water and Sewer......................................... 20.1%
Health Care............................................. 19.3%
Retail Electric/Gas/Telephone........................... 15.4%
General Purpose......................................... 10.9%
Single-Family Housing................................... 7.4%
</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 divided 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 appreciate 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 FLORIDA QUALITY MUNICIPAL TRUST
(NYSE TICKER SYMBOL--VFM)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
One-year total return based on market price(1)........... 10.33%
One-year total return based on NAV(2).................... 8.89%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)............................................... 5.70%
Taxable-equivalent distribution rate as a % of closing
common stock price(4).................................. 8.91%
SHARE VALUATIONS
Net asset value.......................................... $ 16.83
Closing common stock price............................... $ 17.375
One-year high common stock price (08/05/97).............. $17.6875
One-year low common stock price (04/14/97)............... $16.3750
Preferred share rate(5).................................. 3.524%
</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.
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 100.2%
FLORIDA 96.2%
$ 1,000 Bay Cnty, FL Sch Brd Ctfs Partn (AMBAC Insd).... 6.750% 07/01/12 $ 1,117,580
250 Broward Cnty, FL Hsg Fin Auth Single Family Mtg
Rev Rfdg Ser A (GNMA Collateralized)............ 6.200 04/01/30 259,193
1,450 Cape Canaveral, FL Hosp Dist Rev Ctfs (AMBAC
Insd)........................................... 6.875 01/01/21 1,575,817
1,135 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/13 422,810
3,205 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/14 1,113,481
4,005 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/15 1,297,620
4,005 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/16 1,210,191
2,000 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/17 563,600
1,960 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)........................... * 10/01/18 515,108
1,000 Charlotte Cnty, FL Util Rev (Prerefunded @
10/01/01) (FGIC Insd)........................... 6.875 10/01/21 1,113,370
725 Clay Cnty, FL Hsg Fin Auth Rev Single Family Mtg
(GNMA Collateralized)........................... 6.500 09/01/21 763,309
750 Cocoa, FL Wtr & Swr Rev Impt (FGIC Insd)........ 5.875 10/01/26 778,125
750 Dade Cnty, FL Edl Fac Auth Rev Univ of Miami Ser
B (MBIA Insd)................................... 5.750 04/01/20 771,525
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 1,370,662
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 4,431,720
130 Dade Cnty, FL Hsg Fin Auth Single Family Mtg Rev
Ser E Rfdg (GNMA Collateralized)................ 7.000 03/01/24 136,969
20,445 Dade Cnty, FL Spl Oblig Cap Apprec Bond Ser B
Rfdg (AMBAC Insd)............................... * 10/01/28 3,164,886
16,125 Dade Cnty, FL Spl Oblig Cap Apprec Bond Ser B
Rfdg (AMBAC Insd)............................... * 10/01/29 2,341,189
1,000 Dade Cnty, FL Wtr & Swr Sys Rev Rfdg (FGIC
Insd)........................................... 5.000 10/01/13 974,080
1,000 Daytona Beach, FL Wtr & Swr Rev Rfdg (AMBAC
Insd)........................................... 5.750 11/15/10 1,043,010
2,000 Dunedin, FL Hosp Rev Mease Hlthcare (Prerefunded
@ 11/15/01) (MBIA Insd)......................... 6.750 11/15/21 2,220,580
1,000 Escambia Cnty, FL Hlth Fac Auth Hlth Fac Rev
Baptist Hosp & Baptist Manor.................... 6.750 10/01/14 1,072,120
1,000 Escambia Cnty, FL Pollutn Ctl Rev Champion Intl
Corp Proj....................................... 6.900 08/01/22 1,103,120
5,485 Florida Hsg Fin Agy Home Ownership Mtg (GNMA
Collateralized)................................. 8.595 11/01/18 6,043,812
200 Florida Hsg Fin Agy Homeowner Mtg Ser 2 (MBIA
Insd)........................................... 5.900 07/01/29 202,190
2,000 Florida Hsg Fin Agy Homeowner Mtg Ser 3......... 6.350 07/01/28 2,095,360
</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
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$ 1,000 Florida Hsg Fin Agy Hsg Brittany Rosemont Ser G1
(AMBAC Insd).................................... 6.150% 07/01/25 $ 1,029,190
1,000 Florida Hsg Fin Agy Hsg Brittany Rosemont Ser G1
(AMBAC Insd).................................... 6.250 07/01/35 1,035,320
500 Florida Hsg Fin Agy Hsg Riverfront Apts Ser A
(AMBAC Insd).................................... 6.250 04/01/37 518,760
2,250 Florida St Brd Edl Cap Outlay Pub Edl Ser A
(Prerefunded @ 06/01/01)........................ 6.750 06/01/21 2,460,330
975 Florida St Brd Edl Cap Outlay Pub Edl Ser A
Rfdg............................................ 7.250 06/01/23 1,060,644
1,025 Florida St Brd Edl Cap Outlay Pub Edl Ser A Rfdg
(Prerefunded @ 06/01/00)........................ 7.250 06/01/23 1,124,446
1,650 Florida St Muni Pwr Agy Rev Pwr Supply Rfdg
(Prerefunded @ 10/01/01) (AMBAC Insd)........... 6.250 10/01/19 1,798,747
1,000 Florida St Tpk Auth Tpk Rev Ser A Rfdg (FGIC
Insd)........................................... 5.250 07/01/22 964,970
2,000 Halifax Hosp Med Cent FL Hosp Rev Ser A Rfdg
(Prerefunded @ 10/01/01) (MBIA Insd)............ 7.000 10/01/13 2,234,420
4,670 Hernando Cnty, FL Sch Brd Ctfs Partn (FSA
Insd)........................................... 6.500 07/01/12 5,057,050
1,000 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Ser 92 Rfdg.............. 8.000 05/01/22 1,156,450
2,000 Hollywood, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (FGIC Insd)........................... 6.875 10/01/21 2,226,740
7,950 Jacksonville, FL Elec Auth Rev Bulk Pwr Supply
Scherer (Prerefunded @ 10/01/00)................ 6.750 10/01/16 8,642,127
3,500 Jacksonville, FL Elec Auth Rev Saint John's
River Issue 2 Ser 5 Rfdg (Prerefunded @
10/01/99)....................................... 6.500 10/01/14 3,716,405
3,350 Jacksonville, FL Excise Tax Rev Ser B (AMBAC
Insd)........................................... 6.500 10/01/16 3,541,653
1,665 Jacksonville, FL Gtd Entitlement Rev Ser A Rfdg
(AMBAC Insd).................................... 5.500 10/01/12 1,695,203
2,000 Jacksonville, FL Hosp Rev Univ Med Cent Inc Proj
(Connie Lee Insd)............................... 6.500 02/01/11 2,174,720
5,000 Kissimmee, FL Util Auth Elec Sys Rev Rfdg & Impt
(Prerefunded @ 10/01/01) (FGIC Insd)............ 6.500 10/01/17 5,497,200
485 Lee Cnty FL Hosp Brd Directors Hosp Rev Lee Mem
Hlth Sys Ser A (MBIA Insd)...................... 5.875 04/01/24 499,569
1,490 Lee Cnty, FL Hsg Fin Auth Single Family Mtg Rev
Multi-Cnty Pgm Ser A (GNMA Collateralized)...... 7.450 09/01/27 1,663,957
1,000 Martin Cnty, FL Indl Dev Auth Indl Dev Rev
Indiantown Cogeneration Proj A Rfdg............. 7.875 12/15/25 1,154,930
4,000 Miami, FL Hlth Fac Auth Hlth Fac Rev Mercy Hosp
Proj (Prerefunded @ 08/01/01) (AMBAC Insd)...... 6.750 08/01/20 4,418,560
5,000 Miramar, FL Wastewater Impt Assmt Rev (FGIC
Insd)........................................... 6.750 10/01/25 5,593,100
5,000 Orange Cnty, FL Hlth Fac Auth Rev (Inverse Fltg)
(MBIA Insd) (c)................................. 8.949 10/29/21 5,956,250
2,000 Orange Cnty, FL Hlth Fac Auth Rev Hosp Adventist
Hlth/Sunbelt Ser A (AMBAC Insd)................. 6.875 11/15/15 2,205,240
1,000 Orange Cnty, FL Hsg Fin Auth Multi-Family Rev
Mtg Hands Inc Proj Ser A........................ 8.000 10/01/25 1,019,270
775 Orange Cnty, FL Hsg Fin Auth Single Family Mtg
Rev (GNMA Collateralized)....................... 6.550 10/01/21 816,075
</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
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$ 7,500 Palm Beach Cnty, FL Arpt Sys Rev Rfdg (MBIA
Insd)........................................... 7.750% 10/01/10 $ 8,501,625
270 Palm Beach Cnty, FL Hsg Fin Auth Multi-Family
Rev (FSA Insd).................................. 5.900 06/01/29 273,367
1,500 Pensacola, FL Arpt Rev Ser A Rfdg (MBIA Insd)
(a)............................................. 6.000 10/01/12 1,547,535
1,565 Pensacola, FL Arpt Rev Ser A Rfdg (MBIA Insd)
(a)............................................. 6.125 10/01/18 1,616,175
3,250 Polk Cnty, FL Indl Dev Auth Indl Dev Rev IMC
Fertilizer Inc Ser A............................ 7.525 01/01/15 3,517,995
3,500 Reedy Creek, FL Impt Dist FL Ser A.............. 6.000 06/01/16 3,654,595
5,000 Reedy Creek, FL Impt Dist FL Util Rev (AMBAC
Insd)........................................... 7.250 10/01/08 5,362,500
14,000 Reedy Creek, FL Impt Dist FL Util Rev Ser 1991-1
(Prerefunded @ 10/01/01) (MBIA Insd) (b)........ 6.500 10/01/16 15,274,420
1,000 Saint Lucie Cnty, FL Sales Tax Rev (Prerefunded
@ 10/01/02) (FGIC Insd)......................... 6.500 10/01/22 1,112,010
1,000 Santa Rosa Bay Bridge Auth FL Rev............... 6.250 07/01/28 1,022,810
1,460 Sarasota Cnty, FL Hlth Fac Auth Rev Hlthcare
Kobernick/Meadow Pk (Prerefunded @ 07/01/02).... 10.000 07/01/22 1,804,326
1,250 Tarpon Springs, FL Hlth Fac Auth Hosp Rev Helen
Ellis Mem Hosp Proj............................. 7.500 05/01/11 1,332,650
1,250 Tarpon Springs, FL Hlth Fac Auth Hosp Rev Helen
Ellis Mem Hosp Proj............................. 7.625 05/01/21 1,337,738
------------
153,320,499
------------
PUERTO RICO 4.0%
1,886 Centro de Recaudaciones de Ingresos Muni Ctfs
Partn........................................... 6.850 10/17/03 1,956,694
2,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
W............................................... 5.500 07/01/15 2,017,980
1,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
X Rfdg.......................................... 5.500 07/01/19 987,410
1,250 Puerto Rico Elec Pwr Auth Pwr Rev Ser T......... 6.375 07/01/24 1,361,687
------------
6,323,771
------------
TOTAL LONG-TERM INVESTMENTS 100.2%
(Cost $145,780,155)........................................................ 159,644,270
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2%)................................ (327,300)
------------
NET ASSETS 100.0%........................................................... $159,316,970
============
</TABLE>
*Zero coupon bond
(a) Securities purchased on a when issued or delayed delivery basis.
(b) Assets segregated as collateral for when issued or delayed delivery purchase
commitments.
(c) 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.
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $145,780,155)....................... $159,644,270
Receivables:
Interest.................................................. 2,835,103
Investments Sold.......................................... 282,075
Other....................................................... 1,158
------------
Total Assets.......................................... 162,762,606
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 3,031,753
Investment Advisory Fee................................... 94,962
Custodian Bank............................................ 60,329
Income Distributions--Common and Preferred Shares......... 53,103
Administrative Fee........................................ 27,132
Affiliates................................................ 14,385
Accrued Expenses............................................ 93,164
Deferred Compensation and Retirement Plans.................. 70,808
------------
Total Liabilities..................................... 3,445,636
------------
NET ASSETS.................................................. $159,316,970
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 1,000 issued with liquidation preference of
$50,000 per share)........................................ $ 50,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 6,496,170 shares issued and
outstanding).............................................. 64,962
Paid in Surplus............................................. 96,162,928
Net Unrealized Appreciation................................. 13,864,115
Accumulated Undistributed Net Investment Income............. 414,475
Accumulated Net Realized Loss............................... (1,189,510)
------------
Net Assets Applicable to Common Shares................ 109,316,970
------------
NET ASSETS.................................................. $159,316,970
============
NET ASSET VALUE PER COMMON SHARE ($109,316,970 divided
by 6,496,170 shares outstanding).......................... $ 16.83
============
</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.................................................... $ 9,881,861
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,106,852
Administrative Fee.......................................... 316,243
Preferred Share Maintenance................................. 138,883
Trustees Fees and Expenses.................................. 29,106
Legal....................................................... 9,405
Custody..................................................... 8,217
Amortization of Organizational Costs........................ 428
Other....................................................... 166,998
-----------
Total Expenses.......................................... 1,776,132
-----------
NET INVESTMENT INCOME....................................... $ 8,105,729
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 245,032
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 11,272,413
End of the Period......................................... 13,864,115
-----------
Net Unrealized Appreciation During the Period............... 2,591,702
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 2,836,734
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $10,942,463
===========
</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................................... $ 8,105,729 $ 7,959,956
Net Realized Gain....................................... 245,032 56,881
Net Unrealized Appreciation/Depreciation During the
Period................................................ 2,591,702 (584,044)
------------ ------------
Change in Net Assets from Operations.................... 10,942,463 7,432,793
------------ ------------
Distributions from Net Investment Income:
Common Shares......................................... (6,705,935) (6,776,256)
Preferred Shares...................................... (1,752,659) (1,796,477)
------------ ------------
Total Distributions..................................... (8,458,594) (8,572,733)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... 2,483,869 (1,139,940)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment.......................................... 522,937 226,109
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS................... 3,006,806 (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 $414,475 and $772,336,
respectively)......................................... $159,316,970 $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.
- --------------------------------------------------------------------------------
<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)........................ $16.444 $16.621 $16.282 $17.392 $16.013 $14.786
------- ------- ------- ------- ------- -------
Net Investment Income............. 1.251 1.232 1.266 1.275 1.346 1.049
Net Realized and Unrealized
Gain/Loss....................... .438 (.081) .497 (1.100) 1.309 1.116
------- ------- ------- ------- ------- -------
Total from Investment Operations... 1.689 1.151 1.763 .175 2.655 2.165
------- ------- ------- ------- ------- -------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders..... 1.035 1.050 1.050 1.050 1.007 .743
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders........ .270 .278 .293 .202 .185 .195
Distributions from and in Excess
of Net Realized Gain:
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................ 1.305 1.328 1.424 1.285 1.276 .938
------- ------- ------- ------- ------- -------
Net Asset Value, End of the
Period............................ $16.828 $16.444 $16.621 $16.282 $17.392 $16.013
======= ======= ======= ======= ======= =======
Market Price Per Share at End of
the Period........................ $17.375 $16.750 $15.625 $15.625 $17.125 $15.625
Total Investment Return at
Market Price (b).................. 10.33% 14.18% 7.58% (2.62%) 17.05% 9.33%*
Total Return at Net Asset Value
(c)............................... 8.89% 5.30% 9.47% (.23%) 15.91% 11.96%*
Net Assets at End of the Period
(In millions)..................... $ 159.3 $ 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)................. 5.87% 5.70% 6.06% 6.33% 7.04% 6.24%
Portfolio Turnover................. 9% 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
August 31, 1997
- --------------------------------------------------------------------------------
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.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
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 COSTS--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, 1997, the Trust had an accumulated capital loss
carryforward for tax purposes of $1,189,510 which will expire between August 31,
2003 and August 31, 2004, respectively.
At August 31, 1997, for federal income tax purposes, cost for long-term
investments is $145,780,155, the aggregate gross unrealized appreciation is
$13,953,794 and the aggregate gross unrealized depreciation is $89,679,
resulting in net unrealized appreciation of $13,864,115.
F. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays monthly
dividends from net investment income to common shareholders. Permanent book and
tax basis differences relating to the recognition of certain income which is not
taxable for tax purposes totaling $4,996 has been reclassified from accumulated
undistributed net investment income to capital.
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.
For the year ended August 31, 1997, 100% of the income distributions made by
the Trust were exempt from federal income taxes. In January, 1998, the Trust
will provide tax information to shareholders for the 1997 calendar year.
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
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.
For the year ended August 31, 1997, the Trust recognized expenses of
approximately $6,000 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 $66,100 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 per trustee under the plan is equal to the trustees' annual retainer
fee, which is currently $2,500.
3. CAPITAL TRANSACTIONS
At August 31, 1997 and 1996, common share paid in surplus aggregated $96,162,928
and $95,635,308, respectively.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares............................ 6,464,916 6,451,214
Shares Issued Through Dividend
Reinvestment.............................. 31,254 13,702
--------- ---------
Ending Shares............................... 6,496,170 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 $20,038,899 and $14,103,697,
respectively.
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
- --------------------------------------------------------------------------------
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 August 31, 1997 was 3.524%. During the
year ended August 31, 1997, the rates ranged from 3.280% to 3.822%.
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 Florida Quality Municipal Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen American Capital Florida 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 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 American Capital Florida 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
prorata 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 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
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, 5,160,046 shares voted for the
proposal, 110,129 shares voted against, 210,686 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, 803 shares voted in
his favor and 0 shares withheld. With regard to the election of Wayne W. Whalen
as elected trustee by the common shareholders of the Trust, 5,376,312 shares
voted in his favor and 103,745 shares withheld. The other trustees of the Fund
whose terms did not expire in 1997 are Dennis J. McDonnell, Theodore A. Myers,
Hugo F. 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, 5,351,262 shares voted in favor of the proposal, 32,472 shares voted
against, 97,126 shares abstained and 0 shares represented broker non-votes.
20
