<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 6
Portfolio of Investments......................... 7
Statement of Assets and Liabilities.............. 10
Statement of Operations.......................... 11
Statement of Changes in Net Assets............... 12
Financial Highlights............................. 13
Notes to Financial Statements.................... 14
</TABLE>
VFM SAR 4/98
<PAGE> 2
LETTER TO SHAREHOLDERS
March 23, 1998
Dear Shareholder,
The new year ushered in what
promises to be an exciting and
challenging time for investors. The
Taxpayer Relief Act of 1997, signed
into law by President Clinton in
August, creates many new opportunities
for you and your family to take a more
active role in achieving your long-term [PHOTO]
financial goals.
Most Americans will benefit from DENNIS J. MCDONNELL AND DON G. POWELL
the bill's $95 billion in tax cuts over
five years. The so-called Kiddie Credit
gives parents $400 in immediate tax
relief for every child under age 17, and families will find it easier to save
for their children's college expenses with the new Education IRA. The bill also
cuts capital gains tax rates for the first time in more than a decade and
loosens restrictions on tax-deductible IRA contributions. Perhaps the most
exciting feature is the new Roth IRA, which allows investment earnings to grow
tax free, not just tax deferred.
This year, more than ever, it could be important for you to talk with your
financial adviser about how to make the tax code work to your advantage. At Van
Kampen American Capital, we have prepared a variety of publications to help you
understand your choices under the new tax legislation. And with the help of your
adviser, we'll help you locate the many benefits hidden among the changing tax
landscape.
ECONOMIC REVIEW
The U.S. economy sustained its forward momentum throughout 1997, growing at
a moderate rate of 3.8 percent, as measured in terms of gross domestic product.
Despite this continuing growth trend, inflation not only remained low but was on
a decline.
Nevertheless, market watchers remained alert for signs of surging prices.
One cause of concern was the extremely tight labor market. The percentage of
unemployed Americans fell to a 24-year low of 4.6 percent in February, as the
strong economy created more jobs than expected and wages continued to rise. To
date, increased productivity has allowed the U.S. economy to absorb this
increase in the workforce without overheating or driving prices higher.
Florida continues to profit from strong national and regional economic
fundamentals. Consumer confidence throughout the nation has benefited Florida's
tourism industry, traditionally the state's bread and butter. Strong tourism
prompted solid regional economic activity and spurred investment into new
businesses, which is slowly improving the state's economic breadth. Although
economic trends remain favorable, certain indicators suggest growth could begin
to slow during the next 12 to 24 months. Demographic trends remain the major
challenge going forward, as economic and population growth places pressure on
the state's infrastructure.
Continued on page two
1
<PAGE> 3
MARKET REVIEW
The bond market rally continued during the past six months, with both
taxable and tax-exempt yields gradually drifting downward with minimal
volatility. Bond prices move in the opposite direction of bond yields, so as
bond yields fell during the period, bond prices were on the rise. Thirty-year
Treasury yields declined from 6.61 percent on August 29, 1997 to 5.91 percent on
February 27, 1998. In addition, the currency crisis in Asia helped spark the
domestic bond market, as U.S. Treasuries enjoyed an increase in demand from both
foreign and U.S. investors.
As is typical during bond market rallies, municipal bond yields also
declined, although municipals did not perform as strongly as taxable bonds.
Heavy supply and low yield levels contributed to the weaker performance of the
municipal market. Generic general obligation 30-year AAA-rated municipal yields
dropped from 5.30 percent to 4.96 percent at the end of the period.
Credit spreads--the difference in yield between high-quality issues and
low-quality issues--remained extremely tight during the past six months. Under
normal circumstances, low-quality issues provide higher yields in order to
compensate investors for additional credit risk. In 1997, close to 49 percent of
newly issued municipal bonds were insured--causing a scarcity of
higher-yielding, lower-rated securities. This shortage, combined with low yields
in the municipal market, resulted in very narrow credit spreads.
Municipal yields continued to be very attractive compared to taxable yields.
For example, the Bond Buyer Revenue Bond Index, composed of 25 revenue bonds
with an average rating of single-A and an average maturity of 30 years, is
representative of the bonds we typically purchase for the Trust. The Index was
yielding 5.36 percent at the end of the reporting period, while the 30-year
Treasury bond was yielding 5.91 percent. In other words, the difference between
municipal bonds yields and long-term Treasury yields is historically very
narrow.
Florida continues to be the fourth-largest issuer of tax-exempt securities.
Demand for this specialty state paper remains very strong, keeping prices at
levels slightly higher than general market securities.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality
as of February 28, 1998*
<TABLE>
<S> <C>
AAA.......... 75.4%
AA........... 7.9%
A............ 5.6%
BBB.......... 7.5%
Non-Rated.... 3.6%
</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
TRUST STRATEGY
We employed the following strategies in managing the Trust during the period:
- - At the inception of the Trust in 1991, we were able to invest the Trust's
initial assets in bonds with attractive coupons and yields, and many of
these securities remain in the portfolio today. These securities, with
coupons much higher than current market levels, are approaching their
10-year call date and are at risk of being either pre-refunded or called. If
this happens, we will need to replace them with new bonds at current lower
coupons.
To help minimize this risk as the call dates approach, we gradually reduced
the Trust's holdings of pre-refunded securities and replaced them with
longer-term discount securities or securities priced near face value. If the
bond market continues to rally, discount securities are more likely to rise
in price than premium securities.
- - Duration was also a major focus. At the end of the reporting period, the
duration of the portfolio stood at 5.21 years. Duration is a measurement
used to express the sensitivity of a bond's price to changes in interest
rates. Each year of duration represents an expected one-percent change in
the price of a bond for every one-percent change in interest rates.
Typically, funds with short durations perform better when interest rates are
rising, while funds with long durations perform better when rates are
declining. Our interest rate outlook, described in more detail below, is
moderately optimistic. However, lengthening the duration of the Trust would
significantly impact the dividend, so we will maintain a somewhat short
duration in order to support the Trust's high dividend.
- - Due to the narrow credit spreads between AAA-rated and lower-rated
offerings, most acquisitions during the period were AAA-rated, as these
securities provided more relative value. However, due to our research
experience, we were able to identify and purchase several non-insured issues
at attractive yields. Examples include Santa Rosa Bay Bridge Authority
(NR/BBB-) and Puerto Rico Highway Authority (Baa1/A).
TOP FIVE PORTFOLIO INDUSTRY HOLDINGS BY SECTOR*
<TABLE>
AS OF
FEBRUARY 28, 1998
<S> <C>
Water and Sewer......................................... 20.4%
Health Care............................................. 20.3%
Retail Electric/Gas/Telephone........................... 12.9%
General Purpose......................................... 11.9%
Single-Family Housing................................... 7.1%
</TABLE>
*As a Percentage of Long-Term Investments
PERFORMANCE SUMMARY
For the six months ended February 28, 1998, the Van Kampen American Capital
Florida Quality Municipal Trust generated a total return at market price of 0.29
percent(1), including reinvestment of dividends totaling $.4845 per common
share. The Trust offered a tax-exempt distribution rate of 5.60 percent(3),
based on the closing common stock price of
Continued on page four
3
<PAGE> 5
$16.9375 per share on February 28, 1998. Because income from the Trust is exempt
from federal income tax, this distribution rate represents a yield equivalent to
a taxable investment earning 8.75 percent(4) (for investors in the 36 percent
combined federal and state income tax bracket). At the end of the reporting
period, the closing share price of the Trust traded at a 1.12 percent discount
to its net asset value of $17.13.
[DIVIDEND HISTORY GRAPH]
Six-month Dividend History
For the Period Ended February 28, 1998
<TABLE>
<CAPTION>
Distribution per
Common Share
<S> <C>
Sep 1997............................. $.0825
Oct 1997............................. $.0825
Nov 1997............................. $.0825
Dec 1997............................. $.0790
Jan 1998............................. $.0790
Feb 1998............................. $.0790
</TABLE>
* The dividend history represents past performance of the Trust and does not
predict the Trust's future distributions.
OUTLOOK
We expect the U.S. economy and the demand for products and services to
remain strong in the coming months. However, the impact of the Asian financial
crisis is a looming question. The fallout from Asian currency devaluations in
late 1997 occurred at a time when the U.S. dollar was extremely strong against
most major foreign currencies. If Asia's purchasing power is sharply reduced due
to weakened currencies, analysts fear that U.S. export sales will slump. At the
same time, as Asian goods become cheaper relative to American goods, domestic
companies could face a period of price competition versus imported goods. Taken
together, these developments could cut into the earnings of U.S. corporations.
There is no debate that the Federal Reserve Board believes low inflation is
the ideal environment for the economy. Because inflation is low, it is unlikely
that the Fed will change short-term rates in the near future. While the Fed
continues to give credence to signs of economic strength, we believe it will
wait to determine the impact of the Asian situation before taking any action.
Longer term, interest rates need to be high enough to control economic growth.
With a focus on inflation rather than growth, the Fed will probably take any
necessary actions to keep inflation from rising. We will expect a rate increase
by the Fed only if there are signs of an acceleration in inflation.
Regarding the municipal bond market, we believe yields will remain near
current levels through at least mid-summer. This will depend not only on the
general economy
Continued on page five
4
<PAGE> 6
and the taxable bond market, but also tax-exempt bond supply and demand levels.
Given what we have seen this year, the market appears to be in a solid
equilibrium position, with strong demand to accommodate record municipal supply.
We believe the Trust is positioned to perform well in the coming months and
do not anticipate making major changes to the structure of the portfolio. We
continue to seek a balance between the Trust's total return and its dividend
income, as well as to 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. While we believe it is
unlikely that short -term interest rates will rise, this event would have an
unfavorable effect on the dividend-paying ability of the common shares and would
also negatively impact the price.
We appreciate your continued confidence in Van Kampen American Capital and
your Trust's portfolio manager.
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 six
5
<PAGE> 7
PERFORMANCE RESULTS FOR THE PERIOD ENDED FEBRUARY 28, 1998
VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
(NYSE TICKER SYMBOL--VFM)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
Six Months total return based on market price(1)......... 0.29%
Six Months total return based on NAV(2).................. 4.71%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................. 5.60%
Taxable-equivalent distribution rate as a % of closing
common stock price(4).................................... 8.75%
SHARE VALUATIONS
Net asset value.......................................... $ 17.13
Closing common stock price............................... $16.9375
Six Months high common stock price (02/10/98)............ $ 17.750
Six Months low common stock price (10/28/97)............. $ 16.375
Preferred share rate(5).................................. 3.400%
</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.
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 101.8%
FLORIDA 96.4%
$ 1,000 Bay Cnty, FL Sch Brd Ctfs Partn (AMBAC Insd)..... 6.750% 07/01/12 $ 1,156,330
250 Broward Cnty, FL Hsg Fin Auth Single Family Mtg
Rev Ser A Rfdg (GNMA Collateralized)............. 6.200 04/01/30 263,948
1,450 Cape Canaveral, FL Hosp Dist Rev Ctfs (AMBAC
Insd)............................................ 6.875 01/01/21 1,573,322
1,135 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)............................ * 10/01/13 438,076
3,205 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)............................ * 10/01/14 1,153,672
4,005 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)............................ * 10/01/15 1,344,479
4,005 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)............................ * 10/01/16 1,253,885
2,000 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)............................ * 10/01/17 583,960
1,960 Cape Coral, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (MBIA Insd)............................ * 10/01/18 533,708
1,000 Charlotte Cnty, FL Util Rev (Prerefunded @
10/01/01) (FGIC Insd)............................ 6.875 10/01/21 1,112,840
725 Clay Cnty, FL Hsg Fin Auth Rev Single Family Mtg
(GNMA Collateralized)............................ 6.500 09/01/21 771,734
750 Cocoa, FL Wtr & Swr Rev Impt (FGIC Insd)......... 5.875 10/01/26 804,068
750 Dade Cnty, FL Edl Fac Auth Rev Univ of Miami Ser
B (MBIA Insd).................................... 5.750 04/01/20 797,790
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 1,379,136
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 4,431,960
130 Dade Cnty, FL Hsg Fin Auth Single Family Mtg Rev
Ser E Rfdg (GNMA Collateralized)................. 7.000 03/01/24 137,106
20,445 Dade Cnty, FL Spl Oblig Cap Apprec Bond Ser B
Rfdg (AMBAC Insd)................................ * 10/01/28 3,674,784
16,125 Dade Cnty, FL Spl Oblig Cap Apprec Bond Ser B
Rfdg (AMBAC Insd)................................ * 10/01/29 2,718,836
1,000 Dade Cnty, FL Wtr & Swr Sys Rev (FGIC Insd)...... 5.250 10/01/26 1,005,990
1,000 Dade Cnty, FL Wtr & Swr Sys Rev Rfdg (FGIC
Insd)............................................ 5.000 10/01/13 1,004,340
500 Daytona Beach, FL Wtr & Swr Rev Rfdg (AMBAC
Insd)............................................ 5.750 11/15/10 537,685
2,000 Dunedin, FL Hosp Rev Mease Hlthcare (Prerefunded
@ 11/15/01) (MBIA Insd).......................... 6.750 11/15/21 2,221,460
1,000 Escambia Cnty, FL Hlth Fac Auth Hlth Fac Rev
Baptist Hosp & Baptist Manor..................... 6.750 10/01/14 1,089,400
1,000 Escambia Cnty, FL Pollutn Ctl Rev Champion Intl
Corp Proj........................................ 6.900 08/01/22 1,123,160
5,100 Florida Hsg Fin Agy Home Ownership Mtg (GNMA
Collateralized).................................. 8.595 11/01/18 5,695,221
200 Florida Hsg Fin Agy Homeowner Mtg Ser 2 (MBIA
Insd)............................................ 5.900 07/01/29 208,384
2,000 Florida Hsg Fin Agy Homeowner Mtg Ser 3.......... 6.350 07/01/28 2,128,880
1,000 Florida Hsg Fin Agy Hsg Brittany Rosemont Ser G1
(AMBAC Insd)..................................... 6.150 07/01/25 1,058,950
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<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)..................................... 6.250% 07/01/35 $ 1,057,900
500 Florida Hsg Fin Agy Hsg Riverfront Apts Ser A
(AMBAC Insd)..................................... 6.250 04/01/37 531,230
2,250 Florida St Brd Edl Cap Outlay Pub Edl Ser A
(Prerefunded @ 06/01/01)......................... 6.750 06/01/21 2,458,102
975 Florida St Brd Edl Cap Outlay Pub Edl Ser A
Rfdg............................................. 7.250 06/01/23 1,054,843
1,025 Florida St Brd Edl Cap Outlay Pub Edl Ser A Rfdg
(Prerefunded @ 06/01/00)......................... 7.250 06/01/23 1,118,613
750 Florida St Dept Trans Alligator Alley Rev (FGIC
Insd)............................................ 5.125 07/01/22 743,250
1,650 Florida St Muni Pwr Agy Rev Pwr Supply Rfdg
(Prerefunded @ 10/01/01) (AMBAC Insd)............ 6.250 10/01/19 1,802,575
1,000 Florida St Tpk Auth Tpk Rev Ser A Rfdg (FGIC
Insd)............................................ 5.250 07/01/22 1,002,950
2,000 Halifax Hosp Med Cent FL Hosp Rev Ser A Rfdg
(Prerefunded @ 10/01/01) (MBIA Insd)............. 7.000 10/01/13 2,231,120
4,670 Hernando Cnty, FL Sch Brd Ctfs Partn (FSA
Insd)............................................ 6.500 07/01/12 5,115,892
1,000 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Ser 92 Rfdg............... 8.000 05/01/22 1,159,690
2,000 Hollywood, FL Wtr & Swr Rev (Prerefunded @
10/01/01) (FGIC Insd)............................ 6.875 10/01/21 2,225,680
7,950 Jacksonville, FL Elec Auth Rev Bulk Pwr Supply
Scherer (Prerefunded @ 10/01/00)................. 6.750 10/01/16 8,626,863
3,350 Jacksonville, FL Excise Tax Rev Ser B (AMBAC
Insd)............................................ 6.500 10/01/16 3,535,523
1,665 Jacksonville, FL Gtd Entitlement Rev Ser A Rfdg
(AMBAC Insd)..................................... 5.500 10/01/12 1,735,862
2,000 Jacksonville, FL Hosp Rev Univ Med Cent Inc Proj
(Connie Lee Insd)................................ 6.500 02/01/11 2,185,140
5,000 Kissimmee, FL Util Auth Elec Sys Rev Rfdg & Impt
(Prerefunded @ 10/01/01) (FGIC Insd)............. 6.500 10/01/17 5,503,800
485 Lee Cnty FL Hosp Brd Directors Hosp Rev Lee Mem
Hlth Sys Ser A (MBIA Insd)....................... 5.875 04/01/24 520,347
1,445 Lee Cnty, FL Hsg Fin Auth Single Family Mtg Rev
Multi-Cnty Pgm Ser A (GNMA Collateralized)....... 7.450 09/01/27 1,631,506
1,000 Martin Cnty, FL Indl Dev Auth Indl Dev Rev
Indiantown Cogeneration Proj A Rfdg.............. 7.875 12/15/25 1,175,470
6,500 Miami Dade Cnty, FL Spl Oblig Ser B (MBIA
Insd)............................................ * 10/01/33 943,800
4,000 Miami, FL Hlth Fac Auth Hlth Fac Rev Mercy Hosp
Proj (Prerefunded @ 08/01/01) (AMBAC Insd)....... 6.750 08/01/20 4,416,760
5,000 Miramar, FL Wastewater Impt Assmt Rev (FGIC
Insd)............................................ 6.750 10/01/25 5,663,650
5,000 Orange Cnty, FL Hlth Fac Auth Rev (Inverse Fltg)
(MBIA Insd) (c).................................. 8.857 10/29/21 6,006,250
2,000 Orange Cnty, FL Hlth Fac Auth Rev Hosp Adventist
Hlth/Sunbelt Ser A (AMBAC Insd).................. 6.875 11/15/15 2,206,960
1,000 Orange Cnty, FL Hsg Fin Auth Multi-Family Rev Mtg
Hands Inc Proj Ser A............................. 8.000 10/01/25 1,109,910
775 Orange Cnty, FL Hsg Fin Auth Single Family Mtg
Rev (GNMA Collateralized)........................ 6.550 10/01/21 825,158
7,500 Palm Beach Cnty, FL Arpt Sys Rev Rfdg (MBIA
Insd)............................................ 7.750 10/01/10 8,489,625
270 Palm Beach Cnty, FL Hsg Fin Auth Multi-Family Rev
(FSA Insd)....................................... 5.900 06/01/29 279,115
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$ 1,500 Pensacola, FL Arpt Rev Ser A Rfdg (MBIA
Insd) (a)........................................ 6.000% 10/01/12 $ 1,637,445
1,565 Pensacola, FL Arpt Rev Ser A Rfdg (MBIA
Insd) (a)........................................ 6.125 10/01/18 1,683,330
3,250 Polk Cnty, FL Indl Dev Auth Indl Dev Rev IMC
Fertilizer Inc Ser A............................. 7.525 01/01/15 3,521,505
3,500 Reedy Creek, FL Impt Dist FL Ser A............... 6.000 06/01/16 3,695,230
5,000 Reedy Creek, FL Impt Dist FL Util Rev (AMBAC
Insd)............................................ 7.250 10/01/08 5,333,750
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 15,289,120
1,000 Saint Lucie Cnty, FL Sales Tax Rev (Prerefunded @
10/01/02) (FGIC Insd)............................ 6.500 10/01/22 1,118,590
1,000 Santa Rosa Bay Brdg Auth FL Rev.................. 6.250 07/01/28 1,083,110
1,000 Santa Rosa Bay Brdg Auth FL Rev Cap Apprec....... * 07/01/21 277,030
1,460 Sarasota Cnty, FL Hlth Fac Auth Rev Hlthcare
Kobernick/Meadow Pk (Prerefunded @ 07/01/02)..... 10.000 07/01/22 1,806,166
1,900 Tampa, FL Rev Hlth Sys Catholic Hlth Ser A1 (MBIA
Insd)............................................ 4.875 11/15/23 1,818,015
1,250 Tarpon Springs, FL Hlth Fac Auth Hosp Rev Helen
Ellis Mem Hosp Proj.............................. 7.500 05/01/11 1,349,537
1,250 Tarpon Springs, FL Hlth Fac Auth Hosp Rev Helen
Ellis Mem Hosp Proj.............................. 7.625 05/01/21 1,354,050
------------
155,527,566
------------
PUERTO RICO 5.4%
1,769 Centro de Recaudaciones de Ingresos Muni Ctfs
Partn PR......................................... 6.850 10/17/03 1,840,877
1,500 Puerto Rico Comwlth Hwy.......................... 5.000 07/01/38 1,425,285
1,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev...... 4.750 07/01/38 921,180
2,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
W................................................ 5.500 07/01/15 2,124,520
1,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser X
Rfdg............................................. 5.500 07/01/19 1,019,880
1,250 Puerto Rico Elec Pwr Auth Pwr Rev Ser T.......... 6.375 07/01/24 1,389,525
------------
8,721,267
------------
TOTAL LONG-TERM INVESTMENTS 101.8%
(Cost $148,603,938)......................................................... 164,248,833
SHORT-TERM INVESTMENTS 0.0%
(Cost $100,000)............................................................. 100,000
------------
TOTAL INVESTMENTS 101.8%
(Cost $148,703,938)......................................................... 164,348,833
LIABILITIES IN EXCESS OF OTHER ASSETS (1.8%)................................. (2,966,706)
------------
NET ASSETS 100.0%............................................................ $161,382,127
============
</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
9
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $148,703,938)....................... $164,348,833
Cash........................................................ 58,447
Receivables:
Interest.................................................. 2,753,424
Investments Sold.......................................... 65,000
Other....................................................... 5,081
------------
Total Assets.......................................... 167,230,785
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 5,389,788
Income Distributions--Common and Preferred Shares......... 146,177
Investment Advisory Fee................................... 86,857
Administrative Fee........................................ 24,816
Affiliates................................................ 10,500
Accrued Expenses............................................ 107,767
Trustees' Deferred Compensation and Retirement Plans........ 82,753
------------
Total Liabilities..................................... 5,848,658
------------
NET ASSETS.................................................. $161,382,127
============
NET ASSETS CONSIST OF:
Preferred Shares ($.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, 6,502,576 shares issued and
outstanding).............................................. 65,026
Paid in Surplus............................................. 96,272,011
Net Unrealized Appreciation................................. 15,644,895
Accumulated Undistributed Net Investment Income............. 363,478
Accumulated Net Realized Loss............................... (963,283)
------------
Net Assets Applicable to Common Shares................ 111,382,127
------------
NET ASSETS.................................................. $161,382,127
============
NET ASSET VALUE PER COMMON SHARE ($111,382,127 divided
by 6,502,576 shares outstanding).......................... $ 17.13
============
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 4,873,541
-----------
EXPENSES:
Investment Advisory Fee..................................... 557,656
Administrative Fee.......................................... 159,330
Preferred Share Maintenance................................. 68,871
Trustees' Fees and Expenses................................. 14,456
Legal....................................................... 6,044
Custody..................................................... 5,705
Other....................................................... 70,657
-----------
Total Expenses.......................................... 882,719
-----------
NET INVESTMENT INCOME....................................... $ 3,990,822
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 226,227
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 13,864,115
End of the Period......................................... 15,644,895
-----------
Net Unrealized Appreciation During the Period............... 1,780,780
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 2,007,007
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 5,997,829
===========
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended February 28, 1998
and the Year Ended August 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
February 28, 1998 August 31, 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................. $ 3,990,822 $ 8,105,729
Net Realized Gain..................................... 226,227 245,032
Net Unrealized Appreciation During the Period......... 1,780,780 2,591,702
------------ ------------
Change in Net Assets from Operations.................. 5,997,829 10,942,463
------------ ------------
Distributions from Net Investment Income:
Common Shares....................................... (3,148,612) (6,705,935)
Preferred Shares.................................... (893,207) (1,752,659)
------------ ------------
Total Distributions................................... (4,041,819) (8,458,594)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES... 1,956,010 2,483,869
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment........................................ 109,147 522,937
------------ ------------
TOTAL INCREASE IN NET ASSETS.......................... 2,065,157 3,006,806
NET ASSETS:
Beginning of the Period............................... 159,316,970 156,310,164
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $363,478 and $414,475,
respectively)....................................... $161,382,127 $159,316,970
============ ============
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
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
1998 1997 1996 1995 1994 1993 August 31, 1992
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period (a)............... $ 16.828 $16.444 $16.621 $16.282 $17.392 $16.013 $14.786
-------- ------- ------- ------- ------- ------- -------
Net Investment Income........ .614 1.251 1.232 1.266 1.275 1.346 1.049
Net Realized and Unrealized
Gain/Loss.................. .309 .438 (.081) .497 (1.100) 1.309 1.116
-------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... .923 1.689 1.151 1.763 .175 2.655 2.165
-------- ------- ------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............. .485 1.035 1.050 1.050 1.050 1.007 .743
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders... .137 .270 .278 .293 .202 .185 .195
Distributions from and in
Excess of Net Realized
Gain:
Paid to Common
Shareholders............. -0- -0- -0- .068 .029 .068 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders... -0- -0- -0- .013 .004 .016 -0-
-------- ------- ------- ------- ------- ------- -------
Total Distributions........... .622 1.305 1.328 1.424 1.285 1.276 .938
-------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of the
Period....................... $ 17.129 $16.828 $16.444 $16.621 $16.282 $17.392 $16.013
======== ======= ======= ======= ======= ======= =======
Market Price Per Share at End
of the Period................ $16.9375 $17.375 $16.750 $15.625 $15.625 $17.125 $15.625
Total Investment Return at
Market Price (b)............. 0.29%* 10.33% 14.18% 7.58% (2.62%) 17.05% 9.33%*
Total Return at Net Asset
Value (c).................... 4.71%* 8.89% 5.30% 9.47% (.23%) 15.91% 11.96%*
Net Assets at End of the
Period
(In millions)................ $ 161.4 $ 159.3 $ 156.3 $ 157.2 $ 155.0 $ 161.9 $ 152.9
Ratio of Expenses to Average
Net Assets Applicable to
Common Shares**.............. 1.60% 1.64% 1.67% 1.72% 1.66% 1.63% 1.60%
Ratio of Net Investment Income
to Average Net Assets
Applicable to Common Shares
(d).......................... 5.60% 5.87% 5.70% 6.06% 6.33% 7.04% 6.24%
Portfolio Turnover............ 6%* 9% 8% 17% 19% 13% 37%*
* Non-Annualized
** Ratio of Expenses to
Average Net Assets
including Preferred
Shares.................... 1.10% 1.12% 1.14% 1.16% 1.14% 1.11% 1.12%
</TABLE>
(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
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
February 28, 1998 (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.
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1998 (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. 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 February 28, 1998, for federal income tax purposes, cost for long- and
short-term investments is $148,703,938, the aggregate gross unrealized
appreciation is $15,664,865 and the aggregate gross unrealized depreciation is
$19,970, resulting in net unrealized appreciation of $15,644,895.
E. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays monthly
dividends from net investment income to common shareholders.
Net realized gains, if any, are distributed annually on a pro rata basis to
common and preferred shareholders. Distributions from net realized gains for
book purposes may include short-term capital gains, which are included as
ordinary income for tax purposes.
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 six months ended February 28, 1998, the Trust recognized expenses of
approximately $1,100 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.
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
For the six months ended February 28, 1998, the Trust recognized expenses of
approximately $25,400 representing VKAC's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of VKAC. The Trust does not compensate its officers or trustees who are officers
of VKAC.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Trust. The maximum annual
benefit under the plan is equal to the trustee's annual retainer fee, which is
currently $2,500.
3. CAPITAL TRANSACTIONS
At February 28, 1998, and August 31, 1997, common share paid in surplus
aggregated $96,272,011 and $96,162,928, respectively.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares.......................... 6,496,170 6,464,916
Shares Issued Through Dividend
Reinvestment............................ 6,406 31,254
--------- ---------
Ending Shares............................. 6,502,576 6,496,170
========= =========
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $12,188,108 and $9,885,970, 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, 1998 was 3.400%. During the
six-months ended February 28, 1998, the rates ranged from 3.400% to 3.785%.
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
VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*--Chairman
STEVEN MULLER
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., 1998
All rights reserved.
(SM) denotes a service mark of
Van Kampen American Capital Distributors, Inc.
17
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> FL QUALITY
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 148,703,938
<INVESTMENTS-AT-VALUE> 164,348,833
<RECEIVABLES> 2,818,424
<ASSETS-OTHER> 5,081
<OTHER-ITEMS-ASSETS> 58,447
<TOTAL-ASSETS> 167,230,785
<PAYABLE-FOR-SECURITIES> 5,389,788
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 458,870
<TOTAL-LIABILITIES> 5,848,658
<SENIOR-EQUITY> 50,000,000
<PAID-IN-CAPITAL-COMMON> 96,337,037
<SHARES-COMMON-STOCK> 6,502,576
<SHARES-COMMON-PRIOR> 6,496,170
<ACCUMULATED-NII-CURRENT> 363,478
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (963,283)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15,644,895
<NET-ASSETS> 161,382,127
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,873,541
<OTHER-INCOME> 0
<EXPENSES-NET> (882,719)
<NET-INVESTMENT-INCOME> 3,990,822
<REALIZED-GAINS-CURRENT> 226,227
<APPREC-INCREASE-CURRENT> 1,780,780
<NET-CHANGE-FROM-OPS> 5,997,829
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,041,819)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 6,406
<NET-CHANGE-IN-ASSETS> 2,065,157
<ACCUMULATED-NII-PRIOR> 414,475
<ACCUMULATED-GAINS-PRIOR> (1,189,510)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 557,656
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 882,719
<AVERAGE-NET-ASSETS> 160,675,976
<PER-SHARE-NAV-BEGIN> 16.828
<PER-SHARE-NII> 0.614
<PER-SHARE-GAIN-APPREC> 0.309
<PER-SHARE-DIVIDEND> (0.622)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.129
<EXPENSE-RATIO> 1.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
