<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Letter to Shareholders................. 1
Performance Results.................... 3
Portfolio of Investments............... 4
Statement of Assets and Liabilities.... 6
Statement of Operations................ 7
Statement of Changes in Net Assets..... 8
Financial Highlights................... 9
Notes to Financial Statements.......... 10
Independent Auditors' Report........... 13
Dividend Reinvestment Plan............. 14
</TABLE>
Letter to Shareholders
November 22, 1995
Dear Shareholder:
The first ten months of 1995 have been very positive for most investors. Both
the fixed-income and equity markets have made considerable gains during the
period ended October 31, 1995.
This year serves as a reminder of just how quickly markets can move and how
difficult it can be to predict the timing of those movements. Moreover, this
year reinforces the importance of maintaining a long-term perspective and
reaffirms the principle that it is time---not timing---that leads to
investment success.
[PHOTO]
Dennis J. McDonnell and Don G. Powell
Economic Overview
Although the third quarter posted a stronger-than-expected annual gross
domestic product growth rate of 4.2 percent, the economy has slowed
significantly this year. This slowdown is due in large part to the Federal
Reserve Board's efforts to tighten monetary supply in 1994---a measure
that proved successful, as economic growth during the first half of
1995 was substantially lower than its fourth quarter 1994 rate of 5.1 percent.
And, while other key economic data have shown mixed signs during recent months,
the general economic trends for the year continue to support a "soft landing"
scenario.
Comfortable with the economy's rate of growth and level of inflation, the Fed
reversed its trend of raising interest rates and lowered short-term rates by a
quarter percent on July 6. With slowing growth, interest rates declined and the
value of many fixed-income investments rose (bond yields and prices move in
opposite directions).
Performance Summary
The Trust produced a tax-exempt distribution of 5.62 percent <F3>,
based on the closing stock price of $11.75 per common share on October 31,
1995. Because income from the Trust is exempt from federal and Ohio state
income taxes, it is important to compare the Trust's distribution rate to
an equivalent taxable rate. For example, for Ohio residents in the combined
marginal tax bracket of 40.8 percent, the Trust's distribution rate
represents a yield equivalent to a taxable investment earning 9.49
percent <F4>. In fact, many closed-end municipal bond funds, such as your
investment, are currently offering higher yields (after taxes) over many
income alternatives.
As the graph on the following page shows, the Trust's net asset value and
market price have made significant gains over the one-year period. The Trust's
closing stock price, for example, gained more than 5.5 percent from October 1994
to October 1995. Moreover, we are pleased to report the Trust generated a
one-year total return at market price of 12.04 percent <F1>, which includes
reinvestment of dividends for the period ended October 31, 1995.
1 (Continued on page two)
Economic Outlook
We believe the Fed will move cautiously before it continues to lower
short-term rates, waiting for key indicators to show that the economy has truly
settled into a slow growth pattern. Although current economic data continues to
send mixed signals, we anticipate the economy will grow at an annual rate of 3
percent in the fourth quarter and inflation will run under 3 percent.
Based upon a generally modest growth and low inflation outlook, we believe the
outlook for fixed-income markets is positive. As interest rates fall in response
to a slowing economy, we believe yields on short-term municipal bonds will
continue to move significantly lower than long-term municipal bonds. Lower
short-term rates typically translate into lower leveraging costs for the
Trust, which provides increased opportunities for higher earnings over time.
Additionally, a steepening of the municipal yield curve would likely increase
investor demand for long-term municipal bonds and help to boost market prices.
Long-term municipal bond prices will also benefit from the combination of low
supply of new municipal bond issues and increased demand driven by scheduled
bond maturities.
[GRAPH]
Market
Date NAV Price
31-Oct-94 12.36 11.125
30-Nov-94 11.89 11.000
31-Dec-94 12.40 11.250
31-Jan-95 12.95 11.750
28-Feb-95 13.49 12.500
31-Mar-95 13.60 12.250
30-Apr-95 13.49 12.750
31-May-95 14.15 11.875
30-Jun-95 13.78 11.750
31-Jul-95 13.86 11.625
31-Aug-95 13.97 11.500
30-Sep-95 14.02 11.500
31-Oct-95 14.32 11.750
Based on month-end prices
While there has been varied speculation about the impact of tax reform, no one
is certain about what will finally happen. Consequently, in the near term, the
municipal market may continue to experience periodic market fluctuations as
various proposals come to the forefront. However, in the long term, we believe
the municipal market will remain an attractive investment choice for investors
seeking high current income. We will continue to keep a close watch over any new
developments and evaluate the potential impact they may have on your investment
in the Trust.
Once again, thank you for your continued confidence in your investment with
Van Kampen American Capital and for the privilege of working with you in seeking
to reach your financial goals.
Sincerely,
Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Investment Advisory Corp. Investment Advisory Corp.
2
<TABLE>
<CAPTION>
Performance Results for the Period Ended October 31, 1995
Van Kampen Merritt Ohio Value Municipal Income Trust
(AMEX Ticker Symbol VOV)
- ----------------------------------------------------------------------------------------------
<S> <C>
Total Returns
One-year total return based on market price<F1>....................................... 12.04%
One-year total return based on NAV<F2>................................................ 22.18%
Distribution Rates
Distribution rate as a % of initial offer common stock price<F3>....................... 4.40%
Taxable-equivalent distribution rate as a % of initial offer common stock price<F4>.... 7.43%
Distribution rate as a % of closing common stock price<F3>............................. 5.62%
Taxable-equivalent distribution rate as a % of closing common stock price<F4>.......... 9.49%
Share Valuations
Net asset value........................................................................ $ 14.32
Closing common stock price............................................................. $11.750
One-year high common stock price (05/01/95)............................................ $12.750
One-year low common stock price (11/16/94)............................................. $10.000
Preferred share rate<F5>............................................................... 3.40%
<FN>
<F1> Total return based on market price assumes an investment at the market price at
the beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Trust's dividend reinvestment plan, and sale of
all shares at the closing stock price at the end of the period indicated.
<F2> 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.
<F3> Distribution rate represents the monthly annualized distributions of the Trust
at the end of the period and not the earnings of the Trust.
<F4> The taxable-equivalent distribution rate is calculated assuming a 40.8%
combined federal and state tax bracket, which takes into consideration the
deductibility of individual state taxes paid.
<F5> See "Notes to Financial Statements" footnote #4, 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.
</TABLE>
3
<TABLE>
<CAPTION>
Portfolio of Investments
October 31, 1995
- --------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bonds
Ohio 96.3%
$ 1,000 Akron, OH Wtrwrks Rev Mtg (AMBAC Insd) ................ 6.550% 03/01/12 $ 1,076,570
2,000 Alliance, OH Wtr Wks Rev (FGIC Insd) .................. 6.650 10/15/17 2,169,320
1,000 Anthony Wayne, OH Loc Sch Dist (FGIC Insd) ............ 5.750 12/01/18 1,003,600
1,000 Clermont Cnty, OH Wtrwks Rev (Prerefunded @ 12/01/01)
(AMBAC Insd) .......................................... 6.625 12/01/13 1,131,780
1,500 Cleveland, OH Arpt Sys Rev Ser A (FGIC Insd) .......... 5.700 01/01/06 1,558,530
1,250 Cleveland, OH Pub Pwr Sys Rev 1st Mtg Ser A (MBIA Insd) 7.000 11/15/24 1,432,675
1,000 Cleveland, OH Wtrwks Rev First Mtg Ser F-92 A
(Prerefunded @ 01/01/02) (AMBAC Insd) ................. 6.500 01/01/21 1,120,630
1,500 Columbus, OH Wtrwks Enlargement No 44 ................. 6.000 05/01/14 1,561,110
1,000 Cuyahoga Cnty, OH Multi Family Rev Dalebridge Apts .... 6.500 10/20/20 1,023,360
1,000 Dayton, OH Arpt Rev James M Cox Dayton Intl Rfdg
(AMBAC Insd) <F2> ..................................... 5.250 12/01/15 957,480
1,000 Delaware Cnty, OH Swr Impt ............................ 5.250 12/01/15 959,810
1,225 Fairfield, OH City Sch Dist (FGIC Insd) ............... 7.200 12/01/12 1,428,191
1,000 Fairlawn, OH Swr Sys Impt ............................. 5.750 12/01/13 1,005,640
1,000 Franklin Cnty, OH Rev Mtg Seton Square North Proj
(FHA Gtd) ............................................. 6.150 10/01/18 1,003,090
250 Gateway Econ Dev Corp Gtr Cleveland, OH Excise Tax Rev
Sr Lien Ser A (FSA Insd) .............................. 6.875 09/01/05 278,335
1,900 Greene Cnty, OH Swr Sys Rev (AMBAC Insd) .............. 5.500 12/01/13 1,902,090
1,000 Guernsey Cnty, OH Pub Impt (AMBAC Insd) ............... 6.200 12/01/11 1,063,060
1,000 Lakota, OH Loc Sch Dist (AMBAC Insd) .................. 7.000 12/01/09 1,175,900
900 Logan Cnty, OH ........................................ 6.250 12/01/14 940,581
1,000 Lorain Cnty, OH Hosp Rev Emh Regional Med Cent Rfdg
(AMBAC Insd) .......................................... 7.750 11/01/13 1,199,710
1,000 Lucas Cnty, OH Hosp Rev Impt Saint Vincent Med Cent
(MBIA Insd) ........................................... 6.625 08/15/22 1,117,220
1,000 Miami Cnty, OH Hosp Fac Rev Upper Vly Med Cent Proj
Ser A (MBIA Insd) ..................................... 6.500 05/01/21 1,062,990
1,005 Middleburg Heights, OH Southwest Genl Hlth Cent (FSA
Insd) ................................................. 5.625 08/15/15 994,267
1,000 Ohio Hsg Fin Agy Single Family Mtg Rev (Prerefunded @
1/15/14) .............................................. * 01/15/15 312,280
1,000 Ohio St Air Quality Dev Auth Rev Owens Corning
Fiberglas Proj Rfdg ................................... 6.250 06/01/04 1,020,550
1,500 Ohio St Bldg Auth St Fac Adult Correctional Bldg Fund
Ser A (MBIA Insd) ..................................... 6.000 10/01/08 1,600,965
500 Ohio St Econ Dev Rev ABS Ind Inc Proj ................. 6.000 06/01/04 518,975
</TABLE>
4 See Notes to Financial Statements
<TABLE>
<CAPTION>
Portfolio of Investments
October 31, 1995
- --------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio (Continued)
$ 1,000 Ohio St Higher Edl Fac Comm Rev Univ of Dayton
Proj (FGIC Insd) .................................. 5.800% 12/01/14 $ 1,013,410
1,000 Ohio St Wtr Dev Auth Solid Waste Disposal Rev ..... 6.300 09/01/20 1,032,760
1,800 Student Ln Funding Corp Cincinnati, OH Student Ln
Rev Sr Subser A ................................... 6.150 08/01/10 1,841,508
875 Sylvania, OH ...................................... 7.450 12/01/10 997,097
1,000 University Cincinnati OH Genl Rcpts Ser E1
(Prerefunded @ 06/01/99) .......................... 7.300 06/01/09 1,101,740
1,000 Woodridge, OH Loc Sch Dist (AMBAC Insd) ........... 6.000 12/01/19 1,028,900
------------
37,634,124
------------
Puerto Rico 4.5%
700 Puerto Rico Comwlth Hwy & Tran Auth Hwy
Rev Ser V Rfdg .................................... 6.375 07/01/08 742,056
500 Puerto Rico Elec Pwr Auth Pwr Rev Ser T ........... 6.125 07/01/09 526,985
500 Puerto Rico Elec Pwr Auth Pwr Rev Ser Z Rfdg ...... 5.500 07/01/14 484,095
------------
1,753,136
------------
Total Long-Term Investments 100.8%
(Cost $37,717,286) <F1>...................................................... 39,387,260
Liabilities in Excess of Other Assets (0.8%)................................... (314,496)
------------
Net Assets 100%............................................................... $ 39,072,764
=============
*Zero coupon bond
<FN>
<F1> At October 31, 1995, cost for federal income tax purposes is $37,717,286;
the aggregate gross unrealized appreciation is $1,669,974 and the
aggregate gross unrealized depreciation is $0, resulting in net unrealized
appreciation of $1,669,974.
<F2> Securities purchased on a when issued or delayed delivery basis.
</TABLE>
The following table summarizes the portfolio composition at October 31, 1995,
based upon quality ratings issued by Standard & Poor's. For securities not rated
by Standard & Poor's, the Moody's rating is used.
<TABLE>
<CAPTION>
Portfolio Composition by Credit Quality
<S> <C>
AAA.......................... 71.9%
AA........................... 10.1
A............................ 15.4
BBB.......................... 2.6
=======
100.0%
=======
</TABLE>
5 See Notes to Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
October 31, 1995
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at Market Value (Cost $37,717,286) (Note 1).................................... $ 39,387,260
Cash........................................................................................ 30,501
Interest Receivable......................................................................... 756,304
Unamortized Organizational Expenses (Note 1)................................................ 12,474
--------------
Total Assets........................................................................... 40,186,539
--------------
Liabilities:
Payables:
Investments Purchased..................................................................... 955,810
Investment Advisory Fee (Note 2).......................................................... 21,465
Income Distributions - Common and Preferred Shares........................................ 11,087
Administrative Fee (Note 2)............................................................... 6,604
Accrued Expenses............................................................................ 118,809
--------------
Total Liabilities...................................................................... 1,113,775
--------------
Net Assets.................................................................................. $ 39,072,764
==============
Net Assets Consist of:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 300 issued with
liquidation preference of $50,000 per share) (Note 4)..................................... $ 15,000,000
--------------
Common Shares ($.01 par value with an unlimited number of shares authorized,
1,681,438 shares issued and outstanding).................................................. 16,814
Paid in Surplus............................................................................. 24,466,994
Net Unrealized Appreciation on Investments.................................................. 1,669,974
Accumulated Undistributed Net Investment Income............................................. 39,836
Accumulated Net Realized Loss on Investments................................................ (2,120,854)
--------------
Net Assets Applicable to Common Shares................................................. 24,072,764
--------------
Net Assets.................................................................................. $ 39,072,764
==============
Net Asset Value Per Common Share ($24,072,764 divided by 1,681,438 shares outstanding)...... $ 14.32
==============
</TABLE>
6 See Notes to Financial Statements
<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended October 31, 1995
- ---------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest........................................................ $ 2,190,284
---------------
Expenses:
Investment Advisory Fee (Note 2)................................ 243,920
Administrative Fee (Note 2)..................................... 75,052
Preferred Share Maintenance (Note 4)............................ 71,216
Audit........................................................... 34,355
Trustees Fees and Expenses (Note 2)............................. 27,382
Custody (Note 1)................................................ 16,895
Legal (Note 2).................................................. 8,765
Amortization of Organizational Expenses (Note 1)................ 4,997
Other........................................................... 56,404
---------------
Total Expenses.................................................. 538,986
Earnings Credits on Cash Balances (Note 1)...................... (4,650)
---------------
Net Expenses.................................................... 534,336
---------------
Net Investment Income........................................... $ 1,655,948
===============
Realized and Unrealized Gain/Loss on Investments:
Realized Gain/Loss on Investments:
Proceeds from Sales............................................. $ 15,967,938
Cost of Securities Sold......................................... (16,451,854)
---------------
Net Realized Loss on Investments ............................... (483,916)
---------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period......................................... (2,204,116)
End of the Period............................................... 1,669,974
---------------
Net Unrealized Appreciation on Investments During the Period.... 3,874,090
---------------
Net Realized and Unrealized Gain on Investments................. $ 3,390,174
===============
Net Increase in Net Assets from Operations...................... $ 5,046,122
===============
</TABLE>
7 See Notes to Financial Statements
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the Years Ended October 31, 1995 and 1994
- -------------------------------------------------------------------------------------------------------
Year Ended Year Ended
October 31, 1995 October 31, 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income.............................................. $ 1,655,948 $ 1,706,726
Net Realized Loss on Investments................................... (483,916) (1,636,938)
Net Unrealized Appreciation/Depreciation on Investments During the
Period............................................................. 3,874,090 (3,829,340)
---------------- ----------------
Change in Net Assets from Operations .............................. 5,046,122 (3,759,552)
---------------- ----------------
Distributions from Net Investment Income:
Common Shares.................................................... (1,200,525) (1,291,379)
Preferred Shares................................................. (553,900) (378,379)
---------------- ----------------
(1,754,425) (1,669,758)
---------------- ----------------
Distributions from Net Realized Gain on Investments (Note 1):
Common Shares.................................................... -0- (14,460)
Preferred Shares................................................. -0- (2,817)
---------------- ----------------
-0- (17,277)
---------------- ----------------
Total Distributions................................................ (1,754,425) (1,687,035)
---------------- ----------------
Net Change in Net Assets from Investment Activities................ 3,291,697 (5,446,587)
Net Assets:
Beginning of the Period............................................ 35,781,067 41,227,654
---------------- ----------------
End of the Period (Including undistributed net investment income
of$39,836 and $138,313, respectively).............................. $ 39,072,764 $ 35,781,067
=============== ===============
</TABLE>
8 See Notes to Financial Statements
<TABLE>
<CAPTION>
Financial Highlights
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated.
- -------------------------------------------------------------------------------------------------
April 30, 1993
Year Year (Commencement
Ended Ended of Investment
October 31, October 31, Operations) to
1995 1994 October 31, 1993
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period <F1>....... $ 12.359 $ 15.598 $ 14.583
----------- ------------ ----------------
Net Investment Income............................. .985 1.015 .377
Net Realized and Unrealized Gain/Loss on
Investments..................................... 2.016 (3.250) .955
----------- ------------ ----------------
Total from Investment Operations.................... 3.001 (2.235) 1.332
----------- ------------ ----------------
Less:
Distributions from Net Investment Income:
Paid to Common Shareholders..................... .714 .768 .256
Common Share Equivalent of Distributions Paid to
Preferred Shareholders........................ .329 .225 .061
Distributions from Net Realized Gain on
Investments (Note 1):
Paid to Common Shareholders..................... -0- .009 -0-
Common Share Equivalent of Distributions Paid to
Preferred Shareholders........................ -0- .002 -0-
----------- ------------ ----------------
Total Distributions................................. 1.043 1.004 .317
----------- ------------ ----------------
Net Asset Value, End of the Period.................. $ 14.317 $ 12.359 $ 15.598
=========== ============ ================
Market Price Per Share at End of the Period......... $ 11.750 $ 11.125 $ 14.875
Total Investment Return at Market Price
(Non-Annualized) <F2>............................. 12.04% (20.59%) .89%
Total Return at Net Asset Value (Non-Annualized)<F3> 22.18% (16.26%) 5.75%
Net Assets at End of the Period (In millions)....... $ 39.1 $ 35.8 $ 41.2
Ratio of Expenses to Average Net Assets Applicable
to Common Shares (Annualized) <F4>................ 2.39% 2.20% 2.13%
Ratio of Expenses to Average Net Assets
(Annualized) <F4>................................. 1.44% 1.35% 1.60%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (Annualized)<F5>..... 4.89% 5.57% 4.19%
Portfolio Turnover.................................. 45.47% 56.04% 16.52%
<FN>
<F1> Net asset value at April 30, 1993, is adjusted for common and preferred
share offering costs of $.417 per common share.
<F2> 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.
<F3> Total return at net asset value (NAV) reflects the change in value of
the Trust's assets with reinvestment of dividends based upon NAV.
<F4> Beginning with the year ended October 31, 1995, the Ratios of Expenses are
based upon Total Expenses which does not reflect credits earned on
overnight cash balances. (Note 1)
<F5> Net investment income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
</TABLE>
9 See Notes to Financial Statements
Notes to Financial Statements
October 31, 1995
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Van Kampen Merritt Ohio Value Municipal Income Trust (the "Trust") is registered
as a nondiversified closed-end management investment company under the
Investment Company Act of 1940, as amended. The Trust commenced investment
operations on April 30, 1993.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements.
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 less than 60
days 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.
C. Investment Income -- Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of
each applicable security.
D. Organizational Expenses -- The Trust has reimbursed Van Kampen American
Capital Distributors, Inc. or its affiliates (collectively "VKAC") for costs
incurred in connection with the Trust's organization and initial registration
in the amount of $25,000. These costs are being amortized on a straight line
basis over the 60 month period ending April 29, 1998. Van Kampen American
Capital Investment Advisory Corp. (the "Adviser") has agreed that in the
event any of the initial shares of the Trust originally purchased by VKAC
are redeemed during the amortization period, the Trust will be reimbursed
for any unamortized organizational expenses in the same proportion as the
number of shares redeemed bears to the number of initial shares held at the
time of redemption.
E. Expense Reductions -- During the year ended October 31, 1995, the Trust's
custody fee was reduced by $4,650 as a result of credits earned on overnight
cash balances.
10
Notes to Financial Statements (Continued)
October 31, 1995
- --------------------------------------------------------------------------------
F. 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 October 31, 1995, the Trust had an accumulated capital loss
carryforward for tax purposes of $2,120,854, of which $1,636,938 and $483,916
will expire on October 31, 2002 and 2003, respectively.
G. Distribution of Income and Gains -- The Trust declares and pays dividends
from net investment income to common shareholders monthly. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
2. Investment Advisory Agreement and Other Transactions with Affiliates
Under the terms of the Trust's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Trust for an annual fee payable
monthly of .65% of the average net assets of the Trust. In addition, the Trust
will pay a monthly administrative fee to VKAC, the Trust's Administrator, at an
annual rate of .20% of the average net assets of the Trust. The administrative
services provided by the Administrator include record keeping and reporting
responsibilities with respect to the Trust's portfolio and preferred shares and
providing certain services to shareholders.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Trust, of which a trustee of the Trust is an affiliated person.
For the year ended October 31, 1995, the Trust recognized expenses of
approximately $10,600 representing VKAC's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors of
VKAC. The Trust does not compensate its officers or trustees who are officers of
VKAC.
The Trust has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their
11
Notes to Financial Statements (Continued)
October 31, 1995
- --------------------------------------------------------------------------------
compensation to a later date. The retirement plan covers those trustees who are
not officers of VKAC. The Trust's liability under the deferred compensation and
retirement plans at October 31, 1995, was approximately $24,100.
At October 31, 1995, VKAC owned 6,700 common shares of the Trust.
3. Investment Transactions
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the year ended October 31, 1995 were $23,137,636 and
$16,451,854, respectively.
4. Preferred Shares
The Trust has outstanding 300 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is currently reset every seven days through an
auction process. The rate in effect on October 31, 1995 was 3.400%. During the
year ended October 31, 1995, the rates ranged from 2.500% to 5.375%.
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.
12
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Van Kampen Merritt Ohio Value Municipal Income Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen Merritt Ohio Value Municipal Income Trust (the "Trust"), including the
portfolio of investments, as of October 31, 1995, 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
October 31, 1995, 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 Merritt Ohio Value Municipal Income Trust as of October 31, 1995, 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
December 11, 1995
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Dividend Reinvestment Plan
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The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust Company,
as your Plan Agent, will automatically invest your dividends and capital gains
distributions in Common Shares of the Trust for your account.
How to Participate
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be
re-registered in your own name which will enable your participation in the Plan.
How the Plan Works
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common Shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
Costs of the Plan
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
Tax Implications
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income
tax which may be payable on dividends or distributions.
Right to Withdraw
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attn: Closed-End Funds
14
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
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
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
Limited 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
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies 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 direct at 1-800-421-5666 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
15
Van Kampen Merritt Ohio Value Municipal Income Trust
- --------------------------------------------------------------------------------
Officers and Trustees
Don G. Powell*
Chairman and Trustee
Dennis J. McDonnell*
President and Trustee
David C. Arch
Trustee
Rod Dammeyer
Trustee
Howard J Kerr
Trustee
Theodore A. Myers
Trustee
Hugo F. Sonnenschein
Trustee
Wayne W. Whalen*
Trustee
Peter W. Hegel*
Vice President
Ronald A. Nyberg*
Vice President and Secretary
Edward C. Wood, III*
Vice President and Treasurer
Scott E. Martin*
Assistant Secretary
Weston B. Wetherell*
Assistant Secretary
Nicholas Dalmaso*
Assistant Secretary
John L. Sullivan*
Controller
Steven M. Hill*
Assistant Treasurer
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
333 West Wacker Drive
Chicago, Illinois 60606
Independent Auditors
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., 1995
All rights reserved.
SM denotes a service mark of
Van Kampen American Capital Distributors, Inc.
16